The Ramsey Show - Slow and Steady Beats Get Rich Quick

Starting point is 00:00:00 brought to you by the every dollar app start budgeting for free today normal is broken common sense is weird so we're here to help you transform your life from the ramsie network in the fair winds credit union studio this is the ramsie show thrilled to have you with us triple eight eight two five 5-2-25 alongside the refreshed new father. Got a good night's sleep last night. So that means he's going to be extra good at helping you folks today on the money issues. George Camel, my dear friend. And then I'm Ken Coleman.

Starting point is 00:00:43 If you're new to the show, welcome, welcome, welcome. I'll help you make more money. George is going to help you keep more money. That's the combo. And so we're going to get right to it. Kate's joining us in California. Kate, how can we help today? Hello.

Starting point is 00:00:56 Thank you so much for taking my call. My husband and I have been married for almost two years now, and when we came into the marriage together, we both owned a house. And the house that he has, we live in right now, and it's paid off. The house that I have is in a different city, that's where I was living before, and I still have a mortgage on it. It's worth about $500, and my mortgage has $3.25 left. We pay every month, but then we have renters, and it covers most of it, but we're losing about $200,000. dollars per month with the property management fees and we're trying to decide we chip away at it every we do every dollar and we're on babysat six we're doing great but we chip away at the mortgage

Starting point is 00:01:39 every month whatever we have left over we spend towards the mortgage and we're trying to chip away at it but we're trying to decide if we should keep doing that or if it's and it's worth to keeping the house or if it's just going to be too much and let me ask you a question let it go let me ask you a question I want you to speak on behalf of your husband I think you're qualified Do you enjoy losing a couple hundred bucks a month on that house? It's weird. We both see the pros and cons. No, no, no.

Starting point is 00:02:11 You're sounding like a politician. That's a yes or no answer. Do you enjoy losing a couple hundred bucks? Do you enjoy it? I'm okay with it because I really love this house. And I don't want to give it up. And we go to the city that's in a lot and visit. And so eventually one day I would love to have it paid off and then have it be like,

Starting point is 00:02:28 so we go and we can stay there. I'm not sure why you call this. I'm not sure why you call this now. Well, because we're really torn. And there is some like... Who's torn? Wait, wait, wait, wait, wait, wait, wait, wait. Who's torn?

Starting point is 00:02:41 I'm holding George off because I know what George is going to say. So I'm trying to... This is actually fun that we got behind what's really going on. We are torn. There's over 100 people in the lobby. Show of hands if you think she's torn. Oh. All right, about half.

Starting point is 00:02:57 About half. I don't think you're actually torn. I think you want to keep it, and your husband wants to get rid of it. Is that true or false? It's partially true. I feel like the issue is I want to do upkeep on it, but it's a lot of money, and it's like, is it worth it? And the other thing, it's like the house we're in right now is great and we're thankful, but it's not a forever home. And so it's like, we don't want to get another home.

Starting point is 00:03:20 Kate, your forever home is with Jesus Christ. There is no forever home. Oh. You're not 90. You're going to move seven times before. before you passed from this earth. Yeah. So here's what I'm here.

Starting point is 00:03:30 George from the top ropes of the church. Just off the balcony. I like a Jesus juke every once in a while. You came in with a robe on and off the top of the balcony there. It's just fun. I like that. Here's what I'm getting at, Kay. I think this is a sentimental house for you.

Starting point is 00:03:44 This was your first house that you had on your own? Yes. So there is a real emotion tied to this. And there's a sunk cost fallacy. And it feels like letting go of this house is letting go of something you worked really hard for. and so I think what you need to do as best you can is to untie your motion and instead tie onto some logic, which is what your husband's probably using. He's just doing math and going, this doesn't make any fiscal sense.

Starting point is 00:04:07 We're losing money. And then the other part of this is where is the house located? You're in California. Where's that other house? So we're down south and my house is up north. How far away? About five hours. Oh, this is insane.

Starting point is 00:04:23 So would you now today go, hey, let's buy this house. five hours from us to rent out and lose money on. Would you make that decision today? No. So the key here is you became a landlord by default. And even if it was working out, I'd probably tell you to sell it because it's still long distance. It's still a nuisance. It's still a headache. I got a theory, George. And I don't mind being wrong. Kate, I think George may be right on the emotion piece, but you didn't react. Here's what I hear. I think that you think this is such a smart investment if you can just somehow figure out a way to not lose money on it or somehow just keep it. I think you feel like it would be financially irresponsible to let go

Starting point is 00:05:05 of this house. Is that true or false? Well, I grew up with parents that were all about good credit scores and all this stuff. So they push me and encourage me to get this house when I was single. And they're all about like, oh, you've got to keep it now. It's getting higher in value. Are you here. This is amazing. True or false? I'm just saying, I'm helping you. It's not about me being right. I want you to get, I'm trying to identify for you what's really going on here. I think you think it's irresponsible to let go to this house. And you're going to now let down mom and dad. That's an added layer. Is that what's going on? Yes or no. And I don't know. I feel like it's worth it. In my opinion, it's worth it keeping it. I knew it. We could use it in a future.

Starting point is 00:05:54 But don't say it's worth it out of finance. You're saying it's worth it emotionally. It's not worth it financially. No. How much money are you losing a year on this house? Be honest. Um, that's a good question. It's about 200 months that we're losing, so.

Starting point is 00:06:13 Okay, well, that's easy math. $2,400, but it's more than that because now you've got to fix it up and do other things, right? You've got to fix it, yeah. It's not worth it on paper. It's not worth it. If you sold it, you'd want to, if you sold it, you'd want to. walk away with about 150 grand. That's worth it. Now, what would you do if you had 150 grand in your pocket today? Great question. Well, like I said, we, the house that we're in, we just had a

Starting point is 00:06:41 baby and their stairs and we just, we want to get a one-story house. And so like we're, that would probably, you probably put it towards in the house. And like, the house that we're in is also very valuable. So we would be able to. Oh, you want to play this game again. Okay. You didn't learn a lesson the first time. No, I feel it's crazy. I feel like you're talking in circles. You should run for office. I really think.

Starting point is 00:07:00 Does the baby have trouble with stairs right now? Is that the issue? I was just worried about it, yeah. Okay, I'll tell you what I did, because I have, many people have stairs. It's very common in houses to have stairs. What did you do with your stairs? You put a gate. I got a baby gate installed.

Starting point is 00:07:16 Problem solved. And I carry the baby. Right, well, that's smart. It's where these arms came from. You know, I'm getting to the age now. If you put a gate on my stairs, I probably wouldn't. go up. No, Ken's going to have a little motorized I don't want to pull a handstring, James. It goes up the stairs.

Starting point is 00:07:28 I'd have to stretch. I play a lot of pickleball. I got a stretch. You know, we're having fun with you, Kate, but you won't even answer the question, but I think George's question is your homework assignment. What would you guys do with the windfall, the $150,000 from the sale of the house that's five hours away? George and I have spoken.

Starting point is 00:07:49 It makes no sense. We're going to say this until the cows come home to be a long-distance landlord. We've said that a million times. We're going to say it a million more times. George and I've told you why. I think we've identified the emotion around this, which was our goal to help you see how your emotion is outweighing your logic.

Starting point is 00:08:08 And then now it's like, hey, you've got to start thinking about what would we do with the 150 plus the equity on the current house that you don't like. That's the movie. Am I right, George? How old are you, Kate? How old are you guys? 30. 30. Okay, you let this thing ride till 62. If you just invest 150 grand, you'll have 3.6 million.

Starting point is 00:08:28 Oh, boy. So I'm not buying the fact that this house is the greatest investment. You could make truly passive income just investing it into an index fund. And so this is really about emotion than it is about logic. I would sit down and grieve this house and then put it on the market. Take some cute picks. Say goodbye. I wouldn't grieve it. I'd celebrate it. Money, money, money. Money. If you ever Googled yourself, here's the two worst things you can find. Photo evidence of your worst haircut and your personal data floating around on some sketchy website. I mean, the bangs were regrettable, but your info being bought, sold, and reposted all over the World Wide Web, even worse. And trust me, it happens all the time, and that's why I use Delete Me. You guys, over 20 billion records have been leaked in recent years, and that info gets pulled into these people search sites.

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Starting point is 00:10:03 So do that today. Join DeleteMe.com slash Ramsey, Code Ramsey. Anna is up in Little Rock, Arkansas. Anna, how can we help today? Hey, such a treat to talk to you all. I'll make my question brief, and essentially, I just learned that I'm expecting my first baby. Hey, watch out. That's exciting.

Starting point is 00:10:39 Congrats. Super excited, and I'm as nervous as I am excited. But my question is, is I have a piece of a piece of fine jewelry that was gifted to me from a family member. And the appraisal value of several years ago was $11,000, although I think it may be worth a little bit more. But my question is, is two parts. One, what can I expect to, like, the appraisal value versus sell value. I just don't know what to kind of expect for that. And then my second question is, how do I go about finding a buyer for fine jewelry. I hear about finding a private seller for like a vehicle, but I've listened to

Starting point is 00:11:22 the show for a while, and I've never heard about somebody trying to sell jewelry. So I would love any help. It's a great question. George's doing a little research. Quick question. He's the only person I could think of that would have a quick answer on this one. Why are we selling it? So one, I am a simple person. I am not a jewelry friend whatsoever. So I have no attachment to it. And my husband, like, picked up an extra bus route. And I am trying to get my side business started just to pile up cash. And so really, I just, I would really want, like, I feel like this is just a quick way to get kind of a nest egg. Okay. And so we're trying to build up. Are we have any debt? Yes, we do. Okay. So it's not about the nest egg. It's about the debt. I'll let George walk you through that. And who's the family member that gave you this? Sure. It's my mother. And mom's not going to be, and again, I'm not in any way. I'm just curious. I'm getting all the facts here. Would mom be upset to find out that you sold this? No. It was originally given to me to sell for, to like help pay for my wedding. Oh, great. Done. Then absolutely. Okay. That's all I needed to know.

Starting point is 00:12:34 No sentiment, no relationship destroyed. I would sell it. And there is, there is a spectrum, depending on. how fast do you want this cash and need the cash. You could get it fast at a pawn shop. You could go to a local jeweler. From my research, you're probably looking at 30 to 60% of appraisal value. So top end, you might be looking at, you know, five, a little over five grand. On the lower end, maybe three or four grand. And so I would at least try a local jeweler to see what they think, what they would offer.

Starting point is 00:13:02 What about Georgia, is it like a car? Can you sell it? Can you go put it online? There's auction houses. Now, the thing is, it's going to take more time to find a private buyer. An auction house will cost you a little bit, and it might take a little while to sell if it's a unique high-end piece. And there's online marketplaces as well. So it just depends.

Starting point is 00:13:19 If you're in no rush to sell this, you just want to get top dollar. I would go that route if you guys aren't desperate. Have you done some research on your own as to pieces like this? So I went to the retailer that it came from. And so, like I said, it was valued at 11,000. at the time, and they offered me $900. Okay. No, no, no, no.

Starting point is 00:13:42 I'm talking about online. I'm talking, like, for people that, because you go retail, you're going to get whole, you're not going to get the pricing that you want. You have the appraisals, so you have a lot of info about this piece of jewelry, correct? Okay, good. I'm saying, are there people that are selling these things online? That you can check the, go to eBay and find that item and then go to completed and sold in the filters.

Starting point is 00:14:02 That will show you what it's actually selling for. Awesome. So that's one. Thank you so much. I really appreciate it. your research. I appreciate the call. Wow. Yeah, I mean, that's very rare. That you have a piece of jewelry that nice, that isn't sentimental and won't destroy a relationship from the person who gave it to you. Yeah. Speaking of which, you got a nice piece on your wrist right there. My wife's grandfather passed

Starting point is 00:14:23 and grandmother said, hey, if you'll take this and you want to fix it up, keep it, but just don't sell it. Yeah. So I am under strict conditions to not sell it. Right. And I don't think I ever will. I'd love to pass it down to, you know, my kids. By the way, I remember when you first showed it to me, it looks good on you. Thank you. Yeah. I'm, you. I'm, you. I'm, you. I'm, you. I'm, you. I'm, you. I'm, Usually an Apple Watch guy, and so this is a big change. No, I think this makes you look like an adult. Well, I'm a dad now, Ken. You're a dad, you got a beard.

Starting point is 00:14:46 It's time to wear a real man's watch. I don't need to get texts on my wrist. By the way, because it's an older Rolex, can I say that? Yeah. I just said it. So it occurs to me I didn't really filter that very well. Oh, it's totally fine. But the size of that matches your wrist size.

Starting point is 00:14:59 You're saying I have a dainty wrist. I understood. You're small guy, small wrist, small watch. I think it works, is all I'm saying. Tammy's up in New York. Tammy, how can we help? Hi, Ken and George. I love you guys so much. Thank you for taking my call. Thank you. We love you too.

Starting point is 00:15:15 Thank you. So just to get to it really quickly, I have, in Baby Step 2, I just finished paying off about $30,000 in credit card debt. Nice. And I have basically two more, with the exception of my mortgage, two more is my pension loan and my car. Now, my car is a lease that's up in September. of next year, which they say we valued at $20,000 by that time, just got like a payoff estimate last month. Right now, it's about at $28,000. And my pension loan that I just took off for a kitchen renovation is about $36,000 left on it. So I'm wondering if I should pay, and that's at 5%. I'm wondering if I should pay, I guess, work on paying the car off before my lease

Starting point is 00:16:05 and pay extra payments toward it, or should I attack the pension loan? Well, if you're just going to put this in the dead snowball, you would just do the smallest balance first, which would put the car there if that's your goal. You want to keep the car? I do, yes. Okay, and what's your income? I'm at about 208. Fantastic.

Starting point is 00:16:25 So you're going to be able to knock this out pretty quick. Yeah, once I started this, because I've been Dave Ramsey-ish, and I'm getting serious now, I basically kind of stopped my retirement. I had my money all over the place, disorganized, saving in so many different pockets. So I kind of organized that and realized I have so much more to put towards it. So that's what I was able to kind of, you know, pay it down much more quickly. Well, now you know you have the ability and discipline to save up for the next kitchen renovation. Yes.

Starting point is 00:16:57 So are you done with debt completely? You're never going to borrow a dime again. Are you at that place? That's the plan. That is the plan. I'm working very hard. to not do it at all. But I still have a mortgage, and that's the bigger one.

Starting point is 00:17:09 But, yes, I guess I'm just worried about the lease car if I should just allow it to just. I would work on getting that amount and just knock that thing out, because you can throw payments at it and knock that 28K out in how many months do you think? So you think if I pay extra towards the least every month, it would make it less old by the end of September? Yeah, I would look at the agreement that you signed and talk to them and say, hey, look, I'm looking to buy this thing out. Here's the buy-off amount. Can I make, you know, payments every month to work toward that?

Starting point is 00:17:44 And that way, you're not just sitting there sitting on a giant pile of savings. Okay. Okay, so that's what I will do. Reach out to them, see if I can pay extra, and that will kind of lessen the amount or get me to owning it, owning it faster. Yeah, either way, you're going to be okay. If you went and taxed this pension loan and knocked out $36K, you'd have the money by the time the lease is over to buy the car anyways. Right. Either way, you're prepaying the appreciation.

Starting point is 00:18:14 It's still outstanding. I'm still working on it. It was the credit cards that I paid off. The pension loan in the car is still the outstanding ones. Yeah, I'm just saying either way you hit it, you're going to have the money to have own this car outright by the time the lease is over. That's the important part. You're not going to be an alert there. But I'm proud of you for making a big change.

Starting point is 00:18:32 I mean, you've been turning to debt every which way, even making an amazing salary. So, way to go, going, I don't need to do that. I make $200 grand. What am I doing, taking out loans? Yeah, and I'm living paycheck to paycheck, and I'm just, I'm not investing as much as I could. I've been investing, but not organized and diligently. Yeah, you could be doing way better for how hard you've been working. I know.

Starting point is 00:18:55 I'm proud of you. Hey, never too late to start. Yeah. We want you to hear this, Tammy. Like, just decide, like you've already decided. but decide every day, maybe take seven to 10 days and write something down every morning, something that is your words, but something that's very declarative, it's very simple, I'm not going to do debt ever again, or I'm getting out of this and I'm never looking

Starting point is 00:19:21 back, something like that to change your mindset so that you begin to not see debt as an option ever again. It's like cutting something out of your appetite, and then you'll lose the taste for it. that's the challenge. This is a mental game, and you can win it. You've already won so much. So we're really excited for we. We're believing in you. Thank you so much for the call.

Starting point is 00:19:41 Good luck with that buyout. You're probably going to need to just do it as a lump sum. I don't know they'll allow extra payments. It might go toward the lease. So again, look into that. But either way, just start stacking that cash and make those payments and get that thing owned fully. This show is sponsored by Better Help. Most of us are guilty of oversharing with the wrong person sometimes.

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Starting point is 00:22:16 insurance is the only kind of insurance that does that. The others like whole or permanent life insurance try to add in investing and that's a really bad product that doesn't do what it's supposed to do. You only need life insurance while someone depends. on you financially. So if you're like most people, you need a policy worth 10 to 12 times your annual income for a term length of 15 to 20 years, and it should be a level policy, meaning the premium stays the same. For more info and resources on this very important issue, use our free term life insurance guide. Go to ramsysolutions.com slash term life guide. That's ramsysolutions. com slash term life guide. Or you can get the link in the description of the show notes if you're

Starting point is 00:22:57 on YouTube or podcast. Lisa joins us now in Ohio. Lisa, how can we help? Hi. We recently sold our home after experiencing some financial difficulties and medical setbacks. And we're just looking for the best way to kind of move forward. We have three teenagers. They're very involved in extracurricular activities. It's a medical issue. We just kind of want to move forward. We want them to have a normal childhood. So, yeah, just kind of looking for the best way for us to move forward. Okay, so we need to paint a clearer picture for us here. So when we're tackling debt, we've got two things that we have to do just at the top, right?

Starting point is 00:23:42 We have to decrease expenses wherever, however, and then we also need to increase income. So give us a picture of the debt. But before you do that, give us a. a quick household income. What is our take-home pay? We're about, I would say about 11,000 a month. 11,000 a month. That's good income. Very good. And is this double income? Yes. Okay. Double income. Okay, now walk us through the debt. Smallest, the largest. Sure. So we're looking at about, I would say we have 60,000 in cars. We've got three cars. My 17-year-old and then the two of us.

Starting point is 00:24:29 That's it? That's the total debt. It's just the cars? No, no. Okay, so I want you to walk me through, I want you to walk me through smallest to largest, because that's what we teach in the debt snowball is to attack the smallest debt. So walk us through that. Sure.

Starting point is 00:24:43 So 20,000 in credit cards. And then, you know, we have, I would say our medical debt, we're looking at, I don't know, about 9,000. And then we just keep having these medical costs pop up periodically. We'll kind of be making some good headway. And then, like, my son has an anaphylactic food allergy, so he'll wind up in the hospital or all have, like, scans. Are you using the credit cards to help supplement the medical costs? Well, so my kids were still in daycare when I had cancer.

Starting point is 00:25:22 So I had to keep them in daycare I wasn't able to care for them during the day So a lot of that is still left over from And by the way, we're not judging you We're just trying to figure out how we're So let's keep going with it is 9,000 a medical debt Is that the smallest debt you have? Yeah

Starting point is 00:25:43 Yeah Okay, what's next? Just us chipping away at But we have 13, oh sorry We have 13,000 in student loans 13K, so 9K medical, 13K student loans, 20,000 in credit cards. That's multiple cards. So what's the smallest credit card amount?

Starting point is 00:26:02 $500. Okay. All right. You see what I'm trying to drive you to this? I'm going to get George here. But any other debt outside the $60,000 in cars? We had three cars. What are the cars?

Starting point is 00:26:12 Give me the three car amounts. About 25, 25, and 10. Okay. Are you underwater in all three of these? or any of these have any of these have any of these equity? Just in the one we're underwater. Which one? Mine.

Starting point is 00:26:28 25? One of the 25s, yeah. Okay. Any other debt? No. I mean, our kids are in activities, which those are costing about, oh, let's say, 8,000 a year. Okay, that's on the chopping block. That's significant.

Starting point is 00:26:47 All right. I'm bringing in Dr. Camel here. He's got his lab coat on. stethoscope. He's got his scalpel. Mostly scalpel. That's mostly what we need here. His scalpel is ready to go. All right, George, walk her through this. Well, now, while the medical issues, that is something that is out of your control. I'm so sorry that I hope you're doing better than you were. Are you currently in remission

Starting point is 00:27:10 or what's the status of the cancer? I am, yeah. It's just those darn scans we have to have. Yeah. And have you done the math? You know the ins and outs of your insurance? because I would know that like the back of my hand. How much am I going to pay? What's the deductible? What's the out-of-pocket max? They didn't cover my chemo.

Starting point is 00:27:27 So that kind of kicked our butts, too. Do you have a high deductible plan, or is it PPO? No, we're about $900 a month in insurance, and then our out-of-pocket max is $7,500 a year. Okay. So now we kind of know here's how much this is going to cost us out-of-pocket max. And do you guys have nothing in save? right now?

Starting point is 00:27:50 So from the sale of our house, we have 18,000 after, so we had to pay out, like we paid a chunk of that medical debt off. What's the rest of the 18,000 doing right now? What's the goal with that money? I have it in a high yield savings account. I just fill, we had like $50,000 equity in our house, and so I, my goal, I just wanted to like pay ourselves back for that and get back into a house eventually, but I just, I don't know, is that like the best thing to do?

Starting point is 00:28:18 I don't know. We're paying $2,600 in rent. That feels like I'm just flushing it down the toilet. Well, what's being flushed down the toilet is $102,000 in consumer debt with varying interest rates. That's what's crushing you. Not right. So the other part of this is we've been living high in the hog, taking out car payments for every single car we want. And that's the part where I go, all right, these cars could be offloaded to clear over half the debt. Oh, yeah. Not to mention a massive race. Just give us real quick, what do you think the car payments are for all three of those cars, you know, off the top of the top? I do know. It would be, I would say it's probably about 1,200. My heart said 1,200 there, ding, ding, ding. Imagine a $1,200 a month raise. Now you can make progress on that credit card debt and you can get ahead of the medical stuff. So that's my goal for you guys is you're bringing home $132K a year, which is awesome. My guess is your expenses are right up there too. Because whatever the kids want to do, I want to give them a great childhood. Yeah, what are the $8,000 in kids activities? a year? Yeah, so sports. I mean, my son's a golfer. My other son plays football, baseball, basketball. My daughter is in dance and tumbling and cheer. Okay. Are they going to do any of these

Starting point is 00:29:32 professionally? My son is a senior this year. He's the golfer. Like, is he like scholarship level? I mean, I don't know. I don't know that colleges. He's kind of thinking more about trades. Well, the answer is no. Perfect. So he can start. already known. I hate to tell you. Here it would be my take. Are they 16, 17, 18? 17, 13, and 11. Okay. I would have a 17-year-old start working, and they're going to start funding their own extracurriculars. Okay. But it's still costing you $8,000 a year to cover some of his stuff? Well, he has been up to this point, I would say, about $2,000 of it with golf. So, yeah, I mean, he's right on the tail end of us covering, you know, that. Listen, part of this thing, and you said

Starting point is 00:30:18 that was very interesting at this top of the call. You said, we want our kids to live a normal life. And I get it. I completely get it. There's no judgment coming from me. However, your daughter's in three major things. And one's enough. And there might be a season where she can't do any of it, where she learns. This is why. And it maybe keeps her from getting into debt. Like, you guys are going to have to make some changes. And you have to throw the kids' activities on the block. You have to. And then you're putting a scam in the game, too. You're saying, hey, mommy's got to sell her car, and we're going to have to cut you down to one activity because we need to clean up a mess that your dad and I made over the past several years.

Starting point is 00:30:57 And we know that health issues are going to continue in our family. We need to get ahead of this, and that takes priority over these other activities. So you'll get back to it. But the next two to three years, you're going to be just chunking 30 plus grand a year of this debt to clean it up. That's what it's going to take. That's the math behind it. And I believe you can do it if you offload the cars, get the expenses down. now we can breathe. We've got that margin to attack it.

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Starting point is 00:33:24 So that quiz is a fabulous little tool. Brett is up in Maine. Brett, how can we help today? Yes, I'm 100% disabled vet. I have several benefits. The housing market is crazy. I am trying to figure out, should I stick to the 27% of my income for the payment and zero down on a 15 year? Or should I, or can I move to a 30 year since I have a fixed income?

Starting point is 00:34:01 Well, first we want to say, thank you for your service. You're a great American. Yeah, that's some serious sacrifice, man. How are you doing? It's getting better every day, but a great scoff. Good, good. Well, because of your disability rating, the funding fee on that VA loan would be waived, which is great news, because VA loans can seem like a great deal, but then you realize they're also riddled with their own issues. And the property requirements are also strict.

Starting point is 00:34:30 Interest can be higher, and so I would tread with caution, and the biggest thing I would caution you against is going in with zero down. So that makes me ask another question. What's the state of your financial world right now? I am three to six months from completing step two. I have a fully funded, well, I have the step one completed and put away. Good. I expect another one to two months to fully fund a three to six month emergency fund. And then after that, go into 3B, if I should still accumulate a 10 to 20% down.

Starting point is 00:35:07 payment. Okay. So you were speaking out of order for the baby steps. You have six months to go to get out of consumer debt. Correct. Then it's going to take you another three months or so to stack up six months of expenses? Correct. Okay. Then that puts you at a year from now, we'll be in Baby Step 3B, saving up for a down payment. Correct? Okay. How much money, once you're out of debt and you have the emergency fund, how much money could you save up in that, let's say, in a year, if you you had no debt. 2,000 times 12, that's 24 grand. Okay.

Starting point is 00:35:48 So you could save up 24 grand, and what kind of house would you be looking at? Have you started looking at the price range in your area? 150 to $215,000. Okay. So my goal for you is to be, can we put down 10, 15, 20% on this house? and if that VA loan is the best choice financially based on the rates and the fees and all

Starting point is 00:36:12 of that, I'm totally fine with you doing that because that funding fee is waived, but I still would stick with a 15 year and work to pay it off as aggressively as possible because here's what we found. People who take out a 30-year loan tend to pay it closer to 30 years and they do 15 or closer to 10. People who take out 15-year loans tend to pay it off in 10. Or if you're the average baby stepper, seven years. And so there's a forced saving. plan you have there when you get that 15 year and worst case it's done in 15 years how old are you I'm 27 amazing young guy a lot of life ahead of you and that means this house searching is on pause because we have a year to or even saving up the down payment another year maybe year and a half of stacking up

Starting point is 00:36:56 the down payment then we can begin the hunt okay so here's what that means before you're 30 you're going to have equity in that home and be in a place that it's really peaceful instead of going, hey, this is now way too much of my take-home pay as being eaten up by this mortgage. And then you're going to pay it off before you're probably 40. Now, that's a game plan for some wealth building right there. Love that. Again, thanks for the call, Brett, and glad to see that you're on your way up and hang in there, cheering for you, hold the line to exactly what George said, and this is going to turn out to be a great, great situation for you. Annie is joining us now in Iowa. Annie, How can we help?

Starting point is 00:37:37 Hi. So I have kind of an investing, saving question. So me and my husband are both investing 15% of our income. We're set to pay off our house next year. And I'm wondering, yeah, very exciting. I'm wondering with the access, we're kind of wanting to start saving for a future house, an upgrade, and pay that one in cash. Love it.

Starting point is 00:38:01 We had a meeting with our financial advisor, and he suggested. putting in in a Roth IRA so that we get tax-free growth versus I had kind of planned on putting that in a brokerage account. And I don't think they're saying they're wanting you to pull out the contributions tax-free. Is that what they're saying with the Roth IRA? Correct. Go ahead and max out the Roth IRA. And then five years down the road when we want to step up in house, just pull out the

Starting point is 00:38:32 contributions. I would personally just use a non-retirement account if you're going to use it for non-retirement purposes. I like to keep things real clean. So a Roth IRA is my retirement account. A brokerage account is used for things before I retire. And so you will have capital gains on that, and depending on your income and how long you hold those investments, it'll likely be 15% is what you'll pay only on the growth. So if you throw in 100,000, it grows to 150,000. you'll pay 15% of $50,000 in taxes.

Starting point is 00:39:08 And the other thing is, how long is this going to happen? Is this like a five-year goal to upgrade in house and cash, or is it two years? I would say it's five years, yeah. Okay. If it's five-plus years out, investing that money's fine. If it's anything less than that, I start to get a little cautious and go probably better to park it in a high-yield savings account to keep things more liquid. Because you don't want to get there and go, oh, the market took a negative 24% dip this year.

Starting point is 00:39:34 There goes our house fund. Right. So the longer stays in there, the better chance you have of that money growing. And this is going to be a long-term plan, right? Yes. How many years are you thinking? I would say five years at the soonest, maybe 10 years. Love it.

Starting point is 00:39:51 It just depends kind of on our situation in that time. We're not in a rush to move out. Okay, good. Know that we want to pay cash for our next house. Love that. How old are you guys? 26. Oh, my gosh.

Starting point is 00:40:04 kids? No, not yet. Oh, see. So we'll have the house grade off from five and a half years, so we beat the average a little bit. Annie, that is incredible. That's what I was wanting to know. Can I just say you are going to be in like a rare error for a young couple? I love this story. They're already thinking, but she's being patient about it. What caused all of this? Because most people go, why would you pay down your house? You're 26. You got a low rate, just ride it out. That's the difference. Yeah, where's this patience come from for this young couple? What's going on, Annie? I've been a big fan of the show.

Starting point is 00:40:37 My parents, obviously, have raised me on Dave Ramsey, so that's been a big part of it. What's your household income? About 180. Good, heavenly days. You guys are going to be rich. What's your mortgage payment? The principal and interest portion. Yeah, about $1,300.

Starting point is 00:40:58 So you're going to free up that amount, plus all the margin you have being debt-free, which means you're going to stack up... Yeah, $4,000 extra a month that will start probably stacking up. $50,000 a year, saved up for five years, invested. Yes. You're going to have a couple hundred, $300,000, $400,000. That's a nice house in Iowa, huh? Yep. On top of the equity you have in your current home, which once it's paid off will be how much?

Starting point is 00:41:23 About probably $2.20, depending in five years what the market is like, but yeah. I mean, my goodness. You're a real estate agent, the title company, they're all going to be like, what, you're Yeah, they're going to think you guys are punking them. Like 30 years old, buying a house and cash? Yeah, they're not prepared for it. So, so happy for you. What great piece you guys are setting yourself up for, Annie?

Starting point is 00:41:45 We're just applauding you. Thanks for sharing the details. Because I think you've modeled the way for a lot of young people that are listening right now. So, fantastic job. Thank you so much. These are luxurious questions you can ask when you follow the Ramsey plan to a T. I'm telling you. So proud of her.

Starting point is 00:41:59 Yeah, really good stuff. Folks, this young generation, they're fine. They're going to be okay. They're going to crush. The good ones are going to be fine. Take, quick reality check. AI isn't just for sci-fi nerds and Silicon Valley tech bros anymore. It's the new weapon of choice for every scammer

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Starting point is 00:43:52 David, how can we help? Yes, I was calling to see. I lost my job about a month ago. And we have a few months left to go until money runs out. And I'm just wondering, when should I start considering starting my house? Now, when you say the money runs out, runs out of where? Well, we have a couple months of savings and also a severance package from my employer. Are you using the savings now, or are you able to live off the severance?

Starting point is 00:44:23 So far, the severance so far. How much do you have in savings? About 20,000. Okay. What were you making? And what was your income, your take home before being let go? Base salary was 105 plus bonuses. Okay.

Starting point is 00:44:42 Are you doing, what kind of work were you in? I was having a marketing for an e-commerce company. Okay. I'm assuming that you're aggressively, you've got recruiters helping you, kind of that background, what you've done, seems like your problem. No? I haven't connected with any recruiters. I've been applying for jobs, diligent.

Starting point is 00:45:02 I think today I applied for about 20, and I also have been reaching out to local businesses to see if they need any help with their marketing. Okay. Maybe see if I could get freelancing or something. Great. I would keep doing that, but I would absolutely at this stage, because you were at a director level, high level, I would get a recruiter involved because, again, they don't win unless they get you something.

Starting point is 00:45:22 So I would add that to the strategy here. Okay. But the other thing that I would tell you, and again, I'm giving you advice on what I would do if I were in your shoes. And what I would do is while on, you know, prospecting and hustling and connecting, I do not want to touch that emergency fund. That's just me. And so while I've got the severance that's paying the bills, and you may be doing this.

Starting point is 00:45:50 Are you working even just side jobs right now to bring in some money to supplement the severance so that we're stacking some cash? I haven't like applied for any like entry level positions or anything. yeah i'm just telling you i'm open this to working uh yeah definitely but i haven't applied to anything well i would and my point is is you know whether this is uh i'm working at a walmart or i found a manufacturing job where it doesn't you know i door dash into car i'm going where can i make a minimum of 20 to 25 bucks an hour because this is just this is just a uh a bridge but um you want to slow down the burn rate that's the

Starting point is 00:46:31 goal here while getting that job. Is this the only income in the family? Are you single, married? No, my wife, she works as well. Okay, what is she making? She makes a little over 80 a year. Okay, so can you guys live off the 80 and not touch this? Not, not really, no.

Starting point is 00:46:52 And what's that due to? Do you guys have a big mortgage? Well, we do have quite a bit of bills. Are those, yeah, our mortgage is about $2,500, well, if you include, like, property taxes and insurance, about $2,500. Okay, and then do you guys have any debt outside of the mortgage? Our cars will be paid off, like, March of next year. Dude, I'm offloading these cars before I burn through my savings. What are the cars worth?

Starting point is 00:47:22 They are worse, roughly, probably about $15 a piece, $15 a piece. What do you owe on them? Three and five. What are the payments? About $800 a month. Yeah. Why not take $8,000 from your savings, pay off the cars that frees up actual money in your budget every month? Yes.

Starting point is 00:47:45 I'd actually sell the cars. Would I do that earlier or what I do? Okay, sell versus... I'd sell one at least, you know, because you're actually going to turn around and go buy something is the issue. Oh, I know, but still, you know, instead of using that, I mean, yeah, I'm with you, George. You'll still have 12K in savings. You still have severance. You'll free up 800 bucks a month.

Starting point is 00:48:04 My goal would be, have you guys ever made a budget together? Just sat down and said, hey, here's. Okay. So I would go through that very judiciously tonight and say, what can we cut from this to live on a very bare bones emergency style budget? Which means no eating out whatsoever. We are only covering the four walls. Housing, utilities, insurance, food, keeping food on the table.

Starting point is 00:48:29 the major things. Outside of that, there's really nothing else you need right now. Correct. Correct. Okay. And until you get a stable income, until you get back up to making, you know, 200 as a household, we got to live like we make 80 grand a year. That's right. And you can see we didn't immediately go to you selling the house. That's what you proposed. But, but let's walk through the numbers. That's the scariest part to me because I don't know where, at what point do I decide? And I know right now it's kind of taking time for people's houses. Well, I mean, you guys bring home still four to five grand a month. What is she taking home?

Starting point is 00:49:04 She brings about, say that again. Is she bringing home four grand a month? About five to six. And then I also have a retirement from the military. And that's what I'm saying. You guys can't figure out how to live on seven grand a month right now? That's the scary part. We were living, we had about 20,000 or more that we didn't.

Starting point is 00:49:29 Well, actually, there was more that we didn't need, but we had budgeted in, like, Christmas and vacations and stuff, so we can cut everything out. We can probably cut it back about 30,000. That's what I'm saying. You don't need to sell the house. See, the house stays there. Don't touch it. You don't want to mess with that. That can't be your fallback.

Starting point is 00:49:46 And quite frankly, I think what George has figured out is it doesn't need to be your fallback. This isn't, we don't use the house and then throw the family into disarray unless it's the only option. And I don't think this is, I mean, while you're finding something between your military, Let's run these numbers again for you. Just real quick. You're bringing in how much a month on the military benefit? 1,200. 1,200.

Starting point is 00:50:07 And then your wife's bringing 6? Yes, sir. So that's 7,200. 7,200. A mortgage is 2,500 of that. So why do you need an extra $5,000 a month? Where is this money going? Well, there is, we did set up like the envelope plan where a lot of money gets set aside for

Starting point is 00:50:27 their birthdays and Christmas and stuff. so there's all of this money that moves over for like saving four okay but i'm talking 60 grand a year that we need to account for here that's five grand a month so that's the part where i go i think we've been a little lackadaisical we've got a little comfortable and i need to i need to feel some fire under your butt to go dude we need to do something now we got this debt we need to clean up i don't have a job right now our lifestyle just got cut over 60% because of this income hit so everything we were doing before is off the table right now Now, we'll get back to there. Once you're making $120,000 a year again, we can reinstate the sinking funds and the vacation funds and all that. But right now, we're not doing any investing. We're not doing any spending. All we're doing is trying to keep food on the table, keep the mortgage paid, keep the lights on. And George is right, by the way. I'm fully in bore with George. I would pay off the two cars today, like as soon as you hang up. And the reason is because you just gave yourself another $800 to the equation we just ran, which means we're now at $8,000 a month.

Starting point is 00:51:26 Okay. I pulled up my budget. Bills are about $6,000 a month, not including food and stuff like that. Why doesn't that include food? Well, the way I set the budget up is more like these are non-negotiable kind of like bills that are the same every single month. I don't believe you have $3,500 of non-negotiable bills outside the mortgage. I would do an audit with your wife tonight and you both go, can we live without this for a season, for three months? Can we scale down Christmas to a, you know, white elephant secret Santa swap? The answer is yes. This will be a very popular segment, I think, on your YouTube channel.

Starting point is 00:52:06 I'm going to suggest it. Just slashing the budget. No, a house call from Dr. Camel. It's all Zoom, though. And you just sit there and you go through because I think you could literally in five minutes. I'd give you one. All right. I'm in.

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Starting point is 00:54:20 Hi, guys. I'm such a huge fan of the show. Oh, thank you. So basically, yeah, of course, I've been watching you guys for years now. So basically, I'm 25 years old, and I almost make $90,000 a year. Wow. I'm currently... What do you do?

Starting point is 00:54:39 Yeah, I'm doing digital marketing. Good for you, Noel. Way to go. Thank you so much. And I'm currently working on my MBA program, and, I've been dating my boyfriend for almost two years now, and when we first met, he was making a similar salary to me, but since a couple of months ago, he was let go from his job, and now he's been unemployed for going on three months now. We currently live together, and my concern is with all of our combined student loan debt, car debt, and consumer debt, I'm a little bit worried if he doesn't find a job. should we continue living together? Do we start splitting everything 50-50? Do I dip into my savings

Starting point is 00:55:25 to help sort of cover like our... Hold on, second. All right, hold on, hold on. Okay. I got to stop you here. Should we start splitting things 50-50? What does that mean? What have you been doing? That's what I want to know. So basically when we decided to start living together, he said that he will cover the rent, which is about $1,300 a month, and I would pay for groceries and our utilities. And then everything else we pretty much take care of independently. Okay. And now he can't afford it because he's the broke roommate. And so you're going, I guess we need a split, should I cover?

Starting point is 00:56:03 Who's been, well, wait a second. He's been out of work for three months. Did he have a severance? He got his PTO pay, but I think that's now gone. paying the rent for the last three months? So he paid the rent last month and then I pay the rent this month and yeah. All right. So now here's what's interesting to me.

Starting point is 00:56:26 So you call us and we're so thrilled you did. I mean, couldn't be any happier because this is serious stuff. But the fact that you called us and the way you've set this question up, you're like, it leads me to believe that there's been some conversations maybe or he has made some statements or there's a pattern of the way he's handling this that's got you going uh-oh there are red flag swirling so what what is it that makes you call and ask this question of should this mean that uh i put the brakes on sharing you know all this kind of stuff and not think about this dude as marriage potential what's happened um well i think what's happening

Starting point is 00:57:09 right now is that he has been interviewing for places that nobody seems to be hiring and he doesn't really want to take a lower paying job or like two part-time jobs in the meantime. And I'm just concerned about how what jobs he's willing to take versus not and being potentially too picky in this environment where it also seems like nobody's hiring. Well, that's true. So just a quick for the rest of our audience and for you, the job market is very soft right now. Unemployment is eking up. This is this is a real. thing. So the job market's very, very soft. So what that means is, is that it does take longer to get hired because companies aren't hiring as quickly, because quite frankly, the economic

Starting point is 00:57:55 uncertainty with tariffs and everything else, a lot of companies are holding and in a holding pattern. So that's real. But what is also real is, is this young man, for his own mental and emotional health, needs to be doing something. And I get the temptation to go, well, I don't want to go backwards. But yeah, this should concern you. And yes, I would not be thinking about anything in this relationship. I'll just play your dad for a second, because I'm probably old enough to be your dad. Yeah, I would not be thinking about long term with this young man until we see how he handles this storm. This is a real storm. Let me say this on his behalf, so I don't sound like the angry, you know, boomer dad. I'm an exor, by the way. There,

Starting point is 00:58:43 we know from research that losing a job has the same emotional impact as losing a loved one. So I do have a lot of empathy for him, and I want you to have that empathy and understanding that he's three months into having his world rocked. And so I do have some sympathy there as well as empathy. But to your question, and I want George to jump in here, I absolutely think today is the day. We should have been separate. I mean, I would have never told you to live with the guy. but you are no judgment i'm just telling you i wouldn't have told you to do it

Starting point is 00:59:18 but i would be separating everything what what is yours is yours what's his is his and you guys split everything down the middle and unfortunately your romantic roommates but that's where it ought to be george yeah i think this is not a punishment to him of you i'm moving out because you don't have a job i think you go hey this was a mistake and it's just this is making it more and more clear and it just makes it a weird relationship now because now you're like does he get kicked out and he has to go find his own place because that might be here's the thing

Starting point is 00:59:51 I would have more onus if I needed to cover rent that month I'm going to be doing Instacart that night but because he has you to float him I think that's creating a sense of kind of comfort and complacency in his life and yes it should scare you by the way as he's a future mate potentially I'm going to tell you something right now

Starting point is 01:00:08 and Stacey knows this if I lost my job there is no sitting around for three months nothing I'm working I'm busting it and so yeah you ought to be concerned by that because while I acknowledge that it is an emotional blow I'm also saying that life sucks sometimes it hurts and we don't just sit at home so imagine you with two littles and if this happens to this guy so yeah this ought to scare the crap out of you. Yeah. Yeah. And I feel like too, like when I talk to him about it, like my mindset is like, if I want a job by this date, I'm having it. I don't care what it is or how much it pays. Like I'm just going to go get it. Love it. And I just feel like he's waiting for like

Starting point is 01:00:54 the perfect job. And I don't know. Yeah. Yeah. So hey, Noel, I'm not telling you what to do in this relationship, but I'm telling you to press pause on the relationship. Meaning you're not thinking about what this looks like in the future until we see how this dude steps up. And by the way, George, do you have any problem with her telling him that? I don't, but I tend to be a little bit more black and white, you know, like just lay it out there. Well, I can tell. She's very professional with her language and her words. And so this is, it's going to feel like an awkward conversation because it is.

Starting point is 01:01:24 It's going to be uncomfortable. And how he reacts is not up to you. So that's the tough part. And it sounds like he's going to be probably deflecting, making excuses, probably going to get upset and defensive. And again, that's very telling. Yeah. When's the lease up? April.

Starting point is 01:01:44 Yeah. That's a long ways away. It's a long ways away. Because I was like, if this thing were around the corner, I would just tell you, hey, you know what, let's redefine the relationship. I'm willing to stay in the relationship, but I'm not going to live with you. I'm concerned about how you're handling this. I think you say, I need to go find a roommate who was able to pay their share of the bills. Well, that's 100% the case.

Starting point is 01:01:59 And I would choose a just female friend at that point, and I would not move in with anyone else until marriage. Now it's a sitcom. It's Three's Company. You don't even remember that show. Do you remember that? funny to there we go but noel seriously you've got to take care of your finances right it because your name's on the lease yeah and my fear is you go well i guess i'll cover it this month don't cover it and then month i go get a roommate that's kind of a real by the way that's not

Starting point is 01:02:25 passive aggressive that's a legitimate move that's protecting your finances and if sparky doesn't like it tough yeah i just don't know if you know i should just wait and see or if i need to start No, you shouldn't wait and see. No, you've already got an instinct that this dude is showing a lack of character. I'll say it so you don't have to. That's why you called us. Yeah. And I'm telling you, sweetheart, you're, I'm begging you as your fake podcast dad.

Starting point is 01:02:57 Your instincts are right. Your instincts are completely right. I can tell by your tone, you are not being cruel and out of control and overreacting. You are not dramatic, No, well, you are sharp. You've got your act together. And by the way, you deserve a guy, whether you're living with him or not, who's like, man, Noel's worth this. 100%. I'm not going to sit around and play video games and let her pay the rent while I'm eating ramen noodles.

Starting point is 01:03:21 And the research bears this out. Professor Scott Galloway says what women are looking for is a man's ability to provide future resources. And so this is a signal, and you should be paying attention to it. Don't wait, Noel. Put the pressure on this young guy. Listen to your fake podcast ad. I've never said that before. So much wisdom.

Starting point is 01:03:37 Take it from your fake podcast dad. You're worth more, Noel. You're worth way more. And you got to take care of you. I get to be fake podcast, uncle, calling it. I was going to say, brother. The Ramsey's show question of the day is brought to you by Why Refi. You may think no one can help with your defaulted private student loans, but why refi is different.

Starting point is 01:04:33 They work with borrowers in tough spots without judgment. Check them out at why refi.com. slash Ramsey. That's the letter Y, R-E-F-Y.com slash Ramsey. It's not available in all states. Today's question comes from Hudson in New Mexico. My parents are in their early 70s, and they think their money will run out in the next several years. They want me to sell my condo and buy a bigger home with an in-law suite that they can live in. They will contribute $225,000 toward the purchase of the new place. Additionally, there is a life insurance policy that will leave me and my mom $450,000 when my dad passes away.

Starting point is 01:05:10 The problem is that my wife does not want to live under the same roof as my parents, as they do not get along. If my wife drives my parents away, I will end up with nothing from the insurance policy as they will cash it in instead to use it for their living expenses. What do I do? Oh, my gosh. First of all, this is framed terribly. He's created...

Starting point is 01:05:32 He just put a wedge in an impossible choice. Do I choose my wife for my parents? That's the real question here. It's a non-issue. You've got to go with the wife. But it doesn't have to be all or nothing on this, George. Am I right? Well, now there's a price tag on the parents' relationship.

Starting point is 01:05:49 He's going, hey, I'm losing out on half a million if I go with my wife's side. You can tell the parents, hey, you're not living with us. Yeah, I don't think your quality of life is going to be great if you do this. Number one for your marriage, but number two, just for your own independence. My confusion is they're in their early 70s. they can use that $225 grand to go get their own place. Yeah. And if they can't afford that, they can use that towards rent for the next several years.

Starting point is 01:06:13 Such a false choice. I would not combine my financial life. I've only seen it go poorly. And it gets very messy financially when you go, well, this house is partially ours because we put in this portion and we want to do this renovation and we want it this way. I think it's going to create it even more rift in your marriage. So for those reasons, I'm out and I would leave the half a million on the table from life insurance policy and go, I chose to be married to this person. They'll leave and cleave.

Starting point is 01:06:39 And this is, we are going the opposite direction with mom and dad moving in, creating some awkward situation and tension. You know, because I think it's actually may be valuable. We'll see. I, I, let's put you in this scenario, George. Let's put you in this guy's actual shoes. Okay. Your parents come to you and they say what, what do it? What do you? Hey, George, sell your condo, get a bigger house within-law suite. We'll give you 200 grand toward it. And there'll be a life insurance policy to help cover expenses once dad passes. I go, mom, dad, that's very sweet of you to bring this idea to me. I talked it over with my wife, Whitney, and it just doesn't make sense for our family right now. Selling a condo is a big move. It's very expensive. And we want to help it any way we can,

Starting point is 01:07:26 but we don't want to combine our lives in this way living under the same roof. And we love you guys. And if you need any assistance or advice on what to do with this money to help create a life for yourselves, I'm happy to help. Okay. Good. That's it. That's what I would say. I love that. Leave it there. I love that. So good. Phil is on the line right here in Nashville. Phil, how can we help? Yeah, thanks for taking my call. I'm 72 years old, and I'm halfway through a 30-year mortgage, so I got 15 years left. I owe $234,500 on the mortgage, which is at 3.5%. I also have a brokerage account of $291,000 that's been earning me 7.1%. I have two IRAs with $750,000 in them, and I also get $55,000 annually through Social Security.

Starting point is 01:08:19 My question is, should I take the brokerage account money? and pay off the mortgage or keep the mortgage for the mortgage interest on my taxes. Mathematically, keeping the mortgage for tax purposes doesn't make sense. It's stepping over a dollar to pick up a quarter. And so what I personally, if I was in your shoes, at your age, going, man, okay, I'll pay it off by 87 at this rate. I think life's too precious, and I want you to have retirement with dignity. And for those reasons, I would free up that mortgage payment today. You could cash that money out. You'll have the capital gains taxes on the brokerage account,

Starting point is 01:08:57 but you'll still likely have enough to cover the mortgage, right? Oh, yeah. Mm-hmm. I would do it. And how much is your mortgage every month? What number are you freeing up? It's $2,380 a month. I just gave you a $2,300 a month raise, my friend. And you can do without what you want. You can go invest that. I would continue to invest it if you don't need the money and just keep piling onto that nest egg. and then you've got 55 grand from Social Security plus you'll have a you know within the next several years you'll have multi-million dollars in there in that nest thing so you're going to be okay either way I just don't want to live for the next 15 years with a mortgage if I don't have to right especially because your mortgage is a guaranteed fixed rate you're making right that three and a half percent is what you're making by paying it off the market Lord only knows I hope it continues to do well but in the short term it could be negative 20, percent next year.

Starting point is 01:09:53 And so it's hard to compare them apples to apples, but what we'll say is freeing up that mortgage, especially at 72, is just going to give you some peace. It's one less thing living in your head rent-free. Yes, and that way I would also be debt-free. I don't have any other debts. Yeah, you reduce your risk, you reduce the need to touch the nest egg? Are you married? No, I'm single.

Starting point is 01:10:15 Oh, wow. Phil. Single guy, 72, you just freed up some money? Yeah. Are you in good health? Yes. Okay. So you'll likely live into your 90s with this freed up mortgage payment, which is incredible. All right. So I would go crunch the numbers in your budget and go, what kind of life can I live now? Can I spend a little more? Can I give a little more? Can I invest a little more with this freed up mortgage payment? And I don't think you're going to miss the brokerage account sitting there. You could stack it back up if you want. Right. All right.

Starting point is 01:10:45 Congrats, man. I feel like we're celebrating Phil's debt freedom today. I think we are. I mean, and who knows? I mean, the future is bright, Phil. I mean, you're an eligible bachelor that George just found $23,000 extra income. So, come on, man. All right. Time to travel, I guess. There we go. Hey, Phil. Are you a good-looking guy? I think he's a good-looking guy. I do. He sounds like it. Reasonable. All right. We're going to apply to get him on the Golden Bachelor. You know, it's interesting, true story.

Starting point is 01:11:15 This is crazy that you said that. My wife and daughter, I have a 16-year-old daughter, and they love this Golden Bachelor. It's so much more entertaining. I've not seen it. Phil needs to check it out. But I feel like, Phil, you could be the real-life Golden Bachelor. I mean, do you know how many ladies out there your age need a stable man like you? It's got plenty of dough?

Starting point is 01:11:36 I mean, come on, buddy. Get on those cruises. Okay, thank you so much. Congrats. Hey, Phil had enough. Phil said, don't get involved. He's like, guys, I got this. I got this.

Starting point is 01:11:48 I asked for financial advice, not relationship advice. Yeah, we went to the Golden Bachelor, which by the way, he may not even know what that is. I mean, it's a television show. There's a thing called television for the young kids out there. I got to explain it to them. Yeah. Yeah. Do you watch this Golden Bachelor?

Starting point is 01:12:02 I saw an episode or two, and it was a little cringy for my take. And that's why I want Phil on there. I think he'd be much better, much better candidate for the show. It's just awkward. They did, like, the older ladies are doing like photo shoot and kind of this boudoir thing. And I went, this is too much for me. Okay. You just said that.

Starting point is 01:12:19 You just, you took me to a place that, quite frankly, I didn't want to go to. I'm not going to unsee that. You're welcome. Again, you know, in Phil's case, though, this is a great thing here. You hear that story. And, you know, I love that decision, George. I love that the, I love that you walked him through that. And that's such a good, because to your point, I've seen some data recently.

Starting point is 01:12:42 What is the average age now the people are reaching? Isn't it? It's gotten higher. Oh, like as far as longevity? Yeah, longevity. Yeah. Like, because if you take in the, you know, the average age, well, that's factoring in infant mortality and other things.

Starting point is 01:12:57 Right, right. So when you look at it, if you've made it to 72, and you're in good health, there's a strong likelihood you'll make it into your 80s and 90s. Right, right. So, so it's not in that situation. It's not too late. And to your point, I love how you laid that out, you know, like this money can be working for you.

Starting point is 01:13:10 And if he doesn't need the nest egg, right now it just sits there about every seven years it's going to double yeah so you have 750 today seven years from now he's 79 1.5 is sitting there oh at 86 it's at 3 million that's fantastic so quite the legacy what is uh 86 year old george camel doing with his time with all the money you're going to have hopefully just not being bothered i would just like to remain unbothered that means you're just sitting in your lazy boy unbothered i never said it was lazy i could sit outside i ask you what are you doing and you say i just want to be unbothered playing a 99 year old Ken Coleman and pickleball.

Starting point is 01:13:43 Now that's my goal. Now that's an answer, and I think a lot of people would like to see that. I really do. Hey, if you're tired of living paycheck to paycheck and feeling like you can't get ahead, we'd love for you to join one of our free, every dollar trainees, hosted by one of our Ramsey personalities. That'll be George Camel. We'll be doing one of those. We're going to show you how to stick to a budget and even find thousands, that's right, thousands of dollars of money.

Starting point is 01:14:41 margin using every dollar. So you can get out of debt and start building wealth. Plus, you can ask questions during the live Q&A. Here's where you sign up for free, by the way. Ramsey Solutions.com slash webinar. Ramsey Solutions.com. It's free. Sign up. You won't regret it. That's right. Jeff is up in Michigan. Jeff, how can we help today? Yeah. So I'm 49 years old. My wife recently passed away from cancer. Oh, no. So sorry. Sorry, Jeff. yeah so we're good shape financially no debt other than our mortgage um she was a teacher and um one thing we talked about a lot about during treatments and cancer treatment and all that was you know we saved all this money we financially responsible um you know which would have done

Starting point is 01:15:33 more trips more vacations instead of just we did a lot of home projects ourselves we didn't hire out a lot of contractors. We both have kind of a background and kind of a fearless trait to take stuff on. And, you know, where's that fine line of living life and still

Starting point is 01:15:53 putting money away to do the right things? You know, working still to find what my new budget is, you know, I'm dealing with all that. And there's just a lot of stuff unanswered questions and you know. How recent did she pass?

Starting point is 01:16:08 six weeks ago. Oh, goodness gracious. Wow. Well, I would just give yourself some grace and time to grieve right now. Yeah. I wouldn't even be thinking about a budget. I would just do enough to make sure your bills are covered and taken care of and you get food on the table.

Starting point is 01:16:25 But, man, I mean, I can't imagine the fog of grief that you're in right now. And so are you in a good spot financially to just kind of float and grieve and cover the bills and get some help and heal? Yeah. Yeah, when we bought this house eight years ago, we did everything. It was based on one budget and one income. If something would happen, looking back, you know, I'm grateful for it. But, you know, it was all based on one income. We both made roughly the same amount of money.

Starting point is 01:16:54 I had a little bit of higher income, but, you know, it was, yeah. And the biggest thing I'm fighting right now is insurance because she was a teacher. So health insurance was there. And so I'm paying COBRA, which is outrageous. but for the next four months, you know, all or out-of-pocket was matched in February. So versus starting over. What's your work situation? I'm a sales rep.

Starting point is 01:17:23 Okay. So you have no insurance through your company? No, we do not. Okay. Jeff, one piece of homework I would give you, check out our friends at Health Trust Financial and see if they can get you a lower price. plan. You can go to

Starting point is 01:17:38 HealthTrustfinancial.com and just kind of get the quote and see what they're offering, what the rate is to help you shoulder some of this burden right now. Did she have any life insurance or anything?

Starting point is 01:17:50 That's part of my fight. She had one through school and I found out yesterday I'm going to get taxed on that one because it was one that she did not contribute to. It was just one that they provided. I imagine it wasn't a lot.

Starting point is 01:18:04 No, it was 75. enough, you know, covered funeral expenses and everything else went out to take anything out of stadiums and all that. Yeah. But, you know, she had started her 22nd year this year, and every other year she elected the supplemental life insurance through school through the insurance thing, which was 150 to 200K, depending on which one she selected or was available each year.

Starting point is 01:18:30 And they're telling me that she did not elect it last year, and I have a hard time believing that after doing that every other year. And it's just fighting with few people to try and get the information because I can't access her documents unless they open things up for me. And so she was very detail-oriented, and I can't imagine she would have not elected that last year. She was diagnosed while they found the tumor right around Halloween, so all her insurance paper would have been submitted before then. And so it's just those fights.

Starting point is 01:19:04 Those are the ones that are driving the nuts right now. But even without her income and even with the Cobra, I'm wondering how much margin you have every month, just off your income? I'm still clearing between 800 million grand. Okay. So that's extra on top of your bills. Okay. After all bills are paid, yeah. Okay.

Starting point is 01:19:29 Well, your question was, how do you balance? Okay, including Cobra. Okay, good. So you're wanting to know how you balance, quote, living for. for today versus saving for the future, especially after, you know, your life just changed dramatically. I mean, the picture that you had for the future is just gone. And you have to grieve that and create a new one for yourself. And you're still a young guy. You're 49. Are you in good health? Yeah. Okay. Well, once you've grieved and you've begun to heal, I think then you can

Starting point is 01:19:57 start dreaming a little bit again and go, okay, what does the next five-year, 10-year-15 plan look like for me. And part of that is an intentionality to just, you know, let's get the mortgage knocked out in the next decade. But also, what are the things that were on the backburner that you don't want to have regrets about later on? Yeah, I'm curious to know what your investment portfolio is. What's your retirement accounts look like? We're sitting pretty good. Between IRAs and everything else we had, combined, I just that time the other day with our investment guy kind of signed in the paperwork over into my name, call her stuff and we're sitting at about 400 there plus she has a pension and I'm waiting for

Starting point is 01:20:36 the paperwork from the state because the other part of that will be taking a lump sum on the pension or riding and out and taking whatever that's going to be monthly income yeah generally what we find is that taking the lump sum and investing it is a better option if you're not going to need the money because you have control over it the pension has a terrible rate of return there's risk there and I don't know what the survivor benefits are if it all gets passed down to you or if it's 50% or what the rate is, but you'll have much more control on your own

Starting point is 01:21:07 taking that lump sum or investing it. And you said you're 49? Yes. Okay. So even with your 400 grand, at 62, you'll likely have $1.5 million if you added nothing to it. And so I would just continue on with the baby steps.

Starting point is 01:21:22 Do you have kids? We have an adult daughter with a four-year-old grandson. Oh, wonderful. Well, I would lean on family right now, lean on that support, get your 15% investing still into retirement accounts, work on anything extra, put some toward the house, but also I would sit down with a budget and go, what are some fun things that you need to be doing now? Maybe that you didn't get to do, you know, you were a caretaker, I imagine for a while and going through

Starting point is 01:21:49 a real tough season. So what are those things that do light you up and bring you some joy? Yeah, I love that. I love that. And Jeff, I was going to ask on the heels of what George just said, I think he's right. Was there a place that you and your wife talked about that you always wanted to go to that sticks out to you? Maybe you thought, well, that's probably the one she would have most wanted to go to. Well, the only place we went out of the country for our honeymoon and we cut that short because we both got sick. So she wanted to never go out of the country again because that was her first and only trip out of the country. Okay. But what about a place that you you guys talked about that you'd like to go to.

Starting point is 01:22:24 We're supposed to go to Yellowstone this past summer, and we started planning for that last fall before she got diagnosed. I'm going to throw it out there. I'm going to throw it out there. I think that's the trip that you take, and you honor her, and you make it a part of your healing process. I would definitely think about that, you know, and Yellowstone's beautiful. Yeah, you know, and it'll be very young.

Starting point is 01:22:48 That's where, you know, I was so very fortunate for the last nine months. And my employer, you know, I collected my pay and just said, hey, take care of family, meeting sales. That's correct. I was able to do a lot of that remotely. And, you know, kind of reverted back to COVID times. Right. You know, so I'm so grateful for that, that, you know, otherwise I couldn't get back to nine months ahead. Yeah.

Starting point is 01:23:12 What was her name, Jeff? Kim. Kim. Kim. Well, we want to honor her legacy, and I know you. Yeah. are going to do that and have done that. By the way, you have just lived your life.

Starting point is 01:23:27 By the way, you take care of your family, take care of your finances. And it's a great reminder to hug your loved ones. I know that tomorrow isn't promised. And that's why we prepare for the future, because we just don't know what it will hold. And so we can't go full yolo, but you can prepare, and you guys have done a great job of that being debt-free, having money in the bank. And we wish you the best on the healing journey, my friend. We've all done dumb things with money. I've done them with zeros on the end. One of the biggest mistakes I see people make with money is not having a plan for it.

Starting point is 01:24:17 You've got to have a plan. You've got to be intentional and you need to get a budget. You have to tell your money. where to go, so you're not wondering where it went. Our budgeting app, every dollar, helps you do just that. It's the easiest and fastest way to make a monthly plan for every dollar you've got coming in and going out. Now's the best time to get started before the ridiculous holiday spending season gets here and sucks you in because you didn't have a plan. Don't let that happen. You're done making that mistake. Go download every dollar for free in the app store or Google Play today.

Starting point is 01:24:52 Welcome back to the Ramsey Show in the Fair Wins Credit Union Studio. I'm Ken Coleman, George Camel, is alongside, and Mike is going to start us off in Florida. Mike, how can we help? So I really have had a few major life. events go on. I've recently had to relinquish my rental apartment and move my wife and son into a one bedroom and really had to just stay there and try and save up income. Did you get evicted?

Starting point is 01:25:44 What do you mean relinquish? So I was the sole income for my family. We didn't have the every dollar or the Ramsey Solutions way of doing things, so I didn't have a budget. And so it just got piling up and piling up. And rather than get evicted, my wife and I decided to talk to our landlord and say, hey, we don't want to leave on bad terms. And so we relinquished it without having an eviction on our record.

Starting point is 01:26:18 Okay. So essentially you kind of broke the lease, had a mutual agreement. to say, hey, we can't afford to live here anymore? Can we leave on good terms? Yes. So you guys downgraded to a one-bedroom that you can afford? What income do you guys have right now? So right now, I am delivering pizzas and doing DoorDash and Uber Eats to supplement my income.

Starting point is 01:26:42 I would probably say my income is probably around 25 to 30, with that being fluctuational based on tips. So you're making my $2,000 a month right now. Correct. Okay. My wife is currently working part-time for the county, and she's probably bringing in $20K herself. Okay. With that, and I do want to explain, the one-bedroom situation is actually staying with a blended family. I'm staying with my in-laws right now in a 10-by-12 bedroom.

Starting point is 01:27:20 as a family of three. So all three of you are staying in there? Correct. Okay. And how old's your kid? So my son is a year and a half. Okay. You're in the same bedroom with your in-laws.

Starting point is 01:27:34 You're all sleeping in the same room? No, no. My wife, myself, and my son are in the same room. Oh, okay. Got it. All right, sorry. And you're not paying any kind of rent or you don't have any expenses there for housing right now? They're just letting you crash?

Starting point is 01:27:50 Correct. Okay. So what's your question today? So my question today is I have a huge passion to start my own business, start my own side hustle. I don't know if it's going to be more harm than good if I was to invest that in a startup and try and bring in some income for myself. I'm very much a work or performance-based work. So I'm going to, I wouldn't invest all my time in doing that. What's the business?

Starting point is 01:28:28 So I'm a finance guru, I feel. A guru? And I like to deal with numbers. That doesn't make you, but that doesn't make you a guru. A guru means like you're widely respected because of the, I just want to help you out there because I'm a little nervous about where we're going with this. What is the business? It's just a bookkeeping, accounting.

Starting point is 01:28:55 It's what I want to go to school for, and I feel like bookkeeping would be the first level in doing that. Have you done any bookkeeping before? I have. I have about a year and a half to two years experience entry level. Great. And so right now, let's play this out. What would you charge? What's the going rate for somebody like you with your experience?

Starting point is 01:29:16 I don't know if it's an hourly thing. Give us the numbers here. So I was thinking there would be a monthly recurrent fee. I would be charging anywhere from $3 to $500, depending on the size of the companies. If they're a smaller business, it'll probably be about $350. I would track all their financial transactions. How many hours do you anticipate working for $350?

Starting point is 01:29:46 bucks. So I'm thinking anywhere from about 10 to 15 hours per client. And you're only going to charge 350 bucks a month? Just starting now. Yes. And you have no credentials right now? No credentials. I do plan on going to school, but at this moment I figured increasing my income is top priority. Okay. The reason I'm walking you through this is to be a sounding board because that's what you wanted from us. I don't know in this particular, in your financial situation, unless you've got previous clients that can open up doors for you, and that's certainly worth trying if you've got that to where you could pick up some people on the side

Starting point is 01:30:32 and you could start doing this for extra income, then great. The other thing about this business is that it doesn't require a whole lot of investment to get up and going. You're not buying machinery. Correct. Correct. That's a positive, but, you know. I'm projecting no more than $500 just for the startup cost and the LLC created and computer and stuff like that. I wouldn't put a lot of effort into that right now. I would see if I could get some people, if we can throw the fishing rod out there, throw the cast the rod, and let's go, let's see if we can find something.

Starting point is 01:31:10 And if we can pick up something, let's just go do that. And let's just do basic 1099. if some small business. Let's see what we can get. I wouldn't invest a nickel right now, George, in trying to launch this business. Yeah, you guys are underwater right now, so it's not the time to kind of like invest into a passion project. I love the idea of you making income. So if you can get a few clients, let's do that and use the proceeds from that to then fund this thing later on to get the education. But right now, you guys can't afford to breathe. Yeah. You'd be better serve working at Walmart, stock and shelves. I've tried to plan everywhere. I've gone to Walmart multiple times during the week and I've asked to speak to a manager trying to get that

Starting point is 01:31:49 on-site job and they tell you go online and I appreciate that gumption but we don't just and my point is you keep going you keep going you right now have got to do anything if you show up on a construction site and go do you need a laborer um and and I'll give me a shovel I'll carry bricks around the site like that's the level of of urgency that you need right now We don't just, you know, and I appreciate you went to Walmart, but your response to me should be, you're right, you're right, Ken. I'm continuing to do that. And I've done Walmart. It's not working out, but I'm going to go to Target next, or I'm going to go to Big Lots, or I'm going, you know, and I'm going to show up again on a construction site. I'm going to tell you something right now, George. I've said this before. But in today's current environment, if I was looking for fast money that was decent money, I would literally get in my car and drive around construction sites. I'm not saying that you're going to get something every time you go, but. you know, they need, a lot of times you're going to find that they need somebody to just do something, hard work. And manual labor is not the place where everybody's lining up. There's not a line out there. Well, if you live in a neighborhood, you've got clients there. Because, you know,

Starting point is 01:33:00 as Dave says, rich people are scared of leaves. So you just go around and say, hey, I saw your grass a little overgrown. I've been cutting lawns in the neighborhood, be happy to do it. Here's my rate. You're going to have to get creative until you can get this side hustle off the ground. But right now, We need to get some consistent income, see if your wife can work more. I don't know what the child care situation is. But if we have that under control, both of you need to be working 40, 50 hours a week to clean up the mess, get to a stable place so that you can rent your own place again soon. But this is, it's a lot going on. It's not the time to pursue this thing over on the side.

Starting point is 01:33:32 I agree. Buying and selling a home is a big deal, and you want an expert in your corner fighting for you to get the right deal at the right price. That's why we only recommend Ramsey trusted real estate agents. They're hand-picked pros who know their stuff, listen to your needs, and have your back from the first call all the way to closing day. To find a Ramsey trusted agent near you, visit ramsysolutions.com slash agent. Ramsey Solutions.com slash agent.

Starting point is 01:34:42 A financial peace university class is a great way to stay motivated on your own baby steps journey while encouraging others. When you lead a class, you get access to the FPU lessons, premium version of every dollar and additional content for free for an entire year. You also get support from a community of other coordinators, our team of experts, and tons of free resources. So far this year, this is really great, really great, George. We've seen over $75 million in debt paid off and money saved from FPU classes. So if you love serving others, you got that coach, teach your heart, the encourager heart, this is a great way to experience life change that you've seen yourself. Go to Ramsey Solutions.com slash FPU. Ramsey Solutions.com slash FPU to get your first class set up or you can click the link in the description if you're listening on YouTube and podcast.

Starting point is 01:35:34 Dawn is up in Philadelphia, Pennsylvania. Dawn, how can we help today? Hello. I'm looking for a little bit of advice. on how I should approach some debt that I have outstanding. So just for background, I'm recently divorced

Starting point is 01:35:49 July of last year and I had to refinance my house as a result of the divorce. So not talking about the house right now, the only debt that I have is 18K for a car. So I'm trying to determine do I get a second job?

Starting point is 01:36:05 Am I being too conservative fiscally that I could probably pay more of it off now? That leads me to believe that you are. It's a very question that you asked there leads me to believe you are. So what evidence do you think that you have that says, hey, I could put a little bit more towards this? Well, just in my checking account, I maintain about $7,000 to $9,000 month over a month after, you know, I pay my bills and everything. So I have that, and then I have in my emergency fund about $31K.

Starting point is 01:36:37 Whoa. So I have some cushion. I mean, you could pass the card. today. Yeah, if you were doing the baby steps, we'd say, start with a thousand bucks in the starter emergency fund, pay off all debt, you have enough to do that, then begin three to six months of expenses. So you're doing the baby steps out of order, but the good news is you could be debt-free today, and you could burn less brain calories on this whole thing. So I guess I'm just, it's just me now. So I guess if something happened with my job,

Starting point is 01:37:05 I don't anticipate that, but if something happened with my job, then I'd be unemployed, and then cushion would go away. Well, if something happened with your job, you couldn't afford the car, it's getting repoed. And so you've got risk on either side. You've got more risk owing other people money and not owning this asset right now. And you're still going to have $13,000, even if you pay it off the car today. And then you'll begin rebuilding that. What's your car payment?

Starting point is 01:37:29 $4.15 a month. So you add that. Now you have that extra margin to add to your emergency savings goal. That's an extra $5,000 a year right there. And how much can you throw at your savings? right now if you freed up that $4.15? How much could I, if I freed it up? So I come away, after I pay all my bills every month, I do have about $1,500 left over. Right. So what we're saying is, is if there's no car payment, and now it's $1,900. Well, okay. So that's another $23,000.

Starting point is 01:38:00 If you did that for 12 months, you just put that $1,900 away. You'd have about $23,000 on top of the $13. So you're going to be fine. Okay. And then you can start investing. So then that's what I was going to ask you. That was the second piece. So hold off on the invest. I have a little bit of investment now, but hold off.

Starting point is 01:38:18 I'm thinking about some EFTs that my friend told me about, and I do need the research. You mean ETF? EFTs, I'm sorry, electronically of Sunday trade. Yes, EFT. Sorry about that. ETF. I keep saying it wrong. Yeah, yeah.

Starting point is 01:38:32 It's all right. We know. But similar thing. Do you have a retirement account through your employer right now? I do have one through my current employer, and I do. have some one, some additional one from a prior employer. Okay, I would get, the part of your homework is rolling over the prior employer money. I would just do a direct rollover to an IRA.

Starting point is 01:38:52 That'll give you the most control and flexibility. It is an IRA. I should have said that, yes. It's already in the IRA. Okay. It rolled over. It's separate from my current employer, but it is an IRA. Okay, so you have that.

Starting point is 01:39:05 So I would just not contribute any more until you're out of debt with that three to six months of expenses. So if your expenses are $5,000 a month to cover all your basic bills, then I would suggest having $25K, $30K in there. Okay. And a high-eal savings. Okay. And then one other question.

Starting point is 01:39:24 So for my 401K, I'm currently doing 6%. My employer matches 4% up to 100K, and then after that it's – I can't remember what it is. It's 50% after that. Okay. Did I not increase my 6% while I'm trying to pay off, do all these other things? Well, you just told me you would be willing to pause all investing until you get into a better spot financially. And it won't be long, but I would pause that 6% because how much do you make a year?

Starting point is 01:39:53 About 157, not including my bonus. So 157, 6% is $9,400 extra. You could be throwing your emergency fund, which means it's going to get done faster. So here's the honest truth. You could be done with this whole thing five, six months from now. You could be debt-free completely if you pay off the car today, then restock the emergency fund over the next five months, and you'll be back to investing, not 6%, but 15%. You're almost going to triple your investing rate. Do you see that?

Starting point is 01:40:23 I see some of what you're saying. So you're saying what I'll lose from my employer not matching, because if I stop doing my piece, they don't match anything. So you said what I'll lose on that is not significant enough to make me go the other route. Exactly. And the other thing it does, it lights a fire under you. because you love that match. You want to get back to that match, which means you're working even harder to get that emergency fund back stocked up. That's what I found. That's human nature and psychology. Here's what's cool about this. You're working really hard to restock your emergency fund

Starting point is 01:40:53 on, not working really crazy to pay off a car. That is a depreciating asset. Right. That makes total sense how you just said it. I'm working, I work hard to build savings, not pay for something that goes down in value. That's right. You're building. for the future instead of paying for the past. And yes, and by the way, we love that you called Don because it is a very real psychological hurdle to cut a big check from an emergency fund. You totally get it. However, the reason I told you about how you're working hard to replenish your savings

Starting point is 01:41:27 so that you can invest and start on your path to becoming a millionaire, which I want George to paint a picture for that in just a moment, but understand that the minute that you pay the car off, which is a depreciating asset, you also are now freeing up $400 plus a month right back into your pocket. So I just want you to see that full picture so you can overcome that psychology of, oh, I don't like writing a big check out of an emergency fund. That's why I asked you, do you see it? I do.

Starting point is 01:42:00 I just got to get over, because it's just me now. Totally get it. I'm divorced, so I do get what you're saying now. Yeah, because if you see it, you believe it. And the other thing I've been thinking about is getting the part-time job. Sure. My full-time job and get a part-time job to help with this. Do you think that makes sense as well?

Starting point is 01:42:18 Yes, and I'll tell you, well, I don't know what George thinks, but I say yes, because it's going to further help you with the psychology that I just outlined. Like, think about how much more secure you're to feel because you're bringing in that extra money. Got it. And here's the truth. You don't need it financially. You don't need it. You're going to get through this pretty fast, but I do think it's going to light a

Starting point is 01:42:38 fire under you after you just went through one of the hardest things a human could experience. Yeah. And I think action always helps with healing versus just sitting around changing Netflix. Now, real quick, George, paint a picture for her when she gets to Baby Step 4. Oh, let's do it. Let's do the investment calculator. What's your total retirement investments right now? About 380K. Woo-hoo!

Starting point is 01:43:03 I like it. You're going to like where this goes. How old are you? I am 56. 56. Now we're going to ride this out. You can make 157. That's before the bonus.

Starting point is 01:43:14 But if you do 15%, you're going to be maxing out a 401K. That's 235 right there. You understand that? Okay. So that's, let's say, two grand a month. You're going to have quite the nest egg. Let's say you do this until 67.

Starting point is 01:43:26 Oh, boy. Let me see it before you tell her. Okay. Oh, boy. Don, are you ready for this? George, tee it up. I am. 1.6 million at 66.

Starting point is 01:43:36 I don't know how you did the math. Tell her. You can jump on Ramsey Solutions.com. Use our free investing calculator. You're 56 current age. I did 67 retirement age. Currently you have 380 grand. If you contribute 2 grand a month and we assume a 10% rate of return,

Starting point is 01:43:51 that's what we've seen overall in the U.S. stock market, you're going to have 1.6 million. Only 264,000 of that is the money you put in. Almost a million is just compound growth doing the heavy lifting for you. Go do it yourself, Don, so you can see he's not making magic over here. real numbers. I like it. Pump for you, Don. You got a great income. Let's use it to build some wealth. Go, Dawn, go. Hey, what's up? Dr. John, here. The new dates have dropped for the money and marriage getaway over Valentine's Day weekend

Starting point is 01:44:36 at 2026. This is your chance to hit pause on everything in your life and reconnect with your spouse over a long weekend in Nashville, Tennessee. Me and my friend Rachel Cruz will be digging into topics like sex, money, communication, and more. This weekend is happening on February 12th through the 14th and early bird prices start at $749 per couple, but the prices will be going up soon. Get your tickets today at ramsysolutions.com slash events. Hey, folks, we would love for you to share the show if this show is helping you, entertaining you in any form or fashion share, like, follow, subscribe, the whole nine yards. Smash all the buttons you see. Oh, that's what the YouTuber say, smash the like button.

Starting point is 01:45:39 Is this thing? Is this a thing? 100%. You know, it cracks me up how often between you and Jade, I hear something new, and I've never heard before. I give Canon education every day against his will. Yeah. No, I actually appreciate it. I'm not, but I will say I'm not comfortable ever saying the word smash in a video. I feel like I'm too old for that.

Starting point is 01:45:58 And if you hear me do it, I want you to just hit me right in the front. Your teenage daughter would not like it. Oh, yeah. She would hate it. She would say, she would say, dad, that's so. cringe. There we go. Yeah, there's certain words that I don't think I should say. There's too young for me, you know, and that's one of them. Just because you don't like something, it's not your preference, doesn't make it cringe. Can we just drop that? Yeah, very bothersome. Thank you

Starting point is 01:46:21 very much. What is cringe to you? Someone else likes. You know, kind of like my cardigan sweaters. That is cringe. Now you're aging into it very nicely. It's perfect. Aging very well. All right, we digress. Scott is up in North Carolina. Scott, how can we help today? Hey, good afternoon, guys. So I overall had a question based on my current financial situation and thinking ahead, now that I'm getting a little older, as to whether or not to pull some money out and renovate a separate building on my residential property to rent out as like a one-bedroom, one-bed studio kind of apartment. Nice. How much money would it cost to renovate this? currently I'm thinking it's probably around 40k to renovate it and what will it turn into what will that give you 40 grand for how many square feet

Starting point is 01:47:12 and then also what do you think you would be able to make on rental so it would be around 650,700 square feet and the realtors that I spoke with based on the location etc. It's made it around $1,000 a month but I was kind of thinking 800 as conservative number okay and what would it add to the overall property value you know for resale um now that aspect honestly i haven't really discussed with them that much so i'm honestly not sure you planning to be

Starting point is 01:47:46 there forever um currently yes i mean that's one thing that let me do the question because they just did a rehabilitation of property taxes here and then like shot up right but see that that's why i even though you're planning to stay there forever. If I'm going to sink 40 grand into something, George, on my property, I'm automatically going to go, how much value does this add to the entire thing if I were to sell? So right now you got your home, X amount of bedrooms, bath, acreage, whatever, and now I've created a second living area on there. So that would be one thing. But if you're staying there forever, that's fine. But I still think it's worth looking into. And then the other thing is how, what do you think, what gives you a lot of confidence or how much confidence do you have

Starting point is 01:48:29 that you would be able to rent this out on a regular basis? I'm pretty confident. I mean, the area I live in, it's very close to a lot of universities, hospitals, things of that sort. So I wouldn't think that I would have any kind of problem finding a long-term renter for it. So it's a one bedroom, and you're putting it out there. So, like, people coming in for football games or tourism or something like that, you're a that's what you think this is um but potentially i mean i was sending more like you know um like just to establish a long-term renter specifically oh a long-term renter all right

Starting point is 01:49:06 all right i asked all the questions uh george is is very particular on these things well i'm just you're trying to backtrack and go why are we doing all of this yeah i don't see it cover an increase in property taxes um i mean property taxes i mean that and the thing is currently I've been with my employer the majority of my bill of life, but there's a lot of change going on. And currently, I don't necessarily feel, I guess, secure in my position. And in the area, I'm not sure that I'd be able to find a job equivalent making to what I make now. Which is what? What do you make now?

Starting point is 01:49:40 Not taking into account annual bonuses around 110. I just don't think $1,000 a month solves the problem you're trying to solve. Well, and then where is this $40K coming from, you said? So aside for my retirement account, I did start, you know, obviously I've tried to save some. I've not been the best at it, but I've tried to save. And I did start investing in the stock market during COVID, and the returns on that have been pretty positive. So I think between my broker's account and personal savings, I have around 80 grand saved. Okay, that's actually liquid.

Starting point is 01:50:11 You're not going into retirement for any of this money. Correct. Man, I mean, it's a gamble. I wouldn't do it. It's going to take you probably. five years to just break even on this. And that's why I'm out. And you also said, if you didn't have this job, you'd likely have to move to make

Starting point is 01:50:28 something similar, which tells me you might need to sell this house before, you know, you even break even on it. So, I mean, 80K, you're fine to cover the property taxes. I just think you're trying to do multiple things at once and go, well, property taxes are going up, might as well get a rental, versus just going, hey, what can I do in my budget to just add a sinking fund and cover this added expense. My payment just went up every month. I can handle it. Because being a landlord on your own property has its own problems. There's risks. There's vacancy. There's maintenance. There's repairs. There's the actual renovation, which is probably

Starting point is 01:51:04 going to cost you more than you think it will, because that's usually how it goes. I actually think you're afraid. I think what's driving this is the job situation. That's what I heard. I heard that you're a guy who's, I'm not so sure that you're going to have your job for very long. That's what I heard. Honestly, I mean, I think that's the main part of it. Because, I mean, ideally, I wouldn't necessarily want to handle a long-term rental and have that at stress. Right. I think you just answer the question. Well, the reason I, okay, so I'm glad you answered that because here's the thing. That's why I drove in on that point. So fear is driving this possibility. And so if we

Starting point is 01:51:43 play this out, the very thing you're afraid of happening, this would actually would be one of the worst things you could do if the fear came true. In other words, 40 grand of cash, and to George's point, there's no guarantee that's going to be 40. So you need that 40K. I'd want that 40K in liquid. I'd want it there so that I had a cushion if I needed a cushion if I lose my job. So the very thing you're trying to solve with this idea, I don't think this is anywhere near the best idea. I think the best idea is to hold the cash and stack the cash. Okay. Yeah, leaving it invested and then you getting a part-time job will have better ROI in the meantime.

Starting point is 01:52:23 So if you're really angling to make a little more money right now and you want to make $750 a month, you can go do that using the skills that you have today. That's a great point. Go make $1,000 doing something else. Okay, answer. I mean, I guess one follow-up question around that scenario, and I think I already have the answer. I mean, just thing logically through this, but wanted to kind of pose it to you as well. I mean, because I was thinking, like, worst-case scenario if I were to lose my job,

Starting point is 01:52:46 because I don't necessarily want to leave this area this day or I grew up in or whatnot. If I were unable to find an equivalent job making what I make, I mean, I considered potentially cashing out my 401K, because my 401K... No, horrible idea. You're going to be calling us a 60 going, hey, man, I'm broke, I don't have anything in retirement, and my body gave out. I can't work anymore. I don't have anything in retirement.

Starting point is 01:53:09 Do not cash it out. You're essentially taking out a loan for 35 or 4. 40% by cashing out your retirement, which you would never do that, right? And that was my initial fault, but that was like a no-go. It's horrible. It was a fault in the back of my mind, so I appreciate y'all. Unless you're facing bankruptcy or foreclosure, you never touch your retirement accounts if you're not 59.5 yet. Scott, if I can, can I encourage your heart on something?

Starting point is 01:53:35 And I'm not saying this critically, but here's what I'm hearing. I'm hearing a guy who is looking at a real possibility of something bad. happening and you've gotten protective instead of proactive. I think everything I'm hearing is a protective solution instead of a proactive solution. That's what I hear. And I think that you need to happen to this possibility, not try to go, how do I protect myself from this bad thing happening? And I consider a 401k thing, which is a horrible decision. I'm considering spending money on this rent thing, as opposed to going, if this happens, I'm going to do this, this, and this, and I'm going to spend my time connecting with people. And I'm going to give you a copy

Starting point is 01:54:15 in my book, The Proximity Principle, just as some form of, hey, I'm going to build my network starting today so that if this happens, I can be proactive and not protective. I just sense that over you. And that, by the way, we all fall into that with fear. But I think the best way to handle something that could be a negative that could be coming is to think proactively on how to solve it, not protectively. George? It's a good word. Nothing to add. No notes. No notes. Our scripture of the day comes from Psalm 86 verse 11. Teach me your way, Lord, that I may rely on your faithfulness. Give me an undivided heart that I may fear your name.

Starting point is 01:55:35 And our quote of the day from Mark Twain, don't let schooling interfere with your education. I know Ken loves that one. I do love a good Mark Twain. By the way, I'm reading the biography on Mark Twain right now by Ron Chernow. How's that? It's a tough read. Really?

Starting point is 01:55:50 Yeah. I thought he'd be a fascinating guy. He is. Chernow's a little heavy. Oh. I just, I don't want to endorse the book because, and I got Dave reading it. And Dave and I were talking the other day on the show, he's like, man, that's pretty heavy. I got, it's just, it's not an easy read.

Starting point is 01:56:03 In light of who Twain was, you would think it'd be more brevity. A little bit, a little bit lighter fair. It's a very good point. Very good point. Carol is joining us in Charlottesville, Virginia. Carol, how can we help today? Hi there. So I have an anecdote for you.

Starting point is 01:56:18 I was at the credit union the other week, and I was at the teller window, and this gentleman walks up to the next teller window, and the teller says, how are you today? And he goes, better than I deserve. And I was like, Dave Ramsey in Charlottesville? It's the secret signal. That's how you know they're a real one. Yeah. Did you, like, give the guy a knowing look and say, I know you?

Starting point is 01:56:38 Yeah, I said. I said, I know where that comes from, and he chuckled as he was depositing his money. Love it. By the way, can I just say, Carol, I love that you use the word chuckle. It's one of my favorite words. I don't think we use it enough. So thank you. You're welcome.

Starting point is 01:56:54 Okay. So I have three properties, my primary home, my and two rentals, the duplex. And primary home is paid off. But how much based on, how much would you put aside? for, you know, like, the roof may be replaced one day, or the HVAC is going to go out. Is there a percentage of the value of the property? I should have any thinking fund, or is there a formula for that? Yeah. Good question. George, what do you think?

Starting point is 01:57:26 I don't think there's like an industry standard formula, but I think, you know, kind of going, hey, 10% of rent, if I can afford to put that aside, so if you're renting it for $1,200, can you put away $120 a month? and if you feel like based on the it also depends on what's going on with the house is it a 20 year old roof well you're probably going to need a roof fairly soon and so i would um you know you could do an inspection on it and kind of see where the problem areas might be because they'll tell you hey the h-fack is okay but you're probably looking at five years you're going to need to replace this thing if it's a brand new property you might mean a lot less issues so it really depends on the current state of the properties but more is always going to give you more peace exactly did you have a number in mind um i you know i read have google this and you know it says anywhere from five to ten percent of the property value of the that feels real high that seems like a lot what would that be for you so each each of these duplexes one well one of them just got renovated completely um and that that sent me back about 42 but that was everything new flooring siding windows, how to replace some floor. Yeah, see, none of

Starting point is 01:58:39 that's going to just spring up on you. And that's the stuff. You want to get ahead of the stuff you know is coming and then also have some for the emergency stuff that you can't foresee coming. Right. Yeah. So the one I've heard is about 1% of the property value. So 10%, now 1% a year.

Starting point is 01:58:55 Yeah, 1% per year. Yeah. So eventually you might have 10% of the value. One of them is like 300K. The other one is probably 250 because it does need work. But this one's been totally redone, 300. So 1% is what? Well, on the, it would be 2,500. $2,500. Yeah, I would have an ultimate goal of saying, hey, can we have 30K each in an account eventually? Yeah. But if you can't do that tomorrow, that's okay. But if you know one of them

Starting point is 01:59:25 needs more work sooner, I would stack that one up faster. And you can always move the piles of money around. It doesn't have to be, you know, 30K here, 30K there. You can move it around. You can move it around eventually if something comes up. Yeah, I had one account that services both houses. Are they paid off? You have a mortgage on both the rentals right now? Well, yeah. Well, the one that I'm in was paid off, and my primary residence had a house fire. Oh, my goodness. Plus your heart. So that was completely gut it. That house is paid off, but I had to gut that house, and I've had to cash flow some of the stuff that insurance wouldn't pay for. So to do that, I took a mortgage out on the one rental property to help until I can get settled.

Starting point is 02:00:10 Oh, it was paid off, but you went backwards to fund it, taking the equity. Yeah, so my primary is turn. So I had this grand plan. I just turned 59 last week. Everything was going to be paid off by the time I turned 60, all of my mortgages, and that didn't happen. But still trying to make that happen. What are they worth? And what's the left on the mortgages?

Starting point is 02:00:32 Yeah, so 150 is owed on this one that's worth 300, and I owe 27 on the one next door that's worth 250, and then my primary home, the value, because it's been totally redone, everything's been redone, that's probably going to be a half million, and that's paid off. That's great. I'd walk on knocking out that 27K rental mortgage and then move on to the 151. And worst case, if you don't like one of them, just sell it and pay off the other one and be done. Yeah, I've been thinking about that, too. You might find the juices and worth the squeeze on how much you're actually making per year

Starting point is 02:01:08 and what your hassle factor is and what your time is costing to put the effort in. Exactly. And it's been – well, I've been living in the one rental while my primary home is being renovated. So that was good. I didn't have to pay rent somewhere else. I'm just living here for free. What are you clearing on both of the condos? Um, on this one, I'm clearing, well, it was paid off. So, probably $1,100 between the two. So, like, 500 each. See, that's the point that George is making. It's just for $13,000 a year. Without even the risk and, you know, vacancy, repairs, maintenance. I'm going, if you sold one of them and put the excess in an investment account, you could probably make $13,000. Yeah.

Starting point is 02:01:57 truly passively with no headache. Yeah, well, I've got 1.5 in my investment account. Woo! Good for you. I would get rid of one of these. I would sell the one with more debt on it and then pay off the other one, and you can hold on to that for a while if you want to, and that's a whole lot less. Yeah, the thing with real estate is you need a lot of it in order to actually replace your income.

Starting point is 02:02:24 Yeah. So to make $500 a month maybe, I don't know. if it's worth it for you. If you're kind of done with it, you're dealing with a lot of issues, the house needs a lot of repairs. There's nothing wrong with throwing in the towel and going, you know what?

Starting point is 02:02:36 I tried it. It was fun for a season. I'm turning 60. I just want less hassle factor. Yeah. Yeah, no, that has crossed my mind too. And then, you know, the other thing is I went back through by,

Starting point is 02:02:48 I'm not a baby step, Ramsey person, but I've always lived below my means because both of my parents were depression-era kids, right? so we always lived below our means. You know, we had everything we needed. My father always said,

Starting point is 02:03:02 if we don't have a cash and we're not getting it, I mean, that was the role. So that's how I've been raised. That'll get you far in life. I went back and looked at my social security statement, you know, for all the years I've been working since, like, 1984 or whatever. The average, the average of my salary was $48,900. Wow.

Starting point is 02:03:23 And I'm sitting on $2.5 million at the moment. So I'm pretty good. Way to go. No, you're not pretty good. You're pretty freaking awesome. It's what you are. That's just phenomenal. Not even 60 yet.

Starting point is 02:03:35 At 59, I would unload one of these things and not have the debt on it. You've got so much money in your retirement. That's, George, what is she going to... It's not going to change your net worth because that $1.5 million, you know, by the time you're 66, will be three if you don't do anything. If you don't do anything. Right. I would enjoy my life a little bit more. That's just too much of a headache for someone who's worth what you're worth.

Starting point is 02:03:56 worth. That's my opinion. Like, none of this is, you're not in trouble. But this is just, if I look at how much money you're actually making on this for the... If it was paid off and it was a cash cow and it was very little effort and a little hassle factorized out, just keep it. You're enjoying it. But it feels like the joy is gone. And you don't need it. It really, I mean, I had great tenant. The tenant that I've had, she's been over here for 15 years. She is not a hassle. And the tenant that was in this house wasn't a hassle either until she her circumstances changed but anyway you know and I yeah well the people may not be a hassle just the maintenance and upkeep yeah we're just saying going by there any of this so you're doing great uh fantastic fantastic scenario thanks for calling us

Starting point is 02:04:40 you're glad to end on a high note oh i love that and hey to the rest of you remember there's ultimately only one way to financial peace and that's to walk daily with the prince of peace christ jesus You're going to be.

The Ramsey Show - Slow and Steady Beats Get Rich Quick

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