The Ramsey Show - Slow and Steady Is the Best Way To Build Wealth

Episode Date: September 9, 2024

📱Watch the full episode for free in the Ramsey Network app. Jade Warshaw & George Kamel answer your questions and discuss: "Pay off debt or pay for marriage counseling?" "Why are credit cards bad if I pay them off?" "We keep fighting about my husband's car," "Is my son obligated to give his dad money?" "Should we buy a house or continue to rent?" Support Our Sponsors: Christian Healthcare Ministries: Find out more at https://info.chministries.org/budget Churchill Mortgage: Get started at ChurchillMortgage.com BetterHelp: betterhelp.com/Delony to get 10% off your first month   FAIRWINDS Credit Union: Check out the exclusive account bundle designed for Ramsey fans at https://www.fairwinds.org/ramsey Zander Insurance: Go to zander.com or call 800-356-4282 for a fast and easy quote today. Next Steps 📞 Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET or click here! 🏆 Set and actually reach your goals with the NEW 2025 Ramsey Goal Planner! Hurry—They sell out every year! ☂️ Get the right insurance without breaking the bank. 🚢 The Live Like No One Else Cruise is booking fast!  💵 Start your free budget today. Download the EveryDollar app! Listen to more from Ramsey Network 🎙️ The Ramsey Show   🧠 The Dr. John Delony Show 🍸 Smart Money Happy Hour 💡 The Rachel Cruze Show 💸 The Ramsey Show Highlights 💰 George Kamel 💼 The Ken Coleman Show 📈 EntreLeadership Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

From the Ramsey Network, it's the Ramsey Show. I'm Jade Warshaw. Next to me is George Campbell, GK, and we are your hosts for this afternoon. This is a live show. We take calls about your life and your money, so if you want to call in, get in where you fit in. The number is 888-825-5225. We'll get you on the line. All right, George, you ready to do this? I like to get in where you fit in. Get in where you fit in. I fit in a lot of places. So that's a good, I'm going to use that. That's good. You'll get into a lot of radio shows. Okay, let's go straight to the phone lines.

Erin in Charlotte, North Carolina is on the line. What's going on, Erin? Hey, guys. Thank you so much for taking my call. Sorry, I'm a little bit nervous. That's all right. We've got you. So me and my husband were in Baby Step 2,

and we just received a small inheritance from his grandpa. It was $19,000. Okay. And we are trying to decide. So we've had some marriage problems, and we have found a while back this program online. It's a whole program. It's really intense, and I really think that they could help us.

However, it's $4,400, and that's for the whole program. And when you break it down, it equals about $150 a session, which is about what marriage counseling would be if we went per session. And we're trying to decide if we should do that or if that money should just go to our debt snowball. My thinking kind of is it's an investment in our marriage. And if our marriage is stronger, then, you know, we can, it'll just be better in the long run, obviously. You know, and then we'll, you know, just stronger partnership, you know, building our lives together. Have you done marriage counseling before? We have. Okay. But we just, you know, we haven't really found anyone in the area that we kind of click with or just scheduling. These people, you know, we both felt like we clicked with,

and it's Christian based. And it's just, you know, I really think it would be a good thing, but it's like, we got this, all this debt that's kind of looming in the bank. Are you guys, I mean, are you in a, are you in a catastrophic situation? Like, are you guys barely holding on? I wouldn't, no, I wouldn't say that. I mean, right now we're okay. Right now there's just, there's a lot of underlying things that are still kind of there that I feel like they definitely need to be worked out. I wouldn't say we're on the brink of divorce or anything like that. I mean, here's the thing, and George can chime in here.

When people put their marriage and their health first, I'm very rarely going to push back on that too hard because you're the one in there every day. Like you're calling into a radio show. I'm getting three minutes to talk to you. Only you know truly what your marriage needs and what point you're at. I don't know if a $4,400 investment is where you're at. You do though. This is a money show. So of course it's like, I'm wondering, I'm like, well, can they get the work they need for 2000? Like, of course I'm thinking about the numbers here, but ultimately I think that you and your husband are going to be the ones to really be able to sift through this. I mean, I'm going to start asking you questions now about your debt.

How much debt do you have? Total is 96,000. Okay. 96,000. Okay, so your thought was we can just, this inherited money, it's found money, we weren't counting on it anyway, we can pop in here and, you know, take the $4,400 and it'll almost be like it never happened because you weren't counting on that money anyway, right? Right. My thought is what if you took a step and you went, Hey, we're going to do a once a month marriage counseling, 150 bucks a session, do that for a year. That's still 1800 bucks. And then once you're out of debt or you want to continue that, it's still going to be more affordable than using this lump sum right now, which is going to hurt a lot more. That's a big chunk of change. It is. And the truth is when I think of a marriage intensive,

like I'm thinking of whenever I've heard it in context. So this is just me. Whenever I've heard it in context on some of the podcasts I listen to, it's like something catastrophic has happened. There's been a betrayal of trust on a major level. There's something really heavy going on that needs deep work and deep help for a long period of time. And so or there's been something that's been wrong for a really long time. And it's like,

this is our last ditch effort. We're talking about divorce. And so people dive into these intensives as kind of like a last ditch effort to save the marriage. It didn't sound like that listening to you talk. I'm going to be honest. It didn't sound like that. But again, only you know if it's like that and you're just not wanting to get into that on the radio. So I'm with George. I mean, there was there was an infidelity. And, you know, for a long time, it was like, you know, crisis mode. How long ago? It's been a year.

So we have been working on it. And know, I, I trust him right now. You know, there's no, but it's just, I have a lot of these feelings that, you know, keep coming up and, you know, it's, it's, it's, yeah, we have a daughter. I'm, I'm doing it. I'm pushing my chips in. I'm doing it. I'm like, you got kids. This is a major thing it's not

that old uh if it were me and the money came up and it was like i i'd almost view it as a blessing i'd be like you know what well and that's what i thought too because i feel like if we ended up getting divorced that's probably going to cost a lot more than that well that's what jay asked are we on the brink of that yeah it sounded like we're not, but there are some things to work through. So here's where I look at it. If you decide to do it, I would make sure it does not slow down your debt snowball. So we go, what are we willing to do if we use this amount of money to counseling? How do we not slow it down by that amount for this many months? And then we go, all right, I'm going to take on that side job. I'm going to sell that thing that I really didn't want to sell so that it doesn't feel like they're competing. Yeah. I like George's take on that too. That way you're

not losing ground, but there is a hierarchy here and it's kind of, you know, everything we teach is, you know, go balls to the wall. Like we're going ham on everything. And that is true. Like when you have a money goal, you need to do all of that in order to accomplish it. But there is there are these outliers that are equally important, George. Like when we talk about, for instance, when we say be gazelle intense, you know, everybody's looking around to cut areas and they're cutting their food budget. And next thing you know, they're eating ramen noodles every day. And I'm like, wait a minute, wait a minute. We're not doing this at the expense of our physical health, right? There's you, you cut, you cut things out, but you don't go to the point where you're doing unhealthy habits in order to accomplish goals. Same thing in relationships.

You know, you can go so crazy, work so hard that now you're like, okay, well, there is a relational component with your children and with your spouse. And you have to look at the timeline and go, am I, is the timeline so long that it could have a relational effect for my husband and I it was a seven and a half years of getting out of debt so we had to weigh that into the equation so that we weren't seeing relational losses in what we were doing and it's the same thing here with their marriage if their marriage is on the rock they had a catastrophic event and so there's part of that that you do have to weigh in because at the end

of the day, there's more to life than money, right? You got to have your health. You got to have your relationships. You got to have your marriage, relationships with your kids. And so being able to weigh that in a very wise way and let it filter through your values as we're teaching this is really, really important. We probably don't talk enough about it. Your analogy of sort of like a car repair. I'm going, all right, this is the Louis Vuitton of marriage counseling. Can we get a Target bag right now? I don't know, George. That can hold our stuff.

And that's where I go a monthly session with someone local. Could that fill a gap right now and get them on the path versus going, we just heard about this thing. We need to do it. They were a great salesperson. We like them. I would just be doing a little more research into other programs. There's one called Marriage Helper. They're friends of ours.

No advertising, but it's a much more affordable option. That's good, George, because the truth is not everybody has $4,400 at their disposal. And it's not to say that there's no help for the people who couldn't afford something like that. So that is a very, very, very good. I'm just doing my research. I'm the kind of guy who does the research. Do your due diligence. Find the help that you need.

Don't sacrifice your relationships, your marriage, or your health. This is The Ramsey Show. Hey, when you go against what society thinks is, quote, normal, like avoiding debt, for example, it might seem weird at first, and that is totally okay. We want you to be weird if that means doing things intentionally, including how you spend your health care dollars. And one you to be weird if that means doing things intentionally, including how you spend your health care dollars. And one way to be intentional is with Christian Health Care Ministries. CHM isn't health insurance. They're a health cost-sharing ministry that's helped hundreds of thousands of families like

yours take care of health care costs without sacrificing their freedom. Find out more and join at chministries.org slash budget. That's chministries.org slash budget. You're listening to The Ramsey Show. I'm Jade Warshaw. Next to me is George Campbell. We just came out of a meeting talking about this very thing, the Live Like No One Else cruise that is quickly approaching. And you need to know that the cabins are going super duper fast. We've had more than 90% of the cabins booked. So if you're even thinking about going, you need to, as they say, I don't know if I can say it. Oh, is it family friendly?

I was going to say. Well, now I'm worried. Paint or get off the ladder. Let me go with that one. Oh, that's a good one. Paint or get off the ladder. I was going to say the other one. I try to just avoid painting. It's just easier for me.. Paint or get off the ladder. I was going to say the other one. I try to just avoid painting.

It's just easier for me. Yeah. James, do you know what I was going to say? Could I say it? Dave said it lots of times. Okay. You got to piss or get off the pot is what I'm trying to say. Okay.

You need to decide if you want to go on this cruise so that there's cabins left. You don't want to miss this chance to go on this cruise. It's paradise, guys. And did I mention you don't need a passport? That's the best part now if you have a passport i'd probably bring it but you don't need to have one because we're starting in fort lauderdale florida fort lauderdale florida and we're ending in fort lauderdale florida even though in between we're going to really fun places like i learned that's called a closed loop a

closed loop that's right going to turks and cacos st thomas puerto rico bahamas it's going to be fun uh on board the ship there are so many things you can do. You can relax, but you can also do fun stuff. There's excursions. All the food is included. Room service. You can lounge by the pools. A hot tub.

Come on now. I won't be in that hot tub, but you can get in the hot tub. Have a good time. Stay active at the State of the Art Fitness Center. There's pickleball courts, which you will catch me on the pickleball court. Plus, you'll get to hang out with all the Ramsey personalities on board. George, you'll be there. I can't wait. I will be avoiding the fitness center, though, so don't look for me there. Okay, so I won't be in the hot tub, and George will not be in the gym. I might join the pickleball court, though. Yeah, you were good. George and I played pickleball

last week, and he shocked me. Aim to impress. All right, so we'll have the entire cruise ship for seven days. Again, this is March 22nd through 29th of 2025 you do not want to miss this unforgettable vacation all right very good all right george you want to hit these phone lines let's do it where are we going we're going to springfield missouri we're going to talk to kyle what's going uh kylie what's going on kylie hi there i wanted to talk to y'all about credit cards. This is George's freeway. Tell me more, Kylie. Yeah. So I have never been in credit card debt. My husband and I have never been in credit card debt. We are really diligent and mindful about paying off our monthly payments and cash in general. Just having it on me gives me anxiety. And so I was just

wondering, why are they still a bad thing? Well, number one, I would see a therapist about the anxiety related to holding cash. That freak you out to have $10 in your pocket? Because we're not advocating that you have to use cash for everything in your life. We're saying, use your own money on a debit card, for example, and you will spend less and hit your financial goals without any risk of ever going into debt or paying interest. Okay. Have you tried switching to a debit card to see what that feels like?

No, because my husband is really adamant about getting his credit score up. Oh, okay, okay. That's another convo. In my book, Breaking Free from Broke, I break down the eight character archetypes. So you would be the perfect spender. You're the person who says, I pay it off every time in full, never paid a dime in interest. Your husband would be who I call the credit scorekeeper who's going, I got to get my credits. So why does he want to get his credit score up?

He just believes that it's a good thing and isn't fully on board with the Ramsey method just yet. But if you ask him beyond, I think it's a good thing, because I think he's smarter than that. What would he actually say if you said, why do you want to hire a credit score? What does that do for you? What do you want to use it for? Probably like getting a house loan one day. Okay. Okay.

Now we're getting somewhere. So if we're saying I need a high credit score to get a house, we know for a fact that you don't need a credit score to buy a house. Now you don't want a bad score that will hurt you, but having no score won't hurt you. And so as far as that argument goes, you know, really what most people say is I want a high credit score because I'll have more access to debt, if they're being honest. Does he know that? No, which part exactly? Does he know the part that you can do manual underwriting and that

you don't have to have a credit score to get a home loan? That's just... He doesn't believe that, I think is the problem. But it's not Santa Claus. He doesn't get to choose to believe and have the faith. It's just a fact is you can do this. And so I could show him all the data. But again, at some point, he has to realize that he just is choosing to believe false things. And so that's on one side. On the other side, using a credit card, like you're saying, is it bad to use it? It's not a moral issue to me.

You can make a moral argument of who's actually paying for your rewards. Where is that money coming from? Because the credit card companies aren't a nonprofit. They're not charities. And so we can go down that route. But as far as the spending part goes, every single study shows that you spend more when you swipe a credit card. And I believe emphatically that if Kylie switched to a debit card for 30 days, she would spend less. And not only less, she would spend so much less that it would negate any credit card rewards you could have gotten. And if you really think about it, I mean, going back to that, that kind of stuck with me when you said your husband just doesn't believe that you don't need a credit score. You have to think about what's informing,

think about what's informing what most of us know about credit and credit scores. It's banks and financial institutions, right? Those are the commercials we see on the TV. That's the ad in the magazine, right? That's the YouTube ad that you saw. And the truth is, going into credit card debt and going into debt in order to upkeep a credit score makes a lot of people a lot of money. And so if there's a couple of options, if there's a couple of ways to skin this cat here, one is you pay cash, one is manual underwriting, and one is you use your credit score and try to work real hard to have a high credit score, which one do you think people are going to talk about

the most? It doesn't mean that the other ways aren't feasible. It just means that one is way more lucrative for a lot of companies and the others, they have no skin in the game. So they have no reason to talk about the idea that you could do a zero score loan. So maybe frame it up to him like that. And maybe that'll cause him to kind of think about it in a different way. so then if we are never in credit card debt though i guess that's that's ultimately where my um wondering comes from but then why use it so what would then be your reasons for using it you know the points and the score okay let's talk about the let's take one of your credit. What is the cash back number on everyday purchases? I don't know off the top of my head. So let's use an example of 2%, right? You get 2% back.

So if you spent $100,000, they would give you $2,000, right? Now, if you spent $100,000 on your other expenses that you can put on a credit card, I would say we can do better with a debit card. Would you agree? Yeah. So what if I could convince you that you could save 2% by using your debit card? You would spend more than 2% less if you used your own money versus someone else's money that you got to pay back later. Would you believe me? I could show you how within every dollar budget, exactly how to shave off not just 2%, but 5% or 10% off of your spending. And that's my big argument here is even if you are the perfect spender and you truly will never pay a dime in

interest, the fact of the matter is your brain says, this is not my money. It doesn't have the same weight as Kylie's bank account with money leaving right now. Because you know, I got 30 days to figure this out, right? I mean, I kind of want to believe you, but I also want to know my own brain and I process, okay, I have this much in the bank. I know I can't spend more than this. Are you guys hitting all of your financial goals? Like, are you like, we are crushing it. We could not improve if we tried. I'm sure that's not the case. We're currently in baby step two. Okay. So there's, there just tells me one thing and I think you can do better. Number one,

I think you, you will get debt free faster if you cut up the card. You've removed all temptation to spend more than you make. Think about that. We are zero dollars in debit card debt. We are one point two trillion dollars in credit card debt. And so to say that they're the same and that you spend money the same, it's a false equivalence because you simply cannot go into debt when you use your own money. It's kind of a funny like it's kind of a funny thing to think about, Kylie. I mean, I'm still thinking about it through the lens of marketing. And it's like, if no one, if no one, if you never saw a thing about

the credit score on TV, on your phone, on the internet, and you just went to the library cold and you said, all right, how do I handle my money? And there was an article about using your own money and saving up and having freedom and versus you have to borrow money so you can borrow more money so that you can borrow more money so that you can borrow more money and be in debt it's like it's insanity it'd be book closed like oh yeah i already know what i'm doing but because these marketing companies they spend billions and billions of exactly how to market to kylie we fall for it Like we fall for it because we're intended to fall for it. And it's very hard to get past it when someone tells you the truth.

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pick up and screen your call. Remember, this is a show about your life and your money. We're helping people build wealth, do work that they love, and create amazing relationships. That's what we're all about here. So let's go to the phone lines. We've got Olivia in Roanoke, Virginia. What's going on, Olivia? Hi. Yeah, so I called in just basically because I feel like I'm experiencing a lot of disagreement in my marriage as far as finances go. Tell us what happened. Well, we're both on the same page that we want to get out of debt. Like we both agree that we want to get out of debt. We want to have more money in our bank account and more security. Uh, I just, I feel like I'm the one sort of

leading with that, like gazelle intensity. And right now I feel like one of our roadblocks in front of us is my husband's car. We both have a car. I have a more reliable American-made car that it's up there in the miles, but it's, you know, one of those ones that's meant to last. And then he has a 20-year-old European car. And it's something that he got earlier this year after he wrecked his reliable car during a snowstorm. He paid in cash, which is great. We don't owe anything on our vehicles, but ever since he got that car, which I never, I never wanted him to buy it. Uh, and I expressed that to him, but just let him do it because he was adamant and it was what he wanted. And he was just,

how much did he spend? I was a $3,000 car. Um, and I would say considering how much we've spent, which I don't know exactly. He hasn't told me I can't access his receipts. He told me he doesn't, hasn't even been putting their receipts together with the rest of the cars. What does that mean? You can't access, do you guys not share a bank account? So you can't see? No, we do.

We do. But, like, I don't have a place where all of this stuff is just compiled, like all of the receipts on what he spent on car parts. He's very handy, and he does a lot of the repairs himself, but he's probably done at least five or six repairs since he bought the car. Are these for fun repairs? Like, is he, like, souping it up or is he needing to keep this thing running okay so you're also then then something also tells me you guys aren't keeping a budget because you if you were keeping a budget you wouldn't need receipts you

would see the transactions coming through okay he went to advanced auto parts he went to pet boys he you would see that come through so is that right there's no budget as of right now no i have like downloaded y'all's app before and tried to like get that going but our financial situation has not been great and i all the more reason to get into the budget okay let's break this down no i agree i agree you're like he's spending way too much money on this three thousand dollar car he's probably already spent more than three thousand dollars on the three thousand,000 car, correct? Maybe not, maybe not quite, but we're in a position now where the car isn't working to where he's comfortable driving it even to work. And so we're down to being a one car family and he works 40 minutes away. Okay. And you want to sell this car? I want to sell it. And we literally

can't even afford, it's like $300 in parts that he needs right now. And we can't even afford to buy that. Is it sellable? If you sell it, what would you get? Or is it just scrapped? If we sold it right now, we would get pretty much nothing. But if he fixed it up,

he might be able to get a similar price as what he bought it for. I'm not 100% sure. So you're saying right now he would get $500, but if I put $300 in, I could get $3,000 for it. And you wouldn't get $3,000. You'd break even. You'd get the money back that you spent. We would technically wouldn't break even after everything he spent.

Well, I don't even know. Why don't you guys do a little math on this? Go back and do a little detective work. See what's been spent on this car, and then you guys can make the best decision, figure out what needs to be done, factor that in, and then figure this out. This is the smallest of the concerns in my mind, this car. This is not what's holding you guys back right now. It's just the ankle biter that's in front of your face. So what's

the real thing holding you back? Is he not willing to make other sacrifices? Yeah, so I would say stubbornness is what's really truly holding us back. I tried to discuss this car with him yesterday, and it just turned into an argument. Let's say we never talk about the car again. What else are we doing? Because just not dealing with the car is not the thing that's going to get us out of debt. Yeah. So what are the steps you're taking? So I'm pretty much the only one doing anything to get out of debt. I mean, I don't know. He works. What are you doing?

What are you doing to get out of debt? Let's talk about you. Yeah. So I am working. I'm a full-time mom. So I work on the weekends to clean for somebody, and I've been setting aside that cash for a little while. And I don't even have my thousand dollars yet because we keep

running into things and I keep having to fork over my emergency fund because there's no money in our bank account. Let's halt right there. There's a couple of things that I hear that is really going to help. Number one, there's a lot of division here. There's I'm doing this. He's not doing that. This is my emergency fund. I don't have access to the receipts. Like there's a lot of division that I hear that lets me know there's something there's something missing here. So there's some marriage things going on where you guys are feeling separate from each other. You're not able to talk to him. He's not able to hear you and probably vice versa. So I would want to do some detective work there and maybe get into some counseling to figure out

what's the holdup there. Number two, I think the problem that you're running into financially with when you are setting aside money and it's getting eaten up, you guys don't have a budget. So there's no way to know what's coming. There's no way to plan for it. So before you get off the line, George and I are going to get you hooked up with every dollar because George, I think that's really the issue here. Um, at least financially the issue. Well, tell us about your take home pay. What is the take home pay for the month with your cleaning on the weekends and working full time? What comes in? If I worked four weekends a month doing this one cleaning job that I'm doing, I would be bringing in, let me just pull my calculator up really quick. I've never actually done this math.

This is exciting. This is great. This is part of it for everybody listening. Knowing these details. You got to know your numbers. You know your numbers. Then you know what you need to do in order to get where you want to get. So in just four days out of the month, I would be

bringing in $720. Okay, great. What does he bring home every month? That number, I don't even know. Okay, so like he has so many medical issues. No, but you know, you see, you have access to the bank, right? What does the bank statement say was his income? Yeah, when you see his check roll through. Is it the same check every month? No. The average I would say that we get, so like weekly, is between $300 and $500 a week. Okay, so maybe $2,000, like $2,000 a month. Why is he making so little?

So part of it was they cut his hours back at work because business was slow. And then they recently brought his hours back up. And when that happened, he also got basically what I would call a raise. They allowed him to start receiving commission because he's an incredible worker. He's a hard worker. What does he do for work? He's a chimney sweep. But then he threw out his back pretty much right when that happened he has had back issues his whole life and he probably needs surgery one day but he's he'll miss work because of stuff like that like this isn't just the first time it's happened where he throws his back out it happens i would say once or twice a year where he misses a few days of work because of it and then there's like sickness and all those like normal life things that throw that. I think he needs a new job. Yeah. Is it fair to say

that he can't be a chimney sweep anymore? I mean, when you said once or twice a year for a couple of days at first, I was like, that's I mean, you get a cold and you're out once or twice a year, right? The people in the audience are like, yeah, Jade. so there's part of me that's like how big of a deal is this like we're we're not losing weeks of work you know every couple of months it doesn't sound like it sounds like it's a day here a day there i'm he needs to make more money i'm with you on that he needs to make more money you need to make more money you both need to earn more money um i agree with you there i think here's can i just be honest with you what i think olivia i think you're frustrated and rightfully so and sometimes when we get frustrated it's easier to look at the other person and go here's what they're not doing but i think this is both of you

i think there's something that both of you i think there's more that both of you can be doing to make this better even something as simple as knowing the numbers, right? And in these types of situations, when you are married, here's the thing, you can't control what he does. You can control what you do. You can ask him and you can let him know, here's what I'd like. But at the end of the day, Olivia can only control Olivia. So here's what you can do. You can get the every dollar budget. You can say, hey, let's do this together. And if he doesn't do it, you can still put the budget together. You can tell him, hey, for baby step one, I think we should save a thousand dollars. And if he doesn't want to do it, you still save a thousand. Like Olivia can be on

her game and lead by example until your husband starts to get on his game. This is the Ramsey show. This show is sponsored by BetterHelp. This is the season for Halloween. It's October, we're wearing costumes and we're wearing masks. So if you haven't started planning your costume yet, get on it. And while you're thinking about it, I want you to be honest. A lot of us hide ourselves. We hide our true selves behind costumes and masks all the time. We do this at work, we do this around our friends, we do this around our families.

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Just fill out a short online survey, and you'll be matched with a licensed therapist. Plus, you can switch therapist at any time for no additional cost. Take off the costumes and take off the mask with BetterHelp. Visit betterhelp.com slash deloney to get 10% off your first month. That's betterhelp.com slash deloney. You're listening to The Ramsey Show. The Ramsey Show question of the day is brought to you by YRefi. YRefi refinances defaulted private student loans and builds a custom loan based on your ability to pay. Now, you guys, private

student loans are different than federal student loans, right? Like Sallie Mae. So learn more about this custom refinancing option and a lump sum payoff option you could qualify for after 24 months. Go to Yrefy.com slash Ramsey. That's the letter Y, R-E-F-Y dot com slash Ramsey. This may not be available in all states. Today's question comes from Alyssa in Pennsylvania. Oh, never mind. It's Courtney in Iowa. We had two. I'm going to go with Courtney in Iowa, final answer. She asked, my ex-husband and I received a large inheritance during our marriage and set aside college money for both of our children. Now my ex is financially strapped and has asked our youngest son for his college fund, which he didn't end up needing to fund his education. Our son is 24 and getting married soon, and I trust he will use the money responsibly.

I can't believe my ex has put our youngest son into a terrible position. Is our son morally obligated to give his father this money? Short answer, gonna say no there's no moral obligation there's no legal obligation no and i i have questions though i mean my first thought is okay the parents put the money aside for the kids in the 529 they list the child as the beneficiary unless there was a discussion that was like hey what if you don't use this money, it goes back to us. And they change the beneficiary back to themselves or the wife or whatever. I don't know. But if it's still in the son's name, I'd be like, this is my money.

Or, I mean, he's about to get married. I can pass it to my kids. How cool would it be to change the beneficiary to their kid? That's what I'm saying, yes. In a year or two or five or whoever. You know, I think that's, and part of this is we're enabling this ex's bad behavior for a grown man to just suddenly be financially strapped and need to rob his kid's college fund tells me a lot about the character of this person.

Right, because a 529 is a gift. Like, it is you gifting the gift of education to your... Well, the confusing part is this came from a large inheritance during their marriage that they then set aside in a college fund yeah but still even if they had worked to save the money you know it would still be money that they earmarked and said this is a gift to our kids for their education so in many ways it does feel like revoke like like turning around on a gift yeah i'm i don't like it yeah i don't like it and i don't like it. Yeah, I don't like it. And I don't like this ex. I think he needs to find a different method to get this money than to rob the college fund, which by the way, will come with a whole bunch

of penalties. You got to pay income taxes plus the 10% penalty on top of that. And so I'd hate to see that when this money's been growing tax free, it can be used for future generations to allow them to go to college debt free. And who knows what college is going to cost 18 or 20 years from now when this son has kids. Yeah. And if you're, I mean, let's just pretend for a second. Let's play this out, George. Let's say how much money would need to have been in there to pay for kids' college. Maybe there's $70,000 in there to pay for the whole thing. If he didn't use it, then this is idea of my ex is financially strapped like you don't suddenly up and need 50 or 70 thousand dollars that's over time many decisions being made so yeah my final answer is this whole thing just gives me heartburn just looking at it but i would

say uh no your son is not morally obligated to give his father this money and i wouldn't if i were him and if i were the mom so i can keep going on this and if i were the mom it was both of their inheritance that's so we don't know where this came from and all that well she says my ex-husband and i received an inheritance i'm like part of this is on her too like she should get to decide she says, no, this is our son's money, that on that. Okay. You can figure it out. All right. Thanks for the question. That's a real, it's like a common core math problem. It hurt my brain. These are the hard topics that George and I go after on the Ramsey show. It's very hard hitting content. It's what we do. All right. Let's go to David in Providence,

Rhode Island. What's going on, David? Oh, hello. Hello. How are you? Hi. All right. I'm good. How are you? I like how Dave puts it. I'm better than I deserve. Okay. Love to hear it. How can we help today? So me and my wife are in an interesting financial choice right now. And I think it's kind of like a pivotal choice and I just need some advice. Um, so we have no debt, no kids. Um, Lord willing, we'd like to have kids in about five years. Um, and then at that point, you know, we would go down to like a single income, you know, we, we just would both value her being a full-time mother. So we have about $40,000 to $45,000 saved up in the bank.

And we're currently renting an apartment right now. Our rent is $1,575 a month, which is sort of average for the area that we live in. Um, so our question, my, uh, my question rather is, um, do we buy a home that we can afford right now that would not really suit us when we have children? Meaning we would, we would probably have to sell it in about five years or do we continue to rent for like another three to five years and then buy a house that would be bigger maybe maybe suit us more as a larger thing why would you need to sell when you have one kid that's what i was going to ask um yeah i mean we really wouldn't need to sell for like the first kid um we we kind of both would like to have more than just one though um but yeah i mean like but that stretches you to one though. But yeah, I mean like a one-year-old would be fine.

That stretches five years to like maybe seven years, no? As far as space. Because an infant is like this big. Yeah, well, so maybe I should define the space a little better. I mean, they don't make one-bedroom homes. Well, the one we're looking at is $200,000 for

not really a home, I guess. It's more like a cottage. It's 650 square feet. That's like a tiny home. That's super small. Yeah. Okay. That does change a little bit. That's tiny. So what if we got something more reasonable? Let's say it's a two or three bedroom to where you could grow into it,

even with two kids, even if it was a little bit tight, what would that cost you? In this area? I mean, there's nothing, it would either need such a large amount of repair that it's like really a huge undertaking, like more than just an average fixer upper. So what about one in good condition? You don't have to do some HDTV show.

Yeah, the price would be probably about $350 or so. That's reasonable. And you're going to keep saving in down payment. Is $45 everything you have in savings? Does that include your emergency fund, or is this just earmarked for down payment? That's everything we have, yeah. Okay.

That does change it a little bit, too. And what's your household income? Yeah, so right now with both of us, it's about 160 to 170,000 a year. But if, you know, after we have a kid and my wife would stop, you know, making an income, right, then that would go down to about, I don't know, 110 or so. I mean, it depends on with me

getting a raise between now and then and whatever, but around 110, something like that. I would say you're on the path and I would just set the home budget that makes sense and then go, okay, well, how much more down payment do we need to save up to make this affordable to where it's no more than 25% of our take-home pay? And I would base that take-home pay off of your income alone, since you know that's the goal. Yeah. And the good thing is your rent is not astronomical. Like your rent is not far out that I'd be like, you got to get out of this rent. You're paying 3000 bucks a month for rent, right? You guys' rent is at a good spot. And I don't think that I'd be interested. I know it's not an actual tiny house, but I don't think I'd get into this tiny house deal. I think I'd ride the wave and just go, you know what?

We're going to take the instead of living five years in this 600 square foot house that basically is an apartment. Let's live in an apartment and let's save up this money and do this. This three hundred fifty thousand dollar deal. OK, yeah, yeah, that's kind of what we were thinking about. I value the opinion. thank you so much absolutely yeah for what it's worth our apartment is actually bigger than the house it's nothing crazy but it's it doesn't take much i know 700 square foot apartment you just beat the cottage for sure so i would i would go slow there's no urgency or rush on this and i would just stack up as much as i can while you have two incomes and no kids. Now's the time. Yeah. And you might need to save up a hundred grand or 150 grand

to make this payment affordable for your solo income in the future. But that's what I would do. I would aim for that 350 house and try to get there as soon as possible because Jade, like we know it's a moving target. Yeah, that's right. Three years from now, that might be a 450 house. That's right. So you still want to move with urgency, still move with intensity. And of course we never want that payment to be more than 25% of your take-home pay all in. That's thinking about things like homeowners, all of it. So that's the framework that we're working with. Hey, thanks for hanging out with us. That does it for this hour of the show. George and I will be right back with you. Before you know it,

this is The Ramsey Show. Do you ever feel like you're finally making progress towards your goals only to get quickly distracted by something else in your feed? Well, that's why we created the Ramsey Network app, your single source for content that keeps you motivated. The Ramsey Network app is designed to keep you laser focused on reaching your goals. Loaded with over 7,000 hours of Ramsey shows, this free app is the best place for uninterrupted content and no distractions. Plus, you can search specific questions to get more personalized content in seconds. So for the days you need some extra motivation, you'll have proven advice at your fingertips. It's time to get serious about your goals and shut out the distractions for good. Simply search Ramsey

Network in the App Store or Google Play. If you're listening on a podcast, just click the link in the show notes to download our free Ramsey Network app today. From the Ramsey Network, it's the Ramsey Show. I'm Jade Warshaw. Next to me is George Camel. We're going to be your hosts for this hour. Give us a call. This show is all about your life and your money.

And so if you're interested in building work, building wealth, if you're interested in doing more of the work you love or increasing your relationships, this is the show for you. You can call in. The number is 888-825-5225. We'll get you on the line. All right, let's get right into it. The first call comes from Stephen. He's in San Jose, California. What's going on, Stephen? How you doing, Jade and George? Thank you for taking my call. I'm a huge fan. You bet. We're glad you're here. How can we help? So my question is, I've been married for about 18 years and we got in your plan back in 2018 and then we got out of debt.

Unfortunately, from that time period, we had a separation due to my addiction to alcohol and everything kind of fell apart. We separated finances, everything. We remained married because in hopes, you know, kind of reconcile the marriage. Yeah, I got myself clean. I'm over a year clean. Way to go. Yeah, thank you very much. I appreciate it. It's been a very hard struggle, but I'm very happy and I'm glad to get myself back just just for myself, you know? Um, but in that unfortunate, in that time period, I accumulated, um, you know, some debt about $50,000 worth of, uh, you know, a car and consumer debt, um, combined total. And we are still separated financially. And, um, I know it's an emotional tie to this, but my goal is ultimately to get my family back, get my marriage back, get my finances back get my marriage back get my finances back in order and you know we did everything together and now that it's been separated for the past couple years how and even is it possible that we get back on track we get

things together do I attack this debt by myself and then you know I just I'm getting information and advice from different people and I know you guys are the professionals and I trust you guys. And you got it the first time. So, well, I mean, there is part of this. Obviously, you guys separated your finances because of the addiction. And so I'm guessing you both were working with some sort of counselor who was recommending these boundaries, right? Yes, absolutely. OK. And so did they kind of give you a point

where it's like okay once this takes like do you have a a lever that you pull where it's like once this takes place everything goes and we have that trust that we keep the finances together or um that's yeah that's a funny thing because our our counselors advice is hey you guys do your thing and you do your thing separately and maybe maybe, you know, in the middle, you guys will meet down the road. And, you know, I don't feel the same way. And I kind of challenged that the last counseling session because I feel like, hey, if we're going to be back on board, let's do all this together and let's get after it because that's how we did it prior. What's your wife think?

I understand this is an emotional tie. It's a huge thing for my wife. It's a red flag for myself. It's embarrassing. It's shame, guilt, all of that, you know. know what's your wife feel is she ready to combine money again no i don't um no because even you know on top of that with addiction um i i had an injury at work i'm a driver for you know major delivery company and you know my income was was, was reduced because I'm not working in overtime. And so I think she wants to have a set, okay, the year of sobriety, that's great. Let's get,

you know, let's just get that in order. And then financially, I think she wants me to be back working stable and bringing an income in order to get back on track and feel comfortable to join those finances again. And I, I agree. I understand that, you know, but I'm, I'm like, I'm at that point of where I was with addiction, where I'm sick and tired of being sick and again. And I agree. I understand that. But I'm like, I'm at that point of where I was with addiction, where I'm sick and tired of being sick and tired. And I want to get after this. But there is a part of this where there was, you know, for her, I'm sure she experienced a huge distrust. Like there's part of this where it's like, OK, like you said, I'm really glad this year has happened. I think we're going to keep going in that direction. But and to your point, I don't think this should be indefinite. Like I don't

think that you should live life separately, but I do think you guys need to work together and figure out what that point is where, you know, you go, okay, once we've accomplished, we've checked these things off the list. Everybody feels comfortable again. We're going forward. We've got some track record established. Now we're ready to go together. I think you guys have to work together, even with a counselor, to kind of be a third party in that to make that happen. Because you're right. You don't want to continue to operate separately once you've gotten to that point of health where you don't need to operate separately. But to her point, yeah, she's got to feel good about this, too too because the truth is the past has been hard for both of you.

Absolutely. And I think I've come to this point where I've let emotion not play a factor because alcohol was fueled off of my emotion, and I come from a crazy past. But I'm trying to think more rational now, but I'm also trying. I'm like, I want to get gazelle intense on this. Let's jump in. I'm all in board. And I know she's like, well, let's pump the brakes. And it's hard to stay focused and motivated when we were kind of living on separate islands. Yeah. But you can pour all that emotion into doing those things that

she said she wanted to see you with a stable job, you with a stable income. And when you have those things, then you are also paying off debt as well. So there's part of this that I think she's probably wanting to see, is this the real thing? And is it the real thing on every level or just part of the levels? Absolutely. So I would do this on your own as you get the stable income. And then as you join and she goes, oh, wow, he's really changed. He's doing this thing. I'm on board. Then we combine incomes and we attack this debt together. I know you feel the guilt and shame from it. Is she willing to tackle it with you at that point?

That conversation hasn't come up. She's aware of how much the debt is and where I'm at. And I feel truly we haven't even spoke about that. But I believe that she's not willing to put her hand in this because it's like, hey, this is your responsibility. You kind of fix it, you know, and I'm taking ownership and accountability of that. So are you guys splitting rent, like the mortgage right now? How is this all working? Well, that was a funny thing.

Like we were all living together. We were doing all the separate, I mean, living together. I'm sorry. And then when the separation happened, she went to go live with her family and I went to go live with my family. So the opportunity to like, I want to get this done like six months a year, you know, I really want to get intense and get this stuff back in order because we're

not, we're not, we're in a position where we're living separate and we have that opportunity to kind of, you're still living separate. Yeah. You're still living separate. Yeah.

So what is the game plan to even move in together? See, the game plan is to obviously pay off debt. I want to be debt-free before we make any moves because— Wait, did she say, I'm not moving back in with you until you're debt-free? That words have not come into play, but I'm sure that's how she feels. Okay, sounds like you guys have more conversations to have because I do think that probably coming out of this, she probably has a set of boundaries that she's thinking, I got to see X, Y, Z. And if she was on the line, she may have a whole

different story and go, well, no, here's what you need to know. And we go, oh, okay. Okay. So it's hard to play judge and jury here, but I will say you need more clarity and there needs to be a very clear conversation of what must be true because I want to spend my life with you physically, financially, everything. I want to move back in with you. I want to combine finances

and I understand I got work to do. What needs to be done? Then we can go about the business. And I would think about selling that car, Stephen. Yeah, how much is the car out of the 50,000? 50,000? About less than 10,000 worth of it. It's mostly consumer debt. You know, unfortunately this addiction brought to me where I credit cards. Yeah. It's all credit cards. Yeah. And I took a leave from work medically because I just felt like I was in that headspace and I wasn't even getting paid at one point before I got medically clear to kind of go take care of this addiction.

OK, so it sounds like you're on the right path. It sounds like you're understanding. Here's what it's my mess. I need to clean it up. Have that clear conversation with her. Figure out, OK, what are the points that we move in together again? What are the points where we combine our money again? And are you really serious about getting back with me or are these parts caveats in order for that to happen?

This is the Ramsey Show. A lot of financial institutions don't care too much about you, but they care a lot about getting their sweaty hands on your money. They have fancy furniture and marble columns in their lobbies because you're paying for them with high fees just to access your own cash. But Fairwinds Credit Union is different. Guys, you know I prefer credit unions because of their membership focus, lower fees, and better experience overall. Fairwinds has been in business for over 75 years and we're excited to endorse them because they share the Ramsey mission of helping people get out of debt and living generously. They won't try to force debt products and loans on you, and it's easy to join Fairwinds no matter where you live.

They serve hundreds of thousands of members worldwide. Anything you could do at a bank branch, you can do on fairwinds.org. Plus, your deposits are federally insured by the NCUA, up to $250,000. So talk to my friends at Fairwinds andorg slash Ramsey to learn more. That's F-A-I-R-W-I-N-D-S dot org slash Ramsey. I know you work hard for your money, and the key to keeping more of it in your pocket is by making a plan for your spending with a budget. And EveryDollar is the budgeting app that I use personally

because it's perfect for looking every dollar you make in its little president face and telling it exactly where you want it to go. Just like you told that guy in traffic exactly where you wanted him to go. And even better, EveryDollar walks you through the entire budgeting journey so you always know your next right step. Download EveryDollar for free in the App Store or Google Play today. This is The Ramsey Show. George Camel is my host. I'm Jade Warshaw. We're taking your calls. 888-825-5225 is the number to call.

Hey, George, I saw this sitting on our desk, and I think it's worth talking about because we hear so much doom and gloom about Americans not ready to retire or the American dream is dying, you know, here in America when it comes to money. And this is really cool from CNN. Number of 401k millionaire reaches new high. Yes. I actually just talked about this this morning on Good Day Orlando. We did a media hit with the nice people over there. And this is exactly what we talked about, because there's

so much hope stealing going on out there. All you hear is there's a retirement crisis and the next president's going to screw this up and cause us to all be broke. And here's Fidelity saying, actually, we're at record highs and across our 401k accounts, they have half a million people who have balances of a million dollars or more in that one account. Wow. Wow. In just one 401k account, which is very encouraging, average balance hit 1.6 million. That's great. That's excellent. So that's encouraging. So the question is good for them, George. What about me and my 401k? I don't have a million. Well, that's true. The average 401k out there is more like 126 grand. Yeah. Yeah. So it's like a

10th. So how do you get there, Jade? Well, it takes consistent investing over a long period of time. So if you sporadically put 3% to get the employer match, yeah, it's going to take a bazillion years to get a million. But if you follow the Ramsey plan, you get out of debt as soon as you can, two years or less, you get the emergency fund in place, you begin investing 15% of your household income into that retirement account, you will see that it doesn't take long for compound growth to work its magic. That's right. And all the time around here, we're talking about 10% returns. And anytime I talk about 10% returns, especially if it goes on social media, there's always somebody popping into the comments saying something like, well, where are you going to get that? Or how could

you get that? Or that's impossible. And I always have to explain the idea that this is an annualized term. Number one, it's not to say that every single year you're going to get 10%, but over the lifetime of your investing, that is what you're getting. That's the average of all the years you've been investing. So if it was up 30, down 12%, up 20%, down 6%, if you take into account all of those years, you're looking at 10% to 12% on average in the stock market. That's right. And when you look at them by year, most of the years are up years. You have those years that tank because something catastrophic has happened, whether in politics or international, but it always recovers and it always recovers really in our favor. I just looked at the S&P 500, which represents the total U.S. stock market. I looked at the numbers, Jade, this morning.

And in 2004, so 20 years ago, we have 5x'd since then. Yes. So if you had 10 grand, now you're talking 50 grand. And even if you started investing 10 years ago, your money would have went 2.5x. That's right. And so it's not a rocket science analogy here. You just need savings rate, how much money you're putting in, plus time. That's right. That's the formula to become a 401k millionaire. Yeah, that's what we rocket science analogy here. You just need savings rate, how much money you're putting in, plus time. That's the formula to become a 401k millionaire.

Yeah, that's what we're looking at here. So your 401k is a great place to start. We say all the time, you know, sometimes here we talk about baby step four and we kind of push past it. But it's worth talking about, George, because a lot of people have questions. A lot of people don't realize, OK, when I invest in my 401k at work, what does that mean? And where does that get me?

So let's take a moment and kind of explain that because I posted a video on Instagram last week about Baby Step 4 and I was overloaded with questions on, okay, what does that mean? Where do I go? What if it's Roth? What if I get a match? So let's take a moment and teach the people when we say Baby Step four, what are we talking about? I'll start with the first part. So here we teach that you're not ready to invest until after you've paid off your debt, which is baby step two. And after you've invested three or, and after you've saved three to six months of expenses, that's baby step

three. From there, we then teach, okay, now you take 15% of the gross that you're making every single month. This is before insurance comes out, before taxes comes out. You take that money and you're investing it. And we say, let's start with an employer-sponsored account if there's a match. Yes. So if you make $100,000 a year, you should see $15,000 in contributions in that retirement account. That's 15%.

Yes. And the strategy here is simple. Match beats Roth beats traditional. We go for the match first because it's a 100 percent return on our investment. I put in four percent. The employer puts in four percent. Great. Next, we can move to all the Roth options available. All that means is that the money is put in after tax and grows tax free. So you're not going to be able to deduct it from your taxable income for the year like it's traditional, but you never have to pay taxes again. If you have two million dollars in a Roth 401k at retirement, Uncle Sam doesn't touch it. That's

like $2 million of net income, take-home pay. So I love that. Then beyond the Roth options, like a Roth IRA or Roth 401k, you can move to any traditional options you have. That's right. And one of the other things I love about investing is if I can set it and forget it, like if you're doing the 401k right now and you can go to HR and set it up and it happens like clockwork, that's wonderful because you don't even have to think about it. It's just happening monthly. It's money. You can almost pretend like it's never happened, right? You're not thinking about it. And same thing if you have a Roth IRA, you could probably set it up to where that's coming out automatically to you on payday. Because here's the thing. If you don't do it on payday, good luck to you. It's not happening.

If you see that money in your bank account, it's hard to go, you know what I should do? Invest for the future. You're going to go, oh, I'm going to buy me some stuff. Yeah, that's right. I love the idea of picturing like you never had that money and then future you. It's going to feel like you found like a $20 bill in your coat pocket, except it's going to be like a $2 million bill in your coat pocket. So let's talk about George briefly, because we got some time. Let's talk about for the people who say, well, I make too much to invest in a Roth IRA. Well, the IRA does have limits, but there's ways around it with the Roth where you can do a backdoor Roth. And all this means

is you're going to use after-tax money to fund an IRA, and then you can immediately convert it to a Roth. Yeah. And it's legal. It's a legal loophole. Totally legal. This is not like a life hack that's going to get you in trouble. And I would recommend working with a pro on all of this.

You can connect with one at ramsaysolutions.com to help. That's what I did when I came to Ramsey. I had an old 401k. I rolled it over to the IRA for my Apple career. My short one-year and three-month Apple career. I had some 401k money in there it over to the IRA for my Apple career, my short one year and three month Apple career. I had some 401k money in there. That's great. So whether you're rolling over or you want to do a backdoor Roth, there's a lot of options for high income earners. On top of that, there's the mega backdoor Roth. Yes. There's a lot. It feels like a seven-year-old named this.

The mega. Mega backdoor. And then for the people who are like, okay, Jade, George, great. I'm maxing out my 401k. I'm doing well. I'm maxing out a Roth IRA. What else can I do? We love the HSA, health savings account. If you have a high deductible insurance plan, that's a great way to go. I mean, obviously when you put the money in at first, you're thinking this is for my health savings, but beyond a thousand dollars, you're able to invest that money. And by the time you turn 65, it doesn't have to just go to medical costs. You can use that for- It acts like a 401k. Basically. Which is really cool.

What if you're really doing well, George, and you're like, I did it all. I did the HSA, the Roth IRA, the 401k. What am I going to do next, George? I would just invest in a general investing brokerage account. This is not connected to retirement, and you don't get tax advantages. Well, let's run it back a little simpler because some people are going, when you say brokerage account, George, what do you mean? What is that? What is a brokerage account? What's a brokerage? Well, it's simply an account for investing that you work with, you know, firm like you've, we've all heard of Vanguard or Fidelity or Schwab. So you can work with a pro in this. You can open these yourself and you just simply invest in,

you know, this is what Dave does. He gets a big check that's non-retirement. He goes, I'm going to put it in index fund inside of one of these accounts. It's not connected to your employer. It's not connected to your retirement. It's simply... And you pay taxes on the money, on the growth of that money.

And you don't get any tax deductions when you put it in. So there's no tax benefit, but the benefit is you don't have to wait till 60 to tap into it. I like that. And you can use it for anything at any time. Okay. So let's take it a step further. When we talk about investing that money, what are we talking about? We're talking about, because a lot of people go, oh, I'm investing in single stocks, Apple, Nvidia, right? And we're saying, no, no, no,

that's super risky. Let's invest in mutual funds, right? So this is like betting on a single horse versus betting on the racetrack. Yeah. I'd rather just enjoy the game and go, we're all going to be winners if we put money into the racetrack itself. That's right. We're going to get all the horses in that race. And that's what you're doing when you invest in a mutual fund, which is like 90 to 200 plus. Sometimes more. Yeah. And so that's what you're betting on. And you can see the return is a lot less rocky than a single stock of one company. Instead, we're going, here's the top 500 companies we're all rooting for,

the top 500 horses in the race. And that way you get the benefit of all of that growth. And there's different types of funds that he's talking about. We talk about growth funds, growth and income funds, aggressive growth funds, international. Those are the four that we teach. You're spreading your eggs out. You're not putting them in one basket.

So if your international fund is not doing very well, probably your growth and income fund is trucking along and doing just fine as it should. And so that's how this works. That is baby step four in a nutshell. George, you're a genius. I wouldn't go that far. I would.

But you know what? You don't have to be a genius investor to make money in the stock market. You just got to ride it out. Don't jump off the coaster, man. Stay put. Stay put. All right. Keep tuning into The Ramsey Show to learn more about how to manage your personal finances. These days, it's not if your identity gets stolen, it's when. And the only ID theft protection plan I have ever recommended is from Zander Insurance. It helps real people with real life situations. Like the call we got on the show recently where a woman's abusive ex opened a credit card in her name and racked up

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This is The Ramsey Show. George Campbell is with me. I'm Jade Warshaw. We're taking your calls. This is a live show, so if you want to get on, go ahead and give us a call, 888-825-5225. Let's go straight to the phone lines. We've got Dan in Los Angeles, California. What's going on, Dan?

Hey, guys. How are you? Happy Monday Angeles, California. What's going on, Dan? Hey, guys. How are you? Happy Monday. Happy Monday. Yeah, I guess my question is, what do you do when you're barely getting by each and every month? You're behind on pretty much all your bills. You're getting sued by a debt collector all at the same time as you're trying to prepare for the birth of your first child. The short answer is make more money, but I know it's going to be more than that. So tell us what's going on.

Yeah, so I guess past two years, I went into two different business ventures with partners that long story short, I just ended up getting the short end of the stick and never got compensated. So since then, I've had to pretty much just drive for Uber and Lyft to supplement income. Right now, we are one month behind on our rent. I am currently two months behind on my car. Utilities for, like, gas and water and power, I have not paid for probably, like, the past year. Wow. And it's still on?

And it's still on, thankfully. Have you talked to them? Have they talked to them? Have they talked to you? They sent out notices, and I've made payments whenever I can just to keep things on. What are you paying for? Even if you have a little income, where is it going? So I guess, could I give you guys the breakdown of certain expenses? Yeah, I want to know. Because those things should be covered first.

If you do nothing else, put food on the table and cover your four walls. And it sounds like you're not covering the four walls. So I'm wondering where is the money going? And by the way, tell him the four walls real quick, just so he knows. That's food, utilities, housing, transportation. If you cover nothing else in that order, which means the credit card companies can kick rocks because you got to feed your family and keep the lights on.

Yeah. Tell us more numbers. How much is rent? You're in Los Angeles. Yeah. My portion is split with me and my partner and I pay about $1,600. $1,600 just for you. Okay. Yep. And then? My car payment is $610 a month. Okay. That's a lot insurance insurance is 330 a month okay in charging costs alone to charge my vehicle i drive a tesla oh no it's about 800 a month okay so stop there because we're already like we're doing good now you're driving uber and ly, which I don't know. I'm not stepping on anybody's toes, but I tend to think of those as side hustles. Now I do know in places like New York and where there's a lot of traffic, people do do this as their full-time job. So tell us what

you're making from Uber and Lyft and what you're making each month. It's anywhere from like 42 to 46, roughly, give or take. 100? Yes. Per month. Okay. And tell us where that's going. Okay, obviously half of it, a good portion of that's going to rent. Okay.

Charging the Tesla. What else is laying around here? Because it seems like with that, you you can cover rent you can cover the car uh how are you why are you behind on rent and utility bills because you're even after what you just told us you still got about 2800 to go you gotta eat yeah um i guess phone and cable is 150 each so that's 300 there um groceries i spend about roughly three to four hundred dollars on groceries um um phone and cable why haven't we cut off the cable yet we're not paying utilities but we're paying for cable yeah that's yeah that's also why i'm calling in just to like

figure out kind of how to navigate all of this. And tell me about the partner situation. You guys are not married, so therefore you have not combined finances. Yeah, we have not combined finances. We are very transparent with our finances. We know our incomes. We know how much we spend on, you know, on certain things. How is she doing financially? Because she has to live in this

hellhole that you've created together. Yeah, we're both in literally the exact same position. Whatever extra change that I bring in, you know, I'm usually sending to her so that she can cover whatever bill she has, vice versa. If I need a couple of dollars here and there, she'll send it to me. So we're just. What's keeping you guys? I'm so confused. The math isn't mathing because if I take the, if I do it at 4,200, which you said is on the low end, if I subtract rent, if I subtract the car, the charging, the insurance, the phone, the cable, the food, I still have $160 left. and I know that's no kind of margin but I'm trying to understand why you haven't been paying rent when you had the money

to pay rent and why you haven't been paying your car when you've had the money to pay the car yeah what else is left out of the yeah when we fell off when we started getting behind on things, it wasn't until afterwards that we were able to at least be up to date with current matters. So you just don't have the money to get a month to get – you can pay for the month, but you can't pay for the previous months. Exactly. Gotcha. What is keeping you guys in Los Angeles?

That's a good question. That is a good question. That is a good question. Is she working? She is, yep. Okay, up until the pregnancy? I'm sorry? Up until the pregnancy, she'll be working? Yeah, yeah, and she gets, like,

maternity leave and all of that. Are her... Okay, so you're doing Uber. You could do that anywhere. What she does, does she need to be in Los Angeles County to do it? She doesn't have to be here, no. Okay, so...

You guys need to get as far away from Los Angeles as possible. I know, that's right. We need to get your rent down. We need to cut every single bill that isn't necessary to your life. You need to sell both of these cars, and you need to get three more jobs.

You want an answer on the way out of this? That's it. And if I had a baby on the way, I would be like, I want a different life for this baby than the life I'm living right now. Are you there yet? No, we're definitely not there yet. I mean, what George is saying, are you there yet emotionally? Like I'd be on the phone with comcast or whoever has the cable today and going i can't afford this cancel it now cancel it three months ago and i get on the phone with all utility companies say please keep the lights on i got a baby on the way i'm working on catching up i'd call every debtor in my life and say here's where i'm at here's what i'm trying to do and so far i don't hear very much, I don't know, urgency toward the situation. I think this is a classic, like, no one wanted to hold him and no one wanted to fold him.

Like, it sounds like you came out, you went to Los Angeles, and you had this idea for this business. You got screwed. I don't know your partner, what her thing was, but it's almost like you're hanging on to something that you thought was going to happen. It didn't happen. And now you've got to rebuild something new and start again. And you know what I'm saying? That's exactly the situation. Yeah.

And so the good news, the hard part about that is it sucked. But the good news is you get to start fresh and do something completely new, be completely successful. And you don't have to be clinging to this you know past failure um any longer you can choose to let that go at any moment because i'm not staying in la eating beans and rice to drive uber i'm just like if i'm you i'm getting i'm hightailing it out of there right yeah are you gonna move tomorrow tomorrow? When's your lease up? So we actually just re-signed for another 12 months.

Yay! Yeah. It's also a situation where when it comes to renting apartments, your credit has to be in relatively good standing. That's true. And both of our credits have been absolutely obliterated. But there are places that don't care about your credit, that they just want to see if you have cash money. There are places that care about your credit and then there's places that they're like, do you have first and last month's rent? Yes. Okay. They might make you pay a little

bit more upfront. They may put different, you know, things into the contract, but it's not strictly based. What doesn't help is you got a missed payment now. So we need to fix that part ASAP. We need to get up on the bills, which means we got to work extra, cut everything in your life that isn't necessary, which right now is pretty much everything. I'd sell the car and find a normal job and you can walk to it or bike to it. You don't need to spend two grand a month on your Tesla to make four grand. Put a time limit on this. Put a time limit on this put a time

limit on this this needs to happen in the next two to three months you guys need to be out of la and into something different and fresh and new and good sign up for a new life for that new baby we're rooting for you man this is the ramsey show all right let's cut to the chase it's easy to get discouraged about crazy house prices and interest rates. But when you have the right real estate agent to help you buy and sell the right way, you'll have confidence to make smart decisions. Ramsey Trusted Agents aren't just experts who guide you through buying or selling. They're someone you can trust to have your back from the first call to closing day.

Find a Ramsey Trusted Agent near you at RamseySolutions.com slash agent. RamseySolutions.com slash agent. All right, you're listening to The Ramsey Show. I'm Jade Warshaw. Next to me is best-selling author George Camel, and this is a live show, so if you want to call in, you can hit that number. But George, imagine this. And those of you listening, imagine this as well.

Not just George. Imagine you look up a year from today and you finally accomplish the things that really matter to you. The goals you said you were going to do. You were going to get out of debt. You were going to start that habit. You were going to start whatever it was.

Imagine you actually did it and you achieved your goals. This doesn't just happen by chance. You got to have a plan. You need something that's going to keep you focused, something that's going to keep you motivated and organized every single step of the way. And lucky for you, we have that. We're excited to announce the new 2025 Ramsey Goal Planner. It's here. I know, I feel like I needed a drum roll there. It's packed with monthly teachings from Rachel Cruz, Dr. John Deloney, and myself. We're there to help you set attainable goals with your money, guys, with your faith, your relationships.

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in the description if you're listening on YouTube or podcast. Get them while they're hot. All right, let's go to the phone lines. Jennifer in Detroit, Michigan. What's going on, Jennifer? Hello. Okay. Is it okay to borrow for home repairs when we have lost our homeowner's insurance and we put down a large down payment on our home before we realized we immediately needed so much for the repair? Well, tell us more. I don't know what the down payment has to do with this, but you bought this home. I was only bringing it. You bought this home. I was on, yeah. You bought the home. You had homeowners?

Yeah. Very briefly, we lost it basically immediately because we bought a home with a flat roof and basically all of the homes with flat roofs are losing their homeowners insurance. Oh gosh. All of a sudden. Yeah, because they have like some new technology where they can take satellite pictures. And even people who have roofs that are still under warranty are fighting to keep their homeowner's insurance. What's the, for those listening, if you have a flat roof, like what's the issue with that? Is it flooding?

What happens? Leaks? Yeah, it's basically water pools on it. The drains get clogged. It just has a much lower life expectancy than a slope roof. And more risk for the insurance company. Exactly. Have you had any claims or losses so far?

We just bought the home two months ago. We knew that the roof needed to be replaced, but our plan was to replace it with another flat roof. And we have the money to do that, but considering everything that's happening with flat roofs, it seems unwise to lay out the money. Yeah, if I could choose a different roof, I would not go flat at this point. So what is it going to cost for a traditional roof? Okay, so here's the thing. Our long-term plan was that we wanted to add a second story to our home because we don't have quite enough space for our family, but we were going to manage with the space that we had. And so we don't want to put on a sloped roof without putting on a second story because we want to put the sloped roof on top of the second story.

And in order to do that is really expensive. It's like over two. Is it worth sinking another 200 grand into this house versus just buying a different house when the time comes? So I'll say that for us it is because we're really, really location sensitive. And this location is exactly what we were looking for. Our family just moved internationally from Israel. Right. And we just needed to make the transition. And there's no other homes in the neighborhood that have a second story and a slope roof?

Listen, Jennifer. Not really. I mean, we were just, we were just, you know, we were just shopping for homes and we bought the one that. Yes, but the story, the story has changed. And I think you've got to be, you've got, you're very rigid on your plan it's like this was the plan this is the plan and I get that but there's there's a bad guy now like the story has changed and so you guys have to kind of be willing to change your story too like the original plan was we switch out this sloped roof for or this flat roof for another flat roof and then that buys us time and then when it's time we build the second story that on that but that's not that cannot be the story anymore so the only way that that that you can still play that out is if you have the money to put on the second story and then get the

traditional roof and if you don't have the money to do that then you have to rewrite the story you have to right but we wouldn't be able we wouldn't be able to sell this house and buy a much larger house either maybe not immediately but what you never gave us the numbers so what do we do now you said you have the money for you said you have the money for a flat roof what does that cost and then tell us what the cost is for a traditional sloped roof. Okay. So to replace the flat roof would cost $25,000. Okay. And we have that. We actually have about $100,000.

Okay. But in order to build a second story with a sloped roof on top would cost over $200,000. Right. But you don't have that money yet. Can I ask a stupid question? My hands raised. Why not take that $100,000 and just upgrade and house? Yeah. Instead of over building on your own house and now you're underwater because the money you put in is not even what it's worth. That's my worry for you. This is not the only house that exists for you

guys. That's what we're trying to get at. What'd you buy the house for 250 are there any 350 000 homes that have sloped roofs and second stories no not really there was we would be by jennifer if i google if i go on zillow, am I going to find a house for $350,000 with two stories and a slope roof within two miles of your house? No, no, no. It would be like $400,000 or $500,000. Okay, let's call it $400,000. Let's call it $400,000. You save up another $50,000. You can upgrade, and you can avoid dropping $200,000 into a house that is not going to be worth $450,000 when you fix it up.

I think it would be worth more than that. Then wait a minute, Jennifer, what are your options? You tell us the options. Let's flip it because we're telling you and you're like, no, no, no, no, no. So you tell us the options. Well, I mean, okay, the reason why I mentioned the down payment is because from my perspective, we could have put down a much lower down payment and then we would have had that cash. And so taking out a loan feels like it's the equivalent of just having put down a lower down payment. And so it doesn't feel like I'm being like anti-RAM thing. I got you. OK, so you're you've kind of thought if we paint this the right way, we can feel good about taking out this debt in order to do this house yeah basically

because it just it would ultimately be the equivalent of just having put down why would you go into debt when you have a hundred grand are you saying go into debt because she wants the story yeah she wants to add the addition i think what i think you're doing i think you're willing to add more risk and stress to your life in order to get exactly what you wanted and i'm just telling you, listen, variables came into play. And I hate that for you. Like, I hate that this happened, but I truly do not think this is the only house out there for you. And I would not leverage my home and go into further debt in order to make this happen. And I get there shoulda, coulda,

wouldas. I would be pissed if I were you. I be so frustrated like man this is not the way this was supposed to go and i'm acknowledging that with you but the truth is you don't have the money to pay for the way you want this to work right now that's the truth and i really think that if you would let go of your like kung fu grip on this you might see that there's other options that serve you better. Well, so I'll tell you that right now, I really don't want to move for a completely non-financial reason. I just moved a family of nine from, we've lived in Jerusalem for 15 years, and I just moved a family of nine back to the States. And I'm trying to get my children used to the neighborhood and making friends and like, you know, they're in a foreign country. Even more reason to not do an HGTV level renovation on the house right now. And so here's what you can do on the insurance side.

I want to answer the initial question before we got sidetracked. I would go to ramsaysolutions.com slash home and get connected to an independent insurance broker. Because I've looked into your issue and there's lots of other companies that will cover you. It might be more expensive. You might need to look into an excess and surplus plan or an off-market insurance plan. There's also the Michigan Basic Property Insurance Association. Have your insurance broker apply for that, which should guarantee you some level of insurance. You can also look into the Fair Insurance, F-A-I-R, for options there.

All right, guys, that does it for this hour. If you want to keep watching and continue the show, head on into the Ramsey Network app. You can find it by Googling or going into the Apple Store and searching Ramsey Network. We've got Teresa coming up. Her husband doesn't believe that being debt-free is a possibility. Head into the app to see how that goes down. Hey, you're still here? What are you doing? You do know that the rest of today's show is playing right now over on the Ramsey Network app, right? All you got to do to finish the episode is search Ramsey Network in the App Store, Google Play Store, or just click the link in the show notes

to download the app for free. Yep, you heard me right, for free. Then right there on the home screen, you can watch the rest of today's show. Bada bing, bada boom. All right, I'm getting out of here. Enjoy. We'll see you on the app.