The Ramsey Show - Stop Messing Around & Follow the Plan That’s Proven To Work

Starting point is 00:00:00 Hey guys, this is Dave Ramsey from the Ramsey Show Podcast. If you're sick of money stress and tired of living paycheck to paycheck, we're here to help. Check out our latest episode streaming now on Amazon Music. Brought to you by the Every Dollar App. Start budgeting for free today. to you by the Every Dollar app. Start budgeting for free today. From the Ramsey Network, it's The Ramsey Show. I'm Jade Warshott. Next to me is your cohost, George Campbell.

Starting point is 00:00:32 We're chopping it up with you, taking your calls about your life and your money. So let's get right into it, George. You ready to do this? I'm pumped. All righty then. All right, let's go to the phone lines, man. We've got Abby, who's in Fort Worth, Texas. What's going on, Abby?

Starting point is 00:00:48 Hey guys, thanks for having me on today. So I have my husband and I are currently in the process of converting our chapter 13 bankruptcy into a chapter seven. And we just found out a couple weeks ago that our home has some pretty expensive foundation repairs that could be necessary that could cost around $25,000. And we don't want to go into any more debt for that. So we're wondering if we should sell our home and rent in the meantime in order to kind of restart our lives back after this bankruptcy. Man. So $25,000, have you gotten multiple quotes on this or is just one guy said this?

Starting point is 00:01:31 It's one, but half of the house has already had foundation repairs, so that half is already warrantied. So it's kind of a weird situation where we feel like we need to use that company in order to use the warranty on the half that hasn't been done. So that half hasn't been paid yet? No, it has.

Starting point is 00:01:50 It's like, was done, like, Texas Foundation is weird, whatever, half of the foundation only needed it at one point, so they only did the repairs back in like 20, like a long time ago. And now the other half has kind of shifted and need about the same repairs. But that part's not under warranty? They would, no it's not and they would use the warranty to do adjustments on the half that has. And that would lower the cost?

Starting point is 00:02:17 Is that what you're saying? I'm just asking, could there be another company out there, it's been a couple years I guess, could there be another company out there where you could get it done less and it still be under warranty once the work is done? Possibly. I haven't looked too much into it because I'm a little hesitant to do foundation repairs at all because in order to do that we have to move completely out of our house and then for about two weeks and then move back in. So even if

Starting point is 00:02:45 it was, you know, 10 or 15,000, it's still kind of as a put off to me. Well, let's talk about those numbers a little. Tell us what you're on the hook for after the bankruptcy that the bankruptcy didn't clear and tell us the numbers, what you own your house and what it's worth? Lauren Ruffin We have, we'll have two cars left after the bankruptcy. One is $18,000 and one is about $43,000 left and then just a student loan for about $3,000 and that will be all that's left after the bankruptcy. Robert Leonard So what was the bankruptcy clearing?

Starting point is 00:03:20 Lauren Ruffin Yeah. Lauren Ruffin We had, in 2019, I had a surgery that went bad and was out of work for about a year because I was quite a submit. And so, I was paying rent on credit cards. I mean, I did everything using your credit card and all of the really expensive medical bills and therapies that I was having to do. So now...

Starting point is 00:03:42 Because you said you did Chapter 13, which would be the payment plan. Yeah. Yeah. Yeah. So I did Chapter 13. We were keeping up with the payment plan as best we could, but my son got diagnosed with autism. He's two and a half, and so his therapy costs are through the roof, and so we couldn't even keep up with the Chapter 13 payment plan anymore.

Starting point is 00:04:02 And so after about a year and a half, we've done a conversion into Chapter 7. So are they going to take any of your assets to pay this off? Like, are they going to take your cars and sell them to try to make this happen or? No, because we are worth so little that like even our, like that we fall under all of the exemptions. I have all the homestead exemption and the wild card exemption. I think there's something in Texas, like nothing we own is.

Starting point is 00:04:32 So are you current on your payments on the cars and the student loans? Yes, yeah, I was behind on the student loans for quite a while and I just made a payment this month and caught it back up. Okay. Question. Well, with the car, one of them, my parents bought it for me because I wrecked my car

Starting point is 00:04:55 literally right after we had filed for Chapter 13. Which one? Was that the 18 or the 43? The 18. So, I couldn't even get a new car if I wanted to so my parent my lovely parents said let's let us do it for you. We'll pay cash and pay us. So you're paying them right now.

Starting point is 00:05:11 Kind of calling. Yep. So I paid them 400 a month when I came. Okay. The $18,000 car. What's it worth? About 17. It's not.

Starting point is 00:05:20 We're not underwater too much like if I private party. I looked and it was like Maybe 17 was on the higher end in the $43,000 one. What is that one worth? About 34. Okay, and What's the pain? Can you tell me what you're paying your parents every month? How much is that just to see? Mm-hmm I pay 400 for my car Alright, um Yeah, what you didn't tell us the house. What do you own it and what's it worth? Oh, I'm sorry.

Starting point is 00:05:49 That's okay. Yep. We have 294 left of our principal, and if we put it on the market today, we would list it for $345. With the repairs needed? That's as is? No, without. As is, as is. Okay. So you could still come out of this thing and make a little bit after fees? Just a little bit. Yeah, and like our hope was maybe if

Starting point is 00:06:15 we sell it and you know even if we get 10-15 after closing costs we put that into a high yield savings. We rent for two years build up a down payment and then You know, hopefully get into that debt free start immediately working on well, we wouldn't put in the high yield savings We really put it towards once you get settled in your new rental the rest would go towards debt technically, right? Because at this point we're working those baby steps in order. So What's your household income? Did you guys mention that? We make annual combined about 153. So not bad at all.

Starting point is 00:06:51 Like we bring in good monthly income. It just, it costs us so much. It feels like to live. Our mortgage right now is 3,100 a month. Okay. That's going to give you a lot of breathing room. My question for you is, if the, if, is there any way to roll back this bankruptcy and give you guys control back over this?

Starting point is 00:07:11 Because if you sell the house, that's going to give you a lot more money back in your pocket. I mean, I didn't ask you, what's it going to cost you to rent? We've been looking at places, because I told my husband, if we're moving and renting, I want to have as little as possible. So we're looking like at places that are max 2400. Okay good. But we do have two a two-year-old a one-year-old and one on the way that's coming in August. Well the good news is it has to be like it's well the thing is kids kids no it doesn't

Starting point is 00:07:39 kids are crazy but they don't take up a whole lot of space right they take up a lot of space with our energy and mental space but like physically they don't take up a whole lot of space, right? They take up a lot of space with our energy and mental space, but like physically, they don't take up a lot of space. So this is your season. I wanna encourage you, Abby, this is your season to do the most. And by doing the most, I mean, sacrifice to layers that you never thought you had in you.

Starting point is 00:07:59 This is the season where you live in that really small, really cramped apartment that you'll tell stories about, you know, 20 years from now, right? When they're grown and you'll say, when you guys were kids, small, really cramped apartment that you'll tell stories about 20 years from now, right? When they're grown and you'll say, when you guys were kids, we lived in this little apartment, because this is you taking your life back. And so you're gonna have to make decisions that are vastly different

Starting point is 00:08:15 than anything you've ever done before. The fact that you understand that you need to sell this house is so important. But look, if you sell this house and you don't gain the margin out of it monthly that you need to make this happen, it was all for naught, right? So make sure that you don't let your eyes get big and see an apartment that goes, oh, well, that would be a lot nicer because then you're taking the whole sting out of this punch. So make sure that you live in something

Starting point is 00:08:38 smaller and try to, if you don't have to go through with converting this bankruptcy, don't. If you can get out of it and say, you know what, we're taking control of this, I would do that immediately. I'd get current. And I'd also see if you can get rid of that $43,000 loan. Oh man, sell it! It's insane. Yeah. Find the amount you're underwater and get rid of that thing, even if you take out a loan to cover the difference. All right, Dave, you have some strong opinions. Possibly, yeah. I think so.

Starting point is 00:09:20 Okay, because you really prefer credit unions over big banks. Well, credit unions, for one thing, are non-profit, which means that the members, the customers, own the credit union. So any profits that the credit union makes goes back into customer pricing. So you get better interest rate on savings, cheaper checking, and so on, that kind of thing. And what's more important than that, though though is the fact that the customer is the owner changes the spirit on the credit union. So I find very few credit unions that aren't very customer-centric. Well, and I think we have found one that is incredible, and that's Fairwinds.

Starting point is 00:09:59 They are an incredible credit union that is really out with the heart to help the customer. They're the right kind of people with the right kind of values. And they've done a really, really good job with customer service. And the deals that they're offering, the Ramsey Tribe, is incredible. Yeah, absolutely. And I love that the things that we teach, they so line up with. And you're right, their customer service is unbelievable.

Starting point is 00:10:21 Winston and I just signed up and we got an account. And I'm not kidding, it took less than five minutes. It was so user friendly. The step-by-step approach was unbelievable. And then the next day my phone rings and it says Fairwinds on my phone. So I answered it and talked to someone there and they said, yeah, they give calls to every new customer.

Starting point is 00:10:38 And so again, they just really care about your experience and I so, so appreciate that. Plus anything that you can do at a traditional branch, you can do with them at fairwinds.org or on their app, and you'll have free access to over 33,000 ATMs. Hey, you guys know how much I hate banks in general, and so for me to do this is a big deal. Talk to our friends at Fairwinds,

Starting point is 00:11:01 and check out the combined checking and savings bundle that they created just for the Ramsey Tribe. You guys, it's incredible. Yeah, you guys, it's so easy to join Fair Winds no matter where you live. So go to fairwinds.org slash Ramsey. Our question of the day is brought to you by Wi-Refi. If you've got defaulted student loans that don't let you gain any momentum, I get it. No judgment, but also nobody's coming to bail you out. So take charge of your Wi-Fi. So take charge today at wireffy.com slash Ramsey. They offer

Starting point is 00:11:46 refinancing to a low fixed rate loan built just for you. That's the letter Y, R-E-F-Y dot com slash Ramsey. Remember it may not be available in all states. Today's question comes from Chelsea in New Hampshire. She says, I'm currently on baby step two. I recently followed George's advice and put half my emergency fund in a Laurel Road HYSA. It's a high-yield savings account. I didn't move at all because it made me a little nervous, but after seeing roughly $2.35 of interest deposited in the high-yield savings and the measly one cent of interest in my regular savings account, I really want to move it all over there.

Starting point is 00:12:21 My fear is that if I have an emergency, it's going to be difficult because there's no debit card attached to the account. Not having direct access kind of scares me. What should I do? Oh, it doesn't sound like you got much to cover an emergency at this point. I did the math, Jay. There's probably 800 bucks in this account

Starting point is 00:12:38 if it's making two bucks in interest a month. And so I would be more concerned. Now you're in baby step two, so here's a thousand. She's saying I put 500 over here, I got 500 over here, but I need direct access. Here's what I found when it comes to emergencies. Very rarely is it, I need cash within the next hour. If that's the case, you're probably getting scammed.

Starting point is 00:12:56 It's probably some kind of Western Union transfer thing that wants you to buy some gift cards. Most emergencies I found, there's time to transfer it out of the savings account to the checking account. And so you've got a little bit of time. You can take a day or two to get that money in there. And so it's really not that big of a deal. I found, I keep all of my money in a high yield savings.

Starting point is 00:13:15 I will say, you know, this might be, you and I might vary on this a little bit, because, you know, George, he's very level-headed, very cool, calm, and collected. I, on the other hand, tend to freak out. So I kept my, so when we were on baby step one George I kept the thousand dollars and like the same account that's connected to your check Yeah, just like a normal savings cuz I'm like, which that's fine

Starting point is 00:13:35 I'm not trying to earn interest on this like I don't care I just want to be able to get to it and then when we moved up to the three to six months Then I popped that in the HYSA because it's true I do feel like those bigger emergencies like your foundation or your roof or, I don't know, you need a new car or something like that. Yeah, then it's like, yeah, I can take some time. I'll take some days. And to your point, George, it gives you time to think rationally.

Starting point is 00:13:58 Is this the best decision? Have I spent time on this? And then by the time the funds transfer, you can feel like a financially responsible adult. Yeah, the bigger problem is when you have, the access is too easy and you go, whoops. Oh man. I just moved it from savings to checking and now it's gone. Yeah, that's a good point.

Starting point is 00:14:14 You kind of have to know your personality, right? I like a little boundary line there, but you can also do wire transfers and things like that. Yeah, that's true. If you need it a little quicker. That's true. Good question though, and I appreciate that. That is a good question. Wait, let's take this a step further. So that's true. Good question though. And I appreciate that. That is a good question.

Starting point is 00:14:25 Wait, let's take this a step further. So you could do, there's three options here. So let's say you bank with, you know, I'm making up a name, Wall Street Bank, right? And you've got your checking account at Wall Street Bank. And so you then put your savings account there to keep your thousand dollars at Wall Street Bank. Then there's an option of saying,

Starting point is 00:14:41 hey, I don't want it there, but, and I want to put it somewhere else. So you put it on an option of saying, hey, I don't want it there, but, and I want to put it somewhere else. So you put it on an online high yield savings account, but you feel like, hey, that's, that's kind of too far away. I have to do the transfer. You could do another checking account at another bank that's not online. So you do have the debit card, but it's not the kind of thing that whenever you pull up your, your bank balance, you just see it sitting there. Cause my thing is if I see it, then I'm tempted by it. But if it's on a whole other app, on a whole other bank,

Starting point is 00:15:11 I'm not tempted. Out of sight, out of mind. Out of sight, out of mind. This is just, this is the way my mind is working. When I have needed the money faster than, you know, the two business days or whatever it is, I just do a wire transfer. I call them, do a wire transfer,

Starting point is 00:15:21 it's there within 24 hours, you know. What was the last emergency you had? Oh my goodness, that I really needed the emergency fund? I can't remember, I only remember the ones when I was broke and didn't have it. But once you have the emergency fund, I started doing better maintenance, and I would just cash flow it out of our checking,

Starting point is 00:15:35 out of our budget, and switch around some line items. Isn't that funny how that happens? I don't remember the last big, where it was like a $5,000 emergency. We tended to be like a plumbing guy, the electrician, a few hundred bucks. Yeah, that's true. The last big one we had was, let me think,

Starting point is 00:15:50 our washer and dryer. Our washer, our washer went out. Oh boy. And of course I did what any American would do and say, well, if you gotta replace the washer, you gotta replace the dryer so they can match. That wasn't the smartest choice. Aesthetic, it's all about aesthetic.

Starting point is 00:16:04 It was all about aesthetic. I don't regret it but it might not have been the most savvy choice. Let's go to the phone lines. We've got Sarah in Seattle, Washington. What's up Sarah? Hey, how are you guys? We're doing good. How can we help? So I want to do my snowball out of order and I have a reason. So I am a full time working adult student. I have paid off several debts till now. My next four debts are student loans. Because I'm still a student, I don't have a payment due on them. So I wanted to jump to my if debt that would make it so that I can free up a payment and do my snowball, grow my snowball faster. Oh, I see.

Starting point is 00:16:47 So you're not doing the baby steps out of order, you're doing the debt snowball out of order. Yes. Okay. What's that debt that's outside of the snowball you wanna start on? So I had some legal issues with my ex-husband and I had to take a personal loan.

Starting point is 00:17:06 So if I get that payment for that, that's almost $1,000 a month that I'm having to pay that would contribute significantly to growing my snowball. Is that your only debt outside of the student loans? No. What else? So, pretty much all of my debt is related to the legal issues I had with my ex and then my house. How much is the personal loan? You said how much it is a month, but how much is it total?

Starting point is 00:17:36 That loan right now is about $8,500. Okay. And is that technically the next smallest after the student loans? Yeah. So, my four student loans range from 5,500 to about 8,000. So they're right in order. It's just, they would come before the personal loan. The only question I had in this is,

Starting point is 00:17:58 and this is kind of getting in the nitty gritty, but I'd be wondering, okay, are these loans subsidized? Are they unsubsidized? Do they have the ability to gain interest even though I'm still in school? Do you know the answer to that? Yes, three are subsidized, or not subsidized. The smallest one is subsidized. So only one is not gaining interest.

Starting point is 00:18:17 Okay. My employer is paying for my tuition now. And before this legal issue with my, I was half flowing school. I see. I see. I mean, knowing that my loans are active, even if I'm not, would still make me want to work this in order. But I understand the temptation that you're saying of getting like the thousand dollars back because you're spending that. So that's what my brain would do. My brain would be like, listen, student loans are a major problem. I want to knock these things out as soon as I can,

Starting point is 00:18:46 how amazing to have paid them off before you've even graduated. That's kinda where my mind goes, George, what about you? Well, I wanna zoom out a little bit and go, what is your total debt amount right now? Excluding the house? Yes. About 78,000.

Starting point is 00:19:02 Okay, and what is your income? About 135. While a full-time student? Yeah. Wow, you're amazing. I'm not a full-time student. I work full-time and I'm doing school online. Okay. Well, what's the other debt? Because you named about 30,000 in student loans,

Starting point is 00:19:20 I feel like, give or take. What's the other debt? In student loans and personal loans. So literally it is all related to- What is it? So I've got the 85 I said, another personal loan for 14, credit card for about 27, I owe my mom some money, and then my house. How much do you owe your mom?

Starting point is 00:19:47 About 17. Okay. That's some for sure. Yeah. It was a two-year legal battle. So. In the, in here's, this is going to sound nitpicky. Okay.

Starting point is 00:20:01 And there's method to my way of thinking of this and George might have another take on it. But you know, my husband and I paid off $460,000 of debt, 280,000 of it was student loans. And it's it's just daunting to look at a task like that. And I'm sure you feel the same way, Sarah. But I found that there's something about if I have found a system in a solution, if I can build the muscle of sticking to the plan every time, I stick to the plan, I stick to the plan, I stick to the plan, it takes the guess out of it and it causes me to be more consistent long term than kind of jumping around and picking and choosing because this is, you're going to hit peaks and valleys on this. There's

Starting point is 00:20:39 going to be times where you're ready to run through a wall because you're so like geared up to do this and then there's going to be when you want to quit but if you build up the muscle of I stick to the plan I do I stick to the plan then there's something about that that really helps and so in this case I would stick to the plan even though that thousand dollars is waiting there build the muscle of doing the plan the right way so that when the rubber meets the road you'll do the plan the right way I love that you're gonna free up a lot of money clean up those student loans too those Those payments will also get free.

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Starting point is 00:23:20 if you're listening on YouTube or podcast. Love that. Let's go to the phone lines. Eric in Seattle, Washington. Eric, what's up? Hi, this is Eric. How do you do? How do you do?

Starting point is 00:23:31 We do good. I'm good. Thank you. Do you have any questions for me before I ask my question? Should I? I've never done a pre-questionnaire. I think you should start this one out for us, Eric. Okay. Well, here's the story. I have two children. I have a son, 37, and a daughter, 27. And

Starting point is 00:23:58 I have, you know, for a few years, I've had a dream of becoming wealthy and being able to afford to buy a home for my children. And that is starting to look like a reality. But I was thinking about it, like, is this something I really want to do? And I realized that by giving them a home, I'm not really giving them anything. I'm taking away the thrill that they would have of achieving this milestone on their own. So I abandoned the home. I mean, are you picking the home? Are you picking the home or are you just giving them the home? Are you picking the home or are you just giving them the cash? I was thinking I would help them pick a home, but I just, I don't think it's a good idea.

Starting point is 00:24:55 I think they, it'd be more satisfaction if they could do it themselves. Maybe ask them. So I came up with the idea of putting an incentive plan together for them to start saving up for a down payment. Is this a home together? Can you clarify? Are you talking about buying like a big family home or are you talking about buying individual homes for each of them? I'm talking about buying individual homes for each of them? I was talking about buying individual homes for them.

Starting point is 00:25:27 Oh, wow. How much money do you have for this purpose? Not that much right now, but I own two software companies that are both doing well. Okay, so are you worth multiple millions of dollars? So here's what I would do. Let's just make this cut and dry. If you're wondering if it would steal their joy or not, just ask them. Say, guys, here's what I would do. Let's just make this cut and dry. If you're wondering if it would steal their joy or not, just ask them.

Starting point is 00:25:47 Say, guys, here's what I was thinking of doing. I was thinking of saving up some money to buy you guys a house, but I don't want to steal your joy out of this. Would you want me to help you pick it out or would you prefer to just be gifted this cash? Would you prefer to help me with for me to just help you with the down payment. I think if we have questions in these situations, George, the best thing to do is just ask. And I, listen, I'll tell you, I for one would have loved if somebody was like, let me give you this special gift. Ask any Gen Z millennial who's struggling to wonder if they'll ever afford a home. And they went, I don't want to steal your joy. Oh, come on. I think that I'll say, no, I'll take the house. I'll be very joyful. Ultimate joy. Oh yeah. The question is, how are they doing financially? Right. Because if they're question is, how are they doing financially? Right.

Starting point is 00:26:26 Because if they're already struggling, broke, and they can't take care of this home, it could be a burden instead of a blessing. So there's a lot more we need to dig into to understand, are they responsible financially already? What is the cause? What's causing them to not be able to afford a home right now? And is this home going to cause some level of entitlement?

Starting point is 00:26:44 There's a lot to dig into, but it starts with a conversation with them. Yeah, that's right. So if your kids are, like George said, if they're entitled, if they're doing something that's like a failure to launch and they're struggling, yeah, monetary gifts probably aren't the right thing. Or if there's a lot of misbehavior and they're just going into credit card debt, just buy stuff they can't afford, I wouldn't just throw a home at that. No, but if they're great citizens and they have great jobs and they're managing their

Starting point is 00:27:07 money well, that is a wonderful gift. And I think something like that, especially younger in life like this, he said they're 37 and 27, that truly has the ability to set somebody up for life, like truly. Can you imagine? I mean, well, George, you're the exception. You bought your house early and you paid it off pretty fast. Yeah, but I've thought about this exact question. What I want to buy my daughter, my daughter's not even two yet. I'm like, what I want to save up, because who knows what a home's going to cost when she's 25. Yeah.

Starting point is 00:27:34 Is it going to be a million dollars? That's true. And so I kind of want to be ready, but I also want to make sure she has some skin in the game. Yeah. And that this doesn't turn into an entitled Brad who goes well daddy said he's gonna buy me a house I don't need to try in life. Well, that's always the fear as a parent. That's true Like Sam and I we put aside for our kids We have two of them there five and seven right now and in my mind

Starting point is 00:27:53 I'm thinking yeah Like I don't know when that day is gonna come for them with it there It's if it's when they're in their 20s or 30s or 40s But the thought is yeah We'd like to be able to give them if if not the whole thing, like at least the down payment. Cause Sam's mom helped us quite a bit when we bought our first house and it was such a blessing. Like it was such a blessing.

Starting point is 00:28:11 Did you feel robbed? No, I was like, oh, thank the Lord for Nina Morshaw. Like she is a saint. Like that's, it's such a gift. It's grace and mercy right there. Yeah, man, I know that's. So I think it really depends on the person, but if the kids are working hard,

Starting point is 00:28:25 they have a great work ethic, they're debt free, they have an emergency fund, and they're just plugging away at this down payment and it's tough because of where they live, then yeah, I think it's a really awesome thing to do. It's kind of leave the legacy while you're alive, instead of when you're in the grave and you throw a bunch of money at them.

Starting point is 00:28:40 Because by then they're probably all right anyway. Exactly. So I like that mentality of sort of leaving the inheritance while you're still around to watch them enjoy it and help them grow. I think we can help Chris and Moses Lake real quick before we go to break. What's going on, Chris? Hey, I got a quick question for you. So me and my wife were trying to get out of debt as fast as we can. We've got a pretty big mortgage that we took out two

Starting point is 00:29:05 years ago on the house. So we, it was 637,000 for the house. We put 20% down. So we had, we're at 508,000. We've been paying up for two years. Our interest rates is 5.99. Payments are 3,446 a month, but I've been making additional payments on it because I don't wanna be in it forever. So right now, we've been for a year and a half, we've been doing about 5,000 to 5,200 on it. And this is your only debt? This is my only debt.

Starting point is 00:29:40 I have credit card debt. I own all my houses, I own all my cars. I don't use credit cards. I only use them for like a debit card basically. It's a credit card debt. I went on my house, I mean, all my cars. I don't have, don't use credit cards. I only use them for like a debit card basically. It's a credit card, but I pretend I guess it's a debit card. We just paid off. I'm just going to glaze, I'm going to glaze over that for now and pretend like you didn't say that so we can answer your next real question. What's the question you have today? So my thing is, is me and my wife, we're working on it real hard to pay it down. We're looking at where on track to pay this off in 11 years. It's a 30-year loan, but if we keep paying the way we are, we should be done in 11 years. Great.

Starting point is 00:30:12 I've also been putting money aside saving because I believe that if you have a savings on the side, more fee doesn't show up in your life as long as you have a good savings on the side. Well, we would teach for you to have three to six months of expenses, and then after that you're in baby steps four, five, and six where you're investing, saving for the kids' college, and putting extra payments towards the house. So that's all good. How can we help you today?

Starting point is 00:30:33 So my thing is, it's something my wife and I have been doing that we've been putting away. So in savings, I've got $95K, and I've got it in a high savings interest. It's at 3.7%, so we're making some off of it. But my thing is, is I'm trying to set, my wife is like, do we've been kind of waiting to hoping that the interest rates would go down, but I don't think they're going to. We were thinking about taking a big lump sum right now. And from my savings and putting a big down payment on, you know, to knock the loan down

Starting point is 00:31:02 even more. Yeah. Or do I just stay the course that we're doing because we are knocking it down pretty quick? I wouldn't use your emergency fund if that's what you're talking about. If the 95,000 is your three to six months of expenses, I would leave that there

Starting point is 00:31:16 because you need that there as a cushion. I'm guessing that's more than that. So anything above six months, I would take that as a lump sum and throw it at the mortgage because the less principal you pay, or the more you throw at the principal, the less interest you'll pay the following month, which will save you money in the long run. So I would not wait for interest rates to do anything.

Starting point is 00:31:32 I would just be plugging away at that mortgage every single month like you're doing consistently and knock that thing out and try to even beat your goal. Do it in 10 years or less. So we found the average millionaire does in our study, 10.2 years. Ooh, that's so so that's lightning fast. I imagine that when a person who's not used to hearing our show hears that they're like, George, you're lying. It's the data.

Starting point is 00:31:53 Oh, I would have made 10.2 is too random to make up. That's just what the data said from 10,000 millionaires. And it wasn't necessarily their first home. That's right. That is true. Could have been their second home. They rolled equity into it. But 10.2 years, they got that mortgage knocked out.

Starting point is 00:32:07 They didn't hang on to it for interest deduction or anything crazy like that. Yes. Because they were going to invest it and make the spread. I've heard that one before, Jade. Don't get me started. I won't get you started until next segment. There's a time in your life and at the baby steps for renting, but you don't want to do it forever because when you rent, you're still paying for a mortgage just somebody else's. Plus, rent means instability in your budget because it always goes up, never down.

Starting point is 00:32:52 So when you're ready to buy, make sure you work with a mortgage partner you can rely on. Churchill Mortgage. Churchill is Ramsey Trusted to help you make the move from renting to home ownership wisely. Churchill understands that when you buy a home the Ramsey way, your mortgage payment will be a consistent, manageable part of your monthly budget. Plus, when your home is paid off, that was your largest expense.

Starting point is 00:33:15 Now, it's extra money in your pocket and an asset towards turning you into a Baby Steps millionaire. Get started on the American dream of home ownership today at ChurchillMortgage.com. That's ChurchillMortgage.com. into a baby steps millionaire. Get started on the American dream of home ownership today at ChurchillMortgage.com. That's ChurchillMortgage.com. ["Dreams of Home Ownership"] All right, so George, it's time for one of my favorite segments on the Ramsey show, Talk Nerdy to Me.

Starting point is 00:33:52 All right, let's do this. What is our topic today for Talk Nerdy to Me? Okay, we're talking about what the heck is a mutual fund? Wouldn't you like to know? I would. Well, Jay knows, but for the benefit of the group, a lot of people go, okay, I know what Dave talks about that a lot, the go, okay, I know what Dave talks about that a lot, the good growth stock mutual funds, right?

Starting point is 00:34:08 That's a classic Dave line, but what is actually going on there? So let's talk about this. Mutual funds are investment vehicles that pool money from multiple investors, AKA you. And me. And Jade, and me, to purchase a diversified portfolio of stocks, bonds, or other securities.

Starting point is 00:34:24 So how do they work? So you're buying shares of a collective portfolio. Ooh, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait tiny pieces of ownership. Ah. So mutual fund, let's say there's 90 to 200 companies within this one fund. And so when you buy a piece of the fund, you're really buying a piece of these 200 companies. Amazing. Got that? Yeah. So investors, we all benefit from this diversification,

Starting point is 00:34:58 because we all know, oh my gosh, Elon burped and Tesla stock went down 40%. Right. Well, we don't have to worry about that when there's 199 other stocks from other companies to balance it out. So when you say that you could have a fund that's got everything from Procter and Gamble

Starting point is 00:35:13 to Pfizer to Coca-Cola to Apple, all of that, all of those different stocks in one fund. Exactly. So the benefits here, instant diversification, you have lower costs because trading single stocks can get expensive. Mutual funds make it really affordable to invest in a range of stocks

Starting point is 00:35:31 without all these transaction fees because you're not doing these little nickel and diming transactions. And with an actively managed mutual fund, which is a lot of the time what we're talking about on this show, there's a team of investment experts that have come together to decide which stock should go in here.

Starting point is 00:35:46 And they're actively going, hey, should this one move out? Should this one move in? And what are they trying to do when they do that? Well, they're trying to get the best return for us, the investors. So that's the goal. So when you hear about a few types of mutual funds,

Starting point is 00:35:59 for example, a good growth stock funds. So what that means is these are equities to their stocks. These are not bonds, they're meant to grow. So we say good growth stock fund. So what that means is these are equities to their stocks. These are not bonds. They're meant to grow. So we say good growth stock. These are companies that we expect to see some growth from. When you hear the word index fund, well, that's really just a type of mutual fund.

Starting point is 00:36:16 And what people are generally referring to is a passively managed mutual fund. So nobody's deciding what's in the fund. It's just taking the top 500 companies. So an S&P 500 index fund is just going to take the top 500 companies and buy those stocks. That's right. And you could have different indexes. Yes. So we talk about the S&P 500 a lot. That's kind of like the holy grail of indexes that people follow. But you might

Starting point is 00:36:40 have heard of others like NASDAQ, Dow Jones. See the ticker symbols up. So they're just different pools of companies. Some are tech focused, some are other healthcare focused. And then you've got bond funds and these are really fixed income. These are for people who don't like the volatility of the market, they just want something stable. So these invest in corporate or government bonds.

Starting point is 00:37:00 There's regular interest income, lower volatility. So some people like that. This is just getting nerdier and nerdier. I'm liking it. Yeah, I'm trying to put it on the bottom shelf so that in five minutes we can all go, great, we learned it, we can move on. And then lastly, a money market fund.

Starting point is 00:37:14 So you hear about that? It's almost like a high-yield savings account where it's just sort of sitting short-term debt instruments, but it's high liquidity, meaning you can take that money out and you're not gonna worry that it's gonna go up and down. It's just gonna sort of sit there making a little bit of interest like a savings account. Love that.

Starting point is 00:37:30 So George, how do mutual funds make money? I mean, you told us what they are, but technically how are they making money? Are we making money every time the company makes money or how does that work? Yeah, so as the company stock share value goes up, we make money. And sometimes that's paid out in a dividend.

Starting point is 00:37:45 So think of that like profit sharing. The company made some profit. They're gonna reward the shareholders for holding onto these stocks for the long term by giving them a little bit of money. Love that. Or it can be reinvested. And so that's what we do in our retirement accounts.

Starting point is 00:37:59 We're not getting dividends off of that. We're just reinvesting the growth. That's right. And that's what creates this amazing compound growth. And the other way is capital gains. So when you sell it for a higher price, if I buy Apple stock at $100 and five years later, it's $150, well, I made 50 bucks per share.

Starting point is 00:38:13 That's another way I make money if I sell that. And now you don't want to do that in a retirement account, but unless you're of age to retire. That's true. But if you're under 60, you want to just hang on. But if it's in a taxable brokerage account, meaning it's non-retirement, you would sell and you would have capital gains tax,

Starting point is 00:38:30 either short term or long term, depending if you've held it for a year or longer. So George, I hear Dave and you guys and myself all the time, we talk about the four different types. Can you go through those so that people know once and for all what we're talking about? Yes. So you'll hear Dave say, growth and income, growth, aggressive growth, and international. Here's what you might see that listed as if you're looking at your 401k for example.

Starting point is 00:38:52 You might see it listed as large cap. That would be your growth and income. These are large, boring, stable companies like your Home Depots. They're out there. They're not going to be skyrocketing. They're not like innovating in crazy ways, But they're stable. Consistently, yeah. You need these as the foundation. Then you have the medium cap,

Starting point is 00:39:08 which is gonna be your growth funds. So these are medium to large companies. Then you have small cap. These would be considered your aggressive growth companies, like small tech startups. And those are gonna be the wild child. It's gonna go way up, way low. That's right.

Starting point is 00:39:22 And then finally, international. So you wanna have this as a hedge. Think like BMW, LG, Samsung. These are international companies. And what we found, Jade, when the US market just took a dip like it did recently, what happened? International funds went up.

Starting point is 00:39:35 So they balanced each other out. So it balanced out. And people have said, well, Dave, international funds have been underperforming the US stock market for a long time. Should we switch that up? And we just saw a great example of why Dave keeps international as a quarter.

Starting point is 00:39:47 So when you talk about investing in your retirement account, we recommend just a quarter in each, one fourth. So 25% in that large cap, 25% medium, 25% small, 25% international. And if you just choose those four funds in your 401k that have a long track record and have a solid return, you're gonna be okay. It's as simple as that.

Starting point is 00:40:06 You don't need to over complicate it. I love that. I feel like you made it very clear for us. I tried and we do have, there's some great next steps you can take and number one is connecting with a SmartVestor Pro. So these are financial advisors that can teach you all of this stuff in depth

Starting point is 00:40:20 so that you understand what you're doing. They're not making decisions for you. The ball's in your court, but you need to know what's going on with your investment. So you can reach out, connect with the SmartVestor Pro, ramzesolutions.com slash SmartVestor, or click the link in the description if you're listening on YouTube or podcast.

Starting point is 00:40:36 Very, very good. I like it. Painless. This is very, very helpful stuff. All right, George. I'm the Miss Rachel of mutual funds. You know, I try to just keep the cookies on the bottom shelf. You said the Miss Rachel? Yeah, that's for kids. Oh, I was gonna say the Miss Rachel of mutual funds. You know, I try to just keep the cookies on the bottom shelf. You said the Miss Rachel?

Starting point is 00:40:46 Yeah, that's for kids. Oh, I was gonna say. You're beyond that phase. I'm in the Miss Rachel phase right now. Oh, so this is like cocoa melon, that kind of deal got you. All right, George, let's take a social question. Let's do it.

Starting point is 00:40:56 All right, so Jane from Instagram asks, does Dave or George ever recommend not paying off your home if you are retired? I gotta think about that. That's like a little riddle here. If Jane retires at 67 and Dan retires at 68, who will pay? It's like a word problem. Would we ever recommend not paying off your home if you're retired? I mean, you need to have the money. So if you're retired and you don't have an all you have is enough income to keep up. Well, you don't have the extra money to throw at the mortgage.

Starting point is 00:41:28 But if you're able to knock it out and then still have the rest of your retirement, now we don't know, it'd be great if we know when you were going to pass from this earth, that would really help us with our calculations. Also true. But we don't. So if you're able to pay it off and able to throw extra at the principal. Why not? I've never heard Dave say, no, it's a terrible idea.

Starting point is 00:41:45 Keep the mortgage around. I agree. I've never heard it either. All right. We've got another one. Kendall from TikTok. I like this one. She asks, what do you think is the hardest baby step? Oh, that's a tough one. What do you think, Jade? You went through a slog with baby step two.

Starting point is 00:42:02 I do think that baby step three is a sleeper. Like I think people sleep on it thinking, oh, it's going to be easy. I'll finally be paying myself. And I felt that way. And then once I got in it, I felt tried. I was like, you guys told us that this was going to get easier.

Starting point is 00:42:16 And for us, it felt, and I don't want to say harder, because Baby Step 2 is a, that's a struggle. But Baby Step 3, man, people sleep on it. Well, it's almost like you run the marathon and at the end they go, okay, the 5K starts now and you're like, what, can I just get a break? Exactly, exactly. I gotta keep doing this?

Starting point is 00:42:33 Exactly, I mean, what did you think? Oh man, I don't know, I think hardest is an interesting term because baby step two, while it is really difficult, it's also kind of exhilarating. Yeah, it's gratifying, yeah. It's like you get angry at the debt, it's also kind of exhilarating. Yeah, it's gratifying. Yeah, you get angry at the debt and it's kind of this us versus them. And you feel it, like you feel the results.

Starting point is 00:42:50 You see the progress, yeah. But you're right, the Baby Step 3 part where you're not quite building for the future but you're done paying for the past, it's just this purgatory in the Baby Steps. So for that, I'm gonna go Baby Step 3 today. Don't hold me to it. Wow, we both said Baby Step 3.

Starting point is 00:43:03 My mind could change. Wow, okay. Will Rudder is saying Baby step three. My mind could change. Wow. Okay. Will Rudder is saying baby step two. A lot of folks are saying two. Okay. Oh, two. Oh, dang. I guess we were wrong. Baby step two is difficult. Like nobody like, no, don't put shade on us for that. We're saying it is difficult. Hey, that does it for this hour. I'm not going to talk about it anymore. You'll have to hang on and check us out in the next episode. Statistics show that half of Americans don't have enough life insurance, or they don't have any at all. I don't understand this, John. Why don't people wanna take care of their family?

Starting point is 00:43:47 They think they're gonna die or something? Well, I used to be one of those guys, I didn't even think about it. And one of my buddies said, hey, the only reason to not have life insurance is if you hate your wife and kids. And I immediately went and got term life insurance. That's a gut punch.

Starting point is 00:44:00 And oh, you're telling me, and for decades, Dave, I've sat across people who've lost a spouse, they've lost somebody important to them. Me too. And They don't know what to do next. I mean, you're gonna have a crisis here And you know, you got two options while you're sitting and talking to a young widow She's concerned about how she's gonna invest all this money properly and not mess this up or she's concerned how she's gonna eat tomorrow That's exactly the two options and Take care of your dad gum family, man. Term life insurance can replace income, pay off debts, cover funeral expenses, so your family can actually have the opportunity to just be sad, to just miss you.

Starting point is 00:44:33 That's exactly what it's supposed to be. It's saying I love you to your family. Term life insurance. Jeff Zander and the team at Zander Insurance makes it easy and affordable. I've used them personally for 25 years. They're the only people I trust. Go to zander.com or call 800-356-4282. I hate to admit this but I don't always eat right. I know I need to eat more fruits and veggies but sometimes I just have to pound some chips because they

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Starting point is 00:46:00 Thanks for hanging out with us on the Ramsey show, I'm Jade Warshaw George camel It's always good to be here with you. We're taking calls about life and money George Campbell. It's always good to be here with you. We're taking calls about life and money. It's a free call in show. If you didn't know, you can call in triple eight eight two five five two two five is how you get your call onto this show and onto the board. And Alex did exactly that. He's in Tampa, Florida. So let's go to Alex. Alex, what's going on, man? Hey guys, thanks for taking our call today. You're welcome. How can we help? Sure. So I want to know if I should sell my car or not. So, I'm on Baby Step 2 and I'm doing the debt snowball right now. I'm working on a credit card that's about $3,000

Starting point is 00:46:34 and then paying the minimum payments on my car. And I'm not sure if I should sell it or not. What's the car worth and what do you owe? Yeah, so I owe about $11K on it and I did the Kelley Blue Book. It's between $6K and $8K, so $8K private. Okay, and what do you make a year? My take home is about $50K, $41K a month. Okay, now there's no reason to sell this car. Okay. Number one, you're underwater on it.

Starting point is 00:47:06 And number two, you're going to turn around and buy a six to eight thousand dollar car. So it's not going to do you much good. Yeah, that's what I was battling with. I wasn't sure because I'd heard in other different segments, like to get rid of it and take, you know, the little bit of hit. But I wanted to call because... Well, if you owed like $30,000 and you're making 50,000 a year that's way too much car and we'd say hey sell it for that reason and even if you have to take a little hit but you got 14 grand total in debt or is there more?

Starting point is 00:47:38 No no 14 total. Okay and you make 50k a year so you're gonna be done with this thing in 12 months or less. Yep, that's the game plan. Right? Are you throwing at least a thousand toward these? Yeah, I put about 1100 into my debt per month. Perfect. Yeah, you're right on track, man.

Starting point is 00:47:57 Knock it out and try to get your income up. Maybe get a side hustle, but the car is not the main problem and it's not going to be the solution to sell it. So I would just keep on going with the debt snowball, knock out that credit card debt, and then really hunker down on that car loan, get rid of it, and never do it again. Good question. Thanks for the call. Yeah, George, you're so right. Sometimes it's like once you've done all you can do, you just make those payments. There's nothing else to do except just make the payments until it's done.

Starting point is 00:48:21 And it's probably not that big of a payment if he owes $11K on it. I don't know where it started, but it sounds like the car is a reasonable purchase outside of him using debt to cover it. Agree. All right, St. Louis, Missouri. We've got Blake on the line. Blake, what's up?

Starting point is 00:48:37 Hey there. I was just calling because about a month ago, I finished Baby Step 2. And I've been doing it for six years and I'm just like not feeling the excitement that I see other people doing it. I still feel like a gazelle hunting by a lion. Why? Tell us more. I don't, I that's the thing is I just can't figure it out, you know. Why did you start this in the first place? Why did you start this whole thing six years ago in the first place?

Starting point is 00:49:10 What was going on in your life where you decided I'm done? I had a business that got destroyed by a tornado, ripped the roof off my house. Whoa. And blew both of my business buildings to the ground. And I ended up in severe debt. And I was about $120,000 in the hole and opened up my fridge and I had no food in there. And I had about $1.50 to my name and I just fell on the ground crying. And I was like, I got to change something. So I got a second and third job and hustled my way to where I am now. Wow was this the big tornado that we heard about on the news years ago? Yep. The Joplin one? Yep. Wow. Wow. That's crazy.

Starting point is 00:49:55 So how much- That context helps. Yeah how much debt was this total that you got that you paid off? Today it's about 125, 126. Wow. So you started your whole life over essentially. Yes. So my guess is, you know, I think that when we do these things, as much as we do them out of a must, like I must do this, this is the right thing to do. It's my only choice. Like when your back is up against the wall, a lot of times you're like, this is my only choice. But if you also don't have that clear vision for the future kind of like the the sunny side of it, the why then sometimes we can

Starting point is 00:50:34 accomplish those things. It's like, okay, I did what I was supposed to do. I did what I had to do. But what was it all for and it sounds like you're kind of feeling that, right? Yeah. You know, I, um, you know, I know Dave normally says like, Hey, go, you know, talk to a pastor or something like that. Unfortunately my pastor is just left the church two months ago. I'm kind of, you know, I don't really have family relationships. I don't.

Starting point is 00:51:02 Are you feeling a little depressed? Like mentorship? Are you just feeling a little down and depressed? Is that what it is? You're just kind of down on the dumps right now? Yeah, well, you know, everything in my life is going very well, but I just like don't feel excited the way I think I should be. Yeah, I mean, listen, Dr. John is not here, but sometimes you just kind of go through those periods of melancholy. And I don't know, it sounds like you linked it to the debt payoff. Maybe it has nothing to do with that. But I do know, like when you go through those seasons where the things that are

Starting point is 00:51:33 supposed to kind of light you up, you're just kind of numb and you're just kind of melancholy. Yeah, that's a time where I would reach out and talk to somebody. And if your pastor is not available, you know, I get on BetterHelp or I'd get on, you know, get on with a counselor or somebody who can help me just talk through it and kind of give me some tools to work through it every day. I think you're stuck still in this fight or flight from all the trauma that you experienced and just paying off the debt you thought would solve everything. It solved something. It got rid of the money stress, but it didn't just magically give you

Starting point is 00:52:04 this dream life either. And so I think there's a lot more to now explore. Now that you got the money out of the way, now we can focus on career and relationships and all the other aspects that make life worth living. It's just when you're broke, it's hard to focus on those things. And what George just said is a big deal.

Starting point is 00:52:21 What you experienced, and I know this is a buzzword in society, but here I really think that it applies. Dude, you experienced a trauma. Like that's wild to have a tornado of that impact and that size and magnitude, not only to experience that like in your emotions and that be in your neck of the woods, but for it to actually destroy your business and your home. Like that is a big deal. And that is not something that is just gonna go away because the storm passed.

Starting point is 00:52:49 You're gonna have to unpack that with some people because the truth is a lot was in danger. Your life was probably in danger. More so than, you know, it wasn't just a financial thing to George's point. And baby step two kept you so busy, you didn't have to really deal with all of that. You sort of just probably numbed from it

Starting point is 00:53:02 and went, I'm just gonna work hard and get rid of this debt. So you know what to do, Blake. It's just gonna take a little bit of work to get there, but I'm rooting for you, man. Ooh, that's a tough one. Just know it's gonna get better from here. It is. You solve for peace.

Starting point is 00:53:14 Do you remember seeing that on the news when that came through? Yeah. I didn't put two and two together. I think there was a Netflix documentary about it now. I think I saw that. That would make sense. The twister or the something like that. I mean, it feels like now there's big events

Starting point is 00:53:26 happening all the time, but that was a huge one. It was a big one. Okay, I'm gonna ask another quick question. These are fun. Okay. Wondering what banks have the best interest for your money. I'm gonna read this, but I don't know what they mean by it. Wondering what banks have the best interest for your money.

Starting point is 00:53:44 Is a redneck bank a good one? What does that mean? That's a real place. I've never heard of this. I just Googled it. But their tagline is where banking's funner. That's pretty funny. But no, wondering what banks have the best interest.

Starting point is 00:53:58 There's a bajillion banks. The one that I personally use is called Laurel Road for high yield savings. And the rates change all the time. so I don't rate chase anymore. They've stayed very competitive. So Laurel Road is the one I personally use. Jade probably uses a different one. I use Marcus by Goldman Sachs because a good friend told me about it.

Starting point is 00:54:16 And I also use Ally from time to time. Yeah, I wouldn't rate chase. They're all going to be solid. What you want to make sure is FDIC insurance, no minimum balance required to open an account and no monthly maintenance fees. Yeah. A technology has changed a lot in the last 30 years. Now the hot topic is AI, and I understand that it might seem intimidating.

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Starting point is 00:55:33 including Ramsey Solutions, that rely on NetSuite to help tackle some of their biggest challenges. And right now you can download the CFO's guide to AI and machine learning at netsuite.com slash Ramsey. That's free at netsuite.com slash Ramsey. People ask me all the time, George, what's your number one money saving hack? I'm glad you asked.

Starting point is 00:55:57 Nothing makes me happier than helping another frugal friend. So here's the hack. Get on a budget. Seriously, how are you supposed to save money if you don't know how much you're spending in the first place? And that's what makes the Every Dollar Budgeting app a game changer. With Every Dollar, you'll get a clear picture

Starting point is 00:56:12 of your spending. And from there, it's easy to see where you can get more intentional, cut back, and save more money. So how much money are we talking here? Well, the average Every Dollar budgeter frees up $395 in their first budget. That's the hack.

Starting point is 00:56:26 And if you ask me, I think you're way above average and you'll save even more. So what are you doing still listening to me? Go download the Every Dollar app for free and start saving more money right now. All right, you're listening to the Ramsey Show. Let's go directly to the phone lines where we've got Liz in San Diego, California. Liz, what's up? Hey, so my dad and mom bought a house in 2019 that I'm currently living in with my five children and we want and I want to buy it from them. Okay, but um, there's a problem.

Starting point is 00:57:18 But I don't know if I can necessarily afford it just with everything going on with economy and my personal finances. And I feel like right now it's a little bit of a, like I need to, the timeline has been rushed because my mom passed away and my dad's going to get remarried soon. And so I just feel like my financial security with my kids is up in the air a little bit. Okay. Were the parents living there with you or you were living there alone with the kids? I was living there alone. It was a, it's a second, it's considered a second home.

Starting point is 00:57:56 And so your dad's getting married to a new wife. So I'm trying to understand why that's connected to rushing you out of the house. Just because he's been, because he just retired as well. And so I think that he wants to kind of gain more financial freedom from us, like, and get rid of- From you? Well, you know what I mean, like not have a- Does that house have a mortgage on it? It does.

Starting point is 00:58:24 They bought the house for $510. And it was in the middle of my divorce, so we didn't want to put my name on it, so it wasn't going to be tied at all to any of the proceedings. And then- What's left on the mortgage? He, I am pretty, he we agreed that I would buy it for the price so it doesn't Really matter 510 are you assume?

Starting point is 00:58:54 Are you trying to assume the old mortgage or you're just like trying to start from scratch with your own? To give him all that I guess that's the thing is I don't know I don't know which route because we've never done this before What would be the best for both of us going into this? Like should I but I don't think I would qualify Well, that's that's the hard part of this So it sounds like you're wanting it sounds like you're wanting to keep the house more so for stability of your family because your family's Been living here since 2019

Starting point is 00:59:24 Right, and it's just a rental. It's not like the house you grew up in or anything like that, right? Right. Yeah. But it's become my kids home. Sure. You know, my question is, I mean, here's the thing. If you buy this house and you can't afford it, you will not be able to keep it long term and you will end up moving because you won't be able to afford it. So I think it's really important to run those numbers out and the way we teach it here, which is really the best way to buy a house is when you run those numbers out Liz, if it's going to be any more than 25% of your take home pay, you can't afford it. And if it's creeping up over 35%, especially like that is just a rope tightening around

Starting point is 01:00:06 you. Like it's going to make you feel completely bound up. You won't have the money to do any of the things that you need to do really to further your life. You won't have the money to invest. You won't have the money to pay for your help, pay for your kids college, that sort of thing. So that's why we teach it that way. Have you done any rough estimate on this to see what that might look like? No

Starting point is 01:00:25 because I I'm not sure if I should try and get my own conventional and I don't think I would even I don't know if I was qualified or if there's some kind of a way for me to assume. Well assumption is even harder because you now you're dealing with the equity that's already there and you're kind of on the hook with that so I I can't see that being the route, especially if you already feel like you can't afford this. I would be thinking, yeah, run it out as a conventional loan and see where you match up. What's your income? Um, I so growth from my job, I make about 80,000 a year. Um, but then I have alimony for the next three years and

Starting point is 01:01:11 Um, i'm just i'm graduating soon With my doctorate and so i'm hoping to get a bump an increase in my circumstances But george, I mean it's not done done yet George has got the mortgage calculator pulled up Let's just run some quick math and see are you debt-free? um I have about 11,000 in In debt okay 11,000 in debt mm-hmm my cards are paid off. What's the 11,000? Just credit cards I I have medical expenses.

Starting point is 01:01:48 I have special needs kids. Okay, so I see even more why you're wanting that to be. And no savings? No, because it's been used. That's the part that worries me, is you haven't built the foundation to now support being a homeowner and the expenses that go along with that. And so not only do you not have an emergency

Starting point is 01:02:09 fund, you still have debt, you also don't have a down payment. And so to buy this house for $500,000, you need to take out the full amount as a conventional loan, right? Yeah, that would have to be how that would have to be it. And that's what I don't. And that's what makes me nervous is I, I mean, like, I just don't think have to be it. And that's what I don't. And that's what makes me nervous is I mean, like, I just don't think I can do it. You're talking, you know, that's going to be $4,000 a month, which is going to be most of your take home pay. Yeah. Right. Yeah, because I think my take home is about I'm trying to think because I have

Starting point is 01:02:41 401. I try to pay in as much as I can. Okay, let's give you let me give you a couple of tips because I have 401. I try to pay in as much as I can. Okay, let's give you, let me give you a couple of tips because I hear a lot of things that you're saying Liz and I think we can do it give you a couple of practical things to really help you. Number one, if you want to be ready for this house, like what George said, you need the foundation, you need to pay off this $11,000 of debt and we want you to save up three to six months of expenses. That way if something happens, let's say you do buy the house and the AC goes out, you've got the money to fix it. You get a hole in the roof. You have the money to fix it, right? Home ownership is expensive and

Starting point is 01:03:12 you want to have the money there so that you don't go into debt to deal with the things of home ownership. So number one is that foundation. Number two, you got to have a budget because I can always tell when somebody doesn't have a budget when I ask them how much they make and it's kind of like, and I don't say that to throw any shade that is most Americans. So I want you to be better than average and know your numbers through a budget. So before you get off the line, we're going to give you every dollar and Liz just having that is going to give you so much control because you're going to know exactly where your numbers are, exactly how much is going out, exactly how much you can put on this debt. And then you can start doing the calculator, the mortgage calculator that George has here and we'll make sure you have the link to that. So then you can project out and say, okay, here's the margin I have with every dollar. You'll be able to see how quickly you'll have it paid off with their financial roadmap.

Starting point is 01:04:02 And you'll be able to see how quickly can I actually buy this house. And then maybe Liz, you can sit down with your dad and say, dad, my kids have been living here since 2019. You know the situation. I'd really like stability. Is there, and you can start a path forward. I will have my debt paid off by X, Y date. I will have my emergency built up by then. And then it'll take me this long to save for the down payment. Is there any way that we can elongate this so that I can keep my kids stable? That's your best bet here, but definitely getting into a house you can't afford is not. Yeah. Would he be willing or does he need this money? I think he's, I, it's one of the, it's, yeah, I think he's willing. Like he's been, he's been pretty supportive until now.

Starting point is 01:04:44 I think it's just because my mom's death was very unexpected. I'm sorry. That it it it just up increase the timeline. Yeah, sorry. No, don't apologize. That is a tough thing that you're walking through. And you've got a lot on your plate. You got five kids you're taking care of by yourself. Yes. Yeah. You've got a lot, Liz. And here's the thing. You're you're searching for something to

Starting point is 01:05:16 grab on to. Right. You've got a lot going on and you're searching for that thing that can just anchor you in right now. And a lot of times we do find that when people go through something really tough like this and they've got this kind of overwhelming, it is easy to reach for something that's the wrong choice and it ends up making it worse. And so if you don't remember anything else from this call, just remember right now I can't afford this house. Right now I can't afford this house. And that way you won't do something that you'll regret and getting these numbers will help you make a case with your dad.

Starting point is 01:05:47 And honestly, yeah, you know, that's the best. I mean, that's the best I can tell you right now. I hate that you're going through this. Well, home ownership, you need to make that decision from a place of strength. And right now we're in a place of weakness and desperation and dad really needs this and that's not the right time to make the biggest financial decision of your life. So I would push pause, find another way, rent for a while, build your own foundation and buy a house when the time is right, whether it's his house or another one.

Starting point is 01:06:13 Yeah, we're rooting for you, Liz. This is a tough season, but it's not going to last forever. You're going to look up months and a year from now and you're going to feel a lot better about what your life is looking like. I've been helping people get out of debt and change their lives for over 30 years. So I know change isn't always easy, but it's worth it. And here's change that's actually easy and worth it. Switching to Boost Mobile. Boost gives you nationwide 5G coverage for reliable calls and streaming.

Starting point is 01:07:02 And their plans start at just 25 bucks a month for unlimited talk, text and data. With Boost Mobile there's no junk fees, no contracts and they offer a 30 day money back guarantee. Plus their customer service team is made up of real people, not robots. So switching is easy. So go to BoostMobile.com slash Ramsey. That's boostmobile.com slash Ramsey. 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,

Starting point is 01:07:48 they're people you can trust to have your back from the first call to closing day. Find a Ramsey Trusted Agent near you at ramsysolutions.com slash agent. That's ramsysolutions.com slash agent. Around here, we like to do something called the debt free scream. It's when we invite folks out, really anybody can come, you can sign up to do your debt free scream, but we've got an amazing lobby here where we host guests of the show, and if you wanna do your debt-free scream, there's a really nice stage here where you can do it on. These are people who have paid off debt,

Starting point is 01:08:32 they've been walking the baby steps, and they're excited about it, and they wanna truly shout about it, right? That's what it is. And so we've got Jonathan here. He's from Franklin, Indiana, here to do his debt-free scream. Jonathan, what's up? Hi, how's it going, Jayden George? It's going good. Oh, very good, very good. Well,

Starting point is 01:08:48 I just paid off, on November, I paid off $89,600 approximately and it was, it was my house. Whoa! Way to go! Thank you, thank you. Just nonchalantly dropped that in there. Yeah, yeah, like it's no big deal, but it really was a big deal in my life, absolutely. Oh, that's a big deal, all right. How old are you? I'm 36. Holy smokes, 36 years old, how long did it take you to do that?

Starting point is 01:09:14 It took me, well, paying off the house, it took me about eight years, but when I started the Ramsey plan, it was about six and a half years. Nice. Wow. So you had debt previous to the house that you paid off in six and a half years, then you turned around and did the mortgage in eight. Is that what I understood? Yeah. Yeah. So

Starting point is 01:09:29 I started following the baby steps in about July, 2018. I heard about it in January. It took me about six months to ditch the credit cards. You know, I thought I was winning with my 800 credit score, my credit card rewards, but from July 2018, it took me about six and a half years to pay off the house from when I got full Gazelle Intense on the day plan 100%. Holy smoke. So 89,000, how much money were you making during that time? My range of income was about $50,000 to $80,000.

Starting point is 01:09:59 Wow. What kind of work do you do? I'm a middle school languages teacher. This just gets better and better. All right. Because you know you're breaking through all the stigmas, right? Oh yeah. What stigmas? I mean people think, oh a teacher, you know on a teacher's salary.

Starting point is 01:10:12 So single. So one income, teacher's salary, and you paid off your house. Yes, absolutely. That's rare. And you did it so fast. Yeah, yeah, absolutely. Well, number one, I bought a house that I could afford and also just worked extra jobs and came home from school

Starting point is 01:10:28 and just ready to game on, was just ready to get the house paid off, was really, really happy about getting it done. What caused you to be so intense about, like what clicked in your brain? What caused that? A lot of times people have an I've had it moment or there's something that's kind of driving that intensity.

Starting point is 01:10:42 What was that for you? Yeah, I mean, for me, I was already a little bit weird. I already knew like before I'd ever heard of Dave that I really wanted to get the house paid off. But once I heard about Dave and I had, you know, really had the baby steps and I really started following them 100%, it was just, it was just game on and I was just ready to do it. I really became an obsession, honestly. He sounds like a numbers guy, like a logic, like I just wanna follow the system to get the thing done. Well, what was the, did you have a specific goal in mind? If I wanna pay it off by this time or in this many years?

Starting point is 01:11:13 Yeah, I kind of, I called the show back in 2018 and that's when I really started getting full game. And Dave told me, he said, it's just gonna be a short amount of time where you have to pause retirement, that kind of stuff here. Dave told me, I think you it's just gonna be a short amount of time where you have to pause retirement, that kind of stuff here. Dave told me, I think you'll get paid off in five years. Well, it took me just over six from that point,

Starting point is 01:11:31 so I'm sure he's not too disappointed. Oh no, he's cheering for you, dude. Oh yeah, absolutely. What were the side gigs you had? Oh, I had a lot. I worked for the US Census, I worked for Subway for a while, I worked as an interpreter, I interpreted Spanish over the phone. So yeah,

Starting point is 01:11:45 a lot of side gigs and I'm also in the Air Force National Guard and everything. Wow. Yeah. That's incredible. Well, thank you. You're a guy who makes the most of his time. You're not sitting around much. Yeah, definitely not. No, I was working. He's either serving sandwiches or serving his country. He's out there.

Starting point is 01:12:02 Yeah. Thanks for your service. Well, thank you. Who was cheering you on? Or tell me, was it folks cheering you on or folks looking at Jonathan going, man, this Jonathan guy, like he's bizarre. Like this guy's nuts. I would say, oh, definitely a little bit of both. People were definitely rooting me on

Starting point is 01:12:15 when they heard about the story. They said, maybe I couldn't quite go that fast, but definitely were cheering me on, thought it was great. So I got a lot of encouragement from friends, family, and just people that I'd met who found out about the journey. That's crazy. What's your next financial goal, now that you've hit baby step seven?

Starting point is 01:12:30 Oh, that's awesome. My next financial goal, well, number one, I've kind of been putting off some of the repairs on the house. I got to get that saving up a little bit for that, eventually get another car. But what I would love to do is go over to France and just learn French for a while.

Starting point is 01:12:42 Yeah. Save up for that, yeah. That's incredible. I definitely think you should. Save up for that. That's incredible. I definitely think you should do the travel abroad thing. That's incredible. Of course, Jade's going to vote for the fun thing instead of the home repairs. You know.

Starting point is 01:12:53 Upgrading the car. You have plenty of time for that. I mean, gosh, you're only 36 years old. You're going to be a bazillionaire, number one. And you've got all the time in the world. Yeah, it really feels great. It feels like a big load off my shoulders and I don't have to work these extra jobs anymore.

Starting point is 01:13:07 So it feels kind of nice to come home from work and not have to work anymore. So it's been wonderful. It's been a great, great journey. Really glad it's over and really excited for the future. What's the home worth? The home is worth just about $200,000. Nice.

Starting point is 01:13:20 What do you have in the nest egg? Nest egg of God, just shy of about $200,000 as well Well on your way here. You're halfway to baby steps millionaire. Yeah, it just doesn't seem real but yeah, it's it's definitely come It's incredible We know teachers with a number three career out of our millionaire study and so you are living proof of well How do I don't understand aren't teachers? Well, here's how you do it You just follow the principles stay out of debt and at 36 you're be a millionaire. Probably by the time my guess is early 40s, you're gonna hit that.

Starting point is 01:13:48 Wow, that sounds about right. It's kind of crazy when you say that out loud, but yeah, that does sound right. Have you played with an investment calculator? Yeah, a little bit, a little bit. I would say probably, definitely realistically, within the next five, 10 years, it's probably gonna happen. Oh yeah, I'm excited for you.

Starting point is 01:14:03 So what do you tell the person listening? I mean, we hit on it earlier. You busted through a lot of stigmas, right? Single income, a lot of people think, oh, they look at us. Must be nice to be married. And dual income, dual income, right? And you're like, no, didn't have that.

Starting point is 01:14:18 Now you're on a teacher's salary and you're purchasing a house, which a lot of people think it's hard enough to purchase it, let alone pay it off, but you've done all of this in eight years. What do you say to that person? I say it's definitely possible. Like I said before, you buy an affordable home, so this might not be a nice house. A lot of people want to upgrade their houses. A lot of people want to take a, you know, take a heat lock out to get things upgraded. Just if you're laser- focused and really willing to work extra jobs and really

Starting point is 01:14:46 really worrying really willing to to stay focused on on that goal it is it is definitely definitely possible. You know if you live by what you guys teach them you mentioned it before 25% of your your take-home pay if you start with that and you you work very hard and you put all the extra income you can on the principle the balance it'll get paid off in no time. And that's exactly what I did. Word up. Wow. Way to go. Well, here we have it. We've got Jonathan from Franklin, Indiana paid off $89,000. It was his house. He did it in eight years, George making 850,000 to 80,000. Jonathan, count it down. We want to hear your debt free scream. Three, two, one, I'm debt free. Woo.

Starting point is 01:15:27 That's what I'm talking about. That's what I'm talking about. They say it can't be done, George. But we see it's done right here. The proof is in the pudding. The proof is in the pudding. I'm sure his middle school students are now watching him as a YouTube sensation now going, that's our teacher.

Starting point is 01:15:41 Oh, yeah. That's what's up. I mean, he's got all the time. He's 36. That's like, he's got all the time. He's 36. That's like, he's a young gunman. That's wild. Yeah, he's not even old enough for a midlife crisis yet. I'm inspired by this.

Starting point is 01:15:51 What do you do now? Yeah. What do you do now? Well, he's going to France. I'd like to go to France. Saint Tropez. I bet he'll never eat a Subway sandwich again, though. No.

Starting point is 01:16:00 He'll be eating French baguettes. Once you do the side hustle, you're like, oh, you see how the sausage is made. You go, all right, I'm done with that. Yeah, I know that's true. If you're taking a trip abroad, George, where are you going? Oh, France is definitely, France and Italy, I think, are my top two right now.

Starting point is 01:16:13 Top two? Because I think I'm in my bougie phase, so I just want to eat really good. So I think as far as food goes, maybe Greece would be nice too. Greece is cool. So you're saying the bougieness is a phase? I feel like this is just who you are.

Starting point is 01:16:25 I think it's a phase. Well, you know, some people wanna go for adventure. They wanna like go hike. I'm like, no, no, no, no, no. I wanna eat. Take me to the finest dining. Yes, I want to eat. I don't, I mean, I'm an active person.

Starting point is 01:16:35 I don't mind a walk. I'll take a walk after I eat. A walk for you is a hike for me. Well, I don't wanna- We have different definitions. Jake goes on 10 mile walks. I don't wanna do that on vacation. On vacation, I'm like you.

Starting point is 01:16:47 I want to sleep in late. I don't want to have like this big itinerary that I have to wake up at 6 a.m. and check all the things off the list. I want to sleep in. I want to order room service. It's all about the food. That's where it's at for me. Yeah.

Starting point is 01:17:00 So Italy and- When I say I want to experience culture, I really just mean I want to eat their amazing food. I think that's a great way to experience it. Oh, we have a gift for Jonathan. We forgot to mention. Oh, we did. What is our gift? Two every dollar premium subscriptions.

Starting point is 01:17:11 Good for a year. So you can use that and you can pass it on to someone who cheered you on, maybe even a naysayer. Give it to the hater and say, hey, this is how I did it. If you want to know the budget was the key, it's on me. I love that. I love that.

Starting point is 01:17:23 And it's just a reminder, you know, when you do things like this, you gotta dream about it. Like, Jonathan reminded us, let's dream. Why are we doing this? Why are we paying off our debt? Why is it important for us to build the savings? Have that really clear picture so that you can actually see it through to the end.

Starting point is 01:17:38 I don't care if it's a trip to France. I don't care if it's, you know, you buying your dream car or a new pair of Jordans. But having that why, having something to shoot for, man, you can accomplish more than you ever dreamed possible. Listen, guys, I've heard just about every excuse for why folks think they can't get ahead with money. So let's go ahead and settle this right now. You get the final say on what happens with your money.

Starting point is 01:18:17 That's why you have to start telling your money where to go so you can stop wondering where it went. So if you're going to start winning with money you have to get on a budget. The easiest way to get started and stick to it is with the Every Dollar Budget app. It'll help you make a plan for every single dollar coming in and every single dollar going out every single month. And guess what? It's free so no excuses. Download every dollar in the App Store or Google Play today. George, we just witnessed that amazing debt-free screen from Jonathan, paid off $89,000.

Starting point is 01:19:06 It happened to be his house. He did it super quick, eight years and on a teacher's salary. And we found time and time again that what allows people to win like that is the foundation of having a really, really good budget. And our EveryDollar budget is just that. And so our EveryDollar team has multiple free trainings for you this month, which is basically trainings for you to use EveryDollar at its optimal capacity is basically what it is. So join a live team and a live webinar to learn how to break the paycheck to paycheck

Starting point is 01:19:36 cycle in just 90 days. And you'll get a step-by-step walkthrough of the EveryDollar budget app. This is the only budget app that I use. It's the one that George uses. And so you'll get the biggest budgeting questions answered. It's a live Q&A. And yeah, it's just for you. Over 160,000 people have already done these webinars. And I'm sure they would say

Starting point is 01:19:56 that it was a breakthrough for them, right? Spots are limited. They're always gonna be limited. So sign up now for free at www.everydollar.com slash webinar. I haven't said www. Yeah, I was shocked you took us there Jade. That's what it says on the paper. I was legitimately surprised. Also known as everydollar.com slash webinar.

Starting point is 01:20:14 There we go. HTTPS colon slash slash. Listen, I'm reading. I respect it. Let's go to Summer. She's in Orlando, Florida. Summer, how can we help today? Hi, thanks so much for taking my call. So my question is, should I start increasing my investment contributions as like the stock market, you know, dropped, you know, to capitalize off of some of these like lower prices and costs right now?

Starting point is 01:20:42 You got a crystal ball we need to know about? How do you know it's gonna keep dropping? You're saying you wanna buy them when they're on sale is what you're saying? Yes, ma'am. Yes, the answer is I don't increase or decrease investing based on anything the market is doing. I'm accidentally dollar cost averaging,

Starting point is 01:21:02 meaning I just invest 15%, well now I do more because I'm in Baby Step 7. But if you're in Baby Step 4, 5, and 6, invest 15% of every single paycheck, regardless if the market's up, the market's down. And so I don't time it. I don't go, well, it's on sale. I'm going to buy more.

Starting point is 01:21:16 I just keep buying exactly the amount I was. And you're going to naturally buy more because 15% of something on sale is going to be more shares. Okay. Where are you in the baby steps, Summer? Like five, six and seven, I don't have any debt. I do more than the 15% now and I'm just trying to save up to buy a house in addition to my retirement. So you haven't bought a house yet? Correct.

Starting point is 01:21:40 I see. How much are you investing? What percentage? It's over 15% because I do. So probably 18 to 20%. And how much are you putting aside for your down payment or is that just not something you're like gunning towards just yet? I am saving up for that. I mean, I want to pay full cash.

Starting point is 01:22:01 Right now I have about 12,000 for a down payment, but I'm looking eventually, you know, for six years from now to pay full cash right now I have about 12,000 for a down payment but I'm looking eventually you know for six years from now to pay full cash for all. Oh so that's your plan you're like I'm just going to save up over the next six years and just knock it out in cash. Yes. Interesting. Well I listen I'm I love that plan. What would what's your thought on that versus saying hey if I really put the pedal to the

Starting point is 01:22:24 metal I could put a pedal to the metal, I could put a really nice down payment now, get in the market sooner. Do you know what I'm saying? Yeah. Because from, you know, let's say 2019 to 2022, we saw home prices skyrocket. So the fear is with that length of timeline,

Starting point is 01:22:40 housing market could increase to where it's a moving goalpost. And you went, oh my gosh, I saved up 250,000 and now that house is 300. And so this sounds crazy to say, I'm all for paying cash, but if it's gonna take you that long, it might be wise to ratchet down to 15% with investing, throw everything else that you can toward a down payment.

Starting point is 01:22:59 And once you can buy the home that you want where it's gonna be 25% of that after-tax monthly income, pull the trigger on a 15 year fixed rate and then aggressively pay it off. Okay. That essentially locks in a lower price for that home and allows you to have margin, because 25% on a 15 year is about as conservative

Starting point is 01:23:17 as you can get with a home. And then you're still gonna have a paid for cash home within six years. And you have had that time to also build equity in the home all of this time, which is nice. Okay, perfect. Thank you so much. Just a thought. Yeah, you're doing a lot of good things.

Starting point is 01:23:32 I would just make those light tweaks of just, hey, let's bring this down to 15%, freeing up a little bit of money toward that down payment so we can speed that up so that you're not looking at a six to 10 year journey to get into a home. Exactly, very good question, good question. Let's go to Jenny. She's in Columbus, Georgia. Jenny, what's up?

Starting point is 01:23:48 Hey, how are you? We're good. How can we help? Good. So my husband and I, we finally took financial peace this spring. We are almost out of debt and we have reached a three-month fully funded emergency fund when my motor needed to be replaced. We were able to pay in cash to get a motor to put into our 15 year old vehicle and a few weeks later the car started acting up again. The shop told us that the transmission is going out but it can wait a little bit longer and we don't have the cash right now to cover all of it so we decided to wait.

Starting point is 01:24:22 Yesterday the same car started smoking. We don't know the source of this yet or what it might cost to fix it. Currently, our savings is down to about a one month emergency savings because of the motor. We have three children and we're expecting our fourth to arrive in about three weeks. Oh my goodness. Yes. We have our 15 year old car has 175,000 miles on it and it will cost a minimum of $5,000 to fix. That's just the cost of the transmission.

Starting point is 01:24:52 We don't know about what the new thing is. We have found a decent replacement car but the price tag is $15,000 before interest and all the fees, but this car only has 85,000 miles on it. Our concern is that since this is the only family car we have, should we go into debt fixing a 15-year-old car or should we go into debt by getting a used car? I would not do that. I mean, hear me.

Starting point is 01:25:21 My car is pretty old and the car I had before that was pretty old and our family rides in it just fine. And the 145,000 miles, my car's got more than that. So there's 175,000 even still. I don't, you can't see who I'm looking at through the glass right now, but one of our producers, Will Rudder has got one of the oldest cars. What is it? His has got 350,000.

Starting point is 01:25:46 Is that? Oh, 450,000. Oh wow. 380. 380, 380. 380, Bob. And he's going strong. So my point is, I'd rather, you know, it's, when it's your car, it's like the,

Starting point is 01:25:59 you know what's wrong with it, right? And you're like, okay, let me just go ahead and get this thing fixed. It doesn't make sense to spend $15,000 when you could really spend five, because it's with it, right? And you're like, okay, let me just go ahead and get this thing fixed. It doesn't make sense to spend $15,000 when you could really spend five, because it's still money, right? Don't forget math just because one's dead and one isn't. So I would be coming up with the money

Starting point is 01:26:13 to get your current family vehicle fixed. Now it's about figuring out how we can do that. So can you tell us what your income is? Yes, our monthly income is 9,000. Okay. How much of that could you put away? Because this baby's coming in three weeks, you said. Yes.

Starting point is 01:26:29 So, like, next, in three weeks' time, how much more money can you set aside? Like about $3,500. Okay. So, plus you have how much in savings right now? We have about $3,000. Okay. So, that's $6,500. So, that gets the repair done without going into debt.

Starting point is 01:26:47 Right. I think my husband is very concerned about us even being in the car before it being fixed. We're going to get it looked at and understand where the smoking is coming from. Is it a solvable problem? But I don't like the option A, go into debt for this, option B, going to debt for this. I think that's where we painted ourselves in a corner. The goal is to avoid debt and also stack up cash and make sure that you and baby are home safe before we do anything else

Starting point is 01:27:14 and make any big financial decisions. How much of the 9K is your mortgage payment? So we don't have a mortgage right now. We have a rental cost right now, which is only $1,200. Okay, great. So there's a lot of money here. I think that if you guys get really creative, if just in a month you've got $3,500 of margin, I think you guys can get really creative to find the other $1,500 you need to get this

Starting point is 01:27:40 car fixed really fast. But it might- And worst, worst case, you could rent a car for a while, borrow a car for a few weeks just to get this car fixed really fast. But it might- And worst worst case, you could rent a car for a while, borrow a car for a few weeks just to get by. And I think those are good options versus going into debt for a car we can't afford. Mm-hmm, mm-hmm. Okay, okay.

Starting point is 01:27:55 Yeah, George has a really good, that's a really good thing, George. We hear it, I hear it all the time. I mean, I have a personal story of a friend of mine who I don't want to give away who it is. So basically their car broke down and they showed up the next time I saw them and they had a brand new vehicle. And they were like, well, it was going to cost $800 to get the car fixed. And we didn't have that. So we just rolled the equity into

Starting point is 01:28:19 another brand new vehicle. And next thing I know, they've got like this super nice. And I'm like, oh my gosh gosh that is the definition of broke the train has left justification station yeah that is the definition of broke right there so that's a good indicator that it's time to make some changes with your money we'll help you do that this is the Ramsey show Hey, what are you still doing here? You know the rest of the show is happening on the Ramsey Network app, right? So you got to jump over there to continue watching. You can download it for free.

Starting point is 01:29:03 Just go to your app store, type in Ramsey Network. It's completely free. And I'll drop a link in the show notes to make it easy for you. So if you're watching on the app, you're in luck. But if you're watching anywhere else, this show is over for you. So jump onto the app and let the fun continue. All right. Go on now.

Starting point is 01:29:21 Don't make it weird. Okay. I got nowhere to go, so you need to go. Okay, bye-bye now. All right, this is getting weird over there, guys. What do we do?

The Ramsey Show - Stop Messing Around & Follow the Plan That’s Proven To Work

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