The Ramsey Show - The Numbers Don't Lie

Starting point is 00:00:02 Brought to you by the Every Dollar app. Start budgeting for free today. Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union Studio, this is the Ramsey Show. I'm George Camel here with Dr. John Deloney, taking your calls at AAA 825-5-225. Eric is in San Jose to kick us off. What's going on? Eric, how can we help? Hi, yeah, thanks for taking my call. I just had a question about how to build this idea of kind of shared ownership of budget building and overspending. Just to give a little bit of context, my wife comes from a family that's got kind of poor financial education and behaviors,

Starting point is 00:00:56 and she acknowledges this and recognizes this. But we kind of go through a statistical process over the years of marriage where we'll do really well one month, and then the next month, it just kind of goes off the rails. And, you know, generally we're doing okay, but I kind of want to find a way to help encourage her in the moments when she's doing well, but also try to keep us on track for the long term so we don't have to keep having the same conversations over and over again. What are the cause, why does she choose to get off track? So I hear a guy who's trying to be really respectful of his wife, and I honor that. but it sounds like y'all have these heartfelt conversations,

Starting point is 00:01:37 y'all join allegiance, you get on the same plan, and then a month later she just is like, I don't care. Yeah, I mean, I don't want to say it's the I don't care part. It's more of just not knowing and keeping being mindful of where we're at. But that's a fancier way. Not being mindful is a fancy way of saying, I don't care. Yeah, that's fair. right and so it's it's it's it's that's the conversation you have to have because because we're past

Starting point is 00:02:09 the point of we're not on the same page we're past the point of you you clearly have talked to her about what freedom means and what safety means and your dream for your family and she's actually agreed with you and she's also agreed on like she knows her story she knows why these things are wired into her she's come from that like unwise money money habits right yeah the only thing left is i got to go do the thing i can't I can Google what workout to do all day long. It doesn't, I got to go to the gym, right? And so my question for you is, do you have any idea?

Starting point is 00:02:42 Because I don't think it's a matter of you not encouraging her enough or whatever. It's just, frankly, it's maturity. It's integrity. It's her keeping her word. When she says, oh, I don't know, or I did, like, what does she communicate to you is the root problem here? I think the problem is that she feels like there's a need. Right? That's not being fulfilled. And whether that's, you know, we needed this grocery item or we needed this household thing to take care of the family. And she fulfills that need without really considering the budget. And I've oftentimes said, you know, that's an important need and we can talk about that. But it has to fit within our budget constraints. And if it's not fitting in the month currently, you know, maybe that's something we have to wait for. And that's kind of just always. been a hard thing for her to hear. Can you label this in the budget if it actually is a need for the

Starting point is 00:03:39 family? It sounds like she's not buying frivolous things. It's, hey, we needed paper towels and we didn't factor that into the budget. Right. What's some examples of things where you guys, she goes off rails, doesn't talk to you about it, and now you're frustrated? Yeah, because I don't think you'd be calling us if it was just, oh, we didn't have any milk or we didn't have any paper towels. No, true, true. I mean, examples are, you know, like we'll go to a we have we do have a budget line on it for like home needs right whether it's toilet paper paper towels

Starting point is 00:04:12 you know a new broom whatever and so it'll be it'll be things like that that she'll feel like like we need and we've already used that budgeted money for something else and that it kind of makes doesn't have that conversation and goes out and

Starting point is 00:04:30 spend that additional money without having those conversations about, hey, we're over budget, but this is a need we need. So she's not checking back in with the budget to see if this actually fits, and that's the part that's frustrating you. Or more important, she's not sitting down with you saying, hey, we made this budget, and I realize we're short. Right. Right. Right. Neither is happening, really, in the moment, you know. And so the question, the only question you can ask yourself is, are you, are you a reasonable,

Starting point is 00:05:00 and I don't mean this in a dramatic way, I mean this in an honest way. Are you, a safe person that she can come back to and be like, hey, we made this budget and I'm realizing two weeks into this month, we're going to need these other things, or I want these other things. Are you a person that she can sit down? You're like, oh, sweet, well, let's get this thing out and see if we can just not go out to eat then, or we can do this other thing. Or are you the guy that throws the budget down and says, this is what it's going to be this month, this is my militant household.

Starting point is 00:05:27 We're going to follow this. And she has that natural, like, that I have, which is kind of wired in. Like, you tell me I can't. Oh, man, I'm probably gonna, right? So that's the only question you can ask yourself. And if you're a safe person to sit down and you're an open and curious person that she can come back to, then the next thing is, man, you've got to dig into the truer conversation, which is you've got a wife that kind of doesn't care.

Starting point is 00:05:53 And that's a scarier conversation to have, quite honestly. Yeah, I mean, to be, it could be a little both. I've come on strong in the past sometimes when, you know, she's made expenses and didn't necessarily consult me, and they're small. So I think to your point, it could definitely be a little bit of. And set a dollar amount. Say anything over $50 we need to talk about beforehand. So set some boundaries.

Starting point is 00:06:19 And if there's areas where she is buying things that are frivolous, let's shut that down. Because I know in my house, if I buy ice cream, I'm going to eat some ice cream that week. And if I don't have ice cream, I'm not eating ice cream. And so there's a piece of this where you can set your own boundaries. boundaries and make sure that we're sort of removing things that we know will harm us and adding friction to those areas. And also, when you all have that conversation, you go first and you be honest, I recognize I've made this an exercise in militancy. And I say things like, you didn't

Starting point is 00:06:51 consult with me, like, you know what I mean? Which is what weak overbearing bosses often say to their employees. You got to loop me into it, man. Yeah, yeah, yeah. You didn't CC me on this. Like, it's you coming and being honest and saying, hey, I realize I'm not, I'm not a fun person to do life with when it comes to the budget. And I come on too strong. And this is a thing we're doing together. And so I'm going to work on being more flexible and more honest about,

Starting point is 00:07:17 oh, we do need a broom, actually. And that means I'm going to have to take 30 bucks from my fund line because our house needs a broom more than I need another video game or whatever you're thinking. And bring her into that. Bring her into the every dollar budget where we go, hey, we got to find somewhere this money needs to come from. because there's a finite amount of income. Do you actually show her the budget?

Starting point is 00:07:35 Do you have it? Is it on paper? Is it in your head? Is it in every dollar? How do you do this? Yeah, so we have a similar budget tracking program app that we both have access to. It's not every dollar. That's hurtful, but I'll continue.

Starting point is 00:07:50 I'm sorry. It's just what we got used to when we started with. Sure. But yeah, so we both have access to it. And every month, you know, we'll try to sit down and we have that conversation.

Starting point is 00:08:04 She doesn't necessarily like those conversations. Okay, so I want to paint you a picture of a future where your wife loves sitting down with you to plan the upcoming week. Like where you're a person, y'all are planning laughter together, you're planning fun together, you're putting intimacy on the calendar,

Starting point is 00:08:20 you're building a life together. Get her favorite drink ready before the meeting? Yeah, and part of that is we're going to talk about what expenses we're have coming up. And by the way, if you're teeter tottering, one month it's good and the one month you fall off, that usually means you're not giving it the full 90 days to fully, like, create a budget that actually works in reality. Yeah, your budget should reflect your real life, and it's okay if you need to adjust to get there.

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Starting point is 00:10:35 I currently owe $55,000 on it, and I have a pretty high interest rate. So I was wondering if I could let you guys know where all my assets are at and what would be the best way to just pay this off as soon as possible. What's the interest rate? It's 13.7%. Man, why is your credit so bad? Oh, I have a 750 credit score. I'm 23 years old, so I guess it couldn't really do any better than that. Interesting.

Starting point is 00:11:05 Okay, are the other trucks paid off? Yes, sir. They are. Okay, do you have any other consumer debt? I have a zero-turn mower, but my payments on that are about 180 a month with zero-percent interest, so that's not very much for me at all. Okay. What's left on the best?

Starting point is 00:11:20 balance? Of the mower or the truck? The mower? 7,000. Okay. All right. What's your income from this business? What do you actually take home? Well, right? It all depends on the project. Some weeks I could come home with 10,000 profit. Some weeks I could only come home with 1,000 profits. It all depends on the week. What did you file in your taxes last year? Last year was a lot less than what it is this year. Last year was about $68,000 total. I probably I'm well past that now and it's only July. Okay, so you might clear $100,000? I think so this year, yes, absolutely.

Starting point is 00:12:00 And what assets do you have? So currently I have $32,000 in my business checking. I have quite a large amount of cash. And another thing I want to bring up is I have an index fund with about $100,000 and I wanted to see if it was possible to maybe, what would be the best way to pay it off because it's not like to deposit 30,000 into the bank all at once. Well, how much do you have in cash? You said you have a large amount in cash.

Starting point is 00:12:28 Yes, sir. I have 55,000 in cash. Which is as much as that's owed on the truck. Correct. So why don't we just use that? I can't deposit all that much in the bank or else I'll get flagged by the IRS, they said. I was about to ask you, like, how much are you holding away for quarterly taxes because you're running your own long business? Yes, sir. So that gets all... deducted automatically with the accounting service I have. So they have all those numbers and stuff.

Starting point is 00:12:57 I'm not worried about the numbers. Where's your retained earnings account? My business checking. That's the 32? Yes, sir. So you've got that 32 is basically if you clear 100 grand, you're holding your 30, whatever, 5% that you're going to have to pay in taxes. That's what that money is for?

Starting point is 00:13:16 It's not to repair the mower, repair the trucks, pay your guys, get ghastly? It is for everything. It is for everything. So whatever I own taxes will also get taken out of that account. Okay. George and I can't sit up here and tell you to continue to run an illegal business where you want to hide cash from the government and not pay off your gas. It's not an illegal business.

Starting point is 00:13:37 I have a legitimate corporation. Okay. But you said you couldn't use the 55 cash because you have to report it, which means you're not reporting it as income is what we're saying. So we can't use that in the equation. Oh, okay. I understand. So I was only able to deposit around $10,000 the bank that told me.

Starting point is 00:13:55 Okay. Because you don't want to report it to the IRS. Correct. Because you can deposit more than that. But the bank says, hey, we have to file a report if it's over $10,000. Correct. Yes. Sorry for confusion.

Starting point is 00:14:08 No, I understand now. Well, it's a hard question to answer because I would just deposit the money, report the income, and pay my cheeser with a car. We'd pay the truck off. Yeah. Problem solved. Yeah. The other route is to sell.

Starting point is 00:14:20 off, you know, enough from your index fund to cover it, knowing that you also have to cover the taxes from the capital gains. It's either short-term or long-term capital gains, long-term, obviously more favorable on the tax side. But this is like, we're solving surface-level problems right now. There's some deeper issues. Like, why did we go into debt for all these things? Why is the mower not a big deal? Because here's the Ramsey principle. We believe that running your business completely debt-free and growing at the speed of cash is the wisest way to actually sustain the business. And the hard part for me is you literally have the cash on hand by 4 o'clock this afternoon to owe no man a dime. It's not like you're paying a million dollars in taxes to the

Starting point is 00:15:03 government. I mean, at your income, it's not that big of a deal. Yeah, I understand. Okay. I think I I just have to, I don't know what I was so worried about. I would work with a CPA. Do you have one that you have for the business? I do. Okay. I do. I would get in touch with them and figure out what are all the taxes owed. I want to do this right. I want to be completely debt-free and report all the income and just start clean. Real quick, George, you're better with a calculator than me. Will you figure something up for me?

Starting point is 00:15:32 I can try. The $55,000 loan over seven years at 13.9 percent. Oh, boy, now I've got to pull up an interest calculator. I would love to know. Because here's what I'm... It was going to be what? 95 grand is where you'll end up paying if you just make minimum payments. Correct.

Starting point is 00:15:49 Okay. And that car is, that truck's going to be worth, what, 15 or 20 by then? Yeah, I mean, it'll hold a little more value. It's a dump truck. Okay, but let's do. The math you're avoiding, you're going to pay 13.9% interest. You're going to pay $40,000 extra dollars to not pay $10,000 in taxes. Gotcha.

Starting point is 00:16:16 That's just bad math. Like, you're sitting on $55,000. grand cash, you're worried about the 30% or the 28% or whatever the government's going to take out of that. And so to avoid that, you're going to pay $45,000 on a depreciating asset or $40,000 on a depreciating asset over, and it's going to sit around your neck like a rock over the next seven years. Yeah, I understand. And do you have a personal emergency fund for your own life? Yes. Is that separate from all this, or is that part of the 55 cash?

Starting point is 00:16:48 That's what my index fund is. That's one of my... Okay. What I keep saving into, eventually when I get to retirement. I did just open up a Roth last year, so I'm starting with that as well. Okay, cool. You're doing a lot of good things. I'll give you another tip. For your emergency fund, it is wise to keep it liquid.

Starting point is 00:17:06 Three to six months of expenses liquid, which means not in a brokerage account invest in the stock market, because as soon as you have an emergency, the market's going to take a dip 15%, and it's going to gut you to try to take that money out. So just keep it in a high-yield savings account. making three and a half percent, and then you can leave the rest invested. But I would take enough out to pay off all of your debts, get you the emergency fund liquid, and then move on from there to actually invest for the future,

Starting point is 00:17:31 running a completely debt-free business. If you hate that life, call us back and you can yell at me. I'm fine with that. But I promise you you're going to have so much more peace in your life if you simplify and focus on one thing at a time. Yeah, if you hate this, here's a deal. In four months, you can go take out a personal loan for $55,000 at 13.9% and put that money right back in your checking account.

Starting point is 00:17:52 You'll be right in the same spot. Yeah. But I want you to try running a business, running your life, and not owing another man a dime. And like George said, give the government their money and move on with your life. Gotcha. If you had a trillion-dollar business and you were moving stuff around, or you had a $300 million business, and there was some true tax savings you could make with moving stuff around and moving it to this state, fine, that's great, good, and awesome.

Starting point is 00:18:17 You're just not there yet. I'm not there yet. George isn't there yet. We pay our taxes and we get on about our life. And I'll tell you, last year I paid so much in taxes, I had to call a buddy. I called a friend and said, I just need to tell one other human how much I wrote in taxes. And I told him, and he got silent. And he was like, oh, man.

Starting point is 00:18:36 And then he was like, oh, that means you had a good year, though. And I was like, yeah. And he goes, well, okay, then get on your, like, get over your, like, I shared it with somebody. And then I got on about my life. You know what I mean? Yeah. Like there's so much Instagrammy stuff about how to save on taxes and slap up and flip it and reverse it. Buy a G-wagon and depreciate 100%.

Starting point is 00:18:57 I'm just, it's exhausting. So, Nicholas, at the beginning of the call, you told me, hey, yeah, I got a malware, but it's 0%. I want you to start thinking bigger about your life. So instead of thinking how much down, how much per month, which is broke person mentality, think wealthy person mentality. How much? Let the sentence stop there. not how much in interest and not how much down, not how much in payments, how much total and can I afford it in full? And if the answer is no, then we need to pause.

Starting point is 00:19:25 A little bit of delayed gratification, a little bit of patience. That's how you're going to build this business the right way because there's going to be a temptation around every corner to scale and grow way too fast. And I don't want you calling back saying, dude, I am way over leveraged in my business. I'm all about practical ways to save time and mental energy, especially during the summer when life gets busy. between vacations, camps, deliveries, travel plans, online shopping, and trying to keep everyone organized, my mental load can get pretty full. That's one of the reasons why I love delete me. Most people don't realize how many data broker sites have their information online, like old addresses, phone numbers, and even family connections. And that can put you at risk of being a target for

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Starting point is 00:22:24 And for all the naysayers. Dave doesn't really say how he does it. He doesn't really show why the... Like, here it is. This is the opening of the books. Dave gets so nerdy that we're like, you're sure you want to share the formulas for this, Dave? This is pretty in-depth.

Starting point is 00:22:42 And he's like, this is what I do. Well, and I think, I think, and it's, I'll be generous. It's nobody's fault. They just assume Dave is this old guy ripping from the hip. and I remember one time he was explaining something about the way bond rates interact with interest rates that affects the... And he said something along the lines of, and I kind of, my brain had melted by this point,

Starting point is 00:23:06 but he said, all right, so algebra normally goes this way. I'm going to take it into... Another dimension. We're going this way. And I was like, you know what? I'm just going to say, I trust you. All that to say is for folks who think Dave is just an old boomer who doesn't get it and he's just ripping from the hip.

Starting point is 00:23:25 This is a great opportunity to see, oh, there's a ton of method behind the madness, and it's got math to it, and it's formulated out, and it's well thought out. And actually, you begin to see the magic of the distillation into, I'm going to make this as simple as possible for knuckleheads like me to follow these things called the baby steps, but there's a method to this, and here's the playbook. And it goes deeper. And we had to convince today if people wanted to hear the nerdy stuff, because nobody wants to hear this.

Starting point is 00:23:52 and the audience was like, I would like to go deeper. Right, right. It's become one of the flagship events now. Oh, yeah. And everyone wants to say, okay, where's this guy putting his money for real? And why is he putting it there for real? The decision making, the mindset around legacy planning, because he's in that face.

Starting point is 00:24:07 It's really, really good stuff. So join us. And a lot of people ask, hey, what if I can't watch it live? There is a replay as well. So check it out, ramesiesolutions.com slash events. Amberly is in Salt Lake City. What's going on, Amberley? How can we help today?

Starting point is 00:24:21 Hey, I'm just calling for some advice on my situation. I'm 21 years old. I'm headed to college in the fall, and I'm trying to do it the right way. Back when I was in high school, I was able to get 55 college credits and a technical degree in automotive studies. Wow. I then served a mission for my church and used my savings from my technician job as a co-in-in-when I got back. So I paid for another semester of college and bought a car in cash. I now have my associates in about $2,000 in savings, and now I've transferred to a new college

Starting point is 00:24:59 to get my bachelor's in experience design and management. My question today is, how do I avoid debt in college and stick to a budget while feeling like I don't have that much money to work with while in the first place, but not wanting to burn out? Super simple. Yeah, you asked you asked 50 questions there in one, Amberley. I was supposed to say, hey, I'm really proud of you. The fact that you've made it this far, dead free, it sounds like, is incredible.

Starting point is 00:25:26 But not only dead free, but you've also done something that was important to your faith. You've also kept your character about you. You've also got a vision for what you want to do. And like all that. I'm proud of you. Just as an old man talking to a 21-year-old. Well done, dude. You're on the path.

Starting point is 00:25:40 So let's look at the math of this. What is this school going to cost you each year and in total? Yeah, like it sounds like you went to a Lexus dealership. You got in the car and you're about to turn out of the parking lot. And then you're looking out the window going, how do I do this debt free? Like, you've already enrolled in a thing. And now you're asking about the price. George and I would suggest you're doing that backwards.

Starting point is 00:26:06 Like instead of saying, okay, here's what I got. Here's how much money I have. Like we save up for the car first. Then we go car shopping. But we've already went shopping. We picked the car. We signed it. And now we're like, oh, we got to pay for that.

Starting point is 00:26:16 How do I do this debt free without any stress and without burning out? Right? You get what I'm saying? Yes. Okay. So is this a local in-state school? It is an in-state school, and tuition is going to be $3,500 a semester. Nice.

Starting point is 00:26:33 That's very reasonable. That's beyond reasonable. Okay, so seven grand a year. Are you living at home? No, I am renting. Renting. Okay, and are you working part-time, full-time right now? I do have a job.

Starting point is 00:26:47 It'll pay about 18 an hour with room to improve. about 33 hours a week. Fantastic. Dude. Okay, and you can still do school while working those 33 hours a week? Yes. I'm doing all night classes so that I can still work during the day.

Starting point is 00:27:04 Amberley, I hope everyone listening, everyone who's over the age of 40, who thinks it's all going away because this young generation, there's a Jillian Amberley's out there who are, Amberly, you're giving me hope for my kids. So well done, dude.

Starting point is 00:27:19 You're on it. Thank you. How much is your rent? $500 a month. Wow. This is incredible. Okay, so your gross income for the month, let's call it $2,400, you take home $2,000. Is that fair?

Starting point is 00:27:32 Yeah, roughly. Okay, great. So $2K a month, your rent is $500. That leaves us with $1,500. Now we still have to cover other bills, so you've got to eat, right? Mm-hmm. And you have $2,000 to your name. We're going to call that your starter emergency fund, and you have no debt.

Starting point is 00:27:46 So right now we could sock away a little bit of money each month, right? Yes. How much do you think you could put? away into a savings account if you worked really hard? I feel like I could put at least 500. Okay. So that's six grand a year right there. That's a good start.

Starting point is 00:28:07 But we need to cover seven grand a year just to cover the tuition. Okay. Right? Then I feel like I could make, I could probably do more. Or then you've got summer too. There's other levers. Yeah, you can work more in the summer. You could apply for scholarships and grants like a, like a,

Starting point is 00:28:22 woman, make that another part-time job every weekend. I'm going to apply for five or six different scholarships. And even if you get a couple out of that, that was still a pretty good hourly rate. And so that's the way to do it, is go to affordable school, check, you did that part. Work part-time, check, get scholarships and grants, check. Now you've got an actual system here to cover the gap. So turn it into a little math equation, know that my income will cover this portion, and then get ahead of it. So you know, when is the next bill due and how much is that going to be? Do you know? Is it like September it's going to be due? Yes, I believe so, September. So $3,500 by September. Well, I don't even mind you getting

Starting point is 00:29:07 on a semester payment plan with your college. I'm going to pay you this much per month for this semester. I'm going to pay you this much per month. Usually they'll do it for 50 bucks or $75. They put you on a semester payment plan. And just, If it's $600 a month and for a couple of years and you can factor that into your monthly budget, that makes it simpler for you. Okay.

Starting point is 00:29:28 And Amberley, I want to get to the question beneath the question that you asked, okay? Can we be honest and say you're 21 years old? You've been working hard since you graduated high school and you've largely been working somebody else

Starting point is 00:29:44 has been telling you what to do. And now you're entering into a phase where quote unquote you're free and now you got two other knuckleheads saying well actually you got to keep living like this pretty pretty low we're not out of the woods yet right like just like burnout is not being honest with the reality that you're in and you're very honest so if you if you are able to metabolize i got two more hard years of scratching and clawing ahead of me and i'm going to choose joy at work when i'm doing whatever i'm doing 33 hours a week and I'm going to find not drudgery,

Starting point is 00:30:22 but I'm studying a thing that I actually want to go do in the world, and I'm going to choose to walk into those classes with a smile on my face. Not every day, because not every day is like that, but I'm going to choose gratitude walking into that thing, and I'm going to keep a calendar. I know this ends in two years. Man, that's going to keep you from that bitterness,

Starting point is 00:30:41 that resentment that I just want to break free and do whatever I want whenever I want. It's just going to keep you on that path for two more years. I'd rather you do this now than the back end where you're trying to make student loan payments while trying to live your new adult life. That's right. So set up a sinking fund. $600 a month in that thing covers me no matter what. You're crushing him.

Starting point is 00:31:00 Automate that and you're going to graduate completely debt-free, making good money. So proud of you. This is a success story in my book. I've met plenty of people over the years who had a product that they wanted to sell, a side hustle that they wanted to start, or a business idea that they couldn't stop thinking. about. But they never took the first step because getting started felt complicated. Shopify makes it much easier. You can build a professional-looking online store in no time flat with everything you need already built in. Then when customers are ready to buy, Shopify checkout helps more of them actually complete the purchase. That's important because abandoned

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Starting point is 00:32:55 Hey. How can we help? Hi. I'm calling. So I'm calling because I would love a professional opinion. I'm 26 years old, currently living with my parents and paying rent to them. I desperately want to buy a house and move out. My parents keep telling you to wait for interest rates to drop that I don't want to.

Starting point is 00:33:16 I work full-time, and I have worked full-time in about 18. I have no debt. have a pretty good credit score and I'm trying to figure out what the best next steps are for myself. Wow. Well, you asked for a professional opinion. We can only give you amateur ones, but we'll do our best to guide you. So you said you're desperate.

Starting point is 00:33:36 Where is this coming from? Do you want out because you don't like your living situation? Are you tired of mom and dad's thumb on you? What's going on? Not so much that. I just feel like I'm a little bit behind for my age. I mean, I'm going to be 27 next year. Oh, my goodness. I didn't do the math.

Starting point is 00:33:53 26 does lead to 27. Yeah. Gosh. So you're behind who is out. Medicare is kicking in soon. How many 26-year-olds do you know in the Bay Area who are homeowners that you're behind? Well, I'm less in the Bay Area. I'm more in the Central Valley, so not quite fancy.

Starting point is 00:34:11 Okay. Any 26-year-old in California, how many of them own a home? Probably not many. But I'm an ambitious 26-year-old. Okay. I just want to make that clear that you're not. behind anyone. You're behind your own self-imposed goals. Yeah. Okay. That helps us just clear the decks right there. So you have a goal to be a homeowner in your 20s. Your parents are saying the interest rates are

Starting point is 00:34:34 high, you should wait, and you're saying, I don't want to wait. I just want to go buy a house. Pretty much, yeah. Okay. How much money do you have saved outside of an emergency fund for this house down payment? So I have about $49,000 total checking and savings. And that can. And that can, counts your emergency fund? That's kind of all the cash to your name? Yeah. Okay. I have 20,000 and a 401k from my last job, but other than that. And how much is a house that you would want to buy in your area? Right now, probably between like 400,000 to 500, 550. Okay. And what do you bring home? What is your after-tax monthly income? Don't include the 401k and health care, but kind of after the government takes its part, how much would you bring home

Starting point is 00:35:22 every month? Probably about 36 to 3,800. Okay. So our parameter here at Ramsey, to avoid you being house poor and avoid you making a regretful decision is 25% of your after-tax monthly income going towards housing. That includes the principal, the interest, the property taxes, the insurance, the HOA. Because what happens is, Kayla, you go out and buy a house and you're like, I did it. That house is $2,800.

Starting point is 00:35:48 of your income out of $3,800. Now you are broke. Right. That's what we want to avoid. So I'm just crunching the numbers here to show you, even with 20% down, that's $100,000 down, on a 15-year at the going rate, which let's call it 5.8% on a 15-year.

Starting point is 00:36:06 You're talking about $4,000 a month for that mortgage. Mm-hmm. So my question to you is, I love that you have this goal. The math says, we can't do it right now. Right. And I'm trying to figure out, like, I maybe get a second job. Because also, I don't really want to rent. I feel like renting doesn't really make sense, especially with, I mean, that's pretty much half of the mortgage every month, too. Okay, but there's also a lot less risk involved with renting. You don't have to cover the HVAC going out.

Starting point is 00:36:42 You don't have to cover, you know, you're covering rent, and that's buying you time and patience. and so I'm not saying that to crush the dreams. I'm just showing you the math of it going, I know it stinks to rent. It may be the wisest thing to stay at home for now and keep saving for another year. I think you should go out and get your own apartment. And I'm saying this intentionally, not a fancy one.

Starting point is 00:37:03 Like the least expensive one you could buy that's in a safe location. And practice, and it sounds so cheesy to say it like this, but practice the daily expenses, practice the bills coming every month, and they just rely on you and practice. Here's what it caught. Here's how much money I'm going to have at the end of every month and practice. I can't go out to eat or I get to go out to eat or whatever.

Starting point is 00:37:26 Like, it's getting your feet underneath you. You're like an amazing freshman in high school basketball player who's like, dude, I'm just going to skip it all and go to the draft. And everyone's like, hey, you could play your sophomore. You're in high school. Maybe go to college, get some good coaching there, and then head to the NBA. I mean, you're a go-getter and you are clearly good at safe.

Starting point is 00:37:49 Man, 26, I was so underwater with how much I'd spent. That's not you. Like, you're on it. But there's just several steps to take. But I can't parse how much of this is pent up. How much would you feel unshackled from this obsession with, I've got to get a house, I've got to buy a house. I'm behind, I'm behind.

Starting point is 00:38:09 To I'm 26 and I got a full-time job and I have 50 grand to my name. And I have $50 grand in my name and it's in cash and my mom comes down and says, you need to clean your room, right? Like how much of it is if I just got away from my parents, got my own place, got my own place, settled at in, did my own laundry, made my own meals, went home for Sunday afternoon breakfast or Sunday afternoon lunch, whatever. That would help this sense that you're behind. Because I do think at 26, you're behind because you still live with mom and dad making the kind of money you make. but you're not behind when it comes to home ownership and all that, especially in the area that we're trying to buy house. So that will scratch the itch of independence.

Starting point is 00:38:49 If you desperately want to get out, go rent. But please, please, please, don't go out and buy house. I don't think you'd even qualify at this point. But even if the bank said, sure, we'll give you a loan. It's going to be $3,000 a month out of your $3,800. Getting a side job is not a sustainable path to home ownership. You were going to burn out and call us back going, I need to sell this house.

Starting point is 00:39:08 It was a mistake. And I'll tell you, I bought a fancy house here in town and I just last, like, was it two or three weeks ago now, had to replace the whole central AC unit that passed inspection that was good to go. And it just died. And that was super expensive. And if you've burned every bit of cash you have just to walk in the front door, you're in a real, real mess. When the roof needs to be repaired, when the sidewalk's got to get fixed, when the foundation has an issue.

Starting point is 00:39:35 And we're just saying this is just part of owning it home. and it'll appreciate over time, but man, there can be some acute challenges you have that if you don't have the cash for it. George, people beat us up for the 25% thing. It's us trying to say, hey, we care about the fact that life happens. We still want you to invest and go on vacation

Starting point is 00:39:54 and enjoy your life and not just have to pay the home payment. That's all you can do with your life. So I hope that helps bring some clarity to it. And I'm going to give you my free home buying course, Kayla. So hang on the line. Our team will make sure you get that link I hope it gives you some clear next steps at least because I think right now what you need are just some facts.

Starting point is 00:40:13 Because if I give you a goal, Kayla's going to go get it. Yes, you will. And I think that's all we need right now. And it's a lot of just emotion. And I just want independence at all costs. But I don't think the next move is to buy a house. And just the napkin math scared me looking at that. And that's the reality.

Starting point is 00:40:28 So I would not wait until interest rates drop. I think your parents are wrong on that one. You should buy a house when you're financially ready to buy a house. And that's the parameter. A quarter of your after-tax monthly income will help you make sure that you're making the right decision. And if you're California, again, this isn't us being fun ruiners. This is just us caring about you. It's a math problem. And so if we're telling you, hey, get it down to 25% of your take-home pay, that means you're going to have to move into less of a house and you're going to qualify for, no question.

Starting point is 00:40:58 That also means you're going to have to double and triple and quadruple down on your down payment to bring that total of the house you're buying down. might mean I got to work on my career and figure out how to make six figures in order to make this goal happen. Or I got to ask myself, do I have to live in California? Because there's other places in the Midwest where I can buy the same house for half or a quarter of the cost. Yeah. I grew up in Boston and at 20 I moved not because of the cost of living, but part of it was I don't know if I can sustain a life here in a high cost of living area. What kind of life do I want? And if home ownership is important to me, I got to migrate south to where I can get myself a nice little town home and afford it. And that's what I did. And now I'm on, you know, my fourth home in 13 years

Starting point is 00:41:42 just because I followed these principles. But having too much house is one of the worst things you can do for yourself financially because you will not sleep well in that house. And you'll hit that goal and go, that wasn't the goal. The goal I really wanted was freedom. And this house is actually shackles. Yeah, there you go. And your own house becomes a prison that you lock on the inside. And man, I don't want that for anybody. And then the H-FAC breaks. Exactly. And it's a prison nightmare. It's a hot, hot prison. Ouchy. Thanks for the call. For anybody wanting that free first-time homebuyer course, we're going to drop a link

Starting point is 00:42:16 into the description of this episode. So wherever you're watching, go to the description. We'll drop a link there so you guys can check that out for free. Appreciate the call. Hey guys, it's Rachel Cruz. If you're working the baby steps, every major expense deserves a second look. And health care is one of the biggest expenses in most families' budgets. And That is why I recommend that you check out Christian health care ministries. CHM isn't insurance. It's a health cost-sharing ministry. That means members help pay one another's medical bills,

Starting point is 00:43:03 and they've been serving Christians since 1981. CHM programs start at just $115 a month. And here's why that matters. If you are paying more than you need to for health care, that money could be going toward paying off debt, building your emergency fund, or reaching your next financial goal. And your monthly cost isn't based on your medical history or where you live. Y'all, a lot of families find CHM gives them more room in the budget.

Starting point is 00:43:31 That's why so many members say they're better with CHM. And right now, new members can receive a 50% credit towards their first month of membership. Go to CHMistries.org slash budget and use promo code Ramsey. That's CHMistries.org slash budget and promo code Ramsey. Welcome back to the Ramsey show in the Fairwinds Credit Union Studio. I'm George Camel here with Dr. John Deloney taking your calls. Mark is in Des Moines up next. Mark, welcome to the show.

Starting point is 00:44:08 Hey, thanks for taking my call. Absolutely. What's going on? So my wife and I, together, we make a lot $250,000. That's a combination of her income, my income, and then some VA money we have coming in, which we've been skating by, things have been eating. easy. However, we have no debt other than our mortgage. However, she is burnt out at work and is looking at going back to school. Her going back school will be covered by the GI bill, so I'm not

Starting point is 00:44:39 concerned about cash flowing that. Just trying to figure out how to or where to pull back. We've been going like crazy, trying to get our house paid off, and squirrel away as much money for retirement as possible. And I'm just kind of worried, you know, where I pull back. Do I pay less in the house? Do I invest less money? Do I put less into my kids' college funds? Where do I go? So you guys are in Babyseps 4 through 6. You're out of debt with the emergency fund. You're investing 15% in retirement. You're putting some money away for college and you're putting extra toward the mortgage. And you're saying, hey, if my income goes down to 120, what does this plan look like then. Correct. What will the income go down to? About that. So she makes $125 and she would be, yeah,

Starting point is 00:45:29 going back to school for two years. Okay. So new question, can we live and accomplish all of our goals making $125,000? Have you done the math on that and done a budget based on that to see what sacrifices must be made? So looking at it, I do think, I mean, I think we've, yeah, it looks like our expenses are about $7,000, and off of the $125, $130, we're bringing in just shy a nine a month. Great. So you still have some margin. You can still put something in college. You can still put something toward the mortgage. Correct. And this is also assuming your income doesn't go up. Right. With your job. And she's going to be out of school eventually, right, working again. Right. So really, we're looking at a temporary dip in income. Can we live off 125 for

Starting point is 00:46:18 three years. Correct. That really helps clear it and go, okay, we're not losing this forever. We can make sacrifices for a couple of years for her to go to school. What does she want to do? She wants to go more into like the therapy side of things. What is she doing now? She's medical, so it would just be kind of a different specialty.

Starting point is 00:46:40 Okay. My only fear, and John will be perfect to speak to this, is that she goes with her. And if she's burnt out now doing this, who's to say she's not going to get burnt out doing therapy, which is also a very difficult field. Right. Yeah, I'm trying to hear for the question beneath the question. Do you not think it's wise for your wife to go back to school? I have no problem with her going back.

Starting point is 00:47:02 I just, we've been working so hard to try and, you know, try and do everything right. And I feel... What makes this step feel like you're not doing something right? Because if you moralize it and make it a right or wrong issue, you can get sideways real fast. If you're trying to solve for, I must get on a track and never get off this track till the end of time, that's a recipe for a pretty rigid life. You created sort of your own prison there. Yeah, and you locked it on the inside. If you're creating a life with somebody, y'all are co-creating this thing and what do we want it to feel like?

Starting point is 00:47:38 What do we want to look like? We've been bust in our butt because you can flip the, like what you've told us, you can flip the whole thing around and say, we worked our butts off for this exact moment when one of us just has to say, off and tap out and go get another stop doing boxing and go do jiu-jitsu for a while. Like, it's not like we're quitting. It's we're going to retool for another exercise, right? And so we've done all this for this exact moment. That's what I'm trying to get to the thing beneath the thing here. Because it sounds like you all have worked your butts off.

Starting point is 00:48:07 This is a perfect time to go back to school. Somebody's already paid for. Yeah. It's like checking every single box. So I think the hard part for you is you saw the marathon time and went, dude, we're going to make great time. and now that time is going to double. It's going to take a longer time to save for college and to pay off the house.

Starting point is 00:48:23 That's the part I think you just need to grieve and go, man, that would have been cool to pay off the house in five years. It's going to take eight now. But you know it's going to be more awesome than that. Having a wife that loves the skin that she wakes up in every morning, having a wife that's got her spirit back, having a wife who's engaged in the thing that she really loves. Like, that's worth it 100 times out of 100, right? Absolutely. I appreciate it. And that's the one thing I would make sure she understands is the grass may not be that much greener on the other side.

Starting point is 00:48:52 I hope it is. I hope she loves therapy. But I would have her go talk to people who are doing the things she wants to do to get a full picture of it, not just what sounds like relief. And Mark, when y'all are talking about this, I want to, this doesn't get talked about very often. And so when you're sitting with your wife here, okay, I'm going to use you two as the example, but for everyone listening, your wife has. this feeling, this emotional set, like this physical, like I've got to be done with this. And I feel like I want to go back to school. I want to get trained and become a therapist. The world needs more therapists right now. Like, great. Those feelings are real and valid and good. And your feelings of frustration and I wanted to hit this goal and we had a deal. And suddenly, like we were both going to use what georgia said we were both running this marathon and then you stepped off the curb and broke your ankle your feelings of frustration and annoyance and oh dude those are real too

Starting point is 00:49:57 and they're not equally like one's more not more valid than the other they're both valid and they both have space on your kitchen table and so when your wife says i've got to be done there's a great opportunity we've set ourselves up for this moment that's true and you saying I'm going to be all in 100% and if I'm going to be fully in this secret world we call our marriage together, just you and me. I also have to be honest about my feelings.

Starting point is 00:50:23 I'm frustrated because I really wanted to get out from one of this house. Both of those are true. Right? So we're not fighting. We're not competing. It's not my feelings versus yours. It is both are true.

Starting point is 00:50:35 What's the right decision for us moving forward? And the way you've painted it, it sounds like the right decision is to have a whole and healthy wife to take advantage of this opportunity to have free tuition. And it's not like she's just saying I'm burnt out. I just want to stay at home and stay off in a space for the next three years.

Starting point is 00:50:48 It is, I'm going to actively be participating in building something because we do have this shared vision of our life. We both still are two independent people who go to our own jobs and work real hard to serve other people. And then we come home and do this thing called life. Like those things all work together, but both of your feelings count. Does that make sense? It does. I don't want you burying half of yourself just to keep the peace in your house. I want you being honest about what's going on in your heart and mind and then saying,

Starting point is 00:51:12 and because I value us, we're going to go do this thing. Or she might say, okay, what if in two years, what if we cut our spinning to the bone and got this house paid off, and then I went and did it? I can suck it up for two more years, right? That's how couples make united decisions when they're both honest and they can both hold space for each other's feelings, however uncomfortable those things are. Perfect. I really appreciate it. You got it, brother. You got your homework. And how it's, big things to both of you for your service.

Starting point is 00:51:41 Oh, absolutely. And not only service in the military, but service in your medical careers, service to go be a mental health therapist, like all that. Like you've dedicated your lives to help and hurting people, and I'm grateful for you. And it's cool to think they're more present because of the plan they followed. That's it. That's it. That's what I want from my therapist, from the person performing a medical procedure on me. I don't want my doctor to owe anybody anything. Yes. I'm not saying that you're a bad doctor if you have loans.

Starting point is 00:52:06 I'm just saying it's nice to know that you are fully present and focused because there's nothing else. on your mind, stressing you out financially. 100%. That's pretty cool. This show is sponsored by BetterHelp. Somewhere is the time when people escape, whether it's relaxing or going on vacation, we've all been told this lie that if we could just escape from it all, everything will magically work itself out.

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Starting point is 00:54:10 Michael is in Indianapolis up next. Michael, welcome to the show. How can we help? Yeah, great guys. Thanks for having me. So my wife and I actually won the lottery this past weekend. Literally? We won, yeah, we won $400,000 off a scratch-off ticket. Oh, nice.

Starting point is 00:54:31 Was this a goal you guys had? Like, was this a regular kind of habit and you finally hit it? Yeah, so, no, we were on vacation. I found a $5 bill on the ground and went and bought a lottery ticket with it. The second time I had ever played the lottery, And here we are. Wow. Dude, I've seen this movie.

Starting point is 00:54:48 Yeah, literally. I thought we've been saying. And it's a verified winner. Yeah, it went today and actually, and they verified it all and should be paid out in about four weeks. What's the payout? It's going to be close to $300. Wow. Do you owe taxes after that?

Starting point is 00:55:05 Because I know they withhold a forced amount, but you will likely owe taxes on top of that, right? Yeah, so they think it's estimated to be around $275. what we'll see at the end of everything. But we're working with a CPA and financial advisor to hopefully figure out all those details so we don't make any mistakes. Oh, good. So what do you need us for? Real quick, Michael, I got to ask you. It's a personal question, okay?

Starting point is 00:55:29 Just you and me and a couple million people listening, okay? Here's how I think I would handle this. If I got a scratch-off ticket, let's say for 400 grand, and then I took the cash-out option, and then there was the taxes. if I scratch this thing and it said you won $400,000 and my take home

Starting point is 00:55:50 what deposited in my account was $275 my first impulse and I'm embarrassed to say this would be like oh man you know what I mean I would first be like

Starting point is 00:55:59 oh dude I lost $125,000 even though I just got $275 out of nowhere right is that how you feel or are you a better person than me to the honest we're like ecstatic about it

Starting point is 00:56:11 because we were hoping to buy a $250,000 house in the next five years. And so we kind of saw this as like a literal gift from God. Like, hey, here's your house five years early. Wow. There's somebody just stumbling around right now, wondering where their $5 bill is. I hope you're happy, Michael.

Starting point is 00:56:25 Dang it. I'm just kidding. All right, you're a better person than me. Okay. So you've got a CPA and a smart investor, so they're going to handle the tax stuff and investing if you're going to do any of that. The question is, where are you at in the baby steps?

Starting point is 00:56:37 From a scale of we got consumer debt to we are investing 15% and saving for our kids college? Yeah, so that's what I'm calling you. So we obviously want to buy a house, but we've been paying off our debt. We actually just became debt-free three months ago. We paid off about ADK in three and a half, four years. Awesome.

Starting point is 00:56:56 So we're completely debt-free, and we're saving towards retirement, saving towards our kids' education, and now we're just trying to build up our savings for a house. And so we had about 15,000 saved up for it, and then obviously now with this money coming in, it's going to change some things. And so that's what I wanted to know from you guys is, hey, what would you do with this money? Would you use it to pay off the house and full that we're

Starting point is 00:57:19 going to buy, you know, whenever that happens? Or 100% in cash. 100% down plan. And if you have money left over, you know, you can enjoy some of it. You can give some of it. But investing some of it at this point, you're probably going to burn most of it just on this house purchase and that's okay. You got plenty of time to build wealth. What do you guys make in a year? I make about one 10, 115. And how old are you too? And my wife to stay home? We are 26.

Starting point is 00:57:47 Oh my goodness. So making six figures at 26 completely debt-free with a paid-for house, how much are you going to be investing a month? A couple grand? Yeah, I don't know. You're going to be just fine. I'm not even going to use the investment calculator because I think it'll break with that many zeros on the end from 26 to 65.

Starting point is 00:58:06 I'm going to tell you something to that. I would recommend you do that I would not have listened to me at 26, okay? We've already established you're a better person than me and you're wiser than me. And so I'm hoping that this would sink in. If you and your wife have been, had a goal for a $250,000 house and that was your dream and you all had a plan for it and suddenly the world drops $275,000 in your lap, I would stick to that $250,000. I'd buy that house and I would give that $25,000 away.

Starting point is 00:58:42 Because I think that's going to mark this is the kind of people we are. Yeah. And it would be a, because the temptation that I would have had at 26 is, I want to buy a $250,000 house, suddenly $275,000 drops out of the sky. I'm going to buy a $500,000 house and I'm going to put $275 down. That's what I would have done. and that would not have been a couple of action steps towards the man I want to become in my 40s, 50s, and 60s. And so you and your wife saying, let's stick to our original plan. We literally won the lottery.

Starting point is 00:59:18 And now we're going to bless another family, another whatever, with this 25K. And then we're going to wake up the following day and have a house with no bills. And we're going to be right back in the same situation, making good money with the life we want to have. and we're going to have real demonstrative action steps towards the couple we want to be, which is a generous couple that doesn't owe anybody any money. That's what I would recommend you do. You don't have to do any of that stuff I just said, but that'd be pretty rad. I love it.

Starting point is 00:59:45 And if you already know how to manage the money you have, then getting more of it is not going to crush you. It's the people who can't manage money, and then they get a huge pile of it. Well, now they're really screwed. They make a huge mess. That's why we see so many lottery winners to lose it in the first year or two. So way to go, man. That's awesome. All right, let's head out to Harrisburg, Pennsylvania.

Starting point is 01:00:04 Brian joins us there. What's going on, Brian? Hey, how are you? Good. So I got to let on a lot of time, so I'm going to ask my question. My fiancé has student loans, I don't have any, and I'm budgeting right now to put as much money, spare money that we have towards the student loan.

Starting point is 01:00:24 But I'm wondering if maybe I should try to split it between the student loan and savings or just put it all towards student loans. Well, number one, are you applying it to the student loan? Are you just saying I'm earmarking this in savings? What do you mean? Well, I don't recommend, and we wouldn't recommend, you paying off someone's loans that you're not actually officially legally married to. Yeah, so we're getting married in two months,

Starting point is 01:00:49 and I'm planning this for after we're married. Okay, sweet. That's what I was going to say. I would put it in a high-yield savings account, and you guys get back from the honeymoon, you've got the pile of money, let's apply to the student loans. So it depends on where you're at in the baby steps

Starting point is 01:01:03 We would say have your Sartar emergency fund $1,000,000,000 dollars, obviously make sure that the wedding is cash flow You got that? That has $5,000 in emergency, sorry, I didn't mean interrupt you. No, you're good, so you got $5,000 in cash and is the wedding all paid for, honeymoon paid for, all that? Yeah, pretty much, yeah.

Starting point is 01:01:20 Okay, I want pretty much to be, it's for sure paid for, we're not going to put the gap on a credit card. I have the money set aside for the last stuff we need. It's just a matter of... Like, sign of the check. Okay. And then once you guys are married, we're going to just make a list of all of our debts. Is it just your fiancé student loans, or are there other consumer debts as well?

Starting point is 01:01:40 No car, like no other debt on my side, and she didn't have any either. Great. So it's just her student loans. What's the balance? 30, all in about. Cool. So her student loans become y'all's debts and y'all pay money. So I would not, you said should I split someone to saving?

Starting point is 01:01:56 Should I split some over here? We would say just attack the debts. do nothing else but focus on these debts. And once those debts are paid off, now we can stack cash. You freed up all of those payments. That puts you in baby step three, where you get three to six months of expenses saved up in a high-yield savings account. So how long will that take you guys based on the current trajectory? I'm putting about, or my plan is about $1,000 a month towards the loans once we're married.

Starting point is 01:02:24 And so it'll probably be two and a half years. Is she working too? Yeah. So together, y'all can only put $1,000 in? That's all the margin y'all have? Yeah, or at least that's what I'm budging as of right now. What will your household income be? Mine is before taxes about 60, and hers before taxes is about 20.

Starting point is 01:02:49 Okay. Is she working full-time? Yeah, she'll be full-time. Making 20? Yeah. I'm confused by that. That's like $9 an hour. Yeah, or sorry, no, that's after taxes, sorry, I don't remember what the math was before taxes. Okay.

Starting point is 01:03:06 Yeah, sorry. Well, I would aim to try to get them paid off in less than two years. The average we see is 18 to 24 months to get rid of your consumer debt. And if it's just the student loans 30K, I would try to up that income once you guys are married. Have her making 40, you're making 70. Now we can knock this thing out way faster. Because $1,000 a month for 30 months, that's a grind. Especially if that's all of the margin you have.

Starting point is 01:03:29 Put 18 months on the calendar and have a what must be true for this to come to come to fruition conversation and see if y'all can make that happen. Hey, George Camel here. Listen, if you've had your phone two or three years, your phone can now be unlocked. That means you can switch to Boost Mobile to get unlocked, bring your own device, and keep more of your money where it belongs. Look, the fat cats of big wireless, they are counting on you, just staying put and overpaying every single month. They want you to think switching is complicated, risky, or just not worth it. Meanwhile, your bill keeps climbing like it's training for a triathlon. But Boost Mobile makes switching simple and way less spendy.

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Starting point is 01:05:21 with your private student loans, now is the time. WhyRefi helps borrowers explore low fixed rate refinancing options and affordable payment plans. Go to yrefi.com slash Ramsey. That's the letter Y-R-E-F-Y.com slash Ramsey may not be available in all states. Today's question comes from Jill in Minnesota. Jill writes, our son graduated high school last year and has not worked for the past seven months. He says he's applying for jobs, but he stays up all night playing video games and sleeps all day.

Starting point is 01:05:50 We've tried to help him and have given him plenty of time, but nothing has changed. We wrote up an agreement that gives him two months to find a job and start paying rent. If rent is late, his phone service and Wi-Fi privileges will be suspended If he doesn't pay rent for two months in a row, he'll get a 30-day notice to find another place to live. When we reviewed the plan with him, he became angry and hurt, and I'm struggling with intense mom guilt. I don't want to enable a lifestyle that isn't preparing him for adulthood. Are we being reasonable?

Starting point is 01:06:20 Here's the problem with this question. I don't want to enable a lifestyle that isn't preparing him for adulthood, and I don't want to feel uncomfortable. and those two things can't coexist. Our mutual friend, Henry Cloud, has a great story. It's very similar to this. That when the parent was talking to Dr. Cloud about this situation with their kid, he said, Dr. Cloud wisely said, what your kid needs desperately from you is problems. Because your son has zero incentive to do anything differently than what he's doing.

Starting point is 01:06:59 He has free rent. He has his free schedule. He has nothing, no responsibilities. He's just doing what a natural inclination, this oozing through life, because there's a place to ooze. He's on an infinite summer break right now. He graduates high school. What do 18 year olds want to do? Sleep all day and play video games. He's living the dream. Right. And the greatest gift he could get. The greatest gift a young man like this could get is responsibility. The idea that I have to do a thing because there are real consequences if I don't. And so I think you're not only being reasonable, I think you're being overly generous because now it's going to turn into a year where there's any true consequence here. Personally, this is just me. I haven't worked with people of this age my whole

Starting point is 01:07:45 career. Getting into the phone service and Wi-Fi privileges brings him back to a middle schooler and you back to I'm grinding you from your fill in the blank. And so if we're going to truly do a tenant, like a, like a tenant like a homeowner agreement here, we're not going to do little, we're not going to insert little mom and dad pokes in here. You pay your rent or you're out. Bigger than this, it almost feels like just to say, hey, you know what? We're wrong on this deal. We need you to move out. Like we want our house back. We want you to fly a little birdie fly. And it's time to go make it happen. And then he's going to have to go. And you're going to have to be the adult, emotionally intelligent, emotionally mature adult and

Starting point is 01:08:32 say, I am going to feel sad. I am going to feel upset that I did a thing and my son's mad at me. That's part of being a parent. But I know this is the right thing. Yeah, right now it sounds like every time you talk to him, you just sound like his landlord. And I think at 18, you're transitioning from parent to friend. And so what he probably needs is just some guidance, someone to care about his future and show him a path out and go, hey, I noticed you're really into this. Have you tried doing this over here?

Starting point is 01:09:01 Yeah, but maybe find him an outside mentor. For seven months and he's like, oh, I just want to play video games. Yeah. Not happening. Not happening. But I know at 18, like, there's things I love doing, but no one showed me that, oh, there's a job that I could actually do some of these things. So that's where I go.

Starting point is 01:09:15 Maybe he needs an outside mentor, a friend, a third party to kind of step in and get him excited about life. Here's the way I like to frame this. Um, less like, if you don't do this, then I'm cutting you off. I'm cutting off your relationships. I'm cutting off your home. I'm cutting off these things.

Starting point is 01:09:33 I like to frame these especially with all kids. But when you're talking to an 18-year-old, here's the choices in front of you. If you want to go to college, if you choose to go to college, here's how we are going to support you. If you choose to go get a job, here is how we're going to still open up our house

Starting point is 01:09:49 on Sundays for you to come over for lunch and you can sneak some laundry in. If you choose to do nothing, you are choosing to move out. you're choosing to fill in the blank and as a parent I can say I can't stand that you're making that choice because I want to be right here with you the whole time you're choosing to leave I don't like that choice but that's a choice you're making and I want to always hand the choice the responsibility um or another analogy I use a lot is I want to I want to hand the weight back on the bar that is life back to them

Starting point is 01:10:18 and say you've got to learn how to lift this and get stronger because that's how life works I'm not going to be there to clear the deck for you all the time um and if you've waited it until 18 to start enacting this, if mom guilt has haunted you his whole life, man, it's going to be an abrupt lesson for both of you. It's going to be really rocky for a season. No question about it. But yeah, I'm not going to have a high school graduate just living in my house. Freeloading. Yeah, playing video games all night and sleeping all day. As cool as it sounds. All right, Teddy is in Los Angeles up next. Teddy, what's going on? What's going on, you guys?

Starting point is 01:10:56 Thanks for taking my call. You got it, brother. What's up? So my wife and I would like to get your opinion on if leaving California in pursuit of a lower cost of living and eventually buying a home would be the best decision for our family. That's a big decision for two random guys. Yeah, we don't know you that well. You tell us. So you're saying you value home ownership over your current location?

Starting point is 01:11:25 Yeah, I think so. and just like the future of what our lives could be in like our family. Now you're talking. Now you're talking. Yeah. So there's a bigger picture here and you're going, here's what we really want. And none of these things mean we have to stay in California.

Starting point is 01:11:41 You're willing to make a sacrifice, which is wise because we always tell people you don't get a pass on math. If you can't afford to have the thing there, you don't automatically get it. And you might need to move to a lower cost of living area if your current income can't support it. I'm right on board with that. Where do you guys want to move? My wife is down with Tennessee, and I am down with no state income tax. Okay, so any state with no income tax, you're like, that's fine with me, and so Tennessee could be it. Texas, Tennessee, Florida, Nevada.

Starting point is 01:12:16 Yeah. Okay. And do your jobs transfer easily? So I work full-time as an EMT phobotomist in the ER right now, but I, I'm in school debt-free at my local community college, getting my nursing degree. Oh, boy. And my wife works full-time as an assistant manager at a clothing store. Awesome.

Starting point is 01:12:40 So both of you would need to find jobs before you make the move. And do you have family nearby in California right now, or would you, are you already kind of on your own? Yeah, that's kind of the thing that's keeping us here is, you know, we got another kid on the way. In January, we're having our second baby and our family, her parents and my mom, they all live around us. So it's like if we need to do something, we can drop our daughter off and it's free and we trust them. Yeah, sure. That's the thing I wanted you to weigh because a lot of people underestimate how great their life is until they move away from family. And they go,

Starting point is 01:13:18 oh my gosh, I didn't know that was such a lifeline until we didn't have it. My wife and I did that. We had two young kids and we moved halfway across the country. And both of our parents lived within a few hours from each other. It was tough. And what it meant was kind of like we always say you don't get a pass on math. Me and my wife did not get a pass on new relationships and we didn't get a pass on new friends and new mentors and things like that. We just had to go, we had to go not use the default settings, which had been our parents and our neighbors. And we had to go, we had to go dig in.

Starting point is 01:13:51 And I'll tell you on this side of it, leaving family has been really hard. And some parts of it have been amazing. Right? So there's no, there's no Scott free. But the thing that we wanted, like you're talking about, is we wanted financial freedom. We wanted water to fall from the sky occasionally. We wanted these giant green things called trees.

Starting point is 01:14:08 Like we had some things in our mind that we wanted for our kids and for our family, solving for peace. And that came at a, it does come at a cost. But on the whole, man, it's been the greatest thing we ever did. So once you make the decisions, just make peace with it. And don't go, man. And remember in California, just go, this is our new life. We said, this is it. We're going to move forward with this.

Starting point is 01:14:28 And so it must be true here. Exactly. And so you might need to start budgeting for some childcare with that newfound higher income thanks to less taxes. A lot of banks are happy to hold your money. But Fairwin's credit union helps you make progress. Most people spend years focusing on their financial goals and never stop to ask whether their bank is helping them get there or just holding on to their money. The real goal is building an emergency fund, paying cash for your money. your next car, saving for a home, looking at your finances and actually feeling some peace.

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Starting point is 01:16:22 nothing to show for it, I have a solution for you. It's the every dollar budgeting app. It'll help you find extra money every month. It helps you build a personalized plan to beat debt and build wealth. And in just 15 minutes, you're going to have a clear plan for your money. You're going to find thousands in hidden margin, and it will feel like you've got to raise. You're going to be in control again. So don't live normal, live like no one else. You can start every dollar for free in the app store or Google Play. David is in Lexington, Kentucky up next. What's going on, David? Hey, how's it going? Great. What's your question? I just kind of have a question about how the fastest and best way to get out of debt. Me and my wife, we've been married for four years

Starting point is 01:17:01 now. It took us about a year. We spent way too much money on our wedding. We realized that after about a year, after we've been married, and started to fight in our way out of it. We paid off a little over $30,000. And fast for a couple years, we bought a home. We still didn't have all our debt paid off at the time. Bought a home. Now we have two kids, and we have right at $42,000 in credit card debt. We have $20,000. We have $20,000. She has 20,000 student loans, 13,000 in a mower. I think I still owe 13,000 on my truck, not 14,000 on my truck. I make roughly, I do four different, I have four jobs and a mowing company of my own.

Starting point is 01:17:52 It's the mower. I think we're going to, and she has a little party business where she does parties all together. I think we're going to clear right at 100,000 this year. and we're just like, we're still not getting anywhere on the debt. So you guys make $100,000 and you have about $89,000 in debt? Yes. Plus the mortgage. Yeah, the mortgage is 1656 a month.

Starting point is 01:18:16 We owe $2.15 on it. Okay. So let's ignore the mortgage for now. We're going to walk through a process called the Baby Steps. Do you guys have $1,000 for a starter emergency fund? We do. Great. Baby Step 1 check.

Starting point is 01:18:28 Baby Step 2. We're going to knock out all of the money. consumer debt using the debt snowball method. So you ask, what is the fastest way to get out of debt? The one that has been proven to actually work, the one that we recommend that's caused millions of people to do this thing is called the debt snowball method where you list the balances, smallest to largest, and you ignore the interest rate, which is really hard to do when you see that interest adding up. But the goal here is momentum and progress, and you're going to knock out that smallest balance really fast. With all the margin you can muster up, selling stuff,

Starting point is 01:18:58 working those four extra jobs. She's hustling on the weekend with her side business. And once you free up a debt, you free up a payment. Now you apply that payment to the next debt. And so if you do that, making $100K and you got $89 in consumer debt, that's still going to take a while just based on the debt to income ratio. So now we go, okay, what can we sell? Well, you got to mower on a truck. Could we sell those things and get cheaper versions of them and get out of those payments? Or how much do you make on your mowing business on the side versus the... far, if I don't do any, pick up any other customers this year and I just stick where I'm at, I'm going to make 22, but as you take taxes out, it's going to be about, well, not taxes,

Starting point is 01:19:38 but gas and supply and the payment on the mower. I got zero percent interest for 48 months, so I don't have any interest on it. Are you trying to impress this, David? Trying to sell me on a mower? But we had, so all that together should be right at 15,000 cleared. Okay, so you basically bought a depreciating asset that, you basically bought a depreciating asset that, is 100% the valuation of your company. Right. And so I would say mathematically and psychologically and timewise and two young kids,

Starting point is 01:20:10 if you stop mowing and sold this tractor, there's 0% chance you get a 13 grand for it, but let's pretend you did. And you just said, I'm not in the mowing business anymore. You actually come out net neutral, which in your situation is net positive. Because if you just went and got an, like, for the time you mow, if you just went and got an hour, a minimum wage job,

Starting point is 01:20:31 you'd come out net better when it's all said and done. You get what I'm saying? Mm-hmm. So how much is the mower worth? It's brand new. I just bought it this year. Oh, boy. It's 2026.

Starting point is 01:20:43 Yeah, it's 2026. I've already put 120 hours on it. Oh, geez. Guess how many of your customers care if you have a 2026 mower versus the 22 addition? I have two nice mower. or is at my place. What kind of... Did you buy a tractor?

Starting point is 01:21:01 It's a scagg, tiger cat, too. Okay. Good gosh. So you wanted a nice toy, and you said, I can justify it with my side business. That's fine. Kind of, yeah. What's your main business? I work for a Walmart distribution center.

Starting point is 01:21:16 Okay, what's your second business? I do the maintenance owner church campus, which is a total of four different buildings. What makes you the most money? money per hour? Per hour is whenever I do landscaping jobs. So could you just work at your distribution center and cancel those other jobs and just start hustling more lawn care jobs? I could, but it's very flexible with my other three jobs are all here on the church campus.

Starting point is 01:21:45 All of them are here. I took the place of four other people. Whenever I took on all these positions, there was four different people doing them. I took all of them on. It's very flexible. I maybe work here 20 to 25. five hours a week, give or take a couple hours. What do you make per hour?

Starting point is 01:22:01 And I bring home. I think it was 17 hours, $1,400 a month after Social Security and taxes are cut out. Or saying if you make $50 an hour doing landscaping, even with less flexibility, you'll come out ahead. Right. But I'm worried that I run into the risk of not having a client, having the proper amount of clientele in order to fulfill all the area. Because this is year-round. I'm getting paid for everything here. I got you.

Starting point is 01:22:26 But here's the thing. you're in an emergency situation. You're 100% leveraged without your house. And that my screen says you're $109,000 in debt, which is 20 more than I factored. So where's the other 20 coming from? What is it now? You got 42 in credit cards, 20 in student loans,

Starting point is 01:22:46 13 on a mower, 14 on a truck. Is there anything I'm missing? Yeah. I said 20,000 student loans, correct? Yep. Yep, no, that's everything. What is the truck worth? You owe 14 on it.

Starting point is 01:22:57 What can you get for it, private party? I think I know what I need to do. I think I need to sell the truck, but everybody and my family's like, if you're working that much, you need a reliable truck. It's worth 20. I think I can get 24 out of it. So you will net 10K in which you could go get a truck for 10K. Right. That's still reliable. That's what I think I need to do, but so many people that I've relied on all my life. So many people are broke, David. You're asking broke people for advice. You're going to get broke people answers. Right. We're trying to show you a path out, and you're trying to justify it with. reliable transportation. And so what's your truck payment? $3.15 a month.

Starting point is 01:23:36 And then what's the mower payment? 316. No, I'm sorry, they dropped it. It was a $2.82 a month. Okay, but between the two, you just gave yourself a $600 net raise if you sold both of those things. Now you got some margin to knock out the student loans. Right. Because now you're only $62,000 in debt. so we can start knocking out the next mall's balance.

Starting point is 01:24:02 So even though I would clear, even though I'd clear more money a month, having the mowing business, you're saying I would still come out. You could go get a mower on Facebook Marketplace and charge 50 bucks a yard. The only thing I'm worried about on that mower is that you could resell it for nine.

Starting point is 01:24:18 Right. Could you get your 13 back out of it? No chance, I bet. I think I could probably get 10 to 11. Okay. So you could save up the difference and you'd still be bad. better off. If you came up with $3,000 in cash to get out of that loan and sold it, it's still wise.

Starting point is 01:24:33 So don't have the sunk cost fallacy of, well, I'm underwater on the mower, so I can't sell that. I can't sell the truck because I need reliable transportation. That's the kind of stuff that's going to keep you in debt. I can't give up this church job because it's flexible. Yeah, I fully believe I can sell the truck. I don't have an issue selling truck. It's just been trying to listen to other people I trust it, but I see what you're saying 100% there. So you're saying I should give up the church job and the mowing business and sell my truck and the end and just pick up a part-time. No, I'm saying if you're going to keep this tractor and keep this mowing business,

Starting point is 01:25:03 because it sounds like you're really good at it. It sounds like you're actually making some headway. You've reached that saturation point where the amount of jobs you're willing to go get barely covers your costs. But since you've barely covered your cost, if you found time, if you found another 22 hours in your schedule, could you fill that time with mowing jobs that would then get that cash flow of this business in a powerful way, get that truck, I mean, get that tractor paid off in three months. And now you're off to the races.

Starting point is 01:25:31 Right. You know what I'm saying? So don't do all three of those. Like, because then you'll just be sitting at home with one job, no truck, no, no lawnmowing business, no side hustles. You got to work extra jobs. I just want you to say like you've got to pick a few things and go laser focus on them instead of trying to do everything and keep a lifestyle and keep flexibility. It's just too much. Yeah, you're spreading yourself thin. So you asked us what's the fastest way out of debt? We just gave you a path out of this thing real fast. Now you've got to decide if you're going to go do it. Welcome back to the Ramsey show in the Fairwinds Credit Union Studio. I'm George Camel, joined by Dr. John Deloney, taking your calls at AAA 825-5-2-2-25. Jeff is in Seattle, Washington.

Starting point is 01:26:27 What's going on, Jeff? Hey, what's up, George and Dr. John? I have kind of a strange financial living situation, and I have a question basically about what to do next with my savings. All right, John is no stranger to strange. Hit us. Okay, so I'm 38. I work full-time remotely, and I sold my house in March. It was kind of a nightmare. And so I basically have like $900,000 in savings. I don't have any debt. I make like $220,000 last year. And I've been living in my car ever since then, which I know is not really the normal situation. And my plan is to move into a sale, buy and move into a sailboat. And no, November, but I don't know if this is a stupid financial mistake and whether or not I should sort of spend more money on my life. I'm not really doing anything with my savings and I don't have any children or a wife or anything. Tell me, tell me about this kind of nightmare. What was so

Starting point is 01:27:33 nightmarish about being a homeowner? Okay, so first time I ever bought a house, I bought it well within my means. It wasn't a huge amount. It ended up being 350 total. I think I ended up owing 200 when I sold it and I lost about 85 grand. So the reason it was a nightmare was there was a negligent survey during the closing process that led to an absolute legal nightmare between me and the neighbors. And during that process, I was hit by a hurricane and that denial of my insurance claim led to basically a lawsuit against the largest. title insurance company in the country. And it basically took up all of my free time, and it was just like destroying my life.

Starting point is 01:28:18 So I just figure, you know, you only get one life and I'm going to lose 85 grand. That was not fun, but. But you have 900 and savings now. How did you get $900,000 in cash? Well, so 800 of that is in the stock market. I guess I'm using the wrong terminology. Like a brokerage account? Non-retirement?

Starting point is 01:28:39 It's in a broker. it's in a brokerage account. Yeah, I'm lucky enough to have a family member who's a portfolio manager, so it's been great to not have to pay fees when I invest, and it's just really good at it. And so I've been putting money in this since I was 18, right? So 20 years of that, it's about $900K. I have a bunch of money in crypto that's, like, really I don't even add any into it.

Starting point is 01:29:02 And then I know you're supposed to have less in your savings, but I have like $100,000 in my checking account just because I am lazy, I guess. Okay, so what drove you to live in your car? Pun intended. Like, why not rent somewhere? That's a very strange decision to go. I'm selling my house. I have $900,000 and I'm going to choose to live in my car.

Starting point is 01:29:22 You know what not? You have more than a million in liquid money. More than that? I mean, you've got 900 in the stock market. Plus you said, crypto. Plus crypto. Like, you've, yeah, I guess you're not liquid. I have $800 in the stock market, yeah.

Starting point is 01:29:38 Okay. So why the car? car. Why not rent somewhere? Why are you scared of renting? I think maybe I'm having a midlife crisis. Basically, I'm not just like sitting in my car in an empty field. I'm driving around the country and using Starlink to work. And I'm just like seeing all the things I've never seen before. Like I've been there, I don't know, every national park and, you know, just beautiful. So this is an intentional adventure for you? Yeah, but to be honest, like when I first went into it, I, I said, okay, listen, you're basically rich for your age.

Starting point is 01:30:13 Why don't you, like, treat yourself and buy a van or an RV or something? And I just don't do that. I'm, like, using my car I already owned. And even the sailboat, like the sailboat I'm planning to buy in November, it's $25,000. And so, I mean, the stupid financial decision in my mind is I could buy a catamaran that's about 20% of my total net worth. But, you know, people do dumber stuff like that all the time. Like, the last guy bought a lawnmower that's worth. more than his house or something.

Starting point is 01:30:41 I wasn't fully paying attention, but... It wasn't that bad. I just feel like I'm... Yeah. But I wouldn't make your life decisions based on what's less dumb than what other people would do. I feel like right now you haven't been making super intentional decisions. It just sort of been like, that sounds fun. I'll try that.

Starting point is 01:30:56 So what are you really after? Like five years from now, where does Jeff want to be? Is he still living in a sailboat? Well, to be honest with you, maybe this is like path of scope of this conversation. But I don't think in five years, going to have a job because of AI, right? I know this is like a national conversation, and nobody really knows where it's going, but, like, I don't think I'm going to make it to 65.

Starting point is 01:31:20 Like financially or employment-wise, or you think you'll be dead by 65? No, I'm in good health. I think that my profession, right, I work in software. Okay. I am not sure that I'm going to be able to work to 65 if I wanted to. I think that I could be laid off in five years. So let's say I 100% agree with you. Like that that's a very real possibility.

Starting point is 01:31:46 And so I'll take you back to when I was part of a think tank with higher education and there was six of us on the team. And I think within six months, five of us had sold our house. Like we saw the math on the problem that was higher education. We're like, oh, this ends real soon. So two things happened. One, here I am this many years later and colleges are still kicking, right? And I was also right. Like, it's on not a great trajectory.

Starting point is 01:32:18 But in addition to selling my house, I also use that as a time to get my finances order, go back to school, get trained as a mental health professional, and to begin to expand what could then come next. and so if you want to get on a sailboat and just ride the seas and just say the end is coming for me and I'm not going to do anything else about it you can do that or this could be an amazing work it could be an amazing runway for you to do your software job and go get retooled in a totally different profession and into a totally different skill set for somebody else you can help for the next 20 or 30 or 40 years of your life. One of those feels like it's cashing out, and one of those just feels like I'm looking at a potential reality in front of me,

Starting point is 01:33:05 and so I'm going to, while I'm writing this thing as long as I can, because it sounds like you've got a great deal ahead of you, what could be true in an alternative world, right? I see. And I know a lot of people ask you, calling about how to get out of our money pit, but there's this saying that people say,

Starting point is 01:33:24 you can't take it with you, right? And like, am I just going to die with my, $100,000 in the bank and have, like, why did I work? I think about this all the time. I think you need a deeper purpose than just my work and my next toy. Do you want to have a relationship? Do you want to be married? Do you want to have kids? What kind of life do you want to build outside of, okay, you have, because here's the thing. It's not dumb to buy a sailboat in cash and have that adventure. It's dumb to make all of your life decisions based on the fact that it's all going to come down eventually, so why even try? It's just a nihilistic thought.

Starting point is 01:33:58 By the way, I don't blame you. Like, the, the, the, between the media and this, this emergent new technology we have and the national, like, there's some real challenges. I just told my son recently, I think your generation, the, the hardest thing you're going to have to fight is rage. Not anger. Anger's right. But rage. This impulse to, you know what? What's the point?

Starting point is 01:34:22 Nileism. Let's just burn it all down. And so, yeah, like, like, give yourself a picture and fight. So you're laid off. You had a five-year runway and a million dollars worth of salary over those five years to go retool and become this man that you want to become. What is that picture? Let's aim for that. And it should include relationships. Whatever you're looking for you will find. So be real careful about what you're looking for. You should not feel uncertain about investing. And you don't have to. That's why we created investing essentials, a two-night virtual event where George Camel and I, walk you through my playbook for investing and wealth planning. We'll simplify everything from 401Ks and mutual funds to passing on wealth so you can invest with confidence. Tickets start at $199.00. Get yours today at ramsysolutions.com slash events or click the link in the show notes. Hey George, I want to talk about that last call for a second.

Starting point is 01:35:56 The existential crisis? Yeah, because I think that young man tapped into, he's 38. All of us have to be honest about the, there's a band, and I'll say 50 to 20. 50 to, you know, my son's 16, he's experiencing it. There's this pervasive, the air we're breathing. We were told a story that wasn't true. We were told the story, if you just go do these things, if you just go, make money, if you just go get this degree, if you just go get this dream job, that suddenly

Starting point is 01:36:31 everything not only works out for you, but that you don't have any worries. And there's this, this, it's not growing, it's roiling already, just a rage and a trapped feeling of life is happening to me. I have no agency in this thing. What's the point? Right. And throughout history, these moments have happened and they've been flashpoints when there's big technology advancements that happen all the same time right it happens at the industrial revolution in before when it's real easy to give into the rage i feel like i'm uh obi one canobi right now right like you give into the rage and it shoots you off into directions of nihilism of blindly following something of wanting to burn everything down and i get it i'm in the middle of it right

Starting point is 01:37:25 and I've got a young son, I've got a daughter, I'm in the middle of it and I feel it and I get it. And also, my plea is to not let the rage take over and to exhale and to say there's things in the world that we hate. There's things in the world that should not be this way. And anger in those moments is right. The question is what are we going to do with that anger? Are we going to direct it to, okay, here's what I can control here. here is what I'm going to stop listening to. I think a great gift for people in that young man's situation is again, responsibility. Who depends on you, right? And that means I got to be vulnerable

Starting point is 01:38:07 and I got to allow people into my life. I got to allow relationships. I've got not even just romantic relationships. I've got to allow other people in. And that means I've got to let myself out. I've got to have people that count on me and that I count on. And we have to find value and doing this called life together. And from that comes a shared sense of purpose of, oh, I matter. I got to show up here. My life can't just be about how much money I have in some stock market account somewhere because that it, as he said, you just get to a point like, what are we doing? If my job's going to go away someday, which by the way, all of our jobs are going to go away someday. We're going to go away someday. The job I have right now didn't exist when I was in college.

Starting point is 01:38:44 There's no such thing as a podcast. There's no such thing as YouTube, right? So the job I'm doing now, who knows what this many years later is going to look like? Who knows? It's easy to just get trapped in that. And instead of saying, okay, you're right, things might change someday. So do I have my home taken care of? Right. And I mean, that's kind of the base of the show. You can't control what the government's doing with X, Y, or Z. You can't control what this other country's doing. You can't control what this politician's doing. I can control. I'm going to have a group of guys over once a week. I am going to control do I owe anybody any money? And I can control.

Starting point is 01:39:21 You know what? My job is looking more and more fragile by the day. I'm going to start. I don't want to be doing this. But I got two years of night classes and Saturday classes so that I can get retooled on a whole different career or a less fragile career. Like those are things we can choose. And man, I just want to implore people. Don't give in to the rage because rage always you end up in a place that you never wanted to be.

Starting point is 01:39:49 Right. And so feel that anger and then sit back and say, what can I control here? And how can I best use the time, the relationships, the resources I have to go create the life I want? And for me in my house, I say it all the time, we sell for peace. What is the least chaotic world that me and my wife, our kids, our close friends can create in a world that's chaotic, right? And that just guides our investing decisions, that guides our purchasing decisions that guides the, hey, you know what? But my daughter's at a church camp this week. So me and my son and my wife were like, dude, let's go see The Odyssey.

Starting point is 01:40:24 Three hours. Late show. Let's just go late. We did. And we stayed up past her bedtime, which screwed up my workout routine. We had a blast. The movie was awesome. We laughed as a family.

Starting point is 01:40:33 We ate too much. It was, we're solving for peace, right? And at all, most always comes from relationships and this idea, this question, who do I want to help with my job, with my giving, with my resources, with my, just with my time. Who do I want to help lift up? And will I allow myself to be lifted up? That was beautiful. I couldn't have said it better myself. Please, please. Please. You know what? I should have recommended a book for him and it's not a modern self-help book. It's the book of Ecclesiastes. I think that is the best book. If you're going through an existential

Starting point is 01:41:07 crisis, it'll help you reveal what matters. Because here's the, the TLDR, the big quote of the book is everything is meaningless. And meaningless does not mean a lack of meaning. The actual root word is vapor. It's temporary. It's quick. So then you go, okay, if everything's temporary, does nothing matter? Or does everything matter so much more? So much more. You get to choose.

Starting point is 01:41:26 Yeah. You could read that as, well, nothing matters. Financial nihilism it is. Or you could say, you know what really matters? Relationships, people, meaning, purpose of my work. That's the book. So go check that one out if you're still listening, my friend. That's a tough call.

Starting point is 01:41:41 But I relate to what he's going to. I relate to it. And not only do I relate to it, I hear it all over the place. Like that question, what's the point? not be, I have a million dollars and I want to live on a sailboat, but the root of that is what's the point? What is the point? Yeah. And not only what's the point is, not only what the point is it in the present, but if it's all just going to dot, dot, dot down the road, why even, right? And man, I get that. And fine meaning where you are. And that's my plea. Beautiful. Rant over. Tom is up in Jacksonville,

Starting point is 01:42:14 Florida. What's going on, Tom? Hey, how are you all doing? We're doing great, man, just having an existential crisis over here. How can we help? Yeah, not sure I can follow up with anything more meaningful than that speech. But my question, I want to call. So me and my wife are starting to look for a person, our first house. And so live in Florida, and there's townhouses everywhere. And I wanted to see what y'all's opinion is on buying a townhouse versus a single-family home. You know, you can get probably a little bit nicer of a house in a townhouse and for less, but I sometimes worry about, you know, you don't own all four-war.

Starting point is 01:42:49 wall. You have that share wall. So what do you all think in terms of that? Townhomes are moronic, Tom. I'm totally kidding. I just said that because George is right next to me and he lived in a townhouse for a long time. My first two homes were townhomes and I have no regrets. No, great idea. And if that gets you your foot in the door with home ownership, lovely. And I think town homes, people poo poo on them for really no good reason. Sometimes it's a slightly higher HOA fee. So the key really is location. Is it a neighborhood that's going to give decent appreciation, whether it's single family homes or townhomes. Does it make sense for your family based on the space you need? We had a, you know, three-bed, two-and-a-half bath townhome with

Starting point is 01:43:29 1,900 square feet. That's like twice the size of my childhood home. And so townhomes are bigger. They're nicer than ever. They get the nice countertops. And so if that's what you guys can afford and you don't want to wait to jump to the single-family home, then go for it. How much is it? A lot of them start in the high twos. So like if we're looking at, a decent single family home in the area. You're looking kind of upper threes and, you know, trying not to go too much past four, but you can get a pretty decent townhome for upper two, low threes.

Starting point is 01:43:59 And so, you know, especially with trying to not, you know, go above the 25% take home pay, it's, that's kind of one of the big things. But one other concern is what do you see on appreciation versus that? I know I feel like I've read that townhomes don't appreciate maybe the location, like you said, is one of the biggest things. Yeah, the location will matter the most. They might appreciate slightly slower if you, looked at the data, but I'll tell you the numbers on our town home, obviously this was during

Starting point is 01:44:22 like the COVID boom, but we bought for like 300 and it sold for 529, which is insane. Wow. And so to say that townhomes don't go up in value is BS. And the key is it was a very desirable neighborhood. A lot of people wanted to be in that neighborhood, regardless of what kind of home it was. And so that's where I would caution you to work with your real estate agent to go, what is a great location with good schools that's going to have decent resale value that we can afford. And so once you look at across the board, you're going to make a smart decision that's not going to leave you wondering, well, we could have made 4% more. You're not doing this to make the spread. You're doing this because you want a place that you can call your own. And you're going to build some

Starting point is 01:45:00 equity in the meantime. And what we did, we paid it off. We took that 100% equity, rolled it into the next one. And that's what will happen instead of you just renting for the foreseeable future instead of waiting for that single family home. So I hope that helps anybody out there wondering, should I do it, should I not, especially for young people. If you want to get that first home, a town home could be a great option. Hey guys, Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now, you can get that same kind of help any time with Ask Ramsey.

Starting point is 01:45:59 Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want some. something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to Ramsey Solutions.com and try Ask Ramsey today. That's Ramsey Solutions.com. Buying or selling your home is high stakes because one bad deal can cost you tens of thousands. You don't want to overpay for your next house or sell your current home for less than it's worth. That's why Ramsey trusted connects you with vetted real estate agents who have the experience to guide you step by step to make smart decisions not expensive mistakes. You can find a local Ramsey trusted agent who has your best interest at heart for

Starting point is 01:46:51 free at Ramsey Solutions.com slash agent or click the link in the description if you're listening on YouTube or podcast. Katie is in Milwaukee up next. Katie, welcome to the show. You made it. Yeah, thanks. Thanks for taking my call today. Absolutely. What's going on? So my husband keeps using debt to finance our lifestyle. We're not. We are not in debt. We are network, millionaires. But whenever we go to buy something, like a car, or looking at buying our first time together, he's like, we'll just get alone for that. You're like, why? Why would we do that? So you have the cash to pay for the whole thing outright, but he would prefer to take on the payment and use his cash elsewhere? We're not using his cash elsewhere. Like, what's his logic behind it?

Starting point is 01:47:41 I think it's because that's what people do. So he doesn't know any better. He's just like, well, you get a car payment. Who pays full price for the car in cash? That's crazy. Is that his mentality? Yes, yes. How long have you guys been married?

Starting point is 01:47:58 We've been married eight years. And this has been like this the whole time. You guys have misaligned values when it comes to money from day one. Yes. We were married and we moved countries. We had a baby all very close. kind of close together. So I was kind of elsewhere kind of focused. And now I'm kind of like, wait, we do what now? So I'm just kind of starting to pay more attention. And we've had the

Starting point is 01:48:24 conversation about it, but I haven't kind of had all the numbers in front of me to kind of go, wait, why are we doing this again? And now I want to kind of work towards our house. And I know he's going to be like, well, we'll just put down a small amount and we'll paid off. Yeah, he's busy taking on debt. He's not trying to pay some. off right now. Yeah, we don't have any debt, so that's nice. The beauty of the conversation you all have is it's actually not a numbers conversation. You can't outnumber him.

Starting point is 01:48:52 He's going to always have, well, you're not seeing this picture. Well, and let's be honest, it's worked out for him. Yes, he's been very fortunate to have great jobs. They've financed a bunch of his bachelor years. He's had great travel, lived all over the world. He'd be lucky, and he had invested. I give you that. But we're making big decisions now because we don't have a house.

Starting point is 01:49:15 If neither he hasn't not ever bought a house I have before in a previous relationship. And yeah, I think he's a bit scared of. There you go. And that's what I'm saying. Like the conversation to have now is the bachelor life you had is over. And in fact, the first marriage that we had when we didn't have a kid, it was just us traveling around the world, doing what, like that marriage is over. and now we have a new marriage, a new life that we're both co-creating together. Who do we want to be in that marriage?

Starting point is 01:49:47 And that's when you, we're not talking about why you take a loan and we got the cat. Because that gets to be a proxy war, it gets to be a distraction from the conversation, which is, I want to live a life with just you where we are never beholden to anyone, where we are always constantly free. and so anytime we take out a loan we're now they're our boss that this mortgage company is our boss and this car company is our boss and this credit card company is our boss I want you and me to be the drivers of our destiny and because you're a millionaire you all can do that right but this is about you saying here's what I want here's the life I want to build what life do you want to

Starting point is 01:50:33 build and you'll put that out on the table and discuss that because you all are other Otherwise, you're just going to get distracted, and he's going to actually be right, because all the data he has in his life up until now is, it always works out. Right. And so you trying to fight that is a futile game because for him, it's always worked out. It's the only life he knows. Yeah, because I've got the budget, and I'm kind of going, because I don't know. Has he ever looked at the budget in a meaningful way? Has he?

Starting point is 01:51:01 Yeah. Or is he just like, hey, cool, nice for you that you have the budget. but I'm going to keep living my life. He's kind of like, we should go to Portugal. That'd be great. I'm like, well, how much are you going to spend? He's like, well, it doesn't matter. Okay.

Starting point is 01:51:16 Well, so also part of this conversation is you haven't been part of the lifeblood of your home. You've probably taken on responsibilities that he's had a majority voting share. Yeah, and he takes care of this part of it. And now you're saying, hey, I want us to do our life together. That's a total sea change. That's a new marriage. Right. And I said to him, you know, we've got every dollar budget, so I'm kind of starting to record stuff just so I have visibility.

Starting point is 01:51:42 And I said, Jim, that doesn't mean that I'm going to take all the decisions away from you, not at all, and I don't want to do that. But I just want to have visibility so that we can say, well, we just spent 40 grand last year on travel. Right. Is that okay? Or do we want to spend 20? Sure. And so then when he's like, do when we should we do this trip, yes, I want to feel confident making those decisions rather than be like, can we really afford this? I mean, we can, but also I want to afford a house. But you want to do it intentionally instead of just, he's the free spirit and you're the nerd, and you guys have never really called that out. I'm guessing you guys don't have combined finances in every area.

Starting point is 01:52:17 That is correct, and that's the other thing that I've been battling for the last couple of years, is hey, let's just pull in the money we have from our previous country into this one. How much is that going to cost it? So he has his savings, you have your savings. There's one kind of checking account that you can both pay bills. out of together? Is that what happens? Yeah. So how much does he have in savings? I just wrote it down. I looked at all of our bank accounts together.

Starting point is 01:52:43 So you have access to all of his bank accounts? I can see it now. We have $582,000 in cash. Wow. No wonder. He's like, let's go to Portugal. We've got money to burn. And you're going, hey, I'd like to own a home. That money could go there. And so you guys really have different, you're going in totally different directions. Yeah. It's a tug of war. His disability is one thing and the shared decision making.

Starting point is 01:53:11 I do want to be confident in making the decision and not just leaving it to him. And we had this conversation a little while ago, and he's like, well, why do you care now? I'm like, well, when we moved here, and I'm not from here, when we moved here, I was 30 weeks pregnant. I had a lot going on. I was finishing our house. I was living in a new country. Yeah, I didn't care. It was not on the radar.

Starting point is 01:53:34 But now that we're kind of like, okay, we've settled in and we're, you know, living life and I think was working for a couple of years, not right now. Well, his line of questioning was just defensive. Well, why do you care now? It wasn't, oh, I love that you want to be involved. Let's create some goals and vision for our life together. And also, Katie, you have to be honest if you're a fun partner to do life with when it comes to these things. Well, I want to be a fun partner. thing. I, you know, he's, he's a fun personality and I want to be able to be, yes, let's do that,

Starting point is 01:54:10 let's have fun, let's do those crazy things, let's go on the helicopter, right? Right. But I'm not sure how much with spending. I'm not sure, you know, I've got a few of these things. And I just kind of like, until I have the full visibility, I don't feel I can, I can be that fun. Have you shared that with him? Like, hey, I'm not trying to kill the fun. I just want to make sure that we're planning for the fun because I'm more type A and it gives me peace to know ahead of time what we're going to do. Yeah, I don't think he believes me necessarily

Starting point is 01:54:40 because I think he thinks I'm going to put him on a leash. Do you put him on a leash in other ways? No. Have you put him on a leash before? Nope. Okay, then that's him just projecting out. He's making up stories, right? Right.

Starting point is 01:54:55 But there's something to be said for the honesty of your biggest fear is that I put you on a leash my biggest fear is that we have no leash and we run out. Well, it's not even that we run out. It's just that we don't make smart decisions, i.e., if I want to spend, let's say we find a house that's $850,000, because our neighborhood, 850 is not unreasonable. And he's like, I only want to spend $6.50.

Starting point is 01:55:19 And based on what? Well, that's cool. I want to be able to be like, okay, we can't afford $8.50 because of A, B, and C. Wouldn't that be awesome? Let's make that decision together. rather than the fear of not being able to afford it because we don't really have a good plan. So he can justify it when he wants to use the numbers against you

Starting point is 01:55:40 and weaponize it. Yeah, I have a good example. He made an investment. Okay, go ahead. He made an investment with a friend in a hotel. Without telling you? No, no, no. Okay.

Starting point is 01:55:53 He told me over time, but it started out with 50 grand and then more and then more. We're at 200 grand, with zero return. and six years. Oh my goodness. You guys probably need a counselor more than you need a budget, but I'd recommend both. Hey, what's up guys? It's Jade Warshot. Listen, summer spending adds up so fast between vacations and road trips and camp fees and events and all the extra gas and grocery runs, money can get tight before you know it. To really get your money under control and keep it that way, you're going to need a plan. And that's what you'll get with the every dollar budget app.

Starting point is 01:56:45 It helps you track your spending, free up cash to put toward debt and savings, and it's the simplest way to make a plan for your money before the month begins. So, no more wondering where your money's going. You're telling it where to go. Download every dollar in the app store or Google Play and start for free today. Our scripture of the day, Philippians 1-6. God who began the good work within you will continue his work until it is finally finished. Michael Jordan once said some people want it to happen.

Starting point is 01:57:24 some wish it would happen, others make it happen. How's that motivation for you? That's a good line. I like that. Meredith is in Raleigh, North Carolina up next. What's going on, Meredith? Hey, yeah. So I am a recently divorced single mom of two kids, and I've discovered the baby steps to kind of help me get back on track,

Starting point is 01:57:45 and I'm at the point where I'm almost ready to start investing my 15%. Awesome. However, I am in real estate, and I own a property, management firm on the side. And so every month, my salary changes. So I'm just curious, like, what's the best way to go about calculating my 15%. Well, you know what a bad month looks like. You know what a good month looks like. Have you had any $0 months? What's been your lowest month in the last, say, 12 months? Yes, I have some zeros, but I run myself as an S-Corp, so I pay myself a monthly reasonable salary. So I don't know, like, do I use the 15% from that salary or?

Starting point is 01:58:30 Yeah, what did you report on your taxes? How much income? Like 140. Great. So I would base it off of that or whatever you're going to, you know, have this year. So you go, all right, 140, 15%, that's 21 grand a year. Every month, I need to be doing 1750 into some type of retirement accounts. Okay. So just pick a. number and like stick to it every month. And then whatever comes in, the other way to do it is, hey, if I got it, whatever comes in that month, I'm investing 15% of that. If nothing comes in, nothing gets invested. If 20 grand comes in, 15% gets invested. And do you do that based on the growth or do I like subtract out all my business expenses? Well, if it's business expenses,

Starting point is 01:59:13 you can because whatever you're actually taking home is what you want to factor the 15% on. So whatever your gross income, you're taking home, you want 15%? of that. Okay. And then should I have like two separate savings, like two separate six months accounts, like one for business expenses and one for personal or is my like emergency fund only like personal? I would keep your emergency fund and a retained earnings account with your business. So if you know there's expenses coming up, I don't know what kind of overhead you have. Some businesses don't have much. Some you know I need to invest in this. I need to replace this. I need to cover the taxes here. So you can figure that out with your CPA if you have one on how much you need to set aside for your specific business.

Starting point is 01:59:56 But I think having both and separate is wise. Business checking, business savings, personal checking, personal savings. Okay. Absolutely. And this is good for anyone with a regular income out there, I always recommend having sort of a peaks and valley fund outside of your emergency fund. If you know you're going to have a great month, well, you know you're going to have more than you need for your expenses. So set that money aside in savings so that when you have a low month, you can then pull money out of that without dipping into the emergency fund.

Starting point is 02:00:24 It's how farmers have lived for centuries. Centuries. Yeah, they know. Like, I'm not, I'm going to get the harvest once a year. Once a year. And I need to put that money away to cover my expenses for the rest of the year. Yeah. Live like a farmer. Live like a farmer. George means farmer in Greek. Fun fact. Fun fact. I always try to give you one, John.

Starting point is 02:00:41 That didn't feel as fun as I was hoping it would. It's fun to me. I never said it was fun for you. It's fun for me. There you go. Caleb is in Phoenix up next. What's going on, Caleb? Hey guys, I want to thank you for just everything you do. My wife and I started following the baby steps three months ago. So it's completely changed our perspective on money, and you guys are awesome. Love to hear that. Yeah, so my question is, I'm in a lease car right now.

Starting point is 02:01:06 I hate myself now after listening to you guys. So I'm of 4,000 miles over it, and I've got 13 months to go. I'm just trying to figure out what I should do, whether save up money for the car, save up to pay the fees at the end, or buy a car now to call. put miles on it. Ouchy. Out of curiosity, what is the fees for going over your mileage? It's 25 cents a mile.

Starting point is 02:01:27 Oof. Yikes. Okay. And we're just going to continue down this road, literally, because you're just driving too much. Yeah, my work commute to about 40 miles a day, and that's just accumulated over the time. Well, there's three ways out. None of them are fun. All of them are painful.

Starting point is 02:01:47 There's early termination, which is the most expensive way to go. There's the lease transfer where you find someone else to take it over. Good luck with that. And there's the least buyout, which is the most popular one where you need to come up with the full amount. So have you figured out the early buyout? I haven't. I put a significant amount down, and I know I only owe like $6,000 left on it. Yeah, but that's not what the early buyout's going to be.

Starting point is 02:02:11 I would contact them and say, hey, what is the early buyout amount to get you out of this thing? and then that becomes the number to save up for. If you want to then own the car, then you can decide I'm going to sell this car, I'm going to keep this car. Got it. So my payment's really low. I actually traded in a paid off car for this. So I put $10,000 down.

Starting point is 02:02:33 So my payment's only $2.40. If I terminate this early, is that going to hurt me? Because I don't get that $2.40 payment for a little bit longer. Is that the $2.40 payment? Your balloon at the end of this with penalties alone is going to be thousands of dollars. That's the number that really matters. versus the payment. So how much do you make? About $100,000 a year.

Starting point is 02:02:58 Okay. And how many months are left on the lease? 13. Okay. So I would at least find out from them. If there's only 13 months left, you may be able to afford it. Do you have anything saved? No, I just paid off a bike, and I've got like $2,000 left in savings. Okay. Well, we need to figure out the buyout price, and that will give you the home. homework to figure out if this is going to be worth doing. If you're going to do it, the lease buyout is the best option financially speaking, because then at least you own the car and then you can

Starting point is 02:03:29 sell that car for what it's worth. So the hope is that you find out the buyout amount is, let's say, $20,000, $15,000, but the car is worth $30. So now you buy it out and you then sell it and you have all that money to go buy yourself a different car in cash. Got it. Okay. That's the fun way out. Do you have any other debt? Yeah, my wife's car We only owe like $19,000 on But that's it Caleb, I got to stop you

Starting point is 02:03:57 I don't want to ever hear the word Only in front of debt ever again It's only 240 bucks a month Well, it's only 19,000 You're right, you're right That's us justifying our decisions I know you've done this On the back of a napkin

Starting point is 02:04:10 How much are you projecting In fees, in mileage fees Are you going to have to pay? Oh, it's going to be bad Well, Mike, word commute It's going to get short here in the next couple months, so I don't know what it's going to be.

Starting point is 02:04:22 I just know I'm going to stop driving this car as soon as our work location changes as what I was planning on. I'm just wondering if it's cheaper to Uber to work every day. It might be. I'm not sure. I'm actually, funny enough, the bike I have, it's a dirt bike,

Starting point is 02:04:41 and the new shop location that's opening up is so close that I can actually take the desert to drive there. I was going to ride the bike to work. Wow. That's pretty desperate. I mean, based on your payment, $240 in 13 months, that's a little over $3,000 remaining in payments. So I don't think it's going to be that big of a number,

Starting point is 02:05:00 and I'm hoping the car is worth more than $3,000. It definitely is. Plus the 10 you've already put in it, so let's say $13,000. There's a real chance you call them, and they give you a smaller number than I have in my head. Right now, and the number I have in my head is dramatic and caustic, because that's kind of how I how I do life.

Starting point is 02:05:20 That's what's happening in John's brain right. You might get a three or four or five thousand dollar number and that would be worth scratching a claw and just buying this car

Starting point is 02:05:28 and taking that. I mean, think of how stress is you can't drive your own car just to go run down the street because or to go to a buddy's house and you have to calculate oh it's going to be $8 for me

Starting point is 02:05:39 to go to my friend's house because and there's too much warrant hair so we're going to ding you for that so these are leases are my least favorite. And if you're thinking about it, you're going, well, it seems like a good deal. The payment's lower. Well, that's because you owe nothing at the end of it. You're just

Starting point is 02:05:55 prepaying the most expensive section of depreciation and then handing back the car. And by the way, tell me if I'm wrong here, George, by putting 10 grand down on a lease, you just wrote them a check for the depreciation. Oh, they're very happy to get some money up front. You gave them cash for the depreciation. They're winning on every side. And it's why you're going, well, if they know, it's the best, it's people go, George, so smart because they're covering everything. All the maintenance is covered. They're happy to sell you that dream. But the truth is they're making so much money on it. It's why they push people towards leases. And they take the car back after you've paid for all the depreciation after two years.

Starting point is 02:06:32 They've maintained their vehicle. Now they have an asset to sell on top of that. Then they call it certified used and resell it at premium price and minus the depreciation that you gave them cash for. They've changed the oil on their car and now they've won twice. That's a genius scam. Man. That puts this hour of the Ramsey Show in the books. Remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.

The Ramsey Show - The Numbers Don't Lie

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