The Ramsey Show - There Are No Shortcuts to Financial Responsibility

Episode Date: April 22, 2024

💵 Sign-up for EveryDollar today - The simplest way to budget for your life! Jade Warshaw & George Kamel answer your questions and discuss: "My husband gambled all our money away and I just lost my job," "Why should I pay down my mortgage?" "Where should I start on the Baby Steps?" "Why real estate investing isn't just rainbows and paychecks," "Should I buy a house just because it's a good deal?" "Is it reasonable to ask our kids to sacrifice for our debt?" Support Our Sponsors: BetterHelp NetSuite Zander Insurance Next Steps 📞 Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET or click here! 🏦 Take Your 3-Minute Money Assessment - Get a personalized money plan! 🍎 Enter the Teacher Appreciation Giveaway 🏠 Find a Ramsey Trusted Real Estate Agent 💼 Find The Work You're Wired To Do Listen to more from Ramsey Network 🎙️ The Ramsey Show   🧠 The Dr. John Delony Show 🍸 Smart Money Happy Hour 💡 The Rachel Cruze Show 💸 The Ramsey Show Highlights 💰 George Kamel 💼 The Ken Coleman Show 📈 EntreLeadership Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

🎵 Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. I'm your host, Jade Warshaw. I am joined by best-selling author George Camel in the house. Tonight we're, today, also this afternoon, we'll be taking calls about your life and your money. So give us a call. The number is 888-825-5225 and we will chop it up together. We'll help you find a solution.

Let's go straight to the phone lines where we've got Jerry in Denver. I'm sorry, where we've got Ashley in Jacksonville, Florida. What's going on, Ashley? Hi. Oh my god, I don't know whether, I was just thinking this, I don't know if I should be excited that I'm on this show or if I should be just disappointed, but here we are.

Yeah, I know. Thank you guys for taking my call. I really appreciate it. I am stuck in a little bit of a pickle and i just you know i've come up since i've put in the request to be on the show i've come up with a couple different options for myself but um i just want to kind of get y'all's opinion and see what the best option would be but basically my husband makes about 85 000 base salary a year i made about 50 000 base salary well he commissioned, so sometimes it's a

little bit higher, maybe like up into the $110,000, but we've learned not to rely on any bonuses. So we go off of the base salary. Yes, that's right. Right. And then so we last year, we realized, you know, we had a two-year-old and I took a year off. I was suffering severely from postpartum depression and we accidentally kind of racked up a lot of money on our credit cards during that time. Okay. So now we're stuck at $35,000 on credit cards and the interest is all the way up to 27% on a couple of them. Yipes. Okay. Yeah. Okay. So I had a plan and you know what they say when you have a plan, right? Like throw it out the window because that is not what's going to happen. Let me just say because

we owned our home. We bought our home in 2021. We had about $75,000 of equity in it. Okay. So we put it on the market three months ago and we sold it and we got the $75,000 and I thought we were going to be, you know, pay off the credit cards and we're good now. What did you do? What did I do? I didn't do anything. So, you know, it happened for a reason and I believe that God had me, I've been married for five years. I've been with my husband for eight. Tell us what happened. He accidentally gambled a lot of money and we lost a lot of money um how much all of it uh 25 000 he lost so now you got so now well we've paid i paid off so as i didn't know that it's march madness i didn't know that it was going on um he was in a really bad spot mentally

he's doing a lot better he He's in therapy. He's doing everything to fix this. He feels absolutely terrible about it. Of course, everything. Regardless, I was also terminated from my job last month. Oh, boy. Okay. So let me recap right quick. In case. Let me just recap. So you were you went back to work, you were still making 50. Now you've been let go from that position or laid off. So that $50,000 is gone. Were you able to take any of the money from the sale of the house and pay off the $35,000 of credit cards?

Unfortunately, I was trying to get it consolidated before I paid it off. So I was literally calling the collection. I just want to know, did you get any of it paid off? No. Okay. And have you acquired more debt since then? I want to have a full picture of this. So all the only debt in the world that you have is these credit cards for $35,000.

Is that correct? And $11,000 of student loans. And $11,000 of student loans. Any cars? We have a lease ending next year, but we own our other vehicle. Okay. I want to caution you from this point on. I heard the word accidentally two times.

We accidentally, I had the baby, was feeling postpartum depression. We accidentally ran up $35,000 on a credit card. My husband accidentally gambled away $25,000. Okay. These are things that are not accidents. I wouldn't call $25,000. Okay? These are things that... Are not accidents. I wouldn't call them accidents, George. He intentionally gambled this amount of money. For sure.

He lost control. Oh, absolutely. I mean, it was 10 days after I lost my job, and his brother and him really talked about, oh, I made $3,500 a night. And he was looking at it like, maybe I can recoup some of her losses. And that right there, that's the problem because you guys looked at this debt, you keep finding quick ways out. You're like, we have $35,000 of debt. Let's sell the house. We'll take that equity. But wait, before we do that, let's try to consolidate it. And before we do that, let's try to gamble and see if we can get some money back i feel like you guys are trying to take a shortcut and each time it's

ending in like major disaster like this is a and so far i'm not feeling a lot of responsibility taking on your part or your husband's part it's been like well we had a plan but then life had no you chose to do the consolidation you chose to get that lease you chose to do the consolidation. You chose to get that lease. You chose to gamble away $25,000. And I'm not doing this as a judgment because I want to beat you up. I'm saying this because we have to own our decisions and realize that life isn't happening to us. We're going to start happening to it. That's right. So are we done making excuses?

Are we done with the bad decisions? Oh, absolutely. And that's, I mean, I definitely, you know, this is why I called him. My husband instantly said, he goes, you know that they're mean, right? And I said, great. We're financially abusing our credit cards. We're financially irresponsible. We have no budget.

We have no sense of direction. I need help. We need to click y'all's heads together. Y'all are treating yourselves way worse than we could ever treat you. That's true. We care about your financial future more than you do. We want to see you win, and there's a way out of this. Number one, is he in Gamblers Anonymous right now?

He's in therapy. He hasn't started any support groups just yet. Is it helping? I mean, you said that he was gambling March Madness, so it's only been, what, a month? Yeah. But this is not the first time this man has gambled. It isn't, but it's always been, like, maybe $200, $300,

and it's always been, like, with me or, me or like of my knowledge but this time he did it as far as you know there's a huge yeah it was a huge betrayal um we're marriage counseling we're in individual therapy we've been it's been it's i'm at this point now because of how long it's been i've had the time to go through all of the emotions so i think now instead of of being like, oh, you know, taking ownership of this because I didn't have a play in that aspect of it, I messed up. I was, you know, I, women can't win. We stay home with our babies and we can't afford it.

You can win, you can win, you can win. I don't want you making any more excuses. What I want you from this point on, I want you to take responsibility like George said, and we're going to give you a plan to walk out of this. Right now, your A1 is you're looking for new employment. Whatever you were doing before, let's look in that market and see if you can make $50,000 again or higher. Take this as an opportunity to bring in more income.

With your husband, he needs to be, if $85,000 is the base salary, he needs to be going bananas to get those bonuses. That's right. And at this point, you guys are walking through the baby steps. We teach it here all the time. Baby step one, put $1,000 aside. Do you guys have any money saved anywhere besides the $50,000? $15,000. That's it. That's all we have left. $15,000 or $50,000? $15,000.

$15,000. Okay. So we're taking that. We're putting $1,000 aside. That's your emergency fund. And then you're taking the rest. You're paying off that student loan today. Today you're paying it off. And then you're taking whatever's left and we're going to start knocking out these credit cards little by little. We don't need to consolidate it. We don't need to call anybody to do anything for us. You guys need to methodically take that margin every single month and put it towards that credit card. We're going to get you set up with every dollar so that you can budget as effectively as possible. And listen, today's the day they draw a line in the San George. Life's not going to just happen to you anymore.

You're going to happen to it. That's exactly right. This is The Ramsey Show. This show is sponsored by BetterHelp. This is the season for Halloween. It's October. We're wearing costumes and we're wearing masks. If you haven't started planning your costume yet, get on it.

And while you're thinking about it, I want you to be honest. A lot of us hide ourselves. We hide our true selves behind costumes and masks all the time. We do this at work. We do this all the time. We do this at work. We do this around our friends. We do this around our families. We even do this when we look at ourselves in the mirror. I know because I've been there multiple times in my life, and it's the worst.

If you feel like you're stuck hiding behind masks and costumes all the time, if you find yourself hiding from your true self, I want you to consider talking with a therapist. Therapy is a place where you can be honest, where you can talk to somebody else and reflect and learn, and you can accept all the parts of yourself over time and start living an authentic life. Masks and costumes should be for Halloween parties, not for our emotions and our true selves. And if you're considering therapy, try calling my friends at BetterHelp. BetterHelp is 100% online therapy. You can talk with your therapist anywhere, so it's convenient for you and your schedule. Just fill out a short online survey and you'll be matched with a licensed therapist. Plus, you can switch therapist at any time for no

additional cost. Take off the costumes and take off the mask with BetterHelp. Visit BetterHelp.com slash Deloney to get 10% off your first month. That's BetterHelp.com slash Deloney. You're listening to The Ramsey Show. I'm your host, Jade Warshaw, joined by George Campbell. Hey, the Live Like No One Else cruise is back. Hey, don't call it a comeback. I'm calling it a comeback, George. It came all the way back from 2020.

Some of you remember we tried to do this back in the day, and the virus had another plan. And now, you know, you can't keep a good cruise down, George. You can't keep us at bay, literally. Hey, that's good. That's good. They should have used that in the marketing. They should have.

Listen, this is your chance. Don't miss the boat how about that one oh just saying all right join Dave and all the Ramsey personalities I'm talking about you George me the Big Eagle himself Rachel Cruz Ken Coleman John Deloney did I ever get everybody we're all gonna be at sea March 22nd to 29th uh the live like no one else cruise this is what it is and so for those of you who are on baby step four or above this is the ultimate debt free celebration and i stress george baby step four or above because if you're in baby step two we don't want to see you on this cruise because we want you paying off your debt instead is that right yeah this is honor system we have no way to officially pull your credit report to make sure you don't have debt.

I'll be there doing that. Yeah, that would be fun. I'll be checking everybody in. Before you get on board. We got some special guests. Man. We got some cool friends. Stephen Curtis Chapman, Stephen Bargatze, Nate Bargatze's dad doing magic and comedy,

Deena Carter, Carolyn Xavier, another great comedian, Wynn and Phil, songwriters of some of the biggest country hits you've ever heard, the behind the scenes guys. So this is going to, Manit Chauhan as well.

I love Manit. I love anything cooking related. Food network star and wonderful chef. Apparently, yeah, apparently she'll be doing

some food demonstrations. That's great. That's where I'm going. Listen, I'm going because of the locations. We're going to Turks and Caicos,

St. Thomas, San Juan, the Bahamas. Listen, I'm going because of the locations. We're going to Turks and Caicos, St. Thomas, San Juan, the Bahamas. Listen, you do not want to miss this. Man, the tickets are going so, so fast. We started posting about this last week, and the tickets started just zoom zooming. Again, we tried to do this in 2020, and it sold out in a couple of weeks. And so now that we're bringing it back, these cabins are getting booked up with the quickness. Well, there's more demand. Think about it. In the last five years, how many people have gotten out of debt, got the emergency fund, began investing? So there's even more demand now. People saying, I wanted to go, now I can go. That's a very good point. So just

know VIP upgrades are already sold out and the suites are almost sold out too. So trust me, as someone who worked on cruise ships for 10 years, you need to get these tickets because you want to get the good, good, get you a room with a balcony, with a window. You know what I'm saying, George? That's what you need. Get that good room. Book your cabin at ramseysolutions.com slash cruise. That's ramseysolutions.com slash cruise. Do it today. Oh, I'm excited. Let's go straight to the phone lines where we've got Jerry in San Jose, California. By the way, if you want to call us, the number is 888- five five two two five and we'll hook you up jerry what's going on buddy well sir george and madam jade thank you for taking my call i appreciate

it thank you of course uh so here's the deal uh my wife and i we we are having a difficult time trying to decide between uh living close to our aging parents, even though it means that we kind of have limited income opportunities and even more expensive housing, versus moving further away to kind of improve our income and maybe even find better housing opportunities. Okay. Where do your parents live? Sorry, go ahead. Where do your parents live that it's go ahead. Where do your parents live that it's more expensive and less opportunity housing wise? Well, so Central Valley of California,

I'm sure you're probably already aware, housing is somewhat expensive in the state. And, you know, we do okay, but we're getting to the point where we're having a tough time making the ends meet. Okay. So you're already there. Yes, ma'am. So it's a matter of staying there versus moving somewhere that makes more economical sense for you.

That is correct. Is this both sets of parents? No, sir. My set of parents are really my mother. She does not live in California, so that makes it easier. Where does she live? In Chalang, yes. Are you trying to, is the other option moving by where she is?

That's what I'm trying to clarify. I see. Well, the option we're considering is either A, living kind of halfway between her parents and my mother, or just moving where we could get the best income. Where does your mother live? My mother, she lives in Denver, Colorado. Oh, boy. Two very high markets.

Okay. I don't know if this is even a possibility, but I'm throwing it out there. Can they move closer to wherever you land? Well, that is actually, that's a great question. So my mother has expressed the possibility of doing that. She said, wherever you guys end up, I'll come and move next to you guys. I think the challenge is with my wife's parents. They're not quite as willing to move, and that's where the rub lies.

What is the nature of their care? Are they actually in poor health right now? No, no, no. They're doing great. They are in their 80s, but they're in very good shape for being in their 80s. I don't see why you couldn't just move further away and visit when you need to, and if things take a turn, you can always reassess. Yeah, yeah.

I think that's kind of where we are leaning. I guess for me the concern was, you know, let's say we take off, we do our thing, and then, you know you know mom or dad starts going downhill and so there's the possibility that you know my wife might be living you know months hopefully not over a year but you know just taking care of them while I'm holding down the sport is that the plan that as they is that the plan that as they get older you guys would be primary care providers? I think so. That's kind of the assumption. It's kind of like, yeah, what we thought we would be doing. Well, I would definitely, instead of assuming that, I would definitely speak with them and find out what they have in

place. They might have long-term care insurance. They might have something in place or have an alternate plan since, you know, they're the people that are in question here. So I would definitely speak with them and find out. And that way you guys can make a plan together that makes sense. And honestly, as the caretaker, you guys are, I'm trying to say this delicately, it's your time and resource and effort. So in many ways, it might make sense for them to come where you are so that you can afford to take care of them because living in you know central valley and also having to take time off from work these

are all things that you guys are going to have to consider um in order to make this work so i kind of probably just threw another set of variables in there but yeah honestly i think you have well spoken jade that that's also kind of what's been coming up in the conversations between my wife and I. She's actually not too far away from me. And she is confirming, she's where we're at. You know, the assumption is that we're going to take care of you guys as you continue to age. And we're happy to do that. But in order for us to do that, it's got to work out for us financially so that when the time comes for us to retire, we're also, you know, in an advantageous position. Yeah, that's the big caveat here is I don't want you guys to have your financial goals held back because you're taking care of the parents. And then one day you wake up and go, oh, crap, we're still broke.

And we had nothing to show for all of our hard work. So if they have a big nest egg, I'd rather see them get quality in-home care if that's the option. But at least roll out all the options, put the conversation, put all the cards on the table, and then make a decision when the time comes versus what could be five years from now. Absolutely. Either way, I think that you guys have to get to a place that is sustainable for your lifestyle, for you to be able to live and have a home and take care of yourselves. That's a big, big piece of this puzzle.

Yeah, I absolutely agree. And I think that's, you know, like you said, it's just becoming more and more apparent that that has to be our focus if we want to, you know, make anything of ourselves and for our future generations. How old are you, Jerry? 39. 39? Okay. And what's you guys' financial outlook? Do you have debt? Are you doing well? So we do have debt. Actually, it's so funny. We were doing pretty good on the Ramsey program, but I got a little dumb and I got a car loan. Oh, Jerry.

But I know. You said this was funny, Jerry. Listen, from here on now, I want you guys working the baby steps. Yes, mom and dad, you need to think about what the future holds for them. But A1, Jerry, is you and your wife getting your financial situation in order. And that means paying off this debt and, hey, never get a car loan again. No more car loans. Put your financial mask on first, buddy.

I know. That's right. Yes, that's a good analogy, George. And give me a better punchline next time. That was not that funny. This is The Ramsey Show. What does the future hold for business? Ask nine experts and you'll get 10 different answers. Economic growth or a recession. Business taxes will go up or down. AI will help us work or it will replace us all. But there's no such thing as a crystal ball. That's

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what's next. And speaking of what's next, download the CFO's Guide to AI and Machine Learning at netsuite.com slash Ramsey. It's free at netsuite.com slash Ramsey. Hey, you're listening to The Ramsey Show. I'm your host, Jade Warshaw. I'm joined by your other host today. His name is George Camel. He is a bestselling author of Break Free From Broke. Breaking Free From Broke. I should say it the right way. It's active, I guess. It's active. We're Breaking Free From Broke. It's a great book. You should pick one up if you haven't. And if you want to give us a call, the number is 888-825-5225. We'd be happy to take calls and discuss your life and your money. That's what this show is all about. And with that,

we're going to go straight to the phone line and talk to Chase, who's in Orlando, Florida. What's going on, Chase? Hey, guys. So how are you doing today? We're doing great. How can we help? Yes. So I just, well, finished up baby step number three, which is I did one year of a fully funded emergency fund just because I'm a little bit paranoid, but so basically I'm still step four, step five, done working on, but what I'm struggling with is step six, paying off my home early. Okay. So essentially, I have $500 a month to play with. I only owe $107,000 left on my mortgage. And to me, I think that I'm ready to build wealth and start investing that $500 versus paying down my home's equity. So I'm just calling in to kind of get a little insight

on what I should do. And you're already investing your 15%, correct? Off your gross? Correct. Into my employer's 401k. So tell us why you're struggling with doing all three simultaneously. Because we found that people who walk the baby steps, when they embrace this method, most people pay off their home within seven to 10 years. And we've done the largest study of millionaires that there are. And we have found that most millionaires, 67% of millionaires have paid for homes that they paid off. And it makes up about a third of their investment portfolio as a whole. The other two thirds goes towards, you know, their employer based retirement accounts, or if they have Roth

IRAs, that sort of thing. Gotcha. I guess my big thing is I know my house isn't going to be, it's kind of that it's max equity in my opinion, because it's not in the nicest area or anything like that. So paying that off quickly versus having the money invested, I feel like the money invested, I get a bigger ROI in my investment long-term. What's your mortgage rate? My mortgage rate is 3.25%. Okay. And you're saying I'd rather invest that extra 500 bucks instead of paying down this 3.25% mortgage. Correct. And what would you invest in? My mortgage payment right now is only $800 a month. And that's including escrow. And what's your income?

My income is about $65,000 to $70,000 a year, depending on commissions. And how old are you? Sorry, one more question. 27. So the truth is you're going to become a millionaire regardless of what you do if you just consistently invest and never go into debt again. So what you're trying to do here is you're saying, I want to build wealth faster in the short term, maybe, because you're also speculating that your investment will make more than your forced pay down of 3.25%. Right. So what would you invest it into? Some kind of mutual fund that's tracking the top companies. Okay. And how long would you leave that money in there?

Since I'm only 27, probably until I'm in retirement age. Okay. Well, the other piece is, what if we could free up that mortgage payment you're making? Or at least most of it, aside from property taxes and insurance. How much is actually going to principal and interest out of that payment? So the payment's $880 a month. $700 of it is going to principal and interest. So the other $180 goes to my insurance and taxes. That feels real low. But okay. So let's imagine you freed up $700 in the next few years by aggressively paying down the mortgage. That's $1,200 you could be investing. That's serious. Right.

And you're also not taking into account that the mutual fund could go up and down over time, and you're going to be watching that money, and you're counting on this spread to happen. And so at the end of the day, you might make some money, you might not, but I would rather see you be free psychologically, emotionally, and financially by paying off the mortgage. Yeah, that's a big part of this that I think we, it's, you can't factor into an equation is the peace that you feel when you pay off a mortgage. Because you just told me you were paranoid to the fact that you have a year of emergency fund, but you're not paranoid

about owing $107,000 to a lender who could take away your home if something happened. I can see how that's contradicting for sure. So if I'm you, if you're truly paranoid, then I would want to see you pay off your house super fast. And if you hated the way it felt, then you could always borrow against it and get a mortgage again. But no one ever does because they love living in a paid-for home. Yeah, definitely. I just got to get over the fact that I'm no longer seeing any type of account grow because what I liked about the emergency fund

is I'm seeing that account grow. You are seeing it grow. I think people forget, like every time you pay off your mortgage, that's money back in your pocket. Every time you make payments, it's money back in your pocket. It's for savings and it's equity. And even if you're not in a great area,

you still could build another $107,000 in equity. Your house isn't going down in value. No. Unless you live in a mobile home. Do you? Right. I do actually, yes. Then your house is going down in value. Then your house is going down in value. You should have, listen, you should have told us that from the jump chase. Let's re-talk about this because yeah, I don't necessarily like the idea of you staying in a home in quotes that's going down in value. Regardless of pay it off early or not, you need to get out of this mobile home. And the good news is you've got a bunch of money sitting there. You've got six months of

savings that you don't necessarily need. You could put that towards a down payment if you wanted to, since you over-saved. Yeah, and in my opinion, I'm on a good-sized lot, so I could probably sell it for like $225,000, $230,000. So you would walk away with $100,000 in equity? Oh, yeah, about that or more. And that's the move. If I'm you, by the way, what do you have saved? Tell me how much you had.

In my emergency savings, I have $20,000. But in my retirement accounts, I have $70,000. So the $20,000, that's your one year of saved expenses? Yeah, because my expenses just total $1,500 a month. Okay. Times 12 is only $18,000. Then I changed my advice. I changed my advice.

I would not touch that because I think wherever you're moving to next, $20,000 is probably going to cover you for three to six months. But I would get out of this mobile home and I would try to recoup whatever you can and get as much value out of it while you still can. But you're right. Staying in it, you're just losing money hand over fist. I've never seen a millionaire say the key to becoming wealthy was I got in a mobile home and the payment I would have paid, I put into investments. I think you're going to be wealthy and I don't think this strategy is going to have anything to do with it. And then I think you're going to feel way better about paying off said mortgage because it's actually going to be a mortgage that actually does go up in value and you can buy in a better neighborhood. Now,

what you were saying makes a lot more sense for george and i but i think that's definitely going to be the move going forward oh that was different we got there all right let's try to talk to let's see sarah real quick she's in charleston south carolina what's going on sarah hi i'm doing good um i had a question about whether or not we should save for a house in about two years and buy or if we should just invest that into our IRA. Okay. Well, let's find out if you're in the position to do either. Do you guys have any debt? No. So we're on baby step four-ish. Perfect. We have no debt at all. We have two fully paid off cars. We have 70K in CDs and sorts with a high APY. Okay.

We have 5K in our checking. We have 55K in our savings. We have 14K in a Roth IRA for myself. And then my husband's IRA, his work is matching. We have 48K. Okay. And we were doing 10% and I wanted to increase that to 15%. Yeah. So technically you guys are on baby step 3B or baby step 4. It's up to you. You can do one before the other. Like if you say, you know what, for now, we're going to stop investing and we're just going to save up our down payment. You can do that. If you think that you can save the down payment in two to three years, you could make that move.

If you think it's going to take longer than two and a half, three years, then I would say start to invest some so that you don't lose out on that time. But you know, you've got 70,000 in CDs. When do they mature? In between a year and 10. Some of them are 12 months. Some of them are five. Some of them are two. I think the longest one was 10. Okay. Well, that gives you a little bit more time to save up to see what you can afford. Use the calculator on ramseysolutions.com. How much house can I afford? And start running those numbers to see what you need. And I think at this point, it's really just truly up to you guys. Yeah, the key is how urgent is this home purchase? You can invest anywhere from 0% to 15% while you save up that down payment quickly.

That's how to think about it. Love it. This is The Ramsey Show. These days, it's not if your identity gets stolen, it's when. And the only ID theft protection plan I have ever recommended is from Zander Insurance. It helps real people with real-life situations. Like the call we got on the show recently where a woman's abusive ex opened a credit card in her name and racked up over $8,000 in debt.

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You're listening to The Ramsey Show. If you've got questions about your money, we've got answers. I'm Jade Warshaw, your host. George Camel is your host today as well. And if you have a call, if you have a question, you can call in. The number is 888-825-5225. And a nice gentleman will pick up and screen your call. And if he sees fit, you will make it to the airwaves. That's how this works.

We're going to go to the phone lines. We've got Ashley in Fort Worth, Tejas. What's going on, Ashley? Hello. Thank you all so much. I'm so excited and nervous all at the same time. Us too. Don't worry.

We won't hurt you. Okay. I hope not. It's embarrassing a little bit. Some of the stuff I'm going to tell you. But I've been listening to the show for like 30 days, and I finished reading Total Money Makeover. My husband and I are both high earners, but I've made a lot of really stupid decisions with the money that we've been blessed, I've paid off about $40,000 in debt, which is my student loan, and then a small equity line that we had on our home, which was really kind of silly that we had it,

but it was just this little pet, as y'all said, that we just kept there because it was a low payment and didn't really seem like much of anything, but we've paid that off. We don't really have any other debt other than our vehicles and our home what are the vehicles so we both owe about 50 000 on our car so 100 total 102 driving some nice whips you know yeah we've and we've made you know we've bought new cars over a couple years we've just rolled a bunch of negative you know if it's over 50k's over 50K, it's a whip, Jade. I learned that. Yeah. Okay. I'm with it. I'm with it. So, um, I cannot, you said you're high earners. Can I just know, you know, what do you guys earn combined a year? Yeah. Um, after we pay, you know, the IRS, their pound of flesh, about 750 would be our combined. Mamacita. What do you guys do for a

living? Uh, we're both, uh, We're both work and sales and leadership positions. Very cool. Well, you're crushing it. You guys are rock stars in that regard. We're hustling. And the good news is you can get rid of these cars probably like today. How much do you have in savings? We have about $300.

We just struck the IRS with that check. So $300 after that. Wow. That's non-retirement, right? That's non-retirement right that's non-retirement sweet what are y'all saving for an apocalypse listen george anything can happen i guess wouldn't shock me in texas they're always prepared over there well why don't we pay off the cars today yeah what's stopping you i guess just the fear of not having the cash

sitting there i don't know you'll have $200,000 left over and you'll make another $200,000 in the next few months. I know. Where's this fear come from? I think we need to address that. Well, let's see. What's your monthly budget? Like what's it take to make your lifestyle tick each month? That's been the fun part about this whole thing is we never really had a budget and we had credit cards and, you know, we would just pay them off every month without really even looking at it, you know, which is silly now that I've listened to y'all, but we've gotten rid of all of our credit cards and we actually sat down and

made a budget together. And with investing savings and giving combined, we can live really, really well for about $28,000 a month, which if you do- I would hope so. Yeah. I mean, that's investing 15% in addition to what the company matches for my husband and is already taking out and all of that. What's your mortgage payment?

It's $3,200. Oh, that's nothing. Our taxes rolled into it. Yeah. We have a 2.7% interest rate. So super low. Is it a 15 year or 30 year? It's a 30 year. Okay. So honestly, with your mortgage,

that's very frugal for what you're earning. If I were you, my goals would be like George said, I'm paying off these vehicles today, paying off these whips today, like George said. Thank you, Jess. Yes, you George said. Thank you, Jay. Yes, you're welcome. And then, yeah, keep doing your investing, your 15% plus plus. And then my next goal is what do you owe on the house?

So that was another question I had. We owe about $460,000, $462,000 if I'm being exact. But we could sell it for $1,000,050,000. So we have really great equity sitting in this home. That's awesome. Do you want to sell it? A little bit of a remodel. I mean, I love to move, but I don't know that that's always the best choice. Well, it's not about best. I mean, you guys make great money. You can stay in this house. I don't want to do it just because there's equity there. I want you to move because you want to move and it's the right thing for you guys.

So you're going to sell it. You get a million. You take the equity from that. You'd roll it over to the next house. Is that the goal? And you want to stay in Texas? Well, that would be my thing, is we could pay cash for a new home

and have absolutely zero debt. Sure, but you could also, if we're going to be real, you could pay off your mortgage this year. That's also true. So to me, that's not the to be real, you could pay off your mortgage this year. That's also true. So to me, that's not the deal breaker of we could pay cash. Well, you could pay it off in the next year, making $750,000. So I'm not concerned either way. But if you're going to filter this through the baby steps, we pay off the cars.

You still have $200,000. That's plenty of emergency fund. Continue to invest 15% of your amazing income. You'd probably run out of spots to do it and go to a brokerage account eventually. That's right. And then anything left over, let's just attack the house with. Do you have kids? I do. We have two kids. Two kids. Okay. Yeah. Yeah. I mean, two kids, four and 14. And we have, you know, college funds set up for them. And then just little like custodial brokerage accounts set up for them listen in the future i love george's plan i and i i endorse that i co-sign

that plan um i think for you guys the hardest part is you make so much money it could be easy to get sloppy because it's like it it feels like it's easy to clean up a mess because there's a lot of extra cash sitting there so i think for you, the discipline is going to be we are on a budget. No matter what, we get to decide what the budget says, but we follow a budget. And we create a plan for our money. Yeah, the budget might have 10 grand of fund money and a line item for you guys. Yeah. Who knows?

But without making that budget, you're going to wake up and go, where did all of our money go? We spent $60,000 on a credit card this month. And that's why I love you cut up the cards. You're sticking to your own money. You're making the budget. And then you can have your fun in the plan. That's right. It's freedom to spend.

Freedom to spend. All right, real quick. Let's go to Tommy. He's right here, local in Nashville, Tennessee. What's going on, Tommy? Hi there. I have two quick questions for you guys. They're not quick, but they could be quick.

Well, we'll make them quick. We got about three or four minutes. But long story short, I have done the baby steps and I kind of fell off the wagon. So I did the first three and we have no debt and we're a single income household. So the issue kind of is during baby steps two and three, where I have side jobs, my wife's home with the kids and, you know, hustling to make it happen. Now that that has happened, I kind of, and I stopped contributing to my retirement account during that time. That's been a few years now. And now we kind of just spend, we're kind of at a set point of our budget. We don't really have extra to go back to that.

We've had two more children since then. And, you know, just life is just there. So I'm not just counting on a bonus and a raise in the future, which I am counting on the next year. What's your income? I'm not counting on that. About $100 to $105. Are the kids in daycare? No, they're all About 100 to 105. Okay. Are the kids in daycare? No.

They're all at home with Mommy. Okay. And what are you investing right now, 15%? No, so we're not right now. You can't financially? So when I do, I have every dollar. So I'm doing all right. But when I am putting all the apps, putting everything into an envelope,

I have about $500 or $600, which would be about there, but then that always gets consumed. I end up transferring it back from savings at some point. But if you're investing, that's coming out of your check before you ever see it. No, no, I'm not investing. They paused it to pay off the debt, and now they're realizing they don't feel like they have the margin. There's something eating up this $100,000.

What's your mortgage payment every month? About $1,900 something, so $2,000. So $2,000? That shouldn't be it. You have some massive expense in your budget that we don't know about. Because if you don't have daycare... Yeah, we have no debt debt so no daycare um i think the mortgage is the biggest one but we're gonna sit down get back you're probably bringing home what six grand a month

about six grand yeah so where does the other four thousand dollars go even food and insurance utilities all that probably close to eight hundred to a thousand we're not even halfway there insurance when you went through your budget what was the biggest line item besides rent? Because for most people, it's daycare or school tuition. If you don't have that, what was your second biggest line item? You should know that off the top of your head. And if you don't, that's where the problem is. Here's the thing, folks.

You got to know how much money you make. And you got to know, at least off off the top the top three most expensive line items in your budget if you don't know that that's your homework for tonight you should know it's rent it's daycare and then it's my you know if it's your car payment or whatever that next thing is uh that way you know where your money's going those are those top three things make sure you do your homework tonight folks this is the ramsey show live from the headquarters of ramsey solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships.

I'm your host, Jade Warshaw, joined by your other host, best-selling author, George Camel, in the place to be. We're taking your calls all afternoon long. The call is simple. 888-825-5225. And we'll get you hooked up with some advice about your life and your money. All right. Let's go straight to the phone lines, George. I'm excited. Let's go.

We got Chelsea and Daniel. And let's kind of, before we go, let's kind of like frame this up a little bit. George, set the stage. This is a segment we've done a few times. I guess we call it pick a side. Is that right, Producer James? Pick a side, any side. So a couple calls in, both of them on the line with a disagreement. Sometimes it's lighthearted.

Sometimes it's a big, you know, debate. And we just help them decide. And so Jade and I will cast our votes. I am Judge George. And we got Judge Jade, which sounds way cooler. I'm putting on my referee jersey, my whistle. I'm ready to get into it. I was thinking more like the judge's robe and tiny gavel. Okay. You went law. I went sports. I never go sports. I wanted to know that. All right. Let's check in with Chelsea and Daniel. Can you hear us?

Yes, we can. All right. Tell us what's going on. So we disagree with what to do with specifically in this case, $80,000, but any situation where we get a tax return or a bonus, how we're going to use that money. And our disagreement today is that we, I would like to put it towards the house and pay off the house. And he would like to invest that money back into the market. And our ultimate goal here is to build wealth so that we can live comfortably when we're old and our kids can benefit from that eventually. That makes sense. So you guys are on baby steps four, five, and six, yes? Yes.

Okay. Just to confirm, you sound a little- That was not a confident yes. That's okay. Do you guys have any debt whatsoever? Our mortgage. Just the mortgage. Okay. And do you already have three to six months of expenses saved up? Yes. Okay. So yeah. So technically you're on Baby Steps 4, 5, and 6. Are you guys currently investing 15% of your gross income monthly?

I'm going to say yes. I think I'm pretty sure we are. We might be doing more than that. A little more. Daniel, do you want to add something? I think she's right. We haven't done the math, but I'm pretty sure it's around that, if not more. Okay, cool.

And where did the 80K come from? Shares of stocks from my company. Okay. So you bought some employee, was this an employee stock purchase program? No, it's like RSUs that you get. It's part of compensation. So they vested and you sold them. Now you have 80K sitting in the bank. That's right. Wonderful. Okay. And really the discussion is what is the best way to build wealth long term? And Daniel's saying, hey, I want to invest this money. It could grow to X, Y, Z amount.

You're getting starry-eyed over those numbers. And Chelsea's security gland is flaring going, it would be so nice to get this mortgage paid off. What do you owe on that mortgage? That's exactly right. We owe $385,000. What's your household income? Around385,000. Okay. And what's your household income? Around four. Wonderful. $400,000, sorry. Sweet. Okay. And what is your end goal? Let's like snap our fingers. You guys are older. Do you have like a retirement plan? Is there a nest egg number that would really excite

you? I haven't invested a lot of thought in it, but I mean, a million would be nice just to like, I don't know. Okay. Enjoy the... How old are you two? Whatever, however that grows. I'm 20. Oh boy. Give me a second here. I think I'm 33, I think. Okay. You guys are younger than me. Here's my thing. What if I told you, if you guys just continue down this path, you're going to have between five and 10 million just sitting in one account? Easy. Either way, regardless of what happens, regardless if you invest this money or you pay down the house first, you're going to have five to $10 million net worth. If you just keep doing what you're doing.

Wow. So when you put it that way, Daniel's going to get his wish because your wish is financial security. Chelsea's wish is financial security. And so what we're arguing about is the short term. And truthfully, you guys make $400K. What if we set an aggressive goal to pay down this mortgage? Let's say we used $80K. We paid it down to $300K. We said, all right, over the next two years, we're going to pay down this mortgage.

And after that, we're going to invest that mortgage payment to make Daniel happy for the foreseeable future. Do you see how that's a win-win? Yeah. It's kind of a win-win. My concern there is that's two years of not investing. No, no, you're investing 15% of $400,000. Okay. Have you plugged that into an

investment calculator lately, Daniel? We're not saying don't invest and pay off the mortgage. We're saying invest 15% and whatever's left, pay off the mortgage. And I would consider this $80,000 above and beyond your traditional income. So just a little layout. Go ahead. Go ahead. The point that we disagree on is like, do we take the like, quote unquote, extra money bonuses or stuff like that that we get and invest it in the house or invest it in like index funds right or whatever a form of stock where you're based on the way the baby steps work which is what we teach here baby steps four five and six you do them simultaneously but the the extra um are you getting this every year this money uh a couple times a year yeah

yeah okay so what i would just consider it part of your household income. And so I think to make both of you happy, you can invest 15% of whatever your household income is. So let's say this 80K, we'll consider it part of your household income, invest 15% of that. The rest we put toward the house. Gotcha. That's a good way to look at it because it comes every year. It's part of your normal income. It just comes later, basically. So I like that plan. But just so you're familiar with how the baby steps work is when you do four, five, and six, four is you invest 15% of your gross. So to George's point, I love the idea of including this with that because it technically is your income. And then you get intentional about

paying off your mortgage. And technically, we don't tell people to go above 15% until they've paid off their mortgage. So that's our plan here. And that's the plan that I would recommend and advise for you. And can we do some fun math, Daniel, just to give you some peace? Sure. You're 33, right? Let's say you invest just 15%, no more. Everything else goes toward the house, even for the rest of your life, and you continue to make $400,000. That's $60,000 a year, right? Okay, can you give me the dumbed-down math on how you got there? Yes.

So $400,000 times 15% is $60,000. Divide that by 12, you'd be investing $5,000 a month. You said you're 33, right? Okay. Let's say you keep investing $5,000 a month into retirement accounts, you name it, brokerage accounts, $5,000 a month. You said you're 33, right? Let's say you keep investing $5,000 a month into retirement accounts, you name it, brokerage accounts, $5,000 a month until you're 60. Even with an 8% return, which is modest, that's $5.7 million if you started from zero today. And our team just put it on the screen if you're watching on YouTube. Good math, my guys in the

booth. So Daniel, just to give you some peace, even if you started from scratch today with this income, you would have $6 million in that account. And that's assuming you never make more money and never invest more than $5,000 a month, which is obviously not going to be the case. With a 10% return, you're talking $8 million. And you can adjust for inflation. All the nerds can come at me. I'll be okay with $4 million, $5 million, $8 million, $10 million. All that to say, your dream was a million. And I just showed you how regardless of how you get there, you're going to be much higher than that.

So real nerdy, fun discussion. But as far as picking a side, I'm going Team Chelsea and I'm paying off the house. But really, we're splitting the difference. We're investing and paying off the house. Put that gavel down. That's it. Judge George has ruled. Listen, I'm right there with you, but I think I'm just the bailiff in this case.

The verdict is, say it. Chelsea. There you go. You are not guilty. This is The Ramsey Show. Thank you for listening to The Ramsey Show. I'm your host, Jade Borshaw. Your other host today is George Camel. And I'm actually excited, George, that we're hosting together, especially talking about this brand new upcoming event that we have. It's Dave Ramsey's Investing Essentials. And George, you're going to be a big part of this. Yes, this is a virtual event. So you can join us wherever you are. And this is really a deep dive on investing. This is something that our fans and audience have been asking for. They're saying, hey, what's Dave's real playbook beyond just Baby Step 4? What are the actual mechanics of investing? What are the options

out there? Even real estate investing. Dave's got a huge real estate portfolio. He's done it the right way. He's done it at the speed of cash, which hurts people's brains. And so he's going to walk through how he buys real estate, the things he looks for. We're going to be walking you through not only retirement investing, but other options outside of retirement. What if you're self-employed? What if you're a high earner? What are your strategies to invest and retire early? So we're going to be talking about all of that. A two-night virtual event happening May 21st and 22nd. It's online. You can watch from the comfort of your home.

You just need to buy, if your spouse is going to join or you want to have a watch party with the boys, that's what I generally do. You just buy one ticket and you can join us for that. That's pretty cool. Yeah, I heard Dave talking about this the other week and he said it's going to be like 101, 102, 103, all the way up to 104.

And I think that's great because people definitely have different areas of interest and they want to go as further than they've ever gone. It's like working out. You got to start with the low weights, low reps, and then you get to my level. You're benching 300. Oh, wow. Okay, George. No, I can't. I'm trying to get on that level. That's like three George Campbells. We can't do that. I love this. For the first time, Dave is opening up his personal playbook on investing. You do not want to miss this. You're going to learn how to maximize your 401k and mutual funds. You're going to learn Dave's personal strategy for real estate investing and which investing trends to follow and which ones to avoid. The tickets are $249. Again, this is a two-night event.

You're getting Dave Ramsey. You're getting George Campbell. You're getting all of this. If you're interested, go to ramseysolutions.com slash events to get your tickets today. Can't wait. It's about four hours of content over those two nights. Listen, I'm going to be there. I'm logging on.

I'll be tuning in as well from inside the room. I'll be there live. I love it. Let's go to Blake who's in Louisville, Kentucky. What's going on, Blake? Hey, thank you guys for taking my call. I've been a long time listener and I really appreciate it. Awesome. How can we help today? So I just had a quick question and it's kind of a little bit of a debacle for me. We have a van that we had bought, me and my wife, whenever the height of the used vehicle market was insane. People were paying astronomical numbers for used vehicles.

And I bought it based on the safety of my daughter, who at the time was only eight months old because the vehicle we had didn't have AC in the rear. But down to the money, the part of it. How much was the van 30 so the van uh was 40 000 okay and we owe 32 115 on it still our monthly payment is 585 75 okay and i'm trying to see if i'm headed in the right direction here i have a truck that I can sell right now for $10,000 to $11,000. And then I have a trailer, just one I can haul cars on and stuff, that I can sell for anywhere from $2,500 to $3,000. We also have $15,000 in savings. And I don't want to sell all of our vehicles because my wife is a stay-at-home wife and

she needs them for our two kids. Well, I'm willing to sell everything. I vehicles because my wife is a stay-at-home wife and she needs them for our two kids well um i'm willing to sell everything i know that's part of dave ramsey's baby steps sell everything well if it makes sense so the truck the truck that's paid for that's worth 10k is that your daily driver no i actually drive it i'm fortunate enough to drive a company service truck oh nice okay that's good and what about what about the trailer? The trailer is just something I had upgraded. It's just something I found on Facebook Marketplace years ago. So you don't need it? I don't, not necessarily. I mean, I do haul with it every once in a while, but not enough to keep it around. You'll survive. And the 15k, is that your three to six emergency fund? Or is that, what was, what did you have that yearmarked for? It was just money saved? So I actually was heavily into sports cars a few years back.

And I actually sold it because I realized it sat in the garage and it was unrealistic to keep. So that was that money. And we turned that into our emergency fund. And it's, actually, we're not even able to touch it. So that's very important to us. What do you mean by that? Like, we talked to the bank. We talked to the bank about not being able to, it requires me and my wife both to agree on moving that amount. Oh, okay.

What account is it in? What kind of account? It's a savings account. Okay, just a normal savings account, but with a little bit of lock and key. Yes, exactly. Got it. So you owe $32,000, a little over $32,000 on the van, and you're thinking, hey, if I sell all this, I can clear $27,000. If you sell it plus add the savings to it,

you're going to be able to clear at least $26,000 because I want you to keep $1,000 set aside. Of course. And that's the plan, right? You chuck that towards the van, and then, you know, you've just got a little left on it, right? My thought was to sell the truck, sell the trailer, and then we would be roughly down to $20,000 on the van

and then actually sell it back to the dealership. They would take it off our hands, no questions asked, essentially. And I detail my vehicles like I'm a fiend about it, so they're consistently clean and they love the fact that it's as clean as it is. So they're willing to give me that. So you're just trying to get out of from being upside down. Exactly. And I don't, I don't, I just don't want to sit on it anymore. We do have, I have a car that my grandma had gave us. Um, it's a, my dad called it an heirloom. Um, what happened to this whole reliability story you gave to me? He realized that it's not that big of a deal

and that anything with ac will work what's what's your household income now um so now that my wife stays home she's two weeks home now to stay at home mom my take home is right at it's 69 300 i think it's like 5800 a month okay okay so20,000 upside down. Is that what I'm getting? Yes. And it's because we put so many miles on the van in such a short amount of time. So if you sell the trailer and the truck that only gets you 1200, 12,000, I'm sorry. So where's the, where's the rest coming from? Cause you had said you didn't want to touch the savings. Yes. So if we don't touch the savings, so we have $32,000 on the van. If we take that $12,000 from the truck and the trailer or the $2,500, that knocks the van down to $20,000.

You're saying you could sell it to the dealer for $20,000? Roughly. $18,000 to $20,000. Oh, I see. Yeah. Now, would it make sense to sell it back to them even if they say, hey, look, we'll only give you $18,000 for it? I don't think it's worth getting rid of this thing. I feel like you should just keep it at that point. And then, yeah, now would it make sense to sell it back to them even if they say, hey, look, we'll only give you $18,000 for it? I don't think it's worth getting rid of this thing.

I feel like you should just keep it at that point. Yeah, I'm trying to get out from under it. And I just didn't know if it was worth to keep it or to give it back. I mean, how quickly could you save up another $5,000? We're actually, since she's only two weeks into being a stay-at-home mom, we're still trying to figure out how to re-budget everything. Because we lost, let's see here, we lost about $2,000 a month in income. The only reason that I might vote for you getting out of this is because it's a $40,000 vehicle and you make $69,000. And I'm guessing that with your...

That's your take-home, right? Yes, that's my take-home. So what's your gross on your tax return? Does it say $85,000? Roughly. I would have to go back and look, yes. Yes, that's my take home. So what's your gross, like on your tax return? Does it say 85, 90? Roughly. I would have to go back and look, yes. Then, you know, it's up to you. You're not out of, you were out of bounds to go into debt for it,

but you're not out of bounds to keep it and pay it off. It's up to you. If you're just like, I hate the thought of this thing. I hate the sight of it because of what it's cost us, and you want to get rid of it and downgrade. I'm not mad at that, but just understand that, you know, you're going to have to come out of pocket at some point to get something. I know you said your grandmother has a vehicle. I don't know the state that that's in, but, you know, knowing that you've got $15,000 to the side, it might be worth it for you to put some money with that and upgrade a little bit.

It's up to you. My fear, since you love cars and toys, that you go out and go, well, we lost that van. It was so reliable. And now this grandma's hoopty's not doing it. So now we got to go get another $50,000 car for reliability. Well, you need to draw a line in the sand that you're not getting car loans anymore, right?

Nope. We're actually done with that. No, that's why I'm trying to figure out how to get out of this because I'm at the point, you know, I'm sick and tired of being sick and tired. I would sell the truck and trailer, use most of the savings to pay this thing down, get rid of the payment, and then decide what you want to do with it. You probably will end up keeping it just because you've already done. The damage is done. The loan is gone. You freed up the 600 bucks that you were paying on it. That's going to help you in the future.

George, how often do we get people who have rolled negative equity into vehicles, they end up upside down and it's just they're trying to move heaven and high water to get out of these loans? My guess is 90% of the callers with car loans are upside down in this market. And it's one of the reasons I hate car loans so much.

But the good news is you could sell it. Well, if you're looking for something to do with your tax return, a lot of y'all are upside down. That's what you could could sell it. You got, you know. Well, if you're looking for something to do with your tax return, a lot of y'all are upside down. That's what you could do with it. You could take it. Finally get out of that loan that you've been paying $700 a month for. Just an idea.

This is the Ramsey Show. I want to stay right side up, Jade. You are listening to the Ramsey Show. Hey, thank you for listening to the Ramsey Show. You know, throughout the duration of the show, whoever we're hosting with, we all go out into the lobby of Ramsey Solutions. There's folks that come to visit from far and wide. We had a lot of folks today from the Minnesota area. And it's really great. Yeah, I see you guys. It's really great. People share their stories. Sometimes they do a debt-free scream. Sometimes they just want to take pictures and get a book signed. And I love it when people hop on the stage, George, and say, this show changed my life.

I love that. Nothing makes me happier. This show changed my life. And so if this show has done anything for you, if it's a show that you enjoy, if it's a show that would cause you to trek across the country all the way here to Franklin, Tennessee, hey, make sure that you are subscribed to trek across the country all the way here to Franklin, Tennessee. Hey, make sure that you are subscribed to all of the places where we offer The Ramsey Show. Make sure you're sharing it.

Make sure you're clicking that follow, that subscribe button. That does so much for us. It's something that you can do to support that's totally free. It takes almost zero effort except for that, you know, your clicker finger. That's it. You got to move that a little bit. We're not doing a telethon. There's no PBS donation. All we ask is that you do this very easy and free thing. Takes you a second. That's right. Like, subscribe, share. That's all it is. Maybe it's a text message and say, hey, I listened to this podcast today. It was amazing. You would love this. That does so much for us. It also kicks it up in the algorithm

so other people can discover life change. And so keep doing that. Keep watching. That does so much for us. It also kicks it up in the algorithm so other people can discover life change. And so keep doing that. Keep watching. We're so, so grateful for all of you that have made this part of your normal, regular rhythm. Love it. All right, George, you ready to get into it? It's showtime. Yeah, we're going to go all the way to Milwaukee, Wisconsin. We got Andrew on the line. What's going on in Wisconsin? Hey there, how's in Wisconsin? Hey there. How's it going? Doing good.

How are you? Good, good. Thank you for my call. Long time listener. First time caller. Awesome. Well, how can we help today? So I, best thing I ever did in my life, I bought a duplex when I was 20 years old.

This was about 13 years ago. So now I'm trying to figure out, should I leverage or should I pay cash for the next one? I'm not exactly sure. Interest rates going crazy. I don't want to mess around with that, but all in escrow, I'm under a thousand dollars a month so I'm not exactly sure what I should do but I definitely want to get another duplex is the first one paid off it's 40,000 left 40,000 left okay can you tell us can you paint us a bigger picture so we can kind of understand what's going on so duplex number one you owe 40,000 you paint us a bigger picture so we can kind of understand what's going on? So duplex number one, you owe $40,000. Duplex number two, what will it cost you? In the area, looking like $250,000, $250,000 is going to be the minimum. Okay, so $250,000. All right. And tell us about the rest of your debt. Do you have any other debt?

Car loans? Student loans? No debt. Okay. Personal mortgage? That's it. That's it. Are you renting right now?

Or do you live in the duplex and rent the other ones out? I live in the duplex and I rent out the other half. Got you. Okay. So essentially you owe $40,000 on your personal mortgage, which also happens to be a duplex. What do you earn? What's your income? I make about $70,000, $75,000 a year.

And you're asking us, should I pay off this mortgage or should I leverage the equity and go get another one? Correct. That's my biggest decision right now. Okay. Well, I can tell you, based on your attitude, you're not going to like what we have to say, which is never leverage debt, never go backwards, always pay for investment properties with cash. You've probably assumed that. So did you want to call in for us to confirm that, or what was the hope here? That was basically me asking you to confirm that. Yeah. Well, the HELOC is going to put you at risk.

That's what you were going to plan on doing is kind of this BRRRR method you've probably seen on social media. I'm going to take out the equity I built, the home appreciated in value. I'm going to take that money. I'm going to put it into the next duplex and the next one and the next one. You can do that. Right. Some people have success with it or at least Early still tell you they do on social media. What we have found is that to build wealth with way less risk and way more peace, we move at the speed of cash. And that's what Dave has done.

And that means you might have to get your income up if you want to buy another investment property in the next decade. And we need to get this mortgage paid off because what if you freed up that mortgage payment to then dump into a savings account or investment account and later on buy that duplex with cash? How long would that take you? Right. To buy it with cash, it probably, I don't want to wait five years. I want to do it tomorrow. And you can do that, but I think it's going to increase risk, increase stress, and also decrease cash flow. Because until you free up that mortgage, it's not going to help. What's the monthly payment on duplex number one? Like, what are you paying versus what you earn off of it? So escrow all in, I'm under $1,000, and then I bring back another $1,000. So I'm literally almost even

every single month. So you're just breaking even, you're not making money? Well, yeah. Yeah. I'm not making money. Okay. Correct. Well, then if you're not making money, you're losing it in real estate because of all the risk, the cost, the maintenance, the upkeep. One thing goes wrong and your plan is now underwater. Now, what you're saying is you're basically, quote, living rent free. Yeah, because it's balancing out. Your expenses are just covered, but there's zero profit involved here. You'd have to pay it off for you to recoup that $1,000 or you said just under $1,000.

Yeah, you're correct. This all worries me of how little margin you have in this whole game. What's making you want to go do it again? It's not like, you're not like Scrooge McDuck over here like, I'm raking in the money on this duplex. I got to do it again. Help me understand. I mean, I guess I'm 30 ish, just over 30, and I almost half a million dollar net worth. I thought this was the best thing I ever did financially, I guess. What would happen if you took that instead of investing $250,000 in a duplex that you've seen the rate of return is not great.

What if you took that same money and just invested it over time in good growth stock mutual funds and earned 8% or 10%? And that's the thing that I do invest in. That's where I make most of my money, I guess. Here's where I'm at. The secret sauce is not the duplex. The secret sauce is living on less than you make,

avoiding debt, investing consistently. That's really the key is your savings rate and getting your income up. It's not the spread on this duplex and it's not going to be the spread on the next one. And it's not to say that real estate is not a good place to invest, especially once you hit baby step six and beyond. It's a great place to invest. As a matter of fact, I'd love for you to tune into George and Dave's real estate investing essentials live stream that's coming up. The dates on that, George, what are invest. As a matter of fact, I'd love for you to tune into George and Dave's Real Estate Investing Essentials live stream that's coming up. The dates on that, George, what are the dates on that? May 21st and 22nd.

Yeah. I want you to tune into that. The tickets are 250 bucks. For somebody like you, I think it's really going to be worth it. So you can see, I mean, Dave is a guru on real estate investing. And I think for you going forward to pick the right type of real estate investments, to purchase it the correct way, I think that that is going to unlock a treasure trove for you. So if I were you, Andrew, that would be, I would wait to do anything

until after you tune into that event. But I can tell you offhand, duplex number two is not the move based on what you're, the spread that you're making. That's definitely not the move for you. And at the very least, you might consider paying off duplex number one. You got forty thousand left on it. It might be worth it for you to pay that off. And maybe you end up renting out all of the units and you go move into another residence. I'm not quite sure. but investing essentials is gonna be definitely

the move for you going forward. Yeah, and Dave has said that the deal is really happening on the front end. When you buy that property, you wanna buy it at 70, 80% of what it's actually worth. The problem is right now in the marketplace, everyone and their mom wants to get the duplex and become the real estate guru.

So there's not a lot of deals to be had. And the ones that are quote deals might need a lot of upkeep, maintenance, renovations, and we don't have the cashflow for that. Exactly. It can break people. Well, yeah, that's what tempts people to go into debt. And before they know it, the thing that was supposed to be cash flowing for them is costing them money. And it's another full-time job to be, you're trying to fix it up yourself and

get contractors that are reliable. It's not all rainbows and paychecks. Yeah. And just for anybody listening, if you're breaking even, you're not making money. You're not making anything. You're just surviving, treading water. That's right. And listen, you can only tread water for so long before you start to go under. Not to be bleak, but that's the truth. Ooh, this is The Ramsey Show. You are listening to The Ramsey Show. Thank you for being a listener. I'm your host, Jade Warshaw.

Next to me is George Camel. He is author of the number one bestselling book, Breaking Free from Broke. And you are bestselling author of Money's Not a Math Problem. Ooh. I've met my match. Yes. And speaking of, let me just talk about a couple other books we have coming out.

Ken Coleman, Find the Work You're Wired to Do. I'm really excited about this. Number one. You hear that? It's hardcover. Hardcover, but a short read. That's opportunity knocking, Jay. That's what that is. That's right.

That is. It's your future waiting for you to walk through the door. Listen, this book right here, this is this is swanky. What's cool about it is it includes his get clear career assessments. You get a unique code with each book. That's right. And the book then helps you use your unique results to find the work you're wired to do. And so it's a really, really cool product that's coming out. And of course, Rachel's on her book tour right now. Yep. I'm glad for where I am, which is book number two in an installment. The first one was I'm glad for what I have. And now we've got I'm glad for where I am. She's been on a book tour. She's been

in Phoenix, L.A., Dallas coming up. She'll be in Atlanta on April 27th signing books at Barnes and Noble. So check out what's going on in your area and get Rachel Cruz to sign your book. I love this book because of what it teaches. It really teaches kids about contentment and being happy for their family and glad for their family and where they are. Love it.

Illustrations are absolutely beautiful. If you don't have a copy of this, be sure to pick one up. Can I call an audible, Jade? Go ahead. Atlanta is on April 26th. It's at the Barnes & Noble and Mansell Crossing, 1 to to pick one up. Can I call an audible, Jade? Go ahead. Atlanta is on April 26th. It's at the Barnes & Noble and Mansell Crossing, 1 to 2 p.m. Oh, there you go. So April 26th, if you're in the Atlanta area, go to the Barnes & Noble, Mansell Crossing and say hey to our

friend Rachel. I love it. And then, of course, we've talked about the Investing Essentials event that's coming up May 21st. And as a precursor to that, you could pick up Dave Ramsey's quick read, Real Estate the Ramsey Way. That'd be a good one. So lots of great books out there, great authors. We already talked about Breaking Free from Broke. If you don't have a copy of that one, you need to get it because it's this generation's total money makeover. That's what I like to call it. People have been saying that and I appreciate that and they're cutting up their credit cards because of it. And I will take that. That's good, George. It doesn't have me on the cover cutting up the cards, but maybe one day I'll lose some hair and we'll recreate it. I'm not doing the bald cap. I refuse.

Let's not and say we did. All right, let's go to the phone lines. We got Daniel in Syracuse, New York. What's going on, Daniel? Jade and George, a pleasure to speak to you all. How are you doing today? We're doing great. How are you? I am doing awesome.

And, George, I've got to say, man, I love the YouTube shorts. I just sent one to my wife this morning. Killing it. Oh, thank you so much. I appreciate that. How did she take it? Was it like you dogging her or was it entertaining? It was entertaining.

Well, she said, no, I know that I'm eating away my money. Like, this is not new to me. Oh, good. See, usually people send it as like a passive aggressive. They send my clips. It's like, hey, you need to watch this. You start budgeting better, you know, but that's funny. I'm glad you guys are in a good spot.

No, we're both aware of our terrible eating habits. Okay, so my question is, should I buy this house that my grandmother is offering to sell us even though we are in $70,000 of debt? Well, tell us more. What kind of debt though we are in $70,000 of debt. Well, tell us more. What kind of debt is it, the $70,000? So it's in student loans, about $32,000 of me, $32,000 of my wife, and then about $6,000 in both of our cars combined. Okay. All right. And what's your current living situation? So income, I make $45,000 a year, which, yeah, not very much.

I do graduate with my master's in social work in about three weeks, and then my income will increase in June to $65,000. Okay. What about your wife? She is stay-at-home and just does side hustle for now, like DoorDash. Okay, and what'd she bring in from it? It's worth noting. I'd say about, like, $400 a month. Okay, and that $400 a month, that side hustle, is that because you guys are working super hard to pay off this debt? We're not working hard to pay off the debt right now, just because I'm still doing part-time school and working.

We're basically just, because we're new to the program, we're just learning how to live below our means. Like, this is brand new to us, and so far it's been an amazing life change. Listen, I can validate that. There is a part of just learning how to live on your budget that is almost like a baby step zero thought here. Yeah. How are you living now? Are you renters? Did you buy something? Where are you living now? Are you renters? Did you buy something? Where are you

living? We're living in the house that our grandmother is offering to sell us. So she's given us a great rent price. It's only a thousand dollars. Yeah. Okay. So you're renting the house for 1K and she has said at some point, you guys want to buy it how much would it be um not a set price but just kind of talk with them probably about 100 000 maybe 120 okay why isn't okay um what's the house worth about 200 000 so that's the killer like i know this totally is against the baby steps but then thinking thinking about the equity, I'm like, I don't know. Well, is she like, how urgent is this home sale? Is she going to evict you? I mean, what's going to happen?

Can you rent this for the foreseeable future? Right. We could probably rent this forever. I mean, obviously not, but. Well, does the deal still stand, you know, two years from now? Let's say you guys pay off the debt. I think it would. The problem is we'll only want to live in it, I think, a max four years or so.

It's kind of small. We're going to want more kids. Then why buy it? I don't want you to buy a house because it's grandma and it seems like it could be a good deal while you're in debt. That's thing one. And then thing two is I don't want you to buy a house while you're in debt, period. Yeah, yeah. Does grandma just not need the money that she's willing to take a $100,000 hit?

Pretty much, it sounds like. Is she doing real well for herself? Yeah, yeah, they are. Okay. Well, I would have a conversation with her and say, grandma, this is so kind. Thank you for the inexpensive rent. Thank you for this amazing deal. We're in debt right now, and we're actively trying to get out. Can we make this deal happen X, Y, Z years from now while we continue this rent price? Because who knows if her situation changes too. Here's the question I'm getting at. Is she just trying to find a way to give you guys a $100,000 gift?

I don't think so. I think she's just really kind and is willing to, you know, she's not going to make any money on it. She's willing to give us a deal if it benefits us. Yeah, I just don't want to, you know, buy it and then sell it quickly in like a year or two and let that be weird if we just made money off of you. That's what I was going to say. That's why I asked that question, because if she was just trying to give you a $100,000 gift and she doesn't care that much

about the property, then if you did buy it after you paid off the debt and turned around and sell it, it'd be no hard feelings. But after you paid off the debt, if you bought this house from her and she gave you this great deal, it could feel weird for her if you turned around and bought it and then sold it in two, three years. I don't know. That could feel a little bit weird. Maybe it was something she was trying to keep in the family and give to you guys. I'd definitely do a little bit more research around that. But either way, you guys are not in a position to purchase a home. No. How much money do you guys have in savings? Pretty much nothing.

We've got enough for the emergency fund. I've got enough to pay off this last course in the summer. But that's about it. Yeah, because my worry is you become a homeowner, and then this old house becomes an old house with a lot of old problems. And the HVAC is starting to go, and the roof needs to be replaced, and you still are broke. And that part really scares me because we get those calls too. That's real.

So I'm going to move slowly. And yes, you might miss this deal, but I hope it still exists two or three years from now when you guys are in a better place financially. And I would use that ammo to put fuel on this fire to get out of debt even faster. To be like, next time an opportunity comes up, we're going to be ready. That's right. Hey, how old are the kids we just have one daughter she's 16 months 16 months okay um yeah i'd be you know your wife's stay-at-home mom she's side hustling if you guys really want to knock this out i'd be looking for ways that you can pick up side work that maybe she can extend or start working part-time. I'm not

sure what you guys have decided family planning wise, but you guys, I definitely want you getting off after the 70K of debt. Sometimes with student loans, people think that they can kind of just let it sit there and, you know, you can take one of the government plans and it's not so much on the budget and they just kind of are there as that mess in the closet that you kind of try to hide from yourself and everybody else. So I want you getting after it. Your cars aren't a big deal. You should be able to knock those out fairly quickly. But the goal right now is to get $1,000 saved

and knock out this debt with the quickness. Yeah, set an aggressive goal. Go, you know what? Two years, we're going to do it. What does that mean? $35K a year. Yeah. What is that?

That's almost $3K a month. How do we find that? Christian, let's set them up with every dollar so that they can use the financial roadmap plan so that they can kind of see what their future and their horizons look like for getting out of debt and they can get some very clear pathways in place. All right, folks, that does it for this hour of the show. We'll see you next time around. This is The Ramsey Show. Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships, like the one that I have with George Campbell. So tough. I'm your host, Jade Warshaw. The both of us are going to be taking your calls for the next hour. So you

can give us a call. The number is 888-825-5225. And we will do our best to get you on the straight and narrow. George might yell at you a little bit, but I don't know if I could if I tried. He might hit you with a snarky comment or two. There we go. A little sarcasm. I like it. I'll tweet at you passive aggressively after the call. There you go. All right, let's go straight to the phone lines. We've got Teresa. She's in Austin, Texas.

How can we help, Teresa? Hi, Dave. Hey. Hi, George. How are y'all? Doing great. How can we help? George, please don't yell at me.

That should not be anyone's fear. I'm the least intimidating man alive. Okay, so I am totally new today, Ramsey, and we are in baby step two. Okay. I just don't know if I have enough for retirement, and that's what scares me the most right now because I'm 52. My husband is already retirement age at 66, and he is still working full time. Okay. I only have a Roth that I opened up a couple of years ago and it's got 32, about $32,000 in it right now.

Okay. My husband also has a Roth that he opened up. It's just got 15,000 in it, but he has a Roth, I'm sorry, a 401k at work. What's that got? It's $135,000. And that's all we have. Okay. Tell us about your house. We have a mortgage. We just refinanced back in 2021 to a 15 year mortgage at a 2.125 interest rate. Okay. And what do you owe on it? Uh, 177. Okay. 177,000. Okay. And what are you guys? Okay. Keep going. Keep going. We have a parent student loan that I have been

working on since my student, uh, graduated back in 2017. And back in 2018, we started on this repayment plan of $108,000. Oh, Lord. And I'm down to the last $15,000. Oh, so you only owe $15,000? Yes. So you've been chucking away on this. Is that all the consumer debt you have left, or is there anything else? Yes, that is it. Like I just started in November and we paid off all the credit cards,

all the miscellaneous this and that that we had and my husband's truck. Okay. So you have a decent income. What is the income? I made $78,000 last year. My husband made $46,000 and my business made about $20,000. Okay, good. Okay.

All right. So what's your question for us today? Will I have enough to retire? Because I'm 52. I'm so afraid at my age I've passed that mark of the million status. There's a lot of factors that come into play, and so it all depends on when you want to retire. I think you're going to have to work longer than you want to in order to get there.

But I don't think all hope is lost. I love what I do. So I don't mind working. I can work. The key here is we need to make sure before that happens, obviously, and you know this, that we clear out that $15,000 of student loans. How quickly do you think you could pay off that final $15,000? I was thinking we could have it paid off by the end of this year. But if I keep attacking it, we could have it paid off by September, October. I like that better. Do you have any money right now in savings? Only my $1,000.

We use the rest of it to pay off debt. Okay. I can give you some hope for now, and then we'll give you the current. Just to give you hope for the future, you're 52. Let's say you work until 67. Okay? Mm-hmm. So if you, with your current nest egg, it's about $182,000 altogether, all of your accounts, retirement, right? Yes.

And you contribute 15% of that $144,000 income you have once you're out of debt and have the emergency fund. That's about $1,800 a month. Well, with a 10% return until 67, you would have $1.5 million across those accounts. So to give you some hope, it's not that bleak, but that also means we got to get our butt in gear. We're going to invest 15%. We're going to get the house paid off. Then we're going to invest 15 we're going to get the house paid off then we're going to invest more and this is a like your husband is that means your husband's going to be working long before long after he wants to as well yeah he wanted to just work another couple of years but he may have to work more than that

i think he's gonna have to work until he can no longer physically work and even then we're going to find him something he can do i think the key for you guys that magic point to where he might be able to and both of you might be able to cool out is when you get this mortgage paid off because then to george's point you'll have the 1.5 million and hopefully you both if social security can can stick it out you'll still have that plus no mortgage, which lowers your expenses. This is a reasonable. Now, you're not going to be like balling out on private islands, but you're going to be just fine as far as covering your basics. That's right.

Okay. So breathe easy there. I feel good. But in the short term, we got to get on a game plan to get rid of the rest of this debt. What happened to the student? Are they working? She is working. She is married, and both of them have helped pay this off. Okay. So we're all paying towards it. Are they continuing to help? Yes. Are they doing well financially? Could they clear this $15,000?

Yes. I don't think they can clear it right now, but since January, they've been contributing at least $2,800 towards it every month. Oh, good. That's good. Okay. That means this thing's going to be cleared even faster than October. I'm hoping. Okay. Yeah.

If you were my parents and you were calling to the show and I was hearing it, I'd be like, oh my goodness, mom and dad can't retire? I'm going to pay my student loan. I'm going to go get a side hustle and take the rest of this loan on myself. But again, the problem with these Parent PLUS loans, they're high interest rates. The parents are stuck with them. They legally signed and the parents now can't retire because they're busy paying off their students' debts. And it crushes families. And so I'm sorry you're going through this but i want to serve it as a warning to those parents who are about to take on those student loans to go don't do this the reason the student loan companies make you do a parent plus is because they don't

even trust your student to take on this money and they'll give that kind of money to rodents and so these companies are vile yeah they're really luckily you've got kids with a good head on their shoulders and they're going, okay, yeah, I have some responsibility in this as well. And they're making good money. A portion of it, yeah. She has contributed from the beginning, so I've been very proud of her for that. Good. So we know the game plan going

forward, knocking out the student loan. We are working hard. Husband two, you guys are not stopping work until this mortgage is paid off $177,000. And George gave you a light at the end of the tunnel. Listen, $1.5 million at age 67. Is that right, George? Yeah.

And she's 67. Now he'll be much older than that. He'll be a lot older, which means he's going to be working for the next 10 years. And this is the reality of trying to have some dignity in retirement. Listen, George, this right here, if you're listening to the show right now and you are in your 30s or 40s, this is what you're trying to avoid. This is why we come so hard

and go so hard in the paint, folks, about getting your debt under control. Stop borrowing money. Start doing the things that set you up for a rich, satisfying life as you get older. Because trust me, you do not want to be 52 and 66 years old calling into this show talking about paying off student loans. Come on now. Let this be the wake

up call. That 15 year mortgage, it's paid off in 15 years. So when you're 35, you take on the mortgage. By 50, it's paid off if you've done nothing else. Take the advice. Don't be scared. This is The Ramsey Show. You are listening to The Ramsey Show. I'm your host, Jade Warshott, joined by the very funny, very hilarious George Campbell. He makes me laugh quite a bit during the breaks. So kind. Yes. I paid her $5 on Venmo for that, and it was worth it. It's worth every penny. During the break, George was cranking that Soulja Boy, which was very different. Not a visual

that America needed. We need healing, Jade. We do. Let's offer them healing through the question of the day. How about that? Today's question of the day comes from Stella.

She's in Florida. Here's what Stella has to ask. How do we budget a debt snowball with low income? My husband is a carpenter and a paramedic and earns $60,000 a year. I'm a stay-at-home mom and homeschool our three kids to save on school and

daycare. We rent a house from an acquaintance and pay about 40% less than the current market. Our only debt is $61,000 in student loans. I signed up for every dollar, but with our current income, we are stretched to even put money on that last debt. My husband has been trying for a year to get a better paying job, and I'm trying to figure out a side hustle I could do from home. If I remove gymnastics and swimming fees for the older kids, as well as reduce our weekly groceries to 150 bucks, it would still take us four years to pay off our debt. That's bare minimum. No restaurants, no presents, no camping holidays. Is this a reasonable ask for our kids for four years? I want to fight this as a gazelle, but it would be so hard for so long while they're young.

Listen, I'm glad that she wants to fight this as a gazelle. Here we're butting up against choices, I think. And it's hard because, you know, you make the decision to stay home and be a stay-at-home mom which for some people let's be honest like what they were earning in the in the marketplace it didn't work out for them to have kids in daycare it was just sucking up that money it sounds like they have three kids it sounds like maybe some of them are in daycare and some of them aren't sounded like she said that there were older kids I would be looking at this right now from her point of view. And I'd say,

okay, I've got to get a side hustle. I think sometimes George, we hear the language of, I'm looking for a side hustle. It's like, no, decide on one today. Like decide on any side hustle today. Any money is better than no money. And then you can start, you know, re-evaluating and finding what pays more that's out there, pick up something instantly that's thing number one i think and then i i do want to also put this out there because it's just worth noting getting out of debt takes time and even though the average right the average person that walks through the baby steps they're getting out of this in two two years two two years or less um there are people on the other side of that average like me and so others, that it takes longer than two years.

And that is okay. That is just part of the journey. And you do have some options here where you can maybe cut back and increase income. But there is something to be said, and I say this many times, there's something to be said, George, about taking that horse to the Old Town Road

and riding it till you can't no more. Like your income is your income. And then sell it once you're done. Yeah. and then when you're done you're done but you have to keep riding down the journey like it doesn't it doesn't there's not an easy button and it's worth noting that and i hate to say that because it's hard but there is part of that that when you choose your lifestyle and when you've chosen the debt that you have to do what it takes to pay off your choices yeah and as i look at this i wish we could just look at their budget and see where all this 60 grand is going because i'm i'm confused how they're barely making ends meet now they have 61 000 student loans and i it triggers me jade anytime i see someone say our only debt and then they go on to like it's some crazy number yeah of debt any debt

stresses me out but 61 000 student loans ain't nothing and so if i'm her it sounds like there's only one kid in daycare should the older kids have gymnastics and swimming kids plural that's probably two sure there's one left that's probably the one in daycare if this is a game of clue that's how i deduce that i like like that. So I would go back to work if I was her. Because if she can make even $2,000 and daycare is $1,200 or $1,500 for that one kid, she's still going to make more. That's right. And net. So I would go out and get a full time job. I know it's your dream to be a stay at home mom, but I'm not okay with it taking four or five years to pay off this debt. That's a really good point, George. And feel free to

attack me in the comments if you want. But most kids, if you're putting them, listen, I'll give you my numbers. My daughter's in daycare. It's a really good school. It's $12.75 a month. And then when my son, he was in daycare, but he recently went to kindergarten. So that cleared that other $12,000. So daycare is super expensive but to george point george's point um don't forget to re-evaluate once one of your kids become school age and go okay now at this point like like you said i'm pretty sure that she can earn more than 1200 a month i believe that she can earn three thousand dollars a month if she puts her mind to it and so suddenly all of a sudden she is able to um clear some margin on that. And that could

be going towards debt. And in those moments, you have to have those hard conversations and say, okay, what do I want more to pay off this debt or to stay at home? Is it worth it for me, you personally, to stay at home and have a four-year debt payoff journey or to go to work for two years and have a two-year payoff journey, and then you can go back home. And so unfortunately, you know, you can't have it all. Sometimes you have to make really hard choices, but just know that they're temporary. Short-term sacrifice for long-term gain, and the kids will be okay. I promise you that. But if you can, you know, $61,000 in debt, well, if we can do this $30,000 a year, it's gone in two years.

That's $2,500 a month. So the question becomes, how do we find an extra $2,500? That might mean going back to work full time. He continues the side hustle, but it's absolutely doable. And this is reality. We see it on the debt-free stage all the time. That's right. That's right. Yeah. Temporary sacrifice. That's what we're talking about. Let's go to Jim. He's in Phoenix, Arizona. Jim, what's going on in your world? Hey, how's it going, guys? We're doing good. How can we help? Hey, so I had a question. My wife and I started a small business about nine years ago in the middle of, I guess, all of our baby steps. We're currently on baby steps six, just paying off the mortgage on our house. But as we've grown our business, it's grown quite a bit

over the past nine years. And we're kind of at this point where we bootstrapped it from the beginning. So basically all the financial backing for the business is us. So they kind of seem very intertwined, our personal personal finances versus the business finances. Yeah. How do we, what would be your guys' recommendation on prioritizing paying off your house or taking

that money because we're at a point now with our business where we need to build on to our current building for an expansion we're outgrowing the current building that we're in um and so we need money to grow the business because we kind of are kind of limited in caps with our current size of the building we're in manufacturing so the square footage kind of equates to output. Sure. So do we, my wife and I are kind of going back and forth, do we try to cash flow this expansion, which could be from $500,000 to $700,000 building addition,

or do you take that money, pay off your debt, but that's going to delay the growth of the business if there's um is there any other option could you lease in the meantime use you know you continue to pay yourselves what you're paying yourselves and put the extra in a separate fund and so we've talked about that too and so we're in manufacturing and fulfillment so we make products that we sell to consumers and so the idea of of moving our fulfillment offsite, but there's a lot of logistic issues with that. How quickly could you save up 500K to do this expansion?

We could do it now. It's just depending on how big of a nest egg do we want. And that's always my personal struggle too because with payroll, we have roughly 70 employees. Our business is somewhat cyclical. So we have, you know, in the fall, very busy, in the spring, slower. So I'm probably a little too conservative on that. By nest egg, do you mean the business savings account?

So you have $500,000 in retained earnings? Yes. Great. And so you were thinking about, hey, we can tap into that retained earnings and increase our payroll or we can use it for this. So the question is like, you know, we could take that money. Could we pay off our house today with that retained earnings? Yes. I sometimes like to keep that in the retained earnings. We have a money market account is just a, I call it like our three to six months savings for the business because there's low seasons, but we're just

constantly growing. So it's kind of like, we want that money liquid in case we do need to dip into it. I would let business stay business and use your money you're paying yourselves to cover the mortgage. And if that means paying yourselves more or waiting for this expansion to be done, I'm okay slowing down the home payoff process. I am too, especially... That's my question. If you have enough, I guess, you want the other, like, initially... What's left on the mortgage? ...to add to prolong...

How much is our mortgage? Yeah. $2,000 a month. What's left on the whole loan? Yeah, what's the whole chunk? $350. I would just set an aggressive goal and make it a goal to stick to that.

We're going to put an extra $2,000 on the mortgage, and then we're doing our business stuff over here, but I wouldn't intertwine them, and I'd cash flow that expansion as soon as you're able to. I would too. And if you want to pay yourself a couple thousand extra a month and you can afford to do that, that's fine, but you don't have to take the whole chunk. This is The Ramsey Show. What's going on? You are listening to The Ramsey Show. Hey, thank you are listening to the ramsey show hey thank you for listening thank you for watching i am your host jade warshaw i'm joined by george camel now is the time that we get to talk about the best budgeting app in the world i'm talking about every dollar it is a world-class

budgeting app that helps you manage your money the ramsey way. And I have to say, it's probably my favorite out of all the offerings that we have here, George. I think EveryDollar is my absolute favorite only because it's just so dat gum helpful. The EveryDollar app is home screen worthy. And I don't say that about a lot of apps. I don't know how you set up your apps, but I got mine in folders labeled alphabetically. EveryD dollar stands apart. It's on the front home screen. It's ready to go. Okay. At first, I didn't know what you were talking about, but now I do. Yeah.

You do not put every dollar in a folder. Every dollar should be- You don't hide it under a bushel. Listen, on- Let it shine. On iPhone, where you have the lower level, it needs to be right there on the lower level, the ones that you go to first. And if you're having a problem budgeting, try putting it on the home screen front and center. I bet it'll change it for you.

I know, that's right. Oh, I love every dollar. Here's the thing. You can start every dollar for free and immediately see where you stand with your money. So if you have questions about, hey, why can't I make any traction? Or I can't seem to see where our money is going. Or I feel like we make a lot of money, but we still feel broke. All of these things can be solved with every dollar. Especially if you're like my spouse has a spreadsheet. I'm like listen if you're the other spouse you don't want to look at that spreadsheet. I know that's right. Unless you married another accountant. I'm telling you right now it's not working. And they don't want you look at listen here's the thing with spreadsheets George. Whoever made it they don't want your grubby fingers on the script on the spreadsheet either. They're like

I get too nervous. You mess with one cell and that whole spreadsheet is like abort abort crisis i know scares the heck out of me if you want me to go to sleep and fall asleep instantly try to show me a spreadsheet and i like i'll just fall asleep instantly but when you and sam can just log into the same every dollar app and see that's your transparency what's going on gives you some peace. I feel like every dollar fills in the communication gaps that are missing between man and wife. Because it's like sometimes you forget to tell your spouse, hey, I went to Publix and, you know, I went to the grocery store and spent $17.29 for them to fill it into the spreadsheet or for them to write it on the paper budget. Like that's a disaster. That's an argument waiting to happen. Make it easy. Download every dollar.

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What's going on, Abby? Hi, Jade. Hey, George. Hope you're both doing well. Thanks for taking my call today. I have gotten myself in a huge mess with mostly credit card and medical. I bought my first home almost three years ago, and now I'm deciding whether I need to sell to get myself out of this mess or if there's a way to stay and and get out of this. Well why don't you tell us about the credit card debt and the medical debt and we can start to look through it.

Okay so about $15,000 probably combined I'd say close to in between six and seven on my credit cards and the rest of that is medical. Okay. All right. And what's your income? Is there any other debt or this is it? I do have, I mean, the house and a car, but other than that, no. Well, what's the car? Car is $24,000. What's it worth? Well, I'll tell you this, probably about $8,000 less than what I owe on it. Okay. So it's only worth about $16,000?

Yeah, in between $16,000 and $20,000. Okay. All right. And tell us your income, please. I'm right at under $46,000. That's just my income from work. Now I do get child support for the kiddos, but I try not to include that if I don't have to. But I basically had to get into that a lot this year to help with bills for the house. So on your monthly, monthly, how much cash do you see? So about $24.50 for my check, my pay stub, and about $7.80 with child support.

Plus another $7.80. Okay. So I'm looking at this and how many kids is it? Two. Two. And what are their ages? 15 and 8. Okay. So I'm looking at this and I don't think that anything's on fire that you would have to sell your house unless it's making up too much of a percentage of your take-home pay. So how much is your mortgage? So my mortgage is right at $12.35 a month. Okay. So that's high for you. And it's went up. It is. I mean, when I first bought the house, I was at about a thousand dollar payment, but property tax goes up each year and that because my interest rate's great it's like 2.8 percent on the mortgage but what's hurting me is you know it's gone up every year because of the property tax and i'm really at a point you have this house when you were married no i'm single single mom so you got this house post all of that and knowing full well

that you you were you were making 46 at the time and still do? Yeah. Because this is just a lot. I mean, over half of your paycheck is going toward the mortgage. And so it's not really a shocker that there's not much left to throw at the debt. Yeah, it's definitely hurting me. And I don't think now that I think back and I'm like, we tried so hard to get a house. I was working two jobs prior to purchasing it, paid off all my student loan debt, paid off some credit card debt I had at the time. And then about a year after I moved in, they started racking back up. And a lot of that was, you know, groceries, things we needed

for the house that I didn't have cash for. And it just became too much. Yeah. Well, if we can't get our income up for the long term, our core income, get that 46K up, this is going to be unsustainable because the debt isn't really the problem. And the house payment, truthfully, isn't that large comparatively to what you would pay in rent. But overall, because of your income, it's really going to be a struggle to make any headway. Yeah. And it is because, I mean, all the cards and collections, I've paid three off since the end of last fall. I paid one off about $1,800, another $500, and another $400 balance. But, you know, I don't have the money each week. I mean, by the time bills are paid monthly, I'm left with a little over $400, and that's groceries, that's gas, that's household essentials.

So if you freed up all of your payments, let's say you took your credit card payment, the medical debt payment, the car loan, what does that all add up to a month? For the, you said the credit card. So basically what I'm paying out a month, I mean, I'm not paying anything on the credit cards right now monthly besides on two of them. I pay a total of $65. Okay. So what I have left between that and all my mortgage payment, car, and other bills, I'm left over with just over $400 a month. Well, I think part of it is the credit card balance is going to continue to go up. The interest alone is more than $60.

Yeah, it's killing me. And I don't even know how to tackle those now because thankfully I've got it. I think the car needs to go. Yeah. How do I get out of that, though? I just, that's my... You'll need to come up with a difference that you're underwater for. And I wouldn't go to the dealership because they're going to give you tiddlywinks for that car.

You need to sell a private party to get the most value out of it and get as close to that 20 as possible. And then you need to come up with the other four. And that either needs to be a loan from a credit union, plus as much as you need to get a beater car for now, or you need to save up $4,000, which is going to be difficult as you're laying this out, saying, I barely have a few hundred bucks a month left. Do you have any money saved anywhere? 401k. 401k, and that's it? No cash? No cash. Okay, what do you do for a living? I work for an insurance company. I'm a broker service rep. Okay. I've been there almost nine years. Well, the home is a last, last, worst, worst, worst case resort. So I wouldn't go selling it to get out of this. I agree. Because you're

not, honestly, you're not going to find cheaper rent. It doesn't solve all your problems. I've looked for months and I agree with you completely. That's been the only reason I didn't go ahead and go forward with it because everything else is going to cost me just as much as I pay now. The income, the income is the key to unlocking this puzzle. And then getting out of that car and then tackling the rest of the debt. And by the way, settle that medical debt for pennies on the dollar. Call them and settle it up when you have cash. This is The Ramsey Show.

You're listening to The Ramsey Show, our scripture and quote of the day. By the fruit, you will recognize them. Do people pick grapes from thorn bushes or figs from thistles? That's Matthew 7, 16. Josh Billings said, be like a postage stamp. Stick to one thing until you get there. I like that. Well, then you get thrown away.

Oh. Yeah. So, I don't know. All right. I'll m. Well, then you get thrown away. Oh, yeah. So I don't know. All right. I'll mull on that one for a little bit. Marinate on that, George. See if it's a single use. See if it makes more sense. I guess that's life. Single use. You only get one. Hey, okay. There you go. George. I'm going to start making my own quotes. I feel like you made this a little bit depressing instead of. I just feel like out of all the things you want to be like, I didn't think posted. That wasn't on my bingo card. I'm going to be honest. But hey, it's a tough gig picking the quotes for the day. You know, I got to hand it to the team.

What's your favorite quote? I'm putting you on the spot. Oh, gosh. I usually go versus because I try to, you know, be better than you. Okay. You know, versus a quote. Quotes are man-made, Jade. That is true.

Scripture is forever. It's inherent. Yeah. Okay. Well, what's your favorite scripture i've been mulling on proverbs 13 11 wealth gained hastily will dwindle but whoever gathers little by little will increase it listen you hit my line of work it's hidden in your heart i like that it just it does something for me for the get rich quick bros out there i'm like this

is why that's that's the thing i like it how about you john 10 10 what's that one uh i have come that they might have life and life to the fullest or a rich and satisfying life. I like that. The first part is the thief comes only to steal, kill, and destroy, but I have come that they may have life and life to the fullest. I like the context of it. That helps. That's good.

Good stuff. All right. We're just over here talking. There's our Bible drills for the day. We did it. All right. Hide the word deep in your heart. It will serve you throughout life.

All right. Let's go to Cleveland, Ohio, where we've got Jordan on the line. What's going on? How's it going, guys? Good to be talking to you. You too. Hey, I have a quick question. I know the time's short, but I'll give you a quick rundown.

So my wife and I are trying to decide if we should sell our house and just about everything we can in order to pay off all of our consumer debt and then relocate to a different house in a different location because she is wanting to go from full-time to part-time in order to homeschool our children okay and and so we're down to my income and with my income alone um it'd be almost impossible to keep the momentum going with our debt snowball our total debt is is around $84,000 consumer debt. What we owe in our home is $119,500, roughly. And then talk with our realtor, we could sell our home for $260,000. Okay.

Okay. And then if you sell the house, you're moving out of Cleveland, and where are you moving to? So I live south of Cleveland in West Salem, so in Ashland, Ohio area. So we probably stay in like the Wayne County, Ashland County area, just due to work, for me at least. Is it at least less expensive? Yes, it's less, it's least expensive down in these two counties. Okay, so the plan is we're selling, we want to sell the house, pay off all the debt,

we'll have a little bit of money extra. That'll be your emergency fund, I'm guessing? It would be, so we already have our emergency fund built up to $2,000. And so that would just be our extra money that we can use for down payment or whatever we need for what we can. Well, you need a fully funded emergency fund.

So once you pay off the debt, you're going to need three to six months of expenses for your new location. So that would probably be closer to $10, $15, $20, which would still leave you another $10, $15 on top of that to save up for the down payment. That's your kind of starter down payment fund as well. Okay. But I like this plan as long as it's what you want to do anyways. And so selling the home because you want to move is different than selling the home because you want to get out of debt faster. Our main goal is because we want to have a small little homestead. We'll homestead at the park.

Okay. But we live in an HOA now. We have a half acre now. It's perfect for having a homestead, but the HOA doesn't allow anything other than dogs and cats. Our eventual goal is to actually buy some land and to start a homestead,

but with her wanting to go down to homeschool and slow down that snowball a little bit, we're trying to expedite that. We even keep around the edge. We just sell the home, and then after the emergency fund is funded and everything's paid off, with what's left, we do a down payment on a chunk of land and then put, like, a cheap mobile home on it that we could pay cash for

and then live in that until we save money to build. We've just kicked around so many ideas, and we're kind of like, before we make any more stupid decisions with money, let's call you guys. I might make this homestead thing, thing like it might be the five-year plan maybe the 10-year plan i don't know but we need to get our income up in order to get as much down as possible what what is your income my income is roughly 70 000 with overtime and that would transfer to the new location yeah i might i'd say i keep it the new job uh i work pipeline so i travel all over the place.

Okay. And she wants to, right now she's still working full-time, but she wants to go part-time. What's she making full-time, and what will she be making part-time? So she is a stay-at-home special ed teacher. So she makes roughly $42,000, $45,000. And then when she goes down to part-time, from the first job that she's looking at,

she'd be practically losing a whole paycheck so we'd be going from um to 25 to 3 000 from her to 12 to 15 so it's literally cutting in half um and the kids how old are they four and two four and two can i can i suggest another option yes because she's actually listening oh okay hi wife um here's the thing. Your kids are still daycare age. They're not like school, school age yet. I mean, the four-year-old, when they turn five, six, they'll be going into kindergarten. But there's part of me that wonders if, while you have this income, if you just attack this debt and just go crazy and make this kind of a two or three-year plan and say, hey, we're going to go crazy.

We're going to pay off this debt with our cash flow. Then when we're good and ready during that time, we were accruing equity in the home as well. Then when we get ready to sell this house, we're going to get max out of it. And then you're kind of going into this with more money and just kind of with a little bit of grit under your belt and then the kids will be really school age like it'll be time for them to be in first grade and in kindergarten and that kind of thing have you given any thought to that because listening to your situation if if the kids were already in elementary school I might think okay yeah she wants to get this started now but you kind of have a couple of years before all of that even starts. Okay. Yeah, we've kicked around that idea

too. It's just, yeah, we've kicked around all kinds, like all three of those ideas we've kicked around. We just didn't know which one would be more financially smart, I guess, because the one is the quicker way to where we can move into a nice... Because we've worked on that part, and so we found homes that we could afford that are nice that would sustain us for a period of time until we're able to get there. Well, the thing is, as far as financially smart goes, you're letting go of an asset that was appreciated, and then you're going to buy land and put a mobile home on it, which goes down in value. And so overall...

That's option b option a is the live in a sub a suburb with no land and just bank and then just live off my account save up and then eventually once they get to make land on that one but my point my point for you is you've got two years where you can let this asset that you've already put money and time into you can let it appreciate more and it's kind of like um i i don't know for me i'm like i've got this asset i have the ability for it to make more money for me so that when i do go to sell it i could have a full down payment not just 10 000 or 15 000 okay if you can you sell anything as part of your debt 84 000 are there cars here

there's one car yeah it. It's her car. Okay. Is it a lot of your world as far as the value? Yeah. It's 48,000 of that 80. Oh, wow. That thing needs to go. Yeah, she was afraid you'd say that. That's the golden ticket. You buried that lead hoping I wouldn't talk about it. Goodness gracious. What's it worth? Because we rolled over negative equity from a truck that I purchased back when I, before I was just being stupid.

There it is. So what's the car actually worth? So the car's worth probably 32, 33. Yikes. So you're upside down a good 16 grand on this thing. Yes, sir. And there's no money saved anywhere. We didn't ask that. Do you have any money saved anywhere? We just have 2000 for our emergency fund right now. Got it. Yeah. Listen, you've got some options here. If you want my opinion, my opinion is I would sit on this for two to three more years. I would pay off this debt with my hard earned income while you've got the two good incomes and you can do this as fast as you want to do it, you know, and then I would, you know, you can give do this as fast as you want to do it, you know, and then I would, you know, you can give yourself a cutoff if you want to. Okay. By the time junior

gets in kindergarten or by the time junior hits first grade, and that's when we start the homeschool, that's when we turn the key and initiate this. But I would take care of the, I would definitely do that. I'd work. Here's the thing, Jordan, your options get limited when you have debt. And so everyone has dreams and I want to be staying at home and I want to go part-time and I want to have the homestead, but debt limits your options. It's a thief. And I hate that for you, but let that be a lesson to everyone out there that debt is never a blessing in your life. It always holds you back. I love it. This is The Ramsey Show. Hey, folks, Dave here. You want to hear even more life-changing content from Ramsey?

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