The Ramsey Show - Wisdom Starts Where Debt Ends

Starting point is 00:00:04 Brought to you by the Every Dollar app. Start budgeting for free today. Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union Studio, this is the Ramsey Show. I'm George Camel, joined by Rachel Cruz this hour. We're taking your calls at AAA 825-5-225. Isabella kicks us off in Washington, D.C.

Starting point is 00:00:35 Isabella, welcome to the show. Hi. Thank you so much. Absolutely. We are currently paying over $5,000 a month in bills right now, and in a few months we're going to be moving and then paying less than $1,000 in bills. And we're hoping that you guys have some advice on maybe budgeting better. We're worried we're going to see a significant drop in our bills,

Starting point is 00:01:05 which leads to an increase in, I guess, our bank account. and I'm worried we're going to see that money and be like, wow, now we can buy all these things that we want and go out to dinner and this is great. And we're 27, you know, so I'm worried that we're going to want to spend it. What life hack did you find to cut your expenses down by 80%? In 2020, I bought a property, a two-bed, two-bath condo, and the mortgage, I put over 60% down on it, and the mortgage is $300 a month. So we're moving into it. So it's the mortgage that you're basically giving up that $4,000. Yes, yep.

Starting point is 00:01:46 The rent in Washington, D.C. is insane. What's your household income? It's about $10,000 a month. Great. So you have $5,000 and expenses. So you should already have $5,000 left over, life as it is. Yes, but then, of course, Washington, D.C. is expensive, and it's groceries, and just life in general.

Starting point is 00:02:10 So that doesn't count groceries. Are you guys moving out of D.C. then? We are, yeah. We're moving to Hilton Hood Island, which is where the property is. Oh, gotcha. Well, that's wonderful. That sounds nice. Rachel's jealous.

Starting point is 00:02:22 That sounds nice. Okay, so your income stays the same at 10K, but your bare bones expenses go down to a thousand. Yes. And you're worried you're just going to spend the difference instead of do something smart with it. I am very worried. And then I'm questioning, do we try to pay off the rest of the house? I mean, we have 40,000 left on it. But if it's only $300 a month mortgage, is it smart to pay that off? I think at 3% interest, it's making more. Making more where?

Starting point is 00:02:55 So if we put it in the stock market, like, I think it would make more there, wouldn't it? Well, there's a lot of ifs here. Number one, you're not investing right now. We're hoping the market is up consistently, which over time it's going to go up into the right, but there's going to be years where it could be down 20%. And so there's a guaranteed rate of return, which is paying down your mortgage systematically. And then there's the variable of we could make money in the market. So want to make that part clear. Okay.

Starting point is 00:03:24 So the second part here, do you guys have any other debt outside of this mortgage? Nope, nothing. Amazing. And you guys have savings? Oh, yeah, we have over 100 in savings. Oh, wow. A hundred grand, sorry, not $100,000, $100,000. $100,000 and no debt.

Starting point is 00:03:41 So you could pay off the house today and still have 60 left over. Oh, absolutely. What's stopping you? It's just a question of, is that smart? Where is that $100? Where is the $100? Where is the $100 right now? So your point about making more is not really a point because that $100,

Starting point is 00:04:00 if just in a regular savings account, it's making like a little over 1%, even less than 1%. Is it in a high yield savings? Yeah. I'd have to ask him. I bet it's just in a traditional savings. All right. Well, I'll tell you what I would do if I was in your shoes. It's besides the point from your question.

Starting point is 00:04:18 But I would pay off the mortgage today, be completely debt-free, house and everything. The piece you will feel is unimaginable. Your risk will go down. Your margin will go up, even if it's by $300. And now you guys are making $10K with $700. and expenses. That's pretty wild. So here's what I would do to force yourself to do the smart thing, to eat the vegetables

Starting point is 00:04:38 first, as we say, is to auto transfer that money somewhere where you can't touch it. And for you guys, since you'll be in what we call Baby Step 7 with a paid four house, that could be two investments every month. And you're saying the $4,000 and margin that they're going to get. You would just, you would direct it to. Well, if you have 10 grand coming in and only $1,000 in expenses, you might go, we should upgrade our life in some ways. Yeah, I was going to say, I think you can do all the.

Starting point is 00:05:00 above, Isabella, honestly. I would. If I woke up in your shoes, I would write a check. I'd be done with a mortgage. I mean, and if you hate us, you can take out another one later if you'd like. But I would pay it off. And then from there, really, I mean, the uptick on lifestyle, and this is true if you're getting a lifestyle increase like you guys are, or if you're getting a massive raise or people that change jobs and they see this, it's good to be in a practice and a flow of three things, of giving, saving, and spending. Okay, so when we're talking about the saving, you need, yeah, you guys need to be putting some away in savings.

Starting point is 00:05:36 You need that rhythm in your life. And that will be for retirement investing. That will be for short-term savings because you guys may want to upgrade things in the house in two years, right? And you'll just continue to take that, what would be what, 60 grand in a savings account and just continue to up that. I mean, I would. And then increase your lifestyle a little bit.

Starting point is 00:05:56 it's okay to spend some. It is okay to go out to eat at this point in your life, Isabella. So you're fine. You've earned it. And you guys are only 27. The amount of wealth you're going to build is astounded. So enjoy it. And then Isabella, I really would encourage you, you guys need to be giving. Have that in a rhythm. Because as your income increases, you're going to see, your spending will increase. Your savings will increase. And if that giving element is not there in a rhythm, then life long term starts to become pretty dull and can become very self. inward looking, and that's it. And that's a pretty empty life. And so that giving component is, I think it's so big. Yeah. No, I definitely agree.

Starting point is 00:06:37 So enjoy some of it, save some of it, give some of it. And I think you guys are going to do great. Have you guys ever sat down and done a budget together? We've kind of thrown it back and forth here and there, but we've never actually sat down pen to paper. This is how much goes here type of thing. Okay, that'll make you feel better too. We'll have more control.

Starting point is 00:06:56 How many thoughts and feelings you have around this? And once you put it into the budget, you're going to go, oh, my gosh, I can't believe we've never done this before. It feels so much better just knowing where the dollars are going to go before the paychecks hit. That's the key to preventing lifestyle creep is having a plan for that money before your emotions have a plan for the money, before companies have a plan for your money. For the Instagram ad has a plan for your money. Ouch. Sorry, Rachel. That was personal.

Starting point is 00:07:23 But you guys are doing great. If anything, it sounds like you need to let loose a little more. Yes. And I think your question is a good one just in the motivation of it. Because for so many people that are listening, their money is such a question mark of like, I don't know. I don't want to. I'm fearful of this over here. I don't want to do this.

Starting point is 00:07:42 If that's too much, is it okay to do this? It's all these questions. And honestly, Isabella, a detailed budget and working through it, it answers a lot of those for you where you feel there's not questions because there's not questions because there's plan. And so if you, if you hold in line, we'll give you every dollar and we'll give you the premium version, even though you'll be fine. You can, I'm sure she can afford it. She can afford it, but for Erin, I'm going to give it to you as a friend because I do, I want you and your husband to sit down and do that budget because you will see in every dollar the first line item is giving, the second is savings, and then all of your expenses underneath. And when you live your life

Starting point is 00:08:16 in that order, especially at 27 on baby step seven, I mean, it's insane, insane. You're just putting good practices in place. financially. You build these muscles now. Nothing's stopping you guys. We're so proud of you. Well done. What a good place to be. Hey guys, it's Rachel Cruz. If you're working the baby steps, every major expense deserves a second look. And health care is one of the biggest expenses in most families' budgets. And that is why I recommend that you check out Christian health care ministries. CHM isn't insurance. It's a health cost-sharing ministry. That means members help pay one another's medical bills. And they've been

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Starting point is 00:10:29 Hey, how are you doing? We're doing well. How can we help today? Hey. Thank you for taking my call. My wife is definitely not going to believe that I talk to you all today. Are you going to tell her? Is she going to find out?

Starting point is 00:10:39 she is definitely going to find out yes we've actually been going back and forth and she's like I'm going to call today and you know she's just kind of been so busy but you beat her to it oh see chase here's what happens the callers that call in we tend to naturally side with them because they're the callers we want to help them so you've beat her to the punch so you're thinking there's a good chance you're going to win the arguments because you called in but we're going to try to no we're going to play fair i don't think i think she's going to win the argument and you know I feel like I kind of already know the answer, but, you know, I just kind of, you know, I think it's just my flesh and kind of, kind of on greed that I'm dealing with, so I wanted to call, you know.

Starting point is 00:11:19 Got biblical real quick. All right. Get some knowledge and humbled, you know, because, you know, my wife's awesome and I want to, you know, I want to respect her and these, you know, financial decisions as well. Okay, so lay out the argument. Okay, what happened? What's going on? All right. I'll argue. I would say, well, not really big argument. But anyway, so we just upgraded to a vehicle or a SUV,

Starting point is 00:11:40 a bigger SUV, because we just had our second child. Congratulations. She's going to be going, thank you. She's going to be going part-time.

Starting point is 00:11:48 So, of course, she's going to be having the little kiddos more often. So I just want to give her some space, more space. So anyway, I wouldn't say we upgraded.

Starting point is 00:11:57 We got a 2,021 SUV for about $23,000, I believe. And kind of even going back before this, our kind of arguments have been, hey, let's pay off this vehicles, let's pay off these vehicles. And she's like, yes, and I'm like, no. And that's kind of just been going back and forth.

Starting point is 00:12:17 Thankfully, we did go ahead and pay off my truck, so we only have one car payment. And so kind of trying to decide what we want to do going forward, given that she's going to be having a pay cut. and she is the one to swipe the debit card more often than me. It's a very nice way of putting it. And I know she's out on the show to defend herself, so that's all I'm going to say. Okay. She's probably the one buying a bunch of stuff for the house, too. We'll throw that out there.

Starting point is 00:12:48 So the only debt you have is this $23,000 SUV loan? Yeah, yeah, just a loan. Okay. So what's the argument? How fast to pay it off? Or to go ahead and pay it off. You have the money. Oh, okay.

Starting point is 00:13:04 Yes, yes, yes. So, yes. How much do you have? Well, the money, so currently, I don't, we don't, and I kind of did this about four years ago, so I don't keep anything in our personal banking savings. I kind of like all my money to grow for us. So I kind of, you know, I don't say banker. I'm with kind of like an Edward Jones type company.

Starting point is 00:13:28 So everything is growing in the market. So currently that we have in savings is about $130,000. Okay. And then additionally, we have two other, we got two traditional accounts about $20,000, each. And, of course, we have a couple of Roth accounts. Everything totaling right now to be about $1.90 with mostly $125 in savings. Okay.

Starting point is 00:13:57 And you don't have anything in checking your savings, except you're spending money for the month? Well, so in savings, just in our personal bank, and I keep about about a $5,000 buffer for emergency. But if you had an emergency above that, you would have to sell off some of your stocks and mutual funds from Edward Jones to fund it. That's correct, yes.

Starting point is 00:14:22 Okay. Well, step one, I would encourage you to keep a full emergency fund outside of that in a high-yield savings account. and the market could do better, but man, when you have an emergency, the market doesn't care about the timing. So if the market's down 5% and you have to withdraw that money, it's going to hurt. It's going to add insult to injury along with fees and taxes. So I love that you want your money to grow, but I still would keep your emergency fund aside because it's not an investment. It is insurance against life.

Starting point is 00:14:51 So once you do that, you have the money to pay the car off, and I would do it today. I don't know who's on what side if your wife is saying, let's pay it off today. day and you're going, oh, we got the money, what's the risk? It's a couple hundred bucks and a payment. We can stomach it. Is that your side? That's exactly my side. It comes out to about a $370 a month payment. And with that being our only, I mean, we have a house payment and then that vehicle payment, and that's the only debt that we have.

Starting point is 00:15:20 How come your wife is going part-time back to work? Is that because she wants to? So she's just a, and this is what a lot of. love about her. She's just such a, just a godly woman, and she wants to be there for her kids more than work and just nurture the kids at home while they're young. Well, here's my case, Chase. Would she want to be home full-time? And that is a definitely goal in mind. Definitely. She will love to be home full-time, yes. I would agree with that. But you guys can't, from a financial perspective, though. It would be tight? I would say, I mean, I would say it would be

Starting point is 00:15:59 High, it'd be doable, but, you know, like I just don't think, you know, I got a toddler as well. So we're kind of getting her to some extra curricular activities and, you know, that's come up. You got a little bit of mother out daycare payment. So, and then you get into the talks of when she starts kindergarten, are we going to homeschool or private schools? Sure, yeah, you just want options. I get that. No, that's not, that's not bad. You can be a godly woman and work part-time, too.

Starting point is 00:16:27 So it's great. I bet she is a fantastic. mother. So what I would do, honestly, Chase, is for sure. I would be paying that, I just paid this off. And I would move what George was saying some money, maybe three months. You may not need a ton, but I would up that $5,000 and have at least a three-month emergency fund there. In case something happens, it's just, it's there. And you don't have to go through the hoops of taking out investments and selling and all of that. So that is, it's the clearest plan. And my question, to you is have you guys ever bought a car in cash or have you always taken out a loan and then

Starting point is 00:17:03 eventually paid it off yes no it's always just been alone and just pay it off you know as far as we can it would be an interesting experiment because like you're saying the 370 it's not going to it's not going to kill you guys but this is the part about money and debt specifically that you can't put into a calculator or an Excel sheet is the absolute freedom of just owning your stuff and not owing and we actually have some great friends and they could easily afford the car payment they always kind of had it's just kind of always what they've done

Starting point is 00:17:37 and then they paid off their cars and that he was laughing at me a little bit because he knows what I do I don't like rub it in my friend's faces by any means and he was like man I didn't really realize just how good that feels like it's our car it's ours and we're not attached to any

Starting point is 00:17:57 any loan department any bank in it. And so there's an emotional piece to this chase that actually is going to free you guys up. And what that unleashes, spiritually, I do wonder if it creates more creativity for you guys and your options in life. And does that free you all from a deeper level to be like, no, if she really desires to be home more? Like, do you figure out an easier way to get there, right? Where it's not just all math. There's something emotional about it. Yeah, you guys are speaking two different languages and you're missing each other. because of that. Your logic and math, and she's emotion and freedom and risk and security.

Starting point is 00:18:35 And because of that, I don't think you're going to find a compromise if you keep talking the way you guys are talking. Right. So here's what I did, because I've been in your shoes, Chase. My wife retired after nine years here at Ramsey. She now stays home with our kids. I don't know that you say retired. She retired. Well, I don't know if she's going to work again. My goal is that she never has to go to an office again. But, Chase, part of that was we got the home paid off. And we didn't talk about, well, it's a three point, I could make more on the market if we put it there. We just went, we're going to have more options and more peace and more margin and more freedom if we just get rid of all of our debt. And that's what happened.

Starting point is 00:19:10 And we just upgraded to the minivan life because we got two little ones. And it was some grieving on her part to get rid of that SUV. But I'll tell you, walking in there and just writing a check and just leaving with a zero percent interest rate, zero dollars a month is the best feeling in the world. world. And I'll throw this out there, Chase, because you brought it up, so I'll go there. But when you look in scripture, there is nothing positive about debt ever. And it's not a sin. It's not a salvation issue. There is nothing that points debt and wisdom in the same category. There's not. And so if you want to live a life with wisdom with your money and you want to follow, whether it's proverbs, the Old Testament, whatever, wherever you want to pull from, it says over and over that the

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Starting point is 00:22:27 You can also get free checklists and guides that will help you file at ramsysolutions.com slash tax resources. And we will link all three of those down in the description of this episode. Tony is in West Palm Beach up next. Tony, welcome to the show. Good afternoon. How are you guys doing? We're doing well. How can we help? So in February, I paid off my house.

Starting point is 00:22:51 Awesome. And definitely, you know, I was a big accomplishment. But I just feel like it's thought it'd be more freedom than I have. How much did you pay off? And how quickly? I paid off. It was $110,000 in about, two and a half three years, closer to three years.

Starting point is 00:23:23 Wow, way to go. Good for you. Why did you do that? Actually, I listened to you guys about five years ago. I started listening to you guys. And that was my start journey of like, I got to get this together. And, I mean, I was, I bought my house back in 2009. So my payment was never really that high

Starting point is 00:23:51 And so I just kept You know Once I heard you guys I thought I put more money toward it I had a piece of property I bought when I was like 20 years old And I used that also toward it

Starting point is 00:24:05 To pay off my You sold that property Yeah sold it And um Just try to pay off all the first Like you guys didn't say Pay off like the little bill Like the smallest bill and work your way

Starting point is 00:24:17 and once I got those first ones out of the way, I really started trying to put as much as I could toward the house. I was also with that property. I had thought about using that investment down the line, but I said, what's the best investment is my house? If I can have that paid off, you know, that's a big step. But the house is paid off, and I'm trying to invest. I feel like I'm very, I'm 43 years old, and I'm a little late.

Starting point is 00:24:47 I have a pension at my job, but I'm kind of late as far as investing in like a 457. I have an IRA outside of work, but I just feel like I'm kind of down. Like when you hear people say, I have 300,000, I have this much. I have like 60,000 between all my accounts. So I get nervous thinking, I'm 43, you know, will have enough time investing. I have three daughters, one in high school, one in middle school. in one elementary school, and it's like, you know, I haven't put any money really yet toward college. So I started getting, like, you know, a little worried about.

Starting point is 00:25:29 So you're just overwhelmed in general because you thought paying off the house would somehow solve all of the other problems. It would solve retirement. It would solve college funding. It would give you purpose. But all it did was it gave you freedom and peace and some extra margin. And so that's a step toward it. But it's not the whole picture. And so it's okay. what you're feeling is normal. And you're not behind. I know it feels like it because there's someone else has more than you. But man, the good news is it's not a race where there's one million people running.

Starting point is 00:25:59 It's just Tony's race. Gotcha. And there's going to be times where it's slow and there's going to be times where it's fast. There's going to be seasons where it's crazy because you're cash flow in college. And there's going to be seasons where you wish you had something to say for. Gotcha. Are you married? Yes.

Starting point is 00:26:14 Okay. How much you guys make a year, Tony? $172,000 Okay I mean it sounds great It should be able to You know Put more money

Starting point is 00:26:26 Like it shouldn't be as You know Kind of stressed out about it But it's still You know It seems like At least the house to pay up

Starting point is 00:26:36 But something always comes up I'm trying to save You know I use a lot of my Um Personal savings also To pay the house off So I've been trying to, you know.

Starting point is 00:26:48 How much do you have left in savings? About 12,000. So now I'm trying to, I'm trying to put, you know. Were you not, were you investing, well, you have 60,000 invested, you said. So have you been investing in the last five years after you paid off your consumer debt too? You've been putting money away? I was only putting like $200. I was putting like, I was putting about $800 a month.

Starting point is 00:27:11 And then I went down because I said, my goal was I could see the light at the end. the tunnel here that I can get this house pay off so I stopped really putting too much an investment and investing inside to really push to get the house done but then you know time like they say time helps for investing and I feel like I kind of cut myself short but I guess I can try to make it up now well you can so at this point now that you're on baby step seven which is to build wealth and be generous so if you invested even if you went back to our 15 percent which you can invest more and say you have 60,000 saved now, say you put $2,000 in a month,

Starting point is 00:27:50 okay, which would be $24,000 a year, and you do that for 25 years, then that's going to be $4 million at retirement. Okay. With a paid-off house, how much is the house worth today? About $700. Okay. Well, and in 25 years, you know,

Starting point is 00:28:08 you'll be, gosh, close to probably have a $6 million net worth at that point. And that's less than 15% of your, your gross household income is the written numbers Rachel just calculated. And you only put in that. What would you do? $2,500 a month? Let's just have fun with this. What would you say? It would be, let's see, 258 divided by 12, 2150 would be exactly 15%. Oh, okay. I was close, George. Yeah, I was just saying. I'm saying Rachel's being concerned. You're being a little conservative. By $100 a month, Tony, I was being conservative. Let's do it. Okay, hold on. Hold on. Let's just up it. Just for the fun of it. 2150. Okay, there we go.

Starting point is 00:28:41 4.4.2. All right. We're getting up there. I only put 1,200 right now. Yeah, you got to up that, Tony. So I think that that is a little, okay, and you paid off your house, which is incredible. But that is one reason we talk about babysaps four, five, and six. We don't jump from paying off consumer debt straight to paying off the mortgage because you want to take care of retirement. And that's 15% of your income. So if you had been doing that over the last 15 years or the last five years since listening, you would have more, which is fine.

Starting point is 00:29:10 I mean, you're growing to be okay. And kids college. We talk about that next. Like you need to be putting money away for kids college and then throw out of the house. So if you had waited just in a different scenario, another four, five years to pay off the house and instead did these other buckets, I do wonder if it would have felt less extreme. It would have probably felt a little bit more in rhythm with your life, right?

Starting point is 00:29:35 But it's not a bad thing, Tony. But I think I could see how if you go straight there, you pay everything off. And then you're like, oh, my gosh, I have college and retirement. these two big buckets that are very legitimate. So that feeling you have is real, and I'm not negating that. But I also want to encourage you, yes, if you fund – and again, Babysept 7, you can invest more than 15% if you're income, right? So even if you went up to 20% invested.

Starting point is 00:29:59 Once the kids are out of college and you've helped cover as much as you can from that, you'll be upping that to 30, 40% of your income. You could throw so much an investment at that point. And then you have a paid off house too, Tony, at the end of this, right? Plus a pension, plus Social Security. Yeah. And a lot of people going into retirement still have a mortgage. And that's a big thing that they try to take care of before retirement.

Starting point is 00:30:19 And, yeah, you're done with that at 43, which is pretty remarkable. Thanks. Yeah, just like you say, though, the stressful just, like, if I probably would have done the other way around, it would have been a lot. At least those bases are covered, but you're still, I mean, it's one way, you know. Yeah, but that's okay. It's okay. Yeah. Listen.

Starting point is 00:30:38 You said, go ahead. $2,200 a month. 2100 a month. Yes, to invest. Okay. You can put that. Yeah, Roth IRAs. I don't know if you can't remember who said he had 401ks work-wise.

Starting point is 00:30:52 But, yeah, to find some investments to put that in. And yeah, and you'll be great. You'll have four million. The biggest thing is stop beating yourself up over what you could have done differently. You got the rest of your life ahead of you. The windshield is bigger than the rearview mirror for a reason. So you got this, Tony. Keep fighting the good fight.

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Starting point is 00:32:59 So if you want to learn more about the baby steps, you can learn more at the link in the description. We'll get you all the information you need to follow along. Isaac is in Montgomery, Alabama. Next, Isaac, welcome to the Ramsey Show. Hi, thank you, Rachel and George. Thank you for taking my call. Sure. How can we help?

Starting point is 00:33:17 So I'll try to be concise and get to the point. So I'm recently married. I'm 27 years old. My wife is 26. I have a full-time job of career. I make take home about, say, 60 a year after taxes and all my benefits. She is still in graduate school, but she's getting paid as a graduate assistant. And then she has a second job that take home.

Starting point is 00:33:45 is about 3,500. So combined, we're kind of in the eight range. I vary due to overtime and at minimum, I'm usually around mid-fours. But she's about to get a full-time job. And at this point, I'm really excited about working in Baby Step 2 and killing all her student loan debt. We have about $100,000, just a little bit over combined. We have a little bit of credit card debt, about, I think, $8,000 total. and 2000 on the car that she drives.

Starting point is 00:34:19 So we have a lot of kind of small student loans that I'm looking forward to get paying offs, including the car and the credit cards. But I've had these conversations, and I've kind of tried to show her a timeline. And, you know, if we really work hard and use all this extra money that we're going to have after our expenses, that we can get rid of this debt within maybe three years, is the time frame I'm looking at, kind of generally. and that we won't make as much as we think, and we'll be spending more, just trying to be really, give a lot. Is that about $3,000 a month toward the debt?

Starting point is 00:34:57 Say that again? Is that about $3,000 a month getting thrown toward the debt and the debt snowball? Yeah. To get it done for a three years? Give her take. And having these conversations, there's just a bit of a split, a divide. but she's very kind of concern. She's not really been in this sort of situation before.

Starting point is 00:35:18 I mean, she finds it hard to believe that we're even going to be able to pay off the debt. And I've tried to, you know, been like, hey, you know, we can do this. We're going to make the money for it. You know, I know we're not making the most, but even with what we do and what we spend, we'll be able to do it. It's going to take a little bit of time if we keep our noses down. but I'm trying to compromise. She wants to keep a credit card.

Starting point is 00:35:47 We're going to get rid of about four credit cards, and we're compromising on keeping one. And then when it comes to the debt, we're compromising right now, where we've talked about it, where she wants to be putting about 10 or 15% of our surplus away towards either an increased emergency fund or like a house fund,

Starting point is 00:36:09 something we're renting right now, but we really do want to buy once we get rid of the student loans. Yeah. And again, I've been like, hey, if we go hard at the student loans, we're going to make that up in the back end. As long as we get one done, then the next and then the next, it's going to be over probably $1,500 to $2,000 of extra money will have once we get rid of all that student loans.

Starting point is 00:36:36 So, Isaac, I'm curious from your perspective, why do you want to pay off debt? What goes on inside of you when you think about it? Name off a couple of emotions. Like I don't want to put any words in your mouth, but what does it feel like for you? Right now with it, it feels overbearing. You know, you've got this weight.

Starting point is 00:36:59 I've got this weight on my shoulder, and I see all this money every month going towards these debts, and because of the minimum, I'm watching the principal go up. No, I hear you. I hear you. So you're going math again. Stay with me in the emotional room. As your wife.

Starting point is 00:37:12 I'm trying to give the women's perspective. Okay, so it feels overbearing. So then what does that do to you throughout the day at night? Like, how does that affect your life? It's just added stress. I can see the finish line, and it makes me excited. I feel like when we get there, we'll be free. And it'll be the freedom, the weight off our shoulders.

Starting point is 00:37:39 I don't, again, we're recently married, so I don't think it affects us too much. We have a good ability to talk to each other. And right now it's just kind of, it's an added stress that I want to, I want to be able to get rid of that. And I can see the route and the path. And that's like, that's my number one priority right now is let's, let's follow the plan and make ourselves uncomfortable and really get, you know, get rid of it so that we can be free and have a bit more, you know, air to breathe.

Starting point is 00:38:17 Sure. No, I can. Yeah. Totally. And I concur with what you're saying. I just think for her probably, she may feel a little overwhelmed because you're like, here's the timeline. This is what we're going to do.

Starting point is 00:38:31 I see the finish line. Get on track. We're going to do this. Let's go. And she's like, whoa, whoa. I have other thoughts and other goals and other desires. You know what I mean? To have an emergent.

Starting point is 00:38:42 Like she has her own goals. And the great thing is everything you've named off so far as a couple, all the goals are amazing. They're all great, right? Like she's not saying, oh, my gosh, I just want to go and spend a bunch and just go travel Europe for, you know, two months and do nothing. And you know what I mean? Like she's not like a not realistic person. Like everything that she's wanting is realistic.

Starting point is 00:39:08 And so that's the great thing. And so the work is going to be for you guys to get aligned. And I would want to make sure that she hears from you, Isaac, not just the numbers and the finish line and the charts and the calendarization of how you're going to do this in Excel. But she hears from her husband, who's, from what I hear, has a weight on him that is so stressful. You feel a responsibility. I'm sure now that you're married, and she's in grad school and you feel like you are the main source of income at this point. And so much is on your shoulders.

Starting point is 00:39:44 And when this debt is gone, there is that deep level of relief. But I want her to hear you explain it in a way that's more human than just like a human calculator. So I do wonder sitting down and having a heart to heart with her and you showing, your, yeah, I mean, your push towards that, I think would be helpful. And then I'll throw out, this is probably a little bit more on the knowledge side, but again, her goals are within the baby steps. And we, this plan has been proven for over 30 years, the fastest way to build wealth and to have, you know, these massive goals achieved is in a very specific order. And that is from a mathematical, but also an emotional level.

Starting point is 00:40:34 And so I would probably kind of push her on that in a sense that this is, this isn't something that people just made up, right? It's been done for over three decades, and it is seen as the most efficient way to get to the goals she wants to get to as well. Yeah. I've got a couple Ramsey company books. I've got the total money makeover that I've kind of encouraged her to read after I finish my reread of it.

Starting point is 00:41:04 We use every dollar. I've gotten her on that too, and I've showed her kind of how it works and how I like to use it. And we've gotten a lot better at tracking our expenses and now that we're doing everything together, joint bank accounts and all that, we've gotten better with making sure we know where our money's going.

Starting point is 00:41:24 It's just kind of that long-term plan that. And I think you guys will get there too, I think I would give you guys some great. race. You're newly married. You've combined two adult lives. She's still in grad school. I mean, there's, yeah, I mean. So she's been hustling, you've been hustling. Now you're married and she's going, wait, I thought marriage was going to be like fun. And you're giving me like a running regimen for a marathon all of a sudden. So I think there needs to be some vision cast about, hey, where do you want to end up five years from now? Great. We both say we want to be debt free with savings

Starting point is 00:41:55 in the bank and own a home. Great. Now it's just about what's the best path to get there that's surefire. And we know that's the rammed. So it might take, you know, walking her through Financial Peace University. Hey, Friday nights, we're going to watch a new lesson and we're going to talk about it. We're going to do our budget and check in. And also dream. So romantic, George. Get some popcorn.

Starting point is 00:42:15 Get some takeout. What an exciting Friday night. She really is going to be like, is this marriage to Isaac? Listen, I don't care what's happening with the housewives. I just don't care. Oh, my gosh. Here's something that keeps a lot of parents up at night. Kids are growing up with more access to information than

Starting point is 00:42:45 ever before in history. But most of the content is calculated to keep them distracted, make them mad, and keep them scrolling, not help them think for themselves. World Watch exists to be the antidote to the algorithms. World Watch is a video news service built specifically for preteens and teens. Their daily 10-minute videos that explain what's happening in the world through a factual Christian worldview. No outrage, no noise, just clear reporting you can watch together and that your kids can actually understand so they can come to the dinner table and engage. and curious instead of worked up or zoned out. And I love that World Watch doesn't talk at kids. It gives family something to talk about because when my kids are older, I want them to be able to

Starting point is 00:43:26 think for themselves and separate news from noise. And right now you can try WorldWatch free for 30 days. Click the link in the description or go to worldwatch.news slash Ramsey and use promo code Ramsey to get started. The Ramsey offer includes your first full month free on top of the standard seven-day trial. That's worldwatch.news slash Ramsey. Welcome back to The Ramsey Show in the Fairwinds Credit Union Studio. I'm George Camel here with Rachel Cruz taking your calls at AAA 825-5-2-2-25. Lynn is in Peoria, Illinois. What's going on, Lynn?

Starting point is 00:44:09 Well, my question is, should I pay off my daughter's house? Wow. Whoa. That's exciting. Yeah. What brought this about? Well, I moved in with my daughter. And she's a disabled veteran.

Starting point is 00:44:25 So her income is full VA disability and full Social Security disability, which comes to about, somewhere around $70,000. Okay. And I'm on Social Security and a pension, and mine comes about $30,000. She owes $104,000 on her house. And I have $100,500,000. a 3% savings count. Not sure what to do with it.

Starting point is 00:44:59 And I thought it would save a lot of money to pay off her house, and she would then be paying me at least $2,000 a month, and it would be, I'd have recovered my basic money within four years. So this is like a loan, like a 0% loan is really what you're talking about? Well, she's willing to pay interest, too.

Starting point is 00:45:25 We both live easily within our budgets. I have almost no bills. So if that's the case, why doesn't she just pay her own mortgage or put extra onto it and pay it off in four or five years? Well, she has been putting some extra towards it, but I just thought that without putting extra towards it, it's going to, you know, more than double the cost by an interest. and why should the bank get it? Why shouldn't I get it? Oh, so you want to become the bank? Right.

Starting point is 00:45:58 Is this all the retirement money you have, this $100K? Yes. Well, that scares me, too. What if you need it? And it's locked up, and she's only paying you $2,000 a month, and all of a sudden... Well, I'm trying to think of, you know, what's the worst that can happen and what would I need it for. I mean, I have a supplementary Medicare, and I'm very healthy. In fact, I was just at the doctor. Everything is great.

Starting point is 00:46:22 Lynn, I would not do this. I would not do this. No? No. For multiple reasons. The highest being, you being your daughter's bank, from a mathematical perspective, I can see how you can sort of make it work, but relationally, that's going to be a disaster. Well, we've had some experience with that because when she,

Starting point is 00:46:48 wasn't on this building and she at that time lived with my house. We just worked things out fine and I helped her get her act together and you just changed the relationship from mom to daughter to now lender and borrower. And there's no way around it. I mean, can this come out totally fine? I mean, sure, but I don't think we would have jobs if that was the case. Like there's a disaster that happens that's looming there. And so keeping things separate where financially she is doing what she's doing, you're doing what you're doing. And what scares me,

Starting point is 00:47:30 Lynn, is you have $100,000 to your name, which is amazing. So well done. I mean, that's a great savings. But what are you going to do for a house? You're going to pay off a home that's in her name. You have nothing else to your name. And what if you want to move out? What if she wants you? to move out in a year and a half or two years. You know, what does life look like? It just starts to really limit options, and it puts a strain on a relationship because there's not much safeguarding you in that.

Starting point is 00:48:02 Now, if you had a million dollars, and you're like, listen, I'm going to write $100,000, you know, $4,000 check and just pay off my daughter's, you know, mortgage. She's a disabled veteran. I mean, I would be like all day, yes, what a blessing. What a blessing. but it's not a blessing when you become the bank. Well, I guess I just think that we're in an unusual situation

Starting point is 00:48:25 because I'm close with all my kids. My other kids think it might be a good idea. We want to keep it close. That's the issue. And if she has to evict her lender, that's about as awkward as it gets. Yeah, I guess because we have some history in having mingled finances, I just think it'll go okay.

Starting point is 00:48:49 Okay. Well, I don't know. I don't think we can convince you otherwise. So I'll tell you, I would not do this my own mother. But that's what you're basing it on. It's just the, um, well, there's a relational aspect. And decades of, you know, decades of hearing personal experiences from people. And Lynn, I'm going to say when you, when you owe family money, regardless of how you slice it, it changes the relationship. It just, it becomes odd when you, when you mingle, finances and family. And again, if it is a gift and there's no strings attached, that's one thing. But when you start to wait for a payment from your daughter and, you know, things that can go sideways and you're going to spend all of your, like I wouldn't even do this for you, Lynn. I mean, I don't think it's smart. Yeah. I don't think it's smart in your financial situation, let alone adding in the idea of

Starting point is 00:49:43 mingling debt and all of that with your daughter. I think that she, can, I think if you have a, if you're set up well in life and you want to help her and you want to write a $30,000 check to help get the mortgage down for your daughter, that's a beautiful thing. Because currently you're not paying any rent? No, no, she pays all the bills. And has there ever been any talk of, because you said the finances have been mingled. Are you paying for anything as part of this arrangement? I just pay for my supplementary Medicare and that's it. But no utilities.

Starting point is 00:50:18 Do you care for her from like a physical standpoint with her disability? Or is she able to, like, are you a caretaker from like a physical sense for her? I don't know the extent of her disability. Somewhat. We just help each other out. Okay. I mean, I've, I, my life has been intermingled with all my children forever because I homeschool my kids. If it's working for you, then just keep doing it.

Starting point is 00:50:49 but I would not make it worse by becoming the lender. I think Lynn's going to do it. Which is great. And I'm glad you called in, Lynn. I really pray it all works out. Here's my fear. I pray in four years, you recoup your money. Nothing else happens that you stay healthy and everything goes according to planning.

Starting point is 00:51:07 I really do. I pray that that is the case because that's what she's going to do. So all good prayers and vibes and all the things that people send people's way. I'm picturing Lynn's daughter calls in a year. from now and says, hey, so I'm getting married and my mom was my lender, but she's also my tenant, and I have to kick her out. And Gary, my fiancee. And she has no money because she gave it all to me to pay off the mortgage, but I owe her. So now she's demanding a lump sum in order for me to move out. And I don't have that. But it's in my name. And Gary, the fiance, what's he going to do,

Starting point is 00:51:43 you know? I would much rather a hard conversation with Lynn now than the harder conversation with the daughter later. It is what it is. I'm pretty sure Lynn has made up her mind. And she may have great relationships. It may be, you know, I don't know, George. You win some, you lose some on the show. I love my mom so much that I would not take a dollar from her in debt.

Starting point is 00:52:02 No, no, no, I would love her. Because I want her to come over and make me grape leaves in Baklava and not say, where's my money? Where's my money? It's not going to be a fun conversation. If you're shopping online and these days, everybody does, data brokers are out there right now, buying and selling your personal information, your phone number, your home address, your email,

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Starting point is 00:53:42 slash Ramsey or click the link in the description. Jonathan is in Indianapolis up next. Jonathan, welcome to the show. Hi, thanks for having me on. Absolutely. How can Rachel and I help? So I've been having some big issues of money. About 10 months ago, I fell and broke my hip.

Starting point is 00:54:20 I haven't been able to work. I am on disability, and I make about $1,500 a month off of that. And working was to help supplement that. recently my daughter's had some issues with mental health right now looking at roughly $400,000 in debt from mental health stays in different facilities and things like that and I'm just trying to figure out if I need a file bankruptcy or try to pay it off by a little. she's 14 so there's still another four years of hospital stays and other things coming our way and it's just going to be more and more and more. Wow. Gosh, Jonathan, I'm so sorry.

Starting point is 00:55:10 Oh, that's so hard. Are you married? I am not. I've got a fiancé. She's been taking the last 10 months to take care of me for the hip. I've had some setbacks with it and probably going to have to have another surgery with. Wow. So total income right now is $1,500? For me, for her, it's a little bit more. She's about $2,000 a month.

Starting point is 00:55:38 And that's her working part-time? Yes. Okay, so total $3,500. And what are your bills every month right now, including your minimum debt payments? Right now, bills are together, rent vehicles. All that. It's a, about $3,500. I've got nothing left in the tank. So just barely break in even every month? Yeah.

Starting point is 00:56:02 What other debt do you have outside of the $400,000? I've got about $50,000 or so in credit card from trying to keep our heads afloat from not bringing any income in. Cars are broken down. Things have broken in the house that just need fixed. Do you have car loans as well? About $10,000. Okay.

Starting point is 00:56:31 So you got 60 between the credit cards and the car loans plus the $400. Yeah. Yeah. And nothing with her hospital stays. Insurance doesn't step in at any point in what you guys have done. No, unfortunately, because it's mental health. They didn't even really want to give her her diagnosis, but they finally did. And it's one of those things where because altogether, I've,

Starting point is 00:56:54 got four children. She can't even come over to my house right now because of the other three kids being there and below risk that she poses. Oh, wow. Where is she? Almost two years. Does she stay with her mom or is she in a facility during that time when she came home? She was in a facility, just got kicked out of it.

Starting point is 00:57:16 She was supposed to be there for about four months. She was there for a little over two weeks. Wow. So is she with her mom right now? or is she staying with you? Yes, she actually just got home last weekend. So what are the doctors saying at this point is the best path? Basically, they just keep trying to get her into facilities and things like that.

Starting point is 00:57:40 This last one was $60,000 up front. For the two weeks day? Yeah. And with our custody agreement, I owe about 70% of anything that she incurred. over $400. Wow. Well, is she on medications right now? Are things under control in any way, or is it still just in flux?

Starting point is 00:58:07 It's still just in flux. The medications seem to help the things go downhill and try around different things, and it's just been a whole series of events. Well, what I'm trying to do is get a handle on what the future looks like for medical bills, because if we can sort of know what's coming down the pike, it helps to manage. But if it's just this unlimited black hole that we're going to just spend hundreds of thousands of dollars, it's going to be hard to climb out. Yeah.

Starting point is 00:58:36 Is this straight up medical debt? Yeah. Who is the debt through? It's from all the different hospitals that she's had stays at. She's had seven stays in the last eight months. Okay. Have you been up to date on the payments for these or across? collectors coming after you?

Starting point is 00:58:56 Collectors are coming after because I just don't have anything left in the tank. Well, I'm just, I'm so, I can't imagine what you guys are walking through. That's so difficult and so heartbreaking to see your child suffer in that kind of way. But I, I'm just thinking, moving forward, Jonathan, there's a couple of things that could be possibilities. medical debt is one that can be very much negotiated. And so what that looks like going forward, probably not anytime soon, but if there was a way somehow of working on the side,

Starting point is 00:59:36 working from home, having any amount of money that you can present to them once it's in collections, that they may know like they're not going to get anything from you. You don't have anything, right? But if you have a little bit of something, it might be kind of a carrot to dangle. now $400,000 that's kind of, you know, that's obviously up there. So that's one route that I'm

Starting point is 00:59:59 thinking of. Also, when you guys are choosing, and I want to be careful even asking this because I don't want to come off offensive by any means, but when you're choosing these facilities, are you in such an urgent mode that you're like, sure, this one, just put her in and we need to make sure she's safe? Or have you, have you guys done, you and her mom? done levels of research and talk to practitioners and talk to places of different options, right? And I know we want the best care for our kids. But when I hear $60,000 for two weeks, I'm like, oh, man, I wonder what other options are out there. Do you feel like you have the bandwidth to do that research and have kind of that, those facts on your side?

Starting point is 01:00:45 Yes, we've, her mom is actually in the medical field. and we've done lots and lots of research into the facilities and things like that. Were any of them nonprofits? No, because there's nothing near us that, unfortunately, will be a nonprofit. This one, we actually had a center to Wisconsin for, because unfortunately, well, she was on her psychiatrist office. She ate 23 extra strength of Benadryl. Oh, my goodness.

Starting point is 01:01:16 Wow. Well, I would be looking into, and it sounds like you've been doing this, the homework of looking into every financial assistance program available through these providers, because with your income, my guess is they're going to go, all right, he can't pay, the income's not going to be there to pay, or it goes to collections and you end up settling for 10 to 30% of the total balance, which means you're not on the hook for 400 grand now, you're on the hook for 40 to 60. You see what I'm saying? Yeah. That is a sort of best case scenario we can hope for down the line. And I wonder for you long term, Jonathan, $1,500 a month, because how old are you? I'm 33. I've got not an immune disease. That's why I'm on disability. Okay.

Starting point is 01:02:02 Well, I'm just wondering for the sustainability of your life, and obviously everything with your daughter is like a whole other level, but I'm just talking about just you and your fiancé to sustain somewhat of a manageable. life, your income, it's going to have to come up. And I don't know if that's you and your fiance getting married and she works full time. And she's the main breadwinner because of what you, you know, what you're dealing with personally. Or if there's things that, you know, even call centers, I'm like, if there's anything making 22 an hour, you know, and working 30 hours a week to bring in something just to sustain your life, right? And then beyond that, obviously caring for

Starting point is 01:02:46 your daughter. But I would be looking at some options in that scenario just from a career standpoint because you are still so young. You're 33. And I would want you not to struggle and write inch by inch for the rest of your life either. And so even if they are willing to settle with collections for 10% of the balance, you still need to come up with $40,000. Yeah. And that's going to take really upping the income. That's that's the key variable here that we can control. because there's so much out of your control. But, man, I hate that you're going through this. This sounds like it's not going to be an easy fight, but we are rooting for you, man.

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Starting point is 01:05:22 I am calling today, I guess basically they'd call you and ask you to talk me out of taking out student loans. Okay, let's see how good our persuasive sales pitch is here. We've been 50-50 so far on the show today. I think so. You can't always bat a thousand. We'll see what we can do. So what happened that you ran out of money here? So I worked a summer job that I thought was going to cover my tuition and everything I needed this year as well,

Starting point is 01:05:50 as long as I took a part-time job to start the fall. And so far, I just started my junior year. I'm 20 years old. And I've cash-led college all the way up until now. The only day I have is on a car. I owe about $11,000 on the car. And I'm underwater, so it's not helpful. But I, this morning, I just, I've run out of money.

Starting point is 01:06:14 And I've been struggling to find a part-time job since I got back from my summer job. I haven't found, The only job I found, I'm working five hours a week as an assistant for a travel agency. And so I'm just not making enough to cover my expenses. I've been in interviews where the only thing that's held people back, they've like handed me the compensation package. They're about to hire me. And then I tell my school schedule, and they're like, we just can't work around that.

Starting point is 01:06:37 And so I'm like at the point where I don't have enough money to cover what I need. And I'm like, student loans are about the only thing I can see. Are you living on campus? I live with my parents. Okay. And is there any financial help from them? No, they make a lot of money like almost $300,000 a year, but they have probably close to half a million dollars in consumer debt and they can't afford anything. Oh, wow. So how much is tuition a year? Or per semester, I should ask. Per semester? So I'm on a half tuition scholarship. My tuition for this semester was about 2,000. Books was about another 200. So that's the gap?

Starting point is 01:07:19 is two grand i already paid the tuition for this semester i don't have money for like to pay my car payment to pay my insurance how much is all that per month how much would you need per month to to get by like as a college student to scrape by what would you need a thousand bucks a thousand dollars okay um man i'm like i feel like somewhere you can make 300 bucks a week you know that's the take I mean, can you wait, can you just wait tables? I've applied for server jobs and not even gotten, like, and I tried calling them, and they've been like, they just aren't, they have an open application, but I'm not looking

Starting point is 01:08:03 because I know the service industry, though, is, like, they're looking for people. So have you walked in? And that's where I have experience. Before I took off my summer job, I was working in a restaurant as a cook, and I look to the manager for a minute, and I just can't find anything. Yeah. Have you gone in person to these places or just applied online? And how many have you tried?

Starting point is 01:08:26 I've gone in person. About five different restaurants, but I've gone to my family when we've gone. Okay. I would hustle a little bit, Zayden. And I wonder, too, I mean, Salt Lake, is there, I mean, I'm thinking of, is there a landscaping company you can pick up part-time on the weekends? Is there, I don't know. I mean, it's just things in your. neighborhood. If you live with your parents, man, there's people in my neighborhood making money because

Starting point is 01:08:52 rich people are scared to leave, as Dave says. For three, I think 300 bucks a week, I think you can do this. Do Instacart. The thing is I'm 20 years old and Instacart. Like, well, one, I actually live just north of Salt Lake in an area where it's, there's too many drivers and I've tried Instacart DoorDash. They won't. Their wait list is a year out. Rachel's not buying it. Really? Zayden, I'm going to encourage you to look at other side hustles too. It doesn't have to be one of the app side hustles where you need the car and all that. But right now, the gap is so little. Go to Salt Lake City Airport and do Uber.

Starting point is 01:09:33 I'm like, that place is packed all the time. I don't know. I'm just. I guess you to drive Uber. Okay, well, do you? I guess so. I don't know. I'm trying to think if I drove it.

Starting point is 01:09:45 I think maybe that was a new thing because when I drove Uber, I don't think I was 25 yet. but all that to say, Zayden, I think we can hustle more. I think we're trying to help you. I don't think hitting up five restaurants is not going to close the gap. Oh, to write alone. Never mind that says a writer. Rachel's like, I'm going to find the fine print on this one. I am.

Starting point is 01:10:05 I am. Okay. You got to be 21. How old are you, 20? 20. When's your birthday? When's your birthday? Next July.

Starting point is 01:10:16 All right. We got some time. Okay. I just feel like there's a rich person that needs their, you know, trees trimmed or something, and then snow and salt lake and shovel sidewalks. I don't know. I just feel like... Just use AI, make a little flyer and say, here's my services.

Starting point is 01:10:31 For $300 a week, I think you can do... I just believe in you. What do you can do this? I'm in software engineering. Okay. So you're a techie guy. All right. Talk to them about tech stuff.

Starting point is 01:10:44 Well, I'm just wondering is stuff you can even do online for people. If you're in software engineering. Coding? Because nobody cares if you're 20 or 30 doing that kind of stuff. Yeah, it's something I've thought about. I've struggled to find a market for. Like, I've been reaching out. I posted something on my Instagram a couple weeks ago

Starting point is 01:11:04 to see if people were interested in me building a website forum or something. How many followers do you have on Instagram? A thousand. Okay, so probably went to four people. I think we need to do a little more active, proactive marketing. you need to find the problems and go, hey, I can solve this for you. Here's what I charge. Because, Aidan, I'll say this.

Starting point is 01:11:23 If you call it and you're like, I need $15,000 for this semester's tuition, I'd be like, okay, we've got an uphill battle here. $2,000, I just, I don't know, or $1,000 a month is what you said you need. I don't know. I feel like you can figure this out. Because would you take out student loans for your lifestyle? Would you use it for your car payment? and everything? I would mostly be using it to cover gas and stuff because I'm at a commuter school.

Starting point is 01:11:53 I pay about 200 to 300 a month in gas. Okay. So is there any jobs on campus you can do? Because I did that when I was in college and made, you know, $12. $12 an hour in the publicity office writing up press releases or whatever. Is there any jobs on campus you can find? I tried that too. It's crazy.

Starting point is 01:12:13 I applied like two weeks before school started. I applied to every open job posting and even called a couple of the offices. Are you athletic? Is there a sport you played in high school? I ran cross-country. Okay. I'm wondering if, because I know in our area, people pay for college students to help train their little nine-year-olds, and they pay $60 an hour for baseball or something.

Starting point is 01:12:37 Right? I'm like, I'm like, I don't know. I'm not a cross-country runner. Can you teach a kid how to breathe properly and have right? the correct form when they're running? I don't know. I don't know. Maybe someone in Salt Lake.

Starting point is 01:12:50 All we're trying to say is, the world is your oyster and you haven't explored enough. That's it. But you can close the gap without student loans. If you think student loans are going to be the answer, you're going to take it every time. But if you said no student loan debt, I got to get a $300 this week. What am I going to do? And you just go try 17 things. And at 20, you have the benefit of being able to do that.

Starting point is 01:13:13 It's such a luxury to be young living with. your parents. And you're living at home. That's right. No rent. There you go. This is the time. But I'll tell you, I bet that car payment is putting a dent in his ability to save. I bet you're right. And at the time, it was like, well, it's a small car payment. I need a car. You've got to get a good car. Not a big deal. Now it's that $300 a week that's really chipping away. Man. Well, we do have a sidehousel quiz that I encourage you to check out. You can go to ramsysolutions.com slash side hustle or use the link in the description. That's for anybody out there. And it'll help you figure out which ones make sense for you. based on how much time you have, what kind of skills you have, at-home jobs versus in-person jobs. And I think more than ever, there's like the quirkiest jobs people find side hustles. People that have called, and I wouldn't recommend this because I don't know that much about it.

Starting point is 01:13:59 But like the baseball, remember that guy that called in and they have like, he has like $40,000 worth of baseball cards because it's like a hobby and he like knows how to collect. I don't know. And I'm like, it's unbelievable. I got nine-year-old in my neighborhood that pick up dog poop. $20 a visit. $20 a visit. So I'm telling you.

Starting point is 01:14:14 They're booked up. And I know Salt Lake, there's some nice areas, some big houses. There's some, there's some wealthy people in that area. Dress nice and go to the door and say, hey, I live down the street. Here's my skill set. If you guys need any help, let me know. Pressure wash a driveway, you know? I don't know. I think you can do it, though. I really believe in you. Okay, George, we hear from so many people that are trying to live out to the Ramsey plan, right? They're getting out of debt and everything. But the hard thing is there's not many banks out there that actually support the way we teach people. to handle money. Yeah, most banks, they don't want you to win with money. So they charge a bunch of

Starting point is 01:15:18 nuisance fees. There's all this fine print. And worst of all, they are pushing debt products at you nonstop. Yes, but the good thing is, is that fair wins isn't like most banks. They're not like the other guys. They're not like the other guys. Yeah, they are not pushing debt. And they actually want you to win with the baby steps. And so what's great, too, is they created the smart bundle for Ramsey fans, which includes a high yield savings account and no monthly fee checking. Which is huge, because it's rare to have a checking account tied to a high-yield savings account. You can get all of that with Fairwinds. And for the nerds out there, you can have 10 different high-yield savings accounts for different goals.

Starting point is 01:15:53 So you got your emergency fund, the car upgrade fund, the vacation fund. The world is your oyster. So beautiful. And check out the debit card, the new one. The live like no one else's debit card. It's so beautiful. That's a conversation starter. It's so good.

Starting point is 01:16:05 Well, and when you swipe or you tap, you know, every time you take it out of your wallet, you're remembering that you are living like no one else and you're being intentional with your money. I've been using Fairwinds for months and months now. I love their features, the app, the customer service. It is all so good and so aligned with the Ramsey Principles. Absolutely. So y'all, we both bank at Fairwinds, and we love their commitment to Ramsey values. So check it out.

Starting point is 01:16:26 You can get that smart bundle. We're going to drop a link in the description, or you can go to fairwins. org slash Ramsey today. That's right. That's fairwins. org slash Ramsey insured by the NCUA. All right, Rachel, you know what time it is? It's question of the daytime.

Starting point is 01:16:58 Oh, yes. Brought to you by YREFI. Sometimes the hardest financial step is the one you've been avoiding. So if your private student loans are past due, YREFI can help you explore low fixed rate refinancing options and payment plans tailored to your circumstances. Go to YREFI.com slash Ramsey may not be available in all states. Today's question is from Adam in Vermont. I've been working on the debt snowball and recently started a new job making $160,000 a year.

Starting point is 01:17:22 I have $110,000 in student loans, $47,000 in IRS debt, and $30,000. 36,000 in credit cards. I have been paying about 3,200 per month towards my debt using the debt snowball method, small, so large, just at this pace, I won't be debt free until 2033, which feels very far away. Is there a way to do this faster? Wow. Well, you got a new job making 160. I mean, call me crazy, George.

Starting point is 01:17:50 I will. Quick math. But I'm like, well, Vermont, I'm trying to figure out where he lives. I'm like, could just swing, make it, you know, acting like. Like you make 60, throw 100 at this. I mean, I know it's after taxes and everything, but throw 100 at the student loan debt. You got 47, 36.

Starting point is 01:18:10 I mean, man, two years, possibly, right? If you live on 60, two and a half years. It's a margin problem. Two and a half years. Is there a way to do this faster? Yes, you are not throwing enough at the debt. You have a great income making 160. Well, he said he recently started it.

Starting point is 01:18:24 So I'm going to assume. So let's reassess our debt snowball. Yes. Can we throw 5,000 a month? If we're bringing home 10, we live off five and send five to the debts, it's going to be done a lot faster. So that's the math here, is just figuring out how much margin I can free up from cutting expenses down, increasing income. That might mean you're working overtime or side hustle on top of your 160 to clean this up in a reasonable amount of time. Because 2033, I mean, I don't know if the world's going to still be rotating on its axis by then.

Starting point is 01:18:53 So let's get a game plan. Who knows? That means short-term sacrifice versus. the next seven years of our life. Yeah, but I think two and a half years, I bet he could do this by, by 2030. That's less than four years. Yeah. Yeah. I like this plan. I mean, five grand a month, he's done in just over three years. Yeah. So that's what I would be aiming for is no more than three years. And then that means that he's never got, you know, that he doesn't get a raise in three years, which you probably will. Right. And you throw all the extra at it. So maybe even faster than that.

Starting point is 01:19:25 Yeah. And the best way to do this, the, uh, the, The every dollar budgeting app is now far more than just budgeting will actually help you devise a plan to find more margin with personalized recommendations for your situation. So I wish you were on the line out, I'd give it to you. But since you're not, reach out. If we can get access to your information, we'll send you one. But for everyone else, if you're like, I want margin, how do I get that? Every dollar will help you find it so that you can make more progress in your goals and work the plan even faster.

Starting point is 01:19:52 We'll drop a link in the description as well. Judy is in South Bend, Indiana up next. What's going on, Judy? Well, hi, guys. Hey. I wrote out, you know, like a sentence. So I'm saying my husband and I have been married for 50 years. Congratulations, Judy.

Starting point is 01:20:13 Wow. Consecutively? Yeah. That's impressive. You got to ask. It's a long time. I've been in a marriage for 50 years. That's good.

Starting point is 01:20:23 Okay. You guys aren't even 50 years old yet. No. No, we're not. We're retired. We have no debt. We're financially secure. We don't need to leave it to our kids.

Starting point is 01:20:35 They're doing well. I enjoy going to the casino with my best friend and a few times a month and my husband does not like it and we argue about it all the time. I just wanted to know what you had to say about that. Okay. What does financially secure mean? How much money do you guys have? What's your net worth?

Starting point is 01:20:59 Probably $9 million. Wow. Fantastic job. And you're not going to leave any to your kids? Well, we will, but... Oh, okay. Oh, but you're saying like, yeah. Yeah, they're doing well, which is amazing.

Starting point is 01:21:13 Yeah, absolutely. What is your yearly income? Like, what do you guys live off of? About 120. Oh, wow. Judy, what's your friend's name that you like to go to the casino with? Will you drop her name? Or is that too personal?

Starting point is 01:21:27 I'm Mary. Mary, Judy and Mary. All right. Love it. What's the game of choice at the casino for you? We play slots, and we know that that's, you know. No, I'm not. No judgment here.

Starting point is 01:21:40 Okay. How much do you spend in a given outing at the casino? About $200. And you do that, how many times a month? A couple times. Like three? Five? Three.

Starting point is 01:21:55 Okay. Okay. So have you ever. spent more than $600 in a given month at the casino? Yes. Okay. What is the most you've spent at the casino? Probably a thousand. Okay. Was that discussed prior to going to the casino?

Starting point is 01:22:11 No. I think this is the crux of the argument. It's not that you're going to the casino. It's that he doesn't know if you're going to go spend $200 or $1,000. It doesn't matter. I have $9 million. But it's the, there is zero communication about that. It's not in any budget. It's just you willy-nilly going, spending as much as you feel like, which you can financially. But she's not spending like, I mean, I hear you, George.

Starting point is 01:22:36 I hear you. But also ratios, but ratios. Yes. You guys are spending so little that your money, you're going to have $20 million sitting there and he's going to go, I guess that casino money wasn't really that big of a deal. I don't think for him, it's a, I think he just thinks it's stupid. Is that what he thinks it's a waste? Yeah.

Starting point is 01:22:54 You're throwing money down the drawing. Okay. So yeah, yeah. That's a... Does he have any hobbies? Yeah. What does he do? That you think is stupid.

Starting point is 01:23:02 Is he a golfer? Yeah. No, he fishes. I don't think he does anything stupid. And if he did, I wouldn't care if he did it as long it was, you know, safe and legal. Sure, sure, sure. Is he actually getting the fish? Is he bringing it home and cooking it or is he just catch a release?

Starting point is 01:23:20 No, no. He brings out the walleye a lot. Wonderful. Judy, I am perfectly. fine with you and Mary going to the casino and spending a couple hundred bucks a month. Totally fine. When I said nine, I met like all our assets and everything. Well, sure.

Starting point is 01:23:37 Yeah, yeah, yeah, yeah, yeah, that's fair. Your real estate, cash, investments, all that. I mean, how much cash do you guys have? I mean, yeah, to live off of cash-wise, investment-wise, what would that be? That does not include real estate? Probably three. Okay, yeah. I mean, you guys are.

Starting point is 01:23:56 This is where the Ramsey personalities differ on this subject, which is fine. And Dave's out of town. So it's George and I's today. I'll pretend to be Dave. Yeah, because George would side with Dave. They think it's, well, you can give you your opinion about it. Well, here's the thing. Dave hates losing money.

Starting point is 01:24:13 So he does think it's dumb to do anything where you're almost guaranteed to lose money. Right. But I would say if you're having an experience and you're spending money, and again, it is reasonable. you, there's no, like, addiction that you're trying to, like, satisfy, right? Like, there's nothing big happening. It's not big numbers. And you're having fun with it. I mean, that could be, you know, going to the mall and buying a couple shirts for 200 bucks, right?

Starting point is 01:24:41 And instead of that, she's, she's going to go and play some slots. Listen, it doesn't, it doesn't bother me. Now, that doesn't matter that you didn't call to get my permission. But for you and your husband, where you. you guys have to come to is, yeah, I think you guys need to make a budget, honestly, and say, hey, for once a month, here's an amount of money that's going to be my fun money that I'm going to enjoy. And again, you could use that money and go get your nails done or go get a massage or, I don't know, whatever. And he'll probably think that's stupid too. Yeah, and he could.

Starting point is 01:25:13 Totally. Actually, I think it's stupid because we've never been on a budget and he's always wanted to be and I poo poo it. Oh, Judy, Judy, all right. Here's your in. Here's your end with him say you'll do a budget and you guys and you have to agree you get a vote in the budget too it's not just him making it and telling you what to do you get a vote and a say and hey here's the amount of money per month that we spend and here's where it's going to go and judy needs a line item marionize day away right or whatever it's going to be that's the line item and and then he gets a line item for some of his fun money and yeah call it a day so maybe that's your end with him is Now you'll do a budget.

Starting point is 01:25:56 How nice is his fishing boat? He actually goes with his brother and he's got three of them. Oh, nice. That's intense. All right. Yeah. That's a lot of money. That's going down in value.

Starting point is 01:26:09 It's true. The key is you guys financially could spend double what you're doing right now per year and still never run out of money and likely never touch the principle. That's right. So this is not mathematical or financial. It's all emotional and you guys need to get to the root of why he's frustrated with this and come up with a compromise and the budget is going to help. Hey guys, George Camel here. There are a lot of things you probably shouldn't ignore.

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Starting point is 01:27:23 have an e-sim these days, you can switch from the comfort of your home, just like I did. So it's okay to notice when you're paying more than you should, but you shouldn't keep doing that. Stop overpaying for your phone service. Go to boostmobile.com slash Ramsey and make the switch today. That's boostmobile.com slash Ramsey. $25 forever requires customers to remain active on BoostMobil Unlimited Plan. Welcome back to the Ramsey show in the Fair Winds Credit Union Studio. I'm George Camel here with Rachel Cruz, taking your calls at AAA 825-5-2-2-25. Lisa is in Raleigh, North Carolina up next.

Starting point is 01:28:06 Lisa, how can we help today? Hi, so I just wanted to see if I get some advice or some information. We were thinking about paying off my parents' home, and they are going to beat us to home right afterwards. And just want to see what your thoughts are on that and the tax implications regarding that. What's causing them to ask you to pay off their home? Oh, I don't think they're asking. We're just looking at pretty much looking at their estate, how to finalize some of their estates. And we just, they were going to, they didn't want to do a wheel and all of that.

Starting point is 01:28:38 So we just thought, you know, free and clear, we'll just pay it off and you just feed it to us. and we wouldn't have to worry about anything when they pass. Why didn't they want to do a will? We just didn't. I mean, we just don't get the easiest way because, you know, we're pretty financially stable to be quickest and easiest way to do it, you know, and then it's done. We don't have to worry about it after they pass. It's in our name already. I imagine they have other assets in their estate outside of this house, right?

Starting point is 01:29:04 There's other accounts? Just bank accounts, and we're not too concerned about that. They can, you know, do what they will with that. I think it's just a little bit easier with the home to go ahead and get it in our name. That way, you know, when they pass, we don't have to go through lawyers and courts. Yeah. I want to say, though, from a capital gain standpoint, you don't get a step-up basis, right? Yeah, if they deed it to you while they're alive, it's one of the worst things you can do financially

Starting point is 01:29:36 because it's considered a gift and not inheritance. and so the original cost basis would carry over. So if they paid $100,000 for this house and it's now worth $500,000, when you go to sell that house, you're going to owe on the difference. You got to pay taxes on the $400. But if they just pass away, you inherit the house, then you get a step up in basis, meaning it's fair market value at the time of their death. So it starts at $500,000.

Starting point is 01:30:01 So if it goes up $100,000 over five years or whatever, right, then you sell it. You only have to pay taxes on that $100,000. So basically you could sell it without any taxes if you inherit it within, let's say, six months after they pass. But if you get it deeded over to you, you're going to carry over what they paid for it as a basis. And I would say even if you plan on keeping it, Lisa, you're going to have to pay those taxes over decades that they've owned this home. Right. So would it make a difference if we got an appraisal right afterwards? It doesn't matter because if they deed it to you while they're alive, it's considered a gift.

Starting point is 01:30:38 it's not an inheritance. So no, the cheapest, smartest way to do this is that they create a will and the home goes to you all when they pass. Even with the mortgage still? Yes. Like if they haven't paid off the home. Regardless if you pay off the mortgage or not, the best way to do this is to inherit it. It's the value of the home.

Starting point is 01:30:57 So you'd rather have a value of $500,000 sitting with you after they've passed as an example than having a $500,000 asset. but it's really imprised at $100,000. So when it sells, you're paying taxes on $400,000 that you could have just avoided by not deeding it to you. And a will is pretty simple. Lisa, I mean, you may go through a little bit of probate and stuff,

Starting point is 01:31:19 but it's not very complicated. You can go to mama bear legal forms, mombaralegal.com, and create a state-specific will for them. And if it's a very simple estate and it's a primary home or residence, some bank accounts like what you're saying, it's really not difficult at all. You guys are actually creating,

Starting point is 01:31:35 you guys are choosing the more difficult. route. And in some states, I'm not sure what North Carolina law is, but if you can set up a transfer on death for that house, then it will avoid probate. And same thing for any bank accounts. There you go. A bank account would be payable on death, POD. If you can set that up on the bank accounts, it avoids probate. And if there's anything that has a beneficiary designation, like life insurance or a retirement account, all of that can also avoid probate. So there's a lot of things you can do to keep it simple, but you still definitely need a will and a simple online will that state specific will do the job. And we have a great partner with Mama Bear legal forms where you can do that

Starting point is 01:32:10 very cheaply. Less than a couple hundred bucks and it's over. I did it in less than 15 minutes from my own parents just a couple weeks ago. Yeah, no, I did. I used it with my daughter when she went off to college. Good. So what's left on the mortgage? That's interesting. About $50,000. And what's the house worth? It's interesting. Probably about $200. I think they bought the house at about 140, 150. Okay, so it hasn't appreciated much. Okay, okay, that's fair. Yeah, that's a huge significant amount. And why? That's the reason why. Like, we, we talked to a couple lawyers and CPAs, and they seem think this was the best route. I wasn't, honestly, we're not sure. Well, are they not doing well financially? Are they struggling? Is that why you're

Starting point is 01:32:50 looking to pay it off? Well, it's not bad. They're old. They're just living off social security, and this is just a burden that we were willing to take on my husband and I. Um, It wouldn't make a significant impact on us financially, so we thought this would just be quick and easy. So you guys have an extra 50 grand cash laying around that you could set to this? We do. Oh. Yeah. Then I would, at least I'd just pay it off, but I wouldn't worry about it being deeded over.

Starting point is 01:33:17 I would just create the will that upon their passing, you all get the house. Gotcha. And then look into that TOD, that transfer on death. Okay. That's the simplest way to do it with the lease. Because here's the deal. I don't know how much you love paying taxes. I want to pay as little as I can legally. And so this is a good way to not have their parents hard-earned money and their assets getting taxed to oblivion by the government because you just made one wrong move. Yeah. How old are they? They're about 75, 80 years old. Okay. Okay. Great. And they'll probably, will they be living in this home?

Starting point is 01:33:53 Probably. Probably. I mean, we don't have any plans on do anything with it. They're out of it. Sure, sure. Yeah, so, I mean, that could be another 10 years of it appreciating, right? Right. So, yeah, that's how I would do it. I still wouldn't have it deeded over to you while they're alive. But if you want to pay it off to be nice, because I think the house is going to go to you either way, it sounds like. Right, and you're absolutely right. We'd like to avoid the least amount of tax as possible. Yeah, but if you didn't pay 50 grand and pay off their mortgage, would this house still be inherited by you?

Starting point is 01:34:33 Well, here's the concern. There's other parts to it. There's multiple siblings that my parents just doesn't feel comfortable. Oh. Do the siblings know about this arrangement? Yes. So they know. So you feel a little bit more justified in the scenario.

Starting point is 01:34:50 If you're like, well, we've paid it off. So we're the ones who paid it off. It helps. Yeah, yeah. So we kind of have like skin in the game in this asset of mom and dad's. Okay. Oh, boy. I got you.

Starting point is 01:35:02 I got a whole other layer of 10. Yeah, for sure. But also it doesn't change the answer of what you would do from a will standpoint. But yes, that can, I can see how you're like, let us help it pay off the mortgage so that it creates less. Sort of guaranteeing your spot on the will. Well, that and like it looks better to the siblings when they don't get the house because Lisa can be like, well, we paid for it. So, you know. So yeah, I get that too. So have they had the conversation with the other siblings? about what they will or will not get? Oh, yeah, absolutely. Okay, good. That's where the will is the most important, because it just lays it out clearly,

Starting point is 01:35:43 and then it's their job to tell everybody who's involved in the will what's going to happen. It should not be a surprise after they pass, and they're like, what? Lisa's getting the house and all... And now they're mad at you. It destroys the relationships, which it doesn't sound like there's a lot of function here,

Starting point is 01:35:58 mostly dysfunction, but please do this the right way. Welcome to families, though. Welcome to families. You don't get to choose which ones are functional. All right, let's cut to the chase. It's easy to get discouraged about crazy house prices and interest rates. But when you have the right real estate agent to help you buy and sell the right way, you'll have confidence to make smart decisions.

Starting point is 01:36:53 Ramsey trusted agents aren't just experts who guide you through buying or selling. They're people you can trust to have your back from the first call to closing day. Find a Ramsey trusted agent near you at Ramsey Solutions.com slash agent. That's Ramsey Solutions.com slash a... Ramsey is taking over an entire cruise ship. We're heading back out to the open seas. Seven nights in the Western Caribbean, Bahamas, Jamaica, Grand Cayman, Cozumel for the live like no one else cruise. March 14th through the 21st, 2027.

Starting point is 01:37:43 And this is a full cruise takeover. It is only Ramsey fans and us personalities on the boat. And it was such a blast last year when we did this. And so we're doing it again. So fun. I mean, honestly, and it's a nice ship. Very nice. Beautiful.

Starting point is 01:37:57 Now, you've been on a lot of cruises. This was like my first cruise as an adult, so I had no clue what to expect. Okay. What did you think? I was blown away. Yes. And it's so nice, you don't have to think about, well, how much does that cost? You sort of just show up.

Starting point is 01:38:09 It's all there together, yes. And it's there. It's like you prepaid, you did it with cash. I will say the Ramsey's growing up, they were cruise people. I feel like you're either a cruise person or you're not. And all the memories we made as a family on cruises, They are. They're so fun. And this is a, and again, a nice ship because we've been on, like, big ones, really small. All the different types. This is the perfect size. Happy Medium. Yes. And all the content. I mean, it's us. We're all hanging out. All the Ramsey personalities. It's a little smart money happy hour.

Starting point is 01:38:34 That's right. We do live tapings of your favorite Ramsey shows on there, world's largest debt-free scream. New wealth building teachings, new content from all of us personalities, which weirdly people want more of. I was like, I thought we were here to have a good time. I was like, no, tell us more about Roth. Oh my gosh, every session we did, it was like back down. We do a ton of Q&As. Y'all could vacation. You guys can hang out, but everyone wanted to learn. It was a great thing. It was fun. So if your baby stepped four and up, meaning you're debt free with the emergency fund,

Starting point is 01:39:01 mark the moment, celebrate, live a little. Have something to look forward to in the budget. So secure your cabin. They are moving fast. You can go to ramsysolutions.com slash events or click the link in the show notes. All right. Molly is in Oklahoma City up next. What's going on, Molly?

Starting point is 01:39:18 Hi, thank you for taking my call. My husband and I are expecting our first baby this January. Oh, congratulations. Thank you. I would like to stay home for the first one to two years, but we would be losing about $500 to $600 a month. We have $10,000 in checking, $130,000 invested, and then our current take-home.

Starting point is 01:39:48 is 5,800, but if I quit, it would drop to 4,300. I was just seeing if it would be okay in our situation if I stayed home. My husband makes quarterly commission, which could make up for the shortfall, but we wouldn't be saving any money probably for two years. So can you live off of 43,000? I'm sorry, 4,300 a month? No, because we do, our biggest expenses are house. That's our only debt. And then we do tithe off of our gross amount and then insurance. So how much will you be?

Starting point is 01:40:26 What's your deficit each month if you just went to his income? Five to six hundred short a month. Okay. But since we have like $130,000 invested, like is it okay to, you know, since it's such a short season, pull from that or use his commission check to make up for it. Well, yeah, he could use the commission check for sure. I mean, he could just add that as income. Is your investments retirement?

Starting point is 01:40:55 Is it like in 401Ks in Roth IRAs or is it in just index funds, mutual funds? Where is it? So 100,000 is in stocks and then the rest is in retirement in 401K. Okay. And we only have $10,000 in checking, but we'll throw everything else to that from now on. Do you guys have consumer debt? I don't. Our only debt is our house.

Starting point is 01:41:20 Okay, so no credit card debt, student loans, car loans, nothing like that. What's the mortgage payment every month? It'll bump up to $2,000 next month. Because of insurance or property taxes? Property taxes. Got it. Okay. So that is a little less than half of your take home.

Starting point is 01:41:39 pay, that's the scarier part, is this is just a big part of your financial world. Yeah. Yeah, so you may not be able to afford to stay in the home and not work. Even with, like, that much saved up? Yeah, because your current income, you guys can't support your lifestyle. Even with you working full-time, it's still about a third of your take-home pay. And we recommend 25% of your after-tax monthly income going to mortgage. Anything above that makes it really.

Starting point is 01:42:11 hard to then save for college, pay extra on the mortgage, save up for vacation. You'll have no wiggle room at all in the budget. Yeah. So that's probably where I would be. Now, two years is a quick timeline, but. Yeah. Now, if you want to sell off your non-retirement stocks, you said it was 30 grand? No, 100 grand.

Starting point is 01:42:31 Well, 100, you said it's retiring. No, 100's in stocks. Is that in single stocks? I'm not sure, actually. Okay. I just know it's invested in stocks and my husband kind of did all that. What was the purpose of that investing? Well, we really just, I mean, I've saved my whole life.

Starting point is 01:42:49 I just have always had like this huge chunk just sitting in my checking, not doing anything. So we just moved all of that to stocks because without the baby and me working, we save about 1,500 a month. We live very frugal. Yeah, yeah. Yeah, I mean, you. you absolutely could pull some of that money and say, hey, we're going to use 500 bucks a month. but I don't want that to be your long-term mindset, Molly, because I think what can be hard is once you hold that baby in your home,

Starting point is 01:43:23 you know, there's always a chance, which is beautiful and wonderful, that you're like, I just, I don't want to go back to work. Nothing in me wants to go back to work, right? And when you're used to kind of taking this funnel and it's dripping out, eventually that runs out. And so the goal is to right-size lifestyle and income so that you don't have to touch those investment. So if you guys did for a little bit, I wouldn't, I wouldn't be mad about it by any means, but, but you definitely have to justify the choices you guys have made in order for you to

Starting point is 01:43:54 say at home. And sometimes we can't have it all. Do you know what I mean? Right. That might mean you change where you live long term. Yeah. So that we can lower the mortgage. And, you know, and even, I don't know, George, I mean, even in, you know, you mark it two years, which would be what? So the baby will come in 27, 28, but like the January of 29. is the marker of either, hey, if his income hasn't come up and she wants to stay home, we have to move at that point because we can't sustain this long term. You guys will just have to have a pretty like solid stake in the grounds before that because we just see it enough that people save and they start to live off that savings.

Starting point is 01:44:33 And eventually that savings runs out. And then it goes to credit cards. And then it's like, oh my gosh, we got pregnant again. And in 18 months we have baby number two. We got to upgrade the car. Well, let's dip into it. Like, right? Like, it just starts to kind of snowball if you're not used to living below what you're making from an income perspective at this age, especially, right, as a young adult.

Starting point is 01:44:54 Yeah. That's a hard decision. Wishing you guys the best. I know, but good luck. Yes. That's exciting, though, about the baby. All right. Let's go to Ashley in Bloomington, Indiana.

Starting point is 01:45:02 What's going on, Ashley? Hey, guys. How are you? Doing well. What's your question? I'm calling because my child support is about. to go down $488 a month because my ex-husband got a lower income job. And I'm on baby's step number one for like the third time.

Starting point is 01:45:24 And I have cut subscriptions. And I'm really trying to hone in on what else I can do besides getting another job because I have three children, two of them are disabled. It's really hard to find someone to watch their children. And part of that cost of having disabled children is that they go to therapy full time. And I work from home. So I have to take them to therapy in the morning and come back home, work, take my oldest daughter to work because she doesn't drive because she has her own mental health issues that don't allow that. And then I work out my car for three hours about a day.

Starting point is 01:46:03 Then I go pick up the kids and go back home. What's the gap you need to cover in your budget? Well, I would like at least $500 to $700. Okay. So if you can make an extra $700 between cutting expenses and increasing income, that would do it. Right. But I can't increase my income because the insurance, the kids are on. If that's the case, then what you're doing right now, you need to get that core income up.

Starting point is 01:46:31 So if you're making $20 an hour, we need to get to $25 an hour. Well, I can't make any more. money though because my kids are on Medicaid and if I make any more money then they'll get kicked off Medicaid. This is a rock and a hard play situation. You're either to choose we need to figure out how to make this work if we're going to stay on Medicaid or I need to make enough that we can get out of the system entirely to make this sustainable. But either way, there's going to be sacrifice, Ashley. Hey guys, Dave Ramsey here. Every day on this show we help people work through real money problems and figure out what to do next. Now you can get that same kind of help anytime

Starting point is 01:47:25 with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to Ramsey Solutions.com and try Ask Ramsey Today. That's ramsysolutions.com. If you're enjoying the show, you're finding value in the conversations today. Pass it along. Share the show. Share the show. with someone that you know, someone you love. It's one of the biggest ways you can help us grow. It's one of the best marketing engines we have is just you guys,

Starting point is 01:48:21 hitting the share button or word of mouth, telling people along the way, playing it in the background, creating some curiosity, all of that help. So thank you for doing that. Stacey is in Springfield, Missouri up next. What's going on, Stacey? Dave, thank you for taking my call. I would love to be Dave.

Starting point is 01:48:39 I appreciate that. I am so sorry. No, it's okay. I don't get it a lot, but when I do, it's an honor. That's the George's biggest compliment. That's okay. I am so sorry. People do think Dave is my dad, which is hilarious.

Starting point is 01:48:52 I'm like, no, not Rachel's brother. Oh, is this John? I'm George, and I got Rachel next to me here. Who is Dave's daughter? So you do have like Ramsey DNA at the desk today. Okay, okay. Well, that's good. We got you.

Starting point is 01:49:04 My question is my mom is 75, and she has given pretty much all her money away to my siblings. And she is almost basically, she's past bankrupt. She's in the hole. Oh, gosh. So she didn't have money to give. She had thousands of dollars to give, and she gave them. And then she went in debt to take care of them.

Starting point is 01:49:31 Oh, gosh. So my question, so I now sit down every month with her and go over her budget. We've created a budget. We have mapped everything out. And I'm just curious if she needs to go back and start the baby steps. And that's going to be the way that we get her out of debt. She's really making a lot of headway. And my other question is she has a trust that is her beneficiary.

Starting point is 01:50:02 And should we initiate a hotch pot clause on it? Because she's treating what my siblings have already received as inheritance. So this is Rachel, by the way, Stacy. Yeah. So did she, so what she's given to your siblings is going to count against their inheritance, basically.

Starting point is 01:50:24 Yes. But what does she have left? Because you said she has no more money. Is it her home? What assets does she have? She does have her home. She still owes on it. How much is it worth if you sold it?

Starting point is 01:50:39 If she sold it, it would probably be worth $200,000. Okay, and how much does she owe on it? 75. Okay. What else? What else assets? Does she have to her name? Any investments, retirement, anything?

Starting point is 01:50:53 She does have good retirement. She has like $30,000 annuity that she found that hadn't been liquidated. 30,000, okay. Yes. She has. She has good retirement. She still received, my dad is deceased, and she still receives part of his retirement and his military retirement.

Starting point is 01:51:19 Okay, how much is that per month? 6,300. Okay, gotcha. But really, she has $125,000 of equity and $30,000. Yes. Okay, in this. That's her net worth, per se, without adding in all the debt. So how much debt does she have?

Starting point is 01:51:39 Hang on, I've got that total right here. She has $145,000 in debt. Just consumer debt? It's, yes, a lot of his consumer debt. She let my brother use her credit card, two different credit cards that they maxed out. She took out a loan to remodel my brother's kitchen. She took out, and because she liquidated all, a lot of her investments, is she is deep in debt due to her taxes.

Starting point is 01:52:17 Is she of sound mind? Yes. How much is she owing taxes? About $23,000. Okay. Yeah, she about cried at the taxed office. Yeah, I bet. It was very sad.

Starting point is 01:52:38 I took her in, and it was so sad. Yeah. So how can we help today? Because I can't solve years of family dysfunction in a call. I wish I could. But what can we specifically try? I'm working on it all my life. So do I, okay.

Starting point is 01:52:52 Well, she's not going to have anything. All right. Sorry. I'm sorry. I did not mean to interrupt you. You keep going. She's externally processing. No, so, I mean, like, right now as it is, I mean, my mom does very little, and she does

Starting point is 01:53:07 understand that she did do a lot of this. And so she lives off of what is left after she pays these debts. which is very minimal. But my concern is do I need to probably, do I need to just start with the smallest amount and start knocking that down? She's got one very close to being paid off. One credit card is just about done. Yeah, I mean, I would pause everything, Stacey,

Starting point is 01:53:40 and focus on the IRS debt because they can put a lien. Okay. I mean, yeah, I wouldn't mess with that. I would move that to the front. And so how much does she have left after she pays minimum payments to stay current on everything? And after she pays her bills, like her mortgage and lights and everything, do you know how much margin is left that she can throw extra at this tax bill a month? She pays extra. Oh, well, she pays a little extra on every bill every month.

Starting point is 01:54:11 Okay, so I would not do that. I would take her down to all minimum payments. Okay. So do all minimum payments and then anything extra after those minimum payments I would throw at this tax bill. Is she on a payment plan with the IRS? Yes. Okay. So out of the 6300, do you know ballpark what extra she has per month to throw at this?

Starting point is 01:54:32 Like 3,000 or 2,000? No, when it, I mean, like if you, well, I would have to break down her minimum payments. Yeah. Because we've, she wants to get out of debt. So she's been adding extra to each one. Right. But if I came down to it, I would say she probably has somewhere around a grander. So I don't know.

Starting point is 01:54:57 Like when it comes down to it, after she pays everything, she has like $200. Okay. Okay. So, but if we go down to the minimums, I think. Oh, I'm sorry. Yeah, I could. Yeah, maybe a grand. But that would be two years to pay off this tax bills, basically, if you put everything to that.

Starting point is 01:55:14 Well, she's paying, she's paying $1,000 to state, or $1,200 to state and $500 to, I'm sorry, $1,200 to federal and $500 to state. For the tax payments? Yes. Okay. Wow. Well, are you the only sibling helping right now with her situation? I have an older sibling who kind of helps, but she just moved back in with my mom, so I don't know that that's going to be help. I mean, this is probably dysfunctional, Stacey, but did you go to your mom?

Starting point is 01:55:47 brother? No, no, no. Did you go to your brother and say, hey, pay mom back. She's $145,000 in debt because of your kitchen renovation? Yeah. I have talked to both my siblings, and I have tried to have family meetings where we can sit down and go over, you know, this. And I plan to still have one of those. But they're not budget. understand. My brother has no, there's no way he can. He can pay it. Yeah. Yeah. Well, the biggest thing is to stop the bleeding. Have you, have you convinced your mom no more giving the kids anything? Yes. Close the credit cards. Have the credit cards been closed? Have you frozen her credit? I would do that with all three bureaus because I don't trust these siblings as far as I can throw them. Truthfully. So I would freeze her credit because this is boring on elder abuse.

Starting point is 01:56:43 Well, and that is what I have told them. And there's elder abuse, there's elder law attorneys that you can contact to see what your options are, but this is such a bad situation where they've leached off of your mom knowingly. And the mom, and to her, she let it happen. She let it happen. And she's reaping the consequences, which is really sad at this age. There is no inheritance that will be going around. You'll be lucky if her estate can pay the debts. I would almost would just cash out the $30,000 and take care of the IRS to get them off your back.

Starting point is 01:57:15 You'll have $7,000 left, and you just kind of start throwing at that smallest credit card. Because she can live off the $6,300 that's coming in. But, man, that's tough. I don't know. That's, yeah. But I think I'd get the IRS out. Yeah, that would be A1. And A2 is making sure that none of these kids get another dime, and she doesn't let that happen.

Starting point is 01:57:55 People ask me all the time. George, what's your number one money-saving hack? I'm glad you asked. Nothing makes me happier than helping another frugal friend. So here's the hack. Get on a budget. Seriously, how are you supposed to save money if you don't know how much you're spending in the first place? And that's what makes the every dollar budgeting app a game changer. With every dollar, you'll get a clear picture of your spending. And from there, it's easy to see where you can get more intentional, cut back, and save more money. How much money are we talking? Well, the average every dollar budgeter frees up $395. in their very first budget. And if you ask me, I think you're way above average. So, why are you still listening to me? Go download every dollar for free and start saving more money right now. Our scripture of the day, John 812. Jesus said, I am the light of the world. Whoever follows me will never walk in darkness, but will have the light of the world. Martin Luther King said, you don't have to see the whole staircase, just take the first step. All right, let's go out to Morgan in Tampa up next.

Starting point is 01:59:14 What's going on, Morgan? How are you guys? We're doing great. How can we help? So my question is, how do I navigate a super large amount of debt with also keeping up with my expenses, my mom, and my late father's expenses as a three months after graduate. full-time employee. Wow, that is a lot going on.

Starting point is 01:59:44 Yeah. So tell us about why you're covering your parents' expenses. So my mom, she's disabled and she can't work from the past like 15 years. And a close family friend was helping before I was. And then while I've been in school, I've just taken out a large sum of debt to come to help with those coverages for my mom. And then my late father, I'm covering his expenses that he's left behind. Everything was unexpected. And he has an apartment I'm trying to sell.

Starting point is 02:00:17 It's been stuck for like a year on the market. And so that would help a pretty good amount. But it's, yeah, it's stagnant. Wow. What other expenses are you covering for him? So he has, my family's from Romania. and he has a property over there, which is pretty low. It's like property taxes, his apartment here in the States.

Starting point is 02:00:44 And, oh, gosh, there's a bunch of hidden fees, like lawyer fees. He was in collections. There's all kinds of fees. And he's passed away. Is that what you said, your late father? Yeah, that's correct. So these are charges that I've just stuck versus some that have just been wiped away. Well, debt at death usually goes against the person's estate.

Starting point is 02:01:08 So have you contacted a lawyer or anything to get this settled out? Because I don't want you paying debts that you don't have to pay. Yeah, yeah, yeah. You don't owe those. His estate will. So you do need to sell these properties. And even if the one in Romania is low, I probably would still sell it. Because you can't afford to keep all of this right now.

Starting point is 02:01:30 Oh, definitely. So if you liquidate the property in Romania and if you like low-balled offer just to get this condo out of here, what would you walk away with? Do you know? I've been, you know, I've been working with the realtor and we've been going down and down on the prices. And I feel like my offer is pretty low. It's in a nice area. The problem is he has two, or I have two step siblings that it would have to be. it amongst us. And the amount of loans that I've had to take out student loans, I should mention it's like 120,000 at like 17% interest rate. I haven't reconsolidated anything. So it's super large.

Starting point is 02:02:15 And a lot of that comes from me trying to keep up with my mom and his expenses. So if I don't sell this apartment at like what it's worth, then I'm like not even covering how many like loans I had to take out to pay for this apartment. Does that make sense? Okay. What would have happened if you didn't take out all this debt to cover the expenses? It would be foreclosed by the bank. All the properties would be taken. So why have you taken on the burdens of the world onto your shoulders? Yeah, you could have just let that happen. Because you can't afford to do any of this. And now all the risk is on you because those student loans, all that debt is in your name.

Starting point is 02:02:55 I thought, well, I mean, the apartment isn't worth nothing. I thought it would sell quickly. then I could help cover everything. I didn't think that I was going to be in such a big hole. And also, when I was in school taking these loans out to cover my expenses, too, I didn't, it just didn't dawn on me what 17% interest would do to that. And I also didn't understand that it was incurring while I was in school. I thought it would start six, seven months after I graduate. The, yeah, the majority is private.

Starting point is 02:03:27 And then there's like some federal, too. Okay. Well, a little bit of homework. You can go to whyrefi.com slash Ramsey. That's our partner to help refinance these private student loans that are crushing you, and they can likely get you much better terms. So that's one thing you can do to get a little breathing room. But the overall thing is you can't keep covering everybody's expenses as much as you want to. So mom is going to have to figure it out. Is she on disability? What is her income sources right now? Disability. That's it. And how much is that? 800 a month. That's it. Is there any survivor benefits from your late father? No, they weren't together at the time, so it didn't apply. And she's living with you?

Starting point is 02:04:11 What kind of disability does she have? More like I'm living with her, and she's got a bunch of things. She broke her back, like 10 years ago at a nursing home, lupus, fibromyalgia, just, like, bone pain, that kind of thing. and I'm living with her covering her expenses, and she's also a huge hoarder, which I've tried to mitigate her spending. But, yeah. Well, I think mitigate. We need a stronger word. I think we need to remove her ability to spend if you're the one covering her expenses.

Starting point is 02:04:41 Yeah, you have to take over. It's almost like a parental. Yeah, you're in charge of this business now, and you need to make wise decisions. She doesn't get any access to anything. You're making sure her basic needs are covered, and that's it. Yeah, that's what I've been trying. Are you working Morgan? Harder.

Starting point is 02:04:57 Yeah, I have a full-time job. How much do you make? 72 after taxes. 72 after taxes, okay. And that's with working overtime, which hopefully I can keep up. How much debt do you have total? So, 193, and then if, I mean, if I take on my mom's house, which, like, the mortgage and stuff, it'd be, like, $300. Yeah, no, no, no, don't take on her house.

Starting point is 02:05:20 You're going to go into a vortex of debt. Yeah, and it's not probably in a great state, a state of, a state of, you. like cleanly not yeah okay so don't okay so um okay so because we have a few minutes here's what i would um Morgan i would um I would probably move out of your mom's home and I would go rent an apartment somewhere I want you to to have a um you have to set up stability for yourself because everything around you is not stable uh your mom has $800 a month coming in I think you need to kind of figure out, okay, what's the minimum that she needs to survive, not her spending habits or anything. What does she need for her mortgage to be paid so she doesn't give foreclosed on?

Starting point is 02:06:06 And reasonable food budget and all of it. And I would manage that on the side and help her there. And then with your income, I would get this apartment sold. I would get the, and even if it's, I mean, I wouldn't take a loss, but even if it's like a, you only make 30 grand or something off of, like, I mean, you need to simplify all of this pretty quickly. And out of that, then you're going to have to work your way, yeah, out of this debt. And it's going to be a journey for sure. But I think you've done really amazing things, Morgan. I think you've tried to be the hero for so many people. And I think you kind of have to take the cape off and say, I don't have the ability financially to carry all this because you don't at all, at all.

Starting point is 02:06:54 And what this is going to turn into is just you going to more and more debt, then you're unable to cover your own expenses, let alone someone else's. You have to stay afloat yourself before you can help people. What's the other 73 in debt? You said you had 120 in the student loans at 17%. What's the other 73? Car, the rest of the student loans that are federal, my car, credit cards. Yeah, that's a big one. Okay.

Starting point is 02:07:20 What's left on the car loan? 8,000. and then 15 grand in credit cards. Are you still using the credit cards? Yeah, I am. I would make a pact with yourself that you are done turning to debt to solve these problems because it's not solving anything

Starting point is 02:07:39 even though if it's temporarily putting a Band-Aid on it for a couple of days and then it's 26% APR and you're not going to be able to climb out of that. The balances are going to balloon on all of this, the student loans, the credit cards. So at 193, you're going to look up six months from now it's going to be 220 while you're still taking on more debt. So you've got to decide I'm done with debt.

Starting point is 02:08:00 I'm done covering everyone's expenses. At some point, adults need to figure this out for themselves. And you can help your mom as much as you're able to and get the step siblings involved. But please stop trying to carry this on your own. Yeah, hold on the line, Morgan, and Christian will pick up and we'll give you financial peace university. It's just the bulk of everything from budgeting, getting out of debt and wealth building. And I want you to start that process. That puts this hour of the Ramsey show in the books.

Starting point is 02:08:23 Remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.

The Ramsey Show - Wisdom Starts Where Debt Ends

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