The Ramsey Show - You Can’t Hack Your Way Out of Debt

Starting point is 00:00:00 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 and the Fairwinds Credit Union Studio, this is the Ramsey Show. I'm Dave Ramsey, your host, Dr. John Deloney, Rampson. Ramsey Personality, number one bestselling author, and host of the Ramsey Network. Dr. John Deloney's show is my co-host today. Open phones here at AAA 825-5-225.

Starting point is 00:00:41 Joan is in Florida. Hi, Joan. How are you? I'm good. How are you? Better than I deserve. What's up? I have a question.

Starting point is 00:00:50 I would like to know if it's okay if I lock my husband out of my savings account. Wow. Tell me more. Sounds pretty dramatic. Yeah, it is. We've been married for 45 years. Probably 20 some years ago, we got into some credit card debt, a lot of credit card debt to the point where we had to take out a second mortgage. I also borrowed against my 401K, and it took probably 10 years to claw out of that debt. And I mean, we were really good about budgeting, and now we have our home paid. off, all our cars are paid off. We had absolutely no debt until probably the last year. I picked up a second job before to help, you know, get this debt out. Well, I've since left my second job and we are just spending, I say we, it's not really we, it's him, it's just spending way more

Starting point is 00:01:51 than what we're bringing in. Oh, just, he has just, he bought a boat, he's bought a truck, to pull the boat. He's bought road bikes. He's bought mountain bikes. He has gone through $40,000 in savings in the last year buying these things. What is your all's net worth? Net worth. Our home is worth probably $650,000. I have $650 in my 401k. I had $50,000 in savings. and now I have, I guess there's about eight in there now. You keep using the word I. How much does he have in his 401K? Nothing.

Starting point is 00:02:36 Okay, so you have a net worth of a million and a half dollars, give or take. Correct. And your household income is what? It's 82, between the two of us, it's 82,000. And you guys are in your 60s? Yes. Okay. And so what kind of midlife crisis is this dude having?

Starting point is 00:02:55 It's 60. He's saying that he wants to get all these things bought before he retires, and he plans on retiring next year. So he wants to enjoy his life. We sort of had a significant event happen in our family. We had a family member of ours who just worked himself to death and died in his 40s and didn't enjoy life at all, didn't enjoy any of the money that he made. So my husband was like, well, he's not going to do that. He's not going to be like that. It doesn't sound like the problem is the boat or the truck.

Starting point is 00:03:28 It sounds like you come home from working your second job, and all of a sudden there's a new boat in the driveway. Oh, I hate it. I look out there and I see it, and I hate it. No, no, no, no, him doing crap without you guys being an agreement in it. That's the problem. I agree. You didn't know this.

Starting point is 00:03:44 You didn't go along with these purchases. They just occurred. No. Well, I did go along with the boat, but I didn't realize he was going to spend as much as he did on it. And I didn't realize that he, I mean, he just keeps putting more money into it. For people that have been married 45 years, you all suck at communication. Yeah, not good. Yeah, I agree. I agree.

Starting point is 00:04:06 Or did he just change it on you? Have y'all been communicating well for a decade? And then all of a sudden this went sideways? No. No. This isn't new. We've never really agreed on finances. You know, I'm more of, let's save, let's put it aside.

Starting point is 00:04:23 And he's more of let's enjoy it. It's just gotten, it's just gotten bad in the probably last year and now. I appreciate your frustration and even your anger. And those are justified, all right. But the problem is not the savings account. That's the symptom. Okay. The problem is you all are not aligned.

Starting point is 00:04:46 I agree, 100%. You're not unified. And so I don't think I'm hearing you say, because you said, I went along with the boat. I don't think I'm hearing you say that you're opposed to enjoying some of the money. What I do hear you say is you don't like being surprised and people running roughshod over your hard work while you're working two jobs. Yes. And that's fair.

Starting point is 00:05:14 Second job. Yeah, that's fair. I gave up the second one job, yeah. But to compare your all's life in any stretch of imagination to the 40-year-old workaholic, he's not even on the same. plan it so you can't use that as a justification to do something stupid and lie to your wife it's the dishonesty yeah yeah yeah so you really do for the sake of i mean if you're in your 60s and you guys are healthy you may have to be fighting with this old man for another 30 years right you need you all need to really work on this and get on the same stinking page because i agree yeah

Starting point is 00:05:46 Sharon and i make more money and have more money and i don't buy any boats without sharing knowing what the boat costs and we make the decision together beforehand and if the boat involved a truck to pull the boat we would be talking about that too we don't just make this up as we go when i come home and go see what i did honey and we've been married 43 years and i'm 65 years old so we're right in the same camp with you kiddo okay and here's the other side of it he's not on the phone so just you are yes the gotmans are um like kind of the goats when it comes to marriage research okay okay and they created this thing called called the four horsemen of the relationship apocalypse, they can tell with 90 plus percent

Starting point is 00:06:26 accuracy after watching a couple communicate just for a little bit, whether they're going to make it or not. And the relational dynamic of contempt where one person thinks they are better than the other person is the number one predictor that this thing's not going to, it's going to fall apart. And listening to your language, this is mine. I put this in my account. He has nothing. I'm wondering if there's not a dynamic in your marriage that has established itself over the years of you're the good one and he's the bad one. Yeah. You're the you're the smart one. You're the one who saves and he's the child. And these dynamics have a way of self-reinforcing themselves. It doesn't give a pass. It doesn't give an excuse for his dishonesty, his line to his

Starting point is 00:07:17 his impulsiveness. Yeah, acting like a child. But it creates a context for where if you're going to treat me like a child for 40 years, I'm acting like a child. Then excuse it. And if he was on the phone with me, Dave and I'd be letting him have it. But you have to say this is the dynamic that we have co-created for 40 years where I think I'm better than him because I make more money or I had a second job I think the quality of his soul would be greatly increased if the two of you could mutually respect each other, dignify each other with being in agreement before we make major decisions. There you go. And that usually starts. And then also concludes combining ownership of everything. So you don't have a 401K. We have a 401K. You don't have a house. We have a house. We have an income. We are doing this. This is what we have a boat now. And that kind of stuff.

Starting point is 00:08:06 And when you sit down to have conversations about feeling dishonest, whatever, if you sit down and say, you went out and did this again and you did this, he's going to fight you. He has to. You've declared war. If you sit down and say, hey, I'm hurt. I'm scared. I feel this way. Start the conversation with eye statements, and that can be an invitation.

Starting point is 00:08:25 And then if he continues to act like a child, then we're going to have to respond in some different ways. But you've got to reset this whole communication pattern. Yeah. You guys got to work on your skills. That's it. Your skills are low. And that may mean sitting down with a marriage counselor who's not, who's teaching you how to develop these skills. Hey, you guys.

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Starting point is 00:10:39 Hi, Brooke. How are you? I'm okay. How are you? Better than I deserve. What's up? Oh, hi, Dave. I appreciate you taking my call.

Starting point is 00:10:48 Sure. So just a little backstory. I'm 27 years old. I'm a single mom finishing my MBA. I work full-time, and I raise my three-year-old son, mainly on my own. I live with my nana, but I would like to move out sooner, other than later due to differences and just wanting to move forward in life. Okay.

Starting point is 00:11:08 I do have some student loans and a little credit card debt, but I feel like I'm in a constant cycle just, you know, just trying to keep up because my income is not very high. What's your income? I'm just honestly not. Right now I make $20.19 an hour. Okay. And you're finishing an MBA when?

Starting point is 00:11:26 March 2026. So six or eight months. Okay. Yeah. And I do currently have my bachelor's in computer science. Why are you making $20 an hour then? Because I only work as a customer service representative. Why?

Starting point is 00:11:44 You have a four-year degree in computer science. Oh, I mean, I know. I applied a job constantly, and I graduated in August of 2024. So I've been out of school for quite some time. Yeah. Okay. So your career search process, is it? is not working.

Starting point is 00:12:06 Thus, you have a horrible income compared to your education. Your MBA's not going to make this any better. Yeah. If we don't fix the career search process. Agreed? I definitely agreed. Yeah, let me promise you that they're not going to suddenly start calling you just because you've got an MBA.

Starting point is 00:12:26 And there's a weird moment where the NBA might be a liability because they don't want to pay somebody an NBA salary who doesn't have the experience that that NBA salary would require. Does that make sense? You might find yourself in a leadership gap. Yeah. So, yeah, we got to get you, we got to get your career moving, kiddo. That's the issue.

Starting point is 00:12:48 What challenges have you had? I think the main challenge is just that I have to work from home because I have no help with my son. Oh. And that puts a major. Yeah, that's an issue. Yeah. What about child care? Is that not something you want to do? It's not something I necessarily want to do. I did recently try it. My son had a hard time adjusting, plus it's just so expensive.

Starting point is 00:13:15 Yeah. And with just my income, it's just hard to make it. Yeah. I mean, if you suddenly start making $80,000 a year and you put him in daycare, this whole thing changes. And he's going to adjust. Right. Right. Kids do every day. And there will be a tough adjustment period. He's been with you every day.

Starting point is 00:13:32 he was born and there will be a tough adjustment period but yeah I think I think the problem is you put not sure where to go from here because I I probably have applied a 3,000 jobs I'm being honest that's what I was thinking yeah so here's the thing applying for jobs never works you can't get jobs that way and I'm going to walk you through what to do and we're going to give you some help on that part but part of the problem was is you demanded to work from home and be a full-time mom while people were paying you for working and they didn't want to do that and I'm not shocked by that I wouldn't hire you either under those circumstances okay because I know what you're doing you're changing diapers you're not working that's the employer's

Starting point is 00:14:20 viewpoint okay work from home productivity sucks corporate America and people that hire people know that including me okay and so this idea that you get a full day's work out of somebody when they work from home no one is under the illusion that's happening and it's all in the name of work life balance and i want to be with my child all of that's great you just got to decide some options here so if you want to work from home you are limiting the the quality and the number of positions you can get making 7080 100 thousand dollars a year by 90 percent Okay? So you can't, this is not an option for you in this situation.

Starting point is 00:15:05 You have too many competing goals. I want to be home full time with the kid and I want to make a lot of money. These are competing goals. And so I don't blame you for that. Those are all legitimate feelings and legitimate goals. But, you know, as you said, I'm a single mom. And so I'm boxed in this corner. So there's a period of time here that we're going to pay a price to get this family

Starting point is 00:15:28 this little tiny two-person family, stabilized and sustainable. Now, back to the other thing, the practical parts of looking for a job. The, we have, we hired at Ramsey, we have 1100 team members. Last year we hired just under 200 people, okay? We had 15,000 applications. That's what you're putting your name in. It's known as a needle in a haystack. Okay.

Starting point is 00:15:57 So you don't get through to good positions simply by filling out things on LinkedIn and on whatever other automated resume posting process you're using is to get 3,000 applications in. 3,000 applications tells me you had absolutely no contact. You just filled out the stuff and went and it went right in there. And no one saw it. It's one of the 15,000 that came in here and we only hired 200. But I'll also tell you every person when I've called HR and said, I know this person, Steve, or I know this person, Susan, and she's applying for a job here, 100% of them have gotten an interview. Not all of them get hired.

Starting point is 00:16:37 They don't all get hired, but they at least, they put them to the stack. So you got to know someone or know someone that knows someone that knows someone that says, hey, my friend's friend, Brooke is solid. She's finishing up her MBA. She put in an app over there the other day. would you guys at least give her a look? And you've got to work the phones that way. You've got to work the emails that way.

Starting point is 00:17:00 And it could be somebody down the street. It'd be somebody your granny plays bridge with or grandkid works over there. I don't care. But some connection. And doesn't that to necessarily be a professional connection. It's just, you know, my wife the other day, a lady that she was playing bridge with, the grand kid applied here at Ramsey. So then the grand kid gets a look.

Starting point is 00:17:23 I don't think we hired that one, but they get a look, and they wouldn't have got a look otherwise, and you're not getting a look. That's the problem. Yeah. So Ken Coleman calls this the proximity principle to get in proximity of the people doing what you want to do. What field are you wanting to go into other than IT? I mean, I mainly look at positions for software developers, but again, it's very much time. Are you, are you, you have their ability to write code? Yeah, yeah, I do. Current code?

Starting point is 00:17:59 Maybe not up-to-date. I mean, I definitely could learn it if it was something that they would, you know, give me the ability to do. Yeah, okay, all right. Well, your information systems, your four-year degree would give you the ability to do more than just write code. And your code, if you're going to be, if you're going to simply crunch code, yeah, you're going to have to really be cutting edge on that to get that position.

Starting point is 00:18:20 So anyway, I'm going to put you on hold. we're going to send you Ken Coleman's book, Proximity Principle. I'm also going to send you a book called Finding the Work You're Wired to Do. But my advice to you would be to decide what it is that's most important and become comfortable with the discomfort of that decision. Okay. If it's most important that I go make $80 to $100,000 a year moving towards my MBA, otherwise there's no point getting this MBA. You're just collecting degrees. You're not a thermometer. Okay. So you just keep going along, going along, going along. And so decide where it is I'm going to go and then what I've got the Earl Nightingale used to say that the impediments to success are not what you're willing to do to get there it's what you're

Starting point is 00:19:02 willing to give up to get there and so if I'm going to be out in my own apartment and we're going to have a sustainable income it's not making $20 a target to grow our life together with this baby it's going to involve some daycare and it's going to involve being at the workplace. Or the other trade-off is, you're going to be at nannas. I'm going to be at nannas for seven more months until this little one goes to preschool and then I'll make that move. But it's all going to come with a choice. And I think, Dave, the challenge that people in her demographic, they went and got the degree everybody told them to get and they said at the college, you're going to make this much money when you graduate. People thought, A, that means I can live wherever I want to

Starting point is 00:19:43 have this stuff all right when I walk out the door. And you've got a third challenge, which is you're a single mom. I want to be at home. And so you're going to have to make some sacrifices short term and really get on the phone and start calling everybody you know and every friend of everyone you know. And that's going to be your way in the door right now. And they're friends. Yeah. And get somebody to pull your application out of that needle in the haystack. What does the future hold for business? Ask nine experts, and you'll get ten different answers. Economic growth or a recession.

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Starting point is 00:22:02 Hi, David. How are you? Good afternoon. Fine. How are you guys? Better than I deserve. How can we help? Yeah, just wanted to call in. A company is switching a little bit of staffing model. Currently, we have company cars and company. paid gas cards affiliated with that. We're going to switch that over, and I have to

Starting point is 00:22:22 turn that in by the end of the calendar year here. We're going to get a tax-free stipend and mileage pay from the company going forward into next year. So I just wanted to talk through that with you guys and see what some

Starting point is 00:22:38 of the best ideas would be. Some of the guys I work with are talking about leasing or getting something brand new. My wife and I, we've been on your program for a while, So we know where you stand with taking loans out on cars. We haven't had a car payment since 2018. Good.

Starting point is 00:22:56 So we're in there. I just feel a little upended here. Number one, it's obvious, and we'll just say it out loud to make sure everyone knows. The reason the company is doing this is it saves them money. Translation is going to cost you money. Okay. The net, net, net effect of this whole thing is, you're going to, it's a pay cut.

Starting point is 00:23:21 Okay. So, because by the time you operate a vehicle, the stipend doesn't cover it, they know that or they wouldn't be doing this. And so there's no other reason to do this. And that's why they're doing it. But that's neither here nor there. It's still happening. And that, that's where we are.

Starting point is 00:23:37 Does the, how many miles a year do you drive? I'm pretty fortunate, you know, I'd say 15,000. Oh, so you're not, you're not, you're not, you're not a road warrior. Okay, good. No. So they're going to give you the stipend whether you have a car payment or not, right? Yes. Do they have guidelines on the age of the vehicle or anything?

Starting point is 00:24:00 Yes. It cannot be, it's got to be less than eight years old. Okay, cool. All right. Do you have any money? Yes. Okay. So go buy a car.

Starting point is 00:24:12 Wait a minute. Oh, you don't have a car because you're only running. You don't have a second car now, right? You already. We do. We have two other cars, but the one my wife uses to run around with the kids, the other car I have is 12 years old. Okay, take some money in the 12-year-old car and upgrade to a 5-year-old car with cash and then take the stipend. Okay. No payments.

Starting point is 00:24:40 Just pay myself back out of the stipend then. Yeah, yeah. Because here's the thing. If something happens, God forbid, and the company goes broke or they lay you off or fire you, or you decide that they're unethical and you have to walk out one day, you've still got a car payment. Yeah. Well, here's what's going to happen. They start by not letting people go and they get rid of this, they get rid of the, everyone gets a car program to a stipend program.

Starting point is 00:25:07 The next cut they make, they're going to couch it as we didn't have to lay anybody off, but we had to make some sacrifices, and it's going to be the removal of the car stipend. that's what's going to happen. But you got the car payment independent of whatever they do. And so you don't take a car payment. No. And, you know, I think you probably upgrade your car a little bit anyway. If you got the cash to do it, put it a little bit with a 12-year-old car and get a five-year-old or car or whatever and then collect that money, put it in your pocket, get your mileage, put it in your pocket.

Starting point is 00:25:38 And know that the good news is with you because you're not driving any miles. You're just driving back forth to work. I mean, 15,000 is nothing. So a little bit more than that, but I mean, that's not like high miles. Road Warriors are putting 40, 50,000 miles on a car. So the good news is with you, I might be wrong. You might actually net out on this. It could be, yeah.

Starting point is 00:26:05 But the more miles you put on it, the worst this is going to be for the other people in the company, they're going to lose their butts. I give this program 18 months. I'm willing to bet that this is a phase out. of we're taking care of our employees vehicles, and this is a way they're going to phase this out. No, or even if it's not a planned phase out, you know, 36 months from now, you've got a new CFO and they're looking at the whole thing again.

Starting point is 00:26:28 We're trying to beat stock price and whatever the thing is. Whatever it is. We don't know. We can let go 25 people. It doesn't have to necessarily be with malice or forethought or evil, but it's just corporate America. They're going to look out for one thing, and it ain't you. Right.

Starting point is 00:26:43 And so, but either way, yeah, take that. stipend and put the money in your pocket and upgrade with cash. And don't count on it. Don't start budgeting it. I mean, budget it, but don't start pretending it's forever. Which is what people do when they take a car payment. That's exactly right. Well, company gives me $500 and that means I need to go get a $550 car payment. Right. Nope. That's not what it means. Mary's in Louisiana. Hi, Mary. Hi, thank you for taking my call. Sure. How can we help? I am wondering if it is a wise decision to be paying for life insurance on my mom to protect myself financially from my parents' financial irresponsibility when she passes away. You're not responsible for their irresponsibility when she passes away.

Starting point is 00:27:28 Right. And that is what my husband has recently been trying to... Not only morally, but legally you're not. Okay. So if your mom, tell me about your mom's situation. How much debt does she have? It's got to be over $100,000. Okay. Do they own anything?

Starting point is 00:27:52 Not outright. No, but I mean, did they have a house? Yes. They have cars with car payments. They still, they have no car payments. They still owe on their house. My mom is 66. My dad is 61.

Starting point is 00:28:06 Okay, so if you were to guess, if you added up all of their debts. Do they even own enough to cover their debts? No. No. Okay, that's called a negative net worth, right? Yeah. And so what happens when someone passes away, when you die, what you own stands good for what you owe. Okay. There's no generational debt in America. It doesn't get passed down to me. No. Zero. The other half of the reason on why I did it is because my if my dad passes away first my mom is going to be okay and then I guess with what you just explained I wouldn't inherit any of the debt I would just have to clean up the mess and close it out oh yeah you just send them all the death certificate with a letter that says you're screwed

Starting point is 00:28:56 and they'll go away okay they may have to sell this home if you had your eyes on this house yeah you don't get to keep anything of theirs they're going to sell the house I'm not expecting anything at this point. Okay. Yeah, but I mean, but if you want to keep the house, now you've got to go clean up the mess because the house is standing good for the debt, even if it's not a direct lien on the house. What you own down one column versus what you owe down the other column, assets minus liabilities. That's how it stacks out, and you have to sell all the assets to pay all the liabilities. If there's anything left, it's called an inheritance. If there's nothing left, then it's in the hole, the bank is screwed. They shouldn't loan these people money. They get what

Starting point is 00:29:36 they deserve. Mary, I'm going to ask Dave a question on your behalf, okay? So, Dave, let's say there's a house worth $350,000. It's got $100,000 left on the mortgage. So there's $250,000 and this family owes $270,000 in 401K loans and whatever. Who is responsible for selling the house and you have to, would she as the trustee or the beneficiary or the person, the executive of the will, would she have to sell the house and then disperse the equity of that house? Or does she just hand the keys over and say, Merry Christmas, y'all do get out? You could do either one. Even if you're the executor, you could do either one.

Starting point is 00:30:12 You could just say, I choose not to invest a year of my life to get you people all paid and I get nothing. So the credit card companies and the car dealerships would have to sue the mortgage company or... They'd have to put liens on the house. And then after the foreclosure, if there was anything left on the house, then they would get that. But, yeah, it just depends on how much trouble you want to go to, okay? And how much of your life you want to invest in, quote, sweeping up the mess after the garage. sale. And so, but you're not obligated to. So a simple one is, I had one the other day that was a friend of a friend. And the guy died with like 14 credit cards and he was in an apartment

Starting point is 00:30:50 and he had nothing. So that's a simple one, right? You really did just send them a copy of the death certificate and a note that says you're screwed. And those credit card companies got what they deserve, which is nothing because they shouldn't have been alone in that guy money. Right. He's a palper and so they you know that that's an easy one to clean up doesn't take much time and you know don't call me and they're probably gonna try to chase down their money call you threaten you whatever fine just jump in the creek you don't know you anything yeah i didn't you ain't got my signature buddy yeah so that that's the deal and that's that but much better thing would be if you could give mom and dad to actually work on this and oh you probably try it hon wow that's so sad

Starting point is 00:31:35 Statistics show that half of Americans don't have enough life insurance or they don't have any at all. I don't understand this, John. Why don't people want to take care of their family? They think they're going to die or something? Well, I used to be one of those guys. I didn't even think about it. And one of my buddies said, hey, the only reason to know. not have life insurance is if you hate your wife and kids. And I immediately went and got term life

Starting point is 00:32:11 insurance. That's a gut punch. And oh, you're telling me, and for decades, Dave, I've sat across people who've lost a spouse. They've lost somebody important to them. Me too. They don't know what to do next. Me too. I mean, you're going to have a crisis here. And, you know, you got two options while you're sitting and talking to a young widow. She's concerned about how she's going to invest all this money properly and not mess this up or she's concerned how she's going to eat tomorrow. These are the Two options. Take care of your dadgum family, man. Term life insurance can replace income, pay off debts, cover funeral expenses, so your family can

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Starting point is 00:33:24 and feed the kiddos? And if anyone in your life depends on your income, you need life insurance. That's just basic adult responsibility. How do you choose from all the options out there? We have told people for 30-plus years. The only thing to do is just buy term life insurance. It's very inexpensive. 15 to 20-year level term, 10 to 12 times your income. So if you make $50,000 a year, you need $500 to $600,000. That's simple.

Starting point is 00:33:50 It's really not that expensive. If you're in your 20s and 30s, it's about the cost of a pizza. And so you've got to take care of your family. If you want to know more about this, just go to the term life insurance guide. It's free. You can get it at ramsysolutions.com slash term. life guide or click the link in the description and we'll take you straight there john is in arizona hey john how are you hey john sorry hey dr john and dave oh you can call me john that's what my

Starting point is 00:34:15 mom calls me that's perfect what's up perfect thanks for taking some time um hey so we just a family we just finished building a home we moved in last month uh during the construction we were able to cash for a good amount and the remaining mortgage is six hundred thousand dollars we're still working to sell our old home, it's paid for. We should be getting around $500,000 from that sale. We have about $880,000 between investments and retirement and $100,000 in cash that has our emergency fund and some intermarked funds to landscape our new home. The question is with the $500,000 from the sale of the old home. I'm kind of wrestling with not wanting my network to be so top-heavy with home equity versus investments, which is what it would be

Starting point is 00:35:02 if I put it all towards that mortgage. Just want to get your advice. What's your household income? It's right around between 300 and 400, depending on the year. Okay, good. Way to go. And what's your, what's the new home worth? Totally.

Starting point is 00:35:20 We cash flowed about a million, so it would be about 1.6. Okay. All right. Yeah, you know, your house is a high percentage of your net worth, and you're not going to get away from that. You made that decision when you decided to build a $1.6 million. our house. It got away from us there? Yeah, that doesn't change.

Starting point is 00:35:37 Scope creep is what got you. It wasn't the, it really isn't the, the net worth situation doesn't change. Just because you're high, you can't hide from it now by not paying off the mortgage. It doesn't accomplish what you're trying to accomplish. So what I would do is, you know, I'd get that mortgage paid off as quick as I could. You got $500 to throw it $600 when the other house sells and then I'm going to take a chunk of my other money and knock out that last $100. might use some of that emergency fund instead of putting the bushes in for right now.

Starting point is 00:36:05 Let's get the stinking thing paid off, and I'm going to get it paid for. And then I'm going to start moving in that direction. So what we've discovered to answer your overall question, philosophically, so to speak, not really philosophically, but practically, that's your tactical answer that I just gave you. Now, strategically, your answer is this. That's a better way of saying this. As we were working with wealthy people, what we find is the larger their network, worth, the smaller the percentage of their net worth is on personal things, home, cars,

Starting point is 00:36:40 vacation homes, toys, whatever. The smaller your net worth, the higher the percentage is on your home. So, for instance, if your net worth is a half a million dollars and you had 300,000 of the half a million in a paid-for house, that's not disturbing. That would be fairly normal. but that's about your ratios and you're sitting there with about a $4 million net worth. Three and a half, right? And you've got half your net worth right now sitting in your house.

Starting point is 00:37:12 So that's starting to be disturbing. It's not anything to panic about, but we're not buying any more personal crap on the net worth column side for a while. You just did it. Your house poor. Not technically house poor. But you see what I'm saying. You need to get the balance back, rebalance your net worth, because by dumping everything into other investments that are non-personal investments over the next, whatever number of years, to where when we look up in a few years, you've got a $10 million net worth, and of that the house has doubled, and it's $3 million. Now, that starts to be pretty comfortable.

Starting point is 00:37:48 But like I talked to a guy the other day that, you know, we were looking at his numbers, he's got $100 million net worth and a $10 million house. So it's net worth is his house only 10% of his net worth at that. And yours is over 50%. So that's the, but again, that follows with the line of thinking of the higher your net worth, the smaller the percentage of your net worth is going to be in personal home cars, vacation homes, toys, so on. And so, you know, you take a billionaire and they've got an $8 million jet and the billionaire has a couple of homes, they still, it doesn't add up to.

Starting point is 00:38:25 to even 6% of their net worth in personal consumption. And so that, that, again, validates the concept of the higher the net worth, the smaller the percentage. So, but yours is, as high as your net worth is, I don't disagree with you, John. It's a little bit unnerving to be there. But being in debt doesn't change it. Well, and you called it out. This call should have happened before we, we decided what size house we were going to build.

Starting point is 00:38:49 You've already, you've already committed it. So cows out of the barn. I want to, I want to take that risk off of my. risk profile. I'm going to pay that sucker off. Yeah, that helps the situation. It does. Helps the sleep at night factor. Right. That's right. Just get it paid off. And then let's just, okay, we have made our personal consumption pledge for the next six years. That's it. And we're sleeping in it. And in reality, that means we're going to be aggressive. We're going to put 15% in these mutual funds. Are we going to up a little bit?

Starting point is 00:39:15 Yeah, we're going to up at all. Because everything's paid off. You're baby step seven. So we're going to start doing investments out here big time and there's not going to be much more person. So if you go to the beach and your friend has a nice condo at the beach, uh-uh, you can't have one. Right, because you, instead of buying a $700,000 house and a beach condo. Beach condo. Your beach condo, put some sand in the bedroom. Yeah.

Starting point is 00:39:35 I mean, that's what we're doing here. This is, that's where you are now. So you're just a little beach there in the second master suite of the $1.6 million. So, yeah, that's no. No more. You know, mama wants a Bentley. No, mama ain't getting a Bentley. It's not happening here.

Starting point is 00:39:51 We got a one and a half million dollar house. And here's the beautiful thing. You make $300,400,000 a year. clean it up real fast. This is two or three years. You're okay. It's more of a, it's not a, your stupid discussion, or you've done something extremely dumb discussion. It's just like, I'm with you, John. I'm a little nervous about it. And I would, based on that, start making the moves to not be nervous. First one, pay off the debt. Second one, redistribute most of your investing away from personal issues for the next five, six years. And then you'll get it

Starting point is 00:40:21 bounced back again. You'll be okay. Cool. Victoria is in Columbus. Oh, hi, yo. Hi, Victoria. How are you? Hi, guys. I've had better years. Uh-oh. How can we help? So I'm calling because, sorry, I promised myself I wasn't going to get a mobile, but I feel like my life is at the stake. It's okay, Dawn. You're good. I really don't know. I really don't know what to do. We have a business. It's a trucking company. my husband is one of the drivers, and we currently have another one.

Starting point is 00:40:57 Do you have two trucks you're running in the trucking company? Correct. Okay. We had more, but we've had really bad luck with drivers that really did some bad things for us. So we are selling some things to try and liquidate the assets to pay off some of the debt. But essentially, we're probably about $400,000 in debt. How much of that is the two trucks? trucks? One of the trucks we own outright. The other truck we still owe probably about $75,000 on.

Starting point is 00:41:31 And what is the truck you own outright worth? It's probably worth about $100,000. And what about the other one that you owe $75 on? It's probably worth about $40. Okay. So that's $140,000 of the $400 in debt if you sold both those and went and got a job. correct okay i'm just catching up all right now what do you own a home uh we we actually own three so we have three mortgages and all three of them are rented okay do they any of them have any equity one of them has equity how much we owe we owe 267 on it and it's probably worth about 450 000 sell it today put it up on the market today okay so okay i'm a little short on time i'm a little short on time i'm a little short on time i'm

Starting point is 00:42:29 going to give you a ramsie coach as my gift to sit down with you okay but you call me up emotional and thinking you're bankrupt and um when i sell everything which is what's going to happen in a bankruptcy i don't think you're bankrupt but you're going to have to turn loose to some things you can't hold on you can't be the monkey with the hand in the bottle holding on to the jelly beans because you You can't get away from the bottle. You've got to let go of the jelly beans, pull your hand out of the bottle. And that's how it works. I think you can get out, though. I wish I had more time with you. I'm sorry. Hang on. We'll get you some help, though, kiddo. But your info being bought, sold, and reposted all over the World Wide Web, even worse. And trust me, it happens all the time. And that's why I use Delete Me.

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Starting point is 00:44:01 found and what's been deleted. So, take back your privacy with DeleteMe. Right now, Ramsey listeners get 20% off at JoinDeletMe.com slash Ramsey with Code Ramsey at checkout. So do that today. Join DeleteMe.com slash Ramsey, Code Ramsey. Welcome back to the Ramsey Show in the Fair Wins Credit Union Studio, Dr. John Deloney, Ramsey Personality, number one bestselling author, Ph.D. in Counseling is my co-host today. Todd is with us in Texas. Hey, Todd, how are you? Hey, guys. I had a question about... I'm going to be 59 and a half in about six more months. I just had a birthday.

Starting point is 00:44:57 And my Roth IRA at my work, I'll be able to cash that out without any kind of penalties. And it's the one where you pay your taxes in advance. So I'll be able to get the whole amount out. Yeah, I know about what a small. Yeah, we want to build a small, excuse me, a cabin. And it looks like I'm going to have about 140,000. dollars to work with. And we've talked to a couple of builders, and we can get about 900 to a thousand square foot place built for that. My question is, would it be more prudent to pull that

Starting point is 00:45:34 cash out because it will take all of it and go ahead and build the cabin and be debt-free as far as any kind of a mortgage, or would it be more prudent to actually borrow the money and leave that in there because I think it's getting to the point where the compound interest is really starting to build over the years. I mean, that's not how compound interest works. Is it not? No, compound interest does not like get a running start. It just is, you just make interest on whatever's there.

Starting point is 00:46:05 And over time, you make interest on whatever's there and whatever's there is larger over time, but it's not, it doesn't mathematically get a running start. So do you have any other money? I have a little bit. I have about $8,000 in my savings account. What about your wife? Are you married? Yes, and my wife probably has four or five, and then we have a household account that we have about probably another four or five. Because you're 59, you quit work, you're going to retire. Oh, no, no, no, no. And you're going to be broke.

Starting point is 00:46:37 No, no, no. I'm not going to retire. You can't take your money on a 401K unless you don't work there anymore. Uh, that's not what they told me. This is a TSP, and I work for the federal government. Oh, okay. All right. And, uh, no, they told me. Okay, but let me tell you what you just did. You, you have absolutely no investments now.

Starting point is 00:46:57 No, I would not, but I was, we would both still be working. Yeah. How does that make it smart? Well, I mean, that's why I'm calling you, buddy. That's why I'm looking for an answer, my friend. The answer, you're not going to do my answer, okay? My answer is you can't afford a cabin. Oh, really?

Starting point is 00:47:21 You don't have enough money. So you're saying that because. But now that's not my only, you know, I do have, you know, I'll have the Social Security and I have a FERS retirement account with the government. I know. Are you familiar with those? Yeah, I am very. Yeah.

Starting point is 00:47:39 But, but I mean, dude, you have no money an account. cabin? Yeah. That's just, there's no way that this makes sense. The reason I'm, see, here's the thing. If I wait until I'm 70 years old to when I can retire and then I build a cabin, what good is a cabin going to do me? I'm going to be 70 years old. Well, you won't have to eat the logs. Well, my thought was, go ahead and, you know, we have a home. We'll build the cabin. And in a year or so, if it's looking like it's not working out, I could either sell our home, our primary residence, and move to the cabin, or I could sell the cabin. I guess what I'm saying is, what's the thing beneath the thing?

Starting point is 00:48:31 You've wanted a cabin a long, long time, and you haven't saved up enough money to buy a cabin. Well, it would be in the TSP account. I know. You haven't saved up enough money to buy a cabin because you're going to have to retire broke with a cabin. And that just doesn't, I can't tell you to do that. I'm not going to, I like you too much to tell you to do something that's going to bring you harm, sir. And this is harmful to you. In your mind, you're not worried about having no money in a cabin. And I'm really worried about you having no money. Too many calls from 65 and 68 and 72-year-olds. And so, you know, if you want to go stay in a cabin, rent one for the weekend, and keep your money and your investments. And, you know, you have not saved enough money. You've not done a good enough job with your investments to be able to afford to have a second home. And you just don't have the money. I mean, it's like, call me up and going, Dave, I want to buy a $2 million yacht.

Starting point is 00:49:35 And I've always wanted one. Well, you don't have the money. I'm sorry if you always wanted one, and it breaks my heart. You can't get your $2 million yacht, but you don't have $2 million to buy a yacht. And it's the same thing. You don't have the money to do this. You think you've got the money, but when you go do this and you use up all your money, you're going to be living on social insecurity broke with a cabin.

Starting point is 00:49:56 And that's just, I'm sorry. I can't tell you to do that because I like you too much. I think you're a good guy. You're going to do it anyway because you've got it all figured out, but I can't stop you. But you did call and ask, and so I'm doing. duty bound to tell you the truth because I care about you. I'm kind of speechless, Dave, and that's a rare moment for me. Well, I get really, really wanting something, but the thought of, the thought of relying on the government 20 years from now, like, no, they'll get, they'll take care of me.

Starting point is 00:50:27 They'll write that check. That seems infinitely more foolish than, I don't know. Yeah, I can't wrap my head around it. It doesn't make any sense to me. Yeah. the and here's an interesting thing folks everybody everyone falls for this and i have in the past too and some of you do are doing it right now that if you borrow the money it's as if there's no like i haven't um like that doesn't count i i still got my money my i still got my money right

Starting point is 00:50:56 is because i borrowed the money it's like it's like it's like it allows you to be in denial yes it's you're participating in denial when you borrow money because you're you're you're you're you're not admitting that you don't have the money when you borrow money there you go okay i bought this car that i didn't have the money to buy i didn't have the money to buy the car but i bought the car anyway because i'm in denial about the fact that i don't have the money and i wanted the car anyway and so and i work really hard there's that old saying whatever you go looking for in the world you're going to find it if you really want a cabin you're going to figure out a way that this somehow makes sense to you which is why it's good to have wise counsel but wise counsel

Starting point is 00:51:37 It doesn't do you any good if you don't listen to Wise Counsel. So I guess my promise to you, brother, is if you buy the cabin, I'll be here in 10 years and you can call me when you're trying to figure out what you got to sell, and I'll help you with that. But we'll be talking again. Yeah. I just can't wrap my head around that. And by the way, I really, really want a hunting place with a big cabin on it. I really do. With all my heart, I want that.

Starting point is 00:52:01 I just don't have the money for it right now. No, you really do. Personally, you're not kidding. I personally, really, really want that. So if he builds it and gets in trouble, would you buy it from him? It depends on what county it's in. How many deer has got on it? But yeah, I'm happy to.

Starting point is 00:52:16 I'm sure. I got a feeling there's some deer around it. He's in Texas. Oh, man. Oh, man. The proverb says that the wise sees trouble and takes refuge. The simple moves forward anyway. and is punished for it.

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Starting point is 00:54:46 Today's question comes from Andrea in Ohio. Andrea writes, my partner and I have been together for over 25 years, and we have four children together. I've been asking him to marry me since we had our first child. Oh, geez. He recently stated that we can get married. If I sign a pre-up, he had nothing at the start of our relationship, and his business has grown significantly. He has over 300 employees, and his net worth is in the millions. I gave up my career 20 years ago to raise our children.

Starting point is 00:55:19 We are financially well-off, and he has taken very good care of the children and me. Dave is so sick, I don't want to finish this. Is he wrong to ask for a pre-up? I love him, but wonder if I should just let go the idea of marriage. I don't really, I don't really know how I can help you. I think you let go of the idea of marriage 25 years ago and you started having kids. Yeah. Andrea, you made a really terrible bargain.

Starting point is 00:55:45 Yeah. You gave up everything and he gave up nothing. He raised his kids and helped him build a business and he owns it. You made a terrible bargain 25 years ago. Yeah, this breaks my heart, man. And, you know, the, the, the, the ship has sailed. I mean, there's, I, you know, by the way, he, here's another, I mean, I'd call his bluff, but I don't think you will. Um, because I think this guy's a jerk.

Starting point is 00:56:24 Yeah. And I think the reality that you feel very, very exposed, you felt exposed for 25 years. It's because you've been exposed. You've been exposed. I also think if this was to go to court, I think you would have some claim to a lot of this stuff, but it's going to be a mess. I have no idea what Ohio law is on this kind of stuff. You certainly got child support coming out of your ears. The thing beneath the thing here is...

Starting point is 00:56:51 You're not going to do anything, I can tell. No. You're so codependent. It's unbelievable. And he's such a jerk. He wouldn't... He's such a man who lacks any sort of integrity. in any way, shape, form, or fashion.

Starting point is 00:57:05 The thought of even taking care of his common-law wife of a quarter decade and the mother of his four kids, he's thinking of his net worth protecting this. His answer is, all this money I made while I was sleeping with you is all mine. It's mine. I mean, I wouldn't want to be in the same room with that guy personally. Yeah, he's slimy. Yeah, he's a terrible human being. But here we are.

Starting point is 00:57:28 um my guess is you've got Dave my guess is she's got bigger issues and she's either unsafe he either has people on the side she is recognizing how completely exposed she is and I think she needs to go see a professional counselor but she also probably needs to sit down on an attorney because I think this type of question tells me this is just just what's right above the water line tip of there's a big mess underneath this yeah that's true this is so So, you know what it is, though? I can't help Andrea, but you know what we can do? We can read the email. And here's a point, all right? You're 24 years old. And your boyfriend wants to move in together. I hope you read this email and realized how stupid that is.

Starting point is 00:58:23 I mean, that's just... Just how unsafe it is. How unsafe it is and how exposed. you are it's just straight up stupid and i hope some of you get pissed off about me saying this i hope you say i'll never listen to dave ramsie again because some of the most smart things i've ever done in my life is when somebody made me mad and i'm trying to make some of you mad right now because this is if you're 24 and and you're you have a 24 year old daughter and her boyfriend wants to move in with her you need to grab both of them up and box their stupid butt

Starting point is 00:58:57 little ears. Because this is what it sets up. It's what it sets up. And we've got all the data, right, not just the feelings and the research to go with it. Here's some data for you. If you're 35 and you're married, your net worth is somewhere around 10x if you're shacked up and you're 35. Married men live seven to nine years longer than shacked up men. Hello? Cancer survivors. How much higher percentage of people survive cancer than are married than those who are shacked up in a toxic soup bowl like this woman's in? And we talk about this all the time, Dave.

Starting point is 00:59:47 What if this woman gets cancer? Exactly. Because it's $300 million business. He may or may not want to help you out. And here's the thing. We talk about this a lot, Dave. Success and money makes you more of who you are. And if you're dating somebody who's a jerk to you and maybe you accidentally wind up pregnant

Starting point is 01:00:09 and you say, okay, well, maybe down the road if this is how this plays out, somebody becomes very successful, they were a jerk before they had anything, they were a jerk when you gave up your entire career and your safety. Why? And then they become worth millions on your back. and they stay a jerk. They get an extra humongous jerk. Yeah.

Starting point is 01:00:31 This is a mess. Love involves serving each other. Yeah. There's no love in this whole equation right here. This just burns my belly. Yeah. It breaks my heart for Andrew. I'm sorry, man.

Starting point is 01:00:40 Andrew, you have made some really bad choices 25 years ago, and now you are sitting in the poop. It's unbelievable. And, yeah, I mean, you don't have any options. Your option are stay in the poop. or demand that we get married with no pre-up or I'm leaving and taking the kids, which is actually about the only healthy thing to do in this situation, load up and leave. You are with somebody who is not a person of them than they are. You are the kids.

Starting point is 01:01:14 And it hasn't been for days or for decades. For years, yeah. For decades. If he was, he would have committed to you and you'd be taken care of you right now. And you would have been taking care of him. you gave up wow but okay so but the point is this sometimes in your some of you in your decision-making framework you think about Friday thank God it's Friday how's you feel in the moment well that's what a child does adults devise and plan and and have a plan children

Starting point is 01:01:47 do what feels good children move in together at 24 and it starts Then you, if you extrapolate that decision-making paradigm, if you use your decision framework and say, okay, how's this going to work out 25 years from now? Well, Andrea just told you. And then that tells you if it's a good decision or not. It might be an okay decision by Friday. You might get away with stupidity between now and Friday. But when you extrapolate your decision-making out with a long-term decision horizon,

Starting point is 01:02:19 vision horizon, then you end up with Andrea. and you can tell the decision's a bad idea. But this, I mean, this isn't just about the money and the kids. I guarantee, I guarantee this is an abusive relationship. Oh, I promise you this. Oh, it is abusive, just with what we know. Psychological, financial. With what we know, it's already abusive, but there's got to be more to it.

Starting point is 01:02:38 Right. Like you said, tip of the iceberg. So, yeah, this guy. Andrew, hear from us, man, you're not crazy. You're not crazy. I will bet you dollars to donuts. He's got a couple on the side. That's what I mean.

Starting point is 01:02:48 At some point, you got to go sit down with an attorney and walk through and figure out this mess. Yeah. But she's not going to. No. I love him. Well, but also, I mean, also I want to, I mean, I don't. Being an abusive relationship, man, you can get trapped, and it's a scary proposition. Quarter century being told, you're useless, you're worthless, you're nothing, seeps into your nervous system over time.

Starting point is 01:03:11 And maybe this is her first reaching out saying, am I nuts? The answer is no. You're not nuts. You've done some stuff that's really damaging to yourself by allowing this to go on. way too long, and our encouragement will be to stop it now. Stop it now. Yeah. You're worth more than this. I was going to say, you know, tell him the only way you're sticking around is if you marry him, I don't think you marry him. I think you'd just let him go. Yeah. And take half his mind.

Starting point is 01:03:35 I don't want to be married to a man who treats a wife and, I mean, a woman and kids like this. I don't either. I don't want you. I mean, we like you and we don't want you to do that. We love you. We want you to win. So, yeah, I think, I think you're done. But you're not going to do it. We've told you for years, dead is dumb, cash is king, and the borrower is slave to the lender. So when we find a bank that actually gets that, we shout it from the rooftops. That's why we've partnered with fair wind. Credit Union. These guys aren't pushing credit cards or auto loans like your current bank is. Fair Wins is on your side and now they've taken it to the next level. They worked with us to create a high yield savings account that gives you a great rate without the junk. No bait and switch

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Starting point is 01:05:46 and feeling like you can't get ahead, join one of our free, every dollar trainings. They're hosted by one of the Ramsey personalities, and we're doing one every week. We're going to show you how to stick to a budget, find thousands of dollars worth of margin to get out of debt and start building wealth. Plus, you can ask us any question during the live Q&A. Sign up for free at ramsysolutions.com slash webinar. Marie is in Denver. Hi, Marie. How are you? Hi. I am going to tell you my story. I am recently divorced. I'm 73 years old and I'm debt-free. And I have a total of $100,000 in a money market. And I have to withdraw a thousand or two each month for living expenses. Because my Social Security pays all but $100 for my one-bedroom apartment. And I do have a trustworthy car. And it's

Starting point is 01:06:46 fine, it's paid for, and I don't, I haven't worked in a while, but, you know, maybe I can get a part-time job at some point. But my question is, if I'm doing the right thing by just keeping all the money I have. Oh, we just lost you, huh? Oh, no. I'm sorry. She just dropped. Yeah. Kelly, see if you can get her back and we'll catch back up because that lady You need some help. Jordan is in Oregon. Hey, Jordan, how are you? Good, Dave.

Starting point is 01:07:21 How are you? Better than I deserve. What's up? Thanks for taking my call. Sure. Okay, my question is, we did a family deal mortgage before we found you. My wife and I are huge fans. We've been paying it like a 15.

Starting point is 01:07:38 We have five years left. It was all done by a lawyer, so it's legit. but the interest is only 1%. I would like to pay it off early, but everyone around me is saying, don't do that, it's stupid, you know, because the money's making more just sitting in high-yield savings.

Starting point is 01:07:56 You don't have the money in high-yield savings? We do. Oh, you have the money to pay it off? We do. Oh, okay. Yeah. Well, who cares what everyone says? Everyone's broke.

Starting point is 01:08:08 Well, I know, but that's why I'm calling you. I know, but everyone's broke. Don't take financial advice from broke people, man. Yeah, no, I know. Or indebted people. Well, our CPA is even saying not to do it. Fire homes. Yeah.

Starting point is 01:08:19 He can't add. Yeah. Who's the family member that owns this loan? It was my grandpa, and that's part of kind of the funny equation is that he recently passed away. So his wife, who's not my grandmother, is now the bank. And everything is still okay, but something in my gut just wants to pay her off. Your gut is correct. You have a good gut.

Starting point is 01:08:43 So here's the thing, okay? The borrower is slave to the lender. Absolutely. Period. No exceptions. Correct. 100% of the time that you loan money to someone, you change the relationship. 100% of the time you borrow money from someone, you change the relationship.

Starting point is 01:09:05 It is impossible for your step-grandmother to treat you the same as if, if you didn't borrow her money, it is impossible for you to treat your step-grandmother with the exact same honor or dignity as her as the former wife of your grandfather when you owe her money, because we now have this transaction involved. And the way we say it around here, it doesn't apply to this situation probably, but Thanksgiving dinner tastes different when you eat with your master. Right. The borrower is slave to the lender, and if you're a slave, you have, by definition,

Starting point is 01:09:40 a master. Even if it's a sweet, kind little white-haired master, you still have a master. Correct. And you probably have her kids. How many kids does she have? Yeah, she's got three, and one of them is fairly involved now with her since my graph has passed, and so. And that's where you start getting this idea that, well, that's actually, they would be better siblings than most if one if not several of them don't think well that's our money or we want to get our money settled et cetera yeah absolutely so you're asking what david and i would do both of us i paid off by the other day today yeah you know what's going to happen you're going to feel like you took a good shower you're going to feel clean yeah yeah not to mention you won't have a house

Starting point is 01:10:32 payment forever yeah yeah exactly and there is like there is a there is a financial calculation. And you're right. No. Well, there's a math problem to be made. No. Not when you adjust for risk. Not when you adjust for relationship damage. Well, that's what I'm saying. Not when you address for the actual realities of what actually happens. That's true. Because these people who say, oh, you're making 4% and they're only charging you 1%, so you're making a net 3. This is the most naive financial formula on the planet. I'm with you. You're leaving out risk. You're leaving out the strain on your body. You're leaving out the strain on your relationships. And all of those have an actual dollar cost to them over time

Starting point is 01:11:09 that no one has ever been able to calculate accurately, except God says the borrower's slave for the lender and he meant it. There you go. And obviously he knows I do math better than your broke friends. And so that's it. That's what it comes down to to me. I quit borrowing money, period.

Starting point is 01:11:25 And the last time I'm going to loan anybody I love money happened about 40 years ago. So if there's somebody needs money that I've got in my family or friends and I've got the money and I decide they need my money, I'm going to give it to them there will not be alone yeah that's simple all right we were talking with marie i think we got her back 73 she's got a hundred thousand dollars she's trying to live on her social

Starting point is 01:11:47 security but it barely pays her one bedroom worth of rent in denver colorado marie why are you in denver um i moved there from the south and i have a daughter and grandson there and i've been there for like 17 18 years and it's hard to go back to the south yeah i wasn't trying to get you to go back the south. It's just a very expensive real estate market. Well, it is. And I'm really north of there, but that's the main area. Yeah. You know, it's 16 miles north. Where are your, are you like up in Aurora or? No, in Windsor. Okay. Okay. And so how close to your kids are you? Physically. You mean physical? Oh, real, I'm close to my daughter, real close to my daughter and grandson. Can you move a little bit further away and get a much cheaper apartment? Well, it's 13.

Starting point is 01:12:37 90, and that includes, they started charging for water and all that. And that's about as cheap as I even saw when I was looking. Yeah, I know, but I'm just asking because you can't afford the apartment. Yeah. That's what's killing me here. Okay. I don't know, because if you burn $1,000 a month and you don't make anything on the 100, then you would burn it up in 100 months, correct?

Starting point is 01:13:04 Yep. and so you're 80. Right. 81, 81 at that point. With no assets, no dollars, no nothing. And now you're homeless. Right. Okay, we don't want, that's not a plan.

Starting point is 01:13:16 If we invest the hundred and we made 10% on it, that'd be $10,000 a year, $833 a month. That'd help, but you didn't have to live within that. Otherwise, you're going to burn it up still. Yep. Okay. And if I can make enough working and say, if I have to add something to it, and you're going to have to manage your expenses, and that includes the investigation of cheaper rent somewhere, somehow.

Starting point is 01:13:41 Okay. And I don't know what that is. I don't have a magic wand to wave. I just know that Denver is very expensive. It's a beautiful city. It's very expensive. And so do you move 30 miles out in the country somewhere and, you know, rent a little garage apartment from some little couple that's sweet, and I don't know.

Starting point is 01:14:00 I don't know. But you're close enough to family, but you cut your costs in half. You need to get with a SmartVestor Pro at Ramsey Solutions.com and get the majority of the $100,000 invested so it starts making something. Making 4% versus 10% is a deal breaker for you. So you've got to get up there making, get the money in some mutual funds and get to making some money. And this is a heartbreaking thing to say. It's one of the hardest things I ever have to say on the show for a 73-year-old recently divorced woman. That tells me you've been through a lot, but you might have to go get a part-time job.

Starting point is 01:14:32 Yeah, she said that. Yeah. If you have to go get some money coming in somehow. So I would do three, I would twist three knobs on this and try to get it to where it runs sustainable. Because the math you're giving me is not sustainable. It's going to burn up. Knob number one, get the money invested so it makes some more money. Knob number two, get your expenses down by considering different rent.

Starting point is 01:14:51 And knob number three, create some income by doing some kind of work while you can. And let's try to get this where you create a thing where you're not burning through the money. and, you know, end up in a really horrible situation. Blake is in Minnesota. Blake, how are you doing? Better than I deserve. How can I help? All right.

Starting point is 01:16:01 I'm 39 years old. The only debt I have right now is a personal loan for $30,000. It's a 10.9% interest rate. I have about 140 in my Roth IRA. Over 50 of that is what I put in. I'm just curious if it's worth taking the money out to pay off the personal loan to free up some cash. How old did you say you are? 39.

Starting point is 01:16:29 Oh, no, no, no, no. You can't do that. No, you're going to get hit with a penalty of 10% plus your tax rate. And so you're going to get hit with like a 35% or a 40% of hit. So it's like saying, Dave, I want to borrow money at 40% interest to pay off a loan. No, no, we're not doing that. Oh, okay. I thought what I put in, I could take out. On your Roth, you can, but I wouldn't unplug your Roth. What's your household income, sir? Between me and my wife, almost 100. Okay, and how much do you owe in your cars? My wife's car, she has about 12,000 left, and I have 14,000 left. Is that the 30? No, the 30 was about a year ago we consolidated all of our credit cards and everything into one. Okay, okay.

Starting point is 01:17:17 So you actually owe 60? Yes, besides with the cars in the personal loan. Yeah. All right. So now what will have you to do? And you've got two years of pretty extreme discomfort coming. You're going to live on beans and rice, rice and beans. You're not going to see the inside of a restaurant unless you're working there as your extra job and you're not going on vacation. Scorched earth on your lifestyle. Get on a detailed written budget on the every dollar app. Lay out your budget and live on nothing. And with your extra income that you create and the stuff, you sell around the house and the tight budget, you pay off $30,000 a year for two years and you're 100% debt-free except your home. Now you've got your life back. But you guys have chip shot at one little thing at a time, one little thing at a time, one little thing at a time, and then bought a car, and then one little thing at a time, and then

Starting point is 01:18:10 one little thing at a time all the way into $60,000 worth of debt making $100, and you can't breathe. Yeah, I mean, we're not struggling by any means. Yeah, you are. You're broke. age yeah you're broke yeah bro i've been there both of us have this is not fun i mean you're not bankrupt but you got no wiggle room in your budget it's no fun that's why you're trying to do something about it it's just it's uncomfortable yeah yeah and there's no but there's no hack the hack is hack through it as fast as you can by living on nothing for a short period of time

Starting point is 01:18:48 you and your wife sit down and say what would it feel like if we had no payments What would it feel like how fast could we build some wealth? What kind of generosity could we do? How would we change our whole family tree if we had no freaking payments? And then you get in attack mode and knock it out. I don't know if you're ready to do that or not because you called me looking for an easy way out. You're not quite ready to be disgusted yet. But the people that change their lives, sir, are the ones that say I'm sick and tired of being sick and tired.

Starting point is 01:19:17 I've had it. And you kind of got to get that thing going in your voice. And when you do that, well, now you're going to start to see some things move. And that'll work. So, but don't rob future you because you can't quit consumption. Right. Last time you tried to borrow your way out, by the way, borrow your way out of debt, it didn't work. A credit card debt, we ain't got a consolidation loan.

Starting point is 01:19:44 Now we're going to cash out. We're trying to find it. I was trying to find an easy pill. There's no easy button on this. You got to get it. and that's a hard thing so John I was being interviewed on one of the podcasts the other day

Starting point is 01:19:58 one of these famous guys and he was asking me because we've got so many Gen Zs and so many millennials here and I kind of had a thought I thought I'd run it by you oh kind of came to me in the middle of that

Starting point is 01:20:13 well I often get asked because I'm such a proponent of Gen Z and millennials I love those two generations. Huge fan, yeah. I've got 600, 700, them on my payroll that work here, and I love them. They're incredible team members. They do a great job. And the guy was going, why is that?

Starting point is 01:20:30 And he goes, you've got the good ones. Yeah, there's some bad ones. There's some good ones. There isn't every generation. And, but why is it? It's because they grew up with this magic wand in their hand. And so anything is possible because if I push a button or download an app, anything's possible. I push a button, stuff shows up on my porch.

Starting point is 01:20:46 I push a button. I can answer any question. And I push a button, A, I'll write my paper for me. I push a button. I mean, everything is possible. So their possibility thinkers, their abundance mentality is unbelievable. The toxic version of that, when it goes too far, is it's entitlement. Correct.

Starting point is 01:21:03 But the other thing I thought, he said, well, what's the main thing we could teach them? I was actually speaking at a college, too, recently with a bunch of young ziers. And he said, what's the first thing you would tell this generation? I said, well, what comes with this instantaneous abundance, not only is the positive of it is you get this thing of anything's possible. And so you really think positively rather than negatively where like some of my generations, it's around with their lip stuck out whining. My granddad's straightened nails, right? Yeah. The world's coming to an end and everything's so bad.

Starting point is 01:21:41 You know, everybody's got a bunch of whiners in the generation. But our generations were like negative thinkers and we had to teach them. them with Zig Zigler, how to be a positive thinker, right? But these guys all think positive already. What they don't have is the patience. And that comes out, that lack of patience when a boomer or somebody's looking in from the outside, they call that entitlement. I don't think it's really entitlement. I think it's, I'm used to getting something quickly. And when it doesn't come quickly, I don't know how to act. It's an expectation. It's not even entitlement. It's just the way it's always the way it's been. Right. Every time I push a button, something happens.

Starting point is 01:22:14 And then I pushed a button and nothing happened. And you have to be able to distance food apps from developing a great relationship with somebody. It takes time. Or getting stronger. Or like paying off $60,000 worth of debt. Or paying off debt. Right. There's things that just take time.

Starting point is 01:22:30 That's two years of grind. Right. Oh, you mean I can't push a button? Yeah. No, it's two years of grind. You mean I can't? No, it's two years of grind. Right.

Starting point is 01:22:45 But no, no, no, no, there's not an app. There's not a hack. There's not a shortcut. TikTok ain't going to help you. It's two years of grind. And then you'll be free forever because you will be changed, not just your money. And the hardest sell for me is people realizing you're going to be out of debt, but you're not even going to recognize yourself.

Starting point is 01:23:05 You'll have muscles you'd understand. You'll have strength you didn't understand. And you take that level of discipline and strength and ability to grind and then put that on top of or underneath this endless possibility mindset. and literally the world is yours. But that only comes from high reps over an extended period of time. That's it. This is not, this is not I lift two pushes on the bench press.

Starting point is 01:23:28 This is high reps, low weight, every day. For years. Every day. And then you are transformed. You're transformed. And then the money is transformed too. But that's just the, that's, like you said, it's not the best. part. The best part is you are changed.

Starting point is 01:23:47 When Sharon and I went through the crucible of losing everything and then having to claw our way back out with our fingernails, it isn't that we went through that. It's that we went through that. Right. I mean, it's it, we are so freaking permanently changed from that in such a good way that, you know, it makes the strain worth it. And so if I could inject with a needle, a big syringe into a generation that is fabulous, the ability to persevere over an extended period of time, add that to their incredible abundance thinking and possibility thinking. It's going to be the biggest, baddest, coolest generation in history of man ever.

Starting point is 01:24:32 And that means whereas I remember my granddad, my grandmother, they got a sack of oranges for Christmas one year. Yeah. Because there wasn't oranges everywhere, right? And that was a big deal to get oranges into sex. Right? That was huge. Well, you knew somebody of Florida. You knew somebody who knew somebody who got a sack of oranges. That was a cool thing. They had to inject, go manufacture, go work at optimism. This group has to, everything is possible, but it can detach you from reality. So you have to inject hard, regular practices on a day and day out basis. You have to learn to cook in the micro, in the crock box, in the microwave. And wait. And you have to learn to be bored and not scroll in a Walmart line. You have to learn to pay off your stuff. over time, you have to learn to exercise on a regular basis, and you will be stunned at who you become on the back end of that journey.

Starting point is 01:25:34 Hey, what's up? Dr. John Deloney here. The new dates have dropped for the money and marriage getaway over Valentine's Day weekend at 2026. This is your chance to hit pause on everything in your life and reconnect with your spouse over a long weekend in Nashville, Tennessee. Me and my friend Rachel Cruz will be digging into topics like sex, money, communication, and more. This weekend is happening on February 12th through the 14th and early bird prices start at $749 per couple, but the prices will be going up soon. Get your tickets today at ramsysolutions.com slash events.

Starting point is 01:26:11 Welcome back to the Welcome back to the Ramsey Show in the Fair Winds Credit Union Studios. I'm Dave Ramsey, your host. for being with us. Dr. John Deloney, Ramsey Personality, is my co-host today. The phone numbers AAA 825-5-2-2-25. Michael is in Arizona. Hey, Michael, how are you? I'm doing well, Dave. How are you? Better than I deserve. What's up? Well, Dave, I'm married. I'm 25 years old. I have a toddler and another baby on the way. Fun.

Starting point is 01:27:05 And a bit of a pickle financially. My job hours are really inconsistent. And so we're about $13,000 in debt. Most of it is medical or dental. And I'm barely working enough to cover the essentials some weeks. Some weeks I'm making overtime. Up until now, I haven't made the best financial choices. But I decided to start school, so I'm going to school for IT. I just don't know if I should try to focus on getting out of debt or try to focus on school to get a better job and then try to work from there. Hmm. What do you do now, sir? Now I drive a submit mixer.

Starting point is 01:27:48 Okay. And they pay you what when you're driving? I'm on track to make about $65,000 gross this year. Okay. And you can't live on that? If on that I could barely live, there would not be much extra for much of any With $13,000 with debt? You can't live on $65,000? Well, I haven't made the best financial... Ah, okay.

Starting point is 01:28:21 We don't have a system. We don't have a system, so we don't know. Okay. That I believe. That I believe. All right, that makes sense. Yeah, I need to change my ways, and I'm... Yeah, so you and your pretty wife sit down the night and open up the every dollar app.

Starting point is 01:28:35 I'm going to give you the upgrade version of it for free and to start laying out a detailed budget of what it takes to live each month and your income is not as volatile as your behavior okay so when you get that system down that's going to help you a lot because more you know and I don't if you want to change careers from cement truck driver to IT

Starting point is 01:29:02 I'm perfectly fine with that so what are you spending on the IT I'm not spending anything between scholarships and federal aid. It's all paid for. That's awesomeness. And what are you studying? A certification program?

Starting point is 01:29:20 It's an accelerated bachelor's and master's program for a bachelor's in IT and IT management. Okay. My biggest, oh, sorry. Are you able to do this like in the evenings after you get done driving? Yes, I've been working on it each day when I get done. The biggest problem that I'm having is my hours are so inconsistent, and with the way the market's been, they've been cutting our hours. So I'm making less and less money, and that could continue to go down. I may not make $55,000 this year.

Starting point is 01:29:57 Let me reset you for a second. To be making $200,000 a year, you do not need a four-year degree or a master's degree in IT. You need to have certifications, and you need to know how IT works. works and you but you can get all of that a whole lot faster than you can do an online bachelor's online masters even if they're accelerated what you've signed up for is complete overkill for your goal i've got tons of tech people like 500 i'm working in the building and i don't know of any of them that have a master's in IT one or two have a four-year degrees most of them have industry certifications they've got Microsoft certs they've gone to code school

Starting point is 01:30:41 They've learned a code. They've learned, you know, some of the cybersecurity moves that need to be done. They've learned platform technologies, but they are not, they don't have a master's degree in IT. But the time you finish a master's degree in IT, what you have learned will be irrelevant because the market moves that fast. So I'm going to ask you not to do what you're doing. I know that's very hard. but if you were my son, I would say, yes, IT is a great path for you. The good news is you can get a couple of certifications within six or eight weeks

Starting point is 01:31:18 and go get a job in that field, making $60,000 be a lot more steady. Oh, and by the way, they'll probably pay from that point forward once you're working for a technology company or a company that embraces technology and digital technologies like Ramsey does. They'll probably pay for you to continue to study and get more certification. we do that here. We teach people new languages. We pay for their certs. We pay for them to go through because we want better and better technology of people on the team every day. But, you know, a master's degree is 1,000 percent not necessary to move into that field. I'm the hiring person. I can tell you that. I mean, I'm your employer. So I'm sure I know what I'm talking about.

Starting point is 01:32:01 And Michael, tell me about the jump from cement mixing to IT. Is that something you want to do? Are you just listening and hearing what people say is the next good job? You're just going to try to do that? When I was in high school, I took a certification, and I really enjoyed it, but I just never did anything with it. Okay. And then when I got married and then we had our first baby, I was already in the construction field, and I kind of just stuck with it because it's what I knew.

Starting point is 01:32:36 well you got a job and you're trying to feed your family good for you you're a noble man I'm proud of you it's awesome that's a good thing so what I'm saying is that number one I might reset how I'm trying to enter the IT field and with that let's go ahead and get a different job today we don't have to stay in the cement business until we get cement driving business until we get to a master's degree completed that's not necessary to do this so you could get a job very quickly in the IT world and be in the proximity of the people that you're going to be working with anyway, they'll give you better advice on how to get tools in your belt, how to get educated to move up through the ranks in the IT section of a company, and a lot of times

Starting point is 01:33:24 they'll pay for it. And so it solves several things at once. It shortens the time between you and the cement mixer and the IT, and it fixes the fact that the cement mixer hours are going down now. Because we're going to start moving into IT now. And that's what I would tell you to do across the board on this. Because you have, you're a good guy, a noble person, you're willing to work hard, you're willing to do whatever it takes to feed your family.

Starting point is 01:33:49 You just hadn't had a good track to run on. And you've got to develop a track. And you reached out and got a track. I'm just thinking, and there's a better one than the one you grab the hold of. I'd also recommend sitting down with somebody. You got a degree in, you got a Ph.D. in higher ed. Does this guy need a master's in IT? I mean, I don't know enough to know about it.

Starting point is 01:34:06 I don't know any of the guys that work on the stuff that I'm working on that have master's degrees. In Nashville that we're in the building here that work with you. You know more than I do about that kind of stuff. Do you know any of them that have... No, I don't know any of them. I don't have a single PhD. Yeah, no. Not a one.

Starting point is 01:34:19 You'd get a PhD in IT if you want to teach IT. That'd be it. Right, that'd be it. Teach people things that we don't use anymore. I would love to see you go sit down with somebody, not in the university setting, but somebody who's working in IT in your local area and ask. What do I need to do? What do I need to do to get in the door?

Starting point is 01:34:36 And they might say, well, don't you just come work here right now? We have a $40,000 job, but we'll train you in the X, Y, and Z, and you and your wife could take a six-month hit, and you're back on, you're back on the road. Yeah. But go sit down and have coffee with somebody in your area right now. Today. That'd be the path. Yeah.

Starting point is 01:34:50 And don't wait until the cement mixture job just dwindles to nothing. It's going to. The boat has a hole in it. Go ahead and get off the boat if you can. Yeah, yeah. Hang on. We're going to send you a copy of Proximity Principle from Ken Coleman and help you get going. We've all done dumb things with money.

Starting point is 01:35:13 I've done them with zeros on the end. One of the biggest mistakes I see people make with money is not having a plan for it. You've got to have a plan. You've got to be intentional and you need to get a budget. You have to tell your money where to go so you're not wondering where it went. Our budgeting app, every dollar, helps you do just that. It's the easiest and fastest way to make a monthly plan for every dollar you've got coming in and going out.

Starting point is 01:35:36 Now's the best time to get started before the ridiculous holiday spending season gets here and sucks you in because you didn't have a plan. Don't let that happen. You're done making that mistake. Go download every dollar for free in the app store or Google Play today. Only one smart way to do a real estate transaction, especially in a world like we live in today. Have a high-quality, high-octane, high-protein, Ramsey-Trusted agent that you can trust make your home a blessing, not a burden, in your corner. You can compare agent profiles, you can interview them, choose the right one to work with, all at Ramsey Trusted.

Starting point is 01:36:31 So find a local Ramsey-Trusted Real Estate Pro for free. RamseySolutions.com slash agent or click the link in the show notes. Stephen is in Michigan. Hey, Stephen. How are you? Doing good, Dave. How are you doing? Better than I deserve.

Starting point is 01:36:47 What's up? So I got a question that I think I know the answer to, but I'm going to see what you're going to say about it. So I bought a house last year in my interest rate is 7.375, and my mortgage was sold, and the new mortgage lender is. is saying, hey, we can save you some money if you refinance. Now, we're on the back half of Baby Step 2, my wife and I, and I have the money to pay off our car approximately $6,600.

Starting point is 01:37:18 And the mortgage lender says, I would strike now, why rates are a little lower, because if you pay that car off, that's the last piece of debt in my name. You said your credit's going to start to drop off, and that'll start to hurt you. So I guess my question is, do I pay off the car, or do I refinance and then pay off the car? What should I do? Yeah.

Starting point is 01:37:38 Well, your mortgage lender only makes a commission when they sell you a mortgage. Right. So we know their advice is tainted in this case. This guy's pitching pretty hard. He is. They are pretty aggressive with the calls. Yeah, yeah. So that right there tells you that something's up, right?

Starting point is 01:37:58 And so, yeah, I'm paying off the car and I'll get around to the mortgage later. Why did you take such a high interest rate loan? Well, we were living in big city. I know, but that's above market. Did you have bad credit? No. Credit score is up for sevens. Hmm.

Starting point is 01:38:20 Yeah, 737 is ridiculous. I mean, the market for a year has been at six. That's weird. Yeah, so I don't know a whole lot about finance. I've recently started learning everything and going through the financial piece and the baby steps. So I am making up for lost time. All right. Let's do two things.

Starting point is 01:38:41 Let's answer your question in two parts, and so we get the whole thing, and that'll help you. And it'll help some people that are listening to. Okay. Number one, if the only choice is between paying off your car or refinancing, we'll pay off your car. Okay. So that part's answered. And number two, the mortgage lender being aggressive is your hint that he's, self-serving, not you serving.

Starting point is 01:39:04 Okay. That's why they're calling back all the time. I'm trying to make a commission. And so number three, here's how you calculate when you refinance a mortgage. Your break-even, you do a break-even analysis. All right, let's use an example. All right, let's pretend that you had 737 and you could get 6-37. That's a spread of one if you refinanced, right?

Starting point is 01:39:31 and your loan balance is currently what uh 380,000 okay so 1% is 3,800 bucks a year correct that is your savings okay so if it costs you 15,000 dollars to refinance and you recoup at the rate of 3,800 it's going to take five years to get your money back You follow that? That's called a break-even analysis. How long before I break even with a savings of $3,800 versus a cost of $15,000? If your cost was $7,600, you break even in two years. And everything after two years, you're putting $3,800 in your pocket.

Starting point is 01:40:21 That one starts to make sense. Right. But 15 years doesn't make sense. And so what we've got to do is we have to figure out the closing cost. and divide the annual interest rate savings into the closing costs, and that number should be to maximum of three years. Two to three years or less. And so what that ends up telling us is the lower the closing costs

Starting point is 01:40:50 and the greater the difference in interest rate when you refinance, the more likely you are going to be to do it mathematically, because the faster you're going to break even. I agree. Okay? And so if these rates drop on down, if we see some continued movement, and we've seen a little bit of movement in the last few weeks, where the 15 year right now is 5.86 on a 15 year. Okay.

Starting point is 01:41:14 It's 5.95, you know, so it's only a tenth of a point. It's just barely moving. It's just hanging around. But there's all this discussion around the Fed and all these other things right now. There seems to be some downward pressure. So I disagree with your guy that now is the time. I probably would wait a little bit. But if you could save 2% right now and you can make your money back in two years,

Starting point is 01:41:35 I'd refinance it right now, but not with your car money. Okay, yeah. So the way you do the analysis is divide your interest rate, dollars saved, interest dollars saved, into your closing cost dollars, and that's your number of years to break even, and that number of years needs to be two to three years, maximum. and so just to throw a few more stats at you guys listening out there and hearing this the average home in america for the past 25 years has sold every 6.5 years and the average mortgage only lasts 5.5 years and so if you have a

Starting point is 01:42:12 seven year break even on your refinance you got screwed because on average you're not going to be there that long oh it's my forever oh shut up i'm giving you the averages i don't hear about your forever nothing okay so the the deal is that you're refinance needs to break even in two years, maybe three. But as we see these rates slide down, and some of you're sitting in some six, even some seven percent interest rates, and we see them slide down towards five again, you're going to see that two percent margin, and that two percent margin is going to take a whole bunch of you and make this formula work to refinance.

Starting point is 01:42:50 Why would I, I'm asking for a friend, why would I pay off that car with that $6,000 bucks versus pay this thing off and lower that rate substantially because we've got to clear the cash first the cash flow on the car payment is much greater than the 3800 which a good call so I'm probably paying five six hundred bucks a month on that car versus seven average is 780 right now then the 3,800 bucks divided by 12 okay and the mortgage is going to be sitting there and the car it's like an impediment in this whole thing it's like the it's like the it's like the fly in the I love that. And the mortgage is sitting there.

Starting point is 01:43:27 I've got to clean up the mess so I can go work on and fine-tune the stuff that's not as big a mess. Yeah, okay. We don't mess with the fine-tuning while we still got baseballs being thrown through the window. So if somebody clears the cars and they've got $35,000 in student loan debt. They need to clear the student loans. Before you go refinance your... Yeah, unless you want to roll your refinance costs into the mortgage, you can do that. Okay.

Starting point is 01:43:50 But you don't need to drain cash to do it. Okay. Because, again, but only if you're breaking even, then. Because you now owe more on the house by $7,000, but you're going to save $3,800 a month, or $3,800 a year. So that's two years. You'll be back in two years. Two years. You come out ahead on doing that, even though you owe more, but you'll owe less when you're done.

Starting point is 01:44:08 So all that works out mathematically. But, wow, a little bit of a barrel of fish hooks. But, yeah, that's guys and gals how you work your refinance calculator. And Churchill mortgage can help you with all that. We've endorsed them through all the ups and downs of interest rates. over all these 30-something years they've been on the air with Ramsey, and they can help you whether, and they'll tell you the truth. They're not going to do what this mortgage lender is doing to Stephen and just hounds you to buy something you don't need to buy. I'll tell you my favorite

Starting point is 01:44:36 thing. When I called Churchill and said, this is several years ago, and refinance my house. And the first thing the guy said to me was, I need you to hear me say it. I'm not going to take your money unless this works out for you in the end. And so let me run the math on it, and I'll holler back at you. And then he called back and said, oh, yeah, this is a great deal, X, Y, or Z. But that was the first. first thing is I'm not going to just make a sale on your back. I'm not going to take your money if this isn't going to work out for you and your family. And I, man, I was like, man, I'm all in. I appreciate that. And just a little inside baseball guys, mortgage companies have

Starting point is 01:45:09 been dying for the last three years because they existed for the previous 10 years, 20 years, on refinances. And refinances have disappeared as some of you're sitting on 2.37 and you're not going to refinance at a 5.8. You'd be dumb to do. that. And so the refinance market has dried up and they were living off of refinances. So a lot of mortgage companies have gone broke. And so that's where some of this pressure is coming from. And then you got people like, rocket. Woo! You spend hours researching before making a major purchase like a home or car, but it's also a good idea to put in the work searching for the right insurance coverage.

Starting point is 01:46:06 To protect your biggest assets, I recommend using Ramsey trusted pros. Whether you're looking for car, home, or any other type of insurance, Ramsey trusted providers have been coached and vetted to serve you like we would. Find what you need at Ramsey Solutions.com. slash insurance. Simply head to the show notes, click the link titled Are You on Track with the Baby Steps? And complete the free quick quiz. Erickson, Ohio.

Starting point is 01:47:03 Hi, Eric. Hey, Dave. How are you going? Better than I deserve. What's up? Well, I'm looking for maybe some advice in a sounding board. So I'm 37 years old, married. I have four young daughters. My oldest is in second grade. My wife and I both have very good jobs.

Starting point is 01:47:21 Combined income, gross, before retirement taxes is about, 310, 315. Wow. Yeah, so we're doing well, right? So about 7, 8 years ago, we had the opportunity to buy from my uncle's estate, the family farm that's been in the family's for, you know, 150, 60 some years. And it's appreciated more than we would ever thought, you know, in that amount of time. So we bought it for 7,700 bucks an acre.

Starting point is 01:47:51 You know, the neighbors just sold for like over 18,000 an acre. So we're something like, I know, great. Those things don't happen. That's what I'm saying. Like, this is a real life. You know, should we just get out now? So we still have a note on the farm. We didn't buy it in cash.

Starting point is 01:48:06 We didn't have that kind of cash. But it's relatively cheap money because that was back in 2019. Then we refinance it's about a four in 4.125 is what we have on it. So 80 acres, you know, it would probably, you know, 1.4-ish. It's hard to say, you know, it's worth what. Somebody will pay for it. And you owe what? About $400, just a shy $400, I think $3.95.

Starting point is 01:48:32 All right. And you have a mortgage on your home? We do have a mortgage on our home, yeah. What do you owe on your home? $2.35. Okay. And you make $3.15. Do you have any other debts?

Starting point is 01:48:47 No, none. How much in your nest egg and retirement and so forth? So I was just looking at this afternoon. I think mine has 205, and my wife, she started a little bit later. She has about 100, 105 somewhere in there. So how old are you guys? We're both 37. Okay.

Starting point is 01:49:05 Wow. Well, if you hadn't called us, what normal people would do would be just continue to service the 400 and let this thing continue to skyrocket and value. Right. I'm not as happy with the 400,000 as most people would be in debt. You got a million dollars equity laying there. And so I start asking myself, if I'm you, and I've got a million dollars piled in the middle of the table, and I don't own this farm, would I go buy this farm or would I do something else with a million dollars? Right.

Starting point is 01:49:40 And you would only buy the farm if you thought it was going to continue to go up in value pretty rapidly, right? It's an investment. That's why you would buy it. Well, in this case, it's actually got another added element. It's been the family for a hundred. It's been in the family for 150 years. So that's emotional. It has been in the family for a while, but, you know, at the time, nobody else wanted it.

Starting point is 01:50:03 And so my wife and I were like, I mean, we had some money. We were able to make the payment. We kind of, you know, pencils it out and all that, and it worked out, knowing that it's a good. Do you have any money that's not in retirement, any cash or investments that are not in retirement? Yeah, I mean, we have some savings. We also have, like, a brokerage. The brokerage account has like 80-some thousand, you know, just savings at the, you know, at our bank, it's about 50,000.

Starting point is 01:50:27 Okay. So what, here's two options, and either one is fine with me. All right. Option one is, you said, how much is in the brokerage again? 80? No, no. 85, 85. And you make 315.

Starting point is 01:50:42 And then you got 50 in your emergency fund? Mm-hmm. Any other money that's not retirement. no not really i mean some checking account but that's maybe 20 some thousand so i guess that counts but i don't look at that is no it's not a lot i mean you're making 315 000 so that's not that's a month and so all right um the uh so what i'm going to do is look at our budget you and your wife and say all right i want to pay off our house really fast i'm going to throw 85 at the house that leaves 150 and we make 315 and so we're going to pay off the house in the next 24 months

Starting point is 01:51:17 while paying minimum payments on the farm. Yeah. And keep the farm. That's option one. Option two, sell the farm, pay off the house, and invest the money somewhere. Okay? I mean, either one's fine. So the question becomes, where do I want to invest a million dollars?

Starting point is 01:51:39 Right. Do I want to invest a million dollars in wonderful dirt and wonderful Ohio? or which is not obviously not a bad investment it's done really well yeah it's not a bad investment one of the guys we studied in the millionaire study had 24 million dollars worth of dirt and it was just dirt i mean it's kansas i like dirt farmer in kansas i mean just straight up man i mean soybeans and corn baby hello you know and um what it is 24 freaking million dollars all right so it's just you know so don't talk it's good there's nothing wrong with i'm not mad about dirt at all. So, but you just need to ask yourself, the reason you bought this was not because you

Starting point is 01:52:25 woke up one morning and said, I want to systematically invest in dirt. No, it was presented to you because of the family connection and that kind of woke you up and you went, well, that might be cool. Let's go do it. So you almost kind of backed into it. Definitely. But it wasn't the implementation of a strategic thought. That's true. Okay. And so now what I'm saying is I'd back up and look at this through strategic eyes and say, all right, I can keep it. It's no sin. But what I'm doing is I'm investing a million dollars into dirt.

Starting point is 01:52:59 If I'm going to do that, then I'm going to get my house paid off pretty quick. And then we're going to turn our attention to getting the 400 knocked out and be sitting here debt free with by then a piece of ground that's worth $2 million and a house that's worth what? What's it worth today, your house? No, $350-ish, probably $3.75. Yeah, so it's going to be 400, 500, 600,000, 600,000 by then. So, I mean, you're going to have $2 million worth of dirt, $600,000 worth a house, and then you're going to be loading up your mutual funds in your retirement, and you're going to be looking at $5,000, $6,000 net worth in about a four to five-year period of time

Starting point is 01:53:30 by leaning into these things and thinking about it strategically if you keep the farm. If you don't, then you pay off the house, you take the money. You do the exact same thing, but you do it with different investment vehicles. So either one of those is fine. But if you keep it, it comes with the pledge. with the two of you to not beans and rice, but to be intentional and systematic about clearing the house pretty quick and then clearing the farm pretty quick after that.

Starting point is 01:53:54 No more debt. If you're going to keep it in five years. All this paid for it. I have a couple million dollars worth of real estate, which is not a bad year. More like three or four million dollars worth real estate in five years. Yeah. Yeah, that's where we're headed.

Starting point is 01:54:06 And that's if you keep it. And it's obviously gone. I mean, I thought it's been a minute, but I thought I read that tech companies are looking at some of places in the north that were old rust belt places where they can go in and buy dirt cheap and put out big ecosystems of whatever it could just be farmlands doing that and it might just be good dirt for farmland yeah i mean ohio it's you know so i don't know uh but i i do not have personal knowledge of that marketplace i don't either but so it's just interesting i'm so happy

Starting point is 01:54:34 for you that you made all that money on it and and that you have this problem it's awful i have a strange attachment to dirt so i'm my my answers are never rational yeah my too. Brett is in Wisconsin. Hey, Brett, what's up? Hey, Dave. Really great to talk to you. Thanks for chatting with me. Sure. So I've got, I kind of came late to the baby steps. I don't think I've been terribly irresponsible with money, but, you know, it was running out at the end of each month and thinking I make too much money to be broke, as you say. And so I've kind of started doing your program. We've gotten on a budget. Have you really? Credit card. So you, every dollar written down before the month and your wife and you agree on it?

Starting point is 01:55:18 Yes. Wow. How'd that feel? Well, it felt better for me than for her, I think. But, you know, knowing that there's money left over at the end of each month has been great for my peace of mind. I know that. So we've stopped using credit cards.

Starting point is 01:55:34 We never carried credit card balances, but, you know, everything came in, went right to them, right? Yeah. Where I'm at right now is I've got a lot of retirement savings, but, and, you know, my only debt is probably car loan and home loan. And I'm trying to get on the path. Is it really okay to stop saving for retirement completely? Yeah, for a short period of time and knock that car out.

Starting point is 01:55:56 Absolutely. That's what we teach people and it works. You're not talking about doing it long, five or six months and you're clear. You don't have a car payment anymore, no more credit card debt. We now have a plan. Me and my wife are in agreement. Sounds like her vote needs to count a little bit more in this budgeting, like you kind of crammed it down her throat a little bit.

Starting point is 01:56:11 But, yeah, other than that, sounds like you kind of got it going. It takes a little while to get the momentum moving off of this, though. Our scripture today, John 8 and 12, 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. Jordan Peterson said, it is my firm belief that the best way to fix the world, a handyman's dream, if there ever was one, is to fix yourself. So most of you are aware that we record this show or do this show live on the glass here at Ramsey from 1 to 4 Central Time Monday through Friday on the lobby in the lobby of Ramsey Solutions. And then various platforms pick up what I'm saying right now, hours from now.

Starting point is 01:57:36 By the time you hear that, it will be old news. But moments ago, Charlie Kirk was shot and killed in Utah, at Utah Valley University. And I don't know a lot of the details at this point other than apparently it was a long, long distance shot. And not super long, a couple hundred yards, but it wasn't up close and personal. But in the days and weeks to come, I'm sure all the sort of. issues of mental illness that are associated with a shooter will come out and all those kinds of things. It just takes my breath.

Starting point is 01:58:19 I mean, I know Charlie, I knew Charlie, and I had spoken at some of his events, and he's brilliant and a firebrand, for sure, a lightning rod, and brilliant in debate, 31 years old, two little girls uh looks i mean in they're like four years old and under and uh same as my little grandkids same age as them and um many many many of the people that we speak with in leadership events and um pastors across the country uh and are a lot of us run in the same circle and we've been you know again i've been at his events with pastor friends of mine

Starting point is 01:59:05 and leadership, friends of mine that teach and so forth in that. And so I had many, many, many conversations with him. And this is just sickening. I can't breathe. I mean, it's just I can't think anything except about a little wife that's 30 years old and a couple of little kids because somebody has decided that they're political views are more important than anything else and decide to put a bullet in somebody. And it's just simultaneously angry and sad and rage inside my chest right now.

Starting point is 01:59:51 And I'm just, I feel just sick. I think I'm going to throw up. But, yeah, certainly we will be praying for his family. And we will also be in touch with all of them. And like everybody else in America, we'll be trying to help them out and do anything for them that we can to try to just deal with the results of some animal that is some mentally deranged moron that's out of control. And this is just the result of people have lost the ability to have a good argument without losing their minds. You can't argue your political point. You can't argue a point of view.

Starting point is 02:00:39 You can't say that someone's right or someone's wrong without somebody losing their dadgum mind in this culture right now. And it's just plain dangerous. And it's not going to end well if we don't get some of these folks under control. Yeah. I'm just going to get home and hug my daughter. Yeah. Amen.

Starting point is 02:00:59 My daughter's a little, I got a little girl home. Yep. And, yeah. that's all I'm going to say. Yeah, you just, you can't have enough security to offset this level of crazy. Yeah. It's impossible. I mean, we're careful with our appearances, places and, you know, do what we can to have reasonable wisdom about the exposure you take when you step into public and have an opinion. But, um, and obviously he's a lot, was a lot more controversial than us where we stir up a enough controversy and let people hate us, but nothing like he had.

Starting point is 02:01:39 It was the stuff he got was over the top. And, but it's just, he's sitting there in the middle of a bunch of college students having a discussion. Well, it goes back to it. Willing to engage today's societal events and, you know, cultural arguments. It just goes back to what you said earlier, though, man, it's, it's, there's disagreements and there's vehement disagreements and there's anger and there's frustration. And then when you go home, there's a dad. of two little girls and if you can't make that separation man you need to go get some help

Starting point is 02:02:12 because it's a it's a i don't know i i i got too much experience showing up to that and having to call that wife and i'm i don't have it you've done enough you've done enough trauma cases yeah i need to get home and hug my wife and hug my daughter and be really grateful that i've got that that that privilege today yeah you know it is interesting what you're talking about that um You know, you go back to the number of relationships, families, and otherwise that were fractured by the argument over nuanced arguments about COVID. Right. And they still don't speak to each other. Still don't see their grandkids because one of them wanted a mask and one of them didn't. And so they made little things, the major things. And I can't speak to them because they voted for Trump or they didn't vote for Trump. 30% of the calls into my show are adult kids who are cut off by their parents or parents calling in saying our adult kids have cut us off.

Starting point is 02:03:14 Just divided. For whatever reason or whatever reason. Yeah, it's like cancel culture and inside homes. Yeah. Inside families. Yeah. And inside neighborhoods and inside whatever. So, yeah.

Starting point is 02:03:28 You can't, you know, you can't seem to separate the level of importance between the father of two little. kids and your little pissant argument that you've got or even a big argument but it's it's that's not pissant in comparison to him being there for his kids that's right that's right you know and weighing against that there's not an argument you've got that weighs against that zero no one no one yeah i don't care about you know you can talk about whatever flag you want to fly i don't care but you can't you know that that's just it's just ridiculous because uh none of your little argument at the end of that trigger is actually um valid at that point it's um you've invalidated the whole thing yeah but i'm it's a really really sad thing i want to not talk about that guy i want to talk about go home and

Starting point is 02:04:17 hug your kids and go home and and um say a prayer for the kirk family yeah i don't care who you are don't care what you believe i don't care what you vote for say a prayer for a family that just lost her dad and lost her husband and if you've got nonsense in your family make the phone call today it's too short man It's too short. Yeah. It's too short. Make amends. Make the phone call, man.

Starting point is 02:04:38 Yeah. I don't disagree. I don't disagree at all. There's some lessons you can take from this. It's just here for a vapor. But, yeah, that was a... Violence has struck out again. You know, there it is.

Starting point is 02:04:51 And sometimes it's little children in a school, and sometimes it's other things. But in every case, it's somebody that's trying to take power into their own hands. And this is, it's really... really at a really critical time. It's scary. It's heartbreaking. This nation needs prayer. And we surely do. Oh, my gosh.

Starting point is 02:05:12 Well, yeah, we'll pledge to you guys that we'll be in touch with them. And obviously, anything that we can do, there's nothing we can do. But anything we can do, we will. And the thing we all can do is to try to be just a tiny bit better as a result of our hearts being broken. and just back up about three steps and reconsider how, how, how, how to manifest some of these opinions without being so dead gun violent about it. It's pretty simple. Civil, civil discourse. Wow.

Starting point is 02:05:46 What an idea. And, you know, let's just label somebody and then vilify them. And it's just awful. Just awful. Well, we don't have that kind of. on this show very often because we don't cover current events, but Charlie was a friend of mine, so pretty much sucks. That puts this hour of the Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial

Starting point is 02:06:15 peace, and that's to walk daily with the Prince of Peace. Christ Jesus. Thank you. Thank you.

The Ramsey Show - You Can’t Hack Your Way Out of Debt

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