You Have To Mentally Take Debt Off The Table If You Want Financial Peace

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from the ramsey network app it's the Ramsey Network app, it's the Ramsey Show, where we help people do work that they love, build wealth, and create amazing relationships. I'm Jade Warshaw.
Next to me is Rachel Cruz. We're taking your calls all hour long, talking about your life, your money.
It is a live show, so call in. We want to hear your calls, and we'll get started, Rachel.
It's going to be great. Let's get into it.
All right, we've got Emily from New York City, New York. What's going on, Emily? Hi, thanks for taking my call.
I'm mainly calling because my husband and I, I feel like we make pretty good money, especially for where we live, and we're in a lot of debt, mostly from him going to dental dental school and I would love to be a stay-at-home mom we had to be over the summer I would just love to not have to work and just be home with her all day but I just don't feel like that's like the right decision financially until we get out of debt so I guess I'm just calling to see if that's even feasible for me to do or kind of your thoughts on that. I mean, it might be.
Let's run the numbers out. So you said your husband has got, it's a dentist.
Is that what he is? Yeah. Dental debt.
So how much debt is there? Like around $350,000. And what's his salary now that he's working? He makes like $250,000 and up.
It depends. And Emily, will that change significantly year by year? Do you guys see that growing, or do you think it's going to be pretty consistent for the next couple of years? I mean, if he owns his own practice, then yeah, it would go up significantly, but then we're taking on more debt right sure sure um yeah so it just depends i guess what were you making when you were working before the baby so i'm still working actually i just i would like to stay home but i am still working um i make around 115 115 okay um is there any other debt besides the 350 in school debt to talk about? No.
Really that's it? No cars? Like um no the I mean we have like a little bit left on the car but like I mean we could really pay it down like today I guess. How much is a little bit? Like less than 10,000.
Okay and then no credit cards nothing like that? No, nothing else. It's mostly the student loans.
What savings do you guys have, Emily? We have like $50,000 in an emergency fund. Okay.
And then we're also renting right now, so we're trying to save up for a house. I just feel like we're doing maybe too much at once once but we're like yeah is the 50,000 with is the 50,000 saving for the house too or is that quote unquote just the emergency fund? Yeah that's just the emergency fund.
How much is how much is for the house? We have maybe like between 15 and 20 towards the house. Towards that's okay and for New York are you guys like Manhattan? Where are you guys? Like in the suburbs.
Okay okay outside how much are your operating expenses every month with rent and everything how much does it take to run your household um sorry I have the number right here I mean with with everything I feel like we're like with savings and everything we're like right on what we bring in a month um because we do try to put like money towards savings yeah if there wasn't savings what is it just for like food rent like all your just just to keep things afloat I guess yeah I guess between like five and six thousand okay like if we're cutting back on a lot of things yeah yeah yeah no total yeah like No, totally. Yeah.
Like bare bones would be six. So you're putting aside for savings, down payment savings.
Are you also investing right now? We both put 6% into our 401k. That's matched by our companies.
Okay. So I think I understand why you're feeling like you're doing a lot because you are.
And they're all good things. Like none of this is, they're not quote unquote bad decisions.
I mean, it's great to save. It's great to think about investing.
But I think that you're feeling this because when you do a lot of good things at once and in the wrong order, it can feel like, oh my gosh, I'm just trying to fight for my life here. So what we would teach is the good news is you've got savings, you've got money here, and you've got a great income.
It's just how can we do this in the right order to where we're really making progress and we feel good about how our money feels month to month. So I would say here's the caveat for all of this.
You're pregnant and you're getting ready to have a baby. So I know you just had a baby.
We have you just had the baby. She's had it the summer.
Yeah. Lordy, lordy.
OK, great, great, great. OK, so forget what I just said.
And I would tackle it like this. I'd say, okay, if we really want to get ahead, how can we get as much money in our month to month budget as possible? Right? That's what I'm solving for.
And so I would say, temporarily, let's pause retirement contribution. Let's get that 6% of our entire income back into our pocket.
And let's pause saving for a down payment just temporarily. So now we have the full force of our income working for us and we can quickly pay off this debt, right? Right now you guys are making the amount of your debt.
And so that gives you a two, you know, if you live on half, you're done in two years. Yeah.
I mean, that's what I was going to say, Emily, like running the numbers. Let's just say in a dream world, you put what you were saving for your house and your emergency fund and you did the classic Ramsey baby steps.
So you went down to a thousand dollars, you put everything. That means you guys would owe 280.
And if you worked for one more year and you guys lived on one income on $80,000, because you said we, she's, you said it would be terrible, but we could live on 6,000 like with everything. And that's the barest bones, rice and beans, beans and rice, the lowest.
I mean, when you do that, yeah, you're going to need, you know, 70,000 ish. And if you guys are making 400 right now, you're making 115 or 150? 115.
Yeah. 115.
Okay. Yeah.
Between like 350 and 400, I guess. So really just living on your income would do mean in a year almost in a year emily you guys could do this now what that's gonna what the what the weird mental shift is these other things you've been saving for having the safety net of this big emergency funds and this dream of home ownership soon here you know that like you start back to square one when you do this, but that gives you

the option then for you to be home, right? That this debt is paid. And then now we're slowly going

to work back to our goals, but we can do this in more of a, you know, strong financial foundation,

or let's just dream that maybe you worked one more year. I don't know.
And you guys put it

another way, another hundred thousand to jumpstart. I feel like I can't, like, I feel like

I can't not work until like we're in a home, like our own home and not renting. I mean, that's,

That's absolutely right. uh to jump start like i feel like i can't like i feel like i can't not work until like we're in a home like our own home and not renting i mean that that's that's your prerogative i mean i think what rachel and i are outlining what what she just outlined is the fastest possible way the fastest possible way is you continuing to work you live on your one salary and you plow through this another option is you're like listen jade i've got this little baby i want to be home now that route, then it's only your husband's income.
Yeah, it's going to double the amount of time it's going to take you to get out of debt, which you're still not far beyond that parameter of the one and a half to two years. If you really double down and really get on a tight budget on that.
Yeah. So you've got options, but as long as you know, this is what we're doing.
We're paying off the debt first and pausing all savings in retirement to do that. Then after that, we're saving up.
And for you guys, I think you'll already be set up to do this, but you're making sure that you buy that house based on the one income that you're gonna be living off. So based off of the 250,000, I wouldn't base it on what he might make in the future because you really don't know.
And the worst thing to do would be to get more house than you can pay for. And then it feels like a burden.
Right. So I think if you're making those decisions, you're going to be OK.
Yeah. And I think, too, Emily, it's one of these like it's it's a values conversation.
Right. I mean, you can say, you know, we value right now me being home and it's where I want to be.
And if that's what you and your husband agree with from like a lifestyle perspective and that in your family decides that that's great. That's what you guys have decided.
Now run the math on that. And if that starts to feel like you can't breathe and that you're going to be home, but you're going to be stressed out because you guys are living on nothing for four years where you're like, okay, I could just do one more year, get out of this debt.
You know what I mean? Like it's a, it's an either or game. But for me, just like now when the baby's little, in my opinion, like do it now so that you are home when they're four or five, six, when they remember all of it.
Yes. When they remember.
Ooh, I love it. This is the Ramsey show.
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It's free at netsuite.com slash Ramsey. All right, back to the phone lines we go, taking calls about your life and your money.
Another call from New York City, New York. We've got Jasmine on the line.
What's up, Jasmine? Hi, how are you? Doing great. How can we help? So I'm in a bit of a pickle.
I'm having trouble trying to find out what's the best financial decision. I made the mistake of putting my sister's car in my name.
She needed help. I tried to co-sign for her.
The dealership denied her, and they only approved me. She promised me if I put the car in my name that she would make all future payments.
Long story short, we got into a dispute. She refused to refinance.
She went and bought herself a new car and left me with a $22,000 loan debt. Oh, no, Jasmine.
She kind of did it out of spite. Oh, no, she didn't.
Oh, my gosh. Okay.
Man. She thinks it's very funny.
I already have a debt on my car, which I owe $6,000 on. I'm currently pregnant with my third child oh my question is is should i sell both cars and just finance a new car or should i just sell her car and just pay the difference which would be eight thousand dollars it's upside down eight thousand um so the market price for her car she has a 2020 toyota corolla um the market price for her car is 14 and because i owe 22 once i sell it i would have to pay eight thousand dollars go ahead did you kelly blue book it for an individual seller by chance yes and that would only be 15 so i would still be at like seven yeah yeah yeah you're still underwater okay i just didn't know sometimes you can get a couple thousand dollars more for individual.
What about your own car? You owe $6,000. What's it worth? Is that one upside down? And what did it begin as? I started with this car of $15,000.
I took out a six-year loan. So I owe $6,000 on this car.
Teddy Blue put it for $7,000. I had a dealer to call me and said, hey, Blue, give me $8,000 for it.
So, I mean, that's a plus. But I would still have to pay rollover, you know, her car if I get a new car.
So either way, I wouldn't be before both situations. Okay.
I'm more inclined to keep the car that you have possibly. Let's find out more about your income.
Tell us about your income. Tell us about your other debts so we can get a fuller picture here.

So I make $47,000 a year. Very little money is not that much.
I am currently renting. So my rent is only 15.
I have $10,000 in credit card debt already.

And she put $418 of easy pass tickets in my name that I also have to pay for.

You can't, uh, you said easy pass tickets. Is that something you can dispute as fraud?

Um, no, I can't dispute it because she was driving the car and the police is in my name.

Ah, got you. Okay.
So tolls, not like part. I got it.
Tolls. Okay.
Oh my God. Your sister.
Can I just ask a question? This is neither here nor there, but did you know that she was capable? Yeah. Shifty from the beginning.
Did you know that? Or are you just learning this about her? I'm just learning this about her. Nobody in my family would help her and I felt really bad for her because she's in a bad situation and financially during that time I didn't have any debt and I don't have with my car so I said hey I don't mind helping you as long as you pay but now I'm stuck with this debt.
I wonder if so my first thought is yeah definitely got to get out of the car note the 22,00,000 one. It's not a car that you need.
And it could be worth saying, okay, like I'll get a personal loan for the difference so I can offload the vehicle. That way I'm not paying the full payment on a $22,000 car.
I'm just paying a payment on the $8,000 loan to get out of it. And then maybe keeping the loan that you have for your car.
Obviously it would be first first on your debt snowball, right? So you pay off your $7,000 car. Now, what is your car payment? My car payment is $336 a month and hers was $500 a month.
Okay, so once you pay off your car, that'll free up $336 a month. And the hope, here's my hope.
I don't know if it's worth your time or effort, but my hope is that while you're paying off your $7,000 or your $6,000 loan, you can be telling her, Hey, I sold this car and it's now just an $8,000 loan. You really do owe this and you should be paying it.
And maybe you guys can start having that conversation. And I try to collect whatever I can from her.
I'd be like, listen, hit me with half. Hit me with anything, but you've really put me in a tough situation.
I've got children. I've got another child on the way.
I need help with this. And truly, you're on the hook to help me.
Really, you should be paying it. But I take whatever I can get.
Do you see what I'm saying? And so by the time that one comes up in your debt snowball, hopefully you've got, hopefully something from her. And if you don't, you just continue to plow through it because it's on your name yeah it's definitely yes but the thing is she thinks it's funny so she says that nothing's in writing can't take her to court for it

and she just went and got a new car she's not yeah you can't i mean yeah that's the that's the

dangerous thing yeah and so why what like i again we can't like sit here and like psychoanalyze

your sister but yeah but you keep saying that she thinks it's funny and all of that. How old is she? She is 23.
I'm 26. Okay.
And, and she understands the severity of the, like, she, she understands what's going on. In her text message, it's, it's, it's not her problem.
It's my problem. Wow.
Okay wow okay so it's just it's really a character integrity issue and jasmine we we call this around here stupid tax where there's just things that we pay it's going to end up being 8 000 for you after you sell the car and for the difference um of just i don't have the money right now so i would end up being paying 500 a month on top of my car on top of my car note. See if you can get a personal loan for the difference or like go down to the credit union.
I don't care where you do it. I just care that you get, I'd rather you owe $8,000 than $22,000.
Even if it's a slightly higher interest rate, I still care about that because you're going to be able to, it's going to free up a little bit more money and you're going to be able to clip through your $6,000 car note faster by lowering that amount of debt, therefore the payment on it. So don't get a new car.
Don't try to have it roll over anything. No, no, no, no.
Because you're A, you'd be rolling over negative equity and B, you're not solving the problem at the root, which is the debt. The debt is the problem, whether it was debt from, like Rachel said, stupid tax or debt from your own car or your own credit cards.
Debt is still the problem. And we don't want to, you can't solve a problem while simultaneously creating it.
So you've got to, you know, put a full stop on debt. Okay.
Yeah. Okay.
So yeah, so keeping your car, Jasmine, and then your goal is for the debt snowball. You're going to pay off your debt smallest to largest.
So even with the credit cards, which we didn't really talk about in here, but listing those out, if it's three or four cards and one is $2,000 balance, one's $4,000, whatever it is. So let's just pretend that the car sold a $22,000 car and you now have an $8,000 loan.
So you have an $8,000 car loan or a personal loan because of the car your six thousand dollar car loan and then list out your credit cards all separately and then sit there and just say okay smallest debt to largest debt and you're going to pay minimum payments on everything and pay the smallest one off first and again even if it's the even if one of the credit cards is a twelve hundred dollar credit card pay that one off first and then you're going to go down the line because that's how you're going to get the most effective use of your money. Once that's freed up, that credit card is paid off, frees up a couple hundred bucks a month to roll over to the second smallest debt.
And you just keep that going. And, God, Jasmine, I'm so sorry, but for everyone listening, this is why you don't co-sign.
Because the bank looked at the sister and said we don't try we don't that's right we don't trust you you can't no they said you won't be able to make the payments and if a bank won't give you money who gives money to dogs they like send dogs credit cards in the mail banks will give any money to anybody so if they don't want to give money to somebody that's the massive that's the biggest red flag that is. Like a bank will not lend someone money.
That means they're not good with money. They do not have the money to pay it.
And they're not willing to take the risk. Yes.
So do not take it, people. Learn from Jasmine.
So Jasmine, I'm so sorry. And not to throw another little like element into this whole situation, but she did say she's expecting.
I know. And so we usually go in st if we if you are pregnant so jasmine i mean honestly you may even want to pause all of this go ahead and do the debt snowball list everything out so you can see it so you know what your plan is but honestly i would be just stocking savings for right now if you can get rid of the car that would be one thing i would do i would take out that eight thousand dollar personal loan and get rid of the car but you also want to stockpile some cash until baby's here and you're okay.
Everyone's okay. And then whatever money you've had saved during this time, press play.
And hopefully that'll pay off a couple of those smallest debts as you're saving. But I'm sorry, Jasmine.
Best of luck. I hate that your sister did this.
Listen, I'd put her in a headlock. You can do that when you're siblings.
You can rustle them when they don't act right. This is the Ramsey Show.
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Today's question comes from Lucia in Arizona. She says, I have two young Hispanic daughters under the age of five, and it's a tradition in our culture to have a celebration when a woman becomes 15.
The average cost for this event in America right now is between $5,000 and $20,000. How can I save for this while keeping up with inflation? I can't imagine how it's going to cost when they're 15.
Wow, man, the quinceanera, quinceanera, sweet 16, sweet 15. Yeah.
What do you think, Rachel? I mean, well, I mean, the range is what you're talking about here. I would have the same mindset as a wedding that you can go as expensive as you want.
You can go as inexpensive as you want. And a lot of that is dictated by the emotions and the expectations of the person involved aka your 15 year old or aka the bride yeah um and i and so i think there's a lot there as a parent you have more control over than a wedding yeah right yeah yeah um and so i think you tell the 15 year old here's what we have saved and it's a part of your tradition so you're gonna know we're gonna save for this right um so be putting money aside for it and when the time comes I mean I wouldn't worry about inflation and all of that because we can't control it but just save what you can and what you have at that time is what you have to spend but no I would not be going into debt for it I wouldn't even be honestly stressing over it either um you know I would have a plan for it and then let it be as it is.
And the 15 year old doesn't get to dictate the decisions either. So, yeah.
Yeah. I'm also filtering it, Rachel.
I'm also thinking, OK, two girls, which means two weddings coming up and possibly two college educations coming up. So I I feel like I would filter it a little bit through knowing what else is coming so unless you guys really have a wonderful income I mean in five years less than five years are gonna be going to college too yeah and then maybe in less than five years I'm gonna be getting married so there's part of me that's like all right I want to be really realistic realistic to make sure that we're able to save for all of that.
And good luck. Godspeed.
Godspeed. But you have control over the expenses in that.
So you get to make it as fancy or as not. But yeah, I wouldn't let the cultural pressure, right? Because I know this is a bigger deal than like a sweet 16.
I get that. It's like rite of passage.
Yeah, it is. It's a big deal.
So you want to celebrate and honor that. But yeah, we're not going to be stupid about it.
That's right. When it comes to the cost and we're going to be wise because that's a bigger gift to them than this one night kind of celebration, right? So.
And invite a lot of people so they get a lot of gifts and she gets

a lot of money back. There you go.
Put in the college fund. That's good.
Put in the college fund. All right.
Kaylee is in Phoenix, Arizona. What's going on, Kaylee? Hi, guys.
Can you hear me okay? We can. Awesome.
It's such an honor to get to speak with you guys. I'm kind of new to the baby steps.
I became debt-free about two years ago. Congratulations.
Thank you. Yeah, my net worth is currently at 44,000.
But my problem is I really want to go back to school to get my master's. And I'm not sure if I should continue maxing out my retirement accounts each year or if I should just start saving now and not max out my retirement accounts, but use all of my savings as much as I can to front as much of my school costs as possible.
Okay, so how much is the school going to cost? How long is the program and everything? Yeah, so my prerequisites are going to be around $13,000, and then the program will be around $29,000, and then plus living costs. Okay, and what are you getting your master's in? I want to get it in nutrition.
Okay. What will you do with it? I want to work as a registered dietitian.
I'm not sure like the specific job that I want. I know what the entry level costs or the entry level pay is for these jobs.
But I am interested in like any aspect of the field, whether it's like consultation, research, private practice, or anything like that.

The range is around like

starting out 80 to 90,000. Okay.
Okay. And you've talked to people in this industry, right? And

a master's is a requirement, would you say? Is that a barrier to entry to even get in and apply

to some of these places? Or is it just looking nice on the resume? It is a requirement, would you say? Is that a barrier to entry to even get in and apply to some of these places, or does it just look nice on the resume? It is a requirement in order to hold the dietician license. Okay, okay.
Cool. And you're making what now, did you say? Right now I make $61 a year.
Oh, good, okay. And what do you have in savings that's not retirement? Currently in my high yield savings, I have $17,000.
Okay. Okay.
So your question is, should I stop maxing out retirement and use that extra to put towards paying for the schooling? Right? That's the question? Exactly. my question is can you do it without doing that have you run the numbers is it possible or is that the unlock here like do you mean can i do it while still maxing out my retirement accounts yeah or or what is i guess what is that stop where you say here's at the point where I need some of this cash.
Can you still invest, you know, up to your match? Or can you still, is there any point that you can do a little bit of investing and also save for this? If I wanted to not take out any student loans whatsoever, I wouldn't be able to invest anything from this point moving forward into retirement account okay and which would be for how long four years um it would be about two and a half years okay yeah i mean honestly kaylee i probably would i would pause i mean it's a short it's a short time um you already have some in there which is great so that'll to grow. And I would take student loans off the table if I were you.
Not an option. Yeah, take it off as not even an option.
So now going forward, how can I go to school and get my master's debt-free? So that 17 is going to help with the prereqs. And so what you could do, and people do it all the time.
It's a lot. But people work full time.
They sure do. And go to school.
And, you know, if you can keep your job and cash flow your way. I mean, Kaylee, that would be incredible because at the end of it, you have no debt.
You're starting off. You get to switch jobs.
You'll be making 80, which is a $20,000 bump. Yeah.
At the low end. And you start retirement funding there and you're off to the races versus saying, oh, I'm going to just pretend that you go, you know, $43,000 in debt.
You come out and you're making $80,000. Well, that's half of your income already in debt.
So it's going to take you probably three years to get back. So it's kind of this like, there's a big give and take here.
So the sacrifice on the front end, which is going to which is gonna be a lot school and working but cash flowing your way even pausing retirement for two years and then getting that degree and then I would press play on retirement and go on so that's what I would do but I would I would mentally it's a mind shift thing but you have to mentally take debt off the table and then see what your options are because when it plays it's the easy route it's easier just to. It feels easier.
Yeah, it feels easier. And then on the back end, it's so many more years climbing out of it financially.
And and that's more time missing out on retirement. Right.
I mean, like all of it's because you're repositing for more years than two to pay this off. So and I mean, I feel like it puts a salty taste in your mouth about the thing that you love doing.
Right. You go to get this degree in nutrition're like i love nutrition i love helping people and then with this debt attached to it now you kind of feel that every time you go to work every paycheck is going towards that and so i feel like it kind of taints that whole the passion part of it yeah all right very good call thank you for the call thank you for the question yeah let's go to ariel i like that named Ariel in Washington, D.C.
What's up, Ariel? Hello, thanks for having me.

I'm calling Thank you for the call. Thank you for the question.
Let's go to Ariel. I like that name.
Ariel in Washington, D.C.

What's up, Ariel?

Hello.

Thanks for having me.

I'm calling to get your advice on whether or not I should cancel an upcoming family vacation

based on some issues that I've been having.

I was laid off right before Thanksgiving and just trying to figure out what the right responsible

thing to do.

Ariel, I'm going to hold you over.

I took your call with not much time left on the clock. So do you mind holding for me? Not a problem.
All right. I'll see you after the break.
Sorry about that. I was looking and I thought, we've got plenty of time.
That was a lot. Well, you know what? Spring break's coming up.
So a vacation call, that's going to be a good one. Yeah, that's going to be a good one.
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Yeah. And it's because we trust it.
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That's the only one I'd use. Amen.
Oh, yeah, for sure. All right.
So just before the break, I picked up Ariel. She's in Washington, D.C., and she's got a great question about vacation.
What's going on, Ariel? Sure. So I was calling to see and get your advice on whether I should cancel an upcoming vacation or if I should keep it based on my circumstances.
Tell us more. Was there like a down payment? Will you lose money? Yeah.
So I have to cancel the next couple of weeks or we don't get our money back. But I was laid off right before Thanksgiving and I'm still trying to find a job.
We're just trying to figure out what the responsible thing to do is. Yeah.
How much are you, how much are you in on it and how much will you lose if you cancel it? So the trip is about $3,500 and we'd probably lose about $2,500. Oh man.
Oh gosh. And that's even if you cancel in the next couple of weeks? Yes.
You will still lose that. That's what you're going to lose.
Yes. Okay.
So you're $1,000 basically out of pocket. It's $2,500 out of pocket.
But $1,000 would be added to go out of pocket. Sorry, that's what I mean.
Okay. Yes.
And are you married? Is there a dual income situation in the home? I am, yes. And he's working, but he does work for the federal government.
And so far, it's okay, but it's a bit uncertain. So that's up in the air as well.
How much does he make a year? $120,000. $120,000.
Okay. Do you guys have any debt? None but the house.
Okay. We are net worth millionaires, so we have cash cash it's just oh tell us your cash situation okay uh we've got close to 200 000 in cash and in like in a high yield savings high yield savings and investment as well but not not retirement ariel you can go on this yeah just do it it's a thousand bucks okay yeah you're totally good.
Okay. Honestly, take it.
I'm going to say, even if it was $5,000, you're okay. Yeah.
You have $200,000 in savings. Okay.
Yeah. You've just been living in this tight, cut everything out phase for a while.
Which is wise. Yeah, that's fair.
Because your savings will eventually dwindle if you're just living off of it. So I get it.
But from like, relatively speaking, I would not lose $2,500 not to pay $1,000, especially where you are with your cash. Like, yeah, you're great.
So what kind of job do you get? Go ahead. I said, I'll take it.
Yeah, for sure, girl. Go on that trip.
Yeah. Okay.
So what's, what's taken you so long to find a job? What, what were you doing? So I was doing marketing for a tech company and I have been interviewing. I was actually offered a role a couple of weeks ago, thrilled about it.
And then I got found out yes, last week that they eliminated the role. Oh, shoot.
So I went back to square one. Oh, man, I'm sorry.
I'm networking. I'm doing all the things, but it's just...
Taking a while. It's kind of crazy out there.
Yeah, yeah. Are you guys able to live off of...
I know his income's a little bit unstable just because he's working for the government and everything, but for 120, are you guys able to sustain life on that or are you having to dip into this 200 to live off of? So far, we've been able to. You know, we have two little kids in daycare.
We're cutting out everything we can. It'll be, we'll start eating into it, I'd say, in the next couple of months.
Okay. But so far, we've been able to.
But it'll, you know, I need to find something to do, and that's for sure. Keep it afloat.
Okay. Yeah, for sure.
Yeah, And if you guys get to that position, you know, maybe for you, it's even something that looks different and maybe not as high up as where you were, but I think you guys are good. I mean, you're, yeah, you're in a, you're in a good spot.
I'd say you're good. Go on the vacation, be smart about what you're spending while you're on the vacation, just like day to day things.
But other than that, I'd say, enjoy it. You, you know, enjoy it.
It's a vacation. All right.
Good one. Let's go to Ricky.
He's in Atlanta, Georgia, ATL. Shadi, what's going on, Ricky? Hello, how are you doing? I have an investment, I have an investment property that I own this worth of about 700,000 and I'm trying to decide, I have two offers.
One offer is 600,000 at 6% for 25 years. I own a finance with 15% down, and one offer is a cash offer for $700,000.
Or should I keep the property? I'm 62, and I'm getting ready to retire, and I have some money in my 401k, but I've worked with some financial people. And it seems like if I take this property and pay the depreciation and the capital gains and put the money into an IRA, I will leave more money for my kids in 25 years than if I hold on to the property.
With the value of it and everything. What would cause you to consider the other offer over a $700,000 cash offer for the amount that it's actually worth? Because I've been told in the past that it would spread out the depreciation of capital gains and I wouldn't have to pay the taxes.
One year I could spread it out over the length of the loan. What was the rental bringing in monthly rent? It brings in about $9,400 a month.
Okay. And you're just kind of tired of it.
You're like, oh, I don't want to deal with it. I'd rather sell.
I've been doing it for 20 years. Yeah.
And at one time I had two partners in 66 properties. We have split up and I'm down to 13 properties.
Oh, wow. That's great.
Yeah. I mean, I would, I like diversification in general.
So the fact that you have other properties is great because you're still in that, you know, a little bit of real estate, you know, in your entire portfolio. But if you have a cash offer like this, I mean, I would be, yes, I would be tempted to take it.
I just know how much work it is to um keep up with properties and you've kind of played the long game because really when it comes to making money in real estate it really is what you've done where you bought i mean how many years ago you've had it for how long i've had it for 20 years yeah of course we paid 400 000 for right It really made no money on it till now. Yeah.
Because all of the money went to the mortgage. Sure.
Yeah. So now that it's paid off and now you have so much equity in it, that's like the payday of rental, right? Where you get to do this and sell it and yeah, put money in IRA, live off the interest.
And I think that's probably what I I would do I think it simplifies everything and since you're a real estate guy you still have other properties are those other ones paid for yes they are I'll keep I'll keep five rental units completely paid for okay Ricky so how much how much are you worth I'm just curious how much are all these properties combined um with my private real estate, it's about $2 million. Wow.
That's great. Very good.
All paid for. Yes.
Wow. All paid for.
Well done, Ricky. Well done.
That's really cool. Yeah.
I mean, I think either way, you're going to be fine. But yeah, I like the idea.
We just met with our financial planner this week. And like last year, what the market did was insane.
Yeah. It was like in the, like 20, I mean, it was just crazy.
You know, 22 wasn't a great year, but 23, 24 were great years. Excellent, yeah.
So it is kind of fun to see the math game in the market, just knowing, okay, you had a piece of property, which is ideal, right? When you make money in real estate, you're kind of making it at the buy. So you buy it, hopefully cheap.
And then as it appreciates and you gain equity then you get to sell it and that's where you're making the money and so that's i mean it's literally that's what he's done and then go put it in the market and and hopefully knock on wood i know it won't all be that as good of a year as we've had the last two years but it's just incredible it's it's really the same game with through with putting it in the stock market as it was with real estate. This is the same idea of keeping that investment over time.
And over time, like you said, you might not have a year like 23, 24, but you could and you should see at least a 10% return over that scope of time. And so that's what we're talking about when we say that.
So I think it's great. Great, Ricky.
Way to go. Congratulations, too.
Yeah, congratulations.

I love a call like that. I love celebrating wins with people.
That does it for this hour of the

show. Hang with us and we'll be right back for the next hour.
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 not 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 not have life insurance is if you hate your wife and kids. And I immediately went and got term life insurance.
That's a gut punch. For decades, Dave, I've sat across people who've lost a spouse.
They've lost somebody important to them. Me too.
And they don't know what to do next. You're going to have a crisis here.
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.
That's exactly right. These are the two options.
It's saying I love you to your family. Term life insurance.
Jeff Zander and the team at Zander Insurance makes it easy and affordable. I've used them personally for 25 years.
They're the only people I trust. Go to Zander.com or call 800-356-4282.
From the Ramsey Network, it's The Ramsey Show. Thanks for hanging out with us.
We're taking more calls about your life and money. Again, if you want to call in, you can.

The number is 888-825-5225.

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That gets you on the line.

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All right, Rachel, you ready to get into it? Let's do it. Patricia in Sacramento California is on the line hey Patricia hi how you doing we're doing good so I need help I went from zero debt in January 23 to 54,000 in April 24th I was trapped in this abusive relationship that I was hospitalized and arrested for fighting back, but I'm out of that now.
Oh my gosh, Patricia. I'm so sorry.
Thank you. I was in survival mode, so I signed up for a debt relief company and I trusted them, but now that I'm able to take a look at what's going on, I see that they're taking all their fees up front.
They're barely paying my creditors. And I have to respond to my second lawsuit by next week.
Oh, my gosh. I've also found expired DocuSigns that I never saw they would expire really quickly.
And so I don't know what they've negotiated. I know they've negotiated about $36,000 of it.
there's still, the rest of it's outstanding, and I did pay off my first lawsuit privately. So the companies that they stopped paying are suing you, right? You stopped paying your debts, and the money that you sent, they weren't paying it.
what is that who's suing you your your creditors

well there were like uh 12 or 13 cards all together so they've settled with some of them but the ones that they just wanted except waiting in line um they're the ones suing me yeah so i like i said i paid off one and and yeah how much have you given them the debt relief company to start. I have given them

$7,000, over $7,000

and $4,000 of that has gone to their fees. Only $3,000 has gone to my creditors.
And I did find that when they settle, what's considered settling is when they negotiate a settlement and make the first payment, then they're eligible to take all their fees, which is 25% of my enrolled debt. I'm sorry.
I mean, you're finding out what's absolutely true, which is these places are a scam. And I hate that you're finding that out the hard way.
Do you know what it will take to get, like, how can you get out of this? Have you kind of researched what it would take for you to get out? Will you be dinged if you say, listen, I don't want to pay any more into this. I don't want to do this anymore.
What's their policy on that? Well, the contract, they say I can end any time. So that's why I figured they're padding their fees up front in case I decide to end.
Yeah, you're right. But the one that I want to settle right now, because I do have some money to settle the second lawsuit, but I tried to call them directly and they won't talk to me because of the power of attorney.
So the company won't call me back either. And so when I called them this morning, they said, there's no update except we got the power of attorney.
And I'm like, no, stop. I don't want them to settle with them.
Well, you have to cancel. It sounds like you have to cancel your agreement with the debt relief place first so that they're not signing and making decisions for you so i feel like that's first in line first in line is getting documentation that i'm no longer part of this program i'm not giving them any more money and i have my power of attorney back so they can no longer sign for me so i'd i'd want that first i'd want documentation of that not just a okay over the phone right and then after that then you can really do for yourself

what they were saying quote they were going to do for you which is yeah at this point at this point

because there has been no payments made on this debt yeah they're going to be ready to settle

and you should be able to do that okay but yeah they said they want to talk to me and so do you

think i have time before because i have to respond to the summ to me. And so do you think I have time before,

because I have to respond to the summons by next Tuesday. Do you think I would have time? How much do you owe for the ones that are suing you? So the ones that suing me, they want like $4,500, but I enrolled $3,800 with them in April.
well I did just pay off one lawsuit

and they were wanting

$32 with the with them in April um so well I I did just pay off one lawsuit and they were wanting 3,800 and I I settled that and you got that in writing that's in writing the first one you paid off yeah so what I mean yeah what I would say Patricia is this 4,500 I I don't want to give you the wrong advice but from what I have gathered over the years of doing this show and talking to people, it's $4,500. They say it expires on Tuesday.
If it takes you another week to get out of the debt settlement, you call them back. They'll give you another deal.
Ten days later, they're there. They just want the money.
I mean, at this point, too, with debt settlement, you haven't paid them for so long. They're lucky to get anything, right? I mean, at this point.
And how these companies work work too they these debts are sold so many different times they've gone through three different companies i mean they're not really keeping track there there's a level of intimidation always with them whether they're on the phone or through mail and so um i mean some of it is legit right i mean they can but but i i i really think patricia if you take all of next week to get out of the debt settlement and it takes you a couple of days and for them to email over paperwork, like what Jade's saying, and have documentation that you are really out, then I would call this company back and show them and tell them, hi, I had a document. I'm a few days late, but I have $3,800.
I can pay you and just settle this now. They're going to take your money.
They will take it. So I wouldn't be, I would be on it.
I would be urgent about all of this. I want you out as soon as possible.
But I wouldn't let their timeline be the one that's dictating all this either. Yeah.
I mean, like you said, Rachel, a lot of it's fear tactics and you going, oh my gosh, they're suing me. Oh my gosh, I have a timeline.
Oh my gosh, if I don't. And Rachel is exactly right.
It's, you'll have the opportunity to make a deal again well I have to reply to the summons and by next week because if I don't reply to the summons then they'll make a judgment again and what do you what's the reply what's the process of that what does that mean I have to go to the courthouse and file a response it costs 250 that's what I did so could your response be well here's there's two things happening here a you're concerned about filing the response which is next week right what day what day uh it's the 13th the 13th um yeah i don't know what day is that is that tuesday it's like wednesday okay so you have you have two business days to try to get out of this. And if you can, then you can apply, go to the court summons and say, I just got out of the debt consolidation.
I have the money here and I'm ready. Right? That's one response.
The other response is I've been trying to get out of this debt consolidation and I have record of me trying to call and pay this and they have not taken my payment. But I have the money.
I have the check here. I'm happy to pay it today.
Right. So there is part of this where you might have to like plead your case on that.
And that's why it's so important to document everything you're doing. I called them on this day at this time and they have to record those calls, too.
I called them at this day and this time. So you just do your due diligence on making sure you're keeping record of everything and then show up at the summons with wherever you're at in life.
I just filed the paperwork or I'm waiting to hear back on them and just take it one day at a time because I think you're freaking out a little bit about what may or may not happen. And if you have the money and you're saying, judge, I want to do this, I don't think the judgment's going to be against you.
I think there'll be fair on that. Right.
So how would I go about revoking the power of attorney? Do I need a lawyer to do that? Or can I do it myself? Do you know? I don't think so. I mean, it sounds like whenever you signed up for this debt relief, part of the papers you signed said, and you guys can speak for me and sign for me and all of that.

And so it should be that when you get out of this.

Yeah.

Revoked along with the entire agreement.

Yeah.

Or both.

Patricia, I'm so sorry.

You know, you've gotten yourself out of a lot worse situation than this.

So this is, you can do this for sure.

You can do this.

It's going to take some time.

But we hope that helps. We're cheering you on.
All right, Dave, you have some strong opinions. Possibly, yeah.
I think so. Okay, because you really prefer credit unions over big banks.
So why is that? Well, credit unions, for one thing, are non-profit, which means that the members, the customers own the credit union. So any profits that the credit union makes goes back into customer pricing.
So you get better interest rate on savings, cheaper checking, and so on, that kind of thing. But what's more important than that, though, is the fact that the customer is the owner changes the spirit on the credit union.
So I find very few credit unions that aren't very customer-centric. Yes.
Well, and I think we have found one that is incredible, and that's Fairwinds. They are an incredible credit union that is really out with the heart to help the customer.
You know, that's why we're partnering with them, because they've got a scope to be able to handle the Ramsey audience, and they're the right kind of people with the right kind of values. And they've done a really, really good job with customer service, and the deals that they're offering, the Ramsey tribe is incredible.
Yeah, absolutely. And you're right, their customer service is unbelievable.
Winston and I just signed up, and we got an account. Yeah.
And I'm not kidding. It took less than five minutes.
It was so user-friendly. The step-by-step approach was unbelievable.
And then the next day, my phone rings and it says Fairwinds on my phone. So I answered it and talked to someone there and they said, yeah, they give calls to every new customer.
And so again, they just really care about your experience. And I so, so appreciate that.
So again, you guys, I know it can be a pain to switch banks or to open up new accounts, but Fairwinds, again, they make it so easy. Plus, anything that you can do at a traditional branch, you can do with them at fairwinds.org or on their app.
And you'll have free access to over 33,000 ATMs. You guys know how much I hate banks in general.
And so for me

to do this is a big deal. Talk to our friends at Fairwinds and check out the combined checking and savings bundle that they created just for the Ramsey tribe.
You guys, it's incredible. Yeah, you guys, it's so easy to join Fairwinds no matter where you live.
So go to fairwinds.org slash Ramsey to learn more.

That's F-A-I-R-W-I-N-D-S dot org slash Ramsey. Listen, I know a lot of you would rather watch paint dry in slow motion than file your taxes.
But thankfully, you don't have to dread filing when you've got Ramsey Smart Tax. It comes packed with everything you need to file online before the big deadline.
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That's ramseysolutions.com slash smart tax. So around here, we teach a method called the seven baby steps and it's seven baby steps to finding financial peace, right? It's the quickest, most efficient way to building wealth.
There's seven baby steps. And if you are working them, we have a really great way to check to see if you're on track.
Okay. So there's a quiz that you can take to check your progress and you can also receive a personalized plan that's just for you as you walk your own journey on the baby steps.
So simply head to the show notes and you can click the link that's titled, are you on track with the baby steps? So if you click that link, then we'll send you the quiz and you can complete it. So that's a really great way to stay motivated and make sure that you're staying on track with this whole thing because it is a journey and you need that extra boost.
All right, let's take another call. We've got Grace.
She's in Omaha, Nebraska. Hey, Grace.
Hi, I am going to college next year and I just had a question about which college I should go to. My state school I would have to pay for and it would be about two years to go.
But I got an opportunity to go to a very prestigious school that would be a full ride, but it would be four years. And I was just wondering, is time more valuable than money? Oh, wow.
Okay. So both options are paid for? Is that what you're saying? My first option, which is like my state school, I would have to pay out of pocket you would pay

out of pocket right yeah and right now i just don't i have stuff in savings but it would be i'd have to work very hard and it would drain my savings account pretty much okay how old are you grace i'm 17 17 okay great what's the um can we ask what school it is the The one, the four-year? The four-year school is Notre Dame.

Wow.

Say less.

Golly, Grace.

You know what?

I, yeah, I mean, I'm going to the school that's paying me.

And it's four years.

Which is normal.

Which is normal.

And I think that, again, it's not for, I get this for everyone.

Like some people do the trade route.

Some people leave high school and go right into real estate and get their real estate license they start so you know like yeah anything's great but I do think there's something about those four years out of high school where you're on your own and it's kind of that bridge between being so dependent upon mom and dad on so many things and now like I'm I don't have to go fully real world I have like four years to get a great degree yeah learn some life experiences kind of have that bridge I think it's like from an age perspective I think it's good I agree because you'll have your whole life to work and do all the things and if and because it's paid for right I mean if the money if all this was different from a money situation I may may have a different answer, but it's paid for.

Yeah.

And I mean, I would do it.

What do you want your degree to be in?

My degree, that's another thing.

If my degree is going to be in educational administration,

so I would like to teach in foreign countries is like the entire idea.

Oh, that's awesome.

And Notre Dame has a program for that.

That is cool.

Well, that's perfect.

What's keeping you not doing Notre Dame? Is it just because of the time? Like it's four, it's two extra years? It's two extra years. And from my house, it is almost 14 hours away.
And I would be paying in travel expenses as well because my parents will not pay for that. And they don't really want me to go to Notre Dame.
So I'm kind of... Where where is Notre Dame I should know this but I don't where is it um it's do you know where Chicago is it's about two hours from Chicago okay okay area so it's quite a drive and I'd have to fly there because they do not allow cars for freshmen oh that's interesting okay so you'd be driving home for your parents would parents, would they help pay for the state school? They would help pay for the state school.
They do not want me to go into the degree that I'm going in. So it's not so much...
I'm afraid it's not so much a gift as it is a loan. And so I really want to pay it by myself.
What's their problem with the degree? Which is why I'm very hesitant. What's their problem with that? It's teaching and and it doesn't make they say it's teaching and it doesn't make any money so they're a little i mean hesitant for the notre dame part it's like whatever i'm not making for you it's just a time investment right and what rachel said there's just the and the part of becoming an adult that you get over four years like sometimes they're part of school is not just the.
It's the experiences that you have. So teachers are in our top five of baby steps millionaires too, Grace.
So yes, I think that on your Instagram. Yes.
So, I mean, it's known. Yeah.
Teachers don't, teachers should be paid way more. I have children in public school and I'm like, God bless you, all of you.
So they should be paid more. But if you it is a career over time, you know, you get the pension like you do.
There are benefits. You do move up.
Right. But it's yes, it's not a career.
You're going to make three hundred thousand dollars. Right.
So so I get that. But it's what you want to do right now.
Is it, Grace? Yes, it is. Yeah.
So I i wouldn't let the drive home like what you're driving home for thanksgiving right for spring summer break whatever that is i wouldn't let that deter me from making the choice okay i wouldn't but yeah and unless you saw like a really clear path to do the state school and do it in two years and pay for it and that made you feel more comfortable being closer to home or whatever, you know, it may be, it may be some extra work on your end to do that option. And sorry, last question, Grace, is it a academic scholarship that you're getting? The scholarship that I'm getting for the region that I'm in, I have a benefactory that reached out to me and my school and wanted to pay for it because Notre Dame is Catholic and then I came from a private oh I got you okay okay I got you but yeah it's it's around academics as well okay okay because I wonder is there any scholarships and grants you could get from a state school option just just to get some other you know look at that um some other things but for my state school as well i have ten thousand

dollars in scholarships for that to help me with it and then they did give me a twenty thousand dollar scholarship as well for my state school but it will still come out of my pocket wait so you have thirty thousand dollars for the state school ten thousand and twenty so the $20,000 would be if I went through their four-year program. So I'm trying to get them to give me the full $20,000, but they don't want to do that.
But I'm still looking at $23,000 that I'd have to pay. You would have to pay? Over two years, right? So that's $12,000.
That's $1,000 a month. I mean, it would be some work for you to do it, but I don't know.
There's not a wrong answer here if both of them don't include debt. That's the truth.
So if you're able to do the two years with whatever scholarship they give you and you're able to cover the rest and there's no debt, that's a wrong choice also if you choose to do the Notre Dame for four years which is covered completely that's not a wrong choice at the end of the day it really just boils down to what you want to do yeah our our only caveat is there can't be debt that's our stance on on the decision that you make okay so I hope that's what I want to hear I hope that helps you got you've got some things to mull over and think over but I think that it's really great that you have those opportunities and that's what we want to see it's nice to have choices I think at the end of the day and you know and it's really hard at 18 to know what you want to do long term so it all can always change but if you have a niche and like a an inkling of like okay I want to do this and she said and I want to teach I want to teach like where I go to foreign countries and do this like I want to I want to do that and Notre Dame has a program for that too and it's paid for it does feel like a pretty obvious option except for that like element of getting home and you would have to cover the cost of that. So that may be meaning that you, you know, work a few nights a week or something just to have some extra cash.
I think that's a small thing to figure out. Yeah, I do too.
Great scheme. I agree.
I agree. But gosh, that's great.
Great question. I know.
I know. All right.
Let's take a Facebook question. All right.
Logan wants to know, I made it to baby step six, Rachel, and I have a question about paying off my mortgage. On the mortgage, do I continue to eat beans and rice, rice and beans until the house is paid off and only see the inside of a restaurant if I work there? Some Dave quotes there.
Or can I grab a cold beer and just relax a little bit, Rachel? Oh, my goodness. That's what Logan wants to know.
Logan, you can relax. Pop a beer.
You're fine. No.
So we always talk about, you know, baby steps one through three is intense. So while you're getting out of debt, building up an emergency fund, you are, you're going to be focused and every amount of energy and money is going to get those completed.
And then once those are completed, then you move from intense to intentional. And so paying this house off, you know, again, some people stay because they choose to intense and they just go right down the lane and pay off the house.
But this is the time to kind of ease up because I don't think, you know, long term, which you and Sam, you guys did maybe step two for years. I mean, it was a marathon.
I am. I am popping a beer right now, Rachel.
I am drinking beer as we speak. So just, yes, relax, enjoy it.
And yeah, Jade's enjoying herself as you all say. Hey, what's up, guys? It's Jade Warshaw.
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We have Peter who's in Manchester, New Hampshire. Let's see what he's talking about.
Peter, how can we help? Hey, how's it going? Going good. What's going on in your world? Not much.
I was just curious to see.

I have, in probably like five years or so, I'm thinking about buying a house.

I'm just kind of just curious to see about manual underwriting.

I know, I think I know mostly about what I know about it.

And I'm just curious to see what companies you'd suggest to go through to do that.

And I know it's kind of rare to find, I guess, is what I've heard anyways, but just kind of see what you guys think. How old are you? I'm 23.
Okay, cool. Well, you're right.
Like manual underwriting is what we would say for people who don't have credit scores, right? Which is what we suggest. And just kind of clarifying the idea that a zero credit score means that you have not borrowed money.
And if you did borrow money, you paid it all off and your credit score rolled to zero or indeterminable. It is not a low credit score.
It is not a bad credit score. It is a zero credit score.
And you're right. You do have to do your due diligence and search around because every loan company, you know, every mortgage company won't do that.

Right.

So here we talk about Churchill mortgage because they will offer manual

underwriting and they'll do it for just about every state.

Rachel,

I know there's some that are not on the list off the top of my head,

but most of them are.

I think it's like,

and if not,

they can help find a provider in your,

in your area too.

So I would contact Churchill is who I'd recommend.

And yeah,

and it is, I mean, yeah, there's a little bit more of the effort put in to this kind of process kind of like sometimes it's effort without living with debt like if you don't have a credit score you know there may something with insurance may come up if they pulled your credit report they don't have anything so you have to show them past bills that you've paid on time like there's a little bit more effort but it's way worth it from a mental capacity than keeping debts and managing debt your whole life for the score, right? That's right. But no, but it is still possible and people, yeah, they're still doing it all the time.
And it's still a possibility. Yeah, absolutely.
Let's go through what you'll expect. Let's go through what you'll expect so you'll be able to start planning for that because I think that knowing that going in is important so you do have to show rental history so if you're living with your parents I feel like this is where people get hung up is if they're living with their parents and they haven't been paying them any sort of rent you still have to be able to show 12 months of rental history so keep that in mind you're going to have to show 12 months of other trade lines said, if you're not borrowing money, then other trade lines could be things like cell phones or utilities or even insurance payments, car insurance payments, something like that.
And you're going to have to show like actual money that you're making money. So you'll have to show income for the last 12 months.
If you're self-employed, it'll usually be like 24 months and they're going to want to see your pay stubs for the last 30 days. OK, so that's what you're looking for.
And if you are self-employed, they might want to see your tax returns as well. So that's kind of just a nutshell of what they're going to ask for.
So you can be prepared for that. OK, perfect.
Thank you. So would it be smart to make an account with said bank or mortgage company so that I can like whatever I get? If I can, if I'm able to throw money into that account, I can start a relationship with them.
Is that kind of a smart way to do it? Or do you guys suggest anything other than that? So they're not. I just want to be set up for when the time comes to be ready to do it.
I love that. I love that you want to be ready.
I think you're thinking of it as a bank, a bank or like a bank account. It really just is a mortgage company.
So you would set, if you're ready to set aside and start saving for a down payment, we would say a high yield savings account is a good place for that. Not with a mortgage company, like an ally bank or somewhere, you know, that's be looking online is usually a great option for high yield savings so yeah your your savings for the down payment should go in a high yield savings account with a traditional bank or an online bank and then when it's time to actually buy the house which for first-time home buyers we recommend a five percent down payment and on a 15-year fixed rate with your payment being no more than 25% of your take-home pay.
So after you have all of that, then you're able to say, okay, I'm going to go to a mortgage broker or a mortgage company and get a mortgage. They're going to have to do manual underwriting because I don't have a credit score.
And then you keep on moving. And it's great.
Yeah. And I always will take it a step further because if you're a first-time homebuyer, Rachel, I feel like there's so many things that you're like, I didn't know that.
I didn't know that. It just keeps hitting you.
And so one of the things that I started, it's just like a little acronym to remember. It's like when you're ready to buy a house, you play the right cards, right? You play with a stacked deck, D-E-C-K, right? So D is down payment, right? Rachel just said what you're looking for, 20%.
If you can do more, that'd be great. You know, but if only you can get it's 5%, like that's fine too.
But even earnest money, E is for earnest money. People forget that when you make that offer, you've got to be ready with cash.
That goes right away, right? To say, yes, I'm serious about this offer. And that does go towards closing costs.
But if you were thinking, oh, like I'm not quite ready yet. Oh, I didn't know I needed to have that money yet.
Knowing that that's coming is important. Of course, C, you're on the hook for some of the closing costs.
But if you were thinking, oh, like I, I'm not quite ready yet. Oh, I didn't know I needed to have that money yet.
Knowing that that's coming is important. Of course, C, you're on the hook for some of the closing costs.
So that's another expense there. And then K, you have to keep in mind the other things that go along with buying a house or moving like boxes, Rachel, and packing tape and the bubble wrap, like that stuff is so expensive.
So just really getting your mind around all of it as you're saving up is so important so that you're not kind of hit there and like disillusioned at how much it really does cost so it's like a taste of being a homeowner just getting through the home buying process where you're like oh my gosh there's just a lot there's so much so much i hope that helps thank you so much for the much for the call. Sarah is in Rochester, Minnesota.
What's going on? What's going on, Sarah? Hi. First of all, I'm so excited to be able to talk with both of you ladies.
I love listening to you both, so thank you for taking my call. Thank you so much.
Yeah, my question today is about my husband and I's situation if we're ready to buy the house that we're currently living in. And we have the opportunity to do that on a contract for deed, actually.
From your parents' home? Yes. Where are they going to go? It's not my parents' home.
My parents own the home. Oh, okay.
Were they using it as a rental, like for an investment property?

It was actually my grandmother's home.

Oh, okay.

And so they've had it.

What have they been doing with it the past couple years?

So we've actually been living in the home since she passed away for the past six years.

Okay. So we've actually been living in the home since she passed away for the past six years.
My husband and I wanted to get married before we would move in together and then also consider purchasing the home. So now we're kind of in this spot where we've been here a long time and we've been paying rent.
And we just want to know in our financial situation, is this a good time and I maybe part of it is we're just a little scared to make the jump sure how much are they selling it to you for around 400,000 400 the other scary part okay and is that like a market value or is that um yes discount it's market value so you're not getting any kind of deal because it's grandmother's home. Well, there may be a little bit of a deal in there, but I would say probably maybe no lower than like 380.
Okay. No, that's fine.
Yeah. And do you guys, do you feel like financially, are you guys out of debt and have some some savings so the we've been working really hard on getting everything paid off we actually just paid off one of our vehicles oh congratulations for a while thank you which was really motivating um so we do have one other vehicle to pay off that we still have twenty thousand dollars on okay how How much do you guys make a year? We're making around $145,000.
$145,000.

Okay.

Do you have make a year? Making, uh, around $145,000. $145,000.
Okay. Do you have money saved at all? Any savings? Um, well I have, um, um, we have money saved about $15,000 in a CD.
Okay. And then we've been keeping like a little bit of an extra savings for us with the kids.
But the rest we've really tried to put towards our debt. Okay.
So what would be the down payment for the home? So we could put a down payment of $20,000. How? Where is it coming from? That we had set aside to put that from to put that you have an extra

20,000 yes okay I would um I would slow down a little bit Sarah I think it scares you because

you guys are in a little bit of a shaky situation I take the 15 some money from the 20 pay off the

car tonight you'll have 15 left that's your emergency fund then I would re-save for a down

payment to make you feel good about it so I think you guys are still a few more months away

Thank you. some money from the 20, pay off the car tonight.
You'll have 15 left. That's your emergency fund.
Then I would re-save for a down payment to make you feel good about it. So I think you guys are still a few more months away, maybe a year away.
But the good thing is the house isn't going anywhere. That's right.
It's grandma's house. So tell your parents, hey, we need a few more months and I'd be out of debt emergency fund with a good down payment.
Listen, guys, I've heard just about every excuse for why folks think they can't get ahead with money so let's go ahead and settle this right now the truth is you get to decide what happens with your money and if you want to start winning with money you have to get on a budget the every dollar budget app makes it easy for you to plan every dollar you've got coming in and every dollar going out. Plus, it's free.
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All right, you're listening to The Ramsey Show, and I don't have to tell you guys, money and relationships can be two of the biggest stressors in life. I mean, it's so true.
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Okay, they're going to be live in six cities. That's Louisville, Durham, Atlanta, Phoenix, Fort Worth, and Kansas City.
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I hope to see you there. All right.
Let's get into these phone lines. We've had great calls today.
Keep them coming. We've got Becky in Louisville, Kentucky.
Becky, what's going on? Hi, I just had a question. I am 47 and I was wondering how to get caught up on retirement with $47,000 worth of debt.
Oh, okay. $47,000 worth of debt.
You're thinking about retirement. Tell me your age again.
You said it really quickly. Oh, sorry.
47. You're 47 and $47,000 of debt.
Yeah. Look at that.
Okay. So let's kind of unwind this a little bit.
What's your income? Tell us a little bit about what you do. I own a cleaning business.
Just my husband and myself that do the cleaning. And we make about $6,685 a month as after tax.
And what else did you say you needed? Is your husband the same age you are? Is he in his late 40s? Yes, 47. Yeah.
Okay. What kind of debt is it? I was looking at it.
It's mostly like back taxes and we have three credit cards. Okay.
So you owe the IRS. How much of that is IRS debt? I owe, let's see, about $25,000, one to our local DOR, Department of Revenue, and then $15,000 on IRS.
Okay. And then we have two SBA loans that adds up to about $13,000.
Okay. Okay.
Yeah, so you've got your work cut out for you here. I mean, typically we would say, you know, to do the debt snowball, list them smallest to largest, and go through like that.
In this case, you know, we always say that IRS debt or tax debt jumps straight to the top of the list. So, I mean, that's the case for you.
I would start off with that IRS debt, the $15,000 and work through that. And then I would go to the DOR debt and then the SBA loan will probably be final.
In the meantime, my question is, what can you guys do? I mean, you're entrepreneurs, you're creative minded. What can you guys do to start bringing in more income, kind of using your skills in the now? Yeah, I was curious, how much per house are you guys making? Well, we do mostly commercial jobs.
That's the majority of our income is what what we make um we have a few residentials we could probably add on uh but residentials um probably a week we probably make about 600 a week okay um and are you guys working 40 hours oh plus um yeah it's usually about 60 hours a week. 60 hours, okay.
Yeah. And making 70 combined? Yes, uh-huh.
Around $70,000, $6,000 a week or a month. Uh-huh.
Okay. Well, when you break it down, you know, you're both working full time, so it comes out to be, you know, $35,000 each that you guys are making per year and i'm just wondering because the biggest thing for this is to get your income up like what jade was saying to get out of this is going to be like that's going to be the biggest thing so i'm just wondering from a time perspective is there anything spending 40 hours a week you know doing um something like what else because you're spending 60 hours a week is what you're saying is really what ends up being so i'm just wondering you know what else is out there not to not to close down your business because i know this is how you guys are making a living well what would it look like to add more and bring other people to help you so you're not i mean you guys are only gonna have so many hours in the day yeah but to get more clients on and then you're bringing on people to say okay or upcharge yeah have you guys raised your fees in a while uh the last time we raised it was last year okay okay but i mean of course everything is going up so i mean yeah i look for ways to offer some sort of i mean obviously off raising your prices to meet inflation makes sense but then you can find premiums that you can add that don't necessarily take a lot more of your time but it gives you a reason to increase your price right so you could look for things like that you look for things like that i'd look for other built like other commercial properties other personal properties and then i'd bring on a couple of folks that are like because there's always people looking for side hustles so somebody who wants a house cleaning side can go to you guys.
And now you're just taking a percentage of it because you're the one sourcing the work. Right.
So I think there's a lot here for you to do, but you're going to have to get creative and you're going to have to pull the trigger on that stuff sooner than later. So you can see the impact of that money.
OK. Yeah.
So really, Becky, I mean, it's it's cutting expenses and upping income is what it comes down to so before even doing anything into retirement paying off this 47 000 and that like that's that's number one goal um okay and and then once you pay that off be stacking some cash after that for an emergency fund and then start looking yes at retirement do you guys have anything saved right now in retirement um i think i've got about two thousand okay okay do you have any cash available just a thousand that we you know save for emergency fund yeah okay that's great but we do have a big job coming up um that's gonna give us about thirty thousand30,000 from the job. Good.

You think I should just use all that towards the debt,

or should I put some of that in retirement?

Use all of it towards the debt, but pay taxes on it first so that you don't. Oh, absolutely, yeah.

So that you don't land yourself in this.

Yeah, the whole tax thing was like a big not have knowledge in it when we first started.

Sure.

Becky, how do you get more of those jobs, having someone paying you $30,000. Is there more of that out there? Yeah.
Oh, may have lost Becky. Okay.
Well, yeah. Okay.
Well, that's great. Well, yeah, if I were you, I think being able to find those bigger fish to fry, if you will, because if it's the same amount of time, find clients that are going to be paying you more for the same amount, right? I mean, if you're working 60, I mean, it is a little defeating of like, man, 60 hours a week making 35,000.
You'd make more doing something else. I mean, right when it comes down to it.
So again, I know this is y'all's lifeblood and you've built this business. So I'm not saying to abandon it, but you do kind of have to reevaluate what is my time worth? That's and am I charging enough too we do find that a lot in small businesses that you know that demand is there yes and yet you're like okay you've kept your prices you know relatively okay but you could you could up them and test it at the very least test it you know take a couple of your clients and get get to that number that you think and I think you'll be surprised at what people will pay for a couple of reasons number one like it's a service people are willing to pay for and it's it's a pain in the butt to change like it's a pain in the butt to say oh man okay I guess I need it's too expensive I guess I need to find a new service like most people are like okay whatever yes totally whatever.
Yes, totally. Seriously.
And I would be apt to tell you that corporations are going to be less likely to change and absorb some of your raises than individuals like with a homeowner. So yeah, Becky, I would be looking around.
And again, that $30,000 deal, that's amazing can we, can we, can we get that? Yeah, I like that. All right.
Thanks for the call. Quick question from Jeremy on Facebook.
He says, do you have any guidelines as to when we should think about withdrawing investments? I invest regularly and I understand the power of compound interest, but I also want to take my family on holiday vacations. Oh yeah.
Well, I mean, I would sit down with your financial planner and kind of map out, okay, if we have some non-retirement accounts, you're gonna be paying taxes on the growth. So you need to remember that and what's worth it, what's worth cash flowing versus living off these investments.
And what's that? We've got, we just had that conversation this week. I'm like, you know, when does that happen? But as long as you can cash flow things, keep those investments growing.
I agree. But when you get to a point as you get older and that maybe income starts slowing down,

that's what those investments are there for. And so be taking those out.
But yeah, it's a great

question. Great question.
Great answer. Hey, if you want to keep watching the show, you want to

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