Are You Ready To Go Scorched Earth on Your Debt?

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John Deloney. We're taking your calls at 888-825-5225.
We'll do our best to give you the right next step for your life, your money, your mental health, your relationships, whatever is going on. Shannon's going to kick us off in Phoenix.
What's going on, Shannon? Yes, hello.

Hey. What's up? Oh, okay, so I'm calling because my ex-husband and I bought a townhouse for our children to live in during college.
And then four months later, I filed for divorce. first our was final, but in the divorce, they didn't split up the property because my oldest daughter was on the title in the mortgage.
So then after that, I had to get a real estate attorney. And we're now at the point where we have a legal agreement for my ex to refinance the property and get my name off the property.
Or if he doesn't do that by March 1st, then we sell it. But this is being contentious.
And my issue is for my daughter. He's telling my daughter that she has to be on the refinance of the property.
And I'm just want to give her the right information for her financial security for her life if it's a good thing for her to be on the mortgage of this $600,000 property. Is she in school? She is a junior, and she also is a real estate agent, and she is making about $50,000 a year.
Yeah, that's not even in the same plan. It is a $600,000 mortgage.
I know. If she was artificially propped up with you and your ex paying the mortgage.
Yeah, she shouldn't be on it. Right.
Yeah, no. I don't know why she would be on this.
It's just like y'all are paying for her dorm room. It just happens to be not not a dorm room it happens to be a condo that you as the parents decided to buy for yourselves and that's yeah because what's going to happen is he's going to get mad or something's going to happen he's going to quit paying and a 21 year old college grad is going to have a gets foreclosed half million dollar mortgage yeah she's going to get foreclosed on she can't afford that yes and and that's what i thought but he's um um citing to her and saying to her that we signed a legal agreement and that she has to be on she didn't sign anything did she he didn't my attorney said that um uh here it is he said she is not a part of the settlement agreement,

that her signature acknowledges that she's aware that it took place,

but it doesn't bind her to any terms of the settlement. So whose name is on the deed and whose name is on the mortgage?

All three of ours.

Yikes.

So the greatest gift you could give this young woman is to sit down with your daughter

and say you need to go find yourself an apartment to live in and get out of this thing.

I think she can afford her own apartment.

I think she's at the stage in her life where that's what she,

Thank you. to your daughter and say you need to go find yourself an apartment to live in and get out of this thing.
I think she can afford her own apartment. I think she's at the stage in her life where that's what she can do and wants to do, but her younger brother and sister also want to live in this townhouse.
That's between them and their dad. I know.
I would get out of this. It has not been a blessing so far.
It's not going to be a blessing a year from now. And by the way, why did you file for divorce? Financial reasons.
Because he's not a person of character? Yes, because he does things like this to me constantly, and I've wasted a whole bunch of my personal money, so that's why I got out for financial things we kept getting into that me and my family had to pay to get us out of. So we call that financial infidelity here.
And there's no reason to think he's going to suddenly start acting with character and integrity on these exact same matters with other people. He's just looking for the next victim.
You left. I agree.
And we have this legal agreement that he has to refinance by March 1st and December 15th. I got an email from a title company and he's now wants to assume the mortgage because I definitely know that he'll save a lot of money on the interest rate.
Yeah, but you have to get off in this young child. Yeah, I've spent $10,000.
Can he even afford this if he assumes the mortgage and it's just on him? He's just going to rent it out to a stranger off the street at market rent or what? What's his plan? Right. I don't know if he can actually qualify.
I think that's why he needs our daughter to help qualify. Well, he can't force her into this.
Yeah, that's predatory. Tell your daughter, please don't do this.
I know I tried, but it's, yeah, he's just very convincing. And he's had renters in and out, but can't keep renters in there.
And there was even one time when there was a renter who was an ex-con and he didn't do a background check living with my two children. I know, but listen, listen, you're looping on something you've already made a decision on.
Yeah, I agree. Like you just telling yourself the story again about one other time he screwed up and one other time he screwed up and one other time he screwed up is a choice for you to be miserable right here in the present.
Don't do that anymore. What you can do is affect what happens tomorrow.
And you can sit down with your daughter and say, this is a bad deal financially. You're going to be attached to a $600,000 mortgage.
your father who you love and is your dad i'm not going to talk bad about him but facts are he is not skilled in financial matters and so i'm going to tell you as your mother please do not attach yourself to a six hundred thousand dollar mortgage to somebody who especially with somebody who is pressuring you to do something that you can't afford here's's the, this is not a mom and dad. This is a math problem.
And he's using her as a pawn in this scheme. And if she chooses knowing all of that to still go through with this, that's on her to deal with.
That's right. She's going to, and he's going to have to deal with it when he realizes a 21 year old cannot help pay this mortgage.
And you can tell her you're a grownup. You can do what you want to do i um will be with you you can call me when this thing goes sideways and you can smile at her yeah or you can say you make 50 grand a year go get an apartment i know you're the mom and you love her and she's what 20 now 21 now 21 now so you're in that weird awful bum slash really awesome transition where you get to stop telling her what to do and you get to just sit down across from her at a diner and say, I'm going to try to use the power of influence.
I love you. And here's what I would do.
Or here's the, here's the things I've done and it was wrong. And so here we are.
Yes, and that's exactly why I called you guys because I didn't know what else to do.

I kind of tried those things, and her dad is very convincing and she wants to help. She's a really good kid.
Well, she's a kid who's grown up being a people pleaser because she had to. Yes.
Yes. And the only other thing I could tell you to do is to ask her to just run the numbers with you.
Yes. And this is not going to be the last time she bails dad out if she goes down this path.
And she's going to learn the hard way. And it'll probably destroy their relationship long term.
I don't see a world where this just ends up perfectly. And they're all happy with what happened financially.
That's right. I agree.
Yeah. And let me just say this, George, to all the, not to you, but to all the parents out there.

Yeah.

If you ever, ever have to go tap the credit, pull a credit card out in your kid's name, sit them down and try to convince them to use their success, their wealth, as a pawn in some scheme you're running, you're a scumbag.

Thank you. This is America and you're an adult unless you don't break the law.
Don't drag your kids into this stuff just because you have an ego. You can destroy them with you.
Please don't watch some Instagram reel or TikTok where they're like, just buy a piece of property for your kid while they're in college. It's a wealth hack.
Here's what happens on the other side of that. Relationships are broken.
There's no wealth hack here. Don't do it.
Let your kid just live with seven roommates. That's how it should be in college.
God bless. This is The Ramsey Show.
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Amanda is out in Kansas City up next. What's going on, Amanda? Hey, how are you guys? Doing great.
How are you? Doing good. I just had a question about investing.
I want to know the best way to disperse the 15% each month. I recently just quit my job to be at home with my son.
Congrats.

Yes, yes.

Thank you so much.

We are debt-free as of last fall, finished off a student loan.

Great.

Cut up credit cards.

We have every dollar premium, so we're very much on a very strict budget.

But my husband invests 7% with his employer, and then both of us have... You broke up on me.
Both of you have what? Oh, we both have ROPs that we contribute to. We're just not really sure where to go.
We've been contributing to that for about five years. And then we opened up a custodian account and a 529 for my son.
So just trying to figure out the best way to do all of that kind of at the same time. Okay.
So you're in this 456 land. We need 15% of our income going to retirement.
That's the priority. We're going to put our own mask on first.
Anything beyond that can start going to kids college fund, beyond that toward extra on the mortgage. And so are you guys investing 15% of your household income right now? We haven't like totally looked at it because what we have been doing is putting a little bit into our son's account, a little bit into the Roth, because we just kind of started on this journey of obviously doing a one income family.
Okay. So what is your household income? It is, we bring home about $3,600 a month.
And I also have a $1099 work-from-home job, but it's very inconsistent. I can make $300 one month.
I can make $1,000 one month. Okay.
So the take-home pay is about $43,000 a year. What is his gross income? About $66,000.
Okay. So $66,000.
So if we take that number, now we're going to go, okay, 15% of that's $9,900, which means every single month you guys should be investing $825. And here's the way to filter that.
Use this strategy, match beats Roth beats traditional. Does he have a match through his employer? Yes.
Great. And then beyond that, does he have a Roth option through his employer? I don't know, but we each have Roths through our own financial advisor.
Okay. So you have a Roth IRA.
You have a spousal IRA now as a non-working spouse. So you can contribute to that.
Does that need to be changed to a spousal one? I would check with your advisor on if the actual account needs to be changed, but just legally, I want all the stay-at-home spouses to know that they still have an option to invest through an IRA as long as the other spouse has earned income. So it's kind of a cool hack there.
But with your income, you're not going to get super far. I mean, you know, $9,900, that'll max out the IRA, one of them, and you'll get the match.
You'll probably end there. Okay, perfect.
So we shouldn't worry about putting it into both accounts, the Roth IRAs. It doesn't really matter.
You know, 5,000 in one Roth. Let's say you put 5,000 in one, 5,000 in the other.
If you put 10,000 into one, you're going to have the same rate of return, same exact dollar amount if you're invested the same way. Got it.
So it doesn't really matter strategically, you know, if we're going to fill this one up versus this one. So beyond that, beyond the 15%, I like the idea of putting money away in the 529 account, and then you guys have a mortgage? Yes, about $1,000 a month.
Okay. My guess is you probably don't have a ton of extra wiggle room beyond investing and paying all your bills to then throw at the mortgage.
Correct, yes. Okay.
My guess is you probably don't have a ton of extra wiggle room beyond investing and paying all your bills to then throw at the mortgage. Correct.
Yes. Okay.
So my goal for you guys would be how do we get our income up so that we have margin to throw more at college and more toward the mortgage payment. That's your next goal.
Once you get that 15 dialed in. And if you guys can't get to 15 and the bills are too tight, we need to cut some spending and increase income in order to get there.
Okay. Okay.
Got it. And then, hey, I want to ask George a question on your behalf.
Is that okay? Yeah. So, George, we often say on the show, you need to do this, you need to do this.
But sometimes I think people hear that as you need to do it all right this second. So tell me if I'm crazy, but it sounds like in this particular family situation, they've got this goal of paying off the house.
They got this goal of fully funding these 529s and they want to invest 15% and another family value that they've put on the table is we want to go to a single income, right? So might it be that over the course of this first year, we're going to just knuckle down and suck it up and we're not going to have a ton of extra money, but the goal is mama and baby full-time at home seeing how this thing plays out. And then we begin to maybe husband can work a shift or two extra, but then you start to get a sense of this is our reality and then you begin to say okay i'm going to pick up some other shifts or maybe when she the baby turns two then we can do some part time stuff and but it feels like you have to you don't have to all at the same time especially when you're trying to navigate we just brought a baby home to the house oh yeah no there's definitely a seasonality to this yeah a lot of, Hey, we're paying for daycare right now.
We can't put extra on the mortgage. And that might be a reality for the next three or four years.
But I think it's important to sit down and go, okay, if we don't, it's four years of no movement. Is that worth it to us? And if it is four years of, we can only go on one date a month or we're going to have to- We can't go on vacation, but we're going to fund retirement.
Right. So this, and Lane Norton always says, everything is a trade, right?

Everything's a trade.

So it's really important that one person stay home.

It's really important that we homeschool the kids.

Cool.

Is it more important than a vacation?

Because if y'all make that intentional trade, you don't wake up in five years and go, we

never go on vacations.

You wake up in five years and say, we made some sacrifices because this stuff mattered

to us.

And I think it's that lack of intentionality and that lack of understanding. There's just seasons to this thing.
Absolutely. Right.
Yeah. No, Amanda, how does that hit you? That's exactly kind of what we've been thinking.
This obviously isn't forever and I'm going to keep my license up so I can, not license, but my certification up. So when I, when the kids are, you know, in school age, then I go back to work.
And so, yeah, it's definitely just a season of life. I was just making sure that we weren't not saving as much as we could in a, you know, in a healthy way.
I love that. I love it.
But 15% is like, is that benchmark and it's not a, you know, a wet finger in the air. We found Dave's been doing this for 30 plus years.
If you're investing less than that, there's a risk that you might not have enough in a retirement. If you're investing way more than that and the house isn't paid off and the kids' college isn't funded, your kid's going to go into crippling student loan debt and you're going to have a mortgage for the next 30 years.
So there's a balance to it. And we found that if you invest 15% of your income for most people until the house is paid off, you're going to have at least a million, probably multi-millions in that one nest egg.
And so it's a beautiful picture, especially for a young family like that. That's a great way to go.
But you're right, John, this is a tough part of the baby steps. Once you get out of one through three, because we found baby step one, 30 days, boom.
Baby step two, get out of debt, 18 to 24 months. Baby step three, get the emergency fund, six to 12 months.
That's great. you can knock all this out in two and a half years then baby steps four five six forever this is a 17 year journey man like how do we balance it it's like it's like the there's a great theologian who's once said the worst part of being a christian is that it's every single day right it's like you can't ever like memorize all the whatever the book of genesis and be like i'm good.
It's like, cool. Did you take care of the homeless on Monday? And did you take care of the least of these and serve the widows in your community on Tuesday? It never stops.
Or a guy cuts you off in traffic and you exhale and you pray. And you say, I hope this guy gets to the hospital before his wife passes.
And I didn't flip him off. And you're like, I'm becoming a better.
the next guy that flips you out, you got to do the whole thing over again. Right.
And so same thing with exercise, same thing with diet, same thing with being a good spouse, same thing with your money. There comes a moment when it's like, oh, this is every day for the rest of our life.
And if you, if that's frustrating, welcome. It is for all of us, for me, for George, for all of us.
I think you get through baby step three and there's this sense that, okay, now we don't have to think about it anymore. And it's like, no, you got to think about it for the rest of your life.
And it just sucks. But at least you're thinking about the future instead of paying for the past.
That's right. So it's a different problem to have, a better problem to have.
Yes. But you always have to be intentional.
Absolutely. And that's where the budget comes into play.
You've got to get control. Once you get good at that budget, after about 90 days, you get it dialed in, you start to breathe a little easier because there's less unknowns floating around your head.
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That's B-Y-R-N-A dot com slash Dave. Welcome back to the Ramsey Show.
I'm George Camel, joined by Dr. John Deloney.
The phone number to call is 888-825-5225. Haley is down the street in Nashville.
What's going on, Haley? I am doing pretty good today. Are you able to hear me pretty well? Yes.
We got you. Perfect.
All right, then. Perfect.
What's your question?

So I am wanting a great startup advice on how to start paying off my student loans. I am 25 years old, and I am on the end of my road to become a licensed therapist.
and during between the ages of 21 to 23, there was a lot of struggles, unfortunately, to where to the point I was possibly stealing food, risk of homelessness. And when I had found out about refund checks, I was accepting multiple loans just to live off of those refund checks from ranging of $4,000 to about $7,000.
And now being 25, I have about $135,000 in student debt. I'm not out of college or graduate school yet, but I'm wanting to go ahead and start tackling this.
Yeah, that was a real common thing I used to see. They've kind of curbed it over the last few years, but there used to be lines of students that come out and register for classes, get the loan check, and then cancel their classes, and it would just float them to the next semester and then float to the next semester.
So here's the crummy part. You're not going to like our answer.
You're going to have to work really hard and make a whole bunch of money to pay that stuff off. Okay.
I mean, I know that sounds so annoying. I remember one time in grad school, I asked a guy who came in, and you've probably done this too, he was in a counseling class.
And he was a professional, had a big successful had a big successful practice and i said hey um how do you make six figures as a counselor in the room kind of gasped because you're not supposed to ask that question because it's supposed to be all altruistic and kind and i'd do it for free yeah and he looked at me and he said you're not gonna like my answer just like i said to you and i said okay go for it got to work really, really hard, and you've got to be really, really good at being a counselor.

And you've got to take clients on Sundays. You've got to take clients at 6 o'clock in the morning because that's the only time they can get in there before work.
And you've got to work really, really hard. And if you become very, very good at what you do, people will pay you to come help them.
I absolutely agree. That is one thought I was having because, unfortunately, in the state of Tennessee, a typical counselor's salary is only about $50,000 to $60,000 a year.
So I'm in Tennessee. Here's what you have to choose.
You have to choose to not be typical.

And so the typical counselor follows a particular track, and those are my friends, that's my community, that's my world,

and so I don't hate on that one bit.

But if you want to get your head out above the clouds,

you've got to do some things that are going to put your head out above the clouds,

which means you've got to do things differently.

You've got to do groups.

You've got to do early mornings on Sundays and late nights on Saturday nights,

and you've got to do things that other people don't want to do or can't do.

And probably other jobs in between your sessions. Exactly right.
While you're building your client base, you got to do other jobs. And not have enough arrogance to say, well, I'm a licensed counselor.
I don't do Uber. You have to have the ego to say, I'm about helping people and I can't help my clients if I'm worried about how I'm going to get my bills paid.
And so I'm going to work like B-A-N-A-S all across the board, and there's no job too small for me, and I'm going to get it done. And what you'll find is you become an amazing therapist because you begin meeting clients where they are at 6 o'clock in the morning.
I used to see clients at 6 o'clock in the morning. That's the only time she could meet.
And so I was like, cool, I'll be there. I absolutely do love that.
How much, how much further do you have to finish this program? I will be done with my classes by May. And then I'm starting my internship, May 26th to November 2nd.
And then you got several years. Is that a paid internship or? No, this is unpaid internship, but I already have a full-time job at another treatment center.
When does that start? How much does it pay? Is that starting in November?

No.

So I'm currently working a full-time job right now,

but my unpaid internship starts May 26th. Okay.

So you're going to have a season where you're just going to have to scratch and claw and make it work

because you're working full-time, you're doing a great thing,

and you've got to get your internship hours just to graduate.

And then you're going to have to do your 3, 3000 hours after that, right? After you pass your exams. Yes.
So what are you making right now? I make roughly about 42,000 a year. Good.
And what will you be making at this new job? Do you know? Roughly about just the same. Because right now, for mental health technicians, that's just what I work as, it's going to be about $22 an hour.
So after all of this school, you're going to make the same? Is that what you're telling me, or am I hearing it wrong? Okay. So for a therapist, it would really depend ultimately on the agency to where hopefully I can try to make about $55,000 to $60,000.
That's my dream to start off with. Yeah, but that's only at the agency.
You're going to have to also see clients on Saturdays and Sundays and Monday mornings and Tuesday nights. Yes.
You owe $100,000. $135,000 making 50 grand is going to take you a decade to pay off if you're lucky.
Can't do that. And that's not a plan.
I want to see you debt free in a few years, not 10 or 12. So that means, like John said, getting that income way up and also not going further into debt.
So here's the advice that you may be shocked to hear. I would not begin paying off your debt.
Your goal should be to stop the bleeding and to not go into any more debt. So have you already paid all the way through this program or do you still owe more? I have not paid all the way through yet.
How much is remaining? But I, oh gosh, it's still, you talking about my student loans itself? Well, you owe 135. Are you going to go take out more student loans to finish this program? No.
So you're done. We're done taking out debt.
Yes. Are you using debt in any other area of your life? Do you have a credit card? No, I do not have...
Well, the only credit card I do have is care credit just for my dog to take him to his yearly debt appointments. Okay.
And you don't have any other debt outside of the student loans? No car payment? I do have a car loan. How much is that? That is about, I have the exact number right here.
I have about $10,000 left on that. Okay.
And what's the monthly payment? That is about $350 a month. All right.
So when you're ready to pay off the debt, when you're through this program and you haven't taken on any more debt and you've got this down, then we can begin paying it off. And you're going to do this in order of smallest to largest balance, ignoring the interest rate.
And I'm guessing all these student loans, you probably have like 11 or 12 student loans if you broke them all out. Yes, correct.
Okay. So don't do any consolidation here.
focus on attacking the smallest debt, whatever's next. If the next debt is a thousand bucks, let's attack that with all the extra margin we can get with our newfound income from working extra.
That's how you're going to pay this thing off, but again, it's going to take a whole lot more income. Okay, and the good thing is that I also got, I don't really know how to quite use it.
I did get a life coach and spiritual coach certification to maybe open up another side business as well. That's what I'm talking about.
You're going to have to be a, I love that you're getting the experience in the field at a treatment center. That's some of the best experience you could possibly get.
I love it. Because you're going to get to interact with wealthy clients and clients that don't have any money.
You're going to get to see everybody, right? You get to see how systems work and you're going to get to work with top-notch physicians and psychologists and crummy counselors. You're going to see everybody.
That's fantastic. But yes, you're going to have to use every hustle move you've got to see any kind of client all day, every day.
You're going to be exhausted, but you've dug yourself $130,000 hole. And so we're going to use all of your certificates, all of your extra things, and you're going to meet clients where they are all across the board.
And you're going to work and you're going to work and you're going to work and you're going to become very, very good. You're going to get this stuff paid off quick.
Hang on the line, Haley. We're going to send you Financial Peace University.
Watch all nine lessons. It's going to put a pep in your step and give you the financial literacy you need to actually get through this.
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That's betterhelp.com slash Deloney. Welcome back to The Ramsey Show.
I'm George Campbell, joined by Dr. John Beloney.
Open phones at 888-825-5225. John, we'd be remiss not to talk about these fires in California and how they actually impact everyone.
So we wanted to hit some practical things, some financial pieces to think about, and even people who don't live there. It could affect you too.
Yeah. And man, there's, there's two big things here.
Um, and this is just me getting personal one. I've got friends and, and, um, colleagues out there in the affected areas and not even directly in the areas.
I do have some friends there, but also in the peripheral, right? Um, and so I'm somebody, I grew up in Houston where there was natural disasters. And so anytime there's a natural disaster, get i just it lights me up on the inside right i become a seven-year-old little boy who remembers um 10 days with hurricane alicia we had to eat on a on a camp stove and i remember that just the helplessness and yeah and the thought of being a dad and standing with my wife and my two kids and our house is burned like it's just

harrowing for me that's number one number two given the job that i have the larger picture man is um we have these challenges with regulator regulators we have these challenges with local ordinances that you know you can't do all sorts of things that would make areas safer to live in and we're driving out insurance.

And at the end of the day,

and this is a hard pill for all of us to swallow, a bank's not going to loan you money for a mortgage if it's not insured. They're not going to loan you.
We don't want people taking auto loans, but— They've got to protect their collateral. They've got to protect it, right? So if you take out a mortgage, the first thing they ask for is you got to have the house insured, right? And so this affects not only the people who have lost their homes, and it's just tragic.
This affects all of us. And so just a couple days ago, I sent an email to you guys and to Dave and like, hey, I'm worried about the state of the insurance market, right? And so, man, I'm glad that you put this thing together, George.
This is awesome. Just to walk people through what's happening and then what can we do? Yeah.
So like you mentioned, these increased claims for natural disasters that depletes funds, which leads to higher rates, even in low-risk states like Maine and Vermont, and that broadens the financial burden beyond California. So there's a lot of factors that have compounded this, like you mentioned, regulatory constraints that prevent insurers from raising rates to cover their increasing costs.
There's already rising costs from inflation, reinsurance, natural disasters, and then the insurer's inability to remain profitable under current conditions. Remember, they're a business.
They need to make money. You know, this is not in defense of the insurance companies, but if they get bankrupted by having to cover all these claims, they can no longer do business.
Imagine if you had a cheeseburger stand and the cost of beef quadrupled on you and your local government said you have to charge this for a burger well then you can't sell birth right so like um i never thought i would say this but i've i've i understand the business of insurance like if the government's saying you can't do this and the government's not doing the things for the infrastructure to support if there is a fire break that breaks out or whatever challenges, then you can't do business there, right? It's a mess. And it's got a lot of people looking at their own insurance and wondering what does this cover? As everybody should be doing, by the way.
This is a good time to check into that. So there's standard coverage limitations.
So typical homeowners insurance covers events like fires and theft, but often excludes major natural disasters, these acts of God. And then there's supplemental policy.
So depending on your location and risk factors, you might need additional insurance like flood or earthquake coverage to ensure comprehensive protection. That's a big deal in California, earthquake coverage.
Of course. Or if you're on the coast, right? If you're in Florida, you're in Texas, you're on the coast, and there's an increase in frequency or an increase in intensity in storms, yeah, you're going to have to get additional riders if they'll even provide them.
Exactly. And without the adequate catastrophe insurance, you could face substantial out-of-pocket expenses for repairs or rebuilding after a disaster, as many Californians are dealing with now.
They didn't have the right coverage, they didn't have the right policies, and they're left to foot the bills. Or they had them and they got canceled on January 1 or whatever rumors are floating.
I mean, it's a mess. So here's the tactical recommendations.
Number one, like we said, review your current policy. Understand what is and isn't covered under your existing homeowner's insurance and call the hotline and check in with the customer service and go, can you explain to me what this actually means? And then number two, assess your risk.
Consider the likelihood of various natural disasters in your area and determine the necessity of additional coverage. Can I say this? We have a kind of an internal rule that we don't say I told you so.
This is one of those moments when we beat the drum over and over again, don't have a house payment that's more than 25% of your take home because you never know when you're going to have to go get a new rider. You're like, dude, we are super exposed.
We didn't need to go get a fire rider. We need to get an additional policy to cover a flood.
And because these 500 year floods are happening every year now, if 50% of your take home is taken up in your house, you can't float that extra 600 bucks a month or the extra 400 bucks a month, whatever it might be. And so that's why we always say, make it 25%.
You might have to get a smaller house, but man, when these things pop up, you have some margin. Think about this.
The mortgage doesn't go away just because your house did. No.
You still owe the bank that money. Right.
And you got to find a new place to live. Exactly.
So very, very scary. The third thing you can do, if you're in a good financial spot, you're out of baby step two and three, you got no debt, you have the emergency fund, you can raise your deductible.
And that will help lower your premiums. You're willing to take on a little more risk from the insurance company and they reward you with a lower premium because you're going to have to pay a little bit more before their part kicks in.
Another one, take advantage of discounts. So some insurance providers have discounts on policies with teenagers if they have good grades or a safe driving record.

You can qualify for discounts by installing certain safety features like burglar alarms or if you combine your policies. And that's the next one is bundling these policies can save you up to 25%, which is huge.
And then, of course, this is the big one. Compare quotes.
Shop around with an independent insurance broker. I know you love your buddy from college who works at the name brand place, but he's a captive independent.

He's a captive agent, so he can only sell State Farms insurance. And so I like to shop around from the top companies.
I use an independent broker to do that. And if you guys want to learn more about this, you want a Ramsey trusted insurance pro that can tailor the coverage to your specific needs.
We've got a site for you to go to, ramamsaysolutions.com slash insurance, and they'll help you figure out if you have the right coverage for your situation and only giving you what you need and making sure that you get the best price. And man, we were just in a meeting, George, you and I and several other of our colleagues, and it actually made me, it gave me a little bit of light at the end of the tunnel.
They said that this particular service through Ramsey Solutions has been getting lit up. People are going back and checking their policies, and then they're calling Xander.
They're calling some of these brokers and saying, can we get some help? And they're getting the help that they need. So that's, that.
I guess there's some silver lining here that maybe this situation is causing people to get the right coverage. Yeah.
So that they're protected. That's the point of insurance is to protect.
As you build wealth and you're playing offense, you've got to also think about the defense. What are you doing to protect the wealth that you're building? Because all it takes is one emergency like this.
Or if you don't have health insurance and you have a health crisis, it can bankrupt you. That's right.
So you've got to make sure you have the right insurance in place across several areas. And there's a lot of trash products in the insurance world that you also don't need.
And our Ramsey trusted insurance pros won't steer you to those products. They're only going to give you the stuff that Dave would talk about on air that everyone needs.
So this is one of those things. I get pretty passionate.
It's simply, and I've said it ad nauseum, so I won't continue to beat the drum too too much but I've just sat with people who have lost a spouse and they're older

and they look at me

and there's a very particular hollow look in their eyes

and they'll say, I got to go to work on Monday

or I don't know where anything is.

And so I beat the drum about

you got to have a will, you got to have a will.

Please hear me beating this new drum.

All of us beating this new drum.

Go check your insurance coverages today yeah and get term life insurance if you have anyone in your life that relies on your income that means kids a spouse you need term life insurance 10 to 12 times your income and if you're a voting member of your community find out about infrastructure in resources do we have water we do control burns Do we take care of some of these things when times are good so that, not if, but when things go sideways, we're going to be okay. Because, man, you don't want to find out standing at the end of your block, when the whole block, I mean, just...
Another reminder, and this is something you've railed on, John, is know your neighbor. Know your neighbor.
Be friends with your neighbor. If something goes down, can you go over there, knock on the door on the door and they're like oh absolutely yeah and we're so disconnected in today's world that you're lucky to see your neighbor yeah let alone know them talk to them have their number and uh that's been a beautiful thing that's come out of this is just the level of community and people coming out of in droves people have lost their homes are helping other people who have lost their homes and so that is you, you know, in the darkest times, we also see the most beautiful parts of humanity.

That's right.

And if you find yourself in a position where you're in Vermont,

you're in Texas, you're in some place,

and your family's safe and you're doing well,

see if you can get online,

if you can find some places where you can give

and be in support of our brothers and sisters out there in California.

Just lost everything, man.

Generosity is a great way to feel connected to these things. That's right.
That feel out of our control and sisters out there in California. Just lost everything, man.
Generosity is a great way

to feel connected to these things that feel

out of our control. Put some skin back in the game.
That's right.

I love it. Good stuff, John.

Thank you to the Booth folks

keeping the show afloat and to you, America.

That's what I call them. That's as good as I

can say. There you go.
Nicest thing I can say about

those guys. And we'll be back before

you know it. This has been The Ramsey Show.

From the Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Camel, joined by the host of The Dr.
John Deloney Show, Dr. John Deloney himself.
The number to call is 888-825-5225. If you want to join the conversation and get your question answered, that's the way to do it.
April's going to kick us off in Gettysburg. What's going on, April? Well, hello.
First of all, I'd like to say thank you so much for having me on your show. I feel truly humbled by it.
That means the world. Yeah, thank you.
Back before Thanksgiving, I discovered your show and I started listening actively. And I thought, you know, my whole setup of how I did money and business was very much off.
And I thought, I've got to start rearranging things and get on the baby step. My husband and I are on the baby steps.
We secured the first step and we were also getting, I'm sending you some of your advice about having all of our accounts merged. So we had put our savings and our checking account together in both names.
And my husband had had a separate account that he'd had for probably about 25 years. And I told him, I said, you should really put me on that account.
This way we can, you know, put some money in that too. And it was a good thing.
I started listening to your show because it really helped me discover really what was going on. I'd always been pretty active, proactive with my own money as much as I could be, as much as I knew how to be.
But on the 2nd of December, my husband had called about his other account, which for the longest time, it had been pretty dormant. I think he had, well, exactly, he had $100.26 in there for the longest time.
And the bank had told him that he was overdrawn $3,000. And he, of course, called me immediately and told me, how can this be? I I said you need to call the bank back and ask what's going on here so he called the bank and they had told him that the teller or whatever had given out three thousand dollars and it got written off his account because his account was one number off from a customer that had it withdrawn from his account, which really made no sense to us.
We couldn't understand how. You're telling me they like fat fingered the wrong account number and withdrew his account by negative $3,000.
$3,000. But it gets even crazier what we've been going through with it because they said that this had happened back in may of 2024 and here we are in december and they'd said well we closed your account in july july 8th and we were like we never got notice of this and my husband wasn't as proactive with this other account because he figured clearly oh it's there i don't have to worry about it and i just thought oh no so we got a letter um from them you know saying even a copy saying we're sorry there was a mistake and even showing us the teller's number and the individual's name of who got the money but it didn solve our problem.
They said the bank then told us they would send us a check for $100.26, which is what my husband had in the account. He told him, I'm not doing business with you folks because this is nuts.
Okay. But they had put my husband into check systems and also gave him a negative credit report across the board and And we were just like, I can't believe this is happening.
I feel like you guys have been burning too many brain calories on this. You take the check, you dispute it on the credit report, and we move on with our life, and we never do business with this bank again.
But, you know, that's not all, though, because we got the check for $100.26. We thought, okay, it's over.
We're done. They're going to fix it.
That's not what happened. Then December 19th, they sent us a check for $2,899.74 and we're like, what's going on here? And a paper saying that, you know, you're still in check systems.
You can deal with this with them, and we're like, what? So I contacted an attorney, because if you add to $2,899.74 with $100.26, you come to $3,000. So they were still making us look like we had a black eye, my husband.
Okay. So we were like, what's going on here? Did you talk to the bank about that? that they they told us oh no we can come and we'll even come to your house and pick the check up i said i've never heard of stuff like this before what is it a big is it a big big big bank is it a mom and pop no it's a big bank yes we were just shocked by so here's exactly what's happening i'd be willing to bet my truck's not very nice but i'd be willing to bet my truck this is what's happening.
I'd be willing to bet.

My truck's not very nice, but I'd be willing to bet my truck this is what's happening. They're a humongous bank.
One teller either is screwing with the system, but more than likely he made a mistake. He or she made a mistake.
And they doled out $3,000 to the wrong account. Fine.
There's no person at a humongous bank. It's all automated.
and I can almost guarantee you

that whatever email address

your husband signed up on that account 15 years ago, whatever, he's got emails from that bank that were automated and just cranked out. Or he got letters that he just didn't open because he knew he had a hundred dollars in that account.
Everything on those big banks is automated, automated, automated, automated. Even the refund check that accidentally got automated to you guys.
And so, A, stop doing business with a big bank. That's why I like a bank.
I was texting my banker today, right? I like that. I like having their cell number.
And I'm an old Luddite when it comes to that kind of stuff, but I like knowing the person to call. And like George said, you guys are wasting way too many brain calories on this.
You don't need to get an

attorney. You need to dispute it with a credit

report. We did, and they did send them a

letter, and they said they're still going to clear it

with tech systems, so we're waiting for that to happen.

Yeah, they will. It's all,

you're just dealing with a bunch of zeros and ones. You're not

dealing with people.

But here's the thing. I'm going to go back.

Companies

make mistakes. Big systems make mistakes.
That's why we tell everybody, check your stuff every month. Well, we had moved and we had given our new address, but nothing had ever come here.
And the old address... We or your husband says he did.
He actually changed his address with the bank. Yeah, I don't think he did.
Yeah. Not with USPS, but did he change it with the bank? He says he did.
Yeah, but probably not, right? No, he said he did. I know.
I don't think this is worth fighting with him. I don't think this is worth...
We're not fighting about it, but you know what I mean? It certainly makes you feel a certain type of way. It's very jarring and shocking.

That's right.

This could happen.

I see it's $3,000.

It's like, wow, how did this happen?

It sat there for so long.

It's just computer on computer and a humongous bank that's worth $2 trillion.

They're just going to write it off.

It's not worth – they've done the actuarial table.

It's not worth their time to mess with $3,000.

They just peg your credit, and they write it off, and they move on. None of this is malicious or personal.

It was just someone who was inept. Yeah, it's a system.

Well, I can say I'm just glad that I did tap into your show and got more proactive with checking.

Good. And also, I don't let money just sit around.
I want my money to have a goal and a purpose,

and so if it's not your checking for bills, put it in a high-yield savings account.

Thank you for saying that. You're awesome.
You started digging into some challenges and you drank the Ramsey Kool-Aid. Welcome to our cult.
We're going to hook you up with Financial Peace University. You and your husband can watch that.
We're going to pay for it. And we'll hook you up with every dollar app that y'all can share together.
And y'all can start keeping track with all of your money. So hang on the line here.
We'll get you hooked up. But let's flip this whole thing around.
Wow. Y'all caught a $3,000 error and the bank's trying to fix it for you.
That's amazing. That's awesome.
You're getting back on the right track. So I'm glad y'all started digging into this stuff because now we're on the right path.
Focus on the future. This is the Ramsey show.
Hey, what's up guys? It's Jade Warshaw. And look, if there's anybody who knows student loan debt is a problem, it's me.
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Welcome back to The Ramsey Show. I'm George Camel, here with Dr.
John Deloney. What up? 888-825-5225.
Don't be shy. Give us a call, and we'll talk about your life and your money.
The call is toll-free. Who needs tolls these days? When's the last time you made a non-toll-free call? We were in a meeting earlier, and someone's like, who still says toll-free? I don't think most of the people on this.
I think if you're under 30, you don't even know what that means. Here's what it means.
That I paid per text when it came out. Like you got this many texts a month, and if you sent one extra text, so you could get a text from somebody you're dating like, but do you love me? And then that next text cost you like $30 because you'd gone outside of your text.
Honestly? Or to call somebody not in your zip code, you had to pay for long distance. I had a long distance card.
I think we should go back to paying for texts and calls, especially calls. Make those more expensive.
No, especially texts. You call me, let's get off the phone as soon as possible.
No, calls are free. Human to human connection, free.
Text message, you have to pay $8 per text. Then we'd start, stop getting this, yo, what up, how are you? Emoji, George liked this text.
Stop, I'm done with it. LOL.
All right, here we go. The Ramsey Show question of the day is brought to you by YReFi.
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Today's question comes from Kimberly in Washington. When I was a child, my parents took out a whole life insurance and a Gerber grow up insurance policy on me.
Together, they're worth about $50,000. I'm 28 now, married with no kids, and my father is handing off the insurance payments to me to assume now.
Aw, what a great gift. Hey, I bought this thing for you.
Now you get to keep paying on it. Now that you're older, you don't have any kids, so you can pay.
But now it's sentimental. You know, it's like, oh, but you had that when you were just a baby.

It was Gerber.

You'd hold your life insurance policy

and play with it.

The squished up pears in a jar

with your face on it.

So insane.

These monthly payments

added together

are around 40 bucks every month.

I don't know what to do with these.

My husband and I

are currently on Baby Step 2

and easily able to afford

these payments.

I just don't know

if they're worth it.

GK, what do you say? No, I'd get out of this i know but it's so the warmth and the memory my dad took it out for me and i want to honor his no stop you're a grown adult you're not a gerber baby anymore they're worth about 50k if that's the cash value now opt out hit the you know surrender the policy take whatever cash value has built up and then use that money for literally anything else invest it pay off your debt filter it through the baby steps but i would not continue to pay this monthly premium for a subpar product you can do way better on your own and instead take that money and if you don't have a term life insurance policy start that so get term life in place and then cancel the whole life policy. And that term life policy will be way cheaper with better coverage than your whole life policy.
I don't know how these work. Is there a diminishing? Like, so if it's a $50,000 payout, if she cancels it and takes whatever cash is in there? Well, you lose the death benefit.
You know, the face value of the policy. So let's say the face value of the policy was $100,000, but the policy is worth 50K right now, cash value that was built up over those 28 years.
So the face value doesn't change, but the cash value will build up over time. And it can deteriorate because sometimes, you know, all the commissions and fees you have to pay can then eat into it.
So they're going to take your cash value to pay the premiums if you can't pay. Yes.
So there's no way out of this thing. Just surrender it and realize that it was a very kind mistake.
It was a well-intended mistake for your parents to take this policy out. And reminder, life insurance is not for babies.
It's meant to replace your income to protect the people you love. So a baby doesn't need life insurance unless your baby is a prodigy actor that is the breadwinner for the family.
Sure, you can get life insurance for your baby. But anyone else, not for you.
Also, I'm feeling more and more now, George, on my show, we got some data that this particular Christmas, jillions of people are canceling their families. like, so-and-so voted the wrong way, or so-and-so made me...
Listen, that's a whole other show. But Kimberly, on behalf of your dad, I guarantee you that when your mom found out she was pregnant and told your dad, your dad got excited, and he wanted to think about your future, and he went and talked to his, his insurance person.
He went and talked to his, um, his, his retirement person. And that guy or that woman gave him this advice and he did the best thing that he was told to do.
So he's a good man trying to take care of you when you were born. That's awesome.
And now that you've got more information and you've, you've got different advisors in a couple of knuckleheads on a podcast, now you know something different. So good for your dad for looking out for you when you were young.
I wish he'd gotten some different advice, but he didn't. And here we are.
Let's go make the next right move and high five your dad for loving you this far. Absolutely.
And if anyone out there is interested in term life insurance, the people that I trust, the people that John trusts, they provide it for our families. Go to Xander.com and get term life in place, 10 to 12 times your annual income.
You can do a 15, 20, 25-year policy depending on your stage of life. But the goal is to be self-insured after that policy lapses.
So 20 years from now, we're set. We've been following this Ramsey plan, investing, getting the house paid off.
So we have our own nest egg that replaces this insurance policy. But get it in place today.
It's very affordable and a great product. And Xander will shop the top companies for you.
And one more double click. Yes, Xander's a sponsor of the show.
More importantly than that, Xander's who take care of my family, my wife and kids, George's wife and kids. Like this is who we use in our house.
I trust these folks, and I know them on a personal basis,

and so I like standing behind them.

Absolutely. Good word.

All right, let's go out to Sam in Charleston.

What's going on, Sam?

Hey, good afternoon, gentlemen.

How are you all today?

Doing great. How are you?

Good, good, good. I do have a – I've got a question.

It's in regards to my 401k.

So I have a 401k from a previous employer with about just a little bit shy of 500k in it. Haven't worked for them for, you know, about five years.
But my question is, I'm thinking about possibly rolling it into a Roth IRA to avoid the taxes when I retire. And I'm just kind of wondering what kind of tax penalties am I looking at? And is it even worth doing at this point? Well, it's not going to be a penalty.
It would be a conversion, and so you're going to have to pay taxes on that $500,000 in order to convert it to Roth. And so that would be, the only time you would do that is once you're in baby step seven with a paid-for house.
Are you at that spot yet? Gotcha. No, sir.
No, not yet. Okay.
So what I would do, though, is roll it over, do a direct rollover. Is it all the money traditional 401k? Well, it's kind of half and half.
So I've got traditional 401k, and then the other half is straight company stock. So, I mean, the return on that stock has actually been really good.
Last year alone, I reaped a 25% increase in it just because of the stock split that we've actually had. Okay.
Well, I'm telling you right now, it's actually really good. It's a risky plan.
And I'll tell you, the market overall did 24%. So you could do that across if you just invested in the top 500 companies in America through an S&P 500 fund, you would have seen a 24% return.
So I would move out of those single stocks. I don't know, are those inside of a retirement account or is that just non-retirement stocks that you could cash out? No, I could definitely cash it out.
Okay. So the traditional 401k, do a direct rollover to a traditional IRA.
That way you don't pay taxes on that. Okay.
But that way it's in your control. And I'll just have to pay taxes after or when I get ready to retire as I withdraw, correct? Exactly.
Or you can convert it before then and pay the taxes. You might do that strategically, you know, a little bit per year versus doing all 500,000.
But that's up to you and your tax pro and financial advisor. You can dig into the numbers and see when that would be worth it once you're in baby step seven, completely debt-free house and everything.
But the single stocks, I would cash out and know that you will pay taxes on that. Hey, Sam, I'm going to ask George a question on your behalf.
Is that cool? Sure. So George, if you have $500,000 in a traditional and you're going to do a backdoor Roth and roll it, do they take the taxes out of that $500,000 or do I need to have a check that I can write the cash amount? Do you get what I'm saying? Oh, I see.
Well, you're actually rolling it into another retirement account, so you need to have the cash. So that $500,000 is going to go $500,000 to $500,000, but I'm going to have to write a check for the taxes.
So then I can just pull it.

So the conversion, when you get to 500,000, you're going to have to have a chunk of money.

You can do that with non-retirement because you're actually cashing it out,

turning it into dollars, your stocks into dollars.

And so then you could take a portion of that to pay the taxes.

So this is where, that's why it's a baby step seven thing,

where you need to have saved up all the cash to cover the tax bill.

But they're not going to pull up from what's being held.

Exactly. But it's a great question, Sam.
You've done really well, man. Way to go.
This is The Ramsey Show. 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. They don't know what to do next.
Terrifying. 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 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. Hey, guys, good news.
Presale is on now for my new book, Build a Business You Love. If you're a business owner, you know running a business is hard.
That's why I wrote this book, to share what we learned over the last 30 years so business owners can grow your business faster with fewer mistakes. Pre-order your copy today, and you'll get access to over $350 in bonus items only at RamseySolutions.com slash store.
RamseySolutions.com slash store. Pre-order today.
Welcome back to the Ramsey Show. I'm George Camel here with Dr.
John Deloney. If you missed it, we announced our two-night virtual event, Investing Essentials, hosted by Dave Ramsey and yours truly, George Camel.
We know that investing can be overwhelming, it can be confusing, and a lot of you are getting your investing advice from a 60-second social media post. Not the way to do it.
So with this virtual event, we're going to walk you through how to maximize your retirement plans, how to choose the right mutual funds to get the most out of your money, how to invest with confidence. Plus, Dave Ramsey will unpack his personal playbook on real estate investing, explaining how he made millions in property investments, and how he did it debt-free.
And I'm telling you, this is stuff that he's never talked about on the show. It is straight nerdville.
There's formulas, there's graphs, there's charts, there's ups and downs. Friends become enemies, enemies become friends.
It's a beautiful story. So check it all out.
It's happening March 4th and 5th. It's completely virtual.
You can watch from home. Two nights.
Tickets start at $199. Get yours today at ramsysolutions.com slash events or click the link in the show notes if you're tuning in on podcast or YouTube.
Here's what I love about this. This is where America gets to meet the Dave that we know.
And we know, and he would never say this, on the show, Dave's like, oh, you know. I'm just a hill, really.
Dave is like good will hunting. And Dave has explained to me how bond rates are...
I remember I've been around academics my entire life. Some of the smartest minds on the planet about a singular sliver.
And I remember listening to one of his explanations on a whiteboard. I was like, I don't know what he's talking about.
So here's what I love about it. Everybody on the internet is just like, you need to do this and this and this.
And if you poke one centimeter into their bullcrap, it just turns to ash. It turns to dust because it's not real.
They have no substance behind what they say. It just sounds good because it gets clicks and views.
That's exactly right. Dave has lived it.
Dave's lived it. But not only that, he can show you how the math works.
And all the things he does, sounds like he's just ripping it off the cuff. He's not.
And so, unfortunately, over the last 10 years, Dave's advice has kind of gotten dumped into in certain platforms into just another swipe up, right? Just another Instagrammer who's, this is him going, I call. I'm telling you exactly how I do it and why I do it.
And here's the math. And it's astounding.
Can I be honest? We had to pull teeth to get him to do this because he said, nobody wants to know this stuff. It's so, it's so nerdy.
Like nobody. And then people went, no, we want to know.
This is the biggest event we've ever done. We want you to go deeper.
And so that's why we created this event. Awesome.
I love it. I love it.
I love it. Whether you're just getting started with investing or maybe you're at that step where you want to become, you know, a real estate mogul, you're going to get something out of this.
So join us. Go to RamseySolutions.com slash events and join us for investing essentials.
Amanda is in Harrisburg, Pennsylvania up next. What's going on, Amanda? Hi, Dr.
John. Hey, George.
I'm excited to pick your brains today. Pick it.
All right. So I wanted to know what you guys would think of me going back part-time after my maternity leave was over.
I just had a baby last month. Wow.
Congratulations. How's it been? Thank you.
His first kid? Oh, it's the best. Yes.
First kid, IVF baby took us four years and we are so happy to have him. That's wonderful.
So why do you need a couple of dudes' advice on this?

I just want to make sure that we are,

that you guys think we're financially okay.

I watch you guys every single day,

and I was like, I'm going to call in the Ramsey

and see what they think before I make this decision.

So let me ask this.

If money was no object,

would you just stay home with baby

and not work outside of the home?

Yes.

Okay.

Yes. But you're saying, hey, I might have to work part-time not work outside of the home? Yes.
Okay. Yes.

But you're saying, hey, I might have to work part-time

in order to make the budget numbers work.

Correct.

And we are in baby step two, so I just wanted to run things by you guys,

see what you thought, and I'm going to take what you say and run with it.

Okay, before we give you the numbers, can I ask you one personal question?

Of course.

I'm going to ask you a question that you're not allowed to answer,

and so I'm going to ask you to be brave on account of the millions of new moms who are listening to this too. Okay? Okay.
Often there's an identity crisis when it comes to, I used to be a professional. I had this.
I really, I had a great career. I found a lot of purpose in that career, but I really want to have a family.
I want to have a baby and then have this baby and you tell yourself a story.

I've got to do this because I'm going to really want to do this.

And then you have this baby and you're at home for a few weeks and then the

creeping or a few months or a few years and that creeping,

I really found some purpose at work too.

And then you get in this, there's this,

there's an entire ecosystem designed for one thing to make moms feel guilty.

So you have to buy stuff, but then you say or think the words,

I'm sorry. there's an entire ecosystem designed for one thing, to make moms feel guilty so you have to buy stuff.
But then you say or think the words, I kind of want to go back to work, and then it's like, oh, well, if you were a good mom, you would stay at home all the time, or I can't believe you left your job. So tell me what you want to do.
Forget the numbers for a second. If you could, would you just want to stay at home forever? I would love to stay at home with my baby.
Okay. So this is a...
And we also have a farm. Okay.
So I would like to dedicate time to that. Right now I can't really help out with that.
Yeah, dude. E-I-E-I-O.
Get the farm. That's awesome.
But so this is a math problem. Yes.
Okay. That super helps me.
All right. Great.
So let's play this out as if you're at home not working. What is the income coming in every month? If I wasn't working, my husband makes around $65,000 to $70,000.
All right. And what are your monthly expenses? $2,500.
That's it? That includes food, utilities, shelter, transportation, insurance, clothes? That's amazing. Yep.
So why can't you guys do this today? We could. I guess I feel a little bit guilty.
There it is. We've been doing the Gazelle intensity since October of 2023.
We've been able to pay $89,000 of debt off. Amazing.
What's left? Everyone told me that Dave Ramsey was outdated, but, I mean, it works. It works.
He is old, but he's not outdated. Yeah, it works.
Okay, so how much debt do you have left? We have $27,000 left. We are throwing another 10K.
We're pulling it out of our stork mode that we did. So we're paying another 10K off next week.
So then we would have $17,000 left. Okay.
Yeah, we storkmaned for three months and was able to save up $20,000. Amazing.
We've been going hard. So 17k, how quickly will you guys pay this off with you being home? With me being home, well...
Are we talking six months from now? You're debt free? It's actually, we're thinking by June we could do it. Amazing.
That sounds a lot like six months. I nailed it.
Okay. So six months from now you're debt-free.
Now we're working on the emergency fund. Can we save that up in another six months? Probably three and a half.
Wow. Okay, so we're talking before the end of the year, you guys are debt-free with a fully funded emergency fund.
You freed up the debt payments, which was how much? What were you guys paying per month or currently? We were paying over $6,000 a month in debt. What? Yeah, I was working a lot.
My husband was working extra. Okay, this is when you had two incomes.
That makes more sense. I was like, that's more than your take-home pay.
Okay. Great.
So here's what I would do with your husband tonight. Go to EveryDollar and craft a new budget just using his income going, how is this going to work? Do we have margin left over to save and invest and give on top of that once we're debt-free? Great.
And guess what? If it comes down to it and he goes, I need to work a little more in this season, that's fine. Or if you need to work five hours a week because you want to and it's going to help, that's fine.
You get to choose. But what I wouldn't do is give up the dream because of guilt or because you feel like do this out of your values.
And if your values say, I want to stay home with this baby, then figure out what must be true financially to do that and then make the sacrifices necessary. And can I tell you, Amanda, unfortunately, you are in a moment in your life where there's not a move you can make, where you're not going to feel guilty.
Or that someone else won't judge you for it. That's the world you're in right now.
And so if you can exhale, like George just said, and do what's best for y'all, and I want to high five you. You worked three years like maniacs to get to this exact moment when you know what you can do? Whatever y'all want.
Whatever you want. And just knowing, oh, if I go back to work part-time, I'm going to feel guilty for leaving my baby.
And if I stay at home, I'm going to feel guilty that quote unquote-unquote, I'm suddenly not a breadwinner, which is silly. I don't have marketplace value.
Yeah, yeah, yeah. You have existential, like, your value is astounding.
But you're going to have a feeling about it. And so you're going to have to practice doing the next right thing for a season.
Also pick up my buddy Nia Ruck, R-U-C-H. She has a new book out called The Power Pause, which is about this exact moment for when you're staying at home and you're crafting a career after that.
I haven't read it yet. It's been sitting on my desk, but the reviews are astounding.
It's called The Power Pause. Pick up that book and you might not feel so alone after reading through that.
But George... I'm going to suggest one more, John, because my wife stayed home and struggled with this.
Amanda, read in praise of stay-at-home moms from Dr. Laura.
That one was very, very comforting, very friendly. Look at your shout now, Dr.
Laura. The OG.
The OG. The OG.
So I hope that helps you. It's the right choice if it's the right choice for you.
So just move forward. Don't look back.
Don't think about what if and crunch the numbers to make sure you can do it. But I'm telling you, based on napkin math, it's possible.
This is The Ramsey Show. I talk to people every day who want to know how to do better in two areas, money and relationships.
That's why I'm pumped to bring the Money and Relationships Tour to a city near you. Join me and Dr.
John Deloney for a night that will challenge the way you think about this stuff and possibly change how you live forever. Starting April 21st, we'll be in Louisville, then on to Durham, Atlanta, Phoenix, Fort Worth, and Kansas City.
Grab your tickets at RamseySolutions.com slash tour before they're gone. Welcome back to The Ramsey Show.
I'm George Camel here with Dr. John Deloney.
Call us up at 888-825-5225. Hey, The Ramsey Show Annual Listener Survey is now live, and we want to hear your favorite parts of the show, what you like, what you don't, what you want to hear more about, whatever it is we want to hear from you.
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So that's worth it. You give us our opinion, you get to change the future of this show, and you might win a gift card.

I'm going to call that a win.

And also, say nice stuff about us.

Yeah, don't go in there just to trash John.

All right, he gets enough of that.

He works hard on his hair, and so it's just not a good thing to put in the survey.

If nothing else.

There we go.

Exactly.

Let's go help out Christy in Houston, or as John calls it, H-Town. H-Town! What's up, Christy? You have to say it like that, apparently, Christy.
How are you doing? Hi, guys. How are you? I'm doing great.
What's going on? Yeah, so I was hoping I could get your advice. My husband and I bought a home about two years ago, and we did not realize the extent of repairs that it needs, and the area is a lot more unsafe than we anticipated.
So we're planning on selling the home and moving to an apartment, and so we just wanted to know if you guys think this is the best option for us right now. I hear no red flags.
If you want to move, you want to move. You made a bad decision.
It didn't end up working out. There's no harm in selling it and renting for now until you figure out what's next for you.
What would it sell for in its current condition? Our realtor says it could be hit or miss. He said a quick sale would be about $230.
If we left it on, it could be $250 and upwards. We just won't know until we list.
Okay, what's the urgency?

Is it very livable now? Are you guys safe? Can you, you know, stage it, market it, do all the right things to try to get the most bang for your buck? It is livable now, but maybe a couple months ago we had to do some floor work ourselves in order to make it livable because of the rod in the foundation. So it's not completely fixed.
There's areas of the house that I would probably avoid, but it's not unlivable. It's not unsafe.
I mean, we could list it and get a decent amount. What'd you pay for it? We paid, we got $223, but it's a home from my father.
So he gave us a gift of equity. So we owe $181 on it right now.
Okay. So you'd probably walk out of this thing with $20,000 to $40,000 if you're lucky after fees? Correct.
Okay. And you would just, do you guys have any debt right now? We have $1,000 left to pay hopefully by the end of this month.
Amazing. Do you have any savings? We don't.
So we would be starting, other than the $1,000, right? We would be starting our emergency fund. So you'd leapfrog to baby steps four, five, and six, where you're debt-free with a fully funded emergency fund.
You'd rent. And then beyond that, I'd begin saving up a down payment.
And your next purchase is going to be very different. You're going to do it out of a place of strength.
You're going to know what you're getting into before you get into it. You're going to choose a better neighborhood.
You're going to choose a home with less problems. And so I feel good about you guys selling this thing.
Do you have a good realtor? Do you trust them? Yes, he's actually a family friend. So I've known him since he was about, since I was about 12 years old and I'm 30 now.
Okay. Well, you can trust them and they can be a terrible realtor.
Are they really good at their job? Are they going to get you top dollar for this? I believe that he would do every effort. Okay.
To make sure that we did. Yeah.
Awesome. And we have a whole real estate home base.
If you want to check it out for more resources on this, you can jump on ramsysolutions.com slash real estate. And there we have articles, how-tos, calculators, courses, you name it, to help you guys through this home selling process.
But it's a hard lesson to learn, Christy, but you guys are getting out of this thing mostly unscathed. I mean, you're safe.
You're going to make a little bit of profit. I'm going to call that a win and a lesson learned.
Yeah. And I guess to free you from any existential dread you have, if you had bought this house and it was the greatest move you ever made it's still okay to sell it if you're all ready to move and you want to downsize move to an apartment for a season knock your lights out right yeah so either way i think there's a lot of emotion in it george and it's like i feel like i'm quitting i feel like we gave up on the dream no man you learned you learned like um no one to quit we thought we were gonna be house flippers and we hate this and so we want to back that thing up and get out of this awesome knock it out go do it love it all right let's go out to laura in new york up next how's it going laura hi thank you for taking my call sure how can john and i help so my husband and i are in credit card debt of about $60,000 and I wanted to know the best way to pay it off.

Do we... So my husband and I are in credit card debt of about $60,000, and I wanted to know the best way to pay it off.
What did you spend the $60,000 on? It's just over years. Over years of just...
Living on more than you make. Exactly.
How old are you two? We we're thinking 54 and 59.

All right.

Okay.

And you want to know how to get rid of the 60K?

Yes.

What were you thinking about doing?

I have a feeling you had some ideas.

Well, we were thinking, do we take out a consolidation loan?

Do we transfer them to credit cards with a 0% interest? No. Keep going.
This is fun. I'm having a good time.
No. So I don't know.
I don't really know. That's why I need your help.
Don't do any of those things. So here's the deal.
There's a few things you can't do, and I'll tell you what you can do. What you can't do is move the debt around.
That's a consolidation loan. The other thing you can't do is take out more debt to pay off your current debt.
That sounds as insane as it is. So looking to a HELOC or borrowing from retirement, these are not options.
So if you said these are off the table, what are my husband and I going to do to get rid of this debt with our current savings, things we can sell, and our future income? That is the only way out of this thing instead of just feeling like you did something and creating more problems down the road. Okay.
So what's your household income? Monthly, it's about $18,000 a month. It's amazing.
Laura, $18,000 a month? So you know what this tells me? You guys are living high on the hog right now. You're spending $25,000 a month even though you make $18,000.
That's how we get into $60,000 in credit card debt. So here's what you're going to have to do.
You need to chop your lifestyle down to nothing. As in we put food on the table, we cover the utilities, you cover the mortgage.
Do you guys have a gigantic mortgage? What's eating up 18 grand? Well, our credit card bills. And no, our mortgage, I think, is about $3,000.
My husband has that information. So you have $15,000 non-mortgage income every month? Right.
And it's disappearing into what? Because the credit card bills are how much? What's the minimum payments on 60 grand in credit card debt? So they're all different credit cards. I know, but you added up the payments.
How much are you sending to the lender every month? Is it $800 a month? $4,000 a month? I'm not sure. My husband pays the bills.
Okay. I'm sorry I didn't have all this information.
So, Laura, I can hear it in your voice. You need to be a part of this.
Because your household is running without you, but you're responsible for the fear and the stress in that house. You get what I'm saying? Right.
So, before you do anything about HELOCs and that kind of stuff, you got to sit down with your husband and say, as your wife, I am scared every night I go to bed because I don't know the state of things. And if he's a good New York husband, I'll say, I got it.
It's under control. It's fine.
And you have to have the courage and hopefully he's got the courage and you have to say, I need to walk alongside this thing. I need to be with you.
This is us. We're in this together.
Do you guys have anything in savings or anything you could sell? Any other property? Non-retirement accounts? Nothing. Do you have anything saved for retirement? Yes.
In our 401ks. Are you guys currently investing? Yes.
Okay. So your husband's going to need to get on board with this, but if you guys paused all of your investing and you lived off of a very small portion of your 18 grand, what if you could throw 10 or 12 grand at this debt every month? Guess what? It would be gone in four months, five months.
Done. Okay.
That's the solution. You don't owe anybody anything you are rich

you don't need a consolidation loan

a HELOC

you don't need to borrow from retirement

you need to just start

using your income

to your advantage

and using it to knock out the debt

sometimes

oh sorry George

sometimes people

make this kind of money

and they think

they don't have to pay attention

and then you look up

you can out earn your stupidity

for a long time

how do we owe 60,000

you gotta pay attention

right

you gotta pay attention

and this is literally

a six month problem

and it's all gone

it's all gone

but I think this is a relationship issue. I don't know that he has the same urgency as she does.
He's not feeling the same way. Correct.
That's going to be the tough part, not actually getting out of debt. Once you get him on board, this thing's gone.
Hey, check out the rest of the show on the Ramsey Network app. Go get it in the App Store or click the link in the description to keep enjoying more of the show.
Hey, what's up, guys? Episode two of 90 Day Money Makeover is available right now on YouTube. This series follows real people as they take on the challenge of transforming their finances and their lives in just 90 days.
In this episode, watch as they face new obstacles, celebrate wins, and push forward on their journey. And of course, I'll be walking alongside them every step of the way.
Okay, now here's a little sneak peek of what the new episode is all about. Me and Dara, back in November, have a new son, a baby boy.
We have $87,000 in debt. I've been in debt since I was like 18 years old.
I gave birth to him. I knew, I said, I cannot leave him with someone that I don't know.
I don't care if we're eating rice and beans, Sean, I told him. There was no going back.
When you guys called into the Ramsey show, it was like,

I think that we should push them harder.

Baby Jonathan being born is a wake-up call for us to finally change.

I can't go on another month.

Wake-up call.

You know, for the next 20 years, this is important.

You know, we gotta get this right.

You want to pay off your debt.

You want to get your time back.

You want to get your home.

Nothing usurps those three.