It’s Never Too Late to Clean Up a Financial Mess

Speaker 1 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 Campbell, joined by my good, good friend, Dr.

Speaker 1 John Deloney. Taking your calls at 888-825-5225, you jump jump in.
We'll help you take the right next step with your life, your money, your mental health, your relationships, whatever is going on.

Speaker 1 And hey, before we get going.

Speaker 2 Speaking of what's going on, yeah, before we get going, I think it's important just to

Speaker 2 let our friends and

Speaker 2 colleagues and family members in Los Angeles just know we see it.

Speaker 2 It's just a disaster, man.

Speaker 2 I'm rarely speechless and just watching some of that footage.

Speaker 2 I've got friends in the, it, in Pepperdine.

Speaker 2 It's just devastating to see. So it's one of those things you feel helpless sitting this far away and you're watching on your, you know, on your, on your TV or watching on your phone.
But

Speaker 2 what we can offer right now is to let people know they're not alone. We see it and our thoughts and

Speaker 2 we're praying for you guys big time.

Speaker 1 Yeah, our hearts are with you all. And speaking of which, John, our first call is

Speaker 1 from California out here. Nietish is with us.
What's going on, Nietish?

Speaker 3 Hey, folks. Thanks for taking the call.
Sure.

Speaker 3 And I appreciate your sentiments on LA Fire.

Speaker 3 Right now, I have a question that my wife and I bought a house worth around 2.5 million.

Speaker 3 And we have another house which is worth around 1.3 million.

Speaker 3 And it has 500K remaining.

Speaker 3 We have rented it out. It's around $4,000 per month.

Speaker 3 So our salary is around $900,000.

Speaker 3 And

Speaker 3 yeah, so we were just kind of concerned

Speaker 3 whether to kind of keep the rental property

Speaker 3 or

Speaker 3 sell it off.

Speaker 3 The rental is coming like pretty nicely, like it's around $4,500, which is kind of like covering all the mortgages

Speaker 3 and any other insurance and stuff like that. So I was just wondering what your thought is on that.

Speaker 1 What is the mortgage on your current home?

Speaker 3 It's around 2 million.

Speaker 1 Okay, so you've got 2.5 million. Do you have any other debt outside of these two mortgages?

Speaker 3 Just a car loan, maybe 40K.

Speaker 2 Okay.

Speaker 1 Well, you're calling us because your plan isn't working as you wanted it to. There's some stress here.
And I would feel it.

Speaker 1 If I was over 2.5 million in debt, regardless of my income and how great things were right now, in the back of my mind, I would be knowing this is a house of cards.

Speaker 1 It could all come crashing down any minute. Yep.
And so you want to reduce risk in your life. You're using language like, well, it's just a 40K car loan.
That's kind of what gets us here, right?

Speaker 1 You guys have an just undeniably insane income. And yet what happens is you just go, well, we can acquire more and handle more payments.

Speaker 1 And it leads us to this place where we have to decide: do we want to keep going down this road or do we want a more peaceful path? So if I was in your shoes, I'm going to try to reduce that risk.

Speaker 1 So you have an amazing income. How much extra margin do you have at the end of each month?

Speaker 3 So we have around cash coming in around 25K

Speaker 3 after all the 401k savings and everything.

Speaker 3 We have around 1 million in stock

Speaker 3 and around 401k is around another million.

Speaker 1 Okay, and the stock is non-retirement, right? It's fully vested?

Speaker 3 Yes.

Speaker 2 Okay.

Speaker 1 So you could sell a whole bunch of that and knock out a lot of this debt.

Speaker 1 You could knock out the car loan instantly and knock out the rental loan instantly and make about, you know, what, a quarter progress on your own mortgage.

Speaker 3 That's absolutely correct. My wife and I like so my wife kind of feels that the rental is self-paying, so why should we worry about it? Let's just like the rentals pay for our mortgage, pretty much.

Speaker 3 And I'm trying to convince kind of like lowering the risk. So I don't know.

Speaker 2 Do you remember? I don't know if you remember. It was a while ago.

Speaker 2 There was this thing called COVID, and people quit working, and then the local government said they don't have to pay rent and you can't evict them.

Speaker 3 Yeah.

Speaker 2 Remember that? Yep.

Speaker 3 Yep. I do.

Speaker 2 do so i would i would i would assume the mortgage on your rental property is um not very safe because you don't you don't ever know and especially in california with the um squatting laws the resident i mean

Speaker 2 i mean it y'all y'all are y'all have good tenants and god bless you because those tenants can go south in a hurry and it might be 30 days 60 days 90 days six months two years you guys get tied up in court but the bank doesn't care they want to get paid every month

Speaker 1 and the other risk is having all this money tied up in a single stock and a single company. So I like the idea of offloading it for other reasons other than just getting debt-free.

Speaker 2 My mom worked at this company called Enron that used to do that, gave everybody a lot of stock.

Speaker 2 And I had friends who went to bed, millionaires who woke up one morning with zero dollars because all their retirement was in stock in that company. So yeah, man,

Speaker 2 if you're talking to me and George, our families, our houses, we'd sell that stock and start paying off everything we own, man.

Speaker 2 I'd much rather have two tangible assets, two homes I can go see, than a company saying, no, no, no, I promise we're worth it. I'd much rather that, man.

Speaker 2 Okay.

Speaker 2 And especially you're too rich to be holding a depreciated, a loan or depreciating asset like a vehicle, man.

Speaker 3 Okay, sounds good. So I have some extra like $5,000

Speaker 3 per month that I can contribute towards my mortgage. Do you recommend me putting that into the mortgage too?

Speaker 1 Yeah, once the car is paid off, then your next step, you know, if you're filtering this through our Ramsey baby steps, you should be completely consumer debt-free with a fully funded emergency fund, then begin investing 15%.

Speaker 1 Then, any money beyond that can go to kids' college and paying off the mortgage early.

Speaker 1 Okay. And with your income, I think sit down with your wife, show her: okay, here's where we're at, here's where we could be.

Speaker 1 And if we go down this path, we sell the stock, we become debt-free, we free up that rental mortgage payment, we free up a car payment, we have all this extra money, we could tackle our own mortgage and probably be done with that with your income in under five years.

Speaker 3 Yeah.

Speaker 1 That's pretty amazing.

Speaker 2 And how old are you two?

Speaker 3 We are 39 and 40.

Speaker 1 Think about that. You're in your mid-40s and you will have, I'm not even saying sell the rental property.

Speaker 1 You could keep it if you're going to knock it out and reduce some of the stress and increase the cash flow. You'd be sitting with about a $4 million net worth of paid-for property in your mid-40s.

Speaker 2 And a million dollars in your retirement fund.

Speaker 2 Yeah. So you're worth $5 million, free and and clear.
And here's the thing you have then that you don't have right now. Absolute freedom.
Peace.

Speaker 1 And guess what? Your buddies are going to think this advice is stupid. They're going to be like, you should buy nine more properties and leverage all the debt and do HELOC on the first one.

Speaker 1 That's what's going on out there in the culture, but they don't live your life. They don't pay your bills.

Speaker 1 They don't know what happens inside your home, what's happening inside your body, how you're feeling about it. And that's where John and I go.
We're solving for freedom all day long.

Speaker 1 And you're in an amazing position where you have a million dollars sitting there in stock. You have about a million dollar income.
This problem is pretty easy to solve.

Speaker 1 But the hard part is the choice and getting your wife aligned on this.

Speaker 2 I think

Speaker 2 the new wealth moving forward in the 21st century, George, is

Speaker 2 can you fall asleep on your pillow at night? I think the new status of wealth, like Dave used to say, it's not the BMW.

Speaker 2 I think the new status of wealth is nobody owns me and my family. Me and my family have freedom.
We've got peace. And man, I don't care how little or how big your salary is, solve for that, man.

Speaker 2 You change everything in your home.

Speaker 1 Well said. Thanks for the call, Nate Teach.
Good conversation. This is the Ramsey Show.

Speaker 1 Welcome back to the Ramsey Show. Open phones at 888-825-5225.

Speaker 1 Dan is up next in Jacksonville, Florida. What's going on, Dan?

Speaker 3 Hey, guys. Thanks so much for taking my call.
Can you hear me?

Speaker 2 Yes.

Speaker 1 How you doing?

Speaker 3 Good, man. Good.

Speaker 3 So my question is, I just got married about two weeks ago to my wife, who was lucky enough to inherit a Roth from when she was young.

Speaker 3 And it's right now it has about $75,000 in it, and all of it is in Apple stock. Okay.

Speaker 3 So I know, I think, how you guys are going to feel about that.

Speaker 3 And then

Speaker 3 I also have $30,000 in a bond from my grandpa.

Speaker 3 And I guess my question was just how to best go about just investing that and what using it for, whether it put it towards the mortgage or if we're saving up for a car or just kind of how to best utilize those funds.

Speaker 1 Yeah. So what you said it's in a Roth, is it a Roth IRA, the Apple stock?

Speaker 3 It is, yep.

Speaker 2 Okay.

Speaker 1 And then you got 30K in a bond. And what is your next financial goal? As you guys look at this new marriage, do you guys have any debt you're looking to clear?

Speaker 3 Yeah, we have

Speaker 3 about $8,000 right now on a credit card that

Speaker 3 was originally hers, and we're looking to knock that out real soon. We just got a bunch of money from the wedding, so that's kind of what we plan on doing.

Speaker 3 So it should be debt-free, and honestly, at the next week or so.

Speaker 2 Awesome.

Speaker 1 And then how much do you guys have in savings for an emergency fund?

Speaker 3 Right now, about $19,000.

Speaker 1 Well, just knock out the credit card today. What are we doing?

Speaker 3 Yeah, no, you're 100% right. And after hearing that, I definitely think we will.

Speaker 2 Make a declaration in front of America, Dan. You're going to do it today.
Yeah.

Speaker 1 That leaves 11K in your savings plus this 30K bond.

Speaker 1 That's plenty. That should be more than six months of expenses for you guys, right?

Speaker 2 Of course. Oh, yeah, definitely.

Speaker 1 And then you have a house together?

Speaker 3 We do, yep. So

Speaker 3 I think there's about $165 left on the mortgage. So I think the next big goal would honestly just be to get that knocked out as soon as possible.

Speaker 2 Yeah.

Speaker 1 So you could use that. I mean, I know there's some

Speaker 1 required distributions from that IRA, I believe, with the new Secure 2.0 Act law. So So I would look into that and see when you need to deplete that account by.

Speaker 3 Okay.

Speaker 1 But you could use part of that money to knock out the mortgage. You could use future income and just let that money ride and continue growing for you.

Speaker 1 But I would use any money beyond your emergency fund to start knocking out that mortgage.

Speaker 3 Okay.

Speaker 2 Can you take, George, can you take the distribution, the mandatory distribution, and turn around and buy a new Roth with it?

Speaker 1 Yeah, you couldn't do your own investing.

Speaker 2 Just flip it around and do it again.

Speaker 1 Yeah. So I would sell the Apple stock and be in a more diversified investment fund.
Like you were saying, hey, there's Apple is a great company. I used to work there.
I had some Apple stock.

Speaker 1 There's worse companies you could have invested in over the last several decades, but I still would sleep better at night knowing that was in a broad-based index fund that had a lot of Apple in it, but it wasn't 100% Apple.

Speaker 1 Right.

Speaker 1 So I would do that either way, and it's up to you what you want to use those funds for.

Speaker 3 Okay.

Speaker 2 All right. Perfect.
How old are you, Tim?

Speaker 3 So I just turned 26, and she is going to turn 30 next month.

Speaker 2 Amazing.

Speaker 1 You guys are going to knock this mortgage out fast. What's your combined income now?

Speaker 3 Right now, combined, and obviously this is super recent, but combined right now is about like give or take 90.

Speaker 2 Okay.

Speaker 2 Great.

Speaker 1 Well, debt-free, making 90 grand with a 165,000 mortgage. You guys are going to be completely debt-free within my guess is three to four years if you do this the right way.

Speaker 3 Wow. Yeah, that'd be amazing.

Speaker 1 What about by your 30th birthday? You guys have no mortgage?

Speaker 3 Yeah, that would be something, man.

Speaker 2 That would be awesome. It's not something.

Speaker 2 It's just a choice you make today. You get what I'm saying?

Speaker 1 It sounds cool, but then you're like, crap, I got to put extra on the mortgage every single month without fail, consistently.

Speaker 2 Right. Can I do that? And then here's what y'all will do.
Y'all will figure out the

Speaker 2 romance, the sex and intimacy, the dates, the fun. Y'all will figure out your life over the next four years and how to have fun and laughter and joy and friends over and potlucks and whatever.

Speaker 2 And then you're going to suddenly find yourself with no mortgage four years in.

Speaker 2 And then the whole world opens up. You get what I'm saying? Like, I think a lot of times people go crazy the first two years.
They put everything on the credit card. They go bananas.

Speaker 2 They buy all the fancy stuff. And then they realize, oh, we spent a lot of time on external stuff and we didn't take the time to have to do the hard work internally.

Speaker 2 You guys, if y'all flip that around and you're just intentional, like we're not going to have any money because we can put all in the mortgage and we're going to make a run at this thing,

Speaker 2 dude, that would rule. Dude,

Speaker 2 no mortgage at 30. I can't even wrap my head around that, man.

Speaker 1 Yeah, and this inherited money, that's just leap proging you. So I'm going to use that to create a legacy for my own family.

Speaker 3 Yeah, no, it's definitely lucky. So,

Speaker 3 but yeah, no, that'll be the goal. So I like that by 30.
So that'll be the goal.

Speaker 1 That's it, man.

Speaker 1 That kind of goal and that kind of intentionality, you start to get your new wife excited about that. You guys are aligned with money, like John said.
You can stop talking about money.

Speaker 1 You can do more fun things with your life than have money fights. So, we're rooting for you, dude.
Awesome. Congrats.

Speaker 2 You could do things instead of money fights.

Speaker 1 That's what it's all about.

Speaker 1 Louise, let's talk to Louise in Medford, Oregon, up next. What's going on, Louise?

Speaker 3 Hey, guys, nice to meet you guys. How are you?

Speaker 2 We're doing great.

Speaker 1 How can we help today?

Speaker 3 Yeah, so I'm 24 years old, married. My wife is also 24.

Speaker 3 Our household income is about 90 to 100K a year.

Speaker 3 About eight months ago, I started hearing about your show.

Speaker 3 Immediately, we went debt-free. It was no-brainer.

Speaker 3 Now we have an emergency fund, and we are currently renting and in the process of getting money for a down payment for a house. So the question is,

Speaker 3 what advice would you guys give us as a first-time home buyers? Should we save 20% down,

Speaker 3 20% down payment, or should we do an SHA loan, conventional? What would you guys recommend?

Speaker 1 Great question.

Speaker 1 I'll give you the Ramsey parameters and we can dive into your situation after that.

Speaker 1 We recommend at least 5% to 10% down for a first-time homeowner and only choose a 15-year fixed rate conventional loan

Speaker 2 where the payment is no more than a quarter of your take-home pay.

Speaker 1 And I know once you crunch these numbers, Louise, you're gonna go, Oh my gosh, these guys are out of touch. How could anyone do that? We can't change the laws of math.

Speaker 1 So a lot of people go, Well, I guess it'll just be 60% of my take-home pay going toward this mortgage, and I'll be stressed forever.

Speaker 1 And so that might mean you need to choose a different house, choose a different location, choose a townhome instead of a single-family home, save up a bigger down payment.

Speaker 1 So, knowing all that, where do you guys stand financially? What's your goal?

Speaker 3 Um, we would want to get like a single house

Speaker 3 family, like three bedroom, two bath, something like that. We'd always have family over.

Speaker 1 And what is a reasonable home in your in the area you want for those parameters? What's that going to cost?

Speaker 3 We're looking around 400,000.

Speaker 2 Okay.

Speaker 1 And how much do you guys plan to have down?

Speaker 3 That's kind of the goal that I'm trying to set.

Speaker 3 I'm fine with waiting until we get 20%.

Speaker 3 but if you guys recommend 15, 10 or something before,

Speaker 3 we can pull the trigger as well.

Speaker 1 Well, I think based on the mortgage payment with the current market and rates

Speaker 1 where they're at, I think that's going to be a hefty mortgage payment that you guys won't be able to stomach. That might be 70% of your take-home pay.

Speaker 1 So it's not as much of a down, how much down five or 10%.

Speaker 1 It's we might need to save up 30% down in order to make this mortgage work for us, which means we need to get our income up and we we need to rent for another two years.

Speaker 1 Okay, so those are that's the kind of sacrifices you'll need to start looking at. Are we willing to compromise?

Speaker 1 Are we willing to do a three-bedroom townhome that's $300,000 because we have urgency to get into a house?

Speaker 3 Yeah, because, like, talking about sacrifices,

Speaker 3 I own a business, and when I was a little younger, I think I made a rookie mistake of buying

Speaker 3 an $85,000 work truck.

Speaker 2 It paid off, but

Speaker 3 if you don't mind asking the second question, should I sell that truck and buy a $34,000 truck? And then that would speed up the process. Yeah.

Speaker 1 Absolutely.

Speaker 2 You can do your job with a $30,000 truck.

Speaker 1 Sell it today.

Speaker 2 Got it. Today.
Yes, get rid of that thing, dude. $80,000.

Speaker 1 It's not like if you get double the truck, you're going to make double the money. Right.
That's not how business works. You know that.
So I would definitely make the sacrifices needed.

Speaker 1 And if that means downsizing in truck, I'm doing it. If that means working overtime for the next six months to get this down payment going, I'm gonna do that.
So you guys decide.

Speaker 1 You can pull all the levers you want, but don't take any shortcuts doing these first-time home buyer, 0% down-type loans. They're not in your favor, my friend.
This is the Ramsey Show.

Speaker 1 For free tools and resources to help you reach your home goals, go to ramseysolutions.com slash real estate or click the link in the show notes.

Speaker 1 Welcome back to the Ramsey Show. I'm George Campbell, joined by Dr.
John Deloney. The phone number to call is 888-825-5225.

Speaker 1 Well, there's a lot that goes into buying and selling your home, and all of those decisions can feel overwhelming, and you shouldn't have to do it alone.

Speaker 1 And that's why we created Ramsey's Real Estate Home Base. It's a place with all the tools and resources you need to get prepared to buy or sell your home with confidence.

Speaker 1 You're going to find calculators, start-to-finish guides, how-to articles, a podcast, a book, and even a video course all packed with actionable steps. to help you navigate this process.

Speaker 1 So if you're ready to take those steps toward your home goals with peace of mind, go to ramseysolutions.com slash real estate or click the link in in the show notes and description if you're listening on YouTube or podcast.

Speaker 1 Cindy's up next in Fort Worth, Texas. How can we help, Cindy?

Speaker 3 Yes, hi. Me and my husband are reading your total money makeover book and we are trying to get serious about getting out of debt.

Speaker 3 But we currently have about $300,000 worth of debt and we're just really struggling to make minimum payments on credit card, let alone save up the $1,000 emergency fund wow does that include your house yes okay so how much do you owe not including the house

Speaker 3 so

Speaker 3 it's

Speaker 3 140

Speaker 3 okay

Speaker 1 can you break that down for me

Speaker 3 so we've got about fifty thousand dollars credit card

Speaker 3 fifty thousand dollar car loan that was seventy five thousand i just sold my car to get out from under that

Speaker 3 and about forty thousand home equity loan.

Speaker 1 You got it all. You've collected them all.

Speaker 2 So hold on, you sold your car, but you still owe $50,000 on it? Or does he have a car?

Speaker 3 Yeah, we have, we are, we're financing three cars and now just two.

Speaker 2 Okay.

Speaker 2 Tell me about the other two you're financing.

Speaker 3 My husband's car is a 2022. We owe about $33,000 on it.
And then my daughter's car is a 2022 Corolla, and we owe about $17,000 in that.

Speaker 2 So we're going to sell both of those in the next 15 days, right?

Speaker 2 Are we? Yes, I think we are.

Speaker 2 Y'all are

Speaker 2 very scary, bro.

Speaker 1 If you can't come up with $1,000,

Speaker 1 then these cars have to go. You guys are ⁇ I mean, these cars are robbing you from a different future.
You can get nice cars later.

Speaker 1 We're not saying you can never have these cars again, but this is part of the issue. You get rid of these car payments, you can breathe again, right?

Speaker 2 How much do you and your husband make?

Speaker 3 I think it's about $130,000 a year before taxes, bringing home probably right around $100,000.

Speaker 2 Okay.

Speaker 1 Are you guys doing any investing right now?

Speaker 2 No, no, in our 401k.

Speaker 2 What's that?

Speaker 3 Just in our 401k.

Speaker 2 Well, that counts as investing.

Speaker 1 Just investing.

Speaker 1 So if you took that down to zero, that would put some money back in your paycheck every month, right?

Speaker 3 Yes.

Speaker 1 Okay, so that's a start. You can reshop reshop all of your insurance.

Speaker 1 You can go to ramseysolutions.com slash checkup and do a coverage checkup, reshop it all, because you might be able to save some big money every single month just by reshopping insurance.

Speaker 1 And on top of that, can you guys work extra, either of you?

Speaker 3 Yes, I actually just picked up a Saturday job.

Speaker 2 Good.

Speaker 1 Good. Do you feel the compounding effect of what a few of these things stacked on top of each other would do for you?

Speaker 3 Yes, just getting rid of my car this past Monday, we are going to be saving $1,031 a month. Boom.

Speaker 2 Wow. And there's your $1,000 right there, right? Yeah.
Yep. Absolutely.
So you'll have $1,000.

Speaker 1 And then what are these car payments that are left? What do they add up to each month?

Speaker 3 Let's see, $1,259 a month.

Speaker 1 So think about that. If you sold the cars and downsized to just something you can get you to A to B, you'd be saving an extra $1,200.
So you freed up $2,200 just by getting rid of some cars.

Speaker 2 Like after taxes and take them, you just added a $40,000 year income to your house.

Speaker 3 Yeah.

Speaker 2 Right. So let me ask you this.
You guys have $160,000 left on your mortgage. You got $140,000 in debt.

Speaker 2 Y'all make $130,000.

Speaker 2 This, that tells me that y'all, because y'all don't have, I know it feels like it, you don't have a ton of debt. And

Speaker 2 I mean, you got car notes, you got credit card debt, you'll have a lot of debt, but you also make good money. This tells me you guys go out to eat all the time.
Your daughter's a princess.

Speaker 2 Like, do y'all spend recklessly? Do y'all not have a budget?

Speaker 3 We definitely have a budget. There was some time that we got a little bit out of control.
We have two teenagers, but we have reeled all that in.

Speaker 2 Okay.

Speaker 2 I think one of the greatest gifts you could give your teenagers is to sit down with them and say, here's how mom and dad have lived, and here's how things are going to be different.

Speaker 2 And we're going to take your precious Corolla. And I know you love it, but we're going to sell it because it's the right thing to do.

Speaker 1 You're the worst.

Speaker 2 I can't believe you. But I'm telling you right now, the 27-year-old her, the 40-year-old her, will remember this moment as my mama did, dad did whatever it took to become free.

Speaker 3 Yeah.

Speaker 2 And I think it will be a watershed moment for you and your family.

Speaker 3 Okay.

Speaker 2 And it will really, really not be fun. Not be fun at all, right?

Speaker 1 But when you explain to them, like, you guys won't have to take care of us in retirement because we made these sacrifices now.

Speaker 2 And the 16-year-old doesn't care. She wants her cool Corolla right now.
You know what I mean?

Speaker 2 Like, she didn't care, especially with the crummy car you're going to have to buy her or that she's going to have to go to work for.

Speaker 3 Right.

Speaker 1 Yes. So there's a lot of sacrifice to be made here, but this is a very hopeful situation because these cars we can kind of undo a little bit.

Speaker 2 I don't know what they're worth.

Speaker 1 Do not just go trade them into some dealership that gives you bottom dollar.

Speaker 1 Sell them private party, clean them up, take some good picks, put it on Facebook Marketplace and Craigslist and get top dollar for these cars so that you're not underwater on them. Okay.

Speaker 1 And I'm hoping because they're pretty new, you can still, most of the equity is still inside of them versus being underwater.

Speaker 2 Especially

Speaker 2 the Corolla.

Speaker 3 Mine wasn't even trade, you know, just they paid it off. And then my daughter's is, my husband's is not.

Speaker 2 He would be upside down. That's fine.

Speaker 2 Go to a local credit union and take out the difference. Because I'd rather you be $5,000 in debt.
And then he gets a $2,000 car. I'd rather y'all owe $7,000 than owe the $35,000 that you owe now.

Speaker 1 True. Okay.
And remember, this isn't forever this might be a two-year journey as you guys clean up all this debt get to some financial foundation then we can save up and pay cash for a car no problem

Speaker 2 it's i'm gonna ask you a very stereotypical like generalized question that's not fair okay but i'm just a lifelong texan is your husband in enough that he's gonna sell his truck and get a seven thousand dollar car

Speaker 2 uh yeah he would he's all on board that's an that's an amazing good man good for you yeah good for you that's that's fantastic fantastic.

Speaker 2 So now you just have hard work ahead of you, but it's going to clear up way, way faster. On this $50,000 of credit card debt, is it one big credit card or is it 30 just

Speaker 2 no?

Speaker 3 It's two big credit cards.

Speaker 2 Okay.

Speaker 1 Did you do some kind of consolidation loan or balance transfer or is these, did you actually max out each card?

Speaker 3 We maxed out. We were really frivolous on one and the other one we had everything go wrong in one year and had to put ACs and cars cars and taxes all in one.

Speaker 1 Well, from now on, here's what you're going to promise me. We're not going to swipe that credit card one more time.
We're going to be our own bank. Yep.
And we can make do without it.

Speaker 1 And if something really goes down or you need more than $1,000 to cover it, you'd push pause on all the steps and save up really quickly because you guys have a great income.

Speaker 1 Yeah. And that's where freeing up those payments will give you a little bit of breathing room.
Right now, you just need to get your head above water.

Speaker 1 So make all the minimum payments on the debts, focus on the smallest one, get the the thousand in place, reshop the insurance, pause the investing.

Speaker 1 And as you start to get more margin, it's going to become addictive. You're going to go, where else can we save? What else can we do? We can cut that subscription.

Speaker 1 And so I'm going to send you my book, Breaking Free from Broke. And there's a chapter called Margin is Breathing Room where I lay out at least 10 ideas to make more, 10 ideas to spend less.

Speaker 1 My goal for you, just choose a few on each list, and you will feel so free just days from now if you do what John and I tell you to do.

Speaker 2 And

Speaker 2 I'm going to talk to everybody here, but I'm also talking to you too. Okay, Cindy, I think when you're having to

Speaker 2 toggle a lifestyle shift with kids, especially teenagers, I want everybody to keep in mind this one word, ownership. How can I invite my teenager,

Speaker 2 my middle schooler, especially, and even my elementary school kid, how can I invite them into the lifestyle changes we're making?

Speaker 2 That can be, I'm going to teach them about how much money we make, right? And they're going to start doing the budget with us.

Speaker 2 I'm going to help, they're going to get to sit in my lap when they're younger and punch the button in. This is what our electric bill is.

Speaker 2 Yep, so when I tell you to turn the electric, like your lights off, this is why they're going to put the marbles in the jar for every thousand we pay off.

Speaker 2 But when they feel a part of it, then there's less, oh my gosh, and more, okay, we're all doing this together. And then you get a whole family united in the same direction.

Speaker 1 Beautifully said. Hang on the line, Cindy.
We'll send you a copy of Breaking Free from Broke, wishing you guys the best. You're going to make it through.
This is the Ramsey Show.

Speaker 1 Welcome back to the Ramsey Show. I'm George Campbell, joined by Dr.
John Deloney.

Speaker 1 As a listener of the Ramsey Show, let me ask you a question: Are you staying on track with the baby steps to reach your financial goals?

Speaker 1 If you're not sure or you want some clarity, take a quick quiz that we created to check your progress and you'll get a personalized plan in minutes just for you.

Speaker 1 Simply head to the show notes, click on the link titled, Are You on Track with the Baby Steps? and complete the free quiz.

Speaker 1 Kyle's up next in Portland, Oregon. What's going on, Kyle?

Speaker 3 Hey, crew. Thanks for taking my call.
Sure. My main question is regarding my student loan.
So I have a pretty substantial student loan amount. It's $250,000.

Speaker 3 And so I work for a non-profit. My main question is, should I pursue that 10-year public service loan forgiveness, or should I just kind of tackle it and go head-on and just try and pay it off?

Speaker 2 Are you a doctor or an attorney?

Speaker 3 So I'm a doctor or pharmacist. I'm a pharmacist.
So my gross annual is about $170,000. My take-home is about $120,000 after taxes.
Oregon has some

Speaker 3 pretty insane income taxes. Yeah.

Speaker 2 That's why we live in Tennessee.

Speaker 2 Do you, that was a dig. I love Oregon.
I think Oregon's a stunning place.

Speaker 2 Let me ask you this. Do you, what's the market rate for a pharmacist? If you quit there and went over to Walgreens or quit there and went over to a local hospital, what would that do to your salary?

Speaker 3 So I would make definitely a lot less. So I work for kind of a healthcare giant.
I'm sure if I said the name, you guys would recognize it automatically.

Speaker 3 So I make probably the best hourly, and the benefits are phenomenal in terms of how much I pay a year in health care and how much I pay for, like their match is pretty good as well.

Speaker 2 Oh, so you're working at like a hospital, but technically it's non-profit.

Speaker 3 Exactly. It's a not-for-profit hospital system.

Speaker 2 Okay. All right.

Speaker 1 So you're saying you wouldn't make more going into the private sector?

Speaker 3 No, I would not. I'd probably make less.

Speaker 2 Okay. So,

Speaker 2 dude, my, I mean,

Speaker 2 here's what I just saw firsthand.

Speaker 2 And I, after the, like, Biden's going to forgive it all, and then it didn't and then with Supreme Court like after all that I've I'm gonna be honest with you I've stopped watching the the news ticker on it every day okay

Speaker 2 but what I witnessed was some of the most brilliant extraordinary law students of mine decide to go into public service because of this 10-year repayment program and they got hosed just got denied They went all the way through it and then a thing happened or they went from one, from working as a public defender to working on the nonprofit and they reset the clock.

Speaker 2 I mean, just crazy stuff that makes no sense

Speaker 2 and it really soured me on it. And so what I would tell you is 10 years from now is two and a half presidential elections.
If you think you can predict what's going to happen in 10 years from now,

Speaker 2 best of luck to you, right?

Speaker 2 So what I would tell you is for your soul, you make 175 grand.

Speaker 2 And I know you get beat up on taxes, but you make $175,000 and you could probably pick up Saturday and Sunday work.

Speaker 2 I would hit the gas in an insane way over the next 18 months and just pay the sucker down as fast as I possibly could. That's what I would do.

Speaker 2 I just watched some of the brightest minds like you just get burned alive by a governmental promise that didn't come through. Shocker.

Speaker 3 Awesome. I appreciate it, guys.
I'll give you some stats, too. So my wife and I, we own a home.
We've been there for about a couple of years now.

Speaker 3 We have a four-year-old son, and we actually have a baby girl due in May.

Speaker 2 So, really excited. Awesome.
Congratulations.

Speaker 3 Yeah, so we've been working on the debt snowball, step number two. So we actually paid off our first medical bill today, which is $1,300, which has been nagging.

Speaker 3 So we're making some huge changes in terms of how we spend. It's actually showing.

Speaker 3 But should we keep snowballing? Because we are still able to continue snowballing while working to save for our baby. So

Speaker 2 I just

Speaker 3 have about 1500 bucks in our starter emergency fund right now. We have about 150,000 in retirement accounts.

Speaker 1 Are you guys still investing right now?

Speaker 3 We're still investing right now, yes.

Speaker 2 Okay.

Speaker 1 I would recommend pausing that down to zero for a short time to knock out these debts faster. And I would also recommend pausing to stack up cash.

Speaker 1 I know you can snowball while saving, but the, I mean, May is not that far away. Four to five months of stacking cash.
I hope everything goes perfectly. Mom and baby are home safe.
Great.

Speaker 1 Let's hit play, and we have a bunch of money to throw into the snowball, and we'll continue on.

Speaker 3 Okay.

Speaker 1 We call that stork mode in the baby steps. When you're in that baby step one through three world, it's okay to pause and just stack up cash.

Speaker 2 And by the way, everyone you work with is going to tell you that's the stupidest thing they've ever heard.

Speaker 2 They're going to tell you, dude, you're missing out on the 2% or 4% match. Are you an idiot? Those guys are morons.
And here's what you're going to have that they don't.

Speaker 2 You're going to have $25,000 in cash in the bank as your wife heads into labor or $30,000 in cash. And

Speaker 2 you're going to be able to sleep at night.

Speaker 2 Yeah.

Speaker 2 And none of your colleagues have that.

Speaker 2 They've got a bunch of like cool things on a tinkey and a cool thing's like...

Speaker 2 I don't know what they have. I'm just being a jerk.

Speaker 2 But you're going to be able to sleep at night.

Speaker 2 And then the day after the birth, when the mom's doing awesome, baby's doing great, not day after, but the week or two afterwards, you're going to take that money and you're just going to roll it back where it needs to go.

Speaker 2 And suddenly that loan is going to be $225,000 because you're going to just drop $25,000 on it and knock it down.

Speaker 1 So I'm not anti the PSLF program, but again, the status is...

Speaker 2 I absolutely love the idea. As a taxpayer,

Speaker 2 you have the brightest minds in the world to go actually solve some of these governmental nonsensical issues. Dude, I love the idea.

Speaker 1 i taxpayer i love the idea of taking some of the brightest minds and saying you work for the government for half or a quarter of your market rate i happily pay back your student loans yep but they those peers just get screwed it's a half a percent is what was actually approved from september 2020 through june 2023 four million were processed 19 000 resulted in forgiveness it was a half a percent yeah so I think the program itself has a lot of flaws.

Speaker 1 I'm not mad at it. And I also think devoting 10 years of your life to this and kind of putting yourself in some golden handcuffs here because now there's a sunk cost.

Speaker 1 You're three years in, you have a terrible boss, the workplace changes, and you go, I got to get out, but man, it's going to ruin my chances.

Speaker 2 Or some AI thing comes out and somebody calls you and they're like, hey, we'd like you to come work with our new pharmaceutical thing. It's going to be amazing.

Speaker 2 And you're like, oh, I can't do that because I've seven years into this 10-year repayment. Just get it out of your life, man.
That's tough. Get out of your life.
Get out of your life.

Speaker 1 All right. Let's go out to Crystal in Dallas, Texas up next.
How can we help, Crystal?

Speaker 3 Hey there.

Speaker 3 So my question for you is, I'm a single mom of three.

Speaker 3 I do have a mortgage and then I have $25,000 cash in the bank. I have $6,000 of 0%

Speaker 3 interest debt.

Speaker 3 And I have a car loan that I owe $25,000 on.

Speaker 3 My annual income is $90,000.

Speaker 3 And so I'm just trying to figure out, you know, I feel safer having that cash sitting in the bank, right? Because I'm a single mom of three kids.

Speaker 3 And if I were to lose my job or, you know, something happen,

Speaker 3 that's kind of my safety net.

Speaker 3 So I'm just trying to figure out, should I put some or all of those funds towards paying off the debts that I have or leave it sit in the bank?

Speaker 1 This is a tough one. You do have a lot on your plate.
And I would argue that there's also risk and, you know, it's unsafe to owe that lender. They could repo your car if you don't make the payment.

Speaker 1 And so there's a piece of me that goes, if you knocked out the 6,000 debt, leaves you with 21.

Speaker 1 If you took 15 or 20 of that and threw it at the car loan, you're done with this car loan within a few months, making 90K, right?

Speaker 1 You freed up a payment from your other debt. So this is not a, you're going to go a year year with a thousand bucks in the bank.

Speaker 1 We're talking about maybe three months, and then you're going to restack it with no payments in the world and get there really fast.

Speaker 1 Okay. But that's the kind of fire when you feel that thousand bucks in the bank and you feel unsafe, that's when you go, I'm going to kick it into high gear.

Speaker 1 I'm going to do whatever it takes to get rid of this debt fast, to get to that financial foundation.

Speaker 2 And if you flip it around, if you were to lose your job and you have this pile of cash, all those lenders are still calling you the next day.

Speaker 2 Right. So you still, it's six and one half doesn't another.

Speaker 2 You could spread it out, right? You could pay some a little bit, but you're still going to have to pay that money.

Speaker 2 I would rather,

Speaker 2 I mean, just sitting here, this is me.

Speaker 2 I'm not a single mom with three kids, and so it's much easier for me to say this when I look at my own risk profile, but I would rather owe nobody and get laid off and figure out what's next than have a whole, have a small pocket of money, but have a whole bunch of creditors that are come knocking on the door when I got no job.

Speaker 1 i that that's just me personally i'd test the waters pay off that first debt see how it feels i think you're going to go all right we can do this you're going to feel the progress this is the ramsey show

Speaker 1 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 Camille, joined by Dr.

Speaker 1 John Baloney, and we're taking your calls at 888-825-5225. You jump into the conversation and let us know what's going on in your world, and we'll try to give you the right next step.

Speaker 1 Henry's going to kick us off in Raleigh, North Carolina. What's going on, Henry?

Speaker 2 Hey, how are you? Good.

Speaker 1 How can we help?

Speaker 1 So

Speaker 3 I'm kind of lost financially. I'm not really too sure what to do.
I'm in a good spot, but I'd like to see if y'all are in my shoes. How would you, what would you do in the future coming up?

Speaker 2 All right, lay it out.

Speaker 2 So,

Speaker 3 me and my wife previously had a home. Then we actually just moved back in with my dad.

Speaker 3 He's not charged us anything. He just wants us to save money.
I currently have $14,000 in my bank account.

Speaker 3 We got a little surprised when we moved in, and my wife is now six months pregnant.

Speaker 3 So yeah,

Speaker 3 I don't really know if I should just keep saving and then buy a home or because some people were telling me to buy a trailer, some people were telling me to buy a home. I'm not really too sure.

Speaker 3 All I'm doing is just putting money in my checking account, and I don't really know what direction to go.

Speaker 1 How much debt do you have?

Speaker 3 I don't have any. I actually just paid all mine off.

Speaker 1 Awesome. So you're at Baby Step 3.
You're saving up a fully funded emergency fund. What does three to six months of expenses look like for you guys?

Speaker 1 Obviously, it's tough now because you're basing it off of zero rent living with dad, but what would it be?

Speaker 3 Well, right now, the only thing we really have is my wife got a new car about six months ago.

Speaker 2 Is there a payment on it?

Speaker 2 Yeah, it's about Henry. That's debt, homie.

Speaker 1 We got to start off this relationship with honesty. I asked if you were debt-free.

Speaker 3 Well, I'm thinking of me. She put it in her name.
She did all of it herself.

Speaker 2 No, y'all are y'all.

Speaker 2 Any money she owes, you owe.

Speaker 1 Was this against your will, or were you an accomplice in the crime?

Speaker 3 Well, see, I work a lot.

Speaker 3 Like, I get work on call, so I was one of those I was on call and working, and she said she was going to go look at cars and and then kind of snuck away to the dealership and showed up with what?

Speaker 1 How much was this car?

Speaker 3 Um, thirty-two thousand.

Speaker 1 And what do you guys make a year? God almighty,

Speaker 3 so I make twenty-one fifty, she makes nineteen

Speaker 3 an hour.

Speaker 1 Okay, so you guys are making, I'm gonna just ballpark it and say you guys are making about 80K a year,

Speaker 3 yeah, about there.

Speaker 2 Okay,

Speaker 2 so in our world, just

Speaker 1 I don't know. John's at a loss for words.

Speaker 2 Yeah, it's rare.

Speaker 2 My wife and I,

Speaker 2 I just can't wrap my head around any successful marriage I know.

Speaker 2 The partner would not go make a $30,000.

Speaker 2 Dave and Sharon Ramsey, they're worth $700 million, would not make a $30,000 purchase without telling the other person.

Speaker 3 She told me she was looking at them, and then, I mean,

Speaker 2 I know, but here's the deal. In our world, we call call that financial infidelity and I want you to consider it being that serious of a thing

Speaker 2 because

Speaker 2 you

Speaker 2 have cash in the bank you're worried enough about your um future finances that you moved home with your wife to live with your dad right back to your high school house

Speaker 2 you have the burden that most men don't fully understand until the their wife tells them hey i'm pregnant right and now suddenly it's like you're under a squat rack and someone just put two more 45s on each side and you're like, whoa, this is heavy.

Speaker 3 See, that's the thing I'm worried about. So every week, I've been doing a lot of overtime.
So I've been slowly building up, buying diapers, buying things to be prepared. It's just.

Speaker 2 Yeah, don't do any of that. Don't do any of that.

Speaker 2 Don't do any of that.

Speaker 2 And again, that's you anxiously spinning out.

Speaker 2 Okay. Okay.

Speaker 2 You and your wife have to get united on how much do we owe? We're going to share a bank account. There's not your money and my money.
It's our money. We're creating a home, a family.

Speaker 2 We made a human together, for God's sakes. And so we're going to share everything from this point forward, including our dreams, including our value systems.

Speaker 2 And that's where the hard conversation, like, hey,

Speaker 2 we can't have a marriage where one person just rolls off and buys a... I mean, for God's, I texted my wife.

Speaker 2 When she knew I was at Guitar Center buying guitar, like, I let her know, hey, I'm going to get one. And then she sends me like a roly eye face, but it's in the budget.
Like, you know what I mean?

Speaker 2 It's just she's annoyed by it but it is but i wouldn't even do that like with a small purchase like that and so i but it speaks to a larger unity

Speaker 2 and you've got one of you buying cars doing whatever and then you're up there like like hoarding diapers right

Speaker 2 here and so that just gets to this unity um let's be on the same page and let's work together towards a common thing and that may be the first time you've either of y'all have ever seen that in your lives and so it's new and we can help you with that man but do you get what i'm saying how How peaceful that would be?

Speaker 1 So let this new baby be a reset and say, hey, I've done a bad job leading our family when it comes to finances. Don't make it about her and her mistakes.
And like John would say, use I language.

Speaker 2 I want us to be on the same page moving forward because I want us to create an amazing home that maybe neither of us had growing up because I don't want our kid to ever have to move back in with us.

Speaker 3 Gotcha.

Speaker 3 Yeah, I can definitely do that.

Speaker 2 My next question would be:

Speaker 3 how would we get out of it? Because, I mean, it's 15% APR, $7.40.

Speaker 2 Jesus folks, bro.

Speaker 2 What's left on the loan?

Speaker 3 I came.

Speaker 2 I'm sorry.

Speaker 1 What's left on the loan?

Speaker 3 Well, the principal is $32,936.

Speaker 1 So did she put nothing down?

Speaker 3 We put $4,000 down.

Speaker 1 Oh, so this car actually costs $36,000, $37,000.

Speaker 2 Yeah. What's it worth?

Speaker 2 $26,000.

Speaker 3 Yeah, when we were looking at it just to sell it, I mean, I'm probably paying about four or five grand just to get rid of it now.

Speaker 2 Do it. Pay it right now.

Speaker 2 Pay it right now, bro.

Speaker 1 What's your car worth?

Speaker 3 So I don't even, I have a spare vehicle, but it actually broke down, but I don't have another vehicle.

Speaker 2 So you guys are a one-car family.

Speaker 3 Yeah, I don't have to drive. I don't have to drive.
I have a company vehicle, so I don't have to drive, you know,

Speaker 3 a personal vehicle to get to work.

Speaker 2 Got it.

Speaker 3 So that helps us out a lot.

Speaker 1 I would look at what the private party value is and try to get top dollar for this and be as little upside down as possible and then use whatever in your savings to cover the difference to clear the title and then go get you a $4,000 used car right now to get out of this mess.

Speaker 1 Because then you can start stacking up. I imagine the payment on this thing is massive.
What are you paying monthly?

Speaker 3 With insurance, it's almost $1,000 a month.

Speaker 2 Golly, dude. That is,

Speaker 2 man.

Speaker 3 I almost had a stroke when I saw it.

Speaker 2 Yeah.

Speaker 1 Yeah, no wonder she didn't tell you.

Speaker 2 Goodness gracious.

Speaker 2 Has she seen, so let's be, I want to be compassionate. Has she seen that was dumb?

Speaker 3 Yeah, now, oh, yeah, now she's trying to figure out what we can do. Okay.
Because now she's on the same page because before I wanted to just buy a cheap beater.

Speaker 2 Yes, absolutely.

Speaker 3 She did. So that's all I've ever done.
I've never owned a brand new vehicle myself.

Speaker 2 That's why you have no debt and $14,000 in a bank account. But

Speaker 2 you know what I mean? You haven't made some car dealership wealthy by paying the depreciation on their vehicle for them. Yep.

Speaker 1 So your job is not to convince her that she needs to sell her car because she made a giant mistake. Your job is to give her a vision for what the future is going to look like.

Speaker 1 And a byproduct of that is, we got to sell the car.

Speaker 2 That's a different conversation. And so we're going to go take out a loan for the difference, or we're going to save up five grand real fast, or you have $14,000.

Speaker 2 You're going to go sell that thing private party, and you're going to be upside down on it. You're going to write the other $4,000 and you're going to be done.

Speaker 1 But then this baby's going to come into the world debt-free with a fully funded emergency fund, fund, building for the future instead of paying for the past.

Speaker 2 Don't buy a trailer, go get an apartment that y'all can rent and y'all can save up for a down payment on your own small starter.

Speaker 1 Yeah, I'm gonna say thanks, Dad. I gotta go get my own place and we'll figure it out.
This is the Ramsey Show.

Speaker 1 Welcome back to the Ramsey Show. I'm George Camel, joined by Dr.
John Deloney.

Speaker 1 Hey, if you're ready to get your finances in order once and for all in 2025, join us January 23rd for a free live stream, Take Control of Your Money. It's hosted by Dave Ramsey and Jade Warshaw.

Speaker 1 That's how you know it's going to be good.

Speaker 1 You're going to learn how to stop living paycheck to paycheck, learn how to free up more breathing room so you can pay off debt fast and finally get ahead with money.

Speaker 1 Plus, Rachel Cruz and I will join at the end for a Q ⁇ A where you ask your money questions live. And here's the real reason to join.
When you sign up, you'll be entered to win our cash giveaway.

Speaker 1 Five people will win $4,000 each. Not a bad way to kick off the year.

Speaker 1 So go sign up for the free live stream by going to ramseysolutions.com slash live stream or click the link in the description if you're listening on YouTube or watching wherever podcasts all that good stuff check out the show notes all right Lucas is in my home state Wusta what's going on Lucas yeah

Speaker 3 and not to that Nazis I enjoying some of the some of the cold weather because I'm a skier but you know not not too excited that there's not too much snow here yet oh wow Nashville might be beating you for we got plenty of snow today we got like five or six inches today

Speaker 3 probably

Speaker 3 probably but uh but yeah no it's uh it's a it's a good day and honestly it's a good year I mean,

Speaker 3 we've got some good resolutions, and hopefully,

Speaker 3 being on the call today, hopefully you can give me some advice because I'm trying to find some peace of mind over here.

Speaker 1 Yeah, what's the question?

Speaker 3 Yeah, so the question really is like, you know, I'm getting married this year to a beautiful woman, and, you know,

Speaker 3 we're...

Speaker 3 God willing, we're in a great position to

Speaker 3 get married, buy a house, build a house, part of our goals.

Speaker 3 But we're faced with some challenges at the moment. And the challenges are really like

Speaker 3 we're not able to find land that's kind of like in our price range.

Speaker 3 Homes are just

Speaker 3 very expensive in general if we wanted to go down the route of building a home.

Speaker 3 And then we're also faced with the challenge of becoming further from our family, our friends, our church, family, our communities,

Speaker 3 to find that nice price that's fitting that fits into our budget. So really the question is like, should we keep like continuously saving? Because

Speaker 3 we're not in debt.

Speaker 3 We have a budget.

Speaker 3 We've spoken to some of the financial advisors and whatnot. We're in a good spot, but the thing is, should we keep saving and wait for affordable land that's kind of in our budget?

Speaker 3 You know, we're kind of looking for the center. We're looking somewhere in the central mass area.
Or should we

Speaker 3 buckle up and consider buying one of these homes on the market when it seems like those really expensive ones and the ones that are kind of like fixer-uppers are all at the same price.

Speaker 2 Let me free you from two things.

Speaker 1 Number one, let's assume there will not be magic affordable land anytime soon. And number two, let's assume there's no such thing as our dream home.

Speaker 1 And so instead, if you go, all right, I'm a newlywed looking to get my very first home, it doesn't need to be the 30-year dream, but I need to get my foot in the door.

Speaker 1 And so that can free you to go, all right, we're not going to go buy land and do this dream home right now.

Speaker 1 We're going to go buy a single family in an established neighborhood with some good schools at a reasonable price. That still is too expensive.

Speaker 1 It's because I'm angry at how expensive the housing market is. I know I wish we could all go back in time, but we can't.

Speaker 1 So instead, we go, all right, how much do you guys have saved right now for the down payment?

Speaker 1 How much do you guys have saved?

Speaker 3 So we have right now saved a little bit over 200K.

Speaker 2 Wow. 200 grand.

Speaker 1 That's amazing.

Speaker 3 First off, I want to, if my parents are listening, I just want to say thank you to them because without them, you know, it's they really helped, you know,

Speaker 3 they really helped me save some of the money and also my fiancé. So

Speaker 2 what really they did is they modeled it for us.

Speaker 2 Yeah.

Speaker 1 They modeled what it looks like to live on less than you make. So that's awesome.

Speaker 3 Thank God they did. Yeah.
So we're ready to put a down payment. And details of a down payment, I have no idea, to be honest.

Speaker 1 Okay, what does a reasonable home cost in the area that you would like to live right now? Not the dreamland, but just, hey, this is near family. It's in a good area.
Is it half a million?

Speaker 3 Yeah, I would probably say around there or even $400,000, $400,000. Okay.

Speaker 1 So you could put 50% down today and have a $200,000 mortgage, and your household income is what?

Speaker 3 Household income a month is around $10,000.

Speaker 1 Great. So you guys are taking home about $120,000 a year?

Speaker 2 Correct. Okay.

Speaker 1 So now your next step is jump on the Ramsey Solutions mortgage calculator and go, all right, on 15-year with $200,000 down on a $400,000 house. The payment's going to be, you know, $2,500.

Speaker 2 Great. That's a quarter of our take-home pay.

Speaker 1 Let's go ahead. This is a great home.
Let's do it. I wouldn't overthink it to the point where you wait seven years to buy perfect land.

Speaker 3 Yeah, I think that's the issue, though.

Speaker 3 That's the thing.

Speaker 3 I mean, we're very much like, we've got this money, we've got this vision, we want to just build something that we want first off the bat, but we're battling that idea of buying something or just.

Speaker 1 Are there existent neighborhoods with new builds where you could have it, you know, somewhat custom for you?

Speaker 3 Not necessarily. We're looking, I think we're very unique.
We're looking for something very specific. Like, we're looking for a nice little overlook of an area of land and

Speaker 3 some kind of like

Speaker 3 a good acreage of land, probably a good like five acres of land.

Speaker 2 You come from the Deloney lineage.

Speaker 1 Exactly. John loves nothing, but he's just give me all the acres you got.

Speaker 2 Okay, so Lucas, here's a thing you need to make peace with, okay?

Speaker 3 Yeah, yeah, yeah.

Speaker 2 You have a dream

Speaker 2 and a dream, and you've worked towards that dream. So, here's what you've done.
You've made choices.

Speaker 3 Yeah.

Speaker 2 What you're not doing is choosing to have peace with your choices.

Speaker 2 Yeah, I agree with that. You're the guy that got married and continues to talk to all his old ex-girlfriends.

Speaker 2 Like, it doesn't own the gravity of the reality of I made a choice. I picked her.

Speaker 2 And so, you guys, right now, as a family, I mean, as a couple, y'all have picked a house on five acres.

Speaker 2 And that means y'all aren't there yet financially. Great.
Make peace with it. Be frustrated and be annoyed.
But what you're doing is you're making yourself crazy.

Speaker 2 And so, and what I want you to see is that choice, you're making a choice to be miserable.

Speaker 2 Now, if y'all want to go back to the well one morning, one Saturday morning over pancakes and the sun's out and it's cold and y'all like, hey,

Speaker 2 let's swipe the table clean with this five-acre dream. And let's, like, if we had to go right now, is that still our dream? Great.
It's awesome.

Speaker 2 And maybe y'all are like, you know what? We don't need five acres. We can go play at the public parks, dude.
We want to get a house. Let's get a house right now.
Okay.

Speaker 2 But right now,

Speaker 2 you're working really hard towards a dream. You're way ahead of the curve.

Speaker 2 Most Americans don't have $250,000 in an account somewhere.

Speaker 2 Yeah. So I want you to focus not on the scarcity, on what we don't have.
Bro, you are on your way.

Speaker 1 you're in the point zero zero zero zero one percent of people yeah i'd be frustrated that it's so expensive to buy land that's annoying you still can't afford a million dollar yeah it's a small property and

Speaker 2 i'm not going to choose misery now with two hundred thousand dollars in the bank

Speaker 2 yeah you know what i mean and then if you want to yeah no yeah go ahead go ahead i was gonna say if you want to change if you want to change your values change your values but right now your value is about five acres and i love that that's me and my family too and i'll tell you after three or four years my wife wanted something crazy like Cell Signal.

Speaker 2 And she wanted to live in a society. Yeah, like water to always come out of the faucets when we turned it on, right?

Speaker 2 And so who knows what's going to happen in four or five years?

Speaker 2 Or land is really a fun idea until you have two or three kids and going to the grocery store takes an hour and a half round trip. Or dropping them off at school is a two-hour round trip.
Right. Yeah.

Speaker 1 So all I have to say is,

Speaker 2 dude, I'll be in pursuit of acres until I don't live anymore. I love that dream and vision.
And if that's for y'all, awesome.

Speaker 2 Just don't choose misery today because y'all are doing great, man. How old are you guys? Yeah, that's where it.

Speaker 3 We're in our late 20s.

Speaker 2 Awesome.

Speaker 1 You're running out of time, man. Come on.

Speaker 2 Dude, you're so far out of the game.

Speaker 2 But think about it.

Speaker 1 If you guys got a normal house now in a normal neighborhood and you get it paid off in your early 30s, probably by the time you guys are 30, you'll have this thing paid off, knowing how intense you guys are.

Speaker 1 Then we start stacking up cash on top of that.

Speaker 1 We can sell it we can get the land on top of that who knows your income is only going to go up from here you're obviously you two are sharp uh you're going to be newlyweds combining income you're going to start off your marriage debt-free with two hundred thousand dollars in the bank i'd be grateful and i would uh you know take my chips home from the the gambling table and go we did real well

Speaker 2 or you can rent a house once a year you and your wife can go stay at a farm somewhere for an obnoxious week and then keep the dream alive, right?

Speaker 2 And then when you got the money, you got the money and you go get your place, man.

Speaker 2 But let's don't choose misery today by just sitting there fretting and googling and checking Zillow every five minutes. Like, don't make yourself bananas.

Speaker 1 There's a secret listing I haven't found yet.

Speaker 2 Get a dollar amount. And work your butt off to get that.
I'd rather see you working instead of Googling, right? Don't choose misery.

Speaker 1 Welcome back to the Ramsey Show. I'm George Campbell, joined by Dr.
John Deloney. Open phones at 888-825-5225.
Our question of the day is brought to you by YReFi.

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Speaker 1 You'll have a payment you can afford with a low fixed interest rate you couldn't get anywhere else to help you stick to your budget and work that debt snowball. Go to yrefi.com/slash Ramsey.

Speaker 1 That's why FY.com/slash Ramsey. May not be available in all states.

Speaker 2 Today's question comes from Wanda in South Dakota. Wanda writes, My 71-year-old husband had to retire last year due to a stroke.
He's okay now, but not able to work.

Speaker 2 He was self-employed and did not have a 401 or a pension. We have to live off what we were able to save, which is about $320,000.

Speaker 2 I'm 67 and got out of the stock market a few years ago because I couldn't sleep at night worrying about whether the market was going to tank.

Speaker 2 Our house was paid off, but our property taxes are high and we pay a lot in medical insurance. My husband's Social Security is around $2,000 a month and mine is $1,600.

Speaker 2 Can you please tell us where we can invest our cash so we can live on our savings at least another 20 years? Whew.

Speaker 2 All right. So they have a.
Can I just say this? Like, this is Wanda's scared. Yeah.

Speaker 2 And also it's not as bad as like they're in better shape than many of the calls that we get.

Speaker 1 Yeah, they have a fixed income of 3,600 and they have 320,000

Speaker 1 that I think is just sitting in cash right now in the bank.

Speaker 2 That's what it's what it looks like. And but they have no liabilities.
They paid off their house, right? And so all of that at least lets me go, whew, okay.

Speaker 1 This is where I do a budget with my husband and go, okay, we have 3,600 coming in. Here's all of our bills.
Do we have money left over or are we in the red every month?

Speaker 2 We're going to take property taxes. We're going to divide by 12.
That's a monthly bill we're going to put aside.

Speaker 1 Put it in a sinking fund line item in the budget so that you have that money ready come 12 months from now. That's right.
Now, as far as the money goes, where to invest it?

Speaker 1 You say, where can I invest this money? Well, you just told me you got spooked by the stock market tanking. And can I give you some

Speaker 1 peace here? If the stock market goes to zero, we have much bigger problems.

Speaker 1 Every company in America goes bankrupt and is worth $0.

Speaker 1 That's what would have to happen. So I'm not worried about the stock market tanking.
You're going to have to ride some ups and downs, sure.

Speaker 1 But if you look at the stock market last year, 2024, it was up 24%

Speaker 1 over your money that got 0% sitting in a bank.

Speaker 1 And so I'm much, I'm actually more scared for that money to sit not being in the stock market than I am about the market tanking.

Speaker 2 George, this makes me think stock market that she had a bunch of stocks. And maybe I'm just looking at it when I see the word stock.
It could be stock markets versus

Speaker 2 some

Speaker 2 mutual funds.

Speaker 1 That has hundreds of stocks. So that's what you want to focus on is an index fund, a broad-based low-cost index fund.

Speaker 1 You know, if this money is not in a retirement account, I don't know where it is. I have no clue.

Speaker 1 But if it's non-retirement, you can just invest it in a taxable brokerage account and, as you need, pull money out of it.

Speaker 1 And obviously, when the market's down, that's the worst time to pull it out because it's worth the least.

Speaker 1 But when the market's great, you can pull a little more out and pocket that away in a savings account to cover you for the future months. But it really depends on what your bills are.

Speaker 1 If your bills are three grand a month and you're taking in $3,600, breathe easy. You don't need to touch the money.

Speaker 2 Let it grow. Let it rise.
In fact,

Speaker 2 I would strongly challenge somebody to create a life that is below that $3,600 a month threshold. You got no bills other than

Speaker 2 you got your utilities, you have your insurance, and then you've got your health insurance, right? Your homeowner's insurance and your health insurance.

Speaker 1 And your property taxes. Property taxes, yeah.

Speaker 2 So I would try to build a world where we did that.

Speaker 1 Yeah. If you need to downsize in-house and get lower property taxes, that might be an option too.

Speaker 2 Or leave South Dakota. I mean, there's all kinds of options there, but you would suggest just put it in a

Speaker 1 back in the stock market in an index fund or mutual fund. That's it.
Keep it simple. Let it ride.
Don't touch it unless you need it.

Speaker 2 And let's say the last hundred years historical averages stay, right?

Speaker 1 Yeah, it's 10 to 12%.

Speaker 2 Then

Speaker 1 it'll double every seven years at that point.

Speaker 2 Right. So when he's 78, you'll have 640, depending on what you pull, right?

Speaker 1 and so in 20 years at 85 it'll be 1.3 million yeah yeah i could live with that yeah could be all right thanks for the question great great question wanda all right sue is in detroit up next how can we help sue

Speaker 3 hey guys nice to talk to you

Speaker 3 i was hoping i could do this a little bit a little bit better but uh got a question for you i've been

Speaker 3 with someone and recently married

Speaker 3 three years and found out

Speaker 3 last year that my spouse has not filed taxes for over 20 plus years.

Speaker 2 Oh, geez. How bad is it?

Speaker 3 And I'm very, very firm on this. I don't know.
Things have been hidden from me. I gave them an ultimatum last year.

Speaker 3 I said, listen, you've got one year to clear this up, to get started, to reach out, get a payment system going. I was like, if you

Speaker 3 talk to them, they're not going to come after you. They'll work with you because I've had it happen before.

Speaker 3 So

Speaker 3 a year went by, and I found out that the person he was supposedly taking his taxes to and filed an extension with had passed away.

Speaker 3 I had no idea this person had passed away, and come to find out, he then admitted he had never taken any information to this person whatsoever.

Speaker 2 So, if behavior is a language, what's he been telling you for the last year?

Speaker 3 That

Speaker 3 he's too scared, and he's putting

Speaker 3 that fear over our relationship.

Speaker 2 That's one way to think of it. I was thinking more him looking at you saying, I would rather be scared and hide than to make my new wife feel safe.

Speaker 3 Yeah.

Speaker 2 Is there kids in this mix?

Speaker 3 Well,

Speaker 3 there are five kids. Thankfully, they're from a previous marriage.

Speaker 3 So

Speaker 3 I'm not really sure how to proceed with this other than I've been researching and trying to protect myself. Luckily, I've always done married filing singly

Speaker 3 because it just seemed odd to me that

Speaker 3 I'd say, hey, let's get our taxes. And he goes, well, I'm going to be a little bit late.
You go ahead and just do it this way. And I said, okay.

Speaker 3 And then it finally really just started gnawing at me last year. And when I found out about that,

Speaker 1 is he ready to deal with this? Or is this just you wanting him to? He's not.

Speaker 3 I want him to, and it's been over a year, and now I'm going to have to make good on my word.

Speaker 1 Is he ready for his kids to visit him in prison? What's his game plan here?

Speaker 3 I have no idea. Just put your head in the sand, I guess, and hope that you've dodged the bullet for 20-plus years.
Maybe you'll get lucky a little bit longer. But

Speaker 2 what else is he honest with you about?

Speaker 2 This kind of stuff doesn't happen in a vacuum.

Speaker 1 Probably other debts, his spending, I'm guessing no shared financial life.

Speaker 3 No, I found out

Speaker 3 that

Speaker 3 he had just gotten a job a couple years back with a company I work with, and the salary that he was telling me what it was was actually like $20,000 less annually than

Speaker 3 what

Speaker 3 he is actually being paid.

Speaker 1 So he's actually making more, and he's using that money for God knows what.

Speaker 3 Exactly. I don't know what.

Speaker 2 So

Speaker 2 have you been through an ugly divorce before?

Speaker 3 Yes.

Speaker 2 Okay. I have.

Speaker 2 So it's really common to find yourself in this situation. And when you get in a, go through an ugly divorce before, especially one that you thought was going to be forever,

Speaker 2 it's common to look in the mirror and lose trust in you. Like, what did I not see? Why did I do this sooner? Like, all that kind of stuff that comes with it.

Speaker 3 Right. Blaming myself for not seeing red flags sooner.

Speaker 2 That's right. And so I guarantee you, that's happening again tenfold this time.

Speaker 2 Yeah.

Speaker 2 And I've been

Speaker 2 very,

Speaker 3 very

Speaker 3 Dave Ramsey approach. Actually, he introduced it to me back after

Speaker 3 my last failed marriage, and I've been working really hard to be financially sound.

Speaker 2 Yeah, but he's a scam artist.

Speaker 2 He's a scam artist and a liar and doesn't tell the truth.

Speaker 3 Yes. And so I've done the morning of my marriage.

Speaker 3 I've moved on with that. I've been moving finances to a totally separate institution.
We've never had a bank account together.

Speaker 3 Anything like that.

Speaker 3 I just, I don't want my children to be affected by this. I want to buy my house.
I rent a house from my mother.

Speaker 3 I want to buy it. I want to have that stability so that I can have my grandbabies come here someday.
Yeah. And.

Speaker 2 Have you pulled your credit to see if he's pulled anything in your name?

Speaker 3 No, he has not. I did check that.

Speaker 1 Okay, I would freeze that too.

Speaker 2 Okay.

Speaker 1 And then you or him, maybe both, need to get in touch with a tax attorney ASAP and figure out what's the next step. Because this is not going to just go away.

Speaker 1 They don't just go, well, I guess he doesn't exist anymore. He hasn't paid his taxes.
He fled town. They're going to find him.

Speaker 2 And they may hold you responsible for some of the tax, the joint taxes, while y'all were together. So yeah, I would get a tax attorney.
And if he won't, then you need to go on your own.

Speaker 2 And I'm sorry that this has happened to you yet again. What a mess.

Speaker 1 This is The Ramsey Show.

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Speaker 1 You're just living in it. All right, Rick is in Madison up next.
What's going on, Rick?

Speaker 3 Hey, guys, how are you? Doing well.

Speaker 2 What's up, brother?

Speaker 3 Good, good. Say, a question for you.
My wife and I are restarting the baby steps, and we currently have about five grand in our savings account, and about 111-ish in debt. 58 of that is mortgage.

Speaker 3 18 of that's credit card, 8,600 is a car,

Speaker 3 and 27 and a half of that would be a home equity loan.

Speaker 3 My question for you is, should I take that savings down to $1,000, use that four to put towards debt, or how do I go about tackling this, gentlemen?

Speaker 1 Yeah, the debt snowball, you know, you're going to attack the smallest debt. So, what is the smallest balance right now out of all those debts?

Speaker 3 Smallest balance is the car at 8,600 at 1.99%.

Speaker 1 Are the credit cards, did you do consolidation on those?

Speaker 3 It's just one credit card. Long story short, half of that is from some medical bills that insurance didn't want to cover.
Yada, yada, yada. You know how that goes.

Speaker 2 Okay.

Speaker 1 But you have an $18,000 balance on one card.

Speaker 2 Correct. Okay.
One card.

Speaker 1 So if you threw that at your smallest debt, that's the car loan, that would leave you with $3,600 to go. How quickly could you tackle that while making minimum payments on the rest?

Speaker 3 I think we could probably do that pretty good. My wife and I make $160,000 combined and probably bring home like $1,110,000.

Speaker 1 Awesome. So you guys have a great income to tackle this, but you're still staring down a mountain.
I would separate the mortgage, so take that out when you're looking at this debt snowball.

Speaker 1 It makes it overwhelming. And that's a baby step six item.
So so that's going to come later.

Speaker 1 So that really, I mean, it kind of frees you when you just look at that and you go, all right, we've got some debt, but we make 160 and we got to clean up, you know, 45.

Speaker 1 All right, we can do this. And so now your new mission is to figure out how much margin you can throw every month at the next smallest debt.

Speaker 1 And again, it's going to pick up more snow because of that debt snowball working for you as you free up each payment.

Speaker 2 How much do you pay a month for that car?

Speaker 3 $325,000, I believe it is.

Speaker 2 So

Speaker 2 let's pretend you get paid on the 15th.

Speaker 2 If you took the $4,000 from your savings and y'all had $4,000, because y'all bring home, what, $10,000 or $11,000 a month, you had $4,000 left and you ran it and you're done with a car in one month.

Speaker 2 Now you've just dumped $325 back in the system

Speaker 1 on top of the money you're already throwing. So that's where it happens faster than you think because of that snowball method working in your favor.
But again, this is some intentionality.

Speaker 1 If you're throwing, you know, if you've got 50 grand to pay off and you're on the track to do four grand a month, this is going to be a year of sacrifice.

Speaker 2 Can y'all do four, can y'all do four grand a month?

Speaker 3 You know what? Well, that's part of it. You know, we'd have to get back to a budget.
So I honestly, I'm not going to say yes. I'm not going to, well, I'm going to say yes because I want to, right?

Speaker 3 But we haven't been on a budget. I'll admit that to you guys.
We just kind of fell off.

Speaker 2 But you're bringing home. I've been there.
It's fine.

Speaker 1 You're bringing home like 10K a month thereabouts. Are you doing any investing at all in a 401k or anywhere else?

Speaker 3 So, yeah.

Speaker 3 Through mine,

Speaker 3 about 8.5% gets taken. That's not voluntary.
That's through the Wisconsin Retirement System, the WRS.

Speaker 3 And then I have a 401k and I have a 457B

Speaker 3 that I have. And my wife has two Roths as well through her work.

Speaker 1 Okay. So you guys are doing a lot at once right now, and you're not really seeing a whole lot of progress.

Speaker 1 So what if just for one year, we said we're going to pause retirement and we're going to come back swinging, investing 15% after that

Speaker 1 okay i'm going to write this all down here so pause retirement so pause retirement you can reshop your insurance that can save you big sometimes because you've been overpaying with the same carrier so reshop it you can go to ramseysolutions.com slash checkup and do a little coverage checkup there to make sure that you're checking off all the boxes and then on top of that now it's okay what are the other levers we can pull are there any subscriptions we can cut we're going out to eat we need to stop that and start meal prepping and being really intentional about our grocery runs and so once you start doing six or seven things at once, making more, spending less, all of a sudden, it's easy to find five grand sitting around in that budget that you were just kind of lazy with.

Speaker 3 Okay.

Speaker 3 All right. Yeah, I appreciate it, gentlemen.
That was my question. I just wasn't, you know,

Speaker 3 like everybody, we're always paranoid about money and finances, so that's why we weren't sure what to do with that additional savings we had.

Speaker 2 So you got it. And it's scary.

Speaker 1 I'm not going to lie, Rick. When you take that down to 1,000, like your breath is taken away.
And you realize just how risky of a position you've put yourself in by being in all of this debt.

Speaker 1 But the good news is you get out faster.

Speaker 2 Well, and

Speaker 2 he was saying it there, and I think it's important. You know, like I always tell people, you got to choose your heart, right? Being 100 pounds overweight is a hard way to live.
It's hard.

Speaker 2 And losing 100 pounds is incredibly hard. So it's not a matter of one's easier or not.
It's just choosing your heart. Similar here, it is terrifying.
to go to $1,000 in your savings account.

Speaker 2 Like that's terrifying. It's also terrifying to wake up every single day and know we are 50, 60, 70, $150,000 from multiple different angles.
These guys will take our house.

Speaker 2 Those guys will take our car. They'll take our insurance.
Like,

Speaker 2 so you're just choosing your fear. Which one do you want to have, right? Do you want to have an acute fear of, oh my gosh, we only have a thousand bucks and we got to hustle and get this thing done?

Speaker 2 Or do you want that grinding, low-level hum, that fear that never goes away, that you don't even get a say in your own life? Like, man, I'm out. But you're just using your fear.

Speaker 1 Yeah. What's interesting, as you were talking, I was thinking about how people tend to go into debt when they're desperate or when times are really good.
Yes.

Speaker 1 And they go, well, we'll just take out a HELOC.

Speaker 2 We'll take out the home equity loan.

Speaker 1 Yeah, sure, get the car payment. We can stomach it with our income.
And then they don't make that income anymore. There's a job loss.
They need to move for whatever, for family.

Speaker 1 And all of a sudden, it gets scary because you realize just how exposed you were. That's right.
What's the old Warren Buffett quote? When the tide goes out, you can tell who is skinny dipping.

Speaker 1 Yeah, who doesn't have any clothes on. And so the tide's been great.
I mean, you've been submerged in the water with this beautiful income, surviving, making all your payments.

Speaker 1 And all of a sudden, the tide goes out and you go, oh my gosh, like this is a scary way to live.

Speaker 2 That's right.

Speaker 1 We actually had a house of cards situation.

Speaker 1 And so this is, I'm really proud of Rick because this is the hardest part to get to when you're willing to just burn the ships and go, all right, we got to do it.

Speaker 1 We're willing to do whatever it takes. Show me the way.
Yes. Those are my favorite calls to take because they're not trying to argue that their plan is working.

Speaker 2 Yeah. No, I love it when someone's like, okay, what I'm doing is not working.
Help.

Speaker 3 Right.

Speaker 2 And that's one of my my favorite phone calls to make when I call buddies like about workout programs or nutrition or something.

Speaker 2 Okay, what I'm doing is not working. I need some help.
And I love that, man, because that's usually when people can say, all right, I got you.

Speaker 1 Instead of arguing with John going, well, my workout plan, this is what I'm doing. Here's why I think it could actually work.

Speaker 1 And they're just watching you going, all right, that's cute.

Speaker 2 Whenever you're done, whenever you're ready, we'll be here with a better plan for you. That's right.

Speaker 1 But that's big. If

Speaker 1 this is the year you're going, hey, I'm going to get out of debt. I'm going to do things differently.
We're here for you.

Speaker 1 We've got a free live stream coming up on January the 23rd called Take Control of Your Money. It's completely free, hosted by Dave Ramsey and Jade Warshaw.
And maybe you need some new information.

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Well, Dave and Jade, they are, I think they're 90% pep, DNA-wise.

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Speaker 1 Go check it out. Link is in the description.
And again, this is it. If you're listening on YouTube or podcasts, to continue listening to more of the Ramsey Show, go download the Ramsey Network app.

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