Normal Is Broke... Do You Really Want To Be Normal?

Speaker 0 It's a bonus session.

Speaker 1 Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships.

Speaker 1 I am Rachel Cruz, hosting this hour with my good friend and best-selling author, Jade Warshaw. And we'll be answering your questions about life and money, relationships, career.

Speaker 1 So give us a call at 888-825-5225.

Speaker 1 So we're going to start off in Spokane, Washington, and we're talking to Jules. Hi, Jules.
Welcome to the show.

Speaker 2 Hi.

Speaker 1 How are you doing?

Speaker 2 I'm okay. I'm just a little bit stressed.

Speaker 1 All right. How can we help?

Speaker 2 So I'm a single mom on government assistance, and I'm just feeling really stuck in like the system.

Speaker 1 Okay. Tell us more about what what you're receiving and what's causing you to feel stuck.
So I have like

Speaker 2 so I have food stamps and then I have like um Medicaid or whatever for for me and my my kiddo. Um but I'm just feeling stuck'cause I had gotten a job over like this summer working at like a daycare

Speaker 2 um and

Speaker 2 I couldn't accept the position because I'm sorry, I'm nervous.

Speaker 2 I

Speaker 2 like I had to run it past my complex because I live in low-income apartments

Speaker 2 and they

Speaker 2 up your rent like a percentage of your what you're making.

Speaker 1 Yeah.

Speaker 2 And I had told them like that in that when I moved in my apartments around April that I was getting child support at the time, and I was,

Speaker 2 which was like, I don't know, $600.

Speaker 2 But then they can't,

Speaker 2 sorry, this is confusing. They can't adjust that until another year.

Speaker 1 Okay.

Speaker 2 So they can't fix that I'm not getting child support anymore

Speaker 1 until the $600 stopped and now your rent is higher.

Speaker 1 Okay, so tell us.

Speaker 2 So I had to give up my job so that I could keep my benefits and

Speaker 2 I had gotten my son into daycare, but the daycare funds for low income are now not, they don't have any funds.

Speaker 1 What is your agenda? So I'm like, okay.

Speaker 1 What is your age? I don't have any.

Speaker 2 I'd say like my mom helps pay for my car and my phone. Okay.
And then I get maybe $200 child support, maybe.

Speaker 1 Okay.

Speaker 1 And what are you making?

Speaker 2 Oh, nothing.

Speaker 1 Why not? You don't have a job.

Speaker 1 So, because what you're saying is when you went to actually start working, then you basically price yourself out of the situation you're in, from your apartment to everything else. Is that right?

Speaker 1 Right. Right.
So, like, I was

Speaker 1 like,

Speaker 1 how quickly will your rent, because you said it will take them a year to realize that you're not getting the extra $600 a month. Will they, will that same be on the other end?

Speaker 1 That if you start working and making money, will they raise your rent?

Speaker 2 Yes.

Speaker 1 Okay, but why would they raise it, but not lower it, depending on your situation? I

Speaker 2 don't know. Honestly, I'm really confused about it because,

Speaker 1 yeah, I would get some

Speaker 1 information

Speaker 1 because here's

Speaker 1 because here's the thing.

Speaker 1 I could understand like the rock and the hard place that you're in of like, okay, once I start this track of actually making some money, then the life as you know it will change.

Speaker 1 But I want to encourage you, the life as you know it

Speaker 1 will change to something better, something that you have way more say over your life. You have way more choices and options and freedom and opportunity to do some amazing things.

Speaker 1 And so that jump is going to be scary. And I want to help you real quick.
We just have a few minutes to try to set you up well for when that jump is going to occur.

Speaker 1 Not if, because I do, I want you, I want you to be working and I want you to be able to support. Is it, do you have one child?

Speaker 1 Yeah. Okay.
I have a toddler he's he's almost two okay and your mom's helping you out a little bit with child care it sounds like

Speaker 1 well she doesn't help me with child care just just with finances oh okay just with your phone and your and your car so with your car do you have a car payment that she's paying or is she helping you just with gas and everything else just with just with gas and like insurance okay okay

Speaker 1 so I think I think the way we work this backwards and we're going to give you all the materials that you need to get started but the way to work this backwards is what's what's that threshold of you losing your benefits?

Speaker 1 So figuring out what that is and then figuring out, okay, if I do that, how much more do I need to support myself?

Speaker 1 Have you kind of done that math and said, here's what I need every single month in order to survive?

Speaker 2 Absolutely. Yeah.
No, I have done the math. And when I had qualified for that job, I actually sat down and went through all the finances.

Speaker 2 And like I'm in counseling, I go to like doctor's appointments and things like that. And I kind of did the math and I was like, okay,

Speaker 2 I'd be losing more than I was making. And then the insurance for the new job wasn't kicking in until 90 days.

Speaker 1 And so I was like, oh, shoot.

Speaker 1 Okay, but what do you need? What is that?

Speaker 1 What's the number that you say if I get, you know, $3,500 a month or $4,000 a month, I will be able to pay my rent, my car note, my kid goes to daycare, and I, you know, we have groceries that you're covered.

Speaker 1 What is that number?

Speaker 1 So

Speaker 2 I haven't, so I didn't take the job, so I kind of lost track of the the finances.

Speaker 2 But

Speaker 2 let me ballpark it. I want to say,

Speaker 2 like,

Speaker 1 maybe, like, honestly, like,

Speaker 1 I

Speaker 2 maybe $1,000, because I'm thinking, like, I have my phone if I were to pay all my bills myself.

Speaker 1 What about housing? Because, well, you price yourself out of the current situation you're in. Yeah.

Speaker 2 So I'm in those low-income, so probably.

Speaker 1 We're talking about a situation. Jules, to be clear, we're talking about a situation where you don't have government assistance, where you are paying your rent.
So like not

Speaker 1 only low-income apartments either. That's right.
I'm talking about a situation where you pay for everything and you're no longer maybe $2,000. Okay.
So you need $2,000 a month. So

Speaker 1 what I want to encourage you is that's out there. It's out there today.

Speaker 1 And it's going to, it's going to require you making, working more than 40 hours a week, possibly. But I mean, you can go over.

Speaker 1 There's a lot of places like Walmart and even fast food that are paying over $18 an hour if you can work your way up.

Speaker 1 So it's out there.

Speaker 1 I think right now the biggest thing that you're dealing with is this kind of mental block because you're used to this and it's very hard to get your mind around something that you've not really experienced.

Speaker 1 Right. And you're like, oh my gosh, I need this.
I need this. And the truth is, you're not far away from being completely free from this.
Yeah.

Speaker 1 And I would, and I would tell you, Jules, too, we, especially when it comes to money, the more facts you have,

Speaker 1 the easier, in a sense, being able to process and make decisions becomes. Because when it's just this idea of like, gosh, I don't even know how much we spend here.

Speaker 1 I don't know what apartments will cost.

Speaker 1 So like to Jade's point earlier, your homework would be to find actual numbers, actual numbers of a one-bedroom apartment somewhere, actual numbers of, hey, here's really do what I spend at the grocery.

Speaker 1 And per week, here's what I think it will be. And it doesn't sound, you know, it's not this, I don't think it's going to be this outrageous number.

Speaker 1 I mean, just just like what you just quoted us, even, I'm like, yeah, $20,000, $2,000 a month. I mean, that's $25,000, $30,000 a year after taxes.
So like that, that is very, very doable, Jules.

Speaker 1 And so if you stay on the line, Kelly's going to pick up because we want you to be able to have the information to help you.

Speaker 1 So we'll give you Financial Peace University, which is our nine-lesson course. We're going to give you every dollar, which is every dollar premium to hook up to your bank to actually create a budget.

Speaker 1 And when those transactions come in, Jules, actually track them and drag and drop them and start telling your your income when you get a job, hey, this is where this is where it's going.

Speaker 1 And then we'll give you some of Ken Coleman's

Speaker 1 material because there's a get clear assessment.

Speaker 1 And I want you to take this, Jules, because I want you to have the ability to see yourself and your giftings and what you're wired to do and find a job in that lane. So we believe in you, Jules.

Speaker 1 You're doing an incredible job as a mom. So stay on the line, Kelly.
We'll pick up.

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Speaker 1 All right, let's go to Anna Marie Island in Florida and let's talk to Amy. Hey, Amy, welcome to the show.

Speaker 2 Hi, how are you guys?

Speaker 1 We're doing great. How can we help?

Speaker 2 So I'm a little confused as to where to go. I own two properties.

Speaker 2 One of them is on the island, and

Speaker 2 that property I owe about $400,000 on. It's worth $700,000.

Speaker 2 My monthly payment with HOA and everything is $4,500.

Speaker 2 I own another property just over the bridge. It's a bicycle ride to the beach.

Speaker 2 That is an Airbnb property I've been making about $50,000 a year on, but I don't owe anything on that property. That is worth about $650,000.

Speaker 2 What I am thinking of doing

Speaker 2 is

Speaker 2 selling my property on the islands.

Speaker 2 I'm kind of tired of the HOA. stuff

Speaker 2 and

Speaker 2 actually I'm in the process after Hurricane Milton renovating my Airbnb property right now, and I'm thinking I want to move into it. Wow.

Speaker 2 I'm thinking of selling the condo on the island and moving into the house just over the bridge. Then I'll have no house debt.

Speaker 2 I have two hundred thousand in cash after the renovation left over.

Speaker 2 And then if I sold the condo, I would have I would make three hundred thousand profit off of that. So I'd have a half a million.

Speaker 2 The only other debt I have is my card, which I just bought. And

Speaker 1 I know that it's

Speaker 2 well, it's kind of against Dave's rules, I know, but I just bought a new Infinity Iowa $70,000 on that. So that's a $1,300 a month payment.

Speaker 2 I have a $70,000 IRA, a $20,000 Fidelity account.

Speaker 1 So

Speaker 1 what's wrong with doing this deal and moving into the

Speaker 1 Airbnb and selling the one on the island? What's wrong with that?

Speaker 2 It's not what's wrong with it.

Speaker 2 I think that's a smart decision. The question I have for you guys is,

Speaker 2 so I'm a real estate broker. I've done real estate, you know, renovation, split, building all my life.
I'm a single woman, 55 years old.

Speaker 2 If I did this move and my condo actually sold and I got into the house, I'd have a half half a million and I need to know what to do with it because

Speaker 2 I'm most likely to want to buy real estate and fix it and do all that. But and I'm not knowledgeable at all about the stock market.

Speaker 2 I'm I'm trying to just wrap my brain around all of it and learn because I'm getting to the age where I want the money to work for me instead of me working the money, you know?

Speaker 1 Yeah, for sure. Yeah.
Uh, how old are you? So I'm fifty five. Okay, and what do you do for a for a job?

Speaker 1 I'm a real estate broker. Oh, that's right.
You said that. I'm sorry.
Uh, how much do you make a year doing that?

Speaker 2 Well, that's

Speaker 2 that varies quite a lot, but anything from $100,000 to $300,000 a year.

Speaker 1 Okay.

Speaker 1 And then your primary residence where you live now, what is the situation there?

Speaker 2 So

Speaker 2 the condo on the island is

Speaker 2 we I owe

Speaker 2 you.

Speaker 1 Is that where you're living? Is that condo?

Speaker 2 It's been my primary residence.

Speaker 1 Oh, it has. Okay.
I'm sorry. I got you.
Okay. Perfect.
Perfect.

Speaker 1 They are now renovating it, but I'm thinking about moving here. Yeah, that's great.
That's great. Okay.
So the $500,000 cash.

Speaker 1 I mean, what I would do honestly with it is I would take some of it. I would diversify it.
And I love the idea that you like real estate.

Speaker 1 And maybe because I come from a real estate family, but I think it's a great,

Speaker 1 I think it's a great option to have, especially if you know what you're doing. And a lot of people don't, but you do because you live in this world.
And it's great. It's a great way to invest.

Speaker 1 So I would take some, Amy, and I would probably max out a Roth IRA every year. I would make that part of my rhythm.
I think it's $7,000 per year that you can do.

Speaker 1 So I would allocate some money to make sure that you had the cash. And that can come out of just your income that you're making anyways.
It doesn't have to come out of this $500,000.

Speaker 1 What is your income?

Speaker 1 Just anywhere from $100,000 to $300,000. Yeah.

Speaker 2 Anywhere from like $100,000 to $300,000.

Speaker 1 I'm made a little more than that. Yeah.

Speaker 1 So I would, so yeah. So that would be a thing, that would be something I would do.
And then I would still, you know, I think your, your IRA, do you have any other retirement investing?

Speaker 1 Do you, like within your brokerage, any kind of 401k or anything?

Speaker 2 I've always felt like

Speaker 2 I've always felt like I do better with real estate than I do with like

Speaker 2 stocks have always scared me. You know, it's always

Speaker 1 been an unknown. Well, and so let me tell you this.
There is a level of risk that I wouldn't take in the stock market when you think about single stocks.

Speaker 1 And there's ways to do it that's risky and then ways that actually

Speaker 1 have way less risk and you still get a great rate of return on average, anywhere from 10 to, I mean, 12, 13%. I mean, this past year, the market did incredible.
So it was even more than that.

Speaker 1 But doing mutual funds, investing in mutual funds, which is going to be 90 to 200 stock within a fund. So no single stock investing, all of that.

Speaker 1 So really you limit your risk when you spread your money around. And so that

Speaker 1 would be the bet that I would do. I mean, I would do anything I could to do some tax-favored plans in retirement.
So that would be your Roth IRA.

Speaker 1 Yeah, within your brokerage, I don't know if you're, if, if you, do you own the brokerage or you work for someone?

Speaker 1 I own the brokerage. I do.
Okay. But I do.
So I would look into like a, I would look into it, like a

Speaker 1 SEP. I mean, I look into a couple of individual 401k.

Speaker 1 Yeah, I would look into a couple of options just to put some money in from a retirement standpoint because that is going to be, it's going to have more tax advantages than just going into the market on your own personally.

Speaker 1 So I would, I would allocate some money for that. I would look around.

Speaker 1 I mean, I don't know what real estate is going for in your area, but I mean, if you can find something and pay cash for it and have another rental property to the side, I mean, I think that's, I think that's a great option as well.

Speaker 1 So yeah, there's a, there's nothing, you know, you can't, I wouldn't say do anything completely wrong unless you took all this money and just like blew it or put it all in like one single stock or something.

Speaker 1 But I think real estate and some in retirement would be great but i would also recommend sitting down with one of our smart investor pros uh we actually just met one uh in the last break that's right here from seattle yeah um and a smart vestor pro can sit down and really help look at all of this with you as well and just kind of your long-term plan of retirement um long-term goals that you may have and be able to let this money work for you in that way as well Yeah, I think that you're doing well.

Speaker 1 The thought I keep having is, you know, a lump sum is going to double every seven years.

Speaker 1 So let's say you sold the house on the island, you got the 300K, let's say you dropped that in the bank and then you invested the cash that you have into real estate.

Speaker 1 I mean, if you do that and you continue to add 15% of your income

Speaker 1 every single month, I mean, in 10 years, I mean, you're going to be looking pretty good. You're going to have around 1.3.

Speaker 1 And that's just assuming, you know, you're kind of midway at that midway point in your income. It's not assuming for the months that you're making 300 or the years that you're making 300 and above.

Speaker 1 So you have a really great horizon on this and way to go. Good job.
Yeah, yeah, that would be some good numbers to kind of play with.

Speaker 1 If you go to ramseysolutions.com, our investment calculator is there and plug in some of the numbers and just say, what if I just invested, you know, all this 500,000 in a mutual fund?

Speaker 1 Because if it doubled,

Speaker 1 you know, every seven years is kind of the rule of seven. That could be exciting to you.
And it may be less work and headache as real estate.

Speaker 1 But if real estate is something you love too, maybe you take some of this and buy a paid-for property. Thanks, Amy, for the call.

Speaker 1 Welcome back to the Ramsey Show. Up next, we have Brent in Cincinnati, Ohio.
Hey, Brent, welcome to the show.

Speaker 2 Hi, Rachel.

Speaker 1 Hello. How can we help?

Speaker 2 So I'm wondering if I'm able to purchase

Speaker 2 a car for my wife. We've been leasing to own.

Speaker 2 for the three years and upcoming December we can purchase it for $19,000.

Speaker 2 The same car is valued at $23,000.

Speaker 1 Okay. So you've been leasing it for three years.
What was it worth when you started? I'm just wondering how much it's depreciated.

Speaker 1 How much?

Speaker 1 No, how much was it worth?

Speaker 2 $28,000.

Speaker 1 Okay.

Speaker 1 Okay. And now it's worth $19,000, but you're saying you've seen it other places for $23.
Is that what you're telling me?

Speaker 2 Yes, with the same mileage, the same year.

Speaker 1 Oh. It looks like a good deal.
Yeah. Do you have the money? And do you like the car?

Speaker 2 We like the car, but we don't have the money, so we'd be getting a loan through my credit union.

Speaker 1 Oh.

Speaker 1 And what's the alternative? You just give it up?

Speaker 2 Yes.

Speaker 1 Do you have a lot of money?

Speaker 2 My wife's very attached to the vehicle and doesn't really want to consider any cheaper options.

Speaker 1 Yeah. Listen, I can understand that.
Go ahead. Well, yeah, why is she attached to it? She just likes it a lot.

Speaker 2 She likes it a lot.

Speaker 1 Okay. Well, the fact that she's not going to be able to consider, is she sitting there with you, Brent? Tell her hi for us.

Speaker 1 What's her name?

Speaker 2 Elizabeth.

Speaker 1 Hey, Elizabeth. Hi, Elizabeth.

Speaker 1 So,

Speaker 1 yeah, I mean, when you put yourself in a position when you purchase something and say, well, I'm just not, I don't want to look at anything cheaper. You've kind of already made your decision.

Speaker 1 I mean, if you guys don't have the money and you don't want to look at anything cheaper, I mean, I guess the only thing that you guys have decided at that point is, yeah, you're going to take a loan out and buy the car.

Speaker 1 We would advise you differently.

Speaker 1 And so you called the show. So we'll give you our advice.
I don't know if you're going to want to take it

Speaker 1 because what you had to realize is you've been basically renting this car for three years. In the most expensive way possible.
In the most expensive way, yeah.

Speaker 1 And I know you know, you can't really tell the interest rate on a leased car, but when people, you know, actually ratio it out, it's it's high.

Speaker 1 It's it's usually more expensive than if you went and got a traditional car loan.

Speaker 1 So then you're going to take a $19,000 loan, pay interest on that, and then we're going to look up in four to five years, and this $19,000 car is going to go down to probably $10,000 or $12,000 in value.

Speaker 1 So when it comes to cars, it is one of the places places that financially speaking,

Speaker 1 I mean, it's kind of one of the dumbest debts you can get into from a financial perspective because again, you're borrowing money and paying more on that borrowed money because of interest on an asset that's going down in value versus like a house, a mortgage, right?

Speaker 1 You take out a mortgage, you do pay interest on that loan, but the value of that home is going up at the same time. So the car itself is not a wise purchase to make when you don't have cash for it.

Speaker 1 So my next question to you guys would be, do you have any cash available to you?

Speaker 2 Do we have no, we don't. We're still trying to get over some credit card debt.

Speaker 1 Okay, good. How much, how much debt do you guys have?

Speaker 2 We have $4,000 on the credit card, and then we have a few monthly payments.

Speaker 1 What are those?

Speaker 2 We're paying off our wedding rings, which we have

Speaker 1 $7,000 left over. Okay,

Speaker 2 and then we have some

Speaker 2 a personal loan or paying back my parents, which we owe about $2,500 left.

Speaker 1 Okay.

Speaker 2 And I'm doing $500 every paycheck.

Speaker 1 Okay.

Speaker 2 So about towards the end of January, the $500 a month will clear up.

Speaker 1 Okay. How much do you guys make a year?

Speaker 2 Close to $40,000 a year.

Speaker 1 Combined. Combined?

Speaker 2 Yes.

Speaker 1 Are you both working?

Speaker 2 My wife is looking at getting a new job that could make more money soon, but we just don't have the money yet. And I don't want to make decisions on

Speaker 2 we'll have more money later.

Speaker 1 Yeah. I want to make the decision on

Speaker 1 what we have now. Absolutely, which is very wise.
Very, very wise. So yeah, a $40,000 income.
There's no way I would take a $19,000 loan for a car. You can't afford it.
Do you guys have kids yet?

Speaker 1 No, not yet. Listen, I'm going to throw throw something wild out here and roll it over in your minds and in your hearts tonight.
But she's not working yet. You don't have children.

Speaker 1 When it comes time for this lease, like you let it go. But if you have to be a one-car family for a couple of months while you save up, what's the harm in that?

Speaker 1 Just a thought.

Speaker 2 Yeah.

Speaker 1 I suggest that my husband and I did that while we were trying to get out of debt. We got rid of one of our vehicles and we were upside down, but we got a small loan for it to get out of it.

Speaker 1 And then we had one, just our single car, we paid it off. And then we actually found that it was doable for us for quite a while and we stayed that way.

Speaker 1 And then when it was ready, time for us to have a second car, we bought it in cash.

Speaker 1 And for you guys in this season of your life, that actually might work out better for you than a lot of other couples because she's not really working yet.

Speaker 1 And I'm going to say this, Brent, and I'm going to be very as kind and fun as Rachel is.

Speaker 1 It just comes through. But what the life you guys just described to us from a financial perspective only is so normal.

Speaker 1 You have a personal loan to the parents for, I'm not sure why. You got wedding rings.
You didn't have the money. So you guys took out a loan.
You have some credit card debt. You have a car lease.

Speaker 1 Like this is, you guys are, y'all are the normal Americans out there. But the problem is, Brett, normal is broke.

Speaker 1 Normal is 78% of Americans today are living paycheck to paycheck, meaning if you miss a paycheck, you don't have enough to cover your bills.

Speaker 1 So if you guys decide that you want to continue to live normally, then what you guys have so far decided is that. And normal would be to go get, just keep the $19,000 car because you like it.

Speaker 1 That is normal and you will have normal results because of it. But what we encourage people is to flip all of that onto their head and actually say, what is the weirdest thing we can do?

Speaker 1 Because if I get the results of normal, which is paycheck to paycheck living and not being able to build wealth and not being able to invest or save for the future or have any amount of money and savings, like I don't want to be normal.

Speaker 1 That's not where I want to be. And if you guys look at each other tonight and say, we don't want to be that.
We want to be people that have no debt. We have an emergency fund.

Speaker 1 We're actually funding some retirement for the future. We have a house that we can afford.
It doesn't stress us out. We have margin in our budget.

Speaker 1 Like this life that can be created, Brett, is possible, totally possible. But you can't get there if you keep doing normal things.

Speaker 1 So what Jade's saying is a one-car family for a couple that doesn't have kids, is that inconvenient? Yeah. Is that weird? Yeah.
But you know what?

Speaker 1 You don't have a car payment because that car payment on that $19,000 car, it's going to be $600 that you guys don't have.

Speaker 1 Like, so you have to make different decisions if you want different results, Brett. And that's going to mean not taking out a loan for a car.

Speaker 1 For you guys, the reality is a one-car family. It's saying goodbye to my emotions, saying goodbye to what I want and what I love and all the things that got me to this place.

Speaker 1 And you put all that to side and you guys are like, we're adults. Yeah.
We're adults and we're going to make adult-like decisions and we don't have the money. We can't afford this car.

Speaker 1 You can't afford this car, Brett. At $40,000, you can't afford half of your annual income going to the value of a car.
Like that, it's not good. That's not wise.

Speaker 1 And I would be working like crazy to get your income up. And and I would start working to get out of debt.
I mean, you guys could get all this paid off. Your debt's not crazy.

Speaker 1 I mean, you know, 2,500, 4,000, like you guys can get this cleaned up really fast if you just say, we're going to be weird and we're going to work 60 hours a week because we don't have kids and we're going to take side hustles.

Speaker 1 We're going to drive Uber, right? I mean, like, here's Brent. Here, let me put this in perspective.

Speaker 1 Here's a couple of interesting statistics about cars because I want you to never go and have a car payment again. Number one, Rachel just said 78% of the people living paycheck to paycheck, right?

Speaker 1 85% of people who buy, who get a car take out a loan or at least to get it. And I think that's a very interesting correlation.
Almost everybody.

Speaker 1 Almost everybody, which is almost the same percentage of people living paycheck to paycheck. And for most people, that car payment is about $525 a month, which is very close to where you guys were at.

Speaker 1 And I know. And if you invested that instead of give it to a car company, what would that be, Jay? Well, think about it.
Most new car payments are over a term of six years.

Speaker 1 If you had listened to us and invested that money over the last six years, you'd have $85,000 instead of a car debt that's gone down in value. And so be weird, Brent.
Be weird.

Speaker 1 I think one of my favorite things right now in life, Jade, is I will hear a trend that, and not to point fingers at generations, point them. Gen Z will come up with.

Speaker 1 And you hear it and you're like, well, that sounds familiar. I think we've been doing that.
It's already a thing.

Speaker 1 One of them was cash stuffing. This was like two years ago.

Speaker 1 They came up with someone on TikTok was like, we're going to cash stuff, which means you take cash and put it in different compartments, like envelopes to pay for things.

Speaker 1 And they're calling it cash stuffing. It was this new, like, that's such a wise idea.
How smart. You know, it was a new trend.
And we're like, that was the envelope system.

Speaker 1 Richards and having wallets. Or yeah, I was like, I think we have a product for that.
We have a wallet for that if you want that.

Speaker 1 Another one was like, they have, it's, they call it dinner parties. Yeah.
And they're like, and everyone brings a dish.

Speaker 1 So instead of going out to eat, you bring a dish and they're calling it a dinner party. We're like, isn't that a potluck? Like, is it, have we been doing this like in the Baptist churches for a year?

Speaker 1 You take like the negative stuff. They were calling like what we would call financial infidelity.
They were calling it stealthy spending. Oh, like stealthy

Speaker 1 spending. Get around the spouse of your purchases.
Yeah.

Speaker 1 So yeah, these, these things that have been going on, they just kind of put a little ginsy, like sprinkle dust and excitement, a little glitter on it and and make it a little bit exciting.

Speaker 1 So, there's a new trend

Speaker 1 that they have come up with, and it's now like trending on social. And it is called slow shopping, is what they're calling it done.

Speaker 1 Where it means you don't just buy something when you want it, you wait to see if you really need it. What a concept.
Vetting a purchase.

Speaker 1 So, slow shopping, it's become a big trend now among the Gen Zers, which we applaud. We are all for this

Speaker 1 quote-unquote new trend of Mindful buying. Yeah, but the idea is that, again, shoppers are now cautioning each other to be slower when they're making purchases, not go off of a motion.

Speaker 1 And even if there are deals and promotions, still wait to see if you need it. Don't fall for those traps.
Wow. Which is very smart.

Speaker 1 So, yeah, the whole idea of spending and consumerism has always been something we've talked about here. But the slow shopping,

Speaker 1 yeah, we are all for Gen Z.

Speaker 1 This is wild. This is is wild and crazy to me.
And then there's another one. And then you're ready for this one.
Okay. This is on TikTok.
This is the latest financial trend.

Speaker 1 It's called under consumption core is what they're calling it, where it basically means that you don't buy anything that you don't need. What a time to be alive.
So you just use what you have

Speaker 1 already.

Speaker 1 And that's all. And if you, you know, actually have something you need, then you can buy it.
But if it's just something you want, we're not buying it.

Speaker 1 And they're calling that under consumption core, which again, it's been around forever, Jade. You know, this whole idea of like,

Speaker 1 you know, being

Speaker 1 like, I don't know. I hear these terms and I'm like, I don't even, I don't know what it means.
Okay. Kelly may be able to tell us.
She, I feel like she's like in the trenches.

Speaker 1 She's like, I don't know either.

Speaker 1 Yeah, but under consumption core is what they're calling it.

Speaker 1 So, but, but, but again, this consumerism and this idea of what we've been teaching at Ramsey for decades is, yeah, if you don't have the money, don't buy it.

Speaker 1 Your needs versus wants is always something to consider because there will always be a new and better thing. But if you don't have the money, don't buy it.
So I'm glad that Gen Z's.

Speaker 1 And it reminded me of there's a Saturday Night Live old skit, old skit with like Steve Martin, oh, yeah, Amy Pohler. I think, do we have it? Okay, let's let's play that.
This is

Speaker 1 what it reminds me of. I just can't get these numbers to add up.
Like, we're never going to get out of this hole. Credit card debt.
Does it ever end?

Speaker 1 Maybe I can help. We sure could use it.
We've tried debt consolidation companies.

Speaker 1 We've even taken out loans to help make payments. Well, you're not the only ones.
Did you know millions of Americans live with debt they cannot control?

Speaker 1 That's why I developed this unique new program for managing your debt. It's called Don't Buy Stuff You Cannot Afford.

Speaker 1 Let me see that.

Speaker 1 If you don't have any money, you should not buy anything.

Speaker 1 Sounds interesting. Sounds confusing.
I don't know, honey. This makes a lot of sense.
There's a whole section here on how to buy expensive things using money you save.

Speaker 1 Give me that.

Speaker 1 And where would you get this saved money? I tell you where and how in chapter three.

Speaker 1 Okay, but what if I want something but I don't have any money? You don't buy it.

Speaker 1 Well, let's say I don't have enough money to buy something. Should I buy it anyway? No.

Speaker 1 Now I'm really confused. It's a little confusing at first.
Well, what if you have the money? Can you buy something? Yes. Now take the money away.
Same story? Nope.

Speaker 1 You shouldn't buy stuff when you don't have the money.

Speaker 1 There we go. What a concept.
Such common sense. Such common sense.
So yeah, America,

Speaker 1 follow Gen Zers. You know, when you're going to buy something, especially this holiday season, be a little slower with your purchasing.

Speaker 1 Make sure you have the money for it and you know if it's not a if it's not a need maybe you skip it maybe you skip it and live in that under consumption core uh trends which is so great i feel like it should just be under consumption yeah i don't know that's it

Speaker 1 talking to two millennials here wow okay oh all right let's go to san antonio texas and regina is with us hey regina welcome to the show

Speaker 2 hi first off i'm 26 and the fact that i only know about the under underconsumption makes me feel so old.

Speaker 2 But you also forgot about the de-influencing. So now

Speaker 1 kind of de-influence people. Yes, I love, I actually really like that de-influencing trend.
Yeah, same idea. Well done.
Thanks, Regina. Thanks for the

Speaker 1 keeping us young. I got you.
So good. So good.
How can we help?

Speaker 2 So, yeah, so obviously right now I am super old. Not obviously, but I'm on the show now.
So I am Dave Crazy right now, and I'm in baby step two.

Speaker 2 And I feel like I don't know if I've made his name a cuss word just yet but I do know that a lot of my friends they know I'm on it and they support me and I feel like some have been trying to spread the word about it but I have a little cousin and she looks up to me a whole lot she just turned 18 she just entered college for the first year and I really want to try to go about that conversation of finances with her because I know when I was 18 my prefrontal lobe wasn't developed yet right so like anything that anybody would tell me, I was like, yeah, yeah, yeah.

Speaker 2 Like my mom swears she told me not to, you know, get debt, but she also, I remember her telling me that I could get a credit card when I was 18. So that's all I remember.
Sure. And so I'm trying to.

Speaker 1 Oh, no.

Speaker 1 Oh, no. Did we lose her?

Speaker 1 Oh.

Speaker 1 Let me put her on hold.

Speaker 1 Okay.

Speaker 1 Shoot. Okay, Regina, we're going to answer your question.
I think our phone systems just got a little crazy. That was like the old school fax machine.
That's what it did sound like.

Speaker 1 Somebody was sending us a fax. Yes.
Okay. So we'll talk through this, Regina.
I'm so sorry. We had to cut you off because of that.
That's right. I can't ask any follow-ups.
But

Speaker 1 yeah, to be a great influence,

Speaker 1 I think is number one. I appreciate you even thinking about people in your life and saying, oh my gosh, I know someone does look up to me and watches my decision making.

Speaker 1 And I want to be able to help them when it comes to this. So first, I'll give you my number one is always, always, always, people are going to see what you do more than what you say.

Speaker 1 And so, she's going to be watching you do this. And she may be watching you, you know, take on an extra job to pay off debt.

Speaker 1 She may be watching you say no to a vacation that all your friends are taking. And you're like, Yeah, I'm not going because I'm paying off debt.

Speaker 1 Like, as you live this out, that is going to speak so loudly.

Speaker 1 Because even like your parents, you know, they're like, you know, they may have said something, but then also they're like, Yeah, I bet you can get a credit card and they probably live with credit cards and live with some debt.

Speaker 1 And you just kind of follow what you know and what you see, how people act as you watch them.

Speaker 1 And so, by you just simply living, just know like that is a great starting point because she's going to be seeing what you're doing and realizing, oh, she's not stressed about money. Yeah.

Speaker 1 God, Regina has margin to spend and she's like saying no to things and she's going to be watching your decision making. I agree.

Speaker 1 I think seeing that, I think there's a couple areas that that really applies. And weirdly enough, I think it's the same areas that we talk about couples being aligned on.

Speaker 1 People don't like for you to just strike up a conversation out of the blue about their money,

Speaker 1 their politics, their religion, how they raise their family, right? It's like, when you do that, it's like, wait, wait, wait, whoa, whoa, whoa, whoa.

Speaker 1 So to just like, even if it's in love, like bringing it up, it kind of feels invasive because those topics are extremely invasive. And so I think Rachel's exactly right.

Speaker 1 Let your actions speak louder than your words and they truly will. Like the fruit, you know a tree by the fruit it bears.
Yeah.

Speaker 1 And if you guys do have a great relationship, you know, sitting down with her at lunch and just telling her what you're doing and just being like, oh my gosh, okay, I found this new show and I'm so excited about it.

Speaker 1 I'm paying off. And talk about what you're doing and not point the finger at her.
And just say, if you ever have any questions, please like call me.

Speaker 1 I want to talk about this and I would love to help if you want help. Like I'm here for you.
You know, just offering that door to be open. Thanks, Regina, for the call.
Thanks to everyone in the booth.

Speaker 1 Thank you, Jade, for a great hour. And we'll be back, America.
This is the Ramsey Show.

Speaker 1 Live from the headquarters of Ramsey Solutions, it's the Ramsey Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships.

Speaker 1 I am Rachel Cruz, hosting this hour with best-selling author Jade Warshaw, and we are answering your questions about life and money and relationships, career, anything and everything.

Speaker 1 We are here for you. So, first up, we have Stacey in Nashville.
Welcome to the show.

Speaker 2 Hi, it's Stacea.

Speaker 1 Stasa, I'm sorry.

Speaker 2 You're totally fine. I've heard it for all 33 years of my life.

Speaker 1 I bet you.

Speaker 2 First and foremost, I am unapologetically fangirling. You guys are some of my favorite hosts and personalities ever in the history of the whole show.
Oh, I'm so nice.

Speaker 1 I'm so glad. I'm glad we're here for you today.

Speaker 2 Absolutely. They keep it 100 all the time.

Speaker 1 Rachel, you're just the best. So you are kind.
Thank you. Thank you.

Speaker 2 Yeah. Well,

Speaker 2 just a little context. I have been following the principles of Ramsey since I was 17.
I'm 33 now. Wow.

Speaker 2 Two and a half years away from being a baby steps millionaire.

Speaker 1 Oh, my gosh. That's amazing.

Speaker 2 So grateful, like so, so grateful for the principles. I come from a family that does not have money, and so I'm actually calling you today because I don't have anyone else to ask.
this question.

Speaker 2 So I am in baby step six. My husband and I are in baby step six.
We are about eight years away from paying off our house fully.

Speaker 2 And I know y'all say, I know the principles inside and out, but I know y'all say to not purchase a second property until your first property is paid off.

Speaker 2 And so we're in a predicament where we want to purchase land and then eventually build a small home on that land.

Speaker 2 And so we would love to throw like $50,000 at purchasing land, but I'm wondering how to navigate big purchases while in baby step six.

Speaker 2 Do we just like stay gung-ho for the next eight and a half years with like every extra penny going as a mortgage?

Speaker 2 Or like when do we have permission to save up a good chunk of money and make a big purchase? And is it okay that that big purchase is toward like one component of a second property?

Speaker 1 Yeah, it's a great question. Is the $50,000, will that be enough to cover the land that you're looking at?

Speaker 2 Well, well, that's the thing. I'm from Nashville.
Rachel, I know you're familiar with East Tennessee.

Speaker 2 So like we know exactly what part of town town outside of Chattanooga or East Tennessee that we would want to purchase.

Speaker 2 And so, if and when the right land came available and we were able to jump on it, I want to be able to jump on it.

Speaker 2 And right now, a lot of land is going for a lot less because people aren't buying houses, primary houses, and especially not buying secondary property. So, land has been cheaper.

Speaker 2 And so, I'm trying to weigh the options of like, do we go ahead and like jump on it if something's in that 50,000?

Speaker 1 When you say jump on it, when you say jump on it,

Speaker 1 is that permission to buy something that's more than $50,000?

Speaker 1 Like more than the cash that you have?

Speaker 2 No, we have, so we have that cash on top. And that's what I'm wondering.
Do I, we have our emergency fund and we have on top of our emergency fund extra cash.

Speaker 1 $50,000.

Speaker 2 Do we throw that at the mortgage? Yes. I'm like, do we throw that at the mortgage and maybe go get the mortgage paid down a year faster? Or do we jump on land?

Speaker 1 Yeah, because the land, would you guys want to, in your perfect world, would you move there before eight years or is this like in 20 years?

Speaker 2 No, so this would just be a second enjoyable spot. We live in the city.
We live like right downtown in East Nashville.

Speaker 1 Okay. So

Speaker 2 this land would be like a little getaway space for us to share with our family and for ourselves, just enjoying for us.

Speaker 1 Gotcha. Yeah.

Speaker 2 Like to get out in the country.

Speaker 1 When would you start building on it after this first mortgage is paying off? Or what are you thinking? Absolutely. Yeah, I would buy the land.
Yeah, why not?

Speaker 1 Yeah, buy the land. Okay.

Speaker 2 I just, I don't know of like hearing permission of like, because it's associated with a second home, like, did that have to wait until the mortgage? And I don't know. I don't have anyone to ask.

Speaker 2 Like, how do you like wisely go about it? I know.

Speaker 1 I think it's wise that you're paying cash. It sounds like it's reasonable.
You have the money to do it. And I think it really goes back to that teaching of

Speaker 1 once you pass baby step three, things kind of, you're able to live your life and you're able to focus on the things that are valuable to you and that you want to spend money on.

Speaker 1 And in this case, you're going to continue to pay the house off and you're not building the residence before you're figuring out your primary residence. So

Speaker 1 for me, it's, I would, I would do the same thing if I were in your shoes and I heard about that. Yeah.
And it's, you know, $50,000, which is a lot of money.

Speaker 1 But it's also like, that's the price of a new car for some people when they replace their car.

Speaker 1 So, yeah, it's not like we're talking about $500,000 and the house could, your primary residence could be paid off today or something.

Speaker 1 It's a reasonable amount of money. Cause how much do you guys make a year?

Speaker 2 Combined, we're at 310.

Speaker 1 That's great. Okay.
Yes, I would for sure. I would, yep, I would save.
And I, and, and I'll even go a little further because I'm such a sweet

Speaker 1 that to, to really get what you guys want long term, if the, if you're looking at other properties, you're like, gosh, if we had another 10,000, like that would be, that, that would be even, you know what I mean?

Speaker 1 Like, like, don't,

Speaker 1 because you're not in a rush, don't cheapen the purchase by just being able to say, we got it.

Speaker 1 So really looking, and I'm sure you guys have done your research, and maybe 50 grand is just enough, and like it's perfect and you're getting

Speaker 1 slow shopping

Speaker 1 to be able to get, you know, so maybe 50 grand really will get you guys exactly what you want, and that's amazing. But I would also say, you guys make great money.

Speaker 1 Yeah, you're in baby step six, you're doing great. And again, if you're like, you have it, you know, 10 grand more and we be disciplined in this.

Speaker 1 Don't, don't let it go crazy, but like 10 grand more would really get us this view here, this, that, you know, whatever it is. Right.

Speaker 1 Maybe even pause a little bit, save up a little bit more, and get what you want as well. What do you owe on your current house? Just curious.
We owe $5.50. Okay, so you've got to wait.

Speaker 1 So we're on track.

Speaker 2 Yeah, we've got about eight and a half years. And my husband gets annual bonuses and sometimes they're 35, sometimes they're 50.

Speaker 2 So what we use is like we just live on the base salary and then those bonuses can either go to some of the mortgage or they can go to a big purchase. And so we know that those come every year.

Speaker 2 So I'm like, okay, we could add that and that could be extra going going towards land, you know, a nicer piece of land. Or, you know, it's not going to move the needle a ton

Speaker 2 in how early we pay off the house since we're pretty aggressive about paying it off monthly now.

Speaker 1 Yeah. I mean, the good news is.

Speaker 1 The good news is, and I'm not saying that this will happen.

Speaker 1 It doesn't sound like it would, but the good news is if you were to purchase something and then seven years from now, if you change your mind or something in your life changes,

Speaker 1 it's something that's gone up in value, hopefully, and you could sell it. And, you know, you won't have lost anything.
So, because a lot can change in eight years, is true, but yeah.

Speaker 1 If I were in your shoes, I'd do it. Would you guys use the lands between now and eight years just to go and, I don't know, yeah, and camp and camp and all of that.
You would use the lands. Okay.
Yeah.

Speaker 1 That's correct. Absolutely.

Speaker 2 So that's what, and be flexible. Also, like, kind of camp and see where do we want the front of the house?

Speaker 1 Where do you want the natural light? Yeah, that's fun.

Speaker 1 Totally.

Speaker 2 But I just, I look at, you know, bots outside of Chad. And you're going to need Tennessee all the time.
And some are going to auction and people just don't have the extra money.

Speaker 2 And so they are going for a little bit cheaper.

Speaker 2 And we don't need a view. We also just kind of want wooded seclusion.
So it's just up in the air.

Speaker 2 I just wanted to get permission, quote unquote, permission to make a large purchase, even if it is associated with a second property while in babysitter.

Speaker 1 Chris hadn't heard anyone ask about that.

Speaker 2 Yep.

Speaker 1 Absolutely. Well, I'm glad you called because, yes, you have our permission because you're paying cash and it's a reasonable amount compared to what you guys make and overall your financial life.

Speaker 1 So it's not adding risk. Yep.
Nope. It's great.
And congratulations. Well done.
That's always refreshing to hear.

Speaker 1 It's kind of that first generation of, hey, we're doing something different with our money. And hear that too.
Since she's 17, she's been doing this.

Speaker 1 Maybe not as aggressively in high school as you are when you're a working adult, but this is a marathon. It is a long-term play.

Speaker 1 Yes, they are rhythms in your life at which you adopt good money habits and you get to be a point to say, yeah, we want to buy some lands. So I'm so glad you called.
This is The Ramsey show

Speaker 1 welcome back to the ramsey show up next in boone north carolina we have sierra on the line hi sierra welcome to the show hi thank you absolutely how can we help um so my husband and i are living paycheck to paycheck and

Speaker 2 I was introduced to Dave Ramsey for my grandmother.

Speaker 2 Now, I have been trying for the past six months, and I'm stuck on baby step one.

Speaker 2 And we're not getting anywhere. We had half of baby step one,

Speaker 2 and then

Speaker 2 everything happened with the hurricane, and we're back to zero.

Speaker 1 Oh, man.

Speaker 1 Were you guys hit hard? Were you one of the towns?

Speaker 1 Yeah, we were.

Speaker 2 It's okay. It happens.

Speaker 2 but

Speaker 2 I'm just I feel like we can't catch a break and living paycheck to paycheck is so hard for us I am a full-time student

Speaker 2 college student I'm 29 and my husband works full-time sometimes even over like overtime shifts just so that we can get by and I just I don't know what to do anymore what's he bringing in income

Speaker 2 about 49 to 50,000 a year okay

Speaker 1 and when do you graduate

Speaker 2 I have about five semesters left, so I'll be finishing up in 2027.

Speaker 1 Okay. Wow.
Okay.

Speaker 1 Are you working at all, Sierra?

Speaker 2 I'm not, but I pick up pet-sitting shifts to try and bring in some money. I tried a full-time job and full-time college, and it destroyed me.

Speaker 1 Okay.

Speaker 1 What are you getting your degree in?

Speaker 2 Biology.

Speaker 1 And what's the goal with that? What do you want to do?

Speaker 2 I want to go work on the coast as a marine biologist.

Speaker 1 Wow. Okay.
Okay. So you're he's bringing in 49,000.
You're doing pet sitting. How much do you guys see a month? Like after taxes, after everything? What does that look like monthly for you?

Speaker 2 It's about

Speaker 2 $3,500. Okay.

Speaker 1 And what how are you guys living? Are you renting? What are you paying for rent?

Speaker 2 We are renting.

Speaker 2 We pay $1,000 a month for

Speaker 2 okay

Speaker 1 um yeah this is tough um

Speaker 1 the solution that you're looking for i mean people live paycheck to paycheck for different reasons sometimes it's our spending's out of control and we've got to you know rein the budget in and rein the spending in and sometimes it really is an income issue and it's in this case i think you're creeping up on an income issue um

Speaker 1 I'm just wondering,

Speaker 1 what is your husband doing for work? What kind of work does he do?

Speaker 2 He makes fiber optic cable.

Speaker 1 Okay, and you said he had a side hustle too. What's that?

Speaker 2 He door dashes.

Speaker 1 Okay. So

Speaker 1 I'm wondering if

Speaker 1 both of you need to sit down and kind of figure out, okay,

Speaker 1 what do we both need to do in order to make this work? Because to your own words, it's not sustainable. Are you guys going into debt? Like, how are you covering the overages?

Speaker 2 We are door dashing every chance that we can get okay um just so like i can get to class and we can get food and sometimes his mom helps us out okay so there's not you're covering the overage then

Speaker 1 so there's part of this and and there may be more that you can do income-wise but there is part of this where you've said okay i'm gonna go to school for the next uh three years and i'm gonna become a marine biologist and by me doing that here's what we've decided my income is limited and he's in his career right now.

Speaker 1 And so there's part of this that you guys have decided by, you know, by choosing this path. And I'm not saying it's a bad thing.

Speaker 1 It's just we've both understood that for the next three years, it's going to be extremely tight. But there's a light at the end of that tunnel because you're going to be a marine biologist.

Speaker 1 What's a marine biologist make?

Speaker 2 It kind of depends. I'm trying to get a state job

Speaker 2 and that can range anywhere from $50,000 to $70,000.

Speaker 1 Okay. And how are are you paying for school?

Speaker 2 Right now, I am pretty set with financial aid and scholarships. I've already finished my associate and

Speaker 2 went through that with honors. So I've been doing pretty well with scholarships.

Speaker 1 So no debt, no loans. Do you guys have any other debt or any debt at all?

Speaker 2 Yes. I have three credit cards, but it only adds up to about $1,000, maybe

Speaker 2 hundred

Speaker 2 and I have a car how much is that

Speaker 2 um

Speaker 2 the total on it's twenty eight thousand and I pay um

Speaker 1 six hundred and sixty eight dollars there's some money album Sierra you got to sell that car yeah you got to sell it see and I'm trying to figure out how to sell it so I'm not sure because I'm $13,000 flipped on a car

Speaker 1 oh wow

Speaker 1 so you so you owe 28,000 and how much, and you're saying you really can't sell it except for $15,000 is what it's worth?

Speaker 2 When I had it, because I went and had it appraised at a dealership. Okay, don't.

Speaker 1 And they said they could only give me $6,000. Yeah, yeah.

Speaker 1 Okay. So don't do the dealership route because they will always give you a much lower rate than what you could actually sell it private sale for.
So go on KellyBluebook.com.

Speaker 1 Put in all the info and just see on the high end what you could get for it. Okay.

Speaker 1 um so the the dealership told you how much would they pay for it

Speaker 1 six thousand oh my gosh six thousand dollars and it's a 20 and you owe twenty eight thousand what kind of car is it it's a 2017 jeep cherokee and i have a hundred and sixty two thousand miles on it okay what what does your husband drive what's his deal

Speaker 2 um he has a motorcycle that's paid for got you and um we have a we call it a hoopie

Speaker 2 um

Speaker 2 and it's it's just a really old beater that's also paid for.

Speaker 1 What about the motorcycle? What's it worth?

Speaker 2 About $4,000.

Speaker 1 Okay.

Speaker 1 Yeah, I would,

Speaker 1 okay. I think, yeah, I would be selling this car, Sierra, for sure.
And even if it's,

Speaker 1 even if you can only get $16,000 for it, I would rather have a $16,000 loan than a $28,000 loan. Does that make sense? Like,

Speaker 1 that's going to change your numbers a whole lot. And if I were you guys, do you guys have kids?

Speaker 2 We have a two-year-old.

Speaker 1 You have a two-year-old. Okay.

Speaker 1 Yeah. I mean, I.
I might sell the motorcycle and take the 4,000 and get a beater car for you. And then sell your car.

Speaker 1 Yeah.

Speaker 1 I mean, honestly, because you can always go back and get a motorcycle again. But you guys, I mean, to your point.
I mean, it's going to cut that payment down when she gets a loan for whatever it is.

Speaker 1 Possibly. I mean, it'd be, yeah, you guys would have an extra $300 a month coming in.

Speaker 1 Yeah. So there's, and there's decisions here.
And I think Jade set it up really well.

Speaker 1 And it's a, it's a, it's kind of a hard pill to swallow in life, but it's understanding that, you know, as adults, we make decisions around our life. And not all of them.
It's not so bad. Yeah.

Speaker 1 Not all of them are right or wrong. It's not this, you know, oh, gosh, you shouldn't be in school right now.
It's not that at all. It is, though, we have decided to do this route.
And because of that,

Speaker 1 we're not going to have a lot of money. Like we're going to be, we're going to feel broke for three years until I get through school and until I get a job and all that.

Speaker 1 And in three years, it's going to look different. But in the meantime, what can we do?

Speaker 1 What other decisions can we make that are going to be adult-like decisions that may hurt and they're not fun, but it's things like getting the extra job like you guys are doing.

Speaker 1 It's selling stuff to see what you can free up. It's getting out of debt and freeing up income.
Cutting up those credit cards. Cutting up credit cards.
Yeah. I mean, it's doing a couple of these,

Speaker 1 making some of these decisions within the big decision of the lifestyle you guys have made just just to make it easier sierra and that's the thing is is we want peace you know we talk about financial peace is what we want for everyone and that peace is going to look different depending on you know everyone's situation and you know the way they view life and all of it it's a little bit of you know subjective to a degree but you don't have peace right now and so what i would fight so hard for is in these three years

Speaker 1 how can we get some peace and being able to free up some money would bring some of that and how do we do that well i just listed out a couple of options from jobs and selling stuff and all of it.

Speaker 1 So that's what I'm talking about. And one of the things the long term that you've committed to, like once she starts working, she's got a great pathway to make $70,000.

Speaker 1 And yeah, and then together with your husband, yeah, y'all will be making, you know, 130,000

Speaker 1 before taxes. Like that's amazing.
So the light is coming,

Speaker 1 but it's getting to the light that I think is really key. And what decisions can we make in between? And these are hearts here.
I understand. Like, these aren't fun.

Speaker 1 It's not always fun, but it's getting you to a goal that you guys want together. And part of that is you still being in school.
So, I commend you for having a two-year-old and doing this.

Speaker 1 And I'm so sorry about the devastation in your area.

Speaker 1 We think about you guys so much. So, we're praying for you.
Thanks for the call.

Speaker 1 Welcome back to the Ramsey Show.

Speaker 1 Our question of the day is brought to you by YReFi.

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All right. Today's question comes from Teresa in Wyoming.
She says, my husband and I have five girls under the age of 12. Wow.

Speaker 1 We have been in our home for seven years and we owe $234,000 on it.

Speaker 1 We love our house and three acre property, but in the past few years, the homes on either side were bought by a man who rents them out to people who work for him.

Speaker 1 Now we have what looks like a junkyard next door. They've also moved a two-bedroom trailer to one of the properties that houses more workers.

Speaker 1 They dump all their construction materials on their land and regularly burn enormous piles out of it. I have complained and the county has been out, but nothing has changed.

Speaker 1 They walk through our front yard and the woods, which is our property. Recently, the police taped off

Speaker 1 the woods and a crime scene investigator spent the day. Oh my gosh, there and hours,

Speaker 1 spent the day and three hours there, I guess is what it should say. So all of that backstory.
What should we do? Our realtor has said that we could sell the home for 800,000. That's pretty good.

Speaker 1 Should we stay because our interest rate is so low and paid off? Or should we put up a fence around the property? I've got five young girls to look out for.

Speaker 1 So please guide me on what to do in this weird situation, Rachel.

Speaker 1 Wow. Man, this listen, the crime scene would have got me.

Speaker 1 I would have a lot of questions. She's in Wyoming.
So there's like

Speaker 1 my mind is going to some shows that I've watched. But anyway,

Speaker 1 I love that. This is worth a lot.

Speaker 1 I wish I knew how close,

Speaker 1 like,

Speaker 1 how close the neighbors are. I'm envisioning more land, I guess, because I'm envisioning Wyoming.
But three acres

Speaker 1 isn't like

Speaker 1 crazy, crazy. Yeah.
Yeah.

Speaker 2 I, you know,

Speaker 1 I wouldn't let the interest rate keep me there. I definitely wouldn't.
I think that you have enough equity that you could probably move on if you wanted to.

Speaker 1 And if you're truly concerned about safety and I'd make sure to get all the information from the county first and say, okay, are there any violations? Are you planning on doing anything?

Speaker 1 And if they're not, then

Speaker 1 I'd probably get to step in. I know.
Yeah. You're the primary residence in which you live.
Some people, there's not a lot of options.

Speaker 1 You kind of are stuck, you know, depending on your situation, but you want to feel safe. I'm like, that's the one place in life where like you can go.
Yeah. And not have to think.
And for your kids,

Speaker 1 where you're not worried about them and already having a good time. Yeah.
Yeah. So I

Speaker 1 may talk to him and just see not what he would change, but if he's thinking of what his long-term plans are.

Speaker 1 Because who knows, he could say, oh, yeah, in the next two years, I'm leaving and going somewhere else or whatever, right? And then this problem, it's short-term.

Speaker 1 I would not have the conversation with the hopes that you can change the way he does life and all the, you know, how he's lived thus far. That's not going to change.
Yeah.

Speaker 1 But I would be curious what his long-term plans are. And if he doesn't have any, then I probably would be moving.
Just to feel, yeah, just to, I mean, you have the option. You have great equity

Speaker 1 and just to feel safe again. I mean, honestly, it's like, golly, I just want to enjoy my house and what's around me versus like rolling my eyes every time I go.
And again, some people,

Speaker 1 there's no option, and you will be in the house that you're in because of interest rates and everything. So, but they've got options.

Speaker 1 Yeah, it's a, it's a, it's a blessing to be able to say, hey, we can, we can actually make a different move. So I probably would.
I, I would, too.

Speaker 1 I think that there's a soul tax here and a mental calorie tax that you can afford to pay. Yep, I love it.
But thanks for the question, Teresa. All right, let's go to Adam in New York City.

Speaker 1 Hey, Adam, welcome to the show.

Speaker 2 Thank you.

Speaker 1 Absolutely.

Speaker 2 I have a question.

Speaker 2 I was in an accident and there was a settlement.

Speaker 2 I have some debt about

Speaker 2 $28,000 total between my wife's credit cards, my credit cards, and what's left of my car payment.

Speaker 2 We're going to wipe out our debt the minute we get

Speaker 2 our payment.

Speaker 2 But what we want to do is we want to know what we do with the rest. It's about close to a half a million.

Speaker 1 Oh, wow. What happened, Adam?

Speaker 2 I really can't go into detail. Okay.

Speaker 1 Sure. Are you okay?

Speaker 2 I'm getting there. Yeah.

Speaker 1 Okay.

Speaker 2 And yeah.

Speaker 1 Will you have long-term medical issues at all?

Speaker 2 I have something that was implanted that is helping me. Yeah, I really can't get into the whole.

Speaker 1 Oh, yeah, no, I don't want you to. I'm just thinking for part of this money, if there was going to be ongoing high medical care for you, that that was going to be part of my answer.

Speaker 2 Senators down the line, I have to get something, like, get something done again.

Speaker 1 Okay. Um, I just want to make sure you have the cash for all of that.

Speaker 2 Yeah, yeah, and that's what. And

Speaker 1 also, working

Speaker 1 going forward, will you be working again or are you disabled?

Speaker 2 Yeah.

Speaker 2 No, I'm working both. Um, My wife and I are working.
Okay, that's great. I got back to work.
I got back to work, but it was, you know, it wasn't easy.

Speaker 1 I'm sure, yeah. Well,

Speaker 1 I'm glad you're doing okay.

Speaker 1 What's your combined income, you and your wife?

Speaker 2 $134,000.

Speaker 1 Very cool. Okay.
So you'll have to have a child.

Speaker 1 No children?

Speaker 2 No, we're more like mid-50s.

Speaker 1 Okay.

Speaker 1 And how are you living?

Speaker 1 What's your housing situation?

Speaker 2 We have

Speaker 2 It's an expensive area, but we have

Speaker 2 paying about

Speaker 2 our rent's close to $1,700 a month.

Speaker 1 Okay.

Speaker 1 So

Speaker 1 you know that you want to pay.

Speaker 2 Ridiculous.

Speaker 1 Oh, yeah.

Speaker 2 Yeah.

Speaker 1 Well, are you in the city? Like,

Speaker 1 what part of New York are you? No, we're not in the circumstances.

Speaker 1 Okay.

Speaker 1 So you know that you want to pay off the debt, which is about $28,000, right? That's cars, credit cards. Cars and credit cards.

Speaker 1 And then you're going to want to put aside three to six months of expenses. That's what we teach here.
That's what we'd call baby step three.

Speaker 1 So in your case, I'd put away six months just because you do have some things medically going on. And if I were you, I'd probably put out my out-of-pocket max.

Speaker 1 I would just like having that that I can get to.

Speaker 1 And then the next thing on the list, obviously you should be investing.

Speaker 1 Once this is done, you should start investing 15% of your income, your wife and you combined every single month just to set you up for later on.

Speaker 1 But But with this $500,000, this might be a good time to start thinking about a long-term housing situation that's not renting.

Speaker 2 Yes, right, right.

Speaker 2 And

Speaker 2 so, what we're going for is what we need

Speaker 2 in the area we need to live in because of work.

Speaker 2 We just buy the house in cash or,

Speaker 2 I mean, as much as we can down on down payment.

Speaker 1 Well, what are you pricing out?

Speaker 1 real if you look at what you'd like to buy, what's it cost?

Speaker 2 But what we're getting settled for, what we're looking for is we could barely even pay it in cash.

Speaker 2 Well, I was wondering, should I put in a money marketing account and save up until we find something we like or just put a nice down payment on something that

Speaker 1 we have a lower I wouldn't buy something that you you don't like, but I also you want to buy something that you can afford. So that's that's what yeah, that's what I'm saying, yes.

Speaker 2 But what we like and what we can afford is what are the price ranges you're talking about?

Speaker 1 to give me more numbers

Speaker 2 okay the homes that we're looking at

Speaker 1 for for just just my wife and I they're they're they're starting at like 450,000 okay okay so what would be a what would be a number that's like oh yeah that's a that feels like a good house for us good area it's what we want what is that you said starting at 450 but Is that what you're thinking around?

Speaker 1 450, 500?

Speaker 2 Yeah, 450, 500.

Speaker 1 Oh, that's great. Okay.
Does it weird you out that all to spend and buy outright? Is that what you're saying? Does that weird you out to take all this cash and do that?

Speaker 2 And then I feel like I'm like, we're, we're housebroke after that.

Speaker 1 Yeah.

Speaker 1 Well, honestly, Adam, that's, that's probably what I would,

Speaker 1 that's what I would do. I mean, and again, I, and don't feel the pressure to pay for it all in cash, but if you see a house that you like and you guys have to take out a $50,000 mortgage,

Speaker 1 I would do that. And it will feel house poor, but that means the largest expense in your life,

Speaker 1 there is no expense to it. So

Speaker 1 the opposite of you guys.

Speaker 1 Yeah, you guys can be able to cash flow so much retirement out of this and put so much money in investments.

Speaker 1 That's what I would do. That would be a huge way to get a jumpstart on this.

Speaker 1 Yep, that's exactly what I do. I would do it too.
Thanks for the call, Adam.

Speaker 1 Welcome back to The Ramsey Show. I'm Rachel Cruz, hosting today with bestselling author Jade Warshaw.
And we are taking your calls. And up next, we're going to north of the border, Jade.

Speaker 1 We're going to Toronto, Canada. All right.
And we're going to chat with Diana. Hey, Diana, welcome to the show.

Speaker 2 Hi, how are you?

Speaker 1 We're doing great. How can we help?

Speaker 2 So basically, I am

Speaker 2 48. I've got no kids.
I'm single. I've got my mortgage that I've got about 13K left.

Speaker 1 left nice

Speaker 2 I have yeah I have some investments 38k that I can't touch until I'm 55 which unfortunately I mean well fortunately that's right around the corner but

Speaker 2 my thing is I haven't been working for a year I quit my job because I needed a change my salary is only 55k so when I do eventually get a job

Speaker 2 you know it's it's not very high but in the year I've been paying my maintenance and my mortgage on my credit line.

Speaker 1 So I've accumulated another $10,000 in the last year.

Speaker 2 But here's the thing. This is not the first time I've been in a situation.

Speaker 2 I've quit my job before, and I've been, you know, not wisely paying my mortgage and my maintenance fees on my credit line, but that's been a little buffer for me.

Speaker 2 And then I'll get a job and I'll pay it down.

Speaker 1 That's such a risky way to live.

Speaker 2 It is, it is. And, you know, that's what we call cash poor, right? Where, you know, I'm not making a lot of money, but I'm smart with my money.

Speaker 2 money you know I'm not paying to get my nails done and stuff like that I'm you know putting every cent that I have to that mortgage when I am making money but here's my main question I have no kids I and my condo is worth about 700k right why am I rushing because I only have 13k left on this mortgage why am I rushing to pay down this mortgage I don't know

Speaker 1 I want you to answer this question because you laid out a very interesting plan that I don't understand why you're it's it's strange to me that you are rushing to pay off your mortgage and that you're going into debt to do it without a job.

Speaker 1 This is what I would call emergency mode, but I feel like you're kind of living it like a normal lifestyle. When do you plan on working again?

Speaker 2 Well, I'm looking for a job, but here's the thing here in Toronto, like salaries are very low and I'm being I'm cherry-picking. Let's be honest.

Speaker 1 But what caused you to, what caused you to quit your job before you had another one lined up? Was something bad going on?

Speaker 2 Yeah, I just didn't, I was sick of it. I I was working for a company eight years and I was tired of it.
Like, I was,

Speaker 2 I need a break.

Speaker 1 How are you eating, Diana? Like, and I'm not being facetious, honestly. Like, how, how are you having money to live?

Speaker 2 Oh, again, that's why I've accumulated the 10,000 because I've been paying

Speaker 1 your

Speaker 1 mortgage and your lifestyle off this line of credit. 100%.

Speaker 2 So that's what that 10,000 is.

Speaker 1 I've been paying my mortgage. Yeah, so that's, I mean, that 10K

Speaker 2 accumulated over a year.

Speaker 1 Yeah, it could have been a lot worse.

Speaker 2 Exactly, exactly. And, you know, and technically it's only $8,000.
It's crawling up. I'm rounding up here.

Speaker 1 But the thing is, how did you get by on $8,000?

Speaker 1 What? Did you have savings?

Speaker 2 You know what? I had a little bit of savings, and I was technically collecting EI for like six months.

Speaker 1 So let's be honest

Speaker 2 with only $8K, it is only.

Speaker 1 So I'm very much the way everything is.

Speaker 1 I think that there's, yeah, I would say a couple of things, Diana. So the rush to pay off the mortgage, because you have no other debt but the line of credit, correct? The $8,000.
And then that's it.

Speaker 1 So the rush to pay off the mortgage, number one, we don't tell people to rush to pay off mortgage, their mortgage.

Speaker 1 We say that it is the baby steps at which, after you're investing, you don't have kids, so there's no kids college. Then you would pay extra on the house.

Speaker 1 So it's not this urgency to pay it off quickly, but it is an intentionality that you want to pay it off faster than for Americans, the typical 15, 30 year mortgage.

Speaker 1 We wanted to do it faster than that because your housing line item in your budget, whether it's rent or a mortgage, is always usually the most expensive thing that you pay for every single month.

Speaker 1 And when that's freed up, that means you have all of that money. And for some people, I mean, it's a thousand or more

Speaker 1 dollars that's freed up every single month that you can turn around and use for your life or to invest or all the above, right? So that's the purpose of paying it off.

Speaker 1 It's not if you have kids or not. It's truly a line item issue in a budget.

Speaker 1 And when that's, when your house is paid off, not only is there emotional freedom because you don't have payments, but there's also a financial freedom because you don't have payments.

Speaker 1 So for me and you, I mean, you have, I mean, you don't have a lot left. $13,000 on a, did you say a $700,000 condo? I mean, that's incredible, Diana.

Speaker 1 And I want you to work. I mean, I don't want you to sit there and like be racking up debt.

Speaker 1 And it may not be the job you want, but in the meantime, I would be getting something to earn some kind of money to live off of so you're not living off debt. Yeah, because

Speaker 1 you plan on living here, right? Or do you have a big plan to sell this and get access to the money? Like, what are you thinking long term? And by long term, I mean, like, in the next eight years.

Speaker 1 Five years.

Speaker 2 Yeah. Okay.
So, and here's the thing. I just got back from Jamaica because I was like, look, I know it's not wise.
Let's add another couple of grand on that on that credit.

Speaker 1 Diana, you're so different. Hold on, hold on.

Speaker 2 but but but only only because i haven't traveled in seven years you know what i mean and no i don't

Speaker 1 diana i have to tell you i don't know what you mean

Speaker 1 but no i know but you don't have a job diana you're going into debt for a vacation you don't have a job

Speaker 1 how much was jamaica how much was jamaica and how are you paying for it

Speaker 1 it was only two grand that was only two grand so so you're telling me i'm not kidding you're telling you're telling us this is great by the way i really appreciate you calling because she's a free spirit.

Speaker 1 You're a true free spirit. You got $8,000,

Speaker 1 and you're telling me for a full year,

Speaker 1 you have lived off of $8,000. I understand six months you were getting some unemployment, and you took a $2,000 trip.
So technically, you only had $6,000 that you were using.

Speaker 1 I just don't know if I believe your numbers. I feel like that's impossible.

Speaker 2 Well, eight grand, because let's be honest,

Speaker 2 that

Speaker 2 credit card payment is this month. So that'll push me over to the $10,000.

Speaker 1 Oh, now we're at $10,000. Well, it was $8,000 of Jamaica.
Okay, so then, yes, that's right. It hasn't hit yet.

Speaker 1 So, Diana, listen, you're smart. You've,

Speaker 1 because

Speaker 1 you've paid down this condo, that's the reason I'm giving you credit. I'm like, okay, I'll do it.
You've paid down this condo.

Speaker 1 So, you have something in you that works hard and you are smart when you're making an income, but you're not making, I mean, this isn't smart.

Speaker 1 Like, what you've been doing so far, the decisions in this last year,

Speaker 1 are

Speaker 1 really, it's just interesting. It has the ability to ruin what you have built if you keep this up.

Speaker 1 And that's my biggest fear. It's a rhythm and a pattern that's begun.
And I'm scared for you to stay in that long term because it will be financial disaster.

Speaker 1 You've made so much progress financially, so much in your life. I mean, you look at your condo.
I mean, seriously, like, it's amazing.

Speaker 1 I just don't want you to keep going backwards because there's not a job that's paying you what you want. Like, just get a job and pay something.

Speaker 2 See, and that goes into my next question because my mentality, maybe it's a good thing I'm calling in because I'm like, maybe I should take another year off and just travel what just enjoy my life while I still

Speaker 1 look look I I get it traveling is fun I I'm right there with you um is it possible is it possible you don't know what you would want to do professionally and instead of figuring it out it's easier to just

Speaker 1 because

Speaker 2 Because let's be honest, I don't want to get another admin customer service position where I'm only making 55K.

Speaker 2 So the fact that I was able to pay my mortgage and all that stuff.

Speaker 1 If you could do anything you wanted to do professionally like if there was nothing no barriers what do you think you'd do i don't i don't know that's i don't know so you're

Speaker 1 you want to go on an eat pray love journey and figure out

Speaker 1 and i'm all about the travel i just want you to have money to do it too i do too um okay so

Speaker 1 this is a fun call i don't think that we're going to convince you to change your philosophy on life right now.

Speaker 1 I mean, I hope we can, but I think you're, I think you're in a mode right now.

Speaker 2 But you're really just look, because I think because I have the cushion, because my mortgage.

Speaker 1 Yeah.

Speaker 1 Here's the thing.

Speaker 1 You can't outearn bad spending habits for long.

Speaker 1 And although you do have this equity built to your own point, it's not like you're saying, you know what, guys, I've got $600,000, you know, $777 of $1,000 of equity here.

Speaker 1 I'm going to sell it and I'm going to travel the world and use that as my destination.

Speaker 1 That's different, but you're holding on to it and you don't seem to have a plan to sell it. And for that reason, you could look up and really have racked up a lot of debt.

Speaker 1 And you're starting. Yeah, I mean, you're starting halfway to where you were.
You're just making, you have great progress. So keep at it.
So I'd get a job. But Diana, hold on the line.

Speaker 1 Kelly's going to pick up. We're going to give you Ken Coleman's book.
And in the book is a get clear assessment because I want you to get some focus on what you love.

Speaker 1 I think you have a lot. I mean, you have a lot to offer the world.
You offered us a lot.

Speaker 1 You were fun. I appreciate the call, Diana.

Speaker 1 Thanks to all the guys in the booth. Thank you, Jade, and thank you, America.
Listen on the Ramsey app coming up in the next hour. YouTube and podcasts ends now.