It’s Time To Go Scorched Earth on Your Debt!

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

Speaker 1 I'm Ramsey Personality George Campbell, joined by Jade Warshaw, best-selling author, and we are here to help you take the right next step for your life and your money.

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

Speaker 1 We'll try to get you the help and hope that you need. Jackie's going to kick us off in New York City.
What's going on, Jackie?

Speaker 2 Hi there. Hi, everyone.

Speaker 3 What's going on?

Speaker 4 Well,

Speaker 2 I would love to be able to help my sister obtain a mortgage.

Speaker 2 Since the death of my mom in August,

Speaker 2 he finds herself in a position of needing a place to live. I want her to move very close to me in the same town, hopefully.

Speaker 2 And unfortunately, because she was my mother's caretaker for the last six years,

Speaker 2 she did not have an income.

Speaker 2 My husband

Speaker 2 does not want to co-sign on a mortgage

Speaker 2 for her. Why not? I'm having a hard time with that.

Speaker 3 When he told you that, what did he tell you?

Speaker 2 He told me I'm 62 years old. We just paid off our own home.

Speaker 2 I do not want my name on another mortgage for the rest of my life.

Speaker 2 I'm having a hard time with that as a reason because it's it

Speaker 2 most likely would be a temporary situation.

Speaker 5 What do you mean temporary?

Speaker 2 Well, I would assume that once my sister is

Speaker 2 settled and

Speaker 2 with a job, that she would be able to take over the mortgage. I guess refinancing and

Speaker 2 us I guess getting his name off of that mortgage.

Speaker 5 How old is your sister? No.

Speaker 3 You're sixty-two. How old is she?

Speaker 2 She I am actually sixty. She is going to be sixty two in February.

Speaker 1 Gotcha. Does she have income now?

Speaker 2 She has a very small pension that she's uh collecting on she started debt early because of um leaving her latest job and um does she have any money to her name

Speaker 1 no jackie do you see the writing on the wall that your husband sees you are taking on this mortgage for yourself it's going to stifle your ability to retire because you're going to have to pay this entire mortgage yeah well i'm jackie first off i'm sorry that you lost your mom you it says on the screen that you live in new york What does it cost?

Speaker 3 I'm just trying to get my head around the numbers.

Speaker 5 I'm sorry.

Speaker 2 I actually don't live in New York. New York would be the biggest city closest to me.
That was the question.

Speaker 5 So where you live, where you live, what is New Jersey?

Speaker 3 Okay, and what you're looking at, what does it cost?

Speaker 2 As far as

Speaker 2 for her to buy a home.

Speaker 3 Well, I mean,

Speaker 3 for her to live in a house that she needs or wants to. I mean, you're the one saying that you should buy her something.

Speaker 5 So I'm just trying to see what you guys have looked at that would suit her needs.

Speaker 2 Her buying a home would be contingent upon the selling of my mom's house. Sure.

Speaker 3 And what would you guys get for that?

Speaker 2 And I would say that

Speaker 2 approximately between $80,000 and $90,000. I am one of seven.
So

Speaker 2 we are all on the deed. So it's one-seventh of the entire sale.

Speaker 2 and um i have also agreed because i'm not in the can i clarify is the ninety thousand one seventh or is it the ninety seven ninety thousand split seven ways i'm sorry no it's um it ninety thousand would be one one seventh all of us would probably collect okay got it possibly yes okay

Speaker 2 so we're we're trying to sell the home now so in other words her her obtaining a home close to me would be contingent upon the sale of my mom's house. Sure.

Speaker 2 I have also agreed because I'm in a position where I don't work.

Speaker 2 I don't have to.

Speaker 2 We're well set.

Speaker 5 Can I ask a question?

Speaker 7 Sure.

Speaker 3 If you want your sister to live very closely to you, because that's in one hand, and then you've got your husband who gets a vote saying, I do not want to sign.

Speaker 3 and co-sign for a house, which by the way, I agree with. I'm pretty sure George 100% agrees with too.

Speaker 5 What would it look like if

Speaker 3 she stay with you guys for a while until she could you guys set a limit of time and say, hey, we want you to live here or we want you to live on this side of town or on this side of the country, whatever it is.

Speaker 3 What if you stayed with us for four months or whatever you guys decide, talk to your husband, and until you get a job on this side of town.

Speaker 3 And then when you get a job, the house sales, you'll move into your own place. What would something like that look like?

Speaker 2 Probably not doable simply because of the pet situation. There are two dogs and a cat,

Speaker 2 one being my mom's pet and

Speaker 2 my sister's dog as well.

Speaker 1 Can she afford to take care of these pets?

Speaker 2 She can.

Speaker 2 I mean,

Speaker 2 are you asking me if she would give them up?

Speaker 1 I'm not asking that. I'm saying

Speaker 1 it sounds like she's broke and then these pets are adding an extra expense and now she's going to jump into home ownership. I'm wondering if she can rent somewhere instead.

Speaker 1 Why does it have to be she needs to buy her own house or else?

Speaker 2 Well,

Speaker 2 unfortunately, from what I understand about renting, you're having to meet so much criteria of having a job for the past six months or that.

Speaker 5 Well, there's way more.

Speaker 3 Let me tell you this. There's way more criteria needed to buy a home than to rent a home.
To rent a home, I want to make sure basically that you can afford the rent.

Speaker 3 And that way, if you have debt to pay off or other things to get in place, you have the time to do that. Whereas if you're going to buy, there's really quite a bit that needs to be in line first.

Speaker 3 And based on what you're saying, it doesn't sound like she has that in line. At the very least, being able to put a down payment, it sounds like she's quite far from that.
And so.

Speaker 1 Here's what I would do. I would take her 90 and park it in a high yield savings account.

Speaker 1 Let her rent for a year in something that's, you know, an apartment, maybe a small home if it's reasonable in your area.

Speaker 1 And then once she has income and has proven that she can make all these on-time payments, maybe then you at least help her buy the home, not financially, but just from a support standpoint, walking through all the pieces of it.

Speaker 1 But I would not intertwine your finances. If you want to gift her some money to do this, that's fine, but do not sign any piece of paper.

Speaker 3 Because the truth is, think about,

Speaker 3 and I'm not saying this in any negative tone, but she hasn't worked for quite a while.

Speaker 3 And she's 62 years old and she's moving to a new area of town and has to find not just a part-time job, but a job that is going to support her as a single woman and that could take some time um do you know does she have any other debt or do you know anything else about her financial situation no i mean she has no other major debt she might have like maybe three hundred dollars in credit card

Speaker 2 um debt that's um something that she pays the minimum balance on okay well

Speaker 1 the really at the bottom of this jackie is we want to make sure that she can sustain her own life and that you're not artificially propping her up for the rest of her life because that's not fair to her.

Speaker 1 She needs to learn how to become independent and kind of grieve the life that she had as a caretaker and go, all right, I got to do this on my own now and I got to pay my own bills.

Speaker 1 And that means I'm going to have to go to work. Foreseeably,

Speaker 1 who knows how long? She might have to work into her 70s at this point.

Speaker 3 And it's not fair to your husband either because the truth is, you guys have built a life together and it's allowed you to get to this point.

Speaker 3 And it's okay if he says, and he is smart for saying, I'm 60. I'm 62, I don't want to put my name on somebody else's debt.

Speaker 3 It's not smart to co-sign for someone else's debt, and that's really what this comes down to.

Speaker 1 He knows you guys are going to have to pay that bill for the rest of your lives or eventually sell it. It's going to cause more relational turmoil.

Speaker 1 So we need to figure out a way for her to do this on her own. Thanks for the call.
This is The Ramsey Show.

Speaker 1 Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw.
Open phones at 888-825-5225. Well, today is 11-11.

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Speaker 1 Dennis is up next in New York, New York. What's going on, Dennis?

Speaker 9 Hey, hi, George. Hi, Jay.
How you guys doing? Great.

Speaker 5 How are you?

Speaker 9 I'm doing good. I'm new to the program.
I'm up to baby step three. I'm raising my three to six months

Speaker 9 emergency fund. Awesome.
Yeah, my question is

Speaker 9 for the next, as I move forward, do I put the rest of the money I want to save for a down payment, do I put that in a high old savings or can I put that in a low risk investment like SPY or something to let it grow?

Speaker 1 What's your time horizon for this purchase? Are you looking at buying a home in the next two years or six years?

Speaker 9 No, at least five years minimum.

Speaker 5 Okay.

Speaker 1 If you're looking at a five year plus time horizon, you can invest it in something like a, you know, an index fund, mutual fund, to help that money grow at a much higher rate than a high yield savings account.

Speaker 1 And the reason for that time horizon is if you're below that, if you're talking a year, two year, three years, there's a much higher chance you could lose money right before you go to make that purchase.

Speaker 1 So five years plus, we've seen in the market, you're likely going to make money. And so uh that's a that's a great move.
You're talking five years out. How much are you looking to save up?

Speaker 9 Here in New York, it's probably expensive for a house, like $600 minimum. So

Speaker 9 I don't know, like,

Speaker 9 I didn't map it out exactly, but.

Speaker 1 You're probably looking at a six-figure down payment.

Speaker 9 Yeah.

Speaker 1 How much can you save each year based on your current income?

Speaker 9 Current income, about $13,000, $14,000.

Speaker 5 A year.

Speaker 9 Yeah.

Speaker 5 Okay.

Speaker 1 So if you get aggressive, could you save $20,000 a year for five years? With that invested, you'll have a healthy six-figure down payment.

Speaker 9 Yeah.

Speaker 1 That'll get you there.

Speaker 9 Yeah, I'm going to have to up my income a little bit and then.

Speaker 3 Over five years, I think so.

Speaker 5 I mean, I would hope your income goes up.

Speaker 1 What do you do for work?

Speaker 9 I'm in financial health care services.

Speaker 5 Awesome. What do you make?

Speaker 9 Financial healthcare. Right now, about 65.

Speaker 5 65?

Speaker 5 Okay.

Speaker 1 Yeah, I mean, that's a great income, but for New York City, that's tough. It's a very, it's an ultra high cost of living area.
And so I would try to up your income.

Speaker 1 That would be my goal to get that core income up over these next five years while I aggressively try to save as much of my income as possible.

Speaker 1 All right. That's the goal, man.
That's the goal. I hope that helps.
Not easy in New York City, Jade.

Speaker 1 I mean, people call from California or New York and they go, hey, your housing parameters don't work. And we go, the math isn't broken.

Speaker 1 The math of your reality is broken where you want to buy a $600,000 home, but you make $60K. Yeah.

Speaker 3 I'm hoping he lives outside the city and somewhere, you know,

Speaker 1 I got a lot of friends out there, and they live in the suburb of New Jersey, and they commute in.

Speaker 1 And, you know, it's a good life. If you want to be a homeowner, that's kind of the game you have to play.

Speaker 3 100%. And yeah, especially making sure that that payment is no more than 25%.
That's a key, key piece of this.

Speaker 1 Because if you make four grand a month and your payment is $2,500 a month,

Speaker 1 you're not going to be able to survive and pay for anything else. Tom is in Seattle up next.
What's going on, Tom?

Speaker 11 Hi. Hey, thanks for taking my call.
I just need your opinion and if you can give me some guidance on the following.

Speaker 5 Come on, Tom.

Speaker 4 Huh?

Speaker 3 I said, come on, let's hear it.

Speaker 5 She was excited. I'm excited.

Speaker 14 Okay, good.

Speaker 11 I'm 61 years old. I'm going to retire in four years.

Speaker 11 Our son graduated with a degree in chemistry two years ago.

Speaker 11 His company has told him that he needs a degree in engineering, which he wants to pursue. So it's going to be two years full-time.

Speaker 14 And I know he can do it.

Speaker 11 But my question is, you know, my wife and I paid for everything on the first degree. I'm close to retirement.

Speaker 13 How much assistance do we give him?

Speaker 3 It's up to you. You don't have to get, you don't have to give him any.
And that's the thing I want you to walk away from this from.

Speaker 3 If you guys have it to give and it makes sense with the plan that you've created, yeah, you can decide what that is. But

Speaker 3 being paying, paying for education, especially paying for it in full, really is a privilege. And it's something that you get to decide if you want to do it or if you don't want to do it.

Speaker 3 And there's no guilt if you say, I don't want to do this, but you do need to have that conversation. It needs to be really clear.
And I would be very

Speaker 3 forthcoming on ways that he could pay for it himself so that he doesn't go into debt.

Speaker 3 And I think that's the most important thing that you can do is say debt is not on the table and it shouldn't be on the table for you.

Speaker 3 However, your mother and I are only going to pay for X percent or 0% or whatever you guys decide. What are you thinking about?

Speaker 16 You know, I'm just, I'm kind of lost because he just,

Speaker 17 he kind of sprung this on us.

Speaker 3 Yeah.

Speaker 11 You know, I think, you know, we've got, we're debt-free, house is paid for.

Speaker 11 We got

Speaker 11 about 600 in IRISM 401ks, another 450 in cash and mutual funds.

Speaker 3 What's your house worth?

Speaker 11 House is worth about $300 to $320.

Speaker 5 Okay.

Speaker 14 And,

Speaker 11 you know, household income right now is about $185.

Speaker 5 Oh, wow. Great job.

Speaker 1 If you wanted to do this, could you cash flow it as part of your budget versus taking money out of your investments or savings?

Speaker 6 Yeah,

Speaker 13 I think so.

Speaker 11 With my work,

Speaker 11 it's a draw versus error. It's a draw against commission.
So I get four big settlements a year.

Speaker 5 Okay.

Speaker 3 What's it going to cost?

Speaker 11 I am thinking $40,000 to $50,000.

Speaker 3 And when you say he just sprung this on you,

Speaker 3 what does that mean?

Speaker 3 When did he say it?

Speaker 11 Oh, like two weeks ago.

Speaker 5 Listen.

Speaker 10 He'd

Speaker 13 had a talk with his boss who just kind of laid it on the line for him.

Speaker 1 Well, can I be honest? I think it's ridiculous that the employer is not paying for this.

Speaker 1 If Dave Ramsey said, hey, we want you to do this job, it's going to require this degree, go get it, son. Go pay 50 grand.

Speaker 5 I'm not doing that.

Speaker 1 Usually, if the employer wants you to do it, they're going to foot the bill for it.

Speaker 3 That's a really good point. There's another point that I'm thinking of, which is,

Speaker 3 um, I'm trying to put this in a delicate way because if, if it was sprung on him, then I can see why he's springing it on you. But there's also a part of it that

Speaker 3 to just be like, hey, I need $50,000 makes me feel like maybe he doesn't understand just how much money that is.

Speaker 3 And it might be good for him to pay for a good chunk of this and feel that so that it's not just, oh, I can just up and get the degrees I need.

Speaker 3 You know what I'm saying? Like, I don't know your son, you do, but there's part of that that I do want him to understand. This is a lot of money.

Speaker 3 It's like our parents told us, money doesn't grow on trees. Like, you have to go out and

Speaker 1 what happens if he tells the boss, hey, I can't afford $50,000 for this degree. What's going to happen?

Speaker 12 Well, okay,

Speaker 11 the way they put it to him is that

Speaker 13 his career, his future with the company progressing, is limited without a degree in engineering.

Speaker 5 Okay.

Speaker 1 Did he know that when he stepped into this role?

Speaker 14 No, he did not.

Speaker 6 And he's, he has been, he's, the company he works for is a

Speaker 14 very well-known worldwide electronics manufacturer.

Speaker 5 Watch. Okay.

Speaker 1 I might, I mean, it might be time for a career change where the latter's higher while keeping his chemistry degree. I don't know.

Speaker 1 But I would not just foot the bill for this without doing a lot more research and pushing back. So there's some conversations to be had with his boss and then he with you.

Speaker 1 And we got to figure out if we're going to do this. And if we're going to do it, we got to do it dead free.
Thanks for the call, Tom. This is The Ramsey Show.

Speaker 1 Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw, open phones at 888-825-5225.
Before we get to the phones, today's question of the day is brought to you by YReFi.

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Speaker 3 All righty. Today's question comes from Antonio in Washington, D.C.
He says, I'm 26, finally graduated as an electrical engineer, and I'm about to start working in 2025.

Speaker 3 So I'm trying to plan out what happens in the next year. One of those concerns is leaving my parents' home and finding my own place.
Good for you.

Speaker 3 My worry, however, is that I am not sure if I should do this by renting or by buying a space.

Speaker 3 I know the consensus is never rent, but I see it as a stepping stone of sorts, a place of your own while not being able to comfortably purchase a property yet. Very smart.

Speaker 3 This is considering the mortgage, the maintenance, taxes, et cetera.

Speaker 3 My idea is to rent for one to three years while I build my career and income streams and then consider buying a small property to call home.

Speaker 3 Is this the correct way of thinking or are there things I'm not thinking of? Antonio, I think you hit the nail on the head. You're a smart dude.

Speaker 1 Like you think he's the crazy one when in reality, everyone else is crazy for telling you that renting is a waste of money. You should buy, bye, bye, bye, bye.

Speaker 5 Bye, bye, bye.

Speaker 1 Fall in sync on this one.

Speaker 3 I know. Thank you.
Thank you, George, for the setup.

Speaker 1 He's spoken like a true electoral engineer. He's like, I don't know.
The mathematics, they're not computing.

Speaker 1 You're right. You're right, Antonio.
You don't need to buy a house just because you're out of mom and dad's.

Speaker 1 Rent for a while, get out of debt, get the emergency fund in place, get a nice, healthy down payment.

Speaker 1 And then once you feel ready, financially and emotionally, go ahead and buy a small property to call home, as he says. Very good.

Speaker 1 And here's the other thing. You don't know what's going to happen with relationships in the meantime.
You might get married and she decides, I hate this little house that you bought.

Speaker 5 Oh, God.

Speaker 1 I wouldn't have done it if I were you. So I think it's wise to wait and see a little bit as, you know, there's nothing wrong with buying a house at 29 instead of 26 or even 35 instead of 30.

Speaker 3 Well, the good news is we've got a real estate home base for him waiting on him when he's ready. And it's waiting on you too.

Speaker 3 If you're thinking about pulling the trigger on a home, We've got a wonderful real estate home base. You can find it at ramseysolutions.com slash real estate.

Speaker 3 They can actually help you if you're buying or selling whatever your real estate needs are. It's a nice little hub there that has everything you're looking for.

Speaker 1 That's right. Including, you know, there's tools, resources, calculators, articles.
But I also did a course, Jade

Speaker 1 for first-time homebuyers. Tell me more.
Check that out.

Speaker 1 Well, there's, I walk through, you know, little, little quick videos to help you understand what it's going to take, what all the pieces of the process are. Oh, I love this video.

Speaker 1 It's the course I wish I had before I I bought my first home.

Speaker 3 I love a video. It's different when you hear somebody saying it versus trying to read it.
I don't know why when it comes to things that have those, that many details. Oh, yeah.

Speaker 5 Videos.

Speaker 1 And our team did a great job making it visual, making it clear, helping you understand all the what the heck is escrow? What's going on there? We break it down for you.

Speaker 1 Go to ramseysolutions.com slash real estate to get access to all of those resources.

Speaker 3 You probably made it funny, too.

Speaker 1 We tried. There was a men in black reference that I'm very proud of in that, including VHS tapes.
So, you know, I got to make it fun.

Speaker 1 If I'm involved, I want to pigeonhole myself as a guy who cannot be boring.

Speaker 3 Good job.

Speaker 1 That's what I try to do. All right.
Let's go to the phones. Matt is in Baltimore.
How can we help, Matt?

Speaker 12 Hey, guys, big fan.

Speaker 13 Great to be on with you.

Speaker 1 You as well.

Speaker 19 So

Speaker 13 I'm currently debt-free myself,

Speaker 18 and I'm working on paying off about $41,000 of my wife's debt.

Speaker 5 Okay. Now,

Speaker 18 we split everything down the middle, middle making minimum payments but i am a disabled veteran and i work part-time so i have a little extra money in my pocket about twelve thousand i'm sorry twelve hundred a month which i spread load between uh my son's college fund a down payment on a house and uh building my retirement or building my emergency fund okay uh so my question So my question is whether you think it's smarter to spreadload my extra unspoken for income across different savings accounts, or if you think I should attack each thing individually.

Speaker 3 Well, first off, it's Veterans Day, so thank you for your service every day of the year. We're appreciative of that.

Speaker 3 What you said, I know you have another question there, but what you said about you and your wife kind of threw me off from the very beginning, to be quite honest, when you said that you're debt-free, but your wife isn't.

Speaker 3 That was kind of like my signals went off because here we really, really believe in combining money and doing that if you're a married couple.

Speaker 3 So my question is how long have you and your wife been married?

Speaker 14 So me and the wife have been married about four years.

Speaker 5 Okay.

Speaker 13 And that problem kind of became twofold.

Speaker 18 One of which is

Speaker 18 she wasn't really handling her finances very well and she hid debt from me until very recently.

Speaker 5 Okay.

Speaker 18 And we don't share one bank account.

Speaker 18 We just combine it for all the household bills.

Speaker 1 So you pay half of her minimum payments?

Speaker 13 Yes.

Speaker 1 And then she pays half of all household bills, you pay half? Yes. Do you guys make the exact same amount of money?

Speaker 18 So I make more with my benefits.

Speaker 18 Okay. So I try to help out with a majority of it.

Speaker 1 Doesn't that feel unfair, though? If she doesn't make the same exact amount, but you're splitting things equally. I feel like if I'm her, I'm going, hey, this isn't fair.

Speaker 1 I'm paying two grand out of my three. You're paying two grand out of your four.

Speaker 1 You know? Do you see how there could be some relational problems with that? Some resentment?

Speaker 5 Yeah.

Speaker 10 So

Speaker 13 we have the household bills.

Speaker 18 She has her personal car. That's $16,000.
Then she had to get a consolidation loan to cover $25,000.

Speaker 17 So she's paying for her car.

Speaker 18 And I'm paying the insurance, and I'm paying half of her debt.

Speaker 3 When you told me earlier that she was hiding, I actually have two questions for you.

Speaker 3 When you told me earlier that she was hiding debt from you, I want to know how much she hid and how long that went on. Then I want to know what you guys have done to rebuild trust.

Speaker 3 Because what I don't want is,

Speaker 3 depending on what you tell me, there could be a situation where I understand that you guys have,

Speaker 3 if you've been working with a counselor, maybe there's a separation going on. But I also want to know what you guys are doing to rebuild that trust.

Speaker 18 So

Speaker 18 she had

Speaker 18 various credit cards for buying product as well as

Speaker 18 lifestyle payments like just regular regular payments that she was putting on a credit card and then just paying the minimum payment.

Speaker 3 And how much was that to the tune of like what type of debt did that rack up?

Speaker 13 So that ended up racking up about $25,000.

Speaker 3 Okay, and that's the consolidation.

Speaker 13 to get all that consolidated and pay off all her cards.

Speaker 5 How did you find out about it?

Speaker 3 Did she tell you or you discovered it?

Speaker 18 So, a little bit of both. Basically, what had happened was, you know, the rent goes up, the daycare goes up, things like that.
And she came to me saying she couldn't pay her half anymore.

Speaker 18 So, I went over her finances to see where the trouble was or what we could cut out.

Speaker 18 And I realized she had about $300 a month payment spread across like four different cards. Got you.

Speaker 3 And so, what did you guys do? You went to counseling?

Speaker 15 Well,

Speaker 18 I took the consolidation loan out to pay everything off to make her solvent

Speaker 18 and then splitting that it's about 400 change a month cuts her half down to about 200 a month okay she's paying that off about

Speaker 5 putting extra

Speaker 3 listen that's great i if you notice i i have veered completely away from your monetary questions because i care mostly about your marriage and it bothers me that what this is telling me is you still don't trust her because this thing happened which is a big deal by the way i'm not minimizing that at all but it's caused you to say, oh my gosh, you did this without me knowing.

Speaker 3 You're not good with your finances. I don't really trust you.
So we're going to keep it separate. I'm going to control my half.
You control your half. And I'll also chip in, right?

Speaker 3 So there's this, this is not a good way going forward. And my, my encouragement to you is don't let it go on like this.

Speaker 3 You guys need to get with a counselor and figure out how to mend this so that you can be back on the same page again, because it's very hard to accomplish a singular goal when you're on two different

Speaker 3 And I want you guys on the same path so that you can combine, you can support each other. There's no kind of like animosity, there's no resentment, there's no, on her end, there's no guilt.

Speaker 3 Because once she said, hey, I did this, I'm sorry, please forgive me.

Speaker 3 She's not going to be, you guys aren't going to be able to move forward until she knows, okay, this guy, we're back on the same page. There's trust there again.

Speaker 3 And I'm not saying that that's going to happen overnight, but I want you to work towards that.

Speaker 1 Marriages are either growing together or they're growing apart. And I want to see more unity.
I want to see you make progress with your marriage and your money. And that's going to take unity.

Speaker 1 That's going to take one bank account, one budget. We're getting out of our debt.
This is we, not us and you and me. That's how to do it right.

Speaker 1 Thanks for the call. Happy Veterans Day.
This is the Ramsey Show.

Speaker 1 Welcome back to the Ramsey Show. I'm George.
She's Jade. We're here to help you with your life and your money.
Call us at 888-825-5225. Linda is up next in Madison, Wisconsin.

Speaker 5 Linda, how can we help?

Speaker 17 Hi, thanks.

Speaker 21 I'm glad to be able to get some really good advice.

Speaker 15 I have a pretty difficult situation.

Speaker 21 My question is, what is the best strategy for me to pay off my debts given my current circumstances?

Speaker 5 What are your

Speaker 21 58 and I was diagnosed with cancer two years ago?

Speaker 5 Oh, my goodness.

Speaker 23 What kind? Yeah, I'm doing well.

Speaker 20 Praise God. Uterine cancer

Speaker 4 came

Speaker 20 blindsided, of course.

Speaker 16 So I was

Speaker 21 making really good money as a veterinarian and

Speaker 25 working on trying to save a nest egg when all this happened.

Speaker 21 And because of everything, I decided to take an early retirement and I was fast-tracked onto full Social Security disability

Speaker 20 in 2022.

Speaker 16 So, but unfortunately, I hadn't saved a large nest egg

Speaker 16 by this time for retirement.

Speaker 3 What did you have?

Speaker 4 Well,

Speaker 20 right now,

Speaker 20 this is where I'm at.

Speaker 24 I own a house, my home,

Speaker 22 no mortgage.

Speaker 20 It's a brand new construction house.

Speaker 27 So I literally just moved in.

Speaker 5 Nice.

Speaker 5 What's it worth? That's another story.

Speaker 20 I haven't had it appraised, but I'm thinking I could probably get $250,000 for it.

Speaker 1 And you live alone?

Speaker 25 I live alone, no kids.

Speaker 7 I own my car.

Speaker 3 So are you debt-free?

Speaker 19 Completely? No.

Speaker 21 So this is, no, this is my fear:

Speaker 7 I do have approximately $35,000 in debt right now, of which

Speaker 20 $24,000 is on a credit card that I had used where I went over budget on the house.

Speaker 20 About $3,900 is for special medical care and supplements on a credit card.

Speaker 7 Neither of those credit cards are, they're interest-free right now.

Speaker 4 Okay.

Speaker 16 But that will end next June.

Speaker 3 The medical, and then the credit card that you're putting the medical stuff on, is that an ongoing expense that you're using that for, or was it kind of a one-time deal?

Speaker 26 One-time deal.

Speaker 5 Okay.

Speaker 25 So I'm done with that.

Speaker 24 And then I, unfortunately, I had to have a high-deductible insurance in 2024.

Speaker 20 So now I'm going to have a total of right now.

Speaker 26 I'm at 7,100

Speaker 22 of medical bills that are going to be coming due next year.

Speaker 26 And

Speaker 7 my complete and entire life savings is $97,500.

Speaker 26 Okay.

Speaker 20 And so my question is,

Speaker 20 what strategy would you recommend I use to pay off this debt and rebuild savings or work on that?

Speaker 1 How much do you have in savings?

Speaker 1 Where's the $97,000 stored?

Speaker 20 I have it in a high-yield savings account at 4.8%

Speaker 5 interest at this time.

Speaker 1 So you could pay off all of your debt today using that money. Correct.
It would just leave you with less in savings. That would still be a fully funded emergency fund.

Speaker 5 Correct. How are you doing?

Speaker 25 Well, I was going to say that.

Speaker 21 My living expenses are quite

Speaker 25 low, except for I actually spend a lot on groceries and supplements because I have to buy, you know,

Speaker 5 organic food and graphics.

Speaker 5 What's your SSDI income?

Speaker 1 What is your total income each month?

Speaker 22 $3,117.

Speaker 1 And what are your monthly bills?

Speaker 1 If you exclude the debt payments you need to make? Let's say you were debt-free today. How much would your total expenses be per month?

Speaker 23 So my total expenses are coming out around $2,500.

Speaker 5 Okay, good. That's without the debt.

Speaker 8 Without the debt.

Speaker 1 So let's say you took your $97 in savings, you subtracted your $35,000 in debt, you were debt-free tomorrow, less stress, better for your health.

Speaker 1 It leaves you with $62,000 for your emergency fund, correct?

Speaker 1 Yeah. And then you'd be able to cover all your bills with about $600 left over.

Speaker 3 What's your out-of-pocket max every year for your insurance?

Speaker 16 Well, starting on January 1st, I'm going to be on Medicare.

Speaker 25 Okay.

Speaker 5 So I have a very

Speaker 16 that'll help, and I, it's only, it'll be $255,000 a month,

Speaker 1 and and they cover a lot i mean i'm going to still have some co-pays and things but that'll be life-changing i should that is part of that 2500 okay good so if i was in your shoes truthfully i would get rid of this debt today

Speaker 1 using your savings i know it's going to knock it down i know it's your life savings but that's also going to free up 600 bucks you could put in a savings account to add to that to start to cover some of these expenses.

Speaker 26 That's what I was wondering.

Speaker 1 And I mean, the risk here is you got to live off of $3,100 for the rest of your life, right? Do they have a cost of living increase each year with that?

Speaker 15 They do.

Speaker 20 You know, it's based on the government, but they do have a cost of living increase.

Speaker 12 I mean, technically, I could.

Speaker 20 I'm trying to make it work.

Speaker 21 I could get a part-time job or something.

Speaker 20 I mean, I'm not completely disabled, but I'm trying not to do that because,

Speaker 20 one, it's just more stress on me.

Speaker 5 And two,

Speaker 5 if I don't have longer time

Speaker 5 for sure.

Speaker 1 What is the prognosis? You know, is there a way you beat this? What does the doctor say?

Speaker 27 Well, originally

Speaker 24 it was bad.

Speaker 20 I mean, I was like, I was bad.

Speaker 7 You know, we're talking about grade three, stage four.

Speaker 5 Wow.

Speaker 20 So I was an overachiever

Speaker 21 right out the gate.

Speaker 16 But I am on immunotherapy, which has been just a game changer, a lifesaver.

Speaker 20 I'm in complete remission and I'm doing everything.

Speaker 5 Like I'm doing all the naturopathic stuff that you can

Speaker 20 imagine.

Speaker 1 We are so glad to hear that.

Speaker 5 That's great.

Speaker 1 And I truly think that debt has a physical weight on our bodies. And I think when you pay this off today, you are going to feel so much better.

Speaker 1 Emotionally, physically, mentally, spiritually, all of it.

Speaker 5 And then

Speaker 5 your job is to get on an every dollar budget.

Speaker 21 You were going to say, oh my gosh, you like failed epically.

Speaker 5 No,

Speaker 7 I'm so far behind the

Speaker 7 picture.

Speaker 5 Linda,

Speaker 3 there is always a measure of peace that can be achieved. Always.

Speaker 3 Always. And you've got actually, you know,

Speaker 3 you have the money to do exactly what George said. You can be debt-free.
You've got a paid-for house. To be able to say that is amazing.
You've got paid for cars.

Speaker 3 You've actually accomplished quite a bit. You may have done it in a roundabout way, but the most important thing is you're healthy and you've got your life back.

Speaker 1 Exactly. And beyond that, now we've got to make sure we're living on less than we make.
We're on a written budget. We have margin left over instead of being right to the line every month.

Speaker 1 And that's what's going to happen when you pay off this debt. And that extra 600 bucks, we need to just keep living like that.
Didn't exist. Let's pile away into savings.

Speaker 1 Maybe even investing long term. You can jump on ramseysolutions.com and get in touch with a Smart Vestor Pro who can teach you how to invest this money.

Speaker 1 So instead of a 4% rate of return in your savings, you could get 12%. I mean, this year, we've seen 38% returns in the market, Linda.
So your money could grow for you. I mean,

Speaker 1 if you continue to live a healthy life, you know, 30 years from now, I want to see this money grow for you to have an even better retirement than you thought possible.

Speaker 3 And, you know, based on what you said, I probably would encourage you to start working part-time again. That's definitely not going to.
hurt you financially. It's going to help you financially.

Speaker 3 And if you're healthy enough to do it, it'll give you some great purpose as well.

Speaker 16 yeah, yeah, I'm just trying to enjoy every day right now, and I am enjoying every day.

Speaker 1 Yeah, that'll change your perspective.

Speaker 21 Really needed this advice. I'm so glad I got to talk to you because it's been weighing on me like, you know, all these different ways I could go about it.

Speaker 8 But I've been watching your shows and learning a lot.

Speaker 26 And I, you know, I've got my written budget.

Speaker 16 I've got things down to the penny.

Speaker 26 You know, I know

Speaker 5 what's going going on.

Speaker 1 So Linda, hang on the line. We're going to send you a whole year of every dollar so that you can budget the Ramsey way and get over this.

Speaker 1 As soon as you're out of debt today, it's going to feel so good. Man, Linda, what a gift I'd be giving myself going through what she's going through and has gone through.
I want a life of freedom.

Speaker 1 Okay. Get rid of those brain calories and replace them with something much better.
Linda, we are cheering for you. We hope you continue to have good health and call us back if you need any help.

Speaker 1 This is the Ramsey Show.

Speaker 1 From Ramsey Network, this is the Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships.

Speaker 1 I'm George Camill, joined by Jade Warshaw, and we're taking your calls at 888-825-5225. If you want to talk about your life and your money, this is the show for you.

Speaker 1 If you're looking for something else, I don't know why you're here, but we're glad you're here.

Speaker 5 Glad you're here. Stick around.

Speaker 1 Maybe you'll enjoy it. Mackenzie kicks us off in Pittsburgh.
How can we help

Speaker 28 Hi, how's it going? Great.

Speaker 1 How are you?

Speaker 28 I'm well, thank you.

Speaker 7 So I have a quick question.

Speaker 28 My husband and I, we bought a house in 2020 for an extremely low price, and we got a really good interest rate on it, 3%.

Speaker 28 It's not in the area that we would like to stay long term, but we are in debt, so we're not planning on moving right now. My question is, would it be wise to sell our house?

Speaker 28 And because of the market and the work that we've done to it, we would make a significant amount of money off of it. Would you like to sell our house?

Speaker 28 We are, we bought it for $70,000, and we are estimating $140,000 selling it, and we owe $65,000 on it currently.

Speaker 5 Okay.

Speaker 5 What kind of debt?

Speaker 28 So we have,

Speaker 28 obviously, we have a $65,000 mortgage. We owe $27,000 on one car, $11,000 on another, and $70,000 on our student loans combined.

Speaker 1 What's your household income?

Speaker 29 $166,000.

Speaker 24 That is new. That started happening in September.

Speaker 5 Awesome.

Speaker 1 Great income. So let's walk through two scenarios.
One is you stay in the house and you aggressively pay off the debt. How quickly making $166 could you pay off $100,000 in debt?

Speaker 3 I mean, pretty quickly.

Speaker 5 Two years?

Speaker 1 $50,000 a year?

Speaker 28 Yeah, I would say that's definitely possible.

Speaker 28 The other part of that is my parents are moving and they are looking to rent out their house now that they're currently living in and they're moving into another.

Speaker 28 So I was thinking, what if we rented my parents' home and then use the income from our home to pay off almost everything?

Speaker 28 We would just have a little bit of student loans left and we could get that paid off in

Speaker 7 like a few months.

Speaker 3 Do you like the house? Do you like your house that you live in?

Speaker 28 I like our house, but I don't particularly like the area. We live in town and I want to be somewhere more secluded.

Speaker 21 So in the future, we do plan on moving.

Speaker 5 Okay.

Speaker 3 I'm going to ask a question. I know it's going to be hard to answer, but just try your best.
If you didn't have this debt, right? If there was no $109,000 of debt,

Speaker 3 would you be so pressed to leave or rent right now to get out of that area?

Speaker 28 No, but we would definitely be looking for a house.

Speaker 3 You'd be looking. Okay.

Speaker 3 I'm trying to, what I'm trying to assess is if this is feeling like a way to get out of debt quickly and kind of avoid pain, but possibly at the expense of, I mean, you've got some nice equity in this house and doing things that you wouldn't normally do, like rent, because in your situation, you shouldn't necessarily have to rent again

Speaker 3 if you wanted to move to a different house. That's just what I'm looking at.

Speaker 1 If you sell the house, you're probably going to get about 60K after paying off the mortgage and realtor fees and closing.

Speaker 1 Okay. So you're going to knock out a little over half the debt, which is great, and you'll knock out the rest of the debt in a year.
So really what we're talking about here is one-year difference.

Speaker 1 If you stay in the house, it's going to take you a year longer. If you sell the house, it's going to take you one year shorter.
So it's up to you.

Speaker 1 This is not an on-fire situation where I go, you got to sell the house. That's a drastic last ditch effort to get out of a bad situation.
Nothing is on fire here.

Speaker 1 Your mortgage payment is probably not that large compared to your amazing income.

Speaker 3 Yeah.

Speaker 3 I probably wouldn't do it if I were in your shoes. I think that the idea to get out of that area, I think that's good and I think it's in your head.

Speaker 3 But I don't, I'm with George. I don't think it's on fire.
And

Speaker 3 I like when people walk through this process, especially when we're talking about cars that we can't afford,

Speaker 3 it's just a good lesson in, okay, this is what it really costs me. I can actually feel the cost of $27,000 and $11,000 and $70,000.

Speaker 1 It's an insurance policy to never go into debt again when you sacrifice to pay it off over two years. And honestly, one year after that, you could pay off the mortgage if you continue down that path.

Speaker 1 So now we're talking about three years from now, we'll be completely debt-free, including the house. That gives us a lot of options when we move.

Speaker 3 And your motives just change. I mean, truly, we don't realize how much debt

Speaker 3 kind of pushes our motives forward. And then when it's gone, it's like, oh, wait a minute.
Things look different now.

Speaker 3 And so there's part of that that I'd like for you to experience because I really think that right now, even this debt is clouding your motives slightly. But George is right.

Speaker 3 Sitting on a paid-for house makes you think of the whole thing a lot differently. And so I'd like for you to be able to experience

Speaker 3 the situation that you're in debt-free. And I'd also love for you to build up the habits to keep it that way by paying this off.

Speaker 1 What are you guys paying for your mortgage right now?

Speaker 28 $590 a month.

Speaker 1 America is mad at you right now.

Speaker 5 I just want to let you know. We're not happy.
Way to go.

Speaker 1 What would your parents charge rent if you moved to their place?

Speaker 28 I mean, I don't know the exact number. I'm guessing because of the area, it'd probably be about $1,200 a month.

Speaker 1 So you're paying way less now.

Speaker 5 Yeah.

Speaker 1 So I don't think the juice is worth the squeeze on this one just to get you out of debt a little bit faster.

Speaker 1 I would use that amazing income, live on little of it as you can to cover the bills and throw the rest of the debt.

Speaker 3 I mean, with a $590 mortgage, you guys should have a lot of this.

Speaker 1 That's a lot of more. That's a lot of margin left over with that $166 grand.

Speaker 8 Yeah, and we've been paying off that.

Speaker 28 We had about like $12,000 in credit card debt that we paid off. Um, and we're starting to work on and like attack these things, but I got a little excited thinking we could expedite it.

Speaker 1 That's exciting, too, when you look at all the ways you could get out of debt faster. But selling the house, that's a big one with a lot of numbers on the end.

Speaker 3 Can I take you to task a minute? How long did it take you to pay off the $12,000 in credit card debt?

Speaker 12 So it was kind of a process.

Speaker 28 We actually, we have a one-year-old,

Speaker 28 and we initially were going to go like gazelle intensity, and then I found out I was pregnant and I was not going to get a paid maternity leave.

Speaker 17 So we paused,

Speaker 28 decided to save for my maternity leave. So

Speaker 28 I would say it took us

Speaker 28 maybe like four months to pay off our credit card.

Speaker 3 But this was after.

Speaker 3 After the baby.

Speaker 29 Yes, yes, correct.

Speaker 3 Okay, because she's one years old. My point is, and I, like I said, I'm taking you to task.

Speaker 3 My point is, I don't think you guys have, I truly don't think you've been willing to embrace what it will take to pay this off.

Speaker 3 You have a great income.

Speaker 3 And I want you to see that it's going to cause a level of discomfort to do this. And I think before you were searching for a way that it wouldn't be discomfort.

Speaker 3 It's like, okay, we could sell this house. Oh, it's moving to my parents' house.
That'll be better. And so I don't want you to search from place to place to find how this is going to be

Speaker 3 the most,

Speaker 3 how it will give you the most comfort to do this because you may end up putting yourself in a worse situation trying to do that, like paying double for rent than you are for a mortgage that can be paid off in a year.

Speaker 3 So that's kind of what I want to leave you with is

Speaker 1 you will feel this.

Speaker 1 I would just stay put where you are, Mackenzie. I mean, you guys are bringing home probably 10 grand a month.

Speaker 22 Yeah, about.

Speaker 1 So think about this. If you can live off of five and put the other five toward debt, that's 60 grand a year in debt payoff.
You're done in less than two years.

Speaker 1 That's some napkin math to get you excited about this.

Speaker 3 And that's no side hustles.

Speaker 1 Yeah, that's without doing anything extra. I could live off five grand.
We could do this.

Speaker 1 So that's what my goal is: sit down with your husband tonight, do an every dollar budget, and go, okay, we make 10 grand.

Speaker 1 It's disappearing right now into a little bit of laziness, a little bit of comfort. Let's really get on this thing and be done in 18 months.

Speaker 1 Let's have a big, hairy, audacious goal so that we can move on with our life and have our home and our dream location one day. This is the Ramsey Show.

Speaker 1 Welcome back to the Ramsey Show. I'm George Campbell, joined by Jade Warshaw.
Open phones at 888-825-5225.

Speaker 1 Well, tax day isn't until April, but there are some really important moves you can make before the end of the year that will affect what you owe.

Speaker 1 And we're all about trying to help you pay the government less legally. I feel like I have to

Speaker 3 have to put my spectacles on for this.

Speaker 1 We're about to get nerdy. So we got seven quick tips.
We're going to make this painless, and you might even learn something.

Speaker 3 so what's tip number one jay all right number one check your paycheck withholding that's a good one the goal is not to the goal is to not have a big refund that just means you're overpaying to the government right every single month you're giving them too much so you need to adjust your withholding to get as close to zero as possible and again i'm saying that you do not want a tax refund every year that's what we're talking about here if you're getting like we get our three grand refund every year you just gave the government an interest-free loan that should be coming back into your paycheck every month to the tune of almost 300 bucks a month next tip income is taxed only in the year you receive it.

Speaker 1 So if you can, defer any income until January 1st or later to save on this year's tax bill. So you might be self-employed and you've got vendors that are paying you.

Speaker 1 You might say, hey, can you pay me January 1st? And that way I have less income this year that will be taxed. That's one way to do it if your employer allows that.

Speaker 1 Caveat, consider whether that extra income will push you into a higher tax bracket next year. So if you kind of know what next year is looking like, you can figure out what's going to happen there.

Speaker 3 It's good to note, though, that the way the tax brackets work, if you are pushed into a higher tax bracket, your whole income is not going to be taxed at that rate.

Speaker 3 Just the amount that places you into that bracket, if that makes sense.

Speaker 1 So if you hit the 22% bracket, well, you're not paying 22% on the entire amount. That's right.
It's just on an amount over a certain amount. So that's a helpful tip.

Speaker 1 People think, I don't want to make more, Jade. I'm scared.
I'm like, no, you're not paying that much more in taxes.

Speaker 3 Making more money is a good thing. Yes.
Please.

Speaker 5 Okay. Keep going.
What's the next one? All right.

Speaker 3 Number three, let's save by contributing more to tax advantaged retirement accounts. You know what I'm talking about, 401ks, 403Bs, IRAs, that could be traditional.

Speaker 3 You want to do these,

Speaker 3 you want to do traditional 401ks and traditional IRAs that are funded with pre-tax dollars, okay, so that you can write off the contributions as a deduction.

Speaker 1 That's right. You can't deduct like a Roth 401k contribution.
You've already paid taxes on it. But the pre-tax stuff, the traditional side, you can save some money there in your taxes.
Yep. Next one.

Speaker 1 If you're 73 or older, you can withdraw, you need to withdraw from traditional retirement accounts to avoid penalty. True, that.

Speaker 1 So these are required minimum distributions, RMDs, as they call it in the biz. And there's a minimum you have to withdraw every year.
And here's why the government wants their piece.

Speaker 1 So if you got these traditional accounts that have been sitting there, the government's like, hey, when are you going to take money out to pay us taxes?

Speaker 3 Yeah, they want that tax money.

Speaker 1 Best believe it. Another reason why I love the Roth, you already paid the taxes.

Speaker 1 So there's no RMDs on that. Yeah.

Speaker 3 I had somebody, this is a sidebar. I had somebody on social media, George, that was like, hey,

Speaker 3 my plan is I do all traditional and I'm just when I, just before I retire, I'm going to go back through and convert it all to Roth. And I was like, wait, wait, wait.

Speaker 1 You're going to have the biggest tax bill of all time.

Speaker 5 Yeah. Of all time.

Speaker 3 Yeah, it was a scary thing. I hope she read my comment.

Speaker 5 Yeah, would not recommend. Oh, boy.

Speaker 1 Okay, what's the next one?

Speaker 3 All right, the next one is, let's use gift tax, the gift tax exclusion to avoid filing a gift tax return.

Speaker 3 For instance, if your gift is greater than the gift tax exclusion amount, the remainder goes towards lifetime gift exclusion.

Speaker 1 I believe it's like, I don't know, 17 grand per person,

Speaker 5 per child or whatever.

Speaker 1 So you can really move a lot of money around and gift it without ever needing to file for that life, you know, gift exclusion lifetime, which is millions and millions of dollars. That's right.

Speaker 1 This really does not apply to a whole lot of people out there. All right.
Next one, take advantage of tax deductions and credits.

Speaker 1 Now, we've all heard about deductions and credits, but you can really reduce your taxable income by doing a a bunch of things.

Speaker 1 So, for example, paying property tax in full by December 31st, you could write off property taxes when you file.

Speaker 1 If you pay your January mortgage bill early before December 31st, you can deduct the interest portion of that payment.

Speaker 1 Making charitable contributions to receive deductions, keep that list there. There's EV tax credits you can file for, energy-efficient home upgrades.

Speaker 1 So there's a lot of things you can do, but this is really for those that itemize, which because of the 2017 Trump tax cuts, the standard deduction almost doubled for everyone.

Speaker 1 So it made way more sense for people to do standard deduction versus itemize. So less and less people are doing that.

Speaker 3 Are you tax deduction or credits?

Speaker 5 I like a credit. Ooh.

Speaker 1 Well, you know, I feel like the deduction will lower your taxable income. The credit is taking some money off the bill.

Speaker 5 Yeah, I kind of like that.

Speaker 1 It feels better to get the money taken off the back end of the bill.

Speaker 5 It feels like a coupon.

Speaker 3 Yeah. Or like some sort of a debt.

Speaker 5 I don't know why.

Speaker 1 But I'm not eligible for a lot of credits these days. Me neither.
You know, so it's fine.

Speaker 5 All right, number seven. Should I go to this? Okay, we just talked about this.

Speaker 3 Converting retirement accounts to Roth has its tax advantages. You'll get tax-free growth on your retirement savings, which we talked about, and tax-free withdrawals at retirement.

Speaker 3 The thing is, when you're going to do this, we really say this should be like a baby step seven activity. Because again, you're paying a tax free money.
Yeah.

Speaker 3 And depending on how much you had in traditional accounts that you're converting over, it could be decent, definitely something to plan for.

Speaker 5 Yeah.

Speaker 1 So you're better off using that money toward getting the home paid off and all that. That's why it's a baby step seven

Speaker 1 thing to do.

Speaker 3 And that's why you need to do a healthy mix throughout the years.

Speaker 5 That's right.

Speaker 1 And one final bonus tip for you, connect with a Ramsey Trusted Tax Pro. These are the folks that can help you do things the Ramsey way.

Speaker 1 They're not going to tell you to do stupid stuff like go buy a $100,000 car because it's a write-off. Our Ramsey Trusted Tax Pros are not going to steer you in a bad direction.

Speaker 1 They're going to help you save the most money and do it by the book and take out all the jargon and confusion and stress out of the taxes.

Speaker 1 So if you have questions, reach out to a tax pro, ramseysolutions.com slash taxes. They'll help you save money on taxes now and in the future.

Speaker 3 All right. Was that quick and painless? I felt a little

Speaker 1 discomfort, but yeah, it wasn't fun, but it wasn't painful either.

Speaker 5 That's right.

Speaker 1 No pain. Some, you know, some weirdo out there enjoyed that.
Some accountant, some spreadsheet loving guy was like, yeah, let's go. All right, let's go to Fort Worth, Texas up next.

Speaker 1 Kara joins us there. What's going on, Kara?

Speaker 30 Hi.

Speaker 8 My husband and I just found out recently that my parents are in a bit of debt and don't have really any savings.

Speaker 30 And both of them are living on a fixed income due to medical diagnosis that

Speaker 30 leave them on disability and Social Security for their income. Wow.
And just wanted to know the best way to help them out of that.

Speaker 30 We found out just recently that that debt had been enrolled in a debt relief program.

Speaker 5 Okay.

Speaker 5 Okay.

Speaker 30 So it was almost $40,000 that was enrolled last year.

Speaker 30 And year to date now, I think of these seven different

Speaker 30 debts, three of them are settled and payments made.

Speaker 30 Two of them have reached an agreement and are in progress on making those payments.

Speaker 30 But unfortunately, the last two are the largest,

Speaker 30 totaling almost $25,000 less that are in advanced negotiations, and I believe a lawsuit has also been filed

Speaker 5 for that.

Speaker 1 What is their income?

Speaker 30 So

Speaker 30 income with

Speaker 30 so they're both on Social Security due to disability, and there's also some long-term disability coming in that totals about $5,500 a month.

Speaker 1 Okay, so that's their fixed income. And what are their monthly expenses?

Speaker 30 So they do still have a mortgage that's about $1,650 a month. They are currently making payments to the debt relief program of about $6.50 a month.

Speaker 8 And then

Speaker 30 everything else, bills and food, comes out to

Speaker 7 total, including the mortgage and the debt relief program, comes out to about

Speaker 31 right at the $5,500.

Speaker 30 It comes pretty close every month.

Speaker 1 Have you had a conversation with

Speaker 1 saying, hey, mom and dad, you're broke. Here's like, let's look at the numbers.
Do you see the reality of your situation? Have you had that conversation?

Speaker 31 Yeah, so that's where the conversation started.

Speaker 1 Are you guys in a place to help them financially? Like, if you were to cover the 25 grand they owe to get out of this lawsuit and be, could you just gift that to them?

Speaker 27 We do

Speaker 30 have money available that is sitting in a non-retirement investment account

Speaker 4 that could be used to

Speaker 17 essentially pay that off.

Speaker 5 I don't know the process of that.

Speaker 3 What baby step? I was going to ask her what baby step she's on, but that's okay.

Speaker 1 We're getting to the line. This is a tough one.
If you want to gift it to help them out of the situation and then say, you're never going to debt again.

Speaker 1 There's going to be some strings attached if we do this.

Speaker 1 But otherwise, they're going to have to do this on their own and use their income to do it, which means lowering their lifestyle and potentially trying to do some part-time work, which might be difficult with their situation.

Speaker 1 No easy answers here, that's for sure.

Speaker 1 This is the Ramsey Show.

Speaker 1 Welcome back to the Ramsey Show. I'm George Campbell, joined by Jade Warshaw.
And from time to time, we have some guests that want to celebrate. their debt-free journey.

Speaker 1 They come visit us here at our headquarters in Nashville, Tennessee. And Brooks and Shannon have chosen to do that.
Welcome, guys.

Speaker 5 Thanks for having us. Thank you.

Speaker 1 This is exciting. Where are you from?

Speaker 5 Dillsburg, Pennsylvania. Just outside of Harrisburg, state capital.

Speaker 1 Awesome. And how much debt did you pay off?

Speaker 5 We paid $145,000. Whoa.

Speaker 3 Tell us more because I have a feeling.

Speaker 1 This is great news. All right.
How long did this take?

Speaker 5 Six months. Six months.

Speaker 1 And what was your range of income during that time?

Speaker 5 $62,000 to $144,000.

Speaker 1 Okay, I got a lot of questions here. That is a lot to pay off in six months.
Yeah.

Speaker 5 What did you pay off? Well, there was about $35,000 for the food truck for the business. Nice.
And then you're looking at weird people. Weird people.

Speaker 1 You paid off the house.

Speaker 3 Wow. Wait, can I set this up for the listening audience right quick? Because the truth is you guys came up to me on the break.

Speaker 3 And they were like, hey, Jade, I don't know if you remember this, but you and Rachel were hosting and it was kind of a help us decide what we should do. I think we call it this or that.

Speaker 3 Yeah, pick a side, whatever. And it was between paying off your house or like remodeling your backyard.
Correct. And based on what you laid out, I think Rachel and I were like, do the backyard.

Speaker 3 And it was going to, because you're like, we could do the backyard or it'll take us two years to pay off the house. I feel like you told us.

Speaker 5 Correct.

Speaker 3 And now it hadn't been two years. So what happened?

Speaker 5 We just started playing around with the calculator and realized,

Speaker 5 because I was a photographer for 10 years and I said, if I retire and go back to work, I'm an actual tech writer.

Speaker 5 And I'm like, if I go back to work and we put everything

Speaker 5 and just

Speaker 5 go after it.

Speaker 5 The first goal was, well, what does it look like if we can pay off the house by the time our oldest graduates from high school? Okay, we can do this. Well, what about the youngest once he graduates?

Speaker 5 Okay, and then boom, boom, boom. And then we found, like, what if we do this in six months? If we do this, we do this, we do this.
And

Speaker 5 let's just go after it and, you know, just be tenacious with it. And we didn't go gazelle tents.
We went scorch earth. And nothing is left.

Speaker 1 Can you walk me through this? Because I'm like trying to do the math and it's hurting my brain as to how you paid off $145,000 in six months making $144.

Speaker 5 So the $35 was from retained earnings from the business. I had the cash on hand, but I was reluctant to spend it just because that's that safety net, just in case anything happens.

Speaker 5 And, you know, like you all say, just paid off and it's better off for it. And we are.
That's right. And thankfully, we just sold it last week.
We closed on it. Oh, wow.

Speaker 1 Are you done with the food truck business?

Speaker 5 It just didn't work out. What kind of food was it? It was just, you know, pub food, you know, burgers, fries, things like that.
It's just, it's a tough industry.

Speaker 5 We own and and operate a craft brewery so uh that was just a addition to it and it's just it's a tough industry to to live and work in and uh so we just decided to uh to move on because it wasn't working so that's awesome uh focus on other food that was much more profitable and mainly less stress for me yeah absolutely what's in your what's in your hand that would be our lucky lobster uh this is our hazy double ipa and uh wow so this is good marketing i was wondering i was like is this guy drinking on the clock here not yet okay i think we'll have the first that's for after the debt-free screen the you got absolutely i love it so you you paid off the 35 the food truck with retained earnings what about the mortgage how did you knock that out in six months so like i said i went back to work uh in the corporate world i also got a part-time job and then i also work at our tap room so a lot of it was on my shoulders it was but we knew it was for we're because we're going We're going big.

Speaker 1 So this was all, this was all cash flowed through income. Yes.
You didn't sell anything to get rid of this. You didn't have saving.

Speaker 1 You just went, we're going to put every dime we we can from our income and live off of very little.

Speaker 5 All the tips we earned from the tap room, everything. I mean, we were scouring the couch cushions just to get a couple quarters here.

Speaker 5 And just we have a goal and we're going to be tenacious at it and we're going to get after it.

Speaker 3 And mission accomplished. That, I mean, I'm just tripping because you guys, you went from a two-year horizon to six months.
Yeah.

Speaker 5 Yeah.

Speaker 1 Just by crunching some numbers and going, we could do better.

Speaker 5 We could do better. It's all about the budget.
Yeah. All about the budget.
And now we don't have a payment in the world. No.

Speaker 3 So we don't. So what's next?

Speaker 3 How do do you celebrate that?

Speaker 5 Well, I mean,

Speaker 5 mama needs a new car, first and foremost. We've been driving hoopties.
I mean, my entire life I've been driving paycheck cars. Okay.

Speaker 5 I kind of like them because you don't have to worry about getting them damaged.

Speaker 5 You know, the first thing that you do when you buy a new car is someone scratches up against it in the parking lot.

Speaker 3 Yeah, you have to park in the back.

Speaker 5 You know, with the new house we have, you know, we haven't completely finished the basement off, so the bar is going to go down there.

Speaker 5 And then possibly Europe as well, too.

Speaker 5 So no backyard. The The backyard and the pool.

Speaker 5 There was never a pool, but it's just, you know, you put different priorities on things and which is the most important. Nothing wrong with that.
Yeah.

Speaker 1 And the basement bar has clearly been the priority.

Speaker 5 Well, you know, it's, well, and getting back to, you know, to the new house. So we actually lost our original home.
So the home we paid off, we lost in a fire

Speaker 5 January 2023. Holy moly.

Speaker 5 We got a photo of it. Oh, my goodness.

Speaker 5 So that's 15 minutes after I called.

Speaker 5 Wow, 911. That's the day after.
Were you in the house? We were at home at night.

Speaker 3 At night? Yes. It was 10 o'clock at night.

Speaker 5 Thankfully, we were up watching TV. Just before we went home.

Speaker 5 And long story short, it started in our garage, and we had a door with a doorbell, and we had no notice of the fire except the doorbell rang. The doorbell rang.
We got up to see what's going on.

Speaker 5 We thought, you know, who's at our door? Or at 10 o'clock at night on a Monday night. We walked to the back door where the doorbell would have been, and we heard something weird.

Speaker 5 He opened the garage door. And

Speaker 5 the garage was completely open. Who rang the doorbell? Nobody.
The Lord did. The Lord rang the doorbell.

Speaker 5 I just got it. I smelled those shoes.

Speaker 5 Holy smoke.

Speaker 1 In my head, I was like, please tell me there was nobody at the door. No, that would be a literal miracle.

Speaker 5 And the next day, the fire marshal asked, what did you see, smell, hear?

Speaker 5 And

Speaker 5 we're like, we had no idea the house was on fire until the doorbell rang.

Speaker 1 Is that a feature on the doorbells now? Or if there's like smoke and fire, they know.

Speaker 5 It was the hand of the Lord. Maybe that's something we need to look into for business.
Wow.

Speaker 1 Okay, so what happened after that? Does the insurance company write you a big check?

Speaker 5 They did.

Speaker 5 So

Speaker 5 we had the choice whether we wanted to sell off the land and then buy a house somewhere else or rebuild a new to us house. And we got to design the house of our dreams within budget.
Wow.

Speaker 5 And it's the house we live in. We often say we paid off the old house.
The current house which we live in is the gift. The Lord gifted to us and will propel us to do marvelous things in the future.

Speaker 5 And actually, one thing Shannon left out, as we were walking away from the fire, I, to this day, I can still remember her saying to our boys, something good will come from this. That's right.

Speaker 5 Something good will come from this.

Speaker 5 And it really has put us into a financial position to do a lot of good things within our community because our community, I can't say enough about, we can't say enough about

Speaker 5 loved us.

Speaker 5 We don't care. They clothed us.
They howled us. I mean, we literally only had our our

Speaker 5 locks. Yeah, I mean, you can go from living high in the hog, life is great, to being homeless in a matter of an hour and not having anything.

Speaker 5 And that change your perspective.

Speaker 3 What perspective did that give you? Because few people will experience that.

Speaker 5 Yeah. So honestly, that became our why.

Speaker 5 How our community responded floored us. And we're like, we need to give back for more now.
And so that motivated the why.

Speaker 5 And honestly, it was just stuff. Yeah.

Speaker 5 Our boys. It can all be replaced.
The four things that needed to get out of the house got out without any harm. We can replace other things.
We can replace the cars. We can replace this, replace that.

Speaker 5 It doesn't matter. It really doesn't matter.

Speaker 5 And I want to tell people who are listening, we did not use insurance money to pay off the mortgage. The insurance money went to rebuild the house.

Speaker 5 This was hard work.

Speaker 5 A lot of sacrifice. I mean, the long,

Speaker 5 long days, long nights working every Friday night, Saturday night, Sunday, just to reach our goal. And

Speaker 5 we just go after it.

Speaker 3 you guys, all four of you, because I see the boys there, you guys are incredible people, an incredible family.

Speaker 1 And you give new meaning to the word scorched earth, which you use. I want to just point out, the irony is rich here.

Speaker 1 Let's get the boys up here. What's going on, guys? Names and ages.

Speaker 5 So this is Colin. We call him Tank.
Tank. He's 14.
Here, why don't you go by mom? Okay. And this is Ian.
We call him E. or Big E.
Big E. So he's 12.
Tank is 14. Wow.

Speaker 1 And these young men got a front row seat to a lot of sacrifice, a lot of life change, some trauma, but here they are, resilient, persevering, and they're going to live lives of debt freedom thanks to mom and dad's hard work.

Speaker 5 Absolutely.

Speaker 1 All right, count it down. We've got Brooks and Shannon, Colin, and Ian from the Harrisburg, Pennsylvania area.
$145,000 paid off in six months. House and everything

Speaker 1 after it burned down and they rebuilt, making 62 to 144. Count it down, guys.
Let's hear a debt-free scream.

Speaker 5 Let's go, guys.

Speaker 5 Ready? Three, two, one. We're debt-free!

Speaker 1 There's a lot of firsts in this debt-free scream. Wow, wow.
And cracking the can, that's a first for me. Listen, it might be contradiction.

Speaker 1 Wow, that was incredible. Inspiring, guys.
This is the Ramsey Show.

Speaker 1 Welcome back to the Ramsey Show. I'm George Campbell, joined by Jade Warshaw.
I've got to mention we just met our debt-free screamers out there, and Shannon is an Air Force vet.

Speaker 1 So I wanted to say a very happy Veterans Day. Very thankful for the service and sacrifice of so many today.
Indeed. And not to be outdone, Jade, there is a much lesser holiday.
It is Singles Day. Ooh.

Speaker 1 Tell me more. That rests in the shadows of Veterans Day.
Apparently 11-11, 1-1-1-1. All single, I guess, the same single digits.

Speaker 1 So for all of our single friends out there, I see some hands being raised in the booth from our friend Will.

Speaker 3 But it has nothing to do with relationship status.

Speaker 1 It does.

Speaker 3 Oh, it does.

Speaker 1 It has almost everything to do.

Speaker 3 Tell me more.

Speaker 1 That's it. We just, you know, it's the largest shopping day in the world, apparently.
This is what I'm told, again. And we love any excuse to give our folks a great deal.

Speaker 1 Whether you're single or not, these deals apply.

Speaker 3 So it's not about the digits.

Speaker 1 I don't know. I'm not in charge.
You think they put me in charge of the holidays? I don't know. National Pizza Day, I'm not in charge of that.
But today only, we figured, you know what?

Speaker 1 Fine, let's give the people a great deal. So today only, we've got deals as low as 11 bucks in the Ramsey Solutions store.

Speaker 1 Popular questions for humans Thanksgiving edition, total money makeover, baby steps millionaires, building a non-anxious life from our friend Dr.

Speaker 1 John Deloney, Ken Coleman's Get Clear, Career Assessment, so many deals, just 11 bucks. So today's a great day to just go ahead and start stocking up before the holidays.

Speaker 3 Is your book $11?

Speaker 1 I don't think we're there yet.

Speaker 5 I think mine is.

Speaker 1 Maybe we'll get there. Yeah.

Speaker 5 Okay. Check it out.
One day.

Speaker 1 You'll have to see for yourself. I don't know what they put in there.
They don't, again, they don't put me in charge of this stuff. Ramseysolutions.com/slash store.
Find out for yourself.

Speaker 1 Or if you're listening on YouTube and podcasts, click the link in the description. All right.
Tate joins us up next in Seattle, Washington. How can we help, Tate?

Speaker 17 Hey, guys, just want to say I'm a really big fan.

Speaker 5 Appreciate that.

Speaker 13 I'll try to make this quick.

Speaker 7 So, backstory.

Speaker 17 I recently graduated college six months ago and got a really good job and just became debt-free and just maxed out me and my wife on our Roth RA's.

Speaker 5 Wait a minute.

Speaker 19 We're soon to do our HSA and in January we'll max out both our Roth RA's for 2025.

Speaker 5 Cool.

Speaker 6 And doing our, you know, a 401k and everything.

Speaker 5 You guys are crushing.

Speaker 6 Yeah, yeah.

Speaker 17 Thank you. Oh, the baby steps work.

Speaker 5 Yeah, you're doing much better than I was after graduation.

Speaker 1 I'm impressed. I want to be like you when I go up.
Okay, so what's your question today?

Speaker 17 So we want to buy a house, but we're kind of just

Speaker 13 the market's not good.

Speaker 17 So it's not looking good, and we don't know what to do.

Speaker 15 Like we plan on saving up about 50 grand this year.

Speaker 10 Okay.

Speaker 13 And I don't know if that's even enough to put for a down payment for where we live.

Speaker 3 What are you looking at? How much do the houses cost that you're looking at?

Speaker 13 About for a small house with a thousand square feet that was built like, you know, like in the 70s,

Speaker 13 it's about $400,000 and there's only probably about a handful out there and this is the Seattle area

Speaker 5 It's actually in Bellingham Washington's office is at yeah okay

Speaker 1 which is which is a pretty you know high cost of living area some big companies over there have you done the have you done the math?

Speaker 3 We've got a really great calculator of basically how much home can I afford and you can plug the numbers in and see okay what do I need to put down and and basically you can work backwards to say how do I get this payment to where it's only 25% or less of my take-home?

Speaker 3 Have you done anything like that yet?

Speaker 10 Yes, we have.

Speaker 12 It would take us a few years, like two years.

Speaker 5 Okay. And what if you're not?

Speaker 1 Hold on. Is that a long time for you, Tate?

Speaker 17 I guess, yeah. I feel like I'm behind in life.

Speaker 5 How can I tell you?

Speaker 1 Tate, you just graduated.

Speaker 10 Yeah.

Speaker 5 Okay.

Speaker 1 How old?

Speaker 13 I'm 20.

Speaker 19 I just turned 27 a week ago.

Speaker 3 Can I tell you a secret? That's not even a secret, but it might make you feel better.

Speaker 5 Sure.

Speaker 3 What if I told you that my husband and I rented for 10 years before we bought a house and we didn't explode or burst into flames?

Speaker 5 Just letting you know. Because you got to be able to afford it, right?

Speaker 10 Yeah. But you don't think we're missing out?

Speaker 5 No.

Speaker 13 I could put like 30,000 in my equity.

Speaker 1 Well, you know what? I wish, let's build a time machine. Let's go back in time, buy a house when it was $14,000 in order to build more equity.
There's a lot of things we wish we could do, right?

Speaker 1 The best time to plant the tree was 20 years ago. The next best time is today.

Speaker 1 But that doesn't mean that you should get impatient and entitled and go, we got to get it in now because we're throwing away money on rent. Learn to have patience.
You're 27.

Speaker 1 Go talk to a 60-year-old and you'll see there's a level of, I guess, maturity that happens when you go, okay, not everything's going to happen on my timeline.

Speaker 1 And I remember 27 feeling like, Time's running out. I have one year to do this in my career and hit this financial goal or else.
And then five years goes by in an instant, you're like, oh, okay.

Speaker 1 I have more patience than I thought.

Speaker 3 Plus, there's the whole thought here of if you buy this house before you can really afford it, you're not going to be thinking about equity.

Speaker 3 You're going to be focused on making the payment every month because it's going to be eating you alive if you even get to keep the house, right?

Speaker 3 So you have to run, you have to run this equation for what it is. You cannot, and the truth is, you could buy a house before you can afford it, but it'll be a problem for you.

Speaker 3 So it makes sense to wait. And two years in the grand scheme of things is a drop in in the bucket.

Speaker 1 And if you don't want a crappy house like you're kind of talking about, this thousand square foot, it's super old, then don't.

Speaker 1 Then wait, save up more, get a bigger down payment, and that will lower your monthly payment. So that's what I would do if I was in your shoes.

Speaker 1 And if you don't like the timeline, we got to figure out a way to make more and spend less to create more margin to save up faster.

Speaker 1 And so I would just turn this into a math equation that puts some fuel on the fire versus a woe is me shaking our fist at the, you know, the sky gods.

Speaker 3 You know, it's, it's a funny renting is a funny thing i think that you can really enjoy your renting experience while you're renting you know what i mean like there's more to life in a in an instant than whether or not you're renting or buying and i think it's really easy in a moment to kind of base your whole life and like whether or not you deem yourself successful in a moment or not right it's like you were 27 years old you got so much time ahead of you and you're gonna look back on this and go oh my gosh it was so funny that i was so rushed at 27 to have a home.

Speaker 3 Because a lot of times we're compared, like without even realizing it,

Speaker 3 subconsciously, we're comparing ourselves to something else we've seen. It's not even really just our race that we're running.
We're thinking about what our friends have.

Speaker 3 We're thinking about what our cousin did or what the people on social media did.

Speaker 1 And you got to do that. Yeah, you got to put blinders on.

Speaker 3 Yeah, if you couldn't see any of that, if all you saw was the race that you have to run in front of you, you wouldn't be so sidetracked by that. I think.

Speaker 1 If we said the average person takes seven years to buy their first home, you'd be like, oh, wow, I'm doing great. Right.

Speaker 1 So I think we need to look at this class half-full situation and go, man, what a blessing it is to be 27, no debt, maxing out Roth IRAs, maxing out HSAs, and be able to buy a house two years from now in a very expensive area.

Speaker 14 Yeah, I suppose you're right.

Speaker 17 Yeah, that's that's a pretty good way to think about it.

Speaker 1 Perspective, man. It's a wild thing when you can change your mindset.
But you'll be there in no time. What's the household income?

Speaker 6 After

Speaker 1 we've cut our 401k up and just the gross household income?

Speaker 13 150 net.

Speaker 5 Amazing. Oh, gross.
Oh, gross. 150.
Okay, good. That's great.

Speaker 1 And how long have you been married?

Speaker 10 We just celebrated our one-year anniversary a few months ago.

Speaker 3 Yeah, you guys are doing great.

Speaker 3 You need to just take it chill,

Speaker 1 Tate is upset.

Speaker 5 Take it chill that you're doing great. Yeah,

Speaker 1 you're doing great, Tate. This is a lesson in patience.

Speaker 3 What do you think that is, George? I feel like more and more we get calls. And if I had to sum it up, it's just like this race to get a house and be, you know, have wealth.
And like,

Speaker 3 it's just this.

Speaker 1 Well, it's the 19-year-olds calling and saying, I need a million dollars by 25.

Speaker 5 And I go, why?

Speaker 1 And they go, I don't know. I just, I feel like I need to, or else I'm behind.
I'm like, behind on who? Have you listened to the calls on this show?

Speaker 1 Like, people are happy to have a million bucks in a Nest Ag by the time they retire.

Speaker 1 Who told you that time is running out and that if you're renting, you're throwing away money? And it's probably a mix of society, parents, and TikTok at this point.

Speaker 5 Yeah. And don't get me wrong.

Speaker 3 I think it's great if you,

Speaker 3 I think it's great if you enter into your adult life, you've largely avoided debt, or if you did have it, you paid it off quickly.

Speaker 3 I think it's great when you're able to walk through the baby steps and get further at a younger age. I think that's amazing.
I mean, that's the whole goal.

Speaker 5 The sooner, the better.

Speaker 3 But if you're just this rush to kind of like check these boxes, I just want to remind people to like life is a journey life is a highway

Speaker 1 it's a highway i can't sing anymore because i think we'll get taken off the air but enjoy the ride put the top down speaking of the ride it's almost over here if you're listening on youtuber podcast so if you want to finish the show head over to the ramsey network app for a distraction-free experience you can download it in the app store of your choosing or click the link in the show notes to check it out but This ride's over, Jade.

Speaker 1 I'm sad to say. It's been fun.

Speaker 1 And so if you're on radio, hang tight. We'll be here.
But if you're on YouTuber Podcast, go jump onto the app. We'll see you for a whole nother hour of the Ramsey Show.