Life Is Too Short To Choose Money Over Happiness

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.

Speaker 1 And we're here to answer your questions about life, money, relationships, career, anything and everything. We are here for you.
So give us a call at 888-825-5225.

Speaker 1 All right, up first, we have Charles in Tulsa, Oklahoma. Hi, Charles.
Welcome to the show.

Speaker 2 Hey, thanks for having me.

Speaker 1 Absolutely. How can we help?

Speaker 2 Yeah, I was just recently notified that

Speaker 2 my company plans on laying me off in the near term.

Speaker 2 And

Speaker 2 I'm trying to

Speaker 2 write down

Speaker 2 like a long-term financial plan and I'm writing out my assets.

Speaker 2 And I'm just kind of looking at what I have down. And the vast majority of my stuff is not liquid, meaning it's in either a retirement account or it's equity in my home or

Speaker 2 whatever.

Speaker 2 And I'm trying

Speaker 2 if it came down to it and I needed to access that money,

Speaker 2 what would be the best way to go about doing that?

Speaker 1 Okay, so you don't have any savings right now. Anything liquid is what you're saying.

Speaker 3 Because if you know ahead of time. I have like

Speaker 1 three months of savings.

Speaker 3 Okay. Oh, great.

Speaker 1 Well, I mean, this may feel Pollyanna, but you're not laid off now. You know you're going to be in the near term.
What does that mean? Does that mean 30 days, three months, six months?

Speaker 2 They couldn't give me an exact date,

Speaker 2 but they said most likely January. But the manager was kind of, my manager was kind of doing me like a really solid, and he wasn't really supposed to tell me this information.

Speaker 3 And so insider like

Speaker 3 insider.

Speaker 3 And so he, so I wouldn't, I would like to.

Speaker 1 Yeah, so I would make it a goal not to pull money out of your house equity-wise, not to pull it out of retirement because you're going to get dinged with penalties and taxes.

Speaker 1 Because, I mean, it's between, yeah, you have four months to continue to save and look for a new job,

Speaker 1 right? I mean, so, I mean, in a perfect world.

Speaker 3 Yeah, the goal is to do that.

Speaker 2 I'm just trying to do the last-ditch efforts.

Speaker 3 Yeah. I'm trying to write down a plan.

Speaker 3 I feel like you have to focus. I think you're focusing on the wrong part.
You're focusing on what do I have to depend on if I don't get the job as opposed to focusing on what will I do to get the job.

Speaker 3 Because if I'm you, I'm taking those other, especially the retirement, the house, I'm taking that off the table. Like it's not even an option.

Speaker 3 So I feel like you've got to go into this pretending as though that money doesn't even exist.

Speaker 3 Because if you go into it with even like just a piece of that in your brain as an option, then when the time comes, like let's say the time does come and it's getting close to the wire, you're going to be like, well, at least I have this money here.

Speaker 3 And

Speaker 1 that's dangerous. Yeah.
I think, I mean, this is the extreme stance we even take, Charles, is that we say not to pull money out of retirement unless it's to avoid a bankruptcy or a foreclosure.

Speaker 3 So, I mean, yeah.

Speaker 1 so I, I, to Jade's point, I would act like it's not even, not even there. So financially, Charles, how are, how are you? Do you, are you living paycheck to paycheck? Do you, um,

Speaker 3 you have three months of savings, which is big. So,

Speaker 3 so yeah, it sounds like you're in a good situation.

Speaker 2 Well, yeah, my original goal was to get out of,

Speaker 2 um, because I started listening to the show

Speaker 2 earlier this year and my goal was to get out of debt this year. And the only thing that I had on my on my card was my card my car payment and I took a radical stance and I sold my car and good for you

Speaker 2 and

Speaker 2 I traded it in for a car that has 300,000 miles on it so I'm I'm debt free with three months of savings

Speaker 2 cool so it's anything my uh my um

Speaker 1 and what kind of line of work are you in

Speaker 3 yeah I'm in accounting okay listen you're gonna land on your your feet. No problem.
Yeah.

Speaker 1 I think you're, I mean, I appreciate the due diligence of the plan and everything, but,

Speaker 1 but I would encourage you, Charles, I think you're in a better spot than you think you are.

Speaker 3 I mean, you have no debt.

Speaker 1 You have three months of savings. If I were you between now and then, I would just be stockpiling cash.
I would get that up to a six-month emergency fund just in case.

Speaker 1 And then as an accountant, I mean, you'll have plenty of opportunities to find a job.

Speaker 1 And then when you plug into a great job and you have too much savings, maybe you could say, okay, I'm going to take some of that, maybe put more towards my retirement, but maybe between now and then focus on just stockpiling cash.

Speaker 3 Are you able, like legally, or with the stipulations of your job, are you able to start kind of creating a book of business on the side so that you kind of have that as a bridge?

Speaker 2 I do corporate accounting, so not specifically clients.

Speaker 3 Got you. Okay.
Stuff like that.

Speaker 1 Well, I would start networking too, Charles, right?

Speaker 3 Between now and then.

Speaker 1 I mean, talking to companies that are looking for someone. And nothing's stopping you from talking.

Speaker 3 Having offices. No, no, no.

Speaker 2 And I was told like two hours ago. So I'm trying to do, like, I started sending out words and maybe.

Speaker 3 Okay, that's fair.

Speaker 3 You're still writing in your journal. Like, you're still trying to make heads or tails of it.

Speaker 2 Yeah,

Speaker 2 I got like a bunch of stuff for now, and then I'm just trying to create a plan of action. And

Speaker 3 are you married? Figure out what to do next.

Speaker 2 I'm no, I have an eight-year-old son now.

Speaker 3 Okay. Okay.
Yeah.

Speaker 1 Yeah. So from all that, I mean, yeah, if I were you, I would just be saving money.
I'd be looking for another job.

Speaker 1 And if they're going to lay you off and you find a great opportunity, then it's time to say, okay, that door is shut and I'm going to walk in something else.

Speaker 1 I mean, in that sense, that's not a selfish thing or you're not leaving them high and dry. You're taking care of yourself in that situation, too.

Speaker 2 Right, right, right.

Speaker 3 Exactly. So great.

Speaker 2 Yeah, I don't like if I leave early, like it is what it is, you know?

Speaker 3 That's right. Yeah, if you're going to be laid off, for sure.
I'm like, yeah.

Speaker 3 Well, thanks for the call, Charles. I hope, I hope that's helpful.

Speaker 1 Yeah. And I appreciate that he called us two hours after I found out.

Speaker 1 Because there is probably a level of like panic and, oh my gosh, what he was doing when he called us was like getting all my ducks in a row, which makes more sense that he's like already going to, okay, what if I run out of money?

Speaker 1 But when you let the drama settle and the emotion settle, it is amazing how you can, and he's put himself in an incredible position, right? I mean, this is a totally different conversation.

Speaker 1 If he has no savings, has a car payment, has, you know, is living paycheck to paycheck, then there's going to be,

Speaker 1 a whole other level of, hey, this is, there's going to be more pain to this. Absolutely.
But that's one reason you do all of this, you guys, is to set yourself up for the unexpected.

Speaker 1 And we always say the emergency fund is there

Speaker 1 after you are debt-free and you have a fully funded emergency fund of three to six months of expenses, which is what Charles has, that it takes a crisis and turns it into an inconvenience.

Speaker 1 That's right.

Speaker 3 Hey, did he say it was his leader who let him in or was it just somebody he worked with?

Speaker 1 I think he said his leader.

Speaker 3 I hope it.

Speaker 3 I was going to say, like, that's probably the nether piece of this is just to make sure it's accurate information and not like hearsay or like office rumor that you're, yeah, because that can happen as well, right?

Speaker 1 You jump, you jump off this train that wasn't even

Speaker 3 a crash. Because of what people are saying at the water cooler, but I think he did say it was Liz Leader.
Yes. Okay.
Yeah.

Speaker 1 I think we're getting odds.

Speaker 1 But again, Jade, I think, too, that

Speaker 1 padding of planning is great of what he was talking about.

Speaker 1 But getting yourself in that position that when life happens, because it's not if, it's when, and it may not be a job layoff, which I feel like we're hearing more and more of.

Speaker 3 I don't know, I feel like we're getting more calls of that.

Speaker 1 Um, but you know, the you know, the health of one of your kids or family members, I mean, stuff is going to come up. And to put yourself in a position, not that money, money does not

Speaker 1 make you immune to life, right? But it does give a buffer when those hard life events happen, it can soften the blow, it can, absolutely,

Speaker 1 so great. Well, Charles, again, thanks for the call.
This is the Ramsey Show.

Speaker 1 Well, Jade, the live like no one else cruise is 90% sold out.

Speaker 3 So the cabins are booked.

Speaker 1 The ship is getting full. We're going to set sail in March.
You know, we were just talking March, it still seems like a far way away, a little bit.

Speaker 3 Yeah.

Speaker 1 But with kids and school calendars, we've already like, we've started talking about.

Speaker 3 gosh. You have to plan.
Yeah, you do. You definitely.

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So that's in March.

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All right, up next, we have Richard and Maria from Dacoma, Washington. Hey, guys, welcome to the show.

Speaker 2 Hi, how are you guys?

Speaker 3 We're doing great.

Speaker 1 How are you all?

Speaker 3 Good.

Speaker 1 It's fun having both of you. We usually have a single caller.
So I'm glad we have we have two. Are you guys?

Speaker 1 What's going on? Are you guys married?

Speaker 3 What's happening? This means debate. I know it.
Does it?

Speaker 2 Yes, we are married.

Speaker 3 All right. So how can we help?

Speaker 2 So we need to get a truck because we'll be moving to upstate New York within the year. So we need a vehicle that can handle the snow.
So we both have agreed we want to buy a used around $30,000 truck.

Speaker 3 Okay.

Speaker 2 But we differ on how we want to buy that truck.

Speaker 2 So

Speaker 2 we have $50,000 in savings right now, not including our IRAs and 401ks.

Speaker 2 And then

Speaker 2 so she wants to buy the vehicle outright. And then I want to use our,

Speaker 2 we both have pretty good credit. And then I want to use a sizable down payment to try to get our APR under 4.6%

Speaker 3 so that we

Speaker 3 have more money in our savings.

Speaker 1 Okay. So you have more money in your savings is why you want to do your way.
Maria, why do you want to just pay for it outright?

Speaker 2 I don't want to have any debt or any car payments, and I would just like to buy it cash and not worry about it anymore.

Speaker 3 All right. I have a question.
What portion of the $50,000 would you consider to be your three to six months of expenses?

Speaker 2 That's the other 20K. That's why we set the mark at 30K for the truck.

Speaker 1 So 20K would cover your emergency fund and then 30K. Okay, well, I mean, Richard, you called the Ramsey show.

Speaker 3 So I think you know what we're going to say.

Speaker 3 I know.

Speaker 1 Yes, I know.

Speaker 1 Yeah. So, I mean, I understand, Richard, the mathematical side, right? Some people, well, not with car payments.
It's the one part of.

Speaker 3 I mean, I understand him wanting to have the savings.

Speaker 1 More savings, yes, yes. But

Speaker 1 realizing, though, Richard, that you're going to be paying 4% to 5%

Speaker 1 on an asset that's going down in value where you could have that possibly invested even in just an index fund, making 10% to 12%,

Speaker 1 your money could be working for you way more.

Speaker 3 And just for fun, you said you'd want to put down a decent down payment. What were you thinking you would put down?

Speaker 3 On the $30,000 hour?

Speaker 2 The value of the car.

Speaker 3 Okay, so $15,000. So then let me see if I can make you feel better about this.
So what's you guys's income?

Speaker 3 Uh, we make what will it be?

Speaker 2 Around 100K.

Speaker 3 Okay.

Speaker 3 And so how long without a car payment, how long do you think it could take you to save up that additional 15K? Because in your mind, that's what you'd be parting with is $15,000.

Speaker 3 That was the part that made you feel uncomfortable, right? Otherwise, you would have been willing to put the full-down payment, like pay the thing in full. So how long could you save up?

Speaker 3 How long, how quickly could you save up $15,000 with no car payment?

Speaker 2 Probably like five or six months.

Speaker 3 Yeah.

Speaker 3 So that's, I mean, we're talking about something that is almost less than half a year in order for you to be completely free, for you not to be investing in, to Rachel's point, a depreciating item.

Speaker 3 I'm not even going to call it an asset because it's going down in value. So

Speaker 3 I feel like that, I feel like we made a good case.

Speaker 3 Yeah, that makes sense. Are you convinced, Richard? Yeah, I am.

Speaker 1 You know, what I think is hard, though, I, because again, when we talk about money, naturally, the math is going to come in, people's emotions come into all of it.

Speaker 1 So, it all, that, that all makes sense. But the part that you just can't calculate, though, Richard, is

Speaker 1 this level of not having risk of having autonomy completely over your life? And Maria's probably thinking too, right? What, like, you know, God forbid something happens, who knows?

Speaker 1 Um, there's no risk at all, right? We just talked to a caller that's about to be laid off, and he has no debt. He actually sold his car to get out of car payments, has an emergency fund.

Speaker 1 And then, you know, that life change for him is going to be very small impact-wise, financially, than the opposite.

Speaker 1 So I know you guys have savings, and you're probably thinking, well, we could just cover it, you know, if something happens, but there's still a level of risk and the other part of just of being owned.

Speaker 1 I mean, honestly, I'm like having Toyota Motor Company, having a part of your paycheck every single month, there is something emotional there that can't go into a spreadsheet.

Speaker 1 And we had Dr. Arthur Brooks on the show a few weeks ago, and he talked about the science, scientifically, what the brain does when you have debts.
There is a level that you know you're not safe.

Speaker 1 Like there is something there innate that people don't talk about.

Speaker 1 So there is a freedom here, Richard, that again, maybe a little painful parting with the cash, but I would, I would encourage you guys, this is why you did that.

Speaker 1 This is why you saved is to be able to use your money and not use other people's money.

Speaker 3 And then there's a practicality of, I mean, we're going going to talk about this later in the show, but insurance costs are going up.

Speaker 3 And to be able to enter into a car with no car payment, it frees you up to be able to deal with those fluctuating costs that have to do with just life in general, whether it be the cost of your insurance going up or the cost of groceries going up.

Speaker 3 Like there's a lot going on. And so to be able to clear out as much variable as possible in your life, it's just, for me, it's worth it.

Speaker 1 Yeah, absolutely. Maria, how are you feeling?

Speaker 2 I'm feeling good.

Speaker 3 Okay, so she's like, I won.

Speaker 1 So, how does this work, though? Because we talk to usually, just one of the spouses calls in on our show. And

Speaker 1 usually it's Maria that calls in and is like, hey, I want to pay cash for this car. My husband doesn't want to.
So we're usually talking to one of the spouses.

Speaker 1 And we talk about the idea of being aligned values-wise with your money. So I'm curious for you guys, if you will share.
You don't have to, but.

Speaker 1 you know, what does that conversation look like for you all?

Speaker 1 Is it Richard you saying, all right, Maria, I hear you. I hear Jade and Rachel.
I'm going to just make the decision?

Speaker 1 Or what does those conversations look like when you get off the phone, do you think?

Speaker 2 The conversations are honestly very good because the only thing we want is to just make the best choice for us. And we just want to save the most money.
And

Speaker 2 I totally agreed with him. And I'm like, you know what, we can do it your way or we can do it my way.

Speaker 2 It was just the reason I want it my way is just to not have that feeling, oh, we have debt. And he feels the same way too.

Speaker 2 But, you know, with his reasoning, it was also, could we get a little bit more money in our savings doing it my way? And I'm okay with doing it his way, but I also just had my idea.

Speaker 2 And I think our talks about money are great. We pretty much agree on everything.

Speaker 3 Did you guys have debt prior to this that you paid off together? No. Oh, okay.
So you've been living a debt-free lifestyle. Yes.
Oh, okay.

Speaker 3 So Richard, you were like, we could just see what it might feel like.

Speaker 3 You're like, I'm willing to dip a toe in the water. That's funny.
That's funny.

Speaker 2 See how the other side lives.

Speaker 3 See how the other. They live with stress and payments, Richard.

Speaker 2 Yes, and I'm terrified to live that way. And I know I would be insanely stressed.
But I also know that we've got about 10 months until we move and need that vehicle.

Speaker 2 So I was hoping in 10 months we would save up, you know, fully have a car savings and the whole thing.

Speaker 1 100 well based off the numbers that richard gave as quickly as you could save up 15 000 i think that that's actually pretty feasible so very good yeah you guys could continue to save and make the cushion even more yeah that's that's a great point because it's it's in 10 months well you guys are awesome i appreciate i appreciate you both calling in and talking through it because uh you know there's a spirit of humility there too right of just saying hey we want to be on the same team and we want to do this well we have the end goal is the same how we get there might start to kind of weave a little bit but hearing each other I think is great.

Speaker 1 So thanks for the call. This is the Ramsey Show.

Speaker 1 Welcome back to The Ramsey Show. I'm Rachel Cruz, hosting with Jade Warshaw, and you can give us a call at 888-825-5225.
We are answering your questions about life and money.

Speaker 1 Up next in San Francisco, we have Maria joining us. Hey, Maria.

Speaker 2 Hi, ladies. Thank you so much for taking taking my call.
I'm so excited to be on the Ramsey Show.

Speaker 1 Oh I'm so glad you called.

Speaker 3 How can we help?

Speaker 2 Okay, so I'm 50 years old and I have only $100,000 in my retirement and I

Speaker 2 own two investment properties. I recently adopted my daughter, who's two now, and my priorities have changed.

Speaker 3 Yes, congratulations.

Speaker 2 Thank you very much. So I want to know know if I should be just selling my rental properties, what to do about

Speaker 2 increasing my retirement. I have $15,000 in credit card debt,

Speaker 2 which I am in the process already. I have three credit cards.
I already paid one off.

Speaker 3 Okay, good job.

Speaker 2 Yeah. And

Speaker 2 yeah, so I need your help. I need you to tell me

Speaker 2 if I should just get rid of these properties.

Speaker 3 How many is it?

Speaker 2 There's two. So

Speaker 2 one is just a simple duplex and the other one is

Speaker 2 two flat plus a basement apartment.

Speaker 1 How much do you owe on each and how much are they worth? Could you sell them for?

Speaker 2 Yeah, so the one, the duplex is worth $144,000 and the other one is worth I'm sorry, I owe $144,000 and the other one I owe $396,000.

Speaker 3 Okay.

Speaker 3 What could you get them for?

Speaker 2 The one that's $144,000, I could get $242,000,

Speaker 2 which I haven't earned much equity on it. I bought it for $180,000.
It's ridiculous. And then the other one, which I recently bought three years ago, that I can get

Speaker 2 $550,000.

Speaker 3 Okay.

Speaker 3 All right. Okay, good.

Speaker 1 So, yeah, $250,000. Pretty much you could cash out before taxes and fees and everything.

Speaker 1 Okay. And then your retirement, you have 100K.
How much are you making a year in your job?

Speaker 2 I make between $100,000 to $120,000.

Speaker 2 Yeah, I work for the school district, so I make $100,000 during the school year, and then over the summer, I can

Speaker 2 work privately. So I make about $20,000 more.

Speaker 1 That's so great. And you have the credit card debt, a $15,000.
Any other debt, or is it just that?

Speaker 2 Just that. I don't don't have student loans.
I don't have car.

Speaker 2 The one thing that I do have is, so I'm in California right now, and I'm living in my parents' home, but I pay the mortgage.

Speaker 2 They helped me out by buying this house back in like 2013 because

Speaker 2 I made the biggest, the big mistake that you guys always say not to do is buy a house with a fiancé, before he was my husband.

Speaker 3 Oh, shoot, yeah.

Speaker 2 That was a bad decision. And so my my credit got hit so I couldn't afford anything.
So my parents said, you know what, instead of renting, let me just buy a house and you pay the mortgage.

Speaker 2 So I've been doing that. And their plan is to, yeah, for me to, this is my house, like to own the home.

Speaker 2 So they would transfer the loan, the title, whatever, over to me and the equity is mine.

Speaker 1 Okay.

Speaker 3 When will that happen?

Speaker 2 We couldn't do that right away. It's just a matter of finding out what the process is and if that's even doable with the type of loan that it is.

Speaker 3 Okay.

Speaker 1 Do you have any liquid savings?

Speaker 2 I have

Speaker 2 a problem. I have $2,000 in my bank account right now.

Speaker 2 I had

Speaker 2 $20,000, but I used that money, one, to pay off the last credit card, the one credit card that I did.

Speaker 3 That's good. That's right.

Speaker 2 And then the other, the rest of it was I went to Chicago where I'm originally from and I was was not working, so I lived off that

Speaker 3 to pay.

Speaker 2 Yeah. So now I only have $2,000.

Speaker 3 Okay. Okay.

Speaker 3 So the good news is you don't have a ton of consumer debt. It's the $15,000.
You could probably knock that out fairly quickly with your income.

Speaker 3 And then you've got these assets, about $250,000 of equity if you were to offload them. So you've got options here.

Speaker 3 And then the next part of the equation is just assuming everything continued going as it is now right you're 50 years old let's say you plan to retire at 65 you've got a hundred thousand saved in retirement now if you just kept contributing once you clear out this credit card debt you save up three to six months of expenses if you just contribute fifteen percent fifteen hundred dollars a month for the next 15 years you're gonna retire with over a million dollars so that's okay that's as it sits now which and as a teacher will you have a pension well is that question yeah

Speaker 2 yeah so i'm a therapist, and yes, I only have a, so I'm currently working through an agency, and they don't offer a pension.

Speaker 2 But I was working through the district directly in the past, so I do have somewhat of a pension in California and in Illinois, but that only adds up to like $60,000 right now.

Speaker 3 Okay, well, that's great. $60,000 a year.

Speaker 1 Is what it'll end up being?

Speaker 2 No, that's $60,000 that's there.

Speaker 3 Yeah. Just a lump sum.
Oh, I hear you.

Speaker 2 Yeah.

Speaker 3 When do you have, okay.

Speaker 3 Do you have access to it?

Speaker 3 Like, when do you, if it's just a lump sum, when do you get access to it? And is it something that you could take and reinvest until you're ready for it?

Speaker 2 I don't know if I could take it and reinvest. I know I

Speaker 2 have access to it once I retire, but I don't know if I could pull it

Speaker 3 and put it.

Speaker 1 Is it growing well? Do you know what percentage it's growing year after year?

Speaker 2 I don't know that.

Speaker 3 Yeah, I think that I need to ask.

Speaker 1 No, no, you're great. And I think, yeah, I would find that out.

Speaker 1 Cause I think the more information you have, Maria, around the situation, even Jay, just plugging in, you know, your info for the next 15 years and an investment calculator, like, oh, a million dollars.

Speaker 1 Okay, this is feeling, this is feeling better. Right.

Speaker 1 So, so what I would do, if I were you, I would sell the two properties. Um, I would too.
I mean, at this point, I think, you know, being in real estate and all of that, it's not paid for.

Speaker 1 And I think it's going to cause more stress. And I think you need the money.

Speaker 1 I mean, I think at 50 years old, you're going to be able to to do some really great things investing wise for your future with that money

Speaker 3 did the income you quoted include the profit from the rentals

Speaker 3 no okay no

Speaker 1 how much do you make for those those per month

Speaker 2 so right now so the the one that's the single house that one um i was making about let's see christine about 800 a month

Speaker 3 the problem with that is that 800 a month in san francisco

Speaker 2 No, no, no. That's in Chicago.

Speaker 3 Oh, yeah.

Speaker 1 Oh, so these are not, these aren't even in your, these are both in Chicago and you're in San Francisco.

Speaker 3 Yeah.

Speaker 3 Even more reason.

Speaker 1 Then I would definitely sell them, Maria.

Speaker 3 Definitely.

Speaker 1 I would not be a long-distance landlord with this bill. Yeah.
So if I were you, I would find a great real estate agent. You can actually go to ramseysolutions.com slash real estate or slash agent.

Speaker 1 And there's Ramsey trusted agents in that area.

Speaker 1 And you can interview a couple of them, check out them and use one of them because they, you know, basically do exactly what we teach and they're going to help you through the process.

Speaker 2 But I would say that I just bought, even the one that I just bought like three years ago.

Speaker 3 Yeah. Yeah.
It's long distance number one. And to your own point, you could use access to that money because the next step then is I would get with a Smart Vestor Pro.

Speaker 3 And if you find out that the deal with the parents' house and all that is going to be a longer than five year play, like you could invest this money for the short term.

Speaker 3 And then when you're ready to come back to it, that could be the money that helps you have your own property in cash

Speaker 2 Right, but wouldn't I get a dang with taxes if I just use the equity from these two properties if I just invest them rather you will pay some capital gains Yeah, but it's been over a year so so yeah, there will be there will be some taxes, but there'll be taxes when it sells eventually as well.

Speaker 3 Yeah, yeah,

Speaker 3 so I would I would offload that.

Speaker 2 I would want my plan one more detail on there. My plan is to be closer to family in Chicago.
So I wanted to buy a home in Chicago, a single-family home for my daughter and I.

Speaker 3 And when the time comes, you could do that, but you're kind of, you're projecting really far in the future and there's nothing to say that you're going to want to live in either one of these properties that you've been renting out for X amount of years.

Speaker 3 Yeah.

Speaker 1 I mean, I, yeah, usually you don't want to move back into something that's been rented out to families for the last, yeah, five to six years. You're going to want your own thing.

Speaker 1 So yeah, Maria, I would sell those.

Speaker 1 I would use that money, pay off the credit card debt, get a good emergency fund of three to six months of expenses, and then sit down with the Smart Investor Pro and look at your, yeah, look at your income, look at the cash you have and your investing strategy going forward.

Speaker 1 Because I think that's going to bring you peace knowing that you and your daughter are going to be taken care of

Speaker 1 in the next five to 10 years down the road.

Speaker 4 To find a Ramsey trusted real estate agent that can help you buy or sell your house the way we teach, visit ramseysolutions.com/slash agent or click the link in the show notes.

Speaker 1 The Ramsey Show question of the day is brought to you by Why YReFi. YReFi refinances defaulted private student loans and builds a custom loan based on your ability to pay.

Speaker 1 Now, you guys, private student loans are different than federal student loans like Sally Mae.

Speaker 1 So to learn more about this custom refinancing option and a lup sum payoff option that you can qualify for after 24 months, go to yrefi.com slash Ramsey.

Speaker 1 That's why the letter why refi.com slash Ramsey may not be available in all states.

Speaker 3 Okay. Today's question comes from Matthew in Oregon.
He says, my wife and I are debt-free except our expensive townhome. We bought it in 2022 with a 30-year term mortgage.

Speaker 3 Our monthly payment is about $4,200 a month, including escrow and PMI, while our net take-home pay is $8,750 a month. Wow.

Speaker 3 Our annual gross income is $110,000, which means our housing costs take up about 40% of our income, which limits how much we can invest.

Speaker 3 We both have the potential for income growth, but today's high cost of living is challenging, especially with four kids. We're in baby step four, five, and six, but still feel trapped.

Speaker 3 It's hard to see a finished line of no mortgage payment. Should we stay where we're at and wait for our income to grow or sell our house and move?

Speaker 3 This is one of those reality moments, Rachel, I think that if you're, if you're truly engaged in what's what's going on financially in your home, these are the moments where it's like, it's really tough because for those of you who don't know, here we teach that your payment shouldn't be any more than 25% of your take-home pay.

Speaker 3 And the reason for that is once it creeps beyond that, especially beyond 30%, is you really do start to feel that. And you start to experience what we call being house poor.
And

Speaker 3 your blessing on a house now becomes a burden, right? Because you're not able to have the margin to do the things that life calls for. I mean, in this case, it could be anything from childcare.

Speaker 3 It could be anything from they're wanting to pay off their mortgage and they don't have any margins.

Speaker 1 Yeah, well, and if you're in baby step four, you're funding 15% of your income in retirement. So automatically, that's taking it.
You have 45% of your income to live off of.

Speaker 1 That's before food and utilities and everything. Yeah.
So it does, it starts to dwindle, not always like in the right spots, right? And so.

Speaker 3 And if you give 10%, forget about it. That's right.
Yeah. That's right.

Speaker 1 Now you're down to 35% and for basic living. So it's almost that feeling of like we work too hard to feel this broke.
You know what what i mean like we shouldn't feel like this

Speaker 1 um and it is because 40 of your income is going to housing and so yeah um yeah i mean i i would be looking elsewhere because you say an expensive townhome which i'm assuming is a really nice one um probably in a nice area yeah and so i would be looking for other options you know you may be getting an older home it may not be near the city because that's usually where prices go up right the closer you are to the city um so you may be moving out and all of it which i know with four kids i know it's so easier said than done just to be like oh oh yeah, like get up and move.

Speaker 1 I know that that's like, it could be changing schools, all of this.

Speaker 1 But the quality of your life and going to bed at night and having peace and not stressing and not being, you know, to this point of like on a break, like you just feel like, oh my gosh, I just go to, I go to a job and I have no progress in my life.

Speaker 1 Like that is daunting.

Speaker 3 That's for the birds. You go, think about how much time you spend at work.
You go to work all day, eight hours a day. Some people far more than that.

Speaker 3 And then you, you feel like you have nothing to show for, you can't enjoy your life.

Speaker 3 You can't do the things that make you feel like you're making progress in life then there's the part of this uh equation rachel where they do see

Speaker 3 um a way for their income to go up now there's been times people have called in the show and they're like hey uh i'm at 30 of my income but i know that i have a raise coming up in the next 12 months yeah and if we get that raise you know it'll equal out and so there's a part of that where if they said hey we see a place where we're gonna get uh you know a 15 increase both of us both of us yeah and that's gonna happen in the next 12 months.

Speaker 3 Maybe there's a part of this where you can ride it out. That's right.

Speaker 1 That's right.

Speaker 3 But only if that's 100% absolutely going to be true.

Speaker 1 Yes. Yeah.
Don't be on a wish and a prayer of it maybe happening and then you're stuck in the cycle for the next four to five years because that's going to be exhausting.

Speaker 3 Yeah.

Speaker 1 All right. Let's go to Will in Miami.
Hi, Will. Welcome to the show.

Speaker 1 Hello. How are you? Doing great.
How can we help?

Speaker 2 Yes. So, uh, my parent, my father bought a car two years ago.

Speaker 2 This is a Mercedes.

Speaker 2 He's a retiree

Speaker 2 surgeon and he now works as a surgical assistant.

Speaker 2 Here, since all the recession

Speaker 2 and

Speaker 2 all the economic problems we've been going through the country,

Speaker 2 that area of health, he hasn't been able to get a job on for the last year. He has some stuff on and off, but he hasn't been able to have a stable job.
The payment for this car is

Speaker 2 $500 a month, $550

Speaker 2 plus insurance

Speaker 2 that rounds up to somewhere between $650 to $700 a month.

Speaker 2 And because

Speaker 2 he doesn't have a job right now,

Speaker 2 it's been really difficult to maintain old expenses.

Speaker 3 What's he doing to maintain it?

Speaker 2 I mean, right now, all our family is working. We are immigrants and everybody contributes.

Speaker 3 You're paying for your dad's car payment?

Speaker 2 No, I'm not. I'm just saying that everybody's paying their fair share, but

Speaker 2 the car

Speaker 2 right now is one of those crazy expenses.

Speaker 3 Are you all under the same roof?

Speaker 2 Yes.

Speaker 3 Okay.

Speaker 3 And so explain to Rachel and I kind of how that works. When you say everybody's paying their fair share, what does that mean?

Speaker 2 So between my sister and I,

Speaker 2 our rent is $3,000.

Speaker 2 My sister and I pay about half of that.

Speaker 3 Okay.

Speaker 2 And the rest of the expenses are covered by our parents.

Speaker 2 Although we didn't start paying until recently, until about six months ago. My sister just graduated from college.
I'm still a student.

Speaker 3 Okay. How old are you, Bill?

Speaker 2 Oh, I'm 28. I'm just a late Bloomer student.

Speaker 3 No, that's great.

Speaker 3 I was just curious. That's great.
Okay. So it's just you and your sister.

Speaker 3 The agreement is we all kind of live under one roof, but together you guys pay for half of the rent and we pay for the other half and everything else. Yes.

Speaker 3 And so you're concerned that since your dad is not working, how is he affording to pay for this Mercedes or this expensive car car that he has?

Speaker 2 I mean,

Speaker 2 to be honest, like we cannot afford anything right now.

Speaker 2 Even though we are able to cover the basics, that doesn't cover the credit card debts my parents have.

Speaker 2 That's why

Speaker 2 I believe that the car is one of the things that is

Speaker 2 taking them down.

Speaker 3 So the hard. Oh, go ahead, Rachel.

Speaker 1 Well, so, okay, a couple of things, Will.

Speaker 3 Where did you guys immigrate from?

Speaker 1 I'm just curious.

Speaker 2 Oh, we are originally from Venezuela.

Speaker 3 Okay, yeah, yeah. We've been here for eight years.

Speaker 2 We became citizens last year.

Speaker 3 Okay.

Speaker 1 And the only reason I ask is I do find, even in the Hispanic culture, there is this like gathering of family, right?

Speaker 1 There is more than just the standard American that's like, oh, it's, you know, Americans, I just feel like we're more independents and you just, you know, you run, you run on your own track.

Speaker 1 We're other countries, other cultures, there is more of this like family-oriented life.

Speaker 1 Uh, so I'm not saying one is wrong or the other, Will, but as a 28-year-old guy, and I know you want to support your parents and be there for them and all of it for your own dignity, Will, as a man, um, emotionally, I do want you to somewhat separate what your parents have chosen with their own lifestyle versus what you're choosing, right?

Speaker 1 So, they've chosen to, or he's chosen to have a a Mercedes, okay? That's his choice. You have not done that.

Speaker 1 The credit cards, I don't know if the credit cards are paying the light bill to keep the, keep the, the, you know, the house going, that's one thing.

Speaker 1 But if it's credit card debt that's coming from your parents that charge their own cards for their own lifestyle, that is, that is their money and their choices.

Speaker 1 It does get a little bit confusing when you are living under one roof. So I think, Will, emotionally, I would detach myself from your parents' choices.

Speaker 1 And until they start affecting you, you, which they might soon will, there may be a point that you say, hey, I'm going to have to make a different decision for my life. Yeah.

Speaker 1 And I may have to go get a job, pause school and do something different because I'm not going to be taken under because of their bad choices. But here's the thing, Will.
Jade and I joked earlier.

Speaker 1 We were like, it takes a lot of therapy to realize you can't change people. You cannot change people.
So I hope that helps, Will. You're an awesome son, and we wish you the best.

Speaker 1 Thanks to all the guys in the booth. Jade, thanks always for being a great co-host.
Thanks Thanks to our live studio audience here in Nashville. Thank you, America.
This is the Ramsey Show.

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 are here to answer your questions. So give us a call at AAA-825-5225.

Speaker 1 We'll be answering your questions about life, about money, relationships, career, anything or everything. We are here for you, America.
All right, up next, we have Josh in Sacramento, California.

Speaker 1 Hey, Josh, welcome to the show. Hi.

Speaker 2 Hi, thanks for having me. I'm taking for my calls.
Absolutely.

Speaker 2 Straight to the point. Straight to the point.
I live in the People's Republic of California. I'm trying to leave this state.

Speaker 2 What I have a problem with is it's kind of a financial and life career as well. So right now I'm a federal government employee.
I am seven years out from retirement or not eligible.

Speaker 2 My wife is a nurse. She makes really good money in California.
They make her anywhere for $90 an hour.

Speaker 2 My goal is to, one, sell my house, transfer to a different position and to a different state within the same agency,

Speaker 2 just because I have a very toxic work environment going on right now, and I just, I need to get out.

Speaker 2 But the problem is, is if my wife leaves the state of California, she'd go from $90 an hour to $30 an hour, which is a

Speaker 2 huge financial cut.

Speaker 2 She'd also probably lose her 401k as well as that.

Speaker 2 We did talk about doing Foster to adopt in the event that we did move. But my question to you, I guess, is: am I just being

Speaker 2 cutting my nose off to spite my face and just try to just deal with it, knowing the fact that I have seven years left to retirement, my house will be paid off in four years?

Speaker 3 You sound like you're at the end of your

Speaker 3 rope. You sound really frustrated.

Speaker 2 Oh, I am. I'm very frustrated.
Yes, I'm very frustrated.

Speaker 2 I've wanted to transfer and get out out of the state for 17 years of my career.

Speaker 3 Does your wife want to leave as well?

Speaker 1 Besides the money, I know she'll take a pay cut, but just in general?

Speaker 2 Her family's here, but she realizes how frustrated I am.

Speaker 2 And like I said, my boss is just

Speaker 3 totally horrible right now. And it's been going on for a long time.

Speaker 2 Oh, yeah. Yes, it has.
So my question to you is...

Speaker 2 My being emotionally stupid by wanting to leave just so I can, quote-unquote, have a more happy life to trade one stress for another for financial stress well

Speaker 3 is it California like okay so if you you work for the state

Speaker 2 it's it's it's California the state sucks the high taxes just getting out of everything all right

Speaker 3 okay you are yeah you you're at your wits end you're done you're done um okay so if you were to leave what would you do and where would you go

Speaker 2 uh I'd basically stay with the same struggle agency. I would go from what I'm doing now to to basically to just a different

Speaker 2 function or job function, but just to the same pay.

Speaker 3 Is there a difference?

Speaker 2 I'm glad. It would be a lower cost of living, which would be $13,000 a year.
Where? But I'd imagine that... So it'd be from California possibly to Georgia.

Speaker 3 But I'm wondering if basically

Speaker 2 the tax rate out of Calif. Well, that's where the position is at for my agency.

Speaker 3 Have you ever been to Georgia? Okay. Have you ever been?

Speaker 2 Yes, I have.

Speaker 1 Okay. What's your wife think about Georgia?

Speaker 2 Sections of it she hates.

Speaker 3 Okay.

Speaker 1 Because here's the thing, Josh. I mean, I can hear you're frustrated.

Speaker 3 And I, I mean, I could only imagine.

Speaker 1 I mean, I understand it is from like just the state perspective that you're frustrated with. And then on top of that, you have a terrible job.

Speaker 1 You go and work somewhere for 40, 50 hours a week in a miserable place. So yeah, you're not in a good, this isn't like a good headspace for Josh.
So my question is,

Speaker 1 you're not the only one in this equation, right? So your wife is going to have as much of an input

Speaker 1 in this decision too, because

Speaker 1 I think that there has to be this, you know, I don't know, but if she is not on board, resentment later on in life, you know, moving away from family,

Speaker 1 going to a place she hates, she's going to end up being you in four years, possibly. I don't know, but that's a warning sign.

Speaker 1 It's just like, you guys need to be so tight-knit on this decision because it's a big deal to move across the country.

Speaker 1 So you guys need to lock arms and like be like, we are in this together.

Speaker 1 The good, the bad, the ugly, we are in this together. Cause I don't want your marriage to be destroyed in the process either.
Right. And I want to be able to give her a voice too.

Speaker 1 And her frustrations may not be as deep as yours.

Speaker 1 And I don't want her.

Speaker 1 And I, and honestly, Josh, the motivation for her, I'm like, I, there's a part of me that I'm like, I would hate for her to do it just to make you happy because Josh is frustrated.

Speaker 1 So we got to go do what Josh wants to do. Right.
So like there needs to be a level of agreement upon you guys.

Speaker 1 And I thought plan B too, which I know you you hate California, but is there a different position you could take where you guys live, a different job, a different opportunity, at least to get out of the toxicness of that job and then just have the frustrations with the taxes in California?

Speaker 3 I don't know.

Speaker 1 But if you and your wife agree to move to Georgia, then make the move. You're not, no, leaving a job seven years away from retirement is not stupid because the work is, you're in a terrible situation.

Speaker 1 So no, that is not stupid to leave that.

Speaker 3 No, listen, I

Speaker 3 am of the mind that if one spouse is completely unhappy, then the neither, nobody's happy. That's true.
So, I do think that probably a move is good.

Speaker 3 But if she has come out and said, I don't really like Georgia, then Georgia's got to be off the table.

Speaker 3 You've got to pick a place where both of you are like, Yeah, I feel, yeah, I'm up for that adventure. And I mean, there's 50, I don't want to say 50 states.
What is it now? 49.

Speaker 3 No, it's 50.

Speaker 3 But don't the other territories count? Okay. Oh, So there's 50 states and then some territories, depending on what history book you look in.
Okay.

Speaker 3 And so there's a lot of options here is what I'm saying. Going back to the conversation about the 401k quickly, what made you say that she'd lose her 401k?

Speaker 2 So, so, well, I wouldn't say she would lose her 401k. What she does is she would stop contributing to a 401k.
So she'd be able to take it out.

Speaker 3 Yeah, you just transfer it.

Speaker 3 You just transfer it. Right.
Okay. I just want to be clear about that.

Speaker 2 I guess the issue is me is, you know, I've only got seven years left. My mortgage will be done in four years on my house.

Speaker 2 My wife is like going from $90 an hour to basically $30 if she decides to work. If not, then it's like it's a huge

Speaker 3 let me ask you. Let me ask you this.
Is there any world where you're like, I is there any world where you're willing to ride this out longer?

Speaker 3 Because you're the person who brought up, in just seven years, I'll retire, and in just four years, I'll have my car paid off.

Speaker 3 So or yeah, I'm sorry, my house paid off.

Speaker 3 So do you really care about those things?

Speaker 3 Or do you know what I'm saying? Like, are those things that you're weighing in, or are you beyond that?

Speaker 2 So, here's the problem: emotionally and mentally, I'm just checked out.

Speaker 2 The problem is, I don't want to live life on the emotional aspect. I know logically, financially, it makes more sense to stay.

Speaker 2 However, I don't know if I can emotionally and mentally handle it for a while.

Speaker 1 Yeah, mentally and emotionally is going to be

Speaker 1 because you could be debt-free and still be miserable in your job.

Speaker 3 And you're not saying this is after six months. You've said for years.

Speaker 3 For years, years, you've been upset.

Speaker 2 Yeah, I thought about most of my career, probably about 10, the last 10 years of my career, it's gotten a little bit more.

Speaker 3 So it's safe to say that you have sacrificed a certain level. Why have you stayed in it, Josh? I'm curious.
What was that?

Speaker 1 Why have you stayed in it for 10 years?

Speaker 2 The pension and early retirement.

Speaker 1 Okay, so this is a good lesson for America that money does not equate to happiness.

Speaker 1 There is a level of your life that as adults, we have to decide to bring a level of peace and just into to work a crappy, I would say a different word, but we're on a family-friendly show, crappy, crappy situation just to make a paycheck.

Speaker 1 You guys, it's not worth it.

Speaker 1 Like, life is too short. Life is too short, Josh.
So, you and your wife, I would sit down, you guys, yeah, pick a place on the map and say, We're gonna transfer.

Speaker 1 And we may even be in different careers, but we're gonna find the level of peace and enjoyment.

Speaker 1 And we may make less, but people that make less and live within their means and work somewhere, they're happy. So, yeah, you gotta, yeah, Josh, y'all gotta make some changes for sure.

Speaker 1 And you should have made them eight years ago, if I'm being honest, not to shame you, but we need to make some decisions here, Josh. We're rooting for you.
Come to Nashville. This is the Ramsey Show.

Speaker 1 Welcome back to The Ramsey Show. So one of the, I would say, pillars of winning financially that is so key is doing a budget, being intentional.

Speaker 1 with where your money goes, where your income is going, because your income is going to help you live the life that you want. And that includes being debt-free.

Speaker 1 That includes having savings and investing and spending and giving and all the things. It comes from your income.
So being intentional with that is really important.

Speaker 1 So our app, Every Dollar, helps you do that. And it's fantastic.
And we have people,

Speaker 1 gosh, I mean, millions that are subscribed and that are building budgets every single month. And we love sometimes to walk through those.
And Jade, you do this a lot, even on your social.

Speaker 3 Yeah, that's Instagram. Yeah, I put out a call a while back and I said, hey, if you want me to review your budget, you know, fill out this Google Doc.

Speaker 3 And so many of you got back to me and it's really been fun to go through budgets.

Speaker 3 And so Rachel, today, one of those budgets that was submitted, we actually have Natalie on the line from Chattanooga, Tennessee. So Natalie, you told me, are you there?

Speaker 3 Yes, I'm here. So you told me it's you and your husband, right? You're a mortgage analyst.

Speaker 2 No, I'm not. I'm actually a stay-at-home mom.

Speaker 3 Stay at home mom. Is anybody a mortgage analyst?

Speaker 2 No. My husband is a chemist.

Speaker 3 Oh, wow. Why did I have that on here? All right.
Well, stay-at-home mom, a chemist. Is it right that you make $80,000?

Speaker 2 Just about that. Yeah.
So I want to say his income is about $73,000, and then I make around an extra $6,000 a year through like a fixed side hustle that I'm doing.

Speaker 2 And then I also have another side hustle on top of that.

Speaker 3 Cool. Cool.
Good for you. And so after taxes, after some little bit of investing you're doing, and after insurance, you guys are bringing home around $4,884 a month.
That's what you put on your form.

Speaker 3 Yeah.

Speaker 2 Yeah, that's correct. Yeah, just around $4,900.
Yeah, that's pretty much what I've calculated.

Speaker 3 Okay, cool. So with everything that you said you have in your budget, which as a matter of fact, we can pull it up on the screen here.

Speaker 3 So let's just kind of like go through this budget so everybody can see up at the top, that black number, $342. That is your margin.

Speaker 3 That's what's left over after we've put in everything that you said you spend money on every single month. So just going through here real quick, we see the mortgage here, $1,556,

Speaker 3 which is a little bit over the 25% that we talk about.

Speaker 3 Water, internet, all that looks good. Sewer looks good.
Groceries, $800.

Speaker 3 Is it just you and your husband, or you have kids as well?

Speaker 2 So we've got four kids.

Speaker 3 Yeah. Wow.

Speaker 2 The grocery budget is

Speaker 3 great.

Speaker 3 Yeah.

Speaker 3 And you can do it for $800.

Speaker 1 That's fantastic.

Speaker 3 Amazing.

Speaker 2 Yeah, I do a lot of cooking from scratch and I make bread. Like all of that.

Speaker 3 Oh my girl.

Speaker 2 I've really slimmed it down.

Speaker 3 It's great. I find that to be actually very impressive.
Okay, so transportation, $250 on gas, phone, $140,000. Like, this is a bare bones budget.
I see auto insurance.

Speaker 3 It looks like you've got term life insurance. That's really good.
But then we see that there are three debts here.

Speaker 3 A student loan, which if I click into it the balance is eleven thousand dollars

Speaker 2 and then you've got this car payment yeah we we've shaved the the first student loan down to eighty seven hundred nice

Speaker 2 we're checking away at that yeah so we're putting trying to put like a minimum of a thousand dollars a month to um that first loan.

Speaker 3 Okay, so that's that's a great segue. So we see that your margin is 342.
How are you coming up with this full thousand? Where is that money coming from?

Speaker 2 Well, I think when I originally submitted those numbers, we had still had some cell phones that we were paying off. So we've taken care of those.

Speaker 3 Okay, great.

Speaker 2 We've got a little extra margin there. And then just through my other side hustle, we try and

Speaker 2 meet that $1,000 minimum is kind of our goal each month. So we're trying to hit that.

Speaker 3 at least and then whatever we can make on top of it we've been just throwing out the debt as well okay so it sounds like so there's kind of like four areas that we really look for where people can cut.

Speaker 3 Like, there's more than four, but there's like four key areas that we kind of zone in on when we're looking at someone's budget.

Speaker 3 And it feels like you're doing two of the four, which is you're side hustling, like you're bringing in extra money. We're usually looking for people to bring in like an extra $800 to $1,000.

Speaker 3 You're doing that, it sounds like.

Speaker 3 We're always looking for areas where we can cut costs. And your budget is super bare bones.

Speaker 3 You know, with kids and having an $800 grocery budget, I feel like that's a green check check as well but then there's two other areas that I am wondering about you did at least when you submitted this you told me that you guys are investing $200 a month

Speaker 2 so yeah actually we he's we stopped investing to news for O and K I finally convinced him yeah nice so yeah so what that says that's adding to the to the thousand two probably correct good wow so we i think it was actually closer to like 250 that was coming out

Speaker 2 every every month so we've got that extra money as well. So we're not currently investing.

Speaker 3 And then the, so that's three green checks. And then the fourth one is your withholding.
Like, do you guys get a tax return every year?

Speaker 2 We do. Yeah.
And it's usually a pretty good amount. I should probably

Speaker 2 double check that.

Speaker 2 Yeah, the refund is usually pretty, pretty good amount.

Speaker 3 A basic way you can look at that is to just see, okay, what's the refund? Let's say it's, I don't know,

Speaker 3 $8,000 or $6,000, whatever it is, divide it by $12,000. And then you're like, hey, that's money that I could have back into my budget every month.

Speaker 3 So if I were to give you homework coming off this call, it would be that. So that going into, you know, the new year for sure, that you guys are having more money in your budget.

Speaker 3 But I love that you made the progress on the student loan because the way I calculated it here, I took a look at your budget.

Speaker 3 If you could get the amount that you're paying extra on this debt up to 2,000, like if you're paying an extra 2,000, you guys are out of your debt free in less than 24 months, which is that just sounds so amazing.

Speaker 2 We are hustling over here.

Speaker 3 I feel it for you.

Speaker 1 I mean, seriously, yeah. I mean, it's, it's, it's powerful what happens to when you actually start living on a plan.
How long have you guys been doing living on a budget and doing every dollar?

Speaker 2 Yeah. Well, so we've been on a budget for forever, but I would say we've been really intentional about paying off the debt since March

Speaker 2 because we've just had kids like every year in the last like six years. So that's just really been the focus.

Speaker 2 And now that we're like, you know, taking a break from like having babies and being pregnant and all that, we're like, all right, let's tackle this debt, you know?

Speaker 3 So good.

Speaker 1 Because I was going to say, when you start living intentionally, like with the budget every single month, you may find, oh, yeah, that was money going out there that I forgot about, or I forgot about that Apple subscription or whatever, you know.

Speaker 1 And it could be $20, $30, $40 here or there. But for you guys, I mean, that makes a significant difference, you know?

Speaker 3 For sure.

Speaker 2 Yeah. And I think that was the issue.
Like, once we in March decided, like, hey, we're going to do this.

Speaker 2 It was kind of me sitting down with him and saying, like, I'm really sick and tired of like trying to like pull from savings every month to like meet, you know. Yeah, basically.

Speaker 2 So there's always that deficit of like, hey, we're overspending, so we need to pull from savings, but then we're not really going anywhere, if that makes sense.

Speaker 1 So, Jade, on the first, but on the first debt, the first student loan, how much is the payment a month?

Speaker 3 The first student loan, the payment is $184 a month.

Speaker 1 Okay, because that's another great thing too, is that's another, you know, almost $200 freed up once that's paid off to throw at the next debt too, right?

Speaker 1 So you can count that quote unquote as found income.

Speaker 2 Yeah, our goal is to have this first debt completely paid off by either February or March because he typically gets,

Speaker 2 he gets an annual raise, but also a bonus check that comes with that. So whatever we get from that is literally just going to pay off that first one.

Speaker 2 whatever's left over, obviously up until that point. And then we'll move on to the next one.

Speaker 3 Because you have two more. So, if I had, if I had a piece of homework for you, it would be to increase that margin with more side hustles.

Speaker 3 Get like, if you're doing a thousand now, try to increase it by a thousand. And if you do that, then you're able to pay off that student loan and far, far, like far exceed your timeline there.

Speaker 3 And then, if you do that, it frees up the money, like Rachel said, and you could pay off the $18,000 Chrysler in six months, just over six months, seven months, which is exciting.

Speaker 3 But I did want to ask you because last time I saw that you submitted this, you had 4,000 in savings and you had 2,000 in single stocks.

Speaker 3 And so that's also money that has the ability to be liquidated to put together. Well, I'm not sure where that came from.

Speaker 2 We just have the emergency fund. So we've just got the $1,000.

Speaker 2 But no, I don't know if maybe I put an error in.

Speaker 3 Oh, okay. Okay.
Well, then.

Speaker 2 I've really got no extra cash.

Speaker 3 Yeah.

Speaker 1 I guess that's probably the mortgage analyst, you know.

Speaker 3 So

Speaker 3 who knows where he came from? But this is great.

Speaker 1 good job Natalie I love that and Jade you're so great though of walking through it because it's the truth when you start living on purpose like that you start to see like the nooks and crannies of your money situation and let it work for you that's the power of using your income so great thanks for the call Natalie this is the Ramsey Show

Speaker 1 Welcome back to the Ramsey show. We just went over a budget live here last segment.

Speaker 1 And Jade, you're actually going to be doing a webinar walking people through the Every Dollar budget, how to budget, what budgeting looks like, how you actually put this into practice day in and day out.

Speaker 3 Yeah, we're just doing a live training. It's going to be Thursday, September 12th.
So tomorrow, and

Speaker 3 you can get the clarity that you finally need with your money.

Speaker 3 And we're going through, just like we did with Natalie before the break, we're going through those four areas where you can find money in your budget because most of us, Rachel, could do with an extra thousand or two thousand dollars in our budget.

Speaker 3 And it's real money that's waiting for you to find it, right? So we're going to walk through that budget with you.

Speaker 3 And here's the thing: over a hundred thousand people have registered for these free trainings in the past and they have come away with it with the tools they need to manage their money.

Speaker 3 And so really now it's your turn to really get involved. And

Speaker 1 yeah, don't wait. And we answer your questions when we do these webinars where they are live and

Speaker 1 Q ⁇ A. People sometimes pull up a question or you can comment.
And if anything, honestly, seeing other people, I mean, it's up to 7,000 people that can be in it live. Yeah.

Speaker 1 I mean, you're seeing everyone comment on the side. That's what I love the chat going because it's people from all over.

Speaker 1 and all have a similar goal, usually have a similar emotion around it with a lot of, you know, fear and shame.

Speaker 1 A lot of people that live paycheck to paycheck their entire life and they're trying to make a change. So it's really motivating to see other people on the journey.

Speaker 1 So make sure to check it out and they can sign up.

Speaker 3 Yeah, you can sign up. You can go to everydollar.com slash webinar to sign up and or you can click the link in the description if you're listening on YouTube or if you're listening on podcast.

Speaker 3 So that's tomorrow, September 12th.

Speaker 1 All right. up next we have Blake in Bowling Green, Kentucky.
Hey, Blake, welcome to the show.

Speaker 2 Hey, Jade. Hey, Rachel.
How y'all doing?

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

Speaker 2 So to expedite this story,

Speaker 2 I bought a farm that came with a house at $17.

Speaker 2 I paid $60,000 for it and put $20,000 down.

Speaker 2 I cash flowed all the renovations and

Speaker 2 now my wife and three kids, we all all live here, and we've outgrown this house, and we're going to sell it. I would say the house and farm is conservatively worth $350,000.

Speaker 3 Wow. And that's great.

Speaker 2 We owe $35,000 on the farm.

Speaker 2 But the question that I have is, my wife has $80,000 in student loans.

Speaker 2 Do we take some of this money that we're going to use to build another house and buy another farm? Do we take that equity and put it all towards the student loans?

Speaker 1 Yes.

Speaker 3 Yes. Yep.

Speaker 1 I would.

Speaker 1 Because I wouldn't encourage you guys to go back into home ownership until you're at a point where you have debt paid off in a fully funded emergency fund, and the equity you're about to get is going to be able to do all of that, plus be able to put some money down

Speaker 1 on a new build or a new construction loan. Is that the only like is that the only debt you guys have is this 80 grand

Speaker 2 um

Speaker 2 we made a bonehead mistake and took out a loan for a camper um

Speaker 2 in in march which we've uh dove head first into you all's um plan and trying to pay this debt off we paid 15 000 in the past three months Good for you guys.

Speaker 3 That's great.

Speaker 2 So we owe $18,000 on the camper.

Speaker 3 Okay.

Speaker 2 And

Speaker 2 yes,

Speaker 2 that's the only debt we have.

Speaker 3 It's just really the camper. Okay.
Yeah. I would pay off.

Speaker 1 I would pay both off then. How much do you guys make a year? Yeah.

Speaker 3 About $200,000.

Speaker 1 $200,000. Okay.
That's great.

Speaker 1 Yeah. I mean, like,

Speaker 1 always kind of my friendly warning, if we were all hanging out, I'd probably say this to you, is whenever you get a lump sum of money, and we find this with people that may, you know, get money from insurance or they may have gotten

Speaker 1 an inheritance or they have a ton of equity that they're liquidating.

Speaker 1 Whenever you get a large sum of money and then you go and you just wipe out the debt, because you're going to be able to do that in one day,

Speaker 1 it's a really amazing gift to be able to do that.

Speaker 1 But also you're skipping a little bit of the sacrifice and the process to get out of that debt, which usually makes people never want to go back in because they've had to get extra jobs and sacrifice lifestyle and they feel this pain associated with debt and getting out.

Speaker 1 And you guys aren't going to have that necessarily. I mean, you're going to kind of go through and wipe it out, which again is such a gift.
And you guys have been so smart on all of it.

Speaker 1 So I think, though, it takes an extra step of you and your wife sitting down, shaking hands, pinky promising. I mean, all the things that we're never going back into this

Speaker 1 because, you know, you're going to have to. And I heard that from you a couple of times: oh gosh, we made this mistake and that mistake.
So that's my only level of

Speaker 1 advice when it comes to you guys going forward, that the behavior really has has been changed. And I believe it has for you guys, the way the way you're talking.

Speaker 1 But I'm excited for y'all. I mean, that's great.
I mean, you'll come out, you know, after,

Speaker 1 gosh, you'll pay taxes and all of that. And so, you, yeah, you may have enough.
How much of a house, new construction loan are you guys going to take out? Do you know?

Speaker 2 We don't really want to take out any more than about $450,000.

Speaker 3 Okay.

Speaker 2 So

Speaker 2 I'm thinking with all this debt paid off from the home equity, hopefully we can put down about $200,000.

Speaker 1 Yeah, possibly. It might be a little thin because you'll be paying some taxes.

Speaker 1 So yeah, I would run some of those numbers, but it could be close. And then I would want you guys to have some cash too aside just for an emergency fund above what you're going to put down.

Speaker 2 We do have a $25,000 three to six months emergency fund put up.

Speaker 3 Oh, Blake. All All right.
So you got 25 grand.

Speaker 3 Yeah. Okay.
That buys you, that buys you a little bit more. Yeah, for sure.

Speaker 1 And if you guys wanted to just have fun, pay off the camper today with that money before put the house for sale and everything.

Speaker 3 I mean, you could, yeah, you could, you could do some of this now.

Speaker 2 The other problem,

Speaker 2 the problem that me and my wife are going back and forth on is her student loans are able to be forgiven because as a, it's like a public service forgiveness.

Speaker 1 if she pays monthly for 10 years then the entirety of the loan is forgiven is that something we should look into no i wouldn't um for two reasons usually to get that forgiveness you have to be in some type of line of work for that long to be able to to qualify for it uh which kind of just puts you in this position of being forced into something you may not want to be in and then honestly blake if i'm being frank i mean in 10 years who knows what's going to be out there where congress is going to be who's going to be president i I mean, who knows between now and then?

Speaker 1 And so the idea that you guys can do this on your own and have power over your situation without anyone else's influence or dependence on anyone else, there's power in that.

Speaker 1 And there's going to be more hope in you guys changing your lives and doing this than waiting for a program. But I hear, you know, we get that question sometimes and I get the benefit.

Speaker 1 And for some people, they've been in something and it's a year out.

Speaker 3 And I'm like, all right, well, it's a year out. Yeah.

Speaker 1 But I would not force myself into a box to be able to qualify for it. And again, if it's in, you know, eight to 10 years, who knows what's going to be happening in DC?

Speaker 3 I don't trust it.

Speaker 2 Right.

Speaker 3 Personally. I don't trust it either.
Yeah.

Speaker 1 So, um, I hope that helps, Blake. Well done, you guys.
You, I mean, I can't believe you, you guys bought that property again. We'll say this for $60,000.
When was this?

Speaker 2 I bought it when I was a senior high school in 2016.

Speaker 3 Oh, wow. Totally.

Speaker 3 Okay. And you put $20,000 down on the $60,000 property?

Speaker 3 Yes. Wow.
Way to go.

Speaker 1 And now it is $350,000. That's incredible, Blake.
Well done. You guys, I mean, you guys have made some smart decisions.

Speaker 1 And make sure, again, with the sale of that, make sure you, again,

Speaker 1 all the check marks are, you know, all the boxes are checked when it comes to taxes, capital gains, anything like that. Make sure you do your due diligence of making sure that's all covered.

Speaker 1 And if you need a tax pro, Blake, or even a real estate agent, you know, you can go to ramseysolutions.com and check out our trusted pros there

Speaker 1 to be able to help you through some of it. If you, if you need that additional help, make sure to check them out.

Speaker 1 But yeah, that's, I mean, that's a

Speaker 1 story everyone wants. Oh my gosh.
So in 10 years, it appreciated like crazy.

Speaker 3 Yeah, that's really great. I'm happy for them.
That camper is my only question mark.

Speaker 1 Do you want to sell it? I want to get rid of it.

Speaker 3 You know, you know what? Everybody's not a camper person and they're camper people. So I'm not going to.

Speaker 1 You're not. Jade, would you camp or camper?

Speaker 3 I would glamp. Uh-huh.
I'm with you. I'd glamp.

Speaker 1 My husband went away this weekend with some friends. Yeah.
And they basically stayed in a house that didn't have air conditioning or walls. It was basically camping.

Speaker 1 And he like had the, he like brought an air mattress. I was like, you all are crazy.
So yeah. But Blake, I'm sure you guys, I'm sure the camper was nicer than that.

Speaker 3 So yeah,

Speaker 1 you guys enjoyed.

Speaker 1 So one of the expenses that

Speaker 1 is hard to face as adults, but it's true, there's a couple of them. But one of them is insurance.

Speaker 1 And in recent years or recent months, I mean, I guess close to 18 months now, they just seem to keep going up, up, up. Home, auto, I mean, it's just, it continues to rise.

Speaker 1 And according to Quadrant Information Services, home insurance rates are about 23%

Speaker 1 higher than they were last year. Car insurance is up.
39% compared to December of 2019. Yeah, it's a lot.

Speaker 3 And the factors that are playing into it, it's interesting. So even if you look at like car insurance, I mean, you do have to think about where you live in the United States.
Is climate an issue?

Speaker 3 Or do you live in a place where there's tornadoes and so there's hail storms and it damages your vehicle? You know, it could be something like,

Speaker 3 I mean, wow, I just had to completely blank my brain out there.

Speaker 1 No, but I mean, but yeah, you think about whether it's, yeah, tornadoes, rain, hurricane, anything that can be damaged.

Speaker 3 Yeah, climate's a thing. And then you think about models, right? We're doing a lot more electric vehicles.
There's more technology inside of them. And so there's that part of it.

Speaker 3 And so by and large, we're seeing an increased amount of car accidents, which is interesting. Okay.
So there's that playing into it.

Speaker 3 Some people would still say supply chain, although part of me is like, I feel like that's

Speaker 1 pretty much caught up. I feel like, do you remember though in that, in that height of COVID, you would drive by a car lot and there would be like no cars.
It was so eerie. And now they're pretty full.

Speaker 1 I would say the the car lots are, there might be some cars still on back order, but I think for the most part,

Speaker 3 yeah, you can get it if you need it. And so, you know, a lot of people are probably like, well, what can we do about it? And this right here, Rachel, is where what we teach really does play in.

Speaker 3 Because if you do buy a car in cash, you run the, if you buy it in cash, it's used, then you are qualifying yourself for a lower rate. And so that right there is a good

Speaker 1 motivation.

Speaker 3 Obviously, the car model that you choose still plays a part in it. How old you are still plays a part in it.
Like, so all of that plays a part.

Speaker 3 So there are some ways to get around this, but even when you do all those things correctly, there is still the idea. Like it is getting higher.

Speaker 3 And that just, I mean, the truth is that that just sucks.

Speaker 1 Yeah. And it's one of those expenses too that you're like, I can't do anything about it.

Speaker 3 Right.

Speaker 1 Like when your property tax goes up, I mean, whatever it is, you're just like, oh my gosh, I just feel, you feel stuck. You feel trapped because you have to have it.

Speaker 3 Yeah.

Speaker 1 But yet it's one of those things that just continues to rise.

Speaker 3 I mean, you could raise your deductible. That's something that you could do.

Speaker 3 You know, there's another thing about if you buy your car in cash and and you have enough money saved up that if something were to happen to that car, you could replace it in cash.

Speaker 3 Then you could drop off like comprehensive insurance because you're like, hey, if something happens, national, like natural disaster, something that's crazy, I have the cash that I could actually repair it if I need to.

Speaker 3 Yeah. So there's things that you could do to save on it.

Speaker 3 But there's just a big part of this that it is, you know. It's frustrating.

Speaker 1 Yep, for sure. Yeah.
So there's other things that you can do, whether it's look for discounts. You can even bundle policies and then you'll get a better deal that way.

Speaker 1 But I would, again, shop rates because sometimes the bundles, it really is helpful. And sometimes if you're shopping from just like one carrier and you're not comparing prices,

Speaker 1 you may not be getting the best price. So make sure to do your research there.

Speaker 3 And I mean, the same thing's happening also with home insurance. We're seeing

Speaker 3 certain states are not willing to cover things that they once did. And again, some of this is linked to climate.
Some of it's linked to natural disasters, that sort of thing.

Speaker 3 And I mean, we had a call the other day where a lady called in. She said, I'm being dropped from my insurance because my state has decided that they don't cover you if you have a flat roof.

Speaker 3 And it's like, okay, great, you know, and so all of this, at the very least, it really ties in what we teach and trying to put yourself in a position where you can have as much peace as possible.

Speaker 3 So if these things do crop up, it's not a disaster. It's like, okay, this is very inconvenient, but because I've set myself up, I can deal with it.

Speaker 3 And so that's how this works. If you want to work with an independent insurance agent, you could contact a Ramsey Trusted Insurance Pro.

Speaker 3 The good thing about our Ramsey Trusted Insurance Pros is they are going to advise you and help you do things the way we teach. And so that's what you're looking for.

Speaker 3 They're not tied to any one carrier and they'll pull quotes from all companies to help you pick the best deal.

Speaker 3 So you can go to ramseysolutions.com slash bundle to get connected and to start saving money on your insurance.

Speaker 1 Because it is a part of the budget.

Speaker 3 It's just part of it. It's part of the life.
Part of the life adults. Yes.

Speaker 1 All right.

Speaker 2 Up next, we have, is it shay in chicago hey welcome to the show hi thank you so much for having me absolutely i'm trying to make this quick i'm thinking of doing a voluntary repossession of my car and i'm just wondering if that's a good idea well i'm going to call it well let me rephrase that i call it a voluntary repossession but i'm really trying to get rid of some debt i'm tired of paying the car note i thought that was the right idea yes but can we

Speaker 2 can we sell it that's my goal i'm hoping to try to sell it to the dealership um and i'm assuming of course can Can we sell it private sale? Ah, I'll be sure.

Speaker 2 Well, I currently pay on it, so I'm not sure if

Speaker 3 I want to be, I guess. Okay.
So here's what I would do. I would not give it back to the dealer.
I would not do a voluntary repossession, even though that's not what you meant.

Speaker 3 I would never do that because that's going to destroy your credit and just be heartache. And I wouldn't sell it back to the dealer because they're not going to give you the best price for the vehicle.

Speaker 3 If I were you, what kind of vehicle is it?

Speaker 2 It is a Buick Encore GX.

Speaker 3 Okay, what year? 2021. Okay, I'd get on Kelly Blue Book today after you get off this call and I'd see how much can I get for this private sale? What do you owe on it?

Speaker 2 $22,000.

Speaker 3 Okay. And just your best guess, if you're like, hey, I have done a little bit of research.
What do you think you could get for it?

Speaker 2 I'm hoping to get at least $20,000.

Speaker 3 Okay. So if you thought that giving it back to the dealership would give you $20,000, then I bet blue booking it, you might be able to break even on this just based off of what you've said.

Speaker 1 Yeah, Shay, what's causing you to get rid of it? Is it just because the payment is so high?

Speaker 2 Yes. And honestly, I'm just trying to get out of debt.
I want to be able to pay off. My mom and I just bought a family dupe, so I want to put my money into paying this off, not a car note.

Speaker 1 Not a car. Yeah.
Do you have any other debt?

Speaker 2 Yes, I do have credit card debt.

Speaker 3 How much?

Speaker 2 $9,000.

Speaker 3 Okay. Anything else? No.

Speaker 1 How much do you make a year?

Speaker 2 I make $73,000 a year.

Speaker 3 That's good for you.

Speaker 1 That's so great. Okay, what's caused you to just up and say,

Speaker 1 I want to get out of debt.

Speaker 3 I don't want to do this anymore.

Speaker 2 I'm just tired of living the life that I've been living. I don't feel like I'm living like a 25-year-old.
You know, I'm making okay money and I'm not seeing the benefits from it.

Speaker 3 Yeah. For sure.
Well done.

Speaker 1 I mean, that's a good why. We usually find shade people that start saying, gosh, something's got to change.

Speaker 1 A lot of it comes like that, to say, I work hard and I don't feel like I have anything to show for it.

Speaker 3 It's just this feeling of, I mean, there's nothing.

Speaker 1 And I'm, and yeah, and you're 25 making 73,000. That's a lot.

Speaker 3 That's great. Where'd the credit card debt come from? Because you've got a good income.

Speaker 2 Honestly, poor decisions. And then also before I got this car, I had a car that was giving me trouble.
So I was putting some money into it to put it on my credit card, trying to get it fixed.

Speaker 2 And it honestly, it still ended up going out on me.

Speaker 3 So I love this.

Speaker 3 I love when people stop and realize that they have a choice. Like you don't have to keep going the way you've been going.
You have a, you can opt out of that lifestyle and you can go, you know what?

Speaker 3 Yeah, I want to do better than this. I want to to feel like I'm making an impact.
I want to feel like my income matters. I don't want to keep living like this.
So bravo. I think.
So great, Shay.

Speaker 1 Have you been, have you plugged into the Ramsey baby steps at all?

Speaker 2 No, I have not.

Speaker 1 Okay. So

Speaker 1 I would encourage you to,

Speaker 1 yeah, dive into some of the stuff. We'll have Christian pick up and we'll we'll give you Financial Peace University, which is our nine-week.

Speaker 1 course that we always say every high schooler should have taken. But at 25, if you can get this, Shay, because there's a process because your emotions there.

Speaker 1 The decision in Shay has been made that I don't want to live like this anymore.

Speaker 1 So now the best way to be effective of this and to actually see a lot of impact is to have a step-by-step process of what you do.

Speaker 1 So, Shay, we have what's called the Ramsey baby steps, which the first thing you do is going to get a $1,000 emergency fund.

Speaker 1 The second thing you're going to do is pay off all of your debts, smallest to largest. So it would actually be you,

Speaker 1 you getting rid of this card, which is great, and then knocking out the credit card.

Speaker 1 So if you have multiple credit cards, write each of those out separately, smallest amount to largest amount, regardless of the interest rates, pay minimum payments on everything and pay off that smallest credit card first and work your way up.

Speaker 1 I would be getting a side hustle. I mean, I would do anything I could to knock this out.
And again, you make some great money.

Speaker 1 So even limiting your lifestyle, living on a budget, doing a couple of those things is going to help you.

Speaker 1 And then your next goal, Shay, will be to get a fully funded emergency fund of three to six months of expenses saved in the bank.

Speaker 2 Okay.

Speaker 1 And what, I mean, could you, how would that feel right now? If you had no debt and you had five months of expenses saved in the bank, how would that feel?

Speaker 2 Amazing.

Speaker 1 Amazing. So good.
Okay. Stay on the line.
Christian will pick up and we'll give you some stuff to help you on your journey. I'm so glad that you, that you called in.
I know. So great.
Okay.

Speaker 1 Those of you that are watching on YouTube or listening on podcasts, make sure to download the Ramsey Network app. We'll have the third hour there.

Speaker 1 If you're listening on radio, keep listening and we will be here in the next hour. Thanks to all the guys in the booth.
Thank you, Jade, for a great hour. And thank you, America.

Speaker 1 This is the Ramsey Show.