You Can Stay Broke Or Start Changing

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Normal is broke, and common sense is weird.

So, we're here to help you transform your life from the Ramsey Network in the Fairwinds Credit Union Studio.

This is the Ramsey Show.

All right, we're talking about your life and money.

Nothing's changed.

The number is 888-825-5225.

That'll get you on the line.

I'm here with Dr.

John Deloney.

I'm Jade Warshaw.

Let's get into it, John.

Let's get involved.

We got Dana in Phoenix, Arizona.

What's up, Dana?

Hi, thank you for taking my call.

I really appreciate it.

No problem.

My question is whether or not my husband and I should accept a gift of $38,000 from our in-laws when there is a major history of dysfunction around money in his family.

What's the gift for?

Is it just out of the blue or is it for something specific?

They pretty regularly are trying to give us money and pay for things, but this gift apparently is for tax purposes.

They recently met with their financial planner, tax accountant, who told them that because of their gains that they made this year in the stock market, that it would be tax advantageous for them to gift each of us $19,000.

The back story really is that his parents have used money as a tool for control and manipulation in the past,

so much so that

when we were planning our wedding 17 years ago, we ended up eloping because of their behavior around money.

Wow.

And the money issues as well as other things led to us not having a relationship with them for 10 years.

Is it just your husband or are there other children?

He has a brother.

Things are kind of different with

his brother's relationship with his parents.

They just have very different personalities and how they handle things.

So the money's not been a problem for the brother that you know of or is it kind of a problem for him too?

Well, they've sort of used the same tactics with his brother except that his brother and his wife gladly accept money from them anytime it's offered.

Since they've reestablished their relationship, my husband and his parents, six years ago,

they actually actually ended up moving to our small town two years ago.

And since then, it's just they're constantly trying to give us money.

We're business owners.

Give us an example of the manipulation.

Tell us what that looks like.

Tell us what happened either with the wedding or, and tell us, tell us.

I want a recent one.

Yeah.

You want a recent one.

So anytime, so like I said, we're business owners.

Anytime something happens, so if a truck breaks down or, you know, just regular business things happen, it's let us pay for it.

We'll pay for it.

We'll buy you another truck.

And when we say no,

they tell my husband that he's being difficult.

They don't understand why they won't let him let them just help.

And what does he say?

There's crying, there's a lot of emotional manipulation.

Jay's question is important.

What is his next statement?

If his next statement is, I love y'all too much, and I'm so glad we have our relationship back, I can't let money come between us.

That's one thing.

If he, when they start crying and he says, fine, just fine,

then that's another thing.

So what's his response?

His response to them is that we're just not comfortable taking the money or the help.

I don't know how in-depth he's got with them about because of money issues in the past, because generally when he's tried to bring up things from the past, he's usually met with, I don't know what you're talking about, that never happened.

And and what were those tell like i need from you dana like the raw and the real do you know what i'm saying like tell me when we did it he slapped her and said that she he was ungrateful like tell me the drama part of it because honestly at this point as you're telling me it doesn't really sound like they're bad people or like doing anything wrong per se it just sounds like they see an area they want to help and they're confused that you don't want their help and them being confused doesn't make them bad guys to me or manipulators.

It just makes them parents that are overstepping a boundary that maybe you've laid over and over again and they just can't see why you wouldn't want to take a gift.

Tell me the toxic part of it.

Is there a toxic part of it where when you take the money, they try to control you and tell you, tell me that part.

Yes.

So I'll give you our wedding example.

When we were planning our wedding, where we were getting married, it was a resort by a creek.

And as is traditional and normal, we asked his parents to pay for their lodging.

My father was paying for our wedding.

And

the lodging that we offered to them, my parents asked, do they want this house?

It was the house that was right next to the creek.

It had four or five bedrooms in it and we figured that their whole immediate family and everyone could stay in that house since they were traveling.

And if they didn't want that house, my parents would have paid for it.

When we presented it to my father-in-law, he said, of course, he paid for it.

And then as soon as money was involved, we started getting constant phone calls telling us what to do with our wedding, how to plan the wedding, who could come, who couldn't come.

I remember very specifically getting a phone call from my father-in-law asking me when I was going to send the save the date.

And my timeline on sending them was unacceptable to him.

And he specifically said to me, This isn't rocket science, Dana.

You need to send it.

Got you.

Okay.

Now I'm starting.

Now I'm starting to get it.

Okay.

So you had this bad example, this bad thing that happened a long time ago.

And it's kind of left a bad taste in everybody's mouth.

You don't want to take money anymore.

And when you try to explain to them, hey, the last time we took money, this is how you guys acted.

We don't want to do that again.

They're kind of like, don't bring up the past.

What are you talking about?

They're doing that, right?

Well, the thing is, is we haven't really addressed the past.

Okay.

So it sounds, I mean, John, jump in here because.

Here's, you know, does your husband,

do y'all just not want to take this money?

Well, the issue is mostly for our business.

We're very proud of ourselves that we've built this business.

Yeah, but there's a point of that where it becomes ego.

Right.

Because I'm listening.

Listen, I'm looking at 38,000 and I'm like, tell me more because this is.

I built something cool too.

And if you want to send me 38 grand, I'm happy to take it.

Here's the thing.

Y'all have had a grenade dropped.

Grenade's probably dramatic.

You've had a large firecracker dropped in your living room.

They offered you 38 grand.

If you take it, that might come with, you're going to do Christmas here because we gave you this money.

And y'all are going to say, no, we don't want to do do Christmas there.

We're gonna do somewhere else.

And they're you're gonna have an adult temper tantrum on their side.

Or you're gonna say no to the money and you're gonna have an adult temper tantrum on their side.

Mm-hmm.

So they've already taken the step.

So really,

here's the bigger issue.

You're still, no matter what decision y'all make, you are letting them drive the right decision for you and your husband.

And at some point, y'all have to decide that we decide what's best for us.

And if it's taking the money and dealing with drama or dealing with somebody saying, You didn't send these out in the right time, shut up.

Who cares?

Yeah, as long as you stay on the front end, hey, we're not, we just want you to know we're so grateful and this is such a nice gift, but please, we don't want any strings to be attached, which means if it's a gift, it's a gift, and we'd be grateful to you for giving it.

But we're hoping that there will be nothing else attached to it.

And if there is, let us know now so we can decide.

That's what I'd, that's what I'd say.

Or they can create a 529 for their grandkids.

Yeah.

or

or just say we don't we don't want your money.

Yeah, you could say that too because I'm willing to bet.

I'm willing to bet you would have started getting those emails and calls if he hadn't have had to pay for his own place for that wedding.

Is that fair?

Yeah, so they're gonna be like this whether they're giving you money or not, right?

Oh, that's such a good point.

Yeah, it's just such an ongoing issue.

I just don't, I know it's important and

I don't want our relationship to get affected.

I don't think it's a problem.

The relationship's already affected.

It's already a problem.

Yeah, I don't think the money is the problem.

I think their personality style and their personality traits are the problem.

And money just magnifies everything, right?

It magnifies you as you already are.

It makes you more of what you already are.

So it's more of, I don't really like their personality.

They're controlling people.

That's another topic.

So you're in a fight, take the money, or don't take the money, but you're going to have a fight either way.

Statistics show that half of Americans don't have enough life insurance, or they don't have any at all.

I don't understand this, John.

Why don't people want to take care of their family?

They think they're going to die or something.

Well, I used to be one of those guys, I didn't even think about it.

And one of my buddies said, Hey, the only reason to not have life insurance is if you hate your wife and kids.

And I immediately went and got termed life insurance.

That's a gut punch.

And oh, you're telling me, and for decades, Dave, I've sat across people who've lost a spouse.

They've lost somebody important to them.

Me too.

They don't know what to do next.

Me too.

I mean, you're going to have a crisis here, and you got two options while you're sitting and talking to a young widow.

She's concerned about how she's going to invest all this money properly and not mess this up, or she's concerned how she's going to eat tomorrow.

That's exactly these are the two options.

And terminal life.

Take care of your dadgum family, man.

Term life insurance can replace income, pay off debts, cover funeral expenses, so your family can actually have the opportunity to just be sad.

Yeah.

To just miss you.

That's exactly what it's supposed to be.

It's saying I love you to your family.

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All right, back to the phone lines we go.

We've got Kelly, who's in North Carolina.

Kelly, how can we help today?

Hi.

I've got some credit card debt, and two of them

is over $26,000, $26,706.

I'm overwhelmed.

I've tried to keep up with everything,

but with the interest rate, I'm not getting anywhere.

And so I don't know what to do.

I don't know what it is.

Bankruptcy.

I've called different debt things,

and they want like the fees are like $16,000, $10,000 for fees.

And

in my hand, I don't see that that's a real, I don't know what to do.

I don't know what it's called.

Bankruptcy or what to do.

We've cleared off, I think, five, six cards, and we're shutting down.

We're shutting them down as fast as we can.

But the two, and we have a couple others, but we can work those through.

But the two with the chase,

I'm at Williams.

I don't know what to do.

Okay, Kelly.

So

you told me the two that's got the $26,000 on it.

Can you tell me the rest of the debt?

Yes, I can.

Well,

I thought I could.

So because you mentioned, you said

the two combined is $26,706.

Then you said there's a couple others that you can kind of handle.

Yeah, the others, there's one that's

$8,000 was discovered.

Okay.

But I think that we could handle that.

And there's another one I think that we owe

why when I had it right in front of me and now I can't see it.

That's okay.

You look for that.

And I'll just verify a couple other simple questions.

You said we.

Is it you and your husband?

Yes.

Okay.

How old are you guys?

My husband is 78, and I just turned 76.

My husband had pastored for 56 years.

We lived in church parsonages.

And so then we had to move into a house and we used a lot of credit cards.

Okay, so you guys have really been using credit cards to live on.

Yes.

Okay.

That is so true.

That is so true.

I'm sorry, Kelly.

That's okay.

I need to bite my bottom root for a minute.

Yeah.

No, you're okay to be sad.

You're right to be sad.

But I'm trying to, I'm trying to work it out.

I don't know.

Should I try to call?

No, no, no.

You called the right place.

Yeah.

You called the right place.

What's your total if you had to add up all the money that you owe somebody else?

How much is that?

Well, Discover, we owe

$8,236.55.

Okay.

And there's another small one, and I can't find it.

It's like $430 or something like that.

We can do that.

I want to do what's right before the Lord, but I just...

Well,

listen, you're on the right track.

Your heart and your mind are saying, I need to clean up this mess.

And that's the first step.

And we're going to help you with the rest.

We don't go out to eat.

Here at the house.

I think

selling stuff right and left.

There's something somebody's supposed to come and buy today that if they show up, we'll help.

Yeah, listen, I believe that you're doing all that.

Kelly, I think you're doing all the right things.

We're going to try to help you take the next step.

Can you tell us what your income is every month?

Between.

Yes, I can.

Let me get my ledger here.

I get $1,638.60

in

Medicare.

Okay.

We have a house rental that we get $1,012.50 a month.

My husband gets

his Social Security is $1,598.90 a month.

$1,598.

And then

from the Southern Baptist,

he gets

it's called a housing allowance, so

we don't have to pay tax on it.

And that's $382.39 a month.

Okay.

And then he gets

a small VA disability check of $171.23 a month.

Okay.

And then he gets a small retirement of $372.95 for teachers' retirement.

Okay.

So you're almost $5,000 a month, yeah?

Yeah.

Yeah.

Okay, good.

So, I mean, I'm really

How much of that do you pay?

I know you get a a a housing allowance, but how much of that do you pay to your home every month?

We our our house payment is two thousand one hundred and sixty six dollars and four cents.

Okay, um, that's a big part of this while you're feeling so much stress, okay?

Your your housing payment's high.

Um, and can you tell me uh you said you moved into that house recently.

Can you tell me what the house, what you purchased it for?

Well,

19 years ago when my husband was pastor, he had a

major heart attack while preaching, and he had to have a four-bypass.

And we were a long ways away from the hospital, and so we stayed at a place called Antiat House.

So

one of our heart's dreams that we would pay that forward.

So our heart was the house that we have here has three bedrooms downstairs and a very, very large room upstairs.

Got it.

So what we want to do is establish a place called the Shepherd's Home

where people have,

they can come and stay with us and we can still minister to them.

I love, go ahead, John.

I was going to say, Kelly, can I tell you something?

And I'm telling you because I love you?

Yes.

Y'all can't afford to do that right now.

Your heart is so big,

and it's like

it was such a blessing, but y'all aren't in a position to do that right now because y'all can't make your basic payments, your basic bills.

And that dream is amazing.

And we know that we can't do it until we get out of debt.

I know, but you don't, even if you were out of debt, like sustainably speaking.

Like it's it's it it I don't know there's ever a scenario where 50% of your take-home pay or 40% of your take-home pay should go to housing.

Because housing, the taxes are going to go up.

The cost of electricity is going to go up.

This is going to continue to be an escalating burden for you.

Yeah, the cost of living is going to go up, but you're on a fixed income, which that means it's going to stay the same.

So we've got to get you in a position that's sustainable for you to manage the monthly payment of your rent or mortgage.

And also, to your point,

make some headway on these credit cards because you can't pay them off making the minimum payment.

Do you have any equity in this house that if y'all sold it, you could clear your debts?

No, we don't.

We don't have.

We have,

well, and one of the things I didn't understand is

the first year we overpaid

our taxes on the house.

And the tax company here did a refund to the mortgage company.

And I told the mortgage company, I said, we've overpaid you.

You need to either give us that money back or let us apply that $7,000 overpayment to

principal.

And they said, no, it went back in escrow.

For the following year.

Yeah, it just goes into the following year's taxes.

So you're not going to lose that money.

You just don't get it right now.

It's gone towards the next year's taxes.

But see, but every month they pick out money out of cars.

They afford the taxes.

So why didn't they?

Kelly.

I want to hold you over because your problem is one that millions and millions of people are facing.

And so I want to give you a step-by-step plan.

And I don't want to get distracted by, well, the tax over here and this over there.

But I want you to hang on the line.

We're going to go to a break.

And when we come back, we're going to walk through this with you.

But you're going to have to open your heart up to some significant changes in how y'all are doing life so that y'all can put your own oxygen mask on first and then be able to take care of the people around you.

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If you're a person who's been rocking with us for a while, you've been watching the show on YouTube, maybe check it out on podcasts or on the Ramsey Network app.

Hey, maybe you're still listening to us on a thing called the radio.

We're really grateful for that.

When was the last time you had the radio on?

I had it on this week.

I love that.

Just listening to old country music.

I love that.

Wow, that's great.

And hey, here's a flex.

My son, he's 15, is like, dad, turn off this, just turn the radio on.

And I'm just wondering

if they're done with all the players.

They're reverting back.

Yep.

I love it.

Listen, wherever you're listening to the show, first off, we just want to say thank you for listening.

If it wasn't for you guys, John and I wouldn't have jobs.

So thank you so much for listening.

And if this show has done anything for you, take a moment and share it with somebody.

Honestly, the best marketing plan out there is just word of mouth.

So if you like the show, if we said something that hit, share it with somebody, hit the little paper airplane on social or, you know, send them a link, you know, slide in their DMs, whatever, whatever method of choice that you have, keep sharing the show.

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It's something that you can do.

It's totally totally free and only takes a second of your time, but has a great, great benefit.

Thank you so much.

Okay, we are going to go back on the line.

Remember, Kelly was on the line a few minutes ago.

Just a little recap: her and her husband, 78, 76 years old, they've got a decent amount of debt.

So far, it looks like they've got somewhere around maybe $36,000 of debt.

We haven't gotten the exact number yet,

but they're making $5,000 a month and she's looking for a way out.

We were able to figure out that her house payment is $2,100 of the $5,000.

So right now we're talking about what it looks like, Kelly, to sell your house.

Because I know that you have a dream of ministry and you know, being able to gift those rooms to people in need in your three-bedroom house.

But

or is there a possibility that you, in the short term, maybe the next year,

Kelly, you

invited people to live with you and charge them a thousand bucks a month or $500 or $800 a month and they could rent the rooms from you for the next year the next two years while you all climb out of debt and get yourselves in a better position

well actually we have a really really large room upstairs that has um

you know complete bathroom it's got a couch it's got sure sure sure sure a clean bed and everything

and we thought about renting that out but everybody that we've talked to wants an outside entrance sure i can see that kelly i'm going to shoot you straight here's Yeah, here's where you find yourself.

I'm going to shoot you straight.

You've got to sell your house.

Renting is putting way more on your plate at 78 years old.

It's something that you'll have to keep up indefinitely because, like I said before, you're on that fixed income.

So, your plan today, I'm going to tell you right off the bat, your plan is to

put your house up for sale, get on ramseysolutions.com and find yourself a realtor because we have the best in the business.

And you got to sell this house.

And after that, you've got to find something, even if you rent for a while, something that is only 25% of your take-home pay.

That's all you can afford.

So you're spending like $1,250 a month or $1,500 a month.

That's basically your budget there.

And then from there, we're going to do a little thing called the debt snowball.

You're going to list and you're going to go through tonight with your husband and you're going to find all the things that you owe.

You're going to list them from smallest to largest.

And you're going to pay the minimum payment on everything, Kelly.

But the smallest debt, that's where you put all your extra money until you knock it out.

So it sounded like you had one that was for about $430.

Let's get that one knocked out immediately.

And so that's how this is going to work.

And then you'll go to the next smallest debt.

In the meantime, we're going to get you hooked up with every dollar.

And on every dollar, you can get a free coaching call.

So we're going to make sure to get you hooked up.

Our phone screener is going to pick up and make sure to get you hooked up with that.

Okay.

So you're all taken care of.

Well, I think something else I want to call out here.

If you have too much house, right?

And by the way, let's go back to Kelly for those of you who just tuned in.

Kelly and her husband were beneficiaries of some free housing while they had a major medical emergency

years ago, and they've always had the dream of being able to offer that sort of support for somebody else.

That's amazing.

And

they've got a math problem, which is we can't afford to pay off our debts and make our make our

payments.

So if you buy a house that's too much, usually that means, depending on what market you're in, that house is big, which means your electric bill is high, your water bill is more,

to air conditioning and heat to that place is more.

So in their situation, they may be looking at a one-bedroom apartment because that's what they can afford.

Absolutely.

And that also drops their utility payments.

It drops everything.

So you're not just going to see the savings in the mortgage.

That's the thing.

You're going to see savings that come from all over the place.

And that can help you get out of there faster.

And let me just, can I just say this?

Because I feel like we live in a world today where everything has to be bigger and better and flashier and newer.

Can I just say there's no shame in living on your hard-earned income and just living on what your income can afford you?

That credit card companies will make you feel like you need more and we need extra, but to just work hard and in her case, to have worked hard for, you know, seven levels of life, right?

And to just say, okay, we worked hard for seven, seven decades.

We got $5,000.

That is our income and we are going to live on that and have pride in that and feel good about that.

There is no shame in the game of that.

That's right.

And I just might look differently than you dreamed your 70s would look.

Right.

But man, oh man, you're talking about an amazing woman, an amazing husband who are really on the edge.

They can't handle another financial emergency, another health issue.

Yeah, absolutely.

Absolutely.

All right.

Let's go to Lucy, who's in Atlanta.

All right, Lucy, how can we help you today?

Hi, Jade.

Hi, John.

How are y'all?

Doing great.

Good.

It's nice to talk with y'all.

I'm very honored to speak with you.

I grew up in Murfreesboro, Tennessee, right down the road from y'all.

And we took a Ramsey course my senior year of high school.

Got away from it a little bit.

Came back here recently, about three months ago, and started listening to

the show.

And

me and my husband, we got married about a year and a half ago, both brought some credit card debt into the relationship and ended up paying that off as of yesterday.

Good.

So we paid off about $7,000.

And

so now we're on baby step three, obviously saving for three to six months of expenses.

But I kind of wanted to know, I mentioned this to my dad, and he had said that it would be a good idea to reach out to y'all and see what you think.

Once we save up for that three to six months of

emergency fund, would you recommend saving even more just in case anything happens?

Like with our roof, I know that's technically what the emergency fund is for.

Or even putting stuff aside for travel fun items.

Okay, so yeah, we're talking about two different things.

I love the question.

Yeah, after baby step three, so the purpose of baby step three, let's just reiterate, is for emergencies.

It is in a fully funded emergency fund and we suggest three to six months.

Now, whether you do three or six months is largely dependent on personal factors.

So if you're a single person with one income and maybe you have a health issue that flares up every couple years, you want six months, right?

You want more.

You want to make sure you can cover your deductible, all of that.

If you're a family, maybe you're a family and you're dinks and you both have a high income, you have stable jobs, you're healthy people, maybe you opt for three months, right?

So it's up to you, depending on those sorts of factors.

In today's world, I'm not going to lie, for most people, I'm like, just go on ahead and do six months.

I just feel like we like that security the way the world is now.

I don't know.

So once you get that six months, Lucy, that's really all you need.

Now,

from there, if you're going to continue to save up for other areas that are

kind of like sinking fund areas, whether it be like you said, we know we need a new roof, we know that's coming.

If you know something's coming, it's not an emergency.

So, yeah, you need to save up.

If you know you want to purchase, you know, upgrade your car, or you know, that you're putting a down payment on a house, right?

So, those are, those are sinking funds.

And just a reiteration, maintenance and known maintenance, John, is not an emergency.

You know, your car is going to need new tires.

Save up for it.

You know, if you have a leak and you see it starting to form and you know, like, hey, I'm not going to run this through insurance.

We're just going to pay for it.

Save up for it.

That's not an emergency.

You knew it.

You see it coming.

You know it's coming.

So that's just a little sidebar there.

But yeah.

The thing that happened to me and my wife is we had to replace the roof without.

thinking we were going to have to.

And then, of course, that's when the air conditioner went out.

Right.

Right.

So we were able to save up for the roof issue, and we had the emergency fund for the air conditioner.

And if we had just tried to play it out, be like, just pretend it's an we'll wait till it's an emergency.

Yeah.

It, you'll, you'll, they'll double and triple up on you.

And now my screen said, you never mentioned this.

My screen said, when can we open fun accounts while working the baby steps?

You didn't mention anything about that.

So let me just hit that right quick.

Yeah, after baby step three is when it's time to start having some fun again.

So that's when you add back in those

go to dinner, go to the movies, y'all go on a trip, go have fun.

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all right the all new every dollar is here

and now it's way more than just our world-class budgeting app there's a ton of advanced features to help you make faster progress with your money.

As a matter of fact, the average person finds thousands of dollars in margin in just the first 15 minutes.

Matter of fact, we've gotten some calls through here, John, already of people saying, hey, guys, I'm in the all-new every dollar and I've already found, you know, X amount of margin and I'm putting it towards my debt.

And so I think that's really exciting to hear.

But you can start today at every dollar.

You can start your every dollar today for free.

You can get in the app store or at Google Play.

But guys, I'm telling you, you get in there, you do a quick onboarding, and don't try to skip the onboarding because that's where they find out everything they need to know so that you can have a personalized plan.

So it just takes a few minutes, give them the information, then it's going to spit back, hey, based on what you told us, here's the amount of money that we can find you.

And I'm telling you, there is money hiding in plain sight in your budget and in your finances.

You just needed somebody else to look at it.

And so it'll look at it at it, spit back and say, hey, we found you X amount of thousands of dollars.

Here's what you, and then it'll tell you, here's what you need to do to get it.

And so then you can say, do I want to do what it's telling me to do or do I not want to do what it's telling me to do?

And so you go through the recommendations it gives you.

And then you can say, hey, I agree.

Maybe I agree to these, but I don't agree to those.

And you check the boxes.

And then it'll say, okay, based on the ones you agree to, now here's how much money you'll have.

And it'll keep walking with you as you do what it's teaching you to do.

It really is, John, as though you had myself or you in your pocket.

You don't want me there, but it's like having you or Dave or George.

That's what they're talking about.

But yes, it's pretty amazing.

It's pretty awesome.

So if you have, if you don't know, now you know.

All right, we got Eric, who's in Knoxville, Tennessee, right down the road.

What's up, Eric?

Hey, guys.

Thank you for taking my call.

You got a brother.

What's up?

My question is, well, I'm getting, I'm 19 years old and I'm getting married next year.

Congratulations, man.

Thank you.

And I feel like I've always been generally pretty smart with my money.

I've never had to take out money for anything.

I pay for my car in cash.

And

I grew up on 21 acres with my parents.

And I've saved up enough money that I was able to build my own mini home at the bottom of the property.

Dude, way to go, man.

I paid cash for that and everything.

What?

But I'm still in school.

Hold on, hold on, hold on.

You're just blown by this.

You are in a better shape than most people in the country.

It's incredible, dude.

And I know that sounds silly.

Like, you got to pay for a car.

You got to pay for a place to live.

Right?

That's amazing.

Yes, sir.

Who taught you this?

My parents.

And I've always, I mean, I've been watching Dave Ramsey since I was 12, 13.

Lots of people watch, but very few people live it like you are, man.

Well done, brother.

That's cool.

So how can we help?

Well, my question is, I know later down the road, it's just, you know, 500 square feet, really small.

I know later down the road, probably five, four or five years, I'm going to want to be able to buy a house.

But me and my fiancé, we have no form of credit coming in at all.

Good.

We've never had loans on anything.

Fantastic.

The only loans we'll even be taking into the marriage is she's about to

graduate nursing school.

So we'll have about 15K in student loans.

Okay.

And I'm hoping to have that paid off in the first year.

I'm still in school, so I'm just working part-time.

So I'm working as a pest control technician part-time.

Okay, good.

So I'm only making about 30K.

Okay.

And she had the job lined up making about 75K when she graduates.

So our first year of marriage, take home should be about 100K.

Right.

But my question is, just when I want to, you know, take that next step and naturally build a house and build a family, is there something we should be doing to build credit?

No, but I do want to address that.

So there's a couple areas of this I do want to address.

I agree with John.

I think that you're doing a fabulous job.

But I also want to say there's no rush.

So that is the,

if you can embrace that, then you're going to be home free.

There's a lot of times, John, this rush to like, I get married.

Then I got to get the house.

Then I got to do this.

It's like you're trying to like check boxes really fast.

And you've got so much time, Eric, and you're in such a good position.

I don't want you in such a rush that you start going back on all of the things that got you where you are today, which is you, I don't borrow money and I'm not interested in building this credit score, right?

Those are all these things that you've done and you've gotten great results, right?

You've the fruit of that is amazing.

So just remind yourself, the fruit is the proof, right?

The fruit of what you've been doing is the proof that it's been working for you.

So don't go back on it.

Now, here's the thing.

Let's talk about the no credit score thing because you're right.

When you guys get married, you're not going to have a zero credit score because you've got this student loan open here.

And so until you guys get that paid off, get that account closed, and then it's going to take another six to eight months for your score to drop away or for your wife's score to drop away.

Yeah, it'll be tough for you to buy a house with a low credit score.

Does that make sense?

So having a low credit score is not going to help you out, but once you pay it off and you have a no credit score, you will be able to do that.

And we're always going to suggest John Churchill mortgage.

That's who I have my mortgage with, John.

I'm pretty sure when you want a mortgage, that's

who you had it.

My credit score was zero.

It was non-existent.

None.

And they just do a process called manual underwriting.

And that's the way they've done it for for a jillion years before they started turning us all into algorithms.

And that just means I had to send them a letter from my employer.

I had to send them a tax return.

I had to send them proof of employment.

And an actual human looked at an actual file.

And they're like, oh, this guy's got a great job.

He has always paid his bills on time.

No-brainer.

Here you go.

Gotcha.

Does that make sense?

I'm glad you're asking this question.

Here's what a credit score is.

It is not, or let me say what it's not.

It is not an indicator of your wealth, how much wealth you have.

It's not an indicator of how well you're doing financially.

It simply is a dating score for how well you've dated in the past.

Except it's not asking about girls you've dated.

It's asking about banks you've dated.

So if I gave you $5 million right now, your credit score would still be zero.

That's a shame.

It has nothing to do with your wealth.

It has everything to do with, have you borrowed money from a car dealership once and you paid them back?

Okay, we'll give you some points for that.

Did you one time borrow from somebody else?

It's just a report card for how well you've managed debt in the past.

And so far, you've been a dude that just doesn't play that game.

And they can't get the system can't get its hooks in you.

And so it says, well, you got to have this number, otherwise, you're not a wealthy person.

It's not true.

It's just not true.

And so you,

Jade, I love what you said, brother.

Listen, y'all come home with 100 and what was it, 110,000?

Yep.

110 grand.

So let's say after taxes, y'all are holding $60,000 next year.

In the first three months, you should pay off this entire student loan and be done with it.

Then y'all can have $45,000.

If y'all can eat light, y'all have no bills, right?

Or very, very minimal bills, other than like a cell phone bill and a small light bill or whatever.

If y'all could stay in this house for two years, y'all could literally have, I don't know, $75,000 to $85,000 in cash.

That's right.

When y'all decide to move out.

Would that be fun to live in 500 square feet with QBL?

No.

But dude, if y'all waited, it's like, we're going to wait till we can drink legally.

Sure.

The day we can buy a beer in a restaurant, we are going to go buy a house.

Y'all will be able to put 80 grand down or more, 100 grand down.

And let's not forget, I mean, there's always the option to rent.

Let's say you do.

start hating each other's face in 500 square feet

like that could happen and you're like man we got to get out of here just know again pump the brakes you don't have to buy a house tomorrow you can always go rent a two-bedroom apartment right and then you can still save up money like uh like john is saying so you have options.

In no way are these people like painted into a corner.

They've got so much time, so many options, so little debt.

People always ask me, what would you go tell your 18, 21 year old self?

And I often say nothing because that guy was an idiot, wouldn't listen to anybody.

But if I could get one message through to him, it would be slow down.

Yeah.

Slow down.

Relax.

I hear that.

And I was so amped about having a car and having a place and having, slow down, man.

Instead of saying, and like in this, in this guy's case, just put a date on the calendar.

When we are 22, we're going to buy a house.

Let's see how much cash we could have in the bank by 22.

Let's see if we can live in a way that we have this much money by 22.

It will change everything in your life moving forward.

Yeah.

All of that.

100%.

Oh, so true.

All right.

Hail Mary.

If you could go back and change one thing you did when you were 19.

What is it?

19.

Well, he's 19.

That's why I picked 19.

Like, if you could go.

I'll say 21.

I left and I drove an 88 Trissel Easy hatchback that was the size of a small wheelbarrow through college.

So I graduated with my student loan debt, and the first thing I did is went and bought the biggest truck I could find.

And so my first year out of college, I almost doubled or tripled my debt.

Holy smokes.

All right, yeah, that's a big one.

What about you?

I straightened my hair instead of leaving it curly.

Mine wasn't as big of a deal as yours.

I ruined my financial future.

I ruined my body.

A relaxer.

Keep hanging out with us.

There's more show to come.

If you've listened to me for more than five minutes, you know that being normal with your money is not a good thing because normal is broke.

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All right, welcome back to the Ramsey Show here in the Fair Ones Credit Union studio, continuing to take calls about your life and your money.

Again, if you were wondering, how can I call that show, Jade or John?

The number is 888-825-5225.

No worries.

If you don't get on the line, you can leave a message and we'll still schedule your call for another time.

All right, Hattie is in St.

Louis, Missouri.

Hattie, how can we help today?

Hi, Jay and John.

My question is,

my husband and I are just getting ready to purchase our first home, and I keep hearing about

doing a line of credit, a

$10,000 line of credit to make a bulk payment, and then putting your paychecks into that and paying all your bills out of that to build $10,000 up again.

You've got to do me a favor.

Do me a huge favor.

My mind just isn't.

Please delete Instagram off your phone for 60 days.

Okay.

Just get off.

Just get off.

Okay.

For real.

Just get off.

I can do that.

It's Facebook, actually, but I can do that.

Whichever one it is.

For 60 days, and then I want you to solve for one thing and one thing only, okay?

Okay.

Peace.

Okay.

Peace.

Ah.

I was just talking to one of my oldest best friends on the planet yesterday.

This is an honest conversation.

And I was asking him a question about: hey, if I move this here and I move this over here and I pay this here, and he said, hey, you're doing a whole bunch of work for like 1.8%.

And he said, you're the guy who tells me you solve for peace, not for arbitrage.

And I was like, I'm getting off the phone now.

You're right.

Okay.

I was going to move it to this account because this one's got 3.4.

And since interest rates just dropped, what if I moved it over to this one?

And he's like, bro relax and then he did a quick calculation it's like you're doing all this for like $70

like go enjoy your life and he was right

yeah I have accounting background so I was like well what does his numbers actually crash and I'm like okay this perks kind of but does it really and I just wanted to hear somebody else say it's okay just make double payments you'll be just fine make triple quadruple payments make stupid amounts of payments but like Jade and I will both tell you the best like we can tell you what we do in our house yeah like we borrowed a mortgage and we put on a 15-year note, and we just paid as aggressively as we could.

Just make extra payments.

Make extra payments.

Ta-da.

How long have you been married?

Um, 23 years.

And y'all are buying your first house?

Yeah, we had some health conditions, and um,

I just had a brain tumor in 2020, so that set us back a little bit.

Wow.

How are you now?

How do you pay off?

I'm great.

Well, I have MS, so I'm disabled from that, so I can't work, but it's only his income, so I get really creative with the finances.

I love that.

Okay, so you know this as well as I do, that stress

is

a multiplier of MS symptoms, right?

Yes.

What if you just solve for peace?

Yeah,

exactly.

If you just took out one mortgage, made one payment, and then you spent the rest of your time focusing on things you love and have fun with.

Well, yeah, exactly.

We just want to have the house paid for by the time that we're above 60.

Done.

The shortest distance, is this still true?

The shortest distance between two points is a straight line.

I've heard there was somebody who's, I need to go look in that.

I heard, because my track coach always told me that.

I know, but sometimes I feel like there is a shortcut.

In this case, let's pretend like that still holds because I think it does.

Don't do all the loop-de-loop, okay?

You're really smart.

I can tell.

Like you said, you've got the background.

Use your powers for simplicity.

Use your powers for good.

Or

let me say this.

Can I take this call way too deep, way deeper than you're asking it to?

Yeah, go for it.

I spent my career working with folks who

had special needs of some shape, form, or fashion.

Yeah.

And one of the biggest metas that I got from working with those people over time was a fear that they were going to be a burden on other people

or that I needed to contribute in some way on top of my

extra, what I'm doing for my friend, my family, my community, whatever.

And so

I don't want to paint a picture.

but I don't want you sitting at home thinking I'm a net drain on this house.

But if I figure out some way to escalate our mortgage payments, that then I've proven that I'm worth being here.

Right.

I want you to help simplify the chaos in the house and be an agent of peace in your home.

And your husband's the luckiest man who's ever walked the earth.

I love that.

Thank you.

Is that fair?

Yeah, he'll tell you that too.

Well, I know he will, but you don't believe it unless you come up with a secret plan to pay off the mortgage.

Like, you know what I mean?

Yeah,

just uh, take his word for it.

You're pretty amazing.

You're pretty amazing.

I, I, and Jade, I've heard this, I've heard this song and dance on the internet.

It's like, all right, this is what you do.

Yeah,

I don't know.

I'm not a dumb guy, I'm not the smartest guy in the world, but

I think I can figure my stuff out.

And usually, I'm like, you lost me at step 17.

I'm just going to make a double payment and go on with my day.

Yeah.

I mean, let's run this out for the folks who might be listening for the first time, John.

So obviously, we do like our countercultural take on mortgages is first off, if there's a world where you can just stack up some money and pay cash all day, baby, all day.

Like that's, we're gonna yeah, people are like, oh, I'm gonna take on a mortgage for tax savings.

That's the literally the dumbest thing.

Man, if you have the money or you live in, you know, I'm gonna pay $100,000 of interest so I can get $10,000 in tax savings.

Yeah, don't do it.

If you can get cash, and there's somewhere in, I don't know, Kansas where you can still find a $200,000 house and you can pay it.

I did it, right?

Then the next level is, hey, in a world where everybody's getting 30-year mortgages, we're always going to suggest a 15-year mortgage.

And at the base of that is, well, you'll get a better interest rate.

But the other base of it is you're going to pay it off 15 years sooner if you just pay the payment, right?

Everyone says, I'm going to get a 30, and I'll just, I'll just pay it like it's a 15.

But you won't.

You won't.

There's always going to be something that pops up instead.

And so we're like, hey, set it for, set the dial for like, you can't screw this up.

So 15 year is what we're going to suggest.

And even if you never make an extra mortgage payment, you're still paying it off 15 years earlier, which is giving you another 15 years that you can invest more to build wealth, right?

For your legacy, for retirement, you know, to buy that restaurant you want to buy, whatever that thing is.

So 15 years what we're talking about.

Now we are always saying, hey, this,

the payoff of the mortgage lies in baby step six.

So it's after you've paid off your debt.

It's after you've saved up an emergency fund.

It's you've been you've been investing 15% of your income all the while.

You've put a little bit aside for your kids' college.

And now, after all that's kind of rolling, now we're saying, hey, you know, maybe I have a little extra change I can throw over to this mortgage.

I make the payment and maybe I pay another half payment or maybe twice a year I double the payment.

Whatever that rhythm looks like, it's just about you being intentional.

You don't have to get intense about it, but just being intentional about saying, I'm going to put extra money on my mortgage.

And there's some really crazy arithmetic out there that if you just make one extra payment a year, like the quickness.

It's like seven years off or something,

it doesn't take a whole lot in order to really shave that 15 years down.

And John, on this show, we find that if people follow the baby steps, no matter what point you lock in, if you actually lock into the baby steps, most people have their mortgage paid off in like 10 to 12 years.

It's like 15-year thing.

Yeah.

So.

And by the way, people always ask, hey, is it okay if we get hyper-intentional about we've had the mortgage for a while?

Yeah, if you got two or three years left on it and you say, we're going to go to baby step one

and you and your and your spouse lock arms, go knock it out.

Go do it.

Get it done.

Yeah.

And then on the flip side of that, if you're like, and you're like, hey, you know,

all my life I had to fight and I finally just got out of debt and I'm not ready to put double payments on.

That's also your prerogative and nobody's going to be mad at you.

The point is, you started in the best possible spot, which is a 15-year mortgage that was no more than 25% of your take-home pay.

And I understand that that is a tall order in today's world and today's day and time, but it's still possible.

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All right, we're going to go back to the phone lines, but before we do,

I didn't say who was hosting today.

I probably should.

It's you and it's me.

John and Jade.

John and Jade.

So now you know, just in case you were wondering, John, you're kind of like on the

mental wellness tip for anybody who doesn't know.

You're everywhere, so everybody knows.

No, they don't.

I believe that they do.

And then I am your money expert for today.

So that's how this thing works.

Two people, two chairs.

All right, let's go to Nicole in Denver, Colorado.

What's up, Nicole?

Hi, thanks for taking my call.

My husband and I just got married, and we both want to have children, but now we have to adopt or preferably get a surrogate.

We have some debt, we have some savings, and my husband is about to start a business.

So we really want to prioritize this because of our ages.

I'm factoring us in, like us needing some extended time to have kids.

And both of these options are expensive.

My question is, how do we fit a baby into the baby steps?

Oh, I love this question.

How old are you, by the way?

I'm 30.

He's 34.

Okay.

So if you were calling in and you were like, hey, we're thinking we're going to get pregnant the old-fashioned way, I would have just said, yeah, tomorrow, whenever you're ready, right?

I'm never going to tell somebody they have to, you know, wait till they're out of debt to have a baby.

I'm never going to say you have to have this financial echelon accomplished before you can start a family.

I would never tell you that.

Now, it is your own personal choice.

I can tell you, my husband and I, we were like, ah, we're going to pay off our debt, then we're going to start a family.

That was a personal choice.

I don't think anybody else has to make that choice.

But in your case, it doesn't change my answer, but there are some considerations because in your case, yeah, it's going to cost a pretty penny.

How much does it cost to do surrogacy in the 2025 world?

There's a huge range.

I would say 50 to 100 grand, huh?

More than double it, 90 to 200,000.

Agency fees, surgery compensation, medical expenses might mean multiple rounds of IVS.

And then for adoption, if you're working with an agency, somewhere between $30,000 and $60,000.

So,

I mean, the pragmatic answer is adopt instead of do a surrogate.

But I just, I don't know how to even start saving up for this.

Okay.

No matter what your income.

What's your income?

Right now, I'm in school.

I'm a student for another six months.

I have a part-time job.

I earn about $2,500 a month.

My husband gets about $7,000 a month.

Okay, good.

And a third of that is untaxed disability for being a veteran.

So it's cool.

I guess, and Jade, push back on me here.

Adopted kids, one of the most amazing things.

By the way, that 30 to 50 of the

private adoption, there's tax rebates.

There's local support.

Sometimes there's business support.

So I would check into all those different things.

The last buddy of mine that did this, I sat down with him.

He said at the end of the day, they were out of pocket like $11,000.

Oh, wow.

And you can,

you can do, but that was after tax breaks.

And dude, who knows what tax looks, cuts and breaks look like now, whether they're bigger or smaller, who knows?

But it's worth to find all that out.

And there was some upfront costs that he got reimbursed for, et cetera.

But that's just

one buddy of mine.

So I'm a huge fan of it.

I think the challenge for me is if you get pregnant

and had a kid and you had health insurance, or you didn't have health insurance,

I want to say fixed costs because there's medical conditions, there's NICU, there's all kinds of other things that could happen.

But inside of a bell curve, often

there's a $5,000 deductible or a $10,000 deductible or a, hey, we want to cash pay this thing and this is what it's going to cost.

When you get into $90,000 to $200,000,

that to me feels like we have to do some significant planning because that is, that's, I mean,

that is a, that's a, that's a graduate degree or that's a home in certain places, right?

That's a huge chunk of money.

And I would feel irresponsible to say, yep, it doesn't matter.

You're starting a family, just go let it rip.

Um, because that's a ton of debt to carry into

on top of your student loans.

I'm telling you guys, is to, if we're doing, you know, highest cost scenario, if we do do surrogacy, just help me out.

How do I even start this process?

It might not be that expensive, but worst case, well, it's a math problem, right?

Yeah, I mean, it's a math problem.

And I'm going to make it super clear.

I would never recommend any kind of debt for this.

I mean,

you know, you're going to do what you're going to do, but Jay didn't tell you to go into debt for

a family

because

there's a risk of here, right?

There's no guarantee on any end of the spectrum.

And to John's point, when you get into numbers like 200,000, 100,000, that is insult on top of injury.

Yeah.

If this doesn't go the way that we want, right?

And sometimes in life, things don't go the way we want.

Although I'm praying that it does for you.

So you see what I'm saying, right?

I just want you to,

I don't have to explain the risk to you.

Well, and there's the other side of it is, again, I've got a close friend who had a really traumatic pregnancy and there was Nikki's days and ICU stays.

And God knows what those bills are going to end up being.

And you deal with those as they come.

This is one where we're planning out the door.

We know this is going to be 100 grand or 150 grand.

So real steps, like let's pretend, hey, 50,000 is what we need.

That's kind of somewhere in the middle of the adoption realm there.

And so, yeah, I would treat it like, in many ways, I would treat it like the debt snowball, right?

You're paying minimum payments on all your normal debt, but all the extra is going to your smallest debt.

In this case, it's this adoption bill.

So, after all your minimums are met, now we're using our margin to stack up $50,000 as quickly as possible.

And what I would do is I would say, okay,

I'm starting up my every dollar budget.

I've got everything in here, and I'm seeing here's the margin that we have every single month.

So, let's pretend it's $3,000.

I got $3,000 of margin.

That's going, and I'm going to keep stacking that up until I hit 50K, right?

Run those numbers out, see how long it's going to take.

And at any point, you go, Hey, that's longer than I want.

What can we do to make that go faster?

Income is the issue.

So we say, okay, can we get extra jobs?

Can somebody drive Uber?

Can somebody pick up extra shifts?

That sort of thing.

So in that way,

you can kind of control it.

But at the same time, you'll probably hit a point where it's like, this is as fast as we can go.

And you just kind of have to ride that train until it's done.

I love it.

All right.

Thank you so much.

Yeah, really great call.

Thanks for the call.

That's, you know, John, that's,

I actually got that call a couple of days ago and it's true.

You know, when Sam and I were in debt, we had almost half a million dollars of debt.

We were young, 23 years old.

And I, I, I remember thinking, I'd rather wait.

And plus, I wasn't sure if I wanted family yet anyway.

So I was like, let's just wait.

He wanted to wait because it was just eating our lunch, literally.

Just chaos and anxious installing your house.

Yeah.

And so for us, there was, we had just made the decision and said, hey, we're going to clean up this mess and then we'll feel great about, you know, having a family plus, you know, and again, this is, I'm not saying anybody else has to make this choice, but I kind of had this clear picture of this is the life I want to be able to provide.

And so that was kind of like a guiding light for us.

I was like, I don't want to feel like I have to work.

I want to feel like I'm working because I want to work if I'm not going to stay home with these kids.

Like I wanted as many options, not just for us, but for the kids too.

So that was our choice.

And yeah, I ended up having kids later in life.

That was a choice we made.

But I remember the years that my wife and I were trying to have kids and it wasn't happening.

And then I sat down with somebody.

We went to the meeting about adoption and private versus public and all those things.

And I remember my mind shifting to,

I'm owed this, I deserve this.

Yeah.

And

it was giving me a pass.

I'm just going to go borrow on whatever this costs because I want a family.

And it was this, like, I remember thinking, do I want to to add, because this is when I still owed a jillion dollars, do I want to add that burden to a guy that's already pretty spun out because of all this money I'm carrying that I owe people?

Right, right.

And I remember very much feeling, though, that like math doesn't apply to me here.

This hurts.

And I can, I want to have a family and I want to be able to like give a kid a family.

Like all that stuff was so good and right.

And yet, math doesn't care.

It's still, it's going to be, you're going to have $200,000 mortgage

on an adoption, right?

Or on a surrogacy or whatever.

And so there is something about,

I would never tell somebody, don't have kids if you owe money, right?

Sure.

Especially if you've got a traditional

health insurance.

Yeah, yeah, yeah, yeah.

Yeah, sure.

But if you're going to go make a $30,000, $40,000, $50,000, you can put that much money on the table, I want you holding that check because otherwise you are setting yourself up for all kind of additional chaos

in addition to having a kid and all the heartbreak and joy and all that comes with that.

Absolutely.

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All right, you're listening to the Ramsey show.

Hey, don't just set goals in 2026.

I want you to actually learn how to reach them for once in your life.

And we're going to help you do that.

The 2026 Ramsey Goal Planner is here, guys, and it's packed with monthly content from myself, from Rachel Cruz, from Dr.

John Deloney sitting right next to me.

And it's all there to help you stay on track with your money, with your faith, with your relationships, all of it.

And finally, for the first time, you can actually follow through on your goals.

It's so helpful.

Now, I'm going to tell you the real deal.

Every single year we sell out of these, all right?

Already gone.

Listen.

There can't be that many left.

There can't be.

So the point is.

This is not a sales pitch.

This is is like them sending being like, hey, we have like almost like they cut off product benefit.

Nobody in the building can buy them.

Yeah, we can't.

There's only a few left.

And it's just for just for our fans.

The only way I'll get one is if one of you send me yours because I didn't even get one.

But the point is.

They might be already gone.

So if you were thinking of getting one, go on there now and make sure you can get one.

They're $49.97 at ramseysolutions.com slash store.

Or if you're watching on YouTube or the podcast, you can just click the link in the description.

Now, I'm going to tell you straight up.

I was making a joke before.

I always get a couple of these and I send them as gifts.

It's on my gift list every year to send to other people, and everybody loves it because it's so helpful.

And so, yeah, get involved.

All right.

Next, we have Sue from Chicago, Illinois, Chi Town.

What's up?

What's going on, Sue?

Hi.

Thank you guys so much for taking my call.

I'm blessed to be able to speak to you guys and to listen to you guys every single day.

You are so good.

What's up?

I'm I'm stuck.

I'm 54 years old and

married with a child.

And I just found out that my husband no longer has savings,

no longer has the college account for our child because he's gambling and there's more infidelity I just found out about.

So There's that.

I just started a job, thank goodness, because I kind of I had a feeling like something was up.

And my job

will be able to pay in the future for the success that I want with our family, but I'm kind of at a T-section.

The big question here is, do you want to stay in this marriage?

No, and I hate saying that.

We had an issue before where things were questionable, and he said he wanted to reconcile and this was years ago and I had a huge cancer scare.

I am cancer-free.

It's great.

It's wonderful.

He

hid it really well since then.

I don't feel for

my peace and my daughter's peace moving on in her life

that it's safe to stay in this marriage.

So I think answering, well, there's two things.

One is you are right to be fearful about if there's sexual infidelity, you're right to be worried about the betrayal, worried about your health, worried about like the values of your marriage being swiped out from underneath you, right?

The financial infidelity, you waking up one day and realizing y'all have no safety net.

That's a real harrowing fear also.

And so whether you choose to stay in this marriage and heal it or

and y'all have to rebuild this thing from the ground up because it doesn't exist anymore as it was.

You still have to take the steps to go open your checking account and deposit money in your account and begin to have some sort of financial safety because this person is very unsafe and very reckless.

Yeah, I did that with my new job.

Good.

Yeah.

So, but that now has been paying for groceries

and school fees.

And I don't,

pennies, pennies putting it aside could possibly

eventually get a down payment for that.

Hold on, hold on, hold on.

You're doing a very natural thing, but I want to slow you down.

You're solving for seven steps down the road.

I need you to solve for step one, which is I need to get me and my daughter into a safe place.

Yeah.

Exhale.

Next step.

Okay.

I want us to make sure we have the apartment that we've moved into or that he's moved into.

Can we afford this house?

And we have to sell it.

Do I have attorneys' fees?

We rent.

Okay.

We rent.

We don't even have a hostage.

Okay.

So am I on that lease?

So if I go get an apartment, a one-bedroom apartment for me and my daughter for the next 18 months, because that's what I can afford right now.

Am I on that lease?

And is he going to quit paying?

And then it's going to blow up my world.

Right.

So it's getting those very basic things.

Four walls.

Do I have a place to live?

Do I got food?

Do I have utilities?

Do I have water and heat?

And do I have transportation to get to and from my job?

Okay.

That's what we're solving for right now.

You'll solve for what's my retirement going to be?

What's a pension?

all of that is a problem for future you.

Okay.

Okay.

Thank you.

And anxiety is taking future stuff and dragging it into the present and trying to solve it in the present.

Don't do that.

You've got enough trouble right now.

As you experience, and as the Bible says, you got enough trouble today.

Let's deal with today.

If you are done with this marriage, I want you to...

push pause and call an attorney.

Okay.

Okay.

And they will guide you.

They'll have not thousands, but a list of questions, thoughts, ideas, and they will walk you through step by step, and you won't feel so alone.

If you want to try to save this marriage and reconcile, you got to call a therapist today, a licensed therapist, who will walk with you.

It's just too much.

Your whole world exploded, right?

Yeah, yeah.

It did.

It really did.

And

I'm more worried about my daughter.

Yep.

How old is your daughter?

She's a junior in high school.

Yeah.

But she's now been, unfortunately, it's blown up in her face, and she's very aware of everything that is happening.

Let me tell you the greatest gift you can give her.

Take her out to a diner.

In fact, tell her we're skipping school this morning.

Take her out to a diner so she'll know it's a special moment.

And I want you to look her in the eye and say,

I'm not going to talk bad about your dad.

I'm not going to run him down.

You're not going to talk crap.

You're not going to swear at him about him.

because that's her dad too.

And she knows in her body, half of her is him.

So if he sucks, then half of her, right?

But I'm going to tell you the truth.

I'm going to tell you I'm scared.

I'm going to tell you I'm heartbroken.

And I, your mom, am working to keep you and me safe.

And so you're going to give her this gift.

You're going to A, give her the gift that she's not crazy because a lot of parents try to just say, I want the kids to know.

I don't want them to, I want to hide my tears.

I want to hide everything.

And what it does is it makes your kids feel nuts because their insides are melting.

So it's important for her to see, oh, mom's a person too.

If she's sad, I have permission to be sad.

Yeah, I've never hidden anything for her, even when I got the cancer.

She's

never painted pink polka dots on my head when

it was growing back, because that's what she said was happening.

And the next plan, the next important thing for her is to know my mom has a plan.

I have a job.

I have my own checking account.

I'm going to, we're going to, your college plans may have completely changed, but I'm going to be right next to you, walking with you, right?

And it's letting her know you're not on your own and her job isn't to take care of you.

Okay.

Okay.

100%.

That will be a blessing to her for you to say, I'm hurting, and here's my plan.

Thank you.

Okay.

I would also recommend this, and this is like, I don't feel like I want to want you to give you another thing to worry about.

I want you to go pull your credit report from all three credit bureaus today.

Yes.

And I want you to freeze your credit.

Well, it is.

Okay.

Good.

Good, good, good.

I did that as soon as I found out.

Excellent.

Excellent.

Very smart.

Excellent.

What's your husband doing right now?

Is he running, hiding?

Is he saying here?

How how did you find out?

Uh, I just well, I started I got the Ramsey become a millionaire and started I just started going, Hey, can we go over the bills?

'Cause I wanna get put all this together and make a budget.

I wanna make a plan.

And he started listing off these bills.

I'm like, well, what bill is this?

What bills?

He goes, oh, it's a loan.

It's a loan.

I go, it's a loan for what?

It's a loan for what?

And he goes, well, I have a lifestyle to keep up with.

And I'm like, I don't understand.

Like,

he should be getting, he's retired and has now a part-time job.

So it just exploded.

Hey, it just exploded.

Yeah.

Well, thank you for trusting us with the call.

Stay on the line.

We're going to hook you up with Every Dollar.

It's the best budgeting app in the world.

We're also going to hook you up with Financial peace university so you and your daughter if y'all want y'all can watch these lessons together and

want you to begin using this app for you make a budget for you so you know where every dollar is going because right now every dollar is precious and if it's time to call an attorney go call one if it's time to call a therapist go call one

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All right, this question is a good one.

I'm going to have to process this out loud.

All right, read it.

And it's funny because I've been wrestling with something about this.

Oh, really?

Okay, I'm excited then.

Today's question comes from Gabriel from California.

Gabriel writes, I need advice on whether to take on commission work for a very popular video game.

I would get paid to make 3D digital models for game servers who have the aesthetic that I'm trained in.

I developed these skills over the past two years.

However, here's my dilemma: I stopped playing video games several months ago due to a conviction to stop playing them and just grow up.

I've been benefiting from the time away from them to connect with friends, read my Bible, and attend church activities.

I've actually lost a desire to play video games, but I could make a ton of money with this side hustle.

Should I take the opportunity or walk away because I'm afraid I'll be pulled back into that world?

So

here's where this question is with me.

I watch social media

melting us culturally.

And yet,

every day I post on it twice a day.

Right?

You're in my brain right now.

I live in it.

And so I've had this weird tension with it.

And the piece I've come to is if it's a cesspool,

if it's constantly sending people negative, negativity, things that way to divide people up and whatever,

I can tell myself I'm going to be someone who puts good out into that world.

Yep.

And so that's where I've landed right now, but I do wrestle with it, right?

If they came in and said, hey, social media is over.

It doesn't exist anymore.

That part of our business is over.

We're going to have to do something else.

I would exhale.

It would cost me a lot, right?

Understood, yeah.

But I would exhale.

And so there's a tension there.

So this is a little bit different because he's not making his, he's not able to put positivity out into a negative environment.

He's going to literally be participating in it, right?

So

part of me, I don't know.

What do you think?

I think we can look at this from two arguments.

I don't think he's created like a good versus bad argument.

Like video games are bad, therefore I'm not playing them anymore.

He's like, I found relief being out of that world.

Yeah, I think he found it more of there's better things I could be doing with my time.

This is kind of a drain on me, so I'm not going to do it.

Um,

so for him, I think it was like productive versus not productive, not necessarily good versus bad.

Like if he had said, hey, oh, I think you're evil, it's like quit them, right?

Like, I got out of video games because the chat's crazy and it's not good for kids, and people, it's dangerous, and like sex trade, all these things.

Like, if he had said that argument, I would have been like, dude, it's a moral thing for you.

You have to walk away.

But since it's more of a personal productivity thing, I would say

any,

I would, I will hold it more loosely, but at the end of the day, I would still say anything that feels like a violation of personal integrity for you, you do have to walk away from.

However, I would say this doesn't really feel like a personal integrity thing.

It feels more like you're getting older and you're like, I can't spend time on video games, so I'm not gonna.

And he's got his lived experience where he spent too much time for too many years on them.

Right.

But also, and I've, I've, I've been a, I mean, I've run my mouth about video games for a long time, but I've got buddies who play with their kids.

I got buddies who play with kids in college and it keeps them connected and they have fun and they talk trash and those little things.

Like it's so it's fun for them, but then they set it down and they go back to their to their regular lives, right?

And so, yeah, it comes down to a personal conviction at the end of the day.

Yeah.

Um, it almost feels like I don't know if this is a good analogy either.

Somebody who has struggled with alcohol gets an amazing opportunity to make a bunch of money to be in a bartender.

And

that's a bad idea.

It could be, right?

But if someone says, dude, I don't have any,

for six months, I could pay off everything.

Yeah, I wouldn't.

Probably I don't say I wouldn't go back in the bar.

Well, no, because he struggled with it.

It was an addiction.

I don't think that's a good analogy because one's like going to be a game.

But he's saying, I don't want to be pulled back into that world.

I think that

I don't know much about making video games.

So I think it has more to do,

I think, and correct me if I'm wrong because I'm not a gamer.

I think it has more to do with him than the outsider.

Because I don't know if

you're making models for this, if you actually have to be in the game and kind of like play it.

Play the game and talk about the game.

Yeah.

So if he has to be in that world in order to create for it, I think that's where more his struggle is.

Versus, I don't want other people playing these games.

I don't want other people.

Oh, yeah, because it's a moral conviction.

So, Gabriel, I would tell Gabriel, if he was sitting here, and thanks to everybody letting us think that out loud.

Yeah, right.

I would tell Gabriel:

no amount of money is worth your personal peace and your personal integrity.

Yep.

And so, if this is a matter of, I feel like this is an integrity issue for me, but I can make some good money in the short term, I would say, walk away.

Yeah, right.

There's other ways you can make money.

And the other side of it is, if you have just found peace, like, man, I love doing other things in my time and good on anyone who wants to play games.

It's not for me anymore.

And you can go back into that world and make some quick money over six months, knock your lights out.

Right.

Yeah.

Yeah.

I'm with you on that.

It's,

yeah, I was just reading back over the question.

I'm with you.

If you feel like it's, it's pulling you back, don't do it.

There's other ways to make money, and there's always going to be

temptations.

Well, and we get this call from folks who listen to the Ramsey show.

They, they buy into the message, they live it their own life, but they sell whole life insurance policies.

Right, sure.

Or they work at a, at a, at one of the big, the giant banks who take advantage of people.

So, um, and they are faced with this moral dilemma.

but i get again i think that's more of like the good versus bad argument because we're saying um

hey debt it it is truly like out to get you like it truly is out there to try to scam you try to try to trap you all those things this didn't feel like he didn't mention anything now don't get me wrong i have my own views of video games i don't want to project that onto him but If you're a person who, if Gabriel, if you're listening to this, if you do feel like, hey, I just think video games inherently, they're trying to track people.

The algorithm is there to keep you stuck, keep you locked in.

I just don't agree with that.

Like, if you do have a moral stake in it, I 100% wouldn't do it.

Yeah.

Because then you're compromising your own personal integrity.

Man, that's a good question.

It is a good question.

And I challenge everybody in their life:

if your day job at some level conflicts with what you know to be true or what you feel is to be right or true,

It's easy to bomb the job,

but there's something about taking personal ownership and saying, I can't be a part of this anymore.

Or I'm going to,

the building's on fire.

I'm being asked to steal money, but I'm going to start looking for a way to transition out of this job into something else.

I'm going to turn down this opportunity.

And both of us have gotten opportunities to go speak at a place and we're just like, you know, I'm going to sit this one out.

Everyone has to make those kind of choices.

Right.

But the fact, Gabriel, that you're even asking this question is pretty noble.

Good for you.

I think so too.

because i think it's so easy to just run for the money whatever you know what you're yes you have to have you have to have your personal moral compass and that sometimes can look different from other people it's kind of like going back to the drinking thing that you said um some people go to a party they're like hey alcohol is just not for me i don't like who i am when i have a drink right and then the other person could sit right next to you and there's no moral dilemma they're not going to act a fool they're just going to have one or two drinks go about their business and it's fine right so different things affect different people in different ways if i drink i don't feel good the next day That's fine.

Sure, it is.

I think this is wrong.

I think nobody should be doing this, right?

But whatever you bring to it, live it out everywhere.

Live it out everywhere.

And that's the good word.

Oh, good.

I liked that one.

That was a good one.

All right.

Since we just took a question that was

verbal, me reading it.

Somebody wrote it in.

Let's do another one from social.

All the questions are verbal.

I know.

I know.

That was not the right way to say it.

Okay.

Let's do this one.

This is sue from tick tock she says why does canceling a rarely used card affect someone's credit rating

okay so we tell john we tell people john uh

it's time for you to not only pay off your debt but you need to cancel it you need to close the account and be done with it not just pay it off and so she's saying yeah if you cancel this card it your your credit score initially is going to go down that's true and that's okay it's one of the factors that they use to measure your credit score right It's how many lines of credit you have open,

how many, how long have you had it open, what percentage of it are you using.

All of that affects your credit score.

And so, when you do something that affects one of those, you know, ticks in the algorithm, yeah, it's going to ding you.

But in the long run, if you just close them all and pay them all off, your score is going to roll to zero, and you're going to be a person who has a zero credit score.

And that's ultimately what we want.

Stick around.

There's more of the Ramsey Show coming up.

Hey, you guys, Rachel Cruz here.

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hey, welcome back to the Ramsey Show.

We're here in the Fairwinds Credit Union studio taking calls about your life and your money, like we always do at this time.

We got Tom in Minneapolis, Minnesota.

What's going on, Tom?

Hi, John and Jade.

Thanks for taking my call.

I got a question around term life insurance.

I'm 65, and over the years, when we had four children, over the years we I would buy

life insurance, but term life insurance, and then it would, you know,

at one time I probably had a million dollars.

I'm down to down to one last policy of $250,000.

Okay.

It has seven years left, and the annual payment's only $7

a year.

Okay.

And this questioning whether or not I should keep it because I really don't need it.

And it's just not, you you know, it's just my wife and I today.

So.

I mean, yeah, you're right.

The point is that we get to the point where we can kind of self-insure where that nest egg is big enough to where if something happened to you, your wife would be okay.

And it sounds like you have that.

Yeah, I mean,

yeah, no debt and million, you know, multiple millions of dollars put away, probably a seven or eight million dollars rate.

You're saying that the policy runs out in seven years?

It does.

In 32, it's done it, but it's only $7 a year.

Like it's $250,000.

Now, $250,000 is not going to change our life.

No.

No, but neither is $70 a month either, or $70 a year.

Right, right.

There's no right or wrong answer on this.

If you want to keep it, you can keep it.

Because like you said, the $711 a year is not changing your life.

The $250,000 is not saving your life.

I would ask your wife, how does she feel about it?

Hey, do you want this extra $250,000 coverage?

Does it give you any extra level of peace for me?

I could maybe let it go and just have that conversation.

I'm,

if it were me, I'd probably be like, just keep it around, let it play out.

But like I said, there's no right or wrong.

Yeah, yeah, okay.

So that's it.

I just,

I know she'd say, you know, she's always had her trust in my management obviously pay off.

And she can't believe we're in a place that we're in today.

So she'd just say, hey, I don't really care.

Hey, well, dude, let me be the first to tell you today.

Well done, brother.

That's awesome.

Really good like the thought that you could pass away tomorrow and your wife's gonna be okay that to me is the greatest i don't know just as a as a husband that's the greatest feeling i could have that if i if i cashed out tomorrow my wife and my kids would be okay that gives me a lot of peace call hey do me a favor call our friends at xander um what i know about those dudes is they will tell you the truth and they won't take money from you that they won't they won't try to bilk you for money they'll be honest with you and they'd be a great person to run this policy by and just cash just run through the numbers for you and

they're it whether it would save you if you just quit paying on it if you can't like they're gonna answer all those specific insurance questions so call them um they've they've the ones who did my life insurance policy me too me too yeah so let's talk a little bit about life insurance for new new listeners who are like what the heck are they talking about so here we are always we're always going to suggest term life insurance that's what i carry that's what john carries and you can get it on a you know a 15 year level term a 20 year level term and basically the term is just what it says you are covered during that that term of years.

And the level term means the price is not changing.

But the point of life insurance is for anybody who depends on your income.

So for instance, I work at my, in my home and my husband works, but if I were to pass away, that's a big chunk of income that's gone.

And so my family has a dependency on that, right?

And same thing with Sam.

If Sam were to pass away, we have a dependency on his income.

So we suggest you get 10 to 12 times your income, which a lot of people think, oh my gosh, that's a lot of money.

Like that could be be in the millions.

That's a lot of money.

And it is, but it's about survivorship.

It's about the people who are, like I said, dependent on your income long term.

They don't just need, you know, 30,000 bucks.

They need to be able to continue living until their life situation changes.

Or maybe you're a stay-at-home mom, right?

And you've been staying at home.

If you're the spouse in that situation, you want to make sure this.

mom can continue to stay home.

So you need a nice nest egg there.

That's what it's there for.

I won't get into the whole whole life thing.

I feel like that's a different call, a different time for a different day.

But I do want to say, term life insurance is a way that you love your family well.

Now, I know I hear it now, John.

People are like, Oh, I have insurance through my job.

No, you get 10,000 bucks, dude.

You have barely enough to cover the cost of a coffin these days.

That's right.

That's it.

If that anymore, that's right.

That's that could barely cover your funeral, and that's it.

So, you need more.

And trust me, it's not expensive.

Like this guy said, he's paying $711

a year.

That's nothing.

Like David would say, that's a biscuit.

Yeah.

Yeah.

So get it done.

It's so easy.

They'll come to your house and do the medical, you know, they'll draw your blood at your house.

It's easy, and then they'll set your term and you'll be set.

So that's how this works.

If you're wondering this too, my wife has a part-time job,

but the vast majority of the income is mine.

I have a policy on her.

It's not near as big as mine.

Three to four times.

But if she was to pass away tomorrow,

if you've listened to this show for five minutes, you know that my life would be in shambles.

Yes.

Right.

I would have to hire some support and help.

That's right.

There'd be plane tickets.

There would be parents coming and going.

There would be, I need help with, my whole life would fall apart.

So I'd need to hire folks to come backfill that.

And that money would add up and add up, especially when I'm in a season of grief and my income would drop because I'm on commission, right?

So all that says I got a policy on her.

It's not, again, it's not near the size of mine is, but I do have one out on her because there's going to be real cost associated to me trying to figure out how to manage my life and my kids' life with her gone.

That's such a good point.

Yeah.

When you have a stay-at-home spouse or a spouse that maybe works part-time or whatever the case, there's still a huge monetary value on what it takes to, if you're the home CEO, right?

So you're doing all the shopping and you're planning all the meals and you're taking the kids to school and you're picking the kids up.

Well, who would who would do that if that person left?

Do you have to hire a nanny?

Would you have to have a babysitter there at the house, you know, six hours a day?

That is all cost.

So please, please, please, term life insurance is what we're looking for.

And what we were talking about earlier with Tom is the idea is that you don't have to pay a premium forever.

So he's got millions of dollars.

That's right.

He's now insured.

He's insured.

His wife's insured.

And that means that whatever pops up, he's got the money that he can carry that risk now.

The point of insurance is to transfer risk when we can't afford it.

Right.

And so when you're walking through the baby steps,

you can't carry that risk.

So let the insurance company carry it.

But the hope is that you get to a point, you keep walking through the baby steps where you've got a couple of million dollars stacked up or whatever your nest egg is stacked up to where when you hit a certain point hey if somebody passes away there's enough money on that nest egg that they can draw from they can cut or you know if something happens my medical expenses will be covered as well like all that stuff is there so that's how this works it's just a really good thing to think about from time to time we get calls all the time john of and it's sad when someone passes away there was no life insurance no will and everything is just in a tailspin.

I've mentioned this several times over the years on this this show, but a couple of times

when I was doing crisis work, I responded to calls where a husband had passed away and there's a, there's just, I don't know how to describe it other than there's a very particular look

when a spouse just lost her husband and she looks and I remember one person in particular said, I have to go to work on Monday.

We don't have anything.

And it was the most harrowing,

it's like, what do you mean?

Like, we don't have any money.

We don't have any insurance.

We have nothing.

You got to figure out.

And I got got to figure out I got to go.

I got to get a job now on Monday.

We'd have no, we have no kids.

I mean, it was just such a horroring conversation.

And then the other, the other, I remember one other person in particular said, I don't, I don't know what to do.

I don't know what anything is.

I don't know if there's a will, where it is, the accounts.

I don't know if we have life insurance policy.

It was just a zoo.

And I remember being like, man.

Like, me and my wife, that's a big deal for us is where's the forms?

Where's the passwords?

Where's everything?

Because it's not a matter of if.

It's a matter of when.

Yes.

And I want that to be the last thing she worries about:

what do we have and where?

Term life insurance, a will, making sure your spouse knows where all the documents are.

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You know, last segment, we were just talking about the importance of term life insurance.

We were saying wills, making sure your family knows where all the important documents are.

And we actually have an online wills quiz because you might have been listening to that saying, hey, Jade, I don't know.

Do I, I'm 18.

Do I need a will?

Or I'm 21 and single.

Do I need a will?

Or, you know, I've been married 50 years.

My wife already knows what we're doing.

Do I need a will?

You need to take the wills quiz is what I'm telling you.

Okay.

So here are the top questions people have about online wills.

Let's talk about it.

Number one,

they ask, how do I know if I need a trust or if my estate is too complicated for an online will?

Okay, so that's a great question.

So the answer there is, if your estate is worth less than 1 million, then getting a will online is probably a really great option for you.

So if you're worth less than a million, yeah, probably online will is good.

Next one is number two.

Jade, what do I need to start my will online?

All right, making a will online or not involves a couple of big decisions.

Number one, you need to know like who's going to get my stuff.

You need to know who do you want to take care of your minor children if you have children because that's going to be all part of the will and you need to decide who do you want to make decisions if you are in some way incapacitated now i'm going to tell you right now john when sam and i made our will you kind of have to make an event out of this because it's not the most fun conversations to have and the truth is after a long day of work to come home and talk about what will happen if you're incapacitated it's not necessarily fun but hey pizza and wine helps a lot of things i'm just saying i remember i gave my wife like this big long, like, here's how I want my funeral to go.

And she was like, hey, I'm not doing chores for you.

Your funeral will be as I plan it.

And I'm like, but I wrote it down and it's in the will.

And she's like, I don't, I just sue me.

Come get me then because I don't care.

But you do.

You need to sit down and you need to decide these things.

And it's okay if it takes more than one evening or if you get kind of like mentally exhausted and have to come back to it later, just as long as you come back to it later.

Now, number three, is an online will legally valid?

Great question.

Yes, an online will is legally valid, but not just any online will you find on the internet is going to legally validate your state.

Okay.

You want to make sure your online will needs to be made to match the laws of your state, the state that you live in.

Okay.

So that's the important part.

Number four, why would I want an online will versus a traditional one made with a lawyer?

Very good question.

The truth is, yeah, they're just less expensive and they're more convenient and they take less time to set up.

So you could just pop online, do your thug fizzle, and move on versus trying to set up something with an attorney.

So if you have more questions, you can go to ramseysolutions.com slash willsquiz to find out if an online will is right for you.

All right, enough of that business.

Let's go to Sarah, who's in Georgia.

Sarah, how can we help today?

Hey there, thanks for taking my call.

I have a question about whether or not I should take out a home loan or a HELOC.

I bought my grandmother's house two and a half years ago.

And when I bought it, I knew it would need to be renovated, like down to the studs.

So that's probably going to cost about $250,000.

Gosh.

Yeah, it's going to be expensive.

I'm in a pretty good financial situation, and I've saved up $75,000 toward that.

And so

and I've got savings, I've got an emergency fund, I've got retirement, all of that squared away.

But

do I take out HELOC or a loan, go ahead and reno the house, and then after it's done, it will be income producing because I can rent out the basement and bring in about $2,000 a month.

Or do I wait and continue to save for next probably

four or five years until I have enough to just pay cash for all the renovations

see here's what I think about in these situations and I'm gonna just play this back to you and John cut in so when I hear somebody run out the two sides of like what I could do on the one side when they're talking about the debt they're like I could just get a HELOC I could get it all done I could have this income producing property I could you know and there's all these positive positive things.

But then when they talk about the cashway, it's like, well, I could wait five years and then I would just, but they're not listing all the pros on that side.

So, Sarah, we want to remind you of all the pros of paying cash because

there are pros.

And yeah, it could take longer.

But the truth is we didn't mention there would be no risk.

on your home, which was your grandmother's home, which is clearly a source of great pride and joy for you because you bought it.

So we would eliminate the risk from that.

We would allow you to sleep better at night.

We would ensure that an asset that's been in your family remains in your family.

Like there's a lot of pros on there that you didn't list that are

benefits to doing this thing in cash.

How do you, where'd you come up with the 200 number?

So I've gotten some estimates from contractor, a general contractor, and everything that needs to be done.

And it is more expensive because essentially the basement would, it'll be two full kitchens, one for my living space, one for other living space.

Yeah, and that was actually my question.

Is there a path where you phase this in,

where you completely gut and renovate your kitchen with your $75,000 and you have an amazing, beautiful living space?

And then you exhale for a year or two, and then you make a choice down the road.

Do I want to go through and completely gut and do this?

Because here's what I promise will happen.

If you have a HELOC and what you're going to do is you're going to say, I want a $200,000 HELOC against my

home.

They're going to say, well, there's always an overage or whatever.

I'm just going to give you $275,000 and whatever you don't use, that's fine.

I promise it will balloon up because they'll be like, well, what about these fixtures?

We could get these are nice.

And it just gets out of control.

And if you have $75,000, you say, this is all I have.

It just changes how you spend your money.

But is there a way you can phase it in?

Yeah, why does it have to be an income property?

Why can't it just be the place?

Or an income property later when I have the money to make an income property.

But can you get this awesome kitchen?

I'm trying to think of a new of a third way or a fourth way or a fifth way

other than I've got to borrow a couple hundred thousand dollars against an old property, which, by the way, I think that's probably when they get in the walls, they're going to find all kind of wild stuff.

And they get into the basement, they're going to find all kinds of structural, like that's just what happens on those old homes.

Or

I can't do anything for five years and I just got to sit here.

Is there a middle ground there?

Well, so it needs

new

electrical

and some plumbing updates.

And so the thought was

in the long run, it would save money by just doing all that at once versus

going in and doing plumbing in one area or fixing electrical in one area or just doing the upstairs and fixing that and then doing the downstairs.

How much would it actually save?

I don't know the exact number.

I would want to get that because I think that's one of those things that we just think, hey, if we just do this all at once, it'll be cheaper.

Well, that's a luxury.

Let's be honest.

That's a luxury for when you have money.

So let's break this down to a smaller,

we're talking about a big house there.

Let's break it down to a smaller denominator that we can talk about and it'll make more sense.

If you had a flat tire and you didn't have any money, and you're like, oh man, I have a flat tire.

I'm going to go buy a tire.

And they said, well, you should get all four.

You'll get a better deal.

You'd say, well, I can't afford all four.

I've got enough for one tire.

I'm just going to get the new tire that I need.

And suddenly it makes a lot of sense because it's like, why would they, why would I buy four tires I can't afford?

I don't even really need the four tire.

The third, you know, the other three.

I just need the one.

And so when we put it like that, you can't, it's the same thing with this house.

You can't afford, it doesn't matter if it's a better deal to do it all at once.

You can't afford it.

And Sarah, here's the other side.

The show wouldn't exist if people didn't take out a four-year HELOC on their house for a couple hundred grand and they immediately get into a construction project and then

they get sick.

Man.

Their in-laws get sick

or COVID shuts everything.

Like this show wouldn't exist if everybody's plans always worked.

And so we have the misfortune and the blessing of our whole job consists of people who had this great plan.

It's just going to be 36 months.

It's just going to be four years.

And something blows up.

And that's why, man, if you don't owe anybody any money and you put 75 grand on the table, you get a brand new kitchen, they do the wiring, and they do just the plumbing in that area.

And then something happens, you can take two years off, and you don't have this looming, hey, they're going to take our house from us because we put it on the block.

It's just

a way to take risk off the table.

And I want to do $250,000 of work on my house.

I do too.

And I still got to wait and do it little by little.

Okay, so.

Buying and selling a home is a big deal, and you want an expert in your corner fighting for you to get the right deal at the right price.

That's why we only recommend Ramsey trusted real estate agents.

They're hand-picked pros who know their stuff, listen to your needs, and have your back from the first call all the the way to closing day.

To find a Ramsey trusted agent near you, visit Ramseysolutions.com/slash agent.

Ramseysolutions.com/slash agent.

All right, welcome back to the show.

We've got Brian, who's in Phoenix, Arizona.

Hey, Brian.

Hey, Jade.

Hey,

John.

Thanks for taking my call.

Yeah, you bet.

So I'm in my late 20s.

I'm on baby steps four and six.

And I have around $40,000 that I want to spend on a car.

And I'm wondering if it makes financial difference whether I choose a new or used car for the same amount.

Interesting.

Yeah.

How much do you make?

Around $200,000.

Wow.

So you got some cash.

What do you do for a living, dude?

I am actually, funny enough, I'm in sales, financial advice, things like that.

Well played, man.

Excellent.

So, you, how old are you?

28.

28.

And you've got a great income, killing it.

What's your, I mean, what do you have in retirement?

What's your nest egg?

So, total nest egg is around $830,000.

Okay.

$310,000 is in retirement.

I've got 357 in taxable assets.

Okay.

30,000 cash, 13,000 HSA, and 120,000 on the home that I purchased last year.

Okay.

So you're a millionaire?

No, it's 830 total.

Oh, okay.

I thought you were saying 830 was in your retirement.

So

you're saying the total amount, the total amount is 830.

Okay.

Correct.

So

I do think that in this case, if you want to spend the 40,000, it's no big deal.

I would spend it on a used vehicle, though.

I would.

Tell me why you don't want to

oh no the 26 rav four is looking pretty nice

okay so if i told you you could get a 25 rav for and somebody turned the key in it and backed it off the lot and drove it right back on and burned 10 grand of that

because i because that that's the difference the moment you buy sign your name on a brand new car you drive it off the lot it's worth it's worth last year's car

and that's why we tell folks waiting and a million million-dollar net worth is arbitrary.

Like Dave just picked that number, but it's, it's basically, can you walk into your house and set $10,000 on fire in the living room?

And that's going to be, and you're okay with that.

You've got a million bucks, that's such a time, it would be dumb.

And

nobody would want you to do that, but it wouldn't change your life.

And so that's, that's the difference.

And I, dude, I love RAV4s.

My wife drives a Highlander.

I love them.

In fact, she asked me the other day if I could trade that in for a RAV4, an older one, right?

I totally love that car.

It's just what's, what is driving off the lot and immediately losing that equity worth to you.

Got it.

And I guess, would it make sense if I were to wait another year or two and buy used, if I really wanted to, sorry, buy new, if I was able to bring it up to a million?

I did that exact thing recently.

Like literally that exact thing.

Yeah, the million is a, to John's point, it's a rule of thumb.

It's something that we kind of feel like, hey, this is the point point where, to John's point, you don't care about, you can take the loss, you can take the hit.

You're very, very close.

I mean, bro,

you're so far ahead of all of humanity.

You're doing great, man.

You're doing great.

I'm going to advise you to do a used car.

If you did a new one, lightning wouldn't strike you.

Worse things could happen in your life.

But we're just telling you the rule of thumb that we think is kind of that safe point where you can really feel good about it.

Like you can feel good about driving off the lot brand new.

And it's like, hey,

if you're a rule follower it's like i follow the rules and i did this do you know what i'm saying like it's that kind of thing do i think it would break you no it wouldn't break you

at all you wouldn't feel it at all you wouldn't feel it so take that very contrasting advice but but

but you you you put it out there so let me ask you what what is waiting six months like what's what's burning a hole in your pocket right now right

My car is getting to the point.

I drive a used car.

It's the first car I had.

It's at the point where it's a lot more maintenance, a lot more money is going into it.

So I think it's ready to buy something newer.

Yeah.

I mean, like, like I say, dude, you're doing so well.

And if you think it's going to, like the, the intellectual exercise or the, the discipline of I'm going to put on the calendar four months.

I'm just going to, I'm going to make myself wait four months.

Um, and then I'm going to go buy this car.

Then if you think you need that and that'd be good for you long term, because you're, you work in sales, right?

So some years are going to be up, some years aren't.

That's the lifestyle.

So, I'm having a, I'm in a good season right now.

I'm in a season of blessing.

That's awesome.

I'm going to practice just holding off just because I can.

That's a good thing.

It's like somebody sits in a cold plunge.

Like, I just, I am going to do this because it makes me tougher, right?

And I think that'd be an awesome exercise.

But also, if you went out today, you're not, again, you're not going to be destitute tomorrow.

You're going to be fine.

But you are going to have just said, Hey, like Toyota dealership, I want to give y'all 10 grand of my hard-earned money.

Really for no reason other than I wanted this right this second.

Because here's the truth.

The truth is if you said, hey, Jade, there's a used car I want to buy, that's $50,000.

I would have said, yeah, go do it.

Because somebody else has already burned the depreciation for you.

But my point is the amount is not any risk to you.

No.

It fits your income.

It fits your net worth.

And so that's kind of the way I'm reverse engineering it in my mind.

But, you know, if you want to hit that rule of thumb, that's also great.

Here's another game to play.

What's your mortgage every month?

Like $3,000.

A $3,000?

Correct.

Okay.

So just ask yourself,

is this car today worth three months of house payments?

Yeah.

Great question.

If that's a good math, if that's a good trade for you, then cool.

Yeah,

cars are an interesting thing because if you're a car person, you're like, I'm in on it all day.

But then if you're like me, who's not much of a car person, the question that John just asked, I'd be like, no, it's not worth three months more.

You know, I'm that person because I like nice things, but for whatever reason, cars just don't, they just don't do it for me as like, I'm willing to spend this money today.

Like, I just.

And again, I want to run back what Jay just said.

Our rule of thumb here is once you're out of debt,

don't own anything of vehicles with wheels on it, toys that are worth more than half of your annual take-home income.

You make 200 grand.

So technically following that line, if you came and said, I want to buy a $99,000

if you got cash for it.

It's not about the dollar amount you're spending.

The $40,000 is nothing for you.

It's simply about, do you want to,

for the one year having it now,

do you want to burn $10,000 or $7,000?

I don't know how much a RAVFOR depreciates in one year.

I have no idea.

But do you want to burn that now?

Or do you want to go buy a 2025?

Or if the model changed and everything upgraded or whatever, do you want to wait a couple more months till December and they're going to start liquidating those cars at a lower price?

And you can pick one up there, which is what I did last year with a truck.

Do whatever you want, man.

And you're well within the rule of thumb.

Yeah,

this is not a.

But it's a principle as much as a, you're going to be in trouble of any kind.

Yeah.

Cause, and that, that's the crazy part of this rule of thumb.

If you said, hey, Jade, I want to get this $99,000 car in cash.

I'd be like, I would tell you that's dumb, but do it.

But I mean, it's not going to hurt you.

It'd be stupid, but do it.

Right.

But it goes back to that principle of can you just, can you just eat that?

Yeah.

Man, interesting conversation.

I like it.

I like it.

I like it.

All right.

I like these social questions that we have on the desk.

So if you follow us on social media,

you can submit questions.

I guess even if you don't follow us, you can submit questions.

That's the whole point.

But if you don't want to call them to the show, and this is a way that you want to ask, you could do that.

So, William from Facebook says, Is there an average amount or percentage you should set aside in your budget each year to fund for future maintenance and repairs on a home?

So, like, he's wondering if there's like an actual number that we're saying, hey, in your budget, always budget this amount kind of as a sinking fund.

It's like a depreciation.

Yeah.

My answer would be no.

Obviously, you've you've got your emergency fund, right?

Three to six months.

That is for the stuff that pops up that you didn't see was coming.

And then beyond that, I would treat it as a sinking fund.

Anything that you feel like you couldn't cash flow in a month's time.

Like some people, their income is enough that if they blew their tire out, they could cash flow it.

Other people, if they blow their tire out, that's setting them back.

So, yeah, you probably need to have some sort of a car maintenance sinking fund that you're putting $50 a month in or $25, whatever suits your budget that you're putting aside every, you know, month for that.

what else does he ask for?

Home repairs?

Yeah, again, if you know your roof is 25 years old, and you're going to need one in two years,

start putting aside for it.

So, yeah, that's a really good question.

It's not a certain amount.

There's not an amount that we say, this is the amount.

It's based on your situation and your budget.

And by the way, if you don't have an every dollar budget, I'm going to suggest you get one.

It's the best budget out there.

It's the one that I use, it's the one that John uses, and it'll help you create those sinking funds that you need.

All right, today's scripture and quote of the day, 1 Thessalonians 5.1.1, 5.11.

Therefore, encourage one another and build each other up, just as in fact, you are doing.

All right, Vince Lombardi said, confidence is contagious, so is a lack of confidence.

That's so good.

Gosh, that's what everybody needs right now.

Confidence.

Is a unified.

We got this.

I like that.

Yeah.

That'd be cool.

It makes me think of, gosh, I always go to Remember the Titans and you've never never seen it, which is me,

right?

I've seen it a thousand times.

Okay, but the last time I feel like I quoted it, you didn't know what I was talking about.

What'd you quote?

It was about mounting up on wings like eagles.

That was the quote of the day.

Yeah, and I said, like eagles, y'all.

Like eagles, y'all.

Yeah, yeah, yeah.

I totally forgot.

All right.

And then this out of context.

I've seen it a thousand times.

I was thinking about it again.

I was like, strong signs.

This one I was thinking, attitude reflects leadership, captain, right?

Anyway, moving on.

And the math teacher brings in like that film strip.

He's like, I've been breaking down the other tendencies.

I was like, bro, you're like running algorithms with a pro tracker vector.

It's a classic, classic movie.

A film, really.

You should really watch it.

All right.

Kira is in Austin, Texas.

Hey, Kira.

How can we help today?

Hi, Jade.

Hi, John.

I had a question.

My employer allows us to convert our 401k

to Roth.

And I was wondering if that is a good idea to start doing.

Yes.

Yes.

If you got the cash, do it.

Okay.

I can't do it all at once because I have quite a large 401k and the company only matches if you contribute to the 401k, not the ROS.

So over time, would that be a good investment to do?

I think so.

They only match it if it's the traditional 401k.

They don't match it if you put it into the Rothbard.

So the 401k.

Correct.

So it's still contributing to the 401k,

but I can convert it to the Roth, which is weird.

But then you can't touch that for five years.

So I'm going to go with the traditional first because the equation is match beats traditional beats Roth.

Match beats Roth beats traditional.

There we go.

So free money, nothing's going to beat out free money.

And so we want the free money first.

And then we love Roth over traditional, right?

Because when you're older and down the line, you don't want to have to pay taxes on that money.

You don't want your family to have to pay taxes on that money.

So if you can convert it, that's also a great thing.

And

yeah, I would do that.

Okay.

And I could only do a little bit over time because I don't want to get out of my tax bracket when I

like, because,

and you can correct me if I'm wrong, but it counts as income, right?

When you convert it.

And then you have to pay, like,

I don't want to move out of the tax bracket.

So if I make a a large amount, I don't want to like control.

You're over my skis on that one.

You'll have to ask a tax pro on that one.

Yeah.

Okay.

What baby supper are you on?

I'm on

four, I think.

Whatever, whatever contribute

paying down the house.

Okay.

Four or five.

So

you might want to get with the tax pro, but you should be paying.

you're paying money because you're you're basic essentially when you do a Roth, you've already paid the taxes on it.

Yeah, no, I meant when I convert,

when I convert it, so let's say I convert $50,000, don't I have to pay my tax bracket percentage for that $50,000 that I convert?

Because I have to do that.

Yes, but that's the conversion.

That's what you're

paying taxes on that $50,000 as though it was income now, and you're not going to pay taxes on it when it becomes $500,000 30 years from now.

Yeah.

So, yeah, so that's what I'm saying is like I have $330,000 in the 401k that I could convert, but I don't want to convert all of that at once because I don't have the money to pay.

Yeah, okay.

So here's the thing.

Here's the thing.

Technically, this is a baby step seven action, what you're doing here.

Okay.

So I should pay off my house before I do that?

Technically, yes, because

it's almost like if you were rolling this money over to a traditional Roth, or I'm sorry, to a Roth IRA.

It's almost like if you were doing that and we would save that for baby step seven because of the tax implication,

you're in baby step four, so there's other more important things to do than to do that.

Now, I wish

I'm thinking through this because this is the first time I've had this call because I love a Roth, but at the first, at the same time, you're getting this match over.

So I'd almost pretend like the other one wasn't there until baby step seven.

Okay, so don't convert it.

Yeah, because I don't want that.

You don't want me off my house.

Yeah, I I don't want that tax burden on you until

after baby step six.

Yep, that's my final answer.

Is that your final answer, John?

I think my final answer would be start converting that other, the backlog, if you will.

Like maybe start now, like this year's income converted.

That's what I was thinking is doing like $50,000 a year.

And what's your take-home salary every year?

What do you make?

For me and my husband, both, or just me?

Just you at your company that you would roll to, you'd do it back to a business.

$200,000.

$200,000.

Okay.

So you make a chunk of money.

Okay.

I don't mind that.

I don't mind what John said.

And keeping the past in the past, but from this point forward, whatever your current amount is that you're starting with it as a traditional, and then at the end of the year or whatever, however you want to do it, rolling that over.

I'm not mad at that.

And here's what my algorithm on that in my head is, is not a dollar for dollar.

I'm sure somebody could whip out a calculator and make a math case one way or the other.

Well, she would have been doing that anyway, like on the taxes.

Exactly.

But I'm saying, like,

in doing it out of order,

is there's a risk too.

Let's say the stock market has significant troubles down the road, right?

So there's a risk.

Anytime you're in the stock market, there's always, you're always playing a risk game.

The one thing that's not going to change is that mortgage is still coming every month.

Yeah.

And so

I want to knock out the thing that's against me all the time.

Like I want to take the risk off the table.

And that's just a personal thing.

And so I would probably roll

this year's income into the Roth to do it back to a Roth at the end of the year.

But I would, yeah, I'm with Jade.

I would save that catch up, if you will, until I've taken all my risk off the table.

But that's just me.

And that may be a terrible mathematical calculation.

I can't do the math in my head.

But that's for me just wanting to solve solve for peace in my house.

Yeah.

The only reason I was thinking about converting it since it grows tax-free once you pay taxes on it isn't anything.

It grows from it.

And I still have.

Well, that's why I said

your current amount, like whatever you're putting in there for this year and the years going forward, I'm fine with you.

getting the match and then rolling it over and then because that was a tax burden you were going to take anyway.

Yeah, exactly.

Whereas the big chunk, the 330 or 40 or whatever it was, that's a bigger tax burden.

And like I'm with you on John.

Would you rather not have a house payment?

Save the big chunk as a baby step seven action.

Yeah, that's a good question.

And that will cost you for everyone who's yelling and screaming into their

YouTube channel.

Yeah, people aren't going to agree with it.

It's going to cost you, and Dave may disagree with me, but it's going to cost you potential compound growth that, I mean,

it's going to cost you money to keep it there, right?

If you're going to roll into a Roth and it could have grown tax-free,

there's going to be a penalty there, right?

It's going to cost you something to not make that action.

But it's also going to cost you money that could have paid down your house principal.

Right.

It's a purpose.

And that house principle never is going to go away.

And so I would take that risk off the table first.

That's just me.

It's a prioritization.

We would say that

if somebody called in today, and even though this is through her employer,

if somebody called in today and said, hey, I've got $500,000 sitting in my, you know, in my traditional fund, should I roll it over?

But they had a bunch of a pile of debt sitting there and they had payments.

We would still walk them through the baby steps.

And so in the baby steps, any type of

conversion, any type of investing over 15% is a baby step seven action.

And so that's the way it rolls.

And it's just, like John said, it's keeping the priorities, the priority, which is getting peace and getting your house paid off would come first in that.

But I do love the idea of my, the people who come after me being able to get all of my retirement with no taxes.

Absolutely.

It's yes,

it is important to do that.

If you can do it, do it.

And if you can only do Roth, only do Roth.

But like I said, free money, that's again, that's going to trumpet at this point.

So that's the way it works.

All right, guys, enjoyed hanging out with you today.

Remember, there's only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.

Thanks for watching the Ramsey Show.

See you next time.