He's Behind On His Bills and Wanting to File For Bankruptcy

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From the Ramsey Network and the Fair Winds Credit Union Studio, this is the Ramsey Show.

Speaker 2 I'm George Camill, joined by Ramsey personality Jade Warshaw, and it's open phones at 888-825-5225.

Speaker 2 John is going to kick us off in Indianapolis. What's going on, John?

Speaker 3 Hey, how you doing? My name is John.

Speaker 4 We got that part.

Speaker 3 I'm sorry. I want to know, should I file bankruptcy?

Speaker 3 And if not, how do I get out of debt?

Speaker 4 Wow.

Speaker 6 John,

Speaker 6 tell us what's got you feeling like bankruptcy is your only option.

Speaker 6 Tell us your debt. Tell us your income.

Speaker 3 So the debt that

Speaker 3 me and my wife is in is $30,000. My income is close to $3,500 a month.
My wife's income is close to $2,000 a month. She just now started back working.

Speaker 2 Okay. Good.
So you're bringing in $5,500 a month as your take-home pay?

Speaker 7 Yes.

Speaker 4 Okay, good.

Speaker 6 So

Speaker 6 is it possible, if you said she's just started back working, is it because she just had a baby?

Speaker 7 Yes, of course.

Speaker 6 Okay, so I'm feeling like you might have been in a really, really tight season because she wasn't working and bringing in the money, and now she's back to working.

Speaker 6 So has it, has there been a little bit more breathing room since she's been back working?

Speaker 8 Yes, it has.

Speaker 7 It really has.

Speaker 6 Okay, that's good.

Speaker 6 So the good news is, you know, I was expecting you to say we have, you know, $290,000 of debt or $490,000, you know, but the $30,000, when I hear that, I go, oh, we can do that, George.

Speaker 2 This is a solvable math problem. Yeah.
What kind of debt is the 30? Break it down for us.

Speaker 3 All right. So most of it is personal loans.

Speaker 3 Being brought up or being

Speaker 3 gotten the time that she wasn't working.

Speaker 3 And also because I have two other children I'm on child support.

Speaker 4 Okay.

Speaker 5 So the time when I have them,

Speaker 3 it was tough. I didn't want

Speaker 3 my kid that I have with my wife looking nice and being able to do nice things and with them not being able to. Of course.
So

Speaker 7 it's more personal loans.

Speaker 3 My child support went up within a year. So I'm paying $7.46 a month.

Speaker 3 I took out another loan to pay a lawyer so I would be able to get the visitation rights.

Speaker 6 How much did that cost?

Speaker 3 $4,500.

Speaker 6 Okay, so $4,500 on visitation. Is all the $30,000 personal loans and credit cards?

Speaker 7 Yes, yes.

Speaker 4 No cars, no student loans.

Speaker 3 One vehicle, $18,000.

Speaker 6 Well, that's a big part of it.

Speaker 2 That's half. Is that on top of the $30,000, or is that part of it?

Speaker 10 Part of it. Okay.

Speaker 2 So $30, in total. What's the car worth?

Speaker 3 The car is worth about $10,000.

Speaker 2 So you're $8,000 underwater on it?

Speaker 3 Yes.

Speaker 6 Is that, when was the last time you checked that? Was that private sale? Was that what the dealer will give you? Did you only go to one dealer? Tell us about your due diligence on that.

Speaker 3 So I checked that last night when I was looking at

Speaker 3 Credit Karma.

Speaker 6 Okay, so what I want you to do, your homework is let's go on Kelly Blue Book and let's see what it would do if it was a private sale.

Speaker 6 Because chances are you're going to get more for it than that for private sale. And I would be interested in knowing a little bit more about that to make the next decision.

Speaker 6 What I want to know from you, John, is you guys have a fine income, $5,500. Yes, $746 goes to child support.
That's fine. How much are you paying for

Speaker 6 or mortgage if you own your home?

Speaker 3 So my mortgage is $1,175.

Speaker 6 Okay, that's not bad.

Speaker 6 Is there another big expense that we should know about? That's eating your lunch?

Speaker 3 No,

Speaker 3 that's mainly it. You know, besides utilities and

Speaker 3 gas and my truck.

Speaker 2 What's the total of all of your debt payments? Just making minimum payments. What does that add up to for the month?

Speaker 4 For the car, the personal loan.

Speaker 5 So, and that's the thing.

Speaker 3 I haven't even been able to make a payment yet. Or, you know, I have, I just haven't done it.
So, maybe.

Speaker 6 Do you know what I think, John? I think that you would really benefit from a budget, a digital budget that you can.

Speaker 6 put your income in at the top, the $5,500. And then in the budget, you will list out everything that you spend money on.
And

Speaker 6 every dollar, which is what I'm going to give you, the best budget out there, it's going to keep a running tabulation of how much money you can spend.

Speaker 6 So you'll put in, I make $5,500, me and my wife combined, and then you'll list everything out.

Speaker 6 Okay, here's what we spend on groceries, here's what we spend on rent, here's what we spend on gas, utilities, everything for the month.

Speaker 6 And then after all of those things that are necessity for you to spend money on, then at the end, you're going to see, okay, how much is left?

Speaker 6 Now, with what's left, you've got a couple of choices, John.

Speaker 6 You can say, okay, with the two, with the $2,300 that's left, we can either squander that on DoorDash and Takeout and Target and Amazon Prime, or we can take that extra money and we can use it to start knocking down this 30,000.

Speaker 6 But what happens is if you don't give that margin, that extra money, an assignment, it just, poof, it just goes away, right, George?

Speaker 2 Exactly. So if you can learn to live off, you know, let's say $4,000 out of the $5,500, if I said, hey, come hell or high water, you guys got to figure this out.
Could you make that work?

Speaker 7 Yes, yes, we can.

Speaker 2 Because guess what? That means you got $1,500 left over, which means you're debt-free in less than two years.

Speaker 2 Bankruptcy at this point, it feels like my back is against the wall, and this is a great shortcut, get out of jail-free card.

Speaker 2 But the truth is bankruptcy is going to, number one, implode your financial world for the next seven to ten years on your record, which is going to hurt your ability to do pretty much anything.

Speaker 2 And then on top of that, we didn't change the behavior that got John into this mess. And so the best way to get out of this is to avoid bankruptcy and just do the debt snowball method.

Speaker 2 And this is real clear. Just pay off the smallest balance first and ignore the interest rates.
So, what's your smallest balance debt right now?

Speaker 10 $400.

Speaker 2 Perfect. So, next paycheck, you could knock that out.

Speaker 2 If you paid that off before you did anything else, you could knock out $400, right?

Speaker 12 Yes, I can.

Speaker 2 So, then you free up the payment that you were making on that $400, right?

Speaker 2 So, we roll that into the next debt. So, what's the next smallest balance?

Speaker 3 The next smallest balance, I think, is $748.

Speaker 2 You could probably knock that one out too with the next paycheck.

Speaker 6 Yep, in one month.

Speaker 2 So one month, you've already cleared two debts. Do you see the progress and momentum that the debt snowball gives you?

Speaker 7 Yes, yes, I do.

Speaker 6 So that's the math part of it, which works every single time if you do it. But I'm going to tell you the emotional side, what's going to happen to you later this month.

Speaker 6 When that check comes and you've paid the things like the rent and the utilities, you've gone and gotten groceries, you've put gas in the car, you're going to see that money sitting there and you're going to see Olive Garden and you're going to want to go out to Olive Garden.

Speaker 6 And there's there's going to be a movie that came out, and you're going to want to go see the movie.

Speaker 2 And the kids want to go, and you've got them, and you want to impress them. You want to show them your love.

Speaker 4 The boys want to have drinks.

Speaker 6 The boys want to go have drinks. That's what's going to happen.
And then you're going to go to yourself. You're going to say, well, I work hard for this money.

Speaker 6 Shouldn't I get to spend it the way I want to spend it? Can't I start this next week? Can't I start it next month? Well, my wife, right?

Speaker 6 And it's going to, all the excuses and all the emotions are going to start setting in. Am I wrong?

Speaker 9 No, you're definitely right.

Speaker 6 Right. So now that we've shed light on it, now that we've told you this is coming, you'll be,

Speaker 6 your awareness will be heightened and you'll say, man, it's happening. That thing that George and Jay told me about is happening.
I have a choice to make. I am at a crossroads.

Speaker 6 Critical, John, because the time is going to pass anyway. And you can look up in two years.
And like George said, you can be completely debt-free.

Speaker 6 Or you can let your emotions control you and you can look up two years and you can be calling us back in the exact same situation.

Speaker 2 You're going to knock this out real fast, John. My guess: 18 months.
If you and your wife get on that budget and hang on the line, Christian's going to pick up.

Speaker 2 We're going to gift you every dollar to make it super easy.

Speaker 2 Download the app, get on the same page, list income and expenses, and then make a plan to create as much margin as possible to get out of debt as quickly as possible.

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Speaker 2 Carly is in South Carolina up next. Welcome to the Ramsey Show, Carly.

Speaker 15 Thank you for having me. How are y'all doing?

Speaker 2 Doing great, good.

Speaker 5 How can we help?

Speaker 15 So my question is,

Speaker 15 how can I pay off my credit card debt so that I can create a savings? But after I get paid and I pay all of my bills, I literally have nothing left over.

Speaker 4 Well,

Speaker 6 that's a math problem. That's an income problem, Carly,

Speaker 6 which

Speaker 6 I'm going to be honest with you because we've been doing this show for a long time.

Speaker 6 I'd rather you have an income problem where you can just go out and work more, create some margin, and now we solve the problem versus you having to cut everything out of your budget because you've already done that.

Speaker 6 That's the good news. You've already cut everything down, haven't you?

Speaker 2 Yes.

Speaker 2 So, what do you make, and what are you spending?

Speaker 15 Okay, so I'm a teacher, um, and I only bring home thirty-eight hundred dollars a month.

Speaker 2 All right, what's your rent?

Speaker 15 My mortgage is $2,100 a month. I have a $550 car payment, and daycare is about $700 a month.
And I do want to say I am a single mom of five, so I'm doing this on my own.

Speaker 15 So it's really hard to save when I have five kids. And then, so

Speaker 15 I've paid everything, like my utility cell phone bill, car insurance. I have nothing left over.
No, you don't. I've been having to use

Speaker 4 your heart.

Speaker 15 No, he he is not involved at all.

Speaker 2 I mean, legally, I feel like he should be.

Speaker 15 I agree.

Speaker 15 I don't know where he is.

Speaker 15 And when we were together, we've known each other since high school. And when we were together, he was on again, off again with jobs.
I've always been the sole provider.

Speaker 6 So even if a judge was going to make him pay, nobody can find him to make him pay. Is that what you're telling me?

Speaker 6 Correct. Yeah.
Okay. So I'm going to point out two major problems.
And I'm just warning you right now. this is going to be a lot.

Speaker 6 Number one thing is with your $3,800,

Speaker 6 your rent is more than 50% of your take-home. And it is extremely, it's almost impossible, Carly, to make that happen, especially when you have

Speaker 6 another high bill, something like insurance or a high car payment. So

Speaker 6 that right there must change. Second thing is.

Speaker 15 I'm sorry. I just bought this home in January.

Speaker 6 I understand.

Speaker 6 That's why I said this is going to be very, very tough

Speaker 6 because no one, home is security, right? Home equals security. No one wants to be told that their home is too expensive.
No one wants to be told that they might possibly have to sell, right?

Speaker 6 That's the worst thing I could have said to you emotionally. I understand that, but I'm just, right now I'm telling you the math.
Math doesn't have emotions. That's the math.

Speaker 6 50% over 50%, almost impossible.

Speaker 6 Unless you see a world where your income is going to double, because that's the next problem is your income is quite, it's on the low side for a single mom with five kids. And I'm not,

Speaker 6 I'm just telling you the facts. So we've got to solve for these very tough problems.
Does that make sense?

Speaker 2 Yeah. When did you get the car?

Speaker 15 Well, my car I've had since 2019, and I had to refinance

Speaker 15 one time.

Speaker 15 So it's going to actually be paid off in June.

Speaker 4 Okay. Well, it's based on your current payment?

Speaker 6 Yeah, what do you owe

Speaker 6 a little bit over four thousand okay so it's almost done all right so just based off you making the payments you should be done in June July I like that but it doesn't that's going to give you some breathing room but at this point the only way you're making it to June July is if you're putting it on credit cards which is what you said so how can we bring in some more money Tell us, is there any margin of time?

Speaker 6 Is there anything you could do that is work from home, that is something you can do on the internet when the kids are asleep?

Speaker 2 Is there any margin of time for school tutoring, something?

Speaker 15 I have looked into all that. And with it just being me, we have no family here.

Speaker 15 I have to pick up my kids at a certain time. And I'm telling you, by the time I get home after dealing with high schoolers all day, I'm exhausted.
And then I have to come home and be mom. Okay, yeah.

Speaker 15 And I have looked online to do like online tutoring and things like that. But like by the time I get my own kids situated, it's too late to do anything else.

Speaker 6 Where's your family?

Speaker 6 Like your extended family?

Speaker 15 I'm three states away.

Speaker 6 Okay. What caused you to come to South Carolina?

Speaker 15 Because the cost of living was cheaper.

Speaker 6 Okay. And your family, where

Speaker 6 you said three states away, where are they?

Speaker 15 Virginia.

Speaker 4 Okay.

Speaker 6 Okay. Got it.

Speaker 6 I want to know about, here's what I'm talking about.

Speaker 6 You're in a place, it sounds like you're a little isolated, where there's not folks you can reach out to that might be able to help you, be able to free up a little margin to be able to work more.

Speaker 6 That's one thought that I'm having. Other thought is, like I said, this house is too expensive.

Speaker 6 Is there a place where we can move and teach and maybe make more as a teacher and be able to have a lesser rent?

Speaker 6 These are the problems that we have to solve because I think you and I can both agree we can't keep going as it is, right?

Speaker 5 Right.

Speaker 4 So something has to change.

Speaker 2 I'm sorry, what'd you say? What's your total debt right now?

Speaker 15 $7,000 on a credit card with an interest rate of 23%.

Speaker 2 Plus the $4,000 on the car.

Speaker 2 Yes. So we're at $11,000 total.

Speaker 18 Yes.

Speaker 2 Okay, that's all the debt.

Speaker 4 Okay.

Speaker 2 Well, the good news is, as far as debt goes, that's one of the lower numbers we've heard on the show.

Speaker 2 But the problem right now is you're underwater every month and there's no hope that the income's going to go up or the expenses are going to go down, at least until the car is paid off.

Speaker 2 So have you stopped going into debt? Are you able to float the bills right now and just get by? Or are you going swiping that credit card every month?

Speaker 15 I'm able to pay my bills with my income. What I'm putting on the card is groceries, gas, and like toiletries, household items, stuff like that.

Speaker 6 Yeah, you're not going out doing the most, having fun on credit cards. You're just surviving.

Speaker 5 Correct.

Speaker 6 And that's the part. Yeah.
So, yeah, when June, July comes and you're able to get the $5.50 back, that is going to help, right? Because how much every single month are you putting on credit cards?

Speaker 6 Do you know the exact number?

Speaker 15 Oh my gosh.

Speaker 15 Groceries alone is like at least about $800 a month.

Speaker 15 And then if I'm having to get gas because I drive an SUV, that could be like

Speaker 17 $3.20 a month.

Speaker 15 And then like toiletries and things like that, maybe another two.

Speaker 6 Yeah. So $1,300 a month burn rate, it's too much.
Cause if you keep doing that until June, July, you're going to look up and instead of having.

Speaker 6 Yeah.

Speaker 6 So I'm saying that I don't want to scare you. I'm not trying to, I'm trying to give you hope to see, hey, if we can shake this loose, you can get to a better situation.
But it can't stay like this.

Speaker 6 We got to look at housing that's.

Speaker 6 less expensive. We've got to look, start looking tonight.
My homework for you tonight is let's look at teacher salary in other states. Let's look at the ways to increase your teacher's salary.

Speaker 6 Let's look at those sorts of things and start getting some ideas of how you can make a little bit more money there on the side. Then I want you to look at, okay,

Speaker 6 where are some people? Where is my family? Let me look at the cost of rent over there.

Speaker 6 Let me see what it would take to get a three-bedroom apartment or what would it look like to have a two-bedroom apartment for a season and have three kids in the room and two kids in the living room on a pull-out couch.

Speaker 6 Like there is going to be a level of sacrifice here that you're not going to like. And I'm just keeping it 100 with you.

Speaker 6 Fair enough? Yeah.

Speaker 5 Yes.

Speaker 6 And I'm saying it because I love you. No part of this, no part of what it's going to take in this next season is going to be fun.

Speaker 6 What is going to be fun is when you finally get out of debt, when you can finally sleep at night because the bills are paid, the groceries are bought, the gas is bought, and none of it was on a credit card.

Speaker 6 That's going to feel, it's going to feel so good. It'll make all the sacrifices worth it.

Speaker 2 Right. What's the age range of the kids?

Speaker 15 They are 17, 11, 9, 5, and 2.

Speaker 2 Okay, what's the 17 year old doing?

Speaker 15 She's in school. She's a junior in high school.

Speaker 2 Is she working part-time?

Speaker 15 She's actually about to start next week. She got a job at Burger King, actually.

Speaker 2 Okay, good. This might be a hard conversation as, you know, she enters adulthood and you know, let her know what's going on.

Speaker 2 Because if she can help out during this time, even covering her own stuff, and say, Hey, I got to cover the young kids, if you can cover your own bills, that's going to really help mom out as she tries to climb out of this hole and get out of debt.

Speaker 2 That's going to be a tough conversation. But as the kids get older, hopefully, they're out of daycare.
This is a season, it's going to be longer than you want it to be, but it's a season.

Speaker 2 And if you can get rid of that car payment and daycare is off the books, and maybe we move to renting long-term or we get the income up, then we can breathe.

Speaker 2 So, we got a lot of variables to solve here. We're rooting for you.

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Speaker 2 Welcome back to the Ramsey Show. I'm George Campbell here with Jade Warshaw.

Speaker 2 If you're enjoying the show or any other Ramsey show, hit the like button, hit the subscribe button, hit the share button wherever you're watching or listening.

Speaker 2 It means the world to us and it helps spread the word and get this into more ears and hopefully help change some people's lives. Tim is in Detroit up next.
What's going on, Tim?

Speaker 7 Hey, guys.

Speaker 20 Thanks for having me on.

Speaker 2 Absolutely.

Speaker 4 That's your question.

Speaker 20 So I've recently run into,

Speaker 9 I guess, a tough conversation with my wife. She got together with some friends and kind of talking about our financial situation.
I pretty much run the show.

Speaker 9 I don't rein her in too much or anything, but I've been accused now of being kind of financially manipulative or controlling.

Speaker 9 And I'm hoping for maybe a diagnosis from you guys or some advice on how to navigate this.

Speaker 21 Well,

Speaker 6 I love that you're bringing this up and saying,

Speaker 6 I want help. I think that alone lets me know that there's a lot of hope here if what's being said is true.

Speaker 6 I will say, based on the first words that you said, like, you know, I kind of run the show, that does make me think, okay, one person is carrying way more of this load than they should.

Speaker 6 Now, I will say,

Speaker 6 it's one thing if you have said, honey, I got this.

Speaker 6 I'll do it. Matter of fact, I don't really need your involvement.
And it's been like that. And it's another story if she's kind of been like fine with you doing it.

Speaker 6 She's been fine with you handling it. She has not shown an interest in it.
It takes two to tango on that part, right? So tell me how it's been and be honest.

Speaker 6 Has it been more of the latter or more of the first scenario?

Speaker 9 You know, we're a very good team.

Speaker 9 Finance in general tends to make her a little bit nervous. So this kind of happened out of necessity.

Speaker 9 We both came into our marriage with basically nothing, a little bit of debt on both sides, worked our way out of it. We're basically on baby step six.

Speaker 20 And

Speaker 9 the system that's kind of evolved is

Speaker 9 she has one debit card, access to one account, and just kind of does her daily spending on that. I'm paying all the bills and making sure money goes into all the IRAs, paying the mortgage.

Speaker 6 Does she have the passwords to all the other stuff?

Speaker 9 She has passwords to maybe about half of it. She doesn't have passwords to like the retirement stuff only because

Speaker 9 she has really no input. I give her kind of a,

Speaker 9 you know, a check-in maybe every six months or so.

Speaker 4 But if she if she asked for it,

Speaker 6 if she asked for it and said, Tim, can you send me the passwords to everything? Would you have a problem with giving them to her?

Speaker 9 No, absolutely not. And in the past, she ran her own IRAs and stuff, and I would

Speaker 8 have to

Speaker 9 remind her to kind of, hey, go in, reinvest your dividends and stuff like that.

Speaker 2 So where do you think this is coming from with her friends?

Speaker 9 She's not comfortable handing off, but now, you know, it's been kind of called into question.

Speaker 2 Has she come to you with this before she spilled the tea with her friends?

Speaker 2 No,

Speaker 21 this all kind of happened organically, the system that we have.

Speaker 9 And now that she's revealed it to her friend group, they've said, hey, that's messed up.

Speaker 2 So they were like, hey, red flags. And then your wife came to you and said, hey, I was talking to my friends, and they're seeing some red flags with the way you're managing our money.

Speaker 9 Yeah, basically they're saying, hey, she should have, yeah, she should have more input, more say.

Speaker 11 And she should.

Speaker 7 I would like to

Speaker 9 say, too, I don't restrict her spending in any way.

Speaker 20 She has the same sort of freedoms that I do.

Speaker 11 Yeah, too.

Speaker 9 Similar spending patterns.

Speaker 4 I don't think this is an indictment on you.

Speaker 23 Packages. Yeah.

Speaker 6 I don't think this is an indictment on you. Based on what you're saying, I think, like you said, this kind of has happened organically.

Speaker 6 I think out of necessity, like you said, you kind of took the wheel on things and it just ended up this way. I think her friends may have heard her say something without full context.

Speaker 6 And maybe they were like, oh, girl, you got to change this, right? Whatever.

Speaker 6 What I'm hearing is what happens, I think, in a lot of relationships where one spouse, money's not really their bag.

Speaker 6 They don't really care a whole lot about it, so they're fine with letting the other spouse do it.

Speaker 6 The problem with that is what we're seeing now, which is something happens, and there feels like a bit of a loss of control.

Speaker 6 Suddenly, they're feeling like maybe I don't know what's going on, and I should know what's going on. The truth is, it's on both of you guys,

Speaker 6 how this has happened. And I really think it's probably pretty simple to get it back on track.

Speaker 6 I think it's you telling her what you just told me, which is, you know, what, honey, this has happened, and it's just as much on me.

Speaker 6 I should have pulled you in more, and I should have made sure that it and let you know that it's really important for me for you to be an equal part in this. And for that part, I'm sorry.

Speaker 6 Going forward, I do, I think both of us should have a handle on what's going on. I am happy to show all the passwords, I'm happy to log into everything.

Speaker 6 I want full transparency, but I also need from you going forward to demonstrate interest in this so that it can be both of us on this. What do you think she'd say to that?

Speaker 6 It's,

Speaker 11 I think she'd probably like to hear that.

Speaker 11 You know,

Speaker 9 like I said, the finances have caused her a lot of anxiety in the past.

Speaker 11 That's why we ended up here.

Speaker 5 I think even.

Speaker 4 Wait, go back. Why?

Speaker 6 Why anxiety?

Speaker 9 When we got together and when we got married, I had a tiny bit of debt, but a couple of bucks. She was in more debt than I was.
And it

Speaker 9 kind of caused a little bit of shame. And we dug her out of that and everything.
And I think maybe to date, she still kind of holds some of that.

Speaker 9 But we've done really well. And it's been,

Speaker 21 she works, I work. And

Speaker 9 it's all been okay, but I'm not sure really what she would do with that information or if she would even go in and check it. I mean, yeah, I would never deny her any of those things.

Speaker 6 So if I were you, I mean, we're talking numbers. We started talking numbers, but it does sound like it's an emotional conversation to me.
And I'd start there.

Speaker 6 That's where I would start with the conversation. I'd say, hey, I've really been thinking about what you said and numbers, account information aside, rest assured, we can share all that.

Speaker 6 I just want to understand how, how the, how long have you guys been married? I want to, you know, how has the last 15 years made you feel?

Speaker 6 I'm thinking about when we came in this relationship with debt, it felt like you were carrying some shame.

Speaker 6 I want to know about that. I want to talk about that.
Like start from that place because then you're going to understand why she says everything else that she says going forward and vice versa.

Speaker 6 Yeah, I. I appreciate that.
I can do that.

Speaker 6 You know, because she might be thinking, if she's still carrying that shame, I mean, the thing you got to understand with financial shame is it's not just something I did.

Speaker 6 It's an identity that I now am. I'm the one who was bad with money.
I'm the one who slowed us down. I'm the one who wrecked everything, right?

Speaker 2 And they deserve a vote in this marriage when it comes to money. Yes.
And that turns into when you just are gabbing with the gals. Oh, my gosh, he's so controlling.
He doesn't let you have a say.

Speaker 2 And now she's going to have an existential crisis. And so I think this is

Speaker 2 between you two. I don't like that it's even gotten this far where it's turned into like a gossip mill and her friends are involved.

Speaker 2 This is just a marriage issue where we go, hey, we have not been on the same page communicating. We've done well in spite of all of that.
We're doing good financially. And I need to bring you into it.

Speaker 2 And I need you to care so that this doesn't turn into you saying, well,

Speaker 2 I never knew. You never told me.
And so, again, to Jade's point, she needs to be interested and curious. And you need to be forthcoming.
And then we need to be aligned.

Speaker 2 If we played the newlywed game and I said, hey, what's y'all's net worth? What's your next financial goal? How much are you investing? What kinds of things are you invested in?

Speaker 2 I want her to have the same answers as you.

Speaker 23 Yeah, yeah. And that's probably the difference because she, I don't think, could really answer any of those questions.

Speaker 2 And right, it's probably because like it feels overwhelming. She feels shame.
She's not the type of person who understands all of this stuff.

Speaker 2 And so what you can do really well is put the cookies on the bottom shelf and just help her understand what you're doing in a non-patronizing way and say, we're a team.

Speaker 2 We're building this thing together. And I want to make sure you know where we're going so that you're not upset upset when we get there.

Speaker 4 Understood. Yeah.

Speaker 6 I think you guys will get on the same page. I love that this happened for you.

Speaker 6 I think this is going to be a catalyst for a much more open, a much more trusting, much more transparent relationship, not just with money, but the two of you as people.

Speaker 6 You want to know what? I'm going to send you my book, What No One Tells You About Money. It's not going to come until later because it's still on pre-order, but we're going to write your name down.

Speaker 6 We're going to send it to you and your wife so you can read it Because the emotional part of money is the part that nobody talks about.

Speaker 6 And a lot of times it holds people back, like we've seen, Tim, with you and your wife. But no longer, I'm going to help you fix it.

Speaker 6 Hey, y'all, you know, I'm all about keeping your budget in check, especially during the holidays. And that's why I always start my grocery shopping during the holidays at Aldi.

Speaker 6 From fresh produce to holiday favorites and charcuterie boards for parties, Aldi has it all. And at prices that will help your family save big, up to $4,000 a year for a family of four.

Speaker 6 So do what I do for my family: shop at Aldi first to save on groceries without sacrificing quality or holiday joy. Find a store near you at Aldi.us.
That's A-L-D-I.us.

Speaker 24 Savings based on regional analysis of Aldi versus select competitors. Prices may vary by location, product availability, and the market.

Speaker 2 Well, Jade, a lot of the calls so far this hour are less about the math and the money and more about the emotions behind it.

Speaker 6 Absolutely.

Speaker 2 I'm scared because I can't make ends meet and I'm continually going to debt.

Speaker 2 I have shame because of my past financial mistakes and now I don't trust myself to even be involved when it comes to money in my marriage.

Speaker 2 And I love what you talk about in your new book, What No One Tells You About Money, because you're finally telling us the emotional fight is real and you got to be aware of it.

Speaker 6 That's right. I mean, we've all been guilty of it.
We're looking for, we know there's a problem and we're looking for the fix And there is a solve, right? There's a proven plan.

Speaker 6 We know the baby steps work if you work it. But we forget to talk about the person in the mirror who has the ability to steer the whole thing off course, right?

Speaker 6 And it's because our emotions, I mean, just in the last 45 minutes, George, we had to tell somebody to sell their house. We've had to tell people to have difficult relationship

Speaker 6 conversations with their spouse. That is not easy.
That is, that has nothing to do with dollars and cents. That has to do with how are you feeling?

Speaker 6 That has to do with giving up a piece of you that you've worked so hard for. That has to do with dealing with past mistakes.
That is all emotional. Has nothing to do with the debt snowball.

Speaker 6 You see what I'm saying? And so you need both. And so that's why I wrote this book because I, I mean, I.

Speaker 2 You've been there.

Speaker 6 I know what it feels like, George, to, you know, stand in the mirror and you're just crying because your life is not. what you thought it would be at this point.

Speaker 2 And you wish someone told you. So here's Jay telling you.
So go get the book. It's on pre-order right now for $24.99.

Speaker 2 You get over $100 in free bonuses, like the enhanced audio book, early access to the e-book, instant access to a Jade video, your financial checkup, and a book-exclusive three-week online book club with a live Q ⁇ A with Jade.

Speaker 2 So go check it out. Ramseysolutions.com/slash store.
If you're watching on YouTube or podcasts, just click the link in the description. Michael is in Columbia, South Carolina, up next.

Speaker 2 Welcome to the show, Michael. How can we help?

Speaker 21 Hi, guys. Thanks for taking my call.

Speaker 21 First off, I want to say I started taking FPU in January of this year, and it has completely changed the way I look at my finances, has really helped me crush a lot of my debt.

Speaker 21 So the class is highly worth it. Love to hear that.
Yeah,

Speaker 21 in January, when I put all my debts down on paper,

Speaker 21 a total of 10 credit cards and two vehicle payments,

Speaker 21 two vehicle notes, I was around $90,000 in debt. I've brought that down to $65,500 in the past 10 months.

Speaker 7 Good.

Speaker 21 I cut up seven of the the 10 credit cards. There's three that are still open that have a balance on them.
And then the two vehicles

Speaker 21 are the majority of that balance.

Speaker 21 So my question is: anytime I've got an extra income, I've put it towards the debt snowball. I'm trying to get out of baby step two as fast as possible.

Speaker 21 I have a unique situation, and I have my stepson is 19. Our child is nine.

Speaker 21 Back in 2019, I had a little bit of extra income. I put it into a 529 account for both of them, about $4,000 each.

Speaker 21 That has gone up when my 19-year-old graduated high school in 2024. He went to a local community college, totaling about $3,000 for both semesters, which is very affordable.

Speaker 21 After the semester ended last year, he came to us, said, I'm not interested in college. I don't want to go.

Speaker 21 So I was told that the people that managed the 529 account, I can just roll his amount into my son, my younger son's amount.

Speaker 21 My question is, between their two 529 accounts, it's about $11,500.

Speaker 21 I have roughly eight to nine years before my youngest even will go to college.

Speaker 21 I know I get penalized for taking money out of the 529 account for you if I'm not using it for school. That's right.

Speaker 21 Is it worth it taking that money out now, getting penalized and putting it towards my debts?

Speaker 21 and then

Speaker 21 building it back up for my younger son after I'm debt-free? Or is it better to keep it in those accounts for the time being until he goes to school eight, nine years from now?

Speaker 21 If he goes to school eight or nine years from now,

Speaker 6 I have some thoughts in my head about it. Can you tell me more about these cars though, before I tell you my thoughts?

Speaker 21 Yeah, I'm sure it's not the Dave Ramsey way, but these were purchased. We moved to South Carolina three years ago and we drove hoopdies for a long time.

Speaker 21 So in 2022, right after we moved, I did end up buying buying my wife a more reliable vehicle. I bought her a 2022 that had a 2022 Hyundai that has about 15,000 left on it.

Speaker 6 15,000? What's it worth if you sold it? Just curious.

Speaker 21 That I don't have off the top of my head.

Speaker 8 I do not know.

Speaker 6 Do you think you're upside down?

Speaker 7 No.

Speaker 21 No, honestly.

Speaker 21 One of the things why I took FPU, the reason I took it was that I was... I'm like, I make good money.
My wife makes okay money. So like, how do we just never have money?

Speaker 21 And when I looked at stuff, I was like, oh, well, we're paying for this. We're paying for this.
So I feel like the last 10 months, we've really turned our life around financially.

Speaker 21 Where I handle the finances solely. Not that I don't keep my wife involved.
It was just when we got together, she's like, I'm not into finances.

Speaker 4 Did you hear the last call?

Speaker 21 I did. And I was actually laughing during it because it's the exact same thing.
My wife, I tell my wife all of our financial stuff, but she just is not. She doesn't want to pay the bills.

Speaker 21 She lets me handle that. And that was even before we got married.
When we got engaged, she's like, I'm going to have you handle the finances.

Speaker 6 Interesting. We'll talk more about that later.
Tell us about car number two.

Speaker 21 Car number two is a vehicle that I bought for myself.

Speaker 21 It was a 2024 that I bought in 2024, a Toyota truck. The vehicle I had before it, I drove literally until

Speaker 6 about this car because what you're doing is

Speaker 6 you're qualifying it before you tell us. And we don't care.

Speaker 4 We don't care.

Speaker 2 I don't care if the engine blew up on the last one and so you went to the dealership and you guys

Speaker 6 we want you to be debt-free, and we're not going to let you excuse yourself out of it. We want you to hit your goals.

Speaker 17 So, tell us about car number two, this 2024 chart.

Speaker 21 Yeah, car number two, I planned on at the time, this before FPU, I planned on buying a used vehicle.

Speaker 21 Um, when I went to the dealership, the used vehicle, this was not that much more expensive than the used vehicle at the time.

Speaker 6 Tell us the amount, sure, please.

Speaker 4 Oh, it was

Speaker 4 54,000 out the door. Okay, what do you owe now?

Speaker 21 What do I own owe now?

Speaker 4 I have 30 on it. Okay.

Speaker 6 So you've been paying it down.

Speaker 21 Yeah. And I know you talk about emotional spending.
I did get a nice bonus that year, like a very large bonus. So that was like, I'm going to spoil myself with a new vehicle.

Speaker 2 Instead of paying off the other debt, you're like, you know what?

Speaker 4 Let's still go into debt.

Speaker 21 This is, but yeah, this is pre-SPU before I knew all this stuff. Sure.

Speaker 2 But common sense would say, let's maybe try to get out of the hole before we dig a new one.

Speaker 4 It would.

Speaker 6 And I'm taking my glasses off because, yet again, George, this is all, it is all emotional. All your caveats, all of the things that you were trying to qualify, it's emotional.
And I get that.

Speaker 6 I want you to hear me all day. You were tired.
You were tired. You were frustrated.
You wanted to feel like your income was being spent on the things that you enjoy. Right.
Am I wrong?

Speaker 4 You were tired of driving hoops.

Speaker 6 You're tired of driving hoopdies. You're a man.
You want your wife to feel like she's, you know, that you love her and you want to spoil her a little bit.

Speaker 6 I see it. I hear it.
I have felt it. I understand.

Speaker 6 And

Speaker 6 you called in trying to figure out how to get out of debt faster.

Speaker 7 True? Yeah.

Speaker 21 Yeah. So the plan, the, you know, the debt snowball is working for me, but I'm

Speaker 21 any extra money I'm having come in, I'm trying to throw at that. I just want to get that debt down as fast as possible.

Speaker 6 What's your income?

Speaker 21 After tax, I make about $72 a year.

Speaker 6 That's with your wife?

Speaker 21 No, no. My wife makes probably about

Speaker 21 hers, it's kind of up in the air because when we moved, she doesn't work full-time. So she kind of has the luxury of what's a normal woman.

Speaker 2 Does she work full-time?

Speaker 21 She, yes, she's actually in the past two, three months, she has started working more hours.

Speaker 2 Okay, because right now we don't have the luxury of working part-time. Correct.
We both need to be working full-time plus.

Speaker 21 So between the two of us, pre-tax, we're probably closer to $120,000 a year.

Speaker 6 Okay. And so, what, like $7,000 a month, 7,500 a month?

Speaker 21 Yeah, just around, yeah. I'd say that's the sweet spot right there.

Speaker 4 Oh, go ahead, Jordan.

Speaker 2 I just want to make sure we answer your question. I would not crack open my child's piggy bank to essentially make my truck payment.

Speaker 4 No.

Speaker 2 And so I would be selling that truck. And the truth is, you're going to pay income tax on that college money.
You're going to pay a 10% penalty. So that $11,000 quickly turns into $7,000.

Speaker 2 And you're unplugging the growth, which that's going to double, triple by the time your kid's in college. And that's if you do nothing nothing to it.
So I don't want to unplug the growth.

Speaker 2 I don't want to pay all these taxes and penalties while this money is growing tax-free. And for that reason, I would sacrifice for my own life before hurting the kids' future.

Speaker 2 So that's what I personally would do is sell the truck, work extra. I would not touch the 529.
Yeah.

Speaker 6 I agree. And for other reasons, too.
It's too much of your world to have this much tied up in vehicles that are going down in value.

Speaker 2 Yeah, that is very true. You got some nice cars in that driveway.
I'd rather see you guys building wealth instead of driving a truck that's going down in value every day.

Speaker 1 I've been doing this show for over 30 years and some of the saddest calls I have taken are from situations that are completely preventable.

Speaker 6 Yeah.

Speaker 6 And what's so hard is I feel like one of those, especially the ones that I'm like, oh, it's terrible, are people that call in and their spouse has passed away suddenly and they don't have life insurance.

Speaker 6 We actually took a question of a lady and she had three kids pregnant and husband didn't have life insurance. And I'm like, I can't even imagine.
Or even if it was opposite, right?

Speaker 6 If a mom passed away, there's a dad with kids and trying to figure out how am I going to afford child care?

Speaker 6 How do I outsource some stuff that maybe she was doing?

Speaker 6 And it just takes the grief and the sadness of something like a sudden death to a whole new level. Like when you have to think through how am I going to pay my bills?

Speaker 7 How am I going to make next week?

Speaker 6 Yeah. In the middle of all that grief, like it's just, it is, it's terrible.

Speaker 6 And so life insurance is the one thing, especially as a mom with three little kids that I'm like so big on for people to get because it's inexpensive.

Speaker 6 Xander is the place that Winston and I actually get all of our life insurance. And we keep re-upping it because I'm like, I just want it there.

Speaker 6 Like there's something about that safety of knowing that you have money if something suddenly happens.

Speaker 1 And it doesn't cost much because Xander shops among a gazillion different companies. It doesn't cost much.
You just have to admit that someday you're not going to be here. You got to say it out loud.

Speaker 1 And you got to say, I'm going to say I love you to my family by taking care of them and taking the time to put this stuff in place. The costs are stinking pizza.

Speaker 6 There really is. So that is one thing to do to say I love you to your family.

Speaker 1 So we've used Xander for all of our family's needs for insurance for many years, including, of course, term life insurance. To get a free quote, go to 800-356-4282.

Speaker 1 That's 800-356-4282 or go to zander.com.

Speaker 2 Welcome back to the Ramsey Show in the Fairwinds Credit Union Studio. I'm George Camill, joined by best-selling author Jade Warshaw.
Open phones at 888-825-5225. Joseph is in Pittsburgh up next.

Speaker 2 What's going on, Joseph?

Speaker 2 Yes.

Speaker 2 What's happening?

Speaker 17 What's going on? How are you?

Speaker 1 Good.

Speaker 2 What's your question today?

Speaker 20 My

Speaker 25 girlfriend going to be fiancé

Speaker 20 and I are going to be building a house costing around $700,000, and we want to know if we're way over our heads or if this is actually feasible.

Speaker 2 Numbers aside, you're in way over your heads. There's not even a ring on the the finger, and you're going to sign up for a mortgage and put your names on a deed together?

Speaker 20 No, by the time that the deed is there, there would be a ring on the finger.

Speaker 2 So, this is going to be a new build, and you're just hoping that all the plans work out perfectly.

Speaker 20 Yes, we do have the ability to live with either of our parents rent-free.

Speaker 20 Obviously, that's not ideal, but we're going to have to do that

Speaker 4 While the house is being built,

Speaker 2 why do we have to do any of this?

Speaker 2 Let me lay out a different path for you. Tell me why it doesn't work for you guys.

Speaker 2 Why not get engaged, get married, rent together, save up on your own, and then purchase a house or build when you're financially ready?

Speaker 6 Yeah, what's the rush? So

Speaker 20 we would like to start a family early

Speaker 11 around 2028, 2027.

Speaker 20 And our initial thoughts are renting is putting money into a place that doesn't build us wealth. So we might as well put it towards a house that's going to be building us wealth.

Speaker 20 And if we have to live with our parents for a year or two, we're perfectly fine with that because we do have stable jobs that we're able to

Speaker 4 make money off of.

Speaker 21 Right now we have about

Speaker 20 $60,000 in savings and then a little bit more in checking.

Speaker 6 How much do you plan on putting down on this $700,000 house?

Speaker 20 So we are looking to put down around between $100,000 and $130,000. This is going down the house.
And then her parents are extremely wealthy. And they were planning on matching whatever

Speaker 6 we put. Whatever you put.
So $260,000? Yes.

Speaker 2 Yes. Okay.
And why do you need a $700,000 home as newlyweds

Speaker 2 in Pittsburgh?

Speaker 20 We are looking... We are looking to have kids, so it's in the suburbs, and we're going to be building so that we don't have as many maintenance house issues.

Speaker 20 Simply put, we're trying to set ourselves up for the future where we don't have to move. We don't have to do all these other things.
We're just on that path of get a house and live there.

Speaker 6 What's your income?

Speaker 10 Not a custom build.

Speaker 20 Our

Speaker 20 income, we are both around

Speaker 20 $32,000 to $35,000 a month.

Speaker 4 A month?

Speaker 20 Yes, and that is not including commission.

Speaker 4 So you both are...

Speaker 16 Not $1,000.

Speaker 20 $3,200.

Speaker 4 Good God, right. I was about to say, holy smart.

Speaker 2 So it's like, well, yeah, you guys are making a million dollars. Okay.
So you're making like $70,000. And how are you going to afford a $5,000 a month mortgage?

Speaker 6 Yeah, that's what I'm doing.

Speaker 6 We both did the math. That's funny.

Speaker 11 So we also...

Speaker 20 She has commissioned. She's an insurance agent, so she has commission coming back for her.
I also own my own company that brings in $2,000 to $3,000 as well on top of that a month.

Speaker 6 So you're at $10,000

Speaker 6 a month.

Speaker 20 About that, yeah.

Speaker 2 So we're already setting ourselves up where half of our take-home pay goes toward the mortgage.

Speaker 4 Yeah.

Speaker 6 You're still at half. Before you were even worse, but even with the $10,000, what I'm seeing on here, $4,500

Speaker 6 for the mortgage, if you put down $260,000 on a $700,000 house,

Speaker 6 you're house poor. Right.

Speaker 6 Right. And you're fine with that.

Speaker 21 No, we're not fine with that at all.

Speaker 20 We're obviously going to be expanding

Speaker 20 our income. We're trying to see if this is feasible now because we do have career projections going forward that it won't be anywhere close to that.
As well as

Speaker 20 my business and her commission are

Speaker 6 everything you're saying, Joseph. I'm with you.
I love dreams. Like, I love a good dream.
I love the plan. I love goals.

Speaker 6 But you're setting yourself up in a situation where everything must go as planned for this to work out.

Speaker 6 And even if it does go as planned, you're still setting yourself up for several years of a situation where your house is 50%, where your house poor for several years.

Speaker 6 So even if everything is perfect, you're still setting that up, which is not good.

Speaker 6 I truly, truly would love for you to slow down a little bit on this and say, okay, let's do all of this, but let's just do it in the right order and at the right time. Let's get married.

Speaker 6 Then if you want to live with your parents, that's your prerogative. I wouldn't do it.

Speaker 6 But if you want to live with the parents to save more money faster, like that's y'all's choice if you want to do that. And then

Speaker 6 save up. Make sure when you do buy a house, when it's time that it's the right percentage of your take-home, make it to where you're not house poor.

Speaker 6 You have this amazing deal where your in-laws are going to match that amount. That's awesome.
Milk it for all it's worth and make sure you get to a point where you can get this thing to 25

Speaker 6 okay

Speaker 6 then you're in a situation i'm fine with you guys doing this thing believing that this is going to be the only house you ever buy for the next 20 years if you want to believe that that's okay but let's can we just do it right can we pump the brakes just a little so it's all done in the right time

Speaker 20 yeah is this a thing where to increase our incomes first or a

Speaker 20 savings and emergency fund kind of deal?

Speaker 6 I think it's both and you said that there's a, there's a path where both of you guys earn more and it's

Speaker 6 as you do that, you're saving up more too, right? Because I'm also looking at this on a 15-year fixed. My guess is that you were looking at it on a 30-year.
Am I right?

Speaker 20 I have both in front of me, but yes, I was looking at a 30-year fix.

Speaker 6 And again, all that, you're doing that because you're trying to go fast.

Speaker 4 I want to go fast.

Speaker 4 Why?

Speaker 6 You have your whole life together. I get it.
I know. I get it.

Speaker 20 So we are both 21.

Speaker 2 Who told you it's too late? Who told you you have to rush into this or else? And you got to do this by this time. And we're going to make this much?

Speaker 2 I just think there's something else going on here where you're wanting to rush the process and leapfrog into a lifestyle that you just can't afford yet.

Speaker 20 No, we've been dating for about four years and going to be graduating this upcoming May from college.

Speaker 20 I'm working around 50 to 60 hours a week. She's working 30, going to be 40 this upcoming semester.
It was just one of those things where

Speaker 20 we were looking at it. Yes, we were dreaming big and we saw that we could afford it and we would still have extra income.
You can't afford it.

Speaker 2 It's already artificially propped up with the in-laws money. And so I would go with what you guys can afford.

Speaker 2 And if you can get a $400,000 three-bedroom, I would do that and have a small mortgage that you can knock out quickly and you can upgrade over time.

Speaker 2 Because the truth is, you're going to hate your house five years from now for whatever reason, and you're going to move. It's okay to move six years from now as your life changes.

Speaker 2 But we don't need to plan for, well, one day we're going to have five kids, so we might as well get the five-bedroom now and just get ahead of it. We don't even have a ring on the finger.

Speaker 2 So I would just do things in order. And I love how excited you are.
You're a planner. You're futuristic.
I have a lot of that in me.

Speaker 2 But I know I fall flat on my face when I make too many plans and one domino doesn't work out.

Speaker 2 What if she stays home once you guys have kids and you go, oh my gosh, well, we projected that her income would be 100,000 by now. This totally screws up our plan.

Speaker 2 So I would move real slow and realize you don't need the lifestyle that her parents have today at 21 years old. It's okay for it to take a while.
That's actually healthy.

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Speaker 2 Gabby's in Springfield, Missouri up next. Welcome to the show, Gabby.
How can we help?

Speaker 15 Hi, guys. I'm grateful to be talking with you.
I listen to the show all the time.

Speaker 15 I also want to shout out my husband and my anniversary is today. So shout out to him.
Lucky, honey.

Speaker 15 The heart of my question.

Speaker 26 Thank you.

Speaker 15 The heart of my question is, in working the debt snowball, should I skip to the next biggest debt with the intention for the military to pay off my student loans?

Speaker 2 How much of a guarantee is this and how long of a journey is it going to be?

Speaker 15 Great question. So we are currently in baby step two and working off our debt.
We've paid off about 20,000 of our 100,000 so far over the past several months.

Speaker 15 And we have about 25,000 in student loans. That's the next step in tackling the debt snowball.
I serve in the Army National Guard, but I'm a nurse on the civilian side.

Speaker 15 And my next Army contract begins in May of 2027.

Speaker 15 When signing a new contract, I basically have two options, either a $10,000 lump sum that's heavily taxed, so it's equivalent to about $7,500, or for the government to pay towards my student loans up to $2,000 a month.

Speaker 15 So in theory, they would pay pay towards all of it over the course of a three-year contract.

Speaker 6 So $2,000 a month for the entire time?

Speaker 6 Yes.

Speaker 6 But it doesn't even start until 2027.

Speaker 15 Correct. Yeah.
With the last contract that I signed, not all of the options were presented to me. So I took the $10,000 lump sum

Speaker 15 and it equivalent to about $7,500. And we put that towards debt, but we got stupid again.
So we accrued more debt.

Speaker 15 So I don't know approximately how much of that you know actually made a dent towards it but but if you do it this way you're not done until 2030.

Speaker 15 Correct yeah that's the thing so if we continued to pay the minimums on student loans we would still be paying about $6,500 in the time that it would take to get to May of 2027 until my contract renews but you know mathematically they would be paying off 25,000 in student loans for the sacrifice of you know paying the minimums in 6500.

Speaker 6 So you have to ask yourself, is the $15,000, because let me just make sure, it's a lump sum of $10,000

Speaker 6 or it's pay this off, it'll take until 2030. So you have to ask yourself, is the $15,000 difference, is it worth the next five to six years of your life?

Speaker 17 Right.

Speaker 15 Yeah. And that's kind of why I'm conflicted and asking you, because if it's, you know, them paying towards it and that's, you know, basically free money.

Speaker 2 If this wasn't on the table, would you still sign this contract

Speaker 12 um or is part of it just like well it's a good benefit

Speaker 15 yeah i mean it's a it's an amazing benefit but yeah i would still sign the contract for the fact that the reason um we have awesome insurance through the military my husband's a type one diabetic and civilian side insurance is crazy expensive for him so what's your household income

Speaker 15 So together, we make about $182,000. I bring in about $4,800 a month.
My husband brings in about $4,000 a month.

Speaker 15 But I have, I'm working three jobs right now, including my military job, my civilian job, and then I also pick up shifts at the hospital since I'm in our civilian side.

Speaker 4 Wow. Do you guys have kids?

Speaker 15 So picking up extra shifts. We do, and we have one on the way.

Speaker 17 That's another piece of the puzzle.

Speaker 2 Well, that's why I'm going like, are you going to be able to keep this up for three years?

Speaker 15 So my civilian job is very flexible with the timing. So like I'm staying at home with my daughter today.
We just have the one and she's two, but we do have one on the way.

Speaker 15 And I'm just like the kind of person that just like grinds and grinds and works.

Speaker 15 And so, yes, realistically, I probably won't be able to pick up any shifts at the hospital the later I get into my pregnancy.

Speaker 15 But yeah, ideally, like after the baby comes and we get all settled in, I'll be able to pick up like one shift a week, maybe two.

Speaker 6 How long do you plan on it taking? So you said there was, let me go back, there was $90,000 of debt. You've already paid off 20, right?

Speaker 4 Or 100?

Speaker 27 Did you start with $100,000?

Speaker 15 It was more like $120,000 to start off with. So as it currently stands, we have about $100,000 in.

Speaker 4 So you have $100,000 to go.

Speaker 2 What else is there other than the $25,000 in student loans?

Speaker 2 Sure.

Speaker 15 Let me break it down. So we've got about $20,000 in consumer debt.

Speaker 15 That's like credit cards and things. My husband's car, we owe about $11,000.

Speaker 15 We replaced our HVAC system earlier this year when it went out, which cost a pretty penny. That one's about $11,000.

Speaker 15 My car is where we got silly, and we got a new car whenever my last car got totaled.

Speaker 15 We still owe about $32,000 on it. I already Kelly Blue booked it and it was appraising for $25,000 to $29,000.
So

Speaker 4 that's private sale.

Speaker 6 Okay.

Speaker 6 Is anything else? Or that was it?

Speaker 15 And then the $25,000 in student loans. So it all equivales to about $100,000 right now.

Speaker 6 What's your projection for paying off this other $75,000? Like, how long do you guys see this taking you?

Speaker 15 Yeah,

Speaker 15 right now with our budget, we can, with me picking up extra shifts and getting an extra $2K a month, we have about

Speaker 15 $3,000 to $3,500 in margin a month, maybe a little bit extra that we can throw at debt. So like this month alone, we paid off three of our smaller debts, which is like a big ego boost, I guess,

Speaker 15 to keep on going. So

Speaker 15 hopefully we can pay off all of our debt in the next 18 months. And I can't remember if the way I calculated it included the $25,000 in student loans or not.

Speaker 6 Is that what you got, George?

Speaker 2 I doubt it. Because $75,000, $3,500 a month, that's 21 months.
That's without the student loans.

Speaker 15 Okay.

Speaker 15 And I think that that was just me being like, let me get super aggressive and pick up an extra shift a week or so.

Speaker 2 I just know as a dad of a newborn, it's just life is going to have to slow down a little bit. And so I don't know that you can keep at the same pace in this season.

Speaker 2 And for those reasons, I feel like you guys could just get aggressive right now and start to really tackle this. I mean, you could delay the student loans and do the contract May of 27.

Speaker 2 I don't think that like it's going to be on fire.

Speaker 2 But you guys have such an amazing income that this whole thing could be done in two years.

Speaker 6 I kind of like that idea of what George is saying. Even on your own.

Speaker 2 I don't, I just, it's not that big of a, it's not like they're paying off $150,000 of student loan debt.

Speaker 6 It's a $15,000 swing if you look at it. Yeah.

Speaker 2 And you guys make $180,000. So in the grand scheme of life, you could do that in three months on your own dime and be done with it.

Speaker 6 Because if you still, still, if you decide to sign the contract in 2020,

Speaker 6 2027, there's still the 10K that they could offer as a lump sum. And when that comes, you can do with it

Speaker 6 whatever baby step you're on or whatever life calls for at that moment. So it's not like, it's not an all or nothing thing per se.

Speaker 6 There's still money on the table that you can have in 2027 if it feels right to sign that contract.

Speaker 6 But I like the freedom of and the openness of just being able to take control of your situation and be done with it when you're ready to be done.

Speaker 15 Yeah.

Speaker 10 Yeah. I

Speaker 15 would agree. That's what my father-in-law is swaying towards.

Speaker 15 But, you know, the military personnel that I trust, their advice, they're swaying in my direction, which is like just continue to pay the minimums and let the military pay for your

Speaker 6 seven. It's free money, like in essence, but when you factor in your time and your emotion and your choice in the matter,

Speaker 6 that also has a cost in this equation. And we want to not leave that out.

Speaker 2 Do you guys have savings right now?

Speaker 15 We are really following the Ramsey plan, so we diminished our savings down to $1,000.

Speaker 15 But my husband, you know, with me being pregnant, he's getting a little bit more cautious. So we're kind of doing Ramsey-ish as a compromise.

Speaker 4 Well, we'll tell you, you won't trust me.

Speaker 2 Let me give you permission to be Ramsey-ish and go just stork mode is what we call it.

Speaker 2 So it's okay to pause the debt snowball right now and just stack up cash because we just don't know what's going to happen until baby and mom are home safe. So when is baby due? That's true.

Speaker 15 June of 26th.

Speaker 2 Okay, awesome. Yeah, I mean, there could be a great scenario where you guys just stack up a bunch of cash and then you're good.

Speaker 2 The insurance paid most of it and now we hit play on the baby steps and we have a big pile of cash to throw at these debts.

Speaker 4 That's true. That's true.

Speaker 2 So I think that would give you some peace of mind during an already pretty stressful time where you're working multiple jobs, pregnant, trying to handle all of this $100,000 of debt.

Speaker 2 It's okay for it to not be at, you know, breakneck pace.

Speaker 2 Okay.

Speaker 15 Yeah. Thank you.
I just needed that extra reassurance that everyone tells me to slow down, but I'm just like in that mentality of life is on fire. We need to go while we're young.

Speaker 10 Go, go, go.

Speaker 2 Well, it serves you well when it comes to the debt-free journey. That's right.
But, you know, that stress can take a toll on you and the baby.

Speaker 2 So I'm just looking out for your health as well during this time. The baby steps, it's a great framework, but life is going to happen.

Speaker 2 It's okay to hit pause for a moment when you want to be intentional and make sure that you're also protecting your family. So thank you for the call.

Speaker 2 Thank you for your service, especially coming on the heels of Veterans Day. So this is the Ramsey Show.

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Speaker 2 Are you staying on track with the baby steps? You can take a quick quiz to check your progress and receive a personalized plan made just for you.

Speaker 2 Simply head to the show notes and click on the link titled, Are You On Track with the Baby Steps? and complete the quiz. Aaron is in Charlotte, North Carolina.
What's going on, Aaron?

Speaker 25 Hey, George. Hey, my wife and I are, you know, kind of batting around the idea of moving back to Raleigh, North Carolina from

Speaker 25 a small town in South Carolina, just about two hours south.

Speaker 25 And just kind of curious how we balance the desire. So we got married in October of 21, moved down here in May of 22, and

Speaker 25 wanted to be closer to my wife's family with us being newlyweds and wanting to have kids. And we've had some issues with infertility.

Speaker 25 But just kind of curious. I really have been the one that wants to push to go back to that area.
I've been remote and just feeling a bit stir crazy.

Speaker 20 And we're in baby step seven.

Speaker 25 Our income's about $173,000. So just kind of curious what your thoughts are on balancing those desires between my wife wanting to be close to her family.

Speaker 25 versus wanting to be in person for work and just a little bit more to do and getting getting back into our old gyms and routines and things of that nature.

Speaker 2 So it's not a financial conundrum, it's a quality of life for you guys.

Speaker 20 Yeah, quality of life.

Speaker 25 And it sort of feels like a financial piece because, you know, going from no mortgage to maybe renting for a year into our house sales and buying a more expensive house in that area.

Speaker 25 You know, so it becomes a little bit of a concern. You know, we've been debt-free fully with the the house and everything since last September.

Speaker 25 So it's a little bit of both.

Speaker 2 So what's the house worth?

Speaker 25 Right around $360,000 to $370,000.

Speaker 2 Okay. And what would the house cost in the new area?

Speaker 25 In Raleigh,

Speaker 25 maybe $450,000 on the low end up to $600,000.

Speaker 12 Okay. Do you guys have any money saved?

Speaker 25 Something $450,000 to $500,000. Yeah, around $30,000.

Speaker 2 Okay. And then what's the urgency around this? We want to make this happen in two months or two years.

Speaker 25 Yeah, so we've been talking about it. I actually, the new job that I took is based out of that area, but they let me stay remote because we had some uncertainty about wanting to move.

Speaker 4 That's convenient.

Speaker 25 We were actually supposed to move back in May, but they let me stay remote.

Speaker 2 So are you stir-crazy, meaning I want to be in an office? And that would that solve this if we got you an office?

Speaker 25 That's what I'm feeling. Yeah, just being around the house all day.

Speaker 4 Because we can solve that. You can go get an office in your area now.

Speaker 6 Yeah, that's less about Raleigh and more about just finding you a job where you can be around people.

Speaker 25 Yeah, so I was in person. There's pretty much one main employer in this area.
I'd have to drive an hour and a half to Charlotte or an hour to Florence. So there's just not really any opportunities.

Speaker 25 We're in a pretty rural area. And I was working.

Speaker 25 whenever we came down here with a local employer, but I left after about two and a half years. There's just poor management, and they were doing a lot of fraud, and just wasn't comfortable with it.

Speaker 25 So I started looking for a new opportunity.

Speaker 6 Aaron, help me understand. I just want to make sure.

Speaker 6 Your wife wants to move, or your wife is not sure?

Speaker 25 Unsure. So she's unsure.
She does want to be close to family if we are able to have kids. You know, she likes the idea of being able to be near her family here.

Speaker 4 Is your family in Raleigh?

Speaker 25 I also miss the gym. My family is in that area.

Speaker 6 Okay, so it's not just the gym and creature comforts. Your family is there.
So there's family in each spot.

Speaker 4 Okay.

Speaker 25 Yeah, not as much of a concern for me. Being near the family, you know, we're pretty independent.

Speaker 4 Does she like your family?

Speaker 6 Like, are they, are you guys in really great relationship with her, with your family?

Speaker 25 Yeah, I think so. I think it's,

Speaker 25 I don't think she would be as comfortable like if we had kids.

Speaker 25 with my mom and dad, you know, just their house can be a little bit chaotic versus her home or her family is a little bit more put together in that sense.

Speaker 25 I think that's a fear from her side for sure.

Speaker 6 Yeah, I go back to what we said before. I'm not sure that Raleigh is,

Speaker 6 I'm trying to kind of prioritize what you're saying. It sounds like, I feel like I heard you say being in office or, you know, being around people is, was the number one thing.

Speaker 6 Then for you, it sounded like the number one thing. Did you say like being able to go back to our gym? Did I hear you say that?

Speaker 25 Yeah, just like lifestyle, more to do, actually having like a gym to go to and more things to do. Live in a society, like a society.

Speaker 4 Like restaurants and areas.

Speaker 6 Okay. So

Speaker 25 is it? She used to always love going to home goods and stuff like that. You know, so we kind of miss, we both miss that piece for sure.

Speaker 6 Got it. Got it.
Got it.

Speaker 6 I mean, for me, the house thing, I think if you guys really want to do this, it's just a matter of saying, okay, we make a good salary now.

Speaker 6 Can we save up a good portion of this to where if we do take out a mortgage, it's really, really small and then we're committed to knocking it out pretty quickly.

Speaker 6 I don't think there's anything wrong with this.

Speaker 2 Yeah, it's, it's, you know, if you call Dave, you'd say, well, it's ideal if you did 100% cash. That'd be awesome.

Speaker 2 But it's not, we're not going to yell at you for taking out a 15-year, knocking it out early. You're going to do that regardless.

Speaker 2 So I know it feels like you're moving backwards, but if your quality of life increases, that's a win. So my take is I would do it, make it an adventure, and you can always undo it.

Speaker 2 If it's just terrible in Raleigh and this was not what you thought it was, I do think it's wise to rent.

Speaker 2 I know it feels like you're throwing away money, but if you just rent for even six months to a year and get your bearings, figure out what area you want to live in, figure out what area has the right schools and how close to family you want to be, all of that is going to play into it.

Speaker 17 Yeah.

Speaker 6 And don't buy, don't buy anything until this old one sells, please. That's it.

Speaker 2 Yeah, you don't want two mortgages on your hands.

Speaker 4 You won't have a mortgage on this one.

Speaker 2 And you can still time that. I mean, it's very much possible and you can make it contingent, but

Speaker 2 it's going to be easier if you already have your home sold and now you have all that cash sitting there.

Speaker 2 You're going to be able to be more nimble and have more negotiating power because those sellers love when someone doesn't have a contingency on a home sale.

Speaker 5 Yeah.

Speaker 25 Yeah, my biggest thing was just kind of the weight of, you know, those different values, like my wife with being close to her family versus, you know, some of those lifestyle choices.

Speaker 25 Like I said, it wasn't as big of a concern being near my family.

Speaker 4 She's got to be on board.

Speaker 25 I feel like I could move to

Speaker 25 Tennessee or Georgia, you know.

Speaker 6 It's not a financial thing on our end. Your wife's just got to be on board with it.
I think that's more of, I think that's the biggest question I hear: is

Speaker 6 is she 100% with you on, man, we just, we got to get out of here. We got to go to Raleigh.

Speaker 6 Um, she might be saying things like, oh, I wish there was a home goods or I wish there was things, but does she actually want to move? Um, sit down tonight.

Speaker 6 Like, you guys go on a date this weekend or do something where you're really laying this thing out. Um, make sure you're on the same page about it.
It's not a financial problem.

Speaker 6 I can tell you that.

Speaker 12 It's just you guys.

Speaker 2 And you guys aren't pregnant yet, and there's hope that you could be in the next few months. What's the timeline there?

Speaker 25 Yeah, we've been battling infertility for the last two years.

Speaker 25 So it's still a work in progress there.

Speaker 2 Yeah, I mean, that's its own journey. And so the question is, do we want to, you know, keep this up for a few more years before we make a big decision to move?

Speaker 2 Because, you know, if you guys get pregnant, I hope you do. Well, now we have at least some concrete next steps.
There's something happening that sort of starts this, the catalyst.

Speaker 2 And in the meantime, if you want to get out of the house, get out of the house and go find somewhere to work, maybe even lease a spot that's cheap, somewhere you can rent out a little office to get away.

Speaker 2 That might be a nice stopgap for now until you guys make that next decision.

Speaker 2 But good luck, man.

Speaker 11 There's a lot going on.

Speaker 2 I don't think there's any bad moods here.

Speaker 2 The only bad way is if you drag her through this and she's kicking and screaming and you're like, we said this is going to be awesome.

Speaker 2 So that's the tough part is the relational aspect of just getting aligned on, hey, we said we're doing this. Now we got to make peace with that decision.
And it is a big one.

Speaker 2 But again, it's nothing, nothing's fatal here. So I wish you the best of luck.

Speaker 6 Quality of life, George, is a big, you know, we can't forget about that. All the time we're asking people to sacrifice to win.
And there's a time and place for that.

Speaker 6 You know, you might have a season where you work a job you don't really like to get the paycheck so you can pay off the debt, right?

Speaker 6 But the overarching picture, the biggest piece of life, yeah, you should be doing work that you enjoy. You should be in a community and in an environment that you enjoy.

Speaker 6 If family is close to you, yeah, like we want that for you. Quality of life matters.

Speaker 2 And that's why the baby steps matter even more in these cases. Because if you're a financial piece, you got options.

Speaker 2 But if you're in crippling debt and you don't have the income to support it, you're out of options. And so I love that they're doing this the right way.
Baby step seven, no mortgage.

Speaker 2 And they're going, yeah, we could do it either way financially. It's the emotional part we got to wrestle with.
And that part can be even more difficult sometimes. So best of luck to guys.

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Speaker 2 Dan is in DC up next. What's going on, Dan?

Speaker 21 Hey, guys, how are you?

Speaker 4 Great.

Speaker 20 How can we help today? Awesome.

Speaker 8 So, a couple of things. I'll give you the quick synopsis of it.

Speaker 8 looking to find the best way to invest a million dollars.

Speaker 4 Is this hypothetical or real?

Speaker 8 It's real. It's actually crazy.

Speaker 7 So what happened was my wife,

Speaker 8 she works for a big box retailer.

Speaker 8 She makes about $200,000. I own my own business.
I make about $75,000.

Speaker 8 We own a home.

Speaker 8 We bought it at about $365,000. We owe $260,000 on it right now, but the interest rate is 3%.

Speaker 8 And we have a son who's 13. We've got a 529 for him.
There's about 30,000 in it right now. My wife's got a 401k that has about 315,000 in it.

Speaker 8 She puts in

Speaker 8 7% of her pay, and the company matches 5%.

Speaker 21 There's stock options as well with her.

Speaker 8 And

Speaker 8 what happened was my business that I own, we came into a very lucrative deal.

Speaker 8 We considered it's probably going to be a one-time shot unless something else happens again.

Speaker 8 But we're considering it a one-time shot. It was a two million dollar gross business, and we netted just over a million dollars from that.

Speaker 23 So

Speaker 2 from the deal, is it a full buyout?

Speaker 8 It was not a buyout. No, I still own the company.

Speaker 8 We just got a very, really awesome opportunity.

Speaker 7 We took it and it worked out really well.

Speaker 4 So,

Speaker 8 basically, right,

Speaker 8 we had it, we had $130,000 in debt when we started Ramsey's baby steps about five years ago, and that was just from Cars, student loan, credit card debt.

Speaker 8 So, that is paid off. I'm super happy with that.

Speaker 8 Our house, again, we owe $260,000. It's only 3%

Speaker 8 loan on it right now. But my thought is:

Speaker 8 you know, we don't need the million dollars.

Speaker 8 We're in a different situation, right? My wife makes really good money. We make money.
We're fine.

Speaker 8 Do we put this in different investments?

Speaker 8 Should I throw $100,000 into my kids' 529 and just let it sit there so that way that is covered?

Speaker 8 Should I utilize like a personal advisor? We went to a couple different banks banks or folks just in general.

Speaker 8 You know, they want a fairly decent amount of money to manage our money.

Speaker 8 So, personal advisors, they want around 1.2%.

Speaker 8 Robo advisors online, they're much cheaper. I just got done a conversation with a Vanguard and they want 0.3%.

Speaker 8 And they give, because of the amount of money that we have available to invest,

Speaker 8 they'll give us

Speaker 8 a real person.

Speaker 8 So that's already kind of the winner on it in my mind. And we're looking to hopefully retire faster now.
So

Speaker 8 we're both 40, and it would be great if we could retire, say, 55, maybe a little bit earlier if the investment strategies are right.

Speaker 4 Yeah.

Speaker 4 There are a lot of good things on the table here.

Speaker 2 So you're saying you're going to net a million. When a million net income lands in a savings account, what do you do today?

Speaker 7 Yep, it's there.

Speaker 8 it's there in the money market. Okay.

Speaker 2 I can tell you're, you're really good at numbers. You know your stuff, which is very impressive and that bodes well for you.
I would, here's what I would do personally.

Speaker 2 I would pay off the mortgage today and I know you're going to say, well, it's 3%.

Speaker 2 It's 3%. Why would I pay off a 3% mortgage? I would do it for the peace of mind, for the risk factor, and for the fact that you can now invest what was your mortgage payment.

Speaker 2 And that's going to really free you guys up to retire earlier when you have no mortgage left. And then you're still going to have a ton of money left over.

Speaker 2 So I would put maybe 40 or 50K into that 529 and front load it. I would do that.

Speaker 2 You don't want to overfund it because if you put 100K in there and that money doubles in the next seven years as your kid heads off to college, there could be, you know, 250,000.

Speaker 2 That might be reasonable for what college costs seven years from now.

Speaker 2 So if you wanted to just front load it and then never put another dime in, you'll probably have $200 plus thousand dollars in there by the time college rolls around. I would also enjoy some of it.

Speaker 2 So I would do something fun, plan a trip. You guys have no other consumer debt, right? You already paid all that off?

Speaker 8 We have no other debt. No, just a house.

Speaker 4 Great. Wow, that's great.

Speaker 2 So, you've got some spending goals. Let's do something fun and enjoy the fruits of our labor.
Let's have some giving goals.

Speaker 2 Let's give generously and do something that blows our mind that we thought we would never be able to do. And then let's have some saving and investing goals.

Speaker 2 And part of that is getting rid of the mortgage to then free up money to build wealth because now that really increases your net worth.

Speaker 2 So, there's a few things you could do. I I think all of it's good.
If you feel comfortable handling the investment side on your own or through Vanguard, that's fine.

Speaker 2 You can park it in an index fund for now.

Speaker 4 That's probably what I would do.

Speaker 6 And

Speaker 6 it can start simple. If you're happy with what you're invested in in your 401ks, that's a great place to start.

Speaker 6 Like those same funds or similar funds, that's a great place to start, especially if they're

Speaker 6 well diversified and

Speaker 6 you're split between growth and income and aggressive growth and international and all of that. I feel like that's a great place to start.
And

Speaker 4 yeah.

Speaker 2 I would also max out all of your tax advantage retirement options first.

Speaker 2 And so her 401k, maybe she goes in and ratches it up that contribution through the end of the year to max it out if she hasn't already. I don't think she has based on 7% of her 200,000 salary.

Speaker 2 So you could do that to start. You could do some backdoor Roth IRAs if you guys don't qualify for Roth IRAs because of your income.

Speaker 2 And you can max out an HSA if you have access to a health savings account. So there's a lot of things you can do that are tax advantage.

Speaker 2 And for that reason, that would be the reason I work with a financial advisor, not because of, well, this one charges this fee, this one charges this fee.

Speaker 2 You want someone who's actually going to look at your whole financial picture and give you estate planning, tax strategy, optimal money moves, more than just choosing a fund and taking a commission for it.

Speaker 2 Go ahead.

Speaker 2 So I would sit down with your wife tonight and just kind of have a little dream date and go, here's all the things we could do. Let's prioritize from this million dollars.

Speaker 2 What's the first thing we're going to do? Pay off the mortgage. What's the next thing we're going to do? Fund the front load the 529.

Speaker 2 Next thing we're going to do, max out the 401ks and backdoor Roths and whatever other options we have.

Speaker 2 Then whatever is left, I would just park in an index fund for now or even a high-yield savings account until you know what you want to do next.

Speaker 2 Okay.

Speaker 2 All right. Well, I appreciate it.

Speaker 8 Yeah, that's we were looking at maxing out the IRAs, maxing out like an HSA and

Speaker 8 trying to do that. I don't have I have a small 401k that I started the business about five years ago that we took some money out of just to

Speaker 8 just to start it. And so luckily she makes enough that I can play with this business and it worked out.

Speaker 6 That's so awesome, man.

Speaker 2 Way to go. I'm super pumped for you guys.
That's fantastic.

Speaker 2 And the good news is this, this extra money lay that's laying around in the index fund, that can kind of become a bridge account for you guys to make it from, you know, 55 years old

Speaker 2 to 59 and a half to where you can access retirement without penalty. So it's a great strategy if you want to be work optional.

Speaker 2 My guess is a guy like you is probably going to be like a serial entrepreneur and just jump back into another new exciting thing

Speaker 2 or consulting. And so this, this is really a best case scenario.
Yeah. I love getting a call like this.

Speaker 4 It's a great problem to have.

Speaker 6 It's a fun money.

Speaker 2 What do I do with a million dollars? Because usually if someone says that, it's a 23-year-old who's a hypothetical.

Speaker 2 What do I do with a million? I'm like, well, how much do you have? I got 4,000. I'm like, okay, well, call us back when you have the money, but I can tell you what I would do with it.

Speaker 6 Yeah, this is the real deal. Very, very good.

Speaker 17 Exciting.

Speaker 2 And that's that's a tough one, Jade, with a 3% mortgage, because I hear a lot of these. People are hanging on to these low-interest mortgages, going, Well, I can make more in a savings account.

Speaker 2 So why would I? Yeah. And it's so much more than just a math problem.
It's so much more than arbitrage and spread and leverage.

Speaker 4 It is risk.

Speaker 2 It's peace of mind.

Speaker 2 And talk to people who paid off their mortgage. I haven't talked to people.
They don't go back. Dang it, I regret that.
I lost my 3% mortgage because you know what my interest rate is on my mortgage?

Speaker 2 Zero. It doesn't exist.
So I'll take that over 3% any day. And they're going to build wealth just fine without the spread.
So congratulations, guys.

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Speaker 2 Welcome back to the Ramsey Show in the Fairwinds Credit Union Studio. I'm George Campbell, flying solo this hour, taking your calls at 888-825-5225.
You call up.

Speaker 2 I'll try to help you take the right next step for your life and your money. Janine is with us in Newark, New Jersey.
What's going on, Janine?

Speaker 22 Hi.

Speaker 22 So there's some discrepancies between how my husband and I think about finances. We've been married, it'll be 31 years next week.
And just today,

Speaker 22 we were looking at some cash and

Speaker 22 we were going to pay

Speaker 22 to have some work done. Anyway,

Speaker 22 he left me a note saying he left $1,300.

Speaker 22 He doesn't have any more. He'd have to go to the bank.

Speaker 22 And I know for a fact that there was

Speaker 22 $2,200 in an envelope. And so I know he lied.
And

Speaker 22 I also had a discussion earlier with him about tithing

Speaker 22 and the fact that that has not been something that is consistent

Speaker 22 with him.

Speaker 22 because he is in control of finances and he said that he would he can't talk about the past, but he can just do better in the future.

Speaker 22 But I've heard that before because I've had this conversation about the tithing before. So how am I supposed to trust him with

Speaker 22 the past history in tithing and the fact that

Speaker 22 I believe he lied about the cash that was in the house?

Speaker 2 I think we can agree on that. Did you confront him and say there was $2,200? Why is there $13,000? Where did the $900 go?

Speaker 22 No, he did say he left some due

Speaker 22 for some spending money. And he had set the money in a safe.

Speaker 22 But I have the code to the safe because he's, you know, for your protection, if you need to get in here

Speaker 2 to use. And was there $900 in there?

Speaker 22 Well, I looked the other day and it was the $2,200. And then I looked again today after I received that text about the $1,300.
And I looked, and I didn't count it, but there was more.

Speaker 22 It was more than just some spending money. And

Speaker 2 so you think he's clearly lying to you. And do you think there is something going on here, an addiction, an affair,

Speaker 2 that reason why he's withholding this information?

Speaker 22 No.

Speaker 22 I just think it's a controlling.

Speaker 22 I think it's a controlling thing. I don't know.
You can be both.

Speaker 2 You can be controlling because you're trying to hide the vice or addiction

Speaker 4 yeah i don't want you

Speaker 22 i don't think there is i just don't understand

Speaker 22 um

Speaker 22 yeah i i just don't understand the deceit

Speaker 22 and if you bring it up with him he just gets defensive and says well i'll just try to do better because that's not good that was re that that was regarding the tithing and um so he controls the accounts i have access to them and that's why i was able to.

Speaker 4 So what do you mean by control?

Speaker 22 He takes care of all the bills. He pays all of the bills.
He always has.

Speaker 22 When we first got married, he had money saved. I did not because I was a spender.
I had no debt, but I had no savings.

Speaker 2 So you relegated it to him to handle it.

Speaker 22 Yeah, and he pretty much, you know, based on the fact that he's a saver,

Speaker 22 kind of took over, took over the

Speaker 2 how much money do you guys have saved?

Speaker 22 So,

Speaker 22 right now,

Speaker 22 so this is, I know this won't be agreed upon, but we have a joint savings.

Speaker 22 There's like 35 in that joint savings.

Speaker 2 35,000 or 100?

Speaker 22 But we also inherited some money

Speaker 22 a few years back. And so, between the money that we inherited, his

Speaker 22 tax deferred, my tax deferred, there's

Speaker 22 like 1.3 mil in there.

Speaker 18 Okay.

Speaker 22 And so I've even wanted to pay off the mortgage. There's only about

Speaker 22 60 or 70,000 left on the mortgage.

Speaker 2 And how old are you, Tay?

Speaker 22 I'm 59. He's mid-60s.

Speaker 18 Okay.

Speaker 2 How long has your marriage over these 31 years lacked communication and trust?

Speaker 22 Oh, most of them.

Speaker 18 Okay.

Speaker 2 That's what I was getting at. This has been going on a long time, which makes you an accomplice to the crime because you've been sitting back allowing it to happen to you.

Speaker 2 Right. And so there needs to be come to Jesus meeting and some marriage counseling to go, we're not on the same page.
We haven't been on the same page.

Speaker 2 We have money in spite of our lack of alignment, lack of values, lack of just transparency when it comes to money. You can say, I have access to the accounts, but we are not on the same page.

Speaker 2 And I want to know exactly where this money is going and what else is going on here in order to rebuild trust.

Speaker 2 And if he can't straight up tell you, if he starts to get nervous and defensive, that's a sign that this marriage has not been a marriage for a long time.

Speaker 2 Oh. It's been a transactional partnership.

Speaker 20 Yes.

Speaker 2 And that's going to be the sad truth that you have to face, is that we sort of played house as two people who live together, but we are miles apart.

Speaker 22 Yep.

Speaker 22 Yeah.

Speaker 22 It's just been, that has been difficult. I've asked, there's no budget to speak of.

Speaker 22 As long as the bills get paid,

Speaker 22 you know, the credit card gets paid every month, then, you know, we're doing good.

Speaker 2 And the rest of the money disappears into

Speaker 2 wherever he wants it to go.

Speaker 22 Yeah, but it's not really

Speaker 22 disappearing. It was, you know, private school, tuition, college.
So I

Speaker 4 kids are out of the house now.

Speaker 22 They're all in their 20s, but three out of the four remain.

Speaker 2 In the house?

Speaker 4 Okay.

Speaker 2 I think we need to have a come to Jesus to go, hey, we're in the last quarter here of this marriage. I want to make this great.
It hasn't been great, and I want to know if you're on the same team.

Speaker 2 I think if you come at it attacking, he's just going to get defensive again.

Speaker 2 But if you come at it and say, listen, I haven't done a great job being involved, and that part's on me, but you have not done a great job communicating where our money's going.

Speaker 2 And it's left me wondering, is there something else going on? Why can't you be honest with me about where this cash is? Why is it all just smoke and mirrors and defense?

Speaker 2 And if he can't get there, you definitely need marriage counseling yesterday. I don't know that he's willing to go.
Do you think he will do that?

Speaker 22 That's been a struggle over the years. Me always asking, and

Speaker 22 it's never helped. So why try it again?

Speaker 2 You need to go solo then until he's on board. Would you go by yourself?

Speaker 22 I'm currently.

Speaker 2 Okay, and what's come of that?

Speaker 22 We're just getting into some of the stuff.

Speaker 11 So,

Speaker 22 you know, I think I'm at a realization of really am,

Speaker 22 you know, been unhappy for 20 years or more. And do I want to finish the last 20 of my life

Speaker 22 continuing to be unhappy? So that's my

Speaker 22 that's kind of what's been rolling around in my head for the last few days and especially after today.

Speaker 4 Yeah.

Speaker 2 Well, it's going to take time and consistency and honesty and transparency, which means we're doing a budget every month. All our accounts are combined.

Speaker 2 There's no just loose cash, you know, fluttering away every month. I don't know that he's willing to do that.
And at that point, you're going to have to make a hard call.

Speaker 2 Do I want to continue down this route of misery and lack of trust, or do I need to just create my own last chapter of my life?

Speaker 2 I can't make that decision for you, but I hope that you guys come to a conclusion and you don't let this drag on for another 20 or 30 years. I'm so sorry, Janine.

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Speaker 2 The Ramsey Show question of the day is brought to you by YReFi. When your private student loans are in default, it's easy to feel ashamed or stuck.
But YReFi won't judge you.

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Speaker 2 Today's question comes from Erica in Oregon. We've been listening to the show for about six months.
We're in our early 50s and are debt-free.

Speaker 2 Our net worth is $1.5 million, including our paid-off home. Our income is $275,000 a year.
Our HSA and retirement investments are maxed out for the year. But then there's our quote tin can.

Speaker 2 We have about $260,000 in savings accounts and CDs. We both grew up in homes with parents who didn't talk about finances.
Is that too much of a safety net? How much is too much?

Speaker 2 Great question here. So the real question is, how much should you have in savings before you go? We should probably move this elsewhere.

Speaker 2 Now, I do like that it's not literally in a tin can because we've gotten that call before, where it's just cash buried in the backyard, which is at physical risk and it's at risk of just being eaten away away by inflation.

Speaker 2 So if you think about money, let's think about an ice cube, right? If you put an ice cube in the microwave, it's going to melt fast.

Speaker 2 That's kind of like just keeping a lot of cash on hand because it's not even keeping up with the rate of inflation. Now, let's call it room temperature.
You have ice out at room temp.

Speaker 2 If it's, you know, sitting on the counter and that's really your CDs, your savings accounts, it's keeping up. It's slowly melting, but you're at least keeping up.

Speaker 2 And so what I would rather you do is keep that in the deep freezer, which is investing your your money into the market beyond what you're going to need for an emergency fund.

Speaker 2 So you guys make $275 a year. I would sit down and look at your actual expenses for the year in your early 50s and go, all right, we actually spend $100,000 a year.

Speaker 2 So six months of that would be $50,000.

Speaker 2 Now, if you want to go a little bit higher, maybe you guys plan on retiring early and you want to have a few years in case there's a down market or you need to pull from that cash or you have some big upcoming expenses, you can keep that in savings as well.

Speaker 2 But I think beyond $100,000, we're getting into like paranoid apocalyptic territory. And the truth is your money is safe.

Speaker 2 If it's in a bank account that is FDIC insured or NCUA insured, if it's with a credit union, your money is safe. It's not going anywhere.

Speaker 2 If everybody's money disappeared, we're definitely going to be in an apocalyptic state. And that's just not realistic.
And even your money in the stock market.

Speaker 2 If you think your money's going to go to zero in the stock market, in an index fund or mutual fund with hundreds of companies, what you're really saying is I think the top 500 companies in America are all going to go to zero, go completely bankrupt.

Speaker 2 And that's why I have this money in cash. And again, in that scenario, we have an apocalyptic situation that's beyond money.
We're going to be fighting for food and ammo at that point.

Speaker 2 So, how much is too much?

Speaker 2 Anything beyond six months, unless you have a real strong case, a real strong goal for why you need more than that or why you have a separate savings account, I would rather you park it in the market, making on average 10 to 12% versus 3% or 4%.

Speaker 2 So, Eric, I hope that helps. Congratulations.
You guys have done really well. No debt, making $275,000.
You're going to make up for a lot of lost time and retire multi-millionaires.

Speaker 2 So, I don't, I think this is a nothing burger, but I appreciate the question.

Speaker 2 Trey is in Atlanta up next. What's going on, Trey?

Speaker 2 You with us, Trey?

Speaker 10 Hey, how are you doing?

Speaker 18 Great.

Speaker 2 Love your energy. Coming in hot.
What's going on?

Speaker 4 So, I

Speaker 10 got my first job a year ago, and I, over the past, a year and a half ago and I saved $47,000

Speaker 20 and

Speaker 10 my only debt is my student loan debt, which is $10,000 at a 4% interest rate. Now, my goal is next year to be married and I want to purchase a multi-unit home

Speaker 10 to kind of house hack the other side.

Speaker 10 But I've read Dave Ramsey's book and he talks about, you know, obviously getting out of debt.

Speaker 10 And I've spoken with multiple financial advisors and they said, hey, since it's only $10,000 at 4% interest rate,

Speaker 20 just don't worry about it.

Speaker 5 Just keep your cash so you could get that home.

Speaker 10 And I wanted to hear your take on that.

Speaker 2 Well, here's the thing. Financial advisors are incentivized to keep you invested.
Would you agree?

Speaker 11 Yeah, I would agree with that.

Speaker 2 So if they're managing your 47 and then you take it down to 37 to pay off your debt, they make less money.

Speaker 4 They weren't my managers.

Speaker 10 I'm sorry. They were one-off conversations I've had with them, seek out advice, but they weren't working with me by no means.

Speaker 23 Yeah.

Speaker 4 Same principle applies.

Speaker 2 Financial advisors in general. Now, the good ones and the ones that I recommend you work with are the ones that are going to look at your picture holistically.

Speaker 2 And we tell, you know, the people that we recommend, we're like, hey, we're doing the Ramsey plan here. So we're not going to hang on to a whole bunch of debt in order to invest.
That's insane.

Speaker 2 That's like borrowing money in order to invest, which you wouldn't do. And the truth of the matter is you got the money to pay it off.

Speaker 2 So why not just pay it off, be free of the payment, and you're completely debt-free at that point?

Speaker 10 Yeah, I'll be completely debt-free at that point.

Speaker 2 And then that 37, is that your emergency fund plus sum?

Speaker 10 Uh, that'd be my entire income,

Speaker 2 your entire income.

Speaker 10 Yeah, no, I'm saying all my, yeah, emergency funding, like all my savings.

Speaker 2 Sorry, got it. Okay, so I would keep three to six months of expenses saved, which is how much for you? Is that 20 grand, 15 grand, 30 grand?

Speaker 10 You see, my rent, my rent is like 800 bucks a month. Um,

Speaker 10 so probably uh, my living expenses, this is about like two grand, about $1,500 a month. So it'll be somewhere over like $7,000 to $8,000.

Speaker 4 Okay.

Speaker 2 I would go minimum $10,000. I would leave $15,000 in there.
And if you want to invest some of the rest, that's great. But I'm a little nervous about your house hacking idea.

Speaker 2 Because I'm scared you felt for like a TikTok that they were like, it's so great, man. They paid the mortgage for you, especially when you got a lady in the mix.
You like this lady?

Speaker 2 You're going to propose to her?

Speaker 10 Yeah, yeah.

Speaker 10 I'm going to propose and probably have a courthouse wedding next year.

Speaker 18 Okay.

Speaker 2 I would let her be a part of this decision because I don't want her stuck being a landlord and you got, you know, the renter downstairs.

Speaker 2 That's going to make an awkward predicament for a newlywed. And so I'm not a huge fan of the house hacking idea.
I would rather see you guys have a primary home that you guys live in.

Speaker 2 And if you want to do investment properties later on with cash, you can do that.

Speaker 2 But I would just go pump the brakes and go a little slower here and just follow through with the baby steps, which is let's have a thousand bucks saved. You have that.

Speaker 2 Let's knock out all of our consumer debt. You're about to do that today.
Let's get our emergency fund in place. You're about to do that today because you already have it.

Speaker 2 Now we can move on to building wealth and building for the future instead of paying for the past.

Speaker 5 Okay.

Speaker 2 Do you have a ring already?

Speaker 10 No,

Speaker 10 I want to do some engagement counseling first.

Speaker 2 Engagement counseling? Like premarital counseling?

Speaker 10 Yeah, premarital counseling. Yeah.

Speaker 2 Okay, so this thing's headed toward engagement, but we're not quite there yet.

Speaker 4 Yeah, no, sir. Okay.

Speaker 2 Well, I would earmark some of that money for a ring, a wedding. I know you want to do the courthouse thing, but let's just say she wants a little celebration.
You have the money to do that.

Speaker 11 Gotcha.

Speaker 10 So would you say my first step should be getting paying that stew loan debt off first?

Speaker 2 Yeah, today.

Speaker 2 All right. Have you ever been debt-free in your adult life?

Speaker 10 No, this will be my first time. I'm 26.

Speaker 2 Dude, imagine not having to think about making a debt payment.

Speaker 10 Yeah, it would be nice. And that's the peace of mind, is what I've been wanting.

Speaker 20 But after talking to those advisors, they were, you know, so I was like, dang.

Speaker 2 Well, because here's what they're saying. Man, you could make more in the market.
You should just do that and leave the loan sitting there. It's fine.
You'll get to it.

Speaker 6 And

Speaker 2 the truth is, when you are looking at it through that lens, what you're really saying is, I am willing to borrow $10,000 in student loan debt in order to invest in the market.

Speaker 4 Gotcha.

Speaker 2 So when you look at it that way, you go, no, who would do that? That's insane. And so regardless of the interest rate, I'm I'm telling you to pay it off.

Speaker 10 Gotcha. Regardless.
Okay. All right.
I'm going to get on that.

Speaker 2 If you regret it, you can go get more debt later, but I hope you don't, Trey, because you got a bright future ahead of you. There is a lady on the line.
She wants to marry you, hopefully.

Speaker 2 Your future is too bright to stay in debt or go further into debt.

Speaker 10 Yes, sir. Thank you so much.

Speaker 2 Absolutely. And I'm going to gift you something, Trey.
It's called Financial Peace University. I think it's some of the best premarital counseling out there when it comes to finances.

Speaker 2 Because if you guys get aligned with your values, your goals, the principles, you both agree, hey, the kind of people we want to be is the people who don't owe people money.

Speaker 2 That's really going to set you guys up for success. We want to have money in the bank, not owe people money, build wealth for the future.

Speaker 2 And that's honestly one of the big reasons people get divorced is money fights and money problems. And you're about to avoid that.

Speaker 2 And I think it's the most attractive thing a man can be, is debt-free with money in the bank, you know?

Speaker 2 Because even if you got a five in the face, if you got 10K in the bank, it goes a long way, my man. Ask me how I know.
This is the Ramsey Show.

Speaker 2 What's up guys, George Camel here. What if I told you that you had thousands of extra dollars hiding in your budget right now? Listen, I know how crazy that sounds.
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Speaker 2 All right, I've got about 4,000 messages about the 50-year mortgage that was announced via Truth Social from President Trump. So I thought, I guess we need to talk about that.

Speaker 2 Let's talk about the 50-year elephant in the room, shall we? So over the weekend, here's the actual truth of what happened.

Speaker 2 President Trump shared a photo that's now making headlines, and it showed FDR, the president who helped create the 30-year mortgage after World War II, next to Trump, and it said great presidents as the headline.

Speaker 2 And his modern version was the 50-year mortgage under Trump's face.

Speaker 2 And the idea reportedly came from a meeting at Mar-a-Lago where Bill Pultey, who's now the head of the Federal Housing Finance Agency, presented the proposal on a poster board.

Speaker 2 So he made a little arts and crafts. He shows it to the president.
He liked it enough to post it on Truth Social. And now the FHFA says they're, quote, working on it.
That's all it takes, guys.

Speaker 2 You bring him a poster board with a nice picture. He goes, let's do that.
That sounds fun. And what am I having for a dessert at Mar-a-Lago?

Speaker 2 So the stated goal here is to make housing more affordable, in quotes. That's not what this does.
The 50-year mortgage does not make homes cheaper.

Speaker 2 In fact, it makes the housing crisis into a dumpster fire. And let's walk through the reasons why this is.
Number one, the math doesn't work here.

Speaker 2 Let's look at the numbers that have been thrown out there. We're going to take a $450,000 home as the example.
A 30-year mortgage at 6.25%, about $2,700 a month.

Speaker 2 Total interest paid over those 30 years, $547,000. Not great, remember, on a $450,000 home.
But now let's look at a 50-year mortgage.

Speaker 2 And to keep it apples to apples, I'll even give you the same exact interest rate at 6.25, which is not going to happen because this is a much riskier loan. So banks are going to charge more for it.

Speaker 2 But let's just say it's the same interest rate. Well, your payment now becomes $2,450 a month.
So you're saving $300

Speaker 2 at best with this loan. Total interest, this is the kicker, over a million dollars in interest alone on a $450,000 house.
Do you understand how insane that is?

Speaker 2 Now, in reality, Lenders would charge that higher rate on a 50-year because it's riskier, at least 1% more, which means the savings aren't even going to be there in your monthly payment.

Speaker 2 And the interest is going to be even more than that million.

Speaker 2 So that 7.25%, let's keep it there. That's $2,600 versus $2,700.

Speaker 2 So whoop-de-doo, you saved $100 a month all to pay $1.18 million in interest for that home. That is insane.
That is not affordability.

Speaker 2 It's a financial illusion that's going to keep people broke until they die. Because we know the average first-time homebuyer is now 40 years old.

Speaker 1 So let's walk this out.

Speaker 2 You're going to die statistically before you pay off your mortgage. So I guess generational wealth is gonna turn into generational debt.
That's what you're doing if you take this on.

Speaker 2 Reason number two, you are not building equity. You're just renting from the bank instead of your landlord.
So here's what really happens under the hood.

Speaker 2 You see, mortgages are front-loaded with interest.

Speaker 2 So when you look at your amortization schedule, that's the nerdy sheet that shows you how much is going to principal versus interest.

Speaker 2 At first, every single dollar, almost every dollar is going to the bank, not toward your house. So let's share some examples here.

Speaker 2 On a 15-year mortgage, you start paying more principal than interest around year eight. That's when you sort of tip the scales.
On a 30-year, it takes about 12 years.

Speaker 2 On a 50-year mortgage, it takes almost 40 years before you're paying more of your payment to the principal than to interest,

Speaker 2 which means the average homeowner keeps their home for about 11 years and they're moving on. By 11 years in, you've paid that 450,000 mortgage down to about $3080,000.

Speaker 2 Do you not see how insane that is? You have built almost no equity in almost a decade by taking on this kind of loan. So that's problem number two.

Speaker 2 Problem number three, it makes the housing crisis worse, not better. You see, stretching debt doesn't make homes more affordable.
It's just going to make home prices go up.

Speaker 2 And we see this with the car market, right? We're introducing seven-year car loans. Well, what happens? Everyone just goes, cool, we'll just keep raising the prices.

Speaker 2 College tuition, we saw something very similar happen because they realized people would just take on a bunch of debt and the government was going to back it.

Speaker 2 That's what's going to happen with these mortgages. So when buyers can afford a slightly higher payment, builders and sellers are going to respond by raising prices because now we have more demand.

Speaker 2 It's a classic supply and demand curve here.

Speaker 2 So that's problem number three.

Speaker 2 Problem number four, it's going to add massive risk for homeowners. Here's why.

Speaker 2 Borrowers would pay roughly 400 to 500 grand more in interest on that medium-priced home if it stretched out from 30 to 50 years.

Speaker 2 And when it takes three to four decades just to pay down half of your principal, even a small decline in housing values could wipe out all of your equity. That is frightening.

Speaker 2 And that's not including just closing costs and realtor fees. That would eat into what you would have built up in equity.
That's frightening. So this is a debt treadmill where you never catch up.

Speaker 2 If you move to the next home a decade later, you're just going to make a lateral move. You've built almost no equity.
Number five, it is a legal and financial nightmare.

Speaker 2 To make this work, regulators would have to rewrite rules and convince investors to buy these ultra-long loans. And I don't know if you know how banks and investors work.

Speaker 2 They want money like sooner rather than later. So what they're going to do to compensate is higher rates, more baked in fees, because it's already a fragile system as it is.

Speaker 2 So this is a financial time bomb, which brings us to problem number six. This doesn't benefit the American people at all.
It only benefits banks, builders, and Wall Street. Here's why.

Speaker 2 Let's be clear about who wins here.

Speaker 2 Banks get 20 extra years of guaranteed interest, which means if they actually play this out, they're going to get double what they would have in that 30-year mortgage. Then you've got builders.

Speaker 2 Builders get to sell higher-priced homes because monthly payments look more affordable. And then you've got investors who get 50 years of cash flow from your paycheck on Wall Street.

Speaker 2 So the only loser in this setup is you, the homeowner. And there's been a lot of people, a lot of backlash toward this, even from the Republican Party.

Speaker 2 Marjorie Taylor Greene even said that. It rewards the banks, mortgage lenders, and homebuilders while people pay far more in interest over time and die before they ever pay off their home.

Speaker 2 This is coming from a staunch Republican. So this is a system designed to keep you in debt for life.

Speaker 2 Now, the proponents of this, and this is what I've seen on social media, when I posted about it, when everyone posts about it, well, people would just refinance.

Speaker 2 Well, people would just pay extra, and so it's no big deal. Listen, I don't know if you've met humans, but we are emotional creatures.

Speaker 2 And the stats show that a very, very small percentage of people, about 7% or 9%, systematically actually pay extra on their mortgage.

Speaker 2 So left to their own devices, humans are just going to do the bare minimum. They're going to just make the minimum payment.

Speaker 2 And by the way, people who are going to take on a 50-year mortgage probably are going to do it with very little down and very little margin in their budget.

Speaker 2 This is a desperate move that's targeted at broke people.

Speaker 2 So if you do it the Ramsey way, you're going to go for a 15-year, which means you're going to pay a fraction of that interest, likely about a little over six figures, $160 grand in interest instead of a million in interest.

Speaker 2 Oh, and by the way, you're debt-free in 15 years. So even if you took on that home at 40, you're debt-free by 55 instead of 90 years old.

Speaker 2 Maybe making your last payment from the old folks' home if you're lucky, if the Lord willing and the creek don't rise. And this is what I love.

Speaker 2 The old French word mortgage literally means death pledge. And America has finally, we've taken this on and we're saying, you know what? Make it a death pledge literally, please.

Speaker 2 Because for 50 years, I'm deciding I'm going to be a slave to the lender. Proverbs says that.
Proverbs 22, 7, the borrower to slave to the lender, the rich rule over the poor.

Speaker 2 So is this the fix for housing? No.

Speaker 2 Do I believe that there could be a better economic climate and economy that could be more beneficial to the American people? Absolutely. We could build more homes to increase supply.

Speaker 2 We can try to stop corporations and hedge funds from buying up all the single-family homes.

Speaker 2 We could maybe let homeowners transfer their low-mortgage interest rate when they move, which would unlock some inventory because right now people are sitting with golden handcuffs.

Speaker 2 We could even raise the capital gains exclusion so that long-term owners can sell without losing equity to taxes. That would be a cool solution.

Speaker 2 But here's the thing: I have very little faith in any policy taking place that's going to make it easier for the American people to buy a home.

Speaker 2 In fact, as we've seen, it's only going to become harder. So, what's my take on this? Don't wait on a policy to fix your life, to allow you to become a homeowner.

Speaker 2 Bet on yourself instead of the government, instead of on a housing market that's a moving goalpost. So, what's the real way?

Speaker 2 You get out of debt, you you build up an emergency fund, and you get a down payment saved up. And that might go slow.
It might be 40 years old before you can take on that home.

Speaker 2 But when you do it the Ramsey way, and it's no more than a quarter of your take-home pay, you're not going to be in a lurch.

Speaker 2 You're not going to be paying off that mortgage until you're in the old folks' home.

Speaker 2 You're going to be debt-free, owning that home outright instead of it owning you, which is exactly what this 50-year loan is designed to do. And by the way, what did Trump think about it?

Speaker 2 He said, it's not that big of a deal.

Speaker 2 You don't pay our bills, Mr. President.
It is a big deal to lock someone in a death pledge for the rest of their life. So to that, I say no thank you, Mr.
President.

Speaker 2 I will hard pass on a 50-year loan.

Speaker 2 Our scripture of the day, 1 Peter 3, 15. But in your hearts, revere Christ as Lord.
Always be prepared to give an answer to everyone who asks you to give the reason for the hope that you have.

Speaker 2 But do this with gentleness and respect.

Speaker 2 Theodore Roosevelt said, there is only one quality worse than hardness of heart, and that is softness of head. That'll preach.
That's a timeless one right there.

Speaker 2 Well, guys, the all-new Every Dollar is here. You've heard us mention it on the show as we help people try to find that margin to pay off debt.

Speaker 2 And now it's way more than just a world-class budgeting app. There's a ton of advanced features to help you make faster progress with your money.

Speaker 2 The average person finds thousands in margin in just the first 15 minutes of using it. So start Every Dollar for free today.
You can get it in the App Store or Google Play.

Speaker 2 Sheila is in Cincinnati up next. What's going on, Sheila?

Speaker 26 Hi. I was calling to find out some information,

Speaker 26 suggestions about

Speaker 26 investing a little bit of money for some income.

Speaker 4 Okay.

Speaker 26 So my husband and I followed the Dave Ramsey plan

Speaker 26 for years. And

Speaker 26 we were in a good situation and looking forward to retirement,

Speaker 26 tracking a couple, three years down the road.

Speaker 26 And

Speaker 26 he unexpectedly passed away in July.

Speaker 2 Oh, my goodness.

Speaker 4 I'm so sorry.

Speaker 26 So I'm trying to figure out, suddenly, all income stopped.

Speaker 26 His disability stopped.

Speaker 27 His Social Security stopped.

Speaker 26 I won't see that again for another four years.

Speaker 26 Wow. So it was $150,000 insurance policy, life insurance policy.

Speaker 26 And I'm trying to figure out what's the best thing to do with that to generate a little bit of income to make up for the loss of income.

Speaker 2 Yeah, what was he making?

Speaker 26 He just, it varied from year to year.

Speaker 11 This year he was,

Speaker 27 well,

Speaker 27 last year.

Speaker 26 He didn't work at all this year. Last year he was on track to probably break $100,000.

Speaker 18 Okay.

Speaker 2 What are your monthly expenses right now? Let's just talk about the right next thing to do, which is cover your four walls, your food, your utilities, your housing, and transportation.

Speaker 2 So what does all that cost you?

Speaker 2 $800,000. We're debt-free.
We don't have any car payment or house payment or anything.

Speaker 2 Amazing.

Speaker 26 $800 just pays the bills and buys the food.

Speaker 2 That puts food on the table, keeps the lights on. Does that pay insurance bills as well?

Speaker 11 Um, yeah.

Speaker 26 Uh, it needs life insurance and um

Speaker 15 property taxes.

Speaker 18 Okay.

Speaker 2 So let's call it a thousand bucks.

Speaker 22 I'm sorry, car insurance, house insurance.

Speaker 2 Okay, but a thousand bucks all in gets your expenses covered for the month.

Speaker 2 Yeah. So we're really looking at we need twelve grand a year right now just to survive?

Speaker 18 Yeah, maybe. Okay.

Speaker 2 Well, I'll share some math with you and we can try to solve this

Speaker 2 problem together. So if you just parked that $150,000 in a high-yield savings account, you would make about $5,000 or $6,000 a year.

Speaker 26 The bank right now told me to put it in a money market, so that's just where it is right now.

Speaker 2 That's probably a similar rate. I would check on the rate, but right now you should be at about 3.5%, 4% on the savings account rates, especially high-yield money market.
So check the rate there.

Speaker 2 That's a good starting point, but you might need to invest this money if you want to make it last for a long time.

Speaker 2 Right. Because as you start to

Speaker 16 understand.

Speaker 2 Yeah, as you start to withdraw the money, it's going to deplete it. And so what is the next income point that you're going to hit? Is that Social Security in four years?

Speaker 26 There will be a pension that will start a little bit.

Speaker 4 Okay, what's that amount?

Speaker 26 Should start sometime this month.

Speaker 15 Should be about $2,000.

Speaker 4 Amazing.

Speaker 2 So this month you will have $2,000 coming in?

Speaker 17 Right. Great.

Speaker 26 So that leaves me from what we had calculated before he was going to retire and what we looked to think that we would need like $4,000 a month to live on after retirement. Okay.

Speaker 26 And that's what he was working towards.

Speaker 2 So $4,000 was the goal for both of you to have a comfortable retirement.

Speaker 17 Right.

Speaker 4 Okay.

Speaker 26 So now I'm about $2,000 short on that.

Speaker 2 Yes. But that was for both of you you in this, you know, kind of cushy retirement dream.

Speaker 2 Right. So we'll need to sort of have a new picture of what the future looks like for Sheila in this chapter as you are still grieving.

Speaker 2 I mean, it's only been a few months, so I can't imagine the fog that you're in right now.

Speaker 2 But as that fog starts to clear and as you figure out the right next steps, you're going to have to figure out what those expenses really look like for you to not just survive, but also to enjoy life.

Speaker 2 Because you're still young. You've got a lot of life ahead of you.
How old old are you?

Speaker 5 56.

Speaker 2 Okay. And then when will Social Security kick in?

Speaker 15 When I'm 60, which would be four years, and that's taking a cut.

Speaker 26 It doesn't fully come in until I'm 67.

Speaker 2 Sure. Yeah.
And you can delay that a little bit. Maybe you split the difference and take it at 62.
You know, take it when you need it.

Speaker 2 But if you don't need it, you can let it ride a little bit longer. And then the other piece of this, this $150,000, you could invest it.

Speaker 2 And if you invest it, on average, you could see anywhere from 9%, 9, 10, 11, even 12% return on average over a long period of time, over the next 20 or 30 years.

Speaker 26 That's what I need to know is where and how does one invest money to be able to pull off of it for a living.

Speaker 2 Well, what you want to focus on are mutual funds and index funds. These are basically giant groups of stocks and companies.

Speaker 2 So instead of putting all of your eggs in one basket, it's in a basket that has 200 different companies that are all weighted. And so that's what I would recommend.

Speaker 2 And if you want help with that, I would connect with the Smart Vestor Pro. You can do that at ramseysolutions.com.

Speaker 2 Click on Smart Vestor Pro, and they'll guide you through this process because we always tell people only invest in things you understand and you stay in the driver's seat when it comes to your investments.

Speaker 2 So you're not going to relinquish control. You're going to stay in control and actually learn: okay, here's what my money is doing.
Here's where it's going. Here's what the return is.

Speaker 2 And if you do that, this 150 grand could give you about 10 or 15 grand a year. So it's not going to be like a life-changing amount of money, but it could help float the gap that you're looking for.

Speaker 2 It could give you an extra, let's say, thousand bucks a month on average.

Speaker 2 Okay. On top of your two from the pension.
Now, now we're working with $3,000 and our expenses are one.

Speaker 2 Could you live a decent life in retirement off of that?

Speaker 2 I don't know.

Speaker 2 Are you working full-time currently?

Speaker 26 No.

Speaker 2 Are you able to work?

Speaker 2 I don't know.

Speaker 26 Maybe down the road.

Speaker 18 Okay.

Speaker 2 As you enter the new year, I would also look at what opportunities you have to do some meaningful work.

Speaker 2 Number one, because it will give you some purpose in this next season and allow you to continue this legacy. And number two, because truthfully, the money just isn't there.

Speaker 2 We need to create some income to fund the gap right now, to invest, to put aside. Do you have anything in savings outside of the 150?

Speaker 11 Yeah,

Speaker 26 that's what I've been living off of the past three months.

Speaker 2 How much is in there now? So

Speaker 26 outside of the money market,

Speaker 26 about $6,000, $7,000 now.

Speaker 18 Okay.

Speaker 2 So that's quickly getting depleted. And I would love for you to keep that as an emergency fund to cover you when life inevitably happens.

Speaker 2 Now, obviously, you've been in a state of grief, and so I have no shame, no guilt for you using this money to fund your life right now as you navigate this process.

Speaker 2 But I would love for you to keep that emergency fund set aside for those emergencies down the line.

Speaker 2 And that means maybe we get to work, we invest this money, we get that pension coming in, and then we get on a budget. Have you created a budget on your own before?

Speaker 26 Yes, I'm following the budget.

Speaker 18 Okay.

Speaker 4 Do you have every dollar? I have a dollar.

Speaker 27 Yeah.

Speaker 2 Great. I'm going to cover it for the next year for you.
So hang on the line and Christian will pick up.

Speaker 2 We'll make sure to gift that to you because it'll connect to your bank account account and make it really easy to track your transactions, plus a lot of other cool features to help you create margin.

Speaker 2 And you might see that, hey, this gave me four ideas I can do to create an extra $300 of margin. And in your world, that could be life-changing.

Speaker 2 Okay. Are you getting any counseling to help you heal and move through this?

Speaker 2 A little bit. Do you have anybody in your corner, community around you?

Speaker 26 Yes, we do.

Speaker 2 Okay.

Speaker 4 Good.

Speaker 2 Well, Sheila, I'm so sorry. This is not the picture anybody has as they head into their retirement phase.

Speaker 2 I'm so sorry for your loss, but I hope the numbers encourage you that you can not only survive, but I hope that soon you can thrive in this next chapter.

Speaker 2 That puts this hour of the Ramby Show in the books. Remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.