Smart Financial Decisions Beat Big Risks

Brought to you by the EveryDollar app, start budgeting for free today. Normal is broke and common sense is weird, so we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union Studio, this is the Ramsey Show. I'm George Campbell, my co-host today, Jade Warshawn. We're taking your calls at AAA 825. 5225, that's how you jump into the conversation. Dan is in Charlotte to kick us off. Dan, how can we help? It's great talking to you all. Thank you for taking my call. Absolutely. So I'm in a situation where my son has consistently been in and out of debt. At one time I had him come home and live with us so we could help him clear out of the debt. I paid about half his debt off, and it's not going to be back in the same situation again. He has some relationship problems. I think he struggles with depression and anxiety. And right now he is flat broke. He crashes car while doing deliveries, so he doesn't have a car to make any money. And we got him through this month's rent, but we don't know how the next month is going to look in thereafter. So my question is, I don't want to throw money away and not have him make any progress, but he doesn't need help too. I don't know. He doesn't seem to be able to find help on his own and the advice I give him sometimes to take something he doesn't. So it's kind of a mess. I'm not sure where to go with this. You said that he needs help. You mentioned anxiety and depression. I wonder is he getting the mental health that he needs, the mental health that he needs? Is he seeing anybody? Is he doing anything on that side of the equation? Because the way it sounded, it kind of feels like that's kind of affecting this entire situation. I think it is. He's been to a few therapy sessions that he had to pay for himself. He doesn't have any health insurance. And so he's not able to go to those anymore. I tried to get him to seek like public assistance to be able to do those things, but it just doesn't seem like he knows how to navigate the system. He's out in California. I'm here in North Carolina, so it's very hard to help him to manage that situation. How old is he? 35. Oh, wow. Has this been going on his whole adult life since he graduated high school? Yes. It has pleased been in and out of jobs. From my understanding, he's a very hard worker, but he just can't maintain a good working environment. What happens? What takes place? I think he just gets overwhelmed. He's a longer type of person, and I think he gets overwhelmed with a lot of people around him. He's been doing, you know, like DoorDash deliveries, and he's doing pretty well at that because, you know, he's his own boss, and he didn't have to interact with a lot of people. I think that's probably the way he needs to go, but I do think he has probably some, he has owned enough relationship, and it's off now. And I think that contributed to a lot of things recently. Wow. I mean, I'm not sure, but a lot of what you're saying, Dan, is leading me to believe that this is not at the core of a money issue. I think at the core, it sounds like more of a personal issue, more of a mental health issue. However, going back to your initial question, which is, you know, you gave him the money to pay off the debt, he's right back in. How much money did you give him the first time or that you used to pay off the debt? It was probably around $30,000, $70,000, something like that. And how much does he have now? He goes over $10,000, $10,000. So, what's his, if you could describe his lowest low, what's his lowest low been? I mean, has he been homeless, has he been, what's that look like? Lowest low is probably now he's got a very sketchy living situation, a death of shelter. Is it dangerous? Do you say sketchy? Are there drugs involved? Like, what level, if I looked into his life, what would be my. It's not up to residential standards. It's like a commercial refit that's not known for residential. Okay. Do you think there's any substances involved or what do you think? I don't think so. Okay. If I were in your shoes, if this were my kid, I mean, this is real hard for me to say and I'm sure George has some opinions. I think I'd be invested in making sure that he stays someplace livable at the very least. What I hear that my concern would be is that his mental health would cause him to end up in a homelessness situation. And I would try to help prevent that. But at the same time, you've got to be clear on your boundaries because I just wonder if some of this is allowing him to feel some of that pain to kind of shake him up. But I also don't know to what extent the mental side of this is going. So I say that very lightly because there may be some real things that are impending, you know, impending his ability to make good choices. Has he asked for help or is this you kind of stepping in, checking in? Well, he did ask for help and we actually, I got him on a budget about a little over a month ago and he was doing deliveries and starting to make headway. Although he won't always work maybe because he, you know, got into depression that day or something relationally happened that threw him off-kilter. We weren't making progress, but then just recently when he backed his car, then, you know, that kind of sunk him. And there was no insurance? No, the requisites fall and so you don't have collision, it's just liability. Yeah, I mean, I got to tell you, Dan, the way you're describing this, and I know this is a very short call. I want to start by saying that, but when the way you're describing him, I'm not picturing a 35 year old man. It almost sounds like you're talking about somebody who's 18 or 16 or I'm not getting that. His growth was stunted at some point. Yeah, I'm not sure what happened or, you know, was he fine through high school? Well, so we had him tested as a child and he was never diagnosed as being on the spectrum, but he has those tendencies. Yeah, it's like socially the soft skills aren't there. Yeah, yeah. Well, I'll tell you this, Dan, I wish I had a magic wand and could fix it. I'll tell you this, if you, you can use money to help him survive, your money cannot help him thrive. And so that would be the goal is to make sure that he isn't homeless, that he is safe, he has shelter. And as much as you can, I would put your money directly towards those things versus giving him the money. Or even mental health care, putting it directly towards that. If he can commit to going ahead, I'm going to go once a week to see this therapist locally and see a doctor. Anything you can do to help him with his health and help him get a career, those are the two best uses of your time and money versus just trying to fund the misbehavior, clean up the debt before it comes back. That's just going to be a game of whackable until we can get his health and his career under control. Because right now DoorDash, here's the problem of DoorDash. If he doesn't feel like it, he's not going to do it and therefore no income. I would rather where there is some expectation. Dude, you got to wake up, shower and be there by 8 a.m. or else you lose the job. I think he needs some structure in his life right now more than anything. So that's the part you can encourage him as a dad, if you have influence in his life, if he has friends. Think about those kinds of people who can talk some sense into him, be a mentor for him, be a coach for him. That's what he needs right now more than a paycheck. I wish you the best of luck. [Music] You know what's scarier than a life-size skeleton on your neighbor's front porch? A stranger from the internet showing up on your digital front porch because they found your address online. It is so easy for creepy data brokers to get a hold of your information these days. They're out there right now, buying and selling your personal data without your knowledge or consent. That is all trick, no treat, my friends. And I don't know about you, but when it comes to my personal data, I prefer to be a ghost online. And that's why I've had to lead me for years. They don't just remove your personal data once. They keep monitoring and removing it for you, just in case it pops back up like your middle school crush, who just won't let go. And although I love a game of hide and seek with my toddler, I don't want to play it with my data online. And that's why I appreciate that DeleteMe sends me regular privacy reports, showing me what information of mine was out there, where it was found, and what was removed. That is real protection, not just some service dressed up in a costume. Get 20% off any privacy protection plan from our partners that delete me for Cybersecurity Awareness Month. Go to joindeleteme.com/ramsie to get the deal or click the link in the description. That's joindeleteme.com - Com slash Ramsey. (upbeat music) Anthony is in Virginia Beach up next. Anthony, welcome to the show. You with us? - Yes, sir. - Hello. - Good, good. How are you doing? - I'm doing well, how are you? - Fantastic. - How can Jade and I help? - So basically, I make $150,000 a year plus. Sometimes slash Ramsey, I made it just under two. - Nice. - I made a significant amount of debt. I just financially just kind of, I guess stupid. I had to get the confidence to kind of call you guys. I mean, I'm just trying to find out where I should go and what I should do. And maybe a little bit of financial advice. I've been watching Dave for about six months now. - Nice. - How old are you? - I'm 34. - Cool. - Are you single, Mary? - I actually just got divorced last year in August. - Sorry to hear that. Was that part of the sort of unbridled spending? - No. - Or part of the divorce agreement? - No, so unfortunately, I mean, I grew up with not a lot of like guidance in my life as far as financial. So, but I am the first person in my family to actually make like a substantial amount of money. My family's always been on the poor side. And then when I started making money, I was making just ear responsible financial decisions when, you know, buying things that I shouldn't have been buying. And we just racked up a bunch of debt and it got to a point where it put a lot of financial strain on our marriage which caused the divorce. - I'm sorry. - And then, yeah. - So this is your wake up call? - I'm sorry. - My marriage blew up and this is your wake up call going, what am I doing? I make 150 to 200 a year and I got nothing to show for it. - So. - Nothing. And I'm like, and I'm living paycheck to paycheck, so. - Yeah. - You're not alone. - If it makes you feel better, that's the, you know, it's not a great bar to set. But a third of people making six figures are paycheck to paycheck. - And I just pick up on a lot of shame in your voice. I can tell that you look back on that and you feel a lot of remorse in which that had been different. But this is the turning point. I mean, the truth is everybody has that point that kind of fork in the road where they go, all right, what I was doing is not working. And you get to choose if you're gonna make a change or not. And it sounds like you are willing to make a change which is really all that matters at this point is leaving what you did back there, learning from it and going forward in a new direction. And I think that George and I can help you do that if you're open to it. - 100%. Yeah, I mean, the main reason I wanted to reach out is unfortunately I did have a family member pass away relatively recently a few months ago. And I wasn't expecting anything but he had left me inheritance. So I mean, I just, I also wanted to, I don't know anything about investing or I have no retirement, I have no 401(k), you know, I just, I was stupid. You know, I was childish and immature and like looking back at it. And now I really regret it. - How much was the inheritance? - But I just, it's gonna be for 160,000. How much debt do you have? - I have about, well, I just paid off 18,000 but I still have another, I believe, 60. - 60, so-- - No, no more. - I know it. - You bet to have zero debt with $100,000 left over. Do you see my math on that? It was a magic trick I just did. (laughing) I mean, this family member just gave you an amazing blessing. You got like a jet, get out of jail free card. So the question is, are you gonna squander it or are you gonna use it to catapult you to better decisions in wealth building? - Exactly. And that's why I wanted to reach out to you guys. I don't wanna end up in the same position. I'm in now. I wanna leave something for my children. I have two girls. - How old are they? - Just two time cancer survivors, nine and 13. - So this is, this kind of boils down to, I think from here, the biggest play is to what we said earlier. Looking back and going, okay, I know what I did. Let's spend a little bit more time thinking about why you behaved in that way, so that you can recognize that going forward because George is right. You gotta get out of jail free card. This debt is gone. But if you don't understand what caused you to behave the way you did in the past, you're gonna turn around and do it again. So make sure you spend some real time thinking about that. I'm gonna give you a copy of my book, what no one tells you about money because I talk about that a lot in the book. And you're not gonna be able to go forward until you kind of start that process of trusting yourself with money and kind of forgiving yourself for what you did in the past. And just forming a new mindset on how you're viewing money, going forward. And it's all about the choices that you make. So number one, you've gotta start to get on a budget. My guess is you've never used a budget before, am I right? - No, man, I've never, I've never, I mean, I thought about using budget apps and stuff like that. When I was married, my wife did all the pay the bill. - So now from now on, it's on you. It's on you. And as my colleague Dr. John Deloney would say, we can't build from the past, we gotta start something brand new. So starting today, we're building something brand new. What's in the past is left back there. We're gonna start the behaviors that we know work. So budgeting will make sure to give you every dollar for free. Budgeting is a huge one. That is you making a plan on paper, Anthony, before the month begins. So we are just about to go, well, we just hit October. So tonight, let's start planning for October with the money that you make from your paycheck, writing down everything that you could spend your money on. All your expenses, rent, car payments, everything that you might have, plus things like groceries and out to eat, things with your kids. Everything goes on there. And let's just get a baseline for what does it look to spend in a month? And then November's budget is gonna be even more dialed in. December's budget is gonna be even more locked in. That's the number one thing you can do. The number two thing you can do is today, like inside of your brain, inside of your heart, you have to decide that you're not borrowing money anymore. Those are two things you can do. They cost you nothing. You can start those behaviors today. And it will change the whole outlook of how you handle your money going forward if you stick to those two principles. And then the rest will start to fall into place. - Okay. I agree 100%, that's what I wanna do. I mean, I told myself I'm not gonna be loaning anything. If I don't have cash to buy, I'm not buying it. - Yes. - Yeah. - So are you willing to do some drastic measures to sort of put some guard rails around this? - Of course. - Okay. - So you're willing to pay off the debt today? Are you willing to stroke the checks and hit make a payment and be done with all the debt today with that inheritance? - I don't have the inheritance yet. It's coming in in a month. So it's just getting finishing up with probate, but that's why I wanted to be prepared for it when it does come in. I wanna know what to do and how to do it. - Can we pretend like that money is not yours. That money is 60K is allocated to the lenders, right? And let's call, I don't know, six months of expenses for you. Is that 30K? Well, I spend in bills a month with child support around five grand. - Okay, perfect. - I was right on the money. - So 30K is not for Anthony, that's for Anthony's emergencies, right? So out of the 160, we were down to 100 after debt payoff, now we're down to 70 after the emergency fund. Now you're a guy who has no debt, a fully funded emergency fund and $70,000 to his name. That's pretty cool. - Yeah. - So that is not spending money. That is culture, Anthony money. So do you have a retirement plan through your employer? - I just transferred jobs because I'm going to be moving at the end of October, back near my dad, or not with my dad, but near my dad in Fredericksburg. But. - Are you gonna be renting? - The current job that I'm. - Yeah, I'm gonna be renting because I'm my credit, it's honestly really bad right now. It's in the low fives. - Do you wanna be a homeowner again one day? - Of course, yeah, I mean, I wanna build my own home. Like I said, I had all these goals when I was married and things just kind of water fall, I just got myself into a hole. I just don't even know how I got there. - Well, we're looking at future Anthony now, but there's a new chapter here. So what I don't want you to do is make decisions trying to impress future Anthony or fix the past. And so building that home because that was your goal five years ago, you don't need to do that. So do what makes sense for you where you are currently. - So that's 70 grand left over that might just go in a high-yield savings account and become your down payment fund for future home. So you see what we just did there? We just earmarked all of the money so that you don't touch it. - Yeah, you walked out here, Anthony, with five really clear steps and I'm gonna say him again for you so that you don't forget them and so that you can listen back to this episode and really have it lock in your brain. First thing you're doing is you're budgeting. We're sending you that budget for free. Second thing you're doing is you're stopping borrowing money. For good, you need to spend some time really thinking about what that means for you and just re-owning that as your new identity. The next thing is you're gonna take the money from the 160, you're gonna pay off your debt. And then you're gonna take 30,000, you're gonna save that in a high-yield savings account. That's your emergency fund. And then you're gonna take the other 70, and you're gonna park it in a high-yield savings account. Some place where you're not getting to it, you're not touching it, you're not looking at it, you're not ideating on ways that you might spend it. - Jump on a fair one's.org/RAMSI. You can have the 10 high-yield savings accounts there, and that'll be separate from your bank, so that it won't be easy to access. And on top of that, cut up the credit cards, close the accounts, and freeze your credit with all three bureaus, because now you're a guy who doesn't go into debt. That's who Anthony is. That's his identity. Not past Anthony who made some mistakes and had life happen to him. (upbeat music) Hey, this is Dr. John Deloney. I take my sleep seriously because better sleep means better health. And if you've been losing sleep or waking up sore because you've got some old, thin, gross mattress that wasn't designed with you in mind, it's time to make a change. I love Helix mattresses. They make mattresses for real individual people. Whether you're a side sleeper, a back sleeper, whether you sleep hot or if you and your partner have completely different sleep styles, Helix has a mattress designed just for you. I want you to get online and take the Helix sleep quiz. It takes like two minutes and they're going to match you with a perfect mattress that fits how you actually sleep. Helix is not just a show sponsor for me. I sleep on a Helix mattress. Helix mattresses are the best. The best savings of the season are happening right now on Helix mattresses. Go to helixsleep.com/ramsie for their best of the web, offer and get 27% off site wide. That's 27% off site wide at helixsleep.com/ramsie. That's helix, H-E-L-I-X, sleep.com/ramsie. With helix, better sleep starts right now. We wish we could get to every calling question here on the show, but alas, we don't have all the time in the world. If you have a money question, you want to answer for your situation, head over to our website and use askramsie. It's our free AI tool that is built and trained on proven ramsie principles and the results have been amazing. I love hearing from people that even on the show, they say, "Hey, I actually used askramsie for this and I wanted to get your opinion on it and usually askramsie is smarter and more accurate than us." That's just the nature of the business, but it's trained on all of our stuff. So, you know you're going to get a ramsie answer, not just a random one from Google. You can ask your question today. Just go to ramsie-solutions.com, click the link in the description if you're on podcasts or YouTube and check out askramsie. Samantha is in Stanford, Connecticut, up next. Samantha, welcome to the show. Hi. Thank you so much for taking my call. I really appreciate it. My question is around the retirement of the 15%, my spouse and I are kind of in between baby steps four and five, running them in tandem, and I think we're just struggling with the moral of balancing, I guess, of possibly postponing some of those family vacations and memories that we would make with our two young children and planning for a future that we may never get to. So I'm just curious of your thoughts around that and how to balance that as a family. How young are your children? How old are they? They are three and one. Okay, are they in daycare? They are not. I actually work from home and we have some help coming in to help us through that. So help us understand, my screen says the retirement is keeping you from doing these. Help me understand what's going on with the budget that there's not enough margin to kind of start setting aside to take a few vacations here and there. Yeah, I think that we've had our heads down and we've been trying to follow the Ramsey plans for now three years and collectively we've paid off 80 grand of debt and we're at this crossroad of, okay, can we start to breathe or is there some flexibility in this 15% like we just feel like we are just constantly focused on the future future future and sometimes these day-to-day moments of planning these vacations are put in the back burner. So that feels more like a priority statement than it sounds like a money statement. Because what's your income? Gross as a family, it's around 230. Yes, ma'am. This is 100% a priority's discussion. Unless you sit up here and tell me that your mortgage is super high, a super high percentage of your take home, it sounds like something that you guys have to prioritize. What is your mortgage? Our mortgage is 2700 a month, we live in an area that has really high taxes and we get tax on everything. That's less than 25. That's not the problem. Because I mean, you guys are bringing home like 14 grand a month. Well, we're only netting about 10-5 after you pass the money going into retirement and taxes and all that. Okay. So we get 10-5 to work with, 2700 goes to the mortgage and you've got over 7 left and you're saying out of that, you couldn't save like, let's say 500 bucks a month, put away in a savings account for a vacation. A thousand bucks a month. A thousand if you want to go, if you want to go to Disney World, it's going to cost that. We can always go to Branson. What's stopping you? Because I was expecting, usually when I hear this question, I'll be honest to me. Usually it's a time of life thing where we've got kids and daycare. We've just started investing and basically with kids and daycare, you're basically paying for college, right? It costs the same thing. And so it's just a tight season. But if you're telling me, no, I work from home. There's no daycare bill and also we make 230, oh and also we bring them 10,000 a month. There's got to be some major expenses here that we haven't accounted for yet. If I were in every dollar budget right now, what would I see that I'd go, whoa? Probably food and leisure, things that we account for that are weekly treats for the family. And I'm not saying this because it's a bad thing because I just want to know what you mean by that. Yeah, I think for us, we prioritize the family model, so it's just weekly spending a trip to, like, for example, to do or do anything or to go out to dinner, like that's all part of our budget that maybe we should start pulling some of that back and putting it towards vacation. I think that it's exactly that. If you tell me, if you say, because again, and I stand on this because I think it's true, there's nothing wrong with the things that you just said, I'm with you. I think that you've worked hard to get to this point where you can spend money in those ways and you clearly value family experiences. So what you can say is that, okay, some of the family experiences, I value are the ones that are close to home when we can go to the zoo and go to the museum and go see the movie that just came out and go do this. But then you can also start to say, in addition to that, I'm going to put a line item on the budget where I'm going to split this line item and say part of it's going to be spent on close to home experiences and some of it going to be spent on out of town experiences by us going to travel and just knowing that those are things that you tend to need a sinking fund for versus I'm going to be able to fund this in one or two shots. And I think that truly is what it is. You don't need to pull back from retirement, but there probably are some things on your month to month budget that can pull back. And it might be that you pull back on going out to eat because I do think in George this needs to be said. I think that a lot of times when we hit a certain threshold with income, it kind of becomes like, ooh, I can do what I want to do. And it's not that you're reckless in the way that you're not making a budget, but you're reckless in the way that you let certain areas of the budget just inflate, inflate, inflate. And pretty soon you can start to feel like, oh gosh, I thought I'd be able to do more with my money. And it's like, you are doing more. You're just eating it or you're just, you know what I'm saying? So I think that's what's happening. Here's a fun exercise, man. If I said, hey, you have to put a vacation line item for $1,000 a month in that budget, what would you then cut or add to make that happen? If I said you have to get rid of something, maybe you need to add some income, what would you guys do? Probably, it would be like a grocery out to eat budget. We would pull back on it, probably the out to eat as a family budget. So you could cut that one down, anything else? Could you cut some subscriptions? Are there any luxuries that you could go without for a season to get kind of used to this savings muscle being built? I mean, you might have to talk to my spouse about the NFL Funday ticket, but I could build it. Oh, see? See, you're not the only. Yeah. Complicit. I think you have really fun things built into your life. Again, I think your income allows for that. You just have to sometimes make some trade-offs and go, hey, we might not do the season tickets because we want to do the trip to Disney or we might not do, you know? And it's just pulling back on those things and the hard part is, it's kind of like first class. Once you. And I don't fly first class, but once you do, good luck on going back. Start going back. Yeah. So you've introduced some things into your lifestyle that you really, really like, and it's going to be hard to trade those things off because you're going to feel a little bit to do some of these other things, but your money's not infinite. It does have. It's very good income, but it's not infinite. Do you guys get a big tax refund every year? Not really. Okay. It just still seems like you guys are withholding. There's too much being deducted right now to be coming home with 10 grand out of 230. So that's what I'm looking. If you can kind of look at a bunch of things like reshopping your insurance, looking at the paychecks, cutting some subscriptions. I think this doesn't have to be one thing is out of the budget completely. It might just be you're going to give 10 things a haircut. Now all of a sudden, you can find $500 to $1,000. Again, on paper, say, "What is this vacation going to cost and when do we want to go? Have you done that part yet?" Yes. I mean, at high level, because I think all the young kids that want to go to Disney World, so at a high level, yeah. The one-year-old has stated they want to go to Disney? Well, our three-year-old and we were trying to get there before the world. when you're old would be part of it. Listen, can I give you a piece of advice? Don't go yet. I know you didn't ask me, but oh my god. - Samantha, I say that as a guy who is getting roped into going to Disney World with a three-year-old and one-year-old. - It's too soon. - It's too soon. Go a little bit later when they can. - It's gonna be a great time, but the memories are not for the kids at this point. It's for you guys, and it's okay to call that out. But also, you are giving these kids an incredible life. I want you to know that, that it's not about a vacation. They're gonna remember those trips to the zoo more than a flash in the pan weekend traveling. And so, as they get older, I think your income's gonna go up. You're gonna dial in the budget more. It's gonna become a rhythm to save for these things. And ongoing, just keep that $500 or $1,000 going to that sinking fund of the vacation over to a high-yield savings account. And magically, you can afford a vacation every year. So just plan ahead for it, make the sacrifices needed, and I promise you the kids are gonna be okay. They won't go to therapy over this. (upbeat music) (upbeat music) If your business is making seven figures or more, you should be proud of that. But that growth probably brought a mess with it. Systems that don't talk to each other. It's impossible to track down your numbers because they're scattered everywhere. That's a visibility problem. And NetSuite has solved that problem for more than 44,000 businesses like yours. NetSuite brings financials, inventory, CRM, and more into one place. And their AI tool, NetSuite Next, builds AI into everything, automating busy work like forecasting demand and chasing down over to accounts. It's not complicated to use. You just ask it questions like you're talking to a person. And you're not starting from scratch because NetSuite is built on leading practices from thousands of businesses preloaded and ready to go. Ramsey solution switched to NetSuite years ago. It helped us know our numbers and we've never looked back. If your revenue is at least seven figures, try NetSuite Next for free at NetSuite.com/ramsey. That's NetSuite.com/ramsey. Or click the link in the description. (upbeat music) If you've heard us talk about the baby steps on the show, that's because they're the foundation of everything we teach. So if you're new to the show, start there. We're gonna drop a link in the description to the seven baby steps that are the framework for every single call in the description of this episode. Check it out. Steven is in Grand Rapids, Michigan. Steven, what's going on? - Hey there guys, thanks for taking my call. How are you guys doing? - We're doing great. How can we help? - I have a question in my wife, but 48 years, 40 live out in the country in 2021. And we do it our own house, our homestead there. We have two kids, two girls. And everything's going well. Our mortgage is $1,800 and $2 a month. And I was just wondering if it would be a smart move to fill some acres to wipe off some debt, or if I should keep it being that got it for a pretty good price, or what I should do with the obvious smart move or not. - How much debt do you have? - $240,000 right now. - Is that the mortgage or is that consumer debt? - That's the mortgage. - Oh, that's it. You only have the mortgage. - No, I have a truck payment which I bought a youth truck. It is right now, it was like $27,000 on it, which is like $416 a month. - Okay, and that's not part of the $240. - No, no, that's separate. - Okay. - It'd be about $270 total with the truck. And that's all I have. - Got it. All right, what's your household income? - It's right at $92,000 a year. - Okay, you know, if you wanted to, you could, but I don't see why you can't take this $92,000 income, pay off this truck, lickety split. And then beyond baby steps six, like everybody else would do and just make big chunks at this mortgage when it makes sense for you guys and just make a regular rhythm of paying extra on it until it's gone. It's not astronomical, especially when you look at median home prices. - Right, right. - You got a few levels. - I didn't get it, what was that? - You got a few levels to pull. I mean, selling the acreage is one idea. We're just trying to show you, hey, if you can pay this truck off in the next 18 months and you love the truck and you love the acreage, nothing's broken here. - Yeah. - So do you just have too much acreage? And I could do without some of this. It's fine, I could parcel it off. - I'm not gonna lie, it's beautiful. It's a nice piece of property, I love it. The one downfall is, when I got the loan, I got it through a financial institution that does not lock in interest rates. - Oh, is it adjustable? Is it like a hard money loan? - No, it's, and I've got this financial out of Pennsylvania. So they're kind of a conservative group. They have their own investors. They're kind of their own group. And they only loan money to like conservative people. It's kind of a different thing. - Never heard of it. - And so what's your rate? - So it right now is like six and a quarter, which is not terrible. And the cool part about it, it can only fluctuate like a half percent per quarter, which amounts to two percent a year. And it will get three and a three and three quarter when I got the loan. - So is it just an adjustable rate mortgage? - Sounds like it. - Yeah, no, it goes up and down with the, I mean, with the kind of the other. - Yeah, it can only go up two percent annually, but it can also only come down to a percent annually. - I mean, you keep saying only. That's a lot. - That's a lot. - That's a lot of money. - That's a big deal. - $2,000 dollars. - So how many acres? How many acres would you have to sell? If you said, you know what, I wanna do this. How many acres would you have to sell in order to pay off the mortgage? I think you can cashflow the truck, but let's just play with this for a second. To do the mortgage, how many? - I talk to a realtor and reality, I would have to say, probably about 30 out of the 40. - Oh gosh. - It's like completely, I'm a wipe out of the debt. - Mm-hmm. - You know, and that's also, I'm not sure how the capital gains things work, but you know, paying for a grand in acre, you know, and now it's worth probably more like eight. And I'm not sure how much of that would go into capital gains, or how much the government would want from that, and then that would also play any fact if how much I could actually put out the debt. - Have you thought about just refinancing to a different loan, just a normal, conventional 15 year fixed rate? - That's the third thing about it. That when I actually did mostly the process, and by the time I got through, that interest rate was eight percent. So I chose not to, which at this point I'm glad I didn't like it in, because I'm still below that. But interest rates are still fairly high, aren't they? - I mean, you should be able to. - Six and a half on a 15 year. - Yeah, in your area. - That's it. - Plus, you do have the benefit. You have, I think you have a lot more options than you realize, 'cause what you could also do, you could say, "Hey, I'm going to sell, "I'm not gonna sell 30 acres, "but maybe I'll sell 15 acres. "I'll take that chunk of money "when I refinance it, I'll throw it on the loan, "and I'll knock it down majorly." There's so many things that you could do. What I see in this that feels drastic to me, I'm gonna tell you the two problems that I see that I'd wanna nullify very quickly. Number one, I don't like the adjustable rate mortgage. I think that's taking away your peace. It's taking away mine. So I'd wanna do what I need to do to fix that, and we just gave you a couple of options, what you can do there. The second thing that's a glaring thing to me is the truck payment. I think you're in a situation that you don't need to borrow money anymore going forward, and I think that I would get this truck paid off really quickly, and if you do those two things, I think it's going to make the level of peace in your life rise to a very great level. I don't think that you have to push to pay off the mortgage immediately by selling off all of this acreage. I don't think that's the thing on fire. The problem is the adjustable rate mortgage. - Okay, yeah, let me extend to that. I consider doing that, even just like you said, just getting the mortgage down, even $100,000 off a 240, that's almost half. - Yes. - I mean, yeah, I went from $1,200 a month in 2021, being my payment to 1,800, and that's 600 bucks every month, that's just going into interest, and it just stinks. - Yeah. - It was never my intention to buy that much, but it could become available. I'm like 160,000 for 40 acres out in the country. - I don't regret it, because I'm still ahead of this point, even if I sell it, I didn't pay that much in interest. - Sure. - You know, the amount that you went up. - But you left the land, so you said that he left it. - Basically, nothing's on fire now, it's just, let's get you out of the adjustable rate mortgage, and let's have a plan to actually pay off this truck. So how much margin do you have every month right now? Extra money you could throw at the debt. - I could probably do somewhere between $800 and $800 would be comfortable. - Okay, so this is how long it would take you. Can I do the math with you? - $27,000 alone, that would take you almost three years to pay off that car loan. Can we agree that kind of sucks when you make almost six figures? - Yeah. - So what if we could throw 1,500? Could you find that in your budget if you guys tighten things up? - I mean, we've done with, I got hurt at work two years ago, and we've done with almost nothing. I have an awesome wife, she spent no money. like literally. Um, so it's it's all on me. So yeah, I mean, we can we can do with with a lot less and if that's what I think so that's why I would do a budget tonight and go hey, we have a game plan will be don't have to sell any acreage right now, and I'm going to cash flow and pay off this truck in 18 months are you game. My guess is she goes, okay. It sounds like you're the spender here. So you can control this a lot more and you guys probably we bring home six grand a month. What are you bringing home? Yeah, six six to seven. Yeah, okay. Wonderful. And your mortgage is 1800. That's only going to go up until we refinance. So now between paying for everything else, let's go find that 1500 and say 18 months from now this truck loan is gone and we get to keep all this beautiful acreage. And then you always have sort of like a parachute here of selling some acreage if if push comes to shove, but I wouldn't do that quite. Okay, okay, and I didn't know what the market being up, you know, it didn't it is worth, you know, substantial more than it was. If you know at some point, but real estate on a scale in the country, it probably is never going to go back down to where it was. I mean, that might be a bad assumption. Yeah, I think you bought this land though because you love it. I think you bought it because there's something about it. You want to do the whole homestead thing. And I think that you just have to remain kind of focused on what it is that you're trying to do. Really, truly, truly, do you think that the problem was the risk or like that feeling of uncertainty is the adjustable rate. It's not knowing like what's my payment going to be? Is it going to go up? Is it going to go down? And just whenever you have that layer of risk in your life, it does it affects just your day to day. It's kind of like, you know, when you have your computer and there's all the things running in the background, you have all the tabs open. And it's just slowing down your performance. It's just making things cloudy. And I think that clearing that up is going to help you a lot. Close the tabs, Steven. Close the tabs. You all that emotion and excitement will drive you to make decisions you probably wouldn't have made in hindsight. But that dream was too exciting when you saw that beautiful land and you pictured the homestead lifestyle. Yeah, but you know, like we said, there's nothing on fire. He can keep the, keep the grass. Yeah, don't sell the horse quite yet. You're not there. Hey, George Campbell here. A few years ago, someone stole my identity. And let me tell you that is not a quick fix. It takes hours on the phone, piles of paperwork and a whole lot of stress trying to untangle the mess. And even after that, there's this nagging paranoia because your information is already out there. And the truth is, you can do all the right things and still become a victim. That's how common identity theft is. And that's why I'm glad I had that. I had Zander's identity theft protection. When my identity was stolen, their team stepped in right away. They were monitoring my information and caught the issue and their US base recovery specialists help handle the calls, the paperwork, the cleanup, so I didn't have to do it all on my own. Zander also includes up to two million dollars and stolen funds and expense reimbursement. And with the family plan, your kids are covered for free. You work too hard to let identity theft steal your time, your money, and your peace of mind. So go to zander.com to enroll today or call 800 356 42 82. Welcome back to the Ramsey show in the Fairwinds Credit Union studio. I'm George Campbell. Co host today is Jade Warsaw, open phones that triplate eight two five five two two five. William is in St. Louis up next. What's going on William? Hey guys, I very happy to be with you. I just had a quick question and I'm kind of nervous. So I got laid off on Friday. And I would like to kind of go into business for myself. But that'll take time to build the income up if it builds at all. And I'm just wondering if I'm in a position to do that or if I should go look for a radio job. Man, what happened with the job? I just didn't didn't bid enough work and actually they let off about 50 guys before me and then the. Yeah, then it then I got my call. So what kind of work is I'm a welder. Okay, what were you making? So at that point, I was making 36 an hour. Nice. Okay. And what would the business be? So well, I would like to do art. I like sculpting the main business would be just regular welding and fabrication. But then also I would proceed the art on the side in a similar fashion to how I've been doing it for the past couple of years. But it's I'm just not sure like the money. So the business is welding you do your own welding business. And as a hobby on the side that could make money one day, you would want to do sculpting. Yes. Okay. Yeah. Metal sculptures. So they do tie in together. How quickly can you start getting welding work and have you kind of looked at how many clients you need or what do you need in order to kind of make what you are making at the old job. Do you think that would take realistically to get back there? I think it would take probably 18 months to get back to maybe 12 to 18 months to get back to that working independently. But I don't know. There's also a lot. I would imagine there's lots of insurance liability things that need to be covered there that I haven't looked into what I've kind of. I like the idea of you, you have a trade that you could easily turn into your own business. If you have a business sense, I don't know that you do just yet. But already you saying, hey, this is at least a year to year and a half build. In my mind, I would go, let me get another job right now. And then while I'm working the current job, just bringing in some money to make ends meet, right, just continuing to feed my family. Hopefully I can get another welding job making what I was. But while I do that job, I'm going to start doing the leg work for putting this business together. I'm going to start figuring out what insurances I need. I'm going to start figuring out all the nuts and bolts, all the foundational things. And then I'm going to start building. I'm going to start taking some clients. I'm going to start doing some things on the side and building that up. And when I can pull that boat close enough, George, I'm jumping right in it. You're just like stepping gently instead of just hoping you can make it without hitting the water. So that's the goal here. And in the meantime, you might just need another job to get by until you can sort of build up your book of business. And the sculpting will remain a hobby for now. Let's put that in the back burner unless you're like, oh, I've already sold multiple pieces for thousands of dollars. What did you bring home every month when you were welding? Uh, free tag or post tax was four grandage. Okay, four thousand. I put a lot in my, I put a lot in my 401k and stuff like that. So it, it was lower than it needed to be. What was it? What was it just after taxes, not after investing, but what was it after taxes? I want that number because that's our goal. So whenever you're looking, it's that or higher, right? So as you're looking for jobs out there, because what you might find, and I don't know, you could speak to this. But you might find that if you get a job welding, they might say, well, you can't do a welding business on the side. That is, you know, a conflict of interest. So you might have to pick something that's not welding that can make you for four grand a month so that you can go ahead and build this welding business and start building up your client base without it being a conflict. But at least we know how much you need to earn and that's kind of the goal. Yeah, so pre-tax. I was 1440 and then with the options of 462, 15, I was netting 977 85. And I'd have to go through and do the math to break down, break down the deductions there. Do you have a specific skill in welding? So I was a pipe welder, but I think I'm more, I really just said that because it was lucrative and I couldn't subsidize doing art with that, but I find myself fabricating more than anything. So can you find some of some fabrication contractors and get some work in between? Probably. I also, my, my expected timeline is about three month layoff. I don't think it's like I'm never going back. I think there's just. So January, yeah, I'm just, I'm, this is something I've been passionate about and I'm nervous because I try to lose in a very risk of burst manner. I'm nervous that I'm using it. The layoff has a catalyst for a poor decision when I'm not there financially to take that risk. And that's fair. I think that your spidey senses are exactly right because you're talking to two creatives here. We love art. We love the arts. Okay. So I love the idea that you have, and I love entrepreneurship. So there's two things that I love for you. I want for you, but I think your, your instincts are telling you a correct thing, which is there's a way to do this. That's wise. And the way to do this. That's wise. It's not just to jump in it with no net and with no plan and with no money. The way to do this is what we said, we're going to, we're going to do it right. We're going to, if this is a three month layoff, you don't know that for certain. It doesn't sound like it sounds like you just think it is. I try to find that out for certain. Is this. How long does it last? When will the paychecks run dry? And if they can't tell you, then that's your cue. I'm going to go out and get a job. Go out and get a job. And then once you land that job. job. Now let's start working on the welding business. And again, to George's point, I do think you need to start business first because we know that that's going to bring in some income. And then once that's bringing down the 4,000 a month, now we can start trying to go into the art welding space. But you got to play this the right way. You can't just, that's like me just saying tomorrow, I am a professional vocalist. I mean, you are very good. Yeah, but I don't, I ain't got a job. You need money. I don't have any money. Exactly. So we got to do this the right way. So how much savings do you have right now to your name? So as savings, I have 20,000. Nice. And no debt. Zero debt. Yeah. Fantastic. Well, I've set yourself up to being a great spot. I've heard the Ramsey jingle. Yeah, I've heard the Ramsey jingle since I can remember. So fantastic. I never heard it called the jingle. I like that Dave's going to really love that. So the goal now is that's your emergency fund or goals to not touch that thing if we don't have to. That's your breaking case of true emergency. Hey, I'm up against the wall. The electricity is going to get shut off unless I dip into this emergency fund. Now on the side, you can start creating a side pile that is sort of the business startup fund because you're going to need to buy some equipment, right? You're going to need to pay for some insurance. Yeah, actually insurance is the thing I think I need no equipment. Over the years, I've been well, I've been cash flowing. Perfect. Good. You own it. It's not owned by the business. Yeah, I'm, I'm sole proprietor on LLC. That's great. It's just faster. And the next thing is can I actually get some clients? Am I good enough at the sales side? Because you might love welding, but man, you hate getting the jobs and you might need to either offload that to someone who can get you the jobs and pay them or you need to be working for someone else. Those are the two options. Hey guys, it's Rachel Cruz. If you're working the baby steps, every major expense deserves a second look. And healthcare is one of the biggest expenses in most family's budgets. And that is why I recommend that you check out Christian healthcare ministries. CHM isn't insurance. It's a health cost sharing ministry. That means members help pay one another's medical bills. And they've been serving Christians since 1981. CHM programs start at just a hundred and fifteen dollars a month. And here's why that matters. If you are paying more than you need to for healthcare, that money could be going toward paying off debt, building your emergency fund, or reaching your next financial goal. And your monthly cost isn't based on your medical history or where you live. Y'all a lot of families find CHM gives them more room in the budget. That's why so many members say they're better with CHM. And right now new members can receive a 50% credit towards their first month of membership. Go to CHministries.org/budget and use promo code Ramsey. That's CHministries.org/budget and promo code Ramsey. Tom is in Los Angeles up next. Tom, welcome to the show. Hey guys, how you doing? Doing great. My question is I'm 24 years old and I'm looking to buy my first ever nice car. I've never had a car with payments. I've been very diligent about saving and no wasting my money. And I just don't know if it's the right move. I've always heard cars are depreciating assets. And I'm just kind of has been to make the move. Well, I'm proud of you for never having a payment. Are you ready to waste some money on an depreciating asset? That's the question. I think I am, but I'm not sure. How much is the car? The car varies from 18 to 23 25 max. Okay, what kind of car is it? What's the year making model? It's 2016 through 2019 RC 350 F Sport Lexus. Sounds nice. So it looks nice. I mean, you're not a debt guy. So if you didn't have car payments, I'm guessing you don't have any other debt laying around. I have no debt. Yeah. And I'm guessing that you've got three to six months of expenses on top of the money you need for the car. So I've saved about $55,000 so far. I have $33,000 in mutual funds for separate mutual funds. And I have about 22,000 in cash. And right now I'm waiting. I just listed my work then. I had a gotten a van about four months ago that I was using for the work, but it's a V8 and gas was very expensive. So I just listed it for sale yesterday. So and what's it worth? Yeah, no. Roughly about $10,000. Okay. And the mutual funds that's just in a brokerage account. I have a financial advisor that helped me set that up. So I believe so. Yeah, but I'm not retirement. That's the key. No retirement. Okay. How much do you make? It varies. I have a small business. And I work in the poor industry. So I work for a big company. And that brings me about three to five, three to six thousand a month. And then I have my own business on the side that brings me another two to five a month. So in the summertime, I do a bit about 10,000 a month right now. We're slow season. I'm doing anywhere from six to eight. Wow. So you're making anywhere from can we call it like 75 to 120? What's I think I'm going to make about a hundred thousand last year. I made about 80 fantastic. So let's let's say nine. Let's call you 90. And this would be your only vehicle. So right now I have a 2002 Ford Ranger and old pickup truck. And that's why I'm going to be using for work for now. Great. I mean, it's green lights all around because our parameter is you pay cash. You buy used unless your net worth millionaire. And the total value of all the things with wheels and motors in your life adds up to no more than half your annual income. So you check all those boxes, right? Yeah. So can we go buy this waste of a depreciating asset and enjoy it? We should, right? Yeah. That's that of an idea. I don't think. I think you need to do it. I think you need to. I think you need to do this. You already have do you have one in mind like you know it's out there or it sounds like you have a range that you're willing to sort of concede for. And now you know the prices. I'm kind of waiting for the best deal. There's a 2018 for 18 seven right now. And I really like that one, but I have to wait until I sell my van because I have no space to store three vehicles. And you don't need three vehicles. Yeah. But don't be out there. So there was one other good deal that I missed out on just because I couldn't I couldn't get it just yet. But yeah. And you're ready to take on the insurance, the maintenance, all of that that comes along with a luxury vehicle. Additional costs, you know, I'm young. I haven't had my license for that long. And my insurance is going to be probably about $300 a month on top of the whatever I buy it for cash. How old are you, Tom? So I'm 24. 24. How are you living? Do you rent? I'm guessing. I made sense of Los Angeles on my screen. Yeah, I rent a room. I cost me about $250 a month. What's your long term plan for, you know, living in California in Los Angeles area? I'm not from the United States. I moved here about six years ago from Greece. So long term, I'm planning on retiring there. Okay. Cool, cool, cool. All right. Yeah. Way to go. You've done really well. And I'm glad you're walking through this slowly and wisely instead of impulsively. You've thought about a long time. You've worked to save up for it. Yeah. You might need to cash out some of the mutual funds. It sounds like to make this happen, right? I'd like to not mess with any of it. I don't want to touch it. That's why I'm trying to be 25 max because I figured since I'm going to get the 10,000 from the van, I have another 22 in cash roughly. Yeah, but I want you to have some liquid cash as your emergency fund. That's the only thing. Okay. So keep through to six months of expenses and then anything beyond that becomes your car fund. Okay. Because their emergency is going to hit the market's going to take a dip and you're going to need to dip into those mutual funds at the worst time. Okay. So just kind of know, I don't know what your earmarking those mutual funds for, but I like my investments to have a goal. So do you have a goal? No. Well, it sounds like it was the car. I didn't want to waste it. I didn't. Well, the car, yes, but the main reason I put it there was I just didn't want to have immediate access to it. I didn't want to spend it or anything else. And I wanted to be out of sight out of mind, live as if I don't have it. So let's talk about that because that's a part that it is, this is a part of budgeting. And a lot of times people have margin. It's just like, let me throw this in the bank, but you do want to be intentional even with the margin. If you're in a good enough position that you can do your budget and look at that margin and say, okay, I got $3,000. What am I going to do with it when I just throw it over there in the HYSA? It is a good discipline to sit down and go, what, what do I want to do with this money? If I'm going to throw it in a high yield, this is what it's for. If I'm going to throw it in a brokerage, I'm doing it because I'm saving for a down payment on a house. If I'm gonna split it up, I know what the split up is. And when you do that, not only do you have a greater level of control of the money, but then when you reach over to spend it, you can do that with confidence because I've earmarked this money. Yeah, specifically for that reason. - Well, ideally, I'd like to buy it home, but it just think California doesn't, it seems like it's an outer reach plan. - And that, well, that's why I asked you about that, because I could sense that there is some trepidation in your voice about doing this car. And I'm looking, I'm like, okay, this guy lives in Los Angeles. It would be tough for me if I know that I have home buying on the horizon. It would be hard for me to spend $25,000 on a car. So now it's a thing of priorities, and it's a thing of timeline of what's most important to you. That's why I asked about that. So if you say to me, hey, Jade, if I'm being honest, home buying is actually number one on my list, well, then we might need to talk. But if you do say, no, for this season, cars number one, home buying is number three or four, then that means that we have more flexibility. So what would you say? - I'd like to be very cautious with where I spend my money. I don't want to waste it. That's why I've been so hesitant to do the car. And ideally, yes, the house would be number one priority. It just seems like it's impossible to do it out here. And I was thinking about buying a house out of the country, buying an apartment back when I was from, and my parents helped me run it as an Airbnb. And that seems like a little more doable apartment out there that will do quite well and the-- - Well, if that's the case, Tom. If that's the case, Tom, then you need to start aligning that because if you sit here and say, hey, guys, my number one priority is to buy a house, then your goals have to align with that, which means, okay, if that's my, I'm going to start shifting everything towards that. And right now, that's not the case. We're talking about a car when we should be talking about, okay, what's it look like to get out of the Los Angeles area, what's it look like, career-wise, what's it look like, property-wise, and that's really the conversation. If I were you, I wouldn't buy this car until you start to online on what you want the next two years to look like in your own life and keep that home buying thing on the table. Obviously, you can't do it in Los Angeles in the next two years, but what does that look like for you? Because $25,000 is a lot of money if we're talking about buying a home. - Yeah, I don't know how much time I have. It's just, it was kind of a reactionary idea of, keep saving, all I do is work. I'm working about 60 to 70 hours a week. I have two weeks off in the year. I'm 24 and I was like, why am I being so mature all the time? - You could go somewhere where you might be immature. Why couldn't you go somewhere where your money gets you a lot further? You say you're in the pool business. My guess is you could do that in a lot of different places around the country, maybe South Florida. Tennessee has a lot of pools, I don't know, science. - Start dreaming, man, but you got a lot of time. - It sounds like you are either in the moment or you are so far in the future, we can split the difference and enjoy life today while planning for what's ahead. (upbeat music) - If you're living like no one else with your money, you're probably being smart with your entertainment choices too. And the truth is finding entertainment that's high quality and the lines with their values is not easy. That's where Angel comes in. They make movies that check all the boxes, values driven, quality, and as I'll get to in a minute, affordable. And it's why I'm excited to see Angel's latest movie, Angel and the Bad Man in theaters now. It's a classic Western with a big name cast. You got Tommy Lee Jones, Zachary Levi, Neil McDonough. And it's all about redemption, love, and second chances. Values the world needs more of. And speaking of value, when you become a premium member of the Angel Guild, you'll get two free tickets to see Angel and the Bad Man in theaters, plus access to Angel's entire family-friendly streaming library and free tickets to every future Angel theatrical release. All that for 20 bucks a month or just 179 a year. I'm a premium member of the Angel Guild myself, and I can attest to the fact that the content, the movies, the TV shows, are values driven, and highly entertaining. So to become a premium member of the Angel Guild, click the link in the description or go to angel.com/ramsie. Get all the details at angel.com/ramsie. Limited time offer. Visit angel.com/ramsie for details. (upbeat music) - We always love hearing from you guys, so if you would, leave us a comment on YouTube or Spotify on this episode. If it helped you, something stuck out. Something was fascinating, crazy. Share it with a friend as well. Hit that share button, that means a world. Thank you for doing that. Sean is in Atlanta, Georgia, up next. Sean, welcome to the show. - Hey, thank you for having me. - Absolutely. How can we help? - Hey, back around 2000. I know I'm going way back. I took out one of those dumb 125% second mortgages for about 25,000. And I paid on it for like 10 years. And when 2008 came, I lost my job and got another job, but I was having a hard time making that second mortgage payment. So I called them in 2010, said, "Hey, anyway, you guys can help me with this." They said, "No." So basically, I haven't paid them since 2010. - Whoa. - Do you still have the house? - I still have my house. - Is there a Lena against it? Like when you check the records? - I looked at court records. I don't see a Lena. Every once in a while, it's been sold numerous times to other companies and every once in a while, I will get a letter maybe once a year for like the privacy notice saying, "Hey, we might sell your information," or something like that. - Okay. - But other than that, I am looking to pay my house off within the next two to three years. I only have 68,000 on it. And I don't know what's gonna come about when it comes time for this, 'cause my wife keeps telling me after a certain amount of time, if they don't contact you and they don't try to get their money, then you might not owe that money. And I don't know, I try calling the real estate attorney. He's like, just call a title company and just have them do a title search. - Yeah. - Yeah. - It can just ruin me off. So I didn't know if that was really the right thing to do. - Yeah, 'cause then you can see if there's anything against it or if it's totally clean, because you're probably right. They probably kept selling it. Linda after Linda, you're not paying anything. They just charge it off, sell it to the next one, charge it off, sell it. And so, you may be right. I mean, I checked the law in your area, but it could be too old to collect, but at the same time, it could come back as a zombie later. Like, hey, you owe this plus, plus, plus, plus. - Right, and that's kind of what I'm worried about is if I paid my house off, are they gonna come after me at that point? - That's the part to find out. I think right now we're sort of living with the boogeyman under the bed. Let's just put the flashlight under there and get the title search done, and you can check with your county, and check the register of deeds records for the property. - Yeah. - Have you done that? - Yes. - Have you pulled your credit report? Does anything show up there? - No. - Okay. - They've done a poll, and my credit report, nothing like that. So, I'm just like, I'm at a loss. - Does the company exist anymore? - According to, like, I've researched the one that owns it now, and they exist. Some companies just like to buy debt, and they still exist, and they send me a privacy notice every year. - Interesting. - I mean, it's possible that in all the hubbub of 2008 or '09 and after. - The chaos, it just got lost. - Maybe it did get lost or settled or forgiven, and you didn't know about it. - And there might be a statute of limitations. I would ask you a real estate attorney about the laws in your state to see if they can either enforce it. - When you do sell. - Right. - That's why I wanted to wonder about the statute of limitations. - Yeah, worst case, I would just go, "Hey, when I sell it, I might owe something," in a worst case scenario. - Right, 'cause I took out a $25,000 loan, and now, even after I paid 10 years, I still owe $25,100. - Because of that crazy interest. - Yes, it was $125,000. - And my guess is, it's been so long, even if it does exist, it'd probably be willing to settle at this point. - And I just, with the interest being the way it was, and what that would mean in today's money, if it were out there, I'm pretty sure someone would be trying to collect it. Do you know what I mean? That just feels, but yeah, if you do that professional title search, and there's nothing there, I feel like that's about as clean as-- - I would do some more due diligence, and then sleep easy knowing you did everything you could, and get everything in writing. So they know, and that you know. - And we know. - I would trust your real estate attorney over us on the air, 'cause don't know your exact state laws and what to do about it, but I would definitely do that title search. - Listen, I'm rooting for you because that would be pretty sweet. - It's a big win. Chad is in Fayville, North Carolina, up next. Chad, welcome to the show. - Hey, how you doing? - We're doing great. What's going on? - Yeah, I've got a question that kind of wants to know if that's on something. So, 2024, my wife and I was working for a company and they were downsides and so we decided to leave. So, when I left, I threw out my 401(k) and paid my home off in whatever loose bed I had. I kind of want to know how to go forward with now kind of being more aggressive with my retirement going forward. I'm 48. Do you guys have no debt? Just a couple of vehicles, so two vehicles were seven, seven, fifty a month. One of them, like 10,000 left, I went on it, the other one's like 12. Okay, do you have the cash to pay those off today? We do. So, here's what we got. So, when I left the company, I threw out my 401(k) and paid off the house and all that. She had a previous property because we got married in 2021. She sold that property, okay, so we got 40,000 out of that inequity. We put that in a short-term CD and it's been there ever since. We both went back to working right after, you know, right after leaving the other company. I opened up 401(k) with this company and started it immediately, so I got like 16,000 in that 401(k) and that company that I'm working for now. She rolled over her 401(k) from the previous company into an IRA, so she's like 137 now. Oh, good. On top of your 16. Yeah, she's got a new 401(k) that matches like 3%, so she don't have a whole lot of this because it didn't start for her for a year, for some reason. Okay. And then I've got a pension from my old employer that their telling me will be like maxed out at 75,000 when I retire at 67 that is showing an estimation of like 33 right now. So that's just sitting there. What do you guys make every month? Or a year? So right now, so I was making a lot more with my previous job, but right now I worked three days a week for a pretty big company in maintenance and I'm making like 17. And I bring home like 1700 every two weeks. And what's that a month? And she brought, let's see, 17, 17, that's 34, 34 month. Okay. And what is her gross income per year? She brings home, okay, I can tell you by a week, she brings home six hundred a week after her 401(k). For a week. Figure it out. Yeah. Okay. She's talking like 40, 50 grand. Yeah, I'm probably making like 60 I think. So you're making about a hundred grand together. Yeah. And the four with the other job I was making a little over a hundred before and now is now. So let's focus on what we have at hand. So you guys have 153,000 between the two of you in retirement, you're making $100,000. If you follow our plan, both those cars get knocked out, you have no consumer debt. You build up an emergency fund of three to six months of expenses. And then you invest 15% of your household income, which is $15,000 a year is what it amounts to. So you would be adding 12, 50 a month across your time. That's how Sam would got 40,000 in the bank in a short term treaty that we're just throwing in. Good. But that's really bad. Yeah. Pay off the cars today to George's point. If you do that and then you're going to have to go ahead and save up another three to six months of expenses. And if you do that, now we're free to start investing. If I were you, I may pause investing temporarily. If you need to in order to get everything cleaned up in an order to get that three to six months saved, then turn it back on and when you do, you're going to put aside $1,250 a month that you're investing. And when I plug that in at your current age, age 48, let's say you retire at 67 with 153 that's already there. I mean, gosh. That puts you at $1.8 million, which is pretty good. I think you rest easy. Plus potential. So security. Yeah. Good life. But here's the thing. You have to keep investing 15%. Continuously. And never stop. That's a goal. Never pull it out. This episode is brought to you by BetterHelp. Every year you tell yourself you're going to handle the holidays differently. This time, you're going to stay calmer, you're going to feel more peace, but then the same old pattern emerges, the same family tension, the inability to keep healthy boundaries. And you find yourself cranky, tired, and snapping at people that you love. This year can be different. You still have time to get ahead of all of the chaos, understand what's behind your reactions and come up with a new plan. Therapy can help you build a healthier plan before you actually need it. When you're ready to have that conversation, talk to my friends at BetterHelp. BetterHelp is an online therapy platform with more than 30,000 licensed therapists. You can message your therapist and schedule sessions right in the app. And if your first therapist isn't the right fit, you can switch at any time for no extra cost. You know what's coming. This year, you have time to keep calm ahead of all of the holiday chaos by preparing differently. Go to BetterHelp.com/RAMSI for 10% off your first month. That's BetterHelp. Or, click the link in the description. Our question of the day is brought to you by Ask Ramsey, your free AI money tool that provides personalized money answers based on Ramsey principles. Visit RamseySolutions.com/AskRamsey. Okay. Today's question comes from Kelly and Tennessee. She says, "In my area, all the cars at very low prices have rebuilt titles, which means they can't be fully insured. My husband wants to purchase a car with a rebuilt title for him to drive, but I'm not sure it's a great idea. What is the Ramsey opinion on cars with rebuilt titles?" So what this car has been completely totaled out, and they've done what they need to do to fix it. They can legally give you a clear title for it, but it tells you some things have happened. It's been busted, is what we're talking about here. Yeah, that could involve damage to the frame, suspension, airbags, plot exposure, and so I don't think that's where I'm trying to save a buck. Absolutely not. Because you have to get a rebuilt title, you can't afford that car. Yeah. It's not going to be a savings because there's going to be something that pops up wrong with this car. I've got to believe over time. Yeah. And insurance is like the number one factor here. So if you can't get that thing insured, the insurance company's not touching it, you shouldn't either. That's a lot of risk on you. Yeah. It's a no for me boss. Yeah. What about you? I would never. Not a million years. Okay. Sorry. Unless you're like a mechanic who just wants to fix it up and work on it for fun and you don't really care. Even still. That just feels like. That's just too much risk. Not. No, thank you. Get it discount elsewhere. Abby is in Baltimore, Maryland, up next. Abby, welcome to the show. Hi. How are you? Good. How can we help? So I guess I'm just kind of asking for a little bit of advice or what my husband and I should do next. So he has a lot of student-learned debt. However, not all of it is in his name. It's part of it is in his father's name and part of it is in his mother's name. So with that being said, in total, it's probably about $170,000. And so we're paying his, the loans in his name, as well as those of his parents name. And it's just it costs so much a month that we cannot afford to live. So I was just seeing maybe what your thoughts were on what we can do to pay it off quickly, but also to maybe make that pain a little smaller. What was the was the plan because he sounded like parent plus loans was the plan initially for him to pay back his parents or did they say, "Hey, we'll take out these loans so you can go to school." Like what was the plan? So I think it was just to take them out so he could go to school. Honestly, I've asked him, he's never really given me an answer. They have not only kids, he has five other siblings that they have in their name so he can't consolidate. Right. So were his parents broke? Is there a zero chance they're actually going to pay these loans? So they would have to if he didn't pay, however, we know we so guilty like, you know, they're his loans. So we just don't know what to do. They're trying to refinance them in our name, however, we can't do that. His interest rates are so low, that would be ridiculous to do. So there's a lot circulating here that needs clarity. The first thing is, and listen, you're talking to someone who has been exactly where you're at. Exactly. And so the first thing is, let's get clarity on the story. And for him, it's probably a little uncomfortable because he's sitting in the middle of the two systems that he loves most. He's sitting in between your family, you guys, this family system and the family system he came out of and he's just in the middle feeling like he's probably not doing well for either of them because of this debt, right? So let's kind of recognize the probably the guilt and shame that he's feeling. And when you talk to him about it, just say, hey, I don't think we can move forward effectively until we can really understand. and what's going on and what the expectation was and what it is today. So if he can have that conversation with his mom and dad and say, what was your expectation? 'Cause here's the way I viewed it. And if his expectation, I'm not trying to put words in his mouth, but if he thought, hey, my mom and dad are covering this and I'm covering this portion, he needs to assert that and say, you guys said that you were gonna cover those loans and I was to cover these. And so for my family, I need to do what we said and cover the ones that I'm on the hook for. Now, if that's not the case, then we can talk about, if you don't think that was the case and the case was no matter what, he's supposed to pay back all of them, even the ones that aren't in his name, fine, we just need to figure out what it is. - Yeah. - What do you think? - What's your gut telling you? - I do think maybe initially they were probably or thinking they could help him out. And then each sibling decided they wanted to go to school and so now they can't afford to pay for five kids college loan debt. So I think even if that was initial plan, they would never see it that way if I'm being on it. - That's fair and that's their choice by the way. So the second thing becomes owning what's yours and what's not yours. So today, what portion of the loans are his and his name? - If I remember correctly, I do have a thing but it's on my phone, so I can't look at it. It's 60 to 68,000 would be the realm that's in his name. - So I'd be focused on those. I'd be very focused on knocking those out and I wouldn't be making payments on the other stuff because you got to pay off the stuff that's in your name because you guys are out here trying to have a life, have a family. - Well, we do have a child, so that makes it even more. You know, we have to be for daycare. We have to be for a lot of other things. And it's just, we're actually living with family because we can't pay rent right now because of his loan. - I'm guessing it's different family. - Actually, it's the same, so it makes it harder because they are helping us with living. - I'm screaming for you. - There's some toxic codependency here. I mean, isn't breakfast awkward? - Yeah, I mean. - It is awkward, so before we just moved back. So that is why we were with him. I was without a job, we moved back to this state. I was without a job for a couple months, so that is also why when we were not in this state, we could afford to live and save a little, but that was it. - So you're both working very, very scraping by. I'm about to start my new job. It took a couple of months. - What's your new household income? - So our new household income will probably be about 90,000 a year. We were a little higher beforehand, but that's what we were. - And how is it so low with all these student loans? What did he pursue? - So we both have a master's degree. However, his is in aesthetic management. So finding a job kind of in that with only a few years of experience has been a little hard getting a higher paying job. - But it took almost 200 grand to get through undergrad in the masters for him. - Yes. - Okay, there's a lot that has to be unraveled here. And-- - You are, yes. - What I'm here, here's the reality. You guys got to get out of that house with the quickness. Because as long as you're living there, you won't feel like you have the cajonus to have the conversations that you need to have, which is mom and dad or mom and dad in law. You guys made a choice and it adversely affected you and it adversely affected us. And the truth is you were the adults when the choice was made and we were the miners. And so because of that, it really was your choice and we cannot pay for that. And that's a very hard conversation to have when you're living in their home. - 'Cause if you stop paying, you're gonna overhear the phone call with the collections place calling your parents, calling his parents. So this is just a dark situation all around. So the key is you ask us how do you get out of this? Well, you're gonna have to up the income and then it's small, so largest debts. Let's knock this out using the debts snowball and I agree with Jade, I would focus on your debts for now, the debts that are in his name only to knock those out, then we can figure out the rest down the road. 'Cause that sounds like it's gonna take a couple of years just to knock out his debts. - Yeah. - So this might be a five to six to seven year journey at this rate if you're lucky. So that's where the income really needs to go up. - So yeah, I think and there's no shade on that. You guys, you're not wrong. You can't even afford to live. You certainly can't afford to pay off debts that they signed for as the adults. So this is tough, gosh, I can't say it enough. You know, if you're a parent and you're in the situation where you have kids going to college, you've gotta be realistic and you've gotta be the one to draw the line in the sand and say, we simply can't afford that and you can't either because it would be debt. So this is you guys' chance to kind of change the story here and just start on a new path and do it the right way and not indict your children on down the line. - Wolf, and $2,000 a month and just minimum payments. That is soul crushing. - It's soul crushing and I hate it for the parents too because you know they had good intentions. It's just, that's not enough. - Well, they basically kicked the can down the road and said, future us will figure this out. Let's just take the loans out and here we are. - It doesn't work that way, my friends, unfortunately. (upbeat music) - If you want to free up margin in your budget, one of the first things you should do is take a hard look at your monthly bills because every dollar you overpay is another dollar you don't have for reaching your financial goals and overpaying for your phone bill, well that makes zero sense. And it's why I recommend Boost Mobile. Their unlimited plan is just $25 a month forever. No contracts, no hidden fees, no surprise price hikes. If you already have a phone you love, you can keep it and keep your number when you switch. And if you're skeptical, Boost Mobile offers a 30-day money back guarantee so you can try it risk-free. Listen, your phone bill should fit your budget not the other way around. Reaching your financial goals is easier when you can pay less for the same service. Switching to Boost Mobile now is just a smart money move. Go to boostmobile.com/ramzie and make the switch today. That's boostmobile.com/ramzie. $25 a month forever requires customers to remain active on Boost Mobile and limited plan. (upbeat music) - Welcome back to the Ramzie Show in the Fairwinds Credit Union Studio. I'm George Campbell. She's Jade Warshot. We're taking your calls at AAA8255225. Trenton is in Milwaukee. Up next, what's going on, Trenton? - I'm doing all right. Where should I be better? - We'll see if we get off the call and you have less of an EOR energy. I hope we can get a smile on your face, my friend. - I hope so. - What's going on? - I'm in about 28,9,000 in debt. I'm 20 years old. I'm got year to my name. I'm trying to come back no way I can. And I was hoping you guys could help. - Absolutely. Well, here's the good news. At 20, most people have nothing to their name. And I didn't get any financial literacy until I was like in my 20 mid 20s is when I climbed out of my debt and I had more debt than you. So let me tell you, there is hope. - That's good. - My debt is the 28. - 22,000 of that is a car loan. 2,000 of that is a signature loan. About 650 of that is a credit card and then the rest of it, I owe to parents and grandparents. - Okay, so just kind of person loans to family. And what do you make? - Yes. - I make about, through about 35 a month. 35 a hundred. - Okay, great. You working full time? - Yes, sir. - What do you do? - I work federally. - What was that? - I work at federal bill. - Federal, okay, government job? - Yes, sir. - Cool, all right. So here's the good news. You can climb out of this and be debt free by your 21st birthday if you want. How soon do you want to get out of debt? - As soon as possible. - Okay. - Me and my fiance are trying to buy a duplex making a pass of income. - Oh, boy. - That just went off the rails in another direction, I think. - Yeah, she just got $6,000 reimbursement. So we are saving that for a home loan. - That won't get you a Honda Civic, let alone a down payment. - Mm-hmm. - No. - So, okay, we'll pause on that. Put a pause on any big financial decisions with someone you're not married to. Let's talk about your debt for a second. What is that car worth? You owe 22, what could you get for it if you listed it yourself? - If I listed it myself, I could about 19,000. - Okay, great. So you're a three grand underwater. So that's the amount we need to aim for. Plus, we need something to get you a different vehicle. Would you agree this is too much car for how much money you make? I bought it for the gas mileage, 'cause I'm driving an hour and a half to work every day. or one way? Can we agree there's there's $10,000 cars that get equal fuel economy? Yeah. Okay, because what I'm trying to do is free up your greatest wealth building tool, which is your income, because that payment is crushing you based on your take home pay. What's the payment on that? $7.50. What is the interest rate? 13% out. What's the insurance cost? Because at 20 years old, it's probably up there. It's $350. Oh, my lord. So this is $1,000. Yeah, $1,100 bucks between the payment and the insurance alone. Yeah. It's about a third of what you're taking home. I know we can agree that having a $1,000 back in your pocket. Which is better than the $22,000 car. Because that alone, you'd be out of the paycheck to paycheck cycle agreed. Yeah. And then you'd have that money freed up to then pay off your other debts, which would take you a couple of months at that point. And I just want to clarify this even greater Trenton. This is a third of your income going to your vehicle. Yeah. That's the part when George said, can we agree that this doesn't make sense? It's a third of your income. You can't do anything of a third of your income is going to your vehicle. For most people, the third of their income is going to their home or their mortgage. What is your rent? Rent is 12.5. Okay. Wow. So that car is almost as much as you're paying for housing. Yeah. Yeah. Okay. We see it. We see it. So there's one angle. I'm just showing you one option. One option is you come up with the difference that you owe either with through savings through your income, selling stuff, side hustles, or you go down your credit union and get a person alone for that 3,000 plus a little more to get you a car to get from A to B for now. That's not your forever car. There might be a car you drive for a year until we can get you to a better place financially to where you can get a better car. Yeah. So we're going to stare step in cash from now on because man, at 20, if you figure the stuff out now in your early 20s, you're going to be unbelievably wealthy. If you learn how to get out of the cycle at this stage. But if you do that, now you've got a $8,000 loan instead of a $22,000 loan and you're paying significantly less a month. At a lower interest rate. It's a 2025 jet and I bought it for 20, which I overpay. Yeah. Which I mean, the dealerships will hose young guys like you. Yeah, they will. Once they see a starry eyed guy wanting a nice car, they got, we got him, $750,000. They probably bragged about it in the break room as soon as you left. That's the sad part. But I mean, that can be your homework this weekend, Trenton. You can shop out there and see, I don't know what your, I don't like credit scores, but you would need one to get alone. So if you have one that's fine to get alone for like I said, maybe you get an $8,000 loan. You take three, close the gap, sell this car and then you take another five and buy yourself a beater. That's, that's thing number one on your list of priorities before anything else. And then when you do that, now it's just simple debt snowball. Smallest of largest debts attack the small one with a vengeance minimum payments on the rest. Okay. So do you have any money left over right now each month? With everything I calculated, I have about 400 left. Okay. So think about that. If we freed up that $1,100 plus your 400, that's $1,500 extra dollars you could use to knock out the rest of the debts, which means by Christmas, you could be debt free. That would be amazing. Now that's some short-term sacrifice, right? Driving that beater car is not going to be fun, selling that nice jet is not going to be fun. But on the other side of this, it's not three years of sacrifice, which is the other part. You can do our plan or here's another option. You go work 60 hours a week with a side job or overtime to try to make up the difference to clean up the state yourself. So you decide which hard you want to go down. I think selling the car is the best move because number one, I wouldn't recommend you keep that car even if you could pay it off. We don't recommend any car, any vehicles that are worth more than half your annual income and total. And so right now you're, you're riding that line. And then too, you have your fiancee and it sounds like there's a wedding coming up. How are you guys planning to pay for that? We just plan on doing a court wedding. Okay, good. One reason, one where she's trying to join the army and I'm also in the army. Okay. So we can do that. I don't know if you guys have a date set for that, but we can do that sooner or later sooner than later. And then that allows for both of you guys to kind of join forces on this. Join incomes. Yeah. You can move in together. Are you guys already living together? We've been living together for about five months now. Okay. Does she have debt? She's got about 1,300 in credit card debt. Okay. So once you guys get married, your debt's going to be cleared by Christmas to George's point. Let's say you guys have a Christmas wedding and then you turn around and clear out her debt. Gosh, that looks really nice for you. And we didn't get to talk about this, but I beg of you. Don't buy the dupes. Do not do this dupes. There's no such thing as passive income in the real estate world. I promise you. Hang on a line, Trent. I'm going to send you a copy of my book, Breaking Free from Broke. I can give you the audiobook version if that's better for you. Hang on the line. Our phone screen will pick up and hook that up. And both of you read that and then come up with a game plan. Hey guys, Rachel Cruz here. And I am so excited to tell you that the brand new 2027 Ramsey Gold Planner is available now. Guys, this is the only planner with exclusive monthly content from John Deloney, Jade Warshaw and me to help you set clear goals and actually stick to them all year. These sell out every single year. So don't wait. Order your new 2027 Ramsey Gold Planner for $49.97 at RamseySolutions.com/store. That's RamseySolutions.com/store. [Music] Buying or selling your home is high stakes because one bad deal could cost you tens of thousands. You don't want to overpay for your next house or sell your current home for less than it's worth. And that's why Ramsey trusted connects you with vetted real estate agents who have the experience to guide you step by step to make smart decisions not expensive mistakes. Connecting is easy. Just compare agent profiles, interview your top choices and pick the right one for you. Go to RamseySolutions.com/agent to find a local Ramsey trusted agent or click the link in the description if you're listening on YouTube or podcast. Jose is in Newark, New Jersey up next. Jose, welcome to the show. Hello, thank you for having me. Absolutely. How can we help? Well, that is the question, Anthony. I'm 63 and I'm going to retire for a day. Does your employer know you? Yeah, well, actually, they offered a buyout. Nice. What was the buyout? I decided. Well, the buyout amount is it's calling is and has incentive package and they're offering $2,200 for every year of service up to 40 years along with another $50,000 on top of that just to the cherry on topic. How many years of service you got? I have 40, three. Wow. And you get up to 40. I get up to 40, yeah, which makes it $88,000 plus the $50,000. So guarantee $88,000 a year plus a one time 50? No, no, no, not a year. $2,200 per year of service up to 40 years, $88,000 a one time sum. But I do have a a pension and then this is the reason I'm calling is because I'm stuck between taking a lump sum, which is all at once or the monthly. Okay, what's the lump sum? And that's what I'm trying to decide. The lump sum is down now because of the rate increase in the interest. So it's down to $531.66, $531,656. And what's the monthly payout if you don't take the lump sum? The monthly would be $3,500. Do you need the money today? Like if you were to retire today, do you need that income or do you have other investments? What else do you have? Well, I have $212,212,750 in a 401k. My house is split paid off. And my monthly budget is between $4,500 and $5,000. Okay, so today you don't have the money to cover the $45,000, the $212,000 isn't enough to keep you afloat in that way. Oh, I mean, temporarily, for a few years, because the $88,000, I would get half of that up front. And then the other half over 36 months, I believe it is. I tend to lead towards a lump sum, just because I get to invest it my way. But yeah, because the rate of return, if you get that monthly payment, I would figure out what the implied rate of return is for that pension. Have you sat down with with a financial advisor to actually count calculate this out? I've said that with several actually. What do they say? Well, of course, they're going to say to lump sum because they want that money to. Because they want to invest the money with them. But they showed you the math on which is a better deal. Even if you invested on your own, which one came out ahead? Well, it depends on how long I'm going to live. Can you tell us that? That would be very helpful on our calculation. What's that? Well, you have Social Security coming in as well? I have an activated yet, but that's another option. Okay. And the longer you wait, the more you'll get, of course. 67 is your full retirement age. So depending on when you absolutely need it, if you're in good health and you're 63, there's a good chance you make it into your 80s or 90s, right? There's a good chance, yes. So there's a break-even point. If you took it later in life at 67 or 70, that might be a better bet for you since you don't have a very big nest egg. Okay. So it also factor that in saying, "Hey, 70 years from now, I'm going to activate Social Security and that's going to be a guaranteed payment of whatever plus cost-living adjustment every year." So that might be a good bet. In the meantime, you can use that. 401K, the lump sum, and that's where I'm going, "Hey, all right, you need about 60K of net income per year to live." It sounds like. That sounds about right. So that's where I sit down with a pro, and instead of just talking about, "Should I invest the lump sum, come up with a more holistic plan for how long will these piles of money get me by?" And if they go, "Hey, you know what? They'll get you by for the next decade." And then at that point, Social Security will have kicked in, that plus your lump sum and vested pension, you'll be okay. That's the part that's hard to figure out with you on air without crunching all the numbers. Yeah, of course. Of course. I'm going to be okay either way. I'm just trying to figure out which would be the best. Yeah, generally, we say take the lump sum. Take the lump sum if you're going to invest it. Now, if you're going to just use it all, that's a bad plan. But if you can invest the lump sum, apples to apples, you would find that lump sum in the market would likely beat your monthly payment. In the long run. In the long run, exactly. Yeah. Yeah. So I'm leaning towards that based on everything you've told me. Yeah, I want to go back, did you say. And that's what I'm leaning towards also. What you got for leaving the $88,000, did you say that was a one-time deal? Did I understand that correctly? One-time deal, yeah. Okay. And how much do you have saved currently that's liquid? Liquid, I have about $6,000. Okay. Is that your emergency fund? It feels low. That's my emergency fund. Yeah, that's my emergency fund. Okay, I would bump that up. For a guy retiring on Friday, I want to have a little bit more peace that something goes wrong. I have the money to cover. Yeah. I was told to take the $50,000 and use that as the emergency fund. After taxes, of course, it would be about $38 or so. Okay. And that's fair. But Jose, do you plan on doing anything else that earns money? I mean, obviously, you're not going to do the job at the rate that you were working before. But do you plan on doing anything else to bring an income? Because that could also be a major factor in this. Absolutely. So, how about this? What if you go find another job as sort of an encore career that can float you by without ever touching these piles of money? That would give me a whole lot more confidence in your financial plan going forward. We always are higher. But if you did what you said and said, I'm going to take this $50,000 and I'm going to set that aside. And that's going to be my emergency fund. The $88,000, if you can take that as a lump, that's kind of your bridge this year to say, okay, what do I want to do with my life? And what do I want to do to kind of do that second encore deal? And then, during all that time, the $212 continues to grow. If you decide that you're going to invest the $531,000 lump sum, that continues to grow. And you've just started a completely new life for yourself. It will, it will. And the goal is to beat inflation. With anything you do, inflation is going to be the killer over the next 30 years for your financial plan. So, that's why I say investing in the market in general is going to beat the crappy return of a pension. Absolutely. Which you have no control of. No, and that's that's a 8% return according to the financial experience, the pension. But it doesn't keep up with the rate of inflation. So it's going to diminish over the years. As opposed. Yeah, there's no adjustment. There's no cost of living adjustment on the pension. It's flat. No, there's not. So over time, the power of that money erodes. Yeah. Versus having invested or even social security, it will grow with inflation. So that's why I lean towards that lump sum. But again, I would sit down with whatever favorite financial advisor. Sounds like you got a bunch and go, hey, help me craft a plan where I see all the scenarios. I'm down to two. Yeah. The one is their fees are 0.4%. Okay. And the other one is 0.9%. So I'm leaning. Given everything being equal, I'm leaning towards the 0.4%. That's fair. And those are both very reasonable rights. I mean, 1% is about the industry average and assets under management fees. And it's well worth it if you actually get to retire with dignity and sleep better at night. Versus trying to DIY this and just hope that you made the right decision. And so if you don't have a good smart investor pro in your corner for whoever's listening out there, jump on ramsey solutions.com. Click on smart investor pro. And they can take a good holistic look at your picture. Tax planning, insurance planning, cash flow planning, education planning for the kids, retirement planning. All of that comes into consideration and they can see all of the blind spots that you don't. And that's where pro is worth every penny. Listen guys, I've heard just about every excuse for why folks think they can't get ahead with money. So let's go ahead and settle this right now. You get the final say on what happens with your money. That's why you have to start telling your money where to go so you can stop wondering where it went. So if you're going to start winning with money, you have to get on a budget. And the easiest way to get started and stick to it is with the every dollar budget app. It'll help you make a plan for every single dollar coming in and every single dollar going out every single month. And guess what? It's free. So no excuses. Download every dollar in the app store or Google Play today. [Music] Alexis is in Memphis, Tennessee. Welcome to the show Alexis. How can we help? Hey guys, my question today is me and my husband just welcomed our daughter into the world four months ago. And we have big thanks and you know, we're getting those hospital bills in and everything. And we're wondering we have the option to pay it off in a lump sum or paying it off in payments. Well, they're giving you a sweet discount, right? We're wondering what the best. Well, I don't know about a discount for the lump sum. I haven't checked that. Don't check. Just call and say, hey, I'm looking for a discount if I pay in cash in full today. Amen. You tell them how it's going to go. Okay. And you can even suggest a reasonable discount that you'd like to see. Yeah. Could I get 30% off my paid in full today for the full payment? And they might say no, we can do 20. Okay. Okay. You'll get something. Okay. So when we go to, if we go to pay in a lump sum, we would have to take that out of savings. And we've been trying to save for a house. So do we put that on pause and take the lump sum? Yes. Or how do we prioritize that? Yes. Do exactly what you said. So what I'm filtering that decision through is our seven baby steps, which is the foundation to be able to do anything financially in a responsible way. So the first thing's first is after you've saved just a thousand dollars, the next most important thing is to pay off any consumer debt and medical bills fall under consumer debt. After you've paid off the consumer debt, then we save up money that's considered our emergency fund, a fully funded one, three to six months of expenses. And then after that, then we save for the down payment on the house. So the reason that it goes in that progression is so that you can protect the savings that you actually have. And so that you can move into the house with a lot of peace and freedom because you have an emergency fund. You didn't take your emergency fund and use it as your down payment. So that's kind of the basis of this way of thinking it's I want to make sure that I'm looking at this from all angles so I don't rob myself of peace along the way trying to do something quickly. Okay. So before you do any of this, request an itemized bill from the hospital and your insurance explanation of benefits. And say, hey, I'm not sure that this is all correct. There might be a few errors here, some double billing. Can you guys send me an itemized bill so I can look it over? And what will happen is they'll go, oh, we need to take some random stuff off and clean this thing up, then you get the final bill, then you can negotiate the payment. Okay, how much is it? What's the lump sum today? The lump sum is a little over $6,000. Okay. And how much do you have saved in total? Insurance being applied. We have a little over $13,000. Okay. And is the medical debt the only debt that you have? The only other debt that we have is my husband has $1,600 left on his car. Okay. So my plan for you, after you've done what George said, you get the itemized bill, you go over there and say, hey, I can't pay $6,000 or I can pay the lump sum, but I need a discount so I can give you the money today. And let's say they do it for, I don't know, 4,000. So then you're going to say, okay, great. Now I'm going to take the rest of the money that I have. I'm going to reach over and pay off your husband's car. And now you're completely debt free. And not only are you debt free, but you've got some money to begin to pad your three to six months of expenses. So now the next step is to go, okay, what is a fair amount for three to six months of expenses? It's not three to six paychecks. It's not three to six months of your budget with all the bells and whistles. It's just kind of the way I do it is, hey, man, if something happened, what would we need to make this chip continue to sail? And so whatever that amount is, times that by six. All the non-negotiables. We need to have food on a table, groceries, but we may not be eating out constantly. Right. So now we stack that up times that by four or times it by five and set that aside. Because you don't have to do the full six months. I know you're trying to save for a house. If you want to do it at four months, I'm fine with that. Stack that up. Now we start down the down payment. And so that's the progression of this. And if you do that, you guys are going to be sitting pretty. What do you think? That's what we want. I like that. What's your ass holding down? That sounds great. Well, right now, I'm going to stay at home mom since we had my daughter. And my husband is making about 75. Okay, so now it becomes okay. How quickly can we save up this down payment if he's making 75 and we have our normal bills? And then that'll give you a pretty good picture of when this house is going to happen. So that you don't go, well, I thought it was going to be a year from now. Well, the math will show us at this rate. It might take three years to save up that down payment, depending on the type of house you want. So that's where you guys can come up with a game plan and be aligned so that nobody, you know, is a little starry eyed or confused or frustrated that we aren't where we want to be. And the baby doesn't care. I can tell you that the baby is living like next to your bed, right? Right now, are we in the nursery yet? Not yet. No, you guys are reasonable people. I can tell I can tell by the fact that you had money saved. I can tell by the fact that you don't have a lot of debt. And those are the behaviors I want you to continue. I want you to continue to avoid debt. I want you to continue to be savers. And I want you to be budgeters going into this. So if you don't have every dollar, we'll gift you that for free as your baby. Congratulations gift light baby shower gift. Sorry, we're late to the party. Thanks for the call. Peter is in Salt Lake City up next. Peter, welcome to the show. All right. Thanks for taking the time to talk to me. Absolutely. What's your question? I'm 27 years old and I just had a career based question. I work at a local utility here. It's pretty steady. Make a good income and make about $140,000 a year. Nice. I've got a single income, a three kids and a fourth one come in any day now. Congrats. Thank you. And I'm just considering actually taking an opportunity for a consultant's company. A lot of demand in the power industry these days. But I'm just wondering is it worth the potential 20 to maybe 30,000 or pay increase to move to a job that, you know, could be. It's probably going to be similar benefits. It could be less steady overall. And you know, if it was a contract, I might be looking forward. Now you're working for another company doing the consulting. You're not just out on your own doing consulting. Correct. Could be, you know, probably a fairly large consultant set. Okay. So there's less risk right there because it's not all on you. Someone else is going out and getting these contracts and, you know, they're incentivized to do that. So you're saying you would make 170 likely? My best case, probably, you know, 160 is a reason that I don't have a job. I'll kind of be able to looking at former teammates who have gone. That's roughly what it's been. Yeah. I mean, if the benefits are good and the income's good, I would take it. Because the good is, the power will always exist, right? You can always go back and do a job in the energy field. Right. But now you're a guy who was making 170 looking for a new job. And so that could also help increase your chances of making more in the long run. Yeah. I mean, what's the downside? It's just a new gig and you have to kind of prove yourself in that field. I guess the downside is I'm just kind of risk averse. And I feel, feel comfortable and steady where I'm at. And I, I don't know. And I feel hesitant to make a jump to a place that might not be unstable. What caused you to look at this to begin with? What caused you to kind of look up and out and say, maybe I need to look at things that pay more. Is it debt? Is it kids' college? What's, what fuel do you even be looking at? So we are baby steps four, five and six, you know, a long time list. And it's mostly just looking at, it's, it's, it's the extra money that definitely motivates me. I mean, to grand that's 500 bucks per kid per month going into a 529 plan. When you look at it that way, I'm willing to work and hustle to do that. Yeah, yeah, I guess. Yeah, I just, you know, if I guess I'm always has a downturn in the economy or something like that. Yeah, I think this is a problem. I think it's another kind of values and priorities play. If you, if you're saying, hey, I've got these kids, colleges coming up, I, I could use the money. Then that makes sense that you would begin looking for jobs that offer more money versus staying put and doing the safe play. Plus increasing your skills, new experience, that's only going to help you in the long run. And man, I mean, your field isn't going anywhere. We got to keep the lights on around here. So I think you're in good shape as far as, you know, your job, not being replaced by AI anytime too soon. Good luck, man. I'm excited for you. Congrats on the baby. You've heard from me and the Ramsey personalities for years, but nothing beats actually getting together in person. That's why we created the live like no one else crews for seven days. We're vacationing with you and 2500 Ramsey people in the Western Caribbean with live shows, us, new content, us and more. If you're on babystep four or beyond, come spend the week with us next March. Choose your cabinet Ramsey Solutions dot com slash events or click the link in the show notes. Our scripture of the day, Psalm 2713, I remain confident of this. I will see the goodness of the Lord in the land of the living. Our quote of the day, James Madison, the circulation of confidence is better than the circulation of money. Very presidential. Thank you for that. Jane is in Chicago up next. What's going on? Jane. How can we help? Hi. I'm trying to figure out if selling our home and paying off our debt and rent is kind of starting over is the best next move for our family. Okay. Tell us more. How much debt do you guys have? I mean, not a ton. The real problem comes from we refinanced a few years ago. And now I'm just having a hard time making ends meet every single month. You're saying the mortgage payment is just too much. It's not the consumer, like mortgage for everything else on top of the whole combination, but what do you pay? We are, we are now more money. What do you pay every month? And mortgage is thirty one hundred. And what's your take home between you and your husband? I bring home about four thousand a month. My husband gives me three. We are not on the same page when it comes to finances. So this is you said he gives you the reason. Understood. Yeah. How much does he make three to four? I'm a very he owns his own business. And so it kind of depends on how business is going. Okay. So that's like his pay. That's him paying himself. Or is there other money that he's paying himself that you don't have access to? Does that make sense? I do not have a full financial picture of his. So he gives you three to cover some household bills and then says kick rocks pound saying the rest is mine. Well, not exactly. I mean, he drives a truck. So there's like maintenance and other things, but I do not have a full picture. Yeah. Okay. But who pays the mortgage pay on I have. Well, all the bills, I mean, I pay all the bills. Yeah, I would have all the money that ends up in that. Out of your account. So what I'd want to know, obviously, as it stands, if we just say, hey, we have seventh grand of income, obviously the mortgage is way too much. It's no wonder it's half. So that's why you're feeling that. But the second question I'd want to know, before we even start the business of combining money, because as I can tell, this is going to be a long road, I would at least want to know from your husband, if the 3,000 he's giving you is that just, that's what he pays himself. There's no more. The rest goes towards, you know, expenses. Or is there more that he's just keeping as his own guy money, you know, that he is spending as he wills? I'd want to know that because that is going to play a huge factor in how we approach this conversation. If you guys actually bring home after tax monthly income is like 10 to 12 grand, then we'd say, oh, the house is fine. It's not on fire. There's no problem. Don't sell it. But if you're telling me this is all the money to your name consistently, then yeah, 3,100 out of seven grand is a problem. Okay. Yeah. I mean, I don't think he's keeping a ton of money anywhere, like kid and learn anything like that. And a lot of it goes back into expenses, you know, I am obviously hoping to get on the same page with that. And that is a goal that I am working towards. But do you know how much debt he has been making like 10 to 12? Well, my biggest concern is we picked out an IRS debt from tax taxes from this is other than that. I don't think we have very much debt in general, we have 12,000 in credit card debt. I don't think he has a kind of additional debt, how much is the back debt? How much is the IRS debt? $50,000. Say it again, please. $50,000. Oh, girl, $50,000, $50,000, $12,000, credit card, anything else? Car payments. No. No, that's all I know about. I would pull your credit report to get a clear picture on where things are at and I would encourage him to do the same. Even if you guys are on the same page, we need a full picture of what the what debts are out there so we can attack this thing. So if you today, if you sat down today, Jane, let's pretend you get off the phone here, you get home from work, your husband gets home from work, and you say, you know what, I've been thinking and I'm realizing I have a lot of stress about our financial situation. I wonder if you would sit down with me. I pulled some of the things from the personal side. Can you pull some numbers from your business? I just feel like I need a picture of what's going on and it will give me a lot of peace just to see what's going on with both sides of our life. What would he say to that? Probably no. I tried to have a conversation a week ago and I had it before when all the money was coming in. The business wasn't getting prioritized and so that kind of ends things for it and he does not see, like, re, combining or having that conversation. Forget, forget combining for a second, just so you can understand because the truth is him having 50, him having created $50,000 of IRS that affects you greatly. So he can't assume, and I know you know this, I'm just saying this for a good measure, he can't assume that the things that he's doing as an individual doesn't affect his marriage as a whole because when he got married he became a unit with another person. And so that's the thing, that's the part of this that has to work out is just, forget combining the money, just him understanding, hey, what you do does affect me. You can't think that your whole life over here has zero effect on me. It does. So if you say that to him, what's his response? You can't say that out of my face or I'm not having this conversation, what do you think? And maybe you tell him, maybe you start with saying, my intent today is not to combine money. I know how you feel about that, but I do, I would like to understand what's going on over there. Just like, I'm in turmoil over here. I'm thinking about selling the house, like I just, Bob, I would really love if you could just have some transparency with me just so I can sleep at night, right? Especially if you're the one paying the bills. Right. Right. Yeah. So I would sell the house. I think that is a last ditch effort if we realize there's no hope in the situation to make more than seven grand ever again. But I think that we're going to find is that the house really isn't the problem. It just feels like a good shortcut and it's not going to solve all the problems underneath. Right. Okay. So the question is, can you afford to pay off the IRS debt, the credit card debt in a reasonable amount of time or is this going to take a decade? Right. Well, I do have a payment plan set up. We are working on it. So it should only take a couple of years assuming I don't continue to add to it. And that's my biggest concern is adding to it. Do you guys not have someone doing the books? And that's the part. Yeah. We don't just because it's just a small single thing, but maybe that's something you need it into. It might be a small business, but you got a big problem with the IRS. I'm going to tell you right now, you need to go on Ramsey Solutions and you need to find a tax pro that can help you with this at the very beginning to get you started. And then you need to be looking for somebody who can manage your books ongoing because the definition of insanity is doing something and expecting a different result. You guys have tried or he has tried to manage these books and there's 50K in debt. And then you're thinking gosh, assuming we don't keep right. So there's not a strong sense of confidence. And that's totally fine. Managing books is a completely different set of skills. So invest the money you will save money by investing the money to have somebody do it correctly for you. Some IRS penalties and fees would have been worth paying someone over level on the stress and hassle. Well, here's where and let me just point to this because here's a thing. Now I know what he's not doing is setting aside any sort of monthly withholding or any set I'm sorry, quarterly withholding, which means that means the 3,000 that he's giving you, he doesn't even have it to give. So that means is this business even making any money? That's what my brain goes to immediately. If we're not paying our taxes and we're not taking any income. So that it points to some deeper questions there that need to be answered. Okay. Now, we're giving you enough homework. We gave you a lot. I'm so sorry, Jane. This is not fun. Yeah, I mean, I'm happy to have somebody say it because I just feel very overwhelmed. So. And call us back. Listen, I want, I am saying this. I want you to have these conversations that we had as homework. And then I want you to email again and call back and say, Jade told me to call back, schedule me. And we want to know what happens next so we can help you out and help you take the next step through this. Plus, the people love a storyline. They love the way. Are they now? Yeah, they want to know what happens. We hope for a happy ending here, Jane. That puts this 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.