Your Future Is Worth the Sacrifice

brought to you by the every dollar 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 and i'm rachel cruz hosting this hour with jade warshaw and we are answering your questions about life and money so give us a call at 888-825-5225 first we have john in anchorage alaska nope wrong one hold there we go hey john how are you i'm doing great how are you guys hi we're doing great how can we help so my aunt this is such an odd story has been scammed for about a hundred thousand dollars by my biological brother oh my gosh i did not think that you would say it was flesh and blood it sure is and um he's actually he's been living with her um and us and the family all just found out about this very recently and you know we found out she was three months behind on her mortgage um we are partially caught up on that um and she's only making you know she's on social security and retirement we're trying to figure out how we can fix the situation um we've already removed him from the situation and we're just trying to figure out like all right how do we go forward so how did he do it did he get her to put money in some account was he forging her signature on things like what how did it happen all of the above he actually uh he not only you know got money out of her by asking and by kind of manipulating but he also um you know forged her social security number and her information to open some accounts over what period of time did this happen was this over the course of years or did this happen relatively fast over the last 12 to 16 months i want to say okay so was he caretaking for her was he taking care of her like what was the nature of their relationship together no so um she has basically raised me and my brother as kids and um you know after i moved out my brother stayed so my brother has lived with her since he turned 18 he's only 24 i think he's 24 and she is 76 she's my great i'm so sorry this happened so where does this happen um i don't know i don't know i don't know i don't know i don't know i don't know i don't know i don't know i just leave her it's a hundred thousand dollars that she's been tricked out of deceived out of uh she's got social security what what other assets does she have um so she has her house which obviously isn't paid off but i think she she owes like 260 on it and she's got i think it's worth 500 ish um so she's got a lot of equity in that um she owes probably about a hundred thousand dollars in credit cards partially from him partially from her just you know i don't know i don't know i don't know i don't old people credit card stuff right um okay well and then have you guys pressed legal charges against him john so what we did is we went in and we filed a restraining order against him so we could get him removed from the house um he has been served with that by the police there's a court date coming up soon and we will um we'll essentially be you know pleading our case and saying hey we want to get a long-term protective order against him or against him from her and uh we basically are just trying to keep them away from each other i think my aunt still partially believes that he's going to give her this money back well have you disputed it sounds like the credit cards yeah he did that have you disputed that with the creditors and so um fraud as for the as for the creditors we haven't dug deep enough into that it's all very recent um but we have dug into her bank account at least those things and we fixed a lot of her overdraft charges so she's like got zero dollars in her account you know but all of her bills are at least paid now she's still behind on her mortgage and behind on some of her other um payments but i mean he was taking out quick cash loans in her name with her social security number wow so can you clarify something for me was she giving was he stealing access just because he could see things laying around the house or was she giving him access and she just didn't know what he was going to do with it i think it's a little bit of both um i think he got her social security number from her when they were doing a loan document together she's co-signed on things for him before okay and then he took that and ran with it exactly so her name is on all the credit cards is his name on the credit cards too or he just opened them in her name and he spent the money it's all everything is in her name um you know even the quick cash accounts okay yeah so what i would do is i'd probably pull her credit report put a freeze on it too just because he has we did do that good okay freeze it good so pull that credit report and and it's gonna take you guys it's gonna be so frustrating but going through line by line of this debt to see what is what did she take out because you said she has some credit cards from old lady credit card debt is what you said figure out like yeah what what really is hers from an amount standpoint and an account standpoint whatever she did not sign up for i highlight that and i would not pay on that because what you guys can do is go and um you know with with the court order is you know to to send letters to these companies to say it was fraudulent and that she she should not be held responsible to these and so from a legal perspective but now i am curious john in order for all of that to go through i don't know where the law steps in on his side right to actually press charges that there was a criminal intent and that's the part yes that you take that and that's how she like if that is the case and i'm not sure and i think every state's law is different but if you have to have like a judge you have to have a press charges against him in order to not pay these bills you guys may have to go through criminally to i would convict him so that she doesn't owe 75 of the hundred thousand dollars right that she probably was right was stolen from yeah i might speak to a lawyer about this and find out what the best course of action is because i mean it's 100 a criminal yes you know what i mean yes and i might also contact guardian litigation they might be able to help you going forward to sort some of this out and fight some of these battles for you um yeah this is really really tough so is she facing today is she okay financially or is she struggling to make ends meet at this point she's definitely struggling to make ends meet like she's able to she's now going forward since we've kind of fixed everything she's able to go forward at least making her bills but she doesn't have really anything at all left over um but you know she's also wanting to pay on those quick cash loans and all those other things and so i think um i think you're right you know talking to an attorney would be the best course of action and then you know we did file a report with the ftc um we just looked it up and kind of filed whatever they said and tried to give as much information as possible and we haven't heard anything back yet we don't know how all that works so we're just kind of keeping an eye out i guess yeah i think i wouldn't pay anything on this until i've filed these charges correctly until i've spoken to a lawyer to figure out what the next course of action is i think if i'm in your shoes um i'm making sure that her day-to-day is okay and that she's able to like i said make ends meet and then i think this is just going to be a long web that you guys have to untangle unfortunately and it's just probably the more layers that you uncover the more and from a relation savory it's going to be yes and from a relational standpoint it's so sad you know that that he took advantage of this woman who cared for him terrible and helped raise him and so there is that that relational aspect too which is just so hard um to face i would assume john so i think the worst part about it is you know she really wants to keep trying to contact him and and talk to him and you know make sure he's okay yeah um i mean out of the goodness of her heart she is but i would yep stay far away until things are cleaned up in order to rebuild trust in a relationship which is a whole other tactic but yeah i would not any level of her enabling um that relationship for sure john you're probably gonna have to you probably have a way clearer head than she does to step in and make sure that he doesn't continue to take advantage which doesn't sound like he can but oh man what a mess you 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 net suite has solved that problem for more than 44 000 businesses like yours net suite brings financials inventory crm and more into one place and their ai tool net suite next builds ai into everything automating busy work like forecasting demand and chasing down overdue 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 net suite is built on leading practices from thousands of businesses pre-loaded and ready to go ramsey solutions switch to net suite years ago it helped us know our numbers and we've never looked back if your revenue is at least seven figures try net suite next for free at netsuite.com slash ramsey that's netsuite.com slash ramsey or click the link in the description up next we have renee in charleston west virginia hi welcome to the show hello hello thanks for calling in how can we help um we are trying me and my husband are trying to do the baby steps and we cannot get through the first one because i struggle with impulsive spending and i don't know how to get past this i'm in counseling for it what they're telling me isn't really working so i'm draining every bit of extra money we have because i want to buy stupid stuff what are the counselors telling you what have they told you to try what have they told you to do um give all of my husband my credit cards my debit cards but the problem is i memorize numbers okay or i save them on my phone why do you do it for about a month why why do you spend i have a bad past from abusive relationships and i met my husband who doesn't tell me no one anything coming from a place where i had to ask even to go out to dinner with my parents so he doesn't tell me no and i feel safe enough with him to spend money to get everything that i want or need but now it's like i'm a stay-at-home mom we have five kids um and he's the only one that works and we're trying to do better but i'm draining the accounts and i don't it just feels like the weed in me i can't explain it it just feels this emptiness in me when i spend money yeah because i mean there's a true you know something chemical sense that's happening when you spend you get a dope you're getting a hit from it right just like a gambler would placing a bet or an alcoholic with a drink like like you're you're getting something even from a physical standpoint that feels good right so it's not even just the stuff because once you get the stuff what do you do with it um nothing usually goes in the drawer and i don't use it that's right that's right so so i think yeah starting and i and yeah if dr john deloney was here he could pick this up for sure for sure john yeah yeah but um but i do know you know things that i i've heard him say for sure which i think is true and this is probably true for any you could say bad habit to addiction on that scale is have things in place that that actually you repurpose that energy like what else can replace when you have that compulsive need to get on the phone and to and to buy something what can you replace that with right and so there can be you know like and i've heard john say this this is why they have donuts at aa meetings genuinely because like there's a sugar hit that's like okay like we're getting like we get something what else can you yes and so obviously the healthy patterns would be going for a walk calling a friend right and sometimes those are amazing if you can do these things but what else in your life can you go to when you're in a situation where you're like oh i'm when that compulsion comes to replace it oh gosh and so what what would be a couple of things that you're like okay if i because i do think the counselor is right i think having not having access um yeah stopping the access point which i know you memorized numbers you said so that doesn't help but um but i mean like that's that is one train that i would say to go down what can you eliminate you know from that standpoint but then also when that comes what do you do with that yeah that feeling and i think renee even if you can get a step ahead of it if you're starting to if you can look back on the times that you've spent whether it's like oh gosh i jumped on amazon or i ran over to target or i'm not sure what you're spending location of choices but if you can think back and spend some time and go what happened just before that was i bored triggered it did i get some bad news did my husband go to work and i felt abandoned what what was it specifically that's really the big one is feeling abandoned and there you go and yeah so i feel like i need to spend i mean it's not even just like going to walmart or target and buying something it's i get bored of my car and i go trade it in for another thirty seven thousand dollar loan yeah that's like bad stuff and i think and that's the thing i want you to discuss with your therapist because the truth is in a situation like this the truth is renee we would say that somebody who's got a gambling addiction any kind of addiction it could be gambling spending pornography whatever to that we would say they'd need a separation from the money and in his case he would need to change the numbers on the card because you already know it and that's the extreme but i can't tell you that on the phone today because i also you've already told me something about your past that is in direct relation like uh conflict with that so i would bring that to the therapist and say i spoke to some money experts and they were saying that in this situation normally i wouldn't have access to money something about that feels right but how do i navigate that knowing that i came from this past where i was completely controlled and that becomes the topic of the therapy but the truth is you are an alcohol an alcoholic who's in a bar right now and you've got money to spend on drinks and so yes it makes sense that that needs to be taken away from you well me and my husband even discussed like he will never like we've had the same bank account i mean we've been on the same ones since we've been married but now it's we want to do this and i'm totally for you know getting our lives in order and getting becoming debt free and he's like should i get another bank account and just to because like i said i'm gonna stay at home mom and he works he makes the money and here i am just spending it like nobody's business should he get a bank account with just him on it and i have no access to it well yes for a period of time and that's the thing only it's it's for a period of time well while you get well yes so there needs to be really clear parameters around that what are the steps that need to take place uh for you to get care what is what does success look like right and just have really clear definitions and boundaries around what positive movement forward looks like and what it has to look like for you to then gain access back and then when you do gain access back it's not all at once it's little by little right so there needs to be such clear structure around this plan from all angles and i think that will help you uh deal with it and you cannot feel a right and you can have a say in that he's even tried going to like he's told me no he's taking the cards he's he's working towards it to better us he would never like tell me no if it was something that we absolutely needed sure then i go and run to my parents and i'm like hey i really want this and they need to be on the same page so that means they need to be part of the plan too this is almost like an intervention where the whole family or everyone that you've had gone to for money understands this is a real issue it's like if you were on drugs the whole family knows what's going on don't give her money that's going to throw her back in her treatment but i commend you renee i commend you because you know you have an issue you're calling and you're seeking help yes i was going to say the courage it takes for someone i mean honestly to raise your hand and and the admission of it like you're yeah consciously very aware of what's going on and that's the one thing though about addiction i'm like i knew yeah i literally looked at my husband the other day i didn't even say like hey how was your day he walked in from work and my first words out of my mouth were can we go spend money not can we go to the mall and look for new clothes it was can i just go spend money i'm to that point now where it just fills this void in me and this emptiness and when i see him and i want to feel secure and safe i'm like well let's go spend money because you've been at work all day and i've been alone with the kids yep take me to spend money you know how long have you guys been married um nine years okay because i do think as well when when that action stops and you don't and he comes home from work and you guys don't spend money then what you're forced within is to be in a home where it's quiet there's not excitement happening right and you have to actually be with each other and that's work in and of itself right i mean that's a whole new dynamic that you're not numbing anymore you're truly gonna have to sit with renee and that's probably some of the scariest you know parts of this journey is in the quiet and and i think your therapist i i pray you have a great counselor um i do because good i'm so glad because i i do very much agree with the tactical side of this of cut it off at its source um and you guys put some just like what jade was saying and you be in on this discussion renee like you and your husband sit down and lay out okay for 90 days no questions asked there's no you can't have any access you know we're cutting we're cutting up the cards we're changing accounts access and this is not out of harm this is out of a healing process and both of you sign your names this is for the good of renee in 90 days let's look up and see okay where are we at how are we feeling do we need to extend it do we not and you just continue to walk this journey and he needs to speak to you renee of how to rebuild trust with him because he doesn't trust you right now as he shouldn't right and so for that part of your marriage to be healed so that's another redemptive part of the story that i pray i pray happens and your counselor you should almost not like your counselor because they hold you so accountable you almost shouldn't like them if you're serious about building a business you need an easy way for customers to buy from you yeah that sounds obvious but a lot of business owners leave money on the table not because their product isn't good but because the buying experience is broken or complicated shopify fixes that with shopify you can build a professional storefront and get it in front of your customers fast no coding no technical headaches and when your customers are ready to buy shopify's purple shop pay button is one of the best converting checkouts in the world which means fewer abandoned carts and more sales and if you hit a snag sidekick shopify's built-in ai assistant is there to answer questions and keep you moving you've got enough to think about just running your business the last thing you need is to lose sales because the buying experience lets you down all you need is the idea shopify handles the rest start your free trial at shopify.com slash ramsey that's shopify.com slash ramsey shopify.com slash ramsey part of winning with money is taking control of it and knowing where your income is going and so every dollar is our it's not only just our budgeting app but it really is your entire financial roadmap and it helps guide you to know where you're starting from to where you need to end up and so make sure to download it for free in the app store or google play and it will walk with you every single day when it comes to your money it's an amazing app and it's something to yeah to literally have in your back pocket since it's on your phone but it's so convenient and it's so great and it helps create such great habits for you and your money all right let's go to rob in kansas hi rob welcome to the show thank you for having me yes absolutely how can we help i'm kind of nervous and embarrassed about this i just recently tried to start getting rid of all my debt got quite a bit of it but i've got one debt in particular that i'm spending three hundred and eleven dollar payment a week and that's twelve hundred dollars a month that's really hindering me trying to pay anything else off and get caught up i called my bank to do like a debt a small debt consolidation loan to get rid of my debt and i'm trying to figure out how to do that and i've got this uh rent to own payment pretty much is what it is and and uh if i by doing this in my mind i'm freeing up about eight to nine hundred dollars a month if i wipe this out and i can apply that to all my other debt to accrue even though this this rent to own debt is not the smallest how much is it uh the total um the total is three thousand six three thousand four hundred twenty six dollars and about 15 cents i believe okay and you said it's not the smallest what else do you have um i've got my truck payment my wife's truck payment okay what's that my truck payment is a buy here pay here place because my credit is not the greatest but that's two hundred and ten dollars what's the total what's the total loan um that um the total loan on that's eighteen thousand okay what else my wife's truck is four thousand and that's uh yeah it's about four thousand dollars on hers okay and is there anything else um there's a lot of other smaller stuff and it all equals up to about including the one i'm trying to get rid of all equal up to about twenty seven thousand dollars 27k total okay how much do you have to pay to buy a truck and what do you have to pay to buy a car and what do you have to pay to buy a car and what do you have to pay to buy a car and what do you have to pay to buy a car and i work in the construction industry and i'm a truck driver i average i can either get 50 hours a week 60 hours a week 70 hours a week it depends it's whether whether depending sure well on average on average rob what would you say uh on average i bring in probably thirteen fourteen hundred dollars a week and my wife brings in about twenty thousand dollars a week and i'm a truck driver i'm a truck driver and my wife brings in about six hundred dollars a week okay now for you do you have more i mean just be honest because we want to help you do we do you have more of the 70 hour weeks or do you have more of the like 30 hour weeks or less i would say on average i probably average out between 60 and 65 hours a week okay good what about her uh she's just straight 40 okay okay so it's about 8400 ish a month would you say um so the thing with the debt consolidation it they may get you a better interest rate because those rent to own rates can just be horrible uh but it doesn't wipe away the debt you do understand that right i mean you said it'll get it it'll get it off my back but like it still is around you still have to pay it yep so um so by working that because it is one of the smaller ones i mean it's only three thousand dollars the other two that you or the other three you gave us is larger i know you have some other ones um but since i i would man i i think i rob i would still list out all of the debt i think you need to look at it on paper smallest even if it's a 400 credit card you know balance that you keep rolled over month to month like whatever it is and you guys start attacking that smallest to largest that really is probably going to be the most effective way for you all to to get out how much rent or mortgage um we pay 1900 a month in rent okay because i'm just wondering how much could really be freed up um realistically for you guys i mean could could it be three to four thousand dollars and you guys live on nothing like ramen noodles like you're not like you are spending no money uh we're kind of doing that right now okay and how much that's why i was how much thinking about using my car as a collateral to get this loan that no no no because if you don't free up four thousand dollars next month rob you just pay you could pay off the three thousand like i'm not saying you necessarily do that in that order but like where is this margin going yeah do you have kids i got two okay are they in daycare no they're both high schoolers and take up quite a bit of money because of the school activities they're in okay so let's stop there because i'm glad you said that because i'm looking at this i'm going okay based off the numbers you gave you're making a lot of money and i'm not saying you're going to have a lot of money but i'm not saying you're going to have a lot of money and i'm not saying you're going to have a lot of money and i'm not saying you're going to have a lot of money and i'm not saying you're going to have a lot of money uh you said the truck was somewhere around 200 so we take that out there's still a lot of margin there um forty three hundred dollars of margin 200 a week 200 a week okay so i'll take out the rest and then but i'm still seeing 3700 of margin what's your wife's truck payment uh two hundred dollars a month and then we we actually have some collections that i've been paying on okay and then we have some collections that i've been paying on and then we have some collections that i've been paying on okay and then we have some collections that i've been paying on that are in monthly payment as well ranging anywhere from so those are two there's two things that i see that you can do immediately that's going to help number one i want you to go through your budget with a fine tooth comb because you've given me your biggest expenses and you still have a lot of margin after those biggest expenses you mentioned having kids that are in sports and this and that you've got to put some boundaries around that if you if you were telling me that your main priority is i want to pay off a thousand dollar debt then that means the kids have to know their main priority is not all the sports and all the activities and all the this and that sure maybe they play sports but you've got to put boundaries on some of the other things around that and so you guys are going to have to really tighten this for a short period of time in order to make it right and then the stuff that's in collection stop paying minimum payments and just settle it yes and just stack up your money and say if the debt the collections debt is for 800 say i can give you 200 to call it done i can give you 300 to call it done and don't whittle away at it because it's just going to take forever doing that stuff's already it's already been charged off it's already a bad debt just settle it get it in writing beforehand and then those are cleared out how many of those do you have uh about 10 11 what do they total one of them totals about seven thousand yeah or seven hundred about seven thousand okay it's three another three line of credits one is about 3 500 one is about 1100 the other one is about another 25 to 3 000 and they've already stopped calling us and everything on that one and then i've got a couple other ones that one is 2300 and another one is 2600 and those are making minimum payments on and yeah okay so it's more than 27 000 yeah way more so so rob here's what we calculated was $27,000. Okay. Well, with the car loan of $18,000 and $14,000, you got $22,000 there. We didn't calculate my truck into that debt. I don't know why not, because it's still debt. Here's what I've calculated so far. You've got $39,526 of debt. That's including your rent to own, your truck, your wife's truck, and the few collections that you named off. You told me you had 10, but you only named off one, two, three, four in detail. So you probably have more than $39,000. My guess is maybe closer to $50,000. So Rob, here's the deal. You guys are going to have to have a massive emotional switch. The whole family. We're sitting down tonight and it's like, kids, there's no Christmas. We're doing nothing for one solid year. Because Rob, for one solid year, if you put $4,000 and you pay off debt, $4,000 a month, and you go get an extra job, for one solid year, you're going to have $4,000 a month. You're going to have $4,000 a month. All of this is cleaned up and you stop taking credit every time someone blinks and you're taking out another loan. When you stop it and you go in tense the other direction, you can be out. You really could be out. There is a mathematical way. We see it and we know it's possible for you, but you guys are going to have to make that decision. 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 slash Ramsey and make the switch today. That's boostmobile.com slash Ramsey. Ramsey. $25 forever requires customers to remain active on Boost Mobile unlimited plan. Your feedback on the show is very helpful to us and our team. So make sure to leave a comment below from where you're listening or watching. And subscribe to all of our channels and even send the episode out to a friend that may need it if you're thinking about doing that. If you're thinking about somebody in your head and it's like, huh, they probably enjoy this, go ahead and send it their way. All right, let's go to Gretchen in New York City. Hi, Gretchen. Welcome to the show. Hello. Thank you for taking my call. Yes, absolutely. How can we help? Well, I am a single woman that is 72, almost 73 years old. I am retired, but have been working in my field as a contractor post-retirement. And I just, lost that contract that, you know, the federal government thing, it's done. And so I'm vacillating between panicking and trying to get another job soon or enjoying my retirement and my grandchildren. And I just don't know if I'm okay or if I'm trying to talk myself into it or if I'm not, and I should go out and find another job really quick. Okay. Well, how much do you have in retirement savings that you would live off of? I have, um, my social security and my small pension. I live off of plus, you know, I was working. I have those continuing to come in. And then I have a, um, an IRA that I have not yet drawn on, but, um, my, um, minimum requirement is coming up soon. And I was going to add my birthdays in January and I was going to start drawing out in January. How much is in the IRA? Okay. And what is your, um, RMDs with that? Um, I don't know the answer to that. How much they're going to force you to draw out. Okay. But I know that I already talked to my financial advisor and we decided I would take 18,000 pre-tax, about 1500 a month to augment my social security and my, um, pension. How much is social security and how much is pension per month? Social security is just a couple of hundred, a couple dollars shy, like 50 or so dollars shy of 3000. Um, and, uh, my, um, no, that's not right. I just lied about that. That's pre-tax. I have it taxed. Um, it is about 20 by total with my small pension is that amount. I'm a couple, I'm about, um, 29 50 with both my pension and my social security. Gotcha. Okay. Gotcha. And what is it? Uh, how are you living? Are you in a mortgage? Is the house paid on? Do you still have payments? Tell us about your living situation. I have a mortgage. It's a, I have $140,000 left on the mortgage. It's kind of a new house for me. I bought it a couple of years ago. Um, and I don't have a lot of debt, but I've got a little, uh, well I have debt, but, um, I have about $5,000 on an interest-free loan left on some improvements I did to the house. When I first moved in and I, I, I have enough money in savings that if I don't pay it off monthly, I can make sure it's paid off by a term date, which is March of what isn't savings. And what liquid cash do you have? Uh, my liquid cash is about 14,000. Okay. So we'll call that your emergency fund. So I just want to make sure we're not leaving anything out. It's just, it's the two 17 in the IRA. It's your social social security and pension. 2,900. 272, 272, 272,000. Okay. I'm glad I checked IRA about 14,000 in savings. Um, the mortgage and the $5,000 loan and one other big thing. I bought a car. Oh girl. Come on now. What did you spend on this car? Oh, I was working. I was scrambling. That means you spent a lot. I did. I did. I did. I bought a brand new car. I wanted a hybrid. It's a, it's a Subaru Forester, a 25 and I have a car payment on it. And you know, I must say in my defense that, uh, I keep my cars forever and I thought it would be my last car at this age. If you keep that car, that's going to keep you from retiring when you want to. How much is the loan total? How much did you take out? I owe about 29,000 on it still in my payments are 635. So Gretchen, I love you. Uh, we got to make a change, girlfriend. We got to, we got to make a change because the work that you're doing now can't, how, how, how long could you do this job realistically? Assuming you have good health. I have great health. That's the thing. I actually like working, um, keeps me busy, but you know, I mean, I, I like being home too. So, um, I've been kids and stuff. Sure. How much were you making before you got laid off Gretchen? How much were you making? I, so far this year, well, last year in 2025 in it, I made 47,500. Okay. And, um, this year I was poised to make more if I had worked a year out, probably about 65. I'm, I'm, I'm, I'm not going to lie. I have some worries. My worries are the debt. Number one. Um, I don't love you going into a retirement with 272,000 and debt payments because it's just, it hurts my heart to know that you would be taking, pulling from your IRA and then taking that money to pay off a car loan. That hurts my ever loving soul. And so, oh yeah, I don't want to do that, but that's essentially what you would be doing. So I, I see a couple of things that have to happen. We we've got to, we've got to pay off this debt or we've got to downsize this car significantly, maybe a $15,000 car, not a 30, something like that. Yeah. I, I know that was a bit of a misstep. I thought I'd still be working, but at this point I'm only one year into the loan and I don't know if I'd get my money back. You may not, you may be under just a little bit. I don't want to lose money on the car. Yes, but you're losing money. The longer you keep it, it's going to continue to depreciate. Number one, and you bought a brand new car and that is going to depreciate. Quickly. And so there's just part of this that we call over here. It's kind of just a stupid tax when you do something and you later on realize what, what it costs you, you go, oh my gosh, I wish I hadn't done that, but it's spilled milk. We can't go back. But the truth is what I really want to know is between the pension, do you, I mean, gosh, you have to take those required minimum distributions. Do you need, do you need, let's see here. Oh boy. I'm just, I'm worried for having an income. I know. I would say Gretchen, I would probably be working another couple of years. It's okay. It's okay. That's what I wanted. And that's exactly why I called you, because, you know, I'm talking in my head to myself, sometimes on the left side, sometimes on the right. And I'm like, well, maybe I can just be more frugal with my shopping. You need to. Yeah, I'm not much of a big shopper. My big stores are. But let me, Gretchen, I'm going to give you I'm going to give you clear homework, Gretchen. This is your homework. You need to find a new job because unfortunately you need to work. And I want you to have some earned income because I still want you investing. I still want you putting away in a Roth IRA as long as you can, because you need as much money as you can get your hands on. And I'm going to tell you this. I don't necessarily think you're going to take my advice, but you can't have a six hundred dollar car payment every month. You just can't. I think you need to get out of the car that you have. And I would take some of the fourteen thousand liquid and I would buy myself a cash car. Yes, because Gretchen, our rule of thumb is that you should not have anything with wheels and motors. That's more than half of your annual. Income. Yeah. And you made forty seven thousand and took a thirty thousand dollar car. So it is too much car for your life. Well, that was just I was also I was also counting in my the other three thousand dollars a month that I was getting from social school. Even still, even still, that puts you at fifty one and it still doesn't fit. Yeah, that is not. You're right. So let's let's let's and I have to buy a car. Let's sell the car. But you have the longer you wait to sell the car that you have, the more likely that you have to possibly be upside down on it. So let's get I mean, if I it'd be my homework this week and I'm going car shopping, I have fourteen or fifteen thousand dollars that I have to spend and I'm getting a new car. I'm I'm selling the one I have and I'm getting a new one. And so that is going to free up a lot of margin. Six hundred dollars. And now we can get at paying off this five thousand dollar loan. That's thing three on your list. And if you do that now, we have actual margin. We can start to invest a little on the side. Plus, we're having an income coming soon. Hopefully, yeah, yes, yes. And have that flowing. And Gretchen, remember, too, a good rule of thumb is your is your investments double every seven years without you even touching them. So in seven years, that could be close to six hundred thousand in your IRA, right? I know you're going to be taking some money out, but you're also hopefully putting some money back in. But it will start to grow over time, which is a good thing in your situation so that you can retire. But the next couple of years, it's probably going to be some working. Oh, yeah. When you take your car to the shop, you're probably thinking two things. How much is this going to cost me and is it going to get done right? What you need is a mechanic who will give you transparent information so you can make the best decision for your car and your wallet. Christian Brothers Automotive is the official auto repair shop of The Ramsey Show because you can trust them to take care of your vehicle the right way. Their digital vehicle inspections let you see exactly what their technicians see, giving you confidence on which repairs are urgent and which ones can wait. Plus, every repair is backed by their nice difference warranty three years or thirty six thousand miles. With a guarantee like that, you can walk away knowing that your car and your wallet are taken care of. Schedule your service today and get 10 percent off your visit at CBAC.com/ramseyshow. That's CBAC.com/ramsey or click the link in the description. That's CBAC.com/ramsey. 10 percent off up to a $250 value. See store for details. Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. I'm Rachel Cruz with Jade Rorschach, and we are answering your questions about life and money. So give us a call at 888-825-5107. That's 888-825-5107. Up next, we have Phil in Louisville, Kentucky. Hi, Phil. Welcome to the show. Hey, how are you guys doing? We're doing great. How can we help? Yeah, I was curious. Got a question. My wife and I recently retired and we've got a 25 year old son who everything's great except for I guess he's a little bit delayed to launch. And about. Two months ago, he finally got a job, you know, after not having one for years. And my wife and I, the only difference is really in anything is she is of the opinion that we should continue to pay for all sorts of things, rent and everything like. Why? Well, her position is that, you know, she grew up very poor and ended up being very successful and she wants him to not experience any of those things that she wants. She did. And I'm of the opposite opinion. I think that a little bit of struggle is healthy, especially for a young man growing up. Where's where has his struggle lied? I don't. Where did he struggle? Good question. He hasn't really, you know, he hasn't really he's he's been very well taken care of for sure. And that's why I guess that's really why there's a we have that difference there. Yeah, I think, you know, this pains me so. And I can tell that it bothers you. One of the things that I'd want to highlight if I were talking with your wife is, you know, she's kind of projecting her own experience on him. And that's not his experience at all. You said she grew up poor. He's not good. He has not been poor a day in his life. And it sounds like she and she became successful. She worked hard struggle out of the struggle. Yes. Look what it afforded her. And he hasn't worked yet until it looks like two months ago he got his first job. So I would really push back. Back on the reasoning there. And then the second thing and I'm saying this because I hope that you play this call for her. The second thing that really bothers me about this is every day that she says to a 25 year old or a 24 or 23 year old, I'll cover you. I'll take care of it. You don't have to work. It's too hard out there for you. She is stealing bits of his confidence from him because she's saying you can't make it and I don't think you can do it on your own. Why try? That's the message that she's sending. That's what I've really tried. It just trying to find that I was kind of worried about being too strict or something because it was, you know, I mean, we obviously have, you know, quite a bit of capability to help him, you know, is saying no. And we have, you know, a good bandwidth. Being too strict or something, which I don't think it is, but I think she definitely does. It's not. I mean. Strict. It's actually loving your adult child to be an adult. This is what this is what the world is. And Jade is right. Every moment that you guys continue to step in and save him over and over and over and again, the the. Yeah, well, and it's in the level of entitlement that really starts to grow of what he is going to expect. I was hearing someone say this the other day. I thought it was so brilliant. She was talking about kids and entitlement, but she said kids that are entitled. They have a. Fear of frustration because they've never. Yes, I heard that. Because they never have been able to cope with frustration. The moment frustration enters, a parent comes in and solves the frustration. So the little child doesn't feel frustrated. Then they grow up to be an adult. And she gave the example of being at the ticket counter at American Airlines. And they're like, well, I'm a medallion backflip silver member. How am I not upgraded? And you're frustrated. They're frustrated. Somebody fix my life. Somebody step in and fix this because I can't cope with my own frustration. You've literally he's he emotionally economically. He's like a 12 year old Phil. Like that. That's the that's the son. You know what I mean? And no, no woman. Is going to find that very attractive. I agree with you there. That's not been my. My experience, for sure. Yes. So. So what are the conversations with you and your wife look like, Phil? Because you sound like a very nice guy. You sound very levelheaded. Uh huh. But she, I guess, has a lot of a lot of passion about this because because her way is one so far. Yeah. I mean, we're literally the only issue we've ever had. I mean, we're very agreeable and accommodated in almost every other front. But she just I think it's a natural like it almost feels like a natural like reaction. I don't know. She just does it. She always finds a way to justify. She'll take care of it. She'll intervene. Only child. Yeah. Yeah. He is. Yeah. I just. Obviously. It's like we're we're going past you and we're speaking past you and speaking to her because I think you understand it, Phil. I think you know what must be done. The hard part is is getting her on board. Have you had what are your conversations like with your son? Because here's the other. This is the other road. If you can't get your wife to say, hey, agree with me that we're kicking, you know, little Johnny out, then now you can go to Johnny and say, hey, you know, here's here's what I'm experiencing and here's what I want for you. And I would love if you took the initiative for yourself. Mm hmm. Yeah. You know, I think in the past he has been much, much, much younger and he kind of played us probably, you know, I mean, he was a teenager and back in the day and that sort of thing. And he played it against us. You know, of course, he wants it all. But I'm hopeful, you know, first job really, you know, just a couple of months in here. But maybe. Yeah. Get some real world experience out there and then maybe. And there needs to be a written timeline. Yeah. Of, OK, you know, you have to kick him out tonight, but you guys need to look and say, Um, by, by January 15th, you're going to have your own apartment by, you know what I mean? Like you, here are some timelines because it's good for him and, and Phil, I mean, I mean, I, and for your wife too, I'm like for you guys to be on the same page, yes, is very ideal, but it also doesn't sound like you rarely step in and, and well, yeah, like, Hey, this, this is harming our child, right? This is not putting in a pool or not. This is like a big, big deal. Yeah. This is failure to launch. This is Matthew McConaughey. I mean, like this is, this is the story. Like this is literally playing out right in front of us and it doesn't end well. It doesn't end well. Um, and so the frustrations, the struggles, all of that has to happen in life, right? And people have it at different degrees, but, but you are not immune to suffering in life. You're going to get it one way or the other. He's either going to, he's going to feel it, you know, when, when, once he's married and his marriage is hard or the parenting is hard or his job is hard, he has to have some level of endurance and grit and you have to experience that. And by just buffering, putting pillows around him his whole life, isn't, it isn't going to do that. Rachel, I love that you said that. And I want to double click on that because it's so true. Pain is so necessary. And the more you feel your tolerance for it grows and you can handle more of it. But we both had babies, you know, when you, when that epidural hits and you're like, okay, you're feeling good. But then if it, it wears off and that pain hits you all at once, you're like, I, I can't function. I've never had to function under these circumstances before. But if you let the pain build little by little by little, you can actually learn to adapt. You learn to cope with it. You learn to push through it. And it creates, you know, perseverance, perseverance, character, character, hope. Scripture talks about like, like there's a progression in life. And if you don't allow people to go through those progressions, they don't get to be who they were meant to be. I mean, like the fullness of who they are. And so, oh, Phil, Phil, if Phil's wife, if you're watching or listening to us, we love you, but let the, let 25 year old, let them go. Let them go. Let them go. We'll find a great woman. Hopefully get married. Maybe have babies. We'll get grand babies out of us. God willing. If you're in a really bad debt situation, I know how scary that is. You might be getting harassed by debt collectors every day, threatened with lawsuits, and maybe you think bankruptcy is the only way out. I've been there. 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Well, if you have worked hard and gotten yourself out of debt, if you have a fully funded emergency fund and you are baby steps for and beyond we want to hang out and celebrate with you. We are going to be on a cruise for an entire week in March. And it is the Live Like No One Else Cruise, March 14th through the 21st. And we will all be on it. Jade, myself, George, John Deloney, Dave Ramsey, Sharon Ramsey is going to be there. Some of our families are coming and it's going to be a fantastic time. We did this, I guess, about a year and a half ago was the first one. And we've recorded shows. There's Smart Money Happy Hour. We recorded that. And it is a great time. It is just an excellent week to not only just enjoy some, you know, R&R for sure, but also, I mean, we have so much content, so many sessions. There's something constantly going on on the boat that is Ramsey-esque, if you will. And we're excited to hang out with you. So make sure to reserve your cabin because they are selling out. So make sure to grab one if you go to RamseySolutions.com slash events. Again, the cruise is March 14th through the 21st. We'd love to see you there. All right, let's go to Mike. Mike in Chicago. Hi, Mike. Welcome to the show. Hi, how's it going? Thanks for having me. Yes, absolutely. How can we help? Yeah, so reaching out. So I'm 27 years old. You know, recently this year we bought a home. And, you know, I do have a full-time career. But I'm in about, you know, with the business debt around $650K. So I wanted to know like a realistic timeline on when we, you know, when I can see myself being debt-free. You know, I would like to be, you know, before I enter my 30s. But I don't know if that's, you know, quite practical. Okay, so the $650K, I mean, it is your debt because you signed for it. But it's technically, quote-unquote, with the business, correct? That's combined. So that's some of it. The majority of it is actually the mortgage. You know, there's some of that at the business. Okay, so the business, what's the mortgage? Mortgage is around $420K. Okay. And then the rest on the business, is this just, are you a sole proprietor? Do you have partners? Explain that a little bit more. Yeah, sure. So that's a sole proprietor. A sole proprietorship, you know, it's an auto sales business. So that debt is actually around $150K. Okay. And then the rest of that is $85K or $90K on a student loan debt. And then the remaining $40K or so is personal and also some family debt. Okay, gotcha. And how much are you making a year? So full-time employed is around $95K. What about your wife? My wife, she's actually finishing up some of her exams. She's in her school for her optometry program. So she's currently not working yet. When will she start working? Probably in about a year. Okay. And will she have student loans to add to the pile? No, no student loans on her end. Okay. What will be her starting salary out when she starts? Do you know? Yeah, approximately probably $140K. Okay, that's great. Awesome. But that'll be in about a year, you said, right? Yes, correct. Okay, perfect. So you just bought the house, the 420. I'm assuming you guys saved. You saved up a decent chunk of money to put down on that. How did you do this? Yeah. How were you able to do that so quickly? Because if you were able to do a sizable chunk there, I'm thinking let's apply that same force to paying off this debt. Yeah, sure. I mean, I would love to, you know, apply that same personal. Unfortunately, I'm bad. And that was a lot of my wife's savings. You know, majority of the down payment was from her end. And I had a small part to play with it, you know, while I'm pretty heavily invested in the business. So, you know, trying to grow that. Okay. The only way we're, you know, your initial question was like, what's a realistic timeline to get out of debt? And I think the first thing that you have to decide is how important is it to you? Like how, how intensely do you want to move? Because what I'm kind of hearing is that it's, you've, you've easily pushed it to the side whenever it feels like you want something else more. Well, we want to do the house. We'll push the debt to the side. I want to do this business. I'll push the debt to the side. And so if you're ready to get intense, then it's going to mean some sacrifice. And I just don't know if that's what you're looking to do right now. Yeah, no, I think that, you know, if it does require, you know, a lifestyle change, you know, that's something that we are open to. I wouldn't say that we're necessarily, you know, lavish, you know, spenders or anything, but I know obviously the mortgage is a big chunk of that, which of course we can eliminate that at any time if we wanted to. But then the business, obviously that, that needs to continue, right. That has to, you know, it's operations and expenses. It has to continue that. And then, you know, savings and the student loans, it's just hard to really tackle all that, you know, with at least the income that I'm on at the moment. Yeah. After you pay yourself from the business and, you know, obviously operating costs, how much margin is left for you to start tackling the business debt? You know, at the moment, you know, with being my income only, it's probably a thousand or two to spare really, you know. You know, I do know when my wife starts working, that might change a little bit. And also you see with the business, it's pretty seasonal. So it's up and going. In the summertime season, business is good. In the wintertime, it kind of slows down a little bit. What kind of business is that? It's an auto sales business, the car dealer. Okay. So what did you project when you took out this loan? What did you project on how quickly you could have the debt paid back? Is this in regards to the mortgage or the business loan? The business. Yeah, that, I mean, the business is worth, you know, more than what the debt is owed to it. So if I, for example, wanted to kind of eliminate that debt, it's just a matter of, you know, getting the business and kind of clearing that. No, no, no. I think you missed the first question I asked you earlier. I said after you pay yourself in the business, and after operating costs and all that, how much margin is left in the business that you're reinvesting? How much profit is there? Oh, right. And you said one or 2,000. Oh, no, sorry. I didn't mean to listen to that. So in terms of the actual margin on what I'm reinvesting, that's probably closer to 3,000 to 4,000, you know, profit per month. So there's no way that that business is worth, more than the debt. you're not making any profit hardly okay so okay so yeah what I would what I would be doing if I were you is I would have to find the right balance between what you're invest reinvesting into the business to grow it versus what you're doing to actively pay off debt I would be very aggressive towards paying off the debt right now because that even though it's the business it's affecting you because you're a sole proprietor and then on the other side of it until your wife starts working I mean you've got to be going hard in the paint because 95 is a fine salary but when you hold it up to all of this debt suddenly it shrinks it and it doesn't feel like what it should yeah so that's the shovel to hole ratio that you've got to go and and really work through at this point yeah I think I would have the two different goals I wouldn't be thinking about the mortgage right now Mike I think in the business side I'd be throwing as much money that's coming in you know absolutely after retained earnings and everything I'd be throwing it at that debt so on the business side be working on getting that out of debt and then from the personal side you know you guys have that 40 and the $85,000 student loan I mean I I would be in the practice of not continuing to up lifestyle and throwing that extra if you have a thousand to two thousand dollars be throwing it at that you won't pay all of it off by the time your wife starts working but you guys will have you know get a get a chunk down I mean hopefully I mean be great if you got it down to 20,000 you know in the personal loan side and then when she starts working my goal would be that we do not count her income at all her income right I mean if it hits the account it is going straight back out and it's going to be to pay off this debt because you guys then at that point could get all all of this cleaned up in a year and a half including the business debt if you use some of her income I just want you to be in good business practices to be in a place because you kind of made a comment of like well we you know for operating expenses and all that you just have to have the debt rolling and you don't your your business a hundred percent could be debt-free we teach small businesses every day here through entre leadership about how to get to this place where they are in a cash flow position and they're not they don't have they don't have a bank in their ear you know talking about loans so so on the business side I would be getting out of debt but create some good practices around that because once your wife's salary hits in a year I don't want you to wait for a year but when it hits that's going to be pretty life-changing if you guys allow it to and that's the thing Mike is is what's going to be built between you all between now and then um is a full year of character building and learning to live a certain way it's an identity shift yes and then you're almost immune to this new income until everything is paid off and there's some savings in the bank but if you hold on the line we'll get you um maybe one of our entre leadership books build a business um and then we'll give you total money makeover too just walking like that walking through the baby steps because you guys are at that point that if you want to make the decision like what Jade said if you want to do it you can do it it's just going to be it's a heavy lift um but you can you guys it's very you're very very capable of doing it and we see people like with your numbers all the time yes and they make a decision to do it so that's going to be up to you guys hey I want to talk to you for a second about love and not love like in Titanic or something I mean responsible love the kind of love that moves you to take care of the people closest to you and one of the most important ways to show that kind of love is to show that kind of love is by having term life insurance if you have anyone depending on you a spouse kids anyone you need term life insurance term life insurance gives your family real protection if the unthinkable happens so they can spend their time grieving and not worrying about how the bills are going to get paid Xander is a broker who works for you shopping the top companies to find the right coverage options for your needs and your budget in many cases there are options available with no medical exam instant approval my wife and I had term life insurance through Xander for years long before I worked at Ramsey because we trust them getting term life insurance is a way of saying I love you when you can no longer say it yourself go to Xander.com or call 1-800-356-4282 to find the coverage that fits your family up next we have Michael in New Haven Connecticut hi Michael welcome to the show hi thank you for taking my call um just wanted to my wife and I just paid off our mortgage today and we're both in our 40s so wow oh my gosh we should have done a debt-free scream Michael that's crazy paid off your house that's incredible yeah she's 42 I'm 46 whoa how much was that what did that total uh today's payout was 109. the original mortgage was like 240. wow that's so cool how much is the house worth the house is worth about 440. okay good for you guys amazing all right so sorry we're going off we're just so excited for you okay so uh yep paid off the mortgage today no biggie uh we uh how can we help so um we have a an emergency fund right now that's about 120 000 and we have about 500 000 in our 401ks uh collectively um and we're working on about a 230 to 250 000 annual salary between the two of us so cool so good yeah so we're in a good position we're just and we have a 401k index fund in like a Fidelity taxable account so I'm just trying to figure out with all this extra now disposable income you know what should we do should we be looking at something else that I'm not thinking of or add more to the index fund and less than the emergency fund yeah I mean this is first off let's just start by saying this is a good problem to have to to to have so much margin of return I'm like to to to have so much margin that you're like I don't know what to do with it all that's so good uh you guys are killing it baby steps millionaires so just gosh kudos to you all around so what is the amount of margin that we're dealing with because I mean obviously I'm assuming you're investing the 15 percent and this is going above and beyond that so how much margin do you have to work with um so we're investing our our 15 in the 401k and then um we just have whatever like disposable income that we can put into this taxable account or I mean because now we we wouldn't have any bills essentially except our normal everyday bills right so how much margin do you have to play with put into that a taxable account that brokerage per month um what would you say per month I mean I would say I don't know five to ten thousand a month yeah okay that's great so I'm just wondering uh I I can tell you the things I'd be thinking of uh I'd be very intentional that now that you guys are at this phase because obviously you guys have buckled down in order to do this I'd be making sure that you're enjoying some of this money that all this margin is not just going directly towards hoarding or saving saving saving saving is very good but if you're not living and enjoying your life then it crosses a weird barrier so make sure that you're enjoying you're taking some vacations you're being very generous you're doing those things and then I'd probably do some sort of a split I don't know if you said that you're maxing out all of the available uh retirement that you have but if you are um if you are not I would kind of split it and I would maybe do more to the retirement if you can if you've got an uh you know I don't know if you're each maxing out your 401ks if there's any sort of after tax that you have available if you're each max maxing out your um uh Roth IRAs that sort of thing or your role you know your backdoor Roth IRAs if there's more retirement accounts I would still go there and then I would put a percentage to the brokerage because my guess is I don't know if you ever want to retire early or if you ever want to take your foot off the gas in some perspective you've got a big chunk of money that's not earmarked for 59 and a half okay yeah because you guys each could invest 25 000 in your 401ks and I think it's 7500 into your Roth so I'm with Jade if you can take some good have those accounts and max those out than anything above that um I mean they and they have you know Mega backdoor you know all of these other things but there's a part of me that because you guys are still so young you may want to get to some of this money before 59 and a half and so I would say yes maxing out the retirement and then putting whatever's left in that brokerage I mean that's what my I mean I'll tell you my car that's what that's what we've done my husband and I um that's kind of our goal is to Max out retirement accounts and we even do like an you know an HSA like we'll find like little things that we can do here and there um but then everything brokerage account and then out of that account is where we have had some goals and so i would i would say that for you and your wife like hey what's what is the next goal is it a big giving goal is it a um we want to put in a pool one day or we want to um you know upgrade houses and pay like i don't know what it is but whatever that next goal is for me having that money i don't know if you're a spender or a saver michael but i know for as it sounds like a saver are you is your wife the spender um i believe this is okay yes you know what it's okay you don't have to be anonymous to be a spender i'm a spender you can still be responsible and be a spender i just know from my personality if i just keep dropping money in accounts i've told once in this it almost demotivates me in a sense because i'm like it just feels like this black hole that i'm like am i ever going to see that money are we ever going to like use it i don't know like why like what are we doing for sure so having something earmarked that you're working towards i know for me always feels better emotionally to be like okay this is what we're doing this is where we're heading towards and again you guys get creative with it like it doesn't you know i you know we've even done some fun giving stuff um especially last calendar year that was like a big thing for us it's like we're going to do some great some some big giving and it was goals for us these earmarked things and it was and it was amazing it was so fun but have something that you guys are working towards michael that's what i would encourage you guys to do okay yeah i greatly appreciate it thank you and we are excited so uh we even took a picture in the bank in the lobby after we paid off our parties oh that's awesome that's really cool i've i've heard people say i wonder if this was your experience we've had people that do their debt-free screen when they pay off their mortgage and they're like it was a little uneventful they're like i expected when we turned in that last payment there's something to happen balloons or the people like you know the staff would have confetti and like celebrate with us and they're like and no one that no one really did anything what did it did it feel different for you guys michael like did it feel great or was it a little uneventful like how did you guys experience it no it it felt like the like um butterflies in our stomach and then like the weight of the world was kind of lifted and we walked out of there just we were just giving praise to god saying thank you for everything and um yeah so it was surreal that's amazing that's amazing well y'all have done what a lot of people would say is the impossible in today's world um to have you know to have you know to have you know to have you know to have you know to have you know to have you know to have you know to have you know to have you know to have a paid-off house it's just it's just wild amazing uh i was in kansas yesterday uh at a speaking event and um and i had a couple of women that were kind of coming through the line and i was talking to them and they and they always whisper which always makes me i know they're like i have a paid-off mortgage i've been following ramsey for eight years and i'm like girl she's like i don't one of them was like i don't think i've ever told anybody like there's no one to really like yeah she's like but you know it's happened you know it happens and so it is like when you experience people that have walked these steps and they've done it for themselves like yeah we're over here just yapping on the back you know behind a desk like but you you know the michaels of the world um and even some of these women from yesterday like you all are the people out there that are listening that are doing it yeah you're doing the hard work you're getting up you're having goals you're choosing to put your money somewhere versus elsewhere like you're making these choices day in and day out to further your financial progress to get you in a place where where michael is where he has questions like i don't know what to do with ten thousand dollars a month you know listen i for one love when people share all those big money wins like that because it's inspired it should be inspiring for someone who's not quite there yet or nowhere near that it should be inspiring not the opposite that's right oh this guy's bragging or this guy's no like that lets you know what's possible they're in their 40s living in connecticut yeah hello and doing it so well done michael and you guys they they followed the ramsey baby steps and for some of you that are newer to this plan it is it's the simple seven step plan and it's the simple seven step plan and it's the simple seven steps i say simple because they're easy to understand they're sometimes hard to do but you can walk through them we'll put a link down below and you can you can check them out but everything from saving up your first emergency fund all the way through baby step six which is paying your house off early which is what michael did and now they're on to baby step seven which is to continue to build wealth like we're talking about continue to invest yeah and be wise but also live like no one else and give like no one else 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 to find your address online it's so easy to find your address online it's 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 delete 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 delete me 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 cyber security awareness month go to join delete me.com slash ramsay to get the deal or click the link in the description that's join delete me.com slash ramsay you our question of the day is brought to you by ask ramsay your free ai tool that provides personal money answers based on ramsay principles so you can visit ramsay solutions.com slash ask ramsay all right today's question comes from travis in hawaii he says is the thousand dollar emergency fund is it worth it to be a part of the ramsay project or is it worth it to be a part of the three to six month emergency fund two different funds or does one build on another also are they different also are they different from having sinking funds for car purchases vacations etc all right travis i love this question it's a fair question so the thousand dollar emergency fund for anybody who's kind of new to that that's what we would call baby step one it's the very first thing that we have people do put a thousand dollars aside it's just a quick buffer between you and life it's not the be all and end all it's just a quick buffer between you and life it's not the be all end all because after you pay off your debt and baby step two you you do you build from that thousand dollars up to three to six months of emergencies so the idea is that a thousand dollars it stays put you know if you have to use some of it for an emergency you build it back up but it stays put throughout baby step two and then when you hit three you're going to add to that same fund so yeah it does build on itself now how does that differ from a sinking fund they are very different and i think that that's a really fair call out so i'm going to go ahead and start with the first one and i'm going to go ahead and start with the second one so your emergency fund is sitting there it is only for emergencies emergencies are very clearly defined as things that are um completely unforeseen it's like wow this is a surprise it's something that's completely necessary i must do it and then there's usually an urgency to it which is like i gotta do it now so that's what emergency funds are for whereas sinking funds are things that we know are coming and we know they're expenses that we can't necessarily cash flow so it's like let's kind of start putting up a pool of money to do this thing i know i'm going to need new tires new tires are 800 maybe i can't cash flow that so i'm going to put aside you know 150 bucks a month until i have the 800 that is a sinking fund now i think it's fair uh rachel to say i feel like in baby step two i don't like to get too hung up on sinking funds right especially unnecessary ones obviously you need tires that's fine but vacations and sinking funds for things that you don't really need a sinking fund for that's right you can just cash flow it please don't do that it's eating up even like even like a car like people like well i'll just put some money aside i'm like no no pay off your debt yeah pay off your debt yes because if this money is just if you just have piles of money sitting places you could be through baby step two so much faster that that is going to free up income because you don't have payments anymore once you're debt free to then really fund those sinking funds so yeah i i'm with you on that yeah and then from there yeah once you're out of baby step two some people and i think this is a just to each his own some people like george he is a sinking fund fanatic for everything and i try to avoid them at all costs i just me too don't like it i know so if you need to do it do it but i feel like it makes the budget harder to navigate that's just me but do what you want yep and there's the answer to your question yeah because once you're past baby step three especially you know you'll probably be having a fun that's just some extra money's going into um that can really catch a lot of those things that we're talking about now if you know you're going to replace a car yes you're going to replace a car and you're going to replace yes that may be a time to be like okay we're going to spend x amount so we need to be putting away you know a significant amount each month to get to that car purchase that we're wanting right after baby step three yeah um you know that that all can definitely happen but um but yeah all the line items of all of the funds but i will i i'll give fair ones a shout out though because you can have up to 10 high yield savings accounts with that that's and so um and we've done a couple we put our and we got one for our daughter uh because she worked some of the summer so i earmarked one for her and i'm going to put it in the description box and i'm going to put it in the description box But you're right, I think George has probably maxed out all 10 of his. I'll just say this because I know people wonder how we budget sometimes. I, if there's, when there's margin and I know this is not, I mean, we haven't had to put anything in the emergency fund in a long time, but it's just margin. It's like, we're going to save this in a high yield. We have a couple of high yields and one is like for, um, specifically for like home type things. If something pops up that we want to do on the home, it's there. And then the other one is more like a catch all, but I don't put a line item. This one's for this, this one, you know, this money's for this and that. And I just, it makes it too complex. Nope. I'm with you. I hear you. All right. Let's go to Chelsea in New York. Hi, Chelsea. Welcome to the show. Hi, it's nice to meet you. Yes. Good to talk to you. How can we help? Uh, so I was just wondering the quickest way to help my parents come up with a plan to get out of debt. Okay. Yeah. How old are you, Chelsea? Uh, I'm 23. 23. Awesome. And are your parents active? Asking for a plan to get out of debt? Have they come to you and have you guys had these discussions or it's something that you see and you're like, Hey, my parents probably should get out of debt. I think I definitely see it a lot more than they probably think they feel it. Yes. So how do you know what's going on today? Do they talk about it with you? Yeah. They've asked me and my brother for some help. Um, but I, they don't, I don't know that we really have like a great plan. Uh, we've tried. What's caused the, what's, what's causing the hardship? Is it, they're not working, they're not working enough or are they just crazy spenders? What do you see as the pattern? I believe it's crazy spending. Um, but they also, uh, have their own businesses. And then, um, I just think the spending is honestly too high is what causes the problems, but this has been going on for 30 years, but right now they're at like 500,000 in debt. Woo. Okay. Is that all consumer debt or does that include their mortgage? Uh, they don't own a home. So it's 300,000 in student loans, about a hundred thousand in consumer. I say consumer, but it's a mix of consumer and business and then a hundred thousand in IRS. How do you know, how do you know all of this? Like, cause you have a, a, a detailed level of this. How, how do you know this? Are they. I've tried to help gather everything to help them, but it's just very. Overwhelming. Yeah, for sure. And when they came to your brother and you for help, were they asking about, did they need help financially? Like, Hey, will you give us money? Or were they like, Hey, we need help making a plan to get out of debt. They need help making a plan. I've tried to get financial advisors and other things, but I think that they're just so overwhelmed. How much do they make a year? Their income? Do you know about 200,000 net? Okay. So there's a good income. Um, have they begun paying taxes to the. IRS? Have they gotten in place like a bookkeeper? Okay. Uh, but have they gotten bookkeepers for their business to make sure that they don't get into this mess again? Yes, they have. Okay. Very good. Well, listen, Chelsea, you're a, you're a good daughter because this is really, really tough. So I would start with, um, I would start with having them do some homework. I would have them read the total money makeover and we'll give you, uh, we'll give you two copies, one for each of them. So they can read it on their own time. And then I would love for you to introduce them to the show, because that's one way that they can start to hear this information over and over. And I would love, cause I just think that for them, this is going to be, and I've said this earlier in the show, this is going to be a complete identity shift for them. I would love if they can do that in community. We don't talk about it a whole lot, but we actually offer in person classes. They're called financial peace university. And I would love for you to look on the site and see if there's one near you that they, that you can go with them to and get in a community. I would love for you to look on the site and see if there's one near you that they, that you can go with them to and get in a community of other people who are trying to do exactly what your parents are doing, which is pay off debt. And my guess, Chelsea, is that you're also going to learn a lot while you're there because you're just getting started. I mean, how do your finances look? I mean, I'm in student loan debt from college and I'm working on higher education too. So it's not, I'm not exactly where I'd like to be, but I actually do use a financial advisor from like the Dave Ramsey show. And he's awesome. And so that's been super helpful. I've paid off 80,000 of my student loans already. Oh, wow. Great job, Chelsea. Really good. That's amazing. Why do they have 300,000 in student loan debt? Are they parent plus loans or are they degrees that they each got? Degrees that they got. What was it? So they, they, it was a doctorate. They pulled out against, like they pulled out extra because they weren't working at the time. I tried to warn against it, but I mean, I don't know. It's hard. They, they have a really hard time looking at any of it. It's just really hard for them, of course. Yeah. Well, I want you to approach this with a healthy level of involvement. I want you to help them, but I don't want you to feel the weight of. Responsibility. Yeah. Responsibility for them because they are grown adults. And so you've providing those resources. I think you do that and you wait. And see what they do with it. And that's going to indicate whether or not these are people that you can actually help with what they do with that. But the hundred thousand IRS is where I would start pay the IRS first and then start working on the consumer debt after that. And they should be living on a hundred thousand, 80,000 and putting 120 towards this debt. I mean, after taxes and all, but that's where I would start. I mean, that's where I would start. Welcome back to the Ramsey show at the Fairwinds Credit Union Studio. We are taking your calls at 888-825-5225. We have Olivia in Charlotte, North Carolina. Hi, Olivia. Welcome to the show. Hi. Yes, absolutely. How can we help? So I am calling because I'm trying to see if it is a good idea for us to pay off our mortgage. Currently. I just think that we are struggling, even though we have a pretty high income. We don't have a ton of monthly margins at the end of the month. And part of that is because I previously was working and three years ago I stopped working. And so some of our expenses are still higher. So I'm trying to, you know, make an educated decision on whether it makes more sense for us to either evaluate some of our monthly expenses or free up some of the margin from the. So I'm trying to, you know, make an educated decision on whether it makes more sense for us to either evaluate some of our monthly expenses or free up some of the. would 100% pay off this mortgage, make sure, yeah, I would still keep the six months of liquid cash. And I think when you guys do that, you're going to feel the freedom of what you've actually built together over the last 15 years, which by the way, is really, really phenomenal. How old are you guys? I'm 41 and my husband's 43. That's great. Amazing. So I do think a little bit of your hesitation, Olivia, and I could be wrong on this, so tell me I'm wrong, is there a little bit of like, oh my gosh, we're not going to have to change really our lifestyle and our habits and our discipline because we can just reach over to this big bucket, pay it off, it'll free up $4,000 a month and we'll be fine. It almost covers your sins, if you will, where you're feeling like, but we've been having to dip out of this because we haven't changed our lifestyle. There's a discipline. There could be that discipline issue that makes you nervous, right? That then won't be a problem because you're going to have 45. $300 a month freed up that you don't have to dip into that saving. So what I would say though, is that for you guys to have some habits with money that create discipline, that could be living on a monthly budget. That could be like, hey, we're going to be giving 10% every month. Have some parameters that you live by so it's not so like nilly willy, if you will, that actually I think will make you feel more comfortable and more in control to know like, okay, we can do this. If we have to, here's some parameters, we're going to set for our lives and we're going to live within those. We're going to have to choose to live within those. And I think that's a, that's a healthy way at looking at it. And I think that may give you some internal peace instead of feeling like it's been a little chaotic and we've been able to cheat and like pull money out and keep our lifestyle, not have to really sacrifice. That may feel good. Yeah, we're really big on giving. We do actually do 10% each month and have our entire, our entire marriage. So that's been good. I think where I also, I had a question is, so my husband loves to golf. And so our, we, a few years ago did join a local like golf country club. And so that's one of the major expenses. And I felt bad asking him to pull that away. Cause we obviously have worked really hard and we don't spend a lot of other things on ourselves. We have three kids. So I don't think you have to pull that away. I think reshape it for a second because you guys, you just made, um, flip-flopped a choice that we have a clear opinion on. So we would say beyond 15% of investing, you need to put that towards the mortgage. You guys clearly didn't do that. You said beyond 15%, we're just going to keep investing 15, you know, beyond and beyond. Cause I can guarantee at some point you're investing beyond 15%. So if you go back in time and say, gosh, if we had taken that money that we invested and put it on our mortgage, your mortgage probably would have been gone by now. Right. Yeah. So when you look at it like that, you go, okay, we actually did have the money. Does that make sense? We actually did have the money to buy this house. We really did have the money. You just had it sitting over there in a brokerage account waiting. Yes. You know? So I think that, and I mean, I'm just guessing based off of what the mortgage originally was. I mean, gosh, you must've been making 16 to 20,000 bring home on your own, right? Like you were killing it. So I think that, yeah, I can, I can just tell. So I think that you're well within, enjoying the full, you know, give, save, spend of the 11,000 that you're bringing home now. And gosh, you're freeing up a $4,300 mortgage for the most part. How much is the, is the golf membership? Um, 820, it went up. So when we first joined, we were under 40. And so they get you that way, right? You get in and you're like under 40, you're paying a low amount and then over 40, it goes up. And so it's kind of like, yeah. I think that's totally fine. Olivia, you're bringing home 11,000 a month and you have zero debt from the moment you pay this house off. 100%. You go do that. Yeah. As long as you guys are using it, if you feel like you're being wasteful and it's not being used, then maybe you pause for a season and get back in later. But if you guys are using it and he's using it, um, yeah, I think you're okay. And I think you're going to feel even better from the numbers standpoint when this is paid off and you're like, okay, our active income that we're living off of, that's our practice. We're going to live off of what we make and live below what we make. And I think you can still do that with 11,000 a month. You spend hours researching before making a major purchase like a home or car, but it's also a good idea to put in the work searching for the right insurance. Coverage to protect your biggest assets. I recommend using Ramsey trusted pros, whether you're looking for car home or any other type of insurance, Ramsey trusted providers have been coached and vetted to serve you like we would find what you need at Ramsey solutions.com slash insurance. Next is Sam in Little Rock, Arkansas. Hi, Sam. Welcome to the show. Hi, how are y'all? Hi, we're doing great. How can we help? My question is my husband and I aren't agreeing on this. We have our personal property and our rental property. And as landlords, we have a duty to make sure that if anything were to happen, we're able to cover expenses. So I proposed we do $1,000 and just figure it out if that were to happen. And my husband thinks we should have more. We're on baby step two, by the way. So trying to allocate the funds that we have in our savings and determine how much we should keep as due diligence for. Yeah, for the rental. Well, do you guys keep a separate accounting for the things that you fix out of that? We do. And we have a surplus every month. So we don't know if we should just keep it like at $1,000 and then fund it up to a certain threshold and take the rest and throw that in our debt or. Yeah. How much is sitting in that account, the rental account right now? We have $5,000 for any thing that might happen. And how much do you guys have just in your savings? We have $13,000. $13,000. How much debt do you have? We have $88,000 non-mortgage debt. $88,000. And how much do y'all make? Our income with the rental property included is $11,744 every month. Okay. How much of that is from the rental? How much of the $11,000 comes from the rental? It's $580 a month. So not a ton. Okay. So $580. Can you tell us what you owe on the rental? $176. What's it worth? $260. Okay. And that's another topic I've considered selling it and taking that. I think net after tax we'd get about $50 or $60, but we have like one of those sweet 2.1 interest rates from like the 2021 era. And so my husband's pretty gung-ho on keeping it. And the total debt aside from the rentals was $88,000. Did I get that right? Correct. Okay. You know, I mean, obviously you went out of order by purchasing the rental when you still had debt. I mean, if you could go back in time, would you have made that purchase or would you have focused on paying off the debt? I'm just curious. Knowing what you know now. We bought the investment property and then it was our primary and then we bought another personal property when we moved. And you just kept it? Oh, so that actually adds more fuel to my argument here. If you had told me, and I would have done it reluctantly, but if you had told me, oh gosh, we picked this rental because it was such a good deal and X, Y, Z, and I might've worked with you on it. But the fact that it was kind of a default of, well, we lived in it and then we just didn't sell it. And so it became a rental. I don't know. I might look over at selling it just to get right side up and just to get in a better footing with all of this. Yeah. Yeah. And because it makes you guys 500 bucks a month. It's not a lot of money. Yeah. And the equity in it is not, I mean, it would, it's enough to help you in a situation, but it's not like you're holding onto a massive assets that you couldn't get back into. Right. So what I'm thinking is getting you guys in a place financially that, um, yeah, it's pretty solid. So you could either, I mean, I'm, I'm good with one or two routes. I probably would lean with Jay to like, I almost would just sell it and take the 60, you know, you have 13, like you guys can almost be debt-free. Um, because would you guys go back into the rental business if you, if you wanted to, like, would you, do you guys see yourselves building a portfolio of rentals? Um, maybe, but we have to get this mess cleaned up before I think we can even think about for sure. Yeah. Yeah. Well, I'm just trying to think if you want to stay in it, because for some people, and I'd say, well, then maybe then it's a choosing of that or 15 months of sacrifice just to get out of debt. And then you're going to have to attack this. the rental yeah the rental i mean it's going to be years till you're right side up on everything um what do you owe on the personal mortgage just curious 320 yeah yeah because i'm with rachel i think there's two those two routes are there but then you when you play out the second route a little further and you go okay we're just gonna we're gonna keep the rental and we just kill it on the 88 000 well now your road becomes long because it's like well now all the rent we're taking plus our other money we're gonna either pay off the rental first or we're gonna pay off the personal first because you're gonna want to get to the point where this is all cleared out and i think that's where you're gonna start feeling the stress of carrying those two mortgages so i think honestly when i play it like that i think for that reason i would go ahead and sell it because you're only clearing 500 on it yeah and that and the 500 sam is is before having to fix things in the house and all of that like you guys may not even be making i mean gosh five i mean it's gonna be six thousand ish a year and that doesn't include all the maintenance so it's really not doing you guys a lot of favors it's probably not worth what's it called well worth the squeeze yeah i think i've convinced myself i think we've convinced ourselves that the juice is not the juice is not worth the squeeze thank you jade yeah yeah sam i i i think i'd get out of it and take the equity it was a great first house for you guys but again you're not making you're making 500 bucks a month off this thing you could do that okay babysitting you know a couple of times or something you know what i mean and not have the the upkeep and the you know the stress of a rental right now and if you guys wanted to get back in that's the other beautiful thing is you know you guys could look up in five-ish years and you know if everything's paid off and you guys put some stocks of money away yeah you could get back into this um if you wanted was that your i'm just curious was that your plan from the beginning when you guys bought this house were you like we'll live in this for a while and then we'll buy a new one and we'll rent this one was that your plan and it just got you here or did that just kind of default it was our starter home um and then we had an opportunity that took us out of that area and so when we were looking in the area that we moved to um we thought it was a good investment to keep it and have it someone else pay our mortgage essentially um and so yeah so this is where we're at but yeah i i push for option one because it's now it's also an intentionality play on your own life which is you really didn't set out to have a rental in another area it just kind of happened and then you you flexed for it but it wasn't what you were gunning for or pushing for intentionally if that makes sense it does um i have a second part question if we have time with like what we should do with our thirteen thousand um we're going to um i know you guys have a a queue so hit it yes yeah um go ahead part of our ada is a vehicle um i can sell it in net about four thousand do we take that and get a cash car and then or do i put that towards other debts that come in the snowball order first and then just keep that payment how much is the is the car loan it's thirty one thousand oh gosh yep thirty five yes i would probably i would sell it uh-huh i mean if you it's enough of the ada i mean that gets you guys down to fifty thousand and then suddenly this is so i would take um because what what would feel like a good car to you like a nine thousand ish dollar car when i've been looking i feel like that's where we land with something reliable and feel like we could take our kiddo in um safely um but i don't know if that's unreasonable with the amount i think that's i think it's reasonable yeah i would sell it step down i mean you're stepping down from a thirty three thousand dollar car to a ten thousand to a ten thousand so that's that's a fair sacrifice absolutely so yeah i would do that pull some money from that thirteen um and then yeah you guys should have around eight ish left keep a thousand dollars so that's seven thousand um going so that i mean yeah you guys will have close to forty three thousand left to pay off um which is awesome and and not to keep putting this in your ear but if you sell the house uh you've got that and an emergency fund that's right you'll have all baby steps two and three and that just sets you guys up for so many options in life like it is it frees up your income it's amazing and so that now the house may take a little bit to sell and a couple of things so keep working on that snowball don't just depend on that but man it when that sells if you guys choose that route um and that equity check comes in that's gonna feel really good you guys are gonna have a lot of control over your life i finally get to 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danielle in sacramento hi danielle welcome to the show hi hello hello thanks for calling how can we help so i'm calling um because i need some advice on the best way to purchase my parents home okay um that's exciting what's causing this transaction to happen well so my parents they own their home outright it's paid off um and i've known always that one day it will be my home it's something that we've like clearly discussed in the past and just as too recently they've kind of been you know having some financial issues as far as like my dad's retired now what they used to spend they're still spending that without the income um and so my kind of idea was i'm currently looking to purchase a house well what if i purchased their home from them so that it could still put money in their pocket but i could also live in a home right now too oh boy okay um how much is the house how much would you buy it for um well so that's kind of what we're talking about so right now like just looking on zillow without um getting it appraised or anything like that the house is worth about 590 000 okay and how much money do you have danielle um for a down payment for a down payment i have about 50 grand um okay how much do you make how much do you make a year so me and my fiancee together we make about um how much do you make danielle how much do you make me yes i make about 80 a year 80 a year okay when is the wedding um it is next october so a year from now okay yes and and how much does he make he makes um depending on his overtime um it kind of like ranges between about 100 to 120. okay um i'm going to run a quick calculation because i want to give you the best option the best um opinion but i don't think number one you're going to be able to afford this house well so that's the thing is my parents wouldn't be selling it to me for that price yeah what are they selling it for that was where my head was what would they be selling it for they would want to sell it to me for 350 so they're going to they're going to take a paid off asset when they're struggling with retirement and give you a discount and then they're still going to be struggling with retirement with no place to live this doesn't sound like no she's not going to live there she's going to let the parents live there that's oh your parents are going to live there yes this is a bad there they plan to build an adu on the property this is a bad plan sorry it's taken me a moment i've been sitting here trying to dissect this in my mind this is not good okay this is uh it's not a good plan for a lot of reasons um okay we'll start listing them we love you daniel if we are having a glass of wine we cheers right now and just be friends yes so first off I just want to say this and I know they're our family and we love them but it's really not your job to bail them out like you don't you don't need to do that because I if I were to talk to you aside from your parents and I said what do you want to do with your life like where do you want to live what do you want to do I don't think that you'd be like my plan in life is to buy my parents house and for them to live in the yes in the unit that they're going to build behind me yeah I feel like you're making a major flex that is a huge component to people's lives yes to clean up someone else's mess and I just how old are you I'm 30 yeah at this point in your life you need flexibility you need to be able to go follow a job you need to get you know you have a fiance and all these things I think that you're really tying yourself up in a major way and I would not do that so that's thing one thing two is I'm not convinced this will fix them no even if you did do it because the the house isn't their issue like if they had a massive mortgage payment right and it's like eating up so much but the house is paid for the the the house is not their issue they're their issue they've not adjusted their lifestyle and you know learn to to control their spending so because I think where I'm struggling Danielle to be honest if they had called in I would be like no I would not sell if you guys need money you need to sell your $600,000 house you guys need to go buy yes $300,000 invest 300,000 of the rest and that's your retirement and you got to learn how to live off of that and that's a great retirement it'll double every seven years maybe you guys work a little you like that's I would advise them not to do it just as much as I would advise you not to do it for your own self and and you know and your fiance I'm just telling you four years into this thing what if you guys want to do it for yourself and you know and your fiance I'm just telling you four years into this thing what if you guys want to do it for yourself and you know and your fiance I'm just telling you four years into this thing what if you guys want to do it for yourself and you want to move well your parents are in the backyard and when you're trying to sell this house because he's gotten a job somewhere you don't even mean like it puts your parents in a bind again so like it's a it's a it feels like a short-term solution that for a long-term play is going to be really problematic and I and I get how you got here though like it makes sense like you look at it on paper and it but when you play real life through it all it has the potential to really mess with your relationships honestly yes I don't on a main on a major level and it and it just handcuffs you to this property forever and ever until they decide to move one day because you can't sell it you could never sell that home you know yeah well I think where our mind was is kind of like because we've been looking for a home and we've run into the same scenario of like things are just so expensive right now you know interest rates are super high sure and they're expensive will we ever be able to afford a home so I think that it was like oh well maybe we can help them at the same time as this is kind of beneficial for us too yeah no I hear that I totally hear that and I think I almost would be okay with the scenario if they weren't living in the back and they weren't dependent upon that money for retirement do you know what I mean like if they were set up well and they were like you know what we've done well we're fine we're gonna gift our child $300,000 of equity that's a beauty that's a great like what a great deal if that was the case right and you could afford the home all of it it's out of their desperation that makes me nervous and that you guys are gonna be attached to this property because they're living there it's it's the same thing when we talk to families that they want to buy lots all together well then it traps everyone that they can't move because if if brother and you know brother and sister-in-law want to move we don't want strangers living next door this was supposed to be our family thing like right right it sounds really good until you actually I'm just I'm just nervous for you in that and again at it's because of their desperation I don't like it and I in in the proximity that traps you in that proximity property okay that makes sense yeah yeah no that totally makes sense so if it were in perfect terms and I convinced my parents to sell their house and they say okay we're fine we come up with the number is putting it into like because I know that if they sell it to me or if they give it to me or however that works like one day in the future say that I don't even buy it you know they just want to pass it down to me what is the best way that they could pass it down to me where I won't later in life be hit with a bunch of taxes yeah it would be left in an inheritance like if you just do a will or a trust and that property is needed to you at their death because you want the step up in basis if you buy it before you're gonna take the tax hit when you sell it from when they first purchased it but if they keep this home and you know God willing they live another you know 20 years I don't hold how old they are and they pass then in 2046 in 20 years you know what I mean when it gets handed to you in their inheritance whatever that house is worth then is the value so when you sell it you won't you wouldn't have taxes you wouldn't have to pay taxes on a oh my gosh what it could be a I'm making this up a two million dollar home but they bought it it's like 300,000 yes exactly yep so it would be in that and I would say too I'm trying to run quick numbers for you because it would be about a $3,000 a month mortgage payments if you did this deal and you just want to make sure with your income and I hesitate to even put the fiance because you guys aren't married yet making sure that it's a fourth of y'all's take home pay to just at least be in a good parameters of a mortgage for you guys 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 our scripture of the day comes from Matthew 10 at 31 do not be afraid you are worth more than many sparrows Taylor Swift said I think fearless is having fears but jumping anyway listen we love Taylor she has much better deeper lyrics and some of her songs was do you know jump anyway y'all I think my I don't know you may not want to jump you may not want to jump maybe the fear is good maybe it's keeping you yeah fear can be a gift I read that book yeah the gift of fear yes it's a great book about like your instinct and like fear is a gift God gives you sometimes a hey maybe I shouldn't do this but you know anyways but also do not be afraid he says in Matthew so we'll take that too I see the connection but hey we love it all right let's go to Tucson and we have Carrie on the line hi Carrie welcome to the show hi Jade hi Rachel hello thank you so much for taking my call today absolutely how can we help I'm calling on behalf of my parents who are currently in baby step 7 they are 75 and 76 and have roughly a total of 1.6 million in retirement accounts oh good for them yes they've done really good three of those accounts are IRAs and with their current income sources they are okay cool um and they um I don't know listening to the Dave Ramsey show and and the backdoor Roth IRA if that would be a good option or if they're even able to take the money that they're getting from the RMDs and applying that to the taxes in order to do the backdoor Roth IRA they are 75 and 76 and so I didn't know if age had a factor on that or not or if you guys would recommend them doing that um I don't know if they're able to take the money that they're getting from the RMDs and applying that to the taxes in order to do the backdoor Roth IRA they are 75 and 76 and so I didn't know if age had a factor on that or not or if you guys would recommend them doing that and you're talking about them taking from a traditional IRA and converting it to a Roth or starting a Roth that's a good question yep it would be taking from the it would be using the RMDs coming from their IRA account and using that money to pay taxes in order to transfer the money that's in their IRAs currently over to a backdoor Roth you could do that yeah yeah how much is it do you know how much is in because you you said multiple IRAs, like which IRA would they want to? convert to that Roth? Do you know? And how much money there is in that account? Yeah, that's a great question. They each have their own IRA that are both about $400,000. Okay. And then my father has a simple IRA, which is also around $400,000. So are they going to, what's their strategy on this? Are they, like, so for instance, the one IRA with the $400,000, is the plan to convert all of that to Roth funds? Or like, is there a strategy there yet? Or are they just, go ahead. There isn't a strategy yet. We're just calling to kind of see if it would be a good path to pursue. I think there's a lot of moving parts in this. And so I would sit down with the SmartVestor Pro on this because the short answer is yes, they could take the RMDs that they have to take, and they could use that to help pay for the tax bill on the conversion. Short answer. Short answer is yes. But the long answer is, what's the best way to do this over time so that the taxes feel right for them? I think, and that's the part that you want the strategy on versus just kind of winging it. Do you know what their tax rate would be? They're in the highest bracket right now. Okay. So 37%. Okay. Okay. Listen, I say this with all caution in the world. I just threw it in chat just to be like, hey, what would it, and again, I would 100% though say to sit down with the SmartVestor Pro, Keri, if you go to ramseysolutions.com, I would sit down with someone in person just because they have enough of a net worth to figure out strategically how to make this money work best for them. Because it may, I think it's, I mean, it's looking like it might be $148,000 in taxes to do it. Now with the growth because of their age, I mean, they, are they in good health? They are. Okay. Because I just wonder, you know, another 15 years of that growing tax-free probably would be worth paying those taxes. It's just going to be a big tax bill. And I wouldn't want them spending all their liquid cash on that though. I would want, I would want it to be again, above and beyond that they're still comfortable and good from a, from a cash perspective. I would want it to be competitive in order to pay a massive tax bill in order to convert it. And you don't even have to do it all at once too, Keri. Like they could do it, you know, over the next three to four years and just take chunks each year and, and convert it and just pay taxes, you know, over the next four years. Right. And you can break it up that way. But that's the, that's the strategic-ness that we were talking about of, or the strategy, strategic-ness, I don't think that's the word. Strategery. Yeah, strategery. That's it. That's it. Yeah. The strategy, you know, that a SmartVestor Pro really could look and maximize so much from not only a tax perspective with them, but even investments. Yeah, for sure. Because it, because it's enough to, it's a great question. And listen, we're a big fan of, of Roths. And because, because if they pass to Keri and that's all converted to Roth, that's going to be passed down to you tax-free and you don't have to take our, RMDs, I don't think until 10 years after it's inherited. That's right. So, so it's a good legacy play too, on their end to do it. I just want to make sure that there's, that they feel comfortable with the amount of cash that they'll be paying in those taxes. Because I don't know how much they're having to take out every month. Because I'm not sure if you knew that number of what they're already having to take out, but that could be a great play. So I hate to be so vague. My, my gut is, and from what I'm feeling is a yes, but I don't know the, the best way from a tax perspective to do it, is if you, if you break it up over a couple of years and get that moved over, or if you do it all at once, you probably would want to break it up. So yeah, that's, that's what I would suggest. But again, I would sit down with a smart investor pro to, to run those numbers with somebody. But man, what a, what a wise, long thinking, long-term thinking question. Absolutely. Because I mean, when you really think about it, it's, I feel like it is more of a, obviously there's certain generations that tend to have more traditional money. I think our generation is starting to understand that Roth is like the way to go. And so when we look at our parents, it's like, okay, we want to make sure that that money, if it's being passed to us, number one, we're not having to pay the taxes when we pull it out. And to your point, even having that 10-year buffer of not having to drain the account, that's more time for it to grow. And so just the exponential growth that can take place by making that choice is, I love it. I mean, huge. Yes. Thanks for the call, Keri. All right. I'm going to go to a Rachel, a social question from Rachel in the Baby Steps community. Is it too early to start a sinking fund for Christmas gifts if you're in Baby Step 2? We kind of touched on this a little bit in the show when it comes to sinking funds in Baby Step 2. So I would say, yes, I think it's a little too early. I mean, if you want to put a little away and get your kids, you know, something for Christmas, some people, depending on the numbers in their Baby Step 2 and how long it's going to take them, if you can get out of debt in nine months, there's a little maybe that's like, listen, go to the dollar store, wrap a couple of things, but guys, Christmas is going to look different this year. Next Christmas is going to be awesome. But if you're in Baby Step 2 for four years and you're like, okay, we need a breather. Yeah, figure it out. We need to have a little something for the kids. And it depends on their age. I mean, let's be realistic here. Because if you've got like, I'm going to go with, obviously, if you've got below a one-year-old, forget about it. Christmas. They don't even know. They don't really know. Yeah. You can re-wrap what they already have. But even like one-year-olds, three-year-olds, like one-year-olds to three-year-olds, dollar store, anything that shakes, rattles, snaps, pops, like keep it easy breezy. Yeah. And think about Christmas coming up, you guys. I mean, honestly, I think so much of us buying stuff for our kids is more for us than them. I mean, even my first grader, he just loves Hot Wheels and they're a dollar at Target. You wrap 10 of those and he opens 10 of them. What does he know? He's happy. He's fine. He's good. Oh, what a great show. What a great show, Jade. Thanks to everyone in the booth for making this happen. And remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.