Building Wealth Requires the Courage to Make Unpopular Decisions

0:00Just sticking with your existing Medicare plan could be an expensive decision. Let Chapter Review your options for free. Learn more at askchapter.org slash ramsie. Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union studio, this is the Ramsey Show. I'm George Campbell here with J. Warshaw taking your calls at AAA 825-225. Jump in we'll have a conversation about your life and your money. Enica kicks us off into Ronto. What's going on Enica? Hi, so we're a little family of three. My husband and I and my 10-month old son. And we're hoping to buy a place in the next six months to a year. We're just not sure if now is the right time.

1:01I'll give you a little bit of background. So we have saved up a $175,000 down payment. Our household income is $70,000 a year. And in our city, we could buy a place and have all of our monthly payments under 25% of our income with a 15 year in authorization period. But it would be a condo or a town home. And we've been advised our realtors that they're not likely to hold their value as well. And since we kind of want to use it as a stepping stone, only live there for three to five years, we just we don't want to lose money on it. So we're wondering if it makes more sense to wait, save up a little bit more, and buy a better place from the start. Did your realtor give you a reason why they believe that condos or town homes don't hold their value? Yeah, so it's particularly in our city. Apparently they like overbuilt condos and so there's kind of excess supply at the moment. And just in recent years, it hasn't seen the same appreciation as other properties.

2:06So I think there's a difference between not seeing the same appreciation and it going down in value. If I heard that information, my first thought George would be, okay, I need to be sure that I don't overspend on this, that what I'm buying is truly market value that I'm not getting emotionally attached and accidentally, you know, paying more than I should for that particular condo or townhouse. That would be my first thought. And then I'd want to pull some hard facts and see, okay, what is the appreciation rate? Is it appreciating? Because as long as it's going up, I'm fine with that as if I can get something that I can actually afford versus taking someone's word for it and it's sounding more anecdotal, you know, they will, these things, you know, they lose value because those are two very different statements, a loss of value versus a slower appreciation rate. Okay. Now, are there other neighborhoods that maybe are more desirable that you guys could look at for a condo or townhome? No, it's in our price range. Okay, so give me a price point that you're currently looking at and what would sort of the next step

3:10up be? Yeah, so we're kind of looking at the 250,000 to 300,000 range and that just depends on the HOA fees. So yeah, within that range. How quickly can you guys save up? I'm impressed you guys saved up 175 grand making 70. Agreed. How'd you do that? Yes. Well, we saved most of that before we were married and we kind of both like we're living at home by working. We can save about 25,000 dollars a year. Okay, that's great. It would take us, it would take us two years to kind of save up enough and that's the next level, if that makes sense. Yeah, the issue I see is just the goalpost keeps moving and the home prices could change dramatically in the next two years. We just don't know what the future holds. So I would hate for you guys to save up 50 grand over two years and then that same house is now 50 grand more and it was a waste. Yeah, and another thing, another thing I should have actually mentioned is our current rent is actually 31% of our income and it's almost impossible to find something cheaper than we're already

4:16paying. I think that your real estate agent put a little bit of fear in your heart and if I were in your shoes, if you buy what you can afford and you buy it on good principle and with good sense, the 25% rule, 15 year fixed rate mortgage, right? All of those things, I think that you're going to get into that condo or town home and be glad that you did it. You're going to be back down to 25% as opposed to 31%. And you don't know what the market is going to look like, you know, five years from now, six years from now, whenever you're ready to sell it. So as long as you're making a good purchase, you're not overspending, you don't feel like you're being, do you know what I'm saying? The prices, you know, you're going back and forth in a bidding war. As long as those things are true, I would go forward with this because I agree with George, waiting, you're just going to price yourself out and the goal post is going to continue to move. Yeah. Okay. Thank you so much. Yeah. I'll tell you this, Annika, my first two homes were town homes and I have zero regrets. The first one appreciated. I think I probably made 50 grand, 40 grand on that one.

5:18The second one was hundreds of thousands because we bought it, you know, 2019 pre-pandemic and sold in 2002. And so we went from like 300 to 500 plus. And part of that is we did our homework and made sure that we were buying in a neighborhood that people wanted to live in. And if you do it that way, there's an Annika out there who wants to live in that neighborhood in the future and the town home is what they can afford. So I, if I'm in your shoes, I'm going to go ahead and do it. The insurance is also going to be cheaper. I don't know if the real estate agent is just more pro single-family home or if they are trying to push your budget further than you can take it. But I would make the right choice for you guys right now and not wait. You know, I don't know if this is true George, but I could see how a town home in a normal residential area would appreciate slower than a single-family home just because there's a smaller yard, there's less you can do with it, maybe there's less upgrades. Like I could see how that would be the case, not in a negative way, just in the type of property that it is. I don't know that that's true, but I could see how

6:22somebody would say that, but that wouldn't deter me. They're different types of properties. Are you going to do it, Annika? People want to know. I think so. I mean, we really want to be homeowners and we're prepared for all the unexpected things that come with that at the front as we can be. Do you have, do you have an emergency fund on top of the down payment? Yeah, it has about 19,000 in it. I like that. Awesome. You guys are crushing it. I'm so proud of you guys. You hear horror stories about Canada and the housing prices and everything so unaffordable. And you see a family who is doing really well, making 70 grand. They got a six-figure down payment. They don't have any debt. They're doing it the right way. And that means this decision is going to come with a lot of peace. Well, it looks like they sacrificed to win on the front end. They lived at home. They both were working. It sounds like extra hours. And then that allowed her. It sounds like to say home with a little one and go down to one income. So just doing your work first, like doing your work on the front end, I think is the moral of the story here. Yes. And you know, people always say,

7:23well, I want this to be my forever home. And I'm going to head your forever homes with Jesus because that home, it's going to wear down. You're going to sell it. You're going to move. Life's going to happen. And so I hate putting that much pressure on a home purchase to be like, this has to be a 70 here move. Listen, I think people do that so that they can say yes to things that they're not quite ready for. Like, that's so true. You know, more money and more square. Well, good reminder for the housing parameters. Here's the smartest way to buy a house. Number one, be completely consumer debt free before you jump into home ownership because it's only going to get more expensive. Number two, you better have an emergency fund because the house comes with emergencies. That's sort of part of the deal. And then number three, you have a strong down payment. And that's the hardest part today is how do you save up 20, 30, 50, 100 plus grand? It takes time. And so if you're in your 20s going, I'll never own a home. Just know that the average home owner is now 38 to 40 years old before they own their first home. So you have time. There's no state law, there's no constitutional amendment that says you have to own home by 30 or else you're a failure.

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9:2636,000 miles. Schedule your service today and get 10% off your visit at cbac.com slash ramsi or click the link in the description 10% off up to a $250 value. See store for details. James is in Spokane up next. James, welcome to the ramsi show. I'm going to get after you're in order morning, wherever you're at. Appreciate that. So what's going on with you? Well, I'm 50 years old. I have no debt. I planned on retiring in 20 years, but yet I have no retirement savings and I need to start that, well, 25 years ago, that's not the point. Yeah, the best time to plan to treat was 25 years ago, right? The next best time is today. So are you ready to invest now? You're calling because you're going, all right, I am ready. I'm out of debt now. Do you have an emergency fund?

10:29Yeah, almost 30 G's. Awesome. I love that. What's your income? Depends on how many jobs they work. Well, what is it today? Right now it's about about 86. And that's that's fairly normal. Is that without like a bunch of overtime and extra gigs or is that includes some of that? It that I work contracts for telecommunication. So it depends. Okay. What is sustainable for you? What would you say is a sustainable income per year? 72. Okay. I'm going to go 75. Let's say you're really hustling. That's a little over 11 grand a year if you're investing 15% of your income, which is what we recommend. Once you're out of debt, once you have the emergency fund 15% do you have a mortgage? Yes. Okay. How much is left on that? I think 235. Okay. Is it just you or is there a wife or kids or anybody else in the house?

11:33The cat. That's all you need. Yeah, there you go. You know, I'm listening to George ask you these questions and I'm hearing the answers. And I certainly don't think it's too late by any stretch of the imagination. I liked what you said first off when your income was in the 80s. I think you said 86,000. I think that if you can push it to that limit, that's going to be good for you. That's a good grind for you. And if you do that and you're investing 15% that's around a thousand 75, 1100 bucks a month. That's going straight into retirement. And if you do that for the next 20 years, age 50 to age 70. And I'm going to put you out in 11% annualized rate of return. I mean, you're getting close. You're 930,000 dollars. That's almost a million bucks. And lots of up to take a trip here or there. You do. But you should be able to do both. And think about that. If you had no mortgage payment at that point because 20 years from now, you're going to for sure have your house paid off. You'll have almost a million bucks in this nest egg. And if it's in a Roth account, it's going to be tax free. So that's like net income.

12:36And let's explain a little bit how George and I are arriving at that because I think we're saying a lot to you in one sentence. The way we teach it, there's a series of baby steps. And where you're at because you've got the 30,000 saved, you're at baby step four, five and six, which you do at the same time. Baby step four is you invest 15% of your income, which we have you doing. And if you have kids college, you can put away for that. You don't have that. But also at the same time, any extra money that you have, you're throwing it at your mortgage. So that's why we're assuming, hey, you can invest the 15% and you can throw a little extra on your mortgage. Yes, for sure. And 20 years, that bad boy is going to be paid off. And so that's how we're arriving at those numbers and that that way of thinking. Well, you have any other sources of income at 70? That's not supposed to be security now. Okay. So you have Social Security plus this million dollar nest egg. So that's sort of your game plan of, okay, what do my expenses need to be in order to survive that for a, let's say, a 20 plus year retirement, right? If you retire at 70.

13:41Correct. And if you really think about it, you know, let's round up and say instead of 930,000, let's just, let's put it at a million for a nice round number. If you're used to making 85, if we're thinking, hey, this is a 10 or 11% rate of return, you should thoughtfully be able to pull off 10% and not touch the nest egg, right? If you wanted to account for inflation and take 4% and maybe take 6% out, you'd be very close, suspiciously close to what you're used to bringing in now. And you'd be doing that without a mortgage payment. Now, obviously, 20 years will pass. We don't know what the cost of living will be. But that's kind of, that's the, the, the quick, I'll say, napkin math, which is what George would say. Yeah. So, you know, at 6%, you're talking out of a million, you know, pulling 60 grand a year or 5 grand a month. Can you live off of that plus a little social security if it's still here 20 years from now? That's the question. That's what I'm wondering if we have to is that so security will not be around when it turns 70. Now, the big question for me is 11% realistic. 11% is realistic. If you look at the annualized rate of returns,

14:47they're, they're falling right in between 10 to 11%. If you look back since the inception. Yeah, I mean, if you look at 1950 to today, 11.8% is what you'd find from the S&P 500. That's just tracking the, the top 500 companies in the US stock market. So it is realistic. Now, you got a factor in inflation of what will a million dollars buy you at that point? Exactly. And Lord only knows we can do a rough calculation of three or four percent. And that's where we're getting this six, six, seven percent number for you to as you're sort of withdrawal rate. But the point is going back to your initial question is, you know, I don't have anything saved. I can tell you a million bucks is a lot better than a goose egg better than where you're now. So you should have a lot of peace around that. And think about this. If you get the house paid off in the next 10 years, let's say, well, you got another 10 years where you can start maxing everything out. You can invest way more than 15%. Let's say you doubled it. And now you're investing 2000 bucks a month. And you have catch-up contributions as well. You know, not your 50. And so I would definitely take advantage of all that.

15:47But the key right now is just stick to 15%. Try to throw extra at the mortgage. Keep your expenses really low. Keep working on that income. And you're going to be okay. Well, I'm in a rush. Appreciate the advice. Absolutely. And if you need help with this, you want to map out some projections, get some more detailed information about what to invest in, what accounts go first. You can reach out to a smart investor pro at ramz solutions dot com. And those are investment professionals that can help you with this wealth building journey. But it's a good encouragement, Jay, to anybody who feels like they got a late start, which is pretty much anybody who's, you know, 30 or older is like, man, I wish I knew this stuff sooner. Honestly, even the folks who call in who are killing it, even they feel like they should have more or should do better. And it's, I think it's just one of those things because there are a lot of unknowns. When we project 30 years, 20 years into the future, I mean, are we all going to be writing cars in the air? Are we, is there, will college still exist? Will social security still have a little crater on the moon? We can live in. That'll be fun. I know. We don't, we don't know. Yeah.

16:51Maybe the Lord will be. Miss all up. I've seen left behind. I think that's how it works. You close are just there. Perfectly folded on the bed. All right, Aaron is in manyapolis up next. What's going on, Aaron? Hey, good guys. How are you? Great. What's your question today? So we just purchased our first house with my wife. Woohoo. Yeah. So we only had one car because my wife was very close to her work. She was just walking. And now we need a second car. We saved some money around like $4,000 or a second car, but now I'm considering maybe taking a few grand from our emergency fund and adding that money on top of what we have and get a better car. How much is in the emergency fund? At approximately 30,000. And how many months of expenses is that account for? Give or take six months. Okay. And how much would you be taking

17:57from the fund? I approximately, three thousand, three to four thousand. Great. So we're really going down to like a five month emergency fund temporarily to fund this car purchase. Yep. I'm okay with that. As long as we work on rebuilding, I just wouldn't go below a three or four month emergency fund. If you're going to take that money out, I'd like to earmark my savings to go right. This is the emergency fund. This is the car fund. But because you guys are stacked right now and you do need this car and you're trying to avoid a car payment, I'm totally good with you taking four grand, five grand out of there, buying yourself a nine thousand dollar car. Okay. So because my wife's lost concern, like we already have four thousand dollars for a car, why not just use that? And I was like, maybe we can get a nicer car if we add a little bit more money on public. I think this is a question of how conservative or how unconservative you want to be. If you had the ability to wait and save up and cash flow, I would do that. But if you're like,

18:57a, I don't want to put any more money into fixing this car, I love George's idea. Yeah. I mean, if you're in, you know, crippling debt and you got four grand to your name, that's the car you can afford. That's right. You guys are, you're in your added debt. You got the emergency fund. You've only got 30k. Let's use some of that to buy a little bit nicer car. We can always upgrade the car later. We can always stack back up the emergency fund. So nothing's on fire here. Congrats on the home and the impending car purchase. Very exciting. Hey George Camel here. A few years ago, someone stole my identity. And let me tell you, that is not a quick fix. It takes hours on the phone, piles of paperwork and a whole lot of stress trying to untangle the mess. And even after that, there's this nagging paranoia because your information is already out there. And the truth is, you can do all the right things and still become a victim. That's how common identity theft is. And that's why I'm glad I had Zander's identity

20:02theft protection. When my identity was stolen, their team stepped in right away. They were monitoring my information and caught the issue and their US base recovery specialists help handle the calls, the paperwork, the cleanup. So I didn't have to do it all on my own. Zander also includes up to two million dollars in stolen funds and expense reimbursement. And with the family plan, your kids are covered for free. You work too hard to let identity theft steal your time, your money, and your peace of mind. So go to zander.com to enroll today or call 800 356 42 82. Back to the phone lines we go. We've got John who's in Reno, Nevada forever reminding me of sister act. What's going on, John? How can we help? Yeah, hi, yes, I have a question. Right now, my daughter's not speaking to me because there was comments that I said about me not putting myself

21:04in debt for her to go to college. I never said I wouldn't help her. It's just, you know, I don't want to put my family to endanger for putting me in the loan. So then after that, I mean, it's been probably now a year and three months that she hasn't talked to me. And I guess my question is I make about 185 thousand. I have 45 thousand dollars in debt. I still want to hope her, but I just don't know how to do this or how to even explain it to her. It's just, you know, it just got pretty ugly. Can I ask a question? I feel like for whatever reason I'm making an assumption and I don't want to make it if I'm wrong. Is your wife involved or is this a, is it just you and her or is there a wife involved? Tell me, tell me more about your family situation. So, so yeah, so me and my wife are willing to help out, right? And the only thing is just one of the things that we don't try to do

22:06is put ourselves in loans. Understood. I just wanted to make sure I understood the family dynamics. When did this conversation start? I'm curious was that because this was like, we know that eventually someone might go to college. And then the word June 2025. That's when you started the conversation. Yeah. Okay. And when is college supposed to begin? Well, she actually graduated this year and she decided to go out of state and college too. Okay. And you guys never had this conversation. We had the conversation a couple years back, but her mom and what I'm not with her mom. Um, that's what I was trying to understand. Yeah. I guess they'd never give me type of information or anything, you know, like to be able to clear things out. They just like, oh, you need to pay for this. And then in that same conversation, they're like, oh, well, she can you at least help for the car? And almost like, what car are we buying? So there was never really any

23:07type of information given to me other than just little bits and pieces. And they just expected me to do right there. And then. Okay. Understood. That's that's the family dynamic I was trying to get to. I had a sense that something there was a separation or, you know, your wife is not in the house. Here's here's what I think is happening. And I could be wrong. But just by the way that you're saying your words, it sounds more like you're talking more about what you're not going to do versus talking about what you are going to do. And I would be leading the conversation with exactly what I'm going to do to help. And I think if you do that, then it'll cause them to hang out there as well. And remember that from the conversation, for example, if she says, but daddy, I want to go to this school. And I the only way I'm going to go is going to I need a $30,000 loan. And you say, I'm not taking those $30,000 loan, right? That's not going to work. But if she says, but daddy, I want to go to this college. And you say, honey, I'm going to give you $15,000 for college. It's up to you to figure out

24:07which school you can go to where that money will go the furthest. Here are my suggestions. Do you see what I'm saying? That's a very, that's a very different conversation. Now you've never said, no, you've never said no, you've just said, here's what I'm saying yes to. And I think that that would go a long way because if what's happening is true, which is they're having a bunch of side conversations and they're, you know, marinating on this and maybe inflating it beyond what you've said, your best protection is to be able to say over and over, I'm giving her the $15,000. I'm giving her the $15,000. I've said I would pay, you know, up to this point for this particular school. So if you're being accused of not caring, show that you care by saying, here's a school that works. It's in my budget. If we all pull our money, we can do it like this, right? Let's solve the problem versus everybody talking about what we can't do. Yeah. And that I did try, but that thing is like, no, she needs to go here. That's what she wants to do. And that's what she's going to do. And at that point, I was like, well, I'm not going to be able to do this, but she was out of state.

25:10And then you kept to pay out of state fees too. So are you not helping at all financially right now? Yeah. So what I did was just put, you know, I put myself in child support and all that stuff. So I've been paying all that child support. And that's pretty much a, and when she, and whenever she comes, she came to the house before, you know, she had her own room, her own place to be. And I had, you know, told her like, hey, if you need anything, you know, come to talk to dad. Well, not anything. Yeah. Like, whoa, what I meant like, when I came to school, you know, let me know and we'll talk, but I don't need to be talking to your mom because it just becomes such a toxic. Well, that's what I want to know. What is the relationship with mom versus you on how long has it been like that? Yeah. So it's been 18 years. I never married her. So I have my own family with my wife. Okay. Yeah. So yeah, with my wife, I never married her. So she, I never

26:12been with her ever, ever since my kid was born. So this is just kind of been for lack of a better word like baby mama drama for 18 years back and forth back and forth. Okay. That makes a lot more sense. Now, I just want to, I want to clarify just to get down to brass tax. We understand you're not going into debt. I would not, I would agree with you. And I think George would too. We're not going into debt. I'm not signing a parent plus loan. I'm not going to recommend for her to go into debt. How much, how much money do you plan to give her every month or every semester for college? What's the number that you have in your head? That I don't have. But I mean, I could have come up with the number. That's what we need. Could that restart this relationship? I think if you going to her and saying, Hey, I have really screwed this up and I'm so sorry. There was a lack of clarity. I did not communicate well. I communicated too late. And that's on me. What I do want to do is restart this conversation and create a plan for you to go to college debt free.

27:16And here's how much I can do right now based on my financial situation. Would that get her to perk up? I'm hoping. Yeah. Because there's so much deeper here. This is, there's a lot of relational issues. This money thing is just like one baby symptom of years and years of broken relationships. And I think she's now seeing this as, man, this guy hasn't been there for me relationally. And he's not even here for me financially. Well, yeah. And that's how it seems, right? And the thing is that we all I've always been there for her. She's stayed with me like I tell you guys like every weekend and stuff like that. I made sure that I went to the court. Scott Charles support on myself and then make sure that I had a visitation for with her because I knew that we're going to try to pull her away. So I made myself, you know, available for her. It sounds like there's just everything I'm a nipple. There's two conflicting family dynamics. You've got a family over here who word no debt family. And then there's a family on this end for her. That's like, hey,

28:18whatever it takes we're going to do it. And she's caught in the middle of that is what it sounds like. I agree with George wholeheartedly. If you come to her because I'm going to tell you like this, my dad said to me, I'm not, when I said I want to go to the school and I need a loan, he said I'm not doing student loans. He said to me straight up. He was like, you better get a scholarship. You better be good at sports because I'm not taking out no student loans is what he said. And I was like, okay, you know, and I remember at the time feeling away about it because you know, you're 18 or 17 or 16 or young. But on this side, I'm like, oh, thank goodness. I'm really glad that he didn't ensnare both of us. You know, I went on and I was hardheaded and took out some loans. But at least it wasn't a parent plus loan and at least I didn't ensnare him in it. So I think on the flip side, like longer down the line, she's going to appreciate that. But if you do what George said and you humble yourself and apologize for not starting this conversation earlier as the adult, she is that's going to do something to her on the inside because parents don't apologize to

29:20children enough for the mistakes that they make. And so please, please do that. And don't do it in the heat of the, you know, the next conversation. You go first, call her up and get, hey, can I take you out to lunch? Can I take you out to dinner? Sit her down and go, I messed up. And here's how I, how I did it. And I think that's going to change the whole landscape from this going forward. Yeah, no, I agree. Cool, cool. Man, well, it's a great wake up call to all the parents out there. Do not start this conversation as your child is touring schools. Start this conversation at 12, at 14, at 15. So there's no surprises. Your kid knows exactly where you stand. Hey, I will cover four years at an in-state school. That's right. That's what I'm willing to cover. And if you can't, if you don't have the money, that's okay. As long as you have set the expectation, I don't have the money for college. You're going to have to get a job. You're going to have to do workstay. You're going to have to go to community college. As long as you set the expectation, that's all we can really ask of you.

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31:53Ben is in Birmingham up next. Ben, welcome to the show. How can we help today? Hey, um, yeah, how are you all today? Doing great. What's up with you? Awesome. Doing all right. I am in a little bit of a tight spot. In the past year, I've gone through the board said to move out and just a lot of financial issues have popped up and I have a debt collector chasing me for a loan that was defaulted on, nearing all that. And I have a small amount of cash and I'm only netting $410 a month after bills and expenses. And I was just wondering or just needing some direction on what to do with the cash. It's the best deal with the debt collectors because it's just just weighing on man. I'm afraid of eventually being sued. How much is the debt that you have with collections? It's a $9,800. Okay, $9,800. How does it? A personal personal loan. Okay. Yeah, and how old is that?

32:58A couple of years. Okay. It's been in default for a couple of years. How long has it been in collections? I mean, about a year. About a year? Okay. And so you've got $410 in margin every month after everything is accounted for. Yes. And this is the only debtor is there other debts to speak of? There are other debts. That's just the only one in collections. Tell us about the other debts so we can think through all of it. Okay. The largest debt that I have is my car loan and it's $38,000. And then $35,000 and stinging loans. Those are in deferment right now. And then 12,600 and personal loans. And then of course the $8,900 and collections. And then my smallest debt is $2,300 in credit cards. And this is after the divorce has been settled. This is what was allotted to you? Oh, yes. Okay. Yeah, you know, as far as the collections, you can start putting aside

34:05some cash to try to settle that. And I try to settle it for maybe 25% of the amount. And in the meantime, because you're going to need that money and cash, you're not going to be able to settle it if you don't have the numbers in cash. So I would work towards that. And in the meantime, I think something that could really help you free up some cash immediately is taking a look at this car payment. It's $38,000. Tell us what you bring in a year and a month. Tell us both of those numbers. Okay. In a year, I net a 47,500. And then my monthly net is a 3960. Okay. So hearing those numbers, I mean, George, I look at that and immediately I say, you cannot have a $38,000 car. It is just too much of your world of your yearly income, tied up in a vehicle, something that's going down in value. Did you roll over negative equity? Yes. Okay. So this car is worth what, 10, 15, 20 grand?

35:0720. Okay. So you're 18 grand underwater on that. And the only way out is to come up with that amount, either with savings or through, you know, personal loan, that credit union, I doubt they will give that to you due to your debt and collections and your credit is probably shot from all this, right? Yeah. I've worked it back up to like 690. Okay. I think I heard you say you had some cash saved how much? 2700. So you've got 2700 and cash saved. If I were you, I'd probably be looking to get some sort of a personal loan, credit union loan, whatever I can for the 18,000 to get out of this car loan. And then I would take the 2700, put a little more with it and probably by a $5,000 or, you know, beater car that'll get you from point A to point B. And that's going to save you on this car payment because what are you paying per month for this $38,000 car? $729. $729. Exactly. And so if I were in your shoes, I'd rather have, you know, a debt for

36:09$18,000 versus one for $38,000. Now you've got over a thousand of margin every month if you do that. Well, I drive an hour to work both ways. So that's definitely what I wanted to do because my transmission went out in my truck last year and it was going to cost me 12,000 to fix it. So that's why I had to get another vehicle and rail over negative equity. But I was like, because I've been listening to you guys for about a year. And I knew that was what I should do, but I was concerned that if I bought one that was a beater per se, um, that were drive. Yeah, I'd be stuck on the side of the interstate. Well, we can try to pick something that, you know, is road tested because you can find things out there that are old and still doing well. I mean, I can tell you right now the car that one of the cars that I have is my old Cadillac SRX. It's worth $1,500. But it drives there. Like there's no problems with it. And if you know, if you sold, if I were to

37:11sell you that car, you'd have zero problems driving an hour there and an hour back. So they're out there. I think the way to do that is ask around, ask around town, ask around your church who's selling a vehicle, one where you can really know the background on it. But you know, Facebook marketplace. I mean, just something something with fuel efficiency because you're driving that thing to the ground anyways. Yeah. And so let's buy it when it already has the most appreciation hit on it. What's the making model of your current vehicle? That's a 2024 RAV 4. Okay, we can be honest, been more friends by now. Lower nose. You didn't need a 2024 RAV 4 to go from A to B an hour. That could have been a 2014 and done the same thing. Now I understand that you're worried about the issues. You have the trauma from the transmission going out and sort of like, well, I need the newest for the most reliable vehicle. But the truth is some of these new cars are even less reliable than they used to be. And they got all the technology now. So something goes wrong. Their repairs can be real expensive. So I would be looking to get out of that because that will save you

38:12the most money per month. And that will allow you to then save up and settle with the credit. And how how close are they to suing you? What have they told you? Well, the credit's been so three times or the debt, excuse me. And with the last debt collector, I had gotten an agreement with them twice to pay 6,000 and a lump sum. And they would just change the terms each time I would call back. And they would never put it in writing. And they always wanted my bank account information. And I knew listening to you all to not do that. So so then they wound up selling the debt again. And I haven't begun working with the with the new debt collector. They sent me a letter last week. So I'll have to write them and go through all that again. I mean, you're going to have to hound them almost as much as they hound you in order to get this done. And the truth is, because I've done it, you call one agent, there, you know, there's nothing in their brain and they can't get it done. You got to call nine times, talk to the right person who understands the process,

39:13who will do it right. Right. So this is going to be a full-time job for you. But I do think it's worth it. It's going to be worth the hassle in order to settle that debt for a significant amount less. Now, let's talk about the student loans. You said that they're deferred. I want to know, do you know, are these federal loans, are they unsubsidized or are they subsidized? Because I need to understand if these are continuing to include interest while you wait. They are. Are you interested? Okay. If you can, I would stop that and pay minimum payments. Because I want you to at least do your best to cause these to not grow over time. It sounds like you have the margin to be able to do that. But what this is going to take and this is the part that is not the fun part. If you want to make some, some like, major headway in this debt, you're going to have to pick up more hours over time, side hustle. We've got to get this up from 47,000 a year because, I mean, you just don't have the margin to make this work. Would you agree? Yes. So what are, let's brainstorm some of the things that you can do to your job off for over time.

40:17I mean, you're driving an hour to do this job. Hopefully we can get some extra hours. I'm, I'm salary. I'm a manager. I was thinking though, there are some smaller, where the little town where I live, there are some smaller, like retail businesses where I could possibly pick up, you know, 15 hours a week. Yes. I love that. Just on the side. And do you have shared custody? Do you need to stay in this area? Currently? Not necessarily. I work with, with my church in the area, but as far as, no, we don't, I didn't have kids or anything like that. Okay. So I'm just wondering, can you move just closer instead of driving an hour? Can it be 10 minutes and you pay the same in rent or cheaper? The rent would be quite a bit higher just because I work in Birmingham. Oh, God. So you're heading into the city. Oh, okay. Well, as long as we're getting a side hustle, that's worth your time and not something where you're making pennies. I mean, we need to capitalize on time and money right now. And if you do those things, the things that

41:20George and I said, getting rid of this car, taking those student loans off deferment, and really hone in on here, you can get this debt paid off and you can clean up the situation. Here's something that keeps a lot of parents up at night. Kids are growing up with more access to information than ever before in history. But most of the content is calculated to keep them distracted, make them mad, and keep them scrolling, not help them think for themselves. Worldwatch exists to be the antidote to the algorithms. Worldwatch as a video new service built specifically for preteens and teens. They're daily 10 minute videos that explain what's happening in the world through a factual Christian worldview. No outrage, no noise, just clear reporting you can watch together and that your kids can actually understand so they can come to the dinner table, engaged and curious instead of worked up or zoned out. And I love that Worldwatch doesn't talk at kids. It gives family something to talk about. Because when my kids are older, I want them to be

42:25able to think for themselves and separate news from noise. And right now you can try Worldwatch free for 30 days. Click the link in the description or go to worldwatch.news slash Ramsey and use promo code Ramsey to get started. The Ramsey offer includes your first full month free on top of the standard 7-8 trial. That's worldwatch.news slash Ramsey. Welcome back to the Ramsey show in the Fairwinds Credit Union studio. I'm George Campbell with Jade Warsha. We're taking your calls at AAA 825-5225. Riley joins us in the St. Louis subnex. What's going on Riley? Hey can you hear me okay? You sound great. Okay so uh George and Jade my question is so I just graduated pharmacy school. I have thank you. My husband and I together this

43:25is the only debt we have is my student loans. I have a hundred and thirty two thousand which is the principal and it is a federal unsubsidized. I have 16,000 that accrued an interest while I was going through school and was unable to pay those off so I'm putting right at right under 150,000. I do have a job line up. I haven't met with HR to discuss exactly what my team is going to be. So I can't pinpoint that but I do want to knock out those loans because fast is possible. But with that my husband and I we have the baby fever very strongly and we are thrilled to start a family but at the same time I do want to get a little acclimated to my job and we want to get some of this tackled but when would you guys say is a good time to kind of start going to that next step once I get some of these loans tackled? So here's what I'll say on the matter and I'll allow you to take from it what you will because

44:28I can't stress enough that this is a personal decision for you to make but also there are some very real things to consider. So how old are you guys first off? I'm 24, he's 26. Okay and this is the only debt there is. Yes, ma'am. Okay so I'll start with a couple of points for you to consider. First off you have to think about your career and the unknown of how you'll feel when you have a child. Okay when my husband and I were in your shoes that was the thing I thought it's like okay if I have a kid I'm saying right now I want to keep working but I really don't know how I'm going to feel when that baby gets in my arms and so what you can do today to prepare yourself for that and to have that option is everything right you want to what people want out of life more than anything else is they just want to have the option. So paying off this debt first gives you the option so that's something to consider. I'm not saying you have to but it does give you the option

45:31of saying you know what I paid off my debt I can afford to pull back if I want to from my pharmacy hours whatever. So that's the one to think through and then thinking through okay what would our life look like if we did go down to one income. So having clear thought processes on that today when you're kind of in a cold brain mindset versus later on when you're like you know heated and you know what you think you know what you want. Thinking through that today is so so important. The number three thing that I will tell you is children are expensive and they add things they add priorities they add things to your margin that you're like dang it I want to use that margin to pay off debt now I have to think about things like cribs and there's choices that you're going to want to make. So I'm just being your buddy and putting that out there if you want to have a baby tomorrow you can I'm not I'm never going to take that away from you but I also will say for Sam and I and you guys is dead as less for Sam and I we really thought through that and thought you know for us we want to clean up this debt first we've got plenty of time and for us it was worth it to

46:36do that it was from a value standpoint and so I like to share both sides of that equation again being very clear that it's your option I'm not going to say you can't have kids until you pay off debt but I do want you to think through it you're not in this situation but so many people call in and the reason that they're struggling is they kept having kids instead of focusing on the matter at hand and I think we can do a better job of family planning in a lot of situations and we have the ability to do that so you should okay that's my spiel what are you thinking so I have the my job is lined up I have it that was HR to discuss pay but what I do know is is that it's considered so it's hospital pharmacy it's considered part time but I have the ability to pick up so many hours to where I'm easily going to work 40 hours a week which is because if I do get to the point to where I want to pull back it seems like I'm going to have the ability obviously

47:41that's not 100% a given forever because things change and new employees can get added on but that's where I'm at right now and I've been assured that by management there um my husband is doing pretty well with his job so my part is that I wouldn't so he makes 80 he's he's salary at 86,000 right now he's a civil engineer and he's in the process of doing a test to become a level two which is considered a promotion um I wish I could describe it better but um all I care about is he's getting to pay bump if this goes through yeah a very very nice pay bump it will be making six figures yes sir great that's some good debt pay off money right there and I assume you'll be making decent money as a pharmacist one would hope it's at 30 hours a week I'd be making just under six figures so okay picking up the extra hours I'll be making over six figures right so let's picture

48:45a world where you guys are making 200,000 dollars you're aggressively attacking this debt and we're taking care of a baby can you guys handle that? No that's a loaded question I've know what's your what's the total of your student loan payments? What does that add up to the total of what I would be paying off? Yeah which is the total payments you need to make to satisfy those minimum payments currently? So that's the other tricky part when I was kind of doing my exit loan counseling through FAFSA I didn't it was hard for me to kind of enter in what I needed to put because I didn't like it was asking what my salary was going to be and it was like well I don't know are you in income driven repayment? I do not want to do that okay good I've had plenty of people encouraging me to do the public service loan for different types of debt yeah I don't I don't your homework is to figure out what these payments will actually add up to as part of your monthly

49:49budget what your current bills are and then see where you guys are at and that will give you a very clear picture of how quickly you're going to pay off this debt what adding a baby into the mix would do how much margin are you going to need to cover you know formula wipe wipe stipers all that stuff and that'll give you a better next step how are you guys living? Riley where do you guys where are you renting what do you have? We are renting our rent is 975 a month and that is and then our internet and then we pay internet and electric love that that's a good price for you very reasonable what was your question and then so my question was I had talked to we kind of we had a financial advisor like come bring our exit week of pharmacy school and I asked her a question and I know it's just one person so I love that I'm getting a second input but I I let her know that I wanted to pay these loans off as soon as possible so I said should I max out what that

50:53payment is going to be with my loan servicer and she said no don't do that do what you're comfortable with because you can always pay excess on top and case anything or to happen because my husband also do have about $50,000 yeah I would say whatever they whatever they you know they're going to take your income into account and whatever your payment is that's fine don't try to make it less intentionally your goal is to pay it off so in that way she was right put as much extra as much margin as you can find on top of that minimum payment to go directly to the principal okay George we hear from so many people that are trying to live out the Ramsey plan right they're getting out of debt and everything but the hard thing is there's not many banks out there that actually support the way we teach you go to handle money yeah most banks they don't want you to win

51:53with money so they charge a bunch of nuisance fees there's all this fine print and worst of all they are pushing debt products at you non-stop yes but the good thing is is that fair winds isn't like most banks they're not like the other guys they're not like the other guys yeah they are not pushing debt and they actually want you to win with the baby steps and so what's great too is they created the smart bundle for Ramsey fans which includes a high-yield savings account and no monthly fee checking which is huge because it's rare to have a checking account tied to a high-yield savings account you can get all of that with fair winds and for the nerds out there you can have a 10 different high-yield savings accounts for different goals so you got your emergency fund the car upgrade fund the vacation the world is your oyster so beautiful and check out the debit card the new one the live like no one else debit card it's so beautiful we that's a conversation starter it's so good well and when you swipe or you tap you know every time you take it out of your wallet you're remembering that you are living like no one else and you're being intentional with your money I've been using fair winds for months and months now I love their features the app the customer service it is all so good and so aligned

52:55with the Ramsey principles absolutely so y'all we both bank at fair winds and we love their commitment to Ramsey values so check it out you can get that smart bundle we're going to drop a link in the description or you can go to fair winds dot org slash Ramsey today that's right that's fair winds dot org slash Ramsey insured by the NCUA you Matt is in Portland Oregon up next what's going on Matt how can we help today with a girl in George and Jade I'm glad to get on the show glad to have you my question is my question is whether it's responsible use of funds to start up a side hustle even though I'm not totally sure what the path to profitability on it is overall what is the side hustle

53:56so it is a I previously had a business doing something similar it's a mobile bicycle and e-bike repair um a pretty popular metro area for it yeah poor understanding for that yeah right and I work for a company that that does that um presently um like it's sorry I previously started a business doing that and eventually grew that um into a brick and mortar location and then sold it so I have background in it I know what I'm doing I know what the cost it would cost me currently 30 grand to start it up but from mobile repair business what are you are you needing like a van that has specialty equipment yeah yeah so that would be that would be like if I had my wish list everything was like exactly how I wanted good branding just running start basically okay do it for a lot less but this would be like if I if I could do everything I wanted to do that's that's what it would why do you want to do it as a side hustle if you already know you have had success doing it as a

54:59business are you just thinking that you'll start small and build up what are you what's your angle basically I mean the way I look at it is that the the mobile the mobile option is not a hugely profitable uh enterprise in itself but it's a great ramp to getting into a brick and mortar location building a brand thing like that but why do you let it go the first time I didn't I didn't want to live where I was living um I wanted to you know move out of that area because of my family I'm really from here um and like I said I mean I I did sell the sell the business eventually so it worked out in the long run but I didn't have time as well as like do I just want to be the bike repair on a bus sky like not really um so you know how to do the business the only thing that's changed is location pretty much yes do you have the money to start it again do you have the cash uh I have

56:02uh well more than enough yes I do uh how much do you have about 480 uh in total um and I think I'm gonna oh probably so this is the sale of the business that occurred last year so um I'm gonna oh about probably like 50 grand in in taxes maybe even more okay so let's call it 400 you have for some play money here and you're wanting to try to take a portion of this and try to start this business and you said you work for a company that currently does this yes but I only work weekends um I'm not making very much right now so I have insight into like their metrics and how well they do and they're in their mobile repair business um they are yes they do yes yeah if I'm if I'm the business I'm going do this is a conflict of interest here if we're going to be our competition oh absolutely I would have to quit I probably shouldn't even be calling you guys right now on a national show because if they heard so you're not trying to do both at the same time oh god no that's it got you I would I would basically give them my two

57:06weeks and say look sorry I think I want to go independent how quickly can you be profitable I mean that's the thing is like and let me I'm sorry let me I don't know for sure let me let me restate how quickly can you make a wage that is enough for you to live on and start recouping the 30,000 that you invested let me put it like that I think with the right branding and you know a good good run right off the ground so I think I can get going pretty quickly the character be breaking even within a couple months of having it running and then you know depending on how depending on how much time I want to put into it you know maybe I make it I could recoup my cost and I was really grinding you know within six months or so I love that and tell us about your family that's basically like it's a full time it's a full time thing you know I love that for you who else is a part of this do you have a wife kid who else is going to be affected

58:10I have no no independence it's just me and yeah so I I'm pretty much you know free to do do is I please would you use your savings to float your bills until this thing gets off the ground yeah and that's why I mean I know a lot of this sounds like kind of like okay have the money have the business plan and all that like why why didn't call I just to me it feels a little bit strange to be like knowingly you know dipping into my savings with certain amount it's like I can't work that much I can't work another side thing sure you're telling us you go 40 plus hours a week into this business if you started tomorrow I feasibly good you know if I so I think I could build up a client base quickly but it's like I guess the other thing is best case scenario best case full time pulley book right I maybe make like 50 grand you know profit after everything

59:12can you live off of that but can you live off that in yeah probably yeah I'm pretty I'm pretty through goal I think for you Matt I think what you're looking for is some boundaries on this I think that would make you feel a little bit better and so if I were in your shoes I'd probably sit down and say okay I I know I've got 400,000 that's a nice payday from this other business but I don't want to get sloppy and so if I say that I'm gonna invest 30,000 in this I'm gonna be very detailed on what that 30,000 is gonna go towards and then I'm gonna be very detailed on what I'm going to live off of from the savings and have a very clear timeline if I get six months into this and I'm not profitable I'm not paying myself 50,000 from this then here's what I'm going to do next like you've got to give yourself an on ramp like a go-no-go if I get here and things aren't going then I'm gonna stop because I'm not or I'm gonna stop going at this rate or I'm gonna pick up a part time job or whatever that thing is that you're not just draining off of this nest egg I think you have

1:00:16to have a clear amount of money that's like I'm gonna spend 40,000, 30,000 on the business and I'm gonna live off 40,000 for the next year and that's where it stops I'm 70 in that you do see them saying and I think that'll give you not only a piece but it'll give you a timeline like I got a hustle and I got a flow because if you just buy the burger you're gonna call back three years from now and say hey I blew 400 grand trying to start a business and living off my savings and it didn't work what do I do now and that's a much different problem to have than to call it quits at 70 all in and still have 330 left over to survive and go get a different full-time job somewhere and say hey I tried this if this is really your dream you're doing it with cash you're not going to go into debt for it you've done this before with success yeah you earned the right to do it here but my only hesitation is if 50Ks you're sealing forever this kind of sucks I want to start a business because you can do better than you could elsewhere yeah exactly I'm like is this really a career

1:01:17it's a labor of love I love to do it is it a career well are you trying to exit from it again or is this something you want like is the end goal hey I exit it well the first time I'm gonna do that again or is the goal this is where I work for the rest of my life those are two different angles yeah yeah now that's that's a great question and it's kind of murky I think I got lucky the first time with the exit that's not common in this type of business is no guarantee that would happen again so just being realistic about that you know those end points is kind of what is this business man that you're working for now what do they make yeah I mean is the owner making more than 50 grand in profit well so they the truck the truck does about 120 in the top line revenue and I think they they grossed about a 50% margin that's where I got that 50 from got it but you said that you can go from having a truck to going to brick and mortar so if you were going to

1:02:19brick and mortar what do you think that you'd be you know what would be your revenue and what do you think you could pay yourself hard to say on that because the market is so crowded here and that's actually why I don't want to go brick and mortar I think the mobile is like more flexible easier startup costs so I mean brick and mortar like just for reference like we did in my last or our best year was 2024 we did just shy of a million and I think we made like 115 on that like yeah there's much more overhead margins yeah I mean I would go for it just know if you're kind of signing up for a food truck instead of a restaurant and that's the end game is you run a food truck forever but in the bike world and that's okay if you're if you can make peace with that if you're behind on your bills doing more of the same isn't going to fix it you need a different

1:03:20plan and that's why I tell people about guardian litigation group if you've missed payments if collectors are calling nonstop or if you're getting letters about legal action that's your signal and it's where a lot of people wait too long because the longer you wait the fewer options you usually have and once it turns into a lawsuit things can get more expensive and more complicated fast guardian litigation is a law firm not a call center from day one you are assigned an attorney who represents you so if a creditor moves forward you're not caught off guard and you're not hit with surprised legal fees guardian litigation only gets paid when the debt is negotiated and the client accepts the settlement offer this is about stepping in early while you still have leverage don't ignore the problem take control of it go to guardianlit.com slash ramsi right now that's guardianlit.com slash ramsi attorney advertising results may vary and no specific outcome is guaranteed

1:04:28. Ask ramsis are free AI tool that is built and trained on proven ramsi principles and today we're going to break down the most asked questions of the week there were some questions around a state planning tracking expenses buying a car but the number one question was around retirement investing. I love that what should I consider when deciding between different retirement accounts like IRAs 401k's and Roth accounts good question so here's kind of our order of operation when it comes to investing you've heard a say it before 401k's 403b's up to the employer match so that's great match beats Roth beats traditional is kind of the way that we say it so the explanation there is we love free money right a match is free money this is money from your employer it's an instant 100% return I wouldn't leave that money on the table if you get a 4% match so you put

1:05:29in 4% let's say that's a thousand dollars they're going to put in another thousand yeah free cash so we start with the match if you don't have that available to you or if you do the next place would be the Roth IRA we love the Roth in 2026 you can contribute up to 7500 a year obviously for catchup that's 8600 the Roth is the rock star of retirement accounts you pay the taxes now your money grows and then comes out completely tax-free like the laundry we love to see it and then let's say you haven't hit 15% yet let's say make a hundred thousand dollars 15% is 15 grand you haven't quite hit that between the match and maxing out a Roth IRA well then you just go back to your traditional accounts like that traditional 401k until you hit 15% yeah I love that and a lot of people ask the question and we kind of hit this what's better jade and George do we do Roth do we do traditional is one better if it's up to me always choose Roth always here's why traditional the you get the tax break now but later you have to pay taxes on everything including your air so

1:06:32if they inherit that money and it's traditional money they're on the hook for that too with IRAs there's no higher minimum distributions yeah well the tax rate be at the time you retire and start to withdraw yeah that's very scary good point so Roth go ahead and pay those taxes now enjoy that tax-free growth and then have those tax-free withdrawals forever that's nice it's just nice to know what I'm in finally retired after working hard my whole life the government is gonna get their grubby hands on that money at least I love that I love that go check out ask ramsey can help you figure out how much of your income should go into each of these different types of accounts based on your current situation you can ask your question today at ramsey solutions dot com or click the link in the description if you're on youtuber podcast all right we're out to Jacksonville Florida up next Kirsten joins us there what's going on hi so I'm getting married in 15 days and thank you and we're combining our accounts once we get married and we're basically trying

1:07:32to figure out kind of how to get the baby steps going so we can save to buy a house and we're wanting to know like how much we should save to buy a house and all of that fun stuff fantastic exciting times for you guys okay do you know what your incomes will be once you're married yes so he makes about 48,000 a year right now and I make 40,000 a year right now okay so 88K is what we're working with do you guys have any debt going into this marriage so the only debt we have is two credit cards and the credit cards total $1,600 oh great and so that will get paid off very quickly if not before the honeymoon yeah now we're planning to pay it once we combine the accounts great and do you either of you have savings currently yeah so together right now without paying off the debt we have $11,700 and savings okay and that's everything so that's going to be sort of your starter emergency fund let's take out 1600 let's call it 10k in your emergency fund right now so that's going to be step two is step one pay off all consumer debt step two we're going to then

1:08:37move on to kind of filling up that emergency fund three to six months of our new household expenses yes sir and then we can start saving up the down payment so your question is how much to save yeah kind of because like so once the bills are all totaled up with like food gas all that stuff we're going to be spending $3,100 a month thank you so with the 10k and that includes rent okay great so you're going to be renting for a while yes and once we pay off the debt it actually subtracts $270 so I guess technically it's going to be 20 28 this year something like that okay a month so you guys will be bringing home you said 88,000 will be the gross household income that is correct okay so after taxes can we call it 5500 somewhere around there yes all right so minus year let's call three grand and expenses you'll have $2,500 left over that you could save for that down payment okay yes sir and that is 30 grand a year yes so now we know it's kind of like

1:09:43what house are we wanting to buy and at what point do we have enough down payment to get the mortgage payment to 25% or less of our after tax income right and we're kind of on the like fritz if we don't know if we want to buy land first and then possibly and pay that off and then get a house put on it I think we should just buy a house first I would do the math first and let the numbers speak to your soul because what you're hoping for if you just kind of think with the numbers that you have today okay making you know 5600 500 a month that payment is going to have to be $1,400 at the savings rate that George said which was I think 30,000 a year what would that look like on a you know the houses that we're thinking would suit us so have you done any looking what so ever size for what you guys are looking for size wise bedroom wise do you know what the cost would be yeah so at minimum we would need at least to start out a two-bedroom one bath and that's because we also have a surprise on the way love that yes yes and so

1:10:49um that would be pretty minimal so we can probably find something that's like anywhere from two to two 50 okay so George is plucking plug in that in I just that that was exactly my math I was like man if they get $200,000 house you put 60,000 down that's two years of saving up right aggressively you could get a 15 year fixed rate mortgage where the payments about $1,400 and that would give you guys a whole lot of peace and margin yeah because what's your rent right now while it's 1370 so we're exactly so you'd still have about 2,500 bucks in margin every month to invest to help cover the expenses for the baby all of these things that's the goal here so it looks like you're going to be renting for another two or so years and aggressively saving up but that would be the price point obviously the goal post may move a little because two years from now that same house might be 230 240 so the goal is let's get the income up let's keep saving are you gonna be putting the baby in daycare so no I'm not and that was also something is um I have talked to my boss

1:11:57and he's gonna allow me to continue working and he's gonna be able to let me work at home wow and that's great yes that's work on top of work yes and so the big thing was that I didn't know if I would be able to keep the amount of hours I'm working currently because it's like you just never know how it is you're gonna have a baby so it might lessen just a little bit but he is also in the process of possibly getting a raise at his job which will open up the possibility of like getting a 401k and all that stuff too well what you're talking about I think is a very smart place to be mentally and that's for anybody listening if you're in a situation where both spouses are currently working and you're thinking about buying a house and you know there's children on the way you know children at some point will be part of the equation the best thing that you can think about is what will life look like if we were to go down to one income even if it's just temporarily even if it's for a couple of years while the baby is in arms right and making sure that whatever house you purchase can weather that storm and

1:13:02it's never going to be too big of a percentage of your income that you don't have the option to stay home if you wanted it if you wanted to right it's not the dream home if it crushes your dream of staying home because the organ is so high and so you got to be thinking long term when it comes to the biggest purchase of your life and you know you guys have a couple of years before we're here so let's just be really diligent about getting our income up keeping the expenses low working on saving up that down payment I would just put it in a good high yield savings account and if you don't have one already you can jump on to Fairwinds dot org slash Ramsey they've an awesome smart bundle that includes that account and just start socking away and get ready for this wedding 15 days exciting stuff pretty calm cool collected for getting married in 15 days I know I guess all the details have been ironed out at that point I know it's that baby it's giving her calm

1:14:18this show is sponsored by better help I know a lot of you out there are trying to keep it together all the time you show up to work you pay the bills you smile at the right times but then no one sees you snap at your spouse or lie awake all night running through everything you'd wish you'd done differently during the day just because you're functioning doesn't mean you're okay talking to someone else is a great way to process what's happening in your life and get to the root of your challenges that's where better help comes in better help matches you with one of their 30,000 licensed therapists someone you can be real with and finally put down some of the weight you've been carrying and come up with a plan for getting well they can help you get perspective and see the other side of your situation and help you with the plan for moving forward better help therapists all follow a strict code of ethics and if the first therapist isn't the right fit you can switch for no extra cost asking for help before you hit a wall isn't weakness it's wisdom and

1:15:19strength if you're exhausted from always having to hold everything together trust a better help therapist to help you carry the load go to betterhelp.com slash ramsie for 10% off that's better help h-e-l-p dot com slash ramsie welcome back to the ramsie show i'm George camel here with jade war shot we're taking your calls at triple eight eight two five five two two five we get a lot of questions about buying a home we just had one about how much to say for a down payment and the truth is buying or selling your home is a big decision a lot of zeros on the end and with so much conflicting housing market news it can be hard to know what's going on so we're here to make those latest trends easy to understand and we know mortgage rates still volatile right now but remember rates will always rise and fall what matters most is finding a home you can actually afford two day only your financial readiness should

1:16:21drive your decision on one to buy not rates median home prices went up to about four hundred and twenty five thousand dollars last month which is typical for a spring market as we head into the summer prices are lower than this time last year and homes are taking a bit longer to sell not like the olden days where it was like day one seventeen offers right now there are some markets that that still happening but overall it's slowed down so that's good news if you're ready to buy and looking for a better deal and if you want to learn about the latest housing market trends see weekly mortgage rate updates get free tools to help you buy yourself with confidence head to ramsey solutions dot com slash market or click the link in the show notes if you're listening on podcast or YouTube Sarah is in Cleveland up next Sarah welcome to the ramsey show hi hi everyone how are you this afternoon doing great what's your question today I'm just wondering where me and my husband should invest our money okay tell us more um so we make a combined about three hundred and seventy five thousand we have we have about five

1:17:26hundred thousand and four one case um I have we both have rocks um we're debt free we have a index life insurance um how do you have one that we were kind of talked into oh boy who who hated you enough to sell that to you oh okay what family friend old college roommate who was it you don't have to give names but I know it's someone close to you yeah so I I kind of we're we're uh we're on the seven year plan so on or less you're paying that off um paying that off because every year we're contributing so much for seven years oh boy so that we can max out this is bad huh yeah like a max funded i.u.l policy yes yeah that's exactly what we have one man you made someone so rich they are just counting the dollar bills right now as you're on this call okay well tell us more

1:18:30okay we also we have two annuities oh boy is this the same person that sold you this yeah yeah goodness gracious okay so this was an insurance salesman uh in sheep's wolf's clothing here is what happened this was not a financial advisor so every year we kind of go to him and um we have more money so now we are going to have another chunk of money and I even as we were talking really before we just do this let's let's get some advice so I thought I would call in and see what what should we do with our our money obviously i'm not making the right decision so well you're do i'm i'm trying to put myself in your headspace my guess is you're maxing out 401k's you're maxing out Roth IRAs uh and you're just looking for someplace else to park money right yes okay um and this guy's like i've got just the thing for you do you have term life insurance in place um if you are uh um work we do okay you're gonna need more than that I assume that's probably like a year worth in there yeah probably so I would get it on your own it's always wise to have term

1:19:36life insurance outside of your employer because if anything changes you could lose that and so I would get 10 to 12 times your household income of each your incomes in a term life policy 15 20 25 years max and you can jump on to zander dot com and get that done today start that process and apply and once you have that in place now we can cancel these i.o.l policies and get out of these annuities that is your best bet as much as there's going to be a sunk cost fallacy here and as much as this guy is going to try to talk you off that ledge okay he's going to make this sound like it is the worst financial decision you could ever make is to stop working with him and being in these insurance products okay that i hope that you're sure you do okay but think about it i mean what have they sold you so far investments no they've sold you insurance products that are marketed as investments that's a red flag and if you looked at the the rate of return there's no way it was

1:20:37even close to what you could have made if you just invested it even just in an index fund i mean the market has over doubled in the past seven years and you you're told me you're on year seven if you had just parked that much money all those premiums you put in if you just parked that in index fund it would have doubled so has your money doubled in those seven years no that's another tell so this is sadly the current state of the i'm going to put financial advising world in big air quotes sure because it's really just wealth strategists insurance agents who sell these products and they they make it sound like it's a smart investment well it's the closest thing they don't have the securities license to sell actual mutual funds are away with it with these newities so i'm so sorry Sarah the good news is you guys make so much money you're doing so well on your wealth building journey and this will just be a blip along the way you go oh man remember we fell for that stupid tax when that guy sold us all those crappy policies okay so where should we what should i

1:21:39do then the good news is if you took this money okay you're in your 30s if you took this money and parked it in a brokerage account uh and just like like George said even if you just parked parked it in a normal index fund i'm guessing you have about 15% uh let's just say $4,600 bucks a month for the next i mean you're going to be at $13 million if you did this from today until age 60 whoo and and that's not including the 500,000 you already have invested by the way because that's going to continue to grow as well so this is just an easy non-sexy i said it and forget it and it just grows and multiplies and i come out looking like the hero over $13 million okay what's not really first should i get awesome what should i like just i have to out fidelity has our far long case that's the valid so anything that's employer related you can handle that and then anything outside of that i would contact a smart investor pro and you can jump on to ramsey sleutian.com

1:22:39and get in touch they will not sell you an i.e. well policy they will not sell you in anewity just because they can make higher commissions from it they're going to do the right thing with the heart of a teacher to help you understand what you're investing in and that's the power of working with someone trustworthy and sadly you were kind of swindled into this and it happens to the best of us it happens to a lot especially high earners because they go well this is they told me this is what the wealthy do yeah so i thought i should do that now another place you could invest if you have access a high deductible your insurance i'm sorry your health insurance if you have a high deductible plan you could do something through there and yeah do you have a health savings account through a high deductible plan i don't know no okay so you have more of traditional insurance policy for health for health yes you're good traditional well if you ever did switch to a high deductible health plan you would have access to a health savings account and you can actually invest

1:23:40inside of that just like you would an IRA and it's a great there's triple tax benefits in that there's tax benefits all around it and so that's a great way to invest as well but here's the general blueprint for anybody who is a high earner investing does look different so of course the 401K is a great bet because there is no income limits to investing in a 401k and maxing that out and then you still have access to invest in a Roth IRA even if your income is high and there's a version called a backdoor Roth IRA the way that works is you fund a traditional IRA with after tax dollars and then immediately convert it over to Roth so it's that simple that's a great way to fully fund to backdoor Roth IRAs again the health savings account has some awesome investment strategies within that and then if you've exhausted all of those sort of tax-advantaged plans then you can move on to a just a non-retirement taxable brokerage account and invest in index funds and that can also become a bridge account you can use to retire earlier than 59 and a half a few so choose yes indeed

1:24:43so that's exactly the blueprint for a high earner and you know everyone hopes to get there that's a great aspirational goal to be making two three four hundred thousand dollars yes great problem to have but unfortunately along the way as you build wealth there will be traps there will be wolves there will be people who are trying to make a commission off of you and you got to be aware you got to play defense while you're playing offense and part of that is seeing those red flags becoming educated always pausing and if you if your gut tells you something doesn't feel right about this he was really pushing that product to car let me go ahead and do some google in here recall the Rams you show and get their take on this because we got no skin of the game of them helping you build wealth when you're in the baby steps every expense deserves a second look and health care is one of the biggest that's why I recommend Christian health care ministries CHM is a health cost sharing

1:25:46ministry and their program start at just a hundred and fifteen dollars a month a lot of families find CHM gives them more room in the budget and it's why members say they're better with CHM right now new members can get a 50% credit towards their first month go to chministries dot org slash budget and use promo code ramsie welcome back to the ramsie show in the fair winds credit union studio i'm george camel joined by jade warshaw the number to call is tripe eight two five five two two five if you want to jump into the conversation with your money question amanda is in sacramento up next what's going on amanda hi guys thanks for taking my call sir i tried to back out here before i got on the line because i feel like i'm in just a different financial situation some of the other callers that's okay i'm glad you didn't back out yeah yeah i was assured that i i i i i belong here absolutely you do

1:26:51we've heard it all so i yeah we'll say thank you um so i'm trying to decide i think i know what to do but i'd love your guys's advice in a situation where i just broke up with my ex the father of my children so i'm a single mom and since 2024 i've been paying the mortgage on the house that we're staying in i have a um so divorce agreement that's been signed by the judge and in the court that says that this house is basically mine that if i sell it i get the profits and all of it i can say here yes um so my ex took an equity loan out on the home before he made that agreement so i have to pay a $500 equity loan and an a wonderful mortgage payment of $1,100 which is so reasonable yeah um and so this house was my family home and my dad before he passed away let i say honestly my ex because it all went in his name um by the home and we got a good like

1:27:54three percent interest rate on it um so i'm in a place where even though it's a challenge for me to handle it all by myself um i couldn't really get one for any cheaper than sixteen hundred for myself and my two children um and so i'm in a place where i've gotten a couple payments behind and i used credit cards about eight thousand dollars worth of credit cards to pay bills for a few months and i'm two thousand dollars behind on the mortgage um and my my income is variable i work as a um associate marriage and family therapist so i make a decent income that i deal with a lot of cancellations and then recently health issues what do you make as the counselor i make i make 65 an hour and that's you know because i'm still under supervision so i only make a portion of the hourly rate which is about a hundred and fifty an hour but you're saying that it's hard to get 40 hours when people constantly back out yes there's no cancelation fee unfortunately no because

1:29:04i work with partnership clients so that's a medical division of medical and we can't start to clients anything so on average week if you had to say like on an average week how many hours like paid hours do you think you work i shoot for 20 um which is considered full time for therapy because i'm a trauma therapist and after about six hours a day i start i start to like almost fall asleep in session so that's around fifty two hundred a month it is and what do you bring home from there um and so what i've actually been bringing home is closer to three thousand a month um my last couple paychecks have actually been under fifteen hundred um i get paid by monthly and so that's you know just barely enough to cover the bills i do get eight hundred four child support and so that's a bit of a buffer so if we were to build your budget today we'd build it on thirty eight hundred a month yes okay yes uh because that's yeah that's baseline what i bring home

1:30:10okay sorry for that kind of i just needed to get those numbers if there's anything else you want to keep going you can go ahead and keep going yeah i know go ahead and i think that we could probably work with that as far as what you guys might advise okay so that's about 42 percent of your take home pay is getting eaten up by this mortgage which is a lot but it nothing's on fire so far if we can work work consistently do you have any other debts i do have um i'm sorry uh school debt how much is that i it's a hundred and twenty eight thousand but i haven't started getting charged for it i'm on and like an income based payment okay so the interest on that is staggering but i'm not being charged for it yet it's not the interest is no it's not a crewing while you're on you're in control it's a crewing oh it is a crewing so this could be a hundred fifty thousand dollars and student loan debt and no time easily what's the payment what's the minimum payment to stop it from being deferred uh oh like to cover the interest

1:31:19is that what you're asking well are you paying anything on it right now is there any money payment do okay no if you were to sign up to go ahead and pay it get out of the income dribble payment what would your payment be from what i understand from my colleagues it would be between seven hundred and that's thousand okay all right so that's i hidden costs what about get four yeah yeah any other debt a lot of that just gets eaten up in interest yes sure um so i have a car yes i have a twenty three thousand on a car loan that i pay four hundred a month for okay um no medical debt so eight eight thousand in credit card debt and um yeah oh uh two thousand that i'm still paying for a car that broke down okay okay so we're looking at about a hundred sixty grand in consumer debt okay what is the house worth

1:32:21two hundred and eighty thousand just lift that up what's what's left on the mortgage balance by one hundred and fifty i think it's hundred and fifty six thousand okay okay um so and there's fifty thousand dollar equity loan that would have to be paid out of that all right so that's probably you if i'm just going through the other scenario let's say you did sell and you paid off the mortgage paid off the equity loan paid the fees you know the closing costs all that you're probably going to net close to fifty grand exactly which then you could use you could clean up the car loan the both car loans and the credit card debt with that and start attacking some of the student loans which would help i mean you you'd free up some payments along the way there yes and then you could tackle the student loan that now the issue is where would you where we're going to live and how are we going to rent so that's another issue what what is keeping you right now in sacramento um so i'm actually a couple hours north and i'm in

1:33:24just a very affordable situation so a rental for me to get a two bedroom really small apartment would be about sixteen hundred right amongst where i'm at and super high cost about where they are with less maintenance repairs risk and more cash in more cash yes so that feels like it feels like a good move for you long term and it's a fresh start it's because of all the other variables that we've now added to the picture if you didn't have any other debt and we could fix this with just your income i just go hey let's keep it but right now i don't see a path out to start even paying on these student loans until we solve some of these other issues right i think you have to do this instead of viewing it as kind of what you were saying earlier which is i have such a great interest rate you know i i got the house i was left you know you've got to view this as i get the opportunity to have a fresh start that way it doesn't feel like so much of a loss or it doesn't feel like you're going backwards because you're truly not you're going in the right direction

1:34:25you're building something completely new for your life for yourself for your children and i think having a a brand new place to call home to do that from is actually going to do your soul good yeah clearing some of the debt will free you mentally, emotionally, spiritually on top of financially you've heard from me and the Ramsey personalities for years but nothing beats actually getting together in person that's why we created the live like no one else crews for seven days we're vacationing with you and 2500 Ramsey people in the western Caribbean with live shows us new content us and more if you're on baby step four or beyond come spend the week with us next

1:35:26March choose your cabinet Ramsey solutions dot com slash events or click the link in the show notes today's Ramsey show question of the day is brought to you by why refi defaulted private student loans can derail your money plans but why refi helps borrowers explore refining options designed to get them on track again learn more at why refi dot com slash Ramsey that's the letter why are EFY dot com slash Ramsey may not be available in all states okay today's question comes from Brady in Colorado he says my brother and dad are pressuring me to go into debt to buy the new swatch x ap has a watch by ap I think the x is like a buy okay swatch by ap pocket watch which can be around $1,500 how do I tell them I'm in baby step two and would rather pay off my debt

1:36:30instead of adding more to it they say it's an investment and will increase in value for resale purposes so it's it's not dumb to get one I'm trying to be different because normal is broke how do I keep a relationship with my family if they don't support my decisions around debt so let me start by saying this is hilarious let me start by saying sometimes because you know we do a question of the day every every show and sometimes I'll look ahead and read the question and and but I like surprising myself sometimes because sometimes he came in fresh on this one yeah I did and you know Brady the answer to your question is how do you tell them no you simply say no okay I got to believe you're over 18 at least over 21 maybe even if they're pressing to take on debt it's not a seven year old yeah but I'm just saying the point is you're an adult and you have the ability to say respectfully to your elders no I'm not going to do that and honestly just saying it like that there's no disrespect there and you don't need to qualify it honestly in any way

1:37:34if you want to say no I'm not going to do that because I'm paying off debt you can but you really don't even need to do that especially if you know they're they don't have the same views on debt as you because if you do qualify it with that knowing they don't have the same views the next thing you're going to be having is an argument or some sort of you know confrontation on why to pay off debt why you don't need to pay and it's like I don't even want to deal with all of that it's okay to simply say I'm not going to spend my money on that this time move on I love it I just love the part where he says how do I keep a relationship with my family if they don't that's crazy and the relationship because you didn't buy a a buzzy watch that could go up and value what type of people are yes I don't understand what this relationship was to begin with well the things love this so much why do they buy it all the things to feel pure pressure about I wouldn't expect a pocket watch I think like you know getting offered drugs in high school not like buying a pocket watch yeah dare didn't teach me about the pressure I'd feel from man I wanted me to go into debt for pocket watches

1:38:37I just love it as brother and dad they're like ganging up on him if they love it so much they think it's such a great investment why aren't they buying them all up yeah or maybe they'd buy one for you and just gift it to you because you know you need to have one so bad how about this let them buy it you can buy it off of them for a higher price if you love it one day yeah they can make their money so the bigger the bigger topic here is the idea that when you when you hang out with Ramsey for long enough and you've decided you know what what these with these knuckleheads are talking about that kind of makes sense to me right this idea of paying off debt living on less than you make the borrower slave to the lender sacrificing to win delayed gratification just countercultural yes controversial yes behavior all of this when you sign up for that you have to know that everybody's not going to agree with it and that's okay you've got to know that people are going to have questions and that's okay and I want to say that when you subscribe to this and you actually start doing it people are are going to have questions and they are going to say oh like your life looks different

1:39:41they're going to notice it you can't do the things that we teach George without people noticing it so if you thought you were going to do it and fly under the radar uh George and I are just here to tell you that's not really possible because you're creating a radical change in your life and you cannot create a radical change without it showing and that's a very very good thing so absolutely it's good that you're seeing this Brady it will offend people if you don't go with the stream when you go upstream it offends them because I think while you think you're better than us Jade because you're plant-based yeah that's that's offensive to me yeah what do you think you're better than me yeah eating red meat it's like dude live your life bro you know but there's some reason like if you let's say you uh you drink alcohol a friend who doesn't you go hey man have a drink they're gone now I'm good like why they must know exactly why they want to pressure you into it because you don't it's just like people have their own values their own principles let me give you a hot take can I give you my hot take on that is when when the things that you just said uh money maybe drinking maybe your diet when people feel the need to press

1:40:42in that type of way which is kind of more like a negative kind of way I think that it's usually because you've held up a mirror in front of their face and so when you're doing for example they feel judged we'll keep it to money when you're doing the ramsy principles and you're doing what I'm gonna call financially responsible behavior and you say to you know these jimbronies Brady's you know brother and dad when you you get around them and you say hey I'm paying off debt I don't want to buy a pocket watch instead of them going and taking a moment to reflect and go oh wow I've never done something like that or I've never prioritized it like that or that you know or just going oh okay you know maybe you don't have to have this crazy reaction instead they look at themselves and go oh in many ways and this can happen subconsciously in many ways that's far more responsible than the things I'm doing over here and so rather than reckon with that in the moment they create a controversy out of it and they create uh an argument out of it and they start judging you and projecting onto you instead of just going huh what a responsible thing this guy who's likely younger than me is doing and it happens all the time it's

1:41:47I can tell you you start doing well with your money you start paying off debt your lifestyle starts to look different you go around folks that you've been hanging around out around your whole life and suddenly it's like they have a little bit of hay to raid you know going through their veins and it's like well where did that happen because you're holding up a mirror and you're going I started doing these actions that are hard to do but I stuck with it and maybe in the beginning you were the one laughing at me for budgeting and now you're actually seeing it working and instead of congratulating your Hayton and if that's you if you're a hater out there you need to stop you need to look at people and get curious about what it is that they're doing instead of judging them if somebody's driving the car you wish you drove if somebody's out of the student loan debt that you're still in if somebody cut up the credit card that you're still ringing up by now paid later and door dash on ask them how they did it stop hating on them it's a bad looking you need to stop Jade really just told himself before you record I just I got upset therefore a minute

1:42:48could happen to operate in there if you wrong Jade uh I pity the fool I be I'd be running right I be fleeing the country right now I love you guys but I'm just telling you the truth there's my empathy yeah being having worked here now for 13 years I've heard all all the flack and all the judgment and I go you know what they don't pay my bills and therefore they don't get a vote is that simple you want to buy me a watch great but you're not going to push me to go into debt to buy something I didn't want to buy in the first place as in you know it's an investment an investment I love that George investing into the stock market in a mutual fund buying a watch is a cute hobby and if it pays off for you good for you yeah yeah I mean you love shoes I love you and your husband Sam big shoe people I can't imagine what your closet looks like I'm nervous to even would be nervous to see you guys would say you're kind of hobbyist collectors yes there's a good portion of money tied up in those shoes yes what you're not doing it as boy oh boy this is our retirement plan no

1:43:50and you earn you earn the right to do it when to take your phrase when you eat your vegetables first then later on you can do the dessert and it it's true when you you walk through the baby steps you pay off your debt you do your emergency fund you do all these things that again make you responsibly a financially responsible adult then you get to do the fun things when he's done paying off his debt and he gets everything set up I hope he buys as many pocket watches as his budget allows you know but today's just not the day to do it and that's the crux of what we teach delayed gratification if you can if you can sacrifice now yes you don't have to later because guess what you go into debt for a watch you're going to be making payments on with interest well you're going to sacrifice later with those payments robbing your income and potentially this watch not going up in value and they're going to sell it out of loss and not to be too psychological about this but I think we've all experienced when we bought something before we could truly afford it and that item speaks to you it's speed when you buy the car that you couldn't afford and you've got that $1200 or $850 payment every time you get in the car it's reminding you how big of a portion of your your

1:44:54budget this is I'm the thing that's keeping you from investing I'm the thing that's keeping you from having kids going to college without student loans I'm the thing keeping you from retiring when you want they talk to you so buy it when you can afford it and then when your things speak to you they just tell you what a great person you are that's right I like my wealth and visible and that's hard for a lot of people to grasp who are material who want to be a little showier with their cars and their watches so no thanks jibraties whether you're a small business owner or an individual doing your taxes is not fun it's like an algebra test where if you get anything wrong the IRS can make you pay with actual money but if you work with a ramsey trusted tax pro you don't have to be a tax whiz because they are they know taxes like the back of their hand which makes filing super easy so work with a ramsey trusted tax pro and get back to doing what you love which probably isn't taxes visit ramsey solutions.com slash tax pro and fill out the referral form to get connected to a ramsey trusted tax pro today

1:46:02one of our favorite things is when people share their stories of how they are winning with money and we got this great review for every dollar I want to share with you guys here it is just being able to use every dollar and see all the extra we had every single month was super motivating we'd have thousands of dollars extra and just throw it on the mortgage boom that's what happens the budget is not this boring static app to make you feel good about the numbers it's for real life it's to knock out those payments to get rid of the mortgage to fund the vacation or the car upgrade it reflects your real life so if you want to check it out for yourself you want to take control of your money you want to live like no one else start every dollar for free today just go to the app store or google play let me queen a new phrase you know how uh there's folks out in the space they don't like the term budgeting yeah and so they'll say like intentional spending plan

1:47:02that's my favorite one it's so funny I got one for you okay cost maxing oh that's good I think I think that's gonna be I'm gonna search TikTok for that Gen Z trend I like it cost maxing it's like I care about I care about my time I care about my money I make sure that I have a plan I don't care what yeah it's got a vibe to it it's got a cost max it's like what are you doing with your money I'm costing it on it Gen Z make it happen you heard you heard it get a first or else she'll come after you she's feisty this hour all right Lauren is up next in Kansas City what's going on Lauren hi um how are y'all doing today doing great okay so I have recently paid off a credit card and and prepared to close the account however my mom and my husband don't think it's a good idea for me to close it my husband thinks that it will negatively impact my credit score and then my mom's excuse is you never know when an emergency will come up so how do I convince them

1:48:04that closing the credit cards as we pay them off is the right move well first off the only person's opinion that I'm mad that matters here is the husband you know it's it's okay for you to be thinking about what he thinks but mom yeah when did she enter the chat and you generally take advice from them and live by it no not I mean no I'm definitely my own person okay and where it would be nice to have my husband on board yes I agree with that it sounds like you guys weren't aligned to begin with on just money values and principles that is correct so now this is just a sort of a symptom of a deeper issue which is fine we can still deal with that but he needs to be willing to see your side and it sounds like he's already pre-decided that he's not changing his mind that a credit card is a necessary tool in today's America right so that that was the case and then a few days ago when I when I when they year old people reached out to me to discuss my question on the show I started

1:49:06going over the numbers with him and he's like oh well we can pay off all of that oh by such and such date and I'm like oh okay that's good right I'll like okay but then in my back my head it's like okay I'll believe it when I see it kind of how long you've been married eight years eight years is this the first time that this has been a goal or has it been a goal before and you guys just never got traction it's been a goal before and we've never gotten traction and it's been your idea it was kind of both of our ideas I just was more intense about it why do you think that is uh is it if you if you could guess is it he just doesn't want to get uncomfortable is it he doesn't believe the numbers what part what facet of it stops him I think it's just you know how a lot of people are controversial about the the Dave Ramsey you know pay cash for everything and I think that that's what he's more apprehensive about so in his mind at some point you're gonna need to use you're gonna need to borrow money at some point we will for a mortgage we we currently rent

1:50:13but I don't have any interest in buying a house until we pay off our debt that we have now true but if he's thinking now we're getting to the now we're getting down to the nitty gritty because if we if we can understand okay him paying off the debts not the issue for him for him the issue is if we pay off everything and close the accounts that means we can't build a credit score if we can't build a credit score that means we can't buy a house I think that's what's happening in his brain right okay so we just need to debunk that George and we can yeah we can win this back so do you guys have any other accounts open outside of these credit cards any debt accounts yeah so I have a student loan um that one is just under 2500 okay and then we have two vehicles and that's what our biggest debt is is our two vehicles um what's left on those 78 000 goodness together that's what yeah together what's your household income um two 15 I'm so glad there was a two

1:51:18and the start of that number I was about to lose it okay this is yeah this is a solvable problem he wants to buy a house right that is that his stated main financial goal I think eventually he just doesn't really see many like he's not super driven to purchase a house right now um I would like to buy a house actually and we might even consider purchasing the house that we're renting right now but see that's where I think if you guys were aligned on a goal then the how will be so much easier because if you said hey our stated goal is we want to buy a house in two years that's the goal three years what's the best way to get there well getting rid of these car payments would really help us save up more in free of payments so that we have margin to afford the mortgage right these this is common sense so as far as the credit score thing goes uh in my book breaking free from broke I wrote it for guys like your husband to show them our side of the story with data with humor in a very logical way walking through what life is like without a credit score how to navigate the system even how to get a mortgage without a credit score which by the way

1:52:20Jayden I have both done mm-hmm right and that's what I'm looking you guys talk about it so I'm like trying to explain it and like no we don't need a credit score to do this we can do manual underwriting and there's yes what oh my yeah they talk about it all the time so let us explain it again for those watching and so you can play this back for your husband and we can explain it just in case we you left something out it'll make more sense oh yeah I've got my notebook ready okay so manual underwriting uh it allows you to get a home loan but they're looking at other things instead of looking at your credit score they're looking at other lines of credit okay they're looking for things uh like a phone bill you can use insurance payments electric company payments all of those things the thing you do have to show though is 12 months of document and rental history so those are the trade lines that they're looking for instead of looking at just your credit score basically on time payments on all of those things will prove to them that you are a sort of less risky borrower yeah

1:53:21so 12 months of documented rental history is what you need 12 months of other trade lines like I said things like cell phones utilities insurance and also they want to see the last 12 your income for the last 12 months all right and pay stubs for you know at least 30 days is what they're going to want to see if your self-employed they might also ask for your tax returns but that's it okay that's the only difference and if it makes what's your husband's name you can make up a name if you want okay so tell Jay uh this is what it is in both Jade and George have done it and the only reason here's the thing you do have to do a little bit of due diligence every mortgage company doesn't do manual underwriting but Churchill mortgage does and you can pop on their website and make sure that you know there's somebody in your area that can you know help you out and guaranteed that's going to be the case and so that's probably the only reason he hasn't heard of it because most people do have credit scores and most people but the truth is there's other options and you need to know what all of your options are and it's just something that's not talked about as much because

1:54:23most people honestly just aren't in the position to take advantage of it. Lauren I'm going to send you a copy of my book Breaking Free from Broke we'll get you the audiobook version as well you and your husband listen to that read that there's two chapters you got to check out the credit card chapter that's chapter two the credit score chapter as well if you read both of those it will give you guys the common language now to move forward and then decide what your goals are but the reality is I'm not convinced he cares that much about these financial goals if we're in crippling debt and not really doing much about it you guys have out earned a lot of these decisions so far but you should be making way more progress for a couple making over $200,000 a year I want to see you making progress toward that home and not just well one day let's get on paper two years from now we're going to have a $100,000 saved up and if if monetary like looking at the numbers like Georgia said doesn't work go to the emotional route say what do you want instead of thinking uh goals based on numbers think what do I want to feel do I want to feel free do I want to feel peace do I want to get rid of the shame that I feel every time I swipe our debit card the shame

1:55:27that I feel every time that I look at our bank account the shame that I feel when I think of the money that we haven't saved yet right go the emotional route you might be able to connect there if you're not able to connect on the dollars and cents just yet people ask me all the time George what's your number one money saving hack I'm glad you asked nothing makes me happier than helping another frugal friend so here's the hack get on a budget seriously how are you supposed to save money if you don't know how much you're spending in the first place and that's what makes the every dollar budgeting app a game changer with every dollar you'll get a clear picture of your spending and from there it's easy to see where you can get more intentional cut back and save more money how much money are we talking well the average every dollar

1:56:28budgeter frees up $395 in their very first budget and if you ask me I think your way above average so why are you still listening to me go download every dollar for free and start saving more money right now our scripture of the day philippians four six do not be anxious about anything but in everything by prayer and supplication with Thanksgiving let your request be made known to god mark twain said I've had a lot of worries in my life most of which never happened that's a good way to sum up the wasteful use of energy on anxiety just future things that probably won't happen agreed across that bridge when we get there all right Pauline is in Los Angeles up next what's going on Pauline hi guys thanks for taking my call absolutely I'm calling to ask about if the money my parents

1:57:32are planning on giving as inheritance which is about four million dollars total and property and money to go to just me and my sister or if we should split it up or they should split it up four ways between my sister and I and my two children who are currently ones 18 123 your my parents are go ahead yeah my parents are open to doing whatever we want and I'm trying to figure out the best arrangement from a financial standpoint for myself I'm a financial strength standpoint for myself and also from a family dynamics point of view with respect to like future family cohesion and respect and interaction my sister is married she does not have kids and she and her husband are generally big savers with good paying jobs and she she doesn't tell me how much she has but I think it's likely in the millions she doesn't have a problem with my parents splitting the inheritance four ways so instead of getting two million she would get one exactly and so her plan is to divide her and her husband's money in the future when she gives her

1:58:37into when they pass on between his nephew and my two keep equally and then say you know give 10% to a special needs family member but whose parents themselves are also well off but I believe my life a good amount of hardship a lot of challenges in my life including a lot of medical stuff so medical and education bills and we rented in a high cost the living area for my kids school we didn't save as much as they did and I want to stop you real quick I want to stop you real quick the money that is available the four million what I want to what I don't want you to do is say my life was like this and my sister's life was like this therefore I'm more entitled to this I don't want you to say that I'm not saying that okay I'm just kind of trying to paint the picture of like so my husband I saved less than they did because we didn't have kids and I had more but all those are your choices all those are your choices we need to look at this like

1:59:38clearly and just go what's fair because the truth is you're both you're both siblings and you're both you're both your parents children right so it's like okay we're on equal ground from that point forward and I think that's the fairest way to to look at it because everybody will have made choices in their life to to get them to a certain point you see what I'm saying and neither of you are disrespectful or irresponsible so as long as we know that that's true I think we have to look at you guys as totally even fair enough yes yes so you know she's fine with you know my kids getting more the the money and splitting it four ways and so I'm kind of you know and I'm happy I'm fine with that too for the kids more kids more of the money to come to might me and my kids but I'm kind of trying to think about the consequences of that as I see it and also think about consequences that I'm not seeing right now what it going to trust for the kids I imagine it would go into a trust for them and then my parents would put in like the rules that they would want for what when they can when the grandkids can access that but you know it's

2:00:42still a million dollars left for me and my my sister and so I mean ultimately it's going to end up like all this delayed gratification that I've already done to save money and we've saved about 1.8 million so far my husband and I you know I have to do more delayed things I mean it could have been a lot more but medical expenses education bills all of that you know kept us from doing that but you know I've built on my home I don't you know I love it here's the thing what I'm here's the thing I don't think that you should be making this decision I think your parents should make this decision and then I think they should have you and I think it's unfair of them to put that pressure on you to decide because it just creates a really weird family dynamic. I'm a communal well we're everybody's cool with it though it doesn't really make it really dynamic but if something changes I don't know and I'm not projecting anything negative all I'm simply saying is that's how everybody feels today if something were to change in somebody's

2:01:45opinion were to change let's say your sister there a situation changed somebody lost a job they came on a hard time right suddenly a decision that should have been your mom and dads to say here's the way it is now it becomes your fault and now they're looking at you going well can we have access back to some of that money because this happened and that happened so there's a cleanliness I support but they saved millions they've already I mean she won't tell me how much you say but they don't have care so much here's the thing Pauline by the time you guys pass away you're gonna have a four million dollar inheritance to give to your kids right yeah I think your parents should decide this and you think it'll only be four million I'm hoping it'll be more it'll be more yeah I'm just saying I'm just saying like let's not start but well they have more they save more so maybe it feels more fair I would just go you know what guys it's your decision what I don't want to do is give an 18 year old a million dollars yeah they should pass away tomorrow so if you choose to give them the money please make sure you know if you if you say to them hey if you decide to give the kids money we're grateful but if you could just make sure the trust doesn't

2:02:48hit until I don't know age 30 whatever you decide hey you can use this much for education at 25 they have access to 25% of it they can use this much for a down payment on a house and a good estate planning attorney will walk walk you guys through the right way to structure it so that it doesn't destroy their lives but let's go here but let the final word come from mom and dad and make sure the whole family knows that the way this needs to happen is everybody needs to be in a room your sister I don't know how old your kids are if they're too young they don't need to be there but you and your sister and your mom and dad and your mom and dad need to be the adults and the grownups and saying we have four million dollars and here's what's going to be done with it and here's why we made this decision and it all needs to come from them that way once they're off this earth there's none of that coming back on you or your family or your kids because the truth is you just don't know what can happen and I agree with George they never should have put you in this decision to decide when it had the ability to pull away from your sister and what their family also could receive

2:03:50okay that actually does make me feel a little better so I could probably just say listen this would be my preference but you guys do what you want to do and then she could give her preference and then they can decide yep yep I love you guys could also down with a state planning attorney you guys can have a sit down meeting with an estate planning attorney and go hey what would happen if we did this let's walk out this scenario okay what would happen if we did this what are the tax implications what have you seen work well for families I would just get more information before making this decision and I think your parents right now probably haven't thought a whole lot about it and there's guy whatever the kids wants fine I don't think it's malicious but I think it's a lot I can tell that you feel this pressure bubbling up it's like a pressure cooker right now of what you think you should do I was more worried about like if the kids get a million each when they're 30 or whatever that I'm gonna have less money than to be like the matriarch of the family and give them the things I dreamed about giving them let's all go on a fabulous trip you can do that I'm gonna buy you guys this stuff here's the thing just think about it this way if

2:04:50you never got this inheritance from your family let's say your parents ended up needing it or used it all would you still be okay yeah could you still take them on that trip yeah I could I just have to find ways to save but I wouldn't it wouldn't be a lavish lifestyle that I'd be living in my life I mean you guys already have two million dollar net worth right I suppose I how old are you 46 okay you're 46 with two million dollars you were like the top 1% I don't know who told you you're behind I know you feel like I think you have baggage and guilt from the mistakes you made in the past but Pauline you're doing so good and by the way who said it had to be split equally four ways I mean if if they did ask your opinion what if it was you know two million to you a million to your sister and you know five hundred and five hundred to your you know it does it have to be four ways there's a lot of questions that can be asked but either way if they want to know some of your thoughts I'm fine with them asking some of your thoughts but they need to be the ones that totally decide and yeah this should be a blessing not a burden they made

2:05:53it a burden when they tossed it over to her yeah that's the thing you know when it comes to inheritance and family just things get so tense there's so many zeros on the end there's so much pressure to do it the right way well then she's forced to ask to ask herself well who deserves what and that's a horrible like now she's asking herself questions and making comparisons she probably never wanted to make yeah in order to try to figure this out that's not her job and I mean they could live another 20 years I don't know how old they are the state of their health and so you gotta think if this never happens if they use the money because there's a health crisis they're in a long term you know stay somewhere you gotta think about that too so never plan on it but let's at least be thoughtful in the way we do it and that's where good estate plan attorney comes into play