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Live from the headquarters of Ramsey Solutions, broadcasting from the car rental studios. It's the Dave Ramsey Show where dad is down. Cash is king in the pain of old mortgage, has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thank you for joining us from Rachel Kroos Ramsey, personality number one, best selling author, a couple of times over. And my daughter is my co-host today here on the air.

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As we take your calls about your life and about your money, open phones, a triple eight eight two five five two two five. That's triple eight eight two five five two two five.

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Angela starts this hour in Detroit.

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Hi, Angela.

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How are you? I'm great. How are you? Sure. What's up? I am baby.

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Step number three, my husband, Nathan, listen to you. For several years we tried budget several times. I had a lot of heart issues. I actually got a new heart and a new kidney in the last three years. So we weren't able. Yeah, well, that exciting. God is good and very. Are you there on. But I'm sure you cut you cut in and out after we heard about the heart and so forth and I lost the last part.

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So can you start can you hear me out again? Can you hear me now? Yes, ma'am. OK, so we finally paid off our debt. We had around 16 to 20 thousand dollars in debt from different things, hospital bills and such. So now we are at between three and four. We have about six months worth of money saved. And so we're deciding, trying to decide whether to start investing or save more for the fact that, good Lord, well, I won't have any more health issues, but I don't know if I should just start investing or build up my fund more.

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How much do you have an emergency fund? Fifteen thousand.

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And what's your household income? About 75000. OK, so you consider 15000 to be three months or six months. Expenses of expenses. Yeah, OK, yeah, well, it doesn't hurt to beef it up a little. I mean, if you want to be on the six month side with the health challenges, I mean, you've had some pretty unique health challenges, right? I did.

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I did. Yeah. We had quite and we've had quite the journey now. And, you know, medical bills have been part of your life for a long time. So you're a little bit gunshy.

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Have. Yeah. Yes.

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I would lean towards the six month side. I mean, if you make in 75, I don't care if you got 30 grand sitting in your emergency fund, if that makes you feel better. OK, if I was in that situation, I'd probably want that.

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What do you think, Rachel? That's I was going to say for sure. I mean, today, I guess. Yeah. Because of the health stuff and not knowing that question mark there. More so than the other. Yeah. Than the average person out on the street. Yeah.

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Having more cash available would definitely give you still less than half your annual income. We know your expenses aren't the same as your income, but if your expenses were close to your income, that's six months at 30. So you just have a really healthy, beefy emergency fund and you'll reach the point someday where you have a comfort level where you don't need that. Our emergency fund today is small compared to the old days, but back in the old days, everything was an emergency, you know.

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And so now that we've kind of gotten past that and we've got better houses and better cars and, you know, fewer things breaking. Right. And, you know, more cash flow to do things with. And so you don't we haven't touched the emergency fund for an actual emergency in decades at our place. And so you'll reach that as soon as you get further into your wealth building.

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And you can probably relax that 30 down if you want to. But for today, I'm fine with that. I would.

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I would if I were in your shoes. So. Hey, thanks for the call. We appreciate you joining us. Matt is up next. Matt is in Tampa, Florida. How are you, Matt?

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Doing well. I appreciate you taking my call. Sure will. Yeah, I yeah, I used to work for they gave me the option for an early buyout on my pension, so I took the lump sum at four hundred and fifty four thousand, all but sixty one thousand pre-tax. I rolled it into an IRA good to sixty one thousand. They sent me a check.

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So my question is this, what was the sixty one thousand that wasn't. Why was that not pre-tax. Because it was employee contributions, so when I worked there, I contributed post-tax. OK, so there was no panic, there was no penalty or taxes do then, correct? So you got 61000 floating around extra money right now?

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Yes. Sixty one thousand. So my question is, because that was going towards my retirement, do I invest that sixty one thousand or do I use that to pay down what is owed on my house?

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I would go ahead. I mean, because yeah. If I were you because you were able to roll everything else over the IRA, I would use that to go ahead and clear up the Hellspawn mortgage.

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How old are you? I'm 55. OK, all right, so the 450, if it's invested well and good mutual funds before you get to retirement age is probably going to be a million. Right, so you're done there and we need to get the house paid off, Wario on the house. Oh, three thirty, it's worth 730 justified. What's a household income? 220. Cool. OK, so if we take 330 and throw the 60 at it, then we take that 220 income and let's pound that house then I'm with Rachel.

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I agree.

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Got it. All right. To take the 60 vote down the House and then just use the income to pay down the rest of it. Yeah.

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And I guess give you the background of the thinking on it as a you're set in your retirement account. Yes, if you've invested that well and good mutual funds, ding, ding, you've rang the bell. That alone is going to make you a millionaire. Way to go. Excellent job. On the one hand, the second thing is, is it's not taxable. It's free money. So it's as if we looked up and said, hey, I got 60000 bucks laying over here in a stock account of some kind.

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What I do with that and then that immediately triggers baby step six for Rachel and me.

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And we're both going to put it on the house, but on the house. But in your case, it's even more so because the house is like your last hurdle now.

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And she says, yeah, so let's pound that puppy and be done with it, man, I love it. So that's the thinking that led us to that answer. If that, you know, the the under underpinning the structure of our how we arrive at those answers. So that lets you know how to do it.

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For those of you out there listening, open phones at triple eight eight two five five two two five.

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The interesting thing about the baby steps, Rachel, is obviously they are not we didn't get them from the Bible.

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We made them up. So the only thing that has made us even more stringent on them is that for now, almost 30 years, we find very few reasons that it is logical to violate them.

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So they've really stood the test of time well, and 100 percent.

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And what I find that it helps so much is specifically with money. People just kind of wonder through life, right? I think I'm kind of just like have a little bit of this debt. I'll put some retirement here. Kids college, maybe it's there's just zero plan. And what this does is this gives you focus to say, hey, this is exactly what you need to do and you just walk the steps. And like you said, most people don't get to baby step seven.

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I like man, I wish I had a mortgage or man, I miss credit card debt. Like, you get to the end and it's like, wow, it worked. And that's proof over a period of time.

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Like what you're saying, you know, millions of tens of millions of people that have actually used that clear path. This is the Dave Ramsey Show. You know, what angers me is folks are going through some really hard times, identity thieves are using every opportunity to prey on us. The scams are endless. You need to be prepared. Zanders I.D. theft protection is the only plan I have ever recommended. And I've looked at them all. They just do everything in a smarter, more affordable way.

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Look, most of these plans are just a bunch of hype, not Xander. That's why I recommend them to you. Call 835 642 82 or visit Xander Dotcom.

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Welcome back of the day, Ramsey Show, Rachel Cruze, Ramsey, personality and best selling author, is my co-host today here on the air, open phones at eight eight two five five two two five.

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Well, it has been a weird year for investing. We start off the year everything's booming. Pandemic hits, the stock market takes a dive. Now, the stock market has fully recovered and some of you didn't notice that because you didn't have a news yelling at you that you're going to die, you're losing all your money, and they don't say you made all your money back.

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They don't say that. So you missed that part, a lot of you. But the stock market is fully back where it was back in February and setting records again. And so what you've got to have when you're investing isn't investing professional in your corner to talk you off the ledge when that stuff's going on and to help you understand investing and to help you understand the different kinds of IRAs or kids' college funds or rollovers that you can do the things you can do if you have a small business and all these kinds of things.

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So get with a smart investor pro. We're not in the investing business here at Ramsey, but we have a network of people that we recommend. They're called smart VESTER pros. You are the smart investor. They are the pro that helps you, the smart investor. And they have the heart of a teacher will sit down with you.

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If you're ready to do some investing or you have some questions, just click on Dave Ramsey Dotcom and it'll drop down and then click smart Mr. DropDown a list of the ones in your area after you fill in a little form and then you decide which smart Mr. Pro is best for you within our network.

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But they're all people that are going to know our plans, our systems, the things you're hearing me teach.

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You're not getting like weird advice. It's different. And and they're going to have the heart of a teacher, Lindsay is in Portland, Oregon. Hi, Lindsay. How are you? Good. How are you guys? Better than we deserve.

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What's so great? So my husband and I are twenty five and we make about one hundred thirty grand a year. So my question is regarding our retirement savings. We're on baby steps four and six. We don't have any kids yet. So we are currently maxing out to Roth IRAs. And then I have like five percent or so going towards my work retirement. My husband's company does like a profit sharing, and they contribute about 15 percent of his annual income a year to his work for a link or retirement savings.

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So currently we are ourselves. We're putting away about 12 percent of our income and we are not factoring in that 15 percent that my husband's husband's company is saving. So we were kind of curious. So including that like 15 percent that they do, there's like twenty one to twenty two percent of our income going away towards retirement. So we're using it right there.

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Masroor. If you're putting in 12 percent of your income now and they're putting in 15 percent, that does not equal 21. Well, it's 15 percent of your income is you don't add them together because it's 15 percent of his income, not the household income.

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Yeah, yeah, we didn't. We didn't as the percent. OK, so it's a lot more than 15 percent of our.

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Of our total annual income that is being saved you yeah, because you're putting in 12 hours out of the household income and then they're putting in 15 of his income, right?

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Yeah, OK. Yeah, yeah. They don't. We were curious. No, we didn't add them together, but we were curious if we could light up a little bit on what we're saving monthly like to our Roth IRAs because. Because there is so much that being so mean, because that's such a big portion of my husband's income that's being saved. They're not taking it out of his check. No. And we don't have we don't have to put anything away for that.

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So they're just doing that all independently. So we kind of want to free up a little bit of the money that we're putting towards these like Roth IRAs.

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Well, you're welcome to whatever you want to do. What we teach is that you put in 15 percent of your household income regardless of match, regardless of pension benefits, regardless of what the company does, that you take your household income times point one five and somehow get that amount of money going into Roths into matching 401. Or non-match for 401K Roth 401. Whatever is available to you to to get it all the way up to 15 percent. It sounds like you're putting in 12 percent now.

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And so it sounds like you're underfunding it, not over funding it. Are you going to be OK? Yeah, you're going to be OK.

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But but, you know, the point is, it shouldn't be putting that big a strain on you.

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And no, I'm not going to base my retirement future based on the behavior of some company. I'm going to base it based on my behavior and what I'm doing.

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Yeah. So basically what the company is doing is just gravy on top when you you know, when retirement happens. So looking at you guys in your household income, taking that, you guys make 130000 dollars, 15 percent of that. It's going to retirement.

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Yeah, that's what I would do. Exactly. Exactly. So good question. Thank you for joining us. Will is with us. Wills in Dallas, Texas. How are you?

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Well, I'm doing great. Dave, ask how you are. But I've been listening for 15 years, so I already know. How can we help? Rachel, I will. Well, I was on baby step three B but so I was planning to buy a house here in the DFW area, Dallas Fort Worth area. But my company got in contact with me and offered me a dream relocation to the Denver, Colorado area. I love Denver. I could see myself there a long time, but the housing prices make me cry.

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I'm a single guy. I know dual incomes or anything like that because housing is so much more expensive, I don't necessarily mind renting. Would it be so horrible if I just rented indefinitely and just went to step for five aggressively fund my retirement? I can pay for a house and cash at fifty five and a half. I could.

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But you know, Denver house prices are probably not going to get better by 55. Well that's true, but my retirement account would, wouldn't it.

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Yeah, but I don't know if it'll outstrip Denver prices or not.

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So I mean I think renting when you first get there for a few years is totally fine, totally fine. Don't feel the pressure to go in and have to buy something immediately or even in the in the next two or three years, you can totally rent, be fine, do your retirement, all that. And then but I think long term we always suggest investing in real estate. Owning a primary home is just a great investment because the market naturally is always going to go up again.

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It's going to it may dip, but like overall, it's going to go up. And so being able to own a home long term is a is a great idea.

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Absolutely. I was going with you, too. You said indefinitely. Yeah. And when you drop that word sentence at the end of the sentence for me.

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So how old are you? Well, I'm thirty, really. My main concern is, you know, were I to kind of keep my payment, you know, within the parameters that you teach, I would need like 80 percent down or something like that in order to save that up that. Well, now you're like the young women.

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This is a dream job. What are they paying you for this dream job? Well, not dream job is the dream location of my current job, which I like a lot, but what do you make it say? I make 65?

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OK, yeah, I don't know if you have I think you're probably have looked in one certain neighborhood in Denver. Denver's got is expensive real estate and it is measurably more expensive than DFW. I do agree with that. But 80 percent down is not necessary.

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Well, A.R.T. well you said indefinitely. What if you meet Mrs. Wright in the next year? She's going to want a home eventually. So don't say indefinitely. You never know. That's the problem.

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So, yeah, move up. Go ahead and take your move and go ahead and rent for now. And I would just pile up my baby. Step three, be really high and sometimes baby step three B is done while you're doing baby step four for some people. And so if you want to go and start baby step forward and have a three year or five year plan, the problem is with indefinitely is that real estate is going to go up and guess what?

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Rents go up because rents are a factor of, you know, are reflected in the values, the values reflect the rents.

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And so, as you know, when Sharon and I got married, I mean, you can buy a house for nothing and rent was nothing compared to now 40 years later. And so you don't want to be on the other side of that because your rents are going to go up every year. If you don't, you know, if you don't become an owner and becoming an owner fixes one of the larger items in your budget and keeps you from increasing with the exception of taxes and insurance, you're going to lock in that expense.

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This is the Dave Ramsey Show. Rachel Croom's Ramsey personality is my co-host today here on the air, open phones at Elite eight two five five two two five. Ashley is in Salem, Oregon. Hey, actually, welcome to the show. How can we help? Hey, Dave.

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Well, my husband and I are on a stand off. My husband started a remodel business last year and in his first six months produced 300 construction. This is our first full year owning business businesses, nearly 600 for the year. Wow. And we haven't even started looking for November or December as you make it a profit.

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He is, yes, we're doing very well and I'm actually a stay at home mom. We have a one three and five year old and do the state of the world. I'm looking for home school next year. And at the moment we're living in a two bedroom, two bath, 100 square foot home with no yard for all these kids. That's why as we've cleared all the fifty nine K in student loans and our mortgage, which is only one days remaining, our house is a little bit of a unique situation and this may be the best opportunity we have to sell and make money with little to no modifications on the home.

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The housing market here is really hot right now, so I think we should sell off the loans, get a house. But since our family and the business, which would put us on track for baby step three to pay that mortgage off, but my husband isn't budging on it. He wants to wait to see how the business goes and says he won't move until we've got 100k in savings to put down, which sounds crazy. And my anniversary is tomorrow.

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I told them because I would like for him to allow me to ask the house and I will assume all responsibility so he can continue having the business. Should we sell or should we suffer for a year and risk the market taking a crash, even though I know my husband isn't going to let us fail? So I think either way we go, we're going to be fine. Ashleigh, how you guys don't have baby step three, correct? No.

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Fifty nine thousand hours and you still have fifty nine thousand dollars left in debt. No. One, baby, step two, so we're paying off that debt, but if we sold this house, we would be able to pay off the mortgage and our student loans. And then turn around and buy a house that'll suit us for maybe 20 years. OK, that part's not true, but now you're exaggerating. Yeah. So actually, if I were you sorry.

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I'd love I would love to be on your team on this call, but I'm not going to be I'm going to be with your husband because I want you guys completely out of debt with a fully funded emergency fund before you make another move.

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But we'll have an emergency fund. We've got I don't even know how much, but we have a lot of money in savings.

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You know how much? OK, he has all the numbers. We've got at least 10 in savings. That's not we have a tax account for the business that last year we had thousands and thousands of dollars extra in that because he's really on top of that. I think we've got 10000 in personal savings that he just isn't touching. And then we have no credit card debt, no card debt, nothing like that. We just have the fifty nine and the student loans and then our mortgage, which is 170.

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The main issue here is that we live in a square foot house with three kids under five. Yeah, totally. There are two bedrooms. I'm sleeping on the floor. You know where I would sell the house and rent? But I would not I would I would not buy a house. I would not buy. I'm open to that as well. I just want to get rid of this one while the market is hot because I want to get rid of it because the market's hot.

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You're right. You want to get rid of, though, because you're you're exhausted and you have no room with five people in your family. That's right. Because you couldn't sell out what's really going on. Yeah. That's why you want to sell.

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Not just completely emotional, but but I don't mind if you want to rent or sell the house, pay off the student loans and build your three to six months. And if he wants 100 grand and that's fine, you can sit there and rent for two years. Sharon and I actually did that. We we did it for a different reason.

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We did have school systems and pull the kids out of private schools. Rachel was in kindergarten.

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Each was in first grade and second grade. Thank you. And, you know, we were paying private school tuition because the schools in Nashville suck. And so we moved out of Nashville into the adjoining county where we've got great schools and rented for two years, which is really difficult for me because I have been in real estate my whole life and emotionally to sit there and rent was ridiculously hard. Sharon made that rental house to this day was ugly, though.

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It was it was really ugly. But to this day, she gets an Elvis lip sneer going every time she mentions, oh, that house every time we bring it up.

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So it's not a it's not a positive subject. And but we got the kids into a into a great school system. We cut that expense out and we made that move, but we still were cleaning up.

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So there you go. Actually, I didn't even say I didn't even think about renting for you guys because you just owned a home. So I immediately went to write to the baby steps for you as you can. But you but you can just go rent, sell it and rent if that's what you guys want to do for sure, because I'm with you as a mom. I've got three littles, basically the same ages. And yeah. I mean that's that's hard.

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I get it. I totally get it. But you got to make decisions again, not based on emotion, based on fact. And you guys need to do what's best for your family financially and in the long run while keeping your sanity. But and here's the baby on the same team to actually I feel like the way you were wording everything was like, well, he's this I'm not sure you guys need to find that common ground and work together because you're going to just get so you can go so much faster in this process, working closely together and being on the same team.

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Yeah, it's almost as if, you know, you're slamming your fist down and saying, I've got to do this and he's trying to hold you back and be responsible. And, you know, and that you both have to.

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What Rachel's saying is you both have to identify what responsible looks like. So responsible would be you clear your debts and you have an emergency fund before you buy a house. OK, what Rachel said at the beginning of this, now you can do that one of two ways. You can sit there and endure the LeWinter square foot with three littles for one more year. And it sounds like with the numbers you've got, you will be able to do that in one more year and you can do a lot of stuff for a year.

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There's a lot of people got it worse than you. You know, I grew up in eleven hundred square foot house for 17 years. So somehow my mother, my mother pulled that off. I don't know. I don't I don't have scars that I'm aware of from it. So, you know, and we never moved until I was 17 years old. So, you know, lots of people have have suffered less and more rather.

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So, you know, you could do that for one year. It won't kill you. But if you want to move, I have a little better lifestyle, a little better situation and go rent for a year or two and do this in the right order, that's fine. I would not sell and immediately buy with no emergency fund.

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Absolutely would not do that. If that's your only option between the two of you, you need to sit tight and but if you're willing to move and rent and move again in two years after you get everything straightened around, you got some reserves in the business, you got the down payment for the house or maybe even I mean, you may be able to pay cash for a house almost the way you're going, because he's making bank and he's doing a really good job managing this, not these numbers and and and holding you off from running the thing in the ditch.

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So, you know, you give this guy credit. He's a stud.

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So well done, kiddo. You're going to be all right. You'll get through it either way here.

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Open phones at eight eight two five five two two five. You guys jump in.

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Rachel, talk about that again for the listeners, this getting on the same page thing and. You know, like I remember your mom and I had had an argument not dissimilar to her, she was driving that old blue Astro van and she wanted a better car.

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And we had a block of money and I needed to do some stuff that I wanted to do some stuff at the office that would take that block of money and make it back five times over. And I'm trying to go do that.

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And she says she's like, I've had it with his whole car. Kind of similar conversation, right. To what I was doing. And we finally figured out was that we were not head to head, that we got to do both.

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It's just which order we did it.

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Yeah. Which one first. Yeah. Which one's first. And getting on the same page is everything.

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It's that last parrot always says that he wishes he could give a little box of empathy to everyone and that's it. You need to empathize and put yourself in your spouse's shoes. You said we're on, look at our own thing.

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And he said he needs to do that for her because she is at home with her. That's what I'm saying. I would be a pretty girl, a cracker box with three levels. I get that. This is the Dave Ramsey Show. Go for. And. Rachel Cruze Ramsey personality is my co-host today. You're on the air. This is the Dave Ramsey Show. Open Phones, a triple eight eight two five five two two five Jameses in Dallas.

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Hi, James. How are you?

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Good afternoon, Mr. Dave and Miss Rachel. How are y'all? Great man. How are you doing? I'm doing better than the cotton candy, trying to think of something different that better not deserve that. Applause applies also. I got it here.

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Yes, I when I got home, I got to thinking about how I wanted to phrase my question and keep it as short as possible. And I and I came up with this, I'm not a man of few words, but I'm like, Lord, help me because I know, I know, I tend to ramble. But my question is this. Is it still I don't get to listen as often as I'd like to. And I know I can get get on the podcast and stuff.

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But when it comes to retirement, income is just a safe conservative percentage of return. You know, I know you said growth stock, mutual funds, you know, average around eight percent, you know, some years more. Some years less. But if I'm figuring on were debt free. Praise the Lord for that. And, you know, sitting at about just under a million, nine hundred and something in total total assets between, you know, what I'm going to get as a pension and a traditional four one carry a couple of Ralf's, me and my wife and some other investments that we have with TD Ameritrade and and those kind of things.

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And I'm really considering that since I work outside for a living, if I had an office job, I don't think I would be thinking about retiring at 55. I'll be 55 in October and my wife wants to keep working. She loves her job. And I love how you say don't retire from something to retire to something. So, you know, I'm involved in my church and I want to be more involved in a prison ministry and stay busy with those types of things.

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But I guess I'm just wanting a little extra peace of mind on, you know, retiring at 55 because it seems too young.

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But what's your household income now? Household income now? With my wife and I was about a hundred and twenty to one hundred and forty thousand a year, depending on overtime.

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Are you saving sixty thousand dollars a year?

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Golly, you know, I hadn't I hadn't really put the numbers to that. Here's the thing.

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I mean, if you make eight percent of a million dollars, you got 80000. What's your wife make? She only makes about 30000. OK, so I put you 110000 on our income. So you're taking a pretty substantial pay cut if you pull eight percent off your mutual funds, which is what you were talking about doing.

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And, you know, that's assuming they're growing at a greater rate than eight so that you don't destroy the nest egg by constantly pulling off the principal because you're trying to live off of the income that it creates or less. We'd like to have it grow beyond what you pull off so you can do that.

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But you just got to set your household up in such a way that you're living on 100 or so and then you're ready to do that.

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You'll be you'll be fine doing that. So.

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The other thing is, is that if you were to work five more years or so as an example, you know, you would have you know, that thing is probably going to be a million and a half million seven.

[00:32:58]

If you just keep at it a little while longer, it won't take because it's going to be growing, you know, continually as you've got it invested.

[00:33:05]

So thing to remember when you're looking at these kinds of things is if you're invested at 10 or 12 percent somewhere around every seven years, what you've already got in there will double.

[00:33:18]

So if you're 55, at 62, you know, you'd have two million roughly, and so if I'm off a little, let's make it seven million. Five is still going to give you a lot better income than the million will give you today. But congratulations. You've done an incredible job.

[00:33:33]

Millionaires. Yeah, absolutely. And I think, James, to you, I think just looking at the math, sometimes just seeing numbers, black and white on paper helps making that decision. So just map out and say, hey, if I worked for two more years, here's what it would be if I worked for three more years for this, like just kind of go out a few more years and that may give you more peace of mind to say, you know, I am comfortable just going now or maybe if I just work two more years, we can get this.

[00:33:55]

And so I think just go ahead and mapping it out and making a decision based on that is going to help you.

[00:34:00]

Yeah. Or when you retire from what you're doing, if you went into a career that created an income as an encore career, then that changes the entire formula as well, which is something you may want to consider. Charlie is on the line.

[00:34:14]

Charlie's in Orlando.

[00:34:16]

Hi, Charlie. Welcome to the Dave Ramsey Show. Good afternoon, Dave and Rachel, how are you doing? Great. How can we help? So I'm looking at refinancing, hopefully to refinance their home. Our mortgage, we have a we have currently have a 15 year mortgage down to sixty thousand four point five percent. Our monthly payment, Pinart P and I is two thousand. We do have Aspro Fonso, so our monthly mortgage payment is two thousand eight hundred eighty eight dollars.

[00:34:53]

We can refinance down to the two point two point seven and we'd have to increase our balance up to about two hundred eighty four thousand for the closing costs and extra that escrow money that they collect.

[00:35:12]

You can stay in the house. Yeah, we're looking to stay it, we just bought it. It's our dream home. They're saying the closing costs are fourteen thousand dollars. Well, of course, it costs about six to seven, but they're wanting to collect an extra Nexus seven for for Espero.

[00:35:29]

Oh, well, that's not it. That's not lost money, though. That's not cost. And you'll get your scrollwork. You've got an escrow account now that you'll get back, that'll offset that. Yes, so basically you're talking about from 4.5 to two point seven, so round that side, two percent savings a year, right?

[00:35:46]

Yes, one percent on 268 is 2600 and eighty two percent will be 5000 plus, right? Per year in interest saved. And so if you're closing costs are seven thousand dollars after a year and a half, you've made your money back. Are you going to pay this off or sell it within two years? No. OK, then you're going to make your money back and you'll be in the in the in the black on it, right. You see what I'm doing?

[00:36:15]

The fact that the payment change doesn't matter, the escrow doesn't matter because you don't lose that money, that money still retains your position.

[00:36:24]

It's the cost of the refinance versus the interest saved on the loan.

[00:36:31]

And your interest saved on a loan is approximately two percent per year. So around 5000 dollars a year on two hundred sixty eight thousand dollars you're going to save. In interest. And right, OK. And if it's costing you 7000 dollars to do that, that means after year one, you've recouped almost all of the 7000 with a 5000 dollars savings.

[00:36:54]

Now, the payment mayor, the cash flow and the payment may or may not reflect that because sometimes people move from a 30 to a 15. I take a higher payment, too, but the payment, all of that payment difference is all going to principal. So that doesn't matter either. So the analysis, the break, even analysis on it is interest saved, divided into cost, closing costs. And do you recoup it fast enough that it that it looks like fun?

[00:37:21]

And I can tell you this looks like fun. Yeah.

[00:37:23]

Please give me five grand each year as it goes on, ONYA.

[00:37:27]

And of course, the faster you pay it off, if you're going to pay off the mortgage in three years for some reason or another, you wouldn't fool with it. Yeah.

[00:37:33]

Because, you know, you might say four or five thousand dollars net out of all out of all this stuff flying around everywhere in all this trouble. And I want to screw with it if that was the case. But or if you're thinking about moving in the next two years, I wouldn't do it. But where you can recoup it all in less than two years and you probably have a seven to a 10 year window to pay this off, you're going to be saving five grand all of those years after that recoup then, yeah, you do this refinance.

[00:37:57]

It makes a lot of sense. Good question, man. We appreciate you joining us. Refinancers are really hot right now about this half.

[00:38:05]

Like we get questions like that all the time. Yeah, they're there. It's a real estate markets booming in the middle of this pandemic. It's booming. You can't I mean, I know four people put house on the market last week and all of them sold in two days. Yeah, and that's in the Nashville area. But I mean, there's areas where it's not there's more draconian shut down stuff going on in some of these areas that some of you were in.

[00:38:28]

But areas like Tennessee that are open, it is booming.

[00:38:32]

It's a freakin boomtown. Part of it is a bunch of you are leaving those states where they're not letting you do anything and you're coming here, which we love having you. That's great. Thank you for joining us here. You can leave your vote back there, though. This is The Dave Ramsey Show.

[00:39:04]

Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show. If you would like to do your debt free scream live on the show, make sure you visit Dave Ramsey, dotcom slash show and register. We would love for you to come to Nashville and tell Dave your story. If you're looking for fun and practical ways to save money in your everyday life, you need to check out The Rachel Cruise Show, a podcast from money expert and my daughter, Rachel Cruze.

[00:39:32]

Hey, guys, it's Rachel Cruz. And I'm so excited to tell you about my podcast. A lot of people are living paycheck to paycheck. They're in debt. They don't even know where to begin. But they have this need this want to get in control of their money. And if that's you, you have come to the right spot. So in each episode, you can get a ton of inspiration and practical advice. If not, subscribe to the Rachel Cruz show podcast.

[00:39:55]

Make sure you do it today.

[00:39:56]

Hear more from the Ramsey network, including the Rachel Cruz show wherever you listen to podcasts.

[00:40:02]

Hey, it's James, producer of The Dave Ramsey Show. This episode is over, but check the episode notes for links to products and services you've heard about during this episode. Thanks for listening.