Live from the headquarters of Ramsey Solutions, it's the Ramsay show where we help people build wealth, do work that they love, and create amazing relationships. I am Rachel Cruz, hosting this hour with my good friend and bestselling author, Jade Warshaw. And we are here to answer your questions. So give us a call at and we'll talk about your life, your money, your relationships, your career, anything and everything. We are here for you. So first up, we have Ashley in Charlote, North Carolina. Hey, Ashley. Welcome to the show.

Hi. Sorry, I'm really nervous.

No, you're good. Don't be. It's just us girls, us just chatting. You're great, Ashley. How can we help?

So I'm trying to figure out if I step away from work, if I'm going to financially ruin my family.

Let's talk more about that. Why do you feel like that could be the case?

So I make about double what my husband brings in. And he works at a small business, so they don't offer health care or retirement plans or anything like that. And he's never going to leave that. That is his life.

Okay. What does he do?

And I love him.

What are the real numbers?

So he earns about 60, and I earn about 115, roughly.

And how old are your kids?

I have a four year old, a three year old, a two year old, and a one month old.

Wow, Ashley.

Oh, my God.

You're in it. I feel like we should just take a moment and pray.

I almost fell asleep just listening to that.

That's crazy goodness, man. Okay. And I totally get this, Ashley. Like, after my third, actually, when I was pregnant with my third, it was the moment I was like, oh, man, do I want to go back to this work thing. What does this look like for me? So this heartstring that moms feel, it is so real. And so for you, you're a month into a new baby. You have three little ones around. And what does your husband say when you're saying, golly, I'm feeling pulled in this direction?

Well, he says that we'll figure it out and it'll be fine, but he feels like if I do step away, that not going to feel fulfilled staying at home. He feels like I was meant to work and that I'll get bored.

Well, I feel like no one's going to know that better than you, how you'll feel. Right. So it's possible that after having a baby for the first time and you're just a couple of months in, it's possible that you're feeling more emotions in the moment and that you could step away and feel a little bit like, okay, several months have passed now. I'm feeling better about this. That is possible. But I do think at the core you probably do know yourself best. My question when I'm looking at all of this, I'm just really wondering if you do get to the point where you decide, I want to stay home, can you actually afford to do it? Because I feel like that otherwise you wouldn't be calling this show. So that's really the question is, what's your financial situation above what you both earn?

We're doing the baby steps, honestly, we're doing pretty well. We're debt free. We have a fully funded emergency fund. We own our house outright for rental.

Okay. And have you done a budget with just his income, just to see from basic necessities if everything would be okay?

We have. And it's going to feel tight covered with my work. And so if we went to his, we would be about $2,000 short a.

Month.

If we get insurance on his. And I don't know where to cut or what to do because $2,000.

Yeah. That's a significant gap. That's not $200.

Is there something you could do to bring that in to where you're still not working full time, but you're closing that gap while still staying at home?

I'm not sure. I haven't really looked into that.

Okay. And why doesn't he look at for another job? That's another. I know you said that this is his life, but what's the situation?

I mean, this is his life. He's known what he wanted to do since he was twelve years old.

Yeah, but what is it doing it?

What is it? What is it?

Well, he partially owns the business. He is a martial arts instructor.

Okay. So is there a path to growing the business to where he's earning more? Basically is what I'm asking.

There definitely is, but it probably won't be for another year or.

I think what it gets down to, Ashley, is you and your husband, y'all have to sit down and decide what is a priority for our family. What does a priority look like? What are our values when you both have desires that are conflicting. Right. He has a desire to stay in a job where financially you wouldn't be able to do it. It would force you to work. And is that for him greater than having his wife, who doesn't want to go to work, be forced to go to work? Do you know what? There's a. There's a level for me where I'm like, man, there's something about. And if you work, Ashley, I'm like, you're paying childcare for four kids.

That's a lot.

So there's a point, too, that your income at that point, it starts to dwindle really quickly for that. And so, I don't know. There is something in me that I don't know. And, Jade, you can correct me on the other side, I fight for the mom that wants to be home with her kids. I really do. Because I think some moms, us, Jade and I, we love to work, and so we're working, and it's great. But when you have that feelings. I've had that feeling before, Ashley. We're like, I just know for this season, this is where I'm supposed to be. And here's the deal, too, Ashley. It may not be forever. It may that you guys do it for three years and then regroup. Half of the kids are in school, and maybe one has a five day a week program and you start going back in. But motherhood is such a seasonal time. And I really do. I fight for women to be able to honor that. And the thing that sucks is that the math has to math. And so something has to give, Ashley. So there either has to be a level that you say, hey, part time, I'm going to do something on the side to bring an income, like Jade said, or you go back to work full time, or he has to find a different situation to sustain the life that you guys both want.

Right?

When you're crunching those numbers, be careful, because I want to make sure that you're crunching them. If you're doing your budget, your lifestyle as it is, with both incomes, and you say, hey, we could get this, we're just $2,000 away. That's pretty good. That might just be the difference in you changing your lifestyle a little bit. Does that make sense? Is this a lifestyle thing or is it, hey, Jade, even with our bare bones budget, we're $2,000 away. I think those are two different questions, right?

It probably is a lifestyle thing. I mean, there's definitely things that we could cut. Like, there's some programs that our kids are in, but you have to ask yourself, they do dance, but you have.

To ask yourself about that quality of life, too, because there's part of this where I could look at this and go, hey, you go out and make an extra thousand. He go out and make an extra thousand. That should be easy enough. But if that still just gets you to a barely baseline, Ryan, how much are you going to enjoy staying home with four kids when you can't put them in any? Really? You got things to weigh out there.

Yeah.

So maybe there's another option, Ashley, even for you for the time being. Or maybe you guys say for a season, for three years, we're going to grind it out and you do and you cut the lifestyle way back. But, yeah. So thanks for the call, Ashley. I don't know if that helps, but I think you guys sitting down and deciding what you value the most because something is going to have to have a sacrifice, and you guys need to choose that.

That's right.

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I am Rachel Cruz, hosting this hour with bestselling author Jade Warshaw. And we are answering your questions. And today's question. Jade comes from Isaac in Ohio.

Yeah, he says, my wife and I are recently married and found a house that we would like to buy for 600,000. We earn about the same amount a year. $600,000 a year. And we have zero debt. Good. My wife has over 200,000 sitting in a savings account. And I own a home that I bought before our marriage. I proposed she put down 150,000 of her savings for the down payment and put the house in her name. She comes from a divorced household, so it's why I suggested putting the home in her name. Her family thinks it should be the man's responsibility to pay for the house and she should not be putting down any money. I don't know what type of world these people live in, but it's not the 1950s anymore. They don't seem to comprehend that I already own a house and can't just buy another one. What can I say to knock some financial common sense into these people? Isaac, I'm going to knock some financial sense into you, dude. Listen, you're both wrong. All of you are wrong. Here's the thing. There's just a lot of I, me, his, her, all this individual talk, and we're married, right.

My wife and I are recently married. And so I just think that the same way that you feel that her side of the family kind of has this outdated or erroneous way of thinking, I honestly think, Isaac, you have a little bit of it, too, because you guys are very separate. And I understand that you're in many ways, trying to honor some of her previous trauma and her previous pain with the divorce. But I would think of that as even more reason to cling on to the fact that we're together. I'm not going anywhere. We're making this work. We are one. And that's the relational side of it that I see that. I think no matter what you decide here, I think you're going to run into problems until you solidify the oneness in your marriage. So that's thing number one. Thing number two is, yeah, $600,000 house. She's got 200,000 sitting there. If you've got some money to put in.

Yeah.

Put as much down as you can. You don't have any debt. I'm all for that. I don't know what the situation is with the other home that he owns. Part of me is like, there's just.

A lot of singularity going, and the combination isn't happening like it should of the oneness. Because if I were you, Isaac, I would sell your home and you guys together, go in and pull your money together, see it all under one account. And let's put down the biggest down payment we can, regardless of man, woman, whose money it it is you guys together. And I think people get in trouble. Jade, sometimes we could go down this rabbit hole, a whole. Go down the rabbit hole, Rachel. But that way of thinking, there's so many splinters, I think, in it. But one of them being that we don't honor personality enough, it's honoring, are you a man or a woman? And there's something about it is a personality element that is so key, you guys, when it's a married couple. Because if anything, people are like, well, I'm going to let him take care of it, or she just does it all. I'm just going to let her. I'm going to be hands. No, it is a, hey, who is really good at this? Who actually enjoys the money.

That's right.

And here at Ramsay, we call it the nerd. And it's the person that really, genuinely enjoys doing the budget. They really do like crunching the numbers. They like to feel in control. It's fun for them. So let them take the first pass at kind of creating a plan and saying, hey, I found this account here, and this me. Here's what I see. And then the free spirit, the one that may not be as excited about things like a budget or planning for the future as much. They're still in the conversation. They have as much say as the other person. But again, it's regardless of gender. It is truly how you're wired and how you're created and honor that in each other because you can learn from each other in both ends of it.

Absolutely.

I don't know. Yeah, I don't like that way of thinking.

I don't either. I 100%. And I love that you put it in that way. It's just a personality trait. It's not a gender on that. But they've got to get together. Yeah.

On both ends of you all are on both extreme ends. Her family is on one end, and Isaac, the way you view money and relationships is at the other. Y'all need to find that there's a balance there. So come more in the. But thanks. Thanks for the question. Yes. All right, let's go to Gustavo in Denver, Colorado. Welcome to the show.

Hi.

Hello.

Can you hear me okay?

Yes, we can. How can we help?

So my current situation is I am 30 years old, trying to move out, and I have poor credit, except I don't really have any debts to pay off, to build credit, and I'm getting declined everywhere left and right, and I'm not sure what to do.

Do you have poor credit or zero credit?

Poor low 600. But everywhere I apply, everywhere I apply, that's all they really look at.

Yeah. Why is your credit low?

I have two derogatory marks, and I haven't necessarily been smart in the past, but I started following you guys over a year ago, and I've paid off a couple of credit cards, and all is left is two collections. And so it's just dropped over time because I've been slowly paying everything off.

Yeah.

But you still have the two in collections left?

Yeah.

The fact is, it's going to be low and bad until you get everything that was on your credit cleaned up and cleared off, including the two that are in collections. And then after that, once everything's off your credit, it takes six months to twelve months for that to drop off completely, and then you're at zero and that's where you want to get to. So I think it's just going to take you some time. Why are you trying to buy rental properties when you have two items and collections?

No, I'm just trying to move out.

Trying to rent rental. Okay. Have you had a consistent job at the same employer?

Yeah, I work as a trucker and I just actually, a year ago, switched jobs. So I've been employed at the same.

Place for a year. Have you shown them proof of income at an employer for one year? And do you have money saved? Like, do you have first month's rent, last month's rent, a security deposit? Do you have cash that you can be upfront with?

Yeah, I have the cash and I have all the proof for what I make and all the other bills that I paid on time and just nothing.

Yeah. At that point, honestly, you're just working with big corporations where there's probably a manager at that apartment complex and he literally doesn't have the power to rent you something because it probably is, hey, if anybody's below 700 or whatever, you don't have the authority to go and rent. So either you need to get to somebody with higher authority and the power to be able to kind of overwrite that, or you need to look for somebody that's a landlord and they're a one off and it's not part of a big system like a big apartment complex, but maybe it's a small one bedroom, something that there's an owner that you can actually talk to that owner and tell them about your situation. Have you tried that route or has it been just more like apartments that you've been shopping?

I've been looking around in zillow and all the main places to apply for rent. Yeah, the only thing is I'm trying to move out within like two months. And also I had an idea to get a loan to try to build credit, but I'm not really, like, I wanted to get your opinion on that as well.

I definitely would not go into debt to try to build your credit. I think in this case, to Rachel's point, you just got to find the right situation. And going to basically, for lack of a better word, like big box apartment rentals may not be the move for you. And, yeah, finding a landlord that's an individual that is willing to look past that. I also think no matter what you do, cleaning up these collections needs to be a one because as long as you have things in collections, nothing's going to get any better. And the faster that you do pay those off, the faster that you can get to a zero position, which is still going to look better.

And that's the distinction here, that Jade's exactly right. It looks better to have an undetermined credit score that they can't pull numbers for because they don't exist, because it's been over a year since you've had any level of debt. So there's at least a credible story there where what's being flagged for you, obviously, is that there were issues and that number is showing, hey, he didn't pay back what he said he was going to. And it is. It looks bad on you. So I don't know if there's a situation, Gustavo, where you can stay where you're at for maybe six months to a year and you grind it out. You get that stuff paid off, get that place where you have more of a clean credit history and then go out and try to rent or find an individual that you can sit down with and just show them, hey, I'm a person. Here's the situation. And the more cash you have to be able to present, hey, I'm able to cover X, Y and Z. If something were to happen, the better it's going to look for you. So I'm sorry you're in that situation.

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So one topic that we get so many questions on, and people continue to ask to have a deeper dive is investing. So we're so excited to announce a brand new event. Dave Ramsey's investing essentials. And at this event, Dave is going to deep dive into investing and get very specific. And he's going to share his personal playbook on investing, including how he buys real estate. It is a two night virtual event happening May 21 and 22nd. And it's online, so you can just watch it from the comfort of your couch. And investing, again, is something that you guys ask about a lot. So at the event, we're going to dive deep into those basics. We're going to talk about specific things like mutual funds and real estate. You're going to learn how to maximize your four hundred and one K and mutual funds. Dave's personal investing strategy for real estate investing. And again, all of the trends that are out there because there's so much, so much noise around this topic. And so him and George Camel are really going to kind of cut through all of the chaos and really give you a solid plan when it comes to investing.

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Hi.

Hi. How are?

Good, thanks.

Good.

The question I have is I wanted to know if we should pay off our car or sell it and buy a van or something larger for our family.

What do you owe on the car?

21.

Okay, so you've got 21,000. And then the option was, or should we buy a van?

Yeah. So we're a family of three, and the car that we have is fine, but I feel like we're just, like, busting out of the seams. So I wanted to know if maybe we should sell it. I mean, it's probably, if we sell it and probably sell it for probably around the same amount that we owe to break even. Right.

And then how much do you have saved?

Nothing right now.

Okay. Is there another car in the situation too? Are you a two car family right now?

Yeah, we're a two car family.

Go ahead.

How much do you guys make a year?

About 160.

Okay. And what other debt do you guys have?

We have that car and student loans.

How much in the student loans?

34.

Okay. And no money saved at all?

Well, we have an emergency. We have $1,000.

Okay.

We do have another car, but it's paid off.

And what could you get for that one?

We could probably get 7000.

If the goal is to get a vehicle that's large enough for your whole family to fit and pay cash. For it. My first move, unless you can tell me why this wouldn't work. Because you know more about your situation than I do, obviously, is to sell the one that's worth something, so you get a head start saving for the van. So my thought would be, sell car number two. It's already paid off. Clear $7,000. You've already got the thousand.

You'll be a one car family.

You'd be a one car family.

And, Victoria, we're a family of three. Is it just you, your husband, and a.

No.

No, I'm sorry. For family of five.

We have three thought. Okay, Victoria, I think we can stay in this car a little bit longer. I thought it was just a family of three.

Okay.

You have three kids?

Yeah.

Okay. That's fair.

So what have you looked at, like, these vans? Is there one for 7000? Can you find a junker for 7000? Is this dire straits? I guess is what I'm trying to figure out.

Right. I mean, we've been looking at vans. We're looking at, like, a 2015. It's looking around 10,000 to 12,000.

Okay. The only thing will be, you all have to save for it. You got to just save for it. Victoria, it's one of those things that you're going to put money aside month after month, and the fastest way to get there is what Jade said would be to be a one car family. If you don't want to do that, then it is going to be saving $10,000 to get to a point where you can just buy it outright. But then also, that's $10,000 that's not going to pay off. Just your current car, which I understand you went ahead and trade it. I get it.

How urgent is this? Because I'm looking at $21,000 you owe on the first car, 34,000 in student loans. And I get that it's not comfortable for three kids in the back. I don't know. Do their car seats not fit? I just need to understand how urgent it is.

I guess it's not really urgent, but I'm just thinking of, like, it's a growing family. We have sports, we have so many events going on. And, like, the car that it's a. And it would be more comfortable to have a new.

So you have a Toyota Highlander already. Isn't that an is? Okay, I'm changing this. I'm changing my vote right now. You told me you had two cars. I'm thinking, like, a Camry and an Ultima. So you have a sport utility vehicle. That's fine. And if I were in your shoes today, I would not be saving money to buy a new car. If anything, I would still sell car number two or whatever is not the Highlander. Which one's the Highlander, by the way? The paid for one or the 21,000 that we owe?

21.

Okay. Then I'd sell car number two, put it towards the Highlander, get that thing paid off as soon as possible. And can you guys survive as a one car family for a while to pay off some debt before you save up and buy second?

That would be ideal. However, my husband and I both work and we do commute.

Okay, so you're not seeing a way to do that?

I think it's just a sense, Victoria, you're going to have to just pay this car off. You're going to have to pay off these student loans. But you make 160. I mean, you're in New York City, so I know it doesn't go as far, but it's just going to be you guys buckling down for 18 months, two years, and it will be uncomfortable. Yeah, it will be uncomfortable. But trading in and the whole car situation, it's so hard for me because it's such a depreciating asset that I'm like, these loans that are racking up interest and all of it, I'm like, I just want so much of your effort to get these out of your life. And then we can go from there to say, okay, the car is paid for. What does it look like in two years to trade it in? We can save a couple of thousand, go to a minivan. I would make that move later, personally, because, again, all your efforts and straining and saving and sacrificing lifestyle, I'd rather that go to debt than to go to a van to feel a little bit more comfortable.

Yeah, that's going to be going down in value and pretty. You know what I mean? Another thing.

But I get it. We have three kids, and if they're all in one row, they're going to be hitting each other. And it's annoying. And there is stuff everywhere. It is true. But also, I think you guys have different priorities. And if you're going to follow the steps to get in control of your money, stop sending your income out to freaking car payments and student loans and actually keep your income. But let's be out of debt. It's a thing.

She has a Highlander. That's plenty of space. Victoria, I'm getting you a little bit. That's plenty of space. It's not the same layout, obviously, as a minivan, because, let's be honest, I can't drive a minivan, Rachel. But I know I have been in one, and they are. Humility.

The odyssey, it is like a living room. It is the best thing ever. You're not cool. I get it.

But it's so easy to get the kids in and out. That is very true. But a Highlander will get it done.

It will get it done. Yeah. The minivan has its luxuries, and it was so cheap. When we went and priced out cars, we looked at SUVs, we looked at all different levels. And I'm like, I just couldn't stomach buying an SUV because I'm like, my children, God love you if you listen to this later on in your life, kids. But you're disgusting. They take sandwiches and spread them apart and put them on seats, and there's gum in the back. It's just their kids. And I'm like, I just can't stomach a nice SUV personally, at this stage of our life, 100%. And the minivan was a third of the price, really, a third of the price of some of the SUVs that we were looking at. And I was like, all day. It's like a mom sat in that driver's seat. Jade. And the mom said, where do I want cup holders? Where do I want storage? What do I want? You sit in a minivan driver's seat and you think, a mom designed this car? Thank you, mom.

Listen.

Honda Odyssey minivan is great. The worst part of it is it's a minivan. You have to drive it. That's the worst part. But I'm with Rachel.

I know, I know. I'll get my cool mom SUV soon. We'll see. This is the Ramsey show.

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Welcome back to the Ramsay show. I am Rachel Cruz, hosting this hour with bestselling author Jade Warshaw. And we are taking your questions. Anything and everything about life, money. Where is Kate Middleton?

The royal family.

We are here for you, so give us a call at next we have Aurora. Beautiful name in Portland. Hey, Aurora. Welcome to the show.

Hi. Thank you guys for having me.

Absolutely.

How can we help?

So my question is, do I pause baby step two in order to save up money? I just got told last week that we're being laid off here at the school that I work at. It was a little unexpected, but I'm in baby step two. So I'm like, do I save up money now in case for the future, or do I just keep going at the debt until it's paid off?

Is it just you or are you married? Do you have a family?

Yeah. So my husband and I, we started this about a year ago. We paid off almost $50,000. Good for you guys. Yeah. So we have $6,500 left to pay on one card. And our last day of work, well, for me, is August 30. So I have a few months of paychecks. And so, yeah, we're just wondering, do we continue to pay on it or do we save up money and then come August, in case I don't find a job right away or don't get called back, that we have a little bit of a fund to live off of for a little bit.

Yeah.

So you've got 6500 left and then you're done. Done.

Yes.

Wow, that's awesome. How much will you make between now and August? Or how much per month did you all bring in?

Yeah. So we bring in about 6000. It could be between 55 on a slow month, but usually it's about 6000.

Okay. And we're in March. We got April, May, June, July, August. So for your living expenses, I'm just curious, what margin do you guys have left? How much are you throwing at debt every month? That if you pause it, that would go into savings. How much would that be?

1400. We're paying 1400? Yeah.

Okay.

So my little calculator that I have my tracking sheet shows that we should be done with this by August.

Then you have no savings. Yeah. What do you do for work?

So I'm a secretary and they've laid off about half of us, so we don't know if we'll be called back. So I guess we're just kind of waiting. I don't want to quit just now and find a new job because we just never know what could happen.

Sorry, can you just clarify? What do you make versus what your husband makes each month?

Yeah. So I bring in 2800 a month and he's the rest of it.

And that amounts to 6000.

Okay.

Got it. Okay. I think that you've got to do a budget here and figure out what's going on because you've got 1400 left that you're putting towards debt. I do want you guys to have savings. The real question is, what does your lifestyle look like just on his income? And is it something that you guys can live on for a while until you find something new or is it something that's going to put you in a state of emergency? One thing I do want to highlight is congratulations for paying down this debt and answering that call when it came. Because this would feel so much different if you had $50,000 of debt laying around. Am I right?

Exactly. Yeah. And just a quick shout out, like, you guys gifted me financial peace last year and it's been a relief.

I'm so glad. Yeah. I think my first reaction would be what Jade said of, hey, could we live off of if we had no debt? Right. Technically, you'd be debt free. Could we live off of his income for 30 days? 60 days until you find a job? If you can't find one sooner than that, I just feel like your skill set, it's so versatile, admin stuff. You'll probably be able to get something for the worst of the worst. Could you guys live off of his salary for 30 to 60 days? And if you're like, no, we can't, then I would be okay saying, yes, we're going to put one to two months away just for safekeeping because we know this is coming. And again, if these were different numbers, I would probably have different opinions. Right. But because you guys are so close and your income is, well, it's pretty much half of what you guys bring in.

Got 32 and you've got 28.

We're right about the same. So we would be very tight, we'd be very limited and just right on the cut off, which I would be worried to just live off of it.

Well, here's the thing. The blessing you have here is, you know this is happening, and you know it's not happening till August. So it's not to say that you have to wait till August to find a new job. Right. You can start looking closer and closer and really, truly have something lined up so that you have a smoother transition.

Yeah. Do you love the job you're at? Because you keep saying, if I get called back, what does that mean? Is it because another department would need something?

Yeah. Our school district, we have unions, so there is a possibility of being called back once the school year is. We're getting closer to the new school year. They're like, okay, well, if we have extra students, like, our number of students go up, then we might be able to hire some of us back. The other thing is, I don't think.

I would count on that.

Yeah. The other thing is that I would want to look, even if it wasn't a secretary position, I would look at a different, like a teaching assistant or something else in the district because of just the benefit of being able to bring my son to work with me. He works at the same school that I work at, and even if I move schools, I could bring him with me or a school closer. That's the benefit of being able to work in the district. And just the benefits in general, like medical, dental, all of that is taken care of for us.

Yeah. So there's a lot of benefits to your overall life for you to stay if you can.

Yeah. I'm not worried about not being able to find another job. I know that I could do it.

But you want to go back to that school for all of that, which I totally get. Okay. Honestly, what I would do is I would save up maybe two months worth of it. And you won't have it all paid off by August, you'll have two more months of that debt. But I'm okay with that in the season because it's not two years, it's two months. And again, the benefit of you if you do get called back, because I can just hear it and I'm like, I get it. The convenience of your life overall, what that looks like for the next year or two, for two months of waiting is worth it to me. Yeah. So I would be okay with you guys saving two months worth of expenses to the side, which means you'll delay your debt snowball a little bit, which is okay. And we say this. If you're pregnant, if you see an upcoming job loss, if you're having to move. If there are situations that you need to pause the debt snowball for, we're okay with that. I just don't want you to lose momentum. And you all are so close. That's why it's so hard for me where I'm like, oh, my gosh, you all are like, right there.

Well, let me ask you, is any, anybody doing a side hustle of any sort to make this go faster?

Yeah, on the weekends, we're doing Instacart. I am helping my dad with his business. Good for you.

Okay.

We've already cut so much out and we're already doing so much. I would hate to just lose this momentum. I'm like, do we stop? Do we keep going? Yeah.

And the momentum is just going to. You're going to still save at the same speed and the same rate as you are paying off debt. Right. So that momentum goes, and that momentum is still for a big why it is to say, hey, I could get called back to the school where my kids are at and my son's at. And that's a big why, to continue what you're doing. I'm good with you guys saving two months. What do you think, Jade?

I'm with it. My thought was going to be, is there some way that you guys can pick up any extra work so that you can keep almost like doing both? You're still able to maybe to pay off this debt, but you're also able to stack up some savings. And then the other side of it is, is there still a way to have something just be in talks or have something lined up just in case? I mean, I hope you do get called back, but if you don't, I want to make sure there's something there and you're not elongating this process any longer than you have to.

If your confidence is high that you can plug into something.

Yeah. So we get the month of July off for summer break. So there are summer school jobs and stuff that we can pick up?

Yeah, that's it.

So that's what I was thinking of doing. I'm like, okay, maybe I can pick up a few extra summer school hours. And also there is a possibility of being able to find another job. I have somebody who could help me with that.

Good.

Like medical offices and stuff. I'm just preparing.

And Aurora, you guys are doing an incredible job. And this is why you do this. This is why you may. You're not stuck in $50,000 of debt trying to figure this out. So there's a lot more peace, a lot more control in planning. And I'm just. Kudos to you guys. You're doing it, doing the extra work, paying it off, and I'm so excited for you guys. You're so close. You are so close. Well, thanks, Jade, for a great show. Thanks to all the guys in the booth, and thank you, America. This is the Ramsey show. Live from the headquarters of Ramsey Solutions, it's the Ramsey show, where we help people build wealth, do work that they love, and create amazing relationships. I am Rachel Cruz, hosting this hour with my good friend and bestselling author, Jade Warshaw. And we are here to answer your questions. So give us a call at. We will talk about your life, your money, relationships, career, anything and everything. So give us a call. Up first, we have Lisa in Clarksville, Tennessee. Hey, Lisa. Welcome to the show.

Thank you for having me.

Absolutely. How can we help?

Hi. I'm 54 years old. I have no debt. I paid off all my student loans, credit cards, and my house and my car.

Wow.

Yes. I have 72,600 in a money market, and I want to know how to start investing.

All right, that's good. So, are you currently investing any of your paycheck every month when you get.

No, ma'am, we don't have that option at my job.

Okay.

So they're not offering, like, an employee sponsored 401K. That's okay. You can still start investing 15% of your income today by just investing in a Roth IRA. Right. So is it just you or your husband?

No, ma'am, I'm single.

You're single?

Okay.

So, yeah, technically, I mean, you've gone beyond baby step four, five and six, because you've paid off your house. But let's go back to baby step four right quick and jump that one in place, which is 15% every single month, in your case. Yeah. Just start with a Roth IRA. You could start there and max it out. I think you can do 7000 this year. And if you have money to go beyond, above and beyond that, we can look into what that means for you. But that's the first place to start. So that's thing number one. And then, since you've got this big chunk of money sitting in this money market account, I would differentiate what's going to be your three to six months of expenses, and I would put that in a high yield savings account. So, what do you think? Three to six months? In your case, I'd probably do six months, to be honest with you. What's six months of expenses for you?

Well, I only make about 32,000 a year. And I pretty much use all of that to live on and pay the bills. I do have the living expenses. I do have a little bit leftover from each paycheck. But I have not been putting that in savings for about. I got divorced in September, so I haven't been putting anything in savings since I got divorced.

I see. Well, the good news is, like you said, you've got the 72,000, so you don't necessarily need to set any more aside into savings per se. But the retirement piece, I do want you doing that because you've got to keep actively adding to this nest egg.

Do I take any of the 72,000 and put that in a Roth IRA or can I do that?

You can, but you can only do it up to a certain point. And then you're going to have to go into a brokerage account or you're going to have to work with an investment professional to see what's the best option for you to open up. But I do want you. Go ahead.

I'm sorry. No, I got on Smartvestor and I have an appointment with. I guess it's called a financial professional. Yes, I guess I'll speak with.

So when you work with that Smartvestor pro, they're just going to give you the options and the best options for you and your situation. But at the end of the day, the thing I want you to hear me say is I think you've done a great job with the 72,000. But what you've got to do is you've got to take some of that as your three to six months, because I don't want you investing all of your money. You've got to keep some of it liquid. And so whatever six months of expenses is for, you take that and just set it aside, put it in a high yield savings account. So if something goes wrong, Lisa, you can have that. Know, if something happens with your roof or something happens with the car, you've got money that you can have access to without you pulling from invested money. Does that make sense?

Yes. What is a high yield savings account?

It's a savings account. Most of them, the good ones are online accounts you could check out ally. We don't endorse them, but it's just the one I use. I know. George uses Marcus by Goldman Sachs.

We use an ally.

Yeah.

It's similar to a money market account, Lisa. So it's one, it's an account that it usually, I think now is actually getting a higher rate of return than money market account. It is a high yield savings account. And so what it is, it's basically a savings account where you're making more money, but you can't withdraw money up to a certain point in so many transactions per month. So there's some limits on it. But that's okay, because, again, that money is going to just sit there unless you really need it. And if you really need it, it's probably going to be one check that you write out of it if it's an emergency, and then everything else. So a Roth IRa is a great retirement vehicle. Your money will grow tax free, which is amazing. So as it's growing and as it's invested, you're going to be actually making so much money on your money. It's kind of one of those accounts that you put in, and because the market averages 10% or so, you'll be making money while you sleep, if you will. Lisa. Which is a great thing for retirement. Lisa, you said you went through a divorce in September, and so you're back in the workforce.

Were you working before that, or did you go back to work because of where you're at?

I went back to work.

You went back to work? Okay. So I'm guessing this is one of the first times you're handling everything on your doing.

You're doing great.

You're doing a really good job. Lisa, what are you doing for work?

I work in a finance office, so I do the accounting work.

Okay, that's awesome. So my only other thought, because of your age and because you don't have much in retirement, what it would look like to up your income, and I don't know what opportunities are out there for you in your area and with your experience and all of that, but that is something 32,000, that's on the lower end. So I would encourage you to see what else is out there. And I think there's a level of confidence. Lisa, I can only imagine that you now are starting to have, and even sitting down with this smartvestor pro, even listening to him and have him teach you. Lisa. Okay, do not go in and just nod your head and just say whatever you say. I want you to learn. This is going to be some of the biggest changes of your life and things that you're dealing with now that you never probably had to. And so you're going to be a sponge, and I don't want you to put your money in something that you don't understand. And so I want you to really learn, and I think over time, there's going to be a level of confidence that is built, and I think that that can translate into more income.

I think that you're going to feel like, okay, I can actually step out and apply for something and make more. But I think upping your income is another great goal to look at in the next 3612 months.

Absolutely.

Because if you can make even 50,000. Right, 20,000 more, that's going to make a significant difference to what you can put away for retirement. But you're in a really good spot to have everything paid off. You have no bills. I mean, it's only up from here, Lisa, so I'm really proud of you.

Thank you so much. I really appreciate your.

Absolutely. Absolutely.

Really good.

Yeah. And that's. And again, learning about this stuff and understanding what is a Roth Ira, and I even love what is a high yield savings account.

Great.

Yes. Getting to these basics and really having this knowledge. Knowledge gives you power. And when you have knowledge, you usually have options and you're able to see you're not pinned into one thing. And because, oh, my gosh, this is the only thing I got to do. And I don't even get it, but I got to do it. And it's this, like, fear cycle, all of it. Right. Right. When you have peace and you have knowledge and you're learning and you're experiencing, it does give you some confidence. So, Lisa, I'm really proud of you. I think you're doing a really brave thing, and I'm excited for you to sit down with somebody and actually look at your specific numbers, have them teach you and show you, and they're going to run numbers for you to look out and say, okay, in ten years, here's where it's going to be in 15 years. And I think it's going be to really motivating and empowering Lisa for you. So I'm sorry you went through what you went through in September, but we believe in you. Thanks for the call. Welcome back to the Ramsey Show. I am Rachel Cruz, hosting this hour with.

So it is tax season, Jade, it's approaching.

It's here.

It is approaching. And taxes are confusing. We get it. But we want to unpack one question from one of our listeners, and it says, what's the difference between a tax deduction and a tax credit? So tax credits cut your bill dollar for dollar. So if you owe $1,000 in taxes, you have a $500 tax credit. You only pay $500. Love that. A tax deduction lowers your tax bill by lowering your taxable income. So again, you simply subtract the deduction from your income. Less taxable income means less taxes owed. So it's more on your income, not on the actual taxes there. So listen, again, there's a lot of ways you can go about this. Again, there's like, okay, I could self file. Should I sit down with someone? I mean, there's just a lot of questions around taxes. So if you are confident, though, on filing on your own, make sure to head to Ramsesmarttax. And that's ramsesolutions.com slash tax. And there you will find Ramseysmart tax, which is our no nonsense tax software with low upfront pricing, no hidden fees. And we will connect you with a tax pro if you need that. So if you've had a big life change or maybe you're relooking at something, if you own a small business, you've had a child, adopted a child.

Like if something as big has happened in your life, you may want to sit down with a tax pro. And again, you can find that on our website@ramsesolutions.com. Slash tax. And you can get connected to a tax professional who is Ramsey trusted. So again, you can file on your own using Ramsey smart tax or sit down with the tax pro who is Ramsey trusted at slash tax. Love it. Up next, we have Morgan in Tucson. Hey, Morgan, welcome to the show.

Hi. Thank you all for taking my call.

Absolutely. How can we help?

So my wife and I are buying a house. We got it down to 635, but it needs a little bit of work. We do have to put a new roof on it, which we estimate to be about $30,000. However, that's our lowest estimate, so it could be as much as $40,000. We also have another 3000 for radon. So we're looking total at 33 to 50,000 that we have to put into the house before we move into it. Originally we were going to put down $335,000 on it by doing 235 down and then recasting 100 afterwards because it got us half percent savings on the mortgage rate. Now we're trying to figure out do we go ahead with that original plan. We have the cash to do the roof and radon, but if anything goes wrong, then we are going to be short on cash. We'll have the cash, but we're going to be short on it. Or do we hold off a couple of months for the recast and make sure that we have everything squared away? Moved to New Mexico from Arizona and all of that.

So you're going to put 235 down. And when were you saying that you're going to do this recast? How long are you waiting?

We originally were going to do it the next day, which we were allowed to do.

I don't understand why. Help me understand that.

The only reason that we wanted to do it was because they gave us another half percent discount on the mortgage rate.

That's all to the next day. Put another 100,000 down.

Correct.

Obviously, with the recast, you're not closing again. You're just putting $100,000 payment.

Correct.

I don't know. I want to know if there's a loophole there. Like, I want to know something more about that. It just feels weird that you would hold on to your down payment.

From what we can tell, they market you hard. They try to get you to spend that money on something else and not recast. It just gives them one more chance to get the money from you.

And this is all to save a half a percent.

Half a percent and. Yeah. Half percent on the mortgage, 15 year.

Yeah. Because, I mean, if worse comes to worst, Morgan, what would happen if you guys, you put 235 down the next day? They're like, oh, this isn't going to work. The recast. Oh, gosh. Oh, gosh. Could you just throw the 100,000 on the house? Yeah. So, I mean, either way, I think you're going to be okay. But you're asking, with all these repairs, do you take 50,000 of that 100,000 and save it and put it to the side, or. What was your original question?

Right. That's what my original question was. To be on the safe side, $50,000 worth of repairs, we'd like to put down as much as we can on the house, but we also don't want to get into a cash crunch.

Yeah.

So the question is, if you save the $50,000 out, I'm not really concerned about the recast and all that. My thought is, here's my two questions for you. Can you afford the house if you don't get the extra percent off? That's the extra half a percent. That's the first question. And then can you afford the house if you, instead of putting the 235 down, you put 285 down and then you keep 50,000, will you still be able to, will it still fall under that parameter of, that's no more than 25% of your take home on a 15 year fixed rate conventional mortgage?

Yeah, it will.

So then if I were in your shoes. Based on what you said, I would probably be like, okay, we need this money because, like you said, radon, the roof's got to get fixed. Was it radon? Is that what you said?

Yeah, radon and roof.

The roof's got to get fixed. That's $50,000. I mean, you need to get that done. So I would just keep that money out, have those repairs done. You put 285 down on a $635,000.

House, which is great, because you were putting almost 50% down. You guys are in a great position, but, yeah, so I would rather have the cash fix what you need and then aggressively pay down the house, because do you guys have any other debt?

No, we don't have any other debt. We have very good income.

What do you guys make a year.

Before taxes and everything? 480 taxes in four one K, 22 a month.

And then the good news is, I mean, you said it's 50K on the high side. It sounds like you're estimating this aggressively, which is good. And if you get out on the other side and you're like, hey, we still have 10,000 left. Throw it towards a mortgage. Yeah, right.

Okay, so you guys would suggest then recasting less and then recasting or paying down quicker after everything is settled with what's remaining.

Well, are they going to let you recast it even though it's now going to be less than 100,000?

Yeah, they don't care. That was part of the deal we signed with them.

Okay. Yeah, I'm okay with that. And you guys make insane money. Morgan, too. So I'm like, if you'll have roughly 330,000 left on the mortgage and you guys making 480, which, again, is before taxes and everything, but I'm like, you all could have your house paid off in three years if you really did it. I think you're in a great position. I think you're in a great position. But I would have the cash on hand to do the repairs that are necessary. And I'm thankful that, you know that they're coming, because for some people, it sneaks up on them and they don't have the cash to fix it.

True that. Usually when I hear recasting, my radar goes up, because a lot of times people are doing that really just to get a lower payment, and mind they're thinking, this is great. I don't have to close again. I'm not paying those closing costs. I can just have them recalculate it now that I've made this giant payment and get a lower payment. But at the end of the day, the whole point is to pay off your mortgage and get it out of your life, not lower the payment. And so that's kind of, I was wanting to ask those questions, but it seems like they understand. And for them, the motivation was to get the lower interest rate, not to necessarily get a lower payment.

That's right. Yeah. No, that's good, though, because I think, again, with the housing market where it's at, it is, it's so expensive. I mean, everywhere. I just feel like it's insane. And rates still are high. And so the whole mortgage conversation is one that has continued to be had. And it's a hard situation for a lot of people, but for them in this situation, like you said, it is more about getting a lower interest rate because they're going to pay it off quickly. And it's not just trying to finagle the system to just get in a house where we barely can get in, but we're barely doing it. Because when you're stretched to that point, the only way we can do this is if we do a recast, if that's your only option, there's some desperation there, and if anything goes wrong, it's going to be so stressed and you're going to hate this house and you're going to think, why did we do this when we did it? Why didn't we wait 6812 months and save more? So give yourself some breathing room, you guys, in this. And I know people are like, get in the market.

Get in the market.

Incentives out there right now, too, that can lure people away from better judgments.

Yes, exactly. So be careful with some of this, you guys, as you're out house hunting and all of it. We love houses. We love real estate. We want it to be part of your life, but we want it to be a blessing, not a curse. This is the Ramsey show. Welcome back to the Ramsey show. So I feel like one of the things we're known for, Jade, as the anti credit card people, where so many people try to play the game.

Yes.

Try to get the points and the cash back and all of it. And we're just like, you know what? Live your own life, people.

Live your own life.

Don't have the bank involved, but credit card late fees, this has been in the news a lot. They've been capped now at $8, part of the Biden administration crackdown on junk fees, where a lot of people were paying a ton of these fees, especially with late fees and everything, they're cracking down on the credit card companies.

It's crazy. This is from cnn.com. It says federal regulators finalized a rule on Tuesday to cap most credit card late fees at $8 as part of a broader push by the Biden administration to eliminate junk fees. The Consumer Financial Protection Bureau estimates the new regulation, which was first proposed in February, will save families more than 10 billion a year by cutting fees from an average of $32. It comes as Americans continue to pile on credit card debt. Guys, we know Americans are in 1.1 trillion with a T of credit card debt, which is crazy. More than 45 million people are charged late fees on credit cards each year, which, by the way, that means for all the people who say, I have a credit card jade, but I pay it off every month, someone's lying.

Someone's not telling the truth.

Someone's lying because somebody is being charged these fees is all I'm saying. It says these individuals will now save an average of $220 per year. I think that's a lie. The new rule aims to close 2010 loophole. So basically, Rachel, when I hear things like this, there's part of me that thinks there's goodwill here, like there's good intent. I do think that the administration is going, how can we, like families are hurting, people are hurting economically.

We don't want credit card companies take advantage of them being in a tight situation.

Yeah. So how can we kind of close in the gap on that? And so eliminating junk fees, I think in one way it's great because some people might look at $32 a month or $18 a month and go, that's nothing. But we do know that a lot of folks who are using credit cards, not everybody's using them to live a lavish life. Some people are just trying to keep the lights on, trying to keep groceries in the house. And so there's part of this that I know a large population might be going, oh, great, I could use an extra $32. But I really do think that at the end of the day, we have to realize that this is not something that we should cling to for hope. Like this is something for us to go, listen, I got to get out of this cycle. If $32 is what's like, what's meaning the world to me, I got to get out of this. And honestly, what I think is the way the credit card companies on, they're going to find another way to charge you. Right? Do you think that they're really going to let go of $10 billion a year?

No, they're not going to let that slide, they're going to find another way. Whether it's increasing their interest rates, whether it's charging other fees, they'll figure out a way to do.

They're not going to just lay down and say, yeah, sure, whatever, 10 billion. I know. And what's crazy too. And it's interesting to think about. And I hate to say this because like you said, I'm like, there are people hurting and that this is the thing that's somewhat keeping them afloat, if you will. But still in the cycle, these fees hurt less. So does it keep you in a cycle? Because it doesn't hurt as much.

You're not being charged that heavy late fee. So it's okay. If you're late, it's okay.

But then your credit score keeps getting dinged. I mean, like all of it. So it's just being aware that this still, like you said, jade can't be the thing that motivates you. It has to be out of this willpower of a higher will, if you will, to say, oh, my gosh, I don't want this to be my life. And I don't want this cycle in general regardless of what legislation is passed or not. For myself, I want to take control of something greater than this.

I just wish some part of me goes, if you really want to help people, show them the way out. Don't show them the way to stay in it and stay. I mean, Ramsey, here at Ramsey, we're always showing people how to get out of debt, how to get out of a cycle. And I'm just like, stop giving people money and show them the way out.

Yes. But anyway, governments on both sides are not known for that, y'all.

Yeah. You gotta take the matters into your own hands.

That's right.

And just get out of it if you can. If at all, you can. And we're going to show you how to do that here on the show.

Yeah, absolutely. All right. Up next, we have Joshua in Mobile. Hey, Joshua. Welcome to the show.

Hey, how are you all doing today?

We're doing great. How can we help?

Yes, ma'am. Me and my wife, we purchased FPU about three days ago and we've been following through and we had about 6000 in savings so I couldn't get her, talk her into just having 1000 in the emergency. So we got 2000 in emergency since we just had a one month old. So I said, I'll take what I can give.

You.

Got to sleep at night.

I hear you.

Exactly. I took that 4000 and I paid off my credit cards.

Good for you. How'd that feel?

It felt amazing. It's just a never ending cycle, it seems like. So I thank God that I found a way out of that.

That's awesome.

But I also paid off a washer and dryer that I had to purchase due to an emergency that popped up in our home. And the thing is, instead of just having $8,200 of debt left over, I bought my wife this car that I've seen to hear about all day long, and you all keep getting asked about. And this car was $41,000, and I still owe $37,000. But instead of paying off my debt in six months, now I'm looking at a couple of years, and I'm just looking at what y'all recommend. I spoke with a dealership, trying to see if I could come in and maybe trade it in for something a little less.

Have you kelly blue booked it, Joshua?

No, ma'am, I haven't.

Okay, because I'm curious. How long ago did you get it?

We've only had the car for, like, four months. And then I ran across y'all, and I was like, man, that was perfect.

Yeah, four months too late. A little bit. I know. I wish we were there earlier. Was it brand new?

Yes, ma'am.

Okay, so it's taken a hit. And I'm curious, though. You owe 37 on it. I'm hoping there could be a wash there if you could sell it. I would. Kelly blue.

Book it and see what you can.

It's a four month old car, five.

Year loan at 2.9% interest. So it's not a bad loan considering other loans, no.

How much do you guys make a year?

We made $120 last year, annually.

Is this your only car?

When I look at the total, I'm like, yes, her only car. And then my truck is paid off.

And then what other debt do you guys have?

I have a $7,000 personal loan and then $1,800 on a stupid computer that I bought.

Okay, so you'll get that paid off this month? I'm hoping, yeah. Oh, God, Joshua. I'm selling the car.

Yeah.

I couldn't stomach having a $41,000 asset that is going to continue just to drop, drop, drop, drop, drop. As even we're talking on this call right now. It's just continuing to drop. And for you guys just to be out, it's not worth it. It's not worth it. A car. It's not worth it. And so I would sit down with your wife and be like, hey, what does it look like? If we save up some money and we sell this, I'm hoping you can get more than what you owe just to get a few thousand bucks out of it and then pair it together. Go and look on auto trader. Just look around at a private sale of another car. You can get a great car, and a car is a car, right? It needs to get you from point A to point B. And so much of what she had.

A 2008 Nissan Sentra. And like I said, we got a one month old daughter. And I was like, that thing ain't safe. And she's like, well, let's get this 20.

The thing is, you go from one, you go from one extreme to another.

Don't do that. I hate when people do this and I get it's out of the love of the baby. But a Camry is safe. Yeah, an eight year old Camry is safe. It's going to be fine. It's going to be be. And, Joshua, run the numbers just for yourselves and just say, let's put this car payment. Let's just say we just did the norm, which I know you're not doing, because you're wanting to aggressively pay off debt. So I hear that. But just put a car payment. Put your car payment in the investment calculator and see what it's costing you. And that's what people you really need to understand, is instead of your money working for you and when you sleep at night, it's making you money and it's making you wealthier. All of that is going to a dealership and going to the bank, and you're paying interest on something that's going down in value. So it's not worth it. The car is not worth it to me.

What is your car payment? I'm just curious. On this $41,000 vehicle?

Yeah, it's like 750 a month. Like I said, I got the short loan. That's still horrible, but I don't care.

Joshua. Sell it now, a few months later, lock arms, sell it, and then go get an awesome other car in 18 months, once you're debt free. But get this $41,000 of debt in a stupid car out of here. You guys can do this. I feel the motivation. Joshua, you guys are on track. You're four days in, so I'm going to give you some grace. But you're making traction and just go all in. And if you hate the plan, if you hate it, Joshua, you can always go back and get a $41,000 car payment, car loan. If you want to later, if that's what you want to do, you can go back. But try our way first.

If you think you've heard everything I have to say about investing, think again. I'm so excited to tell you about our brand new tonight virtual event, investing essentials on May 21 and 22nd. I'm diving deep into my personal playbook, the investing strategy I've used for over 30 years. We're talking about mutual funds and 401 ks, and I'm unpacking my personal strategy for investing in real estate. Early bird tickets start at $199. Get them before prices go up@ramsaysolutions.com.

Essentials welcome back to the Ramsay show. We were just talking at the break as we were right, coming on hot on the air.

Yes.

Of just, especially you young families that have kids and you're in this season of just, golly, it's a lot of work. And the kids are just, there's goldfish cracker crumbs and peanut butter and jelly and crustables squeezed everywhere. You want to be able to enjoy life. And I think for some people, it can be like, we want the nicest thing. We want a brand new x. We want this, this and this.

Can it even be taken care of, though? The way it's supposed to be is the question.

And there's a level of like, and I can be like this where I'm like, I just don't want to spend money on something that I can't enjoy in life because I'm so scared it's going to get destroyed. And maybe one day, once they're teenagers or, I don't know, parents and teenagers can correct me. Yeah, there's a point that I'm like, okay, great. That's not going to get spilled on or for the most part, you can handle x, Y and Z.

All I know, Rachel, is I watched my son take a piece of pizza and take every piece of topping off of the pizza into his lap in the car. And then when I leaned over to see what he was doing, I watched my daughter spill her piece of pizza on the carpet. And I'm like, I can't drive Alexis truck. I never can.

It's a real thing. So we want to enjoy life to people. So some people go get the brand new thing because of the new baby, and I'm like, I don't know.

They're going to spit up on it.

Yeah, 100%.

The car seat is going to put those deep indentations into that nice leather. Even if you put down the little mat it's still going to put that deep. You put the little kick pads, by the time you baby proof it, you put the kick pads on the back of the seat, then it's not even what it was intended to be anymore. I'm like, listen, I'll just wait.

We'll wait. We're going to have delayed gratification and.

These kids are not going to ruin that truck when the time.

That's right.

Right.

All right.

Up next, we have Erica in Gainesville. Hey, Erica, welcome to the show.

Hi. Thank you for taking my call.

Absolutely. How can we help?

So my husband and I sold our first house two years ago because we wanted to buy some land and we had 150,000 in equity in our house and decided on our path to be debt free. We were going to buy a property outright. We didn't want to have a mortgage at all, so we did. We found a five acre property with a double wide mobile home and we were planning on fixing up the double wide, but now we've decided we hate it and we want to build a house. So we have 28,000 in debt right now, and that's student loans, consumer and medical. And I guess so we want to pay all that off first before trying to get a loan to build a house. But we're worried that it's going to drop our credit and not be able to get a loan to build a house.

Go ahead, Rachel. I heard you.

Yeah, no, I was going to say, yeah, your credit will lower as you pay off debt, but it will get to a place, Erica, where it's undetermined, basically. And so it'll take about six to twelve months, once you pay off that last debt, for it to get there. And then from there, you would do a process called manual underwriting. Now, that's usually for already a home. And so you would have to take out a construction loan and then roll it over to a mortgage once the construction is done. So you would have to work with somebody to make sure with the manual underwriting process, which people still do that. So that is still an option for you. But yes, you will have your credit score lowered as you pay off debt because mathematically, the way your credit score is calculated has to do with debt. And so when you're getting out and you're not accumulating new debt but you're aggressively paying it off, you will see over time, as you pay off these debts, it's going to go down. So, yeah, you guys will just have to be patient in that sense.

Well, the good news is the time is built in because the time that it's going to take you to save up for the down payment is the time it'll take for your score to roll to zero.

Yep, that's right.

So there's part of that.

So my husband's a veteran, so we were planning on doing a VA loan, and I guess we may have to look into that more if they will do an manual underwriting process for VA loans. I'm not totally sure about that.

Well, typically, we would suggest a conventional loan. There are some instances where a VA will work, but a lot of times they have a lot of extra fees that end up making it more expensive. So really do your research on that before you settle in on a VA loan, simply because usually I think the biggest benefit is you don't have to put money down. Correct?

Correct. Yes.

And we want you to put money down because we want you to have almost like instant equity when you're going forward.

Yeah. So at least 5% for your first home is what we say. Five to 20% is ideal. But you guys too, Eric, I'll just say it because I have you on the call. When you go into this build process again, it'll be in a few years, but this is a situation that you'll go to the bank and they're going to be able to say, oh, my gosh, you qualify for this. And you're going to think, oh, we don't need that. And then you're going to start the home build process and be like, oh, we can upgrade here. We could add a little square footage there. And you start ticking your way up. And it's so easy during builds, it's usually more expensive than you think. Your standard can start to really waiver. So I always say this to people that are building homes, have a budget, be firm on it, and say, we're not going over this. And that's what Winston and I did when we built ours. And it was hard. There was stuff that we said no to that we're like, man, we wanted it, but at this moment in time, we can't pay for it, so we're not going to do it.

But it's easy to creep that budget up when.

Absolutely.

And if you can get your loan, a construction to permanent loan the first time, that way they know, hey, I'm getting this loan for this. It's going to automatically convert. And you're not having to go through that closing process twice or get to the point where you've taken out this construction loan to Rachel's point, if you've gone over budget and then you're going over here to try to get that to convert to a mortgage and you're not approving that, you get in trouble there. You can get in trouble there. So make sure you're doing it all in one from the beginning. And there's plenty of mortgage companies who will do that for you.

That's right. Up next, we have Nicole in Kansas City. Hey, Nicole. Welcome to the.

Hi.

Hello. Hello. How can we help?

Okay, so I am calling. My husband and I live very frugally. I mean, we're kind of the joke of everybody because we drive the old cars, but we have secretly been able to put money away, and I'm just putting it away in CDs and in cash. And I've just been following Dave Ramsey for the last year on Facebook and listening to you guys, and I'm going, okay, we need to do something more, because it's great that we have this money in CDs, but that's making us, what, $1,000 a year, right? Talk a lot about Roth Iras. And I'm like, is that what I start doing? We probably make both of us together, maybe $90,000 a year, and we probably have $90,000 savings.

Okay, well, do your employers offer any sort of investing opportunity? 401K?

Yeah, we do both have that. And we have, like, employer match, 5%. Both do the max of 5%. Both.

You are doing that currently?

Yes, we are doing that as well. My thing is, like I said, I'm putting away about $1,500 a month, sometimes $2,000 a month, and I'm going, I need to be doing something more with this money, because I'm going to be 37 this year. And I'm like, retirement is really not that far out.

Totally. Sure. Do you guys have any debt by.

The time I retire? That's right.

No debt. Okay. So what I would do, Nicole, is remember, this formula match beats Roth, beats traditional. So the first thing you're going to do is your match. And you guys are doing that up to 5%. And we want you investing 15% of your income into retirement. So 5% of that 15% is done, which is great. So you have 10% left. So then I want you guys. Yes. To open up a Roth Ira. It grows tax free. The max, I think, is 7000 this year that you each can put in. You each can open one. So I want you to open one, Nicole, and I want your husband to open up one. So you guys will be investing money into that. And then after that's done, run the calculations and see, okay, out of that 10%, after we max it out, how much is left? If there is any left, go back to your 401 and put that money in, and you just do that formula of 15%. And then anything extra that you guys have in your budget that you're able to throw at your house, pay it off early. And you just keep doing that and that.

Nicole, your four hundred and one K and a Roth IrA. You guys doing that from 37 to 67, you're going to be fine. It's going to be fabulous. If you want to go to ramsaysolutions.com and hit our investing calculator and put some of these numbers in and just say, hey, and this 90,000 that you have, keep some of that cash and put it in a high yield savings account. I would do six months of expenses. And then the rest of it you can use to fund your roth. If you need to, you could put it in a brokerage account, some type of vanguard account. Even so, there's some other options there.

And you still have time. You can fund 2020 three's Roth and 2020 four's roth for each of you. You have until April tax day to do that.

A few weeks.

Big opportunity.

Absolutely. Thanks, Nicole, for the call. Thank you, America, for listening. Thanks to everyone in the booth. Jade, always a pleasure. This is the Ramsey show, live from the headquarters of Ramsey Solutions, it's the Ramsey show, where we help people build wealth, do work that they love, and create amazing relationships. I am Rachel Cruz, hosting this hour with bestselling author and my good friend, Jade Warshaw. And we are here to answer your questions. So give us a call at. We're here to talk about your life, your money, your relationships, your career, anything and everything.

Speaking about money, Rachel, we're doing here at Ramsay Solutions, we're doing a money documentary coming up, and we're working on, it's like a new show that we're doing, and we need you guys to be a part of it. And I'm not giving any spoiler alerts, but I'm going to be part of it. It might have to do with somebody coming into your home and helping you with your budget and your life and getting your money together. It's just a little something going on.

Is all I'm saying.

Now, here's the criteria. If you are interested in this, you've got to be somebody who's in debt, right? You've got to be in debt. Maybe you and your spouse are not on the same page with money and you need help with that, perhaps you're having a hard time making ends meet and you're living paycheck to paycheck and your income is a problem. Or maybe you've said to yourself, man, I make too much money to feel this broke. If you're in that camp, we want to walk with you for 90 days and help you turn things around. Like, this is a very immersive, documentary style show, I guess is the best way to say it. So if you're interested, we'll put a link to a form in the show notes so you can check out the show notes. If you're on the podcast and you can fill out the form, and we may or may not get back to you. I'm just saying, this is a casting call. All right, so put your best foot forward. Don't say anything or do anything weird, but definitely be honest. And we'll be able to tell anyway if you're weird.

So, anyway, put it out there. We want to do this. This is going to be so, so fun. And hopefully we'll help a lot.

But Jade's pretty good at budgeting. We'll just say that much.

I might help you budget a little.

Say that much. Oh, so great. And where did they go again, Jade?

They need to go to the show notes. Right, James? That's the best place to look at it.

Yeah.

We'll have the link in the show.

Notes on YouTube and podcasts.

Perfect.

So make sure to check that out, you guys. All right. To kick us off this hour, we have Leah in Dallas, Texas. Hey, Leah. Welcome to the show.

Hi. Thank you for having me.

Absolutely. How can we help?

So, a few questions that I wanted to bring up, but the main one is how to get my husband to be okay and supportive of me leading our debt payoff journey and the budget and just managing the finances. He views it as, because he's the man of the house, that it should be his job. And I am okay with that. But he does not budget. He does not track anything. If we say, how much did we spend on X last month, he has no idea.

So you're just a little better with money? Like, you're more nerdy?

Yes. I do the budget and I track, and I know how much for everything, and he just doesn't do that.

So he's viewing it more as a gender role rather than a skills role, like skill set.

Right.

Individual skill set, yes.

And that's not a great way of looking at it. So I hope he watches this call because we'll just get right. I mean, so blunt to it. Because truly, Leah, because it's not him. And I think that viewpoint is they hold this esteem of I should be the one leading all of x, Y and Z probably from know spiritual conviction. Part of your life is where that comes from.

Leader knows how to delegate it. That's all I'm saying.

Yes, and that's true. To understand that you guys are a team, leah, you are a team. You both have equal say in this. You both have the ability to look at money and you both have ability to say, hey, here's where we think our money should go. Naturally, one of you is going to be better at that than the other. It's just like when you're planning a trip, one of you naturally is going to be more detailed in planning trip. Let that person who enjoys it and likes it, let them do it, let them thrive in that. And that's what this money is. It's not cutting him out.

And it's not an insult.

No, it's not cutting him out either. It's saying, hey, we're both coming to the table, but let me take the initiative because I love doing this. I'm good at this. And let me do this. Let me work in my strength. Um, and again, I think out of the name of, of, um. And leah, you're right here talking with.

Yeah.

Out of a spiritual conviction, if you think. I think we get that tangled up with, oh, my gosh, we have to live this life together.

The man is the head, and I've got to lead out on the finances, and I've got to take the reins.

At it, and he doesn't want to do it. And that's okay.

Do you know what I mean?

And that's okay. So, like, call a spade a spade. And again, it's not one is better than the other. It's just more equal that you guys are working as a team together in this. So I appreciate his heart in it, but I just think when you go about it that way, it can get dysfunctional really quick, and you don't make progress because the person that's good at it isn't the one that's saying, hey, let me take the first couple of steps and then we're going to do this together.

It's almost like when you let the legalism of something keep you from enjoying the fruit of what you're actually there for. Do you know what I mean?

Yes.

And in this case, it's like you both have clearly agreed that you care about getting your finances in order. And you both have. Right? Both of you have said this is something we probably need to do. But he's getting so caught up in, like I said, that legal initiates it or something.

And it's both of you guys.

It's both of you talking. You guys responding and me talking about it right now. It kind of made me realize that. I think part of where his issue comes from is that I am trying to do it y'all's way. Like, Tiffany, you're on two different pages. We're on, like, half of the same page. So he semi agrees. But where we're different is he wants to keep. We have a pretty significant amount saved, a little over 10,000. And he doesn't want to touch that, even though we have an overwhelming amount of debt, and I don't like that. And then he also doesn't want to close one of the largest credit cards we have because he wants it there as a cushion, like, just in case if something happens. So I feel like a lot of what he's wanting is very fear based.

So how much debt do you guys have, Leah?

Not counting the house, 104,104.

What's it in? What kind of debt is it?

Credit cards, my student loans, and one car loan.

Let me ask you this. Would you say if he were on the call with us, if we asked him, are you happy with where you are financially? What would he say?

Yes, and absolutely not.

Okay, so here's the deal, Leah. Here's what has to happen. And something that he. Again, I hope you're listening, husband of Leah, because I'm sure you're great. But what people have to understand is if you're not happy with where you are financially, that means you have to do something different. If you keep doing what you've been doing, you're going to keep getting what you've been getting, which is the definition of insanity. And so change is hard. It's scary, it's uncomfortable. But in order to get a different result, you have to do something different. And this plan that we walk out with the baby steps is there for a reason. It's not like it just was.

Poof.

We just made it up. It's three decades of people doing this. Jade and I, both in our personal lives, have walked this out. I mean, millions of people have done this. And if you walk the baby steps and you do exactly in order what it is, you're going to feel so different when it comes to your money. So hold on the line, Leah, because Austin's going to pick up and I want to give you guys financial Peace university, which is our nine week course, and every dollar premium. So you guys can start budgeting together, both of you, and start this. Because again, it's the idea of getting on the same page with your values and the principles that's important.

I know you work hard for your money and the key to keeping more of it in your pocket is by making a plan for your spending with a budget. And every dollar is the budgeting app that I use personally because it's perfect for looking every dollar you make in its little president face and telling it exactly where you want it to go.

Just like you told that guy in.

Traffic exactly where you wanted him to go. And even better, every dollar walks you through the entire budgeting journey. So you always know your next right step. Download every dollar for free in the App Store or Google Play today.

Welcome back to the Ramsey show. I'm Rachel Cruz, chatting here with Jade Warshaw for the hour, answering your questions at one of the best ways. If you have enjoyed this show via the radio podcast YouTube, please tell your friends and family. We just met a fun mother son at the break and he's 23, introduced his mom to the show via YouTube and she just binged everything she said, watched all the videos and paid off everything mortgage and I'm like, see? So watching on YouTube. If your parents are out there, just send them some clips. If you have friends, parents, send your kids some clips. Neighbors, friends, family. Spread the word. Because our hope and our prayer for doing what we do is for you to take control of your money, create a life that you love, not let this be a stress point in your life. And we really do believe over three decades of doing this plan and the baby steps that we know the answer. We really do. And it sounds prideful, but we really believe that this planet helps you guys. So we want everyone to experience that freedom and that peace when it comes to their money.

And the way to do that is to again, enjoy this show. Let this be part of your daily rhythm. Share it. Leave a review if you'll do that as well. Subscribe to the podcast. Subscribe to the YouTube channel. It helps us out a lot. And again, it helps spread the word because we want people in control of their money. So true.

And Rachel, I'm going rogue for a minute. You said something and it's true. This has been a proven plan for 30 years. People have been taking this plan, using it and changing their life. And we get call after call, every show, and the last call that we got, they had $10,000. They weren't sure if they wanted to put that towards debt or people want to keep around credit cards. And I can say as a person, I mean, like you said, all the personalities have walked through this plan. And I think that there's always a piece of it that when you first start out mentally, you wrestle with. Right?

Sure.

Whether it's the cut up the credit cards thing or the buy a car in cash thing or the zero credit score thing or the take your savings to pay off the debt thing, everybody's going to come up against that wall that feels counterintuitive or feel very uncomfortable. Very uncomfortable. And the truth is, when you face something that's unknown, you can feel a little bit of fear or, like, I'm not sure if I want to take that next that. And this is the thing that I embraced, and hopefully it helps somebody. Never before I found Ramsey, I never helped anybody get out of debt or have a million dollar net worth or save up three to six. I never was able to do that for myself, let alone anyone else, which means I did not have a plan that worked. And some of you need to stop a moment and go, does my plan work? Is what I'm doing working? And the truth is, if it were, you wouldn't be calling us or you probably wouldn't be listening to this show for the very first time. So there is a little bit of pride that has to come down and go, listen, my way of doing things is not working.

This show has been here for 30 years, and this method has been here for probably even longer. And it's helped people, and it's helping people and it actually works. And sometimes you just have to accept that and go, okay. And I love that. Like you said, rachel, the young lady and young gentleman in our audience, she looked at this and goes, oh, this works. I'll do that.

Yes.

And honestly, it's just as simple as that. And I promise, as you keep walking through that plan, you'll start to see, oh, it really does work. And this really does pay off.

That's right.

That's my little two cent for you guys today.

No, I love it. I love it. And change is hard. It's uncomfortable, but it's the way, and it's just common sense, you guys. We say God's and grandma's ways of handling money. So it's not the new, exciting trend that you're going to see on TikTok. And like all of this oh, well, you just do this backdoor thing here.

Boom, boom, boom, boom, boom, boom.

It's pretty much common sense, but it works every time.

It does.

With every debt level, every income level, regardless of where you are, it works. Yeah. All right. Up next, we have Carla in Los Angeles. Hey, Carla. Welcome to the show.

Hi, Rachel. Hi, Jade. Thanks for taking the call. So happy to be here. How are you guys doing?

Yes, we're doing great. Glad you called in. How can we help?

Yeah, so, similar to what you were just talking about. I have a bunch of student loans that are coming up. They were unfrozen after that long student loan freezing during COVID and I have a pretty high payment coming up. And I've been listening to you guys. I'm a relatively new listener, but I'm fully bought into taking the baby steps and tackling one goal at a time. And I'm just thinking through, I have a plan for this year to get really tight on my budgeting and to cut down the debt as much as possible. And I think I have $89,000 in student loan debt from undergrad and grad school. So I have a plan to tackle it with budgeting. But I also, during COVID invested in a lot of stocks, singular stocks, even a little bit of crypto and then some other vanguard. And it's about $38,000 worth of stocks. And I'm just not sure if I should liquidate them. Some of them are a little bit undervalued for what I bought them. So I just am a little bit uncertain about taking a loss if I was to liquidate them and put them towards the student loan debt.

But I feel like I know it's the right thing to do, but kind of just wanted to hear your thoughts.

Well, you tell us what you think the right thing to do would be, and we'll validate it or not.

Okay. I do think the right thing to do would be to liquidate it, even if it is taking a loss, just because I do believe in the mindset of focusing on the debt first and then full force investing later.

Yeah, I agree with that, because I don't think that these stocks were ever intended to be that long term investment that's going to get you through retirement and set you free, because they're just not single stock investments would not be so high risk, and it's so up and down. So, for me, because it wasn't the time or the right place for me to invest the money, I would liquidate it for that reason and use it for a much greater purpose, to pay off this debt. So I think you're right on.

Yeah. How much do you make a year, Carla?

Take home pay after taxes and 401K contributions is around 80K.

Okay.

That's great. Yeah. And I just see this as just, like, a jump start to paying off this 89,000. I'm like, man, if you could get it, you'll get it down, you'll pay taxes and stuff on some of the things, but anywhere from, you'll have 50, 52 or so left in student loans. And that just feels like, oh, my gosh, a totally different mountain to climb versus almost 90. You know what I mean? There's something about that now feeling less.

Than your yearly income instead of more than your yearly income.

That's right. Yes. How old are you?

28.

28.

Okay.

You're really smart, Carla. Just the fact that you even were thinking about all of this during COVID and you were at least being proactive, doing something with your money, and I think that that is going to serve you really well later on. So let me just say this, too. On the investing side, you have plenty of time.

Yes, ma'am.

You have plenty of time. And I would want you to run some calculations yourself, because you're a numbers person, and I want you to see it for yourself. If you go to ramsaysolutions.com, pull up our investment calculator and just plug in some numbers and just say, okay, what.

If I did this?

What if I liquidated everything, put it to the debt? What if I got an extra job, a side hustle, and I really worked hard to get this paid off in two years, and you really started investing 15% of your income, let's say, at age 29 or 30, then run those numbers from 30 years old to 55 years old, investing 15% of your income into retirement, knowing that your income is going to increase over time as well, and just look at it yourself and just say, okay, I'm going to be okay. And so I think we hold on to this level of security, especially when it comes to saving or investing. And the truth is, there's a lot of risk with this payment of your student loans going out every month.

Right.

And having this payment that if something happens to your job, you still owe someone something. So that debt freedom is huge. It really is. With the peace of mind. So I would get there as fast as possible.

Okay. Yeah. Thank you. I think it's just shifting the mindset from trying to do so many things at once to just one thing at a time. I also was trying to save for a home. And I'm having to refocus my mindset, really. But I do believe in it.

Yes, absolutely. Well, I'm so glad you called, Carlo, because I think that's also normal. Right? I mean, what you're thinking through and processing.

I mean, the truth is she's making $80,000 once she gets this debt paid off. If she invests that money from age 28 to 68, that's 30 years average rate of return. I mean, she's going to have $2.2 million just investing 15%. And that's assuming everything stays the same. Everything stays the same, which, of course, is not, because she's a genius and she's going to go on and do make greater things. There you have it.

It's awesome. Well, thanks, Carla, for the call. This is the Ramsey show.

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So we have different events here at Ramsay Solutions that we put on throughout the year that we want you all to come hang out with us here at our Ramsey Solutions headquarters. Stay for some teaching. And we always want to create a great experience for you. So we're so excited because we have a weekend of that coming up, the total money makeover weekend. And it's going to be here in Nashville at the Ramsay Solutions headquarters. And it's a brand new event May 10 and 11th. So in one weekend, you're going to get a complete crash course on everything when it comes to your money. We're going to be doing brand new talks. All the Ramsay personalities are going to be there. Dave Ramsay, George Camel, Jade Warshaw, me, Ken Coleman, Dr. John Zaloni. And we're all going to be talking about this subject because we find that when you are in person with people, there's a level of connection there. There's a level of energy. And when you're with like minded people, something just changes differently than just watching us via a screen or just listening to us in a podcast. So we really encourage you to come out.

We're really excited about this. It's going to be a full weekend, so we're actually going to do a live taping of smart money. Happy hour, me and George Campbell, one of our favorite podcasts. We're going to be doing that on Friday night. And then all day Saturday, we're going to be hanging out with you guys. We're doing q a throughout the day. Again, different talks from all the Ramsey personalities. So get your tickets, because our platinum plus tickets, they're already sold out, but you can still get platinum or VIP, and you have to get them now because, again, they're selling pretty quickly. So go to ramsaysolutions.com slash events and check out our total money makeover weekend. We are so excited it's coming in May. Come hang out with us. All right. We're going to the phones. And we have Hayden in Phoenix. Hey, Hayden. Welcome to the show.

Hi. Thanks. So I have a house question, a little bit of background. Me and my husband, we're 29 and 30 years old. We have a five month old son. We're currently completely debt free. No student loans, no credit cards, no car payments, no nothing. And we have about 130,000 in cash.

Great for you guys. Congratulations.

Yeah. So we are in Phoenix. My husband's job has been really good, and that's keeping us here long term. We do want to move closer to family, which is up north in Idaho or Utah, but we anticipate being here for at least five years. We're actually currently under contract for a house supposed to close tomorrow. However, we got a late disclosure with the condition of the house, and we're kind of questioning whether or not we should move forward and close or back out and other places.

What's the late disclosure?

Yeah, so the house is old. It's built in 1959. So we're aware of electrical issues, indoor plumbing issues, roof issues. Wonder what issues like. It's basically a full gut job.

Okay. Do you have the money for the full gut job?

So we have that 130. We were planning to put about 50 down and then have about 54 different projects and kind of cash flowing, a lot of it, because from what we were told, a lot of it is livable. And we could just kind of get to the projects as we needed to. However, the late disclosure is with the condition of the septic. So it's not on city sewer, it's on a septic. And it's basically like a homemade septic system, that.

This is not the least homemade thing. I think I would.

Listen, there's many things that can be, Hayden. Septic system should not be one of them. There's a lot of things I want to say right now.

Okay.

Yeah, that stinks.

Okay. And, Hayden, this house. Sorry. Is close to where you guys want to move with family.

No. So it's actually a little bit further away from where our current life is. It's about 40 minutes away from my husband's job, so it's definitely doable.

Why do you all want to, like.

In the most ideal situation, why do.

You want to move there?

Honestly, just due to the price, we would love to be right next, I tell you, work. Yeah.

And this may not be you, Hayden, so just correct me. But there is a romanticized fixer upper, and we get to go in and have the before and after pictures with the great music and put it on the Instagram reel. And that's what we see, and that's what we. Oh, it just looks just so, kind of just like. Oh, my gosh. It's just a great adventure. It's terrible, Hayden. And you're going to be living there with a baby, and it is not with a homemade septic system.

It's a crappy situation, I'm telling you.

And again, some people can do the renovation thing, but we talked to more people that took out helocs to do it. They get halfway through. It's too much work. They have to hire contractors. I mean, it just ends up being. It ends up being another job. I mean, you end up literally having a part time job. And it's romanticized because of TV shows and Instagram, but it's a lot.

50,000 may not go far. How many square feet is this home?

So it's about 1700 sqft. Okay. Not too bad.

I don't know. Hate it.

And what do you guys know about. I mean, with the septic tank thing, do you guys know what your path forward would be like? How do you get on the.

Yeah, we've reached out for additional quotes. And because they got the disclosure late, they're able to push closing late. But me and my husband are both looking at each other like this seems.

Are you able to get out of it without penalty because of that?

We should be able to. Yeah, I think the way the contract was written that we should be able to back out without having to lose any earnest money or anything like that.

Listen, for me, this is a brown flag, which is also a red flag. I'm going to make jokes all day about this, but for me, that's enough for me to back out.

It sounds like a money pit, too.

Yes. I don't literally want to have to deal with someone else's crap. There's enough things to deal with in the world. And so I think that, guys, I can go all day on this.

All day. All day.

I won't.

I know. And, Hayden, I know you guys are probably so itching to get into a house and the motivation you did it is because of the price. And I think it's going to end up costing you guys more in finances and emotionally and exhausted. It's just a lot. You're going right into living a fixer upper. And I just don't think it's.

It's the baby, too. With the baby, I just feel like that feels like a lot.

And he's currently waking up from his nap right now. So I'm like, oh, my gosh.

Yeah.

I wouldn't have time, like, I think, to do it. So, yeah, that's kind of where we're leaning.

But it's just, yeah, have some patience. Have some patience.

So many houses and we just.

A home is one thing you don't want to go into going, I don't know, maybe not a home is one thing you want to go into being like, yeah.

Confident. This is it.

Yeah, this is the one. We can afford it. It's the right place. You want to feel that.

And here's what I want for you guys, too, Hayden, is I want you to have three homes on the table that are in your price point, that are in a situation that you're like, okay, this would be good for our family. This, this or this? Which one do we want? When you have choices and options, you make better decisions. When you get pigeonholed into, like, this is the only thing. This is it. We looked at so many houses. This is the only one. You make really bad decisions, and that's with anything in life. So slow down. You guys have the time. You're in a great position, Hayden. That's why I'm like, I don't want y'all to screw this up because you're in a great position. You have no debt. You have cash. Time is on your side. You are the one that's on the right side of this. Right? And so take your time. I would keep looking if it were me. And again, maybe. And me, maybe you're Joanna and chip Gaines, and this is what you do, and you'll love it, and maybe it's fine. It just sounds like a money pit to me.

And then there's things like a homemade septic that I'm like, I don't know. I just don't think it'll be worth it. Your hard earned money, I'm scared. Will not go as far as you think it will in a situation like this. And I would be patient and wait it out.

I'm with you 100%.

Yeah. It is hard, though, because when you do feel like, oh, my gosh, we are in a financial position to do this, we want to, but then all these things keep coming up. Listen to those things. Listen to your gut. Listen to your gut. And again, without other options on the table where you can fully, confidently say, this is where we want to put our money and this is where we want to land and be here.

And I don't think that late disclosure was on accident.

I'm just saying that's a great point. If they loved their septic be, that would be first thing you should see. Our amazing septic system that my husband built.

No one ever.

That's so true. There's a reason, Hayden. There was a reason for that. Good luck, you guys. We're excited for you. This is the Ramsay show. Our scripture today comes from John 1427. Peace I leave with you. My peace I give to you. I do not give to you. As the world gives. Do not let your hearts be troubled and do not be afraid. James Brown said, I'm trying to do one thing. Bring people joy, just like church does. People don't go to church to find trouble. They go there to lose it.

Okay, James Brown.

So good. Well, I'm Rachel Cruz, and this is Jade Warshaw. And we've been answering your questions. So let's go out to Los Angeles, and we're talking to Blair. Hey, Blair. Welcome to the show.

Hey, y'all. I'm a big fan of both of you and excited to be chatting with you.

Oh, I'm so glad. So glad you called in. How can we help?

So I have a question about baby step three b. I'm at a point in my financial journey that I think intellectually, the next prudent step is to buy a house or at least with my sight set on that. But I'm pretty averse to risk and I'm scared, too. So a little bit of background. I'm 36, I'm single. I don't have any kids and don't intend to. And I live in Los Angeles where homes are very expensive. I don't have any debt. My current net worth is around 350. I have about one and 150 in investments like 401 ks and stuff, and then around 200 in a high yield savings account.

Good for you.

Which I realize is too much to be holding on to in a high yield savings account if I'm not planning to buy. But I'm just scared. I really like not having any debt. And because I am single and homes are so expensive, I'm just scared to take on such a big, such a mortgage that I think would require.

What's keeping you in LA? Is it your job or you just love it there? You have family.

It's my job. I'm a lawyer. My practice is here. My clients are here.

Have you priced out things, Blair? Like townhomes, condos even? Because when we say buying a home, it doesn't necessarily mean a single family standalone house. Yeah. I mean, have you looked at other options? Because you are single, you don't need a ton of room. So it's like, yeah, have you looked at those? Have you priced out things like that?

Yeah, for sure. I don't think I'd be comfortable buying anything more than like a one bedroom.

Okay. And what are they going for?

Even that is going to cost probably like three quarters of a million in the area that I live in. That seems about right. And that's more of a mortgage than I want to take on with the current cash I have. And I guess, should I just keep saving and moving in that direction? I feel a little bit like, I know 36 isn't that old, but it feels a little bit old in retirement age. I feel like I should be investing more.

What do you earn every year? What's your income?

This year will be about 320.

Here's the thing.

Good for you, Brooke.

Blair, you're killing it. Even in Los Angeles, like, 320 is a good income and you've got this money saved. And there is a part of this that is prudent because for most of us, when we look at our budget, when we look at what we're spending money on, housing is the biggest ticket item. And if you can find a way to stabilize that, because rent can always go up. It can always change. There's leases involved and you have to go here and there. But if you can stabilize that item by purchasing a home or purchasing, in your case, a condo, there's something that does actually provide peace within that, even though, like you said, it's a lot of money to spend. But on the end of it, you're also building equity. So my screen says, should I invest or should I buy a house? Then I would say in many ways, you're doing the same thing. When you're buying the home, it is real estate. Hopefully, that gives you. Does that help you in any way to kind of see that this is you making an investment? Yes, you're spending money, but it's invested money.

It's not going down a black hole. And by doing that, you're stabilizing your lifestyle.

Yeah, that makes sense. I think. I think I just needed to hear that it's okay.

And listen, if you do it by the parameters that we talk about, you're right. There is a scary way to purchase a home, and there is a right way to purchase it to where it's a blessing. And if you follow our parameters, I'm telling you, it's going to feel like a blessing. You're going to be like, oh, my gosh, this is great. No more than 25% of your take home pay. That's what you're looking for with your HOA, taxes, insurance, everything, all in. No more than 25%. And on a 15 year fixed rate, that's what you're looking for. And with your income, you might have to save up a little bit more money to make this happen. I'm not sure you'll have to run those numbers, but that's what you're looking for. And if you can accomplish that, then that's chef's kiss.

Yep. For, you know, Blair, we always say, facts are your friends. And sometimes these things can be so emotional, and sometimes the math is what helps us. The math can give us permission, and the math can give us a big red light. Right? And that goes on either side of the coin. Some people want to rush into something, but you're like, look at the math. It's not going to work well. But in your case, thankfully, you're kind of on the other end of it, where I'm like, Blair, the math could work. You know what I mean? So actually run these numbers out and see them, because the numbers, they don't have emotion. So just look at them and say, okay, is it within these parameters? Because we're a pretty conservative bunch when it comes to, do we want you to do it. Really. So, again, it may take you, Blair, another year or two, but the more you're in that mindset and the more you're working towards some things, I do want you working towards homeownership. I do want that to be part of your overall financial. That may give you some peace, too, right?

That you're not having to do this tomorrow. You may know it's march now, maybe march of next year is my goal, to really say, okay, I'm going to start looking or whatever it is. Right. You can have a timeline, but I think those things will help you when you actually look at the numbers. Give yourself that permission and give yourself a great timeline.

Yeah, that makes a lot of sense. I appreciate it. I think, yeah, it's helpful to hear, too, that this is a pretty conservative strategy, and it's going to be okay.

And it's okay for you to do both at the same time. By the way, if you wanted to stack up more to put towards this down payment and start your 15% investing, totally. You can do both.

Yeah, I'm investing 15% of my income.

Okay, great.

So, yeah, you don't have to stop doing that in order to save up the down payment because I heard you say with your age or 36, you don't want to get behind or anything like that. So you're doing very well.

Okay, awesome. Thank y'all so much. I really appreciate it.

Yep, absolutely. Blair, thanks for calling. We're excited for you. All right, let's go to Jennifer in Toronto. Hey, Jennifer. Welcome to the show.

Hi there. Thanks for taking my call.

Absolutely. How can we help?

I'm calling about an insurance claim. I suffered some water damage in my home, and I'm expecting an insurance claim of about $30,000. I'm on baby step two, and I had three possible ideas as to what to do with that insurance claim and hoped you could weigh in. Let me know what you think.

Okay.

So first one would be simply to repair the damaged areas of the home. Second one would be to accept a cash payout, which would be 60% to 70% of the amount, and put that towards my debt. And the third option would be to use the funds to put in a basement rental unit, because currently in our area, there is a shortage of rental units, and I know I could rent that out for about $1,800 a month.

I would not do c. How much debt do you have?

$51,000 line of credit. At 1.99% line of credit, what repairs.

Do you need to do to actually have a functioning house. You know what I mean? I'm sure some of it was damaged, so if you priced it out.

Yeah. Surprisingly, I've been lucky. It's really quite functional. I'll definitely need a new kitchen floor. Yeah. And the basement. It's not pretty, but it's still functional. Warm and dry. So I would be okay to live with it for a few years if need be.

Okay.

But eventually you are going to have to deal with the damage, though, right?

Well, the kids are getting older and they're moving out, so potentially, no, I could leave it unfinished.

Okay.

Yeah. As long as it's not doing more damage to the home. I would fix the flooring. Fix what you need to fix, and I would throw the rest of the debt, is what I would do.

Here's the thing, though. You're only getting 60% to 70% of the $30,000 claim if you do that, right?

Correct.

So what's the numbers on that? How much is that going to leave you to pay off? I'm trying to figure out if it's worth it. If it's only going to leave you a couple of thousand for the debt. I'm almost like, use your house.

If the floors come back and they're 20,000 or something, they won't be that, but. So run those numbers. That's a good point.

Run those numbers out a little bit further.

All right. Thanks, Jennifer, for the call. Thank you, America, for listening. Jade Warshaw, always a pleasure. Thanks to all the guys in the booth. And thank you, America. And remember to take control of your money and create a life you love.

Safe matters for your organization, because whatever you lead can only grow as much as you do. I know from experience, I've been CEO of Ramsay Solutions for over 30 years, and now I'm sharing that lead leadership and business coaching experience with you on the entree Leadership podcast. I'm taking your calls and helping you figure out how to overcome challenges within your organization. One episode could change your business. Check it out on Apple, Spotify, YouTube, or on the Ramsey Network app.