Ram. 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 actual amazing relationships. Jade Washaw Ramsay personality is my co host today as we answer your questions about your life and your money. Open phones at Barbara starts this hour in Charlote, North Carolina. Hi, Barbara. How are you?

I am well.

Good. How can we help?

I need some advice on how to move forward with the collections company. I had a roof put on, and I got several estimates done, and I got down to making a decision between two different ones and the insurance company kind of stonewalled on one because they came in like $12,000 more than the other company. So the insurance company told me that, well, why would I pay that much more to have a roof put on when I have a reputable company here that will do it? So when I told I called this company a that I was going with someone else, he became very angry and belligerent and sent me an invoice for $697 for the services he had provided. Although even if you go to his website, it says that he gives free estimates. So he sent it to collections, and they keep calling me about it. I just need to know how to move forward with that. Now, there is one caveat here. One time, after the insurance company stonewalled on him, he asked me to sign this DocuSign, and he told me by word of mouth, I don't have any written evidence of it that this does not obligate you to anything.

It just allows me to continue to try and negotiate with the insurance company. And he said, I do this all the time. I know I can get them to meet my price. So I signed it, which was not a wise thing to do, but it pretty much said that the agreement was between the homeowner and him, his company, and that in exchange for his services provided, that I would agree to enter into a formal building contract with them.

Does it say anything about a fee for the estimate?

It does.

What does it say?

Well, no, not for the estimate, but he does say that if I fail to enter into a formal building contract within 30 days of agreement with the insurance company, that there would be a cancelation fee for expenses incurred during the claim scope of the claim.

Okay, well, you have two options.

That's what I signed.

You have two options.

Okay.

Option number one, I was stupid for signing something. It cost me $695 because you're probably going to lose this because you were stupid for signing that. Done. Stupid, too. So you and me are on the same team. Okay, I'm not picking on you. But, I mean, you said you shouldn't have signed that. I'm saying you shouldn't have signed that. I think it cost you $695 when you signed that without reading it, without half butt thinking about it. So that's one way you can just pay them the money and call it a day and say, well, this guy's a dad gum shyster, and I wasn't real smart when I signed this. It cost me a stupid tax of $695. Or you can call an attorney and take this document to them and pay the attorney $250 or $500 to scare the pants off this guy and threaten to countersue him for his shyster activities. And if they don't pull the claim back, you can go either way. Neither one would be really wrong, morally or ethically, but the attorney might tell you, all I'm doing with the attorney there is what's known as a bluff, because you're not going to sue somebody over $695.

He's not going to sue you over $695, but you're not going to get this stupid thing off your collections until you get rid of it and get it off your collections, either by him removing it or you paying it.

A guy like this, though, this is not his first time doing this.

No, he's a butt, no question about it. And what I would do is jump on and write some reviews online. You could also call him and say, I'm going to write reviews about your company, everywhere, about what a crook you are, and then I'm going to pay the 695, but I'm going to cost you tens of thousands of dollars because you're my new hobby. Yeah, I mean, you can do that. That might be fun because that's really what's going on. But I've done stuff like this. You don't have to look at something, you agree to it and stink and DocuSign. There you go. I don't know. I'm not an attorney. I'm guessing, though, that you probably on a technicality. That technicality being you signed this, you probably lost that money, but you can run the guy up a rail. How much trouble you want to put into $700? It's up to you.

It's an energy question. You want to know what, though, Dave? I probably wouldn't go to the attorney, only because I bet this guy's done this so many times, he would know that that's a bluff, maybe, and she might end up spending.

Occasionally you run into somebody like me, and it's not a bluff.

I would not want to run into Dave on the other end of that.

Burn it to ground just to prove the point, because occasionally I just get redneck about it. But honestly, you could cost him a lot more than 695, the social media and Yelp reviews and anything else you can do. Jump all around his website for $695. I could hire a web guy to just absolutely make a hobby out of it.

Come on. Now, that's what I'm talking about.

If I'm going to pay the guy, it's going to cost him. Yeah, I'm going to have a little fun with it after all. But also, note to self when I do something stupid and it costs me money, I call that stupid text. And Barbara Dave Ramsey's paid a lot of stupid tax. That's why I'm qualified to do this show, because I've done a lot of stupid butt stuff. Hopefully I can keep y'all from doing it and signing stuff. You don't have to look at that's in the category. I've done it, too, though. I've done it, too. It burns you because it's some little minor thing like that. You don't think anything about it.

Yeah, absolutely. And the thing is, when it's vague like that, when it says you may be on the hook for cancelation fees and there's no actual dollar amount, why.

Am I having to tell you to get you to do an estimate on a freaking roof?

Yeah, really?

It's not like rocket surgery here. I mean, come on. Yeah, that's the thing, though. We've all done it, and you said it earlier, and that's a good phrase. How much energy do you really want to put into something like this? And I just have to pick occasionally I pick one, burn it to the ground, and the rest of them, I just broke a check and forget it and go on and just decide which one you want to burn to the ground. If you're angry enough about it, burn it to the ground. I mean, make a big deal out of it.

You know what I'm going to do?

It cost him 60 or 80 grand.

I need to start having those guys sign my document because I had an estimation the other night. The guy was supposed to come out, never came. I'm like, it's interesting how this story flips.

Well, and they say stuff like, well, it's our policy. And I always go, you know, it's strange. I've got a policy, too. And my policy is I don't sign.

Crap like this, or my policy is if you waste my time, you owe me. Like, can we flip it on the other side for once?

Yeah. Talk to a guy. He sat in the doctor's office 2 hours past his appointment time waiting on the doctor. So he sent the doctor a bill.

That's what I'm talking about.

Yeah. There you go.

That's what I'm talking about.

Hey, you're going to use up my time, okay.

My time's.

Arrogant twerp. I'm sitting here trying to give you too much money. Good gosh. I mean, that's the deal. You just got to decide how you want to play this. This is the Ramsay show. Fake it till you make it. It's popular career advice, but it doesn't work for very long. If you don't love what you do, you can't fake the enthusiasm and energy you need to win at work. You also can't fake your physical health and energy. Everybody knows we should eat more fruits and veggies, but fruit chews and veggie tips don't count if you aren't winning physically, I promise you're limiting your opportunities to win professionally. Folks, I know you're going hard right now to pay off debt and get ahead professionally. You need another gear. And that's why Balance of Nature will help you. They help me. They give me the benefits of fresh, whole fruits and veggies in just seconds. The blend of 31 different fruits and veggies is powdered in an advanced process that locks in the nutrients. So go to balanceofnature.com and enter the promo code Ramsay to get 35% off your first order and lock in a lifetime price as a preferred customer.

That's balanceofnature.com with the promo code Ramsay for 35% off your first order. Jade Washaw Ramsay personality is my co host today. Graham is with us in Knoxville. Hey, Graham. How are you? I'm doing well, Dave. How are you? Better than I deserve. What's up?

Me and my fiance are getting married.

Next June, and we've been bouncing around.

The idea of buying a home versus.

Renting, and I wanted to get your thoughts on that. I would not buy until you're married, for sure. Is that what you're talking about? Okay. Yeah. We were thinking right around when we're.

Getting married next June yeah.

Will you have debt together?

We will have very little debt. She has a student loan for about $7,000. We've saved up a pretty good bit.

Going into our marriage and plan on.

Combining our finances and following a lot.

Of your instruction on that.

So you pay off the debt, you'd have an emergency fund, plus you'd have a down payment. Yes. Okay. Then according to the baby steps and what we teach, you would be in a position to buy a home. Let me tell you an idea to think about, okay? And it's not a hard and fast. I wouldn't call you stupid if you didn't do it or something like that. But here's an idea to think about. I think because I'm old and I've seen a lot, that one year after you're married, you will pick a different house than one month after you're married, because I think you will learn a lot about each other during that year. And I always joke and say it takes about a year of marriage to know how close to your mother in law to buy, but that's the kind you get to know each other. I would rather relationally. You spend the first year of your marriage, all of your energy on your relationship, not on hanging curtains and picking wallpaper and, for God's sakes, doing a renovation. Okay. I love the idea of the house not being the purchase, the move not being an emotional, relational drain.

Instead, you all just get really comfortable with each other and pile up a big old stack of cash, and the following spring, buy a house. I like that. And it comes from the Old Testament biblical story in Two Samuel that the young warriors in Israel in those days were not allowed to go to battle in the first year of marriage. They had to stay home and take care of the family. They were not allowed to go to battle until they'd been married at least a year. And so it's a bit symbolic or metaphorical, if you will, and it's not something that you would be completely unwise and stupid and foolish and all that. No, it's none of that. I just think you're going to make a different decision a year later.

I absolutely agree with that. And you've known each other. You get to know each other a little bit better by then.

We've been dating six years. Yeah, you've been living together.

It's different.

I mean, you've not been married together. You might have been living together. I don't know what you're doing.

Yeah, but it's different.

Yeah. It's a different deal, man. And it's not that dramatic, really, but it's subtle. And the thing that that makes you do is it makes you push back against the whole culture that's yelling at you. Buy a house, buy a house, buy a house. Oh, renting is throwing your money away. Buy a house, buy a house, buy a house. Oh, renters are going to hell. Buy a house, buy a house. People just go crazy. They're like a beagle chasing a rabbit, man. And it's okay to have a little bit of patience. Home ownership is a great plan. Owning a home and getting it paid off is a great financial wealth building plan. But everybody doesn't have to buy a house right now. Just calm your butt down.

And the longer you wait, the more you'll have more money to put down on it. Yeah, so there's that.

And who knows what the interest rates will do during that time? Might be fun.

Oh, that's true. Are you trying to make a call here, Dave?

Are you calling something? No, just check. I'm just saying, we'll be after an election at that point, and we'll see what's happening.

I didn't know if you were seeing your shadow or what.

That happens around here a lot because yeah, you get old things circle back around. If you keep the suit coat long enough, it comes back in style. All right, here we go. JT is in Santa Fe, New Mexico. Hi, JT. How are you?

Dave and Jade.

How's it going?

Better than we deserve. What's up?

So I'm about to be at a point where I'm completely out of debt, been working up the last few years, and I'm about to hit zero.

Hey, way to go.

My question is.

Is it foolish to.

Go back into debt?

Yes.

Start a business?

Yes. You just called the Ramsay show. JT, I know you walked into the bear cave and asked the bear if it was hungry.

You already know the answer.

JT advice.

What's the business?

My trade or work is I'm a 401K consultant. I do a risk of compliance, and I don't know.

I just kind of want to start.

My own firm and it's a lot to try to just bankroll.

Why? What do you got to bankroll?

That's what I'm wondering.

Well, to cash flow your day one.

Well, I mean, everything from software agreements, look, all sorts of stuff.

Wait a minute. For what?

You got to have customers first.

Well, I not so much worried about that part as getting everything started.

Yeah, but you're going.

What are you getting started?

What do you mean?

You don't have any money?

Not enough to get this thing going.

Well, what do you think it takes to get this going? Why have you decided what you're describing to me? You need a computer and some sweat.

Okay. And a customer.

Yeah, or six.

Well, that's the thing for what I'm doing. I'd be whale hunting in a canoe, and I need some stuff to be able to do such thing.

Okay. You are not ready to open a business and leave your job when you have absolutely no customers. Whale hunting in a canoe means that you don't have a clue where your customers are coming from. You're not ready to open a business and has nothing to do with a loan. You need some customers on the hook.

Well, the first thing I do, I would take my current job and ask that they 1099 me and I would contract all the work that I'm doing right now and then go look for my own bigger client. So I have an idea for cash flow.

Okay, so now we're eating. Now, why are we whale hunting in a canoe? Well, we got to go after big.

Fish to eat big, right?

Well, no, I mean, rabbits are more plentiful. Let's kill some of those. Neat.

I think you're missing the beauty of the type of business that you're starting, which is this is a business you can start with little to no overhead.

And little to no cash. Yeah, you need enough to eat on, but I don't want you floating in a canoe looking for a whale starving to death because you didn't have any plan or any background. But if you got a plan for cash flow day one on the 1099 side and you think they'll do that, what's the probability of them doing that?

I think so because I'd be taking on a lot of my I'd get my own insurance and stuff like that.

This is so vague. And you have not pro forma this out. The business you're in demands that you do a better job of pro forming than you have done so far. This is a group of vague generalities, and I'm going to go borrow money. No, you don't need to borrow money. You need to organically cash flow this little service oriented business, and you're going to be just fine. And you need to put together a business plan and process that has the probability of you being able to eat and cover the cost of basic software services. But there's no big 500,000 or 50,000 or $20,000 outlay for you to come out of the ground being a consultant.

Yeah, I think, Dave, people think if you build it, they'll come. And I think it's the opposite. You've got to go get them and then build it. You've got to build it while they're coming.

If you build it, they will come. In the movie world is called the Field of Dreams. In the business world is called a field of nightmares. So no. Yeah, you don't want to do that. I tell our guys all the time, hey, elephant hunting is great, but they're a lot more rare than rabbits. You eat really good on rabbits. There's lots of rabbits. Go get the rabbits. And occasionally you stumble into an elephant. Then that's extra. But let's go get the rabbits. Let's get a business model that churns cash here. Stack some cash. You're fine. JT. Do not borrow into the vagueness that you are describing us. You're really going to make a mess. This is the Ramsey show.

Hey, guys, it's Rachel Cruz. If your healthcare costs are increasing while.

Your choices are decreasing, check out Christian Healthcare Ministries. CHM is not health insurance.

It's a biblically based health cost sharing.

Ministry that has helped thousands of families.

Across the country by sharing each other's medical bills.

CHM is an affordable alternative to health insurance that aligns with your values and makes it possible for you to save.

On health care without giving up your freedom.

Check out more@chministries.org budget.

That's chministries.org budget.

Jade Washaw Ramsay personality is my cohost today. Open phones here at triple 8825-5225 in the lobby of Ramsay Solutions on the debt free stage. Aaron and Melissa are with us. Hey, guys. How are you? Good. Where do you guys live?

Just north of Rochester, New Hampshire.

Oh, it's a bit of a haul to Nashville. It is, yeah. Well, welcome. Good to have you. And all the way here to do a debt free scream. How much have you paid off?

$162,158.

All right. Way to go. And your range of income during that time?

About 83,000 to 119,000.

Cool. And what do you guys do for a living? I am a service tech at a.

Fuel company, and I've been a homeschooling, stay at home mom for 22 years. But I also do ebay sales.

That works. Okay. And how long did it take you to pay off the 162?

Four and a half years.

All right, very good. Excellent. Okay. What kind of debt was it?

About 2000 was credit card, 18,000 was a vehicle loan, and the rest was the house.

You paid off your house.

Look at weird people. Way to go. Weirdos. I love it. Wow. What's the house worth?

About 500,000.

Very cool. How much in your retirement accounts?

About 250.

All right. Bumping up. Getting ready to be a millionaire. Look at you guys. I love it. Congratulations.

Thank you.

How long have you all been married?

28 years.

All right. And five years ago, somebody said something and you changed. How'd you get connected to us? What happened?

Aaron actually heard you on your radio show, and then he started listening a little more intently, and it got him thinking. I had recently picked up a full time babysitting job, and the money just wasn't there. We have more money coming in. Where is it? So he brought it to my attention and I listened, and we both just said, let's do it, let's go.

Oh, wow. Just off the radio show?

Yeah. Wow.

And we went out and got total money makeover, and we just hit the.

Road just like that.

And four and a half years later, your house was paid off. Yeah. After 25 years of marriage or 20 years of marriage, you did something completely different. Absolutely. Wow. Way to go, you guys.

Thank you.

They got to feel pretty cool, man. Feels awesome. You knocked it out.

We did.

I mean, how does it feel to be debt free? No payments, no house payment, no nothing. It feels amazing. And free.

Yes.

So you listen to the radio and you hear a guy talking about getting out of debt, how to build wealth. What did the people around you think when you said, I'm following the radio guy, we're doing everything like he says, and that's how we're getting out of this. Did people think you were crazy?

A little bit. They were excited for us, but nobody was like, oh, I'm going to try that. It just wasn't realistic.

I guess now it is.

Yeah, now it is.

Because now it's done. Mic drop. Boom.

So we were sailing pretty good. And then in January of this year, aaron was diagnosed with tongue and neck cancer.

Oh, wow.

So that halted everything for a bit.

Yeah.

Surgeon said to expect to be out of work for four to six months. He had just changed companies for the first time in 21 years, and so we weren't going to get short term disability. He hadn't been there long enough. So that would mean zero income.

Two weeks shy.

Yeah, two more weeks. If they could have pushed the surgery out, we could have gotten something.

So how'd you make it through that time?

We had followed the principles and we had that three to six month savings. And we knew right away we were going to have financial peace, that we didn't have to stress about that. We also had a lot of generosity from friends and family.

Wow. How are you doing?

Now, the peace we had from the emergency fund and the life insurance was everything to me. And that's why we're here today to thank you, Dave. Well, thank you. Thank you. I'm proud of you. And so you got a full recovery.

We just found out he's cancer free.

Come on, somebody.

Hey. That's better than debt free. I'm just saying debt free is good. Cancer free is awesome. Yeah. Way to go, man.

Amazing.

What a horrible thing to go through. But what a great result. Having that money in the account was everything because we would have been thinking about that instead of fighting cancer fighting. It takes everything you got to fight one thing and you can't have six different things going on. Absolutely. Yeah. And you didn't have to worry about that.

Wow.

That's amazing. Well, I'm so glad you're okay. That's the big thing.

Me, too.

Yeah. And if you guys are looking through your radio at home, you can't see their I drank the koolaid t shirts. So there you go. They have officially joined the cult. Say what? I just said amen. I thought you said and then way to go, guys. Congratulations. What do you tell people the key to getting out of debt is? Go ahead.

A big part of it is just to have contentment with what you have. We've always lived a very thrifty lifestyle. We've never carried much debt. We're content with what we have. But I think that's a huge part.

Of it enabled you to just click that about two notches and knock the whole thing out, right? Yeah. It wasn't like this massive change, but you just had to get real intentional. That's a big thing. Contentment is everything. I have a key, too. When I got diagnosed, I came up with a saying it was opportunities. Sorry. Challenges are just opportunities to prove how strong you are. And I think that's true with that. Also, the challenge makes you go harder for my personality. You're exactly right. That's exactly right. That's how things work. Very well done, you guys. Man, you're heroes. That's amazing story. I'm so proud of you. Wow. Who was cheering you on outside, the two of you? On the dad? Anybody? They were just looking at you going, you kind of lost it. Maybe.

We were definitely our biggest cheerleaders and pushing each other along. But our kids have also adopted your principles and they've been very excited watching us through this journey. So that's been encouraging to us to see them feeding off of it.

They do think we're crazy. They do. They live the principles now even though one of them is an adult.

Well, they saw it work for you and they saw it change your life.

Yeah. Very cool. Well, we got the live and give box for you. That's the baby steps millionaires box, our book. You're almost there. And the total money makeover book to give away and hopefully get somebody else moving. It helped you get you moving. And that book has helped a lot of people get moving and of course, financial peace university membership as well. So congratulations, heroes. Thank you. Very well done. Took control of your life. So aaron and melissa rochester, new hampshire, 162,000 paid off four and a half years, making 83 to 119. Almost baby step millionaires with a paid off house and everything. Count it down. Let's hear a debt free scream.

Three, two, one.

We're debt free. Yes.

Love it.

Wow.

Just by listening to the show, Dave.

Life is going to come at you. Sometimes life is named car wreck. Sometimes it's named job layoff. Sometimes it's named throat cancer. But life is going to come at you. And if you have that emergency fund in place and you don't have any mean what Aaron is saying there, it puts you in a completely different posture to fight against whatever life is wanting to deal you.

Yeah, that's right.

Because it's going to deal. You know, we always tell people you need an emergency fund. It's going to rain, Dave. You need to be positive. I'm positive it's going to rain.

Yeah. That's just life. It's not being negative. It's just knowing that something's going to come your way. You don't get out of life without something coming your way.

It's wisdom. I mean, the flying monkeys on the wizard of oz, there's always going to be flying monkeys somewhere. Even if you're on the yellow brick road, there's flying monkeys. Something's going to come.

I'd love to say I know what you're talking about, but I've never seen the wizard of Oz.

You're kidding.

Mic drop.

Are you an American? How do you not have seen the wizard?

It's always just seemed like a weird movie to me, so I never watched.

Have to you. I'm going to have to talk to Sam. We're going to have to remedy this. We're having a watch party and I'm going to go rent the to. Oh, my goodness. We're going to put it on the big screen out here up in the event center. Let's have it at the event center. Have all the people bring their children and get the I mean, the original, the real wizard of Oz. I'm talking about the real one.

Oh, I believe your analogy made sense for some people, Jade.

I mean, that's not just a boomer thing. I mean, that's America and apple pie and Chevrolet and the wizard of Oz. I mean, come on.

It's a little known fact.

Wow. How do you not know about the flying? Oh, this is the Ramsey show. Hey, everybody, Dr. John Deloney here. Researchers tell us that the average person spends about one third of their life sleeping. That's about a quarter of a million hours. And we know this for certain. Restoring your mind and body with sleep is crucial for your physical, emotional and relational health. So if you're going to be sleeping for one third of your life and sleep is critical for every good thing you got going on, why not try and get the best sleep possible? And great sleep starts with an amazing mattress. Like DreamCloud. DreamCloud mattresses are soft, cool and supportive so you can sleep comfortably all night long. I know this because some. Of my family sleeps on DreamCloud. And here's another bit of research for you. Four out of five people say they fall asleep faster on their DreamCloud than they did on their old mattress. And right now, Ramsay Show listeners can get an awesome deal 40% off all mattresses, plus an extra savings of $50. So go to dreamcloudsleep.com today Enter promo code John Deloney. That's dreamcloudsleep.com with promo code.

John Deloney. Thanks for joining us, america. We're so glad you're with us. Open phones at triple 825-5225. Forbes reporting. Americans are overdue with their car payments at the highest rate in nearly 30 years. Higher car prices and rising interest rates are hindering car owners ability to afford their vehicle payments, as 6.1% of subprime auto borrowers are at least 60 days past due on their loans, the highest percentage in data dating back all the way to 1994. According to Bloomberg, Gen, Z and Millennials may account for a significant amount of the borrowers behind on their auto loans as the two generations recorded auto loan delinquency rates last year that were significantly higher than pre pandemic levels. According to NBC News, interest rates for used cars are 13 and a half on average for those with fair credit, but can rocket up to 21 with those with worst credit and subprime loans. 6.1% behind on a subprime loan.

Yeah, they shouldn't have been buying these cars to begin with. That's the problem. That's the problem. When it's subprime, it's because you got low credit, you've got low income. There's a reason that they don't want you borrowing money. And so they say, well, we'll just jack up the interest rate, right, so.

That we can cover you're a high risk borrower. So they're going to charge you super high interest rates and continue your problems.

For you because they know, well, I.

Was forced to buy a car. No, you weren't. They did not have a gun. You were not forced to do anything. I have chosen to do some stupid things in my life, but I have to take ownership of the fact that I chose to do it. I was not forced to do it. I wanted it. I had car fever, I loved the smell of the leather and I paid way too much and I put it on a high interest rate because I was stupid. And I suspect that some people have done that.

Well, what's interesting is this is significantly higher than pre pandemic levels, which to me indicates that after their pandemic, people got used to extra money coming in, whether it was subsidies from the government or whether it was I wasn't paying my student loan and let's just go get a car, let's get a new Camry.

We have the illusion of margin in our budget because of these biden bucks.

That's right.

And there's not a real margin in my budget. But I will go and act like there famous, famous words of right before you die, we can afford the payments. These are the famous words of fools, right before you prove you're a fool, right?

Because all you care about is how much per month.

Rich people ask how much? Poor people ask how much down how much a month.

Yeah. And they're not talking about what these payments are, because we know what the average payment is. $717. Last time I checked.

Yeah.

$600. 650.

The interesting thing, though, the way Forbes and the financial media couches these things, it's as if the people that did this are victims, right? It's like the Gen Z and Millennials may account for a significant amount of the borrowers behind on their loans. These two generations have recorded auto loan delinquency rates last year that were significantly higher than pre pandemic levels.

No, I can't get behind that, Dave, because they went to the dealership and they said, Sign me up. I'll sign on the dotted line. They made that choice. No one said you had to get a car loan. No one said you had to spend $25,000 on a brand new car. You chose to do that.

Higher vehicle prices are at fault. Higher borrowing costs are at fault, according to the article. No, let me help you. You want to know what causes vehicle prices to come down? Lower demand. People aren't buying them. They'll price adjust. That's what's happening to higher education right now. Colleges are getting ready to experience this. People have decided it's, I'm not going to pay $250,000 for a degree in left handed puppetry. It doesn't make sense. And end up being a barista. No, I'm not going to do that. And people are waking up. And you know what? If car prices are so high, then don't buy them.

That's what I'm saying.

Oh, shocking. Look, when see, here's the thing. It's the ancient word. We have forgotten the ancient word.

No.

Yeah. You press your tongue towards the roof of your mouth, release and blow air past it sounds like this. No. No. You can't tell anyone. No. Because immediately that's hate speech now.

Yeah.

No. You told me I can't do something. I just did that's. Right. No. Yeah. I don't like, you know, I wasn't running a poll. I'm just here to help you.

But, Dave, I have to live in my truth, and my truth is telling me that I need self care and I need a new car, and the way for me to take care of myself is to get this new car.

The problem is you have your own truth and I have my own truth, and they're in conflict. One of them is not the.

Kind.

Of you're not allowed to own your own truth. It's sorry. It's not like a thing you can buy. You can't go to Walmart and buy a box of truth and it's different than it's a variety I get a variety pack. A different kind of truth depending on what truth I want. Now, one truth if it's in conflict with another truth, by def definition, one of them is not the truth. The truth is independent of your little feelings. Darling.

I'm offended Dave.

I know I'm offended. And I'm supposed to care. I love oh, it's so fun.

Hey, guys, if you can't tell, we're making fun of you.

Yes, we are. Definitely. If you make all of your adult decisions with your feelings, you are by definition, a child. And so when you purchase something that you can't afford with money that you don't have to impress people you don't even really like at 21% on subprime, and then you get delinquent on the payment, $1,142 car payment, then you become a statistic. And then people like Forbes make fun of your entire generation because of that. And by the way, the Gen Z's and the millennials are actually two very good financial generations. They've done a very good job, by and large, but a portion of every generation is stupid.

Well, the problem is and a portion.

Of the Gen Z and a portion of the millennials portion of the boomers are stupid.

The problem is, Dave, is if you're always pointing to the problem out there, that's the reason. It's the dealership, it's the interest rates, inflation, it's supply chain. If you're always pointing to something out there for your own behavior, you'll never be able to fix it. You'll never be able to fix it, and you'll never get out of debt and you'll never stop fooling around with cars. And everybody has to take that moment and look inward. When Sam and I were getting out of debt, we had one a Jeep car payment for 303 and a Hummer H three for 432 a month. That's so much in car payments. And I thought, like, this is the way you're supposed to live life. This is what you have to do. And it took me listening to the Ramsay show and listening to things and people going, that's so dumb, that's so stupid. And at some point, you have to look at yourself and go, could I really be making a stupid decision and not blame? You're never going to get past it. You've got to look, there's a reason you don't have any money and it's sitting in your driveway.

It's the largest thing we all buy that goes down in value. I don't hate cars. I just hate what they do to people that can't afford them.

Right.

And when you start talking about if you take $550 a month and invest it from age 30 to age 65, you're going to have $5.5 million in a mutual fund. Hope you like the car. It's a $5 million mistake.

Yeah. That your kids are crunching up cheerios in the back and your friends are throwing up in the back.

Oh, gross. I'm just saying, what kind of friends have you got?

Well, if you got a just saying.

I haven't had friends throw up in the back of my car since college. Look, gross. Jade.

I'm just saying, this is what? Okay, your kid, your kid throwing up in the back.

Yeah, the dog. I'll go with the dog. Okay, I'll go with that. The dog got Carson. Oh, boy. But either way, either way, the thing's going down in value. In your case, more than mine. But wow, they go down in value like a rock.

People are driving these cars for Uber. You know, those cars are getting tore.

Nasty. Yeah, nasty. I don't even want to think about. Yeah. Okay. So if you can't pay cash for your car, you should not buy the car that will help you gain wealth later to be able to drive anything you want to drive. In other words, if you'll drive like no one else, later you can drive like no one else. I did today. This is the Ramsey show. Listen, folks, this show has always been about you and for you. So we want to hear from you right now. The Ramsay Show annual survey is live. Text survey to 33789 or go to ramsaysolutions.com survey. When you fill out the survey, you'll be entered to win a $500 gift card. That's survey text it to 33789. Thanks for helping us understand how to serve you best. Live from the headquarters of Ramsay Solutions, it's The Ramsay Show, where we help people build wealth, do work that they love, and create actual amazing relationships. Jade Washaw, Ramsay personality, is my co host today open phones at triple 8825-5225. Jennifer is in Columbia, South Carolina. Hi, Jennifer. How are you?

Hello.

Hey, what's up?

Yeah, well, I wanted to ask you a question. My husband and I, we're having issues just saving and staying afloat. And we're really considering doing a cash out refinance on our home because it just seems like the only way we'll be able to get out the rut and save and eliminate debt.

How much debt do you have?

I have between about 80,000. My husband, it's probably like 300K, but that includes the house.

Okay. How much debt does he have separate from the house?

I'll say probably 50, 60.

And what kind of debt is this combined? Is it student loans, credit cards?

Yeah, it's just loans. Credit cards, my end student loans. And that's really the gist of it.

How much is cars?

I'm sorry?

How much is cars?

We have one car and it's $40,000.

Okay. You have one paid for a car or I'm sorry, one car with a car note or do you have two cars and you have a paid for a car sitting there as well?

Just one car with a car note.

Okay.

What's your household income?

Well, my husband makes between two hundred K a year and I make 21. And then we both have disability.

You make $21,000 and he makes $200,000?

Yes. And you said you both have disability. Explain that.

Because we both were veterans so we do have a disability income.

And how much is that in addition to it's?

Probably extra 20K onto our income.

Can I be honest with you? You all make far too much money to be this broke. Yeah. You have $221,000 coming in a year.

$50,000 coming in?

Yeah. Even more.

You make a quarter of a million dollars a year.

Yes.

You're spending like you're in Congress, and.

You have $130,000 of debt. Here's what I'm telling you, and I want you to really understand this. If you just lived on half of what you make, which is still more than the average family in America, almost.

Double the average family, you would be out of debt.

And it wouldn't take you borrowing on your mortgage to do it, or refinancing or cash outing your mortgage to do.

Borrowing on the mortgage is absolutely the most horrible, ridiculous thing you can do, because it will enable you to consider this chaotic, out of control, disorganized, overspending life. And you're going to crash this car, girl. You guys got to know you got to get control. You know that, don't you?

Yeah.

So the house, what's your mortgage payment? What are you paying on this house?

Well, it went up to $1,900. It was $1,100.

All right. So that's not your problem. It's just your living. I already know the answer to this. But you're not on a budget. Correct.

I feel like we are. We don't do anything. Yeah, but that's not the same.

Okay. $250,000 is going somewhere. Aren't you kind of curious where it went? I am, yeah. I think it's kind of like, whoa, this is a mystery. So what does your husband do for a living?

He's a truck driver. And that's what I wanted to get into. He's a truck driver, and he'll go to work, and it'll be times where, because the fuel prices are so high, everything he comes out of pocket. He's on the 1099. But he works with the company.

He does not make $200,000 a year. Yeah, he grosses $200,000 a year, but his net income after expenses, he's an owner operator, right?

Yes.

There's the problem.

He's not netting 200,000.

Okay.

He's running a business that brings in 200,000, and then he has repairs and fuel and other things out of that. Am I correct?

Yes.

Okay, so you do not have an income of $200,000. Your income is the net profit on his business after expenses are paid, which is more like $100,000.

That sounds right.

Okay.

Does that sound right to you?

Yeah, that probably sounds better.

Okay. So, Jennifer, what do you do? What's your job?

Well, I just finished school. I'm an esthetician, and I'm trying to start my business, and I've been an at home mom, but I'm also trying to start a business.

I want to challenge you with your esthetician work. Right now, it sounds like it's more like quarter time to part time based on your earnings. Am I right?

Well, my income comes from disability, so.

You haven't earned anything from this degree yet.

Right? I just graduated probably like, two Fridays ago.

Oh, okay. Well, congratulations.

That's great. Okay, thank you.

Here's what we're going to do, all right? We're going to set you into Financial Peace University. It includes a budgeting gap called Every Dollar. And then the other thing you ought to do is you ought to contact a Ramsey coach in your area. You can find them online with us at Ramsey Solutions and sit down with them because someone needs to help you guys put together a set of books for his business. And now for your business, so you actually know what profit you have after taxes are paid and after the expenses of the business are paid. And then you will know what it takes to attack this debt. It sounds to me like your $40,000 car probably needs to be sold because I think it's too much car in this situation. And my guess is you probably have a very high interest rate on it. And the reason you only have one car that's super expensive is he's in a truck all the time. He's over the road and an owner operator. You guys need to get your net profits figured out so that you can get organized and get on a budget and begin to attack these debts.

And we're going to list them smallest to largest, and you're going to be able to do it in that order. I thought for a few minutes there you had a $250,000 income and that was super absurd that you couldn't pay off $140,000 worth of debt making that. But you don't. You have probably $120,000 income, give or take, and that's still enough to get you out of debt. But it doesn't make you look as out of control as I initially thought you were, okay? All it means is you're right. Your budget is probably not super, got all kinds. You're probably not eating caviar every night or something here. That's not what's going on. But you are going to have to tighten up and you are going to have to make a decision. And it's probably going to take you about three years of sacrifice, including selling this car and getting a much more reasonable, cheap car temporarily to get yourself out of control. But we'll get you started in Financial Peace University and get you started on the EveryDollar budget and help you get moving. This is the Ramsey show. I say it all the time.

Debt is dumb and cash is king. But when it comes to life insurance, cash value is crap. Cash value life insurance is a high cost product with little to no return on your so called investment. The main benefit is fat commission checks for your agent term life from Xander. Insurance is a much better way to protect your family's future. Xander shops the top companies to find you the most affordable term life rates, then you can use what you save compared to those cash value premiums. To really build wealth, go to xander.com or call 803 5642. Eightynshaw Ramsay personality is my cohost today. Our Question of the Day is brought to you by Neighborly, your hub for home services. When you need repairs for your home, neighborly helps you find local home service providers like Mr. Ruder Plumbing, mr. Electric, and more. Don't wait until something goes wrong. Be prepared. Download the neighborly app today.

Yeah. Today's question comes from Alan in Pennsylvania. He says, hey, y'all. I've recently seen companies advertising cash back debit cards. I'm in the process of transitioning out of using a credit card for day to day purchases. My question is, how does a cashback debit card work and where is the money coming from? That's a really good question, Dave. I hear this a lot, and a lot of people have popped in saying, jade, this is a great way that I can build my credit. It's a debit card that will report to the credit card. Companies know report it on your credit report, but what they're not telling you is you're still borrowing money.

No, the cashback credit card is just like a rewards card.

Well, the ones that I'm looking at.

You'Re talking about, the one now, the ones that Experian launched, one that only works with Experian Boost, and it reports on the credit bureau. Right, okay. But this is simply like, Discover has 1% back Discover points. Or if you get airline miles, it's a cash back rewards.

All right? And I don't have a problem with that debit card.

And where does the money come from? It comes from transaction fees, merchant fees. So we don't accept credit cards on our website because we tell people not to have them. And that would be hypocritical for me to make money off of something I tell people not to do. Okay, so we take debit cards on our website. When you use your debit card on our website, we pay a merchant fee, a transaction fee. Most cases. Ours is different because we doesn't do a lot of volume, but basically it's around 3%. Okay, so $100, I pay 3% to the merchant fee to transact the debit card. Okay. They can then take part of that fee and give it back to you to get you to use the debit card more. Because they make money when you use your debit card. They make transaction fees not off of you, but off of the merchant that you are buying from. Same thing is true with a credit card, by the way. Credit card pays the exact same fees. As a matter of fact, merchant fees are exactly the same. We don't pay less or more because it's a debit card.

We've actually had to argue with a few of these people that they wanted to force us to accept credit cards to get to process our transactions. No, that won't work. Can't do business with you. The credit card companies don't just make money on the interest, on your debt. They also make money on the transaction fees.

Absolutely.

And so when they're giving you airline miles or whatever, it's not just because they're screwing you with 18% interest. It's also because the merchant transaction fee is doing that. And so, yeah, I don't have a problem with this. Let me tell you what the breakdown on this is, though. The only issue, it's the wrong question, because you should not be asking a question of, I want to modify my spending habits, my method of payment, in order to get 1%. Because that means every time you spend $100, you get a dollar. This is not going to move the needle for you.

Well, and somewhere in your brain, you're going to think, oh, if I spend more, I'll get more money. And it's going to make you want.

To spend your way into wealth. When you're trading $100 expenditure for one dollars cash back, you just lost $99 on this. Okay. This is the way that these companies work, though. It's a feedback loop and psychological feedback loop, and they're trying to keep you spending and consuming because that's where the transactions are, where they make all their money. And so it's not where you make all your money, though. And when you're asking the question, oh, boy, I could get 1% back, how about, oh boy, I'm not going to spend $100.

True that.

And now I just made 100 times more money than even asking this question. 100 times more money. I like it by how you double your money. You fold it over once, put it back in your pocket.

Right.

I mean, that's it. So don't let these people suck you into trading a hundred for a dollar, a dollar for a penny. Don't make this transaction and then walk around like, well, I am very sophisticated. I have a cash back. Who gives a crap? You're not sophisticated. You're trading 100 for one.

The focus is wrong.

Yeah. So it's okay if you want to get cash back. It's not bad. But the fact that you're even worried about it is bad.

Absolutely. Since I wrongfully set myself up, I feel like we should talk about the other thing, too.

Yeah. Okay. The other thing is, there is now a debit card that does report on your credit bureau.

Yeah.

And it is only with the Experian bank that's the only works if it only reports if you do Experian Boost. Now, what Experian Boost is is a fee that you pay to the credit bureau reporting company called Experian. You pay them a fee, and they will boost your credit rating. However, those of you that have a boosted rating need to know that no mortgage company will use your boosted rating to qualify you. They will use your non boosted rating. And so you used your Experian debit card. You opened a bank account with Experian so that they could make these fees we were just talking about so that you could pay them extra to boost your credit while using their debit card, all to build a boosted score that a mortgage company won't take.

There's other ones, too, Dave, that will. Yeah, there are the ones that they'll send you a card in the mail and they'll say, we will take a portion of your paycheck and make it a portion of your own money and make it available to you as credit on this card. And so you spend let's say you spend let's say you get paid $1,000. They'll take $300 over and they'll say, spend it on this card, but they're fronting you the money first.

That's a prepaid credit.

And then they'll come in and whatever you spent for the month, they'll come in and they'll take it out of your account.

But that is actually debt.

Yeah, that's what I'm saying.

Yeah, that's actually debt. That's a prepaid credit card.

But they call them debit cards. They're calling them that erroneously.

It is not a debit card does not count on your credit score.

That's right.

Period. Okay. Unless you run it through Boost, but not as of right now, anyway. So, yeah, prepaid credit cards back in the day had huge fees on them. I suspect that does I haven't seen that product. And it was mainly being used by poor people, lower income people. It's like same people shop at the pawn shop and think they're going to get rich off a lotto. It's the same poor people, and that's why they're poor. And it's one of the reasons they're poor. And Dave Ramsey hates the poor. No, Dave Ramsey works his whole life so that you're not poor. I spend all of my time helping you not be poor. I want you to not do poor people stuff, and that way you're not poor. Okay? And poor people stand in line. The number one zip codes that buy lotto tickets are poor neighborhoods. By far the vast majority of lotto tickets purchased are in poor neighborhoods. So I'm not making that up. I mean, it's an actual data point and it's not a moral judgment. It's just going, hey, how's that working for you? It's the same neighborhood that has title pond tote the note lot and rent to own washer and dryer, for God's sakes, that you could buy for $50 at a garage sale, but instead you pay $2,000 for it, rent to owning it.

But this is all short term thinking. Thank God it's Friday. Oh God, it's Monday. And that's where the prepaid credit card shows up is in that environment. It's also payday lenders in that neighborhood. And what is these commercials? God, they're awful. Cash advance place. Well, it's payday lenders. It's cash advance, but just horrendous. And the interest rates with the payday lenders. 800%. 800%. Now you want to find somebody that's picking on poor people. It's those people that are picking on poor people. They're making a good living getting rich off the backs of poor people. When you charge poor people 800% and by the way, rich people don't pay that. They don't play that. And those things aren't in the rich neighborhood. They're not even in middle class neighborhoods. It's your lotto tickets. It's this short term. It'll kill you guys. It'll kill you. Don't fall for it. Don't fall for it. Don't fall for it. Don't fall for it. Just go make some money. Live on less than you make and stack cash. This is the ramsay show. Jade Washaw ramsay personality is my co host today. Thank you for joining us, america. We're so glad you're here.

Open phones at triple 8825-5225 in the lobby of ramsay solutions on the debt free stage. Colton is with us. Hey, colton, how are you doing?

Most excellent. Thank you for having me here today, guys.

We're honored to have you. Good to have you, man. Where do you live?

Austin, texas.

Oh, fun. Welcome to nashville. And how much debt have you paid off, colton?

62,000 258,090. $0.02.

Excellent. How long did this take?

31 months.

Good for you. And your range of income during that time?

Yeah, I started at right over 24,000, and then I ended 2022 with right over 71,000.

Wow.

Good for you. What do you do for a living?

It's diverse. Job description, do a lot, but we work in a pretty small company. But I can be tasked by any of our marketing heads, our sales heads, finance. Our CEO. Calls me the control center. It's where all the information comes together and then actions disseminate.

I like it. Pretty cool. So you average $2,000 a month in debt reduction, starting out, only making $2,000 a month. So most of this must have happened in the back end.

Yes. It was a journey snowballing throughout the whole thing. And as we continued down it, we definitely got to.

As your income went up, you were able to slam it. Yeah.

And everyone that went down, it was the next one came up.

There you go. I love it. Good for you.

What kind of debt was it?

So it was all sorts of debt. We had student loans, mostly private and federal. Had a car loan, bunch of credit card, had some past due medical bills I had to pay. And then there was one little stupid tax. I found myself in the whole time, too.

Okay. I found myself in more than one. That's not bad at all. What happened? How did you find us? What got you started on this 31 months ago? Yeah.

So I was on the lower end of the income of this journey, and I found myself in a place where I really needed a vehicle, and I was in a place where it was mandatory for my job, and I had. To commute to get everywhere. And I was just looking at things. I was like, I have no money. I'm right out of college. I have no means to get a car. How can I do this? So I started going through my diligence to do the research and find out, and I finally found the home base when I found Ramsay and this baby steps. And I read the book Total Money Makeover, and I remember buying it at a half price bookstore, and I was like, $20. I bought this book, and by the time I finished the last page and I closed it, I was like, that's a million dollar book, and it's going to change my life.

Wow. Thank you. Okay, so you're broke and you read a $20 book, and you need a car. How are you getting a car? What happened?

So before I got the book, I actually got the car.

Oh, you went into debt. Yeah, that was the stupid tax 12,000. You solved that problem with another problem. Okay.

Then I read the book, I was like, oh. And this was, like, two months afterwards, and I was like, could have saved my problem.

So how much was the cardet in the 60?

212.

Oh, that's not bad.

That's not too too bad.

That's good. Okay. Yeah, you're in good shape. And then you turn around, and 31 months later, after a $20 book at a used bookstore, boom.

There you go.

I like it.

Yeah, I like your style and all the strategies, getting involved with the career and getting passionate and doing everything you can. Just so many facets of your life, just being able to approach them and win in every single one of them.

Very cool.

What did that look like for you? I mean, obviously you got your income up and you did it doing obviously, it sounds like you're a jack of all trades, but what did that look like? How did you do it?

Yeah, it was actually a transition from a few different jobs. It started on the lower end. I was operations manager for a freight and logistics company, and that worked really well. We did a lot of things, like, we did a lot of different business. Like, freight was only a part of it. We were moving. We were doing international. We had a lot. But then I got a job offered for a new company, and it was a huge step up. And I was like, definitely, that's a place I want to go pursue. And I talked about it with the owner at the time, and he was like, do it. And then that second company sold, and that's where I find myself in this new company. And this is the place where I've just experienced the most growth and the biggest wins all over. Just relationally.

I got a feeling I know why.

Yeah, me too.

I think the secret sauce is called Colton.

I see that yeah.

He's the captain of his own ship. Well done, sir. Well done. Well played. I like it. Okay. How old are you?

30 years old.

30 years old. And you paid off 62,000 in two and a half years, 31 months. And you did that starting at $24,000, almost no income, and jammed it all the way to 71 and did this. What do you tell people the secret to getting out of debt is?

Yeah, I have to believe it's know, you get to the place where you're in a place and you're like, I am done with this. I don't want this anymore and I am going to get to the other side. You find the vision, you find the purpose, and then you can start setting goals. The vision starts. The goals follow the plan. Thank you, dave, for giving us the plan because that was the easy part. The plan proceeds and then once you start hitting the goals and you start doing everything, it all snowballs. It all gets bigger and better and you win so much that you're encouraged and you're motivated and it keeps going and keeps going. But that all started with the vision. You get to the point where you said, I've had enough and I'm ready.

To get past it. Yeah, man.

What was your vision? Because everybody getting out of debt has that thing that they're picturing. Right. That's the why. If I can just get there. What was yours?

Actually, this actually hits the show perfectly is like general generosity. Like, I want to go out and I want to tip outrageously. I want to just give I want to do so much for everyone. But if I'm in a place where I'm making so little money and I'm paying everything I can to the banks, then we find ourselves in a place we don't have very much money to give out. We can't be generous as we want to be. So my goal is to be as generous as possible and to get there. I want to take the steps.

And you figured out that you have a math problem if you're broke to be generous broke people. It's hard to be generous when you're broke. I mean, you can be generous with a smile. You can be generous with the kindness and open a door, make somebody a pie. But outrageous generosity, it requires coin. Yeah. Well done, sir. Well done. I like it. Very good. Play on that. Who was encouraging you?

So that's the biggest thing I could say about the whole journey is like, not many people understood at. Like no one really got it. Like my dad would say, colton, you need a new bed frame. My mom's like, when are you going to open up that dating budget? I need grandchildren.

The dating budget. Wait a second.

How much can I put there? Jade, talk to me through it.

I can't help you.

So people may not understand the steps or the intensity or how focused you have to be to do it. But I was surrounded by people who supported me, like, employer after employer. I got called this morning at 10:00 a.m.. I was sitting in a diner up north, and just out of nowhere, my CEO and our director of sales is sitting right next to me.

Okay?

They called me out of nowhere and said, hey, guess what? We're here in Nashville. We're coming down to Franklin.

You'll do the debt free scream with you.

And I was like, this wasn't on the plan.

This wasn't on the agenda.

But look at that.

It's that level of support that I've had the entire journey. It's like, friends, family, my church, everyone around me, I am so supported. And the fact that we have our CEO and our director of sales here today is just a testament to that.

Pretty awesome. Yeah. You're an easy guy to support. You're an easy guy to get behind. I like placing my bets on a horse that's going to win. So, yeah. Well done. Well done, sir. Proud of you.

Thank you, sir.

Well played. Well played. And congratulations. We're happy for you. We've got the live and give. Speaking of that box for you, the baby steps millionaires book, which is definitely your next stop, and the total money makeover book. Now you'll have a new one, and you can give that away or give that used one away, one of the two, and then financial Peace University membership as well. So thank you for making the trip from Austin all the way to Nashville, and thanks to your leadership team for coming in and supporting you. That's real leadership. That's very well played, ladies. Very well played and good stuff. All right, colton from Austin, Texas, $62,000 paid off in 31 months, making 24 to 71,000. It helps to be a force of nature. Count it down. Let's hear a debt free scream.

Three, two, one.

I'm debt free. Yeah. Wow. That's how it's done, ladies and gentlemen. Wow.

And his dating budget is open for the ladies.

You think it is? You think it's ready now?

It's ready. I'm looking at him.

You think it's happening now?

His face card is not declining, so he's ready. Have you ever heard that? My friend told me that's the cool thing to say.

Oh, is it? Okay, say it again, because I need just a little bit of cool over this way.

This guy's face card does not decline.

Oh, okay.

That's what you say when someone's handsome.

Okay, I got it. It took me a minute, but yeah, took me a lot longer. It didn't take me as long as that other one you were. Oh, my God. That one took me a week. Yeah. I'm so slow. It's good, though. I'm glad I didn't say that about him. So that would have been weird.

Yeah, you can't say that, Dave.

That's be real weird. That would be weird. God help us. This is the Ramsey show. If you pay taxes to the IRS every quarter or run a small business and you're not using a CPA, what are you doing? The more complicated your tax situation gets, the more you need expert help. With a Ramsey Trusted Tax Pro, you can get top notch service year round for payroll bookkeeping, quarterly tax payments, and of course, tax filing. Let an expert take the stress off your shoulders. Go to Ramsaysolutions.com slash tax to find a Ramsey trusted tax pro today. That's Ramsaysolutions.com slash tax. Jade Washaw Ramsey personality, is my co host today. Wow, that guy was inspiring the energy off of him. Amazing. Norman is in Philadelphia. Hi, Norman. Welcome to the Ramsay show.

Hi, Dave and Jade, thanks for taking my call.

Sure.

What's up? Here's my situation. I'm 70 years old, part time pastor bivocational actually here in suburban Philadelphia, small congregation, and we are having to unexpectedly close due to some horrific circumstances. If you want to know them, I'll tell you. They're not super relevant to my problem or to my question, but I had been planning on working for another couple of years and then retiring and then looking for housing. This, quote, retirement is being forced on me a couple of years early, not through my own doing, it's just the situation. And so I'm wondering what is wiser for me to do to purchase or to rent? A couple of things that play a role in my decision. My parents are still alive in their early ninety s, and I'm committed to staying in the Philadelphia area for as long as they're alive, which means I'm in the Philadelphia expensive housing market. Otherwise I could look for much less expensive housing somewhere else in the country.

So you've been in a parish?

Yes, I've been in a parish. Right.

Yeah. Have you been saving money towards purchasing a home?

Yes, I have. I owned a home for 43 years, which I sold about two years ago, and have a maximum of $150 to $170,000 for a down payment from that home.

And what is your income situation going to be?

It'll be once I retire in the 70K range.

Okay.

Right now it's a bit higher than that because my wife and I are still working part time for the next couple of years, but once we actually retire, it'll drop a bit down into the 70K range.

Okay. So if you purchase and your 90 year old parents pass well, when your 90 year old parents pass, we're all going to pass. So when they pass, whether it be two months or 20 years, I don't know. Then your intention would be to leave Philadelphia?

Probably, yes. Mostly because of costs.

Okay. Well, the general rule of thumb, and it depends on the market and the specific area within the specific market to get the exact math, but the general rule of thumb is if you're not going to be in a property two years, you're better off to rent.

Right. My thought is right now that if we actually bought something, we would commit to staying five to seven years, even if, let's say, my parents died in two years.

Yeah. Okay.

So we would just buy something that we would stay in it for at least the five to seven years, regardless.

Of regardless of their situation, you would be at least five. Yeah. How is their health right now?

It's pretty good, actually.

Okay. All right, well, that's good. That's wonderful. Yeah. My father in law is 94, and he's sharper than I am, so that's how we want to be, right? Yeah.

My dad will be 92 next month.

Yeah. I would buy.

I would buy.

You got a five year horizon. You'll make money on it. It'll end up being net net cheaper than having rented over five years. That's right. I would buy.

Okay. Some people have suggested I maybe rent for a year and wait for the interest rates to drop because it's an election year.

Well, that might be so, but during that year, prices might go up too, because we still have a housing shortage. And even though inventory is there's not a lot of people excited about the real estate market right now. There's still more buyers than there is sellers. And so we're seeing prices go up, ironically, while interest rates are going up. But there's not a lot of volume of but. But we've not seen a decline in values, not nationwide. And Philly is a good, strong market, so I doubt it's experienced that. So I would buy. You got a five year horizon. We're going to commit to a five year minimum. You'll make money in that five years versus having rented. You'll be glad you did. And mathematically, I would buy. And let's see what else you stabilize your costs. You're in the housing market.

I am debt free. I am debt free.

Okay, that's good.

What do you have in a 403? B? Like, what do you have in retirement?

Well, it's actually way too complex. I'm going to have about nine sources of income, also, including international, so it's a pretty complex picture.

But you don't have any cash to get a hold of in addition to the 150 to just pay cash for a house.

I do. Yes, I do. Yes. But I would consider that. What would you recommend for putting down for down payment? As much as possible.

I like the 100% down plan. Yeah. I really would. I don't know what your net worth is. There's a lot of different things going on in your story here, but I wouldn't use your last dime to do it. But if you're sitting on another 500, $600,000 somewhere, and you use 400 to go with that, you still got 200 plus these nine sources of income and a paid for house. That's where I would be if I'm in your shoes? I'm going to pay cash for something, but I don't know that we'd have to really dig further down into your numbers to figure that out.

So at what point? Let's talk about that a little bit. Let's say you have a million dollars. What percentage of that would you pull out in order to pay cash for your primary home?

The least possible to have a house that is quote, unquote, reasonable. That's going to shift. All right. Philadelphia. Philadelphia is not an inexpensive market. Right. This is not Dayton, Ohio.

Of course.

Okay. It's not abilene. It's going to be more expensive. It's adjacent to New York. Hello. Okay, so we're in a very and Philadelphia has got a wide variety of.

Neighborhoods, but easily $400,000.

Yeah, I'd go 400 or 500. I would not go 900 out of a million sitting there with a hundred thousand dollars and all of it's tied up in a house.

Absolutely. 500,000 feels like to me, too.

That's pretty tight. But somewhere around that half million mark. And so that's why I say if he's got another five or 600,000 on top of that 150 from the old house that he sold, and he pulled out two or three of those hundred and still had two or 300 laying there, and he paid cash for 450. That starts to be optimum, and that's a less than median price. Slightly below the middle in Philadelphia right now. So that's where he would be. But again, paying cash gives you a lot of ability to just sit and smile.

Absolutely.

And you don't have anything tugging at your wallet. Every month there, it's a different environment. So very smart for pastors to hear this. Not a lot of pastors percentage wise these days have parishes.

That's right.

Not as often as they used to. Parishes were traditionally, or are traditionally employer furnished housing, and it oftentimes was the house next door to the church, so they were handy to the church, and they could go over and turn on the lights. And he was bivocational. So it was a smaller church. Likely. I mean, he wasn't even full time pastor in terms of income off of it. He probably is full time in hours. But those parishes have gone away. If though you are a pastor or sometimes they have an old parish around a church that's gotten started again or something and they'll put the youth pastor or the worship minister in there. In those cases, any of you that are doing that, make sure you're still paying yourself a house payment even though you don't have a house payment because you're going to end up where he is having to buy a house. At some point in your equation. There's very few of you. I mean, if you're a priest in some of the denominations, some form of Catholicism, you might have no housing needs the rest of your life. That's possible. But the vast majority of you that are in a parish are at some point going to need to provide your own housing, whether it's at retirement, at a job change or whatever it is.

And the vast majority of evangelical churches these days are not doing parishes. They've not worked out well. And so be prepared is the moral of the story. And Norman has done a really good job preparing. Done a really good job. There you go. Ladies and gentlemen, that puts this hour of The Ramsey Show in the books. 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 actual amazing relationships. Jade Washaw Ramsay personality is my co host today. Thank you for joining us. America open phones at Sean is in Fort Lauderdale. Hi, Sean. Welcome to the Ramsay show.

What's going on, Dave? How are you doing today, sir?

Better than I deserve. What's up?

So, quick question, I guess I'm about $14,000 in school debt. I am $38,000 in car debt. I make about $50,000 a year. I'm 10% owner of my business with ability to stake up to 30% once I reach goals of $250,000 on a yearly basis and I have about $3,500 in credit card debt, my bills exceed about half of my monthly earnings.

What is your monthly about?

Pretax it's 41 90, I think.

So you're taking home three grand?

Yeah. And then my bills are about 2700, including a $700 car payment. Now, I would immediately sell my car. The problem is I got into a car accident about four months into having the car, and the motorist who was at fault in the accident was an uninsured motorist. So I didn't have uninsured motorist on my insurance either. And, yeah, I exceeded about, I think it was $26,000 in damage. So, yeah, kind of in a rut here.

Your collision should cover it, even if they are uninsured.

It did. So why no, the car is fixed. I'm now driving it again. It's all good now, but it took about two months to repair and I needed to get to work at the time.

What's that got to do with you selling it?

You need to get to work and you did what?

So I needed to get to work at the time, and I started renting a vehicle while I didn't have my car while I was getting fixed.

Okay, but right now you still have a $38,000 car debt. What's the car worth today? It's fixed. You're driving it. What's it worth?

About 29, I'd say.

Who said? Kelly Blue book for private sale or trade? In private sale. Okay, so you're nine in the hole, and how old are you?

I am 25.

Okay, all right, well, I had a.

Job prior to this where I was spending probably a little more than my means. I was making about $100,000 a year, and then the company sold and major layoffs. So I am a business owner. It's just business just started.

Okay, and so what's your question? How can we best serve you?

Just trying to get out of this. I mean, my mom's always told me I got hands that just money flows through. So just start listening to your podcast, and I think hearing it from you might really help.

So you're brand new to the Ramsay stuff?

I am.

Okay, that's cool. All right. Well, the good news is your hands are not a DNA issue. Your hands are money flowing through is a choice. Agreed. Right. It's not like it's a curse. It's just that's how you've chosen to do it. And I don't want your mom speaking anything negative like that over you again. Tell her to quit doing that. Okay. No, I know it's all in good fun, but even joking, you kind of owned it, and I want you to own. I am a responsible, extremely sharp 25 year old guy that recently made 100 grand and soon will again that used to make mistakes with money, and I don't make those mistakes anymore. That sounds more like the guy I know. Yes, sir. Okay. Because that is actually who I'm talking to. You're calling me on a radio show in front of a whole bunch of other people, bearing your soul, taking a great risk in order to figure out how to fix something that you don't know how to fix. I think that's pretty courageous. Yes, sir.

I appreciate that.

So for me, my two cent in this whole thing is I'm always going back to the baby steps. And I know that right now you're making $50,000 a year. I'm always looking for a way to increase my income. If I'm you, is there something else that you can do on the side? I know you're a business owner. I know you've got a lot on your plate. Is there something else you can do to bring some more money in?

I was thinking about getting a second job at maybe a bar or something where I can go and make a good amount of money. I mean, I know some people in the business who would take me in with open arms. It's just I don't want to exceed my ability to be able to run the business as an operator. I don't want to impact my day to day. Well, getting no sleep or something in.

There, there is part of this that you're going to have to embrace, that you're going to go through a season of difficulty, and that difficulty does look like long nights, being tired, working your fingers to the bone, like there is going to be a season of that. And I think that's part of you just embracing it. Here's the thing. It's not long term. It's short term. Right. So I do think that your idea of looking into that, I would just go ahead and move forward with that, assuming that the return on that time is going to be worth it. How much do you think you could make?

I had one of the girls who worked there tell me they made 700 in a night. I mean, I'd probably say average 400 a night, 500 a night.

So you can make almost as much doing that at night as you're making during the day right now.

Right, of course.

And so that solves a lot of problems right there. And again, it's a temporary thing. This is all to clean up the mess, because if you had zero payments right now, your life would be completely different. Agreed?

Absolutely.

That's where we want to take you to. And so we're going to put you on the every Dollar budget. It's an app that we have, the world's best budgeting app. I'm going to give it to you free. I'm going to put you in our class. It's called Financial Peace University. I'm going to give that to you for free because I've been 25 and scared. I remember how it feels. And I used to have money running through my fingers, too. I know exactly how that out of control feels. And you wake up with a financial hangover, which is worse than a real one. I don't want you having that anymore. I want this to get this out of your life. So here's the deal. We're going to put you into all of that, and I want you to start immediately paying down, cutting up the credit cards, get debit cards, don't spend money you don't have, and begin to tear through these first two debts, the credit cards and the student loan.

What's your student loan payment?

It's about $170 a month.

Is that as low as you can get it for now?

I mean, I can definitely try and give them a call and see if I can decrease that, but it's a.

Temporary thing because really what we want is $14,000. Make the whole thing go away. Yeah. And so here's the deal. If you add $4,000 to this equation, credit cards are gone in one month. Four more months, the student loans are gone. Yeah, right. You do the math with me there. Yes. That's pretty amazing. Jade's telling you the secret sauce. Baby, it's you. Okay. And then we're going to tear into this. And if you are not up, back up to $100,000 a year in your current job by March. You do need to sell this car. It's too expensive. If you're making 100, you can keep it, but you got to pay it off ASAP. You should be 100% debt free in your world in a year from today if you'll follow the stuff we teach. And that involves selling the car if you don't get your income up. But if you do get your income up, you'd be able to pay it off and still keep it all within a year. Hang on. We'll get you signed up for every dollar are you a small business owner who feels stuck in the daily grind of running your business?

Well, you're not alone. We've helped thousands of business owners just like you get unstuck with learnings from the entree leadership stages of business. Our free assessment will tell you which stage your business is in today and what you can do this week to get out of the daily grind. So don't wait. Go to ramseysolutions.com slash BIZQUIZ to take our free stages of business assessment today. Jade Washaw Ramsey personality, is my co host today. Angela is in Washington. D. C angela, welcome to the Ramsey Show.

Hi, Dave. And hi, Jade. How are you doing today?

Better than we deserve. What's up?

So I am a 37 year old single female, and I have found myself in a little bit of a whole lot of debt. I have two whole life insurance policies that I would like to cash out or surrender the policies, they total about $11,000. My question is the cash value is.

Eleven or the face.

The cash value is $11,000.

What's the face? What's it pay if you die?

The face value for both of these policies is about $200,000.

Okay, all right. And you're paying monthly on them?

Yes.

Okay. All right. Go ahead.

And about four years ago, I was diagnosed with cancer. And at this current point in time, I'm uninsurable. So I was thinking about cashing them, surrendering the policies for $11,000 so I can start baby step two and create an aggressive plan, a snowball method to pay off my debt. Should I keep these policies considering of my illness, or should I surrender them and start my debt repayment?

What's your income?

I make about $140,000 a year. This includes a 20 year thousand dollars from a rental property.

How much debt?

I'm renting out my basement.

How much debt do you have?

Right now, I'm probably at about $240,000.

What kind of debt?

128 student loans, about $45,000 in credit card debt. I have $30,000 left for the home renovation loan, and I have a $30,000 car loan.

And with the cancer, how are you doing? How are you doing?

I'm doing good. I'm doing good. Now, some of this debt is contributed to that just kind of paying medical bills.

I'm not a medical expert, but are you in remission? Are you okay, or are you still in the middle of fighting it and you're doing good, or what's going on?

No, I'm doing good.

You're in remission?

I'm in complete remission, and I'm on maintenance therapy.

Okay, great.

What kind of cancer did you have?

It was breast cancer.

Okay. All right. And so it is in the rear view mirror right now. How long have you been cancer free?

Since about 2021.

Two years. Okay. All right. I'm thinking more like an insurance person than a medical person right now. That's what I'm trying to do, because I know very little about this except just having. Been around it as a human being, but I'm not a medical person, you follow me? But the experience that I've had, I have two or three ladies almost within eyesight of me right now that on our team that have been through that and are a couple of years the other side of it and are doing fine, and the prognosis is excellent for them. But you're right, they're not insurable for life insurance today, but in terms of their life, their life looks really good. You follow me?

Yes.

And I'm just judging it based on that. Again, it's not a medical diagnosis. I don't know anything about that. But I do know you can't get life insurance. I do agree with that today. So you're single. Do you have any children?

No, not at this.

So you have no dependence. Okay. That affects this, because I'm very hesitant to have someone who's uninsurable cancel insurance, because you can't get it right now. And if you even have a scare, let's say you go three or four years, and then you have a scare, you're not going to get it for another three or four years. So you might end up going a decade with no hiccups. Maybe three or four more years, you'll be getting it right. But if you had a minor hiccup, it could be a decade without it, and your life could change a lot at 37 in one decade. You follow me? All right. So I'm always hesitant to lose something that you can never get back, and that's this insurance. You can't get it back anytime soon. The good news is go ahead.

I also have a term oh, great. Policy. It's term 80. It has a face value, a death benefit right now of $150,000.

Okay, that's extra information. That's very helpful. Thank you. Yes. Cancel your whole life. Cancel your whole life.

I have a long term disability policy and a long term care policy, and I had all of these policies before I was diagnosed. Diagnosed, good.

Okay.

Yes. I would cancel your whole life if I were you, because here's the thing. No one is counting on your income if you were to pass away. So $150,000 cleans up, takes care of your funeral and cleans up the vast majority of your debts and the sale of your house, cleans up the rest of them. Agreed.

Right.

So your mom, dad, brother, sister, somebody cleans up your estate, and you've got the money to do every bit of that, and there's no burden left to anyone. There's no one that was left counting on your income that doesn't have it like a child left behind. That kind of a thing, which is the primary use of life insurance, is to make sure the family is okay. So given all of that and that you have this 150 in term in place, in three years from now, you get married and have kids, and you get some life insurance to cover a family situation, and you've had then five or six years in remission, you become insurable, most likely, at that point. Then yeah. Then you've got a fine plan. You see what I'm doing?

Yes.

And I'm just trying to kind of anticipate but the $11,000 doesn't fix your debt mess. You got to go fix that with your $140,000 income. Right. And you got to start really cleaning that up. And you have to get very serious about living on beans and rice. Rice and beans, but getting rid of the stinking payment, because this whole life payment is what, $500, $400.

All of my life insurance policies, premiums, I pay $508 a month for everything.

Yeah, but how much of that's the term 90.

The term insurance is $88 a year. My whole life is about $2,000 a year.

Yeah. So we're saving $2,000 a year. That's what I'm more concerned about than the $8,000. Okay. Or the $11,000. The $11,000, yeah. You can pay off some of the debt, start cleaning up the car, whether you keep the car or not. I don't know all that, but yeah. The answer to your question is yes. You got a whole picture here we're looking at, that tell you to drop this. But the number of times in 30 years on the air, I've told someone who's uninsurable to drop a life insurance policy, even as much as I hate whole life, is very low. Almost never.

Well, yeah, because what are you going to replace it with?

Nothing.

You're in a mess, and I almost never would tell you do that. I hate whole life life insurance. It's a piece of crap of a product. But in your case, we're saving you $2,000 a year plus putting $11,000 in your pocket for something that you don't even really need.

Yeah. In her case, no.

And so the uninsurable just adds drama to the question, well, luckily, she had.

The term policy in place.

If she didn't, everything.

If she didn't, she had two whole lives worth $200,000. Would you have advised her to keep both of them or let go of one?

I might have let go of one. I would have parsed them out and figured out which was which. And that, I'm afraid, the term insurance is probably expensive. That's why I guessed accurately on the price, because she bought it from a whole life company. When you buy term from a whole life company, they jack the term price up to try to show you that there's not much difference between the two. And you end up paying more than if you went to Xander Insurance and shopped among a bazillion companies that got the best possible deal. So if you go to a whole life company and buy term insurance, expect to pay 25% to 50% more for nothing. For nothing, absolutely nothing, except their marketing plan. But the whole industry is just wicked. The term insurance is the only way to go 15 to 20 year level term, about ten to twelve times your income. Go to Xanderinsurance.com. They'll shop about a handful of different companies. A bazillion companies get you the best possible deal, and you're going to be in great shape then. And you're going to kick everybody's butt in the marketplace if you're insurable.

She doesn't have that option. So, good question. Thank you for calling in and I'm glad you're doing okay.

Me too.

This is the Ramsay show, folks. Changing your family tree takes more than rice and beans and side hustles. It's also about transferring the big financial risks off your family by having the right kinds of coverage in place. That's why my team created the coverage checkup quiz. It only takes about five minutes to find out what types of insurance you need and don't need to protect your finances. Make this quiz one of your regular checkups, starting right now@ramsaysolutions.com. Checkup. That's Ramsaysolutions.com checkup. Jade Washaw Ramsay personality is my co host today. So when I started teaching this information 35 years ago, I had discovered common sense, god's and grandma's ways of handling money. After I went broke, when I went broke, I was making a couple of hundred thousand dollars a year and I had a net worth of a million dollars in real estate. And I have all the letters and licenses after my name and all the academic bull crap that says I'm supposed to know something about money and I went broke. So obviously something I learned with the academic bullcrap was just that bullcrap. Now, obviously some of it was right, but I learned from old people that had money and from basic common sense things in the Bible that you have to live on less than you make.

You have to live on a budget, a written plan. No one goes to success accidentally. You have to get out of debt and stay out of debt. Your most powerful wealth building tool is your income. You have to save and invest and discover the 8th wonder of the world. Einstein called it compound interest. And you have to be outrageously generous. These are five components that are principles of life that are ancient and they are proven. Then the next thing I had to figure out, and it took me a few years, was how do I apply them in the real world? Well, I'm going to cut up my credit cards. I'm going to get on a budget. I'm going to not borrow money for a car. What do I do if I'm in debt? Well, we're going to use the debt snowball and get out of debt. Oh, I've got to have an emergency fund. Do I do that before a retirement plan? Oh, I've got to save for my kids college. Oh, wait, we need to pay off the house. Oh, my goodness. Where do we start? Which of these comes first? I don't know what to do.

So we took the five principles and put them into a process, a proven plan, a path that we nicknamed the baby steps. Now, the baby steps are not ancient. Well, they're 30 years old, but they're not ancient like ancient wisdom from Proverbs. Okay? But the principles that I talked about, the five things, are all woven into the baby steps, and it gives you an order of attack. And we've taught people that the first thing you do is save $1,000. A little starter emergency fund. It's not enough, but it's just for now. The second thing you do, baby step two, is you pay off all your debts except your house with great focused intensity. You live on nothing, and you list your debts smallest to largest and attack them in that order. Then when you're out of debt, everything but the house, boom. You're in the top 10% of Americans right then. And then we're going to go ahead and finish the emergency fund at three to six months of expenses. Then we can let off the gas and let the intensity go down and let it change to intentionality. And we simultaneously do baby steps four, five and six, save for 15% for retirement, save for kids college, and start paying off the house.

Six, when the house is paid off, it takes you to baby step seven, which is everything is paid off. Now there's nothing left to do but build wealth and become very generous. So in the midst of that, Jade, we've taught this and you've taught it as well. You're running into some detailed questions about four, five and six, the retirement, the college and the house.

Yeah. The people on social media are like, you're always talking about paying off the debt, jade, what about for us who have gotten through it? Can we have a deep dive on baby steps four, five and six? And I'm like, yes. So I went through I look at my DMs on Instagram, and I do look at some of the questions on Facebook, and I tried to pull ten that I feel like are the Most Asked Questions.

Frequently asked questions on Jade's DMs.

Yes.

Let's clip through these.

It's better than Dave reads mean tweets.

Well, let me add one to it just because you mentioned it. So on baby step four, Dave, is it my pretax number that I'm doing the 15%, or is it my after tax number, my take pretax.

Pretax your gross revenue. So if you make $100,000 a year, you need to save 15,000. If you make 200,000, you need to save 30,000.

There you go. Well, Dave, if I'm on baby step four and all of a sudden I use up my emergency fund, do I have to stop baby step four, which is investing the 15% in order to restock my emergency fund?

If you can't restock it within two months, yes, within two months. You don't want to be going without an emergency fund. When you walk around without an emergency fund. It attracts bad luck. It's like Murphy is looking out, got me one. Oh, yeah.

So two months is the rule on that. How about this one? How do I toggle between baby step three B, which is saving for a down payment on a house and baby step four, do I pick one or the other? When do I focus on one over the other?

You take that one.

All right. So I would say that if you're going to spend more than two years saving up baby step three B, I might consider adding baby step four to it. And if you're able to save up that down payment really quickly, then I would just stop baby step four. And when you're done, go on to baby step four.

Yeah. Like six months. Pour the heat on, no retirement.

Yeah.

And then go back to then go to retirement. Full on.

Yeah.

Okay. And sometimes people do I'll take the match, my employer matches six. So I'll do 6% instead of 15 while I'm doing three B. Yeah.

You can do them at the same time, but ultimately we don't want you.

To you don't want to do no retirement for more than two or three years.

That's right. Let's see. Number three. What do I do if I make too much Dave for a Roth IRA?

Backdoor roth backdoor Roth is you open an after tax IRA traditional and roll it to a Roth instantaneously. I do it every year and I do it for my wife as well. Every year. We have fully funded Roths every single year. Perfectly legal. It's a loophole in the tax law.

That's right. And by the way, when you say you open, what you really mean is.

Work with a I work with my SmartVestor pro. They do it, I don't do it.

There you go. I just wanted to clarify that, because on the Instagrams, they're saying you do it like you do your own investment.

The only thing I do on my investing is I throw money in an S and P 500, park it till I get my next real estate deal. That's baby step seven stuff there.

Yeah. So let me jump down to question ten, because it goes along with it. It says, do I really need to use a financial advisor to choose the funds in my 401K or can I just pick the funds myself?

You can pick them yourself in a 401, but you need a good financial advisor in your corner not to tell you what to do, but to teach you.

That's right.

And then the other thing. If you're watching the news and you go, oh, God, Israel's at war, the stock market's going to dive, we're all going to die, you need somebody talk you off the ledge and keep you invested because you don't want to jump off in the middle of the roller coaster ride.

I know that's right. All right. What to do with extra money when your home is paid off. My home is paid off. I've maxed my 401K, my IRAs, and my HSA is also maxed. What else can I do?

Well, there's two things that people do. I only do one, well, three things as far as investing. What can other people do? I buy real estate that I pay cash for, and as it goes up in value, you do not pay taxes on the increase in value until you sell it.

Dave I'm not really into real estate. I don't want to be a landlord.

Buy a low turnover mutual fund, and that means they don't sell the stock inside of it very often. So it doesn't have taxes. You only pay taxes when you sell out of the mutual fund on 98% of it. If you got a low turnover ratio mutual fund and so like an S and P 500 generally would be that. And that's why I use those to park extra money in.

What about these REITs?

They're fine. Just check your track record on that's. A real estate investment trust. It's basically a mutual fund for real estate. In the old days, they stacked them with fees so high that the returns were much less than gross stock mutual funds. But in the last ten years or so, they've really come on. They've done a much better job of running them. And I don't buy those because I buy real estate.

Right.

But they're not bad. And just check the track record on them.

Love that. What amount extra should I put onto the mortgage? Or should you ever stop the mortgage to increase investing or vice versa?

15% of your household income into retirement at baby step four something into kids college at baby step five. And any other money we fund above lifestyle we put on the mortgage until the mortgage is gone. The two key areas of people that get their first one to $5 million of net worth and all the research and data that we have says a beefy 401K, Roth IRA retirement plan and a paid off house.

Love that.

Those are the two places to go.

To get rich for college saving.

ESA or 529, they're the same thing, the ESA. The good news about it is there's only one kind and you control it. The 529. There's three different kinds, and only one of them is good. And the one that you control is the one that's good. True, but don't get into 529 is prepaid college. You don't do prepaid college. You don't do that. That's a bad 529. An ESA traditional 529 with your SmartVestor pro is the same thing as an ESA. You select the mutual funds and you're just fine. Cool.

Good job, Dave.

Quick, rapid fire. Anything but the Prudent give thought to their steps. George Bernard Shaw said, 2% of people are thinking. 3% of people think they are thinking. 95% of humans would rather die than think. Oh, gosh. Hardcore, George. Hardcore, buddy. Probably right. Amy's in Charlote, North Carolina. Hey, Amy. Welcome to the Ramsey show.

Thank you for taking my call.

Sure, what's up?

I have a question. So I'm about to close on a house. It's $330,000 house that I put 18% down. So I put 60,000 down. And so the house comes in bare, doesn't have refrigerator, nothing at all. And of course those are the things that I have to buy. And I'm just wondering how should I go about it without getting into debt?

I have to ask, going into buying this house, did you know that there wasn't going to be any appliances inside?

I did know.

So what's your plan?

I put aside so I still have like 20,000 my saved up to just get things at really bare minimum. And I have lived 35 years without having to ever buy furnitures. So everything is going to be brand. Like I have to get everything from beds to fridge to washer and dryer.

Yeah. Was that your emergency fund? Correct? Yeah. I don't want you to use your emergency fund for something that's not an emergency.

Let's just play pretend a minute. You close on a $330,000 house. You spend your last $20,000 furnishing it. The next day something's going to go wrong and you have no money. Right. That's why Jay doesn't want you to spend your emergency fund.

So how should I do about them? How should I go about I mean.

That was your plan to move into the house broke.

Yeah.

So Dave said it. That was your plan to move into the house. You're going to have to move very slowly and very methodically.

What do you make?

I make 35 tax free and I make around like 40 has to be.

Taxed.

So I make 75, 70.

Where do you get tax free income from?

Retirement from the military, like disabilities.

Okay.

So what do you bring home each month? Help me out.

$5,000.

Okay, so let's see here. And you're completely debt free or did.

You buy this house with no $330,000 mortgage?

No, I meant other debt.

Oh, you have other debt.

So I have no other debt. Okay. And I finance house $275,000.

Oh, you put 60 down on 330 purchase.

Okay. That's better. Okay. So what this looks like is every month you're going to be doing a detailed budget in order to figure out how much margin do you have to put towards what the most important thing is. So if I'm you I'm making a priorities list.

The place you live now, do you have furniture in it?

No, I'm renting a room so everything is furnished. And I'm not sure if that's relevant, but my boyfriend is going to be moving in. And my other question is it's going to be my house and he's going to help me pay for mortgage and I'm trying to pay it kind of within 20 years. And he's going to help me have the mortgage, but since it's in my house and I wonder what is a fair amount that he should pay in? Because at the end of the day, if we don't work out, it's going to be my house, and I don't want to screw somebody over. And what do you guys think is fair? That's my second.

Yeah. Okay, so let me back up to the other part first. Okay. You're renting a room, and you don't own a bed.

No, I don't own anything at all.

Okay. All right. The first thing I want you to do is I want you to take $5,000 and go buy a mattress and a bed, and I want you to buy a used refrigerator, and I want you to use the laundry mat until you can save up the money and buy washer and dryer. It's going to leave you 15,000 in your emergency fund, and then you're going to cash flow furnishing this place out of your income. So every month or two, you're going to buy another appliance, another piece of furniture, and you're going to pay cash as you go. You don't do this with a mattress, but everything else in the house go to the rich end of town and go to the garage sale. And you can buy a $9,000 leather couch for $500 at a garage sale in the rich end of town because the lady redecorated and didn't like the color anymore. Okay. And that's how you're going to furnish this place. The first round of furniture, get a decent refrigerator. That kind of gets life started. You can go to the laundry mat until Christmas, and then you can save up and buy a washer and dryer.

If you want to do it faster, you can buy a used washer and dryer and later on upgrade to a new one all with cash and sell your used one on Craigslist. Okay, so 15,000 you have to keep in the account $5,000 budget to get you started with a bed and a refrigerator and a couple of other items. Okay.

Okay.

Does that make sense to you? That way if you have an emergency, you don't lose your home?

Yeah, that would be I feel like I got a beautiful house and my mental health.

But you took it all the way to the edge, kiddo. I mean, you left no margin in this deal. You can't breathe the way you've got this tightened up so tight. Then the second piece is I don't recommend that you ever buy a house or depend on someone that you're not married to to pay for your house if you're going to choose to shack up with him. My preference as an old guy who has a couple of daughters and I know how sometimes people get treated in these situations is I would say he can't move in unless he got married because there's kind of that thing and it's much better for you. You're the one that comes out on the short end of the stick, not the guy.

Oh, I thought it was the other way around.

No, you're the one that comes out. It does not go well for the ladies in these situations. Economically, the economics really suck for the ladies in these things, and somehow guys keep talking them into it, but I'm not sure how. I'll just be old fogey and you can be mad at me if you want to. I love you and I want you to win. And I'm telling you with the truth of what I would do if I were in your shoes or what I do tell my little sister or my best friend or whatever. He doesn't move in unless he gets married. You run your own life. And if he's a man and wants to step up and serve his spouse, then, yeah, he can come on board here and we'll go aside from that, if you're going to do this, don't depend on him to do it. And then you can just decide there's not a fair price for shacking up. There's not a shacking up schedule. We don't have a schedule for that. There's not a price on it. So you just got to decide who's paying for the mustard, who's paying for the mayonnaise, who's paying for the bread, who's paying for the lights, who's paying for the water, or what percentage or whatever.

And you got a roommate. It's a roommate situation. And it's just like in college, that's my mustard. It's the same stuff. And so that's the problem you get into and it doesn't bode well statistically. The data points don't bode well for your future wealth building in this scenario, and it doesn't even bode well for his future wealth building. There's actually what we call a marital advantage in the statistics out there in the data. People who are married have an economic advantage over those who are not. The data is slam dunk. It's not even close. So, something to consider. I got all up in your business, but you asked, darling. But yeah, as far as the house goes, 15,000 in the account. Get a refrigerator and a bed, used furniture on the rest of it, work your way up with cash flow. What do you think?

Yeah, I was shocked you gave her the 5000 out of the 20, if I'm being honest.

But I think she's going to go buy a refrigerator. I don't think we can stop her.

Look, Jade Warshaw would have said you better get you an air mattress and stop playing. I'm not telling her to get a real mattress. You get an air mattress and you get you a college refrigerator. I'm talking about the little guy that goes on the floor. Because I want this as a reminder to never do dumb stuff like that again.

Yeah, never take yourself all the way. The edge. That's the dumb thing. You took yourself all the way the edge. And then what should have been a blessing can end up being a curse. And that's what we're afraid for, honey.

Living like a rapper in this big old house and no furniture with no furniture.

That's how rappers live. I didn't know that.

Giant gold chain.

I didn't know that.

And no money.

Just learned something that puts us our Ramsay show in the books. We'll be back with you before you know it. In the meantime, remember there's ultimately only one way to financial peace, and that's to walk daily with the prince of peace Christ. Jesus.

Hey, what's up, guys? Look, if you like what you heard in this episode and want to know more about getting started on the Ramsey baby steps, go to ramsesolutions.com and click the get started button. We'll help you figure out the best next step for you based on your specific situation. That's Ramsaysolutions.com. And click get started.