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 amazing relationships. I'm George Camel, joined by bestselling author Rachel Cruz. This is your show, America. Give us a call at triple 8825-5225. You jump in, we'll talk about your life and your money, and we'll try to help you take the right next step when it comes to your biggest life's decisions. And maybe know it can be a first world problem. We're down to chat about that too.

We're here for everything.

No problem too small. Kenneth kicks us off in Houston, Texas. Welcome to the Ramsay show, Kenneth.

Hello.

Hey, how are you doing?

I'm doing fine for now.

What's going on?

So I'm currently in a situation where I'm living in my car. I started in November because I racked up about $14,000 in credit cards. And I have 16 on my car as well.

16,000?

Yes, on my car.

Okay.

Where were you living before this?

I was actually living in an apartment with my cousin and her boyfriend, but they decided to get their own place, so I ended up in a car.

And right now you can't afford rent because of the debt?

Yes. It's taking about half of my paycheck every two weeks. And my car payment is 346. So I'm left with about $200. So I started this debt snowball, and I managed to pay off one credit card, but it's still not enough.

It sounds like we need to get your income up. Are you working full time right now?

Yes, I am. I submitted applications to places. I haven't heard back yet.

So what are you doing right now for work?

I'm a sterilization tech. I clean dental instruments.

Okay, what do you make doing that?

I make 18 an hour. On my w two, it said I made 32,000 this year.

Okay. And you're working 40 hours a week?

It's between that. We work half days on Fridays, sometimes full days. So between 36 and 40, can you work extra if you chose to, yes, I'm currently looking.

Okay. I would see if you can work overtime with your sterilization job on top of that, getting another job on the side. I mean, $18 an hour is not nothing. And so it feels like it's not just a car loan. What's your minimum payment on the credit cards?

Altogether, it is over 500. 529. I have a spread between seven.

Do you have any friends or family that you could have to help support you? Go live with some friends for now. Crash on a couch, anything like that.

Friends, no family? I do. They have offered, but the environment for me around them, I do not enjoy. So I rather stay in the car instead of having my emotional well being.

Are you safe living in this car? Where are you actually staying?

So I stay around near my job. So far, nothing has happened, I believe. I don't know how many months?

Like four months now, are you able to shower? And how are you doing all of that?

So I actually have a gym membership, so showering, doing whatever I need to do. I can handle that at the gym.

Okay. Kenneth, how much is your car worth?

I checked on Kelly blue book. It's at 12,000 the last time I checked.

Okay. Worth 12,000.

Okay. 16 some change?

Yes.

And no money saved?

No.

Because my biggest concern right now, Kevin, for you. Yeah. Is what kind of George was hinting at. But it is your living situation. I mean, one of know, four walls is what we say, food, shelter, utilities, transportation. Like, these are things that are necessities, those are needs, and you're lacking, obviously, one of those. So the family situation, is there a way to at least have a roof over your head and give yourself a time frame and say, within 90 days, I'm going to be out of here and looking for my own place. But just for just the bare necessity of having a home, I just worry for you when it comes to that. It's just having a place to stay.

Well, the place at my family's place, I would have to pay rent, which is not much, but I wouldn't have any left to put towards my credit cards.

So right now, if you're working 40 hours a week at 18 an hour, it's about $2,900 a month before taxes. So how much is getting taken out of these paychecks? Are you actually looking at the paychecks and seeing where it's going?

No. I know that about 180 is being taken out for insurance, but taxes wise, I have not checked.

Okay. I would go look at that, make sure you're not taking out too much in taxes. Make sure that you're not putting any money away into investments. Right now, every dollar you can get out of those paychecks needs to go to covering your four walls, like Rachel mentioned.

Yeah, because besides that, you have the car payment, the credit cards, but you should have around $2,000 left because you.

Got about 900 in payments.

That's what it's looking like. Yeah. Each paycheck, it depends. I get about the minimum at least 1060 each month. I mean, each, every two weeks.

Okay, so the first thousand covers your debt payments. Where's the other thousand going?

I have no idea.

Okay, so I think that's a key piece to this, Kenneth, because $1,000, I'm like, that's a significant amount, right? So I would want you to be tracking and knowing this is exactly where every single dollar is going, right. And even just going back to the basic of a budget. And if you hold in the line, we'll give you every dollar premium to be able to figure out so specifically where that is, because I don't want you behind on payments. In a perfect world, I want you to be able to have enough money to pay rent somewhere, and you need.

To be working every weekend.

I was going to say weekends and even nights. Kenneth, it's going to be exhausting, but you're going to have to dig yourself out of this hole. And one of the. I mean, the two ways to do that is income and expenses, right? Those are the two parts of the equation. So upping the income, lowering the expenses, is going to help you gain some traction.

Do you have insurance bills as well to pay outside of health care?

No, it's too much for me right now. Yeah, for. The minimum for me is 400. Why is that?

You have a bad driving record.

No, my driving record is good. It's just been like that. The lease I have paid is 300. Maybe it's because I was in an accident, but it wasn't my fault.

Kenneth, you need auto insurance, man. Even if it's $300, you're in a very risky position right now. Jump onto ramsaysolutions.com. Connect with one of our insurance pros to help you with that and hang on the line. We'll send you every dollar premium to help you make a plan for every one of those dollars. Wishing you the best. This episode is sponsored by Betterhelp. Hey, this is Dr. John Deloney. And some people think relationships have to be easy to be right. Sometimes that can be true. But more often, great relationships get that way because both people put in the work to make them incredible. Therapy can be a place to work through the challenges you face in all of your relationships, whether that's with friends, people at work, your significant other, or even how to get along with yourself. And if you're thinking of starting therapy, try betterhelp. Therapy isn't just for people who've experienced trauma. It's great for building skills so you can become the best version of yourself. Betterhelp is completely online so it's flexible enough to fit your schedule. Just fill out a short questionnaire to get matched with a licensed therapist, and you can switch therapists at any time for no extra cost.

Find the path forward to making all of your relationships incredible. Visit betterhelp.com deloney today to get 10% off your first month. That's betterhelp he lp.com deloney. Welcome back to the Ramsay show. I'm George Camel, joined by Rachel Cruz. This hour, open phones at triple 8825-5225 Maria is up next in Chicago. Maria, welcome to the show.

Thank you.

What's going on?

Taking my call?

Oh, absolutely.

I was calling because I've had this collections since my husband passed away. I think it was even before then, but I never saw it until after he passed away. August 4, 2021.

How old was he?

49.

Wow.

Sudden heart attack. Oh, gosh, Maria, I'm so sorry. Thank you. I'm trying to get through this without crying.

No, you take your time.

You're okay. So I don't know what this is. I don't know what it says. It's a mortgage account statement from a collection agency. So it's up to $44,837. And I don't know what it even means.

Was this for a mortgage on a house?

Well, I still have the house, and I've been making payments. I've never been late or anything. It's just this one thing coming from a collection agency.

Have you contacted them to verify the debt?

I have not, because I didn't know what I should do, how I should do it. I didn't know what to say to them, basically, is the debt. Was it in your husband's name? It was in both our names. And then I noticed after he passed, it just has my name on it now. Okay. And you don't know where this is from? You don't know what it is? No, it just says, like, I was looking at, I found a paper that was back from 2015 as the statement date. And it just says at the top real time resolutions, mortgage account statement. And at that time, it says the outstanding principal was 37,468, and the interest is at 7%. It says it's until August 1, 2037.

Do you think this could have been some kind of second mortgage that your husband had taken out?

That's what I thought. But on my mortgage website, when I go in there and everything, it shows the principal, it shows the first and the second mortgage, but none of them are that same amount because I still owe $173,000. On the mortgage.

Okay. I would contact this collector, and what you need to ask for is a debt validation letter, and they legally have to provide that to you. And that's going to show exactly how much you owe, what creditor, the collector is representing, and confirmation of all of the information, the balances, the account numbers. And that will help you understand what this is for and if this is legit.

Okay. Yeah. Make sure there's no errors sending it every month. What was that?

Make sure there's no errors on there.

Have you pulled your credit report, Maria? No, I haven't in years. Okay. So I would do that. And it's a good thing to just to check it even once a year.

You can go to annualcreditreport.com and pull this for free. Don't pay for.

Yeah.

You can pull it from all three credit bureaus to get a full picture of what debts are attached to your name.

Yeah. Just to make sure that you're able to see. Because on one end it's either something your husband did and you were unaware of it, and now. Because if it's in both of your names, then, yeah, then it is in your name now. Or in a weird way, it could be like identity theft. Someone got your Social Security number or something. I mean, I don't know. Right. So you just want to make sure and validate that this is actually legitimate. And I would look for signed documents as well if the collections agency has any tracking of where it came from. And it may be kind of a rabbit trail that you go down because I'm sure it got sold to another collections. I mean, who knows how many people have actually handled this debt? But if you can get or even call that company, have you even just googled that? I have, and it just says it's a collection agency, but it doesn't tell me anymore.

Yeah, I would contact them. And here's the deal. Never give debt collectors access to your checking account. You set the terms, you let them know what your situation is, and you have 30 days. Once they send you the debt validation letter, you'll have 30 days to respond with a debt verification letter. And I'll get our team to send you a link. We've got a great blog called what is a debt validation letter? We have a sample letter in there that will help you figure out how to frame this up. And we're also going to hook you up with a free financial coaching session with someone that can walk you through the details that we don't have time to do on the air. But I want to make sure that we get this handled for you because it's scary. On top of the Greek.

I know. And it keeps going up and up every month that they send me these letters, and I've kept every single one of them. Good. Yeah. And I'm just like, I don't know what this means. I don't know what it is. He never discussed any of the mortgage or anything with me before he passed.

What's your current financial situation outside of.

I'm working full time. Yeah, I'm working full time.

Do you have kids?

Well, I do have kids, but they're adults now. The youngest is 22.

Okay.

So no one's relying on you?

No.

And you're able to cover all the bills with your own income?

No. My daughter and my son in law live here, too, as well as my son. And they're helping me with the mortgage, and I'm pretty much paying part of the mortgage, plus utilities by myself.

Okay. Do you have any other debt?

No, I just paid off my car last week.

Good.

Congrats. Just the mortgages left, plus this weird outstanding collections debt.

Correct. And I have no credit cards. Never had any. No other anything. Just the mortgage.

Well, I would try to do some digging to see on that credit report, what's in your name, see if you can find any documents from the financial statements that were in his name. Have you looked into that?

I have not. He kept everything, so to go through stuff, it would take me a while. And I work, like I said, 40 hours a week. So it's just like I need to just sit down and go through all.

The papers that he's maybe on a Saturday, have the kids help, because it's going to be hard, because you're sort of reopening the wound in a sense as well.

Is your hunch, Maria, that this is an additional mortgage on your current home? Or are you thinking there could be another property out there? No, it's got to be on this. The address they're sending it to is this. It says in regards to property address. Okay, so it could have been a HeLOC that he took out. I don't know. Yeah. No idea. Yeah. So, yeah, I think getting to the bottom of that. But again, it may be a rabbit trail to actually get to the actual lender that's holding it. Right. And where it originated from. Not just the. Not just the one in collection. Exactly.

I'm guessing it's got to show up on that credit report. And here's the deal. If the debt collector can't verify that debt, they have to stop contacting you about it. And they have to let the credit bureaus know to remove that from your report. Okay, so I'm not saying that's the case. This could be a legitimate debt that you owe, and maybe you can end up settling down the line. But right now, we got to do some homework and get some info, right?

Yeah. He never said a word to me about it, so I have no idea. And like I said, I just keep getting the papers, and I'm like, okay, I don't know what to do with this, but I'm just concentrating on keeping the bills, the utilities on.

Are you doing a budget with your income coming in?

I haven't really, but I know I need to. I don't spend frivolously at all. I just get what I need to get. And that's it. That's why I don't have credit cards, because I'm like, if I can't afford it, I'm not going to buy it.

Wise woman. Well, we're going to hook you up with every dollar premium as well to help you make a plan for every one of those dollars. And what you'll do is list your income at the top and then list all of your expenses and start with the priorities, your food, utility, shelter, transportation, insurance bills. And then whatever's left, we can start attacking. Maybe this debt with that's in collections. And I hope that helps. And we'll definitely hook you up with a free financial coaching session with one of our Ramsay trained financial coaches. So hang on the line, and our friends will pick up and make sure that they hook you up with every dollar and that coaching session. And I'll make sure for the rest of you listening. If you're curious about that blog, if you have debt and collections, we'll put a link in the show notes and description to that blog article on our website. What is a debt validation letter? It's got a lot of great information there that can help you sort through this, because these collectors, Rachel, when they start calling you, you start to panic, and you just write them a check or give them access to your account.

And that's a very dangerous move. You want to stay in the driver's seat.

Yeah. And they can be scary and intimidating. You're like, oh, my God, collections. Like, even that word sounds so scary. But you have a lot of power in that situation and to figure out what to do.

And let this be a lesson to all of you. Talk to your spouse about what is going on in your financial world, share all the documents with them. We call it a legacy drawer. Create a document base with everything you need, every account number, the passwords, whatever it is, so that they're not left grieving while trying to figure out what the heck was happening with the finances. That's a scary place to be. We're thinking of you, Maria. Hope you can navigate this and get to the other side. This is the Ramsey Show.

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Welcome back to the Ramsey show. I'm George Camel, joined by my co host this hour, Rachel Cruz. We also co host a, I would say a more fun show called.

From an entertainment perspective, it's more of smart money happy hour.

I would say that's what we aim for. And so we've got a cocktail or mocktail in hand, and we talk about money through the lens of what's going on out in the world and pop culture, and we have a great time.

All the trends happening out in the world and how it relates to money, it's great. We have a good time. We have a good time.

It's got a cult like following Rachel. We love meeting people all over the. You were in Disneyland, and people are like, I love smart money happy hour.

They said, I love you, George. They called you out, George.

It's nice to be loved once in a while.

Getting on the barnstormer in Magic Kingdom and someone's like, rachel, I love you. And George, on the happy hour, I was like, thank you.

You just wave like you're the mayor of a small town.

I was in line.

That's so fun. Well, hey, we're glad you're here. Glad you're with us. It's an open phone line at. We've got a segment we've done once before on the show. I think you and Jade did it, Rachel.

Yes, we did. It was so fun.

Pick a side.

Yeah.

I've never been a part of one of these, but we have a caller with someone else on the line, and we have to hear them both out, hear their case, and then you and I have to pick a side.

I love it.

Are we ready for this one?

Oh, I can't wait.

All right, let's find out what's happening with Kiri and Diana in Columbia, South Carolina. Welcome to the show, guys.

Hi.

You ready to battle?

We are. Okay. What's the situation? Who's going to go first?

Diana wants me to spell it out and then she'll correct or any inaccuracies.

I like this.

So we have a Stanley situation.

Stanley situation.

Do you know the Stanley cups?

Yeah. Not the hockey, like the mugs.

Not the hockey.

Indestructible tumbler.

We know of these.

And they fit in your cup holder.

And they have a handle and.

A little bit. Yeah.

They don't.

They're very well made. Okay, so a Stanley. Oh, my gosh.

What's the problem here?

So we had a discussion. My eleven year old came back from school and she said her friends have a Stanley cup, and she wanted to buy a Stanley cup. And both myself and Diana have done the financial peace university and the legacy course. So that all kicked in. And I was explaining to her why it didn't make any sense to spend $45 on a cup when you can buy one for $6 at Walmart. But she misconstrued it as me saying that if she bought it, which she would buy it with her own money. So my kids are very good at saving, that I add. Yes. So I get them to put about 50% of what they make. They buy silver coins for me, which I get for them. And they save a lot making money. So when they get a present. But then we've got some chickens. So they sell eggs and then they babysit other people's chickens in a neighborhood.

Okay.

Never mind what a beautiful little timey world you've created. They're buying silver coins from you and they're making money from the chickens. This is like 18 hundreds.

Yes. And they take part in studies where they go into the university and they do, like, exercises and stuff. And they get paid quite well for that.

Good.

Is she in the fifth grade? 6th grade. What grade is she in?

She's 6th grade.

6Th grade. Okay.

I've got four daughters and they're all super smart kids, and they understand they have to give away some of it. And all of that they do save, so that's not a problem.

Okay.

But I went into a rant about brands and industrial psychologists and behavioral economists trying to get us to buy stuff that we don't need and maybe a little bit over the top.

Great.

She probably fell asleep mid conversation.

Yes, I'm a bit of a compulsive saver. I've been saving since nine.

Yeah, it's great. Okay, so, Diana, are you okay? So what's your take, Diana? So he's saying, no, you don't need to buy this. This is just consumerism. It's finest. And Stanley, they know what they're doing. What do you think, Diana? So my opinion is that you need to take each situation for what it is. My kids are good kids. Like you said, she saves a lot of money. She actually has quite a bit of guilt about spending any of her money, and I think that comes from the saveaholic. Dad. That's the right word. She is just so good at saving. And so when she came and she said that she wanted to spend some of her own money on this Stanley cup, I was totally forward. I was like, if you're sticking to your percentages of what you plan to save, what you plan to give, and what you plan to spend, that's totally fine with me, because she's working hard for money. And like I said, if I was dealing with a different situation of someone that wasn't able to save and given things like that, then I would reconsider. But because of the type of kid she is, I think it's totally reasonable.

Wow. Well, you're both very convincing. I don't know if it's your lovely accents, but I'm thoroughly convinced. Here's the funny thing. I think you're both right. And I think Diana's a little more right. I think she gets to do what she wants with this money, even though.

We should have done a one, two, three pick aside.

Well, here's the thing. I'm team Keery in the sense that I'm like. I would be like, well, big Stanley's trying to get at you with their consumer marketing and influencers.

I know you think they're stupid. George doesn't like Stanley's. He thinks they're so. Yeah. And here's the deal. There's going to be things in life that you. I'm just going to go know, sexist here. You men may not really understand first.

Of all, thank you for calling me a man. I'm not even offended.

You know what I mean? There's always going to be things. There's going to be stuff that you guys do, how much you pay for your haircuts, George?

That's not the discussion here, Rachel.

Crazy. I know. So all that to say. All that to say, I'm with George. I'm with Diana. I'm sorry, Carrie especially. I thought y'all were coming in and going to say that she just wants you to buy it for. I'm like, ooh, this is, this would be a good.

There's no entitlement here.

Yeah, no, she saved her own, Carrie. And I'm saying this as a spender daughter that grew up with a dad who sounded a little bit like you.

A little save a holic, if you.

Will, but to give the freedom that she needs to learn. And she may regret this purchase, right? She may regret it, but good for her to actually experience those emotions on her own. Know, trying to talk them out of everything, like they need to make some mistakes. I did.

So you're saying buying a Stanley's a mistake? Rachel.

No, I didn't say this was a saying. I know it's stupid. It's expensive for a cup. I get it.

I drove my wife's car today, and what's in the cup holder? The giant Stanley. Guess who didn't have room for his little cup? Me. The giant Stanley was taking up the whole cup holder.

It is wild.

Sorry. After I saw how bad she felt and we had all these discussions and stuff, and I'm like, you know what, I might not understand lilac and fuchsia cups and importance to an eleven year old girl. But I explained to her, if this is what she wants, she was worried that I was not going to be proud of her. I said, I'll go out with her and buy ten. I'll buy ten for her. I said, literally, because her emotional well being is much more important than a cup. Sure, but I said, we were discussing this with Diana. We got, look, we've both done fPU. Why don't we call him the expert? So I actually emailed the. Then that's how we ended up on this show.

Perfect. I'm so glad you emailed.

Can I ask where your accents are from? Because I want one.

It's South Africa. Yeah.

Lovely.

You just have to go live there for about 30 years and you're good.

Have her listen to this call and have them say Rachel. And George says, buy the cup.

But I will say, we have a daughter. She's in the third grade and even some girls in her class have Stanleys. She does not. Because I'm like, I'm not going to buy that for, you know what I mean?

But then it becomes, well, look what my friends are driving, Rachel. I need a car like that. And it becomes, look at what they're.

So there is a precedent. And what I think what you guys have done so well is you've set a norm, right? Like the level of normalcy that your kids are experiencing is working hard, saving, giving, being wise. That's the norm. And if something kind of is abnormal, for one purchase, for one thing, and it's not the baseline, that's where I say, yeah, that's great. And especially since it's her money. So great. You guys are incredible parents. Incredible parents. Well done.

Thank you so much for the call. I wish the eleven year old could call in next time and let's hear her case and why she'll be able to stand.

She'll be a millionaire.

You know what she's going to tell me? She's going to say, well, George, it fits in the cup holder and it.

Has a handle and a straw. Really works. Y'all cups have worked for centuries.

This is not a new invention. There's been handles on things for a long time, Rachel.

Not like this though.

You won't convince me. This is the Ramsey show.

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Welcome back to the Ramsay show. I'm George Campbell, joined by Rachel Cruz. Open phones at 825-5225 Tom joins us up next in Las Vegas. What's going on, Tom?

Thanks for taking my call. You guys have got a great call screener.

Oh, thank you. We got the best in the business. We got Taylor and Christian today and they're crushing.

They're just cackling back there. Tom, you made their day.

They never get this kind of affirmation from us. I'm glad someone gave it to them.

My question is regarding the collection I noticed I received had a dispute with a phone company, cell phone company a couple of years ago, and I just kind of left it that I got a collection letter and I checked my credit report. It's on the credit report, and I'm going to go ahead and pay it off rather than dispute it's about $150. My question is, how can I guarantee that they will send the paid in full to the three credit bureaus? What I'd like to do is send a letter to them saying, you send me back a certified letter, that you agree to take it off the credit reporting agencies, and I will send you payment in full. Otherwise, I don't want it to linger for years and years on my credit report. What's your recommendation?

Sure. So how are you going to pay.

For this cashier's check?

Okay. And make sure that's certified mail.

Okay.

When you send that.

Okay. Do I need to send a request letter, certified mail, or can I just call them on the phone and say, send me the letter, you'll agree to take it off?

Well, did they send you a payment agreement?

Yeah. Well, they said you can pay over so many months, or you can pay over two months, or just pay it in full and I'll just pay it in full and get rid of it. Get out of my hair.

Yeah. If you send the. Make a copy of everything you send, including the cashier's check, and staple the payment agreement, the certified mail return receipt, and the copy of the cashier's check together and hold on to all of that.

Okay. Now, I have heard somewhere that the collection agency can only report paid in full. They cannot force the credit bureaus to remove it completely as though it was never there. Do you know? Is that correct?

You can dispute it on your credit report once it's paid in full. And they can then remove it.

Okay. After it's paid in full.

Exactly. So you shouldn't have an issue there.

Great. Okay. How long does that normally take once the credit agency gets my payment? Until it's reported to the credit bureau.

I'm not sure of that specifically. I'm sure every bureau has got a different process and a different timeline, but I can't imagine it's going to be months. I would imagine it's between 30, 60 days.

All right. I appreciate that very much. You've been very helpful. Have a good weekend.

Thank you, Tom. And shout out to the phone screeners. They do a heck of a job. They're on the front lines, Rachel.

They are.

Who knows the stuff? We never even hear it never makes it to air.

That would be a good show, though. Just let anyone and everyone.

That's our premium version. You can access the unfiltered calls coming.

Into pay a subscription. You can get that?

Yes. We do appreciate all of the callers. I know it can be hard to get on air, but we appreciate all of you trying your best. And Patrick made it, Rachel. All the way from New York. He made it onto the show. Patrick, what's going on?

Hey, thanks so much for taking my call. I'm huge admirers of you all, and I want to echo the great call screeners as well.

Wow, there's a theme hour now. That's so kind. They're very thankful. They're bowing.

Well, thanks so much. So we have about my wife and I, 68,000 in credit card debt. I have 30,000 in a Roth IRA that's actually in cash. A stock was sold. There was really no profit made. So I believe I could take that out without penalty. So I'm wondering if I should treat that $30,000 like cash or if I should reinvest it into mutual funds to help pay down that credit card debt.

Are you sure this is in a Roth IrA?

Yeah, I'm positive.

Is it in, like, a settlement account?

No, it was invested in a stock, like, one particular company. It made maybe $2,000 over the course of ten years. So not terribly great. I guess.

So who cashed it out?

I did. We sold it.

How old are you guys?

Oh, I'm 38.

Okay, so there must have been penalties, then.

No, because the Roth Iras, I don't think they're.

Oh, on your contributions.

Yes, exactly.

Got it. You can take out the contributions without the penalty, but it will count as income.

Okay, so it would count as income, then.

I believe so. I would check on what happened with that transaction, but if it is sitting in cash, the damage is already done, then, yes. This would just be considered liquid cash that you can use to pay off debt.

Okay. That's kind of where I was leading towards, but I'm not 100% sure what the best option.

Patrick, what caused you guys to get $68,000 into credit card debt?

Being workaholics and doordashing your way into debt and obesity. How's that?

Oh, wow. Yeah.

I'm trying to understand for the listeners out there who may be experiencing something similar. Are you saying you guys were working so hard and you were so stressed that you just sort of ate your feelings month after month?

Yeah. I mean, I would say more about out of convenience. It's a mixture of convenience, of not. Okay. Working a lot.

What period of time was this over? How long?

Probably in the course of two years.

That's a lot of $34,000 a year. Yeah.

It also includes some medical.

It was, like $2,800 a month on Doordash.

Good.

I don't think I could do that if I wanted to.

Yeah, well, it can happen pretty quickly. And the illusion is if you make a lot of money. Right?

How much do you guys make a year?

Combined, we're about 250,000 a year.

Wow. So you could clear this credit card debt without even touching the Roth IRa. But this will just help you speed.

It up, I think it would help speed it up, yeah.

Do you have any other debt?

We could do that. I'm sorry?

Do you have any other debt?

No.

Okay, well, and I think the reason why the medical.

We have to use a credit card because it requires a reimbursement of this particular plan. It's a bit of a previous health plan.

Well, have you cut up the cards yet?

We don't use them anymore. We just use a debit card now.

But you still have access to it. What's connected to the Doordash account? That's the question.

The debit card.

Okay. I might delete the Doordash account altogether for now, until we get the situation under control.

How's your mean? It's. It's. It's better now that know. Gotten a physical, going to the doctor, exercising, all those sorts of good.

It is interesting, Patrick, we hear a correlation a lot with money and health, just in general, that when you get to a point on one of those subjects, that you're just like, oh, my gosh, I can't keep doing this anymore. And with your money, we can't keep doing this. We have $68,000 in credit card debt, and you kind of have this awakening to change what you've been doing with money and doing something different, that you're doing your debit card and working your way out of debt, which is awesome, and how much that correlates to other parts of your life. A lot of people say that they want to make changes in their health. They want to make changes in their marriage. It's amazing when you get one part of your life under control, it really is a domino effect in the others, and that's what you're experiencing, which is so exciting, because I think that it's a new year and you guys are creating some great habits. So I'm proud of you guys.

Out of a dark curiosity, what's the APR on these cards?

I think it varies depending on the credit card, but it's probably, like, a yearly interest of about 20%. So you're going to look at fees, like, up to $2,000 a month, right?

Yeah.

Combined.

That's the scary part.

Yeah. So part of me is wondering, if I just have that chunk of cash, can I throw it at the debt?

How many cards is it across?

It's three cards.

Okay. Yeah, I'd use that. Attack the smallest one first, and then if it covers the next one, go that way and frip the payments along the way.

That sounds great. We've been working on it already a bit, so the number was even a little bit higher. But because of getting the budget under control, doing all those things, getting rid of the credit cards, paying for everything in cash, it kind of got us, and it can happen. Slippery.

It is a slippery slope, for sure. Yep.

Using your own money will always change the game. You can't go into debt if you run out of money in the bank account. And that's why I stick to debit.

Amen.

Amen, brother.

George.

Man, this hour took my breath away, Rachel. But it was fun. You did a great job. You handled it.

So did you. So did the phone screeners.

And shout out to the phone screeners.

This hour, Taylor, their Christian, just killing.

It's their world. We're just living in it. This has been the Ramsey show. Live from the headquarters of Ramsey Solutions, it's the Ramsey show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Camel, joined by Rachel Cruz. Open phones at triple 825-5225 you call in, and we'll give you our advice. Not telling you you'll like it, but we will give it to you unfiltered, unbiased, just wanting to help you take the right next step, and live your best debt free life. Reagan joins us up first in Knoxville, Tennessee. Reagan, what's going on?

Hey, George and Rachel. I am a little sad that I can't talk to you guys for 5 hours, but I'm excited to be here.

Hey, five minutes is better than nothing.

All righty. Well, I've got my question. I can read to you, so I sound a little bit smarter.

Okay. Use some big words.

Okay. I have been married for two years, and we are currently gazelle intense, paying off my wife's nursing school debt. As we plan for the future, we are eager to bring children into our family. We both come from single income families, and we've always imagined that's how our lives would turn out as well. In fact, we borderline consider it part of our faith to build a family with a stay at home mom. I work as an entry level construction estimator making fifty five k, and I can make decent money down the road. It scares me to think about trying to save for a down payment or afford large purchases on my income if we were to have a child soon. But I also don't want to wait four to six years for my income to go up to start having children. Do we need to put off our goal of having kids soon, or do we need to have more realistic expectations about my wife's future employment?

It's a good question. Well, let's start with this nursing debt. How much does she have?

About 50.

Okay. Any other debt you guys have?

No. Is she working right now, Reagan?

She is. She's just barely graduated nursing school. She's making about the same as me.

Okay, let's say the household income is about 110.

Yes.

Okay.

Yeah. I mean, Reagan, I will never tell someone not to start a family, get married, big life decisions. I would never tell someone not to do those. And instead, you should pay off debt, or you should do all these other things we talk about. I mean, I think when you want to start a family, you guys start a family. And people want to wait until they're financially stable and all of that. And I hear that and I get it. But also, I think sometimes that finish line can move and you can feel like you're never really there. And then you look up, you're like, oh, man, it's been four years and we've wanted a family, and we haven't started.

Well, we're out of debt. Should we wait till we have a house? Okay, then we'll wait another three years so we can get the down payment being a house, because a baby can't survive in a rental for some reason. So there's a lot of just weird things that happen along the way. And that's why we tell people, hey, if you want to have a family, go for it. It might be a little more difficult, but it's not going to ruin your life by any means. It's only going to be a blessing and a Roy. So what I would be looking at is, number one, the actual budget and reality of the numbers is, hey, if we have a kid and you're staying home, can we actually cover all the bills? Can we cover the four walls, food, utility, shelter, transportation, insurance, and still hit our financial goals? So I'm wondering, can we knock out the debt while she's working and then stay home?

And that's the goal, is to have her debt paid off in the next six months is what we're tracking towards. And then after that, there's a lot of big decisions we can make. We both drive old cars and we want to save up for a house and things like that. It's just trying to balance the excitement of being out of debt and taking the next step with taking on these extra responsibilities that might harm our income.

Yeah, well, I mean, getting the emergency fund in place once you're debt free is going to be important. If you want to upgrade the cars with cash, that would be a future goal. And then beyond that, you might need to rent for a few years until you have that down payment saved up. And the problem is a lot of people have a kid and they all of a sudden go, we don't have any room now we have to go buy a house, even though we're broke. And so I don't want you to fall into that trap. So can you stay where you are renting right now, even through the first kid?

That's the plan. I think what scares me more is just having the space in my income after we have a kid, if we were to go to a single income to then save up for a down payment.

Yeah, it will just take you longer. You guys will just be. In order for one goal to happen, which is for her to stay home with a baby, then other goals are going to have to shift. Right. And it's a priority thing for you guys. If it's more of a priority for her being home, then the house is going to be down below that. Or if you guys say, no, maybe she works four days a week or.

Something, or works through the first baby, and once we have baby number two, then she's going to stay.

Yeah. Or you guys decide something else, because the house that's more important then that goes first, and then her being home goes second. But it's up to you guys. It's what you guys value. Right. And then out of that is where you say, okay, now we have to make these decisions. And no. So it may mean moving to a cheaper area. It may mean some other things when you go down to one income, but that's what you guys value is what I heard. Is that right? That's correct, yeah. And I think it's one of those things, Reagan. It's kind of that adulting situations that you get in and you say, okay, what is best for our family. And what's best for us may not be the same as x, y and z person down here. So you may be watching x, y and z family do things that you guys may not be able to do on that one income right away. Right? Not that you can never do anything on one income, but it will just take longer. And I think that the more confident you guys are in that conviction, that's going to create the board at which you have your life in.

Does that make sense?

Yeah, that's perfect advice.

All of these actions, Reagan, they have a blessing and a consequence. The blessing is my wife gets to stay home. The consequence, our income got cut in half, and it's going to take us five more years to get a house. And so we have to weigh what's more important to us. What are the priorities right now? Because we can't have our cake and eat it, too. I wish I could snap my finger. And you guys are debt free with an emergency fund, living in your dream home. She's staying home. Everything's great, but there's going to be sacrifices. That might mean you work a side job for the next three years.

Yeah. And Reagan, too. Just know this when it comes to the. And I know you guys don't have the baby right now, but if that is in her, that she wants to be home, you don't regret that. Know you don't regret being home with your baby if that's where you want to be. Now, I work, right? So I'm not in that situation. But I did pull back some from work a few years ago to be home with the kids more. And I look back on that, I'm like, I don't regret that. Right. There may have been some opportunity cost at work or whatever it is, but I don't regret that. So making decisions about things like family and kids and all of that, if you have the option and that's the decision you make, I don't think you'll regret that because she always will have the ability to go back to school. Now, she got a freaking expensive degree to be a nurse, and she's going to go home. So all of you 18 year olds out there, that's what happens. You go to school, follow your dreams for six years, thousand dollars in debt.

Now you want to stay home and be a mom.

It's hard.

Just be aware of these decisions.

And I want to give a shout out to all the moms out there. Rachel, there's so much mom guilt on either side of you. Should be at home, you should be working. You should do this. And I just feel for the moms out there struggling with these decisions.

Yeah. And some moms don't have the choice either, right? That they have to be know. So it is. It's a complicated thing at times, George.

You've got to do what's right for you and accept that there may be sacrifices needed.

Yes. And you guys just had Mia, your little baby. And I think you could plan as much as you want. And then once the baby's here, things shift. You may be like, get me out of this house a little bit. Please, can I get out? Or you may be like, no, I want to be here more. So you can plan. But sometimes that plan even changes.

Amen.

This is the Ramsey show.

Hey, you guys know this, but I'll say it anyway. College is freaking expensive, and student loans are out of control. The average private student loan in 2023 was $55,000. So if you're in over your head with private student loan debt, don't beat yourself up. Look, we've all made mistakes with money in the past. What matters is doing something about it now. So if you're in distress with private student loans, call y Refi. Y refi refinances defaulted private student loans that other places won't touch and gives you a custom loan built for you based on your ability to pay. To learn more, call 8442 Ramsay or go to yrefi.com ramsay. That's 8442 Ramsay. Or the letter y, then refy.com ramsay.

Y Refi is not licensed by the California Department of Financial Protection and Innovation.

Why?

Refi is not authorized by the New York State Department of Financial Services to service any New York loans. Funding may not be available in all states. Welcome back to the Ramsey show. I'm George Camel, joined by Rachel Cruz. If you want to check out more great shows from the Ramsey network, be sure to check out Rachel Cruz on YouTube and podcast. And search George camel with a k on YouTube and Spotify. And you'll find my channel over there. We're making, what, three episodes a week for both of us? On top of smart money happy hour.

Oh, yes. Yes.

Wow.

On top of this show, you can't.

Ever say that people are like, you need smart money happy hour. Every day, I'm like, listen, we got 19 hours of content coming at you guys.

That's plenty.

Go be with your families. Go on a walk, listen to some music.

We'll be with you once a week.

Hey. Well, we've been getting a lot of questions about taxes. And I get it that taxes can be real confusing. And so to help you get a better handle on them, let's unpack a question from one of our listeners. What's the difference between a tax deduction and a tax credit? It's not a trick question, but people get confused. I just uploaded a video about taxes for beginners on my YouTube channel today. Yeah, I went on the street on Broadway in Nashville. The answers were hilarious.

Oh, like asking just like basic, if.

They knew the difference between deductions and credits. Many people were like, well, tax credit. Credit is like debt. Okay? So here it is.

Well, that's fair. Context clues. Yeah, fair.

Decent guess. Here's what tax credits actually are. They cut your tax bill dollar for dollar. So if you end up owing $1,000 in taxes, a $500 credit will slash your bill another $500. And a tax deduction, on the other hand, is more on the front end. It lowers your tax bill by lowering your taxable income. So you simply subtract the deduction from your income. Less taxable income equals less taxes owed. So deductions reduce how much of your income is taxed. Credits reduce the actual tax bill on the back end. So if you're confident about filing on your own, we've got a great tool for you. Ramseysmart tax. You can find that@ramsesolutions.com. Tax that's no nonsense tax software. We're not going to try to sell your data and sell you debt like the other guys. It's low upfront pricing. We're not going to nickel and dime you. And if you want to work with a pro, you can connect with a tax pro who's Ramsey trusted again@ramsesolutions.com? Slash tax. Well, it's time for our question of the day. Rachel, would you do us the honors?

Oh, yes, I will. Today's question comes from Mark in Florida. I'm 64 years old, retired executive with an encore career, happily married, no debt and $3.4 million net worth. I want to lease a new Maserati that will cost a total of $60,000 over three years. My wife is against it. Since this provides no financial benefit, our net worth and liquidity will continue to grow. Can I afford this lease?

Wow. Interesting.

Yeah. Can you afford it? Yeah, you can afford it.

You could afford a lot of stupid decisions.

Do it. It's just that, yeah. I mean, leasing a car, it is the most expensive way to finance a vehicle, and it's going to be you basically just renting a car for three years.

It hurts my heart that you're just going to blow 20 grand every year for fun and then still have to get a different car three years.

At the end of this. I wouldn't do it just because, obviously, we don't affirm leasing and all of that.

If they have a $3.4 million net worth, just purchase it in cash and you'll still end up in a better spot. Because guess what? After three years, you can go sell that Maserati for.

How much is a new Maserati, George?

Well, you know, it depends on the.

I know you know cars so well.

George well, I've been in the market, Rachel.

You've been in the market, been test driving.

I'm so excited. I bet I'm going to get ads now for Maserati. They're going to be like, this guy wants a Maserati.

I'm terrible at guessing prices of stuff.

What would you guess they go for?

Because, like, a Maserati, I don't even know what it looks like. I need to see what it looks like.

You know, the.

We're going to go.

Here we go.

I'm going to guess 200.

No, I mean, I'm sure you can soup it up.

Oh, 150.

But for, like, their normal 63, 80. And it goes up for there. Now it's really starting from. And most people that buy these, they want to soup them up with extra features and do custom $63,000.

We got a guy that had a Honda Civic loan for 60,000.

Tell me about it.

Me and Jade, you know what I might do?

Here's the thing. These, like, ultra luxury cars, they tend to depreciate. And so what I might do if I'm in his shoes is take that 60 grand and go, what used Maserati can I get for 60 grand?

Well, that or just go buy a new one.

Or buy a brand new one.

Just go buy it.

I feel like it's worth the juice, ain't worth a squeeze on.

But I feel like suvs. When we were in the car shopping season, after we had our third, we ended up with an Odyssey minivan. But we did look at suvs like you look at suburbans. You look at all those, some of those big boys. I mean, those are like 100,000. Like, brand new.

It hurts my soul.

I don't understand how Maserati. I'm just shocked. I don't know why. I don't know why I'm so shocked. Should I go get a Maserati?

I think it's. This has now become an ad for Maserati.

Anyways. All right, mark in Florida, go get you a Maserati. Pay cash, don't lease it.

I'm looking at slightly used maseratis. They're going anywhere from $40 to $60,000, maybe $70,000 for 2023. So if I'm him, I'm going to take that 60 and just go buy one in cash.

Golly. What are the other cars that are, like, insane, though? Why did I jump to, like, were.

You thinking, like, lamborghinis?

Oh, yeah. Maybe that's what I'm thinking.

Bugatti.

There you go. I've heard of those.

There you go.

Okay. Maybe that's what I was thinking of. Are those, like, 200, or am I just crazy? Are there any cars for 200?

I mean, like, a Ford is like, $300,000, so depending on the model.

Okay. All right, well, we're not car experts.

Yeah, I don't want to go too far before the car bros come at me. Rachel, they're very aggressive. So, yeah, leasing, it's a bad idea. You're just renting it and you're prepaying the depreciation on behalf of the dealership while they make a whole bunch of money.

And the interest rate is hidden in the lease. You don't even know what you're paying interest like. Yeah, it's just not.

That's the craziest part about leases. They don't legally have to disclose it because technically it doesn't count as a loan.

Oh, is how they met. Okay.

That's how they get away with it.

Interesting. Yeah.

So they just bake it into the price, and so you think you're getting a deal, but really you're just renting very expensively. Yeah, no, thank you. All right. There you go, Mark. You do what?

You go get a brand new one for 63,000, apparently, is what we just learned.

But the key word here is my wife is against this. That would be all it takes for me to go. All right, we're not doing it. If you're not in agreement on this big financial decision, don't do it.

Yeah, that's fair, too.

All right, we did it.

We figured it out for Mark.

All right, let's go to Florida. The Tampa we go. Alex joins us there. What's going on, Alex?

Hey, guys. Thanks for taking my call.

Sure. How can Rachel and I help?

Alex, do you own a Maserati?

I wish.

We'll get you there.

How can we help?

So my question is about more than a year ago. January of last year, I got a new job that doubled my income.

Awesome.

And when that happened, before I knew you guys existed, I started the debt snowball kind of on my own. I was like, that just makes sense. I'll pay off the low stuff first.

Oh, good.

So fast forward a year, and I found you guys somewhere in there, and the baby steps make sense. And I've started budgeting and planning for that. But with my career, it's a little volatile. There's been a lot of layoffs lately in the industry. And I'm a little concerned that once this project is over, if it doesn't go well, I could be without a job for a certain amount of time. Okay, so what's your question was? My question is, should I do the emergency fund first? Just to have a little bit of a fallback before I continue down the debt.

Snowball, how much are you making now?

I make 110.

110? Okay. How much debt do you have?

Lot 375, including the mortgage.

Okay. What about outside of the mortgage? Just the consumer debt.

Just the consumer debt is 125.

Okay. What kind of debt is that?

A lot of it is student loans, about $60,000.

Okay. The line of work you're in, Alex, quickly, because we're coming up on a break. Would you be able to find a new job if the layoff happened?

Yes, eventually. But there's been a lot of people struggling.

If I were you, I would start attacking the debt because the layoff, it's not imminent that it's going to happen. If it happens, it's a fear of it.

You'd pause the snowball and get to work doing whatever you could until you find stability.

That's right.

But hope that doesn't happen, man. Follow the steps. It works. I'm George Camel, joined by Rachel Cruz. This is the Ramsay show. Give us a call at triple 825-5225 Kim joins us up next in my old hometown, Boston, Massachusetts. What's going on, Kim?

Hey, how are you doing?

Well, how are you?

Good.

How can we help today?

Okay, so the situation is that about three years ago, my boyfriend sold his house to move into mine. And the plan was to buy a bigger house for the three of us because I have a son, obviously the market went crazy. Don't want to buy another house. So now the thought is he's going to buy into own my house. So he's going to give me a large chunk of money, put his name on the deed. I don't need to refinance because I don't want to lose my 3%, but I don't know what to do with the money.

Is this deal already done?

No.

Okay, so I'm confused. How much is he going to give you? He's basically buying equity stake in your house?

Yes, exactly 50,000.

Okay. What's your house worth?

About 400.

And how much equity do you have?

Right now I have 200. But that's not the mortgage.

What's left on the mortgage?

Left on the mortgage is 220. And I bought the house for 270.

Okay, so how much equity will he actually have in the house if he does this? Let's say I'm going to play it out. A worst case scenario. Let's say you guys break up. What happens then? He has fifty k in the house. You guys break up, you say, hey, you got to get out. This is my house.

I would pay him back the amount that he put in. The lawyers are going to drop the paperwork so that I would pay him back what he put in, plus any additional equity or. Why are you doing this, Kim? Why are you doing it? We're going to get married. So I haven't even really thought about what would happen if we didn't.

Why not get married?

And he doesn't do it then so he doesn't have to do anything.

If you guys get married today, I would not ask my future wife to be like, all right, once we get married, you pay me 50,000 to live in my house now.

Right? That's what I was thinking, too. I was like, is this crazy? Do I just tell him to put it into retirement? And when we're older that we have a better nest egg?

Well, I wouldn't even say put it in retirement. I would just say, let's pause on this whole transaction until we're married. And then once we're married, you can add them to the deed, you can refinance the mortgage, whatever you want to do at that point to get know financially involved here and combine bank accounts. But this is a really messy situation.

Because when you're married, you have legal standing, right, to be able to split assets and all of that. You don't have any of that, Kim.

And it's going to be messy because you're saying fifty k plus equity. Well, how much equity? Is it a percentage? Is it a number?

Right. I understand what you're saying. Yeah. And we're on the unfortunate side of this call, Kim, that we have received your types of calls when you break up. And they're like, my boyfriend, we thought everything was going to work out and how do we do? And it ends up just being this complete mess when you do things financially with people you're not married to. And so, yeah, we really advise it that keeping everything separate. And then when you guys get married, then you're able to combine finances, which is awesome, because then you're like, oh, great, we'll have some extra money here. His name can go on the house then. And you guys own that together. And you really see yourselves as one at that point. But I would not do anything until you're married. Okay, that makes sense. When we do get married, what should we do with that particular.

Yeah, I would hang on to it because who knows what expenses you're going to have. Wedding. We need to do this upgrade. We need to do this. So I would leave that money. Are you debt free and is he debt free?

No. Yeah, we're both debt free. I have about 50,000 in liquid assets right now, and then my retirement. Great.

Awesome. You guys invest 15% of your income. If you have the emergency fund, and he has his emergency fund, keep it separate. Both of you invest 15%. Any money beyond that, you can just stack up and you're going to need it in the future. And if you don't, let's throw it at the mortgage once you're married and he's on the deed and the loan.

Okay, that makes sense.

I like that plan.

Yes, I do, too.

I hope we talked you off the ledge, Kim. It just scares me every time. Not because we want to be mean, but because we've just seen too much on this show and everyone wants it to work out on paper, and then.

Life happens, and it probably will work out, right? You'll get married and it'll all be great. But it's a risk when you start combining finances before you're married.

Yeah, I mean, this feels like a weird episode of a shark tank. It's like, I'm going to give you 50,000 for 10% equity. I'm like, this is a love relationship, not a weird business partnership, but I'm pulling for you. All right, let's get to another call. We've got the time. Hadley is in Winnipeg, Canada. How exciting. What's going on across the border, Hadley?

Not too much. Pretty cold over here, but good to talk to you guys.

You as well. How can we help?

I just have a question about my truck loan. And me and my wife got married last June, and we're pretty young, but we're going to have our first kid in August this coming August.

Congratulations.

Thank you very much. Yeah, we're just kind of debating on what we should do with our finances. We're in the process of putting all of our stuff together right now. And my truck, I bought it a long time ago, or I guess a couple of years ago. And at the time I didn't know about you guys and pretty big purchase, especially for my salary at the time and even now. But I've paid off quite a bit of it and I'm just wondering if I should leave it and just pay off rest or if I should sell it and whatever I can make off it because I think I could make a little bit off of it based on how much I have paid off already. And then I have 22,000 left on the loan.

And you're saying it's worth 23?

It's probably worth more than that. This is based on private listings. I can't tell you exactly what it would be worth, but I'm guessing at least 25.

Okay, so let's say you went through with this, you sold it, you bank $3,000. Now you need another vehicle.

Yeah. And then the problem I'm having with getting into different vehicles, everything, I've looked through a lot and my dad works at a dealership and he's looked for me too. He's a mechanic as well. And everything that's out there is really high in price for what you're getting. And lots of it is just completely mild out at the price range that I was expecting to get into.

How much do you have in savings?

Together with me and my wife, we have about 12,000, maybe a little bit.

More than 12,000 in savings?

Yeah.

Okay. How much do you guys make a year?

I can't tell you exactly how much you make a year, but because she's having a kid, that will be gone right away. So that's kind of why we're debating this. After taxes, I make like 41.

And she's going to stay home, but.

What is she going to make between now and August?

She makes about a month. She makes about 1400 after taxes.

1400 after taxes.

Yeah.

Okay.

So we got about six months of her continuing to work.

Yeah. And yeah, she's going to stay at home.

Okay.

Are you guys going to be able to cover all the bills?

Yeah, I went through on every dollar and I made a budget and it'll be tight. And that's kind of why I would like to get rid of this. I'm looking to get rid of this truck.

Womb well, with a baby on the way, there's also this element where you may want to pause the steps and stack up cash to make sure we have plenty of money. So I may wait on all of this until baby is here in August. And if mom and baby are home safe, we have a giant pile of cash. Then we can sell the truck and upgrade to the next car in cash.

So you're saying hold on to the truck for now, save up cash and.

Then, because the other thing you could do is sell the truck. Now, you got 3000 out of that deal. Take 5000, take five or eight out of your savings and go get an $11,000 car. That gets you around. I mean, your dad's a mechanic, so get a Pre purchase inspection from him and get a reliable make and model.

Yeah, but keep the rest of that.

Money in savings and then just stack up cash from there.

Yeah. Because how much is your car payment every month for the truck?

Yeah, it's 640 a month.

Yeah, I would get rid of the truck. I would do that. I would do what George said. Take a couple of thousand out of the savings.

That'll add an extra $3,800 to your life.

Exactly. Yes. I'd get rid of it today. And then don't do anything else big. Wait till the baby's here. And then you guys have your emergency fund basically funded, which is awesome.

Keep saving on that and then you got no debt emergency fund and a different car with no payment on it.

Great.

Congratulations. Welcome to the baby club.

So fun. This is the Ramsey show.

Here's the thing about investing advice. You can find it just about anywhere, but that doesn't mean it'll always help you with your personal goals. Here's another option. Check in with a smartvestor pro. These financial advisors can review your plan or help create one that's personalized to you. To find a smartvestor pro in your area, go to ramsaysolutions.com slash smartvestor. Go to ramseysolutions.com slash smartvestor.

Ramseysolutions is a paid non client promoter of participating pros. Learn more@ramseysolutions.com slash smartvestor. Welcome back to the Ramsey show. I'm George Camel, joined by Rachel Cruz. Open phones at AA 825-5225 Rachel, I don't know if you know this, but there is a retirement crisis happening in America.

Is there?

Here's the stat that shocked me. Nearly half of Americans aren't saving at all for retirement and those who do aren't saving enough. So for those of you, maybe you're in. Your retirement isn't a far off dream at this point. It's a fast approaching reality. And we get tons of questions from people asking, do I have enough money to retire? How is this actually going to work? And people that listen to the show, they want to retire with dignity. It's a goal. But sadly, many people, they're not that serious about saving for retirement. They haven't made it a priority. So let's get a benchmark of what the average person in their has saved for retirement.

You ready? According to a recent survey or a study done by Ramsay Solutions, the average American in their 40s has an average balance of $93,400 saved for retirement and contributes 8% of their income towards retirement.

Wow.

The average American in their 50s has an average balance of $160,000 and contributes 10% of their income into retirement. So with those averages, though, it's not enough.

No. So here's the deal. If you're doing these five things in your serious about saving for retirement, so we're going to call this five signs you're not taking retirement seriously. Number one, you have no goals.

Oh, man.

I know it hurts to hear, but we've realized, Rachel, retirement is not an age. You don't just get to retire at 60, right? Because the government said so. It's a financial number and you need to know that number. And you can use our free retirement calculator to do that@ramsaysolutions.com. And set a goal for retirement savings. Now, obviously, we have no magic eight ball to go. Well, you're going to have 4.8 million if you just do this. We don't know what the market's going to do, but we do know if you consistently invest over time, we know what the average track record has been of the stock market with mutual funds, that you'll have a good nest egg.

That's right. Next.

What's the next?

You know that you're not serious about retirement is that you're not saving 15% of your income.

We just saw that in the stats.

Yeah. The average salary for Americans in their investing 15% at age 40 and did that every year until you retired, you would be a millionaire by 65.

Wow. From 40 to 65, it's still possible making 59,000 and if you never get.

A raise and 15% of your income. So this is why we always say in the baby steps to pay off your debt, first get your emergency fund, and then you actually have money to do 15%. Because I think for a lot of.

These, they're just doing too many things at once. They're trying to pay off debt.

Yeah.

They don't have the cash to be able to do it. That's right.

That's a huge problem. All right, next sign you're not taking retirement seriously. You still have consumer debt. You're still hanging on to that student loan, the credit card balance you were working to pay off. Well, we did the HELOC, too, for that pool because we needed the pool for the kids. And here's the thing. Debt is actually just borrowing from your future, which is not a good plan if you want to retire in the future. So use the debt snowball method. It's the one you hear about on this show, smallest to largest balance, regardless of interest rate, and focus on paying off all consumer debt other than your mortgage. And what that does is free up debt payments that you can now use.

There you go.

To invest that $700 truck payment.

It's a beautiful thing.

Amazing.

It is a beautiful thing. Next. This is why you're not serious about retirement is that you overspend on nonessential costs of living. Cost of living is the top reason people don't save for retirement. The average American spends $1,500 on nonessential items every month. It's almost $18,000 a year on things like eating out, impulse purchases and subscriptions. So cut your cost of living.

That's true. And we had a call earlier, Rachel, a guy had spent, what was it? $64,000, $68,000 on credit cards, largely from doordashing. From using doordash to get food out of convenience.

Yes.

So these non essential costs, the subscriptions, the doordashing, the uber eats, whatever it know, pick your at. It adds up every single month and compounds. So you got to cut things out.

That's right. And that's hard to. I mean, we talked to so many people here on the show that they cut their cost of living way down to get margin to pay off debt. And they do the sacrifice. I mean, they do it all. So it is possible. It's not always fun. But then on the flip side, you really realize, oh, my gosh, I have so much crap and stuff that we just don't need. We don't need the 18 subscriptions that we're paying out stuff.

Have you ever passed a garage in your neighborhood and you can't put a car in there? It's just become a storage unit of just crap that we might use one day or we used to use, or it was stuff from grandma and we just can't get rid of it because it's sentimental. I'm like, guys, we have an obsession with stuff.

All the things. Yeah.

All right, last sign. You're not taking retirement seriously. You knew we were going to say it. You're not doing a budget. Having a monthly budget is the foundation of winning with money. Budgets are not for broke people. They're not for when you have money. It's for people who want to have money and want to keep that money. You got to know where every dollar is going. And you can sign up for our free budgeting app@everydollar.com. Every dollar is named after the zero based budgeting method, where you give every dollar a name. Income minus expenses equals zero.

I will forever be thankful for budgeting because I am such a spender. And we were doing our every dollar app because it was the end of the month, right? We're starting a new month, and I was closing it out, and those dang transactions just kind of kept coming in. I'm like, crap, crap. And I'm sitting there, and it just keeps you accountable. So you're right. It's not Amazon.

Amazon.

Even on baby step seven, you want to be doing a budget because you want to be able to say, this is where my money's going. And it is. It's like a mirror in front of your face, and being like, this is what I'm doing, and you're actually seeing it. And if you're not budgeting so much, money just slips away, and you don't even realize it. You really don't realize it. So being accountable in that way, it is so good.

That's huge. And what's beautiful about investing is you don't have to overcomplicate it. I mean, we've got a roth four hundred and one k here at Ramsay. So you can do all 15% of your investing into that Roth 401K through your employer. And if you just invest a menial amount, I mean, we're talking a few hundred dollars a month, which may sound like a lot if you're drowning in debt payments and you don't have a few hundred bucks. But most people, if we got out of debt and we had the emergency fund, we can find a few hundred bucks to invest.

Yeah, that's right.

But if you invest 15%, goodness gracious, you can build some serious wealth while having margin to help cover kids college and pay off the house early. And when you're in baby step seven, with no mortgage payment, you can increase investing.

Yes, that's right.

And build exponential wealth. And so I have less sympathy for people that say, well, you can't be a millionaire today, Rachel, because it's easier than ever. If you just get this on autopilot, start as early as you can. Best time to plant the tree was 20 years ago. Next best time is today. So I feel like the old guy.

That was a grandpa saying it is.

But I love it because it's just like, listen, I get that you're 45 and wish you got this stuff sooner, but it's not an excuse to not invest well.

And the reality is it's going to happen like retirement. Right? At some point, you won't be willing that you live up to that age. I'm like, you're going to want to retire, so you'd rather have some money than nothing. So starting that. But it's creating new habits, it's creating a new mindset. If you're not doing it now, putting that extra few hundred dollars away, it can feel like, oh, my gosh, this feels scary. Or I don't know if we can do this, but there is something powerful about actually doing the action. And once you start doing it and it becomes the norm, then you're not thinking about it again because you're like, oh, yeah, this is just what we do. It becomes a part of your identity. Right? The atomic habits. He talks about that. It's an identity thing. If I am a person that saves for retirement, that's who I am.

The amazing part is you just, over time, learn to live on that smaller amount of money that ends up in your bank account because 15% already left your paycheck before my bank ever saw it.

Right.

That's right.

So you just learn to live on that smaller amount, live on less than you make. We teach that all the time. And I know future George is going to be real happy about this.

I always say that future Rachel is going to be bougie.

Yes.

I can feel her. I can feel the nice.

And do not rely on Social Security. That's going to be icing on the cake. Gravy icing if you're in Canada, if.

It'S even there when we're there. George, have you read all these?

Oh, yeah. They're saying, hey, it's going to be down to 80% by 2034 and it could be gone.

I know y'all. How scary is that? I'm like, what are we doing? So anyways, yeah, depending on yourself. And you guys can do it regardless of what age you are. Start this.

There's no reason to call us at 64 and go, I have zero in retirement. What do I do?

I know. And people do, though, and they go.

Oh, and I can't work anymore. Well, now is a tough time to be calling us. Get a time machine, because I don't have a magic silver bullet that's going to help you retire with dignity and live all your retirement dreams. So that's my plan, is have more than I need, and then I can leave it as an inheritance to my children's children.

That's right.

And cover their colleges quoting scripture. Did you see that lady who donated to the university? A billion dollar donation to the medical school?

I did see that.

It's amazing.

Yes. Who was she? I didn't read the article.

She was a board member and professor, and her husband was very well to do. Left her a bunch of money. And she said, you know what? He said, do what I want with this. I'm going to give a billion dollars so that no medical student has to pay tuition ever again. How incredible is that?

That's amazing.

So there you go.

There you go.

That's one thing to do if you're a billionaire for that school. So take retirement seriously. Go to ramsesolutions.com. We have tons of resources there. And, of course, get your everydollar budget going. Everydollar.com. Get started for free today. That puts this hour of the Ramsey.

Show in the books.

I'm George Camel. She's Rachel Cruz. Thank you to the booth folk, keeping the show afloat. And you, America, will be back before you know it. 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 amazing relationships. I'm George Campbell, joined by the Rachel Cruz. This hour, the number to call is triple 8825-5225 you jump in, we'll talk about your life and your money. Paul is going to join us to kick it off this hour in Orlando, Florida. Paul, welcome to the show.

Thank you so much for having me. How are y'all?

We're doing well. How can we help today?

Yes, sir. My family and I are deciding to take a gap year. So we are just trying to figure out if fiscally, we are being responsible. We have followed Dave's plan. That's where we're at. We're just trying to figure out.

Okay, so tell me about this gap year. What does that mean? No one's working and you're going to travel or what?

Yes, sir. So my wife and I are deciding to resign from our current positions, we have three kids. We already homeschool them. So we decided to take a year off and travel the United States and possibly abroad. So we've budgeted for just, you know, part of american culture tells us to continue to work and build wealth. Build wealth.

Lay this out for us. So what's your net worth, and how much are you guys making right now?

So, combined, my wife and I make about 160,000 a year.

Okay.

We're debt free. So we've paid off the house a few years back.

Oh, wow.

I don't know. Net worth was probably three quarters of a million, I would say, when it's all combined.

Okay. And what's this year off going to cost you guys? Have you run the numbers on the real numbers?

Yes, sir. We are looking at about $100,000.

Okay. And you're going to keep your house?

Yes, sir, we're keeping our house. So we would like to come back to a paid off house. We have paid off cars when we come back, and we're leaving our jobs on good terms. So as of right now, nothing's absolutely guaranteed. But we have commitments from at least my employer saying that it's an easy.

Transition back, that you could come back and make the same amount of money.

Yes, sir. And my wife is probably considering stopping working at this point.

Okay. She would just not go back to work. And you guys would be fine?

Yeah, absolutely.

How much you guys have saved?

So, total savings? A little over 100,000 outside of the budgeted amount for the gap year.

Oh, so you have 100,000 plus another 100,000?

Yes, sir.

Wow. What's the other 100,000 for?

Well, we like the emergency fund, so we just want to make sure that we're able to just be able to be comfortable when we get back. And just in case the jobs don't work out, we have something to fall back on.

Yeah.

Where are you guys going to go?

So we're looking at traveling the United States. So starting home in Orlando, going up the east coast and heading west and just doing the whole United States and then coming back to Florida and then going to Europe for a few months.

That sounds incredible.

Yeah. That's awesome.

Where are you guys going to stay? Is this like hotels? Airbnbs? You have an rv?

We definitely don't have an rv. No, we're looking at just doing Airbnbs or hotels.

Fantastic.

Yeah.

I mean, you get the green light from me. I don't know what Rachel thinks, but this sounds like a fun adventure.

Yeah, for sure. I mean, this is why you do you. This is why we say you live like no one else, so later you can live and give like no one else. And this is what you guys value and what you're wanting to do. You have the money for it. You don't have any expenses, bills back home with a mortgage or anything. And so, yeah, for me, I'm like, do it. What do you guys do for a job? What do you do specifically?

I'm a home builder. I'm in construction, and my wife is a nurse practitioner.

Okay, that's great. I was just wondering if for some reason, the job fell through when you got home. How easy of a line of work are you to pick up something else? But that's great.

Yeah, well, I'm not too far removed from 2008 and the whole housing bubble there, so that's why I'm just wanting to make sure that the emergency fund covers us, just in case something happens. We never know.

But, yeah, I love it.

I think it's great, Paul.

Stop by and see us if you come through Nashville.

Yeah, I mean, we had to save the money from screaming. We're debt free, so maybe on this trip we can stop by.

I love it.

So great. Well, congratulations, Paul. That sounds so fun.

Thank you. Have a wonderful day.

Thanks.

Absolutely. I'm glad he asked for permission from us. Rachel, how cool is that?

I know.

What an adventure, man.

I have such, like, a free spirit in me that I'm like.

I know. I just hope my kids want to hang out with me for a year. You know what I mean? That's cool. The kids are excited about this, it sounds like.

Yeah, I would think. I know. We had some friends do this. They ended up selling their house, put everything in storage, and they just traveled the world for a year.

Wow.

Came back and picked back up. But I'm like, good for you.

Yeah.

I don't know. I think it's great.

I mean, if you do it the financially responsible way, I don't think you're going to have much.

No, no.

And as a kid, that's a really cool experience to get.

Yeah, for sure.

All right, let's go to Alex in Springfield, Massachusetts. Alex, what's going on?

Hey. Good afternoon. Thanks for having me. I think I'm scrapping my whole idea and doing what Paul's doing.

Yeah. Sign me up.

Maybe we all should.

Yeah. So, me and my wife, we just actually just had our first child. He's about a month old now.

Congratulations.

Lots of fun. We're getting tons of sleep. It's great. We're looking to potentially sell one of our, I guess, our only rental property and put that towards the mortgage. And I'm also kind of curious about how and when to start saving for college and what a good dollar value target might be.

Okay. Do you have any other debt other than the rental property mortgage and your primary mortgage?

So we have about $28,000 in savings. And I have a $4,000 0% financed loan for some AC units that we had to get because I was broke in the summer last year.

Okay.

But aside from that, there's no debt except for a mortgage. We paid off our student loans.

Awesome.

And the condo is fully paid for.

So what would you net from the rental property if you sold it?

So I guess that's part of the question too, is I don't know how capital gains taxes work, but we paid off the property for $70,000 was the initial mortgage. And based on Zillow, we're looking at maybe, like, 140 for comps.

Okay, that's what you would sell it for. And it's paid off.

It's paid off, yes. And we would look to sell it for around probably 140.

Okay, so let's say you walked away with 110 or something like that. What's left on your primary mortgage?

So our primary residence mortgage, we owe $150,000.

Okay, nice. That gets you guys down a lot.

I would pay off this $4,000 0% loan today. That brings your savings to 24. That probably is still a full emergency fund for you guys. Sell the rental, apply it to your primary mortgage, and that'll knock it down to, what, maybe 40, 30 grand left on the primary.

Yes.

And it sounds like you want to get out of the rental game anyways right now.

Not necessarily, but we're just kind of thinking in terms of saving for college and whether or not it's worth having that passive income while still sitting on our primary home mortgage.

Yeah. If you go through with all this, you got the emergency fund. Invest 15%. Any money beyond that, let's start throwing into a 529 plan ESA and saving up for college, man.

Okay.

I like your plan. Look at that. What an exciting time.

So great.

The kids are priority over the rental. There's always going to be another rental, but the kids only get to grow up once.

That's right.

I love it. This is the Ramsay show.

Hey, you've been listening to the show. Now it's time to start doing no more excuses. Join me and the rest of the Ramsay personalities for the total money makeover. Weekend here in Nashville on May 10 and 11th, get a crash course in everything we teach about money, including budgeting, beating debt, investing and more. In just one weekend, you'll leave with a plan to put it all into action. It's game on, baby. Early bird tickets start at $99, so don't wait. Go to ramsaysolutions.com weekend.

Welcome back to the Ramsay show. I'm George Camel, joined by Rachel Cruz. Open phones at triple 825-5225 we're pumped about a brand new event coming this May, May 10 and 11th right here in Nashville. It's called total money makeover Weekend, and the lineup includes all of the Ramsay personalities, including Dave Ramsay, including Rachel Cruz, Dr. John Deloney, Ken Coleman, Jade Warshaw and me. I'm George. And in just one weekend, you're going to get a crash course on everything we teach about money. And this is brand new content. Of course we're going to play the hits. You're going to hear about budgeting and beating debt and investing. But we're changing things up. This is going to be a very different event, very interactive, live Q and A's. So no matter what baby step you're on, this will light a fire under your butt to keep going, to keep making progress. And with the first 500 tickets sold, you're going to get a copy of the total money makeover signed by Dave himself. So don't wait. These will go fast. And the early bird tickets are just $99 for a limited time, so get them now because the price will go up.

Ramsaysolutions.com events start preparing for your trip in May to see us in Nashville. All right, Rachel, I got this article here from producer James, and it gives me hope for the future.

We love hope.

We could use some of that during an election year.

What is the hope, George?

Here's the headline. It's pretty nerdy, but 401K millionaires in average balances rose in 2023. Fidelity says.

Oh, well, that's a good thing.

So retirement account balances, which took a sharp nosedive in 2022 due to market volatility, have now started to bounce back. Look at that. According to the latest data from fidelity, so the average four and 101k balance ended 2023, up 14% from a year earlier to $118,600. And the average individual retirement account, the iras also gained 12% year over year to 116 grand. So this is very comforting.

Yeah, that is great, because we talked about retirement in another hour and it was not as well.

People aren't saving.

People aren't doing it. The ones that aren't saving are winning, which is great. And that's the thing with the market, too. We looked at our numbers and, yeah, 2022 was like. And then 23 went, okay, we're back.

So this is exciting. So, at the end of 2023, the article says, signs that inflation was cooling were not only good news for the economy, but also good news for stocks. After the S and P 500 closed out 2023 with a nine week win streak, the number of fidelity balance of a million or more increased 20%.

Oh, my gosh.

In the third quarter. So there's 20% more 401K millionaires than there was, thanks to just riding the wave of the stock market.

Yeah, this is exciting. Yeah, this is a quote. These are the poster children of staying the course and taking a long term approach.

That's what we say investing in the stock market, it's a roller coaster. And if you don't jump off early, you won't get hurt, and you'll be blessed with a fun ride, because here's what you see with the stock market. It goes down, but then it goes up, but then it goes down, then it goes up, but over time, it moves up and to the right, which is what we like to see. That's the power of compound growth.

That's right.

That basket of stocks in that mutual fund, well, each of those shares grew in value, and that made your nest egg grow.

And then fear comes into play, George.

Well, if you look at the headlines.

News and all, everything, and people are like, oh, my gosh, the world's ending. We got to get out of here. And people cash out. We saw that happen a lot.

People pulled out.

Yeah, it was not good.

Which is the worst time to pull out when the stock market is dipping like that. And so you got to stay the course. Do not pull money out. Don't do these 401K loans, don't do the early withdrawals. Stay the course and you will be blessed with a solid return and a great nest egg. That's comforting. All right, let's go to the phones. Brian joins us in Manchester, New Hampshire. What's going on, Brian?

Hey, this is really exciting. Thanks for taking my call.

Sure.

Like I'm talking to the perfect people.

Wow. I'll let Ken Coleman know as soon as we're done. He's going to love that. Please do.

How can I help the money guy? And I've got a mother's heart, so.

That'S good here together.

Very stark difference from Paul from Orlando earlier in the segment here, but I am 31 years old, married to a beautiful gal. We've got four children, five and under.

Wow.

I know. So it's joyful chaos. And so our only very large debt is my student loan debt for 162,000, as it stands.

Right. Okay. What do you get your degree in?

So, I'm an orthopedic physician assistant.

Okay, cool.

What do you make?

Last year, I grossed 127.

Okay, so we have a house with a mortgage.

The mortgage and property taxes together is a monthly $1,500. And then we don't have credit card debt. We just sent the last $1,000 check to pay off my wife's car.

Nice. Congratulations. Congrats.

Thank you. We don't have credit card debt or anything. So my question really is, to your point, right before the break, was kids only get one childhood. And so, with this huge debt, we are trying to figure out the fastest.

Way to get out of that debt.

And so my wife is very fearful about the idea of selling our house and going into an apartment with our four kids. But doing that, we would have enough. If we sold it today, we'd probably make about 200 off of it. So it's a question of, do we.

Just do that, stroke a check, pay.

Off our student loan debt, and then go save for a house? Or do we spend, like, three years really working hard, putting money away in a high yield savings account, and then three years later, have about sell our current home and just reap the benefits.

From it, then I don't know that you need to get out of this house. It doesn't seem like it's on fire. Why not just pay off the student loans and stay in this house?

So, my only question about that was, I did some math, and we've probably got a $3,000 or so margin. If we really try to put every penny we can towards this. And what I'm thinking about is, if we do that, it takes about seven years or so to pay off my student loans, where if we just save in a high yield savings account for, like, three years, we'd have enough for a down payment on a slightly larger house and be able to sell this current house and then stroke a check and pay off my student loans all in one swoop.

So you have three grand of margin right now.

So, I've got three grand of margin right now with the every dollar app, we're looking at it. I've only been listening to you guys religiously for about two months.

Okay, so that's four and a half years at the current track, right? 36 grand a year, four and a half years, that's 162.

And that's margin after everything is paid. Right. Food, like after you budget out your life, right. That's what's left.

Exactly. Yeah, that's what's left.

If we really scrounge, 2500 is probably a little more reasonable with birthdays and all that stuff for the kids.

And your wife is at home with the kids?

My wife's a stay home mom.

Yeah.

What does extra work look like for you, Brian? And where you work? Is there some opportunities to do some overtime? Yeah.

So I'm in the middle of nowhere, roughly. It says Manchester, but I'm quite a ways out from there. And so the place I work is really the only game in town. But I take first call, so I get sort of an hourly rate if I'm called into the building for any reason. And so my ability to work more is really just sort of taking more call. And my wife and I talked about it and we're okay with me taking extra weeknights because it wouldn't really interrupt our life too much if our kids are sleeping anyway. So my plan is to try to increase that a little bit and try to bring home a little bit more by taking a little bit more weeknight call and try to creep on this.

Yeah, for sure. That's what I would do. Yeah. The house. I know you guys want to move eventually, but I wouldn't budge with the house right now. I mean, the housing market is just insane. If you're in a spot that you're like, okay, we can at least the.

Mortgage is killing you guys. If it was like a $4,000 mortgage, I'd say, yeah, sell it. But the mortgage isn't the problem.

We're not house poor.

Yeah, you need to make more money. You put $4,500 for years.

And don't worry about your kids, they're going to be fine.

I don't remember anything before, like eight or nine.

Yeah, dad is loving them. Well, he's going to be working hard. They're not going to live on a lot, and they're going to have fun. They want you guys. That's what they want in life, not a bunch of crap. They want you guys. So don't worry about your kids. You're setting a great example for them.

Thanks for the call, Brian. This is the Ramsey show.

Hey, guys, are you ready for the secret to help you reach those money goals that you've been dreaming about?

It's simple.

You gotta get on a budget. With our budgeting app everydollar. You'll get intentional with your money and build the habits that will make those dreams a reality. And we'll be with you every step of the way from your first budget to that retirement home on the beach. Download every dollar for free on the App Store or Google Play. Remember today, download every dollar for free on the App Store or Google Play today.

Welcome back to the Ramsay show. I'm George Camel, joined by Rachel Cruz. Open phones at triple 825-5225 this is your friendly reminder that you can come watch the show live. We are behind the glass like zoo animals, and there's some lovely people who traveled from all over the world to be here. We got Canada. We got a newlywed couple who just.

Got married yesterday, and they're hanging out with us.

They're choosing to honeymoon with us. Thank you, guys. So come visit us. We got free coffee and baked goods and a mug. And the show is free. Of course, you don't have to make an appointment, but you can always let us know you're coming@ramseysolutions.com. And our team will let you know who's on the schedule.

The schedule.

In case you're hoping to see your favorite Disney character, John Deloney, we'll sometimes get the.

Oh, we thought Dave was going to be here.

Oh, yeah, just us. I'll be honest. One time a debt free screamer was here, and they thought it was gonna be Dave. We had let them know it wasn't. It was me and John.

Oh, no, there were tears.

There were tears. It was like going to Disney World and like, oh, yeah.

No, but Mickey Mouse.

Mickey Mouse isn't out.

Nowhere to be found.

The princesses, they're busy today. And you're just in tears and you're.

Stuck with the mediocre. Like, I think we don't really know.

Who they are eventually.

Oh, man. That makes you feel good, George.

Yeah, that's fine.

Really making a difference.

Thank you. All right, Benjamin's on the line in Houston, and I'm sure he's happy to talk to us. How are you doing, Benjamin?

Howdio. Happy Friday.

You too. How can we help?

Well, a little backstory. I've got $71,000 in debt paid off. Good news. Paid off. Now, as of the new year, 60 of that was student loans. 11,000 was stupid credit cards and stuff. Anyways, I've got a matched four hundred and one k. Eight percent. Five hundred dollars a month in Roth Ira. I'm budgeting for this year to have $30,000 in savings and I currently have a $35,000 emergency fund. So the next step, I'm single. I'm 30 years old. The next step would be pay off mortgage. However, I'm currently a renter. I rent $20,000 a year. And so it makes sense to get into a mortgage or at least a house. But financially, I've been working with the realtor and really digging into these numbers and I'm confused at what makes sense financially. Of course, the realtor is pushing me to get into a house, but with the interest rates and everything, a $250,000 house in Houston is going to cost me $500,000 after 30 years.

You're a good number cruncher, Benjamin. What do you do for work?

Yeah, I've been thinking about this for a while. Obviously a couple of years going through this with you guys. I really appreciate the help. So I'm in training and education for a vehicle manufacturer. Cool. So on the road 160 days a year. So even to think about a house, I'm only there half a year. But anyways, it's hard to find a.

Mate when you're on the road half the year, too. That's pretty intense.

Yeah.

George's dating. Dating advice that you didn't ask for.

Benjamin, this is the start. You said you're how old?

I'm 30.

30? Okay.

Yeah, a little late start. I graduated in 2020.

Hey, it's all good. You're doing great, man.

Yeah.

So you've got 30,000 in savings apart from the emergency fund. So let's call that your down payment fund. You'll have that by the end of the year.

I'm budgeting for 30,000. So by the end of the year I'll have 30,000, but I have 35 currently in savings from emergency fund.

Okay.

So I would set a very specific goal and go, all right, the house I want to get is $250,000. Is that a reasonable amount?

Yeah, that's the new construction. 1500 square foot? Yeah, it's reasonable.

Okay. And what's your take home pay every month?

Well, I kind of budget weirdly. I only pretend I make $5,000 a month, but I've got 25, 50 going into savings. 1000 of that is out of that.

$5,000, what hits your bank account in a given month?

So I have 5000 going to my checking and then I have 1200 going into a high yield savings account. And then I get a $6,000 bonus a year.

Okay, a year. So let's call it $6,500 take home pay okay, so with our parameters of kind of 25% of your take home pay, and you can even factor that in after taxes, but before other deductions like health care or investing, that will help your numbers out with that 25% parameter.

Right.

And so if you said, let's call that 7025% 1750, so that becomes our new goal. Can we get a mortgage? That's 1750 for the principal interest, taxes and insurance. And now that helps us dictate the down payment goal.

Yeah. So that would make a bigger down payment for sure, which is doable.

So that means you might need 100 down on a 250 on a 15 year to get you there. And that might take, you said you have 30 by the end of the year. The next year, could you bump that up and have 75 or 100 if you worked your tail.

Mean. Yeah, I would have to probably get a side job for that. But that's not out of the question. I think Dave says gazelle intensity and I've definitely adapted that mentality. So a side job isn't out of the, um.

Well, I'm just thinking by the end of next year, you'll have six figures.

Ready to put down.

Unless there's a rush to get into a home, I'm going to just stay where I'm at and do this the peaceful way.

Yeah, and that's kind of what I was considering. The question is a mortgage necessary? Or what if I took six years or seven years and paid for a cash and house? I'm sorry, paid for a house in cash. What is the good reason to get into a mortgage without paying cash?

Well, there's not a good reason to get a mortgage, but I would say if your timeline is six years, the problem with housing is that we know it's going to go up in value. And so what I don't want is you have this moving target where, oh, my gosh, I saved 200,000, but now the home is 300 and I save another 100. Now the home is 350. And so that's my worry, Rachel, when it comes to saving up cash over a long period of time.

Yeah. And long term renting, you're just not building equity anywhere. So the idea that saving and paying cash for a house is, I mean, that's an awesome goal. You could totally do that.

If you could do that in two or three years, I would say that's.

A good shorter amounts. Totally. Yeah. But I would give myself like a good two years. And this has now kind of just changed at this point. But I was even thinking for your emergency fund, if you needed to take ten grand out of that, because you could be on the three month side. I mean, you're single. No one's dependent upon your income. So even your emergency funds, if you needed to take a little bit out. But at that point, as we're talking, it's just ten grand.

And are you investing more than 15% right now, when you add it all up, of your gross household income, it's right at about.

For my retirement.

Yeah. Out of your income, how much are you investing?

It's right at about 15. So I got 8% match with my company, and then I'm doing 500 a month in Roth.

But the 8%, regardless of the 8%, are you investing 15%?

Yeah. That's not including the match.

Okay, cool. And another option. Some people do this for a temporary amount of time. You can pause that investment to save up the down payment faster. But with your plan, I don't feel a huge sense of urgency. I know you want to be a homeowner, but I also love the idea that you have a great savings muscle. And so I would try to keep investing 15% and get a side hustle to make up the difference to hit my down payment goal. And who knows? Maybe interest rates will go down. And that's going to help.

You going to say, it could be another world sooner? Yeah, another world in two years. Who knows?

It does seem to move pretty fast, so, yeah, we'll see. I really appreciate that. It's just the $20,000 a year in rent. I think that's where the urgency is going.

I don't want you to feel this pain. I know it stinks because, like, oh, I could be using this toward a house. But home ownership can be a blessing when done the right way. But we've seen it where it's a burden, and you have a lot of extra expenses when you're a homeowner. And so I'm seeing renting as buying patience right now, and I'm okay to write that check every month for the cost of patience.

Hey, I appreciate that. Thank you so much.

Absolutely. Thanks for the call.

Good job. Benjamin.

Got a great head on his shoulders. Rachel. I like Benjamin.

I know.

Very.

Just calm, cool, collected, versus. I got to get a house. I got to get a yes.

Yeah. And when you look at the numbers, that's always. What kind of is the guiding principle? Because our emotions and our feelings can guide us, and not Always, and a.

Real estate agent's excitement can guide us. And then you go to the bank.

Like a residential agent. Just all the joy and excitement about housing.

They're very intense. And happy to help you get into that home of your dreams.

Yes.

And then the banks, they're happy to loan you way more than should be legal. Wow. I got pre approved for half a million dollars. Doesn't mean you should take out a half million dollar mortgage.

I know.

So that's why I like the 25% parameter. I know people look at us, Rachel, like, these people are crazy. What world are they living in? Well, the math hasn't changed. It's just going to be harder. You have to save up more down payment. You have to move further out. You got to go for the condo instead of the single family home. So this is just a hard part of being an adult, is if you got to make adult decisions. And I want this to be a long term, peaceful decision, not the next call in the Ramsay show, where they call in going, should we sell the house? We bid off more than we could chew. Don't let that be you. This is the Ramsay show, our scripture of the day. Psalms 37 21. The wicked borrows, but does not pay back. But the righteous is generous and gives. Benjamin Franklin said, creditors have better memories than debtors. Some old school financial wisdom. Yeah, Ben Franklin, he was doing well for himself. The teeth, the leg. I don't know what else he had. I don't know what else he had going on, but he could afford.

Don't.

Did he have wooden teeth or something?

George Washington. Oh, George Washington.

Guys, I'm not a historian. Listen, I'm not a geographer.

I hate to call you out, George.

What'd you hear?

Don't kill me. But that you didn't know who Margaret Thatcher was. Oh, yeah, Ken told me that, and I thought, oh, no, George the iron lady.

I didn't know. This is stuff. Well, then Ken called me out for not knowing what a chain gang is in football, I was like, why would.

I don't know what that is.

Thank you. And, you know, football, sort of. I'm like, guys, I was busy. I don't know, having a life.

Is that a thing? That is.

It's the people who move the giant markers.

Oh, but they call them a chang gang.

They had to have a cool name because it's not a very cool job. I don't know, guys. This is why I stick to money questions. I embarrass myself when I talk about historians and politicians and sports. I stay away from it all. I'll leave that to Ken Cole.

Well, the latest fact, history wise, then we'll get to the phones.

But Picasso.

Yes. Found out he died in 1972. Died in 1973.

And Rachel is like, I thought he.

Was with Leonardo da Vinci. I thought he's part of the Renaissance. Had no idea.

Wow.

He just died in the 70s, Picasso. I was like, what? I thought all those guys were back.

With, listen, I got chapel.

I don't know. I don't know.

I'll just google it if I need to know it. But until then, it doesn't sit in my brain. Sorry.

In the 70s, Picasso. I mean, crazy. Anyway, that's my fact. That just blew my mind.

All right, timeless. Timeless. All right, let's get to the phones. We're better served there, Rachel, than talking.

About anything about 401 ks.

Let's see if we can help Timothy in Los Angeles. What's going on, Timothy?

Hey, guys. Can you hear me?

Yes, loud and clear.

Okay, awesome. Well, I try to describe my situation. I got out of college in 2021 and just got married. And I had my associates went to work for the past two years, and I'm currently making $20 an hour. It comes out to about, like, 37 grand a year after taxes and everything. We have a one year old daughter, and we didn't really have any debt. But then my wife's car broke down, and we decided to buy her a car last year. It was, like, $20,000 cash value. And then that car broke down, and our warranty covered us to get a brand new engine on it. So we had that. And then I decided to start a business last July. And I'm generating through that business in profit. I'm bringing in about half of my income that I make at my day job. Now, we did have about eight grand in debt because of that, starting the whole business and everything. And then we just used our taxes to pay that back substantially. So now we only have about two grand in debt total. Yeah. Besides the car. The car is, like. We still have, like, $20,000 in the car.

You have the only income in the family right now?

Yes. My wife's a stay at home mom. And the final thing was, I was planning on going back to college this fall. And I get financial aid, so it'll probably be just as much as I'm making on my day job. But the only thing is, we just got news, and we're expecting twins.

Whoa.

Congratulations.

Thank you.

Wow. A lot going on here.

Yeah, this is the thing. We live in a small studio in the back house of her mother's house. So it's already me, her, and our one year old daughter. Now we're expecting twins. And previously we were pre qualified to get a house. We actually live in Bakersfield. We were pre qualified to get a house for about 150,000. But now with the car, we don't even know what we're going to do.

Do you have any money in savings?

We have nothing. We just started budgeting. I just started getting plugged in with the Ramsey show about two weeks ago, three weeks ago.

Well, there's an order for you to become a homeowner, and it's when you're debt free with a fully funded emergency fund of three to six months of expenses and you have a solid down payment. But until then, I'm not going to.

Get paying rent right now, Timothy. Or are you?

We're living there for free.

Okay.

The big question is, can you afford to continue living in California off a $40,000 salary?

Well, I'm not sure. Like I said, I live in Bakersfield, so it's a little bit lower living expenses in LA.

But what would it cost you to go rent somewhere that could fit your family right now with the twins?

Well, small would be like $800 a month, and then a little bit bigger would be somewhere along to $1,300 a month.

This business you started, so you made 14,000 last year because you made half of what you make normally.

Yes. Well, actually, I just started last July, so now I'm averaging about $400 in sales a week. And take home is $300 a week.

Okay.

After input and all that stuff.

Okay.

It's about 15 grand in take home from this business.

Yeah.

Do you see it growing substantially?

It is. Okay.

It's scaling really fast.

So the reality, Timothy, I think, is you're going to have two jobs. You're going to have this job that you're growing, which is awesome. And hopefully it just skyrockets. I mean, that would be the hope. And your day job. And you're going to be working both of those, I think, for a period of time until the car is paid off and this $2,000 loan until you guys get a good emergency fund. Well, no, you know what? There's twins in the picture, so we're pausing everything. So, honestly, I would just stockpile cash at this point until the babies are here. And it's probably a high. Is it twins, high risk? Yeah. So all that to say, I would just be saving a crap ton and once I would just be putting so much away, honestly, that's going to be your best bet right now. And then once the twins are here, and everyone's good. Then I would look at paying off this $2,000 business loan. Paying off the car.

I mean, the car is a lot of your world.

Yeah.

How much is the car worth?

Well, see, it was $20,000 cash value, right. Well, the engine busted, and they put a brand new right off the assembly line, a revised version of the engine, and it was about $17,000 engine. Yeah. But I went to go see, I did an online little quote, and it only came out to, like, ten grand or something. So I don't know if I did it wrong or maybe we should actually go into a dealer, but to see what the price should be. But after all that, my wife and I were willing to do what it takes to sell a car. But we're like, is it a quality.

Reliable car for the family and it fits all the kids.

Yeah, it's a nice car. It's a jeep grand Cherokee Eco diesel, and it's a really nice car.

Okay. Well, for now, I would work to just pay that off in the debt. Snowball, once the twins are here, get the emergency fund in place, then you can think about going back to school and making sure you can cash flow that. But I don't think now is the time.

No.

Do you think that if I were able to grow the business, because I grow, sell, and deliver microgreens, so I'm only spending about 12 hours a week doing.

You're saying if I did this full time, it could replace my income?

Yes.

That kind of thing. Right now situation, it feels risky. You can get the boat close to the dock later on, and you're like, oh, my goodness. I could totally see how if I did this full time, I could make more than I'm making in my. Because right now, you're making your full time salary plus the side money. If you jump to the side stuff, you're just going to replace your original income.

Yeah, that's true.

You're still better off right now financially with your situation. And I would work to go rent a place. Really? Your goal is, can I make $6,200, take home to afford the $1,300 a month in rent? And I would make the jump to go rent at that place.

Okay.

Hope that helps. Timothy, you got the road ahead of you, man. The twins alone on top of the one year old. It's about to be a party. So wishing you guys the best in that also. What a sweet blessing. That's exciting. That puts this hour of the Ramsey show in the books. I'm George Camel, joined by Rachel Cruz this hour. Thank you to all the folks in the booth keeping the show going this hour. And you, America, will be back before you know it.

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