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 Ramsey personality, George Campbell, joined by the one and only, Rachel Cruz. We are here for you, America, taking your calls at 888-825-5225. It is Smart Money Happy Hour Ramsey Show edition, so we're going to try to have fun if the booth folk will let us. We'll see how it goes. If we're allowed. Renee kicks us off in Charlotte, North Carolina. Renee, welcome to the show.

Hi. Thank you for taking my call.

Absolutely. How can we help?

I just first want to say that you both are brilliant educators, so I'm so glad that I can ask you my question.

Oh, thank you.

I have a PhD. I tried the professorship world and have left and now am consulting. This is my first full year in consulting, and It looks like I'm going to bring in after taxes about 100,000, so I'm pretty excited about that.

Awesome. Good for you.

Thank you. My boyfriend and I have been together for four years. He finished a master's last year, and we're talking about getting married, but I do not have good feelings about taking on his debt, and I was hoping that we could talk about that a little bit.

Yeah.

How much debt does he have?

He took out student loans for his master's program. He has 36, 37,000 dollars. Part of it is that I thought he was taking out a $10,000 loan.

Did he tell you that?

He did.

Yes. So is this more about the fact that he lied to you or the debt amount itself?

The debt amount itself really scares me. I took out a very small loan to get through my PhD. I paid it off the minute I had enough money to, I lived way below my means.

So you have no debt right now?

I have zero debt.

Way to go.

What's his feeling on debt in general, Renee? Does he want to live debt-free as well, but he just took out these loans? Is he like, I got to pay them back, or is he apathetic about it?

He does. I've introduced him to your work. He It doesn't really love that. We've talked about Gazelle Intensity, which was a sticking point for him a little bit. Then it also seemed like, Well, you're bringing in so much money. We He's not going to have to do that. His income right now is about 55.

Okay. Yeah. So for me, Renee, what I would look for, because George and I both are married, and I can tell you, I'm looking for perfection. And when you get married to another human being, they're going to be bringing flaws with them into the marriage, as do I bring in flaws to the marriage, vice versa. So we know going into this type of relationship that we're not going to be perfect, right? So we're not looking for perfection here, but we are looking for a similar mindset, similar value system in which we make decisions. And you can put that on any category of life. But we talk about money the most on this show. So this is through the lens money. So I would want to make sure that the value system at which we make decisions as a family going forward is similar. If it's not, it's just going to cause a lot of tension and a lot of conflict. So it is an easier path when you say, Hey, we see this together. So for him, if he's like, Yeah, I don't want to live with debt either. I do want to live below my means.

I want to be wise with my money. But I did take out $36,000 in debt. To me, I'm like, Okay, I can reconcile those two things because going forward, I know that we're going to be on similar paths. We're going to on a similar path. But I am accepting this imperfect person into my life, including his imperfect money situation, and including you, Renee, right? Your imperfections as well going in. So I don't know if that makes sense, but for me, it's more about moving forward and saying, Hey, are we on the same page moving forward? And if we are, I accept all of you. And that includes maybe the mistakes that you made when it came to getting out of debt. But I'm choosing to stand before God and our family and our friends and choose to commit my life to you, and that means every part of you. That includes, even for me, the 36,000 that we'll work towards paying off. That's my perspective. I don't know.

I think the summary of that is the red flag is not that he has debt. The red flag is that he doesn't care to pay this off. That's the part I would really dig into with him, because if the tables were turned and you had 36,000, that he had no debt, you would hope that he would still go, All right, cool. We'll tack this when we're married and it'll be fine. That's the mentality to have because long term, having a partner and having that spouse is the second greatest wealth building tool that exists outside of your income we talk about. It is an exponential wealth builder. When two people come together with two incomes like you guys have, you're going to build wealth so fast, and you're going to knock out this debt so fast. Making 155, let's say he doesn't get a raise by the time you're married, you can knock out 36 grand making 155 really quickly. Way less than a year. I'm not concerned about that. I'm more concerned about what does the next 30 years look like for your marriage.

And remember this, too, Renee. In the relationship, there's always going to be a nerd and a free spirit, and there will always be a level of tension with that. George in his marriage is the nerd. Yes, I'm a funny daddy. When he's the free spirit. I'm the free spirit in my marriage. Winston, my husband, is the nerd. We will always combat the idea that we're not putting more in investments and we're spending in Winston's head, maybe some crazy number on a fall break trip with the kids. But for me, I'm like, But that's what I love, too. So there will always be a level of one that wants to be more hardcore and one that's going to be the saver and be the budgeter. And it's probably going to be you, Renee. I mean, honestly, That will probably be your tendency. And he may just be more of the free spirit, and that's okay, too. But again, as long as you guys can make decisions as a couple through the same lens, that, I think, just allows a marriage to thrive better than when you're trying to make decisions out of two different lenses through everything in life and trying to be these two different people.

Does that make sense?

Yeah.

What's his knowledge with the Ramsey plan and the Ramsey way?

I guess the last couple of weeks have been his first foray into it. He's new. He's seen the books on my bookshelf, but he's not touched- Is he a reader or does he prefer to watch things? He's a reader. Yeah.

Okay. Well, I'm going to send you a copy of Breaking Free from Broke. I think that's going to put a pep in his step to go, Oh, my gosh, this debt is disgusting me. I want to get out now. Another step that you guys should take for premarital counseling is going through Financial Peace University. I'm going to gift you both of those things, my book as well as FPU. If you tell me, he's going to go through it. Because I think sometimes it just takes a little bit of knowledge and dipping your foot in the water to go, Oh, I get what she's talking about now. Dave will turn from a cussword in the house to an exciting plan that you guys can go on together.

Yeah, I think he would like that. He likes things explained to him clearly.

Well, I make it fun as well. So hang on the line, Renee. We're going to send you a copy of Breaking Free from Broke and FPU Watch all nine lessons with them. Have them read the book, go through it together, and I think that will squelch some of the fears that you have.

But this is- And congratulations. Yes.

It's exciting. This is considered this an early wedding gift. I hope it all works out. And call us when you're debt-free, and this is just a memory. More of your calls coming up, 888-825-5225. This is The Ramsey Show. If current times have shown us anything, it's that everyone who has a family counting on them needs term life insurance. For over 25 years, the only insurance company I've recommended is Xander Insurance. Not only do they search all the top term life plans to find you the best rates, but you can now apply completely touchless over the phone or the internet.

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Go to zander. Com or call 800-356-42-82. Welcome back to The Ramsey Show. I'm George Campbell, joined by Rachel Cruz. We get a lot of questions about taxes, and we get it. Taxes can be very confusing. To help you get a better handle on it, let's unpack a question one of our listeners, and this is a common one. What is the difference between a tax deduction and a tax credit? Rachel, I recently asked people on the streets of Nashville about this on Broadway if they knew the difference, and it was hilarious. Credit is like, that's money you owe. That's a debt. I was like, no, okay, buddy. Okay, let's break it down. Here's the spark notes for you guys. A tax credit cuts your tax bill dollar for dollar. If you owe $1,000 in taxes, a $500 credit will slash your bill down to $500. A tax deduction, on the other hand, lowers your tax bill by lowering your taxable income. You would subtract the deduction from your income, and that less taxable income means less taxes owed. Deductions reduce how much of your income is taxed. Credits reduce the actual tax bill on the back-end.

That's how I like to think about it. Dedeuctions on the front-end, and the IRS says, You didn't actually make that much, thanks to this deduction. The credit is an actual discount off the total bill. Hope that helps. There you go. If you're confident about filing on your own, go check out ramseysmarttax@ramseysolutions. Com/tax. That's no nonsense tax software, low upfront pricing, no hidden fees. It might be time to switch from furbo wax, as I like to call it, Rachel. Okay. We'll throw them under the bus. A lot of people have been messaging me saying, I've used it for the first time or this is my third year, and it was a breeze to use Ramsey Smarttax.

Yeah, it's great. It's awesome.

If your situation is a little more complex, You can always check out our tax pro that we trust to help you out who's Ramsey trusted. Just go to ramseysolutions. Com/tax. Dante is up next in Detroit. Dante, welcome to The Ramsey Show.

Hello. Hey.

What's happening?

It's going all right.

Lay it out for us. What's your question today? Are you okay?

Yeah. Just a little bit nervous.

I know you're doing great.

It's just us, Dante.

So I got $90,000 total in debt, most of it student loans. I have $17,000 left on my card, and then about $10,000 in credit card debt.

And the rest of student loans, that's what makes up the 90?

Yeah.

Okay, cool. And what's your question?

Well, I'm only 25 years old, and I got almost Almost $400 a month car payment, and I only make 32,000 a year working at Sam's Club right now.

Are you working full-time?

Yeah, I am full-time.

What was your degree in?

Criminal justice.

Okay. Are you not pursuing that or field in that? Would you want to be a police officer or what?

Well, I just have a few more classes, and I'm done.

Okay.

You're still in school? I I took some math classes at the end just to challenge myself, and, well, I didn't go very well. Then had to drop those, and then I still have a few more to finish. But I'm considering police. I have applied to police departments, but I'm also licensed real estate agent.

You are licensed?

Almost. I have to take the test in Michigan, and then I'd be a real estate agent.

Which path are you leaning towards?

Well, more so the real estate, but I'd like to also… If I I pursue a career in criminal justice, whether it's police or I would like to have another income, which could be real estate.

Okay. Got you.

But obviously, I'd like to get the debt out of the way. Yeah.

Totally. Dante, have you, Kelly Blue, booked your car by chance. Do you know how much you could sell it for?

Yeah. Well, it's about 11,000. Okay. So quite a bit of negative in there.

Yeah. So you're underwater.

Is that private party value? Or is that dealership? Like, trading value? Because it's a big difference.

Yeah. I think private party was maybe 15 on the high side. Okay.

Do you have anything in savings?

I did, but I don't anymore.

Okay. You spent it on bills?

Yeah.

Are you living on your own?

Yeah, I moved out in September. My rent isn't really bad, so it's good.

Okay. Is it a one bedroom?

It's actually a two bedroom. I have a roommate.

Oh, you do have a roommate. Okay. I was going to suggest that to see Basically, what we're trying to figure out here, Dante, is how much margin can we create by spending less and making more. Right now, you just need more income. You've got a big hole of that 90,000 in debt. One angle we're looking at is sell the car, free up that payment. You would obviously need a much cheaper car to be driving around for now. The other side is we need to get your income up ASAP. And so as soon as you're done with school, you might need to get a different job, a second job, a better job in order to start to make headway on this debt.

Yeah.

Yeah, Dante, I feel like for you, it feels a little bit just scattered, right? I just feel like you have a lot of things going on. You have all this debt, You're stressed about it. You're worried about your income, and again, your career path. I'm like, there's just a lot of things happening. So for you, what I would do is I think the money stress really is playing a part in this fog mentality, right? Of having to make a decision. And so I think there's just something to be said about, I mean, you are just full on. You're working five nights a week. You're working weekends. I mean, you go crazy just to allow some momentum to catch up with you, to be able to start knocking this stuff out. Because out of this, even these credit cards, $10,000 in credit card debt, how many credit cards is that? Four or five?

Yeah, at least. And honestly, a A few of those, they're my mom's. And although I don't even use the cards, but they show up on my credit report.

What do you mean they're your mom's?

To build credit, when I was younger, she had added me on there. Oh, wow.

Yeah.

On the account. So it shows up my name on the account, even though I don't have to use the card. Okay.

So I would talk to her and ask for your name to be removed. And what I for you to feel, Donte, it's just this like, drastic change in your life. It's almost just like you're going along and you're trying to manage everything that's going on. And I get it. There's a lot of avenues here and a lot of things happening in your life. And it's almost this, we call it shock the monkey. There's almost this burst of energy that you need that's going to radically shift some things. And you have to feel this level of complete change. And by complete change, call your mom, have that conversation, cut up the credit cards, tell Sam's Club, Hey, I'm working every night this week. Contact Uber or Lyft and say, I'm going to drive every Saturday, and maybe I'll sleep on Sundays, or maybe I'll pick up more shifts there. I mean, it's this idea that it's a complete different mindset, complete different habits than what you've been living in. Because it is true, when you continue to do the same thing over and over again, you're going to get the same result. And so what you have to do is completely shift the way you've been thinking.

And, Dante, honestly, I think part of that is getting rid of this car. I mean, you have a $17,000 loan making $32,000. I mean, that's more than half of your annual income. It's too much car. So my very first goal would be to save a couple of $1,000, buy a car, get rid of this one. If you have to take out a small loan, do it. But I would rather you free up that $400 car payment and have $1,000, $2,000 debt for the difference than $17,000 in a car. You know what I mean? But it's these radical changes that you haven't done yet. It's going to take this level of change to get a completely different result. And you can do it because, Dante, your situation, it's not hopeless. We talk to people every single day with the same situation and the number one quality that we find with people that go from where you are to actually becoming debt-free and winning with money and investing in the future and doing all of this as they believe they can. And so you have to have this belief that, I'm going to wake up tomorrow morning and I'm going to be a different Dante in how I handle money.

So stay on the line and Christian is going to pick up. And I'm going to give you George's book, Breaking Free from Broke. I'm giving away your books, George. So kind. And Total Money Makeover, which is just the playbook of the baby steps. But I really want you to start learning this stuff and doing it. You have to actually do this, Dante, and we believe you can. You can't wander.

You can easily We're into debt, Dante, but you can't wander out. You got to get some mojo here and do something about it. But we believe in you, man. Hang on the line. This is the Ramsey Show. How does an extra $1,200 in your bank account sound? Well, that's exactly what the US Concealed Carry Association is giving away. You can enter for your chance to win $1,200 by visiting uscca.

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Plus, get one of their most popular resources, the Concealed Carry and Family Defense Guide, 100% free. The guide helps you better protect yourself and your family. Inside, you'll learn ways to spot attackers before they strike, equipment and training basics, and a whole lot more. Claim yours and enter to win $1,200 by visiting uscca. Com/dave right now. Welcome back to The Ramsey Show. I'm George Campbell, joined by best-selling author, Rachel Cruz. We're taking your calls at 888-825-5225. You call in and we'll help you take the right next step with your money and your life. Mike is in DC up next. Mike, how are you doing today?

Hey, I'm doing great. Thanks. How are you?

Doing well. How can we help?

All All right. So around August last year, I finally decided to accept the fact that I found myself about, well, I'll just tell you, $11,660 in credit card debt. So I decided to put myself on a budget and start paying it off. I've made about $5,486 in payments toward that debt, which leads me about- Just about?

Was that exact? Wow.

Yeah, that was exact. Good. And then it leads me with exactly $6,173 in remaining debt to pay. Is that all of your debt? Yes.

Okay.

As I'm paying this off, I want to get more aggressive with it, but I'll be honest, I'm really a little worried about pulling money away from a recurring retirement and savings contributions to do it. I just wonder what's your perspective on Should I stop paying my 401k to get that debt paid down as aggressively as possible, or should I just continue on?

How old are you, Mike?

I'm 32. Okay.

What are you contributing right now to retirement?

I contribute about $300 a month towards it.

What percentage of your income is that?

I make 81,000 a year. So I guess, I don't know, back at the napkin math, I'd say that's probably like 6%.

You're saying 300 bucks a month?

300 bucks a pay period, so 600 bucks a month.

Okay, 600 bucks a month. Well, I'll tell you this much, that's not going to give you a great retirement anyways. And so our plan is to pause contributions to retirement so that when you get back to investing, you're investing 15 % consistently without fail for the next decade or two until you get your house paid off and then you can invest even more. And so that's the purpose of us telling people to pause a 401(k) is twofold. Number one, it actually frees up the 600 bucks a month that can now go toward the credit card, right?

Right.

Number two, it lights a fire under your butt to get out of debt faster because you desperately want to get back to investing, don't you? Yes. And the problem right now is you're a little bit comfortable. Like, yeah, you want to get out of debt, but you also I want to invest, and nothing's on fire. I like the fire that is created when you pause the investing. It tells your own body, this is serious. We need to get out of this debt ASAP because I want to build wealth and stop paying for the past. What is the debt of the interest rate on these credit cards?

Well, I actually was able to consolidate my debt into a zero % card. I had some high interest debt that already paid off. And the debt that remains is one single amount on a zero % card, and that zero % goes until March, next year.

Okay. So how quickly How quickly can you pay off if you pause investing, you got the extra 600 bucks back, you got six grand left on the credit card, you're making $81? How quickly can you pay this off if you do all of that?

Probably seven to eight months.

Let's call it six months. Okay. How would you like to be debt-free in six months? Do you have any money in savings?

Yes, I do. I've got three grand in a brokerage, 70 in retirement, and 1,500 in my emergency fund.

Okay. So you got 4,500 in liquid cash right now?

Yes.

Well, you could lower this, I mean, more than half today if you wanted to. If you wanted to keep a $1,000 emergency fund, and then throw the brokerage account and $500 that's in your emergency fund at this debt, then you're down to, you know- 2600 bucks? Yeah.

And if you pause investing, now you have an extra 600. This thing's done in like two or three months, dude.

It's done like really soon. And then just build your emergency fund back up for a few months and throw some cash in there to get that back up.

And then I would, yeah. By the end of the year, you'll be investing 15 %. Yeah. You'll have almost tripled your investing. Do you see the excitement that we have as to why this plan works?

Yes, I do. I think I just needed to hear somebody tell me it was okay because I'm just very wary of liquidating that extra cash, but I totally see what you're saying.

Yeah, and Mike, the reality is, too, people are like, Oh, $1,000 emergency fund. These Ramsey people are crazy. But here's the truth. If a larger emergency fund or a larger emergency comes up, usually you don't have to pay for that Not today. Usually, you can say, Okay, I have 2-3 weeks. I got to come up with some cash with my emergency fund and figure out how to pay this. You'll pause the debt snowball and figure it out. But the problem is that people try to do what you're doing, Mike, six different things at once, or they try to go and build up this big emergency fund before they get out of debt, and they never even get to getting out of debt because they spend so much time with just the savings portion to feel comfortable. And there's really never a number that you're like, Okay, now I feel good that I can go pay off debt. It's this idea immediately when When you become debt-free, what we say your largest wealth-building tool, it's your income. It all comes back to you. And it's an amazing thing. You say, Okay, all these credit cards are gone.

There's no bank in my life left. And now I get to decide what to do with my income. And you're able that much faster than to build up an emergency fund to three to six months of expenses, which is what we want you to do. We don't want you to stay at $1,000 forever. But for you, Mike, you're only going to stay there for two months, month and a half, right? I'm like, It'll be so that you're going to be fine.

Okay. All right. I think I know what I need to do. Booyah.

Another one bites the dust, Rachel. We did it. Mike's on the path. All right, let's see if we can help Jordan out in Boise up next. Jordan, what's happening?

Hi. So my wife and I, we've been married about six months, and we're just now starting Baby Step One. We're working towards getting $1,000 in the savings account. And we just feel really overwhelmed. So we had to move to Boise for my job, and the housing market is awful here. And we only have about $6,000 in student loans left, and then probably at about another $4,000 because of a medical emergency that happened with the ER.

Okay, so you got 10K in debt?

Tenk in debt, right. I separated those because we're not getting interest on the hospital. It's It's just a payment plan. Yeah, just this idea of once we get to that point, by the time we get to 20% down on a minimum of a $400,000 house, which is not… That's the lowest I've ever seen it in Boise.

It just seems impossible to buy a house.

Well, you're not going to buy a house now, Jordan. You guys are broke. You don't even have $1,000 in a savings. No. Exactly. I'm saying. It's going to be a few years. It's not 20% down payment. That's a suggested amount. You can go down to five for a first-time home buyer, so 5%. And by the time you guys do all of this, how much do you guys make a year?

Together, we make about 66,000 before taxes.

Okay. So yeah, by the time you guys pay off $10,000 of debt and get a fully-funded emergency fund of 3-6 months of expenses, it's going to be, I mean, 18, 24, 3 years until that happens. And honestly, Jordan, it's going to be a whole new world. We got an election year. Who Who knows what interest rates are going to do? We don't know what's going to be going on, but we would still stick with that at least 5% down idea. I just don't believe that the lowest house you can find is a $400,000 house in Boise. I don't believe that. Well, you know why? Because I live in Nashville, and it's the hottest market right now. And my husband, he just went and we were doing the investment real estate right now, and he got a great $200,000 house. It's a two bedroom, one bath. They're flipping it in a place outside of Nashville. I just don't believe the $400,000. I get that housing is expensive.

I debunked it, Rachel. I'm literally on realtor. Com right now. What do you got? There's at least 30 houses that are beautiful, three bedrooms, single family homes under $400. All right, Jordan, let's You can do this, man.

You sound a little like us when we get dramatic sometimes.

Just focus on one thing at a time.

It's never going to happen. It's going to happen, Jordan.

Get your income up and you'll get there.

Calm down. You've been married six months. You guys just be patient. In three years, it's a whole new world. Hopefully, there'll still be these wonderful houses in Boise that I'm looking at right now on George's computer.

It's not on the Constitution that newlyweds have to own a home. I hope that frees you, Jordan. Thanks for the call. This is The Ramsey Show. Guys, it's no secret that the real estate market is weird right now. So go with a mortgage company you can trust to have your back. Churchill Mortgage.

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Brentwood, Tennessee, 37027. Welcome back to The Ramsey Show. I'm George Campbell, joined by Rachel Cruz. If you're enjoying the show, Please consider subscribing, leaving a review wherever you're listening, hitting the Follow button, and sharing it with a friend. Just hit the little share button wherever you're listening and send it to someone who might need to hear this. We want to spread this message to as many people as possible, and you guys are the best marketing tool we have out there. So thank you so much to all of our faithful listeners. Aaron is up next on the line in Green Bay, Wisconsin. Aaron, welcome to the show.

Hey, thanks for checking my call.

Sure. How can Rachel and Can I help?

All right. So a little background. I'm 26. I'm currently on Baby Step 3. I'll be on Baby Step 2 when I marry some student loan debt.

Wonderful. She sounds lovely. She sounds wonderful.

She is. My question is car-related. I have three cars, two of which are with me currently, and one's at my parents' house. The one at my parents' house is a classic car that my dad and I restored about a decade ago, and it took us four years to do.

Oh, wow.

I'm wondering if I should sell it or keep it because it's probably worth around $50,000 Wow. It'll probably put me ahead financially about one and a half to two years. But emotionally, that would be somewhat difficult.

Yeah, for sure.

Looking for some wisdom on that.

How much debt does she have?

It'll be about $43,000.

$43,000. Okay. How much will you make total together once you're married?

I'm guessing $130.

You're thinking it would take you a year and a half to pay off the $43 with both of your income?

Well, I mean, if I had 50,000 in cash, I think that would save us, put us a year and a half to two ahead.

When will you get married?

It'll be October.

Okay.

Okay. How much does she make out of the 130?

I mean, she's in school right now. She'll be graduating this year. I'm guessing she's going to make around 50 to 60. Okay.

But she'll graduate in May and then get a job. Right. Okay. Well, she'll have four months as you guys are planning a wedding to be working towards this.

You know, I mean- And you have time, too, as well to just stack up as much cash as you can. So as soon as you get married, you could knock a lot of this out. Yeah.

What's the other car worth? Or what's the other car? You said, I have two cars at home. One is the classic car with your dad. What's the other one that you have?

Yeah. So I have a daily driver. It's worth about 4,000, maybe. And then a sports car worth about 10,000.

Which one do you enjoy more? The daily driver or the sports car?

The sports car.

I'd probably sell one. I would sell one of those.

I can't drive that in winter.

You what?

I can't drive the sports car in winter, so there's a- Oh, I got you.

Honestly, Aaron, I'd sell that one. Sell the 10,000 once you guys get married, and then Then with her working some of this, maybe you guys get it down to $25,000. Then I would keep the classic car and then just pay off the $25,000 because you guys make great money. I mean, you're to the point that you guys could do this quickly.

Right.

So that's what I would do. The classic car, I don't know why, it tugged in my heartstrings, George. I know. It's a father-son, four years.

Yeah, it's a big deal. What we tell people, Erin, just so you understand why you're not special here. We're not giving you a pass just because you're tugging at the heart brings. We tell people, if you can't get out of the debt within two years, it's probably wise to make a more drastic sacrifice to sell the car. So if you said, Hey, it's going to take us six years, and this could speed it up by a few years, and I go, Dude, sell the car. But in your situation, you guys are going to knock this out within the first year of your marriage. Between the money you have in the bank, between her income coming into the picture, you will knock this out faster than you think.

Right.

I wouldn't be too concerned about it. And then worst case, like Rachel said, if you're really done sacrificing, just sell the sports car. You can get another 10,000 sports car later on. It doesn't sound that special.

Right. You love cars, obviously.

I imagine for you, everything is sentimental.

Somewhat, yeah.

Yeah, that's what I would do, Aaron. I would sell the sports car before the $50,000. And you guys, how old are you guys?

I'm 26, and she is 24.

Yeah. So even the year-and-a-half idea that you're going to be ahead a year-and-a-half financially is true. But if it's to depart with something that you love so much, and the fact that you guys are going to be okay, you're fine. You guys are going to do this. You're going to pay it off. You have the time. You have the runway. So there's not an urgent rush. I mean, if you were having to retire, and you had to put some money in retirement, and you still had a mortgage, and you had debt. I mean, there are situations I would say, sell this car. It's just not one for me, personally.

I don't want you to resent her. Every time we look at her, I went, You're the reason. Oh, my gosh. Those student loans are the reason I lost that classic car.

His dad will probably be like, What? Yeah. This woman came in with all that student loan debt.

Well, you know what to do, Aaron. You got this, man.

Congratulations.

Ryan is up next in Dallas. How's it going, Ryan? Ryan, are you with us?

Yes, sorry. I've needed to.

We lost you. How can we help?

Quick question. So I have a 401(k) loan. I know it's shaking your heads already, but I'm working on- SMH.

No, we're good. You're okay. All right.

But I'm cranking through stuff. And so my question was, obviously, my 401(k) loan is through my employer, so it comes out of my paycheck automatically. With the debt snowball method, how am I supposed to make extra payments to that? Would it be a good idea to move that to a personal loan? One, to get the money back on 401(k) earning, and then two, be able to make more frequent payments on a personal loan as I get more occasional extra income, or should I just leave it be?

Well, you can pay back that 401(k) loan as quickly as you'd like.

Right. It was more of the administrative having to go through multiple steps every time to make a payment. So do I need to just save up a chunk and then go through the I work to add an additional payment?

Right now, is there a monthly payment that's due?

It comes automatically. So I get paid twice a month, and it automatically comes out of my paycheck and goes to that.

So How much is the 401(k) loan for?

It's right now at the $25,000.

Okay. And what do you make?

$125.

Good news. Okay. And this is your only debt?

Now I have one other. It's $25,000. A lot of it is related to home updates and needs.

What loan is that?

A personal loan.

Okay. Well, no, I would not move this to a personal loan. I think we've done enough moving around of debts, and I would just tackle this one with intensity. And you have equal debts, and so in the debt snowball, these would fall into a very similar spot. So you can attack the one with the higher interest rate if that makes your heart happy since they're the same balance. Which one has the higher payment per month?

The higher payment is actually the 401k. Okay. I'm paying, I think, 700 a month.

I'd probably attack that one because number one, I can tell you're itching to get that money back in the 401k, and I wouldn't be as concerned with the administrative steps needed to pay that down. But I would throw as much as you can every single paycheck, every single month towards the debt. I wouldn't just wait and try to save up cash to do it.

Are you married, Ryan? Do you have kids? Yes. Okay, so you have a family. Yeah, I would do anything and everything.

Can you sell stuff? Do you have money that you can liquidate that's non-retirement?

Yeah, a little bit. Not much. I mean, I'm on a pretty good track here being able to pay it off. I'm trying not to over-execute myself too much.

Well, what do you have in non-retirement assets?

Non-retirement asset. It's just got emergency fund set up. I started just adding everything to that debt to start paying it down, but I didn't know if there would be a better way to do that.

Well, going into a different debt really solves nothing. That's the problem is you think you did something when you move it to the personal loan, you take that breath of relief, but really, you are not any closer to safety.

Yeah, it's just paperwork that you have to deal with.

Right. I'm trying to make it not so burdensome on the employer to have to handle that. I may just change the deduction now that you say that.

You can just increase the deduction to paycheck.

Yeah, and just crank it out that way and force it out of my paycheck before I can see it, too. That's a great idea.

I wouldn't worry about the employer too much. They're all right. They deal with worse things on our daily basis. That's right. Hr team, shout out to Rick and HR.

Good job, Ryan.

All right. That puts this hour of The Ramsey Show in the books. Thank you to my co-host, Rachel Cruz. The Booth Dudes. We've got Christian, Ben, Austin, Zack, Nathan, Bobby. Appreciate them holding the fort down. And you, America, thank you for tuning in. We'll be back before you know it. 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 Campbell, joined by Rachel Cruz this hour. It's a free call at 825-5225. And if you're Rachel, it's a toll-free call. There's no toll whatsoever.

That was actually Ken Coleman. Sure. I said it once on accident.

It's happened to the best of us.

It's a free call. Do you remember back in the day, though, George, you had to pay. You had to pay for a long distance.

We're about the same age.

Free nights and weekends. Remember that when that was the deal?

Rachel had to call uphill both ways. It was a very difficult life for her at the pay phone in elementary school, calling Sharon.

In the I have a lot of airports, too.

Wow. Little Rachel in the airport using the pay phone. That's a visual. Well, Alec is going to kick us off in Kansas City. Alec, how can we help you today?

All right. I have about 18 grand in total debt that I have consolidated. Well, not necessarily consolidated, but that I've total from my car loan to people that I owe to medical bills, college, all that. So recently, my roommate has told me that if I can't pay the rent, then he's not going to let me live here anymore.

So I'm trying to get that- Sounds reasonable.

Squared away so that I can get back on track.

Okay. So this 18k, you said it is a consolidated loan. It's all one giant loan now?

No, it's not. I misspoke. It's everything that I've totaled up.

Got it. So you have a car loan, medical debt, student loan, and a personal loan or multiple that you owe to random people?

Yes.

Okay.

Are you having trouble making your rent?

Yes. I wasn't having trouble before, and then I made a stupid decision, which I thought It was going to make me more money. What was that? I was making a stable monthly paycheck, and then I had an offer from a friend to work for him, and it didn't pan out. I didn't get paid by him for four weeks, so now I'm looking for new work.

So you quit your stable job? Would they take you back?

It's a possibility, but I'm not entirely sure because I talked to somebody that I used to work with, and he said the positions had already been built.

What were you doing and what were you making?

I worked at a cabinet shop. I worked as a trimmer, so I sanded the cabinets and I put the edge profiles on them and stuff like that.

Okay. And what were you making?

In the slow season, I was making about $500 a week.

Okay, so two grand a month in the slow season?

Yeah, and that has been for the last five months.

In high season, what would you be making?

Maybe around 700 a week.

Okay, so that's 2,800.

Yes.

Can you go just get a retail job that's stable right now?

I actually have already talked to somebody. It's an employer nearby just 10 minutes down the road, and I am going in for a strength and drug test tomorrow, and then hoping that all goes well, that I'll be in for onboarding. He said that I could start this week.

Okay. What would you make?

He said that I could make an upwards of like 750 a week.

I'm done with this upwards and what you could make. What will you get paid if you show up?

I have no assurance.

He hasn't- What job is this?

They're called the Onyx Collection. They make countertops and bathworks, showers, toilets.

Is it a commission job? I don't understand why they're not telling you what you're going to make. Depends on how much work you do.

I talked to the owner, and he said that he would leave it to the production manager to decide where I was needed most.

Okay. Well, you need to get in touch with them and get some actual numbers here, because so far, most of your choices have been based on assumptions.

Right.

Right now, we need to pay rent. And your roommate is being completely reasonable, saying, If you can't pay rent, you can't live here. I don't think that's unkind.

Right.

I would do the same thing if you were my roommate. I'd say, You need to go find somewhere else to live that you can afford.

Okay.

So the 18k, let's talk about that. If you listed all of Can you give me these debts separately from smallest to largest, what is your smallest debt right now?

My smallest debt is to emergency hospital out in St. Louis.

Okay. Is that a few hundred bucks?

That's a Fifty.

Okay. So we're going to gift you every dollar premium. It's our budgeting tool. It's an app that you'll have on your phone. You can log in on the web. And when you enter in all of your debt, it's going to list them out small to largest. And so your goal right now, number one, is to cover your four walls. That's food, utility, shelter, transportation, and insurance. Beyond that, we're going to cut our lifestyle down to nothing. You're not eating out. We're cutting all the subscriptions. You need to cover rent because you can't get kicked out. That's your priority. Okay. The next priority is trying to stay current on all of your debts, so make all the minimum payments. Anything left over beyond that, let's throw it the smallest possible debt. For you, that's that medical emergency debt of 150 bucks. But right now, the biggest priority is income. You can't do any of this without money. Right. So I'm going to go down and work the retail job until I get a better job working in the cabinetry business.

I would hang up with us, Alex, and I would call that company right now and just say, Hey, here's my situation. I need this work, and I want this work. I just need to know how much I'm getting paid. So if you guys can't give me a firm number of where you need me and what I'm going to be making, my budget depends on what I make in my living situation. And if that's not the right time for you guys, that's fine. I just need to know that. Because what I don't want you doing, Alec, is getting strung around. And not that this company is a bad company, but who knows? But they haven't given you a straight answer. And for you, Alec, you need a straight answer. So whether it's like, I know exactly what I'm going to make hourly. But you need some facts around you because I feel like it's this idea all up in the clouds, and it's going to be really hard to plan. And if you have those numbers, then that's when I feel like you can go to the roommate and say, Hey, here's the situation. I'm going to be behind on one month, but I'm getting this job.

This is where I'm going to get paid, and I'm going to catch up, and I'll pay double the rent next month. You have to get yourself back under there. But it's a pretty urgent situation.

Now, in terms of my car, so I owe a total of $10,427 still on my car loan. Would you suggest trying my best to get that down so that I can sell it and break even on that?

What could you sell it for today, private party?

I think about $8,000.

Do you have any money saved?

I do not. Okay.

Well, you're going to need to save enough. You might need to take out, I don't know if your credit shot, if you can even get a small loan from a credit union.

If you don't have income right now, yeah, you won't be able to.

With no income. They're going to need proof of income. But yeah, getting out from under this car would help you. If you go drive a Beater car for a few thousand bucks for now to get you around. Okay. That'll help you stop treading water. But hang on the line. We're going to give to you every dollar premium. You're going to list your income, which right now is not a lot, maybe nothing. Below that, all of your expenses, all of your debts. That's going to help you look at facts instead of just being scattered with your money and where it's going. So we're wishing you the best, man. You can do this. This stinks. This will be a memory in no time. But go work somewhere right now because 750 a week, I mean, that's 36 grand. That means if you could make 17, 18 bucks an hour working retail, you'll be better off. So I might look into that as well. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Rachel Cruz. If you enjoy this show, be sure to check out Smart Money Happy Hour that Rachel and I co-host.

It's way more fun than this show, but it's true. I think you're guaranteed to laugh during Smart Money Happy Hour because we do.

Well, we just have a good time. And it's contagious. We talk about pop culture, current events, and money over there.

Yeah, we're talking about at all. It's great. People love it. It's very casual. It's not a collar-driven show. We just take topics, expound upon them.

Have a cocktail, and we just chat.

Sometimes a mocktail. That's right. If you want to get crazy. That's right. And so check it out on the Ramsey Network, on podcast, YouTube. We film it so you can see Rachel's face as she struggles to get through something without laughing. It's great. All right, we got our question of the day here, sponsored by Neighborly, your hub for home services. Before the weather warms up, Neighborly can help you find local service pros like the Ground's Guys, 5 Star Painting, and Mosquito Joe to turn your outdoor space into your favorite place. I like that. Find the help you need at neighborly. Com/ramsey today.

Today's question comes from Sam in Louisiana. My grandfather owns at 45 acres of family land and plans to will it to my mom with the contingency of it coming to me when she passes. I'm 26 years old, married, and live about 15 minutes from the land. However, it's not where my family wants to live, and it's far off the road. How do I respectfully tell my grandfather to edit that part of his will, edit that part out of his will, or is it wrong to sell it one day when it becomes mine? That's a great question. Man, Man.

It's not where my family wants to live. There's nothing saying he has to live there in the will. It's just saying he gets this family land. Yeah.

I mean, I would probably keep it. You're 26. So let's just do some rough math. Your mom's probably, I don't know, 50s.

Let's say she goes another 30 years. Yeah. God willing.

Yeah. You'll be 56 at that point. Who knows what the world is or isn't or where you want to be or where you don't want to Maybe you'll want land at that point.

Maybe you won't.

That's right. Yeah. I think I would accept the beautiful gift of family land because I think even as you get older, just legacy and ties to family, I think, is a really beautiful thing. And then when it comes to that point in your 56, what you would probably do then is offer it to other family members to buy from you. So it stays within the family is what I would do at that point if you don't want it. But I wouldn't make a decision right now, personally, something that's going to be probably 30 years down the road.

Yeah. And real estate is an amazing asset and a really cool part of the legacy. Just looking at it- You can pass to your kids. Yeah. Yeah. Looking at it as just a wealth building tool and a part of your net worth would be a really cool thing because 30 years from now, real estate is going to be more expensive than it is today. They're not making more of it, it turns out. The Earth is what the Earth is. And so I would hang on to it because 30 years from now, it could be worth millions of dollars and set your family up for generational wealth. And whether your kids choose to sell it or not, that's their problem to deal with. But I don't think there's anything wrong with just hanging on to it and staying in the will and deciding down the road. So thanks for the question. That's an interesting one.

Yeah, that's a good one.

Danielle is on the line in Birmingham, Alabama. Up next. Danielle, how's it going?

Hey there. Thank you so much for taking my call.

Sure. You sound excited. We like that.

I am excited because I am in a tricky spot and I Would love your help.

Rachel is specializing in that.

We can't wait. What's going on, Danielle?

I have quite a bit of debt, but the debt that I'm focused on right now is the most pressing debt. I have student loan debt, but I'm still in school, so I'm pushing that to the side because this debt that I'm in is about 16,000 and it's more pressing. It consists of my car loan and then a few smaller things, the credit card that's at 865. I have a small dental bill that is interest-free of 340, and then a small bill from school that's 130. I'm getting roughly 5,000 $1,000 back from my tax return. It's also important to know that my car loan is at 27% interest rate.

George has come through a little bit. Hold on, let's make sure he can recover. I'm good. I'm back. You okay? You good? Yeah. Just a little bit of a question. You want some of my water?

What's left on this car loan? Do what? What's left on the car loan?

It is $14,406. The car itself was $20. I put five down when I got it. And this was only a year ago. The interest is just killing me.

How much is- Terrible credit. How did you get a 27% What's your current interest rate?

So when I was younger, I'm a single mom, and I went into a car dealership by myself with my newborn baby. They took full advantage of me. It was a Nissan. I'm actually in a class action lawsuit with Nissan because of their transmission. My car ended up dying three times from the transmission. I still owe 10 on it, and I can no longer keep dumping $4,700 into it for new transmission. So I finally stopped paying on it after the third transmission, and they repowed it. I should have voluntarily repowed it, but I just let them take it. So I have a repo on my credit.

From back in the day, and so when you went and bought this car, that's what caused the interest, right?

Correct. Got you. That was just a year and a half ago. I got this car in March of last year.

Okay. How much do you make a year, Danielle?

I do get some child support. Factored in with my child support, I get roughly 25,000-26,000.

A year? A year. Yeah. Okay. What do you do for a living?

Well, I'm a student as well, but I work in dermatology. I was working in the clinic making a lot more, but I took a pay cut to work from home because of my son.

Okay.

Well, To answer your question, I would use all 5,000 and knock out your debt, smallest to largest, which would knock out a bunch of these little debts that are ankle biters right now.

Okay. The three debt, the smallest ones, I have in order. I could knock out two of them right now. I do have a savings of 1,700. Great.

I would keep 1,000. I could knock out, but- I would- Right. I would keep it- Oh, go ahead. I'm sorry.

I'm sorry. I also am in a pretty bad position because my boyfriend and I just broke up. We were sharing a place together, so my rent was half of what it would be anywhere, maybe even less than half. I'm about to move into my own place with my son, and my rent is going to be double.

Okay. Have you looked into other places for a lower rent?

Yes. A studio apartment would cost me about $700 for me and my son. Right now, I pay about 460.

Okay.

It would go up to 700 if you do the studio?

Yes.

Okay.

When are you done with school, Danielle?

I'm hoping to graduate in December with my undergrad, and then I just have to take my JRE and I go to PA school. That's a whole other situation with finding support for my son. Yeah.

And will you be working during that whole time?

I'm not supposed to. I Instacart on the side now, so I'll still do that on the weekend.

How will you pay for PA school?

Probably loans.

How much student loan debt do you have now, Danielle? How much will you have when you graduate in December?

I'll have close to $70,000 worth of debt for my undergrad.

On top of the 18 that you listed out.

Right.

Okay. Danielle, I want to help you because I feel like the path you're starting to walk towards financially is going to be a path of destruction. This stress that you feel with money is going to continue on. If you can hold on the line, I would love to bring you on in the next segment, if we can, just to talk through this a little bit more, because I really do want to help you. I think single moms out there, you're doing It's such good work. I mean, you're trying to navigate how do I... Child care is expensive. You're trying to do something from home with your son, your InstaCardial side. You're doing a lot of really great things, Danielle. But just some red flags came up there at the end of the call, George. So I really, I want to walk this through with you, Danielle, and hopefully give you a better path for more peace for you and your son, not just for this year, but for decades to come. Okay? So hold on the line, Danielle. We're going to come back to you, if that's okay.

Don't go anywhere, Danielle. In America, you don't go anywhere, too. We'll be right back. Welcome back to The Ramsey Show. I'm George Campbell, joined by Rachel Cruz. Before the break, we were chatting with Danielle in Birmingham. So let me catch you up because we're going to go back to her. She has about 70,000 in student loans, 18,000 across some other debts like car loans and smaller debts. She's making about 25,000 to 26,000 right now between child support and working. She's trying to finish her undergrad, go to PA school, and we're trying to help her figure out her life. And so, Danielle, are you still with us? I'm still here. Good. Was that a fair summary? Yes. Okay, so we're back. We want to dig back into your situation because you said you're going to finish undergrad in December, you're going to take the GRE, you're going to go to PA school, and all of that with already having close to six figures in debt while being a single mom.

Right. Yes.

How old is your kid?

He just turned six.

Okay. Oh, great. Is he in school?

He is, yes. He's in kindergarten.

Okay. I have a kindergarten, too. Good times. Fun age. Okay, so, Danielle, what's your undergrad in?

I am pre-PA, and it's in psychology.

It's in psychology. Okay. Here is what I'm I'm going to suggest, Danielle. You said you went back to work from home to be with your son.

Took a pay cut for that.

Yeah. The fact that he's in school, though, is encouraging. I didn't know if he was two years old or how old he was. I think one of the best things that you can do, Danielle, from a financial standpoint, which bleeds into other areas of your life, of just stress and anxiety, I mean, all of it, right? When you have your money under control, does give you a sense of peace to be able to fall back on, because money is the tool we have to have in this life, right? To make decisions. And I want you to have that control. That's what I want for you, Danielle. And I think the path that you're going down towards a lot of debt is going to lead to a lot of stress, a lot of strapped feeling months with payments and beyond, right? Because if you go into PA school with $70,000 an undergrad degree, you're going to be easily six figures into debt. What I would suggest for you is that $5,000 tax credit to apply that, yes, all towards your debt. I was going to ask your car—it's a $16,000 car. How much could you sell it for?

Have you Kelly Blue booked it at all?

I'm upside down significantly on it. You are. It was not a good purchase. It was a Jeep Compass. It's been in the shop a lot. I spent so much money on it. If I sold it privately, I could possibly get seven grands for it, and then I'm left with seven.

All right. Okay. The number one thing I would do, Danielle, is I would up my income. Even if you have to find childcare there for the last 2 hours of the day, whatever that looks like for you. But I think one of the best things you can do right now is up your income from $26,000 a year. And again, this may not be in the field you want to work in, but I would find anything. I mean, anything to do. And I mean, looking at $45,000 to $50,000 a year. I mean, if you can just double your income with a salary-paying job that has good insurance and all of that, that's going to significantly change your world, Danielle. Significantly. Because that's going to bring in so much more income for you. You're going to be able then to knock out this debt with that $5,000 tax credit coming in. It's lowered all the way down to $11,000 $11,000 or so and start chucking money at that $11,000, get that all paid off, and then I want you to tackle that $70,000 student loan debt. And I would pause PA school. And I know that's probably crushing your dreams right now.

But just looking from the outside in, I just see you walking down this path into more and more financial destruction, going deeper and deeper and deeper into debt. And I want you to be able to have the freedom to make decisions with your life and for your son on what you do, right? And when you have no payments, that freedom is there. And if you're stuck in a cycle of payments, though, and owing, it keeps you in jobs you hate, it keeps you in situations that you may not want to be in. And so that freedom, I think, is one of the best things you can do. So if I I would convince you to pause PA school, and I would see if I could just double my income. And even you said you're working Instacart on the side, which is so great, too. A side hustle. And it's going to take probably, gosh, four Four years, five years or so.

To clean up the mess you have and then cash flow the rest. Because what's PA school going to cost? A hundred grand easily?

Probably, yeah. The thing that I was banking on is the fact that I would make 200,000 as soon as I get out.

I wouldn't bank on that. Have you actually looked at what people are making as soon as they enter the PA field in Birmingham?

Yes. I wouldn't be working in Birmingham. I would move out of state. I'm from Pennsylvania, and that's where I would go back.

What's keeping you in state now?

My son, because of child custody with his father, he gets him for five hours on Sunday.

What will change that will allow you to move in the future?

Once I have a career-based job, if I move there, they will allow me to do that.

You You could start a career in Pennsylvania now, correct?

If I had a degree, yes.

Okay. Let's say in December, you finish this degree out and you move closer to family, more support and have a career. Is that a possibility?

Well, I don't really have to support out there either.

You're going to move anyways. What was the reason to move to Pennsylvania?

Just because that's where I want to be, and it's more money out there.

Well, I would go to the most affordable PA school once you can cash flow it, possible, and then move to where you want to move to be a PA.

Right. That was another reason why I was staying in Birmingham. The schools are cheaper here than in Pennsylvania.

Okay. Well, the key here is we don't want you... You're already almost six figures in debt. You're going to add another six figures to that and not be able to climb out of the hole while still making 25, 26. That is just an unsustainable path that really freaks us out. That's why we're recommending going to doubling your income. What were you making before you took the pay cut?

I was making closer to 41.

Okay. Is that job still available? Could you go back to that?

I can go back to it. The reason why I left that job was because my son got kicked out of daycare before he started kindergarten. This was just something that I could do. It's with the same I've been in. I've just been working from home instead of in the clinic. Then I'd go back.

I can go back at it. Yeah, I would do that.

That's going to give you a $15,000 raise instantly.

Right.

That will change your world to get rid of this debt.

Yes.

Once you have enough money saved, you still may want to get out of this 27% auto loan. If you can save up $10,000 and you sell the car, you'll have seven left, pay that off, you'll have 3,000 to get just a Beater car, but maybe one that's more reliable and paid off.

Okay. I don't know if even refinancing it is worth it or if that's even a possibility, but if I took that 5,000 I've got 17 in savings.

If I- You have 17,000 in savings?

I'm sorry, 1,700.

Oh, I was like, Well, that changes things. Okay.

I'm sorry. I wish. I could take the 1,700 take out the smaller ones that I've got built up, my credit card, the dental loan, and then my school. Then the rest is just my car. I don't know how refinancing really truly works. I've never done it before, but if I took $5,000 towards that, would that be a possibility to get that interest rate lower?

It may get the interest rate lower, and there may be a break-even point. You can look into that because going from 27 down to even 15 is a win for you right now. Yeah. So you can look into that. But again, it's not going to change your world, but it may help you just go from treading water to making some progress.

Yeah, for sure. And up in that income, Danielle, getting that margin in your life, That's the key. It's going to do a lot for you. And I would. I would make some drastic moves in that area first, and I would pause PA school. I really would. I would work myself out of this debt, get a great salary job, and you and your son have a stable life. And then at that point, you're able to say, Okay, what do I want to do going forward? And then you can make a decision from there. But I don't want you to making a decision out of this urgency that I have to just jump into something because we make poor decisions when we don't have bandwidth.

It's way too easy to put off making a will.

Believe me, I've heard every excuse in the book, but not having the time is one excuse we can kick to the curb right now. Because these days, most folks can make a legally binding will on their laptop between loads of laundry. If you're wondering if you can make your will online or if you need a lawyer, we have a quiz to help you figure that out in less than five minutes.

Just go to ramseysolutions. Com/ramseysolutions. Com/ramseysolutions. Com RamseySolutions. Com/wilsquiz.

Ramseysolutions.

Com/wilsquiz.

This is The Ramsey Show. I'm George Campbell, joined by Rachel Cruz. The number to call is 888-825. Sean is up next in Wilmington, North Carolina. Sean, what's going on?

Hey, guys. Thanks for taking my call here. Just had a question on if I should... So I own three rental properties, four in total with my primary residence here. And my question is, I've had a change in income here over the last year. I own my own business, and business just seems to be declining. I'm just wondering if I should think about unloading some rental properties here just to create easement here, or if I should unload all of them, keep them, what I should do.

Okay. You have three rental properties. Will you talk us the numbers of how much they're worth and how much you owe on them?

Yeah. First one here is worth 285,000. Currently owe 167,000 on it.

Okay.

Second one is 525,000 net worth and owe 278, 278,000. And then the third one is worth a million, and that one we owe 468,000 on.

Okay. And how much How much do you owe on your primary house?

That one's worth 1 million, and I owe 498 on it.

498. Okay, cool. That's your only debt, right?

Correct. Yeah, the only debt I have is just these mortgages here. All the rentals cash flow. I called before here on this is on raising my... When you guys told me to raise the rent on my cousin, but one of my cousin rents one of these properties. I'm pretty much just break even on that one. But the other ones do cash flow. One cash flow is about 300 bucks a month. The other one, the one worth a million, that one, I'm cash flowing about a thousand bucks a month.

Okay. How much were you making and what are you making now?

On a good year, I'd make 380, close to 400. Bad year was normally 300. Now, it's last year's, I'm down to around 200 here. And I'm just worried if things start going even more south, then I'm just trying to be prepared scared, I guess, here. I don't know. It just seems to be not going down here a little bit. Not going away.

More debt equals more risk, less debt, less risk. And so I think you're thinking through this wisely to Hey, if I unloaded some of this, it would free up the money. I could pay down my mortgage. What's your mortgage payment every month on your primary?

So we recently moved from Arizona to here. Our old house was the one that we kept. That was the one that was worth a million. That one was locked in at two and a half %. When we moved here to North Carolina, rates are obviously a lot higher than two and a half %. We're at 6.5, and we owe that payment for $1,000 a month.

Okay.

And are all these houses still back in Arizona?

Two of them are. One's in New Mexico. I just found a property there. Okay.

So just. So a lot of long distance landlord.

I know. Yeah.

If you- I got property managers on them, too. Sure.

Did you ever raise the rent on your cousin?

I did. That was a difficult decision. Here, we came to an agreement. When I last called you guys, I didn't wanted to create any whiplash, but we're on course to get to market rent, which he'll be on market rent in about another year. We were doing it increasing at $200 because he was paying well below under market rent. The plan was to get him that market, and he'll be there next- So he can afford market rent? No.

Then he can't live in that place.

Okay. Do you enjoy having rentals, Sean? I do. Do you enjoy investment property and all that?

It was my main retirement plan. My thought process here, I could pass these on to my two daughters here. Then 30 years from now, if they're cash flowing, I'm also getting debt pay down on them. Someone else is paying down the debt, and then in 30 years, they would potentially all be paid off. And then plus to the tax benefits on them, it helped the depreciation, helped offset my income when I was making closer to 400. So it helped offset that a little bit. So I liked all the tax advantages and just the appreciation, the cash flow. So I do like it. I don't mind it. I'm trying to be proactive here when my main source of income has dropped and what I should do here.

And that's what's hard. And I think this is a really great example, Sean, of painting a picture of, here's the perfect scenario, right? And you just walked it all through from the tax advantages and the appreciating assets and passing down to kids and all of it. But the problem is, is when debt's in the picture and something goes sideways, like a job, your income is cut in half. Suddenly, this beautiful picture, all of a sudden, the risk is what you're feeling. So I You know what I would do, Sean. This may sound really extreme to you, and you probably won't do it. But if I were you, because we all be in Wilmington, we all be in North Carolina for the foreseeable future, you all going to go back to Arizona.

Moving here was a big deal. We found a property here with 20 acres, and I plan on that with another thing as- Being here. Okay.

So honestly, here's what I would do. I would sell all three, and you're going to walk away with a... It's around 860 $860,000. I would pay off my primary home. That's going to leave you, and I'm not factoring in taxes, so you got to do all this, but that'll leave you around $350,000. I would go find a great house, pay cash for it, and build my rental back up and save because you got $4,000 at that point freed up because your primary residence is completely paid off. The life you could live, even making 200,000, Sean, with no debt is amazing. It's amazing. You're adding a lot of stress and a lot of risk to your life right now, which I understand. If the numbers all play out and this whole game and all of this, I get it. But there is something that you can't put a price on peace. Right now you're feeling this weight. And I don't want to... You're halfway. You're literally on the other side of the country, as far as you possibly could be from Arizona to North Carolina. And I understand you have property managers and all of it, but I'm simplifying my life if I'm you, Sean.

I really am. I think you can build incredible wealth to pass on to your kids, whether that's through investing, whether that's for buying more rental properties that you guys start to accumulate over the years.

Even on the property, that's a million That was locked in at two and a half %.

I'm not concerned about interest rates, Sean. Here's the thing, Sean.

I know. I hear you. But you're not going to be taking out any more debt. So interest rates aren't even a problem anymore.

You make $2,000 to $400,000. We added up the cash flow of All of your properties, it's 15 grand a year if it plays out perfectly. That is jump change for you.

It's nothing compared to what you're doing.

It's not worth the stress and the risk when you can restart fresh and have it cash flow 100% because you don't have a payment on the place. Even if it's a smaller payment, you'll still be probably doing better. Yeah, you'll lose out on the future appreciation, but you're also going to get your life back, and you're also going to get $4,000 back from your primary mortgage that you're not paying anymore. I don't think it's apples to apples again because of the peace of mind. It's 15,000.

Yeah, 15,000 versus, gosh, 48,000 that you're going to be getting back without having a payment on your primary house. And, Sean, what isn't calculated in all of this, and it's something we always try to convey on the show, and we can't always do it well because it's an emotion. But there is something when you don't have debt, Sean, when you don't owe anything and you're not finagling. And I know the cousin lives there, but you're running math on the interest rates, and you're figuring out how to make this payment. The income goes down, the stress goes up, and you have a beautiful 20 acres with a dream situation happening now.

I've been following you guys here for years, and I was actually debt free for about nine months. And watching your guys' show is what led me to do that. So then I obviously didn't continue it and got back into debt.

Yeah. You'll be back there in no time, man. And you're not going to have the relational tension with the cousin. You're going to have so much peace. You're going to burn less brain calories.

It's a better life on this side. I'm telling you. I'm telling you. It'll always be another property. You can build a great legacy for your family. A great legacy still.

That's what's this hour of The Ramsey Show in the Books. Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by Rachel Cruz this hour. We are both co-hosts of Smart Money Happy Hour as well. It's a real treat to be on The Big Show, as we call it here on The Ramsey Show. 888-825-5225. Michael kicks us off in Montgomery, Alabama. What's going on, Michael?

Yes. Hello. I am 22 years old, and I am currently, just about a week ago, got accepted to Auburn University, and I'm going to- War Eagle, my friend.

Thank you.

I'm going to get my history education's degree, my social science degree to be Pacific. Cool. I've completed We did two years at a community college because it was better financially that way.

Smart man. Yeah, so great.

Growing up, my family didn't have a lot, so I'm expected to make... I've I walk to a bunch of people. I'm expected to make anywhere from 40 to 60 grand with my history education's degree.

What will you be doing?

Ninth through twelfth would be my ideal for- Teaching? A history teacher.

Yes. Cool. Okay. What's your question today?

My question stand is, I don't know when I become expected to take out some student loans. That's the only way I would be able to pay for my final year and a half, two years of university. But I don't know what... Once I get that, once I get the job, how I use my degree that I've got to pay back that student debt and also try to make something in the future as a family that came from no money. I don't have that experience with anybody to talk to about how to do that.

Michael, have you applied for any scholarships?

I have applied for some scholarships, yes. I currently have a 3.4 GPA. I actually got an email from my advisors to apply for scholarships.

Okay.

What's this going to cost, this last bit of schooling?

I don't have an exact number. I have their calculator pulled up that tells me an amount, and it is estimated Getting somewhere around 35 right now.

For the remainder to graduate?

Yes.

Yes, for the total degree. I mean, Auburn isn't exactly the cheapest school around.

No.

I'm just looking at all of the options to help you go to school debt-free. Here's the reason. You asked us, How do I create wealth? One of the keys to create wealth is to get out of debt and stay out of debt. Right now, we're going backwards. We're taking a step back, and you're hoping to take a few steps forward once you're working. I hope you make 60 out of college teaching.

I was going to say, is that a realistic- I don't know what a high school history teacher makes in your area, but I would do some homework on that. Because 40 to 60, that's a big swing, Michael. That's $20,000 difference. So I would. I would know the ROI on that. And what I would do, Michael, if I were you, even though it's so exciting, and I think you've been so smart, Michael, up until this point. I mean, you did the community college route, got your prerex done. I mean, that's so wise. And then that's what we always say. And then you can transfer to a larger state school if that's where you want to actually graduate from. But I would do is I would still shop around. I mean, I would apply for other schools in Alabama.

The issue with wanting to look at different schools is my My dad isn't in the best of health, and Auburn is like 15 minutes from my house. So that was the reason. If I could still take care of him and be able to go to school at the same time. I know it's not the cheapest school. There's other schools out there that will be a lot of super long. Are you the caregiver?

Are you his caregiver? Yes. You are. You are. Okay.

I wouldn't be able to go farther away.

Have you looked at an online option anywhere to get this degree?

I looked at Troy's online program, and they're really expensive as well. I haven't went really too far into it. Okay.

I would price out some colleges, public colleges. I would not go private for online degrees and see what you can do. Because you, I mean, you being your dad's caregiver, that's a big piece of this puzzle, right? Where's your mom in this situation?

They are divorced.

Okay. And what health, what situation is he in, health-wise?

It's just me and him. It's a two-bed room.

Oh, I'm sorry. What is his health condition that you have to be his caregiver?

I thought you said house.

Oh, yes. Sorry. No, you're fine.

He had a work accident in the '90s that left him with a broken neck and stuff, and he had severe issues recovering from that.

Okay. Is he on disability? Yes. Okay.

Him being on disability has been major for me as far as community college, because I haven't had to pay a dime for my community college yet.

Well, and Michael, honestly, your situation, I mean, I would look in because There's grants, there's scholarships. I mean, there's plans that you can actually go into because of your current situation. And I would because you're a caregiver at 22 years old. And so, yeah, what I would do is either do online or find a way where you can do school at Auburn and work at the same time and cash flow it. To cash flow. And cash flow it. Even if that means you have to maybe pause a semester, and I know you just got in and it's so exciting, but maybe you say, Hey, I'm going to start back in January, and I'm going to take the next nine months and work and save up some money and apply for scholarships and really get this handle, Michael. Because if you are able to figure out a way to cash flow this money through working, through school choice, and through scholarships and grants, and then you graduate and you automatically are making $40,000 to $50,000 up to $60,000 is what you said. But you're going to be able to do so much with that income to be able to save quickly for a house.

You're going to be able to invest. You're going to be able to really jumpstart this wealth building process is why you called, is how do I create this wealth? And like George said earlier, it's not going deeper in the hole. So I know it's not the standard approach people take when it comes to college, but we've seen so much disaster when it comes to the student loan, whole thing in this country. It's just help people back. If you can make smart decisions now, Michael, which you have up until this point, I just want to applaud you. You've done such a great job. If you can keep at that, it's going to be hard work. But when you can graduate on a solid financial foundation versus a financial hole, you're going to be able to just to run so much faster in your early 20s.

While I was in community college and in high I went to school, I was a radio station intern, and I'm hoping that I could use those two, three years of experience as an intern to push and maybe get some job that would pay a decent amount while I'm going to school and all, because there's a bunch of radio stations there.

For sure. No, that's a great idea, Michael. Get creative, man. I know some of our guys in the booth, they all worked in the radio industry, and I think your early hours been, late hours, pay more, possibly. I So get creative with it, too, if you can, Michael, to really grind it. This is the time to grind it out, and I would do it. But you're smart, and we are cheering you on.

And as a guy who graduated from a school in Alabama with $36,000 in student loan debt, Michael, I'm telling you, I see your future. It's too bright. Don't do what I did. I have a lot of regret, and it slowed me down by years to where I could be with my wealth. So best of luck, my friend. This is The Ramsey Show. All right, let's cut to the chase. It's easy to get discouraged about crazy house prices and interest rates. But when you have the right real estate agent to help you buy and sell the right way, you'll have confidence to make smart decisions.

Ramsey trusted agents aren't just experts who guide you through buying or selling.

They're someone you can trust to have your back from the first call to closing day. Find a Ramsey Trusted Agent near you at ramseysolutions.

Com/agent.

Ramseysolutions. Com/agent. Welcome back to The Ramsey Show. I'm George Campbell, joined by Rachel Cruz. If you're looking for something fun to do this year, join us for our brand new event called Total Money Makeover Weekend right here in Nashville, Tennessee, up the hill from our headquarters at the new Ramsey Events Center. It's May 10th and 11th, and this is going to be an incredible weekend. We're going to give you a crash course on everything we teach about money. You're going to hear from every single Ramsey personality, Dave Ramsey, Jade Warshaw, Ken Coleman, Dr. John Deloney, Rachel Cruz, myself. And this is going to be something different. It's going to be very interactive. There's a lot of Q&A's. We're switching up the event content. And so no matter what baby step you're on, this is going to be an event that will light a fire under you. Whether you're in baby step one or seven, you're going to walk away with some hope, and it'll be a good time. So early bird tickets start at just 99 bucks, but it's a limited time only. So if you want the best deal on tickets, this is it.

We only can fit 2,400 up in that event center. So don't miss out. Start putting this in the budget, get the transportation locked in, the flights, the hotels, and make it a fun weekend here in Nashville, May 10th and 11th. Get your tickets now at ramsey solutions. Com/events. And Smart Money Happy Hour Live, Rachel, on Friday night.

I know.

As part of Total Money Makeover It's your weekend, so if you ever wanted to witness it- It might be the best part of the whole weekend.

So...

Your words, not mine.

Don't miss it. It's going to be great.

It'll be a great time. And that's part of the event. So you're not paying extra to be a part of the live studio audience.

And this event, you guys, I feel like people don't always realize the power of being in a room with 2,000 like-minded people. And Nashville is obviously a great destination city to come to. But being part of something like this for a weekend, it's so It refuels you.

I don't want to say it's life-changing, but it can be the start of life change. You can look back and say, That was the moment. That was the event we said.

We hear that from so many people, and even people out here, when we meet people in the lobby as we're doing this show, Well, I went to this live event in Minneapolis, or I was at that live event that you guys did in Cincinnati, or I was here. It is the thing that just jumpstart you, and it's a full experience, and it's great just to dive in. We're going to do all new money content, but wherever you are on the baby steps, come hang out. Then also, John Deloney and I are doing a money in marriage weekend in October. Oh, that's right. Yeah, and those tickets are at ramseysolutions. Com as well. That was a really fun packed weekend. Come hang out with us. We're- Lots of opportunities. Yes. Having some open weekends for you guys.

Come party. Some of you all need to plan a trip. Some of you all in Baby Step 7, you still got that tight grip on all your money. You're used to debt payoff. Enjoy it. Make a trip out of it. Come see us. All right, Sarah is in Toledo, Ohio. Up next, Sarah, welcome to The Ramsey Show.

Hi. Thanks for taking my call. I'm so excited. Sure.

How can we help?

I'm getting married in June, and my fiancé and I are starting to look at how to set up a budget together and just set ourselves up for success in that way once we're married. We're just wondering how it works since my income is so hit and miss. I'm a full-time wedding photographer, and I've been full-time for almost two years now. I pay myself anywhere from 1K a month to 10K a month after my business expenses. My total income last year through my business This is 40K, but my fiancé makes a steady 65K a year. How can we set up a budget since my income varies so much?

All right. Let's pretend this is post-wedding day. You guys have combined finances. You have one bank account and we're working on our first budget together. All right. So what you're going to do with a regular income, this is important for anyone who has a regular income, commission jobs, sales jobs, you name it, seasonal jobs. What you're going to do is basically create a prioritized spending plan. So just like everyone else, you're going to list your income for that month, what you think it'll be. And if it changes, that's great. And most people have a baseline. You know your worst month is going to be 1K. So list that plus your husband's income. And then below that, you'll have all of your expenses. And you're going to start with the priorities. So this for you guys would be food, utilities, shelter, transportation, giving, insurance. And then if there's more money left over in your every dollar budget, you can start to go into the luxuries, the subscriptions, maybe this travel savings fund, the sinking funds, all that good stuff. And so that's how it works with a regular income. And there might be some months where it's tight.

You might have some amazing months where you create a peaks and valleys fund where you go, All right, I had 10K this month. We're going to put this money aside to cover when I have a 1K month.

Right.

That will also help you when it comes to a regular income. Yeah.

As a photographer, Sarah, do you know... How do you do your payment? Do they do a deposit when they hire you, and then after the wedding, they get the rest of the amount, or how does that work?

It's also difficult because a lot of clients prefer to do things differently. Some clients, their parents are paying for or whatever, and they I just want to pay for it right up front when they book me. I do require a 25 % deposit from everyone, but then after that, it's up to them on how they want to pay it, as long as it's due. Everything's paid off a month before the wedding.

Well, the good thing, and unless it's a spontaneous wedding. But there is a benefit that you have a date set out there so you can look out and say, Okay, in October, here's two weddings. Have they put down the 25 %, or have they already paid me? You're able to forecast it a little bit, which is great. That's an awesome thing to your advantage. And if anything, then spontaneously someone hires you and puts down a 25% deposit you weren't expecting that month, then you're like, Oh, well, there you go. But being able to forecast out a lot with your calendar, I think, is going to be helpful, too. But I think that Peaks and Valleys fund that George mentioned is huge. If you can have just a side account and say, Yeah, here's our standard operating budgets. If we have a huge month, we're going to put some aside, maybe enjoy some of it, right? You want to enjoy some of that. But on those super low months, you can pull a couple of grands from it and not feel bad about it because that's what it's there for, to sustain those things that you really do need throughout that month.

Sarah, one of the best things to do is to learn to live on that spouse's salary with the stable income. If you can do that, then anything you bring in is gravey.

If we can plan on living off of that 65k a year, then anything that I'm bringing in can go into what exactly? Because since I'm self employed. I don't have retirement or anything like that.

Well, you still have options. You can open a SEP IRA. There's a Solo 401(k), so don't think in Roth IRA, anyone with earned income can do that. So you still have lots of options, and you have to set aside money for taxes. And so quarterly estimated taxes needs to go into a separate account.

I am putting 30% every month into a separate savings account.

Good. So do you guys have any debt?

We do. I have 6k in student loans that I'm paying off. And then I have a car and he has a truck, and he also just bought a home.

Okay. So let's focus on the consumer debt. And you focus on yours until you're married. He focuses on his. And let's try to make as much progress before the wedding day because that's going to help you guys out. But if you're asking what to do with the extra money, you would apply it to whatever baby step you're on. Right now, you guys are probably in baby step two. You have $1,000 in the bank, but we're working on this consumer debt. Then it'll be the emergency once you're out of debt. Then it'll be we got to invest 15% of our income, and the rest can go to increased giving. Once you paint off the house early that you guys will have together. They'll always be a home for that money, but you've got to be making that every dollar budget and assigning a dollar to a job. Otherwise, it will float away into new equipment, as you know. That's part of the joy of being in your field, is there's always a new toy to get.

Yes, unfortunately, yeah.

We're going to gift you every dollar premium as a little wedding gift, Sarah. You and your spouse, future spouse, can work on that together. It's fun that you've been a part of so many wedding celebrations as the photographer. Now you get to have your own. Who's going to do your photography? It is.

We're actually eloping and getting married in California.

Wow. I love it. You've seen so many weddings like, We don't need that.

Who needs to spend 50 grand on a party?

That's great, Sarah. That's so exciting. Well, congratulations. That's awesome. We're excited for you. What a What a great place to start out. They're making great money. Yeah. To be able to knock out this debt and start it, it's great.

Great. Hang on the line, Sarah. We're going to send you every dollar premium. That's going to allow you to set up that money. What's really cool is with the premium version, there's a feature called Paycheck Planning, and it'll forecast exactly when and if you might run out of money. This is a great thing for those with irregular income to help you figure out, I got to move that bill around. I got to change the due date there because I'm going to have a high chance of overspending this month. So check out all the features in Every Dollar Premium. It connects to your bank account. There's a financial roadmap tool. So many great things to use there. And that is our wedding gift to you, even if you don't invite us, which there won't be a wedding. They're a low-pay in California.

What if George and I... I know. What if we showed up at the- It's the worst place to visit.

It's the worst place to visit. Just me and you, Rachel. Someone asked me to do their wedding. I'm very excited for that. I got to get one of those online courses now.

Pastor George.

This is The Ramsey Show. Okay, guys, I'm just going to say it. It seems like a lot of tax software out there wants to keep you in the dark about how simple tax filing can be so they can pressure you into add-ons that drive up your bill. But Ramsey SmartTax is the classic blue jeans of tax software. Not skinny, not bedazzled. It just makes things simple, easy, and exactly what you need. And you can save up to 70% compared to other tax software. And if you register for Ramsey SmartTax today, you'll get free resources to help you feel confident about filing. Just go to ramseysolutions. Com/smarttax. Smarttax, and see just how simple tax filing can be. That's ramsey solutions. Com/smarttax. I'm George Campbell. She's Rachel Cruz. This is The Ramsey Show. Open phones at 888-825-5225. We got a lot more shows where that came from on the Ramsey Network. All the Ramsey personalities pretty much have shows, including the Rachel Cruise Show on YouTube, Smart Money Happy Hour, which Rachel and I co-host, and my own YouTube channel. That's been a lot of fun. We bring some snark and entertainment and Memes. You've had some good ones.

With financial advice. And the Millionaires in Cars series, George.

You were a great guest for that series.

Thank you. You've had some fun guests.

Go watch that. We tool around in cars and get coffee and talk about building wealth. And Dave did better than you as far as views, but you are, I think, the second.

I'm not shocked. I'm second? Number two? I think so. Nice. I'll take the silver medal.

She's competitive. I knew that would get to her. It's fine.

It's Dave. We expect it.

Well, we went to the barn with Dave. We had a whole experience. It was It was a special time.

That's good. That's good. Some bonding.

He made me coffee with the coffee machine, which was a struggle, turns out. Almost didn't get there. So tune in for that. Search George Campbell with a K on YouTube and search Rachel Cruz on YouTube and tune into those shows. Leah is in Chattanooga, Tennessee. What's going on, Leah?

Hey. I hope you all are doing well. It's weird talking to you all after listening to you all the time. We're glad you're here.

We're honored.

I have, hopefully, a quick question, but then looking at... We're on Baby Step 2, so trying to pay off the... My husband and I both only have student loans. He has about 38,000, and mine's about 16,000. We have actually been, over the past few years, really focusing on mine and knocking it down because prior to me going to school, My parents told me that they would pay for my undergrad degree or my undergrad loans upon graduation, and as long as I paid for my grad school and everything else that I did extra. We've paid off completely my grad school loans, but the 16,000 is only my undergraduate loans. I guess my main question is, even since my parents are paying for it, does that still go within our debt snowball, or should we focus on my husband's? Our original plan was focused on my husband's loans, and then if we were done with his, if mine were still lingering, then we were just going to knock them out.

Are your parents just making the Is there a minimum payment on yours? What's the agreement for your parents to pay this off?

Yeah, so they're just making the minimum payment. So throughout the years, I have actually put additional to the undergrad loans. I've gotten a couple loan repayments through work and with the COVID stipends and all the extra tax refunds, we have been putting to my undergrad loans as well, but right now it's just a minimum that they are making.

Are these loans solely in your name?

Yes.

Okay. Well, this is your debt, and it sounds like they're not able to just knock it out based on the fact they're making minimum payments. Not all at once. Well, I mean, based on the fact they're making minimums, that's going to take years and years for them to pay this off.

Yeah, I think what I would do, and I may be, who knows? Who knows how this is going to go?

I'm curious to see what Rachel has to say.

I mean, there's a part of me that would say, If they've said that they will pay it, and that was your's agreement, I would be okay paying off the husband's 38,000. Because how much do you guys make a year?

Probably about 110, and it'll go up. My husband will be graduating probably in December, or not probably. He will be graduating in December with his graduate degree, so it'll go up next year. But I mean, for the rest of this year, it'll be about 110, 150. Okay.

Because a part of me would go ahead and just tackle the 38,000 while your parents keep the minimum payment going with the other one because that's not cash out of your pocket. That would be putting towards the 38,000. Then, like you said, when you get back around, see what it's down to. Then at that point, I'd probably just knock it out. But I would let them because they said that they would pay it. There's a part of me that would go ahead and just let them keep their word. But I don't want that debt in my name forever, ever, and amen. That's what's going to end up happening with your parents. But for the time being, go ahead and let them Pay the minimum payment while you guys attack that 38,000. Then when you look at it, to be able to say, Okay, at this point, we want to just pay it off because we don't want this debt around. That's what I would do, George. Would you pay off the 16,000 first?

I like the plan. Well, I just keep I'm thinking if there's high interest on this, and depending on the repayment plan, the balance could go up over time. So I don't know the whole situation, and that's for you to do some homework on. But I just hate this stuff lingering, and it is in your name legally, regardless of what they said. And so that's where I always go back to it. This is your debt. And I hope they... I mean, it doesn't sound like they've ever missed a payment or that they plan to, but you just never know. There's still risk here with it being in your name.

Yeah. And if something goes sideways with all of this and they say, I can't pay it, then I would pause the 38,000 payment on payments on that and then go to the 16 and pay it off aggressively.

And pardon me, I don't know if this would ever work, but I'm wondering, do you use the debt snowball method? You pay off all the debt, and essentially they pay you that 16 grand over however long it takes them.

It's still weird. I know.

I just think there's a relational piece of this that I don't like. I just want this gone as soon as possible.

So would you pay off the 16 first? Would you go ahead and just knock it out?

Are these all separate debts? Are these all listed? These are multiple student loans making these all up?

Yes. So mine is probably, I think it's around maybe eight smaller ones. The ones on mine, some of them are actually really small. So we could knock out Probably a few of them this month or the next couple of months, easily. But then my husband, he mainly has one that's half of his loans, and then the rest are broken up, maybe about six or seven more. Smaller.

I mean, I'm still good with Rachel's plan. I think it's wise to do that, but I would also be in conversation with them about what are we doing to really knock this out versus just maintain the balance.

Yeah.

The hard thing is with it, though, you can't control what they do. So hear me say, though, Leah, that, again, I would be okay with knocking out the 38,000 because, again, there's multiple little loans. You guys can still get that effect of the debt snowball when you separate those all out, knock his out, and then go back and knock out the 16, though. I don't want that 16 hanging around forever.

Neither way. Making 110 plus, you're going to knock your husband's loans out real fast. So make a plan for that. Thank you. I really appreciate Yeah, absolutely. Maybe the next six to eight months, we're knocking his out, and then we're focused on yours and helping mom and dad get rid of this and say, Thanks, mom and dad, for the help. But it's not worth letting these linger. That's what's hard. Anytime there's debt and relationships, it just It gives me a little bit of- I know.

That's what's difficult is, again, so many parents, it's in such goodwill to say, Yeah, we'll pay for the school. But obviously, she takes the loan out in her name.

That's the weird part. It's like, Well, we'll pay for it after the fact, after the loans in your name collecting interest. Right. Versus they just don't have the money to cover it. So it's a promise down the road.

That's right. Exactly. So then it just sits there and lingers, and there's a part of you that's like, okay, well, they're keeping their word now. So not that you're taking advantage of your parents, but you're taking advantage of the situation that they promised you, right? So it's not money coming out of your pocket. They're paying for it. But again, what ends up happening is this is it. And then life happens, something happens to the parents' situation. They're not able to pay. And then, thankfully, she's in a great, Lee is in a great position because she's aware of all of this and knows she wants to get out. But for a lot of people, George, they feel like they got screwed where they're like, Oh, my gosh, I have this $16,000 loan I wasn't expecting. But my dad, they can't retire. They're having... You know what I mean? Life just ends up happening. That's why you never want to mix money, debt, all of it with family.

We've seen the opposite side where the parent took out the parent plus loan for the kid, and the debt is in the parents' name. The kid's not paying. Yes. Now the parent can't retire because they've got six figures of debt that they took on on behalf of their kids. That's right. And it just hurts the relationship, and it creates tension that doesn't need to exist. I know well-meaning parents are out there, but this is not worth it. You got to let your kid make make the choices they're going to make, and you got to do what's best for you. But intermingling this always causes pain in the end.

It makes it difficult.

Student loans, man. I feel like they're going to be around for a while, Rachel.

Not going anywhere, George.

It's just going up.

And we aren't either.

We'll be back. That's right. More of your calls. That was really smooth. That was a Ken Coleman transition if I've ever seen one. There you go.

Just learning from the best.

Wow. Driving from the passenger seat. I like that. More of your calls coming up. 888-825-5225.

We'll be back.

Our scripture of the day, Jeremiah 119, They will fight against you, but will not overcome you, for I am with you and will rescue you, declares the Lord. Mark Twain once said, Keep away from people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great. That's good. That's nice, Mark. Thank you.

George, you do anything you want.

Dream big. Well, I thought it was going to be a joke about small people, and I was going to be offended.

No, George. I'm here to lift you up.

But he meant emotionally maturity-wise small. Yes. Thank you for always lifting me up, Rachel. You're so welcome.

That's what friends are for.

Oh, boy. Open phones, 888-825-5225. James joins us up next in Atlanta, Georgia. What's going on, James?

Hey, guys. I just want to say thanks so much for your time First of all, I'm just grateful for you all. We're on baby step somewhere between five and six, even a little bit, but probably not enough for college. But we feel like a little bit of an impasse now because we're a double income family, but feeling, Lord, call my wife to stay at home with our two young boys. We're two under two. So my question is, what should we do with our house to enable her to be able to do that? Because we did not plan for that when we bought our home.

So what's your income now and what would it drop to if your wife was not working outside the Yeah, it's about 144 take home, and that's after 401(k) and all that, too.

And it'll drop to about 61 take home.

Okay. Based on all that math, how much of your mortgage would that take up every month?

Yeah, the mortgage as it stands with HOA and property tax is 36, which is 36 a month, which is 25 % of our current. But obviously, it would blow past that with the new income, that single income. We're looking, we would have to be around 1860 to be 25% monthly.

It sounds like she's bringing the majority of the income for the household right now, right?

Yeah, she is, Georgia. I'm in Ministry, so she's a blessing to us.

Man, that's tough. Are you wondering, do we move in order to make this work?

Well, it feels we came here for a new role just to help serve the community, and we're in a high, we think, an area that I appreciate really fast, which is great in the long term, but now we feel this is the priority above anything financial is getting her at home. We feel like we have to sell to get to that monthly 25 % rule to enable us to afford her being able to do that. So we feel like we have to sell, but our impasse is, what do we do? Do we go to renting? We have a big stock portfolio that's been a blessing to us from our parents. I'm like, do we use that to do some move?

How much money is in there?

It's about 300,000.

Wow. What's left on your mortgage?

About 470.

Okay. I mean, I would definitely... If you could knock out the mortgage by liquidating the stock portfolio, that would definitely allow you to stay at the home that you're currently in and allow her to stay at home. Right. But there's a gap right now.

That's when '70s left.

What's the timeline here? For example, could she work for another year or two? Or is this like, Hey, this needs to happen now?

Yeah, it doesn't. We're open. Our oldest is turning two in a couple of weeks, and we have a six-month-old, so we just feel so burdened to make it happen as soon as possible. But we're trying to do that wisely and be patient and doing it the right way. We're open on that. We don't necessarily have a firm time. I will say November is our two-year mark for capital gains. That's not that big of a deal to us, but it matters a little bit.

I'm trying to think through the options. I'm wondering if there's a situation where if you applied the $300,000 to the current mortgage and did a mortgage recast, which would cost you a few hundred bucks, it would then lower your monthly payment to where it would be, you'd be on $170,000 mortgage.

Yeah, we thought about that. We thought about throwing it all at the mortgage without a recast which doesn't move the monthly, but takes away more interest with principal.

Yeah, the interest is a problem right now. How much do you love the house, James?

I mean, it's a blessing, don't get me wrong, but it's a three by three, so we're on top of each other. We would love more space to have a room to host family, so we would sell if we could. We think we could probably make 120 if we sold to get back what we put into it, which means if we put that on top of the 300 from stock, we're working with something significant.

Yeah. Then where would you go?

Yeah, we don't know. We don't know. Somewhere in the area, hopefully, and to throw a wrench at all, there's actually a house that's far away from where we currently are, but near our family, so we could probably live rent-free. But the problem is there's no ministry jobs out there that I can find. We're just trying to weigh what's best.

Do you all have any other debt? No, you're on Baby Seps 5 and 6, you said. I'm sorry.

Yeah, no other debt.

Well, we We know the options are we can't stay in this house if she decides to stay home. Unless you look into that mortgage recast situation and you can bring down that monthly payment to be closer to 25%. That's not a hard and fast rule, but it sounds like you're going to be 60% of your take home pay going toward the mortgage if you do this move. That is not sustainable. So your options are either to go rent somewhere if you sell- Well, James, and I think that there's a reality, too.

I think what you do in ministries is amazing. We love people that serve our country, that serve people in their communities and all of it. But that is a choice that you're in this line of work, and it yields $60,000. So there's a lifestyle choice there, right? That you guys as a family together say, Hey, we value this work and feel called to it. It's a higher calling for you. And that's going to have to then reflect your lifestyle as well. So there is a part of me that would say... A part of me just hates liquidating $300,000 of stock just for a mortgage. You know what I mean?

And there's probably going to be some tax burden with that.

Yeah. There's just something about it that I would almost just... I don't know, James. There's a part of me that's like, You got two little kids, you're in ministry, and your wife wants to stay home. And it's like, All right, these are not wrong decisions, but our lifestyle has to reflect that. And so it may mean a smaller house. And you're going to get some great equity in this. I know the interest rates and all of that are crazy and all that. But I would just look at a smaller place that can afford on your salary. And then in four, five, six years, when the kids go to school, if she's like, I want to get back into the workforce, then we can make different decisions then. But I just know as a mom, when you feel that pool to stay home and you have the ability to, like you guys do by making a couple of choices, it's worth it to me. I mean, I think... I mean, a house is a house. You know what I mean? But having peace and joy in your family and making these decisions of what you guys want your family to look like, that feels more important to me a house.

So I would be looking at it, and it's going to be a smaller house. It's not going to be bigger. You may not get the room to host families and all of that, but that's okay. You make 60 grand in ministry, and that's great. And we're going to have a life that reflects that. Does that make sense?

Yeah, absolutely. I love that. So with making that move, because we're definitely on the same page. We're not expecting the moon here. We'll do whatever it takes because we think that's, like you said, the highest calling. Looking at the suggested 15 year fixed on a mortgage To get within the 18, 60 a month, it's like we could afford a really, really bad home. That's not sustainable. So how would you guys recommend structuring another mortgage with rates what they are and trying to get within that 25 %? I guess if I threw enough of the cash down, it would get under that. Is that what you'd recommend?

Yeah. I mean, I would take the 120, and then maybe take- What you need from the stocks. Maybe 100 or so from the stock. I don't know. You'll have to run the numbers, but that's 220,000 to put down on house, and that should get you guys a really, really great head start, would you say?

Yeah, I would think so. Yeah.

So that's what I would do. I mean, that's the move I probably would make, honestly.

I wish there was a magic way to give you everything you want.

I know. I just don't know if I would liquidate $300,000 of stock for a mortgage. Just to keep the house. Just to keep a house while you still will have $170,000 left on a mortgage to keep up for You know what I mean?

That's where the recast could help because that will bring the payment down to.

That's right. The payment would be on 170. Would you do that? If they really want to have the cake and eat it, too, and stay in the home and have her stay at home, that would be what I would do.

I don't know what the stock portfolio was for, but I feel like it's for a time such as this to give them the life they want.

Look at the recast, James. If it's not a great option for you guys, then you probably will have to sell. Yeah.

I don't want to over-spiritualize it, but I feel like when the Lord calls you to something, usually there's some intense sacrifice involved. And so that's part of the deal. Thank you for that. That puts this hour of the Ramsey show in the books. My thanks to my co-host, Rachel Cruz, all the folks in the booth, including Ken Coleman, who is just trying to entertain us right now in the booth. Appreciate that, Ken. And you, America, we'll be back before you know it. Until next time, spend wisely, save intentionally, and give generously. If you're a leader, your personal growth matters for your organization because whatever you lead can only grow as much as you do. I know from experience. I've been CEO of Ramsey Solutions for over 30 years, and now I'm sharing that leadership and business coaching experience with you on the Entree Leadership podcast. I'm taking your calls and helping you figure out how to overcome challenges within your organization.

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