Live from the headquarters of Ramsey Solutions, it's the Ramsey show, where we help people build wealth, do work that they love, and create amazing relationships. I am Rachel Cruz, hosting today's show with Jade Warshaw, bestselling author. Good to have you, Jade. Glad you are here.

Good to be here.

And we are here to answer your calls, America. It's a free call. Why do I say that? I always say it's a free call anywhere in the country, but it's always been a free call for a long time. Toll free. Toll free. Triple, 8825-5225 so give us a call again. We're talking about your life, your money, your relationships. We are here for you. So, first up, we have Debbie in Raleigh, North Carolina. Hey, Debbie. Welcome to the show.

Thank you so much. First, I'd like to say thank you for all the education you guys have given me over the last few months. It's been very helpful in my journey.

I'm so glad. Thank you.

So, here's my story. I got divorced about four years ago, separated. Took about four years to get divorced. I was married for almost 25.

Oh, man.

So I've been navigating my life for the last couple of years, trying to figure out what works for me. I was fortunate enough to get a nice alimony through my divorce, and my ex husband had to give me a vacation home of ours that I sold for twice as much as what we valued it for.

Oh, wow.

I have $1.6 million in the bank, and I'm looking to build a house, and my financial advisor is telling me I shouldn't pay cash for my house. And I am just like, it's stressful for me. I don't know what the right thing is to do.

Is he giving you a reason? What's his reason for that?

He says it just doesn't make sense to take 37% of my money to build a house, that it just doesn't make financial sense. Interesting. When I was married, my ex husband took care of all of our finances. So this is so new to me. And I listen to your show a lot, and I hear all the different things that you guys say about what they claim. If the interest rates are lower, you're getting more for your money. If it's invested. And again, I get super confused. I just don't know. I'll be 60 in two months looking towards retirement.

So, Debbie, what other debt do you have? Any debt?

I have no debt.

Okay. What's your current home valued at?

I don't have a house right now. I live in an apartment.

Okay. And how much are you wanting to spend on this build?

So the quote for the house is.

$630, and you just want to plop down the cash, pay for it outright, and that be that?

Yeah.

And as you have retirement, do you have any other savings?

Well, I have the 1.6 million, which.

Would dwindle to 1 million, which would you knock that down to 1 million.

Right.

Okay. And what are you living off of right now? Are you still working?

I get alimony, which is about $62,000 a year, tax free. Okay. And then I have called in my side gigs for my jobs that I absolutely love, that I make about $25,000, which is, I'm a nanny, and I truly love my job. Again, I'll be 60 soon, so I don't know how long all this is going to last. As far as my income goes.

Yeah.

My alimony is lifetime.

Alimony is lifetime. Okay, Debbie.

Well, I was going to say, your financial advisor is naturally always going to yield in the sense of investing your money, of course, because that's how most of them make money. And again, we're not mad at that. There is a time and a place to invest money, and that is a wise thing to do. But it's also really stupid, Debbie, in my opinion, to go and take out a loan for something that you have money for with plenty of other money. You have a million dollars left over. If you said you had a million dollars, you went to go buy a million dollar house, I'd say, no, Debbie, we can't do that. But you're going to have a million dollars at 60 years old as a net worth of just cash, plus a $600,000 paid for house. And if you invested that million dollars, Debbie, and you did that for 2030 years, you're okay, Debbie, you have a paid for house. You have no bills.

I know that sounds so.

I almost would just fire your financial advisor because I think you're on different pages. I think the way they view money is in a very stereotypical way. And again, Ramsey, we're known as being a little bit different in this arena anyway. But from a mathematical standpoint, this is not a massive risk. You're going to have a million dollars still in a paid for house.

And there's always that equation of peace. Who wants to enter into retirement with a mortgage payment?

Right?

That's more money you'll be pulling out of that investment anyway. I mean, it's going to get paid for regardless. So you may as well pay for it up front.

Yeah. And, Debbie, the $630, that's everything, right? Land build and all, correct?

I've already bought the land. The land is already purchased, and it's on a beautiful lake. I feel really special and fortunate.

If I woke up in your shoes, I would definitely do this.

Yeah. And you mentioned earlier, Debbie, and just to kind of give some clarity around it, you said you'd listened to the show and heard about interest rates and all of that. So one deterrent for people for paying off their house is they may have a low interest rate on their mortgage at 2%. Right. Where in the market you could be making 10%. So a lot of people say.

Why.

Would you take money that could be making 10% and pay off something that you're only paying 2%? If that makes sense. So people have that argument a lot. And mathematically, we understand that. We know that is the math. But what people don't put into the equation, number one is a level of risk. Whenever you carry any level of debt, even a mortgage, there is a level of risk in your life. You owe someone something. And then the second, Debbie, is that they don't calculate and put into a formula, a spreadsheet. Peace, like what Jade mentioned earlier, this level of peace that, again, you're not strapped to anyone. You are free and clear financially, and that is the most powerful thing that you can do. So, Debbie, I'm so thankful you're listening to the show because I'm so sorry you went through this horrible divorce. But we talked to a lot of women who are in a similar situation that for the first time, they're kind of out on their own financially and they're having to learn and all of this. So, Debbie, if you stay on the line, Christians going to pick up. And I want to throw in Jaden and I's book, both of our books, to you, just to continue, just to learn and to grow in this area, because personal finance, it doesn't have to be that complicated.

But you do want good people in your corner. And I don't trust the advice of your financial advisor, if I were to be honest.

I just think, know, money is so much more. Sometimes we're just looking at the numbers and the dollars and the cents, but in this case, it really humanizes because it takes into account our psychology and our emotions and the way we feel, not just a math equation. And so, honestly, you're right. This is one of the one times where the math, it's not always about the math and how the math. Maths.

That's right. Yes, sometimes it is, sometimes it isn't. But when it comes to debt and borrowing money, there is a truth that the borrower is slave to the lender. And when you are free of that, it's an amazing thing what happens to your body, your soul, your mind when you don't owe anyone anything. So, Debbie, I think you're in a really, to go through such a hard situation. You have a beautiful life ahead of you that I think you can do really well. And I think trust your guts. Because, Debbie, you were right. How you're feeling, it's the way we would go, too. So thanks for the call.

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Welcome back to the Ramsay show. I am Rachel Cruz, hosting today with Jade Warshaw. And we are taking your calls at triple 8825-5225 up next is Emily in Pensacola. Hey, Emily. Welcome to the show.

Hi. Thank you so much, y'all, for taking my call.

I appreciate it. Absolutely. How can we help?

Okay, so my husband and I had gone through financial peace, gosh, over a decade ago, but life happened and five kids happened. And right now we're back on it. But finishing up baby step number two, we have no consumer debt. A little bit of student loans left that we expect to be paid off by the end of this year. And then we'll just be left with our mortgage. We are in a 30 year veteran loan, but we plan to pay it off early within, hopefully ten to 15 years. My question is, right now, my question is kind of regarding my credit score. We have four credit cards right now that are open but frozen. We have not used them in probably about a year, I guess. Not sure what to do with those accounts. We're kind of leaving them open right now so that if we close them, they don't affect our credit score. Our hope is that if we have the opportunity in the next few years to refinance, to get a lower interest rate, that we would do that in order to help us pay off our mortgage even quicker. But we're just not sure.

Do we close our credit cards and risk that affecting our credit score? Would that affect it drastically, or do we leave them open and frozen and kind of maintain our credit score? We just don't kind of want to tank it and lose that chance to refinance in the future.

So there is something to be said about when you're going through the process of paying off debt. There's kind of this spoken or in some cases, unspoken thought that, okay, when we do this, we're not borrowing money again. Therefore we wouldn't need our credit score again. Therefore we can close our credit cards. And so in your case, you're kind of thinking about, well, we don't plan on borrowing money anymore, but we want to refinance. And I can just tell you just from personal situation, we have a mortgage and we don't have any other credit cards and we don't have anything else. And before we had our mortgage, our credit score went to zero. We purchased a home with a loan, and our credit is almost perfect. And all we have on there is our mortgage. So you might see an initial drop just because you're closing accounts, but it's not going to go to zero and it's not going to be terrible because you still have something major like a mortgage that you're paying every single month on time. And so there is part of that that it's going to make it okay and it's going to keep it in the upper range.

And so I don't think you have to be worried about that. But my question for you is, do you have any other qualms about your credit score? Because I do think that when you go and set out to follow the Ramsey plan, you have to know eventually your credit score is going to go to zero and you kind of have to cut ties with that old way of.

So ultimately, we do want our credit score to be like, that is our ultimate goal. We don't plan on taking out any more debt. Like you had said, we have two cars. They're old, they're paid for. So basically, our credit cards are frozen in a safe. So we haven't even kind of activated the new ones that they send us all the time. But it's been more of a concern that because that was our extended length of credit attached to some of these cards, that with wanting to potentially refinance in order to get the house paid off, that we just didn't want to.

What's your interest rate now?

Like, 6.8.

Okay, so you guys just recently bought in the last year, too.

If I were you, I'd cancel them sooner than later. So that your score has the ability to kind of do what it's going to do and then even out to where it's going to even out. And then when the time comes, who knows? When these interest rates get lower, then you will have a clear indicator of what it will be and it won't be in that fluctuation stage.

Yeah. And Emily, when you look at the calculations of how a credit score is even mathematically determined, one of the pieces of the pie is new debt, and you guys aren't doing that. So in one sense, you got everything frozen, but you're not taking on new debt, so you're not playing the game naturally anyway. So there is a chance even because of that, mathematically speaking, you may even see a downtick slowly, because you're not playing that game. And so if you're not playing it, I would just cut ties with it. And like what Jade said, even it back out. Or if all else fails, you're going to be fine. You know what mean so, so in my head, it's just I don't want accounts out there floating around. Even if they're frozen.

No way.

So just being able to get rid of them. Getting. Yes. Like Jade said, when everything is back then and stabilized. And sadly, the truth is, who knows what's going to happen in the future. So I'd rather take things under my control and do something that I can do, which is just get rid of them, close it out, and then see how the world shakes out. And then go from there.

100%.

All right, next, let's go to Kyle in Charlote. Hey, Kyle. Welcome to the show.

Hey, how are you all?

We're doing well. How can we help?

So I got a little dilemma. I've just started watching the Ramsay show probably two months ago, and I'm currently in baby step one. I did get the every dollar app I am using that created a budget. So I have me and my fiance. We have a three month old baby girl. She has a 14 year old daughter that actually lives with us as well. We bought a home about two years ago. Mortgage is around 157,000 left on it. She has two vehicle loans. One of them is around 18,000, the other one is around 8000. So she also has three credit cards and she has a personal loan. I don't have any debt currently in my name, but all of her debt together is around 42,000, not including the whole mortgage. So she stays home. She's a stay at home mother. I'm a full time firefighter. I have two part time jobs as well. And I'm trying to figure out I am going to snowball the debt after I do the baby step one, which that's baby step two, but I'm trying to get her on board with the budget.

When do you get married?

We actually don't have a marriage date yet. That's what I was going to say as well. So our relationship is actually hanging on by a thread because of we don't see eye to eye on the financial state.

That's a big deal.

Kyle, has that changed in the last two months since you've been watching us, or has it always been like that?

So it's been like that more since my daughter was born.

Okay.

I've always been a saver. And now that my daughter's born, I grew up. My parents separated when I was twelve. I know how that affects the kid and I don't want that. And I look at the future like anything can happen, and she's not like that. I asked her other day because I was listening and I was like, what is your ten year goal? Where do you see yourself in ten years? And she told me, she said, I worry about today. I don't worry about ten years.

And I'm like, so when you ask her her philosophy on money and you're asking her, hey, are you at a point in life where you're done borrowing? How do you feel about paying off debt? Is she able to give an answer that has any promise?

So she will say she don't want to borrow any more money, but it's just like now she's made some financial decisions that I didn't agree with and I didn't have the control over that at that point. Listen, she can go do what she wants.

The hard part is you guys are. The situation is made more complex because you're not yet married, but you're kind of in this situation where your life seems like you're married. So you feel like, listen, I have to step in her debt, my debt. And so the whole thing is very confused and I think that it is as much as you can keep, put some clarity around that. And either marry her or not. But I would not start paying off this debt until you've decided if this is the person that you're going to spend your life.

Yeah. Yeah. And Kyle and I would have the conversation with her from a vulnerable, not just. Well, what are you you pointing. Tell her you, what's going on in Kyle, what is the fear that you have? What is going on? And start these conversations? And you've said this before, Jade, on different shows, but it sometimes takes time, right? You've had a mindset, a natural shift. And the Ramses probably confirmed that because we lean probably more on your side, Kyle. But you guys together need to sit down and have these conversations. But for now, keep the finances separate. You don't need to be paying on her debt, because if she's not getting out of debt, she's digging herself deeper in a hole.

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Today's question of the day comes from Taylor in Missouri.

She says, my husband graduated college about ten years ago and has not paid off a dime of his $80,000 in student loans. Anytime I approach him about it, he just blows me off. I'm a stay at home mom with our third baby on the way, and I'm afraid the government is going to garnish his wages. What should I do? Well, I mean, yeah, you're getting up to it 100%. If you don't pay your student loans that first day that you pass due, that's considered delinquent. And then if you're delinquent for 90 days, you're considered default. And then at that point, a lot can happen. Number one, your loan can go into acceleration, where basically the whole amount is due at once and you're no longer eligible for payment plans, and you're no longer eligible for forbearance or whatever those other things are. And they can start to garnish your wages, amongst other things. So if I were you, I would be very concerned about this. These are those times where you have to have really clear boundaries in place, and you have to have a what if? I hate to say it like an ultimatum, but this is the way I feel, and here's what I believe needs to be taking place.

And if these few things don't start to take place, then this is what's going to take place on my end. And so that's the way I would approach it. My guess is she doesn't say what the conversations have been, but I would approach it.

Yeah. And if he's a husband, that blows me off.

That's a problem.

It's probably not just in this scenario either.

Right.

It's probably not just about money, that that is how your marriage functions, because it's not like, oh, he's so empathetic and listens, and we're a team here and there with everything else. And there's one thing he's just not. He just turned. That's usually not the case. Usually there's a pattern in who you are as a person that's pretty consistent through all the situations in life. And so my fear, Taylor, is that there's probably more of a marriage issue here than the fact that he's just not paying his student loans, which is an issue, too. So, yeah, I think there's a lot of work to be done, I think, on the marriage side of this, because a husband that just blows off what a wife says, or a wife that just blows off what a husband says, there's obviously not a level of respect and empathy and humility there. And those are some ingredients that you need to have a lifelong, healthy relationship. And so I would work on that aspect, and then out of that, hopefully.

Comes that's a case for counseling. And if I'm in your shoes, in the effort to keep my family safe financially, I'm just going to reach in and pay the bill. I'm going to reach it. I'm going to say what's the login and I'm going to pay the bill. And if that causes a problem. Again, to Rachel's point, the fact that.

He'S functioning like he doesn't even owe the money and paying on it.

Yeah, it's pretty wild.

Yep.

It's the same thing. Like, if the mortgage wasn't being paid and you knew the money was there, pay the. Like, don't wait for somebody to do something that you can do to keep the family safe financially and then deal with everything else in counseling. That's Jane's take.

I love it. All right. Up next, we have Emily in El Paso. Hey, Emily, welcome to the show.

Hello. How are you?

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

I want some advice on how I can start tackling my student loans. I'm still in school and I have about two years left and I want to try to get ahead of it, even though I don't have much income, so that I'm not really drowning in it when I get out.

How old are you? Are you a traditional student?

I'm 25. I'm about to start my third year of medical school.

Okay.

And how much income are you bringing in?

My income is really just allowance that I get for my parents. It's $400 a month, and I realize I don't need to be spending that much on food every month.

So what's your plan? Take half of it and start paying student loan payments?

Yeah, I thought I could probably manage to do 200, $300 of it per month and put that towards my loans.

So this is medical school, Emily. So how much do you owe now? Being two years in, I currently owe.

A little over $23,000.

Okay.

That's not as bad.

Wow. Okay, good. How are you doing that? Is it the school you chose or do you have scholarships? Do you have a situation that you're getting helped?

It's a combination. I am doing school in state to where I live, so the tuition is already a little lower, and my school pays for about half on scholarship. So in general, I usually only need to take ten or twelve grand out per year. I think on the conservative end, I'll probably need to do the same for the next two years and probably double what I've taken out. Now.

Honestly, if I were in your shoes, I would flip it because these student loans aren't due yet. I would focus on piling up cash for the coming semesters so that you're not continuing to take out more debt. And if possible. Listen, I know medical students. It's crazy. If there's any way to pick up any extra work that you can on your off days, on the weekends, whatever it is, I would do that and I would see, okay, can I stack up $1,000 a month? Is there any way where I can find that and make that happen? Because if you can do that, then you're well on your way to taking care of the next 10,000. Did you say 10,000 per year or per semester?

Per year.

Okay, then, yeah. I love that goal. Try to get $1,000 a month and then you're not taking on any more debt. And when you graduate, you can tackle this. 23,000. My guess is they're subsidized, so they're not going to gain interest while you're in school, Emily.

They're unsubsidized.

Well, that sucks. But I still would not change the course of action.

What?

Do you think you'll be worried about them right now?

No, I worry about not accumulating more.

Debt when you graduate. Emily, what type of work are you going into? Do you know how much, on average, people are making in that field?

So, I want to go into surgery. But in general, a first year resident, regardless of specialty, I think that the general average in Texas is around 50,000 a year.

Okay.

And then what's your earnings beyond that? What do you see your potential being in year 1234 or five?

It goes up a little bit per year, but it depends. I might be able to find better numbers. I'm not really sure.

No, you're fine. I was just trying to get a gage. Because the goal would be, like Jade said, if you can do something where you work weekends, even some nights throughout the week, and bring in $1,000 a month, that would be huge to cash flow the next two years. Which means you'd have $23,000 left to pay. And at that rate, with what you're making, it could take two years at that point. But if you work extra above your normal salary, you can get it paid off even faster. Right. So I think it's this idea of looking at the math, looking at the numbers, and making a plan, knowing when you graduate, you're probably still going to be living like a college student while you get these paid off.

Yeah, I don't mind that.

Yes.

Great.

Well, I appreciate you even thinking about it, too, in mid school. Because for a lot of people, it's once they graduate and the bills start coming that they're finally like, oh, my gosh, how do I do this? How do I navigate this?

She's probably seeing that balance grow because the interest is accumulating and she's probably.

So, yeah. What Jade said, though, I think is wise, is to be able to do as much as you can to cash flow that next semester. But, man, this is a great story, though, for all of you that want to go to medical school, because usually when we get these calls, law school, medical school on the show, it's six figures in debt. And so listening to somebody that stayed in state picked a school, possibly because she got so much scholarship on that side that half is getting paid for, which is just incredible. So, again, all these advanced degrees to go into these fields that are so needed, and we're so thankful for. Right. Medical degrees and other things, there's still options out there. And so for those of you that may be in that situation, be creative in the way you think about this. I think the hard thing is people fall into the normalcy of, well, it's medical school. There's nothing else I can do. I'm going to go to whatever school, pay it, figure it out when I graduate. And so, talking to someone like Emily is so encouraging because she made a couple of calls right there and learned some things, and it was great.

Yeah, it's possible. Where there is a will, there's a way.

Clearly, when there is a will, there is a way. And those student loans, jade, for you and Sam, that was a big chunk.

Of, listen, your debt.

So I'm like, it's the one that just, I feel like people, it gets dragged.

I think people think that they can just forget about it and, oh, I'll just put it on the shelf and it won't bother me, I'm like, yes, it will bother you, and it will continue to accumulate. And even if your wallet's not feeling it, because I know a lot of people are on zero payments because of the administration. Your body feels it. Make no mistake. As John Deloney would say, your body keeps the score, and your body knows when you're not safe and debt puts you in an unsafe position.

That's right. This is the Ramsey show. Hey, guys.

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Ramsay, welcome back to the Ramsay show. Let's go to Anne in Pittsburgh. Hi, Anne. Welcome to the show.

Hi. How are you today?

Hi. We are doing well. How can we help?

Well, I hope you can help. That's my question. Is there any hope for our situation? We have been married 19 years. We're in our 50s. We have one special needs son. We're both self employed. I have a business from home, which has been very helpful with our son and being home when he gets off the bus, all that kind of stuff. My husband has always controlled 99% of the finances. My name is not on the bank account. I don't have a login. His business and our home bills are combined on the same account, which I know probably should not be that way. We have a home loan of about 243. If sold, it might be worth $700,000. The big problem I came to realize is that our credit cards are at $209,000.

Wow.

We have a car loan for 21. And some of the credit cards are his business only. But as far as I'm aware, in certain states, your debt is your debt and half and half debt and assets. So I guess I'm trying to figure out, I can't get through to him. He just blows up when I try to say, hey, let's try a budget. Hey, here's all the credit cards on an excel spreadsheet that shows all the percentages. It's just kind of banging my head on a wall, and I don't know how to protect myself, how to protect my son. The only good news is that I do have a 401 that is in my name from before we were married. And then I have a little bit of savings, and then he does have a life insurance policy. God forbid anything happens, but he's not well mentally, and he's been threatening a lot of things. And I thought I should try and get some advice.

Are you thinking about walking away from this?

At this point, I really can't right now. I can't right now. My business is here on the property. And if I would leave, the other thing is I would be taking my autistic child away from the only home he knows that he's had his whole life, his dogs, everything that's comfort to him.

And your husband's not open. I'm guessing based on what you said.

I think he knows that he's in the toilet. I think he realizes, I mean, he's paying the minimums on the credit cards. That's it.

Where's the revenue of your business going, Anne? What account is that going into?

It's going in with everything else. I don't make much. Last year, he had it written down here last year.

Hey, do you think that there could be IRS debt as well? Because when you tell me that all the business bills and all the personal bills and everything's together, that sounds like a mess.

I don't. I think he's pretty OCD about keeping track of stuff. Last year's gross income was 233. But then by the time we got to the bottom of the income, the income is 26,000. Once he takes off, depreciation, all that kind of.

What type of business does he have?

He's an electrical contractor.

So he's making 26,000 a year. He's paying himself 26,000?

Technically, yeah. And it's just him. He doesn't have employees.

And what about you?

It's just myself.

And what do you bring in? What's your payment from your business?

I'm lucky if I bring 10,000 or less.

So you guys combined are living off of 36,000 and you've got the 21,000 in card debt. And how much in credit cards? 206. 29209. Okay. And is there anything else that you think might be out there? Not including the mortgage?

No. And of that, 200 and 940K is just for his business. But of course, I'm pretty sure I'm liable for that as well.

But everything else. And so is he using these credit cards to keep you guys afloat? Just month to month?

Yes.

And when you said he's not mentally well, do you mind going into a little bit more detail on that?

There's increased alcohol. You can tell there's depression upset. We'll even mention the debt. We'll mention. My wife told me that we're this much in debt and she must be full of it.

I don't believe it.

And he'll say this in front of his best friend and it's like, oh, my God. Now he's like sharing it with folks. But I think he's embarrassed. I think he doesn't know what to do.

Yeah, I do.

Know, Anne. It just sounds like my first protection is for you. And the fact that you don't have any access to anything, Anne, I mean, there could be a whole other life he's living, right? I mean, on different levels, on different scales, financially, not, you have no clue what's really going on because the money is kind of the paper trail to a degree, on life and being able to see that, and you have no access to that, which is a hard line I draw. You have to be able to have access and have everything visual that you see. I mean, it's one thing if you're like, oh my gosh, she's a spender, I'm a saver, I don't know what to do. It's a whole other thing. And you cross another line into another level of seriousness when you don't have the ability to access your money. It's a more serious weight there that I hold now in this conversation that creates more ultimatums. And I hear you say, like, I can't leave all of that. But what I would do is that there's other ultimatums in this marriage that has to change because you're not safe at that point.

Right?

Right.

How'd you find out about the 209? Just curious. Did he tell you or you discovered it?

Oh, he did not tell me I discovered it. I started going through his files and I made like the biggest excel spreadsheet you'd ever want to see in your life. And I just tried talking to him, and we were okay there for a while. Oh, I'm paying it down. I'm paying it down. And then once a year, I'd pull these files again and get everything sorted. And I did it again this year and I said, he's to the point now where everything is minimums.

Yeah. For me, this falls into what I would call a level of financial abuse and infidelity, because he's keeping everything on his side. He's making moves without sharing them with you, and they're at the detriment to you and your family and your son. And I would push back on the fact that there's nowhere for you to go. There's always an option. But I can guarantee you this, it is not going to be a comfortable option. There's going to be no piece of it that feels comfortable or easy.

Right?

You know what I'm saying? So I do think that you have to give yourself an ultimatum, and you need to say, all right, what am I going to do? What are my limits? What are my boundaries? And what is my time frame for me to, what is an indicator that this is moving forward or that it's staying the same? Does that make sense? You have to have something very real and very measurable for this situation.

Right.

So whether that's, I'm going to offer counseling and I'm going to give him 60 days to agree to it, or I'm going to ask him for these account passwords and I'm going to ask him for complete transparency and I'm going to give him 45 days to wrestle with that and get to that point. You've just got to make it very clear. Write it down on paper. If you have a friend, get a friend. If you have a pastor, find a pastor. But you need somebody who knows. Does anybody else know this is going on besides us two girls on the radio?

Yes. Okay. A few friends, close friends and family members.

And what are they suggesting? What are they saying? Since they know the situation even more.

And they know him and they know he's not right. I married the 37 year old man who was set in his ways, and unfortunately, he is a collector and that's where the money has gone. He collects things and to the point I said, can we sell some stuff?

So is he hoarding, too? Like, are you in that sort of a situation?

No.

Okay.

No, it's just enormous collections of things that are really our only hope. These assets that could help us get out from under this, but he's not willing to touch them. I'm not selling any of my stuff. He says, great, because years ago he did. He would sell a stamp collection or he would sell some other collection.

So you're just deterioration. So, Anne, I would bring in a third party in that again. And it's so hard to say this on this side of the desk because now we have to go. But you're going to be living this life. But not only is it a secret, but you're also behind. You're trying to live on $34,000 a year as well. So there's two ends of this that are really urgent. So I'm so sorry. I hope this was helpful to give him some ultimatums. But I so appreciate the call. This is the Ramsey show, live from the headquarters of Ramsey Solutions. It's the Ramsey show, where we help people build wealth, do work that they love, and create amazing relationships. I am Rachel Cruz, hosting this hour with Jade Warshaw, and we are here to answer your questions. So give us a call at first. We have James in Mesa, Arizona. Hey, James, welcome to the show.

Hi, Rachel.

How are you doing? Well, how can we help?

Well, quick question. So recently, I'll try to give you a little background or context here. Recently, my brother, who is 57 years old and a friend of mine who is 42, I believe they recently came to me and asked me for some advice of how they could get out of debt based on their circumstances and situation. I felt the best advice to give them, even though I've given them Dave's book, even though I had them listen to the show, that based on their situations, bankruptcy, I think, is the best option. So my question to you, when is taking baby steps or filing for bankruptcy is the better option than taking baby steps?

Well, I mean, I'd want to know more about their situation, but honestly, this is just me and Rachel will give her take. When I think about bankruptcy, they're either going to sell off your assets and put you on a payment plan, or they're going to just put you on a payment plan. And to me, those are all things that you could take on and do yourself. Like, you can look through your assets and sell them off and you can call and make a payment plan. There's so much of that that you can handle on your own. Obviously, yes, some of the debt will be written off, but I'd want to know more about their situation.

Well, first of all, Rachel, they have no assets. The only assets that my brother has, he is turning 58. He will be able to retire from the police department in a year.

Okay.

He has a pension. He has $210,000 worth of debt.

Okay.

Then the answer for me is automatically no. Automatically no, that I would not file bankruptcy, because I think that 210 of debt is an amount of debt that can be paid off, especially when you are able to make an income. If you told me that there was something, a disability, something that was keeping him from being able to work, listen, you're talking to someone on the line who paid off $460,000 of debt with my spouse. So it's going to be hard to convince me otherwise, but keep going. Keep going.

Yeah. Some of the debt, I would say, well, they're student loans, which I think, if I'm not mistaken, that does not bankrupt.

That's right.

But some of the debt, even some of the debt is, to me, is personal loans that they owe to people. We're talking about, when you add it all up, they probably owe $100,000 worth of debt that they just owe to people that they cannot pay back. I was in a situation like that myself at one point where I loaned people money, trying to help them out because they got behind on their mortgage and this and that. I went to each of them and just said, look, just give me as much as you can. And the only way, the best way for me to put it is I probably left 50 grand out on the street.

Does he owe you money, James?

Pardon?

Does he owe you money? Are you one of those? 100,000?

Yes, I am one of those. My mom is one of those.

How much does it in a formal state? Because if you file bankruptcy, is it formally money that has been lent out? It's not through a bank. It's just people giving their own personal money. So even bankruptcy.

And that for, in the case with my brother, it's personal money. It's car debt. It's title loan debt.

So you were loaning him money to pay his car note and his title loans?

No, I will not loan him money. I will not loan him money.

Pay it. Help me understand this, because I understand it's not your situation. You're calling on behalf of a brother and a friend. You told me he was a police officer, law enforcement. He's got a pension. What was keeping him from what got him in this situation? Was it habits?

Like everyone, Rachel? Yeah. Living beyond his means. Credit card debt. He has a timeshare taking trips that he really could.

Here's the thing.

Of credit card debt.

Did you hear what Rachel said? And it's a good point.

Yes, I did. Yes.

And bankruptcy is not going to change that. And here's the thing. If he was ready to change his behavior, he'd be calling us, not you. And like you said, you gave him the total money makeover. It sounds like you've been inserting yourself into this situation, and you can lead a horse to water, but you can't make him drink. So it kind of sounds like he's just not interested. And you love them, right? So you're trying to. And you see that this ends badly, but there's a part of this where you really just have to shake the dust off your feet and keep walking and doing what you know to do and living by example. And when he comes to you for help, when he's ready, you'll be there to help him.

Yeah. Okay. I was wondering if that was an option. When is that option? When is that point of no return? When I say bankruptcy, Rachel, I'm talking life bankruptcy. That's going to every person that you owe and just say, look, I can't pay you. I'm talking about literal bankruptcy, but also life bankruptcy for all the personal loans that he owes to people.

Yeah, he can do that.

He can go to someone and just say, look, I can't pay you. I have to reorganize. I got to get out of this debt first, which is not fair to me, his mom, or a friend.

No, it's not right.

Whoever.

Right.

I agree.

That's right. And I think he can have that conversation, because this is the reality of what it is. They're not going to get their money. The reality is they're not going to get their money. That's right. So he can in good conscious.

I realized that at one point, with all the people that I tried to help, I'm not going to get my money. So I went to them. Like, for example, there was someone who owed me $8,000 because they were behind on their mortgage. And I helped them out. I asked them for 10%. I said, could you give me 800?

James, you need to stop loaning people money.

Hey, wait.

We've been talking about the brother and the friend. Now I'm going to talk about you. You need to stop. You're not a loan shark, and you're not a bank. You need to stop lending people money. Especially family members. Don't lend them money. Give them money if they need. And you get to decide if it's wise for you to do that. But I think that you need to stop lending people money as well. That will be your piece of medicine to take away from this call 15 years ago. Okay, good.

15 years ago, I made that decision. I said, I will never loan anyone money.

Good.

Again.

Good. I think that's a great.

And I've stayed on my financial plan and my investment plan. It's my brother, my mother, it's everyone.

Yeah.

Pray for him. You got to pray for him.

And it is tough, and I totally hear the care in that. But also, James, there is a healthy boundary for you to draw. This is not your life. And you sound way more concerned than maybe your brother even is. And so he's a big boy. He's a grown man. He's a police officer. He can be able to deal with it. You're not going to be able to convince or change him. He has to be the one to do that. And so bankruptcy is an option. It may be 0.2% of the situations that we hear majority of the time. It's people's habits and their ability to put income towards debt and pay it off and sacrifice. This is the Ramsay show.

Hey, guys, it's Rachel.

I love movies with messages of empowerment and hope, and I know y'all do, too. So let me tell you about a new movie called Cabrini from the director of the Sound of Freedom. It's based on the true story of Francesca Cabrini and her fight to improve living conditions for immigrant orphans in the late 18 hundreds. And I cannot wait for you to see her story on the big screen. Starting on International Women's Day, March eigth. Get tickets for Cabrini now@angel.com. Ramsay. And use code Ramsay 20 for 20% off your ticket purchase. That's angel.com ramsay. One thing we're so excited about, Jade, is that we are having an entire weekend here at Ramsay Solutions headquarters, and we're going to be hanging out for an entire weekend for the total money makeover weekend event, May 10 and 11th. So this is one weekend, and it's going to be full of content. This is basically your crash course to everything that we teach around money. It's going to be all new content from all the Ramsay personalities. We will all be there. So regardless of what baby step you're on, this event is for you. And we're going to be doing a live taping of the smart money happy hour with myself and George camel on Friday night, which is always so fun.

And throughout the event, you guys, through the whole weekend, we're going to be doing so many Q as we're gonna be hanging out with you, answering your, um, it is such a powerful come. If you have come to a live event, to be in a room with thousands of people that are like minded, they're walking the same journey as you. It is so encouraging. Hopefully you learn something new, you're empowered again. It gives you hope, and you're able to keep going on this journey. So again, it's Dave Ramsey, myself, Rachel Cruz, Dr. John Deloney, George Camel, Ken Coleman, and Jade Warshaw. So get your tickets today. Our platinum tickets are already sold out, but you can still, or our platinum plus tickets are sold out, but you can still get platinum or VIP. And early bird pricing ends today, March 7. It is done with early bird pricing today, so make sure to go get your tickets now before they sell out@ramsaysolutions.com. Events. And again, if you buy them today, you can save up to $100 for the total money makeover weekend event here, May 10 and 11th. So we hope to see you guys there.

Big deal. That's a big deal.

All right, next is Jenny in Oklahoma City. Hey, Jenny. Welcome to the show.

Hey, thanks for taking my call.

Absolutely. How can we help?

So a little bit of backstory. My husband and I have three kids and one on the way. Congratulations. Thank you. I just started listening to you guys probably about consistently for like a month or so now. So I'm really fresh and I got super excited. But I realized after listening that it was probably the worst time to get excited because I know you guys have something called stork mode.

Yes.

So I was just curious. I'm due in April and we have a student loan for 4900 and then a credit card that's about at 45. And then we have our car loan. And then I just filed taxes, so we owe about. Haven't finished e filing them, but I believe they're going to come to around 3000 or 2800. And so I just wanted to get your advice on what exactly to tackle first. We do have a little bit in savings. We've got about 8000 savings. So based on prioritizing what the best thing would be to do once I have the baby and then also wondering, should we sell the car and get a beater or should after we pay off these two little small ones, should we just work on paying off that car?

How much do you guys owe on the car?

$26,000.26.

What's it worth if you were to sell it?

About 22. So there's that little gap there too.

Yeah.

Okay.

And how much do you guys make a year?

Well, I'm just currently on leave, so what we usually make would be about $98,000.

Okay. And then you have another vehicle that's paid for?

Yes.

And what kind of vehicle is it?

It's a four door Honda Accord.

So if you were to sell this 26,001 and put 4000 with it from your savings this is assuming after the baby, by the way. And then let's say you took the other 4000, maybe put another 1000 with it and bought a $5,000 car. I'm assuming the main car would be the other car you have.

Right. Because once we have the baby, we won't all be able to fit in the little car.

Okay.

Are you able to fit in the car you have now that you owe on?

Okay.

Yes.

I see.

Okay. April is coming up fast, so you're good. So the first thing I would do is the IRS, which you owe in taxes for sure. That's my a one. So go ahead and get that out of the way. That leaves you with 5000. And then I would pay off the $4,500.01 after baby's here because that'll get you guys down to your $1,000 emergency fund. And then I would knock out the 4900 next. And then looking at the car situation.

I might keep it?

Yeah.

If you think you can pay it off in two years or less, which you can. I think I'd keep it because the size of your family and the option, if your family were different, if things were different, it might make sense for you to sell it. But honestly, in this case, with the amount of money that you guys earn and with the size of your family, you need a vehicle that will fit your entire family.

Yes. And it's not an outrageous percentage to your income either. Right. If you owed 26,000 and you made 36,000, then, yeah, we got to get rid of this car. But you guys make 98, which is great. So I would keep the car like Jade said. But the great thing is, so many of these are like little ankle biters, Jenny, that within 60 days after having the baby, you could have majority of this paid off and just have the car left.

What's the car payment?

It's 454 50.

Okay.

I've heard worse. Like, it's not great, but it's not like $768, $1,100. Yeah, exactly. So, yeah, I would do it exactly like Rachel said, when you have this fourth baby, what's the plan? Are you going back to work or are you stay at home mom from here on out? And how will that affect the income?

Well, I currently have the option of hourly pay, so I've got a job that I can go back to or I can do real estate. Real estate hasn't been exactly the best right now, as you guys probably know, starting from scratch.

Real estate or you were doing real estate before?

No, I've had it on the hook for about seven years, off and on. Just kind of. Okay, I'm pretty established, but kind of going back into rebuilding because I did take some time to just work hourly and more consistently, so it would be a little bit of a rebuild, but nothing too complicated.

So you think you'd still hang out around 98,000?

Yeah, for sure. No matter what. That would be where we would be to make ends meet. And then if real estate took over, we'd revisit it at that point, but we would definitely want to stay around the 98 just to suffice.

Yeah. That's great, Jenny. Well, you're in a great position. I mean, I think after baby comes knocking out the IRS, the other two debts, and then tackle the car, which you guys can do. So well done, Jenny. I'm excited for you guys. I think you're going to get some really great traction quickly. That's always encouraging when you have even that $8,000 fund that you guys have, even to be able to throw some of the money at that and just get these out of the way. It gets you moving, which is so great.

All right.

Up next, we have Luis in Cedar Rapids. Hey, Luis, welcome to the show. Thank you. Absolutely. How can we help?

Well, I want your advice on whether or not I should finance a house for my son.

All right.

Well, yeah. He has always followed Dave's advice, so he has never in his life borrowed money or had a credit card. So when he went to the bank to get a mortgage, he had no credit history, and no one would loan him the money. He doesn't smell like he has to buy a house, but he would really like to. We would like him to own his own home. He has a plan where he would rent out rooms to some friends to make additional income with that house. He's 36.

He's 36.

We were originally going to go partners on the house where he has saved up a significant sizable down payment, but with the cost of, you know, how, the cost of housing just shot up in the last year, and so we said we would go partners originally.

Is he married?

Both of our names? No, he's single.

He's single.

Okay.

Yes.

So he's been living with you?

No, he hasn't lived with us since he was 21.

So he's just been renting. Okay.

He's been renting with.

He should be able to do manual underwriting. Louise, if you have a rental history with payments and you can prove employment for two years, did he try manual underwriting?

I'm sure he's never heard of that. I have never heard of that.

That's what you got to do.

Yes. If you don't have a credit score, you have to do a process called manual underwriting, where the bank or the mortgage company actually looks at you, the person. And again, you have to be current on all of your bills for two years, show renters history that you pay on time and employment for almost two. So there's a little bit of work in it, but they can actually underwrite you, the mortgage. So, no, Luis, I think it's a kind mother's heart in it, but I would let your 36 year old son do it on his own.

And every mortgage company doesn't do that. You have to do your due diligence.

Yes.

Go shop options. This is the Ramsey show. Welcome back to the Ramsey show. I'm Rachel Cruz, hosting with Jade Warshaw, and we are answering your questions today. And if you are new to the show, love the show. Listen to the show. An old listener of the show, any of you, it would be wonderful for you to share it with your friends and your family. This is one of the ways that we can spread the word and honestly, word of mouth. It's one of the best marketing tools that we have for you guys. Listening and watching, sharing it with the people that you know and that you love. Because our goal for people is to get control of their money. We want everyone to have a plan from point A to point B that is effective and helps them when it comes to their money, to get control and to build wealth, to change their family tree and have peace, ultimately, is what we're shooting for when it comes to the subject that is not peaceful for a lot of people. So, yeah, leave us a review. Share the. We so appreciate you guys listening and watching.

All right. Up next, we have Jared in Cleveland. Hey, Jared. Welcome to the show.

Hey, Rachel. Hi, Jade. Thank you so much for having me.

Absolutely. How can we help?

Well, I am in. Well, JM doesn't begin to explain it, I guess. I'm a bivocational pastor. I work 60 hours a week for my secular job and about 30 hours a week in the ministry. I'm married. I have two wonderful boys. Love my church because I love my God. God's been good to me. But I've got back against the wall. My back is into the wall, if that's a possible thing. I've got a mortgage that's out of hand. I've got two car payments that are out of hand. Kind of got dealt a bad hand when it came to those particular debts, got lied to in both of them, and it cost me a lot more and stuck me where I kind of didn't have a choice. But I'm looking at a mortgage where I'm paying $1,700 a month. I'm $18,000 in negative equity in my car, and that's. And I've maxed out my credit. I've got nowhere to go. And I could really use some sound, godly advice from you ladies.

Oh, Jared, I'm so sorry. I know it's stressful, and especially when you feel like you're trying to do the right thing and it's not gaining traction, then that is. Yep. Hopefully. Hopefully, we can help here. Okay. So, what do you do for your vocational job that you said?

So, I'm an on call supervisor, and what I do is I take care of people with developmental disabilities.

Okay. And how much do you make in that job?

My take home is 1900 and it's biweekly.

Okay, so 1900 every two weeks.

Correct.

Okay.

So how much do you make as a pastor? What is that?

Bringing in my salary is 1500 a month. And then I have housing allowance and stuff like that, too. I don't know if that figures into this or not, though.

Yeah, it does. So what's your housing allowance? Because is that going towards your mortgage?

It is, yes. And it's $1,900.

Okay, good.

So is your housing allowance covering your mortgage then? If your mortgage is 1700, yes, it does cover that.

And it usually covers most of the electric bill as well.

Okay. Yeah, that's big. Okay. And then how much do you owe on the cars?

For mine, I owe just under 25,000. Like twenty four seven. And then for the other one I owe 8900.

Okay.

And how much in credit card debt?

12,500 for the one. And then the other one is a total of 13,000.

Okay. And does your wife work outside the home at all?

She does.

She works from home?

Yeah.

Okay. What does she earn each month? Bring home?

It depends on the hour she's able to get, but I'd say she's about $800 a month or so somewhere in there.

What does she do?

She does medical billing.

Okay, so I've got you at $8,000 a month between the two of you. Obviously, 1700 of that is going to the mortgage. Okay. So help me, when I look at this, I'm like, okay, mortgage is covered. There's some debt here.

It's like 6500 left after mortgage. So where's it going?

Yeah.

Are you guys on a budget?

Yes, we are on a budget where we're at now. So the credit card debt that I gave you, one of them was the twelve five. The other two are through. I'm doing a debt consolidation because they were maxed out and I couldn't afford the minimum payments, so I moved that into one payment. And then also I'm nervous. I'm nervous.

You're fine. We have time. We have time.

You're good.

And then in addition to that, I pay for my son. He goes to a private christian school.

That might be an area. How old are the boys?

My oldest is seven. My youngest is four.

So seven and four. How much is tuition for the private school?

It is 3700, I want to say, for the year.

Okay, what else? So you're paying $308 a month for?

Yeah. I'm curious where the $6,500 is going, though, because how much payments for your car, how much are they for? Your car?

My car is 480 a month. And then I pay for my wife's car as well.

Which is how much?

240.

Okay, so I've still got you at 5280. Keep going.

Okay, then there was student loans involved in that, and that is now no more because the president, he just took those.

Well, let's just pretend. What would. The minimum payment. What was it?

200.

Okay.

-200 so now we're at 5080. Keep going. I'm just helping you work through this. It's not to try to call you out.

No, not at all. I appreciate it. Let me think then. Cell phone bills, 190 a month. And then I've got car insurance, which is up at 180 a month. Then, of course, we're talking about tithe. So 10% of the amount that I.

Gave you there is going to 800.

Yeah.

Okay. 3900.

What's been on these credit cards, Jared? What are you putting on for $13,000 and $12,000?

Well, a lot of that was just trying to make the ends meet, not having enough to make the bills. My income is higher of the last couple of months because I started asking for more hours at work.

So that's new.

It was below that.

Okay, so, Jared, I mean, just looking at these numbers, there's not like a. Oh, I forgot the $3,000 bill here. Whatever that is.

Right.

Like, there's a month. There's not a big gaping hole. I may just call it out. Jared, I just feel like you guys have been sloppy. Would you agree?

Well, I wouldn't disagree.

And, Jared, and I'm going to say this because you mentioned this, and as believers in this room, I think we're spiritually, somewhat consistent. Scripture has nothing good to say about debt. Nothing. Every time debt is mentioned, it is in a negative fashion. Now, it's not a sin. We'll still go to heaven. It's fine if you still got your credit card debt. Like, okay, everything's fine in that regard. But the wisdom that comes from every time it is spoken, it is in a negative fashion. And so, in that sense, I would say let's lean on the spiritual conviction that we all believe here from something that is consistent and that is eliminating debt. So you've been running to something that is getting you deeper and deeper in a hole. Right. And so I think for you guys, if you tighten this up, Jared, I'm encouraged by it, because I think your numbers are there. I really do. And so I want you to hang on the line because Christian's going to pick up and we're going to give you every dollar premium, and I want you to cut up these credit cards. And I want this to be a moment where a line is drawn for you all.

And you're going to say, no more. We are not running to these credit cards to make minimum payments and make ends meet because you don't need to. You have thousands of dollars, and you have a really blessed situation of even in this pastoral role, to have the mortgage paid for the housing allowance. I'm like, you guys are in a really great position. You're going to be working a crap ton. You're probably exhausted, Jared, working 90 hours a week, but for a period of time. Truly, if you guys threw five grand at some of this, I'm like, you could be knocking this stuff out 100%. I mean, month after month. And so I would get on a really tight budget that there is nothing, no expenses going out that are not necessities, Jared. And you guys can do this. I really believe in you. I think you can. This just has to be a turning point from here on out, this is the Ramsey show.

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

Essentials welcome back to the Ramsay show. We are taking your calls at triple 8825-5225 up next is Lauren in Raleigh. Hey, Lauren, welcome to the show.

Hi, Jade. Hi, Rachel. I absolutely adore you guys. I'm very thankful that I could ask you guys my question.

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

So me and my husband, we purchased our house. It's 1100 sqft. We purchased it five years ago. We figured, okay, in five years, we'll be able to buy our next home. But then it turns out that market, everything, our house, that was our dream is now what our current house is worth.

Best late plans, I tell you.

Yeah, I'm self employed. My husband works for a company. I pay currently $550 in rent every month. For the space I have, we currently owe 136 75 on our house. Our joint net income is 132. And my question is, if it's a good idea to expand on our house, adding a workspace for me so I can consolidate clients in and out of the home. I have a set amount of clients. I don't take new clients, so I feel comfortable there. And adding on a master bedroom so we can have more space to create a family eventually. One thing is that when I spoke with my town, because we're town limits, when I spoke with them two years ago, I asked them in regards to this, and they said, well, you can't have a separate structure outside the house. It has to be attached to the house, and we cannot approve it until after you build. So you have to build, and then you go through the permitting.

That makes no sense.

What happens if they disapprove it after it's built?

I can't use it for work, but it can be a part of our house. And so that's the thing, is what they say is it's kind of risky. But basically what happens is they'll have a town council, they'll open it up to the public, and then if one person says, hey, we're not comfortable with her having a business out of her house, it could be like, JK.

So is this just in an effort, like, you just don't want to pay rent for office space anymore? That's the whole point.

No, it's not that. It's every single place I've rented at. I feel like I just keep getting issues of either last minute changes on management. So I left my last place because I knew the girl was about to sell, and I was like, let me find another place.

Soon.

I found a place. The guy was great. Easy peasy. I rent above a place, so they have event spaces downstairs. Everything was fine. Within a year, they changed management. And now the events have overcome so much to the point that my clients can't even find spacing. And I feel like I'm just never guaranteed as long as I'm renting. And even when I look at it, say, I'm spending $550 every month for the next 15 years, that's like $100,000. So that could be going into my homes.

What would cause your city limits not to approve? We haven't talked money yet, but what would cause them not to approve it?

It would just be the matter of. Of course, they would send out letters saying, hey, here's the town council. I would be little snippet. But I'm just, like, praying that that little snippet no one would pay attention to. But if anyone says, hey, I'm not comfortable. But once that town meetings closed. It's approved if no one said anything. And, hey, I'm not comfortable.

Do you live in a neighborhood where there's a lot of people that could get upset because of parking or help me understand it a little bit better, because if I had a business out of my house, I live in a cul de sac, and I was running eight or ten people throughout the day. If I'm having people park on the street and they're having to go around, there could be a nuisance there. Are you in that sort of situation, or are you out in the field?

I am in a neighborhood. I am blessed with the fact that we live on almost an acre, so I could expand our driveway to create parking so no one would have to be on.

Feel so risky, Lauren? It feels so risky. No, I don't think I would put that much, because it's going to be a lot of money to do this addition.

Right.

And so what kind of line of work are you in again?

Did you say I'm an.

I think it's. I think a little bit of me is like, this is the tax to do business. Like, you have to have space, and if you're in a situation that you would build something out, and then they can come back and say, you can't use it. Unless you guys, as a family, said, we would use this as a playroom. We could multipurpose the space for our family. So either way, we're okay. That's one thing. What would it cost?

Have you priced it out?

When we priced it out about two years ago, the lumber and everything was up. They quoted us around 120.

Okay.

And so I don't know if it's going to be 120 or 150. Who knows? Now, it went down a little bit, but we'd have to go through that whole process again. Basically, once we got a quote, we were like, okay, this is scary. We were too scared to make the leap. But the thing is, anything that we look around our area, nothing for what we're looking for, I mean, our house even is worth what we're looking for. Everything we see is, like, 399 and up. Everything. And so, like, well, we could add on to our house, and we would have a mortgage of less than 300.

I think that we're using the wrong tool to solve the problem. I don't think going up to a $300,000 mortgage is the solution to a $550 rent. I agree with Rachel. I think it's just part of doing business right. You know what I mean? Maybe it's starting to keep your eye on commercial areas. That might be a place that one day you can sink some money in and purchase yourself. I don't, uh.

That is what I was going to ask. Yeah. If you would recommend me purchasing.

I don't recommend you doing anything on debt. Let me make that super duper clear. Whether it's this addition or you've got your eye on a commercial space, whatever that is. But based on what you're saying, I would not do this addition.

Okay.

I wouldn't. Because I don't think that there's no.

Guarantee you could put $120,000 in, which, again, yeah. Which is exactly the amount of rent you would pay. More than the rent you would pay over the lifetime of you working for 20 years at 100,000. You know what I mean? You know what I mean? And you guys said you want to start a family and all of that, and Lauren, I'll throw that out there. Things change so quickly. You could look up in seven years, Lauren, and have maybe not be doing this anymore. Right. Again, if it made sense financially, and it was like, yes, we could throw ten grand here. We have it saved. I can renovate this one area. Everything's fine then. Yeah, run. But you're having to depend and risk on other people deciding if it's okay after the project is done. That's a done deal for me. I'm not putting money in for something that I can't use because one person, Mary Ann from down the know, said no. And then I get screwed. Like, I'm not, depending all know my eggs in that basket.

True that.

And then number two. Yeah. I just don't think that y'all are in a position right now to do. I would. I would just pay for it. Which, again, there's things all the time, Lauren, and it's not outrageous, but there are things as adults that you have to do that. You're like, man, that sucks. I kind of hate that. But it's the price to be able to do what I do.

And the thing that's glaringly obvious to me is it's going to cost somewhere between 120 to 150 to do this build in your mortgage. You only owe 136.

I know. We could pay it off within, like.

I'd be focused on paying off this mortgage.

Okay.

Yeah.

And then suddenly the 550 you're paying in rent for your workspace, it don't matter.

You guys have other debt.

We don't. No. It's just the house. All of our cars are paid off. And another thing is, our cars are ten years old. Who knows if we need a new car eventually. Those things scare me. Now, the one question, though, just to tack on it really quick, is, okay, say we didn't do that. Would you rather us pay off the house within like, six years and then do an addition? Not for the work stuff, but just say, hey, we want to.

And with what you're making, I think, Lauren, you guys could pay it off. In mean, I think you could really get aggressive with it and just say, let's really make this our big goal and we're going to throw everything at this. And then when you look up and say, okay, do we want to save now for the addition? So it may take some time and some patience to do all of this. Or again, I will reiterate, because it is just so true in my life. Four years from now, who knows where the world is? And you guys could have a paid for house and then realize, okay, we actually like this one over here. That's much better. And we'll take out $100,000 mortgage. Now move there, get a step up, or do what you got to do in that regard, too. But I think having no debt, especially a mortgage, it gives you so many options and it frees up so much income. It's amazing.

So true. Rachel, you make such a good point with the timeline. You don't know what's going to happen. Four years ago, I had one kid instead of two.

I know.

Four years ago, I lived in south Florida. Now I live in Nashville. Four years ago, I had a totally different job. Like, you don't know what's going to know.

I know.

So great. Crazy. Lauren, we're excited for you. Thank you. Thank you for the call and thank you, America, for listening. Thanks to all the gentlemen in the booth who make this happen. Jade Warshaw, always a pleasure hosting with you and thank you, America. This is the Ramsey show, live from the headquarters of Ramsey Solutions, it's the Ramsey show, where we help people build wealth, do work that they love, and create amazing relationships. I'm Rachel Cruz, hosting today with my good friend, the best selling author, Jade Warshaw. And we are answering your questions on life, on money, career, relationships. So give us a call and we can help you out at 8825-5225 all right. Up first, we have Alex in Philadelphia. Hey, Alex, welcome to the show.

Thank you very much. How are you?

We are doing well. How can we help?

I'm just calling to see. I'm on baby step number two and I'm checking about pausing all investing. So I have the opportunity to invest after tax in my four hundred and one K and get a company match. And what I was planning to do, I just started the program in January, was to put my after tax contribution into my 401 on a Friday and get the company match, and then on a Monday, pull out my contribution to put towards my debt, and I would still gain the company match. And even at the end of the year, if I paid the 10% penalty, because I'm only 37, I'd still profit about $2,700. So I'm just trying to see if that works or not.

I appreciate the game.

Yeah, I mean, he's a smarty pant. You're smarty pants, Alex. You're trying to finagle the system. This is good. So you've got a Roth 401K. That's a really cool benefit. Plus you've got the match on it, which is another great benefit. And it sounds like you're just trying to take advantage of it and say, well, at least I can have some money instead of no money. How much debt do you have? Let's see what's making it all worth it, right?

I started the program in January. I was a little over 100,000. I paid off 16,100 and 178 so far this year.

Good.

I'm going to have about 8300 left.

Okay, good for you. How much do you make a year?

So it's about 140.

Oh, good.

So this is great. You're making headway. You've got a really good shovel. I personally would not do this for many reasons.

Okay.

A, you are, you're having to come back and you're having to pay the 10% penalty, and at the end of the day, you're not accomplishing fully what you think you're accomplishing, because you're having to go back and pay the penalty and 10%. So you're like, I'm putting this money here. I'm going to come back in and grab it back out, but I'm still having to pay a fee on that money. And for us, the whole purpose is so that you have as much of your income at your disposal to put towards your debt. That's the whole purpose of this. And it's temporary. Like, it's not going to happen forever. And I get, like, a match is free money that's on the table, and no one wants to give that up, Rachel. But it's part of the stupid tax that you pay for getting into debt. Part of the stupid tax is I have to forego this really cool opportunity in order to clean up my mess. And the silver lining of that is it's temporary, it's not forever. And it should motivate you to move faster to get this debt paid off, which it sounds like you are going really quickly.

And what you've said to Jade before that makes sense, is that on both ends, you can't double dip in the sense that, yeah, you may be losing out on that match, but you're also losing out keeping debt around longer and paying interest and all of that.

Right.

So it's both ends of it, if you will. But, yeah, by pausing it, I know I would because I think I would just pause it, Alex. And again, $2,700. Yeah, that's a good amount of money. But it's not going to change your world. I think Alex is going to change his world. Not the 2700. But I appreciate kind of gaming the system. And if you want to do it, that's your call. You're a grown man, you can. But I think just focus, intensity, just doing it all and saying, hey, there's not shortcuts. Like, I'm going to figure this out. We're going to do this and pay off this debt. And you've already gained so much traction. I mean, you've done a really great job. I wouldn't do the gaming the system plan.

No, I would not. Although I think that's the first call like that. I don't think I've ever heard of anyone doing that.

I'm just opting in to pay the penalty and just to keep going.

Listen, desperate times call for desperate measure. It makes you think in a completely different.

Yes. Yes, for sure. All right. Up next, we have Tiffany in Atlanta. Hey, Tiffany. Welcome to the show.

Oh, my gosh. Hi, Rachel. Hi, Jade. Hello. Listening, y'all.

Oh, thank you. Thanks for calling. How can we help?

So I have a question about the every dollar budget. I just wanted to know how soon is it to start the budget for the next month.

To plan it out? Just to have it down visually? Yes, I do it whenever. Yeah, I think you may end up changing it the closer you get to that month because other things may pop up that you didn't realize or something cancels and you take it out of the budget. So there may be some changing, but I think you could go ahead and plan out, I think, as early as you want.

Okay. I just didn't know if it would mess up the next month.

I just didn't want anything to mess up.

Yeah, it won't. Because with every dollar, too, it duplicates the previous month. So it just copies and pastes basically into the next month. And then you go in and change. So for a lot of it, Tiffany, you'll see so many categories are very consistent. We keep pretty much food pretty consistent. Gas for your car is pretty consistent, bills, cable. So a lot of them you probably won't change. But when you get, or at least for us, how we do it at the bottom of our budget is our line items that are the random ones throughout the month. And so, yeah, I think if you want to plan, and every dollar, you can plan out far in advance. So if you said, yeah, we have a big thing coming up in May and I want to go ahead and make the budget. So I need to know how much I need to be making for May because this big expense is hitting, then, yeah, go ahead and. Go ahead and do it. Just caution you that you may want to update it the closer you get to that month or double check and make sure that you're going into the month with numbers that are more realistic than if you had planned it earlier, if that makes.

Okay. Yes. Yes.

Thank you so much. Yeah, absolutely. I'm so glad you're budgeting, Tiffany. I think that's awesome because budgeting you is. We don't go into major detail. I feel like a lot on the show about budgeting, but it is one of the foundational principles that comes with getting out of debt, getting your emergency funds started. I mean, all of it, it really comes down to this. And it's such a peace of mind when you have it. I'm like, we love it. I really do. As a spender, someone that rails without a budget.

Yes.

Easily.

It just helps me, like, I don't know, we're planning for spring break coming up. Our kids will be out of school. And I was like, all right, I'm going to get an Amazon swimsuit. And I went to the clothing category and it feels great. I'm going to go spend and buy something new. And it's there. It's allocated. I have my limits, which I don't always like, but there is a limit. But other than just, I don't know. It really does. It keeps you with peace of mind and control.

So every year, Sam and I will sit down in January and we'll plan every budget for the year just to. Well, it's like a planning thing and it's like a two, three hour event. And we go through the whole year just to get a picture, like a snapshot. And we dream a little bit. We talk about what we want to do.

We talk about.

And then for me, it's great because there's kind of just a template there. You know, it's going to change, but then going into what month is next, we just got to march. So when I set up March's budget, it was basically already there, and I got to kind of see, okay, what's changed since we last talked, and we both can look at it and see. And it's just, I don't know. It's a great planning.

Yes. We do something similar. It's not a monthly thing we do at the beginning of the year, but we do look out and forecast. Okay, we're doing this. The kids will probably be in, like, four different camps in the summer. So we're going to put some chunk of money to the side for camps. We're going to do this for vacations, for Christmas. We kind of plan out in categories what we think we're going to spend throughout the year.

And it is.

It's so helpful when you're down to those decision making. So, Tiffany, we're proud of you for budgeting. Good for you, girl. This is the Ramsey show.

I know you work hard for your money, and the key to keeping more of it in your pocket is by making a plan for your spending with a budget. And every dollar is the budgeting app that I use personally because it's perfect for looking every dollar you make in its little president face and telling it exactly where you want it to go. Just like you told that guy in traffic, exactly where you wanted him to go. And even better, everydollar walks you through the entire budgeting journey. So you always know your next right step. Download everydollar for free in the App Store or Google Play today.

All right, you guys, a lot of you have questions when it comes to taxes. And we get it. I mean, it's confusing. There's so many terms, so many ways to do it. It feels like, and it's a lot. But we want to help you guys get a better handle on them. So let's unpack a question from one of our listeners. I'm a new business owner. What are the most important things that I needed to do to make bookkeeping for my business easier?

That's good.

Great question. Well, first and foremost, congratulations. Starting a new business. We love some entrepreneurs and small businesses and starting one. So number one, if you're not already, keep a personal and business expenses, keep them separate. And we actually took a call earlier in the show where someone had them combined and it gets really hard from an accounting purpose, so keep those two things separate. Also, create a regular bookkeeping routine so that you're on top of tracking your expenses, your receipts, your invoices, all of that. And then lastly, try to automate any processes with accounting software or by working with a tax professional so it can really pay to have a CPA in your corner, because they will review all of your books to help reduce risk, eliminate errors, and maximize your tax deductions, which is really big for small businesses. So, again, you want to focus on growing your business, and then let the people who know what they're doing in these areas, let them do their work. So a Ramsey trusted tax pro really can help. And our team has vetted this group of people, so they really are top notch. So head to Taxpro to get started.

That's ramseysolutions.com slash Taxpro. All right, up next, we have Christine in salt Lake city. Hey, Christine. Welcome to the show.

Oh, thank you. I'm so excited to be talking to you.

We're so glad you called. How can we help?

Thanks. We have a 21 year old son, and we've encouraged him to live with us so that he could save money. But recently, my thing has been watching lots and lots of Dave Ramsay videos where it says that's really going to stunt his growth emotionally. So I'm wondering, what's the best course to take? We should encourage him to buy a house, because I've also been hearing that there's never been a worse time to buy a house or if we should just help him find a place to rent.

So he's 21 situation. Yeah. Tell me, did he go to school? Is he still in college? Where is he at on just kind.

Of his life process. He didn't go to college. He just went out and he went to a technical college, certified in it. And he has a great job. He's making about $64,000.

Good for him.

So he's really responsible. We've never had a problem having him here because he's working hard. He has about $46,000 saved.

Nice.

My gosh.

Yeah. I told him this is kind of a funny part of his story, but I told him, Josh, I'm so proud of you because you get this great job. He didn't run out and buy a fancy car. He's just driving the car. He was driving the car that he had just driven through high school. And then just that very week, someone plowed into it and totaled it and drove off. But he ended up, he just paid $6,000, got himself a new car. So he's really responsible. It hasn't been a problem. And he's great and nice.

Yes. So my take on this always is. It's not a black or white issue. Okay. It's definitely not one of these things that's like, oh, my gosh, he has to be out next week, or you damaged him for life or something. Right? It's not urgent. You're okay. You're a great mom. He's obviously a really smart guy. I mean, like, two years in technical school, and then you're making 64 grand coming at 21.

Wow.

Right?

Really?

I mean, you guys have done a fantastic job. So I think where our caution always is. And not just us, but I think other people in the space, too, would say that there's just this element of growing up that happens when you are out on your own and you're forced to make decisions and keep a level of responsibility that you just don't have to have when you're living with mom and dad. And so we don't want him in this situation forever, ever. Amen. But they were like my sister, she had a transitional period after college for about six months. She moved back home and then moved into an apartment. There's a time and a place, right? This ebbs and flows. It's not a black or white issue. But the thing is that I would want there to be a plan, at least. I think the indefinite idea is really tough, where it's just like, oh, yeah, this is just what we're doing. But I think for him to say, yeah, okay. I think by October, right. Let me get through the summer. And by October, my plan is to be able to rent somewhere. Rent for a bit.

He doesn't need to run in and buy a house right now. I don't think that's wise right now. I think he needs to be out on his own for a little bit.

But.

But I think having a date, Christine, for both of you guys, would be wise, because I don't think staying there forever and ever is a smart plan. And so it can end up being that you could look up and it's been two years and it's been the same. So I think just having a date out there that you both agree on. And again, nothing's on fire. But I would have a date out there to say, we're shooting for this, and this is when I'm going to move out. Because he can. I mean, he has $46,000 to pay.

He doesn't have any?

He could move out next month from a financial.

Jade's more on that side.

I'm like, oh, you could keep him till October.

My thought is, like, however long it takes him to find the right place, he doesn't have to move out of the first place he sees. But if it takes him a couple of months, I think that's good. Maybe roommates. Or maybe he's like, forget roommates. I got money. I'm going to get my own spot. That's good. Way to go, mom and dad. That's great.

Yes. Well done. Well done.

Oh, thanks. Yeah. But you would tell him to rent at this point, rather than trying to jump in when things are so crazy?

Yes, I would. And again, he can look at some of his goals, and I think a goal of owning a home eventually is great. And really, our perspective, for the most part, with the housing market is that when you're buying a home, making sure that you're in the right position, not that the market is in the right position.

Right.

So I really think if he has a great down payment for a house that he can afford within 25% of his income, he has at least 5% down. He's going to be in the area for the foreseeable future, and he wants to get in, then. Yes, he can. But being 21, his first step, really out on his own. I would rent for a year or two, even stuff with, I don't know, the elections coming up this year. I don't know, there is a part of me that I'm like, there's no rush in this, but he has a great cash position to put a down payment on a great condo or a townhome. He's a single guy. He could get into something sooner than later, which is great. But for the first year or two, I think renting an apartment, he doesn't need a lot of.

Yeah. Because when you live by yourself for the first time, there is that feeling of man. Okay. You're getting used to that. And I do think that rushing into home ownership, I mean, there's a layer of stress and responsibility that it's like.

Oh, this is doubling down on that.

This is real. And so it'd be nice to, like you said, have a year or two to kind of get your footing under you and then enter into that even.

All right. Up next, we got Michelle in Atlanta. Hey, Michelle. Welcome to the show.

Hey. How are you guys doing?

Well, how can we help?

I'm 59 years old, $335,000 in debt. Half of that is my home. And the other half is mostly student loans and a couple of consumer debts. I am in a situation where I think my house has like 230,000 in equity, and I'm wondering if I should sell my home, which, by the way, my monthly mortgage is only 1069. Should I sell? Try to get out of these student loans that seem to never disappear.

What were they from, Michelle? Are they from your education or a kid's?

A little bit of both. I have four sons that I help through college as well as my college education.

Okay, how much are the student loans?

The student loans in total are 100,028.

Okay. And then you've got other consumer debt?

Yes. I unfortunately, two months ago had to buy a pre owned used car, but it wasn't $5,000. It was $37,000 before that. I know.

Michelle, we're up against a hard break. I'm going to keep you on the line, though, and we'll come back to you, if that's okay, after this break. So hold on. Don't hang out, Michelle, because there's some numbers here we want to unpack and kind of figure out this puzzle for you and hopefully give you some clarity and a plan. So, Michelle, stay on the line. We will be back with you. This is the Ramsey show.

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Go up welcome back to the Ramsay show. I am Rachel Cruz, hosting today with my good friend and bestselling author, Jade Warshaw. And we are answering your questions. Triple 825-5225 so give us a call. All right, we have Michelle on the line from the segment before we held her over, because she's in a situation that we kind of wanted to walk through more with her numbers. So what we learned from her is she's about $330,000 in debt. About 128,000 of that is student loans, 37,000 of that is credit cards or a car loan, and then a little bit more consumer debt, and then the rest is her mortgage. So, Michelle, was that a fair recap, would you say?

That is right on point?

Okay, perfect. So what's the other consumer debt you mentioned?

So I had a medical scare last year, and so I have, like, $23,000 in medical expenses.

Wow.

Okay. And a $10,000 personal loan that I had before everything happened.

Okay.

What do you bring in every month in income?

Every month I bring in $5,960.

Okay.

That's after 401 and medical and everything that comes out of my check.

How much are you putting into 401K every month or every check?

5%, which is the match amount for my company.

What's the dollar amount, just so I don't have to do that math?

Probably about.

It's like 270. Every paycheck.

Oh, every paycheck. Okay, great.

Yeah.

Okay. I think that your initial question is, should you sell your house to access the equity which is around. You think you'd pocket 230 in equity? Is that what you think if you were to sell this house?

I think I would pocket anywhere between 200 and 230 after all of the fees.

Michelle, what do you have in retirement?

Less than a couple of hundred thousand dollars.

Okay. And tell us more about this house. Is it the right size for you? Is it where you ultimately want to end up? Tell us more.

Well, it's the house my children grew up in. It's about 23 years old. I've kept it in really good shape, and my mortgage payments are like 1069. You can't find rent.

Sure.

For that price.

Yeah, we hear you.

Totally. So I'm just kind of between a rock and a hard place and also thinking about retirement, which hopefully will be soon.

I think you have to look at this on a ten year play. So you're 59. There is a world that if you get crazy about this with your income, $6,500. Because I'm going to pause investing, and I know that feels so counterintuitive for you right now, but if you were to pause investing, that give you another $540. That gives you $6,500 a month. It's just you. Right.

Okay.

So you on an extremely tight budget. You're only paying $1,000 a month in mortgage payments. I'm looking for extra work that you can pick up for yourself, and I'm going to try to knock this out. The average person is out of debt in two years or less, and that's what I want to leave you with. And with the amount of debt you have, it's a lot. You're 50, 60, 70. You're knocking on the door of $200,000 of debt, consumer debt. But I think that there is a possibility here, because I agree with you, to sell this house. Yes, you'd be out of debt, but my guess is you'd want to go right back into debt by getting another property.

Exactly.

And then you're starting from scratch. And so for me, I'd probably walk this out and see if I can get this debt cleaned up and see if I can keep going and get this house paid off down the line.

Even the car, Michelle, it's $37,000. How much could you sell it for today?

Well, I'm glad you asked that question. Last Friday I went and a dealer offered me 30,000 so I would be upside down. Still 7000.

Have you Kelly Blue booked it? Because sometimes dealerships will lowball you because they want to make a margin of spread on it when they resell it.

Actually, one dealership offered me 22,000. Then I went to another recommended dealership that makes good offers, and they were right at 30,000, which is a lot more than the previous one.

Sure.

I haven't looked at the blue book. I thought about doing it a private sale, but I know there's a lot of work around test driving. And again, me being alone, I don't know if I would want to do that.

Yeah, I would just run some numbers. I would just look it up on Kelly Blue book. Because it may come. Because if it comes out to even $33,000. Right, that's $3,000 that you don't have to pay, which is awesome. So I would look at that, but I probably would sell this car. Just overall, the situation you're in and your income, it's bumping up to that. Half of your annual income is in this car. And I don't like that. So you may have to take out if you can get it. Do you have any money saved? That's liquid cash, not retirement.

Well, of course, I have my starter emergency fund, and I do have destitute stock that will be maturing between the next month and this December.

Oh, wow. What's it worth?

Well, today's market is said it's worth about 63,000.

We got the golden tickets. Oh, my gosh, Michelle. Look at that. Okay. Wow. Okay. Absolutely. I mean, if you were to sell this car, Michelle, and get a crappy $5,000 car. Yes. That'll be $7,000. Because you're underwater a little bit. You'll need some cash to buy something. But seriously, Michelle, I'm like, get a car that you get a deal on. And it's great because if you knock that out and then this stock matures, I'm like, oh, my gosh. That knocks out medical. That knocks out the personal.

Yes. Oh, my gosh.

And then you have. How much is that left? About 20K left, I think, in that, which can go now, you've got 108.

On the student loans. And that's it.

Yes, that's right.

Okay, so when I sell the stock, because like I said, between the end of this month and the end of the year, total $68,000. Should I initially knock out some of the consumer debt and then target the loans?

Yes, exactly.

So you'll want to pay off the smallest debt first. So knock out that personal loan of ten K and then knock out your medical debt.

Okay.

And even that, Michelle, is going to feel so great. I'm like, just even getting that out is going to be awesome. And then throw the rest at your student loans. And by the time you do all that, you've gotten your consumer debt from over 200,000 to right around 100,000.

Yeah. And if you can find $4,500 a month to put towards that, you're out of debt in two years.

Oh, wow.

And I know you can find that.

Yeah, I'm sure I can. Yes, Michelle, I was driving my 2007 Camry forever, and someone hit me and totaled it. So that's why I'm in this predicament of this car. But I want to sell and try to find something.

I mean, I really would, because your peace of mind and getting this traction, Michelle, is so key, and I hate to put ages on it, but especially at your age, you're 59 and you want to feel some really fast traction. And a car is not worth this level of stress. The freedom is going to feel so much better. I mean, a great Honda Civic that's 20 years old, give it to me all day.

Right.

I'm like, you will feel better in that.

Let's keep playing it out, too. So you pay off the 108 in two years, and then by then you've got your mortgage, which you owe what? Right. Now, you owe 167 on, but after two years, it'll be a good amount less. And then, you know, you will have felt, hey, I paid off 108,000 in two years. I can pay off 157,000 in two and a half or three years. Right? Do you see what I'm saying?

Five years, Michelle, you could be completely. Now, it's going to be a lot of hard work. It's going to take a lot of discipline. And with that stock, I want you to talk to a Smartvestor pro because there's going to be some tax implications. We want to make sure that you do everything correctly in that regard. So Christian's going to pick up, he's going to help get you get connected to a Smartvestor pro. And then we're also going to give you every dollar, premium and financial peace university, which is our crash course. When it comes to money, it's nine lessons that teaches you everything. And, Michelle, you are at such a great point right now. Golly, there's so much hope. I'm so thankful you have this company stock. It's really going to be a gift to you. Really going to be a gift to you. So thanks for calling. This is the Ramsay show. Our scripture of the day comes from lamentations 322 23. The steadfast love of the Lord never ceases. His mercies never come to an end. They are new every morning. Great is your faithfulness. Serena Williams says, I really think a champion is defined not by their wins, but how they can recover when they fall.

Ooh, good one.

I always love when there's quotes like that from people that win all the time.

I know, right?

I'm like, serena, you're like, what did you lose? Really great tennis player, though. Can we just throw it out there? But it is true. It is true how you recover when you fall. Love it. All right. Up next, we have Joseph in Atlanta. Hey, Joseph. Welcome to the show.

Hey, thank you for taking my call.

Absolutely.

How can we help?

So I have a question about, I guess, the order of debt or how I should go about paying off some of this debt. My wife has a house with a car. It's not much, but on my side, I have about $14,000 of credit card debt that's in the red, like they're in collections. Then I have, like, another 24,000 from chase. That's a charge off. And I was just told it's a charge off, but I don't exactly know what that means. So I was just kind of wondering, should we focus on paying off my wife's debt and the vehicle and all of that. Or how should I go about it?

So you said the house is in your wife's name? Or does she have a separate property that she brought into the marriage?

No, it's in her name.

Okay.

Yeah.

And then she's got a car. What's the debt on the car?

It's like $34,000.

Okay. And so that's. It's just the car, the credit card and the chase charge off, right?

Yeah.

I definitely would start with whatever is late or in collections, just to be the youngest.

The youngest. Listen to me.

Which happens.

The youngest debt, which happens to be.

The smallest debts, too, which is great. How much do you guys make a year together?

Without my side business, it's around, like.

Right under ninety k. Ninety k. And how much do you bring in with the side business?

After expenses and everything? On a good year, it could be 50. On a bad year like this year, like 30.

Okay, well, that's pretty good.

Yeah. Excellent.

Okay, so it's 120 on the low end, but could go up to 150 or more. Yeah.

Okay, great.

That's awesome.

What about your wife? Does she work?

Yes, she works from home. She does health care.

And do you guys have any savings?

Yeah, we have 1000 on the side. And then she has another ten just for herself because she likes to keep it, I guess, just in case.

Listen, I peeped it out earlier. It sounded like there was a lot of separation there, but now there it is again. Yeah. I don't like some of the vocabulary I'm hearing, Joseph.

Well, I don't mind. It's not like I have access to it. But I like to have her safe keep in mind or whatever she thought. She likes to keep it.

I mean, I'll just be honest with you here. The way we view money is when it's a married couple, we view it as one and truly. If there's $10,000, it should be our money, not yours or mine. Because when it comes down to it, you together have a life and you together have debt. And man, oh, man, that $10,000 sure would come in handy right now to pay off a credit card debt that is both of your debt. And so there's a piece to this that.

It'S a total different mindset shift with this. Because if you guys have functioned so long, she does probably feel protective and has this ownership over this ten grand. But what if you guys sat down together and didn't have names on anything and all of that, and you just put everything in a pile, if you will. And one night, you just went down the list and said, okay, here's what all we have. Here's our savings, all of it. And you changed your mindset just for a night and just said, okay, what if all of this was ours? Our income is all together. Everything is together. How fast could we get this paid off? How fast could we build back the emergency fund? How fast could we be investing? How fast could we get to a million dollar net worth? How fast? And start just dreaming big, Joseph, like with you guys together as one, with one unit in one mindset, doing it. And again, it's a different exercise with a mindset shift, because you have been, well, this is mine over here. I don't want her money to have to pay off my debt. It's this tip for tat kind of situation.

And in a marriage, y'all are one. You are all one. And the more you can be unified, Joseph, I'm telling you, we talked to so many couples. If you're in a somewhat of a healthy relationship, we've taken some calls here.

That we're not good.

But if you guys have that mutual respect, you love each other, you're in this together. There is something that deepens in the intimacy of your marriage. When you truly go all in, when you truly say, we are one, we're going to do this life together. And so that would be my encouragement for you, Joseph, is for you guys to have that conversation. And I would start with keeping your $1,000 emergency fund. You got ten grand? I would throw it at the credit card debt. That gets it down to four grand. That's in collections. And if it's in collections, you may even be able to negotiate, Joseph, I would call the collections company and ask them. Tell them I got ten grand. My waxed money. No, I'm just kidding. I have ten grand. Will you settle? Will you settle this? Will you settle this debt?

Right?

I mean, in collections, they may be able to do that. And if they do, number one, do not give them access to your checking account. For them to get it themselves. You send them a cashier's check, number one. Number two, get it in writing. Have them email you. But I would try to negotiate the ones in collections. Because those are more easier to negotiate. And then you guys start working this plan and start working to pay this off. And I mean, yeah, you got 58 grand left after that $14,000 credit card. And you guys could have this knocked out in 18 months.

I do. Got a quick question. What do I do about the charge off thing? Because it's like one of them six years. I'm telling you, I'm a ghost. They can't find me. I'm the gingerbread man.

What is that?

Yeah, a little bit. They'll send sheriffs to the house looking for me for the.

Listen, pay it, Joseph.

You got to pay your bills.

Got to pay it.

You can't escape the law.

He said the charge. What does that mean?

Well, it's destroying your credit, I'll tell you that. Not that you care much about the credit, but at the end of the day, if it's money that you owe, you need to pay them. It's like, beyond collection.

Joseph. Yeah. You're on the map. You got Mastercard, you got capital one, or whoever you're with. We're not going to sidestep the situation. We are going to tackle it head on.

Joseph.

My man said he's the gingerbread man. I've not heard that. That's hilarious. Pay your debts.

But you can negotiate.

You can go back. We got to go briefly back to this my money, his money thing. Because for me, it's a level of trust. There's something there. When you whittle it down to its lowest common denominator, it's a trust thing. I trust you with these areas, but I don't trust you with that. And it's a weird way of thinking, because it's not balanced, right? Like, if you want a commitment, I want a 100% commitment from my husband. I can't say I'm committed to you in every way, but leave this 10% there that I'm not committed. And that's my finances. Because here's the thing. Listen, you put that in any other context. If my husband says, jade, I'm committed to you Monday through Saturday, but, you know, Sunday, that's my day. That's for me. I'm like, what? I will come for you. You'll be on the moon. And it's the same thing with your money. You can't say I'm committed to you in all these other areas, but my money, that's my thing, right? Commitment is.

And what's hard is money has become such a security place for people. It feels like, oh, my gosh, if something happens, this is my escape. Again, if you. The asterisk always is, you guys, if you are in a situation, I feel like we've taken a few of these together. Hosting. There are times to protect yourself. If there is abuse, if there is addiction, you have the what is it.

The keep your money safe?

The safe, yeah.

So you seek counsel. That's the s. Seek counsel. If there's any type of addiction, abuse, that's the a. Financial infidelity, financial abuse, that's the f. And then with the counselor, you evaluate your options. That's the E. And for a lot of people, it is. You need to remove yourself from the situation. It's not to say that you're getting divorced. It's not to say that it's over, but you're removing yourself and getting yourself and your family in a safe position.

If that's it. But then for all of you other couples out there, I'm telling you, when you see yourself as one, there is a stamp of approval or something that happens. When you say, we're combining it, we're combining our lives, and we see people win faster. Your net worth goes up when you say, this is all of us, all of our income. Well, thanks to all the guys in the booth for a great show. Jade, thank you as always. And thank you, America. And remember to take control of your money and create a life you love.

Dr. John Deloney here. Mental and emotional health challenges, broken relationships. It's all just part of life. But they don't have to define you. The Dr. John Deloney show is here to help. It's a caller driven podcast where you can get practical advice on dealing with anxiety, loneliness, depression, relationship challenges, your kids and so much more. Listen to questions from our callers. Or if you're walking through a tough situation and need some help, give me a call. You were never meant to do life alone. And that's what this podcast is all about. Follow along on Apple, Spotify, YouTube, or the Ramsey Network app. Remember, you're worth being. Well.