Intentional Choices Create Peace in the Chaos

This is an ad for BetterHelp. May is Mental Health Awareness Month, and you know that stress you keep pushing down? It's showing up everywhere, in your relationships and in your health. If you need to talk to a licensed therapist, make today the day. Go to BetterHelp.com slash Ramsey to get 10% off. Brought to you by the EveryDollar app. Start budgeting for free today. normal is broken common sense is weird so we're here to help you transform your life from the ramsey network in the fair ones credit union studio this is the ramsey show i'm jay borshaw next to me george camel and we're taking your calls for the next three hours 888-255-225 is you on the line where melissa from dallas texas is now awaiting melissa how Can we help today? Hi, thanks so much for having me on today. So my question that I'm trying to figure out is if I should sell my house while I'm currently in a bankruptcy that was caused by my husband making investments in a failed Bitcoin mining business. Yikes. Yeah. It's not going on here. Okay, so you're thinking about selling the house. You're in bankruptcy. How much money did he lose in the Bitcoin mining scam? Well, there's $250,000 in personally guaranteed business loans and then $100,000 in credit card debt and about $274K on a HELOC. This can't all be due to his Bitcoin investment. From what I've seen, it's all related to the mining equipment and the hosting fees. So he went $624,000 into debt for a Bitcoin mining business? For the most part, yeah. I mean, what I didn't know as all this was happening is that he was also at certain points covering additional expenses out of whatever he was racking up on the credit cards. Got it. And you didn't know about any of this? No. Well, I knew that he was taking out loans, but I really didn't have a lot of visibility to how much we had amassed or in what poor of shape we were in. Okay. Well, before we get to the finances, how is your marriage doing? It's really difficult. You know, I feel like I came into the marriage like a huge Dave Ramsey fan. I didn't have any debt, and I thought we were really aligned. And, you know, honestly, I had three babies in a five-year period, and I really just kind of took my eyes off of what the finances were, and I just completely trusted him to deal with it. And I feel like that was my mistake. Are you guys going through counseling right now? We've gone to counseling twice, and, you know, he wasn't super engaged. The last time that we went, the counselor started saying some kind of hard things, and he felt like he was being really blamed for all the problems. And he later admitted to me that he intentionally sabotaged it. And, yeah, we've had conversations about going back to counseling, but I've kind of put that in his court, and he hasn't taken any action on that. Sounds like he's not ready to accept responsibility for how he has destroyed this family. yeah you know he'll admit that he made mistakes but he doesn't seem to view it with the same level of gravity that i do yeah there's mistakes and then there's three quarters of a million dollars in debt behind your wife's back to try to get rich quick so okay neither here nor there let's talk numbers so you're talking about selling this house i mean did you file chapter 7 or chapter 13 So we're currently under a Chapter 13. Our plan was dismissed. I'm sorry. It's potentially going to be dismissed. To sell the house. Yeah. Well, we tried to move to a Chapter 7 because my husband lost his job in February. But now we're in this weird situation where we have about $30,000 in cash, and our attorney told us, don't convert to a Chapter 7 until you spend down that money. Because they'll take that money. Yes. So if you're thinking of selling the home, let's talk about the equity and what you think you're going to do with that money because obviously, to your point, the court has to approve you selling the house if you're still in Chapter 13. But what's your plan? So you've got the $274,000 HELOC. What else do you owe on the house, and what's it worth? we owe an additional 455 on the house and we could sell the house for around 950k interesting okay so and then what would you I mean would you just turn around and take that money and pay off all the remaining debt or is what's your plan here so our thought is if we end up getting the chapter seven we would take that money and we would really I mean we probably have to move to a renting situation and then just use that money to live for a period of time because my husband's not working right now. Okay. Okay. My question, why in the beginning wouldn't you have just, would you have not just done that? Why would, why not just sell the house, take whatever, you know, $200,000 of equity and just clear out as much of this debt as possible and then pay off the $150,000? Why not just do that? Well, the houses in this neighborhood have appreciated so much that we wouldn't be able to move back here now. And we really just wanted to try and provide some stability for the kids and keep them in the same school district. Right. But with the bankruptcy, you just lose so much control. And you also, there's a redemption that you kind of want to feel, which is getting yourself in a mess and then getting yourself out of it. I mean, I guess it's neither here nor there. You're locked in at this point. Are you asking if I'm locked in? Well, if the case is dismissed, then we won't be able to refile for another 120 days. If you don't have to be locked into this bankruptcy, I don't know that I would be, because you've got equity to really handle more than half of the debt here. And then you're on the hook for $150,000. What's your guys' income? I'm making about $125,000 when he was working. he was in the $150,000 to $200,000 range. Yeah, plus you've got the $30,000 cash. I mean, George, what do you think? Because I'm looking at this amount. Let's say you sold for $950,000 and you cleared the HELOC and your mortgage, right? That leaves you with about $200,000 maybe. Now we have $200,000 to play with. We can pay off the $100,000 in credit card debt, and now we're down to the business debt, and we still have $100,000. So at the end of all of this, you could have $150,000 in business debt as your only thing to deal with while you rent for a while to clean the mess up. Well, you could actually be more like $130,000 because you've got $30,000. Use some of the savings to knock out some of the business debt. And now you've got $130,000 to clean up, hopefully making. Is he going to be working soon? What's the progress on that? Well, because we're trying to move to the Chapter 7, he hasn't really been applying for jobs. Goodness gracious. And see, that's where I'm concerned because life doesn't stop. Like this is not the get out of jail free card that says, okay, we're done. This is all cleared up. We don't have to work anymore. We get to stay in the same neighborhood. Nothing changes. This needs to change you. This should change everything. This business of we're just going to file bankruptcy and he's not going to go to work and this will let us live in the same neighborhood and act like everything's hunky-dory, that's just not reality. I'm not going to do this for the school district. At this point, these kids will be lucky to have two parents who are healthy and present. That should be the focus right now. School we can deal with later. You guys make great money, and you will be for the future. I'm not concerned about you getting into another home that you love. Right now we've got to clean up a mess. Yes. And you want to know what? I'm going to say this, and it might be controversial, but it's okay for kids to feel the weight of mistakes that happen in life. It's okay because they're part of the family unit, and they'll see the family unit go through some rocky times and then they'll see the family unit get their foot and get solid footing again. And that's good. That builds resilience. That helps them see what life is actually like. And so trying to shield them from every bump in the road, you don't need to do that and you don't have to feel the weight of that because that's not life. George Camel here. Let me give you three signs it's time to stop hoping your debt problem goes away and actually take action to fix it. If you've defaulted on a debt, if collectors are calling nonstop, or if you're facing a lawsuit or think one's coming, you don't just have a debt problem anymore. You've got a legal problem. And that's why I tell people about Guardian Litigation Group. 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Results may vary and no specific outcome is guaranteed. back to the phone lines where we have steven in chattanooga tennessee what's going on steven how can we help today my name is steven and me and my wife are 40 weeks pregnant and our hoa has come up with an assessment and it's about $14,000 and they've given it to us for, they're giving us 30 days to come up with the money and didn't know how we could come up with that or what we should do in the situation. Oh my gosh. What's the assessment for? The assessment is for exterior work on our building and it's also for a new roof on our condo building. Was this new information? They came out with it back in January, roughly. We're looking to do this. And then we found out a couple months ago that one of the AC units on the roof was not working. And so they paused the initial assessment. So we didn't know when it would continue until about a week ago. So we kind of had to stop and pay the assessment for the new AC unit, and then now we have to pay the assessment for the exterior work and the new roof. Have you talked to the HOA yet? Not yet. Okay, I think many HOAs would be willing to extend this out a little bit, see if they'll extend it to 6 to 12 months. If you ask in writing, get everything in writing, not just, well, I talk to somebody on the phone and let them know your situation and see if they're willing to play ball. I'm not saying that's your way out of this thing, but if we can buy some time, that would be great because this baby is about to pop. Yeah. Have you been to any of the homeowners association meetings? Is anybody else kind of out of sorts about this? Maybe there's something that you guys can rally together and just say, hey, we all need time. Yeah. Some people are trying to sell and get out of the building. Some people are okay with it because they know it's going to raise their property value. Well, either way, they're not getting out of the assessment. If they sell, they'll just have to pay that out of the proceeds. So that's not a good solution. How much money do you guys have right now, liquid? We have about $4,000 in the bank, and my wife is also 40 weeks pregnant. Yeah. Right, you need that money. We need to hang on to that because we don't know what could happen. So once mom and baby are home safe, now we have a much more clear plan about what we can do with this money. But I think first things first, you need to talk to the HOA, write them an email or a letter, getting some clarity on this and asking for an extension. Yeah. That looks to be a very reasonable thing and a very normal thing to ask for. Okay. But the truth is the HOA just wasn't properly funded. Money was poorly managed. They knew this was coming. and they chose to just make it a special assessment versus, you know, increasing dues way back when in order to save up for this. But this is just part of HOA life. It's part of home ownership, and we say all the time that owning a home is not cheap. Like there are costs that go along with it, but I 100% would do what George said. I would send a letter, and I would make it clear. I'd give a reasonable reason and say, hey, my wife is 40 weeks pregnant. We have medical bills coming due. We want to stay on top of those. We intend to pay this. It's not you trying to get out of paying it or, you know, trying to fight it as much as it is just saying, hey, just need a little bit more time. That's reasonable. Most people don't have $14,000 just sitting around unless you've been walking the baby steps for quite a while. That's why I go like very few people in your neighborhood are going to be able to afford that. Exactly. And I think there probably is some power in everybody kind of getting together and saying as one band, one sound. Remember that? Oh, yeah. From Drumline? Good reference. Yeah. I don't think about Drumline often. I never do. It just came up now. All right. Caroline is in Columbia, South Carolina. Hey, Caroline. How can we help? Hi. I and me and my fiance are getting married later this year, and I am just wondering how aggressive do I need to be with investing? We've gotten out of all of our debt. I went to school on scholarship, so I have no student loans, and he has no any type of debt. And I'm just curious, since we're both 21, I'm just curious what it looks like moving forward and being as wise as we possibly can. I love that. So just general advice for newlyweds? Yeah, but more like with investing and trying to get wealthy, not necessarily quick, but just preparing for a future as we can. Well, time is on your side at 21. So here's the math on this because I think this will really encourage you. at 20 years old, the power of a dollar, it turns into 73X that at 65 years old. So 20 to 65, every dollar you invest is really worth $73. But when you're 55 and you invest that dollar, it's only worth about $4 at 65. So you see there's a big hockey stick going the opposite direction over time where you don't have time for compound growth to do its thing, where your money makes more money and that new pile of money makes a little more money. When you're invested wisely into a mutual fund, a giant grouping of stocks, and we're all rooting for the revenue to go up, the share price to go up, which increases your wealth. So I would definitely be – that would be a goal of mine. I wouldn't make it the singular goal because you guys probably also want to become homeowners or go on a honeymoon or take vacations and upgrade the car. Do you have any money saved? I have about $5,000 saved cash, and then I also have like $6,500 already invested in like a Roth IRA account. So he does not have much savings at all. But, yeah. You know, the best thing to set yourself up for investing is to make sure that you can set that money and forget it and never have to pull it out again and just let it continue to grow and grow and compound like George said. And the way to do that is to make sure that you've got adequate liquid savings. And so I would suggest bumping up your $5,000 to six months of expenses, three to six months of expenses. How much do you think that would be in your case? I'm not totally sure. We haven't quite found a place to live yet. But once I do, like I do plan on getting that done right before we get married and move in. So when do you get married, by the way? October 1st of this year. Okay. So that would be thing one is figuring out, okay, what's it going to cost for us to live once we're married? And then thing two I would say is from there we can decide, okay, we're going to invest. if there's no debt between the two of you, you've got the three, six months of expenses. Now you can say, okay, baby step four is what we teach, 15% of your gross income, combined income, going towards retirement. And usually that's through an employee-sponsored account like a 401K, a Roth IRA, if you don't have access to a 401K. Do both of you have that access? I do. He does not. Okay. What kind of work does he do? He's in construction full-time. He's with a smaller company, so they don't offer any type of insurance or retirement benefits. Okay. I will be starting my job in the hospital in June, and so they do offer all of those things. Okay, great. Then he can put earned income into, you know, a Roth IRA. Do you know how much you guys will be earning together? Together we'll make around 95. Excellent. Excellent, excellent. So the goal would be, yeah, 15% of that every single month, pack that away. And honestly, you're off to an incredible start. George, are you looking at numbers on that? Yeah, so 15% of your $95,000, that's $14,250 going towards these tax-advantaged retirement accounts. So we always teach match beats Roth beats traditional. So what that means is if you have a match through the hospital, let's take that first because it's 100% return on every dollar you put in. Then if you have a Roth option like a Roth 401K or a Roth IRA, let's fund that. And if we still haven't hit 15%, then we can go to the traditional option if you have a traditional 401K. So it just gets filtered through that, and he can still open a Roth IRA and invest just like you have. If he has earned income, he doesn't need to have a retirement account through his employer. And you guys will be off to the races. At 21, if you guys just stay out of debt, keep the emergency fund, Jay just crunched the numbers for you using our investment calculator. Tell her what she's won, Jay. At age 21, this is just if you did this until retirement age 59 1⁄2 or 60. You said you currently have $6,400 in there, $6,500. This is you contributing 15% every single month at an annualized rate of return between 10% to 11%. That's $9.5 million, Caroline. Holy moly. And so that just shows the power of starting young, to George's point, starting young when you're ready, right? You've got everything squared away. You've paid off your debt like you guys have done. You've saved up your three to six months like you guys have done. This is amazing. You are the poster child for this is what life can be like when you don't graduate with a giant pile of debt and a car payment and credit card debt because you were told you have to build credit, which is the stupidest advice you could give to an 18-year-old. So keep doing what you're doing. Stay out of debt. Don't rob your retirement. Get on the same page. Align on your money values and your goals. And you guys are going to be baby steps millionaires and homeowners in no time. Hey, you guys. 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That's joindeliteme.com slash Ramsey. All right, big announcement, George. It's May, and you know what that means. The Ramsey Cash giveaway is here? That's right. That's right. I thought you were going to hit me with it's going to be May, and that would make me sad. Well, at first that was like a big announcement it's May, and I was like, oh, there's an M-dash. It's a pause. A pregnant pause, if you will. A pregnant pause. Well, he's right. It is Ramsey Cash giveaway, and because of that, you can enter every single day from May 1st to May 31st for one grand prize of $10,000. Plus, there's going to be one weekly winner of a $500 prize, and you can enter daily to increase your chances of winning. Plus, be sure to check out our sale going on right now. You can kick off summer with books and assessments for just $12. Go to RamseySolutions.com slash giveaway now to enter. No purchase necessary to win. I love that for you guys. All right. Derek is in San Antonio, Texas. How can we help, Derek? Yes, ma'am. First of all, thank you for answering my call. A little nervous. The question I have is something that's really been bothering me. A lot of calls and a lot of stress in my life to the point where I've just been sick for the last few months and I just want to make sure I'm, you know, making the right decision. My wife and I both retired, former military. We both retired, received a pension. There's some disability benefits in there and I got lucky. I'm lucky. You got to put me in a good place. I got a follow-on job in the civilian world, and our current income right now is currently $275,000 a year. Wow, very nice. It's our home income. The situation is about buying a new house. So we currently live in a home that we moved into when we PCS here. We never thought it was going to be a forever home, but we thought it was a nice home that we moved into, and then we decided to get out of the Air Force. And it's not a million-dollar mansion or anything, but it's a nice two-bedroom home, two-story. And it's definitely better than anything I ever grew up with in my lifetime. Okay. My wife wants to move to a one-story, but it is almost $800,000, which currently has a mortgage of about $4,500 a month, which is currently 25% of our current income, which I think is okay. Yeah, yes. But I plan on retiring officially because, I mean, between deployments, I mean, you name it, overseas, PTSD and everything else, I really wanted to, you know, retire and start focusing on my family, my grandkids in the next 15 years. 15 years, okay. And that's going to cut our income in half to about $150, which turns that now mortgage, which is a 30-year mortgage, and I know it shouldn't be a 30-year mortgage, but I know it's going to turn that mortgage into, you know, basically 50% of our pay. Yes. And I know we're not going to be able to afford that. And that's only if based on the current world that we live in, this job keeps me and everything stays functional because there's cuts that I see every day, especially in the world of tech and AI, such as people getting cut daily. I'm afraid that if we make this purchase that she really wants to make, that we can afford right now, that if anything happens, it's going to ruin us. It's going to ruin us because she's never, ever experienced a financial bind. She grew up with a lot of great things. I grew up poor. So I know what it's like and I can deal with it, but I know it's going to tear us apart. Dude, you sound – And I don't know if I should do this. I 100% sympathize with what you're saying. There's something to be said for you've worked really hard, you have a really great income, and it feels like, yeah, I want to live at the income that I'm earning money, but then those fears creep in and it's like, what if everything goes south? And then if that's the case, we're really in a bind. And so I kind of want to normalize that because that's true for everybody. I mean, if I lost my job tomorrow, George, or if you lost your job tomorrow. Now we have an emergency fund. Yeah. But it's not like we could just never work again and be fine. Right. So that points to what George just said points to the other side of this, which is your bigger fear is that if you were to lose a job or you were that you would never be able to get one to replace it. and that's the part that I kind of would want to camp out on mentally if I were you because we all that's all of our lives is we could lose our job and even with an emergency fund it's three to six months you know six months of expenses so you have six months to find a new gig so you're saying that that would be impossible for you no so what I'm saying is that so is that it wouldn't be impossible I could find a job but so the so the issue is that the house that we live in right now We only owe $130K. So with our total savings and investments and IRAs that we have right now, we have over $300 saved up right now. Okay. So with $300K saved up right now, that's what we have set aside for retirement. Over $324 is the exact number. Okay. The house that we live in now, the plan that we were looking at, and I'm sure a lot of people probably tell you this, is that my current mortgage is only $1,100 a month. Love that for you. But with the current market, I could easily rent it out for twice that and allow that renter to pay for it itself while I just focus on the new house, which I don't know is a good idea. I probably wouldn't do that. I think what it sounds like to me is this is just a meeting in the middle because the truth is, yeah, I don't want you to get an $800,000 house on a 30-year mortgage. I want you to get a house that you can afford on a 15-year mortgage that lands you at 25% of your income. So I do think $800,000 sounds like too much house for you guys right now. Maybe you could get closer to $600,000, right? So I think that there's a place where you can meet that your wife is going to feel good about the upgrade and that you're going to feel good about, okay, this is not so huge of a piece of my world that I feel anxiety about it. Maybe you get something that's instead of 25%, maybe it's 15% or, you know, 20%, and it makes you just feel a little better at night. Because here's the thing. You said this is a 15-year play. If you have a 15-year mortgage, do you want to know what? You're debt-free in 15 years. And most of the people who follow the Ramsey plan are debt-free a lot faster. It's more like a 7- to 10-year deal. Right. So your game plan is to retire in 15 years if everything goes to plan? Yes. Okay. Yes, sir. Then I think that's the play is you get to retire once this mortgage is paid off. That kind of gives you a great carrot to dangle, doesn't it? Yes. So if it's 10 years from now, boom, you got to retire five years earlier. And so I love the idea of setting a goal where she's not having to settle and you're not having to stretch. Instead, you both are aligned going, all right, great. We might need to wait a year to build more equity, knock out this mortgage, which you guys could knock out 130 grand mortgage pretty quick, making 275 with no debt. Right. Right. Have you been putting extra toward it? Yes. So I doubled down on it, and so I was wondering, you know, should I just pay off this house that I'm in now? Yeah, triple down. Just spend what I have, and then triple down, pay this one off, and then. You have all the equity, so when you go to sell, and here's what I did, you roll over that 100% equity right into the new house. And do you have any other cash laying around? Not retirement, but just liquid? Yes, we have about $100K just sitting between our savings accounts. Okay. That's a big cushion. That's a big cushion. and I'm sure probably 50 or 60 would be fine for you to feel good about having six months of expenses. So there's another 40 there that you could put with that and add that to that down payment. The more you can put down, the lower that mortgage is going to be. And if it's on a 15-year and it's a comfortable payment, you're going to be able to throw extra at it and knock it out. What we've seen is average about seven years if you follow our plan to get rid of that mortgage. Does that give you a little bit more peace? It does. I just got to talk to her about it now. Well, once you get sorry-eyed about a home, it's party's over, man. I mean, once you're Zillow doom-scrolling, you're like, this is the house, babe. This is the one. It checks off all of our boxes. That's a realtor's dream. They're like, oh, we got them. You know what I mean? It's like going to a dealership. Being like, that's the car I want. You don't want to do that. You want to go in with walk-away power going, we don't need this house. It's a good house. You kind of want to be nonchalant about it. You do. I mean, Derek, when you called in, you said you made yourself sick about this. Do you think tonight you'll be able to have a good night's sleep? I think so. I think so. I feel a lot better. Good, good. You deserve that. I really appreciate it. And thank you for your sacrifice and service to both of you. Yeah, absolutely. That's fantastic. You know, what Derek is talking about, I totally understand. And some of the best advice I got was just to, like, no matter how well you do, no matter how well you earn, just, like, if you can keep your expenses low, it just does give you a peace of mind. You're more flexible. You're more flexible. And if something did happen, it does help you sleep at night. Like, I could totally understand what Derek was saying, but then there's a side of it that you don't want it to creep into, like, irrational fear and just kind of, like. Just kind of scarcity mindset, glass half empty, it's all going to come crashing down. I'm like, dude, you're debt-free with $100K in savings. So that makes $275K. Even if you go down to $150K, that's still double the average household income. Right. If you can't make that work, we've got bigger fish to fry. You've got bigger fish to fry. And you know what? The worst that happens. Play out the worst that could happen. And the worst that could happen is you sell your house and you downgrade your smaller house. A decade from now, we might sell the house. Yes. I can live with that. Yes, I can live with that, too. This show is sponsored by BetterHelp. May is Mental Health Awareness Month, and according to the National Institute of Mental Health, more than one in five U.S. adults experience mental illness every year. Nearly half of those folks never get any kind of help. And these aren't just statistics. These are real people who are hurting and struggling. They may be you. And we're living in this nonstop noise, with screen comparison, constant notifications. It's our whole world and our bodies are always on high alert. We're communicating more than ever and people are communicating with us. But we're super disconnected. We more anxious We more lonely We overwhelmed and we just don know where to go And that stress shows up in our relationships in our sleep in our health in the middle of our chest We were never meant to carry all of this stuff in our life alone And talking to someone can help. And that's where BetterHelp comes in. BetterHelp is an online therapy platform that matches you with a licensed therapist based on your goals and preferences. Their therapists are fully licensed in the United States, and they follow a strict code of conduct. You can message your therapist and schedule sessions right in the platform. And if it's not the right fit, you can switch anytime at no additional cost. Cut through all the noise. Don't do this alone. Go to BetterHelp.com slash Ramsey to get 10% off your first month. That's BetterHelp, H-E-L-P dot com slash Ramsey. All right, George, let's go back to the phone lines. We have Jonah, who's in Cleveland, Ohio. What's up, Jonah? How can we help today? Hi, my Morgan Stanley advisor wants me to get a low-limit credit card. I was wondering how I should respond to that. What's their reasoning? I mean, just for reasons of building credit, to get a car and a home, and just the standard reasons. Do you agree with him? I'm on the fence. I've never had a credit card, and I've been doing fine so far, so I'm just wondering what you guys think. Well, you tell me this. The Morgan Stanley Advisor exists to help you build wealth, correct? Yes. Now tell me this. Them telling you to get credit to get a car loan, which goes down in value while you pay interest on it, how does that help you build wealth? I'm not sure. I mean, always buying something is not going to make you more wealth. Let's play this out then. Would you not question the advice of said financial advisor and whether or not you should continue working with them? If you guys have different values and operate by a different set of principles. Right. Right. And this is where I'm confused and looking for guidance. Well, the truth is 99% of financial advisors out there are going to be telling you the same thing. You've got to get credit if you want to survive in this world. You've got to bill. Everyone has a car payment. It's fine. Just make it a reasonable one. All of that. Get a home as soon as you can, no matter what, because it's awesome to build equity. This is the kind of stuff that we hear all the time. And the truth is not all financial advisors are created equal. So you want to find one that aligns with your values and principles, which it sounds like are I'm debt free. I want to stay debt free. I want to build wealth with peace and simplicity and not by playing some game. I'm projecting, but you tell me what your principles and values are. That's exactly right. I'm just concerned about if I get to the time when I need credit, will that affect me? So let's talk about that because that's what you're asking, Jonah, is something that probably lots of people are wondering about even while they're listening right now, which is don't I need credit, George and Jade, to operate in this world? And the honest to God truth is you do not. So, George, let's tackle the three. I'm going to go with three main areas where people think that they need credit. First one is, well, what if I want an apartment? Aren't they going to check my credit score for me to get an apartment? And the answer is some places, yes, but many places, no. It's not necessary at all. What they're checking for is delinquency, a bad credit score, no credit score, and I've done this multiple times, no credit score renting apartments. They just go, okay, well, it might be a slightly higher deposit. That's right. Same here. Okay, the next one is what about a car? How am I ever supposed to buy a car in this world, George and Jade, if I don't have a credit score? And over here, I'm going to tell you, and we're going to break down how to do it in a minute, but we buy cars in cash here. And I know that that probably made, Jonah, you might have clutched your pearls or somebody listening clutched theirs. You can't do that in today's world. Cars are $50,000. Well, don't buy a $50,000 car, you dingus. No. What you do, there's two paths to doing this. One is let's say I have a car note now. I just aggressively pay off the car note that I have now. and when the time comes, in the meantime, after I've paid off the car, I'm putting aside a little bit of money extra and extra and when I'm ready to trade the car in, I take whatever value is from the trade-in or maybe I sell it, you know, private sale, I add my saved money to it and I'm able to upgrade. Now, this is a slight stair step up. Maybe I had a $10,000 car and I go up to a $14,000 car or I had a $10,000 and I go up to a $16,000 car, right? We're not buying an $80,000, you know, escalate right out of the gate. Do you see what I'm saying? This is a very slow and methodical way. Yes. And the value is you get to drive a new to you vehicle that's paid for and you have your cash to invest, you know, and build wealth. Now, the third thing, George, and this is the big one. How the heck am I supposed to buy a house in this world, George, without a credit score? This one's hilarious to me because everybody who has opinions about it has never done it without a score. That's right. Let me be the guy who's done it. George and I have done it. It's called manual underwriting or a no-score loan, and a lender will look at your actual financial picture, your tax returns, 12 months of rental history of on-time payments, other alternative trade lines like your utility bills, your cell phone bills, to then grant you the loan. That's it. That's it. And so Churchill Mortgage has been a partner of ours for decades now, and they specialize in these types of loans. And so it's very possible to live without a credit score. In fact, I've been living without a credit card for 13 years now. Same. And I can count on maybe half a finger how many times it was more difficult to live my life. There was one time that I was renting a car, and because I didn't have – it was like your return ticket. You need a return ticket. Yeah, to the same city. They think you're going to apparently never come back with that car if you don't have a return ticket. And that was the only time. And, I mean, we got around it somehow. I don't remember what I did, but that literally was the only time. I have not had a – my credit score disappeared in 2015, and then it came back when we got a mortgage. but I've never utilized it. I've never needed it for anything since then, Jonah. And so that's... Are you convinced? Are you going to, number one, knock at a credit card, number two, switch financial advisors? So my only other question is, what if I could guarantee covering the costs on the low limit every year? If you could figure that out, we wouldn't have a show. So tell us how you're going to guarantee. And even then, here's the truth. You're going to spend more than you would have. Would you agree you're going to spend more of someone else's money that you get to pay back later versus your money coming out of your account now? Well, I would just not spend it at all if it ever became a problem. Well, then it's too late, isn't it, once it's a problem? We have $1.3 trillion in credit card debt as a nation and $0 in debit card debt last time I checked. And honestly, if your thought is like, I'm just going to get this credit card, but I'm never going to spend it, It's not going to help your credit in the way that you think it is. A credit score measures all of your dealings with debt. So in order to have an optimal credit score, you have to borrow a lot of money frequently. It has to be revolving. So it's measuring things like how long have you had the credit? How much of your available credit are you using? How, you know, what's your total amount of credit? What's your total amount of debt? Like it's looking at all of that as a full picture. And so if you're thinking, oh, I'll just kind of like dip my toe and just kind of like wet my beak in the water, it's not going to work. You're going to get pulled into it because every month it's going to say, here are some things that you can do to build your credit. And the next thing you know, you're going to say, well, I'll just put my gas on there or I'll just put my groceries on there. And even if you play it perfectly, all you've really done is make it through the maze, which you're going to have to keep doing. Have you heard of Sisyphus, the guy who pushed the rock up the hill in Greek mythology and he had to do it every single day? We're going deep. That's life on even navigating the credit score game. So here's the deal, Jonah. I'm going to send you a copy of my book, Breaking Free from Broke, because I wrote the credit card chapter exactly for a guy in your shoes who goes, I don't want to play this game, but I think it's the only path. And I walk through the eight different credit card archetypes of the perfect spender and the world traveler and the rewards redeemer. And I walk through how to live with a debit card. Sisyphus is in there. He's an example in that chapter, I believe. I love that. I think it's a great – I like the reference because that's an – I look at that guy pushing the rock up the hill with his 16 credit cards, figuring out which one to utilize based on rotating cash back, which, by the way, is for like restaurants and entertainment, which is the number one area they know you're going to overspend on. That's right. But I got 5%, Jade. You tell me that's free money, Jade. I flew home for free, Jade. I don't pay for travel. But you spent double on those Taylor Swift tickets because you knew you were putting it on a credit card. But I get an Uber credit, Jade. if I get my Amex. You made a bigger tip at the restaurant. You got a second drink at the restaurant. There's a $700 annual fee for the pleasure of using that card. Wow. Oh, but it's thick metal. It's really cool. When people put it down, have you ever been out to dinner with friends that have credit cards and you can tell they have like a pride or like a look at this when they put it down? I actually told Fairwinds Credit Union because they have the Ramsey co-branded card. I was like, well, you guys make like a real thick metal card just to troll the credit cards out there so I can be like, yo, check this out. It's called money. You want to know what? What you're saying, though, is the deeper part of this, I think, I mean, we could go all day about problems with credit cards and what tendencies it causes, and, you know, the points are off the backs of single mother. You know, like we could go on. But at the end of the day, I think it's just an identity thing of who do you want to be. And when you start walking the baby steps and you draw that line in the sand and you just go, you know what? I'm just not a person who borrows money. I am a person who really enjoys spending the hard-earned money that I have. I feel confident in handling the money that I've earned. It is enough for me. I don't need to move a little bit over here and spend a little bit over here on this credit card and get the points over here. It's just my identity. When your rewards can't tempt me, I'm invincible. I have risen above the system. Yes. I'm outside of the matrix, and I think that is just a better way to live. It's not that I'm better than you. It's just that my life is more peaceful. So you get to choose. And hang on the line, Jonah. We're going to send you a copy of Breaking Free from Broke, specifically the credit cards chapter. Read that, send me a message, and let me know if you've changed your mind. Dave, we got a lot of calls on this show where life happens. One day someone's healthy, they're working, providing for their family, and then a curveball hits. You know, we hear it all the time. 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If you're going to be out of work for a while, then you need to make sure the money's still showing up. And that's why Xander is our go-to. They make it super simple to get the right coverage at the best price, no pressure, no upselling. I've trusted Jeff Xander and Xander Insurance for over 25 years, and so has my family. So don't wait. It's fast, it's easy, and it could make all the difference. Go to Xander.com or call 800-356-4282. Protect yourself, protect your income, protect your family. Welcome back to the Ramsey Show here in the Fairwinds Credit Union studio. I'm Jade. Next to me is George Camel. We've got Logan on the line from Orlando, Florida. Hey, Logan, how can we help you today? Hey, so I was wondering, my grandmother has a property and she's going to sell it. And she gave me an opportunity to get it for less than it's worth. And I'm $50,000 in car debt. I live at home right now, so I don't have many bills. You've got a car payment. Yeah, other than that, yeah. Okay. So that's the only debt, just the $50,000 car payment. Is there anything else, student loans, credit cards, personal loans, anything like that? Nothing. How much money do you have saved? About $20,000. Okay. And how much do you make? Including side jobs, and my actual job is around $90,000 a year. All right, you're making $90,000. All right, and what's this deal with Grandma? Why is she willing to give you a deal? Where is she going? I guess just because she loves her grandson. I don't know. She likes the property. It's 10 acres. Grandpa died, so it's just too much for her to take care of. She doesn't necessarily want to get rid of it, but it's just too much for her, so I think she'd give me a deal just to kind of not fully get rid of it. You think she would, or she told you she would? No, yeah, she will. So I'm just saying I think that's the reasoning. Okay. Tell me what the market value is and what type of deal she's giving you. Tell me the real numbers. So I would get it for $350,000, and it's probably worth $500,000 to $600,000. Wow. Okay. And do you like the house? Do you love it? Oh, I love it. You know, it's got a warm place in my heart. Sentimental value. That's sweet. Right. But if this wasn't grandma's house, it was just on the market, would it be something you'd go, I want that? If it was on the market for this price, I would jump right on it. So here's the thing. You're not there yet. You're not ready financially to buy it for a couple of different reasons. How urgent is this, or is this a deal that can stick around for maybe the next 12 to 18 months? Well, I know she's ready to be done with the maintenance and everything. So I don't think it's necessarily like she's ready to move tomorrow, but I think she's ready. She might be able to hold off for the next 12 months. Because you've got a couple of things that some ducks you need to get in a row. Number one, we've got to either pay off this car or get it sold because we don't want to go into homeownership while we're still in debt because then it makes it very, very tight. And this thing is over half your income, So it needs to be gone. What is this thing? What kind of vehicle? It's a Jeep Gladiator. And how old are you? I'm 22. And it's brand new? I bought it brand new, yes. What's it worth today if you went and sold it? So I went to the dealer yesterday to see what they would give me. They told me they'd give me $31 for it. Well, the dealer is the worst place to sell a car known to man. So let's not go there because they're trying to make a profit. But just so, yeah, so I looked up just ones that people are selling around me and they're going for around thirty four. So it's not too much. Do you roll over negative equity? How are you so underwater? I did. I did. I bought a truck during covid. OK, well, here's that. Here's how to get out of this thing. Let's say you sold it for thirty four. That means that you are sixteen grand underwater. Luckily, you've got $20,000 sitting there in savings. So that will cover the amount you're underwater, leaving with a few grand to get you a beater car for now, to get you from A to B. Right? Okay. Now, what's your payment and insurance? Man, my payment is $850,000, but I'm paying $300,000 a week because I was just trying to get it down. Um, so I've been paying 300 a week and it's 850 and I pay my dad like, he doesn't really charge me for insurance, but every once in a while I'll give him like four or 500 bucks just to, you know, we can easily say it's a thousand bucks plus for this payment plus insurance and all that. So that's what you would free up to then start saving up an emergency fund followed by a down payment. Because if you really want this house and grandma's willing to wait, then I would act like this is urgent. And I would get rid of this stupid car that's going down in value when you're telling me that you want to be a homeowner. And let me give you some real numbers. And this is not intended to bust your bubble. This is just intended to give you a dose of reality because what you're seeing right now is a deal. And you're only seeing the deal, but you're not seeing the reality of what can I actually afford. Because you're right, for somebody to sell you something that was worth maybe $500 or $600 for $350, that is a deal. But there's no such thing if you can't afford it either way, okay? So the real numbers on this, and I'm just using our Ramsey Solutions mortgage calculator, I put in, let's say she sells you the thing for $350,000. And let's say it's on a 15-year fixed-rate mortgage because that's what we suggest around here. And right now I'm seeing that the weekly average 15-year fixed-rate mortgage is about 5.64%. So I put that in here. You would need to put about 54% down in order to get this thing close to 25% of your take-home pay, which is where we like your mortgage payment to sit. 25%, and that's everything. That's HOA, taxes, insurance. We want no more than 25% of your take-home pay. So you're talking like $180,000 down? $190,000. Yeah. And it's still tight for you. That puts you at around $1,800 a month, and honestly, I'd like you to be closer to $1,500 a month. So that's me being your buddy here and telling you the truth that even with you going balls to the wall like George said and selling the car and doing all those things, which you need to do anyway, by the way, you still have a journey ahead of you, right? And we don't want you to be like Icarus flying too close to the sun on this thing. That's right. And just because the offer is generous doesn't mean that this is a good deal that you can afford. That's right. Right. So what should I be at for a car payment? Zero. Okay. So if I get rid of my truck, I pay the negative equity off, and I buy a beater for however long, and then just stick it out with the beater. Stick it out with the beater while then saving up, paying yourself that car payment of $500 to $1,000 a month. Well, now you've got $12,000 more at the end of 12 months to then upgrade in car. You sell the beater, take that profit, and apply it along with your 12. Now you've got a $16,000 car. And the key is you don't want anything with wheels and motors to add up to more than half your income, your sustainable income. So don't include the side jobs that you may drop. What is your actual full-time income? Let's say it's $70,000. Well, then we want no more than $35,000 tied up with things in wheels and motors. Do you understand why, Logan? Why we're saying all this? Why we have these parameters. Tell us in your words why you're doing all this so we know you understand. Well, I'm thinking just so I'm not paycheck to paycheck living and I'm out of debt before I go into a mortgage. That's a big part of it. But the other part of it is what George is telling you to do with this vehicle. That's a long-term mindset. The mindset is I never go into debt for cars again. I'm always going to use this method of saving up and upgrading for cash. And the reason for doing that is over time, you're going to have so much money at your disposal to be able to actually build wealth. We've said it before, George, and I'll say it again. Really, the divide between being middle class and being actually wealthy is the car payment. That car payment, 700 bucks a month, 800 bucks. Many of you are over a thousand. If you took that money and put it back into your pocket, maybe not all of it because you're stacking money for the next car. But even $600 or $700 additionally to be investing regularly, that is the ticket. That is the unlock to building wealth. 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See store for details. all right we've got stacy who is joining us from salt lake city utah stacy how can we help out today hi jay george thank you for taking time to chat with me i am wondering if it's at all wise to give my mother-in-law a certain amount of money every month just so that we don't keep having her approaches every month to give us money, kind of basically just getting ahead of knowing that she'll need money and just making it that she has it already and kind of avoiding that situation of being asked. Oh, boy. So we're going to direct deposit to her account just to avoid her having to talk to you. Well, yeah. Yeah, like, yeah, like, not that I know it's stressful for both of us, I would assume at least where. What's her attitude about it? She, I mean, she doesn't act entitled to it by any means. She has six adult children, five of which all have the same job. They're all in the same trade. Most of them make above 100K a year. So, like, everyone's able to help her. She doesn't have the legal ability to work in the country. Okay. So she does live with my brother-in-law. He owns a home, and she lives in – so she doesn't have a car payment. She doesn't have a housing payment or anything. Okay. She does have a teenager dependent. How long has she been in the States? Since she was 17, I think. And she hasn't been able to work that whole time? The entire time? I know she did part of that time. And then I think there's just been some issues. I'm just confused who's been floating her lifestyle and income this whole time for decades. Her children. And has that changed now that you guys are fronting more of it? I think it's shifted. She lived with my husband for about a part of a decade before I met him. And then she moved in with her other son when he bought a house. Okay. So what is the current situation for how much each sibling is giving? What is her monthly income that you guys are supporting her with? I'm not aware of anyone else giving her basically an allowance every month. She has been asking us for money consistently for about five months. It's about $800 every time. What is she using this money for? it's medical bills is big ones which we were aware of because she had like medication like it's not just like oh i need it for does she have health insurance on her own she does she has medicare okay um how old is medication was a little different how old is she i think she's 56 56 and has she has she to your knowledge has she tried to um get the correct visas to be able to work or try to appeal that or whatever it is. Has she been working on that or did she just give up on, I mean, I'm not going to pretend to be an expert in that area, but I, I'm just curious. Yeah, she has. We're actually working on it right now. Okay. It sounds like it's just kind of something that takes a little longer than we had hoped. Okay. It doesn't sound like there's much urgency on her part. I mean, she's got Bank of Stacey. So it's like, why do I have any urgency to go to work when I don't have any bills and someone provides my income? I'm a little worried about that, yeah. I wonder. Do you have the money? Stacey, like how are you guys doing? Yeah, we make great money. I have an income, and so does my husband together, where you take about $13,000 home net. Okay. Do you guys not have any debt? We have a little bit. We just paid down a ton. So we have like $11,000 of consumer debt left. Okay. So that will be gone in the next two months. And then we have a $488,000 mortgage still. $488? Mm-hmm. $80? And do you guys have any cash saved, like liquid funds? We do. We have $14,000 in high yield right now, and then we'll be getting tax refunds soon as well. Okay. Yeah, $14,000. Okay. So I know we can afford to. I guess. You could be in a better situation. I will say that. I mean, the walls are not paving in on you, but I definitely would. If you are going to put yourself in a situation where you're contributing to this monthly, and that's fine if you decide to do that, you've then got to get very diligent about making sure that this is not at a detriment to you by being very intentional about what you guys have going on. And, I mean, anybody who calls the show, I'm going to say, hey, you've got to get on the baby steps. And I think for you guys, paying off that $11,000 of debt and doing that today because you've got the money there, right? Which leaves you with three grand, which is the reality of your situation is you have three grand to your name. Okay. So it feels good because you make a great income, but it is disappearing through a giant mortgage, supporting mom, whatever else shows up. And so I think you guys could do a better job of making sure this money doesn't slip through your fingertips. And I think your husband needs to be aligned here. Is he wanting to continue to support mom at a certain level? We just talked about it today, actually, because another situation came up, which I'm calling. He does, and I brought up, like it doesn't seem fair if she's asking us for the entire amount that she needs every month because she does have three other adult children. And what's the entire amount? That makes the same as my husband. I mean, right now it's another $800. $800? For I think the last four months, yeah, $800. That's the total amount that she needs? Right, yeah. And you guys have been giving her, what, $400 or $200, or you've been giving her the entire $800? this month or this today we did decide on 200 so that other siblings will help the last three months we've given her the entire amount each time so it sounds like it sounds like there's a couple of things it sounds like the the six adult siblings need to get in a room or get not get on a zoom call and say okay here's the deal like mom is going to need this money for the foreseeable future until his visa business gets worked out. We need to set a plan so that we are not all scrambling every month to decide and putting her in this position and her putting herself in this position. And she needs to be clear on what these new guardrails and boundaries are, because if not, it's just going to become, well, I can get more out of them this month. No, instead go, hey, we're going to support you for 18 months. And by then you need to be getting a job. And then once you're retired, we can figure that out later on in life. But she could live another 40 years. This is a long time. This is not sustainable. And I think that's the bigger part of this is somebody and I'm not saying it's you because you're the in-law here, but somebody whose blood needs to be looking at this and going, okay, why can't she work? What is the visa that she needs that she can work? What do we need to do and is anybody on top of this like it's their full-time job? Because the truth of the matter is, of these six adults, you might know what they earn because you know their trade, but you don't know their financial situation. And $200 or $300 a month for some people might feel like, okay, we can swing that. But for other families might feel like, hey, especially if they're, let's pretend they have debt and they're trying to pay their debt off, right? So I want to set the expectation that all these siblings may not contribute and you can't be salty with them if they don't. Because it truly is their choice and we don't know what's going on with their money. Yeah, that's fair. Yeah, that's kind of how I was feeling today when I was like, why is it always us every month? You're right. Because you guys are willing, and you've done it. And therefore, who is she going to come back to? The hand that feeds her. So there lies the problem. And I'm not mad about being generous, but when it becomes expected forever, that's not really generosity anymore. And therefore, you guys need to be more involved with her finances. Because if she blows this or if she is going into debt, well, then this is just a never-ending money pit. So you guys need to be working on, hey, here's your budget. Here's how much is going to go towards bills, you know, to help support whatever the household. Here's how much goes through insurance. Here's how much is fund money. And she needs to be on a budget if you're going to be handing her this check every month. What's her country of origin? Mexico. Okay. Where do you guys live? Salt Lake City. Okay. I was just thinking, like, I don't know. This is crazy, but I was like, oh, I wonder if she lived closer, if she could cross the border and work and then come. Like if she lived like, you know, Southern California. I don't know. My brain was trying to solve for the here and now, but that opens a whole can of worms. But anyway. I would just get clarity. I think we need to have a come to Jesus conversation with just the siblings. You don't need to be involved. It's up to them to figure it out. And then your husband comes back to you to go, hey, what do you think about this situation? 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So start every dollar for free today in the App Store or Google Play. Okay, Rebecca is joining us from Orlando, Florida. Rebecca, how can George and I help today? Hey, thanks for taking my call. Yes, ma'am. So my husband and I, we're just starting the baby steps. We're working on paying off debt. We have about $50,000 in debt, some student loans, some credit cards. And our household income is around $135,000. So we're 32, and we're kind of behind on the game. We haven't started investing or saving towards retirement. Okay. And we have two young boys, and we're contemplating having a third. We would love for many people in age, so we're thinking about getting good night in this year. And I think it's important to know I'm a 1099 contractor, so I wouldn't be getting paid for maternity leave if we chose to have a third. Okay. And with three littles, even contemplating wouldn't make sense for me to stay at home. And so the question is, is it wise to kind of say all done to having more babies for the sake of where we're at currently financially? I don't think that's the case, but I do think that it would behoove you both to really put real numbers on paper and create a timeline to see what's actually possible within the parameters that you guys say you want this to fall into, right? You get the values of saying, okay, if I have a third child, do I want to stay at home? And if so, what's that going to cost? And let's run out the real numbers before we just take this thing off the table because I'm a fan of families. I love families, and I love mamas being able to have as many babies as they want to and making a way to afford that. So where you are right now, you're 32 years old. You've got the $50,000 of debt. Is there any money saved up anywhere? Yeah, so in our savings, we probably have $8,000 or $6,000. Say that again, please. We probably have about $8,000 saved. Okay. Regular savings account. Okay, $8,000 saved, and you guys are bringing in, what, $8,000 a month? Is that about right? Yeah, more or less. Okay. How much can you throw at your debt every month after all of your bills are paid? so one of our sons has some medical stuff that uh kind of eats up a little bit of our margin um but i'd say it's safe to say probably like six or seven hundred dollars if we're if we're tight so your bills are costing you about over seven grand right now per month i mean i think if we're what's your mortgage payment So we're renting. It's $2,500 a month. Rebecca, speak directly into your phone. Tell us again what's your rent payment. Oh, I'm so sorry. That's okay. I said our mortgage or our rent payment is $2,500. $2,500? Okay. Yes. Can you hear me okay? Yes. Yes, ma'am. $2,500 is a little over, so there's a little bit there that's eating into there. What else majorly is going on that is, because your kids are not in daycare right now, or are they? Right. No, we don't have to pay for child care, thankfully. We have some family help. And so right now we have our, just the student loan payment, which is about $500 a month. I don't have all the numbers right in front of me, but we have, yeah, I feel like, you know, It obviously could be a budgeting thing, too, but I feel like it plays a part in this. I think there's some intentionality that we can really, really tighten up. Are you guys using every dollar? We just got Financial Peace University and downloaded the app, so we haven't started it structurally yet. Okay, I think that's going to be an unlock for them, George. You're about to find out that you can live on way less and carve out way more margin. Because here's why I was asking. If you can throw, let's say, two grand a month at the debt, you're done in two years. If you can throw more at it, you're done even faster. And so what I'm trying to do is get you guys debt-free as soon as possible with an emergency fund. Not that you have to wait for that to have the next baby, but if you're saying, hey, my goal is to stay home potentially, well, if you can't make the current income work, how are we going to make less income work? So we've got to figure this out. If it's true that you really want to have this kid, if that's the priority, then we need to make sacrifices to make that a reality. Yeah, how much of the 135 is coming from your income? Yeah, so we have 65, I'm sorry, 60 is coming from me. I work part-time right now. And then 75 from my husband. Yeah, so, yeah, I mean, you're not wrong. It's cutting it in half. So the main things that I'd be... It's one of the things we feel... Go ahead. I was just going to say, you know, I feel like if we already had a third, we would just be looking at how do we make this work. But now that we're kind of in this decision period, we don't want to be unwise and impulsive, you know. The biggest area where I see it playing out in a potentially very stressful way is your cost of housing. So right now you're paying $2,500. It's more than 25% of your take-home. And if you go down to $4,500 take-home pay, for example. Exactly. That's when you're going to be really strapped. It's going to be darn near possible to accomplish anything like that. So there's another sacrifices. We need to change where we live if we want to make this a reality. So that's where I go. You can go to a fake budget tonight just using his income just to see where things would fall. And even you can go, okay, let's say we're debt-free. Let's take out those debt payments. It's still going to be tight. And really, here's how much house we can afford. Then you can start to map out what is realistic for your situation. Mm-hmm. Now, right now, your current kids, you're not paying for child care. What changes so drastically when the third one comes that you'll no longer have access to that? Sure. So, my in-laws and then my mom, I said that come and watch the boys. And so, they're in their 70s, and we're just thinking with a third, it may be a lot for them. I can say now we're seven-month-old and two. Well, with the debt paid off, if you put one in daycare, you might be able to swing that and continue to work. So you keep the two with the family members and then decide which one would go to daycare. And without debt payments, you know, you freed up $500 in student loans. Who knows how much from the credit cards, right? And now maybe you can swing that. And by then, how old's your oldest? He's two. He tries to ask me. Okay, so kindergarten for you is going to be kind of like the unlock moment when one of them can go off to school, right? So I do think that this is possible. I think you've just got to get creative on what it looks like and get so, so intentional now before you're pregnant. Now is the time where you guys are working, working day and night, like Michael Jackson said, all the money, right? Because you guys need to pay off this debt so quickly. You need to start saving for three to six months of expenses and potentially a down payment down the line. Right. Thanks. Okay. No, that is helpful. Yeah, because I just feel like the third changes a lot in terms of my income and just how we, you know, our lifestyle. Absolutely. And that's the thing. If you want to be a stay-at-home mom with three kids, your lifestyle is going to look very different, and you might need to live further out where rent is $1,500 instead of $2,500. And so there's just tradeoffs all the way around, but you'll have the most flexibility and options if you become debt-free and you have the emergency fund and hopefully your husband has a ceiling, you know, a bigger ceiling for his income, he can start making more, then life will get a little more comfortable. But right now the saving grace is these parents and in-laws who are willing to watch the babies. Imagine they had daycare to cover in the midst of this budget. Oh, it would be tough. But what I really love about her calling in is this idea of, like, family planning, like thinking about what you want to do, laying out the numbers, laying out a timeline, and making a plan and not just kind of going into it blindly. Because like I said, I love babies. I love families. But there are things that we can do to make that a better situation for all involved. I always love it. It was a huge surprise. I'm like, well, I don't know if you were in science class, but there shouldn't be a whole lot of surprises there. You're not Mary in the Bible here. I mean, sometimes it happens. George, like, slips past the goalie, you know what I'm saying? And it just accidents happen. Hey guys, healthcare is one of the biggest stress points in your budget. 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That's chministries.org slash budget and use promo code Ramsey. All right, we've got John who's in New York City, Florida. Is there a New York City, Florida? I don't think that's right. Where are you at, John? New York City, New York. That's what I thought. I was like, one of these is correct. The other one is not. Well, we're glad to have you. How can we help you today? Thank you so much for having me. I really appreciate it. My wife and I purchased a short-term rental in October of 2024 at the advice of a tax strategist that we hired. and we're bleeding $1,500 to $3,000 a month in this short-term rental. Okay. And I own a business. My wife's a full-time nurse, and we get taxed heavily. Obviously, the business does. And that's why I enlisted with a tax strategist to understand, you know, options, you know, as far as building generational wealth and how to do that. And that's when we got into this short-term rental. And, you know, we got bonus appreciation, so that was nice. You know, we were able to let off the federal taxes and stuff, but bleeding $2,500 to $3,000 a month doesn't leave a very good taste in my mouth. You might as well pay that to the government in taxes at that point if you're just going to bleed it. I might as well not even do that. You're either giving it to a lender or to the IRS. Pick your poison. Correct. Correct. So my real main question is, you know, it's hard for me to trust people now because of how this leaves a tower taste in my mouth. And I just need really good direction. You know, what do we do with our money to help build generational wealth, to find properties of cash flow? What should my next steps be? What's your business? You know, we want to do something this year, but I'm nervous. We own a print company. Okay. Where did the real estate come into play? Because these are two different goals. And I want to build wealth, but also I want to be a real estate guru and leverage a bunch of debt. Correct. The real estate came into play because of the taxes we were getting. We were getting heavy taxes, obviously. Would you agree that getting into real estate just for tax purposes is not a good idea? My wife, I guess she said so. You're losing $36,000 a year because of a tax strategist saying, dude, you want to save on taxes? Just leverage it in Airbnb. It'll be great. Well, I think you thought you were going to build wealth, too. I think you thought you were going to use that as a wealth-building vehicle as well, not just a tax shelter. And that's the goal, obviously, is wealth-building for generational wealth. What went south with the short term? Was it the location? Did you not get the rents you thought you were going to? Like, what happened? Well, I think it's our property. In all honesty, I think it's our property manager. So our realtor is also our property manager. And when I met with him, I'm pretty upfront. I said, you know, listen, I just need to know what our worst case scenario might be with this property. He said, your worst case scenario is you're going to be out $1,000 a month. I said, good, let's go. We're good. That sold. So you knew that from the jump? Oh, yeah. Okay. And I was fine with $1,000. I knew it wasn't going to cash flow well, but I also was using the benefits of, you know, how much we were going to save on taxes and then also building generational wealth and making this kind of a yearly thing we wanted to do. Okay. So it's just nothing was looking good. So what would this property sell for? This property management company, $1,035,000. It's worth, according to Zillow, $1,065,000. We also own a home. Our personal residence. We bought that for $820, which was about $965. What's left on that mortgage? That one, $617. Okay, and what's the mortgage on the short-term rental? That's about $820. Okay, so you got, let's call it $150,000 in equity on the short-term rental you could get out? Correct. What other debts do you have? Again, obviously I got to pay. We did do a loan where there's a prepayment penalty, So we got a five-year prepayment penalty, which goes down every year. So we'd have to eat that, obviously. What kind of loan is this? It's called a DSCR loan. Okay. What other debt do you guys have outside of the two mortgages? Truly, I've got a car. It's about $600 a month. Business pays my car. We have 0% credit cards that aren't due until next year. It's total about $37,000 between both of us, $37,000. You are a credit card company. dream. I'm sorry? You're a credit card company's dream. I know. Because guess what's going to happen when you can't pony up $37,000 out of nowhere to pay the balance? Let me give you the full picture. I have $150,000 sitting in the bank. And my wife has $10,000, my wife. Between both of us, $170,000. Okay, cash. I know it's going to pay off that 0% credit. How much? Okay, well, great. How much – what's the total amount of your wife's vehicle, not the monthly payment, the total amount? Total amount. It's a lease. Oh, it's a lease. And what about you? My car's paid through the business. It's $5.24 a month. It's a Subaru Outback. How much is the debt, though? What's the total debt? I owe – it'll be done at the end of this year, and then I either will lease another car or – What's the total debt? don't be scared i apologize don't be scared so what's 524 times what's the amount that you owe on your car how much you owe yeah it's we got we owe on my car is going to be three grand that's it that's all you have left yeah because it's a lease so it's three thousand oh yours is the least too Okay. Goodness gracious. These are the nicest cars known to man. What are you guys driving? $600 a month for a lease? When's the lease up? Her lease is up the end of the year. We're both the end of the year. Okay. And are you planning on buying them out, or what are you thinking here? I don't know, to be totally honest. I haven't thought about it. Okay. So we're going to help you think through that. What I want you to take away right now, John, is you're kind of like a happy-go-lucky guy, and you're fun to talk to. But I'm concerned about your situation greatly. You've got a lot going on. And the good thing is I think a couple of moves could get you on just a couple of small tweaks could get you on really, really solid footing. But you'll have to agree with George and I that you're in a dire situation in order to actually do this because I feel like you kind of think it's not that bad. You guys have out-earned your stupidity for a long time, and you can continue doing that. I just think you will vehemently disagree with everything we're going to throw at you, so I don't even want to waste the time. But I'll tell you what I would do. I would sell the short-term rental, walk away with whatever money you can get, take your 160, pay off all of your consumer debt, and then anything remaining becomes emergency fund plus paying down the mortgage. Gotcha. But leveraging the debt game. I should make that my priority is paying down our primary residence. Paying down everything. Pay down all of the consumer debt first. Get an emergency fund. Focus on paying off your primary mortgage. Right now you're just trying to accumulate stuff and assets and car leases, and we're trying to simplify your life to where you get to keep what you take home regardless of how much you pay in taxes. I'd rather you pay what you owe in taxes and not have all the stress in your life and go, that sucks. I had to pay the IRS more than I thought. But it's a nothing burger if you had no debt. You figured me out perfectly because my wife will tell you I do stress out a lot about it. I bet. It's not worth it. It's very stressful. It's stressful for me just to listen to it, so I can only imagine how you feel when you lay your head on your pillow at night. But think about what George just said. You got $170,000 cash. Okay, we pay off the credit cards. That leaves us with around $130,000 or so. You decide whether or not you're going to buy out these leases. Do you know what the buyout is for each of them? I don't know. I think it's around $20,000, $25,000 maybe. For each? If I'm speaking correctly. For each. Would you guys want to keep those cars? I'd have to convince my wife but I don't care okay let's say you did you want to keep your car she doesn't care okay so let's say you spend $40,000 and you buy out these leases now you're at $90,000 you've got $90,000 sitting there after you've gotten out of these leases after you've paid off some credit card debt is there anything else that we need to know of that needs to be paid off no I just gave you all the all the debt we have okay so now you've got some actual cash You sell the short-term rental because did I hear you say you bought it for 1.3 and it's worth 1.6? No, no, no. A million 35, and it's, according to Rosillo, it's worth a million 65 now. Okay, a million, okay. So you'll probably take a little loss on that, but you'll gain three grand back in your life from not bleeding. And so that's where I'm going. This is worth it. Don't have the sunk cost fallacy. It sounded like you didn't want to sell this Airbnb, though, this short-term rental. I mean, I'll be honest with you. I do love the house. I wish, you know, my wife and I would love to be in Florida one day. I'd love to be in the house. But if it's going to cause me stress every day, I'd rather do the smart thing than the future, you know, goal thing. Let's talk about the why behind it because I think you had – I like what you were thinking about, which is what are ways that I can build wealth for my family. I think that that's something that we all need to be doing as parents and as spouses. But the way to do that, we did the largest study of millionaires and the best way to do that is to have a debt free lifestyle, a budgeted lifestyle, a lifestyle that values having the right insurances, saving for emergencies. Right. And then investing in your 401k regularly. That's how millionaires are built. They invest in their 401k regularly. Well, welcome back to the Ramsey Show here in the Fair Ones Credit Union studio. Again, I'm Jade, if you're just joining us, and we have George Camel taking calls from Brandy, who's in Huntsville, Alabama. Brandy, you are on the line. How can George and I help you today? Hi, guys. I have an interesting situation for you that we need help with. My husband and I have been married 10 years, but when we got married, we had a backyard wedding. It was like a $3,500 wedding. It was just close family and friends. And we did not buy wedding rings. So we had said if we make it to 10 years, we would have our honeymoon and buy wedding rings on our 10th anniversary. And that is coming up. So we, and there's more story to that, of course. Like, I mean, he proposed four times. It's me. I bring the George to the relationship. What does that mean? You're the funny daddy? I am the frugal one, I guess. Oh, frugal. And he's more of a free spirit. Yeah. You said no to his proposal like three other times? No, I laughed hysterically the first time. And then the second time I was like, I'm really not good at being married. I mean, we've been married, like I said, 10 years. That's like an Olympic gold medal for me. He deserves a medal for persistence. The guy just kept getting rejected time after time. He laughed in his face. Wow. That's brutal. He is really amazing. He is. A great spouse. And, I mean, we've made it, right, so far. You both seem surprised, which I find entertaining. We both can't believe we're here. Well, congrats on the 10 years. And I love the idea of finally, you know, getting rings and having a ceremony. But there's probably a catch here. So tell me, what is it? Well, we're trying to buy rings and go on a honeymoon. We're not going to have a ceremony. We've already done that. Okay, so rings and honeymoon. Yes, and we are in the middle of baby step two. We've paid off $63,000 worth of debt as of yesterday within the last 12 months. Whoa. Way to go. Right. And we have $49,000 to go. So we were expecting to come to you guys for a debt-free screen next spring. Okay. And we want to delay by a month because my entire paycheck, like my base salary, I own my own business. He works with the state. But my entire base salary goes to paying debt every month. So I get my paycheck, and then I give it to other people, and it hurts my feelings, right? So I am super motivated to get finished, but we both feel that we need a break in order to celebrate this milestone for us. And it only sets you back by one month? Is that what you're saying? Yeah, it would pause the baby steps by one month. And we don't know budgets. We haven't been shopping for rings because I'm terrified to go in there. I think I'm going to have sticker shock and faint. I don't think you know how much it's going to set you back because you don't know the numbers, right? Well, we were thinking around $1,000 on rings total, and then we would spend around $3,200 on a trip. And we wanted to kind of set the budget at what we normally would pay towards the debt a month. Which is about $4,000. Yeah, between $4,000 and $5,000. Okay. And you're saying if you continue this path, you could be debt-free in what, nine or ten months? Probably around 12 because I work in education fields. So I am home. We have six children. I'm home with our youngest children, and there are many of them. But I'm home with them in the summer, so I don't have as much income in the summer. And we plan for that because I own my own business. So it's not a huge loss, but we don't have as much of a margin during those two months. Got it. I'm going to tell you, and again, this could be controversial, but I think that I would do this. It's a one-month setback, and it's a milestone of 10 years. And it's actually funny that you're calling in because I called in to the Ramsey Show long before I worked here with the same question. Sam and I had paid off a major portion of our debt. You've paid off more than half. I think we had paid off more than half of ours, and we wanted to do a 10-year anniversary, and it was going to set us back a couple of months, but we did it. And Dave said that he would do it, and we told him the budget. And so I will now tell you the same thing because I think it's a really important thing, and I think it's one of those things that comes around, obviously, every 10 years. And this is your 10-year mark. I think the budget is reasonable, and I like the fact that it's only a month-long thing. It potentially only sets you back a month, and what I actually think will end up happening is if you wanted to kick it into high gear after this, you could probably make up the time by picking up, you know, cutting back here and there, picking up side hustles. Who knows? You know, if friends and family find out about this, you might get some monetary gifts. I don't know. But I think things can happen that you really don't even have to sacrifice the month. Okay, yeah. And I have a business that's doing very well. It's growing as time goes along. So it will increase over time. And also he's getting promotions at his job. So we know that it will go up eventually. That may take a while, right? But we really want to pause and celebrate. So you got married in the courthouse, no rings. We had a backyard ceremony at our house, and it was beautiful. We have a creek in the backyard. It was a beautiful ceremony, but it was just close friends and family. So you guys have anything on your fingers right now? No, we don't. You couldn't have got a silicone band off Amazon for like $10? Well, I think he wears a silicone band, and he has another band that he really likes. I feel bad. I mean, it took me two years to change my name. Maybe I have a little bit of a commitment problem, but I really love him. Our marriage is great, and I think it's time for me to put a ring around. You want to know what? Okay, I'm going to go one deeper for you. Now, this is your life. Do what you want. I almost, and I'll just be honest, I feel the money is better spent, and this is just me. In comparison to the baby steps, I feel like the ring would be the thing that I'd want to spend more money on because you've never had one, versus the honeymoon. That's just me. What do I know? George, what do you think? What do you think about the whole thing? You may not agree with me. Well, again, Brandy, you told me ahead of time I'm the fuddy-duddy frugal guy, and I love to dangle the carrot. I want to earn it. I want to eat my vegetables before I get dessert. And so personally, I'm going to go, you know what? We're already in our 11th year of marriage. We're going to celebrate before we're done with year 11. And that will put some onus on me to put some urgency on this and bust it to get this knocked out as fast as possible so that I can enjoy this. Wait, it's not going to happen at the 10-year point? You're already past 10 years? No, we will be 10 years coming up in the fall. And I wanted to wait until after the debt was paid so next summer. And he's like, absolutely not. We had an agreement. Well, wait a second. Wait a minute. I'm going to roll mine back a little bit because I thought that the whole point was we're doing it on the 10-year anniversary. But this is not on the 10-year anniversary. You're not doing it on the 10-year? At the 10-year anniversary, that was when we planned on doing the ring and going on the trip. Right. Can I be honest, Brandy? Here's what bothers me. You guys have been, quote, unquote, planning this for 10 years and yet made zero actions to get us here. You know what I mean? Like, what happened over 10 years where you guys went, yeah, we said that, but we don't really believe it. And now all of a sudden it's an emergency. That's a good point. You know what I mean? What happened? Well, it's not an emergency. We did take our savings that we put back for it and put it on our debt. But why aren't you in a better place financially than you were 10 years ago when you guys were broke? Oh, well, you probably weren't thinking about it then. We weren't in a better place. Or were you? I'm sorry? Were you thinking about this 10 years ago? Probably not. Or were you? Yeah, we agreed to do it when we got married. That was what we said. Oh, yeah. That's what I'm wondering. It was an agreement. If I had a 10-year horizon to plan for this thing I knew was coming, I would make sure I was going to get there. And so that's where I'm trying to figure out where you guys went backwards, got into $100,000-plus-thousand-dollar consumer debt, which you guys are crushing. I'm really proud of you. I'm not trying to knock you. I'm just trying to get to the mindset to make sure we've actually changed our behavior that got us here. George makes an interesting point. Listen, I will say this. If you told me it's a once-in-a-lifetime thing, it's 10 years, and you were doing it on the 10-year anniversary, I'm like, yes, 10 years. But if you're telling me we're doing it on a 10-year anniversary and the plan was already to do it at year 11, it takes the cachet. It's got no cachet at that point. I mean, you're not going to regret it if you do it. And you guys will still become debt-free, whether it's in May of 2027. Well, at that point, you may as well wait until 12 years. That's what I'm saying. Everything feels arbitrary because clearly our planning has not gone to plan. I don't know. Hey, guys. Dave Ramsey here. Every day on this show we help people work through real money problems and figure out what to do next Now you can get that same kind of help anytime with Ask Ramsey Ask your money question and get answers built on Ramsey principles we use on the show Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to RamseySolutions.com and try Ask Ramsey today. That's RamseySolutions.com. The Ramsey Show Question of the Day is brought to you by Why Refi? If your private student loans are in default and you're not sure what to do next, Why Refi can help you explore refinancing with a low fixed rate and a payment plan based on what you can actually afford. Go to yrefi.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. Remember, it may not be available in all states. Today's question comes from Grace in Nebraska. My husband and I are about to pay off our last debt, which is a credit card. But I've read that doing this will lower our credit scores a lot. Should we slow down our payoff schedule or knock it out and let our credit score go down? What a hilarious question, which just points to the stupidity of the credit score. Number one, the confusion of it. There's confusion around it. And number two, if I do the thing I know is financially smart, I will be penalized. Well, I think a lot of people don't realize. Yeah, I don't think they know the truth, George, so enlighten us. Well, number one, a credit score is based off several factors that are weighted differently. How much debt? How long have you had the debt? What's the types of debt? Mix of debt. The variety, all of that. Any new debts. And so paying off your debt will not lower your score, especially long term. Now, if you closed all the accounts, it might take a dip because they like to see the open accounts. You know, the longer you've had them open, the better and all that. But I would never say slow down your payoff schedule in case your score takes a hit. Because whatever hit does happen, it's going to be minimal and it's going to be temporary. Well, and you have to ask yourself, the long-term question on this is why are you doing this to begin with? because most of us out here, if we're paying off our debt, we're usually doing it with a greater intention in mind. And over here at Ramsey, the whole thought is you can't solve a problem while simultaneously creating it. So if debt is the problem, if it is the barrier to you building wealth, then what we say is, okay, then I no longer borrow money anymore. And so me paying off my debt is essentially equal with me saying, and I no longer care about credit because I no longer am going to borrow money. So they're kind of synonymous. So my question to Grace would be, what's the point of paying off the debt if you plan on utilizing your credit score in the future, which means you would be borrowing money. And by the way, there are a lot of people who don't carry any debt and still have a credit score. They have open credit card accounts and they pay it off every month. I know those people exist because they always tell me how proud of themselves they are for paying off their balance every month. And they have an 830 credit score and all of that. So, Grace, the real question is what kind of future are you looking for? Are you looking for a future where you keep taking on more debt and trying to pay it off perfectly to appease the credit score of gods? Or do you just want to go, you know what, I'm done. We're going to cut up the card, close the accounts. Six to 12 months later, your credit score will become indeterminable. That's what happened to me. Now, if you have a mortgage, your score will stay up there. And it will stay – as long as you make on-time payments for any debts in your life, your score is going to be fine. It's not going to be – it's not that much better to have a 790 versus a 760. No. It's – yeah. And again, who cares? It's not going to stop you from doing any of the things you want to do because you're living a life without debt. And let me just say this. When Sam and I were in baby step two and paying off debt, I was a little late to acquiesce the credit card. It took me some time to feel like I could let go of that. But what got me is I hated paying it off every month because we'd spend a little bit on it and then pay it off and spend a little bit. I just got to the point where I was like, I don't like the feeling of this. Even if you're paying it off every month, it just doesn't feel good. It feels like you owe someone money. Exactly. Because you do. Even though you have the money to pay them, you still owe them for 30 days. And I think I just hated the feeling of that. And let me tell you, obviously people care about the credit score for a mortgage. That's the big one that's understandable. But again, we've talked about it on the show. Yes. Getting a no-score loan, manual underwriting. It's a very real possibility that Jade and I have both done it. And they didn't give it to us because we're Ramsey personalities. They gave it to us because we had 12 months of rental history, on-time payments, tax returns, pay stubs. And they manually underwrite it. If it makes you feel better, I did it before I was a Ramsey personality, long before I even worked here. So if that makes anybody listening. Before she was a big deal. Yeah. Yeah. I'm still not a big deal. Let's go. So to answer your question, I would not slow down the payout schedule. It would become debt-free. Go ahead and do it. And did you tell him it usually takes 6 to 12 months? Yes. Okay. All right, let's go to Kyle, who's in Boston, Massachusetts. I'm sorry about your Celtics, by the way. What's going on, Kyle? Hey, so you guys can hear me fine? Yeah. Okay. So basically, we bought a house. I'm married and my parents live with us in the house. And we had a baby and we want to have more. But it just seems like the house is getting smaller and there's just a lot of tension, it feels like, in the home. So we want to know if it's possible and if we should look into it more to buy, say, a multifamily, like a three or four unit multifamily, and have my parents live in one of the units and rent the rest of them to offset, you know, that other mortgage. Where is this codependency coming from? why can't they go rent their own place and you guys have your own place right so i'm an only child and i think what happened was most 90 of my life was um them not doing well with money and you know is that a me problem no but in my mind like with them living with us, I know their financial situation, and I know they would be, like, borderline homeless, I guess. But they make enough to rent, because you said they'd be renting one of the units from you if you did a multifamily. Well, right. It would not be as much as the average. So basically, you're going to, it's charity. You're going to let them rent for a couple hundred bucks. and if the day comes where they can't pay because they have other bills or they have other priorities, they kind of know you're not going to evict them and put them on the street. How old are they? My dad's in his 70s and my mom is in her 60s. Are they both retired or are they working still? My dad's retired. My mom is going to retire in about a year. And that's based on what? just what she had told me okay but they don't have the money to actually retire they're sort of needing you guys to float the gap right when you say she's in her 60s is she like 61 or is she like 69 how old is she she is 65 okay and same with your dad is he 70 or 78 he's 75 They're about 10 years apart. Okay, 10 years apart. And they don't bring in, like, what's their Social Security? You said you know their money. Tell us more about the money because that will help us understand how dire this is because it might not be as dire as maybe you stepping in and doing as much as you're trying to do. Okay. So for Social Security, I don't, which will be for my dad, I don't really know what. I think it's probably maybe $1,500 to $2,000, something like that, a month. I'm not sure. And so they give us, we wanted it to be $1,000. They give us $600 a month towards the house that we're living in now. What about your mom? What does she make? she probably makes I would guess around maybe a little more than minimum wage okay do you know what that looks like monthly for her um I'm sorry I thought that you knew the numbers I thought I heard you say that you did know the numbers we know that they can only afford 600 bucks a month for rent I grew up just knowing like how they were struggling financially. And what do you attribute that to? Is it just lack of financial literacy? They never secured careers? What's happening there? Because what I'm seeing is something that seems like it's gone on for quite some time. And I'm just worried that, you know, if you want to put this on your plate and say this is just something I'm willing to fund, that's your bag and you're allowed to do that. What I would not do is continue to take on more debt in order to fund that. I think that this is a cart that you've hitched yourself to. And you need to get out of this mortgage. You need to refinance on your own. And if you can't qualify, that tells me you guys need to go somewhere you can afford and get them off of here. They might need to go to senior HUD housing. And that's the reality of the situation if you can't have them living with you guys. Hey, summer's rolling in soon. Vacations, camps, all the fun. And if you're already thinking, man, I hope I can afford all this, you can enter right now for a chance to win $10,000 in the Ramsey May cash giveaway. $10,000? That's breathing room. You can fix the car, say yes to plans, stick to your budget without stress. We're giving away one $10,000 grand prize and weekly $500 prizes. No purchase necessary. Go to RamseySolutions.com slash giveaway. So buying or selling your home is a big deal in case you were wondering, and you want an expert in your corner fighting for you to find the best deal for the right price. The Ramsey Trusted Program is the only way to find a top agent that you can trust who will help make your home a blessing and not a burden. It's easy. Just compare agent profiles, interview them, and choose the right one to work with. Find a local Ramsey Trusted Real Estate Pro for free at RamseySolutions.com slash agent, or click the link in the description if you are listening on YouTube or podcast. All righty then. Jake is in Boston, Massachusetts. Again, what's going on, Jake? Jake, are you there? We lost him. All right. So close. We can go to someone else. We can go to Tom in Hartford, Connecticut. Tom, are you there? Hey, how are you? Doing good. How can we help today? Good, good. So just for context, I'm not sure how much you guys know. A little bit while back, about four months ago, I decided to exit my previous business. That year, we did about $500,000 in total revenue. The reason why I left was just a partnership dynamic, primarily for autonomy, control, independence, and really just alignment issues. Looking back, I'm about four months into my new endeavor, and I'm in a cleaning space now, like house cleaning, and I'm feeling a good amount of regret and kind of, did I make the right choice? Did I not make the right choice? And kind of just unsure about things. Looking back at my previous business, and they're on track to do really, really well this year. I'm still going to get some guidance and your guys' thoughts. I mean, can you go back? Is it something that you could go back to if you wanted to, or are we just crying over Spilled Milk? Yes. Yeah, I mean, it might be considered crying over Spilled Milk. I think that's one of the things that I'm trying to understand. But the biggest thing is I could go back because they're my current – one of them was just, like, really one of my best friends, and then another business partner was my cousin, too. And it was just, like, one of those kind of, like, missionary businesses, you know, that, like, I just love to my core. And I think with the contrast of my current business, I'm just kind of seeing things, you know, hindsight now. Why did you – you explained a little bit about why you left, but what was really the straw that broke the camel's back? Give us a clear example of what was happening. Yeah, absolutely. So, I mean, there's seasons in the business where you're going – once you're going, at least from my perspective, with the new season of the business, you start to pick up new responsibilities and kind of transition into new roles. And so as we started to transition into new roles, I looked at where I was heading and then where my other business partners were heading. And they were taking on more ownership responsibilities, and I was taking on more employee responsibilities. And so in the long scheme of things, I was like, in my mind at that time, like when we had that conversation, I was like, oh, heard. I'm just going to be an employee for the rest of the time here. Like, that's not what I want. And so, you know, looking back on things now, that was the primary reason why I left. And, of course, there's like a whole bunch of other details. Do you feel like you got too hot-headed about it? Like, were you too emotional about it? Is that what's causing you? No, but I made that decision. Yeah, like, eight months before that, I started to kind of have the thoughts of, like, understanding that leaving could be a possibility just kind of based on the trajectory of things. And I started to come in, like, to be on acceptance with that. And when it became, like, crystal clear that, like, most likely my future responsibilities in the business would have just been an employee, it was very clear to me. And I was like, okay, yeah, I thought we were new shows all about it. If you go back tomorrow, you're not going to become an owner all of a sudden. Exactly, exactly. So I guess it's more so. So are you going back for money at that point of just, like, it's more sustainable and I enjoy the work? Yeah, because I think the mistake that I made, and I think David Ramsey was just thinking about it a lot in my mind, was I kind of left without a financial plan. I left without. I'm very lucky. I'm in a spot where I don't have any debt. I don't have any, like, I have a good amount of savings. I'm getting an exit paycheck from the business for the equity that I did own. How much? So I'm not in a bad spot. So you'll go back with no equity because you already got it. Yeah, yeah. How much was the equity? Equity was 50%. So you got $250,000? $250,000? No, no, no, no. So how we based it, the exit was, the whole exit could be around $50,000, like payout-wise. And then I have savings, too. I really have. And so I just want to make sure I have this straight in my mind. So the reason you would go back is you missed the work. And it would be the employee stuff that you did not want to do before. Now you've decided the thing I did not want to do before, I actually now missed it, those exact tasks. And I would like to go back and do those exact tasks. You know, I think I made a mistake, right? And I think when I first made the decision, I wanted ownership responsibilities. responsibilities. But now looking at it in hindsight, like I understand how hard it is to make it in business, right? Like before I had another person to rely on and another person to cope with. And it was, it was so much different, you know? And so you're willing to go back as an employee, not as an owner. You don't want to buy in anymore. You just want to be an employee. No, I think I would want to go back as an owner. So it's like, it is different. Why wouldn't you just start your own business in that same area? Like you've done it before. Why wouldn't you do it again? What kind of business is this? It was a sports videography business. Okay, so if you started your own business today, what would you do? Left to your own devices. So I would buy a camera, and then I would start filming free social media content for a sports team. No, I'm saying, so you want to go into sports videography. If you could choose any job in the world today or any business. So I did start another business after that. I started a house cleaning business. Yeah, but you don't like that. So I'm saying, what do you actually want to do versus, well, you're like going back to your ex because it's comfortable. And I'm like, well, the same reasons you left your ex are the same reasons it's not going to work. You're going to go back. You're going to become resentful as you see them grow the business while your income doesn't grow along with it, while you're dealing with employees, which is not your passion, according to what you told us earlier. So I'm just worried we're going to make the same mistake twice. Was it a friendly exit or was it drama-filled? Yeah, we're totally good. Yeah, we're good. But obviously, you know, it's like, you know, serious conversations. But no, we're totally good. How old are you? I'm 25. Okay. And I just want to play this out. So it sounds, I feel like you're telling me kind of two stories. And I just, it might just be because we're talking and it's just a short period of time. But on the one hand, it kind of sounds like I made a rash decision. I made a bad choice and I want to go back on it, which we've all made mistakes. We've said things we, you know, we've all done that. So I can understand that. But then another side of you makes it seem like, no, I really put thought into this. This was a long time coming and I finally just pulled the trigger. So tell me which one is it? Was it something that you really spent a lot of time thinking about and you finally pulled the trigger? Or was it something that you feel like you had a rash of emotion and you kind of spoke too soon and now you regret it? Which one is it? Yeah. So, I mean, I don't I don't think it's like I think it's a mixture of things. I don't know if that answers it correctly. It doesn't. And that's what I want to get to. I think you have to. I don't think you have clarity. And I don't think you can do anything until you have clarity. I think right now, and this is, again, Tom, we've only chatted a few minutes. But it sounds like you went away from this job in whatever capacity. You started your own thing. And it looks like you're looking back like a pillar of salt. And you're seeing things over there popping off and doing really great. and you're feeling remorse because your current thing has not grown to scale yet. And that's okay. What I don't want you to go is look back at the thing that you said, nah, that's not for me. And just because it's doing well and doing amazing, suddenly you're questioning. Let me tell you a story. I played college volleyball, and I played for two years, and it was a toxic situation for me, and it was time for me to stop playing. And so the next year when I was invited back to the team, I said, no, thank you. I'm not going to come back. That year, they won championships and did really amazing. The two years I played, we had two losing seasons. For a moment, I was like, dang it. Like, this is a regret. I made a bad choice. But I made the choice I needed to make for me because I was pursuing music, and it was the right choice for me. Even though they were doing amazing, even though – do you see what I'm saying? Just because somebody else is doing great doesn't mean you did the wrong choice. And I just think you need to – I'm not saying we're the same, but I am saying there's – No, I get it. Do you know what I mean? Yeah, absolutely. Absolutely. I don't think you have clarity either way. I just think that you're seeing fruit in each place, and you're like, dang it. We can help with the clarity part, Tom. If you hang on the line, we'll send you the Get Clear Career Assessment, and that will really show you where your talent is, where your passion is, where the mission that you want to see impact in. All that's going to help you get clarity, and it may be, man, I really just want to be the boss. That's really the heart of it, no matter what the thing is, or it might be sports, and now you can go work for someone else doing something, making more with a bigger ceiling. I just don't want you to jump back to the old comfortable thing just because you thought the grass was greener on the other side. Yeah. This is tough. This is tough. Hey, guys. Rachel Cruz here, and I love summer. There is more fun on the calendar, more time with your people, and way more chances to make memories. But you know what else there's more of? Spending. Oh, between the extra groceries and gas and camp fees and family trips, it all starts to add up so fast. And before you know it, money stress starts to steal the fun out of everything. And that is why I love the EveryDollar Budget app, because it helps you plan your money, track your spending, and find more margin in your budget so that you can put extra cash towards the goals that matter most. Enjoy your summer without the money stress. Download the EveryDollar app in the App Store or Google Play and start for free today. our ramsey show scripture and quote of the day proverbs 18 15 says the heart of discerning the heart of discerning acquires knowledge for the ears of the wise seek it out thomas sowell said you don't have to listen to anybody you can learn everything from your own personal experience of course you will be at least 50 years old by that time by the time you know what you need to No, at 25. Ooh, that's deep, Thomas. Okay, so it's a negative cell. It's a negative cell. With the tone of, yeah, sure, you're not going to listen to anybody. You could learn on your own in 50 years, or you could get wisdom from other people and learn it half the time. Yeah. Learn at 25. That's good. Thomas, I think you could have said that in a cleaner way. Well, you know, it's old timing. It's old timing. They've got to make things more complex. I know. I had to really turn my brain on the back. Go to Mark Twain if you want simple. If you want brevity. That's true. Jake is in Boston, Massachusetts. Jake, you're back. How can we help? I am back. Sorry about that. That's all right. I found you guys recently on social media, so figured I would reach out. I guess let me give you some background information before I ask the question. I might be helpful. Sure. So I got $170K in debt. $150K of that is student loans. $20K of it is for my truck. I got $150K saved right now just literally sitting in a bank account doing nothing. and I guess my overarching question is should I pay off my loans, call it in one check or over the next few months or so, or over the course of a few years, make the minimum payment and really don't even worry about it, really just looking for some guidance at the minimum. I missed what you said you have saved. How much did you say you have saved? $150. Cool. Okay. So the whole amount of the student loans? No, I mean, a little bit less. You tell me what you think the benefit would be to kind of peddling this out and just making minimum payments. Tell me what you think the good part of that is. That way it will help me craft my answer for you. Sure. I think mainly just being able to keep building the nest egg eventually, you know, buy a home hopefully soon. And, look, I know it's bad to let debt pile up, but, you know, I'm 25. I feel like I'm doing all right. The career is on a good track. What do you do? I work in sales for, you know, in the fintech space. Oh, nice. So how much are you making a year now? I made $220 last year. I should land around like $250 this year if I have all my quotas and everything. Way to go. So let's just play out the scenario where you have $150 saved, you knock out your student loans, and you've got the truck left. You knock that out in maybe two, three months. Is that realistic? Exactly. Yeah, yeah, that could be a realistic thing. Now look where you are at. You freed up all of those payments, which if you added up all of the payments for the student loans and the truck, where are we at per month? Um, close to like two grand, call it. Okay, so now we freed up two grand on top of our amazing income, and we have no debt. Now we can stack up savings real quick for an emergency fund and then be investing 15% of our income. Yeah, which is pretty wild when I look at that. So if you're talking about wealth building and nest egg, your best path is to get out of debt as fast as you can to free up your income, which is your greatest wealth building tool, to then invest from 25 to 65. 40 years of compound growth, making what you're making, even a 15% put away, you're going to be a multi, multi, multi, multi-millionaire, even nothing else. I just did some fun math because I love to see the number. I mean, you're 25 today. If we did this until 59 1⁄2, which is when you're likely going to want to get at some of that money, I'm assuming you have zero in investments now, but I have a feeling that's not true. but if you just started putting 15% away that's $15 million at age 60 30 million at age 60 or 67 yeah that's really good that's what happens when you have the full power of your income and that's assuming I mean that's assuming you'll never get a raise that's assuming you're not you know what I'm saying ever investing above 15% which I'm sure that you will so all of that to say that I think this is a pretty And then the other side of this is we don't know what life's going to throw at you. You're going to get married. You're going to have a kid. Will it be a job loss, a health scare? And so you're sort of assuming that, yeah, I can float these payments just fine. I make great money. You're very successful, especially at your age. And so, yeah, you could out-earn your stupidity for a while and just hang on to debt, get more debt if you want, get a bigger truck, nicer car. That's the American way. And we're telling you to swim upstream, do the weird thing, which is take that giant chunk of money and pay off the debt. And then free up that income for the rest of your life. I think for me it's like, you know, I've saved this over the course of, you know, three, four years. And then I would have zero one day, you know, when you wake up. So that's kind of where I – Well, you have zero now. Let's do real math. On a balance sheet, if you were running a business, you would find that you are in the hole. Yeah, you're $20,000 in the hole right now. You don't have $150,000. Yeah, right. It's assets minus liabilities. What you own minus what you owe, that's your net worth. and I want to see your net worth as the scoreboard and not what's in a savings account while the interest piles up. Now, if you want to give the Navient people some new furniture in their office building, let the executive team take a nice vacation, you can be a part of that if you want to support it. I'd rather see you build wealth instead, though. I think you'll do the right thing with that, Jake. The hard part with money is when you decide I'm going to start doing the math, then you've got to start doing the math for better or for worse. Not to say that money is just math. There's more to it. There's the behavior. There's the numbers, and there's the emotions of it. And what Jake is getting at is the emotion of it does feel. You're right. And you work too hard to have $150,000 sitting around. Yeah, that's right. And it's going to feel different when you wake up in the morning and that number that you're used to seeing sitting in your Ally or sitting in your Fairwinds account is not there. You're going to be like, okay. But you're talking 18 months. He could save that back up if he had no payments. That's right. As a single 25-year-old. But what it's forcing him to do is feel the weight of his actual debt. As long as that $150,000 is sitting in savings, he doesn't really feel the weight of it. But once he transfers that over and actually pays it off, he's going to go, oh, that was a lot of debt. I did need to get rid of that. And I think that that's a very mature thing to do, a very mature thing to do. So let yourself feel it, if you will. All right, George, do you think we can get to Parker? Yeah, let's get to Parker. Let's do it. All right, Parker on line three. We're up against the clock, my guys, so let us have it. Yes, sir. So me and my wife are now transitioning to single income. She's going to nursing school soon. We have about $11,900 in debt, which is just my car and a credit card. We paid off her car, a credit card, and some of my miscellaneous debt prior to going to single income. and we have around $11,000 in the saving. Trying to figure out how to navigate that debt sooner than later and before she finishes nursing school. What's stopping you from just knocking it out? I mean, next month you'll have enough saved up that you can knock out the debt and still have $1,000, $2,000 left over, right? Yes. So, I mean, the minimum payment on the card, which I owe $1,500 on, is about $40, but it's at 24% interest. Why does the minimum payment matter? Well, yeah, correct. I mean, to your point, it's a super high interest rate. You need to knock that thing out, get it out of your life, right? They'd make the minimum payment $1 if they could, let all the money just pile up in interest. Correct. So I would just go, man, if you want to be free and you want to be able to survive on single income, having less payments in your life is better. Would you agree? Yes, sir. And you can build up that savings how quickly? How much could you put away if you didn't have any of these payments in your life, plus the margin you have currently with your income? If we, if we, probably around like $1,500 a month, probably a little bit more. Great. So now doing the math, we're going, okay, talking six months, seven months? Mm-hmm. And you're back to where you are? But with no debt. Yes, sir. And if you just keep it that way, you'll be able to survive off this income. What is your income now as a householder? So I make around $60,000. I'm in the military, so it's around $60,000. Okay, great. So now we can do a budget based on our $60,000 with no payments and make the sacrifices needed so that she can go to nursing school and you can cash flow it. That's a really important part of this. Yeah. It's making sure we're not going further into debt while trying to pay debt off. That's whack-a-mole. Yeah. And the thing I want you to just remember, Parker, is wealthy people ask how much. Poor people ask how much per month, and that goes both ways. So if you're so focused on, oh, the monthly payment's only $40, I can do that. You need to be focused on the entire balance of the debt. That's when, again, you feel the weight of it, and you feel the need to pay it off, because you do. All right, George, we had a great time hosting. Thanks for hanging out with us, guys. Remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.