Live from the headquarters of Ramsay Solutions, this is the Ramsey show, where we help people build wealth, do work that they love, and create amazing relationships. I am Rachel Cruz, hosting this show today with my good friend and best selling author, Jade Warshaw. And we are here to answer your question. Questions. It is a free call anywhere in the country at 888-25-5225 so give us a call. We'll talk about your money. We'll talk about your life, your relationships, anything and everything. We are here for you. So first up, we have Chelsea in Des Moines. Hey, Chelsea. Welcome to the Ramsay show.

Hi. Thanks for taking my call.

Absolutely. How can we help?

Have you guys ever heard of recasting your mortgage? And I was wondering if there's any downsides to it.

What's making you want to recast? Did you get, like, an inheritance or, like, a lump sum?

No, we're just very good at saving. And we have maybe 20 to 30. Well, we are getting a tax refund, but we have $30,000 squirreled away. And, yeah, we were just wondering if we could lower our monthly payment.

Yeah. So let's talk through this. So for anybody listening, really, the idea of recasting is usually, if you've got a giant lump sum of money, in this case, 30,000, you can put it towards the mortgage. And then you can go in and basically have them redo the amortization schedule so the interest rate doesn't change. And so there's no closing. You don't have to close to do it. But the point is, it can lower your payment. And so my question to you here, we're all about paying off debt. And the best way to pay off the debt is to pay more, not less. Right? And so that would be my question is. And that would probably also be my rebuttal against this, is I want to see you paying more towards it. So can you give us more of a snapshot of what's going on financially? Do you guys have debt?

So I'm finishing up nursing school. I have $12,000 of loans, which I can write a check for in the fall when I graduate. But I was waiting to see, like, if I get a sign on bonus or where I'm going to work, what kind of loan repayment they have before writing that check off to pay off the debt.

Is that it?

That's all the only debt we have.

And then you guys have and all your savings is 30,000. How much will you get back for the tax refund?

12,000.

12,000. Okay. So you have $42,000. So yeah, Chelsea, I mean, if I were you guys, I mean, I wouldn't wait. I would go ahead and just pay off your student loan because you have the money for it, the 12,000. Go ahead and pay it off with the money that you guys have saved and then any bonus or anything you get, then it's just gravy on top, which is awesome. And then what's left for you guys will be that 30,000. And I would make sure that you have a good emergency fund in place. So do you know your, what your monthly expenses are?

Yeah, they're about 2500 total.

That includes rent or your mortgage and everything?

Yeah.

Okay. Is the purpose in recasting? I'm just asking, is the mortgage eating up too much of your monthly take home? Is that, are you feeling a squeeze? Is that why you're wanting to do this?

I think technically it is slightly above 25%. But once I start working, we're going to almost double our income. So to answer your question, we don't really have to lower the monthly payment, but I'm just excited to pay off our mortgage.

Good. Listen, I love that the way we, let me just kind of outline the way we would teach it in order to get to that point because Rachel and I both want you to get to the point of paying off your mortgage and you're actually starting to get to the point where you can start working on that. So Rachel already said, like, you'll have the 30,000 saved. We could call that three to six months of expenses because your refund is going to pay off the debt. Right? So you pay off the debt, you have three to six months of expenses. When you start working, then you're going to start saving 15% of your income, you and your husband combined. You'll figure out what that feels like and then, you know, you can start putting aside a little bit. If you guys plan on having children in the future, when that happens, you can start putting aside a little from that and then you're actually cleared up to then start putting extra money onto your mortgage and we would just say apply it directly to the principal. So pay your normal payment. And then when you have extra money, just as you see fit, you can be very intentional.

Yeah.

And Chelsea, for you guys right now, I mean, your monthly expenses at 2500, which is pretty remarkable. If that's, it is great considering that your mortgage is included in that. If that's true, then your six month emergency fund, it may not be that big. It may be close to 12,000, 15,000. So you may have 15 to 18,000 extra of cash in that fund. And if you want to apply it, like Jada saying, to the principal of your mortgage and go ahead and do that, I would be great with that. And you can even run some numbers and just say, hey, if I did a one time swipe of 18,000 on the principal, and just so you know, now, granted, your mortgage is. I mean, how big is it? How much money do you guys owe on it?

148.

Okay. Okay. It makes a dent.

I mean, it's. It's not recasting it, which is great. But when you do, like, let's say you have 13,000 to put at it, like, right. You don't keep all that 30,000 saved, it is gonna cause on your monthly payment, more of that payment each month to go towards the principal when you do that. And so that's. That's really the magic of this whole thing. So that's awesome.

Yep. Thanks, Chelsea. Thanks for the call. Hope that that helps. Yeah, Jade, I think that's one of these things, especially in. Not this specifically with the recasting, but the housing conversation, you know, trying to kind of find these, like, these ways to be able to do it because people want it in the market. It's just crazy expensive. But when things like recasting come out, it sounds good at first, where it's like, okay, I could apply all this money. I'll have a lower payment. That's great. But to remember, the goal is not to have a lower payment. The goal is to get out of debt as quickly as possible.

That's right. That is right. Well, I love that conversation. And the truth is, you know, I even find that when you walk through the baby steps, you get to this point where it's like, I've paid off all my debt, and you've been so intense that a lot of people want to carry that intensity to paying off their mortgage as well. And listen, I always say, if. If you and your spouse. If you're married, if you and your spouse decide that you want to keep that intensity, great. But to you, you don't have to. You can kind of, like, pull back a little bit and say, listen, we've worked hard. We have sacrificed. Let's enjoy our life a little bit. And at that point, when you go to paying off your mortgage in baby step six, it's really about having that intentionality there. And so it's not a set amount. It's not to say every month. I have to pay an extra mortgage payment or, you know, it doesn't have to be hard in the paint like that. But you can decide what that rhythm looks like. Is it anytime you just get a windfall of money, you put it on there?

Is it, you know, anytime, you know, you can look at your budget and figure out what's a normal rhythm of me being intentional, but that still allows me to have life.

Have life.

Have a life. Yes. Yeah. Because for so many people, those steps, you know, one through three, I mean, it's intense, you guys. And we were talking to a couple earlier, even today, and kind of encouraging them, motivating them to be like to go all in. And the deeper seeing that sacrifice, the faster, the faster you're going to start to see progress. And it's worth sacrificing really deep for a short amount of time versus just dragging it out. And then, you know, once you're done with that though, especially those that, man, they sacrifice like really deep, have some breathing room, to your point.

That's right.

Yeah. That intentionality steps four through six, they're there. So even for Chelsea, even if they wanted to keep that and not put it towards the mortgage right now, wait till she has a job, wait till the fall a little bit, you know, that's okay too. But I would pay off those loans, those student loans today since the money's there, they have a built in emergency fund, which is great. And then anything extra they want to put to the house, put towards the principal. Thanks for the call again, Chelsea. This is the Ramsey show.

If current times have shown us anything, it's that the least expected events can and will happen and we have to deal with it. That's why everyone who has a family counting on them needs term life insurance. For over 25 years, the only insurance company I've recommended is Zander insurance. Not only because they search all of the top term life plans to find you the best rates, but over the years they have constantly changed and updated their systems to make the whole process simpler and easier. To get the protection needed, you can now apply with a completely touchless experience with everything being done either over the phone or the Internet. They also have plans with super competitive rates that dont require an exam allowing you to skip a step and get the coverage you need faster. Go to zander.com or call 803 564282. Great rates and a simple process mean theres no excuse to not get this done. People.

So for years people have been asking for clothing items. Jade.

Yes.

That say things that they love when it comes to money. Things, like, better than I deserve or debt free. And people will make their own.

Yeah.

They come and they have their shirts or their sweatshirts and all of it. And so finally, somebody on our team had the grand idea of, like, hey, we just need to do this. So, you guys, we have some Ramsey merch, which is really fun. We sold this for the first time at the total money makeover weekend live, and so many people were wearing it, and it was so great. And actually, too, it is cute, this. I saw a bunch of these girls wearing the sweatshirt, and I remember I told the girl, I honestly, this sounds terrible. I didn't even know it was ours. And I told them, I was like, I love your sweatshirts. Like, thanks. We just got them out in the store, and I was like, I was like, I'm glad we're selling cute stuff, y'all. So, like, look at oversized sweatshirts, ladies. So it just says debt free. Good conversation.

But it's embroidered. It's not just, like, screened on.

Like, it's, like, very nice. Yes. And then we have some t shirts, you guys, this one says, better than I deserve. We got a blue one. Yes. Beautiful. A hat. Another. What's this one say? We have food at home. What a classic Ramsay way. A hat. And then the great. We love a good mug.

Love it. That's like the Stanley kind of.

Yes. White Stanley looking mug. Live like no one else. All of it, you guys. So it's just some fun merch. So make sure to check it out. You can go to ramsaysolutions.com store. And another great perk of it, which I think is always fun, is, you know, it's kind of a conversation starter when you have somebody that's wearing, like, a cute debt free sweatshirt. You know, naturally, people are probably gonna ask some questions. Oh, 100%. Share your story, talk through maybe the process, the journey you're on to be debt free or whatever it may be. So it's some fun stuff. So again, go to ramsaysolutions.com store and look at the fun, fun stuff that we have there for you. All right, next on the line, we have Joe in Palm Springs. Hey, Joe. Welcome to the show.

Hi. Thank you. I appreciate you guys taking my call.

Absolutely. How come?

I'm calling because my wife and I, we've gotten to a point where we've only got two remaining debts. It's our car payment and then our house payment, and we want to know if we should be throwing all of our money at the car in the house, knowing that a neighboring school district. I'm sorry. My wife is a teacher, by the way, and a neighboring school district just started issuing layoffs to teachers because they're running out of some of the COVID leftover money. And we're a little bit nervous about how hard we should be going after the debt or if maybe we should be supplementing our six month emergency fund a little bit beyond what that six month amount would have been.

I mean, do you think she could get a job within six months, a teaching job?

Probably not for the pay that she has. She works in the more, you know, probably the higher paid district in our neck of the woods over here.

Okay.

And so, yeah, if she were to be losing a job like that, I mean, obviously that'd be a pretty heavy hit to our income that we have coming on in.

What is the income?

She'd absolutely go and work. So our growth from last year is at 146,000. I mean, right now, we're taking home about probably $8,900 a month. She's also out. Other caveat, too. She's out on maternity leave right now, only bringing in 50% of her regular pay, at least until August when the new school year starts.

Okay, how much of the 146 was.

Hers versus the one it was? Yeah, hers was 88,000.

Okay.

And then mine is another 60.

So, Joe, I mean, what's. I mean, have they given her any indication that she would be one of these layoffs? Or is this just like, oh, my gosh, they're laying off, and we're scared and we're kind of freezing. I just wonder how much of this is actually a reality for her.

No, I mean, the. Her district won't tell anybody anything, but she's a relatively newer teacher. She doesn't have as long of a tenure as a lot of her other colleagues do.

Okay. I mean, honestly, Joe, you guys have six months. If you had three months, I would say I would probably bump it up. But I think you're six months. I think that, yeah, you guys are fine if you want to run out a monthly budget on what a new income would look like if worst case scenario happened and she did have to get a job with a lower pay, what that pay would be, and you guys just kind of run some calculations and see how you feel with that. But honestly, the six month emergency fund, that's the conservative side, obviously, of the spectrum. I would feel okay with that if it were me. Now, I understand that she's, you know, you guys have a new baby. Is this your first.

Yeah, it is.

Okay. And she is planning on going back to work, correct?

That's correct, yeah.

And the truth is, if the worst were to happen and there was a layoff, or if she was let go, she could find a teaching job. It may not be at, you know, in the district you want or at that same pay level, but she would find something until she finds the thing. So I do feel good about that. What do you owe on the car?

The car? We just owe 22,000. Okay. We've prepaid it all the way through march of next year. So as it is right now, it's not accruing any interest. It won't. No interest will hit it until next March.

Why did you prepay it as opposed to making a lump sum towards the principal?

We just weren't sure how our finances would shake out once our baby arrived. So we paid out. I mean, we killed off all of our debts and then tried to pay ahead on the car as much as possible, just so that wouldn't be something we have to worry about for about a year's time, in case we just had money issues that popped up with.

How much is in the emergency fund, Joe?

We've got 22,000 in our emergency fund.

And that's what you owe on the car?

That's right, yeah.

If you want to know that, we.

Should try paying ahead on the car. Or should we just.

Well, it's just kicking the can down the road.

Yeah.

Continuing to stay in debt versus just paying it off and being done with it.

Yeah.

If you really want to know what we would tell you. I mean, if we're just chatting face to face, I would tell you. I would say, and this is what I would say to anybody, I'd say, you're going to be better off paying off that debt today because what's the payment? And I know you're. You're ahead on the payment, but what is the payment?

The payment is 700 a month.

Okay? So think about how quickly you could save up an emergency fund when you have an extra $700 a month, along with whatever extra margin, and that way you're done. It's free and clear. You're not worrying about interest, you're not playing a game. And then you guys are set up going forward that it's not really the question that you're asking today becomes a moot point. It's like, yeah, from this point on, we're saving up until we have a nest egg of three to six months. That makes us feel safe and secure, and we're going into this maternity time and, you know, new baby time with ultimate peace because you don't have any payments.

Right. Okay.

Yeah, yeah, yeah. I hope that helps, Joe. I know it's probably not. I know not, yeah, not the. Maybe not the direction you were calling, but again, it's.

We wanted to run it by someone else. You know, I appreciate having, you know, someone on the outside looking in because we get tunnel vision on, you know, what our concerns are.

Yeah, totally.

Yeah. And I think the reality too is what can happen so often that, yes, the layoffs are a reality. Right. They are happening, but at the rate of which they are, and it actually coming to fruition, it hasn't happened yet.

That's right.

There is a point of that reality of saying, okay, if something were to happen, then we act upon it. We don't necessarily have to act upon it when it hasn't occurred yet.

That's right.

Yeah. And sometimes that's a different mindset, but, yeah, not being able, if you guys wanted to keep, I mean, I wonder, wouldn't you would be able to know about the job, but still taking it down to that thousand dollars and then you guys saving what you can to save up for it.

And it's worth noting, honestly, for anybody listening, I'm always going to recommend you, if you have extra money, I'm going to recommend you put it towards the principal, not make extra payments. Right.

It's kind of like the recasting we just talked about. That's right. Degree. Right. You're kind of like shuffling the deck a little bit versus just saying, no, go actually on the principle, because that's going to help you better in the long term, mathematically speaking.

And you almost always have to call in order to do that, whether it's with your mortgage, a student loan, a car payment, you almost always need to call them and say, I already made my, like, I already satisfied my monthly payment, which goes. Satisfies the interest for this month. Now, this lump sum amount, which is separate, I want it to go fully towards the principal and you have to call in order to do that.

So, yeah, we, we were talking to somebody. It may have been on the show or on social media or something, I remember saying, and they were making extra payments, but when they saw their principal really hadn't changed much.

Yeah.

And it was just catching up on all this interest payments and it didn't do mathematically what they wanted it to do. So that's a really good point, that when you are making extra lump sums towards your debt, on the principal. That's usually takes a phone call, some level of communication to be able to make sure that that's where that money's being directed, because that's where you're going to see the biggest bang for your buck in that. So it's a great question. Thanks, Joe, for the call. This is the Ramsey show. This show is sponsored by Betterhelp. Hey, it's doctor John Deloney, and one of the most common questions I get is how to get something off your chest, a deep secret you've never told anyone or maybe something that happened to you, something you've done that you're worried about, because bringing it to light will disrupt your life. Anything. I say this all the time. Secrets will kill you. But it's hard to know where to start when it comes to talking about scary, dark things. Therapy can be a safe, effective place to get things off your chest, to learn how to say hard things out loud and figure out how to work through whatever is weighing you down.

I've personally been blessed to have a great therapist who helps me get those heavy things off my chest. If you're thinking of starting therapy, give better help a try. It's flexible because it's online, so you can suit it to fit your schedule. Just fill out a short questionnaire. You get matched with a licensed therapist, and you can switch therapists at any time for no extra cost. It's time to get it off your chest with betterhelp. Visit betterhelp.com deloney today to get 10% off your first month.

That's betterhelp.

H dash e dash p.com Deloney welcome back. I am Rachel Cruz, hosting with Jade Warshaw and here to answer your questions. So give us a call at 888-825-5225 and today's question of the day comes from Miranda in Florida. Florida?

Yeah. She says, a couple of years ago, my husband bought a house with his mom. He told her that if she helped with the down payment, he would pay the mortgage, taxes, utilities, etcetera. I agreed because I thought it would be temporary as a way to help each other out, but it's sounding more like it's a permanent thing to secure her retirement. I didn't imagine living my adult life, working so hard to pay bills and still feel like a guest in our home. I'm not against him taking care of his mom. I just want to live in my own space where I can relax. I love my husband so much and I don't want to get a divorce. I told him if things don't change in a couple years. We need to find our own place. He suggested that we rent a small apartment where we can live by ourselves with our child. His mom can stay in the house while we continue to pay the mortgage as an investment property. She's elderly, so she cannot work. Is this the best solution?

Oh, man. Oh, geez. Okay, Miranda, we hear you. We hear you.

Yes.

And I'm so sorry. I'm so sorry. But this is why you guys. Situations like this, especially if you bought a house with the mom. I'm assuming both names are on the deed. Like, I mean, like, that's where stuff gets real, real dicey. So.

Hopefully, that's not the case. Hopefully, she just gave money towards the down payment.

Yes. So, yeah, so what I would do is, like, there's a realistic conversation to be had of. I mean, honestly, if someone's going to live in a small apartment versus a.

House, say it, Rachel.

There's a family involved with children, right. And there. And you could find a great spot for her, but it's just her living, right? It's just what she needs. And now, if she's elderly and doesn't have a lot of money, you know, depending on her situation and where you guys are, I mean, there may be a reality in a world where you. Would you help pay maybe the. The rent in that way.

Grandma got to go to the apartment.

Yes, but grandma's gonna go to the apartment.

Yeah.

Yeah. Because at the end of the day, you know, especially if you guys are not on the same page. I mean, we know. I mean, I think it's kind of more few and far between, but people that live with their in laws and it works, you know, like, I mean, that's. That happens. And both parties are genuinely great with the situation. But the fact that you guys are on such uneven footing when it comes to the emotional decision of, like, hey, living with your. With your mother in law, then, yeah. Then something. Something needs to change. And again, and it would. I mean, and there's a lot in that on whose name is. Is on the house, too, because there would have to be a whole process to get someone's name off or someone's changed and all of that. So in the cleanest way possible, if his name and you guys own the house. But she was the one that was just contributing. Right, to the down payment. There will have to be some conversation of equity, though, but because of what, the amount she put in versus what you guys have paid, because she did put a down payment down.

So there is a level to be compensated from an equity standpoint in that for her, for her retirement. But, yeah, this ongoing process with no end in sight, that's what needs to change. And for you guys to have an end date would be the goal.

Yeah, absolutely. I validate that 100%. I think it's totally fine as the wife to say, hey, I'd like our own. I'd like a place of our own and be able to experience life as our own family here. And I love your mother, but, yeah, we can help her with an apartment. But there's also something to be said. You know, she says that they've been working, you know, paying off their debt. She says we've been working our whole adult life, you know, and it's like, you've got to be in a place where you can help.

That's right.

Other people, and I don't know that they're in the place financially where they're able to help and not hurt themselves in the process.

That's a great. Yeah, for sure. Yeah. That's the hard thing, too, is because when people get in a situation, especially with, you know, parents and when they're going to retirement, we've had a lot of calls of that, of kids saying, what's my responsibility for my parents? But if you're not in a good place financially, then you're. You're not going to be able to help. So getting you guys in a really steady place financially, that if there was margin to be able to help and that's what you guys decided together, then that's a whole other, you know, thing. But if. But I would see what is in her retirement and what she can, what she can float, you know, in a living situation. But that is sticky. And it's hard because there could be promises that she feels like you guys made or that he made and you're breaking those. So there's just going to have to be a really hard conversation kind. And you may have to revisit that conversation once or twice because it's gonna be pretty. Could be pretty emotional.

So 100%.

I hope that helps, Miranda. All right. Up next, we have Darby in New Orleans. Hi, Darby. Welcome to the show.

Hello, Rachel. How you doing?

Doing great. How can we help?

I have a two part question. My son graduated high school recently, and he is planning to join the marines in about a year. So I have a vehicle of my own, a 2017 with about 110,000 miles on it. So I'm trying to figure out how should I pass? I want to pass the vehicle to him. But should I give it to him as a gift, or should I sell the vehicle and give him the cash to buy his own vehicle?

It's paid for.

Yes, the vehicle is paid for.

How much is it worth, do you think?

About seven, 7000?

Okay. I mean, I. Either way, I think would work. I think maybe having a conversation with him. I mean, it's a very kind of you. Yeah. I mean, if you're in a place where you can let go of this asset and you're fine and it's paid for and everything. Yeah. Maybe just ask him, hey, do you. Do you want this car? And it may be actually a really great quality car. You know, even though it's past 100,000 miles, it still could be in great condition versus him having to go in car shop and pay for an inspection and all of that. That you have to do when you buy another used car or give him the option. Yeah. If you want to go through the selling process, I can help you with that and even help you find another car that's worth the same amount of money. It sounds like more hassle. There's a part of me that would just take the car and be thankful for it, but I guess it wouldn't offend you if he said, oh, my gosh, I hate this car, and I would much rather have another $7,000 car that you guys could kind of tag team and do that together.

Is that possible?

Yes. Yeah. If I give it to him or sell it, I'm not selling him, but if I give it to him and I take cash for it, I plan to buy myself vehicle in cash.

Oh, you're having him pay you back?

No, I would probably just give it as a gift or just sell it. Sell the vehicle to somebody and get cash for it, and then maybe just see what he wants to do. This maybe wants a different type of vehicle then what I have right now.

Yeah. Right. So I would.

I would.

Yeah, I would ask him. I think that's a fair thing. Yeah. Just to see what he wants. Because he may be great with just being given the car. Or again, if he doesn't want that specific car, then he could say, yeah, dad, could you help? You know, could you sell it and we'll get some cash and we can go car shopping together for that amount of cash. That could be, you know, I think it'd be okay for him to make that call since it'll be his. Him driving it.

That's true.

Yeah.

What will you do if he says, yeah, dad, I want the car and what will you drive and what's your plan for your next vehicle?

I have cash saved already to buy a truck and I'm looking 25 to 30,000.

Okay, awesome.

So great. How generous though, Darby, and what a great position to be in. I'm like to start off, you know, as he's graduating and going off to the marines and everything for a year to be able to have a car that's really, that's a, that's a really generous gift of you to give your son.

So I have a second part question of the same thing.

Okay. Yeah, we have about 30 seconds.

Okay. Should I put his name on my insurance?

Put his name on your insurance.

Car insurance.

And yeah.

Yeah, I would price it out. Car insurance these days is getting like really expensive. Crazy and expensive. So I would probably price out what the cheapest option would be if it would be to bundle on yours or if, yeah, if it's cheaper to get an individual policy, you could go to.

A Ramsey and it'll do all those insurance checkups for you and you can see the best option. Or check with Xander insurance. Really?

Yeah, that's right. Yep. Go to. Yep. Zanderinsurance.com and see what they would do because, yeah, car insurance, it's a tricky, that's a tricky field right now, Jade. We're seeing prices gone and even home insurance, I mean, everything, it's just really gone up. So I would price out and see, and again, if he's a responsible driver and it's not going to hurt you long term, yeah, I would be okay that for a year because he's going to go off to the marines. Yeah, I would be okay with that. Thanks, Darby, for the call.

Guys, it's no secret that the real estate market is weird right now. So go with a mortgage company you can trust to have your back. Churchill Mortgage. Churchill is Ramsey trusted because they're stable, reliable and focused on you. At a time when a lot of companies are being bought out or going out of business, count on Churchill mortgage to stick around. They've been doing things the right way for over 30 years. They'll keep doing them the right way for 30 more. Get started@churchillmortgage.com.

This is a paid advertisement an MLS id 1591 nmlsconsumeraccess.org equal housing lender 1749 Mallory Lane Suite 100 Brentwood, Tennessee 37027 welcome back to the Ramsey Show. I am Rachel Cruz hosting with Jade Warshaw and we've had so many new people join, join the show because of podcasts and YouTube and all of it. And so many of you callers are even new callers. You know, we've gotten a lot that say, oh, my gosh, I've just been listening for the past three months. Some of you have been with us for three years, for 13 years. But regardless how long you've been listening to the show, one of the best ways to get the word out is to share it with your friends, with your family. And we see that. We see the bump when it comes to the algorithm. We see where we're writing in different lists. And what's great about that, I don't know if you're like me, but if I'm like, on a walk and I'm like, oh, I need a new podcast. I'll go to the top shows just, just to see. I just search, like, the top and kind of look through. And sometimes that's how people find us, which is awesome because we want people to have peace when it comes to their life and their money.

And if we're able to help guide that conversation and hopefully, you know, give some, some new perspective, maybe a new plan, a new pathway for people, that's really what we want. We really do have a heart here to help people find peace when it comes to their money because it's such a stressful topic, Jade and such.

Oh, yeah.

Full of a lot of shame and confusion. There's so many messages out there. So if we can give common sense, truth, that's what we want to do. And people find that, and it helps change their lives. And one of the ways they do that is because of you guys sharing the show, reviewing it, subscribing all of it. So we thank you so much. For those of you that have done that or that will do that, we really, really appreciate it. Right. Up next, we have Graydon in Spokane, Washington. Hey, Graydon, welcome to the show.

Hey, how y'all doing?

Doing great. How can we help?

My girlfriend and I are looking to get engaged probably near the end of the year this year and get married in 2025. And we both own our own homes. And I know normally Dave says not to invest in real estate unless you're going to pay cash, but since we both own our own homes, we were thinking of selling my house and using the equity from that to buy a home because we'll have five kids put together that will need to fit under one roof. And then it. Would it be dumb to keep her house as a rental at that point and rent it out, or should we sell both homes. I'm just curious since we already own both homes and have over 200,000 in equity on both.

Yeah, for sure. Okay, so tell me about your home. How much. How much is it worth if you were to sell it today?

450 to 500.

Okay. And how much do you owe on it?

200.

Okay. And then how about her house?

Hers is pretty much in the same range. 450 to 500. And she owes 250.

She has 250. Okay, great.

So if you. If you sold them both, you'd walk away with what?

Probably 400, 450 somewhere then yeah.

What would. And so you said you guys plan on having families. What would happen if you sold them both and put this money down on the house that you want to buy together?

Robert?

That's definitely an option. That's kind of what I was wanting to ask. I know. The thing is, right now, obviously, the interest rates are significantly lower on the homes we own. And whatever we buy together, the interest rate is going to be triple plus what we're currently paying, or I guess double, a little by two and a half times what we're currently paying. So I didn't know if because of the lower interest rate, if it would just make sense to keep it as an investment property and rent it out or if it would just make more sense to sell both.

Yeah, I mean, in most cases it's going to be to sell both. I mean, unless you had the cash to significantly put down on one of the houses and the one that you want to buy. I mean, are you guys combined when this happens, when you guys get married, what will your situation look like financially? What kind of debt do you guys have? Consumer debt? What kind of savings comes into play?

I just recently started the program and I wasn't very far buried in the first place. I only had like 3000 in credit card debt and that only take me a month to pay off. And then I know she has 40,000 in student loans, but I figured use the equity from my house, should be able to pay that off quickly. And then our combined household income would be in the 180 to 200 range. My income varies based off overtime. That's great. So it would easily afford both houses. And that's kind of why I was like, maybe it makes sense.

I'm not quite sure whose house is bigger. Like, what's the better profit of the two, yours or hers?

So mine, we could, in theory, fit the whole family in. It's a five bedroom, three bath. Oh, so in theory we could fit. But it has no backyard. The backyard's trash and the house isn't nearly as nice and stuff on the inside. It's older than her home, but her only has four bedrooms. And we'll have five kids right away. And then we would like to ideally add another kid eventually.

Why will you have five kids right away?

She has two or she has three kids and I have two.

Got it. Okay, so you're combining families. There's part of me. Here's another option. And, I mean, this is not a right or wrong, but what would it look like to sell one of the properties? Because they're about worth the same and there's the same amount of equity, it seems like just about. What would it look like to sell one of them and pay off the student loans and put most of it towards the house that you keep. And it's almost mortgage free. And with your income, you're mortgage free in the next. I don't know, in a very short period of time, depending on how quickly you want to go. And then you're kind of like, in this place where we don't have to do anything, where we don't. We don't have any debt, or it's very low. Our mortgage is very low. And if you decide, okay, the five bedroom house isn't working for us, we want, at some point, we're going to want a bigger yard. That's great. But you're just financially better off and you don't have the rental hanging over your heads, and you've freed up a bunch of income.

Yeah. I almost would just say Graydon to sell hers. And then you guys take. Yeah. What's left when. That's what Jade is saying. But throw it at this mortgage and at the student loan, you can basically have everything paid off and then wait a year or two. I mean, there's no rush. And just see, even at that point, you know, what the housing market's doing, what rates are doing, all of it. Because I would almost just want to be in a paid for house at this point and try to juggle two mortgages, because the truth is, too. Yeah. And a dream world, having hers as an investment property. I get it. But what happens when someone doesn't pay rent? What happens when things break in it? I mean, like that. You still owe money on it. So in that case, it's not this cash free investment. It's something that you guys are gonna have to deal with. And a part of me would just say, golly, I would just simplify it all. Enjoy your married life, newly married, for a year or two. And then if you guys want to upgrade houses, you can, because our all five kids, will they be full custody with both of you?

Like, will you guys have all five pretty consistently, would you say? Or what will that look like?

She has her kids 50 50, pretty much. Exact. And then I have my kids every Thursday and every other weekend.

Okay. Okay. So even from a space standpoint, you know, you guys would be fine in the five bedroom. And I know you said it's older and all of that, but, man, there's. Graydon, I'm telling you, there's something about freedom. Freedom, yeah. Not having. Not having any. Any payments at that. I mean, like, you guys have done really well so far. So just keep that. I would just keep that going. And I probably. I wouldn't fool with keeping an extra property.

I think about whichever one. If you're really concerned with interest rates or really concerned with wanting to stick with one of them long term, for some reason, I choose the one that you maybe can make into what you want it to be. Right. Like you said, one of them, the yard is trash, but maybe the other one is good. And there's, like, space. If you ever wanted to, you know, make some improvements with it, because the truth is, you're gonna have a lot of extra money that you can throw at fun things like that if you do it the way that Rachel and I just suggested. So I'd also put that into the equation and think, okay, maybe the yard is trash, but maybe if we put some money into it, it could be awesome. So there's. There's some creative thinking, I think, that can be done here, not just financially, but to create. To make these. One of. Make one of these properties what you ultimately want it to be.

Yeah. Okay. And then I'm gonna give you another path. Graydon. Sorry. I know we're going all the way around. Let's go. If you sold both, like, the price point of houses right now, what would a house be in, like, your dream world? Like, what's like. Oh, yeah. We could get it for x amount.

I mean, it's kind of crazy. We've been kind of looking on zillow a little bit, and this is allegedly, according to the end, where one of those most hottest areas in the country right now. And if you put a five bedroom filter, you can put it from 300,000 to 800,000. And the cheapest house is, like 600.

Right. Okay. And the cheapest house is probably crappier. Is the cheapest house crappier than your house?

No, I would say it's nicer. Like, you have a better kitchen, granite countertops and all that stuff.

Okay. Okay. Because if you did sell both, you'd walk. I mean, you'd have, like, around 550,000, but you'll still have closing. You'll have a lot of fees in that. Which may take it down, right? Yeah. Which would take it down. And then you'd have a small mortgage on a small amount, or maybe 200,000, but I don't know if that's worth it right now. Great. And a part of me would just.

Man rates for me. Yeah.

I would sell hers, take that equity, pay off her student loans, pay off most of your mortgage, and, man, that's a. Yeah. And you can always upgrade countertops and all of that later if you want, or wait a year or two. And if prices, you know, stay the same or continue to tick up a little bit, save some money, sell yours, and, you know, put that money with it and get a. Get a house that you guys want. So I hope that helps. Thanks, Jade, for being a great co host. Thanks to everyone in the booth. Thank you, America. This is the Ramsey show, live from the headquarters of Ramsey Solutions, it's the Ramsey show, where we help people build wealth, do work that they love, and create. Create amazing relationships. I am Rachel Cruz, hosting this hour with my good friend, Ramsey personality and best selling author, Jade Warshaw. And we are here to answer your calls. So give us a call at 888-825-5225 we will be answering your questions about life, money, career, relationships, anything and everything. We are here to talk about it. So, up first, we have Jason in Irvine, California.

Hey, Jason. Welcome to the show.

Hey. How are you guys doing?

We're doing great. How can we help?

Yeah, so, I'm a graduate student, and I'm really wondering how I should be spending my extra money. So what I take home is usually about 33,000 a year, and I already have a six month emergency fund. I have no debt, and I've maxed out my Roth IRA for this year already. And I'm just wondering, the extra money that I have, where should that be going? What should I do with it?

Wow. Good for you, Jason, how are you paying for school?

So, it's fully funded. It's a PhD program in Stem, so.

Wow.

They pay me to do it.

Good for you. That's amazing. Yeah. So you're making money through the school and getting it paid for.

That's incredible.

When do you graduate?

Probably 2026. Maybe 2027.

Okay, so, two to three years.

How old are you?

Yeah, I'm 25.

Okay.

And how much extra money are we talking a month? So you've maxed out your roth, which is amazing. Yeah. How much money per month do you have that you're wondering what to do with?

So typically in a typical month I'll save between 1000 and a 1500 out of my stipend. And then I put away a big chunk of that to go into my roth for the next year. So I guess what I'm looking at is like 6000 at the end of the year. I don't know if I should just throw it in a high yield savings or if I should be investing it or. What do you think?

Yeah. If I were you, I would just put that in a high yield savings accounts and I would just let it sit there because, I mean, we're talking, you know, twelve to maybe 20 on the high end after three years of cash. And I would assume, Jason, after school you'll probably be looking for a job, possibly be moving, and that could be a great down payment for a house.

Yeah. What's your living situation now?

Yeah.

So I have student housing, which is subsidized, which is great because Irvine is very expensive. Ideally, I think the next big purchase that I want to make in life would be a house, ideally here in Irvine, which would be quite expensive. So you think just renting for a few years after I graduate, saving up as much as I can, and then the extra that I have now, just putting it into a high yield savings would be good.

Yeah, that's what I would do. And for a first time home buyer, you'll look at putting anywhere from five to 20% down. I mean, more if you have it, but you probably won't considering California real estate.

I was going to ask about that. Irvine is expensive. Do you, you plan on staying there? Is there a reason because your family's there or.

Yeah, so I have lots of family nearby. My girlfriend's family is nearby. Okay. I just. I love it here. I'm happy here.

Okay.

That's great to go.

That's enough for me. Yeah.

So I think it'll be. Yeah, you'll have to. Yeah. Have some good savings to be able to do that. And remember, when you do purchase your first home, you know, it doesn't have to be a single family. It could be a condo, it could be a townhome. I think just getting into the market is great. And honestly, Jason, you're in a really great position. I'm like, you have. You're maxing out, you know.

Very good.

Yeah. One avenue of retirement, which is great, but I. I would hate for you to, like, have all retirement funded and then no cash, and then you're not able to buy a house, you know, so. So I would put that extra and. And some high yield savings right now. I mean, they're getting four to 5%, so 100%. So it's really great. I mean, like, you can really take advantage of that, which is awesome. So that's exactly what I would do.

My six month is right now.

Oh, perfect.

Keep adding to that.

Awesome. So great, Jason. Well, well done. We applaud you, but, yep, just put in a high yield savings. You probably have to rent maybe a year or two or three after school even, but I think a down payment on a house is your next big step. So great job. Next we have Alexis in. Is that Lawrenceburg, Tennessee? Hey, Alexis, welcome to the show.

Hello, ladies. My name is Alexis. Obviously, I'm a baby, step number two, with 18,000 still to go. I'm a single mom. I was calling because I'm not sure if I should pause the baby steps to save up to move back to Ohio, where I'm from. My dad has end stage cancer, and when he passes, I will resume part of a tiny over my grandmother, who is in a memory care unit. She has dementia. I'm sorry, I'm not really sure if I should do that or not.

Oh, gosh, Alexis, I'm so sorry.

Thank you.

Okay, so you're looking at. You'll be wanting. You want to move to Ohio because your dad is sick. And have they given him. I mean, I know a diagnosis. Do you know, have the doctor said anything with just, like, lifespan and stuff? Do you know, is it aggressive?

Well, they. Yeah, well, it's slow, but it. They gave him six years, and that was eight years ago, so he's. He's been on borrow time for the past couple of years.

Wow. Okay. Okay. So, yeah. Have you. Have you looked into moving costs? What it'll take to move? Have you looked at, you know, places to rent, possibly up there? Have you looked into any of that?

Yeah, I have. I have the option of staying with my dad and just kind of doing half of the bills there or finding my own place, which would kind of be equivalent to what I'm paying now in Tennessee.

Okay.

So it's kind of the same. And I have a remote job that allows me to work from anywhere.

Oh, good.

I can take my job with me.

Okay, and you said you're a single mom. How many kids do you have?

Only my son.

Okay. How old is he?

14.

He's 14 and homeschooled. Okay. Yeah. Well, I think, yeah, I think this, this is one that I would say, yeah, pause your debt, snowball and save up some money for sure to be able to cash flow this move. I think this is an important move. This is one of the times I would probably say, pause to be able to be close to your dad during this time, especially since this is, yeah. What's looking like in your future, even taking care of your grandmother. So I think it would just be up to you, Alexis, to run the numbers on what's best, um, from you, from a financial standpoint of staying with him or getting your own place. And just think of the emotional toll too.

Right.

You'll have your son and, um, for him, you know, is that a gift, being there with him and his grand, you know, and his grandfather? Or is it, we probably need some space, you know, from some of it, because he's, you know, will have his own thing. Like what? You know, as a mom, I think you can make that call from an emotional standpoint. But also, don't forget about that financial standpoint too, because I want you to be wise, wise with that.

Will you have a support system when you're there in Ohio? Because you're taking on a lot.

I mean, my little brother is there, and so I'll have him. And I have my church family.

Okay, great.

Like my home church from when I was in Ohio. Okay, I'll have that. But as far as the rest of my family now, they'll remain here in Tennessee.

Okay. Yeah, that's, that's a lot, you know, to go. And you've got the situation with your mom, the situation with your dad, plus a move, plus a teenager. There's just a lot in that equation. I just want to make sure you've got people around you that you can lean on and cry on their shoulder and let them hold you up and take care of you because you're gonna need a little bit of, yeah. Care yourself, so.

Sure. For sure. Yeah. So again, this is one of the times we talk about for momentarily pausing the baby steps. But a move like this would be one of those. So to pause and save up and make sure you cash flow all of that. Yeah, but Alexis, I'm so sorry. That's a hard, this is a hard season. I know, but you're, you're doing a great job. And hopefully, hopefully we helped give you a little bit of peace and guidance. This is the Ramsay show.

We all need health insurance, but how do you choose? Benefits vary a lot, and the cost can be surprising. Health Trust financial is the only company Ramsey recommends to find you the right health insurance at the best possible price. Health Trust financial is reliable, which is why I've trusted them for over 20 years. They work for you, not the insurance company. Visit health trustfinancial.com today. Healthtrustfinancial.com dot.

Welcome back to the Ramsey show. I am Rachel Cruz, hosting with Jade Warshaw and taking your questions. Up next, we have Kaylee in San Diego. Hey, Kaylee. Welcome to the show.

Hi. Thanks for having me.

Absolutely. How can we help?

I just have a question. We're in kind of a unique situation. We're a military family out in San Diego. We bought a house a couple years ago, and we don't totally love the area. It's kind of a situation where I don't feel safe when he deploys in the area. We're in a position where we think we can make probably about 40,000 off of the house if we sell it right now, just because of the market in San Diego, and we only have about 35k in debt. So right now we're considering selling the house and then taking the money we make off of the house and just moving on base, paying off all of our debt and being debt free. But I just am wondering if that sounds like a good idea. I don't know. I feel like it's out of order on the steps almost. I don't know.

Yeah. Well, we wouldn't normally tell somebody to sell their house to pay off debt. We would normally just say, yeah, like, you know, work extra, you know, cut your expenses and just do it that way. But if you're not happy with the home that you're in for some reason, then I think that's a separate conversation. Right. So I would look at the house as one conversation, the debt as another, and then. And then if the finances overlap, then that's a pro. But I would kind of keep them. I would keep them separate because would you, even if you didn't have debt, would you still sell?

Yeah, I'd say so. Probably. The situation we're in, I mean, we're gonna have to move anyways in the next two years.

Yep.

Because he's military, and they're gonna make us move in two years. And we've got a great house on base that we're interested in.

Okay.

Of course, that puts us back into, like, the rental people, of course. Which that part I don't love, but, yeah, I think we would sell the house anyways.

Yeah, well, I would say, you know, because of career choice and being in the military, rental people is where I would put you guys anyways. Because what you're experiencing now. Yeah. You move so often, and until you're in a place long term or, you know, his. His time is up there. I would be. I would tell you to rent anyways, so, yeah. This feels like the right move, Katelyn.

I think so. My only question would be, I'm always looking at the behavior part of it. So what kind of debt was the 35,000.

35,000. So only some of it is a student loan, about 8000. That's all I have left on that. And we were actively paying that off, but now I'm actually going back to school. So we did pause on that just so I can bankroll school and pay it right now.

Okay, great.

Yeah. And then the other is a car payment. Of course.

A car payment. Okay.

That's the other one. Yeah.

So it sounds like you've kind of learned your lesson. You're like, I'm. If I go to school this time, I'm cash flowing it, paying off the car. From now on, we buy cars in cash. I just like to check because I do think that sometimes when there is a. A convenient option to pay off debt. I'm happy that you have that, but I also want to make sure that the behavior is in check, too, so that you don't go back in debt again.

Yeah, absolutely. Definitely. Yes. And, I mean, the student loan the first time, too is, like, lost the scholarship situation, too. So we're definitely, like, on the same page. We want to be debt free. This definitely seems like kind of an easy way out, I guess, but we're just not really happy where we are.

Yeah. Listen, I'm glad it's there for you. That's great.

It might be a good idea.

Yeah, for sure. Awesome.

Well, great. I'm glad to know that we're on the right track then. Thanks, guys.

Absolutely. Thanks, Kayla. Yeah. Again, I would. I would separate those. Right. Because I think, like you said, it's easy to do something like sell a home and just have a sweeping pass over the debt.

Right.

You keep on moving. But, um. But those conversations are important. And again, being in the. Being in the housing market right now, if you're in, and especially, you know, if there's a good rate and all of that, that's such to your advantage. But he's in the military, you guys, and it's like you're moving constantly and always. When it comes to if you're in a job, that you're not going to be somewhere for at least five years, renting is usually the smartest option because by the time, you know, up and down at the market, you know, depending on what's going on, uh, you're less likely to. To lose money in some capacity. And so renting is usually just. It's the easiest and honestly, the safest way when you're in somewhere for less than five years, consistently, like a military family. Okay, so, Jade, there was a really interesting article here on hill.com that says almost half of recent home buyers stretch to make on time mortgage payments.

Yeah.

So it's about 50% of homeowners right now.

Yeah. There are some really cool stats that were in that article that I think really just point to the madness of the time. Like, it's just, we went from a time where people were paying $50,000 over asking and $100,000 over asking, and then to a point where, like, interest rates have gone through the roof, and it's like, am I ever going to be able to buy? There's just been so many shifts in the market and people just trying to do the best they can. And so a couple of the stats that I thought were interesting. 43% of recent home buyers say that they're struggling to make on time mortgage payments, and that might be because they overbought or, you know, kind of overextended themselves. This one says roughly 47% said that they feel in over their heads financially, which we talk a lot about, that we want people to feel like they're mortgage is a blessing and not a burden. Still, 44% say that they have taken on additional non mortgage debt since purchasing their home. So I feel like, Rachel, that points to my mortgage is probably more than 25% of my take home pay.

And in order to make life feel comfortable and feel like what we're used to, we're. We're using credit cards or we're using debt for things that maybe we would have used cash for. Here's another one. It says 82%. This is the one that gets me. 82% said that they had regrets about their purchase or that it didn't improve their happiness. And that, Rachel, I feel like that's right in your zone.

Oh, my gosh, it is. And like the housing idea, again, financially speaking, it's wise to own a home, right? Eventually it is, because eventually you're gonna pay it off. It's an asset to you. You're not having to worry about rents rising or, you know, whatever. Like, having a house in your financial portfolio is something that we want for you, but at the same time, people believe and really do, oh, my gosh, if I could just have a house, if I was just a homeowner, life would be better. Life would be okay. And it's one, again, it's another just thing, you guys, again, a very smart financial move if you're in the position for it, but it doesn't contribute to your happiness and your contentment. And if anything, with this article showing is half of Americans are stretched when it comes to this. And so it has become this thing of like, oh, my gosh, we felt like we had to get in and we got in. And especially if you bought, gosh, in 20, 21, 22, when everything like this, at least it's kind of corrected itself to a degree. It's still higher, but it's not like it's going.

Bids aren't crazy over asking price like they were back two years ago, and. But I think people fell into kind of the hysteria of it to a degree of like, oh, my gosh, I gotta get a house. I gotta get a house.

I gotta get a house 100%. And I feel like where we're sitting, we're playing both sides of the fence on, okay, we're on one hand telling people, listen, if you have to rent for a little bit longer, it's okay. There's no stigma in renting so that you can get into a place and have peace about it. And if you do have the money, we know that interest rates are super high. And I think you and I were talking, doing a real estate thing, and there, I mean, six, seven, even 8% for interest rate. We've seen that before. But because houses are just so expensive, that's right attached to it. That's really. So it's like, yeah, we've seen these interest rates before, but not at this price point. And so people are feeling that, and there's people who have the money, and they're afraid to pull the trigger because they're like, do I get in with these when these interest rates are so high? And so both sides of that can be true. We want, if you can't afford, we want you to go do it. If you're not ready, we want you to rent for a while.

And so that's how this is. And so I think, Rachel, let's give them some input on if you're feeling tight in the mortgage that you're in, what are some things that they can do. And if you're ready to buy, how do you know that you're ready to buy? So let's kind of tee that up. So I would say, if you're ready to buy. Of course, here we teach that we don't want the payment to be any more than 25% of your take home pay. I think a lot of you know that. I know. For me, I kind of came up with an acronym to be prepared for this, because the first time Sam and I purchased a house, it's new, and there's, like, costs that you don't know about. And it's like, okay, we have our three, six months of expenses. We have our down payment. But then sometimes other things pop up, and you're like, oh, I didn't know that. And so, you know, the down payment, we always say, if you're a first time buyer, five to 20%. And if you can do more, do more. Be prepared for earnest cost, earnest money, especially if you're selling a house to get into another house.

Earnest money is money you put up up front. So if you haven't cleared on the other house, you need that money. Then things like closing costs, inspections, appraisals, all of these things are coming out of your pocket, and you want to be prepared for that. And so, yeah, that's how you know.

Yeah. And I think there's a reality to you guys. If you just have too much house, I mean, if it's 50% of your income, it's gonna be hard to do much of anything, whether, you know, investing or paying down debt. So, again, looking at the whole picture, I think is really important. But be in a position, if you are ready to buy that you feel good. You feel good about it. This is the Ramsay show. Well, back in 2020, actually, March of 2020, April of 2020, the worst. We were about to embark on a Ramsey live like no one else cruise. And right around that time when we were supposed to get onto a cruise ship, 2020 happened, and the pandemic started to. Started to creep up. And I remember thinking, who's going to tell Dave that we are not getting on this cruise ship? Like, there is no way that we're. But, man, up until the last minute, and finally, everything canceled. The ports were closed, everything shut down. So the crews was officially canceled. And we have heard about it since then from people pretty continuously, and especially those that visit Ramsay solutions are like, oh, we were signed up for the cruise.

Are you going to bring it back? You can bring it back. Well, the answer is yes. We are the live like no one else. Cruise is back. So you can join myself, Jade Warshaw, Dave Ramsey, Doctor John Deloney, Ken Coleman, George Camel, and some other special guests like Stephen Curtis Chapman, Deanna Carter, some famous chefs. Like, we have. We have, you know, a boatload, you could say, of some fun, entertaining people that are going to be on this cruise ship. So we're taking over the entire cruise ship, and it's stopping at Turks and Caicos, St. Thomas, San Juan, the Bahamas. It's. It's. It's gonna be a fun. It's gonna be a fun week.

Seven whole days.

Seven whole days we will be on this ship. It's a beautiful ship, actually. Really, really beautiful. And here's the thing. Vip upgrades, they're already sold out. Most of the suites are almost sold out, but there are a few cabins remaining. So if you want to make sure to check it out. If you want one, like, with an ocean view and all of that, you need to put your deposits down soon because it's actually outselling the one in 2020. It's selling faster than that one did. So this one, what do you call it? Jade? Take sale.

Yeah, set sale.

Set sale, yeah. March 22 through the 29th.

Okay.

So here in about nine months. And again, these are for people that are on baby steps. Four, five, six, or seven. Seven. So if you're getting out of debt, pause. We may do another one. If you're building up that emergency, pause. Don't. Don't come on the ship. Continue down your financial plan, or I should say don't pause your plan. Keep going. But for those of you that have lived like no one else, we are here to celebrate you. So go to ramsaysolutions.com cruise to check it out and sign up and come hang out for a week with us as we celebrate. Celebrate, you guys. All right. Up next, we have Nicole in St. Louis. Hi, Nicole. Welcome to the show.

Thank you. So I have a unique situation. I'm getting an insurance payout of approximately somewhere around $40,000 in about a month. And then I will have the opportunity to get a payout of around estimated around 60,000 next year from a victim's fund.

What happened, Nicole?

My son was killed in an accident last March.

Oh, I'm so sorry. Oh. How old was he?

He was 18 years, eight months, and four days.

I'm so sorry.

So sorry, Nicole.

It's been very rough, and I've not been able to return to work full time, so that kind of plays into my equation, too, because obviously, I've just been trying to survive, but I'm worried about, like, my four hundred one k. I haven't. I just recently started making contributions to it again, but I'm only working part time, so I don't know, like, what the best use of that money is. I want to be smart and honor my son in my choices, for sure.

Absolutely. Are you able, working part time? Are you still able to keep everything afloat with, you know, rent or mortgage or food bills, all of that? Have you gotten behind on anything?

No, I'm not behind on anything. I actually have a very decent hourly rate. I work in the human resources world, and so I'm specialized in one aspect of that, and so I make a decent amount even though I'm only part time.

Okay. And do you have any other kids that you're supporting?

I have an older daughter. I'm not supporting her, but I'd like to factor her into the equation also.

Okay. Oh, man. Nicole, I'm so sorry. Do you have any debt right now?

I have about $12,000 in credit card debt, and I have a mortgage that's. I've got about 128,000 on it.

Okay. Do you have any money saved?

I only have, like, a couple thousand dollars saved. I went through a lot of savings.

Okay. And what, can I ask, caused the $12,000 of credit card debt? What was that on?

Some of it was grief, honestly. Some of it was to pay for final expenses, but the majority of it that's still left, it's just poor spending. Looking for something to occupy my mind.

Yeah, sure, sure. Which is understandable. Oh, I'm so sorry.

Are you in grief counseling? Are you working through that?

I am. I have an amazing counselor, so I'm so appreciative of that. But it's. It's just a lifelong loom that I have to figure out how to live with.

So Rachel and I could give you some thoughts. Obviously, we would say, okay, yeah, let's clear out this debt. Let's make sure you've got a good footing, and you've got three to six months of expenses. But what do you think? You said you want to do something that honors your son. What do you think that might be?

I started a nonprofit in his name, and I've been contributing to that. So part of me was thinking of putting some resources into that, and the other part was just providing for my daughter. She's a college graduate. She works in the medical field, so she's, you know, she is making her own way. But, I mean, if that was her only sibling.

Yeah. Yeah. You know, I. For this, Nicole, I think it would. I think it would feel right to say this amount of money, we always say to do with three, you know, money can do three things. You can give it, you can save it, you can spend it. And I think that would be a beautiful, you know, way to kind of divvy up this, if this. If that's what you want to do. I think it would be honoring to him, you know, for. To pay off this credit card debt. I really do. I don't think that doesn't feel off to me. That feels like a really wise way to set yourself up and continuing your healing. I could see you saving some on the side for your daughter. Maybe she may not need it, and I don't want you to do it out of a guilt or a pity, necessarily, but maybe you kind of keep some on the side that if something comes up in the future, you're able to bless her in that, whatever that looks like for her, and then give some of it to that. To that nonprofit that you started.

I think that that divvying it up three ways feels right in this. And then I would have a plan, too, for the 60,000 for next year, just to know ahead of time what you're going to do. Kind of like a budget that we know, you know, before the month begins, if you will, of where your money's going to go. And I would. I would do that same with the 60. And maybe it looks different. That's 60. Maybe, you know, a year from now, you could say, okay, this amount of money feels right to, you know, maybe again, save some for your daughter if you want to do that. Maybe put some at the house if you want to do that. I mean, whatever feels right to you in that moment. But I think staying within those guidelines is a way to, I think, to honor your son.

I agree. I agree.

I do like that a lot. If I pay my credit cards off, should I put that money towards my house payment as an additional principal payment or.

Yes, if you had. Yeah, if there was more that you were divvying in that category, then yes. Yeah, if there was more there. Yeah, put it towards the principal. Yep. And maybe you just do all that now with the 40, and then maybe when you get the 60, that's when you say, I'll give some of this to charity to get yourself. I think there's something to Nicole about, you know, having that solid financial foundation under you that maybe can give a level of clear headedness, too, when you get this next sum of money. So maybe, you know, using some of this for your benefit to set you up well, is beautiful. But I know both of us sitting here as moms, we can't even imagine. Yep. I know. You're doing a fantastic job, Nicole. Thanks for calling.

It's the last call for our two night virtual event, Dave Ramsey's investing essentials. It's set for May 21 and 22, and you do not want to miss this. I'll unpack my personal playbook on investing and real estate and show you how you can feel confident in your investments, too. Tickets are 199. Snag a vip ticket, and you'll get two sessions with a Ramsey preferred coach. You can join from anywhere. Go to ramsaysolutions.com events and get your ticket today.

Welcome back to the Ramsey show. We're taking your calls at 888255 at 225. So give us a call. Up next, we have Chris in Roanoke. Hey, Chris. Welcome to the show.

Hey, y'all. How are you doing today?

We're doing great. How can we help?

So I have a question. After reading a little bit from breaking fee from broke in the investing section, it said that we should avoid index funds and instead go for mutual funds. But I know mutual funds have more fees, and sometimes they don't beat the index. There's a lot of them out there that don't. So I was wondering if there was a situation where you would choose an index fund over a mutual fund.

Yeah, I didn't know George's words were.

That I'm not sure. Well, I can't say yay or nay to that. There are times where we would say, choose mutual funds, like when you're investing for your retirement. We just know that over time, because they're actively managed, they're switching out those funds in an attempt to beat the index. Right. And so, of course, we want you to have the best rate of return. And you're right. There are a lot out there that don't hold up their end of the bargain, but there are a lot that do. And I know I'm invested in some. And, Rachel, you are, too, for sure. So that's why we would say that. Now, to your point, index funds are not bad. They're passively managed. And the whole point is they follow whatever index it is. So if it's s and p 500 or if it's dow industrial, whatever it is, there's different ones that they follow. And so that is a little bit of, if you're, let's say you were saving for a down payment for a house. And you're like, listen, I'm not going to buy for another seven or eight years. I'm just going to park this money here.

You could do that and you could kind of know, here's the return that I'm going to get. It's kind of like just a place that I'm parking this money in a brokerage account. There's nothing wrong with that. But that wouldn't be my long term, necessarily my long term investment strategy to just park in index funds. Because if you invest the way that we say over those, those four different areas, growth, aggressive growth, international, all those, then you're going to get that four times mix of a better rate of return. And so that's kind of the thinking there.

Yeah. And again, I think more so for the long term approach, especially when you're thinking about retirements, mutual funds are. It's a great, it is a great place to park your money when you're doing all of that, because it is spreading it out so much. But again, like Jade said, you know, for a short term, we know people, you know, a vanguard account and they put some money in. But I think you want to be careful with what you're doing, because a lot with index funds, you're doing it yourself. And I think there is something to be said. If you don't know it well enough and you're not diversified well enough, that's where some red flags can be raised. But, yeah, I wouldn't say it's that we're completely against it by any means.

Yeah. Honestly, if you're investing and you're not investing in single stocks, in many ways, I'm just happy that you're doing the muscle of investing. But to Rachel's point, I think we're in the era of TikTok and Instagram. Do it yourself, and there's some validity to that. But if you really want the best rate of return, you're working with a professional and you're choosing really great mutual funds.

Okay. I guess my question was more because I don't have a lot of margin, and I guess I'm technically in step seven, but I don't own property, so that's kind of what I'm working for in the long term. Is there a situation, so would that be one of those situations where you might go index funds?

I mean, how close are you for a down payment on a house? How many years do you think?

Oh, at my current pay rate, which I'm hoping to improve, it might be.

Ten to 15 years until you have a down payment.

Yeah, yeah. I don't have a lot of margin each month.

So what do you make a year?

I make about 37k.

Okay. How old are you?

I'm 25.

Okay. And what's the market like in Roanoke? Because for first time homebuyers, we're saying, you know, five to 20% down.

I haven't really looked around that much, because I've been. I've got Ken Coleman's book at home. I'm trying to get my income up right now, and I just got out of baby step three, so.

Yeah, that's great.

I figured thinking ten to 15 years down the road might work out best for me.

Okay. I would probably say to be a little bit more aggressive. I think when you get your income up, and depending on which part of the country you're looking at, a 5% down is great. And I would get into the market as soon as possible with that. With the parameters that it's no more than 25% of your take home pay and all of that. But, yeah, I would want to get in more aggressively, Chris, especially if you're going to be somewhere long term, because the faster you can get in, again, reasonably and responsibly, the better off that you're going to be. And in that case, you know, you could. Yeah, you could look into an index fund, you know, vanguard or something like that, or even just high yield savings. But again, that would be. I mean, if you're saying ten to 15 years and you're being for real about that, which, again, I'm going to. I'm going to challenge you on it, then. Yeah, I mean, a mutual fund or index fund, I mean, any of those would be fine, but if you do it sooner, which I would hope that you did.

Well, that's assuming that your income doesn't change, and it is going to change your 25, your income is going to go up. You know, you've got the right resources. You're already digging into Ken Coleman's material, so I can tell your income is going to go up. And I don't know if you have debt or not, but you knock that debt out, that clears up more margin. And so there are definitely things to make that go faster for you. Picking up a side hustle. There's a lot that you can do there. So the ten to 15 window, I'm with Rachel. I challenge that, but that's just our opinion.

Yeah, that's great. Thanks, Chris. Up next, we have court in Lubbock, Texas. Hey, court welcome to the show.

Hey, how are you all doing?

Great. How can we help?

So I have a question, and I don't. I mean, I'm sure you'll get some people ask this, but what are y'all's thoughts on vacation homes? That's kind of what we're thinking about next.

Yeah, I think it's a great goal.

Okay. We've owned a couple, you know, rentals, and they. I mean, we kind of made money when we sold. We don't technically make money because the insurance now, it's going crazy. Every time we go to Florida, they're like, you know, I talk to owners that live there, and they're talking about how they're making double their mortgage or triple. And I know that subjective, but it just seems like a lot more than what you would expect from the tenant landlord type situation.

Yeah. Vacation rentals are the most volatile, so when the things. When times are good, it's real good, and when times are bad, they're real bad. So, no, I mean, I think the same rule with any investment property, regardless of its vacation or just down the road, it would be. It would be paying cash for it so that. That volatility isn't there.

Holy.

Yep. Because here's the thing, Corey. I'm like, you know, yes, again, when times are good and, you know, are people doing this? Yes, they are. But you look back and I'm like, I don't know if I'm just cursed from 2007, 2008 and everything. I'm like, they were given houses away, and people were getting foreclosed on left and right. So do what.

Yeah, I said I was still in middle school.

Okay.

I really remember the tear from that.

Yes.

So, I mean, I'll remember for you, because those are.

Those are the first places that, you know, that people stop when the economy turns. And. And again, we pray that never happens. But again, you're putting there, it's a. It's a risky business. And again, when it does. Well, yes, I agree. There's places in Florida, for sure, they're written out like, yeah, probably double the mortgage, but you're being a long distance landlord. You're gonna pay management. And again, I think it sounds. It sounds romantic to say, oh, my gosh, we have a beach house in Florida. And then when you go in and there's been eight other families that have slept in your bed, you know, it just changes the mindset a little bit, too. So there's a. I was trying to think of another.

I mean, another income where I don't need extra income, but I need to figure out where to put this.

Yeah, I would get. I mean, do you have money? Do you have, how much money do you have?

I mean, I probably, like, between everything, like 3400 liquid.

Liquid or an, or an investment.

Yeah, all liquid.

Yeah. Yeah. So maybe. Yeah, so I would look for a spot. I mean, if you want the vacation side of it. Yeah. Look for somewhere. Look remote. Don't go the hot spots because you're going to pay four times that. Yeah.

3 million just for the starters.

Yeah.

So. Or what you could do court. If you want to get into real estate in Lubbock, go buy.

We've owned a few houses there. We just didn't really make money until we sold. So right now, we're living in a super nice lease that we're in a five year lease right now because I'm so scared to buy a house.

You're leasing?

We are.

But you're. You feel okay going and buying a house in Florida?

I do. Just because we talked about it for four years. We go for, like, I'm leaving tomorrow to go and I'm talking to another.

But you're living. But you're living in your house 350 days a year.

I know. I know. You are. Right. So that's the deal where it's like, I just, I run a business. I run. We have six locations, so I kind of travel everywhere.

Okay. Okay, I hear you. Well, what I would say, cor, is I think, for you and your family, owning your, your main property is going to be key long term to have equity and that you don't have to worry about a house payment later down the road, because you're going to have everything paid off. You'll be self insured. It'll be great. And then from there, let's look at investment properties. Paying cash for them local so that you can keep an eye on them, I think is where I would start. But I appreciate the enthusiasm and all of it, because one day, you could own a house in Florida and pay for it. So that could be a great goal.

That's right.

Thanks for calling in. Thank you, America. This is the ramsay show live from the headquarters of Ramsey solutions. It's the Ramsey show, where we help people build wealth, do work that they love, and create amazing relationships. I am Rachel Cruz, hosting this hour and taking your calls at triple 8825-5225. Will be taking your calls on life, money, relationships, career. So give us a call again at triple 8825-5225. Up next or up first, I should say. We have Carrie and Buffalo. Hi, Carrie. Is it carrie or cari?

It's Carrie.

Carrie, welcome to the show.

Yeah, well, thank you for taking my call. So I was divorced two years ago. I'm a single mom. I'm almost 49. So I'm working as a medical receptionist right now. And I do have a side hustle as an artist as well, where I sell my art. And I'm just really having a really hard time financially right now. Like, I've kind of spiraled since my divorce with keeping up. And I'm. I have about 20,000 in credit debt right now, plus a car loan. And my living situation is. So I own the home. I have a family member that is our mortgage lender, though, so we filed an official mortgage. But. So he's kind of put my payments on hold because he knows my situation is crazy, which is not ideal right now, but.

So your mortgage is on hold right now?

Yes.

Okay.

I'm just. But I can't keep up with my bills. My minimums are so high now because I have, you know, some of my minimums are like $400 on these cards. And then I have the house bills and my son. And I'm just wondering, do I file bankruptcy? Like, what do I do?

So. No, I would not say you're bankrupt right now. No, I know these numbers aren't. Aren't impossible. Okay. So how much are you making a year?

I mean, I've only had this job for a few months. I was working on my own since my husband moved out, doing the art based business, which was doing okay. I was paying my bills, but then I was spiraling, and it just hasn't been great with the economy. People aren't buying as much.

Right.

So I'm only working three and a half, four days a week right now, and I need to get more hours.

Okay.

I'm probably going to look for a full time job within the next, like, few weeks. I just want to wait till my son. Like, I just have to figure out what I'm going to do with my kid. It's really tough.

For sure. How long? How old?

Your son get them off in the morning? Yeah. I have to get them off to school every morning, which they've been really flexible with.

Yeah.

So it's. It's tough because my parents are up in age and I don't want to use them anymore.

No, for sure. For sure. So I think what we're, what we're gonna need is just. Is just this plan, because I can hear you're spiraling. You have a lot of things going on, right? I'm like, you're a single mom. And when you guys were married, did he do most of the finances?

He did, and then he, he ran into some issues with his mental health and some other issues and he kind of lost his whole career in his sanity. So I don't receive any child support or alimony. I kind of just wanted him to leave the home. So I took on the marital debt, which grew a little after he left because it was only my income for so long. And it's just kind, I'm just like at a wall now. We're like, my cards are maxed. I can't make the minimum. What do I do? I'm also back on my property taxes this year because they're not escrowed in my mortgage because of the private lending situation. Like, I have to save and pay those every year. And I didn't have the money this year, so I'm just going to have to keep making payments throughout. It's just like, really? I'm just like backed up against the law and I'm like, what? I talked to a few attorneys about bankruptcy and they recommended against it because they're like, you could lose your house.

Yes. Well, yeah, because we're going to come and take all of your assets before and so we want to be able to keep you. Yes. So here's the thing, Carrie. I think for you to feel stable, I think getting your income up is number one. Okay. And you're just starting this new, this new business. Right? You were in an industry, art and selling the art, which is great and wonderful, but after a while it was not paying the bills. So now I think you're facing that reality. So the upside here is that there's a lot of upside to your income. Right. You can find. I would, and I would, I would find a full time, 40 hours week job. And then I want your first priority to be your four walls, which is food, shelter, utilities and transportation, because this mortgage is not going to go on hold forever. So I do want you to get in a position to know if you're going to be able to keep this house. And if, because how much would the mortgage payment be a month if you were paying it with the taxes?

It's about 1300. So I owe about 160 on the house.

Okay. Okay. Okay. If you, so if you can paint out a picture yearly, like if you were here a year from now, if you had to guess, how much do you think between still selling some art? If you're doing that at all. But also a full time job. How much do you think you could bring in?

I don't know. I mean, the job I'm working at now is only $18 an hour. It's not much at all. And most of the positions I've been looking at, they're like $20 an hour. So I would also contemplate, would you recommend getting like going back to school at night to get my bachelor's because I already have an associate.

No, no. I don't think education is the problem here. I think it is income. And I think you're going to be. Yeah, I think you'll be able to get it up. But I think, I mean, honestly, Kerry, I think getting these four walls covered, making sure your food before credit cards and all of that are paid that you and your son are taking care of on the basic level. And, you know, food, shelter, utilities, transportation. You have gas in your car. Do you have a car payment?

Yes, I do. I had to get a new car last year. I had like a 15 year old car that finally.

Okay, Kara, how much, how much is your car loan total?

The car payment is 365. It's, I think I owe 18 on it.

18,000. Okay. If you sold it today, how much could you get for it, do you think?

I think it's just about even because I did check the other day.

Okay. And no money saved. Not so.

Probably nothing. I'm like living minutes a minute.

Yeah, I hear you. I hear you. Okay. So you have the $18,000 car payment. You have about 20,000. Was that what you said in student loans? I'm sorry? In credit cards. Credit cards. Credit cards. And is that it? And that's it, correct?

Yes. And then the house.

Okay. And you have no money saved?

None.

None savings. Okay. So your first goal, what I would do is to get $1,000 ASap and again, making sure that your other bills are covered. Food, shelter, utilities, transportation. This is before credit cards and everything. Okay. And then I would look at selling your car, Kerry, I really would. And maybe you take out a small $5,000 loan to go get a $5,000 car. But I would rather you have $5,000 in debt than 18,000 with this car. Okay.

Okay.

And I think that's going to start to give you some level of footing here because I need you to get some quick wins as well. And if you stay on the line, Skylar is going to pick up and we're going to get you connected with a coach because as a single mom. I mean, I can, I can feel it. I can feel it on you if, like, there's so many decisions that you have to make. But again, I think having some sort of game plan is going to be really, really important, and the budget's going to help with that, too. And so I'm going to give you every dollar premium, and this will be our budgeting app that's going to walk through how to do a zero based budget. And that's something that's going to help you to be able to say, hey, here's where my money's coming in, and I have a plan for it. But again, I think getting rid of this car and getting another car, that's going to free up that payment and that's going to feel, that's going to feel so much better. It really will. And then cut up the credit cards and start paying these off one at a time.

So out of the credit cards, how many are there?

There's four.

Four. Okay. I want you to list those off. Smallest to largest. Okay. So after you get your thousand dollars, your next goal is to pay off that smallest credit card. Okay.

Okay.

And so we're going to get you with a financial coach, though, because I know that there's, there's just so many, so many elements of this story and this. I do not think you're bankrupt, though, Carrie. I really think if you get your income up and you get a level of stability and consistency with these bills, you get this car out. So you're not dealing with that debt over your head, and you work on getting out of this credit card debt. I mean, you really are going to get some quick wins, and I think that's going to give you a level of confidence to Carrie. So stay on the line. Scholar will pick up. But I'm so sorry. I hope that gives you some level of direction and ideas to get this started, because I do see, hopefully for you, this is the Ramsey show.

Listen, you've been asking for it, and.

Now it's finally here. So stop what you're doing, pull the car over and head to ramsaysolutions.com store.

Right now because we've got brand new Ramsey merch.

I'm talking t shirts, dad hats, yetis, and even a debt free sweatshirt right now available only at the Ramsay store.

That's right. You can wear your debt free scream and rock your favorite davisms, like, better than I deserve. And I included my personal favorite.

We've got food at home.

Your kids will know better than to ask once they see that shirt.

So go check out all the brand new merch@ramsaysolutions.com.

Store today. That's ramsaysolutions.com store.

Welcome back to the Ramsey show. I am Rachel Cruz. Taking your calls at this hour at triple 8825-5225 and just as we came up on the air on YouTube, my new book, my kids book, I'm glad for where I am is out. So you can go to ramsaysolutions.com store or rachelcruise.com and check that out. We did a little book tour here a few weeks ago and got to travel around and meet so many of you guys at these signings and signed some books out with the great people out in the lobby. Which reminds me, if you are in Nashville, Nashville is such a great place to visit. Come check us out. We're in a sweet little town, Franklin, just south of Nashville. And so we do this show every day live from one to four with different personalities. And we do it here on the glass so you can come get some coffee and cookies and hang out with us. And it's always fun to meet people from all over. So we're so glad to have you guys here today. And so come and join us. Also, if you are looking to really get control of your money, you guys, one of the best ways to do that is to budget.

And budgeting is one of those things that can be really intimidating at first, and it's kind of overwhelming, but it's one of the keys to winning with money. It really is to be intentional. You know, I am a self proclaimed spender in a free spirit. Not great when it comes to the details always of life, but I enjoy spending and I'm like, I want to have freedom in that. And for me, a budget was probably one of the hardest things to grasp onto financially when it comes to all of this stuff. And so I have found, though, as a spender and as a free spirit, that it gives me such freedom and such permission to spend money. And you do it on purpose with a plan. And it's more enjoyable when you know where your money's going and what's going on. And so if you've not checked out everydollar, this is our budgeting app. You can go to everydollar.com Rachel and create your first budget for free. And this is a tool that we designed to really help you. And again, it's one of those things that when you want to tell your money what to do, it's going to go so much further.

It relieves so much stress and so many questions out there with money that you actually have a plan. And every dollar premium is awesome. If you upgrade to that, it connects to your bank account, and so all of your transactions will come in, and you can drag and drop them in the app. It takes, like, less than a minute a day, and it just keeps a pulse on what's going on with your money. It is so, so key, and it's awesome. So, again, you can go to every dollar. You can download the app for free in the App Store or google play or go to everYdollar.com. Rachel. All right, let's hit the phones, and we'll go to Jeremiah in Houston. Hey, Jeremiah. Welcome to the show.

Hey, how you doing?

Doing great. How can I help?

Well, my wife found the show, and she's been kind of aggressive about implementing some of this stuff, to say the least, and I just don't.

Jeremiah, let me just say. Let me just say, jeremiah, I'm sorry. I am SORRY. Sometimes we are used as a weapon in people's homes. We're cuss words sometimes. So we're. I'm probably more on your team, Jeremiah. Just know that. So I'm here for you. Yeah.

All right, well, here's the thing. We're actually pretty. We're pretty good financially, but, um, so I'll get straight to it. Her car is financed. The only debt we have is her car in the house. Her car is financed, but it's a 0%, and we only owe about two years on it, and she wants to just start paying it off. And I don't understand that because, like, I save the money, you know? Like, I mean, we have a pretty small budget compared to our income, and I save pretty well, and what we save is earning pretty good interest right now. And she's wanting to pull, like, money out of savings that's earning money to pay this car off early, and I can't understand that. And then she wants to start paying the house off, and the house is financed at two and a quarter.

This crazy woman. Who's she been listening to? This is madness, Jeremiah. This is madness. Oh, man. Okay, well, this is so funny, because I. Number one, I love her enthusiasm, because I think some people, personality wise, when they get this taste of, like, oh, my gosh, I could have no payments. Like, I don't have to owe anyone anything. It is so empowering. It's embolden, right? It's this. This idea of, oh, my gosh, we have the money. We can pay this off. It's so great. And then for other people, more of the math nerds. JeReMiAh, I'm going to put you in this category. You're crunching numbers, right? You're crunching numbers and you're like, oh, my gosh, percentage wise, I'm going to make more over here. Why would I do that? Why would I pay off a 2% interest rate on a house when I could be making 10% in the market? Like, that's just crazy. And so, mathematically, I hear you. I really do. Mathematically, it makes sense. But here's the deal with money, JeremiAh. It's about 20% head knowledge. It's about 80% behavior. So much of money is wrapped up, not just in the percentage, you know, the APR and the rates of return, but it is so much in who we are as people and the emotional side and actually looking to see, okay, what would it feel like, number one, to be completely debt free and don't owe anyone anything, and then we can have some fun on the math side and said, what if we take those payments that was on the car and then just go crazy for a second in the mortgage?

And what if that was freed up and we actually went back and invested that and made a rate of return? And so there's a. It's a. It's a different way of looking at it, this money stuff. But there is something about not owing anyone anything that gives you so many options, so much freedom, so much peace of mind. And I feel like that's what your wife is starting to feel, would you say?

Yeah, yeah, she is. It's what the problem is, though, is like, I planned on doing this again, like, as soon as her car was paid off. Mine, my car is twelve years old, you know, it's getting there. And, you know, as soon as hers was paid off, I was looking at, you know, shopping around and looking for something that was 0% and doing this again.

Yeah.

That is just pulling, you know, $60,000 out of. Out of savings, you know, to pay cash for something.

Yeah. How much do you guys have saved? How much is liquid right now that you could get to liquid?

About probably 60,000.

Okay. And how much is left? How much is left on her car?

10,000.

Okay. Okay. Yeah. So, I mean, in that sense, what you have to realize, too, about the zero interest and cars is number one, usually it's inventory that they're trying to get rid of, and you're financing with 0% interest most of the time through the manufacturer. You're not using a bank or a credit union. And so a lot of the terms on the loan can be. It's really up to them. There's not much, like, negotiating or actually, like, looking at it. And so what we have found is there's actually some risk in it, because for some, they actually have these fees and penalties that if you miss a payment, they actually will go all the way back and back, charge you interest, you'll have penalties, you'll have fees, and it ends up being this, like, too good to be true thing. And that's why a lot of people end up falling for the 0%, is they think, oh, my gosh, what a kind manufacturer to do this. But what they don't realize is they almost get screwed in the process if they just make one mistake. So the 0%, yeah. While some people feel like it's a great deal, there's still risk involved there, Jeremiah.

So I think for you guys, what I want to do, I'm going to gift you guys financial peace university, and I want you to watch it together. I think your wife will be so excited. Jeremiah, you'll have a great weekend. Let me just tell you. If you just say, babe, instead of Netflix, let's watch these lessons, she'll love it. But really, these are nine lessons. And again, you could just get through three of them this weekend if you want. But we really do map out, and it's not just an argument for argument's sake of like, oh, get on our side and be debt free. But there's reason for it, Jeremiah. Not just from an emotional standpoint, like we talked about, but there is a financial benefit that instead of supporting ford Motor company, you're supporting YOUrsELf. You're putting money back. You're using your income, which is your largest wealth building tool for you and your family, versus paying for everybody else. And so we've just found this weird way of thinking. It frees a lot of people in so many ways.

Okay, sounds like fun. Can't wait.

Listen, your wife's gonna love me after that suggestion. She's like, thank you. Thank you, Rachel.

She listens to this every day too, so I'm sure she's gonna hear this. And now there's no way out of it.

So funny. Well, you know what I do appreciate about you, though, because we get a lot of spouses. Usually it's your wife calling the show and saying, my husband refuses to do any of this. I don't know how we're gonna get on the same page. And you're stepping out in good faith. Right. And extending a little bit of an olive branch to say, hey, I kind of want to learn this. Like, I want to. I'm curious. Right. And so keep that curiosity open. Jeremiah. Let me just say that as some encouragement, because I can tell you this isn't really just theory and our opinion on stuff. I mean, millions of people have done this. They've gotten on this plan, they've gotten in control of the money, and for the first time, they're actually seeing their money work for them. And that's what I want for you guys. Thanks for the call.

Hey, guys, are you ready for the secret to help you reach those money goals that you've been dreaming about? It's simple. You gotta get on a budget. With our budgeting app, everydollar, you'll get intentional with your money and build the habits that will make those dreams a reality. And we'll be with you every step of the way from your first budget to that retirement home on the beach. Download everydollar for free on the App Store or Google Play. Remember today, download every dollar for free on the App Store or Google Play today.

Welcome back to the Ramsey show. I'm Rachel Cruz, hosting this hour and taking your calls. Up next, we have Dylan in Portland. Hey, Dylan. Welcome to the show.

Hi, Rachel. How are you doing?

Doing great. How can I help?

So my wife and I are expecting a kid soon. In September.

Congratulations. Congratulations.

Thank you.

Is it the first?

We're kind of wondering. Sorry, say again?

Is it the first?

It is our first.

Yeah.

Baby number one. That's great. Well, congratulations.

Thank you. So right now, we both work, and we're kind of trying to figure out how we're going to afford to save for a home after she stops working. After she stops working?

Yeah. Okay. So where are you guys at financially right now? Like, debt savings. Where are you?

We're really well off. We have probably $120 in savings, and then we have about 40,000 in debt. We bought a new car recently, so that's financed at 20,000. And then I have 20,000 in student loans, and I have the ability to pay those off, but then that would take away from my savings and, like, possible home down payment in the future. Then we're really good off. Yeah.

How much do you guys make a year?

Right now, we make, like, 160, but after the baby comes, we'll be making just me. We'll be working. I'll be making 90.

90,000. Okay. And have the homes you've been looking at, what are the price ranges right now?

A standard home is really a lot of money. So right now we have a home already.

Okay.

We're looking for like a bigger one in like a single family, family home, because I own like a condo now, and they're in like the five to $600,000 range.

Okay, how much is your condo worth now?

3370.

And how much you guys owe on it?

300.

300, okay. Yeah. I mean, here's the hard thing about. Here's the hard thing about money sometimes, Dylan, is the math. It doesn't have emotion. You know, it is what it is. And so when you cut your income in half, which I'm not disagreeing with you in that life decision, by any means, it's going to limit your choices, it's going to slow down your financial goals. Right. And so I think one of the best things that you can do, what I. We always say it's kind of stork mode right now. While you are pregnant or you guys are pregnant, have the baby, and once mom's home and good baby's home and is good, then I would press play on this process and what I would do is just walk you down the baby steps. And so you guys have, you're in a really great position in a way, because you have so much money saved. And that 120, is that all liquid? Like you guys can get to that? That's not retirement?

Yeah, that's all liquid.

Okay, so, I mean, if I were you guys, after baby comes in September, I would continue to save because how much are you guys saving a month, would you say, and margin wise, in your budget?

Yeah, we could probably save like easily 2000. Okay, yeah, 2500.

Okay, that's great. So, yeah, so, I mean, I would. I would continue to do that savings mentality, keep putting money away. And then once baby's here, good. Everyone's good. I would take, yeah, I would take 40,000 of that 120. That'll leave you with 80 grand left. But I would go ahead and pay off the car. I would pay off the student loan and the car. I mean, you guys are going down to. We always say not to have motors, anything with motors and wheels, more than 50% of your annual income. So by you guys cutting your income in half, this may be too much car. When did you guys bought it? Okay, $30,000 car.

And we put ten down and we just bought it.

So you could sell it for 40.

No, no, it's worth 30.

It's worth 30, but you owe 40 on it.

No. So we both.

20,000. I'm sorry, I was looking at the wrong number on my. On my notes. I'm so sorry. Yeah, yeah, I hear you.

Put ten down. Yeah. Finance, 20.

Okay. Because, I mean, right now with her not working or her you guys going down this may. There's. There's a chance that this is too much, but I mean, you. You would be able to pay it off because you have the cash. So I would say keep the car, but I would pay it off. I would pay the car off, the 20,000 and the student loans. Once the baby comes, I would be debt free. I would build up an emergency fund to probably six months worth, since you have a new baby. And so I would do your monthly budget and just say, okay, what our expenses are per month, and I would do times five, times six, you know, five to six months worth and put that just in a good high yield savings account and then see what's left. Because out of that 80 grand, how much do you think you guys would need for an emergency fund?

Probably. Probably. We could put like 20 or 25.

Away would feel good. Okay. For that. So that leaves you 60 grand. And then. And then by that point, that's when I would start thinking about the house then. And, yeah, I mean, it is just so. It's so expensive. And your interest rate right now is what, at 2%, 3%?

Yeah, I have a 2%. Yeah.

And I mean, I'm just curious, is it a two bedroom? What's the scenario?

It is a two bedroom. Yeah. So it's a two bedroom, but we're looking to have, like, two to three more kids in the next couple of years. So that's why it's like, planning now for like, a larger home in the next couple years. But again, houses are so expensive that it's really hard to afford a monthly payment on one income. And to put enough down, monthly payment's so low.

What's your. What's your monthly payment on the condo right now?

1500.

Okay, that's great. Yeah. I mean, honestly, Dylan, if I were you guys, you're gonna have so much life change with this new baby. And considering where you guys are financially and cutting that income in half, I would slow walk this. I really would. I would continue to pay down on your mortgage, on the condo, build in some equity that way, and then on the side, be saving up for another good down payment and then maybe look up. I mean, it's going to be a slower process than probably what you want. And I know you guys want more kids in the future and all of that, but that's going to be in two, three years right down the road when that starts to happen. So I almost would say to stay where you are and then as your family continues to expand, then see where you guys are financially. But I would not be in a rush to get out of this again. Being in the market is great and you're at a great rate right now. And the whole thing is just the idea of wanting more room. But I don't know, I would just say you're not going to be in a financial position to do that.

Would you agree?

Yeah, I think that's kind of what I'm trying to get over is like, that was our long term plan.

Yeah.

But it's really not going to be capable after we go down to one income.

Yeah.

So I'm trying to figure out still how to do it, though. But I don't want to put myself in a bad position.

No, you don't. And I think the piece that making a life decision, like what you guys are doing for her to be home, it's kind of one of those trade offs. And I think it's a beautiful trade off. Right. I think it's fantastic for your family. It's something that you guys value. And I think that's. I applaud that. And so with that decision, other decisions are going to have to shift and, you know, and I think that that's okay. And, you know, how old are you guys?

I'm 24 and she's 22.

Yes. Okay, Dylan, you're good. You're good. You got plenty of time. Let me just tell you. Just. I would enjoy this time. Do not stress yourself out trying to think of, oh, my gosh, we got to upgrade houses. We're going to. And you end up making a poor decision and getting into a house that is over your head, you know, with a monthly payment. You guys are in a really great spot right now, and I would just enjoy it. Enjoy your life. And this is where some of that contentment comes in of like, I mean, bigger isn't always better. Right? I mean, if it starts to really, you know, tighten up the budget and it really starts to stress you guys out, then that house, what could be isn't worth it. Right? It's not worth that peace of mind. And so there is power in saying, gosh, we can just stay where we are, enjoy where we're at, but have a long term plan, have a. Have a four year goal of having a certain amount of money saved knowing that you're going to have some great equity in this condo and then move up and home after that.

Yeah. Okay.

That's what. Yeah, that's what I would say. Is your wife, how is she with all of this? Is she itching to move, too?

Yeah, she wants. She's more worried about when we have our next kid, which would probably be, like, in the next two years. So she's perfectly fine and, like, understandable that we won't have that much money and she'll probably get a part time job to, like, help with that. But it's still. It's so much money in. The interest rate, of course, will probably go down, but it's the monthly is just absolutely insane. Yeah.

Yeah. Well, I would, you know, for sure, you know, I think you guys are in a really a great spot seasonal, life wise. You are been really great financially. I would pay off this debt, get that out, have some breathing room, enjoy the baby, enjoy the condo, be where you guys are. And then when the next step comes, that's what you can plan for. So have a goal. Have a four year goal out there. But I think it's great. You guys are doing an awesome job. Thanks for the call. Our scripture today comes from proverbs 21 five. The plans of the diligent lead surely to abundance, but everyone who is hated hasty comes only to poverty. I like that. The diligent prosper. Right. Being consistent in all this, but hastiness only leads to poverty. Franklin D. Roosevelt said, thank you, James, for this. In politics, nothing happens by accident. If it happens, you can bet it was planned that way. To a great conspiracy theorist, FDR. Just really. We know. We know how all this works, y'all. We know. Oh, so great. Okay, before we go, the calls. You can't see him in there unless you'll have the studio.

Studio camera. But Austin Shelby, there he is behind James. Austin, he has been a producer, you guys, here at Ramsey for multiple years. He actually worked on my show, the Rachel Cruze show, when he very first started. And then he moved on to. He was at Entrez leadership, the Christy Wright show. And Christy was here and then has been here on the Ramsey show behind the glass. He will produce when James is out of town or gone. And this is his last day. And we are just. We're so tearful. Austin, if you can just hear me choking up over here, the heart. But we're thankful. Thankful for Austin. Always thankful for a great team. There's a lot of people behind the scenes that make this show happen, and they become part of the family. You get to know people in such a great way. And so, austin, you will be missed. Thanks for. Thanks for all that you do last day, last segment of the show. Yes. Thanks, Austin and his bucky's hawaiian button up shirts. God bless you. God bless you. All right, going to the phones we have. Is it Natia in Chicago?

Hey, welcome to the show.

Hi, it's Annetta.

Oh, Netta. I'm sorry, Annetta. You know what? They phonetically spelled it out, and I think I just completely busted that. I'm so sorry. I apologize. I hate when people mispronounce names, so forgive me, but thanks for calling. How can I help?

Yeah, so I'm kind of in a situation where I'll say, like, I'm asset rich but cash poor, and I've reached a point in my life where I. I kind of don't know which way to take to get out of that. Okay, so I just discovered the Ramsey show maybe about, I'd say about six months ago, and this was after I had kind of built all my wealth. And I did that. I served in the military for twelve years. So I would take all my bonuses and reenlistment bonuses, put it in a brokerage account. I invested in stocks that grew amazingly. Then I purchased 22 acres of land back in 2022 in New Mexico. And then New Mexico legalized cannabis, and the value of that shot up. So I've made a lot of good decisions, but it's like, when I looked at my monthly expenses, I was like, oh, this is why I'm feeling the squeeze, you know, because we were doing a lot of, like, door dash nails and toes. My pedicures, I have household staff, like a groundskeeper, maid that comes, things like that. And then I do own a home, and so I'm like, I feel like I'm living paycheck to paycheck.

When you were talking about pedicures and manicures, you mean they come to you and you get them done and you have, like, a staff at the house? Is that what you were saying for you?

Well, I go and get manicures and pedicures with my daughter.

I hear you. So you're saying, I love it. You live great, but yet it's still paycheck to paycheck.

But it's still paycheck to paycheck.

Yeah.

And I was wondering what to do, because I have this 22 acres of land sitting here that I really wanted to keep to pass to my children. But I'm wondering, should I just go ahead and sell that to pay off my house and minimize some of my expenses.

Yeah.

I'm just so torn about it.

For sure. No, I hear you. Yeah. I mean, I think regardless of the land, I want you to get in a place where your income supports your lifestyle. Right. And living below your means may mean that there's a level of your income, you know, that where it's at, and that you possibly are living right at that cusp. And that is stressful.

Right.

It is stressful. And so that may mean pulling back on some of the expenses so that you don't have to doordash and all of that.

Right.

I mean, not that you can't enjoy life, but there may be a prioritization list going on that we can kind of walk through. But the 22 acres in New Mexico, what did you buy it for, and what's it worth now?

So when I originally bought it, I did seller financing, so I put about 10,000 down, and then I paid it off, and it came out to a total about 30 grand.

Okay.

It was unimproved land. And then since then, I've had it improved, had it slotted and leveled, and so that made the value of it go up. And I've had companies reach out to me to purchase it for cannabis, you know, farming and things like that.

For how much?

Oh, gosh, I think I had one. The latest offer I got was like 100,000 for it.

Okay. Yeah, that's great. So it's been, yeah, three times what you bought it for. And did you buy. I'm just confused. 22 acres in New Mexico, was that just because it was a great deal or did you plan on moving there, or what was the.

Well, I was living there at the moment, and I was just kind of watching a lot of podcasts and stuff about real estate investing, and this is how you can get into it. You could start with land. And I was like, oh, that's kind of cool. And so then I discovered seller financing, and I was able to buy it that way.

And I get into it. Yeah.

Yeah, I was able to get into it.

Okay, so. So you have $100,000 and it's paid for, correct?

Yeah, that's completely.

So you have $100,000 worth of land. How much are in your stocks and brokerage accounts that you could get out right now if you needed to? That's liquid.

The brokerage account is about 200,000. The have, like 50,000 in my 401K.

Okay.

My savings, I have like, $5,000. It's not much there.

Yeah. Okay. Do you have any debts?

I do. So I. So once I reached my status, I kind of got happy. Oh, my God. So I went and purchased, like, a 2022 Mercedes Benz.

Yeah, you did. Yeah, you did. Okay, so how much is. How much do you owe on that?

I owe, I just bought it maybe like, a year ago. So I owe like, 40,000 left on it.

Okay. How much is that car payment a month?

That is. I pay about $500 a month for that.

Okay, so you have that debt. What else?

Yeah. And then I have. I don't have any credit card debt. I paid that off.

Okay.

My student loan has a car. I don't have any. I paid off my student loans.

Your friend has a car. Did you cosign my son? Your son? Oh, I'm sorry. They said your friend. Okay, and is that. How much does he owe on it?

I think he has, like, 10,000 left.

Is that in his name or your.

Name is in his name.

His name. Okay. Okay.

Yeah.

And how much do you make a year?

I make about 70,000 a year.

Okay. All right. So we had some good news and bad news. I feel like in your situation, there's a lot of upside here, but then there's also these money habits that I need. I want you to kind of get in control of that, I think is going to give you some peace of mind. So. Okay. First and foremost, rule of thumb. Never have anything with motors and wheels. That's more than half of your annual income. So you bought too much car. You bought too much car. Not that you can't get a Mercedes, get a used one. But I would look to see. Yeah, I would. I think that's. That you're going to feel that. Um. So if I were you, because you're. Yeah, you're. You don't have much margin right now, is what you were saying. And so being able to free up a $500 car payment a month, and I would go down in car. I mean, how much could you get for it if you sold it today?

Ooh, I don't know. I haven't checked, Kelly boo. But.

Okay. I would do that. That's on your list. Okay. So as you. As you end this call, and I want you to really contemplate that and not that you can never get a great car, okay. But the thing is what you could do if you wanted to, if you wanted to take some of this money out of your brokerage account to pay for it, but you're taking money out that you're going to have to pay taxes on and all of that. So I don't think that that would be wise. I would get the car out honestly, and then I would make a budget on living on set on less than 70,000. And that's going to change your lifestyle. But look to see, hey, if you want to cash out some of this again for the medium side, if you want to, you can. But I would really, really encourage you to get that lifestyle under that 70,000. I think that's going to give you breathing room. So that may be cutting some expenses. But thanks for the call.

Hey, folks, Dave here. You want to hear even more life changing content from Ramsey? Download the Ramsey Network app so you can catch all your favorite shows all in one place, like the Ramsey show, smart money, Happy Hour, and the doctor John DeLoney show. You'll get real talk about life, relationships, money and your career. Plus, the app lets you browse by topic like debt, business, or selling your home. Get the content you want whenever and wherever you want to listen. Download the Ramsey Network app today.