Ram. Live from the headquarters of Ramsey Solutions. It's the Ramsey show. We help people build wealth, do work that they love, and create actual amazing relationships. Jade Washaw, Ramsey personality, is my co host today as we answer your questions about your life and your money. Open phones at 255225. Ariana is with us in Portland, Oregon, to start off this hour. Hi, Ariana. How are you?

Good, how are you?

Better than I deserve. What's up?

I am trying to figure out how I can get my husband on the same page with his out of control spending so that we can have an emergency fund to fall on and pay off some of our debts that we have.

Well, what is this out of control spending? What do you mean?

My husband spends over $1,000 a month just on phone games.

Phone games?

Like Candy Crush? Yeah.

On his iPhone.

Oh, wow.

Yes, I found it out. I look at our statements.

When you say that out loud, does it sound as crazy to you as it does to me?

Yes.

This is like illness level.

Last year.

I'm sorry, you cut out, honey. What did you say?

Thousand.

You're cutting in and out. He spent, what, 14,000 last year? Yeah. And what's your household income? Apparently your phone has not been paid. We're losing most of your phone here. Okay, so what is your household income?

83.

80. Okay. Are you somewhere where you can walk and get a better signal, maybe because you weren't losing? You about every third word. All right, $85,000. How old is your husband?

29.

Okay, I have a question.

We have a four year old daughter.

I have a question. It's just what I'm wondering. Something tells me this is not the only thing he's overspending on. What else is he spending crazy money on?

His car.

His what?

His car.

His car car.

What's that? Yeah.

He has a 91 Volkswagen.

Yeah. Okay, that just screams money right there.

I'm a stay at home mom, and I am the one that pays the bills, and I pinch money wherever I can.

Okay.

So that we can get those paid.

You need to get some professional help.

That's what I'm thinking, too.

Yeah, because this is not $100, and he makes $200,000. I know. It's 14,000 a year. And the money we're spending on the car, too. So there's something I'm sure you're aware of this, or maybe you haven't heard, but in dealing with our phones, what we are now discovering is that a lot of the things the games actually have them, they've carefully designed the games to create a dopamine hit, to cause you to come back again and again and again. They designed these games to be addictive. If you're not aware of that, it's very true. Okay. It's also true of, for instance, the way the videos now work on slot machines. They have carefully designed those to be addictive. So your husband is involved in an addictive behavior loop, because if you just say what he's doing out loud, everyone that hears it except him thinks cray. Cray?

Yes.

They think he's nuts.

I know.

Okay. And so this is not a money problem. You have a husband that is addicted problem. Now, what do you do with that? If your husband was doing cocaine, if your husband was doing pornography, if your husband was doing some other form of addiction, what would you do? Well, you would demand that he get some help, and you would begin to see someone to build language and a narrative, to talk to him in such a way that he starts to understand that he's destroying himself and his family with this behavior.

Yes. Because I feel like at this point, I'm talking at him.

This point what?

It feels like I'm talking at him.

Oh, yeah, you are. You're talking to an addict.

I just feel like I'm nagging.

He's glazed over. You're talking to him when he's drunk.

Yeah.

You can't talk to a drunk.

Right.

It doesn't make any sense. But what you do need to do is sit down with someone that can give you some language that says, okay, this is terrifying me. I have a baby, and I feel like I am in the house with a cocaine addict.

Right.

Because you are exhibiting the exact same behaviors as a cocaine addict.

Yes. And he just spent 700 in the last three days.

So it's getting worse.

My goodness.

We've established he's out of control. We don't need any more evidence. That's established.

Does he think that there's a problem at all? Or when you bring it up, is he like, no, this is fine, there's no problem here?

He's told me twice that he was going to disconnect the car from his phone, but then that did not happen.

Yeah, well, I mean, I promise you I'm not going to get drunk anymore, but I am hanging out in the bar.

Right. And we do have a car payment every month. And with what he spent last year, we could have paid off the full balance of what we owe left.

But the car payment is not your problem. The problem is your husband is an addict.

Yes.

And you need to start treating this situation like your hair is on fire, okay. With lots of urgency. And so are you guys, by chance, in a good church?

No, we're not.

Who is in his life that can talk to him, that will listen to him? It's not you.

It's definitely not me. I think that we'd have to hire somebody that doesn't know us because he doesn't have a father figure or a mother that he'll listen to.

So you need to say, honey, I'm going to marriage counseling because I'm afraid our marriage is going to end because I'm terrified that I'm married to an addict. You are completely out of control. I'm going to go see a marriage counselor to try to save our marriage. I hope you'll come okay. And set an appointment and go.

Okay.

Regardless of whether he goes or not, you go without him.

Okay.

And have that person start to teach you how to speak to an addict to give you any possibility of getting through the fog of this into his brain. And he remembers that he's a husband and a father more than he is a game player on a freaking iPhone. Right.

Because he works so much.

I don't care how much he works finances. It doesn't mean you don't. Just because you work a lot doesn't mean you get to do cocaine. Sorry. That's not how this works.

I think his not a trade off here. I think if I were in her shoes, his phone would suddenly go missing tonight.

You think it would just look at you.

It's almost like it ended up in the river and no one knows how it got there.

I have no idea where it is. After I dropped it out of the car doing 95. I have no idea what happened to that.

Exactly.

It's somewhere between one of those mile marks back there.

I know that's.

No idea. But he'll have another one by morning if he's not well.

That's true.

This is the Ramsay show.

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Jade Washaw Ramsay personality is my co host today open phones at Josh is in Indianapolis. Hey, Josh. How are you?

Good, Mr. Ramsay.

How are you doing?

Better than I deserve. What's up?

So my wife and I are planning on making a baby soon, and question is, how much money should we have saved up for our future before doing that?

Well, at the very least, I would say if you're on the baby steps, whatever baby step that you're on, I would pause that. And then whatever money that you can stack up, stack up as much money as you possibly can. And then once the baby is born, you can take that money and throw it on whatever baby step you're on. What baby step are you on?

Well, so we have no debt. I'm 21, she's 20. We've been married for almost a year now. We have 8500 in a cash emergency fund. So that's about three months of our fixed expenses. And then beyond that, we have just about seven grand in the bank and two paid off used cars.

What's the other seven grand for? What was that earmarked for?

Well, so we have that sort of earmarked in three different buckets. We have a birthing fund. We going to have a fully funded birthing fund of about 5000. That's the goal.

Is that like your deductible?

So we're planning on doing sort of an at home birth, which some of it will be covered, not all of it. So there's that. So we have that bucket. We have a beginning of a Roth IRA. That's another bucket. And then we have down payment for a house bucket.

Josh few humans in the history of mankind are as ready to have a child financially as you are.

Is she even pregnant?

Dave we had a plan that I got, okayed, by both the dads, my dad and her dad. I wanted to see if Uncle Dave would approve of this plan and if you would make any tweaks to it.

I would make some tweaks.

The prerequisites financially was it's a total of 28 grand, 15 grand in house and investments, savings, five grand for a birthing fund and then the 8500 emergency fund.

Let me make some tweaks. Do you mind?

Yeah, go for it.

All right, so she's not pregnant yet? No, let's wait until she's pregnant to pause. But you've got money laying around here, so I like the 8500. That's your three months. Is she planning on working after the baby is born?

Yeah, she'll have six weeks PTO. We have a grandma and a mom on her side. They're both sort of on our way to work.

Okay, so she does plan on going back to work?

She does, yeah.

Okay, so you've got the $7,000 here. Whether or not you want to keep that for your home down payment fund, I actually think that's the best place for it. You mentioned that some of it was supposed to go into a Roth IRA.

Yeah. I've been in talks with SmartVestor pro people and Edward Jones, interviewing all sorts of people, trying to see who could manage the money the best.

Okay.

The minimum it seems to be is 5000 to get it into one of these at least guided account management accounts. So that's kind of the goal there.

So your goal is to say for baby step three, be and do baby step four, investing 15% at the same time?

Yeah, we're saving for a down payment and would like to start investing. And then also how much money, just in general, should we have laying around before putting a kid in this world?

Yeah, you're good.

Yeah, I think so too. I mean, once she gets pregnant, I like that you have some of this money set aside for baby step three, B and investing. And if you wanted to save up your deductible once she gets pregnant, I'm not mad at that either.

Dustin's in Salt Lake City, Utah. Hi, Dustin. Welcome to the Ramsay show.

Hi, thanks for having me.

Sure.

Yeah. So about six years ago, I received some company stock on loan that I would be able to pay off in the next in the previous six years, and it's coming due, and I'm a little bit unsure if I should have them take the stock back or if I should pay off the loan.

That's a very unusual transaction. Are you sure you don't have options to buy the stock?

Well, I was given options to buy the stock probably about eleven years ago, and then at the end of those, it expired in five years. And at the end of the five years I said, I don't have $30,000, but I'd love to be a member or part owner of the company at that time.

So you borrowed $30,000 from who?

From the company.

You're obviously not the owner of the company. Okay. Definitely. Can you not sell the stock?

It's privately owned.

Have you been paying payments or interest on the $30,000?

Yeah, I've been paying about $600 a year.

What happens if you give up the stock to the money you've paid in?

They just keep it, take it back.

So you're going to lose money on the transaction?

Yeah, I've gone back and talked to them. They said, well, maybe this and maybe that. Maybe they'll give me stock to the amount of the interest I paid. But nothing's definite at this point.

How much has the stock grown since you've borrowed to get it?

It has gone up from $66 a stock to 2.20 a share.

But you can't do anything with it because it's privately held and it's restricted.

Right.

So it has no value at all to you except the cash that it creates. Have they been paying you dividends out on it while you were the owner of it?

Borrowed against no dividends.

Has it paid dividends to the other stockholders?

No, not that I know of.

Okay, I'm turning it in. Yeah. Here's the situation. You have zero control over this. Whether it makes money or doesn't make money. You can't sell it ever except back to the company. It's a restricted, privately held company. It does not have a public exchange to it, and you have absolutely no control over its value. None whatsoever. So if they want to give me some stock, sure. I'll take that. I mean a free gift of anything. I'll just about take as long as it's moral. But investing in this, you're a minority shareholder. You have zero power to tell anybody what to do with anything. You're at their mercy, at the mercy of the handful of people that make the decision whether this goes up in value due to the way we run the company and make the decision as to whether there's any dividend distribution or not. And so I don't want to own any of that personally and I'm certainly not going to pay for the opportunity to sort of own it by borrowing it. No, I think we'll just let him have it back, man. It's what I would do.

I have a question about this because based on everything you're saying, this sounds horrible. What did he think he was getting? Because if he buys it let's pretend he didn't borrow the money. Let's just say he bought into it and there's no dividends paying out. What did he think he was going to get?

Well, the company they set the stock price. It's not set by the marketplace because there is no marketplace for it because it's not public. And so when you own a company that's privately held, you think the company is going to be successful. And so the value of the stock, the stated value went from sixty six cents to two dollars or something. So if he had actually owned it and could sell it for the triple it went up triple 30,000 would have become 90,000.

Right.

But he has to have a place to sell it.

That's my question.

And if you get ready to sell it, you can't sell it on your schedule. You have to scale it on when they're willing to buy it back. So they got to be willing to hand him $90,000 to take his ownership portion away from him, which is the stock. So you don't have any flexibility with this.

Right? And let's say he wanted to leave the company but he had all this company stock.

They would buy him out. They would buy him out of so.

They would have to at that point.

Pointing up the 90 because they're not going to let a non employee be walking around with this privately held stock in most cases anyway. It depends on, I don't know, his exact situation. But most of those things are very tightly closely held. That's what they call it, privately held. Closely held. And so what he was hoping was to ride the value up as the company becomes more successful and cash out someday.

Someday.

But the day you don't have control over is the problem and you don't have control over how much it goes up in value because the company could actually grow a lot and the stock price not go up. That could happen.

Interesting.

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Thanks for joining us, america. This is the Ramsay show. Jade Washaw Ramsay personality is my co host today. If you're joining us live from anywhere in America, you're joining us on Halloween. Boo. The National Retail Federation believes Americans will continue spending this holiday season despite inflation, and they have proven it. Halloween alone is expected to reel in $12.2 billion, with the average participant spending $108.24. This marks a $2 billion jump compared to last year for Halloween.

Frightening.

2 billion. That is frightening. Boo. Americans are expected to spend 4.1 billion on costumes alone.

Wow. Pet costumes have become a recent trend that real dealers are capitalizing on. Pet owners are expected to spend around 700 million on dressing up their pets.

I'm a gas. I can't get my it's not good.

It's a catastrophe. What do you think about that? Guys in the booth like that one?

Catastrophe. What a boom. Okay. That's why you get the big bucks.

Well, here's the thing. It says there are countries with lower GDPs than 12.2 billion. So we spend more on Halloween than some countries even spend to just be there.

Yeah, listen. Wow. I'm not buying my pet a costume. If you want to buy your pet a costume, that's okay. But let me tell you what you shouldn't be doing, okay? You should not be buying your pet or yourself a costume if you're whining about student loan forgiveness. You should not be buying your pet or yourself a costume if you've not been generous and given more than that amount away to someone, a human being that's in need, like a hungry child versus your shih tzu with a tutu.

I'm glad you said shih tzu.

I'm just saying. Unbelievable. Yeah. It's okay if you want to dress your pet up. But if your generosity factor is lower than your personal costume combined with your pet costume, you have issues. If you're broke and your kid is taking out a student loan because you don't have any money and they're going to college, but your Labrador retriever, or worse, your golden doodle, is all doodled up. Then again, the issue is not actually the actual spending. The issue is what you're not doing while you're spending in a country where all we hear about is all this drama about how house prices are so high, you boomers don't understand. You were able to buy a house for $13, and you don't understand. You're right. We don't understand why you're dressing up your golden doodle for Halloween. We don't understand. We think you're nuts.

That's true. Look, where I come from, if you had a roll of foil in the old, like, a couple of old toilet paper rolls, you can make a costume.

Well, I like a party, and I'm pretty much into candy and free candy coming from other people. I like the program. The program is a good program. I like the program.

But if inflation is your problem, if you're worried about paycheck to paycheck, you.

Can'T sit around and whine about wealth inequality when we spent $4.1 billion on costumes. But Americans, the poor is getting poorer and the rich is getting richer and, oh, my God, you just can't have both these things coming out of your mouth. It makes you look stupid. It makes you look as stupid as you are when you do that stuff. So it's okay. Celebrate Halloween. Celebrate Christmas. Celebrate your pets. Spend money on your pets. I don't care. But then don't tell me that there's hungry children in your neighborhood or within 25 miles of where you're sitting right now, and you haven't done something about feeding them.

That's very good.

That's just wrong. I mean, we live in the wealthiest nation the world has ever known in terms of total dollars, and we prove it with these kinds of numbers. I really am not the Grinch. I'm not against Christmas. And I guess the Grinch was probably for Halloween. I don't know his exact stance on Halloween. I haven't checked the Grinch on Halloween. But he's probably pro Halloween. Yeah, he's probably pro Halloween. But either way, I'm not against all this. I'm not against fun. I like fun. Fun's a good thing.

But you shouldn't do it at the expense of the things that should be a priority. And you can't do it while you're whining and complaining about the world coming.

To an end, because it's so unfair out there while I'm running around chasing my own stupid tail.

And you certainly shouldn't be putting it on credit cards, because I know some of you all went over to Home Depot, and those big giant skeletons that I see in everybody's yard, and those.

Two cool, they're giant.

They're amazing. But they're like $500 a pop.

Yeah, my grandkids saw that the other day. Papa Dave, you got to get one of those. I didn't, but they told me I got to get one.

Papa Dave, you didn't get one.

Papa Dave didn't get one. It's not that I'm not against large skeletons. I'm perfectly good. If you're a large skeleton, you're on my team. I'm just saying I'm for you. I'm for the large skeleton, the large skeleton union. And Dave, we're in good shape. I support the union, but oh, my gosh. Y'all seriously 12.2 BA BA BA billion. It's a lot. That's 1000 million. Oh, it is record spending in one of the worst economies. I mean, the economy this time last year was boomtown compared to right now.

Well, you know what? That's an interesting thing, Dave, because you ever go out to dinner and it's like a Tuesday night, and it's not.

You can't get in a restaurant. Can't get in a restaurant right now.

I'm like, is this a myth? Because when I go to Home Depot, people are buying the skeletons. And when I go to dinner, it's packed full in there.

It's the Walmart measure of the economy. If the economy is horrible but the Walmart parking lot is full, something's wrong with your you know, Walmart customers are not usually known as the same customer as Nordstrom.

That's true.

So if the Walmart people are out there spending, that tells you the economy is probably not as bad as somebody saying it is. So I think the economy is very slow right now. I think it's very sluggish.

It is slow.

We've got these ridiculous high interest rates on houses right now. So let's dress up like a kid and have a party. Yeah, I guess that's the plan. It's kind of like during the fauci pandemic when the booze sales oh, yeah. They went through wine and booze sales went through the roof. The liquor stores racked up. I mean, very few people made more during the fauci pandemic than the liquor stores except the plexiglass people. Well, it really goes to show plexiglass people cashed in.

Now people will figure out a way to cope with whatever it is. Obviously, in COVID, people did wine and beers and things like that.

That's what it is. We traded one mask for another.

Yeah, okay.

That's what it is.

Profound, Dave.

Who knew? So we got used to covering our faces.

That's what it is.

That's profound.

So increase of $2 billion in Halloween spending this year. Interesting rent, interesting discussion.

Interesting.

The thing is, all we want you to do on all of these things is think. I know it's a strain, but put down your phone and think. Think. Because if you in one breath are saying how horrible the world is, and in another breath are spending $800 for a giant skeleton in your front yard, something's off in your little deal right there, baby. You need to think. You need to think this through. And so taking care of your kids, taking care of your adult responsibilities and having a party can all happen at the same time. There is not a problem with that. Got no issue with that at all. But you can't have it both ways. Not and look intelligent. I mean, you look foolish when you try to do it both ways. It doesn't play through for you. So consumers will be shopping early for festive decor and other related items. Retailers are prepared with inventory to help customers and their families take part in this popular and fun devil worship. I mean, tradition.

You sounded like my parents.

Couldn't resist. Couldn't resist. We'd made it too easy. It's an underhand pitch.

It was, yeah.

This is the Ramsey show. Look, life insurance has one job to replace your income for your dependence. If you die, that's it. So if someone tries to sell you high cost life insurance that doubles as savings or an investment strategy scams like Whole Life, cash Value, Variable Life, then run Term Life from Xander. Insurance is a much smarter way to protect your family's future. Xander shops all the top companies to find you the most affordable term life rates. Then you can go build wealth with what you save, not by falling for those crap policies. Go to xander.com to learn more. That's xander.com or 803 564282. Jade Washaw Ramsay personality is my co host today. Kyle is in Nashville. Hi, Kyle. Welcome to the Ramsay show.

Hey, Dave. It's an honor to talk to you.

You too, man. What's up?

So I have two questions today. One is a little bit more straightforward. The other one probably a little bit more complex. So the short one is, I'm 29, I have a 7th month old baby, and I have another baby coming in May.

Yay.

Which is very exciting. Yes. But with that, I'm struggling to figure out, given that and also being an entrepreneur, I feel like I should have more than six months emergency fund saved. So I'm trying to figure out what's the right number there? And I'm kind of feeling like no matter where I get it to, I feel like it's not enough.

So I'm curious why, what event in your mind could occur or would occur that would require more than six months of your expenses to be covered?

As an entrepreneur, I feel like I'm always thinking worst case scenario. So I'm like, if there's a big recession or who knows, if all of.

Our business goes, what is the likelihood you're going to go six months with zero income?

Probably pretty unlikely.

Yeah. Because as an entrepreneur, you would, like, get a job true. Before that happened, right?

Yes, sir.

Or you close that business, start another one. I don't know. But I've been an entrepreneur my whole life. I've never gone six months without an income. I've never gone a month without an income.

Yeah.

And I've been through some pretty catastrophic bull crap, but I still didn't go without an income.

What do you do? What's your self employed work? What do you do?

I have a video production firm.

Does your business have savings?

It does. We try to keep three months of runway on hand in cash?

Yeah. Then I think you're good. I think if you have your six.

Months, how old are you?

I am 29.

29. With a seven month old and a baby on the way.

Yes.

You know what you are? You're a good dad. That's what you are. No, you're a good dad. That's why you're thinking about this, because you're concerned about taking care of your babies. That's what's making you think about this. But your math is fine, but the fact. That you're worried about this. All that means it doesn't mean your system is broken. All that means is you're a good man. You just looked around and went, I've got responsibilities and I need to act like it. So you're good.

Okay. Awesome. And so with that, if I have extra in my current emergency fund, should I reallocate that towards something else? Put it into investments, put it on the mortgage, or just curious.

It's not going to kill you. What kills you is the concept. Okay. Let's say you had seven months instead of six months, and you didn't reallocate it. That's not going to keep you from becoming a millionaire, you understand? But continually adding to that and looking up and there's $107,000 in there because you continually haven't dealt intellectually with this emotional concern, then yeah. Then you've gotten yourself over into stupid land at that point, right?

Yes. Well, I feel like I am in stupid land because that's exactly how much I have in my right now. 107,000 I have in a high yield account.

But, yeah, I'm like, hold on. In what planet is $100,000.06 months of your expenses?

I was shooting for a year, and I justified it by saying, hey, well, I'm self employed. My wife's only working part time now, so I should have more than the normal person.

What planet is 50,006 months of expenses? You have $10,000 a month of expenses.

Well, that kind of leads into my next question on whether or not my wife and I need to downsize our house.

But how much is your house payment?

House payment is $4,200.

Okay. What's your household? Okay, then 50,000 would be there.

Okay.

All right.

Yeah.

What do you make a year?

So with bonuses, take home is between, like, 300.

Honey, you own the company. What's your taxable income?

That's it.

It's what?

So my personal take home pay combined with my wife, like, our take home after taxes, is 300 to 350 a year.

Way to go.

All right, then maybe 100 is not too much. If 100 represents six months of expenses and you have 48,000, that's annualized. No, you have 24,000 as your house payment for six months. So 50 or 60 grand is probably enough. Yeah, that the point is you can't keep doing what you're doing. You can't make 100 into 200 into 300 into 400 in savings and high yield savings. That doesn't make it smart. High yield savings isn't even keeping up with inflation. You got biden inflation at 9%, high yield savings paying four or five. So you're running backwards on every one of those dollars.

Are you investing at all?

I am, yes. I've started doing 15%.

Yeah. And you got a house payment, so I'm going to take 40,000 or 30,000 of that. I'm going to decide 60 or 70 as my emergency fund. Anything beyond that, I'm going to throw it at the house, and I'm going to start throwing everything at the house from now on beyond 15%. Following the baby steps. Exactly. So, yeah, your income was a little skewed more than I thought. For some reason, I had a more normal income in my head. But you're making a lot of money.

Doing good.

You're doing really good.

Doing so well.

Yeah, you're doing really good. But, yeah, the point is, a tiny bit more or less of something is not what's going to kill you. It's the concept that'll kill you if you extrapolate know and extend it out into oblivion. Caroline is with us in Chicago. Hi, Caroline. How are you?

Good. Thanks for taking my call.

Sure. What's up?

So I am about my lease on my car is going to be up in a couple of months.

Yay.

I haven't listened to your show a whole lot. You've probably covered this, but I'm 64. Right around the same time my lease is up, I will turn 65, go on Medicare. I'm semi retired. I have a little business I run out of my home. So I'm trying to decide. This is my fourth lease.

What's your net worth?

I'm not sure.

How much do you have in savings? Investments in savings?

In retirement, I've got about 175 in investments in cash. Hang on, let me look at my stuff here. In cash, I have 50 to 60,000 in cash.

Do you have any other investments like retirement investments or roth IRA, something like that you're not telling me about yet?

Yeah, I mean, that's part of the 175 I've got.

So if we cashed you out, you got 200 grand?

My house is paid off.

What's it worth?

375.

Okay. All right. So, Caroline, let me give you a couple of guidelines since you're not a normal listener, okay?

Okay.

A car lease. We call them car fleeces because they're the most expensive way to operate a vehicle. You basically are borrowing the money at an average of 14% interest. That's what they come. 14.2% is the average capitalization on the American car lease. All right?

Okay.

And so if you backed into the actual interest that you're paying and you can back it out of the numbers, if you know how to run the numbers on this, that you're going to find 10% to 20% interest. Somewhere in there is what you're paying. The average nationally is 14.2. So Consumer Reports, many other people have documented that the car lease is the most expensive way to operate a vehicle. Never lease a car. Okay? Rule number two, never invest in a brand new vehicle unless you've got a net worth in excess of a million dollars. And the reason is that new vehicles go down faster in value, you lose more money, and you don't have the money to lose. In your case, you don't have the money to lose. You're 65 years old. You've got a paid for home. You got $200,000 to your name. You don't have $2 million to your name. And so you don't need to turn a $50,000 car into a $10,000 car over the next six years, which is what's going to happen if you're driving one. So buy a one or a two year old used car and pay cash for it for the rest of your life, unless you inherit some money or get some money and end up with over a million dollar net worth.

Do not buy new cars, folks. You can't afford the loss, and you certainly can't afford to lease them and get fleeced. It's the most expensive way to operate a vehicle. Drive a one or a two year old car perfectly fine and pay cash for them. This is the Ramsey show. Listen, folks, this show has always been about you and for you. So we want to hear from you right now. The Ramsay Show annual survey is live. Text survey to 33789 or go to ramsaysolutions.com survey. When you fill out the survey, you'll be entered to win a $500 gift card. That's survey text it to 33789. Thanks for helping us understand how to serve you best. Live from the headquarters of Ramsay Solutions, it's The Ramsay Show, where we help people build wealth, do work that they love, and create actual amazing relationships. Jade Washaw, Ramsay personality, is my co host today. The phone number is triple 8825-5225. Justin is in Houston, Texas. Hi, Justin. How are you?

Good afternoon, Dave.

Good afternoon, Jade.

Are you all doing good today? We're great. How can we help?

Well, I'm calling today about my cousin Brandy. When you're an only child, your cousins are like your de facto siblings. And my cousin Brandy is only really three weeks younger than me. So we often joke that we're the closest things our families have to twins. We grew up very close, and she has two kids right now, a 13 year old son and a five year old daughter. About two years ago, her son Brandon wanted to start making his own money because they live pretty poor. He only makes about 18 or year, and he wanted some money because he's an Astros fan. He wants to go to games, he wants a jersey, and he wants to work and make his own money. And he actually handwrotes letters. And there's his neighborhood next to the apartment they live in. He went around distributing these handwritten letters, hey, I'll mow your lawn for $40. Give me a call. And he started getting calls. He borrowed my lawnmower for a while, started making his own money. He bought his own and even looked up YouTube videos on how to take care of it, how to oil it and take care of the blades.

And I was so proud of them, so proud of them for taking this initiative.

Cool.

Well, a little while later, the money he had in his drawer from working, his mom took it saying, well, no. What do you mean? I didn't know you had this much money. We got bills to pay. So much. So he started hiding what he was making. About a year ago, he actually had enough save to buy a riding lawnmower. He bought it from a pawn shop for about $900. Again, I'm thrilled with them. He's looking up YouTube videos, taking care of it, how to maintain it. And he brought my flatbed trailer just so we could keep it at the house. So that way, whenever he had a client, I would help him out. In the weekends, I would just go over there, hook and book.

So mom is going in there and taking his hard earned $1015.

I'm afraid it's worse than that.

Jade how much is he making?

$40.

It doesn't matter.

About six weeks ago, he came home from school and the mower is gone. She sold it, saying that, quote, we needed to pay bills. She sold her $500.

And then so she's making, like you said, 18,000 or 19,000 a year? Is that what you said?

Yes. She's devastated. She works as a hotel desk clerk, but it's not at a fancy hotel. It's like one of these mom and pop things on the side of Houston. And at this point, whenever he comes home, his mower's gone. He's crushed. He's devastated. I go over there because I'm that close to them. I care about him. I want to find out what's going on. All she tells me is that we need to pay bills. I needed $500. So sorry. I had to tell him. And she's unapologetic about it. And at this point, he's crying right there. His eyes are like cherry. He's devastated. He just stands up, walks to her and says, I can't be your son because you're not a mother right now, you're a monster, and stormed off. And he might have thrown in a four letter word or two, which I'm not going to say on radio.

You're standing there witnessing all this to this lady who's like your sister, and you said what to her?

At this point, I was trying to say, why would you steal from him? What are you doing? And she said two things. One, you can't steal from your kid. Everything that his is mine. I needed to do something. That's what was available. I had to do what I had to do. And then the second of all was, and I swear this is a very small defense for her, that is how we were raised. That's how our moms raised us, and that's how our grandmother raised them, was whenever you start working, you pitch in, and there's no age requirement. When I got my first job at 15, the first thing my mom want to know was, okay, when are you getting paid? We got this bill to pay, and we were taught not to question it. So really, I don't know what to tell them. I don't know what the quote Ramsey solution is on kids working trying to earn their own money. Should they pitch in, or is the money just I'm a lost words because I don't have kids myself. I don't really know what to tell her at this point. I care more about their I don't.

Think she cares what you think.

Yeah, I don't think she does either.

And I know she doesn't care what I think.

I think she blames me for this part because she thinks I'm instilling ideas in his head that he doesn't have to pitch in, that he gets to.

Keep all what she's saying is this has been a generational thing. This is the way she's been raised. It's the way you've been raised, your grandparents have been raised. And it sounds like she thinks that this is right. And like Dave said, I don't think she cares what you think. At like, she thinks that this is the best way to go. Obviously, I can look at this situation and see many, many things wrong with it. A, she's not earning enough money. It sounds like an able bodied, healthy woman who could go out and earn more than 18,000 or $19,000 a year.

So it sounds like she needs next week yeah. Working 40 hours at Target, she could earn more.

Yeah.

Run over to Walmart. They're paying $20 an hour. It's a lot more than she's making now. And she could work 60 hours a week before I take money from my own kid. So she has character issues. You can blame it on your family tree if you want to, but just because misbehavior is part of your family heritage doesn't mean that it's a good thing. That doesn't make it okay.

If anything, I think it would make you want to do better and do differently for your kids.

Yeah. I mean, most of us have something somewhere in our family history that we absolutely don't want repeated down the family tree. Right. So that's a character flaw, including stealing from a 13 year old. Now, if you want to go down the path she's going down, philosophically, you can go down that path, but it requires more courage than being a thief. It requires just sitting down with a 13 year old and go, hey, we don't have much money. We want you to pitch in. And so some of the money you make, you ought to pitch in here in the family and demand that of him. You could do that, but that's different than stealing out of his underwear drawer or selling his lawnmower when he's not home. That's cowardly. She did that because she knows she's wrong.

I'd probably bring that up if if it were my brother or sister. I'm really trying to put myself in your shoes. If it were my brother or sister and I saw that, I think that I would approach it in that way. Like what Dave said, I'd say, look, if you need help around the family, which, by the way you shouldn't. But if you did, why can't you be a grown adult and model what a grown adult conversation would be like and say to him, hey, this month is tight. Would you mind helping out?

Or I need you to help out, or I'm going to make you help out. Right, but at least do that to his face instead of just scarfing his stuff up, number one. But before all that, what would I do if I were in your shoes? Justin? It sounds like you have a fairly close relationship to her, and it sounds like she's off base. And so you need to take her to coffee and say, all right, SIS, here's what's going on. You don't make enough money, your job sucks, and you don't work much. You need to work more, and you need to get a better job so you don't have to steal from your own kid. And I'll help you do that. I'll coach you along, SIS. I'll help you get into Financial Peace University. I'll help you get on a budget. I'll help you start acting like an adult so you're, as an adult, not dependent upon a 13 year old, to, quote, pay bills. You ought to be ashamed of yourself putting your family in that position when you're able bodied and can make enough to take care of your family instead of scarfing from your family.

And so that's me and her having a conversation at coffee. But there's nothing that requires her to do that in the law, and you can't make people do smart stuff. If you could, I'd have been out of business a long time ago. What we teach at Ramsey boils down to taking control of your life. It's all about personal responsibility, and if you own a gun, that's even more important. So I recommend becoming a member of the US. Concealed Carry Association. You'll have immediate access to liability insurance, education and training to protect your loved ones and defend your rights in the most responsible way. Go to Uscca.com Ramsey and join today. That's uscca.com ramsey. Halloween bump music. All right, the booth dudes. Ladies and gentlemen, bringing you what's known as production values open phones at triple 8825-5225. Laura is with us in West Palm Beach, Florida. Hey, Laura. What's up?

Hi.

I was actually calling because I'm wondering if there's any benefit in taking out a student loan, going back to finish to get my bachelor's degree and increase the money that I'm making, or if that's a poor decision to take on more debt.

I think it's a poor decision to take on more debt. There might be benefit in going back to school and finding a way to pay to go back to school, but I don't think that there would be a benefit in taking out student loans in order to do so.

What's your bachelor's? You're studying?

I was. I took a break and I haven't gone back in years, but it was for communications.

Okay. And how's that going to increase your income?

I mean, most of the jobs that I see are all they want your bachelor's. And it's been very hard to get a job, which I've managed to do, but I'm not really enjoying it and it doesn't really pay a whole lot.

That's an absolute mythology. That's just not true. Okay. The idea that you get a generalized degree, like a communications degree, and it automatically qualifies you to make more money is absolutely not true. Okay. You know how I know that? I've got 1000 people working in this building in a white collar setting. I've got everything from computer programmers, web designers, creatives production people. I've got lots of people in the communications field. I can't tell you a single one off the top of my head that I pay money to. I'm their boss. That I know what their degree is. I don't know if Jade has a degree.

No one has ever asked me for my degree. Ever.

Wow.

Okay. So what happened was somehow they got into an interview and convinced us at Ramsey that they could do the job. And then they got in the building and they actually did the job. The degree was irrelevant. The knowledge to do the job would be relevant, but the actual degree keeping someone from getting a great paying job. Lots of people in this building make incredible money, and I couldn't tell you a single one of them's degree. Actually, I take that back. I have an on staff counsel that is our staff attorney. I do know that he has a law degree. Yeah, that one I do know. And I actually know where his law degree is from, oddly enough. But I couldn't tell you the other lawyers that we've hired, where they went to school, even. So, where you went to school or the fact that you have a degree in most fields today does not hold you back. What does hold you back is connectivity to the subject at hand. Like what is it you want to work in? Do you know enough about it? Do you have enough knowledge base and connectivity to the people in that building or in that organization that you want to be a part of that lets you have a chance and to go prove yourself?

But this idea that there's some kind of vague veil out there, that only the people with degrees get behind the veil, that's old fashioned mythology. And the last time that was true was probably 20 years ago.

What's the sort of job that you're trying to get, Laura?

Right now I'm a writer. I'm in marketing. But I just feel like I make fifty K a year now and I just feel like I'm going to be stuck in that pay range. I don't feel like there's much unless I hop jobs.

Are you any good? Are you good at what you do?

What I've been doing.

Are you good at it?

You are?

Yes.

Okay.

Yes.

Are you doing something to get better at it?

Yes.

What? What are you doing?

I'm getting certifications online, actively researching what's new in the industry.

To me, that's more valuable.

That's way more valuable than going back to school. Graduates with a degree in communication that come out or a degree in journalism that come out that want to write very seldom make fifty K out of the gate. Very few of them first job out, make fifty K. Right now, communications degree and journalism's degree just don't pay that much. Journalism is worse. Right? It's absolutely horrid.

I almost wonder if the better route for her. It sounds like with what she does, there's probably freelance work that she could do if she wanted to really quickly raise her income.

Well, what I would do is also start putting some people around you that are better than you are yeah, that's true. And start meeting with them and brainstorming and increasing. Your skill set in writing and marketing, are you doing copywriting that's one type of marketing or writing ad copy or something? That's a unique skill set that's very valuable.

Yeah.

Because when you can do that well, it creates an instant ROI for the people you wrote the ad for. And then you go, oh, she's a studly copywriter, I need her writing this. Or is she writing digital narratives for marketing campaigns? Because just a content person today, there's so much content out there.

Yeah.

And good quality content delivered in a way that actually communicates is not a skill set that you get from a four year communications degree. It's a skill set you get from writing a lot with other high quality, world class writers looking over your work and questioning you and measuring the results of your work. And so I'll give you an example. We're editing a book of mine right now, the old Total Money Makeover book. Sold 10 million copies we're working on. They haven't done a new issue of it in, like, a decade. We're going to do a new issue in the spring. So we're going through the stupid thing with a fine tooth comb, looking at every detail and every statistic that's in there that's outdated. And some of the examples we have from 15 years ago, the home price examples are humorous. They're hilarious. So we're going through and changing all that. So I'm not personally doing I read through it this weekend. I read through the work that our writers have done, but the quality of their writing, we could tell by how many correction I sent, you know?

Yeah.

And so how valuable is that young guy that's Nick is doing that writing? And they're pretty dead gun valuable, because I didn't find a lot wrong with his math was excellent.

That's excellent.

And his ability to grasp what we were trying to say and saying it better in a new world, modernizing it. It was excellent. There's probably 800 entries in there or something like that of changes, and I probably didn't touch 100 of them. That's pretty good.

That is pretty good.

That's exactly what you learn to do. That's your world. They don't teach you how to do that.

That's what I'm saying. If she were to go back to school, what she learns is already going to be outdated. Like, she's going to learn more. Getting in there, like you said, getting around people who are better than her, analyzing people's work that's better than hers.

Former Writers coffee group that meets that meets for a Bible study or for a writer's coffee group on Wednesday mornings before work. And y'all sit and judge each other's writing and up each other's game.

Yeah.

And songwriters do it in Nashville all the time.

Oh, yeah.

The number of people that write a hit song by themselves is unusual.

It's very always a group.

It's almost always I've got a buddy, I sat down, and I had this hook, and he added this lyric, and that melody shifted. And I've heard that story from songwriters in Nashville thousands and thousands of times over the years, and it's all there was. They good. Got in a room and made each other better.

Yeah. Or if she starts freelancing, that'll tell her quickly, because people aren't afraid to give you that feedback. Or if she's having trouble getting work, that would also indicate laura, all of.

This is not to correct you. It is to encourage you. You don't need to spend a dime on a four year degree. I wouldn't. I would spend a ton of effort in getting better.

I agree.

All of you out there, the knowledge. Currency is what's important. Knowledge is the currency that gets you in the door, keeps you in the door and moves you up the ladder. Knowledge. So how do you get in the door? Move up the ladder. You get more and more knowledge. So you're always adding knowledge. You're always adding tools to your belt the rest of your life. If the last time you read a nonfiction book was when you were in school, you're failing. You're destined for mediocrity. Read a nonfiction book, particularly in your area of expertise, for, you know, lean in, learn something new. Learn something new. Hey, when I started Ramsay, they hadn't invented the Internet yet. If I hadn't learned something new, most of you 20 million people wouldn't even be out there right now. You have to learn something new all the time. Every day, every week, every year. You got to get better. You're the answer. Knowledge is the currency, boys and girls, not degrees. This is the Ramsey show. Jade Washaw. Ramsey personality is my co host. Today, The Ramsey Show Question of the Day is brought to you by Neighborly, your hub for home services.

Neighborly is one place that brings together a nationwide family of locally operated providers. To help you take care of repairs, routine maintenance, or home improvements. Go to Neighborly.com Ramsey today and start your search.

All right, today's question comes from Addie in Oklahoma. She says, I'm writing because I have a bit of doubt about this situation. My mom wants to be a cosigner for me to be able to buy a property through an FHA loan. Since I will be a first time home buyer, I will be living in the property, but it will be divided, and the other side will be rented. I was pre approved for $325,000. My mom and the realtor we are working with are telling me that we have to put offers on properties at full asking price. But I'm concerned about this. I'm 23 years old. I only make $36,000 a year as a medical assistant and currently owe $10,000 on student loans. Should I wait before I make such a big investment? Yes. Okay, let's look at some red flags here. Number one, you make $36,000 a year. That's quite low.

That's half of the national average.

Yeah, that's quite low. And you're wanting to buy a quarter of a million dollar house. Over a quarter of a million dollar house. $325,000. The reason you feel nervous and the reason that you feel like you can't breathe, because it's literally like John Deloney would say, it's your body telling you there's something wrong, and when there's something wrong, don't ignore it. Let's look at what's wrong, and you can see what the problem is here. You understand that the only way that you're getting this loan is your mom would be signing for that means if you can't get a loan on your own, it means that all of the loan companies know this is a bad idea. You can't pay. And the only way that we mitigate some of this risk is we bring on someone who we think might be able to pay when you won't be able to make the payment. And in that case, this would be your mother. And she probably thinks that she's being sweet for saying, oh, I'll sign for you. I want you to have this home. But it's a horrible idea because you know and I know that you're not making a lot of money.

You still have debt, and the chances of you not being able to make this payment is high. Not to mention, there's the renting side about this. It sounds like you are both dependent on a renter to live on the other side in order to make this payment, which, again, is creating a lot of risk.

Yeah. This is a mess.

Addie, don't do it.

This is a mess. And let's add one more element to this. It's okay. You're going to be a homeowner.

Yeah. You're 23.

It's okay. You're going to make it. Okay. But your mom has been controlling this entire conversation. Yeah. And maybe it's time that you just said, mom, I love you, and. I'm just not going to do this right now. And that's going to do a lot of things for you and your mom. One is she's not going to get to control you with the purchase. She and the realtor are telling you what to do. Do you not hear that? It was very clear in the language that you used. You're being treated like a little girl. Like your mom's pretty, she may mean well, but she's pretty stinking controlling here. And she loves the fact she needs to co sign. She loves the fact that you are dependent upon her because now she gets to tell you what to do even more. So you need to break free of Mommy. Mommy needs to be a grown up and Addie needs to be a grown up.

Yeah.

Because you need to be separated from mommy and enjoy Mommy as a peer, not as a controlling mother of a 23 year old treating you like you're 13. You're not making a decision in this entire thing. Every one of these decisions are being made by someone else and pushed upon you. You need to stiff arm this back, step back, breathe, get you a nice little apartment and a great life and let all those people go do their little lives. And then when you get ready to buy a house, you'll be in a position to buy a house.

Yeah. Because only two scenarios come of this.

If she went bad, it's all bad.

If she doesn't make that payment, a, her mom's lording it over.

Her mom's going to tell her when she can take vacation because she co signed the loan. I'm telling you, I smell control freak a mile away and I've got a good nose for it. Courtney's in Oklahoma City. Hey, Courtney. What's up?

Hey, Dave. Hey Jade. How are you guys doing?

Better than we deserve. How can we help?

So, first of all, Jade, I'm a huge fan. I've seen your debt free scream about 100 times. It's fascinating to me.

It's awesome.

It is awesome. I've been married for twelve years. My husband and I have three kids where I have almost $100,000 in total debt and we're on baby step two. And when we pay off these small cards, that's a great morale booster, I would say it's easy. Instant satisfaction. And we have some bigger balances that are coming up that I know are not going to have that instant gratification. So what I'm asking is how can I keep morale and encouragement with my husband and I in between as we come into these larger balances that we know are going to take longer and there's not going to be some instant gratification there.

Yeah. What are the biggest balances that you have?

We have 220 thousand dollars cards and 120 thousand dollars student loan debt.

Okay, that's not as bad as I thought you were going to say.

What's your income?

We make collectively almost 90 $95,000. A year.

And at this point, what's your margin going to the debt? Snowball every month.

We can maybe put an extra 150. He's working two jobs.

Wait a second. Jobs? Did you say 50?

What?

Dollars?

No, girl, 95,000.

Yeah.

You shouldn't have told me that. That's not intense. That's not intense at all. Well, no wonder you're worried about these $20,000 balance, because that's going to take forever.

Yeah, I think it helps more when they're the smaller cards, because the smaller.

Cards get paid off.

It helps more because you're not paying anything on them.

Right.

We've got $150 card. It works real good. Pay $150. But it doesn't work real good. When you got 20,000, you got to put 2000, not 150.

So he's actually active duty military? He's an officer. We've had about almost our entire marriage in active duty military.

Okay.

And he actually did the green to gold program so that he could become an officer. He was enlisted. That obviously comes with more income.

Okay.

And he gets promoted next week.

So that's a significant honey makes 95 now. And you're only putting 150. Why? Where's all your freaking money going?

Debt that I accumulated from my parents.

No, you already told us the debt. Okay?

Yeah.

How much are you paying to your parents?

Oh, I'm not they took things out in my Social Security number.

Well, why would you pay it? That's called fraud.

Correct.

You're correct.

Why would you pay it? You don't need to pay that. File a police report and tell the police you know where the criminal is. I'm not kidding at all.

Yeah, right.

Who steals from their own kid?

That's a great question.

People that go to jail. That's who it is. Yeah.

What's the amount of that?

That wasn't very much, but it was probably about 10,000 of that.

Okay, so let's just stop a second. Let me go back. You sidetracked me there with that ridiculous story of your crazy parents, but the deal is still this. You got $95,000 coming in that is not all going to $10,000 worth of debt that your parents took out in your name. Where the flip is all your money going?

My car payments and other how much.

Is your car payment?

Mine's? $700.

Okay, what's the other car payment?

His is $900.

Sell the stupid cars today. Those are completely asinine. Who has $1,800 worth of car payments and calls with a financial trouble? I mean, you sell your cars.

Do you see how much quicker you would pay off your debt if you had that extra $1,700 freed up? One $650 freed up.

You are car poor. Have you got a Ford tattoo on your forehead? Do they own you? You should get one. They own you.

Wow.

And a Chevrolet tattoo on the other arm, or whatever it is. Oh, my God. 907 hundred. We found your problem, Courtney. It is cars. You guys got car disease?

They sure do, Austin.

We make sure they get every dollar. Amputate the tahoe.

Shoot.

This is the Ramsay show, folks. Changing your family tree takes more than rice and beans and side hustles. It's also about transferring the big financial risks off your family by having the right kinds of coverage in place. That's why my team created the coverage checkup quiz. It only takes about five minutes to find out what types of insurance you need and don't need to protect your finances. Make this quiz one of your regular checkups, starting right now@ramsaysolutions.com. Slash checkup. That's Ramsaysolutions.com. Slash checkup. Jade Washaw Ramsey personality is my co host today. Donnie is in St. Louis. Hi, Donnie. Welcome to the Ramsey Show.

Hi, guys. Privilege to talk to you guys. Sorry, I'm a little nervous. I'll give you the rundown here just in case you need all this information. I'm going to be 47 next month. My wife and I have recently married. We've been together for three years. We each have three kids from a previous marriage, so six kids total. We are both debt free. We are fully funded emergency fund.

Well done.

Right now I'm only contributing the bare minimum 6% to my retirement to get the match because we want to save for a house. The house we're living in is from her previous marriage and it has more problems than you could shake a stick at. It's probably going to be one of those as is sell houses to cut that short. So when the kids are growing gone in eight years, we want to move, get a house that's ours.

Why don't you move before?

Huh?

Why don't you move now?

Well, because we don't know if we would stay in Illinois or if we would go to Missouri. It just kind of depends. We have relatives that may or may not be here at that time.

Also that would I know, but why would you stay in a house you hate for eight years?

Well, we don't hate this house. We don't hate it.

It's got more problems than you can shake a stick at. I thought I heard some guy say that.

Yeah.

If you sold it, would it bring anything or it would just be a break even.

Still owe on it? Still owe about 70 on it.

What would it bring as is right now?

As not right now. It might just break even.

Okay, so you would get out of it. So if you saved up a down payment in the next year or so, I would move.

Okay.

I don't want to stay in a place that's not fun for eight years. No, not for eight years. No, I don't want to do that. Move into something that's fun even if it's just around the corner and it's just not broken.

I agree.

Well, there's things that need to be updated on it, like the electrical and the plumbing.

I thought you were going to sell it as is.

Well, that's what I'm saying is wrong with it. It's livable. It's not like we don't hate it like we want to get out tomorrow if we could.

Okay. How can we help?

We'd like to move to well, the root of my question is the reason I put all that in there. So I just started saving for retirement last year because both of us were in previous relationships that you had the other spouse you're dragging along, trying to do the Dave plan, and they didn't want to do it kind of thing. But luckily, we both found each other, and we're both on board with the Dave plan. So the root of my question is for saving for a house. I know you've said if you are going to be saving for more than five years or more to do an S and P 500. And I didn't know if that's still the case because of how bad the market was this past year.

Because market was not bad the past year. Since January 1, the S and P would have made you nine and a half percent.

Right.

That's not bad.

I mean, all my retirement has been bad this past year. I'm, like, down 7%.

I don't know what you're invested in.

Compared to well, it's on fidelity, and it's also the top as far as life average return and ten years average return percentages for small, mid, international and large cap 25.

I don't know what your mix is that caused you to lose money in this calendar year. You shouldn't have lost money in this calendar year. You should have made money now you've lost money since July, it's gone down. The market is down since July, but since January 1, it's up nine and a half percent.

Okay. It was about even all year until the last couple of months.

Yeah, last couple of months are horrible.

Down the last couple of months, it went down. But yeah, that's the only thing I've personally been able to see, and I see it every week because I constantly get paid weekly, so I keep track of what I contribute versus how much it's worth.

But my point is that you're making a statement about an absolute statement about the market that is absolutely incorrect because of the way you're watching it. And so based on that, you were getting ready to do the wrong thing. Now, if you want to leave the money alone for three or four years, the S and P will be fine. If you'd left it alone since January 1 to now, you would have made almost 10% on your money, even though since July, the market is down. And so I've got money parked in an S and P, but I can afford the up and the down. Even if you lost some money, it's not the end of the world in your whole scenario here. So if you want to use the S and P as long as you can handle it, that's fine. But the way your brain is working on the market, I'm not sure you should do it.

He should just put it in a high yield savings account. And I want to call out if you are planning to have this money or save for the next five or whatever years, if you're planning to do your plan. I would not stay at 6% on your investing for that long, by the way. At some point, maybe after year two, I'd kick it up to 15% and save up for your down payment a little slower because I don't want you only doing 6% for the next five to eight years.

By the way. I just pulled it up for the fun of it. The S and P for the past five years is up 53.91%.

There you go.

So that would be almost 11% a year.

Love it.

Okay. For five years. That's the average for five years. So the last five as of today. But since July this year, the market is down.

Sure.

And because what we're seeing is we're seeing the high interest rates under the biden Fed, they're driving the housing market to a screeching halt, and it's affecting a whole bunch of other things. Retailers are really freaking out about Christmas. They're starting to worry that it's going to be a really slow Christmas. Interesting, a lot of people barking about recession, but I don't know. We'll see. We're in an election year coming up on into an election year, so we'll see how this plays out. But anyway, people spend all that to say, donnie, you have a perception of the market that is based on last week's paycheck. So if that's how you're going to measure it, you should not put money into an S and P. No.

Because you'd mess around and high yield.

Savings account and then get your baby step four back up to 15%, as Jade said, because you're not doing this short term, you don't want to be out of 15% in baby step four for longer than two and a half, three years. And what you're describing here is eight years. And so you need to be fully invested into good mutual funds in your retirement.

Do you think he was trying to save up and pay full out cash for a house?

I don't know.

Because I'm like an eight year plan that's aggressive.

I don't know. They've done really well, but that old house represents a bunch of stuff I don't like personally. Ruth is in Macon, Georgia. Hi, Ruth. How can we help?

Hi, dude.

Hi, Jade.

The reason I'm calling in is because.

My husband and I have been on baby step two. Not as intense as we should have been. We're kind of starting to pick it up, but I'm due with a baby in six weeks, and y'all have always said when you get to that point, pump the brakes and just save up.

Yeah.

So that's what we're doing now. But come January, after she's born, barring any complications, we'll start back. Intense again?

No. Intense for the first time.

Well, yeah, intense for the first time.

Okay.

We still had a reduction this year. It just wasn't where it should have been.

Yeah, that's not intense.

Anyway, so my question is, I owe about 22,000 left on my car. So it's at about the point where I could trade it in for about 25 right now or sell it for around 30 or by the time we paid off. And if we stick to the snowball schedule. I've ran all the numbers multiple times, and it always comes out to April 2025.

Sell it? Yeah, sell it and buy a $7,000 car.

Yeah, because we're at the point where it's like we want something that's dependable.

$7,000 cars are dependable.

What about your husband's car?

He has a truck, but it's almost paid off.

I want something that's dependable as code for I don't like the car. All these cars are dependable. $7,000 cars are dependable. There's nothing wrong with a $7,000 car. If you pick the right car, you have it checked out mechanically. You don't buy a piece of junk because you just like the way it looked or something. But I mean, actually, check out the mechanical background. There's lots of really good cars for seven grand, really nice cars. And so, yeah, I would sell that puppy and be out of debt. There's no way I'm fighting with this stupid vehicle for three years. No chance. No fun at all in that scenario, Ruth. So, yeah, baby comes, I'd be selling that car. And don't you ever say I need something dependable again. It's just not true. 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 they love, and create actual amazing relationships. Jade Washaw Ramsay personality is my co host today. Thank you for joining us. America Open Phones at 8825-5225. Michelle and Tyler are with us in Las Vegas. Hey, guys, how are you?

Good, how are you?

Better than we deserve. What's up in your world?

Well, I am calling in to get your advice. My husband and I bought a house a couple of years ago and I am in the mortgage industry. Yeah, I'm a mortgage loan officer and I was earning about eight times what I'm earning today back in 2021 when we bought the home and then the crash happened a few months later. So we're at a negative twelve grand a month from our expenses versus our income. And I've kept a year to date tally since January of this year to current. And so those are exact numbers. And we are at an interest rate of 2.65 on our mortgage, so really good rate. And we have about $400,000 in stock and we have about a million and a half in retirement, which we don't want to touch. And we have minimal in savings and checking, maybe 30 grand. We have borrowed about 100,000 from my parents.

Is that how you're floating the twelve K a month loss?

That was to help and also make sure that we were able to pay on our insurance premiums that were due in April of this year.

Just to.

Keep on our savings plan of that as well as help keep afloat. And we ended up getting a car loan, which we normally don't have car loans, but we ended up financing a car loan at 5.24% while you were.

Car when your income was off 70%.

Because the lease was up and the payment was quite high.

What's your home worth?

Three and a half million.

Okay. What does Tyler make? Tyler, what do you make? He makes 300.

His exact monthly income, the net is 30,948.

Okay. Where is all of your money going then? Because you owe what on the house?

$2,000,164.

What is your house payment?

$11,400.

And that is bringing home 30,000. So why are you burning twelve? Where's it all going?

It is going to private school.

What's tuition? 4300 a month?

Yes.

Okay. Where's the rest of it?

Savings with our insurance premium, grocery 2200 a month savings.

So you're having a super expensive whole life plan, right.

That was started nine years ago. And our 10th payment, which it's a ten pay, was due in April. So we don't have to pay that.

Yeah, you can cancel that and you should. It's a piece of crap to start with and that stinking things, what, $5,000 or something?

It's 50, 416 a month.

So you're borrowing money from your parents to pay a whole life plan is $6,000 of your twelve burn. That's an easy fix. Go get some term insurance and drop that garbage. Cash the cash value out and pay your mom and dad back. How much cash value have you got?

So we have 400,000 cash value on that.

And you have 400,000 in stock also?

Yes.

Cash that crap out.

There you go.

Why are you you've got these assets. Turn around, borrow from your parents. Why not use the assets?

Well, agreed. We have a loan already of 185,000 on there.

Okay, so you're only going to net 200.

That's fine, you can still clear out.

No, the 400 is an addition to that. And that if I borrow against it.

Then if you cancel it, you're going to walk out with all the money and get rid of the expense. And it is a horrid investment. This is what's killing you. You have two major symptoms in these numbers, your loss of income and this horrendous investment program.

Well, the 1290, the third symptom is.

You'Ve not cut your lifestyle because you're used to living on seven $800,000 a year and you all are still acting like that.

Agreed. And I put together a budget. It's just having the family follow it.

So are you going to do what Dave just suggested. Are you going to cancel this whole life, and are you going to clear out those stocks and are you going to pay back that loan to your parents? Before we go further, I just want to know if you're going to do that.

Well, if that's what you're suggesting that I do, then that's why I'm calling in for advice.

I'm suggesting you stop all whole life policies immediately. They're a crummy place to put money to start with. If everything was healthy, I would suggest that assure as Crud wouldn't be borrowing from my parents to pay a whole life premium, which is essentially what you've done here. And I sure as Cred wouldn't have bought a car when I'm so broke I can't pay my bills on payments. I would have bought a car I could pay cash for. I would have cashed out enough stock and go buy a car. You don't need more payments. You've got problems. So you're increasing your burn rate every time you do that, not decreasing it to turn the corner. So what you do in these situations is you button down the hatches. The hurricane is here. The hurricane is temporary. We don't know how long it's going to be on shore, but right now we've got 60 and 80 miles an hour wind coming at our house. Whether it's here for another year or whether it's here for another six months, you and I don't know. I pray God your income comes back next spring, because that means the real estate market has started to come back and this ridiculous economy we're sitting in with these interest rates has started to reverse and go the other direction.

I hope that for America, and it certainly would be great for Michelle and Tyler, but I don't know how long the hurricane is going to last. But right now you've got a burn rate that you can fix. You do not have to have a burn rate. Cut your freaking lifestyle. Get rid of the whole life policy. Get rid of the car payment, cash out enough stock to do that, and look at your family and go, Boys and girls, we don't get to live like we used to live. We don't have the money. And you and your husband be grown ups and sit down and go, we have to live on less than we make. We have a brave new world we're in. We don't make 700,000. We only make 360 now. Wow. And we're going to have to figure out a way to make it on that for a little while. Your house is not your problem. Your house is great. I'd sit right tight in your house, but I'd cut a whole bunch of other stuff out of your life now, right now, and get rid of this burn rate. And then you can wait.

When it comes back up, you can have some enjoyment stuff again. In the meantime, you guys need to find beans and rice back in your budget again. This is the Ramsey show. Here's the thing about investing advice you can find it just about anywhere. But that doesn't mean it'll always help you with your personal goals. Here's another option. Check in with a SmartVestor pro. These financial advisors can review your plan or help create one that's personalized to you. To find a SmartVestor pro in your area, go to ramsaysolutions.com SmartVestor. Go to ramsaysolutions.com SmartVestor.

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Learn more@ramsaysolutions.com SmartVestor jade Washaw Ramsay personality, is my co host. Today open phones at triple 825-5225 keyshawn is with us in Atlanta. Hi, Keishawn. How are you?

I'm good. How are you doing?

Better than I deserve. What's up?

Well, just yesterday, my father asked me to help him buy a house. Mind you, my father is 61. I live with him.

How old are you?

I am 22.

Whoa.

Yeah.

Why are you living with your dad?

Well, right now at this moment? Well, during COVID I found a mentor who taught me a skill digital market online, and I managed to turn it to a career. I made $86,000, and I sat down with my parents when I first got my first job, told them my ambitions and what I wanted to do, and they were finding me just staying home as long as I paid the light bill. And when they said yes, I was.

Like, it's three years ago. What do you make?

I make $86,000.

Why are you living at home? You make $86,000.

I plan on moving out this year.

Good. Like, yesterday. Yeah. You make $86,000.

I know.

Go have a life.

So, what's this got?

Okay, now, you live on your own, and you're 22, and you have a career making $86,000 because we just moved you out. Now we've got that settled. Now, your dad wants your help buying a house, but you don't live there. So why does he want your help buying a house? Because he can't buy it on his own.

No. My dad, all his life, they've been living check to check. Just to give you more context, his rent is like $600, but he pays $1,000 in car payment.

He pays $1,000 in car payments?

Yes. Between two cars.

That's why he's living paycheck to paycheck. Okay. Keep going.

With all that and the things that he's told me in passing, I feel like what he wants to do would actually hurt him more, so I agree. And I don't know how to from the financial things and things that I've learned consuming your content and other content ship, I feel like homeownership is not a real thing currently for him. I don't know how to frame well.

If he's asking he's not asking you for financial advice. He's asking you to sign on the line to help him get a deal. Now, let's change this. Okay. Let's talk about this for a second because there's two different emotional situations with your dad. Emotional situation number one is you live there. Emotional situation number two is you don't live there. Which is what I'm recommending.

Yeah. Because once you move out, the obligation that you don't have any obligation, it goes away.

Then you're sitting down with your dad and going, dad, I love you, but I can't participate in you buying a home because I love you. I think you're going to bring harm to yourself until you get your financials cleaned up. And I can show you some of the stuff I'm learning if you want me to, if you don't want me to. And it'll help you get your house. But if you don't want me to, I understand. But I can't participate in you buying a house because I think it's going to bring you harm and I love you, and I don't want to bring you harm.

Okay.

That's a lot harder to say when you live there.

Hey, is he going to be pissed when you tell him that you don't want to sign oh, yeah. For the loan?

Definitely.

I personally don't think he's very prideful. I don't think he's going to be pissed at all, from what he's told me, that he has saved from all the years that he's worked, I know for a fact he doesn't have the cash for a down payment. And I'm afraid that he's going to make a stupid decision and pull from.

His retirement, and he might well and he's got a car payment that he needs to get rid of, that he needs to build an emergency fund. He needs to save a down payment. Whether you're 26 or whether you're 66, those same things apply. And that's what I would tell him. And I'm almost his age. I'm actually older than you know, I would say, young man.

Well, the thing you have to accept is even if you frame it the way Dave so eloquently put it, even if you come to him, you say all those things, he still might go and do something stupid.

You can't.

And it's likely with the way he's been living his life and his age, it's likely that he will continue on that same path. And if he doesn't, you've just got.

To and hear this, it's not your fault.

No.

His behavior is not because of you, okay? You helping him do something stupid or him doing something stupid on his own, he does something stupid on his own is not your fault. You helping him do something stupid that's bad for him is your fault. And you've identified that. You know what that is. But it's very difficult for you to tell your dad, who is 40 years older than you, no, it's emotionally hard to do that. It's doubly hard to do that when you live there.

Right. Dude, when you move out and your proximity to all this changes, you'll be shocked at how. Little you think about this, but right.

Now, it's right under your nose. It changes the level of obligation. You have an obligation, an emotional obligation, toxic though it be to help your dad. Okay? You have a double obligation to help your dad if you live in his house. Right? You follow me? Both of those obligations do not bind you to doing something that harms him. And we're all three in agreement that this is harmful to him.

Yeah.

Buying a house when you're broke Keisha is not good for you. It causes you to get broker. That's why we call them brokers. That's it, man. I mean, you've heard me say that a thousand times. And so I want your dad to get a house, but I don't want his house to get him, and I sure as crud don't want it to get him and his newly successful young son. I'm so proud of where you are, and I don't want you to get chopped down as you're in a growth spurt.

Yeah.

This is going to chop you down, young man. Don't let it do that. And your dad doesn't mean to do that, but he doesn't know any different. And he's just flailing around and he thinks buying a house is going to make everything better, and it's not. It's going to make everything worse for him. And if you get involved, it's going to make everything worse for you. And you want to roll, you need to rock and roll and go get you a place, like, this week. This week, man. Go get you an apartment this week and set you up a life and get yourself strong. And then if you've got a big old huge pile of money and you got a million dollars and your dad is 82 and he never changed his ways and he's still broke and he can't buy groceries, you can afford to buy him groceries.

Dave I feel like there's been a theme, all 3 hours of parents, parents just messing up. It's parents stealing money from their kids. It's parents taking out credit in their kids names. It's parents wanting them to co sign, whether I co sign on that loan with you or the kids co signing on the loan with them. It's just parents.

Parents misbehaving parents.

Yeah.

So if you guys want to label this particular episode for YouTube, it's called Misbehaving Parents. What happens when parents misbehave? Well, let me tell you. You screw your kids.

You do.

That's what happens when parents misbehave. And your job in life should be to do the opposite of screw your own kids.

It's sad the energy that they have to put in to unravel all of this, whether it's having to call credit card agencies or call the bank or call the police and say, no, it wasn't me that spent the money, it was my dad, or, no, it was my mom.

It's unfair a criminal stole because stealing someone's identity is fraud. It's a federal fraud. If you do it with credit cards, it's fraud. And if it was anyone else criminal fraud, it's a crook. If someone does it in Russia and they steal your identity, we go, oh, the Russian mafia is a bunch of crooks. If your own dad does it, you go, well, I'm paying it back because my daddy stole my identity. No, your dad is a freaking criminal. He's a crook. You need to file a police report on him.

Isn't that crazy how we'll let our own family treat us?

And you wouldn't ever let somebody on the street treat you that way.

Okay. I know.

That's right. It was anyone else. Behaving parents, misbehaving parents, misbehaving parents, and some with just out and out malice.

Yeah. And it causes the kids to question.

Their she sold his lawnmower. I can't even get my head around I know.

For a 13 year old. I know.

Wow. This is the Ramsay show. All right, let's cut to the chase. It's easy to get discouraged about crazy house prices and interest rates. But when you have the right real estate agent to help you buy and sell the right way, you'll have confidence to make smart decisions. Ramsey trusted agents aren't just experts who guide you through buying or selling. They're someone you can trust to have your back. From the first call to closing day, find a Ramsey trusted agent near you@ramsaysolutions.com. Agent Ramsaysolutions.com. Agent Jade Washaw, ramsay personality open phones at triple 8825-5225. Caleb is with us in Indianapolis. Hi, Caleb. Welcome to the Ramsay show.

Hey, Dave and Jade. How are you?

Better than we deserve. What's up?

So I'm 23 and I just got married a month ago, and my wife and I have been building a plan. Thank you. We would be on baby step four to six, but I'm trying to decide how do we best invest as a new married couple?

Well, as a new married couple, if you're on baby step four, five and six, then you would just work the plan as it is. So you would invest 15% of your.

Income, of your household income.

So we're currently investing ten to eleven in our separate Roths through our jobs, and then we have extra money on top of that, that we could build that up to 15% or start putting towards a house fund. We don't own a home yet. I'm trying to decide, is it best to put that towards a house or with the volatility of the market right now, store that away in stocks and bonds?

You could definitely do them both at the same time if you're like. Hey, I want to invest 11% and put X amount towards a down payment. You could do that for a little while. I wouldn't do that long term. How long do you think it would take you to save up a reasonable down payment for a house?

So we actually have a lump sum on top of our three to six months that we could either put towards the house right now or throw into different savings accounts.

What's the lump sum?

We have $35,000 on top of our three to six month it's actually a six month emergency fund with a two.

Month working capital fund. Yeah. Way to go. You've done a great job. Yeah. I don't have any problem with you continuing to build some cash for a little while, but probably in the next twelve months to 24 months you're going to buy a house. And so let's pile stack cash until then. On top of that, 35, put down a good strong down payment in 18 to 24 months and then kick your baby step four up because you'll be done with baby step three B, which is what we call saving for a down payment on a house, if you didn't know. And then that sets you up for back up to then you would get up to 15% of your income going to retirement at that point.

So did you say that you have Roth 401 KS? Is that what I heard?

Yes.

So I split mine between pretax and post tax account, whereas she puts all of hers in a pretax fund.

I would put it all in post tax Roth IRAs.

Yeah.

You have Roth available or post tax?

It's a Roth. Four hundred and one K. Yeah.

If it's Roth, you need to do all Roth.

So after you guys both max those out, are you saying that there's still money left?

Yeah, he's saying 11% is going in there and he's saying we are currently.

Putting about 1500 a month into our different retirement accounts. And then based on our current budget, we are storing away an extra 2500 a month on average.

Yeah. Good for you.

Put that towards the house, that's another.

$30,000 in a year. So that puts you 65,000 down payment a year from now.

If we were to split it, would you recommend throwing it into the mutual funds that you guys discussed? Put that into some sort of bond ladder?

I wouldn't do either one. I just go high yield savings. Because you're going to do it in about twelve months. Okay. You get a high yield savings because we're not trying to make a bunch of money on this. The money that's going to be in this account is coming from your pocket, not from interest.

Okay.

The amount of interest, physical interest that you, let's say you make 10% on 60,000, you made 6000. If you make 5% on 60,000, you make 3000. Neither one of those numbers causes you to buy a house. The number is 65,000 because you put 65,000 in there, not because the bank added three or six. You follow me?

Okay.

So your rate of return in a short period of time, like a twelve month window is almost irrelevant, okay. Mathematically speaking. And so you can get caught up on, oh, a bond ladder or a series of HR. Do I do the S and P? It doesn't matter. I mean, it doesn't matter because you're not in there long enough for it to matter. Because, again, twelve months from now, you're going to be sitting on 65, $70,000 with a down payment, and you're going to buy a home on a 15 year fixed where the payment is no more than a fourth year take home pay. Dude, you're in charge.

Awesome. I love it. And then he's going to be putting his whole 15% to his Roth 401 KS.

Love it.

It's great. Yeah. And if those are maxed, then he can go over to regular personal Roths in good mutual funds and still get to 15% once he gets the house purchased. Bellamy is in Washington. Hi. Bellamy. How are you?

Good, how are you?

Better than I deserve. What's up?

I had a vehicle, and my mom can't afford it anymore, and so I'm going to buy my first vehicle, and I'm going to keep this vehicle for five to seven years. And so I didn't know what a good, applicable down payment or amount that I should have.

How old are you?

I'm 20 years old.

Okay.

And I'm currently in college, but I have no student loan debt. All my family wanted me to get a loan for the last three K this year, but I said no, and I'm paying for it myself.

Great.

Proud of you. Good work. Do you have any money at all for a car?

I told my mom that I needed till December because my last school payment is in November, and last bit is going to be $1,000. So I told her I needed till December to start saving, and then I told her the latest I would be would probably be February, because I have to start after that, saving ten grand.

And can she let you drive this car until then?

She said that that would be okay.

Okay, so by February, how much money will you have to buy a car?

I am hoping to have at least five grand.

Good. Buy a car for 5000.

Okay. So I shouldn't do a loan or anything?

No. Last thing you need is a car payment. You're broke.

Yeah.

You're barely nipping and tucking and getting this doing double backflips and twists and everything else and getting this tuition covered. I'm proud.

Way to go.

Add a car payment to it. You might not be able to make that.

Well, this is the last payment in November, and I will be completely student loan debt free. And then I have a little bit of a gap until next October, until nursing school, and so that's when I wanted to kind of build that ten grand.

Yeah. Good. And we don't need a car payment. We need to build ten grand.

Yeah.

The car payment gets in your way of doing anything you want. To do in this life. So get you an inexpensive $5,000 car or however much money you have by February. If you got more, you can spend it all on a car. I don't care. Now, let me ask you this. Your mom has done this car deal where's your dad?

My dad lives up in Bellevue, Washington.

Do you have a good relationship with him?

We're good, I guess. We're friends.

Okay. Does he know anything about vehicles at all?

Yeah.

Okay. Maybe he can help you or someone else can help you. But what I would suggest you do is you look for a car that is not pretty, but it is very reliable and has low miles and has a lot of life left in it. So I don't care about the sex appeal of this vehicle. As a matter of fact, it might be the kind of vehicle you need to give a name to. Old blue big red Bertha. I don't know. Let's give this car a name. But it's the dinosaur. It's the thing that's reliable, and everybody kind of snickers about the way it looks. Because, Bellamy, you ain't picking up boys with this car. You're living life.

I have a boyfriend, and we remodeled an RV, so I don't have any rent at the sale. I just have to pay $400 for a spot, and we're 20 and 21.

Okay, well, so my point, though, is that you need to get a car that's reliable and that you don't care what people think. That was my point. Okay, I'm sorry.

That was funny. So she doesn't have to worry about getting boys in this car because she's already got some.

I know.

I got that covered. Dave. Dave. I think I missed that. I lost that one. Okay. This is the Ramsay show, our scripture of the day. Ephesians 210. For we are God's handiwork, created in Christ Jesus to do good works which God prepared in advance for us to do. Kimmons Wilson said, every once in a while, a new technology, an old problem, and a big idea turn into an innovation. Kimmins Wilson, by the way. Founder of Holiday Inn Open Phones at Robert Is in Atlanta, Georgia. Hi, Robert. Welcome to the Ramsay show.

Hello, Dave. How are you doing? Thank you for everything you do. Thank you. Got through to speak to you. I read your books recently a friend of mine put along in the gate, and I read it.

Thank you.

And I'm a retired military guy and just recently retired, served 26 years in the United States military, air Force, marines and Navy a little bit too.

Thanks for your service.

And I've been trying to to figure out where do I stand in your kind of the baby steps, so to speak, because I've been doing things as a military kind of guy, a little bit out of step, so to speak, because of the fact that we moved so much and couldn't buy a house and all those kind of things. So as of now, my kids graduated from college, both of them great. Both of them took on a little bit of student loan, so what she said not to do, so I'm trying to help them through that. They're kind of trying to find their way to work now. I have some debt, but I'm in my second job now. I have pensions. My wife is also a retired military person, too, so she has a pension too as well, and she's working too, and her dream job, her second retirement job. And I just don't know how to deal with working debt and where I stand in as far as which I'd be applying to.

Babysit wise, you stand just where everybody else stands. The only thing is you have four sources of income going into your budget. Two, military retirements thank you for your service, both of you, and two jobs, all going on the top line of your budget. That total dollar amount is your monthly budget. And then you apply that monthly budget to living and making progress on the baby steps.

How much debt do you have?

40K in a car for me. Another wife has 60K in a car, bought a house for five hundred K, and I've got about 45k in credit cards.

What's your household income?

Well, I've got 300 plus in Tsp.

No household income.

Household income.

What's your two retirements and your two jobs add up to?

Including my pension, my disability and stuff, about 310K.

Great.

That's two jobs. You and your wife and you and your wife's income?

Yes, that's her job, my job, my retirement, which I get now, her retirement.

And my disability when she gets retirement. Right.

She gets hers in about three years.

She doesn't have military retirement coming in yet. Okay, so you got $310,000 income and you got $150,000 in debt.

Yes.

What would happen if you lived on 150 of that and paid the rest off in debt in one year?

What was that question again?

What would happen out of that $310,000 income? What if you decided, you know what, we're going to live on $150,000, which, by the way, is more than double the median average income. What if you decide you're going to live on 150 and take the rest of it and pay off your debt and be debt free in twelve months?

That's what my goal is. I've kind of got one of those apps and looked at your kind of every budget app is to try to say, I can live off my pension right now, period, and just use my working money. Because my working money is like job. I'm a physician, okay? I paid off 260 of medical debt, I mean, for my student loans. So one thing is like, should I be using my working money just to pay?

You should be using every dollar you can squeeze out of your budget. To pay off your three debts, your two cars and your credit card debt, and you cut up your credit cards. Now, you don't have any payments, but a house payment, you make 310. That's pretty sweet. Now we're in a position to build an emergency fund of three to six months of expenses. Baby step three. Baby step four is 15% of your income going into retirement. And so we're going to add to your retirement income by creating an actual nest egg, not just a pension. A pension is fine, but it dies with you. In addition to having a pension, you need to build a nest egg. And the great news is you make a lot of money, and so you should be able to build a substantial nest egg, build some wealth, man, become wealthy.

Now, since he has that pension, would you still have him invest 15%?

Yes, absolutely. 15% until we get the house paid off. When the house is paid off, we don't have to worry about the kids. They're done. Baby step five is X through it, and then baby step, then get the house paid off. When the house is paid off, we just build a big old pile of wealth and create a big old pile of generosity and a big old pile of enjoyment and all of that. That's what this is for. So, again, thanks for your service, guys. You've done a great job. Now let's clean this mess up. Cindy is in Cincinnati. Hi, Cindy. How are you?

Hi. I'm doing good, Dave.

How are you?

Better than I deserve. What's up?

Well, I'm 66 years old, and I own three houses. I went through a divorce a few years back.

Sorry.

Anyway, I ended up with three houses. Actually, I ended up with two houses, and I continued working. And my son lives in one house. He has four kids, single dad, and I rent that to him and let him take care of that house. So then I ended up moving out of the house that I was in and bought my neighbor's house right next door because it looked more of a retirement home that I wanted to be in. And I had been fixing up the other house, but I kind of got into the airbnb business to bring in some income while I was fixing that up and to help do some renovations. So I make about 50,000 a year off the airbnb, and my day job that I'm at is at risk right now. I'm afraid we're probably going to file bankruptcy.

What do you make there?

About 98,000.

What do you do?

I'm in purchasing.

Okay. All right.

Among other things, I'm the jack of all trades there.

Last man standing.

I've been there 32 years.

Wow.

Been there a long time. And I've got a GED. So I'm blessed that I have what I have.

How old are you?

66. 66. So what's your question?

Well, if we file bankruptcy. I owe 270,000 on two of the houses and I'm thinking about taking my 401, part of my 401 and paying everything off.

How much is in the 401?

$700,000.

I would so the other thing is.

But I rent the airbnb and if I keep that house, I could sell that house.

You can if you'd rather have the four would you rather have four hundred and one K or the house?

The house doesn't mean that much. It's just it's got a good income of about 3000 a month.

Which one would you rather have? I don't care. But if you're going to keep the house, pay them off.

Well, I can't keep the house. I pay them off. The income that I come off of the airbnb?

Yeah, pay them off.

I mean, I'm paying that down.

Yes. You ask if you should take the money out of the 401K if you get laid off and pay them off, yes, you should. Okay. Because you still got plenty of money in the 401 and you got three paid for houses. The only thing that's left hanging in the air is I have this sinking feeling that you're really not charging your son much rent at all, like $50 or something stupid. So when is your son going to create a sustainable life for himself?

I ask him that every time.

Well, every time you don't make him.

Yeah. He is definitely, let's say, sore subject for sure.

Yes. And that's costing you more than everything else we're talking about put together. Because you got a big old pile of money tied up over there and got zero return on it, except what? It's going up in value while he lives there and probably doesn't even do the maintenance.

Well, he does do the maintenance and he does help me on mine. There is some pluses to have him there. But I've got four grandkids, so I could ask them to move, but I choose to, not just so they have.

A place to live. Darling, they'll have a place to live. You're not making your grandbabies homeless by making your son be responsible. Yeah, that's just not true. Don't tell yourself a lie. That's not true. It is time for him to move up the ladder in his life. I'm worried about him right now. I kind of think he needs a little bit of a callus or two. Just listening in. Just listening in and loving you. Hey, thanks for calling in. That puts us out of The Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace Christ Jesus.

Hey, guys, I'm Rachel.

And I'm George.

And you've probably heard our voices before on the Ramsey Show.

And do we have a surprise for you.

Yep, we have our very own show, smart Money Happy Hour, where we talk about pop culture, current events, and, of course, money.

George. It's a great show.

And what else do we talk about?

So much, Rachel.

Not enough.

And yet too much. We talk about guilt. Tipping, because tipping is out of control, and I won't stand for it anymore. Which is why I'm sitting.

I'm glad you were taking such a stand.

And we also talk about something else. I'm passionate about Disney adults. Why is it a thing?

Listen, some adults still find the magic.

Sure. We also talk about toxic money traits and girl math. And if you don't know what those are, you have to listen to the podcast.

Yeah, there's a lot there. You guys, it's pretty fun.

We keep you relevant, is what I'm trying to say.

We help you out.

So pull up a chair to the happy hour you wish your friends were having. We promise you won't regret it. And if you don't have friends, we'll be your friends.

We will. We're great friends.

So make sure to check it out.

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