A Financial Plan Only Works If It Matches Your Reality

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32:43Welcome back to The Ramsey Show. Alongside Jade Warshaw, I'm Ken Coleman. So glad you're with us today as we help you win with your money, win in your profession and win with your relationships. 888-825-5225. Jade, I'm a little excited about it, and I don't naturally celebrate these things like I should. Super excited. Been dreaming about a show concept for a long time, and we've been working on it as a team. The team's done a great job. It's called Front Row Seat with Ken Coleman. And people ask, has it replaced the Ken Coleman Show? Yes, because it is a very different format. imagine uh you're sitting in on a deep dive conversation with somebody who's a thought leader someone who has done something extraordinary in their lives they are a man or a woman of success and you get to be a part of the audience and you're sitting around with us asking a question well that is the format live format we record it and then also we have a virtual format where people can zoom in if you will so we're bringing the audience to the front row seat That's the concept.

33:47It's on YouTube now or wherever you get your podcasts. A new episode comes out every Tuesday morning. If you want to get better personally, move up professionally, and lead effectively, those are the conversations. Wow. How do you source your guests? How do you select your guests? Because you've had some wonderful guests. Yeah, we've had some really fun guests. And the way it goes down is, you know, we're selecting people within those categories. So, for instance, people that can help, experts can help out in the area of personal growth. So that would be an expert maybe on sleep or nutrition or exercise.

34:24Wow, okay. Right? Holistic. We're mixing it up, right? And then, of course, we have people that are professional gurus that can help you on certain soft skills. Like we just had Charles Duhigg. We just recorded that. It'll come out soon. Pulitzer Prize-winning author of the book Super Communicators. Wow. So we're talking about the three types of conversation. So how do we use those types of conversation to win in our profession, but also win at home? That's so helpful. And then, of course, leadership experts. So it's very intentional between those three buckets of content, if that makes sense.

34:53Well done, Ken. Thank you. I'm really excited about it. It's beautiful, by the way, if you want to check it out on YouTube. The team did a great job with the set. It looks really, really fun. So the Front Row Seat is the name of the show, Front Row Seat with Ken Coleman. You can get it on YouTube or wherever you get your podcasts. Let's go to Brianna, who's joining us in Dallas, Texas. Brianna, how can we help today? Hi, yes, I have a question. Well, I need some advice. Me and my husband are thinking about selling our home because we're just drowning in debt, and we just don't have any other option to try to get out of it but to sell our home.

35:32So, yes, that's my question. What has created that scenario where you don't believe you have any other options? Give us some details. Well, we are just drowning in debt. And I know y 'all always say sell the cars and we looked into it. We owe, in one of our cars, we owe like$9 ,000. Okay. And we tried to see if we could sell it, but we will be under. It's really not worth selling. is just, I guess right now we're just better off paying it off. And the other one is$12 ,000. And that one as well is negative. So we're like, okay, we might as well just try to hang on to those and try to pay those off.

36:19And everything else is loans and credit cards, student loans, IRAs, pretty much everything. Go through the other ones. Go through the other amounts for us so we can get a picture of this. So the$9 ,000 car, the$12 ,000 car, what else? and then loans like personal loans we are like 20 000 okay credit cards is around like 35 to 35 to like 40 000 okay student loans is my husband's is like 73 000 okay how much are yours i don't have any good and my uh real are the irs is like 9 500 okay and then i have medical bills that's like$3 ,000. Okay. What's your combined income? Combined income is like$10 ,500 to like $11 ,000 per month.

37:08Yes. Okay. And have you added up, if you don't know, it's okay. But if I were to ask you on the spot, like how much does this cost you in payments every month? Do you know the number to that? Like the debt alone is like$4 ,000, probably a little bit more. Okay. So So you're paying$4 ,000 in payments. And then tell me, what's your mortgage? Tell me about the mortgage. Tell me what you owe on it. The mortgage is like$3 ,100. Okay. And that's what you're paying per month. But tell me how much you bought the house for. The house, we bought it for$386. What's it worth? Right now it's worth like$385,$387.

37:55Well, sweetheart, if you sell the house, that's not going to give you guys any much money at all. I know. We owe$340 on it right now. Right, but after you pay your realtor, there's very little of this that is going to actually solve this problem. Right. That's what we were like, okay, should we just try to fight for it, or should we try to sell it and try to at least get out of it? Jade's got something to tell you. The only thing we were thinking is because my husband drives like an hour and a half commute to his job. Oh, okay. Interesting. So he wanted to move closer to his job because it's a long drive.

38:37Could you rent for less money in that location? Sorry, Jake. That's okay. The rent's probably going to be like$2 ,000. Not much difference. Not much difference. Well, no, you said you're paying$3 ,100 per month. Oh, yeah, that is actually a huge difference. Right? 3 ,100 plus the HOA. Oh, that's not including HOA. What's your HOA? 250 every quarter. Okay, every quarter. Okay. I would consider moving, Jade, in this situation because that's a long way to commute, number one. Well, there's a couple of things. You got that big commute. I was going to ask you, is it an hour and a half each way or is that combined?

39:15Because if it's 40 minutes, that's not as big of a deal. No, it's each way. Ooh, girl. Yeah, I definitely move. He has to drive into the office three days out of the week. So two days he'll work from home, but three days out of the week he has to drive to the office. It's still a lot. Three hours driving in a day is a lot to get to work. So that's one green light. It's not the biggest reason because, like you said, it's not like he's going in every day, but it is a reason. The biggest reason for me to consider getting out of this house is because it's more than 25 % of your take-home pay. and at this point you need every dollar that you can get your hands on now right there is a thought here and and and you guys need to sit and talk about this because there's a thought where i go okay if you guys really start side hustling if you start picking up your income there could be a world when this debt is over that this is not 20 that this is 25 of your take home you see what i'm saying that you raise your income and it becomes something that you can keep around Today, though, it's really a problem.

40:18So I would say your homework to sit down with your spouse tonight would be to say, what are all the things we can do to make money? What are your opportunities that are directly related to your job and what are mine? Do you both work? Yes, we both work. So he has his main job and then he has a part-time job on the weekends to make like some extra income. I try to work overtime. I work at a daycare so I try to work extra like overtime whenever I can. How consistent can that happen? Is that like a daily thing or is it like a couple times a month? It varies it depends on the teachers like I just found out I have COVID so I have to be out all week.

41:03Got you so what I'd be looking for when I'm looking for a side hustle I'm looking for something I can count on that's the whole point so i'd be looking if i'm going to spend the extra hours working i want something that's like clockwork i can get it i can go bust my butt and do it and it's there so you both need that um and then if something if you know uh part-time pops up at the at the job and you have the the leverage you know the place in your schedule to do it you do that too but right now i want here's my my main job and a go-to side hustle that's always there i can work it every day, every weekend, got it.

41:39So that's you guys' job to come up with that tonight. And then after that, have you made a budget? I tried the dollar thing. I just downloaded it. I did like the free trial thing, but I'm going to have to cancel because it's like$18 a month. Y 'all need to stop borrowing money. Yeah, you got to stop borrowing. Ken is right. Ken is right. Like you got in this mess because y 'all are trying to do too much and you don't have enough money for it. So So if you can't afford every dollar to get a budget, you better get it out on paper. You can afford it. You spend more on pizza delivery. Okay? You can afford it.

42:16This is The Ramsey Show.

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44:10welcome back to the ramsey show in the fair winds credit union studio alongside jade warshaw and ken coleman dustin is going to start us off here in new york dustin how can we help today hi there thanks so much for taking my call you bet what's going on question well i have a question about housing and budgeting. So let me give you a little bit of context. My wife and I are in our early 30s. We've been working baby steps. We've been married about two years and at about the year and a half mark, we paid off. We finished paying off around 70 ,000 worth of debt. Oh, thank you. And so we currently live in a one bedroom co-op in the Hudson Valley, which costs us around$1 ,600 a month.

44:53So with that in our budget, we're able to save between$3 ,000 and$4 ,000 a month, and we've been doing that since we got married. And so we're about to have – we have a seven-month-old now, and in the coming May we're going to have our second child. And so that's a lot of people to put in a one-bedroom apartment. Yeah. So to get to a bigger place, it would be about$2 ,400 a month at least in this area just because it's the Hudson Valley. And so our child care costs are likely to go up in the coming August once paternity and maternity leave is done. And so my question is, like, do we stick it out here?

45:35Because our long-term plan is to move out of state in about two years once my mother-in-law retires. and so we're saving up for a down payment. But in the meantime... That's my question. Indiana. We want to go to Indianapolis. In about two years? In about two years. How much money have you got saved up? So we currently have around$17 ,000 saved up. We just finished paying off all of our debt, so we're just getting started on that saving process. But you're saving a lot per month, which is great. Yeah, yeah, exactly. And our living situation really helps with that. And, you know, we've got family nearby and all that.

46:16So the location is good. It's just the square footage is not great. Yeah. And so, you know, do I sell our co-op in the meantime so that during that two-year waiting period we can have a, you know, more expensive but larger place? Or do we just kind of stick it out in the one bedroom with four people? I mean, what I would do is I'd stick it out for as long as I possibly can, because the more that you can save on your living is the more money that you can save for a potential down payment. And I don't have to tell you, you need a lot of money saved for a down payment these days, right? So the more that you can get saved in the next two to two and a half years, that would be my number one goal.

47:01Matter of fact, I'd run it back and say, okay, based on Indianapolis home prices and based on what we want. Which I got you over here. Thank you. Whenever you're ready. Whenever you're ready. We're going to plug that in and then we're going to run it back and say, okay, what must be true for us to move in? And then that is the silver bullet of what we're saving for in the next two, two and a half years. So, Ken, hit me. I'm your assistant. Yeah. I'm giving you some numbers here. Well, my computer died, so I don't have it. It's okay. I got you. All right. You got it? It's what I'm here for. All right.

47:29So an average price for a three-bedroom home. I did three-bedroom because it's going to feel like a castle to him. Love it. Oh, I love hearing the little one in the background. That's real. We like that, folks. $230 ,000 to$299 ,000. Okay. This is approximately$230 ,000 to$299 ,000. Some specifics, if you look at Marion County, because I typed in greater Indianapolis area. Okay. So this is the homework you need to do, my friend. But you got Marion County, median price is$229 ,000. Hendricks County, median price is$303 ,000. Johnson County, median price is$298 ,000. So let's add some. Other surrounding.

48:10So you're in that$230 ,000 to$300 ,000. And then let's add a little inflation to that. Let's say$240 ,000, right? That's what I would say because this is two and a half years from now. So you say$240 ,000, and then knowing that what you're attempting to do is put 25 % down, then you can go in and plug in estimated taxes and insurance and all of that and that number is what you need to be well i got it i got him at if you guys continue to save if i was listening correctly you were saving three to four thousand a month uh you guys can have a shot at getting close to a hundred thousand just your savings not including any equity in the co-op right correct yeah so i what's your equity in the co-op we think based upon comps that i've run in the area that i can get around 54 50 after the sale um and so that brings us pretty close to that uh 20 down payment with what we have saved great and we're targeting a house in Indianapolis, around the 300 ,000 mark.

49:17Great. Love that. Love it. That's very doable. And I'm with Jade then. Listen, the babies don't know. They don't know. This is going to be tough on you and mom. But you know what? Two little babies. These are going to be memories that you two talk about when the kids are long gone. For sure. And you're going to be like, we did it. And I think since we're not asking the kids to suffer, you guys aren't really suffering. But it is a form of suffering. and I'm with my partner on this one. Listen, she and Sam, I brag about this. She and Sam had one car for how long? 10 years. And how many years after you actually had the money to buy a car?

49:53Long, let's see. We were done in 2018. I didn't buy a second car until we got here, which was 2022. Which I don't recommend. I think she's bananas, but she's the real deal. So I'm with Jade. I 100 % would suck it up. They're little ones. It's going to be crazy anyway Two years is going to fly when you've got two babies I know that's right The days are long but the years are short And I'm with Jade 100 % I'd tough it out And then make the triumphant entry into Indianapolis With a really Really nice down payment And by the way cost of living there Fantastic so man you're going to feel like From Hudson Valley to the greater Indianapolis area Oh man What a change unless looking forward to that uh oh wait a second no no no hold on Dustin she's got an idea no it's not an idea I was just about to throw some bait into the water go for it I was gonna throw go for it you said it's a really great cost of living there and I was gonna say compared to the Hudson Valley unless everybody in New York gets spooked and starts going to places like Indiana and Florida and Tennessee oh we have some people raising their hands out there in the lobby you know what I'm saying Indiana is the new Tennessee Are y 'all leaving upstate New York?

51:10I met you all earlier. Is that what you did? Yeah. See, that's what I'm saying. Now, I'm not trying to spook you, but I'm just saying the migration is real. They're more mature. Can we say that? They're a little bit more mature in age. I'm just saying that there are predictions being made, I'm just saying, about another great migration. Oh, well, we'll see. We'll see. We'll see. The times will tell. Now's the time, folks. I thought I was setting you. That's why I said I was putting a line in the water. No, I'm not going to take it. Well, I'll say this. I'll say this. When people say they're going to leave this country Based on some political change Number one It's their right to say it We saw a lot of celebs say it A few actually did it Instead they just went to Indiana They went to England The celebrities I'm thinking of But listen, are people going to leave Over stuff like that?

51:55You better believe it We saw massive migration from California We saw it here in middle Tennessee Certainly a lot of people moving to Florida It's certainly going to happen but I don't think and my brother-in-law and sister-in-law live in Indianapolis so I apologize ahead of time. Of all the places people are going to flee from New York, I don't think it's Indianapolis. I'm not throwing shade at any of my friends. It's a nice area, sir. It's a lovely area but it's not on the top of anybody's list. Is that fair? Even he's acknowledging me. He's like, you make a good point. Lovely place to live.

52:30Is it a top destination? I don't think so.

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54:16Hey folks, welcome back to The Ramsey Show. I'm Ken Coleman and Jay Dwarfshaw is in studio with me. 888-825-5225 is the phone number for us to coach you up. She'll be leading on the budgeting and what to do with the debt calls. And I'm going to lead on how to make more money, how to move up in your professional life so we can make more money, more freedom. That's the theme there. So we'd love to hear from you. And how about a question from the Ramsey Network app, Jade? You up for one of those? Sounds good. Let's do it. All right. This is from Ann. She writes, I'm engaged and my fiance just bought an RV.

54:50Floor. You ready for this? Hard swallow. $240 ,000. but he's not sure how he's going to pay for operating it. Yikes. What? I'm concerned that he may take a loan out. So he'll not only have a monthly payment but also all the expenses and upkeep that go along with owning an RV. My question is, how do I proceed? Because we plan to get married next year and we disagree on money issues. Yikes. Oh, wow. Yeah, that's a big red flag. Dude went and bought an RV. I don't think I realized that RVs were this expensive. Oh, man. Yeah. That's a house. Oh, yeah. On wheels, basically. Okay. Yeah, yeah. Oh, but doesn't go up in value.

55:34Right. Dropping like a rock. Yeah. There we go. Dropping like a rock. Okay. You should be concerned. The fact that she's concerned that he's going to take a loan out makes sense. He took a loan out for the RV. So, yeah, he'll probably take a loan out for the upkeep. The biggest issue is they don't agree on the money issues. Ken, I don't know about you. I believe that money it's one of those big overarching themes you've got to be aligned on it's money politics religion and how you see raising your kids and family that kind of thing I agree and so I agree this is a big one um the best way I think to call this out is just to sit them down and say listen here's what we've said our plans are together we obviously plan to get married.

56:21I've started noticing that you and I have different views on how we view money and how we view debt. Can you tell me a little bit more of how you see that playing out in the future? And maybe just kind of set them up with some questions. Hey, in the future when we want a car, what do you think we would do? Would we get, would we try to save up and pay cash? Or do you think we would take out a loan? And just kind of ask him, learn more about what he would say. And then you, once you've heard his response, then you come back and say, okay, well, here's my viewpoint. I think that if we were going to buy cars, I'd like to pay cash and here's why.

56:57And here, and then lay out your side and say, I just want to have a clear conversation and see, is there a way that we can get on the same page with this? Because this, this feels like it could cause problems down the line and I don't want that for us. And you just have to have a hard conversation. Yeah. I, I agree with everything you said, I'd probably ratchet up the technique here. Tell me. Yeah. I'm going to go with the, he needs a text. What do you mean? I'm going to tell you. You're going to text him the questions? No, I'm going to text him and say, we need to talk. Ken, now you know that.

57:30That strikes fear. If you didn't have bubbles in your tummy, when you receive that text, you will have bubbles. You need bubbles. We need bubbles. We need to talk. This is a bubbles-level conversation. Oh, man. So you want to create uncomfortability going in? He needs to know how serious it is. Okay. This is not a manipulative power play. It is a, we need to talk. it's time to define the relationship because she says in this question I am really concerned that we don't see eye to eye and I think I agree with everything you said I just would put some seriousness on it it's not a threat serious sauce yeah not manipulation I'm just saying it needs to be I don't know that we should be talking about getting married or no I don't know we shouldn't be talking about getting married if we can't get there you've got a press pause on this because this will break us down the road and this has nothing to do with my feelings for you i think it's that serious okay so i'm approaching this as if she were my daughter okay but here's here's let me push on this a little bit there we go this is why people show up let me push on this a little bit okay i would be afraid because love goggles make you can make you change parts of yourself can you and this is embarrassing but give me a real quick 15 second on what love goggles means?

58:48I think I know, but I'm not sure I've ever used it. Love goggles are, you see them and everything's perfect because you've got like these, you don't notice their back hair. You don't notice, you know, the little things that after you get married, you'll start to notice, you know? Okay. So you think she's got love goggles? Yeah. She did. She doesn't now. No, she doesn't. But my point is, if he has love goggles on, if she makes it feel like an ultimatum, then he might change some of his answers in order to get what he wants. And I'm not saying like maliciously or like in a diabolical way. I'm just saying that sometimes.

59:21You think he feels the pressure. Yes. Because the truth is you are your best self when you're in your dating phase. You're your best. Like you're on your best behavior. And so he could be like, oh, yeah, yeah, honey, you know, we don't have to do that, da, da, da, da, da. So you think my approach, help me, how is my approach not, how does she then make it serious? I think if she just makes it a conversation and we're talking, she's more likely to get the real answer. But if she puts the stress of we need to talk, we need to define this relationship, then he could feel the need to be like, well, okay, okay.

59:54Yeah, yeah. No debt. No debt. That's fine. That's fine. But that may not be really where his heart is. That. I know. Okay. So, okay. So let's say I go with your approach. I'm not there yet. Okay. Fair enough. Let's say she has that conversation and then there's no real, there's no real outcome. then I think she can ratchet it up. I think I would start a little more casual. So you like my plan, you just aren't ready to push that button yet? Yeah, we're on like level two, and you were coming in hot on like medium high. That's fair. And listen, I can now say, I understand that, but you know what I was truly coming at it from?

1:00:29If it's your daughter. If it's my daughter, and she's having this conversation, she says, Dad, what would you do? I went, Dad. I pushed the Dad button, everybody. Jade, thank you for pulling me off of it a little bit. If it was my daughter, I'd be like, let me go talk to her. Oh, okay. Hello. You just took me and said, hold my beer and I'm going to kick the door down. All right. All right. Very good. But you get my point. Yes, I do. I would say this. I think you said it well. And I want to park it here. Okay. Can we park it? Yeah, that's a good point. Because here's why. You nailed it on the things that cause marriages to splinter.

1:01:08and unfortunately break you you gave a whole list kids faith politics money yeah and excuse me and to that point we have a lot of new people that are joining this program all the time yes i'm i'm parking it here because i think it's important that we share with people why this actually happens there are deep-seated habits that come from beliefs the environment on all of those issues You can pick any of this. We're only talking money right now. Yeah, yeah, yeah. But when you have two completely different value sets, and you mentioned love goggles, let's just talk about money goggles. Okay. If the two sets of goggles and the way you see money are so different, it literally can cause chaos in your relationship, true or false.

1:01:59Is that too strong of a statement? No, I think that's exactly right. How does it cause chaos? Well, you know, think about it. One is, let's filter it through the question. She is a person obviously a little bit more frugal. She sounds like she's debt averse. She sounds like she understands the value of keeping your income every month. And that might be because all of that belief is because of how she's experienced the world up until this point. And then he's the opposite. I'm not saying he's a bad guy. I'm just saying that his beliefs are based on how he's experienced the world up until this point.

1:02:31And when you want somebody to change what they believe based on how they've experienced the world. That is a hard fought fight. Yeah. It's their default mode. It's their default mode. So it's not just as simple as, well, change. Well, I got to go back in and I got to figure out how do I feel about this? And what does that mean about me? Because I've always operated like this because of this. So it's not just a surface level request. Hey, I don't want to use debt anymore. Oh, okay, no problem. Like it's, it's never that these are. And that's why I say when it comes to these money issues, we do say can, sometimes it might sound a little bit flippant, get on the same page with your money.

1:03:13And the point is it's not a light switch that you just flip up or flip down one day. It's a journey. I agree. And I would say on all of those issues, I think all those issues should come up in premarital counseling. Can I just put that out there? But I certainly believe money ought to just press pause. Don't get married until you get on the same page with this stuff. I think you're going to save yourself a ton of stress and everything else. My goodness, it's that important. So just a little relationship thing. We talk about this. Relationships and money, folks, you just cannot untie those. They are tied together whether you like it or not.

1:03:46So really good stuff. All right. Quick break. Don't move. More calls. They're all lined up, folks. We're going to get to them. This is The Ramsey Show.

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1:05:06Welcome back to the Ramsey Show. Alongside Jade Warshaw, I'm Ken Coleman. 888-825-5225 is the phone number. It's time for our question of the day. It comes to you by and from our good friends, Why Refi? Why Refi refinances defaulted private student loans and builds a custom loan based on your ability to pay. You'll have a payment that you can afford with a low fixed interest rate you can't get anywhere else. So this will help you stick to your budget and work your debt snowball. Go to YReFi.com today slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey may not be available in all states.

1:05:51All righty then. You have to turn your microphone on. Yeah, that's how that works. You do. Okay. Today's question comes from Tyrone in New Jersey. He says, I work for a small company with less than 20 employees. Recently, I discovered that while my employer has been taking deductions from my check for my 401k, they have been holding the money and making a few small deposits into my account throughout the year. And then one larger deposit at the end of the year. Huh. I confronted my employer and their only response was that they were sorry. does this sound legal or unethical and is it time to seek new employment yeesh that does not sound right it does not sound right at all smells very fishy uh yeah because you're missing out on time in the market if they are not investing the money into the funds that you chose this needs to be dealt with instantly instantly like sitting down with lots of leaders going hey look i'm immediately I got questions.

1:06:47Don't go in accusing, but a lot of questions and good questions. Good questions. Why has this been happening? Yeah. You said sorry. That implies a mistake. Has it been remedied? What are you going to do about all the back stuff? There's a lot of things. I need to know tone because I'm having a strong tone. I'm going to say serious tone. A serious tone. Yeah, I'm not messing around tone. Oh, yeah. Very serious. Yeah. I like that you asked this, so I want to set this up well. Okay. The questions themselves take care of the tone. In other words, you don't have to be accusatory, angry, a really pointed, specific line of questioning.

1:07:31Uh-huh, uh-huh. Pre-thought out, maybe right there in front of you on your lap. Yes. Or on your phone. And in the moment, you're serious. Serious face. We're not joyful about this. No. No smiles. No amiableness. It is seriousness But I think the questions asked properly Make it very serious They go, this is a person who did their homework This is a person who has follow-ups There is a line of questioning They feel as though they are on a witness stand And that's how it should be You don't have to be ugly and accusatory Because you're hoping to get to the bottom of this And get an actual solution But by doing this, you're going to find out really quick If this is a fishy situation Or if this is a fixable situation That would be my take.

1:08:16I like that. I love a furrowed brow, but a nod yes. Yeah. That way I'm... First question, how did this happen? Yeah. Oh, okay. And stop talking. Yes. How did this happen? That's a serious question. Then the follow-up is, has it been fixed? Will this ever happen again? Mm-hmm. What happens to the money that I earned that should have been put... That's the real question. These questions are going to imply a whole lot of seriousness. That would be my posture. Spoken from a guy, by the way, who's not done it well. All right? I mean, because I get it. I get how the heat should be pretty hot under the hood there.

1:08:58It should be steaming. But can we keep that in and can we ask the questions that way? That helps us hopefully get some real responses. I hope so. Yeah, this needs to be dealt with quickly. Would you seek, I almost might seek an employment lawyer on this. Not lock up a lot of time, but maybe a consultation. I don't think I, I mean, don't get me wrong. This is not the type of thing that would ever happen here. But let's just pretend I looked at my investments and said, wait a minute, like my thing didn't go in there. I mean, I would go to my leader or, you know, who's over HR or whatever and say, hey, here's what I discovered.

1:09:34I would not be lawyering at this point. I'd be doing what you're doing, which is asking serious questions. This is the thing, though, they've already apologized. That's true. We have an admission of guilt here. At this point, then I'd wait for the next round. And if I see it again, because my thing is if I see it again, then yeah. I'm sorry. I should have done a better job asking you. If you know you've got to go have this conversation with the leader, which they do, I might consult an employment leader. Yeah, I probably would at that point. So I know what should be. mm-hmm that's this is you know what i mean this is very gives me a look they they listen i don't want to say do anybody wrong but they took a loan it smells over there that was a loan i get it let's go to denver colorado next where david awaits david how can we help hi i'm starting to work the well i'm working baby step two and i have been using a credit card for all of my like day-to-day purchases and I pay that credit card off every month, but I'm looking to stop using it.

1:10:37And I'm just a little hesitant to like start carrying a balance so that I have like the money to just use the debit card for other things. And then like have to carry that as I pay that one off too, instead of just like paying it off. And so I'm not sure, like, is it something where I should like wait a month or two and save up the extra money? Or should I just go and carry the balance and pay it off as quickly as possible. So, okay, let me filter it through the baby steps. So when you're paying off debt using the debt snowball method, what we say to do is you pay minimum payments on everything so that you're satisfying whatever your debts are for that month.

1:11:17You're paying, you know, you're doing the things on your budget that are necessary for that month, whatever they may be. I mean, everybody pays their rent or mortgage, you pay your groceries, you pay your minimums on your debt, and then the extra money after that goes to paying off your smallest debt. So you do need to satisfy with your own cash, the things that the month requires and which for you, that's going to feel some type of way because you're used to doing that with your credit card. So essentially you're used to taking all of your income and throwing it to your credit card to paying it off.

1:11:45And this month, you're going to go, no, I'm going to take my income and I'm going to use it on my life. And what the margin is I'm going to use to pay off that credit card. And what you're going to discover there when you do that is what has been true all along, which is that money was debt and you were borrowing it and now you owe it and have to pay it back that's what that's going to feel like you're going to you're going to actually feel that you've been in debt this whole time does that make sense yeah yeah listen I'm proud of you I'm glad that you're see you've seen the light you've had that moment what caused you to to go you know I don't want to do this anymore um it just like it's a little hard to plan like when year.

1:12:29The bill is finished on the 20th of the month, but you don't pay for it until the 15th of the next. And so it seems a lot more simple to manage the other way. Well, listen, I want you to have every dollar. That's going to be a great way for you to make this transition into using your own money. And let me just say, and Ken, I know you can speak to this. When you have been a person who you've let credit cards run their scam on you, which what credit cards do is they say, hey, we'll make your life easier for you. Easy in the word in quotes. But what it's really does is it steals your confidence to handle your own money.

1:13:09That's what it does because you have this crutch that you've been relying on that's always there. It's debt, but you don't feel like it's debt. And then the moment you remove it, suddenly most of us are like, oh my gosh, I don't even know what to do with my own income. It feels exposing. and so that you're going to feel that for a moment and then you're going to go oh wait i actually make money and i i work hard for my money and i should have the dignity of managing it and spending it in and of my control

1:13:42okay there you go that's it and what will change is i was waiting for him to respond because you know the the emotion there he's looking his wounds he really is but you know i love that he told you why the call? Why the change? The stress of living off of that credit card way that a lot of people do that. Well, I'm going to use it for this and then pay it off. And for him, he's not wired for that. And I'm just thinking about how light he's going to feel. When he just starts to do it this way, the way you've told him, and then he goes, okay, now I am in full control. I don't have that angst. And you're not behind a month.

1:14:15When you do that, you're always behind a month. And so what That's the feeling. You put everything on your American Express. And then what happens if you lose your job? Now you just owe the money, but you didn't get your paycheck. Yeah. So there's method to the madness, people. Good stuff. Thanks for the call, David. It's going to work. Take a deep breath, maybe three or four, and it's going to be great. All right. Don't move. Quick break. More of your calls coming up. She's Jade Warshaw. I'm Ken Coleman. You're listening to The Ramsey Show.

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1:16:17Welcome back to the Ramsey Show. I'm Ken Coleman. Jade Warshaw is in studio with me. 888-825-5225. Thrilled to have you with us. We're here to coach you up. Let's go to Brandon in Minneapolis, Minnesota. Brandon, how can we help today? So I just enrolled in an HSA this year and I'm wondering if it makes sense. I had a couple of a couple hospital visits pop up this year and I'm anticipating the same thing next year so even with the compounding interest I'm spending thousands of dollars each year does it make sense to still hold on to the HSA well it depends I mean when you do know that you're going to have qualified medical expenses it could make sense to pay for them through the HSA and in that way you're not you're not taxed on that money um so that could make sense for you so you're thinking about it more um through the lens of your actual health purchases you're not thinking about it as an investment vehicle which a lot of our callers do correct well no i am looking at it as an investment vehicle i'd like to have it you know in retirement oh okay well in that case An HSA is a great idea if you know that you don't go to the doctor much, if you're willing to have that higher deductible because maybe you know that you're not going to meet it, that could be great for you.

1:17:44And then, of course, if you're thinking about it as a retirement vehicle, that's great, but it would not be my first choice. It would be what I would do maybe tertiary to a 401k or a Roth IRA, and then I'd go in and do an HSA. have you already maxed out those other options i have not okay so yeah i've been paying for everything out of pocket so far okay so if we're looking at it through the the lens of strictly investing yeah i'm starting with a 401k if i have it through my work you know start with that if there's no match you start with a roth ira first now for the use of hey i want to filter or some of my actual health expenses through this, then yeah, you could fund it up to the point of, yeah, I know that I'm going to spend, I don't know,$3 ,000 on healthcare this year.

1:18:35So I'm going to put that in there and then I'm going to use that HSA to then pay for those expenses. You could 100 % do that, but I would not overfund it to the point of investing. Does that make sense? yeah okay it's set up weird where I have to have two thousand dollars in the regular HSA and then everything above and beyond I can invest yes and if you if you know hey at this point the two thousand dollars that are in there I'm actually going to use that on health care care costs this year and this is a great funnel for it yeah I'm all for that but as far as you over funding it to the point that you can then invest the rest i would not do that until i've overfunded my 401k and roth ira make sense yeah and i'm you know giving the max uh up to the match for the 401k and i'm uh slated to max out the uh roth ira okay great good for you yeah and if you do all three of those you are what's known as winning at life that's amazing yeah congratulations thanks for the call Yeah, good call.

1:19:39By the way, speaking of winning at life, you dropped tertiary out there. I want to just give a little shout-out to that. It's a great word. Tertiary? Yeah, yeah. That's a word, by the way. You figure out how to use that right, drop that in a sentence this week, you get a good brand at work. Okay. So there you go. Just call that out. Thanks for the call, Ken. I was impressed. Tertiary. I appreciate that. Yeah, very nice. Word of the day. Connor's up next in Boston. Connor, how can we help? Hi, Ken. Hi, Jade. Love you guys. Thanks so much for taking my call. You bet. What's going on? All right. So my wife and I just got married.

1:20:11We're in the process of combining our finances and I basically have a retirement question. My question is, should we convert the money that we have in our traditional 401ks into Roth or should we just from this point forward, put money into the Roth 401k option? Okay. What baby step are you in? We're in baby step 3B. We're currently renting and we're going to be renting for the next couple of years because we're not going to be in the city that we're in long term. Yeah. I mean, how much do you have? Can I ask you how much do you have in your 401k? Yeah. So across my wife and my accounts, we have about 220 ,000 in there.

1:20:53Our household income is about the same. Okay, good. Very good. Typically we would wait until baby step six to make a rollover like that because the truth is you're going to be on the hook for some taxes associated with that, obviously. And with the goals that you have up until this point, in this case, it's saving for a down payment. It could really eat into that goal that you have. So for this matter, you may, you know, yeah, from this point on, I would do Roth style. That's what I would invest in. But I probably would wait to roll it over until you're ready to fit the tax bill and that it's not going to put a dent in your other very important goals.

1:21:33So yeah, you could wait till baby steps to do that okay great thank you very much absolutely love that call they're they're rocking yeah love hearing that uh spokane washington uh near your birthplace isn't that right the city where hey before we go to spokane okay let me go back to that because somebody might be like why do they want to do that what's the purpose okay uh so their their 401k that they have now they have not paid taxes on that money right and what they're trying to set themselves up for is a situation that when they get into retirement, they can pull money and not have to pay taxes on it.

1:22:09So if you do a Roth account, you're paying the taxes upfront so that when you're 59 and a half and older, you can pull money from that and you're not taxed on it. So most people would like to carry that burden now instead of waiting for later. So that's the purpose of that. And whenever you attempt to move that money that you have not yet paid taxes on it, well, then you will have to pay taxes on it. Okay. Yeah. No, good, good explanation. I'm glad you did that. All right, Randy's up in Spokane, Washington. Randy, how can we help? Hi, Ken. Hey, I was recently let go in my mid-50s from an executive position making more than 200 grand a year.

1:22:45And since I'm completely debt-free, everything, and I have a pretty good nest egg set aside investment-wise, I'm thinking about making a career change. But But to start out, I'd be making maybe$50 a year the first couple of years. Later on, it goes up. But it's something that gets me out of the corporate stress and the hassle. I don't have to move. It's right down the road from my house that's completely paid for. Does that sound weird? No, it doesn't sound weird given what you just experienced. I mean, when you lose a job like that, that is a real shot. We know from psychology studies that it's the equivalent of losing a loved one.

1:23:33So, number one, I'm sorry that happened to you. Number two, it's not weird for you to be thinking through this. My first question comes down to the transition phase. So financially, can you make ends meet making this pivot to the$50 ,000 a year deal? And then how long would you have to live in that situation? Yeah, so I'm cash flowing it all out. And I have access to about a quarter million dollars in cash outside my 401k investments, Roth, all that. And so my thought is that while I learned this new career path, maybe I paid myself three grand a month out of that month of cash that I have. And we just went a little bit more quickly than what we were doing before.

1:24:31Right. So that's$36 ,000. Jayden and I are keeping track of the money. So would that then get you to a place where we've got margin if you used$36 ,000 of the$250 ,000 that you got set aside? That's what my spreadsheets tell me. Okay. Now, I'm just curious, what is this new path? Being a surveyor, a licensed surveyor. Okay. And so how much is it? Excuse me. Is that a government job? Is that like a county level, state level? Or is it private? No, it's actually a little private company that they have their own little firm, and they run a little business. All right, so$50 ,000 a year for how long before it goes up, and then what does it go up to?

1:25:17Probably the first couple years, and then as you get more experience and you're running your own jobs and everything, it gets into$70 ,000,$80 ,000 a year. Yeah. At that point, it's just me and my wife. and you've got in your investment situation you started off the call saying your investment situation is good uh in this situation i'm okay with this i just wouldn't limit myself just to the to the 50 000 i'd be doing some other stuff in the meantime because i really don't want to use any of that 250 i've set aside that would be my advice if you love it uh and you can make that change then i'm okay with it it's not my favorite idea but not a bad idea this is the ramsey show

1:26:10welcome back to the ramsey show in the fair winds credit union studios alongside jade warshaw i'm ken coleman and we're going to go to matt who's joining us now in fort worth texas Matt, how can we help today? Yes, sir. So as of this past Monday, I had a truck that I've been paying on for about two years. I had an auto loan for about$30 ,000 on it. I owe about$23 ,000 on it, and the motor blew up. It's unfortunately just a bad design from General Motors. They've had issues with this vehicle or these motors. for a substantial amount of years at this point, and I am now falling victim to bad design, it would be about$15 ,000 to have the motor replaced.

1:27:05And I'm trying to decide what's my best option for it before I try to go trade it in and then be upside down on it. You owe$23 ,000? Yes, sir. uh if you get the motor fix if we could snap our fingers and it was just fixed today and it was paid off is this a truck you'd be happy to drive for a while and could you uh oh the truck's in great condition um other than that um if the motor were to be fixed um there is a company that sells a motor that has the system that caused it to have this issue in the first place, deleted, and that's the option that I went and got quoted from when I talked to the shop.

1:27:48Do you have the$15 ,000 in cash? I do not. What do you have in cash? I don't have much. My girlfriend just finished school, and I was basically the primary provider for about a year and a half with us. Whoa, whoa, whoa, whoa, whoa, whoa, whoa. How old are you? about 30 years old. You're 30. Okay. Compliment to you. You sounded much older. You did. You did. Why are you the primary provider for your girlfriend? You guys aren't married. Is she 32? No. She's a little bit younger than me. How old is she? She is 27. You really don't know how old she is? You had to think about that? That's kind of funny to me.

1:28:34That's a different issue. That's a whole other deal. Okay. Different show. Different show. But I'm going to go ahead and tell you, You probably need to be on top of that one. Okay, so you need to come up with$15 ,000. What do you make? I work in public safety. So last year I made about$70 ,000. I'm probably on track for about the same this year. And if you weren't helping provide for your girlfriend, it's just you, right? Just rent, or do you own a home? I mean, what's the situation there? No, it would just be rent and my normal expenses. And I'm sorry for following up on this. Is she able to support herself now?

1:29:19Yes, she's working full-time again. She just started with the school year. She works as an American Sign Language interpreter, and she started interpreting with her school. Yeah. All right, Jade, I don't know where you're at on this, but there's a part of me that goes, because he's already upset Dallin this, the trade-in option to me is just foolish. you're just not going to get anything at all. I'd rather see him working two, three, four jobs and come up with 15 grand to get that truck fixed. And then you've got to swallow the pill and pay it off. But if the truck's in good shape other than this defect, and again, I'm giving you the answer on what I would do.

1:30:01Well, yeah, I mean, if you roll out the numbers, if we looked it up and said, what could you get for this with the bad engine? I mean, what is it? What would be your estimate? Do you have any idea? Yeah, I've been shopping around with a couple different dealerships. I reached out to GM recently because, or I'm sorry, GMC, because they have the highest rebates and stuff right now. And what would they say? GM would give me$9 ,000. Okay. GMC would give me$9 ,000. I mean, because if you think about it like that, and then you add what you would have to kick in to cover the upside down, plus to get another vehicle do you see what i'm saying you're still shelling out fifteen thousand dollars so that's kind of the numbers on it i i can't see why you wouldn't just at this point i hate it but yeah i don't think the numbers are good for you either way so it's do you want to keep the car and pay the fifteen thousand or do you want to get out of the car and get another beater which i don't think you do i think you'd rather drive the more the nicer car of the two if you can just get the money.

1:31:08I've tried that. You can't go into debt for this. I'll tell you that. Like if you end up, if you can't find the money and you end up having to go the other route of, you know. Okay. Because here's the thing. If you do a personal loan to get from upside down, your numbers are going down. And I can advocate for that, right? I can advocate for you getting out of debt and then having to get a beater car and taking out a personal loan to do that, right? What I can't advocate for is you taking out a personal loan to keep a$23 ,000 car that you were already in debt for. Does that make sense? So if you can't come up with the money, you might be going down in value.

1:31:53But I'm sitting next to a person who, with her husband, they had one car for how many years? A decade. So where there's a will, there's a way. And what I'm saying is figure out a way to get where you need to get. And I think you can come up with$15 ,000 pretty quick, a single guy who's able-bodied. Now you might have to stop taking care of your girlfriend. Oh, that's done. I'm already assuming because she's just your girlfriend. She's a grown woman. You got problems. So taking care of her problems isn't your problem. You can't. You can't. In fact, you guys have been playing house for apparently a long time anyway, so no date nights, no nothing.

1:32:39You've got to come up with$15 ,000 stat.

1:32:44Did we lose you? No, I'm still here. Yeah, it's a bitter pill to swallow. It is. But I just think the way Jade broke it down is great. And again, we're always trying to answer things like, what would we do if you were in your shoes? If you can get the money without debt, yes, keep the cards. To your point, it's going to be a great car when you get it fixed, but you can't do debt. I can't let you take out$15 ,000 of debt and put it with a$23 ,000 debt. I can't let you do that. And you should say that to yourself too. And go back and listen to this call, right? Don't come off this call and go, oh, I can't get$50 ,000.

1:33:21I'm just going to marinate on it because when you do, you're going to see, oh man, The last thing I want to do is go from being$23 ,000 in debt to being$45 ,000 in debt. That would be terrible. I agree completely. Are you stunned? Yeah, I've tried going that route. I just haven't been able to find a place to be able to do that. I initially did attempt to contact my bank to try for a personal loan because other than the faulty design I don't have an issue with the truck I enjoy the truck I've been driving the truck for two years and it's been great so then what do you think your option is because you're either you're either not getting the car fixed or you listen your other option is take the time however long it takes you to save up the 15 ,000 and in the meantime you're taking the bus and you're riding your bike and you're getting ubers and you're calling up leroy to hit you up for a ride like that's that's your option that's what i that's what i think you gotta do yeah i don't think he likes that option i'm not even sure he heard that i went through that painstakingly i think it went in one ear and out the other listen it's not fun that's why it's not fun

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1:36:30It's a game changer. The average person finds thousands of dollars in margin in the first 15 minutes. It stays with you. You are with it. It is the perfect partner. Start every dollar for free today. Get it in the App Store or Google Play. It will absolutely be a game changer for you. Ashley is up next in Indianapolis. Ashley, how can we help? Hi. So I'm a realtor. My commission actually goes through an LLC we just set up. But I have a savings account where I've been putting my salary in, but it's been really sloppy this past year, so I really wanted to kind of get clear. We're on baby step two.

1:37:10So how should I be using that salary account? Should I put in six months and dwindle it down and replenish it every quarter? Or should I have a full year's salary in there before I started attacking the debt? Oh, I see. Okay, so are you the only, is it just you or you said you're married, right? I am married, yeah. Okay, does your husband work? He does. Okay, what do you bring in a year and what does he bring in per year? So this year I'm bringing in$130 ,000 and he's bringing in$40 ,000. Okay. So what does it cost on annual basis? And we can look at this monthly. Let's look at it monthly. What does it cost on a monthly basis to make your household run?

1:37:56$4 ,000. $4 ,000. Okay. So what I would be doing is, since you know that, it sounds like whenever you get a big lump sum of money, you're throwing it in savings and you're just kind of filtering in your portion of whatever makes the household run every single month. Is that right? Sort of. So all of my commission goes into the LLC checking account. And then I put in what I know I need to get paid for the next couple of months, which is$2 ,000 a month. And that goes into our personal account. Okay. And then you're trying to understand, okay, with the rest of it, can I go ahead and start paying off debt or how much do I need to keep aside?

1:38:35Correct. Yeah. Like I should do like six months and then replenish it. Well, how about we come at it? What if we come at it a different way? How about you tell us how much you have in savings or excuse me, in the LLC account right now? Right now we've got$13 ,000 in total. Okay. And how much debt do you have and list it out for Jade's smallest to largest? Cool. So smallest to largest, we've got five in school loans, seven in a motorcycle, 21 in car, and then 22 in credit cards. Okay. A few more questions about that. What's that motorcycle worth if you or he were to sell that today? Oh, he rides it an awful lot.

1:39:21So I don't know. It might be worth five. Okay. You notice I said if. I get it. And it's such a small amount. You guys could knock that out so we don't have to get rid of it. Okay, so Jade, you've got a picture of the debt right now. What do you have in the pipeline as far as home sales? So I have two that are pending past their contingencies. That'll be about$13 ,000 in the next 30 days. And then I also have five active listings. So we're looking at maybe 20 more thousand. Okay. Okay. That gives you a better picture. Yeah. You've got 13 coming and then maybe another 20 ,000 in active listings.

1:40:07And there's already 13 there. I probably, if your husband made a little bit more money, I might pull this number back. But if I were you, I'd want like two months there. Does that feel right? two months in the account to know that I'll be okay. Yeah. So instead of 13, you said 2 ,000 a month is what you pay yourself. So she's saying 4 ,000. Four or five. Okay, let's say five, and that gives you eight to put towards debt. That's what she's throwing out. Does that feel like, and then on a regular occurrence, that five, if it goes down, you're always replenishing it to where it's always five? You're paying yourself your monthly amount, plus there's always five in the contingency account.

1:40:49Does that feel good? Okay, so more like an emergency account. Yeah, but I don't want it to be confused with your emergency fund. Because this really just is, it's kind of like if you have any other sole proprietor, you just want to make sure, hey, there's money coming in. I understand my income is very fluctuated. We would call this retained earnings in Entree Leadership land, right? And so, but what we're also trying to do right now is we're trying to coach you up on what you can do with the 13 that's in there right now and make some headway. You've got a$5 ,000 student loan that you could knock out immediately.

1:41:25Done. And how much money would that free up in payment? Oh, 50 bucks. Okay. It's still 50 bucks. 50 bucks is 50 bucks. Yeah. Which is great. And then the next month, my goal would be to knock out this motorcycle. Yeah. Okay. That's 12 grand over two months. Can I be honest? I'd sell the motorcycle. Well, I was going that direction. I'd take$2 ,000 so that you're not upside down and I'd sell it. That's what I would do. But you said he rides it a lot. That's the only reason I – you know what I'd do? I'd challenge him. Yeah, I'd challenge him to go get a side hustle. What does he do, by the way, for$40 ,000 a year?

1:42:03So we actually live in Anderson, which is like a smaller market, but he is in training to become an electrician. So he is going to skyrocket. He's going to crush it. Okay, you know what? He can keep it. That's where I'm at. Yes. Joy, I mean, excuse me, Ashley. Sorry, sorry, sorry. Ashley, I think he keeps it, and you guys go all in on this and knock this out, but I knocked the student loan out today. I'd cut a check for$5 ,000 as soon as I got off the phone. Yeah, that's going to feel great. It's going to leave eight in there, Jade, and it's going to feel real good. Like, that's a massive momentum.

1:42:38Yeah, and then put the other three on the motorcycle. That cuts that in half, essentially. And then the next month, so that means in December, the whole bike will be paid off. and now you guys will be setting yourself up to work on the credit card debt. Now is it one credit card for$22 ,000, or is it littler ones? No, there's two. Two. They're basically split in half. Okay, great. So, yeah, I would work on right after that. Yeah, now you've got one$11 ,000 card and the next$11 ,000 card. You guys are going to go so fast like this. I love it. I love it. What's your anticipated timeline for him to start making the money as an electrician?

1:43:16I think he's due for a raise in six months, but about a year is when we'll actually know for sure when he'll get in there. I think you guys, if you really get after it, you're going to be a long way down the line here on paying off this debt by the time he comes into some really nice money. I think you're going to be done by the end of the year. Because I think you're killing it on real estate. I'm picking myself for not having it done now. That's all right. It takes a minute to get the bearings on this. Listen, we're not playing armchair quarterback and looking in the back and looking in the past.

1:43:48Ashley, you guys are a great young couple. This debt is very manageable. I'm so proud of you. The thing that made me smile, by the way, Ashley, is when you told me what was in your pipeline. You know? Great. Five houses sitting out there. Let's see if we can stack two or three more on top of that. That's a beautiful situation for you. And if he starts side hustling, yeah, mark my words, in 12 months you're going to be out of debt. he's going to be, you know, increasing his income greatly. You guys are going to be, it's going to be looking good for you. Right. Well, thank you guys so much. Yeah, you're in great shape.

1:44:22Head up, right? Super excited. We're going to put you on the spot before we let you go. What are the chances, Ashley, that you cut a$5 ,000 check today to pay off that student loan? Hmm, 102 %? Whoa! How about that? That's what I'm talking about. That's like a nice birdie puck clap right there. I think that's fantastic. I love that. You know what I love about her? I love when people get it, yeah. She said 102%. That means it's happening, Ken. I think she's cutting the check right now. That is. That's great. Boy, that feels good, doesn't it? Describe for people from a person who, with your husband, you paid off half a million.

1:45:00What is it going to feel like to her? Describe the feeling for somebody who's yet to do it. Oh, boy. Describe it. It's like nothing else because it never comes back. It's a stress that never has the ability to come back in your life again. It's wonderful. Deleted. From the deleted files. Yes. Evaporated. Men in black. you

1:45:34everywhere you turn right now you're being told a lie about money that you can't get ahead that you can't survive without debt and those lies are keeping you broke don't buy into it yes there's a lot of noise and chaos and confusion out there, but there's also hope. The truth is you have more control than you think. This year, it's time to take back your hard-earned money and your life, and it starts by joining our free live stream. On January 8th, me and Jade Warshaw will show you how to go from chaos to clarity with your money. Help you break free from debt and change your family tree, all by using the all-new EveryDollar app.

1:46:14Plus, 10 people who sign up will win$2 ,000 cash. Don't let this be another year of I can't. Sign up for free at everydollar.com slash live stream.

1:46:38The Ramsey show rolls along from our Nashville area-based headquarters. Thrilled that you are with us. I'm Ken Coleman and Jade Warshaw is alongside. The phone number is 888-825-5225. Let's go to Chris in Sacramento, California. Chris, how can we help today? Hi, guys. I just want to say thank you for hearing me out. I'm 27, and I'm getting married within a week. And I have a debt, no debt, sorry, but 65 % of my income is going to my house. And we're drowning about negative 20 % per month on our utilities and groceries. And we've cut back. And I'm debating on whether I sell my home, rent my home.

1:47:23I have an opportunity out of the area for a job that I would be able to live rent free and just trying to figure out life. Wow. Well, what we know to be true is the 65 percent mortgage can't continue. So we know that's true, right? Right. So that kind of takes the weight off of our shoulders to know, OK, we can't stay here. and then the question is what do we do next because you said you've got an now we can start to say okay do we want to do the opportunity that's outside of the area what does it look like I think you mentioned renting this house and so now let's talk about those other options so is it fair to say that we both agree you can't stay in this house yes okay so now let's talk about what do we do with the house if I were you I'd sell it I'd gross about 150 ,000 and probably net after real estate fees about 135.

1:48:21I like that. What's wrong with that? Nothing. It's more, it's just my first home. I just put a hundred thousand dollars into it the last two years. And you know, I was envisioning having my kids here. Yeah. So there's just the emotional connection to it. Um, how long did you have the property? Two and a half years. I put about$150 ,000 down on the house when I bought it. And I had a really good management position at a restaurant before. And that's where I'm going to now for the new opportunity. I tried to start my own business and it didn't work out exactly how I hoped. But I'm recuperating my losses and I'm just trying to get back on my feet.

1:49:02I'm currently serving at a restaurant right now and I've been getting by with that. and me and my fiancee, our net income together is just a wrap. We're not making it. You're in Sacramento. Why are you guys staying in Sacramento for jobs that sound like you could do them really in any part of the country? Well, and that's why we're moving. It's just more of a do we rent the home and make a profit per month about$100,$200, or do we sell the home, put the entire, you know, net into a money market account? Yes. And make about$400 a month on money market. Let's do the latter. Let's do the latter because if you have the opportunity to rent somewhere out of the area and they're covering the rent, then this is an opportunity for you to start over.

1:49:50Let that money grow, that equity that you're going to get out of the sale of this home. Let it grow over time because the time is going to come when you want to buy again. I did have a math question on this because I thought I heard you say, that you put 150 down on the home. And then I also thought I heard you say that you put 100 into it. Is that right? So you put 250 into this home, but you're only coming out with 135. What happened there? Bad contractor. I got really jacked up by that. I lost probably about$50 ,000. Maybe more. Yeah. And I mean, I'm not a contractor guy. I was doing my job and I ended up going underneath the house and I just saw problems and I saw problems.

1:50:33Long story short, it cost me a lot more. And I was paying the mortgage at the same time as I wasn't living in it. So I was, you know, unfortunately paying double away. Yeah. So it just really drained this down. And then I just paid off all my credit card debt. Um, I had about$17 ,000 in debt. We're completely debt free. That's excellent. Yeah. So there's, there's some silver linings here. I think the hardest part is you had a vision for this house you got taken for a ride and that sucks and now as a result you know it's not going to be the house that you raise your family in but i love that you have other opportunities and i mean you can kins here on the on the career side of this to to weigh that out i take advantage of that while you're on the line yeah well chris if i heard you right you've got a really good manager gig you're heading into so you feel good about this yes i'm super calm it's a nice restaurant and uh south lake tahoe it's it's to the ninth it's like my dream job so fantastic and did you say south lake tahoe yes oh man that's that ain't a bad place to work okay come on chris and i'd be going for but yeah i it just it all makes financial set yep and it's just yeah i just i have with my business i've kind of had some regrets on that and i don't want to have my cart in front of the horse and i love it you're asking the right questions jade gave you great advice you do not want to be a landlord from long distance this is time to move on it's a clean start and and i think it's great for you you're going into your dream job in one of the nicest places in the united states to live and uh and you're going to get free of this house which has just been nothing more than a money pit for you unfortunately so yeah sell and move on my friend sell and move on i love that do you want to take another call or Can I highlight this for the people?

1:52:19Jump in. Go for it. I want to highlight this because a lot of times people are like, why does it have to, you know, we teach that the mortgage shouldn't be any more than 25%. And I know there's a lot of questions around that. And this is a really great, it's just a cautionary tale of what takes place when you don't heed that advice. Because if you really think about it, you know, if you look at your money as a whole thing, you know, 100%. I love that you've got an orange. For our listening audience, she has a little tangerine in her hand. Yeah. And if you think about it as segments, right, we got to cut it up.

1:52:51It's going into segments. And so if you think, OK, if you do, let's pretend like, yeah, I'm taking your advice. Twenty five percent. OK, now we got seventy five left. And then it's like, OK, if you're a person who values generosity, most of us do. So you give another ten percent. Now you're at thirty five. And now you say, OK, well, you've got to invest. Baby step four. I'm investing fifteen percent. Now, before you know, we're already at fifty percent of our income. And we haven't even paid our other bills yet. We haven't done childcare yet. We haven't put aside for kids college yet. We haven't, you know, done, taken a vacation.

1:53:25We haven't even done anything yet. And we're already out 50. So imagine what it would feel like if your mortgage was at 40 % or 45%. You feel that very, very, very, very quickly. So it's, it behooves you. It's a great word. You know, I like a good word. it does behoove you to think about, okay, what are my ratios here? And is this sustainable long-term? Because 65%, like you said, they're burning 20 % every single month. There ain't enough tangerine left over. There ain't enough. You got to eat the piff. By the time you do, that is fantastic. That's why I showed up today for that moment. That was good.

1:54:04Yeah, but it's a wonderful illustration. And then I want you to, while we're on this, Okay. Also why we give him the advice, don't try to stay, don't become a landlord, don't keep that house because you think, well, I'm going to make 400 bucks a month. I want you to walk through the math, the real math when people think that that's a good idea. Well, I think for him, it was more of a sunken cost fallacy. I feel like he thought, well, I put this much into this property. If I hang on to it for a while and keep dumping effort or whatever it is into it, maybe I'll get it out. And for a lot of time, for a lot of us, that's kind of what keeps us locked in to something that's just a bad break and you kind of have to just eat pith and go this this was a bad break it wasn't a good investment you know I got taken for a ride and walk away and for him going all the way from Sacramento to South Lake Tahoe and now you're going to be a long distance landlord yeah trust me when he rolls in in that moving van to South Lake Tahoe he's gonna be like I don't I'm not knocking Sacramento yeah all right but that's a difference he's gonna be like forget You want to leave all that behind.

1:55:07Yeah, you want to leave it behind. And he had a bad taste in his mouth. So I think for him to come out, he's clearing 135. It's not as much as he should. That's right. But it's still money. And it's going to sit in a high yield for however long until they're ready to buy. I agree. And when they buy, they're going to put as much down possible on a 15-year fixed rate mortgage, hopefully, that they can get paid off quickly. He's already debt free. Yeah. Yeah. And so the principle of this whole segment is, do you know what it is? You've been saying it. Don't eat pith. There it is. By the way, spell that for people.

1:55:42P-I-th. P-I-T-H. Is that right? I think. I feel like there could be a hidden letter in there. We did. We got validation. The guys in the booth. Great. Yeah. Yeah. Think about the ratios of your income. Think about each section like this clementine I hold in my hand. Oh, it's clementine. It's even better. Mandarin. Love it. that's how we're going to do this. Make sure it's the right. I feel like we went back to Sesame Street. You laid it out for us. I love it. Good stuff. All right, quick break. She's Jade Warshaw. I'm Ken Coleman. We'll be right back.

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1:57:14Welcome back to the Ramsey Show. Alongside Jade Warshaw, I'm Ken Coleman. Our scripture of the day comes from Philippians 1, verse 6. God, who began the good work within you, will continue his work until it is finally finished. Our quote from Nathan W. Morris. The speed of your success is limited only by your dedication and what you're willing to sacrifice. Well, you could put that right on top of the baby steps. You could just lay it over. Factoids. That's really good. Love it. Okay, Harrisburg, Pennsylvania is where we go to talk to you. Leo, how can we help? So I'm having a problem. I make decent money at my job, but I can't seem to save.

1:57:53It doesn't matter if I try separate accounts that aren't connected to my checking account. Mm-hmm. You know, and I just cannot seem to save money to have an emergency fund to pay off debts. What happens? You transfer it over there and then you end up just peeping back in there and sneaking the money out? Yeah. Yeah, I just keep dipping into it, whether it's for something important or just something that I want that's not important. I just can't seem to, you know, connect the dots between saving and not using it. All right, Leo. So I got a question. I'm asking this on behalf of my friend here. if we were following you around with a documentary crew for a week, what would be the top items that you're spending, the type of things you're blowing money on, you're spending the money on?

1:58:40If we're following you around, we'd go, oh, Leo, he's spending money on this. Give us a top five just off the top of your head. Oh, it's gas station, energy drinks, hunting supplies, you know, things that I don't need. Okay. That was good. That's a good list. anything else not really you know uh when i was younger it was uh before i had kids and real responsibilities it was a oh i'll make more money tomorrow and i kind of carry that over now and i can't seem to get away from that trying to out earn bad spending habits i gotta ask another follow-up leo if i'm following you all right and we're in the gas station parking lot we're zooming in on the doors and you're busting out of that thing what do you got in the arms what do you got in the old bag at the gas station.

1:59:24I'm curious. Usually it's two to three energy drinks, maybe a snack for work, and a can of tobacco. Dip, corn nuts, Mountain Dew. Right in it. Oh, man. That's disgusting. Say it's not true, Leo. Oh, it'd be so. Oh, it is. I gotta tell you, if I was on a desert island and the only thing I had was a bag of corn nuts, I'd starve. I'd starve. I really would. I'd die. they're actually delicious so let's help the man out with his budget okay so i think i heard you say you had kids is that right yes how many four okay and you're married still i'm not you're not okay we are dating we are together we live in the same house but we have not gotten married yet okay so you have a woman that you're soon to marry i'm yeah yes okay uh okay so let's talk about the money first and then we'll go back to the relationship because we're not going to speed past that like you didn't just say what you just said.

2:00:23Four kids. Okay. So first off, what you really need, I think the solution here is a good detailed budget. I always say that budgets should be three things, detailed, realistic, and flexible. And that will really help you out because I think what's happening, like you said, you're kind of spending the money before you get it. And it's like, I can out earn this. I can out earn this. And if you don't, then you end up having to pull back out that savings. So we'll make sure that you get set up with every dollar. And what I want you to do. I want you to sit down and create your budget. And I want you to be so detailed about all the things that you know you spend money on, even the energy drinks.

2:01:01If you know that's something that's part of your life right now as it sits, put it on the budget. If you know, hey, like I buy a hunting knife at least once a month, put it on the budget. Like be realistic and honest with who you are in your spending so that you can begin to see, okay, I see what's going on here, right? So that's a good place to start. And then obviously the same way that you're budgeting for all the other things, you budget for things like savings and you can actually see, do I have money to put aside in savings? Can I live the lifestyle I'm living and still have money to put aside in savings?

2:01:33Right now, it seems as though the answer is no, but when you do the budget, you're really going to get a clear picture of what's going on. So that's thing one. Thing two, I haven't even asked you about debt yet. Do you have any debt? We have two vehicles that I pay for, and I have maybe $2 ,000 of credit cards that I'm slowly working on paying off. Okay, so putting everything into perspective, right now, if you do find extra money in your budget after you've budgeted for everything, right now, the money wouldn't necessarily go towards savings. You'd save up$1 ,000 and that's it. If you can get a thousand dollars and just set it aside, tuck it aside for a rainy day, that's great.

2:02:15Everything else needs to go towards paying off this debt. Okay Okay Now Let's talk about the elephant in the room with this the relationship because i don't know why mom is not paying for her car i don't understand it i don't get it well i don't understand why mom is not married i don't go to school well i'm with you on that i'm as traditional as i get why aren't you guys just married yet and it's 100 my fault um i am i want to give her everything that i possibly can wedding wise like i want it to be the wedding of her dreams yeah and with with the money situation i am not to that point where I'm comfortable spending that money on something like that.

2:02:54I hear that. So it's me holding back. She wants, she's pushing for it, which I have no problem doing it, but I want it to be everything she wants. I don't want her to have to hold back on something because we don't have the money for it. I 100 % honor the idea that you want to give her a wonderful wedding party, but I want you guys to frame that as that's what it is. It's a celebration. It's a party. You can get married legally and don't nobody have to know, but you guys, and then you're at least protected legally. Huh? She's been looking into that through the courthouse and things like that. How about this?

2:03:26How about you guys just get married and then you can throw a celebration years from now or you can rededicate your vows and she can put on the dress. Spoiler alert, everybody is married before their wedding day. Everyone. The moment you get the document. The moment you go and sign the document. You had me there for a second. I was like, uh. So the idea that it's like, no, I want to wait until the day. I'm like, we all get married on paper a week or so before we're actually married. That's right. So it's not even like, we make it more of a thing than it is. So I think for you guys, it's like, yeah, get married on paper.

2:03:58That way you can do all the things we just talked about with your wife. Yeah. That sounds nice, doesn't it? Okay. It does. It does sound nice. Yeah. And then you guys can save up for this wonderful party. You can do all of it. How much do you think you're spending a month in energy drinks, bro? Oh, it's usually about$10 a day. Yeah. Okay. So we're going to do 30 days in a month. All right. That's$300. My guy is Ric Flair on those energy drinks. I'm telling you, man, you need to get rid of the energy drinks. That's a$300 a month raise. Do some pushups, some pull-ups. All right. Get some good night's sleep.

2:04:37You won't need an energy drink. I don't need an energy drink. I wake up with the juice, man. Okay. I'm just telling you. I drink a little bit of coffee. But that's like two cups max. That's a lot of coffee. The energy drinks, two cups? All right. Not energy drinks. Those are horrible. Yeah, those are the Tori. But I'm not getting on your health. I'm actually saying$300 a month. I wanted you to see quickly how you just changed your life. That's a big deal. That's a big raise for you. True or false? True. You can get rid of the energy drinks. Don't get me started on the tobacco. Well, I'm slowing down on that.

2:05:13I know. You got four kids. And that's why I didn't bring it up. I am trying to actually be sensitive. I get that one's harder to kick than the energy drinks. If you do this budget, I think you're going to be astonished. And especially when you share it with your new wife, since you guys are getting married this weekend, I think you're both going to be astonished. And there's something about seeing your behavior on paper written out that you go, like you clutch your pearls. you're like, I can't believe I've been spending my hard-earned money on this when I could have this. And so the, what you could have is what you and your wife, when the time comes, you need to be dreaming that up together.

2:05:50Uh, you're giving all this great financial advice. I'm trying to help him, but in a different category. You're my friend. You are Mrs. Clean Eater. Yeah. You do a great job. Thank you. Give him a healthy snack instead of the chips at the gas station. What's he taking to the office for a snack? Come on. Ken, I'm glad you asked Let me tell you what I want right now. I knew you would like it. I take a Granny Smith apple. Oh, I love a Granny Smith. Sour. Sour. I slice it up. Right? So we got slices. Then I get a little jar of peanut butter. It's not just that. We are separated at birth. I know we look like it.

2:06:25Wait, I'm getting more. Hemp seeds. So I go apple into the peanut butter into the hemp seeds. Salted caramel. I don't know if I need to be that chilled out at work. Just a little bit of salted caramel. It is so good. Is the hemp seed going to knock his intensity off? No. Hemp seeds, they're a complete protein. They're really high in protein. They're delicious. I'm learning something new every day. There it is, Leo. There's your healthy snack, man. We just saved you more money. Yeah, man. No more corn nuts. Put it in the cup holder. This is the Ramsey Show.

2:07:07We'll be right back.