Building Wealth Means Defining Needs vs. Wants

22:35Dave Ramsey:How much is in your emergency fund? So in my emergency fund, I have about$3 ,000. And then I also have a high yield savings account that has$21 ,000. And how much debt do you have? Once we pay off our student loans, we'll have zero debt. And obviously sell the house, we would have absolutely zero debt. Okay. Okay. So would you call that a fully funded, that's a fully funded emergency fund for you today? So I'd probably take the money, I'd park it in a high yield savings account. How long do you think that you're going to be in this next military assignment? Do you have any indication? Roughly two to three years.

23:19Okay.

23:19Dave Ramsey:What does she want to do with that money that's left over after her student loan is paid? So she wants to put it into a high-yield savings account because she doesn't have a job lined up just yet. And she kind of wants to use it as a rainy day fund. And I've explained to her that we kind of already have that. So she wants to increase from$21 ,000 to$38 ,000 on her rainy day fund until she gets a job. After she gets a job, what does she want to do with it? I have no idea. We've been just very frugal with our money. Right now, we save roughly 35 % of our paychecks. I told her, I mean... Where is that going?

24:06It's going in... We had it kind of broken up. Some of it is going into my personal Roth IRA. Some is going into a brokerage account. Some is going into a custodial brokerage account for my daughter, and then some is going into a high-yield savings account. Okay.

24:24Dave Ramsey:And so how much is in the brokerage account? The brokerage account has about$2 ,000. Okay. What's that for? Just as a way to, again, the stock market, kind of separate my funds, get better yields from it because my high yields right now is, I think, only getting like three and a quarter percent back. All right. So I think that you have a, I like your thoughtfulness on trying to do the best you can with this money. I actually think you're doing too much and I think you can simplify it back a little bit. You've got what I would call a fully funded emergency fund for now. The next step in the process is what we call baby step four, which is where you're investing 15 % of your gross income and you're investing it into growth stock mutual funds.

25:15Dave Ramsey:And that would be, you know, your TSP Roth C plan, and it would be your personal Roth IRAs, the two of you. And when those two get to 15%, beyond that, what I would be doing is using your brokerage account to put good mutual funds and start saving for your next house. Call it the house fund. Okay. Would you, so in my TSP, I do have part of that because the match is going traditional and I have about 40 ,000. Yeah. I have about 40 ,000 of that. That's traditional. Would you suggest using some of the house proceeds to convert that into a Roth? Cause that's kind of where. Not today. Not today. You're too young.

26:00Dave Ramsey:I mean, you'll get to that. by the time you get to it, you have a paid for house and it may be, it may be not 40 ,000. It might be 140 ,000 and you're going to pay taxes on all that when you move it over to Roth. But I wouldn't do that today. Um, yeah, you're, you spend a lot of time nerding out on all these plans and you've really got it. And you've done a great job by the way, because you're nerding out on all of it. You know, it you're, you're, you're, when we ask you what's going on, you know exactly what you're doing and I can hear why you're doing every bit of it. The only one I didn't understand was the little brokerage account and now I do.

26:35Dave Ramsey:It makes sense. So I'm going to rename that brokerage account house fund and I'm going to dump this money that we're talking about into that house fund as either now or as soon as mom gets her new job, one of the two. And then I'm just going to all overage above 15%, no more than 15 % of your income going into retirement, all overage above that from this point forward goes into that house fund and then when you do either retire from the military or you land in a location where you're going to be a while and it's an affordable housing market and you're going to be there and you make some money on it then you write a check and pay cash for a house at that point and that's what we're aiming towards there and i do that before i worry about converting the 40 000 traditional into roth because that's your match over on the TSP.

27:24Dave Ramsey:Make sure all your TSP is in the sea right now. The other stuff is sucking wind. It's just horrible. All right, Chris is with us. Chris is in Fort Worth. Hi, Chris. How are you? Hey, I'm doing well. How are you? Good. How can we help? I'm not really sure. I have a couple questions. So I have been in the corporate world, tech world, did that whole thing, and went and started selling roofs when I was like 28, 29. Been doing it. I'm 36 now. Started my own company for multiple reasons. Now that I actually know everything, I felt comfortable doing it. Went from, on average, like making about$160 ,000 to$200 ,000 a year to I think this year we could do around like$500 ,000 to$600 ,000.

28:11Way to go. Profit or gross? Thank you so much. Profit.

28:16Dave Ramsey:Wow, you're killing it. Way to go. Yeah, yeah. We're very blessed. And we actually just became obedient to the Lord with our money very seriously as soon as we started our company. And he's taking care of us. So I guess my question is this. So I let a ton of IRS debt rack up. I didn't know what I was doing. I was a 1099. All of that is about to be paid off completely. and we have about yeah it's going to be an amazing feeling my wife is an angel and kind of helped me become disciplined around money because I was extremely I'm an extremist I kind of just well you know how to sell when you try to outsell your stupidity yeah hey man I could not agree with that literally and if it wasn't for my wife I'd probably be living in an apartment proud of you thank you so So, yeah, thank you so much.

29:14So we own a home. We owe about$470 ,000 on it with a 6 % interest rate. We own two cars. One, my truck, I owe$52 ,000. Hers, we probably owe like$44 ,000. Other than that, we have zero debt. How much cash are you sitting on? $290 ,000 in investment account. $114 ,000, but that$290 ,000 was after I paid that off. So I have$114 ,000 ready to pay off. Did you say it was in an investment account, though? It's not liquid? The$290 ,000? It's about$100 ,000 of it is. The rest of it, honestly, like you said, I am actually pretty stupid. No, I didn't say that.

29:57Dave Ramsey:I said you tried to out-earn your stupidity. That's different than being stupid. I've tried that, too. It means you're good at earning money, and it gives you an excuse to not deal with details. And now, today, you've grown up and decided we're going to deal with details. I'm proud of you. So take some of that$290 and pay the KU cars off tonight, okay? Oh, really? Oh, definitely. Why did that surprise you, Chris? I don't know. I'm actually excited to hear that you told me to do that. I figured that we would do that first and then look at the house. Yep, yep. That's right. Okay. And we have a very volatile business, so we can make another$600 next year.

30:38That's why we're telling you to do that. The goal is for you to remove as much risk from this equation as possible. And by clearing out your debt.

30:44Dave Ramsey:Zero debt and a pile of cash allows you to surf volatility like it's a sport.

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32:45Dave Ramsey:Folks, if you want to work the Ramsey Plan, the baby steps like we've outlined, and know every detail, it's the fastest route between where you are and wealth. It's the fastest route between where you are and peace, financial peace, two words that don't go together, like airline service. the fastest way to do that is on a game plan and the game plan is completely outlined dialed in and walks you through giving you the same answers and the same personal coaching that we would give you here on the air and it's called every dollar it's our budgeting app that leads you through the ramsey plan so it's not just a budgeting app it's actually the plan in digital form so you want to do this it's completely free start your EveryDollar program for free.

33:32Dave Ramsey:You and your spouse both put it on your phone. Boom, we've got a plan. Boom, we're going to find some margin. Boom, we're going to get out of debt. We're going to start walking these baby steps. You can find it in the App Store or Google Play for free. It's called EveryDollar. Paula is in San Diego. Hi, Paula. How are you? Good, thanks. How are you? Better than we deserve. What's up? Okay, so my husband and I have been married for almost two years now. We have a baby. We got married in the church. All our friends and family were there, but we never filed the paperwork legally to be married, and that's for a few reasons.

34:13One is I was in a previous marriage, and my child support would be re-evaluated. and then secondly is because I was defaulting on a credit card at the time it was a whole you know mess and I really didn't want to mess up my current husband's like credit and his his chances of you know us ever buying a house or something like that. I just was wondering your thoughts I know you're all about you know getting married and we work together with money I'm just wondering what your thoughts are.

34:51Dave Ramsey:So it's been two years. Did you clean up these things? No, the judgment's still out there. At the time, like before I met my current husband, my lawyer said that I'm judgment-proof, and she said just don't even worry about it. Like don't answer if they call or anything like that. What's the balance on this credit card? Well, it was$38, I think. $3 ,800. No,$38 ,000. And then now I think it's at like they're trying to collect$45 ,000. I called and made them an offer of$15 ,000 because I got a settlement. Oh, good. And they didn't take that. So you had one conversation, and they didn't settle. Shocking.

35:31Dave Ramsey:No, you have to negotiate and argue. That's not one conversation. Oops, they didn't take it. So you're sitting on some cash to settle this with. No, my husband and I put it towards his debt. How much does he have? Well, now he's down to about$30 ,000. Okay, let's go back to your initial question. I would not wait to get married. I think that at the core of marriage, when you do marry somebody, you're taking all of them, and they're taking all of you, and that includes all the baggage that comes with you. And I think it's going to simplify all of this when you guys can get on the same page and start attacking this together instead of letting technicalities get between you.

36:12So I would go down to the courthouse and file the marriage license, sign it.

36:17Dave Ramsey:Yeah. And then let's lay out a game plan to clean this up. And so he has$30 ,000 in debt, and you have$38 ,000 worth of bad debt that you can probably settle for something. Who's that owed to, that credit card? It was Chase. Now it's at some lawyer firm. Perfect. That means somebody bought it for pennies on the dollar. Now you can settle it. Did they give you an amount? Did they say we won't settle it for$15 ,000, but we'll settle it for X amount? Did they give you another offer? Yeah,$38 ,000. Oh, okay. They're like, oh, we'll bring it down from the 45. That was all the extra. And to Dave's point, that's all crap.

36:52Dave Ramsey:So are you working outside the home? No, I've got four kids. Okay. And what does he make? He makes about$3 ,000 a month.

37:06Why? And I bring in$1 ,800 from child support.

37:09Dave Ramsey:What does he do for$3 ,000 a month in San Diego, California? you um technical support not much no it's really not do you have to stay in san diego because of the custody yeah yeah we share custody okay but we're free right now with my mom so we don't have rent so most of his paycheck is going towards his debt right now okay uh well he doesn't have a paycheck we have a paycheck and we have four kids to raise with eighteen hundred dollars and three thousand dollars in san diego california and so i want him to look at extra jobs and what you look at what you can do work from home while you're managing the four kids to increase your all's income he needs to double his income soon.

38:00Dave Ramsey:Okay. Soon. His career sucks. Okay? Yeah, I agree. And so I want him to make more money. I want you to make more money. And then you guys get on a game plan. And a good rule of thumb is you can't hide your way into wealth. you can't deceive your way into wealth and you're deceiving your ex-husband this is an attempt to not engage and get the proper amount of child support according to what the courts say um if you're raising if you're raising that many kids and they're all his kids i doubt you're going to lose eighteen hundred dollars worth child support it's not like you're getting 18 ,000, you're getting 1 ,800.

38:50Dave Ramsey:And so you can't deceive your way into wealth and you can't hide from your past enough to become wealthy. So the hack that you are attempting to pull here is really holding you back more than it's gaining you. Yeah, I agree. To Jade's point. And so if I were in your shoes, I would finish up the marriage, but I would also, as a part of that, let's figure out how we can prosper if we got no child support, how we can prosper and clear these debts.

39:22Dave Ramsey:And if you need some help negotiating next time, get in touch with one of the Ramsey coaches that's been trained by us, and they can help you with that negotiation. Because you just called up a law firm, and they thought, oh, she's got some money now. And we'll say no and see what she comes back with. and you say 15 and they say 38 and you say that's not good enough what would you do that's reasonable because 38 isn't going to get it we know you didn't pay 38 for this debt you probably paid two thousand dollars for this debt and um because that's what debt buyers do they buy it for somewhere around a nickel on the dollar two and a half to three and a half to four and a half cents on the dollar somewhere in there and so if this law firm represents a debt buyer and they probably do, that's what they've got in it.

40:08Dave Ramsey:I'm kind of surprised they didn't take the 15, but they probably smelled on you that they could beat on you a little bit more and get some more out of you. And that was obviously wrong. It didn't work. But I want you, you know, let's try to scrape together some money again and come at them with another settlement. And let's clear up your husband's debt and let's get your incomes up and let's quit hiding. You know, here's what's weird. If you reevaluate the child support, you might get more. That could happen. Your marital status does not keep you from getting child support. Child support is not based on your new husband makes money.

40:46Dave Ramsey:It's based on what the old husband makes and the number of kids he sired. That's where child support comes from. And so it doesn't, you know, reevaluating it would only be down if his income is down. and so no I wouldn't try to hide my way or hack my way around into into a prosperous life I'd be doing I'd have the opposite mindset I feel like the mindset should be how can I set up my life in such a way that I don't need to depend on this money and even if the courts rule that in a way that's not in my favor I'm still just fine I don't need the money exactly that's where you want to get And, you know, my lawyer, oh, you're paying a lawyer to fight this$38 ,000, and they didn't call and try to negotiate it to the other law firm for you?

41:34Dave Ramsey:Hmm. That's interesting. Not good. Open phones here at 888-825-5225. So basically, folks, if you have a credit card debt that is in default, and it's been in default six months, a year, 18 months, something like that, meaning you haven't paid on it in that period of time, they have no indication that you're going to pay. Citibank and all the other rip-off huge banks that have screwed you, they don't keep defaulted debt on the books. They sell it off. They give up on it. And they sell it to somebody for a nickel on the dollar. So$50 buys a$1 ,000 debt. That's what happens. And so that's what she's negotiating in, and that's what we're talking about.

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43:50Dave Ramsey:Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. Amy is with us in Raleigh. Hi, Amy. How are you? I'm good. How are you guys doing? Better than we deserve. What's up? Yeah. Yeah, so I have kind of a two-fold question. I'm just wondering if you could give me advice. I feel a little bit financially behind, so I kind of want to go through that and just see if you have any general advice. And then also, I just have a few questions on how to approach first-time home buying. Okay, we're going to have to pick one. We can't do a full counseling session. Okay, so what is the main thing you need to know today?

44:28I think that I just want to kind of give you an overview and see if you can kind of decide where areas where we could be improving. Yeah, we can do that. Tell us why you feel financially behind. Yeah. So I, my husband and I are 30. We've been married for eight years. Um, we have two kids, two and five. He actually stays home full-time with the kids. I work full-time. Um, so we're kind of working with one income and I just feel like at this point we should have more saved. Um, how much do you have saved? Yeah. So right now I have about 60 K in retirement. Um, and then And we have about$35K in a high-yield savings account.

45:04We have no debt at all.

45:06Dave Ramsey:Your home is paid for? What did you say? Your home is paid for? No, we rent. We don't own. Okay. Yeah. Okay. So we rent our home. That's probably why you feel behind is because you're renters? Yes. I would say that that's probably the number one piece, yeah. All right. I don't think you're as behind as you think and feel. You don't have any debt, which is wonderful. You've got an emergency fund. That's excellent. And you've started retiring. I'm sorry, you started funding your retirement. That's maybe step four. And so I think that's great. I think the only missing piece to your equation or of what you think is next is, okay, how do we get into a home?

45:48And it's just going a little slower than you feel like it should be going. Am I right? Right. And I mean, obviously, we've made the choice to have one income, and I wouldn't change that. I think that that has been great for our family. What is the income? So I make$155 pre-tax, and that is split between 70 % base and 30 % commission. What do you bring home every month? So we bring home after retirement health insurance about$660, so$6 ,600. Okay, and how much of that is margin? After you've done all of those things you need to do, what's the amount that you're like okay we can do whatever we want with this money yes so after we pay all of our just regular occurring expenses we have about 2 ,757 left over after all of our bills yeah that's not counting commissions though that's correct so the way that we approach it is because my commission is monthly and it's kind of volatile we just put all of that in high yield so we put that in savings and we live only off my base pay.

46:51Dave Ramsey:Yeah, okay. Okay, well, that's good. So$6 ,600 is not your real take-home pay. It can't be. Okay, it's just take-home pay on your base. Yeah, that's just the base. That's correct. Okay, so if you continue saving... $2 ,000 plus commissions are going in high yield for your down payment on your house, right? That's, yes. You're not behind. You're doing great. Yeah, if you continue saving at that rate, what do you have at the end of the year? Yeah. You got rid of it. Well, I mean, she's going to be$2 ,000,$24 ,000 a year plus commissions. and she's making 155. So she's got another three or 4 ,000 average a month.

47:24Dave Ramsey:So she's going to put $40 ,000,$50 ,000 away. So all you've got to do is look out at the housing market, look at what it is that you guys think you want and do the math backwards, work backwards and say, okay, what must be true? How much do we have to save in order for this house to be no more than 25 % of our take home on a 15 year fixed rate? And then you're running it back and say, okay, we'll be there in three years or we'll be there in two years. Yeah. You're going to be there in two. That's what it sounds like. And you stay out of debt, you have your emergency fund, and you can decide, I'm not putting more money in retirement today because I'm going to put it all on this house down payment, or I am going to put some on retirement today.

48:00Dave Ramsey:And that's going to kick the can down the road a little bit further on when we're able to buy the house. Either one of those answers is fine, but you're not behind. You're not. And more and more people are buying homes in their 40s. And I think that that just opens a bigger conversation on just comparison and making sure that you're running your race and you're not comparing everything that you do to TikTok and Instagram and the other people at work and what your friends are doing. Your race is your race to run. And you don't have any apologies to make for that. When you read out your numbers, I thought it was excellent.

48:31I thought this person is doing what they have to do. Another person is going to call in and they're going to be 30 years old and it's going to look totally different for them. But as long as you're taking the next right steps for you, you have something to feel good about. Yeah.

48:43Dave Ramsey:Where you're moving towards, you're going to own a home in the next three to five years that's a conservative good purchase. And then you'll start and continue putting 15 % of your$155 away. By the way, it's going to increase over time. And so you're going to be putting$25 ,000 away a year towards retirement, and you'll retire multimillionaires. So, no, you're not behind if you keep doing those things. Now, if you go out and buy a stupid car that you can't pay for and$1 ,200 a month car payment, and we had to have when our puppy needed a seat to sit in or some kind of bull crap that people do to buy a car, right?

49:20Dave Ramsey:Then no, no, you're going to get yourself in trouble. But you're not doing that right now. You've been very wise, very smart, and you're right on track. Cheyenne is in Fresno. Hey, Cheyenne, what's up? Hey, how's it going, you guys? Thanks for taking my call and blessing me with your advice today. Well, thank you. How can we help? so i'm newly divorced and i'm wondering if a refi with a cash out is my only option um because i need to pay off my father-in-law who was carrying our note as well as the ex-husband and my concern is that i'm going to be living paycheck to paycheck and i don't want that to be my future i have two young boys a three-year-old and a six-year-old what is owed on the house Right now with the father-in-law carrying the note, it's$123 ,000.

50:07Dave Ramsey:Plus you've got to buy your ex out for how much? $104 ,000. Oh. So$227 ,000. Yes, sir. Okay. And what do you make? $64 ,000. I just renewed my contract. And so I work at a private school. And so my salary on my new contract will pay off. Can you pay a payment on$200 ,000 making$64 ,000? So when I was doing my research, the best rate that I could find for a refi is 6%, which would be about$1 ,300, a little bit more for a mortgage for a 30-year fixed rate. So my take-home is about$3 ,700 per month. What's the house worth? $355 ,000 at our last appraisal. Okay. And what other money do you have? So I do get child support.

51:03However, because the divorce is new, I just don't want to consider.

51:09Dave Ramsey:That's okay. How much child support do you get? $1 ,700 a month. Did you get a half a million dollars in a 401K or something? Is there any other money? um we didn't touch each other's uh retirement or anything and i do have like my side hustle is i bake uh kind of do my own little cottage business so i bake decorated sugar cookies um so i try to do that as much as i can no i'm do you have any money in an account like a brokerage account or anything? Oh, I have$101 ,000 in my retirement account. I have savings. I have about$20 ,000 in emergency safety. Why don't you use the$101 ,000 to buy out your ex?

51:54I wondered that, but my tax advisor said not to. You said it's a brokerage, right?

51:59Dave Ramsey:Your tax advisor is a moron. Okay. Your tax advisor doesn't need to be advising you anything on your life. you've got kids and a father-in-law in your ear and an ex trying to figure and now you're going to go borrow money because your idiot tax advisor told you no no absolutely not

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53:57Dave Ramsey:The Ramsey Show question of the day is brought to you by Why Refi. If you've fallen behind on your private student loans and don't know where to turn, Why Refi works with borrowers, other lenders won't. And it helps explore low fixed rate refinancing options. go to yrefy.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. Might not be in all states. Okay. Today's question comes from Carmen in Virginia. She says, my husband and I are on baby step six and have a question about paying off our home. Should this still be our focus even though we are sure this isn't our forever home?

54:34Or should we be saving up more to put down along with our current equity on the right one when it comes along. Okay. So for anybody listening, baby step six is the baby step that you do in tandem with four and five. Four is you invest in your retirement. Five is you put towards kids college. And six is you put any extra money towards the house, if you were wondering. And if she told me we know exactly the house, you know, that we have our eye on, you know, it's just, we need a little bit more time. I might have a different feeling about it, but you don't even have your eye on a property. I think it's just something that's living in your mind as an option.

55:16And until then, I would put the money on the current home because...

55:20Dave Ramsey:Here's what's interesting. The way she phrases it, she feels like if she puts it on the current home, like it's like she's going to lose it or something. Yeah. If you pay down your mortgage, it increases your equity. And when you sell your house, you get a bigger check. So it's just a savings account. Your equity is a savings account. When you pay down your mortgage, you're paying, you're putting money into a house. It's just hard to cash out of. You can't just go down to the bank and take an ATM withdrawal on your savings. But, you know, it's forced savings. And the beautiful thing about paying down on your home, instead of stacking it over in a high yield savings to use as a down payment later, It doesn't accidentally buy a bass boat.

55:56Right.

55:58Dave Ramsey:That health savings account, those high yield savings accounts sometimes, oh, we went a little over on Christmas. Oh, that cruise, it just came available and I've always wanted to go and don't have the money. So I'm going to use the down payment money for the next house on that. That doesn't happen if you pay down on your house. So it's forced savings. It's trapped savings. It's not lost money. No, you do not put money in a high-yield savings account to the side for a future down payment when you already own a home with a mortgage. No, you pay down the mortgage instead every stinking time because it traps you and it makes you behave.

56:38Dave Ramsey:Protects you from your biggest problem, which is you. Protects me from my biggest problem, which is me. Jenny's in Denver. Hey, Jenny, what's up? Hi, thank you for having me today. Sure. How can we help? My husband is a mortgage loan officer, has been coming up on three years, and what he is bringing home isn't covering our bills. We have prayed about it a lot, and we were wondering what you would do in our position. He could go back to being a police officer. When he was there, he made about$118 to$120 a year. We do have a base pay from the military and a little bit from the mortgage company that he works for, but that's about$6 ,400 a month, and our bills are about$7 ,500.

57:30Dave Ramsey:What are your bills? We don't have any debt, and we have home, insurance. How much is your home mortgage? It's$2 ,300. Okay. Well, that's not$7 ,500. Where's the other$5 ,000 going? I feel like we are pouring some into his business, trying to market things. We have a couple of kids. I mean, our cars are paid for, gas, groceries, that sort of thing. So you don't know where it's going? We do have a budget. Apparently not. You can't tell me where the$5 ,000 is going. Sure. I do think that part of it is, I'm not sure. I think our gas and groceries, that's a lot of it. No, it's not. That's not$5 ,000.

58:23Dave Ramsey:Sure, I agree. Okay.

58:29Dave Ramsey:So you guys don't have a budget that the two of you have agreed to and that we stick to and that we live on every single month. You have a general idea of where you think the money's going, but right now we can't figure that out, right? Well, no. I do the every-dollar budget. I do it monthly. We both look at it. Well, get it out and tell me where the$5 ,000 went. Every week.

58:57Sure. I think we have spending money. We have things that come up like he has had trips that he's had to do for work. We tithe the 40, let's see, 2200 we get from his mortgage company, 4200 we get from past VA. mortgage is 23 we tithe about um 750 um the 10 percent we use 1600 to 2000 dollars for not just groceries but that also includes any toilet paper and things that we may use 400 for gas um um i can't think of anything else i mean i can pull it up if you if you truly want me to So my question is, okay, so you've got your home with the kids. How many kids are there? Two. Okay. And their ages?

59:5714 and nine. Okay. I think that you, I love that he's looking at ways to get his income up. I think you can do more to contribute too. That's where I see your biggest opportunity. If you told me you had littles, it would be a little tougher. Not that you couldn't do it, but it would be very tough. But with a 14 and a nine-year-old, I actually think, I mean, I know I'm not wrong that you've got some time that you can put into this and close that gap because it's not a big gap. It's a thousand dollar gap. And I think that's exactly where you fit into this equation.

1:00:27Dave Ramsey:So number one, the reason he changes careers is not because you guys can't make a budget that we don't know what it is. Um, and so, um, your$7 ,500 minimum to get by sounds very high. And so I think you guys need to look at that. So what are we spending money on? What's out of control in this household? Um, and what things are we trying to do with this money that we shouldn't be doing with this money while we're tight? Number one, number two, we could add some income from you. And then number three, if then he can't, he's not bringing in enough to support his household and he has the opportunity to change to another career, he should.

1:01:12Dave Ramsey:But there's a third option other than stay. Okay, one option is stay with the mortgage company. Option two is go back into law enforcement. A third option is do something else that makes more than the mortgage business right now. The mortgage business is tough right now. It's hard right now. So maybe he should change, but just running back. I mean, he left the law enforcement world for a reason. What reason was that? And that reason is probably reason enough not to go back to it. So, yeah, I might go to something else. But does your husband need to take a career that will support the household?

1:01:50Dave Ramsey:The answer is yes. Do you need to do some things to add to the household? The answer is yes. Do we need to look at this budget and figure out why it takes us$7 ,500 to exist? that's high okay uh when things are tight now that's you know but you act like that's a template that that's a i think it's what they were used to when he was doing i know law enforcement that's what you're used to i'm talking about why when you you know acting like we're we can't make we can't make ends meet well that doesn't make sense yeah well i can't find a little high to begin with even on the 7100 a month it was a little high so now it's really cutting into your margin in a major way.

1:02:31Yeah.

1:02:31Dave Ramsey:So, yeah. Yes, he does need to consider changing careers, but not necessarily go back to where he was, but maybe go to the third option, which is something new. Yes, you do need to consider having a career. And yes, you all need to go back over this budget together and figure out what we have called a need that is actually a want. Yeah. And figure out where in the world this money's going. I agree. Thank you.

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1:05:12Dave Ramsey:investing can be confusing and people have always asked dave what is your personal playbook how do you do real estate deals how do you choose your mutual funds and so on well uh two years ago for the first time ever, we decided to unpack that playbook. We called it Investing Essentials. It was done as a two-night virtual event with me and George Campbell talking about investing and going through my playbook and also going through several buckets of other types of investments that I don't do and why I don't do them. That's pretty cool. Well, we've only done that two times. We're getting ready to do it for the third time.

1:05:51Dave Ramsey:We're changing some of the content if you've watched the other ones. And now we're going to add some stuff on will planning, estate planning, reducing taxes, and some stuff on building a lasting legacy as well, which is part of my playbook. I do all of those. And so this year, there's going to be new content in there. It's going to be September 1st and 2nd, a two-night virtual event, Investing Essentials. Tickets Start at$199. Get yours at RamseySolutions.com or click the link in the show notes if you're listening on podcast or YouTube. Matt is in Knoxville. Hi, Matt. How are you? I'm doing good, bud.

1:06:35Dave Ramsey:Thanks for getting back in touch with me. I had a quick question on if you have equity in your home, using that equity to pay off your other debt so it's all consolidated into one thing. well into one loan and if um if it's a bad idea can you tell me why no one else can okay it's a bad idea and the only time we suggest you do that is if you're on the edge of bankruptcy and it's the only way to stay keep from filing bankruptcy and you're not so it's a bad idea now why is it a bad idea well in 35 almost 40 years of doing this of coaching families on money what we have discovered, including my house with me and Sharon, is that personal finance is 80 % behavior.

1:07:20Dave Ramsey:It's only 20 % head knowledge. So math is most of the time not our problem. Most of the time it's our behaviors. And the data tells us, the research tells us, that 88 % of the time that you take your debts, your miscellaneous debts, your student loans, your credit cards, your car loan, some medical bills, whatever it is that's piled up, and we move them over to a home equity loan, we no longer feel the pinch of all those bills piling up, and we don't change our habits. And 9 out of 10, 88 % of the time, people run up more debt because they didn't fix the habits that caused the debt in the first place.

1:08:08Dave Ramsey:So how much debt have you got? Let's see if we can figure out a way to get you out without doing that. As of right now, I have$80 ,000 left to pay on my house, and I got my wife's car that's$25 ,000, and then one car's paid off with my work car, and then my truck only has$2 ,000 left on it. Everything else has been paid off, credit cards, personal loans. So the only thing we're talking about rolling is these two cars? Yeah, it would be$27 ,000. And how much, what do y 'all make? How much have you paid off so far? As of right now, we make$80 ,000. My wife's still in doctorate school. She'll graduate next year.

1:08:50Dave Ramsey:Doctorate in what? Occupational therapy. Is there any student loans for that or she's cash flowing it? A lot of grants. Her parents have helped and we've just stayed to the grindstone. Good for you. Very good. Well done. Okay, so she's going to come out making$80 ,000, right? As should, yes. So double your income,$160 ,000. And when does she do that?

1:09:17She probably in about two years because we want to have our second kid after she graduates and didn't want to have to go into work and have just a newborn right off and out of college.

1:09:32Dave Ramsey:All right. And so, and you make 80. Okay. All right. Well, you can do a couple of things here. But what I would do is simply get on the every dollar budget and the two of you sit down and say, all right, we have a plan. The plan is for her to graduate, have the second child, and then begin work. and so encompassed in that plan is that we also need to clean off this$27 ,000 in debt, which is$2 ,000 a month for 26 months. Okay? No, it's not. No, it's not. It's$2 ,000 a month for 12 months. Okay, yeah, okay. Yeah. I was picking it up in my head. No, it's 14 months. Okay, wait a minute. 13 months.

1:10:18Dave Ramsey:13 months gets you out. 14 months, whatever. All right, so$2 ,000 a month we need to put on this debt, and we'll be done in 14 months. If we're not willing to cut our lifestyle enough to do that, and you pick up a little extra work, maybe she picks up some side hustle, I don't know, whatever it is, maybe we sell something else. You have money in savings? Approximately right now$5 ,000. Well, that was before we put it all towards the truck that we was doing, the snowball effect. We put everything towards my truck. It was a$19 ,000 last year or a year and a half ago. Okay, so you've been working on this.

1:10:55Dave Ramsey:How much debt have y 'all reduced so far?

1:11:00Dave Ramsey:Around about$30 ,000. How long did that take? Two years. Okay. All right. So 14 months to do$27 ,000 is not too far off. All right. So you're already living like this. Well, and before this, up until this year, I was only making$45 ,000. So I got a big pay. Okay, so you got a huge increase. And so we're going to live on nothing, finish her school, and get these cars paid off. Or we're going to sell that stupid$25 ,000 car. That's what I would do. Because when I'm looking at this, I'm going, okay, you just told us you used to make$45 ,000. You're already up against the rule of it being more than 50 % of your take-home at$80 ,000 because she's not making the other 80 yet.

1:11:51So if I were in your shoes, I'd actually sell the$25 ,000 one now and go down in car and get you something that is more reasonable for what you're earning today. And then when she starts making$162 years from now, then you can upgrade your vehicles.

1:12:04Dave Ramsey:Your household income goes to$260, you upgrade your income. Yeah, that's probably the best thing. If you're unwilling to do that, you're going to have to sacrifice hard for the next 14 months and stay on a beans and rice schedule to clear these off. You cannot borrow your way out of debt. You're tired of hustling and grinding and pushing this debt monster, and you called us looking for an easy way out with a HELOC, and it does not get you out. It just moves it, and it keeps you from addressing the issue, and the issue is you really bought a car you shouldn't have bought. But if you're going to keep that car now, and it's not horrible.

1:12:43Dave Ramsey:It's just bad, okay? It's not like I scream at you, This is the dumbest thing I've ever seen in my life. It's bad, but it's just bad. Yeah, it's causing you to move slower than you should be. It's a dead weight. It's a walk with a limp. And here's the interesting thing, Matt. You guys are so goal-oriented and you're so focused that you've detailed out every part of your lives. You've done a really good job of planning your life out. I mean, you've got her in school with Grant's mom's help and mom and dad's help and some hustle and grind. We pay cash for that school. She's going to come out with a freaking PhD and PT and going to walk in straight into 80 to 90 grand whenever she wants.

1:13:23Dave Ramsey:But wait, we're going to have a baby first. We've laid everything out. And it's well thought out. You've done a good job of planning all of this. The only thing that doesn't fit in there is this car. Yeah, and you've got to view it as making your journey easier, not as a negative. That's the way you've got to view it. But no, under no circumstance would I roll these cars onto my home because it's going to make you feel like they're not there and you're going to relax and you're not going to deal with the issue. And so absolutely, absolutely. If you want to keep it, roll up your sleeves and get her paid off.

1:13:59Dave Ramsey:Otherwise, let's dump it and get the other two cars paid off. And you've got your old truck. She's got a smaller car, a less expensive car, and we're fine. She's a student. she's not a PT she's a student we're driving a$25 ,000 car

1:14:44Thank you.

1:15:16Dave Ramsey:Joe is with us in Philadelphia. Hey, Joe, what's up? Oh, man, I can't believe I'm speaking with you guys. I'm speaking to two big-time celebrities. I have a lot of fans in my family, and this is something else. We're honored to have you, sir. How can we help? I'm honored to speak to you, too. I want to know, I want you to bless me on this. If you think it's a good idea to pay off the mortgage that I'm still on, but my ex-wife and my kids still live in the house, I no longer live there. And this would be as a surprise. Wow. That's an unusual thing to do. Would you agree?

1:16:01Dave Ramsey:Not many people call me up and want to bless the ex-wife. well it's she's an awesome woman and she's the mother of my kids wow that's i really want to slow clap right now like i'm not gonna lie well i'm gonna do that first i know it's a great i think that's a great idea but like also like joe you got to do this you're gonna got to deliver on this you can't just dream it up are you financially able to do to do this tell us about your money I think I'm going to pull in about$200K. I work multiple jobs, so it's hard to get an exact figure. But I am starting to get on the ransom plan, paying off my debt, piling up a big, trying to pile up an emergency fund.

1:16:49And then I'll be the last part of that. We'll be saving up a slush fund to do this transaction.

1:16:55Dave Ramsey:Okay. And what's owed on the home? At$77 ,000, I believe by the time next year when I pay it off, it'll be around$65 ,000. Okay. And how much debt? So let's calculate your journey. So you've still got debt to pay off on your own. How much do you still have to go? About$20 ,000, but I will be done with that in about two months. Okay. And then how long will it take you to save up three to six months of expenses? I am shooting for an arbitrary number that should do it around 60K. Okay. And that, I think, will take around seven or eight. Okay. And how old are you? Forty-three. And how much do you have in retirement today?

1:17:43I have over$500 ,000. I have a net worth about$1.2 million. Okay.

1:17:49Dave Ramsey:And so$500 ,000 in retirement, Where's the other million? Well, I have, I'm sorry, I should cut that down to about$950 because some of that is the value of the house. If you have to split it when doing that. I also have my own Roth. I have kids for a 529 plan and have some other investments baked in there, too. Do you have real estate? Tell me about the other investments. Oh, it's, well, I mean, that's like, I think investments are around$800 ,000. A lot of that is money devoted to my kids. I also have about$30 ,000 in HSA. You have$800 ,000 devoted to your kids? No, no, no, total investments.

1:18:44Dave Ramsey:Okay, investments in what? Oh, 529 plans for the market. I have a$200 ,000. No, you don't have$800 ,000 in 529 plans. That's not true. No, no, no, no. I'm talking about my net worth. I know. I'm trying to understand how your net worth is broken down. So the total in 529s, the total dollar amount, is how much?

1:19:11About$210 ,000.

1:19:12Dave Ramsey:$210 ,000. How old are your children? $14 ,000 and$11 ,000. Okay. And how much is in your 401k and Roth IRAs? Total of that is$500 ,000. Okay. So that's$710 ,000. And then what other investments do you have? I have HSA. I have around$30 ,000. Do you have any non-retirement brokerage accounts or anything like that?

1:19:44Around$3 ,000.

1:19:47Dave Ramsey:$3 ,000? Yes. Okay. All right. Keep in mind, I'm just starting on this journey. Yeah, when were you divorced? I got to 2023. I'm sorry? 2023. Oh, three years ago. Yes. Okay. All right. Okay, so back to your question then. Jade's right. We want you out of debt, an emergency fund in place. and putting 15 % of your income away for retirement. Beyond that, if you want to do a generosity move, you would pay cash for the generosity move, which is going to be around$65 ,000 or$70 ,000 in this case. And then the question is, should you do that generosity move of paying off your ex-wife's house that has your name on the mortgage?

1:20:37Dave Ramsey:One benefit of that is you no longer have that liability of that mortgage. If she pays it slow, it doesn't screw you up. If she doesn't pay it at all, it doesn't screw you up. Probably wouldn't anyway because the house is probably worth a lot more than$65 ,000. Okay. What I want you to visit is this. Before you write that check, because you're thinking about the kids and you're thinking about the guilt from the divorce and some of these other things, I want you to visit. How old are you today? Forty-three. Okay. Let's say it takes you two and a half or three years to get there, so you're 46 years old, and you're sitting there with that money in the bank ready to write this check and pay off her house.

1:21:15Dave Ramsey:Okay? That's about what we're talking about, I think, if I understood all these numbers right. All right. And I want you to ask yourself, I'm 46. At that point, I will have been divorced for many, many years. The kids will just be at home a few years more. So you're not really doing it for the kids because they're going to be gone from that house shortly at that point. They're already teenagers. They're going to age out of that house. All right. And so I want you to ask yourself, when I'm 56 and I'm dating someone and she says you paid off your ex's house, how's that going to feel? She actually approves of it.

1:22:03She listens to this show. Oh, you're already dating someone. Yes, she's awesome. She also read Jade's book, too. She loves Jade. I think that I think what you really want here is the option. And I like that you're working towards it. And I think that you have the option that in two years, if this suddenly doesn't make sense, you don't have to do it. And so in the meantime, I would keep this aspiration to yourself. I wouldn't go telling the ex-wife. I wouldn't go telling the kids. I wouldn't be talking about this as though it's something that you're definitely going to do. Because to Dave's point, a lot can change in two years and you might change your mind.

1:22:39But I think it's awesome that you're thinking of it.

1:22:40Dave Ramsey:Let's pretend the lady that you're dating, y 'all want to get married and buy a house. And you say, wait, I have to buy my ex-wife's house first. I have to pay off her house. I get it, yeah. That's going to feel weird. So I'm not saying it's a dumb idea. I'm not saying you're not going to do it. It's unusual enough, and I think it sounds like you're thinking about this only in the moment, and you haven't visited the 10-year-from-now version of yourself and ask that version of yourself, is this really something I should be doing? I wonder if there's, and we didn't ask him, but I almost think of it almost like a bankruptcy.

1:23:22If you feel like you owed someone something and it was absolved, it got absolved and it was fair in the divorce, but you still feel like there's something that you owe. I wonder if there's something there that he just feels like he needs to.

1:23:36Dave Ramsey:Just be real careful with those kind of motivations because they don't age well. That's what I'm talking about. So, you know, especially when if it means you can't do something else that is in the present. Because this money is being written into the past. It's not being written to the future. It's not being written into the present. This is money going to the past. Which is not the end of the world. It's not the end of the world. You can do that. It's your money. You have that right. It's not immoral. It's not a horrible thing. It doesn't make you a saint. It doesn't make you a sinner. It doesn't make you any of that.

1:24:12Dave Ramsey:It's just a guy that felt like that's something he wanted to do, and it's his money. So if that's what you want to do with it, that's fine. And I can't say I would. I'm not going to tell you I don't recommend it. I'm not going to tell you I do recommend it. I want you to get in financial shape to do it, and I want you to think about what this means that you can't do and what this is going to sound like in your head a decade later. And if it still sounds good and you still think you want to do it, then fine. Write a check.

1:25:11Dave Ramsey:Welcome back to the Ramsey Show in the Fairwinds Credit Union Studio. I'm Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. Jade Washaw, Ramsey personality, is my co-host today. John is in Raleigh, North Carolina. Hi, John. How are you? I'm doing well. How about you, Dad? Better than I deserve. What's up? Yeah, so just a little bit about myself. I'm a financial advisor, in large part because I've listened to your show for years and seen how you all help people with their money and wanting to be able to do the same. More recently, also, I've stepped into a leadership position with my church as an elder.

1:25:50And what I've noticed is I've become more educated and learned a lot more about, you know, different financial products and solutions is, you know, I've developed opinions on and of course, follow you and your opinions on whole life insurance. And so what one thing I've realized in the past couple of years is we have a member of our church that is another financial advisor for more of an insurance based firm. And I've noticed that he started working with more and more couples at our church specifically. what I assume is around whole life insurance policies. And more recently confirmed that when one of my closer brothers in Christ told me that he had started working with him.

1:26:30And when I talked to him about what he had bought from him and invested in, one of the things was a whole life policy. And so I spent some time educating him on, hey, why I feel like it may not be the best solution for them. And, you know, the young couple helping accomplish their goals and really wanting to better understand and see your thoughts on how can I address this with the other leaders of the church, maybe for those that don't fully know how this product may not be beneficial for them, and how do I potentially confront this member of our church who I'm not sure. I do believe that he could be doing what he believes is best for the people he's connecting with.

1:27:12Wow.

1:27:17Dave Ramsey:Okay, there's two separate issues here for me. All right? Issue number one is the guy simply is in a business that you disagree with, and he's doing business with some members of the church. Okay? That's right. And you're not going to be able to keep that. That's going to happen all your life. Okay? Because there's going to be a banker in there, and people go to open a Visa card at that bank. Or worse yet, there's a payday lender that goes to church there. Or a car dealer who leases people cars that goes to church there. And they may be elders on the board with you. That wouldn't be unusual for bankers and car dealers and insurance agents to be right there on the board with you.

1:28:09Dave Ramsey:or right there on the deacon board or the elder counselor, whatever it is in your situation, you name it, governance-wise. So they simply are in a business doing things that they will give them the benefit of the doubt that they love Jesus and that they think that what you said, that they think what they're doing is good. So I long ago, 30-some-odd years ago, made the decision on those folks, I don't do anything. okay it's just my job to educate and my job to to help the ones i'm supposed to help but it's not my job to be the police officer of what i deem to be a good product for the entire church um and so uh and what happened was a guy who's a a strong believer and an elder in another church that owns a local car dealership called me uh when i first started the radio show almost 40 years ago and I was tearing his head off.

1:29:04Dave Ramsey:I wasn't naming him, but I was just saying car leases ripoff. You're screwing people with a car lease. And I'm on the radio saying this, and he's leasing cars every day at the Lincoln Mercury dealer, right? And so he calls me and he wants to sit down as two brothers in Christ and resolve this. Well, we weren't going to, it was a dumb thing to do. I did sit down and I don't take those meetings anymore because at the end of the meeting, he's still selling cars on leases and I still think they suck. and we both had to have agreed that both of us are probably going to be in heaven. And so, you know, we just had to go, that's the way it is, bygones be bygones.

1:29:39Dave Ramsey:And so I wasn't going to change him, and you're probably not going to change this guy. And you're probably not going to keep him from doing business with somebody in the church. Now, that's bucket number one. Bucket number two is if you feel like he's going to church there and using his church membership as a prospecting tool, then he's in there. He's a wolf in the middle of the sheep pen then. And I don't care what he's selling then. I don't care if he's freaking selling aluminum siding. You know, that stops. That's church discipline. If his reason for being there has nothing to do with church, and he's just looking at this congregation as a feeding pen, if that's how it's actually going down, then that stops.

1:30:35Yeah.

1:30:36Dave Ramsey:And I'll tell you, one time I did do that, I got church leadership involved, was, as you might imagine, a very enthusiastic guy in a multi-level thing. wanted everybody in the church to join his multi-level thing because Jesus had told him. Oh, boy. You know, well, I kind of stood in there and I went, no, you know, you're here for the wrong reasons, and you either need to cease and desist, you're prospecting the congregation, or you need to leave. And we did get agreement within church leadership on that because the guy's motives were not pure. He was there to do business. He was not there to worship Jesus and to be of service to a few members of the congregation.

1:31:26Dave Ramsey:And, John, if you, as a valid financial planner with ideas that I agree with, are in there, and your reason for being there is you're just looking across the pew every week trying to figure out who you can prospect, I'm going to call you out on that. Absolutely. Okay? So if he's in that bucket, I'm shutting him down. And if he's just in the bucket of, I disagree with him, I'm not going to say a thing. Yeah. I mean, you've been in church leadership. I mean, yeah, I think there's a community aspect of church where it can be an advantage. You know, you can find a lawyer, you can find somebody to work on your car, you can find somebody to help with this and that, right?

1:32:06Dave Ramsey:Yeah, but that's different than prospecting. Yeah. And unfortunately, even in that situation, even if you're using it as community, one person has the ability to talk to another person after service and find out that they sell insurance and they can say, oh, I'm in the market for insurance. And they sit down and talk and it's fine. And I agree with what you said, Dave. You can't, you're not the police of that. There's plenty of people who are going to find methods of how they want to live their life. Has nothing to do with what you believe when you walk into the place. Yeah, yeah. And I sat on a church board with a whole life guy who absolutely could not stand me.

1:32:44Dave Ramsey:Because his business was suffering greatly because of me. And I was real pleased that his business was suffering greatly. Yeah. You know, I think the bigger discussion here is there are things, there are products out there that we view as villains, right? Like we view car leases as villains. We view payday loans as villains. We view credit cards, all those things. but it doesn't mean that the people who haven't figured that out yet are bad people. If they're in that business, do you know what I'm saying? There's usually some level of them that they think that they're doing somebody a service when they give you a car loan.

1:33:16They think you're doing you a service when they put you on a lease.

1:33:19Dave Ramsey:But if you have the sense that this guy is in there, he's just got his hair clippers out and he's shearing the sheep, then yeah, we're going to put his clippers up. I'm going to put an end to that for sure. In any business, legit or illegit, that's not the reason you go to church.

1:34:00Dave Ramsey:Dave Ramsey here. For more than 30 years, I've been talking to folks on the air, and I can tell you that most people are broke, not because they don't make enough money, but because they don't have a plan. You need to give every dollar you earn a job, because when you do that, something changes. You stop guessing. You stop worrying. You stop stressing. Our Every Dollar Budgeting app will show you how to find extra cash, pay off debt, and finally start winning with money. But most people won't do it. They'll keep living paycheck to paycheck, keep hoping things will change without making a change.

1:34:36Dave Ramsey:It's time to say enough is enough. It's time to take control of your money. It's time to start your every dollar budget for free today. Go download it in the App Store or Google Play.

1:34:57Dave Ramsey:Well, we wish we could answer every question on here, but we just simply can't get to everybody's. But we do have a solution for you. Go over to our website at RamseySolutions.com and use the Ask Ramsey tool. If you ask Ramsey, it will tell you what Ramsey thinks about this. And so everything that Jade has said on the radio or any of us have said on the podcast in the last three years is built into the data set. All of the articles and books that we've all written are built into the data set. So Ask Ramsey knows what we would say here on the air very accurately. And it's free. It's an AI tool that we have trained only on Ramsey data.

1:35:40Dave Ramsey:It doesn't have any of the sewage from Reddit or something else tied into it or TikTok. It's Ramsey data only. So it gives you a Ramsey only answer. If you want an answer that's not Ramsey, don't go there because it's going to be a Ramsey answer. Ask your question today for free at RamseySolutions.com. Ask Ramsey. James is in Charlotte, North Carolina. Hi, James. How are you? Hey, Dave. I'm good. How are you? Better than I deserve. What's up? So a family member of mine is getting ready to sell their home in Key West. And I am wondering, when is it okay to buy your second home or vacation home?

1:36:26Dave Ramsey:When you pay cash. Can you? No. Okay. Then you can't. Pretty simple. Got it. Yeah. Because a second home is a toy. It's a luxury item. And so it's like, I'm going to buy my fourth car. And there's only two of us. It's a toy. It's a luxury item. And it's going to get used about as much as the fourth car. Okay. And so... If I was able to make it my full-time home and rent out my home in Charlotte, what would that look like? Why don't you just sell the home in Charlotte and pay cash for it?

1:37:11Okay.

1:37:13Dave Ramsey:If you want to move to Key West, you want to live in the house? I mean, it's pretty great. Okay. I love it down there. Your career is mobile? Yes. Okay. I am able to move. Wow. That's pretty cool. Well, that's an option. I would do that. I mean, that's not a second home, though. Okay. That's a transfer of primary residence. Got it. Yeah. The second home is I want to buy a lake house. I want to buy a beach house. I want to buy a mountain house. I want to buy a house in Mexico. Whatever it is, right? That's second home. And that's a toy, and you need to pay cash for those because you're going to be disturbed at how little you actually end up using them.

1:37:56Okay.

1:37:57Dave Ramsey:And so, I mean, even if you work at using them, you're not going to be there but six or eight weeks a year, right, on a second home. But now if you're going to live in it, that's not a second home anymore. So, yeah, sell the house in Charlotte and go buy it maybe. That might be your best move. And I want you guys to get a second home. I'm not against second homes. But the other thing, Jay, we don't want to do is we don't want to rationalize it and say we're going to rent it out. And the renters, the Airbnb renters are going to pay for it for me. I feel like you're not going to show up and it be the same house.

1:38:34You know, I feel like you're going to have wear and tear and you're going to be mad that when you came back, you know, it's not the way you left it every single time. I don't know that I'm right, but I feel like I would feel that way.

1:38:46Dave Ramsey:Exactly right. You turned your house into a hotel room. Yeah. I want it to be mine. And you know what they do in hotel rooms? They take stuff and screw it to the walls so people can't steal it. Yeah. I don't want to know that somebody else was in my shower or in my sheets. That bothers me. That bothers me beyond belief. I just got creeped out bad. Jason is in Denver. Hey, Jason, what's up? Hi, Dave. Jay, nice to talk to you guys. You too. How can we help? Got a question for you. So quick backstory, I guess I'm 27 in your life. We have a one-year-old daughter. Congratulations. Well, thank you. We're technically in baby steps four and five, I believe.

1:39:31Good. But from our families, our background, we come from the Amish Mennonite, college isn't really a thing. Is it still smart to do a 529 plan if we know chances are she won't be attending college or is there a better way to invest?

1:39:46Dave Ramsey:okay um i mean i'm vaguely familiar with amish mennonite thing uh i wasn't aware of uh a prohibition against higher education yeah are you saying that you're not go ahead it's not like they're well i mean technically the amish are against it um now we're not in the amish anymore so we're not against it it's just like my background was i got a full-time job at 14. We were homeschooled up to eighth grade, and I went into the work. And you were doing a trade of some kind? Correct, like construction, yeah, that's what I started in. Okay, so you're in the construction business, all right. And this is your one-year-old daughter?

1:40:29Correct.

1:40:29Dave Ramsey:Okay, and so what do you perceive in your all situation? You're not technically Amish anymore, but the culture and the belief system continues to influence you, which is fair. if I understood you right. And so what do you perceive that this lady, this young woman of 20 years old is going to be doing? Man, it's hard to say career-wise. I mean, my guess is I technically come from a family of entrepreneurs. It wouldn't surprise me if she joins, you know, family business here and there somewhere. But chances are if she's like my wife, I mean, her dream is kind of to be a stay-at-home mom, not really career-driven.

1:41:11Dave Ramsey:Right. Okay. So what education gives a young lady in that situation, whatever the education is, I don't care what it is, but something beyond a homeschool, high school education, what it gives them is options. Right. And as her dad, what I want her to have is options. In other words, if she had a degree in a two-year degree from the Associates College, local community college in entrepreneurism, and then she decided she wanted to be a stay-at-home full-time mom, I can make the case that she's better at being a stay-at-home mom because of that education. Could you? Yeah, I can see that. She's raising the next generation of entrepreneurs, and she actually knows something about it.

1:42:03Dave Ramsey:Okay? And so education, you know, again, but she also has the option of joining her husband's business and helping him run it because she knows something about accounting. Right. So education has a value, and the value, if it's usable, education, I don't want her to get a degree. You've heard me. We don't want them to get degrees in left-handed puppetry. That's a waste. Right. Well, I want a well-rounded left-handed puppetry. No, that's bullcrap. That's just you want to go to school and play beer pong. That's all that is. And that's not what we're talking about here. But if there is some kind of, let's call it continuing education after high school, trade school of some kind, a entrepreneurism program of some kind that is a formal certification program, that would add options to her life.

1:42:56Dave Ramsey:even though there's a probability that she's going to be a full-time mom because she's been taught to enjoy that and to value that. I don't care. I mean, I'm fine if she does that. My wife's been a full-time mom for 40 years, and we're not Amish. So, you know, I mean, I place a value on that. Uh, so, uh, uh, but I would wager that her having a four year degree has influenced the confidence and poise of the daughters and son that she raised. My daughter, my wife. Mm hmm. Okay. And she's never actually used her four year degree in the marketplace. So, you know, but, but, but. Yeah, that's a good way to look at it.

1:43:42Dave Ramsey:So anyway, that's a thing to think about. So I would be setting some aside to continue education. Yeah, I wouldn't overfund a 529. No. I wouldn't go ham on that. I wouldn't go 200K in it. No. And you don't even have to do 529. You could just have a mutual fund in the kid's name. Absolutely. You could just do that. This is for you to continue your education because more knowledge adds to the quality of your life. Usable knowledge. And, honey, we want you to do that because it gives you confidence. It gives you dignity. It gives you poise as a young woman, particularly as a young woman, young man too, but particularly that carries herself well, knows what the flip she's doing, right?

1:44:51Dave Ramsey:You should not feel uncertain about investing, and you don't have to. That's why we created Investing Essentials, a two-night virtual event where George Camel and I walk you through my playbook for investing and wealth planning. We'll simplify everything from 401ks and mutual funds to passing on wealth so you can invest with confidence. Tickets start at$199. Get yours today at RamseySolutions.com slash events or click the link in the show notes.

1:45:59Dave Ramsey:Thanks for joining us, America. Open phones at 888-825-5225. Leslie is in Auburn. Hi, Leslie. Welcome to The Ramsey Show. Hi, Dave and Dave. Thank you all so much for your time today. Sure. So, yeah, I have a boyfriend. He's on disability. He served as a Marine and has PTSD, which really prevents him from going out and getting a traditional job. I have encouraged him to develop some flexible side businesses related to skills that he's expressed interest in, such as landscaping or woodworking. but he doesn't really seem to show much initiative. And I'm wondering how do I approach this topic with him since we both agreed that if we were to get married, that we want a more traditional setup where I can stay home at least part-time and homeschool the kids.

1:46:54So you know he's got PTSD. Is he also depressed? Like, is he feeling like he doesn't have purpose in the world? Because that's what I'm hearing you describe. Right. Right. It's on and off. He does have a bit of a kind of free time addiction right now. He's kind of always watching TV or gaming. And I think that's just taking up all his time. But he does have the PTSD is better now, but he does struggle on and off with depression. And he's working. Is he working with a counselor on that? Not at the moment.

1:47:29Dave Ramsey:So what why would it get better?

1:47:34time you know he he said the PTSD is a lot improved no it's not okay yeah he's hiding in games

1:47:45Dave Ramsey:true they're all shooter games and he's depressed because he doesn't want to go out in the world he doesn't doesn't have any hope and so he doesn't want to go his ambition's gone yeah I don't think there's anything you're going to be able to say in one sitting to convince him of that. Yeah. Okay. He is not a, if he is not progressing in his healing and doing the work to progress in his healing, he's not going to have any change and you don't want to be connected to the guy that you're connected to right now, 10 years from now. Right. Yeah. If he's not getting better, then you have a dream of the way things are going to look, but they're not going to look that way unless he heals considerably from where he is right now.

1:48:40Dave Ramsey:Is that fair? Yes, I think so. He also had a really hard childhood, so I think there's a lot of healing, but he's kind of lost faith in counseling. There's a lot of reasons we could be here, but the reasons are all in the rearview mirror, And the question I've got is hope about the future. And hope about the future means, okay, I'm dating a person that's bipolar. I'm dating a person that won't take their meds and won't go to counseling. Well, they're not going to get better. I'm dating someone who has a gambling problem, and they just won't do anything about it. They're not going to Gamblers Anonymous.

1:49:16Dave Ramsey:They're not sitting down with a therapist. They haven't cut off draft kings yet. And so, you know, they're going to continue to have a gambling problem. But you have this idea that they're going to be something they're not, and it's wonderful that you have that hope for him. I actually have that hope for him, and I don't even know him. As an American, he served in the military on my behalf. I have hope for him. I want him to heal. I want him to get his childhood and the horrible things that happened in the military in his rearview mirror and move forward with a healthy life. And I know many, many men and women who have, but they don't sit in the basement playing games all day.

1:50:02Right, right.

1:50:03Dave Ramsey:Yeah. So in other words, I might reframe this. Can I be your old uncle, ugly Uncle Dave for a minute? Yes, please. If he's not going to get better, don't keep dating him. Right. For your sake, for your sake. Yeah. Don't believe mythology about what you wish. Actually observable things that he is doing, actual behaviors that he is doing that are moving forward for him becoming the man that God designed him to be. But if he's not going to engage in those observable patterns, then this is mythology that's in your head. don't mess yourself up on that kiddo. So he needs to be moving back to earn the right to date my niece, the Princess Leslie.

1:51:04Dave Ramsey:This guy has to earn the right by working on his healing. That's right. And you need to have some very clear milestones in your mind of what that looks like so that if the box is checked green, you can go great. He's doing that. And if the box is checked red, you can follow that down the line and go, okay, now it's time for me to move on. Exactly. Exactly. That's what I would do. Yeah. But you can't take your ambition and inject it into someone else's veins. No, you can't. And that's the hardest thing. You can't take your hope and inject it into someone else's veins. No, you cannot. You can lay out a plan and say, if we did these things, here's what would happen, and give someone a reason to have hope.

1:51:46Dave Ramsey:Yes. But you can't make them accept it. No, you can't. That's the hard part. Horses don't drink just because you let them to water. Phew. Man, that's a hard one. That is tough, yeah. Emily's in Dallas. Hi, Emily. How are you? Hi, I'm good. How are y 'all? Thanks for having me on. Better than I deserve. What's up? Okay, so my husband and I are in baby step number two. We have three kids and one on the way. And I want to start planning to be able to stay home eventually with my kids. And we've got to get out of debt first. Okay. So my question is, should we pay, should we sell our home, our current home that we have quite a bit of equity in, use that to pay off most, if not all, the debt, downsize as a family of six, and live in a smaller home for a few years while we get that debt paid off.

1:52:35Wow, you're really willing to embrace some discomfort here. How much debt are you trying to pay off? I believe it totals about$84 ,000 to$86 ,000.

1:52:46Dave Ramsey:On what? All right, we have two credit cards and a line of credit that's about$12 ,000. My student loan is$13 ,000. My husband's grad school loan is$25 ,000. We have an auto loan that's$16 ,000. And before you told me to sell the car, the car's only worth$8 ,700. We consolidated debt stupidly a few years ago, and so the loan is more than the car is worth. And then we have a home improvement loan that's tied to the mortgage. It's$20 ,000, and then our mortgage is$212 ,000 with a lovely 3 % interest rate. And what is the home worth? I think if we sold it, we could maybe make$340 to$350. We have not gotten serious comps on it yet, but just in my research, that's what it looks like.

1:53:35Dave Ramsey:And what's your household income? We bring home about$95 to$10 per month, sometimes a little bit more. I'm in sales, so I occasionally have a bonus. So you bring home$9 ,500 a month? Yes, my husband and I. Got it. Okay. So about$150K a year. Yes. What portion of that is from you and what portion is from him? Oh, gosh. I think his after taxes and everything on our budget, it's$4 ,731. Okay. And mine is the rest. Okay. So we've got to get this to the point where you can live on$4 ,700 a month, assuming nothing changes in his income. Yes. And he is trying to up his income. he's a teacher and a coach looking into some principalship, things like that.

1:54:23But right now that's what it's at.

1:54:24Dave Ramsey:Do you like your house? I do. We've done a lot of work to it. It's not our forever house, but it fits us well right now. What do you pay for it every month? What's the mortgage? Our mortgage is$1 ,947. Oh, that's pretty good. I don't see how today selling the house is the key to this, because I think I heard you say you owe$312 and it's worth$340. No,$340 ,000 and they owe$212 ,000. $212 ,000, okay. $100 ,000, it clears up their debt. Okay. That'd be 100 % debt-free if they sold it. Yeah, I might sell it and rent for a couple years and save up my down payment for the next house. But the next house has to be purchased in such a way that it allows you to quit.

1:55:09Dave Ramsey:That's the trick. But, yeah, if you want to be debt-free quick, that's one way to do it. I would not sell it and buy again.

1:55:19Thank you.

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1:56:22Dave Ramsey:Proverbs 3.3 is our scripture of the day. Let love and faithfulness never leave you. Bind them around your neck. Write them on the tablet of your heart, then you will win favor and a good name in the sight of God and man. Conrad Hilton said, success seems to be connected with action. Successful men keep moving. They make mistakes, but they don't quit. Almost what we were talking about with Leslie a minute ago. Uh-huh. That's right. There's action involved. I see it. Martha is in Nashville. Hi, Martha. How are you? I'm good. How are you? Better than I deserve. How can I help? Yes. I'm calling because about nine months ago, well, actually, I would say eight months ago, me and my husband decided to pull our kids out of public school and homeschool them for a bunch of different reasons.

1:57:15And we have done that. And now I'm actually eager to go back to work for a bunch of other reasons. And so I'm just calling to see if it is the best choice in us for me to put my kids back in public school and go back to work full time. What changed? um well about a year ago or actually right before we started homeschooling our kids we were in um marriage counseling for about almost a year at that point and um the very last session that we had had with our marriage counselor he had recommended to me that i separate from my husband due to some verbal abuse and emotional abuse that was going on that, in all honesty, I'm not really for sure if I would consider verbal abuse or emotional abuse, but he had picked us on a few things that we had talked about.

1:58:08And so I let it go, and we said that we wanted to take a break, and counseling also got very expensive for us. Well, about a couple of months later, or a month later, actually, something changed where I just felt in me that we needed to homeschool, and I brought it up to my husband, and we proceeded forward. Well, the last eight months—

1:58:29Dave Ramsey:I'm sorry, what does that have to do with the whole marriage counseling thing? The separating, yeah.

1:58:36I really don't know. I don't either. It's very confusing to me as well. But I guess I had just ignored anything the counselor had said, and I had proceeded just to move on with my life as if he had never went to marriage counseling ever. Okay, so you approached your husband and said, let's do homeschooling. You started doing homeschooling. It's been eight months, and now you want to go back to work. What has changed? We're not on the same page financially. I got brought up in marriage counseling as well, and I ignored it then. Understood. And so homeschooling, in all honesty, has brought out a lot of things that I guess I was blind to before or I had ignored.

1:59:18but being home as much as I have been and seeing the chaos that has run amok in my house where the discipline is not there, the interest in the baby steps is not there, the interest in about anything in our marriage is not there. And I guess I needed homeschool to at least show me that. Understood. So you're seeing the money's a mess. Everything's a mess.

1:59:37Dave Ramsey:I got a feeling you want to get a job so you can leave. I don't necessarily want to leave, but I do want to get out of the house. And I didn't realize how much I was going to miss working until I stopped working. And since we are not on the same page financially... I don't know how you getting a job is going to fix this entire soup that you have explained. I don't believe that it's going to fix it at all. You're in the middle of a soup being stirred around. and you getting a job versus homeschooling is just one item in the recipe. And you keep jumping from one thing to another thinking that have nothing to do with your marriage problems, thinking it's going to fix your marriage problem, and it never does because you refuse to address the marriage problem.

2:00:30See, I don't think I'm trying to avoid addressing the marriage problem. Yeah, you both quit and then you quit work to come home with the kids that has nothing,

2:00:41Dave Ramsey:it's not connected at all to your marriage problem. If you tell me - It just seems random and impulsive. If you tell me you went and saw a marriage counselor because you needed a professional to step in and then the professional has said, you've got a problem here, you've got a problem here and a problem here, but you've said, I've ignored what he said and you've done your own thing, then I think that's where the issue is. You got to listen to the professional. 99 % of what will be fixed in your home is going to be fixed when you guys get your marital issues aligned and spend your time on that.

2:01:11Dave Ramsey:I would spend all of my energy on that. If you want to go back to work while you're doing that, that's fine. Or if you're going back to work and in your mind you're going, I need some money because I need to hire an attorney and this is over, then that's a decision. That's a logical decision. I'm not sure it's a good one, but it's a logical one at least. but it's just I'm going to come home and then I'm going to go back to work and then I'm going to come home and meanwhile everything's burning down around me and I'm ignoring that yeah and that's not okay it's not going to help you so yeah go go on back to work that's fine I don't care doesn't matter but you're still going to have hell on earth until you deal with this that's not going away until you deal with it so you've my suggestion is you use some of your new income to pay the marriage another marriage counselor a different one and the two of you lean into that and if If you're not going to lean into that and heal this thing, then call it.

2:02:05Dave Ramsey:If you're not going to fix it, call it. Because your children are suffering in the middle of this cesspool right now that you call a relationship. It's awful. Bill is in Raleigh, North Carolina. Hey, Bill, how are you? Howdy. How's it going? Doing well. Good. How can we help? so um my grandma really wants her childhood home to stay in the family and my wife and i were thinking about buying it from her and so we've actually been renting it from her to kind of test drive it and see uh see if we like it and i pitched to her last weekend the idea of doing a rent to own situation rather than going through the traditional bank because i've never had a loan in my whole life and i don't plan to get any debt ever and she's on board with it so i just want to know where from here we should go to get like a lawyer involved to make this official.

2:02:55Dave Ramsey:I would not do a rent to own, but I see what you're after. I'll give you a different structure. Okay. Um, okay. What's the house worth and what's she going to sell it to you for? It's worth about one, uh, one 30. And I think she's going to sell it to us for about a hundred. Okay. And how old are you two? Uh, we are in our early twenties. I'm 23. And what do you all make? I make around$62 ,000, and my wife is a stay-at-home mom. Okay. All right. Well, a couple things need to be addressed. How old is Granny? She is in her late 70s, and we have talked about the situation in which she passes away.

2:03:35You know, that's been in the conversation as well.

2:03:37Dave Ramsey:Yeah, if she passes away, you've got to have legal documentation that protects you. Exactly. Okay. And so what I would do if I were her and I wanted you to have this house is I would sell it to you for$100 ,000, put it in your name. Okay. And I would carry back the note. And when I die, the note is forgiven. Okay. That's what I would do if I were her and I wanted you to have this house. Right. Now, the downside of that is your parent and siblings, your aunts and uncles, might feel cheated out of$100 ,000. Right. It is an older home, actually, and my wife and I have been putting out a lot of work.

2:04:36You don't need to put work in somebody else's house.

2:04:39Dave Ramsey:Stop that. You are not on this house. Do not put any work into someone else's house. Okay. Don't do that. That's going to end up in disappointment and anger later. Noted. Okay. She dies. You got nothing written down if she dies tomorrow. All the work that you put in is going to be taken by your aunts and uncles, and they're going to sell that house, and they're going to make money on it, on your work. Do not do this anymore. Until this house is in your name, stop working on it. Well, she's paying me for the labor fees. It evens out, I feel like, but I understand what you're saying. But you've got your heart and soul going into this, and you're going to get your heart broken if you guys don't get this written down and quit acting like it's all going to work out.

2:05:25Dave Ramsey:So get it written down, whatever it is. Go to a real estate attorney and come up with a structure of some kind in writing that protects you in the event of her death. And then lastly, I'm going to go ahead and disappoint grandmother. There's 0 % chance you're going to be living in this house when you're 70. Zero. Keep that in mind. That puts us our 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.

2:06:04you