Clarity With Money Brings Peace At Every Stage Of Life

26:51I don't think so. I just feel like either one of two things. Either he's got more money than I think he does and he doesn't trust me or he's super poor and he doesn't want to tell me. So Mandy, for the sake of just me assessing like your security in this, how much money do you have? Like what do you earn? What do you have in your name? Tell me about you for a second. So I make about$70 ,000 a year. My house is paid off. My car is paid off. I have little to no debt. like the house that you guys both live in is paid off isn't it is it in your name it is it is in my name okay I like I owned the house before we were together good and then your car is paid off so you don't have any debt not really no nothing to speak of like three thousand dollars in credit card debt.

27:48Okay. What's in your retirement? So I have a retirement through my, um, my work, um, which is currently like at$50 ,000. And I also have like a state pension. So I'm a state employee. Okay. So, um, so I have that as well. So I just wanted to know how, how part of the, like how, how together you are and you'll, you're on your way. Um, what I would do if I were in your shoes is I would have some real adult talk, which is basically setting a very clear line of, here's where I am, and here's what I'm going to need in order to go forward. Because the way that the marriage is running is not working for me.

28:35It's not valuing me. There's no trust in me. I'm not saying that you've been angry or like combative in any way but I am saying that you've shut me out and I can't be in a marriage that I'm shut out of and our money is a huge part of our life it touches everything and I'm feeling very very put out by all of this and I've made these attempts I don't think I need to list them because you know about them and you have shut me out and so now I am saying here's what I need in order to proceed. We have made it about you and I've let you do your thing and now I'm about to do my thing. That's basically the conversation I would have.

29:16And I would say, here's what I need to go forward because today I'm not safe. You've shut me out. And I don't know if that means that you have millions that you don't want me to be a part of or if it means that you owe millions and you don't want me to be a part of. I don't know. I don't know you. You're not letting me know this part of you. And I've suggested counseling. And so this is you, Mandy, at this point, This is you about you deciding how strong you want to be on the matter. Is this going to be something that you can, because the ball's now in your court. So your decision is, am I just going to swallow this and be like this for my marriage and decide that I'm going to be fine with it?

29:52Or am I going to decide this matters this much to me? And I think that's exactly right. because like as many times as I've suggested counseling, I myself have gone to counseling. You're doing your part. I am. I'm cleaning up my side of the street and I think that is what has helped me like see things through a much clearer lens as how much I'm being boxed out. Yeah. Because you're getting healthy and now it's causing you to see the unhealthiness. Yes, very much so. And I'm like, I kind of feel like maybe I'm overreacting. Like, is this enough to like be done? You're not, Mandy. And if he makes you feel that way, that's what the kids call gaslighting.

30:39You are not the crazy one. You are asking for something very reasonable. Hey, I signed up for life together with this person and you are boxing me out completely. I feel anxious. I feel disconnected. We need to be on the same page and on the same team or else this can't move forward. I'm so sorry you're dealing with this, Mandy. That's not an easy thing. We can't change people. We can control what we can control, and that's us right now. So focus on you and what you can do.

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32:47All right, going back to the phone lines, we've got Mia, who's in Seattle, Washington. What's up, Mia? Hi, thank you so much for taking my call. Yeah, how can we help today? Okay, so my husband and I are on baby step number two. We are$619 ,000 in debt. Most of that is a mortgage. And so my question is really going to revolve around that. But just giving you a little background, we've been in a new home for about a year and two months. Our mortgage on that is$525 ,000. We inherited a Parent Plus loan last October in$25 ,000 for$65 ,000. And we have a 401k loan that we use to get into this house, and we owe$29 ,000 on that.

33:41We do own our cars, and there's no other debt. So my question is, we're both in our mid-50s. We're on baby step number two. We really just need a clear plan on moving forward. How, when, what do you recommend for trying to get to retirement? Our 401K is currently frozen. It only has$60 ,000 in there. So we're really wondering, should we sell and rent until we save up enough to rebuy smaller? We also don't want to live in this area when we retire. We have family in another state with grandbabies. So I know that's a lot to unpack, but whatever advice you can give me, I'm all ears. Yeah, sure. So tell us about your income.

34:24Tell us about your working life. What are you guys earning together and what do you take home each month? Okay, so I'm a stay-at-home mom. We've got five kids. I'm on the last two. I have been home for 22 years, so I don't make an income. He makes an annual of about$200 ,000. Okay. Our take home is about 10 a month. 10 a month, you said? Mm-hmm. 10 ,000. And how much of that is the mortgage? Our mortgage just went up an additional 500 in January due to, they call it an assessment. So our mortgage payment currently with HOAs is running about 4 ,700 a month. Oh, wow. That's really high for your income.

35:08So there is, I mean, that alone would cause me to say, yeah, you've got too much house. And then you've got the debt on top of it. And there's not, unless you tell me there's something that's going to happen drastically with income, you're up against it. That's probably why you're seeing almost no margin, correct? Okay, yes. It's going to be hard either way. So let me lay out some options for you. One is you go to work full time. we drastically increase the income, we're able to clean up the Parent PLUS loan and 401k loan fast, keep up with the mortgage and invest for retirement. Is that a viable path?

35:49Well, I homeschool my two children. How old are they? We can talk about that. They're 10. They're twins. Okay. And is there an option? And I know homeschooling is a real values thing. So it's not a thing where I go, well, just put them in public school and get to work. But there's a reality here where you guys can't retire and you can't afford this house, which means there's no home to homeschool in. That's my fear. And so homeschooling, all of these things, it's a luxury to be able to do that, to stay at home, to homeschool. And right now you guys can't afford the luxury. And so it's either that or you sell, you go rent somewhere.

36:27And I don't know, can you rent somewhere for$2 ,000 a month,$2 ,500 a month in your area? we would have to go outside the main area but it is doable we would just have to downsize which we're both willing to do okay we're both very open to you know whatever we can do um so we're willing to do that yes we would just have to leave this area and it would be just a small commute okay for my husband's employment and for some of our activities with homeschooling but that would be fine okay what's the equity in your house what would you take away we've lost we've only been in a year and a half. So we've lost equity.

37:02And with fees and all that. So you'd walk away maybe owing money? If we, okay. So if I was honestly going to sell today, we could probably after fees, walk away with maybe 60 ,000. Oh, that could almost knock out the parent plus loan. Yeah. That's not what I thought you were going to say. I thought you were going to say we would make zero if we're lucky. That's what I thought. Okay. So that's a huge, that's a huge change in the conversation in a short amount of time. So that makes me feel better about the idea of downsizing is the fact that you could actually make some progress very quickly by getting these Parent PLUS loans out of the way.

37:42And then that would just leave, well, technically you do the 401k loan first, but you know what I'm saying? It only leave the$35 ,000 there for you. Which means if you threw$3 ,000 a month, which your savings from the mortgage down to renting, plus any extra margin. You could clear all of this by the end of the year. So think about that. By the end of this year, you could be renting completely debt-free and start to save up some money in your emergency fund. That would create a stable foundation for you guys to then be able to invest his amazing income. That is the saving grace here is he makes really good money.

38:15The hard news is he might need to work longer than he wanted to in order to be able to retire and support the family. Yeah. And that also gives you the ability, if you decide that you can pick up some income and that you can work, it just frees you up a little bit more to value that system that you have in place a little bit more. Because if you keep this house, you can't. It's like, I have to work. It's a pressure cooker. And we need to release some of this pressure right now. And I hope one day you guys get back into a house and it's not stressful and you can easily afford it and you have no debt, you have plenty of savings, you're on track for retirement.

38:51That's the goal. And that's why we tell people to move real slow when it comes to a house and do it when the timing is right. And so there's viable options here, but again, it's sacrifice all the way around. There's no shortcuts to living the life that you guys want, having the cake and eating it too. That's right. And so I wish you the best. Something's got to shake. Yeah. Thanks for the call. A very good situation. You can make up for lost time on a retirement fast, making 200 grand with no debt. Absolutely. That's the good news. Absolutely. Yeah. All is not lost. All right, let's go to Michelle she's in Norfolk Virginia what's up Michelle hi hey what's up so my question is um I'm wondering if I should quit my job because um I have one daughter in daycare and then we tried for another and surprise we have twins which was not in the budget yes um which She's not in the budget.

39:46So the question is, should I quit my job to stay home and take care of my children? Because I don't bring in enough to cover daycare fees. Or should I hold out for about three to six months and just kind of take the loss while I'm aggressively trying to find another job? Because I'm not trying to have like a lapse in my resume. I mean, there's two questions here. One is, do you like working? And do you want to work? Do you see what I'm saying? Like, is there a part of you that wants to work? Or do you prefer to stay home? And this just gives you the out to do it? So I like working. I grew up very financially insecure.

40:32So I get really nervous by not having a job or any income coming in. Do you need the money?

40:43In your budget? We would be, we'd make do without it. Like, we don't need it, but it's... What does your husband make? It would also be, he makes$6 ,500 a month. Do you have debt? No, we have about$65 ,000 in the bank saved up. Great. We have a little one, too. Well, our mortgage. Okay, what's your mortgage payment every month? $2 ,800. Okay. So, can you guys make it work off$6 ,500 take-home pay with no debt? It feels reasonable. Yeah, but daycare is going to cost, like, so I make$3 ,000 and daycare is going to cost$4 ,000. But I'm saying that he makes$6 ,500 a month. Oh, yes. So, even without you working, you have$6 ,500 a month to work with.

41:31Yeah, it's just diapers and formula. What if you worked part-time? What if you split the difference and you did a part-time kind of half day with the kids? And then you did a part-time job and split the difference.

41:47I mean, I'm open to that. I'm just, I... You have to figure out what, my advice to you would be to figure out what problem you solve, because I hear too. But diapers and wipes and formula is not thousands of dollars a month. And so we also have to be realistic and look at the numbers. Oh, yeah. So I would just make a budget tonight with your husband, using every dollar, just his income, go, here's what our future life would look like. and if the math checks out, you go, yeah, we can make this work, then go for it. Stay home. But if you also like the security, that's why I said you're solving for a couple of problems because if you like the security of working, you can work part-time and that's great too.

42:22Nothing. You got options. You got options. Just figure out, is it, I want to be home? Do I need a job? Do we need the money? Those are the three, the three areas you need to get answers for.

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43:22hey guys welcome back to the ramsey show in the fairwinds credit union studio i didn't say this before because george i think they already know but you're george camel i'm jade warshaw thank you for telling them they may not have known it from last time they know this voice a mile away. Who's that sultry, smooth, cowboy tone right there? That's George Campbell. Cowboy. I like it. All right. You keep saying that, George. All right. We're going to go to Stacey in Portland, Oregon. What's up, Stacey? Hi, how are you? We're doing good. Just living it up. Chopping it up. Oh, great. So my, what I'm looking for is some advice on how to speak to our kids about just the way different families live their lives in return to spending, or excuse me, in regards to spending and debt.

44:10You know, we've always stuck to a budget, avoided debt, and just lived within our means. But we have family members who are constantly being very irresponsible. They're leasing cars and defaulting on payday loans and all of this. Wow. Yes. How do the kids know about it? Well, they don't. So the problem is that our kids just see the outside. They see their cousins get to do all these fun things and have a nice new car and get to go out to eat. And we don't do as much of that stuff. You know the underbelly. Exactly. So they're throwing a tantrum because they're going, Mom, why do they get all the cool stuff?

44:50We want cool stuff. And you have to be like, because we don't go into debt. Well, yeah, we kind of just brush it off. We don't really say that. So that's kind of what I'm wanting to know is how can we speak to them. They are 9 and 11. Perfect. That's a great age because they can understand this script, right? Say, hey, every family does money differently. In our family, we don't go into debt, and that means we don't borrow to buy stuff because when people borrow, they get things now, but they have to pay for them later, which is stressful. We choose to wait and save instead, and that's why our life looks different, and the trade-off is worth it because we don't have debt.

45:29It means we have more freedom and options and peace and more time together. And if there's something you really want, we can make a plan for you to save up and get that thing or have that experience. We don't say never. It's just we don't do it with borrowed money. That's how we live. Would that hit with him or would they go, all right, I'm going to go play video games? Probably the latter. And that's fine. I mean, let me put it like this because my son, I literally had a conversation with him last night. He's not nine. He's seven. My kids are five and seven. And last night it was like, hey, how come I can't play K-pop Demon Hunters?

46:06And I said, because I don't think that's an appropriate game for you. So I start with a very kind of like high level because sometimes I can get away with a high level because that's just not an appropriate. Papa and I don't think that that's an appropriate game for you. OK, sometimes he'll take it at that. But then he took it the next level. He said, well, all my friends are playing it. To which I said, Prince, your friends, they have parents. And sometimes your friends' parents don't value the same things that me and Papa value. And we value making sure that you're always at an age appropriate level with the things in the games that you play.

46:43Some parents don't value that. That's their business. It's not our business. And so it's almost like that with money. It's the same thing of saying, hey, you're going to see people spend their money in ways that are different from us. And that's just a reflection of our values. In this house, here's what we value. And I think that if you can frame it up from that set of values, it actually helps you answer a lot of those questions in the same way. Do you know what I mean? Because then you can always go back to values. Well, in our house, we value this and that. And so that doesn't align. simple as that does that help at all okay you honestly stacy you're further down the parent train than i am so i mean how do you how do you if your kids framed up something like that that they want to watch a movie that you don't approve of or they want to go someplace with their friends that you don't approve of what would you say to them no that is pretty much how i would handle it um pretty much the same thing is just you know different families do things different yeah and what works for us doesn't always work.

47:44But the only thing I worry about, and I don't know, maybe I'm thinking too much about it, is they have cousins who are close in age, and I wouldn't want them going off and saying, oh, my parents say your parents are in debt, and they're doing things wrong. Well, that's why you go to the value side, and that way you don't have to talk anything about what they're doing. You're not throwing shade at them. You're just saying, hey, we don't have the money for that thing and we're not going to borrow money to do it. And so if they go to their cousin's house and say, well, our mom says that we're not going to go into debt for it.

48:20We can't afford that right now. Fine. If they want to judge you for that or the family wants to judge you for that, that's fine. You're going to get judgment from family regardless, no matter what you do. So you might as well do it debt free. Okay. All right. Well, thank you very much. Yeah, absolutely. No worries. I think it's going to take some several conversations. I don't think it's a one time with a kid. It's like, you need to say it 20 times and maybe they'll get it on the 21st. Yes. And even when they're younger, sometimes I feel like you want to talk about it more than they even care about it.

48:50It's like, they just brought it up, but then they're already onto the next thing pretty quickly. Now at nine and 11, yeah, they might keep hounding you, especially if it's something they want to have and they keep continually seeing it. But at the end of the day, man, values, tying it back to family values goes a long way. I would go to my friend's house my cousin's house and play with all their toys that they bought and i had a great time i'd go home and i had my stuff yeah i'd sneak over to grandma's if i wanted to watch cable oh because we didn't have you know absolutely so i didn't feel like i needed to have it personally i just wanted access just bum it off somebody else exactly our neighbors had all the best nintendo games and so we would go over there and their parents would buy them uh like they're they never ate at home so everything was like do you want mcdonald's or taco bell or burger king and if you were over there at just the right time, listen, you're getting a happy meal.

49:40Great. This happens as an adult. Like I love to be on a boat. I am not going to buy a boat. I just want a friend with a boat. Yes. Who's happy to take us out on the boat. Yes. That's the key in life. The key in life is knowing that. And it's also to know, like, sometimes you're around your neighbors and you think I should have the same lifestyle as they do. After all, we live in the same neighborhood or After all, maybe we work at the same workplace. But at the end of the day, you don't really know what their life is. And so you have to also be careful not to make that comparison game. Kids can do it.

50:16But our cousins have this. But if adults do it, it can get. At some point, you've got to mature and go, I don't need to look at my neighbor's bowl to see what he has. Yes. Unless I want to make sure he has enough. Yes. That's the only time to be looking over. Yeah. To see opportunity to be generous, not to be envious. Yes. That's just that you're drinking a poison. I always think about, I think it was Kevin Hart. I think it was the Laugh at My Pain comedy special where he was talking about going out. I think it was this. He was basically talking about going out with his celebrity friends. And it's like, if you're friends with basketball players, like it's really easy to think, oh, we're on the basketball team.

50:52So we all make good money. But if you're the starting player, like if you're on the starting team, you make a lot more. It's a different world you're living in. Right. So you have to know that showing up like, hey, I don't have we might all work at the same place or we might all live in the same neighborhood, but it does not mean our lifestyles are supposed to look the same. And I liked that that that basketball team kind of analogy to remember we're all wearing a jersey, but it does not equate to the same life. And that's going to happen all over in our normal lives. We all have friends who make a lot more than us that make a lot less than us.

51:26And you treat everyone the way you'd want to be treated. You never belittle them and you understand everyone's in a different place financially. That's okay. It's all good. That's their business. It's all good, baby. It costs you zero dollars to mind your own business. I know that's right.

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53:30All right, all right. To the phone lines we go. We've got Carol, who's in Cincinnati, Ohio. What's up, Carol? How can we help today? Hello, Carol. Hello to you. My husband and I are old and retired. I'm 75. He is 80. We have a 52-year-old daughter who still lives with us. Oh. She is single and she has always been underemployed. And we can afford to have her here, but she is annoying. We would like to be alone in our old age. I bet. Is there a way to get her out? Yes. You need to go. Kicking her out. Closing the door. Changing the locks. I'm being dramatic, but yeah, there's a way to get her out.

54:18How long has she lived with you? well she has um over her lifetime for her 52 years she has been with us almost all the time oh she has had two boyfriends that she lived with for a while one of our sons took her in for a year and that helps us out a lot but then he says she cannot be here anymore and none of our other kids will take her in why does anybody need to take her in is she does she have any disabilities does Does she have anything that precludes her from living in life? From working? Yeah. She doesn't want to work. She doesn't have to. If you want to work. But she hasn't had to. Right.

54:56And we have enabled this. We need to learn how to not enable her. The way you learn to not enable her is to stop the behavior today. Because she knows you guys will be a doormat and just keep going and let her come back and keep covering the bills whenever she's short. And so instead you go, hey, you need to leave by the end of this month. Yeah, by the end of this month. And then you have to evict her because likely there might actually be some laws around this because she's lived there for a while, receives mail there. This is like a tenant. And so I would actually look into your state laws and you might need to contact an attorney to do this right.

55:32I don't know how wild she is. She comes after you guys to sue. But you want to make sure you do this right. Okay. I haven't realized there's been legalities with this. I mean, she's living for 30 years. She basically squatters rights at this point. So you might need to give a written notice and say, hey, you need to leave by this time. And the decision's final. You cannot let her back in. She needs to figure it out. She needs to spread her wings and fly. Okay. And there's going to be backlash, isn't there? It's almost the end of the month. What is she going to do when you tell her this? Well, she will probably yell, or she will probably cry, or she may just stomp out the door and say, you'll never see me again.

56:13Okay. Well, that's her choice, though. At 52 years old, if she does that, then you're just going to have to let her do that because that's the behavior of not a 52-year-old. Practically speaking, Carol, here's exactly what I would do. You and your husband, I would sit down tonight. Maybe when you get off this call, you and him huddle up and say, here's what I heard on the call. Here's what we're going to do. You're going to sit down and you're going to say, daughter, this has gone on long enough. we have decided that you are moving out. Not that we want you to move out, not that we need you to move out.

56:47Say it clear. We've decided that you are moving out and you're gonna move out at the end of the month and you're gonna move into your own place. It's up to you what you choose. Now, Carol, I don't know. I'm not saying you have to put her on the street. Do you know if she has any money? Because if you know that you know that she has zero dollars, what you and your husband could decide to do is make sure that she at least ends up in a place. right you can make sure she's there's a place for her to go to and you have it set up that she can go there meaning maybe it's first and last month's rent is paid so she can get into the place but it's up to her to keep keep the living expenses going and you let her know that say we have you know and i'm just making this up we know that you don't have any money so we're willing to pay first and last month's rent which is x amount of dollars no more no you know no more than that and up from From there on, it is up to you.

57:42And we have also decided that we're prepared to see this through to the worst extent. We're not worried about you becoming homeless. We're not worried about you not having a place. We're not concerned about that. We have the full confidence that you can do this. So please do not come and ask for any money because we will not be giving it to you. And make it so, so crystal clear. I love you, but this has to stop for your good and for ours. And that's the conversation. and she's going to yell and kick and scream and you're going to go to bed and you're going to drink a warm glass of milk and you're going to sleep the best sleep of your 75 years.

58:22This is going to be probably the hardest thing you've ever done in your life, Carol, because deep down you love this woman. You want what's best for her and you feel guilty. You feel shame for enabling this behavior and allowing it to happen. You don't want to see her on the streets and have her life take an even worse turn. But this is the best thing you can do for her because her growth has been stunted for far too long. And if she lives another 30 years, she needs to live it freely with independence, not codependent on mom and dad in their old age. Well, it's for sure. Well, we're going to die.

58:54We all are, Carol. That's good advice. Yeah. It's coming for all of us. No one escapes it. And so you need to have a real serious, calm conversation telling her here's what's going to happen. Does your daughter have any addictions or anything that you think could rear its ugly head? Okay. Has she ever been violent? When she was a teenager, she was violent. Okay, I'm just wondering, just for your safety. She did anything a teenager could do. I don't think she would. Okay. However, she could be suicidal. She may say, okay, there's no point of living. I'll just go and end it. Is that her doing that just for attention, or does she really mean that?

59:33She's tried it two or three times. Okay. Wow. So then making sure you know, making sure you know, and I'm sure you've had some sort of counseling on this, what to do in those situations and what your role is in those situations. I don't think your role is to let her move in again. I think your role is to get her set up with counseling, right? yeah and that's a way to do with kindness hey we're going to cover six counseling sessions for you and cover first and last month but you have three days to vacate the premises otherwise we're going to have to file an eviction and it's going to get ugly we don't want to do that but that would be the next step okay and have the non-emergency police line ready to go in case things take a turn i don't know and so that that's the scary part the unknown and it's probably why you've put this off for so long because you don't know what's on the other side of this.

1:00:32It could get worse before it gets better. We don't want to die. We don't want to get killed in the streets. But we also would like to be have a quiet, peaceful home. And that's fine, Carol. It's about time. That's totally fine. You're not asking for something crazy. You're not shooting for the stars here. I think that for you, your piece in this is just understanding that your daughter is totally grown and she's going to make decisions that you cannot control. And she could make many decisions that you do not like that you don't, that you can't control or that you know are bad for her that you can't control.

1:01:08And so for you going into this conversation, as much as you can start to just really make some peace with that and almost prep yourself for that feeling, because something's going to happen that she's going to lash out and you're going to want to do that old familiar song and dance. Yeah. Right. And she will expect it. And so will you. And it's going to come knocking at the door. And so you're going to have to be prepared mentally and physically. And same thing with your husband, because if he folds, it's a problem. Right. So you guys have to be. He is more on this than I am. OK, good. So you'll have to do your due diligence to make sure you're loaded for bear when this comes because it's not it's not going to be easy and you know that and i would warn her say we're gonna have a hard conversation tonight i want to let you know it's going to be uncomfortable but we need to have it okay that we're not coming in cold busting in her room going you need to get out yesterday yeah don't do this that's so good george don't do this out of anger like if something happens and she comes home tonight and there's an argument postpone the conversation because you can't do this like with a hot head you have to do this when you're in your most uh cold state like there's there's yeah you're zen oh good luck this is not not i don't envy you in having this conversation but it's so hard because you can't control the past you regret it you can control what you do now but then you can't control how they react and what they do next and that's the hard part you're like i want them just to go get a job start paying rent and have a great life yes But that part is not up to you.

1:02:50You know what? Christian, send her a copy of my book, What No One Tells You About Money. It's not a money conversation, but you will love, Carol, the chapter on guilt and shame, especially when it's about something that someone thinks you did not do, even though you know you're doing the right part. It'll help you.

1:03:18you

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1:04:57you're listening to the ramsey show thanks for hanging out with us all right guys let me tell you a little something about our tax pros do you have the sheet george i was about to read it oh here it is gave it to me i'm special i'm not i found it you want to you want to tag team this with me is that what you want to do okay i'll have some fun i'll read the first one george i I don't know if you know this, but one of the best things you can do for your finances is to have a really good tax pro in your corner that you can trust. Absolutely. They'll help advise you on the best moves to make for your situation or for your small business, especially if you've had some big life changes in the past year.

1:05:31That's right. So go to RamseySolutions.com slash tax pro to find CPAs and enrolled agents that have been vetted by the Ramsey team. So, so important. Speaking of team, what a great team we just made. Smooth as butter. Peanut butter and jelly. I love it. Ryan in Columbus, Ohio is up next. Hey, Ryan. Hey, how are you? Hey, my question is related to starting a small business. I am 23 years old. I have my own repair shop. I've been running it for approximately a year. I set up the business in January of 2025. The thing I'm running into now is I started out in a very small one bay garage building. I've got a single service bay, very small space.

1:06:14I did that all with cash. That was my goal without borrowing anything. Now I'm running into the issue. I've got customers that I'm losing their work because they don't have the space and efficiency to get it through because of, you know, I tear something apart. I got to get it out before I can get something else in, you know, that kind of thing. And so I'm wondering at what point the balance is between gaining efficiency and borrowing to do so. I'm trying not to borrow, but I feel like I'm really losing efficiency and traction because of it. What would it take financially to expand in cash? Well, I've got the end of 2025, I was able to mostly cash flow the shell of a building that's going to be a three-bay shop building.

1:07:06It is on my own property, so I own the land. There's no additional lease or anything like that. I had a contractor put it up. That cost me about$30 ,000 in the building package. It's just a shell, just a very basic shell of a building. What about to build the rest of it out? It is currently sitting there like that. If I had another maybe$30 ,000 to$40 ,000, that would get it insulated, heated, ready to go to be able to make money out of it. What are you taking home from the business every month? Last year, I basically didn't pay myself. I was living off of personal savings for my personal bills.

1:07:43That, of course, only lasted for a certain amount of time. This year, my goal is to pay myself approximately$3 ,000 a month. And that's what I have it set up for this year. Last year I paid myself like$6 ,000 out of the business. Are you working full-time on top of this? No, no, this is my full-time. I quit my full-time job December of 2024. That's awesome. Okay, but you've made$6 ,000. That was what I paid myself as a salary. Yeah, I'm telling you, you made$3 an hour doing this last year. Do you understand the math on this? no let me be clear so i i was only working full-time for myself i was doing some other part-time gigs at the beginning of the year as work picked customer work picked up the business itself had a gross revenue uh with customer work of 120 000 last year and the net or the gross profit i should say after cost gets sold and labor cost um was about 80 000 that's how you're able to do the three-bay deal and all that correct okay so you're just investing all the to pay a personal salary.

1:08:47Correct. But that can't go on forever. Obviously, this year, I'm hoping to actually create a sustainable salary for myself. How long will it take you, if you pay yourself that$3 ,000 a month, how long will it take you to take some of the earnings out of the business and save up, well, the$40 ,000? But what I really want to ask, and I'm sure you've turned this around every which way, is there a way that you can get that three bay uh shell what's the least amount of work that you need to do on it just so you can get in there and get i could some business going and garage i could put concrete and garage stores in for probably around 20 20 to 25 okay how long would it take you to get that me till the winter uh so that would probably take me that's probably going to take me into you know Maybe the next six months, I want to say, before I could comfortably feel like I could write those checks.

1:09:43Okay, so six months gets us a platform and the doors that we need. And after you have that installed, would you be able to do a little bit of work out of there, a little bit of business out of there? I would be able to move my main operations into there. It would just be that within a couple of months after that, I would be needing insulation and heat, which is kind of like where the rest of the money comes in. But at least you could start making money out of it. tight the point is you could at least start making money out of it so you're not having to turn away business in six months plus plus actual work right and then i feel like once i've got some more space it's going to be more equipment and more all that stuff that's going to be you know that's where the thousands and thousands add up would would that be uh just something that i would just i know i know dave says about being on the cover of slow magazine and that's really what I feel like right now it's frustrating.

1:10:33That means you're doing it right. You're doing the next smallest step that you can take. So right now, and you tell me if I'm wrong, but the next baby step is I'm going to spend 20 to 25 doing the garage and the doors, and I'm going to kind of move everything over there. Now I can start taking on more customers. Now I have more cash flow coming in, so I should be able to pretty quickly add the insulation, and now that's going to create a better environment for everybody. I can keep, I've now tripled the amount of work I'm doing because I have three spaces now. And now I can keep going and you should be able to, whatever the machinery and things you need, the more that you're doing is the more money that you'll come in to be able to do, if that makes sense.

1:11:16I'm just worried right now I'm losing business because I'm not able to get stuff in fast enough for people. You are, but that won't be for long. It's not going to hurt me long term. But it's not going to hurt you long term because you're going to do this in six months. So you've got six months to kind of grit it out. And I mean, there might be some solutions that you can figure out in the short term. But understanding that I'm kind of having the short term suffering, which is, oh, I hate the feeling of turning business away. But also knowing that in six months, you're not going to have to do that.

1:11:50And there's no payments to be made and no debt to pay off, which just increases your cash flow. Everything would fold up or if I would break my leg or something, that it wouldn't be eating me up on payments while I'm not able to produce an income. Yeah, you're just adding risk to the equation. If everything else would fold up. You're not going to be gaining efficiency. I feel like I'm making money out of fixed cars. It's just that it's very, very slow because everything costs a lot. So you tell us what you want to do. What's your gut telling you to do? I don't want to borrow money. then don't there's no you said at the beginning of the call i i want to try to not borrow money instead rephrase it i'm not going to borrow money i will move at the speed of cash i feel like everybody in my industry i feel like everybody in my industry is making payments on everything and i feel like i'm kind of the slow dog that's fine you ever read the tortoise and the hare reread it tonight it'll be a good reminder it's one of dave's favorite books because here's the thing it's really hard to fall flat on your face and have this business fail if there's no debt attached to it.

1:12:52What you're really buying is freedom, even though it's going to take more time, it's moving slower, and the guy next door is crushing it because he's got a bunch of payments and it's working for him. But man, you are a solopreneur, and I can't tell you how many small businesses fail because they're over leveraged. And they thought they'd have the customer base. They thought they would make money, and the lender doesn't freaking care. They want their payment every month, regardless if your business succeeds or fails. and I think I'm 23 I haven't been an adult long enough to be learned patience yet so that's well no you have you have I'm going to tell you right now when you called in Ryan and you told us what you did I was immediately impressed which George knows it's hard to for me to feel impressed by anyone and because I immediately was like wow this guy's patient that was my first thought is like wow this guy's really been patient when you explained to us how you built this I thought well done.

1:13:45And so I think you already are patient. I think what's happening is what happens to all of us, which is you kind of had your, you know, like horses, they wear the thing around their eyes so that they can't see to the right or left so they don't get spooked. You know what I'm talking about? I think that, I think the blinder came off and you look to the right for a second and it spooked you and you're like, oh, maybe I'm not doing it right. Maybe I need to go on another path. Maybe I need to, you need to put your blinder back on and keep focusing on your business. What you've done is working. You're so successful that you can't keep every, you can't take all your customers.

1:14:19You're so successful. Now's not the time to go do something else and go into debt. Now's the time to keep steady, keep going on your path. What got you the business you have is who you are. You're great at fixing cars. You do what you say you're going to do, right? Let that follow you into this next phase of your business.

1:14:51Statistics show that half of Americans don't have enough life insurance, or they don't have any at all. I don't understand this, John. Why don't people want to take care of their family? They think they're going to die or something? Well, I used to be one of those guys. I didn't even think about it. And one of my buddies said, hey, the only reason to not have life insurance is if you hate your wife and kids. And I immediately went and got term life insurance. That's a gut punch. And you're telling me for decades, Dave, I've sat across people who've lost a spouse. They've lost somebody important to them.

1:15:22Me too. They don't know what to do next. Me too. I mean, you're going to have a crisis here. And, you know, you got two options while you're sitting and talking to a young widow. She's concerned about how she's going to invest all this money properly and not mess this up. or she's concerned how she's going to eat tomorrow. That's exactly right. These are the two options. And take care of your dadgum family, man. Term life insurance can replace income, pay off debts, cover funeral expenses, so your family can actually have the opportunity to just be sad, to just miss you. That's exactly what it's supposed to be.

1:15:51It's saying I love you to your family. Term life insurance. Jeff Zander and the team at Zander Insurance makes it easy and affordable. I've used them personally for 25 years. They're the only people I trust. Go to Xander.com or call 800-356-4282.

1:16:23All right, the Ramsey Show Question of the Day is brought to you by YReFi. Hey, you don't have to stay stuck in defaulted private student loans forever. Y-Refi helps borrowers take back control with affordability, refinancing options that actually work. Learn more at YRefi.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. And remember, it may not be available in all states. Today's question comes from Glenn in Virginia. I've been looking at my credit report to make sure I'm including everything I need to pay off in my debt snowball. If an account is listed as closed but still shows a balance, do I still owe that money?

1:17:01If so, should I call them and set up plans to repay what I owe? Good question. Well, close just means the account is no longer active. So if you closed it with a balance, that's a normal thing to do. It may have been, you know, charged off in collections. But you want to look for those key phrases. Paid in full would be a nice key phrase to see that it's actually paid. So you likely still owe the money. Closed with a balance does not mean it's been forgiven. It just means it's not active there. So I would call them and set up plans to repay what you owe because you likely do. Oh, yeah, definitely, definitely.

1:17:37And doing it based on your credit report, that's a good place to start because sometimes there are things that are actively holding a balance, I should say, that you don't know about it because maybe you moved or they stopped sending you notices or it went to your spam account. Anything like that is possible. And it's a good – you can check it for free. Never pay for this. You can go to our website, annualcreditreport.com, and pull it from all three credit bureaus without paying a dime. And it's worth doing. Very, very good. Let's go to Victor in Chicago, Illinois. I love that name, Victor. What's up?

1:18:09Hello. Thank you for taking my call. You're welcome. So I am currently in 50, like 50K, a little bit over 50K in debt with credit cards, personal loan, and a vehicle. okay um so my question is how smart or dumb would it be for me to close like not close out but take out a big chunk of my 401k which is about 62 000 to pay out most of my debt it would be a mistake from the smart to dumb spectrum it's as pretty much as far as you can get on the dumb side. The idea of paying off the debt is not dumb, but doing it in that way to George's point would not be a smart avenue. Now, go ahead, George. I want you to think about what's actually happening here because a lot of people just go, well, I can break into the piggy bank in case of emergency.

1:19:10But here's what actually happens when you pull 50K out. It's more like 75 and 90K because you have a 10 % early withdrawal penalty. So 50K, you pay$5 ,000 right there. Now you got federal and state taxes, which could be, you know, 20, 30%, another 10 to 15K. And so to net 50K, you'd have to pull out 65 or 70. Plus that money is now pulled out forever. And if you pop in 50 grand, how old are you? 38. 38. From 38 to 68, that 30 year gap of that 50K growing for you would be hundreds of thousands of dollars. And so you didn't make a$50 ,000 mistake. you made one with a lot more zeros on the end. And so you're robbing from your future to put out a current fire.

1:19:54And so there's better ways to do it. So let's get into the better way. Are you with me that you're not going to do this? Yes. Hallelujah. So what is the 50K in debt? Break it down. Personal loans for, I believe it's 32 left to pay off. $32 ,000 or$3 ,200? $32 ,000. Okay. To pay off. And credit cards add up to about$10 ,000, and the rest is on the car. Okay. How much do you make a month? Roughly about$5 ,000. Okay. So we're bringing home$60 ,000. We got$50 ,000 in debt. and so this is a math problem to solve, which is we need more income and we need to cut down our expenses down to the bone. So the question is, what caused you to get here?

1:20:48What did you spend the money on from these personal loans and credit cards? So the first I racked up the credit cards, credit cards between like regular credit cards and then I consider after paying Clarnow that also credit cards. Why? Were you spending that because you're trying to survive and your budget is not getting you enough money? Or tell me what caused that. It was once. Okay. If I didn't have the liquid cash, it would be the fastest way to get it and pay off little by little. But it racked up. So I took out a personal loan to clear all of that. And so I took up a loan and didn't stop the spending.

1:21:43Yeah. So another great reason not to take the 401k loan, because we've already learned that that method of kind of taking a loan to pay off debt doesn't work, right? Yeah. So George and I are going to suggest a way that's really going to cure your behavior because it's going to cause you to have to make real changes, really feel things, therefore kind of learning your lesson the old fashioned way, which is I get a consequence and it doesn't feel good. I don't know. I probably shouldn't say this, but back in my day, we used to get spankings when we did things wrong and it hurt. It hurt. It was like, oh my gosh.

1:22:20And you cry and you make sure that from now on you're back home before the streetlights come on. And so that's kind of what this is going to do to you is you're going to feel like, man, I never want to do that. It's going to feel like discipline for you to do this. So George is right. Income is the main deal here. There's really two parts to this equation. It never changes, Victor. You need to cut back and you need to increase income simultaneously, both of those things. How much is your rent? $1 ,000. Okay, great. I'm glad to hear that. So for you, it is like bare bones. It's just you, no wife, no kids.

1:22:58In my mind, if I'm you, I am going down to nothing. All right? I'm cutting everything out. The memes used to say disappear for a while and then you come back debt free. That's you. You're disappearing. OK. OK. And then in the meantime, you're working like Michael Jackson said, day and night. OK. Yeah. What can you do? What are some tell me list off a couple of ideas that you can do for work so I know that you get it. Well, I'm I'm a very handyman, so I could definitely do some side side gigs with when it comes to like. like construction. Great. I really get my hands on if I could get a job doing something, I could do it pretty much other than tech.

1:23:44I'm not good at tech. Okay. Awesome. Can you advertise that? Can you get on Thumbtack? Can you get on a Facebook group? Yeah, I could probably do that. Yeah, do that immediately. And I would start in my circle. If you go to a buddy's house and you realize something's wrong, say oh i'll do that i'll charge you 50 bucks go to your parents house the the fence is broken say i'll fix that at 75 bucks start marketing your talents and just start noticing stuff and just start telling folks you'll fix it for this amount okay in the meantime and then get get on one of those sites uh five what are the different i'm i'm thinking thumbtack hot fiber yeah i've used all those different all those different apps where you can rabbit that's another one uh-huh where you can put your things up there.

1:24:33And here's the thing. You need to make a goal. I want you to go on EveryDollar tonight. If you don't have it, Christian will pick it up and we'll give it to you. And I want you to plot out with what you're making now, do the part in there that's going to tell you how long it's going to take. So you'll fill out the onboarding there and it's going to tell you at your current pace, it's going to take this long. And it's going to suggest a bunch of things for you to do, Victor, to find margin. Sell stuff, get the side hustle, pause all investing, which please tell me you will pause all investing down to zero.

1:25:04And so that means like no contributions to a 401k? Yeah, zero. For now. Because what that's going to do is free up more money to go toward the debt. We need to focus on one thing right now, and that is becoming debt-free and staying debt-free. And so all of this together is going to help you. You're going to do the debt snowball, smallest to largest balances, attack the little one with everything you got, minimum payments on the rest. And here's the math on it. The napkin math says if you can put a little over$2 ,000 a month towards your debts, you're debt-free in less than two years. Okay. So that's the plan.

1:25:31I know that sounds like forever and you want the shortcut of just knocking it out now, but you're just trading one debt for another right now. And so we can't look to debt to be the solution anymore. You are the solution. Your future income, anything you have in savings above the thousand bucks, anything you can sell, all of your talents and skills put to good use, that's what's going to get you there, man. We're rooting for you. Yeah, you can do this. Call us back and tell us when you're debt free.

1:26:24Well, welcome back to the Ramsey Show in the Fair Ones Credit Union studio. George, are you ready to get to another call? I don't know how I could be more ready, truthfully. I'm pretty ready, and this person is in Austin, Texas. Sydney is on the line. Hey, Sydney, what's up? Hi, thank you so much for taking my call. You bet. I just wanted to make sure that we're on the right track, what's the amount of money we're making, saving, investing, and still feeling like we have money to spend on the things that we want and not eagerly waiting for payday. Oh, okay. Tell us more about your situation. um so i just downloaded every every dollar this month 2026 getting on our on our uh budgeting and i plugged in all of our bills and all the things that we want to spend money on and there seems to be quite a bit left over yet the past especially the past six months uh the past year really we were just eagerly waiting for payday okay what do you so in reality you're paycheck to paycheck but on paper in EveryDollar, it's like, hey, you should have$8 ,000.

1:27:24You're like, where is this going? That means you're just not sticking to the numbers. Yeah, we're not sticking to the numbers. And we do put away a little bit in savings. We do have quite a bit in savings, but it's not as much as we would hope considering how much money we make. How do you make? What do you make? So this information just became privy to me. My husband's been taking care of the finances up until now, but he's seeing that I cannot budget if I do not have the information. So he helped me out setting up the EveryDollar app, putting in his income, and I pay all the bills, and I do all that kind of thing with the shared money, but I make sure all the bills are paid.

1:27:58Okay. I think it's about 40, about 40K a month. $40 ,000 a month. You're talking like half a million dollars take home a year. Yeah. Wow. Some months it's a little less. That's incredible. Some months it's a little bit more. I was not expecting that with the way this call was set up. I'm not going to lie. Oh. Okay, so$40 ,000 a year is a lot. I think America's going, I wouldn't know how to spend$40 ,000 a month if you gave it to me. Yeah, what's your mortgage? What's your mortgage payment? You can sign on to my every dollar and you can check how I spend it. You should DM it to Jade and I just for fun because we have a dark curiosity.

1:28:31We want to know how you would even do that. Listen, if you did, we would look at it. So tell us a couple of the biggest line items on your budget. I'm guessing there's a house. I'm guessing. well we try to put away about 12k maybe like between 10 and 12 for taxes every month just to make sure that that's in an account so when that happens we're not like scrounging okay so so that's not actual income so you guys are self-employed yeah no we put away oh yeah but that's before taxes oh okay so after taxes it's closer to 28 i guess so okay so in every dollar you're going to list take-home pay. Is that what you did, or did you list the gross amount?

1:29:13No. I listed the gross, and then I put in as a category taxes. Got it. Okay. Okay. It may be helpful for your sake to do it the other way, but if the gross money shows up in the account, that's what you're budgeting off of. So that makes sense. Yeah, because the gross will show up in our account, and then we take care of paying taxes quarterly. Okay. Fantastic. And then how much is your mortgage every month? So we have a rent. It's$3 ,300 a month. Fine. Okay. Any debts? A little bit of credit cards for just the last couple of months being lazy to pay it off. And we want to put a lot of money into savings so we don't end up paying the credit card.

1:29:50Not much. Maybe$16 ,000 at most. And if we really wanted to, we could pay it off. We just want to make sure we're on the right track and really start budgeting. I'm sorry. Can I go back a second? Did I hear you say you rent? Yes, we rent. Why? How long have you been making this money? um this money about a year for the year before that it was close it was also good i'm yeah we've been married four years so it's been it's been getting better every couple years okay but you've been six figures for upper six figures for quite a while we've always been six figures um upper six figures yeah for quite a bit understand the renting part right quick i'm just location location is very important to us.

1:30:33When we first moved here to Texas, the company was paying our rent, so we're like, great, pay our rent. And now they're no longer, but we still want... The location is very important, and we're looking for a house. We're looking. Okay. So, sorry, that was just a squirrel I needed to chase. Okay. Continue, George. You had a train of thought. I'm confused why you guys are even going into credit card debt with this level of income, because you don't want to touch savings, but then you're going to pay 29 % APR on the$16 ,000? that feels yeah and we have quite a bit in savings how much you haven't said it in the stock market i'm not 100 sure my husband has uh access to that account but he has i think he put 30k into the market in the last couple months and he's got to have about 60 or 70k in his in his high yield savings account okay so i'm picking up on another issue here i know you called about one thing but part of the issue is you don't have the transparency you need to know what's actually going on.

1:31:26It sounds like you asked for that so you can make the budget, but you really do, Sydney, need to know all of these numbers so that you both can live in a state of reality with your money instead of guessing. It's hard to be in reality when you're guessing. If one hand doesn't know what the other is doing, you're going to always have this problem and keep living in the cycle. You both have to be on the same page with full accountability and transparency. So that's step one. And then do you have any other debts outside of the credit card? any car payments student loans we have leases but yeah we have leases but we don't intend to own a car what are they what are the leases so i drive a 20 20 25 minivan and that's 8.93 a month um it's important to my husband that i'm in a reliable vehicle every couple years and he drives a range rover for just under 3k a month goodness gracious so let me go back to the minivan talk.

1:32:22So basically what you're saying is that 99 % of the population is not in a reliable vehicle if they don't switch it out every three? No, I didn't say that. She did. Right. But my point is to call out the ridiculousness of that statement. And therefore that means that you know it too. Plenty of people buy a car, even if you bought a brand new car and you just drove it until, you know, I don't know, for 10 years until you whatever, that would be more reasonable than the statement that was said. You guys are dropping four grand a month to rent cars. And you're prepaying all the depreciation. So that's part of the problem.

1:33:02I think that's a microcosm of a bigger problem here, which is you guys, you make great money and you want to show it off. Right. There's some flaunting here. And the truth is you could save up and buy these things outright. and it would still be okay. But we haven't actually, we don't have the discipline. We have the savings muscle there because he can shovel money away in other places. But you guys are totally okay taking on debt and payments because you can stomach it right now. Yeah. I wonder why there's the aversion because I agree 100 % with George. You guys make good money. If you want nice things, have at it.

1:33:37You don't have a ton of debt, but leasing is crazy. You could have literally bought both of these vehicles outright and nobody would have said a word to you we would have been like great that's awesome and it would have been yours and you wouldn't have been paying outright outrageous interest and all these things on this so what else is there there's the two leased cars anything else um nothing oh uh the only other significant uh is I have a lady that comes help me with my kids and with the cleaning sure and I'm when I put it into every dollar I put in two thousand dollars a month but between you and me it's usually a little bit more because it's five o 'clock and she just stays extra and I pay her I figure more.

1:34:15Okay. So call it three. So on the budget, here's what I think you need to do, Sydney. So when you make the first budget, it's a guess, right? It's I think it's this. I think it's that. I don't know if you've actually gone back. And I'm not sure how long you've been on a budget. But if I were you tonight, I would go back and download some old bank statements and really see. Here's what I actually spent. Add up what you spent on food. Add up what you spent on, you know, DoorDash. Add up what you spent on housekeeping. add up those actual numbers and plug them in every dollar, then you're going to have what's called an accurate budget of what you spend.

1:34:51Then you can decide what makes sense to cut back on. And that's honestly all you need to do is cut back on frivolous spending.

1:35:12you spend hours researching before making a major purchase like a home or car but it's also a good idea to put in the work searching for the right insurance coverage to protect your biggest assets I recommend using Ramsey Trusted Pros. Whether you're looking for car, home, or any other type of insurance, Ramsey Trusted Providers have been coached and vetted to serve you like we would. Find what you need at RamseySolutions.com slash insurance.

1:35:53You're listening to The Ramsey Show. George, I want to come back real quick and talk about the last call that we got because it dawned on me, you know, they were renting their entire lifestyle. They were renting their home, renting their cars. And it's very hard to build wealth if you don't at some point lock in and make yourself an owner of the things that are in your life. We talk all the time about renting is okay for a certain period of time. Obviously, you rent and it buys you time to be able to buy. It's not throwing money down the drain or anything like that. But just be careful. Things like leases are the most expensive way to operate a vehicle.

1:36:36It is like you said, George, you are renting a car. And if you're out here trying to do anything that we teach, if you have a lease, that needs to be the first thing that you look at. I mean. Well, and the other problem is it's really hard to get out of these things. Very hard. I mean, you got to get the buy. You have to have the entire amount in full to get out of a lease. Yes. You can't just like put extra on it and get out. That's the awful part. And good luck trying to get someone to take over your lease. You got to find someone who's real boneheaded to do that. So it really is one of the biggest traps people fall for.

1:37:09And who falls for it the most? High earners. High earners. Because they want to look good. Yeah. And they end up paying ridiculous. obviously leases don't have uh interest the way we think of it is it's cost of capital baked into your payment yeah he's out here paying three thousand dollars a month yes to look good driving the Range Rover so here's the here's the key instead of looking wealthy you want to actually be wealthy and instead of just looking like you have nice things actually have nice things by owning it outright building equity towards owning the home paying cash for that car if you can actually afford it.

1:37:42But instead, we want to shortcut our way and just, well, we can have it right now. It's kind of like a petulant toddler who's just like, I can't wait. I got to have it now or else I'm going to have to know my tantrum. I work really hard. I deserve it. Those are the three, two most dangerous words in the English language. I deserve. I deserve. Yes. I write, I have a whole chapter on that and what no one tells you about money. So the point, the moral of the story, guys, is exactly what George said. Don't be fake rich. Be real rich, especially when you have real money to be real rich. All right, let's go to Kyle in Chicago, Illinois.

1:38:16What up, Kyle? Hi. Thanks for having me on the show. My question today is, should I cash out my whole life policy? Short answer, yes. Let's talk about it, though. Tell us more about your situation. i started it back uh december 2014 oh the total value to yeah you're behind that who hated you enough to sell you that policy was it an old college buddy no it was my wife's cousin oh even worse that's blood man that's dark stuff on top of that a year later uh i saw him at christmas and he said yeah i quit that company because they were making me sell things i didn't believe in I hate to ask, but how much money have you poured into this thing since 2014?

1:39:04And how much is cash value at this point? Okay. As of now,$69 ,000 I've paid in. Oh, boy. And what's your cash value? $59 ,000. Oh! Brutal. Okay. So you know you need to surrender the policy. So what's the question behind the question? uh so based off the chart that they sent me i'm on year 12 based off the chart it looks like on year 15 would be my break-even point wow so you want to keep doing more years i could uh well that's why i called in and asked you guys but what's the death benefit half a million oh my goodness gracious you could have got that with term life for like pennies on the dollar yeah it wasn't until i started listening to dave randy that i knew i screwed up yeah well it's okay we're not here to shame you like tons of people fall for this stuff do you want to shout out the name of the company that he left uh i'd rather not okay just making sure just want to let you you know vent if you want to vent all right so i would surrender the policy, what you're experiencing right now is sunk cost fallacy.

1:40:17You're like, well, I already put this much in. If I stick with it just a little bit longer, three more years of payments, I can break even. I would take the loss and go, hey, that sucked. It was a hard lesson to learn. The good news is you sound like a young upstanding guy with a great income. So you're still going to be able to build wealth. So chalk it up to a hard lesson that was learned here. What do you make? Oh, go ahead. So my wife and I make$160 ,000 a year. Fantastic. What do you make personally? I make 80. Okay, great. So you need a policy worth 10 to 12 times your annual income. So you're already low on the death benefit, even with this super expensive crappy policy.

1:40:56So I would, number one, get term life insurance in place first before you surrender the whole life policy. So there's no lapse in life insurance. And so keep going. uh the next part was about two years ago i called and asked about uh cashing out the policy and they offered a cash value plus a term life like they would take the difference of what a term life would be i'm not doing any more business with this company okay they can't be trusted to offer you any product it's been 20 years of pain so i would contact xander that's who i have my term life insurance policy through. You can call them at 800-356-4282 or jump on zander.com and get a quote.

1:41:44You can actually do a lot of these online. Like for you, you need a, let's say, million dollar policy, 10 to 12 times your annual income. And you can do that with no medical exam, do it completely online and you're in good shape. You sound healthy. Well, thank you. And how old are you? 36 years old. Okay. Same age as me. So likely your policy isn't going to be that much for a million dollar policy, it's going to be, you're going to be like, wow, what a discount I just got for paying this whole life premium for 11 years. And so it is worth it. You're going to get double the coverage for a fraction of the price you were paying.

1:42:16You can turn around and invest that difference on your own in actual good, you know, mutual funds. Likely one to 3 % is what people see the return on their whole life policy. One to 3%. You could literally do better in a high yield savings account. That's truly what we're saying. Yeah. So step one, term life. Step two, surrender. And you'll get some cash value out of it. What will you get at the end of the day? Have you looked into it? I'd get$60 ,000 if I cashed out today. I'd take that. Yeah, take it. Do you have any debt? Do you have any savings? We have mortgage-only debt, and it's$60 ,000 is what we owe.

1:42:57Oh, I love this. This is more than coincidence, my friend. That feels great. This is a divine appointment. so you're telling me by like the end of next week you could be completely debt-free house and everything and not have a whole life policy yeah and i guess the next question is my interest rate is only 2.1 percent who cares dude you're what's your mortgage payment house yes pay off the house 1200 a month okay you want to do some some fun math do you have do you have any money in retirement right now? Yeah, me and my wife have$270 ,000 in retirement savings, and I'll have a pension when I retire.

1:43:39That's so awesome, Kyle. Fantastic. If you don't invest anything except that mortgage payment, you would have$5.3 million between the two of you at 62. If you just invest the$1 ,200, you don't do anything else. I like that math. And so you're already doing more than that. So I'm not worried about, well, it's 2%. 100%. Who cares at this point, dude, you are on your way to building serious wealth, and you can't put the psychological piece into a spreadsheet. And it's so hard for me to explain because I'm the guy who paid off his low interest mortgage. And everyone's like, why would you do that? And now it's becoming a trend.

1:44:10Everyone's like, well, I paid it off because I wanted the peace of mind. And if something happens, you don't have to worry about it. And if you lose income, you don't have to think about it. You just have more flexibility and options. Plus, if your house were paid off, if it were paid off, you would not be calling us saying, hey, I want to borrow$60 ,000 against my home so I can invest. You wouldn't do that, would you? No. Right. So I don't think the spread is worth it on keeping the mortgage. And I would just try to stomach the sunk cost fallacy and go, man, I got screwed by someone that I trusted, by a company that essentially felt like a scam.

1:44:46And you learned your lesson. 36 is actually early. A lot of people - We've all done crap like this, Kyle, just so you know. You got a lot of life ahead of you. You guys are going to build outstanding levels of wealth. I have no fear. So call up Xander. Get on the website. Get that term life policy in place. For anyone that has anyone depending on them, you need term life. 10 to 12 times your annual income. A 15 to 20-year term is what makes sense for most people. It's so affordable knowing that your family is covered. Yeah, and just remember, term life insurance, guys, it's not a baby step. It's not something you do once you hit some point.

1:45:21You do it immediately. I don't care if you're in baby step one. If folks are depending on your income, you need life insurance and you need it today.

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1:46:46Thanks for listening to The Ramsey Show. Back to the phone lines we go. Phillip in Raleigh, North Carolina. Hi, Phillip. Hey, guys. How are y 'all? Thank you for taking my call, and thank you to this call screener for doing the same thing. Well, you bet. Christian is the best in the biz. Look at this. Shout out to Christian. They don't get enough love. They don't. They're really doing the work on the front lines to protect us. Yes, you do. You do lots of work, and we're grateful to everybody in the booth. Hearts. How can we help, Phillip? Well, guys, this is a hard question because there's probably some emotion involved in it.

1:47:25So my wife and I are on our—well, I'm on my second marriage. She's on her third. And for 10 years, we've been living really happy, and we're happy now, and that's great. We took on, just before COVID, we bought a farmhouse. We paid$71 ,000 for it. We put$40 ,000 in it. We remodeled the whole thing. We put it on the market a year later, and the realtor said, no, you need to list it for$315 ,000. Okay, so we walked away with$175 ,000. in process, which was amazing. We weren't expecting it. We were expecting maybe$60 ,000. So the market's been great to us. We've actually flipped one other home since then, and the one we're in, we've been for four years.

1:48:14We're thinking about selling it, and the houses should sell for around$315 ,000. We've got a$70 ,000 HELOC, a$4 ,000 personal line of credit, and a truck that I bought recently for$29 ,000 is what I owe on it. The new house is on a golf course in a neighborhood that I always wanted to live in, and it's beautiful. It's a French provincial home. My wife loves to decorate. I love to give her a canvas to decorate on. And the house is listed at$724. $3.4. We're looking to make an offer on this house that won't exceed$600, and we believe that around$570 is where we would be realistically. $570 as far as a mortgage?

1:49:08Yes, sir. Okay. So how much do you think you'll get from the proceeds of this house? This one, the realtor, he's saying around$3.15. Okay. Is it paid for? oh yeah we owe a$70 ,000 HELOC okay so that's all you owe you don't have a traditional mortgage on it correct yeah we paid cash for it and then um we fixed it up with with more cash but we've had to fix the basement put in a new heat in the air and then we actually put in some hardwood floors okay so after fees will you walk away with like$300 ,000 you think 315 you know i figured i figured if we if we sold for 315 we paid off the e-lock the personal lot of credit in the truck we'd have around 190 uh left over okay and that'll be your down payment for the next house that's that's that's fees and everything yes and let's say you get this new house you think you could get it for 600 i believe you think they're gonna take that low ball yeah that's very low well so it's a 4200 square foot house that was built in the 60s and it's not been remodeled at all um has it been on the market a long time it's been on the market almost four months and um and and you know we're an hour north of raleigh so it's not the raleigh market.

1:50:38The median price per square foot is around$150 in Henderson. And it's on an acre of land, so it's a pretty average. I think the median pretty well supplies. So the short of it is, let's say you got it for$600 ,000 and you were able to put$200 ,000 down. So it leaves you with a$400 ,000 mortgage. And what's your monthly take-home pay as a household after tax but before other deductions? Um, let's see. So it's around 7 ,600 take home. Um, but I also have a tax business, uh, that I've been running since 07. I do around 300 tax returns a year. So, you know, we'll probably net around 30 ,000 from that.

1:51:28And then I usually get about a$10 ,000 bonus every year as well. So have you done the math on what the mortgage payment would be every month if you got a$400 ,000 mortgage with today's rates? It's around the 25 % mark. Okay. Is that a 30-year though, I'm guessing? Yeah, it'd have to be. Yeah, that's a 30-year. That's not the 15-year it talks about. Okay. Well, our parameter is 15-year mortgage, no more than a quarter of your take-home pay. And you guys, you're close. You're on the line. I think you could get there with a little bit of patience and saving. You have a great income. And so it might just be a little longer.

1:52:05And it's hard when you got your sights set on a very specific house. You're like, this has to be it. It kind of gets you starry-eyed and causes you to make some bad decisions. But I like the overall plan of selling the house, paying off all of your debt, having savings left over plus the down payment. How much other savings do you have? What do you have? What other cash do you have? So we have our emergency fund. How much is that? It's around$2 ,000. And then I've got a 401k at work, which can't touch that, you know. Did you say your emergency fund is$2 ,000? Yes, ma 'am. Okay. And that's the only non-retirement money you have?

1:52:48Correct. Yes. Okay. Yeah. Okay. Yeah, I got to say, I love this plan, but the only thing is I agree with George. I just don't think you're quite ready to make this move. You're talking about making a major move. you've got this debt the debt will be cleared off there's no extra money laying around anywhere this has to for this to work everything has to fall perfectly you have to get the house for the exact right amount and what I can tell you is you're emotionally invested and so if you don't get it for 600 I think you're going to make the offer anyway and I think I'm a little worried about that.

1:53:28I think that if they said 680, you'd take it. Or if they said 700, you'd take it. You see what I'm saying? And with no money saved. Yeah, I would want to. Your wife has already pre-decorated this house. That's the problem. And so that's what I'm worried about. And on a 15 year, you're looking at more like a$4 ,000 mortgage. And so that's the reality here is that it's over half of your take home pay. And now there's pressure. Now you have to have this side business work out permanently. And so I just don't want this house to go from blessing to burden real quick when you bid off a little more than you could chew.

1:54:02And when you only have$2 ,000 saved, because then your next order of business really quick would be saving up three to six months of expenses because you don't have any saved. So what if we cleaned up the debt with future income, then we got a fully funded emergency fund, then we could sell the house and use all that equity instead of throwing it towards the debt because you've already cleaned it up. absolutely now that looks more like a oh this is going to be we're in this house for two more years that's the the tough reality that the news you got to break to your wife well and and we're both on the same page with this we could go either way yes she has it decorated but you know what the same decorations are in the house we're in right now that's true um that's true we're realistic about it and to be honest we've been back and forth and back and forth.

1:54:49I've basically done a home inspection on it and everything else. I mean, I sent an email to the realtor saying that I think it's$110 square foot house with all the repairs that need to be made and things. Because I've got a$40 ,000 paved driveway that needs to be fixed. Yeah. Yeah. So, yeah, you're telling me what I thought you would tell me and what I've kind of, I guess, in my heart felt anyway. Yeah. Well, you guys are doing some good things. We moved backwards by taking on all this debt. And so if you didn't have this debt, you could maybe stomach all of this. But right now we got a mess to clean up.

1:55:24We need some savings in the bank. That's how you step into homeownership from a place of strength. It reminds me of a saying. This is an Arabic saying that I heard my mom say. How's it go? Which translates to the camel costs one cent and I don't have one cent. Which means I don't care how good of a deal it is. But Jade, it's a great deal. It's a once in a lifetime opportunity and we don't have the money to make this make sense. I just love that it's a camel. It's the perfect saying for you. I know my last name is camel. That's just how the old Arabic saying goes. A lot of camels in the Middle East.

1:55:58El jemil bil irsh umma andi irsh. Yes, I love it. That's great. Sorry. You ain't got a penny. You ain't got one penny. You can't buy it. I don't care if it's borderline free. Oh, man. You can't afford it. That's a hard lesson to learn. That is a hard lesson. But those Middle Eastern folk, they get it. They know what they're talking about. They're frugal. Thank you.

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1:57:17Thanks for hanging out with us. The scripture and quote of the day. First Corinthians 924. Do you not know that in a race, all runners run, but only one gets the prize. Run in such a way to get the prize. Amelia Earhart said, decide whether or not the goal is worth the risks involved. If it is, stop worrying. man boy that's a that's a dark quote from amelia oh i i felt like it was on point because i'm thinking about the baby steps i'm like oh yeah when we tell people the baby steps the number one thing they're trying to assess is is it going to be worth it like is it going to be worth my sacrifice my time my effort my struggle and if you've already decided that it is going to be worth it just stop worrying just stop otherwise you're just spinning your wheels but i guess Yes.

1:58:05If you Google Amelia Earhart, I mean, you know, she's willing to fall out the sky. Yeah. Really? Wow. All right. John in Las Vegas, Nevada. Get us back on track, John. What's going on? Hi. My my daughter's in her sophomore year of college. And a couple of years back, we made a deal that she did well in school. We'd we'd pay for her housing expenses and ability to go to college if she got a scholarship. She can't throw on her end, and we've been doing that. However, she keeps making decisions that kind of go against what we're advising her to do. And my question is, I feel like we might be hurting her more than we're helping her by trying to send her to college and not holding her to an accountability standpoint of growing up.

1:58:53What types of things is she doing that's not what you want? so a while back i i made a well-known like tattoos were were not a thing that uh that we approved and it was one of those deals where we said listen you know if you want to get tattoo that's on you but um not well you know we're paying for your things because then i feel like i'm subsidizing it and so um you know she she's come home with numerous tattoos and and then uh my the last one she came home with she called me ahead of time knowing that i'd be upset about it And I was glad that she was honest with me. However, she knows that we don't approve of that right now at her age.

1:59:35How old is she? The fact that, you know, she's just about to turn 20. So, you know, it's her body. She can do whatever she wants. However, I just don't feel comfortable with her getting tattoos at that young of an age. You know, that's kind of a permanent thing for a young person. You said two opposing things in one sentence. You said it's her body. She can do whatever she wants. And then you turned around and said, but actually she can't. So I think you have to figure out which one of it is for her age. And then the other question I have just practically, is she using the money that you're giving her for tattoos?

2:00:16Well, so that's the part. So we pay for her housing, and then we also pay for her tuition. Okay. And so she made a decision to do a trip last year and didn't plan for it correctly. And she wound up spending, like she needed help on that trip. So part of that is we lowered her monthly expenses that she gets, and so she's covering that for her job. And then, you know, we're basically letting that be the payment. So we're giving her less for housing, and she covers the difference. Is it an apartment or campus housing? It's an apartment slash housing, campus housing. It's kind of a blend. So it was like$1 ,000 a month, and now we've downed it down to$800 so she can pay back over a year the amount of money that we gave her to live while she was doing her trip to Italy.

2:01:14And so, you know, we're proud of her because she paid for the trip for Italy. However, you know, one of the deals with doing that was, listen, we're not paying, we're not financing that. How much over did she go on that trip to Italy? Like how much did you need to bail her out? Three grand. Ooh, yeah, that's a lot. Yeah, and we were on top of it, we were on a trip in Europe. So we spent a whole bunch of money for our, you know, our trip that we were super excited about doing for us. and then we're having to come out of pocket. So it kind of put us in a bad position. How are you guys covering her tuition and housing?

2:01:49Is this from a college savings account or just cash flow or normal savings? No, that would have been a lot smarter when I was younger. But we're doing very well financially. Between my wife and I, we make about$220 ,000 a year. Awesome. So you just cash flow. How clear was it that tattoos equals we're cutting you off? Or was this just a separate preference? Like, hey, I don't want you getting tattoos. it was separate but when she got in the argument with me about it i said listen we're we're paying for you to go to school and all that is money that you're not having to spend to go to school right so we're trying to set her up as much as possible and and my view on it is i i don't believe in making permanent you know markings on your body until you're until you're fiscally responsible for yourself and then if you want to do that you can do that but also maybe be a little bit older so you can make wise choices instead of a 19, 20-year-old putting things in their body that don't necessarily - Yeah, this is a 20-year-old decision, and it is a preference.

2:02:49There's no moral failure here. I personally, if I'm dad, I get you being upset. I get the disrespect, but I would not cut off her college funding. If you want to tie it to something, I would tie it to grades, attendance, legal behavior, you got to finish in four years, all of that. But this is just a separate issue, and now we're trying to weaponize her college funding to get her to stop. What you can say is, hey, any future tattoos needs to come out of your money from your job. We're going to send this money directly to the landlord, directly to the school. We're not just going to fund it in your bank account.

2:03:22Yeah, so we haven't been doing that. So we've been purposely having her pay everything out of her account. We fund it, and then she makes the payments to those things. However, like I said, she just quit her job without having another one lined up. And she doesn't seem to be in a hurry to get another job. And she's having her boyfriend pay for everything. And we're just going like, hey, that's not a wise decision making. You don't do things like that without having other things lined up. So we're just concerned that she's not making – the whole thing we're doing is trying to develop her to learn how to handle money and make good decisions.

2:04:02and we feel like often we're really bankrolling her bad decisions and that's what we're worried about. I kind of hear two things at play and I'm going to caveat this John by saying my kid I almost wish Dave was on because my kids are young they're five and seven I've not been in your shoes so I'm literally just listening and what I'm doing is thinking back to when I was in college so that's where this is based from just so you know I'm kind of hearing two things go on I'm kind of hearing a concern about how she's handling her money, but I'm also kind of hearing a power struggle of she's getting older, she's making choices, you don't agree with them, which you have the right to not agree with them.

2:04:43But there's also this part of she's just going to make choices. And some of them you're just going to have to let her make, I think. Let's deal with the money part. Money part, I might be inclined to say, you know what, you had the luxury of having this kind of off-campus hybrid, I think that we're not going to do that because you haven't been able to kind of hold up your end of the bargain. So you can do the normal campus housing. And if you get a job, we're open to you doing the hybrid thing where you have the apartment, but you'll have to pay for it. You could totally do that. Plenty of kids go to school and they live in on-campus housing and they don't get the fluff.

2:05:22You know what I'm saying? So you could totally do that. I would probably distance it from this whole tattoo thing. So it did not seem like a retaliatory response to the tattoos because I actually do think that that's very separate. But if you do feel like, hey, we're bankrolling her to the extent to which she's not doing a part time job or some of the things that we talked about her doing from the beginning. I think that that's a fair thing. Now, the other side of it, let's talk about kind of like the tattoos, personal choices with the boyfriend. And that is another area that I'll be honest, I think it could be one.

2:05:57I don't know. This is just me speaking from being an 18 year old girl with a dad who was trying to help me with. I feel like if you get too smothering, it could almost have the opposite effect. So. Yeah, absolutely. Do you know what I mean? So it's almost like. You probably experienced that already. It's like the more you lean in, the more she leans away. and now she wants to rebel because she doesn't know how to even handle that. And it feels like you're controlling her. She's a grown woman now. And so they are two separate issues. And if you want to not feel like you're enabling, you can fund the direct thing you're trying to fund and no more.

2:06:34And now it's on her. And if boyfriend covers the bills, that's a problem he's going to deal with. And when she needs to get a job because she can't buy the things she wants to buy, she might go into debt. And you hate that because you're like, we said you're not going to go into debt. But at the end of the day, putting her in crippling student loan debt and having her hate you forever, I don't think is the right next step. Best of luck, man. That's a tough one. It is a tough one. Hey, thanks for hanging out with us on The Ramsey Show. If you're wondering where you are on the baby steps, make sure to go to RamseySolutions.com to find out.

2:07:02And as always, there's only one way to ultimate financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.