Debt Is Always the Symptom of a Bigger Problem

11:38Dave Ramsey:And how much debt do you guys have? So mine total is right at$212 ,000 with a mortgage. How much of that's mortgage?

11:55Rachel Cruze:$184 ,000.

11:56Dave Ramsey:Okay. All right. Okay. So you got about, what,$60 ,000 in debt? No,$40 ,000. $40 ,000, yeah. $40 ,000 in debt. Okay. What's the 40 in debt on?

12:08Rachel Cruze:All right. I got$2 ,200 in credit cards. I got$9 ,100 on a bad HVAC loan that I had to take when I bought the house. Then I owe$1 ,900 on a zero-turn lawnmower. And then I have$14 ,000 in 401k loans.

12:33Dave Ramsey:No car loan? No, sir. Okay. All right. And what are you paying for daycare? $270 a week. $1 ,000 a month. Okay.

12:47Rachel Cruze:For both kids, yeah.

12:48Dave Ramsey:Okay. Yeah, you're right. It's a matter of getting organized, and we've got to stop some of these decisions that have put you into this debt and reverse that, get the debts cleared. because if you were on a written budget, you and your wife were in agreement, and you had no debt except your house, you'd be in really, really good shape. Yeah. Yeah. And so stuff like the next time a zero-turn lawnmower speaks to you, you have to look at it and say, no, thank you. I'll use the one I have. We're not financing it. No, we're not using a credit card to do anything. We're cutting them up tonight. No, we're not borrowing money.

13:29Dave Ramsey:No, we're not borrowing money. No, we're not borrowing money. And that's a new thing you have to learn to say like over and over and over again. Any kind of a crisis or a desire or an impulse or a wish or a dream that comes up, it cannot result in debt ever again because it has made your life tight and miserable. And we have to get rid of it and keep it gone. Does that sound familiar?

13:54Rachel Cruze:Oh, yeah.

13:56Dave Ramsey:Okay, cool.

13:57Rachel Cruze:Yeah, so what's the part of the organization that's been hard for you guys, David? Is it doing a budget and sticking to it? Is it trying to figure out what debts to pay first? When you ask about organization, what specifically are y 'all struggling with?

14:12I guess how to prioritize maybe because it just, if something comes up, you know, it starts stretching really thin and we can get behind sometimes.

14:27Rachel Cruze:yeah just like like monthly expenses that come up that you didn't plan yeah for sure yeah so i think that's one reason the budget is so helpful we'll give you a year of every dollar because it is um knowing that you have a plan and anything outside the plan there's kind of you know the simple word of no of like we just we can't do that we didn't plan for baseball signups that's an extra 300 bucks or whatever. And you're like, Nope, can't do that. Like, I mean, it just it really kind of forces you, especially where you guys are, how, how tight everything is, like, it really does kind of create a black and white scenario for a lot of these situations where before you kind of finagle it and like, I will just charge on the credit card and figure it out later.

15:10Rachel Cruze:When you live on a zero based budget, it really is directing you to your decision making, which is fabulous. So you guys sitting down and doing that, and then starting to pay off this debt smallest to largest. And so I don't even know, can you sell the lawnmower and get some cash back?

15:29Rachel Cruze:I think it'd be a wash on that.

15:32Dave Ramsey:Good. That's$2 ,000 of debt gone.

15:36Dave Ramsey:All right. All right. This weekend, gone. Now, here's what Rachel's talking about. We're going to give you this every dollar budgeting app, and we're going to give you the premium version. We're going to pay for it free, okay? And then you and your wife are going to sit down tonight and you're going to look at, okay, here's what our take-home pay is for me and my take-home pay for you for this month. And then we're going to take this month's income and we're going to give every one of those dollars an assignment in the budgeting app. This much for food. This much for house payment. This much for electricity.

16:14Dave Ramsey:This much for water.

16:15Rachel Cruze:Insurance, yeah.

16:16Dave Ramsey:This much for whatever. You go right down what your life and you say, this is where the money is going to go. And every dollar has an assignment before it comes to you. And then when it comes to you, you simply do exactly what you had already planned to do on paper. And if something pops up and it will, then you look at the pay, you look, you look at the digital app together and you say, if we're going to do this thing that popped up, what are we not going to do that we take off of here? so that we can do the pop-up. Or we look at the pop-up and say, no, we're not doing it. I don't care if you popped up or not.

16:53Dave Ramsey:We don't have the money because every dollar has been assigned. But, I mean, if a tire goes out and you have to buy a$200 tire, then you look over there and you go, okay, I've got to increase car repairs by$200, and I've got to decrease something else in the budget by$200 so that this continues to match and we don't get behind. and so you and you work on that together and you need to have a budget committee meeting and go over this and stick to it once a week minimum right now until you get the feeling of organized so you're telling your money what to do on that digital app and then that app is going to tell you what to do so that you do what you said you wanted to do that's how this works and it's easy

17:39Rachel Cruze:David, David, that you with the premium version, you connect your bank account. So anytime you guys swipe your your your debit card, because no more credit cards, when you're swiping your debit card out of the checking account, a transaction pops into that app and you drag and drop it. So you can see literally how much you have left in each category is right there with you. And it really does it force if you follow it, it forces you to stay within the bounds. But the great thing is, is that it creates a level of peace to and then you're going to expose and see, okay, how much have we been spending out to eat?

18:07Rachel Cruze:How much have we been spending, you know, here or there? And you start to actually see your spending habits. And because you guys are in debt, you cut all those categories because you're doing nothing. I mean, but just survival at this point. There's

18:20Dave Ramsey:no shelter, clothing, transportation, utilities, and get out of debt. That's all. You're not going to see the inside of a restaurant unless you're working there as your extra job. You're not going on vacation. You're broke. You got to get this mess cleaned up. Not until you get it done. And And you can get it done really quick once you start doing that because you sell the mower, you cut up the credit cards, you look around the house, see what else we can sell. We look around. I can pick up a side job this weekend and make$2 ,000, throw it at this credit card, and it'll be gone. I mean, you start getting creative on knocking these things out, and then you get your life back at the end of the story.

18:53Dave Ramsey:And the end of the story is only about 12 or 18 months away at the end of the first chapter of the story, I guess, because then when you're out of debt, you can build an emergency fund. And when you're building an emergency fund, then you can start investing. And, dude, you literally could retire a millionaire, if not a multimillionaire, if you follow this stuff through exactly like we teach you. And you go from disorganized to$27 ,000 a year looking for a$3 an hour raise and two kids in daycare and I can't breathe, all the way to millionaire. And it takes you 10, 12 years to do all that. We can show you how.

19:27Dave Ramsey:That's what this app, and the app will guide you. It will tell you what Ramsey says next. You got Ask Ramsey on the website for free. You can go in there and ask, and you call us back, and we'll help you even more if we need to.

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21:37Dave Ramsey:kate is in sioux falls south dakota hi kate how are you

21:42Rachel Cruze:hi i'm great i can't believe i'm talking to you you too what's up so i'm calling uh to get your advice on how we can help my parents so my parents are in their late 70s they're faithful christians they have been their whole life um as they've gotten older me and my siblings have been considering how we can help them to age well and you know whether we'll need to take care of them my dad has worked a ministry job his whole life and they've never had much money, but they're very private about money. So recently they've expressed several times that they don't have enough money to retire. I don't think they understand money at all, and we're also concerned that they're giving a lot of money to various ministries because they're really looking forward to being in heaven, and they want to spread the gospel far and wide before they get there.

22:39Rachel Cruze:They've also told us, and I do think they firmly believe that they're going to be raptured before they die. So we all love them very much, but we're also concerned that they may not have enough to, you know, take care of them. And we also, we want to be prepared to take care of them if we need to do that, that they aren't willing to talk to us about it. Is this something we just let go, or how can we respectfully love them for the rest of their years without any information?

23:14Dave Ramsey:Well, first, as a fellow Christian, I hope they're right. Come quickly, Lord Jesus, right? But I don't think we lay out our plans. The Bible that I have read doesn't teach me to lay out our plans as if I'm not going to retire because the rapture is going to be my bailout. Instead, the Bible says in the house of the wise are stores of choice food and oil. You know The Bible does talk a lot about God is our provider And that he cares about us And he has a plan for us And not to worry And all those kinds of things And that's all very true as well But the Bible then On the other hand It says if you don't work You don't eat That's in the Bible And it says if you don't plant If you don't plant corn don't expect corn.

24:17Dave Ramsey:You're going to reap what you sow. And if you sow sparingly, meaning very few kernels of corn, please expect very few corn stalks to come up out of the ground. That's a cause and effect thing in Scripture, okay? God's talking about this is the land in which we live, the world in which we live. And as Rachel said the other day on the show, So God gave us a brain, and we're supposed to use it to reason as well. And so spiritually planning for the rapture, I agree with, and I'm on board for. Where's the line? I'll get in the line, okay? But also while I'm here and we don't know the date or the time, very clear in Scripture that we're not going to know the date or the time of his return,

25:05Dave Ramsey:then out of Jesus' own mouth those words were spoken. And so given that, then we have to plan as if we're going to be here. And then that plan works if we're not here or if we're here. Their plan only works if we're not here. So anyway, the end of a sermon, end of doctrinal lesson, okay?

25:27Rachel Cruze:Thank you for your TED Talk.

25:28Dave Ramsey:But yeah.

25:30Rachel Cruze:No, but it's true. It's true.

25:31Dave Ramsey:How do we love these sweet, precious people who care about other people wanting to meet God, meet Jesus, and they're willing to live on almost nothing and barely get by so that they can accomplish that? What impact they can have on the world for the Lord they are having, and their thumbprints are going to be all over people's names in heaven, and they're just wonderful people. So how do we love them, though? And they're secretive, partly because—

25:58Rachel Cruze:Yeah, how do we take care of them?

25:59Dave Ramsey:Yeah, they're partly secretive because they're ashamed. They're partly secretive because they're ashamed. They're not ashamed of the gospel. They're not ashamed of their ministry mindset. But they know that they haven't done a good job with money, and it bothers them. And so we've got to keep—

26:18Rachel Cruze:And it's almost easier in a weird way to have an excuse for the fear that, oh, gosh, we're not—well, it's okay. You cling on to something because you have a plan.

26:26Dave Ramsey:Yeah, we didn't do a good job, and I'm going to blame it on the rapture.

26:29Rachel Cruze:Yeah.

26:29Dave Ramsey:You know, and so now how do you help them gently and lovingly? Because 100 % chance a 78-year-old with this mindset is not going to change. Right.

26:43Rachel Cruze:98. We'll say 98%. Okay. We'll give you 2 % hope. But I mean, I don't want to go in. We've given up hope that they're going to change.

26:50Dave Ramsey:I don't want to enter the conversation thinking they're going to be transformed financially. Yeah. I don't think they are. I think they're pretty well set on giving everything away in Jesus's name. And I got to say, that's a wonderful person. My goodness, what wonderful people. So I think you siblings band together and you just check in on them every so often, make sure that the property taxes are paid, that there's groceries in the cabinet, don't open the cabinet, and the only thing in there is dog food and they haven't got a dog. Right? I mean, so that kind of thing happens in these situations.

27:24Dave Ramsey:So just check in on the refrigerator and how it's stocked. And, hey, we just bought a beef, and the three of us are going to share it, and we're going to bring a bunch of it over and put it in your refrigerator. And, hey, I just got a friend that's got some chickens, and we all bought a bunch of eggs here, and we'll bring you some stuff. And I just went by Kroger, and they were having a sale, and Publix was having a sale, and, Mom, I brought you a bag of stuff to put in there. And so just make sure the electric bill is paid. and you guys can just kind of subtly poke around without getting them on a full plan like they

27:55Rachel Cruze:actually should be well and thankfully you know and I guess the positive side of some of this too Kate is they're so low maintenance they're used to living on basically nothing versus some people call in and their parents are living the high life and have nothing in retirement and they're going to expect the same and they expect their kids to take you know what I mean there's like a whole entitlement side where this story could have been. But for them, their motivation and attitude in a weird way is, you know, I don't want to say endearing because I don't think it's wise, but it's easier to help someone that has a level of humility and sacrificial heart.

28:31Rachel Cruze:Do you know what I mean? It's not entitled. To do all that. Yes.

28:34Dave Ramsey:Yeah, they're not, they're not brash.

28:35Rachel Cruze:Are you guys, Kate, are you and your siblings in a good place financially just to do a bare minimum like what he was just explaining? We are. There's certain of our families that are going to be more able to do it than others. I think specifically our family would be able to contribute more. And so those of us who may be able to contribute are just wanting to understand what they mean by the fact that they don't have enough money so we can prepare for how we need to help them. But we really haven't been able to prepare at all.

29:07Dave Ramsey:You know, you could just do it in an honoring way. Say, Mom and Dad, you all have done such work for the kingdom. And, you know, Scripture says that your children will rise up and call you blessed. And we're standing here calling you blessed. Blessed. Blessed. And one way you're blessed is your children are standing here and we want to love you. If you'll tell us some of the basic things, we want to help. But you're going to have to kind of tell us what we need to help with. Yeah.

29:33Rachel Cruze:Do you even know, Kate, if the house is paid off or anything? Like, do you have any range? It is. Yep. They have a small home, but it's paid off and they have two paid off cars. So that's a good consolation is that they have a place to live. We're not worried about that.

29:50Dave Ramsey:Food, lights, water, property taxes.

29:52Rachel Cruze:Yep. Yep. Check in on the food, check in on the property taxes. And then what about like, again, we have a little bit of concern that they're still giving a lot of money away.

30:04Dave Ramsey:Mm-hmm.

30:05Rachel Cruze:I just don't think there's much we can do about that. But I mean, it's their money.

30:10Dave Ramsey:And probably some of the ministries that they're giving to. Yeah, probably some of the stuff they're giving to they shouldn't be is probably irresponsible. But so what? There's nothing you can talk about. Right. Unless they ask. If they ask, you can say. But if you can start a conversation and then they say, well, honey, you think we ought to do this one? And you say, well, Mom, let's look at how they spend their money. Let's look at how they're, you know, oh, wait a minute, Mom, they spend 90 cents of every dollar on the guy that runs his salary. And the hungry kids only get 10 cents of every dollar.

30:43Dave Ramsey:Well, I don't think we need to be, Mom, that's not a very good deal for the hungry kids.

30:46Rachel Cruze:And Mom, let's make sure you're not hungry first. Yeah, yeah.

30:50Dave Ramsey:Take care of your own household first or you're worse than an unbeliever. These are all scriptural things.

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32:39Dave Ramsey:Anna in Jonesboro, Arkansas. How are you?

32:43Rachel Cruze:I'm good.

32:44Dave Ramsey:How are you guys? Better than we deserve. What's up?

32:48Rachel Cruze:So I'm having a disagreement with my dad, and I want to know if I should sell my house to pay off my student loans. Ooh. Yes. We bought it together, so that's why I was talking to him about it. 2020. Yes.

33:05Dave Ramsey:So you don't own it by yourself?

33:08Rachel Cruze:Not by myself, but he will let me make the decision. He thinks that you're going to tell me something different. I think you're going to tell me to sell it.

33:18Dave Ramsey:Interesting. Okay. Yeah. This is great. So, um, it's a lot, it's a lot of power. I'm kind of scared. Yeah. So how much student loan have you got?

33:32Rachel Cruze:I've got about$33 ,000.

33:35Dave Ramsey:And what is your income?

33:38Rachel Cruze:I make 54 and some change as an accountant.

33:43Dave Ramsey:Okay. Working 40 hours? Yes. And you're single? Yep.

33:49Rachel Cruze:Single, no kids.

33:50Dave Ramsey:Okay. All right. And what other debts do you have other than the house?

33:56Rachel Cruze:I paid off my car in December early. All I have left is$1 ,700 on a credit card, but I have$32 ,000 in savings, and I could pay that off today and still have some left. Oh, well, bury the lead there. So you'd sell your house.

34:13Dave Ramsey:Instead of cleaning out your savings.

34:15Rachel Cruze:Instead of dumping your savings and building it back up in 24 months. So the reason that my dad is hesitant is because my mortgage is like$800. No, no, no.

34:27Dave Ramsey:We're asking you, why would you sell your house when you have the money in the bank to pay off the debt?

34:35Rachel Cruze:I don't have the money in the bank. I have$3 ,200, not$3 ,200. Oh, okay. Okay.

34:42Dave Ramsey:Well, that's a little different. All right.

34:45Rachel Cruze:Sorry, my bad. You may have said$3 ,200 when we put a zero on it.

34:48Dave Ramsey:I don't know. Okay. Okay. All right. $3 ,200. So I don't have enough to pay off the credit card debt.

34:53Rachel Cruze:Okay. Gotcha. Yep. $1 ,500.

34:55Dave Ramsey:Yeah, and then you pay off the credit card debt. You got your$1 ,000 left. Then we're working on the student loan, and you make$54. And what is your house payment?

35:06Rachel Cruze:$885.

35:07Dave Ramsey:Okay. How long have you owned it?

35:12Rachel Cruze:Six years.

35:13Dave Ramsey:Hmm. How much car debt did you pay off, and how long did it take you?

35:21Rachel Cruze:I think I paid it a year and a half off early.

35:25Dave Ramsey:What was the total debt, and how long did it take you to pay that total debt once you attacked it?

35:31Rachel Cruze:It was$13 ,000, and it took five years.

35:36Dave Ramsey:That's not attacking it.

35:40Rachel Cruze:Well, I lost my job when COVID hit. Okay, all right.

35:44Dave Ramsey:I'm talking about what I was trying to get at was did you pay off$13 ,000 in five months or something? And no, you didn't. You just piddled away at the thing. Okay, all right.

35:55Rachel Cruze:Anna, if you looked at what you bring in each month and if you lived on nothing, you paid rent, some groceries, kept the lights on, and that's about it. Like, I mean, you really had no life. Beans and rice. Yeah. How much extra would you have per month just with your salary? I take about$33 a month. So I would probably need like, depending on gas and groceries, like$1 ,600-ish. Okay. What if we just said$2 ,000 just to play it a little safe? So that's$1 ,300 extra. And if you got, you know, a part-time job at night and weekends, which I know is not...

36:42Dave Ramsey:Bookkeeping.

36:43Rachel Cruze:Not fun. Oh, yeah. Side hustle. Yeah. Yeah, yeah, yeah. Big money. I've been looking into that. Yeah. Yeah, and you brought in an extra$2 ,000. You know what I mean? That's$3 ,000.

36:54Dave Ramsey:In 10 months you'll be done.

36:55Rachel Cruze:A month. Yeah, and you just look at that in a calendar.

36:59Dave Ramsey:Stop your 401k temporarily. And did you get a tax refund last year?

37:06Rachel Cruze:It was like$200.

37:08Dave Ramsey:Okay, so you got that dialed in. Good. Okay. Anything else, any other crap coming out of your check, like crappy insurance that you don't need and stuff?

37:18Rachel Cruze:No, just health and dental, and that's it.

37:22Dave Ramsey:Health, dental, do you have 401k coming out now?

37:25Rachel Cruze:I do not. Okay.

37:28Dave Ramsey:I don't know why you're only getting home with$38 ,000 out of 54.

37:32Rachel Cruze:$33 ,000 is what you said.

37:33Dave Ramsey:$3 ,300 a month, which is$38 ,000 a year. And so why are you only getting home with$38 ,000 out of 54? How much is your stinking health insurance?

37:47Rachel Cruze:all of my insurance together is 53 per paycheck so 106 okay all right uh this feels a little low

37:57Dave Ramsey:yeah that's still a low i mean because you're gross you're grossing almost five grand a month and you shouldn't be having 1700 come out of this check no i grow 3300 a month no i get 1600 per

38:11Rachel Cruze:paycheck.

38:12Dave Ramsey:No, you take home$3 ,300 a month. $54 ,000 is your income, correct?

38:18Rachel Cruze:Yeah.

38:19Dave Ramsey:$60 ,000 a year is$5 ,000 a month. Okay. I can't get down to$33 ,000. There's something wrong with your check to me. But aside from that, I'm going to investigate your check and see what's coming out. Make sure nothing is coming out except health insurance. That's it. And taxes. And the appropriate amount of taxes, not too much. Then I'm going to pick up an extra job, side hustling, bookkeeping, and bring in another$1 ,500 to$2 ,000 a month. Then I'm going to take the every dollar budget and get on beans and rice, rice and beans. And I'm going to be clear of this$33 ,000 in debt in less than 14 months.

39:00Dave Ramsey:And your dad wins the argument.

39:05Dave Ramsey:because I wouldn't sell my house. I would not sell a house where you've got a great payment like this and a great interest rate and you like the house. I would not sell a great

39:15Rachel Cruze:mortgage payment. I mean, yeah, your payment is, I would not sell it.

39:18Dave Ramsey:I would not sell it for 14 months worth of hustle. And I'd go, I'd lean in with 14 months worth of hustle and clean the student loan out and get rid of it. The only reason you're selling it is you didn't have hope that you were ever going to get rid of it otherwise. And I just gave you a 14-month detailed plan, and Rachel did, on getting rid of it. And if you get rid of it in 14 months, it'd be silly to sell your house.

39:44Rachel Cruze:Because how much equity is in it, Anna? I just have so much. Well, that's the thing, is that the houses that sold for what mine did around the time and are selling now are selling for between$200K to$220K. And what did you buy it for? My loan, I bought it for$149, put$7 down, so my loan was for$142.

40:05Dave Ramsey:You're sitting in a sweet spot. Don't walk away from this.

40:08Rachel Cruze:Yeah, I wouldn't.

40:09Dave Ramsey:This is perfect. There's people all over America going, I could have a$200 ,000 house. Oh, my God. I didn't even know they existed. With an$800 mortgage payment. They do in Jonesboro, Arkansas, and a single lady making$54 ,000 owns it. So, you know, that's I'm going to the house is the last thing I sell if it's the only way I have hope to get you out. And I got a lot of hope, a lot of hope mathematically that you're going to be out of this without it. So you can do this. Oh, and by the way, let's just fast forward. What happens to your life when you don't have a student loan hanging over your head and a credit card hanging over your head and a car debt hanging over your head?

40:51Dave Ramsey:And you've learned to live on this budget. Oh, we can start putting money in that Roth 401k. Oh, then we start to talk about how fast does your income at 15 % of your income turn you into a millionaire. Pretty stinking fast, kiddo. It's about 18 years is my estimate sitting here today. So you're going to retire with a million dollars in your 401k 18 years from now. and have a paid for house that by then will be worth$600 ,000.

41:23Rachel Cruze:That's right. $600 ,000.

41:26Dave Ramsey:Yeah. I just tripled it. Yeah. 18 years from now. Sure. Why not? Yeah.

41:30Rachel Cruze:Why not?

41:31Dave Ramsey:It's a$200 ,000 house. It's already doubled once. Yeah.

41:35Rachel Cruze:Just like that. Right, Dave? Yeah. Just like that. That's how you do it.

41:37Dave Ramsey:Just like that. You just move your nose from one side to the other. And just make it happen. Make it happen. So. No, but honestly, yeah.

41:47Rachel Cruze:that people selling their house is if their house is the problem. And for some people, their mortgage payment is huge. They have no margin. They're not able to get out of that. They have some equity. Yeah, and you're wanting to move anyways. Sure. Like there's a, yeah, there's some reasons, but the amount of effort and time it takes for moving, selling, and then you're going to have to go buy something else and it's going to be double what, you know what I mean? You're going to, that increase that you are on the better half on is going to be there waiting for you for the new house. So it's not worth leaving.

42:16Rachel Cruze:So sorry, Anna.

42:17Dave Ramsey:I want you to get a little dirt under your fingernails and get this done, baby. You can do this. I'm sorry. For your sake, your dad wins the argument.

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43:39Dave Ramsey:Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. Cheryl is in Boise, Idaho. Hi, Cheryl. How are you? I'm good. How are you, Dave? Better than I deserve. What's up?

43:52Rachel Cruze:Thanks for taking my call. My parents are to the point in their life where they need extra help. They are 87, 88. And instead of putting them in an assisted living, I would like to take care of them, and that's what they would like. I am not old enough to retire yet. I have about five more years, but they're willing, if I retire, they're willing to pay me the same monthly wage that I make right now. and then they want to give me a$50 ,000 CD, which would make up, that's the difference of whether I retire right now or in five years. My question is, they do not want my siblings to know. They're okay with them knowing about the monthly wage, but they do not want them to know about the CD.

44:39Dave Ramsey:Why?

44:40Rachel Cruze:Because I have some siblings who I think, they think would be unhappy about it, and they don't want to stress. They don't like confrontation. They don't want anybody to be unhappy. I personally think that my siblings should be happy because the monthly wage is way less than if we put them in assisted living. So my husband is a little, we're a little concerned about it causing trouble in the future. But my mom and dad said, nobody knows about our CDs. It's under the table. Nobody will ever know about it because they don't know about that. So we're wondering what to do. Should we insist that we have a family council?

45:21Dave Ramsey:You do what you want to do, but I do not participate in deals that involve deception.

45:26Rachel Cruze:And that's what we feel like, too. We're like, I don't like the secretiveness of it.

45:30Dave Ramsey:It's going to come back and bite all of you.

45:33Rachel Cruze:And that's what we do, too.

45:35Dave Ramsey:It's going to come out in the settling of the estate, and they're going to accuse you of having stolen from your parents.

45:42Rachel Cruze:That's what we're worried about. That's what's going to happen. Yeah.

45:46Dave Ramsey:Absolutely. I mean, we've played this record on this show before.

45:50Rachel Cruze:Okay.

45:51Dave Ramsey:I mean, for sure. For sure, that's what's going to happen. And so, listen, if everybody can't get along, here's the other thing. If they want you to handle the confrontation, I would be willing to do that. Hey, brothers and sisters, here's what mom and dad want to do. Here's what's going on. I'm taking a pay cut, and I'm losing part of my retirement. To cover the retirement, they're giving me a$50 ,000 CD, and I'm taking a pay cut because I really want to go over there. It's a better quality of care for them. It's cheaper for the whole family, me doing it than us putting them in a thing. So you get a deal, but I want to make sure you guys all know about it.

46:27Dave Ramsey:You don't really get a vote. I'm just telling you we're doing it.

46:31Rachel Cruze:Okay. That's there.

46:33Dave Ramsey:And if you don't like it, pound sand. But this is what we're doing, right?

46:37Rachel Cruze:Okay. So it's not, don't put it out there and say, are you guys okay with it? I'm not taking a vote.

46:42Dave Ramsey:It's not their money.

46:43Rachel Cruze:Okay, I like that.

46:44Dave Ramsey:It's not their money. It's this is what mom and dad have decided to do, and I wanted to just make sure you guys knew it now. That you're in the loop. That you're in the loop. So that you're in the loop and not a thing.

46:56Rachel Cruze:Okay. I like that way of approaching it. That way, yeah, there's no argument. It's just what it is so that it doesn't come out in the end. Okay.

47:04Dave Ramsey:We have a family member that had a small business. One of the brothers was involved in the small business. The rest of the family was not. and when the dad sold the small business, he gave half of it to the brother, and he told everybody. But he didn't ask everybody's permission. He said, this is my freaking money, and this is what I'm doing. He didn't say it that way. He just did it.

47:27Rachel Cruze:Okay.

47:28Dave Ramsey:And then just said, this is what happened. And then you get to choose, if you're the brother or the sister then, whether you're going to have a hissy fit about somebody else doing what they want to do with their money. Okay. Yeah, I know that makes perfect sense.

47:42Rachel Cruze:Thank you so much.

47:43Dave Ramsey:Yeah, just lots of clarity and kindness and legacy. What you described had no malice, no theft, no weirdness. You're probably coming out on the short end of the stick, except you really want to love your mom and dad well through this legacy stage of their life, and good on you.

48:05Rachel Cruze:That's perfect. That's exactly. I just have always promised them, nope, I will take care of you, and I'm the one that's willing to do it. And I get along well with them. Yeah. And almost as factual as it can be, too, Cheryl. It doesn't have to be all emotional, right? It's like, here's the facts. Here's the numbers. Here's what's happening. And that's about it. Low drama, low, you know. And let me go ahead.

48:27Dave Ramsey:This is happening all over America at this moment, this scenario. and for you brothers and sisters out there that the other sibling is the one stepping up and going to do the doctor's visits and going to be in the house making sure stuff gets cleaned up and going to make sure the bills get paid and they end up with more than you and you're not there shut up rise up and call your brother or your sister blessed and say thank you for taking care

48:58Rachel Cruze:Thank you.

48:59Dave Ramsey:Thank you for doing this. And you get whatever you want. You're the one on the front line. The rest of you out there. I mean, because this is like a normal. I hear this almost every week among my friends.

49:09Rachel Cruze:You know, it's crazy. I saw a study. I just saw this actually yesterday that the role within siblings, if there's an older sister, she usually is the one that ends up taking the responsibility.

49:21Dave Ramsey:Yep.

49:21Rachel Cruze:That that's like the number one, like predictability. If you are the older sister, the oldest child period.

49:26Dave Ramsey:Yeah, but usually it's usually the daughter.

49:29Rachel Cruze:The daughters are usually the ones that kind of gather. Yes, that end up kind of doing that. And then talking about retirement, all of it was fascinating. But there's data coming out all around it. And there's a whole article on it. And it was, yeah. That'll be Denise for you and mom.

49:46Dave Ramsey:I'm all noticed it's not going to be you.

49:48Rachel Cruze:No, I will. I'm so shocked. I'll stop by. I'm appalled.

49:52Dave Ramsey:I had no idea. I'll stop by. You'll do a drive-by and give us a parade wave from the car.

49:58Rachel Cruze:No. No. But that is, you know, and even, you know, when we look at friends and even, you know, even Winston's parents. Like his, like our papaw, my papaw, my mom's dad is still living. My husband's mom's mom is still living, right? And it is. It's like a full force.

50:17Dave Ramsey:And who is taking care of them. Yes. Whoever's taking care of them, the rest of them need to support the one that's on the front lines and say, thank you. Yep. And not be going, you're getting too much money. You got a CD. Oh, my God. Petty people. Yeah. And it's not even your money. It's their money.

50:36Rachel Cruze:And if you split it between all these siblings that Cheryl has, everyone probably gets 10 grand. And for 10 grand, have your parents being taken care of. You know what I mean? Yeah. It's not like it's a million dollars sitting in there and they're fighting over that. So, anyway, Cheryl, well done. Amen. I hope the conversation goes well. And I have John Deloney in my head, too. But there is a point when you do put a scenario out there of what's going to happen. They are adults, your siblings, and they get to make a choice of how they respond. That's not up to you. That's not your responsibility to caretake their emotions either.

51:08Rachel Cruze:It's what's happening. And they're going to have to be adults and decide. And if they decide they're going to come at my 87-year-old parent after I make the announcement to them, then I'm going to deal with them.

51:19Dave Ramsey:That's the other thing. So you have to step in between and go, because your mom and dad don't do confrontation. Remember, they'd rather do deception. No, that's not a good idea. Not a good idea at all. Because that confrontation is going to come back and it always grows. What is it, Les Parody says? It has a high rate of resurrection. It will come. It will rise up. It will come. You have zombie confrontations wandering through your backyard. All from former dead things. Oh, wow. because you tried to bury it and it came alive.

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53:45Dave Ramsey:Today's Ramsey Show question of the day is brought to you by Y-Refi. Defaulted student loans can derail your money plans, but Y-Refi helps borrowers explore refinancing options designed to get you back on track. Learn more at Y-Refi.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. Might not be in all states.

54:09Rachel Cruze:Today's question comes from Gabriel in Delaware. We recently sold our house and did not anticipate buying another one for at least four to five years. We have$350 ,000 that we want to invest into the S &P 500 and index funds until we are ready to buy again. Several friends who invest regularly have suggested that because it is such a large sum. And we should do a dollar cost average by investing one twelfth of the amount each month instead of investing it all at once. Do you agree with that suggestion or would you recommend investing the full amount immediately?

54:47Dave Ramsey:If you understand what you're putting money into and you've looked at the track record of it, the S &P 500, the math would tell you to put it all in at once. The only reason the dollar cost average is if you're emotionally not committed to this process. And the first time Trump decides to bomb Iran and the market goes down, you freak out. OK, because he's going to do a Trump thing. You can count on it. I don't know what the next one's going to be, but there's going to be a Trump thing. Sometimes it causes the market to go up. Sometimes it causes the market to go down. And there's going to be other things that happen in the world other than Trump that are going to cause the market to go up and the market to go down.

55:30Dave Ramsey:But here's an example. Let's say that you had$100 ,000 for round numbers and you put the money in at the beginning of 2024, all of it. At the end of 2024, the market unusually high went up 24%, 25%. So you'd have$125 ,000 if you put$100 ,000 in in January 1. And at the end of the year, you'd have 125 because it went up 25%. If you put it in a 12th at a time, you'd have about 111 ,000. But if the market went up or went down, you wouldn't be as scared. But you did not have it invested the entire year, the entire amount, and so you did not get what the market made the entire year. Now, if the market goes down 10 minutes after you put it in, which is kind of like Murphy's Law.

56:30Dave Ramsey:Yeah. It's going to, it's like God saying, this is a test of the emergency roller coaster riding society. And see if you can ride the roller coaster or not, right? Like you're going to have a test, right? 10 minutes after you put the money in, the market's going to go down. And so you just got to say, I'm not going to look at it. I'm just going to put it in and it's S &P 500. And so, you know, we'll see what it does, right? This year, year to date, as of this broadcast, the market is up 7%. And it's June. If it continues on that track, that's going to be about 14, which would be fairly normal.

57:09Dave Ramsey:It's averaged about 11.8. Okay? And that includes the big dip after the Iran bombing. And then it came back up.

57:16Rachel Cruze:And we've had a couple of those when you look at the chart. I mean, you can just Google S &P 500, right? You'll see something. But the amount of recovery time, which I don't know the exact date, but it's maybe 30 days, right? I mean, like it's pretty quick on some of these.

57:29Dave Ramsey:It depends on what the event is. But most of the time, this stuff comes back very, very quickly. Even the big newsworthy drops, okay? One of the ones I always remember is when COVID hit in 20. Go back and look at the 20 charts, all right? And from February and down into March, in less than 30 days, the market dropped dramatically. I mean, it didn't go in half, but it went way down. It lost like a lot. And everybody's freaking out because they're freaking out about COVID. And they're freaking about everything. And they're freaking out about masks. We hadn't gotten around to vaccines yet, but at that moment, but they came later.

58:08Rachel Cruze:Job markets were closing.

58:10Dave Ramsey:People were worried about the businesses, worried about what's going to happen with the economy. and the market dove. Okay, it hit bottom in April. We didn't know that at the time. How long did it take it to recover what it lost from the COVID scare in the 30 days prior? 57 days. It came back. So COVID wasn't even over, but we're up in September and the market has returned because the market figured out that that there wasn't going to be two million deaths well and the market figured out that a whole bunch of this was a bunch of hooey well and no they did i mean the market looked around and said we're not all gonna die and um this is you know and the economy is not going to turn into a dust bowl and and and and and so the market recovered the market recovers

58:59Rachel Cruze:common sense over time well and you think back to 07 08 which was a obviously the massive huge drop And was that, how long did that, I mean, that was.

59:10Dave Ramsey:It took a bit. It went in half. The Dow Jones went from 13 ,000 to 6 ,500. Now, how quick did it get back to 13 ,000? I'd have to go back and look, but I think it was almost a year.

59:20Rachel Cruze:Yeah. So that was probably the long, you know.

59:21Dave Ramsey:That was a long one, but it also went in half.

59:24Rachel Cruze:But even the Iran thing recently, right, that it dropped, it came back within like two weeks. It was not long.

59:30Dave Ramsey:It was less than a month. Yeah.

59:31Rachel Cruze:It was not long.

59:32Dave Ramsey:Yeah.

59:32Rachel Cruze:Because we had just put money in Iran.

59:34Dave Ramsey:And then every time there's a news cycle on it, you'll see it like this week, if you go back and depend on when you're listening to this, but I'm doing this real time, you'll see a little blip right now. And, you know, latest news cycle on the same thing. And, you know, because they're bombing each other again for a minute. Right. So all this stuff. So all that stuff comes into it. All that to say, the answer to your question is invest immediately if you have a four to a five-year window because these wrinkles iron out if you give them time. No one gets hurt on a roller coaster except those that get off in the middle of the ride.

1:00:10Dave Ramsey:Don't jump. Don't jump. So if you think you're going to jump, dollar cost average because it keeps you from freaking out quite so much because you're like, oh, it went down, but I don't have all my money yet. And so but if you're going to be one of those people that says I lost all my money in the stock market, which by the way is a lie. If you put money in the S &P, you have never in the history in the last 150 years lost all your money. Zero times that the market went to zero. So you didn't lose all your money. If you put it in at the top in 2008, you're talking about and it goes in half, put 100 ,000 in, it's worth 50 ,000.

1:00:48Dave Ramsey:You could say, I lost half my money because I bought at the top and sold at the bottom. I'm the worst possible timer on the planet. But even then, you didn't lose all your money. You lost half of it because you're the worst possible timer on the planet. So if you just ride it, you're going to be okay. So if you're willing to do that and you're willing to understand that, then you're going to make really, really, really good money as a long-term investment in good mutual funds. And an S &P 500 is a great place to park stuff when you've got a four to a five-year window. Longer term, I'll go with different mutual funds, but I use the S &P for short-term parks like that myself.

1:01:35Dave Ramsey:And just while we're on it, this is a fun stat. I pulled this up the other day because I got curious about it. 23, the market went up 26%. 24, it went up 25%. 25, it went up 18%. Three very unusual years. This year, as I said, it's up 7%. So if you compound those numbers in four years, three and a half years to date, because we're all the way through those three calendar years and halfway through 26 when i'm saying this that's a hundred percent return on your money so if you put in a hundred thousand you put in a million dollars in 23 it's now two million dollars if you didn't add anything to it and just sat there now that is a very unusual three and a half year period of time unusually good i don't recall one and i'm old and i've been doing this a long time i can't i can probably go back and look if there is another one, but I don't remember emotionally.

1:02:35Dave Ramsey:It doesn't come to mind anything that sweet in my memory. Three years in a row, 20 plus percent. That's crazy. Yeah, that's crazy. But I mean, I've got money sitting in the S &P, and I got twice as much right now just because of that three and a half year period of time. It doubled. Meanwhile, I've got my money in checking because I'm scared of the stock market. you'd probably need to do some learning because that's the kind of crap you're missing out on right there.

1:03:31Thank you.

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1:05:00Dave Ramsey:Well, we wish we could get to every single call and question here on the show, but we can't. There's only so many lines and so many minutes to be on the air with you. So if you do have a money question, we have an answer for you. And it's head on over to the website and use Ask Ramsey at RamseySolutions.com. Ask Ramsey. Ask Ramsey is our free AI tool The only data In Ask Ramsey Is Ramsey data We took three four years of this show And put every call And dumped the answers in We took all the books we've written Dumped them in We took all the articles And there's thousands of them on our website And dumped them in There's no Reddit in Ask Ramsey If you don't know what Reddit is It's a sewer And so if you The way AI works is it can only spit out what you put into it.

1:05:57Dave Ramsey:So if the data set is clean, the answer is clean. And the data set in Ask Ramsey is 100 % Ramsey clean. That's all it is. So you're going to get an answer almost as smart aleck as you would here on the air. And exactly the same stuff. And it's quick and it's easy and it's completely free. So ask your question today at RamseySolutions.com. Click the link in the description if you're listening on a podcast or YouTube. Check out Ask Ramsey and tell your friends about it. It's completely free. It's just like calling into the show.

1:06:30Rachel Cruze:We should make a version someday where you can click what type of answer. Do you want a Dave answer? Do you want Rachel? In the tone at which you get your answer, right? And it would be like, hey, guys, it's going to be fine. Here's what you do. And Dave's going to be like, you're stupid. But Deloney's going to be like, how's your dad? I like you, and I just don't think that that's smart.

1:06:50Dave Ramsey:And Dave's like, stop it, you fool. Stop it, you're dumb.

1:06:53Rachel Cruze:And Deloney's like, how's your dad? How's the relationship with your dad? Jade will be like, girl, let me tell you. I don't know. That could be good. I'll send an email after the show and give him my idea.

1:07:06Dave Ramsey:And George will pull.

1:07:07Rachel Cruze:Oh, and George will be like, let me get the calculator out, and we will figure this out together.

1:07:10Dave Ramsey:He's going to nerd out.

1:07:11Rachel Cruze:He loves that investment calculator.

1:07:13Dave Ramsey:All right, there we go. Michelle is in Raleigh, North Carolina. Hey, Michelle, what's up?

1:07:20Rachel Cruze:Hi, Dave. Hi, Rachel. I've been playing with Ask Ramsey, and I always imagined George Camel. Oh, that's all we needed, Michelle. Thank you. Thank you.

1:07:31Dave Ramsey:Well, it's a very precise answer there.

1:07:34Rachel Cruze:You will get a good answer, especially if it has to do with investing, so that's great. But I wanted to ask you all this one. Quick background. I'm 32. My husband is 34. We make about$100 ,000 a year. We have$230 ,000 in retirement.

1:07:53Dave Ramsey:Way to go. Thank you.

1:07:57Rachel Cruze:My husband and I are both military. He just gave money or GI Bill to our two children, which are 5 and 2. And we have$10 ,000 and they're$529 ,000. and we're investing 200 a month into their 529. But I just wanted to see, like, is that enough? Should it be more? Again, they would get 12 months of his GI bill, which I think actually equates to more than just one school year.

1:08:33Dave Ramsey:So his GI benefits for children's college education is one year of his income?

1:08:42Rachel Cruze:um no so the gi bill would cover 12 months of school for each child uh oh i thought it covered all of it oh cool interesting all right so you got 12 months all right so you know what i would

1:08:57Dave Ramsey:do is just say all right where are we going to be living do we think when when we retire from the military in other words where will be the state school that we are the resident you want to guess what state in north carolina north carolina you'll still be there okay all right so you know university of north carolina or whatever that's a state school all right and what is the tuition fourteen thousand dollars a year what's room and board probably about double that probably about that much again so probably 25 30 000 bucks times four so 120 000 bucks oh So minus one year because military is picking that up.

1:09:37Dave Ramsey:Times three. Yeah. So times three instead. So now we got 90 or 100 ,000 bucks. So our 10 ,000 at two years old, what's it going to turn into by the time we get there? Plus our 200 bucks. Is that going to turn into, you know, 100 ,000 bucks? You're going to be pretty close.

1:09:50Rachel Cruze:Yeah. But also looking at the rate of tuition increases with the average has been year to year because it's one of the wildest.

1:09:57Dave Ramsey:And I would underfund the 529 and overfund some of your other investing that you could use at that point. Because what happens a lot of times is by the time you get there, two or three things can occur. One is they get scholarships for whatever reason. A, they applied for them. B, they're academically or athletically gifted. and if they get a scholarship, the amount of their scholarship can be removed from the 529 with no penalties or taxes. Okay? So, you know, but that money now is set free instead of being trapped in the 529 growing tax-free. So that's one thing that can occur. Another thing that can occur is you guys are sitting on a pile of money by then because you're doing a great job.

1:10:47Dave Ramsey:I mean, we're talking 15 years from now. You know, what's that going to look like? You're going to be millionaires easy, and you're going to have other money laying around, and you might decide all kinds of different things. OC, they decide not to go to college. They want to go and be in the trades and get a certification in whatever it's called 15 years from now. We might call it AI today, and they want to be a tech person, and they don't need a four-year degree to do that. They want to be in cybersecurity, and you don't need a four-year degree to do that. You don't need a four-year degree to be a programmer, for God's sakes, right now, for sure, and so on, right?

1:11:31Dave Ramsey:And so that's, you know, maybe they want to be a diesel mechanic, and it's a two-year certification. By the way, diesel mechanics right now are making$120 a year, which is more than a lot of lawyers make. So, you know, let's just think through what is it they're going to do. They may or may not be four-year University of North Carolina. I recommend college if they study something that's actually usable. You don't want a degree in left-handed puppetry. You'll end up being a barista. But if you get a good, solid degree in something that's usable in the marketplace, I still recommend college. So that's how you plan it out.

1:12:06Dave Ramsey:You just look out there and go, what's it cost? And then you back out what you've already got covered and then go, I want to come up a little short because I'm going to have other money.

1:12:15Rachel Cruze:Yeah, because the hard thing, especially Michelle, which is such a great position to be in that you guys are looking at baby steps four, five and six, like you're looking at college and you're able to fund it. And because of how young your kids are and how fast that money can grow, is that, yeah, that's a scenario where it can be overfunded. So you do want to just be watching the numbers and make sure. for majority of people out there, that's not an issue for them, right? They're trying to save for retirement and their kids are 16, 17, and they don't have money for college. So you're on a good scenario, but you are one that you do want to be looking at.

1:12:51Rachel Cruze:Like Winston and I, I mean, we funded a ton. Amelia's 11 and we slowed down hers just because of all this. You're probably done. Just to say, again, I don't know what she's going to do. And financially, whatever's in there that will grow for the next six years. And then if it's not enough, can we cash flow behind it? But that's because we've been doing the baby steps for 15 years, too. So it's all. But it's something to think about, especially because your kids are so young, Michelle.

1:13:15Dave Ramsey:I love this question. By the way, thank you for your service to the country. I'll give you one other thing. Go ahead and start brainwashing them on two things. I mean, parent them. Okay. Okay, thing number one is that you want to bring more, I mean parent them on, is that they are going to engage in some kind of continuous learning after high school. They need to learn something beyond high school. If it's a trade or if it's college, whatever. So this is your college fund. This is your college fund. This is your college fund. Show them when they're 12. This is your college fund, which presupposes in their little mind that they're going to college.

1:13:59Dave Ramsey:That's brainwash number one. Brainwash number two is where you go to school does not matter. So you're not going to school at a super expensive school. We're not paying for it. So we went to the University of Tennessee. We're in Tennessee. Sharon and I did. We taught our kids to say go Vols early. Go Vols. Presupposes you're going to be a Vol. All three of them were.

1:14:26Rachel Cruze:Brainwashing worked.

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1:16:14Dave Ramsey:Elizabeth is in Pennsylvania. Hi, Elizabeth. How are you?

1:16:19Rachel Cruze:Good. How are you?

1:16:20Dave Ramsey:Better than I deserve. What's up?

1:16:23Rachel Cruze:So my husband recently lost his job, And he was working in the trades, but now he's considering reopening a landscaping and home services business that he ran a couple years ago when we first got married. He's started to pick up some side work, and it's showing some strong promise. He's making about double of what he would normally make in his weekly paycheck for his normal job. So our situation is a little bit different now than when we first got married. I'm a stay-at-home mom, and I'm nervous about him taking this business on full-time, which is what he wants to do. So he's pretty much stopped applying for jobs, and I want to support his goals and what he wants to do, but I'm just concerned about putting all of our financial security on a very seasonal business since it didn't produce a lot of income in the winter last time.

1:17:17Rachel Cruze:And I'm just curious what your thoughts are. well he's making how long has he been making double how long has he been doing it um so he just lost his job a couple weeks ago so this is just like very recently

1:17:32Dave Ramsey:dang so if he could good for him if he can double his income for six months that's the same amount he would make in one year

1:17:44Rachel Cruze:right why would i be nervous um i'm just i'm because last time when like i was his accountant i did all those numbers for taxes and everything so i just am getting like the accounting flashbacks to when he had his business when we first got married we pretty much relied only on my income because he didn't we didn't save for the winter and everything i won't he didn't like know to do that, I guess, the first time around. And he does have that mentality. Why did the business fail last

1:18:16Dave Ramsey:time?

1:18:17Rachel Cruze:So it didn't fail. We actually moved across the country. So he closed it down because we moved. We just recently moved back to Pennsylvania in the area. So that's why he was, you know, now with this job loss, he's thinking about reopening it.

1:18:34Dave Ramsey:Okay. Well, a paycheck coming from someone else who's out hustling and trying to keep a business open is no more stable than you out hustling and trying to create some business. They're both unstable. They're only as stable as your ability to leave the cave, kill something and drag it home. You just have the illusion that someone else does it. Oh, until they fire you or lay you off because they can't figure out what to do at their place, which is what just happened. So the security is an illusion. What I don't want to engage in on your side uh for i want to come alongside you what i don't want the two of you to allow to happen is that you ignore trends that are negative okay if but also don't want you to say well last time we didn't save up anything for the winter and um so it was tight it was tight during the winter well then don't do that again you know i mean but if you're making double, why would you not figure out a way to handle that and handle winter?

1:19:43Right.

1:19:44Rachel Cruze:I guess I'm just nervous that it's that trend.

1:19:47Dave Ramsey:You're nervous about something that hasn't happened.

1:19:50Rachel Cruze:Yeah, because we have a daughter and I have to think about her.

1:19:54Dave Ramsey:You're nervous about something that hasn't happened. I'm thinking about her too.

1:19:59Rachel Cruze:It happens the first time around is what you're saying, Elizabeth. But now, can you not shift mentality and say, okay, going forward.

1:20:07Dave Ramsey:As long as we're making double, I'm happy. Is that not correct?

1:20:13Rachel Cruze:Yeah, I'm just, yeah, I guess I'm just a worrywart.

1:20:17Dave Ramsey:As long as we're making double, yes, you're a worrywart.

1:20:20Rachel Cruze:And then, Elizabeth, I would say, though, in the winter months, November, December, January, February, there's something else you could be doing for four months.

1:20:26Dave Ramsey:Two things. Have a plan to create income during winter, and B, save up, act like the squirrel. Put some money in the nest. Get ready for winter. If you're making double, set half your money aside, and then winter is you're a fat squirrel.

1:20:45Rachel Cruze:Okay, so you would not recommend him applying and trying to get back to the time? No, not if he's making double.

1:20:51Dave Ramsey:In two weeks, the guy's already doubled his piss-poor job? I don't want another one of those jobs. I love this one. But get ready for winter. He has a baby to feed and a worried wife. So let's get ready for winter. Let's double down and bank half our check. Let's live on what we were living on when I had the horrible job.

1:21:14Rachel Cruze:From doing this last time, Elizabeth, can you guys calendar out? And when did business start slowing for you guys in Pennsylvania? Is that October? Is that September? When does it start going into winter months for you guys? I would say, like, end of October, early November.

1:21:28Dave Ramsey:What kind of work is he doing?

1:21:30Rachel Cruze:Landscaping. Yeah, he's doing, like, landscaping and, like, home services, which is what he did before.

1:21:36Dave Ramsey:Define home services.

1:21:40Rachel Cruze:It's pretty much mostly landscaping, but, like, he will do some snow removal and stuff in the wintertime, but that's very dependent on whether or not we get snow. Okay, but he has that.

1:21:51Dave Ramsey:But what else can we do around landscaping? tree removal in the winter.

1:21:57Rachel Cruze:Yeah, he does tree removal. You can do that all winter.

1:22:00Dave Ramsey:It's better to do it in the winter.

1:22:02Rachel Cruze:And maybe, Elizabeth, for a period of time, maybe for this first year, just to settle some of this, that he's like, hey, I'll go drive UPS for three months during the holiday season. No. What?

1:22:13Dave Ramsey:Just to say I'm going to be making— Make double between now and September and set half of it aside.

1:22:18Rachel Cruze:But he can be doing something in the winter.

1:22:20Dave Ramsey:just to know that income comes... Yeah, snow removal and stump removal and Cree removal and...

1:22:26Rachel Cruze:And holiday driving if you need to.

1:22:28Dave Ramsey:Whatever it is, but figure it out. But I mean, here's the thing. If you can make double, it's real simple math. Six months gives you all 12.

1:22:38Rachel Cruze:But that doesn't... But Elizabeth, you're not... That doesn't... That's not... It's computing mathematically to you, but you're feeling something different. And why is what I'm wondering. Is it because he didn't do a good job? You guys didn't do a job saving last year. Do you think you have the ability to save this time around? Yes. And, I mean, we've been, I want to say, we've been doing, like, your baby steps and stuff, and we've been in a much better place financially. And I'm just nervous that to see that progress potentially stop if things don't work out perfectly.

1:23:08Dave Ramsey:How old is your baby?

1:23:10Rachel Cruze:She's a year old.

1:23:11Dave Ramsey:Okay. Okay. And so, you know, you've got to look at him and he has to hear loud and clear that we have to do this in a way that makes sure that the family is okay. Meaning we're going to make double and bank half of it. We're going to pay our taxes on time. We're going to have some alternative things that we do during the winter to make sure that we don't even need that savings. you know and honey if you're not doing that I'm gonna go from worried to a problem I'm gonna be a problem for you if we are doing that I'm gonna be your cheerleader and support you but if you're gonna engage in a pattern that puts it looks like this family is gonna be in jeopardy me and you are gonna have a problem so let's keep me cheerleading let's work together and let me do my accounting stuff and we're going to work real closely together.

1:24:08Dave Ramsey:We're not going to go along four months and not talk about this. We're going to talk about it every month. We're going to look at the trend lines on the revenue on the business, like we're running a business. And we're going to say, okay, this type of business is making us more profit. This type is not. Let's engage in that. And let's start thinking about, do we need to buy a piece of equipment for winter? Snow removal, snow blower? What do we got? Attachment for one of the mowers? I don't know what this, But let's just start running a business and anticipating what is coming, and let's do it together and talk about it.

1:24:42Dave Ramsey:We're not going to just go along and like, I'm living my dream, and my family gets hungry. We're not doing that, and I don't endorse that. But I also don't want you to have the illusion that self-employed is less stable than employed, especially when you're making twice as much. It's more stable. so I like his I like him he's a hard worker I mean that's impressive though he turned that around

1:25:08Rachel Cruze:real fast yes yes really fast and he knows what he's doing he's done it before the actual doing

1:25:14Dave Ramsey:the thing he's good at but she's got the accounting skills that's right so she can come alongside and they can have adult discussions about how the business is creating profit and and what we're doing with the profit we're doing our quarterly estimates we're not going to get behind on taxes We're making sure all bills are paid. We're keeping the profits, you know, set aside getting ready for winter. We're going to squirrel. Squirrel money. That's what we call it in the South.

1:26:06Dave Ramsey:Welcome back to the Ramsey Show in the Fairwinds Credit Union Studios. I'm Dave Ramsey, your host. Thank you for joining us. Rachel Cruz is my co-host today. Jim is in San Jose, California. Hi, Jim. How are you? Good. Hi, Dave. Hey, what's up? I had a question. I'm getting married, and my fiancé is 50. I'm 60. We're both retired. and based on our wealth differences, we should probably have a prenup. What is the wealth differences? So she's got$3 million, no debt, and I've got$45 million, no debt. Okay. Yes, you should have a prenup. Yeah, so the question revolves around what's in the prenup, what should go in it.

1:26:51Rachel Cruze:So she wants to feel like we're building something together in our marriage going forward, and she talked about slowly maybe moving some of my separate property into community over time, like 5 % a year, over 20 years. At first I thought that was fine, but then I started looking at the numbers.

1:27:12Dave Ramsey:How much of your 45 million is real estate? Just a couple million. Okay, so what is the rest of it? So the rest of it is stocks mainly. Okay. Yeah, and I've also... Well, the way some people do it, and you can do whatever you want. It's kind of like a will. You make it up, and if you both like it, you've got your deal, right? Right. But what some people do is, A, we exit with what we entered, 3 ,045 ,000. And any growth from then on is ours. Some people do that. Or a percentage, you know, a ratio of some kind. Any growth from this point forward is 70 % gems and 30 % hers or whatever. I just made that up.

1:27:58Dave Ramsey:Okay. Um, and so, but if, if yours is only growing for you and hers is only growing for her, that does kind of leave a negative light on what she's concerned about. And she's concerned fairly then we need to grow a life together from this point forward. The main purpose of this is that she should not come out of this with$20 million two years from now. Right. That's what I was afraid of. Yeah, that's the main purpose. So we exit with what we entered with and then have a formula for how the growth would be dispersed. Okay. And I don't think 50-50 growth is fair. Because if you made 10 % on your investments, you'd make$4.5 million a year.

1:28:46Dave Ramsey:and she'd make$300 ,000. Right. But, I mean, if you want to be generous on it and say, you know, 70 % of the growth from this point forward on our whole thing is mine and 30 % on the whole thing is yours or whatever, make up a number. I don't care. But, I mean, so the two things you have to address is leaving with what we entered and then how do we build a life together and address the growth. Right. Okay. That sounds pretty reasonable. Yeah, but I would not set up a roommate situation where what's yours is yours and mine is mine, and we have to decide who pays for the mustard in the refrigerator.

1:29:26Dave Ramsey:Oh, that'll drive you nuts. Yeah. Do you guys have kids, Jim? Yeah, we both have kids. We have teen kids, and I have a couple older kids.

1:29:35Rachel Cruze:Okay.

1:29:35Dave Ramsey:So I set aside some of the money in trust for my kids.

1:29:40Rachel Cruze:Mm-hmm. So that's already separate. Okay. We're not talking about splitting that up.

1:29:48Dave Ramsey:It's just I saw the 5 % a year, and that seemed reasonable a little bit each year, but the problem is— There's no reason to. Yeah, there's no reason to. It only benefits her if we get divorced, and it ends up being a lot of money in 10 years. But if you took a percentage of growth, it's going to have the same effect. if she gets a percentage of growth without changing the name on the asset if she gets a percentage of growth from this point forward and you get a percentage of growth from this point forward unless it's exactly in ratio to of three to 45 and i wouldn't do that you'd give her more just no i mean if you gave yeah i would be i would give more than that so So if you said, we got$48 million to deal with, you get three 48ths, I get 45 48ths of the growth.

1:30:39Dave Ramsey:That's a little heavy. I probably would lighten up on that personally. So that's like she would be getting about 6 % under that scenario of the growth, but not of the asset.

1:30:53Rachel Cruze:Right, not the principal.

1:30:55Dave Ramsey:The principal is your starting point as of today. That's how most people address it. Now, you can sit down with an attorney. They may have some other ideas if they're used to doing these things. We don't generally recommend prenups except in extreme situations, and yours, my man, is an extreme situation. Okay. And it's really good to talk about it and think it through. And here's the other thing. I would be sure I get under the numbers and address the concern, meaning that's a form of pre-marriage counsel. In other words, where you say, okay, what is it you're trying to address when you say you want 5 % moved?

1:31:34Rachel Cruze:What does that do for her?

1:31:36Dave Ramsey:What is it that you're wanting there? What are you trying to do? And if we did it this other way, does that address it as well? You know? Okay. And, you know, that kind of thing. So the thing I do, the thing I really, whatever structure you use, make it from this point forward that you're building a life together in some manner. Yeah. Yeah, I agree with that. Yeah. that's the danger of a prenup where you just turn your marriage into a roommate.

1:32:05Rachel Cruze:Yeah. Cause I mean, you know, you could have another 25 great years of marriage with her, you know,

1:32:10Dave Ramsey:and, and 14 grandkids.

1:32:11Rachel Cruze:Yeah. Yeah. Each,

1:32:13Dave Ramsey:you know, and that aren't, that aren't related to the other one at all. Yes. Except by this marriage. And so, um, yeah, yeah. I've got a friend that has, uh, four kids and he's on a, a second marriage. third marriage, and she has five kids, and they've all got kids. There's a bazillion people in these two combined families now. Right, right. And you've got to address that because there's a lot, you know, just Thanksgiving becomes a thing. You know, you've got to think through. Yours, mine, and ours. And there's not any—

1:32:51Rachel Cruze:That probably is the wisest way with the kids, like in his scenario. Drop someone to trust. But if the prenup says the first 45 is mine and we're only dealing with the growth, then it can go to wherever he wants it to.

1:33:03Dave Ramsey:That's right.

1:33:03Rachel Cruze:Yep.

1:33:03Dave Ramsey:And that can also be in the will. So trust does that, but it's not 100 % wise. That's very interesting, Jim. Good discussion. The prenups have become a hot topic around here off the air.

1:33:17Rachel Cruze:I was just telling you, I was doing an interview. They brought it up in the interview and the guy doing it was -

1:33:22Dave Ramsey:On another guy's podcast. Yeah.

1:33:23Rachel Cruze:And he was like an anti-prenup. And he said now over the years, he has shifted to more of a pro because, yeah. Pro it.

1:33:31Dave Ramsey:Pro prenup.

1:33:33Rachel Cruze:Yeah, pro prenup. Uh-huh. And I do wonder if people, if there's like a discouragement of just marriage in general, like seeing the stats that you, you know, half the time it's not going to work. You know what I mean? And like, do you prep for that? Where's the wisdom in that? Versus the attitude going in, preparing for the end of the marriage is not great. You know what I mean? The way you slice it is tough.

1:33:54Dave Ramsey:The other thing is the marriage statistic that half don't work is incorrect if you start adjusting for a few variables. If you have four years of education, if you have$50 ,000 a year or more in income, if you are shared in your religious beliefs, if you fill in about five more things, and it goes to about 90 % probability of success in marriage. so it's uh if you get married after you're 22 months old no i'm kidding

1:34:50Rachel Cruze:Hey guys, George Camel here. You ever feel like you make good money and still have nothing to show for it? You run into Target for one thing and somehow walk out$87 later with toothpaste and emotional support candles? Just me? Okay. Well, that's the problem. Most people don't pay attention to how they spend their money, so it does whatever it wants. And that's why we created EveryDollar. It's a budgeting app that helps you create a simple plan for your money. EveryDollar's simple, it's clear, and it helps track where your money's actually going. Plus, you get daily lessons, to-dos, and reminders along the way.

1:35:19Rachel Cruze:It's like having a money coach in your pocket. Your money's been freelancing long enough. It's time to give EveryDollar a full-time job. Go download EveryDollar for free on the App Store or Google Play.

1:35:47Dave Ramsey:Garrett is in Washington, D.C. Hey, Garrett, what's up?

1:35:52Rachel Cruze:Hey, I'm not much, Dave. How about you?

1:35:54Dave Ramsey:Better than I deserve. How can we help?

1:35:57Rachel Cruze:Well, I just have a kind of a vague question, but I'm just kind of looking for some advice on which way to go. I've got myself on some financial waters, I guess you could say. And I guess one of the things, too, is during that way, I wasn't, I guess, open all the way with my wife about it. I mean, actually, I just read Rachel's article about financial infidelity just the other day she sent me. My wife had done. So I'm just kind of looking for advice on which way. I don't know if we should try to do bankruptcy or risk other ways out. So I'm just looking for a little advice on which way to turn.

1:36:27Dave Ramsey:Okay. So you ran up credit card debt that she didn't know about. Is that what you're saying?

1:36:34Rachel Cruze:Yes, pretty much, yeah. How much? There's probably 35. The hard part is honestly I've never really kept track. I've been very bad at budgeting until about a couple weeks ago. Why were you not telling her?

1:36:48Dave Ramsey:Were you running all the bills and you just couldn't pay them all, and you didn't tell her that you were putting on cards, or what was the deal?

1:36:55Rachel Cruze:Yes, pretty much. And then we've got assignments very well, and his health insurance every month is$1 ,400. And then my wife had an injury, a medical injury, two years ago, and so it's been hard for her. I guess my thought was I was doing good, trying to keep some stress, but I think it made it a lot worse.

1:37:14Dave Ramsey:Yeah, yeah. Okay, that's one way this happens. Yeah, and it's just like I'm trying to do it, doing the best I could, and I was trying to keep it off of you, so I didn't tell you, but that's a mistake. Okay, gotcha. And what's your household income, Garrett? It's right around$7 ,400. A month take-home pay? Yes, sir, yep. Okay, and does your wife work outside the home, or is this just you? Just me, yes. You said you had a special needs child?

1:37:44Rachel Cruze:No, he's just having a lot of health problems.

1:37:46Dave Ramsey:He's had some surgery coming up.

1:37:49Rachel Cruze:How old is he?

1:37:51Dave Ramsey:He's 28. Years old? Yes, sir. Yeah. Your child is 28 years old and has health problems?

1:38:00Rachel Cruze:Yes, he's been going on for many years. We've been many places trying to figure out what the answers are. He knows I haven't really got the answers to.

1:38:10Dave Ramsey:Is he a functioning adult? Does he support himself?

1:38:14Rachel Cruze:He does as much as he can, yeah. He's having some issues right now with arms and things like that, which he's in a lot of pain all the time.

1:38:22Dave Ramsey:I'm asking, does he live in an apartment and support himself? Oh, no, she lives with us. Okay, so you take care of him. So he's disabled to the point that he needs— Is he able to work? He's not. No, he's not. he's not even able to drive or do some of the basic things right now because of the pain he's in. Okay.

1:38:42Rachel Cruze:And this has been going on for years?

1:38:44Dave Ramsey:28. Yes, ma 'am, it has. It's been going on for a while. And it shouldn't, to the point where it just keeps getting worse.

1:38:50Rachel Cruze:And, you know, we're trying to find, we've been all over the country trying to find some of the answers. I think we, the family's got some issues with his ribs, and we're hopefully going to get those fixed. And maybe that'll get things on the right track for him. Okay. Not that he doesn't want to, it's just that... Yeah, I got it. the payment has been in.

1:39:06Dave Ramsey:Okay. I'm sorry. What a deal. Okay. Somehow I had in my head this was a baby. Okay. It threw me off. Okay. All right. Now, so the$35 ,000 in debt on the credit cards that she didn't know about, what other debts do you guys have?

1:39:22Rachel Cruze:We have a mortgage. That's pretty much the only other one.

1:39:25Dave Ramsey:You don't have a car payment or a student loan?

1:39:28Rachel Cruze:I do have a student loan. How much do you owe on the student loan? um i think it is roughly 14 i think there's two of them there's one from like 10 15 years ago

1:39:40Dave Ramsey:14 000 yes sir on altogether okay and any other debts no car debt no sir no okay and what's your mortgage payment it's 25 80 okay all right okay um well there's several parts of this and they're all interconnected, so we can't leave one out. Part number one is you and your wife are carrying a burden with your son's health. You're emotionally carrying the burden. You're logistically trying to help him find solutions and get him to those solutions. You're not doing it by yourself. She's not doing it by yourself. The two of you are carrying that together. That way is the only way we can carry the emotional weight of something like that is together.

1:40:33Dave Ramsey:The money is the same thing. She needs to carry the emotional weight of the money also with you. Okay? Yes, sir. And so the way that's going to work is, and it's also going to give her actually more peace because she's going to know what's going on and she's not going to suspect or wonder if there's a hidden credit card debt anymore because she's going to be involved from this point forward.

1:41:00Rachel Cruze:All accounts, everything.

1:41:02Dave Ramsey:Yeah, everything. So we're going to put you on the Every Dollar Budgeting app. We're going to give it to you guys. And both of you are going to sit down and spend$7 ,400 on that app and say, this is what this month looks like, what we're going to do with this money. We're going to put this much on groceries, this much on the house payment, this much on the uh uh utilities lights and water this much on uh medical bills for our son this much on whatever it is we're going to just label out every one of those dollars is going to have an assignment before the month begins we're both going to look at it we're both going to give it a vote and when both of us vote on the budget now we have a budget and then we agree to live on that budget.

1:41:52Dave Ramsey:If anything comes up that's not on that budget, we have to sit down together and change it. That's both of you carrying the money emotionally. And that's not that stressful. It's less stressful than what you've been doing. Unknown, unknown and hidden is more stressful than known. Then you just look at this and say, I'm cutting up the credit cards. We're never We're borrowing money again. And, you know, we have$50 ,000 in student loan and credit card debt that we need to clean up. And, you know, we make$140 ,000 or$150 ,000 a year, and we're going to go do that. Okay. Stop your 401K temporarily.

1:42:35Dave Ramsey:Stop saving temporarily. Do you have any money in savings? I don't know, sir. None at all? No. Okay. Do you have any in 401Ks in retirement?

1:42:47Rachel Cruze:I do have a retirement plan, but I actually would, the app that I should recommend is stop them putting the ring in that a couple weeks ago and I stopped that then.

1:42:53Dave Ramsey:Okay, good, good. So you're already ahead of us on that.

1:42:55Rachel Cruze:When you look at the math of all of this, if you guys can find an extra$2 ,000 a month, which sounds like a lot, but if you limit your lifestyle, right, and maybe even work a little extra or your wife maybe gets a part-time job or something, just$2 ,000 a month, you guys are out in two years. Yeah, I can work overtime all the time. Yeah, it is possible for you all, but also with the asterisk of knowing that medical bills is part of the equation, too. And so it might slow down the process a little bit, making sure that your son is being cared for, for sure. But if you guys really just say, hey, no matter what, we're finding$2 ,000 a month.

1:43:32Dave Ramsey:And no matter what, we're going to live on what comes in. We are not borrowing money.

1:43:36Rachel Cruze:Yep, yep. And you stay out of that hole. Ever again.

1:43:38Dave Ramsey:You cannot get out of a hole while digging out the bottom. Yep. So cut up the credit cards tonight in front of her, sit down and do the every dollar budget together and lay this out. And you can walk straight through this. You'll be able to do it. And that gives her the benefit of rebuilding trust because she knows that we've got 100 % transparency here. And the longer that we work together and have 100 % transparency, the longer, the more the trust will be rebuilt. and because you know this this was not in malice or you were buying yourself something this was you were simply trying to keep stress off of her and it had the unintended consequence of adding stress instead wasn't your intent but that's where it ends up so you learned your lesson on that one so now we just every all cards are face up you know there's no uh no no cards under the table everything's on top and everything's face up and and we're going to deal with it together and it's less it feels like it's more weight but it's less stressful than the unknown for her so you help her by carrying the weight of the medical issues with your son she helps you by carrying part of the weight of this and we've we're a team and we're going to work on both of these things together and be successful

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1:46:20Dave Ramsey:buying or selling real estate's a big deal for most people it's the largest transaction they ever do and so you need a pro in your corner not someone who got their license three weeks ago I don't care if your mother plays bridge with them. You don't buy real estate with them unless they sell a bunch of houses. That's the deal, period. So get a high-quality, high-octane, high-protein real estate agent if you're going to buy a property or sell a property. And then you'll have a good experience because you'll have somebody who knows what the flip they're doing because it's not their first ride on the cabbage truck, too.

1:46:54Dave Ramsey:If it's your first ride, you want someone's driven it before. Hello. Not road in the back. So here we go. Yeah, go to RamseySolutions.com and you can find a Ramsey-trusted agent that we recommend. Real estate pros that we have vetted that are high-octane, high-protein, that get her done. Melanie is in Phoenix, Arizona. Hi, Melanie. How are you? Hi, doing well. Good. What's up? Okay.

1:47:24Rachel Cruze:I really want to buy a beach condo, and it's in Mexico. That's the thing. That's why I'm asking. I just want to know if I can justify paying cash for it.

1:47:34Dave Ramsey:Do you have the cash? I have the cash. How much is it? $3.50. Well, that's cheap. Good. Well, no kidding. Okay, good. Okay, and what's your total net worth?

1:47:50Dave Ramsey:Okay.

1:47:52Rachel Cruze:Oh, I didn't expect that question. I thought you were going to ask my income. That's okay. What's your income? My house is paid for$600 or$700. My little condo is a couple hundred thousand. And then that's it for property. And then, you know, I have maybe, you know, that's the thing. My income is a little bit. But, you know, a few hundred thousand.

1:48:12Dave Ramsey:Okay, and how much is your nest egg?

1:48:14Rachel Cruze:Pardon, pardon. The income is not a few hundred thousand. I know you're used to big rollers. My income is little,$60 ,000.

1:48:21Dave Ramsey:Okay, but your nest egg is how big? Where are you getting the$350 ,000 from?

1:48:25Rachel Cruze:Well, so that's interesting. It's actually from my inheritance, and I thought it would be a beautiful thing to do with the money for all the kids.

1:48:35Dave Ramsey:Okay, so that's the total inheritance is$350 ,000, and you're going to put it all in a beach condo.

1:48:41Rachel Cruze:Well, I know that sounds terrible. That was the house, but I do have a few hundred thousand that's just making a little income.

1:48:51Dave Ramsey:How old are you?

1:48:54Rachel Cruze:64.

1:48:55Dave Ramsey:Okay, all right. Where in Mexico, just out of curiosity, not that it really matters.

1:49:01Rachel Cruze:Well, it does, but Puerto Penasco. So really it's only an hour into Mexico. So you're driving the three hours in the U.S. and then you're crossing the border. It's one hour, one drive, kind of loaded with Americans.

1:49:15Dave Ramsey:Yeah, yeah. Yeah, okay. Okay.

1:49:22Dave Ramsey:Now, if you just lost the condo after you bought it, is your life still okay?

1:49:31Yeah.

1:49:32Dave Ramsey:Yeah. Everything doesn't burn down around you because you're pretty much in the same situation. Yeah, okay. I don't think you're going to lose it. That's not what I'm suggesting. Now, in Mexico, American citizens are not allowed to own real estate. It goes into a Mexican trust. okay and the state runs the trust it's a uh they they use a um a notary and the notaries in mexico are way different than a notary in the states the notary in mexico is like a big deal government job and they they they build the trust out and it's very complicated it's like 73 pages and it's crazy and you don't technically own the house.

1:50:18Dave Ramsey:The Mexican government technically owns the house and you're the beneficiary of the Mexican trust. Okay? Right. So it's a little weird, but there's billions and billions and billions of dollars of American money in these trusts in Mexico. The likelihood they're going to go through and take all these American money away and not have an invasion from the north is very low. So there'll be a problem. Okay, so I'm not worried about it, you know, at all in terms of you being scammed or something like that, as long as you've checked out the particular condo you're going into, making sure stuff like the HOA fees aren't going to go through the roof and that kind of junk.

1:50:59Dave Ramsey:So, you know, make sure you got all that nailed down and that the condo—

1:51:03Rachel Cruze:The ongoing cost, too.

1:51:05Dave Ramsey:The ongoing cost to manage it may make the purchase price look small by the time you're through. Mm-hmm.

1:51:11Rachel Cruze:Well, I've kind of looked at it, and it looks like, and I'm very conservative and usually push things up just because I don't like surprises, I'm saying$12 ,000 a year for all the expenses and things like that.

1:51:22Dave Ramsey:And who's covering that? How are you covering that? You make$60 ,000.

1:51:27Rachel Cruze:Correct. So I was planning on renting it. So most people that rent it, they were used to in the past years renting it like$50 ,000. Now it's way, way down. People are freaking out. they say now half of that$25 ,000. But let's just say, I really just want to use this for family, okay? You want to cover the expenses with the rental and the rest of its family.

1:51:46Dave Ramsey:There you go.

1:51:47Rachel Cruze:Yes, just make what I can make and pay that.

1:51:50Dave Ramsey:Yeah, that's probably harder than the salesperson is making it sound. Okay. But it can be done. It can be done. Okay. I mean, I have friends with stuff in several different neighborhoods around Cabo and Puerto Vallarta and maybe even a few in Tulum and some of those spots. And they all get the pitch that the rentals are not easy. It's a process, and it's basically a VRBO situation, and it's kind of a pain in the butt. But you can make your expenses back if you lean into it a little bit, and you'll probably be okay. I think I would do it if I were you.

1:52:31Rachel Cruze:Oh, my God. I told my whole family he was going to eat my lunch. Oh, my God. I can't believe this. Holy Toledo. Okay. Oh, my God. Okay. See you, senorita. Okay. Oh, my God. Wow. But, wow. Okay, there is one little thing I will say. Just learn to say margarita and fiesta, okay? Oh, my gosh. Okay, well, I don't really want to say any more, actually, because I don't want to argue with you. I don't want to take a chance to change your mind. I'm getting off the line. I'm going to get off the line while I can. She says goodbye. Adios, Dave.

1:53:11Dave Ramsey:Adios, amigo. Hasta luego.

1:53:13Rachel Cruze:I'm heading to Mexico. Oh, my gosh. That's so funny. But, yeah, the emotional exercise of if you had the money there and then it's gone tomorrow, are you still okay? And that's such a key point.

1:53:26Dave Ramsey:It's not just an emotional exercise. It's also an actual because if, you know, what people don't think about when you're buying something in a foreign country is it's not in the United States. People, the laws aren't the same and people don't view the law as the same and they don't view private property rights as the same. And oh, you're OK. I'm not suggesting that the Mexican government is going to jerk the rug out from under all of these tens of billions of dollars of American money.

1:53:54Rachel Cruze:I thought it was the exercise of put the money in the middle of the table and burn it. Are you still okay? I thought it was that.

1:54:00Dave Ramsey:I mean, if it goes down in value, it could go—that community could become cartel crime-ridden and the condo be not inhabitable. Right. That could happen. That could happen. That's more likely to happen than the Mexican government scarfing this under the name of socialism. But I just got back from Argentina and two generations ago, the state came in and took private property away from everybody left and right.

1:54:26Rachel Cruze:Yeah.

1:54:26Dave Ramsey:And in the name of, you know, the little people needed the money. And so they took it away from the big people. Hello, socialism. And so we forget in America that because we've never experienced that, that that's pretty much commonplace in a banana republic. And so in Mexico, I honestly believe is very stable. I really don't think it's a bad investment. I think you'll make some money. But you need to stop and think that this is a different culture. It is not Anglo. It's Latino. And there is a difference in the way people think. And there's a difference in the way the laws are written, the way the government functions, everything.

1:55:02Dave Ramsey:And so the police force, everything's different. So you just need to be aware of that and embrace those differences, enjoy the differences, But don't go in there naively like I bought a condo in Mexico and it's the same thing as buying one on 30A in Florida. It ain't. It's different. And so is the rentals.

1:55:43Thank you.

1:56:04Dave Ramsey:Hey guys, Dave Ramsey here. Every day on this show we help people work through real money problems and figure out what to do next. Now you can get that same kind of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to RamseySolutions.com and try Ask Ramsey today. That's RamseySolutions.com.

1:56:59Dave Ramsey:Our scripture of the day, Psalm 113, 3. From the rising of the sun to the place where it sets, the name of the Lord is to be praised. William Arthur Ward said opportunities are like sunrises if you wait too long you miss them April is with us in Lynchburg hi April how are you

1:57:21Rachel Cruze:hi I'm good how are you better than I deserve what's up well I was curious about how to prepare financially for a child that's on the way um so basically i was working and then in november we had a miscarriage and so i decided to take some time to heal and so i wasn't working when we were expecting this child that's doing two months now and so just relying on one income right now and we have our monthly mortgage of a thousand seven $1 ,187 ,000, and the monthly income is about$3 ,000 to$4 ,000, depending on if my husband's able to work extra hours. So we're just trying to be in a better position.

1:58:13Rachel Cruze:We have used some of the tools that you have, like the EveryDollar app to get out of debt. We just have$7 ,000 in debt right now for an HVAC system besides the mortgage.

1:58:28Dave Ramsey:Congratulations on the baby, April. And you're due in two months?

1:58:33Rachel Cruze:Yeah.

1:58:34Dave Ramsey:Okay. And how old are you guys?

1:58:38Rachel Cruze:I'm 31, and he's going to be 36.

1:58:43Dave Ramsey:Okay. All right.

1:58:45Rachel Cruze:What does he do for a living? He works for a pre-priced, so it's like a printing company. So he makes about$24 an hour.

1:58:54Dave Ramsey:And what were you doing before you took time off for the child?

1:59:00Rachel Cruze:I was a career navigator, so I would help people figure out what type of positions would be a good fit and help them get into training.

1:59:09Dave Ramsey:Okay, and what were you making doing that?

1:59:13Rachel Cruze:It was similar. I think it was about 21 or 21 hours.

1:59:19Dave Ramsey:Okay. All right. Are you planning to go back to work after the child comes?

1:59:27Rachel Cruze:Not immediately after, just because we don't have childcare.

1:59:34Dave Ramsey:Well, you don't have enough money coming into the house to pay this house payment.

1:59:40Rachel Cruze:Yeah.

1:59:41Dave Ramsey:Your house payment is, on his income alone, is not something you're going to be able to do. You can pull it off for a few months, but it's not going to work over the next three years. You're going to get yourself in a pickle. And so either your all's income, his, yours, ours, is going to go up within the next 10, 12 months or so. Or you guys need to start talking about selling this house.

2:00:10Rachel Cruze:Okay. So that's the other part. So basically, my mom gave us$6 ,000 to buy down the interest rate when we bought the house two years ago. And then with this all happening, she contributed some more money for us to be able to finish the basement. And that's what we were going to use to help us with extra income. But it was supposed to be finished in March, and it's still not done. Yeah, I would be pausing any type of renovation, and I just would make sure the mortgage is paid and there's food on the table. I think that's your priority versus finishing the basement. Yeah. Okay.

2:00:52Dave Ramsey:You can't afford$1 ,800 a month with$3 ,000 coming in. That doesn't work. It can work for a little while, but it will not work long term. And so if you're making the decision to stay at home, you're simultaneously making the decision to sell the house unless his income is going to go up dramatically in the next few months. And I don't think it is.

2:01:19Rachel Cruze:So what would you say? How much income should we have?

2:01:23Dave Ramsey:Your house payment ought to be a fourth of your take-home pay, not more than half. And this is way more than half.

2:01:31Rachel Cruze:Yeah. Okay. So either I go back to work once the baby's born, or he probably gets a different type of position or additional income.

2:01:44Dave Ramsey:Yeah, and he's going to have a lot of extra hours somewhere. Or he'll sell the house. I mean, it might be more important for you all to be at home with a baby than to live in that house. I don't care which one you do. I just am not going to participate in you being in denial about this math.

2:02:02Rachel Cruze:I want you to face it head on. I mean, around six grand would get y 'all to that good place from an income perspective with that type of mortgage. So if that's through you doing some work, right, after maternity leave and all of that, or his income going up. But yeah, it's going to be, yeah, I mean, if he brings in$3 ,000 April, right, and it's a$1 ,700 mortgage payment, it's not a lot left.

2:02:29Dave Ramsey:Babies are the best thing ever to happen, but they don't get a pass on math.

2:02:39Rachel Cruze:Okay.

2:02:39Dave Ramsey:You still have to do math, even with the awesomeness of babies.

2:02:45Rachel Cruze:Right. And I'm sure the diapers are going to be expensive and other things, too. Yeah, it is.

2:02:49Dave Ramsey:That's probably not going to kill you, but it's going to put a pinch on everything.

2:02:53Rachel Cruze:Yeah, you'll feel it for sure.

2:02:54Dave Ramsey:Yeah.

2:02:55Rachel Cruze:Mm-hmm.

2:02:55Dave Ramsey:Yeah. Yeah. But congratulations. Congratulations. I'm still happy for you. I still think this is awesome. I just want you guys to address this so that the house doesn't turn this financial situation into a nightmare.

2:03:08Rachel Cruze:Yeah, and your housing situation, April, I mean, even if you guys sold and rented somewhere for three years, that's okay. It's not the end of the world. Yeah, and then you go buy something later. Like, it doesn't have to be a home ownership conversation either, right? So you guys want to look at the totality of your life and say, hey, what are our priorities? What income will be coming in that meets those priorities? And then how do we live a life out of that? That's kind of the backwards way of thinking about it.

2:03:32Dave Ramsey:And it's sweet that his mother gave you some money, but she gave you money given this change of a baby coming to put you into a trap. She didn't mean to trap you, but you're trapped. In the house, you mean? Yeah, I mean, if you can't sell it because Mommy helped buy the house, Mommy gave us the money for the down payment, so Mommy—

2:03:53Rachel Cruze:Or no, toward the interest, she said,$6 ,000 toward the interest.

2:03:55Dave Ramsey:I know, but so we can't get rid of it because Mommy is— You know, we're locked in here relationally because of Mommy. Oh, oh, oh. Then Mommy isn't a blessing then if Mommy's trapping you into a nightmare. Yeah, no. So sorry, Mommy. Marcus is in Clarksville. Hey, Marcus, what's up? Hey, Dave. Thanks for taking my call. Long-time listener for some caller. Great. I want to hear from you. How are you doing, Dave? Better than I deserve. What's up? Man, I love it. I love it.

2:04:24Rachel Cruze:Hey, so I'm active duty military. I am retiring medically after 12 years, four months, and 14 days of active duty service. We are moving from Clarksville, Fort Campbell, to Florida to be an assistant pastor. Our monthly take-home pays are going to go from$12 ,000 to just over$7 ,000. We are wanting to buy a house, but my wife and I are at an impasse. She wants a big house with a large mortgage and a low interest rate. I want a small house with a low mortgage with an average interest rate. What should we do?

2:04:57Dave Ramsey:Well, you don't have a choice on the interest rate. Both are going to have an interest rate. That's, I mean, big houses don't have lower interest rates than small houses.

2:05:06Rachel Cruze:Are you thinking like a 15 versus a 30? Well, no, meaning the lower interest rate would come from a brand new build that the builder would pay the incentive at a 3.99 % rate, whereas the national average, I think, is mid-6%. So basically 4 % versus 6%. They're buying down the thing 4 % on the whole package for the entire mortgage? Yes, sir.

2:05:33Dave Ramsey:Yes, sir. On an R? It would be at$350 ,000. Is that an arm? Versus, what's that? Is that an adjustable rate?

2:05:42Rachel Cruze:No, it is not an arm.

2:05:43Dave Ramsey:It is not. No, sir. That is for the length of the loan.

2:05:48Rachel Cruze:Hmm. I wonder if they're getting desperate in Florida. But I want a smaller house.

2:05:53Dave Ramsey:That's some serious margin in this house. With the average rate. Yeah, this guy's writing a large check.

2:05:58Rachel Cruze:I want a smaller house with the average rate.

2:06:00Dave Ramsey:Yeah, the builder's writing a large check, so this thing's got a lot of margin in it, a lot of profit in it. Okay,$350 ,000. and then you're talking about buying something else. Now, do you own a home there in Clarksville?

2:06:12Rachel Cruze:We do, yes, sir.

2:06:14Dave Ramsey:I would recommend doing neither one. I'd recommend moving there and renting for a year and continuing the discussion until you get on the same page. The page you're trying to get on is not the size of the house. The page you're trying to get on is how much debt we're going to be in and how long it's going to take us to pay it off. That puts us out of the Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.