Debt Isn't a Tool, It's a Trap

23:21Jade Warshaw:So we're debt free there. We don't have any car loans. We don't have any student loan debt. We don't have any credit card debt. Um, so you are mortgage free. That's great. Yes. Yes. We're very happy about that. That's awesome. So you said you have some cash? Not happy enough to go do it again, though, right? So we have a little bit, we have some cash on the side for a small deposit. But if we have the incoming rent and we also have some cushion fund left over after every month. How much? Tell us real numbers. Tell us how much you have cash and tell us how much your cushion is. Um, cash, we have around 50 ,000.

24:03Jade Warshaw:And then every month we have between one to 2 ,000, um, left over every month. Okay. Okay. So what are, I mean, again, give us some numbers. What are you thinking about spending and what are you thinking about? Cause you're kind of like reversing, you're kind of reversing the method. Most of the time it's like, okay, I want to buy my current, like my primary mortgage outright. And then I'm going to turn around and buy a rental. And you're like, well, we already have a piece of property now and it's not our primary. Now we just want to buy a primary residence. So I want to know if there's a way that we can do that in cash, because here's what I wouldn't want to do.

24:42Jade Warshaw:I would not, not me living in a house that has a payment and renters living somewhere that doesn't have a payment, right? They're getting the benefit of your piece. Yeah. Right. That piece was meant for you. And now you're sitting up here in a house with a mortgage and the renters are in the scot-free place. Like, does that sit right with you? It doesn't sit right with me. It doesn't. And that's kind of why we haven't pulled the trigger on anything. But we were thinking if we have the renter's payment and we throw all of our cushion fund to it, we would be able to basically pay off that mortgage pretty quickly.

25:23Who's going to pay for the fence repair and the AC repair and the light bulbs and the roof repair on your house that you live in now that you'll be renting out?

25:37Jade Warshaw:That would probably be. So in addition to that, we'd probably have to set up a fund specifically for that house to maintain it. Correct. Well, let me go. Let me go. Let me go. Let me go. Dave Ramsey on you for a minute. Let's pretend. Let's pretend. Buckle up. Buckle up. Let's pretend whatever house you have in your mind in the other neighborhood that's a little bit better. Let's pretend you have that house today and it's paid for. And you're sitting there and you go, you know what? Let's get a rental property. Would you pick a rental property in the neighborhood where that current house is? And would you go into debt for it?

26:21Jade Warshaw:no are you there no yeah no i wouldn't probably not i mean i'm glad that you were really thinking about it you were like you were jeopardy on that um i i don't think you would right yeah no so that's the way that's how we need to think about this i get what you're saying we have this house. It seems like an asset. Why would we get rid of it? It's paid for. I see your line of thinking, but what's missing there is the actual intentionality of creating the life you actually want and not just letting things fall into your life by default. What you actually want is this house in the other neighborhood, is what it sounds like.

27:01Jade Warshaw:And from what I can tell, what you actually want is a paid for house because you went on and paid off this other house that you were living in. So those are the country roads. That's like, that's what we need to get to. So I think if you took this current house, went ahead and sold it and got the$266 ,000 or the$270 ,000 for it, then turned around and put it with whatever extra cash that you have, would that get you close to the house that you actually want? Yes. I like this. I love it. And then in a few years, if you decide, hey, we're going to move back, there will be a house for sale and you can sell the one you have and you can use part of that money to write a check for this house and pocket the other couple hundred thousand dollars.

27:43Jade Warshaw:Yeah. I like that. But what Jade said, I think double clicking on what Jade said, I want y 'all to ask yourself, you and your spouse, like the idea of rental property sounds good. I totally get it. And like for Dave, I mean, he's got a whole bunch of properties. It's awesome. but I want you to ask yourself do we want to be landlords do we want to get calls on Thanksgiving morning that the sewer is backing up and we have to get somebody out there and pay for that do we want to get calls about the air conditioning going down while we're on vacation like or do you want to pay 10 or 15 percent of that money that's going to be coming in that's supposed to be cash flowing the other house to a management company and they are supposed supposedly going to take care of it right so it's just it's a different kind of life and if that's the life you want to have that's one path.

28:31But I'm not hearing that y 'all really want to be landlords. I'm hearing that y 'all paid for this house. You like living there actually, but life has happened and you need different schools and different support systems and all that's great. And you even want to move back one day. That's all awesome. Just do that in order. But it's all like what Jade said in service to what kind of life do we want to have?

28:50Jade Warshaw:And the good news is if you do this, Avery, if you take my advice, I'm not saying you have to, but if you do, you'll end up with a paid for house, which is exactly what you wanted. You'll end up in the neighborhood that you wanted to be in, which is exactly what you wanted. And because you don't have a mortgage payment, it seems like you're interested in building some kind of wealth. Otherwise you wouldn't have considered a rental property to begin with. So instead of paying a mortgage payment somewhere, you can take that money and you can either invest it in the stock market and build wealth like that, or you can save up for a rental in cash one day.

29:22Jade Warshaw:So if you do this, you're getting the best of both worlds and you're getting it in a much more secure way that's filled with peace and you get to be the benefactor of it, not some tenant.

29:36Okay. I mean, yeah, that makes a lot more sense.

29:40Jade Warshaw:I love that. Okay. I feel like, John, I feel like we solved the world's problem. Did we solve the world's problems, Avery? Yes. Good, good, good. I love that question. John, I love that because I think that the buzzword out there is real estate, real estate, rental property, passive income. And don't get me wrong. Like, I think if you purchased a house and it's a good, you purchased it the right way, the way we teach and you, you messed around and did what she did and you paid it off. Like your first thought is like, I got to keep this. I got to hang on to it. And you're about to do something she did, which is you're about to enter back into a situation that you worked so hard to get out of.

30:20And it's, I think it's always asking that question. What do you want your life to feel like? What are you aiming for here? And if you're aiming for peace and paying off our house brought so much peace to our house, then don't go back into an unpeaceful situation. I also want to point this out, Avery, because of the way y 'all chose to do this thing, not owe anybody any money, get this house paid off, y 'all can do whatever you want now. And that's a cool thing. I know when you have multiple options, it can feel heavy. Be grateful. Y 'all put yourself in a position to have multiple options.

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32:29Jade Warshaw:right on back to the phone lines where we have dane who's in denver colorado hey dane what's up hey how's it going not bad how can we help today all right um yeah so i have a question it's about a home purchase um i currently save 32 percent of my paycheck. That's because of, I guess, diligence, but also I kind of have to. I work for the state and they require that they pull out so much and then it's met. So that's the reason it's a little high like that. The state requires you to take 32 percent of your income? No, no, not the total 32. They require 10 percent and then they match 10 percent. and then I do another 12 % on my own through Roths and stuff like that.

33:19Jade Warshaw:So where's the other 10 %? That's 22%. Yeah. Where's the other 10 % gone? No, they take 10 % out of my check. They give me 10%. Oh, okay. I see what you're saying. So you're taking 22. The 10 % that they're matching, I get 22 out, but as a total, I'm saving 32. Understood. Okay. Got it. All right. I'm sorry about that. That's okay. You're good. So I have the ability to reduce that savings because I do – I max out Roths and stuff like that as well. The whole reason I'm questioning this is I'm trying to build a home. It's a second home. My current home is paid for, and it's just a small cabin up in the mountains here in Colorado.

34:04And it's going to – the price tag is about$225. five. I have, um, 60 ,000 saved. I already have the land paid for and all kinds of other stuff. Um, so I'm going to need a loan out for, I'm estimating by the time I build it about 150 is what I'm going to need. Um, I could cashflow this and that's what y 'all are going to tell me to do. You're not going to, you're not going to sell the paid off home. No, it's just a second home. No, it's going to be a second home. Yeah, it's a little cabin. Yep. So I'm kind of, I feel like I'm rushed against time here. Why? Because I have a 13-year-old daughter.

34:49In three years, she's not going to want anything to do with us. Not true. And the whole point of building this thing. Not true.

34:53Jade Warshaw:Yeah, why are you making that assumption? Not true. Well, I'm just being facetious. Okay, yeah, yeah. But, you know, it's going to be a little bit harder to get her to go up there on the weekends. and all that kind of. I have a younger son, too, who would enjoy it. But I just feel like I'm rushing it. I mean, I feel like I should wait. But by the time I get this cash flowed, it's going to be probably five years down the road is what I estimate. And she'll be 18 years old going off to college and it kind of defeats the point, in my opinion. Can you, okay, so what I'm hearing is, what I'm hearing in a more abstract way is what you really care about is creating memories.

35:32Jade Warshaw:So and you care, you do care about the location. So as you're saving for a place of your own, is it possible that we identify the Airbnb that this is the Airbnb that we rent when we go into the mountains? And it's not ours, but we go as often as we can. And we create memories there. And then when the time comes that we're able to buy our own place, no time was lost. We just now go to a different place to create memories. that's a great idea jade i'm glad i called wow yeah i'm glad you called too like in yeah i mean it's making its way around the internets that like you know kids when they turn 18 they don't want to be around their parents whatever dude i've worked with teenagers and young adults and their families for more than 25 years for a quarter century that's simply not true they don't want to be around parents that are not that they know are not on their team right right they don't want to be around parents that aren't well they don't want to be around parents who are financially stressed and strapped and the home feels so full of tension that their buddy's couch feels less less tense right even though it's grosser and more uncomfortable like like logistically it's still i can just drop my shoulders there and so yeah man create i was going to suggest get a get a camper out on y 'all's piece of land get a silly camper that makes some memories with um and here's the other side and we do that and dude i'm wrestling with this myself i have um a dream of getting a big i want a ranch is dramatic because ranchers are like hard-working people and i'm not when it comes to this stuff but i'd love to have a place that was just mine with a bunch of acres on it that i could go out and goof around and fish on it and do all that stuff um and i got a 16 year old and I have that same clock that's ticking down, but here's the other side of it.

37:23And it just occurred to me a few months ago. So I'll just pass this along. Just me and you and a couple of million people listening. What if my son goes to college somewhere else? And what if he meets the love of his life and they decide to settle down in on the other side of the country? And now I've got this big piece of dirt that I'm responsible for that I got to take care of, but I want to go, I want to go see them. I'm going to be involved in their life. and if they start having kids and they, you see what I'm saying? And so I definitely, yeah, I can see where this might work against you.

37:54Yeah. Yeah. Yeah. You've got that core home. Yeah. Yeah. I mean, I, yeah. And you know, I feel like, I feel guilty even having this problem, you know, like, Yeah, don't. You're a guy who works really hard. And I've done everything. I mean, we're multimillionaires. millionaires I've saved up you know everything's good it feels like I've done everything right like why can't I just go get another mortgage and do this I know I can pay it off here's the thing I

38:25Jade Warshaw:make here's the thing brother you can you 100 % can no it let me tell you something um you could go do that there are worse things you could do in life if you did that it's probably like you said you're a multi-millionaire it's not going to nail you to any wall you're not but you have decided an identity with money and you have decided that I feel best with money when I handle it this way, when I'm debt free, when I don't. And you chose that for a reason. You chose it because it feels good in your body. It gives you complete autonomy. I'm guessing because I know that's why I chose it, right? And by the way, Dane, if you said go, if you went and got a loan today and you met with the GC and handed them already completed plans, let's pretend you already have completed plans and they put a shovel in the ground what in 60 days like you're talking a year before y 'all can even use this thing yeah you're right yeah it's so all of if to me honestly brother it feels like you your eyes have been open just like mine are to one of my favorite people on the planet my son in your case your daughter like yeah we're we're raising them to leave.

39:39And dude, my days are filled with random out of nowhere grief that I've never expected. There's days that like, I just look over and I'm overwhelmed by how much I love this, my son, right? Like, and trying to run around and anxiously do something, especially like Jade said, that violates who I am and how I've raised my kids. I gotta be, I gotta, I gotta protect against that. And I gotta just sit in the grief like, man, three years, it's gonna go quick. We're going to triple down, right? Yeah, no, 100%. I feel like I'm in the position I am is because I've lived a life of patience. You know, I don't, I'm like you, I drive a crappy car.

40:15I did get a nice one recently and it's pretty awesome. Dan, I did get a new car and it's pretty sweet. I'm not gonna lie.

40:22Jade Warshaw:You know what this is like? This is kind of like taking the high road. Have you ever been in a situation where somebody's like really disrespected you and you have the right to go off on them, but you don't cause that's not who you are? You're like, I'm just going to stand here and they're acting crazy, but I'm just going to, I'm going to be me. And I'm just going to go, okay, I'm sorry if you love. This is like that. You're in the situation and it kind of feels like, man, I could really just go on and get this more. You could, but it's just not who you are. And it wouldn't feel good probably later on.

40:52Jade Warshaw:And so going back to your original question, which is, should I cut back on investing to save for this build? You could. I mean, you're doing extra. We would say 15 % of your gross income to go towards investing. Right now you're at 22%. So you could pull back 7 % and that would, it would help you go faster to get towards this goal of paying for this thing in cash. And I would do that. And I think that you should. It sounds like you've got plenty in your nest egg. And this is the time for you to do these sorts of things. You're in baby step seven. Now is the time that if you wanted to choose to invest more, you could, or if you wanted to choose more, uh, to take that margin and put it into other properties, you could.

41:34Jade Warshaw:And so this would be you putting that money into other properties. And, um, here's a fun thing I want you to do. Okay. Say yes, I'm going to do this. Yes, I'm going to do this. I want you to take your daughter out to breakfast. I want you to take your daughter out to breakfast, um, in the next week or two. And I want you to say, Hey, you're one of my favorite people in the world. And I love you than life itself. I got three years left with you. I want you to create a list of things, of adventures you want to have with me over the next three years. And I'll make that same list and we're going to put it together and we're going to go get after the next three years.

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43:38Jade Warshaw:All right, back to the phone lines where we have Jared, who's in Cincinnati, Ohio. Hey, Jared, how can John and I help today? Hey, I was just wondering, should I, sorry, Should I step away from my job to escape the toxicity or should I stay in order to finish baby step two? Good question. Tell us about toxicity. What does that mean to you? Yeah. Right now, the big thing is psychological safety. I work at a church, surprisingly, but there are times where I wonder if I'm going to come into work and somebody is going to blow up at me.

44:27like blow up like a senior pastor or a staff member will scream and yell at you yeah like a like a supervisor um i've i've had a moment where i did make a mistake and you know mistakes mistakes happen but um i got like a call on the phone when i was at a rehearsal and i was like hey that was stupid why did you do that you ruined my day like i'm so pissed off right now i can't believe that like it's so stupid and then when i would ask like hey uh what can i do to help like oh nothing like you just ruined my day i'm so pissed off at you like okay i'm sorry so i i'll

45:06Jade Warshaw:tell you right now yes you need to leave and it shouldn't be i mean if you're working i'm not guessing that you're making like buku bucks or anything i gotta believe do you know what i'm saying are you yeah uh for for the position that i'm in how much how much are you making It's about 50, 50 pre-tac. Right now, you could run down to your local school district and say, hey, I want an emergency certification. I'm good with people and I want to be a teacher. And you would make more than that tomorrow. And it might not be your dream of being a musician or whatever ministry, your thing you're doing, but you would be in service to people, something that you're good at, you have a passion for.

45:45and at least there, hopefully there's responsible adults that don't treat you like crap. But here's the thing I was going to say. Yeah, I think you should leave. And Jade pushed back on this. But I think you should do it wisely. Meaning if you don't have any money tomorrow, then you're in a way worse off situation. You get what I'm saying?

46:08Jade Warshaw:Yeah, I would not run from something. I would run towards something else. Well, occasionally you have to, I think occasionally you have to run from something and an immature, and by the way, you're at a values laden organization anchored into like, it's such a gross violation of just human dignity. But on top of that, it's a gross violation of what this whole thing's supposed to be about, right? That's facts. And so, yeah, absolutely. And by the way, we all make mistakes. I've made multiple mistakes today, right? That's just life. But nobody's running here and screamed at me, right? So, yes, I think you're in a not safe place, not a good place.

46:46Jade Warshaw:Jared, is it just you? Yeah. Are you married? Do you have kids? No. So that's where the fun begins. So we're almost done paying off a quarter million in debt for student loans. We have enough in savings to pay it off today. Oh. But we just had a newborn, our first child. So that adds a little bit to the complication. I was telling my wife, I would love to, I don't know, take up a trade, maybe do CNC machining since there's so much of that around here. I'd love to do a trade or some kind of certification. But like we could cash flow it or I could say end the job and secretly take classes if I wanted to to get a certification.

47:27I'm not doing anything secretly.

47:29Jade Warshaw:Yeah, and I don't think you have to make this jump from this thing that I really hate to the thing that's perfect. I think that there's a gradual transition that can happen here. I think the first thing is we're getting into the weekend. So my homework for you tonight would be, I'm going to go online. I am going to sit down with my wife and I'm going to have some quiet time as well, where I'm brainstorming all the jobs that I might be able to do in the interim, because there is going to be a period between here and the perfect thing, right? So I'm going to brainstorm all the things that I can do in the interim by myself.

48:03Jade Warshaw:I'm going to sit down with my wife. I'm going to get her input. I'm going to get on chat GPT. I'm going to generate ideas there. and I might call it my best buddy as well. And I'm gonna call somebody who's a machinist. I wanna see what that life is like. Uh-huh. So that's what the next couple of weeks is devoted to. You being able to think about what I can do in the interim and then go after it. Maybe I heard my buddy said I could do Amazon Flex and if I did that combined with this, I can make the 50K just like that, right? So figure out what you can do. It's not gonna be the be all end all job.

48:33Jade Warshaw:It's just gonna be right now, I need to replace the 50K. It doesn't have to be what makes my heart beat, right? And then while you're doing that new job, now we can start, okay, what will it look like? Let's go ahead and pay off these student loans because we need to get debt free. Check that off the list. And now I can start saying, what does it take to get into this trade? Now we can start saving up to make that happen. So there's a timeline here that I want you to walk down. I don't want you to feel like you have to do this all in one swift motion. Does that make sense? yeah instead of uh zero to 100 yes and here is the um here's the the psychological medication i want you to take not real meds okay i want you to catch yourself and commit over the next few weeks to not having imaginary conversations with people that you work with where you just finally let them have it and you get these mic drop moments and you win because i know you do that right Sometimes.

49:35I do it a lot, okay? But here's the thing. Your body has a hard time telling the difference between a real fight and one you're spinning up in your mind, but your body wears the stress either way. And when your body wears the stress, so does that newborn, so does your wife, so does the people you're trying to love at your church who have no idea that there's some kind of awful person leading that place. and so commit to I'm going to do what's the next right move for me and my wife and for my new baby for us and I'm not going to give one second of my precious time with my family with myself, with my job search focusing on these imaginary conversations.

50:15I have to ask is there somebody at your church you can go sit down with or is this like an executive?

50:26That's another one of the toxic thing of somebody who is like HR. I was encouraged by my supervisor not to talk to, even though that's their job. So I can talk to somebody, but - Dude, get out of this mess. Get out of this mess so far away from it.

50:43Jade Warshaw:Yeah. And this is how crap gets swept under the rug. This is how people get hurt and it just kind of goes away. People don't want to talk about it. It's this kind of madness that blows up faith community. So get out of that mess, man. Get out of that mess. And let me just recap, because we talked about a lot. So the first thing that we need you to do is we're not going to quit this job until we get another job. There's no point to do that to your family. And there is something that you can do pretty quickly. Another job might be going to work at the grocery store, working at Walmart, working at Starbucks, find another job.

51:14Jade Warshaw:But fast, right? We want to get you out of there fast. So that's thing one. Thing two, as we said, you need to brainstorm all of that this weekend so that you can get out of that job fast. Thing three is you do need to take this savings that you have and you need to pay off your student loans. Make sure you keep a thousand dollars saved. But something tells me you've got a little bit more than that. And then that way, once you start getting in this job, now we can start building up the three to six months of expenses. And now you can actually start funding whatever trade it is that you think you might want to go to school for.

51:40Jade Warshaw:And you can start working on that. So that's the order of events in which this needs to take place. And I think if you do that, you're going to look back on this situation and go, man, I handled that the right way. I stood up for myself and my family. I did the next right thing for us.

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53:38Jade Warshaw:All right, the Ramsey Show question of the day is sponsored by Y-Refi. Remember, if you've fallen behind on your private student loans, every month can feel like you're standing still. Y-Refi helps borrowers explore refinancing options that can help you start making progress again. So go to yrefi.com slash Ramsey. Remember, that's the letter Y-R-E-F-Y dot com slash Ramsey. That's Y-R-E-F-Y dot com slash Ramsey. May not be available in all states. Today's question comes from Grayson in Mississippi. Grayson writes, my wife and I are in our late 20s and we've been married for five years. We had our first baby this year.

54:15I work in construction and make$120 ,000 a year. My wife is a stay-at-home mom, which we both agreed upon. I have a Roth IRA that I've been contributing to since I was 20 and a pension through my local union. We have$6 ,000 in savings and add to it every month. I also have a side hustle, which I use to fund my hobby, which is race cars. I don't ever spend any of my salary on my hobby. My wife gives me grief about how much I spend on my cars, even though it doesn't affect our personal bank account. Am I being selfish for spending the extra money I make on my hobby when I could be putting it towards our savings?

54:51Jade Warshaw:Interesting. It's an interesting frame of this question, which I actually understand what he's asking. And I understand with the lens he's wearing, why he feels this is a noble path. And I get what he's trying to say here. And I also get that his wife is probably less concerned about the cars and more concerned about the way that they're running parallel in their own marriage. I'm going to tell you what I picked up on in this. Okay. He was detailed about everything except how much he's spending on the hobby. It's like, you're telling me how long you've been married, down to the dollar on everything else.

55:30Jade Warshaw:But when it came time to say what you're spending on this hobby, there was nothing there. so I have a sense that there's probably something in this equation that's being left out whether it's the rate at which they're currently saving the wife is like hey I listened to Ramsey we need to be putting aside at least 15 maybe they're not do you see what I'm saying and maybe he's maybe he's spending a little bit more than is the right amount I think that there's a way that all of this can happen in the right balance let me tell you what I picked up on Um, I see one, two, three, four, um, five, six, seven, eight, nine, 10, 11, 12, 13, 13 times he wrote mine, I, me.

56:27right and again what i'm saying grayson is i want you to go through this question you sent us and replace every one of those with ours we we are in our late 20s we've been married for five years we had our first baby this year we make 120 000 combined income together plus i work a side hustle and we make an additional five, seven,$10 ,000. And we have a plan for how much money we want to save. And we both know that we have our own hobbies that the other person hates, right? In my house, my wife doesn't think stand-up comedy is fun at all. I would live there. I do live there. I love it. And she loves, loves gardening.

57:14I like it for like seven minutes. And I'm like, all right, let's move on. I get itchy. That's great. And we decide how much we are going to put towards those different things. And so, brother, it sounds like you are trying to do the right thing in your marriage and in your house, but it's all about you. What you're doing, how you're doing it, and what you should have on your own that you're allowed to do whatever you want to do. And man, you're married. All of it is y 'all. Your goals, your dreams, your retirement amounts, the vision you'll have for y 'all's life. and my guess is the cars is the proxy war in the house like you said wife probably didn't know how much he spent on cars and his excuses or his response is it's mine it's not touching the main money right and she's that's the proxy war for we are not united building this home this marriage together you are telling us how this is going to go and then you go have this other secret thing

58:10Jade Warshaw:that i'm not a part of yeah i listen i agree with that and just to frame it out for somebody who's listening, because I do think that when you have done the things that he has said, when it's like, hey, I don't have any more debt. I have savings. I have money in retirement. Oh, that's great. When you've done all these things, there is a certain feeling of like, I feel like I should be able to have X, Y, Z. So let's kind of, I'll tell you something that has worked for me. And I think this can work for Grayson. I think this can work for anybody listening to kind of determine, is this a fair amount to spend?

58:42Jade Warshaw:Because I think that's, let's pretend all the other kind of weird things in the conversation weren't there. The crux of the conversation is what's a fair amount that I can spend on the things that I like to do, you know? And I think that it really is just a checklist that you can go over in your mind. And I, there have been times that Sam and I have literally sat down and done, gone over this to make ourselves feel right about a purchase. Number one, and it's based on the things we teach. Number one, if you're a person who is on a budget, like every single month, you are consulting your budget, you are planning for every single dollar that you're spending, if you are doing that, like that's your first green check, all right?

59:17Jade Warshaw:The second thing is, are you a person who's out of debt, right, if you're in debt, now's not the time to be doing some crazy thing with your money, right? So if you are a person who is out of debt and the thing that you want to do is not gonna cause you to go into debt, right? If that's true, give yourself a green check. The third thing is, okay, am I a person who is carrying the proper insurances? And I know you didn't see that coming, but that's something that makes you a financially responsible adult. if you don't have a will, if you don't have life insurance, don't do anything else until you have that, until you have the right health coverage, until that makes you feel secure in the things that you do financially going forward.

59:53Jade Warshaw:So if you have that, give yourself a check. If you don't, pause and go do that before you try to go do something crazy. The third thing is, am I valuing, am I saving money in the proper areas? So we would say, hey, gotta have baby step one, gotta have three to six months. You need to be saving 15%, right, for investing. And if you're beyond that, you need to be paying extra on your house, which is a forced savings account. If you are doing those things, okay, give yourself a check. And then finally, you need to be a person who's practicing generosity. Every single month, every time I'm doing something for the community, something for my local church, something for the orphans, whatever that is.

1:00:33Jade Warshaw:If you are doing those five things, John, have a blast. That's right. And so let me speak to Grayson's wife here. Not to Grayson's wife. That's not fair. She's not even a part of this thing. Let me speak to spouses. There's this illusion, Jade, and I found it while doing research for this other book. I just realized I'm super privileged when it comes to this. I have a wife who has always had her things and I've always had my things. And just the way our chemistry works, we've always celebrated that we each have our own weird things that we're into. do. But I was unprepared for how many people told me my spouse resents the fact that we don't do this thing together, that you like this thing and I like this thing.

1:01:19And so if, Grayson, y 'all sit down and y 'all create this and the thing that brings you life and joy is fixing race cars and driving really fast and doing all that kind of stuff, and you're willing to go above and beyond and work for it and we're putting this money in the account and your spouse just says, I don't like it. I don't want you doing it. That's a deeper issue. And that's not a financial issue. And that's not a reason for you to just siphon off and say, well, fine, then I'm taking my ball and going home. This is my money. I can do what I want with it. Y 'all need to get to the root of that concern, that conversation.

1:01:52And it's much more common than I thought it was.

1:01:54Jade Warshaw:Well, yeah. I mean, you and Rachel, you do your money in marriage getaway weekend every year. and I got to believe this is part of that conversation, which is - Who do we want to be? Yeah, and you have to let your spouse, even financially, be themselves. Like just because you're married, you don't erase who you are and the things that you liked to do and the things. And it's okay if your spouse doesn't care. Do you know my husband right now, he'll print something on the 3D printer and then go in the garage and use his airbrusher and paint it. I have zero interest in it. When I say I have zero interest, I have none, but it gives me joy that he's doing something that gives him joy that has nothing to do with me.

1:02:36Jade Warshaw:And I told him that. I told him yesterday. I was like, you want to know it, Sam? I think it's so amazing that you found something to do that has nothing to do with making money. It has nothing to do with career and it has nothing to do with me or us. Good for you. Yes. I remember a few years ago when I had a comedy thing going and a music thing going and I was like, hey, this is too much. I'll quit. And my wife said, no, no, no, no, no. Because when you're gone those two nights, I get a way better version of you on the other five. Go do those wild, weird things that you like because then you're fully you when you get home.

1:03:09And that was, I remember being like, I'm married well. Yeah.

1:03:27you

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1:05:58Jade Warshaw:We've got Dan who's in Philadelphia, Pennsylvania. What's going on, Dan? Dan, I'm too blessed to be stressed, too anointed to be disappointed. How are you guys doing? Okay, I know that's right, Dan. Dude, what's up, dude? So I've been married for about a year and a half. And my wife and I tried to start having a kid about six weeks ago. And she's five weeks pregnant. Hey. That's what I'm talking about. Way to go. Congrats, man. Thank you. So question boils down to what do I need to look at putting into a sinking fund for just medical expenses that are going to be approaching us for the next nine to 12 months?

1:06:34Jade Warshaw:I love that, Dan. Thinking ahead. Good dad already. I love that. So around here, the way we teach is if you're currently walking the baby steps to pause them and stack up cash, which is what you're trying to do right now. And a good rule of thumb there is to look at what is your deductible and what is your out-of-pocket max. That's a really great thing to aim for because then you're saying, hey, no matter what, I know this is the amount that I'm on the hook for and I know this is the maximum amount that I could be on the hook for. You see what I'm saying? And so let's say your out-of-pocket max is, I don't know,$4 ,000.

1:07:11Jade Warshaw:What do you think it is? I believe it floats a little closer to$7 ,000. Okay,$7 ,000. Yeah, that feels about right. So that would be my goal. If I can get that, that's a very good goal. Let's say you knock that out very quickly and you go, okay, what else? Well, the things I'd be thinking about are if there's a NICU stay, if there happens to be an extended stay in the hospital, God forbid, I'm not putting that on you. But if there were, we'd need meals. Maybe there'd be some transportation, those sorts of things. So those are the types of things that you want to save up for. And yeah, ultimately stack what you can, stack as much as you can.

1:07:47Jade Warshaw:And then once this baby gets here, you're going to have a pile of money sitting there and hopefully everybody gets home safely. And then you can take that pile of money and throw it out, whatever your next goal is, whether that's paying off some debt, stacking up three to six months of expenses, or even a down payment for a house. Okay. Thank you. I appreciate it. You are very welcome. Congratulations, dude. Absolutely. All right. We've got Ashley up next. She's in Tampa, Florida. Hey, Ashley, How can John and I help? Yeah, how are you? Actually, I'm 31, and I'm trying to decide whether I should sell my townhome or keep it as a rental.

1:08:22I bought it for$107 ,000 in 2019, and it's worth around$160 now. But the HOA has basically doubled from$378 to$632 a month. Oh, Lord. Yeah, it's a lot. And it's not the best HOA, I'll say. And they're planning to increase it again in October.

1:08:48Jade Warshaw:So, gosh, with that HOA, even if you sold it, why would you keep it as a rental? Don't rent it. Just get out of there. Okay. Yeah, that was my thought because it's empty now, and I've been either putting it for rent or for sale, and I can't even seem to get what I want for it as a rental. Um, why isn't it selling? How long has it been on the market? I haven't had it on the market yet, but someone I know might be interested in the property. If that doesn't work out, call a Ramsey real estate pro and have them list that house and get it sold for you. Cause right now it's weighing on your soul more than, more than the financial weight.

1:09:29It's just killing you. And it makes you mad every time. Cause you probably like living there and the HOA is kind of run you out. Like just get that, cut that cancer out of your life yeah absolutely my life has moved on a bit i've um when i used this as uh my primary residence i it was really good for me because i house hacked and had a run-through in the second bedroom so that was paying my complete mortgage and i basically got to live like mortgage free which is nice where are you living now i'm sorry i'm living with my my boyfriend and um And, yeah, I don't see us living in here again. And due to my business, being more downtown makes more sense for me.

1:10:13So let's say even if it didn't work out, I'd still probably want to try to find a rental downtown. Like a one-bedroom apartment downtown or something? Yeah, you're a roommate. You know, anything that saves money. But the goal is, you know, this person I'm with, I see an upward trajectory for us. And my goal is to be debt-free by the time we have children so I can be a stay-at-home parent. Gotcha.

1:10:35Jade Warshaw:Okay. Yeah, I don't want to get into a topic that's not part of it, but yeah, just make sure you guys do this in the right order is what I would advise. Make sure you're looking out for what's going to be - Make sure you're safe. Yes, thank you. You're not exposed financially. Yeah. Oh, no, definitely not. So the money that I would use, that I would take from the sale of this property, I would immediately put that into investments. you know, for like retirement and make sure I'm okay there. You wouldn't put it in a high yield? Because I'm thinking, let's pretend, if I hear what you're saying, which is eventually it sounds like you're going to marry this guy?

1:11:16Yes.

1:11:17Jade Warshaw:At least that's your plan. We haven't heard from him yet. Yes. So if you guys think you're going to get married, which you think at some point you're going to want a home together, hopefully he's contributing or he's got something to offer financially on his end. Now you've got this pile of cash too. if this horizon is less than five years, I don't know if it is and I'm not rushing you. But if it's less than five years, I'd probably keep it in a high yield instead of investing it. That way you could put it in either to help pay off quote unquote y 'all's mortgage or if y 'all want to buy a house that maybe somebody else who used to date used to be in this house and you don't want that anymore, which I wouldn't blame you.

1:11:59Y 'all want to get a place or y 'all want to get an apartment or whatever, then you've got that that accessible right there okay yeah that makes that makes fun since i have

1:12:08Jade Warshaw:a high yield already so that would be easy yeah and then if you know beyond that if something you know you guys finally get stabled and there's a big chunk sitting there yeah then you could turn around and invest that or let me let me go dark just because that's what you do i wouldn't have a job if if if everyone's plans worked out i wouldn't have a job and so i have a good job because very few people's plans work out. Also, if you have this money in high yield savings account and y 'all do break up and you have a have to get out of here this weekend, then you get to spend that next weekend grieving and being sad, not also wondering where you're going to live.

1:12:45True. You know what I'm saying? So it will be some peace. And also, what other debts do you have? So I don't have any credit card debt. I have right now this house, which I have about$85 ,000 left on it. If I sell it, then I profit that about$50 ,000,$40 ,000 after everything. And then I have a$40 ,000 student loan. Done. Pay that off. Pay that off first. I will pay it off. I should be getting some inheritance with that exact amount, and that would go straight to my student loan. If that doesn't work out, as plans don't always work out, I will put everything I can monthly toward this student loan until it's knocked out completely.

1:13:28Well, but if you get a$50 ,000 check from selling your house, I would take that money and put it towards my student loan.

1:13:33Jade Warshaw:I want to know about the plan of the inheritance, working out or not working out. Is this based on you don't know if you're in that person's will or what's that based on? No, it's the weirdest thing. So my grandparents had a property in the Hamptons. and it's on an Indian burial ground. And so I think the city and the state are fighting for the piece of land. Oh, okay. So there's a lot going on here. But what John is saying is exactly right. Take that equity from the house. As soon as you get it, take it, pay off your student loans, be free and clear. That's what I would do immediately.

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1:16:03Jade Warshaw:Hey, be sure to let us know what you think about the show in the comments. And if you haven't subscribed, be sure to subscribe. You can do that on YouTube, wherever you listen to podcasts. And be sure to send this episode to somebody who you think needs it, somebody who needs a little hope, a little inspiration, a little kick in the pants. All right, let's go to Ethan, who's in Nashville, Tennessee, right here in our backyard. What's up, Ethan? Hey, what's going on? Not a whole lot. Talking to you. How can we help? Okay, so thanks so much for helping. I am a youth pastor. My wife, she also works in the same church as I do.

1:16:37We really get the privilege of working alongside the next generation. She's a worship pastor for the next gen. I'm a youth pastor, and we have over$100 ,000 of debt. And one of the things that students have been asking us, you know, going out of high school, going into college, is like, hey, should we go to college? Should we go into debt? Is that something wise to do? And we're really kind of feeling this tension between, like, faith and wealth and talking about it. Can you help me maybe give good advice for that?

1:17:06Jade Warshaw:Yeah, I can. I love the question. I'll look at it from just the facts of the situation, which is over here, we believe that the borrower is slave to the lender. There's just a piece of that that is not only true, but biblical. So I hope that kind of ties in with where you're at. And so that's why we teach that way. We teach that ultimately, it's better for you to have control over your money and that your income is your biggest wealth building tool. Therefore, if you can avoid the pitfalls, you are going to launch yourself into a life that's full of financial peace, a life of financial freedom.

1:17:44Jade Warshaw:You're going to be able to build wealth. You're going to be able to build healthier relationships. You're going to be better in your career because you're not going to be stressed by financial strain. And insanely generous. Yeah. Right? Yeah, definitely. One of my friends tells me, you don't have to have money to be generous. You have to be generous to be generous, but also helps to have money. Absolutely. I mean, no one's going to dispute. There's different ways of generosity, right? You can be generous with your time and your talents and all these different things. But people want cash also.

1:18:15Jade Warshaw:So there's that part of it. So now that being said, we're not looking down on or hating on someone who has gone into student loan debt. But I think that if you can get ahead of the problem, you can prevent it altogether. And we do teach that the best way to avoid student loan debt is to pick the right institution for your education. Yeah. Right. Don't go out of state. Try to do your gen eds at a community college. be willing to do the work, the full-time job of getting scholarships, be willing to work part-time or do a little bit of work while you're on campus to add to the cost so that the student can have some skin in the game because then you actually feel like, hey, this is just not some free ride that's provided to me.

1:19:04Jade Warshaw:There is a little bit of a difference when you have a little bit of skin in that game. So that's the way that we teach. I also think using your own experience, Ethan, I mean, what's yours? Yeah. So, I mean, my wife and I, like I said, we have over a hundred thousand dollars of debt. The majority of that is her schooling. Some of it is mine as well. And then the rest of it is just the vehicle that we bought her about a year ago. And I grew up with parents that taught me a lot about debt and stewarding my finances. And she grew up not having that. So she went to school somewhere where she couldn't afford and just believed that it was normal to go into debt.

1:19:44And now we're, we're trying to figure out how to get out of it. And we're just feeling this tension right now where we're leading students and we're, we're trying to help them figure out how to follow Jesus ultimately. And they're asking us questions like, hey, I'm feeling tension between wealth and with faith. And I have a hard time answering that sometimes as someone who is trying to figure it out too. I think you're conflating two separate challenges.

1:20:13Jade Warshaw:I was just going to say, those are two different issues. So yeah, number one, the greatest gift you can give those young people is for you to be an authentic, honest human being and talk about the challenges you and your wife face as being being interested called whatever word you want to use to ministry and also this hundred thousand dollar albatross hanging around your neck yeah right and that's gonna that's gonna depend on how far away you have to live from your church that's gonna depend on whether y 'all can buy a house that you can have tons of youth group events at or not, it's going to impact how you give because you've already committed$100 ,000 of those dollars plus interest to a bank, right?

1:20:58And so I think that's conversation number one. And I would just plead with you to lead with authenticity and honesty there. This is the hole we dug ourselves. And we might get called, but we've already chained ourselves to this fence back here until we get this chain caught. We can't make this other call. Do you get what I'm saying? So that's number one. Yeah, I totally hear that. Number two, man, that's it. What you're talking about is in the ethos now, and I get that tension. Jesus talks a ton about money and the love of money, right? And I think to me that's where when money becomes something that is an idol, when money becomes my destination point, when money external, some sort of external number becomes the proof that I have value.

1:21:48Now you got a problem. Now you got a drug. You get what I'm saying? Or think in our culture, think how insane it is. We answer the question, what are you worth with a number? Yeah, right. That's madness, right? And so, but that is the air we all breathe. and the temptation is is to burn the idea that some guy who started um uh who started um a port-a-potty company and then happened to be here in nashville where you and i both live and nashville started exploding as a city a lot of people want to move here and now suddenly this guy has a ton of resources because he honored his contracts he took care of his customers he pays his employees well and now he's really successful, the temptation is let's go burn him down.

1:22:36And let's call him a bad guy or not a godly man because the thing he does, the help and support he provides is somehow unbiblical and ungodly. And I just think that's not true. I mean, I think it's patently untrue. And for me to sit around and look at everybody who has a business, has resources, who's done well, and just make up stories about them so that I can villainize and demonize them, man, that to me feels counter to the message as well, right? And so there is always going to be a tension between wealth and the faith. There's always going to be a tension, I feel it personally, between wanting more and wins enough enough.

1:23:20All those things are actually spiritual questions that I try to solve with dollars sometimes. that's where I would focus a lot of my conversation. Who do you want to help? And if in the process of helping people, you end up really wealthy, then that, like your buddy said, generosity is generosity, man. Then now I have the opportunity to help so many more people. You know what I'm saying? Yeah, I do. Jade, I just said a lot there. What do you think?

1:23:45Jade Warshaw:I think that you got it. I mean, the only thing that I would say is if, I don't know how old these students are, but if you want to distill it down and make it pretty simple, I would go with money is completely amoral. It really just is its own thing and it highlights what you already are. So if you are already someone who is a tightwad, when you get some money, you're going to be even more of a tightwad. Or if you're a jerk, it's going to make you a super jerk. Yeah. But if you were generous with a little bit, now you suddenly get more money, you're going to be ultra generous. So the key here with money is the character piece, I think.

1:24:20Jade Warshaw:And that's kind of on the, is it good or bad side? And I think just on the practical side, I would just lean on, hey, the borrower is slave to the lender. And that when it comes with money, it's not just about student loans. It's in general, you have to decide your philosophy on money. And use your own story. That's what I do on this show every day. I use Sam and I's story of being in$460 ,000 of debt. and they're going to learn the most by you talking as a real person and saying, man, my wife and I, we had student loan debt and this is what it's caused. And this is what we're, this is ultimately what our goal is.

1:24:53Jade Warshaw:We want to get out of debt because it's stealing from us. And we want to be able to be in a place where we can be generous and do. And I think that people are going to relate to that far more because it's coming from a genuine place and it's coming from a guy, a lady and a guy that they trust. Have your students would be cool if you did a series, but have your students, invite them over to your place and y 'all watch the Borrowed Future documentary that we put out a few years ago about the student loan crisis. I think that would be eye-opening for them and it would give you and your students a lot of talking points.

1:25:26But there's a lot of messaging in the world right now about how the idea of wealth is inherently evil instead of the use of wealth can be evil and it can also be really, really good.

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1:27:09Jade Warshaw:Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. I'm Jade. Next to me, John Deloney, taking calls about your life and money. And we've got Tammy, who's in St. Paul, Minnesota. Hey, Tammy. How can John and I help today? Hi, John and Jade. I'm so excited to talk to both of you. This is great. Awesome. Can't wait. Yeah. My husband and I are on baby step six, and we've been working really hard toward the goal of having our house paid off by my 50th birthday. You know, it's such a major milestone. That's cool. That's coming up this February. Our budget and all my fancy spreadsheets and everything showed that this was totally doable.

1:27:43And whenever we've had unexpected expenses before, we were able to adjust and stay on track with that goal. But now we've hit a bigger issue. I was diagnosed with breast cancer last month. I'm so sorry. Yeah. Yeah, you know, it was caught early, and I'm going to be fine. Good. I'm very confident I'm going to be fine. But my budget didn't account for us meeting like our yearly out-of-pocket max in these few months. And it didn't account for me losing all my overtime when I go through like surgery and six weeks of radiation and all that. So we're going to end up just about$22 ,000 short of the goal by my birthday.

1:28:18And I'm kind of devastated by it. You know, we've worked so hard and been really careful, followed the budget. We don't spend on extras. But like on top of that, I also feel bad about feeling bad about it. And that doesn't do any good, right? That doesn't do any good. because the mortgage is going to be paid off next year anyway, right? But it's going to be hard enough to hit 50 as it is. And before I was kind of looking forward to it, you know, with the mortgage payoff. Yeah. But now it's like hitting a brick wall. All right, let me jump in here, Tammy, because I feel myself rising up here, okay?

1:28:49Okay. I'm going to tell you, I'm going to ask you a question and I'm going to tell you something that maybe has never been said on The Ramsey Show ever, okay? Okay. Here's my question for you. What did the paid off house signify for you? Oh, freedom, stability, a lot of less stress in my life. Just a major milestone. The finish line at the end of a marathon, it was going to be just a great event. And is that, are all those things going to not happen in April when you pay it off instead of February? It will, but in the meantime, I'm hitting 50. Yeah, so here's what grief does to us. and I say grief, I'm holding it loosely and there's some very acute grief, like big, heavy stuff.

1:29:37It tends to kind of act like an ooze and it just takes over everything. And so you are right. I'm in my late 40s. I totally get it. I'm excited to turn 50 one day in a few years. And also, I've got some miles on my body. I know I'm over halfway done. And I don't like that. Especially my kids are getting older. like the thought of that, right? And so there's grief involved with that. And you have a lived experience that everyone I've ever sat with who was faced with some sort of cancer is this strange terror that my body tried to kill me, right? From the inside out, right? And so that's a, that's a grief.

1:30:27That's a fear. That's a, like, that was not on our bingo card. That's a frustration. And then, man, when you put that in context and you have an honest conversation with yourself about how have I lived these first 50 years? Am I the person I want to be? What are some great experiences? What are some things I want to do differently in my back half? Who do I want to be when I'm 60, when I'm 70, when I'm 80, and start looking that way. And then you have an honest grief conversation and not conversation, but season with the cancer, like, like health wise, you're going to be okay. Financially, you're going to be okay.

1:31:00But there's still that lingering betrayal. My body tried to kill me. Right. And being there, man, then suddenly, all right. So my mile time is going to be a little bit slower, but you know what? I ran a freaking mile. Like y 'all going to have that paid off celebration. Y 'all going to have the freedom and have the peace. You get what I'm saying? But right now it's all jumbling up into one big bucket. And so spending time kind of pulling that apart and saying, what am I actually grieving here? And we had a goal. We're going to hit that goal. It's not going to be as fast as we did. Cool. I guess you can be disappointed about it.

1:31:32But man, now I want to say the thing that I don't think has ever been said on the Ramsey show. You ready? Yeah. In your particular situation right this second, I don't care about your budget. I don't care about your spreadsheets. You, my sister, beat cancer. Yeah. And I'm going to leave today's show and I'm going to smile all the way home because I got to talk to somebody today that beat cancer and that had done the work for years before cancer so that when it hit, it didn't completely upend everything in your life. And you've worked hard enough on your marriage that you had somebody that was ride or die with you through this thing, right?

1:32:10Jade Warshaw:Yeah. Yeah. You won. You won. You won. Like spreadsheets, who cares? Budget right now, who cares? Sister, you beat cancer. Okay. That's freaking amazing. Thank you. You get what I'm saying? Yes, yes, for sure. All right, now budgets matter, blah, blah, blah. But you beat cancer, right? Yeah. Yes. Every day is a open your eyes and throw your fist up in the air and say, bring it. Yeah, okay. You get what I'm saying? Yeah, yeah, I do. All right. I appreciate that. Thank you so much. Dude, it's been a high, high honor to get to talk to just a straight-up gangster. You're awesome, Tammy. Absolutely.

1:32:58Jade Warshaw:Wow. I mean, John, I don't think you could have said it better. There's points in life where it's not about the money. No, man. It's just not, you know, and this is one of them. Well, and can we say – let me just take two seconds on this. I don't want to compose my thoughts because I get all emotional when I, when I talk to somebody like that, who's, who's awesome on 50 different levels. Um, I think when we talk about the baby steps and we talk about getting out of debt and we give people a roadmap on how to do that, that works a hundred percent of the time if you just do it. And it can very easily, the road markers are paid off house, paid off credit cards, right?

1:33:40And that's by design. It's that way.

1:33:45but what we we kind of blow by it a lot we don't spend a lot of time on it but man the big win here for her yes it'll be cool that she pays her house off it'll be amazing it'll be a moment of freedom whatever the big win is that years ago Tammy and her husband decided we're going to take control of our finances in our house and we are going to be in the driver's seat of our own life. And then cancer happened. And to me, the big win for this family is that it will be a big win that they pay off their house. But the big win is that they weathered a major storm. They had great doctors. They were blessed.

1:34:23They had each other. They had family support, whatever, and got them through this season. That to me is the win that 10 years ago, 15 years ago, they said, hey, let's make a plan for, for when, not if, and man, they did it. They did it. They did it.

1:34:37Jade Warshaw:Yeah. I think, I think, I think that's fair. I mean, that's the whole point. Life is not when something happens, it's like, it's going to happen. You just don't know what it is. Is it a job loss? Do you, do you break your leg? Is it a diagnosis? Is it a, you know, infertility, whatever. Yeah. Yeah. There's just all this stuff that happens. And the best thing you can do, you can't stop the things from happening. You can't make them less painful or less disappointing and hurt, right? It's still disappointing. It's still not what you expected or planned for, but it just you can relieve some of the stress, some of the anxiety, some of the pain to be financially secure so that the money part of it is the least important thing that you're focused on.

1:35:18Now we can go to war on the thing. We can go solve the thing. Exactly.

1:35:21Jade Warshaw:You can be a human being and just see the person in the moment. OK, I'm going to go visit whoever's sick. I'm going to be there. I'm going to do this. I'm not worried about bills. I'm not worried about loss of wages. I'm not worried about all these other things because you did the things to make sure that your financial footing was secure.

1:35:57Dave Ramsey here.

1:35:58Jade Warshaw:For more than 30 years, I've been talking to folks on the air, and I can tell you that most people are broke. Not because they don't make enough money, but because they don't have a plan. You need to give every dollar you earn a job, because when you do that, something changes. You stop guessing. You stop worrying. You stop stressing. Our Every Dollar Budgeting app will show you how to find extra cash, pay off debt, and finally start winning with money. But most people won't do it. They'll keep living paycheck to paycheck. Keep hoping things will change without making a change. It's time to say enough is enough.

1:36:36Jade Warshaw:It's time to take control of your money. It's time to start your every dollar budget for free today. Go download it in the App Store or Google Play.

1:36:57Jade Warshaw:Guys, one of the biggest mistakes that people make is thinking that they can skip having a will, whether it's because you're too young or too healthy or you just don't own enough stuff. But the truth is a will helps protect your family. It gives clear instructions and can even keep your loved ones from having to guess what you wanted during a difficult time. That's not fun. So if you're ready to create one, go to mamabearlegalforms.com, mamabearlegal.com. If you're not sure where to start, text quiz to the number 33789, and we'll help you figure out which option fits your situation. All righty then, we've got Renee, who's in Denver, Colorado.

1:37:38Jade Warshaw:Hey Renee, how can we help today? Hi John, hi Jade, thanks for taking my call. You bet. I'll just jump right into it. I would say for the last two months every day, almost every day, I tell myself, call in and pay off your car because you have the money to pay it. And then I get this knot in my stomach that I'm like, the minute I pay this, something's going to happen where I need that money. Okay. How much do you owe? How much do you have left to pay? What's the amount? $16 ,300. And how much do you have in savings? savings? So I have two different savings. In one, I have$16 ,500. And in the other one, I have about$20 ,000.

1:38:29And they're both in high yield savings accounts.

1:38:32Jade Warshaw:So here's the thing that I've realized about certain types of financial fears over time, because you're talking to somebody who once had almost half a million dollars of debt and no savings. So you want to talk about scary times? That is scary. And one of the things I learned about fear is, you know, you can have a fear that's totally rational and it's okay to feel that way. And then you can have a fear that is totally irrational. And sometimes you're not realizing which is which in the moment you're just scared. But it's so good to test those and find out, first of all, is there even any rationale to this?

1:39:06Jade Warshaw:So in your case, I would look at this and go, okay, let's pretend that you took the$16 ,000 that you have saved and you turn around, you paid off the$16 ,000 car and left you have 20 ,000. So now your brain is freaking out, warning, danger, danger. I'm scared. Like to quote you, something's going to pop off this next moment. The moment I do this, something's going to happen. So let's actually play that out. What could it be? And this really, really, really helps me, Renee, to figure out if something is, if there's even any validity to it. So in your mind, what could happen in the next, let's pretend the moment you hit send on the payment.

1:39:43Jade Warshaw:What could happen that's going to cost you$20 ,000? In my mind, like our furnace goes out and winter's coming up. How much does it cost to fix a furnace? Well, to fix it would probably only be around$1 ,000. Okay. To buy one would be a lot more. Is your furnace acting up? Is it acting up? Is it on its last leg? No. Okay. So that's not, we can now clear that out and say It's not valid that it would just up and pass out, right? It might need a repair, but you're not going to need to replace it. That is absolutely true, that you will not need to replace your furnace completely. So what's the next thing that could pop up that's$20 ,000?

1:40:28Well, we have a special needs daughter.

1:40:31Jade Warshaw:Okay, now we're getting somewhere. I had that money before in the account, even though I knew I had the money to pay it off. so about six months ago we had to put a stair lift in our house because she doesn't she can't walk understood okay i can't carry her up and down the steps so there went sixteen thousand dollars but thank goodness i had in my savings account because i i didn't want to finance it so if we look out over the horizon let's so i love that you said that because this is a great place to start now if we look out knowing that if we look out over the horizon we go okay just like we would do with the budget.

1:41:06Jade Warshaw:Let's think about all the things that we might need to spend money on. We need to do that with the special needs child. What are all the things that might pop up suddenly that we would need to spend upwards of$20 ,000 on? And you can do that. That's your homework to do tonight because that's going to give you peace. Then it's no longer an unknown. Is it a van? Is it care? Is it some sort of therapy? The more information you have in the face of fear, John this is you facts are friends I'm just stealing that right now the more information that you can put in front of this is really going to help you because the truth is you'll probably have more security if you pay off this debt now you don't have debt weighing on you because I promise you that's weighing on you more than you realize and you got 20 ,000 saved and nothing's stopping you from adding to the 20 ,000 at this point because you don't have any debt you can actually stack up more savings.

1:41:59Jade Warshaw:What about that? Yeah. All right, John. I know. And my mind tells me that. My mind keeps telling me that. Every day I tell myself that. Right. And it's like. So Renee, have you had a moment in your life when an emergency happened and you didn't have the money to cover it? Has that happened to you? Oh yeah, of course. Okay. In my younger years. Okay. So here's what I don't want you to do. Don't go to war with your body. It's just trying to keep you safe. Its job is to overreact and make sure you're always okay. Even if being okay right now is not the best thing for you long term. Okay? So, like, when you feel that knot in your stomach, I want you to exhale and smile and say, oh, thank you for trying to take care of me.

1:42:51I'm good, though. because you feel that knot in your stomach and then that sends you on a whole other trajectory right of anxiousness and worry and why am I stressed and what if this happens and if you're like me you start making up stories and then you start responding to those stories instead of just being grateful oh man my body's trying to take care of me it's been down this road before and here's the second thing if you have put your identity as a mom as a wife as a human and I have$36 ,000 in cash in the bank, then it's hard to untangle that. So I want you to do this weekend, spend some time asking yourself, am I good mom?

1:43:33And the answer is going to be yes. My good wife, the answer is going to be yes. Right. And let's untangle our identity from this, this safety net, this, this imaginary safety net. I am good because I have this dollar amount. Now, here's the third thing. I want to play a fun game with you. You ready? Yes. Two weeks ago, let's say two Fridays ago, you went to hit send on this final payment to pay your car off completely. And then your gut told you, it got in knots and it said, something bad is going to happen. If you do this, don't do it. Don't do it. Has anything bad happened in the last two weeks?

1:44:16No. Okay. No, it hasn't. Yeah. And this is the last debt. Well, besides, you know, our home, this is it. So in my heart, I know I need to do it because I need to start concentrating on putting more into my retirement. Yes. You know, because there's always that. And I've done it before. So, you know, of course, I made the mistake buying another car. but I do know once I do it tomorrow I'm going to be like hey I don't have a car payment next time there you go and I would even go further instead of saying I need to do this because I've got all this other stuff I've got to do I'm going to do this so I can drop my shoulders and laugh in my own house

1:45:08right I'm going to do this because I'm going to be free of every financial burden except for our home. I'm going to have peace in my house.

1:45:23And here's the crappiest thing. Here's the worst part. Here's the worst. You could hit send this afternoon and something could happen tomorrow. You're right. And because you've busted your butt, you have $20 ,000 in the bank already. Yes. You've already done the work. You know, the easy part for me is saving the money. It's spending it. I have a hard time, you know, spending. Feel the discomfort. Feel your body trying to take care of you and say, thanks. I appreciate it. I'm driving today. And we are going to be free.

1:46:03You get it?

1:46:05Jade Warshaw:Yeah. Game on. I get it. I just, I'll work on it. Don't work on it. Don't work on it. As soon as I get off the phone. Don't work on it. Walk right through it. Yes, pay this off as soon as you get off the phone. And feel it. Feel it. And then I want you to run out in your front yard and do your debt-free scream so all your neighbors can celebrate with you. I don't owe anybody anything.

1:46:49Hey, guys. Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next.

1:46:57Jade Warshaw: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.

1:47:38Jade Warshaw:all right guys ask ramsey is our free ai tool that's built and trained on ramsey proven principles so today we're going to break down one of the questions that we received this week the question was, how does the rate of return on a 401k actually work? And what is it that I should look for? So first off, it's important to know that your 401k doesn't have a fixed rate of return like a savings account would, okay? Your return is based on the market, right? And it's based on your investments inside of your account that's invested. The 401k is just the tax-advantaged container that that money is sitting in.

1:48:15Jade Warshaw:What you put inside it is going to determine how it grows. So your savings rate matters. Also, most 401k plans offer a menu of mutual funds. When those funds grow, your account grows right along with it. When the market drops, your balance dips. That's normal. Ramsey uses 10 to 12 % as an estimate. That's an expected average annual return for good growth stock mutual funds over the long term. And we do that for planning purposes. We use 11 % as the working number. You'll hear us say that all the time. Now, that's a long-term history average for the stock market. It's not a guarantee for a single year.

1:48:53Jade Warshaw:Again, it's just an estimate. Some years you'll see it upwards of 20 % of more. Other years you'll see negative returns. That's just the truth. The key word here is average over decades, annualized rate of return. Let me say this. That's why, honestly, this is me just being transparent. I don't look. I don't know. Because I am an over-emotional person. Yes. And I also like to think I'm smarter than I am on things sometimes. I think that's good. I think there's a fair balance though, because what you don't want is you've invested your money. You thought it was a good. No, I keep tabs. You want to keep tabs.

1:49:32Jade Warshaw:Thank you. Yeah. And I talk to my advisor and I get the quarterly reports and all that. Yes. But I'm not checking this every month to see what the rate of return is. No, you should not check your investment accounts like you check your checking account. There you go. and because it because if for me it'll make me nuts and if it dips a little bit my body's like it's all coming down yeah and i over the past i have a bad track record of either stressing myself to the point of no return for no reason um or um like doing something dumb and so for me it's a roller coaster i got on and you're staying strapped in i'm yeah any of any choice i make to get off this roller coaster is going to end in me getting hurt.

1:50:13So I'm going to stay on this roller coaster. If some point in the roller coaster, just if it breaks, I will deal with that problem then. But I chose to go on this roller coaster. So I'm just going to write it. It's going to go up. It's going to go down. It's going to go way, way, way up. It's going to be fun. We're going to have a good time.

1:50:26Jade Warshaw:You're going to have a good time. And if you feel like John, if you have questions about how much you are contributing in your 401k, or maybe you just want to learn more about investing, use Ask Ramsey. It can really help you. Ask your question today for your situation at ramseysolutions.com or just click that link in the description if you're listening on podcast or the YouTube. So we've got Jennifer who's in Mobile, Alabama. Hey Jennifer, how can we help today? Hi, yes. My family's active duty military and we have saved quite a bit of money. So we could potentially buy a house, but we don't know if it's smarter to invest the money instead of spend it on a house when we don't know how long we're going to be there.

1:51:06When we leave this duty

1:51:08Jade Warshaw:station in two years, we'll have eight years left for my husband to make 20 years in service. Okay. So that's a 10-year play. How old are you guys? 32. Okay. Is there any, let me ask this. So you know for sure after two years, you're leaving where you are now. Within that eight-year period, is there any chance that you could be in that same space for eight years or do you move every two years? um no there's a minimum of four years so we could potentially live at the next station for four years and then pcs somewhere else or we could just sit he could finish and um stay there for eight years but it's not his choice okay um you know there's part of this and i'd love to hear john's take on that you might know a little bit more about this than me but i'm looking at it kind of from um purely from the dollar side of it, which is the truth is, since there's so many unknowns in this, every time you buy and sell a house, it's expensive, right?

1:52:11Jade Warshaw:There's realtors fees, there's moving companies, there's boxes, there's money going out of the door left and right. And so obviously, it's not a great thing to pick up and move every two years, every three years, or really even every four years, right? There could potentially be two to three more moves in in this span of 10 years. And that's a little bit like, I don't love that. I also don't love the fact, I mean, I'm sure there's part of you that's like, I don't want to be 42 buying my first house. I also understand that. So where my mind goes to this is when we pick our careers, when we pick where we live, when we pick our spouse, when we pick all of these things that are major parts of our life, we kind of choose the things that go along with it.

1:52:56Jade Warshaw:And I think that part of this, when you choose the military, there is a piece of that where you're going, all right, that's what this means. What it means is it's gonna be a few years before I get to settle down. And that's different from the folks around me. In some cases, that might be different than my sister or my aunts or my friends. They got to settle down as soon as they had the money for the down payment. And I think that that might be the battle in this more so than maybe the dollars and cents, because I think you guys can save up. And gosh, yeah, in 10 years, you're gonna be able to buy what you want in cash.

1:53:28Jade Warshaw:But I think until then, that's probably going to be the struggle. Do you want to buy a house, Jennifer? Or do you feel like I need to or I should be doing it? I think it depends on where we go. Okay. Because there's a good, like my husband's in good communications with people that are like choosing where he goes next. And so like if we were to get stationed like close to family, close-ish, like, you know, five hours or less, like I'd be more inclined to buy a house. or if it was a place where housing was more affordable, I'd be more inclined to buy a house. But if not, if we don't buy a house, I guess the money's just sitting in a savings account.

1:54:09It's considered ideal, but it's not really high. It's like a 1.5%.

1:54:14Jade Warshaw:That's true, but if you committed to, we're going to ride this thing out, then you could invest that money and you could have a higher annualized rate of return, which is what we just talked about in that previous segment, which now we're not talking. You can open a brokerage account and just drop it in there. Yeah. And now we're not talking about 4%. We're talking about hopefully 11 % or more, depending. And what I take, so I have like six months of expenses and savings. And then we have probably like what we would want to spend on a house for like 30 % down right now. So we would just move the 30 % over to like a brokerage account and then take it out when we, um, when he's out of the military.

1:54:57Jade Warshaw:If that's what I would do. That's what I would do too. If I were in your shoes, I would sit down with your husband and tonight and say, here's, I mean, you can say your point of view, say, here's what I've been thinking about and here's what I want to present. And this is why. And that's what I would do because anything less than that, you are, you're, you're playing a risk game with putting that money in the stock market. I wouldn't put it in unless you're going to leave it in five years, right? Three to five years for sure. So that's what I would do. And again, the real estate play, I totally get it.

1:55:29Jade Warshaw:It's like, well, gosh, waiting 10 years, that feels like a lot. And I'm not going to, I won't hold you. I believe that having a personal residence is a major part of building wealth. We know that here. And it's not to say that you're never going to do it. And it's not to say that you're not investing and saving up that money. You've just chosen the route. Well, now we've got a 10-year span, which now we can do it. likely the best way, which is we should be able to put cash down, like almost full cash down on something, which is pretty awesome at the end of 10 years. And Jennifer, I'll tell you, this is a biased answer.

1:56:01Okay. I just have had students and graduate students. I've lived in a couple of communities that had a lot of military servicemen and women and the number of folks that were stuck in a house and then they got deployed out or they were stuck in a house and they were promised it was only going to be six years and suddenly it's 18 months and I got to move you over here. And then they have two or three trailing houses because they just bought a house in every town they got stationed in. I've just sat with those folks. They've been my friends. They've been my students. And the stress they have not only dealing with the move, not only dealing with school, not only dealing with their kids and their spouses, but also trying to deal with selling a house four states over.

1:56:47My bias is until you are in a place where you get to decide what you're going to do next, that you hold off as long as you can.

1:56:56Jade Warshaw:Yeah. And I think that's really, really good advice. And just frame it as a wonderful thing. When you signed up for this military life, it's a life of service. And guess what you don't have to worry about doing? Replacing your roof. Replacing the AC. That's a really, really great thing. So just focus on the positives of renting while you can. Thank you.

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1:58:11Jade Warshaw:All righty, guys, the Ramsey Show scripture and quote of the day. My favorite, John 1 5, the light shines in the darkness and the darkness has not overcome it. Never will. I added the never will part, by the way. All right. Joe Girard said the elevator to success is out of order. You'll have to use the stairs one step at a time. I like that, Joe. Gosh, that's nice. All right. Let's go to Jake, who's in Chicago, Illinois. Hey, Jake, you're on the line. Hey, how's it going? Doing all right. How you doing? Not too bad. How can we help? So I have about$20 ,000 in unsecured debts. and I'm trying to figure out how to get out of it with what I have in the best way possible.

1:58:56Jade Warshaw:Okay, I like that question. So what do you have? Tell us about your income, if you have any money saved. Do you want gross income or do you want? Tell me what you make every month. That's a good place to start. Yeah,$7 ,200. Okay, so$7 ,200 a month. Do you have any cash saved? Yeah, about$14 ,000. Okay, so I mean, we're more than halfway there. Okay, so tell me what are you thinking about doing? And then we'll take it from there. What do you think the best route to getting this cleared up is? My brain usually goes to like trying to figure everything out to like maximize stuff. And I'm kind of a minimalist about like, for example, the type of car that I have.

1:59:40I have a paid off car. I can sell it for a decent amount of money and get a cheaper car and help use some of it to help pay off the cash. I like that. I can't use all the cash that I have. I don't have like it's like more of an elational thing I can't really force someone to spend all that money but are you married? I am married so does she have her money and you've got your money? it's one of those deals yeah have y 'all had that conversation? yes sir and she's no go? I've tried to do the baby steps before it hasn't worked I'm talking about the pre baby step conversation which is we are going to be a couple that we do everything together.

2:00:20We don't do part of our life together. We do all of it together. She's out on that? Yeah. I would say as every relationship, there's always imperfections.

2:00:30Jade Warshaw:I wouldn't call this an imperfection. I would call this an issue because I think it's a trust issue. And it's a values issue. So I can't really hear it. I don't know if I can, because I want to guard my wife on that. Absolutely. No, I got you, bro. No, she's not the villain. I'd want to make that super clear. If you and your wife are married and you've got your debt and she's got hers and you get your salary and she gets her salary and you've got your savings and she's got her savings, A, you and I both know that's not optimal. Two people working together, pulling in the same direction. You get there faster.

2:01:07And it helps us give you a path forward. Right. Right. So is that the case? Pretty much. Okay. Okay.

2:01:18Jade Warshaw:I agree with John. This is something you, and I just want to acknowledge this. You're like, hey, I just want to pay my car off. I didn't call in for all this, but it's very hard for us to not solve a problem at the root. Otherwise, we're just putting a Band-Aid on it. So we really care about that and we care about you guys and your marriage too. So I would, I love what John said. I would just approach this and go, you want to know what I was thinking? we're keeping things separate and it's just setting a precedent that I don't like. I really want to be all in on this with you. I want full transparency because if we start keeping things like this separate, like where's the line?

2:01:56Jade Warshaw:And that doesn't sit right with me. Right. And I think if you frame it like that, and then we can start to learn about each other. I think this is, I think this is a curiosity play. Thank you, John. It's a curiosity play of, I wonder why it feels so hard for us to combine money. And I think if you say it like that, it's not, you're the bad guy. I'm the bad guy. Cause the truth is we're all bringing in stuff to our marriage. All of us, my husband and I have been married almost 20 years and you bring stuff in and things follow you and it causes you to do certain behaviors. And sometimes you don't even realize what it is until you start to unwind it in a conversation.

2:02:33Jade Warshaw:And so I think that that is such a good thing for you guys. How long have you been married? It'll be a year on Sunday. Perfect. I love this so much because this is, this is the time where you start having those types of conversations and it's not a negative thing. It's not a bad thing. It's, it's all building and it's all growth. Okay. But let me say this, like to double click on what she just said, the conversation does not start with baby steps, with money, with, with dreams, with retirement accounts. It starts with we're a year into this thing here's a dream I have here's what I would love I'd love to do all of my life with you and you do all of your life with me and you might have a partner that looks at you and says I will never do that and then you have a choice to make okay cool or like much harder choices so you live your life and do your thing I'm just telling you and you know this I've looked at all the data man and couples who share a checking account who go all in together their lives and they are married well man their lives are extraordinary it's just it's it's amazing okay it's hard so let's talk about then let's let's be totally realistic and say let's pretend you're all on your own you're all on your own because the truth is and even folks listening this happens you know you you get bit by the ramsey bug and you're like yes let's go and your spouse has nothing of it and they're not changing today or tomorrow or in the next six months or maybe in the next year, they might not.

2:04:10Jade Warshaw:So what can you do in the meantime? And I love this. I talk about this and what no one tells you about money. I have a really good friend of mine who ran into this situation. And it's not to say that just because your spouse is not really moving doesn't mean you can do nothing. The truth is it's gonna go a lot slower because it's easier to work together. And if you've expressed, I would really like to work together, then all you can do and I call this is not fancy but I call it share do share it's you're keeping you're doing your part of being transparent which is saying hey uh I'm gonna call your wife Sally hey Sally I got twenty thousand dollars of debt and this is just over a casual conversation you know I'm thinking I'm gonna pay my car off and I'm just whatever extra margin I'm gonna do it with that and so you're letting them know you're sharing your philosophy you're letting them know what you're doing.

2:05:00Jade Warshaw:You're doing everything on your part to bring them in. Every time you make a payment, man, I paid off another$700, man, I paid off another thousand. You're letting them know. And then pretty soon it's going to be gone. And you're going to say, man, I paid. And you're sharing, you're doing the action you said, and then you're sharing the result. And that's the best way you can do. The friend of mine paid off over$90 ,000 that way. And it was crazy because at the end, that's when the spouse got on board and was like, I'm sure they did. Yeah. You know, but is that ideal? No. Is it the way that we say ideally it should be?

2:05:33Jade Warshaw:No, but life happens out here. Is it reality sometimes? Yes. That's the reality is it would be wonderful if you had one conversation with your wife and like I dream of Jeannie, she said, you got it, dude. But that's likely not the case. And I just also want to normalize this conversation for a lot of other folks. When you have this conversation, it is rarely going to be a one-time talk. No, it's over and over again. It's over and over again. And the other truth is, John, there might be a couple of arguments. There might be a couple of parts where it's like, oh, man, like this kind of rose up some other stuff.

2:06:03It's like you are kind of waking up the sleeping giant a little bit.

2:06:09Jade Warshaw:And I just want people to know that it's not perfect. It's not like a family. It's not a full house moment. So, Jake, if you want to sell your car, sell your car. And buy a cheaper car and pay your debts off. Do that, man. you guys think that's wise to sell it? Because I've been going back and forth. I've been paying about it for about like a month and a half. I like that idea because the$14 ,000, that's a shared savings that you guys have, or is that just your savings? So it's our savings combined. Okay, then yes. I would say, and I would share it with her, I'd say, I really want to pay off my car debt in order to do that because I don't want to offend you.

2:06:48Jade Warshaw:I don't want to overstep and take too much of this$14 ,000. I'd like to take this much, and then on my side of the sacrifice, I'm going to sell my car so that this, you know what I'm saying? What's the net difference going to be? Oh, in the car? Okay. So I can sell it for around$14 ,000. Okay. And then can you take seven from the saved money and clear it? So I'd have to ask. And I would. Yeah, I'd have to ask because if we did that, that would, because then I'd have to get a new one, obviously. I'd have to get a new car, obviously. and I drive like an hour, two hours every day to work so I need something a little bit more reliable.

2:07:30How much do you make? Maybe how much, like me alone or us can buy? I'm talking about margin you have.

2:07:37Jade Warshaw:Here's what I do. Here's what I do. I would say ahead of time, I'd come up with a plan and I'd say, I'd like to be able to take 7 ,000 from this to pay off the car and here's what I'm going to do. And I think that's fair for everybody. Hey guys, remember, there's ultimately only one way to financial peace and that's to walk daily with the Prince of Peace, Christ Jesus.