Financial Peace Is Built, Not Borrowed

12:24Rachel Cruze:It was great. It was a great week.

12:26Dave Ramsey:I was a little bit worried about being trapped on a ship with 3 ,000 Ramsey fans, right? That could be a long week for me. You know, that could have gone sideways. But honestly, I had a blast. Yeah, it was great. With Sharon and I, we would just sit down and have dinner. We'd talk to people. It was just, we had the best time. We really did. It was a lot of fun. So you can secure your cabin. They're not quite sold out, getting close, with a$600 deposit and join us and my high school buddy. And we'll all be there. and click the link in the show notes.

12:56Rachel Cruze:Two rednecks from Antioch on a cruise. That's right. That's what you need.

12:59Dave Ramsey:You might be a redneck if you're cruising with so-and-so and Dave, right? I'm not going to throw the guy under the bus, but yeah, there we go. So click the link in the show notes. Go to RamseySolutions.com slash events. Book your cabin. It will be next March. It will be sold out. You will be really FOMOing. Now, you do not come if you're in debt. This is only for Baby Step 4 and beyond. We're not hypocrites. We tell you when you're in Baby Step 1 through 3, you're not going on vacation. This is a vacation. but if you've hit baby step four and beyond and you save up the money and you want to go on this night this is holland america i mean this is a good line it's caribbean cruise it's going to be amazing and uh but if you've saved up your money and you want to hang out with us for the week it's an incredible week you're going to learn a lot too because the sessions are incredible that

13:41Rachel Cruze:we're teaching so that was the funniest part is it really is a vacation you get to go to all these islands and so we have all these sessions booked out with things that you know we we teach from stage and a couple of things and i'm like yeah you know the room might be like half full i don't know, most people I'm sure are out on the pool deck or at the aisle. I don't know. You just assume people are vacationing. Every session is packed.

14:01Dave Ramsey:We had a pastor do devotionals in the mornings and you couldn't get in.

14:05Rachel Cruze:Yeah. I mean, it was like everyone went to everything, which was so fun.

14:07Dave Ramsey:It was a lot of fun. All right. Samantha is in Toronto, Canada. Hi, Samantha. How are you?

14:14Rachel Cruze:Hi, good. Thank you. How are you guys?

14:16Dave Ramsey:Better than we deserve. What's up?

14:18Rachel Cruze:So my husband has been doing his dream business for almost four years now. And I just want to know, because he hasn't really brought in any income from it, how long is enough for me to support him in this over our time?

14:37Dave Ramsey:You have a business that you ran for four years that doesn't make money. That's not a dream business. That's a nightmare.

14:43Rachel Cruze:Yes. In my perspective, it hasn't.

14:47Dave Ramsey:No, in his perspective. I mean, it's a business. It's not a hobby. We're supposed to make money.

14:53Rachel Cruze:Yep.

14:54Dave Ramsey:So what kind of business?

14:57Rachel Cruze:He's doing a couple of sports training. He's part of the gym ownership, and they've just been putting lots of efforts. Even his partner's been doing some investments in it, but nothing yet. They have projections, but I'm tired of looking at projections of what could be. He's thinking of this business as our way out in the future, but it's hard to see in the future when right now, for years, we've been kind of struggling, right? For sure. Are you working, Samantha? Yes. So for the past, throughout the duration of our marriage, I've been the financial supporter, and I was okay doing that. but once we had our first son three years two and a half years ago and i'm still working yes it put in a completely different perspective and then i have to go work back right away and we've had many conversations of um why is the burden on me when and then his and then we come up with compromises but it still feels like it's and then we're having our second and then now my worry that we're back in a situation where we were with our first.

16:06Rachel Cruze:And I'm still at work. I'm doing, we made some compromises of our living situations. We could keep our cost down. We're at my parents. So we're not really paying, you know, for rent. Okay.

16:21Dave Ramsey:So here's what needs to happen, right?

16:27Dave Ramsey:he needs to sit down with his partners and proper business acumen would dictate that we see a pattern of growth in the revenue and in the profits to get us to where we can eat out of this thing in a short period of time so we need to see some directional move in the numbers that give us hope he needs to do that not you and he doesn't need to do it for you needs to do it because it's good business. Okay. The byproduct is it's good for you because you get some hope too.

16:57Rachel Cruze:No, she's saying that they've been doing that.

16:58Dave Ramsey:I know they've been doing projections, but projections that aren't hit. Okay. And, and so that's not, if we have a business unit at Ramsey that sets projections and they don't hit them, then we assess, okay, how much longer do we go with not hitting projections? And then we close it. If it doesn't hit projections, You know, if you don't have a reason to believe other than just I hope, I wish, but in business, you need to see some things move. I need to see some trend lines in my sales. I need to see some –

17:35Rachel Cruze:Yeah, my fear is that they've been propping themselves up thinking all these things. They might. They might. And it's not been real.

17:42Dave Ramsey:But here's the difference. Yeah. Here's the difference. You need to set a deadline. He needs to set a deadline.

17:46Rachel Cruze:Yeah, with you, Samantha.

17:47Dave Ramsey:And he needs to come back and say, all right, we're going to go until this date. And at this date, we're going to see some profit. And we're going to see some trend lines towards that date between now and then. What's killing you guys is this sense that there's no end to this.

18:04Rachel Cruze:And you got a second baby on the way. Well, that's her. Does he not have any? I know, but he's the dude. A part of me is not, I mean, I don't want to offend your husband, Samantha, but I'm like, good God, go mulch lawns. Like, go do something to bring in income for your wife and your baby and your soon-to-be baby. Like, that's wild to me. For four years not making anything. Does he have any of that in him? Like, is he mad about it and he's angry and he wants to change this and that? Or is he just like, I love it. It's been great. I don't know. We'll see where it goes. We're hoping the next thing's going to hit.

18:37Rachel Cruze:So the compromise that we had because he wants to work around his schedule with the gym, he had to be pretty flexible, is that he went back to school, and here in Canada, the majority of the grants, like we only had to take a loan with our income.

18:54Dave Ramsey:Went back to school to do what?

18:58Rachel Cruze:He went back to school just to gain some grants so that we can sustain us a little bit. That's not an income.

19:05Dave Ramsey:The boy needs a job.

19:08Rachel Cruze:Yes. The boy needs a job.

19:10Dave Ramsey:Rachel's right. He needs to go make some money. and they need to set a deadline by which this gym and this member, this dream is profitable. Otherwise, it's not going to stay open. I'm not going to be there.

19:20Rachel Cruze:And I would challenge them and be like, hey, yeah, we have six months or whatever you guys decide. Six months comes to mind. And I want to see two big changes in the business. Like what are two drastically different things you're going to do to be there?

19:32Dave Ramsey:If I own the gym, you're going to have to do something that makes me want to keep it open six more months or I'm going to fire all of you and we're going to close the thing. I'm sorry, Samantha. I'm sorry.

19:41Rachel Cruze:That's tough.

19:43Dave Ramsey:He needs to do that. And it's being exasperated by the fact that you are carrying a child.

19:48Rachel Cruze:And you're living with your parents.

19:49Dave Ramsey:And you're living with your parents. I mean, all of it.

19:51Rachel Cruze:It's a lot. And you have the right to feel.

19:54Dave Ramsey:This needs to end.

19:55Rachel Cruze:Yes, to feel urgency, Samantha.

19:57Dave Ramsey:It needs an end date. It needs an end date if it's not profitable. Yep. Now.

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21:49Dave Ramsey:The land of the free, the home of the brave, the best representation of the free enterprise system in the history of mankind. It's called America. and already two times this hour the side hustle and the small business has risen to the point that they give us a question or two this hour so a couple things to remember if you're starting a side business or you started a business got a side hustle that's growing into a business here's some book recommendations for you you ready write these down the the premier book in the last 30 years probably that most of us love and we love the man too is our friend jim collins wrote the book Good to Great.

22:28Dave Ramsey:You need to read that book. You need to pick up the book by Michael Gerber. It's called the E-Myth, Entrepreneurial Myth, E-Myth. And in that book, my friend Michael says that you will either learn to work on your business or you will forever work in your business, which you just own your job then. But if you learn to work on it, then you can take a vacation and it keeps running while you're not there. That's the proper growth of business. And that applies to both of our calls this hour. Our latest book, Build a Business You Love, is wonderful in this regard. It'll help you with laying these things out and help you recognize the stages of business as you go along.

23:11Dave Ramsey:And my friend, Dr. Henry Cloud, who wrote the book Boundaries, also wrote a fabulous book called Necessary Endings. And everyone should pick that book up because how do you know when to end something? A relationship, a marriage, a career, a job, a business, a business unit, employment of a team member needs to end, or I don't want to work for this toxic boss anymore needs to end. How do you know? Well, there's actual steps that you should go through in a decision-making framework, and Henry walks you through it. One of the core thing, thesis in that That is if you lose hope that it's going to get better.

23:53Dave Ramsey:So a horrible example would be you're married to an alcoholic and fourth time through rehab. And now they fell off the wagon again. Well, I lose hope that that one's going to get better. And this marriage has come to an end. That's an example. But if you think it's going to get better, then, you know, real reasons, pattern indicators, not wishes, not words, but actual behaviors and things happening in the revenue. if it's business, whatever it is, give me a reason to have hope, and then we'll continue. Necessary Endings by Henry Cloud. That's the fourth book. So some good books to help you guys along.

24:28Dave Ramsey:And those are where I get some of the thoughts, where Ramsey Personalities get some of the thoughts we throw at you. On-site hustles, businesses, small businesses, our entree leadership materials. We coach about 10 ,000 small businesses. If you're interested in that, you can find all of that at RamseySolutions.com. All right. Gene's in Montgomery, Alabama. Hi, Gene. How are you?

24:48Rachel Cruze:How are you doing today, Dave?

24:49Dave Ramsey:Better than I deserve. What's up?

24:52Rachel Cruze:First of all, I just want to say thank you guys for all the work you guys have done. I've just started following you guys about a month ago, and I've got my$1 ,000 saved. I'm on baby step two. Great. And I've listed all of my debts. Great. Good for you. Back in 2024, I messed up my taxes, and I'm 1099. I'm a truck driver. And that year I just filed my taxes and I owe them. And it's a$21 ,000 balance that I owe them. But I just started the debt snowball and I listed all my debts from largest to smallest. And I, I'm struggling to attack this$21 ,000 and I've been doing all the other ones. I've paid off so far.

25:40Rachel Cruze:I paid off three credit cards so far. And I like this momentum, but listening to the show the other day, you told one of the other callers to attack the IRS first, but I'm staring at that mountain, and I don't know if you guys could kind of give me some direction, or should I just continue going from smallest to largest? Okay.

25:59Dave Ramsey:How much debt total?

26:02Rachel Cruze:The total debt that I have left over right now is$80 ,356.

26:07Dave Ramsey:And$21 ,000 of it is the IRS, and what's the rest of it? uh the rest of it$41 ,000 is the student loans$10 ,000 is on my wife's car and then I got$5 ,000

26:20Rachel Cruze:on my daughter's car and I think uh where's the other one and I got$8 ,000 left on one more credit

26:27Dave Ramsey:card okay and so you're gonna be to the pretty quick how much how much have you paid off so far

26:33Rachel Cruze:and in what period of time uh so I've been following you guys for the last three months And in the last three months, I paid off$33 ,056. Good for you, Gene. Three months? Yeah, I'm a truck driver.

26:47Dave Ramsey:Are you going to be able to maintain that pace?

26:51Rachel Cruze:I hope so. In the name of Jesus, I really do say to be honest with you.

26:56Dave Ramsey:My wife is mad at me. I want to be honest with you. Because you're going so hard?

27:01Rachel Cruze:Yeah, well, because I'm gone. Because I'm on the road. And I haven't been home in like two or three weeks. and she's on board with me on this vision and goal and she sees what I'm trying to do, but she does want me to come home.

27:12Dave Ramsey:Yeah, I don't blame her. That makes sense. You're going to have to pace it out so you can make it, but that's a great start. So if you were to maintain that pace or even close to it, you will be through the IRS and the other smaller debts very, very quickly. Agreed?

27:30Rachel Cruze:Absolutely, yes, sir.

27:30Dave Ramsey:So this is only a question of is it going to be two months or is it going to be one month? Or is it going to be three months or is it going to be one month? That's the only real question, right?

27:43Rachel Cruze:We did 10 ,000. He did 10 ,000.

27:45Dave Ramsey:You got 10 and 8 and 5. And 5. And 5.

27:49Rachel Cruze:So it'll be 4 to 5 months. Yeah.

27:51Dave Ramsey:Yeah. Or you can do it now. Either one. So the only question is just, you know, so the tradeoff between the momentum that you're feeling, which is very positive, and I don't blame you for wanting to maintain that, is that the stupid IRS has unlimited power. They can just decide to screw up your life. They don't have to go to court. They can just start garnishing things. They can start keeping tax returns, and they will. They can take your money out of your bank account. They don't have to go to court. Everybody else has to sue you, win the lawsuit, and then go to court. So they've got unlimited power, which is scary as crud, because they're also not real smart most of the time.

28:32Dave Ramsey:So dumb and powerful is not a good mix. And that's what you're dealing with most of the time. Not always, but most of the time. And, I mean, I get audited by these people like it's their hobby.

28:45Rachel Cruze:It may be too much work to do it, Gene. But also, we always say if there is a larger amount owed, you could go down to your credit union and get a personal loan for$21 ,000. Get rid of them.

28:56Dave Ramsey:Pay off the IRS and put the$21 ,000 back in your debt snowball so that you pay off your daughter's car, credit card, your wife's car, right?

29:04Rachel Cruze:And then you deal with that personal loan of$21 ,000 to the credit union versus the IRS. You could do that.

29:09Dave Ramsey:The second reason we move them to the front of the line is that they are not bankruptable. The third reason, you're not going to bankrupt anyway. The third reason we move them to the front of the line is that the interest rate and the penalty is very, very, very high. So all of those reasons cause us to interrupt the debt snowball. The only time, by the way, that we interrupt the debt snowball and move it to the front. But I don't care. It's not the end of the world. That's the reasons we move it. If you understand those things and you want to leave it there or you want to go get that credit union loan and then you knock it out in four months instead of this month, that's okay with me.

29:46Dave Ramsey:But you're taking some extra risk when you do that. And when I'm coaching people that are struggling and they got Chase MasterCard suing them, they got Citibank suing them, and they got Lexus Motor Credit suing them on a repo, and they got the IRS, I'll take all of those other three versus the IRS every time and what they can do to you. The other ones are right. And what they will do to you. But I don't think any of them are suing you. I don't think that's where you are. You're under control. You're knocking this out. You've got momentum. So I'm not scared for you now, but this comes from years of coaching people that were really, really struggling in behind the eight ball.

30:28Dave Ramsey:And I just always want to get the IRS out as fast as I can. But listen, dude, you need to set a date. If they're not gone by September 1, you've got to move them back up. You've got to move them to the front. So set yourself a deadline. I'm going to knock them out by this date, or I'm going to move them to the front of the line. Yep. one of the two and then knock them out and then go back to your debt snowball yeah and i appreciate

30:46Rachel Cruze:your your enthusiasm i mean that's incredible ten thousand thirty thousand in three months yeah that's boom unbelievable maybe your wife and you say for three more months i'm going to do this pace and then you're going to dial it back a little bit because you guys got you got some

30:59Dave Ramsey:you know we ought to have his wife we ought to have his wife talk to the gym owner's wife

31:04Rachel Cruze:he should be like my husband's we're gonna wish my husband was gone working and making money She wouldn't want someone like Gene.

31:12Dave Ramsey:I wish he would leave and go make some money. My gosh. Gene, well done.

31:42Rachel Cruze:Okay, guys, let me ask you something. What would it take for you to switch your bank? Because if you're still earning next to nothing on your savings, you need to check out Fairwinds Credit Union. And I know what you're thinking, it might sound like a hassle. Moving your direct deposit, updating bills, getting a new debit card, feels like a lot. But here's what most people don't realize. Staying where you are could be costing you hundreds of dollars every year. Y 'all, the average savings account pays less than half a percent. So let's say, for example, you've got$20 ,000 saved. You might earn around$70 a year, but with a Fairwinds high-yield savings account earning 3 % APY or more, that same money could earn you over$600.

32:24Rachel Cruze:And that's real money that you can use towards the baby steps. So don't let temporary comfort keep you stuck. Check out the Smart Bundle from Fairwinds Credit Union. You get a high-yield savings account, a no-fee checking account, and the Ramsey Be Weird debit card. Go to fairwinds.org slash Ramsey to learn more and make the switch today. That's fairwinds.org slash Ramsey, insured by the NCUA.

32:56Dave Ramsey:Stacey's in Indianapolis. Hi, Stacey. How are you?

33:00Rachel Cruze:Hi, Dave. How are you?

33:01Dave Ramsey:Great. What's up?

33:05Rachel Cruze:Well, my daughter is 29. She's married. She's a nurse, just works part-time because I have a two-and-a-half-year-old granddaughter. Her husband makes$57 an hour. I'm disabled, divorced, and I used to work in insurance. So I know you don't like this, but I bought whole life insurance. I want to cash in her whole life policy that I've had for 29 years. And just so you know, they each have their own life insurance policies outside of their work. She feels entitled to have that cash value. She thinks it is hers. I disagree. I think the money's mine. I could use the money. What do you think?

33:55Dave Ramsey:Well, you're the owner of the policy, and you paid every dollar for the policy, correct?

34:01Rachel Cruze:Yes. I've been paying$26 a month for 29 years.

34:06Dave Ramsey:And how much is the cash value when you cash it out?

34:09Rachel Cruze:$6 ,800.

34:11Dave Ramsey:Good God. You totally got screwed. Oh, my God. Yes. Oh, my God.

34:15Rachel Cruze:Like I said, my career was in insurance before I had to go on disability 16 years ago.

34:21Dave Ramsey:Okay. So how many kids do you have that have these policies?

34:26Rachel Cruze:Two.

34:27Dave Ramsey:All right. So we're cashing them both in, right?

34:31Rachel Cruze:Well, at the moment, I'm cashing the other one in because, long story short, my other daughter, I'm just not sure where her wife's taking her. So I'm just kind of holding on right now. I don't care.

34:43Dave Ramsey:How old is your other daughter?

34:47Rachel Cruze:She's four years older. So should I just go ahead and cash out one in, too?

34:50Dave Ramsey:Yeah, you better cash them both in. They both suck beyond belief. You've gotten screwed. Don't keep them. And it's not your obligation to take care of the one that has her act together or the one that doesn't have her act together. These are 31-year-old grown women. And you paid for this policy. It is not their money.

35:08Rachel Cruze:Okay. In neither case are you to take care of them. Well, thank you. I just wanted to kind of have somebody else tell me that. That's not only moral.

35:19Dave Ramsey:That's also what the law says. they're not the owner of the asset you are okay you own it that's why they call you the owner

35:28Rachel Cruze:yeah i should wait what age did you open up the policy for your daughter one year old she was one 29 okay and you did 26 dollars a month a month okay i was just gonna say so you should have if you just had that in an smp just for and people for listening it should be 58 000 is what you... If you put it in a real investment

35:50Dave Ramsey:instead of a rip-off whole life policy, instead of$6 ,800, you'd have$60 ,000.

35:55Rachel Cruze:And it says she would have put in$8 ,736. So she put in more than what the investment made.

36:02Dave Ramsey:Had a negative rate of return. This is why you don't buy whole life life insurance and why you don't buy it on your kids for sure. So bad. So, yeah. So bad. Whole life sucks. Have we been unclear about that on this show?

36:17Rachel Cruze:That is a good question, though, that her daughter assumed it's hers because her name was attached to the account.

36:26Dave Ramsey:You know, probably, Stacy's gone, but probably what has happened is that Stacy has told these kids their whole lives that she's invested this money for them. For sure. And, oh, that's my policy. You made an investment for me. Thank you.

36:40Rachel Cruze:Mm-hmm.

36:41Dave Ramsey:and you got this money because I've set this money aside for you.

36:44Rachel Cruze:In my name.

36:45Dave Ramsey:Yeah, it's in my name, but it's for you. And that's probably what she said all along. Yeah. And so now they're going, yeah, but you told me, Mom, it was mine. I know.

36:52Rachel Cruze:Yeah, that would make sense.

36:54Dave Ramsey:That's probably not some entitled brat. She probably just messaged it wrong. But technically speaking, you own the money. And by the way, you laid the whole thing out on how she makes money. her husband makes$57 and you're disabled and all that. None of that matters to the discussion. It's either her money or your money, regardless of who is deserving or who's hurting or who is more healthy financially. Like the other daughter, I'm not sure she's going to turn out yet. Well, she's 34. I think we're pretty sure, you know? And so she's going to have to have an encore to get this straightened out.

37:35Dave Ramsey:She could.

37:35Rachel Cruze:34 is young.

37:36Dave Ramsey:I know, but you can have an encore at 34. And you need one, apparently, if your mom still don't know if you're going to make it.

37:42Rachel Cruze:Yeah, so the victim language in it.

37:46Dave Ramsey:Exactly, doesn't matter.

37:47Rachel Cruze:Containts maybe the attitude that the daughter's having, too. I don't know. But yeah, just some thoughts, Stacey. But yeah, was your money you put it in under your name, too?

37:56Dave Ramsey:It's technically your money. But, you know, I might take back my answer. If you promised her this money her whole life, then probably you ought to just keep your promise. and give it to her. Morally, legally, it's your money. Except that if you said, this is your money, this is your money, this is your money. You know, if I had a mutual fund I opened up for you and I said, this is your college fund. We're going to use it for college and it's your money. It's your money. We're saving for your college, which I did, by the way, it was a uniform transfer to minors act and UTMA was in your name. And then you went to college.

38:28Dave Ramsey:I ended up, we ended up paying for college out of our pocket. And then when y 'all graduated, we gave you your UTMA to start your life off as an adult. And so, but that was in my name. It was my money. Sure, yep. And, but I had allocated that emotionally and relationally to you.

38:45Rachel Cruze:And we didn't know it, though. No, you didn't. You knew you had a college fund. I thought you were paying for college, so there was a little bit of a... You thought I was using it for college.

38:53Dave Ramsey:Yes. Yeah, that's true. Yeah. But, so the...

38:56Rachel Cruze:So how it's communicated is important, too, of expectations. Did you make a promise? Yes.

38:59Dave Ramsey:Did you promise your kid this was their money?

39:01Rachel Cruze:And if you did, you ought to keep that promise. Yeah, and that's the expectation. So she would be disappointed.

39:06Dave Ramsey:So I would take my answer back if that's the case, Stacey.

39:09Rachel Cruze:But if not, it's yours.

39:10Dave Ramsey:Yeah. And, you know, who is making money, who's not, is not relevant to the discussion. Jocelyn's in Houston. Hi, Jocelyn. How are you?

39:20Rachel Cruze:I'm good. How are y 'all?

39:21Dave Ramsey:Better than we deserve. What's up?

39:24Rachel Cruze:So basically, I have two 401ks that, like, has$2 ,600 in them. I have about$7 ,000 in credit card debt that I kind of just racked up being financially irresponsible. But I want to know if I should take those out to just kind of put towards that debt. I'm on baby step one and like just trying to get my life together. I'm 26. I live rent free right now. What do you make? Yeah, just about$3 ,000 a month. Okay.

39:59Dave Ramsey:I'd pick up my hours and attack the credit card debt and leave this alone, and I'd roll it to a 401k. It doesn't matter much. Or IRA. It doesn't matter. And I'd roll it to an IRA. I'm sorry. It doesn't matter much mathematically because it's such a small amount, but percentage-wise, it's suicidal. Here's why. Okay? Okay. You cash out the 401ks, you get a 10 % penalty plus your tax rate. Let's call you in the 20 % tax bracket for the fun of it. I don't think you are, but you might be. that that means that 10 plus 20 taxes that's 30 that's like borrowing money at 30 interest to pay off your credit card so they're going to take almost half the money if you take it out instead of rolling it to an ira so i think as a as a matter of starting to make good finance wise financial decisions more than just the math i would go ahead and roll it to an ira and force myself to pay off the credit cards with hard work.

40:56Rachel Cruze:Yep. And just keep it in there and don't touch it and let it grow. And at retirement, maybe 100, 200K in there. I don't know what it'll grow to, but that'll at least be a little bit of a safety net too for retirement, which is great.

41:10Dave Ramsey:Yeah. And you just add to it as you go along. I've had some IRAs that were so small at different times and I move them around, put them all together later, put them in a pile and it has ended up turning into some serious money over time. But the big thing here is I just want your brain to get used to not looking for shortcuts at high cost. And this is a shortcut at a high cost, even though it's$2 ,600. So you're probably going to lose$1 ,000 of that in taxes and penalties. And so you're still going to get out$1 ,600. And$1 ,000 does not change your life one way or the other. It's not the dumbest thing you've ever done by any stretch or will ever do.

41:49Dave Ramsey:So it's really not that much money. But if you add a zero to it, it starts to be$10 ,000. If you add two zeros to it, it'd be$100 ,000.

41:58Rachel Cruze:Yeah, and what changes your life in this, Jocelyn, is your income going up. Making$3 ,000 a month, I would look to see where can I get an extra$1 ,000,$2 ,000. What does that look like from an income perspective? because that's going to get you through the$7 ,000 in debt so much faster. And then your emergency fund and beyond. So it's kind of your, that's your ticket out, not the old 401k.

42:52Rachel Cruze:Hey, I want to talk to you for a second about love and not love like in Titanic or something. I mean, responsible love, the kind of love that moves you to take care of the people closest to you. And one of the most important ways to show that kind of love is by having term life insurance. If you have anyone depending on you, a spouse, kids, anyone, you need term life insurance. Term life insurance gives your family real protection if the unthinkable happens so they can spend their time grieving and not worrying about how the bills are going to get paid. Xander is a broker who works for you, shopping the top companies to find the right coverage options for your needs and your budget.

43:33Rachel Cruze:In many cases, there are options available with no medical exam and instant approval. My wife and I had term life insurance through Xander for years, long before I worked at Ramsey, because we trust them. Getting term life insurance is a way of saying I love you when you can no longer say it yourself. Go to Xander.com or call 1-800-356-4282 to find the coverage that fits your family.

44:05Dave Ramsey:Welcome back to the Ramsey Show in the Fairwinds Credit Union Studio. Rachel Cruz, Ramsey personality. My daughter is my co-host today. Louise is in Tampa, Florida. Hi, Louise. How are you?

44:20Rachel Cruze:Hi, I'm doing good. How are you guys?

44:22Dave Ramsey:Better than we deserve. What's up?

44:26Rachel Cruze:so i had a question about me and my fiance have a credit card and i am always making sure that if we use it we pay it off before statement date he was telling me that why don't we let why don't we carry a balance to build credit? And I don't know if that's how that works. So I kind of wanted to ask you guys, does that make sense?

45:01Dave Ramsey:How old are you guys?

45:04Rachel Cruze:We're 27, both of us.

45:06Dave Ramsey:Okay. And when are you getting married?

45:10Rachel Cruze:Well, we're saving money, so I can't say a date just because that's one of our steps.

45:17Dave Ramsey:I'm sorry. You have to have money to get married?

45:20Rachel Cruze:Wait. Well, I mean, yeah, we can just go get it done and that's it. Yeah. But like the wedding I would like, you know?

45:28Dave Ramsey:Yeah. Okay.

45:29Rachel Cruze:We've been saving for a while now.

45:31Dave Ramsey:Yeah.

45:31Rachel Cruze:How much y 'all have saved for the wedding? So, so far we have 20. And then we also have another 20 that's our six months of living.

45:44Dave Ramsey:So what kind of wedding are you going to have?

45:48Rachel Cruze:Well, I don't know, everybody. Weddings are expensive. It's not a lot. But I want to make sure that if I want something, I can have it. There's not that much money in the world.

46:00Dave Ramsey:Yeah, I know. That much money doesn't exist. I want it, I can have it? That's a four-year-old. No, you don't get to do that. You set a budget on your wedding, you're a grown woman, and you get married, and you do it for$20 ,000, and you start planning it this weekend. Okay, back to your question. Now, so your fiance is correct that if you were to run a balance on your credit card and pay it on time, it will cause your credit score to increase. Because your credit score is based on, it's by an organization called Fair Isaac and it's called your FICO score. And it's based on how you interact with debt.

46:44Dave Ramsey:how much debt you have, the type of debt you have, and whether you pay your debt on time or not.

46:51Rachel Cruze:New types of debt.

46:52Dave Ramsey:New types of debt. That gives you, if you have too much debt or too little debt, that gives you your credit score. So your credit score, technically speaking, if you analyze how the algorithm works, is your I love debt score. And the higher your credit score, the more you love debt. Yeah. So if your goal as a married couple is to get in debt and stay in debt deeply the rest of your life, the credit score will serve you well. But if your goal is to build wealth, then you would avoid this at all costs. Because you don't want to play kissy face with the bank to build a score that shows how much you've been playing kissy face with the bank.

47:40Dave Ramsey:instead I want money I want to build a net worth I want to become wealthy and the credit score is not an indicator of your financial health or wealth it's simply mathematically speaking an indicator of how much you've been playing kissy face with the bank that's how it's determined and so what he's saying is hey let's owe the bank more money and pay it off a little at a time so that we can make other banks happy. Wrong. Bad plan. You follow my logic?

48:20Rachel Cruze:No, yes, of course. That was what I was telling him. It's like if you just want to be more in debt, then what's the point of doing all your steps, let's say?

48:30Dave Ramsey:Exactly. You wouldn't do any of our steps if you're going to do that. If you want to stay in debt, you need to go do a different plan. Our plan won't work.

48:39Rachel Cruze:and louise this is an important subject um for you guys to get aligned on when it comes to your marriage money fights and money problems are one of the always in the top three reasons for divorce and so this is it's a that this is a big tension point it may not feel huge i mean it's an it's big enough for you to call to be like hey this doesn't feel right um but if your value system is different with money, not that you guys have to be the same person, but that you're moving in the same direction financially because you're a team and you're like, well, this is how we're running our household. If, or when we have kids, like, I mean, it, it continues on.

49:17Rachel Cruze:And when you start in such a different place, it's a, it's a red flag for me. I would, I would want to be in the same place. And you may decide, Louise, getting off this call, you could totally decide, Like I'm okay with debt, right? Like we're not trying to push you, right? But you need to be on the same page. Clearly a life of peace and building wealth is avoiding debt. And that is what we do.

49:39Dave Ramsey:And then your credit score means my credit score has been zero for 35 years. Rachel has never had a credit score.

49:44Rachel Cruze:Undetermined. Yes. Never had a credit score in her life. But then you have to pay cash for cars. You know what I mean? Like you're saving up for vacations. Like you are choosing a life without debt. But you also are choosing a life of living below your means, of delayed gratification, but of a lot of peace and control and autonomy over your money.

50:04Dave Ramsey:Which gives you a large pile of money, by the way, because you're not giving it all to some stupid bank.

50:08Rachel Cruze:Yeah.

50:09Dave Ramsey:So there we go. That's where wealth comes from. Yeah. The other thing I'm going to throw in, and you didn't even ask about this, but for God's sakes, cut up that credit card and close the account tonight if you're not going to get married. The two of you don't need to be on a credit card together. Yeah. Super dangerous for you. Super dangerous for him. The credit card balance runs way up and one of you runs off. The other one's stuck holding the stupid thing. And now you're going to get sued or you end up paying a balance for the one that left. And I know no one ever leaves. Bull crap. You're not married.

50:39Dave Ramsey:Okay? They leave all the time. So get off that card. Do not be doing stuff financially and legally with somebody you're not married to. Danger, danger, danger, danger, danger, my daughter. Don't do that. Please.

50:52Rachel Cruze:And especially since there's not a date. And a date set, right? It's kind of this endless feeling of the abysm of like, we're going to figure it out. And then when you live in that, which people do for years and years, you know, we talk to people, they have engagements for four years. They live in that. They start playing house. You start commingling finances. You get down the road. It just, it starts to, it starts to be a problem. So I would keep everything separate.

51:18Dave Ramsey:At which point I always feel.

51:19Rachel Cruze:Until you guys get married. And if he is the one, like you guys set a date. Get married.

51:23Dave Ramsey:Or get off the ladder.

51:25Rachel Cruze:If he is the one. And that could be in December. It's not like you have to do it tomorrow, but put a date on the calendar that you guys work towards just for some certainty in the relationship.

51:37Dave Ramsey:You have the money to get married. Set the date now. Get married. This is not good for y 'all. It's not good. We don't care. We make no money when you get married. It doesn't help us at all.

51:47Rachel Cruze:We are not in the wedding business. Too bad.

51:48Dave Ramsey:I need to get in the wedding business. I need to do something. No, it's true. As often as I tell people to get married these days, I need to.

51:54Rachel Cruze:It's your priest. I was going to say priest. You won't be a priest. It's a, what is it? What is it when you're ordained? You want me to officiate the wedding? Ordained.

52:05Dave Ramsey:I'm going to start doing weddings. Dave's weddings. Yes. That way I can make some money off all this advice.

52:10Rachel Cruze:And Elise can get her.

52:10Dave Ramsey:Then I can have a conflict of interest.

52:12Rachel Cruze:Then she can get the fiance and they can call in the next hour and we'll get the wedding. You know what I mean? You can keep it rolling.

52:17Dave Ramsey:We'll just fly you up here and you can stand on the debt-free stage with your little bouquet. There we go. There you go.

52:21Rachel Cruze:common person.

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54:16Dave Ramsey:Jeff is in Birmingham. Hey, Jeff, what's up?

54:20Rachel Cruze:Hey, Dave, how are you? Thank you for taking my call. Sure.

54:23Dave Ramsey:How can we help? I'm facing kind of a crisis I never intended.

54:31Rachel Cruze:Due to some illness and due to some other things, I went into a government-sponsored forbearance program with the largest servicer in the country, and that was in 2023. three. Since then, I've gone back and forth several times trying to get back on to where I just pay my payment. And, you know, I've been told numerous different things. And, you know, I was told, hey, you can do, you know, back in payment. And so I paid, you know, trial payments, and then they send me the paperwork, the paperwork's not right, I send it back. And And the longer the short is, is I've gotten down now to where the last trial payment I paid, I paid on the last day of November, screenshot of the email they sent, you know, confirming the payment.

55:21Rachel Cruze:And then they came back and said that I failed the trial payment plan because of the payment being late. I filed a RESPA and a notice of error, contacted FHA. I've been through a lot of different steps to get them to acknowledge that the payment actually was made on time because I wanted to get off of this cycle that's been going on almost three years now. And so I have a document in front of me that says if I don't pay them$43 ,000, they're going to foreclose my house, which I have over 50 % equity in. And I was looking for some kind of suggestion. I've done everything I can do up until this point.

56:04Dave Ramsey:So$43 ,000 is the amount you're in arrears right now? Correct. Net of everything. And that number is probably correct. But what you're saying is that you had a forbearance plan, which is a plan to pay payments greater than the normal payment to catch up. And apparently that's gone sideways several times to get$43 ,000 behind. What's your normal monthly payment supposed to be?

56:29Rachel Cruze:$1 ,200.

56:32Dave Ramsey:So you're at least 40, 38 months off in only three years. How's that possible?

56:43Rachel Cruze:Well, it takes them, instead of the 30 days

56:46Dave Ramsey:No, no, I mean, just think about it. From 23 to 26 is only 36 months. That's as if you haven't paid a payment the whole time. Well, so that's the other thing

56:58Rachel Cruze:They're holding, I think, six or eight payments in escrow somewhere that they don't even account for during my trial payments. But then, you know, there's three, you know, they did three appraisals. I mean, they just rack up fees like it's, you know, going out of style.

57:13Dave Ramsey:Yeah, and are they charging you huge late fees as well?

57:17Rachel Cruze:Yeah.

57:18Dave Ramsey:And have they tacked on legal costs in that$43 ,000 as well?

57:23Rachel Cruze:It doesn't list it as a line item, but I can't even get them to give me a line item.

57:27Dave Ramsey:I can't get to$43 ,000. That's what my problem is.

57:31Rachel Cruze:You and me both. And when I start doing the math and every time I ask them about it, oh, you know, I don't know. The loan that they sent me after they told me they would just put the back payments in the rears of the mortgage I had, which I was never laid on, then they sent me a loan for 40 years that was going to raise my payment$15.

57:53Dave Ramsey:Yeah. Well, that would probably be correct, actually.

57:56Rachel Cruze:but yeah well it would be and so i called him and i said this is not what we ever discussed and the person that i talked to had no idea but are you talking are you talking to fha or to the loan servicer i've talked to both no i mean who when you made that phone call who was it to um so i when i talked to fha they said well you can you know if you filed an appeal and a notice of error with you know with the mortgage servicer yeah let them answer and then we can work that But basically, the loan servicer is the one that decides whether the payment was late. I just, you know, and I explained to the FHA person, I said, I don't understand how you can send me an email that I have a screenshot, and it's in my inbox in the correct month that it was due, and tell me that my payment was late.

58:42Dave Ramsey:Yeah. Okay. All right. So the net, net, net is that you probably have, in reality, six payments or seven payments or some amount laying in escrow. So$7 ,000,$8 ,000, and you have$43 ,000 owed in arrears. So somewhere around$36 ,000 would get you caught up. Obviously, you don't have that. And obviously, we're dealing with bureaucrats at the FHA and incompetence at the servicer. Who's the servicer? It's free-to-mortgage. Yeah, okay. All right. Yeah, incompetence at the servicer. That would be normal because they're massive, and they massively don't give a rip.

59:26Rachel Cruze:What a name, too. Freedom.

59:28Dave Ramsey:Yeah. That's what they're giving you. It's the opposite of freedom.

59:29Rachel Cruze:I also have a 2.7 % interest rate, so every time they try to do anything, they're like, well, you know, it'll go up a lot.

59:35Dave Ramsey:So what is your income?

59:40Rachel Cruze:So that's the other thing. The reason I went on forbearance originally was from long COVID, and then I had to go into the hospital, and I almost died. and it took me a little while to heal. Well, they told me, well, you can't pay payments while you're on forbearance because it'll kick it automatically into foreclosure. So every time I've tried to get back into paying for my mortgage, it's a seven-month, eight-month process.

1:00:07Dave Ramsey:Yeah.

1:00:08Rachel Cruze:They have to give me some kind of answer, and if it's not perfect, it goes right back into the loop.

1:00:12Dave Ramsey:Yeah. What do you make now? What do you make?

1:00:16Rachel Cruze:Well, so currently I don't have a job, but I have the, I mean, I do contract work. I do other things, but prior to getting sick, my income was$230 ,000. Okay.

1:00:26Dave Ramsey:What will you be making in the coming months? Enough to pay a$1 ,200 payment?

1:00:32Rachel Cruze:$10 ,000 to$15 ,000 a month.

1:00:34Dave Ramsey:Okay. Oh, good. All right.

1:00:37Rachel Cruze:And then I have money that, I mean, I have assets. I've just had them tied up from a divorce that was five years ago. So what assets do you have?

1:00:47Dave Ramsey:What assets do you have?

1:00:49Rachel Cruze:So, I mean, I have an account that has$400 ,000 in it, but I can't touch it until my ex signs the paperwork, which that's like the last thing, and she just kind of keeps dragging her feet on it.

1:01:00Dave Ramsey:Wait a minute. What is the$400 ,000?

1:01:05Rachel Cruze:It was an investment account that we had when we were married.

1:01:11Dave Ramsey:Okay.

1:01:12Rachel Cruze:But it's frozen.

1:01:13Dave Ramsey:So let me put it to you this way. I can't make Freedom Mortgage be competent or the FHA not be bureaucratic idiots. And you can't either. And so the best thing you can do is write them a$43 ,000 check. You owe them anyway. Well, I had an option on that. Yeah, you do. Yeah, you do. You make$10 ,000 a month. I don't currently make$10 ,000. You said you're going to in the coming months. I asked you. Yes, correct. Yes, no, I will. Okay, then go make$43 ,000. They're not going to foreclose in 20 minutes. It'll take them six months to a year to get around to it. Have you noticed that they're slow?

1:01:57Rachel Cruze:Yeah. The one thing that concerned me is they sent me a letter saying that if you don't make it by X date, then we're going to process. Well, what's the date? Tomorrow.

1:02:05Dave Ramsey:Okay. Then they're going to start foreclosure. Right? Okay. Yeah. And in Alabama, that takes at least a month, but it probably takes six months because they're probably going to sit on their thumbs because it's what they do. They're thumb sitters. So, really, I mean, you probably have time to cash flow this. In the meantime, I'm going to the judge and saying, I'm going to smack my ex into next week. I'm going to have the judge smack her into next week and get her to sign the dadgum paper. Holding up$400 ,000, I'm getting ready to lose a house because of it. so those are variables you can control you're asking for some way to make your stupid butt mortgage company and your inept fha behave they can't the things you can control you need to go control and get forty three thousand dollars out of that four hundred thousand dollar account or go get forty three thousand dollars out of some work you do in the next 90 days before the actual foreclosure date occurs and pay this thing current that's what i would do if i were in your shoes If you don't do one of those two things, you need to put your house on the market right now and sell it before you lose it.

1:03:14Dave Ramsey:But you need to go get some money and get stupid freedom out of your life. That's what this comes down to, because you have tried for three freaking years to negotiate with morons, and it doesn't work.

1:03:38Thank you.

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1:05:33Dave Ramsey:One of the signs after all the years of doing this that we know when someone's ready to change their life is when they've had an I've had it moment. Where they say, that's it. I've had it. I'm sick and tired of being sick and tired. I feel like a rat in a wheel. I run, run, run, run, run, run, run, run, run, get nowhere. I'm sick of this. when you reach that point we're ready to help you because that's the point that's when things change because that's when you're ready to sacrifice to win for the first time otherwise you're too worried about your own dadgum comfort to go win if you're sick and tired of being sick and tired and having nothing to show for it we've got a way out the every dollar budgeting app will not only help you get on a budget but it's build you a personalized ramsey plan that helps you find extra money every month you have a coach in your corner it's like having rachel me in your ear and jade and george and even deloney in just 15 minutes you'll find thousands in hidden margin and you're gonna feel like you got a raise don't be normal get sick and tired of being sick and tired live like no one else start every dollar for free in the app store or google play evan is with us in tulsa hi evan what's up hi how are you guys better than we deserve how can we help

1:06:50Rachel Cruze:my husband's extended family likes to meet for their birthdays for dinner and uh cards are exchanged with money um at each gathering and we're a bunch of grown adults and i feel like it's just a little unnecessary and i just want to know how i can be the bad guy to get kind of put have stopped to it.

1:07:13Dave Ramsey:Oh, I wouldn't do that. Oh. I wouldn't do that at all.

1:07:19Rachel Cruze:Well, how much?

1:07:20Dave Ramsey:I would have him do it, but I wouldn't do it.

1:07:23Rachel Cruze:Well, he always makes me a bad guy, though. I know, that's the problem. You're going to be the Wicked Witch of the West.

1:07:28Dave Ramsey:It's his family. He's got to deal with them, not you.

1:07:30Rachel Cruze:Well, I might already be that with the family.

1:07:33Dave Ramsey:So why do we want to increase it? At this point, why do you get invited to the party?

1:07:39Rachel Cruze:That's a great question. I wish they Oh, because you give money. That's why.

1:07:43Dave Ramsey:Yeah.

1:07:44Rachel Cruze:You bought your way in. I mean, how much is it? I'm just curious.

1:07:51Rachel Cruze:Usually, okay, I would also say my husband's a very generous man. Like, he's not one. He's like, it's fine. It's fine. Whatever. And so usually we put like, you know, 60, 80 bucks in each card. Good God. Thank you.

1:08:07Dave Ramsey:That's weird.

1:08:10Rachel Cruze:thank you oh my gosh okay how many okay i just i'm trying to picture how many people are at the table how like how many brothers and sisters spouses parents he's an only child and i think so they view their family like cousins aunts as like oh it's not even like his siblings

1:08:31Dave Ramsey:no oh no no no no how many people are at this dinner uncle grandpa so usually it's

1:08:38Rachel Cruze:1, 2, 3, 4, 5, 6, 7, not including us.

1:08:43Dave Ramsey:Okay, not counting grandkids. There's eight of us, Rachel, Winston, Daniel, Allison. No, there's no grandkids. No, not counting grandkids. So there's eight of us. I can see all eight of us sitting at a table. And the chances of us giving each other money is precisely zero.

1:08:56Rachel Cruze:The chances of getting a birthday card are basic. I have four brothers, and they're lucky to get a text from you.

1:09:00Dave Ramsey:You're lucky to get a text. Yeah.

1:09:02Rachel Cruze:Yeah. But, so it's been a tradition forever and ever. But these are all 30, 40-year-old, 50-year-old people?

1:09:09Dave Ramsey:50, yeah, and 60 and 70.

1:09:12Rachel Cruze:Yes.

1:09:15Dave Ramsey:Yeah.

1:09:15Rachel Cruze:And there's a birthday tomorrow. That's what I'm calling right now.

1:09:17Dave Ramsey:Too late. You're in on that one. You can't fix that one.

1:09:20Rachel Cruze:Well, on that one, yeah. But, like, how do I bring up, like—

1:09:22Dave Ramsey:You don't.

1:09:23Rachel Cruze:I don't mind getting together. You don't.

1:09:25Dave Ramsey:Your husband has to.

1:09:26Rachel Cruze:No, okay.

1:09:26Dave Ramsey:And if he won't, it's not going to happen.

1:09:29Rachel Cruze:No, he's too nice.

1:09:30Dave Ramsey:But he just doesn't want to upset his mommy.

1:09:33Rachel Cruze:No, it's not even his mom. I think his mom would be completely fine with us doing it. But people who go with the flow, they don't want to cause any risk. Yeah, exactly.

1:09:42Dave Ramsey:I wouldn't cause a risk. I wouldn't cause a stink. I would not make it about them. I would not make it. His job, though, is to fix his family, not yours. Really, that's bad mojo. You do not want to get in that relationally. But he should sit down and say, hey, guys, we're working on some financial goals, and we'll be happy to pay our part of the dinner and come to dinner with everybody and celebrate. and we'll send you a nice text and buy you a nice card. But we're not going to give grown adults any cash anymore because we're working on some other stuff. We love you all, though. Hope it works out for you.

1:10:13Dave Ramsey:And he just needs to raise his hand and say that. I did do that inappropriately. Actually, I had my wife's participation, and she may have actually done it. She should have done it. Her family. There's 90 million of them, and they all gave each other Christmas gifts. And she's got like five brothers and sisters. There's 13 grandkids. There's people everywhere all over this house. And we go down there and you buy all these adults that you see twice a year. And I love them. They're good people.

1:10:39Rachel Cruze:Yeah, we're about to be with them like three weekends.

1:10:41Dave Ramsey:Or some socks. And it's just, or whatever. Try to guess what University of Tennessee paraphernalia they need this year. Or whatever it is, right? And we finally, when we went broke, I told Sharon, I said, the little kids under 12 get a gift. Everybody else gets a nod. Or we'll draw names. And so she said, oh, that's a good idea. We'll draw names. And I said, okay. And I don't remember whether she brought it up at Thanksgiving or I did, but she raised her hand and she said, hey, guys, we're broke. We're drawing names this year because we can't do everybody's gifts and we'll buy the kids under 12 the babies, little baby gifts or whatever because it's Christmas.

1:11:18Dave Ramsey:And we drew names. So it was a similar discussion. And by the way, that went real well. Everybody else went, oh, yeah, we kind of thought the same thing, but we didn't want to be the first one to bring it up.

1:11:27Rachel Cruze:yeah and if anything evan and i know you're not a major fans of the family but if he wanted to give some like thoughtful gift or something you know what i mean like you can do something for 20 bucks of like hey i saw this you know uncle you know uncle rick and i thought of you and that's his birthday gift versus giving a check of 75 dollars or 20 320 or something 420 yeah Yeah. Yeah. Okay.

1:11:55Dave Ramsey:Yeah. Let me say this, Evan. You're correct. This is absurd.

1:11:59Rachel Cruze:But it almost wouldn't be a hill, though, that I would just push and push and push and push. Because it happens six times a year. And it may be a thing you just, if you don't want to address it, you got to just live with it. And it's a roll the eyes kind of thing. But he should. Because it is kind of.

1:12:15Dave Ramsey:I don't disagree. It's weird. It's just a bunch of 60-year-olds giving each other 80 bucks. That's just weird. okay but yeah but if you want to do it it's okay i just don't i think it's weird but yeah and i just raised my hand and go we have some other goals we're not doing it but your husband has to do it otherwise you're just going to come off all stinky stinky evan you don't want to be stinky evan yeah no you let always let when you have a conflict with the other side you let the other side handle the other side that's you know because otherwise you end up being the stinky one and it's just it's not a plan not a plan linda is in knoxville hi linda how are you

1:12:52Rachel Cruze:Good. Thank you for taking my call, Dave and Rachel. Sure. My question is about a 529 account that has been growing since my daughter, who's about six years out of getting her master's, did not have to use much of it, and it has been growing and growing. She's single with no children.

1:13:13Dave Ramsey:Why did we not use much of it?

1:13:16Rachel Cruze:She got a wonderful scholarship. You can pull that much out without any taxes.

1:13:24Dave Ramsey:The value of that scholarship can be withdrawn with no taxes or penalties.

1:13:28Rachel Cruze:Is she too late? No. Six years ago.

1:13:29Dave Ramsey:You might have to go back. You might have to file an amended return. Well, you wouldn't have to file it unless you got audited, but you might have to go back and do that. But talk to your tax advisor about how to do it. But you can pull the amount, the value, market value of the scholarship out at any time with no taxes or penalties.

1:13:50Rachel Cruze:this was worth the call. Wow.

1:13:52Dave Ramsey:Okay. Well, since you didn't pay nothing for it, it definitely was worth it.

1:13:55Rachel Cruze:Well, no. High value. And your high school curriculum has a lot to do with why all three of my children are very financially stable. So thank you for that as well.

1:14:08Dave Ramsey:So what was her scholarship worth, do you think? What was the tuition worth?

1:14:13Rachel Cruze:Um, uh, 15 a semester, so$100 ,000. How much is in the 529? Uh,$330 ,000.

1:14:24Dave Ramsey:Awesome. Well, we can get a bunch of it out.

1:14:26Rachel Cruze:And then would you take the rest out and pay taxes on it?

1:14:28Dave Ramsey:You're going to pay a 10 % penalty plus taxes on the growth on everything else. Or you can move it to a sibling or a child.

1:14:36Rachel Cruze:Yeah. She is the one who's earning the least out of her siblings, and so they're fine and she is really wanting to look at getting a house and that's kind of what makes my heart hurt is there's money sitting out there.

1:14:52Dave Ramsey:You're going to get$100 ,000 out for the house. If you pull the other$200 ,000 out, you're going to get a 10 % penalty on the growth only. I don't know how much y 'all put in and taxes as well.

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1:16:43Dave Ramsey:Ann is in Salem, Oregon. Hi, Ann. How are you? Hi, pretty good. How are you? Better than I deserve. What's up?

1:16:52Rachel Cruze:I was married for almost 43 years. I divorced my husband. I moved out into an apartment. He's in the house now, and we can't get rid of it because he will not get out of the house. He's been there for like two and a half, almost three years. I don't know how. He tells me he can't pay the rent and taxes and everything and move to somewhere else and pay that, too. So I'm kind of confused. And how do I get him out of the house to clean up the house?

1:17:21Dave Ramsey:OK, so it's not selling because it's junky.

1:17:24Rachel Cruze:Well, that outside the yard is pretty messy and stuff. But I just and they do show it. One lady did offer 250, but she's a flipper. She wanted to buy it cheap and flip it. And that wouldn't give us probably about$360 ,000.

1:17:40Dave Ramsey:Okay. All right. Forty-three years in?

1:17:46Rachel Cruze:Yeah. Wow. I should have left a lot sooner, but I didn't. It's one of those things. Wow.

1:17:53Dave Ramsey:What is your income?

1:17:58Rachel Cruze:I have every month is$22.97.

1:18:03Dave Ramsey:How old are you?

1:18:06Rachel Cruze:$71 ,000.

1:18:07Dave Ramsey:Okay.

1:18:10Rachel Cruze:How much do you guys owe on the house? About$152 ,000.

1:18:16Dave Ramsey:Okay. What does he make?

1:18:20Rachel Cruze:Well, he's retired from, I won't tell you where, but he's retired, and I get 40 % of his pension. He gets 60%.

1:18:28Dave Ramsey:Your$2 ,200 is 40 %?

1:18:33Rachel Cruze:No, it's like 1654 is my 40%. Where's the rest coming from? Social Security. So I barely get by, and I have about 120 left for gas and food. And I've got 6 ,800 in credit cards, which I use.

1:18:51Dave Ramsey:So he's correct in that he doesn't have the money to pay rent and the house payment, right?

1:18:57Rachel Cruze:Right, right.

1:18:58Dave Ramsey:And neither do you.

1:19:00Rachel Cruze:Right. We're kind of stuck. I don't know what to do.

1:19:05Dave Ramsey:Hmm.

1:19:08Rachel Cruze:And the plan in the divorce that he was going to sell the house and you guys were going to split the equity? Yeah, or else he was going to buy me out, but he can't refinance. Yeah. He says he can't. I don't know, but he has to do that. I don't think he can.

1:19:21Dave Ramsey:I don't think he has the income. If that's his only income.

1:19:24Rachel Cruze:Yeah, it is.

1:19:25Dave Ramsey:Yeah. Yeah. And, well, I mean, so if you got your wish and he moved out, then your house is going to get foreclosed on, isn't it?

1:19:41Rachel Cruze:No, that's lower the price enough where somebody would buy it. But I'd like it cleaned out so I could, you know, paint a few things and make it look a little nicer. It doesn't look real good right now.

1:19:51Dave Ramsey:Yeah. So it's on the market at$3.60?

1:19:58Rachel Cruze:Right now it's$3.50.

1:19:59Dave Ramsey:$3.50, okay.

1:20:03Rachel Cruze:Yeah, he started at$4.40, which is crazy. Okay.

1:20:09Dave Ramsey:Well, I mean,

1:20:16Dave Ramsey:the problem is you light a fuse that's six months to a year long before the house gets foreclosed on when he moves out. And so you go over there, paint it, you clean up the yard, and if it doesn't sell, every single month you're going to be dropping the price because you're going to have to get rid of it. You may wish you took the$250.

1:20:39Rachel Cruze:Yeah, I'm kind of thinking that I should have.

1:20:42Dave Ramsey:Well, I'm just saying, if you light this fuse, you're creating a pressure cooker.

1:20:47Rachel Cruze:Time's ticking. When he moves out, now the clock starts ticking.

1:20:51Dave Ramsey:The sands start going through the hourglass. The pressure's on. You follow me? Yeah. And I want to be careful what you sign up for, that you know what you're signing, what trip you're taking here. What would I do?

1:21:08Obviously, he is not going to help by cleaning up the artery.

1:21:14Dave Ramsey:I would have already. for his own sake. He should have done that because he would get more money in his pocket.

1:21:20Rachel Cruze:He's disabled, too. He had fixed back surgeries, and I don't know what he can lift or do.

1:21:26Dave Ramsey:Yeah, so he's not doing anything. Okay. And for good reason now. We're not going to accuse him of... Okay.

1:21:33Rachel Cruze:He can't afford to hire people to do it. We don't have the money to.

1:21:36Dave Ramsey:No, you don't. So you have children?

1:21:41Rachel Cruze:Grown children.

1:21:42Dave Ramsey:Yeah, where are they?

1:21:45Rachel Cruze:One's here in my town, but they both have back problems. One's in Roseburg, one's in here, Salem. Okay. All right.

1:21:57Dave Ramsey:And so obviously they're not able to help, and they were probably affected by the divorce in terms of their motivation to help.

1:22:05Rachel Cruze:One is, yeah. Yeah, definitely. What's he paying in mortgage payments every month? About what I'm paying, I'm paying$1 ,122, and he's paying probably about$1 ,200 or$1 ,300. $1 ,300. I'm just wondering, rent-wise, if there's anything cheaper.

1:22:29Dave Ramsey:I don't know if him moving out and you going over there at 71 with a paintbrush and a trash can is going to make this deal work enough that I'm thrilled with the bomb that we set a fuselette on. May not move that much. Yeah, I mean, I don't know. I don't know the house. I don't know the deal. So who's, do you know the realtor? Do you trust the real estate agent?

1:22:52Rachel Cruze:I do. Well, we bought the house from the same guy.

1:22:56Dave Ramsey:Okay. And what does the real estate agent say you should do?

1:23:02Rachel Cruze:He says, just keep waiting for the right people to come by, which I don't agree with, because we can't keep waiting. I was going to pay all my credit cards off when this house sold. Now I've sold out credit card bills.

1:23:14Dave Ramsey:How much credit card debt do you have?

1:23:17Rachel Cruze:$6 ,800.

1:23:19Dave Ramsey:Okay. That's not bothering me much. We'll get there. That's not a panic. You're eating. Everything's okay. It's not ideal, but none of this is ideal. Yeah.

1:23:33Rachel Cruze:And no retirement accounts or anything. It's just the pension. Right. I'm just wondering if there's any other money.

1:23:39Dave Ramsey:There's no money anywhere.

1:23:41Rachel Cruze:Well, not that I know of. He's not the truthfullest person in the world, but I don't know what he's got really. But I doubt if he has much more.

1:23:52Dave Ramsey:So sad, Ann. I'm sorry. Okay.

1:23:58Dave Ramsey:So what I would do would be to try to work with your ex to allow some access and begin to get some things cleaned up that you would do if he moved out while leaving him there and dropping the price. And if that doesn't work, then you're going to have to ask a judge to have him move if he doesn't voluntarily want to move because he's going to stop. What?

1:24:23Rachel Cruze:Because I did call him one day. I was going to talk to him about the house. He hung up on me. He wouldn't even talk to me.

1:24:29Dave Ramsey:Okay. Well, then you're left with a judge, I guess. Yeah. That's what I'm thinking. So either we drop the price and or you move out. And if he won't do that voluntarily, the judge will have to tell him to do that because he's invited. I assume there's a divorce decree saying the house has to be sold. And the house is not actively being marketed. It's not a marketable condition. And so you can force that. But, Ann, be aware, you may be playing some cards here that lights a fuse on this bomb that you lose the house. I mean, it's possible. If the real estate market slowed down for some reason, there's a jump in interest rates, and nobody wants to buy anything.

1:25:09Dave Ramsey:Even the flippers are out of the market, and that price drops on down. Yeah, you may be wishing you'd taken the$250. I'm kind of wishing you'd taken the$250 right now, but I don't think he wanted to take it either.

1:25:21Rachel Cruze:Yeah, well, if it's at$350, I mean, there's probably other flippers in the area. I mean, hopefully you can get it. But the thing is, is if you don't get somebody to make a transaction quickly, that real estate, that can go months. And that's the part that scares me where I'm like, I don't feel like you have that financial margin to go that long. It's going to have to go fast. Don't confuse this move with any of the 43 years worth of emotions.

1:25:49Dave Ramsey:if there's any um i didn't detect it but if there's any anger or i'm revenge i'm hitting back or i'm trying to make this guy finally behave one time yeah no or something like that you need to make this move because it's the right i think she wants a hundred thousand and a hundred thousand

1:26:07Rachel Cruze:dollars of equity to pay off credit card debt and live exactly live a little more comfortably

1:26:40Dave Ramsey:Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm Dave Ramsey, your host, Rachel Cruz, Ramsey Personality. My daughter is my co-host today. Brock is in Manhattan, Kansas. Hey, Brock, what's up?

1:26:55Rachel Cruze:Hey, guys. How are you guys doing?

1:26:56Dave Ramsey:Better than we deserve. How can we help?

1:27:00Rachel Cruze:So I got married a few months ago, and a few weeks ago we found out my wife is also pregnant.

1:27:05Dave Ramsey:Yay! Yeah, I know. We're very, very excited. And we have a little bit of a debt problem. So she had a car payment that she paid off all on her own, and then after we got married, I helped pay off the credit card, which wasn't too much.

1:27:19Rachel Cruze:It was about$2 ,000. But she also has about$177 ,000 in student loan debt, and I was wondering how we should attack that.

1:27:29Dave Ramsey:Is she a doctor or a lawyer?

1:27:33Rachel Cruze:I wish I could say either one, but she is either.

1:27:36Dave Ramsey:She is an at-home daycare, or she's a freelance nanny, basically. A freelance what?

1:27:42Rachel Cruze:What was her degree in, nanny? She actually never finished college. I know.

1:27:48Dave Ramsey:Oh, no. She got a degree in what? She didn't finish.

1:27:51Rachel Cruze:She didn't get a degree. Was it a private school? Private? It was a D1 state school. Oh, so out of state probably. Yeah. And she, yeah, this is a bad situation.

1:28:06Dave Ramsey:Oh, man. Bad's probably not the word. Dumb might be the word. Wow.

1:28:14Dave Ramsey:How close did she come to finishing? She had a little bit left. It wasn't a ton, but it was enough where it was like, we can't afford to keep going. The degree is in what? What was she studying? Like a bachelor's.

1:28:29Rachel Cruze:She started out in education. She wanted to be a teacher. And then she decided that she changed her mind and wanted to be, she was doing business marketing. what I'm doing now. But thankfully, the Army pays for mine, so we don't have to worry about it.

1:28:44Dave Ramsey:What do you make? I make about$54 ,000 a year,

1:28:51Rachel Cruze:and she makes about$36 ,000.

1:28:55Dave Ramsey:Okay.

1:28:57Rachel Cruze:And then I also have about, I do have some savings, thankfully. I have about$35 ,470 in a mutual fund that just basically mimics the S &P. and then I also have just under$30 ,000 in a money market.

1:29:13Dave Ramsey:Okay. Okay, and you have how much owed on her car still?

1:29:18Rachel Cruze:None. That's all paid off. And the credit card's paid off as well.

1:29:21Dave Ramsey:So the only debt left is$175 ,000?

1:29:24Rachel Cruze:Yes, sir.

1:29:27Dave Ramsey:How old are you guys?

1:29:29Rachel Cruze:I'm 20 and she's 23.

1:29:31Dave Ramsey:And you graduated from college as well? I am about 65 % through mine.

1:29:39Rachel Cruze:I'm doing it online while I'm in the Army.

1:29:41Dave Ramsey:You're in the Army?

1:29:43Rachel Cruze:Yes, sir.

1:29:45Dave Ramsey:I thought you were in marketing.

1:29:48Rachel Cruze:No, that's what I'm getting my degree in. Oh. And is your school being paid for? Yes, ma 'am.

1:29:56Dave Ramsey:So you see your$54 ,000 is your Army service, your military service? Yes, sir. Yes, sir. And she makes$36 ,000 as a nanny? Yes. Okay. And you have$30 ,000 and$35 ,000,$65 ,000 laying around. Okay. Yes, sir. All right. All right. So, yeah, what I would do is I would continue to stack cash until the baby comes. And when the baby comes and everyone's healthy, I have bad news. your wife is not going to be a stay-at-home mom. She's going to be working. She has$175 ,000 worth of debt she signed up for, and so she's going to be working for a while. So we need to get used to that idea. And because when you have your first baby particularly, there's a tremendous draw to want to be home with a child unless someone has a tremendous professional draw into the marketplace.

1:30:56Dave Ramsey:And so you guys need the$85 ,000. So let's pretend that you stack another$10 ,000 worth of cash. That's$75 ,000. And when the baby comes home and is healthy from the hospital and mommy's healthy and mommy goes back to work, we write a check for$75 ,000 and put it on the student loan. And you have$1 ,000 in your account and you attack the$100 ,000 with a vengeance. And you guys work extra. You do everything you can. You sell everything in sight. Right. When are you going to re-up with the military? I wasn't planning on it, but... When will you leave the military? I have two and a half years left.

1:31:36Dave Ramsey:Okay. With a degree? With a degree, I will leave with a degree. Yeah. Okay. And then I will also make more as I stay. I would hope your income will go up substantially at that point.

1:31:48Rachel Cruze:It's going to be a three or four year. Yeah.

1:31:50Dave Ramsey:You're going to be a while to get through this$100 ,000 that's still remaining after the baby comes.

1:31:55Rachel Cruze:Yes, sir.

1:31:55Dave Ramsey:But you guys are going to get used to working a lot, both of you, to clean up this mess.

1:32:01Rachel Cruze:Well, and it's a good thing that she is and what she does because she can be watching her baby along with another baby or two.

1:32:09Dave Ramsey:Assuming the people that she's nannying for are good with that.

1:32:12Rachel Cruze:Yep, that's right. There's some flexibility in it because if not, she's going to be paying for child care and it's going to be eaten into that. You know what I mean? like you're it's not it's not going to be that great i mean i kind of side and facepalm because

1:32:27Dave Ramsey:i um feel so bad for this baby and this young married couple that was terrible that they're um that they have been screwed by student loans and by the whole lie that congress has put out by continuing to issue student loans congress has screwed americans with the student loans

1:32:48Rachel Cruze:This generation, millennials and Gen Zs, yeah.

1:32:51Dave Ramsey:They're just, they're screwed. And you're sitting there, and who loans somebody$175 ,000 to get an almost degree?

1:33:03Rachel Cruze:An 18-year-old.

1:33:04Dave Ramsey:Yeah, only the U.S. Congress would do that. There's only one organization that's that screwed up, and it's the U.S. Congress. And they go, oh, there's a student loan crisis. It's awful. We should forgive the student loans, Biden said. Well, yeah, but you keep making them, you bunch of bozos. So why do we need to forgive them if you're going to keep making them? You keep making these loans over and over and over, and some poor young girl goes across the state line and goes to another state to get a degree, and, oh, wait, she didn't. Did you know that 54 % of the people that start four-year degrees finish them?

1:33:42Dave Ramsey:That, by definition, means half don't. And you get where she is. and she married a young man serving his country. Thank you, sir, for serving your country. And now they've got a beautiful baby on the way. What an awesome start to life. But they got this cloud hanging over their head full of knives that Congress set up. And we Americans have allowed this because we keep electing the morons that keep this stuff on the books. They're called congressmen and congresswomen. Yeah, they're morons because they keep doing this over and over and over and over again. and then they talk about it like a politician.

1:34:18Dave Ramsey:It's awful. Well, you caused it. You can't talk about it being awful, and you sit there and cause it. And moms and dads, you ought to have your butt kicked up around your neck and wear it like a collar if you let your kid do this. You really should. I mean, what kind of parent says, oh, honey, go live your dream, go get a degree in left-handed puppetry, and go$175 ,000 in debt? You parents ought to be smacked into next week for your lack of backbone to stand up to your own teenager. No, you're not doing that. That's stupid. That's a parental answer.

1:34:57Rachel Cruze:Welcome to a Ramsey family meeting.

1:35:27Dave Ramsey:Hey, guys. Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now, you can get that same kind of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to RamseySolutions.com and try Ask Ramsey today. That's RamseySolutions.com.

1:36:09Dave Ramsey:If your private student loans are in default, when you've fallen so far behind, the loan is considered unpaid. That's what default means. Y-Refi might be able to help. They help borrowers in tough situations explore low fixed-rate refinancing options that fit your budget. Go to YRefi.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. might not be in all states.

1:36:34Rachel Cruze:Today's question comes from Sam in North Dakota. My wife and I are 29 with no debt and are currently saving for our kids' college. When the rainy day comes and you have to dig into your three to six months emergency fund, do you pause investing and saving for college to focus on replenishing your emergency fund? I would say it depends on how much you have to dip into it. Hopefully you don't have to go through all the paperwork to pause all that, especially retirement having to go into hr and pausing it to refill it but if if it's a significant amount yes you probably would but in a perfect world you would just cash flow some extra money and get it filled back up in the next month or two um again i agree it would depend it kind of feels like this is a hypothetical yes because in a if you have a situation where let's say you got

1:37:22Dave Ramsey:$15 ,000 in your emergency fund and you take 12 out, you're probably going to stop everything for a little bit and rebuild that. And you wouldn't even ask the question. Um, but most of the time what has happened in reality with people were coaching and in Dave and Sharon's house and Rachel and Winston's house is, uh, you know, you have a little bit of an emergency or some kind hit and you cashflow the emergency without even touching the emergency fund. A lot of times. If not, your emergency fund takes a little hit, a$3 ,000 or$4 ,000,$5 ,000 hit or something like that, and you just cash flow the replenishing like you were saying.

1:37:57Dave Ramsey:But if it takes a major hit, most people don't even ask. They kind of know, I got to get that rebuilt.

1:38:02Rachel Cruze:Yeah. Like if you lose a job, for instance, I mean, everything kind of goes on pause until we get the income back, you know, so that would just happen naturally.

1:38:11Dave Ramsey:Exactly. 401k certainly would have been stopped. But, yeah, you stop your 529s, you stop the other spouse's 401k, that kind of stuff. You stop all investing while we get straightened around. But, again, you're diminishing your expenses or your money going out in order to not have to touch the emergency fund in that case. Elizabeth is with us. That is in Salt Lake City. Hi, Elizabeth. How are you?

1:38:39Rachel Cruze:Hi, good. How are you doing?

1:38:41Dave Ramsey:Better than I deserve. What's up?

1:38:43Rachel Cruze:So I fear that my husband and I have gotten ourselves into a bad situation. We just moved into a new house before selling our old house. And then we also have some rental properties that are not currently rented. So we are basically drowning in mortgage debt. And the house that we're in now, we've been in for about a month. and we're almost considering listing this house too and just seeing which one sells first just to get one sold. And so I just wanted to see, I guess, what you would do in our situation.

1:39:23Dave Ramsey:So the other two are on the market.

1:39:26Rachel Cruze:So one is not on the market. We're trying to get it rented. It's a house with a basement on it on top. Oh, no, no, no, no, no.

1:39:33Dave Ramsey:Sell it.

1:39:34Rachel Cruze:Okay, sell that one. You're broke. You don't need a duplex.

1:39:40Rachel Cruze:Okay. We just don't know that we could sell it. We could make probably$1 ,000 a month on it. I guess we haven't listed it, but we don't know that we could sell it to make enough money.

1:39:51Dave Ramsey:I want you to sell it anyway. It's not an asset. It's a liability because it's not renting for enough to screw with. If you think you've got$12 ,000 gross cash flow, you know what that means? That means annually you're probably losing money when you incorporate vacancy and repairs and legal fees for evictions and so on. Yeah, you're not making money. Okay. That duplex has zero fun in it.

1:40:18Rachel Cruze:So list that and then just keep our other one.

1:40:22Dave Ramsey:I get them both listed aggressively so I don't have to sell my new house.

1:40:27Rachel Cruze:Okay. The house that we moved out of, we have had it listed for four months, and we've had almost no interest.

1:40:36Dave Ramsey:Drop the price.

1:40:37Rachel Cruze:We've dropped it$25 ,000 a week ago.

1:40:39Dave Ramsey:Drop it again.

1:40:42Rachel Cruze:Okay, just keep dropping it until.

1:40:43Dave Ramsey:And when you lose your butt on this, learn your lesson. Yeah. You should never have done this deal. Yeah.

1:40:53Rachel Cruze:You turned yourself into a motivated seller. Yeah. Okay. Yep.

1:41:03Dave Ramsey:And I hope you don't have to sell your house. You may have to sell your house, though.

1:41:06Rachel Cruze:How much shorter are you guys a month, Elizabeth?

1:41:13Rachel Cruze:Well, I don't really know. My husband does construction. He has a construction company, so he some months makes no money. Some months will make$50 ,000. but we have about$100 ,000 in our savings and we are feeling like for the next few months if we keep all these properties we're going to be taking out of our savings and then we have some credit card debt too.

1:41:36Dave Ramsey:How much credit card debt?

1:41:39Rachel Cruze:$30 ,000.

1:41:41Dave Ramsey:My hope is that you can get these two properties sold really fast without having to dip into the$100 ,000 too much and then you can write a check when that's done and get rid of the credit card debt and you guys need to quit living hand-to-mouth. Construction business is—I grew up in the real estate and construction business, and too many people in our world think we can out-earn our bad decisions in chaos. And I tried for a long time, and I couldn't do it, and I don't think you guys can either.

1:42:13Rachel Cruze:The problem with dropping the price on the house we moved out of is that right now, If we sold at the price of that now, we would make about$175 ,000. His dad loaned us the down payment for this house, which was$150 ,000. So the deal was that he would loan us that until we sold the house, and then we would use that money to pay him back. So would it be worth it then to just keep dropping the price? Yeah, you might have to write his dad a check out of your$100 ,000. Yep. Okay. Okay.

1:42:45Dave Ramsey:You've become a— all right that it's that or sell the house you're in i mean i don't care but you you called me and said you're drowning i'm trying to keep you from drowning yeah and you have to get very precise very clear and sharpen your machete to keep from drowning and quit trying to hold on to all these different things with i'm gonna hold on to this and the problem with this and i gotta hold and it makes a thousand dollars and it's a stupid duplex and my daddy-in-law and you know you just You're going to have to go, something's going to give here. We better decide what it is or it's going to decide for us.

1:43:19Rachel Cruze:Yeah, I think one of the bigger problems is my husband really wants to, we have a few other rental properties that don't, I mean, maybe a few hundred a month, but he wants to have eventually a bunch of rental properties. You're going to go broke. Yeah, you guys can't make this.

1:43:35Dave Ramsey:You guys are going to lose everything.

1:43:37Rachel Cruze:Elizabeth, I wish I could just wave a wand and just create peace in your life. You guys are just running and running and running, and it's not worth the stress.

1:43:44Dave Ramsey:He has bought off on this idea that if you buy real estate, it'll make you rich. Real estate will cause you to go bankrupt if you're highly leveraged in it and you have no money. I know I did it. I'm an expert on that. I have a Ph.D. in that. And so, you know, just, oh, man.

1:44:03Rachel Cruze:Did you guys have, what's the$30 ,000 in credit card debt? Was that just to keep?

1:44:07Dave Ramsey:Something else afloat.

1:44:08Rachel Cruze:Is that lifestyle or was that a specific part of it? Oh, that's my husband. For his business, he will like run up his credit card for a job that he's doing. And then when he gets paid for that job. Yeah. Y 'all are all living backwards.

1:44:24Dave Ramsey:If you guys don't get your business organized and you don't sell off all this rental property and you're probably not going to, you're going to go broke. You're going to lose everything. It's going to come crashing down around your head. I've done this for 30 years. You have all the symptoms of somebody who's going to be bankrupt in 36 months. you're not going to make it. If you don't get your freaking business act together and get your business acumen going where you actually know what you're making and quit running a dadgum construction company of this size out of your hip pocket with a credit card, that's just completely primitive.

1:44:56Dave Ramsey:You're going to have to add to your sophistication level to stay open and you're going to have to quit borrowing money up your eyeballs on all these real estate deals and acting like there's no tomorrow.

1:45:05Rachel Cruze:And have to go to dad to do the...

1:45:07Dave Ramsey:You bought properties that are cash flowing$100. Translation, they're losing money every year. You're losing money on all of that. And then you bought a house without having the other one sold, and you're handcuffed to your father-in-law. I mean, you guys have done like a whole laundry list of everything that's going to cause people to go broke. And if you guys don't rush and undo that laundry list, you're going to go broke. Yes, I hope I'm scaring you. I hope I'm terrifying you enough that you go in and put for sale signs on everything, and you hire a freaking accountant and get somebody in there to straighten this construction company up and make sure it's actually making a profit.

1:45:46Dave Ramsey:I'm not even sure it is. We may just be swapping dollars the way we do things over there. You guys got to stop this, Elizabeth. You're scaring me to death.

1:46:07Dave Ramsey:Hey guys, George Camel here.

1:46:09Rachel Cruze:You ever feel like you make good money and still have nothing to show for it? You run into Target for one thing and somehow walk out$87 later with toothpaste and emotional support candles? Just me? Okay. Well, that's the problem. Most people don't pay attention to how they spend their money, so it does whatever it wants. And that's why we created EveryDollar. It's a budgeting app that helps you create a simple plan for your money. EveryDollar's simple, it's clear, and it helps track where your money's actually going. Plus, you get daily lessons, to-dos, and reminders along the way. It's like having a money coach in your pocket.

1:46:39Rachel Cruze:Your money's been freelancing long enough. It's time to give EveryDollar a full-time job. Go download EveryDollar for free on the App Store or Google Play.

1:47:09Dave Ramsey:Adam is in Green Bay. Hey, Adam, welcome to the Ramsey Show. Hey, Dave, thanks for taking my call. Sure, what's up? Well, I thought maybe I could get Dave Ramsey to tell me it's okay to buy a new vehicle. Nope. That's a short answer, huh? Do you have a net worth of a million dollars or greater? Not exactly. Well, it's either a yes or a no. There's a not exactly. I mean, it's a math thing. It's a no. Okay. All right. A no. All right. Then if you're buying a new car, you're losing too much in value. I mean, it's very simple. You can do whatever you want to do, dude. But I don't find millionaires that ask this question.

1:47:52Dave Ramsey:People that become millionaires don't ask this question. They don't say, how close to the edge of being dumb can I get and still become wealthy? They don't ask it that way. They go, I want to stay way away from the edge. I'm going to drive an old used car and build up money because cars go down in value like a rock. That's where Chevy gets that.

1:48:11Rachel Cruze:Yep. All right. But what's your – What's the car? Yeah. Well, I want to hear the numbers. Yeah. Well, we kind of have our hard set on a Toyota Sienna. We're in Wisconsin, so the all-wheel drive is nice. This one can tow, which would be really handy for us. got a couple small kids who want to be able to have a little bit of extra room for toting people around so that's the one we kind of settled on and the trouble is i would be very happy my wife and i have talked about we'd be very happy to buy a used model for a few years old or maybe even a little bit older that has reasonable miles for a big drop down in cost but the problem is with this one man you look at ones that are two or three years old and they're still going for virtually the same price as the new one, you've got to get to 100 ,000 miles or better and six, seven, eight years old before you really see the prices coming down.

1:49:01Rachel Cruze:In our case, we'd be buying cash, so we're not financing it. And even with paying the cash, we still have our emergency funds stocked. What's your household income? About 180.

1:49:14Dave Ramsey:And this is what, an$80 ,000 car?

1:49:18Rachel Cruze:$55 ,000.

1:49:19Dave Ramsey:$55 ,000, okay.

1:49:21Rachel Cruze:And brand new, they're going for what? close to that? Yeah, well, that would be a brand new price. You know, tax title and all that would probably be a little bit more, about$57,$58, somewhere in that ballpark. And what other car do you guys have? Yeah, well, my wife just got into a car accident, so we're kind of under the gun. And I have a Tesla Model Y that's also paid off. Okay. And worth what? Probably about$30. Okay. I'm just trying to make sure you're within that.

1:49:52Dave Ramsey:Okay, I got a 2024 Toyota Sienna I'll sell you for$43 ,000 because I can buy it right now for$42 ,000. Anybody near me? I don't care if it's near you or not. For$10 ,000, you can figure it out. Yeah, yeah. I just looked it up online. It took me about a half a second while I was talking to you. Okay. In other words, your whole price scenario is absolute BS. you've completely convinced yourself that the new one is the same price. It's not. Here's another one for$45 and another one for$45.

1:50:31Rachel Cruze:$2024?

1:50:32Dave Ramsey:Yeah,$2024.

1:50:33Rachel Cruze:I should have.

1:50:34Dave Ramsey:Yeah, I'm sorry. I should have specified.

1:50:36Rachel Cruze:I think if you filter out the, if you're only looking at the all-wheel drive and with the tow, the ability to tow, I think that's going to change a little bit.

1:50:45Dave Ramsey:Okay, what are you towing?

1:50:47Rachel Cruze:We have a pop-up camper and a trailer.

1:50:51Dave Ramsey:Okay. And what's your other car? Tesla.

1:50:54Rachel Cruze:Tesla Model Y.

1:50:55Dave Ramsey:Oh, yeah, you said that. I'm sorry. I missed that while I was looking up the Toyota. Okay. And you can do whatever you want. But the thing that the overarching decision-making paradigm is what you have to fight against. and number one thing that you violated is, I mean, I haven't looked up, I honestly just typed in 2024 Toyos in just to see what they're doing, and they're all in the 45, 41, 42, 43. There's like seven of them on the first page. It came up 30 seconds later, and I haven't even searched yet, okay? So I don't know about the towing part of the all-wheel drive part. And she totaled her car.

1:51:39Dave Ramsey:And her car was what?

1:51:42Rachel Cruze:It was a Nissan Rogue. And we were already, the funny thing is we were leaving the dealership from talking about getting the new vehicle when she got rear-ended. Okay. All right.

1:51:52Dave Ramsey:So problem number one is, and we all do this, so I'm not going to pick on you too harshly. I'm not going to mess with you because you're asking the question in a proper tone, and I appreciate that, and thank you. I'll be nice. But so when I do the thing that you're doing, it's just I'm rationalizing and I'm trying to figure out a way to get what I want. And you can probably afford it and it's not going to bankrupt you. OK, so you do whatever you want to do. But I'm not going to tell you to do it because, you know, because you can buy this car. Ten thousand dollars cheaper than new. For sure. A hundred percent chance you can.

1:52:31Dave Ramsey:And you just hadn't found it yet. You haven't looked yet. you just hadn't poked around yet.

1:52:36Rachel Cruze:And the urgency to replace

1:52:37Dave Ramsey:is real. And we're moving up, for God's sakes, from a Rogue, which is a completely different vehicle. It's in a different class. The Sienna's a bazillion times a better car than the Rogue. Right? Yeah. I'm really glad she's going to be... It's a minivan.

1:52:56Rachel Cruze:We love a minivan.

1:52:58Dave Ramsey:Yeah, it's a great car. Maybe there's another class, a minivan, they'll give you the same stuff. you know, the Honda Odyssey or something, right? What's the one you got? Is that what you got? Yeah. And so that's a good car.

1:53:10Rachel Cruze:It's the queen jewel of the minivans. Oh, is it more?

1:53:13Dave Ramsey:It's probably more. I don't know.

1:53:14Rachel Cruze:Probably similar.

1:53:14Dave Ramsey:I got no idea. But it's a good car, though. And I don't know about towing it. I don't know about all-wheel drive. And both those things are okay. But the second thing is this. You've got to adopt everyone, including you, Adam, and including me, the mindset of saying okay the rich get richer and the poor get poorer because the rich people keep doing rich people stuff and poor people keep doing poor people stuff and middle class people keep taking out car payments on new cars that they can't really afford to pull a pop-up camper

1:53:46Rachel Cruze:but he said he's gonna pay he's not taking out payments but that's what middle class people do

1:53:50Dave Ramsey:and you're gonna lose ten thousand dollars when you drive it across the when you go across the curb and it goes blum blum that was the sound of ten thousand dollars that's what that sounded like That's exactly what it sounded like. And so you've got to get out of that mindset that that's okay until you have enough money to waste that much money. Now, I waste that much money. I buy new cars. But I've got several hundred million dollars in net worth. And so I can afford the blimp blimp sound. It's not that big a deal. The building I'm sitting in,$600 million. So, you know, it's okay. But I want you to get there.

1:54:27Dave Ramsey:I want you to be where you have millions of dollars.

1:54:30Rachel Cruze:Well, whatever. You just threw out like insane numbers. Okay. No, I didn't. But to all of us just talking, you...

1:54:38Dave Ramsey:The point is... The point is... The point is you build wealth by not buying things that go down in value as your largest primary purchaser. Yours is in a unique situation.

1:54:45Rachel Cruze:You have a unique situation.

1:54:47Dave Ramsey:I do, but I got there by doing this stuff.

1:54:49Rachel Cruze:Yes, and also you make a great... I mean, like, yes, but for people that we talk to that are doing this, that are baby steps millionaires...

1:54:57Dave Ramsey:The people we talk to are different? They're not different. We're not better than them.

1:55:02Rachel Cruze:Not that we're better. What? No. You just said you are sitting in a$600 million building. Dad, that's not normal. That's okay. We're normalizing life, everyone. The average person who makes$64 ,000.

1:55:15Dave Ramsey:The average millionaire doesn't buy a new car.

1:55:19Rachel Cruze:A hundred percent. But they don't have to sit in a$600 million building to do that. The average income in America is$64 ,000. The baby steps millionaires that we talk to do very simple things. They live on less than they make. They invest into their Roth IRAs and their 401ks. They don't send$1 ,200 car payments to car companies. They pay themselves that money. And they don't buy new cars. All of that. Yes.

1:55:40Dave Ramsey:They don't buy new cars.

1:55:41Rachel Cruze:So all that to say, yes, you do not have to.

1:55:43Dave Ramsey:That's how they became millionaires.

1:55:44Rachel Cruze:It is. That is how they became millionaires.

1:55:46Dave Ramsey:That's the same point. It's exactly the same thing. Are you serious? I'm dead serious.

1:55:51Rachel Cruze:Okay. The average person isn't going to go and build a$600 million. No, that's not the point. And you said, I have hundreds or whatever you said.

1:55:58Dave Ramsey:I don't want to be a hypocrite and say don't buy new cars when I do. Yes, but if you have a net worth of a million dollars, anybody.

1:56:06Rachel Cruze:Yes, if you have a net worth of a million dollars, you can buy a new car. I can afford it. Sorry, America. I want you to be able to afford it. We're doing this.

1:56:12Dave Ramsey:I want you to be able to afford it. That's all.

1:56:14Rachel Cruze:100%.

1:56:15Dave Ramsey:And so, Adam, we were harder on each other than we were you. That's great.

1:56:25Thank you.

1:56:52Dave Ramsey:You should not feel uncertain about investing, and you don't have to. That's why we created Investing Essentials, a two-night virtual event where George Camel and I walk you through my playbook for investing and wealth planning. We'll simplify everything from 401ks and mutual funds to passing on wealth so you can invest with confidence. Tickets start at$199. Get yours today at RamseySolutions.com slash events or click the link in the show notes.

1:57:36Dave Ramsey:Our scripture of the day, Isaiah 43, 18 and 19. Forget the former things. Do not dwell on the past. See, I'm doing a new thing. Now it springs up. Do you not perceive it? I'm making a way in the wilderness and streams in the wasteland. Albert Einstein said, a person who never made a mistake never tried anything new. I like the Henry Ford quote, too. He says, those of us who make mistakes have those who never make mistakes work for us. Buying or selling your home is a high stakes proposition because one bad deal could really screw up everything. That's why Ramsey Trusted connects you with vetted real estate agents who are trusted by Ramsey because they're high octane, high protein.

1:58:17Dave Ramsey:To find one for free, a Ramsey trusted agent that is, go to RamseySolutions.com slash agent or click the link in the description if you're listening on YouTube or podcast. Okay, there's some backstory and history that's worth going into to make sure that we settle that last little interchange, exchange. So, number one, the bottom line is that wealthy people that we have studied, 10 ,000 millionaires in our research, do not buy new cars. Even after they get their first$1 to$5 million, they're driving. The typical is out. He was looking at a Toyota. It's honestly a two-year-old Toyota. When I'm interviewing millionaires, I ask them all the time what they're driving, and they drive a 10.

1:59:03Dave Ramsey:Ford, Chevy, Toyota. Or they drive a piece of crap old car, and I tell them to upgrade their car because they're still being too big a tight walk. They've gone too far. But that's the millionaires. People who want to drive new cars typically land and stay in the middle class most of the time with high car payments. That's what our data says. So we're not going to tell you to buy a new car until you have a million dollars and you can afford to take the loss. then let's talk about me saying I've got a sitting in a 600 million dollar building or whatever and Rachel not liking that because it's not relatable and other people don't understand and they just blow me off because they don't want to listen to that so the history is this I've got several brand new cars that I bought and I don't want to be a hypocrite the first time on the Dave Ramsey show it was called back in those days because it was I honor my elders thank you because it was me No, that's not the point.

1:59:59Dave Ramsey:Back in the day when the dinosaurs roamed the earth, I was driving a, what was it? I can't remember the number on the thing. The little Mercedes coupe.

2:00:09Rachel Cruze:It was a blue.

2:00:09Dave Ramsey:Little blue Mercedes coupe. And it had 230 ,000 miles on it. I bought it for$7 ,000. It overheated on the way to a live event in Chattanooga. I was driving from Nashville to Chattanooga. The vice president of live events was in the car with me. We're on the side of the road and I'm pouring water over the water heater, the radiator, trying to get it to cool off and get water back in to get to the live event. And the car is worth probably at that point$3 ,000. I'd driven it in the ground. And he's like, this is ridiculous. You're a millionaire. You need to buy a good car. And I said, I can't buy and I can't drive a good car and be on the radio telling people to drive junky cars so they can get out of debt.

2:00:50Dave Ramsey:And he goes, yeah, you can. You need to be the proof that it works on the other side.

2:00:53Rachel Cruze:Yeah, absolutely.

2:00:54Dave Ramsey:And I upgraded. Live like no one else.

2:00:56Rachel Cruze:Later you get to live.

2:00:56Dave Ramsey:It was great. I was so worried that Twitter was going to attack me.

2:01:00Rachel Cruze:That was before Twitter. It was.

2:01:02Dave Ramsey:It was. I was so worried that people were going to hate me.

2:01:06Rachel Cruze:The family at O 'Charlie's. Because I was inconsistent and I was a hypocrite.

2:01:09Dave Ramsey:And I bought a two-year-old Jaguar, which was a very nice car at the time, and upgraded considerably from like$3 ,000 to$20 ,000 in those days or whatever it was. But I went through this great angst that it was okay for me to buy something nice when I had the freaking money.

2:01:29Rachel Cruze:Yeah. So I had to overcome that.

2:01:32Dave Ramsey:And instead, I'm going to be the poster child that goes, you can go do this if you go do this. Yeah. And so that's why I still don't want to come on the air and say, I buy a new car. I bought several new cars and I can afford to lose that money.

2:01:46Rachel Cruze:Yeah, so you're justifying saying, here's what I have so that I can afford it. I wasn't talking down.

2:01:51Dave Ramsey:No, no, I don't think you were talking down at all.

2:01:53Rachel Cruze:I was just saying you don't have to justify it. I think majority of people that listen, they know.

2:01:59Dave Ramsey:Well, no, some of them don't. And you'll read it in the comments later after this argument.

2:02:03Rachel Cruze:Actually, it'll be a good few seconds.

2:02:04Dave Ramsey:Because you read the comments and I don't.

2:02:06Rachel Cruze:Every now and then I will.

2:02:09Dave Ramsey:James is in Chicago. Hey, James, how are you? Hey, guys, I'm good. How are you? Better than we deserve, for sure. What's up?

2:02:17Rachel Cruze:So my mother-in-law's got a house that recently went under contract to sell for$335 ,000. And then a couple weeks later, it appraised for$360 ,000. They haven't closed on the house, and they won't for another two or three weeks. Is there any recourse to close that gap at all? Okay.

2:02:37Dave Ramsey:Somebody missed it. The real estate agent? I believe so.

2:02:42Rachel Cruze:And, you know, I hear all your commercials about the trusted real estate agents, and I think that was certainly the case.

2:02:51Dave Ramsey:But— Wait a minute. Was that one of our agents? No, no, no, no. Oh, oh, oh. I'm saying— It wasn't a great agent. You think the agent screwed up in the original pricing and convinced your mother-in-law to sell her house too cheap? I believe so. So you think the appraisal is actually accurate?

2:03:07Rachel Cruze:it yes i do because the house is i was surprised when she said we should list at 335 and then she went and sold it before it even listed it was just kind of a you know friend

2:03:20Dave Ramsey:of a friend situation i bet everybody jumped over so it's 35 000 underpriced or about 10 percent and there's already somebody it's bought it's under contract supposed to close any minute you're right you're yeah well i'm um the the first thing that pops into my head james and i'm just gonna off the cuff is well she sold her house too cheap that's sad because she's given her word she signed a contract and i don't want her to get sued for specific performance under this contract um and then the second thing that pops into my head is i'm going to kick the incompetent real estate agents, but I don't...

2:04:06Dave Ramsey:Ethically, I can't tell her to break that contract. Right. I wish she had done a better job and listened to you. I wish she'd done a better job at selecting her agent. And I bet I'm going to hear that this lady needs this money bad, doesn't she? Something like that. Yeah. Gosh.

2:04:27Rachel Cruze:It would help if she had it.

2:04:29Dave Ramsey:We could put it that way. Well, it always would help. Right. Yeah. Is there anything else going on in the deal? Is the contract contingent upon a whatever, whatever, whatever, like a home inspection? Has the home inspection report come back? The home inspection came back clear. There's nothing pending there.

2:04:51Rachel Cruze:The only thing I can think of is if their loan falls through last minute.

2:04:54Dave Ramsey:Yeah. I mean, there's, sorry, I'm trying to think, three weeks until closing. Yeah.

2:05:00Rachel Cruze:So I don't know if their loan is approved. You know, I have no idea. But if that falls through, we can relist, and then, you know, we solve that problem. Exactly.

2:05:10Dave Ramsey:Exactly. You know, and then. And get a new real estate agent. Certainly. Certainly. Yeah, I mean, unless there's something sideways in the contract deal that she can use to ethically get out. Like I knew a guy who had his house on the market, and the radon inspection came back and found radon, and they wanted him to spend$500 to fix the radon. And he said, no, contract's over, and canceled the whole thing because he wanted out of the deal, and he used that to get out of the deal. But he had a legal, ethical out because he refused to fix the radon, and he had the right to do that in the contract.

2:05:47Dave Ramsey:So, you know, that's the kind of thing, like if they came back with something in the home inspection, you say, well, I'm not going to do that. You can do that. That's part of the home inspection process. And then they would go, well, you know, okay, we'll take it anyway. No, we're not going to fix it. And we're not, based on this home inspection, we're not selling the house. You could just, I mean, there'd be a way to walk out of it then legally and ethically. But I don't think there is here. You know, I'm not an attorney in Illinois. you might ask one to be sure.

2:06:15Rachel Cruze:Just to see. I know. Competent real estate agents are important. I know. And I would feel bad for that family on the other end who's in contract for something and you kind of go back on your word. Yeah. Just from like a, I mean, it's worth it. Or it's worth the, I'm saying like the new price is what the house is worth. I get it. We think it is, yeah. But that still feels off.

2:06:36Dave Ramsey:It's wrong. You gave your word, you sold the house.

2:06:38Rachel Cruze:Yeah.

2:06:38Dave Ramsey:And people walk away from contracts like they walk away from everything in this society today too much. You should honor your word. And so I hate it. I don't like it. I've signed up for things I wished I didn't sign up for.

2:06:49Rachel Cruze:And also, too, to sell a house today is harder than it was a few years ago. So she may have even, even if it was at 360, had to negotiate down some anyways, right? So you may not have gotten the full 60 anyways. You would never know. But, yep, sorry, James.

2:07:05Dave Ramsey:So you should get a high-octane, high-protein Ramsey trusted real estate agent, or you shouldn't get one at all, this is what you get. You make a mistake, it's a$30 ,000 mistake. It's huge. That puts us our of the Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.