Intentional Choices Create Peace in the Chaos

25:42So you have six months to find a new gig. So you're saying that that would be impossible for you? No, so what I'm saying is that it wouldn't be impossible. I could find another job. But so the issue is that the house that we live in right now, we only owe$130K. so i and with our total savings and investments and iris that we have right now we have over 300 saved up right now okay uh so so with 300k saved up right now uh that's what we have just set it says that's for retirement that's what we have set aside for retirement over you know 324 is the exact number okay the the house that we live in now the the plan that we were looking at and i'm sure a lot of people probably tell you this is that my current mortgage is only eleven hundred a month.

26:27Love that for you. And, and then with, but with the current market, I could easily rent it out for twice that and allow that renter to pay for it itself while I just focus on the new house, which I don't think is, which I don't know is a good idea. I probably wouldn't do that. I think what it sounds like to me is this is just a meeting in the middle because the truth is, yeah, I don't want you to get an$800 ,000 house on a 30 year mortgage. I want you to get a house that you can afford on a 15-year mortgage that lands you at 25 % of your income. So I do think 800 ,000 sounds like too much house for you guys right now.

27:02Maybe you could get closer to 600 ,000, right? So I think that there's a place where you can meet that your wife is going to feel good about the upgrade and that you're gonna feel good about, okay, this is not so huge of a piece of my world that I feel anxiety about it. Maybe you get something that's instead of 25%, maybe it's 15 % or 20 % and it makes you just feel a little better at night. Because here's the thing. You said this is a 15-year play. If you have a 15-year mortgage, do you want to know what? You're debt-free in 15 years. And most of the people who follow the Ramsey plan are debt-free a lot faster.

27:38It's more like a 7 - to 10-year deal. So your game plan is to retire in 15 years if everything goes to plan? Yes. Okay. Yes, sir. Then I think that's the play, is you get to retire once this mortgage is paid off. that kind of gives you a great carrot to dangle, doesn't it? Yes. So if it's 10 years from now, boom, you got to retire five years earlier. And so I love the idea of setting a goal where she's not having to settle and you're not having to stretch. Instead, you both are aligned going, all right, great. We might need to wait a year to build more equity, knock out this mortgage, which you guys could knock out$130 ,000 mortgage pretty quick, making$275 ,000 with no debt, right?

28:17Right. Have you been putting extra toward it? Yes, so I doubled down on it. And so I was wondering, you know, so I just pay off this house that I'm in now. Yeah, triple down. Just spend what I have and then triple down, pay this one off, and then. You have all the equity. So when you go to sell, and here's what I did, you roll over that 100 % equity right into the new house. And do you have any other cash laying around? Not retirement, but just liquid? Yes, we have about 100K just sitting between our savings accounts. Okay. And I'm sure that's a big cushion. That's a big cushion. I'm sure probably 50 or 60 would be fine for you to feel good about having six months of expenses.

28:55So there's another 40 there that you could put with that and add that to that down payment. The more you can put down, the lower that mortgage is going to be. And if it's on a 15-year and it's a comfortable payment, you're going to be able to throw extra at it and knock it out. What we've seen is average about seven years if you follow our plan to get rid of that mortgage. Does that give you a little bit more peace? It does. I just got to talk to her about it now. Well, once you get starry-eyed about a home, it's party's over, man. I mean, once you're Zillow doom-scrolling, you're like, this is the house, babe.

29:24This is the one. It checks off all of our boxes. That's a realtor's dream. They're like, oh, we got them. You know what I mean? It's like going to a dealership. Being like, that's the car I want. You don't want to do that. You want to go in with walkaway power going, we don't need this house. It's a good house. You kind of want to be nonchalant about it. You do. I mean, Derek, when you called in, you said you made yourself sick about this. Do you think tonight you'll be able to have a good night's sleep? I think so. I think I feel a lot better. Good, good. You deserve that. I really appreciate it.

29:52And thank you for your sacrifice and service to both of you. Yeah, absolutely. That's fantastic. You know, what Derek is talking about, I totally understand. And some of the best advice I got was just to, like, no matter how well you do, no matter how well you earn, just, like, if you can keep your expenses low, it just does give you a peace of mind. You're more flexible. You're more flexible. And if something did happen, it is it does help you sleep at night. Like I could totally understand what Derek was saying. But then there's a side of it that you don't want it to creep into like irrational fear and just kind of like just kind of scarcity mindset.

30:26Glass half empty. It's all going to come crashing down. I'm like, dude, you got your debt free with 100K in savings. Just make 275. Even if you go down to 150, that's still double the average household income. Right. If you can't make that work, we got bigger fish to fry. You got bigger fish. And you know what? The worst that it's like play out the worst that could happen. And the worst that could happen is you sell your house and you downgrade to a smaller house. A decade from now, we might sell the house. Yes. I can live with that. Yes, I can live with that too.

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32:49All right, George, let's go back to the phone lines. We have Jonah, who's in Cleveland, Ohio. What's up, Jonah? How can we help today? Hi, my Morgan Stanley advisor wants me to get a low-limit credit card. I was wondering how I should respond to that. What's their reasoning? I mean, just for reasons of building credit to get a car and a home and just the standard reasons. Do you agree with him? I'm on the fence. I've never had a credit card and I've been doing fine so far. So I'm just wondering what you guys think. Well, you tell me this. The Morgan Stanley advisor exists to help you build wealth, correct?

33:31Yes. Now tell me this. Them telling you to get credit to get a car loan, which goes down in value while you pay interest on it, how does that help you build wealth? I'm not sure. I mean, always buying something is not going to make you more wealthy. Let's play this out then. Would you not question the advice of said financial advisor and whether or not you should continue working with them if you guys have different values and operate by a different set of principles? Right. Right. And this is where I'm confused and looking for guidance. Well, the truth is 99 % of financial advisors out there are going to be telling you the same thing.

34:12You got to get credit if you want to survive in this world. You got to build – everyone has a car payment. It's fine. Just make it a reasonable one. All of that. Get it home as soon as you can no matter what because it's awesome to build equity. This is the kind of stuff that we hear all the time. And the truth is not all financial advisors are created equal. So you want to find one that aligns with your values and principles. which it sounds like are, I'm debt-free, I want to stay debt-free, I want to build wealth with peace and simplicity, and not by playing some game. I'm projecting, but you tell me what your principles and values are.

34:45That's exactly right. I'm just concerned about if I get to the time when I need credit, will that affect me? So let's talk about that, because that's what you're asking, Jonah, is something that probably lots of people are wondering about, even while they're listening right now, which is don't I need credit, George and Jade, to operate in this world? And the honest to God truth is you do not. So George, let's tackle the three. I'm going to go with three main areas where people think that they need credit. First one is, well, what if I want an apartment? Aren't they going to check my credit score for me to get an apartment?

35:16And the answer is some places, yes, but many places, no. It's not necessary at all. What they're checking for is delinquency, a bad credit score, no credit score. And I've done this multiple times. No credit score renting apartments. Yes. They just go, okay, well, it might be a slightly higher deposit. That's right. Same here. Okay, the next one is what about a car? How am I ever supposed to buy a car in this world, George and Jade, if I don't have a credit score? And over here, I'm going to tell you, and we're going to break down how to do it in a minute, but we buy cars in cash here. and I know that that probably made Jonah you might have clutched her pearls or somebody listening clutch theirs but you can't do that in today's world cars are$50 ,000 well don't buy a$50 ,000 car you dingus no what you do there's two paths to doing this one is let's say I have a car note now I just aggressively pay off the car note that I have now and when the time comes in the meantime after I've paid off the car I'm putting aside a little bit of money extra and extra and when I'm ready to trade the car in I take whatever value is from the trade in or maybe I sell it, you know, private sale, I add my saved money to it and I'm able to upgrade.

36:21Now this is a slight stair step up. Maybe I had a$10 ,000 car and I go up to a$14 ,000 car, or I had a 10 ,000 and I go up to a$16 ,000 car, right? We're not buying an$80 ,000, you know, Escalade right out of the gate. Do you see what I'm saying? This is a very slow and methodical way. Yes. And the value is you get to drive a new to you vehicle that's paid for and you have your cash to invest and build wealth. Now, the third thing, George, and this is the big one, how the heck am I supposed to buy a house in this world, George, without a credit score? This one's hilarious to me because everybody who has opinions about it has never done it without a score.

36:59That's right. So let me be the guy who's done it, George and I have done it. Yeah. It's called manual underwriting or a no score loan. And a lender will look at your actual financial picture, your tax returns, 12 months of rental history of on-time payments, other alternative trade lines like your utility bills, your cell phone bills to then grant you the loan. That's it. That's it. And so Churchill Mortgage has been a partner of ours for decades now and they specialize in these types of loans. And so it's very possible to live without a credit score. In fact, I've been living without a credit card for 13 years now.

37:32Same. And I can count on maybe half a finger how many times it was more difficult to live my life. There was one time that I was renting a car and because I didn't have, it was like your return ticket. You need a return ticket. Yeah, to the same city. They think you're going to apparently never come back with that car if you don't have a return ticket. And that was the only time. And I mean, we got around it somehow. I don't remember what I did, but that literally was the only time. I have not had a credit. My credit score disappeared in 2015. And then it came back when we got a mortgage, but I've never utilized it.

38:04I've never needed it for anything since then, Jonah. And so that's... Are you convinced? Are you going to, number one, knock at a credit card, number two, switch financial advisors? So my only other question is, what if I could guarantee covering the cost on the low limit every year? If you could figure that out, we wouldn't have a show. So tell us how you're going to guarantee. And even then, here's the truth. You're going to spend more than you would have. Would you agree you're going to spend more of someone else's money that you get to pay back later versus your money coming out of your account now?

38:39Well, I would just not spend it at all if it ever became a problem. Well, then it's too late, isn't it? Once it's a problem. We have$1.3 trillion in credit card debt as a nation and$0 in debit card debt last time I checked. And honestly, if your thought is like, I'm just going to get this credit card, but I'm never going to spend it, it's not going to help your credit in the way that you think it is. a credit score measures all of your dealings with debt. So in order to have an optimal credit score, you have to borrow a lot of money frequently. It has to be revolving. So it's measuring things like how long have you had the credit?

39:14How much of your available credit are you using? What's your total amount of credit? What's your total amount of debt? It's looking at all of that as a full picture. And so if you're thinking, oh, I'll just kind of like dip my toe and just kind of like wet my beak in the water, it's not going to work. You're going to get pulled into it because every month it's going to say, here are some things that you can do to build your credit. And the next thing you know, you're going to say, well, I'll just put my gas on there or I'll just put my groceries on there. And even if you play it perfectly, all you've really done is make it through the maze, what you're going to have to keep doing.

39:47Have you heard of Sisyphus, the guy who pushed the rock up the hill in Greek mythology and he had to do it every single day? We're going deep. That's life on even navigating the credit score game. So here's the deal, Jonah. I'm going to send you a copy of my book, Breaking Free from Broke, because I wrote the credit card chapter exactly for a guy in your shoes who goes, I don't want to play this game, but I think it's the only path. And I walked through the eight different credit card archetypes of the perfect spender and the world traveler and the rewards redeemer. And I walked through how to live with a debit card.

40:17Sisyphus is in there. He's an example in that chapter, I believe. I love that. I think it's a great, I like the reference because that's an exhaust, I look at that guy pushing the rock up the hill with his 16 credit cards, figuring out which one to utilize based on rotating cash back, which by the way is for like restaurants and entertainment, which is the number one area they know you're going to overspend on. Yes, that's right. But I got 5%, Jade. You tell me that's free money, Jade. I flew home for free, Jade. I don't pay for travel. But you spent double on those Taylor Swift tickets because you knew you were putting it on a credit card.

40:49But I get an Uber credit, Jade. if I get my Amex. But you spent double. You made a bigger tip at the restaurant. You got a second drink at the restaurant. There's a$700 annual fee for the pleasure of using that card. Oh, wow. Oh, but it's thick metal. It's really cool. When people put it down, have you ever been out to dinner with friends that have credit cards and you can tell they have like a pride or like a look at this when they put it down? I actually told Fairwinds Credit Union because they have the Ramsey co-branded card. I was like, well, you guys make a real thick metal card just to troll the credit cards out there so I can be like, yo, check this out.

41:22It's called money. You want to know what? What you're saying, though, is the deeper part of this, I think, I mean, we could go all day about problems with credit cards and what tendencies it causes. And, you know, the points are off the backs of single mother. You know, like we could go on. But at the end of the day, I think it's just an identity thing of who do you want to be? And when you start walking the baby steps and you draw that line in the sand and you just go, you know what, I'm just not a person who borrows money. I am a person who really enjoys spending the hard-earned money that I have.

41:54I feel confident in handling the money that I've earned. It is enough for me. I don't need to move a little bit over here and spend a little bit over here on this credit card and get the points over here. It's just an identity. When your rewards can't tempt me, I'm invincible. I've risen above the system. Yes. I'm outside of the matrix. And I think that is just a better way to live. It's not that I'm better than you. It's just that my life is more peaceful. So you get to choose. And hang on the line, Jonah. We're going to send you a copy of Breaking Free from Broke, specifically the credit cards chapter.

42:24Read that, send me a message, and let me know if you've changed your mind.

42:41Dave, we got a lot of calls on this show where life happens. One day someone's healthy, they're working, providing for their family, and then a curveball hits. You know, we hear it all the time. A car accident, a cancer diagnosis, a heart attack, and suddenly everything changes. Yeah, and that's why you've always said that having term life insurance from Xander is essential because it protects your family if the worst happens. Yeah, that's right. You need 10 to 12 times your income in coverage. No gimmicks, no whole life junk, just straightforward term life protection. But there's another piece that people often overlook, and that's long-term disability insurance.

43:20Yeah, it's important to understand the difference between them. Life insurance steps in when you die. Disability insurance steps in while you're alive but can't work. So it replaces a large part of your income so the bills still get paid while you get back on your feet. Now, if your employer gives you free disability insurance, great, take it. If it's discounted there at a better price, take it. But if not, Xander can help you find the right plan. Whether you're single or married, it's not optional. If you're going to be out of work for a while, then you need to make sure the money's still showing up.

43:52And that's why Xander is our go-to. They make it super simple to get the right coverage at the best price. No pressure, no upselling. I've trusted Jeff Xander and Xander Insurance for over 25 years, and so has my family. So don't wait. It's fast, it's easy, and it could make all the difference. Go to Xander.com or call 800-356-4282. Protect yourself, protect your income, protect your family.

44:24Welcome back to The Ramsey Show here in the Fairwinds Credit Union studio. I'm Jade. Next to me is George Camel. We've got Logan on the line from Orlando, Florida. But hey, Logan, how can we help you today? Hey, so I was wondering, my grandmother has a property and she's going to sell it. And she gave me an opportunity to get it for less than it's worth. And I'm$50 ,000 in car debt. I live at home right now, so I don't have many bills. You've got a car payment. Yeah, other than that, yeah. Okay. So that's the only debt, just the$50 ,000 car payment. Is there anything else? Student loans, credit cards, personal loans, anything like that?

45:10Nothing. How much money do you have saved? About$20 ,000. Okay. And how much do you make? Including side jobs and my actual job, it's around$90 ,000. All right, you're making$90 ,000. All right, and what's this deal with Grandma? Why is she willing to give you a deal? where is she going? I guess just because she loves her grandson. I don't know. She likes the property. It's 10 acres. Grandpa died. So it's just too much for her to take care of. And she doesn't necessarily want to get rid of it, but it's just too much for her. So I think she'd give me a deal just to kind of not fully get rid of it.

45:54You think she would or she told you she would? No, she yeah, she will. Tell me. I'm just saying I think that's the reasoning. Okay. Tell me what the market value is and what type of deal she's giving you. Tell me the real numbers. So I would get it for$350 ,000, and it's probably worth$500 ,000 to$600 ,000. Wow. Okay. And do you like the house? Do you love it? Oh, I love it. You know, it's got a warm place in my heart. Sentimental value. That's sweet. Right. But if this wasn't grandma's house, it was just on the market, Would it be something you'd be like, oh, I want that? For this price, I would jump right on it.

46:37So here's the thing. You're not there yet. You're not ready financially to buy it for a couple of different reasons. How urgent is this? Or is this a deal that can stick around for maybe the next 12 to 18 months? Well, I know she's ready to be done with the maintenance and everything. So I don't think it's necessarily like she's ready to move tomorrow. but I think she's ready. She might be able to hold off for the next 12 months. Because you've got a couple of things, some ducks you need to get in a row. Number one, we've got to either pay off this car or get it sold because we don't want to go into homeownership while we're still in debt because then it makes it very, very tight.

47:21And this thing is over half your income, so it needs to be gone. What is this thing? What kind of vehicle? It's a Jeep Gladiator. And how old are you? I'm 22. And it's brand new? I bought it brand new, yes. What's it worth today if you went and sold it? So I went to the dealer yesterday to see what they would give me. They told me they'd give me$31 for it. Well, the dealer's the worst place to sell a car known to man, so let's not go there because they're trying to make a profit. But just so, yeah, so I looked up just ones that people are selling around me and they're going for around 34. So it's not too much.

48:03Do you roll over negative equity? How are you so underwater? I did. I did. I bought a truck during COVID. Okay. Well, here's how to get out of this thing. Let's say you sold it for 34. That means that you are 16 grand underwater. Luckily, you got 20 grand sitting there in savings. So that'll cover the amount you're underwater, leaving with a few grand to get you a beater car for now, to get you from A to B. Right? Okay. Now, what's your payment and insurance? Man, my payment is$850, but I'm paying$300 a week because I was just trying to get it down. Um, so I've been paying 300 a week and it's 850 and I pay my dad like, he doesn't really charge me for insurance, but every once in a while I'll give him like four or 500 bucks just to, you know, we can easily say it's a thousand bucks plus for this payment plus insurance and all that.

49:05So that's what you would free up to then start saving up an emergency fund followed by a down payment. because if you really want this house and grandma's willing to wait, then I would act like this is urgent and I'll get rid of the stupid car that's going down in value when you're telling me that you want to be a homeowner. And let me give you some real numbers. And this is not intended to bust your bubble. This is just intended to give you a dose of reality because what you're seeing right now is a deal and you're only seeing the deal, but you're not seeing the reality of what can I actually afford?

49:37Because you're right for somebody to sell you something that was worth maybe five or 600 for 350, that is a deal. But there's no such thing if you can't afford it either way. Okay. So the real numbers on this, and I'm just using our Ramsey Solutions mortgage calculator, I put in, let's say she sells you the thing for$350 ,000. And let's say it's on a 15 year fixed rate mortgage, because that's what we'd suggest around here. And right now I'm seeing that the weekly average 15 year fixed rate mortgage is about 5.64%. So I put that in here. You would need to put about 54 % down in order to get this thing close to 25 % of your take-home pay, which is where we like your mortgage payment to sit.

50:1925%, and that's everything. That's HOA, taxes, insurance. We want no more than 25 % of your take-home pay. So you're talking like 180 grand down? 190. Yeah. And it's still tight for you. That puts you at around$1 ,800 a month. And honestly, I'd like you to be closer to$1 ,500 a month. So that's me being your buddy here and telling you the truth that even with you going balls to the wall, like George said, and selling the car and doing all those things, which you need to do anyway, by the way, you still have a journey ahead of you, right? And we don't want you to be like Icarus flying too close to the sun on this thing.

50:53That's right. And just because the offer is generous doesn't mean that this is a good deal that you can afford. That's right. Right. So what should I be at for a car payment? Zero. Okay. So if I get rid of my truck, I pay the negative equity off, and I buy a beater, right, for however long. And then just stick it out with the beater. Stick it out with the beater while then saving up, paying yourself that car payment of$500 to$1 ,000 a month. Well, now you got 12 grand more at the end of 12 months to then upgrade in car. So you sell the beater, take that profit, and apply it along with your 12.

51:34Now you got a$16 ,000 car. And the key is you don't want anything with wheels and motors to add up to more than half your income, your sustainable income. So don't include the side jobs that you may drop. What is your actual full-time income? Let's say it's 70 grand. Well, then we want no more than 35 grand tied up with things in wheels and motors. Do you understand why, Logan? Why we're saying all this? Why we have these parameters. Tell us tell us in your words why you're doing all this. So we know you understand. Well, I'm thinking just so I'm not paycheck to paycheck living and I'm out of debt before I go into a mortgage.

52:13That's a big part of it. But the other part of it is what George is telling you to do with this vehicle. That's a long term mindset. The mindset is I never I never go into debt for cars again. I'm always going to use this method of saving up and upgrading for cash. And the reason for doing that is over time, you're going to have so much money at your disposal to be able to actually build wealth. We've said it before, George, and I'll say it again. Really, the divide between being middle class and being actually wealthy is the car payment. That car payment, 700 bucks a month, 800 bucks. Many of you are over a thousand.

52:43If you took that money and put it back into your pocket, maybe not all of it because you're stacking money for the next car, right? But even$600 or$700, additionally to be investing regularly, that is the ticket. That is the unlock to building wealth.

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54:32All right, we've got Stacy who is joining us from Salt Lake City, Utah. Stacy, how can we help out today? Hi, Jay, George. Thank you for taking time to chat with me. I am wondering if it's at all wise to give my mother-in-law a certain amount of money every month just so that we don't keep having her approaches every month to give us money kind of basically just getting ahead of knowing that she'll need money and just making it that she hasn't already and kind of avoiding that situation of being asked oh boy so so we're going to direct deposit to her account just to avoid her having to talk to you well yeah basically yeah like yeah like not that i i know it's stressful for both of us i would assume at least where what's her attitude about it she um i mean she doesn't act entitled to it by any means she has six adult children five of which all have the same job they're all in the same trade um most of them make above 100k a year so like everyone's able to help her she doesn't have the legal ability to work in the country.

55:49Okay. So she does live with my brother-in-law. He owns a home, and she lives in... So she doesn't have a car payment. She doesn't have a housing payment or anything. Okay. She does have a teenager dependent. How long has she been in the States? Since she was 17, I think. And she hasn't been able to work that whole time? The entire time? I know she did part of that time, And then I think there's just been some... I'm just confused who's been floating her lifestyle and income this whole time for decades. Her children. And has that changed now that you guys are fronting more of it? I think it's shifted.

56:32She lived with my husband for about a part of a decade before I met him. And then she moved in with her other son when he bought a house. Okay. So what is the current situation for how much each sibling's giving? What is her monthly income that you guys are supporting her with? I'm not aware of anyone else giving her basically an allowance every month. She has been asking us for money consistently for about five months. It's about$800 every time. What is she using this money for? it's medical bills is big ones which we were aware of because she had like medication like it's not just like oh i need it for does she have health insurance on her own she does she has medicare okay um how old is she medication was a little different how old is she i think she's 56 56 and has she has she to your knowledge has she tried to um get the correct visas to be able to work or try to appeal that or whatever it is?

57:38Has she been working on that or did she just give up on, I mean, I'm not going to pretend to be an expert in that area, but I, I'm just curious. Yeah, she has. We're actually working on it right now. Okay. It sounds like it's just kind of something that takes a little longer than we had hoped. Okay. It doesn't sound like there's much urgency on her part. I mean, she's got bank of Stacy. So it's like, why do I have any urgency to go to work when I don't have any bills and someone provides my income? I, I'm a little worried about that. Yeah. I wonder. Do you have the money? Stacey, like how are you guys doing?

58:14Yeah, we make great money. I have an income and so does my husband together where you take about 13 ,000 home net. Okay. And you guys don't have any debt? We have a little bit. We just paid down a ton. So we have like$11 ,000 of consumer debt left. Okay. So I'll be gone in the next few months. And then we have a$488 ,000 mortgage still. $488? Mm-hmm. $80? And do you guys have any cash saved, like liquid funds? We do. We have$14 ,000 in a high yield right now, and then we'll be getting tax refunds soon as well. Okay. Yeah,$14. Okay. So I know we can afford to, I guess. You could be in a better situation.

58:58I will say that. I mean, the walls are not caving in on you, But I definitely would if you are going to put yourself in a situation where you're contributing to this monthly and that's fine if you decide to do that, you've then got to get very diligent about making sure that this is not at a detriment to you by by being very intentional about what you guys have going on. And I mean, anybody who calls the show, I'm going to say, hey, you got to get on the baby steps. And I think for you guys, paying off that eleven thousand dollars of debt and doing that today because you've got the money there.

59:31which leaves you with three grand, which is the reality of your situation is you have three grand to your name. Okay. So it feels good because you make a great income, but it is disappearing through a giant mortgage, supporting mom, whatever else shows up. And so I think you guys could do a better job of not making sure this money doesn't slip through your fingertips. And I think your husband needs to be aligned here. Is he wanting to continue to support mom at a certain level? um we just talked about it today actually because another situation came up which i'm calling he says and i brought up like it doesn't seem fair if she's asking us for the entire amount that she needs every month because she does have three other adult children and what's the entire amount of my husband uh i mean right now it's another 800 800 for i think the last four months Yeah, 800.

1:00:21That's the total amount that she needs. Right, yeah. And you guys have been giving her, what, four or two, or you've been giving her the entire 800? This month, or this, today we did decide on 200 so that other siblings will help. The last three months, we've given her the entire amount each time. So it sounds like, it sounds like there's a couple of things. It sounds like the six adult siblings need to get in a room or get on a Zoom call and say, okay, here's the deal. Like mom is going to need this money for the foreseeable future until his visa business gets worked out. We need to set a plan so that we are not all scrambling every month to decide and putting her in this position and her putting herself in this position.

1:01:05And she needs to be clear on what these new guardrails and boundaries are. Because if not, it's just going to become, well, I can get more out of them this month. No, instead go, hey, we're going to support you for 18 months. And by then you need to be getting a job. And then once you're retired, we can figure that out later on in life. But she could live another 40 years. This is a long time. And it's not sustainable. And I think that's the bigger part of this is somebody and I'm not saying it's you because you're the in-law here. But somebody whose blood needs to be looking at this and going, OK, why can't she work?

1:01:37What is the visa that she needs that she can work? What do we need to do? And is anybody on top of this like it's their full time job? Because the truth of the matter is, of these six adults, you might know what they earn because you know their trade, but you don't know their financial situation. And$200 or$300 a month for some people might feel like, okay, we can swing that. But for other families might feel like, hey, especially if they're, let's pretend they have debt and they're trying to pay their debt off, right? So I want to set the expectation that all these siblings may not contribute and you can't be salty with them if they don't.

1:02:15Because it truly is their choice and we don't know what's going on with their money. Yeah, that's fair. Yeah, that's kind of how I was feeling today when I was like, why is it always us every month? But you're right. Because you guys are willing and you've done it. And therefore, who's she going to come back to? The hand that feeds her. Yeah. Yeah. So that's there lies the problem. And I'm not mad about being generous, but when it becomes expected forever, that's not really generosity anymore. And therefore you guys need to be more involved with their finances because if she blows this or she is going into debt, well, then this is just a never ending money pit.

1:02:51So you guys need to be working on, hey, here's your budget. Here's how much is going to go towards bills, you know, to help support whatever the household. Here's how much goes to insurance. Here's how much is fund money. And she needs to be on a budget if you're going to be handing her this check every month. What's her country of origin? Mexico. Okay. I'm worried you guys live, Salt Lake City. Okay. I was just thinking like, I don't know, this is crazy, but I was like, oh, I wonder if she lived closer, if she could cross the border and work and then come. Like if she lived like, you know, Southern California, I don't know.

1:03:26My brain was trying to solve for the here and now, but that opens a whole can of worms. But anyway, I would just get clarity. I think we need to have a come to Jesus conversation with just the siblings. You don't need to be involved. That's it's up to them to figure out. And then your husband comes back to you to go, hey, what do you think about this situation? We all pitch in 200 bucks a month for the next 12 months. And then we see where we're at and reevaluate. Yep.

1:04:01Thank you.

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1:06:07You can live like no one else so that later you can live and give like no one else. So start EveryDollar for free today in the App Store or Google Play. Okay, Rebecca is joining us from Orlando, Florida. Rebecca, how can George and I help today? Hey, thanks for taking my call. Yes, ma 'am. So my husband and I, we're just starting the baby steps. We're working on paying off debt. We have about$50 ,000 in debt, some student loans, some credit card, and our household income is around 135. 35. So we're 32 and we're kind of behind on the game. We haven't started investing or saving towards retirement.

1:06:47And we have two young boys and we're contemplating having a third. We would love to have any people in age who were thinking about getting to the night in this year. And I think it's important to know I'm a 1099 contractor, so I wouldn't be getting paid for maternity leave if we chose to have a third. And with three littles, even contemplating wouldn't make sense for me to stay at home. And so the question is, is it wise to kind of say all done to having more babies for the sake of where we're at currently financially? I don't think that's the case, but I do think that it would behoove you both to really put real numbers on paper and create a timeline to see what's actually possible within the parameters that you guys say you want this to fall into, right?

1:07:34You get the values of saying, okay, if I have a third child, do I want to stay at home? And if so, what's that going to cost? You know, and let's run out the real numbers before we just take this thing off the table, because I'm a fan of families. I love families and I love mamas being able to have, you know, as many babies as they want to and making a way to afford that. So where you are right now, you're 32 years old, you've got the$50 ,000 of debt. Is there any money saved up anywhere? Yeah, so in our savings, we probably have$8 ,000 or$6 ,000. Say that again, please. We probably have about$8 ,000 saved.

1:08:16Okay. Regular savings account. Okay,$8 ,000 saved, and you guys are bringing in, what,$8 ,000 a month? Is that about right? Yeah, more or less. Okay. How much can you throw out your debt every month after all of your bills are paid? so one of our sons has some medical stuff that uh kind of eats up a little bit of our margin um but i'd say it's safe to say probably like six or seven hundred dollars if we're if we're tight so your bills are costing you about over seven grand right now per month i mean i think if we're what's your mortgage payment So we're renting. It's$2 ,500 a month. Rebecca, speak directly into your phone.

1:09:04Tell us again, what's your rent payment? Oh, I'm so sorry. That's okay. I said our mortgage or our rent payment is$2 ,500. $2 ,500? Okay. Yes. Can you hear me okay? Yes. Yes, ma 'am. $2 ,500 is a little over, so there's a little bit there that's eating into there. What else majorly is going on that is, because your kids are not in daycare right now, or are they? Right. No, we don't have to pay for child care, thankfully. We have some family help. And so right now we have our, just the student loan payment, which is about$500 a month. I don't have all the numbers right in front of me, but we have, yeah, I feel like, you know, It obviously could be a budgeting thing too, but I feel like it plays a part in this.

1:09:54I think there's some intentionality that we can really, really tighten up. Are you guys using EveryDollar? We just got Financial Peace University and downloaded the app. We haven't started it structurally yet. Okay, I think that's going to be an unlock for them, George. You're about to find out that you can live on way less and carve out way more margin. Because here's why I was asking. If you can throw, let's say, two grand a month at the debt, you're done in two years. If you can throw more at it, you're done even faster. And so what I'm trying to do is get you guys debt-free as soon as possible with an emergency fund.

1:10:29Not that you have to wait for that to have the next baby, but if you're saying, hey, my goal is to stay home potentially, well, if you can't make the current income work, how are we going to make less income work? Right. So we've got to figure this out. If it's true that you really want to have this kid, if that's the priority, then we need to make sacrifices to make that a reality. Yeah. How much of the 135 is coming from your income? Yeah. So we have 65, I'm sorry, 60 is coming from me. I work part time right now. And then 75 from my husband. Yeah. So, yeah, I mean, you're not wrong. It's cutting it in half.

1:11:06So the main things that I'd be... It's one of those things we feel... Go ahead. I was just going to say, you know, I feel like if we already had a third, We would just be looking at how do we make this work. But now that we're kind of in this decision period, we don't want to be unwise and impulsive. The biggest area where I see it playing out in a potentially very stressful way is your cost of housing. So right now you're paying$2 ,500. It's more than 25 % of your take-home. And if you go down to— $4 ,500 take-home pay, for example. Exactly. That's when you're going to be really strapped. It's going to be, I mean, darn near possible to accomplish anything like that.

1:11:47So there's another sacrifices. We need to change where we live if we want to make this a reality. So that's where I go. You can go to a fake budget tonight just using his income just to see where things would fall. And even you can go, okay, let's say we're debt free. Let's take out those debt payments. It's still going to be tight. And really, here's how much house we can afford. Then you can start to map out what is realistic for your situation. Mm-hmm. Now, right now, your current kids, you're not paying for child care. What changes so drastically when the third one comes that you'll no longer have access to that?

1:12:22Sure. So my in-laws and then my mom and so that come and watch the boys. And so they're in their 70s and we're just thinking with a third, it may be a lot for them. I think for an hour, seven-month-old and two. Well, with the debt paid off, if you put one in daycare, you might be able to swing that and continue to work. So you keep the two with the family members and then decide which one would go to daycare. And without debt payments, you know, you freed up$500 in student loans. Who knows how much from the credit cards, right? And now maybe you can swing that. And by then, how old's your oldest?

1:13:04He's two. He turns to NST. Okay. So kindergarten for you is going to be kind of like the unlock moment when one of them can go off to school. Right? So I do think that this is possible. I think you've just got to get creative on what it looks like and get so, so intentional now before you're pregnant. Now is a time where you guys are working, working day and night, like Michael Jackson said, all the money, right? Because you guys need to pay off this debt so quickly. You need to start saving for three to six months of expenses and potentially a down payment down the line. Right. Thanks. Okay. No, that is helpful.

1:13:41Yeah, because I just feel like the third changes a lot in terms of my income and just how we, you know, our lifestyle. Absolutely. And that's the thing. If you want to be a stay-at-home mom with three kids, your lifestyle is going to look very different, and you might need to live further out where rent is$1 ,500 instead of$1 ,500. And so there's just trade-offs all the way around, but you'll have the most flexibility and options if you become debt-free and you have the emergency fund and hopefully your husband has a ceiling, you know, a bigger ceiling for his income. He can start making more.

1:14:12Then life will get a little more comfortable. But right now, the saving grace is these parents and in-laws who are willing to watch the babies. Imagine they had daycare to cover in the midst of this budget. Oh, it'd be tough. But what I really love about her calling in is this idea of like family planning, like thinking, thinking about what you want to do, laying out the numbers, laying out a timeline and making a plan and not just kind of going into it blindly. Because like I said, I love babies. I love families. But there are things that we can do to make that a better situation for all involved.

1:14:45I always love people like it was a huge surprise. I'm like, well, I don't know if you were in science class, but there shouldn't be a whole lot of surprises there. You're not Mary in the Bible here. I mean, sometimes it happens. George like slips past the goalie. You know what I'm saying? Just accidents happen.

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1:16:52All right. We've got John, who's in New York City, Florida. Is there a New York City, Florida? I don't think that's right. Where are you at, John? New York City, New York. That's what I thought. I was like, one of these is correct. The other one is not. Well, we're glad to have you. How can we help you today? Thank you so much for having me. I really appreciate it. My wife and I purchased a short-term rental in October of 2024 at the advice of a tax strategist that we hired. And we're bleeding$2 ,500 to$3 ,000 a month in this short-term rental. Okay. And I own a business. My wife's a full-time nurse, and we get taxed heavily.

1:17:37Obviously, the business does. And that's why I enlisted with a tax strategist to understand, you know, options, you know, as far as building generational wealth and how to do that. And that's when we got into the short-term rental. And, you know, we got bonus appreciation, so that was nice. You know, we were able to write off the federal taxes and stuff. But bleeding$2 ,500 to$3 ,000 a month doesn't leave a very good taste in my mouth. Of course not. You might as well pay that to the government in taxes at that point if you're just going to bleed it. I might as well not even tell you. You're either giving it to a lender or to the IRS.

1:18:06Pick your poison. Correct. Correct. So my real main question is, you know, it's hard for me to trust people now because of how this leaves a tower taste in my mouth. And I just need really good direction. You know, what do we do with our money to help build generational wealth, to find properties that cash flow? What should my next steps be? What is your business? We want to do something this year, but I'm nervous. We own a print company. Okay. Where did the real estate come into play? Because these are two different goals. If I want to build wealth, but also I want to be a real estate guru and leverage a bunch of debt.

1:18:43Correct. The real estate came into play because of the taxes we were getting. We were getting heavily taxed, obviously. But would you agree that getting into real estate just for tax purposes is not a good idea?

1:18:58My wife's saying yes, she said true. You're losing$36 ,000 a year because of the tax strategist saying, dude, you want to save on taxes? is just leverage an Airbnb. It'll be great. Well, I think you thought you were going to build wealth too. I think you thought you were going to use that as a wealth building vehicle as well, not just a tax shelter. And that's the goal, obviously, is wealth building for generational wealth. What went south? What went south with the short term? Was it the location? Did you not get the rents you thought you were going to? Like, what happened? Well, I think it's our property.

1:19:26In all honesty, I think it's our property manager. So our realtor is also our property manager. And when I met with him, I'm pretty upfront. And I said, you know, listen, I said, I just need to know what our worst case scenario might be with this property. And he said, your worst case scenario is you're going to be out$1 ,000 a month. I said, good, let's go. We're good. That sold. So you knew that from the jump? Oh, yeah. Okay. And I was fine with$1 ,000. I knew it wasn't going to cash flow well, but I also was using the benefits of, you know, how much we were going to save on taxes and then also building generational wealth and making this kind of a yearly thing we wanted to do.

1:20:00Okay. So it just, nothing was looking good. So what would this property sell for? This property management company,$1 ,035 ,000. It's worth, according to Zillow,$1 ,065 ,000. We also own a home, our personal residence. We bought that for$820 ,000. It's worth about$965 ,000. What's left on that mortgage? That one,$617 ,000. Okay, and what's the mortgage on the short-term rental? That's about$820 ,000. Okay, so you got, let's call it$150 ,000 in equity. On the short-term rental you could get out? Correct. What other debt do you have? Again, obviously I got to pay. We did do a loan where there's a prepayment penalty.

1:20:43So we got a five-year prepayment penalty, which goes down every year. So we'd have to eat that, obviously. What kind of loan is this? It's called a DSCR loan. Okay. What other debt do you guys have outside of the two mortgages? Truly, my wife's got a car. It's about$600 a month. Business pays my car. we have 0 % credit cards that aren't due until next year. It's total about 37 between both of us, 37K. You are a credit card company's dream. I'm sorry? You're a credit card company's dream. I know. Because guess what's going to happen when you can't pony up 37 grand out of nowhere to pay the balance?

1:21:24Well, let me give you the full picture. I have$160 sitting in the bank. And my wife has... Do you have anything? I think she's, yeah, maybe 10 grand, my wife. Between both of us, 170. Okay, cash. That money's your mark. I already know. I know it's going to pay off that 0 % credit. How much? Okay, well, great. How much, what's the total amount of your wife's vehicle? Not the monthly payment, the total amount. Total amount, it's a lease. Oh, it's a lease. And what about you? Your car. My car's paid through the business. It's 524 a month. It's a super route back. How much is the debt, though? What's the total debt?

1:22:02um i owe it's it's pay it'll be done at the end of this year and then i either will leash another car what's the total debt don't be scared i apologize don't be scared so what's 524 times what's the amount that you owe on your car how much do you owe yeah it's we got we owe on my car is going to be three grand that's it that's all you have left yeah because it's a lease so Oh, yours is a lease too. Okay. Goodness gracious. These are the nicest cars known to man. What are you guys driving? $600 a month for a lease? When's the lease up? On yours? The lease is up the end of the year. We're both the end of the year.

1:22:47Okay. And are you planning on buying them out or what are you thinking here? I don't know, to be totally honest. I haven't thought about it. Okay. So we're going to help you think through that. What I want you to take away right now, John, is you're kind of like a happy-go-lucky guy and you're fun to talk to. But I'm concerned about your situation greatly. You got a lot going on. And the good thing is I think a couple of moves could get you on just a couple of small tweaks could get you on really, really solid footing. But you'll have to agree with George and I that you're in a dire situation in order to actually do this.

1:23:23Because I feel like you kind of think it's not that bad. You guys have out-earned your stupidity for a long time, and you can continue doing that. I just think you will—you vehemently disagree with everything we're going to throw at you, so I don't even want to waste the time. But I'll tell you what I would do. I would sell the short-term rental, walk away with whatever money you can get, take your 160, pay off all of your consumer debt, and then anything remaining becomes emergency fund plus paying down the mortgage. Gotcha. But leveraging the debt game— I should make that my priority is paying down our primary residence.

1:23:51Paying down everything. Pay down all of the consumer debt first, get an emergency fund, focus on paying off your primary mortgage. Right now you're just trying to accumulate stuff and assets and car leases, and we're trying to simplify your life to where you get to keep what you take home regardless of how much you pay in taxes. I'd rather you pay what you owe in taxes and not have all the stress in your life and go, that sucks. I had to pay the IRS more than I thought. But it's a nothing burger if you had no debt. You figured me out perfectly because my wife could tell you I do stress out a lot about it.

1:24:22I bet. It's not worth it. It's very stressful. It's stressful for me just to listen to it. So I can only imagine how you feel when you lay your head on your pillow at night. But think about what George just said. You got$170 ,000 cash. Okay, we pay off the credit cards. That leaves us with around$130 ,000 or so. You decide whether or not you're going to buy out these leases. Do you know what the buyout is for each of them? I don't know. I think it's around$20 ,000,$25 ,000 maybe. For each? If I'm speaking correctly. For each. Would you guys want to keep those cars? I'd have to convince my wife, but I don't care.

1:24:55Okay, let's say you did. If you want to keep your car, she doesn't care. Okay, so let's say you spend$40 ,000 and you buy out these leases. Now you're at$90 ,000. You've got$90 ,000 sitting there after you've gotten out of these leases, after you've paid off some credit card debt. Is there anything else that we need to know of that needs to be paid off? um no i just gave you all the all the that we have okay so now you've got some actual cash you sell the short-term rental because did i hear you say you bought it for 1.3 and it's worth 1.6 no no a million 35 and it's according to rizillo it's worth a million 65 now okay a million okay so you'll probably take a little loss on that but you'll gain three grand back in your life from not bleeding and so that's where i'm going this is worth it don't have the sunk cost fallacy It sounded like you didn't want to sell this Airbnb, though, this short-term rental.

1:25:45I mean, I'll be honest with you. I do love the house. I wish my wife and I would love to be in Florida one day. I'd love to be in the house. But if it's going to cause me stress every day, I'd rather do the smart thing than the future goal thing. Let's talk about the why behind it because I think you had – I like what you were thinking about, which is what are ways that I can build wealth for my family. I think that that's something that we all need to be doing as parents and as spouses. But the way to do that, we did the largest study of millionaires. And the best way to do that is to have a debt-free lifestyle, a budgeted lifestyle, a lifestyle that values having the right insurances, saving for emergencies, right?

1:26:27And then investing in your 401k regularly. That's how millionaires are built. They invest in their 401k regularly.

1:26:48Well, welcome back to the Ramsey Show here in the Fair Ones Credit Union studio. Again, I'm Jade, if you're just joining us. And we have George Camel taking calls from Brandy, who's in Huntsville, Alabama. Brandy, you are on the line. How can George and I help you today? Hi, guys. I have an interesting situation for you that we need help with. My husband and I have been married 10 years, but when we got married, we had a backyard wedding. It was like a$3 ,500 wedding. It was just close family friends, and we did not buy wedding rings. So we had said if we make it to 10 years, we would have our honeymoon and buy wedding rings on our 10th anniversary, and that is coming up.

1:27:30so we um and there's there's more story to that of course like i mean he proposed four times it's me i bring the george to the relationship and what does that mean you're the fuddy-duddy i am the frugal one i guess and he's more of a free spirit yeah you said no to his proposal like three other times no i laughed hysterically the first time and then the second time i was like i'm really not good at being married i mean we've been married like i said 10 years that's like an Olympic gold medal for me. He deserves a medal for persistence. The guy just kept getting rejected time after time. He laughed in his face.

1:28:07Wow. That's brutal. He is really amazing. He is. He's a great spouse. And I mean, we've made it right so far. And we have a dream. You both seem surprised, which I find entertaining. We both can't believe we're here. Okay. Well, congrats on the 10 years. And I love the idea of finally, you know, getting rings and having a ceremony. But there's probably a catch here. So tell me, what is it? Well, we're trying to buy rings and go on a honeymoon. We're not going to have a ceremony. We've already done that. Okay, so rings and honeymoon. But we are in the middle. Yes, and we are in the middle of baby step two.

1:28:40We've paid off$63 ,000 worth of debt as of yesterday within the last 12 months. Whoa, way to go. Right, and we have$49 ,000 to go. So we were expecting to come see you guys for our debt-free scream next spring. Okay. And we want to delay by a month because my entire paycheck, like my base salary, I own my own business. He works in the state. But my entire base salary goes to paying debt every month. So I get my paycheck and then I give it to other people and it hurts my feelings. Right. So I am super motivated to get finished. But we both feel that we need a break in order to celebrate this milestone for us.

1:29:16And it only sets you back by one month. Is that what you're saying? Yeah, it would pause the baby steps by one month. And we don't know budgets. We haven't been shopping for rings because I'm terrified to go in there. I think I'm going to have sticker shock and pain. So then I don't think you know how much it's going to set you back because you don't know the numbers, right? Well, we were thinking around$1 ,000 on rings total, and then we would spend around$3 ,200 on a trip. And we wanted to kind of set the budget at what we normally would pay towards the debt a month. Which is about$4 ,000. Yeah, between$4 ,000 and$5 ,000.

1:29:46Okay. And you're saying if you continue this path, you could be debt-free in what, nine or ten months? Probably around 12 because I work in education fields. So I am home. We have six children. I'm home with our youngest children, and there are many of them. But I'm home with them in the summer, so I don't have as much income in the summer. And we plan for that because I own my own business. So it's not a huge loss, but we don't have as much of a margin during those two months. Got it. I understand. I'm going to tell you, and again, this could be controversial, but I think that I would do this.

1:30:21It's a one month setback and it's a milestone of 10 years. And it's actually funny that you're calling in because I called into the Ramsey show long before I worked here with the same question. Sam and I had paid off a major portion of our debt. You've paid off more than half. I think we had paid off more than half of ours. And we wanted to do a 10 year anniversary and it was going to set us back a couple of months. But we did it. And Dave said that he would do it. and we told him the budget. And so I will now tell you the same thing because I think it's a really important thing. And I think it's one of those things that comes around obviously every 10 years.

1:31:00And this is your 10 year mark. I think the budget is reasonable. And I like the fact that it's only a month long thing. It's potentially only sets you back a month. And what I actually think will end up happening is if you wanted to kick it into high gear after this, you could probably make up the time by picking up, you know, cutting back here and there, picking up side hustles. Who knows? You'll, you know, if friends and family find out about this, you might get some monetary gifts. I don't know. But I think things can happen that you really don't even have to sacrifice the month. Okay. Yeah.

1:31:33And I have a business that's doing very well. It's growing as time goes along. So it will increase over time. And also he's getting promotions at his job. So we know that it will go up. Eventually, that may take a while, right? But we really want to pause and celebrate. So you got married in the courthouse, no rings. We had a backyard ceremony at our house, and it was beautiful. We have a creek in the backyard. It was a beautiful ceremony, but it was just close friends and family. So you guys have anything on your fingers right now? No, we don't. You couldn't have got a silicone band off Amazon for like$10?

1:32:10Well, he wears, I think he wears a silicone band and he has another band that he really likes. And I feel bad. I mean, it took me two years to change my name. Maybe I have a little bit of a commitment problem, but I really, I love him. Our marriage is great. And I think it's time for me to put a ring around. You want to know what? Okay, I'm going to go one deeper for you. And now this is your life. Do what you want. I almost, and I'll just be honest. I feel the money is better spent. And this is just me. in comparison to the baby steps, I feel like the ring would be the thing that I'd want to spend more money on because you've never had one versus the honeymoon.

1:32:45That's just me. What do I know? George, what do you think? What do you think about the whole thing? You may not agree with me. Well, again, Brandy, you told me ahead of time, I'm the fuddy-duddy frugal guy and I love to dangle the carrot. I want to earn it. I want to eat my vegetables before I get dessert. And so personally, I'm going to go, you know what? We're already in our 11th year of marriage. We're going to celebrate before we're done with year 11. And that will put some onus on me to put some urgency on this and bust it to get this knocked out as fast as possible so that I can enjoy this.

1:33:14Wait, it's not going to happen at the 10-year point? You're already past 10 years? No, we will be 10 years coming up in the fall. And I wanted to wait until after the debt was paid so next summer. And he's like, absolutely not. We had an agreement. Well, wait a second. Wait a minute. I'm going to roll mine back a little bit. Because I thought that the whole point was we're doing it on the 10-year anniversary. anniversary but this is not on the 10-year anniversary you're not doing it on the 10-year at the 10-year anniversary we were that was when we planned on doing the ring and going on the trip right can i be honest brandy here's what bothers me you guys have been quote-unquote planning this for 10 years and yet made zero actions to get us here you know what i mean like what happened over 10 years where you guys went yeah we said that but we don't really believe it and now all of a sudden it's an emergency that's a good you know what i mean what happened well it's not an emergency We did take our savings that we put back for it and put it on our debt.

1:34:08But why aren't you in a better place financially than you were 10 years ago when you guys were broke? Oh, well, you probably weren't thinking about it then. We are in a better place. Or were you? I'm sorry? Were you thinking about this 10 years ago? Probably not. Or were you? Yeah, we agreed to do it when we got married. That was what we said at the time. Oh, that's what I'm wondering. It was an agreement. If I had a 10-year horizon to plan for this thing I knew was coming, I would make sure I was going to get there. And so that's where I'm trying to figure out where you guys went backwards, got into a hundred plus thousand dollars consumer debt, which you guys are crushing it.

1:34:41I'm really proud of you. I'm not trying to knock you. I'm just trying to get to the mindset to make sure we've actually changed our behavior that got us here. George makes an interesting point. Listen, I will say this. If you told me it's a once in a lifetime thing, it's 10 years and you were doing it on the 10 year anniversary. I'm like, yes, 10 years. but if you're telling me we're doing it on a 10 year anniversary and the plan was already do it to do it at year 11 it takes the cachet it's got no cachet at that point i mean you're not going to regret it if you do it and you guys will still become debt free whether it's in may of 20 27 12 years that's what i'm saying everything feels arbitrary because clearly our planning has not gone to plan i don't know

1:35:37Hey 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.

1:36:27the ramsey show question of the day is brought to you by why refi if your private student loans are in default and you're not sure what to do next why refi can help you explore refinancing with a low fixed rate and a payment plan based on what you can actually afford go to why refi.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. Remember, it may not be available in all states. Today's question comes from Grace in Nebraska. My husband and I are about to pay off our last debt, which is a credit card. But I've read that doing this will lower our credit scores a lot. Should we slow down our payoff schedule or knock it out and let our credit score go down?

1:37:06What a what a hilarious question, which just points to the stupidity of the credit score. Number one, the confusion of it. There is confusion around it. And number two, if I do the thing I know is financially smart, I will be penalized. Well, I think a lot of people don't realize. Yeah, I don't think they know the truth, George, so enlighten us. Well, number one, a credit score is based off several factors that are all weighted differently. How much debt? How long have you had the debt? What's the types of debt? Mix of debt. The variety, all of that. Any new debts. And so paying off your debt will not lower your score, especially in the long term.

1:37:40Now, if you closed all the accounts, it might take a dip because they like to see the open accounts. You know, the longer you've had them open, the better and all that. But I would never say slow down your payoff schedule in case your score takes a hit. Because whatever hit does happen, it's going to be minimal and it's going to be temporary. Well, and you have to ask yourself, the long-term question on this is why are you doing this to begin with? because most of us out here, if we're paying off our debt, we're usually doing it with a greater intention in mind. And over here at Ramsey, the whole thought is you can't solve a problem while simultaneously creating it.

1:38:16So if debt is the problem, if it is the barrier to you building wealth, then what we say is, okay, then I no longer borrow money anymore. And so me paying off my debt is essentially equal with me saying, and I no longer care about credit because I no longer am going to borrow money. So they're kind of synonymous. So my question to Grace would be, what's the point of paying off the debt if you plan on utilizing your credit score in the future, which means you would be borrowing money? And by the way, there are a lot of people who don't carry any debt and still have a credit score. They have open credit card accounts and they pay it off every month.

1:38:53I know those people exist because they always tell me how proud of themselves they are for paying off their balance every month. And they have an 830 credit score and all of that. So, Grace, the real question is what kind of future are you looking for? Are you looking for a future where you keep taking on more debt and trying to pay it off perfectly to appease the credit score of gods? Or do you just want to go, you know what? I'm done. We're going to cut up the card, close the accounts. Six to 12 months later, your credit score will become indeterminable. That's what happened to me. Now, if you have a mortgage, your score will stay up there.

1:39:22And it'll stay – as long as you make on-time payments for any debts in your life, your score is going to be fine. it's not going to be it's not that much better to have an 790 versus 760 no it's yeah and again who cares it's not going to stop you from doing any of the things you want to do because you're living a life without debt and i'll just let me just say this uh when sam and i were in baby step two and uh paying off debt i was a little um late to acquiesce the credit card it took me some time to feel like I could let go of that. But what got me is I hated paying it off every month because we'd spend a little bit on it and then pay it off and spend a little bit.

1:40:02And I just got to the point where I was like, I don't like the feeling of this. Even if you're paying it off every month, it just doesn't feel good. It feels like you owe someone money. Exactly. Because you do. Even though you have the money to pay them, you still owe them for 30 days. And I think I just hated the feeling of that, George. And let me tell you, obviously people care about the credit score for a mortgage. That's the big one that's understandable. But again, we've talked about it on the show. Yes. Getting a no score loan, manual underwriting. It's a very real possibility that Jade and I have both done it.

1:40:33And they didn't give it to us because we're Ramsey personalities. They gave it to us because we had 12 months of rental history, on time payments, tax returns, pay stubs. And they manually underwrite it. If it makes you feel better. I did it before I was a Ramsey personality, long before I even worked here. So if that makes anybody listening. Yeah. Yeah. Yeah, that's, I'm still not a big deal. Let's go to Kyle. So to answer your question, I would not slow down the payoff schedule. Just become debt free. Go ahead and do it. And did you tell him it usually takes six to 12 months? Yes. Okay. All right, let's go to Kyle, who's in Boston, Massachusetts.

1:41:05I'm sorry about your Celtics, by the way. What's going on, Kyle? Hey, so you guys can hear me fine? Yeah. Okay. So basically, we bought a house, I'm married, and my parents live with us in the house. And we had a baby and we want to have more, but it just seems like the house is getting smaller and there's just a lot of tension, it feels like, in the home. So we want to know if it's possible and if we should look into it more to buy, say, a multifamily, like a three or four unit multifamily and have my parents live in one of the units and rent the rest of them to offset that other mortgage. Where is this codependency coming from?

1:42:09um why can't they go rent their own place and you guys have your own place right so i'm an only child and i think what happened was most 90 of my life was um them not doing well with money and you know is that a me problem no but in my mind like with them living with us, I know their financial situation, and I know they would be borderline homeless, I guess. But they make enough to rent, because you said they'd be renting one of the units from you if you did a multifamily. Well, right. It would not be as much as the average rent. So basically, it's charity. You're going to let them rent for a couple hundred bucks, and if the day comes where they can't pay because they have other bills or they have other priorities, they kind of know you're not going to evict them and put them on the street.

1:43:06How old are they? My dad's in his 70s and my mom is in her 60s. Are they both retired or are they working still? My dad's retired. My mom is going to retire in about a year. And that's based on what? It's just what she had told me. Okay, but they don't have the money to actually retire. They're sort of needing you guys to float the gap. Right. When you say she's in her 60s, is she like 61 or is she like 69? How old is she? She is 65. Okay. And same with your dad. Is he 70 or 78? He's 75. They're about 10 years apart. Okay, 10 years apart. and they don't bring in, like, what's their social security?

1:43:58You said you know their money. Tell us more about the money because that'll help us understand how dire this is because it might not be as dire as maybe you stepping in and doing as much as you're trying to do. Okay. So for social security, I don't, which will be for my dad, I don't really know what. I think it's probably maybe$1 ,500 to$2 ,000, something like that a month. I mean, that's so lying to me. I'm not sure. And so they give us, we wanted it to be$1 ,000. They give us$600 a month towards the house that we're living in now. What about your mom? What does she make?

1:44:48She probably makes, I would guess around, maybe a little more than minimum wage. Okay. Do you know what that looks like monthly for her?

1:45:01I'm sorry. I thought that you knew the numbers. I thought I heard you say that you did know the numbers. We know that they can only afford$600 a month for rent. I grew up like just knowing like how they were struggling financially. And what do you attribute that to? Is it just lack of financial literacy? They or they never secured careers like we're what's happening there? Because what I'm seeing is something that seems like it's gone on for quite some time. And I'm just worried that, you know, if you if you want to put this on your plate and say this is just something I'm willing to fund, that's your bag and you're allowed to do that.

1:45:39What I would not do is continue to take on more debt in order to fund that. I think that this is a cart that you've hitched yourself to. And you need to get out of this mortgage. You need to refinance on your own. And if you can't qualify, that tells me you guys need to go somewhere you can afford and get them off of here. They might need to go to senior HUD housing. And that's the reality of the situation if you can't have them living with you guys.

1:46:37We'll be right back. budget without stress. We're giving away one$10 ,000 grand prize and weekly$500 prizes. No purchase necessary. Go to ramsaysolutions.com slash giveaway.

1:47:03So buying or selling your home is a big deal in case you were wondering, and you want an expert in your corner fighting for you to find the best deal for the right price. The Ramsey Trusted Program is the only way to find a top agent that you can trust who will help make your home a blessing and not a burden. It's easy. Just compare agent profiles, interview them and choose the right one to work with. Find a local Ramsey Trusted Real Estate Pro for free at ramseysolutions.com slash agent or click the link in the description if you are listening on YouTube or podcast. All righty then. Jake is in Boston, Massachusetts again.

1:47:40What's going on, Jake? Jake, are you there? We lost him. All right. So close. We can go to someone else. We can go to Tom in Hartford, Connecticut. Tom, are you there? Hey, how are you? Doing good. How can we help today? Good, good. So just for context, I'm not sure how much you guys know. A little bit while back, about four months ago, I decided to exit my previous business. That year we did about$500 ,000 in total revenue. The reason why I left was just a partnership dynamic, primarily for autonomy, control, independence, and really just alignment issues. Looking back, I'm about four months into my new endeavor, and I'm in a cleaning space now, like house cleaning, and I'm feeling a good amount of regret.

1:48:26And kind of, did I make the right choice? Did I not make the right choice? And kind of just unsure about things. looking back at my previous business, and they're on track to do really, really well this year. I'm still going to get some guidance and your guys' thoughts. I mean, can you go back? Is it something that you could go back to if you wanted to, or are we just crying over spilled milk? Yes. Yeah, I mean, it might be considered crying over spilled milk. I think that's one of the things that I'm trying to understand. But the biggest thing is I could go back because they're my current – One of them was just like really one of my best friends.

1:49:02And then my other business partner was my cousin too. So, and it was just like one of those kind of like missionary businesses, you know, that like I just love to my core. And I think with the contrast of my current business, I'm just kind of seeing things, you know, hindsight now. Why did you, what, what you explained a little bit about why you left, but what was really the straw that broke the camel's back? Give us a clear example of what was happening. Yeah, absolutely. So, I mean, there's seasons in the business where you're going, once you're going to, at least from my perspective, with the new season of the business, you start to pick up new responsibilities and kind of transition into new roles.

1:49:37And so as we started to transition into new roles, I looked at where I was heading and then where my other business partners were heading. And they were taking on more ownership responsibilities, and I was taking on more employee responsibilities. responsibilities. And so in the long scheme, in the long scheme of things, I was like, in my mind at that time, like when we had that conversation, I was like, oh, heard, I'm just going to be an employee for the rest of the time here. Like, that's not what I want. And so, you know, looking, looking back on things now, that was the primary reason why I left.

1:50:04And of course, there's like a whole bunch of other details. Do you feel like you got too hotheaded about it? Like, were you too emotional about it? Is that what's causing you? No, I made that decision. Yeah. Like we, but like eight months before that, I started to kind of have the thoughts of understanding that leaving could be a possibility just kind of based on the trajectory of things. And I started to be at acceptance with that. And when it became crystal clear that most likely my future responsibilities in the business would have just been an employee, it was very clear to me. And I was like, okay, yeah.

1:50:35I felt very neutral, very calm about it. If you go back tomorrow, you're not going to become an owner all of a sudden. Exactly, exactly. So I guess it's more so – So are you going back for money at that point of just like it's more sustainable and I enjoy the work? Yeah, because I think the mistake that I made, and I think David Ramsey was just thinking about it a lot in my mind, was I kind of left without a financial plan. I left without – I'm very lucky. I'm in a spot where I don't have any debt. I don't have any – I have a good amount of savings. I'm getting an exit paycheck from the business for the equity that I did own.

1:51:11How much? So I'm not in a bad spot. So you'll go back with no equity because you already got it. Yeah, yeah. How much was the equity? Equity was 50%. So you got 250 ,000? 250 ,000? No, no, no, no. So how we based it, the exit was, the whole exit could be around 50 ,000, like payout-wise. And then I have savings, too. I currently have. And so I just want to make sure I have this straight in my mind. So the reason you would go back is you missed the work. that's and it would be the employee stuff that you did not want to do before you would now you've decided the thing I did not want to do before I actually now miss it those exact tasks and I would like to go back and do those exact tasks you know I think it's I think I made a mistake right and I think in when I first made the decision I wanted ownership responsibilities but now looking at it in hindsight like I understand how hard it is to make it in business right like before I had another person to rely on and another person to cope with.

1:52:10And it was, it was so much different, you know? And so you're willing to just go back as an employee, not as an owner. You don't want to buy in anymore. You just want to be an employee. No, I think I, I would want to go back as an owner. So it's like, it is different. Hey, why wouldn't you just start your own business in that same area? Like you've done it before. Why wouldn't, why wouldn't you do it again? Because what kind of business is this? It was a sports videography business. Okay. So if If you started your own business today, what would you do? Left to your own devices. So I would buy a camera and then I would start filming free social media content for a sports team.

1:52:45No, I'm saying you'd want to go into sports videography. If you could choose any job in the world today or any business. Sorry, I did start another business after that. I started a house clean business. Yeah, but you don't like that. So I'm saying what do you actually want to do versus, well, you're like going back to your ex because it's comfortable. And I'm like, well, the same reasons you left your ex are the same reasons it's not going to work. You're going to go back. You're going to become resentful as you see them grow the business while your income doesn't grow along with it, while you're dealing with employees, which is not your passion, according to what you told us earlier.

1:53:15So I'm just worried we're going to make the same mistake twice. Was it a friendly exit or was it drama filled? Yeah, we're totally good. Yeah, we're good. Obviously, it's like serious conversations, but no, we're totally good. How old are you? I'm 25. Okay. And I just want to play this out. So it sounds, I feel like you're telling me kind of two stories and I just, it might just be because we're talking and it's just a short period of time. But on the one hand, it kind of sounds like I made a rash decision. I made a bad choice and I want to go back on it, which we've all made mistakes. We've said things we, you know, we've all done that.

1:53:54So I can understand that. But then another side of you makes it seem like, no, I really put thought into this. This was a long time coming and I finally just pulled the trigger. So tell me which one is it? Was it something that you really spent a lot of time thinking about and you finally pulled the trigger? Or was it something that you feel like you had a rash of emotion and you kind of spoke too soon and now you regret it? Which one is it? Yeah. So, I mean, I don't think it's like a – I think it's a mixture of things. I don't know if that answers it correctly. It doesn't. And that's what I want to get to.

1:54:25I think you have to – Got it. Got it. I don't think you have clarity. And I don't think you can do anything until you have clarity. I think right now, and this is, again, Tom, we've only chatted a few minutes, but it sounds like you went away from this job in whatever capacity. You started your own thing, and it looks like you're looking back like a pillar of salt, and you're seeing things over there popping off and doing really great, and you're feeling remorse because your current thing has not grown to scale yet. And that's okay. What I don't want you to go is look back at the thing that you said, nah, that's not for me.

1:54:59and just because it's doing well and doing amazing, suddenly you're questioning. Let me tell you a story. I played college volleyball and I played for two years and it was a toxic situation for me and it was time for me to stop playing. And so the next year when I was invited back to the team, I said, no, thank you. I'm not gonna come back. That year they won championships and did really amazing. The two years I played, we had two losing seasons. For a moment, I was like, dang it. Like, this is a regret. I made a bad choice, but I made the choice I needed to make for me because I was pursuing music and it was the right choice for me, even though they were doing amazing, even though, do you see what I'm saying?

1:55:39Just because somebody else is doing great doesn't mean you did the wrong choice. And I just think you need to, I'm not saying we're the same, but I am saying there's. No, I get it. Do you know what I mean? Yeah, absolutely. I don't think you have clarity either way. I just think that you're seeing fruit in each place and you're like, dang it, I want to. We can help with the clarity part, Tom. If you hang on the line, we'll send you the Get Clear Career Assessment, and that will really show you where your talent is, where your passion is, where the mission that you want to see impact in. All that's going to help you get clarity, and it may be, man, I really just want to be the boss.

1:56:15That's really the heart of it, no matter what the thing is, or it might be sports. And now you can go work for someone else doing something, making more with a bigger ceiling. I just don't want you to jump back to the old comfortable thing just because you thought the grass was greener on the other side. Yeah. This is tough. This is tough.

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1:57:52Our Ramsey Show scripture and quote of the day, Proverbs 1815 says, The heart of discerning acquires knowledge, for the ears of the wise seek it out. Thomas Sowell said, You don't have to listen to anybody. You can learn everything from your own personal experience. Of course, you will be at least 50 years old by that time. By the time you know what you need to know at 25. Ooh, that's deep, Thomas. Okay, so it was a negative cell. It's a negative cell. It was the tone of, yeah, sure, you don't have to listen to anybody. You could learn on your own in 50 years, or you could get wisdom from other people and learn it half the time.

1:58:28Yeah. Learn at 25. That's good. Thomas, I think you could have said that in a cleaner way. Well, you know, it's old-timey. It's old-timey. They've got to make things more complex. I know, I had to really turn my brain on for that. Go to Mark Twain if you want simple, if you want brevity. That's true. Jake is in Boston, Massachusetts. Jake, you're back. How can we help? I am back. Sorry about that. That's all right. I found you guys recently on social media, so figured I would reach out. I guess let me give you some background information before I ask the question. I might be helpful. Sure. So I got$170K in debt.

1:59:01$150K of that is student loans. $20K of it is for my truck. I got$150K saved right now just literally sitting in a bank account doing nothing. And I guess my overarching question is, should I pay off my loans, call it in one check or over the next few months or so, or over the course of a few years, make the minimum payment and really don't even worry about it? Really just looking for some guidance at the minimum, you know? I missed what you said you have saved. How much did you say you have saved? 150. Cool. Okay. So the whole amount of the student loans? No, I mean, a little bit less. You tell me what you think the benefit would be to kind of peddling this out and just making minimum payments.

1:59:55Tell me what you think the good part of that is. That way it will help me craft my answer for you. Sure. I think mainly just being able to keep building the nest egg eventually, you know, buy a home hopefully soon. And look, I know it's bad to let debt pile up, but, you know, I'm 25. I feel like I'm doing all right. The career is on a good track. What do you do? I work in sales for, you know, in the fintech space. Oh, nice. So how much are you making a year now? I made$220 last year. I should land around like$250 this year if I have all my quotas and everything. Way to go. So let's just play out the scenario where you have$150 saved, you knock out your student loans, and you got the truck left.

2:00:44You knock that out in maybe two, three months. Is that realistic? Exactly. Yeah, yeah. That could be a realistic thing. Now look where you are. You freed up all of those payments, which if you added up all of the payments for the student loans and the truck, where are we at per month? um close to like two grand call it okay so now we freed up two grand on top of our amazing income and we have no debt now we can stack up savings real quick for an emergency fund and then be investing 15 of our income yeah which is pretty wild when i look at that so if you're talking about wealth building a nest egg your best path is to get out of debt as fast as you can to free up your income, which is your greatest wealth building tool, to then invest from 25 to 65.

2:01:2840 years of compound growth, making what you're making, even a 15 % put away, you're going to be a multi, multi, multi, multi-millionaire. You do nothing else. I just did some fun math because I love to see the number. I mean, you're 25 today. If we did this till 59 and a half, which is when you're likely going to want to get at some of that money. I'm assuming you have zero in investments now, but I have a feeling that's not true. uh but if you just started putting 15 away uh that's 15 million dollars at age 60 30 million at 66 or 67 yeah that's really good that's what happens when you have the full power of your your income and that's assuming i mean that's assuming you'll never get a raise that's assuming you're not you know what i'm saying ever investing above 15 which i'm sure that you will So all of that to say that I think this is a pretty – And then the other side of this is we don't know what life is going to throw at you.

2:02:23You're going to get married. You're going to have a kid. Will there be a job loss, a health scare? And so you're sort of assuming that, yeah, I can float these payments just fine. I make great money. You're very successful, especially at your age. And so, yeah, you could out-earn your stupidity for a while and just hang on to debt, get more debt if you want, get a bigger truck, nicer car. That's the American way. and we're telling you to swim upstream, do the weird thing, which is take that giant chunk of money and pay off the debt and then free up that income for the rest of your life. I think for me it's like, you know, I've saved this over the course of, you know, three, four years and then I would have zero one day, you know, when you wake up.

2:03:00So that's kind of where I... Well, you have zero now. Let's do real math. On a balance sheet, if you're running a business, you would find that you are in the hole. Yeah, you're$20 ,000 in the hole right now. You don't have$150 ,000. Yeah, right. It's assets minus liabilities. What you own minus what you owe, that's your net worth. And I want to see your net worth as the scoreboard and not what's in a savings account while the interest piles up. Now, if you want to give the Navient people some new furniture in their office building, let the executive team take a nice vacation, you can be a part of that if you want to support it.

2:03:30I'd rather see you build wealth instead, though. I think you'll do the right thing with that, Jake. The hard part with money is when you decide I'm going to start doing the math, then you've got to start doing the math for better or for worse. Not to say that money is just math. There's more to it. There's the behavior. There's the numbers and there's the emotions of it. And what Jake is getting at is the emotion of it does feel. You're right. And you work too hard to have 150 grand sitting around. Yeah, that's right. And it's going to feel different when you wake up in the morning and that number that you're used to seeing sitting in your ally or sitting in your Fairwinds account is not there.

2:04:03You're going to be like, okay. But you're talking 18 months. He could save that back up if he had no payments in his life as a single 25-year-old. But what it's forcing him to do is feel the weight of his actual debt. As long as that$150 ,000 is sitting in savings, he doesn't really feel the weight of it. But once he transfers that over and actually pays it off, he's going to go, oh, that was a lot of debt. I did need to get rid of that. And I think that that's a very mature thing to do, a very mature thing to do, to let yourself feel it, if you will. All right, George, do you think we can get to Parker?

2:04:37Yeah, let's get to Parker. Let's do it. All right. parker on line three we're up against the clock my guys so let us have it yes sir so me and my wife are now transitioning to single income um she's going to nursing school soon we have about eleven thousand nine hundred dollars in debt um which is just my car and a credit card we paid off her car a credit card and some of my miscellaneous debt prior to going to single income. And we have around$11 ,000 in the saving. Trying to figure out how to navigate that debt sooner than later and before she finishes nursing school. What's stopping you from just knocking it out?

2:05:19I mean, next month you'll have enough saved up that you could knock out the debt and still have a thousand, two thousand bucks left over, right? Yes. So, I mean, the minimum payment on the card, which I owe$1 ,500 on is about$40, but it's at 24 % interest. Why does the minimum payment matter? Well, yeah, correct. I mean, to your point, it's a super high interest rate. You need to knock that thing out, get it out of your life, right? They'd make the minimum payment a dollar if they could, let all the money just pile up in interest. Correct. So I would just go, man, if you want to be free and you want to be able to survive on single income, having less payments in your life is better.

2:06:02Would you agree? Yes, sir. And you can build up that savings how quickly? How much could you put away if you didn't have any of these payments in your life plus the margin you have currently with your income? If we...

2:06:18If we... Probably around like$1 ,500 a month, probably a little bit more. Great. So now doing the math, we're going, okay, We're talking six months, seven months? Mm-hmm. And you're back to where you are, but with no debt? Yes, sir. And if you just keep it that way, you'll be able to survive off this income. What is your income now as a householder? So I make around$60 ,000. I'm in the military, so it's around$60 ,000. Okay, great. So now we can do a budget based on our$60 ,000 with no payments and make the sacrifices needed so that she can go to nursing school and you can cash flow it. That's a really important part of this.

2:06:59It's making sure we're not going further into debt while trying to pay debt off. That's whack-a-mole. Yeah. And the thing I want you to just remember, Parker, is wealthy people ask how much. Poor people ask how much per month. And that goes both ways. So if you're so focused on, oh, the monthly payment's only$40, I can do that. You need to be focused on the entire balance of the debt. That's when, again, you feel the weight of it and you feel the need to pay it off. because you do. All right, George, we had a great time hosting. Thanks for hanging out with us, guys. Remember, there's ultimately only one way to financial peace and that's to walk daily with the Prince of Peace, Christ Jesus.