It’s Time to Go Scorched Earth on Your Debt

28:15So, so, so good. And six grand a month. It's a lot. It's a lot. So just for anybody who's listening for the first time, whenever we have people ask about their home situation, you don't want it to be any more than 25 % of your take-home pay. And that's not just with mortgages, that's rent as well. And the purpose of that is to make sure that you've got your income at your disposal to do the things that we teach, regardless of your baby step, whether it's to be able to do all of it, to be able to save 15 % in baby step four, five, and six, you can't exceed that or else you'll wonder, how is everybody saving 15 %?

28:53It's because our mortgages and our rent is 25 % or less. Yes. Yep. Which allows, again, so much of your income to be able to do so many things, whether it is paying off debt, like where she is in baby step two, or beyond that, what you're saying with investing and even kids college, putting extra towards the house, all of it. Yes, yes. But yeah, what I appreciate about her, though, is she, she's not like a typical, we see some people get out and they out of law school out of, you know, doing all the residency with in the medical field, and they make$320 ,000 their first job. And that's a that's a great income.

29:29It is. And you want to feel it. You want to go enjoy it. And you want, you know, upgrade the car, get a nicer spot. Like you just want to all these things you want to be in it. And so her though, I could hear it in her voice where she was like, no, I am, I'm cutting, I'm getting out of this because it's crazy to think if she does this in three, four years, which is totally doable. Absolutely. At that point, she'll be making 400 ,000, you know, with nothing, with no debt. Yeah. It's amazing. That's so true. You know, and she did this with COVID. She kind of went back and revenge spend, which was a real thing.

30:03But it's true when you make an income like that or really anything, if you've worked hard to get what you have, you almost feel like it's a reward to be able to enjoy it. And it is, but if you've made mistakes, you've got to go back and pick them up and clean up the mistakes. And that's just part of it. And so I'm really proud of you, Elizabeth, for doing that. Call us back when you're debt-free. Matter of fact, come see us in Nashville and do your debt-free screen live.

30:51you know one of the first things i discovered working in the financial world is how absolutely devastating it is when the breadwinner of a family dies and there's too little life insurance or none at all. Grieving families are suddenly left behind scrambling to pay bills and trying to make ends meet. I also discovered that there are a lot of ripoffs in the life insurance world like that whole life crap posing as an investment opportunity. What you need is level term life insurance, usually 10 to 12 times your income, which is the smartest, most affordable way to protect your family. The key is finding an independent broker who represents a ton of companies and works for you, not for the insurance company.

31:33This is exactly what my friend Jeff Zander and his team at Zander Insurance are all about. They shop the term life companies to find you the best options, and they've been around for over 95 years. So you know they'll be there when you need them. Zander is the real deal, and that's why they've handled all my personal insurance for over 25 years. I trust them and you can too. Visit zander.com for instant online quotes or for a more personal touch. Give them a call at 800-356-4282.

32:22All right. Thanks for hanging with us. We're going right back to the phone lines where we have Amanda, who's in Santa Fe, New Mexico. Hey, Amanda. Hi, thanks so much for taking my call. I hope you guys are good. Absolutely. How can we help today? Hi, so I need more of a, I guess, relationship advice. I want to see how I can maybe get my husband to be as intense as I want to be on step number two, or maybe how I can be less intense and can balance out. He said I'm a little bit obsessing over money right now. Okay, so he's viewing you as obsessive. You're viewing him as a little bit passive. Tell me some of the things that you want to do that he doesn't agree with.

33:10So we have some crypto that I would love to take out so we can get through a step two faster. And I know he was not totally on board. So I made like different plans as to how it would look like or how long it would take to pay off our debt. If we took out the crypto, if we, you know, sold my car and I would get a cheaper car or we didn't do either so we could compare the length at which it would take to get to step two. And then he's supportive of going to step two, but he was just like, you're obsessing too much over this. He's not feeling the pain as much as you are. Yeah, he's like, we're going to get through it.

33:59You just need to calm down. You're spending a little bit too much time on it. You should focus on our family and our marriage instead of looking at this. Wow. Okay, let me go on that side. Does your marriage need attention? Is there other things that need more attention right now? I would say maybe. We just had a baby. We have a four-year-old and a six-month-old right now. So I would say maybe we could, we try to do date nights and stuff, you know, at home and we go out for dinners. Okay. Maybe like once a month or something. Okay. So. I guess I can see why we could spend more time. Maybe I would start by, I'm going a different direction.

34:44I don't usually go this. So maybe you could start by getting a picture from him of what that looks like in his mind. what does it mean for you if I thought about what you said what does it mean for you um in your mind what does it look like for me to spend more energy on our marriage what does it look like for you um for me spending more time on our family because I'd like to meet you where you're at and then I'm hoping that we can meet each other where we're at and so if you start by I don't know what that is for him yeah because I'm not saying this is you Amanda by any means but we do have some people that are so hardcore that every conversation is around getting out of debt.

35:23Every purchase is looked at to like the nth degree when the spouse walks in the door and it's like, look, I saw this. You know, and it's just like it becomes so obsessive to the point that there's nothing else in life but this. And listen, we're all about intensity, right? Like we want you, but also you're a whole person. And so you are in a marriage. You are a mom. You have these other roles that you can't neglect. So on the extreme side, Amanda, how, where would you be with how I just described? Are you that person? Or are you like, no, I'm not that person. He just is way too passive. And I'm not that crazy.

35:56What would you say where you are? Well, you know, I would admit I'm not like crazy obsessive, but I do want to get through the debt payoff. And yeah, maybe you could be a little bit more, I guess because I I'm the one that handles the finances I would like for him to be on board and not be the one that's like oh we can't, no we shouldn't be spending on that. Yes, you don't want to be the mom of him and giving permission of what he can and can't do and what we can and can't do as a family we as two adults need to decide that so there's a core issue there it's a big issue. Yes, like he's not in there with you.

36:34I like that, I think if I were in your shoes my next step would be set up a date, like a date night. And the first date would be for you to learn more about what we talked about before. What does it look like in your mind for me to do these things? And then I'd set up another date and I would say, here's what I know you didn't ask, but here's a few things that I would like to see going forward. And I think if I do some of the things on your list and you do some of the things on my list, that's us meeting in the middle. And to do all of that around a date night, I think is a great way to be intentional.

37:09I'll just be honest. I, for one, like the fact that you're running different scenarios of, if we did this, here's how quickly. And if we did this, in that way, there's options. And I think maybe presenting it to him that way and saying, hey, what I don't want to do is make the decisions for our family. What I don't want to do is be the one saying you can or can't do this. So what I thought would work would be me bringing options so that you can decide and that we can decide together and both feel good about it as opposed to me saying, no, we're selling the crypto and no, you're selling your car, that sort of thing.

37:45So it just really feels like hearing the heart around the situation for both of you would be helpful. Yeah, and I do wonder, Amanda, if you guys are just missing a point of connection and it sounds like so simple, but honestly, I could see being in your shoes and feeling like I feel so isolated over here. I feel so much responsibility. I have a new baby. I have a toddler. This is up to me to make all these decisions about the household finances. I feel like I'm on my own. I don't feel connected to my husband. Like if I had a husband who was paired with me, excited with me, asked questions, was involved, had thoughts, maybe different opinions than me because that's gonna happen.

38:21But at least there's a connection point and I feel a level of connection where his level of connection, Amanda, to maybe be something totally different, right? And so figure out what that is for him, like what Jade's saying. So I think there's like kind of this missing element of, you know, you could be functioning more like roommates and you're the CFO and, you know what I mean, doing this role all on your own versus it being a marriage. And we're in this together. And what we both need may look different, but let's say that out loud so that we at least hear each other. And that's the part of marriage is that, you know, You're not going to be the hero to your spouse's story by any stretch of the imagination, but you can at least choose to step into those things.

39:02Absolutely. And I do wonder if that would help you because he does need to be part of these decisions with money. It does not need to be on your shoulders, Amanda, at all. Yeah. Okay. And you're probably, yeah, and I'm sorry, I'm going to keep talking. Because I bet you feel the stress, though, because you're seeing the numbers day in and day out, and he's not. That's right. So he doesn't feel it as much as you. And I'm like, oh, we have this much left for our grocery budget. And he'll be like, okay. You know, he's supportive of that, but I'm the one that has to, like, remind, like, hey, we have this much in our account.

39:34We don't want to use our savings. Yeah, you're wanting to get – you just want help, and you want 50-50 on this. And I don't think that's too much to ask. I truly don't. I don't think you're wrong. I don't think you're wrong at all. I don't think he's wrong for saying what his needs are. I think you guys just need to really talk about it and don't leave anything out. Just be honest and see where that leads. Do you think you could be honest with him? And if so, what do you think his response would be? Do you think there'd be any change? Yeah, I think I could be honest with him. The thing is that we used to do finances together, but I told him I didn't think I could trust him with the finances because I feel like it would be unnecessary expenses.

40:23So then that's why I felt like I had to take over the finances. Because he spends too much on unnecessary things? Is that what you said? Yeah, maybe. So you wouldn't trust his methods? Maybe not, yeah. Okay. I guess, yeah. It's a philosophy. I have it in my mind that I wanted a specific way with the finances, but I feel like it's just sticking to the budget and not purchasing what's not necessary. It sounds like you both have two different philosophies. It sounds like for you, getting out of debt's really, really important or finding this financial security, whatever that means for you, is really, really important and you're willing to really sacrifice to get it.

41:06And it sounds like for him, debt is not as big of an issue. Therefore, why be intense about solving it? You are definitely correct, yes. Okay. So that's a whole different conversation, I think, because if he doesn't mind debt, then you pushing to go harder, he's like, why, why, why? Right? It's just like a moot point for him. So the conversation needs to be, here's the way I'm feeling. Here's what this debt is making me feel. Here's my philosophy on debt. Where can we meet in the middle? Where can we align on this? Because the baby steps, they're not there to be the stumbling block for a marriage.

41:45They're there to be unified. To be unified. And if it's causing so much friction, then you have to take steps back and go back to the almost the precipice of where you guys went awry and spend a lot more time having those conversations getting aligned before you start any actions on the baby steps.

42:13tax season is coming up fast which means a lot of you are paying more attention to your money and maybe realizing the holiday damage so if you're trying to clean up the budget and start the year strong cutting your phone bill is an easy win with boost mobile keep the phone you love and pay just$25 a month for unlimited data, talk, and text forever. No contracts, no traps, just predictable savings that help you stay in control. Switch now at boostmobile.com slash Ramsey. Restrictions apply. See website for details.

42:55Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm Jade. This is Rachel. We're headed back to the phone lines where we have Matt, who's in Orlando, Florida. Hi, Matt. How are you? I'm good. And you guys, it's very, very nice to talk to you. you guys finally great how can we help today um so basically i have racked up around 26 000 in consumer loans and unfortunately i have a immigration situation with a lawyer and everything so i had to put a lot of money so a lot of like loans towards the credit card and i just want to know uh what should it be the best if i go for a debt relief program or i pay car uh the highest first?

43:41What do you recommend that I should do on this situation? Well, I wouldn't go to debt relief simply because they're going to take all of your payments and pool it. And then in the time that you're not paying it, they're going to use that as leverage to strike a deal for you. And you really don't need them to do that. That's going to tank your credit. If you wanted to do that on your own, you could really do that on your own. So I would not get involved with the debt relief program. um the 26 000 that you mentioned is that everything that's including the immigration lawyer fees and everything or is there more to speak of no it's everything okay and how much are you earning right now um around 55 60 000 okay good is it just you or do you have a family are you married i'm married okay uh go ahead rachel well i was gonna ask how many credit cards does this consist of?

44:36The$26 ,000? It's six credit cards. Six credit cards. Do you know the balance on each of them? The American Express around$10 ,000. The other credit cards around$2 ,000,$3 ,000. Okay, perfect. Okay, so what we would tell you is to list out the debts smallest to largest and actually regardless of the interest rate and pay minimum payments on everything, stay current, but attack that smallest one first. And so what I would do, Matt, is if you guys can up your income, I mean, even if you can get, gosh, if you could find 500 bucks of margin, $1 ,000 of margin a month, and then maybe work extra, and you get another$1 ,000, some of these two,$3 ,000, you could be paying off every month, do you know what I mean, as you go down the line.

45:25And that's what's powerful about it is you start actually knocking some of this stuff out. And And then those payments that you were paying on those roll over to the next step, right? So the$300,$400 a month you're paying for minimal, now that's paid off. So that's an extra, you know, could be$2 ,400 going to the next one, right? So you kind of keep that snowball effect going. But that's going to be the fastest way, the most efficient way for you to tackle these. So no, I would not pay a debt consolidation company. I wouldn't go to a debt relief company. I wouldn't try to combine the debts into one thing and take out a HELOC or whatever, right?

45:59people maneuver their debt around so much. The best thing for you guys is to take these six credit cards and you and your wife sit down and say, how fast can we pay these off ASAP? And it's$26 ,000. So you can do this. I mean, I really do. I mean, if you can get$2 ,000 a month, you know what I mean? You got to pay it off in a year. Yeah, I just have a feeling that every month that I pay, I usually pay a little bit more than the minimum. So every time I pay$200, and it comes back interest$200. So I'm like, I'm just paying the interest basically. Yeah. Right. And I'm moving a step forward, but not exactly.

46:39I hear you. And it's going to feel like that on all of the debts that you're paying the minimum on. The one that's going to feel that you're making progress on is the smallest debt. So just know that until it's, everybody's going to have to be on hold at the minimum until it's their turn to be the smallest debt. because in that smallest debt, you're paying it off lickety split. So just for real numbers, after you pay the minimums on everything and your household is taken care of, how much extra money do you have every single month to put towards these debts, to put towards the smallest debt? I would say$500,$600.

47:13Okay. I could put more, but then I leave money out of my pocket in case of an emergency or something. Okay, so what we need to make sure is that you have$1 ,000 saved as an emergency fund. so that you don't have to be worried about that month in and month out. If you have$1 ,000 saved, that's what we would call baby step one. And that way that's there. You don't have to think about, you know, what if I have a flat tire? You know, there's money there. And then secondary on your every dollar budget, which by the way, if you don't have an every dollar budget, Christian will pick up after this call and make sure we set you up with it.

47:46I want to make sure you have a cushion item, a cushion line item, meaning that you're budgeting a certain amount of money every single month just as a something could happen. I don't know what, but maybe it's$50. Maybe it's a hundred dollars that you just keep in your account just in case, you know, maybe a subscription slides through that you forgot about so that you just feel good about the money that you budgeted for debt actually going towards the debt. Yeah. Matt, do you have a thousand dollars saved right now? No, not really. Okay. So yeah. So that would be the first goal is to work towards that.

48:21So it may take you two months to do that. But in all of this, we want it to be really aggressive. So almost say, could I do this in a month and a half? Could I do this in one month? Like, what do I have to do to get this thousand dollars as quickly as possible? And again, it's probably going to mean working overtime, getting a side hustle, but this is all on Matt for nine months. You know what I mean? Like we're not, you're not going to be doing this forever and ever. And you're right. These credit cards, because I mean, are these interest rates in the 20 % or higher even some of them? Yeah. Yeah.

48:49So they're terrible. It's horrible. So the faster you get out, the better off you're going to be. Where some people can hold on to a student loan because it's not high interest, you know, and they don't really feel it. You feel credit cards. Credit card debt you feel. So getting out as fast as possible, Matt, is going to be your goal. But I see a way out for you guys. I mean, I really do. And even if your wife can take a part-time job and her, you know, even bring in an extra$500 a month or something. Absolutely. That stuff helps. That stuff changes the game. So let's take a moment. I feel like this is the second or third call.

49:21And I want to just kind of go back to basics on debt payoff. So first things first, you got to have baby step one, like you got to have the thousand dollars. I have tried it without it back in the day, and it didn't work. Because to his point, Mark, to Matt's point, you're worried about, well, if I put all my money on the debt, what if something happens? That's what baby step one is there for. So guys, you have to have baby step one in place. Next thing is the cushion. You got to have, you know, a cushion is not an emergency fund. It is not a slush fund. It is strictly there in case something that you forgot about comes out.

50:00And a way to think about it is what's the worst that could come out? I don't know if you still have Amazon Prime. What is that like 120 bucks? Right. And that hits or a Dropbox subscription or something hits once a year. So think about like, yeah, maybe it's 150 bucks. If you're getting out of debt, and especially if you have, you know, when I say lower income, if you're kind of in the average income, you're making 60, 70, yeah, 150 bucks extra. That's a great place to start for a cushion. Now, if you're making a little bit more, you might need a little bit larger of a cushion because there might be larger things that come out.

50:30So you need the cushion. And the next thing is just understanding that when we talk about the debt snowball method, I've been noticing this, Rachel. When we say smallest to largest, it's by balance. It is not by payment due. Okay. I've been noticing people are doing it by payment and I'm like, no, no, no, no balance. So the full amount that you owe, that's how you're listing them. You got to pay the minimums because I've also, and I've done this. You think, oh, I don't have to pay the minimums. I just want all the money going at the smallest debt. No, no, no, please pay the minimums. It is, it is thankless.

51:03I will just go ahead and say you, it doesn't feel good, but please do that because it's going to keep those debt collectors off and it is going to help keep the interest at bay. Okay. So please do it. And it's going to give you more motivation to go quickly through the debt snowball. All the smallest money goes to the debt. So that's just a little refresher for you, for you to get yourself right. If you haven't been doing it right up until this point.

51:43Well, Dave, you know, on the show all the time we get calls about cars, used cars. What's one thing you want folks to know? Well, really a couple things. Number one is always buy used unless you've got a million dollars. We don't buy new cars. And if you're going to buy used, number two, you want it to last. And that means regular, proper maintenance. Yeah, that's a big deal. I know when Sam and I moved from South Florida up to Tennessee, that's the first thing you're looking for. You need somebody who can take care of your car. So when we found Christian Brothers Automotive, it was a no-brainer, and they've been absolutely great.

52:12We're excited to recognize Christian Brothers as the official auto repair partner of The Ramsey Show. Christian Brothers keeps things simple, honest, and transparent. Every repair is backed by their nationwide nice difference warranty. Three years or 36 ,000 miles, whichever helps you more. Listen, Dave, I'm first to admit, I'm not into cars like you are. But the thing about Christian Brothers is I feel just as confident going in there. They're not trying to upsell me. I feel 100 % confident that I'm going to get the service that I need. Hey, if you want your car to last and stay on track with the Baby Steps, trust Christian Brothers.

52:45Go to CBAC.com slash Ramsey to find your local shop, schedule service, and get an exclusive Ramsey discount, 10 % off your visit, up to$250. Yeah, that's CBAC.com slash Ramsey. See store for details.

53:12All right, back to the phone lines we go where we have Anna, who's in Greenville, South Carolina. Hi, Anna. How are you? Hi.

53:23So I'm calling today because I just need some advice on what to do with the money that I just got from the sale of my home. So I'm a single mom of three. got divorced a couple years ago, but the house just, it was a nightmare, but it just sold in September. And so after I got the money off of it, I ended up making a little over a hundred thousand off of it. Oh, great. I took, uh, the first thing I did is I went and paid off all my credit card debt. Cause I had a lot of debt from the divorce process. Um, so I have no credit card debt at all. Um, no, the only, only two things I still have, um, on my credit one is our student loans.

54:07I'm about 45 ,000 in student loan debt. Um, but I am a teacher in a title in school. So I am on the public service loan forgiveness program, which I know y 'all speak about still trying to pay that off. Um, cause you know, those can be complicated, but I have talked with someone and I'm on the right path. I've been paying on it for five years. And then the other thing, I owe about $8 ,000 on my vehicle, but I have tax money coming in that should be more than enough to pay that off. So right now I'm renting because that was the only option I had until the house sold that I could afford. And, you know, it is easier.

54:50However, I would really like to be able to buy a home to where I feel like I'm investing in my future for me and the kids instead of renting. I kind of feel like I throw a little bit of money away. I know that that's not fully the case because I'm not having to worry about fixing things, but I'm pretty handy. I can fix most things myself. So I guess my question is, I don't think I'm quite ready because I'm not sure where I want to buy a home at the moment, but based on interest rates in today's economy, for me to have a home big enough for me and the kids, I would have to put$100 ,000 down on something just to get the payments to where I can afford them.

55:26Right. So, Anna, out of the$100 ,000 that you got, you said you paid off all your credit card debt. How much of that is left? Oh, it was like, I ended up with like$112 ,000. So I took that$12 ,000. I still have$100 ,000. Oh, wow. Okay, perfect. Okay. All right. That's great. So, you know, what we would suggest, yeah, I think you probably know our answer to a degree of what we would do with this hundred grand. If it were me, I would pay off the student loans in the car today. And then I would look to say, okay, I have, you know, you'll have around 40 ish, 48 ,000 left. And I would take that, I would put it in a high yield savings account.

56:08And I would just be making it a goal to be building that up because part of that 45 ,000 that's going to be left. Is that right? No, no, no. I'm sorry. The$45 ,000 was your student loans. Yeah, yeah. Well, I guess it'd be around$45 ,000 or so that you'll have left. Once you pay the car off. Yep. Part of that's going to be earmarked for an emergency fund. And then start saving on top of that, though. And it may take you another probably two years, Anna, of renting to be throwing some money at this to be able to get to a spot where you're going to be able to buy the home that you want and to have, you know, we always say to have at least a 5 % down payment.

56:48What percentage, when you say I would need at least$100 ,000, is that to get your payment to 25 % of your take home pay? Yes. Okay. Yep. Because a four bedroom home in my area, you're not going to find one under $300 ,000. And for me to be able to afford the payments per month, I need it to be at at least 200 ,000. Yep. So, so a couple of things in this number one, you know, you know, it may not be a four bedroom home, you know, two of the kids may share a room, I shared a room growing up and a bathroom. You know, you may decide, hey, I'm gonna value home ownership more than just the comfort of what you know, my kids, space wise, right?

57:30Some people make that decision. Some people don't. Some people say, no, we're going to save an extra year to make sure we get really what we want. But there can be decisions you make along the way. I just don't want you to ever feel locked in that I have to get this type of house in this specific area. This has to be it, right? I would broaden the horizons just to see if you're wanting to get into the house faster or maybe you have the patience to save another year or two. Yeah, I 100%, Rachel, agree with your plan. And I wouldn't change it at all. And I would make it my goal. If possible, you know, the best way to do this is on a 15 year.

58:06So I'd make that my goal, too, if it's not already your goal. But the biggest thing that's going to give you peace is having this debt gone and having that three to six months of expenses really between you and life, especially with three kids is such a it's just a breath of fresh air to have that. So I like the goal. I like that you have one hundred thousand cash, but that's exactly what I do with it. OK, yeah, I have the money and an MMA. account that's gaining like 3.5 % interest. I really don't know much about the high yield savings. Is that what the hundred thousand is in? Yes. Okay. Okay.

58:44Yeah. So same thing. It's in a money market account right now? Yes. Okay. Yeah. That's fine. Yeah. Yeah. Money market and high yield are pretty much the same. Yeah. So that's, but that's where, where I would keep, I wouldn't invest it because I think, you know, you're going to use this money probably in the next three to four years. And if it's anything longer than five, you could think about, you know, a brokerage account or an index fund or something that would probably make some more. But if you're going to be using it in the next three years, I would just keep it in that high yield and just keep saving on top of that.

59:15I would too, especially knowing that really a portion of that is technically your three to six months after you've paid off this debt. Having it liquid is a good place to have that as well. Yeah. Thanks for the question. Good question. All right. Let's go to Brayden in Philadelphia. Brayden, how can we help today? Brayden, are you there? Hey, what's up? I'm sorry. No worries. Hey, how's it going? Hey, how are you? How can we help? So I'm calling today because I've been doing the baby steps, but I've been doing, I guess, Ramsey-ish would be the word. And it's kind of not working out so much. I'm kind of like still paycheck to paycheck and I've been budgeting.

59:56So I just had a couple questions about some debt that my wife and I are in. And again, I guess my income up, because there's a couple options. I have a two-year degree from Penn College, and pretty much I could go back for four years and I could do an additional two years and have a bachelor's degree in engineering. I'm not sure how much that would help. But I don't want to take out student loans on that either. So you're facing an income problem and you're thinking changing careers is the situation, is the move? Yeah, I mean, it would be more so the same field, but a different job. It'd be more engineering than like technician work.

1:00:39Okay. Do you know what it would cost you to go back to school and how much more would you earn by doing that? It's hard to say. I think each semester is around 12 to 15, and it'd be another four semesters. I'm not sure how much more I'd earn, really. Depends on the kind of living in an area. I'm a little bit outside of Philadelphia, so I don't know what kind of work would be around here for that much. So I think that's where you've got to start. Anybody who's looking to switch career fields, and especially if you're looking to pay for school in order to do it, you've got to do that initial research to find out, number one, if I go back to school, what's the earning potential there?

1:01:23Do I have a potential to earn just$10 ,000 or$12 ,000 more, or can I double my income? And then from there, it's like, okay, if I feel like the jump in income could be worth going back to school, now I have to go back and say, okay, how much does it cost? And where can I go that's the least expensive route, how long would it take me to save? And then you're able to weigh out those really important factors. So I think you have a little bit of research to do there. I'm guessing that you're feeling this because you guys are in debt. Am I right? Yeah, yeah, we got a kid now, we got another one on the way.

1:01:58We're both super happy about what it's kind of... Yeah, how much debt do you guys have? I think quick math around 37 I think. Okay. Is that cars, credit cards? We have a car on there a few credit cards of personal loan. Okay. And that's actually not including her house. Okay. Yeah, Brayden. Yeah, I hear you. We're about to go to a break. But I would say to you, I would encourage you and your wife, sit down tonight and just say if we went scorched earth and did this Ramsey thing the real way, what would this look like to get us out of this mess? Because it's just kind of floating around. And then I would make sure too, before you're even talking about school, you need a hard fact that you need a degree in order to get these other jobs, which you may, but I would want to know black and white, like, yes, you absolutely have to have this four-year degree in order to have this job.

1:02:47And this job, you're going to make$40 ,000 more. That's when you know it's a green light.

1:03:00Thank you.

1:03:31Most people just drift through life with their money. fees like other banks. Plus, it comes with the Ramsey Be Weird debit card, which says debt is normal. Be weird right on the front of it. It keeps you connected to your budget. And every time you use it, it's a reminder. You control your money, not the other way around. Fairwinds Credit Union is for people who are serious about taking control of their money. So if you're ready to stop drifting and start building wealth on purpose, open your smart bundle today at fairwinds.org slash Ramsey. That's fairwinds.org slash Ramsey, insured by the NCUA.

1:04:24so if you've kicked debt to the curve you deserve to celebrate on the live like no one else cruise hang out with dave and the ramsey personalities on march 14th through the 21st 2027 in the Bahamas, Jamaica, Grand Cayman, and Cozumel. Cabins are limited. Save up to$300 off when you book by February 7th. Click the link in the show notes or go to RamseySolutions.com slash events to book your cabin today. All right, that's exciting. I can't wait for that. We've got... So fun. Yeah, I know. We've got Taylor, who's in Fort Worth, Texas. Hi, Taylor. Hi, I'm so excited to talk to y 'all. Thank y 'all for answering my question.

1:05:01For sure. How can we help? Okay, so I need y 'all to help me solve a disagreement between me and my husband about how much to spend to upgrade my car. Yes, we love a marriage disagreement. Give it to us. Y 'all are perfect to help me with this. We can do this. Okay, so a little bit of background. We are on, I think, baby step four. We don't have any debt. We're 28 years old, no kids. And we don't have any debt other than our mortgage. We have a small mortgage. And we recently inherited$100 ,000 from my grandpa. And so of that, we're trying to figure out how much we want to spend to upgrade my car.

1:05:45And it's definitely a want, not a need. So I'll preface with that. But my husband wants to spend, if anything, around$25 ,000. And I would like to spend up to$50 ,000. Nice. That's a big difference. What kind of car are you looking at, Taylor? Well, that's the hard part. We really can't look at cars because we're at such a difference on price that it makes it hard. What we've kind of decided on is potentially maybe a Volkswagen Atlas. But of course, the year really depends on how much we're going to spend. Yes, for sure. For sure. And of course, I think he's being frugal and he thinks I'm, you know, kind of spending too much.

1:06:26And so we're just kind of at a disagreement and at odds. Totally. Okay. If this, if the upgrade of the car, is it, um, let me ask this, the current car you have, are you like, yeah, I'm going to have to upgrade at some point, probably in the next year or two. Or is it like you both have fine cars, but you're like, Hey, we've got a hundred grand and I enjoy a nice car. Which one is it? Well, he drives a very nice truck. Um, so I'll say that we don't own it. Um, it is a business truck. So, you know, it's not something that we own. I drive a Mazda CX-3 2017. It has about 100 ,000 miles on it. So it could definitely go for the next probably three more years.

1:07:06What would go? So OK, so whether you spend 25 or 50, what's the plan with the other money? Like, does it keep you from doing something else? Not necessarily. We don't have kids and we probably plan to in the next couple of years. And so I think my husband is just like, we could spend on the house to pay it off or on other investments. In the next two years, we're going to have probably a lot more expenses than we do currently. And he just feels like seeing it grow. And I mean, he just sees that big number and is like, wow, we can do so much with that, which I totally understand. What's left on the mortgage, by the way?

1:07:41Around$200K. Okay. And how much do you guys make a year? $200K. Oh, wow. Okay, so. You make$200K. Yeah. Yeah. Yeah. So you probably know our parameters on this. Have you heard of it? Yes. So nothing more than 50 percent. Yeah. So we always say that things with motors really the whole family combined shouldn't be any more than 50 percent of your take home pay. Taylor's at 25. Yeah, he's at 25. And I mean, you could you could go up to 100. No. I was going to say, no, she's at 25, wanting 50 ,000. Right. My math's right. If you make 200 ,000. yeah a year yeah and she wants to spend 50 000 uh-huh that's 25 percent yeah of the ticket so she's way way she's way below yeah like even with his he's at 12 percent yeah yeah that's what i'm saying you've got you guys have a hundred dollar hundred thousand dollar window to fill and so in cars in cars and so you yeah okay so here would be the deal i would say in order to feel good about you spending 50 let's say he loses his job and he needs to go buy something could he buy something for 40 to 50 that he would feel good about?

1:08:53Well, he works for his family's business. Yes. Well, no, I'm hypothetically though, because if he could, then together you guys are under the 50 % rule. If you have a$50 ,000 car and he has a$50 ,000 car, you're at$100 ,000 of cars making $200 ,000. Does that make sense? So like you're good. And you're saying as long as he'd have the ability to do what you're asking to do. Yes. Yeah. Yeah. Yeah. To stay within those parameters, then yeah because again god forbid he loses a job you know and needs a car and he'd need a car could he do it within the parameters of the 50 percent total household of vehicles and he could you know he could buy a truck into account the inheritance at all or do you just kind of ignore that and think about how you got it yeah no i kind of ignore it that's just a cherry on top the fact that you didn't have to save up for it unless unless something in the inheritance says that they want this to go for your future kids college tuition or something you know what I mean and you're going against and you're like oh gosh that feels weird to do that yeah um I mean Taylor I'm saying yes I'm on your team Taylor Taylor he's gonna love this you know what maybe say 45 to give them like a little bit a little bit of a buffer 48 yes but hey but seriously though research the cars because what you want and the year you may find like oh my gosh I can totally get that for 43 and i and i'm great with it you know what i mean so the research is going to help too i think bring some of this just the idea because like just and i understand like golly swan the pill of 50 000 to a car well is it used or is it brand new used okay we would buy used okay just double checking that yeah yeah i i am a green light i think you called the right day taylor if You got George Camel.

1:10:37I don't know what George would say. I think he'd say yes. But would he say yes? I say yes. So the key is now you have to get your husband to listen to this episode. I know. Yes. And you got him. Because I called in and y 'all agreed. And you're married to him, though. So there's, you know, you committed your life to him. So there may be a little give and take, but we would say yes. Oh, wow. Congratulations on the new car. Thanks. Oh, man. I love a call like that. Those are my favorite calls when we get to get in the middle and decide. And when we get to tell them, when we get to say yes to people, because I feel like so many of the calls, it's like, dude, you got to sell the car.

1:11:12You can't go on that vacation. No, you're broke. You don't have money. You can't do that. That's I feel like that's a lot. It's not fun. So when we get to say yes, because it's response, it's fine. Well, and I think it's a good it's a good reminder because a lot of people forget that we want you to be able to live like no one else. Obviously, we're telling people all the time, hey, cut back, pull back, get a beater. and it's really great to understand that these moments happen too every day. Yes. Whether even if it's not an inheritance, maybe you've just worked really hard and now you have the money.

1:11:43You have the big bonus or something. Yeah, it's fun to be able to do this. And just the reminder, I think it's good to go back and remind folks who might be listening for the first time, you know, we're sticklers about this obviously because cars go down in value. I mean, you said it, you know, you drive a car off the lot, it could drop 30 % so, so quickly. In just a year or two. Yeah, it's crazy. Especially like with EVs now, they're very, like it's huge. And so the parameters are there really just to make sure too much of your world is not going down in value. That's so, so important. And so yeah, 50 % is the rule.

1:12:14And then I asked her earlier about if she was buying a brand new vehicle, because we even have a parameter there that really you should have a net worth of a million bucks before you purchase something outright. Because again, brand new vehicles drop in value so quickly. and I've heard Dave say, you really want the feeling that if I took that amount, that value that it was going to drop and I just put it in the street and burned it, I would feel nothing, right? You don't want to be attached to it in that way. And so that's kind of, they're parameters, they're guidelines and they're there for you guys.

1:12:45Yeah, just to help you. And whenever you get a big sum of money too, we didn't really touch on this earlier, but really we always say there's three things you can do with money. You can give it, you can save it, you can spend it. And I think doing all three in a situation like this, I think is important. So, you know, if we were still chatting with her, I probably would tell her, hey, take some of this, give a little bit of it. That's true. Yes. Put some in savings for the future. Spend some on you. Like, you know, there's a there's a three prong to this money stuff. And some seasons you're going to be saving more, you know, for something, for a down payment for a house or whatever it may look like.

1:13:16You know, some seasons you're going to have tons of generosity flow through you and you're able to do a lot, which is amazing. And then some seasons you're going to be able to enjoy your money. So it doesn't have to be like a equal split between the three every single time, but just be aware that that's how money flows. And it should be flowing at some level of all three of those buckets. Yeah, that's what you're looking for. I love it. Congratulations on the new car. I hope that your husband gives you zero problems because we agree with you wholeheartedly.

1:14:01Thank you.

1:14:28Today's question of the day is brought to you by Y-Refi. Defaulted private student loans don't fix themselves, but they can be fixed. Y-Refi helps you by refinancing defaulted private student loans into a low fixed rate payment that fits your budget. So you can clean up the mess and move forward with a plan. Visit Y-Refi.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. may not be available in all states. Today's question comes from Jenna in Michigan. She said, your podcast inspired my husband and I to start the baby steps and we've made so much progress. I'm expecting our first baby and we'll be having a baby shower soon.

1:15:08As a new mom, I feel pressure to get the nicest, which means most expensive items. So my baby can have the best things with all the talk about how there are so many items you need. What advice would you give a new mom wanting to be smart financially, but feels the pressure of needing to get the new things her friends say are important? Oh, that's a great question. Well, you asked two moms, so we can attest to this. Yeah, I mean, I do feel like people go crazy on the first baby. You're about to have a shower, so I'd say register to your heart's desire. Put stuff on the registry, see what you get.

1:15:43And then I know the money coming out of our pocket, where we spent the most, And we did. We invested in a good stroller and a good car seat because those things lasted through three kids. And if you know baby stuff, toddler stuff, I mean, stuff gets beat up constantly. Oh, yeah. So we did. We bought the nice. I mean, we did. It was a very, very, very nice stroller car seat set. But everything else we went cheap on to the high chair, the crib, like all of that stuff like did not. It was the thing like what's going to get the most wear and tear that I would want to keep for the next kids. Right.

1:16:20So it's like kind of that's how we made that decision. Yeah. So I think it's the two things. I think it's being practical and buying the most expensive items sometimes is worth it because it is the nicest and it's going to last you. And then but then the other side of that prong is the is the keeping up side of feeling like you have to keep up. And let me tell you, you're going to buy something and then six months later, they're going to come out with a better thing of that. I mean, it just keeps going and going and going and all the crap that is out there. It is like I swear it's like the wedding industry.

1:16:51I mean, it's like billions of dollars. So much, so much. So I would not. Yeah, I would not feel the pressure. It's easier said than done. I mean, just saying this over a microphone doesn't help you. But I do want to really like once you get past it all, you're not you don't even remember. Like you don't even think of like, oh my gosh, should I get the best bottles or pacifier or whatever? You know what I mean? I will say our stroller, I wish I had made a different choice to this day. Did you? Did you buy a nice one, but you didn't like it or what? It was. And it was the one everybody recommended.

1:17:21And I honestly didn't do a ton of my own research. I just went with what was recommended and I hated the stroller. But I'm with you, Rachel. Sam and I picked like four or five things that were really important. And they obviously happen to be the most expensive ones. But when we put them on our register, our registry, we kind of had the idea that, you know, most people probably aren't going to get you a$500 gift. Right. So we kind of knew we'll probably be on the hook for that. Or maybe we could use our gift cards towards those things. But we kind of knew, like, we'll get the expensive stuff likely and everybody else will get all the other dads.

1:17:56But the best thing I bought, and I want to hear what you think of this, the sock, the Owlette sock that goes on their foot. Oh, I don't know. It measures their breathing so you don't have to worry about, is my baby okay? That's the main thing that I would get up in the night to just be like, I just need to make sure that they're fine. But it measures. It's a little thing that goes around their foot and it grows with them in infancy. And it measures their O2 and it goes off if for some reason they've rolled over and they can't breathe. Yes. Oh my gosh. Best purchase ever. Yeah, peace of mind. I don't even know if they have.

1:18:33I'm trying to think. I don't even know if I knew that. yeah if we had that yeah maybe back in your day I know oh it's so funny yeah but there's so much so much crap I feel like that they just yeah it's so marketed to so just make decision and they don't go to consignments for clothing that's what I did too I found a few places in Nashville that did consignment that's where I bought so many of the kids babies the baby is none the wiser make the things that make your life easier that's what I'd say amen hallelujah all righty Craig who's in Salt Lake City, Utah is on the line. Hey, Craig, how can we help today?

1:19:08Well, I've got a business, a construction business, and over the last couple of years, I've had a couple of jobs that have went a little south on me, and I've taken out a business loan from my bank, and I've also got a cash flow to ride the incoming, outgoing, and my overhead during between payments. Well, over the last couple of years, I've managed to get myself about$240 ,000 in debt, and my payments on the cash flow in the business are about$4 ,600 a month. And we took out an equity loan on the house to pay down some of it. But right now I'm sitting at about, with all my bills, everything, I'm about$9 ,800 a month to just cover my overhead.

1:20:02And we owe just under$300 on our house. It appraises for just under$600. And I'm wondering if it would be a good idea to sell the house and pay off this debt or whether I should just keep trying to pay it and make heads away. or I'm worried that if I sell the house, now I've got to buy another one and I'm not going to get my payment. It's only$1 ,800 a month. Well, how much was the home equity loan? Like how much is that going to cut into the$600 that it's worth? Well, it was$109 for the home equity loan is what we got. And you still owe$300? Is that correct? Yes. So it's about$400 ,000 in debt.

1:20:45So you'll net out around$200 ,000. Yes. okay so walk us through the plan is the plan to take the because if the plan is to take whatever equity maybe you walk away with 170 after all of this i don't know uh what's the plan with that 170 is it to clear business debt is it to roll it into a less expensive house what are you thinking well i my my lease payment on my shop space is about 2400 a month and so i would take this if we sold the house i take this and clear the business debt but i still have to have shop space because i have a bunch of equipment that i need to have running to stay in business um can you clarify for me when you said earlier that you had 240 000 in the business is that including the 109 of the HELOC or is that in addition to?

1:21:44No, that includes that. Okay, so it's 240 total or is it 349 total? Yes. No, 249 total with the house loan and the cash flow and my business loan. So you would take the 170 and you would throw it towards all of the cash flow loan?

1:22:12Yes. We're able to keep up with the payments. I mean, it's tough, but just those two, the business loan and the cash flow is about$4 ,400 a month. My business, I mean, I'm able to generate that, but I've had to let a lot of the employees go because I had to increase my overhead. Yeah. And so now I'm doing everything myself. Is the business, do you see it having an upward trajectory or is it flatlining? Is it going down? Where do you project revenues to be in the next 12 months? Well, I stay pretty busy. I average, I don't know, I would probably average in the next year maybe$200 ,000 in volume.

1:23:03so it almost feels like you grew too big too fast like you created a world that you can't sustain so yes you selling your house is making a huge i mean you've already taken out a home equity loan if you sell your house and then turn around and take the equity and run it back into this business and it's still not even fully clearing the debt i'm afraid of that because it's only going to clear out some of the cash flow loan. You're, you still have this business loan over here that has, how much will be left? Well, we, we figure after the sale of the house, I would have, um, probably about 40 ,000 in the business loan.

1:23:44And that would be the only, the only law, you know, the, yeah. So unless I would sit down with your wife and unless y 'all had an aggressive growth plan to get a house again in the next five years. But man, yeah. I'm not sure. I'm not sure about this business. I might sit down with, I might sit down with somebody who could give you some input on how the health of the business and maybe get connected to our Entree Leadership Coaching and see what they tell you about this business because I'm not convinced you need to keep it.

1:24:30Welcome back to the Ramsey Show in the Fairwinds Credit Union Studio. I'm Jade. Next to me is Rachel Cruz. We've got Lauren, who's on the line from Tampa, Florida. Hi, Lauren. How can we help today? Hi there. So my husband and I are expecting our first baby come spring, and we're trying to decide whether I will keep working full-time, move to part-time in a different role, or step away from the workplace totally. So we're just like wanting some help, weighing the risk versus reward of one, leaving the workforce, and like what to do to reduce the hours for a season, kind of just all that that comes with it.

1:25:07Totally. Well, congratulations. So exciting. What would be the main motivation for you to change? Is it anything money-related, financial related? Is it just your longing of, you know, wanting to be a working mom or not be a working mom? Like what's pulling you the most? I think the main thing is leaving my leaving a baby with daycare for five days a week seems really, really hard. My husband isn't he's he works in law enforcement. So he's on 12 hour shifts, right? And he might be moving back to night shift come, you know, springtime when the baby's due. And so that's also kind of a factor Or like, could I be solo parenting for days at a time while he's working night shifts and then sleeping during the day?

1:25:50And then I'm having to do overnights and daycare and all that on my own. That's a lot. Where are you guys at financially? Could you live off? Yeah, we have no debt. Just our mortgage. We could live off of one income. Right now we invest pretty aggressively. so a little bit more than like two grand a month into like retirement and um like a like a brokerage so is that 15 or is that more or less or do you know what percentage that is uh it's more than 15 of our take home okay what do y 'all bring home a month uh per month we bring home about a little bit more than 9 000 between the two of us oh yeah that is more okay um and what would it be if you stopped well that's that's a good question so i'm currently full-time engineer and so i haven't had the conversation yet with my employer of what part-time would look like um i know i could not say in my current department so i'd have to either switch departments within the company and take a pay cut to go part-time or just leave the company all together and find a different part-time role what does your husband make what what's what's his income of this 9 000 um well he makes about 96 a year and i make 94 a year so okay about half split yeah so could y 'all live off of 4 500 a month comfortably like mortgage and food and you know you guys are in a good spot yeah mortgage and food but we would have to really decrease our investing sure yeah well you're in the good news is you're in a really great spot to just choose it's not you're not your back is not against the wall.

1:27:27There's nothing that's demanding attention financially. You're doing very, very well. And the biggest red flag is usually, can we afford the mortgage like this? And I'm just curious, if you went down to 4 ,500, I know you'd be working part-time, but just curious, what is your mortgage every single month? It's about 1 ,800. 1 ,800. Yeah. I think that with you even bringing in a little bit, you'd be okay. Do you want to work, Lauren, or do you want to be home? I think ideally I would like to work part time just to be able to contribute financially to the to the family, but then also like have time at home with with littles because for sure.

1:28:05They're only little ones. Yeah, for sure. Well, here's the great thing that I I feel like I've learned in this of having three kids and and working is different seasons are going to bring different things and it's OK for you to make a different decision. So I feel like sometimes women feel like I have to make this call and it's going to be my life forever. And that's not the case. That doesn't have to be. You know, you could you could choose. Hey, I just want to be home full time. That's great. And then you may get in six months. And I had a friend just like this and she's like, I'm going crazy.

1:28:36Like, I want to babysit her so that I can go and like do something and just to like and to use my talent. She's really talented. And she missed that part of her. You know, she really did feel like there was something God has given her. and that part she didn't have. And so she's like, I kind of wanted to do both. And so she figured out a way to do both. But she changed her mind, right? Or some people say, I'm going to go back to work and they get in. That happens a lot here at Ramsey with some girls, you know, they have a baby. And especially your first, you don't understand how it feels. And you think I'm going to come back and then you get back in the swing.

1:29:07Yeah. And you're back in and you're six months in, nine months in. You're like, I hate this. I want to be home. Guess what? You can quit and do that. You know, so like, just know because of this financial situation you guys are in, which is such a blessing, what a gift, is that you can make a different decision. So, you know, if you're a knee jerk right now is, hey, I think I do want to work part time. Yeah, start talking to your employer about that and start making plans around that. And then learn, give yourself permission that if you're in the six months and your husband's working night shift and, you know, life is just hard and exhausting and you're like, man, I just want to be home and do the home thing.

1:29:41You can make that decision, you know, it's not an all or nothing. Yeah. Yeah. Now what about like leaving the workforce? Like I guess one of my fears is leaving the workforce as a woman for a period of time and then not either making as much as I make now or like, I guess never, I guess never being as professionally leveled as I am now. Like if I am to leave and then come back. Yeah. I could be, I could be wrong on this. So Jade, if you have a different opinion, I think that is something that to a degree we've kind of like created this fear in our heads to feel like we can't have an off ramp. So we have to go, go, go, go, go.

1:30:15But I've, I know many women who have off ramped a career for four to five years and get back in when the kids are in school. And it takes a little bit to get back in, but like they do it and they, and they've thrown, they've been fine. Now that may not be the case, every single position or every single company. But for me, that, that fear of it not being an absolute, there's not like a lot, you know what mean, it's more an idea that that can happen. That would not be my motivator because it's not a hard fact. It's a fear that's not always realistic. Yeah. And I think it depends on what field you're in.

1:30:50It could be something that if you're keeping up, like if you're just keeping up, whether it be certifications or you're just keeping up with new improvements, you know, how that particular field is shifting, just being in the know could help. And there's a big part of this where there's also the assumption that, okay, let's pretend you're a stay at home mom for 10 years, right? And you're thinking, oh my gosh, after 10 years, will I really be able to get my old job, right? Be in my old field. Who's to say you would even want to do that type of work? So even you changing as a person to saying, hey, I may want to go back to work, but not necessarily what you were doing before.

1:31:27So also giving yourself the ability to evolve in the career space and maybe have a completely different act and do something totally different. And what the world's going to look like too in eight years, you know, is wild. Yeah. So to your point, the fear part there, it could really be unfounded because careers could change. You could change. Yeah. Yes. It's a lot to think of. This is a huge choice. And hopefully that Rachel and I just gave you a couple of thoughts just to push you in a direction. But it really is a big choice. Yeah. And you're never in a corner though, right? It is a big choice, but we have multiple choices you get to choose from, you know, any given month.

1:32:07It's your life. You know, you get to make that call. And none of them are for life. You always get to go back. It really is. It's so seasonal. I mean, I know I pulled back some after I had Charles because I had three kids under five and I was like, I can't do the travel I'm doing. And I did pull back and I did. I watched people have books come out that hit higher than mine. My podcast, I saw other people's shows do better. And you do, you kind of sit on the sideline for a season. And now that they're all fully back in school, I'm like, oh my gosh, I like have the ability to do more. And it's great.

1:32:42You know what I mean? And I'm not saying my situation's exactly going to mirror every single person, but that is what so many working moms I talked to when I was just in Lauren's position before my first. That's what they always said. It's so seasonal. And it is. After being through a couple of these seasons with kids, it is life is so seasonal as a mom. So give yourself permission to be presently where you are. Cause I really do think that's where God and the Holy spirit has you.

1:33:18If you've been working the plan, paying off debt, saving and changing your family tree, I'm proud of you. And if you're in Baby Step 4 or beyond, it's time to celebrate. The Live Like No One Else cruise is back March 14 through 21, 2027. Join the Ramsey personalities and me as we sail to Half Moon Cay, Cozumel, Jamaica, and Grand Cayman on the ultimate debt-free vacation. Cabins will sell out just like last time. Lock in yours with a$600 deposit at RamseySolutions.com slash events.

1:34:07One of the best things to do for your finances is to have a really good tax pro in your corner that you can trust. They'll help you. They'll help advise you on the best moves to make for your situation or for your small business, especially if you've had some big life changes in the past year. Go to RamseySolutions.com slash tax pro to find CPAs and enrolled agents that have been vetted by the Ramsey team. Very, very good. All right. We've got Mark, who's in Indianapolis, Indiana. Hi, Mark. How can we help? Hi, how are you doing? Good. What's up? Hi. So my wife and I bought our first home recently about a week ago.

1:34:46And the thing is that the seller had agreed to fix a few items from the inspection report. And we've taken a look at the fixes, and we've had a few issues going on this week. And we're not really sure if we have any recourse that we could do or anything that we could do after closing on this house now. What are we talking about? Tell me what the items are. so um the sump pump was not operational um what's not the pool what'd you say sump pump oh sump okay i'm sorry go ahead yeah the sump pump was not operational and they were they agreed to replace the sump pump which they did they did replace the sump pump but in doing so they did not connect the the pipe properly and the the day that i went um the day that i went right after closing there was water flowing everywhere oh my gosh the flooring of the basement and then we also have a garage door situation that they put on a new door but they the the um they half-heartedly did it because um there's still the old tracks and the old pieces from the old door so they use some crappy person to you know that did crap work on the repair yeah it's in the contract right for it to be fixed and they didn't fix it and it's not fixed so yes yeah force that absolutely and it's just been a week right mark it's not six months yes it's been a week so that's what we're wondering like i would talk to your realtor and go back yeah and absolutely that they i mean you have and you have evidence did you take pictures yeah i took pictures and i took videos i sent to my realtor but there's just it's just been crickets on that end so from your realtor if there's if someone's scared yeah from from our realtor so i'm not sure if someone's just if they're just busy or they're just scared not wanting to be bothered i don't know what's going on yeah i'm not sure what's going on i'd show up do they have a place that you can show up to show up to their it's about a 30 minute drive though but i i mean we're we're willing i would i'd show up at their realty office and say hey i've been working with bob and i just closed on my house and this is part of my contract and it's not been done and i've been trying to contact bob and he's not answering my texts or my emails or my calls that's what i'd do okay yeah and then i yeah and then we'll be able to recoup anything yeah it's in your contract that that that's that was a uh part of the deal of this being a fair deal and they did not do it and if they don't do it in the next 72 hours and answer you're gonna have to get it fixed and when you get it fixed you're gonna bill it to them along with a letter from your lawyer Yeah, it's in your contract to fix it and they didn't fix it properly.

1:37:50So they have to go back and fix it. So, yeah, no, you definitely have a level of recourse. Now, is there a world that nobody answers your call, Mark, and everyone disappears and you can't find anyone? Is it worth pushing legal action at that point? You'll probably pay more in fees than to fix it, right? So like there's a point. There's a world that, yeah, you end up just having to fix it yourself. but I would go to every single measure possible. Yeah. To get this. Cause that's so, that's so unfair just to do a crappy job on the fix, just to say, to check off, check it off to get the contract through.

1:38:27Terrible. The worst part is having to spend the time and the effort and the brain power on this. Oh, sorry. You're going through that, but thank you for the call. Next up is Katie in Dallas, Texas. Hi, Katie. Hey, thanks for taking my call. I'm 44. My husband's 46. We currently only have$80K left on our mortgage. We have no other debt. We are interested in purchasing a newer home, bigger, more desirable area, which would leave us with a newer mortgage of about$250K after about a$250 ,000 down payment. And I'm just wondering if this is financially smart. I think number-wise, it's doable. However, emotionally, it feels a little bit more challenging to move forward with this.

1:39:14For sure. How much do you guys make a year? Close to$200. Okay. How quickly could you pay the$250 off, do you think, if you guys said, okay, paying off the house is a priority to get this mortgage down? How quickly do you think you guys could do it? Honestly, I don't think it would happen very fast, maybe seven to 10 years. Okay. What do you have? Go ahead. It just feels like we wouldn't be able to, I'm going to say, build wealth as far as contribute more to the 529s, more to the 401ks doing this. What percentage are you doing for, you're doing retirement now? Are you doing 15 %? My husband and I are each both doing 10%.

1:39:58Okay. And how long, what do you have in there? What do you have in retirement so far? About 550. Okay. So that'll double. Yeah. I mean, that will, that'll double every seven years. So you guys, I think we'll be fine at retirement and people that are doing, you know, the baby steps on average, they pay off their home in about nine years. So let's say that's you guys, you know, then you'll be, you know, your husband will be 55. you'll be um 53 with a paid off house um so i think the numbers i don't i don't think it's absolutely terrible but but you know big purchases like this i always want to check my spirit in it and ask like the motivation of it right is it to be closer where you guys want to be is it for the schools for the kids is it it is in a newer newer neighborhood a bigger home you know, kids in the neighborhood that are friends with kids, my kids.

1:40:57Yeah, totally. Yeah. So, I mean, yeah, it doesn't that doesn't absolutely scare me. I just want to make sure you guys as a household can fund 15 % of your income into retirement. And I don't want the kids colleges to go on complete pause because you guys wanted a newer, bigger house, right? So from a legacy perspective, I do think there is some level of saying, hey, we are going to have to contribute and make sure the kids are good with college and do this? Can we do both? Because choosing one or the other feels maybe a little off. And I'd also ask myself the question, because when I look at this, my brain goes immediately to, oh my gosh, you only owe$80 ,000 on your mortgage.

1:41:36Now, I'm just throwing this out there. The question I'd ask myself is, if our house were paid off, would I still be interested in getting at that point maybe a $200 ,000 mortgage on a house? Or would I be like, no way, my house is paid off. I'm good to go. That, that, that'd be the question that I'd spend a lot of time with. And you might be like, yes, Jade, I am ready to go. Yeah. It does seem like we're almost towards the finish line yet. We've been looking at houses for the past decade. Okay. How much is the house, how much is your current house worth? About 280. Okay. And what are you guys looking to upgrade to?

1:42:14the sale price is$4.95 but we put down about 55 percent oh yeah yeah I think you guys are fine Katie I mean as long as you get it's not gonna mess you up yeah as the payment you know no more than 25 percent of your take-home pay so that you guys can invest in retirement kids college all of that so it may be a season of decreasing lifestyle a little bit yeah and and pulling back from yeah I want the household to be investing 15 % and you guys are at 20 right now. So just be thinking about that. So pulling back will help with this and to hopefully maybe get it paid off sooner. But, but yeah, with your ages income, what you're putting down, I mean, they're putting down 55%.

1:42:56Like I think you're doing everything right and above, And in that, in that perspective, the biggest thing is making sure, and I'm assuming that you guys already do have some sort of emergency fund in place, but making sure you have the right amount of emergency fund because now with a bigger house payment that amount needs to go up to match that new lifestyle obviously so just some little things to keep in mind um I love that you mentioned the 529s and making sure that college is still a priority yeah it's very very important but other than that I'm like let's go it's great

1:43:58Welcome to 2026. Last year is officially in the rear view and you're fired up to finally make some changes with your money. New year, new goals. We love it. But let's be honest, old you said the exact same thing last January and the January before that. And before you know it, those money goals fizzle out faster than the fleeting flavor of LaCroix. So here's the truth. New Year motivation only gets you so far. You need an actual plan. And the good news is you don't have to figure it out on your own. Every dollar builds a personalized plan based on your goals and your real life. And it actually coaches you to stick with it.

1:44:32Plus, the EveryDollar app will help you find extra money hiding in your budget. And trust me, there's always something hiding. The average person finds$3 ,015 in the first 15 minutes. That's basically like giving yourself a raise and a much happier new year. So don't let future you down. Make them proud. Go download the EveryDollarBudget app and start for free right now.

1:45:05so just a reminder so much of what we teach here is not just to make your life difficult by saying that you need to cut back on your budget or you need to sell your car the whole purpose of this is so that you can live like no one else so that you can achieve financial peace And of course, that does translate to numbers. The hope is that you'll become a Baby Steps millionaire. And a Baby Steps millionaire is simply someone who has used our teachings, the Baby Steps and all the methods associated with that. And they've achieved a net worth of a million dollars or more, which when you think about a net worth equation, guys, it's what you own minus what you owe equaling a million bucks.

1:45:42And so we actually have someone on the line who has accomplished that and we want to celebrate them. We have Kelly, who's from Oklahoma City, Oklahoma on the line. Hey, Kelly. Hey, how are you doing, Jade? What's going on? A million dollars. Tell us more. Well, yeah, a net worth of 2.4 million. Wow. And I'm 57 years old. My wife is 49. And we inherited zero dollars and zero cents. Amazing. So every bit of it we've done ourselves. incredible what's the 2.4 consists of okay it's uh i got 1 million we got 1 million in retirement that's i rolled over tsp i was uh in the military okay and then her 457 we got roth it's mostly an index funds there's a little mutual funds in there yeah and then non-retirement we got our emergency fund of 30 000 and then we put 260 000 in high paying dividend etfs my wife uh is really into that and it's paying dividends.

1:46:47That's great. And then we've got$890 ,000 in a brokerage account. Wow. And then our home, which we paid cash for in 2015, is worth about$200 ,000 now. That's amazing. Well done, Kelly. That's amazing. So what kind of work do you both do? I mean, you mentioned the TSP and mentioned the military. Tell us about that. Yeah. Well, I'm retired military and my wife is still working. She's a nurse. Okay. So she's been able to work quite a bit. You know, overtime is always there for her. Yeah, that's always one of the top careers we hear from people that achieve a millionaire status is, yep, in the medical field in that way.

1:47:28Okay, so how long have you guys been married? We got married in, let me think here, 2006. Okay, great. Great. So what would you say, maybe not as a married couple, but as, you know, while working, what do you think the worst year financially, how much did you make? And then what was your best year? And same with her, if you know off the top of your head, I'm just curious. Well, when we first got married, she wasn't working because she immigrated here. Okay, yeah. I probably made, probably like, I was making$35 ,000,$40 ,000 a year. Okay. And we were deeply in debt. I was deeply in debt. Take that back.

1:48:16Oh, so you brought most of the debt into the relationship? I brought all the debt. How much? Oh, boy. How much did I have in debt? Back then, it was probably I had student loans, car loans, personal loans. I had it all. Yeah. Yeah, it was probably close to 90 ,000. Wow. So going from a negative net worth, building it up to 2.4 million, what would you say the key? What were a couple of things that you did that you were like, this was this was a game changer for me? I think the game changer was realizing that I had got myself in the mess and it was me that's going to get myself out of the mess. That's so true.

1:49:01Yep. The personal responsibility aspect of it, that you're going to be the thing that changes it. Yes. And then, I mean, obviously, you know, you've got the spouse. That's such an important part, your partner in accomplishing all this. I mean, what would you say to the person? I mean, we get calls all the time who they're trying to decide, should I marry this person? Or maybe they're newlyweds and they're trying to figure it out. What advice do you have for that couple? Oh, for a couple, the one thing is you both have to have the same principles and values, you know, as far as money goes. If someone just doesn't mind being in debt and doesn't plan and doesn't set goals, I think that's a red flag because it's going to be a one-sided marriage.

1:49:45Absolutely. You're going to be carrying the burdens. Yes. Absolutely. Yeah, absolutely. Absolutely. So you never gave us the top number. So the lower number was around 35. What did you guys get up to in order to accomplish this? Probably just just recently, because with our dividends and that's one thing that changed was the Robert Kiyosaki book. When I read that and it said that the wealthy don't work for money, their money works for them. That's what we've been able to do is increase our money, our income by passive income. So now it's about one hundred and fifty thousand. Wow, way to go. Well done.

1:50:20Way to go. But during just your working lifetime, did you guys ever break$100 ,000, would you say? We did towards the end of my military career, but that was only like, you know, within like maybe like two, three years ago. Yeah. Did we break$100 ,000? That's what's impressive. And I think what a lot of people need to hear is that, you know, your income is powerful, right? It helps, but you don't have to be making$300 ,000 a year to become a millionaire. Absolutely. You could be making under six figures, right? Like, just like Kelly, you and your wife did, but it's the diligence. I mean, the amount you guys have in investments, whether it's ETFs or, you know, your, you know, your retirement, you have almost a million in retirement, all of that, like that stuff adds up and it's just the consistency and the diligence of what you guys did.

1:51:11Again, you guys weren't making 300 grand, right? You barely even hit six figures, but that's only in the last few years. That's not what created it. It was the consistency of the investing and you guys being wise and paying off your home and all of it. So absolutely. Well done. So, so well done. And just curious, what role did the budget play for you? Like, were you budgeters or how did you do this? Well, the budget is we tracked every expense. I mean, we really were diligent. We really were intentional. intentional and i've known a lot of people like you said they make a lot of money but they're broke yeah yeah so you know basically we made sure that after excuse me we paid ourselves first like they always say we put money into our investments first and then what was left that's what we used to pay our living expenses so if we had to cut back on certain things we did yeah you know but We were buying our freedom is what we were doing.

1:52:09I love that. Well, well done. Well done, Kelly. And to your wife as well. What's her name? Her name is EG. EG. Well done, Kelly and EG. You guys are an inspiration. And what I really, truly love about your story is that so many people think if you walk the baby steps, you're going to be an old man by the time you're a millionaire. And I just love that you guys are young. I mean, you've got your whole life in front of you. and what's, you know, you just, you've got, like you said, you bought your freedom and you've got your time back. So well, well done. Thank you so much for calling in and encouraging everybody.

1:52:43So, so good. You bet. You bet. Well done, Kelly. Well done. I love a call like that, Rachel, because it just, it's so inspiring for people to actually see what's possible if you walk in. Well, and especially him, right? He's 57. So we'll make up an age of when he started all this. I He's$37 ,000,$90 ,000 in consumer debt. And it just shows that you can still make the change, right? Wherever you are, you can still make the change. And he went from nothing and negative. Yes. Deeply in debt, you know, nothing. No one gave him a hand out, as I said, like no inheritance. But it is. It's the consistency of what you're doing day in and day out.

1:53:22And, you know, we're not as blunt to say, like, you know, you have to do retirement first before lifestyle necessarily. we are big on like, you know, you want to, you want to give, save and spend. And so, but that idea that my future is worth it, that I'm going to, I'm going to make that the priority, not the lifestyle today. That's a, that's a different mindset than most people. Most people, they want to feel good today. Right. And I, and I get that. Right. But at, at, at what expense? Yeah. And what it is, is not sacrificing what you want most for what you want now in the moment. And I love that.

1:53:56You know, I think the number one advice that I give to people is, guys, the time is going to pass anyway. If you're 30, one of these days you're going to be 50. And if you're 40, one of these days you're going to be 60. And what you do with that 10, 15, 20 years, it matters. And usually, here's the thing. It really is just like a two or three year window that if you can just pour on the gasoline and do what you need to do for a very short period of time, it affects that entire 10, 15 year, 20 year window substantially. So please, please, please let Kelly and I believe her name was EG. Yeah, I like that.

1:54:29Let that be your inspiration. If you've been on the fence, come on, get started today.

1:54:56Hey 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.

1:55:46All right, our Ramsey scripture and quote of the day. Proverbs 12.11 says,

1:56:05So good. All right. Adam is in Detroit, Michigan. Adam, how can we help today? Hi. So I am in an interesting situation. I have a job offer which would move me out of state into Indiana. where we are looking to sell our house and use the money from our house to pay the debts and then live with my in-laws for a couple months. And I just kind of wanted to get your opinion and some non-biased thoughts on if this is a good idea or what should I be thinking about financially. The first question was, if you use the money to pay off the debt, why wouldn't you just rent an apartment or rent a house? Why would you have to live with the in-laws?

1:56:51um they they're they have a very big house it would save us additional money where we could basically put my entire check to the side where we wouldn't be you know spending just to spend you know that's why i don't want to get into renting again i think how much debt do you guys have at them uh including my student loans about 40 000 okay and um how much would this um if you did was it you were selling correct and how much would you get from that uh i would say after uh the sale of the house and realtor fees and all that probably about 90k okay okay so you clear the debt and you're left with 50 that's your emergency fund and the how much do you guys make a year i'm sorry how much do you make a year i make 100 000 why don't you all just pay off the $40 ,000 and stay in your home?

1:57:48Well, the job moves me. Oh, that's right. You said that. Oh, I'm sorry. You're moving. I'm so sorry. Yeah, yeah, yeah. I got you. Okay, so once you take the job, you'll be making$100 ,000. You'll have no debt plus$50 ,000, part of which would be your emergency fund. How old are you guys? We're both 29. We turned 30 this year. Do you have kids? We have three kids. Oh, man. I just can't see why you would need to live with family because you'll have no debt. You'll have plenty of savings. Get your own spot. Are you guys familiar with the area? Like, would you want to know when you buy a house, where you want to be?

1:58:25Yeah. So, I mean, I went to college in the area. My wife is from the area originally. Okay. So we're very familiar. We have a lot of family and friends in the area. Okay. Do you... My main thought was to, you know, take a couple months to basically save up for 20 % down on a house that we want. And how, yeah, how many, yeah, how long would you be there, would you say? We said max six months. Okay. And that's why I want to be smart about how much I pay off versus how much I keep to the side. Here's where we always, I feel like, I don't know, especially Jade and I, I feel like we're on the same page with this.

1:59:02While we always kind of caution against the idea of just moving back home or moving in with, you know, the family. because for the most of the time, people just have this vague idea, hey, I'm going to move back home to pay off debt. And then you dig into the numbers and they've been home for six months. Like, well, how much are you saving? Like, well, I, you know, I've actually gone$2 ,000 in credit card debt or whatever. And you're like, how have you gotten in debt when you're living at home and you're saving money? Because they don't really do it, right? They just kind of have this idea of it.

1:59:32it's not driven it's not specific there's not a timeline so the only reason I would be I would somewhat entertain it for you guys in this situation is it's short enough it's six months and to move somewhere and move out and get a six-month lease you know might be somewhat of a headache you know what you're going to be putting away and I would just say if you choose to do this be be diligent about it because I do think living with family over the long term it just can erode the you know what I mean like yeah there's a tension point to it and it's five of y 'all that's a lot yeah yeah so if you guys know for sure there's an end timeline it's no more than six months we're gonna get because we're moving anyways like I don't know yeah I I would be I would be somewhat okay with it Adam but again you guys have to be diligent because some people get in these situations and more than like or more than what we see they just get lazy about it and they don't really put what they think they're going to put away and all of it.

2:00:34So you just have to be diligent. That's my word of caution. Yeah, I think the one thought process we had is my entire check, which is about$6 ,000 a net a month, I would set the entire$6 ,000 off to the side and would just go into a separate account with the$50 ,000 that we have left over. Yeah. And my wife's account would pay for the car payments and the car insurance and all that stuff. Car payments. I thought that you were would be totally debt free. I have two leases. So those those I didn't include those in the 40 ,000. When are those leases up? Her lease is up in May and then mine has another two years on it.

2:01:14Are y 'all going to be paying for it to own the car? Are you guys just done after the lease and have to buy a new car? uh we talked about possibly buying out her lease on her car and then um so those from that mine those actually obviously add to the timeline so i mean i would sit and plan that out because obviously my next question for you before you said the lease was going to be how much do you need to save up for this down payment like what's the exact number and run that back but now Now you have to add in, okay, what is it going to cost to possibly buy out these leases? Or what's it going to cost at the end of the lease to now buy something in cash, right?

2:01:57So those are real numbers in the higher thousands to be aware of. And that could really set this on a longer journey. So if you had to spitball it right now, what would you say the cost car-wise is going to be for you guys?

2:02:16it's a great question i know like our monthly payments right now is about 800 between the two cars between the two okay so your wife's is over in may i mean that's creeping up here in a little bit what do you think you'll do i mean go buy a six thousand dollar car with one of your months paychecks yeah i mean but but that to my point i guess what i'm saying here to my point is that's the sort of thing if you're living with in-laws, it could be really easy to say, oh, well, we'll just end up spending more on a car because you don't have any other, right? There's no parameter to keep you in line.

2:02:51So just be aware of that. If I had to vote for this, and I think Rachel and I are split, if I had to vote for it, I think I'd vote no. I think I'd vote get rent somewhere and decide if you like the area and be on your own with your three kids. But if you didn't do that it wouldn't be the worst thing in the world okay yeah the decision is not going to make or break you it just could create bad habits though um that you don't even realize because the lifestyle creep that could happen again hypothetical but you know you're not paying for the you know it's just it's just that ongoing which you guys know you're adults Adam I mean you guys have done you you've been homeowners you know you know the deal but um it's just that it's just getting lazy on any of the numbers and then actually pushing things that you wouldn't have pushed otherwise like getting a nicer car that you wouldn't have done if you were paying rent paying bill like living in reality it changes the numbers you're going to be living in reality hopefully in six to eight months you know when you when you have a house but making sure always to adam that you guys have that emergency funds and all of it so there's some there's some steps and that may push the timeline so yeah you and your wife um that's the homework is figuring out what these create real numbers.

2:04:04Don't just make it something up in the clouds, say tonight or sit down this weekend and say, okay, lease is coming up in May. What's the plan? What are we going to spend and make a hard concrete number and then decide about your lease and say, are we really going to ride this car payment thing out for two more years? Or, you know, can we buy this thing out, decide and figure out whatever research due diligence you have to do, get that actual number. And then from there, it's then saying, okay, realistically in this area to get the payment underneath 25 % of our take-home pay, what must our down payment be?

2:04:37And you might look at that number and go, oh gosh, in order for us to do that, that could be like 10 months or that could be like 14 months. And then that might cause you to pull back a little bit and decide, do we really want to live with in-laws for over a year? So I can just see this snowballing really quickly. So just be on top of it. Yeah. And the hard thing with lease cars, too, is usually not always, you know, usually can afford a lease payment of a nicer car than if you got a car payment. Right. And so even the type of car you guys, if you don't do the buyout that you're going to get, it may not be as nice as the current car you're driving, too.

2:05:13So just be thinking through kind of the scenario and don't let your lifestyle creep, you know, outweigh smart decisions. So true. Well, thanks for hanging out with us today. And remember, there's ultimately one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Thank you.