Stop Living in Financial Chaos

13:13Dr. John Delony:um my my when i when i'm working like i'm supposed to and not i i've i've it's eight thousand dollars usually i know i've just been struggling to go to work with my depression and everything so i'm trying to get back my hours back up right now so what's your what's your mortgage every month with the HOA it's 3046.

13:40George Kamel:Man so that's eating your lunch right now out of your 8 ,000 take-home pay right we recommend 25 percent so if it was at two grand we'd call this a win and so right now a big part of it is your consumer debt a big part of it is the mortgage and the part that we can control today is getting rid of the consumer debt payments so nothing can you afford the mortgage payment every month you're not on you're not at risk of

14:04Dr. John Delony:being behind right i know i haven't missed a payment and i um i mean by next year i'll have a nine percent raise and then i get five percent every year after that for four years so i feel like i'm gonna keep getting better i just i just want to get rid of something yeah well the house

14:20George Kamel:isn't on fire right now so can we compartmentalize and put this house on the back burner and say we're going to be okay. You didn't lose money. It's like a stock. Until you sell it, you're not going to realize a loss or a gain. And Nashville is a solid market. Let's just hope in the next couple of years, the market bounces back up, you're out of the water, and you've also been adding equity with every payment. Right. So now if we focus all of our energy toward your smallest debt, which one is that? Is that appliances or the phone? It's the phone. Okay. Then we have the IRS debt. I'm going to put an asterisk on that because that one's going and go to the top of the list because they can destroy your life, garnish your wages, all of that.

14:57George Kamel:So let's, you have a payment plan with them? Have you talked to them? I do. I pay$170 a month. Okay. So let's knock that one out first. And then this car loan, what's that, what's the car worth? You owe 33, eight on it.

15:11Dr. John Delony:It's 26. So I was, I just need to pay it down by 8 ,000 to get rid of it. And I, I just didn't know if I should prioritize that or what, what to do first, but I feel like Do you have any savings? No, I have$147 in my checking, but I also – I get paid tomorrow, and so I try to budget all the way down to zero. Okay. How much do you have in this secret account for your mom that she thinks she's paying you rent but not really? She does know I'm doing it for her, but it's$4 ,000 in there.

15:43George Kamel:Okay. Because I'm thinking instead of you trying to pay down the car to get it there, because what's going to happen is the car is going to continue to depreciate. so you might be better off just setting money aside to cover the amount you're underwater on or going to your your local credit union down the road and getting a personal loan for the difference plus enough to get something to get from a to b is this the only car at the house

16:06Dr. John Delony:no my i have another car it's a 2005 scion that my mom drives when i'm gone because we live 35 miles away from the airport.

16:16George Kamel:Oh man, that's a hike. Okay, because I'm trying to think, you obviously need transportation, but getting rid of this car, what's the payment on that? $7.14. Goodness gracious, you could really make a dent in those other debts if you freed up that payment.

16:30Dr. John Delony:I know, that's why I just, I realized that was one of my biggest mistakes.

16:35George Kamel:Yeah, and is that$26 ,000, is that private party value or trade-in?

16:39Dr. John Delony:That's Carvana, but I feel like But Parvana usually gives one of them. Private Party would probably be a little higher, I'm sure.

16:48George Kamel:That's what I'm wondering. If you can get Private Party for$30, you have enough today to clear it with mom's savings. So I would look into what you could get Private Party because, man, you just got a raise and you got some breathing room. You can live to fight another day and start attacking these debts with the debt snowball. But that's the game plan. There's no shortcuts, no more consolidation, no more credit cards. we're just doing nothing but knocking out the next smallest debt. Can you focus on that instead of the whole big picture, the entire mountain? Let's just focus on the next little crest we're trying to hit.

17:22Dr. John Delony:Yes, and I believe that as long as I can get back to working as hard as I was at the beginning of the year that I can create$2 ,500 to$3 ,000 extra margin per month to put towards it. I love that. Brandon, is depression something you've struggled with forever, or is this just a ever heavier shadow that's just forecasting over your life as you've taken on more debt payments, got into more situations, your mom moved in? What's the nature of this? I think I've always – I mean I've definitely always had it. Clinical depression was a diagnosis as a kid. I just think that all of the stuff recently has heightened it.

18:04Dr. John Delony:And I just fell into a deep depression around the same time last year. And then every time I end up being out of work. So I just, I, yeah. And I'm going to the doctor on Monday. Make sure you go to the doctor on Monday. I'm proud of you for that. And hang on the line. We'll hook you up with three months for free with our friends at BetterHelp. You can just do that whenever and wherever, okay? But I want you to talk to somebody. But one of the things I want you to do is exactly what George said, but I want to take it one step further. I want you to not type it. I want you to get a piece of paper, old school style, and write down your debt smallest to largest.

18:40Dr. John Delony:I have it right in front of me. I wrote it down to talk with you guys because I didn't know. I just wanted to pull it out of my head. Dude, and getting this stuff out of your body onto paper and then mapping the plan. All right, this isn't pretend. I think I can get three or four. I'm going to actually write this stuff down and get a map so that at the end of this month, I've paid this off. And at the end of this month, I've paid this off. And over time, the single greatest gift you could give your mom is you being sturdy and well. Okay. And that might mean taking the 4 ,000 bucks that's in this little account over here and clearing your debt so that you can put a thousand dollars a month away of your own money or$1 ,500 or$2 ,000 away, creating your own emergency fund from the floor up.

19:26Dr. John Delony:And you'll have that money back in way, way, way, way more when it's not all flowing out of the house to pay debt payments.

19:32George Kamel:Yeah, here's the math on it, Brandon. You get rid of that car payment like we talked about, and you free up that 700 bucks, you start throwing at the debts, you'll have 48-9 left in debt. And if you chunk 2 ,800 bucks a month at this thing, you're done in 18 months. Imagine who you're going to be 18 months from now, completely debt-free with the financial strength to actually help your mom out. You're a good man.

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21:34George Kamel:Kathy is in Richmond, Virginia, up next. Kathy, welcome to The Ramsey Show. Hello. Hey, how can we help?

21:42Dr. John Delony:I'm 56 years old, and I'm currently separated after my husband left of 24 years. Oh, I'm sorry. He left in January. and I'm looking for some help or advice because I was a stay-at-home mom for four kids and supported my husband and his career. I took care of other family members, my grandparents, my dad, my mom. I have no social security points. I have no job history to speak of. I do have some health issues. And I'm kind of in a limbo right now. He left in January, and there's been no separation agreement or anything done yet. And I felt like he's kind of trying to, for months, he kind of, I felt like he kind of played me that he was going to come back.

22:36Dr. John Delony:And then a couple weeks ago, he told me he wasn't coming back and that he'd been seeing somebody. And that he wanted us to get a separation agreement written up. And the cheapest way for us to do that was to sit down and agree to everything ourselves and just have a lawyer write it up. Hey, Kathy. Yes. I'm not doing – so when somebody leaves another person, whether in a business arrangement or in a marriage, when somebody says this marriage is over, this business is over, we now – partnerships now enter into a business transaction. Correct. And that's what you are in. And I don't do business with dishonest liars.

23:22Right.

23:23Dr. John Delony:And so the most unwise thing you could do is have a man who has no character, who lied to your face over months and years, who then says, I want to sit down at a table with you and we'll come up with an agreement and somebody will stamp it for us because it's going to be cheaper for me. No chance, no way, no how. Wow. Yeah. So you need your own attorney that's fighting for you. Go get an attorney. Well, I went to an attorney. I borrowed$300 from my son to go to an attorney. And I went to him and it was before I found a lot of stuff out. But he sat down and did the basics and didn't look great for me.

24:09But, you know, he said what it was, and I went on about my business.

24:16Dr. John Delony:And recently I got in touch with legal aid here, and they told me they couldn't really help me. Okay. So why did you say it didn't look good for you? um well i'm currently in our home and um we have about four hundred thousand dollars in equity in this home okay out of that 400 in equity um about 225 of it was from my parents home that was sold and put into this house for a down payment because my mom also moved in with us at that time okay so I could help take care of her. She's here. I'm here. He left the home. He's been paying the bills somewhat because obviously maintaining two homes when you haven't been financially honest and whatnot, there's been issues.

25:11Dr. John Delony:And a couple of times there's... But let me interrupt here because we have limited time and I want to make sure I am pretty clear here. part of you metabolizing the divorce is coming to grips with, I'm probably going to have to sell this house. Yeah. Me and my mom are going to have to move possibly to a two-bedroom apartment for a season. Okay. I'm going to demand via my attorney half of the retirement accounts my ex has, any other secret accounts he has. And by the way, you can tell him all of that stuff is in discovery. All the secret accounts, all that stuff gets put out on paper. How long you've been having affairs, with who, all of that stuff gets laid out.

26:00Dr. John Delony:And if he comes back and says, I'll give you a 70%, you can have the house, you can have all this, great. He might give you the house and you still have to sell it because you can't make the mortgage payments. Yeah. Yeah. And, but, but it's, it's recognizing most, most folks, especially once you get blindsided into a divorce, like you're in, they recognize the marriage is over and all the grief and all the heartbreak and all of the relational mess that is, but they want to keep everything else the same. I want to keep in the same house, the same car and the same life and the same cell phone plan and the same every and it's it's it's those who can exhale and say everything is different now that's one that can then look at a clean slate and say okay here's how much money i actually have i'm 56 and i gotta go get a job today and it shouldn't be that way of the problem but that's where i'm at that's part so what are the health issues that are keeping you from working so i have some immune deficiency issues and I get sick very often and I have chronic diarrhea.

27:06Dr. John Delony:There's lots of things. My doctor suggested that I go ahead and try to get on disability. And when I talked with them, with him paying the bills here and even after, once I'm getting alimony, the only thing I'd qualify for is SSI. And they said that I would qualify for the disability part, but not the financial part. So I wouldn't be able to get that. And I tried to work. And I got sick a lot, which poses a problem. You know, obviously, stress doesn't help it. Sure. I'm hoping that, you know, that'll get better. But I'm worried about my health insurance. I'm worried about just surviving. You know, he makes about$115K a year, maybe$120K with his bonuses and raises.

27:53Dr. John Delony:But his 401K, he pretty much wiped out during the pandemic to take care of some other things. And when he lost his job, he started rebuilding it, and it's not much there. I mean, I had no idea how bad we were financially. And that was my stupidity. I take full responsibility for that. I trusted him.

28:16George Kamel:Do you guys have any debt?

28:19Dr. John Delony:We have debt. There's credit cards, some that I didn't know about. There's two parent plus loans. There's a car payment. He actually owes about$6 ,000 on a utility bill that I didn't know about. On your house? At some point on my house. and at one point he had that bill sent somewhere else because it was late and didn't want me to see it, I guess, and forgot about it. And this is a small water company where we live, privately owned for our neighborhood, and so he worked something out with the guy at some point. When I did find out about it, I just lost it. Okay, but hold on. Let's do this, Kathy.

29:07Dr. John Delony:Let's do this.

29:11Dr. John Delony:let's give those type of what happened to a lawyer and let them dig through that stuff because it's distracting you from this one terrifying question what am I going to do now yeah and all I want all of your energy focused on what can you do what are you going to do it might be I have to make some hard phone calls to my kids because I can't work and I it's going to take four months for me to go through the SSI process and like but but it's you saying this stuff all happened he should have been doing this he's been doing this for years yada yada cool attorney go go to war on my behalf and get whatever you can and here I am now what am I going to do now?

29:58Dr. John Delony:Is there an online job I can get just at my house for a year? That's what I'm trying to do. Yeah. Right. So I've networked, I have a huge network and I've reached out to everybody and I'm working on that now. I've been putting applications in for months. Good. Trying to find a work from home job because that I could, I could do some of that, you know? Excellent. Excellent. And I want to, but I'm also, you know, I'm worried about my mom. She lives with me. I can't, you know, I've got to make sure she's okay. And all the kids are out of the house. All the kids are out of the house. Is she eligible for Medicaid?

30:37Dr. John Delony:She is getting her retirement and my dad's benefits from my dad's job. Okay.

30:44George Kamel:Until we know what's next and how this dust settles, it's going to be hard to make a financial plan. So your goal should just be to sock away as much money as possible, get by for now and try to clear the decks and have the best financial outcome for you so that you're not carrying a load. Sit down with a lawyer.

30:59Dr. John Delony:Sit down with a lawyer ASAP and say, it's time to buckle up because we're going to war.

31:24Dr. John Delony:Hey, what's up guys? It's Jade Warshaw.

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32:23Dr. John Delony:$25 forever requires customers to remain active on Boost Mobile Unlimited Plan.

32:41George Kamel:if you're new around here welcome we answer every question through this lens the seven baby steps so if you haven't seen them yet we're going to drop a link to learn about them below in the description of this episode so you can better understand the best plan to get out of debt and build wealth. Thomas is in Boise up next. What's going on, Thomas?

33:02Dr. John Delony:Hello, George and John. It's good to talk to you guys. You too, brother. What's up? I just want to know how I can save money from medical school. I know it's a really big expense, and I really do not want to go into debt to do it.

33:13George Kamel:Love this mentality. How old are you? I'm 18 years old.

33:17Dr. John Delony:18. Nice.

33:18George Kamel:So the good news is med school is a little bit of a ways away. Do you guys have any money saved right now?

33:24Dr. John Delony:Yeah, so I have$20 ,000, but I will not need to use those$20 ,000 to pay for undergrad.

33:33George Kamel:Great. How is undergrad getting paid?

33:36Dr. John Delony:So I have a scholarship that covers about maybe 70 or 80 % of the total tuition, and then my parents have enough money to pay for the rest, well, most of the rest, and then whatever I can work during college will pay for that.

33:50George Kamel:Cash flow. So you'll leave that$20 ,000 alone for now?

33:53Dr. John Delony:Yep. Barring unusual circumstances, that should be able to work. Fantastic. So I think there's a couple of things. By the way, I'm super excited for you to go to med school. I want a world full. Like there's a shortage. I want there to be good primary care doctors out there. Like I'm excited for you to do this. Because it's psychiatry. Oh, nice. Nice. I want to do psychiatry. So I knew you'd like that. There you go. So hear me say everything I'm about to tell you is I want this to be part of your life. You're a young man. you're driven and I love it. And you've got a plan already. I love that.

34:27Dr. John Delony:Here's the things, like a couple of frameworks I want you to wrap your head around. Okay. First is there will be an immense amount of pressure to, um, sold to you that there is only one path. And that is you better be super grateful. Whatever school offers you a thing, you better take it and you have to take it. And if you don't take it, you're a terrible person. You'll never get into med school and it's all over for you. And whatever you get, you just pay that price. And if you don't have that money, then you borrow that money. But that's the path. I want to free you from that. Okay. You're going to feel a ton of pressure that way.

35:03Dr. John Delony:The second pressure, and this is the one that you might not like, is you do not have to go to med school the year after you graduate undergrad. you can graduate undergrad go work for two or three years save a whole bunch of money and then go to med school and yes you will not be however many years old you still got to do your residency you still got to do your psychiatric rotation all that stuff is true but i'm thinking at you at 18 i'm thinking of you as a 33 year old doctor not as a 21 year old med student and when I come into your office bringing one of my kids or I'm struggling or my wife is struggling I want you not owing anybody anything so that you can look at me and be super honest and direct and give me the clearest path you get what I'm saying so I'm thinking of you way further down the road than what what about 21 what about 21 what about 22 what about 22 man if you have to wait until you're 25 to go to med school?

36:10Dr. John Delony:That's awesome. It's great. Yeah, you'd be happy to know that I've already kind of actually like thought through those things. So like, for example, I would love if I could go to University of New Mexico because they're the cheapest medical school in the nation. Great. Great. And New Mexico is a rad state. I spend a lot of time there. I love New Mexico. So it, but again, it's, it's looking at the price, looking at the total picture, seeing what kind of scholarships you can get. All that same stuff is still going to apply. It's going to be different in med school and it's going to be more competitive and yada, yada you know all that stuff but it is saying okay if you if you look at it from i have to go to med school in this year at this time you you put yourself on the only train in town which that is accept whatever offer you get and take out loans up to your eyeballs to pay for it if you unhook yourself from that and say i will buy the alexis which is an amazing car win and only win I have the cash to hand over to buy that Lexus, then, dude, you free yourself from the traditional path, which means you also free yourself from the chaos that millions of borrowers have found themselves in across the country, myself included.

37:18Does that make sense?

37:19Dr. John Delony:I appreciate that. Yeah, I have one follow-up question regarding the money I do have saved. So currently it's in a high-yield savings account, but considering I won't need to access that, most of it, for at least four years, bare, bare minimum, probably five or six, what would be, like, how would you recommend I manage?

37:40George Kamel:Now that's all the money to your name?

37:43Dr. John Delony:Pretty much. I have$2 ,000 in just a general savings account, and then I have about$500 in a checking account that I budget out of.

37:51George Kamel:Okay. Here's what I would do. I would definitely keep liquid money because you're going to need it. I know you may not need it for school, but life's going to happen along the way. So it's good to just keep$20 ,000 in a high-yield savings account. And let's not think about it as an investment. Let's think about it as insurance. This is our never-go-into-debt insurance plan. So here's what you can do. You can set up a different fund, call it the med school fund. That can be high-yield savings. You could even invest it if this is a six - to eight - to ten-year plan. and you can sock away every paycheck, every scholarship, grant, whatever comes your way, you put it in that med school fund and that can grow for you over the next six to 10 years.

38:29George Kamel:And if you do that, you're going to walk out of undergrad with no debt, a big pile of money and ready to face the world. And like John said, you might work a gap year for two years and sock away even more money and get accepted to an in-state public med school or University of New Mexico and know the numbers, know the facts and going clear, I'd go in, oh, I can cash all this.

38:50Dr. John Delony:And Thomas, what George just said is really, really important. Okay. And here's why. I in no way want to cast anything out on you. Okay. I hope it's a smooth ride. But for almost 20 years, my job was sitting with young people who came in and said, my dad's got cancer. My mom just got laid off. My mom and dad are getting divorced. Dad just died. or my transmission just fell out of my car and my dad lost his job. What do I do? And so I want you to, what George just said is right. At 18, you have a plan and you have followed that plan. But as you enter into higher stakes and more responsibility and you're making more decisions and you just get older, the world happens still.

39:34Dr. John Delony:And so having that 20 grand in an account that's going to grow as high as it can, which is much interest as it can, but also you You can get it if you need it. That's really important, okay?

39:46George Kamel:So remember this, the person with the most patience, information, and options always wins. And so that's what we're trying to set you up for. The patience being it doesn't have to happen this year on your timeline. The options being you don't need to just go to the one med school that accepted you. And then the information. What are all of the variables at play so that I know, I know, I know what all the scholarships and grants are, who's charging what for tuition, what kind of aid I can get that's not student loans. All of that is going to put you in the best position, and it's going to feel like you're moving backwards because all of your friends are going to be leapfrogging you.

40:20George Kamel:But what you're doing is you're moving backwards in a slingshot so that when you finally get out of med school, you are going to be catapulted so far ahead of everybody because you don't have debt. And so it's a temporary setback for a long-term win. And that's the goal here. It sounds like that's what you're wanting.

40:38Dr. John Delony:Will you do me one thing, Thomas? I've been listening to you guys for a while, so yeah. Thomas, can you do me one thing? Yes, John, we'll come to you for you. Do you have any friends or family members or neighbors who are psychiatrists? I do not, so I will have to meet some people that are more psychiatric. Well, I think it's instructive. It won't matter. Well, you would need to know this before next year. I'm hearing more and more folks deciding to go the psychiatric nurse practitioner route or going to be a nurse practitioner or going ahead and getting their nursing degree, working for a couple of years, the hospital pays for their master's degree, and then they have saved up enough money to go get their doctorate nurse practitioner.

41:21Dr. John Delony:There's so many paths now that get you very, very close to what you want to do, which is sit with hurting people and be a resource for folks that may not take 14 years of your life, may not take 10 years of your life and may get you out into the field earning money faster while also doing the thing you really love to do. Does that make sense? Now I've got friends who work in medical schools. I've got, I mean, I love that whole process, but also be open to there may be alternative paths to what I really want to do, which is to sit with hurting people. And in your case, psychiatric places, man, maybe a psychiatric nurse practitioner is the way to go.

42:01Dr. John Delony:And you can stretch that over time, get a nursing degree instead of a pre-med degree, get into the hospital, get to work, and then start earning your way up that way. So that's another option, but sit and talk with people in the field and see where the field's going and anticipate it that way.

42:15George Kamel:Man, I'm so proud of you. The fact that you've already said this is your goal, that you're taking debt off the table, tells me you're going to take debt off the table because it's not an option. You're going to find a way.

42:33Dr. John Delony:Most people spend years changing their money habits, but never think twice about how their bank probably works against their values with nuisance fees and endless debt products. If you're being weird by sticking to the baby steps, you deserve a bank that helps with that. That's why Ramsey partnered with Fairwinds Credit Union. They built the smart bundle specifically for Ramsey listeners, not for everybody else. And it includes up to 10 high-yield savings accounts, so you can set up different funds for different needs and goals. And now they've introduced the Live Like No One Else debit card. The original Debt Is Normal Be Weird debit card is still available, too.

43:19Dr. John Delony:And every time you reach into your wallet, your card is a daily reminder that you follow a different path. Listen, if you're living like no one else, your bank should back you up. Check out the Fairwinds Smart Bundle, including the all-new Live Like No One Else debit card at fairwinds.org. That's fairwinds.org. Insured by the NCUA.

43:54George Kamel:Welcome back to the Ramsey Show in the Fairwinds Credit Union Studio. I'm George Camel here with Dr. John Deloney, taking your calls at 888-825-5225. Xavier is in Orlando up next. What's going on?

44:09Dr. John Delony:How are you doing? I'm interested in – thanks. I'm interested in how I can pay off my debt and save.

44:17George Kamel:Those are two opposing goals. Yeah, that's tough. How are you going to do this? What's the purpose of saving while paying off debt? What are you trying to do here?

44:29Dr. John Delony:I just feel like that I should have more than a couple thousand dollars available at all times just in case anything happens. But I don't know what the right number to have is for emergencies, and I don't like seeing the numbers that I have, if that makes sense.

44:47George Kamel:I totally get that. How long have you been listening to the show?

44:51Dr. John Delony:Not very regularly. My mom's an avid listener, so growing up, driving at school and whatnot, I'd hear it every morning. And I just thought it may be a good idea because I knew it's out there, and I have those questions right now. How much do you owe? I graduated college a year ago, and I owe about$70 ,000. $20 ,000 of that is on my car. About$8 ,000 is on a high-interest personal loan I took out in college to get by. And then the rest of it is student debt, which is about, I think,$35 ,000. How much are you making in your full-time work? I make$75 ,000 a year. Okay. So I want you to – George is going to give you a path that will work 100 % of the time if you'll just do it.

45:40Dr. John Delony:But I want you – I love the fact that you're looking at your risk profile and seeing I don't have enough savings. I love that. That's awesome. but if you try to save and you try to pay off debt at the same time saving while you're while you owe other people money is like trying to turn the the bathtub water on faster but you haven't dealt with the fact there's a huge hole in the bottom of the bathtub as you keep adding water it's just going out the bottom and what we need to do first is fix the bottom of the bathtub so it can hold water and then when you turn that faucet on dude it will fill up so freaking fast it'll it'll go and go and go but you've got a 70 000 hole in the bottom of your bathtub right now that we got to get patched up because it can't your bathtub can't hold water anymore you get what i'm saying so prepare yourself to feel really uncomfortable for a probably two years of really grinding hustling moving and dude then that sucker will fill up real real real fast

46:44George Kamel:so i'm gonna quote aladdin here on his magic carpet outside the balcony do you trust me

46:53George Kamel:sure all right i like how long that took let's go on a magic carpet ride i also pause when george asks me do you do i trust him i try to quote aladdin once a day so how much do you have in

47:02Dr. John Delony:savings now um i would say about three thousand dollars i wouldn't necessarily call that savings that just kind of lives in my checking account for expenses.

47:11George Kamel:Okay. So if push comes to shove, could you keep$1 ,000 aside and not spend it?

47:16Dr. John Delony:Oh, yeah, for sure.

47:18George Kamel:Great. Let's call that your starter emergency fund, and we're going to use that to hit all the little things that might come our way as we tackle the rest of the debts. Now, what you're saying, that day is coming when we fully fund the emergency fund to three to six months of expenses. So are you living at home right now or renting? I'm renting. things.

47:38Dr. John Delony:My rent is about$1 ,000 a month.

47:40George Kamel:Great. You got roommates or is that you solo? No, I have a roommate, so I'd be paying$2 ,000 if it was my own place. Great. We split. Okay. Now, you have a great income, but we also have a pretty sizable amount of debt. It's pretty much, you know, you got$70 ,000 in debt, you got$75 ,000 coming in. So this might take a beat unless we make some drastic sacrifices. So how badly do you want to get out of debt?

48:04Dr. John Delony:pretty badly i've always told myself after college i wanted it to be three years and i'm getting close to one year in and i haven't made the progress i'd like to make so we want to knock

48:13George Kamel:this out in two years i don't know how feasible that is but yeah that would be we got let's let's

48:20Dr. John Delony:find out that's 35 grand a year magic carpet rides dude we got you that means 2 900 bucks a month or so we need to go toward the debt so looking at your current take-home pay how much are you bringing

48:30George Kamel:it in every month?

48:32Dr. John Delony:It's about, let me look here, sorry. It's about$2 ,800 a paycheck pre-tax, post-tax. It's about$2 ,000. And I have 8 % of that going to 401k for my - I'm so glad you said that.

48:46George Kamel:I was going to ask. So you make$75k, right? So if we take that 8 % that you're putting in, that's$6 ,000 a year. so we both agree that paying off debt is the a1 so that we can then get an emergency fund so that we can build wealth yes sir so what if we reallocated that eight percent that's six thousand dollars toward debt payoff instead so now that money's back in your paycheck instead of sitting in retirement and we're going to come back swinging because right now you're investing eight percent we're about to double it once we are out of debt with an emergency fund up to 15

49:19Dr. John Delony:what would you say to my company's matching because i feel like i'm losing money if i'm not putting in that minimum 8 % to get that benefit.

49:26George Kamel:Well, we can't talk about losing money when we're$70 ,000 in debt with interest.

49:31Dr. John Delony:Fair enough.

49:32George Kamel:If we really cared about losing money, we would have not gone into any of this debt. And so, yes, you're going to miss out on the match, but what that does is it makes you angry, doesn't it? You're like, dang it, I'm missing out on free money because of my past decisions. So here's what the whole purpose of these baby steps are, is to get you to be angry at the debt. The debt is the villain. Now, you had a part to play, You were an accomplice to the crime. But if we can be angry that we only have$1 ,000 and that's kind of scary for our emergency fund, if we're missing out on the match and that makes us angry because we'd rather get free money and build wealth, good.

50:04George Kamel:Because that's going to speed up the process. What happens is too many people get comfortable because they got$3 ,000 in savings. They get their company match, and they're in no rush to pay off the debt. They're like, I'll get there when I get there. I want you to have a goal where you're saying, man, are you 23 right now? Yes, sir. Okay. Your 25th birthday. let's celebrate with a debt-free scream that's that's how visceral and clear you need to make it as i'm paying off seventy thousand dollars in debt by my 25th birthday that means this much needs to go to debt per month that might mean you need to go get a side hustle or two

50:38Dr. John Delony:or it might mean hey mom can i move in for one year to pay all this stuff off right or it might mean hey i'm gonna sell this car and i'm gonna drive a twenty five hundred Camry with 250 ,000 miles on it and all the paints come off on the hood, but I don't care because at 25, I'm not going to owe anybody any money. Right. And if you, if you suddenly overnight, you sold this car and you took the$12 ,000 that George has found for you six this year and six next year. Now you're down to 58 ,000 against your 70. Now suddenly you're 22 down, right? So you're down in the thirties of how much you owe. You get what I'm saying?

51:15Dr. John Delony:How fast you can go. If you start saying I'm done with this? Yeah, I never even considered the car option because that would save me about$500 a year on the payment and knock down my debt another$20 ,000 on top of that, or$500 a month, sorry. What's the car worth? About$20 ,000. I don't know what it's worth. I paid about$23 ,000 for it and I have a little less than$20 ,000 on my loan.

51:37George Kamel:Okay. I would see what you can get private party for it. And if you can get a decent amount and go get you a different car, that might mean you save up for a little bit. It might mean you get a personal loan from the credit union for five grand, but at least we're going from 20K in debt to 5K just to get from A to B. This is not the car you drive for the next five years. This is your two-year baby step two car so that the next 20, 30, 40 years of your life is just freedom. And I'm telling you, man, you make a great income for your age. You're a sharp guy. If you just trust us and do this process, you will be debt-free by your 25th birthday.

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54:10George Kamel:Bend it on and keep the hope going. Eric is in Lynchburg, Virginia up next. What's going on, Eric?

54:17Dr. John Delony:Hey, guys. George, Dr. John, I just wanted to tell you, you guys are in the top five favorite Ramsey personalities for me. Oh, nice. I'm glad we made the top five. We made the list. Yeah. How can we help? I'm going to quickly give you the bullet points. My wife and I, we bought a house at the end of July. we got a mortgage for the house, but then in August, we received a lump sum of money. Our mortgage was sold to another mortgage company, and we wanted to go ahead and pay it off, but we lost the paperwork.

54:56George Kamel:Sorry, you broke up on us. You wanted to go ahead and pay it off,

54:59Dr. John Delony:but we wanted to pay it off, but we lost the paperwork in the move, and we called the mortgage advisor to find out who we needed to pay our mortgage to. And she urged us not to pay the mortgage because it would hurt her professionally.

55:18George Kamel:In what way would that hurt her professionally?

55:22Dr. John Delony:So she didn't specify and I didn't reach back out and ask her. I don't know if it would just be, you know, that she would lose her commission. or if there would be something with the investors that she works with that would put a black mark next to her name.

55:43George Kamel:This makes no sense to me. I've heard this in the car loan world where they get a kickback, and if you pay off the car loan in the first month, then they lose the kickback. But in the mortgage world, they make money on origination fees, and that's a one-time thing. and then they sell the loan off as you just saw it went to a different lender so i don't know how this would hurt your original loan officer right and i don't know but it's it's been bothering me

56:12Dr. John Delony:because i don't want to hurt anyone professionally no eric eric let me let me say this man i i'm going back in my mind right now and i'm thinking of my friend larissa i'm thinking of my friend david i'm digging on my friend Todd. These are all folks that I have used over the years for various, like for a mortgage, for multiple mortgages, for banking back when I would borrow money from a local bank, all the way to the bank I work with now that is, I don't know any of the bankers particularly. It's an impersonal relationship. Like we do business together. That's about it. every single one of them, I've paid off something early and they have celebrated me.

56:59Dr. John Delony:I don't like to do business with somebody that is, that is not happy when they, when I as their customer am winning. Do you get what I'm saying? Yeah. And so I, I, I, on its face, I don't like this interaction. I don't like you because basically what this person is saying is, Hey, I need your family to keep staying into debt, going against your own principles, paying extra money every month, because I think this might – it's not passing my smell test, but more than that, I don't want to do business with folks who aren't in the business of helping me as their customer win in whatever way I need to win.

57:38Dr. John Delony:You get what I'm saying? Yeah, I do. She specifically asked us to wait until March to pay it off.

57:46George Kamel:Very strange. Well, here's the deal. She may be talking about servicing.

57:50Dr. John Delony:$5 ,600 in interest. Yeah, this whole thing is gross, man.

57:58George Kamel:It doesn't make any sense to me. Think about it this way. If your freedom is bad for someone else's commission check, that's their compensation plan's problem, not your mortgage payoff's problem. Right. So I would pay it off today, and she can be upset. I mean, she's not even explaining what's going on here. And even if she did, even if she's like, well, I get a portfolio bonus because we serviced the loan. And if that goes away, then I'll lose that. That's not your problem. She can go make money off someone else who's going to hang on to their mortgage for the next 15 or 30 years. But Eric wants to be debt free.

58:32George Kamel:She'll be just fine. You're not taking food off of her table. So are you going to pay it off today?

58:41Dr. John Delony:I'm going to, yes.

58:43George Kamel:That's what I needed to hear.

58:44Dr. John Delony:Eric wins. You've – this is a rare feat, brother, but you almost got me speechless.

58:51George Kamel:I can tell you're a very kind-hearted person, and when someone says, hey, this is going to hurt me, you go, well, I want to pause for a second.

58:58Dr. John Delony:And your loan officer didn't give you any further explanation as to why she needs your$5 ,600 or something bad is going to happen to her? She said it would be detrimental to her professionally.

59:15George Kamel:Okay, if she gets fired over this, then she works for a terrible organization. That's not how it works. I've never heard this in my life, George. Is she going to pay the interest payments that you're making to keep this loan afloat? Where's her generosity here? Right. So let's think through this clearly. This was a business transaction. This feels like a scam, brother. That's the best I can think of it. I would pay it off and be done. And that way you don't have to talk to a loan officer ever again. That's how I would trade it, man. But it's very sweet. I mean, the motive behind it and the heart behind it is sweet.

59:50George Kamel:But the actual logistics of this are pretty wild. I would not do it.

59:55Dr. John Delony:Yeah, you're a good man, Eric. Better than us, apparently. No, I mean, here's the thing. If somebody says, hey, I'm going to ask you something bananas, and it might cost you this much money, here's how you can help me out. I'll hear you out. But if I come to you and say, hey, I'm excited. This just happened. I'm about to do a thing. And you're like, hey, please don't do this. It'll hurt me professionally. I can't tell you any more than that.

1:00:14George Kamel:I'm busy profiting off of your debt. Please don't ruin that for me. That's crazy behavior. Hope that helps, sir.

1:00:20Dr. John Delony:Especially to the tune of$5 ,600 more dollars.

1:00:22George Kamel:No, thank you. Connor's in Milwaukee up next. What's going on, Connor? Hey, guys.

1:00:29Dr. John Delony:Thanks for taking the call today. How you doing?

1:00:30George Kamel:We're doing great. How can we help?

1:00:33Dr. John Delony:Yeah. A couple of questions. First, my wife and I got married last August, August 16th of 2025. And since being married, we went from$70K in student loan debt down to$39 ,000 this year so far. Good work, brother. And that is on one income. She was finishing up grad school for speech therapy. So that was just on my income. And I bring home roughly about$100K before taxes.

1:01:00George Kamel:Awesome.

1:01:03Dr. John Delony:So the question at hand is, we still have one loan on there with a nasty interest rate. It's about 7.8%. that is at$20 ,000, that single loan it is. It's a grad plus loan. And we are, we found out two weeks ago, expected. Hey, congrats. So, yeah, amen, amen. So the plan was to get debt-free and then start a family, but our good God had better plans. So we're ready. We're ready to rock. The question is, the$39 ,000 in debt, does that put on hold? If it's not put on hold, we're thinking about moving. I'm sorry if I'm rambling. The question here is, do we move because we currently live in a dirt cheap apartment paying$10.45 a month in rent?

1:01:50Dr. John Delony:And we're thinking about moving to a three-bed apartment for a nursery because I work remote to be at$19.50 a month. So that's a big jump. The question is, do we keep paying the debt, or do we move and put the debt on hold? You're asking two guys this question, so I'm going to answer this way, and my wife might answer differently. I know the picture of a big, fancy nursery is fun for Pinterest and stuff, but you're really 18 months away from

1:02:28Dr. John Delony:I would stay where you are and try to get this debt paid I would stack cash actually and as much cash as I possibly could to make sure everybody gets through the pregnancy safe and sound and everything's good and all that and after that I would dump all that cash we'd stashed away towards this debt get this thing knocked out and then start looking at what's another apartment going to look like. That's what I mean, that's what I would do. And it does take away the Pinterest photo or the Instagram photo of the new nursery. But I mean, you're talking about a six to seven to eight pound little person.

1:03:03George Kamel:That's going to live in your bedroom for the first three to six months. In a bassinet. That's about what you need. I don't think we would make this move yet. I would treat it as a, hey, we are out of debt. The baby's growing. We need a little bit more room and we have the income to do it. Because 1950 is a big chunk of your take-home pay right now. So that's the other piece to look at is can we even afford this apartment regardless of what happens next?

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1:04:57so

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1:05:43George Kamel:Wait, wait, hopefully we'll do another one one day. You can join us. But this is really to help people mark the moment, the milestones and the journey that we often just breeze by and move on with because life gets crazy. And we had such a good time last year doing this that we're bringing it back. All inclusive pricing starts at$2 ,100 per passenger. That's your cabin, food, entertainment, taxes and tips all included in that. So check it out. You can book a cabin at RamseySolutions.com slash events. Craig's in Roanoke, Virginia up next. What's going on, Craig?

1:06:13Dr. John Delony:Hey, guys. Thanks so much for taking my call. Sounds like all kinds of people from Virginia on here today.

1:06:17George Kamel:It's the Virginia theme hour. It's the Virginia theme hour.

1:06:20Dr. John Delony:There you go.

1:06:21George Kamel:What's up?

1:06:22Dr. John Delony:All right. So, guys, I'm 61 years old, and for years I've been following you guys. My wife and I were doing the baby steps. We were on baby step six, saving 20 % of our income. We were sitting pretty and paying down the mortgage. on my 61st birthday last February. She decided she didn't want to be a part of the team anymore. Oh, no. I'm so sorry. We went, yeah, that's okay, brother. I'm going to rebound it. It's no worries. So I had to, unfortunately, I wanted to keep the house. So I had to refinance the mortgage and take cash out to pay her some money. So I ended up with, instead of the two of us going in with a small mortgage.

1:07:02Dr. John Delony:Now it's me going in with a pretty big mortgage. So my dilemma is, can I still retire early despite the fact that I lost her income and have a mortgage? It's the last thing I thought I'd be doing right now, but I am where I am. I still think I can do it. I just want to see if you guys think I'm nuts.

1:07:21George Kamel:Wow. Well, I'm so sorry, man. That's not the picture you had heading into retirement. That totally flips the table for you and restarts this next chapter. What's your mortgage payment?

1:07:32Dr. John Delony:It does indeed. It's only, it's$2 ,800.

1:07:36George Kamel:Okay, and what's your income?

1:07:37Dr. John Delony:It's a$350 ,000 mortgage.

1:07:38George Kamel:Okay.

1:07:41Dr. John Delony:$180 ,000 base,$20 ,000 bonus.

1:07:44George Kamel:Okay, so about$200 ,000, you'd say? Yes. And what's your take-home generally from that, your after-tax monthly income, but before investing in health care and all that?

1:07:55Dr. John Delony:$8 ,400. I stopped contributing because I'm ready to pull the pin. Okay.

1:08:00George Kamel:How much do you have in your nest egg?

1:08:03Dr. John Delony:I've got$475 ,000 between a Roth and a rollover. Okay. I've got some unconventional stuff that I've done, guys. You keep me honest on this. So I've also got$260 ,000 in precious metals. It's secured safely. And I took in that Roth and rollover IRA accounts. I invest heavily in gold and silver mining stocks. So I know it's risky. What do you know that we don't know, Craig?

1:08:36George Kamel:You're going all in on this.

1:08:39Dr. John Delony:Brother, I've been studying it for a long time, and I have some people that I subscribe to that help guide us. And it has worked out just spectacularly for us. So what's your net worth today? 1.3. But that counts what I was just going to tell you. I took$334 ,000 out of the rollover and bought an annuity. And I locked in. I wanted to de-risk it, essentially. So I took the gains from some of these miners in January during the big run-up and took that$330 ,000 out, bought an annuity, and I locked in$2 ,200 a month for the rest of my life. When added to my Social Security, if I take it in February, that'll be$5 ,000 a month between the annuity and Social Security.

1:09:29Then I've got the rollover, the Roth, and the metals to carry the balance.

1:09:36George Kamel:And what are your monthly expenses?

1:09:39Dr. John Delony:$7 ,000. And that's building in a little bit of slush. I think that's safe for me to do. So I've got the$5 ,000 locked in,$7 ,000 a month heading in. so essentially when i start if i start pulling out in january i'll start pulling out about two thousand twenty two hundred dollars a month so are you going to dip into social security early to make this happen i if you guys don't think i'm nuts i'm going to file in november and start taking it in february i think you're i think you're insane but like you knew that before you called i wouldn't do any of the things you're doing zero of them and so like this is like fun for me to hear it's awesome but like yeah this is madness but like you have a plan okay then

1:10:23George Kamel:you know i can't tell you on a three-minute call without seeing all the variables like yeah just pull the plug man you just retire early you got this and then you're gonna call back four years from now saying i'm broke and can't cover my bills and george told me to retire early so it's hard to say how long you can make this last but so far it feels like everything is sort of feeling like impulsive now. Like you just want, I just want to do it and see what happens. And so I would have you sit down with an actual investment pro who can slow you down, look at all the numbers, all the variables and see, is there a better strategy?

1:10:55George Kamel:Because right now you're talking about de-risking, but then you have all these single stocks and you got money over here. And then there's these precious metals, which you're going to have to liquidate to turn into actual money to use to live because you can't pay your bills with bars of gold yet. And so that's the part I want to investigate. Is there a better strategy overall?

1:11:13Dr. John Delony:Keep in mind, brother, there's a strong possibility you've got another 30 plus years of being alive. Yeah, I hear you. I bought the golden software. 30 years. Yeah. You know what I mean? I hear you. The game you're playing is of such bizarre risk on one side and such collapsed risk on the other. George's word is the word that I had in my mind and it's very common and you might be like no bro no no no it's all good but what you're experiencing is something I've heard over and over and over again for years after something life-changing happens to somebody a loved one dies a spouse gets Alzheimer's a spouse just up and leaves you a child passes away where there's this rush for a sense of feeling aliveness, which is really an avoidance of grief and reality.

1:12:12Dr. John Delony:And I'm going to just run roughshod because I only got one life to live. I've already seen what happens when plans don't go the way I wanted them to go. And I'm just going to go bananas. And that's my fear for you. I hear it in your voice. I've got this panic almost. I'm going to do this. I do it my way. I've been following this guy on the internets and that's, and bro, if that's you go, go that way. No, I'm just nervous. I'm just nervous. You should be. I think that's your body saying, I don't know, man. You know what I mean? I've been, you know, honestly, I've been planning this for six or eight months.

1:12:45Dr. John Delony:This honestly doesn't feel impulsive to me. I bought the Bolden software. I plugged all the numbers in and verified things. And by the way, the mortgage is, it's only a 15 year and I'm paying extra on it. So it's going to be paid off in 10 years. So, because I'm paying$3 ,400 a month on that.

1:13:02George Kamel:And that's even if you unplug your$200 ,000 income?

1:13:08Dr. John Delony:Yeah. So in 10 years, the mortgage will be gone. So I'll have that$5 ,000 a month coming in, and my expenses will only be$4 ,000. But why wouldn't you stay for 24 months and pay your house off in cash just now? I guess I could. What are you in such a rush to go do? I travel for a living, and I've been doing it for 15 years, and I'm over it. Okay. I'm just over. I'm over the airports. And frankly, I think that's what contributed to the separation. Okay. Now we're getting to the root of it. Because here's what's going to happen. Knowing that the mortgage will be gone and that the annuity and the Social Security cover my bills and I still have a half a million to spend.

1:13:55Dr. John Delony:I know, but let's say this. If every single part of your strategy works out, then the mortgage is gone in 15 years. you can guarantee it's gone if you still work for two more years

1:14:08George Kamel:understood get the difference i want to have so much that i don't have to think about can i retire i'd rather be like i could have retired five years ago but i like what i do i need every parlay to

1:14:18Dr. John Delony:hit for me to get my money at the end of this of this plan i mean dude and you do you boo but i that's just not a risk i want to put myself through when i've got a potential 30 plus more years to go

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1:16:22George Kamel:Our question of the day is brought to you by YReFi. Sometimes the hardest financial step is the one you've been avoiding. So if your private student loans are past due, YReFi can help you explore low fixed rate refinancing options and payment plans tailored to your circumstances. Go to YReFi.com slash Ramsey. May not be available in all states.

1:16:41Dr. John Delony:All right. Today's question is from Scott in Idaho. Scott writes, my wife and I are about to hit baby step four, which means we'll start investing 15 % of our income. And I have a question around the four types of funds that you recommend. When you say four types of funds, do you literally mean we should invest in four individual mutual funds or should we try to find one or two that covers all the bases?

1:17:06George Kamel:Good question, Scott. Well, if we meant one or two that cover all the bases, we would have said that. So four mutual funds means four different mutual funds.

1:17:16Dr. John Delony:spouse answer i would have said it scott i would have said scott's on the line so i feel like i

1:17:21George Kamel:can be a little scott no it is a great question there is a lot of confusion around this we do recommend diversifying across four types of mutual funds and that is growth growth and income aggressive growth and international and oftentimes uh the best equivalent to this that you might find actually out there in your 401k or an ira they might be listed as large cap or mid cap or small cap or international. And so those types of funds have different types of companies in them. So you think about large cap companies, their capitalization is$10 billion or more. And then you get to international companies who are established overseas companies, but produce a lot of products that we buy stateside.

1:18:02George Kamel:So if you're diversified across all of those, you have likely thousands of companies sitting in those accounts. There might be some overlap across a large cap and mid-cap depending on what funds you're in. But the key is that you are widely spread. So yes, you're right. There are one to two that could cover a lot of those bases. Like a total market index fund has the entire U.S. stock market. Now you're still missing out on the international side, but you're largely getting the large cap and mid-cap companies inside of those big funds. You hear like a S &P 500 fund, that's the largest 500 U.S.

1:18:35George Kamel:companies. So that's a lot of those large cap companies. So it's a great question. And we do have a lot of resources around this, so we'll link one in the description below of how to actually choose mutual funds. We'll have the team drop that for you if you want to read up on that, Scott. But it is a good question, all snark aside. By the way, that's kind of a question I would have. John from Nashville submitted that. John from Nashville. There we go. Alright, Willis is in Charlotte, North Carolina up next. What's going on, Willis?

1:19:01Dr. John Delony:Hey, guys. Thanks for taking my call.

1:19:03George Kamel:Sure.

1:19:05Dr. John Delony:So I've got a question about how to tackle my student loan debt. And I guess the second part of that question would be, you know, did I, when we got into the details, you know, I want you to kind of tell me if I messed up by the, you know, the house that I purchased and kind of my mortgage amount and what I should be prioritizing.

1:19:27George Kamel:Hit us with some numbers here. What's the mortgage and what is your after-tax monthly income?

1:19:33Dr. John Delony:So the mortgage is$22.98 principal and then kind of all of them utilities I'm somewhere around$2550 to$2600. We'll take out utilities.

1:19:44George Kamel:We'll leave it at$2298 for your mortgage. That's going to include principal, interest, taxes, and insurance, and HOA.

1:19:52Dr. John Delony:Actually, that does not include HOA. So HOA would be then like$2398.

1:19:56George Kamel:Okay. Got it.

1:19:59Dr. John Delony:So after-tax income is just right around$5 ,000,$5 ,100. And then, yeah, so that's those numbers.

1:20:08George Kamel:So it's about half. To cover the mortgage, it takes about half your take home pay.

1:20:14Dr. John Delony:Exactly.

1:20:15George Kamel:Okay. That's a lot of house for sure. And how much student loan debt do you have?

1:20:20Dr. John Delony:I've got$32 ,000 in student loan debt. Now, the good thing is, it's not good on that behalf, but I have no other debt whatsoever. I've crushed all that in the last three years. Good. Are you married? I'm not. I'm single.

1:20:36George Kamel:Single. Okay, great. What do you do for work?

1:20:39Dr. John Delony:I'm in the solid waste industry. So we build RNG facilities. We convert methane to natural gas.

1:20:47George Kamel:John knows a lot about that. Keep doing it, brother.

1:20:49Dr. John Delony:It's a good business to be in.

1:20:51George Kamel:So let's talk about this. You're trying to connect the dots here between your student loans and the mortgage. What's the question in here?

1:20:58Dr. John Delony:I guess the question is, you know, do I have too much house? Should I be looking to get out of the house so that I can then kind of take a step back to go forward? then crush the student loan debt, and then from there, you know, then look into the housing market again.

1:21:15George Kamel:I mean, yeah, so we recommend doing this in a certain order. And so what you're describing here is what happens when you do it out of order. So we recommend getting out of all consumer debt, getting a fully funded emergency fund, and then purchasing a house on a 15-year fixed rate mortgage where the payment is no more than a quarter of your after-tax monthly income. So what you're describing here is half of it is your mortgage, and we have these student loans. And do you have savings? Do you have an emergency fund?

1:21:41Dr. John Delony:I do, yes. I have around$12 ,500.

1:21:45George Kamel:Okay, great. So one problem doesn't solve the other here. Even if you were completely debt-free outside of the mortgage, this is still too much house. Now, the too much house is not helping you pay off the student loans because there's not much margin to go with the debt. Is that the main issue here? Say that one more time. There's not a lot of margin left over after all of your bills are paid to then throw extra at the student loans.

1:22:09Dr. John Delony:Exactly. And I've tossed around, you know, is it that, you know, the house is obviously one of the issues. Do I chase larger salary or do I just kind of take the, I guess you'd say, easier route maybe and get back out of the house?

1:22:20George Kamel:I mean, if you can double your salary, we've solved some problems. I don't know how realistic that is for you. But what I would say is that the house is, there's some smoke. It's not quite on fire yet, but if you can't get your income up to, let's say, your buck, let's see,$2 ,400. So you're looking at close to like$9 ,000 or$10 ,000 is what you should be taking home just after federal and state taxes in order to make this make sense. So if that's not going to happen in the foreseeable future, you may want to look at selling in the next year. Okay. And part of that means the profit – will you get any profits?

1:22:54Do you have enough equity to even come out ahead?

1:22:57Dr. John Delony:I've done this since January, so I would probably just – no, I would say no.

1:23:02George Kamel:Did you put any money down?

1:23:05Dr. John Delony:I did not. I find – that's another kind of probably internal issue is I finance 100 % of the loan. What kind of loan is it? It is a five-year arm at 5.7%. Oh, bro, get out, get out, get out, get out, get out, get out, get out. Ay caramba.

1:23:22George Kamel:Okay. Well, with the Fed rates just moving up, that arm just got more expensive. So your mortgage rate, your mortgage payment is not a static payment. It's going to go up. So I would definitely look at getting out of this house. You don't have to do it tomorrow, but I will be looking at getting it listed, seeing how much you can actually net, seeing if you're going to be underwater because that's a big part of this. Is there's one thing to make some money or break even, but if after fees, you're not going to have enough to pay off the mortgage, that's a different problem.

1:23:50Dr. John Delony:And Willis, let me just tell you, brother, I've been here. I've done this exact thing. I had a I had way way way way more student loans than you did but man I was in a rush I bought a house that I couldn't afford and 11 months later I took a check to closing to get out and it was embarrassing it hurt me and my wife's relationship it was just it was I had a little kid the whole thing was a mess dude but it ended up being the right decision that's that really changed the trajectory for me and my wife in two different areas one it got us out of the hemorrhage which was we're never going to get this debt paid off because our house takes up so much of our monthly income.

1:24:29Dr. John Delony:And the bigger thing that it changed in me is this right here will never happen again. It was, it was just like, I will never be embarrassed. I'm never going to bring a check to closing again, as long as I live, you know what I'm saying? So I did, I've been there. It's humbling. It's embarrassing. All those words you want to say, but man, if you're thinking about you in five years and the guy that doesn't owe anybody anything that's back in his own place, a house that he can afford, likes his job, all that kind of stuff. Man, you're talking about a free man in three to five years. You know what I'm saying?

1:25:01Dr. John Delony:Got it. I've been there and I hate it for you, brother.

1:25:03George Kamel:So you're going to be okay. I'm not worried about you. You're a young guy. You're going to get out of this debt. You're going to be a homeowner again one day. But for now, to kind of clear the decks and start from a place of strength, I think that this house is going to continue to be a problem. And I don't want you just chasing a job you don't like that pays more just to make a mortgage payment on a house that you really don't need right now.

1:25:24Dr. John Delony:And no, no, no, no 100 % down loans and God help you, no adjustable rate mortgages. Please, please, please. That's my note to America.

1:25:34George Kamel:Fixed rate is the one you want. And I wish you the best, man. If you want to reach out to a solid real estate agent, you can go to ramsysolutions.com slash agent and get connected with one of our Ramsey trusted pros. They can help you get out of this and get the most for that house, put you in the best financial position possible.

1:26:09Dr. John Delony:If you're already enrolled in a Medicare plan, you might think there's nothing else to do. You're good to go. Wrong. The fact is Medicare premiums, networks, prescription coverage, and benefits can all change, even if your health doesn't. So doing nothing could cost you hundreds or even thousands of dollars a year. With annual enrollment time coming soon, you need to talk to Chapter right away. Chapter is the only Ramsey-trusted Medicare advisor, and they save Ramsey fans an average of$1 ,100 a year. They explain your options simply and help make the smartest decision for your situation. And whether they find you a better plan or confirm you're already in the right one, Chapter's services don't cost you a thing.

1:26:56Dr. John Delony:Medicare annual enrollment runs October 15th through December 7th. So review your plan with Chapter now and avoid expensive mistakes later. To talk to the unbiased Medicare experts at Chapter, go to askchapter.org slash Ramsey or click the link in the description. That's askchapter.org slash Ramsey.

1:27:27George Kamel:Welcome back to The Ramsey Show in the Fairwinds Credit Union Studio. I'm George Camel, joined by Dr. John Deloney, taking your calls at 888-825-5225. John, as we kick off this hour, there's something we need to talk about. Big headline floating around. You've changed hair products? Not yet. I'm getting close to it. But it has to do with the Fed. Oh. Everyone's favorite three-letter word. Buckle up. It sounds like the mafia. It is, George. They have unlimited power. So let's talk about this headline. We're going to throw it up on the screen for you guys. otherwise it's a juicy one federal reserve hikes interest rates for the first time since 2023 amid stubborn inflation so basically uh you know there's been a little bit of chaos happening in the world and inflation is still pretty rampant so the fed one of the levers they can use is increasing the fed funds rate what that does is it trickles down to consumer debts specifically things that have a variable interest rate so let's talk about what this means what it means for your money, and I hope it affects very few of you because you follow the Ramsey plan.

1:28:30George Kamel:So what happened? The key rate for the Fed went from three point, it went to 3.75 to 4%. That's up a quarter point. And that happened on September 16th. And it is the first hike since 2023 after two straight years of the Fed cutting. So they were cutting, cutting, cutting, and then inflation's hot. And they went, we got to bring it back up. The vote was unanimous. Nobody blinked. That's the whole headline. Everything's moving up a quarter point. So what does that mean for your debt? Well, if you have a fixed rate mortgage, it means nothing. It's a fixed rate. It's not going to affect that. If you have a variable mortgage, like an arm, like we had in a previous caller, it will affect that.

1:29:09George Kamel:If you have credit card debt, that is a variable APR. So instead of 27%, it might be 27.25 % now. Car loan, same thing. If you're looking to go get a new car loan, and I hope you're not, I hope you're paying cash, that's going to be a little bit more expensive. So the over-under is the Fed is making borrowing more expensive to try to cool inflation. They're trying to limit how much people are borrowing, make it hurt a little more so that we spend less. Will it work? Well, they've been doing this for a while now, but it is one of the ways historically that has been used to cool inflation. So we talk credit cards, we talk car loans.

1:29:44George Kamel:Here's some good news if you're looking for it. Silver lining, high-yield savings accounts. Well, I was about to ask. Savings accounts?

1:29:49Dr. John Delony:So if you've been following the Ramsey plan for a decade and you have an emergency fund and a high yield savings account, that rate suddenly went up too. So you're going to be earning more money.

1:30:00George Kamel:Exactly. So if rates are at, let's say, 3 % for high yield savings accounts, you might see it go up to 3.2%. Yeah. So that is a win. And it's a good reminder that wealthy people earn interest, broke people pay interest. You want to be on the right side of interest. and the problem is people have been borrowing up to their eyeballs and rarely do they even look at the apr they just see the shiny car that new car smell they swipe the card because life happened not thinking about the ramifications of how difficult it is to pay down debt when it's at 27 apr so if you're a ramsey follower you are trying to get out of debt you're currently in not taking on any new debt this likely won't affect you that much and if you don't have a mortgage, this affects you zero.

1:30:43George Kamel:So here's what I want you to walk away with. This is one more reason you don't want your life dependent on debt. The Fed is going to move rates up and down forever. That's their entire job is to find the sweet spot Goldilocks balance. But if you don't carry this consumer debt, you're not white knuckling an adjustable rate mortgage. A rate hike has a lot less power over your monthly budget. So control what you can control. That's always been the move. I can't control what the Fed does, but I can control me not going into credit card debt.

1:31:08Dr. John Delony:So this is not for me because obviously clearly I know the answer. I'm asking for a friend here. Could you explain to my friend as though he was a middle schooler how – I'm clearly asking for myself – how does increasing the interest rate cool inflation down?

1:31:28George Kamel:Well, if less people are borrowing money, that's going to limit the amount of spending. And so part of inflation is people are spending so much that it's bringing the inflation rate up. So if we can curb that part, less people taking out buying new cars, less people swiping the credit cards, that will end up cooling the inflation rate overall. Their goal is 2 % is the goal. And they are not quite close. Yes.

1:31:51Dr. John Delony:Not even close.

1:31:51George Kamel:And so they're just trying to move these levers. And it's not an easy task. I don't envy them. I would not want to be sitting in that seat right now because they're in the hot seat. And they're nobody's friend when they raise the rates because – Especially with the midterms coming up. They're going, whoa, whoa, you're making us look bad over here raising the rates. So overall, this is kind of a nothing burger in the grand scheme of life, a quarter percent. And it doesn't have a direct correlation to mortgage rates because most fixed rate mortgages are not tied to the Fed rate. It's actually tied to the bond market, to mortgage-backed securities, the 10-year treasury yield.

1:32:26George Kamel:So you're not going to see this affect mortgage rates directly. There might be a correlation slowly over time that it ticks up, but it's not going to happen overnight. So I hope that helps people understand a little bit what's going on with the Fed funds rate. Again, this is as much as I've thought about it. I don't lose sleep over this, and you shouldn't either. Just keep following the Ramsey Plan. Control what you can control. Get out of debt. All right, let's go to Annie in Richmond, Virginia, up next. What's going on, Annie?

1:32:53Dr. John Delony:Hi. Thank you guys so much for having me. Sure. Um, yeah, my question, so my husband and I are wondering if we should sell our house. It's more than 25 % of our income and it's definitely limiting our ability to pay off our debt and build our emergency fund. And honestly, even in the longterm, it's limiting us to be able to save up for a down payment on another home. So, um, yeah, we're just wondering if we should sell it. And if we do, would we buy smaller or would we rent something? Can I ask you a question before George answers your money question? Yes. Do you hate this house? um no but we don't love it we only we're like in between like and love hate was a little bit of a of a deloney being a drama queen like i usually am um i can hear in your voice you don't like this house well i think we don't like where it's at and yeah there are some aspects of it we don't love it's hard we've like we've been here a couple years so there's some memories here that we like and we've made it our own as best we can, but we don't love it.

1:33:51Dr. John Delony:Yeah, then numbers, who cares? Sell the house.

1:33:56George Kamel:It's okay to decide we don't want to live here anymore. But if it helps you financially, that's a byproduct that we can all get behind.

1:34:04Dr. John Delony:Yes, it would definitely help us. I think we would not be able to buy something else that would be any better financially for us currently until we obviously pay off our debt and get our money in order there.

1:34:18George Kamel:That means you're going to rent, right? Yeah.

1:34:22Dr. John Delony:That would be, yeah, I guess so.

1:34:25George Kamel:Did you just realize this for the first time? Like, oh gosh, we're not going to jump into another house we can't afford? We have to rent? That's going to be the sacrifice. The sacrifice is we're going to rent for a while. It feels like we're moving backwards. It's a smaller space. We got neighbors right next door through the wall. this might not be fun but what's fun is not being stressed out about money for the next several years and building a foundation to where you make this next house purchase from a place of strength instead of you know impulse or desperation and somebody else fixes your plumbing for the next few years i miss those days yeah i do look forward to that part of it that would be nice for sure walk us through the numbers what is your mortgage payment every month so our current mortgage

1:35:07Dr. John Delony:payment is$1 ,850. Okay.

1:35:09George Kamel:And what is your after-tax monthly income?

1:35:12Dr. John Delony:About$5 ,800. It takes a little bit. We have a daughter. I work part-time, so I just work as many hours as I can, but usually right around there.

1:35:19George Kamel:Okay. So it's about a third of your take-home pay. Not unreasonable. Yeah. So that part's not on fire. How much debt do you have?

1:35:27Dr. John Delony:We have$8 ,000 left to go, so not a ton left. Yeah.

1:35:32George Kamel:Annie, I would stay put. I would knock Knock out the debt, build an emergency fund. If you got savings, let's knock that out now. The sooner the better, build the emergency fund. And then you can continue saving and make the move on your terms. But nothing's on fire here. I would not go ahead and just sell this house to go rent somewhere for$18.50 instead.

1:36:15George Kamel:Whether you're a small business owner or an individual, doing your taxes is not fun. It's like an algebra test where if you get anything wrong, the IRS can make you pay with actual money. But if you work with a Ramsey Trusted Tax Pro, you don't have to be a tax whiz because they are. They know taxes like the back of their hand, which makes filing super easy. So work with a Ramsey Trusted Tax Pro and get back to doing what you love, which probably isn't taxes. Visit RamseySolutions.com slash TaxPro and fill out the referral form to get connected to a Ramsey Trusted Tax Pro today.

1:36:59George Kamel:Ask Ramsey is our free AI tool that's built and trained on proven Ramsey principles, and we're going to break down one of the questions we got this week. Here it is. If I have extra money coming in this month, should I prioritize putting into my son's 529 for college next year or pay down my car loan? Well, I love that you love little Jimmy, but that car loan comes first every time. The baby steps make this very clear. You don't put a penny away for your kids until you got your own mask on first, clearing the decks for your own non-mortgage debt. And here's the core reason. The car loan has an interest rate that is working against you right now.

1:37:32George Kamel:Any extra money put into a 529 instead of the car loan is costing you. So even with college coming next year doesn't change the order of the baby steps. You got to have a conversation with your son about how he's going to pay for this without debt. And that might be scholarships, grants, working part-time, community college. There's a lot of ways for him to go about this in a smart way. So kill the car loan now. And if you've got more questions, you can ask very specific questions and have a back and forth conversation just like you would on this show at RamseySolutions.com and then click on Ask Ramsey.

1:38:01George Kamel:All right, let's get to Hope in Medford, Oregon. What's going on, Hope?

1:38:06Dr. John Delony:Hi, I'm 19 and getting married exactly a year from today. We bought a fixer-upper about a year ago. I'm in real estate, so my job, my money, my monthly income really varies. I'll be officially on my own by next month or next year, and so my income will double. My fiance makes a pretty set income, and we're just trying to figure out what we should prioritize first, our house, our wedding. We also have a truck payment and we also have a part-time job where we work on a ranch and get paid in cattle. So I have the option instead of getting paid in cattle to hash out at the end of each year. So I'm just trying to figure out the best way to go about all of our debt and also this house, because it was a fixer-upper.

1:38:53Dr. John Delony:We did a private loan where we have three to four years to refinance and build the main home and we have to pay them off and what's the interest on that just trying to figure out the best way it's a 6.7 okay so you've got a mortgage and you have things you need to fix up on the house we have already fixed up everything versus i was able to save up 25 000 um and i bought the house right when i turned 18 way to go instead of doing a down payment. Three of them, thank you. We built a mini house inside the only existing thing inside. So we spent that$25 on building a miniature house that we live in and cleaning up all the garbage.

1:39:33Wow.

1:39:35Dr. John Delony:So you guys aren't scared of hard work. Do you have a house inside of a house, like a Russian doll? Say that one more time, sorry. You have a house, you built a miniature house inside of your, of the fixer upper house? Of the shop. So they burnt down, it was a tweaker house. They burnt down two houses and the only thing left was a shop. So we cleaned the shop and we built 500 square foot of a house.

1:39:56George Kamel:Okay. Okay. So let's make this clear. At least let's separate the debts until you guys are actually married.

1:40:03Dr. John Delony:Yes. I hope you're not going to like this. Okay. But I would only have a job if people's best relational plans didn't work out. That's all of my life. Okay. And so I want more than anything, George and I are rooting for you and your fiance to get married and y 'all are going to be married for 70 years. It's going to be awesome. But we also spend most of our time talking to folks who bought a house together, renovated together, paid off each other's debts, started businesses together, and then they break up. And untangling that type of financial mess is almost impossible when two teenagers are, in the eyes of the law, two teenagers are dating and they went into all of these business arrangements together.

1:40:52Dr. John Delony:What usually happens is somebody walks away having paid off their boyfriend or girlfriend or fiance's debts, bought them a car, whatever, paid for their school, and then they are out all of it. And so that's why we always tell folks... So we keep everything in our own name. So the house is under my name because I bought that the month we got together. So he has helped with that, but it is in my name, and the truck is in his name fully. Okay. So your name's not on these—so if he breaks up with you and drives off in this truck, you're not obligated on the loan to make payments for his truck? No, sir.

1:41:28Dr. John Delony:Okay, perfect. Same with the house. It's under my name, not his. Excellent, excellent.

1:41:31George Kamel:So the only two debts are the truck payment and this private loan on the house?

1:41:36Dr. John Delony:Yeah, I just made my last school payment this month. Awesome. And so that's fully paid off. Thank you. and then I owe$1 ,000 on my tires. Like I had to get new tires for my truck. So that is the only...

1:41:48George Kamel:And you went to debt for that?

1:41:49Dr. John Delony:My truck is also paid off. $1 ,000. Okay.

1:41:53George Kamel:Yes. How much do you have in savings right now?

1:41:56Dr. John Delony:So we lease out our front field, so we get cash for that. So in cash, we have$3 ,300. And then in the bank, I have$500, he has$500. So when you say we, whose money is the$3 ,300? that is um very much so together he sold a car so a 1500 of that was so is half of it yours could you reach over and pay off the tires we could yes so my question is should we pay off the tires with that cash or should we put it towards the wedding so we don't go in debt over a wedding well you have time to save up for the

1:42:33George Kamel:wedding i don't want you hanging on to tire debt while saving up for the wedding for the next year so let's just knock that one out now that makes you completely debt free outside of the private

1:42:41Dr. John Delony:loan on the house right yes now we have 12 months are you guys sharing the cost 50 50 for this wedding yeah what's the budget um right now i'm at 3 700 towards it like i've already bought my wedding dress we've already bought in tables and chairs so what's the total budget like are you is it's going to cost you guys 10 grand all in it should be under 4 ,500 oh wow we're doing everything we're working for the venue so we will put in work you guys are hustling okay so you need to save up 2 ,250 over the next 6 to 12 months yes that's very reasonable that's less than 200 bucks a month or that's one cow you get paid in cows don't you you get paid in cows cows are at about $3 ,000.

1:43:29Dr. John Delony:Boom. Yeah, I was going to say, I went to get a burger the other day. Cows are about$10 million a piece, man. I would love to get paid in cows. Yeah, so we get the cow and then we have the baby and then we sell the baby at the beginning of each year. Wow. So this year we're going to, we have $3 ,000. We can either cash out or buy another cow from them. Now buying a cow may be best because we can invest into a herd where we could be making certain money each year. It'd be about $2 ,500 gross.

1:43:57George Kamel:Dude, forget Get crypto. We need to get investing in some herds, John. All day. At least I can hug a cow. It's like settlers of Catan out here. All right. I can't hug a crypto. I like this plan, Hope. So here's the deal. You pay off the tires today, reach into that fund. Then you're saving up for the wedding. You're going to do that. I mean, your next commission check from real estate will do that.

1:44:18Dr. John Delony:Except it won't. I'm in appraisal. And so with appraisal, I don't get the$10 ,000. I get about$800 every time I do a job, which is great. Some weeks I'm super busy and I make that. Okay. Because I'm in training for the next year, I only make half of that. So if that's an$800 appraisal. You get$400. I know the math. Well, no. $850 for an appraisal, 35 % business to companies, and I split that$50-50. So I truly only get$247 for that.

1:44:45George Kamel:But you got like nine side hustles. So I'm just saying altogether, you can come up with two grand over the next 12 months. Yes. So you're good. But now the question is, can he pay off his truck before the wedding and get an emergency fund? Here's the goal. You guys get married a year from now, and you both have no debt and a fully funded emergency fund. Then we tackle this private loan together on this house because now it's our house.

1:45:08Dr. John Delony:The truck, no, it's$30 ,000.

1:45:11George Kamel:So he's not going to be able to – how much does he make?

1:45:14Dr. John Delony:He makes about$1 ,400 to$1 ,800 every two weeks.

1:45:18George Kamel:He can't afford this truck.

1:45:22Dr. John Delony:yeah that's way too much truck his payment is low his payment is i don't care if his payment zero dollars he owes 30 grand on a depreciating asset and he's making 40 grand a year yeah that's a problem he he's bought he's bought something that's going down in value every day that he owns it yet the amount he owes on it is staying the same the rule of thumb that we use and that we all live by is like everything with wheels and motors in your home should not be more than 50 of your total take-home pay total gross income so he's way

1:45:59George Kamel:over that so there's an easy solution here if he wants to build this life with you let's sell the truck get something we can afford in cash and now by the time we're getting married we have plenty to pay for the wedding, to have a nice emergency fund of six months of expenses and then never go into debt again and knock out this private loan.

1:46:18Dr. John Delony:And if you're making$40 ,000 a year,$400 truck payment is still a lot of money.

1:47:07George Kamel:We'll see you next time. to finish guides, a podcast, and even an in-depth video course hosted by yours truly. What's not to love? So if you're ready to take the next steps toward your home goals, go to ramsaysolutions.com slash real estate. That's ramsaysolutions.com slash real estate.

1:47:41George Kamel:While you're out there playing offense, trying to build wealth, you also have to play defense, and that's where insurance can come into play. But it can be hard trying to find pros who aren't just looking to make a buck and agents who actually know what they're doing. They know their stuff. So I got you covered here. Ramsey Trusted Insurance Pros are vetted and coached to make sure they're market experts who have your best interests at heart. So you can go to ramseysolutions.com slash coverage to find the type of insurance you're looking for and connect with a Ramsey-trusted agent. Alex is in San Diego up next.

1:48:09George Kamel:Alex, welcome to the show.

1:48:11Dr. John Delony:Thank you, Dr. Loney and Mr. Kamel. I appreciate you taking the call.

1:48:14George Kamel:Absolutely. What's going on?

1:48:17Dr. John Delony:My wife and I have completed steps, baby steps one through three. We're on step four, or finishing up step four. We're getting close to that 15%. But we bought a new build home about a year ago. It was obviously quite a bit of money, but currently we're doing pretty decent, even though our monthly payment is pretty high. and we're saving quite a bit, and we have a lot in savings, and I'm just kind of trying to figure out where to go from here.

1:48:40George Kamel:Cool. Okay, so you are close to investing 15%. What's the hold up there? What's the timeline to get to 15 %?

1:48:48Dr. John Delony:Nothing. It's just a matter of adjustment. I'm about probably at 14%, and my wife's about at 12%, and we just got a lot going on in the mind because there's some family planning that's going on, and we've been keeping that in mind. But, yeah, we're close to bumping it up to the full 15%.

1:49:01George Kamel:Okay. So once you're at 15%, you dial that in. You said you don't have kids yet. You're looking to start a family?

1:49:10Dr. John Delony:We're probably looking to have one here in the next year or two.

1:49:13George Kamel:Okay, great. So we can pause on baby step five. We can skip that for now, which then puts us at baby step six. So anything beyond the 15 % going to investing, any extra margin, we can throw some of that at the principal on that mortgage.

1:49:27Dr. John Delony:Understood.

1:49:27George Kamel:What's the left on the mortgage?

1:49:30Dr. John Delony:uh like i said we just bought it so it's about 700 uh 705 000 is the mortgage yes what's the payment the payment our total housing cost that's including the insurance

1:49:42George Kamel:and the hoa fees is about 5800 a month 5800 okay and then what do you guys take home after taxes it's 10 000 10 ,003 okay so 10-3 yes so you're talking over half of your take-home pay is taken up by this mortgage?

1:49:59Dr. John Delony:Yes, it's about 56%.

1:50:02George Kamel:That's up there. That makes me nervous for you, brother.

1:50:06Dr. John Delony:Yeah, yeah. Well, I would say we're saving actually about$2 ,100 a month. We're really good with our expenses and going, I may have omitted this, but our savings is pretty high. We're about$97 ,000 in savings right now, so we're well above that$6 ,000. It is in a high-yield savings account, but we're past that six month of expenses.

1:50:28George Kamel:And that's great. And you guys have no consumer debt?

1:50:32Dr. John Delony:No, no, yeah. I pay off my student loans very quickly. She was fortunate not to have any student loans. So I was pretty aggressive about mine paying off in like three years after I graduated.

1:50:40George Kamel:Okay. So the issue I'm seeing here is that that high yield savings account, while it's awesome to have 97 ,000, doesn't fix the ongoing issue that half of your take-home pay is disappearing into that mortgage. Because you're not going to dip into your high yield savings to try to keep the mortgage afloat. Correct. That's not going to work. So we're going to have to look at the overall picture to see, is the income going to go up any time in the future? Because what happens, let's say you guys have a baby and she wants to stay home, or she keeps working, daycare is$2 ,500 in San Diego.

1:51:10Dr. John Delony:Or there's an extended NICU stay, or she's got to be on bed rest for four months. That's one of those things that's out there that we say, that's one of the reasons why, and I know it's so frustrating for everybody, especially with how high the housing prices are, is to keep it at 25 % just because you never know what's coming down the road towards you, right? Right, yeah. Yeah, I'd say my income or both of her works are pretty stable. She's a nurse, and I actually work in higher education at a four-year university here in San Diego. My pay bumps, my shovel getting bigger is not as fast as her.

1:51:46Dr. John Delony:She's getting pretty substantial increases in pay, but yeah.

1:51:49George Kamel:Okay, so what I'm trying to show you is that you've limited your options by making this home purchase because both of you have to keep working and you have to make way more than you are now. So that's an imperative if you're going to stay in the home long term. Now, if you're going to decide we're willing to sell in a year or two when the baby's here and we got this daycare cost and things are tight, then that's another story. But for now, you're going to try to get to 15 % and just sock away money. And if and when you guys are pregnant, then we can pause and save up some money. You already have$97 ,000, so there's really no need to go to stork mode, as we call it.

1:52:27George Kamel:You guys are in a good spot there. But the bigger glaring issue is what are we going to do with this house payment?

1:52:33Dr. John Delony:Yeah, yeah. My only – in terms of the immediate nature, not now, I am – we are currently doing biweekly payments, and I actually have set it up. So we actually put in an additional$300 each payment towards the principal. I'm trying to pay it off close to$20, if not sooner. But I was also thinking about putting something in – opening the 529 and putting a couple thousand dollars away for now at that point and then just leaving it so it can continue growing. But yeah, the move is definitely to increase our income.

1:53:00George Kamel:Yeah, I wouldn't put anything in the 529. I mean you got 20 years potentially plus before we have to even think about the kid going to college. Yeah, all the AI companies said it would be dead way before that. Yeah, I'm more concerned you guys run out of margin here because of this house payment. It's only going to go up as taxes and insurance go up as well. And so that's where we need to look at our incomes pretty severely and go, if she's not going to go make 30 % more and you're not going to go make 40 % more in the next couple of years, you probably have to sell this house eventually because you're just not going to have that much margin once you factor in daycare costs.

1:53:34Dr. John Delony:Yeah, well, she's actually going to be seeing an increase of 20 % in the next few years actually, given her union had just a big fight over obviously pay increases, but yeah.

1:53:43George Kamel:Okay, I would just keep watching it. It's not like an immediate fire now because you guys do have some stability with no debt and emergency funds. So I'm not going to tell you to go sell the house today. But that's the main issue I'm seeing. But I wouldn't let that stop you from trying to start a family or do anything else. But there's no need to get hyper-focused on saving for college right now. I'm more concerned about the mortgage.

1:54:02Dr. John Delony:George, is this a situation where, like, let's say he's basically got$100 ,000 in an account and he owes$705 ,000 on this mortgage. Is this a situation where he could say, okay, six months is$30 ,000 for us and then take$70 ,000 and put it against that mortgage and recast it to where it ultimately gets down below without having to sell the house? I'm trying to think of a solution for him to not have to sell it. And if he's able to pay off massive chunks of principal because they are saving and right this moment they're making money and they want to start a family in a year or two, maybe that happens.

1:54:45Dr. John Delony:Or like me and – we want to start a family. It took three or four years, right? So who knows what that timeline looks like. But is that a viable option?

1:54:53George Kamel:Well, you can do a recast, which is where you take a big lump sum of money, throw it at the principal, and they basically re-amortize your mortgage. So the payment does get lower. It's not magic, but it does take the new balance and just redoes the math for you. So that is viable, but with a$700 ,000 mortgage, throwing 50 at it is not going to make a dent in your payment. Plus, just six months of their mortgage alone is$35 ,000, let alone their other expenses. Oh, yeah. And so that$97 ,000 is likely a little more than six months, but not much. And so I don't think it's going to make a dent. Now, if they had$400 ,000 they could chunk at the principal and recast it, I'd say, great.

1:55:33George Kamel:Problem solved.

1:55:34Dr. John Delony:And bring it down to$200 ,000 or all they owe is$200 ,000 or$300 ,000.

1:55:37George Kamel:But again, he said they had$2 ,100 ,000 in margin. And I don't know what daycare costs are in San Diego, but that will disappear real quick with a baby when you're paying for that because she is going to continue working. so that's the part that worries me long term and it's the kind of stuff it's it's why we are so conservative people yell at us because they go ramsey's out of touch with their 25 going i'm like i'd rather be out of touch and allow a mom to stay home if she wants to yeah because now you have no options and so i want to have as many options as possible and part of getting locked into this mortgage taking up 56 of your take-home pay is you got to keep working you got to make more.

1:56:15George Kamel:You have to take that job even though you hate it. And so it just limits your options. So my heart breaks for them, but they're sharp. They're young and sharp. They'll figure it out. Maybe he'll switch careers. Incomes can go up.

1:56:25Dr. John Delony:Yeah.

1:56:26George Kamel:And maybe they decide, you know what, we can downsize, but it's San Diego.

1:56:31Dr. John Delony:Yeah. I mean, it's one of the most expensive places.

1:56:33George Kamel:You're not going to find a house for 300 grand that makes sense for them. So that's part of the issue with real estate, especially high cost of living areas. You need a really high income. That's part of the math. And they have a great income. They're taking home$10 ,000 a month.

1:56:46Dr. John Delony:Yeah. But it's just enough right now. Where they're choosing to live and where they're choosing to buy a house in the house, they're choosing to buy all of those things together. It's frustrating. But there is – I always say this and I hate having to say this because I have to say it to myself all the time. If I take the emotions out and what I want out of the picture, I'm just looking at a math problem. And math often doesn't care what I think. Hurtful.

1:57:29Dr. John Delony:Listen, guys, I've heard just about every excuse for why folks think they can't get ahead with money. So let's go ahead and settle this right now. You get the final say on what happens with your money. That's why you have to start telling your money where to go so you can stop wondering where it went. So if you're going to start winning with money, you have to get on a budget. And the easiest way to get started and stick to it is with the EveryDollar Budget app. It'll help you make a plan for every single dollar coming in and every single dollar going out every single month. And And guess what?

1:58:04Dr. John Delony:It's free, so no excuses. Download Every Dollar in the App Store or Google Play today.

1:58:22George Kamel:Our script for the day, 1 Corinthians 9.24. Do you not know that in a race all the runners run, but only one gets the prize? Run in such a way as to get the prize. William James said, most people never run far enough on their first win to find out they've got a second. Amy is in Dallas up next. Amy, welcome to the show.

1:58:44Dr. John Delony:Hi, thank you. I'm a single mom. I'm 50 years old, and I have a rent house in a college town where my daughter goes to school, and I'm wondering if I should keep the rent house when my twin boys get to college, even though I'll be collecting less rent, and is it going to make financial sense to keep it?

1:59:06George Kamel:So you want to hang on to the investment property for what reason exactly?

1:59:12Dr. John Delony:Well, that's, well, I don't really want to, it's kind of, it stresses me out having a property that's far away that I have to manage. Um, but right now it's providing my daughter a place to live.

1:59:25George Kamel:And once she's out, can you sell it then?

1:59:28Dr. John Delony:I could, that's what I'm wondering, like if I sell it then, cause it's paid for. Okay. Um, and so if I sell it, then I could, I'm still going to be responsible for boy, I have twin boys, putting them, getting them housing through college. So would it be better to, since the house is paid for, let them live there, still collect rent for two other roommates until they get through two? Oh, so you're going to be losing, on paper, you'll be losing money because you're going to go down to two renters instead of three, right? Yes. Okay.

2:00:03George Kamel:And you're going to have to fork over money if you sell it to cover housing for them.

2:00:07Dr. John Delony:That's correct. But you'll be, you're not saving money, but you'll be saving capital outflow cash. You won't be having to write two rent checks for them wherever they're living. Exactly.

2:00:17George Kamel:What would you net from this if you sold it today?

2:00:20Dr. John Delony:Since it's paid off, about 320, 320.

2:00:25George Kamel:What would you do with the 320 if you had it in your hands right now?

2:00:28Dr. John Delony:I would add it to my retirement.

2:00:31George Kamel:Okay.

2:00:32Dr. John Delony:So I don't have any debt. My home is paid for. The only debt I have is the boy's car.

2:00:39George Kamel:What's left on that?

2:00:41Dr. John Delony:$12 ,000. And the only reason why I haven't, I have about$25 ,000 in my emergency fund and about$200 ,000 in retirement. But after my divorce, I had no credit at all. Nothing was in my name. And so I kept the car payment in order to build up some credit.

2:01:02George Kamel:So the car is in your name or just the loan?

2:01:06Dr. John Delony:The car's in my name.

2:01:07George Kamel:Okay, and he's driving. He's a driver on the insurance and all that.

2:01:11Dr. John Delony:What's your primary residence right now? What do you mean? It's a home, a house. Yeah, is it paid off too? Yes, sir. Okay, okay.

2:01:20George Kamel:Man, it sounds like what you said at the beginning of the call is this house, this rental property is stressing you out and you don't want to be a long-distance landlord.

2:01:28Dr. John Delony:That's true. So, I mean, with my daughter living there, I kind of have her to help. And once, yeah, to help. And then once the boys are there, I won't even have to, you know, they can do the yard and things that I'm paying for now that I can get them to do.

2:01:43George Kamel:Yeah, but they'll set the house on fire, too.

2:01:45Dr. John Delony:They might.

2:01:46George Kamel:So what would it cost for them to go live on campus or live off campus on their own?

2:01:55Dr. John Delony:About$1 ,200 a month.

2:01:56George Kamel:Okay. And would they be working part-time during school?

2:02:01Dr. John Delony:I would like them to, yeah.

2:02:02George Kamel:I think that's a good plan to have some skin to the game because right now you're covering all the – you're saying, hey, I'm covering all the housing expenses. You guys don't have to worry about anything?

2:02:10Dr. John Delony:So yeah, with the divorce decree, their dad is paying for school tuition, and I'm paying living expenses. Okay. What if we – I think$1 ,200 is low, but I'm going to trust your numbers because you're pretty sharp. You're on top of it. So if we just did like A, you said I don't like being a landlord. It stresses me out. It's a long-distance thing. I'm a hundred percent agreement with you on that. Um, also again, I don't want to overly gender this, but I just worked with college students my whole life. And I know when I was in college, walking into my girlfriend's house, who's now my wife was a much different experience of her walking into my house where I live with four other dudes.

2:02:51Dr. John Delony:Right. And so if you just looked at, so you got that issue. Number one, number two, if you sold this house and got 300 ,000 bucks and you put 50 grand in a high yield savings account, then they're going to live on campus that first year probably anyway. Then you've got three years at$1 ,200 a month. That's going to be about 44 ,000 bucks, 43, 44 ,000 bucks. Then you've got it paid for. Yeah. And then you could take that 250, drop it in your retirement and call it.

2:03:21George Kamel:Yeah. Yeah. I'm looking at this 320 you could net. If you just drop that in a high yield savings account, you could make 10 grand a year and you're not paying property taxes, insurance, you know, yes, you're gonna have to pay for their housing, but I also think they can help out with that too. So it's not all on you. Or they might get scholarships. We don't know.

2:03:40Dr. John Delony:And they're not going to get scholarships.

2:03:42George Kamel:The way you said that so confidently was worrisome.

2:03:45Dr. John Delony:No. I mean, I love them. They're great. You're doing such a great job to not say anything negative about them, but you're like, I don't want them living in my house. I don't, they're not, they're not going to go to school. I only trust them to mow the lawn. They're twin 17 year olds. No, of course. They're feral, and that's awesome. That's why we love them. And also, that's why we're excited for them to go to college.

2:04:04George Kamel:Let them go destroy someone else's house. You don't have to be the landlord. Yeah, I'm totally with you on this. I personally would sell it based on everything you've told me. I think you're going to be okay either way, but the mental load is not worth it. The juice ain't worth the squeeze on this one, and I think you can cash flow any housing costs that do come up. What's your income?

2:04:21Dr. John Delony:I'm a kindergarten teacher. I make about$60 ,000.

2:04:24George Kamel:God, you're a saint, dude. Wonderful. Well, you're in a good spot. I mean, I know you want to make up some time on retirement, and I think eventually we can start dumping some of that money in. Are you talking about using that money in like a non-retirement account?

2:04:38Dr. John Delony:No, I would put it into like my Roth.

2:04:41George Kamel:Because there's a contribution limit on the 401k and the Roth IRA.

2:04:45Dr. John Delony:Yes.

2:04:48George Kamel:So you're not going to be able to dump$300 ,000 into it?

2:04:50Dr. John Delony:No. So when we bought the house, we were using it as like long-term income. because that's what my ex-husband wanted, and he was going to be in charge of it, and that was great. And I just don't want that stress, like even though it might be potential income years down the line.

2:05:08George Kamel:Yeah. Well, you sort of become a landlord by default.

2:05:11Dr. John Delony:Yeah. Yeah, and I can imagine in your situation, especially given what you've gone through, having$320 ,000 in a high-yield savings account just there for a season is going to give you some breathing room. Yes. Well, and I'm doing okay. I'm like I said, I have my emergency fund. I have a start of retirement and I'm putting about 10 % away a month into retirement savings. And I have the boys first year living in the dorm and living on campus saved for them. And that's from my parents. My parents actually set that up for them. Amazing. That's awesome.

2:05:46George Kamel:Well, I would pay off this car and then you can up your investing to 15 % or more because that puts you in baby step seven. You'll have no debt whatsoever, Right.

2:05:54Dr. John Delony:Yeah. And I'm a little bit worried because when they turn 18, I'll no longer get child support, but I'll still be paying. Even if I pay the car off, I'll still be paying their car insurance on the car. I know, but Amy, sometimes you sit down and you have a really direct, hard conversation with 18 year olds. Yeah. About here's mom's situation. And if you want to keep driving this car, you're going to have to cover the costs. Or I can pay$250 of it and y 'all are going to have to get jobs. Yeah, they have jobs now. They know. I mean, they were old enough when everything happened with their dad. But they're very aware.

2:06:32Dr. John Delony:They're great. But I know that you love them and you want them to get the same experience. Their sister, all that is awesome. And I'll just tell you, having worked with college students and their parents for most of my adult life, what they really need from mom from 18 to 21 is mom to be whole and well. Yeah. Right. And I am. I'm in a good place, I think, emotionally, mentally right now. And so that's why I'm able to start looking at these things critically. Perfect. The first six months was just survival. Of course.

2:07:07George Kamel:Yeah.

2:07:08Dr. John Delony:You don't give up because you don't have a choice. That's exactly right. You have to. Yeah. But now I'm starting to look at, okay, life goes on. Yeah. And I want to make the best of it. Perfect. Perfect. Perfect. You're awesome. Awesome. I love it.

2:07:20George Kamel:You're going to do just fine. I would sell this house ASAP. And again, nothing's on fire here, but the way you were like, this thing is stressing me out. I don't want to deal with it. I don't want to keep it long-term just because it's a quote investment. And I see this happen a lot, John, because parents, they see like a tick, a social media video about how it's a life hack to go buy your kids a property where they go to school and they live there and you can collect the rent and depreciation. And it sounds so good on paper. and the reality of it is this.

2:07:47Dr. John Delony:Because you've got four college kids living in your house for... And you're eating the expenses. Eight years.

2:07:51George Kamel:Yeah, that's a tough road. All right, that puts this hour of The Ramsey Show in the books. Remember, there's ultimately only one way to financial peace and that's to walk daily with the Prince of Peace, Christ Jesus.

2:08:15Thank you.