Take Debt Off The Table For Good

22:50Dave Ramsey:Four. That's not who sells your house, okay? That's not what you do. You don't want a side hustler. No. Or I just, I always dreamed of being, no, I don't care. Not selling my house. Okay. This is a$500 ,000,$600 ,000,$200 ,000 asset here. All right. So how do you find someone you can trust that's high octane? We vet them. They're called Ramsey Trusted Agents. You can find a Ramsey trusted agent for free at Ramsey solutions.com slash agent, or you can click the link in the description. If you're listening on YouTube or podcast, we'll take you straight there. Julie is in Greenville, South Carolina.

23:26Dave Ramsey:Hi, Julie. What's up? Hey, Dave. Hey, George. My question today is about taking a dream vacation to Hawaii. My husband and I have been dreaming about taking ourselves to Hawaii, and now we have three kids, so we would love a family vacation to Hawaii. We've wanted this for about 12 years now and started saving. On the bad side of things, we started saving only$100 a month for almost the last 12 years. where we failed is thinking that would get us somewhere in the ballpark of$10 ,000 to maybe$15 ,000, and that would be enough to take five people to Hawaii for a week or two. We failed to think for inflation.

24:17No, you failed to save enough money.

24:19Dave Ramsey:Inflation didn't have anything to do with it. You just weren't saving enough money. So you truly were dreaming. You weren't working a plan. so the question then is now we only have fourteen thousand dollars and every time we try to run the flights what's your household income seventy thousand between the two of us so what does it need to be for how much do you need to spend on this vacation for you to get to go actually go not just pretend 15 to 20 okay 15 to 20 you've got 14 yep exactly so put some stuff on facebook marketplace and buy the tickets that's the question is do we just say you know what let's take it we've always dreamed of this let's do it let's find the money let's pull it out let's because we're not putting anything on debt so let's just work harder wait a minute wait a minute wait a minute you're not putting anything on debt you have debt no no none we refuse you're saying you want to do this oh you mean you're not going to borrow the money for the vacation.

25:28Yes. How long is the trip? How many days or nights? We, right now we want to go seven nights. Okay. I was just wondering what the levers we can pull, because if you go six nights, well, all of a sudden you can afford it. So have you done the research to actually see who has the best price? I've been researching for two years consistently, thinking we had enough for two years and we just keep pushing it off. And so my thought is, let's push it off another year or let's just go to a lesser quality hotel everyone's tired of hearing about this trip i think you just need to go ahead and go you're tired we can't wait another year i mean i just so this is just for fun julie i like costco travel i jumped on there found a maui package five travelers two rooms 11 grand including flights from greenville so i'm just saying if we did that while we were talking julie that's it's 60 seconds of research the goal is the goal is spring break only because children summer sport julie and so we're just thinking through all the options did you not hear what he just said yes and he went on costco.com this is for trip while you were august 4th we're talking like a month from now and it's a week-long trip so i'm just saying we need to look at some options here and not kick the can down the road

26:43Dave Ramsey:because the kids are free this summer so here's here's the problem you're going to have overall you need to go on the trip and you need to pay cash for it and you need to figure out a way to do it between now and spring break and stack up whatever cash between now and then to add to this so you get to do close to the trip as you want to go but the problem is is you have put too much psychological bullcrap on this trip you have your expectations are so stinking high i don't care where you stay you're going to be disappointed because you've been dreaming of this for 12 years and I've been researching, not well, but you've been researching.

27:22Dave Ramsey:George beat you in 30 seconds. I might go. I'm excited about this trip now. George bought the book of trip right now. Whitney, here comes George. We're going to Hawaii. But yeah, you know, I seriously think you're going to be, you've got this thing built up to being some kind of nirvana. It's nice. I've been to Hawaii a couple times. I'm not mad about Hawaii, but it's not actually my favorite place to go. If I was going to spend that kind of money, there's probably a different island I would go to, honestly. But you go, it's going to be nice. You're going to enjoy it. You ought to go see Diamond Head.

27:52Dave Ramsey:You ought to go see Hanama Bay and, you know, run over to Maui. Go see the Big Island if you can with the active volcano. There's some great diving there if you guys know how to do diving. And, I mean, you know, it's a good trip. It's a good trip. But there is no piece of travel. It's like owning an item. As soon as you buy the car, stupid thing breaks. As soon as you buy the house, the hot water heater goes out. And all the little shine and all the little gloss on this dream goes away. 90 % of the excitement was the fantasy of it happening. Exactly. The anticipation. And the actual event is going to be a letdown.

28:31Dave Ramsey:Because you've got this thing up so high in your brain. It's going to rain. Someone's going to get sick. The kids are on their phones. Every afternoon it rains. And they call it a blessing. A Hawaiian blessing. Nice way of saying it's freaking raining again. Okay? Like, what are we, in Seattle? I mean, it's crazy. It's not like the pictures. They don't show that on the brochure. Well, the famous website of the hotel, right? It's like, where is this hotel? Not the one I'm staying in. But yeah, I want you to go, and I want you to have a good time. But let's be more, let's have reasonable expectations as to what this trip represents and what this trip is.

29:11Dave Ramsey:It'll be a fun thing to do. Your family is saved gradually to be able to do it for a long time. You've finally gotten to where it looks like you're going to be able to do it, but maybe not the Ritz-Carlton version, instead the Motel 6 version or whatever it is. I don't know. Where were you staying on your little Costco flight? You know, they only choose quality hotels, so I trust them with my whole heart. Yeah, and you can upgrade, you know. Oh, really? I mean, they sell caskets. I did two trips. I did Cabo and I did Cancun. I'm saying, they don't tell you the hotel? They will if I keep going in the process.

29:45Oh, you got to buy it. Yeah, I got to keep going. I'm in airfare right now. You know, it's a whole process, Dave. I can't just book a trip. It's hotel. What's in the package? There we go. Continue to hotel. Here we go. This is very exciting for me. I feel like I'm getting 90 % of the thrill of booking the vacation.

29:59Dave Ramsey:Yeah, Costco owes us big time for this freaking endorsement. Yeah, I don't think they even do marketing. That they didn't pay for. Here we go. These are, you know, three and a half star hotel. What is it? It's the Aston Con Polly Shores. Three and a half stars. Okay. That's not a bad room. Three and a half? That's not good enough for Dave, apparently, guys. But, you know, it's almost a four star. Yeah. Yeah, you're right. It's almost a three. You want a luxury? But you can actually choose different hotels, which is nice. Okay. You can go down here for it. And you can upgrade that. Here you go.

30:28Waldorf Astoria, four and a half. That's going to cost you a pretty penny. Oh, that goes up. That doubled the trip. That doubled the cost of the trip.

30:34Dave Ramsey:Oh, okay. Now we're up to where Sharon Ramsey wants to go. That's the live like no one else package right there. Okay. All right. But, hey, go on the Ramsey Cruise. That's less than half the price of Hawaii. There we go. Think about it. Could be. Not with three kids. Yeah, that's a lot. I don't know. I don't know. It could be. How do we stack them in those cruise rooms? Yeah, three bunks stacked high.

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32:33Dave Ramsey:Michelle is in New Haven, Connecticut. Hi, Michelle. How are you? I'm good, thank you. How are you? Better than I deserve. What's up? So I was actually calling to find out if I should use my 401k to pay off my student loan debt. No. Okay. You know why? I do know why. I think pretty sure I know what you're going to say about that. Okay. What am I going to say? Well, the tax penalty and then also the tax for your income bracket would reduce what you get significantly. Yeah. So you're going to pay a 10 % penalty plus your tax rate on whatever you withdraw, which is going to be like 35 % or 40 % when we're done.

33:18Dave Ramsey:And so it's like saying, Dave, I want to borrow money at 30 % interest and pay off my student loan, and that wouldn't make sense. So how much do you have on your student loan? I have$16 ,000. Okay. That's not bad. Good. That's good news. What other debts have you got? I've been, honestly, basically an orthodontic debt of$4 ,800. How old are you? A mortgage. I'm 41. Okay. You're single? Recently divorced, yeah. Okay. And you have a mortgage. What's your mortgage balance? Well, the mortgage, the balance is$205 ,000, but it's a three-family. I live on the first floor, and the tenants cover the mortgage.

34:00So I actually have a positive of around$440 a month.

34:04Dave Ramsey:When the tenants pay, they cover the mortgage. Yeah, that's good. Okay. What made you feel hopeless enough to go to your 401k to pay this off? I think the divorce kind of put some things in perspective, especially since I started now having to pay child support. and also now paying for child care just because I wanted my son to have more time with peers and other people besides family. So the budget got tighter and you went, well, I don't know if I'm ever going to be able to pay this off. What is your income? My income, my salary is$101 ,000 a year, but my take-home ends up being around$56 ,000,$51 ,000 a month.

34:50Dave Ramsey:And effectively, after the renters pay, assuming they do, you don't have a house payment because they're paying enough rent to cover it. And so why can you not knock this 16 out pretty quick? So that is what I've actually been working numbers. And part of the problem, I think, is I was putting 12 % of my 401k. I've knocked that down to 4 % to take advantage of my company's match. Yeah, what I would do is just stop your 401k until you're out of debt. You were about to unplug the whole thing anyways, so pausing is way better if we're going to look at the consequences here. And you'll be back to investing.

35:27And the other thing you've got to think about is all of the growth that was unplugged if you were to do that, if you put that in an investment calculator of what that amount would have grown to, it'll make you stop real quick.

35:37Dave Ramsey:Let's just stop the 401k temporarily, get on beans and rice, rice and beans, and knock out the$4 ,800. You need$20 ,000 and you get your life back, right? Right, right. At least that portion of your life. I mean, you've still gone through a divorce. You've still got the other heartache and the things from what you've been through. But if you got$20 ,000 out of$100 ,000, you should be debt-free in well under a year. Yeah, a year would be about a little over$1 ,700 a month would knock it out. Six months, if you could get intense and do$3 ,400 a month, you're done in six months. By Christmas, this thing's over.

36:11Dave Ramsey:And then finish your emergency fund of three to six months of expenses. We're working right up the baby steps. That's baby step three. and then restart your 401k at 15%, not 12, not 4, going into your 401k. Make sure it's a Roth and make sure you're invested in good growth stock mutual funds. And then you're going to be wealthy. And then long term, I want you to decide if you want to live next door to your tenants or not or in the same abode with your tenants. The good news is you're right beside your tenants. The bad news is you're right beside your tenants. and that can be a sticky wicket, as they say.

36:49Dave Ramsey:Footsteps away. It can be a sticky wicket. All right. Sarah's in Waco, Texas. Hi, Sarah. How are you? Doing well, Dave. Thank you so much for taking my call. Sure. What's up? I am a military spouse, and me and my husband rely on, we currently rely on our credit score so that we can easily rent a house when we move every three to four years. That is absolute bull crap. That is just not true. You do not need a credit score to rent a freaking house when you're in the military. That's what I want your advice on. How can we prepare to rent when we, in a year and a half, pay off all of our debts? What do we need to do to kind of prepare so that we can rent easily?

37:41Dave Ramsey:If you're going to go home, your husband's in the military, and what is his rank? He's a staff sergeant. Great. You walk up to the landlord, you meet them at the property, and you say, my name is staff sergeant, and you're in a military neighborhood. He knows exactly what that means. Your landlord will. I promise you. Okay? He knows exactly what that means. It means that you're always going to get that amount of money every single month. Your husband's income is what's known as secure. Your landlord is going to love the fact that your husband is not going to lose his job or get laid off because some tech tycoon decides to cut stock price.

38:25Dave Ramsey:Okay, so your husband has what's known as the ultimate steady job, a predictable environment, and he's a staff sergeant, so he's a leader. He's going to pay his bills. and Mr. Landlord, Staff Sergeant so-and-so is also going to smile and say, we are privileged to be 100 % debt-free, which means it's going to be very easy for us to pay this rent. It also means that when you check our credit, you're not going to see much of a credit score because we don't believe in borrowing money, and I know you're going to like that as a landlord. That's all you've got to say, and the landlord will sign you up.

39:01I guess the other side, my husband does have to have a travel card with the Army, and that is in his own credit score. Is there any way that you know of that we can get rid of that? Nope, he's stuck with that. So my husband doesn't have a terrible credit score? Okay.

39:14Dave Ramsey:He's stuck with that. Great. Okay. So we'll just kind of have to make the case, yes, you're going to see this score because of the Army and the travel card. It shouldn't be a low. That's the only thing we've got. Well, it could be. It could be because there's very little activity on it. It's not going to tank it. Yeah. Okay. It shouldn't stop you from getting a house. If you're in corporate America, I'd have some ideas. But in the military, you're stuck with that. There's not a lot you can do with it. But the big thing is you just have to get the landlord to look at the actual benefit. Why would you want to be out of debt?

39:45Dave Ramsey:So it's easier for me to have money to pay bills. And the landlord's going to like that. I would love to see somebody that comes up. And I have a bunch of houses we rent out. And if somebody walks in and goes, I'm in the military, which instantly I know is guaranteed income. Oh, I'm a staff sergeant. I know what that income level is going to be. Put that out there. And, oh, okay, I got guaranteed income. Oh, and they don't have any debt. It's going to be fairly easy to pay this rent. Instead of like, oh, we have six car payments but a high credit score. Or we got a student loan, a car payment, a boat payment, and four-wheeler payment, and a payment, and a payment, and a payment, but I got an 800 credit score.

40:21Dave Ramsey:Yeah, but how are you going to pay the rent with all these stinking payments? that's what the landlord's thinking now if you're dealing with some idiot that's a corporate employee at some corporate apartment complex and they go well we have to look at the credit score then you're not going to get that one but if you're dealing with a single family residence and you can't make the case that you guys are the best possible renter on the planet as a staff sergeant with zero debt oh you can make that case for sure this idea i have to have a credit score in order for us to rent because we're in the military.

40:54Dave Ramsey:Don't ever say that out loud again. Well, I've played this out. We actually, on my YouTube channel and on my podcast, The Fine Print, I called multiple apartment complexes and single family homes across the country. How many? At least seven or eight per. And so every single one said, well, yeah, if you don't have a credit score, we just do a background check, make sure you're not a criminal. Do you have steady income? And you might have to pay a slightly higher security deposit, which you'll get back. In some cases. In some cases, they don't. Even at apartment complexes that were corporate. I explained my situation.

41:23I said, I don't have a score. Can I still rent with you guys? And they went, yeah, we should have a slightly higher security deposit. Okay. Big whoop. If you follow our plan. So did you have anyone out of seven or eight that said no? There was one in New York that had more stringent laws, but they still said, yeah, if you come in, we can take a look and see if we can make this happen for you.

41:44Dave Ramsey:Okay. So that was the only one. Absolutely not. It's impossible to rent a house without a credit score. What they're looking for— That's just a bunch of crap. Because what people don't understand— People don't believe stuff out there that is not true. They're looking for bad scores. And it makes you do dumb things. They're looking for misbehavior. They're looking for terrible scores, not a no score. That's way less of an issue.

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43:44Dave Ramsey:Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. George Camel. Ramsey Personality is my co-host today. Ashley is in Green Bay, Wisconsin. Hi, Ashley. How are you? Hey, good, Dave. How are you? Better than I deserve. What's up? Hi. So it's kind of a long story, but I'm going to try to condense it. I'm 24. I've been living on my own. Bad family situation I had to get away from. I've been kind of working odd jobs here and there. Currently make about 30 to 35 a year, if I'm lucky. My car that I was fortunate to get recently broke down. It's not worth fixing just because it's not worth the amount of money that it would take to fix it.

44:37I'm just wondering if I have no money in the bank, no savings, how would you recommend getting a different car without taking on debt?

44:49Dave Ramsey:uh what's wrong with your car who said it's not worth fixing um so it's had a lot of suspension issues and it has like 20 222 000 miles on it it's 2011 um you know i wouldn't be able to get that much out of it and the suspension issues they quoted me like three three thousand dollars and then is the car can you drive the car what's wrong with the suspension. Yeah, it's a lot of like different like the wheel bearing, like there's just a lot of things that I couldn't afford to fix. That wasn't what I asked. I asked if you could drive the car. Is it rolling? No. Why? What's broken that keeps it from rolling?

45:37Because suspension

45:38Dave Ramsey:Suspension issues don't keep it from rolling. The brakes are creating, like, a lot of heat. Brakes are different than suspension. Okay. Well, yeah, I mean, it's a lot of things is what I'm trying to say. Have you gotten multiple quotes on this? So let me stop you for a second. Okay, I'm sorry, George. Just a second. I'll let you go back to that. Here's why I'm asking that, okay? I drove junk cars for a lot of my life and turned a wrench on them, old redneck style, all that stuff, right? And I don't want you to have to drive a piece of crap car the rest of your life. I want you to not have to, and I'm trying to get you up and moving again.

46:17Dave Ramsey:But I would say close to 100 % of the cars with 250 ,000 miles have suspension issues. The suspension is merely what causes the car to feel like it isn't riding well. If you hit a pothole, it feels like it runs up through your back, you know, and jars your brains out and that kind of stuff. That's a suspension issue. Or when you go into a corner, it feels like it moves like four times as you go around the corners instead of once. That's a suspension issue. None of those things keep you from driving that car to work. And almost all worn-out cars have a worn-out suspension. I've got a 1960 Corvette that has been renovated frame up.

46:59Dave Ramsey:The suspension in the thing absolutely sucks. yeah okay so the suspension doesn't bother me the brakes you got to have fixed but brakes are different than suspension and different than wheel bearings and i think someone has just looked at your car and said oh this is going to take more than to put this car back the way i would do it because i'm a mechanic is going to cost more than this car is worth yeah well we're not trying to do that we're trying to put a band-aid on this sucker so this girl can get to work that's different sure yeah so they said in the dealership oh dealership there's another problem the most expensive place to get a car worked on the most expensive place to get a car worked on is in the dealership yes i'm aware of that then why did you go there i also if you would let me explain i will explain it to you okay try i i took it i took it to another friend after i was done at the dealership.

47:56And he also told me the same thing. It's going to cost, you know, even though he was able to do it for slightly cheaper, the parts themselves were really expensive with everything that needed to be done.

48:09Dave Ramsey:I still don't think everything needs to be done. Okay. I disagree. Okay. I think your friend is wanting to fix your whole car and I don't think he understands all we need is get the brakes on this thing. Can you get some brakes on it for me so I can get to work. And when I get to work, then I'm going to start stacking cash, and I'm going to sell this piece of crap to a junkyard for$2 ,000 for$1 ,500. I'm going to put$1 ,500 with it, and I'm going to go buy a car that's twice as good as this one, which ain't much still. But we're going to move up in car a little bit. You've got no money. I'm trying to get you off of your feet.

48:45Yeah. Yep.

48:46Dave Ramsey:And that's what I'm trying to do. And the dealer is not even going to come close to helping you. A hundred percent of dealers are going to tell you, oh, you need a new car. here's three easy payments. Asking a dealer to fix your car is like asking a dog if it's hungry. Of course they're going to tell you it's broken. And your friend is probably looking at it going, yeah, I'm a good mechanic and I know how to fix all this stuff and it's not worth screwing with. But he hadn't thought about the fact that you've got no money to go buy a car with. Yeah, I mean, my friend doesn't have a financial incentive to tell me anything, though.

49:21Dave Ramsey:I didn't think that either. I think he's a good mechanic and he wants to fix everything. And I wouldn't fix everything on this car. I drove cars just like this when I was broke too. Can you go back to him and say, hey, I just want to get from A to B. I don't need to do everything. What do I need to do to get this thing rolling again? And then you go take six shifts at whatever it is you're doing and pick up four side hustles and go put your little money together and let's get this thing up and running for four months. I had a guy loan me a car with 400 ,000 miles on it when we went bankrupt. 400 ,000.

49:57Dave Ramsey:This car was an absolute piece of crap. When I drove it into a good neighborhood, the cops followed me. They thought I was going to steal something. This car should not be in this neighborhood. It was that bad. I drove that car for three months, and it was the worst experience of my life. I used to tell people I drove that car for 10 years one three-month period. But you know what I did during that three months? I worked like a maniac, and I bought a$1 ,500 car, which was way better than the blessing my friend had loaned me. That's the blessing of a beater. When the guy loaned it to me, I swear to God, we got the jumper cables, jumped it off, and I drove it up out of the weeds.

50:44Dave Ramsey:you might be a redneck if this is the loner i was driving the vinyl roof was torn loose across the front so when you drove it it filled up with air it looked like a rolling parachute when you come to a stoplight your stop would settle oh man for three months i'm emotionally scarred this was 35 years ago i'm still scarred from this you're still angry at this car i'm old blue old blue take this thing after the farm and shoot it dave is it still around somewhere Needed bullets put in it. It's in a junkyard somewhere. Like an old horse, it needs to be put out of its misery. Uh-oh, wait a minute. That's your line.

51:19Dave Ramsey:Yeah, that's my territory. Anyway, so what I want for you, Ashley, is I want you to get out of the mindset that you're going to go take out a car payment. You're 24. You make no money. You're on your own. You got away from a toxic family situation. And the last thing you need is a car payment. In the meantime, it might be— need is some semi-horrible transportation for a short period of time for you to work like a crazy girl and pile up cash and no happy hours and no eating out and no nothing, no partying, no fun, pile up cash and get you a little better car and then pile up cash and get you a little better car and then you'll start to be in something that's reliable.

52:00Dave Ramsey:But you're not going to do it with car payments. If you sign up for car payments, girl, you're going to be stuck right where you is for the next five years.

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54:10Dave Ramsey:Guys, I want to loop back for a second. If you find yourself with a low income and no money, The way out of the situation is not borrowing money to buy things. That will nail your feet to the floor and you will not be able to move. It's a trap. And that's why payday lenders, pawn shops, rent to own, and tote the note lots are in the poor end of town. They're not in the rich end of town. Because they oppress, they take advantage of people with low incomes who feel trapped and desperate. I have been broke. I've never been poor. poor is a state of mind. Poor is I'm trapped and there's no way out, so I'm forced to rent my washer and dryer at the rent-all place.

55:22Dave Ramsey:I'm forced to buy a car and pay three times too much for it at an interest rate that can't even be calculated on the tote-the-note lot. Or I'm going to borrow money at 8 ,800 % interest. That's actually what it is. It's not an exaggeration. at a payday lender because it feels like I'm trapped and I'm reaching for, I'm grabbing for anything that I can get a hold of to get out of this trap. And when you do that, someone will hand you a concrete block and you will sink. They will not hand you a life preserver. and and so and that includes going to a car dealer when you make 25 000 a year and you're 24 years old to get your thousand dollar car worked on in the repair shop that's a hundred percent of the time not going to go well they are not set up to serve that clientele they're not set up for it they don't even know how.

56:33Dave Ramsey:Their brains don't even work that way. And so you can be angry about it if you want. That's not a bad thing. But the way out is not to borrow your way off of the bottom rung of the income ladder. The way out is to cut your lifestyle to nothing and work like a maniac. And get your income up. Get your income up. Get your income up. Get your income up. You do not, when you're in a situation like that, and I have been there, you do not have any time or margin for any kind of relaxation or luxury. In a country that is full of relaxation and luxury, every Instagram feed is some bullcrap thing that you don't need to be messing with.

57:29Dave Ramsey:You don't need to look at any kind of social media when you're in that situation. All you need to do is work. My grandmother used to say there's a great place to go when you're broke, to work. And it's the only way off the bottom. But it will get you off the bottom. It'll get you out. You're not stuck. You live in the greatest country the world has ever known. And if you simply get up and go work six jobs, today you can make$20 an hour at Target and FedEx. Throw in boxes. Today. Today you can make serious. You do not have to have a master's degree in finance to make a really good living today.

58:13Dave Ramsey:And once you get your income where you can go buy a$3 ,000 car for cash, now things start to loosen up a little bit. And then you can go buy a$6 ,000 car for cash. Because the good news is a$3 ,000 car in one year does not go down in value. It's pretty well done. So you can take your$3 ,000,$4 ,000, add to that, get a$7 ,000. This is how Sharon and I got out after we went bankrupt and lost everything and had two little babies. We did a borrowed car to a$1 ,000,$1 ,500 car to a$3 ,500 car. Those are the real numbers. I remember distinctly when I bought the first$10 ,000 car after bankruptcy, it was several years later.

58:58Dave Ramsey:Wow. It wasn't 20 minutes later, and I wasn't trying to rebuild my credit because credit had not served me well. I was done with credit. And so I went to all the way to the bottom, lost everything, started in the hole because I still owed the IRS. My net worth was not zero. It was negative. I owed the IRS money because you can't bankrupt those buttholes. And so I still got the IRS. I've still got this and that. I've still got these things. And I've still got two babies to feed. And I've still got to keep the lights on. And I was so scared I couldn't breathe. I didn't know what to do. And so if you're in that situation, I've been there.

59:42Dave Ramsey:And I'm not going to sit here and tell you what you want to hear. And if that pisses you off, that's awesome because that's my job is to piss you off so you don't stay where you are. If I can upset you and make you move off your little butt, then I did my job because that's what people do with me. They didn't look at me and go, oh, Dave, you need a government program. I said, you need to go make some lemons out of all that lemonade, all this freaking lemons you got. You got cases of lemons, boy. You need to go do something with it. These are my friends, my family. Zero mercy. Actually, it was really great mercy because it was the truth.

1:00:24Dave Ramsey:That's the kindest thing you can do for somebody. The way out is the truth. Not say, oh, well, you know, you just need, the poor need a line of credit. That's the last thing you need when you're broke. It's going to keep you freaking broke. So the last thing you need is a car payment because you've got a car problem. and I just my job here is to love you so well I remember how that feels and I am not going to tolerate the narrative of lies that are going to be thrown at you I'm a consumer advocate we're here George and I are here to help you not anything else we are not our entertainment value we were entertained long before we got to these microphones doesn't take much this is what you've walked into if you walk into the ramsey show don't expect anything else steve is with us in san antonio texas hey steve what's up hey guys thank you so much for taking my call sure can you hear me yes sir how can we help okay so i'm gonna i'm gonna ask the question and then i'm gonna describe the situation my question is when should i file for social security with Irma in mind.

1:01:34You're working here with Irma, right? Yeah.

1:01:38Dave Ramsey:Okay, give me the rest of the story. I'm so confused. Okay, so I turned 65 in March. I'm a school teacher. I got Part A covered. I filed for Part A of Medicare. The rest, because I'm still with the school district, I'm taken care of. I've got social charity coming to me when I do retire not much but some next March I will meet with in Texas called the what's it called I forgot what it's called but when you hit a certain age and the years of service you get full benefits alright so I'll get that in March the third source of income that I'm going to have when I retire is and I'm blessed I won a scratch off ticket for$500 ,000, and that turned out to be$380 ,000 after the taxes were taken out.

1:02:37So my question is, with Irma in mind, I know in two years' time, I will be taxed heavily because of that sudden growth of income. My question is, what was your advice for filing for Social Security? do I wait until after that two-year grace period, or should I file Social Security next year when I retire?

1:03:02Dave Ramsey:I would wait, given that you're going to take the hit on the lottery. The lottery income is going to come in. Let that purge be the rat and the snake all the way through your taxes, and then do your Social Security after that, and then you won't have to deal with IRMA. It's not a problem. Because IRMA is not affected by net worth. It's affected by income. And so, yeah, that's what I would, yeah. And by the way, what they withheld on that is not necessarily your tax rate. Your tax rate is, they withhold 24 % on lottery winnings, but you may or may not be taxed that. You may be taxed more or less.

1:03:39Dave Ramsey:So you need to get some good tax advice as well. Go to RamseySolutions.com and click on taxes.

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1:05:29Dave Ramsey:Well, we wish we could get to every call and question here on the show. If you've got a money question, you want an answer for your situation, head over to the website and use Ask Ramsey. Ask Ramsey is our free AI tool that's built and trained only on proven Ramsey principles. about three years worth of this show we dropped into it and we dropped all the books we've written into it we dropped all the articles which there's thousands of that we have on our website on different subjects into it and so it's pure ramsey no reddit no tiktok no crap just what ramsey says and if you don't want to know what ramsey says then you wouldn't certainly use ask ramsey but if you do want to know what ask what ramsey says you could ask ramsey and you will only get a Ramsey-fied answer.

1:06:13Dave Ramsey:As a matter of fact, it's getting increasingly smart-aleck. It's starting to sound like me. It's so bad. But hey, ask your question today at RamseySolutions.com, completely free. Ask Ramsey, or click the link in the description if you're listening on podcast or YouTube. Abigail is in Vermont. Hi, Abigail. How are you? I'm doing well. How are you? Better than I deserve. What's up? So my husband and I, we've been married for five years now. We bought a house right before we got married. And before we got together, I lived at home with my mom and I ended up buying my own house on my own, kind of spiraled into we had a good nest egg built up.

1:06:54So now five years into marriage, we have no debt except for a mortgage. And during that time when I was living at home before we were together, I didn't have any bills or anything. So I dumped a lot of money into my retirement account. I did it. It's a 403B Roth. So I have about$143 ,000 in my retirement account. Our current debate that we have is my husband really wants to take a chunk of that money and pay off our mortgage. We have about$54 ,000 in investments, including an emergency fund. Our yearly income is about$110 ,000. But in our investments and our retirement, we definitely have enough that we could wipe out our mortgage.

1:07:39But I wasn't sure if taking that 10 % penalty, because it did go in Roth, if that would be worth paying the mortgage off early. That way, every month except for June and July, we have an extra$1 ,600 that we are able to throw into our investments and our mortgage. What's your mortgage balance? About$125 ,000.

1:08:02Dave Ramsey:Did you keep the house you paid off? So the first house that I bought, we sold it, and we used that money to renovate our current house. Our house was a fixer-upper, so we did all of our renovations without getting any. Okay, so you only own the one house. Correct, yep. And you have$54 ,000, and you have$112 ,000 owed. And$100 ,000, and what was your income? I'm 100 in what? So$110 ,000 in income. Our mortgage is$125 ,000. Okay, and 54 in some. Yeah, 54 in investments and emergency funds. You've got 140 in your Roth. We do have life insurance. Yeah, your husband's wrong. There's no possible way I would pull money out of a Roth and pay off a mortgage.

1:08:47Dave Ramsey:I want your mortgage paid off worse than he does. It's going to do amazing things for you guys, but I don't want to be stupid in paying it off. and the hit you're going to take on this account is not worth it to pay it off. You're going to get there. You're fat on your emergency fund. You don't need$54 ,000 in there, so I'd take$25 ,000 of that and throw it on there. Then you've got$100 ,000 to go, and you're doing about$18 ,000 a year right now, $1 ,500 a month, right? Roughly, yeah. I work per diem, so when I say our yearly income is about$110 ,000, I'm per diem. I'm a nurse, but I have a lot of medical conditions that kind of inhibit me from working more.

1:09:28Dave Ramsey:Do you make$110 ,000 or don't you? We do. But some years we are able to make a little more than that. Okay. Well, when you make a little more, put a little more on it. But if you don't make a little more, then you're still okay. You're fine. I mean, you put$20 ,000 a year on$100 ,000. It's gone in five years. And you're how old? I'm 28. He's 34. Yeah. And so you're going to be not even 40 and you have a paid-for house. The house is worth what today? About$220 ,000. Good, good. You're going to be in great shape. Y 'all are doing so good. I want to reset the conversation with them tonight and go, hey, I know you want to pay off this mortgage.

1:10:03Let's make a plan that doesn't involve decimating our nest egg to get there.

1:10:07Dave Ramsey:Yeah, exactly. Let's use future income, a little bit of our savings. Let's have a plan. Spit shake. Three years, four years, five years, this thing's gone. Yeah, and your 403B, make sure it's invested in good mutual funds because a lot of them aren't in 403Bs. They get into insurance products. Be careful with those. Let's just get in some good mutual funds, good growth stock mutual funds. You should be earning 10%, 12 % average on your money. And if you are, you're going to double that money every seven years. And so about the time this house is paid off, you guys are going to be millionaires.

1:10:38That's one way to look at it. Now, as far as paying this off, would you recommend rice and beans or just continue on the path that we've been doing?

1:10:46Dave Ramsey:I'll continue on the path that you're doing. but I would just say every time I look at, anytime we have quote found money, I get a bonus, I get some unexpected overtime, I get whatever. Anytime we've got some found money that the budget didn't need and that, you know, we can still have a good life while we're doing it, I'm just going to throw all found money at it. You know, you know, rich uncle passes away, leaves you 5 ,000 bucks. That's found money, right? You just throw it at it. Something happens, you get$10 ,000 somewhere, just throw it at it. What's going to end up happening? You're probably going to pay the house off in about four years without doing rice and beans.

1:11:23Sounds about right. Yeah.

1:11:24Dave Ramsey:Yeah. I think that's where we're kind of. Yeah. I think, I mean, that's more than$20 ,000 a year, but you're going to have some found money. You're going to pick up your per diem. Different things are going to happen. And you can still have a good life while you're doing that. You still go on vacation, go on a date. Yeah. Yeah. Don't punish yourselves for no reason. And that, when you're in baby steps four, five, and six, which is where you all are, we are intentional, not intense. One, two, and three is intense, which is beans and rice, rice and beans. You don't see the inside of a restaurant unless you're working there, and you don't go on vacation until you get your butt out of debt and have an emergency fund.

1:11:58Dave Ramsey:Then when you move to where you guys are, Abigail, we go four, five, and six, and that's intentional, and that's when we have a life. But we also have goals. And we're, you know, found money goes towards the goal. and your husband's got a great goal of having a house paid for because guys when you got no house payment you know how fast that old house payment turns into a million dollars when it's invested i did that i took my old house but when i finally paid off the house it was 20 it was a it was about 1900 bucks back in the day and i rounded it up 2500 and i put that automatic draft into a mutual fund just to see and left it on never put anything else in it how fast that one mutual fund became a million dollars was absolutely mind-boggling.

1:12:40Yeah, that's the compound growth on that. Because you're used to paying a stupid house payment.

1:12:43Dave Ramsey:When you pay yourself a house payment, oh my goodness. And it's invested. My goodness. Instead of paying interest to the bank, you're paying yourself some interest. Ding, ding, ding. And once you cross that threshold under$100 ,000, you're like, game on. We got this. Oh, yeah. You can smell it now. Anthony's in Chicago. Hey, Anthony, what's up? Hey, Dave. Thanks for taking my call. Sure. How can we help? uh so i've been recently i graduated two years ago i've accumulated or accumulated a lot of debt in those four years plus a new car i bought that you probably won't like but currently i sit at roughly i was trying to get like some tips i'm like i feel like i'm doing a good job repaying it back and i was wondering if you can provide any more helpful tips to keep going on that aggressive edge that I've started.

1:13:34What's the total debt?

1:13:36Dave Ramsey:The total debt after, like the start, or around that right now? The balance right now. Today? Today is about$50 ,000-ish. What's your income? It's about$66 ,000, but I have overtime, so it was$76 ,000 last year. Good. What's the ish$50 ,000 on? So we got $33 ,000 in a private bank student loan. We got$17 ,000 in federal loans. And then my car is above equity value, above my loan value. I don't care. What do you owe on your car? $15 ,000. Okay. So you don't have $55 ,000. You have$65 ,000 in debt. Correct, technically. Yeah, okay. All right. That's almost 100 % debt to income ratio. So you need to get this income up.

1:14:31We might want to sell the car if you want to speed this process up, but that's the only way to do it. Spend less, make more, throw the difference at the debt. Debt snowball. It's small to largest balance. And hopefully you'll be out of this thing in two years.

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1:16:30Dave Ramsey:Sarah is with us in Oklahoma City. Hi, Sarah. How are you? Hey, doing well. Thanks for taking my call. Sure. What's up? The gist is I'm wondering, there's a lot more context, but I'm wondering if I should take money out of my 401k. so that my fiancé can kind of get prepared and pay off some of his debt before we get married. I'm sorry, what would you do with the 401k money? So I am staying at home right now with our eight-month-old baby, so I haven't been working since like 38 weeks pregnant, and so I don't have my own income. So he's covering everything. Very grateful for that. What does he make?

1:17:19Total, about$35 ,000 a year, so it's pretty low.

1:17:23Dave Ramsey:So you're going back to work, I take it. Yes, at some point soon, but that's not on the table right now. Why? And we get married in six months. Why are you waiting six months? You have a baby. Get married tomorrow. Well, so that's where the nuance comes in. we're Catholic and we have to be kind of in a marriage prep before we can get married in the church. So we have it set up. We've tried to keep our lives fairly separate. We wouldn't be living together if we didn't have a baby, but this is where we found ourselves. And, you know, we made certain decisions so that I could stay home with our son.

1:18:04I was in an in-between. I had left my career a few years ago. So it was just working part-time job.

1:18:10Dave Ramsey:You're looking for a magic switch to make an impossible set of math work, and the magic switch is not your 401K. So the box that you guys have built for yourselves that you're trying to live in doesn't fit, and the 401K is not going to make it fit. So how much debt does he have? He has about 28 ,000. And I have zero. So that's also part of it is... Yeah. Well, number one, you know, I'm fairly aware of the detailed pre-marriage process that a good Catholic goes through. and it's also, by the way, for those of you that aren't Catholic, I'm not, but I'm aware of this part, the statistics of the folks that go through the pre-marriage system that the Catholics use are very good for staying married.

1:19:18Dave Ramsey:So the pre-marriage process that you're talking about is very thorough and very good. I'm a believer in what you're doing. I'm not aware of how they treat a child out of wedlock in that process. That's a little surprising to me. The priest would say, wait, you've had a baby, but we're still going to act like you didn't and go through all of this detailed pre-marriage counseling as if you guys weren't sleeping together. That's weird. Yeah, it surprised us too. So in our area, they actually don't even start marriage prep until after a child is born. So even though we've been together for a couple of years, just to allow, I guess, like freedom with the sacrament and make sure that it's not like a shop-in wedding kind of thing.

1:20:10That makes no sense.

1:20:11Dave Ramsey:Okay, I don't know. I don't know. That's confusing to me, but I don't know how to speak into that. What were you doing before, and how much were you making? so immediately before he was born um i was just working at a brewery and like substitute teaching the 401k is from um when i was a teacher a public school teacher a couple of years ago okay and what's he doing only making 35 how much is in the 401k only about 13 grand okay All right. If you take it out, it's$6 ,000, not$13 ,000 by the time they take the penalties and taxes out of it. It might be$7 ,000. It might be$7 ,000. Okay. And so it's not going to – but my point earlier is it's not going to fix your problem.

1:21:01Dave Ramsey:Your problem is an income problem and a marriage problem, and you need to solve both of those as soon as possible. his income going up temporarily working six side hustles your income going up picking up a side hustle and planning to go back to work um and decide and you do not pay bills for someone you're not married to period and i i don't know how to solve the part that is tied to catholicism because i don't know enough about it to speak intelligently but um i do know if i were in your shoes, I would sit down and talk to a priest and figure out some process by which we got married sooner rather than later.

1:21:44Dave Ramsey:And so if you're going to be married and you're going to have a child and you already have a child together, then, you know, the sooner you get that together, the faster your all's lives are going to be knit together, the faster you're going to be able to get the debt cleared and build wealth and so on. But cashing out this 401k doesn't fix. It's like spitting in the wind is you you got you got you got 60 and 70 thousand dollar problems you don't have a six thousand dollar problem and by that i mean your all's incomes suck and so you know the debt payments alone are probably eating up half the take-home pay yeah and it's like it doesn't fix it it doesn't fix it it's like it's a glancing blow at best okay so um yeah yeah Yeah, interesting.

1:22:36Dave Ramsey:So if you cash out your 401k early, you get a 10 % penalty plus your tax rate. So it's typically going to be a 25 % tax rate plus about a 10 % penalty, so about a 35 % hit. So roughly one-third of your money. It's like saying I want to borrow money at 35 % interest to pay my fiancé's bills. Number one, we don't ever pay our fiancé's bills under any circumstances. You're not married to them. do not pay someone else's bills. It's your roommate. And legally, that's where you stand. And if he decides he's just going to say, yeah, I don't really care about priests, and I don't really care about babies, and I don't really care about you, I'm just going to leave.

1:23:20Dave Ramsey:And then you paid his bills. Now, that's the other call we get on the air here. I paid the bills, I paid his debts, and then we broke up. What now? because I thought we were going to get married. I thought we were in love, and I thought we had a baby together. Oh, wait, that last part, you did what to do. But, yeah, this is where you get yourself in a pinch, boys and girls. Girls.

1:23:45Dave Ramsey:Yeah, this is a problem. It's a serious problem.

1:23:52Dave Ramsey:All right, not aimed at her, but just because I can't get it out of my system right now, Now, there's several pieces of research on what's called the success sequence. If you first graduate from high school and only then do you get a full-time job and only then do you get married and only then do you have children, if you do those things in sequence, if you are a millennial, you have a 97 % probability of not being at the poverty level. If you get them out of order and have babies before kids and high school and jobs and grown-up stuff and you get them out of order, then you have a much higher probability of being at the poverty level.

1:24:34Dave Ramsey:And that's exactly what I'm talking about. That's what I'm fumbling around on here. And so after the cow is already out of the barn, now what do you do? you know well all i can do is try to help you from where you are at that point and that's to return you as quickly as i can to the success sequence which is you know okay we got the baby thing out of order here well let's get married as soon as possible because otherwise you end up you know i make really good money and i paid off all his debts and then he just left because he really didn't want a baby and um even though you know yeah and this you know oh when he took the car I bought for him that's in my name and and he's not paying the bill and my credit score is getting messed up I'm going to get repoed what do I do now Dave these are the calls George and I get every week and so I can't I just want to grab all of you that are 18 to 26 years old by the shoulders and yell in your face, don't shack up.

1:25:38Dave Ramsey:Period. There's no data that says this works. None. There's lots of research that says you're going to get your face pounded in. Your net worth is going to be one-thirteenth of what it should be if you're shacking up and you're 35 versus your friends that are married and they're 35. 1 13th. That's more than 10 X that you screwed yourself up. This stuff matters. Get it in order.

1:26:29Dave Ramsey:Molly is in San Antonio, Texas. Hey, Molly, how are you? I'm good. How are you? Better than I deserve. What's up? Well, my husband and I are trying to come to an agreement on pausing investing to cash by our next house and wanted to get your opinion on that. Okay. I'll give you a little background. We are 33 and 34. We bought our house at 26 and paid it off in five years. Way to go. No debt. Wow. We have two kids. So we have our retirement and 529s. Just, you know, outgrowing our house. We want more land. We would like to build. We're just kind of in that limbo of figuring out. So what's the current home worth?

1:27:23About$400 ,000.

1:27:25Dave Ramsey:Okay. And what would your target be for the move? How much? Looking to be about$700 with the land. Okay. So we need$300 ,000. Yes. Okay, I got that. And do you have any investments or savings beyond emergency fund that are not retirement money? Yes, we have a brokerage for the house that's about$125. Okay, so you're almost halfway there. Yes. Okay, and what's your household income? Last year we grossed$190. Good for you. Well done. Okay, and how much is in your retirement accounts? retirement with 529s no retirement accounts oh just retirement 160 okay and how much is in the 529s 60 okay and how old are the babies about to be seven and two and you're 34 you said yes 33 and 34 okay and so the argument is do we stop retirement and 529 temporarily to get the other$175 ,000 that we need to finish this deal.

1:28:37Correct.

1:28:38Dave Ramsey:And you make$190 ,000. So is that a two-year plan? Yeah, my husband works overtime and has the option to make more. So if we did this, we would probably really crunch down. I mean, if you did$175 ,000, you would need to save$85 ,000 a year, right? out of 190 to do it in two years. Yeah, we can do that. Yeah, so it's a two-year plan. So if we don't stop saving for retirement instead of two years, how long does it take us? Three? Yes. So we're arguing about a year. That's correct. Okay. It always helps me to kind of boil it down when Sharon and I are looking at this Because it's not really philosophically some big, oh, we're not going to save for retirement.

1:29:35Dave Ramsey:It's like one year difference if we do or if we don't. So we're really arguing about a year's worth of retirement savings or two years worth of retirement savings one year when we purchase the house. So would we give up two years worth of addition or savings in my 30s making$1.90? What would you do, George? That's kind of interesting. I like that. I mean, I was in this exact position, Molly, when we paid off our first house. And what'd you do? And we wanted to cash flow the second one. I kept investing. I kept investing at that 15 % rate, but not more. Because, you know, once you're in baby step seven, you can invest 20%, 30%.

1:30:15But we kept it at 15 % and the rest of it, we stacked away to make that cash purchase. And how long did it take you to save them to do your move up?

1:30:21Dave Ramsey:Two years? Yeah, that was a couple of years. Probably three years? Probably three. So I think you guys need to decide the urgency of the house move. Does it need to be$700 to$650 work? Because you're talking, if you're investing 15 % right now, that's about$28 ,000 of your gross income. That's what you're actually talking about. So does the$28 ,000, is it worth waiting a year? Is it worth investing for that year? It doesn't even take a year. It's more like six months now once you talk about that one. Yeah, if you guys actually crunch the numbers, I'm curious what the actual numbers would be based on how much you're investing now, what pausing would get you, what that next house will actually cost.

1:30:54Because the other part is buying a new home is just the starting point is that 700 number. And then you've got the furniture and the moving costs and all the extra things that you want to do. And so it just gets expensive. They can cash flow that. Yeah, make it 190. You guys will be fine.

1:31:10Dave Ramsey:Because they don't have a house payment. Nowhere in this scenario is there a house payment. What's your emergency fund? No payment. Emergency fund is$45 ,000. Okay. You guys, I got to tell you. You're like poster children. You are amazing. Very, very well done. We wanted to come visit when we did pay off new babies and life. I mean, y 'all really got this nailed. You're going to be, no matter which of these choices you take, you're going to be very wealthy because you're doing several things. You're very intentional. You both are having a vote. You both talk about it. We even argue about it sometimes.

1:31:46Dave Ramsey:And we both are setting detailed goals, but neither one of us are budging on the stuff like I'm not going to go into debt. Neither one of us are doing stupid stuff. you're both just deciding, you know, which type of investing we want to do. Do we want to do single family real estate that we're going to live in? Or do we want to, you know, put this money in the mutual funds for there? So, um, so George said, okay, so really it's$28 ,000 a year. So it's two years of that's$50 ,000,$60 ,000. If you pause for two years. Are you guys investing 15 % Molly? I'm just throwing a number out there. I have no idea.

1:32:19I did the math, and I think it might be like 16 % or 17%. Okay. So you could back off a little.

1:32:27Dave Ramsey:Yeah, you could back off a little. But, I mean, so it's$28 ,000 a year if that's the case. Yeah. It slows your savings rate by that.

1:32:40I like the personal challenge of just going, can we do it without pausing investing? That's just a fun challenge for me personally. I'm just a super nerd. So I would go, can we increase our income by$28 ,000 temporarily? That could be an interesting challenge, too. And then you're still done in two years. Can we cut our expenses by$14 ,000 and make an extra$14 ,000?

1:32:58Dave Ramsey:Boom, you just got an extra$28 ,000. Make a game out of it. But, yeah, because both are excellent goals, okay? So there's neither one of these things. Put your face in the stupid column. You know what I'm saying? You guys are just doing so good. I'm so proud of you. It's almost like you're reverting to baby step 3B for a time. That's kind of how I see it. There's not a wrong answer to the argument. Yeah, we say 0 to 15%. I can't just say, you know, Molly, you win, your husband loses, or husband, you win, Molly loses. I can't just – there's not a wrong answer because both of these things are very smart, and you follow the baby steps properly.

1:33:38Dave Ramsey:You're not going back into debt to move up, which I would yell at you for, all of that. You just everything about this conversation is so healthy and positive. I think you two are going to figure it out. And also, by the way, there's there's even a weirder scenario mathematically. Halfway in between. Oh, we shut down investing for one year. And then we start. We take on the overtime and we cut over here. And then where do we end up? How much, you know, and then we're talking even about six months or eight months. We're now talking about, you know, just a few months difference, and then it's irrelevant.

1:34:18Dave Ramsey:So that'd be an easy one to hit in the middle. Yeah, just hit in the middle and go. I like to fast forward and go, okay, when we're 65, do we want to have 11.3 million or 11 million? That's really what you're like, all right, we're going to be okay. It's not worth the brain calories at this point. That's true. That's exactly what it's going to end up to. It's going to be good problems to have. That's funny. Oh, Molly, it's so refreshing to talk to you today. Thank you for calling.

1:35:13Dave Ramsey:Hey guys, Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now, you can get that same kind of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to RamseySolutions.com and try Ask Ramsey today. That's RamseySolutions.com.

1:36:16Dave Ramsey:Sydney is in Lancaster, Pennsylvania. Hi, Sydney. How are you? I'm good. How about you? Better than I deserve. What's up? Oh, my gosh. Sorry. First of all, just so happy to be on the phone with you. Oh, my gosh. I grew up listening to you, so this is just wild to be on the phone with you. Well, we're honored. How can we help? So my fiance and I are getting married in January and we both already are living outside of our parents' house. And so we're trying to figure out what to put on our registry. And a lot of people have been telling me, oh, don't do a cash fund because people want to give you things.

1:36:53And if you don't tell them what you want, they'll just give you crap. But both of us really just would prefer money for the future. Like, how do we go about doing that or should we just like upgrade the stuff that we have?

1:37:07Dave Ramsey:Wow.

1:37:12Dave Ramsey:Well, what occurs to me is that you might ask people to give you money, but certain ones won't. They're just not going to. Yeah. Like, my wife is old school, southern, redneck hillbilly, whatever you want to call it, right? And the chance that she's giving you money for a wedding, for her, that would be tacky. Yeah. It's outside of her value system to do that. She couldn't do it. She's also the one that sends flowers to funerals when they say don't send flowers. She doesn't care. And she cares, but she doesn't care. Yeah. Because she's going to do what her upbringing taught her to do, which is to bless the bride and groom with a silver platter that they will never use, of course.

1:38:00So it's a very southern thing to do.

1:38:06Dave Ramsey:or genteel thing to do or whatever you want to call it. But I don't understand. I would take the money, but I'm with you. George, you got married how many years ago? That was 2018. And we used a registry site. I'm sure you're using a similar one, Sydney. We used one called, I think, Zola, which is a popular one. And on there, we had all the registry stuff, right? All the Target and Amazon crap. But we also had like a home down payment fund listed on there with a little cute picture. And a few people gave to that. You could do a honeymoon fund. and that's just a cash gift that people can give through that.

1:38:37And can you write a little paragraph at the top saying we prefer this? Yeah, you can say it and you can place it. I placed mine right at the top. I wanted everyone to see that first. And in the invite.

1:38:47Dave Ramsey:It's a GoFund, George. Exactly. And so the invite is a little trickier. You don't want to be like, here's the invite. Also, cash gifts preferred. You could. Yeah, yeah. That starts to be a little tackier. Yeah. Yeah. So put it on the registry, George says. Yeah. If it's on there as a link and you can have a blurb up there. And the more practical among us will give you money. And then the ones that were with proper upbringing, like my wife, will give you something you can't use. Do you guys have a specific goal in mind for this money or is it just we'd rather have money? So, yeah, that's the other thing we're trying to figure out.

1:39:21So we both ultimately want to do overseas missional work, like relief work, also like church organizations. So we would love to, like, it would be so much easier if it was for a house, because people would be like, oh, we could see that goal in mind, but we just don't really have any different goals. It depends on the audience.

1:39:38Dave Ramsey:I mean, if your friends and relatives are believers and they want to support your working for the Lord, then that might be more motivating than buying you a house. I'd feel more convicted over getting a cupcake platter to go, you know what, I should probably support the missions they're so passionate about. Cupcakes or Jesus, yeah. You pick. Okay. But you can put that on the registry site. You can put a little blurb of, hey, here's our heart. Here's what we love. Now, if you collect money to go on a missions trip, you cannot spend it on your house. That would be unethical. Oh, definitely not. And also, Sydney, here's the fun part.

1:40:09You have the addresses of all these people now. I might just do a follow-up later with a separate missional ask versus trying to combine it into the wedding. Okay, okay. That feels better to do a support letter six months after you're married. Hey, thanks for the gift also.

1:40:24Dave Ramsey:Thanks for the cupcake platter. Yeah. Jesus, yeah. So I might separate it out just so it doesn't feel like you're kind of mixing two wonderful things at the same time. That's fun. So that's a fun question. If people are going to think you're tacky, they'll think you're tacky. Rachel thought I was tacky because I had a QR code to give to my daughter's 529 at her birthday party. Instead of gifts, I went, I don't want more toys and crap for a one-year-old. I don't know if it's tacky. It's just... Strange? Yeah. It's pretty nerdy. Yeah. I just got excited. A QR code for how old was your daughter? It was her one-year-old birthday.

1:40:58Dave Ramsey:For her one-year-old birthday party, you put a QR code on your kid. It was not on her person. Yeah, well, same thing. It was a little cute frame. It's like you put a tattoo on her forehead. It's like sponsor the one-year-old. Gosh. Well, now I know Dave wouldn't support my daughter's 529. No, I didn't. I wasn't invited, but yeah. Oh, that's funny. I'm kind of with Rachel. I don't know if tacky is the right word, though. No, this is close family. It's just classic nerd George. I wasn't soliciting money from strangers. If they know you, they don't think it's tacky. They just think it's George. Can I tell you, nobody gave to the 529.

1:41:33Dead gum QR codes just don't work. Backfired. Not a one. It backfired bigly. Not a dollar. My parents, they give every year to her 529. I know, but not through the QR code. They don't even know how to do the QR code. You know how long it took me to figure that out?

1:41:48Dave Ramsey:Oh, that is so classic. Now I'm upset. That is. Well, that answers the question. This is a don't try this at home. Wow. Oh, don't DIY this puppy. Oh, my gosh, George. That's funny. Oh, boy. All right. I got the wrong number. Here we go. Here we go. Here we go. Tessa's in Chicago. Hey, Tessa, what's up? Hey, thank you so much for taking my call. Sure. How can we help? So I want to start off by saying that my husband and I have gone over this, and I have very strict instructions on what I'm supposed to tell you. I am the problem. Oh, wow. I acknowledge it. I do. I'm trying to have gazelle-like intensity.

1:42:29Wow. I listen to Total Money Makeover every single day as a little piece of motivation for my day. I'm trying to get better. But he works really hard, and he lets me stay home. I homeschool our kids. I don't want to be careless with his hard-earned money. And we got ourselves into a position when we bought my parents my childhood home. We decided to buy it and renovate it. we started off doing FPU when we got married, and the only debt we have are mortgage, the home equity, which is the problem, and then we do have a truck payment, but his company gives him an allowance for that.

1:43:06Dave Ramsey:They give him an allowance whether you have a payment or not. They do not. That's not true. It's got to be like so many years new. No, they do not. Yes, they do. They give you an allowance whether you have a payment or not. It has to be a certain age, but it could be a paid for a truck. Yes. Okay. So you don't have to keep the payment to keep the allowance. So don't say that again. Okay. Yeah. So that's kind of unclear for me. He had told me how it works, but I still don't quite understand that. But yeah, he gets an allowance for a truck, but it has to be a certain age. It does not require it has debt on it.

1:43:39Dave Ramsey:It's that simple. So we are suffocating and we're dwindling our savings. We do have our$1 ,000 emergency fund, but that's pretty much it. Everything else dwindles. And I don't know if it's a matter of... Where does it dwindle to? So we are paying, our mortgage is$1 ,195 a month. We pay$1 ,000 on the home equity every month. What does he make? He makes$98 ,500 a year take home. And you're at home full-time with the baby. I am a photographer, so I make a little bit, but it's like$8 ,000,$9 ,000 a year. And what's the truck payment? Did he get the allowance? The total payment is 810, and he gets just under that, like 760 or 770, something like that.

1:44:19Yeah.

1:44:20Dave Ramsey:Okay. All right. Well, the truck has to get paid off, and that'll give you your margin back for one thing. You do that before pushing more at the home equity? Whichever one's the highest balance is second. Yeah. Okay. And have you stopped your 401ks? So that was our main question. He's currently contributing 11%. percent. If you listen to Total Money Makeover, you already know you're supposed to stop your 401k, right? That was what I just passed that chapter. So yes, that's what prompted the phone call. Yeah, yeah, you definitely stop it. It's a temporary stop until you get these debts cleaned up, the mess you've made, and then you got margin and you can do this.

1:44:59Dave Ramsey:But you can't do everything at once because everything at once isn't working. That's why you called. You're going to get almost a thousand bucks back in every single month if he stops his 401k. And then we can clean up the heloc, sell the truck, get a cash one, and you're set. Yeah. Got your margin back. You got to have, you got a truck has to be a certain age to get the eight or to get the 700 bucks. And so then you start to wonder if that's actually worth it or not. It might not be worth it because you might be keeping a truck that's expensive that you're wearing out. You got to look at the math on that truck.

1:45:27Dave Ramsey:But anyway, yeah, stop the 401k temporarily and beans and rice, rice and beans. Get on the every dollar budget. both of you. No more eating out and no more vacations until these debts are cleaned up. You bought a house and a truck you can't afford.

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1:46:46Dave Ramsey:The Ramsey Show question of the day is brought to you by Y-Refi. Missed private student loan payments can keep your budget stuck in neutral. Y-Refi helps borrowers explore low fixed rate refinancing and payments based on what you can afford. So you can start moving forward again. Visit yrefy.com slash Ramsey. That's the letter Y, R-E-F-Y dot com slash Ramsey. Might not be in all states. Today's question comes from Amanda in Utah. I vacation on the same cruise line twice a year. Each cruise is 14 days long. If I buy 100 shares of their stock, I will receive$250 in onboard credit per sailing, which equates to$500 a year.

1:47:29Even without growth, I would get my investment back in about five and a half years. I know you don't recommend investing in single stocks, but under these circumstances, do you think it's worth it for me? Oh, boy.

1:47:41Dave Ramsey:Get your investment back. How do you get your investment back? With her onboard credit of$500 a year. Oh. So not just one time. If you're a stockholder, one time of 100 shares. Anytime you sail, you get$250. I guess if you buy 100 shares. You buy 100 shares, but anytime you sail, you get$250. An onboard credit. it's one of those the juice ain't worth the squeeze here especially with five and a half years to make the money back yeah that's not for onboard credit that you may or may not yeah onboard credit which is marked up crap use it in the gift shop yeah a massage you on here the other day when the guy called about the million dollars in onboard art oh no but that one went viral i saw that that was wild he said his mom got his mom had suckered into these options She was buying onboard cruise art and had dropped a million bucks in it over the series of years.

1:48:37Dave Ramsey:She had the money, clearly. Well, yeah, but now she doesn't. She completely broke now because it's all invested in onboard art, which I didn't even know was. I mean, I knew they had. I've been on cruises. I've seen the onboard art. I didn't. It can't be great. I don't invest in. Was she three sheets to the wind? How do you do that? Multiple times. I mean, she had to have been like a lot of three sheets to the wind. That's like she did this over a period of years. But yeah, so anyway, what do you buy on board a cruise? I mean, it's like going to Disney. They sell$9 raincoats because it rains every afternoon because they control the weather.

1:49:10Dave Ramsey:And it rains every afternoon at Disney. And they sell you a$9 raincoat with a Mickey on it that they paid 49 cents for in China. And that's what you're buying on cruise ships. Yeah, it just take your money. It's not like it's, you know, like you're getting mink coats or something on there. I mean, or whatever. Well, she's saying five and a half years, so this must mean$500 a year she's getting. Talking, she's going to spend almost$6 ,000 to buy these 100 shares? Yeah. That's crazy. Well, overall, the answer would be no. Put that$6 ,000 in high-yield savings. Because your onboard credit is going to stuff that's marked up at least double.

1:49:46Dave Ramsey:And so now we're not at five and a half years. We're at 10, 11 years. And it's stuff you might not have purchased anyway. And so buying something on sale that you don't need is not a good buy. And think about it this way. If this was a credit card that said, hey, if you spend$50 ,000, we'll give you this many points. We'd say that's crazy. Don't do that. Don't spend money to try to get some back. So we're going to say it about this. That's crazy. That's crazy. Don't do that. Okay, there we go. Ethan's in Jacksonville, Florida. Hi, Ethan. How are you? Hey, Dave. How are you? Better than I deserve.

1:50:21Dave Ramsey:How can we help? Hey, so my question is, do I leave my current job? I've been here for about two years, and do I go work with my dad for his HVAC company and potentially take it over whenever he's ready to hand it up? Okay. Well, what do you make now, and what would you make there? Me and my wife right now. No, what do you make at your job now that you're going to give up? Yes, 65. And what would you make fixing HVAC for your dad? he would start me out at the same so that's what an HVAC tech makes in Jacksonville 65

1:51:07roughly I mean he's being generous I'll say I don't know exactly what an HVAC tech would make

1:51:14Dave Ramsey:you're not an HVAC tech now no no not I'm not like you know how many employees does he have He only has two right now. And how old are you? I'm 23. And how old is he?

1:51:3846, 47.

1:51:40Dave Ramsey:Okay, so he retires at 65 20 years from now, and you're 43. Meanwhile, you've been an HVAC tech for 20 years, working for your dad, and then you get a company of whatever size it is at that point. 20 years from today. Correct. Yeah.

1:52:09Dave Ramsey:Let's pretend this wasn't your dad. Okay. Somebody offered you a job making the same amount of money you make now, and in 20 years you could have the opportunity to buy the company or be given the company 20 years from now. Would you do that?

1:52:25That's a hard one, Dave. I don't think you would. It's a hard one. I think you could start your own HVAC business and have more than two employees 20 years from now. Yeah.

1:52:34Dave Ramsey:So, you know, what I might do is this. I guess, do you want to, I mean, does he need the help and you want to help him? Do you want to work together? What's your, I kind of feel like there's, like, love involved here. Like, you're trying to love your dad well. yeah like i mean he's so he's my stepdad uh so he's been nothing but a dad to me and um you know and i want to help him out i want to you know i want to do whatever i can to help him and and i love the trade the trade is just i mean it's it's a good trade i worked with him when i was throughout school so i mean i love it it is now i'm doing um what do you do now i'm i'm i work for Anheuser.

1:53:17Dave Ramsey:Okay. So I work swing shift, and I'm young, but I feel old. I ain't gonna lie. You're young, but what? I'm young, but I feel old because of the swing shift. Oh, oh, oh, yeah. Yeah, graveyard. Yeah, that'll get you. Okay. So my wife, she's... So getting on days sounds fun. Better quality of life? Yeah. Yeah, I'm going with that. Okay. Okay. So here's what I would do if I did go forward with this. Let's continue the conversation before you make a decision. Okay. Number one, you said you're how old, 23? Yes, sir. Yeah. So I would want a written game plan for clarity so that everyone, him and you and your mom and your wife, all know what you're signing up for.

1:54:10Okay?

1:54:11Dave Ramsey:Okay. And that's called a partnership agreement, or we can call it whatever. And I want you guys to really spend some time detailing this out, because this way, when this is over, you'll still be friends. Okay. And if you don't do this, you'll probably kill each other. You know what I'm saying, right? Yes. So it worked out when you were a teenager, but you're not a teenager anymore. You're like a grown man and stuff now. So you guys are going to have opinions. So I want him to progressively hand you ownership over the years. Okay. So you kind of move into ownership position? Yeah, and not suddenly 100 % at 20 years from now when he's 65, but instead after you've been there five years, he's going to give you 25%.

1:54:59Dave Ramsey:After you've been there another five years, he's going to give you another 20%. And now he's still a major owner, and you're 33, and he's in his 50s. Okay, kind of think that through, how that's going to feel for him and for you. But I want him to begin to hand you ownership in this. And then based on that ownership, you're going to get paid for the job you do plus the percentage of ownership you have of the profits. And so if the thing makes a profit after you're paid your salary and he's paid his salary for working there or his income, if it makes$100 ,000 and you have 25%, you get an additional$25 ,000.

1:55:42Dave Ramsey:Follow me? Okay. Then lastly, you have to cover all the Ds. What happens in the event of death? Divorce. Drug use. Disinterest. I don't want to do this anymore. What happens in the event of D's? Disability. Somebody gets hurt. They're in a wheelchair. What happens? How's that going to take it? How's that going to shake out? What happens to the ownership? What happens to the income? Write all of that stuff down or don't do this.

1:56:25Thank you.

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1:57:22Dave Ramsey:Our scripture of the day, Isaiah 32, 8. Generous people plan to do what is generous, and they stand firm in their generosity. Charles Buxton said, in life as in chess, forethought wins. I got to tell you, I love hearing all these results from the people using EveryDollar. We've got tens of millions of people now using this budgeting app, and it's following the Ramsey steps exactly. It's giving you a personalized plan, and it helps you get out of debt and into wealth faster than anything else out there. It's the shortest distance. Dave, just being able to use every dollar and see the extra we have every single month was super motivating.

1:58:01Dave Ramsey:We have thousands of dollars extra and just throw it on the mortgage. Hey, that's pretty cool. I love it. So you get to pick when you do it on purpose. I like this. Start every dollar for free in the App Store or Google Play. Aaron is in Anaheim, California. Hi, Aaron. How are you? Good, Dave. Thanks for having me on the show. Sure. What's up? Well, got married a little over a year and a half ago, and wife and I have done pretty well, and we're trying to buy a house. We live in Orange County, specifically, and it's super pricey to live here, as you probably know. Yep. Our goal is to buy a home.

1:58:39We've been smart. Our parents have raised us right. My dad put me in touch with all your stuff, and I've been hooked to the show ever since, And so it's been a pleasure and a blessing in my life and my wife's. Thank you.

1:58:50Dave Ramsey:Yeah. So we've been smart with our money, and we feel like we've done well with it. But I'm kind of reaching a point as we get maybe a little bit closer to figure out how we should move it around from here, I guess. It's currently invested in the stock market. In what? What's that mean? In the stock market. I know. In what in the stock market? 80 % is in equity investments, and then 20 % is in bonds and fixed incomes. Equity investments. What's that mean? You've got it in single stocks? No. Well, yeah, it's kind of spread out across multiple different stocks, and the advisor that's helping me has put it in the market.

1:59:27Dave Ramsey:Okay. All right. Well, that's not what we teach. You know that. Yeah. Okay. That's one thing. That's very risky. Yeah, it is, and it's done well. And the bonds are worse. Yeah, the bonds are risky too. Yeah. Okay. So that's where we have it right now. I mean, we've done well with it, but the market, you know, we're concerned that it's going to come down. And when it comes down, how far is that going to set us back? And I think it's time that we maybe reconsider where we have our money right now. Okay. Yeah. I don't time the market either. So I don't know. I would not do it based on what I think the market's going to do because most people don't have any idea.

2:00:08No one could have guessed the market was going to be up as high as it was three years in a row these last couple years.

2:00:14Dave Ramsey:Yeah. In the last five years, it's doubled, and nobody could have guessed that. Sure. Now, that's not in the portfolio you've got, but the portfolio that I've got has doubled. Yours may or may not have done that because those stupid bonds probably were an anchor on yours. Dragging it down.

2:00:32Dave Ramsey:Anyway, how much is in there, and when will you be buying the house? i've got about 250 000 in it right now um not counting like my emergency fund and other savings that we have and our our goal is i mean we're renting for really cheap from family right now um a house from our one of our family members that they own and uh with 250 000 why have you not bought yet it's so expensive like for a single family home it's not gonna go down I know, but for our area, it's between 1.1 to 1.3. I know, but it's not going to go down, and you have$250 ,000. I'm in a sales role, and it's commission-based, heavily commission-based, so it's been kind of my goal to throw down as much as I can at a home.

2:01:19And since my rent is so cheap and I'm not really pushed up against a wall to move out, I mean, my wife and I have the goal of moving out, right? We don't want to take advantage of it.

2:01:27Dave Ramsey:Okay, so are you willing to trade the volatility of the portfolio that you have and the returns it has for zero volatility and moving$250 ,000 into a high-yield savings account? No, that was what I was kind of questioning. Is it better to have it in a high-yield savings? If you're going to buy within 12 or 14 months, yes. Okay. Because your heart's going to sink when 12 months from now your money's down. You know, if the market dropped 10%, that would be like one of the worst drops in a year in history. Yeah. In history. And that would be$25 ,000, which would not keep you from buying a house. Right.

2:02:07Dave Ramsey:So it's not that big a deal. But I don't know what kind of mess your portfolio is and how much volatility you've gotten yourself signed up for. But if you were to just tell me you're like in an S &P 500 index fund and you're just sitting there riding the actual market, I mean, it's up 10 % for the year right now, today, year to date. So you have any idea what your portfolio is up this year? I'm up 8%, a little over 8 % this year. So you're not even keeping up with the basic S &P 500? Mm-mm. Yeah. Probably because those bonds and fixed incomes are keeping it back right there. Almost like what I said earlier.

2:02:49Dave Ramsey:Yeah, you've got to anchor on this. And you know what bond values do when interest rates go up, right? To go down. Yeah, they're an inverse relationship, exactly. So that's going to be bad. We were thinking, I mean, waiting as much as – I guess – let me quit mouthing around the edges of this. What would I do if I woke up in your shoes? I would move it all to an HSA, or I would move half of it – a high-yield savings account, or I would move half of it there and the other half into just an S &P 500. Then we get the best of both worlds. Yeah, you got a little mix. Whatever the market does, you're going to get.

2:03:31Dave Ramsey:But that gets rid of – the S &P 500 is probably half as volatile as what you've got right now. I wouldn't be in what you've got right now for anything. I don't have a dime in a portfolio that looks like that, not one. I don't play single stocks, and I for sure as cred don't play bonds. And I would have an end goal, an end date, instead of just vibing going, well, maybe a couple years from now, just go, hey, 12 months from now. Our amount of money. We're going to do this. You know, when I get to 400K, we're going. We're going. Or when I get to 300K, we're going. Or whatever the number is. Have a name on it, and then let's go do it.

2:04:04Dave Ramsey:Because the sense of I'm in sales and I'm scared of volatility is never going to go away. that you're going to have that as long as you're in sales. And so that's not going to change based on the expense of the real estate or based on the interest rate environment. It's not going to change based on any of that. And so, yeah, that's what I would do. I would take all the money out of that right now. I would put either all or half of it in a high-yield savings and not worry about it anymore. If I put half of it in, I'd put the other half in. the most volatile thing would be an S &P 500. And I use personally an S &P 500 to park money in while I'm saving up to buy my next real estate project, which is some of my favorite investing.

2:04:51Dave Ramsey:And so I'll let it sit there. And so I've made 10 % on my money this year, you know, that's been sitting there year to date. And I'm fine with that. And if it went down 4 % or 5%, I'm not going to kill me. Be fine with that. You're not desperate. And I don't have to sit there and make high-yield savings rates, which is what, three or four right now? Yeah, three and a half about, somewhere in there. So that's the thing. It's a good call out that we're talking non-retirement accounts here. Yes, yes, absolutely. And retirement accounts, we suggest putting money across four types of mutual funds. Yeah, you're going to have your aggressive growth, growth, growth and income and international.

2:05:33So that's kind of like large cap, mid cap, small cap. And we're talking about the huge companies. Those are the safer bets. These are like the cruise ships. It's going to be hard for them to move much. And then as you get down to the small cap and these aggressive growth, it's like a jet ski. These things are moving. And sometimes it's great. Sometimes there's low lows. But you're riding that wave to capture it over a long period of time. And then international, we saw this happen. International actually went up as the U.S. market went down. So it's a good hedge against the market here stateside.

2:06:02So all of that helps you just sleep better at night. So what's crypto? A pirate boat? Oh, gosh. At this point, I'm not sure who the pirates are and who's taking them down. I think they're taking themselves down. They're sinking. I know that. It's like 56 % down from its all-time high.

2:06:18Dave Ramsey:What happened to you crypto bros bragging about yourself and you're off 56%, 56%, baby. Lost half your money. They get real quiet when it's down. The crypto bros get real quiet when it's not working. They took their ball and they went home. Yeah, they just go hide in the corner of TikTok over there in the deep corners of recesses of TikTok. They go back where they came from. When an investment's not based on anything and it's just hype, as soon as everyone jumps off the boat. Yeah, I hadn't noticed anybody bragging about gold lately either. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.