The Hard Road Leads to Freedom

26:53Rachel Cruze:So he would need a score if he's gonna go get car loans, if he's gonna get personal loans, a small business loan. You know, if he's gonna go into a life of debts, then yes, that score would be necessary. But what Jade and I, you know, what Jade laid out was beautiful to say. If you're choosing a debt free life where you save up and pay for things, where you actually say no to the whole debt industry, even things like a car, then there's really no reason for that credit score. The mortgage is the one type of debt that we won't yell at you for. And so you can actually get a mortgage still without a credit score.

27:29Rachel Cruze:It's called manual underwriting. And you can go through that process and still own a home. And so really that credit score, man, it has been it has been inflated so much of the importance of it. But if you kind of choose the weird path of life, like what we teach you on the Ramsey show and you choose a life without debt, you really you don't need it. Now, there are moments, maybe employers or, you know, even with like cell phone companies, they may pull his credit report to see any history of how he has paid. But there just really won't be anything on that credit report. And it doesn't necessarily ding you.

28:07Rachel Cruze:He may have to fill out an extra form or two. But that would be the only time that you kind of run into a situation outside of debt of why people, you know, try to have great credit history and all of that. So if anything, Kevin, you know, he could even freeze his credit. And so that, you know, make sure that no identity, you know, no one's taking debt out of his name and that, you know, even identity theft and all of that, that can take care of that. So that's probably the card I would play with him is that, yeah, why you don't need it, explain it to him. And creating these habits in college is so healthy.

28:41Rachel Cruze:Like for an 18-year-old to be budgeting the money that he has and spending within his means is amazing. Yeah, Kevin, and I would just add one more layer to that because I think Rachel, I mean, what she's saying is exactly right. And even the fact that just reframing that a zero credit score or an indeterminable credit score in the market is just as effective as a high credit score. There's no negative to it. And Rachel talked about the home. But really, there's kind of three key areas that most people think I need credit for this. Most people thought they needed credit to buy a home, which Rachel mentioned.

29:16a lot of people think they need it for a car and they think they need it for an apartment. And so just kind of getting ahead of those and being able to talk with them and just tell them, hey, when you go to your apartment, just know you might have to pay a little bit more down for first and last month's rent. Just know that they're going to ask for other trade lines, your cell phones, maybe things like your insurance payments. So being ready to be able to show those types of things and just so he knows what to expect with a car, right? One of the big things about this is now we're saving up and we're paying cash for cars.

29:47And just by him doing that, Rachel, he will be so ahead of the average American never getting into that car loan cycle. So that's how this works. And I think when people have that information ahead of time, it kind of just counteracts some of those things that we come up against when it's time to buy an apartment, it's time to buy a car. That's right. Just getting ahead of that.

30:06Rachel Cruze:Yes. No, absolutely. Because, you know, there is a life navigating without debt and, and the, and the positive side of it too, even the numbers, like even, you know, Kevin running, if you go to Ramsey solutions.com, we have an investment calculator and I'm like, just throw in what the average, you know, the average family owes, I think right now,$12 ,000 balances on a credit card. And it's like, throw that in an investment calculator. And instead of that being your reality, here's what your reality could be, you know, in, in 40 years and same with the car, car loan. I mean, the average car payment on a new car is up around$900 a month.

30:40Rachel Cruze:And if you just said, hey, what if you avoided that and debt was not part of your life and you invested a car payment every month instead of paying a car dealer or a bank, what you could be. So the possibilities are endless. So Kevin, yeah, just like Jade said at the top of the call, you were such a great dad. And I think that's where parents can step in. And it's not out of control or judgment with your kids, but teach them and show them like, hey, here is what this looks like. And even your own mistakes, right? I mean, as parents, I'm like, man, that's what a wonderful, humbling thing for your kids.

31:14Rachel Cruze:But please learn this before because that's one line we get all the time is I wish I had known this stuff earlier. Absolutely. And if you can get it, Kevin, at your son's age, oh my gosh, to set him up for not only financially having peace, but also emotionally around money, that is such a gift.

31:44Rachel Cruze:Okay, George, we hear from so many people that are trying to live out the Ramsey plan, right? They're getting out of debt and everything. But the hard thing is there's not many banks out there that actually support the way we teach people to handle money. Yeah, most banks, they don't want you to win with money. So they charge a bunch of nuisance fees. There's all this fine print. And worst of all, they are pushing debt products at you nonstop. Yes, but the good thing is that Fairwinds isn't like most banks. They're not like the other guys. They're not like the other guys. Yeah, they are not pushing debt, and they actually want you to win with the baby steps.

32:14Rachel Cruze:And so what's great, too, is they created the smart bundle for Ramsey fans, which includes a high-yield savings account and no monthly fee checking. Which is huge because it's rare to have a checking account tied to a high-yield savings account. You can get all of that with Fairwinds, and for the nerds out there, you can have 10 different high-yield savings accounts for different goals. So you got your emergency fund, the car upgrade fund, the vacation fund. The world is your oyster. So beautiful. And check out the debit card, the new one, the live like no one else debit card. Oh, that's beautiful.

32:43Rachel Cruze:It's so beautiful. That's a conversation starter. It's so good. Well, and when you swipe or you tap, you know, every time you take it out of your wallet, you're remembering that you are living like no one else and you're being intentional with your money. I've been using Fairwinds for months and months now. I love their features, the app, the customer service. It is all so good and so aligned with the Ramsey principles. Absolutely. So y 'all, we both bank at Fairwinds and we love their commitment to Ramsey values. So check it out. You can get that smart bundle. We're going to drop a link in the description or you can go to fairwinds.org slash Ramsey today.

33:12Rachel Cruze:That's right. That's fairwinds.org slash Ramsey insured by the NCUA.

33:33Rachel Cruze:Well, if you're new here, like many of our listeners that have joined, even in the past couple of months, you know, one filter that we use to answer a lot of our money questions on the show is through the seven baby steps. And so this, these seven steps really take you from paycheck to paycheck, living broke, no savings, debt, all of it to going through it for paying off debt, getting an emergency fund, a fully funded emergency fund, you're funding retirement and kids college, you're paying your house off early, like getting you through that money process is the seven baby steps. So if you want to check it out, make sure you do.

34:09Rachel Cruze:There's, we'll put a link down below if you're listening on podcast or watching on YouTube, because I mean, it's a pretty simple, you read them and you're like, all right, pretty simple to understand. Sometimes hard to do because it can be a long, it can be a long journey, but it really does have you get a grip on your money and actually have control over it, actually have a plan for your income and the fastest way of building wealth long-term it's this so check it out the ramsey baby steps all right let's go to lonnie in austin texas hi welcome to the show hi how y 'all doing thanks for taking my call absolutely how can we help um so i've been davish my whole life and uh i recently got busy with it and i have my thousand dollar emergency fund good and i was tackling my snowballs.

34:57And while I was doing that, I had$17 ,000 on a credit card. And the monthly payments got so bad that I just kind of stopped paying them. I figured I'd pay it later, get in touch with them. And so then when I did that, they put a lawsuit against me. They gave me to a debt collector and went to a law firm. And they said that I had a lawsuit. And they gave me all the paperwork and everything. Somebody came in and she handed me the papers. and so I called them and I settled down to$8 ,000 and I gave them all the numbers that they asked for, my routing information, all the stuff from my bank.

35:38Rachel Cruze:Oh no. Oh no. And they removed. Like, you know, they were supposed to, you know, draft it out of my account, the$8 ,000 and it never moved. So then I called them and sat there for like two weeks and I called them back and they said that I had a zero balance. And so I was like, okay. And then I got a receipt in the mail saying that I had a zero balance and they wouldn't go after the rest of the money that I owed because we had$8 ,000 agreement. So then I sat there for another two weeks, nothing happened. And then they called me and telling me like I had never even spoke to them. They said that I had a lawsuit pending against me and I owed$17 ,000.

36:15Oh, my gosh. Stupid people. They're just idiots, Lonnie. They messed up. They clearly got you confused with somebody else, unfortunately, it sounds like. Well, I did have the$17 ,000 thing, and they might have pulled somebody else's money out of their account. I'm not sure what happened, but it's still sitting there, and they're still saying they have a lawsuit. And I gave them all the routing information again to draft it out of my account. Still sitting there. So my question is, should I like go take some of that money and go hire a lawyer? I don't think so. It sounds like I just want to make sure I'm following your story.

36:57You got it settled for$8 ,000. You sent them your bank account for them to clear it. They didn't clear it, but they did send you something that said it was free and clear. Now they're coming back saying, oops, no, it's not free and clear. You actually still owe it. So what I would do is I would get on the phone and I would call several times until I feel like I'm speaking to somebody with a working brain. and when I feel like I am then I'm going to send them probably a money order for the difference or like a cashier's check do not give them any more access to your bank account okay and that way you've taken it into your own hands to make sure it's paid and then I'd want written receipt again that it's been cleared with the new date on it when it was clear and yeah yeah so so go

37:39Rachel Cruze:renegotiate again back down to the 8 ,000 if you can. And sometimes they are going to need you to have that amount of money to go ahead and just make the payment. But you said you still have in that account. So what I would do is actually get them to email you like a transcript of your conversation or at least in writing say, yes, we are going to settle this for$8 ,000. So you have it on the front end and then send them the cashier's check and then ask them to make sure that they send you a receipt for after, you know, that they have collected your money. So that's what I would do. That's exactly what I did whenever they, when we said, we settled the deal and asked for my account, I said, can you do this today?

38:22And I said, no, not until you send me a piece of paper saying that this will be settled for the 8 ,000. They sent that. And then after they, I talked to them, they sent me a receipt saying that is zero balance. And then they're calling me back. And the guy that I was handling my case or whatever was real arrogant and acts like I owe him money personally. Right, right, right.

38:40Rachel Cruze:Well, but they never took money out of your account, right? So you haven't lost any money, correct? Right. Right. So you're just having to go back through the hoops again of renegotiating. Even send them a copy of that first, you know, the first deal that you made with them. Yeah, it is. It's an absolute roundabout situation. situation and and it kind of ends up being your part-time job lani unfortunately because it is you're dealing with obnoxious yeah yep so obnoxious um but you did the right thing they screwed up on their end which just means you're just gonna have this a little bit longer until you fix it again and just keep trying and honestly by the end of it all i bet that your debt your bad debt has now been so it'll be sold to another company because that collection company is going to sell it off so maybe you'll get it settled for a little cheaper yeah it's just going to go around and around.

39:26Rachel Cruze:And so until it's until it is a done deal, sadly, this is part of the gig of getting out of debt. But you know, I mean, because of your situation and because of what they've chosen to negotiate, what a great thing that 17 went down to eight. I mean, we'll take it. You know, that's a win. And when you do that cashier's check, keep that receipt that you know that you paid them because even if these are bozos, so they may never send you the receipt on their end, but at least you know you did it and you can file that away forever. That's right. All right, let's go to Pete in Jacksonville, Florida.

39:56Rachel Cruze:Hi, Pete. Welcome to the show. Hi, my husband had to go in for unemployment, so you get me. Oh, perfect. What's your name? I'm going to go with Patty. Patty. Perfect. Thanks, Patty. How can we help? My husband and I are looking at buying a lake home, a second home. We are debt-free. We inherited a large sum of money, and we're just wondering if we should pull to pay for the lake home out of that money. or if we should borrow money to get on a short-term mortgage as to keep our tax burden down. Interesting. How much is the amount that you received in the inheritance? $2.9 million. How much is the lake house?

40:41$850 ,000. Okay, great.

40:43Rachel Cruze:So you all guys will have$2 million left. That's not our whole pile. That's just what we inherited. Oh, that was just the inheritance. Okay, how much is your net worth total? $5 billion. Good for you guys. And you're wanting to take the mortgage out so that you're not... What was the thing about the tax bracket? What did you say? We would have to take the money out of our pile, of our investments, to pay for the home, which we can do. But we're just wondering if it's going to boost this up into the 24 or more tax bracket. And we're just wondering if we take out a mortgage, then maybe we could stay in a lower tax bracket and just pay it off over time.

41:26Rachel Cruze:Yeah. Well, the amount you would save on taxes is probably going to be smaller than the interest you're going to end up paying on a mortgage over time. So I mean, I would run those numbers, but no, I mean, I would tell you, just pay for it, Patty, just pay for it. Absolutely. And if you're in that, yeah, I mean, that's cause you're going to have, if you pull the money out of these investments at any point, you're going to have to pay taxes on them. And so, yeah, it's probably going to be a lump sum of it and it's not going to feel great, but also, but also like it's, it is what it is. Like there's a, there's a part of our life of, you know, living in America that I'm like, it, it is that that is the bracket.

42:03Rachel Cruze:And, and to play the game with the government and the mortgage companies to try to get around it. Usually at the end of the day, the consumer's the one that ends up paying more. Yeah. Yeah. Well, don't, Here's the thing, though. It is bittersweet, but it's also it's like mo money, mo problems. It's one of those things where it's like it's a blessing to have this problem because having this problem means you have a bunch of money. And so it's kind of all in the way you look at it. You don't want taxes to to to shield the fact that this is an incredible blessing that you can actually pull. Yeah.

42:38Eight hundred fifty thousand dollars out of an account and pay for a house in cash. That's the business right there, which is beautiful.

42:44Rachel Cruze:and just staying debt free the whole time, owning it, not messing with everything. I'm telling you, in the long term, just buy it. Just buy the property. You guys have worked hard. You've done so well, Patty. As part of this was an inheritance, but also you guys had some of your own hard-earned money, which is wonderful. And this is why you do it for moments like this. So just keep moving forward, get the lake house, have fun, enjoy it. And we all don't care for taxes.

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44:36Rachel Cruze:welcome back to the ramsey show in the fair ones credit union studio i'm rachel cruz hosting this hour with jade warshaw and we are taking your questions at 888-825-5225 first up we have jessica in new york city hi jessica welcome to the show hi guys thanks for having me how are you hi we're doing great how can we help yeah so i'm just calling you know a lot of times i feel like people call and know what you're going to say but i've gotten myself into a little bit of a pickle um i'll start out with what i'm looking for financial advice and how to get back up on my feet or even survive my current situation So I've been in a four and a half year relationship with a man who makes about$900 ,000 in health care.

45:27And I found out about five months ago that he was married. He's been married for seven years and I didn't know this. He claims that he has been afraid of the financial consequences of getting a divorce. But, you know, actively seeing his wife, there was and then there was me. So he is now in the process of getting a divorce, which is costing him like seven figures in alimony. And so now I decided to give him a second chance. And I'm just struggling with living with the situation, the betrayal and stuff. But also I'm struggling if I were to leave the situation, too. I can't I don't know how to get back up on my feet because I move cross country to be with him.

46:14I'm four months pregnant and I am taking care of his family. And also I filed for bankruptcy last year because I didn't want to enter a marriage with a bunch of baggage. And a lot of that debt was after my mom died. I had bought a timeshare and like it's about$40 ,000 and lesson learned. And so I'm debating whether I should stay and see it through because now we're living paycheck to paycheck with this divorce and just the mental baggage of that. And I'm also contemplating leaving the relationship. But where do I start? I used to make, you know,$150 ,000. Now I make$30 ,000 after taxes. So I don't know.

46:59I just want some advice on any of the above. Where are you now? Are you still living together? Like what's the current today situation? So we are still living together as a couple and we have fun day to day stuff, but this financial situation and it's not finalized with his previous ex yet through the legal system. So we're living a normal life. I take care of his family rental property. Help me understand that part. When you say you take care of his family, was that a health thing? What does that mean? So parents, siblings, aunts and uncles, they have a lot of appointments and rental properties.

47:43And I am the rental manager for seven properties. And so you work in the family business. And that's what earns you the$30 ,000? I do that for free. I make$30 ,000 at a remote job. So you manage seven properties for his family for free? Yes. Girlfriend. All my bills are paid for. But yeah. So that's the that's the exchange. If you manage these properties, you live with him and he'll pay for everything. Is that what I'm understanding? I'm not judging. I'm just trying to understand. That's the current situation. I pay my student loans and health insurance. Very small stuff myself. But Jessica, that's what I do.

48:31you in danger girl like you gotta you gotta get out of this like this is this is so unhealthy for you financially it is so unsafe for you because everything hinges and you're feeling that it's

48:42Rachel Cruze:like the golden handcuffs yes of a relationship right that you've kind of built these systems in place where he has so much control over you and i think that's why you laid it out that way because you're right and it shouldn't stop you, but you are right. If you, when you, let me say, when you leave him, you are going to be starting over. And that feels really scary. It does. And it is, but it doesn't mean that you can't do it. You are a fully grown woman. You are smart. You're capable. There's no reason that you can't go into the world and, you know, increase your income from 30k up, you've just proven you can be a property manager.

49:22There's nothing capability wise keeping you from going into the world standing on your own two feet. Yeah. And I just feel like there's this devil on my shoulder telling me that he is still willing to marry me and not sign a prenup, but I almost want to see that through and have him sign a prenup that's going to give me what I - He proved that he could be a deceptive person for seven and a half years. That tells me something. He's shown you something about himself. Don't ignore that. Even though you experienced it different from what his wife experienced, you had two separate experiences. It was geared towards you.

50:04Don't let that make you feel like you've won some prize here. He's been deceptive for seven years.

50:11Rachel Cruze:I mean, I had a whole other life. And if you can function in that mentality for seven years for him and he's not done anything different, right, gone to Arizona to a to a rehab center for six months or something, you know what I mean? like something that that there's but he it doesn't sound like I mean it sounds like he's he is the same the same person so from the relational standpoint I don't know how you how you trust someone after you find out that he he has he's he had a wife and kids and stuff you know and so that's the relational side and then Jessica I mean and then and then the baby what a sweet baby but man that that adds a for sure element makes you feel like you have to stay in it and all of this too.

50:59And so, and I don't know what the laws are, but you guys aren't married.

51:04Rachel Cruze:And so it's not like there's going to be necessarily, I think state by state, there may be different ways you can kind of pick through the law to see if there's anything from a common marriage perspective, right? Because you guys have been to get anything from him to help with the baby. That would be helpful. but yeah I would be creating an independent solo life Jessica of how you would function out in the real world and I would start those habits pretty soon just to start before you actually unless you're you know unless it's unless it's happening tomorrow start you know building some some skills around you for you to hold yourself up do you have family anywhere um they're cross country where are they none of them know what's going on are you close in the midwest okay are you close with them at all um yes my my dad and his side and um my aunts and uncles okay yeah we i call them a lot and but they don't know about this man jessica i may be i may be going home yeah i think with my baby and and i'm gonna start a life i'm gonna so i i mean and And I'm very, very aware of Jade and I sit behind this desk and we say that.

52:22Rachel Cruze:And you are where you are. And the consequences of what we say and the life that you have to build, it takes years. I mean, that is a big ask from us to you of what we would advise you to do. But you can't let this blind you from what's right. You can't let the financial comfort blind you from what you know you have to do. Yes. And I think Jessica, five years from now, has a better shot at creating a better life if she's dependent upon Jessica than a man who's lied to you for seven years and had another family.

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54:44Rachel Cruze:Next up, we have Katie in Minneapolis. Hi, Katie. Welcome to the show. Hi, thank you so much for having me. Absolutely. How can we help? I am curious if our family should focus on increasing our down payment enough to make a$550 ,000 home affordable, or if that would be stretching beyond what we can realistically afford. and I'm also wondering if there's some pride or lifestyle inflation influencing what I want versus what we actually need. Oh great questions okay so how much do you guys have saved for the home now? Currently we are working through baby step number two okay but we are we're looking ahead and it's kind of feeling like the light at the end of the tunnel is not as bright because now I'm looking at the numbers and I can't realistically afford what I actually want.

55:40What do you want? What's the, what's the amount of the home that you think would fit your family? So, um, what, what I want is roughly a$550 ,000 home. Um, we do a lot of hosting, um, and we started our, our debt-free journey this, this past year, like in January we started, um, and we

56:04Rachel Cruze:downsized significantly. Um, and I'm, I'm itching to get out now. Um, and so we, my husband, we're a single income family home. Um, and my husband brings home about 103 ,000 a year. Um, and what hits your account every month, Katie? Yeah. What hits every month just after tax number. Okay, so he actually gets three large bonuses a year. And so we are$4 ,400 weekly. But with his bonus, if I include his bonus amounts, that's$8 ,650 a month. Total? Yes, total. When does he get the bonuses? Is it at the end of the year or how are they paid out or do they pay out monthly? No, they pay out in three large sums within the first six months of the year.

57:10Understood. So you could essentially take that and disperse it throughout the year and kind of get ahead of it like that. OK, I understand. So we're looking at. You could do that. We're looking at when the time comes, assuming his pay is just the same, we are looking for a payment that's no more than 25 % of your take home. So if we take the$8 ,650 and we divide that by four, we don't want to spend any more than$2 ,162 on this mortgage if that's the after tax amount. Right. Okay. Go ahead. I was just I'm I'm trying to see if we just keep our heads down and keep saving for a larger down payment so that we can get the mortgage at a more comfortable amount.

58:00If that's a good plan or if I just really need to reel it in. I think you may. I mean, it just depends on where you see your income going, because I'm just running the numbers here. And if they want to pull it up, I've just got you in for a$550 ,000 mortgage. And right now I just guessed I put in$300 ,000 down. Let's just pretend. 15 year fixed. Let's keep it at 6.5, even though mortgage rates have been moving lately. And that puts you at everything all in. And this is just a guess on property taxes and homeowner insurance. But that puts them, Rachel, at 2 ,907. So we're already above where you want to be.

58:41And we've already put 300 ,000 down. So there's part of me that it's not impossible. That's a very long stretch of time. I think I'd rather adjust my expectations to get into something.

58:52Rachel Cruze:Yes. I mean, on a$100 ,000 income, Katie, I mean, for what you can afford month to month, to enjoy life, too. Like some of this is, yes, us, you know, making sure that there's enough other money to invest and all of it. But it's also just to be able to live comfortably and not stress every single month that you don't have any money to take the kids to Target real quick to get something. You know what I mean? Just to have like margin to live life. So, yeah, I think I think it's I think the expectation of the house is sadly probably going to have to come down. But think about this as a trade. And this is what's probably either going to give you some peace about it or cause you to switch lanes.

59:36You have chosen that a value for you is to be a stay at home mom. And so because of that, we've got one income coming in. And, you know, in America right now, the cost of living is very high. And so when you made that choice to stay home, which is great, you made that your number one priority financially, that means that everything else kind of bows at that. Do you see what I'm saying? And so if you look at that, you go, you know what, I'm getting what I really wanted out of life. Because of that, I'm happy to scale back my home dreams. You may be cool with that. Or it might cause you to relook at that and go, okay, maybe I only want to stay at home for the first six years and then I want to go back to work so that I can have a little bit of both of these.

1:00:18Or maybe you go, today I want to go back to, right? Looking at all of this together and looking at it through values and priorities will help you to know what's most important to you.

1:00:28Rachel Cruze:Is this your first home, Katie? We previously sold a home so we wouldn't qualify for first home buyer, anything like that. But my kids are like next year, my youngest will be going to school full time. So we're, we're at a crossroads right now and I want to go back to work, but I've also been out of the workforce for eight and a half years. So I'm kind of, we're, we're at a pivotal point right now, trying to figure out exactly where we're going and figuring out. Yeah. How How old are you guys? My husband is 35 and I'm 28. 28. Okay. How old are the kids? Eight and four. Okay. So great. And we've paid off$50 ,000 this year.

1:01:20Rachel Cruze:Oh my gosh. And we will be out of debt by July. Excellent. By February. Okay. We have 22 ,000 left. Well done, Katie. But see, listen, if you did$50 ,000 in a year, and if you guys did that for two years, saved$100 ,000, right? You could maybe find it. I mean, I don't have the calculator in front of me right now. But, you know, you could do a$450 ,000 house, right, with$100 ,000. I don't know. I just wonder if there's the amount you guys can save in three years, right? Even$150 ,000. I don't know. I'm just I'm just wondering what you guys can continue to sacrifice that work because a home, you know, it is such a long term play.

1:02:04Rachel Cruze:So I almost would take another year extra of my timeline to save a big chunk for a down payment to make it work right like that to me, that would be that would be worth it. Yeah, if you said what Rachel said 350 ,000, or maybe a little bit more assuming you guys' income goes up and you save$150 ,000, well, then you're right at it. And again, assuming that his income goes up, it sounds like he's got some trajectory. It could be a$400 ,000 house, you know. But it's tough. Our timeline is that we should have a$51 ,000 down payment by July of 2028. So if we just keep our heads down, we could really get a large chunk.

1:02:49But I'm just not sure if that's worth it, or if, like I said before, if it's like a pride thing, or I just need to really dial it in. I don't think you have a choice. Because you cannot do the$550 ,000 house. So that choice is made for you. You simply cannot afford it. So I think the choice is made for you. And I do think If you lower, slightly lower the expectation of the home, allow that over time, over the next three and a half years, as you save, his income is going to go up. Possibly you'll go back to work already. That's looking a lot better for you, Kate, because you're going to be able to afford more home that way with both of those two things happening.

1:03:28So I would approach this as, OK, the next three to four years, that time is going to pass regardless. I'm going to do the best that I can with this time. we're going to save up as much money as we can because the day is going to come. Like, yeah, if you keep doing that, you're going to pile up money and pile up money. And the day is going to come when you're going to be able to buy something.

1:03:45Rachel Cruze:Yep. And when you buy it, hopefully, you know, you have it for, for quite a while. Right. Yep. Um, and so that, that's it. It's like kind of that short term sacrifice to get what you want for a longer term, um, is worth it to me. So So I don't know if that helps, Katie, but oh, I'm, it's a frustrating, it's a frustrating time. We get it. But also it's just adjusting expectations some and probably having to save a little bit longer.

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1:05:56Rachel Cruze:Everyone needs insurance, but it can be really hard to find a pro who isn't just looking to make money and to find agents that actually know their stuff. And so Ramsey Trusted Insurance Pros are vetted and coached to make sure that they're market experts who have your best interest at heart. So make sure to ramseysolutions.com slash coverage to find the type of insurance that you're looking for and connect with a Ramsey trusted agent there. All right, let's go to Joel and he's in Canada. Hi, Joel. Welcome to the show. Hey, how's it going today? Hi, we're doing great. How can we help? So I run a concrete business and I've never took a loan in my life.

1:06:35I bought my house flat out. I've never took a car. Wow. That's awesome.

1:06:41Rachel Cruze:Well done. Thank you. My question though is right now I have about$200 ,000 a year gross profit, but I know I could double that or more if I start playing the debt game and take a line of credit. Because all these big jobs I financially can't do from paying my labors for six months plus sometimes and financing all the materials. So do you think it's worth taking extra risk to expand my company and play did that game? Do you think it's worth it? Personally, yes, but it's putting a lot of risk on top. Yeah. Yeah. And I think that's the, um, that's the biggest factor. And obviously it's the unknown and the way we coach small businesses here through Entree Leadership is really walking through a process of where your business is, you know, where you own it outright and you're not having to play the debt game because when banks and payments and all of that enter into your life Joel you are you're playing a different game at that point and some people think it's worth it and they they they figure it out and that's what they want to do and and it's what they do and then other people try to play that game and their entire life is full of stress because they've out leveraged themselves.

1:08:06Rachel Cruze:They jumped ahead and had some expectations that never really came through that they thought because they were supposed to and all the numbers worked and everything was supposed to work. And the reality is it didn't. And so now they've put themselves in a situation that they could have easily avoided by going slower. And going slow for an entrepreneur is not a very fun thing. I know because you get energy from the growth and you're seeing all the success and all of it. And you're like, why not just magnify it? And I mean, the moment you do is the moment suddenly your business is in a completely different game.

1:08:47Rachel Cruze:And it's not one that we recommend people playing. There's just more peace and more control to go slower and move at the speed of cash that gives you a quality of life that is so much better. and it's not that you can't be successful. It may take you a little bit longer, but it's not saying that you can never get there. And there may be some things you always will say no to. I mean, there's stuff at Ramsey that we could go and buy this tech or whatever. And it's like, no, if we don't have the money, we're not gonna have to say no. We're gonna have to figure out a different path, a different way.

1:09:17Rachel Cruze:Yeah. I do wonder, Joel, what is it? And let me see if I can answer this, ask this question clearly. What is the increase that you would need like monthly and operating costs to do what it is that you're trying to do? it's hard to say the exact amount because it's different from job to job but a lot of these jobs if i'm quoting them i'd need to have finance probably two hundred thousand dollars so i'm wondering if this is something where we can go we need like a replenishable stash of money that is like kind of there for when opportunities come we can go over there and say oh this job is worth it if we do it there's going to be such a gain from it and you're kind of so over the next however long it takes you, you're working to kind of build up this money that's there to be able to go out and do other work.

1:10:05And if you're able to grow slowly doing it that way.

1:10:12Does that make sense? It's almost like you're saving. It's like, it's almost like you have savings that's ready for when these great opportunities come up that you can go do them. And then when you do them, you're replenishing that money. Plus you've earned money, right? Something like that.

1:10:29okay so yeah right now i got a good amount in the bank but i always like to have a certain amount

1:10:34Rachel Cruze:this to have that comfort zone right how much is in the bank right now around 100 000 and i'm saying what if you went well above that and you had the money to do the work when it came like you had the money to explore different opportunities in cash when they come yeah yeah that's definitely an option and this take me longer to build up to that point. Exactly. And that's kind of what I wanted to like put legs to what Rachel was saying when we're saying build slowly. It's not to say that this is the business. It never changes, but you're saving up the money to be able to do more over time versus you just taking out the$200 ,000 loan to do it.

1:11:16Let's save up$200 ,000 over time in the business. Now we can afford to do more of these things that come our way as opportunities. Yeah.

1:11:24Rachel Cruze:And, you know, the calls we get, Jade, on the show of small business loans and things that go awry. And it's like, you know, I got$200 ,000 and the business went under. I'm not saying it's going to happen to you, Joel, but I mean, it's just this element of like, what are you going to choose? Are you going to choose a slower road, but that's full of peace and autonomy eventually of over what you need in the business? And if you need to make a pivot, you have the ability to because you own it all. Or is it that I have to be making payments and now I'm living a life where I'm attached to this banker and what is expected.

1:11:59Rachel Cruze:And it's just a totally it's a different game. And it's one that we teach people to get out of and steer away from then head right into. Yeah, absolutely. And I mean, there's something to be said for his whole life has been built on cash. And look how successful he's been. Yes. When you see best practices that are working for you, keep doing that. Yes, that's right. Absolutely. Stay the course. All right, let's go to Christine in Connecticut. Hi, welcome to the show. Hi, Jade and Rachel. How are you? We're doing great. How can we help? So I remember that my parents never mentioned about having life insurance the minute we get married.

1:12:39um but i recently well recently i got off from this life insurance because it seems too good to be true but the problem is i don't know if i did the right decision and it was the national life group that i was in um i am new to listening to ramsey so i'm like learning and i guess you can say i am on baby step two i mean i am trying to pay off all my loans because i'm tired of it

1:13:06Rachel Cruze:Good for you. What kind of insurance did you get? What kind of life insurance? Whole life? Yeah, it's like the, what is it? Life insurance about when your spouse died and all that, the death thing. Hold on. Yeah, because they said that I got pre-approved for$250 ,000. Is it term life insurance, Christine? or is it like universal life or whole life? So it's an index universal life. It's a life, okay. So it's a type of whole life policy, okay. And so you got that. And how much are you paying per month for this? So since I started with me and my husband, we were doing 200 and 200, so it's 400 in total.

1:13:57Okay. A month? Wow, that's a lot.

1:13:59Rachel Cruze:Yep. It is? Yes, it is. So, Christine, what this is, is they basically pair some type of this investment element to the insurance. OK, so rule of thumb to remember is always keep your insurance and your investments separate. The moment they combine them in a product like this, you get a crappy rate of return and you pay a lot for not a lot. I mean, not a lot of coverage for one hundred dollars in and you're only getting two hundred and fifty thousand dollars. versus if you did term life and let's say you got a 20-year policy, depending on your health and age and everything, it's very inexpensive.

1:14:35Rachel Cruze:I mean, a fourth of what we're talking about here. For way more coverage. For way more coverage because it's just insurance. They're not trying to play this investment game on the side. So what I would do is, do you guys have kids? No, we don't have kids. Okay, so what I would do, Christina, is I would cancel the policy and you may have to pay some fees and all of it to get out of it, cancel it. And then I want you to go to Zander Insurance. So go to Zander.com and look up a term life insurance policy. Okay, term is your key. 20 year and you can do that. Now, if you had kids, I'd say get the term first, then cancel the universal.

1:15:14Rachel Cruze:But at this point, I wouldn't worry about it because there's no kids involved. But I would do it all back to back. So get life insurance. You guys need life insurance. But man, get out of this whole life because it is a crappy, crappy product.

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1:16:59Rachel Cruze:The Ramsey Show Question of the Day is brought to you by Why Refi. If your private student loans are in default and you're not sure what to do next, Why Refi can help you explore refinancing options with low fixed rate and a payment plan that's based on what you can actually afford. Go to whyrefi.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. May not be available in all states. All right. Today's question comes from Gina in North Carolina. She says, at what point does it make financial sense to give up our 3 % mortgage rate and move? We're considering moving because the cost of the HOA is$400 a month.

1:17:38It has doubled since we moved here five years ago, and I anticipate it will continue to do so. we would be moving to a home with a new mortgage interest rate of over six percent i know we're building equity if we stay but i feel like we can never really pay off our house if we continue to live in our current neighborhood okay so this is a good question and i'm thinking about what you're thinking about gina um hoas yeah there is a unknown there and i would i feel your pain on that so it's gone up 250 dollars it started at 250 now you're at 400 or it started at 200 now you're at 400 i would run some numbers on this though because if you move and now you're at six percent you might be paying that same amount basically do you see what i'm saying you're almost like just moving money around one area to another area but either way you're paying the 200 dollars and rates just went back went up yes again so we don't yeah so so playing the rate game yes um and insurance could cause your payment to go up like anything that's right that's right any of those all those things have the ability to adjust over time which is why we're such sticklers about that 25 rule yes to give you breathing room to be able to absorb some of this and the hope is that you're moving forward in the baby steps and you can absorb it in a better way as you go further throughout the baby steps as you're paying off your mortgage so i i don't have all the details of our numbers but just looking at this I'm like I would not move from three percent to six percent

1:19:11Rachel Cruze:because of a two hundred dollar change in your budget that's right that's right a hundred percent unless you were wanting to move anyways and you had the money to do it with the new interest rate and you wanted to don't wait like the best time to buy a home is when you are ready to buy a home so if you guys are wanting to move and you have the money for it but you're just like oh man I don't want to give up the rate that's what a lot of people I mean a lot of people are just like I I don't want to give up the rate, so I'm not going to move, which is fine. Totally understandable. But if you have the ability to and you want to, that's the part of being wise with your money is you get to make these decisions.

1:19:44Rachel Cruze:But if it's only because of the$200 HOA fee at that point. I wouldn't. And you can also to look at things going on in your neighborhood that'll speak to why the rates may have gone up in that way and kind of projected. It's probably going to be like this for a while. Or do you know what I mean? you can sit down and if you dare attend one of the HOA meetings and find out what's going on over there. But unless for some reason, the 3 % house that you already have is like stretching you guys to the gills and you're like, this just really threw it over the edge. But then you couldn't afford a 6 % anyway.

1:20:20Yeah, yeah, yeah. 100%.

1:20:21Rachel Cruze:All right, let's go to Grace in Las Vegas, Nevada. Hi, Grace. Welcome to the show. Hi. Thanks, Rachel and Jade. Thanks for taking my call. Absolutely. This is Grace, right? Yes. Okay, perfect. Okay, good. Sorry. I think I may have hit a different button. Sorry to the booze. Okay. Yeah, how can we help? So question about inheritance. So I don't know how direct I need to be with my dad in asking about our inheritance. and long story short um my dad has four kids um the three you know grew up in the household i did not you know i grew up in the states with my mom so i've never been entitled to any of that stuff and it's fine right i've made my own way i told the screener i'm a baby steps millionaire thanks to you guys wow good for you thank you so i was always led to believe sorry if i get emotional that it was hundreds of thousands of dollars, which I didn't want to fight for, right?

1:21:25Like, I don't want to fight for, you know, like 50K. It's not going to change my life. Anyway, I got a phone call this week, and it might be more in, like, the millions of dollars that this inheritance might be. And anyway, I'm just, like, feeling conflicted because, you know, two of my siblings are trying to get me out of the will. You know, my dad's starting to get dementia. but I guess as the will stands I'm supposed to get the house and some money so again like I was always of the camp of I'm not fighting for this like it's not not something I expect you know at the time I said it's not going to change my life but now that it's I don't know a life-changing number I don't know am I being greedy like should I pursue that like I just I'm struggling like I couldn't even sleep last night trying to figure out what I should do next.

1:22:15Rachel Cruze:Do you have any relationship with the siblings at all? I do with one. The oldest one has kind of been on my side of like, hey, this is about fairness. Like, it doesn't matter that, you know, she's not like, she's a half sister. So, so anyway, yeah. So just with one, the other two, it's like friendly, but you know, it, I, I mean, they have put me in my place before of, you know, you're like, that midlife mistakes. You know what I mean? See, and that's the part. Grace, I hate all of this for you so much. Like, it sounds like there's a lot of emotions. It sounds like there's a lot of water under this bridge that has gone on.

1:23:01And I feel like that's what's clouding this discussion. And I get it. I'm not saying you wouldn't be clouded by that because there's a lot there just in the few things that you've told us. But what I would wanna keep first and foremost is what you said, which is you were going throughout life and you were fine with your Baby Steps millionaire doing your thing. And at the end of the day, whatever happens, I would just keep in mind, it's not yours nor your sibling's money at this point. It's your dad's money. And he's gonna make a plan that he sees fit. Now, I do wanna know, whatever it is, like these bits and pieces that you guys do know about the will, How do you know that?

1:23:40Is that from your dad's mouth? Was there at one point a reading of the will? Or is this just jibber-jabber from the family? It's from my oldest sibling. So I got a call, like I said, and she was, sorry, I'm getting emotional. But again, she said, so anyway, there's a lot of properties involved, right? And pretty much they're getting the lion's share. And it's basically a home. How does she know? How does she know? money because she knows what all it's worth she's kind of had her hand in all these things she helped him um make the will no she i mean she is she knows what's in it basically she didn't make it um but she said yes basically you know you're you're supposed to get this fourth home plus you know whatever is in the bank and they're trying to make it so you don't get the home and you know It basically goes to the grandkids, which I don't hate that either, right?

1:24:36I just wouldn't bet on what she's saying. I think I would go straight to your dad and I'd say, dad, talk to him. Your health is going. We all know that. But you need to, I would love if you would speak to us about what your final wishes are going to be with the property so that we're hearing it directly from you. And with the spirit of what you have in mind behind it, you know, our family is messed up. and it's going to mean a lot to me to hear your wishes from you versus one of my siblings. That's all you can ask for. Okay. So just address it straight on. How do you bring that conversation up though?

1:25:12Without entitlement? Yeah, a lot of gratitude and humility.

1:25:17Rachel Cruze:But just say, Dad, this is starting to weigh on me. And because it's getting dragged so deeply and it's starting to feel really personal. and I don't want it to be. I hate that it is, but this is what I'm feeling and I just think it's going to be helpful and best for you, Dad. You've worked really hard. You have a lot to show for it and I want your wishes to be what they are and I think that it's fair for all of us to hear those together just for your legacy to be able to be lived out the way you want it to be when you're not here anymore And yeah, I mean, I feel like that is totally fair. Totally.

1:26:02Rachel Cruze:And I would also say to Grace, at the end of the day, does it, it feels, I think it's, yes, is the amount of money maybe becoming more motivating for you to be like, whoa, hold on. But also what can easily be attached to someone's value to an amount of money. And Grace, regardless of if you get this money or not. That's right. You are valuable. that you're not some mistake, midlife mistake, like what they're naming, because it can easily going to start to feel like if this money does not come to you, you have less value because of that. And I would detach that from a spiritual element as fast as possible because it's just not true.

1:26:40Rachel Cruze:Will it be heartbreaking? Absolutely. But your value is still there.

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1:28:02Rachel Cruze:Welcome back to The Ramsey Show in the Fairwinds Credit Union Studio. We're taking your calls at 888-825-5225. Let's go to Rachel in Riverside, California. Hi, Rachel. Welcome to the show. hi um can we just ask my question yes yep what can we how can we help you today okay so i'm 54 years old and you know i've been a widow for about six years um prior to my husband passing away i was a stay-at-home mom for 17 years so i immediately got a job and um i inherited his ira um i've been working but work's really slowed up so i'm trying to think about doing a 72t and start withdrawing some of the money that I have.

1:28:47Okay.

1:28:48Rachel Cruze:And you're 54. Yeah. So not quite to that 59 and a half to avoid the penalty. So what are you doing for work now? Right now I'm still trying to do the real estate, but I've taken some time off because it's just been really stressful. I jumped into work so quickly after he passed away. And now I feel like it's hitting me a little harder. Yeah. are you there Rachel? I was kind of scared yeah because I was kind of scared when he passed away for sure so I just immediately started working now I have a pretty big um IRA so yeah why are you thinking you need to I mean if you've got the job now how why are you thinking you need to start doing this flow okay but what kind of work is it real estate okay so I'm I would go more along the lines of is there other work I can do versus trying to draw from this retirement earlier through a 72T?

1:29:46Well, I didn't have a lot of experience before we got married. And then I didn't work for 17 years.

1:29:53Rachel Cruze:How much is in that account? Almost 1.8 million. 1.8. Okay. And how much are you needing to have per month to live on to feel good and secure? Just a couple thousand dollars a month and i have money in my savings but i hate to deplete that is your savings um is it like in a high yield savings account or is it your ira that you're talking about how much how much is in there about 200 000 okay okay because listen richel i'm just trying to figure out and i paid off my house oh my gosh amazing okay that's great see i'm just i'm just wondering how we can fill the next five years or so. Yes. And if you, you know, I mean, like if you pulled 2000 out every, I guess it'd be every month is what you're saying that you need.

1:30:44Rachel Cruze:Yeah. Yep. So I mean, I'm just thinking, because I mean, if you did that, and you pulled 2000 out, I mean, it's going to be over 100 ,000 will be gone from that savings, which is not the end of the world you got 1.8 in an IRA that you can live off of too right so it's not right it's not the end of the world I'm just wondering can you supplement um instead of paying you know pulling two thousand out a month yeah it kind of screwed up I had gotten some job offers and then I I turned them down because real estate was really booming yeah that's okay and now it's like well do I try again and put it out put it out there again and try to get back I would, Rachel.

1:31:23Rachel Cruze:I think you are a lot more competent and marketable than you realize. I mean, you've been doing real estate in California. I mean, I think you have a lot to offer to something. And again, you're not needing this massive$300 ,000 a year job that you're trying to look from corporate that you're trying to replace. Thank God, because you've done so well with your money, though, that gives you the freedom to feel like, okay, I don't need to take this. I don't need to be looking for this needle in a haystack type job. I just need something that I enjoy. I mean, it'd be amazing to find something that you love, Rachel, that you could plug into or an environment that you love.

1:32:01Rachel Cruze:I don't know if there's a great church and you work part-time there, part-time somewhere else, or maybe there's, I don't know, I'm just saying like a receptionist at a dentist office nearby. And you know what I mean? Like you find a group of good people somewhere that's an uplifting environment for you. and again you're not you're not having to make too much money it's just supplementing some of this supplementing yeah it's just i'm pulling from my pension that i had before okay which is just a small amount but i am able to pull on that from a job i had prior to getting married how much it comes in a month for that just like 700 oh okay yeah it helps but you're needed you are going to need some money to, I mean, realistically, how much extra?

1:32:47Rachel Cruze:You said a couple of thousand. Be more specific for me. Well, I am renting out a room, so I'm getting$1 ,500 for that. And so I figure my bills, since I don't have a mortgage, my bills are really minimal. I don't have any debt at all. Yeah. What does it cost you every month to just operate your life? about$3 ,400 $3 ,400 $3 ,400 to$400 $3 ,400 $3 ,400 I was like Rachel and so you've got the$1 ,500 from the room rental the$700 from the pension and then obviously real estate is slow but could we close that gap I mean you're more than halfway there I could but just the stress of real estate has been so much for me And I'm not saying it has to be real estate, but I do want to lay this out.

1:33:39Like if you were to draw from this early doing what you said, if you did do a 72T, it's not just I get I get to pick the amount that I want and I can do it for a limited time. The IRS is going to calculate the government's going to calculate what works for you. And you're locked into that. You're going to be locked in for at least five years. So if something does change, you can't increase it. You can't decrease it. You're you're locked in. And if for some reason that calculation, something changes in your life and that calculation no longer works, you could they could go back and say, well, actually, there's a 10 percent penalty here.

1:34:11And actually, that wasn't the right calculation. So it's kind of a precarious thing.

1:34:15Rachel Cruze:So I would pull out of the high yield if you have to do anything. I would leave the IRA alone. And the high yield is where I would pull some money if I need to. But I'm thinking about this, too, Rachel, of just, you know, you're 54. I think just having a place to go, waking up in the morning, having a purpose, having something that you're going to is really good. It's like a very healthy thing. So I feel like you could find something and make$2 ,000 a month, you know, doing that. And maybe it's part time. That's not a full time job. That's part time. But like two to three days a week, you got a place you're going.

1:34:51Rachel Cruze:You're making some money. And I just think that's a good mental health play for you. And then I'm totally okay if you look up in three years and you're like, you know what? I'm going to retire and go be with my kids over here or whatever. And you got two years that you got to pull from the high yield savings account. Do that. You can do that. You have the margin to do it. But I just think it's good for you to go find something with purpose in your life. Yeah, I guess I'm just scared because I haven't worked outside of, you know, haven't had much work experience. Do you have kids? They're older.

1:35:27Rachel Cruze:They're all grown up. Okay, where do they live? Two live here, and then the other close to me, and the other lives in Texas. Okay, great. Yeah, I mean, well, what do you love to do, Rachel? Do you have a hobby or something that you just love? I used to. I don't know anymore. Okay. I used to volunteer a lot, but I haven't really been doing that. Yeah. Yeah. I mean, honestly, I'm like, you go work at the library. You know what I mean? Honestly. Just anything that you're out with people, you're making some proactiveness in your life and making some money. I think it's good. You know, Rachel, if you hold on the line, Christian is going to pick up and we're going to send you Ken Coleman's book, Find the Work You're Wired to Do.

1:36:08Rachel Cruze:And again, I'm not saying you have to have a full-time career by any means, but let some creativity kind of jog your mind and you know there could be some great things in your area that you plug into you get paid a little bit which sustains your life and it's a beautiful out there Mm-hmm.

1:36:49Hey, it's Dave Ramsey. If you or someone you know owns a small business, listen up. What if you could build the kind of business you'd be proud to hand down to your kids? Over 30 years, I've been able to build Ramsey Solutions into a business that's going to be a blessing for my kids. I'll show you how to do the same thing at Entree Leadership Master Series November 8th through the 13th. During this five-day conference, you'll get my strategies for building a winning business that outlasts you. Visit RamseySolutions.com slash Master Series for tickets or click the link in the show notes.

1:37:49Rachel Cruze:When it comes to looking at your money and your lifestyle, even just like with our last caller, you know, knowing where your money's going is so crucial. And EveryDollar is an amazing app to help you with that. Not only is it a great budgeting tool in it, but also just your overall financial picture and the roadmap of how to get you to point A to point B. It is there to help you. And so EveryDollar is, it's one of my go-to apps every day. I mean, I'm in there almost every day, tracking transactions and looking at everything. And so it really does have an amazing way to walk right beside you when it comes to your money.

1:38:26Rachel Cruze:So if you want to find some hidden margin and take control of your money, make sure to check out EveryDollar for free in the App Store or Google Play. All right, we got Julian in Omaha, Nebraska. Hi, welcome to the show. hey how's it going doing great how can we help okay yeah so i'm basically looking for some guidance about saving for college versus investing in a Roth IRA okay is this for you or for a family member this is for me so i'm 17 right now and turned 18 in two months i just started working at a bank and basically they have a pretty good deal for me so that every uh six percent that i contribute to a Roth retirement account, they'll match it for 5%, and I'm immediately invested.

1:39:15I'm also going to be graduating in May with my associate's degree in business, and I want to go to college after that in state. I think I'll be able to get a lot of scholarships, and my parents will help. So my goal is to graduate with little to zero debt, but I'm not really 100 % sure about that, and I will work during college. Do you know what college will cost each semester um so i was yeah per semester it was about 14 000 because per year is 28 but that's basically the figure price i think we can probably work it down a lot from there but so 28 per year that's 2 000 or so a little over 2 000 a month do you see a plan for that cash flowing that i i yeah um the fafsa opens tomorrow so i was going to fill that out i think i my main goal is to just work hard and get a lot of scholarships and i think my parents will cover maybe room and board not confirmed about that yet um but i think i feel like with my act score and gpa and me going to like an in-state college for only two years instead of four, I was just kind of thinking why, like, my student aid wouldn't need to be as much for my overall costs.

1:40:37Rachel Cruze:Sure. Yeah. I mean, I think your mindset is perfect in the sense of, I'm going to be applying for scholarships and grants. One little asterisk, though, the FAFSA can be very confusing, and some people end up signing up for loans, thinking they're scholarships. So read the fine print, be extra, extra careful. You're such a mature kid. I'm like, oh, my God. And I wouldn't say kid, young man. very, very mature. And I think your parents, I mean, they obviously know you well, you're their kid. And I think sitting down with them this weekend, even and saying, Hey, mom, dad, I'm planning out my college life.

1:41:09Rachel Cruze:I would love to know just, um, and you know, with zero expectation, but I just want to know the plan for college on your end, if there is one, just cause I'm planning so that, you know, so that it's not kind of, I think they're going to do this. They may, they may not get a kind of a solid number from them. And then from there, start, yeah, filling out scholarships and grants, see what you get. You can work. And I think you 100 % can work your way through. Now, the prospect of what the Roth is probably a Roth 401k at the bank, I'm assuming, because they're doing a match. And that's a great deal.

1:41:40Rachel Cruze:But I would not do any kind of long-term investment right now. I would be concentrating on investing in yourself. And that is getting yourself through college debt-free. And there is plenty of time to invest and build wealth. I promise you, you are going to be fine. You know, if you didn't do this for two years, you are going to have millions and millions of dollars at retirement. I just have a feeling you're going to start early and it's going to be wonderful. But I want you to get, I want your number one goal to be to get through school debt-free because that will set you up then to be able to go straight into investing after college and not have to go backwards and pay off debt.

1:42:15Yeah, because to your point, there is going to be the 28 per year is just face value there. You might need a car. You might need an apartment. There's going to be cost of living. And then right after school, what are you going to be getting into? You'll need to, you know, so having money, if you have extra money, saving it just in a high yield versus trying to invest it. So you've got that liquidity of getting to that money when you need it. yeah so I was gonna ask like so you think I should just stat cash for college not touch like the the rock match at all and then so for my college savings account do you think I should save it all in like a high yield savings or I right now I have everything and just like a basic savings yes I

1:42:57Rachel Cruze:would move it to a high yield savings you can check out our friends at Fairwinds Credit Union they have you can do up to 10 high yield savings accounts with them and with the smart bundle so So check that out if you go to fairwinds.org slash Ramsey and open up that. I think that's a great starting place. And yeah, because if you put anything into a Roth, like a 401k or an IRA, you can't touch it till 59 and a half anyways. So I want that cash to be available. And you'll get around, I mean, it should be around 3 % now. Maybe, I'm not sure, I haven't checked rates, but even a little bit more this week.

1:43:29Rachel Cruze:Everything's kind of been crazy. So you'll get much more in a high yield, even 3 % more than basically less than a percent in a traditional savings. Yeah. Okay. Well, perfect. That mainly answers my question. Awesome. Well done. Gosh. I love how his mind works. Smart guy. I know. Smart guy. All right. We got Elaine in Sacramento. Hi. Welcome to the show. Hi, Jane and Rachel. How are you doing today? We're doing great. How can we help? Good to hear. So I have a quick question. We, my wife and I, we are currently on baby step two and have it mapped out to where we'll be paid off within 18 months.

1:44:11Great, congratulations. Thank you so much. Shortly after that, we intend to list our home and then it's a three-story town home. We have a kid and a large dog looking to expand the family. So we want to move into a single story. And so our question is, as we're paying off our debt, are we closing our accounts if we intend on purchasing a home right around the same time that will be debt-free or is that going to hurt us because we wouldn't be able to do the manual underwriting process at that time? That's a really good question. The credit cards, that's the end of all consumer debt? There's nothing else open?

1:44:51Correct. Yeah, we don't have, I mean, in this 18 months, we'll have paid off the student loan as well. It's just one single loan. And I think it's totally like six or 7 ,000. Okay. And all accounts would be closed because what I'm getting at is what I'm getting at, and we can work backwards is your credit score. It's, it usually takes like six to eight months to roll to zero. And that is making sure every account is closed. There's no balance anywhere. If you have a random credit card open somewhere, it's not going to roll to zero. So that's kind of the game you're playing. You want to make sure that everything is closed so that that has the ability to happen.

1:45:32And then from there, you would be able to do manual underwriting.

1:45:35Rachel Cruze:Yeah, because it has to be undetermined, that credit score. So they're basically the credit score can't exist. Like what you're saying, like, you know, this because you mentioned it in the We're getting the call to do manual and during, but it takes, it's going to take, yeah, probably six to eight months to do that. So it may pause your plan to move for about six months. But at the end of the day, honestly, that is, that is worth it. And it's going to probably take you guys a little bit to save up an emergency fund and a down payment, you know, and you may have equity that you're rolling over too, but you could use that six months to pile up a lot of cash to have for a bigger down payment and an emergency fund.

1:46:09Rachel Cruze:So by the time it all is said and done with the baby steps, by the time you get to 3B, you should be good to go. I mean, how much equity do you guys have in that condo? I mean, at this time, the neighborhood that it's we would break even if, you know, if we were. OK, so you do need to save for a down payment. Well, in that that affects what we're saying, because I was I don't know why I was thinking that you're renting right now. Your credit score is going to remain there because you have a mortgage attached to it. that's what I was that's really where I was getting it as I you know we can close the accounts no problem because it's not going to go to zero that's true yeah it's not going to go to zero so what I would do just go ahead and pay off the cards it's not going to it's not going to take your credit in the way that you think because you have such a major asset on there your mortgage that you're paying on time every month um you should have no problem in the world moving from that my husband and I had a mortgage it was the only thing we had when we moved here we got another mortgage and so it was no problem if you're paying your payment on time you'll be fine yep but congrats on the progress you guys well done it's exciting

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1:48:06And if you ask me, I think you're way above average. So why are you still listening to me? Go download EveryDollar for free and start saving more money right now.

1:48:36Rachel Cruze:So one thing we love to see is the comment section. Sometimes we venture in at Jade. Sometimes we don't. At your own risk. At our own risk as the hosts of this show. But we do love to see you guys talk about it and talk through the calls and all of it. The engagement is part of the fun in all of this. So we love it. So make sure you're subscribing to the channels. Make sure you are commenting. and yeah, get in there. Cause I think it's, it's a fun element of, it can be the, it can be a negative part of the internet for sure, but it can also be a positive part. And where you're in, in callers, we see sometimes, you know, they're like cheering on other people and it's great.

1:49:13Rachel Cruze:So, so get in there and engage there on, especially with YouTube and even you can follow me and Jade on all social medias, TikTok and Instagram and Facebook and all of it. And I'm definitely in those comments, rest assured. We see those. We can see those. All right, let's go to Melissa in Tampa, Florida. Hi, Melissa. Welcome to the show. Hi, thanks for having me. Absolutely. How can we help? I just wondered if you had any guidance or advice on how I can talk to my dad about planning for the future, specifically why he should put his assets into a trust versus just leaving me with a will. I've tried to have conversations with him in the past, but I always, it always feels awkward, you know, and I kind of feel like I don't want him to think that I feel entitled to it or, you know what I mean?

1:50:13I just, it's not a comfortable conversation.

1:50:15Rachel Cruze:For you, what's the difference? What do you see the, the push for a trust versus a will? Does he have a large estate? uh yeah i he does i mean in my mind he does like to me he does i don't exactly know the numbers what would you guess he has at least a couple of million i mean he i know his house alone is worth close to a million and it's completely paid off he has um multiple multi-unit rental properties that he borrowed against his 401k when he was younger. And so those are now paid off. So he was able to retire in his early 60s. And as far as I know, he doesn't really have to touch his retirement.

1:51:06He just lives off of the income from the rentals. So I'm an only child.

1:51:14Rachel Cruze:Oh, you're an only child. Because a will can be sufficient enough. I'm curious why that's not good, like what you're seeing. It's like he really needs to do a trust versus a will. I'm just curious what you're seeing. Yeah. I've just heard like I have a couple of financial advisors like in other parts of my family. And they've always just said like you don't want to go through probate. And, you know, the government's going to take, you know, 30 percent of the money of your money. And it's just a hassle. And it's just all these things. but then I mean if I were in your shoes the thing I'd be worried about for me is if you had like a minor like if you had a young child and he was intending to leave a large sum that he would get at 18 like those are the things that I'd want to say instead of just willing him this money that he receives at 18 can we do a trust where it pays out a you know a more reasonable time those are the things I'd be thinking about.

1:52:12Um, but if, if that's not part of this, honestly, I don't see why he couldn't have a will. I mean, yes, it will go through probate, but the state won't decide. The will will decide.

1:52:23Rachel Cruze:And it doesn't take 30%. Where are they getting that number from? Okay. I don't know. No, I don't think Melissa, I don't think, I don't think it's anywhere near 30%. I don't think so either. Um, okay. So there may be just like exaggerating with me, but yeah, I think so. My concern, he does have a will now. I will say that is that I've been, I've been trying to have this conversation with him for probably 10 years. Ever since I started working in healthcare, I saw a lot of, um, you know, a lot of things happened to my patients that I went to both of my parents and who were separate and said, um, you know, please get stuff in writing.

1:52:59And it took me a really long time to get him to get a will. Um, his third, his third wife. You know, finally they did, they did that separate, but together. And, you know, my concern was that, you know, he was getting married multiple times and, you know, that was my concern about him having a will, but now he's divorced again. So I've just said, dad, if you get married again, can you please get a pretty?

1:53:27Rachel Cruze:Yeah, right. Yes. Which would be, yes. Which would be smart on his end. Yes. Going on the third wife for sure. But now he's not married. So, you know, I guess the other side of like me wanting him to get a trust or an LLC for his properties is that, um, like, I'm worried about liability because for him, if something happens, like, I feel like we live in such a Sue happy world that I just have, you know, I have like this horror story in my mind of like him getting into a car accident and somebody, you know, trying to like, if his properties are part of his personal assets and not protected by like a trust or an LLC that they would like, you know, try to take those things from him.

1:54:08That's fair. Part of that's fair enough. With the properties. Yeah.

1:54:13Rachel Cruze:It means a lot of real estate. An LLC would probably be smart for him to set up just for his own protection too. So if something happens at one of those properties that, you know, the renter or whoever can't sue him personally, they're going to have to sell the LLC. So there's ways to do that. But that's, from my understanding, and I don't know Florida law specifically, but from my understanding, it'd be more for his benefit while he's alive than even at his death. But yeah, I mean, setting that up would be smart. But no, and I think it's, I think on like a$2 million estate, I mean, maybe$50 ,000 or something through fees and different things through probate, maybe.

1:54:53Rachel Cruze:But it's so minimal. It will not be 30 % by any means. Now, there may be an estate tax, but that's over like, you know, tens of millions of dollars at that point. Yeah,$15 million, I think, is the... Okay. Okay. The people that are, you know, financial people that I know have just made it seem like it's going to be so difficult for me to, like, do anything with his properties or manage them or, you know, it's going to be such a long process to go through probate and all those types of things. But I'm not really... It's not about the money to me. Like I've even told him, if you don't want to leave it to me, leave it to my son.

1:55:28You leave it to the next generation. At the time he was married. So I was like, please just put it in writing. Don't leave me with nothing.

1:55:34Rachel Cruze:Now, I will say if all the properties were in an LLC and through a trust or something, mostly I think the people that are advising you, that is right. I think that would be a smoother transition. But it's not like it's that it's never going to happen. It may be a longer process for sure, especially if there's multiple properties. So there will be some work on your end. But I don't think it's not the end of the world. I would not lose sleep over it by any means. No. And yeah. And I probably would just tell him to leave everything to your son. I think you want to have more say in what's going on and how, if that's the case, because you don't want your son to inherit 2 million at 18.

1:56:09I mean, that's, yeah. No, no, of course not. I mean, you know, but I was just kind of like trying to, you know, that uncomfortable feeling of talking about it. And you don't want him to read into something that's not there. Right. Yes. Yeah, yeah. Or think that all you care about is his money. Like I would I would trade more years with him for all. Absolutely. And he's known you his whole life. Melissa, he knows that's not true about you. He made you. I know. I just it's just, you know, it can be an uncomfortable conversation to have. He's just he's so smart with money and he's sacrificed his entire life.

1:56:48And now he's retired and I'm the one encouraging him. I'm like, go spend your money. Enjoy yourself. You're the traveling. Like, spend it all. You can't take it with you. You know, like, I try to encourage him to really let go and now enjoy it because a lot of his friends his age aren't, like, you know, physically able, health-wise, to enjoy the money.

1:57:12Rachel Cruze:Yes, absolutely. So, like, he's lucky in that sense. Yes. Well, you're a great daughter, Melissa. So, yeah, I think the will is in place. That's really great. Yes. If the properties were an LLC, you know, and then that's in a trust might be an easier process, but I think you're going to be OK. And if you want to know more, you can take the wills quiz. Ramsey solutions dot com slash wills quiz will tell you if you need a will or if a trust is better. Yeah. And you guys listen to Melissa, though, for real, everybody needs a will. Everybody needs a will. And Mama Bear Legal Forms is a great spot to do that for state specific wills.

1:57:42Rachel Cruze:But regardless of the amount that you have in your estate, everybody needs a will.

1:57:53Thank you.

1:58:19Hey, George Camel here. We often talk about how being normal sucks when it comes to your money. But guess what? Normal isn't so great when it comes to your job either. Normal is staying in a job you hate, dreading Mondays, and working for people you don't even like. Sound familiar? Well, the good news is you can break free from normal because Ramsey Solutions is hiring, and we refuse to settle for the ordinary. In fact, we are anything but normal, and we are proud of it. And right now we're hiring for technology, sales, marketing, writing, copy editing, and creative roles. So head over to RamseySolutions.com slash careers and apply today.

1:59:06Rachel Cruze:Our scripture of the day is Proverbs 14, 25. A truthful witness saves lives, but one who breathes out lies is deceitful. Anne Frank said, people can tell you to keep your mouth shut, but that doesn't stop you from having your own opinion. Oh, true that? Man, it's good. All right, let's go to Josie here in Nashville, Tennessee. Hi, Josie. Welcome to the show. Hello. Thank you for having me. Absolutely. How can we help? I guess the biggest question that me and my husband can agree on is how can we get over the fear of losing everything so that way we can ultimately have everything that we want. Oh, wow.

1:59:49Rachel Cruze:Be a little more specific. What does that mean? Okay, so he had quite a jump in income this year due to a job change. And now we're finally able to pay our bills on time and not be underwater on everything or scrape by between groceries and live paycheck to paycheck. And it's definitely not changed us completely, but now we have room to breathe and experience things that we want and be able to go out to dinner if we want to. Yeah. But we do have we have a little bit under right around one hundred thousand dollars in debt. And we want to we want to be able to actually have everything that we want and set up our kids as well.

2:00:35Right. OK. It's just I think it's just the fear of actually not having that extra money now. Well, how since we've been used to it, what would be the main thing that you'd be sacrificing? I mean, I'm thinking about things like, yeah, going out to restaurants, maybe like entertainment, things on the budget that you can cut back subscriptions. What are you? Is there something bigger and concrete that you're seeing yourself sacrifice? Is it vehicles? What are you seeing? I don't know if it's necessarily anything concrete. I think it's just actually having a cushion in our savings now just in case.

2:01:11Ah, so it's taking the savings. OK.

2:01:13Rachel Cruze:OK. Yeah. Okay. So how much we're going to, how much is he making a year now? So he's on a 1099. So, and with the job that he does, he's a tour bus driver. So it, some months he could be around$4 ,000 and then depending on how many tours he does, it could be around 12 ,000. Okay. So it's a, it's a pretty, pretty big fluctuation. Um, but it's now that we're able to save money, we're scared to get rid of it, to put it towards our debt. What does it take? Just your minimum kind of bare bones, normal month budget. What's it take for you guys to get by? About 3 ,900. Okay. So we'll say 4 ,000. So just to start this thing off, because his income is so variable, like the first step I would take for you guys is to have like a Peaks and Bally's account because there is so much variation.

2:02:08And with the baby steps, you're taking every bit of extra margin and throwing it at the debt. So on a month where he makes$12 ,000, right, you want to be able to have that extra to throw out the debt, but you're not going to feel comfortable to do that unless you have a Peaks and Valleys account that has another$4 ,000 in it. Right. So I would do that and then I would go from there. I mean, how much do you guys have in savings right now? um so we we just recently opened a second checking account to put all of our um like our bill money into our rent and our car payment his motorcycle payment insurance and everything like that and we've we fully funded for october um and then in our separate savings we have 800 okay gotcha okay do you work at all i don't uh we have two kids four and two okay so work inside the house.

2:02:59Go ahead, Rachel.

2:03:00Rachel Cruze:Well, I'm just thinking, I'm trying to map out for you guys, because the$100 ,000, it's all consumer debt, right? So about$60 ,000 is student loans, which I'm still in school. I do online college. So I'll end around September of next year, and my student loan should be around$60 ,000. And then we have my car payment, which is around $8 ,000 is the total. And then his motorcycle is$14 ,000. And then we moved and we started renting this place and we didn't have any furniture. And we got into one of those rent-a-center payments. So now we owe on our furniture. Oh, and it's still rent-a-center? Yeah.

2:03:46It's like a local company that does it like that. And we pay on it weekly so we don't lose our couch and our refrigerator. But you never own it, right? It's just rent to own. Like it's just rent. We do own it. After we get done paying it, we will own it. And how much is that? Total is about$1 ,500. Okay. And he doesn't have a car. He just has the motorcycle. There's not another vehicle? Yeah, correct. Just the car and then my car and then his motorcycle. Okay. So did we get it? $1 ,600. Is there anything else? $1 ,400 and$1 ,500. Anything else? So I have a car that was, it was a lemon and it was repossessed.

2:04:23and I had planned to work something out with the bank a couple years ago. Well, they finally, you know, they took me to civil court and all that, and I'm paying on that monthly as well, and it's about$11 ,000. Okay. Okay, there it is. Okay.

2:04:36Rachel Cruze:So, I mean, Josie, really what it comes down to is I think you guys having that separate account is okay for now because his income fluctuates so much. So I'd get that$800 up to$1 ,000, and then from there, man, anything extra you can throw. Like if he has a great month, you could throw eight grand and get some of this stuff knocked out. Do you know what I mean? Like you can make some big progress in some of these big months. And when you map it out, I mean, it may take you guys 18 months or so to kind of get all of this squared away, but it's not going to be forever. So just as quickly as this income changed, I almost would go back to the mindset, knowing emotionally, though, there's a cushion.

2:05:17Rachel Cruze:Because if something happens, the truth is, if something does happen now, an emergency, and you got a three grand thing, they're like, crap, we got to pay for this. You have the money to do it, right? Like you could cash flow it through that month if you had to. You could pause paying off the debt to cash flow. So that's the beautiful thing is that the money is there if you need it, right, with this great income. but still have the habits of how you guys were living paycheck to paycheck so that anything extra on a month where nothing happens can be thrown at this debt. I mean, you guys should pay off that furniture.

2:05:51Rachel Cruze:Gosh, next month. Next month, you know. It's killing us. Seriously, seriously pay. Like, get some aggressive goals. And I think once you kind of start seeing that momentum and stuff starts getting checked off, it's going to feel great. You're going to feel a lot of freedom. Does he have a guarantee on his pay? Like, is he guaranteed at least the$4 ,000 and then it can go up from there? Or is there no guarantee? No, there is no guarantee at all. So it's really just, you know, if the company gets a client that rents out the truck, then the client will need the driver, then he can go on that tour.

2:06:22Okay. So it's no guarantee. There could be a month, you know, like, because we were planning to try and go ahead because he's on a really long tour right now where he's going to be making a substantial amount where we could fund all the way through January for our monthly expenses. So we were going to try to do that just in case he doesn't have anything in between the holidays from December to January. I wouldn't do that. And I was going to actually ask about that because there is such a fluctuation. I'm also thinking there's freed up time there too. So I feel like probably the third piece of advice in your list of homework would be what can he do if he has a month that he's not doing all of those tours that equal up to 12 or $13 ,000, right?

2:07:04If he has a$4 ,000 month, what is he going to do with that time? Or if there's an off season, what's he going to do with that time? And I think that's a really important part of this equation, because if you don't, you are going to tie up a lot of money, kind of earmarking it for future months. And I don't want you to do that. I think if you have that Peaks and Valleys account, you get one month in that. And then if you're having a situation where there's multiple months of not making bank, then that means we need another secondary job or we need something else coming in regularly to supplement that income.

2:07:36Right. Yeah. I think the biggest thing was just we, we finally got comfortable for a second and now we're scared to kind of start all over again, even though we know in the long run, it's going to feel so great. We're just, we're scared to give it up right now.

2:07:52Rachel Cruze:Yeah, I hear you. But also, there's a little bit of the false security because you still have all this debt. Like you guys still owe$100 ,000, right? Yeah, what's scarier? I didn't even know it was that much until I started adding it up. And I was like, how are we like? Holy crap. Oh my gosh. Yes. Like I felt like a normal person. Like we've got my car payment. We've got this and that. And I was like, it can't be that much. And it is. It is. Once you actually see it. Yeah. So I think sometimes there's a weird false security. if people have a ton of cash on one side, but tons of payments. Because if something happens, those people still have to be paid.

2:08:26Rachel Cruze:That's right. And so there's an element to that that's very real. So I understand that it feels like, oh my gosh, we can take a breath. And that feels great. But listen, stay motivated to attack that debt, Josie. Stay motivated. Send her a copy of What No One Tells You About Money. Oh yes, Jade's book. All right, remember, there's ultimately only one way to financial peace and that's to walk daily with the Prince of Peace, Christ Jesus. Thank you.