When Life Gets Hard, Choose Financial Stability

25:04Rachel Cruze:Right. And you're staying in the marriage, correct? I mean, this is... Oh, yeah. Yeah, 100%. Yeah. And your son, you guys are in from like a physical safety, okay? Right. Oh, yeah. Okay. But it's just the instability that she brings. And when you say that he needs to get out of the house, because I would understand wanting to have a support system, which I think is wise for you guys. So we'll try to kind of talk through it to balance not making any unwise big decisions with money that could be, to your point, disastrous in the future, let alone having to deal with what could be coming for the next couple of years for you all if she can't stop.

25:51Rachel Cruze:So the area you guys would be moving to, it is more expensive because you said you guys are in the country. so it will be on average do you know how much from a housing perspective you can sell your home for for where you guys are now yeah you know we owe$280 on something we could probably get$375 for okay so you'll have you know you'll walk away with probably$80 ,000 or so less than$100 ,000 okay and the homes in the area that you guys would be wanting to be Do you know on average what those are costing? The stuff that we've been looking at for the past 12 months, and we've been out there twice viewing homes.

26:36We actually had made two offers before the cancer diagnosis, and we put everything on hold to deal with that. So we're looking at stuff in the 700s. My wife makes about$250 ,000,$300 ,000 a year.

26:51Rachel Cruze:How is she able to keep a job? She works from home. Okay. And you're not working? Correct. I've never made more than$50 ,000 in my life. Okay. What are you doing for work? He's not working. What were you doing? I'm a stay-at-home father right now. What were you doing before that, making around 50? I was in management position with a nonprofit. How old's your son? Three. Okay. Okay. Okay. Because what I'm worried about, Gary, just in general, not only the housing situation, but if something were to, I mean, if the doctors are correct and everything stays coarse, you are going to have to find work and, you know, obviously support you and your son.

27:35Rachel Cruze:And I'm just wondering getting some level of experience under your belt. before that happens. Yes, and it may not be obviously tomorrow, but in the next probably 12 months, I would be looking and seeing, hey, what could I be doing just to be getting some experience, you know, to move into a position if you need to. I have been looking at some jobs just to get something on my resume because I've worked in five years. Right. You know, the problem is I have to work around. I don't feel comfortable leaving my son alone with my wife. Sure. Sure. Well, I wonder if there's level of family support when you guys make this move.

28:18I mean, my incredible support. My parents will be an hour away. My sister, three sets of cousins, three sets of aunts and uncles.

28:26Rachel Cruze:Now, why are y 'all moving an hour from your parents? I thought you were moving to be close to family. They live in the mountains in the area that we're looking at. pretty far away from the metropolitan area. So it doesn't really solve the problem then, does it? If they're still far away, you're not going to have... An hour is better than 22. Yeah. I mean, I have zero problem making an hour dry, you know, not in order to say. Right. No, I hear you totally. So I wouldn't... I'm a little bit with George. I don't know if I would make a financial move, a big purchase like a home right now. There's a lot of instability going on.

29:03Rachel Cruze:You guys are moving to a new area. And you may get into this, Gary, and there may be a chance you're like, holy crap, I need to be 10 minutes from mom and dad. And so, you know, whatever that looks like. I want the housing not to be a permanent situation for you guys right now. And so I would find a place to be renting. Yeah. And then you guys could look up in a year, year and a half and see where you're at with her health. And your job situation, family situation, all of it. But I wouldn't tie myself down to a big purchase like a home right now if I were you guys. I think the move is smart, and I would want that probably if I was in your case.

29:40Yeah. Personally, I would not buy a home until she is sober because it just put – there's too much risk that her income is floating this entire thing. Yeah. And if one thing happens, you got a$600 ,000 mortgage with no income or even a$50 ,000 income. And now you're going to be facing foreclosure or a short sale. And so it's just too much stress with the stress you guys already have. I mean, to be clear, my parents, they are going to be putting either$100 ,000 to$250 ,000 towards the down payment. Is that a gift? Yeah, it's a gift. And would they just cover rent for a year in the meantime as you guys kind of find your footing?

30:23If I asked, they certainly would. I might use part of that to say, hey, cover rent. We just got to figure out our life. And then you'll know a whole lot more a year from now if things are going to get better or if they're going to get worse. Yeah, I think the challenge is going to be convincing her to rent as opposed to buy.

30:40Rachel Cruze:Well, I don't think she's created that option for her. I mean, I think this is where you really have to step in, Gary. And I hate to say it, she kind of loses a vote when she chooses not to be well for her husband and her son. And so I don't know what that conversation looks like in the midst of your marriage. but I would not, you're putting a boundary up with someone that doesn't have boundaries, but I would not purchase a home if I were you, Gary.

31:20When you've worked hard to buy a car the right way, you paid cash with no payments hanging over your head, the last thing you want is to worry about it every time you drive it. That's why we trust Christian Brothers Automotive as the official auto repair partner of the Ramsey Show. See, most people don't stress about their car because it's older. They stress about it because they don't know what's happening under the hood or trust the people that are working on it. But Christian Brothers Automotive uses digital vehicle inspections. You can actually see what your technician sees and know what's urgent and what can wait.

32:00Plus, Christian Brothers stands behind their work with their nice difference warranty. Three years or 36 ,000 miles, whichever benefits you more. So if you want real peace of mind with the car you worked hard to own, go to cbac.com slash Ramsey. Use the promo code Ramsey and you'll save 10 % off your visit up to$250. cbac.com slash Ramsey. See store for details.

32:45Rachel Cruze:Up next, we have Peter in Greenville, South Carolina. Hi, Peter. Hey, Rachel. Thanks for taking my call. Yeah, absolutely. How are you doing today? Fantastic, and I hope you are too. Great. We are. We're doing good. How can we help? So I'm wanting to purchase my first luxury watch, and financially, I believe we're in a position to do it, but I can't. I grew up with a scarcity mindset, and it's really hard for me, even though I have the money allocated in my budget to pull the trigger on it, I just can't get over actually doing it, even though I actually want it. And I wanted to kind of get an objective opinion, you know, to see if I really am in a good place to do it.

33:24All right. Any guy who used the word allocated would have a hard time pulling the trigger on a big spend. Yeah. I love it.

33:32Rachel Cruze:Well, George loves a good watch, and I'm a spender. So you called it a good time. I want to know what watch this is. People want to know. Yeah, what's the watch and how much are you going to spend on it? It's going to be an Omega Planet Ocean, and I'm looking to spend right around$9 ,000 on it after tax. Okay. Okay. All right. Peter, how much do you make a year? So I make, my base is$102 ,000, but I normally make closer to$140 ,000, and my wife makes$85 ,000. Oh, nice. Okay. Do you guys have any debt? No debt. Baby Step 6. Nice. Okay. And so you guys have been talking about this purchase, and you have the money for it.

34:09It's sitting there on the watch savings fund, is what you're telling me. Correct. It's in a separate pile. It is ready to go. We've been saving for about six months for it. My wife is 100 % on board, wants me to get it. It's just I struggle with the emotional, you know, I know I could use that money. I could pay my mortgage off quicker. Boo. Boo. Not a whole lot. So I want to. Well, let's play this out. Peter, let's say you got off this call and you hit add to cart and you purchased this watch and it shows up. How are you going to feel? Amazing. Okay. Will you feel guilty at all when it shows up and you go, oh, gosh, what did I do?

34:47probably not I think once I put it on it's all going to go away but it's it's getting to pulling

34:52Rachel Cruze:the trigger on it yeah can I ask why do you want the watch why why 9000 this versus a car or something I'm just curious so I've I've been scuba diving for about a decade now and it's it's a watch that's been famous in the dive community for a long time I think it looks great in the boardroom it looks great you know when you're diving you're talking to a lady who is scuba certified I am a certified scuba diver, Peter. So she understands that. I understand the luxury watch market. I need floaties when I go in the pool. I have an eyeball forever. And, you know, it's not like it's an impulse overnight.

35:25I probably wanted this watch for probably a solid eight years. It's just been dreaming, but I know that I haven't been there yet.

35:31Rachel Cruze:Okay, so here's like my categories. Financial, it's a check. And then you go over to the emotional side, and that's why I asked, why the watch? What is it? And there were some green lights for me, Peter. Honestly, the fact that there is a reason for it, like in his mind, right? Like he's been in a... The motive is not, I want to impress my friends. Yes. Or I need to like prove to myself that I made it. Yes. It's been this thing in this niche part of life that you love. You've been thinking about it for eight years. It's not an impulse purchase. Like all of those things, because you can have the money and then the motivation behind and buying a nice purchase, that could be a purse for a woman, a watch for a guy, whatever it is, could come out of a place that you're trying to scratch this itch inside of you and then you get it and then you're not satisfied because it came from the wrong motive and then you're chasing the next thing, the next thing, and it just becomes this whole world of just consumerism.

36:28Rachel Cruze:So that's what we don't want to happen. But I don't feel like that's you, Peter. I feel like there's a reason for it. And yeah, and you've had this, and the fact that it's been eight years since he's been wanting it. It's time. I think your wife is sick of you talking about it, honestly. That's why she's like, get it. Go for it. I can guarantee you're right. She's tired of hearing about it. And then play it out. Is Peter 10 years from now going to go, well, that watch did us in. Shouldn't have done that. What a dumb idea. Or is it going to be something you want to hand down to your kids and grandkids?

36:58Rachel Cruze:Wow, you're going legacy piece, George. A legacy will help me justify anything. Boom. It'll be a legacy piece. And I'll tell you this, Peter. I am not a watch guy, but Rachel's saying that because I am wearing a nice watch. And it was handed down to me from my wife's now deceased grandfather. And so truly it is legacy. And it's a Rolex. Yeah, it's a nice night from the 90s. It's an oyster, Datejust Oyster Quartz from the 90s. And it like, it makes me feel like, it makes me feel closer to something bigger than myself, if that makes sense. Wow. And I don't feel like it's a flex. Because if you know me, you know, I'm like Mr.

37:32Frugal. So no one's like, whoa, look at smooth-talking camel over there. Doing well there, George. Peter, what's your net worth? So we've got – we still have$140 on our house. The house is worth probably$350-ish. And then we've got$83 ,000 between our retirement accounts. Okay. And I'm 28 – or 29, my wife is 28. So we're towards the beginning of saving, but I think we'll be just fine. Yeah. I mean, you're on your way to Baby Steps Millionaire. I think you'll get there in your 30s without any issue. And this watch is not going to be the make or break.

38:07Rachel Cruze:I would love for you, like right now, just to get online and buy it. You know, that'd be fun. It's always the people who we want to give green lights to have the hardest time. I know. And it's the people who should not do it, who are like, I'm going to do it anyways. I'm going to do it anyways. We're excited for you, Peter. What a paradox. Enjoy the watch. Enjoy the watch. All right, let's go to John in Springfield. Hi, John. Welcome to the show. Hi there. Thanks for taking my call. Absolutely. How can we help? um real quick i i got an unpaid medical debt and i wanted your opinion so in the summer of 2023 i had the uh necessity to take a trip in an ambulance to the er um i'm single live alone so i you know i'd rather cut off my leg than do that but that's where i was and and so so So, you know, time passes, I get the bill for the ER and, you know, that's not cheap.

38:59I pay it. A little while later, I get a bill for the ambulance and it's$1 ,695. It would take me to two miles over there and I get that. So, you know, what caught my attention is my health insurer paid nothing. They paid$0 of that and I was confused. so when I called them what they told me is that the ambulance service is out of my network

39:32Rachel Cruze:and so so I think that's ridiculous I think you know what am I supposed to do when I call 911 is I'm going to talk to them about the process take an hour google for the options that are in network and then hopefully you're still alive so do you owe the$1600 then still John? Oh, yeah. So, you know, I have the money. It's never, you know, I've never had a bad debt. Yeah. I just, I'm being pig-headed about this one. So this was, you know, two years ago. Yeah. You know, almost three now. It went to collections. It's not a very aggressive collection agency. They sent me a couple letters. They called me twice and left voicemail.

40:12So you're not paying out of... I haven't heard from them in eight months, probably.

40:16Rachel Cruze:But you're not paying out of just... So my question is... You're out of, like, strife. You're just like, I just don't think that this is fair. Exactly. I don't know what to do if I should just try to settle with them and then come up with a number that makes sense to me. If I should just pay them and get it over with and forget about it. Well, I think there's an emotional tax that you have been paying because it's been in your mind. And even though it feels unfair or, you know, it's like taking advantage of a situation is, you know what I mean? There's a lot of feelings about insurance and how all this works, which we agree.

40:50Rachel Cruze:There's parts of it. I'm like, absolutely. But the amount of emotions that you've put into this may not be worth$1 ,600. And so there is a part of me that says, yes, see if they'll settle just for the game of it, the fact that it's in collections now. You may be able to pay half of it and just say, thanks for the ambulance ride, and we're done. You know what I mean? But I would look to move on with my life, especially since you have the money and it's$1 ,600, you know? Right. Have you fought the insurance company already? Did you play that game? I mean, I talked to the insurance company and they said, oh, talk to the ambulance service because maybe they can do something.

41:28And I talked to the ambulance service and they're like, oh, well, you need to talk to the insurance people. Yeah, the ambulance service is not going to go. Yeah, because it was dispatched by 911, right? I'm sorry? It was dispatched by 911 when you called? Yes, yes, sir. Okay. It wasn't like you reached out to this specific servicer. And so I would use that, pull your explanation of benefits, and you can try one more time to fight it and have them verify that they processed the claim correctly. There was no billing errors, all of that stuff. But you got to become an expert because a lot of incompetent people out there who are just not really wanting to do the most when it comes to solving your problem.

42:03For sure.

42:03Rachel Cruze:And$1 ,600. Sometimes it's just worth having the peace. What's your peace cost at this point? That's it. That's it. And so you got to kind of put a price on that too, John. So I'm glad you're okay. That's, you know, you made it through and everything. But I understand how frustrating some of that stuff is for sure.

42:32Dave, we got a lot of calls on this show where life happens. One day someone's healthy, they're working, providing for their family. and then a curveball hits. You know, we hear it all the time. A car accident, a cancer diagnosis, a heart attack, and suddenly everything changes. Yeah, and that's why you've always said that having term life insurance from Xander is essential because it protects your family if the worst happens. Yeah, that's right. You need 10 to 12 times your income in coverage. No gimmicks, no whole life junk, just straightforward term life protection. But there's another piece that people often overlook, and that's long-term disability insurance.

43:11Yeah, it's important to understand the difference between them. Life insurance steps in when you die. Disability insurance steps in while you're alive but can't work. So it replaces a large part of your income so the bills still get paid while you get back on your feet. Now, if your employer gives you free disability insurance, great, take it. If it's discounted there at a better price, take it. But if not, Xander can help you find the right plan. Whether you're single or married, it's not optional. If you're going to be out of work for a while, then you need to make sure the money's still showing up.

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

44:17Rachel Cruze:Welcome back to The Ramsey Show in the Fairwinds Credit Union Studio. I am Rachel Cruz with George Camel, and we are taking your calls at 888-825-5225. All right, up next we have Adrienne in Mesa, Arizona. Hey, welcome to the show. Hello. Hello. How can we help today? So I'm a little nervous. Sorry. I've been debating the call. I'm not used to this. We won the debate. That's good. Yeah. So I've been pretty good about my finances for a while. I'm not saying I'm the greatest. Obviously, I made bad choices. I have been bankrupt twice, and I made a bad choice. I got a G in position and I run a restaurant and I just came upon some money and I was making really good money during COVID.

45:07And I was bought a house. I got an inheritance. I did some, you know, I had money in the bank about, you know, and so forth. And then I went and wanted to upgrade my truck, which during the time I was okay. and then um you know i bought this truck at 52 000 and i make about 65 000 before bonuses now before i was making 75 those a little more higher my husband he makes about 40 but we keep our finances separate i know that's you know but we just don't do it that way um the question i have the main question is is i don't know what to do with the truck because i am living paycheck to paycheck. I literally pay$945 for a car payment.

45:52I pay$310 for car insurance and probably around in about$200 every four days for gas. I was living the life before my truck. I was not struggling as much. We were able to have food on there and now I just don't know what to do. But I'm upside down in my truck about the car. They sold me. It was a whole mess up deal. So they sold it to me for$50 ,000 with a rollover from a previous car they gave me that had a bunch of problems. They're like, oh, no, we'll get you out of this. We'll put you in this. And they rolled over that truck onto this truck. Before I know it, I'm$51 ,000, and they're only going to give me like$30 ,000,$31 ,000 for the car.

46:38For a trade-in value. For a trade-in value. That's correct. On the streets, it will not sell because it is a lemon truck. but they'll take it for 31 they'll take it for someone will but i can't get a loan because i don't have no credit i'm not good my credit is great i mean but i can't seem to get anyone to qualify me for even a small loan to cover the difference because i've tried that what you guys have mentioned before but no one will take me to cover the difference and i gotta come up with like at least probably like 20 000 i would say yeah what other debt do you have you know I have$4 ,500 and just, you know, a credit card and a personal loan to put some concrete down in my backyard.

47:24And that's it. That's all I owe. You know, I don't owe nothing else. No, that's plenty. I don't think we need any more. You're right. That is plenty enough. Does your husband have debt as well? Yes, that's why we're separate. He has back child support that he owes. We've been current. You know, we've been up to date on it. He pays every month. We just, he did not grow up financially smart. His train of thought is we're going to die owing people. I don't know. His train of thought is completely different than mine on that. I just, he just thinks that, you know, let's not stress about it. You know, what happens happens.

47:59And I'm like, I don't know what to do. You know, like, we're not going to have groceries. Like, I'm literally, I do the$1 ,000 in a month, and I at least take$200 out of it each time we get paid. To do what? to live on to do groceries in the house, you know, because I don't have it. Does he contribute to the household? Yeah, he does. We pretty much split, but he got kind of hooked on. For a while, he was hooked on gambling. I got him off of that, thank God. And then he turned around and he got hooked on these, like, payday things. Like, oh, let's pay in advance, you know. Let's buy groceries on advance.

48:33Let's do this on advance. And at first I was like, okay, because at least you're helping me because I'm not the only one contributing.

48:38Rachel Cruze:And now he can't even keep up with those. And I'm like, oh, my God. Yeah, I hear you. I hear you. Okay. So, yeah, right now I would not recommend putting your money together. I think from a marriage standpoint, you guys are on not only different pages with money, but it sounds like how you view life and so much. So I would just have in the back of your head, like, hey, we need to be doing some marriage work. We need to be learning how to create goals together, have a level of synchronization of what we want life to be and all of that, because he shouldn't be a deterrent for you in your life, right?

49:13Rachel Cruze:He should be a helpful person and same with you to him. And so healing that end, I think, will help with some of the money stuff. But you called for the car. So, yeah, you said your credit's great. I would check a local credit union. Don't go to a big bank and see if anyone local can help you with this. And if not, Adrian, then you're going to have to work extra. You're going to have to work nights and weekends to save up to get the difference of this truck if you can't get the loan. But getting out of this is one part of the equation. But honestly, it all sounds a little chaotic. And so I think having some direction is going to be huge.

49:56Rachel Cruze:So doing a monthly budget, stop going into debt, cut up the credit cards, have this no more debt for the rest of my life policy in your mind, and start working your way out of credit card debt and then attack the card next. And hopefully once you've been paying off those credit cards, you know, that could, I don't know, get you in a different place. Yeah. I don't want to see you go to a third bankruptcy. The third time is not the charm in this case. And so you got to go, this is it. I'm not going to go through this again. And, you know, even with your husband the way he is, you're going to have to climb out of this on your own income at this point.

50:30And that is going to take – let's get every bonus we can get. Let's take all the overtime we can get working our tail off to never be in this position again.

50:38Rachel Cruze:Yeah, that's what's sometimes difficult about a chaotic situation, George, is that when there's such high emotion and high fear and seeing like, oh, my gosh, I don't want to fall off this cliff. if sometimes even in that desperation, we make bad money decisions, right? You're not thinking clearly. That's right. That's right. Yep. So yeah, so if you hold on the line, Adrienne, Christian's going to pick up, and let's get you George's book, Breaking Free from Broke. It's a great title for the situation. Thank you. You know what I mean? Yeah, that's why we did it. Let's get out of this. Very clear.

51:10Here's what's going to happen. For sure. And we can get you the audio book version as well if you're busy, you know, managing a restaurant, hard to find time to a quiet place to read.

51:19Rachel Cruze:Yes, but yeah, listen to that. And then we'll even throw in every dollar for a year. So we'll get you a code to that. Love that. To start budgeting your income. And again, I would love to see some synergy with your husband. And I know his mindset is one way. And you can't control him. And I would say, I don't think you're the one that got him out of the gambling situation. I think he did it. There's something in him that could be changing too, which is wonderful. Yeah. I mean, looking at these numbers,$1 ,000 car payment, over$300 for the insurance. I did the math. She's spending over$1 ,500 a month just in gas for that truck.

51:54So you've got to think through this. She said, honestly, well, at the time, I could handle it. And so the whole point of this show is that there's going to be a time where life's going to happen, and you need to get all of the risk out of your life and all of the peace you can get. And that's why we tell people, be debt-free, even though it's conservative and not a cool thing to say, to save up and pay for the car you can afford. But it's because you don't know what's going to happen. You don't know what's going to happen to your income and to your health and to your spouse. And so living without debt is just going to create a more peaceful environment.

53:04This show is sponsored by BetterHelp. Financial stress does not just damage our bank accounts. It can also take a toll on our mental and emotional health and our relationships. Money worries cause anxiety and they're one of the leading sources of conflict for all types of couples. I know this. My wife and I have struggled with money conflicts for years. Listen, therapy can help even with money conversations. Therapy is not about financial advice, but it can help you build healthier ways of coping, give you strategies to communicate about money and give you a plan moving forward. I want you to consider talking to my friends at BetterHelp.

53:40BetterHelp is an online therapy platform that matches you with a licensed therapist based on your goals and preferences. BetterHelp therapists work according to a strict code of conduct and they are fully licensed in the United States. You can message your therapist and schedule sessions right in the platform. And if the first therapist isn't a great fit, you can switch at any time for no additional cost. When life feels overwhelming, therapy can help. Visit betterhelp.com slash Ramsey to get 10 % off your first month. That's BetterHelp, H-E-L-P.com slash Ramsey.

54:27Rachel Cruze:All right, let's go to New York City, and we have Jake on the line. Hi, welcome to the show. Hi, thanks for taking my call, guys. Absolutely. So I'm just calling because I'm in a situation where I make about$50 ,000 a year after taxes. But I took a 401k loan for about$25 ,000 that I defaulted on when I got laid off. And I currently owe about$12 ,000 in taxes. So my question is how I go about if I should tackle the 401k loan off because that has interest occurring or tackle the IRS debt. And I owe about$2 ,000 in credit card debt as well. Okay, so the taxes are$12 ,000. How much did you say the 401k loan was for?

55:25$25 ,000.

55:27Rachel Cruze:$25 ,000, okay. What did you take out the 401k loan for?

55:59Okay. Did you just stop making payments on the 401k loan?

56:23Got it. So you were laid off and then it came due within 30 days or something? and you couldn't pay it in time? Yeah, about like 90 days, like a couple months. Okay, so that became likely an early distribution. So you don't owe money on that now. It's just going to be taxed heavily. Yes, that's what increased my tax bill from about$6 ,000 up to the$12 ,000 now when I just filed my tax bill. So really we're dealing with$2 ,000 in credit card debt and another 12 in IRS debt? Yes. Okay. So you would tackle the IRS debt first. You want to get them off your back because they can actually destroy your life versus this cute little credit card company who can just be like, pay us.

57:11So I would work on knocking that out first. The bigger issue to me is getting out of the cycle because I don't know that you have the money to pay this off in a reasonable amount of time. Yes, no. I would have to call the IRS to make a payment plan. Yeah, and I would just pay it off as aggressively as possible. Can you work extra?

57:36My union doesn't really offer that much overtime, but I could pick up another job. Side jobs?

57:42Rachel Cruze:And you may, Jake, another option with this kind of thing since it's$12 ,000 is you may be able to go get a loan for it for$12 ,000 and just pay off the IRS and then deal with the credit union or bank that you get the loan from. Honestly, it sounds crazy, but sometimes they're better to deal with in the IRS than having a payment plan. So there's just a lot of power the IRS can have. And so kind of getting them out of your life. Basically unlimited power. Yes. So getting them out of your life I think feels more peaceful to me. So that is an option depending on how your credit is to go get a loan and just pay it off and then tackle that loan.

58:18Okay. And you guys would say don't focus on paying back the$25 ,000 to my 401k? Well, that's what I'm saying is there's no longer payback. It's over. It was counted as an early distribution.

58:31Rachel Cruze:So you took it out and now it just won't be back in your 401k? Well, the only reason is if I was to pay back the$25 ,000 and cure the defaulted loan, they would give me the rights to access capital again. But if I don't ever pay that back, let's say for like the next 30 years in my career, I'll never be able to access using my 401k as like a loan option again. Yeah. We don't want to go back into debt though. So considering it's not an option, it's fine. And you're not with that company anymore, correct? I'm just laid off from that specific shop, but the union is all five boroughs of New York City.

59:18Rachel Cruze:Okay, so you could get back once you're completely debt-free and you want to go back and start funding that 401k. It would be the same 401k is what you're saying. Okay. No, I'm asking, is that right with the union and how it works with the five bureaus that you mentioned? What was your question? I'm sorry. Sorry, will that be the same 401k? You're laid off now from a certain shop, but you said you will get back in and start working again within the union. So will that mean that that's the same 401k? Yes, ma 'am. Okay, perfect. Okay, because I was going to say, usually when you leave a job or you quit or are laid off, you would roll your 401k just into a traditional IRA, and then you move on with your life.

59:59Rachel Cruze:But since you'll be plugging back into it, eventually you'll keep it. You can't unlock the ability to invest until it's paid back. I can invest I was just thinking like you guys said maybe it's a bad habit to even consider like borrowing against my 401k it is because look where I got you Jake look where we are right now never ever ever ever do this again you don't sound happy about it do you want to be back in this position again no you guys are right yeah yeah debt is not a tool Jake it's not a tool peace solving for peace our friend Dr. John Zolomny says this is so key with money. You can try to play the games, do X, Y, and Z.

1:00:38Rachel Cruze:But honestly, Jake, to become wealthy and to actually have options in your life that money can provide, it's going to be you. It's going to be you working hard, you staying out of debt. And instead of paying payments, you're investing, you're saving, you're being wise with your money. That's how you build wealth over time. If you keep trying to play this debt game by I'm going to loan money here and loan money there, you're going to be broke your whole life and you're going to be paying$12 ,000 in freaking taxes. So, so no. Think about it. You've got 14K in debt to pay. If you can scrape together a thousand, a little over a thousand bucks a month, you're done in a year and then decide, I'm never going to go back in debt again.

1:01:11And the way you do that is with an emergency fund and a budget because that becomes, you're never going to debt again, emergency account so that you're not needing to borrow from other people.

1:01:20Rachel Cruze:Yeah, that's right. Yeah. Jake, what kind of, work do you do? I'm in the electrician's union, but I'm not an electrician yet. I'm just pretty much, yeah. Have you looked in the private sector in that? Because a lot of electricians are making a ton of money. And you might be making more at the union. I'm not sure. But have you looked into that? Well, right now, yes, I have thought about that. But right now, I'm just trying to stay with the union until I get my journeyman card. Yeah, right. Yeah. That's the main reason. Will you get a pay bump at that point? Yes, I would get a pay bump. To what?

1:02:07They make about$56 an hour here in New York City. That's great. All right. So you'd be clearing six figures a year. That's great. And how long will that take to get the journeyman card um it takes about five years right now i make um about 40 an hour but i haven't started the apprenticeship i'm just i was just promised that like hey you stay on the job and we'll upgrade you without the five years of uh the apprenticeship because that's about making minimum wage in new york city well you're making over 80 grand right now. So you should be able to clear 14 grand real quick if you just get really focused, which means no spending, no vacations.

1:02:51You're basically like, that was old Jake. New Jake spends nothing on anything unless it's food, shelter, utilities, transportation, insurance, and his debt payments. Yes. If you get laser focused, you'll be in a very different place a year from now, even six months from now.

1:03:06Rachel Cruze:Yeah, that's right. Yeah. It's amazing what can happen when you don't give debt an option in your mind. Like if you really do go as hardcore as we talk about and make it a black or white issue with your money and just say, I'm not borrowing money. What that forces you to do is forces you to look at other options, forces you to take a different route. And it's amazing when you actually start to see it, see that debt as, I don't know, kind of the enemy. A villain in your life. Where you're like, I want this out. The sacrifice that you will do to finally just be done with it is. Your brain gets creative or gets real patient or it gets real sacrificial.

1:03:40Yes. That's what happens when you take debt off the table. And I think it's the only way to create a great life.

1:04:09Thank you.

1:04:15If you're at the point where you think bankruptcy is your only option, stop for a minute. You might have another way out. Guardian Litigation Group. Most debt relief programs sell you on the illusion of protection. But a crappy legal plan tacked on as an upsell doesn't actually defend you when you get sued. It just leaves you confused and exposed. Guardian is different. They're not some call center. They're real attorneys. And with Guardian, you're assigned an attorney from day one. That means if your creditor sues, you're not scrambling and you're not hit with surprise legal fees. Now listen, I'm always going to tell you the best way out of debt is the old-fashioned way.

1:04:54Clean up the mess and pay it off. But if bankruptcy is staring you in the face, Guardian gives you a legitimate alternative. They've helped over 55 ,000 people settle more than$600 million in debt. So before you make a decision that follows you for years, go to GuardianLit.com slash Ramsey. That's GuardianLit.com slash Ramsey. Attorney advertising. Results may vary and no specific outcome is guaranteed.

1:05:39Rachel Cruze:All right, let's go to Stacey in Billings, Montana. Hi, Stacey. Welcome to the show. Hi. Hello. How can we help today? So hopefully I'm not too long-winded for you guys, but I'm calling for kind of some relationship help as long as financial advice. My husband, five years, unfortunately, has a history of infidelity where he talks to other women online. Well, I've caught him with his ex-girlfriend, things like that, talking to them inappropriately. I'm sorry. Yeah. And so things were going well, though. And then, sorry, he also has a little bit of history of alcohol, but that has gotten better.

1:06:25Sorry. But things are going well, and we're expecting a baby at the end of the summer. Oh, wow. Okay. Because we're expecting a baby, we bought a bigger home, and we literally just moved into it a couple weeks ago. And I still have the old home that's under my name and my dad's name because I got that prior to marrying my husband. But unfortunately, on Friday, I found an explicit photo on my husband's computer.

1:07:02Rachel Cruze:like that he recently received from his ex-girlfriend. Oh, Stacey, I'm so sorry. Yeah. So it opens up old wounds. Oh, of course it does. Did y 'all go to marriage? Did y 'all go to therapy at all for all of this? Has he done any work on himself? We did some therapy in the past, but it's all online. It's so hard to get like someone, a couple therapy together. and he kind of just says, I'm going to get better, I'm going to get better. But out of his own. Yeah, no, he's there's something. Yeah, there's something off going on that he needs healing from. And only he can do that because it's a repeated pattern.

1:07:48Rachel Cruze:And it will continue, you know, like self-will doesn't just get you out of stuff like this. I mean, he has some deep work that he has to do if he chooses to. Has this become physical in person in any way? No, I don't think so. I believe him, and I don't think he would ever physically cheat on me. It's just the emotional cheating over time. Yeah. I mean, it's still the same pain. The infidelity still feels very real. Okay, so how can we help? What's your main question? So sorry. So then going to financial advice. We just moved into this new home, higher interest rate, bigger home, bigger loan. I um the next day after finding out about this sorry this is all kind of new now you're fine talking about it take your time you're good um the next day I got all cash offer on the old home um but I was sitting there in the big home alone by myself and I was like there's no way I could stay in this house if things don't go well I'm a single mom like this home is more expensive a bigger lot to take care of things like that um so i kind of had like a conference call with my parents because they kind of know about the history and my realtor and i said what i don't want to sell the old home i think i i guess my question is and i hope i'm making the right decision go back into the old home less interest rate less monthly payment less loan sell sell the new home.

1:09:25I just have a lot of guilt. Okay. Yes. I obviously spent all this money like,

1:09:31Rachel Cruze:and I'm going to have realtor fees and things like that. And sure. Okay. Tell me this, Stacey, how much is the new mortgage payment? The new mortgage payment is probably going to be around like$2 ,500 a month. The new. Okay. And how much do you guys bring home a month as a household? Well, with my husband would be around like$200 ,000 or so. $200 ,000 a year? Yeah. Okay. And then what would you be making if you, you know, down the line? On my own. If I ended up being on my own, I'd make around$140 ,000. $140 ,000. Okay. And an old home is like$1 ,500 a month with half the interest rate. $1 ,500.

1:10:20Rachel Cruze:Okay. But you probably clear, what, close to$10 ,000-ish, a little less, a month? Yeah, yeah. Okay. Maybe, yep. Because the mortgage isn't completely... Yeah. Worst comes to worst, you could afford this new house mortgage on your own and still have cushion. Yeah. How much would your other home sell for? How much was the cash offer? $420. $420. Okay. And what do you owe on that one? Oh, sorry, sorry,$410 ,000,$410 ,000, and I owe probably around$140 ,000 left on it. Okay. And what other debt do you guys have? I probably have$15 ,000 I could easily pay off, but I— Okay. It's old student loans that I should just pay off.

1:11:07Sorry, a little guilty. I listened to you guys. No, you're good, you're good. No guilt, no shame, no condemnation. Yeah. But yeah, I can pay that off. Well, I'm trying to figure out a way. Do you love the new house? Would you want to stay there if it made sense financially? With this baby, it's a big house, and I guess I'm still like, do I want to do this on my own? I think it would be harder to do that big house on my own. It's just such a bigger home.

1:11:37Rachel Cruze:It's double the house. You're talking, Stacey, very like, you sound finalized in your conversation with us about him. That your new chapter is solo. Yeah. Is that where are you? I mean, I can't imagine that the heartbreak is. Yeah. So for now, for sure. I need some time to separate because obviously whatever I've done in the past has not worked out. OK. So I need it. I obviously like sorry, there's so many things, emotions and it's kind of all new. But I obviously want to have a family. I want to raise our son in a good environment with a good dad. But right now, I think just I need to take some time.

1:12:20And so I don't have like 100 % what will happen in the future. But I like to be serious and make sure he focuses on himself and gets help.

1:12:29Rachel Cruze:Yes. Yep. 100%. And I, yep, I get that. It's not a healthy situation. And to live with broken trust your whole marriage is not a great marriage. And so the work, yeah, we always, I mean, our prayer for situations always, you know, is that redemption and reconciliation. And the prayer is that, you know, two people find healing and it stays intact. Like we want that. But also, we know the reality and also know that you have to take care of yourself and this new baby too. So I have an option that maybe we haven't thought about. What is the mortgage on the new house? Sorry, the mortgage on the new house would probably be around$2 ,500.

1:13:15No, I mean the balance of the mortgage. Oh, sorry. The balance of the mortgage would probably be like around$300. So if I sell my old house already depending on equity and things like that, then I'd be probably around$300. Oh, got it. For the loan. Sorry, for the loan. So you haven't taken out a mortgage yet on the new house? Oh, no. Sorry. Sorry. I'm bad with these finance. $560 ,000. That's the current balance. Is that. Okay. But no, we put$200 ,000 down. That kind of was a gift last loan with my parents. Oh, so you owe them that money back? No, because I have equity in the other house with my dad.

1:13:58But I'm saying if you sold it, you can't use that money toward the new mortgage. You'd use that money to pay back your parents.

1:14:07Probably the difference. My plan was just to pay them back.

1:14:11Rachel Cruze:The$200 ,000? Yeah, because of the equity. I know I for sure have at least$200 in equity. Yeah, you'd probably walk away with like$250 ,000. That's what I'm trying to get at. If you use that$250 ,000 to put onto your new mortgage and then did something called a recast, it would drastically lower your payment. You basically throw a lump sum at the new mortgage and they can take it down. So you're saying sell the smaller home. Yep. Pay off the parents. Take the remaining. Take the 50 grand. Pay on this new house. It might take your payment down to 2 ,100, for example, just to give you a little more cushion.

1:14:41But again, it doesn't solve all the problems. I thought you could throw all 250 at it. That would really lower the mortgage and make you sleep better at night. But that feels like the least of your worries at this point.

1:14:51Rachel Cruze:Honestly, Stacey, I would probably just stay put. I don't think I would make any big decisions right now. and if you need the separation, do the separation. I wouldn't do much right now. And if a year from now you need to sell? Yes. I probably would wait a little bit.

1:15:39Rachel Cruze:so we wish we could get to every call and question here on this show but if you do have a money question and you want an answer for your situation head over to ramsey solutions.com and use ask Ramsey. So this is our free AI tool that is trained on Ramsey principles. We have dumped every show over the last couple of years, articles, books, everything that we put out into this tool. And so it will answer you like we would if you had called the show. So it's actually pretty amazing. And it's getting some traction, George. We're seeing a lot of people use it. Oh, yeah. Because it's conversation. Great.

1:16:13Yes. And you can go back to, if you sign in, you can go back to your old chats and follow, keep going with the conversation.

1:16:18Rachel Cruze:You can put in specific numbers and all of it. Like, it really is amazing. And so, yep, if you have a question, go to ramsysolutions.com. Or if you're listening on podcasts and YouTube, you can click the link in the description. All right, let's head to Knoxville. Go Vols. We love to see it. Hey, Michelle. Welcome to the show. Hi, guys. Thank you for taking my call. You are welcome. How can we help? Well, I would like to know if I can afford this$25 ,000 vacation. Ooh, that sounds fun. Where's the vacation to? Okay, I don't know if I'm allowed to say names or anything, but there is a certain cruise line putting out these big, huge ships with tin pools and water slides.

1:17:05And I want to go on one.

1:17:07Rachel Cruze:Royal Caribbean, I bet it is. Yes. I thought you were about to say, I'm going to go get a suite on the Live Like No One Else cruise. I know. You can name drop that. I thought, are you going to come cruise with us, Michelle? Because we have a cruise in March. I didn't even know that was a thing, but I'm going to look into that. Ramsey Cruise. And I think it's probably cheaper than this. Yeah. How many people are going? It's just me and my longtime boyfriend of eight years. And he is side-eyeing me like crazy for the last three weeks since I mentioned this. He thinks I'm nuts. Wow. Well, the main question, do you have$25 ,000 to spare?

1:17:42I think I do. I mean, it's a yes or no question. It's not a thought. You don't need to think. Is it sitting in savings earmarked as Michelle vacation fund? Not necessarily as a vacation fund. I do have an emergency savings, and then I have a separate savings in case I need anything for my house or cars. But just in my checking account, I have$85 ,000.

1:18:06Rachel Cruze:Woo! Nice. Do you have any debt? I have no debt. My mortgage is paid off. I have no credit cards, and I have two really old Toyotas. Okay. So, Michelle, if$25 ,000 left your account in like a week or two, would you feel that at all emotionally? No, not for this or for the Ramsey Cruise. I think you should do both at this point. I mean, the Ramsey Cruise is a fraction of the cost of this one, so I think you can afford both, honestly, but we'd love to have it either way. You can afford this, Michelle. I love your answer. He said that if I can get you guys to say that I can afford this, he will stop side-eyeing me.

1:18:45And now I have another cruise. Wait, are you paying his tab or is he chipping into this? I am willing to pay every bit of this. I am a semi-successful small business owner, and he is a huge, huge reason why. He works with me two days a week. He does have his own full-time job going on. But he works with me his two days off and he takes no payment at all. Oh, wow. That's so nice. So this is you repaying him for the unpaid labor.

1:19:15Rachel Cruze:This is a big, huge thank you. And I want to do this and I want to get out of here for the winter. Our jobs are very seasonal. So we really slow down in December and January. So it wouldn't even be affecting our work. Like we already have the time. Sure. You got downtime. And you're able to, if you have to put a little bit of money away too, between now and then, you could. I mean, I know you probably have to put a deposit down on the trip, but in general. Yeah. Yes. I could actually just go pay it all right now on what's in my checking account, and I wouldn't miss it. I would be so looking forward to it.

1:19:50Trade that number for an experience. Let's go. Now, I'm curious. Eight years you've been dating him. Are there plans to get married? Is there a reason you guys don't want to or one of you doesn't want to? Well, we have discussed it. we're both in our late 40s and we both own our own home and I think we're just kind of neither of us are ready to give up our own homes yet. Got it. So you don't, he doesn't want to move in with you. It's all for the house. You don't want to move in with him.

1:20:17Rachel Cruze:Versus an eternal relationship, you know. This is just an eternal relationship of helping and love. He's married to his house. He's married to his house. Yeah, he values the house. Y 'all value the house more than each other. I'm just saying, what better place to propose than this fancy cruise or on the Ramsey cruise. We'd love a proposal. I know. I think he's actually more into the idea of getting married than I am, but I don't know. He would have to ask for something really good. Not necessarily jewelry, maybe a nice handbag. Oh, you know what? That's the new proposal in 2026. We proposed with a Louis.

1:20:53Rachel Cruze:Oh my gosh. I'm okay with that. She's so... Michelle, you're funny. This is so fun. I love her spirit. You've done so well, Michelle. You've got green lights from us. Yes. This is the way to do it. You're Baby Step 7. It's your time to live like no one else because you've lived like no one else. You got no debt. You saved up. This is a drop in the bucket for you. I think you can afford it, Michelle. And go to RamseySolutions.com and check out the Live Like No One Else cruise. March of 2027, we're going to be set in sale. So come hang out with us too because you're on Baby Steps 4 and beyond. And you don't have to go with him.

1:21:22If he's going to side-eye you, you come alone. We'll be your plus one.

1:21:26Rachel Cruze:Amen. All right, let's go to Greenville, and we have Jenny on the line. Hi, Jenny. Hey, how are you guys? We're doing great. How can we help? Oh, my gosh. I'm so excited. Well, my husband and I got married like a month ago, and we're so excited. Oh, congratulations. Thank you. We just went to the bank and joined all our finances because I kind of made them. But we knew it going into our marriage that we were coming from two different places. And I'm hoping you guys can help me kind of get him on the same wavelength as me. um he came in with a little more debt than i have um and i came in with more savings than he has and i'm hoping that we can pay off all the debt yeah but i think he sees it as um like i don't know me coming in and taking over control so i want him to like be on my page but i wanted to think it was his idea oh wow welcome to welcome to marriage so how do we i'm kidding i'm kidding Manipulate your husband into being okay with this.

1:22:34Rachel Cruze:No, it's not manipulation. It's just taking away guilt because he's kind of apologized. Oh, yeah. And he feels guilty about it. Right. And I don't want to start paying things off yet if he's not on board. Sure. Well, I think the value system needs to be aligned. And I think you guys can talk about that. And you can speak from your experience, Jenny, of how you want to see money going forward. You're creating a life together. You guys are starting off. And just to say, I want a life that I have lots of margin and lots of peace with money. I don't need to live up to the edge and above and beyond what we make.

1:23:12Rachel Cruze:And so I don't want debt to be part of the picture. And just paint a picture, Jenny, of what that does for you. And then you need to be able to talk to him. And he needs to be able to communicate what he sees, what he thinks. And yeah, it may not happen in the first conversation. But hopefully you guys can get to a point where the goal is to pay off the debt. And realistically, yes, you will be using some of your savings for that. But if he has guilt over that, you know, number one, you can't fix that. That's going to be his issues to work in. But also I see that as marriage. I'm like, you take on the other person's stuff.

1:23:44Rachel Cruze:Like when you get married, you're choosing to combine lives, the good and the bad, the past mistakes, the things, you know what I mean? Like all of it. Like you are choosing to combine the life together. Past, present, future. Yeah, and money is part of that. And so it's kind of this, you know, entry into marriage, if you will, you know, but it's there with numbers instead of emotions, I guess. Right, right. I just don't want to like put a damper on his confidence, you know? Yeah, well, as a man, he has this like bow up, I want to provide, I want to, you know, give my wife security. And so this makes him feel a little bit small for him to be in the weaker position and for you to be in the place of strength.

1:24:20and your entire vibe here is not giving guilt. Like, I don't know how you could share any of this with him the way you're sharing it. And he goes, man, you made me feel so bad. Yeah, because it's his stuff.

1:24:30Rachel Cruze:It's his stuff. And it's the thing too, like there's gonna be weakness in life. And so, yeah, his ego may be bruised a little bit, but that actually shows a level of humility to say, hey, I'm like surrendering all of this. And like, I hate, there's some guilt behind this and some shame and I hate this. And like, this is what it's doing to me. You know what I mean? like, and you guys talk through it. And it's amazing what can happen when you just say those things out loud. And so it is not, it's not weakness, in my opinion, at all, because it is what it is. And the goal is to move forward and to build wealth as quickly as possible.

1:25:05Rachel Cruze:And so we want to do this together. I like that. Don't focus on the debt, focus on the future. And part of that is becoming debt free. What's the fastest way to get there? Let's look at our resources. Great. We can knock out this debt. We're all one. Let's move forward.

1:25:33Rachel Cruze:Welcome back to The Ramsey Show and the Fairwinds Credit Union Studio. I am Rachel Cruz with George Camel, and we are taking your calls at 888-825-5225. All right, let's go to Ken in Little Rock. Hi, Ken. Welcome to the show. Hi, guys. How's it going? Hi, we're doing great. How can we help? I just recently learned about money, and I continue to try to learn about it. And I'm trying to figure out how I want to position my income to pay off the debt that I have. All right. Sounds good. Well, how much debt do you have? I have about$140 ,000-ish. Is that consumer debt or does that include your mortgage?

1:26:20It's consumer debt. I don't have a mortgage or rent or anything like that. The job I have, I pretty much just live in my truck.

1:26:28Rachel Cruze:Okay. Are you a truck driver? Yes. Okay. What's the$140 ,000 of debt? What does that consist of? I have a car that I keep at my dad's house. How much is that? Not really. But I owe$35 ,700 on it. Okay. It digs into my income, but I don't feel it as much as if I was to have, like, all these other bills, which was kind of the thought process that kind of freaked me out. I was like, if I had these other bills, this would be a problem. Yeah. If you actually had to pay rent, you'd be screwed. Yeah. All right. So$35 ,000 on that car. What else? I have about 65 on a solar loan that I put on my dad's house that I'm going to inherit when his time comes.

1:27:18But then I have about 40 in college loans that I've just been slowly tinkering with to try and get off of them for the last couple months or so. Yeah. Is that one big loan or is that separated out into like 10 or 11 different ones? It's like 16 different loans. It's crazy. Good. And the solar is one big loan? Yes. All right. And then the car loan is one loan. All right. That's what we're working with here. Is there anything else? No, but it feels like there should be as much money as I feel is going out the door. Yeah. What do you make? uh sometimes on a short month it could be around 4 000 on a bigger on a good month it could be somewhere upwards around 5 500 okay take home so that's your take home bad so about 50 to 60 is your take home pay um i mean it's bad when you have 140 000 in debt yeah that's true that would a great income if you were debt-free.

1:28:27So let's walk through this as how we're going to tackle this. Can you work extra? How does that work? When you say a low month, a higher month, what is stopping you from making more? A low month is when I have to go home. Okay. Because I can stay out for a month or two at a time, and I'd probably take home almost almost 600 grand for those months. And then if I need to go recharge at the house, I miss out on a week of income. Yeah. Okay. So in your home, you're essentially taking time off. Right. Got it. So we need you on the road constantly. It sounds like.

1:29:07Rachel Cruze:Yeah, to get out of this debt, for sure. Yeah, I mean, for the car, Ken, the car makes no sense, number one, of just how much it is compared to your income and how little you're using and you're not using it a lot so um if you sold it do you know how much you could get for it uh probably somewhere between 17 and 20 has it gone down that much or was there negative equity it's an evie it went down okay immediately okay i was like the The second I got the loan, I was looking at it. It's like, this sucks. Oh, man. Well, I'd rather have, gosh. 15 in debt than 35. Yeah. Even if you, you know, the difference you're underwater on, you're going to either need to save up the difference or get a loan from like a credit union to cover the difference.

1:29:55Rachel Cruze:Yeah, and then go get a crappy car that just sits out at your dad's house that you drive when you come home. You know what I mean? Which isn't even all the time. So I think justifying getting rid of the car, I think it's going to give you a little bit of breathing room. And then start knocking out these college loans, smallest to largest, and considering there's 16 of them, you know, staying on top of that and making sure they all get paid, obviously, but that you start, you know, chipping. You knock one out every couple months. Yep, chipping those away. Right. So it'll take you, it's going to take you about probably a good three, maybe three to four years.

1:30:28If your income doesn't change, it will take years. And so the hope is we can get you making more. if you are home, I want you to do inside hustles. Yes. Doing something else to create another$1 ,500 or$2 ,000 a month to get out of this thing faster. Because just the napkin math says, I can do it for you here. $140 ,000 over four years, you need to be throwing$35 ,000 a year at your debt, which is not far off from how much you're making total. Yeah. So that's almost$3 ,000 a month you need to be throwing just to do it in four years. So this is a mountain of debt. And I I feel like you don't have the urgency that I would have, and partially it's because you don't have rent and a lot of bills that the average person has.

1:31:08Rachel Cruze:Yeah. So, I mean, I would have some sacrifices, Ken. So the car would be my first one. I would get rid of it, get a small loan for the difference, and start tackling this because that car payment that you're paying every month could be going towards paying off this debt. All right. Let's go to Milwaukee, and we have Helen on the line. Hi, Helen. Welcome to the show. Hi there. Hello. How good have you made it on? How can we help? Aren't you a ray of sunshine? I am right now, at least. Good, good, good. What's going on? My husband and I are currently expecting baby number four. Baby number four was not planned.

1:31:44However, it's a pleasant surprise. Fun. And I'm doing July. And what baby number four means is we now have to get a larger car. Yes. Our car is currently only fit five. we are going to be a family of six. And as I'm doing July, we have a timeline of 15 more weeks. And we haven't had a car payment in 10 years. We don't want a car payment, but we're exhausting our options to save up in the next 15 weeks to avoid a car loan. We actually went shopping with the$5 ,000 we had to see if we could find anything because we have$5 ,000 saved up for a car currently. And we were actually turned away by a dealership saying that they couldn't get us a family-friendly car that they're comfortable putting us in for$5 ,000 and that they'd only take us if we took out the loan.

1:32:41No, yeah.

1:32:41Rachel Cruze:At that price point, it's probably going to be coming from an individual somewhere that you'd have to find. That's a Facebook marketplace situation. How much would your car sell for? Because you have$5 ,000 saved. How much could you get for the other car? So when I looked on Kelly Blue Book, trade-in, it's around$900 per private sale. It's about$2 ,000 at the highest. Okay, perfect. $1 ,000 lowest,$2 ,000 highest. Okay, great. And how much could you save in the next two to three months per month? Could you put$1 ,000 away? Probably not. That's kind of like the issue we're facing with it. we could see us saving up if we had six months for it, but not the next 15 weeks.

1:33:26Rachel Cruze:How much can you save per month? Right now we're living paycheck to paycheck because I am a full-time student at UWM. I gave my degree in biochemistry and come May, our budget opens up a whole bunch more to where we can put away like maybe$700 a month. Okay, that's great. So what I would say is, number one, the expectation of a super nice car is not really there because you'd sell yours for$2 ,000. So that's great. We're not looking for anything bougie. You're not bougie. It's great. I would put that in the 7 ,000. And you guys could survive with two separate cars. If you've got to go somewhere, you both get into two cars for six months.

1:34:02I just wouldn't leave the house with everybody. That's the goal here. No vacations, no trips.

1:34:06Rachel Cruze:Says a dad of two. We're not going to go see grandma.

1:34:22When people hear my story of paying off debt, they say things like, dang, that must have been so hard. I could never do that. And I tell them, sure you can. It's a short-term sacrifice for a long-term gain. But do you know what's really hard? Working your whole life and never having anything to show for it. Never having the long-term gain. Just feeling broke and stressed and maxed all the time. And sadly, that's the hard that most people choose. Listen, you're capable of transforming your situation and living a life of freedom, but you need the right tools to do it. Like our Every Dollar Budget app.

1:34:56In minutes, it'll build you a step-by-step plan that's tailored to your money situation. And every day it finds ways you can free up extra money in your budget so you can get rid of your debt and actually build wealth. So make the choice today. Short-term sacrifice, long-term gain. Choose the tool to help you get it done fast. Download the Every Dollar app and start for free today.

1:35:30Rachel Cruze:so we were just talking to helen about buying a new car we had to jump off because we had a hard break we had to get to but george and i were talking in the break and you know that there are options you guys if helen hopes hopefully she listened to our advice because we get the call of people that get in a dire situation. They're like, well, you know, I couldn't get this. The car dealer told me this. And so we just went and got a$35 ,000 van just to like make us feel good about it. And then they're trying to pay it off and they're back in debt. And so hopefully it's not what's gonna happen to her.

1:36:02Rachel Cruze:But here's the way you have to think about it. When you take debt off the table and you say, we are not going into debt at all. What does life look like? And so for them specifically, they had$5 ,000 saved. They could sell theirs for$2 ,000. It's a$7 ,000 car. and then she said our income's going to open back up i think she said may or june-ish um and so once she's done with school yeah and she'll they can save 700 you know and if you do that for five months you know you think through you know baby will be three months at that point october you know that's you know that's some that's some cash 3500 bucks that you could easily save on top of that and you go get a ten thousand dollar used car like that's a big upgrade from the$2 ,000 car she's driving now.

1:36:45Rachel Cruze:And that's just in, you know, five, six, seven months. And so, yeah, will there be three months of it being inconvenient? If we need all travel, we take two cars. Yeah, we take two cars. But again, the reality of how much you are probably, well, you got three other kids. I know that you're toting around too. But there is, you know, a way to look at this. And it sounds extreme, but I'm like, if you just are patient for five more months, discomfort for five more months and go get a great$10 ,000 car. And you were looking up vans online. So, yeah, I like to just go, all right, you walked into – she said, I went to the dealership and they laughed me out of there.

1:37:19I went, well, don't go to the dealership. Of course they're going to try to get you in a brand new 2026 Honda Odyssey. And most people go, well, I can't afford a$7 ,000 car, so I'll take on a car payment on a$50 ,000 car. Right. Or it had some issues, so we had to get a brand new car. Or I was worried about my family's safety. So I'm like, all right, go Honda Odyssey because you know that thing's going to outlive you. And so I looked up. I went to just cars.com, filtered. She's in the Milwaukee area. So I just looked up a random zip code. I went 50 miles out. I'm willing to travel to get a deal.

1:37:52And I sorted from lowest to highest. And I found multiple Honda Odysseys. Now, are they the prettiest thing in the block? No. One has 160 ,000 miles for$4 ,000. The one that I like, 137 ,000 miles on it,$8 ,000 for a 2010 Honda Odyssey. the EX. Yeah. And that's fine. It's a, I said, no accidents, clean title. Yeah. So just don't go out there buying a lemon, get a pre-purchase inspection from an independent mechanic of your choosing before you go buy a thing. But don't tell me that$7 ,000 cars don't exist.

1:38:24Rachel Cruze:Right. That's right. And what's wild about that is that's what, 8 ,000. And if you did our plan, they could almost cashflow that right now with what they could sell their car for and that. And then you save up over time. And let's say you save, you know, for another, you know, year, right? And if you're able to put, you know, I don't know. I mean, 500 bucks a month is six grand a year. Six grand. You can get a 16 grand car by then selling that one and upgrading. Yes. In one year. In the next year, a$22 ,000 car. In one year. Like, that's what's wild. It's like, you just have to have some patience with it and think through the math and the reality.

1:38:58Rachel Cruze:And it's doable. It really is, you guys. So Helen, we're excited for you, baby number four, but don't go get the car loan. You guys can do this. All right. We have our question of the day, George, and it is brought to you by Why Refi. And defaulted private or defaulted private student loans can leave you feeling stuck and overwhelmed, but Why Refi helps you explore refinancing options with a low fixed rate and payment base on what you can actually afford. So visit yrefi.com slash Ramsey. That's Y-R-E-F-Y dot com slash Ramsey. May not be available in all states. Today's question comes from Austin in Washington, D.C.

1:39:39He says, we're in baby steps four, five, and six and contributing the full 15 % to mutual funds. Despite these contributions, we have lost over$6 ,000 this year. Our contributions aren't even keeping up with the losses. Any advice or encouragement for us? lots so much

1:39:58Rachel Cruze:welcome to the market today by the way it recovered already did you know that the S &P 500 is back back to what it was what 60 days ago yeah it was like a few months everyone got spooked it took a dip which felt like a crash if you zoom in on one day or one week 100 % and we're already back so no you didn't experience $6 ,000 in losses because you didn't cash out so you're riding the roller coaster and right now you're at a dip and now we're back to level and soon we'll be climbing back up, my friend. So you got to have a long-term perspective when it comes to investing. Investing is for the long haul.

1:40:31Yes. So keep your savings in a high yield savings account for short-term goals and know that your investments are 5, 10, 15, 20, 30, 40 year game. And then, you know, he never checks it when it's up. Whenever he's 6 ,000 up, he's not going to go, hey, I'm 6 ,000 up. Am I doing this right?

1:40:47Rachel Cruze:Yeah. how well the market did the last two years. We didn't really hear much people talking about it. Like every now and then it'd be like - 18 % in 2025. Plus 18 % of your prior was like 23 % and 25%. These are unheard of numbers. Wild, wild. And yeah, it's just, it's kind of like, oh, that's good and good. I'm glad, I'm glad. And then it goes down a little bit and everyone's like - And you have a flat year or even a negative year. And that's a normal part of the process. If you go look at the S &P 500 returns over the last 50 years, you're going to see some down years. You're going to see a whole lot more up years.

1:41:17The market is up way more than it's down, and it has always recovered.

1:41:21Rachel Cruze:Absolutely. All right. Let's go to Ashley in Houston. Hi, Ashley. Welcome to the show. Hi. How are you guys? We're doing great. How can we help? So my husband and I are new parents, and we're trying to make a wise financial decision for our family. All right. We'd really love for me to be able to stay home with our baby, but on one income, we feel like it's going to be a little tight. we would be decreasing our income if I stay home by 55%. So we have a couple options, but we're not sure which path would be the wisest long-term decision for us financially. Okay. What are your options? So one option would be me staying home with her, then working evenings and weekends just to keep our house and our fixed expenses afloat.

1:42:10another option would be me just continuing to work and not staying home with her until my husband increases his income and then the third option would be that we sell our house and we move into a camper on my parents land until he increases his income woof okay i don't like that option

1:42:30Rachel Cruze:can we take that one off the table we'll take three off the table just because of for a long you mentioned the word long term long term financially that is not wise um because you're selling an asset and you're taking one that's going down in value. So let's take that one off. Okay. Have you run a mock budget, Ashley, on if you guys just lived on his income, what expenses would not get paid? Like where does the line cut off? Like are you able to pay mortgage, utilities, insurance? Like where down the line are you like, okay, we're having to draw this line. Is it in the middle? Is it up with the expenses?

1:43:06Rachel Cruze:Like where is that at? um most of our six expenses would be covered it would be more so groceries and gas and then taxes that are um up in the air okay well those are important so those are non-negotiable to eat yeah food shelter utilities and transportation so you're saying your mortgage would get paid and utilities would get paid but you may not have enough for gas and food yes so that would be where I would be picking up additional. I hear you. What is the mortgage? Our mortgage is$18 ,000, but we put$2 ,000 at it. All right. What is his take-home pay? He makes$43 ,000 a year. $43 ,000 a year?

1:43:53Is his take-home? Okay. So we're talking$3 ,500 a month and your mortgage is$1 ,800. Yes. That's tight.

1:44:04Rachel Cruze:Yeah, you may not be able to. Yeah. I do think he needs to make more. I don't think this is like on fire. You could try the route of working nights and weekends. I think it's going to be exhausting real quick and get old. So we need a clear path that he's going to make more. Otherwise, this mortgage is too much or you're going to need to continue working until we have a different financial scenario. Yeah. Yeah. You know, I don't mind the idea of moving, Ashley. Maybe it's you guys moving to a smaller condo, maybe in a different part of town. Like, I don't know what that looks like because you could change your housing situation maybe a little bit.

1:44:43Rachel Cruze:I mean, eighteen hundred bucks isn't like crazy. But if you could find something for like a thousand bucks, right. Twelve hundred bucks even for a small mortgage, that would be ideal. So you're almost shifting your lifestyle, downgrading it so that you can have the value of staying home. Or you value staying where you guys are. And yes, you probably would have to contribute financially a bit until his income comes up.

1:45:21Hey, George Camel here. So you're thinking about buying or selling your home. It's exciting, but there's a lot to think about, and all those decisions can feel overwhelming. Well, here's the good news. You don't have to tackle the process alone. Ramsey's Real Estate Homebase is the place to find all of your free tools and resources for help to get prepared to buy or sell your home with confidence. You'll find calculators, start-to-finish guides, a podcast, and even an in-depth video course hosted by yours truly. What's not to love? So if you're ready to take the next steps toward your home goals, go to RamseySolutions.com slash real estate.

1:45:53That's ramsysolutions.com slash real estate.

1:46:12Rachel Cruze:Buying or selling your home is a big deal. And with all the clickbait headlines out there and conflicting data, it's really hard to know what's happening in the housing market. So we're here to make the latest trends easy to understand. So median home prices stayed steady last month at about$439 ,450. And the number of homes on sale hit$1 million for the third month in a row. So buyers have more options and negotiating power, while sellers face more competition. So the average 15-year fixed rate dipped a bit to 5.86 % last month. And if you are debt-free, you have a fully funded emergency fund and a solid down payment, now is a great time to sell your home, to buy a new home.

1:47:00Rachel Cruze:Wherever you are in the process, that's where you want to be in the baby steps. So if you want to learn more about housing market trends and get free tools to help you when you buy or sell your home with confidence, go to RamseySolutions.com slash market or click the link in the show notes if you're listening on podcast or YouTube. All right, let's go to Blake in Panama City, Florida. Hi, Blake. Welcome to the show. Hi. Hello. How can we help today? Okay, so my question is, so me and my wife have our house paid off at 34. Whoa. And I went back to school and got a degree at 30, you know. So we were struggling before, and I was like, I ain't going to keep doing this.

1:47:39But the thing is, now her family is per-pressuring us, and she's falling for it to go out and buy a bigger and better house and new vehicles. but they're all paid for, houses paid for and she's fallen for it. What do you mean fallen for? You guys haven't done anything yet, right? You're just saying she's in on it. She's like, yeah, I'm ready. Let's go into debt. That's right. Do you guys have the money to upgrade cars and do you want to? No, I don't want to. But do you have the money to? Yes, I do. Okay. But you're just like, that's not a priority for you. Is there any merit to what she's saying in that you could use an upgrade on the cars or the house or Or is it totally fine?

1:48:15Well, with the house, it's about 1 ,600 square feet, and we do have three children, and they're becoming teenagers, so it is getting cramped in there. What's the house worth? About$290 ,000. Okay, and how much money do you have outside of that? And our bank accounts combined, we have about$15 ,000. Okay, so that's kind of your emergency fund? That's right. Okay.

1:48:40Rachel Cruze:Anything above that savings? savings? No, that's all of our savings combined is with that. Okay. And what do you guys make a year? I make right on$170 ,000 and she does insurance and she makes$70 ,000. You make$170 ,000 and she makes$70 ,000? That's right. Okay, so you guys make$240 ,000 and you have no more savings, just$15 ,000? Well, I just started making this about four years ago and that's when I started paying our vehicles in our house debt. That's a long time. Okay, so you've been real focused on the house and therefore haven't been adding anything to savings. Is that right? That's correct.

1:49:14And we have my our vehicles are 2018s and I paid them off to focus on them. OK, gotcha. Got it. So you've been on a debt payment journey and now you're at a good spot and she's already gone. Let's go back in. And you're like, dude, we just played this game. Right. Yeah, we were in debt, you know, since we're 20 years old. I can't do it no more. So I got a degree. Well, Blake,

1:49:33Rachel Cruze:what you guys are making, say you lived on 100 grand a year, you could bank 140, right and go get two nice cars if you wanted you don't care about it but maybe she wants a nice car you guys make good money she should get a nice car what cars are you driving right now so she has a 2018 um durango mine's a 2018 ram 1500 okay but you're fine you're content but she's like hey i want to upgrade cars and i think that's all the time looking what does she want give me like a ballpark what what kind of car what price point is she looking at well she was looking at the Wagoneers and their$90 ,000 goodness gracious two grand a year you know I mean two grand a month yeah no yeah no payments here we're not we're not gonna be going down that road with her but you guys could save up get a you know a used one if you want to look I feel like they don't have great reset is why don't I feel like here's the thing nobody wants to deal with the maintenance because it's in the shop half the time yeah I don't think they're great I don't think those are great cars but you know but it would be okay Blake if she went and bought a I mean, you make$240 ,000.

1:50:33Rachel Cruze:No debt, no house payment. You can get a$30 ,000,$40 ,000,$50 ,000 SUV, and it's not a big part of your world. You make$70 ,000 too much? I mean, just based on your lifestyle right now, it feels like a big jump. Probably. We say no more than half of your income tied up with things with wheels and motors. So technically, if you guys kept up this income, you could have about$100 ,000 in total vehicles. Yeah, that's fair. So maybe a$50 ,000, and it needs to be used. You guys don't need to go get a brand new car. You're not at that point yet. Let someone else take the hit on depreciation. Yeah, but she could go get a$50 ,000 car, but you guys need to save.

1:51:06Rachel Cruze:It's a nice car. Yeah, that is a great car. That's pretty much any vehicle used that she wants. Yes, but y 'all need to save up and pay cash for it, okay? That's right. My thing with the house is the kids are teenagers and it is cramped, but they'll be out the house in five years. I don't just see the point of getting something bigger than just me and her. Okay, well, true. All of this is wants at this point. Our needs are taken care of. But, Blake, you can spend some money, okay? I'm not saying go upgrade the house right now, but I don't think she's – I don't feel like she's completely out of control for wanting to up a lifestyle a little bit, especially since you guys are making good money now.

1:51:45What's your household expenses every month? Everything that comes out of your checking account, what would that add up to in a given month? I would say about$2 ,000. Goodness gracious. And you guys are clear on what,$15 ,000,$16 ,000 a month? Yes, sir. Like I said, it just started because we just got the house and everything paid off in January. Okay, well, let's play it out. That means you could bank$14 ,000 a month,$168 ,000 a year, which means you could go buy our$50 ,000 car and then save up another$100 ,000 and upgrade to a$400 ,000 house all within the next 12 months. Do you hear me? Right.

1:52:19Yes, I just don't know how to. Because we came from nothing. That was so hard to save because I didn't have a good job, and then I finally did, and I'm so scared. to go back to what it was. You won't go back if you don't go into debt.

1:52:32Rachel Cruze:Yeah, that's the thing is you're moving forward with no risk. So you're purchasing the next house in cash. I just told you save$100 ,000 up, sell yours, take that$300 ,000. Boom,$400 ,000 house paid. I got you. Yep, that makes sense. Save up$50 ,000, sell her car, cash. So, Blake, y 'all need to have a little dreaming because you are holding back, which I get why. I totally understand. And I know this is all so new because you're like, we've just paid everything off and like, oh, my gosh, now we want to go upgrade because we just paid everything off. so y 'all so she's been in a season of sacrifice and she's been a great teammate i'm assuming for you guys to hit these goals which is awesome so now you guys need a dream in the future and just say hey in the next 18 months what do we want our life to look like and blake you may be like i'm great driving my truck and that's great and she may say i would love a newer car okay great let's put that on the table and i would love some more space all right let's go look let's just see you And you can just pull up Zillow for the heck of it at dinner just for fun, just for fun, and just see what's out there.

1:53:29In your budget.

1:53:29Rachel Cruze:Yes, but you guys start kind of dreaming in your budget, yeah. Don't go look at million-dollar homes because then she's going to only see million-dollar homes. Yeah, yeah, yeah. But you guys need to have an agreement. We're not going into debt, but we can spend some money and enjoy some of this too, right? Because otherwise, what's the point of you working so hard and being this successful if your family can't enjoy it and reap the benefits while they're alive? Well, that was another thing. My daughter is about to be 16. she's going to need a vehicle. And I know you don't go out and buy a young kid something super expensive, but then my two boys are right behind her.

1:53:59I'm just, you know, scared.

1:54:00Rachel Cruze:So that, no, no. So yeah, so that goes on the list, Blake. When you guys sit down for dinner, okay? Wife wants a new car. The dream would be to upgrade the house. We got three cars we got to pay for. We're going to give each, you know, maybe the kid pays for some. We put some in. I don't know. I'm just making up a number. Maybe you guys set aside 10 or 15 and anything they save up goes on top of that. Yeah, yeah, yeah. And that's it. That's the limit. Yep. So for each kid? Yeah. Is that what you're thinking? Yeah, that sounds reasonable. I was going to go a little cheaper. But yeah, so$10 ,000 per kid we got to have.

1:54:27Rachel Cruze:So that's$30 ,000. This is rare that Rachel goes cheaper than me. I know. I feel like I should get an award for that. You should. Yeah, I've seen it as a statistic where most young kids wrecked their first car anyway, so I didn't want to go so expensive. Yeah, I get mad when I see kids in my neighborhood driving nicer cars than me. I go, that's bad parenting. Get off my lawn. Kid in a brand new Jeep Wrangler. What a way to be so non-judgmental, George. I'm just saying. Yeah, have that freedom. No, but so, Blake, you guys need to sit down and make a priority list of the goals that you guys have in the next 12 to 24 months.

1:55:01Rachel Cruze:Put dollar amounts next to them. Look at your income. And you guys map it out. And this is going to be fun. Don't stress. Please don't squish her dreams, Blake. You're dreaming too small. She's dreaming too big. Let's meet in the middle. But let her dream. This is part of it. It's fun. And she may not get everything you want. That's not the point. But the point is like, here is what I'm thinking and wanting and seeing and whatever. Like, let it just happen. Let it be a fun conversation. You guys aren't broke anymore and you're not going to be broke again as long as you do this thing slowly in cash.

1:55:29Rachel Cruze:Avoid debt. Let me free you from that scarcity mentality, my friend.

1:56:00Hey 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.

1:56:56Rachel Cruze:Our scripture of the day comes from Proverbs 13, 4. The soul of the sluggard craves and gets nothing, while the soul of the diligent is richly supplied. Leslie Nielsen said, Doing nothing is hard to do. You never know when you're finished. Huh. Something to chew on there. Did I get it? Doing nothing. Yeah. Doing nothing is hard to do. You never know when you're finished. I don't think anyone's waiting for it to be done. Is that what she means? Just don't do nothing regardless. I think it's Leslie Nielsen, the famed actor, R.O.P. Yeah. So just keep doing something. Don't think too hard on that one.

1:57:37I think it was meant to be humor.

1:57:39Rachel Cruze:It felt like a riddle or something. Humor. He was a comedian, an actor, so that makes more sense. Should have done the reference. Airplane, the naked gun. It's before your time, Rachel. Oh, airplane. No, I got that one. Yeah. All right. I see. I see. When did he pass? 2010. Okay. All right, let's head to Raleigh, and we have Mary Rose on the line. Hi, Mary Rose. Hello. Hello. How can we help today? So we, kind of a little bit of a longer story. We moved from Washington State to North Carolina in October of last year, and we wasted all of our resources doing so. It was a bad situation in Washington.

1:58:26We weren't making it. We were making good money, but we still weren't making it. So the Lord made a way for us to get to North Carolina. And we had an idea of two years to buy a house. Well, we are in process of buying a house right now. The Lord made that happen as well. We don't have to put anything down at all. the mortgage is going to be less than our rent payment. We do have some debt in cars and some credit cards and stuff that we were planning on paying off. And my question really is, am I thinking about it correctly in, I'd rather pay a mortgage, build equity, than pay someone else's mortgage by renting?

1:59:15I think that's a short-sighted approach because you're not thinking about the full picture, because we don't know what the mortgage is compared to your income and what these debt payments have to do with it. So I don't know that the Lord is in charge of zero-down mortgages, but you're here. I mean, you already did it, right? Mm-hmm. Yeah, I mean, we closed May 1st. Mortgage payment's going to be right around$1 ,550, and we pay$1 ,615 a month in rent. And what's your income every month? What comes into your bank account? Well, so we make about$98 ,000 a year. Okay, is that your gross income? Yeah, that's our gross income.

1:59:56Okay, but you don't know what's coming in every month. Well, every month... Mike, I can give you a guess. Is it around$6 ,000 a month? No. So I'm actually, I just got a new job in the town that we're moving to, which is about$5 more an hour than I'm making, plus$300 extra in bonuses a month. Okay, so what's your new hourly wage? My new hourly wage is$20, and he makes$27. Okay, yeah, that makes sense. You're making about$100 ,000 gross, but my guess is your take-home pay will be about$6 ,000. So$1 ,500 on a mortgage, that's about a quarter of your take-home pay, so you're in line there. Now, how much debt do you have?

2:00:41uh well we pay probably 800 a month in car payments and then probably 400 in credit card payments because we like i said we exhausted all of our resources getting out of washington state what's the balance of the loans the credit card debt the car loan i think the credit cards we've got about 15 our truck is 16 my car is nine and the harley's three something but my husband has have he he's listed his truck for sale so we're we're trying to get the truck out so that we can you know save some money that way and then we can really you know start building a savings so that he can get something that the truck in Washington made sense.

2:01:32Doesn't really make sense down here. His job actually provides transportation for him to get back and forth from work. Plus he can drive his carly there.

2:01:40Rachel Cruze:Yep, and his is the$16 ,000. Yeah. Okay, perfect. So he can possibly sell it. I told him to list it for$27 ,000 and maybe get$25 ,000 for it. Oh, great. So you could walk away with some cash. Yeah, yeah. which could knock out the Harley and maybe close to paying off your car. Right. And what he wants to do is pay the credit cards off because it's a higher interest rate, and then we just cut the credit cards up and we're done with the credit cards because that was kind of just a 50-minute. You can cut the credit cards up now. You don't need to wait until it's paid off, and I would do that. Right.

2:02:15We recommend the debt snowball method because it's the method that actually causes people to get out of debt, and it's all about momentum and psychology. So it's smallest balance first instead of the highest interest first. What you're talking about is debt avalanche method. On paper, you could maybe save some interest. But right now, we're not trying to save interest, right? If we were playing math, we wouldn't be in all this debt.

2:02:36Rachel Cruze:But Mary Rose, I do want to say, though, when we look at the order at which we buy a home, even if it's a great deal. Even if it's cheaper than rent on paper. Yes, on paper. I still would not have bought a home until I had this cleared out because you guys have no money. You have$43 ,000 in debt. And if the heating and air goes out, you're 20 grand. Like, what are you going to do? You know what I mean? Like there's, so, but I'm saying the rent, listen though, the rent, even though you're paying$1 ,000 less, that's$12 ,000 a year you're saving, which is great. And I get building equity and all that.

2:03:12Rachel Cruze:But if something goes wrong, when you rent, things are taken care of. So just know the expense of home ownership, even though you don't see it in the mortgage, you're keeping up with the yard, all of it. So just know that it's still going to feel, it may still feel tight. So really for the last 15 years, we've lived in situations where we take care of everything in the house anyway. Like if the heating or air goes out, my husband takes care, he does everything. Well, as a traditional renter, though, that would not usually be the case. The landlord should be paying for it, though. Right, right.

2:03:47Rachel Cruze:Okay. So just saying. So we understand the taking care of those types of things. My husband's a master of all. He does everything. So we haven't – I mean, this is the first time we've rented from a property management company in 15 years. And so – So when is the lease over, and have you actually closed on the house? So we close on the house May 1st. The lease is over in August, but the sellers agreed to buy us out of our lease. Okay, as part of a concession. What kind of mortgage did you guys get with nothing down? It's a USDA loan. Okay. So I know that you guys don't recommend USDA loans, but my husband got curious.

2:04:33He got on his phone and he put a request out. They approved us up to$250 ,000. Yeah. Yeah, they approved us up to$250 ,000, and by some chance, you know, we took a left, and there was a house on the right-hand side that was a two-bedroom, and we've only been looking at three-bedroom. It was$215 ,000 for, I mean, you can make it five bedrooms, and three parcels, and a huge woodworking shop on the back.

2:05:05Rachel Cruze:I'm sure, yeah. No, I bet it's great. I bet it's great. But the issue is if that house goes down in value, you're now underwater in a house because you have no effort. And USDA loans, they include an additional premium. There's an initial fee of 1 % and a 0.35 % annual fee after that. So it's not as great of a deal as it sounds. It's like saying I got zero down on a car. Great. You just took on the full loan instead of having anything down. So I want to tell you that you can do this house. I wouldn't personally, if you can back out, I would to kind of clear the deck a little bit more and step into this from a place of strength.

2:05:40Right now you're stepping into it out of more desperation from getting out of a bad situation. But it's not going to tank you if you guys can keep up this income. Yeah. But I would focus heavily on knocking out these debts. Yeah, yeah. And he's been in his job since December. I will move into my job actually next Tuesday.

2:06:01Rachel Cruze:And, you know, we're just looking at this. Yeah, I'm excited for you guys. Yeah, I think it's great. I think whatever you're choosing to do, but you guys have to knock out this debt. And yeah, there's a lot of deals and a banker giving you a loan at 0 % down. Is that God or not? I don't know. I don't know. But George, thanks for a great show. Thank you. Thanks to everyone in the booth. And remember, there's ultimately one way to financial peace and that's to walk daily with the Prince of Peace, Christ Jesus. Thank you.