You Can’t Make the Same Money Mistakes and Get Better Outcomes

26:07Is there room for your incomes to grow? There is. Okay. I would hold off personally. I don't think this is like we got to get out right now. I would hold off since you enjoy where you live. This is just a part of living in society, unfortunately, and HOAs get a lot of hate for a valid reason, and assessments are part of the annoyance. You're like, I already pay so much to live here. Now you're just going to throw five. It's like the mafia. It's like, give us five grand or else. And you have no way out of it. And so long-term, if you see the writing on the wall, if three years from now, your income hasn't gone up and yet all of your dues keep going up, the assessments keep showing up, that could be a sign, hey, it's time to move.

26:45But the longer you wait, the better off you are ROI-wise on this purchase of the home. The sooner you sell, the more of a loss you're going to take. because you've got to pay realtor fees and you probably don't have much appreciation at this point. So this could be way more than a$5 ,000 loss just to get out. Yeah, we were estimating$25 ,000 loss to get out. Yeah, so I don't want to eat$25 ,000 to save$5 ,000. And I think you're going to know a lot in 12 months, right? After a year, I think that a lot will kind of shake out and you guys will kind of see where you're at. And then to your point, George, you could look up and say, okay, let's stick it out for another year.

27:26Let's see where incomes are at that point. See what the HOA is doing. And you can make the call, yeah, in three years or so. But I probably wouldn't go any less than three just because of everything attached to it fuel-wise. And if you want to live in a non-HOA community, you're going to have to go probably further out. And it may not be a home that you love. And so this is a tradeoff of living where you want to live. HOAs are everywhere. All right. Mark is in Sacramento up next. Mark, welcome to the show. How can we help? Yeah, I told your screener. I'm just about, I'll be 63 next month, and I got a whole term, whole life insurance.

28:07Okay. That I've been paying into, oh God, since before I was 30. Oh, wow. You made someone very wealthy. My brother's the one that signed me up for it. But that hurts even more. Not in the business anymore. Oh, shoot. Yeah. So my cash value is up well over$40 ,000. The policy itself only pays out$160 ,000. Yeah. And I'm married. My wife is 64. You know, she's obviously the beneficiary. and from what I understand from listening to your show, that should I pass away, my wife will get the 160 and all the cash value is just gone. Goes to the insurance company. Yeah, it's horrible. Yeah. In most policies, that's how it's structured, which is insane.

29:01I'm with you. At 63, you might have a hard time getting term life in place now, but it's worth looking into and to see, you know it's going to be expensive but your whole life policy is also very expensive what are you paying per month oh god it went up this year like over 200 bucks i'm paying 1700 bucks a year oh my goodness yeah how much do you guys have in retirement are you self-insured to where if you didn't have this policy in place your wife would be okay if something would happen me and my wife uh not including our house are at about 1.2 million okay you might be at a spot and you can consult with a financial advisor to see, hey, is this worth keeping around?

29:42Because if you just put$1 ,700 in a savings account, you might be better off than continuing to pay this with$160K payout. Well, that's what I'm – or what about taking out the cash value? Yeah, I mean that's another option. You surrender the policy, take the cash value, invest that plus your$1 ,700 a month. You'll probably be better off. You'll get to$160K pretty fast as long as you're still with us, and I hope you are. Okay, that's my question. I would run the numbers. This might be something you keep around for now until you're very sure that if something were to happen, you are self-insured.

30:18But$1.2 million, based on your expenses, you might go, yeah, we can easily drop this and get this money out of here. And invest that with what we already have. Yeah,$1 ,700 on top of your$40K. That'll add up fast, my friend. And I'm so sorry that your brother hosed you into this. I don't know what your relationship is like with him right now. But 30 years ago. 30 years ago. It's all water under the bridge.

31:02Hey guys, George here. Listen, just because it's 2026 now doesn't mean 2025's ideas all go away. Some things are timeless. Like if you want to win with money, it's still the same playbook. Budget like your money depends on it. Avoid debt like$10 lattes and build wealth on purpose. But here's the truth almost nobody tells you. Most banks make money when you lose yours. They want you swiping, overdrafting and racking up fees because that's how they stay rich while you stay broke. And that's why I tell people to go with Fairwinds Credit Union instead. They actually want you to win with money and become debt free.

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32:05That's fairwinds.org slash Ramsey, insured by the NCUA.

32:23Anna is up next in Seattle. Anna, welcome to the show. Hi, thank you. What's going on? Okay, so I bought a house in August. Just briefly, I'm a divorced single mom. I have two kids. I basically used my divorce settlement to buy this house. I put a big down payment. And even now, I am struggling with having a pretty high mortgage payment with my income. And I don't think it's sustainable. and I'm sort of going back and forth on, you know, what is the best decision? If it wasn't, you know, it's done now, but what could I do to kind of help myself move forward? I bought a house and I thought I would have some money left over, but I had to pay off my car in escrow and that added an extra like$18 ,000 in order for me to get my debt to income ratio low enough to be approved.

33:24So that increased the amount of mortgage you needed, which increased the payment? Mm-hmm. Yeah. Yeah. Tell us the ratios. What is your mortgage payment and what is your after-tax monthly income? So my mortgage is$3 ,880. I don't know,$3 ,890. Let's say that. That includes all of the homeowner's insurance and insurance and property tax, so they put it in there. so um yeah so 30 38 38 hundred um and my net pay is 6 ,222 a month oh yeah yeah i mean i i make 103 000 but i live in seattle and it's a very expensive so we're talking two-thirds of your take home is going toward the mortgage and that's not leaving a whole lot left to live and put food on the table, let alone accomplish any financial goals.

34:20Are you getting child support at all, Anna? Yeah, I get$850 a month for two kids. Okay. And that's on top of your$6 ,200? Yeah, that's on top. All right, that helps a little bit. Yeah, we can count that. Yeah, we kind of count all income coming in, even if it is child support or alimony. Okay. It gets you to like 55%. Now, does that include the take-home pay? Do you have any deductions coming out, like health care premiums, 401K? I pay my health care. My kids' health care are on their dads, and I have to help pay for that. My deductions are just the typical taxes. Just tax stuff, okay. And I do contribute to 401K.

35:09How much? What percent? I believe, I think I meet my company match. I think it's 4%. Okay. So you're likely investing, if you make$100 ,000, we're talking$4 ,000. And so you wouldn't include that for the 25 % parameter, which also helps your numbers. So now we're down to like 50-ish percent, which is not great. But at least we're kind of, we can see the forest from the trees here. Is there room for your income to grow? There's a little bit. I mean, I don't, I wouldn't say anytime soon. Okay. No. But when did you buy this house? I bought it in August. Okay. It's only been half a year. Yeah. It's similar to our last callers.

36:00Six months because there's not going to be a ton of equity. I mean, it's already, I mean, it's, I already, well, I mean, I don't know how accurate, you know looking at redfin etc is but i mean there is there is already equity in the house you know what would you get if you sold it after you know net of fees and all that i mean i don't i don't i didn't calculate the fees but i bought it for uh 7 30 and it's i mean it says it's worth between 8 20 and 9 something yeah i'd be shocked in six months i was gonna say 150 grand zillow's always Because Zillow and Redfin, they're not always accurate. I know.

36:41But what you could do, Anna, just to gather information as you're thinking about this, because it is a big enough question financially for you, is to get a realtor and have them just pull some comps in the area and just see. I mean, you know, maybe it's gone up a little bit. I mean, I don't know. But after you factor in maybe a little bit of equity, but then all the fees and the realtor fees and all that when you sell the commissions, Like once you factor it all in, you may end up losing money if you end up selling. Right. So there might be a reason to hold it and to stay in it for maybe two years or so.

37:15And it's going to be uncomfortable because it is eating up so much, but at least to get some equity back in so that you can make a better long term decision. because it probably was, I mean, I would feel like if I went through something like that and having kids, you want a place to land, you want something that you're like, okay, this is our home, we're building this new life, right? And so like, I could see it almost being an emotional decision and not always factoring in like, okay, what is this actually going to feel like in real life? So I don't fault you for that. It makes sense. But we also want to get you into a place where you can start building walls and you have some breathing room because, you know, going through a divorce like that's that's in of itself extremely stressful and then you put on top of a financial strain which so many single moms they I mean you are in the boat with so many people um which is so hard it's so hard so heartbreaking having to raise these two kids too along with everything so have you done a monthly budget to see how much is actually left over or if you're going into the red each month?

38:14I mean, I'm working on it. I mean, a big part of why I got divorced was because of my financial incompetence. Because of yours? Because of mine, yeah. So what went on there? Just not keeping up with details, spending whatever you want? Like, what does that look like? Yeah, like hidden debt. You know, I'm working on it. I'm actually in a, like a DA program, which is helping. Good. So I, I, I was completely out of debt and now I have, I have that again, home costs or, you know, you know, obviously because I, I kind of living outside my means, but I do know, I do know some places I can tighten. I do have kind of a side job.

38:57I teach classes and I can teach more. Have you cut off all access to debt? Have you frozen your credit and all that? I don't use my, I don't use my credit cards. I mean, the other question I had is I do own my car and my car is worth, I'd say,$18 ,000, but I could easily, you know, sell it and then get a car that is, you know, good for my kids and for me and for commuting. I wouldn't do it. I probably wouldn't. You're not going to free up a debt payment and then you're going to downgrade a car and you might have, you know, eight grand, but that doesn't solve that mortgage problem. Yeah, your car's not the issue at this point.

39:36So I would hang on, like Rachel said, for two years and see where you're at. Nothing is like you're not going to miss a mortgage payment. You're just sort of skating by right now in survival mode. And it is going to be uncomfortable. And that's where the budget is really going to help you. Because now whatever is left over after that mortgage payment comes out, you have to be very intentional with. And that's where a budgeting app like EveryDollar will help. So we'll make that our gift to you to help you figure all this out. And when you fill out that every dollar budget, you'll list your income for the month, include the child support.

40:07And then below will be all of your expenses. Yep. Yeah. So stay on the line and Christian will pick up. And George, I vote that Anna cuts up all of her credit cards tonight. Absolutely. You said you don't use them, but you still have them. I think you just cut it off at the source. Since you know it's an issue, right, just in general, it's been just cut off at the source. And listen, if you hate it, I promise they'll let you back in. You can get another one. Yeah, I only have one and I pay a lot. One is all it takes. I'll tell you that. You can still do some damage. Hey, I'm not kidding though.

40:39I would cut it up and actually use a debit card. Force yourself to use your money because there is something, even if you pay it off every month, there's something about in the moment taking care of groceries, whatever it is. When you pay it, it's done. There's not a bill coming. And it actually factors in psychologically and you end up actually spending less when that's the case. And so I would try it, Anna. You're kind of on this whole new journey, this whole new chapter, this whole new life, right? And so do something so different. You're the kind of person who doesn't swipe the credit card, who uses her own money.

41:14Because she doesn't have one, right? Because she cut it up. I love it. I love that challenge, too. Yeah, I should, sorry. Let me go back. I have one credit card I cut off every month. My other credit card, I don't use. I opened it because I used it for moving fees, et cetera. you know some new things in the house and get some appliances and it had a 0 % well I would cut it up pay it off and close the account and I want you to try no debt Anna like hardcore and it's extreme this is extreme in our world today but be so hardcore with it and be so extreme and do it for six months and see how you feel because I'm telling you there is a freedom there you don't even realize the burden you're carrying so if you keep doing what you've been doing you're going to keep getting what you've been getting so do something so extremely different with your money and see the results

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43:37welcome back to the ramsey show in the fairwinds credit union studio i'm george camel joined by ramsey personality rachel cruz we're taking your calls at 888-825-5225 katie is in south carolina up next. Katie, what's going on? Hey, thank you guys so much for taking my call. I hope y 'all are well. We are. What's going on with you today? How can we help? So, I mean, I might sound crazy for saying this, but I just can't shake the feeling that we're charging a little bit too much money. And I guess I'm looking for a way to justify my guilt or, you know, try and figure out how to process, you know, how fast do we want to grow and how should we scale our company?

44:22Okay. So we, is this your husband? Yeah. My husband started this business before we got married and I kind of joined him after that. We've been in business for about 11 years. Cool. What kind of business is it? It's a trucking company. So we do some hauling. Wow. That business has really taken off, hasn't it? Yeah. What do you guys bring in a year? us. So last year we brought in 290 ,000 sales. And then after, you know, paying everyone and expenses, we profited about 120 ,000. And that's as a household. So that's your household income for the year? So that's not the household income. Most of that stayed in the business.

45:04That was just what the business profited. We paid ourselves about 50 ,000. Oh, wow. And that's together. That's total that came to you guys. Wow. All right. Yep, correct. So where did this price hike come into play and why? Yeah, so our pricing is very simple. We just match what the competition is around us. We don't have a lot of competitors. And, you know, we're one of the few people that do our specific type of hauling in our area. So we really have just always kind of matched what market price is. But I'm kind of looking at case by case, job by job and realizing that the range of profit we have on each job is super wide.

45:50So sometimes it's, you know, a small amount of profit, but a lot of the time it's quite large. Um, so I'm just kind of, you know, when I brought up the idea of restructuring, how we do our pricing and, you know, taking it from super simple to trying to be a little bit more specific so we can afford to help some people that usually say, oh no, you're too expensive. Well, you know, if you're willing to make a 40 % profit on that job instead of 60, maybe that person would have said yes. Cause you feel like you need more business. Do you feel like you need more business? Well, so our work is very seasonal.

46:26The demand in season is so high, we can't keep up with it. But then during the off season, it's not really a thing. So we, you know, we obviously slow down a lot. And that's we're blessed that, you know, able to work very full time, overtime, six months out of the year is enough for us to live off of. And then the rest of the time we can work on side gigs or spending more time with family, which is great. So yes and no, we definitely don't need more work. We can't handle it in the summer, but the idea is obviously to grow so we can do even more during the summer, if that makes sense. Got it. So is there a moral profit margin in your mind that it's like anything above this, it's immoral to charge?

47:10Well, I don't have a specific number. It's more the concept of, you know, is that even a valid question? Well, I mean, if you look at prices, is his reasoning, hey, everything's gone up. Everything costs us more. Fuel, insurance, maintenance, tires, labor, permits. Like, that's all gone up. And so it's not like he's tripling the cost just for fun. And you guys are bringing home$50 ,000 as a household. And it's a specific type of service that you said. There's not a lot of competition. And there's high demand. Yeah. And not a lot of supply, which means you can charge more. And it's not like you're hurting anybody.

47:45They're happily paying you for this service that they can't do themselves. Yes, the more I say it out loud, the more I know I'm kind of making my husband sound like a superstar in business. But, you know, I just always go back to the few cases where people have asked us for help and, you know, we give them our price and they're like, oh, you know, that's way over budget. And in my head I'm saying, I really know I could have helped this person out. I could have met their needs. Sure. and I you know I chose not to because I wanted to keep that profit high yeah I hear you so I wonder if because you know even here at Ramsey for instance like we give stuff away a lot whether it's tickets to a live event books you know um and some stuff it's like very nice coaching you know one-on-one coaching that will pay for people's sessions like yeah we will um have life with an open hands business wise but we're only able to do that because we are making a profit on the other end that is feeding a thousand people that work here and their families and all of it.

48:48Right. So, so there, there is room to be, if there is room to be generous, I would talk to your husband about that and say, Hey, you know, and I hate to, this sounds so like legalistic and I don't mean to be this like formulaic about it, but I don't know. Okay. I'm just thinking like four different situations, you know, throughout the summer when you guys are in high demand and people like we need you, but I can't afford that pricing. you know are there four times that you can say and you guys agree on that okay I just feel something in my spirit that I'm supposed that I'm supposed to extend some grace to them and help them yeah um and so that way you're at least in the practice of doing that when you feel led but it's not changing the whole structure of the company because I don't feel like you guys are doing something wrong or immoral to George's point and okay you know you're you know you guys they're bringing home 50k a year out of this thing.

49:38We're far from being greedy here. Yeah, yeah, it's not like you're making, you know, 5 million and you're like, Oh my gosh, I feel like we're overcharging everyone. Most of your customers are making more than you. And so that's the other thing to think about here is you guys also need to put food on the table and you have financial goals and there's nothing wrong or immoral about making money. Have you screwed anyone over? Have you lied? Have you cheated? Right? No, absolutely not. And so it's okay to say this is what our service is worth and we're going to charge it. And if you can't afford it, that's not a slight on them.

50:06It's just saying, Hey, there's, you need to go somewhere else that you can afford. And so I can't, I can't get everything that I want. There's things that I can't afford. And I don't expect that business to go, well, can you just bring the budget down for me? This is not a charity. If you want to start a charity, go for it. You can open a nonprofit and do all kinds of charitable giving. Yeah. But I wonder, could she kind of like scratch the stitch a little bit within it? Right. I like your idea of saying, Hey, There's going to be a customer that comes our way that I just, my heart grieves for them and I want to help them.

50:34And that's totally great to say, we want to be generous to this many customers a year or when it comes up, we're going to give some people a break. But I don't think you also need to go, well, whatever your budget is, we'll try to meet that because that's how you go out of business. Yeah. I mean, any industry, Katie, there's going to be people that can't afford. You know what I mean? I'm like, I was just thinking about, I don't know, that's why I thought social media. I'm like people that, you know, need help with social media. there's people that do that as a job that that charge insane money because they're really good at it or people that are starting out and don't charge much and i you know you couldn't afford you know the high ends that's okay it's a service they provide and just because they charge a lot you know doesn't make them a bad person it means they're probably really good at their job or they found this niche area of life which is what you guys have done so yeah yeah so nothing bad but i would say lean into when you can um and it's not the whole business model but if there's moments to say, hey, I want to be generous in this instance.

51:29You and your husband get on the same page with that. And maybe that'll kind of help free up your spirit some in that generosity. Think about it this way. If you guys charge more and you make more, that gives you the freedom to be more generous when the time comes without it being a loss for you. And so I think there's nothing wrong with that. And listen, if you charge too much, you'll go out of business eventually. And so you'll know when the price is right, when you have the right amount of supply and demand happening. And so I don't think anyone's right or wrong here. I think we need to meet in the middle and understand you want to be generous, and he needs to pay the bills.

52:01Both of you are right.

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53:08Matthew is in Denver up next. Matthew, welcome to the show. Hey, thanks for taking my call. How are y 'all doing this afternoon? We're doing great. How can Rachel and I help? So I just, I was going to get some advice. My wife and I are looking at taking a$100 ,000 loan from my father to buy an eight unit rental property. And I just kind of want to see what you guys thought based on the details of the property and everything else. Yeah, let's hear it. Because not super excited about this. As of now, taking a loan from your father-in-law. But yeah, give me your numbers. What are you thinking? Okay.

53:53So I got a$900 ,000 property at 3 % interest owner finance. And so it's going to be$100 ,000 of my money,$100 ,000 loan from my dad. And then the owner is willing to do$100 ,000 of in-kind money is what she calls it. And that includes repairs and improvements on the property. for a period of 10 years. And then she's also willing to mentor my wife and I for two years, the first two years that we own the home. And then at the end of the 10 years, it's going to be a balloon payment. And I know this kind of goes against a lot of the Dave Ramsey, I guess, principles, but I wanted to see what you guys thought because I think it might be a good opportunity for us to kind of get a business and start moving that way.

54:46Do you guys own a home currently, a primary home? Yes, we do own a home currently, and we have no debts or payments at all besides that house. Oh, besides the house. What's left on that mortgage? $190 ,000. Okay, and what's your household income? We make around$135 ,000, and there's a lot of room for growth there. Cool. How did this idea come up of the eight unit and then your dad loaning you the money? who brought it up? So we met this woman, um, at a graduation. Um, and we, we had owned a single family home investment property and we got to talking to her and she, and I kind of told her that we're, we're real estate investors.

55:33And she's like, Oh, well, I got a deal for you. My husband and I are trying to, uh, get out of this property because her husband is, uh, is pretty sick and they're just trying to move down to Arizona. And so that's kind of how this got brought up. And then she's the one that's kind of structured this deal. Sounds like it. So she knows your dad and was like, well, if he ponies up 100, you pony up 100, we can make this work. And I'll mentor you for two years from Arizona. Yeah, she's kind of curtail related to my wife, not by blood or anything, Matthew, I just see 85 ways this could go sideways.

56:16It's not worth it. It's not. I mean, from the way the loan's structured with the balloon happening in 10 years, all this borrowing from family, going into a$900 ,000 investment property that you don't have the money for. How much do y 'all have saved? How much cash do you and your wife have? um so i have a hundred thousand dollars for the down and then we have about 250 000 in the markets right now okay why don't you why do you have to borrow money from your dad take your money out if you're going to do the deal i wouldn't do the deal but don't don't borrow money from your dad you have 350 000 okay got it and i guess i don't know i guess my thought is if i could keep it in the markets and make 10%, whereas I could pay my dad back 10 % on the money that he loans the company.

57:09I mean, you're needing the stars to align with this. You need eight tenants who pay on time with no risk there. You need to pay dad back. You need to make money in the markets. There are so many variables here that could go wrong. If all of this just tanks, you're screwed, right? If the market tanks, you're screwed. If you can't find renters, you're screwed. If the market goes down, as Dave always says, if Trump burps and the market goes down. It literally happened. He was like, we're going to invade Greenland. The stock market got spooked. That's right. Yeah. And so you just don't know. I mean, yeah.

57:42But here's the parameters that are underlined. I'd pay off your house, Matthew. Yeah, the underlying principles are we never recommend you buy investment property until your primary home is paid off. Number two, we never recommend you borrow to invest in a rental property. Always recommend paying cash. And number three, we always tell people never borrow money from family. And so there's a lot of principles here that are being violated all for the sake of a quote unquote good opportunity. And can I I'm going to say this, Matthew, and I don't want it to be rude, but you guys had one single residential investment property, correct?

58:13You and your wife. That is correct. And you tell this lady that you're you're you're real estate investors, which I guess technically you are. You have one investment property. and I think she saw ding, ding, ding. Here's my ticket out. I got to get out of this horrible situation I'm in because my husband's sick. And yet I don't think it's like ill will on her end. I just think she thought, oh my gosh, here's a guy who's probably doing all these like deals that you see on TikTok and he's got eight VRBOs and he'll do it. I bet I could offer him this and we'll structure the loan where it works for him so I can get out of here.

58:52That's what she saw. I mean, honestly, she didn't list it. She didn't go and go to some, you know, investment firm that has, you know, 18 different investors around the country that go and buy property. You know, I mean, like, no, no, no. She found you and your wife and you thought you hit the hit a great deal and you hit a horrible deal. Not good. Not good. OK. OK. Thank you. I appreciate the advice. Not what you wanted to hear. I know. But sorry, Matthew. you. So listen, what you and your wife did though, with, I would pay off your house, but I, I'm all about, I think, I think having investment properties is amazing.

59:28My husband and I do my family. I mean, I think it's, I think it is great. You just have to start slow. Like the first one Winston and I got, this was gosh, probably 10 years ago. It was a short sale condo in this like, kind of like sketchy part of Nashville, but it's what we did, but we got a deal. We saved up, you know, we, we bought it for really not a lot. Had to go do a lot of work in it. We sold it. And probably, gosh, seven years later when Nashville was on. And it was amazing. I was like, this is great, right? Like you have to start slow. Start small. Don't start with a million dollar eight unit property because you're about to take on all those people.

1:00:05Like that's going to be a huge headache. Like get some things under your belt. Start small and then start to work your way up, which is not as flashy, not as exciting. But it is it is peace. that is a peaceful way to do this and not create chaos because you guys are setting yourself up from chaos and maybe to ruin a relationship with your dad if this goes bad too i've rarely seen it where they go yeah borrowed money from dad it worked out perfectly paid him back and he was happy i was happy usually it becomes well dad wants a piece of the pie now he wants his money back because he needs to retire that's it which means i need to sell the property oh and he wants appreciation and so he wants that too on top of his hundred thousand on top of interest and it just always ruins yeah or he gets sick and he needs a hundred grand back you know and i don't know there's just a there's a lot a lot of things so i would i would hold off and just go slow and and it's not exciting i want to know exciting but it's worth it what is the 250 invested for what is that earmarked for um what do you what exactly do you mean by like what am i saving that Yeah, you said you had$250 ,000 in the markets.

1:01:11I'm guessing that's not a retirement, just in a brokerage account? Yeah, so it's a mix of IRAs and then just a personal brokerage account, and that's just saving for retirement is kind of what I've been doing and kind of learning to trade it on my own and with the help from a financial investor and stuff. Okay. I was going to say, if you have liquid money that is really earmarked for nothing and you want to take it and throw it at the house, the non-retirement portion, You could do that and speed up the process. Free up a mortgage payment, and then you can stack cash fast. And you guys are amazing savers.

1:01:43So then, yeah, stack up some cash and get$300 ,000 here. Save that over the next five years or whatever your income is. And then go buy a rental property with cash. And that's it. You know what I mean? You can do this slow walking it, but do it in the right order. Pay off the house. If you have the money, I would pay off your primary home. And, yeah, I'd stay away from this deal. The key is reducing risk. And right now we're just adding more and more and more risk. And your first real investment property to be a$900 ,000 eight unit just feels like we're biting off a lot here. Yes. For the purposes of helping this woman move with her ailing husband.

1:02:19Yeah. I mean, eight different families, eight different situations. I mean, that's a part-time job right there of what you just signed up for as a landlord. So there's not passive income. It's a lot of work. A lot of work.

1:02:35Thank you.

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1:04:33We are headed to Detroit next to talk to Caitlin. What's going on, Caitlin? Hi, how are you guys? I grew up listening to you guys, so it's amazing I'm here. That's fantastic. How old are you now? You grew up, I mean, this is a long time. Yeah, my dad used to have you guys on the radio. I used to do the, you know, putting every dollar in the individual envelope. But I'm 24. So nice. So great. Well, thanks for calling in. Yeah, of course. So my question is, I just graduated with my master's. It took me five years, and I ended up getting most of it covered with volleyball scholarships. But now I have$50 ,000 in student loans, and I ended up getting a job out of college that pays$50 ,000, which obviously is a lot less.

1:05:27I mean, it's more like$3 ,000 every month. So I'm just calling in to kind of see how I should attack that and what I should be doing in the future to kind of get these loans paid off as soon as possible. Yeah, that's a great question, Caitlin. Are you living at home or what's your living situation? Yeah, so my living situation, I pay$1 ,251 for my rent. Okay. And it doesn't include utilities. I just moved in, so I don't know exactly how much my utilities are going to be, but I have it kind of conservative at like, you know, like 150, hopefully. Yes. And you said you're bringing home 3 ,000? Yes, 3 ,000 every month.

1:06:12$3 ,000. Do you see your income going up? I know you just started, but I'm just thinking, you know, your rent is close to 50 % of your take-home pay, so it's eating up a lot of your income. So just to be able to pay these loans off faster, I would want your income up. So either if it's from your primary job or you're probably going to be taking a second job, Caitlin, I hate to say it. But right now in life, that's what I would do. And whether you're waiting tables or doing whatever you can at night after your job, a few nights a week can make a big difference. Yeah, that could be$1 ,000 a month.

1:06:49You can just throw all of that at your student loans. A hundred percent, yeah. And that's kind of been where I – because I'm very – obviously, I went to business school. I'm very entrepreneur-minded, but it's a little hard right now because I feel like I'm just looking at a million different things to do. And, again, I'm trying to, like, center myself on what should I actually be focusing on to potentially, you know, start a brand or, you know, bring in some extra cash or something like that. Yeah, well, your focus right now is just solely knocking out that debt because getting rid of that will give you the flexibility to actually pursue those things and not be a hindrance.

1:07:26Because right now you need that financial foundation of no debt and an emergency fund. Then we can start building toward this business. So what did you get your master's in? so I got a master's it was an MBA so just in business administration okay and what are you doing right now for work what kind of work is it finance okay so there's probably a lot of room for growth yes in the finance world I'm hoping that MBA pays off right that that that it puts you more marketable I mean seriously though because some people are getting jobs out of college at 50 grand without an MBA yes and I definitely understand that and I I also hope it does as well And I got my undergrad in marketing, so it was kind of a big switch to going to finance.

1:08:08So I was kind of willing to take a lower paying job in order to kind of get my, you know, foot in the door credits or whatever up. Yeah, exactly. Gotcha. Yeah. So I think, yeah, if there is something that you could start on the side that doesn't cost a lot, that's going to bring in more than waiting tables or, you know, delivering, you know, food or whatever the, whatever the side gig is that you are going to have. If you find a way to make more doing something else, that's great. We actually do find that you tend to make more in your skillset. Like if you have a specific skill, um, you know, even if it's like helping coach volleyball or not coach, but even, uh, like do personalized, um, sessions, like with girls at the local high school, like parents will pay big bucks when it comes to sports.

1:08:54So I'm like, Like if there's kind of a little niche there that you could make more doing there and be able to charge more than, again, if you're just waiting tables or something. But, yeah, I would be getting an extra job or two, and I would try to bring in – I mean, if you could cut this in half, like, right? Because if it was$1 ,000 a month that went towards this debt, that's 50 months. That's over four years. And we want that cut in half. Like could you bring in two grand a month, right, extra beyond your job? and if your primary job, you know, you get a raise maybe in six months or a year, like that extra raise goes straight to pay this debt off.

1:09:29Like everything is so tunnel visioned towards paying off this debt because just like George said, when you don't have debt and then you have some savings in the bank, that's going to give you so much flexibility in what you get to do in life. I mean, the options and the freedom you have. Okay, that makes sense. Thank you. Do you have any other debt outside of student loans? uh i don't i only have well i do i have two thousand for a medical thing that just happened but i'm kind of waiting right now on the insurance to see if that's going to be covered but that's about it okay no car loan no credit card debt oh i have i'm leasing a car but caitlin caitlin i thought you said you've been listening guy you grew up with us caitlin you should know how many times have you heard dave say it's the most opera most expensive way to operate a vehicle.

1:10:19I know. And he calls it a fleece. It even has its own nickname. What car is this? Tell me exactly the make, model, and year of this vehicle. So it's a Chevy. It's a Chevy LT 2025. And the reason why I leased it was because I was, I had my car paid off and everything, and then it completely broke down, and it wasn't fixable. It was very old. So I was kind of in between work at that time, and all my friends were on spring break. Like, I didn't have anybody to take me. There was no Ubers. So I had to make a very, you know, quick call. And that, in my opinion, felt like the best thing to do because I didn't have any money saved for another car.

1:11:00And Ubers were, I mean, like I said, we didn't have Ubers where I was going to school. So that's like, I know, I talked to the dealer about potentially, you know, getting on. There's no getting out of a lease. I mean, you're going to find someone to take it over or have the full amount in order to buy it out. My payment is only$400, so it's not good, but it's not, you know. That's a lot of money out of your$3 ,000 take-home pay. I mean, what's the buyout amount? And you don't get to keep the car at the end, you know? Yeah, that's the other part. But this is a good lesson, Caitlin, because I want you to know that it wasn't a great decision.

1:11:41Like, do you look at it now and like, man, I probably like if anything, I could have taken a five thousand dollar loan out from the bank and at least gotten a five thousand dollar car and paid that off soon. Right. Like there's there are again, we wouldn't have endorsed that. But there are other things that you could have done in this situation. And when you get painted, this is true for anyone, into a corner and you feel like this is my only option. That's usually when we make really bad financial decisions. And some people do that with a car situation. Some people do that with a house. they go and buy a house and they're like oh my gosh I feel like it was the only thing it's the only house we could have bought or you know or the school or college it's the only college I had to do it I didn't have the money so I had to take out the loans it was the only way like when you paint yourself in a corner of having just one option usually debt is going to end up having to be the solution and so I do from from here on out I would love for you to start thinking of like okay I'm not going to be pinned in a corner I'm going to think about options a b c and d and I'm going to look at, okay, here are all my options to bad option, good option, uncomfortable option.

1:12:46Oh, this is a really easy option in the moment. Probably not great long-term. You know, you look at all the benefits, but when you have multiple options in life and you force yourself to have multiple options, because there are, there always are, uh, you make better decisions. So just remember that going forward, Caitlin. If I was 24, I wish someone had told me that because sometimes I don't make great ones. Yeah. No, thank you. That's so nice. Thank you. These are expensive, expensive lessons to learn now, but I'm telling you at 24, if you figure this stuff out and you knock out this debt fast from 26 or 27 onward, you are going to build so much wealth and have the ability to be an entrepreneur.

1:13:18But the problem with entrepreneurs is their risk meter tends to be broken. And so they're willing to take quote unquote risks for a quote unquote opportunities, which usually means leveraging a whole bunch of debt, hoping it all works out. And unfortunately we take the calls from the entrepreneurs who say my business failed and apparently they still want me to pay back these SBA loans. They don't just forgive them just because the business failed. And so doing it with less risk is always going to give you the best ability to survive. Yeah, but you're such a go-getter, Caitlin. Just steer all that energy in the right direction financially, and you're going to do incredible.

1:13:53But you got to rein that in and keep listening to us. And actually listen this time. Don't just hear us. Listen. You're awesome. Thanks for calling.

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1:16:29Hey, Rachel and George. How are you today? Doing great. What's going on with you? Good. Living the dream, of course. Love to hear it. So my wife and I, we started the Ramsey plan a few years back and just started chipping away at it, kind of diving into that deficit. And we've since had a family. We chipped away at it and snowballed our debt and got to baby step number five. And so with the three kids, they're getting to the point where we're getting a little nervous because we don't have anything for them saved dedicated just to them. So we were looking at different ways to get the ball rolling.

1:17:07And once you kind of get into that and open those doors, there's a lot of different options. Looking at ESAs, looking at 529s, looking at Roth IRAs. And then even within those, there's different layers for each one of those buckets. And there's a lot of variables in the equation. And everybody has, obviously, the unsolicited advice because we have three daughters. So once they see them all, you better start saving for college or for weddings and all this stuff. And so I guess the fear is, you know, we want to do something, but we don't want to make a decision now that our girls might pay for later on.

1:17:39Right. So how old are they? Nine, seven and five. OK, nice. We've got a decent timeline here until college, adulthood, weddings. And so the A1 is college and maybe a car if you're going to help with that. And so there's a few ways you can invest. I love the 529 plans are a great option for college saving, ESA also, but there's more limitations to that as far as your contributions. And then you can invest outside of that. And so you can do that in a brokerage account in your name. That's personally how I like it because you retain control. What scares me about some of these investment accounts for kids is they get control no matter what when they turn 18 in most states.

1:18:17And so you give a kid compound growth that's$100 ,000. If I'm 18, I'm going to blow that money. They're like, hey, this should be for a down payment for your future home or your wedding. And they're like, I'm going to go. I'm buying a Lamborghini. Your girls will probably never do that, Austin. But to George's point, it is. You never know. Yeah, that's right. That's right. There is less control when it comes to that. And at 18, yeah, that's a lot to give depending on how much you have saved. So, yeah, so the 529 is a great starting point for the college fund. That's what my husband and I are doing.

1:18:49Our kids are very similar ages. They're 8, 10, and 5 or 6. Now, gosh, eight, ten, seven. Time flies. So, yeah, we have five 29s for each of them. And then we've just kind of created an account in general. I think it's even just like an index fund, honestly, that we just throw money in each month that we kind of save. And it's kind of earmarked kind of for them in the future. So whatever that looks like to be able to help them, you know, in what they need, weddings and, yeah, I mean, all that kind of stuff that just gets so expensive. And depending on when it hits, you know, it could all be at once, too.

1:19:22You never know. So that's kind of what we look at. The options with the 529, I know there's the custodial option, right, where we have more control as the parents versus them. At the same time, if they don't go into secondary education, they want to do something else or they get full rise to wherever. I know there's options there for that money. But if you make, you know, the unqualified withdrawal, we're paying a penalty. There's just there's a disadvantage is when we start to look at it on. Yes, there can be. So the good thing is it grows tax-free, which is great. And then if you get a scholarship and grant, you can actually pull money out at that same amount.

1:19:55Yeah, pull it against the scholarship. So if you get a$10 ,000 scholarship, that's$10 ,000 you could pull out of the 529. And on top of that, with the new Secure Act 2.0, you can roll over up to$35 ,000 into a Roth IRA for them. And so there are more options. And I'd rather you have the money and not need it than not have it. And now they're turning to student loans and Parent PLUS loans. Sure. That's the reality for most people. They go, well, I don't want to invest because what if we don't use it? And then they don't do anything. And so if I'm you, I'm going to open a 529 plan for each kid and then open a brokerage account in my name, like Rachel said, and just put money in there.

1:20:30And that becomes the future gift money, wedding money, whatever. Yeah. And in their name, Austin, my parents did this with Roth IRAs. Once they start working, like when we were teenagers and we actually filed taxes under our name. Once they've earned income. They have earned income. Then you can open up a Roth IRA in that. Yes, in their name. And what's wild is my Roth, which I'm trying to think when mom and dad opened that for me. I think I was probably 15. It's when I started working at. I thought you'd be like four years old. I'm like, well, Rachel's off. No, no, no, no, no. They did it the legal way.

1:21:03I really did go earn an income. But they, and I think they even helped fund it. I mean, honestly, like, because it wasn't a lot of money. As long as you earn that level, they can fund it. So if you made seven grand that year, they can put up to that. They can use their own seven grand. Yes, exactly. in it. So yeah, it wasn't a ton. Yeah, it was definitely not even seven grand. But what's crazy is starting that at 15 versus my husband started one after we got married. And just, you know, just a 10 year period, like the difference in the compound interest. It's pretty wild. So you could do that later too, for the girls.

1:21:34As you're thinking about this, I have a feeling you're gonna have a lot of options. But yeah, but you're not a big fan of the utmost, right, George? No, I just don't like the idea that the kids are going to have control at 18. Because I just don't know what they're going to turn into. I hope they're wonderful sweet children and they're going to be like, we want to give it to the old folks home. But there's a chance they blow it, prodigal son style. So I like retaining control personally. So I would do both. 529 plan and the brokerage account really hedges your bets. And it's okay to not be fair.

1:22:00You know what I mean? The nine-year-old should have more dumped in than the five-year-old because they have four extra years of saving and compound growth on their side. So it's okay to stay in the same way. So you feel like more of a lump sum to start versus a higher percentage or both? If you have the money, I mean, if you've got 10 grand just sitting burning a hole in your pocket, you can front load that 529. And what's wild, too, Austin, is we did this with our SmartVestor Pro. They can do a map. It's not 100 % because we don't know the future, but they can look at the rate of which tuition has increased and how much money you have in to see and say, okay, are you overfunding it?

1:22:36Are you not? I mean, they can kind of help you balance. And even, Austin, if you guys wanted to underfund it some, right, and you knew like, okay, we may only have, I don't know, 30 grand in it per kid or whatever, even though college is going to be double that because we're going to do something else over here. But to George's point, you have to invest somewhere else the difference just in case they do go to school. But if you're scared, they're not going to use it or whatnot. You could underfund it a little bit and invest somewhere else and use that money. And just be prepared to help cash flow.

1:23:03That's right. You have to be able to cash flow if you need to. Or they're working part time to help pay. Yep. They're also working on scholarships and grants. So it's a great problem to have if all of your kids get full rides and the money sits there and you can change the beneficiary at any time. That's it, too. It can be passed down. So your girls could even keep that 529 and give it to their girl, right? Their kids. Grandkids, nephews. That's what's crazy about it is like it can stay in. It grows in perpetuity. Yeah. There was one call we took. What was that last week, George, about the debt?

1:23:30It was a man. He was like 40 and he had a call. I don't know. It was a call. The 529 still? It was something like that. And he ended up saying, I don't want to cash it out. I'm going to keep it. Yeah, like a generational endowment, basically. And he did the math, and it would pay for like 10 kids' colleges, like the next generation down, because of the growth, which is just wild. So even that's something you can think of high level, too. Awesome. So many options. Like I said, a lot of options there, and that's why it was kind of like a little overwhelming for us. So we wanted to kind of throw out a lifeline to see if anybody had any good.

1:24:02Yeah, sure. I keep it simple. I hope we helped narrow down your focus to those two things. One for college, one for non-college. And then I throw in the Roth once they start working. That's right. That'll be later down the road. Get them working. That nine-year-old's, you know, might be coming up. These kids these days, they're always doing side hustles. Yeah. File taxes on them. Yeah. They're going to become, you know, world-renowned YouTubers by 11 years old. Oh my gosh, that is true. That's what everyone's fear is. They're like, everyone's going to just be like influencers and YouTubers. No one's going to go to college.

1:24:30And make so much money. So it's a real fear because I do think college is due for a reckoning where families are waking up going, why would I go to school unless you need to? Unless you're becoming a lawyer, a doctor, a nurse, a teacher, things that require that degree. Otherwise, don't just go to burn some time. As much as Rachel loved her college experience. I know, but I do think, and again, I don't know where I sit with this. I'm not at this age where my kids are having to make these decisions right now. But there is something when you're 18 to still be in a structured type environment. If you have the money.

1:25:07Again, I'm not saying like don't go take out crazy student loans and not know exactly what you're doing. Yes, you want a game plan. But there's something about those years that you're still in a system that helps you kind of like stay on track. You're in a little safe bubble to mature and grow and learn some social skills. They're still so young. I know. It's just a very expensive way to do it. I know. If you're going to go into crippling debt. So always cash flow. You can go watch Borrowed Future for free on our YouTube channel. It's a documentary we did on the student loan crisis and higher education.

1:25:37Worth the watch with your kids.

1:25:55Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. I'm George Camel, joined by Rachel Cruz this hour. The number to call is 888-825-5225 if you've got a question or you want to join the conversation. Jason is in Phoenix up next. Jason, welcome to the show. Hey, guys. Thanks for taking my call. Much appreciated. Absolutely. What's going on today?

1:26:22My family and I are working our way through the baby steps. We're on baby step two. but there's a lot of uncertainty in our life revolving around two kind of central areas. One, the employer I work for is kind of cutthroat, and the assessments are pretty strenuous each year. I do pretty all right, but, you know, there's always that uncertainty every year. And then, two, I was diagnosed last year with a chronic disease that will progress with time. Oh, gosh, Jason, I'm sorry. you? I am. My wife is a stay at home mom. We're a family of five. And there's just a lot of uncertainty in our life. So I've been trying to think about things, things like the rate at which we pay off debt versus the rate at which we can start some other investments besides retirement slash start doing the 529 for our kids.

1:27:14And I just wanted your input on how to juggle the baby steps with those year by year uncertainties. Wow. Well, I'm so sorry to hear about your diagnosis? Is it something where they can sort of give you a timeline of here's how it will progress? You know, is this life threatening? Like, is it something you can manage? What does that look like? Um, it's a long term progression. Um, it's a multiple sclerosis. Um, and so it definitely could be slow, but it also could be, but you could live a long, full life still. Yeah. Yeah, I could. And medicines are really great in this day and age for it. But it's still an uncertainty in the background sort of stacked on top of the uncertainty with the employer on a year by year basis.

1:28:01I just wanted to know if you guys would say that in this kind of a case, we may want to invest in some 529 at the same time first or, you know, something like that? Well, I probably wouldn't just because I think with the, there's no guarantee that you're going to lose a job. And if you did lose this one, you'd have to replace it anyways, right? I mean, so there would have to be, you know, income coming in. And so how much, how much debt do you guys have? And how much do you make a year? I make about 170 a year. And we got about 80 grand in student loans to pay off and then a 266 mortgage. Okay.

1:28:45And how long have you been with the company? Almost three years now. Okay. And is it? And the other thing is that. Go ahead. The other thing is that the company has great health insurance, like one of the best in the country. So my medicines are incredibly expensive and losing the company would mean losing co-pay assistance and stuff like that. Yeah. You'd be paying like hundreds and hundreds a month out of pocket just for the medicine. Is there something obvious in the assessment coming up, Jason, that you think that you really could be terminated? Or is it just this kind of like lingering fear of like, oh.

1:29:20It's a lingering fear. It's kind of subjective every year based on your supervisor. My supervisor likes me, but I don't think he assesses me of the highest quality as, say, the previous supervisor I did. It's just sort of a personal bias. Okay. And so I don't think I have any issues to worry about really right now. Yeah, when is the assessment? It comes up, well, it's conducted in April and May, and then I find out the results in July. In July, I find out the results. Okay, gotcha. Yeah, I mean, if there's nothing obvious besides just that it's just a tough, you know, they make tough calls really quick or, you know, besides that, I would stick with the baby steps.

1:30:05Because I think not having the debt is going to get you guys freed up from not just that payment, but also the risk of having this bill that's just lingering. And if you guys are able to, you know, cutting the lifestyle, which I'm sure you've done, because I think you guys have been working on Baby Step 2, you know, cutting everything down what you can. Because you make a great income. And I'm just wondering if you can get this thing paid off. You know, if you guys lived on 80, could you pay this off in a year? Yeah, I was trying to run the math on that. I think the most we can squeeze out of it, if you just said, like, the groceries, mortgage, and basic bills, I think the most I could squeeze out would be about$4K a month.

1:30:52Our groceries bill is a little high. Well, especially with my diagnosis, I have to eat a pretty good Mediterranean diet. Okay, yeah. I can't just live on rice and beans because diet is a big issue with the progression of this disease, too, they've learned. So this might take a little longer. So a year and a half is what we're talking for you to knock out the student loans? Yeah, that's what I'm thinking, like a year and a half-ish kind of time frame. Do you guys have any savings right now? I mean, besides retirement, yeah, I got about$7 ,000. But I also have some potential lawyer fees coming up dealing with my dad's probate.

1:31:27I'm sort of saving that for just in case. Okay. Yeah. And I'm okay with you having a little bit. Yeah. Oh, I'm sorry, man. Y 'all had a rough go. Yeah, I would just make it an aggressive goal to get that paid off. And then to get that emergency fund. And then you'll be jumping right back into retirement and kids college. You know, I think a two year difference isn't going to be massive. I think you guys will be you'll be fine. And then if something switches with the job, or if something does happen in July, that's when I would pause everything, stop paying aggressively on the debt. See if you can find.

1:32:00Something new, obviously, because you're going to have to support your family in some way. On the defense side, do you have long-term disability insurance? No. I was actually in the process of getting term life insurance. And thank you so much for asking me this. This is another point. I was in the process of getting term life insurance when the diagnosis came through. So I was denied. But these are two different things. So you've got long-term disability, which is you've not passed away. You just are unable to work and you're still alive. Do you have that in place through your employer or do they offer that?

1:32:38No, I don't think they offer the disability one. They do have a life insurance. And then I also picked up accidental death because I have to wait five years after my diagnosis to circle back around to try to get term life again. They require a five-year assessment to see how you progress kind of thing. so um but no i i've been thinking a lot about the long-term disability insurance after listening to you guys and i just asked the guy who i do insurance with the other week if we could look at that he hasn't been able to get back to me yet but i like i look at that as almost even more improbable than ever getting regular term life insurance because you're talking about a long-term thing and this is a something that's chronic right so i'm not sure i would qualify for that ever anymore.

1:33:23Yeah, I mean, there are some guaranteed issue policies. They're just more expensive, and it's not going to cover a whole lot. The policies are going to be much smaller to the face value. But there are certain things you can do, and I would keep pushing to get any coverage you can. Those five kids and your wife. Yeah, to protect your family. But, man, this is one of those, this is going to be your why as to why you're going to become debt-free even faster, as to why you're going to save like a madman to make sure that your family's taken care of. And, man, I hope that this is something that you end up managing and you live a long life and your family's taken care of and those kids go to college debt free.

1:33:59I'm praying that for you. I appreciate that a lot. Wishing you the best on this journey, man. You're an amazing dad, Jason. The fact that you're even thinking about this right now and the stage that you're in and what's going on is impressive. So keep fighting the fight, man. We're rooting for you.

1:34:44All right, let's cut to the chase. It's easy to get discouraged about crazy house prices and interest rates. But when you have the right real estate agent to help you buy and sell the right way, you'll have confidence to make smart decisions. Ramsey Trusted Agents aren't just experts who guide you through buying or selling. They're people you can trust to have your back from the first call to closing day. Find a Ramsey Trusted Agent near you at RamseySolutions.com slash agent. That's RamseySolutions.com slash agent.

1:35:29The Ramsey Show question of the day is brought to you by Y-Refi. If your private student loans are in default, it's time for a plan. Y-Refi helps you refinance defaulted private student loans into a low fixed rate payment so you can get back on the baby steps and start making progress. Go to YRefi.com slash Ramsey. that's the letter Y, R-E-F-Y dot com slash Ramsey, may not be available in all states. Today's question comes from Natalie in Wyoming. My husband and I do not agree on where money should be saved. I was putting money into a savings account until we got married last year. I have around five months of expenses in that account.

1:36:04My husband says it's losing value due to inflation and thinks that any money we save should go into gold or crypto. While I understand in his logic to a point, I do feel uncomfortable with it, especially the crypto. My logic is if an emergency happens, we have immediate access to it. I appreciate that he wants to invest for our future and protect our wealth. Does he have a point about the savings account or should we leave it where it is? Oh boy, this is way beyond just where should we put our savings? This is a fundamental disagreement on what is an investment. That's true. That's so true. Let's separate it.

1:36:38All right, let's talk about the emergency fund first. Your emergency fund should be liquid and accessible in a savings account and ideally a high yield savings account, which helps you at least keep up with inflation. Yeah, so he was right to that point. I agree. Yes. You don't want it just sitting and checking or a normal savings account making 0 % interest. Yes. So, yeah, I'm right. Yes, he's correct. But then you are also correct that this is savings. This is not an investment. We see this as insurance. So your emergency fund is like insurance. It's there when you need it. And so to your point that if something comes up, you have to be able to get to it.

1:37:12So yes, you are exactly right. When you put it in something that you can't get to, I mean, golly, God forbid, crypto or gold that you're going to have to sell, let alone even just the market, right? It takes a little bit to get the money out and all of it. So there's something about the ease of that emergency fund being there. But then also we want to invest, which is a different category. That is completely different. And clearly he's been online too much. If he's going, we got to put all our money in gold and crypto, the US dollar is going to crash. Or maybe the stock market did, you know, 23 % last year and everything's actually just fine.

1:37:45And so I'm not going to trust the fear mongers telling you to put all your money in gold or crypto. If you want to use some fun money and he wants to do that on the side, that's fine. But you need to be investing 15 % of your income into legitimate tax advantage retirement accounts in mutual funds. If you have that as the foundation, a fully funded emergency fund, you're investing 15%. If he wants to use some fund money because he's spooked and he wants to buy some gold or crypto, he can have at it. So I think we're having very different discussions here. And we need to just be clear on what this money is for and where we're going to store it safely.

1:38:17Good question. And if you want a great high-yield savings account, our friends at Fairwinds Credit Union have a really great smart bundle you can check out. Just go to fairwinds.org slash Ramsey, and you can get their high-yield savings account, along with their no-fee checking and the Ramsey Be Weird debit card. Fantastic. Great question. All right. Marissa is in Philadelphia up next. Is it Marissa or Marissa? It's Marissa. Great. Nail it. First try. What's going on? So my question is, should I slow my family down on baby step two to start putting money towards life insurance for my husband, who does work a high-risk job and or for both of us.

1:38:59I have context if you'd like that. Yeah, how much debt do you guys have? So our mortgage is just under$500, and then we have about$44 in school loans, and then we are at about$90 in other personal credit. Okay. And when you say, you know, putting money towards life insurance, what have you looked into and what has been the cost? So my husband's employer does offer life insurance, but it's not nearly enough to, you know, keep me and my current child and future child who's expected in about two weeks afloat. Oh, congratulations. Thank you. So that's not nearly enough to cover our debt and to keep me afloat if something happens to him.

1:39:50I've kind of noodled with the Xander, like kind of not really committing to anything, just estimates. For my husband, we're looking at about$70 to$100 a month to take out enough to cover our 10 months or 10 years of expenses. Okay. 10 times your income? Yeah, 10 times the income. On like a 15 or 20-year term policy? Yeah. Okay. And then for me, we're looking at 30 to 50 a month. So I'm looking at like 150 to almost 200 a month. Yeah. And I'm still working on getting us out of being in the red every month with budgeting and Baby Step 2. Okay. Yeah, well, life insurance is something I would get.

1:40:38So I would figure out where else we can cut in order to make this happen. What's your income? What are you guys bringing in? So together we bring in about base 200 a year. He is paid hourly, and it's kind of tricky to guess. But he makes about almost double what I bring home. And my husband travels for work. And I work from home, but I'm like the stay-at-home parent. So I do all of the housemaking. I deal with our kids That's a lot How are y 'all in the red though, Marissa? Making$200 a year We have debt that we have So we've been married a few years But we are just kind of getting around To like actually financing Not financing Consolidating our money Okay So it's all the payments We just weren't budgeting Yeah We just weren't budgeting And we've decided that we can't keep living like this Good Well, good for y 'all We call it your I've had it moment that you've had that you're like, yeah, we make 200.

1:41:41What are we doing? Why do we feel broke? How do we not have enough? So I love that. Do you guys have the EveryDollar app? We've looked at it, but I've not taken the step to actually set it up yet. Okay. We're going to give that to you for a year. That's our gift to you guys. It's a little bit of a baby gift, we'll say. Yeah, I like that. A push present. That's what they call it these days. That's right. Yeah. The EveryDollar app is your, I hope you get a better push present than that. I think if you do this budget together, you're going to go, oh my gosh, we're bringing in, you know,$10 ,000 a month,$12 ,000 a month.

1:42:18Where is it all going? We're spending$2 ,000 at restaurants, you know what I mean, or whatever. Like, it's just crazy what you can spend when you're not watching. Like, so I think you will tighten up that lifestyle. It's going to be a big change for you guys is to live on nothing. You're going to live on nothing. Like, try to make a budget where you're, you know, in$70 ,000 income, right? And then everything else,$130 ,000, goes to this debt and gets it cleaned up, which you don't even need that much. I mean, yeah, you guys will be out so soon. You really will. You have such a great income. You've got, what,$134 ,000 in consumer debt?

1:42:53$90 ,000 plus the$44 ,000? Yeah. Okay. Is there anything you can sell in there? Are there cars involved that have loans? We both have cards that are paid off, actually. That's one thing we don't have. Wow. Good. That's great. So what makes up the 90 in personal credit? We have – so we finance some home improvement things. That's about 10. We have about 20 in personal credit card. Not to jump down a rabbit hole. there's a work credit card that has racked up debt that we're trying to fix that we are on the hook for unfortunately yeah okay and then it's 44 in school uh student loans oh is that 44 part of the 90 or is that on top of it's on top of oh okay so it is it is 130 so you're right george i mean so yeah if you guys could live on 70 yeah you know and throw everything at this debt like you know you guys can make some which means we are not doing any investing right now we are making sure we're not getting big tax refunds.

1:43:54We are not eating out and obviously not going on vacation with a newborn. You know, we're not shopping. We're not going into Target. We're doing nothing, nothing but to get this debt paid off. And again, I really think you guys will see some big progress. You know, I will give you this, though. We call it stork mode. When you are expecting, we do say to pause everything and save up as much cash until you and baby are home and everything's good. So if you guys want to start, I w we're going to give you every dollar. So I want you guys to make a budget tonight so that you guys can get ready for February and start acting like, Hey, we're going to, we're going to live on a tight budget this month.

1:44:31But instead of that money going to debt, I would just put it in a savings account for now, um, until you're good. And then once you have, once you come home and baby's good and you're good, take whatever has been in that savings for the next two months, which again, I'm hoping is like four grand, eight grand or something, throw it at the debt once that happens. And do not sit on the fence with this life insurance. Get it done today. I know it's$150 a month, but you need it. It's a non-negotiable in the baby steps. Xander.com or you can call 800-356-4282. They'll take care of you.

1:45:18If you've been paying off debt, working the plan, and have reached baby step four or beyond, you've done the hardest part. Now it's time to celebrate. The Live Like No One Else cruise is back. March 14th through 21, 2027. Join all the Ramsey personalities and me as we sail to Half Moon Cay, Cozumel, Jamaica, and Grand Cayman. Cabins sold out last time and they will again. Lock in yours with a$600 deposit at RamseySolutions.com slash events. That's RamseySolutions.com slash events.

1:46:03If you're sick and tired of working so hard and got nothing to show for it, that is normal, unfortunately, and normal is broke. You don't have to live that way. Our EveryDollar budgeting app helps you find extra money every month and builds you a personalized plan to beat debt and build wealth. And in just 15 minutes, you'll find thousands in hidden margin and you'll feel like you got a raise. So don't live normal when you can live like no one else. You can start EveryDollar for free in the App Store or Google Play. Jade is in Boise up next. Jade, welcome to The Ramsey Show. Thank you. What's your question today?

1:46:37Okay, so my husband and I are newlyweds. We've been married about a year. And we have like a huge budget we've combined. I'm afraid we overextended when we purchased our house when we got married. But I'm just trying to figure out how to combine our multiple retirement accounts that are kind of spread all over. How old are you two? Okay. I'm 48 and he's 55. Okay. And I think our 30-year mortgage will have some working until he's 85 unless we do something really smart. Well, yeah, yeah. I hope we do something about that. No need to keep it around for 30 years. And so you're talking about retirement accounts specifically?

1:47:18Yeah, and we also have a lump sum of$70 ,000 coming in soon. So I feel like I have four options with that$70 ,000, and I want to be really smart with that. Okay. What's your household income? So we gross about$200 ,000, and I feel like we bring home about$130 ,000 of that. Great. So about$10 ,000 a month, a little over that. Do you guys have any debt outside of the mortgage? Just one car for$40 ,000. Okay. And do you have any savings right now? Anything cash, liquid? Yeah. We have$6 ,500 and an HSA account for medical expenses and about$15 ,000 set aside for our emergency fund. Okay. So we'll have$70 ,000 coming in plus the$15 ,000.

1:48:07When does the$70 ,000 come in, Jade, did you say? I think 50 will come in in about two months and 30 will come in or 720-ish will come in about four months from now. Okay. So you'll have everything by April, April, May. Yes. Okay. Yes. Cool. And have you guys actually combined your finances as far as a checking account goes? How are you handling that? Yes. Okay. So let's give you the game plan and we'll talk about the retirement portion. So in the baby steps, currently you guys are in baby step two, which means we're knocking out all consumer debt. So right now for you, that would be the$40 ,000 car loan.

1:48:44And the good news is that$50 ,000 is going to knock out that loan instantly. Okay, and that was one of my first option choices is to take that and put it there. I know there's more fun things you probably wanted to do with that, but that is the right thing to do because it frees up a giant payment. What's the car payment? $825 ,000. Woo, you just got a raise. That's great. Great, great, great. So that leaves you, you got 85 total coming your way, 40 goes to the car, that leaves you with 45K. And a majority of that will be your emergency fund of three to six months of expenses. And they have 15 ,000 already of that.

1:49:18Yeah. And so you're going to be golden. You'll be through baby step three by the time all this money comes in, which gets you to the point where you guys are investing 15 % of that awesome$200 ,000 income. That's 30 grand a year you'll be putting into retirement accounts going forward.

1:49:38tracking yes yes okay yes now when it comes to retirement accounts you're talking about combining those retirement accounts will remain in your own name separate i mean like i have percy from a state job and then he has a bunch in like crypto and then i have a bunch in one from like two prior jobs i have some in fidelity from a prior job and some in um yeah land garden some in trans america okay so it's just there's there's funds all over the place and you're just trying to simplify your life yes we have 10 different retirement places where money's being held yeah yeah yeah it's a lot yeah i if i'm in your shoes i would be contacting a smart investor pro and saying hey help us simplify now every account that's in your name is going to stay in your name that when it comes to retirement and same for him but what you can do is then kind of pull the money into one place for like, hey, I want to put it all in Fidelity.

1:50:37Well, they can help you kind of roll all of that over, the things that make sense to roll over. Okay. When we talk about being balanced now, he pretty much went 100 % crypto and I went 100 % ETF. Oh, boy.

1:50:55So is that balanced? That's what he thinks is balanced is, yay, we're like 50-50 almost of crypto to ETF. So like as long as one of us has our head on our shoulders, we'll be good. Yeah, no, his risk meter is broken if he's putting 100 % of his investing in crypto. Yeah, I would not be doing that. He's gambling. That's pure speculation. And again, I'm not mad at crypto. If you love crypto, put some fun money in there. But you guys need to be investing 15 % of your income into tax advantage retirement accounts with things with a proven track record like mutual funds, ETFs. That's fine if you want to do that.

1:51:30But putting it all in crypto is not balanced at all, even if it's on one person. Okay. That's a different battle. So if you had about$300 ,000, would you say about 15 % of that is like the crypto play? You're saying he has$300 ,000 in crypto? No, but if you had$300 ,000 total. In investments, how much is it okay to have in crypto? I mean, we generally say don't have more than about 5 % of your world tied up in those things that are more speculative. So it depends on your net worth. $10 ,000 in crypto for someone might be a whole lot, and for someone else it might be chump change compared to their net worth.

1:52:14So it's all about ratios there. But I think you guys have an alignment issue more than a financial issue.

1:52:22What does he say, Jade, when you kind of bring up that? Does the crypto make you nervous? It makes me really nervous, but he thinks that it'll make him be able to retire a millionaire. What if I told you he can still retire a millionaire and not even touch crypto? Because what's really happening is he wants to shortcut it. Which, I mean, he's 55. He's no spry chicken here. But there's still a level of, I want to get there faster, and therefore I'm willing to take shortcuts and potentially try the get-rich-quick route. so yeah and it may not be a battle you win i don't know jade i don't know what your tolerance is for um yep for that kind of risk but if i were you i just wouldn't count on that money being there in retirement exactly you have to play that game yes so so i would for your sake just say okay well if you like if he's just like gung-ho and he's not moving anything it's not very loving to you, I would say, number one.

1:53:24But number two, making sure that yes, what income that you, you know, the 15 % you put in to the ETFs or whatever it is, run, there's a calculator on RamseySolutions.com and you can run some numbers and just look at those and see how that makes you feel, right? And and you may be, you know, moving up in your job too and doing incredible and you're like, oh, that's great. We'll have$4 million for just my stuff. I mean, I don't know, I was making up members but you know you'll be great you'll be fine even if his you know crashes out and who knows who knows what's going to happen with crypto that's what's hard about it is like there's no long-term track record that we can look back and see what's been proven with it and so again i'm not mad that he has some in it but i wouldn't i think where i think he is not diversified at all i mean that's like the not even the definition of diversification and most financial planners would tend to agree, which obviously they're in the market.

1:54:19They probably have a reason to do their job, but still. Yeah, it might take a third party like that. This helps with knowing that with the$30K left after paying off the new car, that we probably shouldn't put any more of that in crypto. No, I would not. Yes. Going forward, I would do that$30K of your$200K, that 15%, should be going into actual retirement accounts, into mutual funds. So that would be the game plan. Perfect. The next question I had, though, and where I wanted to, like, a big thing is we did buy a$640 ,000 home. The average home price in our market is about$550 ,000. There's not very, you know, so if we were - What percentage of your mortgage, Jade, is going to, I'm sorry, what percentage of your mortgage is from your income each month?

1:55:19or how much is your mortgage payment? It's$5 ,000. We'll just refinance from 7.2 % interest to 5.875. So it's high, but if you guys can keep up with that income, you'll be okay. But I would not let that mortgage sit around for 30 years while he continues to accumulate crypto. And that is my fear, is he will be 85. Going, why would I put down on the mortgage? I can keep investing in crypto. It's going to be a hard conversation.

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1:56:39Our scripture of the day, Luke 14, 11. For all those who exalt themselves will be humbled, and those who humble themselves will be exalted. C.S. Lewis said, Humility is not thinking less of yourself, but thinking of yourself less. Poetry right there. That's good. Great quote. All right, let's go out to Dave in Denver. What's going on, Dave? Hey, guys. Thanks for having me. I'm a loan officer for mortgages. My question is, I often get clients, and they come to me needing a mortgage. Most often it's older clients in this situation. And one spouse has passed away. I have access to their assets or see what they have, and it's a vulnerable situation.

1:57:26And really, they don't need a mortgage. what they need to do is sell some of their assets to get a home to downsize. I'm just looking for advice on how to bridge that gap with that and how to properly communicate that to them. So you see this going to a dangerous place, and you're like, how do I help these people when my job is to lend them the money that they're approved for? Yeah, and it's not overly dangerous sometimes, but they have one spouse maybe had their whole life collecting these assets, And so when I come along, I say, hey, maybe you should look at selling some of these. That's kind of a, you know, my husband or whoever put all this together this whole life.

1:58:05Who are you to tell me to sell this kind of thing? Yeah, you feel like, hey, that's outside the boundaries of my job. But it's like your heart is aching for them to be like, hey, you really need to go do these things. Yeah, so I'm looking for words of wisdom on how to appropriately navigate that. Well, I think you have the right heart. That's the most important part is your motive and your spirit and the tone in which you deliver this. But I think just starting with, hey, I want to make sure this house fits your life, not just your approval amount. And as I'm seeing it here, I can see the assets over here.

1:58:37I can see what the mortgage payment is going to be. I think things are going to be tight unless you make some moves, make some sacrifices here. And you could offer, hey, one recommendation you could pursue is selling these assets, which could do X, Y, Z. Yeah, yeah. And then it's just, it's not you telling them what they have to do. It's just saying, hey, I try to, I treat people how I want to be treated. And I can see all of your information here. And this is what I'm seeing. Yeah. And it's kind of a, you know, for them, take it or leave it kind of thing. But it's almost for your conscious, you know, you're like, man, I see this.

1:59:09And I just want to say it out loud. But at the end of the day, they're going to be the ones, you know, making the decision. And if they don't take that advice and they do something else, that's okay. That's, you know, they're adults and they can do that. At least you're sleeping well at night. Yeah. You said your piece. Oh, yeah, absolutely. I'm just trying to figure out how I sprayed the Dave Ramsey throughout my entire career. Yeah, love it. I love it. It's hard because you're like, well, Dave says, but you can't do that. It's not going to work. And instead, you sort of get to the root of it.

1:59:38You say, the families that I see thrive when it comes to buying a home, they have margin outside of their mortgage payment to live and to save and to have fun and go on vacations. and right now what I'm seeing with your payment, it's going to be a lot of your income taken up by this payment. And so you can go, hey, here's the approval amount, but here would be, let's run the numbers and see what would be a comfortable amount. And then you can kind of get to the principles without saying, well, Dave recommends 25 % of your take-home pay on a 15-year fixed-rate mortgage, you know? They get to choose the wisdom at that point.

2:00:08Yeah, Big Dave. I'm Little Dave. That's Big Dave. Little Dave, Big Dave. I like it. That's true. And you know what, Dave? I mean, honestly, that's it's really it would be so impressive and it would actually garner a lot of trust, I would think, from the people you're working for, because in some situations, I'm assuming, you know, you're asking for them to pay less for a home, you know, and that's money out of your pocket, too. Right. If they choose less loan, less origination fee, less commission. Yeah, I mean, all of it. So there's something, I don't know, really trustworthy for you to say, because you're not you're not doing it the other way to be like, hey, you should spend more here with me so I can make more.

2:00:48In some of these cases, it's it's the opposite. And so they shouldn't be offended by that. Right. There's I mean, yeah, there's I don't know, a lot of kindness in you even doing that. Yeah. Well, thank you. absolutely thanks for actually being uh you know serving well and serving your customers well and being one of the good guys in the mortgage world that's fantastic rachel i've got a friend in the mortgage world and he knowing what i do he's like dude you would not believe the debt to income ratios people show up with you're like this is bonkers like no one should be giving them this loan and sadly a lot of the banks you run it through the computer and it goes yep give them the loan that's fine yep yep we'll just do it and the bank doesn't always care about the reality of your financial situation.

2:01:32Which is wild because that's part of what got us into the biggest housing disaster in 08 is because of that kind of stuff too. Lending people money, an amount that they shouldn't. I know. Keep on doing it though. Oh my gosh. Alright, let's go out to Brian in Alaska. Brian, what's up? Hi, can you hear me? Yes. Loud and clear. Okay, sweet. So I am in an interesting situation where I actually live in my dad's second home or my parents' second home here in Alaska while my family lives out of state. I'm curious. I feel like I'm getting a smoking good deal on rent here. I just rent a room, but it's way cheaper than I can rent anything else in the area.

2:02:17How long should I stay here saving up for a house? How long should I let this good deal ride as long as they're willing to give it to me. That's a good question. How old are you? I'm 28. 28. Okay. Are you married? Nope. Single. Okay. Any debt? Consumer debt? I owe$12 ,000 on an airplane. That's in like a leasing company that I own. Okay. $12 ,000. And that, is that it? No credit cards or car loans? Nope. Okay, great. And how much credit card? And how much do you make a year? Last year. So I started a new job last year. And six months, I made about$55 ,000. And then this year, for the for the whole year, I guess about$120 ,000 to$140 ,000.

2:03:13Good for you. Okay. And how much money do you have saved? I currently only have like$3 ,000 saved. How long have you been living at your dad's place? So I've been living here about three years. I actually used to own half of it and then I sold out my half to my stepmom that paid off a lot of my debt and was able to give me a down payment for this airplane that I lease out. Okay. So this airplane, is this a business you have where you basically rent out the airplane? Yep. Okay. What do you make from that? Is that on top of your 140? That's completely separate. So I make about$40 an hour every time it flies.

2:04:01And right now it's pretty much just all going back into the business for improvements for the airplane. Got it. I'm paying the principal for, I get a loan from a friend of mine, which is basically zero interest, that I pay the principal out of my personal funds. And then what the airplane makes just kind of gets circulated back into making improvements for the airplane. Okay, gotcha. Okay, so, yeah, the whole living, you know, with parents or on their property or whatever, you know, for a period of time, I'm totally fine with it. I think after a while, there needs to be a point that you, you know, go and you're on your own and you're living, you know, on your own, doing your own thing.

2:04:44So what worries me is, and I know you just got this job six months ago, you said, so I'm not going to harp on it too much. But you've had a, you know, you said I'm getting a great deal, all this, but you only got$3 ,000 saved. So there's a part of me that's like, you know, people have this idea, I'm going to go live really cheaply at my parents. But then they don't take what they would have paid in rent or more of what they're saving and actually save it. You know, they end up spending it on restaurants and going on trips and stuff. And so then it ends up being this point of like, OK, you weren't using it actually to benefit yourself or to get you further financially.

2:05:18You were just using it for lifestyle in the moment. So if you're doing this, I want you to be really, really disciplined and you make a great income. And so honestly, Brian, I mean, you're a single guy. You're living in Alaska and basically no rent. If you if you could live on, I don't know, 40 grand a year or something crazy, like you could bank so much money, not only pay off this airplane. But you could have six figures saved up. Yes. You know, by the end of the year, maybe into a little into 27. Really quickly. And I would use that for a down payment on a home because as soon as you can get something in your name building equity, that's the best route for you, Brian.

2:05:56So I'm okay with it for a little bit, maybe a year or two, but I would be so disciplined in that to actually put that money and that savings towards your future and a future home for yourself. I would just say, hey, Dad, I'm going to be out on my 30th birthday. And that's the plan. And you go, I'm going to save up like a madman until then. I'm going to live off$1 ,000 or$1 ,500 a month. And the other$6 ,000,$7 ,000 is going to go into savings for that house. build for your own future and independence, and you will not regret it. That puts this hour of The Ramsey Show in the books. Remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.