You Can’t Outearn Your Stupidity

26:15I couldn't imagine being 19 and having, you know, to make a choice of like, I have to go out on my own. And she has a job. She's working. Which we get calls on the show, people that are 35 and haven't had a job for nine months. You know what I mean? Work ethic is a great sign of success for a relationship. Yeah, for sure. So I think you guys have a lot going for you. I probably would just slow it down a little bit and be still thinking and dreaming about the future together 100%. But I would probably, I would not, I would not encourage you to live together. Let's throw out some alternatives. She has some girlfriends?

26:50Not really, no. No community? You're the only person she has in her world? Yeah, me and my family, yeah. Man. Did she, did you guys like go to high school together? No, we went to same county, different high school. Okay, okay. Okay, because my suggestion is, and they don't have to be BFFs, but just get a couple of roommates and you might need to do the same depending on your situation. At 19, that's just roommate territory. I had roommates all the way up until I was married and I think it's a very healthy thing to step toward that independence without having it all fall on you. Because my fear is she's working at Walmart and you're making more than her and you go, well, I'll foot the rent and you just cover some groceries.

27:30And all of a sudden it becomes this financial imbalance as well. There becomes some entitlements if you're going to pay my bills and I don't have to really go beyond this stage of my career. So I'd love to see you both go, hey, what do we want to be doing five years from now? We'd love to be married. We'd love to have more stable jobs. We'd love to be doing work that we enjoy. And so you can help her figure that stuff out now while you're dating to help her get a head start. But I wouldn't do that by getting an apartment together. All right, thank you. Just one man's opinion. But I think you've got a great heart.

28:02And there's some, you both have been through some things. The fact that you're living with your grandparents at 19 tells me that there's been other family dynamics and dysfunction probably in your life too, right? Something like that, yeah. And so I just don't want you – I want you guys to make these decisions from a place of strength. And right now it seems like we're just running from the thing that we're in and we're going from one bad situation to a slightly less bad situation. So I'm hoping for your independence and I hope that this relationship progresses. and one day you put a ring on it and get married and then get a place together.

28:35And I think you will find that it was well worth the struggle and the patience and the sacrifice. So thank you for that. Tammy is up next in Detroit. What's going on, Tammy? How can we help today? Hi, thanks for taking the call. I have a question in regards to kids after they graduate. So they're turn 18. My husband and I are in steps four, five, and six. We've been kind of saving for the kids' college fund for the past probably three to six months. So we do have some funds right now. In those accounts, I have an 8-year-old and a 5-year-old. We did start a 529 for our 8-year-old, but kind of looking at the way we're investing, I would kind of like to hone in on what we're doing and what our plan is.

29:21My question is if we should fully invest everything in a 529 because our fear is that we do that and one or both of the kids end up not wanting to go to college or wanting to do something else. And then we have all of that money tied up in a 529 that we're going to get penalized for taking it out outside of a college plan. And so my thought was if I we did half in a 529 for each of them and then half in a mutual fund, even though I know those are going to be like the mutual fund is going to be taxed. Yeah. If we, you know, take that out later on. Yeah. It's kind of like a safe bet, though, to not put all of our eggs in one basket.

30:02Totally. No, I hear you. And we you know, I would say my husband and I were we have the same discussion. You know what I mean? Because you're like college has shifted so much, even since covid. You're like, oh, my gosh. And the fact that tuition's I don't know, it's just it's an interesting time. And when our kids go to school, I mean, that's in a decade or more. So it's kind of that big question mark. And so I'll tell you what we're doing, Tammy, that very similarly. Yeah, we're still funding the 529 because we our plan is that they we I want them to go to college. And if we're able to pay for that, that's a gift to them starting off.

30:34Because I just think from 18 to 21, you know, and all the personalities have a little bit of a different opinion about the college thing. Ken Coleman has kind of a different one, but I just think it's a great step. I really do. If you're able to, because I think you learn a lot about yourself. I think that you getting a degree makes you marketable. All the things if you're able to pay for it. I mean, really. But if that fear is still there, you if you want to, you could slow down the 529, depend on a mutual fund, but just know you're going to be paying those taxes. It does not have as good of a benefit.

31:05But if you guys get five years down the line and you're like, oh, wow, we probably they are going to go to school. You can throw more in. Yeah. And you can roll over, you know, up to 35K with the new Secure Act 2.0 from that 529 over to a Roth IRA over a period of time. So you're not out of luck. In their name. Yeah.

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32:42NMLSconsumeraccess.org. Equal housing lender.

33:01The all-new EveryDollar is here, and now it's way more than just our world-class budgeting app. There's a ton of advanced features to help you make faster progress with your money. The average person finds thousands of dollars in margin in just the first 15 minutes of using the app. So go check it out. Start every dollar for free today. Get it in the App Store or Google Play. Cole is in Waco, Texas up next. Cole, how can we help? Hi. So I have a little bit of a stupid tax that I have to pay. Oh, no. We've all been there. What happened? So I bought a car. To preface the plan was to work my butt off for a couple of years, pay this car off, and go into automotive engineering school with an awesome paid-off project car with about a$20 ,000.

33:50It's flushed funds so I can work part-time and all that. Well, the$20 ,000 of that, I was given a coin. That got stolen from me. And long story short, the plan changed. I kind of fell into the depression for like eight months or so, and I'm coming out of that. Wait, it got stolen? Wait, you said a coin? Yeah. Like crypto? No, it was a 1995 West Point Silver Eagle Proof State 70. Oh, like a physical coin that you paid$20 ,000 for. I didn't pay for this coin. My uncle bought it back in 1995. Okay. It kind of hung around and he gave it to me and said that he would hold on to it. And he didn't. He sold it and took that money for himself.

34:43But you didn't have – so you never had the money. I never physically had it, but I just ran on having it. It was promised to you. I hear you. Okay. And he didn't keep his word and he went and sold it and used the money. Okay. Yes. Okay. Okay. And that relationship is long done, it sounds like. Yes, for the most part. I still have to deal with them, but I don't talk to them. Okay. Where do we stand today? How much debt do you have? So I have roughly$33 ,000 in debt. Four of that is credit cards. $29 ,300 is my car.

35:22I'm roughly a little less than$10 ,000 upside down on it. I have no savings or anything like that. So it's worth about$19 ,000? And you owe$29? Yeah, it's really worth, really worth about$21 at the moment. Okay. Is that for private sale? Wholesale. That's wholesale. Okay. So I might be able to get a little bit more out of it. Oh, yeah, you will. Yeah, you'll probably get$25 if it's like an individual. So, okay. I just don't know how to get out of this car quickly because also I'm$22 and insurance on it is more than the payment on the car. Yikes. Jeez. What do you make? I was, whenever I purchased the car, I was making 50K a year.

36:06Now I'm making roughly 33. Oh, no. Yikes. All right. Do you have anything in savings? Eight months span. No. Zero? Zero. I have about 11K and a 401K. That's it. Yeah. I'll touch that. What do you do for a living? What are you doing for work? Right now I'm detailing cars. I could, you know, do it on the side and stuff. I just haven't really tried that. So you work for a detailer? Yeah, I work at a dealership at the moment. Okay. Okay. And you make$33 ,000 doing that, and you're allowed to do it on the side on your own? Yes. On nights and weekends? Yes. Okay. And what were you doing when you were making$50 ,000?

36:46Selling cars. Selling cars. Gotcha. Gotcha. Okay.

36:53Yeah, I mean, I would be making a career change and selling this car. Those would be my two biggest moves right now. And if you can do the detailing on the side all day, I mean, I would be doing that. Could you do like five cars a weekend at 200 a pop? If I, it would be finding the customers to do that. I could do that. Like time wise and physicality wise, it's just finding the customers. That's easy. That's the easy part. You go into any local Facebook group, neighborhood group. 100%. You just do one good job and they'll tell people and say, hey. Or go to a company. I drive through our parking lot and I'll see two or three details.

37:33They're mobile. People, yes. I mean, people pay for it. You start posting everywhere and you're reliable and you show up and you're professional. Yeah. Dude, you will have customers out the door and you can have recurring, hey, would you sign up for, you know, next month if I cut you a deal? And they'll go, sure, come back next month. Yeah. So, and, you know, Cole, what I would probably do too to get out, I mean, this car, what you owe is almost what you make in a year. And so our rule of thumb is always about that 50 % mark. So you are way over that. So I would be in a little bit of panic mode just to get rid of it.

38:05So I wonder if you could go down to your local credit union and see if they'll give you like a$8 ,000 loan or something, take four of it, pay off the difference of the car after you sell it for$25 to an individual, and then you'll have$4 ,000 to buy a really crappy car. Will the dealership give you like the worst car on the lot? uh most of the cars that we sell here are over ten thousand dollars uh i would say that's what i've been thinking is going to my credit union and asking them for an amount and getting a car and so that is a viable option in this situation is trying to talk to my credit union yeah yeah so i mean i would though because i would much rather you have eight thousand dollars that you owe versus thirty thousand dollars that you owe um and then you'll you know you won't have that payment anymore You want to have the insurance.

38:52What's the payment right now? So I have a pretty decent payment for it at the moment. It's$570. Decently large. And then the insurance is over there? Decently large, yes. And how much is the insurance? So the insurance was larger than that for a majority of it. It was like$600, but I'd gotten it down to like$350 and some change. Okay. What do you mean got it down? Did you remove some things from your policy? No, I found an insurance guy that shops my insurance around. Good. Okay. The broker. All right. That makes me feel better. But that frees, I mean, that frees you up. Got close to$1 ,000, Cole, a month if you can get this.

39:31I mean, great, you'll have the payment to the credit union. Dude, I'd be putting business cards in every single person's car I detail. Yes. And say, hey, I do this on the side. It would be an honor to help you out if you ever need detailing. Yeah. Are there nice upscale neighborhoods close to you? Yeah. There's plenty of upscale. That's what I would do, too. I would be, oh, my gosh. Yes. All day. We always say rich people are scared of leaves. That's right. And they're scared of dirt on their cars. Go to your work. They don't like dirt, so go clean their cars. I mean, I'm not kidding. There is so much.

40:07So much you could do. Because you have the talent for it. You know what you're doing. Do you know what I mean? You're not just, like, making this up. Anyone could go do it. You do it professionally. But you're like, yeah, you're good at this. And then are you able to step back in and sell cars and get some income back up? I thought about it, but honestly, selling cars, I don't like, you know, the idea of putting people in the situation that I'm in. Okay, that's fair. That's fair. Yeah, yeah, yeah. I hear that. Okay, well, we got to do something. We got to do something. That was the reason that I kind of left is because I didn't have that point that I was going towards.

40:43And the work that I was doing wasn't my favorite. But I think I'm going to jump into the detailing thing. Another thing was that my girlfriend and I are planning to move to a different city in roughly a year or less. And that's kind of why I'm really like, OK, I need to figure this out. Why are you moving? she is planning on getting a full-time job in san antonio and i really don't have anything left here that holds me here and i thought maybe the opportunities in san antonio would be just as good if not better than here yeah we actually just met a couple from san antonio so it just seemed like a a good plan to kind of see take our relationship to the next level also and it definitely puts some pressure on you move out there with her, this thing better work out yeah for sure good luck, and also remember this you go with you, so don't think that your life is magically going to change just because you entered a different city, the person you are now is going to go with you, so make the changes now before you move get yourself in a position that when you land in San Antonio, you're a different guy than you are today I already hit the ground running I appreciate that Dude I would go full in I would start detailing so much That I have to quit my job Because I'm making too much Doing it on my own Yes That's what I personally would do These guys are making six figures That are doing it full time They're crushing it Yeah Yeah go on there You break out into You know clay bar And ceramic coating And like you start getting Into some fancy stuff You can charge hundreds And hundreds of dollars Per job And I think you have The skills to do And men love their cars They'll pay for it too That's right Not me but Rachel would pay for it

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44:18Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. I'm George Camel, joined by my friend Rachel Cruz this hour. 888-825-5225 is the number to call to join the conversation. Andy is down the road in Nashville. What's going on, Andy? Hey, not a whole lot. How are you guys doing today? Doing great. What's your question today? Awesome. So my question is, I recently purchased a home, and I've accumulated quite a bit in debt, which I know you guys practice against. So to try and mitigate this debt, I'm thinking what I'll do is I've got a house on the property and a shop house on the property.

45:02What I'm really looking to do is to move into the shop house and rent out the bigger house. But it seems like some of the people I've got that are close to me have advised against this. And, you know, I wanted to ask the pros, and they listen to the show. So I'm excited to hear what you guys have to say. Okay, so give us some numbers, Andy. How much are you in debt? I bought the house for$250 ,000. Okay. I put about$30 ,000 down. So I've got about$220 ,000 roughly. Is that your only debt? Is it just the house? Yeah. So actually I sold both vehicles that I had at the time, and now I'm driving around in beaters.

45:52So yeah, that's my only debt. Okay. It sounded like you had racked up some consumer debt, but it's just the mortgage? It's just my mortgage, yes. Okay. And how much do you make a year? Roughly$130 ,000 a year. Okay. And is the mortgage payment overwhelming to you or you're just wanting to do this just to get to get the house paid off as quickly as possible? So I make the house payment in in less than a week. But the the main motivator for why I'm doing what I'm doing or thinking of doing what I'm doing is because I'm a truck driver and I just don't make it home a lot. I'm only home about two days a week.

46:35So I'm trying to, yeah, I've comped some similar properties in the area that are being rented. And, you know, I could basically come out even if I rented that and stayed in the shop house. I could have my bills paid for for free, basically. How much is your payment a month? It's around$1 ,500 a month. Okay. Are you married? I'm not. We're getting there. Okay. Does she want to live in the house once you get there? She, so we live in the house currently, and she doesn't want to move out into the shop house, even though I think it's nice enough for us. I don't think that it's up to her standards necessarily.

47:21Yeah, I mean, you're not making it sound super enticing. I'll say that. You say shop house. It doesn't sound like a place where a person should live. So. Well, it's like an apartment. If you could imagine a little studio apartment, it's something of the nature of that, but it's beyond livable. It's nice, in my opinion. Okay. Well, and she's the girlfriend. She's living there for free, I'm assuming. Yes, ma 'am. Okay. So I wouldn't want to live in the shop house. If I was living with my boyfriend and he's like, you got to go to the shop house because I'm renting this out, I'd probably be like, great.

47:56I'm going to go rent an apartment. Yeah. Right? She needs to do what she needs to do. There's some relational risk here. I don't want to make the decision based on the girlfriend. If it was your wife, I'd be like, Andy, Andy, Andy. But it's the girlfriend. She doesn't have any skin in the game. It just feels like the juice isn't worth the squeeze on this. You don't need to do it. Nothing's on fire. You have a great income and a very reasonable mortgage. Why not just continue on? What's the actual financial problem? Well, as far as the financial problem goes, it's just the fact that I've signed a 30-year note on this house, and I'm thinking of all the interest that I'm going to pay.

48:42So pay it off early. Well, I thought about doubling up the payments when I live in the shop house, and then we could see each other more as well, because I'm only home two days a week right now. Could you double the payments now while still living in the main house? i probably could yeah the only downside i would think is that if are you wanting this house long term andy like do you see like it'll probably be with you for a while i just i always it feels a little weird to have people living in a house for two you know two or three different families or people um and then you go back and move back into it does that make sense like i don't know it's um It just doesn't feel like any of this was intentional.

49:25It's just sort of like, well, I could do this. And your family's steering you against it. Why? What is their big qualm with this move? They're steering me against it because they know that I can afford it as is. And no one in my family has ever rented out a property before. But the way I look at it from a financial standpoint is if I live in the shop house, double or triple up on payments. I can have a, I can turn a 30 year mortgage into a, you know, a three or four or five year mortgage. Sure. And, and then I can be off the road at that point as well. So for me, it's making sense from a lot of different angles.

50:04Yeah. I'm not mad at it. I mean, I don't think it's necessary. I don't think like what George said, I don't think this is an urgent move that I, if you had called and I would have been like, oh, you have a shop house. Great. You should live in that to rent out your main house. That would not have been my advice to you anyways. But if you want to do it, that's, I mean, that's up to you and you'll make extra payments and, but you're just got people living in there and then the, something's going to leak and break. And they're going to be calling you on the road. You're going to have to, you know, figure out, okay, I got to get a plumber down.

50:34I mean, there's legit. It's not hassle-free. Yeah. It's not just easy money. Right. And I think a lot of people think having a rental, there's like, it's passive income is what everyone says. And it's, it's, there's a level of a responsibility you have that you have to be on call. You have to be willing to work with these people, whoever's going to live in there. But one thing I do like, Andy, is that you're not desperate because then you can actually probably go through an actual... You'll take worse tenants, make worse decisions. Yeah, an interview process and get some good tenants. You know what I mean?

51:04Like you're not in a rush. So I would never suggest you do it. I don't think you need to, but if you want to, then do it. And then... I don't think it's going to break you, but I don't think it's going to be the sweet, sweet free money that you're envisioning either. Okay. So do you have savings in the bank? Do you have an emergency fund? Yes, sir. How much? I've got roughly$35 ,000. Good. You've done really well. Yeah, Andy, well done. I'm proud of you, man. Seriously. Thank you. I just think I would set a goal for myself where I still get to live in my own house, and then I make extra payments.

51:41And so figure out a way to do that, and I think you'll cut your mortgage in half or more just on your own volition without ever becoming a landlord. Okay. That would be my goal. That's great. And once you're married, if she's working, she'll add to it too. She'll help knock down that mortgage if you guys are both working. I don't know how she's going to like that idea. Of her working in the future? Is she working now? You know, she is a gym coach for little girls, and they actually went to the Junior Olympics this year. That's sweet. That was really nice. That's great. I'd love for her to follow her dreams.

52:18Do you think I can make the team? Well, you could try. I think she'd be happy to work with you. She likes anybody. She's good with people. That's sweet. She sounds like a keeper, man. Best of luck to you with this decision. It's not an easy one. I wouldn't take it lightly. but I think you have a good game plan here of just figuring out how to do this without becoming a landlord for now. Good luck.

53:07Statistics show that half of Americans don't have enough life insurance, or they don't have any at all. I don't understand this, John. Why don't people want to take care of their family? They think they're going to die or something? Well, I used to be one of those guys. I didn't even think about it. And one of my buddies said, hey, the only reason to not have life insurance is if you hate your wife and kids. And I immediately went and got term life insurance. That's a gut punch. And you're telling me for decades, Dave, I've sat across people who've lost a spouse. They've lost somebody important to them.

53:38Me too. They don't know what to do next. Me too. I mean, you're going to have a crisis here. And you got two options while you're sitting and talking to a young widow. She's concerned about how she's going to invest all this money properly and not mess this up. Or she's concerned how she's going to eat tomorrow. That's exactly right. These are the two options. And take care of your dadgum family, man. Term life insurance can replace income, pay off debts, cover funeral expenses, so your family can actually have the opportunity to just be sad, to just miss you. That's exactly what it's supposed to be.

54:07It's saying I love you to your family. Term life insurance. Jeff Zander and the team at Zander Insurance makes it easy and affordable. I've used them personally for 25 years. They're the only people I trust. Go to Zander.com or call 800-356-4282.

54:40jack is in dallas up next jack welcome to the ramsey show hi how are you guys doing great how can we help today i'm wondering how to pay off debt with my fiance that sounds dicey who's dead is it yes well a little bit of mine and a little bit of hers i have a car loan and she has student loans she'll be graduating from law school in may of how much is that gonna be uh i think about 60 000 see part of the thing is i don't know exact amounts i have rough ideas and i've seen it in the past um but we haven't actually sat down and talked about it since we've been engaged. Okay. When's the wedding? March 21st.

55:23And we're actually in premarital counseling with our church right now, and we're doing the finances topic this Sunday. Awesome. Well, there you go. So fun. Okay. So hers, you don't know how much she'll owe in law school debts. Exactly. Yeah, I imagine it's going to be around$60 ,000. Are you saying$50 ,000 or$60 ,000? $60 ,000. $60 ,000. $60 ,000. Okay. And yours is how much? uh 32 on a car on a car okay perfect how much are you making right now income wise about 110 110 000 all right and when she gets out of i'm assuming she's not working right now no she has a part-time job but just like grocery and gas and she will graduate you said sorry um may yes next may okay so she'll be in school for like two months while you guys are married, graduate, and then she will, how much do you think she'll make coming right out?

56:18Does she have any idea? Ballpark? We're not sure. I've been ballparking like 70 ,000 or so. Yep. That's great. Well, I mean, the answer is really easy. As of right now, you just be paying on your debt and try to get your car paid off. It'd be a fun game to try to get it paid off by the time you guys get married. And the goal should be not going to any more debt. Yes. So no debt for the wedding, no debt for honeymoon, all of that. But yeah, you just keep everything separate until you officially get married. And then when you guys have the wedding in March, come back from the honeymoon, then you guys can attack this as a couple.

56:54Combine bank accounts, combine incomes, combine the debts, do the debt snowball method. So just whatever the smallest balance is left, we're going to attack that and make minimum payments on the rest. And you guys will plow through this. With her new income and your fantastic income and under$100 ,000 of debt to pay off, you'll get through this in six months. Got it. Do you think I should deploy? I have a little bit of a cushion. Should I deploy any of my excess savings into the car right now? I guess just kind of pay as much as I can. Yeah. How much do you have that you could liquidate? Let's see.

57:27I've got 37K in retirement. Eight of that is in a Roth. And then I have like 12K in various cash savings right now. Okay. So we won't touch retirement, but anything that's cash or non-retirement, you could. Hold on. How's the honeymoon and the wedding getting paid? That's a good question. Well, so her parents are paying for the wedding. I am paying for the honeymoon. And so some of that savings will be going towards the honeymoon. So I guess really I have like 5K in savings. I am also living rent-free with my grandparents right now. Oh, nice. So you could really stack away cash fast. That's what I'm thinking.

58:02Could you pay off this car before the wedding? If you got intense? I don't think I could get all the way there, but I could probably get it down to like 15 or less, I would imagine. I mean, you're making like what, 7K a month take home? Basically 67, 68, yeah. Okay, and you don't have any rent. So like, could you throw 5K a month at the car and be done in six months?

58:28If I tried really hard, yeah. I struggled with lifestyle inflation once I got the job because I've been making the same income basically since I've got out of school. Okay, this is what I was getting at, Jack. I find that when people are living rent-free, they tend to get comfortable and their spending tends to go up, not down. So you just trade what you would have paid in rent and it disappears into DoorDash and whatever else. So I would implore you, like your life and marriage is on the line, to attack this car loan so that when you guys are married, you have freed up that car payment, which is how much a month?

58:58$5.59. Boom. Boom. So now we have an extra 600 bucks of horsepower to throw at these student loans on top of our now dual income come May. For sure. For sure. Yeah. Get aggressive with it, Jack. I mean, honestly, because y 'all are going to be living that same lifestyle besides just rent. I'm sure you guys will rent somewhere to pay off these student loans. So you kind of getting in the habit of being disciplined and learning to say no and all the things will go right into marriage. And you guys together, you kind of live on, we say rice and beans and rice, rice and beans. and then get the student loans paid off.

59:31And then you guys, yeah, are making almost 200K a year. Oh my gosh. Think about that. With no debt, you know? And then her 60K of student loans is knocked out super fast. And it's going to be easier to sacrifice right now, Jack. It really is. When you guys get back from the honeymoon and you, you know, your friend, you guys are, it's just going to be this whole new exciting part of life. Like right now is when I would do it as much as possible. The stakes, this is as low as the stakes are going to be. Life is only going to get more expensive. So while you're still quote unquote single, I would use this time you have while she's in law school, super busy.

1:00:04You get busy too paying off that car loan, my friend. Get an extra job. I mean, yeah, y 'all just go crazy and get it paid off. You can do it. How old are you? 24. Oh my goodness. And then Jack, yeah. And then you said you probably will have around$5 ,000 in savings. That's not going to the honeymoon. Throw that at it. You know, just get this momentum going. That knocks it down to 27. And now we start throwing 5K a month. you're done before the wedding my friend while still having enough to cover the honeymoon this is a best case scenario all right thank you guys boom congratulations so exciting excited about march what a great month what a great month to get married is that when you guys are married no december okay that's what i don't know it just feels springy and new i don't know yeah it's great rebirth beautiful all right emily is up next in atlanta georgia what's going on emily uh-oh your phone's all busted Emily can we hear you I can hear you there we go hear me yeah we're good now I'm so sorry um thank you so much for taking my call sure what's your question I have a four-month-old son that we have started a 529 plan for um but I was speaking with my financial advisor a little bit ago and she recommended um a UTMA or UGMA account um I was just wondering what your thoughts were on possibly putting some money in a UTMA account to pay for maybe their first car or something like that, or if I just should put all that money towards 529.

1:01:32Awesome question. How old are the kids? I just have a four-month-old son. Oh, sweet. Okay, so we got plenty of time. This is the best time to open up an investment account. Here's my thing, and this is not a knock against your financial advisor. I'm personally not a fan of the UTMA and UGMA accounts because that money is legally that child's money. So you lose control completely. Okay. And there's no way to restrict. Yeah, once they turn 18 or 21, depending on the state law. It's basically like opening an investment account in their name, but the UTMA is the umbrella that covers it, shields it from them until they're 18.

1:02:07So what George is saying is if you start investing, investing can be crazy. Over 18 years, if you start throwing like 100, 200 bucks in a month, I mean, that stuff can just, it could be a lot of money for an 18 year old. So George is just saying caution because you could be handing over, I mean, tens, hundreds, thousands of dollars. Yeah. Depending on how much you put in there and how much growth. Um, but yeah, so for a car and stuff, I probably wouldn't honestly. Um, now mom and dad, they did for us. We started, um, when we started working and actually could file a tax return and all of that, they opened up a Roth IRA.

1:02:42Once you have earned income. Yeah. And that was more when we were teenagers. But that kind of thing is so helpful because it's crazy. Even just that, me opening that as a teenager versus even my husband when he opened his when he was like 23, you know, starting to work. Like even that year of difference. So there's ways to definitely set them up well to get some things going, like a Roth or the 529 as well. But things, yeah, for them, purchases like a car and that kind of thing. Emily, honestly, I would probably have them involved in it. I would just have a high yield savings account and you guys just kind of cash flow it when the time comes.

1:03:18What I would do and what I am doing, Emily, for my kids is I'm going to do a 529 plan for each kid, invest there. And then if I want money beyond that for, let's say, a wedding one day, a house down payment to give to them, I'm just going to do that in a non-retirement brokerage account that I have control over. That makes me feel a whole lot better than handing you an 18-year-old. And you can just gift it if it's not beyond the gift tack, right? Yeah, you can gift it to them. Yeah. And it's not under their name at 18. So that's a safer bet. I like the plan of 529 for college. Let's make sure we get that done.

1:03:46Are you prepared for Mia and Henry to just be crazy hellions that you're like, I can't give you any money. I don't trust you. That's my fear. Is that what your fear? What kind of kids will I raise? What are you going to raise, George? Likely they'll be so frugal. They'll be like, dad, we're not. That's so much money. I'm like, I raised you right, kid. I raised you right. It's a great question, though, Emily. You're a good mom to be asking for a four month old. Especially for a four month old. That kid's going to be unbelievably wealthy. That's changing your family. Well done. Thank you.

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1:06:13Patrick is up next in San Diego. What's going on, Patrick? How can we help today? Hey, guys. How's it going? Great. How are you? Good. Sort of simple question, but I'm assuming there will be more probing necessary. I live in a county where the housing costs are pretty high. my wife and I have 20 to closer actually to 25 % saved up for a down payment but if that was to happen it would have to be a 30 year instead of a 15 I know the show enough to know 15 is going to be what we're directed toward but I'm wondering how hard and fast is that rule thinking of certain areas where a 30 might be more practical, especially to get into the housing market?

1:07:07Well, I'll start off with this, what we always tell people, and you're from California, and we usually end up saying it to people from California, that you're not exempt from math. It is what it is. So like it doesn't, you know, from a philosophy standpoint, our advice does not change because of where you live. You know, the math is the math. So the 15 year to the 30 year, it is what it is. So I would say, yeah, I mean, we will always stick to that 15 year just to lock you into a system that's going to get you out of debt as soon as possible. Now, does everyone follow that, Patrick? No, they don't.

1:07:43But I would not steer you any other way. But again, is it something that people do? But follow Ramsey? There are worse sins. Like, I don't think it's going to ruin your financial life to get a 30 year. But again, the amount of people who I find who actually pay their 30 year off like a 10, very slim. The people who get a 15 year and paid off in 15, 100 % of the time, they at least do that, if not way earlier. In our millionaire study, we found that the average millionaire pays off their home in 10 years. That wasn't necessarily their first home, but they paid it off in 10 years. And the average baby stepper pays it off in a little over seven years.

1:08:19And so there's just this discipline and intensity going, I'm just going to do it in a way that limits how long I'm in debt against my human psychology, which says just lower the payment, make it easier on me. So my encouragement to you would be, how much more would it take for you to do 30 % down to get that payment reasonable on a 15-year? Have you done the math on that? yeah close to i think so the majority of it is coming from um ira that um we wouldn't be penalized taking it out other than like capital gains taxes um if we just let it sit for a little bit more i could imagine doing that um but it yeah and it would lower the monthly that is uh correct, but it spikes up such that, I don't know, the 15-year just sort of freaks me out.

1:09:13I'm content renting for the rest of my life in this county. That's not necessarily a given. It's just I feel like a lot of people end up there with that. Well, no, it is expensive. Yeah, you're in Southern California. Well, in this market, it makes a lot of sense to rent right now comparatively to buying a home. And so I think that's what you're experiencing. But you're saying, is it your wife that's like, hey, I really want my own home. I want some stability here. Yeah, I think so. Well, I should know so. Yes, it is. Okay. And the other thing, I want to make sure that we have the parameter down.

1:09:45Our teaching is 25 % of after-tax income, but that's before other deductibles like your health care premiums, your 401k contributions. And so that might help your math out in a good way if you just take, hey, here's our gross income, then here's our net income after taxes, and then you can subtract out any other premiums that come out. Yeah, that makes sense. We just went through a potential purchase that fell through for HOA reasons. And I think I found that we probably could afford a little bit more than I thought. It just sort of, I don't know, big purchases scare me. We're just about done being completely out of debt.

1:10:22We just have a car and we have enough in the savings to buy out the car. We're moving right now to an apartment because the housing opportunity fell through. And so I just I want to keep the cash just until we move for, you know, for any unforeseen issues. So what's left on the car loan? $19 ,500, and we've got about$35 ,000 in savings. But that$35 ,000 you're saying is your down payment fund or is that separate? No, that's completely separate. That's all liquid just between the money market and our own just sort of not accruing any interest savings account. Got it. So if you paid off the car today, that would leave you with$15K for your emergency fund, and you could beef that back up over the next few months?

1:11:08Yeah, correct. I would do that. I like that plan. Yeah, my only concern is I would like to have it once, and we're looking to move in like two weeks. I would like to have it, and then once we move and get settled in, then pay it off right away. I'm looking to pay it off probably within like three or four weeks. I just want to make sure that it's there while we're moving. Is that like, I don't know, is that over concern or is that there? What's going to cost you$30 ,000 during a move to an apartment? Well, I mean, they are running credit checks and things like that. So that's one of the things.

1:11:47We're in the application process right now. So I wonder if it would look a little bit freaky from there. If you want to make sure you have enough for us. Well, usually it's first month's rent, last month's rent and security deposit for most places. Yep. which is plenty. They're not going to surprise you and be like, JK, you owe us$20 ,000 today. It's just not going to happen. So I think a lot of this is a little bit in your head, a little bit of like, I feel this sort of false sense of security having this pile of money over here. And again, just like the 15, like if you want to wait four weeks to pay off the car, that's fine.

1:12:16I think that the idea is that we're moving forward, but also I don't want you to get stuck in a reality that's not reality either. So just, yeah, I would just kind of challenge a little bit of that. But I think you guys are on the right track. You're doing fantastic. Yeah, with all the money saved from down payments. Yeah, how much is saved in the down payment fund? Right now. So the inner workings of it is it's an inherited being transferred into an IRA. So before I sort of promote myself as really diligent, a lot of that was helped out. Oh, gotcha. Yeah, so in terms of that— How much will you net from that once you cash it out after taxes?

1:12:57Yeah, and after we're doing the slow transition so that it doesn't change taxes, stuff like that, probably within seven years or so, there'll be, my guess is around between$5.00 and$5.50 into the non-inherited IRA. Okay, but you're moving it slowly to avoid getting hit with huge taxes. Yeah, and we don't need any of it right now, so this seems like the best option. Well, you need it for down payment. So how much are you going to be able to put down if you bought a house within the year? I mean, that's the thing for me, too. I'm like, man, I would just love to get as close to paying cash for a home as I can.

1:13:37We're already investing in retirement as well. So if we completely empty it out, we'll still have retirement left over that we're continually building. And then we'll have the asset of the home. Yeah, OK, I'm confused. You have your savings of$35 ,000 and then you have this inheritance that's coming. It's not here yet. So what were y 'all going to purchase the home with two weeks ago that fell through? We were going to purchase that, yeah. So I'm probably not being super clear. The inherited is currently in process and has been of moving to a Roth. So how much is in it right now? In order to avoid the taxes.

1:14:12In the inherited or in the Roth? The one that you would have access to to put a down payment. Yeah. $140. So that was going to be your down payment? Correct. Gotcha. Gotcha. That makes more sense. What is the house going to cost that you're looking at? What kind of budget? Yeah. Yeah, probably my my ceiling is 750, but it's anywhere around there. I mean, my hope would be somewhere around like 550 to six, but it's just it's tricky in this county. Yeah. And I'll say, you know, real estate looks a little different everywhere. but for the most part, it's a great time to buy. I'm like from a buyer's perspective, it's more of a buyer's market right now than a seller.

1:14:56So even Patrick, if you guys pump the brakes for another year, 18 months, and got more of that inheritance, like all of that to give you some cushion, I wouldn't be in a rush to buy a house, but I would be more on your wife's side that you wanna be a homeowner. I think that's part of your financial plan overall. And if right now is the best time to get in, if you're gonna get in. So if you're going to get into the market, so. I wouldn't do it tomorrow and I wouldn't wait six years either. No. So I'd find a game plan that works for both of you and just go hard at it. And I would follow the baby steps.

1:15:26Right now it's a little bit all over the place. I'm doing four and then I still have two, but I kind of have three already. And so I would just follow it through all the way, man. It's going to give you a lot of peace. Pay it off today. You can do it.

1:15:50We'll be right back.

1:16:18Buying or selling your home is a big deal. And with all the clickbait headlines and conflicting data out there, it's hard to know what's really happening in the housing market. So we're here to make the latest trends easy to understand. Median home prices, that's the middle, dipped a bit last month to about$426 ,000, a typical season shift as we head into fall. And buyers have more options and negotiating power, while sellers face some more competition. And houses are sitting out there a little bit longer. Mortgage rates dipped slightly to 5.5 % in September, which gave buyers some breathing room.

1:16:48But since rates are unpredictable, the best time to buy is when you're financially ready, not when rates drop. Just like we say, hey, don't time the stock market. Don't try to time the housing market because you just don't know what's going to happen. So to learn more about the housing market trends and get free tools to help you buy or sell with confidence, go to ramsysolutions.com slash market or click the link in the show notes if you're listening on podcast or watching on YouTube. Sam is in Atlanta up next. What's going on, Sam? Very good, Tim. I appreciate you guys taking my call. Sure. A quick thing.

1:17:18Well, I started a construction company about a year and a half ago, and it's been rough going. And since I'm running that company through bad business partners, I've found the business about$70 ,000 in debt. And I carry on top of the$70 ,000 and another$40 ,000 in debt. But the business is bringing in about$10 ,000 a month. For that$10 ,000, I'm using about$5 ,000 to$6 ,000 per month to try to pass in this credit card debt that I've incurred with the business. And I'm at a point now, because I had a work truck that I paid off, but it just took a crap. So I'm at this point now where I need to buy myself a new vehicle to try to keep this business going, to try to pay off this debt.

1:18:08Or do I just close the business, get a job, work in construction with my experience, where I can make maybe$120 ,000 a year, and then just use that to pay off my personal debt over$40 ,000? Well, that sounds good. How easy is that to just go get a job in construction and make$120 ,000? With my experience, it's quite easy. you see there's a lot of skills that are lacking in construction. There's this very big need in construction for talented individuals and I have been in the industry myself for about 17 years. Cool. And is there any hope for this business to be making $20 ,000 a month in the next few months?

1:18:51In order for me to make$20 ,000 a month, I would need to hire on some other individuals that I'll be carrying on the road. So I guess why is the business struggling right now? What's the cause of that? The cause of that is I, during the last year and a half of me running the company, with being a novice to owning a business, I got bullied by some big general contractors. And what I know now is that they breached their contract and made me take about a$70 ,000 loss over the course of seven projects. So you got hosed on these deals? Yes. All right. And is that going to happen in the future? I guess I'm wondering, is it time to close up shop because you're just tired of it and it's stressful and you'd rather just work for someone else and collect a check?

1:19:42Because that's great. Or is there room for this business to actually scale and grow and help you clean up the debt faster? There's a lot of room for the business to grow. I think I'm, well, I say, I think I know I'm much more well adapted today than I was when I first started the company. It's just this, that this kind of gnawing at the, you know, the back of my neck, because my wife and I, we've been dead for years up until having this company. Okay. So you're in a tough spot right now, and it's hard to see your way out. Yeah, and the business is bringing in$10K right now. So basically you're bringing in$120K, you'd be making$120K, but when you own the business, you have other expenses.

1:20:25You've got taxes, you've got to be thinking through, you've got to have the supplies and the truck and all of it. Are you getting$10K gross from the business? Is that what you're paying yourself? That's correct, yes. Okay, that's the profit that you take home. Yeah. Okay. I would be applying and seeing what's out there, See if you can actually get that six-figure construction job before I close it down, just so there's not a gap in income. Yeah, what do you want to do? What sounds enjoyable? What sounds hopeful to you? Is it an easier mental load to say, oh, yeah, I can just go get a job and grind it out and pay this off?

1:21:00Or is it more, does it feel better to still own the business and have a little bit more control over your destiny? I would really like to run my company. Yeah. It has less to do with the mental load. I just feel like I'm at a bit of a pinch point because the money I'm bringing in with the business, just about if not more than half of it, goes directly to trying to pass off this credit card debt. Well, the thing is that's not going to change if you go get another job tomorrow and you make$10K a month. You're still going to need to throw$5K,$6K a month at the debt. So how much of this is going to change if you were to close the business tomorrow?

1:21:43Would you be able to sell assets tied to the business? Sell client lists, anything like that? That would help you out? Yeah. Yeah. Okay, so how much could you sell? What could you net after selling all of the stuff, the pieces of the business, whether they're physical or otherwise? I could net around$40 ,000. Okay. Well, that's good. So that gets you a ways into this debt payoff journey. So that changes it for me. I'm going, all right, well, you can always start a business later on in life, can't you? Yeah. And closing this is fairly simple. Like, are there people working for you full time or is a lot of just 1099 contract work?

1:22:25It's only me. Okay. Yeah. I think here's the thing. I don't want you to look at this like, well, I failed. I'll never try again because we believe in small business and we believe in people like you. But there's also nothing wrong in hanging up the hat right now to do what's right for your family and clean up a mess and then restart just with cash, debt-free, emergency fund, and move slow into that next business. Yeah, and cash flow as you go, if you go back and restart it. What does your wife say, Sam? What does she think? She wants me to stick with the company. She does, yeah. What's her reasoning?

1:22:59We're both pretty determined individuals. We're both the oldest child. and so we've always just we've never really had a network of people that support us so we found ourselves being very very self-reliant and just because things are her mentality or our mentality it's just because things are hard right now doesn't mean that they'll be hard yeah and i agree with that um i have a question when you said you were throwing 6k of what you're bringing home at the credit cards is that is the credit cards part of the 70 000 or is that part of the 40 000 of other debt? That's a good question. So the$70 ,000 is the business debt under the business credit cards.

1:23:35And then the$40 ,000 for the debt is my personal debt from the credit cards that we've used to try to pay groceries, pay gas.

1:23:48Okay. Are you guys able to keep your household afloat with$4 ,000 a month? Yes. You can. Okay. Okay. And another question is, are you going to go into debt next month to keep this business running?

1:24:04I don't think so. Because so far, it sounds like you've been using credit cards to keep your personal life afloat and keep the business afloat. So have you stopped using the cards? Yeah, so what happened there is I was running these jobs and things were going smoothly and we were paying off the cards as we were going along. And then when everything went south, that's when we kind of got stuck with the debt. Sam, does your wife work at all? Is she bringing home any money? She does. She's the director for a marketing agency. How much does she bring home? About$120. Oh my gosh, okay. You buried the lead there.

1:24:43So you guys are making. Yeah. Well, a part of me would say, Sam, if you guys want to stick with the business, but you have to have some hard values around it. Even if you have to go get a truck, you said, we're not going into debt for the truck. We're going to figure out a way to save up and pay for the truck. But if you're throwing 6K at this, I'm like, you guys can be out of the business debt in 11, 12 months in a year and then throw a bunch of her money at the personal 40 ,000. You guys could be debt-free in two years. Okay. Where's her$120 ,000 going? What are you guys doing with that income?

1:25:21That goes to just pay our$200 ,000. I'd figure out how to live on$4 ,000, and I'd take$120 ,000 salary, throw it at this debt, and then an extra$6 ,000 that you're bringing in. If you guys tighten some stuff up, Sam. You guys need to get on budget. I think you guys have been spending like you make$240 ,000. Yes. Start acting like you make$50 ,000. Yeah, and then you can keep the business. But cut up the credit cards. Be done with the debt when it comes to the business, Sam.

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1:26:58Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. I'm George Camel, joined by bestselling author Rachel Cruz. The number to call is 888-825-5225. Samantha is in Honolulu, Hawaii. What's going on, Samantha? Hi, thank you so much for taking my call. Absolutely. What's your question today? My question is that me and my husband, we completed FPU last year. We're currently debt-free. We don't own a home. We rent here in our home state. And we have two little kids. Combined between both of us, we make about like 70, 75K a year. But every month, we're currently on baby step three.

1:27:42Every month, we kind of are only living with like$600 left. And we currently have like food stamps. We have WIC. And we're just kind of debating like if it's better to move to the mainland to try to you know buy a house um get more income or if we should try to just suffer it out here um because this is where we're from and um where our family's from and we don't want to take our kids away from this but at the same time we're like what kind of um life are we like living if we're like struggling you know yeah so where's all your money going every month how much is your mortgage um oh so we rent here um in hawaii but um it's 1500 a month um we We are in a one bedroom.

1:28:27We all like room share. Hey, Samantha, can you adjust your phone? It's kind of popping. Are you able to take it off speaker or maybe speak a little bit? Change it up for us. Okay. Is this better? Not quite, but we'll try it out. So you have$1 ,500 in rent. What's your other big expenses? If you had to list out in priority, like here's the biggest one, here's the next biggest one. So our daughter goes to private school. that's$1 ,100 a month. We also pay$900 a month for babysitting. And we own our car, so we don't have a car payment or anything like that. But yeah, that's pretty much it. Maybe just like food and a little bit of lifestyle, but for the most part, we're at the beach, so a lot of the stuff is free.

1:29:14Wow. So you're on food stamps, but you got a kid in private school. That's pretty wild. Yeah, just because of education here, isn't the best. And because of her age, she doesn't quite qualify for kindergarten yet. So for her to be in school, she had to go into private school unless we were going to have her at a babysitter. Like a daycare? Oh, yeah, sorry, like a daycare. Okay. And your other kid's in daycare. And so altogether it's$2 ,000. Wow. What would daycare cost? Honestly, I'm not sure. I didn't look into that. And then what are each of you making? Because it feels like you're in a very high cost of living area.

1:29:57There should be more than 75K if both of you are working full time. Well, I work part time as a flight attendant and then my husband works full time. Okay. And what's causing the part time flight attendant? Are you at home with the kids part of the time? What's going on there? Yeah. I mean, I try to be home as much as I can. So I don't work as much as I could. just because I feel bad if I'm gone for more than a couple of days, more than two or three nights a week. Well, I think we're going to have to make some hard choices here because you're going to feel bad living in a one-bedroom apartment and living on food stamps.

1:30:36So there has to be some give and take here. So if that means you guys have to move and you can keep your income and move to a lower cost of living area and you have a public school. Yeah, and Hawaii is one of the most expensive areas. But to George's point, usually if you offset that, I mean, you think of New York, the Bay Area, Southern California, like usually incomes for the most part, you know, for a family, you're going to make more naturally in that job market. And so what does your husband do? so he's a furniture installer like um um technically it's like windows and glass furniture just um yeah like uh he works for like a small company like a small private company so he's applied to um change his career and um but we just at the current moment um he really hasn't gotten anything back because he doesn't have too many like um like no trade like certifications or licensing um so yeah he's looking for some of the like trade schools here okay uh how much how much hits your check sorry it's getting real bad here um real quick how much hits your checking account every month samantha um roughly about like five thousand um five hundred five thousand five hundred okay well you know what i would tell you guys is what you gave us was about thirty five hundred so you guys have$2 ,000 to spare and that's to pay insurance, food, everything.

1:32:09Yes, everything. Um, so something's got to give Samantha, you guys can't, um, like you said, you're not making any progress. And so, um, your rent's not completely out of control though. I'm like, yeah, the rent's not the problem. No. And, and it's the mix of the 2000 bucks going to the kids to get them in school and daycare and part-time work and the part-time work. Because if we could up the income, we can solve some of this problem. I don't know that we have much of a solution here for the kids because they're going to be in daycare if you're working. So I think we've got to get you working full time in order to solve this.

1:32:44How much do you bring home a month? Like right under$3 ,000, like$2 ,700. Okay. Okay. Well, because it's$2 ,700 by$700. Yeah. But where would you guys move if you were to move tomorrow? um probably to uh the only other state we have family in is um colorado um and i think too because we're from this state we don't know too much about like the seasons and so i think that's probably been our biggest barrier or like our fear about moving um like driving in the snow or something like that um so but no i i get what you're saying i think it's just um upping the income to kind of like make the sacrifice or to try to move.

1:33:35Yeah, I don't, there's no magic wands I can think of here to go, well, this is the problem. I mean, the kids are young, they need to, you know, be in a daycare situation unless you decide to stay home. But again, that doesn't solve the main problem here. You're still going to have a few hundred bucks left over if you're lucky. So I think we also need to look at the lifestyle choices and make some sacrifices now until husband can get a better job. Maybe you get a better part-time job or start working full-time, then you'll start to get some breathing room. Yeah. Cause if you're paying$2 ,000 for childcare full-time, but you're only working part-time, like, is there some shifts there just to save some money, just to get any level of traction.

1:34:10Um, but yeah, from, uh, being where you guys are from a high cost of living perspective, um, I think the number one thing is going to be income Samantha for you guys. And, you know, and it's easy for us to be like, yeah, just go ahead and move. But you're both are from there, which I guess assumes all your family's there. Like I That's a big deal. You know what I mean? Hawaii to Colorado is a pretty drastic change. And moving isn't free. That's going to cost you just to make that giant move. And you need to make sure you have the income to support Colorado, which is not a cheap state to live in if you live in one of the major cities.

1:34:42I was going to say Denver is expensive. Salt Lake City is expensive. Yeah. That's in Utah. I know. The whole area. It's like anywhere you go out there, these major cities, you think, well, it's the Midwest. Those areas are wild. Yeah. No, 100%. 100%. But yeah, that$2 ,000, the extra that you guys have, and when I say extra, there's still stuff to be paid with it. But I would just, I mean, hunker down as much as you guys can. You know what I mean? Like, where can you cut costs and live in the reality of the numbers that you're in? I think that's the biggest thing. And you guys are doing that, but it still sounds like you're struggling, which means to me a lot of it is either some of this$2 ,000.

1:35:19Who knows where it's going? But the biggest gap to me is income. If you're both working, I mean, full-time and a part-time, I would be maybe looking for something else.

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1:36:37Today's question of the day is brought to you by Why Refi. If your private student loans are in default and you feel stuck, you're not out of options. Why Refi specializes in helping borrowers like you find real solutions with low fixed rate refinancing. Go to yrefy.com slash Ramsey. That's the letter Y, R-E-F-Y.com slash Ramsey. Not available in all states. Today's question comes from Kelsey in Georgia. My mother-in-law gifted silver coins to my husband and I several times over the last few years. We sold the first batches to pay off our debts. She made us promise to keep the last and final batch for when the dollar has lost its value in a post-optolithic world.

1:37:20Wow. Currently, silver spot prices are doing very well. And I've been pushing my husband to sell so that we can fully fund our big emergency fund and start investing. He does not want to disobey his mother, but he also is extremely worried about our retirement years. We are in our late 40s and have less than$100 ,000 in retirement. What should we do? Well, I'll tell you this. There is a much higher chance you will retire broke than there is you're going to need to cash in your silver in the apocalypse. So that's just one man's opinion. I can't prove that to you. I think me mom was very sweet to gift you these silver coins, but you're grown adults.

1:38:02You get to choose what you do with the money. And at the heart of this, she's trying to help you guys. That's the heart of it. She wants to make sure that you're taking care of that. You've got the money you need when you need it. And right now you need it. This is going to help you to start investing so that you can build exponential wealth with compound growth instead of hanging on to your debts, not having an emergency fund. So if it's me, I'm going to say sorry, mother-in-law. Well, and I would say if she's, I don't know if she's given them to you yet because she said she gives them to you every several years, that maybe if she says, don't, if I give these to you, you cannot sell them.

1:38:37And I would probably just out of respect say, well, if this is a gift, we may choose to do what's best for our family if we need to. So just like, do you know what you mean? Like, maybe there's like a nod to, or I don't know if you owe someone that. I don't know. I don't know what denomination they grew up in and what they think is going to happen post-apocalypse. That's a whole nother story. You know, where are they at on the left behind spectrum? Pre-trip, post-trip, where are you? Yeah, no, I mean, yeah, I think you're an adult. And I don't like a gift with strings attached. Do you know what I'm saying?

1:39:13Like, it just feels weird that she's like still controlling the gift after it's been given. We don't know how much this is. And she did say, it sounds like they have the final batch. They just don't want to sell it because they promised her they wouldn't do it until the end of the world. Which, at that point, how good is your silver coins? You know, what's that going to do for you? That's what I always feel like with gold people. You need like fuel and ammo and food. Yes. You're like going to go for supplies and actual things, not like little bags of coin. I'd be like, I need a deer. Someone shoot a deer so we can eat.

1:39:44Get some deer meat in a deep freezer with a generator. You'll be way better off than silver coins. Where's Deloney when you need him? He would crush this one. He would love it. He'd be like, I'm with mother-in-law. I always think if you had to have a small group of people to survive something, if it was end of the world, who would you have? Because they have to contribute. Oh, yeah. Do you know what I'm saying? Yeah, so you're saying I'm useless? I would say you and I are useless, George. I don't know. Does entertainment value, camaraderie, does that mean nothing to you guys? Just a good community.

1:40:15Just like keep the vibe good. Keep the morale up. That's a big deal. Deloney brings the deer meat. Yeah. Ken will play pickleball. I think Jade and Deloney would be our saving grace. I think they would help out a lot. Oh, man. Not good. Thanks for the question. Ryan is in Charlotte up next. What's going on, Ryan? How can we help? Ryan, are you with us? Yes. Can you hear me now? Yeah. What's your question? Okay. Awesome. Well, I appreciate you taking my call. I hope you guys are doing well today. Do you want me to get straight to the question or do you want a little bit of a backstory that leads up to the question?

1:40:53Sure. What's your question? Let's just hear that first and foremost. I am about to be going through a separation. Oh, I'm sorry. Yeah, I appreciate it. And my wife doesn't want anything to do with my business. She wants a payout of$150 ,000 to walk away. And I have a couple different options. I'm not sure what's the best. I can give her all of my IRA, which will cover most of it, and then I can refile the rest. How did she get to$150 ,000? And was that within, I mean, have you guys gone through lawyers and attorneys and that's what you, after the assets are divided? Like what, where is this number coming from?

1:41:40We have, yes. That's basically half the equity in our home and property. Okay. Gotcha. She started out at wanting 60 and then she wanted 80 and then she wanted 100 and then, you know, which is fine. I mean, you know, we're married. She's entitled to half, you know, regardless of the situation. Who's keeping the house? I am trying my best to because the land was given to us by some of my family in which we turned around the following year and we built a house on it. So to get her out, like the 150 is the equity, her remaining half of the equity in the home. That's correct. That's correct. Yes. Yes.

1:42:23And of course, the land ties on to the rest of our family's property. Sure. I don't want to sell it, but I'm afraid I may have to if I don't give her my full IRA. Could you take – is the house – how much is left on the house to pay off? Like$145. Okay. Have you considered a cash-out refi on the house to give her the money? I have. The only issue with that is I have recently sold a company that I started back in 2019, and I've started a new company. And I don't – from what I've been hearing, I'm going to have a hard time getting a big refi because I don't have – Proof of income for a long enough period of time.

1:43:18How much cash do you have? Like if you liquidated anything non-retirement, how much could you come up with?

1:43:26I've got a couple pieces of equipment without touching our savings, which she also wants half of that. I could probably come up with$45 ,000,$50 ,000, but then that's going to hurt me from continuing on business. Yeah. I mean, it's just to see even if you don't have fees with this IRA transfer, if you do a direct IRA transfer, that's going to be way better than just withdrawing that money. yeah so she's wanting straight cash don't do that from your retirement yes you want straight cash you don't really want it any other way because that's going to crush you that's like taking out a loan at you know 35 exactly yeah i've got i've got 113 000 in my ira i know it's not much but after everything she'll be getting like 72 but then you're restarting from zero and losing all of that growth on 100 if you plug that into a investment calculator over the next 20 years You're not giving her$113 ,000.

1:44:25You're giving her a million plus. Yeah, my guy says in 30 years, by the time I'm 66, it'll be roughly about 2.3 or so. Exactly. And so I would be working with your attorney to fight against this and make sure that we do this in a smart way that doesn't destroy you for the rest of your life. Because it sounds like she's trying to do. I don't know. Well, no, she's not being like that. She just wants half of it. But, you know, yeah, yeah, yeah. She's not she's not being mean about it or anything. She just wants half of half of the. Right. I mean, that's that is the case. I would sell the house. I know.

1:44:59I know it hurts. No, Ryan. I'm so sorry. Yeah. Financially, mathematically, it makes way more sense to let go of the of the house. Sentimental values tougher for sure. Yeah. Yeah, it is. And I mean, I've I've definitely thought about that. And I'm not 100 percent against it. I just know that when I do sell that property. How much do you make a year? With the new business, which I've only been doing for a few months, I've been netting like$10 ,000 a month. Okay. I would also see if you could work out like a structured pay deal. Yeah, that's what I was going to say. You don't want to go on forever and ever paying her, but I wonder if there's ways that you can liquidate some stuff, give her a little bit of a lump sum, and then be paying her some.

1:45:44You know what I mean? To be able to do both if you can. but I would sell the house before cashing out the IRA, just from a mathematical standpoint. Man, that would sound... But that's really hard, Ryan. I'm sorry. Ugh, that's the heartbreak of divorce. It's a relational, obviously, complete gutted. It turns into a messy business transaction. Yes, and then all of it. So sorry you guys are going through this.

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1:47:07Here are the top questions people have about online wills. Number one, how do I know if I need a trust or if my estate is too complicated for an online will? Well, in general terms, if your estate is worth less than a million bucks, getting a will online is probably a great option for you. What do I need to start my will? Well, you got to figure out who do you want to get your stuff? Who do you want to take care of your minor children? Who do you want to make decisions for you if you're incapacitated? Number three, is an online will legally valid? Yes, but it's got to be state-specific to match the laws of your state.

1:47:37And finally, why would I want an online will versus going traditional, you know, with a lawyer in person? And while it's less expensive, more convenient, takes less time to set up than a traditional will. So go to RamseySolutions.com slash willsquiz to find out if an online will is right for you. Jim is in Denver up next. Jim, welcome to the show. Thanks for taking my call. So my wife is considering a career change, but we've been trying to decide if it makes sense and if it's worth it. She makes about$85 ,000 now working in project management for philanthropy. and she's interested in going into midwifery.

1:48:13It would mean her potentially not being at the work for a couple of years, so lost income, but she potentially would make more on the other side of that. Where are you guys at financially? What do you make? So I make about$205 ,000 a year. Awesome. We're in baby step four, five, and six. So we have six months saved and we don't have any debt. We just bought a house about a year ago, so we don't have a huge amount of equity in our house. So it does feel like we'd need to, it would be a stretch to make it on one income for that time and tightening the budget. And I need to, you know, sell some stock and things to be able to cash flow it.

1:48:50But it does seem possible. It just feels like something where, you know, giving up that income over that two and a half to three years and then, you know, but potentially making$60 ,000 more a year on the other side of that is kind of what we're trying to weigh. So I'm not sure. I don't know the answer to this. That's why I'm asking you. When she goes to school for that, to be a midwife, is it from a schedule perspective she can't work at all? Probably for part of it she'd be able to work, but for some of it probably she'd not be able to work. It's full time for at least, I think for maybe the first year of it she could probably work, but there'd be like a two-year gap or so where she wouldn't be able to work to my understanding so far.

1:49:33Okay, because she probably has to do, to get the certification, I guess, is what she's going for, right? I think it's just a heavy study load and labs and spending time in the clinic and that sort of thing. What's this going to cost? So right now it looks like the program itself is like about$50 ,000 and then there'd be some prereqs she would have to do. So I think all told, like conservatively, we're thinking like$70 ,000. So it's$70 ,000 and then plus the lost earnings for at least probably about two years. And you guys can cash flow that? I believe so. I think it'd be tight, but I think we can cash flow it.

1:50:11And I think we have some stock I have through work that I think I can sell as I go that I think I could use to pay for it. Okay. So it's like there's the tradeoff of like that could also be going towards wealth building and she could just keep her current job. but I think this is something where she wants to do this. Well, she just done with project management, her heart's not in it. I think she, if she found a different job, she could still enjoy it. Her current job, she's really not enjoying right now. And so it's really, she's kind of said, I know I want to leave the job I'm in right now. Maybe I'd go someplace else and I'd make more money and enjoy it more and be fine and don't need to do this.

1:50:50But this does feel like maybe it's a good time to reconsider her career options and think about it. okay well the only thing i don't like about the equation is just that she's running from something she doesn't like to something new um versus if because you from what you just said and again correct because if this is her passion and this is what she wants to do is help deliver babies then i would say this is why you guys do the baby steps you know what i mean you get to like you get to make calls in your life and you get to change things and that's amazing um so if That's just her dying passion.

1:51:24But what you just said kind of was, I was like, oh, where she's like, no, I still like project management. I just don't like my current job. So if I changed jobs, I probably may not want to be a midwife. So I'm like, okay. In my head, it kind of would make sense to just try that first and see if that scratches the itch because you're at least getting away from what you don't like versus having to go through a two and a half year. And to your point, you know, all of it. But again, I say that with a caveat. Unless she says, no, I want to be a midwife. This is what I want to do. It's my passion. It's my love.

1:51:59Then I would say go for it. And you guys, it's going to be a tight two years. But I think that's great because she's doing what she loves. But she also loves project management. And you may not be able to ROI all the math on paper. I can tell you're an analytical, kind of nerdier guy like me. And you're like, well, I want to make it make sense on paper. Right? Yes. I've been trying to ROI this out. And it's one of those where it pays off if she stayed in her current job at her current earnings, it can pay off, but it would take like six or eight years or something. And then there's risk with any new study and all that.

1:52:27But I get the point you're making, which is stop trying to overanalyze it. So add into your equation her joy and see where that takes it. Because then it just breaks the math and you go, well, okay, I guess screw my math. We're just going to have her do this. And the good news is you make$200 ,000 plus and you're debt free. And so I'm not worried about the finances. Now the mortgage side, if you could sell your stocks, maybe you do a lump sum payment and recast a mortgage if the actual monthly payment is stretching you guys? That might help you out mathematically to stomach this in your budget?

1:53:00Because what's your mortgage payment right now? It's about$5 ,000. $5 ,000. And your take-home, just your take-home is what? Just my take-home is$10 ,500 to$11 ,000. That's the part that scares me. Because then your mortgage payment is eating up about half of your take-home pay. Now that's without, you know, your investing in healthcare premiums and other things. And it's only for a two-year period. Yes. Yeah. To your point, can we stomach half our mortgage, you know, take-home pay being swallowed up by the mortgage? Maybe. I also think the recast could help you there where you take a lump sum of, you know,$40 ,000 from the stocks you sell, apply it to your principal, recast it.

1:53:39Now your payment is$3 ,000 a month,$3 ,500 a month. And I'll say it again because it's in my head. I'm like, this is a lot of things changing and moving for the fact that she just doesn't like her current job. So, again, I would have that conversation with her for sure. Just that, I mean, honestly, if she's as happy at both, it's just easier to go find another project manager job and she's still happy. You know what I mean? There's project managers making$150 ,000. And so, if the money is the thing that's alluring of like, well, I could make more, I'd feel more valued. Let's at least explore that.

1:54:11Yeah, yeah. But if it's just, hey, you could pay me a half a million and project management would not be it. Well, then we know. Yeah, but that's not it, though. Because I think, yeah. That's what I'm saying. If it's just not it, no matter what the money is or what the company is. Yeah, but she's saying she enjoys project management. She just doesn't like her current job. There's 17 things I can enjoy. So it's just like we can't just flippantly jump from thing to thing. That's what I'm saying. Yeah. Make it a hobby. Maybe she becomes a doula on the side and it's not going to pay as much. But she still gets to be a part of the process and support moms.

1:54:40and that could be a cool thing. So maybe there's other avenues to do this. Yeah, yeah. So unless it's like a diehard passion, I would do it for her, yes. And I would make all these changes and all of what we're talking about. It's just a lot of work and time if it's not the thing that she's just dying to do, if she would still be content doing project management with another company. So I would push on that. Make sure it's the dream and brings the joy before going in on the adventure. 100%, that's a great way of putting it. And then stop doing the math because you probably won't work it out. How old are you guys, Jim?

1:55:14We're both 37. Okay. Yeah. Perfect. So if she even waits a year, but by the time she's 40, 41, she still gets to do this. Well, that's why I'm a little bit tempted for her to just find something else and see if she still enjoys project management somewhere else. Because she may, may love a company and that be fulfilling to her and that she's great and content. You know what I mean? Right. So I don't know. So either way, I think we're on our eat, pray, love journey here trying to find the next thing for her. And I'm very hopeful she'll find it. She's got a great husband who's very supportive. You've got a great career.

1:55:47You guys have done a great job financially to set yourself up to have this kind of flexibility, to have the options, to do something that it doesn't make sense on paper mathematically. And yet you can still go, yes, we're doing this. Yep. That's financial peace. Yep. I think whatever she's feeling the most where she wants to be. So Rachel, if you were going to Drop this gig and go do something else Meteorologist What would you be doing? I would be a Political correspondent for a network Oh that's solid Anything that doesn't require me to go back to school That is I think I'm not I'm not doing it I will not purchase a textbook for some insane price I will not sit in a classroom I'm with you I don't want to turn in a paper Nothing wants me to be like, oh I want to go back and get a MBA.

1:56:33I'm like, I'm good.

1:57:11Our scripture of the day, Proverbs 1311. Dishonest money dwindles away, but whoever gathers money little by little makes it grow. One of my favorites. Milton Friedman said nobody spends somebody else's money as carefully as he spends his own. That'll preach, Milton. Well said, Milton. Jenna is up next in Orlando, Florida. Jenna, how can we help today? Yes, hi, good afternoon. Thank you guys for all you do. So my husband and I are pretty new in discovering living a day of fancy way and learning about paying off debt. So we have quite a large amount of debt. We've processed it. We've gone through the emotions as far as having that much debt and probably mistakes that we have made.

1:57:59We have between mortgage, student loans, cars, we have over a million dollars. so really what we've been currently doing is just trying to would you say a million Jenna did you say a million over a billion yes between mortgage student loan okay cars everything so what we've been doing and we've been doing like five hundred dollars a week into our high yield savings account which we're trying to save while trying to pay off bills that we just don't know So I guess we're not sure what to do as far as how. Okay. Can you, can you, how much is the mortgage of the million? It is 525. 525. So it's half of it.

1:58:44Okay. So what's the rest? The rest is consumer. So half a million in consumer debt. What does that consist of? So 475 is my husband's student loan. Whoa. Doctor? Lawyer? Yes. Yes. He is a physician. Physician. How much does he make a year? So he currently makes$250. Okay. How much do you make? I make$70. Okay. Is his income pretty steady there? Or does he see, like, how long has he been out of medical school? He has been out of medical school 10 years now. So we've made the mistakes, big purchases, things like that. So we've processed that. So now we're trying to see kind of how to tackle everything.

1:59:31Okay, well, so it's basically a student loan and a mortgage is what you're saying. Yes. Also, we have 26 left on his car. And then a car. Okay. And then we've been working on getting the credit card down, so we may have$1 ,000 to$2 ,000 on the credit card. So that could easily be done here shortly. So that's really not the concern. Where's your savings at? You said you've been putting$500 a month towards high-yield savings. How much do you have in there? Yes. So we are currently at$74 ,000 in our high yield. $74 ,000? Good job. Okay, well, great. Wow. Well, that's going to be cleaning up all this stuff.

2:00:07So tonight I would pay off the credit card in the car with that. Are you going to do that, Jenna? Or is he going to do that? Yeah. We are. I mean, we weren't sure to just completely deplete that and pay off the debt. Yeah, since you're new to this, let's just recap so we're clear on understanding the baby steps. So baby step one is$1 ,000 starter emergency fund. You guys have long surpassed that, which is great. And then baby step two is to attack all of your consumer debt using the debt snowball method. So smallest to largest balance, ignore the interest rates, just attack the little one with a vengeance, make minimum payments on the rest.

2:00:42So that means liquidating any non-retirement assets we have, including savings, outside of the$1 ,000 and throwing it at the debt. Okay. But the good news is that clears a bunch of debts and a bunch of payments for you guys. Right. I think the next question is, because my husband, he's kind of on the opinion, just let's just throw everything into savings and do minimum on the student loans. And the mortgage, because I guess that's just overwhelming at those numbers, or do we stop the savings and just - Stop all savings. You'd even stop all investing. So if he has, if either of you have a company retirement account you're putting money into, even for a match, just pause, go all the way down to zero for the time being.

2:01:21So here's what's crazy, Jenna. So here, I just want to give you a little picture, okay? If you guys went all in and actually did the baby steps, the way we teach, you do exactly what we say. Okay. That means from what I'm gathering from the car and the credit card, it's$28 ,000 for what you guys have saved. Basically, you'll have$45 ,000 left in savings. You throw that at the student loan, you'll have$435 ,000 left of the student loan. What you guys make,$340 ,000 a year, if you guys lived, and I'm going to give you a cush number, and I don't even want it to be this much. If you lived on$100 ,000 a year, which I want you to live on even less, then that means you guys could literally put$240 ,000 towards the student loan every single year.

2:02:08You guys could have this paid off in two years. Two years, Jenna. Year and a half if you actually lived on like$70 ,000. Do what? I said we get overwhelmed and we run the numbers ourselves. So the problem is you guys are attempting to do a lot of good things all at once instead of just putting all of your focus and intensity toward those debts, using the debt snowball. And Rachel's right. I mean, we're talking 24, maybe two and a half years max. You're done totally. You're done totally. And then the other crazy thing, which, again, I want you to still after that, I want you to build up an emergency fund and invest in all of it.

2:02:47But I mean, if you guys lived on$100 ,000, you guys could have your house paid off in another three years. That's true. It's just wild to think in five years, you guys could have no debt. In five years. But you have to do it. And you guys have been living the doctor wonderful lifestyle. Nice house, nice car. Yeah, everything's been great. And if you want to keep paying minimum payments on the student loans and all of that stuff, you will be exactly where you are in five years. Nothing will have changed. Nothing will have changed. So unless you want a different outcome, you have to do something different.

2:03:24And so, I mean, man, if I was y 'all in a heartbeat, in a heartbeat, I would do this. You utilize that income. And I'm giving you a hundred grand to live on. So very generous. Very generous. I would even go less. I would try to do 70 or whatever, right? So, I mean, seriously, if you guys go scorched earth, you could have, you could be completely debt-free in four and a half, five years. I love this plan. There's a lot of hope in this situation if you follow the baby steps. Yes, absolutely. All right, let's squeeze one more in here from David in Salt Lake City. David, get right to the question if you could.

2:03:55Hey guys, thanks for taking my call. I appreciate it. I just had a quick question. We've got 69 ,000 left on our home that we purchased in 2017. And we have the cash to pay this now. But my question is, should we pay it now? I understand, like, I want the piece from having it paid. But from a tax perspective, we're kind of in this tax game of, like, trying to avoid paying a bunch of taxes this year because the business did really well. So I'm wondering if I should pay this now or wait until, like, the beginning of the new tax year and if that would be advantageous. Call me stupid, but I don't understand what the tax purpose is of waiting to pay off your home.

2:04:41So if we spend that or put that$69 ,000, it's counted as taxable income, if I'm not correct. Whereas if you put that in like a 401k or something, that way it's tax deferred. Is this money in savings right now? Yeah, it's just in a checking. So we have a high-yield savings, and then we have a checking where it's just sitting. Yeah, you're not going to be taxed on that. You're taxed in a high yield, but that's— Yeah, if you were selling off an asset and you had capital gains, there would be taxes. But if you're saying this money is already liquid in a checking or savings account, pay off the house today.

2:05:21It's not going to affect your taxes. Sorry, it's in my business checking, so it's not taxable income yet, I guess. I mean, if that money's sitting in your checking, I mean, are you going to itemize deductions? I don't think this is going to affect your taxes. You can talk to a tax pro to double check, but I don't understand how using money from business checking, it's still your money. Are you saying it's technically like you're going to be, it's going to be earned income? I'm saying on paper, it's like, yeah, it would. Like you've made an extra$70 ,000 more. You've made an extra$70 ,000. And so you would technically.

2:05:55Whereas if we put$70 ,000 in our 401k or we have like an independent 401k so we can put in a larger amount, that way it's tax deferred. But yeah, I just, I don't know. Well, for the taxes, I mean, it'd be what? I mean, if you were to pay taxes on that$70 ,000, on that$69 ,000. Extra income. Yeah, I mean, it'd be what? Yeah, I think this is a lot of gyration. I would just pay it off. And yeah, you might have some extra taxes on that extra income. But I don't think it's worth just waiting till the new year. And I mean, it just feels like some tax hacks that you're working on here. I think the peace of mind and a freed up payment will do you way better.

2:06:40So that's what I would personally do. I don't worry about making too much money. I would just call it income, pay off the mortgage, move on with my life, my friend. Way to go.

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