You Can’t Win With Money When Your Relationships Are Messy

29:06And because of that, we're not going to have a lot of money. Like we're going to be, we're going to feel broke for three years until I get through school and until I get a job and all that. And in three years, it's going to look different. But in the meantime, what can we do? What other decisions can we make that are going to be adult-like decisions that may hurt and they're not fun, but it's things like getting the extra job, like you guys are doing. It's selling stuff to see what you can free up. It's getting out of debt and, you know, freeing up income, cutting up those credit cards, cutting up credit cards.

29:38Yeah. I mean, it's doing a couple of these, um, making some of these decisions within the big decision of the lifestyle you guys have made just to make it easier, Sierra. And that's the thing is, is we want peace. You know, we talk about financial peace is what we want for everyone. And that peace is going to look different depending on, you know, everyone's situation and, you know, the way they view life and all of it. It's a little bit of, you know, subjective to a degree but you don't have peace right now and so what i would fight so hard for is in these three years how can we get some peace and being able to free up some money would bring some of that and how do we do that well i just listed out a couple options from jobs and selling stuff and all of it so um that's what i would do it's a long term that you've committed to like once she starts working she's got a great pathway to make seventy thousand dollars and yeah and then together with your husband yeah y 'all will be making you know 130 000 yeah that's great for taxes like that's amazing so the light is coming uh but it's getting to the light that i think is really key and what decisions can we make in between and these are hard sierra i understand like these aren't fun it's not always fun but it's getting you to a goal that you guys want together and part of that is you still being in school so i commend you for having a two-year-old and doing this and and i'm so sorry about the devastation in your area we we think about you guys so much.

30:55So we're praying for you. Thanks for the call.

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32:35You're listening to The Ramsey Show. We help people with your life, your money, your relationships. If that's you, you want to get in on the action, you can call us up. It's a live show. The number is 888-825-5225 and we'll get you on the line. Today's question, today's Ramsey Show question of the day is sponsored by Why Refi. When you're trapped in a maze of defaulted private student loan debt, it's hard to find your way out. But Why Refi can offer you a lifeline with custom refinancing based on your ability to pay and a lump sum payoff option that you could qualify for after 24 months. So go to yrefi.com slash Ramsey.

33:16That's the letter Y-R-E-F-Y dot com slash Ramsey. Remember, it may not be available in all states. Today's question comes from Lauren in New Mexico. I currently own three rental properties and have 30-year mortgages on two of them. You say to have 15-year mortgages because you pay it off faster. If I am putting my profits from my rental toward my principal on a 30-year mortgage and can pay it off in 15 years, is there a need to switch it to a 15-year mortgage? What's the reasoning behind the 15-year mortgage? I make more profits with a lower monthly payment, which puts more money towards the principal.

33:54Well, Lauren, for starters, so we would say not to even have rental property if you're not able to pay cash for it so technically speaking I mean if you could pay it off quickly I would probably just sell one and throw some of the equity at the other and make that a goal to sell it but having yeah three rentals that have mortgages on them yeah not not the not the best idea not really the ramsey way to do it but for your primary home we do say a 15 even though people you know this is one of those that I feel like is a slippery slope because, you know, a lot of people still do the 30 and, you know, whatever it is.

34:31But the thing to remember is that your intentions don't always line up with reality. So if you have the intention of paying a 30 like a 15, you know, stuff happens and you're like, oh yeah, well, we won't pay extra this month. We'll make sure to catch up next month. And then something else happens and you end up usually not paying it's truly like, like a 30, you don't. Now, when you're paying off your house in the baby steps, we do find that people are paying their houses off in like nine to 11 years, which is amazing. So I think that 15 year fixed rate mortgage that we talk about, it just locks you in to a plan to get you out of debt faster with the guarantee that you will get it paid off in 15 years.

35:15It makes you accountable. And let's be, let's call a spade a spade. The truth is, if you go with a 30 year, you're not paying as much. So you get more house. Yes. And I think truthfully, when people want that, they want more house and not when you're locked into 15 though, it's like, okay, maybe suddenly I can't afford what I thought I could get. Yes. So look at the route. Yeah. And that's the thing. That's what's so always interesting with houses is that you're going to qualify for a lot more house and what they will give you than what you necessarily need or even what's good for you financially.

35:49So we always talk about having at least 5 % to put down for a down payment. Your payment being no more than 25 % of your take-home pay on a 15-year fixed rate, which I always say, we understand. That is a very conservative formula when it comes to the housing situation. But just like our last caller, you guys, like you see people like get into housing situations and it takes half their income or maybe one spouse chooses to stay home, but you can't because you've built your life around, you know, having a dual income and it just starts to limit your choices. The deeper you go into debt, the longer you're in debt.

36:20It just limits your life choices on what you can and can't do because it's telling you basically what to do. So that's it, Lauren. All right. That's really good advice. Let's talk to Greg. He's in Biloxi, Mississippi. What's going on, Greg? Hey, Jade and Rachel. It's so good to be talking to y 'all. I'm fangirling a little bit right now. Glad you're here. um so i have been listening for a little over a year but the month before i started listening i co-signed on a truck oh my now for my now ex-fiance oh greg i'm sorry yeah rough situation Um, so we had agreed, uh, once things ended that, uh, Hey, you know, we can keep the loan as it is for a year, uh, cause we needed to wait for the, um, maturity date.

37:17Okay. Um, and so it's coming up on that and just in talking to her on occasion, she most likely is not in a position to refinance it on her own. And she has said that her parents or anyone else won't help her. Good for them. Yeah. Yeah. Just from my, from my perspective, I'm not quite sure how I can get myself out of this. Have you tried persuading her to sell it and start over fresh on her own? I have. She is not completely opposed to the idea, but I don't think I can really rely on her actually following that through. Can I ask a question? And I promise it does kind of relate to this. Who broke up with who?

38:09No, you're good. I ended things with her. Okay. Which makes it a little stickier. It makes it stickier because this is a tie to you. this is a way for you to still be in her life and i don't pulled over greg no uh there's an alarm going off

38:31but my point is like this is a tie to you and if it if things were different i'd say you could make the argument of like hey you broke things off and i want a clean break and i i need to you know be free from this like you could make that argument but in this case it does make it a little tough um how much is the loan for uh there's about 27 left on it okay man how much is it worth do you know uh i actually did look up the kelly blue book a couple weeks ago and it said that private party sale was uh tops like 23 oh gosh and it's upside down yeah okay yeah this i think this is only going to get worse.

39:12So I would really encourage her to sell it. And I'd be strong on that. I'd say, listen, there's a reason that you can't, I mean, the math is like the logical reason is there's a reason you can't refinance this. And the reason is the bank has looked at your financial situation and said, it's not stable. You cannot afford this on your own, which means they expect you to default, which means I'm here for when you default. That's what that means. And I don't know what the hard part is. I don't know if your relationship is there for you to even talk to her like that anymore, but that's the truth of the matter.

39:43I know. Cause I mean, if you can't, you can't make her do anything. And so you really are kind of at the mercy of, of her. I'm like, you can't go in and, you know, you know, take your name off the loan in secret. Right. I mean like, yeah, so it is. So yeah, you're in it. Yeah. You're in a tough position, Greg. And it's kind of one of those, um, I'm sorry that you're gonna have to be one of the sad examples that we'll probably use this week to say when someone calls i should come you know like my girlfriend wants me to co-sign we're gonna say talk to greg in biloxi greg would tell you don't do this because this is what happens my family agrees my family agrees that this is the dumbest decision i've made oh man i mean unless you can just convince her because you're a great salesman uh but coming from an ex-fiance she's probably not going to want to listen to her to your advice i mean you broke her heart sorry greg and now you're you're i mean yeah there's nothing you can do so i think it's one of those stupid texts um you know and i'm praying she doesn't default me too and she just pays this and and gets out of it but you but that's she has been very consistent on the payment okay what is the payment uh oh gosh it's almost seven oh gosh I mean, listen, the most practical thing you can do to be ready for this storm is if she defaults and to be ready if you kind of have some money packed away on the side, because if she doesn't pay it, it reflects on you.

41:11And when it's time for you to buy a house or when it's time for you to do some of the things that you want to do, if you still have a credit score laying around, which you will because of this, it will make it bad. And as we've talked about on the show, having a bad credit score is very difficult. We talk about having a zero credit score, which is wonderful, but this will keep you from having that, even if you pay off all of your other debts. So if I were in your shoes, which this is the game we like to play, I would be, which, by the way, we don't know much about your financial situation. Do you have debt?

41:42The truck, technically, and then I have about$22 ,000 in student loans I'm working on. I've already got rid of the credit card debt. I'd go gung-ho on your debt. I'd work the baby steps on that. And then when I was through, I would be mindful of keeping some money stacked up. Yeah, for your emergency fund, knowing this is something you may have to dip into. And I would tell her too, Greg, you don't want to emotionally be attached anymore, right? And this keeps you guys somewhat together in a weird state for the future. So I'm sorry. I hate that that's happening to you. All right, that does it for this hour of the show.

42:14Stick around. We'll be right back with you before you know it.

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43:24welcome back to the Ramsey show in the Fairwinds Credit Union studio I'm Rachel Cruz and we are going to the phones first up we have Donna in San Antonio hi Donna welcome to the show Hi. Thanks for taking my question. I appreciate it. Yes, absolutely. Okay. So my husband has a student loan that is currently in deferment. It's been in deferment over 10 years. Prior to that, it was in default. It ballooned from$65 ,000 to$340 ,000. What? Donna. Yeah, pretty scary. I know. I know. There was some fraud involved. We tried to take care of it with some attorneys. We were not able to get anywhere. We're stuck with it.

44:11We got married four years ago. His situation is he's 66, close to retirement. He doesn't really have any assets, not really, no savings. I'm 57, probably going to work for another five years. I've got about$1.4 million in investment assets, which are owned free and clear. We both have a joint account with Charles Schwab, which has about$200 ,000 in it. but it's fully funded by me. And then we have two other properties in both of our names. Couple of questions. How can I navigate negotiating this balance down for him? I'm willing to pay up to a hundred thousand for it. And how do I protect myself?

44:53Are they private loans or federal loans? So they're federal loans. They were, they weren't well, I believe they're federal loans. See, I've had trouble with this. They were federal loans and then they were consolidating. Okay. So and from what I understand, you know, I've been to so many different places and I keep hitting a brick wall. It's like nobody can really give me the right answers. I've been told I can't negotiate. If they're federal, you can't negotiate. If they're private, you can. But if the whole lump of them, if that whole lump is federal, you owe what you owe. So what's his best route?

45:33Does he just keep deferring it? No. I mean, he will never be able to pay these off. You know, he'll never be able to pay it. So tell me about the properties because I'm going to – I'll tell you what Rachel and I are going to do, and then we'll explain it. We're going to approach this as any married couple would who has dedicated their lives to each other and has decided that they're one, meaning that they're one in life and money and all of those things. And then we can go back and trace it back if we need to. But let's talk about these properties because what I think is somewhere in the assets between the two of you is the money to pay this off.

46:09I'm just. Yeah, there's definitely money. It's I built this. I mean, we've only been married four years. All of those assets are mine. I mean, I've done what I needed to do and I've built. How many marriages have you guys had in the past? Donna, is this? He's been married once before and so have I. OK, so it's both second marriages. OK. Did you do a prenup at all? um no we didn't we have our wills but we didn't do a prenup okay what can I ask a little bit about that um so I'm hearing you talk and it sounds like you very much want to protect the wealth that you built um but you didn't sign a prenup which makes me wonder about that like how did you how did you view that I didn't realize how um you know I don't know what can I say we're soulmates.

47:00Okay, listen, that's good to know. We're soulmates and, you know, he's a wonderful man and I'm not concerned about really protecting my assets from him. I'm more concerned about protecting my assets against somebody coming in and swooping in, a lender coming in and taking. Got it. Okay, so in that case, I loved hearing you say that because it sounded at first like when you said, oh, I'm only willing to put$100 ,000 towards this, it sounded like you were trying to keep your assets from him right like you didn't want to spend too much on his debt that's the way it sounded at first but now it sounds like that's not the issue and if that's the case can you tell us about these properties because the money might be there to get free and clear of this it's all real estate basically um and again they're all owned free and clear right uh how much how much are into the properties um how much am i into the properties probably you know five or six hundred thousand so tell us probably around five or six hundred tell us property one what's property one worth um so i've got um a condo which is probably worth around two hundred thousand okay um i've got another house which is around 250 um i've got another condo which is probably also around um 200 ,000 are they all owned free and clear yes okay good for you yeah way to go great donna did you know about his debt going into the marriage i didn't i knew he what happened is his his wife his previous wife handled all the finances she was a stay-at-home she did some funky stuff with their finances and he did he thought he thought his student loans were paid off.

48:47He didn't realize until suddenly he didn't get a tax refund one year that he was in default. He didn't even know. So it really was like a big shock. And then, you know, he just, sometimes men just ignore things. Yeah. It was, I think it was too emotionally overwhelming for him and he pretty much just put it to the side. So I knew there was something I didn't realize how many years did he put it to the side uh probably about 13 years total okay so there's so there's enough of a um that the shock has worn off and then we can address reality that he chose not to though right right well now that's gotta bother you right does that bother you is that of course it does okay of course it does yeah yeah sure um but right now i'm committed to the relationship i'm committed to my husband that's great yeah i want to figure out and you guys are in your what 50 uh you say 37 and 66 yeah yeah he's 66 i'm 57 okay and he has why does he have no and what's he been doing like like with retirement and all that he pretty much uh gave everything to her in the divorce sort of one of those situations he he was like no contest just give her what she wants give her what she wants yeah yeah um is he working um he works for me actually i have a business okay he does work for me okay how much is he making um we just have him making something like around 50 000 so we've been keeping it low you know we do we do sort of um um you know uh w-2 is real estate your business is that your business yeah okay yeah Yeah.

50:33So there's I hear two things going on here. I think you're committed to this guy. I, you know, great. I think that you need to reach over and probably sell one of these condos and then go into the joint funds and pay this thing off. That's probably the choice that I would make. I think you guys. I'm worried that and I'm going to say this ever so delicately there's a balance of power here that is feels off and I think that if you don't address certain things it's going to cause issues down the line and I think you need to sit with the couch I think you need to sit with somebody and work through this because it almost feels like you're kind of just taking care of this guy.

51:26And it shouldn't feel like that. You should feel like you're in a marriage where equal people are really contributing. Whatever it is they're going to contribute, but you should feel good about it.

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53:38Welcome back to The Ramsey Show. Up next, we have Brent in Cincinnati, Ohio. Hey, Brent. Welcome to the show. Hi, Rachel. Hello. How can we help? So I'm wondering if I'm able to purchase a car for my wife. We've been leasing to own for the three years, and upcoming December, we can purchase it for$19 ,000. Oh. The same car is valued at$23 ,000. Okay. So you've been leasing it for three years. What was it worth when you started? I'm just wondering how much it's depreciated. How much? No, how much was it worth? $28 ,000. Okay. Okay. And now it's worth$19 ,000, but you're saying you've seen it other places for$23 ,000?

54:35Is that what you're telling me? Yes, with the same mileage, the same year. So it looks like a good deal. Yeah. Do you have the money? And do you like the car? We like the car, but we don't have the money, so we'd be getting a loan through my credit union. Oh. And what's the alternative? You just give it up? Yes. Do you have any? My wife's very attached to the vehicle and doesn't really want to consider any cheaper options. Yeah. Listen, I can understand that. Go ahead. Well, yeah, why is she attached to it? She just likes it a lot? She likes it a lot. Well, the fact that she's not going to be able to consider it.

55:20Is she sitting there with you, Brent? Tell her hi for us. What's her name? Elizabeth. Hey, Elizabeth. Hi, Elizabeth.

55:31So, yeah, I mean, when you put yourself in a position when you purchase something and say, well, I'm just not I don't want to look at anything cheaper. You've kind of already made your decision. I mean, if you guys don't have the money and you don't look at anything cheaper. I mean, I guess the only thing that you guys have decided at that point is, yeah, you're going to take a loan out and buy the car. We would advise you differently. And so you called the show. So we'll give you our advice. I don't know if you're going to want to take it. because what you realize is you've been basically renting this car for three years.

56:04In the most expensive way possible. In the most expensive way, yeah. And I know you can't really tell the interest rate on a lease car, but when people actually ratio it out, it's high. It's usually more expensive than if you went and got a traditional car loan. So then you're going to take a$19 ,000 loan, pay interest on that, and then we're going to look up in four to five years, and this$19 ,000 car is going to go down to probably$10 ,000 or$12 ,000 in value. So when it comes to cars, it is one of the places that financially speaking, I mean, it's kind of one of the dumbest debts you can get into from a financial perspective because again, you're borrowing money and paying more on that borrowed money because of interest on an asset that's going down in value versus like a house, a mortgage, right?

56:51You take out a mortgage, you do pay interest on that loan, but the value of that home is going up at the same time. So the car itself is not a wise purchase to make when you don't have cash for it. So my next question to you guys would be, do you have any cash available to you? Do we have? No, we don't. We're still trying to get over some credit card debt. Okay, good. How much debt do you guys have? We have$4 ,000 on the credit card. And then we have a few monthly payments. What are those? We're paying off our wedding rings, which we have$7 ,000 left over. And then we have a personal loan we're paying back my parents, which we owe about$2 ,500 left.

57:44Okay. And I'm doing$500 every paycheck. Okay. So about towards the end of January, the$500 a month will clear up. Okay. How much do you guys make a year? Close to$40 ,000 a year. Combined? Combined? Yes. Are you both working? My wife is looking at getting a new job that could make more money soon. But we just don't have the money yet. And I don't want to make decisions on we'll have more money later. yeah i want to make the decision for sure we have absolutely which is very wise very very wise so yeah a forty thousand dollar income there's no way i would take a nineteen thousand dollar loan for a car no you can't afford it do you guys have kids yet no not yet listen i'm gonna throw something wild out here and roll it over in your minds and in your hearts tonight but she's not working yet you don't have children when it comes time for this lease like you let it go but if you have to be a one car family for a couple of months while you save up what's the harm in that

58:56Just a thought. Yeah. I suggest that my husband and I did that while we were trying to get out of debt. we got rid of one of our vehicles and we were upside down but we got a small loan for it to get out of it and then we had one just our single car we paid it off and then we actually found that it was doable for us for quite a while and we stayed that way and then when it was ready time for us to have a second car we bought it in cash and for you guys in this season of your life that actually might work out better for you than a lot of other couples because she's not really working yet. And I'm going to say this, Brent, and I'm going to be very as kind and fun as Rachel is.

59:35This comes through. But what the life you guys just described to us from a financial perspective only is so normal. You know, you have a personal loan to the parents for I'm not sure why. You got wedding rings. You didn't have money. So you guys took out a loan. You have some credit card debt. You have a car lease like this is you guys are y 'all are the normal Americans out there. but the problem is Brett normal is broke normal is 78 percent of Americans today are living paycheck to paycheck meaning if you miss a paycheck you don't have enough to cover your bills so if you guys decide that you want to continue to live normally then what you guys have have so far decided is that and and normal would be to go get just keep the$19 ,000 car because you like it that is normal and you will have normal results because of it but what we encourage people is to flip all of that onto their head and actually say what is the weirdest thing we can do because if I get the results of normal which is paycheck to paycheck living and not being able to build wealth and not be able to invest or save for the future or have any amount of money in savings like I don't want to be normal that's not where I want to be and if you guys look at each other tonight and say, we don't want to be that.

1:00:47We want to be people that have no debt. We have an emergency fund. We're actually funding some retirement for the future. We have a house that we can afford. It doesn't stress us out. We have margin in our budget. Like this life that can be created, Brett, is possible, totally possible. But you can't get there if you keep doing normal things. So what Jade's saying is a one car family for a couple that doesn't have kids. Is that inconvenient yeah is that weird yeah but you know what you don't have a car payment because that car payment on the$19 ,000 car it's going to be$600 that you guys don't have like so you have to make different decisions if you want different results Brett and that's going to mean not taking out a loan for a car for you guys the reality is a one car family it's saying goodbye to my emotions saying goodbye to what I want and what I love and all the things that got me to this place.

1:01:41And you put all that aside and you guys are like, we're adults. Yeah, we're adults. And we're going to make adult like decisions and we don't have the money. We can't afford this car. You can't afford this car, Brett. At$40 ,000, you can't afford half of your annual income going to the value of a car like that. It's not good. That's not wise. And, and I would be working like crazy to get your income up. And I would start working to get out of debt. I mean, you guys could get all this paid off. Your debt's not crazy. I mean, it's, you know, 2 ,500, 4 ,000. You guys can get this cleaned up really fast if you just say, we're going to be weird and we're going to work 60 hours a week because we don't have kids and we're going to take side hustles.

1:02:20We're going to drive Uber, right? I mean, like, here's Brent here. Let me put this in perspective. Here's a couple of interesting statistics about cars because I want you to never go and have a car payment again. number one rachel just said 78 of the people living paycheck to paycheck right 85 of people who buy who get a car take out a loan or at least to get it and i think that's a very interesting correlation almost everybody almost everybody which is almost the same percentage of people living paycheck to paycheck yeah and for most people that car payment is about 525 a month which is very close to where you guys were at and and if you invested that instead of gave give it to a car company?

1:02:57What would that be, Jay? Well, think about it. Most new car payments are over a term of six years. If you had listened to us and invested that money over the last six years, you'd have$85 ,000 instead of a car debt that's gone down in value. And so... Be weird, Brent. Be weird.

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1:04:41We're always thankful for the listeners of this show, the people that view it on YouTube, and watch us. But one of the best ways to help spread the word is to share the show with the people that you know, your friends, your family, even on your social media feeds. But, you know, even subscribing, leaving reviews, all of that helps because with the algorithms of today, when you're able to get the show in front of people that may not know about it, just like our last caller, he just said, he just found us like two days ago on YouTube. Yeah, or on Facebook, is that what it was said? And yeah, And it's just, it's great because we want to be able to help people.

1:05:18That's our goal for the show. And the more people we can help, the better we're doing at our jobs is the way we look at it. So thank you again, you guys, for subscribing and sharing. We really, really appreciate it. All right. Up next, we have Wanda in Los Angeles. Hey, Wanda, welcome to the show. Hi. Thank you so much. It's really a pleasure to be on the show. Thank you for taking my call. So I do apologize if I'm hyperverbal. It's the excitement and the coffee couple together. You're good, Wanda. You're great. How can we help? So I recently got a divorce and I owe my husband$50 ,000 and I'm not quite sure where to take the money from or borrow the money from for the$50 ,000.

1:06:02I don't have any money in my savings. I owe$25 ,000 on my car,$12 ,000 to my 401k. And my other expense is my home and my mortgage is$24 ,70 a month. I looked into refinancing. I really don't want to refinance my house because my interest rate on my house is two and a quarter. And so I've been looking at other like HELOC personal loans, but personal loan is like 12 percent. The HELOC is 10 percent. And I just don't know. OK, so Wanda, yeah, 50 thousand. Is it because of the house? Like, are you supposed to give him the equity? Yes, I'm supposed to give him the equity out of the house. Originally, I was supposed to give him$150 ,000, but he knows that he didn't put any money into the house or anything like that.

1:06:52So he settled and said, I'll take$50 ,000. So I'm just trying to figure out the best course to give him the$50 ,000. I did take on a second job. I've been working the second job now for about three months. I haven't received any monies for it because I just haven't turned in the invoices. sure because um what's the time frame that you owe the 50k um it's supposed to be third because we went back to court so it's 30 days after the um court ruling and so the and i got the court ruling in the mail two weeks ago so i have yeah yeah so into basically in two to three weeks it's due? Yes. Okay. Um, so let me kind of set the stage for this right quick.

1:07:39Is his name on the mortgage? Like is he on the deed or the title of the house? It is. So typically, typically what would happen if, if you're divorced, you would do a refinance to get his name off of it. And you would do a cash out refinance so that you could also pull the 50 K out, give him his money. And now you're free and clear from that. But I see why you don't want to do that because of the interest rate. But I now double check this because I'm not sure, but I feel like you can, when you refinance, you don't necessarily have to refinance the entire, the entire mortgage. Yeah. But just the amount that you're a portion of it.

1:08:23Yes. Yeah. And so a portion of it would be at the old interest rate and a portion of it would be at the new interest rates yeah have you talked to have you talked to your lawyer wanda about different options when it because considering it's because of the house uh and his name is on it so you are going to have to get his name off the home yeah um right so what i was advised was um i actually walked to the accountant and so what i was advised to do was to do a quick deed to take his name off the title and if he agrees to stay on the loan, let his name stay on the loan, because if I ask him to take his name off the loan, they may make me refinance anyways, and then I lose the two and a quarter.

1:09:02And so he said he was agreeable with his name being on the loan, and he would just quick deed the home into my name. Yeah, yeah, a quick deed is definitely a great option when it comes to the situation. Yeah, I mean, I mean, and we never tell people to go and take on debt, but there is a point that you're, you're going to be owed this from a legal standpoint and so you you I mean you you have to give that money and Wanda you don't have it right now and so I don't want to see you take equity out of your home and get into that mess of of a HELOC or anything like that so it may just have to be a personal loan okay even though the interest rate for the personal loans is just through the roof well my I mean from the court of law you have to give this money so either Wanda So you sell your home and, you know what I mean, take the equity and pay him what he's due and you have to go find a new situation.

1:09:51Are you able to sustain the home that you're in? Oh, most definitely. Most definitely. Definitely. Yeah. The house is now worth almost$700 ,000. When we purchased the house, it was at$391 ,000. And so I'm very comfortable. How much do you owe on it? How much do you owe on it? $360 ,000. Okay. and in california i can't buy another house at 391 and not in the area that i live in anyway sure sure what uh how much do you make how much are you making i i make 188 000 a year good for you wanda and you're bringing how much are you bringing home after taxes and insurance and everything per month what's your take-home pay um a little over 6 000 okay yeah i mean and your mortgage payments 2000 yeah so you're in but and that's the reason why I got a second job too because whatever I do I want to chop it down with the second job for sure because I don't know which way to go with that yet a hundred percent yeah I mean I mean I mean you're you're kind of stuck between you know a hard place I don't want you to make a bad decision with your home I think that would be unwise so it's not this idea that like you know and it's one thing if you couldn't afford the payment on your income, but you're able to sustain that, which is wonderful and great.

1:11:06But yeah, I would, I would, yeah, do the, yeah, do the quick deed. I would, again, ask, ask the accountant again, wrap back around and just ask what Jade was talking about. And if there's a way to take a portion of it where you're able to pay him out of it and, and the entire loan is not then, you know, subject to the new interest rates, because that would be, that would not be smart. And it's a blessing that he dropped from 145. 50 to 50 ,000. Like that's, that's a big blessing. Yep. So, so Wanda, I mean, I'm looking at this. So let's just say you have, you have, you have$50 ,000 in debt because of the divorce.

1:11:42You got a$25 ,000 car and you got a$12 ,000 401k debts, uh, seven, eight. I mean, that's, yeah, that's $87 ,000. You make 188 ,000. I want you to pay this off in 18 months, Wanda. That's why I got a second Yeah, which I'm so proud of you. Seriously. So yeah. And that's the thing is, you know, that when you look at this high income, I'm like, man, this is, and I know you're in Southern California, so it doesn't go as far as it would in Kansas city or something. I get it. But man, you, you have a lot on your side, Wanda, but, but from this point forward, I want you to draw that line in the sand and say, no more, I'm not doing car payments.

1:12:19We're not doing credit cards. We're not, you know, borrowing our 401k. I'm living on what I make. I'm going to be, you know, funding retirement I mean why is because I mean how old are you Wanda 55 55 yeah so 55 this year it's great so yeah here in five to ten years wanting to retire you know and do something with your life and you're you're going to be able to make a lot of progress really quickly when which I'm I'm so excited for you so congratulations I'm so sorry that it that you know with the divorce and everything that's kind of brought you to this point that's always heartbreaking and grief in of itself.

1:12:51That's, um, that's so hard, but, uh, but you have a lot, a lot of great change ahead and a lot of things that's, yeah, that you can do and make a big, a big impact. Thank goodness that he was a good guy and was like, I know I didn't put any money into this house. Right. It could have been 150. Yeah. I mean, that's, I think that's the really difficult part about, uh, one of the many difficult parts about divorces. There's all these assets and it's like somebody gets to keep the house, but if you've been living in that house together, there's also a portion of it that goes to the other spouse. And so how do they get their money?

1:13:23And so that's, that's one of the frustrating things. And I know like during these times where interest rates, it's like, if I had it at, you know, 2.3%, you don't want to refinance in order to, with these rates. And so I think that's very painful. Yes, for sure. Yep. And again, it's one of these things that to tackle the debt snowball method and even looking at the car, I mean, she's still, she can pay off her car in 18, 12 to 18 months, which is kind of our, you know, buffer so she can keep the car, pay it off. It's not an outrageous, you know, different amount considering her income. But she never needs to borrow from her 401k.

1:13:55Never again. Wanda, you hear me. Thanks for calling in. This is The Ramsey Show.

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1:15:06Exclusions apply.

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1:16:00If you are listening to this on podcast or watching on YouTube, we mentioned in an earlier segment, Jade, that, um, you know, about college and school and all of it. And it is teacher financial literacy month or teacher appreciation month and financial literacy month. And we, um, we just appreciate teachers around here. I know Jade and I, we both have kids in school. And when you have teachers who are part of your own story from being in school, and now if you have kids that are in school, they're just such a gift. Like these teachers are just absolutely incredible. We love them. So we do want to honor them.

1:16:35So make sure to enter our teacher appreciation giveaway at rs.com slash teacher. Yes. And we want to celebrate you. So make sure to check that out, teachers. All right, let's go to Sarah in Philadelphia. Hi, Sarah. Welcome to the show. Hi, thanks for having me. Absolutely. How can we help? Okay, so just really quick. So when I turned 18, I got married to a man who's about 14 years older than me. um we ended up getting a divorce it was like a really controlling situation but in the midst I did get pregnant right as soon as I got married so I have a baby now um she's gonna be five months in May and um so he doesn't help financially I did stay home after I had the baby so I was leaning on him financially and even when we were together I didn't go to school um so the good part is I don't have any debt or anything, but the bad part is like, I don't have like a career path because I went right into being like wife and mother and everything.

1:17:41Um, and now I just like need help with like, yeah. Do you, um, where's your, your parents, your family situation through all of this from when you got married to now? So, um, we got married and like my parents were not super happy with the idea of me getting married not because they didn't want me getting married young i can hear the circumstances yeah and they probably picked up some things around town that they probably didn't like being a 34 year old you know yeah exactly and then um so we ended up um we ended up getting a divorce so i'm staying at my parents now because we're sitting at our house okay wow um wow yeah i'm sorry yeah and he it's okay actually his family has been not his family his brother and his brother's wife have been great throughout this um they let me stay in their house for two weeks without like charging me anything they were super helpful when everything happened they were like listen whatever you need we're here for you like his brother will his brother's wife will call me every day his brother was always like hey if you need any help with the baby like we're here yeah that's great you need that community right now.

1:18:54Like if you have that to depend on, I would, because the truth is if you are going to get out of this, it's going to require you working some hours, like working a full-time job, probably to support your family and childcare is going to be a huge piece of this. Um, so the question then becomes is what can you do for money? Right? Yeah. So thankfully I'm staying home with my mom. Like my parents are thankfully well off. So like it's a place that I can stay and I don't have to worry about like, well, what about the bills? What about, you know, my parents are like, okay, with all that stuff. It's just like, I just don't know where to go from here.

1:19:33You know, it's not like I'm in any danger right now. I just don't know. Yeah. The next steps for you. Right. In life. Yeah. Turning because you'll be turning 20 and all of it. Okay, so I, just because of what you've gone through, Sarah, from a divorce standpoint, having a child, and I never want to minimize someone because of their age, but I am going to say because you're 19. I mean, like you're a kid, right? You're still a teenager, technically 19, right? So all of those factors, I do want to give you so much grace. Like you're still a teenager. You're still figuring out how the world works, let alone the responsibility and the events that you've walked through through a divorce already.

1:20:12right so like just we have a lot of time here sarah there is no i i do not feel like this is a rush situation um there's a lot a lot of grace here i'm like sliding down you're not like a hill you know oh yes yeah if you feel probably out of control so i understand that yes but you're not sliding down in an un um responsible way financially or something right you're you're fine okay so i just want you to know yeah like i have i have no debt if i have a lot of credit cards it's like 40 dollars like i have no doubt i have money saved up i just don't know what to do yep is the divorce final is all of that done any legal bills or anything outstanding there so that's finished and does he have any responsibility like from from the divorce any um child support coming in any joint still i'm sorry oh okay she has to file check for child support so this is only yeah this has only been a month i have to file still and file for divorce or child support Yeah.

1:21:06File for divorce. Oh. Okay. So it's not even, okay. Yeah. Okay. All right. Good to know. And yeah. So yeah, that's why I'm like, I feel like everything is exploring. Do you have a good lawyer? Do you have someone? I don't. Legal representation? Okay. So that would be step one. That's going to be step one. Is to find someone in your area who's a great divorce lawyer. I mean, you're going to want somebody there supporting you and representing you. So I would honestly, Sarah, I would make that step one is to find that person. Because when you file all this is about to it's about to snowball into a lot of things.

1:21:44And and you're going to probably you or your parents will be paying for some of this, too. So so that would be my first goal. Find somebody and then figure out, OK, from a money standpoint, how is this working? How yeah. How much are we going to have to have? Because that's going to allow you to know where I hasn't helped with the baby since she was born. And he might, he might, it'll probably take a court order for him to, and even still he might not. And so for you, I think. Yeah, I'm just trying to figure out like what I do without, like I'm trying not to depend on him at all. Well, don't depend on him.

1:22:19Don't depend on him right now. What Rachel says, right? First step, you get the divorce lawyer. Second step, you sit down with mom and dad and say, okay, we're getting the divorce lawyer. How do we pay for this? And find out what help you have and what help you don't have. and in that same conversation that's also a good time to figure out okay mom and dad like this thing is happening I don't live with him anymore and kind of figure out what create a plan and a vision for the future right it's how long can I stay here what's that gotta look like and guys everybody set really clear expectations of what that means do I can I stay here for a year can I stay here for it and really talk this through because then when you know what the plan is you'll feel better and then you'll know what you can actually focus on.

1:23:03If you know that you have 12 months and then at the 12 month point, your parents expect you to either start paying some sort of rent or I don't know what you'll decide, but then that will inform, okay, what do I need to do next? Yeah, and I would say too, because we always do talk about that expectation, like what Jade's saying. And in this case, Sarah, maybe that expectation is dependent upon your next step and how long the divorce takes. It may even be of if you need to go back to school. And while you're in school, you can stay with them, right? So it's kind of mapping out. And again, this is not in a rush, Sarah, for you.

1:23:40I really don't feel like you have to do all of this tonight by any means. But this is kind of your next big steps is finding the lawyer, filing, starting that process. And then in the meantime, because it's good for you, Sarah, to be thinking through what does my future look like to Jade's point. So what is the next steps? What does it look like? Like, and just paint a broad stroke of like, okay, if I'm 23, what does it look like for me to self-sustain? That's right. To pay rents, all that. Do I need a college degree to do that? Do I love, you know, accounting and I probably need to go get, you know, you know, a degree in that?

1:24:13I actually worked as like a secretary for several construction businesses. I like doing that. Okay. So admin, yeah. Administration is probably really high up in your skillset. Yeah. So finding those kinds of things and then backing out from there and say, okay, you know, would I be able just to plug in with one or two businesses around to be able just to start working, you know, maybe in the next six months and that's great. Or do I need to go back to school? Right. And then with your parents being that safety net for you right now, how much are they willing to be a safety net financially for you right now?

1:24:43And from a time housing perspective, like what Jada said, but Sarah, stay on the line. I'm going to get you Ken Coleman's book, find the work you're wired to do. Um, cause that'll help in that, in that mindset. And I think it could just be refreshing to you to have a level of grasp and control over your future. But I am so sorry about all of this, and we just pray that it's a smooth process for you from here on out. Thanks for the call.

1:25:24Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm Rachel Cruz with Jade Warshaw, and we're going to Gabrielle in Los Angeles, California. Hi, Gabrielle. Welcome to the show. Hello, Jade. Hello, Rachel. It's Gabriel. Sorry. Oh, Gabriel. Gosh, I'm sorry. My bad. Thank you, Gabriel, for the fix. How can we help? All right. I was calling on behalf of my mom. She's 72. She's a widow who never remarried. Currently, she's retired. She's active in her church, and she has a home that's almost paid off. It doesn't include taxes and insurance, but lately she's been asking me for money.

1:26:07It started off small, but it's starting to escalate. How can I help her protect her being independent, but also set up her finances wisely for the future without becoming dependent on me or my siblings? Yeah, for sure. How old are you? I'm 40. You're 40, okay. And her house is almost paid off. Is she still working? She's not. Okay, so she's retired. Do you have any idea in numbers of what's in her retirement? She's currently receiving, as far as her retirement savings, I believe she's exhausted them. So she's currently, the only income coming in is Social Security. Do you know what that is? I believe it was like$1 ,100,$1 ,300 possibly.

1:26:51Oh, wow. And do you know what her mortgage is and what she has left on the mortgage in full? So the mortgage currently outstanding balance is around$100K. Okay. And then the mortgage payment is around, I'd say,$1450. Oh, gosh. Okay. Well, yeah. How is she paying for everything? Right now I have my oldest sister who's living with her, and I believe they're splitting the cost of the mortgage. Okay. So they're half and half. Okay. So that's$700. And then everything else, I mean, is she able to pay for it? Is your sister splitting other bills, you know, like electricity, water, all of that? Yeah. So from what I understand is that my other siblings, she approaches each sibling individually and asks for help, whether it's covering a bill or a few dollars here and there.

1:27:47Yeah. And it's for real needs. It's not for. Yeah. Is she able bodied to go to work? Is she able to work? She is able bodied. However, she hasn't worked in some time. Yeah, that's so hard. I mean, the reality is she either. Yeah. I mean, if she has no if she has no money and all she's getting is Social Security, it's not enough. To your point, when taxes are due for property tax. I mean, when she pays off the house, you know, she's got to pay for property tax and all that. what's the home worth? I'm just curious if she were to sell it, if she were to sell it, what would it be worth? Um, conservatively, probably about 1.1 million.

1:28:27Um, it's a five bedroom, three bath. Um, as far as her renting up a room, that's also been thrown around, but I hate that for her. Require, uh, me involving myself. Yeah. I'm just wondering about, is there like a go ahead i'm just wondering because my head is that she's 72 she's still fairly young and she's in good health she could live till 92 right so in my mind i as in my mind i look at one million dollars that she stands to take away from this and i go okay we can throw a decent amount and invest it and start that fund going and then maybe she can buy a condo for you know, 250 or 300. I mean, you're in Los Angeles.

1:29:15I don't know what's there. What's possible? Can she buy something that's very small just for her? And then your sister goes and does her own thing? Because I'm also thinking what happens if the sister moves out and gets married or moves on in life, right? So there's a lot of variables here. I'd love for her to get some hands on that money, get some of it invested and get some of it in a smaller, modest living space for her? Yeah, I think that's what I envisioned for her. I just don't know where to start. I think if I do get the ball rolling, I'm seeing it through start to finish. So where would I start?

1:29:56Well, I would start with, is everybody in Los Angeles, like your whole family, or do you have family that lives in less expensive areas of the country? uh no we're all basically based out of the los angeles area have you looked at or would you know price ranges of again a very modest one bedroom condo that she could purchase room one bath condo purchased outright out possibly in the areas that worrying like around oh outskirts well yeah because she's got to be able to afford it 400 400 okay okay so then she could invest 500 You know Yeah I'm not mad at that And get that ball rolling And then Again If she's able to Not pull from those investments And maybe for just Three years Work somewhere Just to pay Just the You know Just mortgage I'm sorry not mortgage Hopefully it's paid for Yeah Taxes Taxes You know Lights Water Food And just not touch that money As long as possible And let it grow And then live off of that Because it's either Going to be that or you guys as grown kid adults all have to say, okay, mom's not going to be able to afford this long-term.

1:31:08Are we going to be willing to support her in it? So that would have to be a conversation that you guys have. Will she sell? I mean, if you imagine yourself bringing this up to her, what does that look like? The last time that I brought up the conversation to her, it was emotional for her. For me, it's pretty straightforward. I mean, the way that we're talking right now is the way that I talk with her. And, you know, she's open to it. But, again, she kind of pushes the work on to me. So, and so do my siblings. Do they kind of look to you, your sisters, too, to say, like, what do you think? No, they don't have an opinion as far as what she should do.

1:31:52They feel that, you know, it's our home that we grew up in and that she should hold on to it. and she's only got such and such ways to go. Listen, there's no getting around the fact that this is emotional. I'm telling people all the time that plays such a factor in how we manage the money. But if we look at the numbers, the math is not emotional. She doesn't have any money. She doesn't have anything, and she's healthy. She has a lot of years ahead of her. so she's got to get to the point where the discomfort of staying the same is more uncomfortable than changing right and that's gonna you're starting she's gonna start to feel the cracks in that when you guys stop supplying the money if that makes sense the more that you got and it's your choice but the more that you say okay we'll float it we'll float it we'll float it just know that it'll float through the yeah for the next 20 years yeah so you guys have to kind of get on the same page of saying we can talk to her about this but if she doesn't do it we have to allow her to feel it because when she feels it is when she's going to realize okay I have a difficult choice to make and just try to support her as much as you can and it is emotional it is tough it's your family home there's nothing comfortable about that but the solution often lies outside the comfort zone so so it sounds like my next steps might be like two-part right kind of initiating that conversation with my mom about selling the home possibly and then as far as with my siblings it's having that conversation if we're gonna do this we need to stop enabling her um and giving her money essentially yeah absolutely yeah that i mean that's what i would do and even pull some options you can even get in touch with one of our um real estate pros yeah just to look for the area like what's in the areas of um where you guys are just different options condo wise and you know there Could be one a mile down so she doesn't have to move major locations, right?

1:33:51Maybe it's just the actual home itself. But run some numbers and kind of get some more facts around it. But yeah, this is difficult.

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1:34:58When it comes to debt or building wealth, people often can forget an important step when it comes to reaching their goals, and that's having insurance and having the right coverage or too little or too much can really impact how long it takes you to build wealth. So skimping on insurance might feel like saving, but when life happens, it is not great because you may not have a safety net that you need and we don't want debt to be that safety net. So the right insurance acts as a shield around your loved ones and your wallet if disaster strikes. And in some cases, it can save you money if you're paying too much for insurance.

1:35:32So how do you know if you have the right coverage? Make sure to take the coverage checkup. It's an online free resource that creates It's a personalized insurance action plan for you that's unique to your situation. And it makes an overly confusing topic really easy to understand and gives you the next step specifically for you and your situation. So go to RamseySolutions.com slash checkup to take the coverage checkup or click the link in the description if you are watching on YouTube or listening on podcast. Up next, we have Derek in San Jose. Hi, Derek. Welcome to the show. Hey, Rachel. I'm a big fan and it's a real honor to speak with you.

1:36:10Thanks so much for taking my call. Absolutely. Thanks for calling in. How can we help? So I recently got engaged. My fiance and I are both 36 years old. We're looking to start a Brady Bunch. We've got five kids between 10 and 12 between us. Oh, wow. Between 10 and 12? Is that what you said? Yeah, I have twin sons who are 11 and she has a 10-year-old, 11-year-old, and 12-year-old. Oh, my gosh. That's going to be a house full. That's fun. So great. Yeah, it's been really fun. Yeah. So the reason I'm calling is because we have a pretty large difference in assets. And I think based on your advice, the advice would be that we should get a prenup.

1:36:52So I have roughly$12 million and she has roughly$50 ,000. And so we started the process of looking into a prenup and it's been an emotional one. And I totally understand why. And I think especially like we went through a questionnaire talking together about it. But then when we got the first draft back from my lawyer, that's when she's really not been feeling good about it. And I understand the concern. So, I mean, she feels like I wouldn't be fully entering the marriage in the same way that she is because it feels like I'm holding assets like separately off to the side. And I'm sensitive to that.

1:37:30And especially in some of the context of her former relationship. And so I'm just looking for maybe more clarity and like what you guys would recommend. Oh, man, this is a hard one because it is I think it is a wise decision to do one. And I say that even more. I have a friend who's going through not a great situation. And she came in with a lot more. And now he's just I mean, it was it's just messy. It's messy, messy. And there's a level. Again, you're not you're hoping and praying, obviously, that this is the one and that it's going to last a lifetime. But as you guys have experienced, you know, there there is a reality to all of this.

1:38:15And whenever we any of us get married. Right. I think there is like this like, OK, I'm choosing you for a reason and for a lifetime. But we also don't live under a rock and know that things change in life and situations come up. And unfortunately, some really hard things happen and does cause marriages to break up, right? To enter into divorce. And we don't want that. So what were the – I'm curious. What were the parts of it that was making her – because you guys went through a questionnaire together. And it didn't sound like the questionnaire brought up a lot of red flags. but when she was actually like reading it, does she feel like she won't be taken care of if something happens or like what, what's the, what's that underlying concern?

1:38:59Yeah. Yes. And I think especially like, you know, her kids as well too. And it's something that I want to address and I think we could address like in a will or like some other document or method after we get married. And it's something that I want to do. Like, I absolutely would want her and her kids to be taken care of, too, if something, you know, didn't happen to us. I think it also, it feels very condescending to her that, like, either she, and I don't see it being a problem for her at all. Like, my goal in this, and I think that's what your advice is, is that in our case, that I know is rare, it would help protect our marriage.

1:39:41And that's what I want to do. But I totally understand that she feels it's condescending to her and her family and her friends that they might be a problem and that we would need this to protect against them. Can I ask how stringent this prenup is, how strict it is? Because when I've heard calls about this before, my question is always, is there a way that this can be more progressive? That maybe over time and over years, some of the restrictions fall off? Like, does that make sense to where it's like the longer we're together and the more that this feels right, some of this starts to fall off and now we start to become one.

1:40:27And after a while, it's all gone and we are one. Is there anything built in like that? So there's nothing currently built in like that. So other than that, it's pretty basic. So everything we enter into the marriage with is separate property, except she has a small amount of debt. And she's been awesome about eliminating debt, especially the situation she came from. that I don't want her to carry at all. Like, we would just pay it off. And then everything after the date of the marriage is shared, so income that I make or she made, we just share it. Our plan is that she would stop working. She'd be able to be home with all these kids.

1:41:02Does that include interest on the$12 million, like, as that grows, or does any growth on that$12 million remain yours? Yeah, so at least as it's currently structured, the growth in that would remain mine. I think we have talked about it's not in the document. But like if I were to stop working to also help with the kids, which would be an option, like the income that we drew from that would be considered our income. I think I would. Yeah, I'd be wondering about that if I were entering in that marriage. Like how can we protect what you've already created, but how can I be a player and how that grows from here on out?

1:41:38Like how can I be a part of that? I think I might be wondering about that. That's tough, man. Yeah, and then the only other additional part is we're planning to get a house, and I was just going to buy the house. We title it in both of our names. I just consider it community property. Yeah. Yeah, well, it sounds like you're being very gracious about this, Derek. I think it's such a hard line to be wise in a situation. I mean, you don't sound like you're drawing these crazy hard lines, and you know what I mean? and you're pushing it like it's um your tone feels very humble and and gracious which I yeah I mean I think she probably very much appreciates um so yeah I'm trying to think if I were in her position which you never can fully do for somebody you know there's a part of me that I don't know I think I would understand you're coming in with 12 million and I understand that's not mine right now right like there's I don't know yeah this one's hard for me I I see are you an anti-prenup no I'm not I would not go that far I think it's just it's it's it is a very tough way to start out a marriage clearly yes because we're dividing yours versus mine yeah and everything else in the marriage is out as we say we us our so it it is tough and if you're a person let's you know I'll put myself in the shoes uh me I've always viewed oh when you enter a marriage it's like this yes you don't know who you're gonna fall in love with and that person happens to be loaded and now suddenly you're like oh this picture I had of it being ours is not possible that's just tough I'm not saying it's wrong it's just yeah yeah well and I think too Derek I think it's too I think it can feel like the 12 million's off in this corner and it's never, we're never going to participate in it.

1:43:32But I think the, it comes into it's mine if something happens, but up until that point, it's ours. Like we're sharing assets. That's a good point. That is a very good point. Like we are living our lives together as one, but for some reason, if, if something ever happened in a divorce, this part still goes back to me. Does that make sense? I wonder if framing it, that's a good way to frame it. Cause that with her, cause that, cause it, it can be hers, right? Like you guys can share in this. It's the only time it's not hers is if you guys legally go through a divorce. Does that make sense? Yeah.

1:44:03Yeah, it totally makes sense. And that is how we want to live going into the marriage. Yeah, and it sounds like that's, yeah, and that sounds like your attitude because you're going to take some of our money and we're going to buy a house together with this money and use this money for our family. So I think it's, it's such a fine line, Derek. I mean, it's so hard, but I think I would keep, and bring in a third party. If there's a great marriage counselor or therapist, honestly, it's something to think through and even get other opinions. Because, yeah, you want to be on the same page with this.

1:44:37Hey, do you ever feel like you're doing everything right with money but still stuck? I was you. In debt, running hard, but taking three steps forward and two steps back. Turns out it's not the numbers. It's the fact that changing our ways with money is emotional. That's why I wrote my brand new book, What No One Tells You About Money, to help you push past what's really been sabotaging your progress so you can finally win. You can pre-order now and score over$100 in free bonus items. But only if you order by January 5th. Go to RamseySolutions.com slash store today.

1:45:26The all new EveryDollar is here and it is way more than just the incredible budgeting app that it is. It now has tons of advanced features to help you make progress with your money so much faster. And the average person is finding thousands of dollars in margin in just the first 15 minutes. So get EveryDollar for free starting today. Just get it in the App Store or Google Play. All right, let's go to Alex in Grand Rapids, Michigan. Hey, Alex, welcome to the show. Hi there. Thanks so much for taking my call. Absolutely. So I'm 28 and debt-free. I'm looking to buy a tiny house to put on my parents' property without a credit score now and a tiny house technically not qualifying for a mortgage.

1:46:10How do I go about getting a loan for it? Well, let's talk about the loan process, and then we'll talk about the tiny house on your parents' property. So with the loan process, if you have no credit score, you're just going to have to find a place that does manual underwriting for that. Now, we would recommend Churchill Mortgage. There are companies that do that, and you just have to check and make sure they'll do it in your area. But it's the same process. You're just going to have to show different trade lines. You're going to have to show your pay stubs. You're going to have to show proof of income.

1:46:40If you work for yourself, you're going to have to show your tax returns, that sort of thing. But for the most part, the process is the same. But you're saying it doesn't qualify for a mortgage Because it's a tiny house Correct yeah so if it's under 400 square feet I'm looking at 150 square feet It doesn't qualify for a mortgage What's the cost of it I'm looking at about$40 ,000 to$50 ,000 Oh well save up and pay for it Alex I'm sorry Save up and pay for it It's like a car Right now I only have about$10 ,000 Okay well then just wait a little bit Yeah so just be putting some money aside to$3 ,000 a month and just work your way up and in probably 12, 18 months, then you can do it.

1:47:21Can I ask the long-term strategy on this? Yeah. So I have autism and I can't really live independently. So it's pseudo-independent being on my parents' property. Got you. Got you. Okay. What are you doing for work? I coordinate volunteers for hospice. Cool. Are your parents involved at all, Alex, in this process? Would they be able to help you? Not financially, no, but they've been a great support. Okay, okay, great. How long did it take you to save up the$10 ,000? I just finished. I got debt-free in February and then saved up like$6 ,000 for my emergency to six-month emergency fund. And it's so, I don't know, less, six months.

1:48:08Okay. Yeah, I'm with Rachel. Just keep saving for this. It seems like you've thought through the best way for you to live. And I like that you've thought through that. I don't think you need to go into debt for this. And for anybody who is listening to my zero score spiel, that's for people that are trying to do a full mortgage on zero credit score. But yeah, save up for it. I like the 40 to 50 ,000. Just understand that this is yours. The resale on this virtually doesn't exist because it's on your parents' property and this is money that you'll likely never get back. So understanding that is important, I'd say.

1:48:47Yeah. So running the, yeah, I mean, so it will, are you able to pick up extra work, Alex? Yeah, I'm looking for a second part-time job. Okay, good for you. You sound incredible. I mean, the fact, I mean, you're very ambitious. You're very well-spoken. You know what you want. You've been doing the baby steps. You've been debt-free. you got your fully funded emergency fund. I mean, you're literally doing it all. The only thing that's going to suck is like the next probably three years of saving for this. You know what I mean? You would just look at it like, you know, and people want to save up for a car.

1:49:17They want to save up for a college education, right? And these numbers, these are big numbers. I'm definitely not downplaying that. It's just, so it's going to just take you longer to do it. And even though I guess technically, you know, I guess you could Ramsey, you know, go through it to say, well, But a mortgage is the one type of debt And this is for a house But the fact that there is no resale Because the one reason we do say a mortgage Not only is because it is the most Expensive thing that you're ever going to purchase As a home but also Homes go up in value over time And this is more like a car In a sense where it's going to go down in value And so getting into debt Even a personal loan for this Financially would not be wise So it really would be You putting money aside And I mean I don't know about the market In tiny homes Can you buy Used ones?

1:50:10Can you buy a used one? Yeah that's what I'm looking at I'm looking at them on Facebook marketplace So maybe you could even Alex I don't know Because for some people they may want it off their property There may be some urgency to get one off So maybe you could even negotiate with them And say hey if I have cash What's the lowest? You wouldn't be able to do that today because you don't have that amount but when you're getting closer to that and you know three years or something i mean you may be able to negotiate okay for for a lower price yeah absolutely alex yep thanks for the call um and i again i think yeah i would i just wouldn't do that i wouldn't go the debt route i wouldn't either and because you never know especially if you're already buying it used yes what type of resale would be yeah on maybe you know selling it in the future yeah absolutely all right let's go to Elijah in Salt Lake City.

1:51:00Hi, Elijah. Welcome to the show. Hey, how's it going? I just have a question. I am 22 years old. I'm currently going to college right now. I'm almost done with my bachelor's degree. I have only about a year left. I'm only about$14 ,000 in student loan debt, so almost done. But yeah, that's my only debt. No credit card debt, nothing, no car loan, nothing like that. I guess my question is, well, I'm looking to go into law enforcement after after I graduate. I guess my question is, is it worth it to stay for a master's degree if I get an extra like pay incentive for the rest of my career? Or if I should just once I get my bachelor's degree, take that pay incentive and just start working?

1:51:43Well, what would it cost you to get your master's? How would you pay for it? So that one would be loans. But it would be for a total about master's degree. I've been doing my research about 18 ,000 for the college that I'd be going to. And what's the difference in job that you would get if you just went into the police department with a bachelor's versus a master's? Yeah. So if I went in with a bachelor's degree, I'd be getting a 3 % pay incentive for the rest of my career. If I went in with a master's degree, I'd be getting 5 % pay incentive. So I guess my question is it would take a long time to repay that, like get that money worth, that extra 2 % every year.

1:52:19But I do really enjoy college. I do want to get married before I leave college. and I enjoy my hobby. So I just don't know if it makes financial sense to get a master's degree. Not on debt. Not on debt, but I'm wondering if there's a way that you can cash flow it. Are you working at all? And my next question is, do you have to do it right away or can you work on it later while you're in law enforcement and still get the 5 % bump? Yeah, you can still get the 5 % bump. I've just heard from a lot of people that, you know, it's really hard once you're starting this full-time job to go back. Yeah. I mean, how much are you getting paid like your first year that you're working?

1:52:56So, yeah, first year with a bachelor's degree would be about 90K. Okay. And then with a master's degree, if I came in first year, it would be about 95. Okay. So that's my thing is that the percentage-wise is not big-ish. I mean, we're talking maybe a$4 ,000 difference, and you could do that in two months with a side gig. You know what I mean? Like, so there's a part of me and I know, I mean, we, I have friends in law enforcement and they even move around, they get up to detective or they, you know, move around within it. Yeah. That can change your pay over time as well. So, um, yeah, I think if you had the money and you wanted to do it, I don't think I, I mean, I don't think I would stop you, but also since you don't have the money, it's kind of, that's a no go for me personally.

1:53:41Okay. Yeah. So you would just, you would, okay. So you wouldn't be okay with, you know, taking out student loans for a master's degree? No. Okay. No. Yeah. I'd get this paid off. And, um, man, I wish we had a Ramsey dating app. Cause I feel like we had a lot of calls of some ladies that are always single, Elijah, and they're always looking for a man and we could have pointed them your way. I know. I know. No, I, I, I appreciate the, uh, the, the, the proactiveness of love. I do. I do. Because I do think that's great. I am for getting married young and, you know. And what he said is true. Like, when you're in college, there's people right there to choose from.

1:54:21Once you get out in the world, it's like, I got to work. I got to go out after hours. It's exhausting. It's absolutely exhausting. I got to go to an event, get dressed up. College, it's like you got your pick right there. Got them right there. Oh, Elijah, yeah. I hope that helps. So, yeah, if there's not the cash. But to Jade's point, if you're able to somehow cash flow, or even if you get into a situation where they help pay for half of it, I don't know, you know, your work, that would be incredible, too. So I hope that helps. And yeah, good luck.

1:55:11everywhere you turn right now you're being told a lie about money that you can't get ahead that you can't survive without debt and those lies are keeping you broke don't buy into it yes there's a lot of noise and chaos and confusion out there but there's also hope the truth is you have more control than you think this year it's time to take back your hard-earned money and your life and it starts by joining our free live stream. On January 8th, me and Jade Warshaw will show you how to go from chaos to clarity with your money. Help you break free from debt and change your family tree all by using the all new EveryDollar app.

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1:56:16Our scripture of the day comes from Philippians 3, 13 through 14. One thing I do, forgetting what is behind and straining towards what is ahead, I press toward the goal to win the prize for which God has called me heavenward in Jesus Christ. Booker T. Washington said, you measure the size of the accomplishments by the obstacles you have to overcome to reach your goals. That's good. That's really good. Love it. Love it, love it. All right. Up next, we have Jacob in Grand Rapids. Hi, Jacob. Welcome to the show. Hey, Diane. Thank you for having me. Absolutely. Recently, this year, I've had a change in my whole money, And it's really been having, you know,$3 ,000 and a checking account for emergency, putting everything else towards a high-yield savings account or cash-plus account to some banks.

1:57:10And then, you know, maxing out my Roth IRA as much as I can every year, as well as, you know, traditional brokerage investments. But it really got me thinking, it's like, can you live with these cash-plus accounts or high-yield savings accounts, considering that they accept direct deposits and bill pay and, you know, you can deposit checks. Can you only live with using a high yield savings account with a credit card? And if so, like what's the disadvantage with that without going through, you know, your traditional local bank or even your commercial bank, like the bigger ones, right? Yeah. Well, from a high yield perspective, usually you have a limit on how many withdrawals you can have.

1:57:49So you can't use it like a full checking account. Sometimes they have a limit of five. is, is what I see most of the time. And, um, but yeah, you will get a debit card and a, um, checkbook with that. So you can, you can, you know, take money out of it, but you can't, I mean, if you think about, you know, the expenses, I just think about my every dollar app. And when I open it, it's like 15 transactions, you know, and it's like an Amazon, an Amazon, grocery, Netflix. I mean, so you're, you're, you have a lot of transactions coming out that will not, it'll, it'll exceed the limit of most high yield savings accounts.

1:58:25I see. Yep. So there, there really, there really isn't much as long as, you know, whatever company you go with making sure they don't have those limits and whatnot, um, or a high yield at least. Well, they, they do, they will. Yeah. A high yield usually does have, have a limit of how many withdrawals you can have per month. Yeah. So a traditional checking out. Now, I will say, Jacob, there are some, and we're actually kind of in talks with one right now, possibly for the Ramsey show. There are now banks that are offering a higher percentage rate, maybe like a two to three percent for checking.

1:59:00Just a normal check. Yeah, which is great versus I think our checking is like less than one percent or something. I don't think we basically get anything from it. So there may be some more on the market that are great. It's not it wouldn't be considered a high yield savings. It would be considered a checking account. But there are some banks that are offering, usually online banks, are offering more of a higher interest rate on just a traditional checking account. So that's something you could look into if you wanted to. No, that is true. I've been seeing that with a lot of banks. Like I'm looking at one, like it's Vanguard, and that's the one I was looking at.

1:59:31It is labeled a cash plus account, so it might not be a high yield. I guess that's where my kind of question or to myself was a bit confusing. but the main motivation behind it is you know making my money work for me right and um making sure that yeah it's not fitting and you know yeah for sure but I would say the account that the money you have in your checking or the way I look at it Jacob is that money's sitting there not to make me money it's to keep my life afloat I mean that that and my investments are there to make money for me just like you're saying my high yield savings it's there for a little bit of that bridge mentality of like, we have a lot, you know, we had a good amount of money in our high yield because we were building a pool.

2:00:10So we were writing some checks out of it throughout this past year, but I'd rather it sit in a high yield savings versus a checking account. But yet I know my high yield savings is not where I'm going to make a ton of money. And that's, that's not why it's there. It's fine to have it sit there, some savings, because it will make more than a checking account. But I look at, for me, my investments from real, from retirement, performance Winston I have a separate mutual fund and then we also have some real estate so like I look at those as where my money makes money not necessarily my high yield savings or my checking so I wonder if from your mentality perspective Jacob to kind of like loosen that a little bit and maybe maybe put some more like emotional parameters around these accounts I think so it's also about the habits you're forming like when when you tell me that I'm thinking you're building the habit of I have a block of savings and I can pull from that block of savings for normal every day.

2:01:04Do you know what I'm saying? Yeah. As opposed to when you're checking accounts and you're checking account, I only use this for day-to-day purchases. And my savings over here, I only touch it if it's an emergency. And this HYSA, I only, you know what I'm saying? So you're building those habits. And when you blur the lines like that, I think also to Rachel's point, it just, I think it causes confusion personally. But yeah, I wouldn't do it. there are definitely worse things you could do right you know what i'm saying but for sure i wouldn't do it yeah does that help yeah that's that's where no it definitely does help and you know that's where i'm going eventually i have money set aside i mean a little background for an investment property a multi-family unit and it's just been sitting in you know i think like a point one percent so i was like you know i gotta move this yes for sure you know and and i would a property.

2:01:55Yeah. And I would say this too, Jacob, if that, um, I love that real estate goal for you. And if it's going to be longer than five years, you could even drop that in the S &P 500 through Vanguard if you want it. And, um, if it's longer than five years, you could invest it. It's going to go up and down. It's not going to be as steady as just a high yield savings, but high yield savings, you're only going to get four to 5%. Now, if it's less than five years, I wouldn't probably risk it putting in the market. But if you know, it's going to be longer than five years, you could drop part of it, you know, maybe not all of it, maybe some of it, maybe all of it into just the S &P.

2:02:28Yeah, that is very smart because the compounds and it's a good performance. Yeah, for sure. So again, that answered my question. Okay, perfect. Well, thanks for the call, Jacob. You're a sharp guy, sharp young guy. Sharp young man. To be able to be thinking about all of this, which is great. So again, you guys, just to kind of like clear that up, you know, you want to have your checking. You want to have some savings. And we love a high yield or a money market account. But in that, you're going to have your emergency funds, some short-term savings that you're looking towards once you're debt-free and have your fully funded emergency fund.

2:03:00Maybe your down payment you're saving up for could go in the high yield. and then beyond that be investing and retirement is your number one priority with investing 15 percent of your income will go into that and that's Roth IRAs yep 401ks 403bs now I keep my I keep my emergency for like Sam and I keep our emergency fund in one high yield and then we keep another high yield for like renovation like things like that is that what you do I just like it over there yes that's how I am yeah that's how I am I'm like don't count that like like I like to forget it's even i know and i'm such the free spirits even though i'm like talk about money every day for my job but i'm always like hey babe out of all their accounts like well how much is in this and he like gives me the number i'm like that's not including the emergency fund is he's like no it's not including the emergency but like never include the i'm like i just can't even like emotionally yep go there but uh but yeah those are those are some great questions and you know we were um the high yield savings the returns have gone down a little bit we saw them they're they're crazy they We're at like 5.5 at one point.

2:04:00It was wild, wild, wild, wild. So that's always a thing to remember too in the economy when interest rates go up. It's bad when you're in debt because you're having to pay that interest. But when you're earning the interest, yeah, it might be great. All right, let's go to TikTok real quick. We'll close out the show with a little TikTok. We got Brian and he said, because of your show, we're living the dream. We retired early and we're traveling the country in our RV and we can't stop saving and eating cheaply. how can we eat steaks rips seafood without guilt i thought i said without a grill wait wait wait basically how do you enjoy life on baby on baby step i think they're on seven i think they're they're done they are living the dream so i'll give you my framework for like so basically they're feeling guilty about their spending is that what they're saying okay they have the money so i love this because sam and i sometimes feel the same way like whenever you've gone through a struggle and you've sacrificed to win you do it's like oh like you're afraid you're going to mess it all up.

2:04:54Right. And so here's what five pillars of personal finance. And if you check the boxes, then you're a financially responsible adult. Love it. So number one, are you living on a budget? Okay. Green check. Ding. Number two, are you a person who is living out of debt? Like you're out of debt. You don't have a debt. Ding. Check that box. If you're, I carry the proper insurances. Do I have the proper insurances? Yes. Check that box. Am I a person who's saving for the future? Am I doing, you know, my 15 % to retirement? Am I doing the 529? Am I investing in my, you know, four savings account through my home?

2:05:28Ding. And am I prioritizing giving? If you're green checking all those boxes, permission to spend. Enjoy some life. I love it. I love it. I hope that helps Brian. Enjoy the RV life, the retired life. I love it. Oh, thanks to all the guys in the booth for helping out Jade. Thanks for the great hour. And remember to take control of your money and create a life you love.

2:06:19you