You Don’t Have To Live One Emergency Away From Broke

30:20Do I just say, hey, dude, get your head out of your butt? I think it's when you enter into those conversations with you, with the word you, When you start those conversations with the word you first, you're starting a fight. You're declaring war and he's going to defend himself. What's more important here is for you to come up with your or what statement. I am going to fill in the blank. I will not be married to somebody who puts other people's priorities ahead of ours. I will not marry somebody who doesn't care what I want or what I feel or what I want to co-create. I will not engage in. And so it's not about you need to get your head out of your butt.

31:03It is gently and firmly and in full control. I will not fill in the blank. Or I am going to fill in the blank. That's the declaration. And then he gets to decide, does he want to be a part of this thing or not? Ooh, tough stuff, John. Tough stuff. We're rooting for you, Amy.

31:39so

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32:31That's N-O-K box.com slash Ramsey.

32:55The question of the day today is sponsored by Y-Refi. Private student loans and default can feel like a dead end. But Y-Refi works with borrowers when other lenders won't, creating fixed rate plans tailored to your ability to pay. So go to Y-Refi.com slash Ramsey today. That's the letter Y-R-E-F-Y dot com slash Ramsey. Remember, may not be available in all states. All right. Today's question comes from Veronica, Miss Veronica Vaughn in California. She writes, My husband and I are less than a year away from being debt-free. We are self-employed and have been married for 28 years. My husband is a hustler who works seven days a week.

33:36I'm worried that when there's no more debt, he won't be as motivated. As he's leaving the house in the morning, he'll often ask me, how much do I need to make today? How do we continue the hustle when we get to the investing saving part and we quote-unquote don't need the money? I love this question. I like this question a lot. So I see what you're saying, Veronica, about you're wondering if he's going to lose, like, take his foot off the gas or, like, lose motivation. But I think it's actually the opposite. So let me kind of explain that. I think, John, that when you are in debt, debt rules all.

34:15It is the driver of everything. I'm working all day for that guy's money. Yeah. I mean, but you're right. It is a driver. I've got to make money so that in the so that is so that I can pay off debt so that I can keep making more payments. Right. So your mind in many ways is very limited to that thing when the debt is gone. In many ways, it's like, you know, when you've been wearing a pair of tight jeans all day or like a tight you find or you get home, you take your wig off. You're like, oh, I can breathe like I can finally just be comfortable and I can look and see other opportunities and other things.

34:48It's not just tunnel vision goggles on my debt. And so there's part of this that, yeah, when you're out of debt, things will change. Priorities will change. You guys might look at your life and go, oh my gosh, we thought this was the goal, but now that we can see and we're comfortable and we can actually afford to have options in life, you start to look at other things that might be important to you that you never could have even thought about before. So I do think you might see a shift, but it doesn't necessarily have to be a bad thing. It really is, you know, Dave Ramsey, John says all the time, when he's talking to small businesses, he's like, yeah, move at the speed of cash because when you have debt, it changes the decisions that you make.

35:31It changes the spirit in which you do things because there is a lot tied to debt. Now you've created this pressure in your life, right? To pay the debt. And it's the same thing in personal life. When that pressure to pay that debt is gone, yeah, you can look up and go, you know what? We see it all the time on the show. I want to be a stay at home mom, you know, or you look up and go, you know what? We thought that what we really wanted was to buy a bunch of new cars right after the debt was gone. But really what we want is to just enjoy life. And suddenly maybe you don't want to take a vacation.

36:00Maybe you just want to sit at home and enjoy your home. Right. There's so many things that shift and change because that barrier that was on your heart and mind is just gone. So I would say, let's see what happens. Let's not make it a problem. Or let's talk about it now. Yeah. We need to talk about it now. That's good. But you won't know. You won't know. But also, your husband needs to stop working seven days a week and hustling when you don't have any debt, Veronica. That's what I'm saying. If you're already hating on him in the future, like, he's not going to want to work seven days a week. No.

36:33He shouldn't. Y 'all are running for your lives right now. And so what is it always... We're going to shift to being intentional with this. Right on. and but I think there's a man there's such a problem in modern it's probably all marriages but modern marriages which is I need to have a conversation I imagine a future where this thing happens and then you're going to do a thing and I start getting mad at you about the thing or frustrated with you about the thing that hasn't even happened yet that I don't even have proof is going to happen so have the conversation now and not Not with, are you going to be this motivated?

37:16We don't own any money. Not that way. But, hey, we're getting really close to being out of debt. What does our life want to look like then? Like you were talking about. What do we want this thing to look like? And he probably is going to say, I'm tired of working seven days a week, 365 days a year. I want to exhale. And you might say, well, I like how much money you make when you work seven days a week. And I can't wait to spend all that money on me and us. And you don't need to have that hard conversation. Yeah, I agree. But this sounds like a... It's an imagination. But it's an imaginary character assassination.

37:52You know what I mean? Yes. It's very close to contempt. It's very close to like, I'm up here and I work really hard and I'm afraid he is just going to stop. It's almost like, have you ever had a dream about your spouse doing something? Oh, and you wake up... And you wake up mad and you're kind of like playing it out. And they're like, what's wrong with you? in multiple times to get a cup of coffee and I can feel my wife is mad. I'm like, what happened? And she's like, you know what you did in that dream. I'm like, what? And she'll say, I know it's irrational, but I'm still mad. And I'll be like, okay, I'll.

38:25This is that though, right? It's a scenario that played out in your mind and you have told no one about it to even see if it's real or not. So yeah, John, I agree. Have the conversation and yeah, there's going to be a lot of unknowns. That's okay. But at least say what you're thinking, which is, you know, how do you think you're going to feel when we're out of debt? You don't have to say it in an accusatory way. What do you want to, what do we think our work life is going to look like? What do we think this small business is going to look like? This self-employed business? What are we, what are we, like whatever.

38:53And if you've been hanging on to something for almost three decades of marriage, because I'm also seeing how many wives would love for their husband to turn around as they're leaving the house and say, how much money you want me to make today? Okay. And she goes this much. He's like, I'm on it. Right? Yeah. It might be that he thinks he's loving you every morning, Veronica. And if you tell him, hey, when you ask that question, it kind of freaks me out. It makes me think you're trying to do the bare minimum. And he might say, no, no, no, no. I'm trying to show you that I'm all in for us. Or he might think that the only way that he can earn her respect is, yeah.

39:28Because he's working seven days a week and I didn't seem to be getting it. So maybe if I, anyway, it's having those bigger conversations that I think are awesome. Yeah. But yes, I found, to your point, I found myself, I worked really hard to get out of debt. And I thought peace would be taking my foot off the gas. And it was actually an opposite. Once I realized, oh, now I can earn money forward, not just paying some other guy that I already took it from. I wanted to work so much more because I realized, oh, I can do it and it's going to be mine. It's going to be ours. And so that changed my whole, the whole trajectory there.

40:03Oh, good stuff. All right. Thanks for the question. Really, really good. Let's go to the phone lines. We got Brett, who's in Maine. Hey, Brett, what's up? How can we help today? Hi, good afternoon. Hope you're doing good. My question for you is, I've been dating this girl for a little bit now. And we both kind of came into this with the idea of like, we're dating for intentions to marry. And I'm very much a planner. And so I'm kind of curious what your thoughts are for budgeting for an engagement ring and where the best source of, because I have pulls of money in different spots, like where the best source, whether it's drawing from investment accounts or if it's better just to start saving up.

40:44And so you don't have to hamper or touch the investments at all. Kind of what the best route to go for that. Yeah. Excellent question. I listen, congrats on the successful relationship. I 100 % would not pull the money out of any investment accounts. Those are plugged in for a reason. They're there to build wealth for the future. So don't rob yourself by draining those accounts. Plus, you don't want to get hit with fees and taxes, right? It sounds like this is something that you can cash flow over time and just save up for what you're looking for. We would say 30 days. 30 days of work is probably a good place to start.

41:20Some people might argue that and say it needs to to be a little more or some people might say it needs to be a little less at this point is really is about what you I mean obviously you want to get a ring that you think she's gonna like and you know that sort of thing but it's pretty simple save up 30 days worth what do you say John what I say don't call strangers on a podcast and ask them this question like save up what you think the ring is is is a good amount I mean yeah we've I've taken calls on the show where it's like hey I'm spending$25 ,000. And my personal, I was like, you're an idiot.

41:53And Dave was like, no, he's not. And so everybody's different on this deal. And so it's what you can afford and pay cash for. What is it? Like, it's two months. No, it's not. But it might be one month. It might be four months. It just depends. It depends. And some of you guys can go put a quarter in one of those little tourney things in front of a pizza parlor. Please don't do that. Whatever. You do you, boo. Just pay cash. That's it. Oh, that does it for this hour of the show. Keep on listening. We got more coming at you.

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43:40normal is broke common sense is weird so we're here to help you transform your life from the Ramsey Network and the Fair Ones Credit Union Studio this is the Ramsey Show I'm Jade Warshaw next to me Dr. John Deloney taking calls about your life your money for the next couple hours 888-825-5225 is the number that gets you on the line. Let's go to the phone lines. We got Darby in Nebraska. What's up, Darby? Hey, thank you guys for taking my call. No problem. How can we help? So I have a unique situation. Tell us about it.

44:20So I was a stay-at-home mom. I'm sorry. No, you're good.

44:27um i've been a stay-at-home mom for the last seven years um we found some issues with the current home that we're renting there's nowhere else to rent in our area even towns 20 30 miles away so we saved up money we are in the middle of building a house and i i went and got a job about four months ago to just give us some extra cushion. We have no debt. But I have lost several child care options due to my son's unique medical condition, I guess you would call it. And we don't know what to do. What's his medical condition? What's his challenge? um so we moved into this house when he was one he just he just turned five um last december he he was like so non-verbal i was like is he autistic um they did a random blood test and found out he has extremely high lead levels and it's in the dirt around the home that we live in and he's a boy he eats dirt didn't think anything of it so yeah his lead levels were through the roof i did a detox with him he has finally started talking but he's only been talking for the last oh six months or so So at this time, he's pretty delayed, right?

46:12Yes. Okay. Yeah. Like physically, he's fine. Sure. Have you gotten neurological testing done? No, we've done. Have you gotten him psych evals or developmental evals? No. They think that he's good because he knows he can count all the way to 20. He knows all his ABCs. He recognizes numbers and letters. It's just verbal that he is behind. Is he in a speech path program? Yes. Okay. Very good. And so what is it about his speech challenges that make child care impossible? So because he's very independent, because no one's been able to understand him for the longest time. so he will ask and if he's not being understood he just goes and does it and sometimes he's a little rebellious and he gets very frustrated and mad when he's not being understood and he will repeat over and over a word and which is like I love his stubbornness because that's what's got us this far like him yeah but constantly are you are you are you underselling it?

47:33Because what you're telling me, that's a very, those are just five, I mean, it's just working with four and five and six and seven year olds. Or does he start smashing stuff? I'm trying to figure out. No, he never gets destructive. Okay. Here's what I hear. I hear a mom who is underwater with guilt.

47:55That somehow you did something wrong to this little boy. And I want to free you from that. you didn't. Okay? You're a good mom. Your husband's a good husband. He's a good dad. Yeah, he's a very hard worker. I know. And you are too. And this is a hard, messy situation because nobody likes to uncover, oh my gosh, the home we live in, our one safe place actually is responsible for making our kids sick. Nobody wants that. And here we are. Okay? my fear is you guys have boxed yourself into an either or situation and now you're building a house that you can't afford or that you can barely, barely, barely afford.

48:41And maybe you couldn't rent a house, but I would have suggested if you'd called us a few months ago, get a two bedroom apartment. This is a very short term situation right now, but there's other solutions, but here we are. You've, y 'all building a house. I'm assuming y 'all are under contract and everything. This thing's going forward. yeah yeah we've got started on it and yeah we have three kids okay he's our middle okay are you are you able to make this payment are you all able to live comfortably without your salary we can yeah so with without my salary it's our monthly payment will be that like right at that 25 percent great i i just really want the extra cushion to because we have livestock and our lives are very unpredictable and if there is something else that my middle child needs um like i had to go do a bunch of research on this because there was no research on kids with lead poisoning.

49:49There is countless, countless reams of research on lead poisoning in children. And if your physician doesn't know, you got to move on from that physician. It is, I mean, there's so much literature out there on it, tons. And it is a big deal. It's a very, very big deal. That's why they removed it from paint, except an older, I don't want to derail us. It is out there a lot. Okay. But also Googling everything can make you, it can trap you, right? Yes. So here's the bigger situation. You and your husband need to sit down and say, hey, we've created a life with a ton of variables in it and we have three kids and we're building a home and we're moving.

50:33There's anxiety alarms ringing all throughout your house because y 'all have put too much on this plate in this particular season. And it may be for this season, we're going to reduce the amount of livestock we have. or we're going to move our cows to another field for two years and we're going to take that hit so that we have some margin to be with these three little kids, especially the one in the middle with special needs. Or, and I'm just making something up, but anytime somebody calls me and says we have this problem or that problem, neither or, I want you to at least go through the exercise of putting three or four other variables on the table just to see.

51:08Let's move from Nebraska. What would that look like? I can't do that. Okay, well at least we want to put that on the table. We are going to sell this house that we just put a thing in because I think we found a rental house. Well, we're not going to do that. So I want you to at least go through that exercise. Do we have to have all these cows? Do we have to? Do we have to? Do we have to? And sometimes you can clear away some of the nonsense. You clear out that closet a little bit, and it's much easier to breathe in there. Okay? Okay. And is there any other question we can help you with? I feel like I just talked over you the whole time.

51:41well yeah we were just kind of looking at different like i was kind of trying to think of creative opportunities for me to make some income from home i do a little bit of like custom leather work already that's amazing there's never been a better time in history to sell custom leather work all over the planet if you can get it done and get up a nice e-site yeah i think that's great i think anything that you're looking for it sounds like right now you need money right away so i'd probably look for something that's already contained that you can just get started in and then on the side i'd start the leather thing and yeah e-com that's the way to do it or next door app or somewhere down the road

52:29statistics show that half of americans don't have enough life insurance or they don't have any at 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.

53:00Me too. They don't know what to do next. Me too. I mean, you're going to have a crisis here. And, you know, 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 the two options. And take care of your dadgum family. Term life insurance can replace income, pay off debts, cover funeral expenses. So your family can actually have the opportunity to just be sad. Yeah. To just miss you. That's exactly what it's supposed to be.

53:28It'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.

53:59If you enjoy the Ramsey show, let somebody know about it. Take the time to share an episode of the show, or if you're watching on a platform like YouTube, take a moment to like, maybe make a comment. If you're watching on Instagram, maybe watching one of those clips that we put out. use a little paper airplane and send it to somebody else. All of that is so, so important. When you like, subscribe, and share, it helps us in the algorithm, and more people get this life-changing content. We appreciate it. All right, let's go back to the phone lines where Brenda is waiting in California. Hey, Brenda, what's going on?

54:31How can we help today? Hello, how are you guys? Great. First of all, let me just say, John, you're one of my favorite people on the radio right now, and I haven't had the guts to actually call your show, And I'm so glad that you're on because this question has a little bit of emotion attached to it. The question in its most simplicity is I wanted to know if selling my business property would be a smart move to pay off debt and give me a jump start towards saving for retirement. I opened my business when I was 20 years old. I've had it for 35 years now. and over the last um since 2019 i would diagnose with a medical um well with a blood cancer i'll just say there's no cure however i do feel fantastic right now and so um that's not really holding me back at the moment um and then covid the shutdown with covid and then um in 2023 my salon was flooded in the california floods and so um i was this is like my second go around on trying to get on the baby steps.

55:35And so I had to live off some credit cards pretty much from about 2019 to now. Wait, Brenda, why? How come? Well, I'll say with the flood, when the flood happened, when our community was trying to save it, I'm on one woman's show, so I was literally trying to put 50-pound bags around a fan around my... Oh, you're going to be crying. 50 pounds of fat around my salon and I injured myself. I herniated myself. And because I have this type of blood cancer, when I went to have it operated on, it gave me too much blood thinner and I was eternally bleeding. So I had a long recovery before I was able to just, you know, go and win another chair and start working.

56:22I got that. Did you file malpractice against these people who poisoned you? No, I didn't. Okay. here's what I'm trying to give you back I'm trying to give you back some agency a flood will take everything from you because everything's going okay and then a natural disaster it literally falls from the heavens and it takes everything right yeah and it feels powerless and then when your body gets cancer the very instrument that you walk and breathe and talk through and love through goes to war against you and it's scary right yeah it feels like you lose ages you don't even trust your own body anymore and then it's easy to make the next statement which is i had to for the last six or seven years live off credit cards no i didn't live off credit cards for six or seven years i lived off credit cards for five months oh for five months okay i thought you said you've been doing it since 2019 okay no so for five months during the flood time because I was already on trajectory.

57:26So during the flood. So you're off the sauce now. Okay, thank you. No, no, I'm asking you. You're not using credit cards anymore. No, I'm just trying to pay them down, but with 30%, you know, 29.9 % interest, it's been really hard. How much do you owe? So I owe$24 ,000 in credit card debt, and I have a, most of the cash flow is my son's college, and so I owe$14 ,500. to a parent plus and then 10 at a super low interest rate that I got during 10 ,000 during COVID just to survive during that, you know, disaster also. Okay. So a couple of things right off the top, or let me ask you one more question.

58:10How much do you make a year? Okay. So there's a little trick on that. Normally up to maybe right now, currently I'm about at $55 ,000. Normally I make close to$100 ,000. However, over the last two years, being that I have been in business for as long as I have, my clients are either starting to retire and moving where their kids are and moved out of the area or to their passing. And so as I try to rebuild, I'm not able to rebuild the clientele as fast as they're dropping off. And then they go and move to other areas. So that's where I'm at right now. So here's a couple of, this is me sitting with you at the table, okay?

58:50Not accusational, it's me sitting with you, okay? We're going to choose reality here. The reality is, number one, you cannot afford to be paying for your son's college right now. You don't have that much money. No, I'm done with that. He's out of college now. Okay. And so we're going to exhale. We're not going to pay for anything that we can't afford. The second thing is, you have to ask yourself, do I want to continue to be in business doing hair? Because part of your business is going to require you to really hit the streets to get new clients. And you've been doing it for a long time and it feels like you're going all the way back to starting to square one to go get new clients.

59:27And that's what it's going to take. And you're gonna have to learn all the new technology and Instagram and next door app and whatever. Um, but the, your clients are leaving. So you have to ask yourself, do I want to be in this business and get back in, take the cycle all the way around and start this thing again and get new clients or am i done with this no i'm not done with it okay i have a good 15 20 years of hearing me okay then that means you're just going to have to choose reality and say okay cool my people are dropping off then i'm gonna have to take one less client a day for the next two months and i'm gonna have to hammer the streets getting more people yeah this is what i'm having to do i have been doing that i have been you know posting, I have more visits to my website now.

1:00:15Like I've been every day doing that. That's it. You're just going to have to keep going and keep going. There you go. Okay. So you're working on that problem. And so talk to me and Jade about the bigger issue, which is, do you want to sell your property? So the business that I'm a one woman show, like I said in the business, the tricker is, um, the fact that the, I rented this building from my father for many years. And then about maybe I want to say 10 years ago, um, he was in some financial struggles. And so he basically deviated over to me. There's nothing owed on the property at all. What's it worth?

1:00:51As of 2023, when I left, it was at$380 ,000. $380 ,000. Okay. So I'm going to simplify this a little bit. My screen says, I'm living off credit cards, is selling my business a good idea? So are we talking about just selling the property? Are we talking about selling the property along with your salon book of business? What are we talking about specifically? What are you thinking about offloading to pay off this$48 ,000 of debt, if I understood correctly? The property, the business property and building, not my actual clientele. Okay. Okay. That would go with me. And so where would you do hair if you were not doing it out of this building?

1:01:29What would be the plan? Oh God, it would be a dream just to rent a chair and not have, so what I've always said is like, I'm one person, two households. I have, you know two light bills two gas bills two two of everything and people can barely live on with two incomes in one household these days and so that's where i were so you want to be out of the out of the the building business anyway how big is the building um property wise the land and everything's about three thousand square feet actual building properties maybe fifteen hundred see here's the thing here's my question um you don't you you owe it you own it outright you don't owe anything on the property right it's just an asset and it sounds like you might not be this person so if I'm putting this on you're like hey I'm just not that person I feel like you have a great opportunity here because you've got the space that if somebody wanted to rent a chair from you you could allow somebody in your space I don't know that does nails or somebody in your space that does eyebrows or an anesthetician.

1:02:34All of those things, you have the ability to house those items and therefore make more money. And with you, I don't know what your cancer, you know, the foresight is on that and what that looks like. But on down the line, that might be really good for you. I don't know what the doctors have said, but if you come in a season where you're not able to be on your feet as much or you're doing a treatment, there's still something there that's earning money for you. So that feels like a move to me, along with hitting the pavements, like John said, to try to build your book of business. But one way to build your business is to add pieces to it that don't require as much of your personal time and personal effort, because you're going to hit a ceiling with that really quick.

1:03:14There's no way to scale out of that until you add people. So there's part of me that doesn't think this is the move. I don't think so at all. Yeah. I think if you can just keep building your income above$4 ,000 a month, you can pay off this$38 ,000 to$48 ,000 of debt. And I think that's the move. That's what I would do. Hold on to the building. It's a wonderful asset and it's going to continue to go up in value.

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1:05:30so we have a fun segment here that we like to call asking for a friend you know what this is john whenever there's something that you kind of feel embarrassed about asking about so i get that all the time. Hey, just asking for a friend. So what if you're my friend's wife doesn't like him anymore? I get that all the time. Yeah. Asking for a friend. What is a rash that looks like? James is always like, hey, I'm asking for a friend. Like, do these like really short pink shorts, like do they like make my thighs look or my friend wants to know if it makes his thighs look? It does, James. It's good.

1:06:00Okay. Oh, boy. James is always asking for a friend. I don't want to ever hear the word James and thighs in the same sentence. The single grossest thing to happen in Western fashion in the last 20 years is the increasing creep up. Of shorts? Of the male shorts. Limp Bizkit did it right in the late 90s. Shorts should be mid-shin and that's it. Oh, you are so wrong. And they're getting higher and higher and higher. I am the one who is buying shorter shorts for my husband because show me the thigh. No. Okay, here we go. Upper male thigh is the grossest thing. No more. It's the worst. Please, let's talk about asking for a friend.

1:06:45Ask for a friend. Asking for a friend. What is an asset? Why is asset coming after short shorts? Not. Okay. Man, we could have set that up better. Okay. What is an asset in the way of money? Okay. So assets, let's just talk about that for a minute. because a lot of times you hear, you know, from the dude bros on TikTok. And their short shorts. I need some assets. Yeah. You need to be making money in your sleep, bro. Right. So they're talking basically an asset is something that has a value on it, a monetary value. It's money that if you were to sell it, you would earn more money. Right. That's kind of the best way to think of it financially anyway.

1:07:28And so an example of that would be cash money. Right. Like that's an asset. It's money that you have. Right. When you cash flow everything, you don't need to rely on debt. So it is something that is of value to you. Something else, real estate, right? That's an asset. It's something that, well, if it's done correctly. It can also be a liability, yeah. That's true. So if you have equity in a piece of real estate at that point, yeah, it is an asset. Can we tell everybody what equity is? Equity is if you pay money for something and as you're owning it, it continues to go up in value. So let's pretend you buy a piece of real estate for$400 ,000.

1:08:04And you bought it for$400 ,000 in 2024. And then if you look up next year and it's worth, I don't know,$460 ,000. And you've paid$40 ,000 down on the principal. So now you've got$100 ,000. Yes. Did we do that in a way that makes sense? I hope we did. So that's the idea there. So a lot of times on the show, you'll hear someone call in and they'll say, I've got this real estate property. And we'll say, what do you owe on it? And they'll tell us. And then we'll say, what do you think it's worth? and then we'll do that subtraction and that will tell us what the equity is. Okay, another form of asset would be an investment.

1:08:41Yeah, that could be your 401k, that could be a Roth IRA, any money that's sitting in any type of investment account that is gaining interest is an investment and it is an asset. Getting out of debt and having a fully funded emergency fund is the quickest right way to build wealth. you would invest 15 % of your income in a tax-advantaged retirement account. Like I said, that's an IRA, a 401k. And yeah, that is an asset. It's a way that you're building wealth. Next, tax-advantaged accounts, another type of asset. These accounts let you keep more of your money by reducing taxes now and later. So again, examples of this, a traditional IRA, a Roth IRA, an HSA, even the 529 savings account would be an example of that.

1:09:28and other types of assets. Yeah, your car is an asset. As long as you're not upside down, if you could sell your car and pocket the money, especially if it's a paid off car, yeah, that's an asset. Your wedding ring, if you sold your wedding ring today and you got a couple of thousand dollars in cash, that is an asset. Boats could be assets. Again, it's if you sell it and you receive money and you're able to receive more than what you paid for, it is really what we're looking for. So you hear this a lot when we talk about net worth, John. A lot of times people don't understand the net worth equation.

1:10:01They think if you're a millionaire, it's because you made a million dollars. And that's really not it. It is your assets, which is what you own minus what you owe must be X amount of dollars. In this case, a million dollars, right? So assets play into that equation. It's what you own that is of value. Did I cover it? I think you got it. Did I get it? If you have questions, you can email James Childs. I love that you snuck asking for a friend into and asking for a friend with the equity question. That was good. I was just trying to get a little bit meta here. And by the way, short shorts, the upper male thigh, not an asset.

1:10:41I think you need to bring back the JNCO shorts. Oh, gosh. I'm working on it, man. It depends on who you ask about that. No, not the JNCO ones. I'm talking about actual real car hearts that people cut off to make them shorts because that's all they had. The real social D punks back in the day. Those are the guys. Hey, we saw Newfound Glory the other night at a local club here in town, and they had the long dickies, and it made me happy. Okay. Okay. Shorts should go past the knee, gentlemen. I'm going to go straight onto these phone lines where I got Carrie in Phoenix, Arizona. Tell us what you think about the shorts, Carrie.

1:11:19Don't. It's just like a man wearing pink, if he owns it, if he isn't ashamed of it, he can pull it off. I love that. The clothes make the man. The man don't make the clothes. Wait, the man makes the clothes. The clothes don't make the man. No, it's the other way around. Yeah. Oh, short should go past the knee, right? For a guy, yeah. I feel like that's not only modest or appropriate, but otherwise, some guys take it too far and they get a little bit of swimming trunk, if you know what I mean. James Child. No, like Speedo. Oh, yeah. We don't want that. They need to come down a little bit. Definitely James Child.

1:11:55That's more George Campbell, but that's a different show. All right, so how can we help you, Carrie? How can we help you? Okay, so did you guys hear about the storms that rolled through Phoenix a couple weeks ago? I did. Yes, ma 'am. Okay, we got hit pretty hard, and I took some damage to my home, which is bringing up the question about whether or not we should do a particular remodel that we have been thinking and planning about for the last, like, six years. Wow. So we have, like, if we did the remodel, we would have to obviously pay for everything, including the roof. Well, now my insurance is covering the roof, making the remodel a little bit cheaper out of pocket for me.

1:12:36Okay. So what will it cost you to do the remodel without the roof cost? Okay. So it's not just the roof. Like, it picked up my trampoline and hit my back porch and tore my back porch off of my house. Yikes. In order to put the back porch back on, we have to move our septic tank in order to build the new back porch to code. Will insurance cover the back porch because of the trampoline, because of the storm? Yes. Okay, nice. Yeah. So there's a lot of other stuff that it's going to cover. Now, here's the nitty gritty numbers, okay? We owe about$450 ,000 on our home, but our home's value is$1.2 million.

1:13:14We got locked into that 2.5 years ago. But since then and after COVID, my husband got really sick with COVID. And we were on top of every single one of our bills. We were paying everything down. And when my husband got sick and some of our bills kind of went delinquent, our credit took a hit. So we have a total of$68 ,000 in medical debt. we have approximately 90 ,000 in other loans between two cars and a horse trailer, personal loans, solar panels. We only have 10 ,000 in credit card. We have between my husband and I, we have about 150 ,000 a year in income. I'm an at home mom, but I make the land work for me.

1:14:01So we're on two and a half acres. I board horses. I sell chicken eggs. I have like 54 chickens. All right, so we're at your question. We're up against the clock here. Well, the question is, should you do this renovation, right? Should I do the renovation? But should I do it with an HEA or a HELOC? Please don't. No. Please don't. Listen, you're already in$178 ,000 of debt. Here's the thing. You have a great opportunity, and I see the opportunity you're talking about. You're like, hey, the insurance will pay for the roof. It'll pay for the back porch and some other things on the list. That is going to cut down on your renovation costs.

1:14:40And if you were in a position to be able to cash flow the rest of the renovation, I'd be like, yes, I'm on your side. Go do this today. But the truth is, you're just not in that position, Carrie. You owe a lot of money in debt and the income is great, but you're not there today. So, no, I would not do this renovation. Please don't. Please don't. Have insurance fix the things that need to get fixed.

1:15:31In 2026, don't just set goals, okay? Learn how to actually reach them. And the 2026 Goal Planner is here to help you. And it's packed with monthly content from myself, from Dr. John Deloney here, and from Rachel to help you stay on track with your money, with your faith, with your relationships, and actually follow through on your goals. Now, we sell out on this every single year. So seriously, guys, please do not wait to order yours. You can get one today for a very specific price of$49.97 at RamseySolutions.com slash store. Or if you're watching on YouTube or in the podcast, you can go ahead and click that link in the description.

1:16:11And you, too, can get your 2026 goal planner today. All right. Let's go to Jay. He's in Charlotte, North Carolina. What's up, Jay? Hey, thanks for taking my call today. What's up, brother? daily listener love the show and appreciate all the advice um that you guys offer on the uh on the interwebs and in the radio thank you jay got it absolutely i've got a question for you uh it's kind of a kind of short to the point um my wife and i we are in our own home and we're We're still working a little. I'm working full-time. My wife works part-time. And we have two grown sons, and one of them recently went overseas to go to school.

1:16:59And we, along with him, put together some money for him to go over and start going to school overseas. and now he has asked us to help again and just wanted to kind of get some advice and see what you guys would recommend. What's he studying overseas? That's a good question. We're not really sure. Yeah, I would not put another penny in this. You don't know what he's studying? None. And I am as pro higher education as anybody in this building. I promise you, maybe the top. I'm probably the most pro higher education person I know. And I would not fund my kid to leave the country to go do a thing that I don't know what's going on or what they're doing, what they're studying, what they are expecting to gain.

1:17:49And by the way, if my kid goes to college, one of my rules is you have to study abroad. I even believe in sending kids abroad. I'm a huge believer in that, but you don't even know what you're putting money into. So I would not one more penny. Jay, how much have you given him so far? um it's it's between let's say it's it's around 10 000 okay so and okay his um his mother probably knows a little bit more um we think it's visual art but we're not sure i'm not sure is it is the uncertainty to answer me this is the uncertainty on your part or is on is it on his part has he been kind of telling you and you guys are like, okay, yeah.

1:18:34And just not taking it in or is he being ambiguous and not being clear? Yeah. The second, yeah. The latter. Did he, did he have grades and end of semester? If you're a VA student, you would have visual arts student, you would have a portfolio that you've started your freshman year. So he would have examples of art and examples of, um, all different sorts of products. Have you seen all that stuff? uh some of it yeah have you seen the grades been a while no have not seen any grades um level with us this is level with us jay do you think he's still in school or do you think something else i do okay okay i do think i do think he's in a situation where he is um kind of up against the wall he got he told us he got sick during the first the first semester there and he got behind on some of his classes.

1:19:33And I believe that he did get a job. He never had a job before when he was here, but he has a job now, but it's not enough to generate. And we did recommend maybe looking into other options like a small student loan or something like that, but really without an income, I just wasn't sure whether or not he was going to be able to, you know, pass the formalities of getting a student loan when he didn't have a job, but he does have a job. I don't know if you can get a federal student loan to qualify for an overseas university. Jay, this is not, I worked with college students for 20 years, this is not passing my smell test.

1:20:17Yeah, it's not sounding good, but there's two sides of it. I want to confirm that there's two sides of this here. I agree with John. I would not keep shelling out money for purposes that you don't know of or what it's being used for. That's thing one. But thing two is, it sounds like there was a lack of expectation and lack of clear conversation on how we're going to school, who's paying for it, what's on the table, what's not on the table, what my responsibility is, what your responsibility is. That conversation clearly was never had. And so when you do come to your son and say, hey, son, I can't give you any more money for this.

1:20:55Here's why. But I also want to go back and say, here's what I should have done that I didn't do. Yeah, you have to own it 100%. Yeah. Does that make sense? He did a lot of it on his own. 75 % of it was done on his own. And, you know, we— You still don't even know what it is. Right. What I'm saying— That has been a source of bothering me and his mother for over a year now. So if my kid came to me and said, hey, I'm spending$35 ,000 of my own money that I saved up. Would you help me with the last$10 ,000 to go to college? I would be thrilled. Absolutely. Sure. But we'd still sit down before I wrote a check for$10 ,000 a semester,$40 ,000 over the course of four years.

1:21:43I would still sit down and say, what are you studying? What's your plan with this? What is your day-to-day going to look like? How can I love you here? And by the way, again, every college is different. and I can't speak for overseas colleges, I know I spent a ton of my time taking students who got sick psychologically, physically, like cancer, psychiatric issues, all of it, helping them get back on their feet and be successful that semester and or the next one. And so just, it just doesn't, something's not adding up for me. Something ain't right, yeah. And so I love Jade. What Jade said is so important though, Because if you sit down and say, hey, I don't know what's going on, then he's got to have to defend himself.

1:22:31If you sit down and say, hey, I blew this whole college thing and I want to start over. I need some more information. I didn't do a good job. I wasn't clear up front. I didn't ask you what your major is. I didn't tell you I want to see some of the work. I want to know what the plan is. Why are we studying overseas? What kind of job or life do you want to have? Are you going to live overseas when you get out of school? And is there a visa process? Are you going to come back home? I want to know some of those questions because, Jay, the question I'm hearing him ask beneath the real question is, I don't know where my son is and what's going on.

1:23:06Yeah. And he's nowhere near me. He's in another country. All right. Yeah. There's a lot going on. I'm not going to lie. But I do want to make sure that I'm being really clear, just not only for Jay, but for other listeners, too. when it comes to college, John, you know, being able to pay for school, whether all of it or a portion of it is really a privilege for both parties. It's a privilege for the child to receive it. And it's a privilege for the parent to have the financial ability to say, here's this money for your education. Like that's an amazing thing. That being said, it's not a requirement.

1:23:41Like it doesn't make you a good parent or a bad parent if you can't afford to pay it. But the one thing, money aside, the one thing you must do that is so, so important, you've got to have these conversations before the fact. And you've got to have them more than once because you hear something and information gets lost and details get forgotten. It's up to us as the parent to have these conversations and say, hey, here's what it is. When you go to college, here's what we're going to do. We got to pick a place that you can afford. Here's what your mom and I are going to put in, or here's what dad and I are going to do.

1:24:15Here's what you need to do. We're expecting you to work. We're expecting you to earn$800. Like be specific. We're expecting you to cover your room and board. We're expecting you to cover, you know, your apartment. We're expecting you to live on campus. We're expecting, we're expecting to give you$3 ,000 a month. Be so clear and talk about it as much as possible so that when the time comes, there's no question. And start talking about it your freshman year of high school. Yes. Yes. It doesn't sneak up on you. It's like Christmas. It will be there in four years. And it's a simple reverse engineering math problem to say, we're going to have this many dollars in an account to help you.

1:24:50Yeah. You're going to be responsible for this. And by the way, here's what the top three colleges in our state cost. This is reality. Or like my dad said, hey, you ain't got a college fund. So you better be good at sports or you better get an academic scholarship. And that's the expectation. And tell them that their freshman year of high school, not their second semester senior year. Facts. We'll be right back.

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1:26:06Welcome back to the Ramsey Show. live in Fairwinds Credit Union Studio, taking calls here with Dr. John Deloney. I'm Jade Warshaw. And what is this? Is this Ken Coleman producing the show today? Yes, he's back there producing this segment. All right. It's going to go off the rails. We got Roger who's in Florida on the line. Hey, Roger, how can we help today? Thank you for taking my call. I'm retired about four years now. And I have a sister who's been estranged from the family for a very long time. And I've been sending her about$700 a month for about 10 years. Oh, my goodness. Wow. Yeah. Well, she's never really had a job.

1:26:50She lives in another state out west. And currently, my wife is about to retire and the source that I'm pulling this money from is going to dry up. Oh, man. And so I'm in a spot and everybody told me I was going to be in this spot. You know, I'm not sure I can sustain her lifestyle. You can't. She's never had a job. I know, but Roger, she's never had a job because she's never had to. Right. Yeah. Well, she's never worried about tomorrow. She hasn't had to. because you did for a decade. Yeah, right. Ten years is a long time. Oh, man. No, it's a long time. If you add it up, plus the incidentals along the way, it's a huge chunk of money in my world.

1:27:36I was a modest income guy, but I kind of did the right things that allowed me to retire comfortably. Awesome. And I have a little royalty source, but that royalty source is going to dry it up, and that's what I use to fund this. So that means it's over. Yeah. Yeah, well, I guess my question for you guys is there has to be social services that actually can step in for somebody who's 75 years old and really doesn't have means. And that's where I'm kind of falling short and trying to discover those sources. Yeah, they're there. She could be on Medicaid or, you know, what have you, but don't you think that's hers to discover?

1:28:13I'd like to think so, but in some ways, she just doesn't have that ability to figure this stuff out. Is something going on? Does she have any disability mentally that's developmental? Is something that's causing her, medically speaking, to not be able to do these things that you know about? No, there's not really that. I think it's more of someone who's just been naive their whole life about this kind of things, maybe doing hand runs around the system, whatever it might be. and somebody who for the majority of her adult life has had other people just stepping in and taking care of it well I won't say that's the case you know she's been married a few times and she currently has a husband that's not well they've always seemed to put things together in a very simple way she has a husband let me reverse this if you called her and said I have a hard conversation to have with you.

1:29:17Let me know in the next week when we can have this conversation. And you say, Hey, the, I've been sending you$700 a month for the last 10 years in 60 days and two more months that I'm unable to make those payments anymore. And so I'm not gonna be able to send any more money. And so I'm giving you two months notice. I've been doing this for a long, long time. So I'm giving you two months or even three months notice and i'm gonna send you i'm gonna google i googled this for you you can do this also but i google i'm googling florida research uh florida resources for elderly folks and i'm just assuming that's where she lives um well actually uh she lives out in nevada okay okay nevada resources Six and a half does another.

1:30:03And I wish you the absolute best. Yeah. And here's the thing. Does she call you on a weekly basis and say, hey, I need help with resources? No, she doesn't. She's not a guilt trip type person in this thing. Okay. Then why do you take yourself on guilt trips that she's not asking you to go on? True. I will say that. And I think it's a little bit of loyalty to her. Okay. Although I've seen it like three times in 30 years, you know, it's a little bit trying to be the good guy in this whole thing. I know, but you've been, you've been solving a problem that it sounds like nobody ever even asked you to solve.

1:30:40Well, no, I, yeah, true too. I stepped in, you know, at a, I stepped in at a lower amount of money several years ago and of course life gets more expensive. So I increased it and I did. Yeah, I don't if I still had the wherewithal to supply her and keep her whole, I would do it. Things are things are changing. That's the point, you know, yeah. Around me and my family. You can do what you want. Roger, I don't think we can help you, my guy, because I you want to do this. And as long as you want to keep doing this, you're going to keep doing it. Like you just said, if you had more money to keep doing it, you'd keep doing it.

1:31:16And so I think we're at a bit of an impasse in the way that you feel the need to do this. Like you said, your sister, she's not coming to you saying, help me figure this out. You're just up and doing it. And at that point, then, yeah, it's just your choice. We're not mad at you. But since you called and asked, how do I tell my sister that I can't be her lifelong safety net? We're telling you, you just up and call her and say, hey, I know I've done this for 10 years. the money I was giving you is running out. And not only is it running out, but I've also realized I can't keep doing this. You're going to have to figure out a way to come up with that$700 on your own.

1:31:56And it truly is. The conversation truly is that simple. I know it's harder to actually play out, but the bigger work is for you to figure out why you're having a hard time letting this go. Yeah, no, you're absolutely right. Can I ask a question? I have an inkling. I don't know if I'm right, but just listening to you talk, and John is here, so he'll set us both straight, but just listening to you talk, it almost makes me wonder if a long time ago something happened that you felt like you were supposed to be there and you weren't, and you're just making up for it. I don't know the home you guys grew up in.

1:32:32I don't know anything like that. But I just wonder, are you trying to make up for something? Is there something that your sister should have, you should have been there for and you weren't there? I don't know. And you don't have to answer on this call. But it just sounds like there's something else there that's nagging at you and that's eating at you personally. No, it's a fair question. I think the basic root of it all is she's family. And it's like, you know, what desperation she'll go into if this money's not there. you know it's like pulling the plug saying okay um you know before when i've talked to her about it she goes yeah and this is the guilt thing well i guess i'm gonna have to sleep in my car you know well where's her husband you said he's ill is he just not able to contribute no they're not at a point where she she's never had a job so getting a job would be very difficult for her at 74 and he he's ill where he really can't work so yeah you know they're living and And this is the point, you know.

1:33:34Listen, if you want to be generous, to John's point, we're never going to stop you from being generous. If you feel, hey, I'm called to this, this is what I feel like doing. But there is a component to this that you've also got to be able to afford that. And you said that you set yourself up to be able to retire. But you also said the source that you were pulling from to fund this is drying up. So the question you have to ask yourself is, is there another source that I can pull from that's not going to take away from my family's ability to retire and be comfortable in my legacy? And if you can do that and if you want to do that, you know what?

1:34:09That's your bag. I do think that you're enabling her. I truly do believe that based on what you're saying. And you can't enable somebody and then complain that they are. Failure to launch. That's right. if you're going to keep funding it you have to do that with a glad cheerful heart and stop talking bad about your sister

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1:35:53All right. Back to the phone lines we go. John, are you ready? Let's do it. All right. Elijah, Dallas, Texas on the line. What's up, Elijah? I like that name, by the way. Thank you. I appreciate that. Thank you guys for taking my call. What up? Really good to be on the Ramsey show. Been a big fan for a long time. Glad to hear it. How can we help today? So I followed Ramsey's rule about buying a cash car and not getting into a car payment. So the car that I have currently, it was a 20th birthday present. And sorry about that. It was a 20th birthday present. I put half and my parents put the other half.

1:36:40lately this car has become a this car has become a nuisance the for instance when we first bought it we had to put a thousand into it to get a new engine um about a year ago had to put another three thousand because the transmission went out yikes by the way all by the way all paid for with cash no financing um you've replaced the two big rocks right at this point it's only up from here thank you i appreciate that um now when i was in college we ran into some financial troubles after my father passed away and um i played a role in this as well but i did run up about fifty five hundred dollars in credit card debt okay recently i paid off fifteen hundred and i was this close to rounding up all the money and then sending it for the biggest set okay here's what happened um first another eleven hundred dollar expense engine mounts went out engine mounts went out okay so that's not the one thousand for a new engine that's a separate amount eleven hundred yes okay and and then i was able to pay that and still be able to set myself up to be able to send all the money to my biggest debt which is thirty five hundred as we speak okay thirty four as of today.

1:38:04And then fast forward now the starter and air compressor had gone out. What kind of car is this? You won't believe me if I tell you. It is the infamous it is the infamous Nissan Maxima. Oh, there's the problem right there, my friend. Here's the bigger question, Elijah. And you know what I'm going to say what Jay's going to say, here's a bigger question. Do you have 2 ,500 bucks? Do you have 2 ,000 bucks to go buy yourself another car that's going to get you six or seven or eight months more down the road or one year down the road? Because neither of us are going to tell you we would be bad humans if we told you, you know what, after all this bad luck, you should go get a$15 ,000 car note and just get yourself a new Toyota, whatever.

1:38:55We would not be good people if we you to do that because we'd actually be taking you way further back. You're so close to the edge. I sounds like you're getting super frustrated that you keep getting close to the edge and then keep getting slapped back by life. And I get that frustration, but the solution isn't my buddy. I'll give you this analogy. Here's what you're about to do. I have a buddy named Jordan Syed. He's a fitness guy. He's a brilliant mind. He said, people get on a diet and they start taking their nutrition really seriously. And then they have one night where they just blow it. They just, somebody shows up with a bag of Oreos and they just hammer it.

1:39:32Are you talking about me? I'm talking about myself. I literally, somebody dropped off a bag of Oreos the other day and I crushed it. But he said, what people do then is they're like, well, I'm already off. So the rules are off. And he said, that's like walking outside in the morning and seeing you have a flat tire and then pulling out a knife and going around and slashing the other three tires and you have had a run of walking outside your house and seeing one of the tires flat and you're just so frustrated by it you want to grab your pocket knife and go punch a hole in all the other tires and jade and i are going to tell you please don't do that you're so close man you've worked so hard to get this close either pay the stupid money and pay off that crap and just get a starter and get a whatever and get on down the road a little bit further or go trade that car in.

1:40:24It's depreciated all the way to the bottom anyway and put another$1 ,500 on top of it and get yourself a$2 ,500 car. Yeah. What'd you pay for this Maxima? So I paid$12 ,976. That hurts. If it's okay with you guys, I'd like to run a plan I put together once I get this car back. okay um it's very similar to what you guys actually just said about the$2 ,500 okay the after all the repairs are done I know the car will last me at least two and a half three years okay within that time what I want to do is just put together 7 ,500 eight grand and then actually go the Toyota Lexus route get a 2007 get a 2008 yeah buy that and then just get rid of this car let it go for 4 ,500, 5 grams.

1:41:12Yeah, I love that. I love that. Okay, so that's a good idea. Yeah, that's a great idea. I have an 06 Toyota that I, it will last longer than me. It won't stop driving. Yes, I think you're right. The only caveat is because, now I will say, so currently in my personal checking that I'm using to pay for this, there's$2 ,400 sitting in there at the moment. Okay. The repairs are going to be about$1 ,750, maybe$1 ,800. That'll leave me with about$600,$700 until my next payday next week. Okay. Now, I want to know if this is still a good option because I like to keep at least$1 ,500. Actually, really, really$3 ,000 in my checking account at all times.

1:41:57But as you can see, I've had a few setbacks. Why do you like to keep$3 ,000? That's a big cushion for someone who's in Baby Step 2. Why is that? i guess you can say i'm very extreme and i like to have money laying around for emergencies yeah but i also okay okay here's the thing you get to choose are you working our plan or are you working elijah's plan because if you are working elijah's plan that'll let me know i'm tracking with you on elijah's plan but if you're working our plan which it sounded like you said you were then i gotta hold you accountable so just let me know right quick and that'll that'll inform what we say next.

1:42:33Because here's a weird thing, Elijah. How old are you, brother? 25. Okay. Here's a weird thing I figured out. If I have$3 ,000 in an account and a mechanic says it's$1 ,750, it's annoying and I exhale and I got$1 ,750. I'm going to give it to you. I only got$1 ,200 left. This is the worst, whatever, how much we got left. $1 ,300 left. If I only have that$1 ,000 emergency fund, that's all I got. A, I got$2 ,000 less of debt, which for you is a big chunk of what you got left. And then when that guy says $1 ,750, I say, I can show you my checking account. I have$1 ,000. What can we do right now? And then he's going to go, well, I bet you I can get a good used part right here that will last you for another year.

1:43:18Hang on. Or I can't help you get out of my shop. And you say, cool, I'll go find another person. And what happens is you force yourself into some sort of creativity that you have to find a way, which humans had to do for all of human history until like 50 or 60 or 75 years ago. That's the reason we stick to the plan the way it is. Yeah, I truly, I couldn't applaud what John just said more. You got to decide how you're going to tackle this because that$3 ,000 really is a huge catalyst in how this plays out. so um going so for for the solution would you say as soon as i get it back trade this in and get a$2 ,500 car uh no i was with you i'm with you on the idea that it's best to go ahead and do the repairs on this car ride it out because you said hey if i do the$1 ,700 of repairs i'm going to be able to ride this car for the next two three years and then during that time yeah I save up the$8 ,000 and get you something more reliable.

1:44:20But what I really want to attack is having, and I want to talk to the masses on this. Yes, doing a zero-based budget should never mean$0 in your account. You need to have some form of cushion in your account. But what that cushion is does depend greatly on what baby step you're in, okay? If you're in baby step two, you need as much money at your disposal for debt as possible. So when you think through a cushion, you're really thinking, okay, John what is the worst that could happen that I would not have planned for in my budget what Amazon Prime subscription hits me it's a hundred and I don't know how much it costs these days 160 bucks right for the year that's kind of what it is it's like what's the worst could happen grandma's birthday hits Amazon happens so when you're in baby step two that really is looking like three 300 bucks maybe maybe a little bit more than that because what it's not the cushion is not an emergency fund.

1:45:13That's not what it is. Baby step one was the emergency fund or baby step three is the emergency fund. The cushion is just there, especially in baby step two, just to make sure those random things that happen to come out of your account don't overdraw you.

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1:47:02All righty then. Scott is in Jacksonville, Florida. Scott, what's up, man? How can we help? hi jade john thanks for taking my call you're welcome i have an estate question uh i'd like to start some sort of uh fun for my six grandchildren um two of the grandchildren have 529s the other four grandchildren do not and i'm just wondering the best way to start that fund for them they're between ages one and a half to six years old you are awesome dude you are awesome I listen to your show a lot and I haven't really heard any questions like this. So I'm glad I got through to ask you and Jade about it.

1:47:41Yeah, for sure. So you've got these grandkids. Are you what's the intent of the money? Are you like, hey, I want to help them with education. I want to buy their first car. Tell us a little bit more of what you're thinking here. OK, the two of the grandchildren, they have college educated parents are all three of our adult kids are married. and four of the parents are college educated. So two of the grandkids have a 529 already in place. The other four aren't sure about what their kids are going to do. One couple isn't sure about what college will look like in 18 years. The other one is a single income couple.

1:48:18And, you know, they're living on one income. And I just want to be able to kind of put money aside for whatever they might need. If they want to go to a trade school, if they want to buy a car, if they want to let the money roll and eventually help them with a down payment on a house, or if they get to 55, you know, have some money for retirement. I'm not quite sure. I'm just wondering the best way to kind of structure it. Yeah. So if I were in your shoes, I'd probably talk to the parents first. So let me kind of put myself in your shoes. I'd say, hey, I want to give the kids money. What do you guys think?

1:48:50So my first thing would be like, yeah, if you can help us get this 529 to where it's going to be, that would be amazing. right? And then the next thing would be, okay, from there, we do UTMAs for the kids every year, you know, we contribute, if you can help us contribute to this UTMA, that'd be great, because when they're 18, we're going to transfer that money over to them. Or the other thing could be, hey, we're, for us, one of the things we really want to do is help them with a down payment for their first house, you know, when they're, you know, 28 years old, that sort of thing. So I would talk to the parent first and find out really kind of what the need is, since for you, it seems to be, hey, whatever they need, we'll fund.

1:49:28And then from there on, I'd see, okay, what do they have in place and how can I contribute this money to them? How much are you thinking of gifting every single year? Well, I thought I'd start with maybe a seed gift of maybe two grand per child, and then kind of go from there. Seeing how they're so young, I could put it in a more riskier investment vehicle, you know, that might grow quicker, you know, and still weather the ups and downs of the stock market, I guess, is what I was thinking. Yeah. And what, and who, and you just place them as the beneficiary. Is that what you're thinking? Because I feel like you could do.

1:50:06Yeah. Beneficiary. I can't do a custodial. I've been told I can't do it a custodial IRA, Roth IRA, but I could maybe do something else. I do. I'd work with the parents and maybe do an UTMA, something that you can transfer that'll go over to their name when they're, you know, of legal age. Okay. Like I said, two of the grandkids already have 529. So I could just, with those parents, I've already talked to them. I'm sure they would just take the money and put in their existing 529s. It's the other four parents that really have nothing in place right now at all. Oh, you know, I misunderstood you.

1:50:39When you said before that the other two kids had 529s, for some reason in my mind, I thought you meant that they were fully funded. Like they didn't need any more in the 529. Oh, no, I don't think so. I think they would take any contribution we have. Okay, then I would focus on that because here's the thing. Even if they overfund the 529s over time, that money can be transferred in other ways. Matter of fact, over time, it can actually be transferred to a Roth IRA or IRA over time. So I wouldn't be too concerned with overfunding it. And the truth is, with any 529, there's that risk of, well, what if the kid doesn't go to college, right?

1:51:15So I would start with a 529s for all kids, for the families that don't yet have them set up, I would say, hey, I want to do the seed money of$2 ,000. Can I help set up a 529 for you guys? That's what my mother-in-law did for Sam and I. And it's been great. So I think it's a really, really great gift that you're trying to give. And that's the way I do it. Good call. I like that. Thanks for the call. All right. I think we have time to go to Mike, who's in Ohio. What's up, Mike? Hey, thanks for taking my call. No problem. How can we help? uh so my question was uh my wife and i recently bought a house and um the monthly payment uh with both of our income combined is pretty reasonable it's like a third a little less than a third of our income okay but um we just found out we're having our first kid and the plan was we were going to have her quit working um but the problem is is with just my income alone it's going to be a lot trickier.

1:52:18Yeah. What will that mortgage be with just your income? So the payment is like 2475 right now. And then, so that would be like 45 % of my income. Okay. Yeah. That doesn't work. So we have to solve for that, right? Right. So the plan hopefully was I can refinance in a few months and I'll get like the, like all the fees and everything covered for that. But that would kind of right around coincide when my wife is due. So I was just, my question basically is, should we go back to renting when, you know, the rent was like 1900 versus 24? So it's not a huge difference. Or should we just stick with it and try to refinance the house?

1:53:07When you refinance it, well, I have a couple of questions. When you refinance it, what will the payment go down to? So I'm trying to get a lower interest rate because it's really high. So I don't know exactly. I've looked at a few like, oh, if we got 5%, it would be like 2000. So it's kind of up in the air, but hopefully it would be better. What's your take-home pay? So I take home 5 ,500 a month after like taxes and everything. Okay. So 2 ,000 would still be way too much, right? Yeah. So that sounds like, I mean, 5%, you know, that's a pretty good rate. So I don't think you're going to get anything lower than 5%.

1:53:53So knowing that 5 % would get you to 2 ,000, and that's still not near the 25 % mark. I don't think that that can be a plan. Would you agree with that? Yeah, it does sound tough.

1:54:34And maybe we can get, in the best possible scenario, maybe we can get it to$2 ,000. It's tough, right? How much have you paid down on this house? How much equity do you have in it? We have, I think, like$20 ,000 right now. We bought the house really recently, but we got it under the appraisal. Because I was going to, Jade, I don't, I haven't really heard us talk much on this show about this. I think I've only heard it one other time, but I was wondering if this was a moment for a recast where the length of the mortgage and your interest rate stays the same, but it basically recasts your payment based on what you owe remaining.

1:55:15And that can really drop your monthly payment down without having to go through all the rigmarole of a refinance and all that. But you don't have enough equity. You got 20 ,000 bucks. That wouldn't change your life at all. Yeah, you would usually do that after you've paid off a big lump sum. A big chunk of it. Yeah. Yeah. In this case, I hate telling you this, but I think for you guys, yeah, getting out of this house, because the truth is, it's not like you've done something really irresponsible. Your life has just changed in a major way. Right. You've had you have a baby coming and your wife is now saying, I'm not going to contribute by working outside of the home.

1:55:46I'm going to work inside of the home. So, yeah, your financial situation changes. It's OK if your living situation has to change as well. So don't feel any guilt or negativity wrong. Yeah. You have a new life now. You have a new kid. and so we have to readjust for our new life. Yeah, new house, new housing situation.

1:56:15Thank you.

1:56:45for the Lord upholds him with his hand. Slash from Guns N' Roses said, no one expects the rug to be yanked out from underneath them. Life-changing events usually don't announce themselves. Amen. That's a fact. We wouldn't have jobs, Jade, if that wasn't. Life-changing moments are not a bug of the human experience. It's a feature. It's hurt and challenge and pain and unexpected things is life. Man. It's life. And nothing lasts forever. In a cold November rain. Booyah. Just had to do that anyway. And by the way, just as a callback, Axl didn't, but Slash wore long shorts as he should. Axl wore very, very, very short shorts.

1:57:32You know, Slash has aged very well underneath that hat, I might add. Like, you really can't tell what's going on underneath there. Hey, he's done a good job. Trace is in Salt Lake City. to Utah. What's up, Trace? How can we help? Hey, how are you? We're doing good. What's up with you? Good. So me and my wife, we're 21 years old. We have a combined income of$130 ,000 a year. We're in baby steps four and six with no kid yet. We started investing into our retirement in July and wanted to know if we can put more into each one of our Roth IRAs to get it up to the$7 ,000 for each one of us instead of putting more on the mortgage until April.

1:58:18So then, does that make sense? Yeah. So we can max out that Roth for both of us before April so we can do it again for the next year. Yeah. Does that make sense? Maxing out the Roth, So putting the$7 ,000 or$7 ,500, I can't remember what it is this year, does that put you over the 15 % of your income?

1:58:43So, yes, but we'll max out my Roth at$7 ,000 or$500. And then we want to also max out my wife's, which I think we could do another$7 ,000, right? Yeah, I understand that. But I'm saying that$14 ,000 together, is that more than the 15 % of your take-home pay? Of your gross pay? It would be. And we are still paying the house off, like the 15-year mortgage. We still have around the 15-year. So just for the six months, I don't know, like I said, just to take advantage of the tax-free growth. So you told me you make$130 ,000 a year. So 15 % of that would be$19 ,500. That's what you have for the year to put aside.

1:59:25So you're wanting to put$7 ,000 in hers,$7 ,000 in yours. That's$14 ,000. so technically you still have another 5 ,500 what are you going to do with that um and that's that's another question too do i do i do the traditional or do i just put it into a brokerage account um we had just recently started making 130 ,000 a year are you self-employed or do you have 401ks through your job um we i work for the state so i have a pension and a 401k um she she doesn't if and so we just do the individual roth iras for each one okay so i love that you're doing the individual Roth IRAs. I'd love for you to put the remaining 5 ,500 into your 401k.

2:00:08Okay. Yeah, that's what I would do because it's tax advantaged in a better way than just a typical brokerage account. So I would do that. Now, what percentage, your pension, do you know what percentage that is? What does that look like? Because that's part of this equation as well. Yeah, I get 60 % of it when I retire at 35, but they don't take anything out of my pay. Oh, okay. If it is, it's not much at all. Okay, then I wouldn't really add that in then. Okay, so yeah, do the two Roth IRAs and then put the rest into your 401k. Do you know, I'm guessing the 401k is traditional or is it Roth? Just curious.

2:00:46It's either. So I can do a Roth 401k or there's a 403b. Yeah, definitely do the Roth 401k option. Okay. Okay. That way you're paying the taxes now instead of later. Okay. Sounds good. Appreciate it. All right. I love that. And then, yeah, beyond that, any money that you have extra, you're going to throw that onto, since you're in baby steps four, five, and six, you're going to put extra payments or extra money, I should say, towards your house and you and your wife can decide what that looks like. It can change throughout the seasons. It doesn't have to be double payments every time, right? You're in a season of intentionality.

2:01:20You don't have to be as intense. So that's up to you guys to discover what the rhythm of that looks like in your life. Very good. I like it. All right. Kevin in Houston, Texas. What up? What up? How's it going? Can you hear me fine? Got you, dude. What's up? Hey, I just had a general question. pretty much I'm trying to figure out where should I draw the line whenever it comes to spending a little bit of extra money on things that aren't necessary, but add a little bit of extra comfort in your day to day or just overall life. And I can give you a couple of examples of what I'm trying to talk about here.

2:02:00Yeah, tell me. Give us one. Yeah. So for example, I recently bought my first economy plus seat on a flight. It was never something that I couldn't afford. It was just something that I didn't really want to spend extra money on. I'm 6 '1", for reference, and a lot of these airlines are getting kind of criminal with how little leg room they give. I decided, okay, I'll splurge a little bit. And the flight was just 20 million times more comfortable. I could take my feet out a bit, I can lay back and it's so much better. But it wasn't necessary to achieve the goal. I'm kind of feeling a bit guilty about it.

2:02:42Where's the story that you picked up? Where's it from? That anything above necessary is wrong or morally bankrupt? So I guess my position isn't that it's wrong or morally bankrupt. I guess what I'm trying to avoid is kind of just going down the slippery slope of I just end up spending a lot of money on the things that I don't need. Right. Just because it makes me feel better. Okay. So I guess that's my question is what are some things that I should spend extra money on just because it adds a little extra comfort? Feeling better is okay. That's what I'm trying to get to. Okay. for me I crossed the line when I start thinking I deserve this okay that's when I crosses that's that's a moral line in my head that I don't ever want to cross but you know if you are going to a work trip and you get that you pay that extra hundred dollars or whatever it is to get extra leg room on that flight and it lets you stretch out and let you sleep versus being cramped then you're you walk a little bit taller you're a little bit more rested and you can go handle yourself in that meeting a little bit better and there's that's just a fact that's the truth yeah agree okay and so if you want to get tactile about it we can put an roi on that i think it's a waste of time and money and effort the reality is if you can pay cash for it and you have it and it's something that will make your day a little bit better that do it do it i mean And I'll give you a little bit more practical because I get it.

2:04:25I kind of have a checklist that I go through in my brain, Kevin, that is kind of the green light to quote Andre 3000, if I can do this, right? So number one is, am I a person who's out of debt? If the green light is yes, check it, right? Then I say, am I a person who budgets their money? Like, am I on a budget? Is this part, can I make this part of my budget? Yes, green light it. Am I, do I carry the proper insurances, right? Have I done the things that I need to make sure I'm taking care of my family? Life insurance, term life insurance, that kind of thing. Green light. Am I saving for the future, right?

2:04:56Do I have three to six months set aside? Am I, you know, saving for a down payment for a home, which is also a form of savings? Am I doing those things that are important? Yes. And finally, have I prioritized generosity in my life? If I'm doing those five things and have five green lights, yeah, buy the upgraded seat. You know, do those things. They're fun. Matter of fact, if you want another piece of this, this is for anybody listening. You should spend, if you've checked those five green lights, you should spend money on fun. F-U-N. That is upgrade your food, right? You're not eating Top Ramen anymore.

2:05:29Spend more on groceries is what I'm saying. You should spend money on upgrades. That's the U. Yeah, upgrade your plane seat. Upgrade your furniture. Upgrade your jeans. And finally, the N is for new experiences. Yeah, go on vacation. go to a concert you've never been to we want you guys to enjoy spending money because that's what it's there for you get out of debt and you do all of this John so that so that you can increase your leg room so that you can have a better life quality with your money like that's the whole point of this whole thing being comfortable isn't the worst thing you're right remember there's only way to walk with there's only one way to financial peace and that's to walk daily with the prince of Jesus Christ Jesus Thank you.