Short-Term Sacrifice Leads to Long-Term Financial Freedom

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Normal is broke and common sense is weird. So we're here to help you transform your life from the Ramsey Network in the Fair Wins Credit Union Studio. This is the Ramsey Show and I'm Rachel Cruz hosting this hour with my co-hosted smart money half-hour and bestselling off their George Camel.

We're free gaming because we're actually filming smart money half-hour right after the show. That's right, we usually do episodes. We take a one-month days and when we get to host together, it's the best. Four hours for Rachel Cruz. That's a blessing.

What a gift. Sure. You're welcome. You're welcome. All right.

Give us a call. It triple 8 8 2 5 2 2 5 and we're going to start off with James and Denver, Colorado. Hi, James. Welcome to the show. Hey, guys.

Thanks for having me. I appreciate how you doing. Hi. We're doing great. Thanks so much for calling in.

How can we help? Yeah. So I guess my question. I'm 33, I've been very diligent about savings in junior high.

I finally cross the millionaire, I guess, threshold.

Nice. Congratulations. That's about to buy a house cash. Thank you. Wow.

Mainly because, well, yeah, I just don't want to have a mortgage rates or a little bit higher, and I could probably make more money having a mortgage and even it invested, but just to sleep a little better at night. So I'm going to do that. I have quite a bit set aside as far as brokerage, Roth, Traditional.

But my ultimate goal is to kind of quote unquote retire early, not to be done working, but just with a traditional job. Do things on a little bit more passion about. I do some public speaking. I have a very unique situation, quite disabled, I guess.

I'm still working full time, but I do some public speaking and trying to figure out when

I can kind of step away from a traditional job, rely on my investments, and the little bit of income that comes in outside of that.

“I think that with what I'm doing, it's going to grow and provide a higher income later.”

It's just not at the moment. So just trying to figure out that kind of freedom number. Cool. How much do you have right now in that brokerage account? 435,000.

Awesome. And you said you're 33. So you've got a ways to go before accessing those retirement accounts, so that brokerage account is that bridge to fund the gap. And so I would continue putting money into that.

Now when can you officially use that to cover your life? Well, there's about 1,000 variables that we don't have access to right now. They don't know the future, but you want enough in there that you could pull a percentage off of it, and you're not going to run out before accessing those retirement funds. Especially if you know you might have a gap in income for a couple of years as you get

this new thing off the ground, right? Right. Do you know what your expenses are? If you looked at per year, if you don't have a mortgage, but factoring in the fact you still own a home, so if something breaks, right, that you have the ability to fix it,

“how much would you need to live off of do you think per year?”

I think very conservatively, I could do it off of 30 to 40,000 a year. I was like much more than that. Yeah, I was going to say, like, like an actual, because I would want this situation for you James to be realistic, like I, that is one thing kind of about not that you are quoting the fire movement by any means, but, but that idea that like, I'm going to live on

nothing. I'm going to save a way I can, just so I can retire, and then your standard of living is just so low that there's almost like quality of life suffers. Yeah, no enjoyment, right, so like what would be a realistic, like I, this is the life I would want to live comfortably and good, nothing crazy extravagant, but definitely like

I don't have to be thinking too much about money, because I have enough, what would that number be then? I know 60 to 80 would do that because our 80,000 income now, I'm saving close to 45,000 a year. Okay, okay. So I know that I could do that, I would like to have nicer things and do more, but let's

bring that. Yeah. Yeah, yeah, if I had to live on nice and being convenient, continue to do I can. Yeah. So I would say 60 to 80,000 would be a pretty comfortable number would be that I know, yeah,

when I'm not saving an additional 40,000 a year. And you said you had some income coming in, was that from disability?

Okay. And what do you make now?

“80,000, probably 10, bonus, and maybe 20,000, that's what I do on the side.”

Cool. And you're single? Yeah. Okay. Okay.

All right. Do you have plans on the horizon to maybe get married one day? Well, it's not worth it, like, it happens, it happens, it happens, it's nothing in the pipeline. Okay.

I'm just trying to factor in your long-term future. And I have seen a lot of these, the fire guys out there, they sort of go, well, getting married and having kids is actually a deterrent to my financial plan. I go with your life sucks. If family is a deterrent to your financial plan, so I just want to make sure that you

were thinking bigger in terms of your life in general, not just with the dollars.

But based on what you told me, I mean, one and a half million in that brokerage account

would definitely find. I had 1.6. Look at that. That joy. Yeah.

That's just a good. That's just like if you had to aim at something, I would aim at one and a half. And with your income, you probably get there in the next my guess is, I don't know, 10 years. Yeah. Does that sound accurate?

Yeah. That's exactly what I had figured. So I'm pretending like I have a 15 year mortgage and I'm paying myself under the brokerage 1500 a month. Fantastic.

And so I kind of figured, yeah, I kind of said, kind of figured 10 years. Um, if I get real aggressive, I'm hoping to do it in five. Mm-hmm. Yeah.

And you might be able to.

“And honestly, James your income might be going up more, right, throughout these years”

and everything. So you may hit it earlier. But I do. I think that's a great next goal, especially for people, when my husband and I, we literally had this same conversation.

I think I was telling you about this at the beginning of the year, just looking at, like kind of our next big financial goal, because we put in a pool two years ago, which was like a big thing we say for, and then it's like, hey, what's like the next thing. Yeah. And there's kind of this like crap hit the fan number.

The freedom number. The freedom number. You call it the freedom. I don't know. I don't know.

Everything just goes. And you're like, what can I do that? I could just walk away. And I could still enjoy my life. And yeah.

And we ran that out. And that's our goal. And so we, yeah. So we're shooting for that. And so James, I think that's great.

Especially you'll be on Baby Step 7. You won't have a mortgage, which is insane that you paid cash for your house. And you're just maxing out investments. Yeah.

“So, I mean, just so smart, and again, don't feel like you have to deprive yourself completely”

and enjoy your life now. For the next 10 years, have some fun. Go on a date, go on vacations, enjoy some of this. But yeah, but that's kind of a net. That's a really great next step, especially for people out there who are in Baby Step 7.

I think just to have that number. Oh, and I want to encourage James as well to not wait 10 years to go pursue the thing he wants to do. Yeah, that's true. Do it now.

Some sort of non-compete says you can't go public speak. I would just make that your side hustle, and eventually what might happen is it overtakes your income. That's right. That's right.

Over time. And then you just side to leave three years from now and go do your thing full time. Because what breaks my heart is the fire people out there, they go, well, I'm going to go do something I'm passionate about one day. Like we'll just do it today.

Go do the encore career now instead of when you're 55. Right. And we're exhausted. And especially if you know you're miserable in it, like I think there are some people that are wired, more of like, hey, I have a great job.

It's not like quote unquote my passion, but I'm really good at it. I get paid a lot. And so I get to like use that money to have a great life. I think there's some of that people. And then I think there are some that are like, no, I want to do what I love, but then

sometimes they're broke when they do the thing like all the time and you're like, well, you have to make money and survive. So it is. It's that like beautiful point of what are you good at? What are you passionate about and how can you create a great life around that?

It's like the career just like, well, if he might be able to do that in the next year. She has kisses on the kids say, I don't know if the kids say that, but is that right? And I like it.

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Hey, guys. How are you? Hi, we're doing great. How can we help? Hey, well, it's crazy.

Sorry.

So I have a short question, what very short story behind it?

So my wife and I, where I'm 31, she's almost 30, but don't tell her I told you that. And we would never. We would never. The only that we have other than our house is like hand grand last on a car loan and that's it that we realistically could pay off pretty shortly if we just rife and beans it.

But my question is, so I have a guitar that I bought for a couple thousand dollars like 10 years ago that is like pretty rare one of one and someone recently offered me $12,000 for it which is pretty nuts and I'm just less sentimental than I used to be and I'm wondering if I should just give it a thing while I have like the highest bidder or if I should keep it as like an asset.

Yeah, that's kind of where my thoughts are right now, just trying to figure out the right next move. Wow. So you bought it for a couple grand now, it's worth $12, you got 10k in debt, you're like I could sell the guitar be completely debt free today with two grand left over, but you'll

be guitarless and that will make you sad. You make that I make a dumb move, this could have been worth 20 if I waited because it sounds like you're looking at it as an investment slash asset and it's less so this was my grand pause guitar. Yeah, that's what I'm wondering.

It is the sentimental value, it's not really there as much as what you said, it is more you see it like what George is paying it if like, hey, I could get some money out of this. Yeah, I bought it from like an artist, like a musician because it's not really like dad or anything like that.

“So is that more of the value is because the artist owned it?”

So it was owned by, the guitar is the, it's a Gibson signature model of a famous like on rock guitar player from the band Blink Lady 2. Oh my god. George, George, I was like, it can't be, it can't be Blink 1 or 2. I get a person in this building who might buy that, maybe at this desk.

You might be getting an offer of, that is pretty big. $12,000. After this show. Oh, thank you so much. I'm sitting here.

That's pretty good. I wasn't a little sad that John wasn't alone but also glad because he would immediately say, no, don't you give you a little more money. Well, you're talking to the guy who told someone to sell a horse.

So I, you know, I'm never above selling a guitar to get out of debt.

But your numbers here, like you're going to become debt free pretty fast. How many more months until you guys are completely debt free if you go hard at this? If we really than hard at it, like maybe six months at the most, really. Okay. Just months, your debt free, let's say you have the emergency fund, another three or four

months after that.

“Would you still consider selling the guitar just to have the extra cash?”

Or would you say now I'm going to hang on to it forever? Yeah, there was no debt. What would you do with it? Yeah, I feel like I would hold on to it because I could always make another $12,000. Yeah.

And I could probably never get this again. I think I would hold on to it. Yeah, I don't think it's on, nothing's on fire here. If you were like 150 grand in debt and you guys made 40, or this was going to clear some a lot of pain in your life, but it sounds like you guys were on track to do this without

really, you know, affecting your life right now. So I would say hang on to it. How much do you guys make a year? I'm self-employed. My wife works part time as a nurse, we have a couple of kids.

We're around $100 to $120, which I know it's a big window probably, probably like 110,000. Okay. Okay. I don't know if we're not going this debt out sooner. Yeah.

I would put some gas on this other way. Get out of the way. Get out of the way. Three to four versus six. Yeah.

Yeah.

And I knew that question was coming.

We just started every dollar, so we're. Okay. Okay. So here's my caveat. If you pay off the car in 90 days, you get to keep the guitar.

How about that? Okay. Deal. Pay it off in 30 minutes. I see.

I like, I don't know why. There's something about being human. Dangle the carrot and put some gas on my financial plan.

“And I think that helps me go, if I want to keep this guitar, I've got to go a little”

harder. Yeah. And it's 10 grams. If it was like a nice car, that would bring like 120. You know what I mean?

Something like crazy and tickle. Like if it made a huge dent, I feel like I'd be more up to like get rid of it. Or if you were just in a dumpster fire situation. Yes. And it was like you got to clear everything, nothing counts anymore in life.

Yes. But on the spectrum, you guys make a good money. Yeah. That's right. That's right.

You guys are much closer to okay. Yep. So I think I'd keep it, John. Yeah. Oh, man.

So good. That was a great concert. John and I went to that concert. I know. We had a great time.

It healed my inner child. Just like back tree boy did you. It filled me. I know. He's like his magical.

All right. Let's go to Holly and Charleston, oh, West Virginia. Hi, Holly. Welcome to the show. Rachel, it's so good to talk to you.

Well, thanks, Holly. George is not here. I'm just honored to speak to both of you today. I've been so excited about trying to call it all day.

I'm not finally got through.

So glad. The Lord will do it. You guys, he did. I think that's it. So here's it.

It got a good mood situation. I have little health concerns that have not forced, but the course made to stop working and do intensive intensive therapy. And because of that, I'm not working. But I have a family member who just made $1,500 a month.

And that was wondering.

“Would that be possible to start the Ramsey plan with a fixed income?”

With that small of it income in your situation, I'd probably say not right now. I think I would get into a place mentally where you are. You are able to engage the world in a sense of like that you are healthy enough to start working. Have a job.

Right. And all of that in order to really probably go at this. Because how much how much consumer debt do you have? Give or take a little bit. I think about five.

Okay. So it's not bad actually. Okay. From several years ago. But right now, I only have probably not even five thousand.

But I do have some enough enough to make me a little bit. Concerned. But not terrible. Yeah.

Is it credit card debt? What kind of debt is it?

No, man. It is medical. Okay. And a tuition bill from the school. I felt spending.

And then to. It was for. Ryzen and tea mobile. Okay. Some phones.

When I felt my contract, they had a final bill. Okay. I just had a bit of a pay. Yeah. Yeah.

How much is your expenses every month? Because how are I? I'm just wondering how you're going to live on 1500. Yeah. And what's Virginia?

As you can probably guess living across the living is lower than those places. My rent is 700. My. My electric is about 120 a month. But in myself, my Wi-Fi is 50 a month.

And then my cell phone is 45 a month. I don't have to pay for water. Stewart trash. None of that. But that's what school we're on that.

I'm left with maybe $500. Okay. Okay. I was a month and I had to spend that on groceries. So I'm really.

I'm in a pickle. But I am very grateful. I'm really grateful to have a family number who cares. Yeah. It's very common.

It's very common. It's the intensive therapy that I need. I truly need. Are you paying for that on your own. I'm Medicaid.

Okay. Okay. And is there an end day? Yeah. Holy to that program that you know.

“You know, is it like a 90 day or a six month or a 30 day?”

The one that I had a referral. Two. I just sent this one. That was on you day. The finished it.

It's got a certificate. They need very proud of myself. I support it. Yeah. And then they referred me to.

They referred me to another one. That's 12 months long. So. Oh, wow. Yeah.

Yeah. And it's not even for sure. I got into that app to have a bunch of consoles. A bunch of tests. It's been like that before.

I even accept me. So I'm just out of hope. We may help you get into it. But they'll guarantee you. And we're going to give you that.

And waiting. Okay. Yeah. So I think. Yeah.

From the. I think from the financial perspective. I think my goal would be. Not getting into any more debt. Staying current on all your bills.

So you don't get behind. And then maybe making some small. Goals towards paying some of this off. Yeah.

Because if you can get some traction a little bit.

Even if it's a couple of hundred bucks extra a month. That you kind of work your way in that smallest debt. That actually may give you some level of, you know, good energy. Right. Some confidence.

Yeah. What you're doing. But yeah. I would take care of yourself. [MUSIC]

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Hi, John. Welcome to the show. We're Rachel. Hi, George. Thanks for taking my call. Absolutely. How can we help? I'm my wife and I, we have a lot of concerns, but I can narrow this down to one or two.

“And at this point we're 53 and 54 years old.”

Late bloomers as far as creating a good income and we've developed. We've collected a lot of debt. My wife graduated from law school not too long ago after dropping out of high school. She went back to school and got her lot of degree. We, you know, accumulated a lot of debt there about 250,000 to 120,000.

Okay. That's just the beginning. We have a home that's we'll 365 on and it's worth some more in the mid-force. Maybe a little higher than that. We have a lot of other debt that we've accumulated over the years.

So other than the school loans and the house. Probably another 150,000 or the cars that we're looking at. There's only one car sitting right now. It's about five grand left and that's the thing that got me calling you guys. I had the urge when I looked at that mouth of the load.

I was like, hey, it's worth more than that and I can go trade it in and get another car. And then I was like, what do you stupid? You want to get another payment. And so I decided not to do that and start looking back into the RNG program. And it's brought me here after a couple of weeks.

My wife's not quite on board with me yet because although she's got that attorney job. It's only been a prosecutor's A, which is less than what I make it as a manager at a warehouse club. What's your household income today? Next, we make almost 10,000 a month. That's your debt after that's our take home.

But that is after all the insurance. I mean, I'm max out everything on my paycheck really because. You can talk about investing insurance up till now.

But I stopped math because I'm going to start putting it toward that. Good. I'm already maxed out for this year. I'm already maxed out my 401k matching my company. There's a, a gratuitous 6% on top of that.

So I'm letting them add my 401k from here on until that gets cleared up. The question questions I have are too fold really. Do I. Do we need to sell the home? Do we have to do that?

We're living in a home that's quite frankly too big for us. But we bought it.

It was our first home we bought three years ago.

And we wanted to have enough room for our family. Our kids and grandkids to come over. What's your one to be with us? Okay, 2600. That's right in line with our 25% RAM.

So it's it's not going to be too close. You'll have like 70 grand and equity maybe. Yes, lucky. 50 net after fees to throw it. You're 370 in consumer debt.

“So that's what I'm doing the math here going.”

You guys bring home 120. Yeah, 370 in debt. How much can you realize to throw it all of your debt right now per month? I'm still trying to collect all of that because we are not going to get job. Obviously of controlling our spending.

We've a lot of card and we spend and we don't pay attention. We go away. We still got money in our account. And that's how we live and we've been living, you know,

according to payments and not according debt.

You know, what can we spend at each month? So the other thing is, you know, my wife's not on track with this yet because with her job, she's got an ethical issue at work. She could be singing her employer. And it's a little bit more like a lot of money.

And it's a little bit more like a lot of money. And it's a little bit more like a lot of money. And it's a little bit more like a lot of money. And it's a little bit more like a lot of money. And it's a little bit more like a lot of money.

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And it's a little bit more like a lot of money. And I'm trying to figure this thing out at work. So the conversations just aren't happening. I am ready and we're going to go. I will go live in a trailer.

And I'll go live in an RV. Yeah, you're done. Yeah, you're so dumb with this. Wherever I need to. Yeah.

My wife's not there yet. And that I knew that that was the biggest piece. So, you know, I called and I called the LPs to talk to them. And I was looking specifically for somebody who could be a financial advisor and a financial counselor.

And I'm ready to pull the trigger on that. But my wife's not. And I don't want to make decisions without her. Sure. Do you guys work together, John, about money?

Like in the past. Like, now I'm going to talk about the last six months. You're more in. Okay. So when one gets fired up, the other one not.

Yep. And so we flip flops through that. Yes, you're whole time. Okay. So that's been a pattern for me.

How long have you guys been married? 31 years. Okay. So, breaking a pattern of financial habits and marital habits. It's hard to do in a really quick way.

Right? You've hit your emotional breaking point, which was why this makes it easy. We call out that I've had it moment here at Ramsey. People do exactly what you do. They wake up one day.

And because of one small situation or a crisis, they're like holy crap. I'm done. Like you just like you said, I will go live in a trail. I'll do whatever I have to do to get out of this.

And she may not have to hit it to that extreme.

“But that's, you know, obviously that's why you're wanting to change.”

Just because you have hit that moment. And so to expect her to flip a switch automatically with you. Obviously, probably from a relational standpoint is not realistic. But like you said, it is needed. And so I do want her to feel the weight of what you're carrying.

Because as her husband, you have felt a massive level of now responsibility, a massive level of stress. And anxiety around this that you want free from. And so what can you all do as a partnership?

Even if she's not to that point, my prayer is that she can come around you as her husband to say, okay, I have a lot of stress at work. John, you got to give me 14 days just to kind of get a plan in place. And then my head will be clear.

And then we can move forward.

So I almost would have some kind of like, hey,

I'll give you some grace right now. But it's kind of on fire our situation. So in the next 14 days, we have to sit down and address what we're going to do about this.

“What if this drags out for two years as you guys get foreclosed on?”

Because you keep up with your pain. It's going to become her, but let me even if it's not right now. And the napkin map, John, to help you. Let me just show you this. If you pay 2,000 a month toward your debts,

that's 15 years. Yeah, that's 2,000 a month. That's probably money you don't have right now to throw it all those debts. And so we actually do. How much can you throw at it?

If you can do 7k, 8k, now we're talking 3 to 4 years. Because you stop the 1200 of your 401k so you can add that.

And then any level expenses that you can cut.

You could probably cut another 3, right? I would make it a goal to be out of this thing in less than 4 years. And that's going to take 8k a month getting thrown at this debt, which means upping the income. And maybe selling the house is just part of that game plan to clear some of it.

Working extra and all of it, yeah. Yeah, you guys do have that long road ahead. And getting her on the same page and you guys. Talking about this is going to be a big part, right? You can't cut 3,000 dollars out of a budget used to spend

without your spouse really being on board. And so her sitting down and you guys creating a plan together is going to be crucial. And I think that she will have that ability to do it. (upbeat music)

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So don't let one hospital visit sabotage your financial plan. Go to healthtrustfinancial.com and protect your budget. That's healthtrustfinancial.com. Next up, we have Joe and Indianapolis. Hi Joe, welcome to the show.

Hey Rachel, hey George, how you guys doing? Hi, we're doing great, how can we help? Good, yes, a blessing to talk to you. I'll keep it brief yourself. I actually get married in 12 days.

Oh, cool. Gradually. Thank you. Thank you so much. Yeah, I spent a long engagement about two years.

So we are more than ready. But we're going to be obviously combining finances in kind of tackling debt. So I would just like some wisdom and experience from you guys and how to just set ourselves up. The best we can financially heading into this new chapter. Love, awesome.

And you both are on the same page that we're doing this. Yeah, yep, yep. It's about to be our debt, our income. Absolutely. Yeah, absolutely.

That's great. How old are you guys? We're 25. Okay, great.

“And how much debt will you guys have combined going in?”

Um, so, and I just bought a house last year. So, um, consumer debt, I have about 17.5. That is a student loan in medical. And then she is, she will be a car proctor. So she has about a 190 of student debt that she'll be bringing in.

And that's all that will have. Okay. And how much do you guys will you be making, do you think? Or is she, she just graduating school or is she working? She, she's just graduating.

So, she, we think that she'll probably make about a hundred thousand. I'm talking to the, the car proctors at the office. She's essentially doing her clinicals out right now. We're going to be working. Mm-hmm.

And then I'm, I'm self-employed. And I've only been working full time in the workforce for two years now. Um, last year, I made about a hundred and eighty one thousand. And I'm, I'm on track to do that this year as well. Good for you guys.

Amazing. You're going to be making two eighty one trying to pay down 207. And so you got a big, a big pile here, but you got a big shovel to clean it. And so the goal is combine the income into one bank account with my wife and I did is I had a checking and I just made her to joint checking.

Added her and then we shut hers down. It was that simple. So joint checking, a joint savings.

That isn't used for the honeymoon or whatever to get your life started And start throwing that at the debt. And then stay on a budget and keep living like your broke. Don't get high on the hog just because she's working, making a hundred grand now. Keep living like broke college students and just throw every cent of this debt until it's gone.

Yeah, what's wild. A question. A question I had is I have about 150,000 in my just a savings account personal savings.

“Um, and I, I think I have a answer to this.”

But should I write a check for 175 today and just pay everything all? Yes. And then around another huge check once you guys are back from the honeymoon and clear a bunch of these debts. Okay, that's what I was thinking. What's the money for the 150?

Uh, that's not for anything really. It's just what I've saved up working the last two years. And yeah, it's just accumulating in my account. So do you have, are you going to have a hard time letting go of all of that to pay down her debt?

Uh, you know, I think when I first started making like, I was a broke college student.

First started making like quote unquote like real money right in the adult life. I think at first like probably four years ago, three years ago, I was a little bit hesitant. But I'm more than willing and wanting to just start, you know, from a clean slate. So I am willing. Yeah, I love it.

Well, if you use that, now you're down to 74,000 left to pay off, making 281. And now we're done in a year. And so you see how that speeds us up. And guess what? You're going to be able to build some serious wealth, making 281 with no payments for the rest of your life.

Right? Yeah. Saved up 150 grand. That's a lot of money, but you'll do it pretty quick with no debt payments. Yeah.

Yeah. It's much easier to hear that from, you know, from somebody with your experience. It's what I would do if I was in your shoes. Yeah.

So it's not just like, well, it's what the Ramsey plan says.

It's what I would do is clean up the desk fast.

“I mean, that's what all the assets you guys have.”

Yes. I mean, that's what's crazy. If you have 150,000 saved. Yeah. And 200, I mean, yeah, it's 50 grand.

And if you guys made it an aggressive goal to say, hey, let's pay this off in six months. Right? What's wild to think about Joe is, yeah, I mean, we can talk about the debt payments. But in six months, that's going to be, you know, in your review mirror. It's going to be more now going forward for the rest of your lives.

And hey, how do we set this up? Well, between two people who you will learn very quickly that your wife is not you. And you guys are going to have opposite tendencies with money. You know, you both may grow up in different backgrounds when it comes to money. All of that will start to kind of filter in.

And so what I would say from a relational side is to see your spouse as a strength. And for her to do the same to you because opposite's attract. And sometimes that can actually create the great friction and tension and conflict. But when you can actually pause and say, hey, actually what they're bringing to the tables. I think I'm probably worth that.

And so I'm going to lean on their strength in this area and vice versa, right? So there's going to be those relational dynamics. Yeah, that you guys will be working through throughout all of marriage. But you're going to get good at it. And my prayer is that as you guys followed the baby steps and you get out of this debt.

You guys save up an emergency funds. You start investing in retirement yard 25. You can start all of this in the next year. That is so wild. It's going to be crazy like what you guys are going to build.

So have goals have really big goals of saying, hey, let's yeah, let's pay off the house. Let's go on this trip. And maybe it's a generosity play of like, yeah,

maybe like we have parents that could never afford this type of trip.

Let's make it a goal to be able to take them or whatever it looks like. But have always have something you're kind of shooting for and aiming for with your money. Because you guys make a lot of money. And you're going to be on the other side of this debt and in the blink of an eye. If you do it, which I'm going to assume you are Joe,

to pay it off. And I think that moving forward is the big is kind of that big glaring thing for me. What are you going to do moving forward? Well, the biggest temptation after you get married and you're making 281 at 25 is to look like you make 281. Yes, right.

Let's get some fancy new cars. Even if you had the money to do it. I know. I know. In your friends going, dude, you spent 150 grand on debt.

You could have invested that, bro. That's going to be your friends on the other side.

“And so you have to get blinders on going.”

No, these are the goals we set for our family. Mm-hmm. And that is to be completely debt free to give us options and flexibility. So that one day, let's say she has a kid and wants to stay home. Well, it's going to be hard to do that.

That's amazing. Her income when you got payments all around you and a mortgage. So instead, build a life that has options and margin. That has margin. Love it.

All right. Let's head to Devon and Omaha. Hi. Welcome to the show. Hi.

I'll try to keep it quick. Currently on baby steps, four, five and six. I make about $13,000 a year. Life makes between 80 and 90. And then I run small business on the side.

It brings fluctuate quite a bit in between 25 and 45,000 a year. Oh, nice. Like I said, we're on baby steps, four, five and six.

We had plans to pay an off the mortgage for them in the next three or four years.

But we have a two and a half year old and another baby. And it's all right to delay that baby steps to cherish these years. So she can stay home with them. Yeah, for sure. For sure.

“I would still keep an semi-unaggressive goal, right?”

Because if you went all the way to what the average person, if they have a 30 year. I was like, I'll pay it off in 30. We still want you to pay it off. And, you know, a reasonable time to have that. But if it slows it down by a couple of years because, yeah, if you guys have two babies in the house,

and you're like, listen, we want, yeah, we don't want to pay them for daycare. You know, your wife wants to be home. And you guys make a hundred and fifty thousand dollars a year with just your income,

the side business and all.

I mean, I think it's a green light for sure for her to stay home. Have you done the budget and crunch the numbers just based on your income? Yeah, I'm not factoring just my income. I don't try to factor my side business in too much to our budget monthly, just because that's kind of bonus on the top of the month. Right, just make that the extra mortgage pay out of the money.

How about that? That's fun. Yeah, so how about a thousand to 1500 left a month still? And that's after investing 15% money in college paying all the bills. Here's my next part on that. I have a pension.

“You guys see it on the count. How about you put in your pension?”

Yes. So if it's, you know, six percent in count three. But it's still, yeah, so it's five, so it only be 12 and a half percent.

So it could bump between half percent.

But yeah, we're still contributing to five twenty nine. Right. That's the key. If it's going to derail the baby steps, then we got a problem here. But if you can still do four five and six on your income, then it's green lights.

The other thing is this would bump those up to up to up to 25% will for the mortgage just a little bit. But in the year, we'll have about a hundred thousand outside of our, the emergency fund saved up. We'll be okay to recast the mortgage. Yeah, throw that lump sum at it and recast that'll bring your payment down.

I mean, either way, you're not the payment, the mortgage out fast anyways. So you guys are in great shape. Yeah, and congratulations, Devon.

“I mean, honestly, you guys doing this and paying off your consumer debt, having an emergency fund.”

That's why you do it. Yes, it's have options in life. So you're not tied down to a job that you hate when you want to be home with your kids. And so, yeah, you and your wife have done a fantastic job. So we're excited for her.

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All the things. All the things. But we are here to answer your questions. So give us a call at triple eight eight two five five two two five. We have Lacey on the line and Phoenix Arizona.

Hi, Lacey, welcome to the show. Hey, thanks for having me. Absolutely, how can we help? Yeah, so my question is, I'm a single mom of three. And I'm trying to determine if I actually should drop my emergency savings down to a thousand dollars to put that nine thousand towards my our loan.

Oh my goodness. Okay, how old are the kids? 17, 10 and 8. Got your hands full. I applaud you, Lacey.

Being a single parent. I can't imagine. I mean, you're doing a fantastic job just calling and having a sentence. You together. Because I know it's probably so much work.

Okay, so you have nine thousand dollars saved. I have 10 thousand dollars saved.

And so I have my mortgage, which is 400,000.

“And then I have my car loan, that's 40,000.”

Okay. How much do you make a year? My net take home monthly is 73,00. Okay. So that car.

So what is that? Probably about 90,000. Yeah. A year. Yeah, you're right.

That car is kind of right on the bubble of too much car. For what you make.

We always say, you don't want anything with motors and wheels being more than half of

your annual income. And so you're not quite there, but you are kind of close. So I'm just curious.

“Have you looked at, if you sold the car, what could you sell it for?”

I have. And I've actually been going back and forth on this for a month or two. Okay. So I'm in an equitable position in the vehicle. Or I were to trade it in or sell it private party.

So I owe 40,000 if I were to cancel the warranties. I would get that pro-rated refund applied to the loan. And I would be at 37,000 to pay that loan off. If I sell it private party, I'm hoping it appears I would get about 43. And I actually just this weekend went into a dealership.

And was quoted a $41,000 amount for trading it in. And so the reason I bought this vehicle is because I had been in an accident. My car was totaled.

And I purchased the warranties because I basically have no maintenance, no, you know,

no issues for the next six years. So that's the 150,000 mile power train warranty. And then it includes oil changes, tire rotations, all of that stuff. So I felt like I was getting a really good deal. However, I still have a $750 car payment.

So I was looking at, okay, if I downgrade into something just a wee bit smaller for, you know, 20, 25,000, then that'll drop my payment probably $350 a month. But then I'm not. Why not sell it, net your six and then use, you know, five or nine to purchase something used for now and then upgrade later.

Because then you're completely debt free. And with your great income, you'll be able to save that emergency fund up quick. You'll have 10k back in no time. Yeah, and it just makes me nervous to not have that 10k in makes savings account. Because if they're, you know, for example, I had a dog emergency a few months ago

that cost me $3,000. So if something like that were to come up, then I'm back to having to put something on a credit card which I really don't want to do, right? My question is, say you did Georgia's plan. Okay.

And that means you only have 5,000 in the savings. If you didn't have a car payment, could you, could you find another, I don't know,

“making this up $6,000? Do you think beyond, beyond the car payment?”

I mean, in the position I'm in today, my monthly margin is about 1100. So getting rid of that car payment, I am, you know, $1,800. Almost $1,900 and monthly margin. Okay. Which means you could cashflow a $3,000 emergency between your 1,000 buck emergency fund.

And that's just one month in. And if you put that aside, then you could have your emergency fund built back up in three months. So I hope you don't have any emergencies in the meantime. But if you did, you could have, yeah, you could cashflow up to $8,000 at that point. If you kept $5,000 in, use $5,000 for the car, plus the six.

That $11,000 car. Yeah, I mean, you could, you could make this work. It's, it's transferring risk. Like, see, it's a kind of what we're looking at because, you know, people feel safe when they have cash in the bank, understandably, but yet, over here, there's still money owed.

So from a net worth perspective, like, there's still risk there. So if you did the plan of selling the car, netting out six, putting five with it, buying an $11,000 car. Now you have no risk, right? You have an 11,000 car, but plenty of people drive $11,000. And you might drive that for less than a year as you save up and then get a better car.

Yep. And then a better car.

The problem is when we drive brand new cars, our body says, I need to have a brand new car forever now.

And so I kind of like steer stepping it up because you get used to that nice new leather smell. And the fancy, you know, leather heated seats. And so I think there's something about sacrifice where you got, I'm going to drive this beater car and sacrifice for a short season,

Yes, so it's not so I have no question.

I have no risk, no risk financially, like it is all you, all you.

“There's no bank tied to you saying, if you don't pay this, we can come and get it, right?”

There's none of that happening. And so there's something that's very freeing about it. And we've studied, I mean, tens of thousands of people, I mean, hundreds of thousands throughout the year is millions of people that have gotten out of debt. And I've walked their way through the baby steps. And we have just seen time and time again.

It really is the fastest, most reliable way to build to build wealth when you have no payments. And you depend on your income, which is your largest wealth building tool. And you yourself with the autonomy of just you are able to stair step you financially. And so getting a car loan out of your life of $40,000. And even if it was $2,000 that you're putting aside, it will be $2,000 a year until you pay this car off.

And that's a long time to have a $750 car payment. Right, right. And I promise you, you can afford the oil change and the tire rotation should be free with wherever you got your tire. So I think they'll sell you on those warranties all day and make you think this car is about to fall apart. And I go, well, maybe I shouldn't be buying this car if you're so worried that I need a warranty.

You talk about this in your book, breaking free from broke doors. Most of the money they make is warranties and financing. It's not from the margin on the car.

“That's why they hate people like me who walk in with a check ready to pay cash.”

And so I would get out of that warranty, bring it down to $37. Go get your $43 for it, take that six in profit, plus some from your emergency fund. And find the best car you can, you know, do your research on make model and get a pre-purchase inspection for a month. Yes, you know, you're not getting a lemon. Right, and I see if you have a few friends that are good with cars, maybe some of your friend's husbands or something.

I don't know. Have them look at it too, right? Because it is a big purchase a car and you want it to be reliable. You want to make sure all of those things are in check. And they are, though, that's, I promise you, you can find a used car that has all those things.

And getting out of this payment and freeing it up. It's pretty amazing what it does. But we're cheering you on, Lacey. You're doing a really, really good job. Okay, guys, let me ask you something.

What would it take for you to switch your bank?

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Up next we have Valerie in Chicago. Hi Valerie, welcome to the show. Hi. Hello, thanks for calling in, how can we help? So we are currently in a multi-generational household.

We just moved in not too long ago with my in-laws. But there has been some costly updates that probably should have been taking care of a while ago. But my in-laws are expecting us to pay for it, but they haven't fully given us the home yet. Does that make sense?

Yeah, I mean, when are they planning on giving you the home? Um, when it's paid off. Okay, let's still a bad idea for tax reasons,

but we can couch that for a second and talk about this multi-generational home.

So is it just your in-laws and you guys right now? Yes, there are 10 of us living here in the house. Oh, so it sounds like more than that. Is it kids who else is there? We have six kids.

Oh, okay, so how does this work? I'm curious, because I've heard about these.

And then we're just paying the utility.

So you don't pay rent? No. Okay, so you're living pretty cheaply and they're going, well, hey, listen, you guys are living here pretty cheap.

“The house is going to be yours. We think you should pay for these renovations.”

Yes. We're payers. How much is it? Yes. Well, just for example, we had to order like a new window, and that was like $900.

So, but it had, you know, been needed to be taken care of before we moved in. So they waited until you guys moved in and said, hey, a lot of bunch of repairs to do. That's fun. Kind of, but not really, but my husband got it. Well, I was going to ask, how did this all come about?

Did they offer this as, you know, a great option of life, and you guys were like, let's do it. Yeah. Okay. My husband got a job opportunity, and so we moved back to his hometown. Left to your own devices, would you guys want to have your own place?

No, we want the multi-generational to work. We want it to work. Okay. Well, then I would do a reset.

“If you really want this to work, I would do a reset on all things finances, because it sounds”

like you guys never actually came to any agreements as to how it would work other than you guys pay utilities.

That was pretty much it. Correct. We need a whole lot more than that. And the thing about taxes I mentioned, if they give you the house, while there's still a live, then you lose the ability to have the step up in basis.

If they bought the house for $100,000, when they give it to you, and now it's worth $500,000, where you're going to know taxes on all the gains. But if you inherited the house after they pass, well, now it's a step up. And so the IRS says, hey, the house is worth $500. And you got it at $500.

And you got it at $500. So there's no taxes. So if you went and sold it within a couple months, you have no taxes to pay. And so that's one of the issues with giving a home to your kids. It sounds like a really sweet thing to do while you're alive, but it's actually one of the worst things

you can do from a financial perspective. So I'd caution you again. I didn't. Which then complicates it, right? Well, how do you get the house?

“Well, you need to like buy it from them.”

Or you all live there until they die. I mean, really mean from, oh, yeah. But if that, is that what you guys want, though, you want a long term life like this? Yeah. Yeah.

Yeah. That's how old are the parents in their 70s? Okay. So listen, people do life different. And if this is how you choose and what you guys value and want to do, you do what you guys want.

I mean, you're both at your old adults. Here's my fear, Valerie, is that down the line and we've heard crazier than when I'm about to throw out. And I'm just making this up. You know, his mom passes away in five years. Dad's 75 meets a woman online at 80.

She wants to go and leave and sell the house, whatever. And you're 10, 15 years into this wonderful plan. Something gets to railed. And for 10 to 15 years, you and your nuclear family have done nothing from a home perspective of building equity of having your own of saving for a home. It's quote unquote, you're out of the deal now.

And this pretence scenario. And here you guys are in your 40s or 50s. And you're starting from nothing from a home perspective, which is one of the, it's the largest purchase you make as a home. It's the thing that if you rent, it continues to go up. So that avenue is not smart long term.

I mean, it just puts you in a scenario that can be very sticky that you don't see right now. But could happen in 10, 15 years. Someone gets sick, right? Or you have to take care of them. Yeah.

There's a thing right now that they're doing a reverse mortgage. And you can't even inherit the home without paying them. And so there's a lot of issues that could arise in the meantime. It sounds, this is why doing deals with family can be a little sticky. And what I'm going to propose is going to sound probably a little heartless, but I would.

I would almost write some type of legal contract that could hold up a court that literally plays out. It's what we would do if someone did a partnership in business. We don't recommend partnerships. So if we do, we're like, you got to think about it all. Addiction divorce.

You know, you go through all the things that could happen to put you guys in a bad situation. And you guys need to lay out scenarios to protect yourselves. For whatever that could look like in the future. So that's my only word of caution.

That doesn't always happen.

Sometimes there's crazy or things that happen. So that's what happens. And everything's fine. But we wouldn't have jobs if everything went according to plan for people. Yeah.

And they are willing to write something. You know, get something in, in, in, written form. And case, you know, that actually happens.

Because you're going to have more of this as time goes on.

And so are you guys going to cover it forever? Are we going to split it 50/50? Yeah. That's up to you guys to decide.

“And if you want to put the bill for this one.”

But I think if it's $20,000 in repairs and they just neglected to do them, I don't think that should fall on you. Mm-hmm. And then Valor, you and your husband need to have some really healthy check-ins as well. Because sometimes you get locked in a situation where you start to be really unhappy.

Living with his parents. And again, maybe not next year, but five, six, seven years. Resentment plays up and unity means comes in. Yeah. And it starts to erode you guys.

You're like, like, you just need to be thinking through all of this.

Or if he gets another job offer, he got a job offer to move him.

What if he gets an offer that would triple his salary. And it means you guys somewhere that you really want to. But then you feel stuck in some situations right at the house. Or they expect you to take care of them regardless of the finances. Yes.

Because they are in their 70s. Yep. So I would just be, I would be looking at every possible thing and saying it out loud. And you and your husband be in agreement. And I would meet within a state planning attorney just to help you navigate this.

Not out of like, we're not suing anybody. Or it can help us craft this in a way that makes sense for everybody. Yeah. I think that would be great. And I would feel comfortable probably doing that.

Yeah. And they can walk you through those financial aspects of well as well of what I mentioned, of inheriting the house versus them giving it to you while they're alive. Because that's also some pieces to think about. We get too many calls where someone calls in and they go, yeah, they just gave it to me while they're alive.

And we go, well, you have a tax bill on that. $700,000 in gains from when they bought it in 1982. Yeah. Yes. Okay.

How many bedrooms is this? I'm just curious with 10 people there. $34,5 bedroom. Wow. So are the kids all bunking up?

No, just some of just some of our boys they're younger. And so they also have a bedroom. But there's essentially two like primary fleets. And the six kids are splitting three rooms. Yeah.

Okay. And then we have a baby with us. But also there's potential to like make other bedrooms if we need to along the way. But it's a pretty spacious house with 7,000 square feet. Oh, wow.

This is police. That's great. Okay. Well, I wish you the best. I really do hope it works.

Yeah. It sounds so good on paper. Like grandma and grandpa are there. And Dr. Arthur Brooks. He's mentioned this because he his kids live with him.

Yes. And it's a great situation. Yes. Because there's healthy boundaries in place. Yes.

It takes everyone has to be function. He studies this for a living too.

“You need to have some financial footing.”

Have blood boundaries be emotionally mentally financially healthy for this to work. Yep. And a lot of things a lot of people go in blindly. Not thinking about what could be or don't address things. And that's when the dysfunction starts to play out.

So it can be a beautiful thing if it works. But a lot of times people aren't aware of all the traps. So just going into it, you know. Eyes right open. It's important.

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if you're listening on podcast or YouTube. All right, let's go to Wanda in state college, Pennsylvania. Hi, Wanda, welcome to the show. Hi. Hi, Rachel.

Hi, George. How you doing? Hi. We're doing great. Talk to me, help today.

So I would like to know how one age is gracefully, financially speaking.

“I honestly thought the Lord will come back.”

But what we wait because the long term care is astronomical and frankly, one cannot afford. I feel like the country is not financially kind to the elderly, requiring care. And the light that we say for without debt investing smartly is just gone in a tooth, because the cost involved with any type of elder care. So I'm 56, my husband's 57, and after having witnessed what my parents do have since passed on when they need a care.

It makes me nervous for me and my husband and even my end loss. So how does one plan for that? Well, it's a great question. So there's a couple of things you can do. There is long-term care insurance.

Have you looked into that? I've been thinking about it. I honestly have not, and I'm not sure, like, how old I need to be to even invest in that. We generally say once you've heard 60 on your 60th birthday as a gift to yourself. I would look into it and purchase a policy for you and for your husband.

Because the earlier the better the lower the premiums. Got it? Because that's the one thing that could thank you is that long-term care, a nursing home stay. You know, can run over 100 grand a year easily. And the average stays two and a half years.

So you're talking quarter of a million dollars out of your nest.

“If you even have it to cover something like that.”

Correct. And so it's worth it. Even though, like, man, it's an expensive insurance. Yes, but you're not going to have it forever. And hopefully, you know, fingers crossed.

We can get you self-insured to where you're nested. Can cover that easily without, you know, defeating your retirement. Yep. So that was going to be the next option. So you can do long-term care insurance.

And then the next option is you one. Do you and your husband. So where are you guys at financially? Oh, we've got a couple of retirement accounts. We're still working.

Just about to pay off our house at the end of the year. So we're, we're doing okay. And everything. How much are in those accounts? Oh, goodness.

Let me think. He has like 300. I think I might have 400. I don't even know how this went out.

“I kind of glaze over when it comes to investments in retirement.”

We have about almost 100,000 in the bank. Okay. So yeah, you guys are around 800,000. And then your house is almost paid off, which is so exciting. Correct.

What's that worth? Probably on the last time we checked somewhere around 250 to 300. Okay. Great. So you guys are net worth millionaires.

Okay. Maybe. That's just the math. That's the math. I think you are.

I think you are. It's very exciting. Based on accounting standards.

Your assets minus liabilities would put you over the million dollar mark.

Which is awesome. That's a great milestone. It's not to say you can go retire tomorrow. But at least you're heading in the right direction compared to most of America. So I would continue to invest once the house is paid off.

I'd start maxing out those retirement accounts and build up enough of a nest egg where 250 grand. You know, is not going to tank your retirement. You can still retire with dignity and know that you have those costs. And again, at that point, you still might want long-term care and let the nest egg continue to grow in the meantime. And maybe you maybe you need it.

Maybe you don't, but either way, your cover, not wondering is a health scare or a nursing home stay going to ruin us. I'm going to take us out. Yep. All right. Let's head to Catherine in Virginia.

Hi, Catherine. Welcome to the show. Hi. Hi. We're doing great.

How can we help? Okay. So I would like to know I'm should we increase my living expenses while we save up the down payment for our house. Should you increase your living expenses? Yeah.

So spend more per month while you're saving up a down payment.

Thank you, apartment, so that we could be that quickly for the emergency fund.

While I was pregnant and I was about to be up. Okay. Yeah. How much do you guys bring home a month? I'm going to have to bring some $5,300 and $20 per month.

Okay. Perfect. And are you home with the baby? Yes. We have a toddler and she's one and a half.

Okay. So great. So that where you guys are in Virginia, what would be an average rent for, I don't know if you guys

“do like a two bedroom or a three bedroom or a small home, what are you looking at rent-wise?”

Um, it seems to be that looks for something decent. 1,300 to 1,500. Okay. Yeah. Yeah.

I would say that's pretty doable. When we say 25% of your income is, what should be for living expenses, or for, I'm sorry, for rent or mortgage. So that's about right. Yeah.

1550 or so would get you right there. And if it's, you know, 26%, it's not like anything on fire. It's just a parameter to make sure that you have money left over to do things like and invest and save for the kids college and live your life and go on vacation, because too many people have their house payment or rent at you know 50% of their take on pay. Yeah, so if you guys up to some Katherine for sure, I think that you can make that move because saving for the down payment it may take you guys what two, three years possibly.

Of you renting somewhere to save that up and yeah, I probably would not want to do that in a studio apartment with two little kids. Like walls and several rooms for the sake of everyone. Yeah, because my husband actually works remotely. He lost his job like right before. I got pregnant with our daughter.

Oh, wow. Typically pay cut and so after we used that money from our house that we had bought.

When we first got married to you down here in KF all of our debt.

Um, because we just couldn't afford the mortgage, which is about $2,000. Yeah, so we're just trying to figure out how we can save up that quickly in this possible. Yeah, that's great. Recent I could sometimes this time. For sure.

“Yeah, do you guys have any more consumer debt that you're working on?”

No, no. Okay, great. So yes, so really is that down payment. Do you guys have kind of a goal that you're you're shooting for? Um, for hoping about 40.

I'm hoping in like two and a half years. Um, just based off of the numbers right now. I have done things. So get a couple of reasons, but I just don't want to base up money. We don't have.

Sure, no, I get that. Don't count the chickens before they hatch, but. Yeah, hopefully. If he's got that mindset, I think he will increase his income because he's going for it. Well, and the fact that he was being paid more in his last job than the job he took.

So it makes me think he's marketable, right? At some level to to be able to be making more too. So that's that's exciting. I like that specific all 40 grand two and a half years. That's a little over 1,300 a month.

So we have to be putting that away in a high yield savings account. Well, let it grow. And if you don't have a good one, fair ones is an awesome partner of ours. You can go to fair ones dot org slash ramsy and get a great high yield savings account to help your down payment fund.

Yeah. Awesome. And pregnant with number two, you said, right? Yeah. Okay.

Congratulations. So exciting.

“Yeah, I think with this is this is the change in life style.”

Or in life that happens. Life scenarios that does make you say, okay, what do we need to shift? To create some piece that's doable. And the beautiful thing is that Katherine or husband freaking worked their butts off to get out of consumer debt.

So that $1,200, $1,300, $1,400 in rent is doable while saving more. If not, they would be paying two car payments. That would equal that. Yeah. You know, they wouldn't be able to save for his own payment if they still had debt.

So those are heartbreaking calls. Yeah. So nice to see someone doing it right. I know. So that's the power you guys of getting out of debt and freeing up your income is that you can actually

put money away and save for things that you want in the future for you and your family. So Katherine, well done. Yeah. And good luck to you guys with baby number two. [ Music ]

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May not be available in all states. Today's question comes from Owen in New York. He says I make a 124 grand a year making two jobs more than my parents ever earned. I bought a used car and went to a cheap in-state college. My problem is that I can't afford a home.

And my parents who are retired have a $650,000 home. I live in upstate New York where property taxes are a thousand bucks a month. And houses that aren't falling down selling three days. How can I possibly afford a home?

“And how do I stop being this angry about stolen from buy?”

About being stolen from by the boomer generation and their generations government, which is ruining my relationship with my parents. That got dark quick. I felt a little anger and then he just said it out loud. I feel like Owen needs a hug.

And he's mad at his parents? He's mad at the entire boomer generation. How dare you? How dare you own a home? Wow, and the generations government. Listen, I get kind of being pissed about the housing situation.

That's understandable. It is so great. It is. It's wild. I can't wait for Owen to have kids for them. They're going to be so mad at Owen's generation.

You ruined everything. Listen. Oh, no, Owen. Why were you a child in 1992 instead of buying up a home? What were you doing, man?

What were you doing at three days? That's the running joke. But I do feel his anger. And I actually mention that. Not just that.

Not just being out of your parents. But I understand going, I've done everything right. Sure. Even debt free making six figures. It's still hard to afford a home where you want to live.

Yep. No matter what your age is. And so I get where he's coming from. But the real question. How can I possibly afford a home?

Is set of goal.

“And if you're debt free, you should have no payments.”

And if you have reasonable rent right now, you should have a pretty good amount of margin in that 124 grand. Yeah. To set aside and a high old savings account. To start saving up a down payment.

And we just talked to a couple, right? And the right before the break. And they make, they bring him 5,000. And she said they still can probably put away 1,300. And that's with her and two kids and husband.

Yeah. And he makes double that single, no kid. That's what I'm saying. So like you can make some serious sacrifices to put some serious cash away. And that's the reality of what has to happen.

I'll do that. I have to be true for your parents for as long as what you're going to have to do. Maybe not. Maybe not. But it is the reality.

And I think that's what's hard. It's like it sucks. And I think we can say that. But then what's the next thing we're going to do? We're going to sit and complain to be mad.

Or are we going to say, okay, let's get creative and figure out how can I put money aside to save up for a down payment.

And we say for first time home buyers 5%.

Is it a great call right up to 20 is awesome to avoid PMI, but 5%. Are you going to have to drive 20 minutes further one direction than what you want? Maybe. I don't know. But so there's ways to do it.

And people are buying homes and maybe it's going to take longer. And not specifically where you want to be. But that's that's where we're at. And that's the solution.

“That's what we try to do on this show is like there's a lot of people that are just.”

They just complain about it all day, which I get. But I don't think it can be fun for a little bit. Yeah, Vince for some, but what are you going to do? What are you going to do after that?

Yeah.

“Well, and there is some actual stats behind this anger.”

The median home price is now roughly six times the median household income.

When you look back at the 1970s, it was like two times. Yep. So it is hard. Three times it's hard. I don't want to minimize that.

It is harder for a young person to save up for that home. And so that's not just the market being the market. Part of it is structural. Part of it is supplying demand. Part of it is the interest rates are in COVID.

We're so low. And now everyone's hanging on to their house because of the mortgage. Yeah. 2% rate or something. So no one's letting go of their homes.

And you've got the boomers who have had these homes for a long time. They've appreciated. And they're going to have a big tax bill if they sell. So they don't want to get out. But there is something right.

So I want to bring up that is actually happening right now in Congress. Oh, yeah.

I could actually help a little bit.

Okay. So it's not going to be like a silver bullet. But it's a move in the right direction. So you may have heard on the news. These large institutional investors firms at own hundreds of thousands of single family homes.

You've got private equity firm. Yeah. Well, they've been buying up these homes at scale in cash out bidding regular families. Which is really frustrating. People like Owen, we're about to go buy that home.

It gets bought up by, you know, blackstone. Yeah. And so that makes it more difficult. And we believe homes are for people not portfolios. And so there's actually a bipartisan bill working through Congress right now.

So it's not going to be a big deal. So it's going to be a big deal. So it's going to be a big deal. So it's going to be a big deal. So it's going to be a big deal.

So it's going to be a big deal. So it's going to be a big deal. So it's going to be a big deal. So it's going to be a big deal. So it's going to be a big deal.

So it's going to be a big deal. So it's going to be a big deal. So it's going to be a big deal. So it's going to be a big deal. So it's going to be a big deal.

So it's going to be a big deal. So it's going to be a big deal. So it's going to be a big deal. Yeah, by a home could free up some of the supply. So basically stop these private equities of buying up residential homes.

It would force them to sell off within seven years. And the ones that own 350 are more, they can't buy anymore. It just blocks them completely. And if you are renting one of those homes, you have the first right of refusal to buy that house. And it's going to strip out these key provisions that gave the bill its teeth.

So they kept the name and they removed all the substance and the house vote is happening this Wednesday. And so if this week in version passes, these protections are gone. Which sucks. So we don't want it at all. We do not want this house bill to pass.

And so listen, I'm not a person who thinks I can sway government. But if this matters to you and I think it should, I would let my house representative know. Yeah, this is one of those times where you go find your rep 60 seconds. Go to house.gov. We'll drop a link in the description to make it easy for you.

And tell them to keep the protections in place and to say no to this bill on Wednesday. And you know, Congress here's from lobbyists every day.

They almost never hear from regular people like you and I.

And that's the gap you can fill. And we say all the time on the show, Rachel, you know, what happens in your house is more important than what happens in the White House. But there are structural things happening in the White House that can help the American people. I believe the government's job should be to create an environment that helps people win financially. That's right.

That's right. Not to solve our problems, but to be a part of that solution. So go to house.gov. Find a rep. We'll drop a link in the description.

“If you want to learn more about what's going on.”

We'll drop a link to an article. Yeah, that's the main switch on your rep. Good bill in Congress now bad bill that went to the house. So I mean, as I was reading it, I was like, this is like a movie plot. So crazy.

The bad guys are trying to swap it last minute to sneak it in. And that this is how it all happens. It's like late night. They kind of sneak it through the door. Nobody knows about it. No one has time to read it and then you're voting on it. This is insane. This is why I'm not in politics, Rachel.

It's too much stress for me. I want to. We can help someone in seven minutes on this show. Hi, now. Congress has a hard time doing that.

But we're moving in the right direction. Yes. This is a good bill. And everybody should care about it and say yes to that. Love it.

But say no. Say no to the house. All right, but we are going to say yes to Mike in. What is this Westchester, New York? Hi, Mike.

Welcome to the show. How's it going, guys? Good. How can we help? Good. So today, I'm going to be talking about how graduated in December from college. And then I came out with about 21 grand in federal loans.

I'm still in my grades until August, but I've already paid off about 11 grand. Wow. Good for you. Yes, thank you.

“My question today is, do I continue on this path for about another four or five months?”

Or do I take out from my Roth and kind of just end all right now? As far as as as a student loans. Yeah, that's a great question. I would just keep at it. I would just keep cash flowing paying this off because if you did take money out of your Roth

that's a retirement account and you will get penalized by doing that and paying taxes to on it because you're not 59 and a half. So that's going to be the key. You want to be able to get that money out without that penalty.

Let it continue to grow.

And yeah, in four months, Mike, well done.

You'll be. You'll be student loan debt phrase.

“Do you have any other debt besides the student loan?”

I'd say I drive a use car and I kind of just stay forable. Good for you. How much are you making? I bring home about four grand a month. Good for you, Mike.

Well done. Just keep at it. If you had non retirement investments, like in a brokerage account, then we would say, yeah, let's sell those off and get rid of this debt even faster. But because it's in those retirement accounts, you can technically take out contributions.

But then you're still unplugging all the growth. And at your age, if you actually map out what that cost is costing you over decades. Way more than 10 grams. You'll be slapping yourself going, what did I do? That could have been 150 grand or 500 grand.

Way to go, man. Get that free and stay that free. Okay. Normal is broke and common sense is weird. So we're here to help you transform your life from the Ramsey Network in the Fairwins Credit Union Studio.

This is the Ramsey Show. And I'm Rachel Cruz hosting with George Kamel. We are answering your questions. A triple eight, eight, two, five, two, five. All right.

Let's head to Sam in Roenoke, Virginia. Hi, Sam. Welcome to the show. Hey. How you guys doing?

I'm doing great. How can we help? So I'm 17 and I'm a business owner.

“And I'm just wondering how I could build credit without using a credit card.”

Because I want to buy my first home within the next few years and just don't know where to start on that.

Nice. Way to go, man. What are you making with this business? Well, right now I'm doing around 2 to 3000 a week. Oh, that fluctuates.

You're talking 100 to 150 grand a year at 17. Yes, sir. Now that is before taxes, but yes, sir. What are you doing? Sam, that's amazing.

I'm a mobile mechanic. Wow. Did you go to trade school for that? I graduated in a month. Way to go.

Sam, we applaud you. How do we clone Sam? Unbelievable. Okay. That's so great.

I love this. Okay.

So you're trying to build credit because you want to buy a house one day.

And three years. You must be a homeowner. I see. One year's old. Well, here's a good news.

You don't need credit to do that. I know that sounds crazy coming out of my mouth. Do you believe me? Sam, first of all. Do you trust me?

I feel like a ladden right now. Exactly. Okay. Yeah. So the way to do that is through somebody called manual underwriting.

And it's something I've done personally. And our friends at Churchill mortgage, they specialize in these. They've done tons of them for Ramsey fans who live life outside of the stupid credit system we live in, which is going to debt to get a score. So you can get more debt.

So you can hopefully pay that off perfectly. To hopefully increase your score. To hopefully get a higher score. Does it sound crazy to you? Yeah.

It does sound a little twisted. Because it is. And so manual underwriting instead of automated underwriting,

“which is let the computer decide if you should get the mortgage.”

Then let the three-digit number define your financial life. So instead, the lender will look at your situation. Do you have on-time rent payments? Sam? Uh, I don't believe so.

I don't think I quite know what those are. So do you rent right now or do you live with family? Uh, I live with my parents, so. Is the goal are you going to live there for the next three years? Why you save up?

Uh, I'd like to rent eventually within the next year too. But okay. Okay. So you'll be required to show on-time rent payments. Whether it's to your family or to a landlord if you decide to go rent elsewhere.

But you'll need a year of on-time rent payments. You need some utility bills in your name. So, you know, think water, electric, cell phone, internet. Things that show that you pay your bills on time. That your insurance premiums are paid consistently.

That you have strong employment history. That this business has done a hundred grand for the last three years. And some solid savings and down payment. I get you. And if you have those things, you don't need to have the credit score in order to buy that home or get the mortgage.

Yeah. So Sam, if you were to live with your parents for the next three years, then I would be keeping track at least two years out of rent. So we documented bank transactions going to mom and dad. So document those if you put deposits in for rent.

And maybe they put one bill in your name like internet or something. I don't know, and you pay something so that you have a bill or your cell phone.

So making sure you have that.

And then of course the down payment what he's saying. Or if you go and rent somewhere in the next year or two, then that's great. Because that rent will show up and that utility bill that you'll pay at the apartment or house that you rent. You know, all of that will show that history.

“But the history is big on manual and you have to have that.”

Oh, I got you. That makes sense. But yeah, I mean, if you keep doing this, you're going to pay cash for home and ignore the entire system. That's pretty wild. What's your what's your savings going right now? Oh, right now.

I'd like to have by the end of this year around 40,000 states. Because I do want to possibly migrate into the shop space to rent at the end of this year. Yeah, cool. And just grow my business that way. It's amazing.

All right. Now, what are your monthly expenses? So I do have three vehicles. I do have a lot of tools I have to go through. I guess keep my work going. And besides that just insurance gas.

A to utilities. Nice. And you're doing this all on your own. Yes, sir. The solo per normal.

That's amazing. Sounds great. All the cars are paid off. Those three cars. Yes, sir.

Nice. Okay, Sam.

“I'm going to implore you because you're doing above and beyond.”

I mean, you're a one person or when it comes to the 17 year olds in America. And if you six of this principle with your business, Sam, it is going to help you not only grow, but create such peace and wisdom is do not go into debt in your business. Okay. So when you were 2021 and you're like, hey, I need to go and get five more trucks.

And I need to do this and that I'm just going to go get a small business loan. Whatever whatever. Say no. You're going to get mailers, Instagram ads, email. So you, hey, we'll give you a loan.

Sam, scale your business. I mean, the service. Yes. Say no. At the speed of cash with your business.

Sam. Stay debt free. And I promise you it's one of the number one things that takes small businesses out is debt. And overhead expenses like that. And the debt stays with you even if the business fails.

That's right. They don't care. You're in the green and so stay there. Sam, do not go into the red. Do not go into debt for your business.

But man, well done. I mean, think about three years. If he lives off say 30 or 40 living at home and socks away almost 100 a year for three years. That's 300 grand. 300,000 dollars.

That's mine blowing. Which would buy. You know, possibly a small home. In row and air. I'm sure you can find a home in row and oak for three of the grand.

Yes. Especially as a young single man at 20. That's pretty wild. So there you go Sam, and I'm going to send you a copy of my book breaking free from broke. I have a whole chapter on credit scores and how to live without it.

And I walk painstakingly through everything of how do you rent an apartment? How do you get a car? How do you buy a home without a credit score? And I hope it's a helpful gift to you because we want to see you in. We appreciate it.

All right, Sydney from Instagram asks.

If I only pay minimums on my higher debts and focus on the smallest that pay off first.

Won't that put me further behind because those accounts will be occurring interest? Sure.

“I mean, they're going to accrue interest no matter what because that's how debt works unless it's a zero percent.”

And in that case, the goal is to pay it off so aggressively that the interest doesn't matter all that much. Like, yes, you might be paying 50 bucks or 100 bucks or a couple hundred bucks in interest. But if you're throwing a 1,000 or 2,000 at it, you are faster than the interest. That's right. That's the goal.

Yes. Because when people do the math and they're like, "Well, I shouldn't you pay off the highest interest rate first." What you don't understand number one is the behavior change. What actually ends up happening with the momentum. When you get a small win, our human spirit, it's how we're wired, is that you get excited and you get more intense.

And you keep going and going versus trying to pay off the highest interest rate. Let's say it's a credit card. It's $30,000 or something, right? And you're just like chip in a way, but you got a $1200 medical bill over here, things over here. When you just knock out the small ones and you combine all those minimum payments to keep throwing at the highest, the next highest debt.

It's incredible what happens.

And it'll be proven. It's not just a Ramsey thing. Like, all the business review MIT, they all have come out and said, "David Ramsey was right. The debt snowball method is the best way to pay off your debt." Yeah.

And to your point, George, when you're doing it this quickly, the average person is paying off all their debt in 18 to 24 months. The interest of the ends of the day is just ends up being a wash. And so, because you're outpacing it with the amount of money you're throwing at that debt.

If you're ready to learn how to make your money work for you, check out the smart vester program. Smart vester can help you find advisors who specialize in retirement planning, charitable giving, advanced investing strategies and more.

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Head to RamseySolutions.com/smartvester. The get-connected. Ramsey Solutions is a paid non-client promoter of participating pros, learn more at RamseySolutions.com/smartvester. Let's go to Ben and Cincinnati. Hi Ben, welcome to the show.

Hi, thank you for having me. Absolutely, how can we help? We just paid off all of our student loans and we took the financial fee class and I was worth it. Amazing. Congratulations. Now we're just paying off, we've paid off one other car, we have one more, we're paying off our minivan.

And we just, we bought a house last year, so we're working on those. We do have like about 25K saved up in savings, a little bit for emergency and a little bit for the housing emergency.

“But now as we're working through that, how would you say we should start saving up for her retirement since her job doesn't offer it?”

Okay, so we got a couple of things going on. How much is left on the car? On the car, we have about 12,000. 12,000 dollars left on the car, okay, and then you have 25,000 dollars in savings and then you're asking about your wife's retirement. So before we get there, we do want this car clean down with the debt.

Yep, yep, so I would throw 12,000 out of today out of your 25. Okay, which means you free up a payment, what's the payment on that? That payment on that is about 300, boom, you just got a nice raise right there. Yep, so then I would build that emergency fund back up to what you guys need. Three to six months of expenses and you guys can pick in that range where you feel comfortable.

And then you move on to maybe set four, which is retirement. So her company does not offer like a 401k, 403B, no pension plan, nothing. Now, it's just a small Christian school, so they didn't have that in their offerings. Okay, as a benefit, well, one thing she can do is open up a Roth IRA.

“And so she can do that and find, is it what, 7,000?”

75,000 dollars. 75,000 dollars, yes. Contribution limit. What's your household income? Altogether.

Altogether. Altogether before taxes were about 90 together. Okay, so if we, so our plan, the Ramsey Baby Steps. Baby Step $1,000 emergency fund. You have that.

Baby Step 2 will knock out the consumer debt. You're about to do that today after you get off the call. Baby Step 3, let's fully fund that emergency fund at three or six months of expenses. Then baby Step 4 is 15% of your household income going into retirement accounts. So for you guys, that's $13,500.

“That's what we want to see put away in a simple order.”

If you have a match through your employer, let's take that first.

Do you? Yeah. I already do that. And I think Altogether with my employer putting in about 8% I put in about 12% so we're putting. So you're putting in 12% of your income.

Yeah. But then she's not putting out the way any more. Yeah, that was the way before we got married. I was already doing that. Okay.

Have a Roth 401k through your employer or just a traditional. Model 403B. Okay. Do you have a Roth version of the 43B you have access to? I don't think so.

Okay. Add that to your homework assignment to ask HR if there's a Roth version available. And you might be able to sign in and see on your 43B login there. But if you do have that, I love that option because it's going to be after tax money. But then it grows tax-free forever.

So imagine that's a net income.

If you have $2 million sitting there in retirement, that's like $2 million of take-home pay.

That the government doesn't touch again. Okay. And I would bump yours up to 15%.

And now we're at just collective 15% household income. Do you see what that word?

“Which is probably close to a little less than that 7,000.”

If you're not fully max it out with her income. But yeah. So I would put 15% of hers into a Roth IRA. And then if you're a employer match goes up to 8%. You may want to take it down a few percentages to max out a Roth IRA on your end bin.

If you don't have a Roth 4 or 3B option. Yes, the goal is get the match. Move to all the Roth options that you can fund those. Then move back to traditional options if you run out of Roth options. But with your income, you guys won't, you won't hit that.

You're going to be able to do all Roth there and not run out of room. So that's a great problem to have. Okay. But right now you're doing like three good things at once, which is making it bad. Because you're not.

You don't have much focus. So like we said, if you knock out that car payment today. Yes. Get the emergency funds stock back up in a couple of months max. You're investing 15% with no problem of that household income.

Well done. All right. Let's go to New York City. One of my favorite places. We have Sam on the line.

Hi Sam. Hi. How are you, guys? Hi. We're doing great.

How can we help today? I'm good.

Basically, I'm really nervous.

You're good. Have you? Yeah. I'm at a job for now. It's three years.

I hate it. But I make a hundred twenty thousand dollars. And I have really no other career path that would get me anywhere near that. What do you do? But basically, like I do bookkeeping for a big trash company.

Okay. But do you hate trash? You hate bookkeeping. You know, I actually love trash because trash is feeding my family. Because my base house is really like 85,000.

But I get another 25,000, 25,000 annually. But I get another through commissions. And they're not like, you know, one month long months. These are in contract, you know, every month. The same amount.

It can't go. It only goes up every month. That's cool.

I never heard of a bookkeeping.

And commission. Is it off trash like a account? Right. No. It's like, yeah, trash account.

So the more account's free, you get a pool to that. Yeah. Exactly. The company's ready. I hate it.

Same. What's going on? That you're like, I hate my job. So I'll tell you coming to work. I love coming here.

It's like an awesome, great place to work. But the actual work. Like I feel like there's a lot more. I have to add to the planet than doing bookkeeping. Which I hate.

“And what is that thing you have to add to this planet?”

I don't know. You just feel like you just feel this like annoying feeling that like this is not it. There's something more. And I just need to know, how do I, hey, find out what that is. And be, how do I get there?

Well, that's where I was, I was joking about the trash versus bookkeeping. But sometimes you're doing the right thing in the wrong place. Sometimes you're doing the wrong thing. But in a great place. And there might be a different seat on the bus as we say.

Yeah. That's where I'm digging in. Is there any other opportunity within the company? Because you said you love going to work there, which is a positive. Do you look around and see a position like, oh, man, that would be something.

I think I could really add value and be really good at. No. No. Like, the positions are really pretty booked up. Like, I think if someone out there came into around the company,

probably have to be able to do this job. Do you want more of a challenge? Like, are you kind of bored? Because you're like, all right, knock that out. Yeah.

Do I? Okay. Yeah. Have you brought that up to your leadership? Yes.

I have. What do they say? You're on very, not the word for it. Like, very mind pops. Like, it's not like there's no, the company's very successful.

But it's not very efficient trying to think for the right way. Yeah. Well, that's where I'm wondering. Are there opportunities where you go, hey, I noticed this over here. I know in my bookkeeper seat, it feels a little bit out of bounds.

But could I try this little challenge over here and see if I

“can solve that and create some efficiencies in the business?”

If I'm the business owner, I'm so excited to have Sam on my team. So that's where I'm wondering, and if you run out of those opportunities, or they're not giving them to you over a long period of time, and there's a soul tax you're paying, then I would look for a different opportunity where there is a bigger challenge for you.

Maybe it's a more senior role. Maybe you're in leadership. Maybe you're solving a bigger problem. And so that's where I go. You might be doing the right thing, and you're just not in the right seat right now.

But the thing is that when you have three kids to lie some organs, the whole thing, that's the life of the tax that helps. But when you have them and you're going on, it's time to just switch jobs. Sure, yeah, you have a responsibility to put food on the table. So yeah, you don't want to neglect that by anybody.

We would never tell you to have a gap in income.

No, but I do wonder for you kind of searching. Yeah, yourself and just to say, hey, what else is out there? If you hold on the line, we're going to get you Ken Coleman's book. Find the work you're wired to do. There's a great assessment on the end of that book.

and start thinking through.

And maybe at this company, it may be something totally different. And it may take six months. It may take a year and a half. But sometimes these decisions are slow. And the awareness can be, you know, it takes some time.

“But overall, I think if you keep digging, Sam, you're going to get some answers.”

Hey, guys. Dave Ramsey here. Every day on this show, we help people work through real money problems. And figure out what to do next. Now, you can get that same kind of help anytime with Ask Ramsey.

Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained. Ask Ramsey is here to help. It's fast, simple, and free to use. Go to RamseySolutions.com and try Ask Ramsey today.

That's RamseySolutions.com.

Are you sick and tired of working so hard, but feeling like you have nothing to show for it?

That it's so many people we talk to where they work and work. Make a paycheck. But then they look up and I just feel like I'm broke. Yeah, I feel like I'm broke. So if that is you, make sure to check out our every dollar app.

So every dollar, the budgeting app, it helps you find extra money. Every single month, and it builds you a personalized plan to help you beat debt and build wealth. And you can do all of this. And 15 minutes you guys can find thousands of dollars that is hidden in margin that you don't even know you have. Or your pizza's free.

Okay, it works. There you go. So you guys don't be normal.

“Live like no one else and start every dollar for free in the App Store or Google Play.”

That is one app, George. Shame was plug. I plug in. I tap on a couple of apps every single day. At a habit.

Weather channel app. I still love my weather channel. Oh, I feel like a boomer, but I do a level weather channel app. Email, Instagram, and every dollar. That's it.

I do. Those are those are like a routine for me. I'll go through and look. Yeah. A simple woman.

But every dollar it is. I'm like tracking those transactions. Feeling good about May. Put teachers gifts in there this weekend. Oh, no.

That's right.

“So yeah, when you do it all, you're like, okay, this I feel organized.”

I feel control. You can't keep it on your head. No. It mentally. I'm like, hmm, bet. And guys, if you have kids have a higher miscellaneous fund than ever before.

Because you knew you had a sign up for. Well, they don't tell you till last minute in May. And you're like, oh, my gosh, I'm signing up for soccer in May for fall. I didn't plan that. Put that in the miscellaneous category.

So, but it helps. It does. Even though it takes the stress out of the chaos of life. Yes, it's wonderful. So again, there's a free version.

You guys, make sure to check out. Build your budget. Actually be intentional with where your money is going. All right, let's head to Nick in Columbus, Ohio. Hi, Nick.

Welcome to the show. Hi, thanks for having me. Yes, absolutely.

My wife and I are about to have our first child.

Oh, congratulations. Congratulations. Thank you so much. We, uh, so I have money and an investment account. Um, that would cover all of our debts.

If I were to sell it. And I don't know that I want to do that. We have about, we're, we're just about millionaires in total. Um, that's mostly tied up in retirements. Um, I have been in school for 10 years.

Uh, my wife has her master's. I have a bachelor's. It's a long story, but I had to restart because the school went under. Uh, luckily no debt from that. So we managed to pay off all of my school loans.

Um, we all about 180,000 total. And that's her student loans, the house, and, um, about 15k and credit card debt. Okay. How much is just the student loans, Nick? It's about 50,000.

50,000. How much was the credit card debt you said? About 15k. 15, okay. So that's the consumer debt.

And 100,000. And the left and the mortgage? Yes, that's correct. And how much is in the stocks? Um, it's just under 200,000.

Um, okay. So my company pays me RSU's, and I haven't touched it since I started this company. Is all of the, is all the 200,000 in the company stock?

Okay. Single stock.

It's single stock, and it's up 168%.

Well, that's some good return. To a time to sell. That's exciting.

“Have you factored in what the taxes would be if you sold?”

Um, I haven't factored that in. I've just found your guys' show recently. Um, and started listening. Okay. So this was just.

Yeah. With her pregnancy, she had to help scare. Luckily everything is fine. But now I'm like, um. They had thought that she had to hard issue.

And then went to specialists and ended up she didn't. But they were concerned she would die during labor. No. No. Do you guys have liquid cash at all?

We have about 18k in liquid cash. Okay. Okay. Perfect. Perfect.

Okay.

So you could pay off the debt and still have the 18k leftover as your emergency fund.

And have no mortgage payment or any other payment, which frees up how much. If you add it up those payments per month. Credit card still owns mortgage. So. My wife and I do think a little differently.

We have two accounts. Her income goes into an account that pays for our food. Everything that we would need monthly. And my account just pays the bills. And I say my account were attached to both accounts.

We see what goes in. We see what comes out. It's just how we divide it. Why not eat it together. Can I just ask Nick?

Why don't you just put it all on one account. Everything comes out of one account. Um. We had no money when we started dating in 2010. We were high school free hearts.

Um. And we decided that by doing it this way. We did work while we were in college. Then we made sure that all of our bills were paid.

And we've always just done it that way.

Okay. Do you think things can change? Do you think a mindset of an 18 year old. Maybe could make some tweaks and some adjustments. Now that you're going to be parents and you're grown up.

And you're 30 years old. And you both have careers. Yep.

“That's that's what I'm going to write now.”

Like we weren't planning to have kids necessarily. Not that it wasn't unplanned either. But it wasn't something that we were like, we're going to have kids. We're like, we're going to live. We're going to travel.

We're going to think that we want to do first. Totally. Totally. With my college stuff happening. We ended up not doing as much as that.

And focusing more on that. Okay. So over the time I've only had like two full years out of college. I graduated college. How much you guys make a year you and your wife?

Uh, so not counting the RSU's. We make 250,000 roughly with the RSU that's about 320. Okay. But she's going to be working still next. Do you think after the babies here?

That's her plan. She's a social worker. She gives, like, she helps the community locally through her job. How much does she make? How much out of the 260 is hers?

110. 110. Okay. Okay. Okay.

That's great. Yeah. So just said, I mean, you called in. Can I just give you a couple of maybe random thoughts? I have about your situation.

Yep. Okay. So we talk about when you are pregnant. We have a thing called stork mode. Meaning if you are trying to get out of debt.

We pause the debt snowball. And we just save a bunch of money to the side in case something happens. Okay. Now, that is what people doing the true baby steps. Which means they've already done baby step one, which is they take everything down to $1,000.

If you could imagine, Nick. Yes. We don't want to take everything down to a thousand while getting out of debt. You guys will not have to do that because you have $18,000 saved and $200,000 in stock. So I would not count stork mode for you because you guys have that money.

You will have enough money even if you paid off all of your debt. If that makes sense. So if I woke up in your shoes, I would. I probably wouldn't pay off the house right now, but I would go ahead and wipe the consumer debt. And just be done with the $65,000.

And then once baby comes, everyone's good, mom's good, baby's good. Then yeah, I mean, I might have a discussion to say, hey, what if we aggressively paid off the house? And it just had no debt, like we had complete autonomy over our money, which is pretty crazy. The fact that we can even have this discussion next to this is a possibility for you guys.

“So that's what I would do in your situation.”

I'd go ahead and pay everything off. And if you hate not having a mortgage, you can go and get another mortgage if you want. You can borrow against your house. I mean, you're probably going to get like a $3 or $4,000 raise if you paid off all of your debts, including the mortgage, right?

Yeah, I mean, this year has not been good for us financially. We had a lot of setbacks this year.

And then we had house problems or basement flooded.

We had, it had to work with big and new, some pump line. Our dog has been sick, he's 16. And I'm wondering, can he fairly earn stuff like that? That's even more reason to be completely debt-free, man. You have that money back in your life.

You just sold yourself on becoming debt-free. And you're probably going to have maybe 15% capital gains on the money that's appreciated, not from what you bought it for, but the gap from what you bought it for, to what it's worth today. That might be 20 grand. And look, loan behold, that's 180 grand.

You can throw it your debt. Oh, gosh, I don't feel good. I like to-- Wait your toes in the water by paying off the consumer debt.

“Once the baby's here, I think you'll go, you know what?”

Let's look at it at the rest. Yeah, and then relationally, Nick. You know, I would love to see you guys see yourselves more as one financially. This is our household. This is our family.

The money that comes into the household and won a count. How do we run our household out of this account versus diving it up? Who pays what?

Hey, guys, Rachel Cruz here.

And I love summer. There is more fun on the calendar, more time with your people. And way more chances to make memories. But, you know, what else? There's more of spending.

Oh, between the extra groceries and gas and camp fees and family trips, it all starts to add up so fast. And before you know it, money stress starts to steal the fun out of everything. And that is why I love the every dollar budget app. Because it helps you plan your money track your spending and find more margin in your budget,

so that you can put extra cash towards the goals that matter most. Enjoy your summer without the money stress. Download the every dollar app in the App Store or Google Play and start for free today. Our scripture of the day comes from 1 Samuel 167. The Lord does not look at the things people look at.

People look at the outward appearance, but the Lord looks at the heart. Nathan Morris said, "I've found that the stuff, sorry. I have found that the less stuff I own, the less my stuff owns me." Such a minimalist. Look at that.

“It's a little bit like the Dave Ramsey quote of, "It's okay to have nice stuff.”

Just don't let your nice stuff have you." I wonder if that's where Dave got it from. I don't know. Who's Nathan Morris? We can tell you.

Well, Google, I'm real quick. Let's find out. It's probably from different era. Should we know him? Is he an evangelist?

He's not a president. He's not. I really hope it's the founding member of Boys to Men. Is it? I mean, that is a Nathan Morris.

I don't think it's the same one. That would be a credit. Yes. Author of the Art of Getting Money. Personal Finance Expert.

Boo. Boo. Boys to Men lead singer. We so much more. In my heart.

We'll always tell you. We're on our quotes of the day. We need some boys to men. I'm sure they said something. You know.

Really profound. I was going to know. And money in life. I'd like to say that. Boys to men said it.

I found that the less stuff I own. They probably sang. You should give a little tune George. No. But that.

Yeah. It's okay to have nice stuff. You're nice stuff. Have you. It's a great balance.

Because your stuff having you is you go into debt for it. Yeah. The borrowers, slave to the lender. You don't own it. You owe on it.

So it has you. And the identity contentment piece is really big. That where your treasure is. There you go. There you go.

It's you quote another story. It's just about debt. But it's.

“What is the chokehold that material goods have on you?”

Wow. And you can't take it with you. You can't. Nope. And so it's.

It's fun to have stuff, right? I've seen left behind. You can't even take your pants. All right. They'll be folded neatly on the bed.

Every time I still see clothes folded on a bed. I freak out a little bit. That's that movie. Scar trauma. All three.

Yeah. They gave me the kids version. Listen.

You get left behind the first time.

You get left behind. Three times. That's on you. That's on you. Oh, Lord.

Okay. Emily, God bless you. Emily, sorry. Thanks for coming with us. Round us out.

Yeah. And I know how it falls. We have Emily. Hey. Emily.

What's up? Hey. I am just calling into us. We have been and I just had our fifth baby. We're almost on with baby step three.

But we are going out of our house. And we have an unfinished basement.

and finish the basement.

We're feeling really on top of each other right now.

Yeah. Seven people. That's a lot. What's it going to cost to do the basement? So we asked to me.

It will be about $40,000 to do the basement. For context, we are in a three bedroom as is. So I have two kids in each room and a baby who's going to need a room soon. So we owe 200 pay on our mortgage. And if that is 2.3 so moving just makes no sense.

Neither does refinancing. So we're trying to figure out if a loan to do the basement would make sense. Another piece of information our current mortgage payment is below 5% of our take home. Okay. How much do you guys bring home a month?

About 10. 10,000. Okay. More Gage excluded.

“Would you guys just go buy a different home right now if you could?”

Absolutely not. We love our neighborhood. We love our home. We love the what our home is on. It's our favorite.

Okay. So you want to make this home work no matter what. How much do you have in the emergency fund? About 30. Well, by the time I said one of my stomach baby set 3.

When we're done, it'll be at about 35. Okay. Because I think you can just cash flow this.

I mean, that newborn baby is going to sleep next to you for the first couple of months.

Right? Yeah. It did take us. I mean, we have a lot of kids. It took us about four years to get that fund put together.

But you bring home 10 K a month, you said? We do. Yeah. Our food girl is more than our mortgage. Okay.

Yeah, because you said the mortgage is 100%. So I went. Can you save up? I was going to say yeah.

“Could you just could you guys like really kind of go crazy and just say we're going to”

save four grand a month and 10 months? We'll have it all. And you can even start planning and like doing things even before that. Yes. Yeah.

So we do have. We have been doing that. We're just.

We're like I said, we're really on top of each other.

I've got the baby. My husband also just started a new job or he'll be working from home sometimes. And his current. I mean, he doesn't have an office. Because I've got my bedroom.

Yeah. So what are you going to do with the basement? Is it going to be a bedroom and office? And you're going to parse it out? Um, so it's got space for four bedrooms.

We are hoping to get a quote to do just, you know, two bedrooms initially. Um, kind of leave the plumbing and stuff for later in the bathroom. Well, but I don't imagine we're still looking at 20 K for that. Yeah. It feels reasonable.

Yeah, I mean, I mean, Emily, yeah, we're not going to tell you to take care of the wound. So you called the wrong show. I'm so sorry. But. No, it's okay.

I want you guys to do this. Yeah. So what I would do though is start meeting with some. Because I think if you guys really could buckle down and save three to four grand a month, you could actually start to cash flow this and get it.

Ellie's starting. You don't have to have all 40 grand at the beginning. You know, you could. You could start some of this in six months. When is the baby do?

Oh, she. Uh, he's. Oh, he's here. Okay. I'm so sorry.

Yeah.

“So, I mean, honestly, I, yeah, that's what I would do.”

I would just make an aggressive goal. Uh, to save, you know, 15,000 start the process and you guys just. Be putting cash away every single month. And be cash flowing it as the project is going so that you can get it done faster. You know, versus waiting and having it all saved up.

That's what I would do personally just to get the ball rolling. I know the urgency in it, but yeah, but we. Uh, yeah. I mean, we're not going to work too hard to get that free. So, why go back in and restart the whole process and it just, it's not the move.

Because you're going to build this thing. You're going to feel it. You're going to be paying for it versus saving up and paying cash. You treat it differently. You're going to get multiple bids.

You're going to be very strategic with every moving. Why you do it. When you take out a loan or even worse, like, he lock. You go, well, let's just take out more. Let's just really go big with it since we're already here.

That's what most people do. They use their house like a piggy bank and they just keep moving backwards. And you guys make so much money. You're doing so great. I know it feels chaotic right now.

And you got a newborn, which is not helping anything as far as your exhaustion. A feeling like you can't. Everyone's all over. They're great sleepers. So thank goodness for that.

Well, in what you could do, too, which may scare some people. But you have 30 grand in the emergency fund. You know, you guys could say what only really takes us, you know, 7,000 to live off of. So technically 21,000 could be a three month. Yeah.

It may feel a little risky because you got kids. One income, you know, but 21,000, you know, could be okay for a bit. If that, if you want to take some. You get through the project and then refill it. Yep.

And then jump start it. If you had an emergency, you pause. Pause the work until you're back to some stability. Yep.

And you'll get to the end and be thankful that you don't have a loan to pay.

I mean, seriously. Yeah.

“And George, you hit on it, but I just do when I reiterate when you do things with cash.”

There is something more subconscious that goes into the care at which the planning process is happening. The speed at which people do the changes, if there's changes. You're thinking about those so much more in a diligent way than when you borrow. It's a little bit like, okay.

If that's an extra five grand, tack it on, we'll figure it out later.

Yeah, there can be a little bit of that feeling. And so it really does force you to stay in a time frame and in a budget. I mean, that's a Winston I found when we did our pull project. And we built our house until that's 19. It's a different game when you're cash flowing something like that.

A big project. Yeah. So it's a move slower, but with that comes a whole lot of peace. Absolutely. It takes more patience on the front ends, right, to get to have the cash to do it.

“But in the process, you're just a, yeah, I think you're just a little bit more paranoid.”

About it because like this cannot go over. This just can't go over. So what do we have to figure out? What I mean, if you were running a budget for a company, you're going to go, I got to stay within the budget.

Yeah. And we can't take on any debt. So once you take the debt off the table, it just changes things. And that's really helped me go, well, if I don't feel good about spending that much on it, maybe it's a sign.

That's right. So if you're willing to finance it, but not willing to pay, depart with all that cash. That's your body saying, this is a big purchase. Are you sure?

Yes. And debt removes all of that. It makes it frictionless to get all of these things that you want now. And you signed a bunch of dotted lines that said, "Nope, you owe us." With interest.

Yes, with interest that adds into it. Yep. Absolutely. Well, thank you Emily. And good luck to you guys. George, great show.

Always fun with you. Always fun.

Always fun hosting with you.

Thanks to everyone in the booth.

“And remember, there's ultimately only one way to financial piece.”

And that is to walk daily with the Prince of Peace Christ Jesus. [MUSIC PLAYING]