Take Debt Off The Table For Good

>> Brought to you by the every dollar app, start budgeting for free today. [MUSIC] >> Normal is broken common sense is weird. So we're here to help you transform your life.

From the Ramsey Network and the Fair Wends Credit Union Studio, this is the Ramsey Show. I'm Dave Ramsey, your host, George Campbell, Ramsey First Malmadi, number one best selling author, co-host, the smart money happy hour on the Ramsey Networks.

He's my co-host today. The phone number here is Triple 8, 825, 5225. Maddy is in Sacramento, hi, Maddy, how are you? >> Hi, I'm good, thank you for taking my call. >> Sure, what's up?

>> Okay, I am 23 years old and I have over half a million

in a 529 that was funded from social security money, given to me after the death of my dad when I was a child, until age 18. My mom ended up paying for all of my tuition, because she had the means, which is why all that money is sitting.

I also have 50K in the S&P 500, and I max out my Roth, which is funded from that 529. My financial advisor, he told me not to open a 401k. He is into credit cards and points in that whole game, which is kind of making you question,

if he's investing my money well, specifically the 529. >> Okay, so your question is what? >> My question is, if he invests my money well. >> And in the 529? >> Okay.

>> I don't know, what's it invested in? >> I have no clue. You just told me it's an in a 529. >> Do you have access to the account? >> I do.

>> Okay, you can go in there and see exactly what the investments are, and that will help you figure out.

“Are you looking for a high return and you're not getting it?”

What's the thing you're worried about? >> I'm just worried that it can be sitting somewhere else and growing at a better rate for my future? >> Okay, all right.

Well, the first rule of investing is you don't put money

in something you don't understand or don't know. That's how you lose it. The second rule of investing goes with the first rule, and that is you don't hire someone that does things for you that you don't know what's going on.

Instead, you hire someone that helps you decide because they teach you. So your financial advisors should have the heart of a teacher. Meaning they should have this desire for you to understand what you're investing in.

Yours apparently does not have that desire. How long have you used this person to manage your money? >> So he's actually the financial advisor for the family business, so I kind of just automatically adopted him. >> It sounds like you guys have different financial values

that you're talking about this. >> Well, the credit card points thing is absurd. >> And then not opening a 401k. That's why the only thing is he's gone, well, I can't manage that.

Therefore, I can't make money from that. Therefore, I don't want her to open one. >> Which would be a reasonable thing is, if you don't feel good about someone's managing your money, they shouldn't be managing your money.

Period, regardless of the reason. Even if they're a perfectly legitimate person, and you just don't, you just don't hit it off with them. >> You don't vibe. >> You don't vibe.

“If you're not vibeing, you should go somewhere else.”

I mean, really. So, the credit card thing scares you. You don't know what this is in. You've kind of fallen in to all of this, off of your parents' business.

How old are you? >> I'm 23. >> Okay, all right. Well, you know, if you want to try to stay with him, because he's a family friend and has been with you forever,

that's fine. Just sit down and go have a meeting and say, "Okay, I'm now actually a standalone adult,"

and here's what I require in a financial advisor.

I require that you teach me what is going on with this, and that I understand it or we don't do it. Okay, you don't do any trades without my authorization, and I have to understand what you're suggesting to me. And so, let's go through the portfolio.

If you want to do that, if you don't want to do that, if you want me to just do what I'm supposed to do, and do what you tell me to do, then I need a different financial advisor. Because I'm not going to do what you tell me to do.

You're going to do what I tell you to do. That's how this is going to work. You work for me, not the other way around.

“And honestly, there's a percentage of people”

in the financial advising world who function off of arrogance,

and they think they're supposed to be taking care

of the little people, which is actually bull crap. Okay, instead their job is to not be an arrogant jerk, but instead teach you. And that's their job. And if they're not teaching you, they're failing at their job.

“That's why the smart master pros and the Ramsey program”

that we vet, they don't work for us, but we won't send you to someone unless they have that heart of a teacher. And so, what would I do if I was 23 in your shoes? I would go sit down with your existing guy, talk to him that way,

'cause he probably still looks at you as if you're five. (clears throat) And that needs to stop this week, 'cause you're not five, I'm 500,000 is what I am. I'm not five.

And so, that's a bigger count, and so he needs to treat you with that kind of respect. And then I also would sit down with a smart master pro and interview them. And then after you've had both discussions,

you as a woman of 23 years old in a good brain decide where you want your money to be.

Now, so that's first thing.

And that's a big deal. Does that sound right to you as a feel comfortable? - Yeah, definitely. - Okay, then once you've done that, I also want you to select someone,

“I want you guys to figure out what the flip you're going to do”

with $500,000 stuck in a 529, because you're gonna get hammered with taxes on that at some point. There is a provision to move some of it at age 30, before age 30, or maybe after age 30, which is it, George?

- It's before age 30, into a Roth, but the rules on it are very stringuous. So, I want you to learn about beginning to move that into a Roth IRA as you can. - And it's up to 35,000 is the new secure act 2.0.

So I assume that's what he's doing. - So you can do it up to the max of the $465 is screwed. - Yeah, I mean, you can change the beneficiary. So if Mattie has kids of her own one day, they can do it as sisters or anybody else

you want to pay for call it. - It becomes like a legacy-- - You're gonna pay a 10% penalty on the growth and your taxes on the growth. - If it's not used for education.

- Yeah, and you're not gonna use half of me in all this for education. She's graduating or mother, pay that. - That's over. - So somebody didn't think this through very well.

Should have used the stink in 529 and given you the money, she was gonna use to pay, pay it for the education, and at least got it out from under that 529. - Yeah, you've talked about that before.

- I love 529's, but I very seldom run into them being overfunded, and this was a case where they were overfunded. - That's tough. - Up to a couple hundred grand,

and then it's used for education is fine, but no more than that in a 529. And so I don't, and it can't just sit there forever and grow, it gets worse. The problem gets worse and worse and worse.

So, yeah, you're right George, there's not a lot she can do, I don't guess. - Yeah, but that's why you gotta know, I mean, she learned this years ago 'cause he actually taught her

what he was doing and why he was doing it. She could have understood some of this, but she just, you know, there's two parties at fault here.

The one that didn't teach and the one that never asked.

- Well, this has same got told her mother, not to use the 529, and she's telling her not to do the 401k, which doesn't make sense at all. You need to be doing your 401k. - She should have used the 529 money first

and then moved on to her own. - Exactly. - Exactly, for sure. (upbeat music) - Let me tell you something I see happen way too often.

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Results may vary in no specific outcome is guaranteed. Raquel is with us in St. Louis. Hi, Raquel, how are you? I'm doing good. My question is, I am wanting to know,

“how is it that I can do the envelope system?”

I'm trying to save the first thousand,

but everything is direct, autopay, and direct deposit. And I feel like, do I go with to all everything, and then put it in envelope, and then put it back in the bank? I'm really struggling with that. And just when I get the money saved, a major thing happens,

you know, recently, but how do I do that? Okay, the envelopes for the $1,000 emergency fund are envelopes for other categories. For the first to get my $1,000, and then to do the other category.

Okay. Well, the $1,000 could simply be transferred into a savings account. It doesn't have to be in cash. The other categories, most people are doing the envelopes for just a couple of categories these days in the digital world.

Mainly groceries, groceries, and maybe eating out,

and a couple of things like that.

Well, your light bill, you don't need to, you don't have to go for that. You don't need an envelope for very many things.

“And if you do need, if you want to fund your grocery category,”

and cash, end to an envelope, and write food on the outside of the envelope, and then only buy your groceries out of that envelope, that's the system we've taught years and years ago for a whole bunch of things. Now, mainly people do it for food and a couple of other things.

If you want to do that, you can just take the money out of ATM. Okay. I just go up to the teller. Go up to the teller window and make a withdrawal on your account for that much cash.

But how do I budget, okay? I'm trying to get on a budget.

How do I get on a budget divided up,

and then say, okay, this is what I have to put in, and this is what's in this for each amount. Oh, I see. Okay. The every dollar app is the easiest way to do that.

It's the budgeting app that we invented years ago, and it has grown into, actually, the full Ramsey Plan,

“where it holds your hand and helps you decide what to do with each of the categories,”

so that you're following the baby steps. But download the every dollar app on an Apple Store or Google Play. It's free, and you can set up your budget on it. It won't take about 20 minutes to set it up. And they'll guide you through the whole process.

Yeah, it's very, very hand-imouth easy to understand. Even I can do it. Okay, and then I can just leave all the money in the account and work with that. Exactly. Or if you wanted to say, I'm going to do the grocery envelope.

I'm going to do, I'm going to do cash for groceries, then you could withdraw that portion, whatever you write in every dollar, and say, my grocery budget is $700. Okay, whatever, I don't care what it is.

Okay, then you would go to the teller window and take out $700, or you'd go to the ATM and take out $700 cash, put that in an envelope, write food on it. And that transaction will show up in your bank account, which now you can track in every dollar.

Yeah, track your $700 against the 700 planned. Now you have nothing left to spend, because it's all in cash in the envelope, when the envelope's out, it's out. Yeah, that's the goal, it's to sort of force the discipline with the envelope.

The trick of the envelope system that your grandmother used, your great grandmother used, and I've got people of sent me antique ones from the 20s. Oh wow, I got one from 1913, even. And it's a little card file, the envelope system,

and you write a category on the outside, and when you write $200 for clothing on there for the month, and the shirt is on sale for $225, you can't buy it, because you don't have $225, you've only got $200 cash in your clothing envelope.

But you can spend up to $200 on clothing completely guilt-free, because it's allocated to that. Now, you can have that same experience digitally. But man, I tell you what, when you are doing it physically with those Uncle Benjamin's in the account,

literally in right there, looking at you, Uncle Ben is looking at you, you will spend less. You will take some stuff out of that cart. Yeah, you will not go check-in. Not spent, you will not go, oh, well, I'll fix it later.

You know, I'll move money, you don't lie to yourself when there's real money staring at you. So, I do miss the old days of the Act. You see this TikTok trend called cash stuffing. Gen Z claims they've invented this new method of cash stuffing.

It's the envelope system. Yeah. But I didn't want to say it then. They ripped it off you. Well, you ripped it off, you're Greg Grandmother.

You weren't around in 2013. But I think about it in the old days what happened

And you walked out with money in your hand.

And when you got home, I'm talking 1930s, 40s, 50s. Okay, when you got home, you counted the money out on the kitchen table. And you went, that one for you, one for me, one for you, one for me. This goes in the grocery envelope. This goes in the clothing envelope.

This goes for kids' activities. This is for gasoline. And the envelope system worked perfect because the whole thing was cash based. No, you're shopping online.

It's much harder to use the envelope system for everything. Like you could back in the day.

“Yeah, every dollar house is the only thing that holds”

you accountable, and would digitally back to that.

I'll tell you the other side note that's just interesting. If we brought this back, there would be a revolution. People would burn Washington DC down. If the tax person from the IRS had to stand in the lobby of your company, and you got paid in cash, and you had to take your cash,

and hand it to the tax collector and count it out. Every time you got paid, and people would realize how much money your government, how big a tick on your butt, the government is, how big a parasite the government is. And they would, I'm telling you, there'd be pitchforks and torches.

Oh yeah, I mean, you actually saw and physically had to take possession of the money, and then give it back in cash to the government. Take every time you got paid, people would their faces would melt off. Just the amount of $100 bills you're just giving to the IRS for doing nothing. That hurts. It would be a tea party round two.

Yeah, so it was a really brilliant idea to do income tax withholding. Just make it all behind the media psychological trick.

“It's like the worst thing you should end up with.”

Matthew, the tax collector who was hated even in Jesus' day. Hello. So that's what you end up with. Of course, they were crooked. Oh, went ahead. Yeah, well, that's still brand-style. That's completely different. Yeah.

Yeah. Ouch. Blake's in Orlando. Hey, Blake, how are you? Hey, Dave, how's it going?

Better than I deserve. How can I help? All right, so I have a truck loan. That is about $15,000. Now, I was having a discussion with my fiance the other day. She thinks that I should make a lot of some payment and just pay it off out of my savings that I've been holding on to for a campaign in our house.

And I think that I should continue making payments over time, continually making the minimum payments, but building on top of the principal. You know, it's good that you used to her being right early before you're married. (laughter) The training is complete.

When you get married, Blake. October. Congratulations. That's awesome. You got a good one, I think. Yeah, I've been at this 40-something years, 44 years and I'm still working on being wrong. It's hard for me. Oh, man.

“Yeah, she completely got you. Here's the thing. If your truck was paid for,”

would you borrow on it to put it down payment on your house? You know, same thing. Okay. You follow that, you follow that logic? Right. Yeah. Do you have any other debt? I'll pay your truck off today.

Nope, that's the only debt between two of us. Yeah.

Amazing. What does that leave you in savings?

I think you think hers that puts a-- Oh, no! Would I put in her money on your truck? You're not married. Yeah, I'm just saying, you know, by the time that we are married, combined savings after the truck is paid off. Oh. We'd probably have about 80 grams. Oh, you're going to do fine.

And you'll build it back up real quick. Yeah, that's good. Without a car payment. What's the truck payment? It's the monthly payment. I'm paying 500 right now. That's like 30 extra dollars on top of the minimum payment. Nice. I would pay it off. I'll tell you, here's the interesting thing. Like your truck will drive different when it doesn't drag a payment book around.

Feels lighter. Yeah, it's better to catch mileage. That would be incredible. A few more efficiency increases. And there's no paying via. Just get used to being around, brother, and you'll be all right. , hey, what's up, guys? It's Jade Warshot. Now, I know a little something

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For most people, the largest transaction you make is your home. Buying or selling a home. And it's a little bit complicated, and, you know, not everybody knows how to do it.

But the problem is, it's actually easy to pass a real estate test. I passed my real estate

test as 18 years old as 1978. I took the test in 27 minutes. And I got a 97. And I'm not a savant. It was that snake and easy. Okay. And that means I was eligible at 18 years old to sell a house. And I sold one three weeks later. That should scare you, people.

“[Laughs] The ease in which an 18 year old couldn't complete that trend. That would scare you, right?”

So, if you're going to list your house, don't list it with 18 year old Dave. Okay. Three weeks after you got his real estate test. They must have really trusted you. I'm going to do a good salesman. As a guy I went to high school with. Bless his heart. And the transaction went fine. You didn't screw it up. Yeah, yeah. Anyway, if you're going to buy a house, get a pro in your corner. If you're going to sell a house, get a pro in your corner.

A pro is someone who's actually done a lot of transactions. Like 50 or 100 this year. Kind of thing. Okay. This is not somebody who, you know, I've done how many houses have you sold four? That's not who sells your house. Okay. That's not what you do. You don't want to side hustler.

No. Or I just, I always dreamed of being not okay. Not someone my house. Okay.

This is a $500,000, $600,000 or $200,000 asset here. All right. So, how do you find someone you can trust it's high octane? We vet them. They're called Ramsey Trusted Agents. You can find a Ramsey Trusted Agent for free at RamseySolutions.com/agent. Or you can click the link in the description. If you're listening on YouTube or podcast, we'll take you straight there. Julie is in Greenville, South Carolina. All right. Julie, what's up? Hey, Dave. Hey, George. My question today is about taking

a dream vacation to Hawaii. My husband and I have been dreaming about taking ourselves to Hawaii. And now we have three kids, so we would love a family vacation to Hawaii. We've wanted this for about 12 years now and started saving. On that side of the change, we started saving only $100 a month for almost the last 12 years. Where we failed is thinking that would get us somewhere in the ballpark of 10 to maybe $15,000 and that would be enough to take five

people to Hawaii for a week or two. We've failed to think for inflation. No, you failed to save them a money inflation to nothing to do with it. You just don't save them a money. So, you're truly worth dreaming. You weren't working a plan. So, the question then is now, we only have $14,000 and every time we try to run the flight. What's your household income? 70,000 to the two of us?

“So, what does it need to be for how much do you need to spend on this vacation for you to get to go?”

Actually go. Not just pretend. 15 to 20, you've got 14. Yep, exactly. So, put some stuff on Facebook, market place and buy the tickets.

That's the question. Do we just say, you know what? Let's take it. We've always dreamed of this.

Let's do it. Let's find the money. Let's pull it out. Because we're not putting anything on that. So, let's just work hard. Wait a minute. Wait a minute. Wait a minute. You're not putting anything on that.

Oh, you mean you're not going to borrow the money for the vacation.

“Yeah. How long is the trip? How many days or nights?”

We, right now, we want to go set in nights. Okay. I was just wondering what the levers we can pull. Because if you go six nights, well, all of a sudden, you can afford it. So, have you done the research? Actually, see you. Who has the best price? I've been researching for two years consistently. Thinking we had enough for two years. Then we just keep pushing it off. And so, my thought is, let's push it off another year. Or, let's just go to a.

Where's the quality hotel? Everyone's tired of hearing about this trip. I think you just need to go ahead and go. You can't wait another year. I mean, I just, so this is just for fun, Julie. I like Costco travel. I jumped on there, found a Maui package, five travelers, two rooms, 11 grand, including flights from Greenville. So, I'm just saying, if we did that while we were talking, Julie, that's 60 seconds of research. So, go with the goal of spring break, only because children, summer sports, Julie.

So, we're just thinking through all the options. Did you just hear what he just said? Yes. And Ghee went on Costco.com. This is for the trip. What's your August 4th? We're talking like a month from now, and it's a week long trip. So, I'm just saying we need to look at some options here and not kick the can down the road, because the kids are free this summer. So, here's the problem you're going to have, overall.

“You need to go on the trip and you need to pay cash for it and you need to figure out a way to do it”

between now and spring break and stack up whatever cash, between now and then to add to this. So,

you get to do close to the trip as you want to go. But the problem is, as you have put too much

psychological bulk wrap on this trip, your expectations are so stinking high. I don't care where you stay, you're going to be disappointed. Because you've been dreaming of this for 12 years. And I've been researching, not well, but you've been researching. George beat you in 30 seconds. I might go. I'm excited about George about the book of trip right now. Whitney, here comes George. We're going to Hawaii.

Yeah, you know, I seriously think you're going to be, you've got this thing built up to being some kind of Nirvana. It's nice. I've been to Hawaii a couple times. I'm not mad about Hawaii, but it's not actually my favorite place to go. If I was going to spend that kind of money,

“there's probably a different island I would go to, honestly. But you go, it's going to be nice.”

You're going to enjoy it. It's got to go see Diamond Head. You know, I go see Anama Bay and you know, run over to Maui. Go see the big island. If you can with the active volcano, there's some great diving there. If you guys know how to do diving. And I mean, you know, it's a good, it's a good trip. It's a good trip. But there is no piece of travel. It's like owning an item. When as soon as you buy the car, stupid thing breaks. So you buy the house, the hot water heater

goes out. And all the little shine and all the little gloss on this dream goes away. 90% of the excitement was the fantasy of it happening. Exactly. The anticipation and the actual event is going to be a let down. Because you've got this thing up so high in your brain, it's going to rain. It's just going to get sick. The kids are on their phone every afternoon it rains and they call it a blessing. A Hawaiian blessing. Nice way of saying it's freaking raining again. Okay,

like what do we in Seattle? I mean, it's crazy. It's not like the pictures. It's they don't show that on the brush. No, the famous website of the hotel, right? It's like, where is this hotel? I'm not the one I'm staying in. But yeah, I want you to go. And I want you to have a good time. But let's be more as have reasonable expectations as to what this trip represents and what this trip is. It'll be a fun thing to do. Your family is saved gradually to be able to do it for a long

time. You've finally gotten to where it looks like you're going to build a do it, but maybe not the

Ritz Carlton version instead of the motel six version or whatever it is. I don't know. Where were you staying on your little Costco flight? You know, they only choose quality hotel. So I trust them with my whole heart. Yeah, and you can upgrade, you know, I don't know. I mean, I don't ask it. I did two trips. I did Cabo and I did Cancun. I don't know. I don't tell you the hotel. They will if I keep going Oh, you've got to buy it. Yeah, I got to keep going. I'm in airfare right now. You know, it's a whole

process day. I can't. It's hotel. What's in the package? There we go. Continue to hotel. Here we go. This is very exciting for me. I feel like I'm getting 90% of the thrill. Yeah, I was just big time for this freaking endorsement. Yeah, I don't think they even do more for here we go. These are, you know, three and a half star hotel. What is it? It's the Aston con poly shores. Three and a half stars. Okay. It's on a bad room. Three and a half. That's not good enough for Dave apparently guys, but, you know,

it's almost a four star. Yeah. Yeah, you're, you're right. It's it's almost a three. You want to

upgrade that. Here you go, wall door for story, a four and a half. That's going to cost you a pretty

penny. Oh, that goes up. That double the trip, the double the cost the trip. Oh, okay. Now we're now we're at the workshop and Rams. Yeah, that's sort of like no one else package right there. Okay. All right. But hey, go on the Ramsy cruise. That's, that's less than half the price of Hawaii. There we go. I think about it. Could be. Get back to me. Three kids. Yeah, that's a lot. I don't, I don't know, I could be. How many, how, how many, how do we stack them in those

cruise rooms? Get three bucks. Yeah. Stack tie. Let me tell you what I get asked all the time. When should I get term life insurance? How much

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straight answers, competitive rates and coverage that actually protects your family. Call 8356-4282 or go to zander.com for a quick and easy quote. That's zander.com. Michelle is in New Haven, Connecticut. Hi, Michelle. How are you? I'm good. Thank you. How are you? Better than I deserve. What's up? So I was actually calling to find out if I should use my 401k to pay off my student loan debt.

No. Okay. You know why?

“I knew no why. I think pretty sure I know you're going to. Okay. What am I going to say?”

Well, the tax penalty and then also the tax for your income records would reduce what you get significantly. Yeah. So you're going to pay a 10% penalty plus your tax rate on whatever you with a draw, which is going to be like 35 or 40%. When we're done and so it's like saying Dave, I want to borrow money at 30% interest and pay off my student loan and that wouldn't make sense. So how much do you have you in your student loan? I have 16,000. Okay. That's not bad. Good. That's

good news. What are the debts of you guys? I've been trying to say, basically in orthodontics,

that of 4800. How old are you? Oh, mortgage. I'm 41. Okay. You're single. Really funny, divorce. Okay. And you have a mortgage, what's your mortgage balance? Well, the mortgage is, it's the balance is 25,000, but it's a three family I live on the first floor and the tenants cover the mortgage so I actually have a positive of around 440 dollars a month. When the tenants pay, they cover the mortgage. Yeah, that's good. Okay.

“What made you feel hopeless enough to go to your 401k to pay this off?”

I think the divorce kind of put some things in perspective, especially since I started now having to pay child support. And also now paying for child care just because I wanted my son to have more time with peers and other people besides family. So the budget got tighter and you went, well, I don't know if I'm ever going to be able to pay this off. What is your income? My income, my salary is 100,000 a year.

But am I taking home ends up being around 56, 51 a month? And effectively, after the renters pay, assuming they do, you don't have a house payment because they're paying, they're paying enough rent to cover it. And so why can you not knock this 16 out pretty quick? So that is what I've actually been working numbers and I was part of the problem, I think, because I was putting 12% of my flow of K and not that down to 4% to take advantage of my company's

max. Yeah, what I would do is just stop your row 1 K until you're out of debt. You're about to unplug the whole thing anyways. So pausing is waiting for going to look at

is all of the growth that was unplugged if you were to do that. If you put that in an investment

calculator of what that amount would have grown to, it'll make you stop real quick. But let's just stop the 401k temporarily, get on beans and rice, rice and beans and knock out to 4800, you need 20,000 bucks and you get your life back, right? Right, right. At least that portion of your life. I think you've still gone through a divorce, you've still got the other heartache and the things

“from what you've been through. But if you got 20,000 bucks out of 100,000, you should be dead for”

in well under a year. Yeah, year would be about a little over 1,700 a month, would knock it out six months if you could get intense and new 3,400 bucks a month. You're done in six months. Like Christmas. This thing's over. And then then finish your emergency fund of 3 to 6 months of expenses. We're working right up the baby steps. That's baby step 3. And then restart your 401k

of 15 percent, not 12, not 4, going into your 401k. Make sure it's a Roth and make sure you're

invested in good growth, stop mutual funds. And then you're going to be wealthy. And then long-term, I want you to decide if you want to live next door to your tenants or not. Or in the same abode with your tenants. The good news is you're right beside your tenants, the bad news is you're right beside your tenants. And that can be a sticky wicket. What's that the way? It can be a sticky wicket. All right, Sarah's in wakeo, Texas. Hi, Sarah. How are you?

Doing well, Dave. Thank you so much for taking my call. Sure. What's up? Hi, I am a military spouse. And you and my husband's a lie on we currently rely on our credit score so that we can easily rent a house when we move every two to four years. That is absolutely bulk crap. That is just not true. You do not need a credit score to rent a freaking house when you're

“in the military. I'd like to, that's what I want your advice on. How can we prepare to rent”

when we in a year and a half pay off all of our debts and what do we need to do to kind of prepare so that we can rent easily. So you're going to go rent at home. Your your husbands in the military. And what is his rank? He's a staff sergeant. Great. You walk up to the landlord. You meet them at the property and you say my name is staff sergeant. And you're in a military neighborhood. He knows exactly what that means. Your landlord will. A promise you. Okay. He knows exactly what that means. It means

that you're always going to get that amount of money every single month. Your husband's income

is what's known as secure. Your landlord is going to love the fact that your husband is not going to lose his job or get laid off because some tech tycoon decides to cut stock price. Okay. So your husband has a what's known as the ultimate steady job a predictable environment

“and he's a staff sergeant. So he's a leader. He's going to pay his bills. And Mr. Landlord”

staff sergeant so-and-so is also going to smile and say, we are privileged to be 100% debt free which means it's going to be very easy for us to pay this rent. It also means that when you check our credit, you're not going to see much of a credit score because we don't believe in borrowing money. And I know you're going to like that as a landlord. That's all you've got to say. An landlord will sign you up. I guess the other side my husband does have to have a travel card with the army and that

is in his own credit score. Is there any way that you know of that? We can get rid of that. He's stuck with that. He's stuck with that. Okay. So we'll just kind of have to make the case. Yes, you're going to see this score. It's because of the army and the travel card. It should be a little slippery. Why could be? Because there's very little activity on it. It's not going to tank it. Yeah. It shouldn't stop you from getting a house.

If you're in corporate America, I have some ideas. But in the military, you're stuck with that. There's not a lot you can do with it. But the big thing is, is you just have to get the landlord look at the actual benefit. Why would you want to be out of debt? So it's easier for me to have money to pay bills. And the landlord's going to like that. I would love to see somebody that comes up and I have a bunch of houses we rent out. And if somebody walks and goes, I'm in the military,

which instantly I know is guaranteed income. Oh, I'm staff sergeant. I know what that income level is going to be. Put that out there. And oh, okay. I got guaranteed income. Oh, and they don't have any debt. It's going to be fairly much to pay this rent. Yes. Instead of like, oh, we have six car payments, but a high credit score. Are we got a student loan, a car payment, a boat payment, four wheeler payment, and a payment, a payment, a payment, but I got an eight hundred credit score.

Yeah, but how are you going to pay the rent with all these stinking payments? That's what the landlord's

corporate employee. This is the policy. And they go, well, we have to look at the credit score

than you're not going to get that one. But if you're dealing with a single family residence, and you can't make the case, that you guys are the best possible renter on the planet as a staff sergeant was zero debt. Oh, you can make that case for sure. This idea, I have to have a credit score in order for us to rent because we're in the military. Don't ever say that out loud again. Well, I've played this out. We actually on my YouTube channel and on my podcast to find

“print, I called multiple apartment complexes and single family homes across the country. How many?”

At least seven or eight. Okay. Okay. And so every single one said, well, yeah, if you don't have a

credit score, we'll just do a background check. Make sure you're not a criminal. Do you have steady income? And you might have to pay a slightly higher security deposit, which you'll get back. In some cases, in some cases, they don't. Even at apartment complexes that were corporate, I explained my situation. I don't have a score. Can I still rent with you guys? And they went, yeah, we should have slightly higher security deposit. Okay. Big up. If you follow our plan,

did you have anyone out of seven or eight that said, no, there was one in New York that had more stringent laws. But they still said, yeah, if you come in, we can take a look and and see if we can make this happen for you. Okay. So, but that was the only one. Absolutely not. It's impossible to rent a house without a credit score. What they're looking for is to punch a because what people don't understand, believe stuff out there that is not true. They're making

sure that's all I'm saying. They're looking for misbehavior, they're looking for terrible scores, not a no score. That's way less of an issue. . Hey guys, healthcare is one of the biggest stress points in your budget. It's confusing. And most of the time, it feels completely out of your control. But there is a better way to handle it. Christian healthcare ministries isn't health insurance. It's a health

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month of membership. Go to CHMministries.org/budget and use promo code Ramsey. That's CHMministries.org/budget and use promo code Ramsey. Welcome back to the Ramsey show in the Fairwins Credit Union Studio George Campbell. Ramsey personality is my co-host today. Ashley is in Green Bay, Wisconsin. Hi,

“Ashley, how are you? Hey, good day. How are you? Better than I deserve. What's up?”

Right. So, for it's kind of a long story, but I'm going to try to convince it. I'm 24. I've been living on my own. Bad family situation. I have to get away from. I've been kind of working a lot of jobs here and there. Currently, make about 30 to 35 a year. If I'm lucky, my car that I fortunately was fortunate to get recently broke down. It's not worth fixing, just because it's not worth the amount of money that it would take to fix it. I'm just wondering,

if I have no money in the bank, no savings, how would you recommend getting a different car without taking on debt? What's wrong with your car? Who said it's not worth fixing? So, it's had a lot of suspension issues and it has like 222,000 miles on it. It's 2011. You know, I wouldn't be able to get that much out of it. And this suspension issue is they

“called me like $3,000. How about that? Can you drive the car? What's wrong with this suspension?”

Yeah, it's a lot of different like the wheel bearing. There's just a lot of things that I couldn't afford to fix. That wasn't what I asked. I asked if you could drive the car. Is it rolling?

it from rolling. The brakes are creating like a lot of heat that is first something.

“I break your different suspension. Well, yeah. I mean, it's a lot of things. I'm trying to say.”

Have you gotten multiple quotes on this? Let me stop you for a second. Okay. I'm sorry, George. Just second. I want you to go back to that. Here's why I'm asking that. I drove junk cars for a lot of my life and turned a wrench on them. All red next style, all that stuff. And I don't want you to have to drive a piece of crap car or the rest of your life. I want you to not have to. And I'm trying to get you up and moving again. But I was a close to 100% of the cars with 250,000

miles have suspension issues. The suspension is merely what causes the car to feel like it isn't

riding well. If you hit a pot hole, it feels like it runs up through your back, you know, and

George rings out. And that kind of stuff. That's a suspension issue. Or when you go into a corner, it feels like it moves like four times as you go around the corners that it wants. That's a suspension issue. None of those things keep you from driving that car to work. And almost all worn out cars have a worn out suspension. I've got a 1960 Corvette that has been renovated frame up. The suspension and the thing absolutely sucks. Yeah. Okay. So the suspension doesn't bother

me. The brakes you got to have fixed. The brakes are different than suspension and different than

“wheel bearings. And I think someone has just looked at your car and said, oh, this is going”

to take more than to put this car back the way I would do it because I'm a mechanic is going to

call some more than this car's worth. Yeah. Well, we're not trying to do that. We're trying to put a band-aid on this sucker. So this girl can get to work. That's different. Sure. Yeah. So they said in the dealership. Oh dealership. There's another problem. The most expensive place to get a car worked on is in the dealership. Yes. I'm aware of that. Then why did you go? So I also, if you would let me explain, I will explain it to you. I took it. I took it to another friend

after I was done at the dealership and he also told me the same thing. It's going to cost, you know, even though he was able to do it for slightly cheaper, the parts themselves were really expensive with everything that needed to be done. Okay. I still don't think everything needs to be done. Okay. I disagree. Okay. I think your friend is wanting to fix your whole car and I'll think he's understands. All we need is get the brakes gone this thing. Can you get some brakes on it

for me so I can get to work? And when I get to work, then I'm going to start stacking cash and I'm going to sell this piece of crap to a junkyard for $2,000 or $1,500. I'm going to put $1,500 with it and I'm going to go buy a car that's twice as good as this one, which ain't much still. But we're going to move up in car a little bit. You've got no money. I'm trying to get you all

“for your feet. Yeah. Yeah. And that's what I'm trying to do. And the dealers not even going to come”

close to helping you 100% of the dealers are going to tell you, oh, you need a new car. Here's three easy payments. That's kind of dealer to fix your cars like that's going to dog of its hungry. Of course they're going to tell you it's broken. And your friend is probably looking at it going yeah, I'm a good mechanic and I know how to fix all this stuff and it's not worth screwing with. But he didn't thought about the fact that you got no money to go buy a car with.

So yeah, I mean, my friend doesn't have a financial incentive to tell me anything though. I didn't think that either. I think he's a good mechanic and he wants to do everything and I wouldn't fix everything on this car. I drove cars just like this when I was broke too. Can you go back to him and say, hey, I just want to get from A to B. I don't need to do everything. What do I need to do to get anything rolling again? And then you go take six shifts at whatever

it is you're doing and pick up four side hustles and go put your little money together and let's get this thing up and running for four months. Okay. I had a guy loan me a car with 400,000 miles on it when we went bankrupt. 400,000. This car wasn't absolute piece of crap. When I drove it into a good neighborhood, the cops followed me. They thought I was going to steal something. This car should not be in this neighborhood. It was that bad. I drove that car for three months.

And it was the worst experience of my life. I used to tell people I drove that car for 10 years, one, three month period. But you know what I did during that three months? I worked like a maniac and I bought a $1500 car, which was way, that's a huge upgrade.

When the guy loaned it to me, I swear to God, we jumped. We got the jumper cables,

“jumped it off and I drove it up out of the weeds. You might be a redneck if. This is the”

loaner I was driving. The vinyl roof was torn loose across the front. So when you drove it, it filled up with air. It looked like a rolling parachute. When you come to a stop light, your stop would settle. Oh man. For three months. I'm emotionally scarred. This was $35,000. You're still angry at this car. I'm all blue. I'll blow. Take this thing out of the farm and shoot it, David. It's still in some of the needed bullets put in it. It's in a junkyard. It needs to be like an old horse and

maybe put out of its misery. That's my territory anyway. So what I want for you actually is I want you to get out of the mindset that you're going to go take out a car payment. You're 24. You make

“no money. You're on your own. You've got away from a toxic family situation and the last thing”

you need is a car payment. And the meantime, my desperately need is some semi horrible transportation for a short period of time for you to work like a crazy girl and pile up cash and no happy hours and no eating out and no nothing, no partying, no fun, pile up cash and get you a little better car and then pile up cash and get you a little better car and then you'll start to be on something that's reliable. But you're not going to do it with car payments. If you sign up for

car payments girl, you're going to be stuck right where you is for the next five years. This show is sponsored by Better Health. Some are as a time when people get away from it all. Whether it's relaxing or going on vacation, we've all been sold this lie that if we could just escape from everything, then our lives will magically fix themselves. But here's the truth. A vacation won't fix what you won't face. If you're burned out, if you're anxious, if you're struggling,

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therapist isn't the right fit, you can switch at any time for no extra cost. This summer, don't ignore what's coming to the surface. Sometimes the strongest thing you can do is stop running from things and start dealing with them. Go to betterhelp.com/raims you to get 10% off. That's Better Health, H-E-L-P dot com slash ramsi. Guys, I want to loop back for a second. If you find yourself with a low income and no money,

the way out of the situation is not borrowing money to buy things. That will nail your feet to the

“floor and you will not be able to move. It's a trap. And that's why payday lenders,”

pawn shops, rent to own, and tote the notes are in the poor end of town. They're not in the rich end of town. Because they oppress, they take advantage of people with low incomes who feel

trapped and desperate. I have been broke. I've never been poor. Poor is a state of mind.

Poor is on trapped and there's no way out. So I'm forced to rent my washer and dryer at the rent all place. I'm forced to buy a car and pay three times too much for it at an interest rate that can't even be calculated on the tote the note lot. Ormina borrow money at 80-800% interest.

Because it feels like I'm trapped and I'm reaching for, I'm grabbing for anything that I can get a

hold of to get out of this trap. And when you do that, someone will hand you a concrete block and you will sink. They will not hand you a life-preserver. And so in that includes going to a car dealer when you make $25,000 a year and you're $24 years old to get your $1,000 car worked on in the repair shop. That's 100% of the time not going to go well. They are not set up to serve that clientele. They're not set up for it. They don't even know how. Their brains don't even work that way.

And so you can be angry about it if you want. That's not a bad thing. But the way out is not

to borrow your way off of the bottom run of the income ladder. The way out is to cut your lifestyle

to nothing and work like a maniac and get your income up. Get your income up, get your income up, get your income up. When you're in a situation like that and I have been there, you do not have any time or margin for any kind of relaxation or luxury in a country that is full of relaxation and luxury. Every Instagram feed is some bull crap thing that you don't need to be messing with. You don't need to look at any kind of social media when you're in that situation. All you need

to do is work. My grandmother used to say there's a great place to go when you're broke to work.

“And it's the only way off the bottom. But it will get you off the bottom. It'll get you out.”

You're not stuck. You live in the greatest country. The world is ever known. And if you simply get up and go work six jobs, today you can make $20 an hour at Target and Fed X. Throw in boxes. Today, today you can make sure you do not have to have a master's degree in finance to make a really good living today. And once you get your income, the where you can go buy a $3,000 car for cash. Now things start to loosen up a little bit. And then you can go buy a $6,000

car for cash. And because the good news is that $3,000 in one year does not go down in value. It's pretty well done. So you can take your $3,000, $4,000 and add to that get a $7,000. This is how Sharon and I got out after we went bankrupt and lost everything and had two little babies. We did a borrowed car to $1,000 or $1,500 to a $3,500 car. Those are the real numbers.

“I remember distinctly when I bought the first $10,000 car after bankruptcy. It was a several years later.”

It wasn't 20 minutes later and I wasn't trying to rebuild my credit because credit had not served me well. I was done with credit. And so I went to all the way to the bottom, lost everything, started in the hole because I still owed the IRS. My net worth was not 0. It was negative. I owed the IRS money because you can't bankrupt those but holes. And so I still got the IRS. I've still got this and that. I've still got these things and I've still got two babies to feed and I've

still got to keep the lights on. And I was so scared I couldn't breathe. I didn't know what to do. And so if you're in that situation, I've been there and I'm not going to sit here and tell you what you want to hear and if that pisses you off, that's awesome because that's my job is to piss you off so you don't stay where you are. If I can upset you and make you move off your little

“butt, then I did my job because that's what people do with me. They didn't look at me and go,”

"Oh, then Dave, you need a government program." I said, "You need to go make some lemons out of

all that lemonade. I always freaking lemons you got. You got cases of lemons, boy. You need to go

do something with it." These are my friends, my family. They're zero mercy. Actually, it was really great mercy because it was the truth, the way the thing you can do for us. The way out is the truth. Not say, "Well, you just need the poor need a line of credit. It's the last thing you need when you're broke. It's going to keep you freaking broke." So the last thing you need is a car payment

that feels and I am not going to tolerate the narrative of lies that are going to be thrown at you.

I'm a consumer advocate. We're here, Georgian. I are here to help you. Not anything else. We are not our entertainment value. We were entertained long before we got to these microphones. Doesn't take much. San. This is what you've walked into. If you walk into the Ramsey Show, don't expect anything else.

“Steve is with us in San Antonio, Texas. Hey Steve. What's up?”

Hey, guys. Thank you so much for taking my call. Sure. Can you hear me? Yes, sir. How can we help? Okay. So I'm going to ask the question and then I'm going to describe

the situation. My question is, when should I file for Social Security with Irma in mind?

You're laughing here with Irma, right? Yeah. Okay. Give me the rest of the story. I'm so confused. Okay. So I'm a school teacher. I got part A cover. I filed for part A of Medicare. The rest, because I'm still with the school district, I'm taking care of. I've got Social Security coming to me when I do retire. Not much, but some. Next March, I will meet with in Texas called the. What's it called? If that was common,

when you hit the certain age, and the years of service, you get full benefits. All right. So I'll get

that in March. The third source of income that I'm going to have when I retire is. And I'm blessed.

I want a scratch object or $500,000. And that turned out to be $280,000. $180,000. After the taxes were taken out. So my question is, with Irma in mind, I know in two years time, I will be taxed heavily because of that sudden growth of income. My question is, when should was your advice for filing for Social Security? Do I wait to after that two-year grace period? Or should I file for Social Security next year when I retire?

I would wait, given that you're going to take the hit on the lottery. The lottery income is going to come in. But that purge, be the rat and snake all the way through your taxes. And then do your Social Security after that. And then you won't have to deal with Irma. It's not a problem.

“This Irma is not affected by net worth. It's affected by income. And so yeah, that's what I,”

yeah. And by the way, what they withheld on that is not necessarily your tax rate. Your tax rate is they with whole 24% on lottery winnings, but you may or may not be taxed that. You may be taxed more or less. So you need to get some good tax advice as well. Go to rmsesolutions.com and click on taxes. When I started, I had great ideas and I knew how to serve people, but I didn't have

systems in place yet. At that time, I saw books on the trunk of my car. It was a lot harder to start a business back then. Shopify makes it easier. Shopify is the business platform powering millions of businesses and about 10% of all e-commerce in the United States. If you've got a product or even just an idea, Shopify makes it simple to get moving. You can build a storefront, write product descriptions, and even improve your product photos all in one place. You don't need

“10 different systems duct taped together. Shopify handles everything you need to make sales”

from payments to marketing and analytics. Plus that purple shop pay button is one of the best converting checkouts on the planet for fewer abandoned carts. And if you get stuck, Shopify offers 24/7 support. So if you've been sitting on the sidelines, it's time to turn those ideas into sign up for your $1 per month trial at Shopify.com/Ramsy. That's Shopify.com/Ramsy. Shopify.com/Ramsy. Well, we wish we could get to every call in question here on the show. If you've got a

money question, you want to answer for your situation. Head over the website, use AskRamsy. AskRamsy is our free AI tool that's built in trained only on proven Ramsy principles. About three years

dropped all the articles, which are thousands of that we have on our website on different subjects

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the link in the description if you're listening on podcast or YouTube. Abigail is in Vermont.

“I Abigail, how are you? I'm doing well. How are you? That other than I deserve, what's up?”

So my husband and I, we've been married for five years now. We bought a house right before we got married.

And before we got together, I lived at home with my mom and I ended up buying my own house on my own. Kind of spiraled into, we had a good nest I built up. So now five years into marriage, we have no that except for our mortgage. And during that time when I was living at home before we were together, I didn't have any bills or anything. So I dumped a lot of money into my retirement account. I did it as a four or three B. Roth. So I have about 143,000 in my retirement account.

Our current debate that we have is my husband really wants to take a chunk of that money and pay off our mortgage. We have about 54,000 in investments including in emergency funds. Our yearling comes about 110,000, but our investments and our retirement, we definitely have enough that we could wipe out our mortgage. But I wasn't sure if taking that 10% penalty because it did go in Roth if that would be worth paying the mortgage off early. That way we are

every month except for June and July we have an extra 1600 that we are able to throw into our investments and our mortgage. What's your mortgage balance? About 125,000. Did you keep the house yours paid off? So the first house that I bought, we sold it and we used that money to renovate our current house, our house was a fixer upper. So we did all of our renovations without getting cash. So you only own the one house. Correct. Yep. And the 54,000 dollars in, and you have 112

owed, and 100,000. And 100,000. And what was your income? 101. So 110,000 in income. Our mortgage is 125,000. Okay. We have 140, the F-54 in investments and emergency funds. You got 140,000. Yeah, your husband's wrong. There's no possible way I would pull money out of a Roth and pay off a mortgage. I want your mortgage paid off worse than he does. It's going to do

amazing things for you guys. But I don't want to be stupid in paying it off. And the hit you're

going to take on this account is not worth it to pay it off. You're going to get there. You're fat on your emergency fund. You don't need 54,000 in there. So I take 25 of that and throw it on there.

“Then you got 100 to go. And you're doing about 18,000 a year right now, 1,500 a month, right?”

Roughly. Yeah. I work per dime. So when I say our yearly income is about 110, I'm per dime. I'm a nurse. But I have a lot of medical conditions that kind of inhibit me from working more. And we have-- Do you work, do you make 110 or don't you? We do. Because some years we are able to make a little more than that. Well, when you make a little more pull or more on it. But if you don't make it a little more,

then you're still okay. You're fine. I mean, you've put $20,000 a year on 100,000. It's gone in five years. And you're how old? I'm 28. He's 34. Yeah. And so you're going to be not even 14. You have a paid for house. The house is worth what today. About 220. Good. Good. You're going to be in great shape. You're all doing so good. I want to reset the conversation with him tonight. Go hey, I know you want to pay off this mortgage. Let's make a plan that doesn't involve decimating our nest egg to get there.

Yeah. Let's use future income, a little bit of our savings. Let's have a plan. Spitshake. Three years. Four years. Five years. This thing's gone. Yeah. And your 403B make sure it's invested in good mutual funds. Because a lot of them aren't in 403Bs. They get into insurance products. Be careful with those. Let's just get in some good mutual funds.

“Good growth. Stock mutual funds. You should be earning 10 to a percent average on your money.”

And if you are, you're going to double that money every seven years. And so about the time this house is paid off, you guys are going to be millionaires. Well, let's make one way to look at it. Now, as far as paying this off, would you recommend racing beans or just continue on the path that we've been doing? I'm continuing on the path that you're doing. But I would just say every time I look at

I get whatever. Anytime we got some found money that the budget didn't need and that, you know,

we can still have a good life forward. And I'm just going through all found money at it.

“You know, rich uncle passes away leaves you 5,000 bucks. That's found money, right?”

You just throw it at it. Something happens. You get $10,000 somewhere just throw it at it. What's going to end up happening? You're probably going to pay the house off in about four years without doing racing beans. Sounds about right. Yeah. Yeah. I think that's more than $20,000 a year. But you're going to have some found money. You're going to pick up your per day.

Different things are going to happen. And you can still have a good life while you're doing that.

I still don't want vacation going to date. Yeah. Don't punish yourselves for no reason. And that when you're in baby steps, four five and six, which is where you all are, we are intentional, not intense. One, two and three is intense, which is beans and rice, rice and beans. You don't see the inside of a restaurant unless you're working in. You don't go on vacation. Do you get your butt out of debt and have an emergency fund? Then when you move to where you

guys are at McGale, we go four five and six. And that's intentional. And that's when we have a life. But we also have goals. And we're, you know, found the money goes towards the goal. And your husband's got a great goal of having a house paid for. Because guys, when you got no

house payment, you know how fast that old house payment turns into a million dollars when it's invested.

I did that. I took my whole house, but when I finally paid off the house, it was a, it was about 1,900 bucks back in the day. And I rounded it up 2,500. And I put that automatic draft into a mutual fund just to see and left it on. They were putting anything else in it. How fast that one mutual fund became a million dollars was absolutely mind-boggling. Yeah, that's the compound. It's just all in that. It's just a stupid house payment. When you pay yourself a house

payment, oh, and it's invest my goodness. Instead of paying interest to the bank, you're paying yourself some interest. Ding, ding, ding, ding. That's a man. And once you, you cross that threshold under 100,000, you're like, game on. We have this. Oh, yeah, you can smell it now. Anthony's in Chicago.

“Hey, Anthony, what's up? Hey, thank you. Thank you, thank you. Thank you, my call. Sure. How can we help?”

So I've been recently, I graduated years ago. I've accumulated, or I accumulated a lot of debt in those four years plus the new car about the probably won't like. But currently, I said at roughly, I was trying to get like some tips and like, I feel like I'm doing a good job repaying a back. And I was wondering if you can provide any more helpful tips to keep going on that aggressive edge that I started. What's the total doubt? I told that after like the start or the balance right

out today. Today is about 50,000. Yes. What's your income? It's about 66,000, but I have over time so it's 76 last year. Good. What's the ish 50,000 on? So we got 33,000 in a private bank student loan. We got 17,000 in a federal loans. And then my car is above equity value, above my loan value. I don't care what are you on your car. 15,000. Okay. So you don't have 55. You don't have 50,000. You have 65,000 in debt. Correct. Yeah. Okay. That's almost 100% debt to income ratio. So you need

“to get this income up. We might want to sell the car if you want to speed this process up.”

But that's the only way to do it. Spend less, make more, throw the difference at the debt, debt snowball. It's most of the largest balance. And hopefully you'll be out of this thing in two years. Hey, guys, George Campbell here. Two things you should know about me. I love a good movie, and I hate overpaying for things. An angel just checked both boxes. They've got a new movie called Young Washington, the story of George Washington's early life as a soldier before he became

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“Hi, Sarah. How are you? Hey, doing well. Thanks for taking my call. Sure. What's up?”

And it just is. I'm wondering there's a lot more context. But I'm wondering if I should take money out of my 401(k) so that my fiance can kind of get prepared and pay off some of that before we

get married. I'm sorry. What would you do with the 401(k) money?

So I am staying at home right now with our eight-month-old baby. So I haven't been working since like 38 weeks pregnant. And so I don't have my own income. So he's covering everything. Very grateful for that. But I also hear you all too. What does he make? But total about 35,000 a year since pretty low. So you're going back to work, I like this.

“Yes. At some point soon, but that's not on the table right now. Why?”

And we get married in six months. Why are you waiting six months? You have a baby. Get married tomorrow.

Well, so that's where the new ones comes in. We're Catholic and we have to be kind of in a marriage prep before we can get married in the church. So we have it set up. We've tried to keep our life fairly separate. We wouldn't be living together if we didn't have a baby. But this is where we found ourselves. And we made certain decisions so that I could stay home with our son. I was in an in-between. I'd left my career a few years ago.

Okay, you're looking for a magic switch to make an impossible set-up math work. And the magic switch is not your 401(k). So the box that you guys have built for yourselves that you're trying to

“live in doesn't fit. And the 401(k) is not going to make it fit. So how much debt does he have?”

He has about 28,000. And I have zero. So that's also part of it is. Yeah. Well, number one, you know, I'm fairly aware of the detailed pre-marriage process that a good Catholic goes through. And it's also, by the way, for those of you that aren't Catholic, I'm not, but I'm aware of this part, the statistics of the folks that go through the pre-marriage system that the Catholic shoes are very good for staying married. So the pre-marriage process that

you're talking about is very thorough and very good. I'm in a believer in what you're doing. I'm not aware of how they treat a child out of wedlock in that process. That's a little surprising to me. The priest would say, "Wait, you've had a baby, but we're still going to act like you didn't and go through all of this detailed pre-marriage counseling as if you guys weren't sleeping together. That's weird." Yeah, it surprises too. So in our area, they actually don't even start

marriage prep until after a child is born. So even though we've been together for a couple of years, just to allow, I guess, like, freedom with the sacrament, and make sure that it's not- That makes no sense. Okay, I don't know. I don't know. I don't know. That's confusing to me, but I don't know how to speak into that. What were you doing before and how much were you making? So immediately before he was born, I was just working at a brewery and, like, substituting

teaching before a one-k is from, when I was a teacher, a public school teacher a couple of years ago. Yeah, okay. And once he's doing, I'm making 35. How much was in the 401k? Only about 13 grand. Okay. All right. If you take it out, it's 6,000. Not 13. By the time they take the penalties and taxes out of it, it might be 7. It might be 7.

Your problem is an income problem and a marriage problem. And you need to solve both of those as soon as possible.

“His income going up temporarily working six side hustles. Your income going up,”

picking up a side hustle and planning to go back to work. And you do not pay bills for someone you're not married to, period. And I don't know how to solve the part that is tied to Catholicism because I don't know enough about it to speak intelligently. But I do know if I were in your shoes, I would sit down and talk to a priest and figure out some process by which we got married sooner rather than later. And so if you're going to be married and you're going to have a child and you're

already have a child together, then you know the sooner you get that together, the faster your old lives are going to be knit together or the faster you're going to be able to get the debt cleared and build wealth and so on. But caching out this 401k doesn't- doesn't fix. It's like

“spitting in the wind. You've got, you've got 60 and 70 thousand dollar problems. You don't have a”

$6,000 dollar problem. And by that I mean your old income's suck. And so, you know, the debt payments alone are probably eating up half the take on pay. Yeah. And it doesn't fix it. It doesn't fix it. It's like, it's a glancing blow at best. Okay, so yeah, interesting. So if you cash out your 401k early, you get a 10% penalty plus your tax rate. So it's typically going to be a 25% tax rate plus

about a 10% tax, a penalty. So about a 35% hit. So roughly one third of your money. It's like

saying I want to borrow money at 35% interest to pay my fiance's bills. Okay, number one, we don't ever pay our fiance's bills under any circumstances. You're not married to them. Do not pay someone else's bills. It's your roommate. And legally, that's where you stand. And if he decides, he's just going to say, yeah, I don't really care about priests. And I don't really care about babies. And I don't really care about you. I'm going to leave. And then you pay his bills.

Now, that's the other call we get on the air here. I paid the bills. I paid his debts. And then we broke up. What now? Because I thought we were going to get married. I thought we were in love. And I thought we had a baby together. Oh, wait, that last part you did what do. But yeah, this is where you get yourself in a pinch, boys and girls, girls. Uh, yeah, this is a problem. It's a serious problem. All right, not aimed at her. But just because I can't get out of my system right now,

there's several pieces of research on what's called the success sequence. If you first graduate

from high school and only then do you get a full-time job and only then do you get married. And only then do you have children. If you do those things in sequence, if you're a millennial, you have a 97% probability of not being at the poverty level. If you get them out of order and have babies before kids and high school and jobs and grown up stuff and you get them out of order, then you have a much higher probability

“of being at the poverty level. And that's exactly what I'm talking about. That's what I'm”

fumbling around on here. And so after the, after the cows already out of the barn, now what do you do? You know, well, all I can do is try to help you from where you are at that point and that's to return you as quickly as I can to the success sequence, which is, you know, okay, we got the baby thing out of order here. Well, let's get married as soon as possible. Because otherwise you end up, you know, I make really good money and I paid off all his debts

and then he just left because he really didn't want a baby. And even though, you know, yeah, and this had, you know, when he took the car about four minutes in my name and he's not paying the bill and my credit score is getting messed up. I'm going to get repoed. What do I do now, Dave? These are the calls, George, and I get every week. And so I can't, I just want to grab all of you that are 18 to 26 years old by the shoulders and yell in your face.

Don't shack up. Period. There's no data. This says this works. None. There's lots of research. So you're going to get your face pounded in. You're not, you're, your net worth is going to be

in their 35, one 13th, that's more than 10x that you screw yourself up. This stuff matters. Get it in order.

[Music]

“Molly is in San Antonio, Texas. Hey, Molly, how are you? I'm good. How are you?”

Better than I deserve. What's up? Well, my husband and I are trying to come to any agreement on pausing investing to cash by our next house. And wanted to get your opinion on that. Okay. I'll give you a little background. We are 33 and 34. We bought our house at 26 and paid it off in five years. Why do you have no debt? You have two kids. So we have our retirement and in five between nine. Just, you know, outgoing our house. We want more land. We like to build. We're just kind

of going that way. I love it. Wait a go. What's the current home worth? About 400,000. Okay. And what would your target be for the move? How much? Looking to be at about 700 with the land. Okay. So we need 300. Yes. Okay. I got that.

“And do you have any investments or savings beyond emergency fund that are not retirement money?”

Yes. We have a brokerage for the house. It's about 125. Okay. So you're almost halfway there. Yes. Okay. And what's your household income? Last year we grossed 190. Good for you. Well done. Okay. And how much is your retirement accounts? Retirement with 529s. No, retirement accounts. Oh, just retirement. I'm 160. Okay. And how much is in the 529s? 60. Okay. And how old are the babies? About to be 7 and 2. And you're 34. You said?

Yes. 32 and 34. Okay. And so the argument is, do we stop? Retirement in 529 temporarily to get the other hundred and 75,000 that we need to finish this deal. Correct. And you make 190. So is that a two-year plan? Yeah. I have been worth over time and have the option to make more. So if we did this, we would probably really crunch down in. I mean, if you did 175, you would need to save 85,000 dollars a year, right?

Out of 190 to do it in two years. Yeah. We could do that. Yeah. So it's a two-year plan. So if we don't stop saving for retirement, instead of two years, how long does it take us?

Three? Yes. So we're arguing about a year. That's correct. Okay. I mean, it always helps me to kind

of boil it down when Sharon and I are looking at this because it's not really philosophically, some big, oh, we're not going to save for retirement. It's like one year, difference, if we do, or if we don't. So we're really arguing about a year's worth of retirement saving. Our two years worth of retirement savings, one year on that, when we purchase the house. So would we give up two years worth of addition, all savings, and my 30s are making 190?

What would you do, George? That's kind of interesting. I like that. I mean, I was in this exact

question, Molly, when we paid our first house. And what'd you do? And we wanted to cash

with a second one, I kept investing. I kept investing at that 15% rate, but not more. Because you know, once you're in baby step seven, you can invest 20%, 30%, but we kept at a 15% and the rest of it, we stacked away to make it a long time. And how long have you tried to save them to your move up? That was, yeah, that was a couple years, probably three years. Probably three. So I think you guys needed to decide the urgency of the house move. Does it need to be 700 to

650 work? Because you're talking, if you're investing 15%, right now, that's about 28 grand,

“of your gross income. That's what you're actually talking about. So does the 28 grand”

is it worth waiting a year? Is it worth investing 15? Yeah, more like six months now when you talk about that. Yeah, if you guys actually crunch the numbers, I'm curious what the actual numbers would be based on how much you're investing now, what pausing would get you, what that next house will actually cost. Because the other part is buying a new home is just a starting point.

things that you want to do. And so it just gets, let's make cash flow that. Yeah, making 190,

“you guys will be fine. Because they don't have a house payment. No, we're in this scenario.”

Is there a house payment? What's your emergency fund? No, payment. Emergency fund is 45.

Okay. You guys, I got to tell you. You're like, poster short. I'm amazing.

Fairly, very well done. Be very well done. When we did pay off it, new babies and I mean, y'all are y'all, y'all really got this nail. You're going to be no matter which of these choices you take. You're going to be very wealthy because you're doing a several things. You're very intentional. You both are having a vote. You both talk about it. We even argue about it sometimes and we both are setting detail goals. But neither one of us are budging on the stuff like I'm not

going to go into debt. Neither one of us are doing stupid stuff. You're both just deciding, you know,

which type of investing we want to do. Do we want to do single family real estate? They were going to

live in or do we want to, you know, put this money in the mutual funds for there. So so George said, okay, so really, it's 28,000 a year. So it's two years or that's 50,000 bucks, 60,000 bucks. If you pause for two years. Are you guys investing 15% Molly? I'm just starting a number out there.

“I have no idea. I did the math and I think it might be like 15 or 17%. It should back off a little.”

Yeah, you go back off a little. But I mean, yeah, so it's 28,000 dollars a year if that's a case. Yeah. It slows your savings rate by that. I like the personal challenge. It's going, can we do it without pausing investing? That's just a fun challenge for me personally. I'm just a super nerd. So I would go, can we increase our income by 28,000 temporarily? That could be an interesting challenge too. And then you're still done in two years.

Can we cut our expenses by 14 and make an extra 14? Boom. You just got to make a game out of it. But yeah, because I both are excellent goals. Okay. So there's neither one of these things put your face in the stupid column. You know what I'm saying? You guys are just doing so good. I'm so proud of you. It's almost like you're reverting to babysept three B for a time. That's kind of a see it. Which maybe it's not a wrong answer to the argument. Yeah, we say zero to 50. I can't just say, you know,

Molly, you win your husband loses her husband, you win Molly loses. I can't just there's there's not a wrong answer because both of these things are very smart. And you followed the baby steps properly. You're not going back into debt to move up, which I would yell at you for all of that. You just

“everything about this conversation is so healthy and positive. I think you two are going to figure it out.”

And also, by the way, there's there's even a weird or scenario mathematically halfway in between. Oh, we shut down investing for one year. And then we start. We take on the overtime and we cut over here and then where do we end up? How much, you know, and then we're talking even about six months or eight months. We're now talking about, um, you know, just a few months difference and then it's your relevant. Yeah. So that being around here in the middle. Yeah, I'll just hit in the middle and go,

I like to fast forward and go, okay, when we're 65, do we want to have 11.3 million or 11 million?

That's really what you're like, all right, we're going to be okay. It's not worth the brain calories at this point. That's true. That's exactly what it's going to end up to. That's going to be a good problems to have, honey. Oh, Molly, it's so refreshing to talk to you today. Thank you for calling. 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.

That other than I deserve, what's up? Oh, my gosh, sorry. First of all, just so happy to be on the

phone with you. Oh, my gosh, I like growth listening to you. So like this is just wild.

“It's going to be on the phone with you. Well, we're on. How can we help?”

So my fiance and I are getting married in January and we both already are living outside of our family. So we're trying to figure out what to put on our registry and a lot of people have been telling me, oh, don't you're a cash fund because people want to give you things. And if you don't tell them what you want, they'll just give you crap. Both of us really just would prefer money for the future. Like, how do we go about doing that or should we just like upgrade this stuff that we have?

Wow. Um, well, what occurs to me is that you might ask people to give you money, but certain ones won't. They're just not going to. Yeah. Like, my wife is old schools, Southern, Redneck Hill, Billy, whatever you want to call it, right? And the chance that she's

“giving you money for wedding for her, that would be tacky. Yeah. It's outside of her value system to”

do that. She couldn't do it. She's also the one that sends flowers to funerals when they say, don't send flowers. She doesn't care. I've been she cares, but she doesn't care because she's going to do what her upbringing taught her to do, um, which is to bless the bride and groom

with a silver platter that they will never use. Of course. And so it's a very Southern thing to do,

or gentile thing to do, or whatever you want to call it. But I don't understand. I would take the money, but I'm with you. Yeah. George, you got married how many years ago? That was 2018. And we used a registry site. I'm sure you're using a similar one, Sydney. We used one called Zola, which is a popular one. And on there, we had all the registry stuff, right? All the target and Amazon crap. But we also had like a home-down payment fund listed on there with a little cute, you know,

picture. And a few people gave to that. You could do a honeymoon fund. And that's just a cash gift. The people can give through that. And why can you write a little paragraph at the top saying, we prefer this? Yeah. You can say, and I, you could place it. I place mine right at the top. No, or whatever, we're to see that first. And in the invite to go fund, George. Exactly. And so the invite is a little trickier. You don't want to be like, here's the invite. Also cash gifts preferred.

You could. Yeah. Yeah. And that's not to be a little tackier. Yeah. So put it on the registry George says. Yeah. If it's on there as a link, and you can have a more practical among us, we'll give you money. And then the ones that were with proper upbringing, like my wife, we'll give you something you can't use. So do you guys have a specific goal in mind for this money? Or is just we'd rather have money? So yeah, that's the other thing we're trying to figure out. So

we both ultimately want to do overseas missional work, like relief work, also like your church organization. So we would love to, like, it would be so much easier if it was for a house, because people would be like, oh, we could see that goal in mind, but we just don't really have an eye if you're depends on the audience. I mean, if it's, if your friends and relatives are believers, and they want to support your working for the Lord, then that might be more motivating than buying

I feel more convicted over getting a cupcake platter to go. You know what, I should probably support the missions. They're so passionate about.

Cupcakes or Jesus, yeah. You pick. Okay. But you can put that on the registry site. You can put a little blurb of hey, here's here's our heart. Here's what we love.

No, no, no. You collect money to go on a mission trip. You cannot spend it on your house. That would be unethical. Oh, definitely not yet. And also not sitting. There's the fun part. You have the addresses of all these people now. I might just do a follow-up later with a separate missional ask versus trying to combine it into the wedding. Okay. Okay. That feels better. Do a support letter six months after your married. Hey, thanks for the gift also. Where's the cupcake platter? Yeah. Jesus, yeah. So I might separate it out. Just so it doesn't feel like you're kind of mixing to two wonderful things at the same time.

That's fun. But you know, that's a fun question. If people are going to think you're tacky, they'll think you're tacky. Rachel thought I was tacky because I had a QR code to give to my daughter's 529 at her birthday party. Instead of gifts, I want I don't want more toys and crap for a one year old. I don't know if it's tacky. It's just strange.

“Yeah, it's pretty nerdy. Yeah, I just got a QR code for how old was your daughter?”

It was her one year old birthday. For her one year old birthday party. You put a QR code on your kid. It was not on her person. Yeah. Well, same thing.

Well, now I know Dave wouldn't support my daughter's 529. No, I didn't. I wasn't invited, but yeah.

Oh, that's. I'm kind of with Rachel. I don't know. Tacky is the right word. Yeah, this is close family. It's just a strange nerd George. I wasn't soliciting money from stringing. If I know you, they don't think it's tacky. They just think it's George. Can I tell you? Nobody gave to the 529. So dead gum QR code. Just don't work. Not a one.

It backfired not a dollar. My parents, they gave every year to her 529. I don't know. But not through the QR code. I don't know how to do the QR code. No, long took me to figure that out. Oh, that is so classic. Now I'm upset. That is that answers the question. This is a don't try this at home. Wow, don't DIY this puppy. Oh, my gosh, George. That's funny.

Oh. All right. I got the wrong number. Here we go. Here we go. Tessa's in Chicago. Hey, Tessa, what's up?

“Hey, thank you so much for taking my call. Sure. How can we help?”

So I want to start off by saying that my husband and I have gone over this.

And I very strict instructions on what I'm supposed to tell you. I am the problem.

Yeah, very, I acknowledge it. I do. I'm trying to have developed intensity. Wow. I listen to total money makeover every single day. It's a little piece of motivation for my day. I'm trying to get better. But he works really hard. And he lets me stay home. I homeschool our kids.

I'm just, I don't want to be careless with his heart earned money. And we got ourselves into a position when we bought my parents. My childhood home. We decided to buy it and renovate it. We started off doing FPU when we got married. And we, oh, the only that we have our mortgage, the home equity, which is the problem.

And then we do have a truck payment that his company gives him a allowance for that. They give him a allowance whether you have a payment or not. They do not. That's not true. It's got to be like so many years new. No, they do. They give you an allowance whether you have a payment or not.

“It has to be a certain age, but it could be a paid for truck.”

Yes. Okay. So you don't have to keep the payment to keep the allowance. So don't, don't say that again. Okay. So that's kind of unclear for me. He had told me how it works.

But I still don't quite understand that. Well, he gets an allowance for a truck, but it has to be a certain age. It does not require it has debt on it. It's that simple. So we are suffocating and we're dwindling our savings.

We do have our a thousand dollar emergency fund, but that's pretty much it. Everything else dwindles. And I don't know if it's a matter of-- Where does it dwindle too? So we are paying our mortgage 11.95 a month.

We pay a thousand dollars on the home equity every month. What does he make? He makes a 98.5 a year. And you're at home full-time with the baby. I am a photographer, so I make a little bit, but it's like $89,000 a year.

What's the truck payment? Did he get to you? His truck payments $8.10, and he gets just under that, like $7.60 or $7.70 something like that. Okay. All right.

Well, the truck has to get paid off, and that'll give you your margin back. So one thing. You do that before pushing more at the home equity.

Whichever one is the highest balance is second.

Yeah. Okay. And have you stopped your 401(k)s? So that was our main question. We are--he's currently contributing 11% in that.

If you listen to the 401-- if you listen to the total money makeover, you already know. You're supposed to stop your 401(k) right?

“That was what I just passed that chapter, so that's what prompted the phone call.”

Yeah. Yeah. You definitely stop it. It's a temporary stop until you get these debts cleaned up. The miss you made, and then you get margin, and you can do this. But you can't do everything it wants, because everything it wants isn't working. That's why you called. You're going to get on some 1,000 bucks back in every single month.

The fee stops as 401(k) and then we clean up the he-lock. Sell the truck, get a cash one, and you're set. Yeah. Got your margin back. You got to have the truck estimate certain eggs to get the aid.

I already get the 700 bucks, and so then you start to wonder if that's actually worth it or not. It might not be worth it, because you might be keeping a truck that's expensive that you're wearing out. You got to look at the math on that truck. But anyway, yeah. Stop the 401(k) temporarily, and beans and rice, rice and beans.

Get on the every dollar budget, both of you. No more eating out, and no more vacations until these debts are cleaned up. You bought a house and a truck you can't afford. Hey, what's up, guys? It's Jade Warshot.

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The Ramsey Show question of the day is brought to you by Wi-Refi. And missed private student loan payments can keep your budget stuck in neutral. Wi-Refi helps borrowers explore low fixed rate refinancing. The payments based on what you can afford. So, you can start moving forward again.

Visit Wi-Refi.com/Ramsey. That's the letter, Wi-Refi.com/Ramsey. Might not be in all states. Today's question comes from Amanda in Utah. I vacation on the same cruise line twice a year.

Each cruise is 14 days long. If I buy 100 shares of their stock, I will receive $250 on board credit per sailing, which equates to 500 bucks a year.

Even without growth, I would get my investment back in about five and a half years.

I know you don't recommend investing in single stocks,

“but under these circumstances, do you think it's worth it for me?”

Oh, boy, good girl. Good girl. Investment back. I get your investment back. With her on board credit, a 500 bucks a year.

Oh. So, it's not just one time. If you're a stockholder, one time of 100 shares, any time you sail. I guess you buy 100 shares. You buy 100 shares, but any time you sail, you get 250.

In on board credit. It's one of those that the Jews say weren't the squeeze here. Especially with five and a half years to make the money back. Yeah, that's not. For on board credit, that you may or may not.

Yeah, on board credit, which is marked up crap. Using a gift shop.

You won't hear those day when they got called about the million dollars in on board art.

Oh, no. But that one went viral. I saw that. That was wild. He said his mom has one.

His mom has one. Is she buying on board cruise art? And had dropped a million bucks in it over the series of years. She had the money, clearly. Well, yeah, but now she doesn't.

Completely broke now because it's all invested in on board art. Which I didn't even know was, I mean, I knew they had. I've been on cruise as I've seen the on board art. I didn't. It can't be great.

I don't invest in. Well, she three sheets of the wind. How do you do that? I mean, she had to have been like a lot of three sheets of the wind. That's like she did this over a period of years.

But yeah, so anyway, what do you buy on board a cruise? I mean, it's like going to Disney. They sell nine dollar raincoats that that because it rains every afternoon at Disney and they sell you a nine dollar raincoat with a Mickey on it. That they paid 49 cents for in China.

“And that's what you're buying on cruise ships.”

Yeah, it just take your money. It's not like it's, you know, like you're getting mint coach or something on there. I mean, or whatever. Well, she's saying five and a half years. So this must mean 500 a year.

She's getting talking. She's going to spend almost six grand to buy these hundred shares. Yeah. That's crazy. Well, overall the answer would be no.

Put that screen on the high alert. Your on board credit is going to stuff that's marked up at least double. And so now we're not at five and a half years. We're at 10, 11 years. And um, and it's stuff you might not have purchased anyway.

And so buying something on sale that you don't need is not a good buy. And think about it this way. If this was a credit card that said, hey, if you spend $50,000, we'll give you this many points. We'd say that's crazy.

Don't do that. Don't spend money. We're going to say it about this. That's crazy. That's don't do that.

Okay. There we go. Ethan's in Jacksonville. Florida. Hi, Ethan.

How are you? Hey, Dave, how are you? Better than I deserve. How can we help? Hey, um, so my question is, do I leave my current job?

I've been here for about two years. And do I go work with my dad or his HP back company and potentially take it over? Whenever he's ready to hand it up. Okay. Well, what do you make now?

And what would you make there? The name of my wife right now. No, what do you make at your job now that you're going to give up? Yeah, 65. And what would you make fixing HP back for your dad?

He would start me out at the same. Hmm.

“So that's what an HP fact tech makes in Jacksonville, 65?”

Uh, roughly.

I'll say, I don't know exactly what an HP fact tech would make.

“But what do you, you're not an HP fact tech now?”

No, no, I'm not, I'm not like, you know. How many employees does he have? He only has two right now. And how old are you? I'm 23.

And how old is he? 46. 47. Okay. So he retires at 65, 20 years from now and you're 43.

Meanwhile, you've been an HP fact tech for 20 years working for your dad. And then you get a company of whatever size it is at that point. And 20 years from today. Okay. Yeah.

Um, let's pretend this wasn't your dad.

I have somebody offered you a job making the same amount of money you make now.

And 20 years you could have the opportunity to buy the company or be given the company. 20 years from now. Would you do that? That's a hard one, Dave. I don't think you would.

“I think you could start your own HP fact business and have more than two employees 20 years from now.”

Yeah. So, you know, what I might do is this. I guess, do you want to, I mean, does he need the help and you want to help him? Do you want to work together? What's your, I kind of feel like there's like love involved here?

Like you're trying to love your dad well. Yeah, like, I mean, he's, so he's my step dad. Uh, so he's been nothing but a dad to me and, um, you know, and I want to help him out. I want to, you know, I want to do whatever I can to help him and I love the trade. The trade is just, I mean, it's a good trade.

I work with him when I was throughout school. So, I mean, I love it. It is going to be going on. What are you doing now? I work, I work for Anne housing.

Okay. So, I work for him and it, I'm young, but I feel full. I ain't gonna laugh. You're young, but what? I'm young, but I feel old because of the swing shifts.

Oh, oh, yeah. Yeah, I'm great. Yeah, that I get you. Okay. Um, my wife, she's, she's, she's, she's getting on day.

Getting on day sounds from, sounds fun. Better quality of life. Yeah. Yeah, I'm going with that. Okay.

So, here's, here's what I would do if I did go forward with this.

Let's continue the conversation before you make a decision. Okay. Number one, you said you're held 23? Yes. Yeah.

So, I would want a written game plan for clarity. So, everyone, him and you and your mom and your wife all know what you're signing up for. Okay. Okay. And that's called a partnership agreement or we can call it whatever.

And I want you guys to really spend some time detailing this out. Because this way, when this is over, you'll still be friends. Okay. And if you don't do this, you probably kill each other. You know what I'm saying, right?

Yes. So, it worked out when you were a teenager, but you're not a teenager anymore. You're like a grown man and stuff now. So, you guys going to have opinions. So, I want him to progressively hand you ownership over the years.

Okay. Can you kind of move into ownership? Yeah. And not suddenly 100% at 20 years from now when he's 65, but instead after you've been there five years, he's going to give you 25%.

After you've been there another five years, he's going to give you another 20%. And now he's still major owner and you're 33 and he's in his 50s. Okay. I kind of think that through how that's going to feel for him and for you. But I want him to begin to hand you ownership in this.

And then based on that ownership, you're going to get paid for the job you do, plus the percentage of ownership you have of the profits. And so, if the thing makes a profit after your paid your salary and he's paid his salary for working there or his income, if it makes 100,000 dollars and you have 25%. You get an additional 25,000 dollars.

Follow me. Okay.

“Then lastly, you have to cover all the deeds.”

What happens in the event of death? Divorce. Drug use. Disinterest. I don't want to do this anymore.

What happens in the event of deeds? Disability. Somebody gets hurt. They're in a wheelchair. What happens?

How's that going to take? How's it going to shake out? What happens to the ownership? What happens to the income?

Hey guys, George Campbell here.

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I like this. Start every dollar for free in the App Store, or Google Play. Aaron is in Anaheim, California. Hi, Aaron, how are you? Good day.

Thanks for having me on the show. Sure. What's up? Well, got married a little over a year and a half ago, and wife and I have done pretty well, and we're trying to buy a house.

We live in Orange County, specifically, and it's super pricey to live here, as you probably know.

Yep. Our goal is to buy a home. We've been smart. Our parents have raised us right. My dad put me in touch with all your stuff, and I've been hooked to the show ever since.

So it's been a pleasure, and a blessing in my life in my wife. So, yeah. So we've been smart with our money, and we feel like we've done well with it, but I'm kind of reaching a point as we get maybe a little bit closer. To figure out how we should move it around from here, I guess. It's currently invested in the stock market.

What's that, man? In the stock market? I know, and what in the stock market? So 80% is in equity investments, and then 20% is in bonds and fixed incomes. Equity investments.

What's that, man? You've got it in a single stocks? No, well, yeah, it's kind of spread out across multiple different stocks. And the advisor that's helping me is put it in the market. Okay.

All right. Well, that's not what we teach. You know that. Yeah. That's okay.

That's very risky. Yeah, it is. And it's the bonds. Yeah, the bonds are risky, too. Yeah.

Okay. So that's where we have it right now. I mean, we've done well with it, but the market, you know, we're concerned that it's going to come down.

“And when it comes down, how far is that going to set us back?”

And I think it's time that we maybe reconsider where we have our money right now. Okay. Yeah. I don't time the market either. So I don't know.

I would not do it based on what I think the market's going to do because most people don't have any idea. No one could have guessed the market was going to be up as high as it was three years in a row. These last couple years. Yeah. That's five years.

It's doubled. And nobody could have guessed that. Sure. Now that's not in the portfolio. You've got, but the portfolio that I've got has doubled.

Yours may or may not have done that because of stupid bonds. Probably we're an anchor on yours. I'm dragging it down.

“Anyway, when how much is in there and when will you be buying the house?”

I've got about 250,000 in it right now. And not counting like my emergency fund and other savings that we have. And our goal is, I mean, we're renting for really cheap for a family right now. A house from one of our family members at their own. And with 250,000, why have you not bought yet?

It's so expensive, like for the single family home. I'm not going to go down. I know, but for our area, it's between 1.1 to 1.3. But it's not going to go down and you have 250,000.

So it's been kind of my goal to throw down as much as I can at a home.

And since my rent is so cheap and I'm not really pushed up against a wall to move out. I mean, my wife and I have the goal moving out, right? We don't want to take advantage of it. Okay, so are you going to willing to trade the volatility of the portfolio that you have? And the returns it has for zero volatility and moving 250,000 into a high yield savings account.

“No, that's what I was kind of questioning.”

Is it better to have it in a high yield savings? If you're going to buy within 12 or 14 months, yes. Okay. Because your heart's going to sink when 12 months from now if your money's down. If the market dropped 10%, that would be like one of the worst drops in a year in history.

And that would be $25,000, which would not keep you from buying a house. Right. So it's not that big of a deal, but I don't know what kind of measure portfolio is. And how volatility you've got, how much volatility you've gotten yourself signed up for.

But if you were just somewhere you're like in an S&P 500 index fund and you're just sitting there writing the actual market.

I mean, it's up 10% for the year right now. Today you're today. So, Yomi, I deal with your portfolios up this year. I'm not 8% a little over 8%. So you're not even keeping up with the basic S&P 500. Probably because those bonds and things in comes are, are keeping it back right there.

Almost like what I said earlier. Yeah, you got an anchor on this. And you know what bond values do when interest rates go up, right? To go down.

“Yeah, they're an inverse relationship, exactly.”

So that's going to be bad. We were thinking, I mean, I mean, what much? No, I guess I could, let me put Malvin around the edges of this. What would I do if I woke up in your shoes? I would move it all to an HSA.

Or I would move half of it or in HSA. How you old savings count. And, or I would move half of it there on the other half into, just an S&P 500. And we get the best of both worlds.

Yeah, you got a little mix. Whatever the market does, you're going to get, but you get that gets rid of. The S&P 500 is probably half as volatile as what you've got right now. I wouldn't be in what you've got right now for anything. I don't have a dime in a portfolio that looks like that.

Not one. I don't play single stocks and I for sure is credit. Don't play bonds. And I would have an end goal and end date instead of just vibe and gone well. Maybe a couple years from now, just go, hey, 12 months from now.

What are our amount of money? And do this. You know, when I get to 400k, we're going, we're going. Or when I get to 300k, we're going. Or whatever the number is, have a name, have a name on it, and then let's go do it.

Because the sense of, I'm in sales and I'm scared of volatility is never going to go away.

That you're going to have that as long as you're in sales. And so that's not going to change based on the expense of the real estate or based on the interest rate, it's not going to change based on any of that.

“And so, yeah, that's, that's what I would do.”

I would take all the money out of that right now. I would put either all or half of it in a high yield savings and not worry about it anymore. If I put half of it in, I'd put the other half in the most volatile thing would be an S&P 500. And I use personally an S&P 500 to park money in while I'm saving up to buy my next real estate project, which is some of my favorite investing.

And so, I'll let it sit there. And so, I've made 10 percent on my money this year. You know, that's been sitting there year to date. And I'm fine with that. And if it went down 4 percent or 5 percent, I don't kill me.

Be fine with it. Not desperate. But, and I don't have to sit there and make, you know, how you'll savings rates, which is what? Three or four right now?

Yeah, three and a half about. Yeah, somewhere in there. So, that's the thing. So, as good a call out that this is, we're talking non-retirement accounts here. Yes, yes, absolutely.

And retirement accounts, we suggest putting money across four types of mutual funds. Yeah, you're going to have your aggressive growth, growth and income and international. So, that's kind of like large cap, mid cap, small cap. And we're talking about, you know, the huge companies. Those are the safer bets.

He's like the cruise ships. It's going to be hard for them to move much. And then as you get down to the small cap and these aggressive growth, it's like a jet ski. These things are moving. And sometimes it's great.

Sometimes there's low lows. But you're riding that wave to capture it over a long period of time. And then international, we saw this happen. International actually went up as the US market went down. So, it's a good hedge against the market here, state side.

So, all of that helps you to sleep better at night. So, what's crypto, a pirate boat? Oh, gosh. At this point, I'm not sure who the pirates are and who's taking them down.

They're sinking. I know that. It's like 56% down. Oh, wow. What happened to you?

Cryptobros, bragging about yourself.

And you're all 56%. 56, baby. Lost half your money.

They get real quiet when it's down.

“Cryptobros get real quiet when it's not.”

They took their ball and they went home. Yeah, they just go hide in the corner of Tik Tok over there.

And the deep corners of recesses of Tik Tok.

Yeah, go back where they came from.

“When an investment's not basing anything and it's just hype,”

as soon as everyone jumps off the boat. Yeah, I hadn't noticed him by bragging about gold lately either. We'll be back with you before you know it.

“And the meantime, remember, there's ultimately only one way”

to financial peace in that's to walk daily. With the Prince of Peace, Christ Jesus. [BLANK_AUDIO]