Wealth Doesn't Happen By Accident

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

in the Fair Wins Credit Union Studio. This is the Ramsey Show. I'm Jade Worshott next to me. Rachel Cruz, we're taking calls about your life and your money for the next hour or so. So hop in on the phone lines where John is there from Tulsa, Oklahoma.

He John, you're up on the line. >> Hi, lady. I would like to introduce myself real quick.

I am the president of the First National Bank of the Professionally Spring.

I am married to the CEO of the First National Bank of the Professionally Spring. And let me explain why I say that. So I found out maybe a few months ago we've loaned out maybe $45,000 to three people. >> Oh, okay, now I get it, you're in the bag, you're okay. I was like, where is he going?

“>> How did you find out later that you loaned $45,000?”

Were you loaning money without telling your wife and she doing the same? >> No, she did it to us. And now I said yes to two of these people. And it was 18,000. >> Who were these people?

>> So one is our father-in-law. One is a friend who's a teacher who doesn't get paid in the summer. And then another is a close family friend and I did not authorize the third.

And so now we're about $40 to $45,000 of our emergency fund is loaned out.

And now we've made a financial snag of our own and we need that money. I don't know what to do, yes we are in couples counseling about this and other things. But I don't know what we need to do aside from maybe rice and beans until this tough gets paid back for maybe five to seven years. What is the solution here?

Because we need some of this money now. >> Yeah, how much do you guys make it here? >> We need more. >> It's about, I'm around 69 and she's around maybe 80. >> Okay.

>> So I was supposed to make $10,000 more and then my company cut my overtime. That was kind of the cushion of its fall and so I'm kind of stuck here. We need this money now. >> What happened?

>> Yeah, cause you didn't need this money right now.

>> Yeah, cause just losing overtime doesn't feel like enough of a-- >> We've had some home expenses pop up. >> Like one, but I know it's going to sound really kind of, you know, it's not dramatic but we're building a poll and the patio is also turns out has dry rotted and needs to be replaced. And so we had money set aside for this, but now it's just over it's just.

>> Okay. >> Okay. >> And so I'm just like-- >> How much money are you over at this time? >> How much are they?

>> Maybe as of last night, it's about 15,000. >> Okay.

“>> And how much was your emergency fund total before the 45,000 was spent?”

>> So the emergency fund, I think is gone. I think I'm not really the one who does the book. >> You think it's gone? >> I think the emergency fund is gone. >> Okay, so they're right there.

Let's hang out right there because that's the problem in all of this. There's a lot of individual things that we could point out, but I think the main problem that at least I'm seeing Rachel is there's kind of a lack of a lack of a daisicleness about the money. You don't even know how much was in the fund, but you were okay, you okay $38,000 of loans.

And didn't even know how much was there to begin with. And then you're looking up all of this. Well hold on, I'm just going by what you said. And then you're saying we're building a pool in the midst of this and without an emergency fund or at least we don't know how much was in the emergency fund.

So this points to just what I'm just going to call, there's no intentionality here. It's almost like you guys are doing pretty well, you're making $150,000 a year, you've got a cushion and now we can just kind of do whatever we want.

“And I think that's kind of what's taken place.”

>> Yeah. >> You know? >> And I thought there was still granite, I knew there was more than 18,000 in the emergency fund. >> And you probably felt, but it was vibes.

>> I'm saying it was gone on vibes because it was like, yeah, there's probably more than that. We can go ahead and do this. And the way we teach here is there's so much power and knowing exactly how much money you have in a signing and this is how I'm going to spend it and this is where it's going

to go. And we're thinking about it ahead of time. Now what's happened. So let's fast forward to the loans. What's happened here and this is a separate issue.

really an active generosity because it's not a give, right?

“It's giving is an expected thing in return, I'm giving this to you.”

This wasn't an active generosity, this was an active a bank which you called that out. And now you're on the hook and unfortunately, if you push on your family and friends to give you this money back, maybe before they expected to, maybe before they can so that you can keep doing this pool, it is going to have an effect. Yeah, I mean, that's that's part of the risk of when you go into debt and you borrow or

you're the lender to people in your life because you have this happens. Barrel or slave to the lender. Yeah, absolutely. And we have, we have had the conversation now where I'm like, there is a reason banks would not give these people money and they have to pay.

Yeah, yeah. It's a question. It's a great point.

So that is why I say I'm the president of the first national bank of the potentially

spruce. It's a lesson, okay, people could not qualify for bank loan.

“Yeah, so what's going to happen, John, is for, I mean, honestly, what I would do out of”

just my sanity is I'm like, I wouldn't expect this money back to your points, right? And you said seven to eight year, you threw out like a number of years of what you expect. I would not hold on to that for eight years, okay, so this is what we would call a massive stupid tax.

If they end up writing you a check later in my, then, fine, but I would move about my life I would say that was so stupid that we did that. And now we have to figure out if I'm $15,000 to cash flow a home project that we started with no money, right, extra safety net wise. So we got to learn that lesson too, John, that when you, when you have no margin, you know,

even if you had $20,000, that's all you had and you allocated $20,000 something, you still don't have enough money to do the project, you don't need to spend all of your money on one thing. So I would look to say, hey, we're going to pause everything for now. And I would scrape together and find, you know, $3,000, $4,000 a month of whatever you

can to be cash flowing your way through the deck, the deck, the deck construction and the projects that you have going on. But I would not be holding my breath for your family or friends to pay you back into your point, Jade, I wouldn't originally go to them either because that's going to, yeah, I mean, like, you couldn't, you could have a right to because yeah, but it's not going

to help the relationship. No, I mean, you're, you're done at that point. This whole thing makes me, I've heard your dad, Dave Rimsley quote, this scripture a lot.

And it's so true, he says, suppose one of you wants to build a tower, won't you first sit down

and estimate the cost to see if you have enough money to complete it? It is. Yes. That's just wisdom. That's Luke for $14,000 for anyone who's interested in that's so much of what we teach

guys budgeting and just sitting down and knowing where every single dollar is going. Otherwise, you'll wonder where it went, right? And that's exactly what's happened to John here is they make good money, $150,000 a year and something so slight as I no longer get over time and I've lent out some money and I started a tower or a tournament without counting cost.

“And that's why gosh, guys, if they, if I don't tell you anything else, budgeting is so”

so important knowing where every dollar goes, so so important. But John, I appreciate your humor without paying. Thank you. I appreciate your attitude. Let me tell you what I get asked all the time.

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Hey, Christy, how can Rachel and I help today? Hi.

I'm always just hoping to have any tips or tricks and help working through the anxiety

of not having any money while we pay off a debt. Like, I know we're supposed to put as much money as we possibly can towards paying off those debt, but it still doesn't anxiety to take my account down to just a couple of dollars in the bank until the next payday. Okay.

Can I tell you something?

“Number one, I love this question, and I'm so glad you called in, because I think this”

is something that gets overlooked a lot, and because of that, it can cause a lot of heart ache and pain and Christy. You are dealing with something that I and myself and my husband Sam dealt with first off. Number one, take Rachel, is people forget to budget for a cushion. They budget every dollar, and they're like, yes, I did it, zero-based budget, and everything

is going to debt and minimum payments, and they forget to put a line item in the budget of, you know, it's a little bit different for everybody, but let's just say a hundred dollars that she just leave in there, so that in case something happens that you forgot about, you're not at zero.

Your bank account should never be at zero, it should be zero-based by dollars.

Yeah, zero-based budgeting does not mean zero in your bank account. Yes. So you can have a good cushion in there, so when those things come up, it doesn't take you into the negative. Yeah.

Yeah, a subscription is bound to come out that you forgot about, right? And the next thing you know, you're overdrawn, and then it just creates the cycle to your point of stress and anxiety. So that's thing number one, thing number two, I want to make sure, did you do baby step one first, or did you just skip it and go to baby step two?

So, yes, I did baby step one, and didn't really stop that, like I have a hundred dollars of my paycheck going into a separate savings account, but I don't even know how to get money out of that. Oh, help me understand, are you still doing that? Yes.

So we did, we saved those dollars, and then for my paycheck is automatically deposited, and I separated into a checking account, and then that savings account, so a hundred dollars goes into that savings account. Okay, that's a nice thing. Just as extra cushion.

Yes. Okay. What I would do is I would cut off the hundred dollars going to a separate account because the account that you have there, that's baby step one, you want that money separate from your checking account.

“I think it's very important to have that.”

And then on your budget, that's associated with your checking account, you want to delineate, okay, I have a thousand dollars every month in my budget, my every dollar budget, that is aligned to a cushion. And the reason for keeping it in that checking account is because if something happens, then it's there.

You don't want to, you don't want to have to move it from someplace else because the transaction now is already happened, maybe overdrew, maybe the card was declined, right? That's why you want to have it in the checking account. Does that make sense? Yes, yes.

Chrissy, how much debt do you guys have to pay off? Right now it's around $200,000. Is that consumer debt? We have about three credit cards that we still have to pay. I have a student loan and then we have a key lock.

Oh, okay. How much is the key lock? It's around 30,000. How much do you guys make a year? A close to 200.

Oh. Okay. So you're doing that right by including the he lock in your debt snowball.

“How quickly have you projected that you'll pay off this 200,000 in debt?”

No. So I'm hoping to have the credit card debt paid within the next two years. Is that based on a calculation or is that based off a vibe? It's based off a vibe. Okay.

Chrissy, you're the best. You can pick up on Chrissy. Chrissy, you're my people man because the things that you're doing. I recognize them because I've done these things. And so many people listening are doing exactly what you're doing.

Which is why I love your questions and I love the things that you're bringing up. Do you know what will give you so much peace, Chrissy? And so much motivation is if you sit down. Well, calculate it out. Calculate it at your current income.

Okay, $200,000 a year minimum payments plus extra payments. Use one of our calculators. You can go to ramsysolutions.com.

Maybe they'll put it in the lower third on the screen here.

But do the calculation based as things are today. And then once you see that number once you see okay, 24 months, maybe that's the time period. You can then you now you have options. You can decide am I happy with that?

Am I not happy with that? And if you're not happy with it, then you can start to brainstorm. Okay. If what would make me happy, I want to do it in 18 months. Okay, how much money do I need to fill that gap right?

And now your reverse engineering it to have control and do what you want to do.

And a lot of times, Chrissy.

It's like a $500 difference a month could really move the needle. Change the game. That's incredible. What do you bring home every month? Probably around 12,000ish.

Yeah, yeah, yeah. Okay. Because I'm just okay. Okay. I mean, I just did quick math and I was like okay.

Let's 12, five something like that. Yeah, what could you, you know, if you could pay $4,000 every single month, I don't take you four years. If you could pay $8,000 a month, that's two years, right? So you just kind of like start looking at the numbers and say,

What has to be true for us to be done completely in two years? Well, what would that look like? And if $8,000 feels like there's no way we can live on the rest,

“then what do you have to do to get $8,000?”

Is that an extra $1,000 a month that you guys work extra?

Like, wait, you start to create this pattern, but you know it's done in two years or whatever timeline you pick. And I think that that lowers the anxiety, because there's actually facts in front of you and numbers that you see. And Chrissy, just remember this, too.

We teach this in the baby steps. If something comes up during your debt snowball journey, and you have to have tires and some plumbing fixed in your home, or whatever it is. And it's more than a thousand.

You just pause everything. And instead of that eight grand going to debt, maybe two grand of it stays with you, and you fix the emergency. And then you go back to it.

You know what I mean? Like, there's some Evan float of this to life. That is very real. But that doesn't have to cause you to lose progress or lose sleep at night, because you have anxiety about the unknown.

That's a really good point. I like what Rachel said there. You guys have a really great income.

“And therefore, if you didn't need to cash flow,”

you actually have a nice income to pull from. Some folks, you know, if you're making 60 grand, it feels even scarier for them because the cushion, the amount of extra margin is far less generally. And so I want to encourage you that you're really in a good position

to work the plan and work it to the fullness, and you can really trust that it's going to work for you. And all of this that Rachel and I have said, we haven't talked about side hustles. We haven't talked about overtime.

None of that. And all of those options are available to you. Do you have kids? Uh, okay. I have kids and two are still in the house,

but I want them gone. They won't go anywhere. Oh, they're grown, grown, grown adults in the house. Okay, got you. But the good news is, you know,

you're not in that phase. No child care. Yeah. And so you've got, how old are you? Uh, 56.

Okay, do you have that time? Do you have money and retirement, Christy? You and your husband? Yes. My husband and I both have 401 kids,

and I have a pension. Okay, good, good, good. So then, yeah, this just becomes an, and I'm stealing this from Dr. John Deloni. How do you want your life to feel?

Right? How do you want it to feel when you come home? How do you want it to feel when you're on vacation? How do you want it to feel when you're laying in bed at night? Everything's quiet.

And having this debt paid off and going quickly about it, I think is really going to give you that feeling that you want. You've worked hard for 56 years. You want to feel the peace that should be associated with the hard work that you've done. Yeah, it's just, it's really just getting in that mindset.

And then, you know, for example, my sister or the other day called me and said, "Who let Trisha do you got shut off because she forgot to pay it?" No. Okay, can you afford to get it back on and she could afford maybe half. And since we had the money, I'm like, all right, I'll give you the money,

but it's also money, I don't think I'll ever see you yet. Yeah. So that's what makes me anxious. If I had taken my checking account down to say $100, I wouldn't have had that money to give her to pay that.

I know it's not my responsibility to take her. Sure, no. But when your sister's like to shut off, I hear you want to help. Yeah, yeah, yeah, yeah, I get that.

“So that's why again, there's always buffering your checking account everyone.”

Here, Jay, love and clear.

There's always going to be buffering, okay?

And then you also have your $1,000. You need an operating expenses knowing that there's a revolving door in your life and your checking account does not need to be at zero. No, no, no, no. Yeah, and even if it needs to be more than 100 bucks, I don't care what it is.

But it's like, hey, here's enough that makes sure it's the catch-all for everything. So we don't over draft. And then again, you guys, your $1,000 is separate. And if something comes up, you pull out of that if it's an emergency. Yes.

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Okay, Rachel. Before we move on, I want to go back to the cushion discussion right quick,

“because I think that is something that does get missed sometimes,”

because it's not like a core part of teaching. It's kind of just an assumption, but some of us are still learning it.

And so I want to hit that for just a second.

So if you're in baby step two, and you're thinking, okay, Jade, how much cushion, because you and Rachel didn't tell me how much. Here are some things I want you to think about

in determining your cushion, because it is going to be a little different for everybody. Yes, depends on how much you make all those things. Here are some things that will help guide you in the right direction.

Number one, in baby step two, this is not an emergency fund. Okay, it's not, the purpose of the cushion is not to be an emergency fund. So you already had the thousand dollar same. So if you were thinking of getting up into that range,

you were wrong. This is just a cushion, okay. Number two, a good way to think about it is, this money is here in case something happens that I didn't expect in my budget.

What's the worst could happen? Your Amazon subscription for $120 comes out, right? Yep. Or Grandma's birthday, right? All of those things are kind of under the $150 range.

So that's a fair place to start in your life. Just look at what's really something that I could honestly forget that I didn't budget for. And you'll find that it's usually pretty low dollar things. Totally, totally.

“The third thing you need to consider is that money then is going to,”

if you don't touch the cushion, it's going to accumulate over time. So you could look up and go, oh gosh, I have $400 here or I have $800 here. That's a lot of money. At some point you do need to drain it back down.

Move it over to savings or move it toward the debt, whatever baby step you're on, and keep it at the established cushion amount. So what I did once I learned I needed a cushion is if I got to the end of the month, and I didn't touch the cushion, I would move it onto the debt, and then the next month it's built in there again.

Okay, so don't let this thing accumulate. And then you're like, great. Now we have money to go on that cruise.

And then the third thing I just want to say,

this is on your honor. Okay, this is back when we're in elementary school. The teachers would say that when you take a test. You're on your honor. Yeah.

We're not trying to police you. We want you to get out of debt, and we want you to do it quickly. So that's why we're saying this, it's not to shake a finger at you, but also don't hold $800 in your account when you're trying to get out of debt. You need that to put towards the debt.

So that was my teaching. That's, do you have anything to add? No, I think the basics again for people as their in it. Because a lot of you are on baby step two getting out of debt, and so you're in the middle of all of this. So these are important things to remember, because if you don't, it derails you.

And if something does come up, you're like, well, crap, we're negative 75. And then that's just more demotivating than anything. So keep keep yourself in check with all of it. So that you can keep throwing good money at the debt to get out as quickly as possible. And if you're beyond baby step two, it's not nearly as big of a decision.

Yeah, it's not a big of a deal. Okay, great. That being said, guys, we answer a lot of questions here on the show, whether it's about cushions, whether it's about investing, whatever it is.

“And the truth is we do wish that we could get to every question that you guys have on the show.”

But we can't. So if you do have a question and you want an answer for your situation, just go over to our website and use the Ask Ramsi tool. Ask Ramsi is our free AI tool. It's built and trained on proven Ramsi principles.

You'll get an answer the exact same way that we'd answer it right here on the show. So ask your question today at RamsiSolutions.com. Or go ahead and click that link in the description if you're listening on podcast or YouTube. Alrighty. We got Chris, who's an Iowa city, Iowa.

Hey, Chris, how can Rachel and I help? Hi. I'm looking for some advice. I was very much raised on the Dave Ramsi principles. My dad was very strong.

He actually taught a class using those books. I was homeschooled. God bless you, Chris. Yeah.

We are both previously divorced.

He's been divorced twice.

“And just shortly like maybe two or three months after we moved in together.”

He got laid off of his job and hasn't had a job since. That was eight years ago. She does some, yeah, he does some small odd jobs. Like, maybe two landscape jobs a year, no removal and the winter, but nothing solid. I clean houses for living like at least four or five houses a week.

We do manage a property in our town. But that's eight hundred dollars a month. It barely covers his child's report because he has children from a previous marriage. Our house is halfway paid off. But it's a house that I had for my previous marriage.

And like I just took over the payments. And I used my child's report that I received to pay off. Like the house payment every month. And like we're just barely scraping by. And that's what it's like.

During the day.

Sit that home on his phone.

He like, excuse is very much a religious thing. Like she says that God bless me to be able to work. He's able to be available to the church ministry. Like he volunteers for like church basketball games. That's up chairs at church.

He's gone a few missions trip.

“And like people donated money towards that.”

But like he doesn't provide hardly any money to our household. Sounds like a 19 year old. How old are you guys? That's another issue. She's 52 and I am 32.

So I feel like I made a very bad choice in the beginning. Are you married? Yes. You are. When did you get married?

You said you you. Eight years ago. So he hasn't worked any of the years. You've been together. That is no.

And like I thought it was a fluke at the beginning. Like he lost his job and he blamed it on. Yeah. He was going through a very messy divorce. Okay.

So Chris, it's been eight years. That's a long time. So you've been putting up with this for eight years. What do you think you should do? I feel like I'm very much in a trauma bond relationship.

Like my parents, my pastor. I've gone to counseling with my pastor and my husband. And I'm like they're all like, you know, if he's not going to change. Like what else can we do? What do they suggest?

No, no, no. What do they suggest when you're in counseling? Either we separate. And I'd be better off or he needs to get a job. So what you're going to have to make a decision.

So Chris, you have to make a decision. You're either going to live with this for the next 30 years. Yeah, because Rachel and I are going to tell you the same thing your counselor's told you. Yeah. So you're either going to live with it for 30 years.

Or you make a different decision. You give him, there's an ultimatum. And I hate to like dangle that. But it's been eight years. Sounds like a 19 year old who's in the home from college for the summer.

But do you already mean? And I add this to what Rachel said because this is the crux of all of this. You went to the counselors, they told you one thing. And you said, ah, I'm not ready to do it. Then you're coming to us saying the same thing.

We're telling you the same thing. If you choose to stay, you can't complain anymore. Because you've chosen it at that point.

So for these eight years, I don't know when the first time was a counselor

that a counselor told you, hey, this is your choice. But you made it. And then you made it the next year. And then you made it the next year. And then you made it the next year.

He's not going to change.

“And I'm very cautious to ever like, you know, throw out like you have to,”

You know, divorce him. And unless you're physically in danger or something, right? Because I mean, we're going to get off this call about four minutes. And this is your lot. Like you, you have to, you know, you have to make these decisions.

But you need to know Chris, like it's, you, you will choose this every single day for the rest of your life. And he's not honoring you. If you want to talk scripture, it says, yeah, you want to take care of his own, who doesn't take care of his own household is worse than an unbeliever. And so he's not doing any level.

It's so, it's so interesting that this is his position. Because I feel like Jade two shows go. We had to untangle another level where it was like that she's forced to stay home. And she has no right. It's like, do you get so funny that like you get both ends of the spectrum with people?

So yeah, and I would, and I would assume Chris, I mean, I think this is probably one small area of a marriage that probably has an existed for a really long time. Right. Yeah. There's, there's many layers. And he's unwilling to change.

Yeah. Yeah. And there was other like anger management and things that he's gone through.

And then we have like savings from like our tax return or like we sold a vehicle, like we bought one and sold it for more than we bought it for.

So we have some savings, but then he hasn't in a safe and says, no, we're not going to use that. And that's the thing. And that'll turn around and ask me for $20. But you're focused on the last thing. Your focus, it's very easy to get distracted on things like the money and the say for, you know,

how many houses you're cleaning per week. But the big issue is this is a marriage, a foundational marriage issue.

“And you have to decide, am I going to continue on the ride or am I not?”

[Music]

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Happy to have you on the show. Hi, thank you so much for having me. How can we help? I am calm because I find myself in a unique situation. My husband has just been promoted to a level at work where he is eligible for a company car.

Okay, however, there is a caveat with that that since he has a spouse, the spouse has to either buy or leave. A new car manufactured by that company every four years in order for him to stay enrolled in the program. I currently have a 14 year old Corolla that has been paid off since they won and the idea of this makes me very nervous. But I'm not sure if it would actually be better financially or not. That's very strange because if your car is paid off and they're saying you can have one for free,

but the spouse has to at least one, then it's not a no longer ideal. Correct, and he doesn't get the car from the company, he just has access to it. So seven for a bit if he's fired or if he leaves, then he gives it back. You have a list. Yes.

So what do you think? I, we both need new cars and I can recognize that we're both driving old cars that are coming to the end of their life cycle, but I don't know that buying or leaving a new car every four years is the answer, even if his car insurance gas everything is completely covered. I'm having a hard time stomaching the thought of buying a new car every four year.

Yeah, I would look at the loss that if you bought a new car this year, just say 2026 and you sell it in 2030, well, I guess you can't really put it like on average of what a car depreciates. And you could see that's the amount of money that's wasted.

“Does that cover gas and if your husband operated his own vehicle, right?”

And I think you come out ahead that way. How much do you guys make a year? About 300,000 combined? Okay, what's your net worth? Oh, good question.

I'd say maybe we don't have any debt if that helps. Okay, yeah. 5,600,000. Okay, good for you guys. Yeah, generously will round up.

Yeah, I don't think it's going to be worth it financially when you look at what the money you would lose on a new car every four years.

I think you'd be far better off with him just having his own vehicle.

100% because I just want to make sure I'm understanding this. He gets a company car, but the only way he gets the company car is if you lease a car every four years or buy every four years. Correct. Okay, and you currently, you're like, my car is paid for in cash. So now you would be, you guys would be going back into debt to get a car.

Because now you're, does that make sense? Yes, I don't know if we would end up going in to debt. We've also talked about just leasing the absolute cheapest option. But leasing is the most expensive way to operate a vehicle. Let's, we can break that down if you, if you need us to, but leasing is no better than financing.

Yeah, but even if you bought the new cart in cash and you guys just cash flowed a new car.

“Again, when you sell it, the depreciation, I think will be more than what it would take if he just kept his car, right?”

Because you could go buy, you know, a $20,000 use car and replace your 14-year-old car and be done for another, you know, eight years. Right? Yeah, and then you have to think about what you want because that place heavily into this. If you just said, if this were off the table and you said, hey, let's buy a new car, what would you choose? That's going to be a completely different choice than saying, okay, I have, I know knowing now that I have to do this every four years.

I need to pay for it up front, like, right? Now you're going to choose a, you know, a forward focus because you can pay for it and cash. And, you know, I'm saying so it just, I feel like the tail is wagging the dog on this. And I think that you guys should be in control of your money. So I would lean towards, I think I would lean towards not because it's causing it's forcing you down a pathway. Okay, I agree. I'm trying so hard to be respectful of his progress and excited and supportive and I know how badly you want to participate.

So that's a huge factor, but I've been saying everything that you both have. Yeah, what about after four years, so can you opt out of, like, let's pretend, okay, so today you did say, we're at the point where I actually do need a car. What if you participated and said, okay, well, we're going to take cash and I'll buy my new car, you'll get your company car. We'll do that for four years. And then after that, you reevaluate. And if you decide it no longer works for you guys, there's that feels like that could be an option.

That's true. Yeah, I agree with that. I think it just kind of goes back to what you said about not actually having a choice. Because if I could pick anything in the world, I know what I would get. And I wouldn't think that'd be on my way to the options. Yes.

Yeah. Well, so I think either way, Kelly, you're, I don't think anything is going to take you guys into bankrupt. Or something. They didn't mean, like, it's a, it's a car. And everything will be done with cash if you end up going either route.

“And so that's the only thing I would say.”

You're not quite at the million dollar net worth or we'd say yes, go buy a new car again.

We're just talked about all the depreciation and as a worth, it is not. I don't think it's going to be the end of the world. I just don't like someone dictating. It's part of being out of debt. It's like the autonomy. I get to decide things.

And it's one thing if he just gets a company car and they give him one, he didn't get like it, but it is what it is. That's fine. But for you, then to turn around and have to go purchase something that you don't really even want in the first place. That would be, that would be tough. So again, I don't think either way is going to be a massive issue.

I just think it's a stupid program to make you, it's, it's a force behavior. You have to choose if it works for you guys or not. But that's a choice. I mean, there's not, there's not a wrong choice. I don't think at this point per person.

I would not lease it, though. No, definitely. If you're going to do it, you're a problem. That's right. That's right. Thank you for the call.

Good question. Let's go to Andrea Andrea Andrea and Manhattan, New York. Tell me how to say it. It doesn't matter. I'm open.

Let's go. What about Andy? Can I call you Andy? Yes, ma'am. All right.

Let's go with that. Perfect. How can we help? Thank you for speaking my call. My question is, I have to listen to your show for a while.

“Is my husband and I have sufficient life insurance?”

Oh, good question. How much do you guys make a year? 400,000. Okay. How much life insurance do you guys have?

He has total with his work life insurance.

And on the private policy he has a million.

And the same for me. I also have a million. Okay. Two million. Yeah.

We say four to five times your annual income. Is that right? Yeah. For state homes. For state homes.

That's right. For working. Yeah. 10 to 12. 10 to 12 if you're bringing it home.

So we need more. Yeah, I would double it then. Cost trade. Yeah. It would be like that.

Did we make it clear for you? Do we need to say it again? Just in case. Can you say it again? Yes.

Yes. We have a million. That's not the answer. No, because that would mean that you make 400,000.

Right?

“Ten times that would be a million bucks.”

So he makes 400,000. I don't know. I do not see. I work. He works.

So it's 400.

So I would split that out.

And I would just multiply both of your incomes by 10. If you're both working, it's 10 to 12 times your income. If you are a state home parent, it's four to five. It's kind of half of that as the way we look at it. But yeah, 10 to 12 times for you guys.

So yeah, it would probably need to be double. So two million for you. Two million for him. How old are you guys? 49?

Okay. Are you all in pretty good health? Yeah. Okay. I would do it as soon as possible because term life.

It's pretty inexpensive.

“And you guys, I mean, with at a 50 year getting up there, we're starts to kind of, you know,”

you will pay a little bit more.

But I would do it before I'm 54, 55.

Yes. It's possible. No. And calls the under insurance. They're going to help, you know, you shop out the best ones for you.

And just look for a 15 or 20 year level term. And also just know Andy that the point of this is to get to the point of self-insuring that you don't need to continue. So ideally, you would only have to take out one term of this. And if you continue doing the baby steps the way we teach, you could drop it in 15 or 20 years. Because you've built your nest eggs so that you don't need to rely on it anymore.

Which is really the whole purpose of building well through the baby steps is you have that security that man. We built so much wealth that we're good. Come what may. Come what may. All right, guys.

Remember that sander insurance. That's where you want to go. They're going to help you shop all the different insurances that are out there. That's what I use. That's what Rachel uses.

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All right. Welcome back to the Ramsey Show here in the Fairwins Credit Union. Studio taking your calls about life and money. You've got Omar in San Antonio, Texas on the line. Hey Omar.

Hello. What's up? Well, I haven't listened to you guys for close to a year now. Just little clips here and there on Facebook and YouTube.

And lately, I finally got to do some paying job.

And I started looking more and more into the show watching longer videos and stuff like that. I love that. Yeah. I guess now I'm ready for a little more guidance on what to do with my position. I'm in right now.

I guess what's going on. So I'm 22. I finally got to do some job. Like I said, I'm taking home about 85,000 a year. My fiance.

She's bringing home about 20,000, 24,000 a year. And we got about 85,000 more lessons that right now. How much? About 85,000. 85.

What is the 85,000 consist of? 46,000 in a truck. Oh. 15,000. Yeah.

I rolled over negative equity. And I was. Yeah. Okay. Terrible.

Yeah. 15,000 on a boat that I do make money off of. As I'm a charter captain on the sides. Okay. 18,000 on my RV.

Lots of vehicles here, sir. A lot of toys. Omar. We know what kind of guy you are. I gave up rent to have the RV thinking I'm paying a lot more rent.

Where I can be paying for something I'll eventually own. You know, that's a common thing that I hear.

But you're not alone in that thinking, but we'll talk about why that's not a great choice later on.

Tell us, is there anything else that you're leaving out? I think there's a couple of things missing here. 40, say. Oh, no. You're getting your photos.

Yeah. Any credit cards? No, I paid those off last month. And those student loans are personal loans. No.

Okay. Good. Well, the good news. Well, yeah. Yeah.

“Our rule of thumb is you should have nothing.”

Or you shouldn't have everything combined with motors and wheels. That includes about all of it. That is more than half of your angle income. And you are at your angle income. Um, Omar.

So half of this has to go to make sense financially. Okay.

So I don't know what that looks like for you.

Um, I'm curious. What would the truck bring if you were to sell it? I know there's negative equity in it, which sucks, but well, what would it bring? 25,000. Oh, okay.

How about the boat? The boat. I might be able to break even on it. Okay. I have 15,000 in cash.

Okay. Great. Really what I know of? And the RV. And the RV.

You're living in. Yes. If you were to sell it, do you know how much it would be worth? I do not on a top of my head. What I'd picture won't be.

“It's somewhere around that number as well.”

18,000. You bought it used. I'm assuming. Yes. From a dealer.

From a dealer. And how long have you been in it? Um, eight months. Okay. So I'm glad that you haven't been in it too too long for it.

So really, um, depreciate two to heavily on you. If I were in your shoes, I would be looking at the boat because it's break even. And I'd be looking to get out of the RV. And here's why you might be thinking, well, Jay, I live in the RV. But the RV is the same as one of these vehicles.

It's going down and value every moment that you hold on to it. And so you're flushing money in a greater way down the toilet. A lot of people feel like when they're renting their throwing money down the toilet. But with the RV, you're throwing even more because you're. You're you're footing the bill for the depreciation on it.

So I actually would get out of that. And I would go back to renting. Um, and then. And then if you soldier to just let's pretend. Okay.

So what Jay said, say the boat's gone and the RV's gone. Just for fun. Okay. In the scenario. Say you sell the truck for 25,000.

And then you have 21,000 in the hole. Okay. And let's say you go down and you get a loan from the credit union for 21,000. You take your 15,000 that you have saved. And let's say you go buy a $7,000 car.

I don't know. Yeah. Um, yeah. And you go and take the eights throw it at the 21. Then you only have $13,000 of this loan left to pay off.

That feels like that. That feels like a totally different world. Or more than 85,000 making 85,000. But it's going to require you living on less than you make and getting rid of stuff that goes down in value.

Well, the people long term invest in things that make them money. And when they have the cash to buy something and they can afford it, they go and buy it. And it doesn't hurt. It doesn't sting. It's like, oh, yeah.

I got it. It's what it is. Yeah. It's fine. Um, because I want you to get an RV in a boat and truck and all the things eventually.

You just can't afford it. You're broke. Yeah. So you got, so to make some extreme. Yeah.

So to make some extreme changes, it's going to be extreme. You're going to be moving and selling a boat that you're making some sight and come on.

Um, which will hurt a little bit at first.

But once those payments are freed up, I bet that's the amount of money you make on the boat. I want to tell us, let's hear some real numbers. When you have your truck payment, your boat payment. And we want to include RV because that's rent. But what are those two payments together?

Trucking and boat. Ten ninety for the truck and two fifty for the boat. Okay. So I mean, worth 1,300 almost 1,400 dollars. I mean a month.

Do you make that in boat rent? Whatever you do with the boat? Yes. Okay. So you just will do it without the risk.

Yep. Yep. So to it that the 15,000 I have saved. I was considering paying the boat. And then I have no more boat payment.

But I'd be making, you know, potentially more profits on the boat. So pay off the boat with the 15,000. How would, and then get out of the RV. And then that still leaves the truck.

“So what would, how would you solve for transportation then?”

I mean, you still keep your still $70,000. Yeah. You'd still be driving this truck that's going underwater more and more every day. And you'd still be paying 10, 90 a month for it. Let's say this, John.

If you didn't know anything on the boat and you had no emergency,

I have a boat worth 15,000.

We'd say, sell it. Yeah. To help get out of debt. Absolutely.

“Like the boats, not necessarily the problem in that scenario.”

But it's like sell everything. Sell everything. What does it sell so much stuff? The kids think they're fast, right? You're going crazy at this.

I saw that clip. Yeah. Yeah. So the idea of like, you just get rid of stuff. Like, start getting rid of stuff.

This stuff is supposed to be bringing you fun and peace and joy. And it's not Omar.

I mean, you're calling us.

You're as much as much debt as you make every single year. Like, that's a lot. You want to know what this is like. I just give me a minute to paint this as a picture. You have this house that you've built, right?

With a truck, a boat and an RV. And the house catches fire. Which is this. This is a hot mess. This is a flame.

“And you're going back into the house on fire.”

Trying to save stuff. And we're saying you want to know what? Go ahead and let it burn and then take the insurance money and buy something new. Build something completely brand new. And you're wanting to go back in and go into the fire.

Where all the stuff's going to be damaged and you're risking at keeping the risk. It's trying to salvage the stuff. And we're like, dude, burn it up and start over. Does that make sense? Yes, perfect sense.

You know what I'm saying? Hopefully that helped you out a little bit. Because we want you to start something fresh. That's intentional, that you can build a foundation of wealth and peace on. And you're trying to build on the old rickety foundation that didn't make sense.

That you admit, hey, I made a lot of mistakes here. That's why I'm calling in. Let's do it right. Let's do a fresh. [Music]

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That's BetterHealthHELP.com/Ramsie. [Music] Back to the Ramsey show where we have John and Milwaukee,

“Wisconsin, hey, John, what's going on in your world?”

You're after noon. Hi, 62 years old, and until 3 weeks ago, I was making 93,000 a year. I'm not finishing that alone in your business. Oh, no, I'm wondering.

Oh, yeah, I'm a problem. I'm wondering if I have a solid plan to retire in this point, or if I need to go back to work. Okay, how much do you have in retirement? I have about 700,000 tools.

But 500,000 of that, I want to do raw conversion, starting next year, and with my right-focus, I'm sure it's part-time. With that, I think we could stay in the 12th-10 tax back and do the conversion for the next five years.

Okay, and pay the taxes, and you would have enough money. I do have enough cash to pay the taxes. Okay, how much money do you have, cash available? Well, 250. 200, and is that just sitting in like a high-yield savings

can or a brokerage account or where is that? How are your savings? Okay, great. So you guys have any other streams of income. Obviously, there'll be some social security

does anybody have pensions or any other money coming in that we should know about. No. And how old are you guys, John? I'm 62 years old, I'm 56.

Okay, you said she works fine.

She brings in 30,000 years.

Okay. So it might be a little tight living on the 30,000 for those years, but. Can you, can you? Zero bets, yeah.

Okay, and how's this paid off? Yes, it is. Okay.

“How many years would you plan on living on just hers?”

About four years a year for man out? This, then I would start collecting social security. And you guys have run that budget out. An every dollar budget to see. Okay.

Here it is, because you were make, I mean, making 93,000 a year is a big draw. Yeah, it would definitely be a big change. Like we bring out and look doable. It's not.

Yeah. Is this your strategy or have you talked with like, a smart, best or pro or a professional?

I have not talked to a professional.

I'll tell you. I'm calling you. Okay. I would speak with a smart vester pro because there's a lot of ins and outs of this, especially when you factor in the Roth conversion.

I think that's the part that there's a lot of strategy around that that they'd want to talk through in detail. And I would just want to make sure, because I'm just thinking, you know, you're 62. Praying you have 30 years.

Maybe 40 get to the 102 mark. But I'm like, you know, you, you pray for that. And the amount of growth that's going to happen in that account will probably mathematically be more than a taxisual pay here in the next five years.

So there's enough time that if you do make the conversion, it probably will mathematically be in your favor. But there's also, you know, the reality of life. And to say, okay, is that going to be worth it? You know, if you know, his, you know,

a family history, your own health, all of that. And so I would factor in a lot of those other scenarios too, as you're thinking through this. But yeah, to do something like this and to take your life style this drastically down for five years in order to do it,

“I think you still will become a, come out ahead.”

But I, I would want you to sit down with an investment professional financial planner to, to run the numbers and look at some estimates of what the returns would look like to make sure that this is the smartest thing. Okay, that's all I can do.

Yeah, so if you go to ramsysolutions.com, check out our smart vester pros. There should be one there in the Milwaukee area. One or two and just, yep, I would run it by because I would want to,

I just don't want you paying taxes on the conversions. When you could just be pulling out the money, paying taxes on today, living off of, you know what I mean? Because I think there's enough in there.

I don't know. I just wouldn't run out a couple of scenarios with them. Unless for some reason, it was like strictly a legacy play for those inheriting in the money. Yes.

Because you wouldn't piece there. That's right. That's right. Yeah. So if you were wanting to keep a lot of this and pass it down to your kids,

that's a good point, Jade. Then yes. Then the conversion would be great. But if you're playing it on, using this money while you're alive,

most of it and living off of it, yeah, it might not be. Yeah. I'll just double check. Yeah.

You're a vester for sure. That's a really good question. And I think we do get that question a lot. Which is why going back to,

“and I think it's important to highlight this,”

going back to what we teach our platform for investing, like our strategy for investing is so important to know, because it will avoid a lot of this, which is when you have the opportunity, and you've met the criteria to start investing,

which for the baby steps, it means you're out of baby step one. You've saved $1,000. You're out of baby step two. You've paid off your debt using the debt snowball.

And you're out of baby step three, meaning you've saved three to six months of expenses. Now at baby step four, you can invest 15% of your income, but how do I do it to avoid what we're talking about here?

You want to start first with your employee,

sponsored retirement fund. If you have a 401k through your employer, and there's a match, meaning $3. Start there.

But honestly, guys, if there's a Roth option within your 401k, that is a fabulous place to start, and actually max that out. Now if there's not a Roth option,

and there's just a match, invest up to the match, but then guys immediately go to a Roth IRA. You want to max that out. I think this year is 75,

and they have the 7500, and then there's a catch-up contribution. I think up to eight, max out that Roth, because those are dollars that you've already paid the taxes on,

and then it's going to continue to grow tax-free, and when you get to the point of retirement, if you have most of your money and Roth funds, this is money that's going to grow tax-free, and you don't have to go ahead, you don't have this problem.

Yeah, I'm having to try to convert it later in life, where you're going to be paying taxes on that much, on $500,000 is what he's going to pay taxes on, and spreading it out over five years. And there's no required minimum distribution,

meaning if you don't want to touch it, you don't have to know. Which is so great. If you do pass it to the next generation, I think it is up to 10 years,

But again, what is sad problem for your children to have? Get the money out.

“You have to use it to spend money that you didn't make.”

Yeah, that's right. Very good question though. Let's go to Lauren in Omaha, Nebraska. Hey Lauren, how are you doing today? Oh my God, how are you guys?

This is so cool. I'm doing great. It's great to talk to you. My question is, and it seems kind of straightforward,

but there's a lot of context that I would like to be able to provide all what you guys asked though.

Ultimately, what I want to know is,

how do I prioritize saving for my son? I only have one child. He's had him with the previous relationship. Not my current husband. But I was a single mom for a really long time.

And just this year, I got to the point. I'm sorry, I might start crying. Sorry. I got, I just this year got to the point where

“I'm actually making it like a decent income.”

And my husband and I, who I've only been married to for about four years now, we're doing really well. And Lauren, that's awesome. From where you've come from as a single mom? Yes.

It was hard. Yeah. And, you know, I sacrificed. I worked. I worked the whole time.

I never took benefits or welfare.

Anything like that. And, you know, has dad and I, so my son's dad and I started saving for him when he was a baby, but I never really was able to contribute to it. And I just feel so far behind in my own life.

That I feel like I'll never be able to give anything to him. Oh, Lauren, no. Crap, you've already, oh, no one. You've already given him so much. You've already given him so much as a, of your example.

So, from a numbers perspective, let me ask you this, when his dad was saving for him. What was he, what was he saving in or for? So, we both contribute to the same account. It's just an informal credit union account.

Okay. It's, you know, there's like no return on it. And I've tried to get him to, you know, like we're going to meet this month and discuss our options for where to put it.

Okay. You know, we're like civil with each other. So, it's. Yeah. That's all good.

But there's only about 6,000. And it's mostly in a CD. There's like a little bit that's not. I'm mostly in a CD. How old is your son Lauren?

He's 14. 14. Okay.

So, here's what I would do.

If there was 6,000 to his name, I would be thinking through the first big purchase is probably going to be a car at 16. Yeah. What does that look like?

Does he contribute some to use some of this money that your husband's saved for that? Next is college. You guys could open up a 529 and start funding. Some college funds.

Some money for him for that. Anything beyond that.

“If you want to do any level of investing or anything,”

you can do an up my would be in his name. He'd get it at 18. I probably wouldn't do that at this point. But those I think those are the two big things Lauren. And hey, you've done a great job.

You're not as behind. You're not. You're not behind. We're doing great. As your business grows,

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Hi, I'm trying to figure out if I need a dumb decision. And if I need to sell my home, right now I'm trying to do a house hacking. But when I count for all the income, it'd be mortgage payments.

And yeah, I'm trying to see what you guys think.

Okay, so tell us, explain it to us in real numbers what you have going on and what's happening. Absolutely. So my mortgage payment is $5,000 a month. I make $5,800 bonuses can be up to $3,000 usually. My wife brings in $2,200.

And then the rental income is $2,250. So that puts us at about 13,000 a month after taxes.

“Okay, and the house hacking part, you're in the house and you have, is it a shared space or how does it work?”

It took family home. We live in one unit and then we went the other unit out. Okay, and you said you pay, you told us the mortgage 5,000 a month, but how much is the whole, like, what'd you pay for the property? We bought it for $6,608.

It's supposed to have appreciate about 7% of our work to sell it today. Would you sell it today or do you 7/15? Which would be, I $20,000 a lot.

First is what I put down when I bought it last year.

Yeah. Do you, do you, do you guys like that? Do you like the situation you're in? Or is it all miserable? You don't like the house?

You don't like living next to the people that are renting from you? Like, how is it filled day to day? The tenants are great. Our neighbors are fantastic. The house is 113 years old here today.

We've put like $14,000 in maintenance and repairs. Think God, you know, with my donations, we've been able to cover it without that. We do have 48,000 dollars in debt, but that's student loans and car payments. And so I don't know, because if I account for the rental income, right, the cost of the house is 38% of all of that.

But if I were to assign the environmental income and subtract it from the 5,000 mortgage payment, then what's left over would be essentially my housing cost would be about a fourth of my income.

“So do I account rent as my full revenue or do I just not do that?”

Yeah. I would count rent as income as part of the equation. Yes. And I just want to get clarity on my end on something. You said the mortgage is 5,000 a month.

Is that the total mortgage? Is that your portion of the mortgage? That's the total. Okay. And so it's not terrible.

It's above the 25%, but it's not. Yeah. I mean, it's no. I don't think you necessarily made a terrible decision. The idea of owning a piece of property, though, that is dependent upon other people paying rent.

That's the problem with you at risk, for sure. Nothing's on fire right now. But if you guys want out of that and say, yeah, we want to more stable. We're good renting for a few years, so we get another great down payment. And we'll just go buy a single family home and do our own thing.

You could totally do that. But yeah, I don't think anything's on fire right now. But you are very dependent on that other unit being filled. And the risky thing is, is if that family moves out, you're going to be pretty urgent to put some people in.

“And may not have the bandwidth in the margin to find someone that's great too, right?”

That's part of the debt complex is like, there's tons of urgency to, to keep this ball moving. Because once it stops, you go under. Right. And I, again, let me just clarify a number, just to make sure I'm right on this. Because I don't think the numbers are the issue. I think the, the dependency on the renters are the issue, but just to clarify.

The mortgage is $5,000. They're paying 2,215 of it, right? Correct. And you're on the hook for 2,785 of it. Correct.

Okay. And then plus maintenance. But bringing in your 13,000, you are below 25%. Because 25% of your 13,000 is around 32. Right.

But the 13,000 accounts for the rent. Right. But I'm just saying, if you're, if you're figuring the way we do, which is, hey, you're mortgage. You're mortgage. If you're in your case, you're a portion of your mortgage shouldn't be any more than 25%

of your take home pay. You've got your wife's 2200. You've got your 5800. And you've got money coming in from another source for 2215. Right.

You've got that money coming in. And now that's your income. And then your mortgage, if you're at 25%. Could honestly be up to 3,200. And yours probably might be that way, like you said with repairs and things like that.

The ratio feels correct pointing back to Rachel. I think that she is exactly right.

The problem is not the ratio.

The problem is you're dependent on them paying that. Because if some, for some reason, they don't pay the 2215. You lose the tenants. It takes you a long time to find new ones. Now you do encroach on that ratio.

And now it does feel like an issue. So I guess my last question would be, is it okay to pause the debt payment?

I would cover their renting case.

They were to leave me for one or two months. And then resumed that payment afterwards. I probably wouldn't.

“I think I would probably stick to paying up debt in for some reason.”

When does their lease? When are they up to renew? They just renewed. So it would be until October 1, 2020. Okay.

Yeah. I would just start paying off debt. And then for some reason, if something happens, pause the debt snowball and build up. Because again, even if you had to pay the full a little over $5,000, you could still make that work. It's going to be a lie.

It'd be really tight. But it could be possible, right? So I would just keep throwing money at the 48,000 a consumer debt. And if something happens, then pause the debt snowball, build up some money until you have time to to fill the unit again. And then yeah, and long-term to John, you and your wife decide, like, what's worth the, in flexibility, if you will, of having people next to you and having to depend on someone else for you to pay the mortgage on this place too.

So from a long-term perspective, I would not recommend someone do this. But for you, nothing is on fire. And again, it's not, it's not an crazy percentage, even if you had to pay both units. It's not. That's a really good question, though. And it, it's one of those things that I feel like we get all the time. People enter into real estate and they have it.

The intent is to build wealth and, by way of building wealth, maybe they're creating a lifestyle of peace or whatever it is. But it ends up being more of an anxiety or more of a stressor to them.

“And I think that when that happens, you do have to re-evaluate.”

Yeah, the whole house hacking idea. It's funny. I'm like, on paper, the concept, sure, it can make sense.

You could hear him be like, okay, yeah, someone else's paying basically your mortgage while you're building it.

But then I'm like, yeah, but then you got another, you got the crazy Smiths next door that are, that are, that you're dependent upon, right? They are, they are one of the ones that is holding your financial peace, basically. And they go away, then yeah, then you're stuck with it. And so that's one of the problems about the get rid. If it sounds too good to be true, it probably is because you usually don't factor in real life risk.

Right. You don't factor in people in the situation. Just people, right? The relational side of everything, like none of that fits in an excel sheet. So you really do have to play out your life to say, okay, there's other factors here.

And yeah, with the, it sounds too good to be true, it probably is, is really. It's more real than ever, I feel like, and if you are going to do something like this, because I do like create. Like when people are creative about finding ways to make money and things like that. And so if you are going to do it, you do have to look at the total mortgage and say that, that total mortgage does it fit within the parameter. And if it does, and it's just gravy for somebody to be paying you.

Right. So it's like, hey, yeah, do it until you can't stand the people anymore. Yeah, when we had a guy call and he did that, he had a home, he owns. And it was, it was, it was right at that 25% it was great. And he still had student loans pay off. So he's renting out. He's having roommates, basically.

It's sort of the rooms, yes. And so he's making rental income that he not only could he pay the mortgage, but it's all going towards the debt. So like things like that, you're exactly right. You can still get creative with this, but, but when you're dependent upon somebody, especially in a housing situation, to pay their portion for it to work for you, that's just a level of risk. That's very stressful. Yep. Yeah, yeah.

And if you're interested in real estate, always check out our real estate pros.

They can help you out. You can find those at Ramsey Solutions dot com slash real estate. But again, we're all about paying cash and we're all about handling that 25% rule. [ Music ] A lot of banks are happy to hold your money, but FairWins credit union helps you make progress.

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That's FairWins.org/Ramsie. Ensured by the NCUA. Alright, you guys are question of the day's brought to you by Y-Refi. If you keep putting off dealing with private student loans, now's the time. Y-Refi helps borrowers, explore fixed rate, financing options, and affordable payment plans.

Go to Y-Refi.com/Ramsie. That's the letter Y-R-E-F-Y.com/Ramsie. And it may not be available in all states. Today's question comes from Victoria in Hawaii. We have three children and they are all in music programs.

Last year, we spent $5,800 on lessons alone. We are currently paying off debt and my husband wants to stop all music lessons in order to become debt free.

This is something that I've always wanted to provide for my kids,

so it would be hard for me to see them stop. Should we give up this expense to get out of debt? Or should I continue pushing for music lessons? Ooh. Oh man, okay, so it's close to like 500 bucks a month.

I mean, here's the bottom line with all of us is it's math, right? So the faster you or the deeper you sacrifice and you cut everything that is not a need. The faster you are going to get out of debt, so my question, I guess, would be more of, okay, when you guys look at this timeline, how much debt do you have? Do you have, you know, $50,000, you have $500,000, like how much do you make?

And how much do you make? And how much do you make all of it? Yes, so that plays into a lot of this. Because if 500 bucks a month is going to slow your debt snowball down three months. Who cares?

I would be like, just take the music, like it's three months. You know, but the extra job you're working, that's three more months.

“So you have to account for all these other things that you're stretching out your debt pay off.”

But if it's going to be longer, I don't know, you would have to pick the timeline and decide.

So it's not a need, so if you cut the music lessons, you can always pick them back up six to eight months.

You know what I mean? For now, once you're debt free, you can always just pick it back up and depending on the edge of your kids, like, I don't know, my kids do piano, but they like, one of them stopped for probably five months. And she's getting, I don't know. It's just not that hard court for us, but it's good for them to do.

It's that kind of feeling, so I don't think it's a need. And 500 bucks, again, in some people's world, that's a lot. It could be everything, yeah. It's a lot. So I understand it's an important value for you guys, but you also are broke.

So you have to kind of realize what can we really afford with the lifestyle that we've chosen to live. That's gotten us into debt in the first place. Yeah, I think it's absolutely, I couldn't have said it better myself. And I do think that that does bring up a values question. And I want to throw this in here because I want to know your answer Rachel.

So a while back, I did a post on a couple of things that I would not give up and baby step two. That's good.

Yeah, we're always talking about cut everything, stop everything.

And one of the things I think we can both agree on would be generosity. Yeah, in the form of especially like that if you're a Christ follower of that base, like, hey, I do 10% to my local church or even 10% to a charity. If you're not, that's fine cool. But having generosity, I never let go of that. Other thing I put on there is if you need help and you need counseling, like therapy.

Yeah, yeah, yeah. But if you're counseling, like there's certain things that I think are out of a primal need that totally. You don't want to let go and they may feel like luxuries, but based on your values or based on what is truly in need at a moment. You got to do it.

“One of the things I said is anything that, like, a date night and I'm not saying you have to go out every, you know,”

once a week or, but like having a special night that if you have to pay for a sitter, that you're valuing your marriage and valuing your bonds. And I was wondering if you have anything that you would add to that. Oh, that's a good one. Um, that I would not cut out. I put you on the spot.

No, no, no, no. I was going to say, I'm in my health era. Uh, um, so I wouldn't do, I mean, if I had like a personal trainer, something that a little bit above me on, I probably would cut that for a season. But you got to do your basic appointment.

But I, if I did, if I needed a gym membership, I would keep that. Yes. Like things like that to say, I'm going to keep these classes going. Uh, more from my own sanity. Yeah, because you need it for, yeah, just as much of your mental health as your physical health.

So I would say that. I love the date night idea, because I'm like, even just take me to Chili's chili.

I need all I need, um, I would say that.

“And then as we're thinking about the kids, and, um, like we do wreck sports.”

So they're not expensive. It's not, I mean, you pay like a, I want to show registration. Yeah. And that's about it. And if it was time to sign up for that for like fall soccer, um, I would probably go through with that.

And I would say the kids can still play. Yeah. At the YMCA. So we can find another way to make that money. Yes.

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“Welcome back to the Ramsey Show here in the Fair Wins Credit Union Studio.”

I'm Jade. This is Rachel.

And we have Emily from Auburn, Alabama, on the line.

Hey, Emily. What's up in your world? Hi. Hi, guys. How are you?

Excellent. Doing great. How are you? Fantastic. Great.

I will jump right into it. I am 29 years old. And about two years ago, I went through a divorce. And at the time, my ex was active, daddy, military. And I was a police officer.

So, truly just both very challenging careers. And we, just a different part, long story. But two years later, or we'll go through that. I realized that going from a two-ing time we did not have any kids to wanting come out, like, "Wow, cops don't make any money."

“So after, you know, keeping my job as a cop for, I was a couple of six years.”

And I had to work so many part times and so much over time. I felt like every single month I was just breaking eggs in. So my degree is actually in sales and business marketing. So I went back into sales, I got a remote job. It was a very hard decision because again, I loved my job.

It was so fulfilling. I felt like that was my calling. Like I felt like God, that was what God made me to do. But I need to make a change because I was wearing myself out. I was stretched too thin and it was not the sample.

So I got a job. Working from home sales. And I made double the amount of money. I get to sit at home. I kind of dream job that I bet everybody would like.

But now, on the other side of things, I was able to pay off. I was able to buy a house for the only death that I have is my house. So where's the problem? So I just am so unsafe.

Like I wake up every day and I'm like, "Ah, this is like, third work.

I've found it's great, but this is like not my power." Are you dreading every day? Yes, exactly. Exactly. So what were you making as a police officer?

So my base was about 55. And then I was in a very specialized unit. So we were on call all the time. I worked so much overtime and then on top of that, I would work like part times.

I was like a higher security essentially. Okay, so you would make what doing all of that? So my last year of the cop, my W2 is like 82. Okay, and how many hours did that, because you said you worked a lot over time. So how many hours a week?

If I had to guess, so just normal hours with 40 hours and then on top of that, I was probably working another 20 to 25 hours. Okay, so that's 82. Yeah. Okay.

And then what are you making now at this role? I'm making 150. Okay. So are you essentially saying, because you'd left the cop position because it was stressful, it was just overwhelming.

And you didn't make a lot. It's made yourself. Yeah. So you're saying, you know what? I'd actually, I'd go back to the overwhelming to be doing what I love

instead of having maybe a cushy schedule. But I just don't, I just dread it. Is that what you're saying? Yeah, exactly. Okay.

My questions. I just like I can't stab them going back to making so little amount of money and barely like having any personal time. So it's just like such a hard. Well, would you have to be guilty?

“Do you have to go back into exactly what you were doing?”

Or could it look a little different? So my house now, my only debt is I, my mortgage would be like, my mortgage is about $2200 a month now. And that would, I feel like going back to being a cop on that salary would feel suffocating.

Do you have, how much more, how much more do you have on the mortgage? Like, how close are you to? So I literally just bought it about three months ago for 300. So I thought, like, two, nine days. Okay, thank you.

Forget me, Emily. I don't know how well, I don't know how all this works. I wonder if the overtime you were doing that you made an extra 30 or something. I'm wondering, could you do that and not be a full-time police officer?

Like, every other week, still plug back in and make your money.

Make your money. Make your money. Yes.

“Just to, um, that is definitely a proper reserve officer.”

Okay. Definitely an option. And I've asked my former employees and they're like, as soon as one becomes available, because the city only allows, like, a certain amount in their budget every single year and they're all filled.

So I've been waiting for like a month for them to have it. And opening, because I do think that would be perfect. Yep. But I just feel like, yeah, I'm like, oh, my gosh. Yeah, and that's not a way.

Yeah, it's no way to live. No, there's a point that the diminishing returns of the extra money you make. Yeah, you know what I mean? It's not even worth it to a point of like, I'm miserable every Monday as I'm doing what I'm doing. So you don't want to live your life like that long term by any stretch.

Um, you know, if you hold on the line of Emily, we're going to get you King Coleman's book. Find the work you're wired to do. There's a great assessment in the back. And I'm just wondering from a creative perspective,

what about being a police officer and all those things that you enjoyed. Pulling out that part of you and finding a position, a job that maybe you're not even thinking about, but you're able to use that skill set in your mind in that way. Um, but it may not have to look like you're working 60 hours a week, right? And making half of what you were making when you're working 40, right?

It needs to make sense. Making makes sense, right? Um, so we'll give you that for sure after this call because I'm hoping that maybe can steer you there's an assessment in the back to generate some ideas. Yeah, I like that idea.

Um, I'm just thinking through other things that are maybe just way more abstract of your mortgage. So the main problem is the mortgage payment.

“That's what's keeping you because you go if I go back down to 55.”

Now, my mortgage is too big a chunk of my, you know, my life here. So if you did a play, if you did a play while you're waiting for that security role or whatever that was to open up. If you'd a play where you're like, hey, I'm going to just save up and chunk away as much money as I can. And then maybe I can put like a lump sum on this mortgage and kind of recast it to where that payment makes more sense. And then I can go back to the cop role and not have to do overtime and not have to do overtime.

That's something that might work to again, there's a level of sacrifice to that obviously, but if we're looking at this long term, maybe that is worth it to you. So just another thing to throw the hat there, but I agree with Rachel. Did you come from a family Emily of public service?

No, I'm the first and only one.

Okay. What did you love about it? What was so great? It was just so fun and you just get to like put bad people in jail. And then like this is the adrenaline.

Just so fun. Yes, like Jessica. Yeah. I don't know. I'm trying to give like personality.

Girl. Some eights are some of my best friends. Oh, my girlfriends are a commanding. I just wonder if, yeah, like, what kind of role can you have in that, right? That you find just a, I don't know.

Like, that scratches all those edges to find a fulfilling career. I don't know. I'm like, and you're still, you know, I say so young. I don't mean that, you know, demeaning by any means, but you have a lot of time on your side. Yeah, it's a kind of figure out this path.

And you've set yourself up so well financially in order to do that, which is amazing.

I mean, you're debt free. You've done it all the right way. I mean, it's, it's amazing. So you can have the options, which is wonderful.

“That's why you do all the hard work on the front end.”

So I'm proud of you. Um, yeah, and I hope you kind of, I hope you find that next step. Sorry, weren't. Or should we have the magic career to pull out of our hats? Well, I think the resources really going to help her because it'll help you identify those skills that Rachel was talking about.

And it will suggest other career fields that you can use that same juice that gets you going. Just another career fields that maybe you hadn't thought about. [ Music ] Hey, guys, George Camel here. You ever feel like you make good money and still have nothing to show for it?

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[ Music ]

Alrighty, Ashley is on the line who's in Omaha, Nebraska.

Hey, Ashley, how can Rachel and I help today? [ Music ] We are under our care family and so we move around every two to three years. But we've been saving. Okay, well, I've been saving pretty much everything because I got a job.

And then I convinced my husband to stay with me. And so we keep building up our house down payment. And we know they've only thought about waiting to deliver some work for five years.

“But is there ever a point where it's like, yes, such a high-down payment that you can ignore that rule?”

[ Laughter ] Tell me why you guys move every two to three years, did you say? Oh, we're in the military. Military, okay, gotcha. How long will you guys, well, is it your husband or you?

Myself. Myself. Yourself. Myself.

You're spouse, you're spouse, okay.

No, you're fine, sorry. How long will he be in service for, do you know? Well, lately we were going to get out in my three to four years, but now the talk is to pay in the full 20, which is why. That's when I was like, oh, well, shoot.

Yeah, how much time do I wait to buy? For sure, how much longer is that for you guys? How many more years? 15 or 15? 15, okay.

Oh, I know, actually. I mean, depending on where we live, like we have like a 50% down payment. So it makes us antsy sometimes. Oh, you could just, I don't know.

You know what I'm saying? Yeah, no, for sure. Well, the thing is, you don't have to, you know, number one, you could just leave it alone. And just, you know, I would hate to keep it in just a high yield savings for 15 years.

Yeah, no, no, no. Part of me would open up a brokerage account, put that in, and you just kind of have it earmarked as down payment for when you actually do settle. Because I, I probably would not advise you, I should have buy a house if you're only going to be there for two years.

I would just, the exhaustion of selling it and turning it around. I mean, because yeah, you're going to use probably 15% to commission. I don't think it would be, I don't think it's worth it. But I also don't want you to keep saving, like put it in a brokerage or something. And then go enjoy life, like, do you know what I'm saying?

Like, there's, um, you're in a green position.

“So don't feel like you have to keep putting money away for something”

that's like, you're happening for 15 years. You've done the work. Walk away from the accounts. And then 15 years, the growth on that, who knows you'd have something in cash, probably.

What would you be in sane? That's true. I think, yeah, that's probably what I probably said. We keep it in a CD because we keep thinking, like, Oh, this next move will be there long term and then we move again.

And so, but yeah, I've heard of a brokerage account. Then I'm going to have to. Yeah, you can do it. Fidelity or van guard. I mean, you can honestly just open up your own on on a website.

I mean, they make it pretty simple these days. And I would just get an index fund. You know, you don't have 500, you know, stocks within there, which is awesome. And it really just follows the S&P.

And you kind of just park it in there and don't look at it. Because, well, you guys are a military, you know. Yeah, that's true. Four and a fair start. We start happening in the market dips.

And you're going to be mad piss.

“You're like, "Jay, Rachel just told me to put in there."”

So this is a long term play. I would look at it as a long term investment for the house. And then go rent somewhere great. And I would even say, which I'm a spender, actually. Even if you guys got to a point that you're like, "Oh, gosh,

we need, like, 10 grand for something something something." I don't know. You use some of it. Like, enjoy your life. Yeah, 18 years is a long term. That's a long time.

So I would just park it somewhere that's going to have way more growth long term. And your market is the house funds. And I would rent though. I would not go through the process of buying a home. I would in turning around the sell two years later.

That's a quick turnaround. I'm sorry, but thanks for your service. For you, Andrew has been everything you guys do for this country. We really, really appreciate it. That's such a good point.

You made Rachel all the closing costs. Like, when you buy one, the closing costs, when you sell one, the realtor feed. Like, all that. Yeah.

Getting up over time, over three or four different locations.

It doesn't always, yeah, depending on the mar,

I mean, you know, your house is not going to appreciate maybe even that much in two years. That's right. So you're actually end up losing money by doing that. But I know, I could see,

and I assume they have kids and because she's at our family moves, like, to want to have your own place. Yeah. But throughout he is, you know, because of what you guys do,

And I don't keep other military families that are listening,

“or people that do move around for even career.”

Don't keep a house in another city and try to rent it. Don't be a long-distant landlord. If you leave a city, sell your home, and use the equity to buy the next home. Don't be having, like, three or four houses around the country

of all these places you've lived. Good, good, good advice. All right. Thank you for the call. We've got Kira next who's in Philadelphia, Pennsylvania.

Hey, Kira. Hello. How are you, ladies, today? Doing all right. How about you?

Doing well. All right. I'll get into it.

So a little background about four years ago, five years ago now.

My husband and I got out of debt. We paid $155,000 in 23 months. No. Since then, we've had three babies. And he hasn't had two surgeries.

Two serious surgeries. And we are on baby set of three B. And we're feeling discouraged. I'm going to say a home mom. So, you know, one income family,

“it has been made $85,000 a year before taxes.”

He's in sales, so he can make more than that. But, you know, I'm looking to try and bring in some extra money. If I can. I love to cook. I love to bake.

And, I mean, I've been home. I'm good at it. I don't know. Yeah. So I'm wondering what your suggestion would be to kind of start some sort of side hustle.

I mean, I don't know how far I could take it. And I don't know what the logistics are like the rules are for cooking for people. You know, I haven't looked that far into it. But I wouldn't want to start maybe making meals for people and selling them once a week. Like what are your thoughts?

How can I go about starting? Well, I have two examples of real life examples. There's a mom that goes to our kid's school and she bakes. And everyone just literally uses her for birthday parties.

I mean, she's always doing seven.

She'll have holiday baskets that you can come and buy. And she's kind of created this community that people go to her for, for cookies and cakes and all of it. And so, and she's just, you know, she's a mom. And she's awesome. But she's kind of created this network.

And I don't know how much she makes. She's never told me, but everyone goes to her. So that's one. And then we have people they live in a neighborhood that connects to our neighborhood. And they, they, they were, he was a chef in Nashville. And ended up coming home with his wife.

And they do like sourdough bread. Oh. They during the winter when we have snow days. They make these like basket meals and they sell it on Facebook. And so people are like literally lined up outside their house to get soups.

And like, like, they make the most incredible food. And they've, they have killed it. I mean, they have stand set up. I mean, like, they, it is prime. So I'm like, those are just two examples in my own personal life.

And again, I don't know if they have business license. I mean, I don't know all the ins and outs. But those are two women who are home doing life. But they've like, they're really good at this thing. And over time, ward a mouth.

And a community gets out. And it's amazing. Yeah, I love those ideas. I think I think the best side hustles are based on things that we already love. And that we're already good at.

And that we can set the fees and the hours, right? Which is just that when cooking. I do think in the area, you'll want to check out like what the regulations and what the laws around having like a cottage set up is usually what it's called. Because it could be different when I did things like that when I was in South Florida. It has to do with the scope of what you're doing.

“Sometimes it'll require things like you have to put the nutrition ingredients on the box or you have to have.”

They'll be some regulations for what you need to do. And it's probably, I don't want to say this, but it's probably pretty easy to curtail some that. Some of that if you're really starting small, but once word of mouth picks up, you probably want to make sure that you're following those guidelines and making sure of that. Yeah.

But the biggest thing that I would say aside from legal and all those things is make sure you're running this. If it's supposed to be a side hustle, run it as a business and make sure you're keeping track of what you're spending on product. Yeah. And make sure you're pricing things in such a way that you're actually making a profit. And you can look at back on this and go, I actually made a profit.

I didn't just break even or I didn't just do this thing for putting a bunch of sweat equity. And make sure you're factoring in your time in that in that cost, right? Because the dollars and since might make sense, but if it's making you, you know, 15 dollars, that's right. To make a certain amount of money, then it's no longer worth it.

So factor in all of those things and make sure you're doing due diligence there.

That's why we created investing essentials.

A two night virtual event where George Camo and I walk you through my playbook for investing and wealth planning. We'll simplify everything from 401k's and mutual funds to passing on wealth. So you can invest with confidence. You can get start at $199. Get yours today at Ramsey Solutions dot com slash events or click the link in the show notes. All right, guys, we say it all the time that buying or selling your home is a high stakes game because

“one bad deal could cost you tens of thousands of dollars and the truth is you don't want to overpay on your next house or you don't want to sell your current home for less than its worth.”

That's why Ramsey trusted connects you with the vetted real estate agents who have the experience to guide you step by step to make smart decisions, not expensive mistakes. Connecting is easy, just compare agent profiles, interview your top choices, and then pick the one that's right for you. So find a local Ramsey trusted agent who has your best interest at heart for free at Ramsey Solutions dot com slash agent or simply click the link in the description if you're listening on YouTube or podcast. All right, Mary-L is in St. Louis, Missouri. Hey, Mary-L, how are you?

Good, how are you?

Don't all right, how can we help?

So, I'm a public school peacher, so we have pension. Thank you for your service. As public school moms, we appreciate you. Absolutely. So, currently in Missouri, I am forced to put in 14.5% into my pension to do with it until my pension program. And my husband is military, so we move around a lot, and we will not be in Missouri long enough for me to be invested into my pension. So, that money has to go some, it can't just stay with Missouri's peers program, PRS program.

So, my problem is because I'm moving to another state, and I'm not that that by question, is should I move that into a traditional IRA and let it grow?

“Or should I pull it out, take the fees, which would probably go from, I think I'll have only like 11,000 in there.”

And we'll be pulling out, I think after fees, it's going to be a little less than 8,000. But that would get rid of the less of our debt, and kind of jumpstart our emergency savings. And I would have a pension in our next state. He has a military pension plus all of his retirement accounts plus I have other retirement accounts.

So, our retirement looks really good.

You really want to catch this out, don't you? Well, I wouldn't. And I want you to ask more questions because I don't know every state could be different. But I know that in many states, their retirement system will let you leave the money in the pension. You wouldn't necessarily have to move it.

So, if you wanted to let it stay until it's vested, you could do that. So, I would check on that option. In the state of Missouri, you have to work side in the school system in order to keep that started. Okay. Then I would roll.

I would just roll it to an IRA, honestly. Yeah. And I wouldn't take the, I wouldn't pull any money just as a standard principle out of, out of retirement unless it was to avoid a foreclosure of bankruptcy. So, let that just grow. And you guys, for a crazy amount.

“Yeah. So, yeah, I would roll it to an IRA. And that's what I would tell anybody, even who was at a company, right?”

That left their company and they're 401k. We roll it towards, to a traditional IRA and just keep it in there. Yeah. Really good question. Okay.

Yes. But, yeah. Thanks for you and your husband, too. To touch our military and teachers. So, we appreciate you.

For sure. Great, great question. All right. Next, we have Drew, who's in Greenville, South Carolina. Hey, Drew. Hey, how are you?

How are you? Excellent. How can we help today? Good. Well, my wife and I are on baby step two in our relocating for an upgrade and employment. And we have a house and we're trying to sell it. And it looks like we're going to be clearing about $50,000.

And I'm wondering if we should use that as a 20% down on our next house. Or if we should just crush off the remaining debt that we haven't did a pretty good jump. Still on baby step three by renting instead. Wow. Plan B.

I would say go ahead and pay off for debt. How much debt do you have? 22,000. Okay. What's it in?

Okay. How much do you guys make a year?

85. Okay. Great. Yes. I know. I'll be honest, you know. I would, yeah. I would pay off the debt. Get an emergency fund and then save at least five percent for the down payment.

Because what happens. And you may have felt this already. I don't know. But having no emergency fund. Debt still that you're paying these payments and owning a home. There's so much that can just go wrong.

It is a way more peaceful process. It's a longer process. But it's way more peaceful to have no debt. Everything's paid off. You guys have a fully funded emergency fund.

And then you go and buy a home. And you're a homeowner with that under your feet. That is a much more stable position to be. Awesome.

“Okay. That's what I figured we'd be ending up doing.”

Awesome. So great. Glad we affirmed it. For sure. Great call.

We've got Christine next.

Who's in Los Angeles, California. Hey, Christine. Hi. How are you, ladies? Excellent. How can we help out? Well, I currently own a condo.

I'm single or divorced. And I'm just trying to decide if I should sell it or sell it and rent or keep it. And just kind of like struggle with it a little bit. Kind of expensive. Is that the reason you're even considering it?

I was going to say is that the expense. Is it debt? Why are you even considering selling it? It's a lot. It's a lot of my monthly income. And I have been paying for my daughter's expenses.

She just graduated college. So I've been paying that for the last four years and it's put me in debt. And now I'm just like, are you still paying? Are you still paying her expenses? No.

Okay. No. How much consumer debt do you have? I have $17,000 in credit card debt. Okay.

And is that it? That's it. Okay. How much do you make a year?

“And my gross is like 123 I think, but I take home 109.”

That's after tax. After tax is okay. And how much is your condo payment each month? I'm just paying it. The mortgage and insurance is 3,200.

Okay. And my taxes. And then my HOA is 600. Okay.

So you're at like 3800 basically.

So that's close to the 25% yeah. That's not that's not. Wow. Do you like the condo? Is the only reason you want to sell it is because you have this debt?

Because it's not a massive part of your take home pay. You said you bring home 9000? 109. So around 9000 a month? Yeah.

9000 a month. Okay. Okay. Sorry. It's a bigger.

It's a bigger piece than we. I'm thinking. Okay. Yeah.

“I think I deal for you would be somewhere.”

Yeah. Ideally for you would be somewhere around like 2300 or 2200. And we're creeping up to 4,000. Yeah. Okay.

Yeah. You'd feel that. Sorry. I was doing it on 12,000 a month. I was putting your, I was putting your, your gross.

And on my bad. The debt's not the issue here. Like, I mean, obviously we want you to clear out the debt. That's not going to make a change. I don't think unless you're paying 1,000 bucks a month.

And you feel like that would give you everything you need once the credit card debt is gone. But I don't feel like that's it. Am I wrong or am I right? Well, I feel like I got into that. Well, I don't feel like it.

I got into that because I was trying to pay. I was kind of like $1500 and I'm trying towards my daughter's school and living expenses. And so it's really if I didn't have that, then it would be a lot easier. But you don't have that because you stopped paying those expenses. How long ago have you been outside of that rhythm of life?

She just graduated and moved out on her own. Like two months a month. Yeah. Yeah. Yeah.

I mean, I mean, if we're, I hate to be like two legalistic on this, but it really is a parameter for a reason. And so I think that you're feeling the effects of that. And you were feeling it before because you were going into debt to help her. It's not like you were using cash flow money to help her.

You were going into debt to do it. So I think that you're going to keep feeling that until you find a place of living that's meets your standard of income a little bit better. Okay. So what would you pay for the condo? Like, what do you owe on it and what's it worth?

Let's say that. What do you owe on what's it worth? I owe about 485. And it's probably worth about 60. Okay. So that's an easy. That's kind of a no-brainer, I think.

And emergency funds for somewhere else.

There's different location, but that's a little bit less. That's what I would do. (upbeat music) 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. Alright, our Ramsey show scripture and quote of the day Romans 831.

“What then shall we say in response to these things?”

Well, if God is for us who can be against us, then Jensen Cheroset.

You can have excuses or you can have success. You can't have both. Perfect for what we teach you. Pretty good. I love that.

Alright, let's wrap it on up. We got Lisa who's in Atlanta, Georgia, on the line. What's up, Lisa? Hi there, how are y'all today? We're doing fabulous.

How are you? I am doing okay. We'll tell us how we can help you be better than okay. Alright, my husband recently passed. Oh, Lisa.

Sorry. Thank you. And he did have life insurance, and we both do.

And we have always just had small policies that were enough to basically pay off the house,

because we were both gainfully employed. So, basically I know that the life insurance is coming. It's, you know, we have 100,000 on the house. It's about 200,000 in life insurance. And part of we want to go ahead and just pay the house off and get that done.

But I am close to retirement in the next, you know, two to three years. And I probably won't stay here. I don't think this is going to be my retirement home. So I'm wondering if I should pay it off, or if I should sit tight and wait to decide what I'm going to do first.

“How long, tell us again, how long it's been since he's passed?”

Under a month. Yeah, for that reason, I think I'd wait. We tend to teach not to do anything, like not to make any major financial moves. After something like that, life altering, you know, a loss like that. Just because there's just, I mean, you're in a slide right now.

Yeah, yeah. Yeah, absolutely grievingly says. So yeah, I would not, I would not make any big financial moves for nine months to a year. I would just sit and and and and be sad and the same. How long were you guys married for?

Thirty six years. Thirty so I'm so sorry. Was it suddenly, sir? No. Okay.

Oh, so tough. That is, that is, I, it just horrible. And so the, yeah, the grief you're in, I, yeah, I wouldn't do much. Are you okay with retirement?

“What, what kind of money do you guys have?”

Um, we're in decent shape, not fabulous because we were normal for way too long. Um, but, you know, we did kind of get it all together. Good. And it decent. I mean, you know, I've got, how much is that?

How much is in retirement? I've got 500. Okay. Okay. In my retirement.

And, um, you know, and obviously no debt. And except the house. And how much is the house worth? About 350. Okay.

Good. So, um, and you're going to retire. You think in two years, is that what you said? Probably about like a year, yeah. Okay.

And where do you think you're going to go? Do you know? That's what I'm debating. I may stay here, but downsize. Okay.

Or, you know, and move, you know, kind of move closer into town. We're kind of rural. Okay. Or, we, I mean, we've talked. We also talked about Tennessee and we talked about Florida.

Mm-hmm. As well because they're cities we like in best places.

Do you guys have kids? No. No. Okay. Yeah.

If I were you, if you were my mom, and I was and I was talking to you, I would just put this 200,000 in a high yield savings account. And I wouldn't touch it. And honestly, because you have an, I mean, after the year of the grief in the next year, you're going to be retiring.

There's two major events happening in a pretty fast period of time of these two years. So I probably wouldn't do anything. I would just stay where you are. And after you retire, then you can look up and see how much you've got. You have left on the house after the two years decide where you want to go.

Sell the 350 in a perfect world. You would, you would buy around that same mark so that you could add your 200 of his life insurance to your 500, right? Yeah. And that would be seven hundred.

That would be wonderful. Mm-hmm. Okay.

“So that's probably, that's what I would do.”

And if you go to Fairwins Credit Union online, their whole, their customer service is amazing.

And so if you don't have a bank that has a good high yield savings, I would definitely recommend them. But I would probably just put that 200 in there and let it sit. Yeah. And just, and just grieve and bake your next move for the next chapter of your life, Lisa of retirement. And also, I hope that's helpful.

And I'm so sorry. Yeah. That's so heartbreaking. Oh, thank you for trusting us with that call. That's so special.

Whew. All right. We got Shane, who's in Los Angeles, California. Shane, you're up next. Shane, are you there? Shane, can I hear me? Yep, sure can.

Thanks, like great. The question for myself is, is it okay to loan my parents money just given the circumstances I may not? Tell us more. Tell us the circumstances you're in and tell us how much money they want. You don't loan them. Of course, they would like me to loan them $5,000.

I currently rent a room from them.

I pay about $200 a month. And the last year actually went through a due divorce. And they weren't. It didn't ask me to pay me when I was looking free. But now that I've kind of established myself, got a job.

I'm actually paying them $2,000 a month in that. And they currently have a home that they're paying off. I would say they're about 70% of the way through a paying it off. They actually want to buy an additional home. And they're asking me to pick on loan them $5,000 for that down payment.

And I've heard your conversations, your videos. And I'm kind of in a little bit of a pickle because they've helped me out so much. But you don't have that much. You don't want that. Do you?

Oh, yes, I do. I've able to able to save up. So right now I have about $30,000. Twenty views into my retirement and I have $8,000. Listen.

As you remember. Shane, if they need $5,000 to buy a house.

“That's why they don't need to be buying a house.”

If they can't afford a $5,000 swing. That's not good for them. Like if we're talking about a $10,000 car, and they need to have the money to buy a car. That's one thing. If you can't spend $5,000 that makes your breaks a deal on a house.

You don't even buy the house. I know that's right. Plus, you are the whole point that you're being in there. Was to get back on your feet. That was the whole point, right?

So yeah. Yeah. What are they going to do with their current home? What's the plan? Is it to rent out the next home they're going to buy or something?

So they're going to be living in the current home.

They're going to try to rent that second home.

Okay. So that's important. That it's a risk because, you know, It just can, it's just a lot of money. When do you move out, Shane?

When do you move out? That's a great question. I would just exit myself from this. From the conversation. Yes, or exit the chat.

Because you're getting tired. I think it's weird. When did you go back home? You're getting tired up in the family business. Yeah.

Yeah. And it's like, if you had been out in your own house with your own people, you probably wouldn't even be a part of this conversation. But it's because you're at home. And I get it.

“I respect the fact sometimes you need to reset life throws you things.”

I'm not. There's no shade there. But I think now that you've told me I got 30 K saved. I feel like it's probably just time for you to move on. Yeah.

How old are you? I am 24. 24. Okay. Yeah.

Yeah. I would say I would not loan my parents' money. I do not think you have any obligation because they've been kind to you. Yeah. You're their son.

They chose to bring you in. I mean, it's fine. Like, it is what it is. But yeah. I think the sooner you get on your own shade.

If you, if you do decide against our advice to give them $5,000 of your 30,000,

then give it to them.

“Don't have strings attached because they're going to leap you in to this home and then try to pay.”

That ran and have you in your me all entangled in their mess and don't do it. If you're going to do it, just give it. And that be done with it. But I wouldn't. I don't think that you're obligated to by any means.

I mean, that calls back to our very first call.

“I think it was of the day where the people had loaned family members and friends money.”

Yes. That's right. And then they came on hard times and they invited the money back. And it was like, oh, this is so awkward. It's exactly right.

So that just highlights why the principal is. The bookends of the show people don't lend your friends and family money. Give them money. And if for some reason you move back home,

“you need to put a time limit on that mess and say it is from here to here.”

And here is the clear goal that I have that I'm trying to accomplish. All right, even. Well, that was a great show Rachel.

And remember, guys, there's ultimately only one way to financial peace.

And that's to walk daily with the Prince of Peace Christ Jesus. [Music]