You Get To Decide Your Next Financial Step

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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 Fairwins,

Credit Union Studio. This is the Ramsey Show. I can come and drill to be alongside my friend. My friend, partner in crime today to help you. She is Jay Gorshaw.

Phone number is triple eight, eight, two, five, five, two, two, five, triple eight, two, five, five, two, two, five. Let's go to Taylor. We start to soften Miami floor to Taylor.

How can we help today? Hey, thank you all so much for having me.

I'm really excited to be here.

I just got married last month. And my husband and I both are struggling to combine our finances because of all of the moving parts. Then we're looking for advice from you. What do you mean by all of the moving parts?

Okay, so one issue I have is I'm a contingent worker. So some weeks with the job that I have, I only bill for a four day week. And some days I bill for a seven day week, which means my base and come a month

could be $4400 or it could be $7600. And contingent on for compliance reasons. I don't want to say positive thing. You just have an irregular income. Yes, it's irregular.

But usually the base amount I make, $4400. And then the most I can make is $7600 in a month. What about him? He is part time for the school system. He makes $1,700 a month.

Okay, that's it. Okay, so let's talk about why he's only part time. Well, he has a rental portfolio and he manages right now for different rental properties. What's that going in?

So one of the houses, it's one of the houses has just been built. And he roughly built it for $160. And he's planning on selling this one for $240. The other two, the cash flow between the two of them. They're only paying for themselves right now.

Okay, so that takes us back to Ken's initial question and my initial concern, which is still working part time.

“The truth is he's still only profiting $1,700 a month.”

We'll get back to that in a minute.

I want to answer your first question about getting everything on the same page.

So what I would do, it's not as complex as you think. You need one joint checking account that you're both paid into. And then you need one joint savings account or high yield savings account that you're going to place your savings in. And then from there, that's honestly it.

Obviously if you end up with 401k's, each other will automatically be the beneficiary there. That sort of thing. So for now, just those two accounts and what I would do is I would open up every dollar. And I would budget for your minimum month.

So for you, I would budget the $4,400 for him the $1,700. And I would start with that as you're kind of operating amount of money. And as you get more money, you just add it onto the budget. As it comes in, you increase it. And now suddenly you might decide, oh, well instead of spending six hundred dollars on groceries.

Now we can add a little bit more to that. Or we didn't have money to do anything entertaining. Now we can add that back to the budget, right? And as money flows in, you can increase line items or you can add line items.

Or if you have any debt, obviously the extra money would go towards your smallest debt. Okay, we are debt free. But the more vehicles are paid off, we don't have any credit card debt.

We have a savings established together. We got about between three and $4,000 and gifts from the wedding alone. And we did not take a honeymoon.

“What do you think that we could or do you think that money should go into savings?”

I think you do take a honeymoon. Okay. Yeah, I think that's great. You said you have savings plus so many from the wedding. Is it just the $4,000 or more on top of that?

No, I have, we have like another little like a, I guess you'd call like an emergency account with $2,000 in it together. Okay, so it's $6,000 total. Mm-hmm. Okay, so what I would do is,

I mean, I would probably plan something modest because I mean, you only have $6,000. And then I would try, if I were, if I were you, I would probably try to keep half of this aside as I'm starting to build the three to six months of expenses

and then I do have for the honeymoon. And just a bit modest. Okay. Yeah, what's your, what is your going to be your margin? Now that, you know, we've walked through, we're just operating off a $6,100.

That's his $1,700 and you're $4,400.

“How much margin do you guys have after all the bills are paid?”

Meaning how much is left over on the budget? How much is left on the budget? How much is left on the budget? Between $8,900 a month. Okay.

What's, if you have no debt, where's all that money going? Well, it, up and we just got married last month.

And now we're just now back to a spot where,

you know, we paid for it. So, got it. So what will it be? We're talking about the spot where we're breaking even because we just paid all that stuff off.

“Honestly, I got an uncomfortable position paying for all that.”

And now I'm like, "I can call now." Okay, gotcha. Well, again, you know, as he increases his income, you know, or certainly sees more value out of that, you know, the, the managing the rentals.

You guys are in a decent spot for you to win. And the good news is you have no debt. So, you know, just walking these baby steps out, when it sounds like you're in baby step three, which is to get a fully funded emergency fund.

Of three to six months as months as months. Three to six months of expenses as my brain. I'm gonna take that. I like that. Yeah, yeah.

What's the plan for you guys as residents? Are you renting now or what's up? No, I purchased a house before I met him. And that's the house we're living in now. So you guys have poor properties total?

Well, really, we have more than that if you include his portfolio. He acquired all of his rentals. And he has like, a couple of lots that he purchased for. So he's been really, really strong now. Yeah, that's a lot of debt.

“Well, and Morgan, and, and, and, and how much mortgage debt?”

How much mortgage debt? How much mortgage debt do you have combined, including all his portfolio? Including all six people. I'm counting it right now.

It's okay. Okay. I have six. There's 60k on one of the rentals. Okay.

One 20 on another. Okay. And there's 260 on the house that we live in now. Okay. The other things are paid off.

Okay.

Because when I heard manager in rentals at first, I thought,

this is just what he did for somebody else. Mm-hmm. No, no. He's carrying this debt. Yeah.

He owns them. But he's positive and equity on all of them. Yeah. I'm just wondering about that. He's charging too little for rent every month.

Yeah. I've got close with the tenants that he has. I'll be honest with you. This is just me. I'm not.

“I think there's some things you've done really well.”

If I were in your shoes, you guys are newly married. There's part of me. I would love. Because you said he's equity positive in all of them. I would love if you sold some of these in order to pay off your debt.

And in order to pay off your personal residence. Because if you did that, you guys would be smoking like unstoppable. Yeah. Okay.

Think about that. What's your legacy? Yeah. But what's your mortgage every month? Well, we're just 1,600, but I pay 2,000 because I add extra 400

to principal every month. All right. And that's included in my. And my. Like when I told you, I still have $800 left over every month.

That's already after calculating that. So it'd be 2,000 total. Correct. I love that for you guys. Because if you turned around and took that money, how old did you say you were?

I'm 27. Oh, 30 my gosh. She's got the investment calculator. I'm loving this because this is not even including like your normal 15 percent.

I'm just saying, if you took that money that you have now, you paid off the mortgage. And you said, we're going to take that extra $2,000. We're going to invest it. We're going to invest it for a long period of time. Oh, let me add this in here.

I'm going to tell you what this number is just based on that. And it is drum roll, please.

You're going to have $17 million.

Yeah. Taylor. If you do that from age 27 to age 67, you have nothing in there now. You can tribute $2,000 a month. Average annualized rate of return.

10 to 11 percent. 17 million. Do the math. [Music] Bying a home is one of the biggest financial decisions you'll ever make.

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[Music] Okay, I want to make sure that we lock it on the number you just threw. At that last call or because you know, just say 17 million and speed pass it like you didn't just say what you just said. No, and we were talking about this, you know, the reason that number is so high is. Well, number one, the time in the market.

Like nothing beats time in the market. The fact that they would be starting in their 20s in their case 27 years old.

“That's why it's so important guys when we when we teach this stuff.”

If you can get it, if you can teach it to your kids, your friends, kids, your grandma. Like teach it because the younger the younger you are when you start this. That compounding interest man. It's it's what is it the eighth wonder of the world? Is that what they used to say?

I think that's what it is. Is that right, eighth wonder? And it's true because for them, yeah, age 27, age 67, not saying that they have to work until they're 67. Yeah. Because they're going to be millionaires obviously well into their 40s, right?

But the point here is it doesn't take much. Can we talk a lot? A lot of times people think this is the sell the car show, right?

Because we're always telling people to sell their cars.

But in this case, $2,000 is what is setting them free. I don't even know if that's 15% of their income. I don't know how much they're going to make over the course of their life. All I know is today, if they paid off their house, which they had the money to do, to have that $2,000 of margin and how powerful that is.

And all of you who are watching right now need to think about that. Because if it's not $2,000 maybe free, it's $1,500. Go home today. This is everybody's homework. All right.

Pull out an investment calculator. Go to RamseySolutions.com. Pull out an investment calculator. And plug in the numbers is going to ask your current age. So if you're 47, I'm 42, I put 42 in there.

And then when do you want to retire? I'll put 62. And then start playing around with the numbers. And at the bottom where it says, "What do you think your annual return will be?" I want you to put 10 to 11%.

“Because that's what you should be making in the stock market can.”

If your mutual funds are not producing at least that, which, of course, over the past four years, it's been bananas. It's been in the 20s most of the time.

You need to put that because the truth is,

since inception since 1926, the stock market has an annualized rate of return, which means if we take all the years and take the average of them, it's between 10 to 11%. So you can say, "Oh, Jade, what about 9/11?

What about 2008 and 9/9? Jade, what about now?" Right? That's fine. Yes, it does dip and do all of this. But it does it as it ticks up. It does it like this.

So we're always going up. So I want you to do that. And if you're invested now, go and look and see, "Oh my gosh, what have my returns been?" Because if you're somewhere in the five and six and seven percent,

you're not invested in the top, in the top 10,

“you need to be, you need to be doing better than that.”

So that's just a little something.

And here's what we're going to do to help with the homework

that Teacher Jade just throughout everybody. We're going to put a link to the investment calculator that she's got up on our computer right now at Ramsesolutions.com. We'll put the link in the show notes. Kelly, the producer is going to do that

because she's amazing as well. So we got a homework assignment and we already have the cheat sheet for it. And now I got to do this, go to the show notes, click on the link. And I will, I just want to second the motion. When you do what Jade tells you to do,

you're going to really have a on the ground experience with vision casting. You will. That's so good. That's what I mean, when you can see into the future and what she's going to have you do is plug in numbers

and see what is actually possible. But the possibility has power because it becomes a number and you can see it in the future with just consistent activity. So what's going to happen is as a result of your homework assignment for these fine folks is they're going to now

start to visualize and set a vision for their future. Can you, I know you're ready to preach on this because what happens when there's no-- What happens when there's no vision? People perish.

And what that means, that's straight out of scripture. And what that means is their soul, the spirit in all of us. Truly, begins to seep out of your body. And without getting any more of that. And so that's why it's so huge.

By the way, while we're at it, there needs to be a vision for your marriage. There needs to be a vision for your children. There needs to be a vision for your professional life. There needs to be a vision for your health. Yes.

I mean, you will perish. And what that means is that you are slowly, which we all are. But this idea of never having a vision and something that I'm looking forward to is what kills people.

Which is what Edgar Allan Poe said to put a bow on it.

“Most men leave lives of quiet desperation and go to the grave with the song.”

Still in them. Oh, sorry. I'm now pulling old references. I love it. But that's the idea that we're talking about.

All right, let's get to Bianca who joins us now in Las Vegas. Bianca, how can we help today? Hi, good afternoon. So I have a question. My dad is selling his house that I'm currently living in.

Living in and we're looking at me, my sister and him getting a hundred thousand dollars. A hundred thousand each from the house. And I have three kids. I have two twins or eight months. And then I have a four year old.

I have to leave the father and my kids. My twins were five months. So as I say, I'm home. I'm trying to get back on my feet. And I'm trying to see what should I do with these hundred thousand dollars to get started.

Okay. Wow.

“Well, can you give us a little detail of what are the money problems you're dealing with?”

In other words, you know, we want to know what your debt is. We want to start there so we can kind of help you walk through. What we should do with the hundred case. So give us a picture. Okay. So I have some school that I have to pay off.

That is $12,000. And then my debt for credit cards and stuff is $3,000. And then I did buy a mentorship to get started in my business. Um, that I have to pay off as well. How much?

Um, $3,000. Okay. So $12,000 for the school. $3,000 debt of credit cards. And then my mentorship through $1,000.

So you got $18,000 of debt. Um, the, the hundred thousand is that's going to be the only money to your name. Or do you already have some money saved up? No, I have nothing. I was a stay at home mom the whole time.

How soon do you get the money? Um, that's another household.

“And um, they're taking pictures next week.”

Okay. So I'm, and then also to, um, because I'm getting into like the hair business and my content and all that. I do want a room for the house that I'm going to rent. Because I'm thinking I'm debating what are doing a two bedroom and all of us. We've been in one bedroom and then having one room to have all my things.

Um, to travel and stuff as a traveling hair stylist. Um, interesting. So I'm, okay, exactly. And so I'm just debating what I should. So the houses here are like a thousand six hundred for two bedrooms. And for three bedrooms is two thousand.

To rent the room out is that that's the profit on renting the room out. No, um, for renting a house. That's just her cost rental cost. Got you. So are you generating any revenue?

Any income at all right now is a hair dresser? Um, currently I'm just practicing. That's the thing I'm just practicing my, um, because it's a hair bridal business. So, um, I'm still learning, which I did hair for 14 years. But since I did color, it's a way different department.

Um, like learning a lot of stuff. Got it.

And I, every, well, here's what I'm asking.

Here's what I'm asking. How are you surviving right now? That's what I'm trying to get. My mom, my mom, she's the one helping me right now. Okay, so you're not going into debt.

Oh, and then I can have child support, too. I'm getting $1,800. Okay, so we have $1,800 a month coming in. And mom is helping you out and you're not going into debt for living expenses. Is what I'm trying to get at.

No. Okay, correct. Um, that's good. Okay, so that your big question is I'm getting $100,000. We don't know when you're getting that.

Uh, we hold within three to four months. The house hasn't even gone on the market yet. And then there's, you know, time to get that. So let's just say to be safe. We're looking at four to five months at the earliest that you're getting this money.

Is that fair? Yes, that's what I'm thinking too. Okay, and so when we get the $100,000, we want to clear the debt. And then we set you up for the next level.

So here's what we got going on.

Um, we got to do a commercial break and we want to be able to help you. And so hang on the line, Bianca. When we come back, Jay is going to walk you through every penny of this $100,000. And how it can set you up for financial success. So that's the good news.

You're going to be okay. Hang on the line. We'll be back to take care of you.

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Bianca is going through divorce, all the things separating from the father of her kids. And she's getting $100,000 from the sale of the home. And so we're bringing her back because we got to walk through this. She's got $18,000 in debt. And so Jade, let's jump in here because last we talked to her.

She's trying to find a place in that $1,600 month range for rent.

“And so walk her through here, what would she do with this 100,000?”

How does she get on stable feet with this money? Yeah, so the 100,000, I would use that to walk the baby steps.

So the first thing you're doing, you're paying off the $18,000 of debt.

Okay, so that's going to leave you with a 78 around 80 left. And then from there on, you're going to estimate. You're going to do some research here. You're going to say, okay, what's it going to cost to rent in the area? I think you quoted around $1,600 a month.

Then you're going to estimate food, transportation, all of these things, and you're going to create a budget right now. It's kind of a make believe budget. But you're going to go, okay, what's my cost to living? Is it somewhere around $3,000, maybe $4,000 a month?

And then you're going to take that and you're going to multiply that by six. And you're going to put aside another $18 to $20,000 as a six month emergency fund. So we've already spent 40,000 of this money. And now we've got 60,000 left. Now here's my challenge to you.

I would not take this money can and siphon off $1,600 a month for rent until it's gone. That is not a plan. I would take this money. I would tuck it away and a high yield savings account under a lock in key. This is where you need somebody to hold you accountable.

You're not married right now, but you need a really good friend. Somebody who you're willing to give access to your life in the way of, I know where this money is, I know what you've told me. Maybe I get an alert to my phone if you start spending this money. Something like that to where this money can just hide there until you're ready to purchase a house.

Yeah, I agree. Right, yeah. You know what I'm saying? I want to spend everything on rent. You're not going to spend any of it on rent.

I have a plan for that. Bianca, so let me ask a quick question.

“When you say traveling and hairdresser, does that just simply mean you go to the clients?”

Is that what that means for give my ignorance? Yes, yes, so in the vital industry, you go to the venue and do the hair there. Or you travel to a salon that I have where I do daily rental. Okay. But I just want to have a room to do content because nowadays everything is content, you know?

Okay. I thought I heard that. So that means you're doing some social media stuff, right? Yes. Okay, let me ask you a question.

Are you making any income off of that content? So I do practice every weekend on somebody and they tip me like, and you know, for the month, I gave like the $100, $150 maybe. So is that making money on the content you're posting that stuff? So I'm asking, you said content.

I'm getting somewhere with this. You said, I want to make my content work. Well, content doesn't work unless it's generating revenue. So are you generating any revenue? No.

No.

Can I just be a coach for a second for you?

Uh-huh. There's an old phrase. It's on some cheesy motivational poster somewhere. It says when you chase two rabbits, you'll lose both of them. And I just wonder.

And I'm not saying that this is chasing two rabbits. But I wonder if you shouldn't be putting all of your energy into doing people's hair.

Jade's got it under locking key and I keep it under locking key.

And I'm able to pay for my rent by my own job. I can pay for groceries through my own job. I don't need mom to support me. And I just wonder if that's not the best use of your time. Well, here is my work.

My business.

“I understand, but you have to put time into all the social media stuff.”

So again, you don't have to prove this to me. I'm just telling you, you don't have to prove anything to me. I'm not being cynical. I'm just wondering. There's two sides of it.

And I want to clarify this. I think this is going to help you, Bianca. If you are already doing someone's hair that day for money and it's easy for you to film it. It's not taking a lot of time on your day. Yeah, it makes sense to post it online.

From there, your revenue can be more so about advertising and getting people in the air. Because you know, people use social media like Google now. So that's a great advertising venue. I think to Ken's point, it would be a while before you're generating any sort of revenue from platforms. Is that what you're going to work for?

Yeah. Yeah. So the content is not for me to be like a content creator. It's just to advertise myself. Yeah.

And again, I'm only raising myself out there. God. And I love that Bianca.

“That's why I'm saying I didn't want you to hear cynicism from me.”

I'm just focused. Other focus right now, so that we're bringing in as much money as possible. Because you're a single mama, mama bear. That's got to take care of some very important people. And so that's just me saying think about that right now.

Every ounce of time you have for work needs to be generating money. That's all. How many hours a week are you working currently? Because what I'm trying to get out, I'm just going to be honest with you. You got four kids.

Three. Three boys. And you're going to have a $1,600 rent because remember the plan is to not touch this money. So my question for you is how many hours are you working a week at this? Or where do you think it will start?

And if it's at a part-time level, what will you do with the other time to bring in money? I'm just throwing some questions out there for you to be thinking about. So my goal is to work fighting Saturday and Sunday and just do it full time right now. I'm just doing a couple of color clients to be able to help these table bills in my mom too.

But I just basically fighting Saturday and Sunday which are the busiest days to work.

Because when I get to the point where my business will be successful, I can make up to like a thousand to a thousand a hundred a week. But what will you do on the days that aren't Friday Saturday and Sunday? What will you do on Monday, Tuesday, Wednesday, Thursday? So my plan was to stay with my kids because it pays more.

It costs more to have them in gay care or somebody watch them.

“And that's what my goal is Monday to Thursday and stay with them and then Friday and Sunday work those days.”

Can mom not watch them while you're out working? My mom? Yeah, here mom. I want my mom work. I really have nobody to watch them right now. That's okay.

I get to go. Yeah. Okay.

So here's what I just want to caution you.

I want you to do whatever you can not to siphon this money slowly. Okay. And because what can happen is you can have a distorted view of reality of how well you're doing. Because when the bills are paid and everything seems fine, it makes you feel like everything's good. But if your hair business is not bringing in the money that you really need to survive,

you could look up and be in a world of pain about a year or so from now. Right. So just caution that I think you're thinking through this. I want you to do a deeper level of thinking on the Monday through Thursday deal and see if there's anything you can find. Because don't automatically assume you can't find work that can pay for day care.

I don't want you to automatically make that assumption. And to that point, I'm going to throw it out there. Maybe the best move for your right now is to go work for an established salon that needs somebody cutting hair. And you're not the one trying to find clients. You got enough to deal with right now as you're going through a very traumatic time where you know, you need time to heal.

So I would be considering if I could go make really good money or as much money as you possibly can, given your time limitations for a salon where they're generating customers for your however that works. I'm over my skis here on this particular topic. I should be letting you talk about the business part. But I think if you could get somebody else to pay you is my point.

And till you get established and then we find, okay, I'm going to start doing a couple. Keep my hair color clients. On, you know, maybe I do a Monday night, you know, the boys are in bed at eight. Maybe I do a couple, you know, I do one late night color.

And you begin to build that way.

And I think this is the mindset you're going to have to have. You need to do everything in your mind.

“You need to almost trick your mind that that $40,000 is someone else's and you just cannot touch it.”

Unless there's some crazy insane emergency, which, of course, you got to. Yep. But it's truly emergency money only. And I think if you do that, you will find a way. And there's no way Bianca that Jade and I would bed against a single mama.

No way. Like this is a hero chance. Right? I want you to hear that. Like, there's no stopping you. I wouldn't get in front of you if my life depended on it to take care of those three boys. So I want you to hear that you got this. We believe in you.

Okay. But get after it like your life depends on it. [Music] Dave, we got a lot of calls on this show where life happens. One day someone's healthy, they're working, providing for their family, and then a curveball hits. You know, we hear it all the time. A car accident, a cancer diagnosis, a heart attack, and suddenly everything changes.

“Yeah. And that's why you've always said that having term life insurance from Zander is essential.”

Because it protects your family if the worst happens. Yeah. That's right. You need 10 to 12 times your income, in coverage. No gimmicks, no whole life junk, just straightforward term life protection. But there's another piece that people often overlook, and that's long term disability insurance. Yeah. It's important to understand the difference between them.

Life insurance steps in when you die. Disability insurance steps in while you're alive, but can't work. So it replaces a large part of your income, so the bills still get paid while you get back on your feet. Now, if your employer gives you free disability insurance, great, take it. If it's discounted there at a better price, take it.

But if not, Zander can help you find the right plan. Whether you're single or married, it's not optional. If you're going to be out of work for a while, then you need to make sure the money still showing up. And that's why Zander is our go-to. They make it super simple to get the right coverage at the best price. No pressure, no upselling.

I've trusted Jeff Zander and Zander insurance for over 25 years and so is my family. To don't wait, it's fast, it's easy, and they could make all the difference. Go to zander.com or call 800 356-4282. Protect yourself, protect your income, protect your family. [Music]

By inner selling a home is a big deal, you didn't need me to tell you that. It's just such a huge, huge deal, the emotion, the money that's involved here.

And the reality is, is all these deferring headlines.

There's clickbait on social media, somebody always trying to tell you about the latest things. But we want you to know, we're here, minding the store. What are the real trends? What are home prices at right now? What are we seeing with the inventory? What is the rate on the average fixed 15-year fixed rate?

All of those things, we've got that for you so that you can trust the information. And you can get that by the way by going to ramsysolutions.com/market. That's ramsysolutions.com/market or we have the link in the show notes. All right, let's go to Nick in which to talk. Can's this Nick, how can we help you today?

Hey guys, thanks for taking my call. I was honored to be talking to you all. You too.

So basically, my wife and I bought this house about a year and a half ago with two intams.

We had planned for two intams for quite some time. And the Lord bless us with our first daughter. And so we kind of switched paths. So my wife has a stay at home mom because we like to expand our family a little bit further. But we know that now this house was a little bit more than we could choose.

So we're looking for other options. And one thing that we're looking at is some land that we would like to buy and then build a house on.

“So I called the bank up and they said, hey, you should take out a key lock to buy the land and then get a construction loan.”

And I said, hey, lock, I don't know what what Dave says. So that's why I'm kind of calling in today. So before we answer that part of it, what is too much to chew this house? How much are you, you know, you're running short on money. Give us that breakdown.

Yeah, so currently with our mortgage and everything.

And so it's 40% of our take on pay right now.

Which is how much? A lot more than 25%. Yeah, take on pay is about that 65 grant.

“So take home a 65 and what is the actual amount of the mortgage right now?”

The mortgage is a little over 1800 bucks, but we put extra on because we wanted to pay it off earlier than 30 years. Okay, now we're paying about. I'm sorry. Well, what knowing what we know now, the 1800 is too much, right? It's too much for you guys.

So as we start thinking about what we're doing now, and you're thinking about a house with land. What is the number you need to be at? If you could wave a wand and change your mortgage payment to the right percentage, what would it be? A 25 at max. So 25% would actually be about 1500 dollars.

What we act with the minimum payment right now is 1800, but we actually pay more than that to make it not a 30 year loan. That's why it's at 40%. It's actually about 24 hundred dollars instead. You said you take home 65,000. That's around 5,400 a month.

Yes. Okay, and you said you're trying to get the more. 25% is about 13, 1300. So I wouldn't, I just want to, I just want to make sure we're on the same numbers because you're quoting different numbers and I have on my paper. I just want to make sure you're off by about 300 dollars on a lot of what you're saying which is not a lot, but it is a lot.

You said I'm saying, so I just want to make sure I'm, it's fine that you're off. I just want to make sure we're tracking together. So you've been paying extra on the 1800 dollar mortgage. That's the paying the extra is what's put that at 40%. Yeah.

Got it. Okay. Now we can move forward. Keep going. Yeah.

Everybody told you to take out a heloc. You're, it, it rose your hackles. Yeah. To buy the land. Yeah.

And, but I first of all, you know our answer to that, but I, beyond our principle answer on that, I just don't understand why.

Well, I do. They're trying to sell your product. Yeah, don't do it. But you should be able to do the lot and the house all together in one construction loan. And it needs to be, you know, within reason for you.

So can you do that? Have you found a place where you could,

“get the lot and build a house and come in where you need to come in at what your monthly mortgage is?”

Yes. Yes. I think so. So the, the lot is about 65 grand and we put about 150 into a house on it. And so with the equity we have in our home now that would bring us at a mortgage of about 150.

Maybe a little bit less. So that would, our monthly payment would be about. I probably a little less than $1,500 a month. That's great. So much better situation.

So the point is put the house on the market and do what you just said. But you don't need to get a heloc to buy the land. Okay. You're just going to put a place for a while. Yeah, well, they're just selling you the bank.

That's their job. Yeah. Right. It's how they make money. So, but yeah, you don't need that.

You just do it all in one lump sum. You've actually, if you built a home before. I've never built a home. Neither have I. So, a bit of a lucky on this.

You're saving. But I know you can do it all in one swoops. It sounds like you've researched it. So yeah, you're doing the right thing. I'm glad that you have equity that you can get out of the situation.

Yeah, absolutely. Me too. Yeah, you're looking for a construction of permanent loan. Sometimes it's called like a one closed loan. Because you're not doing a separate loan on the land and then a separate loan.

It's, it's all together and it's, it's one close. It's going to be easy for you to do it that way. Thanks for the call. You're smart young man and now you know what to do. Hey, walk away from these things as we have when we've made dumb decisions. Or maybe not dumb, but risky and then the risk comes home to boost.

So learn from this. Let's go to Emily who joins us now in Philadelphia. Emily, how can we help you today? Hi. Thank you so much for taking my call. Sure.

So my husband and I are expecting our first debut in June.

Congrats. Thank you. And we are wondering the best way to build wealth for our child. Especially because we hope to have many children. So we wanted to make, we wanted to start now with that.

And I wanted to look how to start this. And I didn't have more children in our flower changes. I love that. You know, I feel like that's kind of been a sentiment lately. People calling in and thinking about the best way to build wealth for their kids.

And truthfully, and I think can you would agree.

“I think the best way to set your children up for wealth is for you to set yourself up to build wealth.”

Because when you do that, not only are they learning valuable money principles in the home, right? They're observing what you do on a daily basis. So they're seeing you save money. They're seeing how you speak about money. They're sensing the feeling about money in the house, right?

Not to mention, as you're building wealth, then you can do those things for them.

That's set them up to succeed like, you know, pay for their college.

“You can help them with their first car payment, right?”

You can match the costs or, you know, different things like that. So I think that's the best place to start. And obviously, as you're doing that, yeah, you're putting money in a 529 for them. Maybe you have the extra money that you're putting in a side, you know, in a mutual fund that you plan to gift them at their wedding, right?

Those certain things. So let's talk about given that. Let's talk about your financial situation where you guys are today. Okay, yes, so that was also kind of part of it because we make about total as a house of like 200,000. Great.

For a year. But I am not sure how we were turning after return, really. So, okay. Well, it changed, too, then. 100,000.

Oof. Yeah. Now, how is that?

Because we don't have a ton of time with you.

So we're going to roll through this real quick.

“How will that change your budget in the sense of will it be super tight?”

Or will you still have margin? It will be pretty tight, especially because we're looking at the by-house now. Or doing that based off of his income just in case. Good. Smart.

And so it will be pretty tight. If you want to optimize what we have. And you have no debt? No debt now. Good.

Do you have an emergency fund? Yeah, we moved. I missed six months. The emergency fund and about like 60,000 cash and 40 and a brokerage. She put down for the house.

Okay. And so I'm moving fast here just for Jay to give her the final coaching moment here. So will we still have margin to keep investing 15% and baby step four with the reddit reduction? You'll still be able to do that. Yeah. And then it'll be tight.

So now it's baby step five. So we just aren't going to have a lot to put in there, Jay. It is what I'm hearing. Yeah, you're just about 29. It's just, that's a reality.

So we got to figure out some income. Yeah, it's going to be tight because you're going to be investing 15% you're buying a new house. That, I mean, that's what it is. But here's the thing.

How old are you guys? $26.27. $26.27.

You are so similar to the couple that called an earlier that was going to have $17 million.

If you guys avoid debt, you continue to do this. Your income continues to grow over time. You are going to retire with several millions of dollars, right? $100,000 income on the $1500 income. You're going to have plenty.

You're going to have plenty to put that $1500 into your investment savings. Let's talk about something nobody wants to think about until it wrecks their budget. Medical debt. Medical debt is one of the biggest financial landmines in America today.

“And that's why health trust financial is the only health insurance provider Ramsey recommends.”

You guys a lot of people have medical debt, even with health insurance. Because you can pick the wrong plan, pay big monthly premiums, and still get slammed with huge out of pocket cost later. And if you're self-employed or you run a small business, you're paying 100% of that bill. But health trust financial shops multiple top rated carriers with no extra cost or pressure

to help you get the right plan while finding you big savings. And they don't just look at the cheapest one. They help you understand deductibles and networks out of pocket costs. So you don't get surprised later. And most people who work with health trust financial save up to 50% on their health insurance costs.

That's real margin you can put towards working the baby steps instead of medical bills. So don't let one hospital visit sabotage your financial plan. Go to healthtrustfinancial.com and protect your budget. That's healthtrustfinancial.com. [Music]

Welcome back to the Ramsey Show in the Fairwins credit union studio. Alongside Jade Warsaw, I am Ken Coleman. We're so excited to have you with us today. The phone number to jump in. Triple 8, 825, 5225.

Triple 825, 5225. Mason joins us now in Richmond, Virginia, Mason. How can we help today? Hey, how's it going? Thank you guys so much for being here. I was looking for what advice you could give me.

Or I think most financial advisors would say that my fiance and I are doing really well for our age. But man, I just found myself really stressed and anxious about money all the time. Well, give us some evidence that would say that these financial advisors are correct. So we've got about 50,000 investments. We've got no debt. We've got new paid off vehicles.

We've got about 50 grand in cash. I mean, I think on paper, we would be doing well. But there's a concern in me that keeps me. There's just something in me that's telling me,

Life's getting more expensive. It only gets more expensive. Well, I can tell you that it's keeping me up at night. I get it. I have total interest in, but this is nothing to do with paper. This is everything to do with your past.

Okay. And what I mean by that is somewhere along the way in the environment you grew up in, or with some experiences that you have lived or been adjacent to, you have developed this narrative that you're actually calling us about today. Is that true, or I don't mind if I'm wrong, but I doubt you just pluck this fear out of thin air. Where's it coming from?

That's what I can't tell you. My fiance comes from a very well-off family.

And I come from a pretty middle class family, never struggle or anything.

I really can't tell you where it's coming from. Oh, I know where it is. It was told me about it. You actually just answered. You married a woman who comes from a very wealthy family, which is very different.

And you've got a little bit of fear. I'm not going to be able to finish the way that I see her parents finish. Or maybe I'm not going to be able to acquire everything that they have acquired. And you are comparing your now to where they are, excuse me, you're comparing your next to where they are now.

“And I think that's probably what's driving you crazy.”

I want to bring Jade in. What are you hearing? How old are you? I'm 24. She's 23. I think Ken is exactly right. Number one, you're just getting started. My husband and I got married at 23.

And Ken is exactly right. You both came from families that did fine. And did well. And better than fine. And you do feel that pressure of, okay, we both have a lifestyle we are used to.

We want to get there right away. And you're right. You know, you've got 50,000 invested. No debt, 50,000 in cash. You've done extremely extremely hear me well for 23 and 24 year olds. You are so far above the game.

I don't know if you heard the first call that we took. Where it was some folks in a similar situation. And I was explaining to them the power of compounding interest. You are in such a magnificent situation because your margin is yours to invest. And you're not a millionaire today,

but I'm telling you it ain't going to take long. Ken Coleman is not going to take long at all. And I don't know if you've sat down. Here's my advice to you. And I've said this many times before.

Fear comes into forms rational and irrational. And what I find is the irrational forms tend to be extremely vague. So what you're saying, I'm just afraid I won't be over to retire. I'm just afraid I'm going to mess it up. I'm just afraid that we won't build wealth.

Why? In what way? What's going to happen? So what I would challenge you to do is take that vague fear and put some like substantiated a little and put some meat on the bones.

“Well, if you don't build wealth, why would that be what would happen?”

You would lose your job, the stock market would crash, and play out your worst fears. And then you're going to look at it on paper and you're going to kind of laugh at it. And go, okay, that's pretty silly. Right?

So let's put you on the spot because you're such a kind young man. And let's just put it out there. I want you to be a specific as you can on your greatest fear. The one that you lay awake at night be specific. What is it?

Yeah, we love to move to California one day. And I own a home in Virginia. She'll be moving in here. And it's a lot cheaper in Virginia than California.

And so I just feel, hey, maybe we're never going to be able to buy a home there.

And I understand that. Okay, hold on, hold on. Now we're getting somewhere. That's good, but I want specifics. So let's be specific.

Because we're actually going to use Jade's coaching here, but we're going to give her numbers. All right, so let's pick a number that's pretty realistic. What is that house going to cost in California? Roughly.

Maybe maybe 750 for a condo or town home? 750. I think you need to up it, my God. Let's go one point. Let's go one point four.

Yeah, I like that. All right, one point four. How many years from now? That you would be moving to California. Any time frame, I mean, we'd love to move out there soon.

And just rent and buy home eventually. Okay, let's go eventually. And let's go, let's you like one point forty one. Do more than that. Let's start with one point four.

Because they can get a condo or like a smaller town house. I'll play four and you got no debt and all that. So your big fear.

You're telling me your big fear is I'll never be able to amass the amount of money I need to

to buy that house and not be house poor. Is that what I'm here? Correct. All right, great. Jade, take over this is fun.

Now listen to this. Okay, so here's what I do. I take the numbers and I'd work backwards.

“We talked about this earlier because this is vision, right?”

You're not there today. Although I didn't get your income. What's your income today? Combined. It'll be one thirty.

One thirty. Okay, so what I would start with is I'd work backwards. I'd say, okay, I want a house that's one point five million or one point four million.

What do you take home every month?

It's about eight grand every month. It's about twenty five hundred. So I'd be looking at that and I'd say, okay, twenty five hundred. That's my margin. I want something that's one point four.

I've got to figure out how much money I need to save or make in order to have something that's 25% of my take home. That's the math. That's the math to solve for. And when you solve for that math, you're going to start having answers. And it's going to give you something aspirational to work towards.

“Because here's the thing, it is one hundred percent not out of reach.”

It's just going to take some concerted effort to get there fair enough. And then what you can do, you can say, okay. If I take that twenty five hundred and let's, let's play this. I'll say this a five or six or seven year time horizon. What if I invested that money?

How quickly could I get there if I invested it? And I would play that out. I would go on Ramsey Solutions. I'd use the calculator.

I'd use the mortgage calculator.

And I'd use the investment calculator. That's exciting. You're a punch in, punch in two thousand a month. Okay. It still gives them a little bit of margin for others.

Uh-huh. And we'll do it on a, let's do it on a five year horizon. Do you want to do that? 31? Do we like that?

Yeah, five year sounds great. Okay. Five year sounds great. So do you have anything invested currently? You said 50, right?

Uh, that's just in retirement accounts. Nothing else. Okay. Nothing. Okay.

I won't use it retirement. Uh, okay. So if you started investing that today, you're going to have $250,000 in the next five years. And that's just with what you have now. That's no side hustle.

Right. That's no cutting back. That's nothing else. Yeah. So that's pretty sweet.

Yeah. So the point is, we're not even putting you into this timeline that you got to move to California in five years. What we're trying to do is address your fear.

That you're never going to have to live the life you want to live.

My friend, you're in great shape. Wonderful. You need to take a deep breath.

“You need to take those fears to somebody else besides us.”

Talk through him. What's the source of it? No, I'm serious. Because it's okay, man. But it's so huge.

Jay was right to just lay these fears out on paper. Very specific. And just see how silly they are. Yeah. Or how serious they are.

Because sometimes they are justified. So you're in good shape, young man. Thank you so much for the call. You're way ahead of most people you're age. [Music]

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That's net sweet.com/Ramsey. [Music] All right, let's go to Washington D.C. next. We're Angela, away to Angela, how can we help? Hi, thanks for just in my call.

So we kind of have a two-fold question. My husband and I have a great job. And we're in 87 huge neighborhoods. And my question is, like, I want to be a stay-at-home mom. But it's walking away from this high income job.

Where's it?

“And if so, in the meantime, what do I say for what else do I do to prepare for this?”

Okay. Yeah, let's walk this thing back. So when would you leave if you were to leave, how long from now? Well, I don't have a timeframe.

I'm thinking September, but of course, like whatever God tells me to. You know, we've been praying into it. And stuff like that. Um, what's your reason?

What's your reason for walking away? I know, stay-at-home mom, but would give me something specific.

They're five and seven.

Um, you know, I don't care to pretend

before and after care. I want to be down to go. Totally get it. I would only get it. The greatest reason in the world.

That helps me, though. Because my job here is.

“Yeah, well, here's what we wanted to do.”

We want to help you get to a place on this call. Or shortly thereafter where you can make a decision. It's not for us to tell you. Right. That's why I asked that question.

That's the greatest reason in the world. How much do you make? Right. 300k. Okay.

And how much does your husband make? Um, 170. Okay. And so, um, you're in baby steps seven. Uh, what do you-what do you guys have?

What is your retirement portfolio look like? I'm looking for a number. Um, so that works right now is 3.1 million. Fantastic. Great job.

So you're going to go down to 178. Uh, when you walk. Yeah. And, um, my guess is smart as you've been. You guys are still going to have plenty of margin.

Oh, yes. Yes. How much margin? Thank God. Yeah.

Uh, it's about $1,500 a month. Fantastic. I'm having a hard time finding any reason. And it's a lot of pressure of it.

“Well, that's what my next question was going to be.”

Is this because you're afraid that hmm, what if I want to come back? And I might be throwing something away. Is it that or is it fear of what other people are going to say? I don't think it's fear of like anybody else.

It's going to say it because, you know, with my husband and I always joke with him inside the house.

Like, we are the junters. Right. Right. We're content with what we have. Right.

Um, so I don't care what anybody else is. I see it as a matter of honor to be able to do that with my kids. Absolutely. So what's causing in our grip and poverty? I have an eye grip and poverty.

Right. I never dreamed. And he never dreamed that we'd be making this much. Right. And so would it be foolish to step away?

And. No. That's not at all. Because it's your definition of success. Yeah.

It all has to do with your definition of success. Your definition of importance.

“Where you place your values of importance.”

It all has to do with that. And in some people do their values are in. Um, their job and what they generate in their income and their productivity. And all that stuff in the workspace. And other people their values are centered in other areas.

And that is totally okay. Okay, I'm going to give you an example. Have you seen the movie The Devil Where's Prada? Yeah, I have. No.

Oh, man. I can't sign in. I don't watch. I get it. You got to watch it.

But in the movie, she has this amazing job that quote a million girls would kill for.

She's she's in proximity. She's making money. She's doing her thing. And she doesn't like what it's doing to her home life. She doesn't like what it's doing to her relationships around.

And so she sacrifices it and people think she's crazy for giving up the stream job. But for her, her values are placed in other places. That's all I wanted to tell you is it's totally okay. Success for you means you're there with your kiddos. Yeah.

But that's fabulous. Let's rewind to your real fear here, which is we grew up in poverty. So the fear under there is will I. So the question I'm making this up. But the question that comes with that reality is will we have enough.

That's a question that is constantly rotating in your head because of your backwards. Okay. Great. So here's the deal. So we have to reframe the question.

And so instead of allowing the question to be will we have enough. Now we know we'll have enough. Like your confidence when I asked you what will your margin be. It was awesome. You were like, you literally went like this.

You went, oh, 2500 bucks. Like you're so. I don't understand. But I'm praising you and I'm pointing out to you. Your confidence when you weren't thinking about that question.

You just boom, we're fine. So now the new question is what is enough? And so before you make this move, you write that out. What is enough? And it's like what we have is enough.

We are the Joneses to use your phrase. There's enough that I get to be mom to my five and seven year old. That's enough. Yes? It is.

It is. That's where my point of God has thought that out of me the past year and a half. So my point is you're making a great decision. You're making a great decision. And here's the deal.

Those girls are going to be 15 and 17 in a whisper of a moment. I'm telling you, I'm on the other side of it. I'm ahead of you. Okay. I got my middle one's going to college in three months.

I don't even know how that happened. Okay.

My point is you'll never get this time back.

You can always get back in and make more money. Right. Right. It's just so much right. And it's like what else happened. I thought of to do it well.

It's good.

“Have you allowed yourself to picture what a day is going to look like?”

Let's just assume that tomorrow, you know, you're out. You've checked. You're done. I'm conquering my house. I'm doing my house.

And I am going to exercise. Oh, I love that. Right. What are you going to do with the girls?

What are you going to do on the first Monday when you aren't working in it's summertime?

And you realize, I don't have to go in today. What are you going to do with the girls? We're going to go on walks. We're going to go to the park because I'm healthy. We're going to go find something to get into.

Or maybe we'll travel. I don't know. I don't know. I don't really decided summer. I love that for you.

I love that so much. You're going to cook meals. That's going to take care of yourself. Oh, man. My husband wants me.

He wants me to stay home. Like everybody wants me to. Oh, my gosh. What are we waiting until September? He just needed permission.

Yeah. It changed every 100,000. Oh, listen. That's real. Well, the, by the way, that's real.

By the way, that's why that phrase came about and why it has stuck in cultures along because it really adequately describes the psychological situation when somebody's thinking about doing what you're doing. It almost feels stupid. Doesn't it? Yeah. I get it.

But what we got to do is. I know. Well, I hope we helped because we have to reframe. The reason I asked you what the first Monday looks like with the girls.

“When you're done is because that's what you have to reframe around.”

That's what you're deciding on. You're not deciding on being stupid and walking away from 300,000. You were deciding to make unbelievable memories that when it is all said and done long after you stop working. You're dreaming and fantasizing on the past the good old days. Right.

And when you go home, you were in the middle of the good old days. Man, come on, Ken. So that's listen to that. That's joy. That's kind of what we wanted on this call.

So Angela, you didn't need our permission. I think that hopefully you see this now is not a dumb decision. But maybe the smartest decision you'll ever make. You know, that's powerful. Okay.

Well, thanks for, thanks for walking me through that. This man helped validate something. You're awesome. You're an awesome mama and boy.

You'll never, ever, ever regret making the move that your heart's telling you to make.

That I'll stand by and I'll fight with anybody on that. Anytime. Listen to your heart. It's not just a great song by heart. Listen to your heart.

I knew she was going to do it. Oh, it's such a blessing to be able to throw a bounce pass to somebody who can do something where it is. At Ramsey, we don't partner with companies chasing trends or pushing gimmicks. Trust is earned.

“And that's why we send people to FairWins, Credit Union.”

See, a lot of banks rely on teaser rates, marketing hype, and fine print. That's not how FairWins operates. They've been serving members for 75 years and you don't last that long by cutting corners. You last by serving people well. There's a reason their name is on the studio wall.

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[Music]

What is AskRamsey? You ask? I'll answer. AskRamsey is an AI tool that's built and trained on our proven Ramsey principles. And today we're going to break down the most asked questions from the week.

And the big question kind of wins the Derby as the most asked question. How do I determine the appropriate amount and type of life insurance that I need? Wow.

First off, I love people are thinking about this.

And the Ramsey principles do make it simple. When you go on AskRamsey, it's going to get straight to the point. They're going to say term life only. That's all you need.

“That's what we would say here on the show.”

You need a term of about 15 to 20 years. That's what we would recommend on the show. Coverage amount needs to be 10 to 12 times your annual income, which is just what we would say here on the Ramsey show. Now, the reason is it's very straightforward. Your life insurance, guys, it has one job.

The job is to replace your income of something happens to you so that your family is taking care of. Okay? If you should be beamed up sooner than you expect. Okay? And the whole point is we want you to avoid really bad policies, things like whole life,

universal life policies, and just remember, if you're stay at home parent, you need coverage to.

You need term life insurance, even if you aren't debt free.

So that's the main thing here. Life insurance is not a baby step. You need to get it in place as soon as you learn about it can. Absolutely. So remember, AskRamsey can help you determine how much term life insurance you need.

To get from Zander based on your specific situation. Of course, you've been with us any time. We have been partnering with Zander for very, very long time. They are fantastic Zander insurance. Absolutely can help you.

What they do is they actually shop all the different insurance opportunities for you to get you the best rate. I've known Jeffsander for probably 15, 20 years. Yeah. Great dude, great organization. So Zander.com is the website there.

“And go today, you won't believe, by the way, how affordable term life is.”

I don't think most people think that life insurance is as cheap as it is.

Yeah. It's in the teens. Yeah. So very, very important. And you got to do it.

I remember early on when we got this, this teaching. This was many, many, many years ago. And we were in our 20s. And I, just newly wedged, and I remember feeling so responsible going to bed that night, that if something were happening to me, my bride, I didn't have, we didn't have kids.

Yeah. It was going to be okay. Absolutely. And that's the key. The peace of mind and know that if something tragic happens and unexpected,

that after all the grief and all of that kind of stuff that they're dealing with, they don't have to deal with the stress of not being able to take care of themselves. That's why this is such a huge deal. And that's why, by the way, Jay, people are asking that question. They're starting to see it.

Very good stuff. Kathy is up next. And Denver, Colorado. Kathy, how can we help today? Oh, yeah.

Thank you for taking my call. Um, what I'm calling about is my dad's finances. Um, he's 80. Um, and has Parkinson's. And recently had a fall.

So ended up having him in a nursing home. So you'd have access to therapy. So he has, oh, close to 600,000 in checking. And wow. Yeah.

And, um, so I'm wondering if I'm overstepping my bounds to put it in a CD. I've asked him several times and his theory is he's going to get out. And he's fine. And he's going to go back to running his business and everything's good. So he says, nope, don't worry about it.

Okay. But it's, you know, it's only earning 1 accounts at 0.01, 1 that 0.25. But you have power of attorney? Uh, no. Um, you know, because I'm just the kid and I don't need it.

Um, understood. So. So it sounds like I have a feeling. Um, Yes, this money is of issue.

“But I think there's a bigger issue here, which is you've got to work on convincing him”

that you need more control in the situation as he's aging. And hopefully as his health is declining at a very slow rate is was my hope here. But you said he's 80. How long has he had Parkinson's? Um, he's at Parkinson's for probably 25 years.

Um, his mental state since this fall has deteriorated. Um, and he, he, yeah. Um, I'm the only child. So I don't have like anybody else to kind of bounce ideas off of. What about his soul?

Um, his previous.

And so I had originally thought I would try moving him home this summer when the weather wasn't going to be an issue.

But, um, last time I talked to him here this morning, he thought he was in a hotel. Um, so. What does his retirement account like? What does he have there? I know he's got 600K in checking.

What does the rest of it look like? Um, most all of it's in CDs. Um, and honestly, I would have to go look all those up. I'm not 100% sure my names are on the checking accounts. So I can write checks.

Um, can you just move the money and not? I mean, I, I'm not saying I would move it to a CD. I'd probably just put in on how you old savings account. But can you, okay, can you move that? You, you're on your name as on that account.

I, honestly, I might just go ahead and do it. He's going to be none the wiser and it's for his benefit. Um, I probably wouldn't go as far as to invest it because I feel like he needs. He wouldn't need to sign off on that. But he has more than 600,000.

“That's what I'm trying to understand, correct?”

Yes, yes. Yeah, he's, um, what's his work? I mean, if you had to guess. Oh, uh, including land. Yeah.

Um, probably 10 to 12 million.

Oh, my gosh. Yeah, I, I guess the reason I'm asking this is Kathy. I love where your heart's at and I'm so glad you call us. I don't think you have to do much here. Does he have an estate plan?

No. Oh, now that, now that to me is the priority. You getting in charge of you to take it over his finances. I think that's going to happen pretty soon. Anyway, um, he's in such good shape that I think the bigger issue is is like,

you're the only child. What kind of a will does he have? There's no will. There's no will. He has to do that.

Like that is, that is priority number one, not you managing his money. You're already managing his money in the sense that if he begins to lose all of his ability to function, you're already on the account so you can do all that. But the guys get 10 to 12 million out there. You need to get a will while he's still coherent.

Yes. Yes. Okay. Okay.

That's probably already number one.

You know what's going to happen? Jade tell them, tell her what happens if if he passes and there's no will. There's no will. It's going to go through. The courts is going to go through probate.

There, it's just going to take forever. And you don't know how all of this is going to get divied up. I mean, you're the only child. I don't know what else is going on. I don't know what happens if he's got that.

That brother and everybody comes out of the woodwork. Yeah. This is scary to me. This is something I would be dealing with this weekend. Not this weekend.

Like, well, you're hanging up the phone with us and you're going to see dad. Okay. Now, listen, you know how to talk to him. Okay.

“But you've got to be asking him questions like, hey, dad, do you have an estate plan?”

And things of this nature. And it's not going to be fun to talk to because he's thinking about getting out. And last thing he told you, I'm coming back to run my business and all these things. Yeah. You know what I might do?

I might call up a lawyer and find somebody that will take this on. And that will go with you to him. Great. And kind of work. Oh, okay.

You know what I'm saying? So your dad doesn't have to go anywhere. You could almost start wrapping this up. So I would get with the lawyer. I'd say, here's the situation.

We need to get this done. He's not going to come to you. And try to knock out and let him get, you know, the just of the situation in order to get that started. Okay.

Okay. All righty. But I would say this. I'd start with a question with dad. Hey, dad.

What's your plan? What is your plan?

“And maybe you've already had this conversation.”

Have you? Yeah. To a certain degree. And yeah, he's going to get out. And everything's going to be fine.

And he's. I understand. Dad, what is your plan upon you passing? Because that. I don't think he thinks he's going to.

That's going to happen. Wow. Well, no. That's. I don't know.

How he figured that one out? Because you know, nobody else knows. Nobody else has gotten out of this deal alive. That's true. No.

No. Well, Kathy, I'm not sure. That's a tough one. But this has got to be the sweetest. Kindest, most respectful.

Nudge. Yeah. There's no one else to do it. And it trusts me. This isn't.

It's not going to be nearest painful as what it will be if you don't get this handle. I can assure you of that. [MUSIC PLAYING] Oh, we've had a blast on the road, taking the Ramsay show out on the road to see all you find folks.

We did Charlotte and Denver. Jade Nye were out with John Deloni and Denver just last week. And we're about ready to head out next week. To join Rachel Cruz. It'll be Rachel Jade and myself on April 21st in Phoenix.

And we have a few seats left. Not many, but a few. And it's your last chance to snag those. It is a live Q&A. So it's the show.

And instead of phone calls, we've got people in the room standing up at Mike's ask us questions. We have a lot of fun.

The energy in the room is absolutely amazing.

So if you're listening to us or watching and you're in the Phoenix area, we'd love to see April 21st. Go to ramsysolutions.com/events. Ramsysolutions.com/events. It gets your ticket.

It's going to be fun.

“Are you going to be enjoying any Phoenix food or sights and sounds?”

Have you thought that far ahead? You know, if I could, I would try to get to a basketball game. I know. We already checked on that. Unfortunately, sons will not be in town.

That, come in. I know. We absolutely would have been there. So anyway, it's not going to happen. Lesslie is joining us in San Diego, California. Lesslie, how can we help?

Hi there.

So I'm looking for financial advice.

I've had a lot of major changes in my life over the last couple of years. And the most recent one is actually, but me too, a housing issue where I'm not sure if I can even afford housing. It's just for shock at this point. And I have family and friends who are getting me advice and options and different things to do.

And I'm just not sure what is really the best option for me. Okay. Maybe walk us through these options that you're getting all this advice on. So one is all this kind of plays into. I was doing the baby steps before all this happened. Oh, you sure all what happened.

Take a step. So my mom passed my month. Oh, I'm sorry. And I was living with her helping to care for. Oh.

So I was on baby steps to came off all of my steps because I a couple years prior. I was in a car accident and I got a settlement and I my co-worker was like, Hey, our job piece for this. Do it. See what it says.

And if we do anything with money.

So I started to, you know, the dates were in baby steps. I don't want anything. And I was on step two and then my mom got sick. Um, cancer. Sorry.

So I funny a week after she was diagnosed. I watched the video of your guys is and all of them had said in any instance of cancer, drop everything in state.

“So that's what I started to do because I wasn't sure what to do next.”

And I was focusing on keeping her from mom. But she now passed and I can't afford the place that I was renting with her. And frankly, I don't. I wasn't expecting the cost to be still close to what I'm paying now on my own. For our studio, compared to what we were working.

Sure. So I, I have been looking for different options. And, you know, there are different things. So I saved some money. About 13,000 dollars in cash over the last couple of months to try and get it.

Get an essay to figure out what I want to do. Um, I have. They're not. Blood related, but they're family. Um, and they, they have offered to help me buy a home and I would pay them back.

No. It makes me nervous. Yes. I'm fully so. I don't want to ruin the relationship.

Absolutely. Go with your gut. So take that off the list. Shall we? Can we just delete that?

Okay. Delete. I have been looking at housing and I'm about $6,800 short on just basic cost. Um, whether it is rent or, you know, estimated utility cost. Um, I do have a car loan, which is pretty.

Pretty high. I mean, it's not $2,000. $21,000. But the monthly payment on it's about $6,000 a month, which is, which is roughly what I'm sure. Sure.

Yeah. Yeah. Um, I have, you know, like I said, I saved up $13,000. So I can take a good chunk out of that and try and refinance it again. And that, that was a thought.

And I, you know, continue to try and save between now and when I have to leave where I am. What about?

“But I just, when do you have to leave where you are?”

It's two months to find a place. Okay. Two months. What about? Because you're, you're getting back on your fee.

And I'm going to ask you in a minute what type of work you're doing. But have you considered someplace where you have a roommate? Because you've just been in a roommate situation and you were able to, it was tenable for you. So what if we find another roommate situation temporarily?

While you're able to get career back up and going and all of these things. Pay it maybe pay off this car or sell off this car? It is crazy not a small 300 square foot studio apartment is the same cost as your roommate.

So if what you're saying is I'd rather have a studio apartment than a roommate.

And it's the same price. That's fine. Yeah. So that originally I was like, oh, if it's cheaper, I'll do a roommate. I mean, I don't have anyone I can do it with.

But all, you know, they're their ways to find people. Yeah. Kind of a thing. But the price is, you know, minimal. Like a hundred dollars difference maybe.

“I mean, do you have to stay in their area?”

Do you have to stay in the area that you're in? Because it sounds like your area is super expensive. Um, so that that is leaving the area that I meant. Okay. So let's get all numbers. Okay. The state neighborhood that that number would be like 3,000.

Okay. But what's the one. 30 minutes in one direction or another gets me closer. What, what are the prices?

What's the one bedroom studio going to cost you?

A one bedroom studio. About 20 minutes from where I am now is between 16.95 and 2,100. Okay. What's keeping you in the area where you are now? Um, my job. So I do work for a construction company. And my radius has been 30 minutes from that job.

Okay. I'm going back here because there was so much floating around. The $1,600, so I'm taking the lowest number. You just throw out at a 16.95. Okay. That's your saying.

If you got a roommate for something bigger, it would be the same amount. Did I understand that right? Yeah. Okay. Is the 1600 a month? Is that putting you 600 bucks behind? About, yeah.

Okay. So when I factor in utilities, yes. So we got to get out of this car. That's what I'm thinking. Yeah. Because with the $600 in the car payment,

“obviously make a massive difference for you, correct?”

Yeah. So I-- Would you still be scraping in my bank account? You what? I have 13,000 in my bank account. Uh-huh.

Tell us, okay. So I have been essentially holding, while we figured out what was happening with my mom. Great. I want to-- I want to get some real numbers from you before we ran out of time.

First off, I want to know, what are you earning from this job?

Um, before taxes, 62,000 a year. Okay. What does that look like? What do you take home every month? Um, my net is about 3,000. I am putting money into a 401(2) and--

Okay. There we go. We need to pause that. Uh, I think that we need to get you familiar with the baby steps, and we're going to make sure you leave with every dollar and everything that's connected to it, which is our Ramsey plan.

But what I'm getting--what I'm trying to get you down to is a foundational spot. We need all of your income at your disposal. If we were to do the following things, this is going to work for you. If we pause retirement because,

kind of like what you said with the cancer deal, you kind of pause and you--you stuck-- stacked up money until it was time. It's the same thing with investing. You're not in a place that you're ready to invest.

So it's temporarily pausing. Get that money back in your pocket. How much money would that be back in your pocket? Um, okay, it's 6%. So about $200 each paycheck please.

Oh, there's--well, we're at $400 already. And what I would do if I were in your shoes, that $21,000 car, I would look and see what it's worth. Hopefully you're not upside down.

I would go on Kelly Bluebook tonight. See what it's worth private sale and I would sell it. And then I would use the $13,000 that you have. And I'd maybe use, I don't know, 8 or 10, and I'd buy myself a car in cash.

And now you've still got a little bit of money there

“that if you have other debt that you need to clear out,”

you can start using that for other debt. And I keep a $1,000 saved. That's what I would do. Because now you've got the $600 back in your pocket every month. Plus, the $400 from investing,

I just found you $1,000. Okay. Why are you not excited about this? That's a lot of money, girlfriend. I just broke you funny.

It's so--my job matches my 401k. So that's why I-- Yes, we get it. You'll be able to do that later. Remember, this is just temporarily.

I want you to have the money that you need to get in a situation where you can find some stability, get your legs underneath you, and now you're not feeling like you're in crisis mode. And when that happens, you'll be able to find ways to build up your income,

and eventually you'll be able to invest again. And that match will still be there waiting for you when you need it. [music playing] Welcome back to the Ramsey Show, and the Fair Wins Credit Union Studio,

alongside Jade Warsher. I'm Ken Coleman, so excited to have you with us today. Triple 8-825-5225 is the phone number. We start off with Joshua and San Francisco. Joshua, how can we help today?

Hi. I've got about $80,000 in tax debt,

and I'm wondering if I should file bankruptcy

and just kind of start over. What's your income? 70,000, and then combined it's my wife's like around 100,000. Okay. And that's your total debt that you just gave us?

Yes. Okay. What is your mortgage or your rent? The rent is 2,200. Okay.

What's your take-home number every month? Take-home for me is probably like 4400, and from my wife, her jobs a little bit seasonal. She claims Airbnb is probably around like 3,000 a month, at least on average.

Okay.

“And what's making you think that bankruptcy is the only way out of this?”

Because it just seems like such an insurmountable number and now the taxes are like wrecking up interest and penalties and the credit cards are, you know, I used to be able to balance transfers and kind of keep them under control.

But it's just gotten out of control. And so now, you know, it's just high interest. I can make the minimum payments,

but it just seems like I'm never going to be able to pay it off.

Sure. What do you do for a living? Maintenance tax for apartment buildings. Okay. And what is your wife, too?

She claims Airbnb's. That's right. And some care getting. Okay. I'm going to start right here and go right to what I think is one of the key things we need to address today is

what is the amount of income after taxes? If Jade and I could just put it into your account today, okay? What amount of money would allow you to start making progress and feel like you're actually getting momentum? You mean like how much money?

Let's just assume I'm giving you extra income after taxes every month. I'm asking you, do you know how much money? Extra a month. If I gave it to you in payments,

“what would make a huge difference for you where you go?”

Not only am I taking care of it, but I'm actually starting to knock this debt down. I'm making progress. I see momentum. What's that number?

Additional income. I mean, it's a 160 or 130 grand total. I don't know. That's the problem. You see what I'm saying?

That wasn't a trap question, but I don't think you're on a budget. Am I right? Correct. So the reason I ask you that is because that's part of the issue.

Your wife needs to be working at minimum 40 hours. Seasonal work for people who are broke and are worrying about bankruptcy is not an option. There is no seasonal work. You work in every season.

You're working 60 hours a week. 4 a season. Right? You said that like, that's interesting, but like you didn't believe me.

I mean, we have a 14 year old. I've, you know,

“I've encouraged her to get more of a regular job for many years.”

Why are we talking about the, but you have a 14 year old self-sustaining. 14 year old can let themselves in from school. I've raised three kids. My youngest is 18 now.

I'm not worried about the 14 year old. That's an excuse. Why is it she making more money? I'm just selling to you where she's at. I get it, but you like example of the fact even that she has to work at all.

Well, that's a problem, but I'm trying you called us for financial advice and you guys need more income. So let's shift. All right. I can't solve the marriage problem.

I can't solve that issue. But I can tell you this. I can tell you $3,600 changes your life. Without question. $3,600 a month.

So let's shift it to you. Okay. Because she's resentful for working. And you're calling us. She's not on the phone.

So with the skills you have,

can you pick up over time or go to a second job?

And what this basically means is roughly $2,500 a month, or even $2,000 a month would make a big difference. Can you do that, Josh? I could. Yeah.

Well, that's our first work. I've worked two jobs. Many points in my life. Great. But still, like so say,

I came up with an extra three grand a month. To pay down the stats. Even if I'm putting every dollar with that, it's $36 grand a year. Mm-hmm.

It would still take me what five years, four or five years. It's going to take you between three and four years

Right. So my question is.

As an alternative to that,

what if I just filed for bankruptcy?

“Got rid of as much of the stat as possible.”

What if I told you what if I told you I spent seven and a half years paying off $460,000 of debt? And I didn't file for bankruptcy. I think that's awesome. I'm just kind of, I'm older now.

Why are we difference? How old are you? $1.47. You're not old. Here's why.

Here's why. When you file bankruptcy, the control goes out of your hands. Yeah. Do you understand what it looks like? I don't think you do.

Go ahead. Pay the picture. They're going to decide. They're going to make all the decisions. Depending on which chapter you file,

they're going to make all decisions. They're either going to say, "Hey, we're going to put you on a payment plan." Which is honestly something you can do yourself. They're going to look at your assets.

And they're going to say, "We're going to sell off these assets." And these assets are going to put that towards the debt. That's something that you can decide to do for yourself. It's going to take your credit. That's something that's already happened or going to happen anyway.

Do you see what I'm saying? So why relinquish control when you have the opportunity to hear it go, "Okay, I can look at my assets. I can determine what I want to sell off when I want to sell it off. I can call the IRS.

And I can say, "Let's get on a payment plan. Here's how much I can put towards it."

“And that's what I want to retain for you”

is the dignity of being able to make your own choices and not them come in and have your stuff sold out from under you and all the choices made for you. That's what I'm trying to save you from.

I've never experienced bankruptcy.

Dave Ramsey has. And he would say, "Here and tell you, you can work your way through this." And I'm telling you from my experience of paying off debt. The next four to five years, they're not going to be fun.

I can tell you that right now. It's not going to be something that's enjoyable. There will be enjoyable parts of life. But working two to three jobs is not going to be the enjoyable part. But what is going to feel good is knowing that you made some mistakes.

You made a bit of a mess. But you're also the same person that can turn back around and clean it up. There's dignity in that. And there is something. There's a confidence that's built in that.

And I can tell you on this side of it, if you allow yourself to walk through that, you're going to come out of this a completely changed person. And guaranteed better for it. Guaranteed Ken. Oh, there's no question.

“I think Joshua, what we're hearing is a guy who”

feels like he's ready to give up. You called us going, "I think this is my last shot." This is the Hail Mary. The clock's ticking down. And I only have a 55-yard pass.

And I hope someone catches it. And I think it's bankruptcy. And we're telling you that's not the case. You've got to believe. I do tell you, you've got our marriage issue.

You guys got to get on the same page. I get that you don't want to do it. But I think you guys are in the half-two stage. You're past the one, too. [MUSIC PLAYING]

All right. Let's cut to the chase. It's easy to get discouraged about crazy house prices and interest rates. But when you have the right real estate agent

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Find a Ramsey trusted agent near you at RamseySolutions.com/agent. That's RamseySolutions.com/agent. [MUSIC PLAYING] If you're working the baby steps the best and fastest way

to do it is by using every dollar, it's more than just a budgeting app. The plan is built right in. You can track your progress. Plus, get personalized recommendations

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All right. Let's get to Alex right here in our backyard in Nashville. Alex, how could we help today? Hey, guys. Me and my wife are recently married.

We have a 10-month-old. We're about $35,000 in combined debt. I make about $84,000 a year before tax. And she recently started doing photography. And that's bringing in kind of a slow pass of income.

We have about $13,000 saved. And I'm about to receive a $10,000 bonus.

Okay. $10,000 bonus. I was just writing everything down. When do you get the bonus? I always--

“I was supposed to get this past paycheck”

that I worked for the government. So there's no talent. It could be next paycheck or three months from now. So I'm not super depending on that right away. But I was wondering what the best course of action would be to do with that.

I also recently found out that I have a pension from an old job that I have. That I have. Okay. And I have to decide what to do with that. How much?

Well. There's about $13,000 in that. And when I called them a week ago, they said that I can leave it in that fund for up to five years after separation from that police department. And it'll grow at a guaranteed five percent.

Or I can transfer it to my new retirement. Or I can withdraw it and take a penalty. I would transfer it to retirement. I would not pull it out. If it's retirement funds, I'd keep that retirement fund at this point.

Because the penalty will be what not just that you're taxed on income tax,

but will there be a 10 percent penalty?

I believe she said it was 20. Oh yeah, we're keeping that locked in. So yeah, I would do. If you're able to do a direct transfer roll over and just roll it over to an IRA, I would do that.

So let's take that. Let's take that money off the table. So we've got the 13,000 saved. We've got a $10,000 bonus that's coming at some point. We don't really know exactly when.

So that gives us in theory 23, but today just the 13. So are you familiar with the baby steps? I am. We're on baby steps too. Been on it for quite a while.

We spent the last two years paying off about $80,000 with a private student loans. Oh wow, very good. Very good. So this 35,000 is just the tailland. What kind of what kind of debt is it?

Eighteen of it is government, the student loan for me, free of it is a government student loan for her. Three of it is a credit card that she had before marriage. And my missing any. Yes. Oh, sorry.

About 11 of it is a vehicle. Okay. Okay. So yeah, I'm going to look at this and I'm going to reverse engineer it. And I'm going to say, how quickly do I want to pay off this 35,000?

This 35,000 dollars of debt. And that's going to inform how hard we work going forward. Is that fair enough? Yeah. So I don't know if you've gone into every dollar, but in every dollar, there's a really cool feature in there.

It's a financial roadmap feature where you can basically go in, plug in your numbers and it will say based on what you're doing today.

Here's how quickly you can pay this debt off.

“So my question to you is how much margin do you have to throw out this debt every single month?”

Well, we just recently sat down to do complete overhaul of our finances. And I would say currently like excluding her photography, maybe 500 a month. Okay. 500 a month. So you brought up the photography.

I want to actually talk about the photography because I think that's part of you guys break in this thing free. You didn't include it in your $84,000 of debt, which makes me think there's not a whole lot. I'm sorry, in your $35,000 debt, which makes me think that there's not a whole bunch of money being made from that. How much is she bringing in every month? Well, she started two months ago and she initially was booked out every weekend for a month and she did all their shoots for free.

And now she's doing shoots for about 100 a shoot. And she's doing usually two a day Friday Saturday and Sunday. Yeah, I want to go back into the numbers here. You have a car loan for $11,000. What's the payment on that every month? It's about 500.

I wanted to, when we got married, we talked about just selling it and getting something cash. Unfortunately, there's some damage to the vehicle. No, I don't know why we're not talking about the $13,000. You said you're walking the baby steps. Well, if you're in the baby steps, you shouldn't have $13,000.

“You should have $12,000 at your disposal today.”

And if it's me, I'm going to pay that car off. I know that's not the smallest debt that you have. Or maybe it is. I can't remember what the number. He's got $3,000 in credit cards and $3,000.

I don't know if you're okay with that. But I want to pay that car off and get that $500 a month back. And that's going to take care of that credit card payment fast. I don't know why we aren't paying the car off. Well, the reason that we had so much shade is because originally we were living with my family.

And we didn't know how much money we needed because we were first time parents.

So we'd say that up. And then I just didn't know the best way to it. No shame at all. I'm just saying, you know, I'm not cracking on you. I love that you've been responsible.

I'm just saying that's $12,000 you have to tackle this stuff. You know, at this point, yeah, if you wanted to pay off the car first, fine.

knock out the credit card for $3,000, knock out the student loan, and then come back and hit the car. That's fine. The point here is you've got $23,000 to pay off. And how quickly can you do that?

“If you throw $2,000 a month at that, you're done in six months, right?”

If you throw $1,000 a month at it, you're done in a calendar year, right? And it's a life goes to work, Jade full time. That's still the photography part time. We're only talking about a season. We're not telling her to shut the dream down.

Right. Just go get a $30,000 job or something. And boy, we're out of this quick. Real fast. Right.

But you guys are going to have to, I think this is your first encounter with kind

of like that sacrificial lifestyle. And you're going to feel it. You're either going to feel it in time. You're going to feel it in your wallet. You're going to feel it in the things that you wish

you were doing with your money instead. The things that you wish you were doing with your time. Instead, because I can guarantee you this can. Nobody likes a side hustle. No.

Nobody likes working extra hours. And nobody likes doing it for 12 months. So we'll go ahead and get, that's a give me. We'll tell you that that's the truth. But if you're asking us, hey, how do we do it?

That's the method you keep a $1,000 saved as baby step one. You take anything else that you have saved.

And you apply it to your debt using the debt snowball method.

That's smallest to largest by balance. You knock them out. And then from there on, now you're on to being able to take that money. Save up three to six months of emergency funds. But baby step two is the kicker because that's where the sacrifice lies.

Right. What are your thoughts? No, I mean, that's exactly what I was looking for. I guess I was just kind of looking for the green light to go ahead and just dump the 12 and keep the 1,000 saved. And I really want to clarification on the pension as well.

Yeah. I guess I'll just move that over to my current retirement to the target at the debt. Because it's most of it will get sucked up anyway if you do this. If you said there's a 20% penalty, you'll be taxed on your income tax. Yeah, I would not touch that.

Please just roll that over. And make sure your wife's on board with this. Yeah. What are you doing for a living now? Uh, federal law enforcement.

Yeah. Are you able to pick up, you know, part-time work, you know, in that I am not. Okay. But the nice thing is I have guaranteed salary increases. Okay.

So in October of this year, I'm going to get a $20,000 pay raise and October of next year to be the same. Great. Well, if your wife is willing to just for a season. Start making more money. And boy, you guys are going to be out of this.

I'm going to tell you right now, we've heard too many stories. So I'm going to challenge you to be out of debt in 10 months.

“I think you totally have that in the back.”

That's, you know, I, that's going to require again sacrifice and stretching, you know, as far as more work. But I, I think you guys can do that. Yes, sir. Sorry. Appreciate you guys.

Yeah, appreciate you. Thanks for all you've done to server community and in our country. That's great. Uh, you know, this is very interesting. You said something that I wanted to bring back to you to young couples that are out there.

Listening in their new to this. Yeah.

You said, this is your first time we're talking to Alex, you know, in his wife.

It's your first time reaching this thing where we've got to come together and sacrifice. And you and say I'm a voice in the model of that. Encourage young couples. Yeah. This is good for your marriage.

Whenever you can lock arms whenever you can band together and gang up against the thing that's trying to horn in on your marriage, your life, your relationship, your dreams for each other. That is so solidifying. And what you get the opportunity to, to prove to each other is I can count on you. And you can count on me if Sam says he's going to do it.

He does it if Jade says she's going to do it. She does it.

“That is the best thing it builds trust and security in your marriage.”

And wealth. 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 AskRamsey today.

That's RamseySolutions.com. [ Music ] All right, our Ramsey show question of the day is brought to you by Why ReFi. Defaulted Private Student Loans can leave you feeling stuck and overwhelmed, but Why ReFi helps to explore refinancing options with a low fixed rate.

Visit WhyReFi.com/Ramsey. That's WhyRefY.com/Ramsey. May not be available in all states. Okay, today's question comes from Brooke and Alabama. My husband and I are on baby step two with about 50,000 in debt.

We are also in Stork mode, meaning they have a baby on the way. I love that my husband has a generous heart.

But we always go over budget with typing and gift giving and never make progress paying

off debt. I suggested that we buy smaller gifts for now so that we can be more generous in the future. But he won't consider doing this.

“Am I being stingy or is he being too generous for our means?”

Okay, so I want to start by differentiating between the typing and the gift giving. So if you're a tie there, that means that you're a Christian person and you have the belief of giving 10% of your earnings to a local church. And it sounds like they have that belief. So I'm going to decouple that from the gift giving because if that's a religious value or conviction that you have

that needs to be part of your budget, I would say whether you are in baby step two or not. So for most of us, myself included, even when we are in baby step two, tie is at the top of the list. Giving is at the top of the list. We never stop tiding. I would not recommend you do that.

Now, if the tie is aside from the gift giving, if that is causing you to go over budget, that means there's something else that's wrong. Either there are other items in your budget that are overinflated or your income is an issue, right? I mean, that's what I would say.

Yeah. So that would be my first, I'd put my detective hat on and I'd say, okay, are we going over the budget simply if we tie?

If we stop the gift giving, are we still in the red? And if that's the case, we have further work to do. All right, let's talk about the gift giving side of it.

“Um, in baby step two, I think that you need to be very.”

Chooseie, uh, parsimonious in your, in your gift giving because generosity generally flows out of overflow. And you don't really have that. So I would be very thoughtful about if I'm giving when I'm giving and how much I can actually put towards it because you can't be putting yourself in the red being generous. Yeah, you know, yeah, you just can't give gifts right now. I mean, if we're not, we're talking about your kids. Are we talking about the bird right? Exactly.

Chris, what are we talking about? But if we're talking about like, hey, you know, Larry, Larry's very tiring. I'd like to get him a golf head cover, it's like, no, man, you're broke.

We're all chipping in for Janice, you know, she's getting.

Janice, I can tell you who doesn't need a gift, Janice. Janice, she don't need it. She's got cats at home. She don't need anything. She's that is so, she's not like that's right. There's like hundreds of thousands of Janices that are listening to us right now. And we're going to get a snack for that.

Janice, we love you. I'm all, we love you, Janice.

“Yeah, that's funny. Oh, good stuff there. Let's go to Kylie now and Dallas, Texas. Kylie, how can we help?”

Kylie? Hi, how are you? Good. How are you? I'm doing well. I'm calling with a quick question. We're already my husband and I. We actually have no debt.

Strong savings and invest constantly and consistently. But we feel very stuck. We're hesitant to make big decisions like buying a home or spending because we don't want to make the wrong move. So we just are looking for clarity on what we can actually afford and how to move forward. Confidently without overthinking every thing.

Great. All right. So let's take the thinking out. Let's just look at the numbers. How about that? Is it okay? Sure. Okay. So what is your combined income? Um, combined income is my husband makes 200k a year. And then he gets a quarterly bonus that ranges between 20 and 35,000. So let's split the difference there, right? Let's go 25,000 just for fun.

Really splitting. I know for those of you keeping score, but let's say, so that's another 100,000. Correct. So 300,000, do you bring any income in? I do not currently. So 300k, what do we have saved? We have around 250,000 in a high yield savings account.

Correct. What do you have in your retirement accounts? We have 50k in a brokerage investment account and maxed out the Roth IRAs. And we also maxed the 401k. So what's your total investment and that's nest egg right now? What is it at? Including the 401k? Yeah.

I'm not sure.

I believe so. Okay. Yeah, I was just trying to get a full picture.

The bottom line is you have $250,000 in cash in a high yield savings account,

which is way above what your three to six months of emergency fund would be. And you got a great income.

“So what type of house, what's the price point for the house that if you had all the money right now?”

I don't want scared, Kylie. I don't want Kylie who's dreaming because she can get money. How she wants to get within, you know, obviously we're not talking about any house. That was poorly worth it. What is the house you want to get? Yeah. Just give me the price range.

For the school district that we would prefer to be in the entry-level homes or probably around the million. Okay.

And so when I look at that, you know, our rule of thumb here is you don't want your monthly payment on that to be any more than 25% of your take home pay.

And of course, that's everything in that's HOA. Taxes insurance, all of that is included in that price. So my question to you is if we were to get on a mortgage calculator and plug those numbers in, you've got the two, and this is what I would do tonight with your husband. Technically at your disposal, I would take the 250,000 that's in the HOA I say.

And I would knock it down to six months of expenses. What would you call six months of expenses? Currently without having any debt, we're renting our rent as 3,000 a month. No car notes, no anything. So I'll say 6,000 a month.

Okay. Okay. So 36,000. We save that out. Does that feel good? We'll round it up to 40. That makes me feel good. Okay. So now we're playing with $210,000. So what I'd be looking at is what's you guys, is take home pay.

His take home is 6,000 after taxes paycheck. 6,000. That doesn't sound right on the three. You said this man makes 300,000 a year. Well, he gets quarterly bonus this. So just from the 200K, it's a little over 5,000 a paycheck.

It's a little under 12,000 a month pay home. Okay. Okay. So what I would be doing is I would be looking for a mortgage of around $3,000 give or take. That would be my goal. That you're paying every single month. So then what I'm going to do is I would go into a, you know, mortgage calculator.

I'm using the one on Ramsey Solutions.

“And I'd say, okay, what do I have to put down in order to get my mortgage into that placement?”

And then I'd work backwards from there. Right now you got 210, you could throw in there. And if you wanted to get into this brokerage account, you could. That'd give you 260. If you wanted to, there's really no penalty in you doing that. And I'm looking at a 15 year fixed rate.

If I do that, if I put $260,000 down on this million dollar house,

that gives me a monthly mortgage payment of $7,955 estimated. For you, that's too high. So then I go, okay, what if we doubled that? What if we saved up, you know, 250 more over the course of time? How quickly could I do that?

Now I'm putting 500,000 down on this house. When I do that, suddenly my mortgage is down to $5,800, right? So that's the game I would play. And that's going to help you know, how much money do we need to have saved up? In order to do this in a way that feels good, it feels right.

Right. Would you recommend in the meantime to just continue renting in the full district that we would want to be? I would. Yeah, I would. I think that that's where you guys want to be. And all you're doing is when you're renting you're just buying time. You're buying time and you're buying money to stack up for this down payment.

And I think that's a great investment for you guys. You're going to be there in the next two to three years. [Music] Dave Ramsey here, most people stay stuck with their money because they're not paying attention to it. Most people are living paycheck to paycheck.

Stressed out and broke. Don't be most people. You work way too hard to be broke and feel broke. And you deserve to have something to show for it.

“That's why we built the every dollar budget app.”

It gives you a personalized plan for your money. This shows you how to free up extra money every month and use it to beat debt and build lasting wealth.

Step by step. Look, most people hearing this will just keep hoping something changes but not you. You're ready to make change happen. Starting now. Go download every dollar in the App Store or Google Play and start for free today. [Music] Our scripture today is first Thessalonians 5/11.

Therefore encourage one another and build each other up just as in fact you are doing. Our quote of the day from David Brinkley, a successful man is one who can lay a firm foundation with the bricks. Others have thrown in him. I promise you I've done that.

I've done that a couple times in life. That always feels nice.

“Chris is up in Atlanta, Georgia. Chris, how can we help today?”

Hey, I was calling you had a question. I wanted to get you guys opinion on if the vehicle that being a wife of looking to purchase is in line with our current financial picture. Okay, tell us about it. How much you cost? All right. Looking at two different trucks. Then one of them that really like is $45,000.

Okay. What's the other one? The other one's 35,000. Okay. And what else do we need to know here? Do you have any debt?

No, sir. No debt. Just the mortgage. And what do you have saved up for this vehicle? Well, currently in retirement savings. I have 272,000 in a traditional 401k through my employer in the wife. We have 115,000 like with cash in a savings account.

And what is your buying income? Last year, my taxable income was $187,000. My wife makes 35,000. So after tax bring home between 150 and 160. Right. So you've got more than enough to cover.

It looks like the truck plus have a good three to six month emergency fund in cash. Correct. Correct. Yes, sir. And really where the question comes from is we just bought my wife.

My wife, a new vehicle after having our first child.

We did that with cash. And it was $37,500 vehicle. We paid cash for that. And we have cash to pay. We'd be paying cash for the truck as well.

It just felt like a lot of money. You know, within two months of each other. Yeah. I mean, you've got it. What would you of the 115,000?

“What would you consider your three to six months of emergency fund?”

Um, we, you know, probably 25,000. Oh, okay. Well, it sounds like you've got the margin there. Did you have the money possibly earmarked for something else? Because usually when you're saving up, you know, a stack of money like that, you're doing it for a purpose.

Otherwise you'd be investing it, right? Correct. Yeah.

I mean, you know, for me, I've just always been, you know, when I,

because I get paid, I move everything over that I don't need for the month to save me to count. And um, and you just said it right there. You're a language there that should set you three free because you said, um, what you need, you keep in your account and what you don't need, you move over. So that means you don't need this money.

It's not your mark for anything else. And you're wanting to upgrade a vehicle. And what I'm looking at is the numbers of someone who can afford to do that. You don't have any debt. You've got the emergency fund of 25,000. You can spend another 45,000.

And you've still got plenty of money left over. Uh, you've got a great income. It doesn't, uh, go against our rule. Uh, rule of thumb here at Ramsey as we say. Vehicles shouldn't go.

Shouldn't be more than half of your annual take on pay. And, and that's because, you know, vehicles go down and value. And so we want to make sure that we're limiting that. So you're not, you know, you're not going against that rule.

“I think this is just kind of a personal.”

Yeah. Are you, what's your motion? Because you called us to get our take. What was your emotion about it? What does you think you should do?

Yeah. It just felt like a lot of money. Um, it is. It is a lot of money. Well, whenever we, you know, whenever we bought our house.

We put 20% down so we wrote a big check then. Um, you know, we paid cash in my wife's vehicle. We would pay cash for this one as well. Right. No, doesn't.

But does the 35. Only debt. Right. I'm leaning in here. Does the 35 feel way better to you than the 45? Or is it very little difference?

Well, the main reason I called because the 45 is the truck that I want. The 35 was where my wife was called. Right. No, I get it. But I'm asking again.

Is there a different feeling in your gut in your head?

Is there a different feeling about the 35 if I paid 35 for something

versus 45? That's what I'm trying to understand. Right. Oh, my behalf. No, sir.

Great. I'm here. You don't fall into 40. Right. That's what I thought.

Okay. And that's what I thought. I thought there was. And so that's the, that's where the relationships stuff comes in. So now to me, and again, I'm, I was going to give him a guy who's been married almost 28 years.

Uh-huh. If Jade, if Stacy and I are very separate on 10 grand. Uh-huh. I'm going to choose 10 grand less to be in a better situation. Maybe.

I would, I would push it a little bit because. Of course. I would because expense. Something being denoted expensive is all is all has to do with ratio. And I don't, I, yes, but that you've discounting remotely.

Mathematically. Mathematically. Yes. Now, and, and I would put that to her because obviously numbers and facts have the ability to affect emotions. I agree.

And so if she doesn't have the right numerical facts, that's fair. Did you see what I'm saying? I think she does. I would push that just a little bit. These are, yeah, again, I'm not telling you not to do it.

I'm just giving you my take. And I think that, the, what I'm trying to get out of that, I love that you push back on this because what I'm saying is then you got a cast vision better. Yeah, that's true. You're not casting enough to where she feels safe. For some reason in her mind, she feels safe emotionally with 10 grand less.

True or false. True. Sure. So we got to cover that. Now, we got to fix that.

Let me ask this because I didn't clarify this. Are these brand new vehicles or are these used vehicles? These are used to vehicles. Okay. Yeah.

Yeah. I hear what can I say? Well, I, my thought is, this is why you work so hard. You work so hard. I agree.

And you stack up and you save and you scramble and you do all these things so that the day finally comes where you look in the lot and you go.

That's the trick I want. I get it. That one.

“But when the life is going, I don't think you need that one.”

This one's better. Yeah. He's got to deal with it. Yes. But at the same time, I'd be like, come on, woman.

Don't kill my vibe because this is why it all. Okay. Only you can say that because any dude that's got half a brain doesn't look at his life and say, come on, woman. Don't kill my vibe. I'm saying.

Chris, how close are you? Chris, how comfortable are you? Chris, how comfortable are you saying that? I'm going to read it. Don't do it.

I'm going to read it. Don't do it. I'm going to read it. That's my point. Which is by the way, really smart.

That's a pro move. Let Jade say it. I would rewind it. What's your wife's name if you want to say it? Oh, boy.

Yeah, Ashley. Ashley. This is, this is you and me talking. Over lunch. You know, you guys have done so well.

You got to live a little. This is what gives people gas in their tank when they get to take, you know, the spoils of the war and go out and do something with it and have a good time. And by the way, Ashley, you can get yourself a little something too. That's what I think.

I think you've earned it. I'm back at away from the mic, Ashley. I'm just saying it. They've done so well. They're doing so well.

I'm having fun. Yeah. I agree with you, actually, that the $10,000. If I'm talking to Ashley, I'm going to go. Let's walk through this.

Let's walk through the $10,000 difference. Yeah. Let's go. We feel so comfortable with 35. So I want to walk through this with you.

Let's walk through it. And I minimize her feelings, let's walk through it and let her get all of her words out. And instead of having a counterpoint to her words, ask a question in response. There you go, can you? You're so diplomatic.

I love it. Well, it's not diplomat. It's just someone who wants you out of one.

“And I think she for some reason doesn't feel safe.”

She's going to get to watch this. And I actually think she should watch it because they shall see our heart. We're having a little fun of that. But yeah, I think it's fine for you to get the $45,000 truck. We spent all this time talking about these trucks.

What are the two trucks? Yeah. Let's say, what of is a 2022 Ford F-150 King Ranch? The other one is the same in 2019 on a little bit different on the mileage as well. Right.

So the 2022 is the $45,000 one. Correct. Yeah. You know, I haven't seen these newer King Ranchers.

But I had a friend who had a King Ranch when they first came out.

That is a nice truck. It's nice. And I'm not a truck guy. If I showed up in a truck, people would be like, what happened to you? Oh, I'd be concerned.

Everybody in the studios like shaking their head like, yeah, that's the one. Yeah, yeah. I think that's a good move. So hey, I think her favorite dinner, her favorite restaurant. The favorite cocktail.

Maybe a gift. Maybe a gift. And dude, woo her on this truck. That's not manipulate. That's wooing.

That's a big difference.

“And I think if you woo, you're going to go, woo, woo.”

When you get that big old King Ranch truck.

I appreciate it. Hey, to the rest of you.

Thanks for being with us.

“There's ultimately only one way to financial peace.”

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

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