Build Habits That Build Wealth

Summary

The Ramsey Show — "Build Habits That Build Wealth"

Date: August 14, 2026
Hosts: Rachel Cruze & Jade Warshaw
Podcast Theme:
This episode centers on building practical money habits that lead to wealth, navigating tricky financial situations, marriage and money, investing for retirement at any stage, and overcoming obstacles—whether it’s debt, marital discord, or late-in-life planning. Rachel and Jade answer live calls on a range of financial dilemmas with candor, empathy, and actionable strategies.

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Main Themes & Purpose

• Emphasizing the importance of financial discipline and consistent, collaborative budgeting.
• Navigating money management within relationships and marriages—including aligning on priorities and spending habits.
• Addressing retirement savings at various ages and circumstances, especially when feeling behind.
• Tackling debt (from credit cards to cars to mortgages), breaking the paycheck-to-paycheck cycle, and building margin.
• Empowering listeners to make smarter choices, build wealth, and find hope—even when feeling overwhelmed or starting late.

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Key Caller Discussions & Insights

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1. Budget Discipline & Marriage Teamwork

Caller: Robbie in Oklahoma City
[00:44 – 09:02]

• Situation:

  • Married 10+ years, several kids, struggle to stick to a budget—private school tuition, wife’s discretionary spending (furniture, décor, parties).
  • Separate accounts based on who earns what; lack of full visibility for both.
  • No significant debt outside mortgage; wife has $5,000 personal loan.

• Key Advice:

  • "You’re not working as a team. You’re working as two business partners trying to make a household work. And it doesn’t work that way." (Rachel, 08:01)
  • Combine finances: One joint account, together make a detailed household budget using EveryDollar app.
  • Every dollar should be assigned—ensure each spouse has input on categories meaningful to them (groceries, décor, etc).
  • Joint ownership of debt and expenses.

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2. Retirement Worries at Age 70

Caller: Sherry in Orlando
[10:22 – 19:10]

• Situation:

  • 70, limited IRA ($130k), pulling funds to cover medical expenses, high medical costs, Social Security is only other steady income.
  • Financial advisor warns IRA will last ~7 years at current burn rate, suggests lowering distributions, riskier market exposure, or finding a job (but caller is on high-flow oxygen).

• Key Advice:

  • Look for at-home work: "If you’re able to have a conversation like this with us on the phone, customer service jobs from home could be an option." (Jade, 13:40)
  • Discussed shifting more of IRA portfolio from low-yield bonds to higher-performing mutual funds or equity mix (suggested 60-80% market, even at 70, to help funds last).
  • "You don’t have the luxury of sitting in bonds if you’re trying to live off this money." (Jade, 16:59)
  • Supplemental work to avoid drawing down IRA during strong market periods.
  • If money is left in the market, could triple versus leaving it mainly in bonds.

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3. Reconciling Debt & Wedding Plans in Blended Finances

Caller: Keisha in Atlanta
[22:24 – 28:07]

• Situation:

  • Engaged couple: Keisha (46, well-positioned financially, on baby steps 4–6, plans to move/sell properties); fiancé (57, $50k car loan on a $58k salary, $60k retirement savings).
  • Considers $5k wedding but concerns over fiancé’s car debt.

• Key Advice:

  • “Have the wedding, but I wouldn’t have a $50,000 car if I make $58,000 a year.” (Rachel, 24:08)
  • Both hosts urge selling the car and aligning financial philosophies.
  • Deep conversations before merging finances, including agreeing to Financial Peace University (FPU) pre-marriage: “It’s the 'how' of wealth-building that matters.” (Jade, 26:44)

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4. Teaching Kids Financial Skills Early

Caller: Mandy in St. Louis
[28:18 – 31:09]

• Situation:

  • Parents are involving their young kids in annual meetings with a financial planner, reviewing investments.
  • Wants to know if this is appropriate or “too much” for their ages.

• Key Advice:

  • “Not mad about that. I’d just add in more real-life interaction with money—spending, giving, saving day-to-day, not just investments.” (Rachel, 30:55)
  • Encouraged parents to combine investment education with hands-on money experiences.

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5. Marriage Tension Over Financial Responsibility

Caller: Terry in Orlando
[33:01 – 42:17]

• Situation:

  • Marriage threatened by Terry’s financial disengagement (car repossessed for non-payment despite having funds, habitually avoids payment responsibilities). Wife is overloaded and frustrated.

• Key Advice:

  • “She wants a teammate—to be a husband that loves her, serves her… You must step up.” (Rachel, 39:39)
  • Recommended counseling, introspection into what’s causing money avoidance, and immediate habit changes (auto-payments, active checklists).
  • Marriage issues likely extend beyond money; building trust and intentionality in finances will ripple into the relationship.

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6. Splurging on a ‘Once in a Lifetime’ Family Vacation

Caller: Cambria in Virginia Beach
[44:06 – 52:11]

• Situation:

  • Debt-free for 15 years, considering a $12-15k Scandinavian cruise/family trip as husband retires from military. Hesitant due to job and time-off variables, ongoing remodel costs.

• Key Advice:

  • “If you’ve done what you have to do and you’ve been debt free for 10, 15 years, this is precisely the thing you should be doing.” (Jade, 51:40)
  • Encouraged to cash flow the trip (not dip into retirement or emergency fund), coordinate with employer in advance for time off, and view experiences as a reward for years of discipline.

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7. How Much Do I Need for Retirement—Each, or as a Couple?

Listener Question: Camilla in Illinois
[54:11 – 57:46]

• Situation:

  • Confused about whether “$1 million for retirement” applies per-person or per-couple, and how to handle different ages and retirement timing.

• Key Advice:

  • “The number you need is different for everybody. 15% of gross income invested is what we teach, the ‘magic number’ to retire comfortably.” (Jade, 56:10)
  • Each individual should use separate tax-advantaged retirement accounts, but it’s “our money” for the household.
  • When in doubt, run the numbers with a trusted advisor to account for lifestyle and goals.

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8. Handling a Cell Tower Buyout Offer

Caller: James in Iowa
[57:53 – 63:16]

• Situation:

  • Great-grandmother receives lump-sum and installment buyout offers regarding a cell tower lease. Weighing trade-offs at age 82.

• Key Advice:

  • Lump sum is preferred: “She can turn around and invest that and make a great return... You could make more in the market over the years than waiting for installment increases.” (Rachel, 60:04)
  • Consult professional for maximizing returns and handling inheritance.

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9. Late Start, Mountain of Debt & No Retirement—Now What?

Caller: Michelle in Spokane
[64:53 – 73:24]

• Situation:

  • 56, divorced, $94k debt (credit cards, car, loans, IRS), no retirement, three grown kids. Feels overwhelmed, but income is $84k/year.

• Key Advice:

  • "There is hope. You could go from negative to positive to half a million if you stick with the plan.” (Rachel, 71:14)
  • Focus on paying off debt using the snowball method; consider selling the car to fast-track progress.
  • Once debt-free (possible in 2–3 years), aggressively invest for retirement—even starting late can build significant wealth.
  • "You’re a good mom—you made sure your kids avoided student loans even at a cost to yourself.” (Rachel, 72:25)
  • Take pride in small wins; there’s always a measure of hope and increase.

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10. Convincing a Spouse to Cut Up Credit Cards

Caller: Luke in Billings, MT
[76:55 – 85:52]

• Situation:

  • Wife is nervous to let credit score drop to zero by closing credit cards, concerned about future mortgage refinancing.

• Key Advice:

  • Manual underwriting is a legit path: “If you have no credit score, you can get a mortgage by showing a 2-year employment history and bill payment records.” (Rachel, 84:26)
  • Credit score is not required—being debt-free isn’t a liability for home-buying.
  • Challenge spouse to read up on the facts, not just rely on feelings or conventional wisdom.

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11. Should I Invest or Pay Off My (Very Low Rate) Mortgage?

Caller: Tony in Cincinnati
[97:33 – 100:39]

• Situation:

  • 55, 2.75% mortgage, paying extra, could instead invest the extra to potentially earn more.

• Key Advice:

  • “Paying off the house early is more than a math question… a major part of wealth building is having peace and security.” (Jade, 98:08)
  • Most who pay off their homes do not regret it. Freedom from the bank is invaluable. Once paid off, reinvest the former mortgage for growth.

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12. Young Couple—Should We Build Our First Home?

Caller: Cody in Wichita, KS
[100:39 – 106:45]

• Situation:

  • 23-year-old business owner, about to marry, wants to build a house (would require $200-250k debt), already owes $430k on pasture land and $30k vehicle.

• Key Advice:

  • Don’t build a house in your first year of marriage—focus on paying off car, build up emergency fund, consider selling land to fund house in the future. “You have enough stress already—be creative and patient.” (Rachel, 101:21)

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13. Nonprofit Leadership: Should We Drain Our Savings to Pay the Mortgage?

Caller: Ann in Colorado Springs
[107:29 – 116:00]

• Situation:

  • Executive Director, nonprofit with $220k mortgage, $157k in operating reserves. Board split: throw all money at mortgage or retain buffer.

• Key Advice:

  • “I would be okay taking it down to three months, but not zero. That’s too risky.” (Rachel, 115:13)
  • Compromise: keep at least 3 months’ operating costs in reserve, commit surplus above that to the mortgage. Stability is stewardship for both clients and donors.

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14. Stuck in the “Daily Pay” Trap and Drowning in Debt

Caller: Linnea in Minneapolis
[118:04 – end]

• Situation:

  • Young couple with $120k debt (student loans, car, $40k in collections), use daily cash-out pay cycle (with fees) just to scrape by, one’s still in college, little progress being made.

• Key Advice:

  • Immediate action: “You’ll have to shock the system—work extra to build up enough margin that you’re not living day-to-day.” (Rachel, 123:23)
  • Sell the car, settle collections for less than face value, budget with precision (EveryDollar app—use paycheck planning).
  • Motivational reminder: huge transformation is possible in 3–4 years if they start today.

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Notable Quotes & Memorable Moments

• “You’re not working as a team. You’re working as two business partners trying to make a household work. And it doesn’t work that way.” (Rachel, 08:01)
• "You have to step up... She wants a teammate, to be a husband that loves her, serves her." (Rachel, 39:39)
• “If you’ve done what you have to do and you’ve been debt-free for 10, 15 years, this is precisely the thing that you should be doing.” (Jade, 51:40 – about vacation)
• "There’s always a measure of hope and increase." (Jade, 73:13)
• "Paying off your house early is more than just a math question... The peace and security is worth it." (Jade, 98:08)

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Important Timestamps

• 00:44–09:02: Robbie’s fractured family budgeting
• 10:22–19:10: Sherry’s late-stage retirement crunch
• 22:24–28:07: Keisha’s pre-marital money merge
• 28:18–31:09: Mandy teaches kids investing
• 33:01–42:17: Terry’s marriage on the brink due to financial neglect
• 44:06–52:11: Cambria’s once-in-a-lifetime family trip
• 54:11–57:46: Retirement “magic number” realities
• 57:53–63:16: Cell tower buyout choices
• 64:53–73:24: Michelle’s hope for late bloomers in debt
• 76:55–85:52: Credit card cutoff fears in marriage
• 97:33–100:39: Should you invest or pay off a cheap mortgage?
• 100:39–106:45: Should a young couple build a house with lots of debt?
• 107:29–116:00: Nonprofit financial stewardship debate
• 118:04–end: Breaking the paycheck-to-paycheck debt spiral

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Final Takeaways

• Building wealth is about habits, intentional teamwork (especially in marriage), and being proactive—not reactive.
• No matter your starting point—late career, mired in debt, or feeling lost—you can turn your financial story around with discipline and hope.
• Experiences and peace matter; budget for memory-making and strive for mortgage freedom, while protecting your future.
• Equip your kids early, talk openly with partners, and always have a plan (and a backup).

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For more tools, budgeting help, and resources mentioned in the show, visit ramseysolutions.com.

Transcript

[Sponsor/Advertiser]

Brought to you by the EveryDollar app. Start budgeting for free today.

[Rachel Cruz]

Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union studio, this is the Ramsey show. And I'm Rachel Cruz hosting this hour with Jay Warshaw. And we are going to be answering your questions. So give us a call at 888 825-5225. Starting us off is Robbie in Oklahoma City. Hi, Robbie. Welcome to the show.

[Robbie (Caller)]

Hey, thank you so much for having me. Really appreciate it. You know, I appreciate you giving me the time to kind of run some things by you.

[Rachel Cruz]

Yeah, absolutely.

[Robbie (Caller)]

Yeah. So currently I'm, I'm running into some issues from a budget. Just, you know, it really comes down to budget discipline at the end of the day with my wife. It's been a constant pain point for us throughout our marriage. We've been, you know, married over 10 years, got several kids. And while we're, I would say that we're not necessarily in a difficult position financially. The budget just keeps getting blown up. Meaning, you know, we have really, you know, high important priority things that we're putting money towards and that money gets spent on other things. In particular, we are putting our kids through private school and, you know, that's, you know, to the tune of about $2,000 a month to do that for us. And, you know, the money that we set aside for that ends up getting repurposed for more material things.

[Terry (Caller)]

Wow.

[Robbie (Caller)]

And so we've, we've gone through counseling. We've had many sit downs over the years, and we just kind of go through this crazy cycle, you know, where we, I feel like we're on the same page. And then, you know, here we are again dealing with the same issues.

[Michelle (Caller)]

Okay.

[Robbie (Caller)]

And so I'm basically a point where I'm not sure what to do next. Hence, you know, kind of turning to you all day to get some wisdom, hopefully.

[Jade Warshaw]

How much? I'm just curious to know how much margin you guys have in your budget or is it pretty tight like with private school? Is it down to the wire and there's not much more room to do anything else?

[Robbie (Caller)]

So I would say we have, we have the margin if we're disciplined.

[Jade Warshaw]

How much margin?

[Robbie (Caller)]

Yeah, I would say we have about an additional $2,000 a month of wiggle room there, but, you know, that's getting eaten up. So.

[Rachel Cruz]

And what is she, what is she spending the money on?

[Robbie (Caller)]

Furniture, decor, clothes, you know, vendors for, for parties. That she likes to throw.

[Cambria (Caller)]

It's.

[Robbie (Caller)]

It's a lot of stuff, but I mean, those would be the higher spend.

[Rachel Cruz]

Do you guys have categories in the budget now for cl, Clothing, hosting, You know what I mean? Like the things that she enjoys to do. Is there any money allotted to those things in the budget?

[Robbie (Caller)]

You know, that's a fair question. So to take a step back, you know, my income is designated for all, you know, necessary expenditures, you know, mortgage, utilities, like everything that is necessary, and then also goes towards building our retirement and savings. And what she brings to the table is basically everything else. So that that would be contributed to, you know.

[Jade Warshaw]

And how much is that?

[Robbie (Caller)]

So she nets around $60,000 a year.

[Rachel Cruz]

You guys operating out of one account?

[Robbie (Caller)]

No, multiple.

[Jade Warshaw]

But the funds are shared. Is it like a shared situation? And it's just easier for your brain to think of it like that? Cause it is kind of strange that you're.

[Rachel Cruz]

I don't like the separation. I like. It's like the ideal would be, yeah, we have this much in our housing. This much. This much. And regardless of whose dollars it's being pulled from.

[Jade Warshaw]

Right.

[Rachel Cruz]

We're all functioning out of one account, if that makes sense.

[Jade Warshaw]

Yeah, yeah.

[Rachel Cruz]

She net 60.

[Jade Warshaw]

What do you net?

[Robbie (Caller)]

250.

[Jade Warshaw]

Okay. And can I just ask, because I don't want to make any assumptions, what percentage are you investing every single month for retire? What's the percentage number or percentage amount?

[Robbie (Caller)]

Yeah, so the. That's a good question. The percentage.

[Terry (Caller)]

I'm.

[Robbie (Caller)]

I'm a little fuzzy on that. I put about 750 in my 401k every month, and then that. No, no, no. Monthly. So I get paid by bi weekly, and then that gets matched by my company.

[Jade Warshaw]

Okay. And you said you net 250,000 a year.

[Robbie (Caller)]

Correct.

[Rachel Cruz]

And she's at 60. So you guys are a 310 household,

[Jade Warshaw]

and you're only putting in 750amonth.

[Robbie (Caller)]

750amonth. And then I put in another. So the 401k aside, I put in Simon to a brokerage account separately.

[Jade Warshaw]

Okay, so let me get. Let me get to my point. My point is I want to make sure that your ratios are correct. So we actually see the margin here. Because if you're telling me making $310,000 a year and you're paying 2k a month for private school, that's not crazy. That's less than daycare in some circumstances. And there's only $2,000 left a month. I have a head scratch moment on that.

[Cambria (Caller)]

So.

[Jade Warshaw]

Because my point is where's the money?

[Robbie (Caller)]

On my side. I'm sorry, I. I should have been more clear on my side. I'm.

[Jade Warshaw]

And that's the problem.

[Rachel Cruz]

Okay, so, Robbie, I don't have visibility. So here's. Here's what I would say, Robbie. And I wish she was on the phone because I know there's two sides to every story in this, and it's obviously been a. It's been an issue because you guys have been to counseling for it and all of it. So on one. On one end of the spectrum, she's, you know, a shopaholic. She has an issue. She can't stop herself. It's compulsive. It is. It's an addiction. Right? Like, that's one side. The other side is that you guys are on completely separate pages. You really don't know what's going on. She actually has the ability to spend a little bit of money every month. And to you, you're freaking out because everything is designated in this.

[Jade Warshaw]

We can only spend off of her paycheck.

[Rachel Cruz]

Margin off of her paycheck. And it's all separate. It's just. It's a little strange. So if, if, if the middle grounds, I may be leaning more to the latter for a second. So what I would want, what I would suggest you called us, I would sit down with her, and I would say we make X amount a month, regardless of who brings it in. This is what we have per month. Now, out of what we have per month, we are going to go down a detailed budget, and we're going to talk about how much do you need for groceries? Because if she's the grocery shopper, she's going to know. If you haven't set foot in a grocery store in five years, you're not going to know. So she's going to know. This is how much we need for groceries. This is how much we, X, Y, and Z. And you go down the list, and she has a clothing line item. She. All of this because you guys are not. You're not. You don't have a ton of consumer debt, I'm assuming.

[Robbie (Caller)]

No, we. We don't owe on any of our vehicles. The only thing we really owe on is our mortgage. I mean, my wife has one $5,000, like, personal, you know, loan that she took. Just. She. So she's a realtor and took it out for some reasons that.

[Rachel Cruz]

Okay, so I would have an issue. Yeah. So I think you guys, Robbie, y' all are. Y' all are all over the place a little bit. There's no cohesiveness to this. It's her doing this, I'm doing that, my paycheck here, hers there. And I think that's the root problem. You guys are not working as a team. You're working as two business partners trying to make a household work. And it doesn't work that way. So tonight, if I were you, I would sit down, I would download everydollar, and you guys together create a household budget. And together, what are your debts? The $5,000 loan is as much yours as it is hers. I mean, you guys own all of this together and agree on where your money's going.

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[Jade Warshaw]

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[Rachel Cruz]

Next up, we have Sherry in Orlando. Hi, Sheri. Welcome to the show.

[Sherry (Caller)]

Hi. I'm a little nervous.

[Rachel Cruz]

Oh, you're good. Don't be nervous.

[Sherry (Caller)]

I'm 70, and I've been told by my financial advisor last week that my IRA is only going to last me about seven years. So he wants me to lower my distribution and raise the amount that's in the market. And he suggested getting a job. Well, I. I would love to get a job, but I'm on high flow oxygen. Oh. And I go. I go through a tank about every hour and a half when I'm out and no one's gonna hire me. Yeah, I feel fine. I just can't breathe. Yeah.

[Jade Warshaw]

How much is in your IRA?

[Sherry (Caller)]

130,000.

[Jade Warshaw]

And how much do you pull from it? How much have you been pulling from it every year? Every month?

[Sherry (Caller)]

Well, I've been pulling out 2,000amonth over the last few years. I waited. I had alimony until I was 69, so I waited. And so I've lowered my distribution to 1500 because my only other source of income is Social Security.

[Jade Warshaw]

And how much is that?

[Sherry (Caller)]

It's 1700amonth.

[Jade Warshaw]

On that amount, the 1500 and the 700, does that cover your bills or tell us how much you're in the red?

[Sherry (Caller)]

It's 1700amonth, and right now it covers all my bills. My son pays my mortgage.

[Jade Warshaw]

How much is the mortgage?

[Sherry (Caller)]

1700 months also.

[Rachel Cruz]

Okay, so he takes care of that. So you're. So you have the 1500 that you're still taking out, and then the 1700 basically covers all your bills.

[Sherry (Caller)]

Yeah.

[Rachel Cruz]

Okay.

[Sherry (Caller)]

And the problem is I have an excessive illness, so I have to have Medicare. Regular Medicare and a supplement.

[Rachel Cruz]

Yes, yes. And that's where the 1500 is going to.

[Sherry (Caller)]

A lot of it.

[Ann (Caller)]

Yeah.

[Sherry (Caller)]

And then APOA and stuff like that.

[Jade Warshaw]

Your house, what do you owe on it and what's it worth?

[Sherry (Caller)]

I bought it for 260 and it's down to 200.

[Jade Warshaw]

Okay, what's it worth?

[Sherry (Caller)]

It's probably worth 300 now at this point.

[Rachel Cruz]

And so when you talked to your financial advisor, was he saying, you're going to run out in seven years if you continue to take the 3,000 before you cut that in half?

[Sherry (Caller)]

Well, I was taking 2,000. Yeah. And so even when I told him that I'd go down with the goal of going down to $1,000 a month in distribution, he still said, well, that's still too much. And I'm trying, like, SB and I'm trying eBay and ISO, and I'm trying that, but I've just started at it. It's going to take a while to build that up.

[Jade Warshaw]

What about customer service from home on the telephone?

[Sherry (Caller)]

I could probably do that. I'm just not sure where to look for it. I haven't had much luck on some of the sides.

[Jade Warshaw]

I would look into that. I think that if you're able to have a conversation like this with us on the phone, that'd probably be a great place to start. Um, and I would just, yeah, I'd, you know, get on the Internet and look for, you know, at the different job postings and see that I've said on here before. And again, this is not something that we endorse or anything. It's just something I did back in the day. There's a company called Arise that you can go on and do different customer service jobs. There's basically a whole posting of them, and you can just choose which one you want. And you just need a headset and a computer, and you. You can go from there. And it's not amazing money, but it is something. You probably make a couple of thousand bucks a month doing that.

[Sherry (Caller)]

That's all. I mean, I've really lived very frugally.

[Rachel Cruz]

Right, right. Yeah. Because if you got to the point, Sherry, where you don't touch this money, let's just say, for seven years, which I know may feel like a long time, then it doubles. Right. So you got then 260 sitting there because you're withdrawing about 10%, which is high because the market in some years is doing great. So he's probably running a very conservative estimate, which most investment professionals do when you're starting to withdraw money. And we. We actually probably take more of a lenient case. But even if you were, you know, taking out 6%, you probably would be okay. But then again, that gets you around to a thousand dollars, and that's just basically just trying not to touch that 130. And you're just living off of the growth, which, again, past years was 22% at one point. Right. Which means your 130 would grow even if you were taking that 10%. So it's probably kind of playing that game. He may be a little aggressive on the seven years of you running out at seven, I don't think that's going to happen. But, Sherry, if you can supplement your income and not touch this for even 5 years and find that extra thousand bucks a month somewhere else, that would be a game changer for you.

[Sherry (Caller)]

Now, also, he wants me to increase what I have in the market right now at 30%, and he wants me to increase that to 40. Do you think that's reasonable?

[Jade Warshaw]

How. How can you. Where is the money coming from?

[Sherry (Caller)]

Well, I mean, the amount right now, the majority of it is in bonds.

[Rachel Cruz]

Oh, oh, in your ira, yes. Oh, no, I would go all market. I didn't realize that. I didn't realize you had investment in bonds.

[Keisha (Caller)]

Yeah.

[Jade Warshaw]

That's probably where a lot of your problem is.

[Rachel Cruz]

Yeah. Because your bonds are probably only yielding 3%, Sherry, where you could be making the numbers I was using was assumption that you had money invested in the market, and that's at, you know, 22% one year. I think we're at 11% this year. You're going to get triple, if not more by investing in the market. So, Sheri, I. I would. I know that probably Makes you uncomfortable. I would at least go 80, 20.

[Sherry (Caller)]

Even at this age.

[Jade Warshaw]

Even if it was at this age.

[Sherry (Caller)]

Even though I'm 70 years old.

[Rachel Cruz]

Yes, because you're having to live off of the return of what's happening now. I know that probably does freak you out, but you, you would have to write out. Right. If there is a down year or two. But when you look, when you look historically, even over the last 10 years, your gains would be triple than what you have now. I would say you actually should be in the market more.

[Jade Warshaw]

Yeah.

[Rachel Cruz]

At your age to have more of an aggressive growth pattern.

[Jade Warshaw]

You don't have the luxury of sitting

[Rachel Cruz]

in bonds if you're trying to live off this money, Right?

[Sherry (Caller)]

Yes.

[Rachel Cruz]

So I. Yes. So he Suggested to you 70%. What was he. Because he's probably being.

[Jade Warshaw]

Did he say 40? Is that what you said?

[Sherry (Caller)]

Yes, he said 40.

[Rachel Cruz]

I'd go, I'd go. I'd go 60. Because you're going to make so much more in the market.

[Jade Warshaw]

Is he the one that put you in the bonds to begin with or were you working with someone and then switched to him? Or how did this happen?

[Sherry (Caller)]

Well, when Biden got elected, I moved everything out.

[Jade Warshaw]

You did it.

[Sherry (Caller)]

The market. And then when Trump got elected, I changed that. But it, and I talked to my son at Christmas and he was telling me, yes, mom, you need to be a little more aggressive.

[Rachel Cruz]

Yep.

[Sherry (Caller)]

So I up, I upped it to 30%, and right now my return is only 8.5%.

[Jade Warshaw]

Yeah. So I think what's happened is you've allowed the market to spook you in different in the economy. And really, truly the way to build wealth while you're investing is you truly do. You have to set it and forget it. Once you commit to a strategy, and we'll tell you what ours is, once you commit to it, you set it and forget it. It doesn't matter who's in in presidential office, it doesn't matter what's going on. You are going to ride different waves. That is just part of it. So we're not going to sit here and tell you that there's never going to be a bump in the road. There is, but if you keep it invested, you don't lock in any losses. Right. If you keep it invested, you continue to ride the wave. And whatever dip occurs, you ride the wave. Until now, we're back up again and above. Right. So what I would do is what Rachel and I do, I would invest it across four different types of mutual funds. And if you don't I think that the guy you're using is probably okay. But if you need somebody, you know, you can check out a SmartVestor Pro and they can walk you through this. But you're looking for mutual funds that are outperforming the market. Really. And that's where Rachel got that number of over 10% is what you should look be looking for. Annualized. Right. Obviously in the previous years we've done way out, you know, way more than that. But yeah, growth, growth in income, aggressive growth in internationals where you want this money. And at this stage in the game, I'm with Rachel, like 80, 20 feels fair.

[Rachel Cruz]

Yes. So I just ran some numbers real quick. Sheri. So if you're 70, let's just give you 10 more. 10 more years at 80. If you put that 130 and didn't touch it at an 11% return, that turns into $388,000. If you kept it in those bonds and they're getting a 3% return, it only goes to $175,000. So the difference there is astronomical. Now that's over a 10 year period, which I know is a long time, but if you just cut that in half. Right. Five years. So yes, Sherry, I would, I'm with your financial advisor and your son. I would be more aggressive of you putting more in so that you can actually be taking some money out. And you're not tapping into that nest egg because you're not outpacing inflation even at this.

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[Jade Warshaw]

to remain active on Boost Mobile unlimited plan.

[Keisha (Caller)]

Foreign.

[Rachel Cruz]

The 2027 Ramsey Gold planner is here. And it's now available at the lowest price that we're going to offer at $35.97. Wow. So this planner is more practical than ever. You're gonna get brand new contents from Jade Warshaw, myself and Dr. John DeLoney, plus goal setting guidance and really clear action steps to keep your momentum, your momentum going all year long. So do not wait, grab it by August 23rd for just 35. 97. This is the lowest it's going to get you guys. Even Black Friday pricing will not beat this. So go ahead and get your 2027 Ramsey Goal Planner. You can go to ramseysolutions.com store or if you're watching on YouTube or podcast, you can click the link in the description. All right, let's go to Keisha in Atlanta. Hi, Keisha. Welcome to the show.

[Keisha (Caller)]

Hi, Jade. Hi, Rachel.

[Rachel Cruz]

Hello. Hello, welcome, welcome. How can we help?

[Keisha (Caller)]

All right, first, I just want to say thank you all so much for the advice that y' all giving, for being so transparent with, you know, with what y' all have been through and forgiving the practical advice that anybody can follow. It has really changed my life. So thank you so much for that.

[Rachel Cruz]

Oh, thank you.

[Keisha (Caller)]

So I wrote my question out because I always hear people say how nervous they are. So I'm just gonna read. All right, so here it is. So my fiance is 57 years old. He makes about 58, 000 a year, has about 60ks in retirement. The only debt he has is 50k in a car. He owns his home that he owes roughly about a hundred thousand on me, I'm 46. I make 120k a year. I have 88k in retirement through my job. I have 50k in mutual funds and I high yield savings accounts. I have 20k. I have a rental that I ow about 46k on and no other debt. I'm on baby steps 4, 5 and 6. I currently live in air property that will sell when I get married. I'm going to move to where he is. So we'll sell that and we'll also sell his house and buy one together. So my question is, he has the 50k in debt in the car. Could we or should we have a wedding that's budgeted at 5,000 or less in July of 2027, or does he really, really need to focus on getting

[Jade Warshaw]

rid of that car loan before the wedding or to up the budget of the wedding? What's the point?

[Keisha (Caller)]

I'm just trying to find out. Is it should we or is it Financial wise for us to have a wedding.

[Rachel Cruz]

Although he's in debt.

[Sherry (Caller)]

Yes.

[Keisha (Caller)]

Even though the wedding is only going to be 5K.

[Rachel Cruz]

No, you can. Yeah, I'd have the wedding, but I wouldn't have a $50,000 car if I make $58,000 a year.

[Jade Warshaw]

That's the problem.

[Sherry (Caller)]

Yeah.

[Rachel Cruz]

He needs to get rid of his car.

[Keisha (Caller)]

We talked about that.

[Jade Warshaw]

And also, tell me how. Tell me about this $5,000 wedding. Inquiring minds want to know how you're

[Rachel Cruz]

about to hire us do this.

[Keisha (Caller)]

So one of my good friends has a fabulous home, and we always. I want to have an outside wedding. So that's always been something I want. So they've allowed us to have the wedding at their house, open up to us. Catering is really the only thing that we should have to pay for. That should be the most expensive.

[Jade Warshaw]

And a dress and a honeymoon.

[Keisha (Caller)]

Oh, I am super simple. So my dress will be sundress. Basically. You got.

[Cambria (Caller)]

You got it.

[Jade Warshaw]

You got it on lock. Okay, then.

[Rachel Cruz]

So, yes, to answer your question, I'm great with you spending five thousand dollars on your wedding, Keisha. So, yes, yes.

[Jade Warshaw]

The fifty thousand dollar car.

[Rachel Cruz]

I don't like it.

[Jade Warshaw]

I don't like it. It's bothersome.

[Michelle (Caller)]

My heart sank.

[Keisha (Caller)]

Oh, the car is actually. He paid.

[Sherry (Caller)]

The total cost was 80.

[Keisha (Caller)]

Oh, my heart dropped when I said,

[Rachel Cruz]

what kind of car is it?

[Keisha (Caller)]

Passed out. It's a 2024 Ford Mustang.

[Rachel Cruz]

Okay, that was. That would not be on my video card.

[Keisha (Caller)]

Stuff to it.

[Sherry (Caller)]

No, no, not my food.

[Keisha (Caller)]

But he added some extra stuff to it. All the insurances, the bells and whistles,

[Jade Warshaw]

and so here's the question then, Keisha, are you guys. Now hear me, because everybody kind of has their wake up moment at a different point. Do you guys align on your philosophy on money, on debt, on wealth building? Because if you're looking at this car the way Rachel and I are, and you're like, oh, this is wild behavior, but he looks at it and goes, this is so smart. I love this purchase. I'm not giving it up. And I would do it all over again. You guys are gonna butt heads down the road financially, and it's gonna be tough for you. So have you spoken about this and gotten a glimpse of what you're about to walk into?

[Rachel Cruz]

Because you're. Because financially, you're doing better than he is on paper. Right, Right. So, yeah, I am curious your thoughts towards his financial.

[Keisha (Caller)]

We actually talked about that over the weekend, and he says he's on board. Like I said, he doesn't have Any on board with what credit cards? On board with what financial plan? So I told him about living debt free and building wealth and what my idea is and what I would like to do as far as us building together. And no more stupid purchases, of course. And he said we wouldn't make any decisions without talking to each other about it first.

[Jade Warshaw]

Okay, that's a good start, I think. But I think keep having the lines of communication open, because it's very different to say, do you want to build wealth? Yes, I want to build wealth, too. Do you want to have financial peace? Yes, I do, too. But it's the how of how it's done that you know, because the truth is a big part of this is. Well, one. One thing that we have to do if we want to build wealth is we can't have toys that are going down in value that are this big of a piece of our world. And so getting. I think you're at the point where you can start specifying the conversations even. Even more and saying, here's what I mean by that. It could mean us not driving $50,000 cars unless they're paid for, like, that sort of thing.

[Keisha (Caller)]

Absolutely, absolutely. And I've gone through and I've taught fpu, and so before we get married, like I'm looking at in September, that's going through FPU together so that he really understands and have a clear picture of where I want to go with my wife.

[Rachel Cruz]

Well, you've done. You've done an incredible job.

[Jade Warshaw]

Yeah. We'll gift you the fpu, by the way.

[Rachel Cruz]

Yes, that'll be.

[Keisha (Caller)]

That's so awesome.

[Rachel Cruz]

That'll be our wedding gift to. Yeah. And I think continuing to have those conversations. Cause Jade's exactly right. It's the high level picture of things that is so, so important that you're like, we agree on that. And then when you start to actually get into the details of life and you actually have to go through with the actions.

[Jade Warshaw]

I didn't know that those high values,

[Rachel Cruz]

it's like, well, if it means that, then I don't want this. And so that can be tough. So thanks for the call, though, Keisha. And congratulations.

[Jade Warshaw]

Yes.

[Rachel Cruz]

Let's go to Mandy in St. Louis. Hi, Mandy. Welcome to the show. Mandy, are you there?

[Sherry (Caller)]

Yes, I am. How are you guys doing? Rachel?

[Rachel Cruz]

We're doing great. Thanks for calling in. How can we help?

[Sherry (Caller)]

First of all, I just have to say that when you two host and I'm listening on my earbuds, I have to see what you guys are dressed and look like, because you guys are like classic and simple and it's like, it's like inspiring. So I'm a longtime listener and super excited to talk to you ladies. I'm 44. My husband and I are in baby step six. We have a 12 year old and a nine year old and we make about a little over $200,000 a year. And I had wonderful parents, but I was raised with no, like, financial knowledge. And they're wonderful people, but they're living off of Social Security and like a small pension, have no nest egg. So we are missing our 15% and we're doing well. But what. When I started to clean up our finances, I started looking at their stuff and they had savings account and money and piggy banks and stuff like that. So we took their money and we put it in some index funds with our financial planner. And every year our financial planner, they go with us to our financial planning meeting and he turns the computer around and he shows them, this is how much money you guys made this year. This what you're invested in. And I just want to know, am I doing right by my kids?

[Ann (Caller)]

Is it too much for their age?

[Sherry (Caller)]

It's very age appropriate conversations. He answers their silly little questions and things like that. But I just want to know, are we doing stuff too early for them?

[Rachel Cruz]

It's a great question. I'm not mad about that. I don't want that to be the only isolated conversation and interaction they have with their own money. I want them to also have some money that they can cash. Right. Or that's on like a green light card or something that they can spend and use and save and give. Like, I would want real life interaction with money for them even more than the index funds. But if you do both, I think that's great. My parents did that. We had mutual funds and I want to say we were probably 13ish, maybe a little older than yours. And we would, we would look at it and they would pull it. Now that was when it was mailed to you in like a big packet. So I think you're doing a great job, Mandy. I, I would, I would keep doing that. I, I wouldn't change that part. I would just add in more interaction.

[Jade Warshaw]

Getting their hands on their own money.

[Rachel Cruz]

Yes. So that they're giving some of their money that they work for, they're saving some of it, they're spending some. I want them to feel the day to day interaction with money, not just the investment side. But no, I think we're both.

[Jade Warshaw]

I agree.

[Rachel Cruz]

Yeah. Well, Done. Mandy. Great job.

[Sherry (Caller)]

Foreign.

[Rachel Cruz]

Hey, guys, it's Rachel Cruz. If you're working the baby steps, every major expense deserves a second look. And health care is one of the biggest expenses in most families budgets. And that is why I recommend that you check out Christian Healthcare Ministries. CHM isn't insurance. It's a health cost sharing ministry that means members help pay one another's medical bills. And they've been serving Christians since 1981. CHM programs start at just $115 a month. And here's why that matters. If you are paying more than you need to for healthcare, that money could be going toward paying off debt, building your emergency fund, or reaching your next financial goal. And your monthly cost isn't based on your medical history or where you live, y'. All. A lot of families find CHM gives them more room in the budget. That's why so many say they're better with CHM. And right now, new members can receive a 50% credit towards their first month of membership. Go to chministries.org budget and use promo code RAMSEY. That's chministries.org budget and promo code Ramsey. Next up we have Terry in Orlando, Florida. Hi, Terry. Welcome to the show. Terry, are you there? Terry?

[Jade Warshaw]

Maybe she'll come back.

[Terry (Caller)]

Yes, yes.

[Rachel Cruz]

Oh, there he is. Hey, Terry. How are you doing?

[Terry (Caller)]

Good. How are you guys doing? It's an honor to be on the show.

[Rachel Cruz]

Oh, thank you. Thanks for calling in. How can we you help? Help?

[Terry (Caller)]

Long story short, my wife is talk. Having serious thoughts about divorcement because of my bad financial habits.

[Rachel Cruz]

Oh, no. Okay.

[Keisha (Caller)]

Gosh.

[Robbie (Caller)]

Yeah.

[Jade Warshaw]

How long have you been married?

[Terry (Caller)]

Two years.

[Rachel Cruz]

Two. Two years.

[Terry (Caller)]

Two years? Yeah. Yeah, two years.

[Jade Warshaw]

So tell us about your bad financial habits.

[Terry (Caller)]

Long. Well, I don't really initiate when it comes to financial meetings with each other. We don't really. I don't really talk about our financial. Financial too much. That's really on her side of things. Like I'll make the money or, you know, my half or my share and I'll just like share account and I'll just like leave it there and whatever is the gist of it, I'll kind of, you know, do here and there. Like if there's something needs to be paid, I'll do it. But I don't really know too much about our finances. And then the, our most recent situation that caused the divorce talks is that there was like again, like she'll, she'll process most of the payments and three months ago.

[Jade Warshaw]

What is she asking for from you? What is it? That she wants you to do that you. You have been unable to do in her eyes.

[Terry (Caller)]

Like I said, initiate process. Certain payments stay on top of certain payments. I just got my car repoed, and there's three months of late fees, and I just paid off all those together.

[Jade Warshaw]

Did it get repoed because you simply were not payment?

[Sherry (Caller)]

Yeah.

[Jade Warshaw]

You just didn't pay the payment or you didn't have the money to pay the payment? Which one?

[Terry (Caller)]

I didn't pay the payment. That's it. We had the money. I had to pay it.

[Cambria (Caller)]

What?

[Rachel Cruz]

And can I ask why? Just you forgot or you thought she was gonna do, like, what. What was the reasoning behind that?

[Terry (Caller)]

It was more just not to get to nitty degree. I just. I just avoided it.

[Jade Warshaw]

Okay. Do you go.

[Rachel Cruz]

How old are you, Terry?

[Terry (Caller)]

29.

[Rachel Cruz]

29. And how old's your wife?

[Terry (Caller)]

She's 27.

[Rachel Cruz]

27.

[Sherry (Caller)]

Okay.

[Jade Warshaw]

Before you guys got married, did you pay your own bills or what was the. How did things get done before you got married, or was it just a state of mess?

[Terry (Caller)]

I was a teenager.

[Jade Warshaw]

Not before you got married. You're 29. You've only been married two years.

[Terry (Caller)]

We've been together for almost eight years. Ten.

[Jade Warshaw]

So she's always. What you're saying is she's always taking care of that? Is that what you're saying?

[Terry (Caller)]

Not always. I'll do it here and there, but for the most part, yes.

[Rachel Cruz]

Okay.

[Terry (Caller)]

And I screwed up and I avoided it. And that's the part what I'm trying to change.

[Michelle (Caller)]

Huh.

[Rachel Cruz]

Okay. And do you understand. Do you know yourself well enough to know why? What, What, what, what fear comes up in you that you're like, I have to push this thought aside to even pay a car payment? I don't even want to. That's. Yeah, I don't want to engage that at all. Where does that come from?

[Terry (Caller)]

I would just. I don't think it's fear. Well, maybe fear somewhere that I don't understand, but I would just say laziness.

[Jade Warshaw]

Is it just pure lazy?

[Terry (Caller)]

Just lazy.

[Rachel Cruz]

I think. I think there's something else there too.

[Jade Warshaw]

I do too. Because you go to work, if you were a lazy person, you wouldn't get up and go to work. If you were all that lazy, you probably wouldn't be calling the show. I feel like there's clearly in certain areas a level of intentionality that you have the ability to have. And so that's why I have a hard time just with. Nope, you're just a lazy guy. You can't do that.

[Rachel Cruz]

How did you grow up with money, Terri? What was your home situation like with money?

[Terry (Caller)]

I came from a Caribbean family and it like, that's already a story in itself.

[Jade Warshaw]

You came from what Caribbean family?

[Rachel Cruz]

Oh, okay.

[Jade Warshaw]

Yeah.

[Terry (Caller)]

And like, I didn't really. They're like, think of it like this. You have support, but you don't at the same time.

[Cambria (Caller)]

Yeah.

[Terry (Caller)]

And it really is like, if you mess up, it's strictly on you. And. Yeah, that's kind of how I've been. And. Well, and I say lazy to chalk it up because I think, oh, sorry. Because I just. I mean, I only have accountability to take. And like, hey, I did miss those three months of car payments and it didn't mess us up.

[Rachel Cruz]

Do you have a baby, Terry?

[Terry (Caller)]

Much? Yes, I do.

[Rachel Cruz]

You do have a baby. How old is the baby?

[Terry (Caller)]

He is officially two months.

[Rachel Cruz]

Two months. Okay, sweet thing. Okay.

[Jade Warshaw]

Can you tell me? Because I'm trying to get a sense. Because don't get me wrong, this is a big deal and it's a frustrating thing. I want to know if there's some other things that are pushing harder on the divorce conversation than just who pays the car payment. Are you working regularly? Does the laziness show itself in other areas of life? Like, are you not working regularly? Are you not helping out around the house? Are there other things that are going on that's not money related, that this is really just one of the many things? Or is this the only thing and you're like, okay, I gotta get this one thing right. Just be honest.

[Terry (Caller)]

I mean, to keep it on. I would say, yeah. What relationship doesn't have multiple things? But I would say it. It shows itself up in other ways or factors. Like, so she says it's accumulation of these thoughts, bad financial habits. And I have been trying to change, but it just. It just keeps. Every time there's a mistake, like the repo, she'll bring up divorce. Like, the last time my car got repoed, she bought divorce.

[Jade Warshaw]

So I don't think this is. I'm gonna be honest with you. I don't think this is a money issue. I think this is. I think you have some marriage issues and I think you have some personal

[Rachel Cruz]

issues, and I think she wants you to step up. Terri. I'm gonna be honest. I think I'd be pissed if I just had a baby and my husband can't even pay his own car payment. Like, I mean, a little bit of me, Terri, is like, gotta be able

[Jade Warshaw]

to do you have to be able to minimum the basics?

[Rachel Cruz]

Yes. You have to step up. And so there's. And I know you know that or you wouldn't. So you know what you have to do, but something is blocking you to go and do it. And I, And I think that that is, that's work you gotta do, Terri. You gotta figure out what is going on. And in the meantime, you just have to have action. And you're gonna have to rebuild some trust with her. Because I think she's just pissed. I think she's been doing this on her own and she's been taking care of the money. Cause you even said, I made the money and I put in the account. And she. That's her thing. She's tired. She wants a partner.

[Sherry (Caller)]

Yeah.

[Rachel Cruz]

She wants a teammate with her and to be a husband that loves her, serves her. And what Jade is pointing out is exactly right. When you actually start fixing some of these issues. And we'll use money as the main one because that's why you called. And you actually start being so selfless and you're like literally saying, this is what I want to do. But I know that's probably not the right thing. So I'm going to engage in this process that makes me so uncomfortable. But I'm going to choose to do it for the betterment of my marriage. And you do that, it's gonna trickle through all the other areas of your marriage when you start to change in one area. Cause it changes you, Terri. And I think part of it is you figuring out what is that mental block for you. And if I were you, I would spend a couple hundred bucks a month and go find a counselor or a therapist. And I would. I do think money can be such an embarrassment, shameful, guilt ridden topic. And you're not feeling much relief at home because your wife's threatening to leave. But to.

[Jade Warshaw]

You gotta build that confidence.

[Rachel Cruz]

Yeah. You gotta work some of this stuff out of what is holding you back, because there's something there. And in the meantime, I do wanna be clear. In my opinion, you still have to make some steps moving forward to take care of this baby. As that baby cried on the phone, I was like, oh my gosh, they got a new baby in the home. You have a lot of responsibility and it's doable, Terri, because the money's sitting there. It's not like you can't hold a job and you don't have the money. It's just following through with a couple of things. If you have to make a checklist or have reminders on your phone, put a reminder.

[Jade Warshaw]

It's due today.

[Rachel Cruz]

Pay it, whatever it is, to put into place some actions.

[Jade Warshaw]

That's why I think it's gotta be deeper than that. Because those things, the logistics of it is quite easy. I set the alarm, it rings or I put it on auto draft. What about that?

[Rachel Cruz]

That's right.

[Jade Warshaw]

Then you're not even thinking about it at all, Terry.

[Terry (Caller)]

So, you know, actually, the thing is, like, when it came to the car payment, I really, and this is, I have to emphasize, I thought I did put on auto pay.

[Jade Warshaw]

Okay, but what stops you? Let me stop what stops you from right now. The moment you get off this phone, I realized it wasn't on autopay. Therefore, I'm going to put it on auto pay this second. Then I'm going to show it to my wife and say, hey, I realize I it messed up the last one, but I put it on autopay. I just want to show you that I did that. It's going to come out every month on the 15th.

[Rachel Cruz]

And I would ask her, what do you need from me in this situation? Ask your wife that. What do you need to see from me to help start making some steps towards rebuilding this trust? Because fight for this marriage, Terri, you've

[Jade Warshaw]

been with her all this time, and

[Rachel Cruz]

I don't want you to lose this to me. This can be solved. And for the sake of that baby and everyone, like, do not let this tear your marriage apart. Fight for it and do what you have to do to rebuild that trust.

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[Jade Warshaw]

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[George (Advertiser)]

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[Jade Warshaw]

Mallory Lane, Suite 100, Brentwood, Tennessee, 37027.

[Rachel Cruz]

Welcome back. Welcome to the Ramsey show in the Fair Winds Credit Union Studio. I am Rachel Cruz with Jade Warshaw and we're answering your questions about life and money. So give us a call at 888-825-5225. We have Cambria in Virginia Beach. Up next. Hi, welcome to the show.

[Sherry (Caller)]

Hey, how are you?

[Rachel Cruz]

Hi. We're doing great. How can we help?

[Cambria (Caller)]

I'm wanting to know if I'm being selfish wanting to go on a family, really expensive and once in a lifetime family vacation.

[Rachel Cruz]

Oh, I like this question. Okay, what's the situation?

[Cambria (Caller)]

So we've been debt free. We've been doing Dave Ramsey for about 15 years. We used to teach it. We actually came out to the studio about 10 years ago and met Dave

[Keisha (Caller)]

and we are in a really good financial situation.

[Cambria (Caller)]

But we, my husband is retiring from the military in March and next June. My dad wants to go to Sweden. That's our heritage. And he's always wanted to take this trip. He's turning 80 and he wants to do a 12 day cruise that's about, about five grand, not including, you know, anything off the ship excursions or anything and flights for my husband and I and our two kids, about 4,000. And then he wants to stay a week afterwards and he's gonna take care of the Airbnb or whatever we stay in after. But it's still going to be, you know, a good like twelve thousand dollar trip.

[Rachel Cruz]

Yeah, I would say fifteen.

[Jade Warshaw]

Yeah, I would say. I would, yeah, I'd aim high.

[Rachel Cruz]

15,000. I would say.

[Cambria (Caller)]

Yes. Yes.

[Jade Warshaw]

So where's the problem?

[Cambria (Caller)]

Well, with my husband retiring, not knowing what job he's gonna get, what, how much money you know, he'll be making, how much time off he's gonna be able to have, you know, four months after starting a new job and, and I really want to take this cruise he's willing to do the week after. And so I guess my question is, do I? Like he said, we can try and make it work to the best of our.

[Jade Warshaw]

Well, you've been debt free 10 years. So tell us about the other money that you have. I mean, when somebody tells me that I'm waiting to hear of some several hundred grands laying around in different places.

[Cambria (Caller)]

So we, we've actually, we've been debt free 15 years and we have over half a million in our Roth ira. Good. We have, you know, several different investments on the side. We have about 20,000 that we've gained in, like, we have stuff. We have. We keep our. Our car funds in. Oh, my gosh.

[Keisha (Caller)]

That's.

[Michelle (Caller)]

Okay.

[Jade Warshaw]

Just tell me how much, how much liquid cash do you have?

[Cambria (Caller)]

Probably 50 to 60,000.

[Jade Warshaw]

Okay, so 60,000 of liquid cash, and we'll just say that includes sinking funds, emergency funds. Is that fair enough?

[Sherry (Caller)]

Yes.

[Jade Warshaw]

Okay, and then you've got. You said the 500 and your Roth IRA. Any other money laying around?

[Cambria (Caller)]

I don't think so. There might be some here and there and like, crypto and whatnot.

[Rachel Cruz]

That is the. How were you guys at with your house?

[Cambria (Caller)]

We are about 1:75.

[Rachel Cruz]

Okay. And how much do you guys bring in a year now?

[Cambria (Caller)]

150, maybe. 150.

[Rachel Cruz]

And is he the only one working?

[Cambria (Caller)]

Yes, I'm a singer, so I get here and there, but it's not, you know, it's.

[Rachel Cruz]

It's just until. So he's making 150. Will he get anything with retirement? When he, when he retires, he'll have

[Cambria (Caller)]

about 5,000amonth to wake up.

[Rachel Cruz]

Okay.

[Michelle (Caller)]

Okay.

[Jade Warshaw]

Okay. So, I mean, this is. I think I heard you say this is next year, like June of 2027, right?

[Cambria (Caller)]

Yes.

[Jade Warshaw]

Is there the ability to save up the way you've done for your other sinking funds and have this off to the side? I mean, you've got a year to do it, so. A little less.

[Cambria (Caller)]

Yes. It's kind of harder because in April we started. We decided to. We didn't know about this trip. And in April, we started remodeling part of our house because we decided we're going to stay here. We're going to, you know, make. We're getting out of the military. We're staying here. We love our house. We've been here 10 years.

[Jade Warshaw]

You know how much remodel cost?

[Cambria (Caller)]

We've spent almost 20,000 so far. And we're trying to cash flow as much of it as possible.

[Jade Warshaw]

How much to go and

[Cambria (Caller)]

probably another 40.

[Jade Warshaw]

Okay. So the good news is we know you guys can stack up money to, you know, to spend $60,000 on something at will.

[Cambria (Caller)]

Like, so. So every month we, we, we. We put stuff in different funds every month. And if we stopped doing that, there's probably, you know, there's probably about 2,000 to 2,500 that we could. There isn't $1,000 of, like, discretionary money that, that we choose every month where we want it to go. The other money.

[Jade Warshaw]

I would seek to do this. I would seek to do this without touching. If you're going to do this, my Goal would be let's cash flow it, let's do the remodel and we have to put a bow on that first, but let's look ahead and see what our money's looking like. When will we be done cash flowing the remodel from then on. Will we have enough money to put the 15,000 aside for this? Part of that conversation also is what's he going to do after he retires? And that's a big part of this.

[Rachel Cruz]

And part of his onboarding package for his new job could be slotted. Hey, I do have a three week vacation that's been planned and it's paid for.

[Sherry (Caller)]

Yeah.

[Rachel Cruz]

So as I start my job, part of my contract of starting this new employment can be that this can't take away from any pto. You know what I mean? Like, you can negotiate some of that as a. With a new employer. So that's.

[Cambria (Caller)]

And we did talk about that.

[Rachel Cruz]

Yeah. So no. Yes. I think you go.

[Jade Warshaw]

You have, you have the ability to go.

[Rachel Cruz]

You kind of listen to me. I'm such a spender. I'm like, come on, you have to go. I mean, your dad's 80.

[Michelle (Caller)]

Yes.

[Rachel Cruz]

Yes. I mean, seriously, are the things you

[Jade Warshaw]

cannot miss out on.

[Rachel Cruz]

You know what's crazy is Winston's family, my husband's family, his grandmother came from Sweden, from Stockholm. And we did a. It's weird as you're talking, I was like, is this me? We did a cruise with my family around the same. Probably the same Baltic Sea type cruise. And we went to like the cemetery where all of his.

[Sherry (Caller)]

Oh, yeah.

[Rachel Cruz]

Yes. Where his great grandparents are. I mean, it was amazing and beautiful and like such a. What it does. It feels like kind of a once in a lifetime type thing. And with your dad, who's 80, like, you won't regret going. So. Yes. Figure out a way to do it. And this sounds terrible. Maybe I've been married too long. But I'm like, if he doesn't want to do the cruise, he doesn't have to go. He doesn't have to go. Meet us over there.

[Jade Warshaw]

Honestly. Yes. That's not. That's not bad.

[Rachel Cruz]

I mean, seriously, like, if. Yeah, I don't think that's bad. And if his work can't hold, he'll be okay. He's not crazy about going to Sweden, it sounds like. So. I don't know. I would take kids and go. Go with your parents.

[Cambria (Caller)]

I'm guilty. Going without him.

[Jade Warshaw]

But when you've done. When you've done what you have to do and you've been debt free for 10, 15 years. This is precisely the thing that you should be doing.

[Rachel Cruz]

Yes, absolutely.

[Jade Warshaw]

Exactly.

[Rachel Cruz]

Money is a tool to use to create a life that you love and part of that is with your family, creating memories. And it's not, you're not out of control. You guys have half a million in retirement, your debt free. I mean like it all checks off in my book. So I, yeah, I'm, I'm a, I'm a green light, but I'm with Jay. You got to cash flow it. You guys need to be disciplined and start saving. But you got a year, which is great.

[Jade Warshaw]

Plenty of time.

[Rachel Cruz]

You're going to be fine.

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[Rachel Cruz]

Today's Question of the Day is brought to you by Y Refi. When private student loan payments start getting away from you, it can feel like you're paying for decisions you made years ago. Why Refi helps borrowers explore low fixed rate refinancing options and payments designed around your current situation. So go visit why refi.com Ramsey may not be available in all states.

[Jade Warshaw]

Okay, today's question comes from Camilla in Illinois. She says, I often hear the advice that you need 1 million in your retirement fund or some other arbitrary number. Does that amount apply to a married couple or does each individual need to have that amount invested? I assume it's combined because as a married couple, you're combining other finances. But what happens when spouses are different ages and Retire at different stages. So I like this question, Camilla. So first, let me start out by saying the number that you need to retire comfortably is different for everybody. There is not one number that is a one size fits all. Now you do hear the number 1 million because obviously that's the first layer of the millions. And it's like, if you can hit a million dollars, yeah, that's a, that's an amazing milestone. So I think that's why people park there a lot. And you hear a lot on social media or even in the media that it is a million dollars enough to retire. Does a million dollars get you as far as it used to? I just think those are buzz. It's just a buzzy number. So that being said, what you're, what you're really looking for when you retire, just big picture is you want enough in your nest egg that you can live off the interest without really having to touch the nest egg. That's kind of what you're shooting for. Obviously, you want to be able to account for inflation in that equation, and that allows you to leave money to your children's children. Right. That's the whole point of being able to build that sort of wealth. And some people are able to do that and some people aren. They learn this later on and they have a nest egg and they draw on the nest egg and they draw it down. Right. So what I would suggest is working with the smartvestor pro and figuring out what that number is for you around here. We've kind of figured out that 15%. If you invest that annually or monthly out of your gross income, that's kind of the magic number that should help you hit the number that you need for retirement. That's why we teach that. But the number truly is, Rachel, different for everybody.

[Ann (Caller)]

So it is.

[Rachel Cruz]

Yeah. And depending on your lifestyle and what you want, want in retirement age, you know, some people want to go more simplistic and they're like, I want to just. I want to downsize, you know, they want to go. Some people go the opposite way and like, I want to travel more, you know, so you kind of want to picture as much as you can, you know what you want to do. But that 15 is the rule of

[Jade Warshaw]

thumb and having no debt.

[Rachel Cruz]

That's right. Oh, yeah. And if you have a paid, paid for house and everything like it, that is, that's the way to go. So, yeah, the, the million dollars in retirement. Retirement, yep. That will depend on your lifestyle and how much you're planning on taking out of that fund.

[Jade Warshaw]

I guess we can talk about. She also mentioned it being together or separate.

[Rachel Cruz]

Oh, yes. So you do want separate retirement accounts because you want to get that tax advantage as much as possible. So individually, you both should have Roth IRAs. Individually, you know, 401ks if your company has it, or 403s or a SEP, you know, but if both of you have those going. Yes. One of you will be able to draw out of theirs tax free. You know, at 59 and a half, it's a. If it's a Roth before the other, and then maybe you guys live on that and the other one decides to keep working or maybe they stop working because you got enough there for the 59, 59 and a half year old to.

[Jade Warshaw]

Yeah.

[Rachel Cruz]

Take enough out to sustain the lifestyle you want. So. So, yeah, definitely different accounts. But, but from the mindset that we're still working out of one, we're seeing, it still is ours.

[Jade Warshaw]

Yes, it's ours together. But you can, to your point, you can take advantage of more money going into those accounts. 7,500 each in the Roth or, you know, whatever your limit is for your 401ks, that sort of thing.

[Rachel Cruz]

All right, let's go to James in Iowa City, Iowa. Hi, James, welcome to the show.

[Robbie (Caller)]

Hello, how are you?

[Rachel Cruz]

Hi, we're doing great. How can we help?

[Robbie (Caller)]

So I have a question on behalf

[Poncho (Caller)]

of my great grandma.

[Robbie (Caller)]

She is debt free, lives on a farm, has a home, has a cell tower on the farm that pays her monthly. I think it's like $1,800 a month that she gets for having the cell tower on her farm. They came to her with three different offers. A one time lump sum payment of $355,000 for 20 years, or a second option of $390,000 over installments over five years. Or the third option, 428,000 over 10 year installments.

[Jade Warshaw]

What happens if, during. What happens to the deal? If for some reason over that period of time, whether it's the 5, 10 or 20, and she moves, what happens to the deal?

[Robbie (Caller)]

Um, she will not be moving, but

[Jade Warshaw]

I'm just saying we need to know.

[Robbie (Caller)]

I think it would go to the. It would go to the person who.

[Rachel Cruz]

It would have to be part of the land lease, part of the, the contract of the new sale of the home.

[Robbie (Caller)]

Yeah.

[Rachel Cruz]

Or even if she passes away, James, and you guys sell the property to someone else, I guess. Is that part of the language, that if, if there's a new owner, they automatically, they have to assume this tower for X amount of Years.

[Robbie (Caller)]

Yes.

[Rachel Cruz]

Okay, gotcha.

[Jade Warshaw]

Okay.

[Rachel Cruz]

How much money does she have?

[Robbie (Caller)]

She has right now I think like $50,000 in cash, but she also gets Social Security and she has a retirement. And I think her husband had something that she gets. He's passed away and she still gets something. I don't know if it was a military benefit.

[Jade Warshaw]

Do you know what the retirement nest egg is

[Terry (Caller)]

like, meaning what she has in retirement?

[Robbie (Caller)]

I think it's just the 50,000.

[Rachel Cruz]

Okay. And so she's actually.

[Terry (Caller)]

No, no.

[Robbie (Caller)]

I don't know what's in her retirement account actually, because she does have something saved that is in addition to Social Security. But I know it's not very much.

[Sherry (Caller)]

Okay.

[Rachel Cruz]

I mean my knee jerk. James, I'll be curious. What Jade has to say is I always like a lump sum because she can turn around and invest that and make a great return. I think she'll get probably the most bang for her buck doing it that way. Even though it's a lesser amount, I think she will make from a return perspective more getting it within five years versus 20 years.

[Jade Warshaw]

Yeah, I mean that's basically what we would say with even a pension or something like that. If you can have the lump sum and reinvest it or the lottery.

[Rachel Cruz]

If someone win the lottery, go ahead and take it off. So that's, that's.

[Robbie (Caller)]

She's 82.

[Rachel Cruz]

Okay.

[Robbie (Caller)]

So she has been living her whole life off of what she gets at monthly. So this is something completely foreign to her. She's never heard of anything like this.

[Rachel Cruz]

Sure.

[Robbie (Caller)]

The tower, my grandpa handled it all and they were, he just wanted him out of his face basically. And they were paying him $500 a month. Now her son, my uncle, who has passed away, got them up to $1,800 and now it goes up, I think 5% every five years. So if we did not take a lump sum, it would go up 5% every five years. After the 20 years it would have gone up.

[Rachel Cruz]

Yeah, I just think she could make. Yeah, I think she could still make more in the market having a lump sum and put. Because if it's every five years, would you say every five years it goes up 5% or every year?

[Robbie (Caller)]

Yes. Yeah, every five years.

[Rachel Cruz]

Yeah, I think I, I lean towards taking the lump sum of in five years.

[Jade Warshaw]

I lean towards that too. Yeah, I, I think it's a no brainer, honestly.

[Rachel Cruz]

And have her sit down with. And you probably will help her, James, because you're kind of an advocate, you know, for her, even in this call. Sit down. Smartvestor. Pro you can find one on ramseysolutions.com and figure out the best way from even a tax perspective of if she invests this money because it sounds like she's pretty low maintenance. She's probably not going to use if any of it. But from a generational perspective, what a beautiful thing, right? To be passed down one or two generations to be able to help out family. Right. With what this money could be. And so I would sit down with an investment professional and just figure out from a, A trust stamp, the trust, a trust standpoint or even a will, the tax, the taxes. I don't know. I would, I would want someone looking at this amount of money and just saying, how can we make this go the furthest? Yeah, the best way, the best way possible for her. And if she needs any of it, it is hers. I'm not just like, yeah, I'm not shagging this lady.

[Jade Warshaw]

Sounds like she doesn't hardly.

[Rachel Cruz]

She doesn't. It doesn't sound like she cares for. I mean, she's like, I'm good. I'm good. Which is amazing. But man, what a, what a crazy thing.

[Jade Warshaw]

That's pretty cool.

[Rachel Cruz]

Pretty wild. Yeah. So great. Well, thanks for the call, James.

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[Michelle (Caller)]

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[Rachel Cruz]

Up next, we have Michelle in Spokane, Washington. Hi, Michelle. Welcome to the show.

[Michelle (Caller)]

Hi.

[Sherry (Caller)]

Thank you for taking my call.

[Rachel Cruz]

You're welcome. How can we help?

[Michelle (Caller)]

Well, I'm a 56 year old divorced woman with no retirement saved and a mountain of debt.

[Ann (Caller)]

Baby step two.

[Michelle (Caller)]

And my question is, once I finally get to baby step four, because I have no retirement, should I stick with the 15% of my take home to invest or should I maybe consider increasing that while I'm working on paying off my home?

[Jade Warshaw]

Well, let's tackle one thing at a time because you've got a mountain in front of you. So let's just. One step at a time. So tell us about the debt that you have. The, the consumer debt.

[Michelle (Caller)]

Well, the consumer debt is I owe my mom $1500. I owe the IRS $5600. I have about $14,624 in credit cards.

[Keisha (Caller)]

Okay.

[Jade Warshaw]

Did you say, say that number again?

[Cambria (Caller)]

Credit.

[Michelle (Caller)]

14,624 in credit cards.

[Jade Warshaw]

Okay.

[Michelle (Caller)]

A $23,976 car loan.

[Jade Warshaw]

Okay.

[Michelle (Caller)]

And this is the scary one. $50,603 in personal loans.

[Jade Warshaw]

Okay.

[Rachel Cruz]

Michelle, what's been going on? Did all this kind of escalate after the divorce or.

[Ann (Caller)]

It's just been years.

[Michelle (Caller)]

I spent a lot of almost 30 years paying off student loans.

[Sherry (Caller)]

Okay. Sorry.

[Rachel Cruz]

No, you're okay. It's a lot.

[Jade Warshaw]

How fresh is the divorce?

[Michelle (Caller)]

Oh, it's been years. I've been by myself with kids for many years.

[Jade Warshaw]

Okay. Okay.

[Rachel Cruz]

How many kids do you have?

[Michelle (Caller)]

I have three. The youngest just graduated. Nobody has student loan debt. If I've done anything right.

[Jade Warshaw]

That's excellent.

[Rachel Cruz]

How much do you make a year, Michelle?

[Ann (Caller)]

About 84,000.

[Rachel Cruz]

Okay. Okay, perfect.

[Jade Warshaw]

Okay. How much do you see every month in your, in your month to month

[Michelle (Caller)]

at Take home? Yeah, I take home about 7,000. I pay myself a, I'm self employed, so I pay myself a wage that nets down to about 5,000 and I try to take another 2,000 from the business each month.

[Jade Warshaw]

Okay, and you're not investing right now, right?

[Michelle (Caller)]

I'm not investing at all. I've been seven months into baby step two, so I am making progress.

[Rachel Cruz]

Good for you.

[Jade Warshaw]

Very good.

[Michelle (Caller)]

Good.

[Rachel Cruz]

How much, how much debt do you have being thrown at. I'm sorry? How much cash per month is going towards paying off debt? 2003.

[Michelle (Caller)]

I just got to the point where I can put 2,500 towards the debt.

[Keisha (Caller)]

Good.

[Rachel Cruz]

Okay.

[Jade Warshaw]

Fabulous.

[Ann (Caller)]

I have free.

[Michelle (Caller)]

I have freed up $500 to move.

[Rachel Cruz]

Yes.

[Michelle (Caller)]

I started with about 2,800, so that's perfect. I'm moving forward.

[Rachel Cruz]

Okay. So within three months, the IRS and the $1,500 loan should be close to paid off.

[Sherry (Caller)]

My plan.

[Michelle (Caller)]

That's my plan.

[Rachel Cruz]

Okay, great.

[Jade Warshaw]

What kind of work do you do? Are you able to do extra work? Side hustle? Add more to this.

[Michelle (Caller)]

I hate to say what I do for a living. I'm a bookkeeper and accountant.

[Jade Warshaw]

That's okay.

[Rachel Cruz]

Listen, don't be ashamed of that. You're fine. Yeah, y. I know, but I always

[Michelle (Caller)]

hear the accountants are the ones that make it right.

[Rachel Cruz]

No, you're fine. You are fine. So, yes, I haven't been saying.

[Michelle (Caller)]

I haven't been saying no to work. I've been working myself quite a bit. I don't see the need at this point to get a side hustle because I have the potential to bring in more.

[Jade Warshaw]

Okay. So I would quantify that because sometimes you can take on more work, but you may not see the dollar side of it as soon as you want to. So I would really put a goal around how much do I need to earn per month to hit this goal and how many clients does that amount to? So that you are very intentional about going after that money. And then like Rachel said, just keep going smallest to largest by balance. And that's how you do the debt snowball. Like she said, in three months, once you've paid off your mom and the irs. Now, whatever those minimum payments were, if you were making those, that's now going to go onto these credit cards. Is it one credit card or several smaller ones? Ones.

[Rachel Cruz]

It's two.

[Michelle (Caller)]

I've paid off all the little ones. Everything's closed.

[Jade Warshaw]

Okay, good.

[Rachel Cruz]

So I think if my math is right, Michelle. And it. And again, if you throw on some extra money, I think in two and a half years, this. This could all be gone. And my hope is too, with this car and that that includes possibly selling this car. Do you know how much you could get for it?

[Michelle (Caller)]

Maybe 27,000.

[Ann (Caller)]

Oh.

[Rachel Cruz]

Oh, okay. That's great.

[Jade Warshaw]

You owe 23, right?

[Michelle (Caller)]

Almost 24.

[Rachel Cruz]

Okay. I would, I would, I would get a couple of thousand bucks, Michelle. Sell it, Put that together and go get an 8, 6, $8,000 car because that. That's going to speed up this process so fast for you. Because I think that. I think the urgency of retirement savings is on your. Is on your heels. And so, so if you wake up, call ladies. Yes, for sure. But if you can, if you can be out of debt, let's say by 59. Okay. For the sake of our discussion and you start throwing. I'm using our retirement calculator right here. And I'm going to say, do you have anything in retirement right now?

[Sherry (Caller)]

Nothing.

[Michelle (Caller)]

Okay.

Nothing.

[Rachel Cruz]

Okay. Let's just, I'm going to go big here just for the sake of all of it. Okay. So let's say you start investing at 59. Retirement age is 67. Let's say you put three grand in a month like you are, you are just throwing money in this account.

[Michelle (Caller)]

You're saying a number that I've been thinking in my head and at least my timeline is matching what the two of you are proposing.

[Jade Warshaw]

Well, you're just taking what you were putting on debt and now you're turning around and investing it.

[Rachel Cruz]

And what you're going to have, you're going to, you're going to have $458,000.

[Sherry (Caller)]

Okay. At that point, by six.

[Rachel Cruz]

By six, by 67. Yep. That's, that's, that's pretty wild that you go from negative to positive to half. Almost half a million dollars, Michelle.

[Michelle (Caller)]

So stay with the 15% then and just continue to work on the house and invest. Okay.

[Rachel Cruz]

Yep.

[Jade Warshaw]

Tell us about your mortgage. I'm just curious.

[Michelle (Caller)]

Oh, I owe $217,000. My house payment is 1,610amonth.

Okay. Okay.

[Jade Warshaw]

Yeah, Yeah.

[Rachel Cruz]

I probably was a little aggressive on the three grand a month because you do want to throw some of that at the house. So it may be a little less than that with a paid off house. I wasn't, I, I, I got too excited for you, Michelle.

[Jade Warshaw]

Well, it still might be.

[Cambria (Caller)]

I needed to hear that.

[Rachel Cruz]

I needed, I just need to know that there's, yeah. That there and you know, and you get to make the decision what you want. We find the fastest way is to get the house paid off and on. But, but with your age, if you, you know, if you said, you know what, I am going to throw more at retirement and keep my, my low house payments, you know, that could be your decision. I'm not saying to do that, but I'm just thinking if you're aggressively throwing some money in investments, I think that, that, I think there, there is hope.

[Sponsor/Advertiser]

Hope.

[Rachel Cruz]

Let's just say that however you kind of slice, slice the pie, I think you're going to be good.

[Sherry (Caller)]

Thank you.

[Rachel Cruz]

Yes.

[Michelle (Caller)]

Thank you. I, I've been really overwhelmed and fearful. So thank you, ladies. Both.

[Rachel Cruz]

Yes. And you're a good mom, Michelle. I mean even the fact that you were like fighting hard for these kids not to have student loans because you said you took so long to pay yours off and you're like, I don't, I can't. Do that. And, and there is a wake up call and everyone has that moment, Michelle. We kind of call it your, the I've had it moment where you look up and you're like, I'm 56. I have worked so hard, I've started my own business. I put my kids through college. But like, what about me? You know, you get to this point and, and it makes you mad. But that, but that anger kind of creates that grit to, to get out of this. But it's, this is doable. Right. You're. I don't think I don't see you in consumer debt for, for six years.

[Keisha (Caller)]

Right.

[Rachel Cruz]

I mean, like, you, you could really make a lot of progress and I think you're feeling that. So thanks for the call, Michelle. We appreciate it.

[Jade Warshaw]

It's going to take a lot of intentionality, but I, I think with what we teach, there's always a measure of hope and there's always a measure of increase that can be gained. Right.

[Rachel Cruz]

Yes.

[Jade Warshaw]

She may not have a million dollars, but it's better, it's better to have 458,000. Right. Than $0. So there's always a better measure of hope that can come from doing this.

[Rachel Cruz]

Yes. And that is a pro to owning your own business. I mean, that is one thing because you can kind of, you can set your schedule and even, you know, I mean, I know plenty of people in their 70s and they're still killing it.

[George (Advertiser)]

Yes.

[Rachel Cruz]

You know what I mean?

[Jade Warshaw]

You can work longer if you choose to. Yes.

[Rachel Cruz]

And you can kind of create this environment that you need order to create. You know, have income on the side and you're not just dependent upon those investments at 67 too. Right. That could be an option. So it is tough. I think it's a, it's probably a wakeup call for a lot of people too, Michelle, to realize like, yes, the day is coming. Like it, it's happening and the sooner you start y, the better off you're going to.

[George (Advertiser)]

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[Rachel Cruz]

Well, we wish we could get to every call and question on the show, but if you have a money question and you want an answer for your situation, head over to our website and use Ask Ramsey. Ask Ramsey is our free AI tool that's built and trained on Ramsey principles. So you're gonna get an answer the same way that we would answer on the show. And I used this the other day, Jade, for something I was looking at and they, they continue to update it like they, they are really iterating this, like to make it as good as possible and, and so, and they'll ask you some questions to get a better insight into your situation. I was like, that's what I would have asked. I thought that as, as the question comes up for me, I was like, that's probably what I would ask on the show. So it really is, it is amazing. So go and ask your question [e-mail] or click the link in the description if you're listening on podcast or watching on YouTube. All right, let's go to Luke in Billings, Montana. Hi, Luke. Welcome to the show.

[Poncho (Caller)]

Hi, how's it going?

[Terry (Caller)]

Thanks for taking my call.

[Rachel Cruz]

Absolutely. How can we help today?

[Terry (Caller)]

So we, my wife and I, are in baby step six and, and I'm having a hard time convincing her to cut up all the credit cards and let the FICO score go to zero because she's nervous when and if we go to refi our house for a lower interest rate because we used our FICO score basically, you know, to get our house original.

[Jade Warshaw]

So it sounds like she's missing a piece of information. I think think because in her mind she's thinking if we have a zero credit score, we won't be able to get as good of a interest rate.

[Terry (Caller)]

Yep.

[Rachel Cruz]

Yeah. And undetermined, like. Yeah, they just can't pull up the information because you've Been out of debt and closed all the accounts and that only takes about nine to 12 months. It's not that long.

[Terry (Caller)]

That, and that's what I've told her and the whole manual underwriting or whatever it's called.

[Jade Warshaw]

Why doesn't she believe it? Has she said this is the reason why I don't believe that, that you're telling me the truth or that that fact is real.

[Terry (Caller)]

She just says we used it to get our house originally and it took so long to get it to a good score and I just don't want to close it. And I've tried to explain it to her a few times. And

[Rachel Cruz]

you guys are on baby step six. How much further do you guys have to pay off your house?

[Jade Warshaw]

House,

[Terry (Caller)]

we just bought it like six months ago. So we owe like 520 on.

[Rachel Cruz]

She thinks that you guys are going to refinance. Does she have a belief that it's going to go back down to 2% interest rate? Because it's not.

[Keisha (Caller)]

Yeah.

[Terry (Caller)]

Right now we're at six.

[Rachel Cruz]

Yeah. And that's pretty normal. I mean from what everything that, you know, the Fed is doing and all that, like for the foreseeable future, nobody is saying that it's going to go down significantly. It's probably going to stay pretty steady for, for a long time because remember to look at that, that the 2% that we were living at was an unheard like that was, it was a result of, yes. All this other borrowing that was happening and so it's corrected itself. And so 6% actually in the grand scheme of, of mortgages is not pretty good that bad.

[Sherry (Caller)]

Right.

[Rachel Cruz]

It's bad for us because we've been used to 2%. But it's probably, probably never, I mean most, most real estate experts are saying there's probably never going to go back to 2%.

[Terry (Caller)]

Huh. Gotcha.

[Jade Warshaw]

But I, I, I do want to challenge you and I, I don't, I think it's intellectually fair to do this in a marriage that when you're talking about something, if one person is talking about it from a perspective of facts and the other person kind of refuses to do their side of the work of the argument, which is if you're, if you're doing your side, which is, here's the information I found she needs to do her side, which is, is I need to read the information or I need to see. It can't just be on a vibe. It needs to be on have a fair, have a fair intellectual conversation. And I would challenge her on that. I'D say, honey, I've looked into both sides of this. I understand the credit score side of it and I understand the manual underwriting side. I think you're only looking at one side. And I would really love for you to just read up on this and see that I'm, I'm not making this up. This is really. Here there's two options to inform your ability to borrow money and you're stuck on one. And there's a whole other option here that's actually better for our lifestyle, and I think that's okay to do and just challenge her.

[Terry (Caller)]

That's a good idea.

[Rachel Cruz]

Yeah. So that

[Terry (Caller)]

pretty much. I mean, I've been listening to your guys show for a little while now, and the more I dig, the more I see, the more I'm ready to cut them up. Yeah, but she's not, she's not ready.

[Rachel Cruz]

Does she use it on a. On a monthly basis and pays it off? Because.

[Terry (Caller)]

No, they're all ours are all paid off. They're all at zero. We have our emergency fund and everything. Okay, so we invest it.

[Rachel Cruz]

She needs to know, though, that score will go down if you're not actively using debt. They will penalize you. Yeah. So. So if she's going. Her plan, it's gonna slow, it's gonna go. So it's going to die a slow death versus just taking care of it now and then it's all fine in about nine to 12 months.

[Jade Warshaw]

Yeah. That's another really good point, Rachel. Because she's got, if she wants to do the credit route, she's got to know, hey, it's not just having one line of credit open. Right. They're looking at the different types of credit you have, how long you've had the credit, what utilization of the credit. Right. There's all these different markers that they're measuring. So that's a really good point Rachel just made.

[Michelle (Caller)]

Yeah.

[Terry (Caller)]

And she's more of like the use it for. Use it for a tank of fuel, Pay it off.

[Jade Warshaw]

You know what I think? I think it's a comfort mechanism of time. I think it's just a comfort thing. It's not based on any facts. It's not based on math or, you know, it's just this is what she feels comfortable with. And I, I would challenge that. Yeah.

[Terry (Caller)]

And she has even said before, you know, what if, what if we need it? Or something like that. And it's like, we, we got 40k in the bank. I think we're probably fine.

[Cambria (Caller)]

Yeah.

[Rachel Cruz]

When you're used to this like false safety net, which is what debt is.

[Cambria (Caller)]

Right.

[Rachel Cruz]

I mean, that this is what banks and credit card companies pray for. They. Yeah, they love being in someone's wallets for the just in case, because the just in case happens. And so that this is what they're wanting. And I think, you know, when you said. You've been listening for a while, while part of our. My, My, like, frustration with that whole industry is, is they. They take advantage of people. They sit there and market themselves like they're helping you and they're not. Because the people that actually cannot pay their credit card bills and that now it's gone up to $1.4 trillion in credit card debt. And Americans that are really struggling and really are living paycheck to paycheck, everyone else gets to take advantage of that with the points and whatever. And then we've been brainwashed with this whole idea of the FICO score and the credit score and. Yeah. Do you have to jump through a few more hoops to do something different? Yeah. Cause you're not playing their game. But it still can be done. Like, we both have great, incredible lives.

[Jade Warshaw]

I know.

[Rachel Cruz]

And it's fine. Like, you really can live without this, you guys. You really can and have complete autonomy. And MasterCard isn't the thing that catches your emergencies. It's you that you have built up a system within your family that no one has a say in. And it's beautiful.

[Jade Warshaw]

Yeah. I always say it's. I mean, to your point, you're brainwashed. Hearing this, seeing the commercials. And so, you know, that's the grace that I have for her is we all grew up that way.

[Michelle (Caller)]

You know.

[Rachel Cruz]

That's right. That's right.

[Jade Warshaw]

Never leave home without it. Right. And the truth about that is there's so much money and revenue and profit tied to that style of borrowing money for a mortgage is usually what people are thinking enough. But you don't have commercials about manual underwriting. Like, nobody's talking about it except us. And so for her, she's thinking, I've never heard what you're saying, but I hear, you know, the majority of the world, the majority of the noise, is talking about it in this way. And I think sometimes you do. You have to be willing to go against the grain, do your research, not let it be. Oh. Because so and so said it, but actually look into it and look into the facts and dig in and know what the heck it is that you're talking about and not just make stuff up.

[Rachel Cruz]

Yep. Yeah. So if you. If you do get out of debt, which is our baby step two where you get out of all consumer debt. And then baby step three is you save up a fully funded emergency fund and then you want to go buy a home. You guys, for you first time home buyers, that's baby step 3B. And we say to save at least a 5 to 20% down payment. And if you have been out of debt and you've closed your account, okay, you've closed all your accounts. Now if you have a mortgage, it's a different story because it's going to be there. It's going to be there. But if you don't have any debt within nine to 12 months, you guys, your credit score goes to what's called undetermined. They cannot determine your credit score because they don't have any debt information on you because there is no history to that point for them of how far they go back. And so they do a process called manual underwriting. And you have to be current on a job for two years. You have to show proof of paying bills on time, like your cell phone insurance for two years. Yes. And so there's some, there's elements of this that you get some paperwork, but you can still get a mortgage even without a FICO score.

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[Rachel Cruz]

Welcome back to the Ramsey show in the Fair Winds Credit Union studio. I am radio Rachel Cruz with Jade Warshaw and we are answering your questions about life and money. So give us a call at 888-2552-2,5. All right, let's go to Macon, Georgia. And we have Poncho on the line. Hi, Pancho. Welcome to the show.

[Poncho (Caller)]

Hey, how you doing, man? Thank y' all for taking my call.

[Rachel Cruz]

Yeah, absolutely. How can we help today?

[Poncho (Caller)]

Yes, ma'.

[Terry (Caller)]

Am.

[Poncho (Caller)]

So long story short, and I keep it brief, I've got a. I'm basically retired from two careers. I'm 41, so I feel like I've won in life. But I'm gonna go back to school, figure out something I want to do when I grow up. And I've got a. I've got really no debt. I've been working on the baby steps. I got my emergency fund fully funded in a high yield savings, but I have some chunks of money from some pensions and a 457. It was a public safety 457, so I don't have any penalties. So my question for y' all is, the only real debt I have is my mortgage. And I just want to know, should I invest? Should I pay it off? What do y' all think?

[Jade Warshaw]

Well, I want to know, I mean, you said you've retired from this job. What will be your income moving forward? Will you be receiving some sort of retirement income from these jobs or. Tell me more about what your income is going to be and that'll help us,

[Terry (Caller)]

okay?

[Poncho (Caller)]

Absolutely. So I am retired military. So I do have a pension I'll get for the rest of my life.

[Jade Warshaw]

Okay. How much is that?

[Poncho (Caller)]

It's just under 50 grand a year.

[Ann (Caller)]

Okay.

[Poncho (Caller)]

And I do some part time stuff now. Actually, I just, just retired a couple months ago. I want to go back to school, you know, through the va either I'm going to learn a trade. So trying to just reinvent myself, but the advice I got was I'll take all this money and then put it, put it in an annuity. And I'm like, I don't think Mr. Ramsey's a big fan of annuities.

[Jade Warshaw]

No, I wouldn't do that. But I would be interested in investing on my own. And really you're to that point if you've got three to six months in an emergency fund, which you did say you had some money. I would double check and try to get it. You know, six months is a great place to start. And then from there, yeah, I'd be investing 15% off of the gross. So off the 50,000 a year, that's around $625. And I would start with a Roth IRA. I'd max one of those out. And then from there you know, go on to the next thing. If by that point you do have a job that is offering a 401k, that's a great place to go if they have a match, I'd even go there first. And do your best to spread this investment around until you get to the 15%, the $625. But that's not an annuity. That's invested, you know, through mutual funds in the market.

[Robbie (Caller)]

Yes, ma'. Am.

[Poncho (Caller)]

So I have some money from a pension. I have some money parked in an ira, but I've just got different chunks of money in different spots. And you know, I listened to this whole spiel about annuities and I'm like, I said, wait a minute. I said I'm a follower of Dave Ramsey.

[Michelle (Caller)]

And you know, they didn't like that, probably.

[Rachel Cruz]

No, no.

[Poncho (Caller)]

And they're like, oh, well, you know, the annuities, the old ones had a stigma. And I'm just like, I just ain't passing the smell test.

[Rachel Cruz]

Yeah, well, the problem with it is you get especially like a fixed annuity, you get stuck in a situation that has low interest, it's low risk, but it's just your money could be doing so much more. There's usually a lot of fees attached to annuities, you know, in some cases, some good commission for the guy selling it, of course. And so, yeah, there's just probably more. Okay, so I am curious. You said you got money in different places. So you got, you have your pension coming in, you have your emergency fund and a high yield savings account. How much is in the.

[Poncho (Caller)]

There, just, just under 12 grand.

[Rachel Cruz]

12 grand, perfect. Okay, and then what else do you have? What's in your ira?

[Poncho (Caller)]

Well, it's so it, it's being moved from the county side. I want to say it's just under. It's either 48 or 50 grand.

[Rachel Cruz]

Okay, and what's that invested in right now? Do you know?

[Poncho (Caller)]

No, ma'.

[Terry (Caller)]

Am.

[Poncho (Caller)]

I just put it in a rough kind of, kind of like a holding pattern.

[Rachel Cruz]

Okay, and then what else do you have?

[Jade Warshaw]

Have?

[Poncho (Caller)]

I have a 457. I've got. Geez, I got about 95 grand in there.

[Michelle (Caller)]

Okay.

[Poncho (Caller)]

Which, which I have access to. I mean, it was all pre tax. It was tax deferred, but there's not going to be a penalty.

[Rachel Cruz]

What's that invested in? Do you know, do you know how much you're making on those?

[Michelle (Caller)]

On that?

[Poncho (Caller)]

I want to say my, my ROI last year was about 19%.

[Rachel Cruz]

Okay, that's great. Yeah. So I Almost would just park it. I mean, it's doing great. If it's invested in something long term that you're not happy with, like a, you know, mutual funds or an index fund, you could always cash it out and move it. But then you may. Because you said there's no penalties or taxes with that.

[Poncho (Caller)]

Well, there is taxes, unfortunately.

[Terry (Caller)]

So that, you know, if I were

[Poncho (Caller)]

to just cash that out and like say put it toward.

[Rachel Cruz]

You're going to be paying. Yeah, yeah. Okay. So, yeah, I would probably leave that because that feels like it's doing well. Okay, what else?

[Poncho (Caller)]

Let's see. And I have a couple smaller that I'll get, but not till I'm, you know, 55.

[Rachel Cruz]

Okay, so. So those are your four big buckets, really. The, the retirement coming from the military, your IRA, the 95, 000 sitting, and the emergency and then the emergency fund. Okay, well, I think you're doing good, Punch. I mean, I think if you can cash flow school, if you can go work or. No, no, it's going to be paid for because of the military. So. So yeah, go get, I think go get a degree. You just have to be able to live. I mean, my goal would be not for you to touch these investments because you are 41 and able to hopefully live off maybe this whatever 4700 that comes to you monthly or maybe get a job while you're in school. Right. And find a trade and kind of create the next season of your life, the next chapter of your life.

[Cambria (Caller)]

Life.

[Poncho (Caller)]

Yes, ma'.

[Terry (Caller)]

Am.

[Poncho (Caller)]

Talk about a true, true blessing. Because I was, you know, I was pretty freaking poor most of my adult life. And I'm like, man, I've been given this golden opportunity. I work my tail off.

[Robbie (Caller)]

But yeah, I'm not, I'm.

[Poncho (Caller)]

I'm not to sit at home and do nothing type of guy, but I'm. But I also. All these chunks of money, I don't want to squander it.

[Jade Warshaw]

You're doing better than you think you are. And the, the truth is you should have a couple of chunks of money. Like the way you have this divided is just right. Everyone should have an emergency fund and a high yield savings. You've got that. Everyone should have some sort of retirement nest egg, whether it's an IRA or a Roth IRA. Most people have some sort of a 401k or a 403b in your case a 457. And then it's just a blessing, you know, that you're receiving some retirement off of it, you know, early too Much.

[Michelle (Caller)]

Yeah.

[Jade Warshaw]

So you're exactly. You're exactly right where you should be.

[Poncho (Caller)]

Yes, ma'.

[Sponsor/Advertiser]

Am.

[Rachel Cruz]

Yep. Great job. Well, you know, we're going to send you Ken Coleman's book. Find the work you're wired to, because there's a great assessment in the back, and it may just help narrow down some ideas for this next chapter. Poncho. But I think the next step for you is college, the ne or the degree or trade school, you know, whatever. You choose that next step in education to get the next job. And then when you have that next job, like Jade's saying, invest 15% of that active income coming in and be paying off the house, if you have your house. And, and, and, yeah. And then that's it. So it's not that much complicated. I know it probably feels like a lot. Simple and well done. Thank you for your service and everything you did for this country, Pancho. We so appreciate it. And it's amazing that you can go from, what do you say? I was just so poor, just broke. Broke. Broke is a joke to what you've got now. It's very, very impressive. So keep doing what you've been doing. Yeah. Nothing's wrong. I stay away from the annuities, so I'm glad you called in. Hey, guys, Rachel Cruz here. And I love summer. There is more fun on the calendar, more time with your people, and way more chances to make a memory. Memories. But you know what else? There's more of spending.

[Keisha (Caller)]

Oh.

[Rachel Cruz]

Between the extra groceries and gas and camp fees and family trips, it all starts to add up so fast. And before you know it, money stress starts to steal the fun out of everything. And that is why I love the EveryDollar budget app because it helps you plan your money, track your spending, and find more margin in your budget so that you can put extra cash towards the goals that matter most most. Enjoy your summer without the money. Stress. Download the EveryDollar app in the App Store or Google Play and start for free today. Are you sick and tired? Tired of working so hard and having nothing to show for it? Well, that is normal, and normal is broke. But you don't have to live that way. Our EveryDollar budget app helps you find extra money every month and build you a personalized plan to beat debt and build wealth. And in just 15 minutes, you'll find thousands of dollars of hidden margin and it's going to feel like you got a raise. So don't live normal when you can live like no one else else. So start every dollar for free in The App Store or Google Play? All right, let's go to Tony in Cincinnati. Hi, Tony. Welcome to the show.

[Terry (Caller)]

Hey guys, thanks for taking the time

[Poncho (Caller)]

to take my call.

[Rachel Cruz]

Absolutely. How can we help?

[Terry (Caller)]

I have a question for you. I'm 55, my wife is 52. And right now we pay extra on our house every month and we're on track to have it paid off in about eight years. The mortgage is a 2.75 interest rate. And I'm wondering if I should not be paying the extra and instead using a portion of it to invest.

[Jade Warshaw]

Oh, yeah, it's the common question that we get.

[Rachel Cruz]

Yes, the classic, the classic question when it comes to paying your house off early.

[Jade Warshaw]

I mean, the truth is paying off your house early is more than just a math question. Right. You do want to go into retirement without a mortgage, and that's a big piece of this. And, and I will say this, there are worse things that you could do, right? You could say, yeah, I just want to do this and invest money. But you also want to have a paid for mortgage in eight years. And so I, I do believe that a major part of wealth building is not just money in retirement, but also having the peace and security of having a paid off house. And so I would stay the course and I would put the extra pay off the house in eight years. And then after that you can can, you know, go hog wild on investing if you want to.

[Terry (Caller)]

Well, I've been just, I just had my head down, I continued to plow forward and then I recently started thinking, am I actually doing the right thing by paying this low mortgage rate off early?

[Rachel Cruz]

Right. Yeah. And if you look at it from just a math perspective, Tony, sure, you're going to make the spread of 10% in the market. If you have a 2%, you know, on your home on interest that you're paying versus 12% you could be making. Right. And just like round the numbers. So from a math perspective, that is true. But what, what is not calculated in the Excel sheets that you create is peace of mind.

[Jade Warshaw]

It really is that.

[Rachel Cruz]

It's that. It is this idea of having complete autonomy over your life and your money, that if whatever happens, they can't take your house. A bank doesn't own you anymore. There is something about that freedom that I promise almost everyone we talk to that pays off their house does not regret it. They don't want to go back in. And we used to make the joke all the time, if you hate having a paid for house, you can go get another mortgage. If you Wanted to. I know that would be at now 6%. So I know that that argument doesn't last as much anymore. But there's just. Yeah, there's an emotional, spiritual side side of money and debt that we talk about that a lot of people don't. And again, you can't factor that into your calculations because it's not there. But, yeah, I would say stay the course. I think having that paid off home, and then you could go back and reinvest your mortgage payment every month for the rest of retirement if you want to do that. But having that paid off house is a game changer.

[Jade Warshaw]

Just having something that's truly your, yours, it's yours. No one can take it from you.

[Rachel Cruz]

Yes. All right, let's go to Cody in Wichita, Kansas. Hi, Cody. Welcome to the show.

[Terry (Caller)]

Thank you for taking time to answer my call. I appreciate it.

[Rachel Cruz]

Absolutely. How can we help today?

[Terry (Caller)]

Yeah, so I'm 23. I own a fencing business, and I'm getting married in about three months from now.

[Michelle (Caller)]

And I. Oh, congratulations.

[Poncho (Caller)]

Thank you.

[Terry (Caller)]

I need somewhere to live, and I can't run my fencing business out of any place to rent. I can't find really anything. And I'm just wondering, would it be stupid to go borrow about 200 to 250,000 to build a house?

[Rachel Cruz]

I would not. I would pause just from a couple of things you said. Kind of gave me like a head tilt when you say there's not. There's no rentals that I can have to run my business out of. When you make big statements like that, it shows to me that you may not have done all your research. And when you start to limit your options because of a belief system, then you pin yourself in a corner where you're like, the only thing I can do is build a home to make my life what I need it to be. So I would push against that philosophy. Okay. I would implore you to be a little more creative in it. That's thing 1. Thing 2. I would not build a house my first year of marriage. I. There's so many decisions, so many things that change in life. You guys just need to enjoy. Enjoy life as a newlywed at 23 years old. You're running your own business. You have enough stress on you, Cody, already. I would. I. I would get creative, find a rental. I don't know if you even have to rent somewhere else to run the. The company out of. I don't know what that looks like for you, but I would do that for a year. And then if you guys look up in a year and say, hey, we want to, you know, make a different. Make a move. Then that's when I would start talking about doing something.

[Jade Warshaw]

And then, Cody, let's even talk about. Since I agree 100% with Rachel. But, you know, there is going to come a time when you do want to buy a house and you want to be ready and prepared to do that the right way. And there is a good, better and best way to do that. And we'll tell you the best way, which is honestly to be out of debt, to have three to six months of expenses.

[Rachel Cruz]

Do you guys have that right now? Are you guys at that step by chance?

[Terry (Caller)]

No, I am not out of debt. So right now I am actually in debt quite a ways.

[Jade Warshaw]

Oh, yeah.

[Terry (Caller)]

With fairly good assets. I owned a piece of property I own. I owe about 430,000 on it. It's worth about 700.

[Rachel Cruz]

What kind of property?

[Terry (Caller)]

It's just pasture land. I live on a farm. I bought pasture. It's 160 acres. So I have cows that I obviously run on that help me make my payment, but I also would like to pay it off. And then I have one vehicle note for, I think 30,000, something like that.

[Jade Warshaw]

What about your wife to be.

[Terry (Caller)]

She doesn't have any vehicle loans at all.

[Michelle (Caller)]

She is.

[Terry (Caller)]

No debt at all.

[Jade Warshaw]

Okay. So, yeah, I mean, I'll be honest with you. If I were looking at this, I mean, the first order of business, I'd pay off the credit, the car debt, and then this land could be the difference between you guys having a house sooner than later. Unless you're thinking you were going to build something on that land. What. What was the plan? Land?

[Terry (Caller)]

Yes. So actually my dad has a bunch of land as well, and he deeded me over just 10 acres to my name. If we were wanting to build a house, he would deed that over to me.

[Sherry (Caller)]

Okay.

[Jade Warshaw]

And that'd be separate. That'd be separate than the pasture that you told us about?

[Terry (Caller)]

Yes, that. So I would have 170 then.

[Jade Warshaw]

Yeah. I love the idea because you've got this business that you're building that apparently needs a special space for it. I might love the idea of at the right time, offloading this pasture land because that might be the money that you need to build something.

[Rachel Cruz]

I mean, how many. Yeah, how many acres is it, Cody?

[Terry (Caller)]

160 acres.

[Rachel Cruz]

Okay. So, I mean, yeah, going forward, it's a great asset that you have. So I would make it a goal to pay off the car because how much. How much will you Guys be making a year together.

[Terry (Caller)]

A year together. I think I'm about the business is only about 2 years old this year. I'm projected to make about 150 to 200,000.

[Keisha (Caller)]

Good job.

[Terry (Caller)]

And then I cheat. She was in. She works at a bank, but getting ready for the wedding and stuff like that, I don't know. Yeah, she's not. She's quitting her job, but I'm sure she'll start. So I would guess we'd be making around 200,000 or something like that.

[Rachel Cruz]

200. Okay. Amazing. Amazing. So, yeah, I would make it a goal, Cody. To pay off the truck, you guys get a fully funded emergency fund of three to six months of expenses. And I would start saving on the after that a chunk of money because I do think, you know, building on that land. I think that's great. If your dad deeds over some. I mean that's a gift for sure. But I would not. I would do this in maybe two years. And then part of the. If you need more money past the savings, which you will, I might consider selling some of the acreage of the property to help build this. And then you guys are going to have a massive loan of $430,000 that you're going to have to work to pay off. I mean, that's. That's a. That's a lot of risk, Cody. I'll just throw it out there. I know it's working out right now, but I'm just telling you, that's a lot of money to pay off.

[Sponsor/Advertiser]

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[Rachel Cruz]

If this show has helped you think differently about money, will you share it with somebody in your life? One of the best ways to spread the word about the show is honestly, you guys. It's the word of mouth of how it's helped you. Because we do. We want to get as many people as possible to a place where they have financial peace. So sure, make. Make sure to share the show with your friends and family. We would greatly appreciate it. All right, let's go to Ann in Colorado Springs. Hi, Ann.

[Cambria (Caller)]

Hi.

[Ann (Caller)]

Thanks so much for taking my question.

[Rachel Cruz]

Yes, absolutely. What's up?

[Ann (Caller)]

Well, mine's a little bit different. I'm not calling from a personal standpoint. I'm calling on behalf of my job. I am an executive director of a small nonprofit in rural Colorado. Just a little bit of a backstory that'll maybe help understand things. We had to purchase a new facility five years ago so we could open a free medical clinic. Prior to that, we did not have a mortgage whatsoever. And we only bought the new building with a promise from a grant funder that after a year they would pay off the remainder of the mortgage. So we went into it not thinking we were going to have a mortgage for very long. And within that year, when I approached them again, my previous position is I was a fundraiser. It was when Roe v. Wade had fell and they no longer supported pregnancy resource centers, which is what we were. So now we got stuck with a mortgage.

[Rachel Cruz]

Oh, no, the grant didn't go through through.

[Keisha (Caller)]

It did.

[Jade Warshaw]

Oh, man.

[Rachel Cruz]

Yeah, man.

[Ann (Caller)]

And the original mortgage was only for five years and with a great interest rate, it's for 10 years total. But the first five years was like 3% interest.

[Rachel Cruz]

Okay.

[Ann (Caller)]

We did not realize that at five years that it was a variable interest mortgage. And it jumped to 6.7%.

[Rachel Cruz]

Shoot.

[Cambria (Caller)]

Yes.

[Ann (Caller)]

So that leads to where we are now. I took over as director two years ago and inherited 50,000 doll thousand dollars of debt for the center for the nonprofit. And by the grace of God, we have eliminated all of that debt. And for the first time in 40 years, we actually reached our first goal of having a six month operating buffer.

[Rachel Cruz]

Oh my gosh. Well done.

[Jade Warshaw]

You balance that budget. I like, I like your style.

[Ann (Caller)]

Oh, I balanced it.

[Rachel Cruz]

She's like, I'm getting there.

[Ann (Caller)]

This is a new problem for the board and myself to have because we've never had any over. Like we were, we were nervous to pay the electric every month and now we have a full six months operating cost, which to me, I hate debt. But I also hate living in fear that we're not going to be able to provide our services and pay bills.

[Jade Warshaw]

So with all that done, does it make the mortgage manageable or where. Tell us where the problem is.

[Ann (Caller)]

Well, the mortgage is manageable because I've, I've shifted some things and I've actually ran rented out space in our building that pays for the mortgage. But it has a balloon payment due in five years.

[Jade Warshaw]

Can it be refinanced?

[Ann (Caller)]

Well, and that's the step that we are right now. So that's my big question is we looked into refinancing. We found an amazing Christian company that's going to help us refinance. It will drop our mortgage rate by $200 a month.

[Jade Warshaw]

Great. And there's no more variable rate, which is the biggest.

[Ann (Caller)]

There's no more variable rate. And in fact, we can revisit it every. I think we have it for every three years that if the rate is lower, we can re. Amortize the state.

[Jade Warshaw]

Okay, that's fabulous. So where's the problem?

[Ann (Caller)]

The problem is, is we have kind of a split opinion on my board of directors. And that split is, is to. Not because we owe 220,000 on our building. And they think the part that is disagreeing with the plan right now thinks that we should put every penny that we have directly to the mortgage.

[Jade Warshaw]

Including the six months of buffer.

[Ann (Caller)]

Yes.

[Rachel Cruz]

And how much is in there?

[Ann (Caller)]

We have 157,000 right now in our buffer.

[Sherry (Caller)]

Okay.

[Ann (Caller)]

Which is technically about seven and a half months.

[Rachel Cruz]

Yeah.

[Ann (Caller)]

I have no problem throwing anything over the six months at the mortgage and try to get it paid off as quickly as possible. But I'm really nervous not to have that buffer.

[Jade Warshaw]

So what you have to win votes is that the situation you need to, you need to be lobbying for votes.

[Ann (Caller)]

We want to make sure that we're doing the right thing.

[Jade Warshaw]

I mean, I agree with you.

[Ann (Caller)]

The first problem for us that we've ever had, we want to make sure that we are honoring God and being good stewards because we depend on our donors. And one of the points of view is it's not honoring to our donors to have anything in savings. But I'm like, to me, that's being a good steward to make sure that we can keep going beyond today. So should we keep our six month buffer and throw anything over that at the mortgage so we can try to remove that debt as quick as possible, or should we throw every penny at it to try to erase the.

[Sherry (Caller)]

The debt?

[Rachel Cruz]

No, I, I could even see a split. And personally, if you went down to three months, I wonder if you guys could get some agreements because there's a nonprofit that we support. And I remember we looked over the books at one point and they did have a ton of savings. And even, even me, the, you know, Ramsey Solutions, I even kind of was like, okay, well, they can be using some of this money. Money elsewhere. Right. So I do wonder. I think that it's a great goal to have eventually again. But I do wonder if there's A little bit of a compromise, Ann, that if you guys are like, hey, let's go down to four months or three months. And this is kind of even just using the rule of thumb of just even the baby steps from a consumer side not running a business, you know, if that three to six month. But even Ramsey, I mean, yeah. Retained earnings for six months. That's, that's pretty, pretty conservative. You know what I mean? I think you, I think you could take it down a little bit to throw some cash at this mortgage. And again, part of it is to get everybody on board and part of it is, I think that that's an okay move. I, I, I would not take it down to zero.

[Jade Warshaw]

That does feel unwise to do that.

[Sponsor/Advertiser]

Yes.

[Jade Warshaw]

To be at zero. No savings, no retained earnings. There's no.

[Rachel Cruz]

Yeah. And you don't get taxed on retained earnings for nonprofit. Correct.

[Sherry (Caller)]

Correct.

[Ann (Caller)]

Yeah.

[Rachel Cruz]

Okay. So that's great. That's great.

[Ann (Caller)]

We have our six month buffer in four separate investment accounts.

[Rachel Cruz]

Okay.

[Ann (Caller)]

That we can access at any time in case there's an emergency. And we have those maturing every six months. We have two six month ones and one and two one year ones. So there's always one maturing every six months.

[Rachel Cruz]

Okay.

[Keisha (Caller)]

To kind of keep it liquid besides

[Rachel Cruz]

not getting that grant, because I would consider that an emergency. That's like a. Wow. Change plans. Have you guys run into any big emergencies that you've had to use that fund for in the last 24 months?

[Ann (Caller)]

Well, we've also been very blessed in the last 24 months that we've been able to do all of our major maintenance and improvements and upgrades. We repaired our roof, we replaced our H VAC system.

[Rachel Cruz]

Okay. So there's nothing really looming out there that you would need.

[Ann (Caller)]

Looming.

[Rachel Cruz]

Yeah, I mean, I would be, I would be okay taking, I'd take it down. I would be okay taking it down to three, Ann.

[Sherry (Caller)]

And three.

[Rachel Cruz]

I would. Because I think you guys can. Because again, when this balloon is due. Did you say in five years?

[Ann (Caller)]

Yeah. And so we're in the process of refinancing it now.

[Rachel Cruz]

Oh, that's right. You are going to refinance. Okay, so that would be.

[Jade Warshaw]

And if you've been able to cash flow all of those major projects, if you take this down to three months, like Rachel is suggesting, and I agree with her, and then you commit to cash flowing the rest with the same margin that you were using to do those projects, this mortgage is going to be gone in no time.

[Rachel Cruz]

Yep.

[Ann (Caller)]

Yeah, I would hope so. I hate debt.

[Jade Warshaw]

I mean, how quickly did you pay off the 50,000?

[Ann (Caller)]

It took 18 months.

[Jade Warshaw]

Okay.

[Rachel Cruz]

So, so it really. So if you threw 80 years and

[Ann (Caller)]

then another additional six months to get everything else taken care of. So we've done a ton of work in two years.

[Robbie (Caller)]

Yeah.

[Rachel Cruz]

It's amazing problem to have for sure. Yeah. Because if you look at it, if you took 80. Right. And maybe threw it, you know, you'd be down to 160. And you said it took about 18 months to do 50,000. Right. Like you, you pan it out and I'm like, yeah, in probably four years, you guys could get this building paid off. It's pretty amazing.

[Ann (Caller)]

Yeah, that would be the best thing. So. Because I want to throw everything. My, my personal goal is to have every penny that we possibly can to go to helping our clients.

[Rachel Cruz]

Yes, I know. Absolutely.

[Ann (Caller)]

And so if we have a mortgage, that's, that's money that we're not being able to.

[Rachel Cruz]

Totally. Yes. Well, you're, you're incredible. Yet, I mean you, you took, you took that organization by the brains and you just said, here's what we're doing and looking at all of it. Because to, to have someone like you in that nonprofit world with that business mind, to even look to refinance so you're not stuck with this horrible adjustable rate mortgage. Even those, those moves are so wise. So, so wise. So well done, Ann.

[George (Advertiser)]

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[Robbie (Caller)]

Foreign.

[Rachel Cruz]

Of the day is Psalm 104, 24. How many are your works? Lord in wisdom you made them all. The earth is full of your creatures. Vera Wang said. Oh, I like that Vera Wang quotes. When you have a passion for something, then you tend not only to be better at it, but you work harder at it too. Indeed, I would agree. Agree with that, Vera Wang. All right, let's go to Linnea in Minneapolis. Hi, welcome to the show

[Michelle (Caller)]

for taking my call today.

[Rachel Cruz]

Yes, absolutely. How can we help?

[Michelle (Caller)]

So I got A couple of issues or things going on in a complicated situation.

[Rachel Cruz]

Okay.

[Michelle (Caller)]

So first one is me and my husband. We're about $120,000 in debt. We're 28 and about to be 29. I'm finishing college so that a lot of it is student loans, some in collections, a car. And right now we make enough money on paper, but we're stuck in this daily pay cycle that our job offers where we're able to cash out our earnings every day.

[Keisha (Caller)]

Every day.

[Michelle (Caller)]

And so it's really detracting from our paychecks and we're just stuck in this visual vicious cycle.

[Jade Warshaw]

Every day. You can take part of your every day.

[Poncho (Caller)]

Oh, wow.

[Michelle (Caller)]

Yes.

[Rachel Cruz]

Do you get charged a fee or insurance? I mean anything or is it just. That's how you're getting paid?

[Michelle (Caller)]

It's like a $99 or 2.99 every time you can cash out. Okay, cash out up to twice a day.

[Rachel Cruz]

What do you guys do for a living?

[Michelle (Caller)]

So we work for the same company. My husband worked from home in a different department and then I basically customer service and then I work in the back office. In office.

[Jade Warshaw]

What do you guys work? I'm sorry, what do you guys earn collectively?

[Michelle (Caller)]

85 to 95,000. He's on 32 to 40 hour flex weeks. So it can range between that 85 to 95 altogether.

[Rachel Cruz]

Okay, what do you say?

[Michelle (Caller)]

90.

[Rachel Cruz]

Do you guys have kids?

[Michelle (Caller)]

I'm making 40. We have one two year old daughter.

[Rachel Cruz]

A two year old. Okay, and what are you going back to school for?

[Michelle (Caller)]

I'm in school for psychology and I plan on getting my master's degree.

[Rachel Cruz]

Okay, now you're going to pay for

[Michelle (Caller)]

that as of right now? No, we're. We might stop and pause school to cash flow once we get into a better spot, but right now we've been taking out loans.

[Rachel Cruz]

How much longer do you have till you grab graduate?

[Michelle (Caller)]

I have one semester left until I'm done with my bachelor's degree.

[Rachel Cruz]

And how much of the 120 is student loans?

[Michelle (Caller)]

About 50. It'll be 60 after everything.

[Jade Warshaw]

Okay, 60k.

[Rachel Cruz]

How much is do you guys owe in the car?

[Michelle (Caller)]

24,000.

[Rachel Cruz]

Okay, and what's in collections right now? Is it credit cards?

[Michelle (Caller)]

A couple personal loans and some credit cards.

[Rachel Cruz]

What does that add at to about $50,000. 50,000. And those are all in collections?

[Michelle (Caller)]

Yeah, about $40,000 in collections. Most of it's on my husband's side because he had some larger credit cards and he had the, the larger personal loan. And then we have about $8,000 of active credit cards. We just decided that we were going to stop using them altogether.

[Rachel Cruz]

Good.

[Jade Warshaw]

How long have those bills been in collections? How long has it been sitting there?

[Michelle (Caller)]

A couple years now.

[Jade Warshaw]

Okay, so the good news on that is we should be able to settle that and make some deals on that for significantly cheaper than the 50,000. And that would be something that I would make it probably my full time job. I'd start with the smallest one, kind of snowball it. And whenever you guys can pile up some money, I try to settle it for maybe a quarter on the dollar and do it that way. I just want to go back, I want to make sure I understood you. I thought I heard you say you make 90,000 then I thought you said, I heard you say, say plus 40. Did I hear that? Or it's 90,000 total.

[Michelle (Caller)]

No, it's about 40 to each of us.

[Jade Warshaw]

40 to each of you. Got it. Okay, so a little bit more than

[Michelle (Caller)]

me, but he makes less hours. Once you get the ability for overtime,

[Jade Warshaw]

once you get the degree, you have one semester left. What's your income going to go up to?

[Michelle (Caller)]

Hopefully for me alone, somewhere in the 90,000 to 100,000 range once I have my master's.

[Sherry (Caller)]

Yeah.

[Rachel Cruz]

No, no, no, no. Just with this degree. Nothing. Because it doesn't, I don't think it adds value to your current job, right?

[Michelle (Caller)]

No, not really. I can become like a case manager, something like that for about what I'm making now.

[Rachel Cruz]

Yep.

[Jade Warshaw]

Okay.

[Rachel Cruz]

All right. So the degree is a little bit of a wash. And we're not going to go deeper in debt to get the master's to hopefully make then 100.

[Jade Warshaw]

Got you.

[Rachel Cruz]

We are. Okay. So I mean the, the number one goal would be to get you guys your head above water just in your current day to day bills so you're not having to have this daily pay. Yes.

[Poncho (Caller)]

Yeah.

[Rachel Cruz]

Yeah. I, I want you on a rhythm. And so what this usually means is you kind of have to like shock the system, which is going to mean working weekend, working nights somewhere. And it's gonna probably take, I would think, a good 60 days of another job, Linnea, to get some cash flow in so that you guys have enough in your account that you don't have to be waiting on that next paycheck, if that makes sense, that there's enough in there to pay what you guys need for the next one. And so I did something stupid too.

[Michelle (Caller)]

I cashed out my 401k. There wasn't much in it. It was, was 13. It was $1,600 before taxes. So I have that on the way to just give us a buffer of something so that we can get out of this cycle. And that was the only reason why I did it.

[Jade Warshaw]

Do you know, let's pretend today that you were current and you weren't behind on anything. Do you know with the amount of money that you bring in every month, are in your minimum payments? Are you in the red or are you in the green?

[Michelle (Caller)]

No. Make enough money on paper. Yeah.

[Jade Warshaw]

Okay, so when you do your every dollar budget and you plug in, you know, the 90,000. How much per month for you guys?

[Michelle (Caller)]

So it's about, I think after everything, they give us a surplus of like.

[Jade Warshaw]

No, no, just the amount of your paychecks.

[Rachel Cruz]

Like 6000ish. Probably hit your account. Would you say

[Michelle (Caller)]

should be 20 or 1200 per check. I get paid bi weekly and then he gets paid around 900.

[Jade Warshaw]

Okay. And nobody's investing, right?

[Sherry (Caller)]

No.

[Jade Warshaw]

Okay. So here's what I would say. Do the budget and do it with. I want to know exactly what that margin is going to be. And then the other number I want to know is exactly how much you are behind on today. Like what's the deficit for this month? Right now we're in August, so. And we're not even midway through yet. So are you already operating at a deficit or tell me how this current month looks.

[Sherry (Caller)]

Well, when I did the every dollar

[Michelle (Caller)]

budget, it said that we have about $400 extra at the end of the month. But I think it's more of a timing issue. We have heavier bills in the second half of the month.

[Jade Warshaw]

Okay, good to know. So let's do this. On every dollar there's a paycheck planning feature because what you're highlighting linnae is really important. It's the first step to budgeting is deciding how much we're going to spend. Right. And assigning the line items. But the second part of budgeting that a lot of people miss is now we have to decide when we can spend it. And sometimes it's as simple, Lynea, as calling in and saying, my mortgage is due on the. On the 1st. It might be easier if it's due on the 15th and you can call in and make those changes. A lot of times there's flexibility as long as you're paying it that month. Right. And moving things around so that, you know, when I get the first check on the 30th, that's when I pill, that's when I pay, you know, bills one through three. And then on the se. The 15th check, that's when I pay the majority of the other bills, right? I pay the three biggest ones with the first check. And then I. I pay all the little ankle biters with the second check. And so it's a little bit of a puzzle sometimes to figure out what bills you can pay with what check. But let that be your homework tonight, because I actually think that that's the solution here is knowing, okay, when I get paid that first check on the 30th, even though my entire grocery budget might be $600, but I can only spend 250 of that grocery budget on the first check, and then when the second check comes, now I can spend the other 600. You see what I'm saying?

[Michelle (Caller)]

Thing.

[Jade Warshaw]

And so that's the puzzle that you guys need to sit down and figure out, because I think you're right. There is enough money there at least to hit the minimums. And then when you get on that rhythm, like Rachel said, now we can feel really confident about taking the 400 in margin and chucking it away at, you know, whatever credit card or the smallest debt is.

[Rachel Cruz]

Lenny, do you know what you could sell your car for?

[Michelle (Caller)]

Carvana says 19,000. That was my second. Second part of my question is I'm having a hard time convincing my husband to let go of it. We just got it in January. It's a 2024, and he's really attached to it.

[Sherry (Caller)]

Yeah.

[Rachel Cruz]

Well, I think if you guys can sell this, if you guys can do. If you guys can sell that, maybe get 12,000 for the collections and you start doing it, I think in three and a half years, your life looks different. Yes. All right. There's ultimately only one way to financial peace, and that's to walk daily with the Prince of peace Christ Jesus.