I'm $70,000 Upside Down On My House!

Summary

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Episode Overview

Main Theme:
In this episode, Dave Ramsey and Chris Hogan advise a caller, John from Orlando, who is facing a significant financial and life crossroad. John is $70,000 underwater on his home mortgage but has an opportunity to change careers—from a high-paying software development job to a lower-paying but long-desired federal law enforcement position. The conversation explores the financial ramifications, career fulfillment, and personal relationship costs associated with the possible move.

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Key Discussion Points & Insights

1. John’s Situation: Underwater Mortgage and Career Opportunity

• John explains that he is considering switching careers to federal law enforcement, which would involve a move out of state and a pay cut.

• He bought his house during a market peak two years ago and now owes about $70,000 more than the current market value ([00:38]).

  Dave Ramsey: "You owe more than the house is worth?"
  John: "Yeah, quite a bit." ([00:33])

• Houses in the area have declined in price and aren't selling well.

2. Current Financial Picture

• John is not behind on his mortgage payments.

• Savings: About $110,000 in company stock, $12,000 in cash ([01:25]).

• Effectively, if required, he could pay off the loss on the home, but he is reluctant to use his savings for this purpose.

  Chris Hogan: "The good news is, if you had to bring the cash to the table to get out of this house, you could." ([01:44])

3. The Career Decision

• Current earnings (including stocks): ~$210,000 per year ([03:19]).

• Federal law enforcement job would start at ~$88,000, with a long-term ceiling of ~$190,000 at the highest levels ([03:32]).

• The new role is something he has wanted to do since childhood; selection for the training program is very competitive (only about 1% make it, and he's passed that hurdle) ([04:31]).

  John: "Around 1% of people who apply actually get selected for training. But I've actually made it all the way through to that stage." ([04:31])

• The training process is several months away. He would have to quit his current job to complete it ([05:07]).

4. Financial Advice and Life Perspective

• Dave and Chris note that paying off the negative equity is not financially optimal but can be absorbed given John’s resources.

• Stress that some life decisions are about more than money—if this has been a lifelong dream, it's worth weighing that against the numbers ([06:07]).

  Dave Ramsey: "Just know it's not a financially optimal move. But we know life is bigger than just spreadsheets." ([06:07])

5. Other Considerations

• John is single but has a long-term girlfriend; a move would likely end the relationship ([08:22]).

• There is an age limit (must start training before 37; he’s 32, so there is some flexibility) ([07:11]).

• Renting would be the plan after moving; training is paid and initial housing is covered ([07:54], [08:08]).

• Dave and Chris raise the option of waiting a few years for the housing market to recover, but with uncertainty both in the market and with the future availability of the law enforcement position ([07:56]).

6. “Stupid Tax” Insight and Encouragement

• Dave emphasizes that buying at the top of the market is a painful financial lesson, but not catastrophic given John’s overall strong position.

  Dave Ramsey: "The underwater mortgage is, is like, okay, that was kind of a stupid tax, you know, something you couldn't super control... but here we are. And you're a smart guy. You make great money. You will recover." ([06:31])

• The absence of consumer debt or dependents gives John flexibility to make this potentially “once in a lifetime” move ([09:01]).

  Dave Ramsey: "This, it does feel like one of those once in a lifetime opportunities. Now if he was in crippling debt... this would have been a different conversation." ([09:01])

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Notable Quotes & Memorable Moments

• On pursuing dreams despite a financial hit:

  Dave Ramsey: "I'm not mad at the pay cut. If it's what you really want to do." ([05:37])

• On the importance of life over spreadsheets:

  Dave Ramsey: "Just know it's not an optim. A financially optimal move. But we know life is bigger than just spreadsheets." ([06:07])

• On relationship sacrifices:

  Dave Ramsey: "Is it going to survive long distance?"
  John: "Probably not. That’s another big factor in my decision." ([08:22])

• On bouncing back from tough financial spots:

  Dave Ramsey: "You're a smart guy. You make great money. You'll recover." ([06:44])

• On the gravity of the career change:

  Chris Hogan: "That's a crazy change though, from software developer to federal law enforcement." ([09:28])

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Timestamps for Important Segments

• [00:06] – John introduces his situation: career opportunity, underwater on mortgage
• [01:12] – Discussion of John’s savings and options for handling the mortgage loss
• [02:03] – John describes the law enforcement opportunity and passion
• [03:19] – Breakdown of current vs. potential new income, career ceiling
• [04:31] – Explanation of rarity of the opportunity and John’s progress
• [05:07] – Logistics of leaving current job for training and timeline
• [06:07] – Dave and Chris weigh financial optimization vs. personal fulfillment
• [07:11] – Consideration of age limitations and timeline flexibility
• [08:22] – Relationship ramifications of the move
• [09:01] – Closing thoughts: not a financial disaster due to John's good situation

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Conclusion

This episode highlights the complexities when major life goals intersect with substantial financial challenges. John’s scenario exemplifies the need to balance smart money decisions with deep, personal aspirations. Dave and Chris offer pragmatic advice without dismissing the value of pursuing a dream—even if it comes with a “stupid tax.” The hosts encourage John to weigh all factors, reminding listeners that financial flexibility is invaluable when rare opportunities arise.

Transcript

[Dave Ramsey]

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[John]

I live in Orlando and I have a pretty good job, but I have a potential career change and unique job opportunity that would take me out of state, but it would actually be a pay decrease. And another big problem is that I'm severely underwater on my mortgage.

[Chris Hogan]

Oh, boy.

[Dave Ramsey]

You're not behind on payments?

[John]

No, no, no.

[Dave Ramsey]

Okay, so how are you underwater?

[Chris Hogan]

Like upside down?

[John]

Upside down, yes. Sorry.

[Dave Ramsey]

You owe more than the house is worth?

[John]

Yeah, quite a bit.

[Dave Ramsey]

How did we get here?

[John]

Yeah, houses. Yeah. So I bought this house about two years ago and the market was really high and I moved to the whole home buying thing, so I probably overpaid for it.

[Chris Hogan]

Yeah.

[John]

And then, yeah, houses in my area just. They're really not selling well. They're. The prices have gone way down since I've bought.

[Dave Ramsey]

So you're underwater on paper right now, as if. If you sold today, you would take a big loss and you need to come up with a difference.

[John]

Yes. And that's the problem with this out of state job. Yeah.

[Chris Hogan]

How. How. Do you have any money? Like, do you personally have any money saved?

[John]

Yes, I have quite a bit of savings, but I just don't want to dig into it for this.

[Dave Ramsey]

How much do you have?

[John]

Yeah, so I have docs that I get from my company. I have about 110,000.

[Chris Hogan]

Okay.

[John]

And then just. And then like liquid cash, I have maybe like 12,000.

[Chris Hogan]

Okay. Okay. So the. The good news is, if you did choose to get out of this because it's 70,000 underwater, is that correct?

[John]

That's what I'm expecting, about 70,000.

[Chris Hogan]

Okay. The good news is if you had to bring the cash to the table to get out of this house, you could. However, my question is, why are you moving out of state for a pay decrease? Tell us more about the opportunity. That doesn't sound like an opportunity just yet.

[John]

Yeah. Yeah. So to give more background, I'm a software developer currently, and I do really like my job and the pay is good. So this job would actually be a completely different career change and it would actually be in federal law enforcement.

[Chris Hogan]

Oh, wow. Okay.

[John]

Yeah. So something I've been thinking about doing since I was a kid, and I finally got the opportunity to do it. The. The process takes a really long time, so. And very few people make it through the process. So I wasn't really thinking about this the whole time. I was just kind of going through the process.

[Dave Ramsey]

What's the differences in pay? What do you make now and what Would you make. Hey guys, George here with an important heads up. Mortgage interest rates just dropped and that is great news if you've been holding off on house hunting or, or refinancing. But it also means a lot of other people are about to jump back into the market. And my good friends at Churchill Mortgage will give you a custom plan and a special offer so you can buy or refinance the smart way before the market shifts. So go check it out by going to ChurchillMortgage.com Ramsey Offer that's ChurchillMortgage.com Ramsey offer. This is a paid advertisement in MLS. Id 1591NMLS ConsumerAccess.org equal housing lender what's the differences in pay? What do you make now and what would you make?

[John]

Yeah, so my total, so baseball right now is around 160,000.

[Chris Hogan]

Okay.

[John]

My total pay after stocks and everything ends up being about 210,000, maybe a little bit more.

[Chris Hogan]

Wow.

[John]

Because I get 50,000 in stocks. Yeah. And then this new job would start out around like high 80,000 but it does go up after each year. But yeah, I would definitely even long term like the highest paid people in my, in the new role would make slightly less than I make currently.

[Chris Hogan]

And yeah, my like slightly less than the 160 or slightly less than the 210.

[John]

Slightly less than the 210. I think the top people like once you make the GS13 or whatever, I think it ends up being around 190,000.

[Chris Hogan]

Okay.

[Dave Ramsey]

And you're single?

[John]

Yes, I am. I have a long term girlfriend, but no, not married.

[Chris Hogan]

What's the, you said the percentage was low to even get into this. What, what's the percentage? Like what's the chances that you'll move and actually get into the program or get to take the next steps?

[John]

Yeah. So right now, so they, they're wanting to get me set up for training right now. So around 1% of people who apply actually get selected for like training. But I've actually made it all the way through to that stage.

[Chris Hogan]

Okay, so you made it, you made it under the fence. So what has, what has to happen next? What's the timeline?

[John]

So I haven't fully labeled. So yeah, training would be about three or four months from now. They have to get me selected for a training class.

[Dave Ramsey]

Would you have to quit your job to do the training?

[John]

I would, yes.

[Chris Hogan]

Okay. Okay.

[John]

And then the training. Oh, go ahead. Sorry.

[Chris Hogan]

Well, I'm just thinking through this. So it sounds like this is something you really want to do, right? This, this is you've kind of decided you are doing it.

[John]

I haven't made up my mind. It would be different if I wasn't happy in my current role. But I do really like my current job. But at the same time, yes, this is, I think I've wanted to do for a long time.

[Dave Ramsey]

Well, the truth is you can always go back to software developing if this doesn't work out or if it's, you know, I had fun, but I'm ready to go back. So it'll always be there. I'm not mad at the pay cut. If it's what you really want to do. The, the you're gonna have to just suck it up and go, these stocks are gone.

[Chris Hogan]

Yeah.

[Dave Ramsey]

I'm gonna use this to know get out of this underwater mortgage. You might owe some taxes and then you're going to move and that's going to cost money. And so just know it's not an optim. A financially optimal move. But we know life is bigger than just spreadsheets.

[Chris Hogan]

Sure.

[Dave Ramsey]

Do you have any debt?

[John]

Yep. Other than the mortgage.

[Dave Ramsey]

Okay.

[Chris Hogan]

I mean, I think unless you have another reason that you haven't told us about. If the reason for you strictly is a financial one and. But I kind of like my job. I, I think we've given you an out for both of those. It's just do you want to go forward or not?

[John]

That's. That's true.

[Dave Ramsey]

In the grand scheme of life, the underwater mortgage is, is like, okay, that was kind of a stupid tax, you know, something you couldn't super control. Now you could have put more down and had more equity and got out of it unscathed. But here we are. And you're a smart guy. You make great money. You will recover.

[John]

Okay. Thank you. So financially, it's not the end of the world. It's just if it's more about my decision on what career I want to do.

[Dave Ramsey]

Yeah.

[Chris Hogan]

I mean, I could ask you this question. I mean, there's a chance that if you stuck in this house for a couple more years, maybe you'd see it go right side up. But will this federal law enforcement opportunity be available to you in two to three years? We don't know. Do you know?

[John]

We don't know. Yeah. So there is an age limit. I'm 32 right now and you have to enter training before you turn 37. So I mean, it's kind of closing, but not. It's not closed.

[Chris Hogan]

I mean, you got five years. So if you, if you said to yourself, I know I can wait Three years and I, I want to do that. You could wait three years and see if you can get right side up on this. If you know for sure that that opportunity would be available to you and you wouldn't be one of, you wouldn't be the 1% that doesn't make it to, to training. Right.

[Dave Ramsey]

And would you just rent in this new area if you got the job?

[John]

Yeah, I would probably be. The plan starting out at the new job is to rent for a while. Training itself takes about six months and then, yeah, your housing is taken care of during that time, but then that would probably rent.

[Dave Ramsey]

Is the training paid?

[John]

Yes, it is.

[Dave Ramsey]

Okay, and then the last question, I mean, it's not part of the financial discussion, but the relationship, is it going to survive long distance?

[John]

Probably not. That's another. Yeah, that's another big factor in my decision.

[Dave Ramsey]

Okay, so you're. And you're okay with that, it seems.

[John]

Yes.

[Dave Ramsey]

Okay.

[John]

I think that's, yeah, it's just something I'll need to decide. So I'm looking at all the factors, so the financial factor and then also the relationship factor. And both of those, I think are going to influence my decision.

[Dave Ramsey]

Yeah.

[Chris Hogan]

Okay.

[Dave Ramsey]

I mean if she's the one, that, that changes the scenario. But if you're like, hey, it's been fun, but this career means more to me right now than the relationship, that's a choice you're making and you just gotta make peace with that.

[John]

Yeah, that makes sense, man.

[Dave Ramsey]

A lot of big decisions, John, but I'm excited for you. This, it does feel like one of those once in a lifetime opportunities. Now if he was in crippling debt, didn't have the stocks, he was gonna have to do a short sale and wreck his financial life, this would have been a different conversation.

[Chris Hogan]

That's true.

[Dave Ramsey]

To make that clear that he's in a decent spot, all things considered, outside of being underwater on the mortgage. And that allows him to have this flexibility. And he's single, so no, you know, spouses or children are affected by this move.

[Chris Hogan]

That's a crazy change though, from software developer to federal law enforcement.

[Dave Ramsey]

I got to know what, I mean, if it's. You got to be at 8, there's age and only this many people get in. Is this like SEAL Team six?

[Chris Hogan]

He's going to be knocking on some doors.

[Dave Ramsey]

I didn't want to ask because I felt like he wouldn't tell me. Whatever it is, none of my business.

[Chris Hogan]

I want to know more. It's like a series.

[Dave Ramsey]

It's like Jack Ryan, he is Jack Ryan. He's not telling us. Create your free every dollar budget today. The simplest way to budget for your life.