Debt Robs Your Life of Margin

Summary

The Ramsey Show — "Debt Robs Your Life of Margin"

Date: May 11, 2026
Hosts: Dave Ramsey, George Campbell, Jade Warshaw, Rachel Cruze
Main Theme:
This episode centers on how debt limits financial margin, real-life strategies for breaking free from debt, building wealth, and reclaiming control over your financial future. The hosts take calls from listeners with complex money situations, demonstrating why “normal” is broke and outlining methods to achieve stability and long-term prosperity.

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Key Discussion Points and Insights

1. Navigating Crisis After Loss

Caller: Marie (01:00–09:19)

• Marie lost her husband unexpectedly and is raising three teens. She received $500,000 in life insurance and is receiving his salary for a year, with her rent being paid by a generous friend.
• Advice:
  • Budget for rent and regular expenses even if covered by others, as a discipline and to avoid lifestyle inflation.
  • Don’t rush into buying a home; keep life insurance in a high-yield savings, explore investment options with a professional (SmartVestor Pro).
  • Only consider a home purchase in cash once her future income becomes stable.
  • Encouraged to use the year provided by these blessings to assess career options, possibly taking Ken Coleman’s Get Clear Assessment.

Notable Quote:
“Now, can you replace $140,000 income off 500 grand for the rest of your life? No. But can it buy you a whole lot of time for those maybe teens to get out of the house and maybe you have an encore career? Absolutely.” – Dave Ramsey (05:35)

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2. Stock Options and Emergency Funds

Caller: Max (11:09–16:48)

• Weighing whether to use a $32,000 emergency fund to buy $20,000 in stock options from a non-public company, after job change.
• Advice:
  • Single-stock bets are speculative—don’t jeopardize financial stability or cut emergency savings below three months’ expenses.
  • Consider alternative funding (future income, but not retirement savings).
  • Upon liquidity, convert profits into mutual funds or diversified positions.
  • Remember, opportunity cost and emotional impact if the company succeeds or fails.

Notable Quote:
“Murphy will come knocking. Man, as soon as you buy those stocks, you’re going to have a $15,000 emergency. It’s just how life works, right?” – Dave Ramsey (13:38)

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3. Should You Drain Savings to Pay Off Debt?

Caller: Dylan (16:48–19:27)

• Considering using $39,000 in savings to pay off a $24,524 truck loan.
• Advice:
  • Yes: Pay off the debt. You’re not “losing” savings; you’re correcting your net worth.
  • Spouse’s discomfort is valid, but numbers show you’d still have $15,000 left, no other debts, and a big cash flow boost without the truck payment.
  • Use that freed-up payment to rebuild savings or do something meaningful.

Notable Quote:
“On paper, in an accounting spreadsheet, you don’t actually have $39,000. You’ve got $15,000.” – George Campbell (18:23)

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4. Co-signing Relationship Nightmare

Caller: Shannon (22:52–32:09)

• Daughter co-signed on $70-80k of vehicle loans, credit card, business debt with ex-boyfriend; he’s not cooperating; she’s on the hook.
• Advice:
  • Co-signing creates legal and financial entanglement—courts, not banks, would have to intervene for asset sales.
  • Bankruptcy would destroy her credit and likely not solve underlying issues, as she may still be liable for loan deficiencies.
  • Try to freeze credit, separate assets, negotiate, sell vehicles if possible, protect and repair her credit.

Notable Quote:
“There’s nothing except him being a scumbag, there’s nothing illegal going on here… She’s on the line. That’s the whole point. If this guy doesn’t pay, I’m saying I will.” – George Campbell (27:19)

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5. Running a $2,200 Monthly Deficit

Caller: Harrison (33:18–43:10)

• Married, two young kids, $100k in non-mortgage debt, losing $2,200/month.
• Advice:
  • Major contributors to the deficit: daycare ($1,950/mo), house payment ($2,100/mo), too much house, and vehicles.
  • Sell at least one vehicle, consider spouse staying home if daycare outweighs income.
  • Refocus on increasing income via side hustles like pottery, urgent lifestyle corrections, follow the EveryDollar budget to regain control.

Notable Quote:
“We need to go from I'm scared to I'm angry because that tells me now we can solve the problem.” – Dave Ramsey (39:38)

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6. Should You Cash Out a 401(k) to Buy a Home?

Caller: Dan (44:40–52:05)

• 30-year-old, lender suggesting cashing out $36k in retirement savings to make home down payment.
• Advice:
  • Absolutely not! The lost future value is enormous (compounded growth). “This is not a $36,000 decision. It’s a $1.2 million decision.” (Dave Ramsey, 46:04)
  • If you can’t afford the home without gutting retirement or carrying consumer debt, you’re not ready.
  • Should wait, pay off debts, build a robust emergency fund, then consider a traditional down payment.

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7. Is it OK to Upgrade My iPhone?

Caller: Samantha (54:30–64:25)

• Wants a new iPhone after three years; her husband (a fellow Ramsey fan) is resistant.
• Advice:
  • If you’re debt-free, have a complete emergency fund, investing well, budget for it and use cash—buying used/refurbished recommended.
  • If you’re prone to accidents, invest in protective cases and plan phone replacements ahead.
  • Don’t fall for phone “upgrade” traps with monthly payments via your carrier.

Notable/funny exchange:
“Why are you looking at the Pro Max? It’s like knowing you get into car wrecks a lot and going, ‘I’ll take the Porsche, please.’” – Dave Ramsey (56:46)
“People who… you know how I know someone’s rich? Their iPhone is nude. No case, no screen protector. I go, you can’t hide money.” – Dave Ramsey (60:16)

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8. How Much to Save Before Enjoying Life?

Caller: Ryan (87:04–93:54)

• Married, 26 and 24, high savers, wondering if they’re “over-saving” at the expense of enjoying life.
• Advice:
  • Follow baby steps: after three to six months’ expenses are saved, invest 15% of income; rest can go to the mortgage and “living a little.”
  • Maintain balance between giving, saving, and spending. Allow yourself to enjoy some fruit of your labor.

Notable Quote:
“Once you’re in four, five, and six… you gotta live a little. Live like no one else, so later you can live like no one else and give like no one else.” – Dave Ramsey (94:27)

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9. Should You Pay Off Student Loans or Mortgage (PMI factor)?

Caller: Matt (77:37–83:28)

• $75k student loan at 8%, $416k mortgage with PMI; has $50k in cash.
• Advice:
  • Stick with baby steps: attack the student loans first, then address PMI/mortgage.
  • Use the $50k to pay down student loans, freeing up payments and interest.
  • High income and history of progress allows for aggressive payoff and transition to faster mortgage paydown post-student loan.

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10. Business Debt vs. Personal Debt

Caller: Daniel (83:37–86:20)

• Personally debt-free, business (with partner) still has $80k debt.
• Advice:
  • If the business is not 100% yours, don’t take on more personal liability, but aggressively use profits to pay off the debt ASAP.
  • Once business debt-free, then build both business/personal emergency funds.

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11. Building a House When Already Debt-Free

Caller: Amy (107:56–116:57)

• Debt-free, early 30s, paid-off house, considering building a $1M+ new house on same property in a ski town, with rental income prospects.
• Advice:
  • As long as the new mortgage won’t exceed 25% of take-home pay, and rental property income is reliable, it’s reasonable to move forward.
  • Consider liquidity, dependency on rental—factor vacancies, maintenance, or business income volatility.
  • Primary concern: not returning to a debt-heavy lifestyle and maintaining a sizeable margin.

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12. Life Insurance – When to Get It?

Question from Listener: Evan in Iowa (96:52–99:12)

• Advice:
  • Buy term life insurance immediately when someone depends on your income, regardless of which baby step you’re on.
  • 10–12x income, lock in a 20–25 year term while young and healthy to keep it cheap.

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Notable Quotes & Memorable Moments

• Dave Ramsey (46:04): "This is not a $36,000 decision. It’s a $1.2 million decision."
• George Campbell (18:23): "On paper, in an accounting spreadsheet, you don’t actually have $39,000. You’ve got $15,000."
• Dave Ramsey (60:16): "You know how I know someone’s rich? Their iPhone is nude. No case, no screen protector. I go, you can’t hide money."
• Dave Ramsey (39:38): "We need to go from 'I'm scared' to 'I'm angry' because that tells me now we can solve the problem."

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Important Timestamps

• Budgeting Without Income Stability After Loss: 01:00–09:19
• Stock Options and Low Liquidity Dangers: 11:09–16:48
• Drain Savings to Kill Debt: 16:48–19:27
• Co-Signing Debt Nightmare: 22:52–32:09
• Running Deficits and Breaking the Debt Cycle: 33:18–43:10
• Cashing Out 401(k) for a House: 44:40–52:05
• Upgrading Gadgets and Tech Lifestyle: 54:30–64:25
• "Over"-Saving vs. Enjoying Life: 87:04–93:54
• Student Loans vs. Mortgage/PMI: 77:37–83:28
• Business Debt vs. Personal Baby Steps: 83:37–86:20
• Debt-Free House Building: 107:56–116:57
• Life Insurance Timing: 96:52–99:12

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Tone and Takeaways

• Empathetic, Direct, Encouraging: The Ramsey team responds with compassion, practical solutions, and a sense of urgency, tackling caller problems head-on but urging steady, reasoned action.
• Original, Lively Banter: Especially in lighter tech and lifestyle segments, playful exchanges are present (“dropping a baby is like dropping an iPhone”), but always dovetail back to financial discipline.
• Message: Debt may seem "normal" but it is at the root of financial stress and constraint. Choosing to be "weird"—budgeting, thoughtful spending, attacking debt, and building margin—is true financial freedom.

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Summary Table of Advice

| Situation | Key Ramsey Advice | Action Items | |------------------------------|------------------------------------|-------------------------------------------------| | Crisis after loss | Budget, invest cautiously | Work with a pro, wait to buy a home | | Buying stock options | Don’t endanger savings | Maintain 3–6 months EF, avoid speculation | | Paying off vehicle | Yes—reduce debt, rebuild savings | Pay off, enjoy margin boost | | Co-signed ‘relationship’ debt| Untangle, freeze credit, avoid BK | Work case-by-case; protect credit | | Running a deficit | Sell assets, cut expenses, up income| Make urgent changes, side hustle, budget | | Cashing 401k for home | Never, lost growth is costly | Wait, save, fix credit first | | iPhone Upgrades | Budget for tech, protect devices | Buy used if possible, no debt or plans | | Over-saving vs. Living Life | Invest 15% then spend margin | Prioritize balance, intentionality | | Student Loans vs. PMI | Follow baby steps, pay debt first | Wipe out loans, then PMI/mortgage | | Business Debt | Business must tackle its debt | Use profits, don’t personally overextend | | Debt-free, building home | Fine if margin is solid | Rentals must be reliable; don’t overleverage | | Life Insurance timing | ASAP when someone is dependent | Term, cheap, 10-12x income |

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Final Thought

Debt steals your peace, your options, and the luxury to face life’s curveballs with confidence. In every situation, margin is the key to freedom: emotionally, mentally, and financially. Be “weird”—build margin, seize control, live and give like no one else.

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For budgeting tools, investing guidance, and more, visit: www.ramseysolutions.com

Transcript

[Dave Ramsey]

This is an ad for BetterHelp. You work so hard to be the strong one for everyone else, but you're running on empty. The pressure to show up doesn't just disappear. It takes over your life.

[George Campbell]

And talking to someone can help.

[Dave Ramsey]

Go to betterhelp.com Ramsey for 10% off.

[Rachel Cruze]

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

[George Campbell]

Normal is broke and common sense business is weird. So we're here to help you transform your life. From the Ramsey Network in the Fair Winds Credit Union studio, this is the Ramsey Show. I'm Jade Warshaw. Next to me, George Camel.

[Caller]

Hey.

[George Campbell]

Love it.

[Dave Ramsey]

That was not a sound effect. That was actually me that came straight

[George Campbell]

from the camel's mouth.

[Dave Ramsey]

Hey.

[Caller]

Nailed it.

[George Campbell]

I know I did. Nail that. And we are going to nail it here with Marie, who is in Cleveland, Ohio. What's going on, Marie? How can George and I help today? Today?

[Caller]

Hi, thank you so much for taking my call. Unfortunately, my husband of 46 years old, we were married 21 years. He died suddenly 10 months ago.

[Dave Ramsey]

Oh, my goodness.

[Caller]

And yeah, it's been really hard, but we are trusting in God to take care of us. We have three teenagers, 17, 15 and 13 that I'm now raising. My husband was the main breadwinner and I was a stay at home mom with the kids. I homeschooled them. And I'm wondering how much money I need to have in the bank moving forward if I want to buy a home. We have no debt. We own both of our vehicles. But I am raising three teenagers now by myself and having to figure out an income. The only thing that adds a interesting twist to this is that my husband's the company that he worked with, they're very generous, unbelievably generous, and they have offered to continue his salary for a year. I know I am still absolutely blown away by how God has lavishly taken care of us, but I just don't know what to do. Another situation that's been an incredible blessing is that someone has offered to pay our rent. We currently just rent a home through the rest of this year as well. So I am in a position where I can save quite a bit of money and potentially pay for a house in cash. I just am wondering what would be a wise decision to have in the bank if I do find a property.

[George Campbell]

Marie was there. I'm so, so sorry for your loss. First off, was there life insurance at all?

[Caller]

Yes, there was. Half a million.

[George Campbell]

Half a million. Okay. And have you received that?

[Caller]

I have. I have. It In a, like a savings account, you know, a high yield savings account.

[George Campbell]

Okay.

[Caller]

So, so it is drawing a little bit of interest.

[George Campbell]

Okay, good. And that's just where it should be. I, so I hear two main questions. I hear, you know, how do I basically plan for life and budgeting month to month as the years go by and also how do I set myself up to purchase a home in cash? Is. Is that right?

[Caller]

That is correct.

[George Campbell]

Okay, so I love the generosity that you're experiencing with the folks around you. The year of salary, the year of rent. What I would do is I would go home tonight, we'll send you every dollar at no cost to you, and I would go through and I would just budget out what my expenses are and I would not right now play in the year of rent. I would still put the rent on there just so I can see what it is. Because instead of paying the rent, you'll just pay it to yourself in savings. And that way you'll get used to that muscle of this money comes out. And even though right now it's going to savings, you won't get used to spending it month to month. And I think that that's a good thing. And you can even keep your husband's salary on there since they're going to be paying you a year's worth of salary. And then after that I'd say, okay, with this life insurance, can I draw the same amount of my husband's salary and just keep that budget going. So what did your husband earn?

[Caller]

Well,

he was self employed and so he did have to pull out quite a bit, quite a bit for taxes. And he didn't have very many write off expenses, but he was earning a gross about 140 a year.

[George Campbell]

Okay. And that's what he took home into you all's personal budget.

[Caller]

Well, that was, that was gross. So after pulling out a tithe and taxes, I would say probably more like around 90 or 100.

[George Campbell]

Okay. Okay, cool. So if you can, you know, look at that monthly amount and say, okay, this feels good, you know, for me to live off that amount. So that's going to be somewhere around $6,000 a month. So you'll get to test that out and see how that feels. And in the meantime, I would George, get with a smartvestor pro and start looking at the best ways to invest this life insurance.

[Dave Ramsey]

Yeah. What they can do is look at all of the assets in the picture and then show you projections of how, what kind of Runway you have for this money to work for you. Because if it's invested, it's in the market. So it could go down temporarily, could go up. And the last few years in the market have been great. And that doesn't tell us that much. We don't know what the future holds. But investing it for the long haul is going to do you way better than just keeping it in a high yield savings account. Now, can you replace $140,000 income off 500 grand for the rest of your life? No. But can it buy you a whole lot of time for those maybe teens to get out of the house and, and maybe you have an encore career? Absolutely.

[Caller]

So would you guys think maybe that it's not a good idea to look at purchasing a house just yet?

[George Campbell]

I would say for cash, I don't think so. Because you really need that nest egg until you can secure what your job is going to look like in the workforce. Because to George's point, it's not enough to draw $140,000 off of continuously.

[Dave Ramsey]

Do you guys have any other retirement accounts or any other savings to speak of?

[Caller]

He had a very minimal 401k. It was only around 35,000. And then I have, I mean, grand total with everything put together, 401k, Roth, all that. It was probably only maybe a little bit over 100,000.

[Dave Ramsey]

Okay, okay. And then anything in savings currently that you had, aside from the 500,000 payout?

[Caller]

Not much. We. I have managed with everything. Right now, I'm sitting at about 592,000.

[Dave Ramsey]

Okay, well, you can look at it this way. If you bought a house in cash, that would alleviate having to pay a mortgage or rent. Now you'd still have taxes, insurance, maintenance and repairs, all of that to pay for forever with a home. And so it's going to cost you a pretty penny to run this household regardless. But I like the idea of you sitting down with that smartvestor pro and saying, hey, when would the right time be? Based on our life season with teens in the house, should we just continue renting? What are you paying for rent right now?

[Caller]

About eleven hundred dollars a month.

[Dave Ramsey]

That's amazing. That is so much cheaper than you could do as a homeowner.

[Caller]

I know.

[Dave Ramsey]

When you're.

[Caller]

I know. And it's, it's a great property as well.

[Dave Ramsey]

So I would just hang on to that right now until you know that, hey, I have this job secured, I have this income. I can support being a homeowner with real money versus draining this, this sort of nest egg.

[George Campbell]

Yeah. Do you have any ideas of what you might want to do for work. Have you had any free mental space to ideate on that?

[Caller]

So I do have a background in nursing, but I. It was pretty traumatic the way my husband died, and I just. I can't go back into the hospital right now. So.

[George Campbell]

That's so understandable.

[Caller]

Trying to avoid. Yeah, trying to avoid all of that.

[George Campbell]

That's totally understandable. And you know, you have the right to take your time and think through this. And luckily your friends and family have bought you a year's worth of time. For that. We're gonna send you Ken Coleman's Get Clear assessment. It's actually find the work you're wired to do is a book, and inside of it is the Get Clear career assessment. And that's gonna help you walk through an assessment of what you're good at, what you're wired to do, and it'll show you what to do with the results of the investment.

[Dave Ramsey]

Dave, we got a lot of calls on this show where life happens. One day someone's healthy, they're working, providing for their family, and then a curveball hits.

[Rachel Cruze]

You know, we hear it all the time. A car accident, a cancer diagnosis, a heart attack, and suddenly everything changes.

[Dave Ramsey]

Yeah. And that's why you've always said that having term life insurance from Zander is essential because it protects your family if the worst happens.

[Rachel Cruze]

Yeah, that's right. You need 10 to 12 times your income in coverage. No gimmicks, no whole life junk, just straightforward term life protection. But there's another piece that people often overlook, and that's long term disability insurance.

[Dave Ramsey]

Yeah, it's important to understand the difference between them. Life insurance steps in which when you die, disability insurance steps in while you're alive but can't work. So it replaces a large part of your income so the bills still get paid while you get back on your feet.

[Rachel Cruze]

Now, if your employer gives you free disability insurance, great, take it. If it's discounted there at a better price, take it. But if not, Zander can help you find the right plan. Whether you're single or married. It's not optional. If you're going to be out of work for a while, then you need to make sure the money's still showing up.

[Dave Ramsey]

And that's why Zander is our go to. They make it super simple to get the right coverage at the best price. No pressure, no upselling.

[Rachel Cruze]

I've trusted Jeff, Zander and Zander insurance for over 25 years and so has my family.

[Dave Ramsey]

So don't wait. It's fast, it's easy, and it could make all the difference. Go to zander.com or call 800-356-4282.

[Rachel Cruze]

Protect yourself, protect your income, protect your family.

[George Campbell]

Let's head back to the phone lines where we have Max, who's in Madison, Wisconsin. Max, how can we help out today?

[Caller]

Hey, guys, I'm moving jobs at the end of this month and I'm wondering if I should use up a good amount of my emergency fund to purchase my stock options from the current company I'm at before heading about a 90 day window before heading to the new company.

[George Campbell]

Interesting. 90 days going to a new company. How much do you have in your emergency fund that you're thinking about using on this single stock?

[Caller]

I have 32,000. And the stock options, there's 4,000 of them. Their exercise price is around $5. That'd be about 20 grand.

[Dave Ramsey]

What would you do with the stocks afterwards?

[Caller]

Well, it's not a publicly traded company yet, so it's kind of a, you know, just an intent on their, on their future, you know, kind of earnings.

[Dave Ramsey]

What if they never go public?

[Caller]

Yeah, that's kind of the gamble, the kind of, you know, thing I'm weighing there. I think they're on a pretty good trajectory, about 300 million ARR. So it's, you know, something that they've had a lot of discussion about and plans to do in the future. So that's kind of.

[Dave Ramsey]

So if they do go public, it's going to be a big payday for you. What does your 20k potentially turn into if they go public?

[Caller]

Yeah, I don't know what they would go public at. You know, probably maybe 15 to $20 a share.

[Dave Ramsey]

So you could 3 to 4x your money would be the hope a couple years from now.

[George Campbell]

Are you, what baby step are you in? Do you have any debt?

[Caller]

Yeah, just mortgage.

[George Campbell]

You know, I got to tell you, if I were in your shoes, I wouldn't do this. It feels like a gamble and I think that you could take the same money and invest it and know that you're going to get the return on that, on that money. And I certainly wouldn't want to drain my savings knowing that I'm going to go through a 90 day dry spell with no income.

[Caller]

George had a 90 day dry spell. There's just a 90 day purchase.

[Dave Ramsey]

Could you come up with that money outside of the emergency fund or close to it?

[Caller]

Yeah, I could. It would have to come from probably Roth or.

[Dave Ramsey]

No, not from retirement but from your future income or any other assets that you could that are Liquid.

[Caller]

Yeah, I possibly could.

[Dave Ramsey]

I just like the idea of you setting a guy a guardrail for yourself, of saying, hey, I'm not going to go less than three months of my emergency fund, but I'm willing to drain it down to three months and use future income in order to purchase the options if you're going to do it. And that way you're not stuck in a large because Murphy will come knocking. Man, as soon as you buy those stocks, you're going to have a $15,000 emergency. It's just how life works, right? So I'm not mad if you do this.

[Caller]

There's not an all or nothing exercise option on them I could do, you know, that's good.

[Dave Ramsey]

Then you're going to go. If they do go public, you're going to go, dang it, I should have got 20. I could have made more. There's, there's always going to be that element to it of the what if. So if, if you feel strongly about this company and even then once you do, once they do go public, I would then move those stocks into a mutual fund or index fund versus keeping it in a single stock.

[Caller]

Correct? Right.

[George Campbell]

Just a question. Why are you leaving the company if you're expecting them to do well and go public and all this?

[Caller]

I have a better offer at a separate company and it comes with 140,000 of RFUs in already publicly traded. Same vesting schedule over four years. But you know, it's a stock that's pretty, pretty well traded right now. And so I think it's just a better opportunity also for my career.

[George Campbell]

And maybe one other question I should have asked early. How much do you currently have in retirement?

[Caller]

My right for now, probably around 350, 350k across 401k, Roth and another.

[George Campbell]

I mean, yeah, I, I can get on board with what George said. I think that if you can find a way to either cash flow this or not go beyond the three months, I think that that's a fair, I think that's a fair play on this.

[Dave Ramsey]

Otherwise you're gonna call us back three years from now and say, you guys told me not to get it and I could have made a hundred thousand dollars.

[George Campbell]

I know, you know, it's like one of those things though. There's. So when I, when I look at all the companies out there who are trying to go public and make that transition, it's like then you go, well, gosh, this really is a toss up. You really don't know.

[Dave Ramsey]

Yeah. I've got a friend who's in that exact situation. They have all of these paper stocks that aren't worth anything yet, but one day they could be and it could be their future nest egg or it could be nothing. Like that's basically now we're just playing the lottery.

[George Campbell]

Yeah, it's a lottery play. And at that point, because of his baby. Let's kind of break this down. What the logic is because of his baby step in many ways and because of the net worth that he's built, I think in many ways he could take that money. It's like buying a car. Can you take this and kind of just burn it and it not really affect you? I think he's right on the line of that being the case.

[Dave Ramsey]

Yeah, he makes a great income. If he was in debt, I'm not going to say well don't pay off the debt, it would be a no brainer. But because he is in a good spot, good financial foundation, it's, it's a risk that he can actually take.

[George Campbell]

Yeah, I agree with that. All right. Very, very good question. All right, George, there is not a. Oh, there it is. Dylan is in Baton Rouge. Here we go. I was about to say. All right Dylan, how can we help?

[Caller]

Hi, I'm. I'm just wondering if I should drain most of my savings to pay off our only non mortgage debt.

[George Campbell]

Drain most of your savings to pay off your only non mortgage debt? I'm gonna go with yes, but tell us more so that we can run this thing back and make it interesting.

[Caller]

Okay, well the debt, the only non mortgage debt is my truck which is at 24,524 is left owed on it and we have about $39,000 total in savings.

[George Campbell]

What kind of savings? It's not retirement, is it?

[Caller]

No, it 31,000 is in a high yield savings account and then about 6,000 is in a regular savings.

[George Campbell]

Okay.

[Dave Ramsey]

It's a no brainer for me. I'm paying off the truck yesterday. Why haven't you paid it off so far?

[Caller]

Well, mainly because my wife is apprehensive about it because she sees the, the amount that we have in savings and dropping it down drastically scares her.

[Dave Ramsey]

She wasn't apprehensive when you got a $40,000 truck that went down in as soon as you drove it off the lot with a giant payment.

[Caller]

We weren't married at the time.

[Dave Ramsey]

Oh, okay, there we go. She goes, hey, that was a previous life. That's his problem. And now it's Yalls savings. And she goes, I don't want to See that? Gone to your past mistakes.

[Caller]

Right, Right.

[Dave Ramsey]

Yeah. I would do it and rebuild. Because the truth is, on paper, in an accounting spreadsheet, you don't actually have 39,000.

[George Campbell]

Yeah, you got 15.

[Dave Ramsey]

You got 15. And so even left with 15,000, you're in a great spot. You're completely debt free. 15 the bank. And then you can rebuild your savings in no time, even with just your truck payment. What's your truck payment?

[Caller]

626amonth.

[Dave Ramsey]

You just got a raise. Tell your wife, hey, I just got an extra 625 bucks a month net take home pay, man. She's going to be real happy.

[George Campbell]

Yeah.

[Dave Ramsey]

And she's going, how'd you do that? I paid off the truck.

[George Campbell]

And the truth will be told, if she's willing to immediately take that entire 629 and put it back into savings or if suddenly there becomes a need for, I don't know, some new jewelry or like a nice bag or.

[Dave Ramsey]

Yeah, that's $7,500 extra you have in your budget.

[Caller]

Every year she wants a trip to Disney.

[Dave Ramsey]

So 7,500 bucks will get you there for probably three days, but it'll get you there.

[Caller]

Right.

[Dave Ramsey]

My wife, too. We'll go at the same time, Dylan. How about that?

[Caller]

Sounds great. Can't wait to meet you.

[Dave Ramsey]

Congrats on the truck payoff.

[George Campbell]

Yes, and thank you for the question.

[Dave Ramsey]

I feel like, you know the old boat quote. The best day of your life is the day you buy the boat. And the next best day is the day sell the boat and the maintenance alone. Yeah, the. The best of your life. You day you get that truck. And the next best one is when you sell this. You sell it or you pay it off.

[George Campbell]

I'll take the payoff. I'll take the payoff.

[Dave Ramsey]

He likes the truck. And here's the other parameter. If, if all the things with wheels and motors is more than half your annual income, you got a problem.

[George Campbell]

Yeah. And, and there's a reason that we say that, because vehicles are going down in value constantly, especially if it's something that's brand new. Oh, my goodness. Never buy a brand new car, people, unless you're a millionaire. The amount of value that's lost just in year one is astronomical. And so we're really. These are parameters. These are kind of rules of thumb that we, we live by and teach by here. But it's so good. So say it again, George. If the.

[Dave Ramsey]

You want to make sure that everything with wheels and motors in your life, that's bikes, cars, Trucks, boats, you name it. No more than half your household income is tied up in those things. If you make 50 grand, no more than 25 grand, you make 100 grand now, more than 50 grand, just so you don't have too much of your world wrapped up in things going down in value.

[George Campbell]

That's right, you can take the hit. And if you are interested in buying a brand new vehicle again, you're looking for a net worth of a million dollars or more. So that again, when you take that hit of depreciation, because you will take the hit like Mike Tyson, you can actually.

[Dave Ramsey]

It's a nick.

[George Campbell]

It's a nick.

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[Dave Ramsey]

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[George Campbell]

Well guys, buying or selling your home is a very big deal and you want an expert in your corner. Someone who's fighting for you to find the best deal for the right price. The Ramsey trusted program is the only way to find a top agent you can trust who will help make your home a blessing and not a burden. Trust me, it's easy. Just compare agent profiles, interview them and choose the right one to work with. Find a local Ramsey trusted real estate pro for free@ramsey solutions.com agent or you can click the link in the description if you're listening on YouTube or podcast. Shannon is in Denver, Colorado. Shannon, how can George and I help you out today?

[Caller]

Hi. My daughter recently got out of a relationship that she was in for about three years. While she was in that relationship, they acquired an enormous amount of debt together. Although they were not married. We have about 70, 80,000 in vehicle loans, 15,000 in credit card, and about 20,000 in a business loan her boyfriend had quit his job to win. The owner sold the business so he could branch out and open his own. And the majority of the vehicles are upside down on their loans because he took additional equity to start his new business now that they are no longer together. She is a co signer on all of this stuff.

[George Campbell]

Oh, boy.

[Caller]

She is a single mom of two and he has no verifiable or income because the business is so new and he is in with a partner. She is the only one that has verifiable income and it's not that much, so we're not sure. She's contacted a couple attorneys. Nobody wants to really work with her to get it to where her name is off these loans. I know it can be very difficult, but we're wondering if she should probably file bankruptcy to get her out of all of this debt that she actually has no benefit of.

[George Campbell]

Oh, boy. And you've already run this by attorneys to see if there's anything there to maybe legally split this or do something and nobody will touch it.

[Caller]

They really don't want to because where he is the primary loan holder and she is the co signer, even if they get a judgment, the banks don't necessarily want to take her off as the co signer.

[Dave Ramsey]

Well, they know how risky this is. They like her on there. They want someone else on the hook.

[Caller]

Absolutely.

[George Campbell]

Tell us about the cars. You said they're both upside down. How, how badly and how many are there?

[Caller]

There currently are three vehicles. I believe it's a 22 Chevy Silverado that has about 50,000 that's owed on it. In addition to the vehicle loan, there was also a trailer for a motorcycle as well as motorcycle. I do not believe that has extra equity. I believe that is just straight for those three pieces of property. They have a Hyundai, a 24 Hyundai that is only valued at 33,000, but they got an additional 7,000 to put into his business. She had a Toyota Corolla that was paid off. It's an older Corolla. They went in and got a $9,000 loan on it. The car's not worth but maybe about 4,000.

[George Campbell]

So they owe nine and it's worth four.

[Caller]

Correct.

[George Campbell]

And let's go back to the Hyundai. She owes 33. What's the Hyundai worth?

[Caller]

It's worth 33. They owe 40.

[George Campbell]

Okay. And then let's go back to the first one, the $50,000 one, they owe 50. And what's that one worth?

[Caller]

It's probably worth around 45 to 50. It is a very nice Chevy Silverado club cab pickup.

[George Campbell]

And you're telling me the trailer and the motorcycle are worth nothing?

[Caller]

It's a dirt bike trailer.

[George Campbell]

Okay.

[Caller]

For racing dirt bikes. It's. It would maybe be worth $3,000. Okay, that's in our area in the market.

[George Campbell]

We need that. And what about the motorcycle or the dirt bike?

[Caller]

That's. That's probably the. The motorcycle and the trailer might bring four or five out of them. Combined them together.

[George Campbell]

Okay.

[Caller]

Correct.

[George Campbell]

So what I'd wanna know, what I'd be seeking out next is if she can sell these items, being the co signer. And that's what I'd want a judge to approve. Hey, we can't find this guy. We can't track him down. He has no income. This is destroying her credit. Can we have the ability to order

[Caller]

exactly where he's at?

[George Campbell]

Okay.

[Caller]

He will not cooperate.

[George Campbell]

Right. And that's why I'm saying, can we get a judge to order it? Okay, that's what I'd check on. I don't know if they will because what's taken place is totally legal. She co signed on. On. On debt, which is honestly. And I mean, you already know this is just one of the worst things that you can do because you're on the line. That's the whole point. If this guy doesn't pay, I'm saying I will. That's what you're saying when you co sign. So there's nothing. Except him being a scumbag. There's nothing illegal going on here. There's nothing, quote, wrong going on here. So it's going to be hard. But I would at least try to say. I'd try to go before a judge and say, this person's not paying. Here's what it's doing to me. And can we sell these assets so that we can clear that.

[Caller]

That is an issue we're running up against is he is making monthly payments. But at the rate that he's making these monthly payments, if. If he ever stops, she doesn't know until it's too late.

[George Campbell]

Right.

[Caller]

If he. Her name's on the vehicles as well. So she can't go get something independently of him. And he has come and taken her vehicle while she was at work.

[George Campbell]

Well, how can he do that? Is she driving one of these?

[Caller]

An extra key.

[George Campbell]

Oh, she's driving one of these. She's driving the Corolla.

[Caller]

Yeah.

She's driving the Hyundai at this time.

[George Campbell]

Okay.

[Dave Ramsey]

Are they both on the insurance for all these vehicles?

[Caller]

From what we understand, yes. But at any time he could take her off the insurance and she would have no knowledge.

[George Campbell]

Why is that if she's also on it as well?

[Caller]

Because they are not currently together. It's his insurance agent.

[Dave Ramsey]

Is he trying to actively destroy her life at this point? Where's his head at?

[Caller]

Basically, they. They have. He left her one month after they had a child together. He is not ordered to pay. He pays a hundred dollars a month for child support. That's what we have told her.

[Dave Ramsey]

Ordered by the courts.

[Caller]

If she can. Yes, if she can test it, because he does not have verifiable income, she may end up having to pay him.

[Dave Ramsey]

This is a nightmare. I'm so sorry.

[Caller]

100%. Which is why we're wondering, if she files bankruptcy, would that get her out from under as co signer from all of this, so at least she doesn't end up with all this on her lap.

[Dave Ramsey]

Well, the bankruptcy is not going to help much because they're going to liquidate all the cars and if they get repoed, she's going to be on the hook for the difference. They're going to sell it at auction for nothing, and then she's gonna owe even more while her financial life gets destroyed for seven to 10 years from the bankruptcy. So I don't love that option. I would try to see how we can get her out of these individual situations one by one and get her income up enough to where she could pay them if she had to.

[Caller]

Okay.

[Dave Ramsey]

And I would try to get up. You're about 15 grand underwater on all these vehicles. Obviously she needs something reliable to drive, and obviously we need the ability to find this car and be able to sell it, which that's going to be the difficult part because he's got most of these toys, doesn't he?

[Caller]

He has everything. He. She has access to the Hyundai and the Toyota. But, you know, she would love to sell the Toyota. She can't because of this loan that's on it.

Yeah.

She has told him, come get the Hyundai. I will go out and buy something that, you know I can afford so I can make my own payment, but she can't with her credit wrapped up and all of that.

[Dave Ramsey]

Yeah, well, could drive the Corolla. Right? If she sold the Hyundai, she could do that.

[Caller]

Absolutely.

[Dave Ramsey]

Okay, so if we at least get out of those two, it solves some problems here because that's. That at Least alleviates some of this pain when you owe 33 on 1 and 9 on the other. Which means you need to come up with 12 grand to get out from underwater on this. And then you can keep the Corolla.

[George Campbell]

Yeah. And what about the credit cards? Are those still actively going? Because I'd want to make sure that those are shut down and that more money is not able to be rung up on those.

[Dave Ramsey]

I would freeze her credit. Yes, so that no accounts can be opened under her name and Social Security number as well.

[George Campbell]

And the same thing with this business loan. Her biggest job right now is to work hard to save. I mean, she is on the hook for this money. So let's earn $20,000 and start knocking out debt and make sure it can't come back to haunt us later on by freezing the credit.

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[George Campbell]

Right back to the phone lines where Harrison is in Augusta, Georgia. Hi, Harrison. What's up in your world?

[Caller]

Yes, thank you all so much for taking my call. So my wife and I are in our late 30s with two kids under three. I make about 3,000 a year and my wife makes about 30,000. And together we've got about $100,000 in non mortgage debt, mostly vehicles and credit cards. And after doing our budget, realizing we're running about a $2,200 a month deficit, and I feel completely trapped. I have no idea what to do. I realized we built our life outside of Our financial reality and it's just kind of snuck up on us and I just could use some help.

[George Campbell]

Yeah, listen, I'm going to tell you right now, I got to believe that a lot of that red is in the cars. Am I wrong or am I right?

[Caller]

Yes, you're right.

[George Campbell]

So tell us about the cars, how many are there? And tell us what the payments are. Tell us what you owe on them.

[Caller]

Yeah, So I have two vehicles. I have a truck that I owe about 14,000 on. That payment's about 30, $325 a month.

[George Campbell]

Okay.

[Caller]

And then I have an SUV that's worth that I owe about 30,000 on. And that monthly payment is $560 a month.

[George Campbell]

Okay. Honestly, I'm gonna tell you that's not as bad as I thought it was gonna be. Although I still don't like the car payment. What else is sending you guys, you know, over $1,000 over? When you look at the budget, what do you find are the key contributors?

[Caller]

So it's mostly, I mean, I'm paying $1,950 a month for daycare and that's killing me. And then my mortgage is a little over $2,100 a month. So I really, really put myself in a house that we probably should not have.

Yeah.

[Dave Ramsey]

What's your actual take home pay every month?

[Caller]

6,500.

[George Campbell]

Oh, wow, that feels low. Is. Is investing coming out?

[Caller]

So it was, I was putting about 5% into my 401. I just actually paused that this week. I'm trying to, you know, do whatever I can to come up with some cash. Downloaded every dollar app and then kind of going through that and just trying to figure out, find some solutions here.

[Dave Ramsey]

So you said you have 100,000 of non mortgage debt. I'm counting 44,000 in car loans. Does that mean you have $56,000 in credit cards?

[Caller]

So I have about 25,000 in credit cards. I have about 10,000 personal loan and about 5,000 in medical debt.

[George Campbell]

Okay.

[Dave Ramsey]

Have you and your wife sat down and made an every dollar budget and just kind of put this all on paper to get the, the reality of it?

[Caller]

So I have, and you know, I've tried to talk with her multiple times and she kind of shuts down and it's hard for her to kind of see the reality and, you know, is

[Dave Ramsey]

she overwhelmed trying to.

[Caller]

Absolutely, she's overwhelmed.

[George Campbell]

Well, the truth is, if she's making 30,000 after taxes, after everything, that's not covering daycare hard. It's. I mean, it's it's breaking even.

[Caller]

30,000? Yeah. That 30,000 is from a photography business that's all under the table. But you're right, it's, it's barely covering daycare.

[George Campbell]

But is that what's keeping her? I guess what I'm saying is regardless of how it's being paid or who she's working for, she's out making money. And is that the thing that's keeping her from. Obviously, I'm not saying everybody has to be a stay at home wife. Just hear that. I'm just saying I'm trying to solve a math problem here. If she were to stay home, that's something that might pull this back a little bit. And maybe she can stay home and do photography and just shift those hours to where? Do you see what I'm saying? There's more of a benefit to it.

[Caller]

Absolutely, absolutely.

[Dave Ramsey]

Because if she could do that nights and weekends and watch the kids during the day, well, now we have a problem solved because we've kept some income in the door while getting back our daycare money. 1950amonth, which gets you to more like a $300 deficit and that's without paying off any of your debts.

[George Campbell]

Have you guys talked about that?

[Caller]

We have talked about it and honestly we've tried it a couple times and it just did not go very well. She was, she struggled with keeping both kids at home and trying to work. And so, you know, we kind of came up with a plan that, hey, you know, this is a new business. Let's get the kids in daycare and give you a real shot to really grow business and see where it can go.

[George Campbell]

How long has it been?

[Caller]

So she's, she's only been doing this about six months.

[George Campbell]

Okay, so here's where I'm at with this. There's three things. There's three options on the table here and a couple of them are a must. Number one, we have to sell the vehicles. At least one of them, at least the $30,000 SUV has to go out the door. The other thing is she either needs to choose between, I'm going to do the same part time and stay home with the kids and try to bring in as much as I can in part time hours, or I'm going to find a job or make this job grow in a hurry to be to where I'm making more than $30,000 because you guys are. And the same goes for you too. Like you got to find ways to get your income up, even if it's side hustling. If it's overtime. You guys are up against some very scary numbers here and you cannot. And mind you, we're not even talking about paying off debt yet. We're just talking about getting you out of the red. We haven't even found them. These are just things to get you out of the red. This is not extra margin.

[Dave Ramsey]

And so baseline where you can cover all the bills because right now are you using the credit cards to fund that gap?

[Caller]

Yes. Yeah, that's what we've been doing. But see, it's coming to a head because my limits are about up. And you know, at some point it's all going to come crashing down.

[George Campbell]

And that's why I say it's not a. And that's why I say speaking with her, this is not, it's not personal. It's not having to do with anything with her photography business. This is math and this is numbers. And this is us adulting and saying this is what must be done in this season.

[Dave Ramsey]

We need to go from I'm scared to I'm angry because that tells me now we can solve the problem. And so if you can get her there, you know her better than anyone and just level with her and say, hey, listen, I know I'm overwhelmed too, but we're going to get through this together. We're going to get on a plan. We have the every dollar budget and if you don't have the premium version, we'll gift it to Harrison. If you hang on the line, that'll connect to your bank account. That'll give you all the personalized recommendations. And I think once you see the reality and you can look past the fear and the overwhelm, you guys will go, okay, we can see a path out. And you just got to focus on one thing at a time. That's the baby steps. Thousand dollars cash. Do you have that in the bank right now?

[Caller]

I do.

[George Campbell]

Okay, good.

[Dave Ramsey]

Then it's going to be attacking all of our debts, smallest to largest. So what's your smallest debt? What's the next smallest balance you have?

[Caller]

It's about $420.

[Dave Ramsey]

Great. Now can we knock that out if we worked extra and cut our lifestyle down to nothing?

[Caller]

Yeah, yeah, absolutely.

[Dave Ramsey]

So then at least you freed up that one payment. And so now you see some light at the end of this tunnel and it's going to be a slog. I mean, this might be three to four years for you guys on this journey based on your income to debt ratio.

[George Campbell]

Yeah. Harrison, what do you owe on this SUV? You said you owe 30 but what's it worth?

[Caller]

Worth? It's only worth about 21, so I'm underwater.

[George Campbell]

Okay. Dad, Gummett, the truck.

[Caller]

The tr. The truck only owe 14 and it's worth probably 16.

[George Campbell]

Okay, so there. There's some money there. I would probably sell that one then and take the 2000 and put a little money with it. See if you can cash flow a couple more thousand dollars. So maybe you can get a four or $5,000 deal.

[Dave Ramsey]

That might mean kind of pausing the baby steps for a second to stack up that cash to get a used car, to replace that truck, to get you from A to B.

[Caller]

Right.

[George Campbell]

And what about your work? Let's find ways to make quick money for you. What do you do for a living?

[Caller]

So I work for a building supply company running inventory, warehousing, and then I also teach pottery classes on the side.

[George Campbell]

Okay, does your. Does the main job offer overtime?

[Caller]

No, I'm on salary.

[George Campbell]

Okay, and what about the pottery? Is that. Is that a great side hustle for you or did you just pick it because you like it? Because if it doesn't pay a whole lot, we need to shift to doing something that really pays.

[Caller]

It could be. I mean, I've been doing it 20 years. I'm really, really good at it. I just haven't spent much time doing it because it's, you know, with the two kids at home and.

Right.

[Dave Ramsey]

So what do you make a month on average, doing that?

[Caller]

Doing pottery? Yeah, about 600.

[Dave Ramsey]

And how many hours?

[Caller]

Oh, that's. I'm working two hours once a week, four weeks.

[Dave Ramsey]

Okay. Eight hours a month.

[Caller]

Yeah.

[George Campbell]

Yeah. I think we can pour gasoline on that. I think we could pump it up into high gear.

[Dave Ramsey]

Pretty good hourly rate on that. If you can do more of that.

[George Campbell]

Uh huh. And if you can't do more of that, then tack on something else. And you might be having three or four different, you know, side hustles that bring in money here and there. Same thing with her. But the point is, you guys have got to get the heck out of Dodge. I gotta hear some urgency. This is not even my situation and I'm feeling like I gotta move. We gotta make changes, we gotta shift. So guys, you. You can do this, but you're going to have to get uncomfortable. There's no way this is happening without you guys getting extremely uncomfortable to do it foreign.

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[George Campbell]

Welcome back to the Ramsey show here in the Fair Winds Credit Union studio. Again, I'm here with George Campbell. I'm Jade Warshaw and we're headed back to the phone lines where we have Dan, who is joining us from Fort Myers, Florida. Dan, how can George and I help you out today?

[Caller]

Yeah, so my wife and I are starting on the process of buying our first house and our lender is suggesting we cash out our 401ks for the down payment.

[Dave Ramsey]

Oh, I'm trying hard not to laugh, Dan, because it's just so funny that a lender of course is like, hey, just cash out your retirement to make this happen. Come on.

[George Campbell]

Yes, so I can get paid because I haven't in a while.

[Caller]

Right, right.

[George Campbell]

I mean, you do know that this is a horrible idea. I mean, your red flags went up, didn't they?

[Caller]

Yeah, yeah, that was, that was, that was my, my thought. I mean. Yeah, yeah.

[Dave Ramsey]

So let's play this out. Just, just for kicks and giggles, Dan, how old are you?

[Caller]

I'm 30.

[Dave Ramsey]

Okay, you're 30. And how much are they telling you to cash out?

[Caller]

So I've got, got about 22 in my Roth and my wife's got about 14 or 16 in her employer match.

[Dave Ramsey]

Okay, so 22 and 16 is what you would have cashed out if you listened to your lender?

[Caller]

Yeah, about 36.

[Dave Ramsey]

Okay, so 36 grand, and I'm just gonna play that out. If you left the 36 grand in what it would turn into, which is how much you're Losing if you did this move. Okay. And that's if you never added anything to it, just 36 grand, letting it ride from 30 to 65, that would turn into $1.2 million. So this is not a $36,000 decision. It's a $1.2 million decision.

[George Campbell]

Absolutely.

[Dave Ramsey]

So that's the scary part. So that tells me, though, another thing. You may not be ready to buy this house.

[George Campbell]

Yeah. What took place that you guys even got to the point of discussing such madness? So.

[Caller]

Yeah, so. So we just moved to Florida about three years ago. We make about 140. We've got. Yeah. We've got virtually no cash savings. So that's the thing. We've got 30,000 in credit cards and 20,000 on her car.

[George Campbell]

Okay. I'm glad you told us that, because around here, we really do. We love home ownership. We do. We love when people are ready to make that purchase. We love when people want to invest in 401k days. We love being able to say yes to these things. But there is a time that it creates a much better timeline for this to be a blessing for. A blessing for you versus a burden. And so the way we teach it here is there's certain things that just have to be in line first. And one of those things is we're never going to recommend you buy a house while you're still in consumer debt. That is just. You're just adding insult to injury because home ownership is expensive. Number one, you're going into debt. Yes, it's different than normal consumer debt, but it's still debt and it's still a financial responsibility for you. So we're always going to say, hey, you got to have your consumer debt paid off. That's numero uno. And then after that, we want you to have an emergency fund, because we all know that once you buy that house, something's going to happen.

[Dave Ramsey]

Everything's on you.

[George Campbell]

Yes. The roof is going to happen. The AC is going to happen. You're going to have pigeons that like to nest up in your gutters. That happens to us all the time. And it's like you got to have the guy come out there and remove them. All that kind of crazy stuff.

[Dave Ramsey]

Outside of any family emergency.

[George Campbell]

Yeah, it's an ice storm and you got to have the arborist come out. Right. And when you have debt, you can't cash flow that stuff. And then if you don't have savings, you can't pull from the savings for that stuff. And then the next thing you know, Dave what do you. Or George.

[Dave Ramsey]

I appreciate that. She called me Dave.

[George Campbell]

Oh my Lord. I was waiting for this too, and I just said Dave, the next thing you know, what are you doing?

[Dave Ramsey]

You're going into debt, further into credit card.

[George Campbell]

Credit card debt. So this, we don't want that domino effect to take place. That's why there's actually reason to. Why we teach what we teach George.

[Dave Ramsey]

So is it too late to back out of this whole thing and just keep renting for a while as you kind of create a better financial foundation?

[Caller]

It's not too late. So I mean, the whole story, right? So we've got about 10,000 in savings, in cash savings, but so it's not a whole lot, but there's a little bit there. The issue is, you know, we live about an hour and a half outside of where we work, where we're currently renting for two and a half thousand dollars a month. So I mean, it's pretty. We're already paying a high rental, you know, even being out in the boonies. And then, you know, so with. We just had a kid last year, so we're trying to move closer into town. Rentals in town are about. Rentals in town. You know, closer into town by daycare is about three and a half a month. And that's about what the mortgage would be. To play the devil's advocate on the, on the cash, not the 401k side of things. My wife's 401k match grew that in under three years and like two, two and a half years. So if we replayed that scenario, ideally we'd be back at that same number within two and a half years.

[George Campbell]

That's true. That could be true.

[Dave Ramsey]

You'll be there even if you didn't touch the retirement. You'll add that if you kept where you're at. And so it's still, you're still losing that 1.2 million that you unplug. And even though you're adding to it with the new 36 grand over time, it's still unplugging that growth for the rest of your life versus adding to it. So I still think it's a. And you're, you're making a. You're also going to pay penalties and fees as well.

[George Campbell]

Yeah, we didn't talk about that.

[Dave Ramsey]

That's, that's aside from that. And so I, I think you guys are tired of the commute, you want to be homeowners. And the truth is we made decisions that just passed. Has kind of put us two steps Back with the car loan and the credit cards. Like, you guys are making 140 grand and you still had to turn to the credit card. So it tells me we need to get our current income under control before we step into this new chapter.

[Caller]

Yeah, yeah. So, I mean, the income is under control. That debt's been there for a few years now. If we just.

[Dave Ramsey]

That's even scarier. That's at 25% APR.

[Caller]

Yeah. So paying that. So we've actually been living on a cash, you know, a cash budget for a few years now.

[George Campbell]

I also want to call out another part of this. And. And again, I don't want to sound like I'm here to bust your bubble. That's not what I'm trying to do. I want to give you fair numbers so that whenever this all goes down, it feels good and you can actually keep it. But with your. If you're bringing home 9,000amonth, doing a 3, 500 mortgage is not good for you. That's way too high for you. It's a thousand dollars over where it should be.

[Dave Ramsey]

Ideally, you're sitting at about 2,200, which means you need to have more saved up for the down payment to then lower the mortgage or choose a different home that's at a lower price point. So there's going to have to be compromises. Otherwise you're going to be calling us back when maybe you lose one income or income goes down, and all of a sudden you're going, hey, we can't afford to stay here anymore. We need to move. Or we can't invest 15% to retirement because this mortgage is killing us.

[George Campbell]

And hear it from this angle. You know, you called in saying your lender gave you some bad advice. They have money tacked onto that. And so they're kind of driven by. By, you know, making a commission. George and I have nothing. We're completely un. Unbiased for you. And so we're just looking at this as the numbers are there. We get no commission, we get nothing. And we can just look at this and go at the bottom line, Dan, is you're just not ready to buy a house. You just don't have the money yet. And you can get there. And I think that you can get there pretty quickly relative to, you know, the span of your life. But the day is not today. And maybe next year you could be ready. But the truth is, you guys have $50,000 of debt that needs to be paid off. You need to stack up at least three to six months of expenses and Then.

[Dave Ramsey]

So that's probably like an $80,000 swing before we even start saving up a down payment, which is probably another 100 grand.

[George Campbell]

And that I guarantee that's not what you wanted to hear when you called in.

[Dave Ramsey]

Yeah.

[Caller]

Right.

[Dave Ramsey]

But I think you knew in your heart that this was a bad decision, hence why you called our show.

[Caller]

Yeah, Yeah. I was thinking, you know, I probably got to go find 80. 80 grand or so. I mean, the cool thing is my. I'm self employed. I'm a construction business.

[Dave Ramsey]

Oh, and I've been for you.

[George Campbell]

Sky's the limit for you.

[Caller]

You know, 30 to 40,000 a year.

[Dave Ramsey]

Just. Yeah, go bust it, man. Your income is your greatest wealth building tool. So let's use it to pay off the debt. Get the emergency fund, get the down payment. If you really want that home, prove it. Pay off the debt, get yourself to a good financial spot.

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[George Campbell]

Headed back to the phone lines where we find Samantha, who's in Miami, Florida. What's going on, Samantha? How you doing?

[Caller]

Hi. I'm doing great. How about you guys?

[George Campbell]

Excellent. How can we help?

[Caller]

I am calling because my husband and I love the Dave Ramsey show. We watch it all the time on YouTube and I am trying to convince my husband to let us buy a new iPhone. For me, my iPhone does kind of work, but it's not fully functioning. Apple pay doesn't work, doesn't connect to my watch, but I do tend to kind of break things. I Don't think super fast to the average. But compared to my husband, he is like. He takes care of all his technology. His iPhone's like five years old. You know, mine's about. About to turn three.

[George Campbell]

Okay.

[Caller]

And I want a new one.

[George Campbell]

Okay. So it doesn't connect to Apple Pay, and it doesn't connect to your iWatch.

[Dave Ramsey]

And it's only three years old.

[Caller]

Yes. Yeah, it's three years old. It's fallen a few times. I work in an industry where I move around a lot, I travel a lot.

[George Campbell]

So by fallen, you mean you've dropped it?

[Caller]

Yes.

[Dave Ramsey]

Okay. It didn't trip on its own. That's what we're asking. Okay.

[George Campbell]

Samantha.

[Caller]

Frequently falls out of my hand, though.

[George Campbell]

Let me tell you, Samantha, if you could have been in the commercial break, George was making fun of me because my iPhone is so destroyed. It is just. It's been. It's fallen many times. It's completely cracked. And I am on your side on doing our best, and it's still not being enough with these iPhones.

[Dave Ramsey]

So let's talk through. You're talking to a former Apple store employee, and it hurts my heart when I see an iPhone fall. It's like dropping a baby to me, almost as bad.

[Caller]

I drop babies pretty frequently.

[Dave Ramsey]

Oh, gosh, Samantha.

[George Campbell]

Dropping babies, your own babies or other folks babies?

[Caller]

Just the iPhone. Just iPhone.

[Dave Ramsey]

Okay, good. I was like, don't give Samantha baby. All right, so you're. I get. I understand your husband's frustration, and he's going, why would we get you a new one for you to then make it an old broken one very quickly.

[Caller]

Exactly.

[George Campbell]

What's a new iPhone run these days? I haven't bought a brand new one.

[Caller]

The Pro. The Pro Max one or the Pro I was looking at with 1100.

[Dave Ramsey]

Why are you looking at the Pro Max? It's like knowing you get into car wrecks a lot and going, I'll take the Porsche, please.

[George Campbell]

Oh, boy. $1,100.

[Caller]

Well, even though these. Even the least expensive one, I think was around $700.

[George Campbell]

But can't you get. Can't you get an older model?

[Dave Ramsey]

I'm looking right now on Swappa, which is a. I've sold my old phones on Swappa, so you can buy it an iPhone 16 in great condition for 350 bucks.

[George Campbell]

Oh, love that. And what would be the problem with that, Samantha?

[Caller]

Because I just wanted the new one.

[Dave Ramsey]

There we go. Thank you for your honesty, Samantha.

[George Campbell]

She just wants.

[Dave Ramsey]

So it went from my phone doesn't work to no, I just want the Fanciest, latest and greatest.

[Caller]

If I'm gonna get the new phone, I just want the new phone.

[George Campbell]

Well, let's see. Can you even afford it? So tell us, tell us, is this something that you could do and it's just not a thing? Or if it's something that would really set you back? Do you guys have any debt?

[Caller]

We have no debt. For baby steps. We're on baby step six.

[Rachel Cruze]

Go.

[Caller]

Just the mortgage, just our house.

[Dave Ramsey]

Okay, how much is in the emergency fund

[Caller]

a year?

[George Campbell]

A year's worth.

[Caller]

A year.

[George Campbell]

How much does that equate to?

[Caller]

That's like. Well, if you include like some of our investments, I guess if it's just purely cash on the emergency fund, then six months. Okay, so it's about 60K. And then we also have some investments because liquidate if there was a bigger emergency and in a brokerage accounts. And when we do invest almost 30% of our income.

[George Campbell]

What's your net worth?

[Caller]

All the things.

[George Campbell]

What's your network?

[Caller]

About a million. A million?

[George Campbell]

Wait, okay, so. So. Oh, boy. Is. Is being a little stingy.

[Dave Ramsey]

I have an idea. Samantha, what iPhone does your husband have?

[Caller]

So he's his work, pays for his. And he just got the newest one after having his for five years.

[Dave Ramsey]

Okay, what happened to his old phone?

[Caller]

He cracked the screen.

[Dave Ramsey]

Oh, look at that.

[George Campbell]

Here's where. This is what we really need to discuss.

[Caller]

Five years. He had it for five years.

[George Campbell]

But what. What we really need to set is a baseline and we need to know what is a norm of keeping your phone. Like, what is the normal amount of time that a person should keep their phone before they upgrade.

[Dave Ramsey]

We were just out in the lobby and it was an IPH with the single lens. It must have been an iPhone 4. And it was working great. Yeah, because they took care of it.

[George Campbell]

Okay, George, we need to hear. Because we don't know unless the people speak. So if you're watching this in the comments, put. What is a normal amount of time to have your phone before you Upgrade? Is it 3 years? Is it 5 years? Is it every year?

[Dave Ramsey]

I would like to know as long until it just literally doesn't work anymore.

[George Campbell]

So for the audience, is three years a fair time?

[Dave Ramsey]

I see one person said 10 years, one said five. I'm seeing another five, two, three.

[George Campbell]

Okay, so I think that we're in. It seems like we're in the threshold. Anywhere between two to five years, you should be able to upgrade your phone. I'm. I agree, Samantha.

[Dave Ramsey]

So you can't upgrade it. Here's my condition. If I'm your husband, day one, we are getting a screen protector on there and an otterbox case that is indestructible. The ugliest cases, the ugliest, biggest case you can find to protect it. Because the truth is I doubt you've had screen protectors in good cases on your phones this whole time.

[George Campbell]

Yeah. And even if she had like just double down on it because you need it, put it inside of a bag.

[Dave Ramsey]

I am Mr. Like, I'm proudly. My phone is like perfect at all times.

[George Campbell]

Really.

[Dave Ramsey]

I take care of it. Screen protector at all times. Always in a case. People who. You know how I know someone's rich, their iPhone is nude. No case, no screen protector. I go, you can't hide money.

[George Campbell]

Cause he just. It doesn't matter if they shatter it tomorrow. They'll just.

[Dave Ramsey]

I can spot a trust fund kid a mile away if they've got an iPhone with no case on.

[George Campbell]

But it's slick. You can't even get a good grip on it to hold it.

[Dave Ramsey]

You're living on the edge and there's total confidence.

[George Campbell]

Total confidence. I can just go and ride through

[Dave Ramsey]

and get another one tomorrow. Be a little more shallow with your phones, guys. You're carrying a thousand dollar device.

[George Campbell]

Yeah.

[Dave Ramsey]

You wouldn't do that with your laptop.

[George Campbell]

I've never had the brand new phone. I've never had the most brand new phone ever.

[Dave Ramsey]

I'm proud of you.

[George Campbell]

I don't even know which one this one is, but it ain't the. It's got two holes.

[Dave Ramsey]

Well, you know what's nice? I buy old ones off like co workers as they upgrade and they'll sell them on our little forums or whatever. So ask. I mean, Facebook marketplace, don't get scammed there. But swap is another one. There's a bunch of cell phone swap sites to sell old phones. Buy. Buy used phones.

[George Campbell]

Okay.

[Dave Ramsey]

So all of that really helps because I don't want to overpay.

[George Campbell]

So if I go to the Apple Store, I feel like I get them at the Apple Store, I get an older one. You can get refurbished.

[Dave Ramsey]

They'll have them refurbished, but it's cheaper on swap up. 100% refurbished is just a little bit cheaper than new.

[George Campbell]

Interesting. And there's more that you can choose from on there. Yeah, interesting.

[Dave Ramsey]

And it's all, you know, legit. Not a sponsor, but, you know, it's just a site.

[George Campbell]

I ought to be.

[Dave Ramsey]

Hit us up, Swappa.

[George Campbell]

Okay. So do you think it's fair that, you know, obviously some people like Samantha and myself, we drop Them more often. Even if you hadn't dropped it, Even if you just had the phone for three years and you were like, you know what? I'd like to see what the newer model looks like.

[Dave Ramsey]

Yeah. If you budget for it, you pay cash. I mean, you might need a sinking fund these days because of how expensive these things are. If it's a thousand bucks and you need one every two or three years,

[George Campbell]

you know, and let me bucks a

[Dave Ramsey]

month, you got to set us up.

[George Campbell]

This is a loophole that a lot of people do. Do you want to know what they do?

[Caller]

They.

[George Campbell]

You know, when they're AT T or Verizon, what do they do? They just do the payments for it.

[Dave Ramsey]

Oh, yikes. That's my least favorite.

[George Campbell]

They just add it into the.

[Dave Ramsey]

Which is my phone to their contracts.

[George Campbell]

Yeah. Yeah.

[Dave Ramsey]

So there's some golden handcuffs there. So never think, well, it's super cheap. I just pay it every month. That's what they want you to do.

[George Campbell]

I can. I tell you, I got. I kind of got tricked because I didn't know. So this was several. Several years back. I was going. I got a notice on my phone that was like, time to upgrade. And to me, when it's like, it's time to upgrade, I'm thinking, okay, I'm just upgrading my phone. It's time to just swap them. Swap them.

[Dave Ramsey]

There you go.

[George Campbell]

And I didn't even realize because they just did one phone for another. And then I realized it was in my bill. Oh, it was just automatically. And so all of a sudden, one day, our phone bill went down, and I was like, why did our. And I realized I'd been paying payments on the phone, and I didn't even know it.

[Dave Ramsey]

Wow, that is brutal.

[Caller]

Diabolical.

[Dave Ramsey]

The other thing I need to mention is that a lot of people think, well, my phone is broken. It doesn't work anymore. No, it's just user error because you put so much crap on that phone, it can't function anymore.

[George Campbell]

Too much, not enough memory.

[Dave Ramsey]

You gotta carry some space. And so resetting your phone and cleaning it, you'll feel like you got a new phone. Just like with a car. Get your car detailed, and that car fever will go away pretty quickly.

[George Campbell]

You know what, though? Some people, that's just their thing. Like. Like, if it weren't for Sam Waraw in our house, I would have no dealings with the technology. Like, he does all that stuff. I get frustrated. One thing doesn't work. I'm like, this stupid phone, and he just walks by and pushes one button and it's all fixed.

[Dave Ramsey]

See, me and Sam, we're tech support.

[George Campbell]

Tech support. Every, every household needs a tech support. I can tell it was you in your house.

[Dave Ramsey]

I can't use a, a, you know, screwdriver, but I could fix your WI fi, no problems.

[George Campbell]

Tech support, we need it.

[Rachel Cruze]

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[Dave Ramsey]

customers to remain active on Boost Mobile unlimited plan.

[George Campbell]

Ask Ramsey is our free AI tool that's built and trained on proven Ramsey principles. And so today we're to going going to talk about some of the most asked questions that you guys ask Ramsey. We get questions all the time around budgeting, paying off debt. But this time the top question was around retirement savings. George As a matter of fact the most asked question was this. How do I know if I have enough saved to retire?

[Dave Ramsey]

Well the simple answer that you will hate is you know you have enough saved to retire when your retirement income can cover your retirement lifestyle without depending on Social Security. So figure out how much you'll need to live on each month in retirement with which easier said than done because we don't know what inflation's gonna be. Will Social Security be there? How much will it be? Healthcare costs, all of that. But to the best of your ability, go. Okay, here's what I'm living on now. Here's what I think it'll be, you know, 10, 20, 30 years from now. Then list all of your expected income streams. Hopefully if you follow our plan, you've got the 401ks IRAs, maybe even a pension. And if your monthly income is close to or above that expected monthly Spend spending. You are probably on track. And if there's a gap, that tells me you need to lower the lifestyle, you need to increase how much you're saving now. Or plan to work part time in a retirement. Not a bad idea. So important call outs, though, be debt free before in retirement. So work to pay off the house. Make sure you have everything paid off before you head into retirement. Plan for those healthcare costs. Be on a written retirement budget. Not just vibes.

[George Campbell]

Yeah. Not just a guest. That's so good. And ask Ramsey. It can really help you walk through a retirement planning checklist. Checklist to make sure that you have your retirement savings that can actually float you and your lifestyle in retirement. So again, ask your question [e-mail] or you can just click the link in the description if you're listening on podcast or YouTube. Again, if you want to ask Ramsey your question, go to ramseysolutions.com all right, we got Jeff, who's in Nashville, Tennessee. Hey, Jeff, how can we help out today?

[Caller]

Well, I have a question about my career and I was wondering if you guys could help. So I've been with the same company for almost 13 years, and we're in kind of the restoration cleaning industry. The plan for my future was that I'm to take over the company. We have no written contract. There's no written agreement. It's just something that somebody's told me. But lately I've found a lot of moral and ethical disparity between my owners. And my question for you is, do I hang on and wait until I can take over or is it time to just go ahead and move on?

[George Campbell]

Ooh, I would love to know the moral and ethical because that sounds very serious.

[Dave Ramsey]

Is it like crimes are being committed or they're just doing things in a way you wouldn't?

[Caller]

Not as far as the world is concerned. Biblically, a little bit. Essentially, in this industry, I'm not about giving people money to give me work or people to give me work. Me give them money back. And that has started to happen. After 16 years of this company never spending a dollar on marketing at all. We're now paying off a person to, quote, unquote, give us work that is just not profitable.

[George Campbell]

So you're paying a marketer.

[Caller]

Oh, no, this is paying essentially a maintenance guy to approve contracts or approve bids that we, that we offer up to them.

[Dave Ramsey]

Okay, what is that doing for the company? What's the upside?

[Caller]

I will quote, we have to do what we have to do to get work and That's. That's what I was told this is all about. However,

[George Campbell]

am I missing something on the moral part of this or the ethical? Help me understand. I feel like I'm missing something. So there's a person who's helping you get contracts and they're approving whether the bids are good enough?

[Caller]

No. Essentially, this is a maintenance guy that works for somebody who has the ability to approve or deny estimates for this property. And my company paid that man $7,000 in an attempt to get him to approve more of our estimates.

[Dave Ramsey]

So it's basically a bribe.

[Caller]

That's a. That's a perfect way to put it. Yeah.

[Dave Ramsey]

Okay.

[George Campbell]

Okay. Yeah, that makes more sense. I was. I needed that clarity. Okay, so you're bribing. They're. They're bribing this guy. If we pay you a little money on the side, you'll approve, feed us more.

[Dave Ramsey]

More clientele. I see more projects.

[George Campbell]

Okay. You don't like the way that's being done. That makes sense. The part that I'm really wondering about is you said people are talking about me taking over the company, but there's neither contracts nor paper trail for this. I would need more.

[Dave Ramsey]

I would need like a date in writing versus a just a vibe of like, well, maybe when the time comes you could take it over.

[George Campbell]

Can you have that conversation?

[Caller]

We've had the conversation several times. It's loose ended. There's no definition, there's no timeline, there's no payment there. None of that stuff is discussed. And we're talking a company that may value somewhere around $350,000.

[Dave Ramsey]

If this was a significant other in your life, and we're talking about commitment and marriage, you would go, hey, clearly she's not that into you. If she's kicking the tires going, yeah, maybe we'll get married. Ah, we'll see about that.

[George Campbell]

It might just be a way to keep you. Keep you warm. Like, keep you on, you know, on their side and keep you as an employee. Cause maybe they know that you don't like the way things are going.

[Dave Ramsey]

And you've addressed it. It sounds like. Cause they gave you the answer of, hey, we gotta do what we gotta do do.

[Caller]

That's it. And this has been addressed many times. I feel exactly like that they're trying to keep me on a hook for a while until the day comes, and then we just cut the line. So that question is, I've already kind of formed up an llc, and before I just start really moving forward with it, my question is, do I maintain what I'm doing now.

[George Campbell]

Well.

[Caller]

And try to cold start my llc or do I just jump right into the thing?

[George Campbell]

Well, yeah, that's a whole different question because, Because I, you know, you were. There's income on the line here. Right. So how much are you earning now?

[Caller]

It's, it's minimal. I make 60 a year.

[George Campbell]

60 a year. And how quickly do you think you could generate that same profit from you starting up your own business?

[Caller]

I would need about six, maybe seven months.

[George Campbell]

Is there any part of this business that you can do ethically while you're still working for your boss?

[Caller]

Absolutely. Nights and weekends.

[George Campbell]

Oh, okay.

[Dave Ramsey]

And it's not in conflict with any contract you signed to like a non compete absolute?

[Caller]

I don't have a non compete.

[Dave Ramsey]

Okay, okay, that's true. Then there's nothing wrong with you going, hey, it's my time. When the time is right, I'm gonna go launch this thing on the side. But I don't think in good faith you can continue working for this person because of the soul tax that you're paying right now. The resentment building up, I mean, it's gonna eat you alive. It's a poison that you're drinking every day. You stay here knowing this business is not being run ethically. You're not excited to go to work for a guy who does that. You're not aligned in the values. And so for that reason, I would get out as soon as possible. Even if you go work for someone else in the meantime, while you get this thing off the ground, do you

[George Campbell]

think you could find someone else to go work for quickly?

[Caller]

Well, unfortunately for this company, about 80% of our book of business comes through my ph. It's my contacts, my people, friends, et cetera, church, family. So the work for me won't stop. It just, it will just go through.

[Dave Ramsey]

What happens when you divert those leads to your new business versus them and their business hurts even more?

[Caller]

Unfortunately, they're the ones calling me. I'm not in control of who you know, whether they choose the old company or the new company.

[Dave Ramsey]

But you're going to tell them, hey, I actually started my own if you're interested.

[George Campbell]

So if, realistically, how many leads do you think would come with you and how much money is that? Like how much could you have on the table within your first 30 to 60 days?

[Caller]

First 30 to 60 days with a cold start, not necessarily having everything together, I could probably. I could probably pull together 25 to 40,000 in project work pretty quickly.

[Dave Ramsey]

And that turns into how much in profits does that Replace your current monthly income. Income.

[Caller]

Oh, it would absolutely blow my current income out of the water.

[Dave Ramsey]

I think this is going to happen faster than you think. I think you try this for a month or two and realize, oh, okay, I can do this repeatedly.

[George Campbell]

Yeah.

[Dave Ramsey]

With stability.

[George Campbell]

Absolutely. And cuz here's the thing, you might just flip it. Usually it's the opposite. We say, okay, you know, do this other job while you build the business. But I think you can build the business and if you have extra time, yeah, sure, you could work a side hustle and fill in gaps. But I don't even think you need to do that. It sounds like you've got it right there. There's no non compete so there's nothing ethically here.

[Dave Ramsey]

You just want to run a business differently.

[George Campbell]

I'm all for it. And you want to do it the right way. I think that's really, really good. And we're rooting for you.

[Rachel Cruze]

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[George Campbell]

Well, it's my favorite time of the show, George, where we get to talk about my favorite budgeting app, which is every dollar. And one of our favorite things is when people share their stories about how every dollar is helping them win. As a matter of fact, we have this from a family. They said it's just being able to use every dollar and see all the extra we have every single month. It was super motivating. We'd have thousands of dollars just. We'd have thousands of dollars extra and just throw it on the mortgage and hey, I think that's amazing. And you can do the Same thing too. You can take control of your money, you can change your family tree and you can live like no one else. So start every dollar for free today in the App Store or Google Play. Matt is in Phoenix, Arizona. Matt, you are on the line, my friend.

[Caller]

Hey guys, how are you doing?

[George Campbell]

Doing good. What's up?

[Caller]

I am at a weird crossing point. We are baby step two and we have no consumer debt left. We just have our mortgage which is up 4,16,400 16,000. And we have 75,000 in student loans left at 8%.

[George Campbell]

Okay.

[Caller]

We are trying to figure out. We have 50,000 in the bank too.

[Dave Ramsey]

How much is it? 52.

[Caller]

What's that?

[Dave Ramsey]

How much do you have in the bank?

[Caller]

50,050.

[Dave Ramsey]

Okay.

[Caller]

We're trying to figure out if we should pay the student loans right now. And the only reason I would be second questioning it in the process of all this is because in our mortgage is the PMI, the mortgage insurance, which is $250 a month. Our student loan payment is 117amonth. So in order to get our PM PMI insurance off, we would have to pay $70,000 right around there on our mortgage to drop it off. So my thought process was do I pay the 70 on the mortgage to drop that down so I can roll that extra 250 towards the student loan since it's more than double the student loan payment and then tackle that or do I just keep, keep trucking along and knock out the student loans and then keep going from there?

[George Campbell]

It's a fair question. I, I mean you're looking at, you're looking at what you'll receive back. So you're looking at the payment in essence more so than the balance itself of the consumer debt. And I understand that, that if I were in your shoes because really when we're talking about the mortgage, that really is a baby six activity. Baby step six activity. And so I would continue on with the student loans because there's $75,000 of these bad boys. You got to knock this out. The good news is you have 49,000 that you can put towards that. Cause and I would totally do that. I would totally do that.

[Dave Ramsey]

My guess is you're knocking out a bunch of student loans in the process. Right?

[Caller]

Right.

Yeah.

[Dave Ramsey]

That's because they're broken up. So you're going to free up a whole lot of payments too.

[George Campbell]

Yeah. Have you done the calculation? How much is that

[Caller]

as far as interest?

[Dave Ramsey]

If you paid off the $50,000 of the smallest loans right now, how many Payments would that free up what does that amount to each month?

[Caller]

That I have not calculated.

[Dave Ramsey]

That's a better calculation I think than the minimum payment on the student loans. So I would definitely tackle the student loans. I know the PMI side, but you're going to get there real fast. If you knock out these student loans, what's your household income?

[Caller]

318,000.

[Dave Ramsey]

Goodness gracious. We'll knock out the student loans and the mortgage if you take control of this.

[George Campbell]

Yeah, well over the course of this year why wouldn't that be the goal to pay the, to be out of baby step two. So 75,000 down and then we're act like aggressively saving up three months of expenses where and then from then we can aggressively put extra towards this PMI I 100%.

[Caller]

Yeah, we can definitely do it. We take home about anywhere from I'm on commission but we take home about 14 to 17,000 after taxes every month. So we, we've been aggressively. You paid off 120,000 in the last like 15 months.

[George Campbell]

Excellent.

[Caller]

So we've been, we got everything, all the consumer stuff out of the way. The only monkey wrench here is in about 12 months my wife is going to, we're going to have her say I home and just raise the kids.

[George Campbell]

Okay.

[Caller]

And so we're going to lose about $68,000 in income and we would, we would, our take home after taxes would just be around 13 to 14,000.

[George Campbell]

Okay.

[Caller]

But, but then after we put on health insurance and 401k and all that stuff we would only be saving about after bills and utilities and mortgage we would only be saving about 2 to 3,000amonth. That would be the extra play after all the bills is what we would have to left to play with rather than right now we have about 11, 10 to 11,000 in play every month.

[George Campbell]

So you're saying that that feels like a huge swing. Bigger than I thought. So she stays home. Obviously your income goes down from 17 to 13 and then you figure how much for insurance? Insurance.

[Caller]

Well the, from what I was getting quotes from like the home family. So it'd be me, my wife and two kids. Health insurance, full plan was like it was like 18 or 1900amonth.

[George Campbell]

Okay.

[Dave Ramsey]

Marketplace Insurance. So we'll call that 2000 to your work. Okay. Yeah. That's real high for an employer sponsored healthcare plan.

[George Campbell]

It feels high but for now we'll take your word for it.

[Dave Ramsey]

So I would look at the high deductible plans too which will have lower premiums. Have you looked at those Options?

[Caller]

No, I just kind of got some rough numbers from the. From the representative.

[Dave Ramsey]

Okay. I would make sure to look at those high deductible HDHP plans because the premiums will be way lower.

[Caller]

Okay.

[Dave Ramsey]

Hopefully.

[George Campbell]

So you're. You're down 6,000 for the month. So I see what you're saying there. It sounds like the point is just let's try to kick out as much of this debt while we have this high monthly income. And I think that's a great point play. You can obviously afford for her to stay home. You can afford those things. But it really just frames what George and I said beautifully, which is. Yeah. While you have this money for the next 12 months, let's kick it into consumer debt.

[Dave Ramsey]

Get the emergency fund and get that PMI knocked off. Now we have a whole lot of extra margin.

[George Campbell]

Yeah. Love it. Thank you for the call. Next up, we have Daniel, who's in Salt Lake City, Utah. Daniel, how can George and I help today?

[Caller]

All right.

Yes. My. My question is that my business has debt still, and.

But my wife and I personally do not carry any.

And so it's kind of a weird

spot where we're on baby step four,

but the business is still, I guess, technically on baby step two.

[Dave Ramsey]

Who runs the business?

[Caller]

Trying to figure out.

[George Campbell]

Yeah. Are you solopreneurs?

[Dave Ramsey]

Boom. Looks like you're in debt, Daniel.

[Caller]

Right, Exactly, Exactly. We're in debt. So that's what I thought you were going to say.

We're.

We're on baby step number two till the business is paid off then, right?

[George Campbell]

Huh?

[Dave Ramsey]

How much is left on that?

[Caller]

Yeah. 80,000.

[Dave Ramsey]

Okay. How quickly could you knock that out?

[Caller]

If you guys got this year.

[Dave Ramsey]

Oh, okay. Before. Before 2026 is over, this debt is gone. And then you need to build up an emergency fund.

[Caller]

Yeah, I mean, a business emergency fund. My wife and I have, you know, about $70,000 ourselves.

[Dave Ramsey]

Okay. I would use your personal money to pay off your debt.

[George Campbell]

Is it just. Is it just. Are you the only two owners? Is it just you and your wife, or do you have lots of employees?

[Caller]

50% partner. So I have a. I have a partner. I would love to do that, but

he doesn't have the same amount of

money stored up, and we wouldn't be

able to evenly split paying off the debt personally.

[Dave Ramsey]

Could you knock out your part and having a signed agreement saying, hey, your part of this debt is done?

[Caller]

Yeah, I guess, in theory.

[Dave Ramsey]

I mean, your name is still on the debt, which is the risky part part.

[Caller]

Right. That's.

The whole thing is like the businesses have the debt. Technically the debt that's left is under his credit.

I. Yeah, kind of.

[George Campbell]

Why would. He's not interested in using profit to pay off the debt over time?

[Caller]

Oh yeah, no, we're doing that. Like I said, we're going to have it done probably by the end of the summer.

But.

[George Campbell]

What?

[Caller]

Yeah, I mean, yeah.

[George Campbell]

So if you. And how much was it again? Was it 70 or was it more? More.

[Caller]

It's 80,000 left in business debts on a credit card and a line of

[George Campbell]

credit and it will be done at the end of the summer if you use the profits from the business.

[Caller]

Yes, that's correct.

[Dave Ramsey]

I would aim for that. Yeah, I would get on, on the same page with them and go, hey, listen, I don't want this dead hanging around any longer. It's adding risk to our business. If we get real intense, we can knock this thing out. Do you guys have any reserves in the business as well?

[Caller]

Yeah, I mean, well, we've got customer deposits. You know, those are technically not our

money yet either until the jobs are produced. Residential painting company. So. Okay, you know the deposits, you know,

[George Campbell]

you do need to have some reserves, I think because if you had told me that you were 100 owner of this business, I'd say yeah, pay it off, reach over, do whatever you need to do. But because you're not full owner and there's another guy that's associated with this. Yeah, as long as you guys can have this using those profits by the end of the summer. I love that. And, and stack up some reserves. Six to 12 months is what I would do and maybe immediately. Welcome back to the Ramsey show here in the Fair Ones Credit Union studio here with George Camel, myself, Jade Warren. We got Ryan who's in Chattanooga, Tennessee just down the road. Ryan, you're up next, buddy. How can we help?

[Caller]

Hey guys, thanks for taking the call. My question for you as a 26 year old man married to my wife that's 24, I'm curious. We put a large portion of our monthly income away into savings and retirement. We have little to no debt debt. And I'm just curious how much money is saving too much for retirement versus being able to enjoy your 20s and 30s?

[George Campbell]

That's a very good question. Can you clarify for us a little bit two things? What it means when you say little to no debt and just how much are you putting towards retirement and savings?

[Caller]

Yeah, so our debt, my wife has about $4,000 worth of student loans. We across the board do not have any credit card debt. I Do not have any student loans and we just have our mortgage. Both cars are paid off and we put roughly three grand a month into saving or into investing for our retirement.

[Dave Ramsey]

Why haven't you paid off the student loan?

[Caller]

We had it set up on an automation that was kind of her, I guess, spectrum. And that's what we're planning on tackling within the next, next month or so.

[George Campbell]

Well, how much do you have saved? If you've been putting around three, putting away 3,000. How much do you have in non

[Dave Ramsey]

retirement savings right now in non retirement savings?

[Caller]

So as for our, I guess, emergencies fund, so the 2000amonth correlates with, I guess the 401k and our Roth IRAs. Understood.

[George Campbell]

How much do you have savings?

[Caller]

So we have roughly about 25 grand in our taxable, I guess, liquid brokerage outside of our initial retirement.

[George Campbell]

So do you have any, do you have any high yield savings money? Like just any money in savings?

[Caller]

Well, that, that is, I guess, drawing from the high yields right now. It's uninvested cash in my brokerage account.

[George Campbell]

Oh, got it. Okay.

[Dave Ramsey]

So it's just sitting there like a money market situation.

[George Campbell]

Okay, cool, cool.

[Caller]

Correct. Correct.

Sorry.

[Dave Ramsey]

All right, so you're wondering, are you saving too much by putting three grand away a month into investments?

[Caller]

Correct. When I did my calculation, 11% over the next, you know, 32 years or so till I hit 60 for retire, like $15 million, which is great number to have with contributing that much each month, but.

[George Campbell]

So the 3K is 11% of your money.

[Caller]

What do you mean by that?

[Dave Ramsey]

You're saying 11% as the rate of return when you calculate.

[Caller]

Correct.

[Dave Ramsey]

Oh, what's your household income? Gross household income?

[Caller]

Yeah, we make roughly 130,000 here.

[Dave Ramsey]

Okay, okay. So our baby steps go as follows. Baby step one, $1,000. You have that baby step two, pay off all consumer debt, which means the student loans are paid off today, which brings your brokerage down to 21,000. Tracking.

[Caller]

Correct.

[Dave Ramsey]

Now we need three to six months of expenses. What does six months of expenses look like for you guys? Is it more than 21 grand?

[Caller]

I would say between 20 and 25. Great.

[Dave Ramsey]

So we'll call that good. Now we're at baby step four. 15% of household income, which for you guys, 15% is going to be 19, 5, 1600amonth, 1625. So that's the amount you should be putting away. And any extra money then gets diverted to the mortgage and to enjoying your life. So you asked how much should we, can we use some of this to enjoy our 20s and 30s. Yes, you should be using it. And I think investing three grand and putting every dime away into retirement is a bad idea because you have a flat tax retire.

[George Campbell]

And honestly, I think this is just a mental shift, more than a, more than anything. Because after you do the 1600 every single month, if you did another 1500 extra on the mortgage, it's the same 3000. You're just splitting it up and doing it in the right ways. So you're still, do you, do you see what I'm saying? So in many ways you're still investing because a mortgage in many ways isn't, it's, it's an investment. It's, it's, it's definitely a forced savings account account at best. And so you are investing, you're just doing it in different ways. So it's just a mentality shift there.

[Caller]

Sure.

Okay.

[George Campbell]

The dollars themselves don't really change.

[Caller]

Yeah, I guess there's, I guess it's harder from mentally, from a, I guess liquid versus illiquid standpoint.

[George Campbell]

Well, let's talk, let's talk, let's talk through that. Let's talk through that. Because it is worth talking through that. We have found that it sounds like your goal is to build wealth, right?

[Caller]

Correct.

[George Campbell]

Yes. We've done the largest study of millionaires. And one of the things that we found is there's two, there's two key portions of this. Number one is these people, they invest in their 401k. That's where they build the majority of their worth. It's not. They've got all this real estate. They don't have these crazy. No, they invest in their employee sponsored accounts. That's what they do. And then the other thing that they do is they pay off their home more mortgage and they do it relatively quickly. And so if you can do those two things combined effort, that is the ticket. That's what we have found works time and time and time again for millions of people. And you're, you're right there. Like I said, the amount that you're putting towards savings doesn't change. You're just not investing at all. So we're creating diversification in many ways.

[Dave Ramsey]

You have a forced savings plan by putting it into that mortgage, paying it off, having all that equity. And that's exactly what my wife and I did. Ryan, we are very much, I mean, you guys are earlier than we even got started. We had a paid off home in our early 30s, became baby steps millionaires in our early 30s. You guys are gonna get there even faster at the rate you're going. But I would caution you to slow down a bit. Move from intensity to intentionality once you're out of baby step three and you begin to invest. Because I don't want you to look back and go, oh, my gosh, we have kids now. We're not gonna. We didn't get to do all those trips we wanted to do. Life got crazy and chaotic and complicated. So I would allocate in your business budget money for vacations and trips and some little luxuries. You guys have earned it. You've worked your tails off at 26 and 24 to be soon to be debt free as soon as you're off this call.

[Caller]

Yeah, I appreciate, is nice to know that percentage threshold of, you know, how can I still be secured for the future, but also enjoy today. So I appreciate it.

[Dave Ramsey]

If you just do 15% until the mortgage is paid off, you're going to have so much in retirement. And by the way, once the mortgage is paid off, you, you can ratchet that up to 20, 30, 40, 50%. But make sure that you're also giving and spending. You got to have all three in check. Investing, saving, giving, spending. So all of Those in check, 15% investing, 10% giving, especially if you're a person of faith. And then you can enjoy it after all the bills are paid. And that's where the every dollar budget comes in. It forces me to, to go, oh, yeah, I need to put money away for that vacation.

[George Campbell]

Yes.

[Dave Ramsey]

So we don't go, wait, this savings account is just for life? No, no, no. You earmarked it for vacation, so use it.

[George Campbell]

One of the things that kind of makes me sad is we can really get into the, the, the baby step two mode. That just gazelle intensity mode, because it feels good. We're making accomplishments, we're paying off debt, we're saving really quickly. And it's like if that mentality continues to follow you, you never really enjoy the fruit of the baby steps. The whole point is to really rush it so you can get out of those painful periods, get out of baby step two, get out of baby step three. But man, once you're, Once you're in four, five, and six and the house is starting to come down and everything is really, you know, starting to take shape, you're investing your 15%, you've got

[Dave Ramsey]

to live a little, Live like no

[George Campbell]

one else got to.

[Dave Ramsey]

So later you can live like no one else and give like no one else. And you know, I got a DM the other day they went, hey, can I buy this fancy coffee machine? I know you like coffee. And I was like, well, where are you guys at financially? They go, well, we're millionaires. We have a great income, no debt. Get the coffee machine. It feels like you're doing a bad thing because you're spending $2,000, which feels insane. You're right. It is insane. If you're broke, yeah. But if you have the money, it's a small part of your world and it increases your quality of life.

[George Campbell]

Do it. And what else makes you feel better is when you know you're generous, you know that you're also giving a generous portion of your money. You feel great when you then go and spend some on yourself and on your family and on the things that you value. It is a very delicate balance. Excellence. Give, save, spend. You gotta do all three.

[Rachel Cruze]

Hey, guys, Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now, you can get that same kind of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple and free to use. Go to ramseysolutions.com and try Ask Ramsey today. That's ramseysolutions.com.

[George Campbell]

The Ramsey Show Question Question of the day is brought to you by Y Refi. If your private student loans are in default and you're not sure what to do next, why Refi can help you explore refinancing with a low fixed rate and a payment plan that's based on what you can actually afford. Go to yrefi.com Ramsey remember, that's the letter y r e f y.com Ramsey and it may not be available in all states.

[Dave Ramsey]

Today's question comes from Evan in Iowa. I'm a husband and father of two young children currently in baby Stephen two. I do not have term life insurance and neither does my wife. While we were looking at our monthly budget, the subject came up of when is the right time to get life insurance? Is this a financial priority while we are paying off debt or should we hold off until we are debt free and have our emergency fund in place? Great question.

[George Campbell]

Controversial.

[Dave Ramsey]

And the beautiful answer is that you need term life insurance regardless of what baby step you are on. As soon as anybody relies on your income, young children, a wife, even when you're just young and healthy, it's a good time to lock it in it's

[George Campbell]

a great cuz it's cheaper.

[Dave Ramsey]

Number one, it's so cheap. And so absolutely both of you need to get term life. You need 10 to 12 times your annual incomes on a, you know, 20, 25 year term. And you will find that it is quite affordable. And if you're a stay at home spouse, you definitely need term life insurance to the tune of at least half a million. I like three quarters of a million million.

[George Campbell]

Well, we had a call about that earlier one, I think it was my, maybe our first call today. And it really is that 10 to 12 times number is so important because ideally what you want for anybody who's dependent on your income, if you should go, because we're all going to get beamed up at some point. But if you should go earlier than expected, you want that person who's left behind to not have to worry about. Because many, many stay at home moms, they've never worked in the workforce.

[Dave Ramsey]

Yeah, and that was her situation. She had, you know, some teens at home, she would stay at home, hadn't worked in a long, long, long time. And she had $500,000 payout, which is, you're going, wow, that's life changing money.

[Caller]

Sure.

[Dave Ramsey]

But it's not. I never need to work again.

[George Campbell]

Right.

[Dave Ramsey]

And so if he had had 10 to 12 times his income in term life, he would have had 1.4 to $1.6 million.

[George Campbell]

And she could have then drawn the exact amount of payment. She could invested that amount.

[Dave Ramsey]

The market would have spit off enough income for her to cover all of her expenses. Expenses without having to worry about when is this money going to run out. And they were renting.

[George Campbell]

Yes, that's right.

[Dave Ramsey]

Think about that. 10 to 12 times your income invested, your family's covered. And so they're, while they're grieving your loss, at least they're not struggling financially figuring out what's next. So get term life in place. Zander is the place we've been recommending for decades now. I just re, I just got a term life policy.

[George Campbell]

You do 15.

[Dave Ramsey]

Well, now that I got young kids and you know, dogs that are too expensive, I don't just felt better. It was like, I'll sleep better at night. I might sleep with one eye open now because I might be. I'm worth more dead than alive. But I know my family's going to be taken care of and Whitney's not going to be, you know, yelling at me. Hopefully, hopefully looking up, hopefully looking up, yelling at me, looking down. There's a problem she hates when I talk about it. She is the person who's like I don't want even want to think about it. Me either.

[George Campbell]

And you bring up a good point because I think a lot of people avoid these types of discussions. Life insurance will because it is a mortality issue and it's like ew. I don't want to think about the worst happening but it really is a way to love your family.

[Dave Ramsey]

Well, I hope you never have to use it. And it was just money well spent to transfer the risk to the insurance company. That's the goal is that the policy runs out after 20 or 25 years. You've been following the baby steps. You got a paid for house at the end of that. You've been investing for a couple of decades. So your nest egg has caused you to be self insured.

[George Campbell]

Yeah, that's the goal. That's what we want. Want to get to.

[Dave Ramsey]

Exactly. So go check it out. Xander.com is the place to go. Get this done. Do not wait.

[George Campbell]

Don't wait. Eric is in Kansas City, Missouri. Hi Eric. How can George and I help out today? Good.

[Caller]

I am recently retired at 57, forced out at age by my job. I have a 401k that I am unsure what to do with it because we can no longer contribute to it. But I don't want to draw from it either. So I'm trying to figure out how to max it out, optimize my gain with it.

[George Campbell]

Yeah, well you could do a direct transfer rollover and roll it into an ira and I would suggest maybe getting with a smartvestor pro to help you do that. And you can find [e-mail] but that's easy to do. My question is what do you plan to do with your time? It sounds like you weren't ready to retire yet.

[Caller]

Well, part of its medical, part of it was by age. So I mean I make enough money right now or through my retirement and disability through the VA that I don't need to draw off of my.

[Dave Ramsey]

When you say retirement, what is your current income coming from now?

[Caller]

I have, I get about 7,000amonth right now. I get 3,000 from my job that I retired from like a pension. I get money. Yes.

[Dave Ramsey]

Okay. Another four grand from disability from the va.

[Caller]

Yes.

[Dave Ramsey]

Okay. And so you're saying I don't need to touch the 401k money, but I want it to grow. So absolutely I would do what Jade said, do a direct rollover. So you don't want to see that money. It should not pass through your bank account, they will just transfer directly over to an ira, which is a non employer sponsored retirement account. And that way you have all of the options in the world, way more than you even had in that 401. But the key is if it's traditional, you want to make sure it's rolled over to a traditional ira, and if it's Roth, you want to make that portion transfer to a Roth ira. That way you're not having any tax implications.

[George Campbell]

How much is in that 401, Eric?

[Caller]

It's only 400,000.

[George Campbell]

Only 400,000.

[Dave Ramsey]

That's a lot of money. A lot of money, my guy. But in Eric's case, I feel like it's not enough.

[George Campbell]

Well, you know, you're not using it, which is good. And I love George's point. It sounds like it's traditional money. So it is going into a traditional ira. But depending on what baby step you're in, I would be interested in over time moving that to Roth funds if possible. And that's something else that the Smartvestor Pro could help you with. Because if you're not touching this money and it truly is for posterity, then you want that to be tax free growth. You want them to not have to pay taxes on that money when it's transferred to them and when they have the ability to access that.

[Dave Ramsey]

Can I give you some mind blowing math, Eric?

[Caller]

Yes, sir.

[Dave Ramsey]

So based on what the stock market has actually done over the last several, several decades, since 1950, we've seen a 10 to 12% average annual return. And so there's something called the rule of 72. And it's simple. You divide 72 by the annual rate of return. It tells you how quickly your money will double. So at a 10% rate of return, your money would double every 7.2 years. So if you're doing the math at your age at 64, if you just leave that alone invested, that 400k turns into 864. 1.6 million by 71, 3.2 million by the age of 77.

[Caller]

That's what I want to hear.

[Dave Ramsey]

Yeah, there you go. And that's if you never add to it. Like you mentioned, you are fine on your own with your disability income and your pension income. So if you continue to live on less than you make and let that grow, that is generational wealth.

[George Campbell]

And that's where the transfer of Roth really matters for, for you. Plus you don't want to have retired minimum distributions if you don't need it.

[Caller]

Right?

[Dave Ramsey]

So that Smartvestor Pro can help you also. What was that?

[Caller]

I said, yeah, because currently, you know, I would like to also contribute more into, you know, my investment instead of letting just ride because I've got money and savings. That's not making any money. You know what I mean?

[Dave Ramsey]

Yeah, you can invest that. That too. So that SmartVestor Pro walk you through it. And I would also ask them about Roth conversions because like Jade's saying, if you can convert those strategically so you could do a portion each year moving from traditional to Roth, you pay some taxes, doing it all at once is going to bump you way up in the tax brackets and cause you to have a big tax bill. And so that SmartVestor Pro can walk you through it strategically so that that money is then growing tax free the rest of your life.

[Caller]

Life.

[Dave Ramsey]

And passed on to your heirs tax free, which is going to be pretty cool for somebody in your life one day.

[Caller]

Thank you.

[George Campbell]

Does that make, does that make a lot of sense for you, Eric?

[Caller]

Yes.

[George Campbell]

Okay. Good, good, good. And is it just you, Eric, or do you have a wife, kids? Is there anybody else? It's just you. So what do you plan on doing with that 3.2 million? I mean, what do you think you feel. Who's the beneficiary of that?

[Caller]

I try to take care of my, my sisters and my mom.

[George Campbell]

Okay.

[Dave Ramsey]

I love man.

[George Campbell]

Yeah, you are. That's a, it's a really good point, George. You know, he's in such a great position and there's many people who, even if, even if you are drawing off your retirement, there's still going to be a large portion there. And you do want to make sure that you're setting it up as a legacy piece so that whoever is inheriting that is not inheriting a major tax burden.

[Dave Ramsey]

That's where a good financial advisor is worth every penny. And so if you want a Smartvestor pro to help you think strategically about whatever it is, wealth, estate planning, tax planning, you can go to ramseysolutions.com and click on SmartVestor.

[Rachel Cruze]

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[George Campbell]

Alrighty. Guys, guys. It's May, and the Ramsey cash giveaway is officially here. You can enter every single day from May 1st to May 31st. There's going to be one grand prize winner who's going to get 10 G's. $10,000.

[Dave Ramsey]

10 bands.

[George Campbell]

10 bands? Yes. Also bands. Plus there will be one 500 weekly winner, which is pretty legit. And the good news is you can enter daily to increase your chances of winning. So multiple times, once a a day. Plus be sure to check out our sale going on right now. Kick off your summer with books and assessments for just $12. That's pretty darn good. Go to Ramsey Solutions.com giveaway now to enter. No purchase is necessary in order to win. All right, Amy in the city I was born. Spokane, Washington. What's going on, Amy? How can George and I help?

[Caller]

Hi. Thank you for taking my call. I'm calling because my husband said that if I could get the Ramsey show to appro of our house build, we could move forward with it. So no pressure or anything. My entire future is just riding on this. No, but we're in a pretty good place.

[Dave Ramsey]

I hope I'm not a dream killer. I've been known to be a dream killer. To be fair.

[George Campbell]

Is he anywhere listening? Is he with a glass on the door somewhere listening? You know what?

[Caller]

He rides bikes and he is currently listening to the show in his ear pods on a bike ride. Okay, okay, okay.

[George Campbell]

Shout out, shout out. Wherever you are on your bike. We're gonna do our best to be fair.

[Dave Ramsey]

I want to get you there. I want. I want this to be a yes. So walk us through the predicament.

[Caller]

And we're both. I just want to start with. We're both very much on the same page. We're just like. We want to be strategic and make sure this is the right choice for our family. And so I'll give you just a little bit of a idea of who we are. So we're 36 years old. We've been married for 12 years. We're actually. Spokane is the closest town to us, but we're in a very desired ski town nearby and we own a house. We have no debt. We've paid off our house. We took financial peace University right when we got married. And really it's. It's been fantastic for our life.

[George Campbell]

That's incredible.

[Caller]

At 36 years old, it feels really good. It really does. And we, we just built a apartment above a garage on the same property that we live in, in this house right now. And so we're gonna like. Our desire is to build a house because we have a pretty big piece of property on this same property. So it's paid for. And we would then have our house and the rental as income or and the apartment rental as income.

[George Campbell]

Got it.

[Caller]

And so we're just trying to figure out like my husband's pretty hesitant to go back into any kind of debt, which I understand. It's been so great. I think we paid off our house about four years ago and so we're just going back. Do we, do we wait until we have the cash on hand or. Being that I'm pregnant with our third and I don't want our baby sleeping in a closet. Do we, do we build the house that will function for our family better than the one that we currently live in? And we don't want to sell our house because it will make really good income.

[George Campbell]

Okay, well, how much is it going to cost to build this house?

[Caller]

It's probably about a million.

[George Campbell]

Okay, and what does that get you? What does a million get you? Is this like a four bedroom house? Like what does it get?

[Caller]

Yep, four bedroom, like I said, Keytown. It costs quite a bit to build here. And I think a million might be being a, you know, between 1 and 1.2 for the plan that we have. But yeah, it's a four bedroom room and three baths.

[George Campbell]

Okay, four, three. And what do you have saved so far towards this? Not including emergency fund. Yeah, not retirement. You know, the deal.

[Caller]

So we'll just give you kind of our like cash on hand is 500. And that's, that's kind of just in the bank right now because we were needing to pull out a lot to build this current apartment that is, that I was talking about.

[George Campbell]

Okay.

[Caller]

And then in our Roth 401K, we have about 450. And then our joint account that. So the Roth, you know, that's our retirement. We can't do that.

[George Campbell]

But that's off the table, huh?

[Caller]

Yeah. So 275 right now. And our current property is valued. We don't really know because we just built this, but I would say probably 1.5.

[George Campbell]

How much do you guys make? What do you take home every month? Well, because that's really what this, that's really what this is all riding on. Because I can tell you right now, if you tell me, hey, I'm looking to do a house for 1.2 million and I just plug this in. The Ramsey Solutions Mortgage calculation calculator. If you put the $500,000 cash down on a 15 year fixed at. I'll put in 5.6 for now. I don't have it on my screen what the current rates are, but that's going to put the payment around 7,000 bucks a month. So as long as this is no more than 25%, you're on the right track in my. Unless you say something crazy in the next few minutes.

[Dave Ramsey]

Yeah. Well, what is your average take home pay?

[Caller]

I. We own a business and we, I would say about it changes year to year, but I'd say about 250.

[George Campbell]

Okay.

[Dave Ramsey]

Is there annual income?

[Caller]

Yeah.

[Dave Ramsey]

Okay, got it.

[George Campbell]

Because yeah, I need you to be taken home.

[Dave Ramsey]

That puts you at. My guess is you're probably taking home around 12 to 14amonth.

[Caller]

Well, we pay ourselves once a year because it's a seasonal business.

[Dave Ramsey]

So what do you pay yourselves? 250k. We're just trying to find out your after tax monthly income to figure out if this mortgage is going to make sense because I'm not. If you, you know, I understand wanting to pay cash. It's not a sin. If you go back to baby step six for a season with the intentionality of we're going to pay this off pretty aggressively quickly to get back to baby step seven.

[Caller]

Like our plan would be five years.

[George Campbell]

Well, if, if you say, hey, we, we, we pay ourselves $250,000 cash in our pocket and we split it over 12 months. So it's around 21,000amonth. It's, it's getting you close. Close. It's getting you close. But that mortgage is still creeping up.

[Caller]

Right, but then what would you guys say if, if our house, you know, our house would rent for about 4,4500amonth and the apartment for about 2,500, 4,525.

[Dave Ramsey]

So you can rent out both separately.

[Caller]

Both separately? Yes.

[George Campbell]

Right. That, I think that gets you there because that's now considered income.

[Dave Ramsey]

Now there's still some, you know, variables with that. So you don't want to count it 100% because you've got vacancy, you know, tenant issues. All of that is going to play a part. Yeah, but I feel like you guys are thinking about this pretty clearly. The only concern is you'd have, the majority of your net worth would be in real estate. So that's the only thing to think about if you have, you know, 450k in retirement. But I think long term you guys are 36. So over time your retirement is Going to surpass your. Your home. And the other thing to think about is, is this the same property? If you were to sell one day, could you sell them separately? Is the. Is the land big enough?

[Caller]

Yeah.

[Dave Ramsey]

Okay, great.

[George Campbell]

Okay, So I just could. And go ahead, go ahead.

[Caller]

Oh, no, I was just saying, like, that's definitely been a huge. And there's more land that we could. I mean, if we wanted to divide off some, we could just sell it as property, too.

[Dave Ramsey]

You could, like, parcel it out and just sell pieces of it.

[George Campbell]

Okay, so if you tell me, if I. If I hear these numbers right, which I think I did, one rental is 4500, the other one is 2500.

[Caller]

Yeah.

[George Campbell]

So that's another $84,000 a year. And that gets you there.

[Caller]

Comparable.

[George Campbell]

If you keep that and it's consistent, that gets you to just about $2,800 or $28,000 a month, which is right where you'd want to be for this mortgage. But what George said is very critical. Usually we would not tell somebody. It's the same as somebody said, I can buy a house, but as long as I have somebody living in the rooms. Right. To make the mortgage for you guys. That's the critical part on this. That $84,000 is really dependent on. Is this person going to be dependable month after month after year?

[Dave Ramsey]

And will this business income be dependable? You got to think about that, too. But you got a green light from us if you check all those boxes. Congratulations.

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[George Campbell]

Our Ramsey show scripture and quote of the day is Proverbs. Proverbs 22, 26, 27. It says, do not be one who shakes hands in pledge or puts up security for debts. If you have nothing with which to pay, why should your bed be taken from under you?

[Dave Ramsey]

Shots fired.

[George Campbell]

Shots fired for sure. Doug Larson said people are Living longer than ever before. A phenomenon undoubtedly made necessary by the 30 year mortgage.

[Dave Ramsey]

That's hilarious.

[George Campbell]

Dang. 30 years though, that's a short lifespan. Doug.

[Dave Ramsey]

Come on, Doug.

[George Campbell]

Come on, Doug.

[Dave Ramsey]

I mean, he lived a good long life there based on the timeline.

[George Campbell]

Yeah, that's for sure. We got Damon in Arkansas. Damon, how can we help today?

[Caller]

Yes, hello. Thank you for taking my call. I recently got done paying off my student loans. I didn't graduate. I didn't know what I wanted to do with my life. But I'm at a point now where I'm the sole provider for me, my wife and our four kids. We have two children who have been diagnosed with autism that'll she has to stay at home with with them. So again, I'm just. I'm the sole provider. But I have, I have a car note for 15,000, then I have my mortgage for things. I think I have 150,000 left on there. Should I go back to school? Should I, Should I.

[Dave Ramsey]

What are you doing now?

[Caller]

I work in a factory.

[Dave Ramsey]

What do you make?

[Caller]

17 an hour.

[Dave Ramsey]

Okay, so that's about 35 grand a year. Is that full time? 40 hours a week.

[Caller]

Yes.

[Dave Ramsey]

And what did you go to school for originally that you didn't finish?

[Caller]

I was a physics major.

[Dave Ramsey]

Okay, so what would you go back to school for today if you were to choose a different career path?

[Caller]

Still don't know. I see a lot of people in that, in this factory have degrees that I would have not even gas considered would have gotten them their positions. But it almost feels like I just need a degree in any.

[Dave Ramsey]

Well, I don't want you to get a degree for the sake of getting a degree. And then you're back where you are going. Okay, now what? Nobody handed me a job all of a sudden. So I want you to have some aim and purpose with this. And we can help with that. We'll send you our friend Ken Coleman's book. Find the work you're wired to do. It has the get clear career assessment inside and I think it'll help point you in the right direction. But in the meantime, I mean, 17 bucks an hour you can make doing just about anything. And if you're handy and you can go into the trades, there's a lot of money to be made there. You could triple your income within a couple years of years.

[George Campbell]

Yeah, because that, that does bring up the bigger question, which is whether you went in trades, whether you needed certificates, whether you needed a degree. What. What would be the plan in your mind to pay for this? Because George and I definitely don't want you to go further into debt for education. We value education, we just don't want you to go into debt for it. So what do you think a plan could look like?

[Caller]

I would like to not have any debt at all at some point with having my car paid off and getting my mortgage paid off. Ultimately I want to have no debt, I think.

[Dave Ramsey]

How are you getting by right now? I'm curious. Damon, you're making 35k a year. You got the car payment, you got the mortgage, you got four kids, stay at home, spouse. How have you been surviving?

[Caller]

It is a struggle. Every month, man. Every month. It, I mean we, we have a nothing on paper budget, but essentially we just have our bills that we have to pay and then whatever's left over, you know, is our food, our gas, we make, I make not enough to have anything left over at the end of the month.

[Dave Ramsey]

But you're able to cover all the bills, just nothing more? You're not going into debt to cover any bills?

[Caller]

Yes.

[Dave Ramsey]

Wow, that's impressive. I just want to applaud you for making all this work even without a budget, which I encourage you to make one. And I'm going to hook you up with everybody dollar which will give you that plan as well as the get clear career assessment.

[George Campbell]

Now how were you able to pay off the student loans on this?

[Caller]

I, I had, I was, I had a different job, I was getting different hours and we, we moved to this town where I'm at now and I, I lost that job and now this is, I just, we, we had some residual income left over that, that we decided like, okay, you know, I may be able to go back to college and get a better income. Let's just toss it towards these, what's left of my student loans. I've been paying on them for a decade.

[George Campbell]

What were you making before and what type of work were you doing?

[Caller]

I was in a tipped position, so it's tough to say. Made 55,000 in 2025. Yes, 2024. Excuse me. And I was a, I was a cage cashier. I paid people jackpots. Usually people are pretty happy to see me.

[George Campbell]

Oh, okay. Well, the good news is you've seen a higher earning potential like you've seen, okay, I know I can go out in the world and make $55,000. I would just apply that. Honestly, if I were you, I might just get curious and start looking online and just start applying for things. You can do that for free, right? And start. Ken Coleman would say to use your proximity and see who you know, Ask around, ask your friends. I'd make a list. My goal tonight would be I'd make a list of 10 to 15 people that I could reach out to and say, you know, what are you doing? Have you heard anything? Is there anybody hiring and what you're doing and just start making some phone calls and start trying to make some connections and just see what's going on in your group and your friend group and your church group are people working places where they need employees. And that would be a great way just to get started, just to see. See what? What can I pull from? And who knows, you could end up landing something where you're making a little bit more and that could lead to the next step while you're figuring out the work that you're actually wired to do here. Very, very good question.

[Dave Ramsey]

Hang on the line. We'll send you that assessment and every dollar. Damon.

[George Campbell]

All right, let's go to Caleb who's in Fort Bragg, North Carolina. Hey, Caleb, how can George and I help real quick?

[Caller]

Hi. How are you guys doing?

[George Campbell]

We're doing good. We're right up against the clock. How can we help help you?

[Caller]

I. So I am currently on baby step two, but I'm going to be out of baby step two in about two and a half months. When I get out of it, I did some budgeting. I realized I'm going to have about $2,700 every single month just for free.

[George Campbell]

Nice.

[Caller]

And my expenses are going to be like my six month emergency fund is literally going to be less than baby step one. And so I do need to buy a car and I'm looking to buy a car and obviously my emergency fund is going to change when I have to buy insurance. So my question is, one, should I buy a brand new car or a piece of crap? And then two, how much should my emergency fund be since my expenses are so low?

[George Campbell]

A very good question. First one is, I love that you're going to free up that much margin. What is so urgent that you need a new car right away? Because if I could hold off on the new car and save the emergency fund first, I would do the emergency fund first. And you want to build your emergency fund based on your current or very quickly foreseeable monthly expenses. It's a bare bones budget. So this is if I took out all the bells and whistles of my budget that aren't necessity. And I said, okay, it's rent, it's transportation, it's insurances, it's daycare. All those things that if you hit an emergency situation, maybe you lost your job, maybe there is a diagnosis. Obviously there'd be certain niceties you'd probably cut away and you'd keep things down to bare bones. So three to six months is what I'd, I'd aim from. If, you know, you need a car, I'd save up the three months, do the car, and then come back and do the six months. But if the car is really just something that's a nice to have, George, I would go ham on the six months since it's just you. And then I would start to save up for the car that you want.

[Dave Ramsey]

And I would, I would not go, hey, it's either going to be the worst car I've ever seen or the nicest car I've ever seen. Get something reasonable. What is it? What is your income?

[Caller]

My income right now is about 4,500 a year.

[Dave Ramsey]

45. 45,000?

[Caller]

Yeah, 45,000.

[Dave Ramsey]

Oh my goodness gracious, man. What are they paying you over there? Okay, so 45 grand a year. You're single?

[Caller]

Yes.

[Dave Ramsey]

Is this the only thing with wheels and motors in your life is this one car?

[Caller]

Yeah, I don't have a car currently.

[Dave Ramsey]

Okay, cool. So you want no more than 20k and for a guy your age, I think 20k is even the upper, upper, upper limit. I might shoot for something more like in the 15 range. That'll just get you from A to B. It's decent, it's used. Do not go buy a new car, don't go to the dealership because they're going to try to get you into a giant payment. And go, man, you can get the brand new one for just a little bit more. What kind of payment you looking for? You're paying cash, you're buying used. And I would, I like the idea of a ten thousand dollar emergency fund. For sure.

[George Campbell]

Yeah, absolutely, absolutely. Well, George, it's been fun, but it's also over. Oh, I'm sorry. Hey, remember, there's ultimately only one way to financial peace and that is to walk daily with the Prince of peace, Christ Jesus.