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Dave Ramsey
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Jade Warshaw
Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network in the Fair Ones credit union studio. This is the Ramsey Show. I'm Jade Warshaw. Next to me, GK George Camel. Taking your calls. Really? For the next three hours, it's gonna
George Kamel
feel like two hours to going to fly by.
Jade Warshaw
Oh.
George Kamel
Because literally the amount of show they hear.
Jade Warshaw
That's right.
George Kamel
Ads and radio breaks.
Jade Warshaw
That's right. But for us, it's three hours in the studio and we've got Sam, who is on the line in Cincinnati, Ohio. Hey, Sam. How can we help today?
Caller
Hey, can you guys hear me?
Jade Warshaw
We can. Can you hear us?
Caller
I am 19 years old. Sorry. Yes, I can. 19 years old. I just graduated high school. I'm heading to college about 45 minutes away. I'll be coming home on the weekends because I have a lawn and landscaping business that I like to keep up. And so I have a truck that's not good on gas mileage. So I'm looking to buy a car. Something small, like a Honda Accord. My parents told me to buy something a little nicer and reliable, maybe around $20,000. But that would take me down really low on cash, and so I'd have to take out a loan. I'd rather buy something around $10,000 and just. Just pay it in cash and just get something that just gets the job done.
Jade Warshaw
I love that.
George Kamel
Have you ever heard the phrase that people vote with their wallets?
Caller
No.
George Kamel
When it comes to politics, they vote for what's best for them financially. I think your parents should vote with their wallet if they're going to have a say in you taking on a car. Right. So unless they're paid for it. I know they want Sam to have a nice, reliable car, but Sam can only afford an $8,000 car, and he's going to get the best one he can for that money.
Caller
Yeah.
George Kamel
That's where it ends.
Caller
I will say I have around 20,000 now in cash. And up until August, I'll be making anywhere between 1500 to 2200 a week. Wow. And so. And then I have another around 16,000 in tools and equipment. That's all paid off. That was all paid in cash.
Jade Warshaw
Wow. Good job. Excellent.
Caller
Thank you. So I just. Just. I don't know if that changes the scenario.
Jade Warshaw
It doesn't. It doesn't. What that tells me is you're so smart with and you understand the power of cash, and it Sounds like you understand the power of delayed gratification. Right. And that's kind of what this car business is about. It sounds like you don't want to go all the way down to zero in savings, and I actually think that's very wise. And I think you understand. I'm 19. I don't need a $20,000 car. So you understand the difference of needs versus wants. So that's what's gotten you this far. And your parents, God love them, I think that they're, you know, they're not trying to jack you or trying to do anything negative. They're just. They're just. They want you to have a safe car. And they probably, somewhere in their minds don't believe that you can find a $10,000 car that checks all the boxes. And I think that when you do it, they'll go, oh, that is nice. That does work.
George Kamel
I'm curious, do they know how well you're doing, how much cash you have?
Caller
Yeah, they do. My dad's an accountant, and I like to call him my own accountant. He runs all my numbers and does all that stuff.
George Kamel
OK, so how much of that 20k would you call your emergency fund
Caller
in terms of expenses? I guess when I go to college, I honestly don't know how much I'm going to spend. It's in a little town called Cedarville, and there's not much to do, so I'm guessing I'm not going to spend any more than, I don't know, $300 a month.
Dave Ramsey
Wow.
George Kamel
Well, let's say 10,000 is your emergency fund. Okay. And let's say the other 10,000 becomes your car fund. And you can make 1500 a week and bank most of that, right?
Caller
Yeah.
George Kamel
How many more weeks can you work
Caller
now? Until mid August, so I don't know how many weeks?
George Kamel
Oh, that gets us like two months. Okay, we'll call it seven weeks.
Dave Ramsey
Right.
Caller
Okay.
George Kamel
And let's go on the low end. You said you can make 1500 bucks a week. On the lower end, yes. Okay, 1500 bucks a week. Seven weeks. That's over 10,000 bucks. So you take your 10,000, you have, call that the car fund, a new 10,000 from your future income. Now, you could buy a $20,000 car in cash. Do you need a $20,000 car? Absolutely not. You could find a great Honda Accord. That's a, you know, 2016 for 12. Fifteen grand, probably.
Caller
Sure. Okay. Yeah. Yep. Well. Well, I appreciate you guys.
Jade Warshaw
You've got some options. I just, I love to hear a responsible young Lad handling his money with care. Love that. All right, Abby in Birmingham, Alabama is next up. Hey, Abby.
Caller
How can George and I helped a question about life insurance. So I'm 27, about to be 28. I've had a $75,000 whole life since I was 22. But I just recently went through Xander from listening to y' all and got a 200,000 term policy, which, you know, you can keep it till you're 80 or whatever. And I went to go cancel my whole life the other day. Talked me out of it because they were like, well, what happens when it gets to the point you can't pay it anymore? Like you're. Because, you know, the bands are like five years. So it goes up like a percent or two every five years now that, well, I'm doing Dave Ramsey and that you're supposed to be self insured by the time that happens. Anyway, they were, you know, Dave Ramsey owned part of Xander. He. He makes money off. Blah, blah, blah.
George Kamel
That's hilarious. So now you know they've no integrity because they've already lied to your face and they're trying to convince you to keep it so they can keep their commissions.
Jade Warshaw
Yeah.
George Kamel
So a little bit of a vested interest to ask them if you should keep it.
Caller
Alrighty. Because I was gonna do the surrender or whatever and you should. He was telling me all that. And I mean, what do I. I know it's a scam in the end, but there's also this thing about you can pause it, quit making payments on it, but not really surrender.
Jade Warshaw
Okay, so here's.
Caller
Here's the issue.
Jade Warshaw
No. Because you two products wrapped up in one. Right. Part of what you're paying every single month is being invested and it's being invested at a very poor rate of return. Very, very bad. Somewhere between 1 to 3% is what I would estimate.
George Kamel
That cash value is crawling. You could do better in a high yield savings account.
Jade Warshaw
Right.
George Kamel
Than you could with that cash value.
Jade Warshaw
If you pass away, your family doesn't get to keep that cash value. That goes away. That goes back to your insurance agent who sold you this. Right. And so what we're suggesting is let's just pay for insurance. Like, let's just pay a little bit or a lot bit less per month on the term life insurance. Then the extra money that you're not paying in that premium, you could take that and invest that at 10%. Or if you don't want to invest it, you could apply it to your budget. Right. Whatever baby step you're on. So you're saving yourself money by simply buying insurance. And if you believe what we teach about the baby steps, there is a time to pay off debt. There's a time to save money. There's a time to have insurance. There's a time. Right. There's a time to invest. And so that's a great way to think of it is right now is the time to buy insurance. When you're ready to invest, you'll be doing that at 15% and you'll do be doing that earning probably 10 to 11% in the market.
George Kamel
What's your current payment you're making for that whole life insurance policy?
Caller
I think it's 51 87amonth.
George Kamel
So going and say 5251 87, like $51.87?
Caller
Yes, sir.
George Kamel
Okay. And the death benefit is real small. 75,000. That's not going to get you very far. If something were to happen to you, what is your household income or your personal income?
Dave Ramsey
Sorry
Caller
about. Probably right. At 30, I'm like a part. I clean houses. Right now I'm actually a nurse, but I had a baby and been doing what I can do to cash flow while my husband's working as well, so.
George Kamel
Cool. So we recommend having 10 to 12 times your income. So you're actually a little low on that 200 side for Xander, I would up it to 300. You can also get another policy versus just trying to swap it out if you already have it. But. But surrender that policy. Don't trust them. Run far, far away from any kind of permanent life. You might as well light your money on fire.
Jade Warshaw
Yeah. Just remember, the purpose of life insurance is for anybody who's dependent on your income. If something were to happen to you, this is to replace that. It's to make sure that they're okay. And $75,000 is maybe gonna get them a year of life, but you wanna set them up for life, which is why you want 10 to 12 times your income.
Dave Ramsey
Let me tell you what I get asked all the time. When should I get term life insurance? How much do I need? Is it affordable? Those are the right questions to be asking. So let's take a quick review. The fact is, term life isn't a baby step. So if anyone is dependent on your income, you need to have 10 to 12 times your income in life insurance now. And most people are surprised by how affordable term life really is, even if you're not in perfect health. Look, I understand the hesitation since most insurance companies make it more of a hassle than it needs to be not at Zander Insurance. They're not an insurance company. They're a broker that works for you. That means they'll shop and compare the top term life companies to find the most competitive options on the coverage for your family. For almost 30 years, I've recommended Zander for straight answers, competitive rates and coverage that actually protects your family. Call 800-356-4282 or go to zander.com for a quick and easy quote. That's zander.com.
Jade Warshaw
All right, back to the phone lines where we have Emily in Omaha, Nebraska. Emily, you're on the line. How can we help?
Caller
Hi, how are you?
Jade Warshaw
Excellent.
George Kamel
How are you?
Caller
I'm, I'm doing all right, thank you. But honestly, I'm on the show today to just ask as someone who has, I really feel like exhausted almost every option and has done everything to cut spending and all those things to pay down her debts. Like, what are suggestions or recommendations that you have to generate more income to keep aggressively attacking that. Yeah.
Jade Warshaw
So tell us where you're at right now. You've cut your budget back. And with everything pulled back to a skeleton, how much margin do you have right now?
Caller
Very, very little. So I was, I recently became unemployed. I was working on a minimum wage budget before and after leaving that job, I thankfully got a job today, but I won't start till two weeks and that is going to like pay me 20 an hour. So it's significantly more than what I was working with before. But before it was, I think I only had about $20.
Jade Warshaw
Wow.
Caller
After, after, after your.
Jade Warshaw
So you've been, you've been staying alive like the Bee Gees, like you've been barely making it and now there's like, you know, sun starting to part through the clouds and it's, you know, you've got $20 an hour. This is behind on anything.
Caller
Yes, yes, I am.
Jade Warshaw
Tell us what you're behind on.
Caller
Yeah, I am behind on my credit card debts and a personal loan debt.
Jade Warshaw
Okay. What. So you start this job, you'll be working 40 hours a week.
Caller
Yes.
Jade Warshaw
Okay, excellent. All right, so let's go through the debt so we can get a picture of it and then we can try to help you find kind of where you are today and where you need to go next. So we know you're behind on the credit card, the personal loan. What are the total amounts of those debts?
Caller
In total, it minus like my student loan debt, it's about 20, 29,000.
Jade Warshaw
Okay, 29,000 minus the student loan debt.
George Kamel
If we Added student loans in there. What's the total?
Caller
About 50,000. Okay.
Jade Warshaw
Okay. So another 20,000 of student loan debt.
Caller
Yes.
Jade Warshaw
Okay, cool. Alrighty then. Yeah. So you've got this job, you're starting to work. The first thing that you're going to do when you get that first paycheck is let's get current on everything. Let's get current on everything, and let's make sure we've got our four walls working. First thing you're going to do is I pay my rent and then I pay my utilities. I make sure there's gas in the car and I make sure there's groceries. Those are the four things first. And then we're getting current on anything that's behind. So that's the first thing. Write it down in your notebook. And then after that, we can begin to say, okay, what's a normal rhythm going to look like going forward? We've got everything taken care of. We're going to make sure to give you every dollar, which is how you're going to budget your money. Do you have it already?
Caller
Every dollar app? Yeah, I do.
Jade Warshaw
You do have it. Okay, excellent. Have you opened it? Have you gotten started in it?
Caller
Not yet. I recently came across it.
Jade Warshaw
Okay, so that's homework number two. Tonight you're gonna open up every dollar and you're gonna do the math and say, okay, If I work $40 a week at this new job, what are my paychecks gonna be? Do you get paid biweekly? If you get paid a month, however you get paid, put it in there. And then we're gonna start to run out all the things I just said. First you're doing those four walls, then you're getting current on everything, and then we're gonna find out how much margin there is and whatever margin you have left that is going at your smallest debt on top of the minimum payment. So your smallest debt is probably one of these credit cards, I'm guessing. How much is it?
Caller
Or, sorry, no, it's a bill from the IRS right now. Is the smallest.
George Kamel
Did we factor that into the 50k or is that on top of that?
Caller
That's. That's factored in.
Jade Warshaw
What do you owe them?
Caller
$986.31.
Jade Warshaw
Okay, cool.
George Kamel
So that's the first goal. We put the IRS debt at the very, very top because they can really screw up your life and they basically have unlimited access to your financial world. So we're gonna attack that one first. Luckily, it's the smallest, so it'll be gone real Fast. So I'm curious. You said you had 20 bucks left at the end of the month with your old job. Now with the new one, I'm gonna guess you're gonna be taking home like 2,700 bucks a month after taxes, hopefully. Okay.
Caller
Yeah.
George Kamel
So now how much margin would you have then? If you kept your expenses this low and made your minimum payments on debt, how much extra could you have?
Caller
Potentially? 1.
Jade Warshaw
We can help you if you tell us what you were making before.
Caller
I was making 14 an hour before.
George Kamel
Okay, so you got a. You're getting about a $12,000 raise. So let's call that. You're getting an extra 7, 800 bucks a month.
Jade Warshaw
That's big. That's major for you, but it's good. But I don't want us to stop there because how old are you, Emily?
Caller
I am 27.
Jade Warshaw
Okay, you're 27 years old, which is you're at a major crossroads right now. You felt what it feels like to struggle, but at 27, I don't want you waking up at 37 feeling the same way. Right. I'm making 20 bucks an hour. I'm trying to make ends meet. I'm just l looking for margin. So I want the bigger goal to be. I don't want to feel like this. I don't want to be floundering. I want a plan. And so I'd be looking for what is it that I want to do with my career? What do I see myself doing five years down the line, 10 years down the line, 20 years down the line? And I'd start making a plan for what it looks like to start accomplishing that. Because we can give you quick fixes for how to get margin. Because the truth is, yeah, you are going to need a side hustle on top of this $20 an hour job. You are going to need to pay off this debt. You are going to need to out figure handle that side of things. But if you can start looking on the career side of things, that's really what's going to break you free long
George Kamel
term and short term. There's a lot of things you can do to up the income. And Emily, let me encourage you. I was exactly where you were when I was 23. I started at Ramsey. I was 40 grand in debt with my, my consumer debts, credit cards, student loans. And I was making about that. So it was overwhelming to see those numbers. So what I started doing was finding out what stuff do I have around the house I could sell. Is there anything I could flip that I could buy cheap on Facebook and then sell for more. Can I do any of these deliver delivery jobs? Back in the day they didn't even have doordash and Uber eats, so I was doing Uber and Lyft driving people around nights and weekends. And then look at your tax withholdings. If you're getting, you know, a big refund at the end of the year, we can change that. You can. Are you doing any investing right now?
Caller
I am actually.
George Kamel
Okay. I would pause that down to zero because that's going to free up a couple hundred bucks probably. Right?
Caller
Yeah.
George Kamel
Perfect. So every single extra dollar we can find is going to get thrown at this debt and you will get back to investing in no time and you will retire a multimillionaire if you follow plan. And then there's also all kinds of things you can do like babysitting, dog sitting, pet walking.
Jade Warshaw
I mean just babysitting is where the cash is. That's where the bag resides.
George Kamel
I don't know when babysitter started charging like 20 something dollars an hour, but it's gotten insane. As someone who has to pay these
Jade Warshaw
people, I have come across and am sorry to say that I have paid as much as $30 an hour for a babysitter. Huh. Now this, this is the type that, you know, cleans up after the kids, puts everything away. We'll fold the laundry, we'll put things, you know, it's not just I just sit there on my phone while you write. Yeah. So I would encourage you to look into some of those service based positions because people will pay because they need
George Kamel
it and you can jump on it. There's apps like, you know, in sites like care.com you make an account and people will find you. And if you have, you know, if you look like a sane person with a decent profile picture, they'll go, okay, yes, let's see if, if Emily can handle this in Omaha. And so there's going to be a lot of things you can do. I'm going to send you my book, Breaking Free from Broke. There's a whole chapter called Margin is Breathing Room where I show people, here's all the ways you can spend less, here's all the ways you can make more. That's it. Those are the two levers. And you've already done so much good work in spending less. So now it's how can we make more in the short term and then long term, how do we get that core income up with our full time job? But I have a lot of faith that you will get through this. My guess is less than two years.
Jade Warshaw
Yeah, I do, too. But the key thing is this is the crossroads. And for anybody listening, when you have that I've had it moment, which is what Emily essentially has had, which is I'm tired of struggling. I'm tired of just staying alive. I'm tired of just holding on by, you know, my fingernails to get through a day. That's when the rubber meets the road. And you have to decide if you do the things that we teach. The time is going to pass anyway. And to George's point, you are going to wake up on the other side. You'll be out of debt, you'll have savings for the first time ever, and you'll be well on your way to building wealth.
Dave Ramsey
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Jade Warshaw
Back to the phone lines. We we've got John, who's in Reno, Nevada, forever reminding me of Sister Act. What's going on, John? How can we help?
Caller
Yeah, hi, yes, I have a question. Right now my daughter's not speaking to me because, you know, there was comments that I said about me not putting myself in debt for her to go to college. I never said I wouldn't help her. It's just, you know, I don't want to put my family too in danger for putting me in a loan. So then after that, I mean, it's been probably now a year and three months that she hasn't talked to me. And I guess my Question is, I make about 185,000. I have $45,000 in debt. I still want to help her, but I just don't know how to do this or how to even explain it to her. It's just, you know, it just got pretty ugly.
Jade Warshaw
Can I ask a question? I feel like, for whatever reason, I'm making an assumption, and I don't want to make it if I'm wrong. Is your wife involved or is this a. Is. Is it just you and her, or is there a wife involved? Tell me. Tell me more about your family situation.
Caller
So.
So, yeah, so me. So me and my wife are willing to help out. Right. And the only thing is, just one of the things that we don't try to do is put ourselves in loans.
Jade Warshaw
Understood. I just wanted to make sure I understood the family dynamics.
George Kamel
So when did this conversation start? I'm curious. Was it because this is like, we know that eventually someone might go to
Caller
college, and then the word June 2025.
George Kamel
That's when you started the conversation?
Caller
Yeah.
George Kamel
Okay.
Jade Warshaw
And when is college supposed to begin?
Caller
Well, she actually graduated this year, and she decided to go out of state in college, too.
Jade Warshaw
Okay.
George Kamel
And you guys never had this conversation?
Caller
We had the conversation a couple years back, but her mom and what? I'm with her mom.
Jade Warshaw
That's what I was trying to get.
Caller
Yeah, I guess they never give me type of information or anything. You know, like to be able to clear things out. They just like, oh, you need to pay for this. And then in that same conversation, they were like, oh, well, she. Can you at least help for the car? And I was like, what car are we buying? So there was never really any type of information given to me other than just little bits and pieces. And then you just expected me to do it right there and then.
Jade Warshaw
Okay, understood. That's the family dynamic I was trying to get to. I had a sense that something. There was a separation or, you know, your wife is not in the house. Here's what I think is happening, and I could be wrong. But just by the way that you're saying your words, it sounds more like you're talking more about what you're not gonna do versus talking about what you are going to do. And I would be leading the conversation with exactly what I'm going to do to help. And I think if you do that, then it'll cause them to hang out there as well and remember that from the conversation. For example, if she says, but, Daddy, I want to go to this school, and I. The only way I'M going to go is gonna, I need a thirty thousand dollar loan. And you say, I'm not taking no thirty thousand dollar loan. Right. That's not gonna work. But if she says, but daddy, I want to go to this college and you say, honey, I'm going to give you $15,000 for college. It's up to you to figure out which school you can go to, where that money will go the furthest. Here are my suggestions. Do you see what I'm saying? That's a very, that's a very different conversation. Now. You've never said no. You've never said no. You've just said, here's what I'm saying yes to. And I think that that would go a long way. Because if what's happening is true, which is they're having a bunch of side conversations and they're, you know, marinating on this and maybe inflating it beyond what you've said, your best protection is to be able to say over and over, I'm giving her the 15,000. I'm giving her the 15,000. I've said I would pay, you know, up to this point for this particular school. So if you're being accused of not caring, show that you care by saying, here's a school that works. It's in my budget. If we all pool our money, we can do it like this. Right? Let's solve the problem versus everybody talking about what we can't do.
Caller
Yeah. And that I did try, but their thing is like, no, she needs to go here. That's what she wants to do and that's what she's going to do. And at that point I was like, hey, well, I'm not going to be able to do that, especially out of state. And then you have to pay out of state fees too.
George Kamel
So are you not helping at all financially right now?
Caller
Yeah, so what I did was just put, you know, I put myself in child support and all that stuff. So I've been paying all that child support and that's pretty much it. And when, whenever she comes to, she came to the house before, you know, she, you know, she had her own room, her own place to be. And I had, you know, told her, like, hey, if you need anything, you know, come to talk to dad.
George Kamel
Well, not anything.
Caller
Yeah, like, whoa. What I meant like when it came to school.
Jade Warshaw
Right.
Caller
You know, let me know and we'll talk. But I don't need to be talking to your mom because it's just become such a toxic.
George Kamel
Well, that's what I Want to know what is the relationship with mom versus you and how long.
Jade Warshaw
And how long has it been like that?
Caller
Yeah, so. So it's been 18 years. I never married her, so I have my own family. My.
Jade Warshaw
Okay.
Caller
Yeah. So, yeah, with my wife. I never married her. So she. I never been with her ever. Ever since my kid was born.
Jade Warshaw
So this is just kind of been, for lack of a better word, like baby mama drama for 18 years, back and forth, back and forth. Okay, that makes a lot more sense now. I just want to. Sorry, I want to clarify, just to get down to brass tacks. We understand you're not going into debt. I would not. I would agree with you, and I think George would too. We're not going into debt. I'm not signing a parent. Plus lo not gonna recommend for her to go into debt. How much. How much money do you plan to give her every month or every semester for college? What's the number that you have in
Caller
your head that I don't have. But I mean, I could come up with the number.
Jade Warshaw
That's what we need.
George Kamel
Could that restart this relationship? I think if you going to her and saying, hey, I have really screwed this up and I'm so sorry. There was a lack of clarity. I did not communicate well. I communicated too late, and that's on me. What I do want to do is restart this conversation and create a plan for you to go to college debt free. And here's how much I can do right now based on my financial situation. Would that get her to perk up?
Caller
I'm hoping, yeah.
George Kamel
Because there's so much deeper here. This is. There's a lot of relational issues. This money thing is just like one baby symptom of years and years of broken relationships. And I think she's now seeing this as, man, this guy hasn't been there for me relationally, and he's not even here for me financially.
Caller
Well, yeah, and that's how it seems. Right. And the thing is that we always. I always been there for her. She's stayed with me, like I told you guys, like every weekend and stuff like that. I made sure that I went to the courts, got child support on myself, and then made sure that I had visitation for with her because I knew that we're gonna try to pull her away. So I, like, made myself, you know, available for her.
Jade Warshaw
But now I just.
Caller
Everything got manipulated.
Jade Warshaw
There's two conflicting family dynamics. You've got a family over here who we're a no debt family. And then there's a family on this end for her, that's like, hey, whatever it takes, we're going to do it. And she's caught in the middle of that is what it sounds like. I, I agree with George wholeheartedly. If you come to her because I'm gonna tell you like this, my dad said to me, I'm not. When I, when I said I want to go to this school and I need a loan, he said, I'm not doing student loans. He said to me straight up, he was like, you better get a scholarship, you better be good at sports because I'm not taking out no student loans is what he said. And I was like, okay. You know, and I remember at the time feeling away about it. Cause you know, you're 18, you're 17, you're 16, you're young. But on this side I'm like, oh, thank goodness. I'm really glad that he didn't ensnare both of us. You know, I went on and I was hard headed and took out some loans, but at least it wasn't a parent plus loan and at least I didn't ensnare him in it. So I think on the flip side, like longer down the line, she's going to appreciate that. But if you do what George said and you humble yourself and apologize for not starting this conversation earlier as the adult she is, that's going to do something to her on the inside because parents don't apologize to children enough for the mistakes that they make. And so please, please do that and don't do it in the heat of the, of the, you know, the next conversation. You, you go first, call her up and get, hey, can I take you out to lunch? Can I take you out to dinner? Sit her down and go, I messed up and here's how I, how I did it. And I think that's going to change the whole landscape from us going forward.
Caller
Yeah, no, I agree.
George Kamel
Cool, cool, cool. Well, it's a great wake up call to all the parents out there. Do not start this conversation as your child is touring schools. Start this conversation at 12, at 14, at 15, so there's no surprises. Your kid knows exactly where you stand. Hey, I will cover four years at an instant state school.
Jade Warshaw
That's right.
George Kamel
That's what I'm willing to cover.
Jade Warshaw
And if you can't, if you don't have the money, that's okay. As long as you have set the expectation. I don't have the money for college, you're going to have to get a job, you're going to have to do work study. You're going to have to go to community college. As long as you set the expectation, that's all we can really ask of you.
George Kamel
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Jade Warshaw
may vary, and no specific outcome is guaranteed. All right, back to the phone lines. We go where we have Timmy, who is in Dallas. Dallas, Texas. Hey, Timmy. How can George and I help you out today?
Caller
Hey, good afternoon. Hey, shout out to smart money happy hour. Hey, represent.
Thank you.
Jade Warshaw
Keep it going. You're welcome. It's Friday. I know you guys aren't gonna see this till later, but it's Friday, so I feel like I'm on a different level.
George Kamel
We're vibing.
Jade Warshaw
How can we help, Timmy?
Caller
All right, so my wife did call last week about our mobile home. So we owed about 80. We owe 80. 98,000.
Jade Warshaw
Okay. I think I remember this.
Caller
Finally got an appraisal. It was a paola in Dallas, Texas, but we finally got an appraisal, and the difference is $33,000.
Jade Warshaw
That's what it's worth.
George Kamel
You're saying it's worth 65.
Caller
Okay, 5. Yes.
Dave Ramsey
Okay.
Jade Warshaw
So you're 33 upside down.
Caller
Yes. Yes.
So that's fun. So we're. We're already. We're in baby step three. And so we have right now saved up. I want to say 2000. And so now is now. It's like, which way do I go? Right. I want to sell this Thing like Dave said last time. It's just. I just. I'm financially illiterate. I just. Just don't know what to do.
Jade Warshaw
Yeah, I, I would. I. This is going down every single day that you wait. For those who didn't hear that episode. Yeah. Your wife called in. This was something that was really keeping you guys stuck. And we suggested that you sell it right away, get it appraised, sell it right away. So you've got the appraisal. And the way to get from upside down on this is you've got to get a loan for the difference. And as as much fun as that's not going to be, it's better to have $33,000 of debt than to have $98,000 of debt. That's just creating a bigger gap day by day by day. Right. Basically going up. So that's what I would do. I would try to go down to the credit union if you can, try to find something with as low as, you know, lowest interest rate as you can. But the key is we've got to get out of this mobile home. That's going down. Now, tell me about the land, because I don't remember, do you guys own the land or where is it?
Caller
Unfortunately, we do just rent out the land. And so each year it just keeps increasing. So right now we're at 950.
Jade Warshaw
Got to get out of this.
Caller
Yeah, yeah.
Jade Warshaw
And just. And find some place to rent for a while and just kind of clear your minds of this. This thing. That did not go well for you.
Caller
Yeah.
George Kamel
How much money do you guys have right now?
Caller
So late in the game?
George Kamel
How much money do you guys have right now? To your name?
Caller
I would say in savings, checking, just $3,000.
George Kamel
Okay. Because I'm wondering, I'm guessing the time it would take you to save up the gas, it would be a year or two from now, right?
Caller
Correct. Correct.
George Kamel
To save up $33,000. What's your current household income?
Caller
Current household income is 80,000.
George Kamel
Okay. And what's your monthly expenses? How much does that add up to to cover everything?
Caller
2,700.
George Kamel
Okay. So there should be some margin at the end of each month right now, right?
Caller
Yes.
Yes, there is.
George Kamel
Okay. If you guys are taking home 60 and spending 30, you could save up 30 grand in a year. Again, the value is going to go down. So the gap is only going to grow at this rate because the appraisal is only going to come back the same or lower next time you do it.
Jade Warshaw
Yeah. I mean, if you can. If you take out that loan for the difference and then you get very aggressive about paying off that 33,000. You know, that's, that's the choice you have to make. I'd hope that you could do that, you know, within the year as well if you got extremely aggressive. So it's, it's your choice. But I, if I were in your shoes today, I think I'd call it and, and get out of there. Have you looked at rent in your area?
Caller
Unfortunately, I think rent's pretty high in my area, so it's going to be around 1700. But a two bedroom, just because I got two daughters, if I remember correctly,
Jade Warshaw
didn't you tell me that the interest rate on this thing is crazy? So your payment's high on the, your payment?
Caller
Super high.95. Yeah.
George Kamel
Oh, okay.
Jade Warshaw
What are you paying every month for it?
Caller
It, the mortgage alone is 1100.
Uh huh.
Jade Warshaw
But then the rental and then the,
Caller
plus the lot rent. Yeah, 950.
Jade Warshaw
So you're. Yeah, this is going to be cheap. It's going to be cheaper for you to rent. I mean you'll have to pay, right? You have, you have the $33,000 loan. So you'll have to put some margin towards that.
George Kamel
But I think you're putting two grand towards housing already, right, is what we're saying.
Caller
Yep. Okay.
George Kamel
And so putting 2000 towards something that helps you build for your future is way better than something that's going down in value like a vehicle. So this is not going to be fun. And I don't know how easy it's going to be to get a loan for the difference on this. But that's your option other than selling stuff aggressively, saving up as much income as you can. But again, that's going, that could be a year from now before you can get out of this.
Jade Warshaw
Do your diligent, do your, do your due diligence, see what you can find and as a last resort, yeah, go ahead and cash flow. But when, when we say cash flow, we don't mean like do, do, do. We mean everybody's picking up second and third jobs and we are attacking this like a virus. Like we're going crazy on it. Okay. We want you to get out of this for good. Shelley is in Atlanta, Georgia. Shelly, how can we help today?
Caller
Thank you for taking my call. I've been listening for quite a while now and I really appreciate everything you guys do. You two are my favorite.
Dave Ramsey
Thank you.
Caller
Anyway, my question is, my husband was diagnosed with dementia about a year and a half ago. He's Been doing treatments every two weeks. We have very expensive insurance, but it is covering it. So that's a good thing. He's doing quite well.
Dave Ramsey
Good.
Caller
He's 77 and he works part time still, believe it or not. Wow. Just one day a week, but it's just something to do, you know? Yeah. My question is, I'm trying to save up, fill up our emergency funds, and we're completely debt free. House is paid off, everything is done. I'm 65 and I still work full time. My question is, do I keep putting money into the emergency fund to get to the recommended 12 months in a situation like this, or that's what I heard on Ramsey, or do I use some of that money to try to bring him to some of his siblings? He has six siblings and they're kind of spread out. Four of them are coming for my son's wedding next week, but there's still two that we haven't seen in a while. Because I feel like, you know, we're getting to that point in time. Right. I feel like I feel guilty that he's not being. He's not seeing them.
Jade Warshaw
Is. Are the siblings that he hasn't seen that are not coming for the wedding, are they older? Like, are they. Is it hard for them to get out?
Caller
There are all their ages range from like 67 to 80.
Jade Warshaw
Okay.
Caller
And actually the 80 year old's coming in from New York and. But there's one that's in New Hampshire and he's like in his late 70s
Jade Warshaw
as well, when he's not able to travel.
Caller
Correct. And then we have one that's in Lake Charles, Louisiana, but he's. He's a little bit younger, but. Yeah, they're just busy.
Jade Warshaw
Listen, you have no debt. You've paid off all your debt. You paid off your mortgage as well. Yeah. You do need to save up an emergency fund. But I think that you guys have worked hard and earned the right to, you know, take a trip to New Hampshire to see a family member or whatnot. So I would not let that stop you. What are you earning? You said you're still working full time. What do you make?
Caller
I just do a little job. It's about 45. And then with his Social Security and his job between all of it, it's like 77. So. Okay.
Jade Warshaw
Okay. What is his Social Security? I want to know monthly what you guys are bringing in.
Caller
He is bringing in 27, 47.
Jade Warshaw
Okay.
Caller
And mine, after everything is taken out, probably is around 3, 26.
Okay.
Jade Warshaw
Okay. And there's no nest egg.
Caller
300.
Jade Warshaw
300,000.
George Kamel
I would be looking, of course, for the short term plan, which is, yes, we need an emergency fund. You can go six months or more. You might just have a sinking fund in the budget for medical expenses. And then we need a long term plan because if you're looking at, you know, dementia care, it could be 50 to 100,000 a year.
Caller
Right, right.
And that's, that's why, that's what stops me from spending money, like very frugal. We don't do much.
Jade Warshaw
And you should be.
Caller
But we had thought about getting long term care. Well, of course we never did it. Now we can't because of him. You know, with his diagnosis, you can't get the insurance. Insurance.
George Kamel
Yeah, yeah.
Caller
So, but, but as far as. So it. On one hand you're saying go ahead and just keep.
George Kamel
Yeah, keep funding it and then start a sinking fund and don't feel guilty for spending along the way. You still have to live your life. You still need to see family. And the best thing you can do is make a game plan for what this looks like long term. Become an expert on this health insurance plan. What does it cover, what doesn't it cover? Have the full out of pocket max ready to go. That's all the things you can do in a situation this difficult. And we are, we are rooting for him. Sounds like he's doing good. Let's hope it stays that way.
Jade Warshaw
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Caller
Hi, guys, how are you doing?
Jade Warshaw
Great. How can we help today?
Caller
Okay, I'll try to keep it as brief as possible. So my husband and I are currently working to pay off debt and we're trying to follow like the Dave Ramsey plan as far as the baby steps, which we have not started because we're in a difficult situation and kind of need help with a realistic plan with our finances. So we both have loans for paying off. My husband, he bought from a loan company, several, and he is paying those balances. And I've also borrowed to help pay off his part of the rent which was originally supposed to be for my car payment. And because we're focusing on making those payments, our cash flow is extremely tight. So in addition, I'm helping cover a portion of his rent obligations while he's paying off his loan, which has caused me to fall behind.
George Kamel
I'm sorry, what's the rent for?
Jade Warshaw
Are you living in different places?
Caller
No, we live in an apartment. Same apartment complex.
Jade Warshaw
And you're married?
Caller
Yes.
Jade Warshaw
What do you mean when you say his portion of the rent? Does he owe from another?
Caller
Yeah, he. No, not from another. We split the rent in half, but
George Kamel
he hasn't been making his portion. So you covered it with debt?
Caller
Yeah, because I. I come up short because I have my dose that I'm paying too. And if I don't have enough, I had to make the non smart decision.
Jade Warshaw
How long have you been married?
Caller
Two years. Will be on Monday.
Jade Warshaw
Two years. Okay. Happy anniversary. And you said I. You mentioned children. How many total?
Caller
No children.
Jade Warshaw
Oh, I thought I heard you mention somebody.
George Kamel
Okay, so what's the rent?
Caller
The rent is about 19, 16.
George Kamel
Okay, and what do you guys each make?
Caller
I make about 15 every two weeks and he makes about. He gets paid every week, so about 700 every week.
George Kamel
Okay, so you're both bringing in about three grand a month? Yeah, about six grand total.
Caller
Yeah.
George Kamel
Okay, so the rent is about a third of your income, which is a little high, but it's not. Not broken. Why did he get behind on rent?
Caller
That's what I've been trying to figure out too. I did ask him. He did mention borrowing from like five different other companies that he's paying back.
Oh, boy.
How? When he gets paid every week and I didn't really Get a clear answer on that part.
George Kamel
Well this is t. You know this, this is a huge marriage issue more than it is a financial issue. There is zero transparency, zero accountability, zero acting like a married couple. You just, you get got shacked up with a bad roommate.
Jade Warshaw
Have either of you expressed the interest in wanting to kind of combine money so that everything is transparent and it's just one big pool?
Caller
Actually I did. That was me.
Jade Warshaw
And what did he say?
Caller
Kind of hesitant on it. He didn't really like the idea of like even though it's coming, his money is coming in through his account, mine and my account. He didn't want to combine.
Jade Warshaw
Did he say why?
Caller
No.
George Kamel
Is it shame? Is it fear? Is it baggage? I think we need to get to the root of that in order to solve this because I don't see a path forward if you're going to continue to borrow on his behalf because he's behind on rent and he won't tell you why. This is crazy.
Jade Warshaw
It's very tangled up. It's a very tangled up situation.
George Kamel
Cuz you can't control him, you can't change him. And so if he continues to make bad decisions, it's going to affect you, right?
Caller
Yeah.
George Kamel
In some way shape or form. And I hope you don't take on any more debt for him. Can you promise me that?
Caller
No, I'm paying my back. I just have two more payments left and I'll be done. But it's kind of sucks.
George Kamel
What's your total debt? What's his total debt?
Caller
I have my car that I'm paying off. I have about 7,000 left, 6,000 left on it. Okay. I just have also my credit card which is about 800 and something left on it and I just have paying off my car parts which is about little over 2,000 left. And then he just has the. I'll say about 10001500 left for his.
George Kamel
What's that debt?
Caller
It's between those five loan companies.
George Kamel
Okay. What are these loan companies?
Caller
Some type of apps he found on his phone.
George Kamel
Okay. I thought so like these short term. It's basically payday loans but make it digital.
Jade Warshaw
Yeah.
George Kamel
Which is even worse.
Jade Warshaw
Something's going on here. I'm going to break up the money talk just for a minute cuz I want to go back to the marriage talk. I've been married for almost 20 years. It'll be 20 years next year with my husband. And one of the reasons you get married is yes. You want a level of commitment. You want to know like this is my person But a. A bigger part of that is you see the ability to build something bigger than yourselves together over time. And there's a shared vision that's there. And you spend the years of your marriage aligning on that vision and going towards it together. That's one of the joys. That's why you have children. That's why you buy a house. Like those are the. You're just creating this life together that you both visualize and both agree on and both believe in it so much that you work hard to achieve it. And what I hear right now, and this is not meant for shame or indictment or anything like that. It's just. Just you called us and I'm letting you know what I observed because it's still really early and still very, very fixable. What I hear right now is two people who agreed to live together, but that's kind of it. And so you've got goals and he's got goals, and you spend your money like this and he spends his money like that. And I ain't got to tell you what I do. And she don't have to tell me what she did. Right. And it will be impossible to build anything like that. And I think you're starting to butt up against that. You're starting to feel that, which is why you suggested, hey, let's put the money together.
Caller
Together.
Jade Warshaw
That's thing one. Thing two, I want to mention, because it's just the truth. And it's. Again, it's not to promote fear or shame or anything like that, but when people want to hide, it's generally because they have something to hide. Most people, the part of the purpose of entering marriage is you want to be known. You want somebody to see you and know you and get to accept all the facets of you. And this person is hiding something that they don't want you to see because they're either ashamed of it, they don't think you'll accept it. Do you see what I'm saying? So that's what I'm hearing. I'm not a counselor nor a therapist. I'm just a person who's been in a relationship with the same guy for almost 20 years. So I would really dig into that and I would really do it out of love, not out of I'm angry at you or I'm pointing the finger at you. But, man, I love you and I chose you for a reason. And I just feel like there's something here that's between us. Us. That's between us. It's Causing a rift. And I don't like that. And I would love to get to the point where we know each other and we have nothing to hide. And if we have to see a counselor to make that happen, I'm all in with this. Right. Approach it from love and see what happens. Okay, now we can get to the numbers.
George Kamel
Well, the good news is you can attack your debt all you want. You can get rid of it. And you're right. There's not like. It's not like you have $50,000 of debt here. The problem is, unless we address the root problem, you're going to go further into debt. You're going to get evicted eventually. If this continues or like Jade said, you have this conversation, you restart what this marriage looks like. Well, now we have some unity. We have some vision. We have transparency, accountability. Now we can make a plan for $6,000 coming in instead of my 3,000 and his 2,800. And I don't know what he's doing and he's not paying his share of the bills. This is not working. And so tonight you have a new marriage.
Caller
Marriage.
George Kamel
It's going to be a come to Jesus conversation. Catch him in a good moment. Don't come out attacking him.
Jade Warshaw
Yeah, don't do it in the heat of an argument.
George Kamel
For sure. You're the problem and I'm doing perfect is, hey, we've been really in miles apart. We are in different galaxies right now. And I love you. I want a different kind of marriage and I want a different financial future.
Jade Warshaw
Oh, I love that. Listen, when you sense a red, and this is for anybody, everybody, listen. When you sense a red flag, don't ignore it. Go headstrong into it, 10 toes deep. Get right into it and get to the root of that problem.
George Kamel
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Jade Warshaw
Well, investing can be confusing and overwhelming. So lucky for you, we created a two night virtual event that you that gives you a simple strategy that you can feel confident in. George, you and Dave paired up on this and I'm really excited. It's going to be a two night Investing Essentials event September 1st through the second. It's the only place that Dave unpacks his playbook for investing and wealth planning. Plus, this year you guys added some new content.
George Kamel
Yeah. So we did real estate investing on night two. We're going to shove that into night one and make night two all about wealth planning. Planning, I like that. So we're going to talk about legacy navigating whales, insurance, taxes, how to keep the government's hands off of all the wealth you've built.
Jade Warshaw
Great.
George Kamel
How to pass it on to your kids without destroying their life. All the things that that will really affect a lot of people who are in that baby step four through seven phase. And Dave, we go super nerdy. So if you've ever been like, man, I wish they'd go deeper. I wish we'd get a little more inside baseball. Yeah, listen, Dave will have some formulas that will have he's like beautiful mind out there. It's like goodwill hunting to see Dave. Dave on the board crunching the number. So check it out. Tickets start at 199 bucks. Get yours today ramsaysolutions.com events or click the link in the show notes. If you're listening on podcast or YouTube.
Jade Warshaw
Yeah, Stella is in Rochester, New York. Stella, how can we help you?
Caller
Well, I'm actually looking for some advice on house investing. My husband and I have been married for a few years. We're out of debt. We're trying to save up for our down payments and someone close to us who's done really well investing in real estate is giving us some very well meaning advice. But something sounds fishy to me and I can't quite figure out where the problem is.
Jade Warshaw
Okay, so you're getting fishy advice. You're on, baby. You've paid off all the debt. Do you have a personal residence or this is strictly for, you know, welfare.
Caller
We're renting right now. Okay. We're out of debt. We have our emergency fund and, and we're working on a down payment. So I guess you could say baby step, three and a half.
Jade Warshaw
Love that. 3B is what we call it, which is right on. Are you guys investing at all or you're just solely saving up?
Caller
We're right on that tipping point between having the six month emergency fund and starting to invest.
Jade Warshaw
Love that.
Caller
Okay, so tell us about friend is telling us. Oh, you know, this is a way that you could, you know, get in on the ground level and grow really fast and you know, win.
Jade Warshaw
And what are, what, what is that? Tell, tell us the details. What are they saying?
Caller
So he was looking at a rental property in Florida which was $1.2 million, which we could never afford, but after a hurricane it's now 600,000. So he says he. Or we could buy it, put in 200,000 in renovations and then it would be back to that $1.2 million value. So boom, you just made 600,000. Now you can take out a home equity loan on that debt and then use it to buy another house and do the same thing. So you just made magic money. You don't have to pay income taxes and it's win win. What could possibly go wrong?
Jade Warshaw
There's where you lost me. So if you had said, hey, here's a property that needs some work and some improvements and you know, I can get it for cheaper because it needs work and improvements and I'm going to purchase it and do that. I'm all for that. But there's several parts in this. George, I know you heard it too that are just really.
George Kamel
It just sounded like a TikTok came to life and they've been watching a whole lot of it and maybe they tried. Maybe it has worked so far. That's not the whole story here. Yeah, and I agree there's something fishy. Are they, are they profiting off of this? I don't understand how you're. It seems like your friends are benefiting if you do this.
Caller
It.
Jade Warshaw
Well, do they do this?
Caller
They do this. They've done well for themselves. But I don't. I'm starting to have wonder wondering if they're actually in the plus or if they just owe more than they're actually worth.
Jade Warshaw
And you'll never know. You'll never know. But what I know unless you told us not the truth, which is okay because you don't have to tell us where you are, but my screen says you're in New York, and this property is in Florida. So they're. They're saying, hey, go in other states where you can't even really see the property. You don't even know the market. And let's get involved over there. You gotta pay a property manager, somebody
Caller
who cares about us very deeply. They live in another state and they're snowbirds. So this was a property he was looking at, and then he was trying to give us advice on we could
do something, why don't they buy it?
And in my brain, he was talking about it. I don't remember what decision he made.
George Kamel
I think you let them have this one. So I appreciate the offer. This is all you guys. We're working on our own financial plan, and we're going to go slow, and we're okay with that.
Caller
And by the way, we're in the Rochester area. There's a low, lower, much lower house that we can actually ford. And we do this and, you know, and it's lost its value. We put in some amount, it doubles in value. Where does the. So what goes wrong when he starts stacking those helocs? What. What's the error that happens?
George Kamel
You're stacking debt on top of debt on top of debt. So every rung of this ladder that he's describing is borrowed money tied to your home. So one bad contractor bid, one vacant month, one rate hike, one Florida insurance premium, and you're underwater. And the whole house of cards comes tumbling down. And they get real quiet when that part happens. And you don't hear from them. You only hear from them when things are going really well and they're really loud and they want you to get in on this. So this is like an mlm. It's like cryptocurrency. Someone just got a little too excited and they want everyone in on it. So I don't know if they personally benefit or if they're just real excited because it worked for them. They went, wow, free money.
Caller
Yeah.
George Kamel
But you guys do not need this level of risk in your life. And it violates several of them. Our real estate principles, number one is pay cash for any investment property. Because of the risk that's involved, it's hard. You can. You can do the formula and you can represent the risk. Nobody does that. People who are into real estate investing, generally their risk meter in their brain is broken. Every extra dollar they want to put into a house to reinvest, to get a heloc, to do it again, do it again. And the truth is the. I Love this proverb 13:11 11. Wealth gained hastily will dwindle. Whoever gathers little by little will increase it. So if it feels like your wealth is being built too slow, you're on the right track.
Jade Warshaw
Okay, and I think you guys need to clarify, what is your goal? Is your goal today to have a say for a house that's you, you know, yours and yours alone, and it's just your primary residence? Is that your first goal, or is your first goal to be Scrooge McDuck and have a real estate empire? I think just from listening to you, the first goal you've walking the baby steps. So my guess is your first goal here is we just want a house, and we want something to call our own, and we want to do it in a smart way. And if you do that, that will set you up to build wealth like George is describing, and then be able to pay cash for real estate with extra margin. But I would not ever sacrifice the American dream of being able to purchase a home and being able to pay off that home and live in peace for. Or some sort of real estate mogul's idea of how to really just ruin your life with debt and helocs. Yeah.
George Kamel
I mean, this is Dave Ramsey's origin story.
Jade Warshaw
Absolutely.
George Kamel
He built a $4 million real estate portfolio on borrowed money at age 26, and he lost it all when the bank called his notes. And it can happen fast. And so it's a lot of risk that is not represented in these conversations. And for those reasons, I would very politely say, no, thank you. We're going to live our life. We got other financial plans. But thank you for letting us know about this quote. Opportunity.
Jade Warshaw
Absolutely.
George Kamel
Which. That's my trigger word, Jade. Anytime soon.
Jade Warshaw
Opportunity.
George Kamel
If you call into the show and you say, hi, we have an opportunity, whatever comes next is about to be the worst decision you've ever made.
Jade Warshaw
It's never good. It's never good. It's never good to have an opportunity.
George Kamel
No one ever says, hey, we have the opportunity to purchase a house really peacefully with 30% down. It's always, we have an opportunity to do zero down on this home and start with zero equity and been in a really risky financial position.
Jade Warshaw
Yeah, it's never good. What we teach, it's very simple to understand. Some might say that it's boring because it doesn't have a lot of hoops to jump through and it's not a lot of bells and whistles.
George Kamel
It doesn't make for a great TikTok when we say, hey, save up, pay off Your own house first, then save up and pay cash for any investment. Real estate, property. I'd get zero likes on that video.
Jade Warshaw
And while you're at it, don't borrow against your current mortgage because we actually want you to gain that equity. We like, we like the idea of you having equity and yeah, putting your
George Kamel
house on the block. Variable interest rates. I mean it's just a credit card attached to your house.
Jade Warshaw
Yeah, absolutely.
George Kamel
That's what a HELOC is.
Jade Warshaw
Absolutely.
George Kamel
And people make it sound like it's some wealth hack that everyone knows about and does except for you.
Jade Warshaw
Yeah. And then when you ready to sell that piece of property and you're thinking, oh, here's my payday now you've got that HELOC hanging over that. It's like, oh, I forgot about that, that, yep, I still owe 50,000 over there or what have you. So the way that we teach the whole purpose guys is we want your home to be a blessing and not a burden. When we tell you things like the 25% rule, your mortgage should be no more than 25% of your take home pay after taxes. It's so that you feel good and you can actually enjoy your home. You're not house poor. When we tell you not to borrow against Your home on HELOCs or home equity loans, it's so that your wealth that you build is your wealth. And when the time comes for you to upgrade in house, you have all of that at your disposal.
Dave Ramsey
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George Kamel
to remain active on Boost Mobile unlimited plan.
Jade Warshaw
The Ramsey Show Question of The day is brought to you by why Refi? If you've fallen behind on your private student loans and don't know where to turn, why Refi works with borrowers other lenders won't and helps explore low fixed rate refinancing options. Options go to yrefi.com Ramsey that's the letter y r e f dash.com Ramsey Remember, it may not be available in all states.
George Kamel
George Today's question comes from Isaac in Indiana. Our primary home is our only debt. With a $300,000 mortgage. I have roughly $400,000 in mutual funds and a little over $300,000 invested in precious metals. Should I sell my medals and put the funds towards my primary mortgage? I know what you're gonna say, but it's a big struggle for me. My initial investment in them was only 150,000 and my gut says to wait until there's enough to pay off the mortgage completely and cover capital gains. But waiting is slowing down our investing more for retirement. Kick me in the pants with your wisdom.
Jade Warshaw
Wow.
Dave Ramsey
Wow.
George Kamel
Well that's the first time I've heard that. I like that line though. Yeah, I might use that gladly. Wow.
Jade Warshaw
Gladly. So.
George Kamel
So he's got, I don't know if the, it sounds like the mutual funds are non retirement. The $400,000 right on 300,000 in precious metals. I don't know why it's sentimental to him but he said his initial. It's more about the taxes. I think he's scared of the tax hit more than anything else and I
Jade Warshaw
think he knows what we'd say about like commodities. I think that's why he's also looking there and not looking at the mutual funds.
George Kamel
Yeah, if I, if you're going should I use the mutual funds or the precious metals? I would personally use the precious metals. I don't know what apocalypse is going to help you survive with your bars of gold Scrooge McDuck style. But a paid for house, that's what you're really trading for. Would I rather have a paid for house or would I rather have $300,000 in gold and silver? I would rather have a paid for house personally.
Jade Warshaw
Indeed.
George Kamel
And so yes, you'll have $150,000. That was the growth. You'll have capital gains tax. At your rate, it may be 15% of that. And so you're talking about really to pay off the house, you're going to have a tax of 22 grand a page pay. Now if you are debt free with an emergency fund and Savings, you could cover that. Or what I would do is just pull from the mutual funds. Pull 22 grand from the mutual funds to cover the taxes when tax time comes due and enjoy your freed up mortgage payment.
Jade Warshaw
Small price to pay to, to have a paid for mortgage. I think 22,000.
George Kamel
Do the math on this. Take that mortgage payment, the principal and interest, pop it into an investment calculator for the rest of your life and say I invested that. Now we're talking. Talking. There's a million bucks on the other side of paying off this mortgage. I'll take it.
Jade Warshaw
I like it. Yeah. Or yeah. Or just thinking about if you didn't pay off the mortgage, what you're paying in interest, all of that time, you're gonna pay well over 22,000.
George Kamel
So we can, any way you slice it, we can do the math all day long, but this is more emotional than anything. It's just a big, big chunk of money.
Jade Warshaw
It is.
George Kamel
And there's something physical that you're letting go of to get rid of these precious.
Jade Warshaw
I understand it. Well, that kick in the pants wasn't so bad. Let's go to Elizabeth who's in Nashville, Tennessee, right in our backyard. Hey Elizabeth.
Caller
Hey, how are you doing?
Jade Warshaw
Doing good. How can George and I help?
Caller
I'm reaching out because I just found you guys literally within the last two months and my husband and I are in $189,000 worth of debt and I currently work an AP and wondering if I should continue to get my accounting degree or just get this debt paid off.
George Kamel
What kind of Debt is the 189?
Caller
It's 150 in student loans. Between my husband and myself, he got his master's degree and then I when I was younger was stupid and went to school twice and dropped out. And then it's $8,000 in a car, 4,500 which with two credit cards and then 3,000 for the vet. Okay.
George Kamel
And how much longer do you have if you continued school?
Caller
48 credits.
George Kamel
That sounds like a lot of credits. So it's a couple years.
Caller
Yes.
Jade Warshaw
Are you currently taking out student loans to pay or how are you cash flowing?
Caller
I was taking out student loans but we just had a two month old and so I stopped school while I was pregnant because it was very difficult.
Jade Warshaw
Right.
George Kamel
So you haven't restarted school yet?
Caller
I haven't restarted. So I'm trying to figure out.
Jade Warshaw
I do think you. I think you need to because you're not. If you told me you were paying cash, we'd be having Maybe a slightly different discussion, but if you're calling me saying debt is the problem and I'm currently borrowing while I know it's the problem, you can't solve a problem while simultaneously creating. And if we know debt is the problem, we have to stop borrowing money. That is the first and foremost step that you have to make when you decide, hey, I'm going to get my life right with this money. Got to start borrowing money. That's thing one. Thing two is we'd say, okay, now we got to get on a budget and think. Three is now we're going to start to work this thing through the baby steps, which is the method of teaching that we have to help people break free from debt and build wealth ultimately over time. Are you familiar with the baby step steps?
Caller
Yes. We started a Financial Peace University class.
Jade Warshaw
Excellent.
Caller
And we're trying to, we're trying to get our income up in between. Our child doesn't start daycare for another month. So we're. When one's not with baby, we're driving for Lyft. But then we're putting that on our car and we're trying to make more income but we just, we don't know where to begin.
George Kamel
What's your household income now?
Caller
It's 120 gross. Our take home right now is 6200.
George Kamel
Okay. Are either of you investing right now?
Caller
We stopped, actually Both stopped our 401k last night.
Jade Warshaw
Very good.
George Kamel
Because I'm wondering why you're only taking home 74 out of 12050 grand in taxes. It's crazy.
Caller
He's a high school teacher in the metro school district and they are on a 10 month contract. So they were withdrawing money for the summer. Summer, which we stopped that last night too.
George Kamel
Okay. So hopefully that take home pay goes
Jade Warshaw
up and then he can get up hope and then he can get something for the summer to cover those summer months.
Caller
Yes. Aside job here, he's the one staying home with baby to prevent like that additional daycare from kicking in earlier.
George Kamel
Got it. And how much are you making personally?
Caller
55.
George Kamel
And what would you be making if you continued this program?
Caller
I could have go up to 100,000.
George Kamel
But that's not immediate.
Caller
No, it wouldn't be immediate.
George Kamel
That's sort of like this is where this could go. So year one, could you be making 65?
Caller
Yes.
George Kamel
Okay. I'm just, I'm looking at the ROI of this because I'm scared. We're going to fast forward. If you continued this school and you're going to be $250,000 in debt now with a toddler trying to clean this up, making only $10,000 more, which is you getting like 6, 700 bucks extra in your paychecks. So that's my fear. And so the other side of this is if we pause school, we try to get our core income up without going further into debt, we clean this mess up for the next couple of years at least now we can start from a place of peace, a place of strength instead of desperation.
Jade Warshaw
Yeah. These student loans, are they. Are you currently making payments or are they in forbearance or deferred?
Caller
We're currently making payments on them. We did do the income based one because it was fifteen hundred dollars a month, which we couldn't afford that with baby and everything.
Jade Warshaw
Okay.
Caller
The payments got lowered, but it stresses me out that the interest is now higher than our payment that we're making.
Jade Warshaw
That's right.
George Kamel
And make less progress because you just lowered the payment.
Jade Warshaw
Yeah. And that's the picture I want to paint just to make sure you guys understand what's at stake here. I would never just say stop going to school without a really good reason. And the really good reason is the longer you wait to attack this $150,000 student loans, I mean, you can look up in 10 years, and instead of it being $150,000, it's closer to $200,000. Right. And so I don't want that to be the case. I want you guys to really do a complete 180 on what you've been doing. You've been focused, obviously, both of you, on your careers. That means school, that means education. You focused on starting a family. Now I want you to focus on, on. We are paying off debt. We are eat, sleeping and breathing debt payments. Right. That's all we're doing. We're working so many extra jobs. We are leaning on friends and family to watch the baby because you've got to go out and hit your shift. Right? That's what's gonna be taking place. And I'm just warning you up front, it's not fun. But the outcome is totally, totally worth, worth it. If you guys can really get on the same page of this and say, okay, here's what we're doing, here's what I can do, here's what you can do, here's what we're cutting back. And I'd start with that vet bill. Minimum payments on everything. And how quickly can you get $3,000 to get the vet out of your life?
George Kamel
I like this plan, baby steps, one little movement at a time and eventually you start gaining that moment.
Jade Warshaw
Okay, guys, let me ask you something.
Caller
What would it take for you to switch your bank? Because if you're still earning next to nothing, your savings, you need to check out Fairwinds Credit Union. And I know what you're thinking. It might sound like a hassle. Moving your direct deposit, updating bills, getting
Jade Warshaw
a new debit card feels like a lot. But here's what most people don't realize. Staying where you are could be costing you hundreds of dollars every year, y'. All.
Caller
The average savings account pays less than half a percent. So let's say for example, you got $20,000 saved. You might earn around $70 a year.
Jade Warshaw
But with a fair winds high yield Savings account earning 3% APY or more, that same money could earn you over $600.
Caller
And that's real money that you can
Jade Warshaw
use towards the baby steps. So don't let temporary comfort keep you stuck. Check out the smart bundle from Fairwinds Credit Union. You get a high yield savings account,
Caller
a no fee checking account and the
Jade Warshaw
Ramsey Beweird debit card. Go to Fairwinds.org Ramsey to learn more
Caller
and make the switch today.
Jade Warshaw
That's Fairwinds.org Ramsey insured by the insur NCUA. Guys. If you're working the baby steps, the best and fastest way to do that is by using EveryDollar. Every dollar is more than just a budgeting app. It's the plan that we teach. Built right in, it's a fabulous tool. You can track your progress, get personalized recommendations and coaching for your situation that will help you find, free up more money, more margin to work the plan even faster. It's like having one of us walking with you every day, showing you the next right step, holding you accountable. Start every dollar for free by downloading it in the App store or Google Play. You remember in Living Color. Mo money. Mo money. Mo money. Do you remember that?
George Kamel
How old do you think I am?
Jade Warshaw
I'm sorry. Not as old as. Not as old as me apparently. Austin is it. Thank you. Will Rudder. He knows what I'm talking about in the booth. Austin is in Roanoke, Virginia. What's going on?
Caller
Austin.
Jade Warshaw
Austin.
Caller
Hey, Jaden. George. What's up?
Jade Warshaw
Doing good. I just aged myself. Help me feel better. Let us solve your problem.
Caller
Okay, so here we go. So I'm a 26 year old pharmacy student. I'm going into my third year. I have about $290,000 in a brokerage account and a inherited IRA I've been taking out student loans for the first two years, which has accrued to about $100,000 in debt. I was wondering if I should cash. Cash out my brokerage and cash flow the rest of my schooling.
Jade Warshaw
Okay, let me make sure I've got this straight. So the 290, part of it is in a brokerage and part of it is in an inherit. In an inherited IRA.
Caller
Yeah, that's right. I got about 158 in a brokerage and the inherited IRA is about 128,000.
Jade Warshaw
Okay. And the inherited IRA, how much are you required to pull out every year?
Caller
My RMD that I took out last year was about 20,000, but the RMD, I think it's around five grand.
George Kamel
Okay, so you took out more?
Caller
Yes, for tax reasons. Wow.
George Kamel
Well, I would definitely get rid of this debt. You've got the money. What's the brokerage account being used for? What are you investing in that?
Caller
It's through an investment group that was recommended by a family friend. So it's just kind of been sitting there and I've just been watching it grow. And I logged into my financial aid provider today and saw that I just crossed $100,000 in debt. And I was like, oh no. Wow.
George Kamel
Well, here's the thing. I would think through it's taxes. So the brokerage account and the inherited IRA have very different tax treatments. When you take money out of that inherited ira, it's taxed as ordinary income. So whatever your tax bracket is, let's say that's 22%. While the brokerage account, if you have a long term capital gains, you've held those assets for more than a year. Well now that could be 15%. So you're going to take a much smaller hit by taking the money out of the brokerage account. So that's the part I would look at. My guess is the brokerage account is going to, is going to be your best bet to knock out that 100k. And I would absolutely do it.
Caller
Okay. And for the rest of my like tuition, I have two years left. Would you recommend just cash flowing that?
George Kamel
Oh, absolutely.
Jade Warshaw
I mean, and you've got the $5,000 that's going to come of the inherited IRA whether you like it or not.
George Kamel
You got to draw down that IRA so that kind of becomes your cash flow. School money, right?
Caller
Yeah, code. I mean tuition is like 40 grand a year and I've been paying, I haven't been taking the full amount of loans. I've been paying for half and loaning the minimal amount that financial aid will
George Kamel
let me take out, I would just avoid loans altogether in the future. So pay off the ones you have and then cash flow the rest using the inherited IRA and then even part of the brokerage if you have. Have to. Because coming out of school making good money with no debt, it's going to put you in a very different place financially. You're going to have so many more options with all that margin coming in versus your friends who are in school graduating with 250 grand in debt right now. They have to live over here, they have to work over here. That's what happens. Debt free equals margin, options, flexibility. And I understand you can make the case that, well, if I leave it invested, it could turn into. Into this. You're going to be just fine. At your age, if you start investing with no debt, your investing rate is going to be significantly higher than your peers.
Jade Warshaw
Yeah, absolutely. How much school is left?
Caller
2. 2 years. So about 80. $80,000 worth of toys and left. Oh, great.
Jade Warshaw
And I'd be working hard, too. I'd be working hard to cash flow as much as I can so that you don't have to pull as much off. But I would consider this a college fund and thank whoever.
Dave Ramsey
Yeah.
George Kamel
Who left this for you?
Caller
Well, my grandma left this to me. I'm very blessed.
George Kamel
What a legacy. I think she'd be smiling upon you, seeing you graduate debt free. Sharp young man, whole life ahead of him without debt. I mean, because now you can do the same for your grandkids.
Jade Warshaw
Exactly.
George Kamel
A good man leaves an inheritance to his children's children. The Bible says, I love that. That's future thinking. You stop thinking about yourself as much and go, what am I doing for the next generation? And the ones beyond that.
Jade Warshaw
If you can start your young adult life with no, no debt, you are significantly.
George Kamel
It's like a wealth cheat code.
Jade Warshaw
It's a cheat code. I mean, because you're not going to spend the app. You know, the average person that we find around here who starts working the baby steps because they have debt, it's taken them, you know, one and a half to two years. That's on average. That means there's people who. It takes a lot longer and there's people who takes a little bit less. But to not have to spend the first two to three years of your
George Kamel
life cleaning up a mess.
Jade Warshaw
Cleaning up a mess and getting on financial footing. But to just be able to accelerate
George Kamel
forward, you become a homeowner faster, you're going to build wealth faster. You're going to be able to retire. Retire earlier than all of your peers.
Jade Warshaw
Yeah, I like it. If I think about that, I might be crying on the couch about. About how much time it took to right the wrongs.
George Kamel
Debt free at 23. What could have been.
Jade Warshaw
Oh boy. Is it Kira? Kyra is in Great Falls, Montana. Kyra, Did I get it right?
Caller
It's Kyra.
Jade Warshaw
Yes.
Caller
Second.
Jade Warshaw
Second time. Okay, how can I we help you?
Caller
Okay, so my question is about renting a car with a debit card. I've traveled for work a couple times a year and I've never had a problem with it up until the last couple months. I went to rent a car and they were like sorry, you don't pass the credit check, we can't rent you this car. Thankfully I had my mom traveling with me so she was able to rent it because she had a credit card. But you know, they basically told me there was no way around it. They were not going to rent me a car because I did not have a credit card.
Jade Warshaw
Was it because your return ticket wasn't to the same destination? Because I know that they will put up a stink about that.
Caller
No. So I showed them my return flights. I you know, did the $500 deposit or hold on my card, all that stuff and they asked me for my Social Security number. I gave it to them and they came back with little piece of paper that said my credit score was four. So you know, we haven't had credit cards for six. I don't know because we have credit cards for six years. We have a paid for home. Wow.
Jade Warshaw
Who was it?
Caller
Any vehicle.
George Kamel
You want to shout them out?
Jade Warshaw
Yeah, shout them out. Who was this wonderful credit card company that did you wrong?
George Kamel
The rental car company.
Jade Warshaw
Rental car? Yeah.
Caller
Yeah, rental car. It was Hurts so good. Happened back in April and then my husband and I actually got pre approved for a mortgage so that we can move and the we told them that they were going to have to do manual underwriting and I told them about my rental car experience and how my credit score was for and all this stuff. And they actually came back to us and they were like well your husband doesn't have a credit score but you have a great one so we can actually approve you for this mortgage because your credit score is so great. I don't know how.
Wow.
George Kamel
I would pull your credit report to
Caller
get to the bottom later. Yeah, I went to rent a car again about two weeks later, same thing. They wouldn't rent it to me because I didn't pass the credit check.
Jade Warshaw
So that's really interesting. I would want to make sure. First off, I do want to clarify that a zero credit score is just as good as a good credit score. But if you have anything that's hanging around open, open that is causing that to reflect as just a low credit score, I would double check. I would hop on and make sure that there's no open accounts. There's nothing anywhere that's keeping that from rolling to indeterminable. And then other than that, I would choose a different rental car company because unfortunately, and, and you'll find this with apartments, you'll find this with mortgage companies. You'll find this across the board. There are some companies that won't do their due diligence to look and really say, okay, does this person have the money to do the thing that they're saying they're going to do? And for that reason, you have to be the one to say, I'm just going to find a company who is going to keep the lights turned on upstairs and understand that I have the money to rent this car, buy this apartment, manually underwrite this house.
George Kamel
Yeah. And remember, the person working at that desk may be incompetent. And so that's always a possibility. And you might need to talk to a manager. And if they are the manager, God bless. Yeah. I would go over to the, you know, a different rental counter and go, hey, they wouldn't help me over here. I've got plenty of money. I want to rent a car. I will bring it back.
Jade Warshaw
Yeah.
George Kamel
And I've had a good experience. I'm trying to think of the ones I've had a good experience with.
Jade Warshaw
Use Avis. My husband and I tend to do Avis.
George Kamel
Oh, nice. A national and enterprise I've had good experiences with. So I would try those. But you do you do a little research. Call ahead and ask, hey, what's your debit card policy? Be prepared for the credit check. Let them know, hey, I don't have a score. You're going to pull it up and it's going to say, no score. That's fine. What they're looking for is that bad or low score. And for some reason. Reason you had a whopping four.
Jade Warshaw
That's why.
George Kamel
About as low as I've heard.
Jade Warshaw
Welcome back to the Ramsey show here in the Fair Winds Credit Union Union studio. We've got Liza, who's in Austin, Texas on the line next. Hey, Liza, how can George and I help out?
Caller
Hi, good afternoon. I love your show and I, I really have been taking notes all These past two, three months on financial matters. But I do have a concern. This is all new to me. I. I just. I grew up with not being financially responsible and how to save money. I am a single mom. Mom. I have one daughter. She is 20 and she is going to school, university. And we have not been. Well, lately. We financially have not been helping us out because we earn, I guess. I guess earn. We don't earn. How do I say? We earn a lot for a family of two. And I've been helping her out, paying her tuition every semester. But I. What I rely on to pay for her tuition balance, or leftover balance to help her pay her semester is taken out of my ira. My Roth ira.
Dave Ramsey
Oh.
Caller
And I don't like to do that because that's my. Of course, that's my, My retirement.
Jade Warshaw
Absolutely.
Caller
And.
Yeah. So any helpful tips, please. Where do I start?
George Kamel
How much.
Jade Warshaw
How much have you pulled out of the Roth so far?
Caller
Like every, every year I take about. I take about a thousand. Five times two will be around 3,000 a year.
George Kamel
How much is in their total?
Caller
Right now? It's 5858 with 70 cents.
Jade Warshaw
Okay.
George Kamel
Okay. So it's. It's about to be zero if we keep this up.
Caller
Yes. Exactly.
George Kamel
How old are you?
Caller
I am 44.
George Kamel
Okay. Well, it's clear that you love your daughter. Can we agree on that?
Caller
Yeah.
George Kamel
You're doing something genuinely sacrificial to invest in her future. And that, that part is right. Your heart is right there. But the vehicle that you're using to do that, that's the issue here. Because right now, here's the future. Let me paint it for you. You retire broke. Now your daughter has to take care of you financially, sacrificing her future, creating a generational cycle. Right?
Caller
Yeah.
George Kamel
And you didn't mean for this. You had good intentions. But I don't want you to become a burden to your daughter later on because you sacrificed for her today. So I think there's a different way. We can come up with a game plan to cash flow $3,000 a year. Would you agree?
Caller
Yes, sir.
George Kamel
We're not talking $30,000 a year. 3,000 is manageable.
Caller
Yes. It's about like 6,000 to 7,000 a semester.
George Kamel
Okay.
Caller
She's about to work here part time in the summer.
George Kamel
Good. So how much will she make doing that?
Caller
That we don't know yet because she will be working soon. So she's going for animal science. That's her major. And she's been applying to all these, like, vet Clinics and stuff. And so is she wanting to be
George Kamel
a vet ve tech? What's her goal?
Caller
Like a vet tech? Yes.
George Kamel
Okay. Does she know how much vet techs make?
Caller
I think she told me once, but I forgot that number.
George Kamel
Okay.
Jade Warshaw
I thought I heard you say that for a family of two, you guys bring in a really good income. What do you guys bring in together or what do you bring in?
Caller
Year is 120.
Jade Warshaw
Okay.
Caller
Approximately.
George Kamel
Okay. And how much longer does she have for school?
Caller
Hey, Emma, she has two more years to go.
George Kamel
Two more years. So we're talking like $12,000 solves this, correct?
Caller
Yes, sir. You got it.
George Kamel
Okay, so what if we had a game plan to where she works part time, she covers, let's say half of that amount over the next two years and you cover the other half and you both cash flow it without robbing your future.
Caller
Okay, let me write this down. I have my notes and everything. So.
George Kamel
Yeah, you said. So you bring home how much a month? Seven.
Caller
Seven.
George Kamel
Now how much of that can we use to save for the college fund and cash flow this?
Caller
Okay. I have consumer debt and I have a car loan.
George Kamel
So what's left on the car loan?
Caller
It's $9,984.56.
George Kamel
Okay.
Caller
And the consumer debt is $4,603.05 cents. Okay.
George Kamel
And have you stopped going into debt?
Caller
Yes.
George Kamel
Okay, great.
Caller
I'm just paying these off already. These are like past, past debt.
George Kamel
They're older debts.
Caller
Yeah, they're older. Yes. Yes, sir.
Jade Warshaw
So ask. Answer one question for me. So before you were saying that you were taking out $3,000 a year from the Roth IRA to make this happen. Right. So that's essentially all we're looking to find if you were floating all of it except $3,000. That feel fairly easy equation to solve. Unless I'm missing something.
George Kamel
Because now we can just budget 250 bucks a month over to a little savings account so that we have three grand by the end of the year. You see the math on that? 3,000 divided by 12. So now we can make a budget. Okay. Hey, we're going to budget to cover our debts, aggressively pay that off. And on the side we put 250 away in a savings account earmarked for her college.
Caller
Yes.
Jade Warshaw
In addition to what you were already putting aside.
Caller
Yes.
George Kamel
And then if she can work part time, that lowers the amount you even need to put in.
Caller
Yes. Because I, I do cash out my vacations from work, so that's like every quarter. So I use that extra money to pay for the rest of her, her tuition, plus the 1,500 of the IR IRA. I'm sorry, Roth. Sorry.
Jade Warshaw
Okay, so we won't cash out the additional a thousand or however much it was from the ira. If you want to keep cashing out your vacation, that seems to be working for you. There's extra cash there. And then the rest is cash flow through the budget, plus your daughter's portion from her job. And I think you've got it covered. I think you're doing a great job.
George Kamel
Paychecks are the solution instead of your retirement account. So are you investing anything currently into the Roth IRA every month or anywhere else?
Caller
Yeah, it's. What's a month? It's with Edward Jones.
George Kamel
And how much is that?
Caller
About 400, 480 or 60amonth.
George Kamel
Okay, so starting today we're going to pause that. We're going to take back that 480amonth and apply it to our debts.
Caller
Oh, okay. Okay. So we can actually go tell our employers, say, hey, I can stop that.
George Kamel
Yes. So I have like the stop all contributions. And what this does is it allows you to focus a season so that you can get rid of your consumer debt so that you can cash flow your daughter's college. So that's your deep. Why let that fuel you to get really intense, to not let this debt drag on any longer. It's been hanging out long enough. You got a future ahead of you. Your daughter has a future ahead of her. And so let this be an aggressive season. For the next six months, we're going to knock out the consumer debt, which frees up how much in payments. What's the car payment? What's the consumer debt payment every month?
Caller
Okay, the, the car loan is 390, but I pay 500amonth. Actually, I raise it to 525 to pay it faster.
George Kamel
Okay, so 390 on the car plus how much on the consumer debt?
Caller
It. Well, it varies on the payments monthly, but it's 4,000 right now. 4,603. I make monthly, like I guess their minimum payments because I have some like
George Kamel
a couple hundred bucks.
Caller
Yes.
George Kamel
Okay, so right there, that's going to be 5, 6, 700 bucks freed up. Once you knock out these debts. Now you got some margin. Now instead of ever robbing a retirement again, we are just building and building and building so that you can retire with dignity and not have to rely on your daughter to cover the gap.
Jade Warshaw
And the good news is once you do that, if you start investing 15% of your income from let's say age 46, when this is actually done, to age 65. You're going to be right close to a million dollars.
Dave Ramsey
You should not feel uncertain about investing and you don't have to. That's why we created Investing Essentials, a two night virtual event where George Camel and I walk you through my playbook for investing and wealth planning. We'll simplify everything from 401ks and mutual funds to passing on wealth so you can invest with confidence. Tickets start at $199. Get yours today at ramseysolutions.com events or click the link in the show notes.
Caller
Okay,
Jade Warshaw
So Ask Ramsey is our free AI tool that's built and trained on proven Ramsey principles. And today we're going to break down the most asked question of the week. So this week we saw the biggest question was what's the best way to create a debt payoff plan? Well, they're in the right spot, George.
George Kamel
I love it. If you've hung out with us for long enough, you've heard us talk about the debt snowball method. The other method that you may have heard about is called debt avalanche. Think about it this way. Avalanche is focused on the highest interest rate. The debt snowball is focused on the smallest balance. You list out all of your debts from smallest balance to largest balance. We ignore the interest rate from now and we're going to pay minimums on all of the debts except that small one. The small one we're going to attack with all the vengeance we can. Everything extra, we're going to just focus on that one debt. Yes, that's it. And once that debt is knocked out, what happens? You freed up a payment that you can roll into the next debt and the next one. And so that creates a snowball effect as you pick up more snow along the way. You get some quick wins, you get some progress, you get momentum. That's what causes people to get out of debt.
Jade Warshaw
I love that. And so if that helped you, you can try Ask Ramsey for yourself. Ask Ramsey can help you lay out a debt payoff plan based on your debt balances, your minimum payments and your interest rates. Ask your question today@askamseysolutions.com or just click the link in the description if you're listening on podcast or YouTube. Gail is in Phoenix, Arizona. Hey Gail, how can we help today?
Caller
Hi, how you doing?
Jade Warshaw
Doing excellent. What's up in your world?
Caller
Well, so I'm just gonna be turning 69. Last 40 years, a serious drug problem. I worked a lot. I worked for a Lawyer, back and forth. So I lived at home, took care of my mom, and she died about two years ago. Thank you. The house I lived in with her, me and my brother were able to sell it for seven times the amount when they bought it.
Jade Warshaw
So what you end up taking, we
Caller
got 700 and I think it was 750 right around there. The house they bought for like 135, 30 years ago. And, you know, I think because, you know, in an addiction, you don't think about anything but yourself and. Never thought I'd get old, let alone, you know, what I would do with. With my life. But I have a son. I was. I was a single mom. He's 37 now. I don't know how that happened, but. And so we sold the house. And I was able. Okay, I got sober. I got serious with God. I started to walk with God. I mean, serious one. And, you know, once that started, I started walking. All these things. Things were hitting me like a ton of bricks. You're this old, you don't have, you know, you didn't save. Never, never thinking about retirement. So I bought the house. I got it for 325. It was 350. I got them down to 325. I was able to gut the whole house because it was very old, very old. And I bought it. I don't have a mortgage.
Wow.
Jade Warshaw
I love that.
George Kamel
Way to go.
Jade Warshaw
I love that. How can we help you today? Listen. Right on. Amen.
Caller
Yep.
Jade Warshaw
How can we help you out today?
Caller
So what? So this last two years, I've been just saving. I. Like I said, I work full time at a law firm. My salary, My. My salary is about 50,000 a year. Yeah. And so I started taking. I went full retirement age with my retirement. My. To get my retirement savings. I started that. I get full retirement. That's 2303amonth. Okay. So that's the money I coming in. I don't. My HOA is only 80 bucks a month. So all. I have no debt whatsoever. I own a car, you know, so I just have my regular bills.
Jade Warshaw
Are you investing? Are you investing 15% every single month?
Caller
No. That's the question. I was able to say even after, you know, I did all my. I started saving last month. I should be putting 1000.
Jade Warshaw
You should be putting about $625 away every single month into your 401k, if your job has one.
Caller
I don't have one.
George Kamel
Is there any retirement plan through the employer? Okay.
Caller
Nothing.
George Kamel
So you have access to a Roth ira at least I don't have a
Caller
clue what to do. What I did do the other day or last week was I took 7,000, open the brokerage account.
Jade Warshaw
Okay.
Caller
To, to buy SpaceX. I was allotted 14 shares. That was it. So I still have 5,000 sitting.
Jade Warshaw
Well, let us help you. Let us help you because we only have a little bit of time with you and we appreciate the backstory because that does help. But what George and I would suggest for you to do today, the same way that you went over and opened a brokerage account, you can open a Roth IRA because you have earned income. So we want you to open a Roth ira and then we want you to, to invest. At this point, I wouldn't mind if you picked.
George Kamel
Yeah, it's $8,000 a year since you're over 50. And that'll allow you to sock away $8,000 a year tax free because you're using after tax income to fund it and it's not tied to your employer. And that will compound over the next 10, 20 years, God willing, into a nice little nest egg for you. And so between that plus Social Security, the goal is how can I survive? Because right now you don't have much of a nest egg, it sounds like, but you have a paid for.
Jade Warshaw
And I would stop buying those single stocks, by the way. Yeah, I don't want you to do that again.
Caller
Okay.
Jade Warshaw
Don't do that anymore.
Caller
So I don't. I'm. I'm going to be 69. So my boss is saying he wants to retire next year. That means I have to. Well, definitely keep working. But what do I do? What's. Where do I get a Roth ira? I don't know.
George Kamel
Where did you open the brokerage account?
Caller
I opened it with E Trade. So Morgan says, Stanley.
George Kamel
Okay. So you can open a Roth IRA through them as well. And in your shoes. What I would do is get a pro in your corner because time is of the essence and we cannot screw this up. So I've got just the person for you. Jump on ramseysolutions.com and click on Smartvestor Pro. These are investment professionals with the heart of a teacher because that's what you need right now. You need the financial literacy so that you know what you're doing versus just hoping. This is like spray and pray. I hope my money's doing well. I hope it grows. They will actually educate you to go. Here's what a mutual fund is versus a single stock. Here's what a Roth IRA is versus a brokerage account. And they can Help create a strategy so that you can retire with dignity instead of just fingers crossed. Hopefully one day I can.
Jade Warshaw
And you've done a good job. I mean, the fact that you were able to buy a house in cash is a great thing. You've got a great secure job, you've got a good income going forward, you're going to be just fine. But you've got to do what George said to do next. You can't just guess and hope that everything works out.
George Kamel
Yeah, well, there's a level that DIY is, becomes dangerous.
Jade Warshaw
Yeah.
George Kamel
Because I've done DIY in my own house with like a house project. Doesn't end well. Usually I end up calling a pro to fix all the things I messed up.
Jade Warshaw
Yeah. Especially if you don't feel like you have a baseline of knowledge and you don't have a lot of time. She doesn't have time to make any more mistakes.
George Kamel
At 22, you can screw some things up and make up for it later.
Jade Warshaw
Listen, at 22, if you just parked your money in an index fund, I would probably never stop you. Right. And it's just growing and growing and growing. There are worse things you can, could do. Right. So I, I agree with her. A smartvestor pro. You have to, you need to get the help you need. But I think that Gail was a cautionary tale for a lot of people listening. It's so easy to just go through life, George, and think, I'll, you know, I'll make that change later. I'll save later, I'll save later, you know, and the time, it does catch up with you. And so if you're listening now and you're looking at your finances and you feel that squeeze of living paycheck to paycheck, if you feel you, you know, that, that shame about knowing the debt that you have, you haven't touched the student loans, you're still spending on a credit card. Right. You just, you know, went down and bought yet another car and you have another car payment, it's going to be another three to four years before you pay it off. Don't ignore that. We get those checks in our spirit. We get those red flags. Start today. If you start today, then you will look up in two years, three years, the debt will be gone. I know for Sam and I, it was seven and a half years. How long did it take take you?
George Kamel
Two years.
Jade Warshaw
Two years. You commit for two years, your debt's
George Kamel
gone, and the next 20 is freedom and margin.
Jade Warshaw
Yes, freedom and margin. And you can actually live like no one else. George said something so amazing to me on the way into the studio. We go out and shake people's hands. In the breaks, he came back, he said, jade, one of my favorite things that I get to spend money on is a laundry service. I love that.
George Kamel
Buying my time back.
Jade Warshaw
Buying your time back and all of that is because you sacrificed to win. When it was time, it was crunch time. And when it's time to crunch, get to crunching.
George Kamel
Get to crunching. Well, I mean, here's the crazy math on this. At 20 years old, every dollar you invest becomes $73. 65. But you invest that same dollar. At 50 years old, it becomes $3.50. At 65, that hurts. Instead of $73, you got three bucks because you waited 30 years. So do not delay. Get to investing. The best time to plant a tree was 20, 20 years ago. The next best time is today. It's not too late. If you can still fog up a mirror.
Jade Warshaw
The time is going to pass anyway, boys and girls.
George Kamel
Hey George Camel here. So you're thinking about buying or selling your home? It's exciting, but there's a lot to think about and all those decisions can feel overwhelming. Well, here's the good news. You don't have to tackle the process alone. Ramsey's real estate home base is the place to find all of your free tools and resources for help to get prepared to buy or sell your home with confidence. You'll find calculators, start to Finish guides, a podcast, and even an in depth video course hosted by yours truly. What's not to love? So if you're ready to take the next steps toward your home goals, go to ramseysolutions.com realestate that's Ramsey Solutions. Com dot.com realestate.
Jade Warshaw
Well, buying or selling your home is a high stakes game because one bad deal could cost you tens of thousands of dollars. You don't want to overpay for your next house or sell your current home for less than it's worth. That's why Ramsey Trusted connects you with vetted real estate estate agents who have the experience to guide you step by step to make smart decisions, not expensive mistakes. Connecting is really easy. Just compare agent profiles, interview your top choices, and ultimately pick the one that's right for you. Find a local Ramsey Trusted agent who has your best interest at heart for free@ramsey solutions.com agent or click the link in the description if you're listening on YouTube or podcast. Jackson is in Colorado Springs, Colorado. Hey Jackson Maxson, what's up?
Caller
Hey Jordan. Jade, how are you doing?
Jade Warshaw
Great. How can we help today?
Caller
Had a question regarding our baby step three emergency fund. Wife and I just hit three months and we both think we need to get to six months. However, that'll take us about another 14 months to get there. Part of that is a sinking fund for a labor and delivery bill. What would be your thoughts on where we should be at? Three months is about 25,000. Six months is about 42,000.
Jade Warshaw
I think that what you're doing is about right. Kind of stopping and saying we need to put this money aside specifically for labor and delivery. We know we're going to need that money. I would exactly do that because chances are you are going to use that. You might hit your deductible. You don't know what the situation is going to be. So I like the idea of that. Hopefully there's some that you can hold back when it's all set said and done and plop it over into the emergency fund and if not, you can just push play, you know, on the extra three months once you're done saving up for labor and delivery.
Caller
Perfect.
Jade Warshaw
Yeah.
Caller
I have another question. There's time.
Jade Warshaw
Yeah. What. What are the numbers? Tell us the numbers. What's three months?
Caller
Three months is about 25,000.
Jade Warshaw
Okay.
Caller
Six months is about 42. A little over 42. We are both pretty conservative. Said, let's go to 45.
Jade Warshaw
Yeah. And what's labor delivery?
Caller
So we just had one about a year ago that was about 7,500. I budgeted 9,000 just to be safe.
Jade Warshaw
Okay. So hopefully you'll have another 1500 when it's all said and done to plop over there and get you closer to the 42. 45 you want.
Caller
Yeah, hopefully.
George Kamel
What was your other question?
Caller
Would you. We have a paid for car that's worth 45,000. We've been debating back and forth we should sell it by a $20,000 car and basically end our baby step three with the extra.
George Kamel
Oh, I see. Okay.
Jade Warshaw
What's your income?
Caller
Wife, stay at home? Mom. She makes about $1,000 a month doing remote work. And then I make132.2 after base salary and vehicle allowance.
George Kamel
And what's your other car worth for other vehicles?
Caller
My truck is worth about 18,000. We're just under the 50% mark.
Okay.
George Kamel
Yeah. Nothing's on fire here, but if you're just like, we don't really need this much car. We can get something great and reliable for the family for 20 or 25. You can always use that margin. To then apply to the emergency fund and spare yourself 14 months of sacrifice. So it's like, either way, there's sacrifice. Going from a $45,000 car to a $20,000 car.
Jade Warshaw
Feel that.
George Kamel
You'll feel that. And saving 14 months of sacrifice with this baby on, all that going on, I think that's well worth it if you guys don't really care about driving the fanciest cars.
Caller
Yeah. And I do love my wife being in a basically brand new car that's paid for.
Jade Warshaw
Yeah.
George Kamel
What kind of car is the. The one that's paid for?
Caller
Toyota Tundra Or. I'm sorry, Toyota Forerunner. Mine's a Tundra 4Runner.
George Kamel
Okay. So she'll be using the Forerunner last forever.
Caller
Yeah.
George Kamel
I mean, yeah. Four Runners are great, and they hold their value pretty good, too. So you're in good shape, man. Congratulations. You guys have really thought through this intentionally.
Caller
Yeah.
George Kamel
A good place to be.
Jade Warshaw
Very good. Thanks for the call. All right, we've got Rebecca in Dayton, Ohio. Rebecca, you're on the line.
Caller
Hi, Jaden. Hi, Jaden. George. Thanks for taking the call.
Jade Warshaw
Yeah, absolutely.
Caller
I have a question about my husband's retirement account from a previous employer. He switched jobs about a year ago. He did have a traditional 401k with the previous employer. He now has a Roth 401k at the new employer. And his old account has been going pretty good, and so we've just. He just kind of let it ride. But we've been hearing you say that that's kind of like leaving your stuff at your ex's house. So we're kind of trying to figure out how to go about moving that, but we're so nervous that we would do it wrong, but we should be able to do that ourselves. Is that correct?
Dave Ramsey
Yeah.
George Kamel
It's not a complicated process. The key is you never want to see the money in your bank account. You want to do something called a direct rollover, and you want to keep it in kind. Meaning if it's a traditional 401k, we want to do a traditional IRA.
Caller
Okay.
George Kamel
Because if you move it to a Roth IRA, well, now you've got to pay the taxes on that.
Caller
Both of the accounts, the old account, that's traditional and the new Roth, they just happen to be with the same cost company. But does he need. You know, he opened a Fidelity account. Does it need to stay with the same company or it doesn't matter?
George Kamel
No, it doesn't matter. He could roll it over to Vanguard, so you could just get a direct rollover over to A Vanguard ira, Fidelity ira. It doesn't matter. The key is direct rollover. And what happened with my wife's 401k when she left Ramsey to stay home with our kids, they actually mailed us a check. Now, it wasn't to my name. It was to the Vanguard account. And then I deposited that check into the Vanguard account. So it's not a complicated process, but I understand it's a lot. There's like a lot of zeros on the end, and it can feel intimidating. So if you need help with that, you can always reach out to a Smartvestor Pro. Just jump on a ramseysolutions.com, click Smartvestor Pro. And those are investing pros. That's what I did when I first started at Ramsey. I had an old Apple 401K. They helped me roll it over to an IRA. That was. That took some guesswork out for me, for sure. Okay, and then you want to invest. That's another key. It's just going to sit in the settlement fund in the cash portion. So you want to make sure you actually invest that money once it's in there into good funds.
Jade Warshaw
Yeah. And I was going to say you mentioned that you didn't want to move it because you liked the way it was invested. So I would just choose the same funds again and make sure, if you really loved your rate of return, that it's invested the exact same way in the same fund.
George Kamel
Just get to as close as possible.
Caller
It's been getting about 18%. So we're like, okay, that's good. But now we're thinking we do still need to move it where we can control it.
George Kamel
Yeah, well, I mean, it's not magic. The market has been doing really well the last couple years. It was like 26%, 23%, 17%. So that is probably the reason for that. It's not magical funds. You can probably find very similar funds in that ira. But I do like an IRA because you have full control of it. So that that's a nice feature. And you have access to all of the investments in the world versus just what's in your employer's 401k.
Jade Warshaw
Absolutely. Well, George, let's see. Let's try to help Connor. I think we can do it real quick. Connor, get your question fast. Connor in Washington. Washington, D.C.
Caller
jade. I'll be quick. I got married a month ago, and we experienced an import of love and generosity. I'm sitting or I'm driving a leased car that expires in December. I'd be able to buy it for 19,000. Or I can, you know, forego it, let the dealer take it, and then buy a beater. But I feel like I'm getting a pretty good value value on this. On this car. So the question is, do we take the gifts from the wedding and put them towards this shinier car, or do we just put them directly towards the loans and keep it simple?
Jade Warshaw
Gosh. Yeah. How much loans do you have? What do you owe in debt?
Caller
We have 72,000 total in student loans.
Jade Warshaw
You know, I'm all about having a nice car, but if you can have more cash to go towards this debt, I'm going to take that every single time. The gift was yours to do what you want with. And I would definitely, when I can get out of it, I get out of it and I take some cash and buy a beater.
George Kamel
Yeah. The way I think about this is if you did not have this lease and you had $19,000 and you had 72 grand in debt, would you go out and buy a $19,000 car? Probably not. And so I know it's a little painful. You're newlyweds, you're excited. You want to feel like we made it, we're doing well for ourselves. And then you go out and buy a $7,000 car. Now you're going, ah, this kind of stinks. But what happened for me, Jade, is it actually lit a fire under me. Anything that you don't like about that car just becomes more fuel to get out of debt faster.
Jade Warshaw
So you're right. I know that's right. Sam and I used to have a. We had an old Jeep. It was a Jeep Liberty. And we decided, like, this is our. We are a one car family. And everything went wrong with that car. But, you know, you're getting out of debt. At one point, the motors went out in the windows, so the windows wouldn't stay up. And to take it to get fixed, it was like $700. And we were like, nope. My husband found like, shoelaces and, like, inside the door, used the shoelaces full.
George Kamel
MacGyver.
Jade Warshaw
MacGyver. By the time we got out of that car and, and upgraded, like, smoke would come out of the engine. Every time I started it up, it was just. It's a beater.
George Kamel
I'm glad you're alive to tell the tale.
Jade Warshaw
I live to tell the story.
George Kamel
We don't need to go that crazy, Connor. But I would just buy a reasonable used car for far less than 19.
Jade Warshaw
We're not telling you to do anything. We haven't done ourselves is the point of the story.
Caller
Foreign.
Dave Ramsey
Dave Ramsey here. For more than 30 years, I've been talking to folks on the air and I can tell you that most people are broke not because they don't make enough money, but because they don't have a plan. You need to give every dollar you earn a job because when you do that, something changes. You stop guessing, you stop worrying, you stop stressing. Our every dollar budgeting app will show show you how to find extra cash, pay off debt, and finally start winning with money. But most people won't do it. They'll keep living paycheck to paycheck, keep hoping things will change without making a change. It's time to say enough is enough. It's time to take control of your money. It's time to start your every dollar budget for free today. Go download it in the App store or Google Play.
Jade Warshaw
Ramsay shows scripture and quote of the day. Ephesians, chapter 2, verse 4 through 5. But because of his great love for us, God who is rich in mercy, made us alive with Christ even when we were dead in transgressions, it is by grace you have have been saved. Thank you. Earl Wilson said this. If you think nobody cares if you're alive, try missing a couple of car payments.
George Kamel
That'll do it.
Jade Warshaw
They'll come after you. Oh, that's so funny. I love that. All right. It's also kind of sad.
George Kamel
There's a sentence to it for sure.
Jade Warshaw
Jesse is in Nashville, Tennessee. Hey, Jesse, how can we help?
Caller
What's going on, guys? Hope you're all doing good today.
Jade Warshaw
Yeah.
George Kamel
What can we help you?
Caller
Yeah. So my question, yeah, I'm 22 years old, you know, graduated college. I've now kind of been working for a year. And my question is, should I be chasing in my career something that is more financially stable or something that's closer, like tailored to my passions? And what is the balance in that?
Jade Warshaw
Why can't it be both? Tell us more.
Caller
Yeah, I worked so I worked nine months on foster care and I enjoyed it but it was very much just didn't pay great and it was just emotionally burnt me out and I thought I needed a break. So now I'm trying something in the business realm selling insurance and you know, it's maybe more higher earning and kind of provide more for me. But I'm trying to figure out that's just something I want to do long term and this is what I want to do. You know, it feels like 10, 15, 20 years.
Jade Warshaw
That feels like a really Big leap of interest from caring for children's literally orphans to caring to selling insurance. Is there something that you can do that still works heavily with caring for people, mainly children, that maybe doesn't burn you out quite as much and maybe you can make a little bit more money. That's what I'd be thinking because clearly, do you see what I'm saying, there's a huge gap. Gap there.
Caller
Yeah.
Jade Warshaw
Have you thought about that?
Caller
Definitely I haven't. Yeah, that's what I've just been trying to ponder and think on these past past few months as I've started this job in insurance now.
Jade Warshaw
Well, our colleague, our former colleague whom we still love, Ken Coleman, wrote a book, find the work you're wired to do. And inside of it there's a career assessment. George and I are going to send that to you because I think that's all your hang up is. I think that you've identified what it is that you're passionate about. We just have to figure out all the different ways and all the different career fields that you can use that passion and that book is going to help you do that. What I wouldn't do today is choose a career simply based on how much money you can make out of it and what you perceive to be stable. I would not do that.
George Kamel
Yeah, you'll get to the end of that road with a lot of regret going, now what? I'm burnt out. I paid a soul tax for a day decade. Sure, I made some money, but it was not worth it. So I want to know this, Jesse, where are you at financially today at 22?
Caller
Yeah, I mean I've been living at home. My parents paid off all my debt and you know, I'm kind of at a point. I just proposed to my girlfriend. We're about to be married next nine months. So it's kind of, you know, we're not in the negatives. Got a couple thousand dollars in savings, good emergency fund. And now it's just trying to figure out what can I do to as we navigate going into marriage.
George Kamel
So that's great. Well, that financial piece gives you so much flexibility. It gives you options to pursue the thing you really want to do instead of, well, I have to go sell insurance because it makes a lot of money because I have a lot of debt to pay off. So staying debt free is actually sort of a hack for doing the career that fuels you. And I'm just, I did a quick Google search and find the work you're wired to do will help you with this. But I'm looking at jobs like licensed clinical social worker making 60 to 90K, child protective services, investigator, supervisor, 50 to 75K, foster care program director, 65 to 100K. So there's a lot of jobs out there that can pay well. And the truth is, at 22 with no experience, expect to not make much.
Jade Warshaw
That's right.
George Kamel
That's kind of the name of the game. And as you get more experience, by 32, you should be making much more. So you got a lot of time on your hands. So just don't squander it. Start to kind of vibe out. What is the thing I liked about that? How can I pursue that? But the key is, what do you love? What does the world need? What are you good at? And then what can you be paid for? And if you find that sweet spot in the center there, you have struck lightning. It's something most people don't do their entire lives.
Jade Warshaw
I like that. I like that. Good question. Thanks for the call. We've got Drew, who's in Springfield, Missouri, up next. Hey, Drew.
Caller
Yeah?
Jade Warshaw
How can we help?
Caller
Me and my wife have a question. We. We were thinking about taking some equity out of property that we have to buy, some rental property.
Jade Warshaw
Okay. How many properties do you have total?
Caller
We have two. We have our main house. It's paid for. We have a lake house, and it's paid for.
Jade Warshaw
Okay, and so which you were going to borrow against one of these to buy the next property?
Caller
Yeah, we were. The way we feel about it is it's like having cash in a checking account. It's really not doing much. And I could be wrong. That might be the wrong way of thinking it, but just seems like a lot of equity sitting there, not doing anything. So, yes, we were going to take the equity out of the lake house and try and put it in some rental properties.
George Kamel
The lake house was meant for you guys as a toy, right? You're not renting it out?
Caller
Yeah, that was just. No, we're not renting it out. It's just a weekend thing.
George Kamel
Okay, so here's the way to look at it. It's not an investment, and therefore, it doesn't need to make you money. It's just for you to enjoy. And the reason we tell people to pay cash for things like that is so that you can stomach that. You know, Dave Ramsey's got a lot of properties. He's got a lake house that he loves. He does not look at it and go, man, and a lot of money just sitting in that lake house. I'd like to have that, because what happens is now you're moving backwards. You're taking. Taken on the HELOC or the home equity loan to do this. Now the lake house is on the block. You got a new payment in your life to try to do this again with another rental property. So I. The. I want to know what's the deeper reason behind this, Because I don't think it's that the lake house is just sitting there. It sounds like you guys are wanting to build wealth in a different way.
Caller
Well, yeah. And so really, what's driving it is we got started late on investment accounts. We just got started a few years ago, and we're. We're trying to catch up is kind of. What the.
George Kamel
How old are you guys?
Caller
I'm 38, and she is 39.
All right.
George Kamel
What's the lake house worth?
Caller
It's roughly 300. We. We put a lot of improvements to it. I mean, we bought it and just have remodeled it from one end to the other, so it's kind of hard to tell. But 300 is a safe number.
George Kamel
How often do you use the lake house?
Caller
Just about every weekend. Oh, wow.
George Kamel
So it's getting a lot of use. So you're not. It's not something you were like, hey, I'd be willing to sell this thing and put the money in investments because we're behind.
Caller
No, it's our hobby. It's pretty much our only hobby. We.
Jade Warshaw
What's your income? What do you guys bring in every month?
Caller
Well, we take home about 145,000 a year. And what's the gross amount of that? I'm not 100% sure on that, but
George Kamel
how much could you invest a month right now in order to, quote, catch up? Because you're only 38. You got plenty of time.
Jade Warshaw
Absolutely.
George Kamel
And you got no debt in your life, it sounds like.
Caller
Well, there is a. The boat that's sitting in the. In the boat slip. I owe 6,000 on it. And that's it. On debt, we invest out of that. 145 that we take home, we invest 68,500 of that. Wow.
Jade Warshaw
Until. That's great.
George Kamel
The stock market.
Caller
Yeah, we have an Edward Jones.
George Kamel
Okay, and how much do you currently have in investments?
Caller
224,000. And that's. That's. We've accumulated that over. This is my second year.
George Kamel
Okay, well, let me show you the math on this. You're 38. You got 5,600amonth. Basically, going into these investments, you already have 224,000 you're going to have 7.4 million at 60 if you just keep this up.
Caller
Yeah, it's pretty good.
George Kamel
So therefore I tell you that to say you don't need to rush this, you don't need to take out a HELOC to go get an investment property that hopefully ROIs, that hopefully, hopefully, you know, actually makes any amount of money because you have debt leveraged against it, which is going to hurt the cash flow. So I would just keep doing what you're doing. The life hack here is your income and your savings rate. Not that you're not doing enough wealth hacks and taking out enough helocs to leverage more properties.
Jade Warshaw
That's right. You guys have done really, really well and you've set yourself up for success. There's no reason to really change, change the recipe now, unless you love real
George Kamel
estate, than just stack cash or invest and buy real estate and cash. But the stock market is a great passive way, a truly passive way. No headaches, no landlording. The money just grows and grows and grows.
Jade Warshaw
That's right. Well, thanks for hanging out with us today, guys. And remember, there's ultimately only one way to financial peace and that's to walk daily with the prince of peace, Christ Jesus.
Caller
Sam.
Podcast: The Ramsey Show
Episode: Develop Steady Habits That Create Lasting Wealth
Air Date: June 22, 2026
Host(s): Jade Warshaw, George Kamel, Dave Ramsey
Main Theme:
This episode focuses on the crucial habits, mindsets, and actionable strategies for developing lasting wealth—no matter your background or any past “money mistakes.” The hosts answer live callers’ questions on cars, debt, insurance, investing, family finances, and more, illustrating each point with real-life financial challenges and emphasizing personal responsibility, strong habits, and clear communication.
This episode is a comprehensive primer on the Ramsey Baby Steps and core philosophies: cash over debt, responsibility, taking the slow-and-steady path, planning for emergencies, investing wisely, and always focusing on your “why.” It addresses real-life challenges across generations and financial situations.
For additional guidance or budgeting help, visit RamseySolutions.com.