Smart Money Decisions Often Mean Sacrificing Today for Tomorrow

Summary

Podcast Summary: The Ramsey Show – Episode: "Smart Money Decisions Often Mean Sacrificing Today for Tomorrow"

Release Date: May 2, 2025
Host: Dave Ramsey
Co-Host: Jade Washaw
Description: In this episode, Dave Ramsey and his co-host Jade Washaw tackle various financial dilemmas posed by callers, offering expert advice on debt management, retirement planning, homeownership, and more. The episode emphasizes the importance of making smart financial decisions that often require short-term sacrifices for long-term stability and wealth building.

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1. Managing Business Debt Amidst Closure

Caller: Robert from Washington D.C.
Timestamp: [00:46] – [13:01]

Situation: Robert and his wife are co-managing a family business set to close in a few months, leaving them with a shared debt of approximately $160,000. This debt includes rent ($215,000), a PPP loan ($74,500), and a $70,000 loan from his father-in-law.

Key Discussions:

• Debt Allocation:
  Dave Ramsey discusses the importance of understanding ownership percentages and how they relate to debt responsibilities. Robert and his wife own 30% of the business, while his in-laws hold 40%, and his sister-in-law and her husband hold 30%.

• Negotiating with Creditors:
  Robert received a notice indicating potential negotiations with the landlord, which could significantly reduce the owed rent.

• Personal Guarantees:
  The PPP loan is a concern as Robert's wife is the sole guarantor, placing their personal finances at risk.

Notable Quotes:

• Dave Ramsey:
  “[04:02] And you own 30%. Yeah. And that doesn't equal 74. Okay. So yeah, depending on… It’s gonna change when the rent changes.”

• Jade Washaw:
  “[03:31] Is there any cash anywhere?”

Advice Provided:

• Debt Redistribution:
  Ramsey and Washaw guide Robert on redistributing the debt proportionally based on ownership percentages. They emphasize the necessity of all parties contributing to the repayment to avoid overwhelming any single member.

• Written Agreements:
  It's crucial to have all parties agree and sign off on the debt distribution plan to prevent future conflicts.

• Emergency Funds Allocation:
  Utilizing any available cash reserves to reduce the PPP loan burden is recommended.

• Financial Strategy:
  Ramsey advises Robert to prioritize paying off significant debts first, such as the PPP loan, to protect personal finances from business liabilities.

Conclusion: Robert is encouraged to create a structured repayment plan, involving all stakeholders, to manage the impending business closure responsibly. Maintaining clear communication and written agreements among all parties is essential to ensure equitable debt distribution.

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2. Debt Management During Job Transition

Caller: Lee from Spokane
Timestamp: [13:23] – [26:18]

Situation: Lee is transitioning to a new job that includes an unpaid training period of six weeks, followed by two months before receiving a regular paycheck. During this time, he contemplates whether to use retirement funds to pay off $7,500 in credit card debt.

Key Discussions:

• Emergency Fund Usage:
  Lee has $500 in his bank account and $17,000 in savings, fearing further debt accumulation during the transition.

• Income Stability:
  Concerns about reduced income and the ability to meet monthly obligations without dipping into retirement funds.

• Debt Prioritization:
  Distinguishing between essential debts and those that can be managed without resorting to retirement accounts.

Notable Quotes:

• Dave Ramsey:
  “[16:04] No, that's borrowing money at 30% interest. It’s going to be a 10% penalty, plus your tax rate.”

• Jade Washaw:
  “[16:50] If I were you, in many ways, you kind of are in a storm mode.”

Advice Provided:

• Avoiding Retirement Fund Withdrawals:
  Ramsey strongly advises against using retirement funds to pay off credit card debt due to high penalties and taxes.

• Budget Optimization:
  Encourages Lee to maximize income streams during the training period, possibly through side jobs like tutoring.

• Debt Repayment Strategy:
  Prioritize paying off high-interest debts first while maintaining minimal essential expenses.

Conclusion: Lee is advised to maintain discipline in budgeting, avoid tapping into retirement funds, and aggressively tackle credit card debt using available savings and increased income from side hustles during the job transition.

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3. First-Time Homebuyers Facing High Mortgage Costs

Caller: Jerry from Dallas
Timestamp: [22:03] – [30:24]

Situation: Jerry and his wife, first-time homebuyers, are apprehensive about purchasing a home due to the high mortgage costs, which consume approximately 45% of their monthly take-home income. They are debating whether to proceed with the purchase now or wait until after a year.

Key Discussions:

• Affordability Concerns:
  The proposed mortgage significantly exceeds the recommended 28-30% of take-home pay, potentially leading to financial strain.

• Adjustable Rate Mortgage (ARM) Risks:
  The mortgage in question is an ARM, posing risks of increased payments in the future due to interest rate fluctuations.

• Future Financial Planning:
  Considerations include potential changes in family dynamics, such as having children and associated costs like daycare.

Notable Quotes:

• Dave Ramsey:
  “[23:09] So this is not only 45%, it's an adjustable rate 30 year mortgage.”

• Jade Washaw:
  “[27:32] And so the best advice I can give you is to think about that future.”

Advice Provided:

• Mortgage Type Evaluation:
  Ramsey strongly advises against opting for an ARM due to its unpredictability and potential for increased financial burden.

• Housing Budget Adherence:
  Recommends ensuring that mortgage payments do not exceed a safe percentage of income to maintain financial health and flexibility.

• Long-Term Financial Stability:
  Emphasizes the importance of considering future expenses and income stability when committing to a mortgage.

Conclusion: Jerry is counseled to reconsider the current mortgage offer due to its unsustainable percentage of income and the inherent risks of an adjustable rate. The experts advocate for more affordable housing options that align with sound financial principles and long-term stability.

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4. Unique Mortgage Situations Involving In-Laws

Caller: Spencer from Dallas, Texas
Timestamp: [33:53] – [39:00]

Situation: Spencer and his wife purchased a home with the assistance of Spencer's in-laws, who effectively acted as lenders. They owe their in-laws approximately $348,296 for the house but plan not to repay before the in-laws' passing. Spencer seeks advice on whether to restructure this informal mortgage.

Key Discussions:

• Formalizing Debt Agreements:
  The importance of restructuring the debt to acknowledge it formally or seeking forgiveness to alleviate personal financial burdens.

• Estate Planning Considerations:
  How the debt will be handled in the context of the in-laws’ estates and potential inheritance implications.

• Relationship Dynamics:
  The emotional strain of owing money to family members and the awkwardness it can create in personal relationships.

Notable Quotes:

• Dave Ramsey:
  “[35:08] And they have no intention of receiving that from you before their death?”

• Jade Washaw:
  “[36:34] And she needs to lead that conversation.”

Advice Provided:

• Debt Restructuring:
  Ramsey advises Spencer to have an open conversation with his in-laws to either formalize the mortgage or arrange for debt forgiveness.

• Written Agreements:
  Emphasizes the necessity of having all parties agree in writing to prevent future misunderstandings and emotional conflicts.

• Tax Considerations:
  Introduces the concept of the Unified Estate Tax Credit to facilitate debt forgiveness without incurring gift taxes.

Conclusion: Spencer is encouraged to proactively address the informal mortgage with his in-laws to formalize the agreement or seek forgiveness, thereby reducing financial and emotional strain. Proper documentation and open communication are key to resolving this sensitive financial arrangement.

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5. Balancing Saving and Enjoying Finances in Marriage

Caller: Sarah from Canada
Timestamp: [45:11] – [53:05]

Situation: Sarah and her husband earn a substantial combined income ($300k-$350k annually) and are balancing aggressive saving for their children’s future and retirement with enjoying the finer things in life. Sarah prefers to spend on vacations and nicer things, while her husband is more inclined towards saving.

Key Discussions:

• Financial Prioritization:
  Understanding how to allocate income towards savings, investments, and lifestyle expenditures harmoniously.

• Intentional Budgeting:
  The importance of being deliberate in financial decisions to accommodate both saving and enjoyment without compromising financial goals.

• Financial Checklists:
  Jade introduces a "Financially Responsible Adult Checklist" to assess financial readiness for various expenditures.

Notable Quotes:

• Jade Washaw:
  “[48:55] Financially responsible adult checklist.”

• Dave Ramsey:
  “[53:04] You've got your frackle.”

Advice Provided:

• Balanced Allocation:
  Advises maintaining a balance between saving (15% of income), investing, and budgeting for lifestyle and generosity.

• Checklist Implementation:
  Encourages using a checklist to ensure all financial bases are covered before making discretionary purchases.

• Open Communication:
  Stresses the importance of couples communicating and aligning their financial priorities to achieve mutual satisfaction and financial peace.

Conclusion: Sarah and her husband are guided to implement intentional budgeting practices that allow for both significant savings and enjoyable expenditures. Utilizing checklists and maintaining open financial communication are recommended to achieve a harmonious balance between saving and spending.

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6. Retirement Planning and Emergency Fund Management

Caller: Crystal from Portland, Oregon
Timestamp: [56:29] – [86:28]

Situation: Crystal and her husband are retiring soon after becoming debt-free, including paying off their house. They have an emergency fund of $25,000 but are questioning whether to maintain the same level of cash on hand post-retirement or invest excess funds for better returns.

Key Discussions:

• Purpose of Emergency Funds:
  Clarifying that emergency funds are not solely for loss of income but also for unexpected large expenses.

• Investment Opportunities:
  Evaluating whether to invest portions of the emergency fund to maximize financial growth without compromising financial security.

• Emergency Fund Adequacy:
  Assessing if the current emergency fund is sufficient given their financial status and future needs.

Notable Quotes:

• Dave Ramsey:
  “[78:00] We have fully funded emergency fund.”

• Jade Washaw:
  “[86:28] You have to think about daycare.”

Advice Provided:

• Reevaluating Emergency Fund Needs:
  Recommends adjusting the emergency fund based on current net worth and future financial stability, suggesting that the need for large cash reserves diminishes as wealth increases.

• Strategic Investing:
  Advises investing excess funds in low-turnover mutual funds or Roth accounts to benefit from potential growth while keeping some liquidity for unforeseen expenses.

• Continuous Financial Assessment:
  Encourages regular review of financial strategies to ensure they align with changing life circumstances and financial goals.

Conclusion: Crystal and her husband are advised to maintain a practical emergency fund while strategically investing surplus funds to enhance their retirement savings. Regular financial assessments will help them adapt to changing needs and maximize their financial security during retirement.

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7. Maximizing Retirement Contributions with Tax Efficiency

Caller: Bob from Birmingham
Timestamp: [83:53] – [86:28]

Situation: At 61 years old with six years until retirement, Bob has a traditional 401(k) with the government and is considering whether to maximize contributions or shift funds to a Roth account for tax advantages.

Key Discussions:

• Tax Implications of Traditional vs. Roth:
  Understanding the differences in tax obligations between traditional and Roth retirement accounts, especially concerning Required Minimum Distributions (RMDs).

• Inheritance Considerations:
  How Roth accounts can benefit heirs by avoiding taxes on inherited funds.

• Investment Strategies:
  Choosing low-turnover mutual funds to minimize taxable events and maximize investment returns.

Notable Quotes:

• Dave Ramsey:
  “[84:02] What ends up happening… A traditional…”

• Jade Washaw:
  “[86:28] You have to think about daycare.”

Advice Provided:

• Favoring Roth Contributions:
  Recommends shifting to Roth accounts to avoid RMDs and ensure tax-free inheritance for heirs.

• Tax-Efficient Investing:
  Suggests investing in low-turnover mutual funds to reduce tax liabilities and enhance investment growth.

• Comprehensive Financial Planning:
  Advises Bob to consult with a financial advisor to tailor investment strategies that align with his retirement goals and tax considerations.

Conclusion: Bob is encouraged to prioritize Roth contributions over traditional 401(k)s to benefit from tax-free growth and inheritance advantages. Investing in tax-efficient funds further optimizes his retirement strategy, ensuring financial stability and legacy planning.

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Final Thoughts and Takeaways

Throughout the episode, Dave Ramsey and Jade Washaw provide actionable advice tailored to each caller's unique financial situation. The overarching theme emphasizes the necessity of making informed financial sacrifices today to achieve long-term financial peace and stability. Key takeaways include:

• Structured Debt Management:
  Understanding debt responsibilities based on ownership and relationships is crucial for equitable repayment.

• Avoiding High-Penalty Loans:
  Steering clear of withdrawing retirement funds to manage debts due to severe financial penalties and tax implications.

• Sustainable Homeownership:
  Ensuring that mortgage payments are within a manageable percentage of income to prevent financial strain.

• Effective Communication:
  Open and honest discussions with family members involved in financial agreements help maintain healthy relationships and clear financial pathways.

• Balanced Financial Planning:
  Integrating saving, investing, and enjoying financial resources harmoniously supports both immediate satisfaction and future wealth accumulation.

This episode serves as a comprehensive guide for listeners navigating various financial challenges, reinforcing the importance of strategic planning, disciplined budgeting, and proactive debt management in building and maintaining financial wealth.

Transcript

[Dave Ramsey]

Live from the headquarters of Ramsey Solutions, it's the Ramsey show where we help people build wealth, do work that they love and create actual amazing relationships. I'm Dave Ramsey, your host. Thank you for joining us. Jade Washall, number one best selling author and Ramsey personality is Mike co host. Today Robert is in Washington D.C. hi Robert, how are you doing?

[Robert]

Great, Dave, thanks for asking. Glad to have a little bit of time on this show with you all.

[Dave Ramsey]

Well, we're honored. How can we help? Sure.

[Robert]

So I have a family business that we've been managing for about seven years now. It's going, they're going to be closing down the next couple of months and we're going to be due to owe about $160,000 in debt. How can my wife and I attack our share of the debt while also protecting household finances?

[Dave Ramsey]

Okay, who owns the business?

[Robert]

So the business is a split between my, my mother in law, father in law, my sister in law and her husband and my wife and I. It's not exactly one third all the way around, but it's pretty close.

[Dave Ramsey]

Okay, so what percentage do you own?

[Robert]

My wife and I own 30% together.

[Dave Ramsey]

Okay, and what is the nature of the $160,000 in debt? What kind of debt?

[Robert]

So we're going to owe about 215 in the next six months of rent due our lease agreement with the landlord. We will, we owe 74,500 approximately through a PPP loan. Thanks Covid, for making things difficult. Of course. And then the last part is about 70,000 that my father in law, when we initially purchased the business, he fronted that through his, you know, retirement account, taking a loan on his, on his IRA or something like that. And even though that part's not, you know, like legally actionable debt, I think it's morally and ethically the right thing to do to pay him back as well.

[Dave Ramsey]

Right. What percentage of the business does he own?

[Robert]

He and his wife together own 40% with my sister in law having the last 30%.

[Jade Washaw]

So the 160 of debt, is that 30% of the overall debt or is that, is there more debt besides that is what I'm asking that others are on the hook for.

[Robert]

This is basically everything. Now I understand that my father in law could kind of absolve that 70,000 if he wanted. That's, that's his, I guess that's his.

[Dave Ramsey]

Percentage it turns out.

[Robert]

Right.

[Jade Washaw]

Right.

[Dave Ramsey]

So if he just, if he said if he just took his percentage and against his retirement and called it, he's out.

[Robert]

Right. Then I suggested that to him as well as a possible course of action?

[Dave Ramsey]

Well, it's the, it's the natural thing to do mathematically.

[Jade Washaw]

Yeah. Why would you be on the hook for 100% of the debt if you own 30% of the business?

[Dave Ramsey]

Yeah, he's on the hook for 40% of the debt and 40% of the debt is to him. So that's just a wash. I mean it may be a little bit, it may be a little bit off. There may be a few thousand dollars, it could be like $5,000 off, but it's pretty close. Okay, then you've got the PPP and you got the rent. Have you all tried to negotiate with the landlord at all on the final rent?

[Robert]

Actually I got notice about an hour ago that he's willing to do a little bit negotiation. So we might be able to knock that number down significantly.

[Dave Ramsey]

The only other change, the formula with your father in law then.

[Robert]

Yeah, yeah. And I said the last wrench in the gear here is that my wife has that PPP loan is about 70, almost 75,000. She is the sole guarantor on that.

[Dave Ramsey]

Oh crap.

[Robert]

Yeah, yeah. So she did it in the name of the business, but she, she only did herself on the math.

[Dave Ramsey]

Wow. And you own 30%. Yeah. And that doesn't equal 74. Okay. So yeah, depending on. Okay. The total is going to change when the rent changes. So 40% changes and it's not going to be enough to cover father in law. So his is not going to be a wash as the rent goes down. You follow me on the math equation?

[Robert]

Not exactly, but I'll go with that.

[Jade Washaw]

What do you think the rent is going to be?

[Dave Ramsey]

Let's just say, let's just say you cut the rent in half. Then you got a 150 debt that you would apply 40% to instead of a 160 debt. You follow me?

[Robert]

Yeah, that tracks.

[Dave Ramsey]

Okay then, then that you know. So that's 60,000 bucks, not 70,000 bucks. So your father in law is still owed $10,000. You all still owe the rent and you still owe the other. So.

[Robert]

Right.

[Jade Washaw]

Is there any cash anywhere?

[Dave Ramsey]

Like is the lease guaranteed at all?

[Robert]

Oh, I can't recall. Top my head.

[Dave Ramsey]

Okay, if they got a personal, personal guarantee on it by one of the other parties because I'm starting to try to divvy this up. Like your father in law is going to get his. You guys are going to get the PPP and somebody's going to put some money on the PPP for you all because you don't owe all of it. It's now half of the loan and you only own 30%. So somebody needs to throw some cash at that for you all. Does anybody in the picture have any cash?

[Robert]

We don't have a whole lot on hand. I mean we've, my wife and I got through the Financial Peace University a few years back. We could potentially throw an emergency fund at it. I know this is not emergency.

[Dave Ramsey]

It's close.

[Jade Washaw]

Right, but there's no, there's zero cash in the business after you close.

[Robert]

The business is doing not well right now. We could potentially liquidate, which is. We're gonna have to do anyway. But we're trying to do some kind of, you know, fire sales on the remaining items and wholesale things to other businesses in the.

[Dave Ramsey]

Yeah, it sounds like mathematically, it sounds like mathematically any cash you guys can drag out of that business needs to be thrown at the ppp.

[Robert]

Does it make sense?

[Dave Ramsey]

If you can get the PPP down to where it equals your share, then you guys just take it on and move it over onto your personal debt and pay it off. Right. That's your portion of it. But right now it's double your share. So if you guys could find 20,000 bucks and or the other sister in law comes up with that and then. So you take the ppp, the father in law takes his and your sister and your brother. Other sister and brother in law, whatever they are, owe the father in law a little bit of money and they owe the back rent.

[Robert]

Yeah, it could be something like that.

[Dave Ramsey]

Yeah, that.

[Robert]

Should I try to seek some kind of notarized agreement as to how we break this down?

[Dave Ramsey]

Yes, yes.

[Jade Washaw]

I was going to say, do you.

[Dave Ramsey]

I'm not worried about it being notarized. I'm really worried about everybody agreeing.

[Jade Washaw]

Right. I was going to say, do you foresee any issue with them understanding how we've broken it down? Because it's, it's based on what you guys said, the. How it's divvied up. Do you foresee an issue with that?

[Robert]

No, but I just, you know, I always try to be cautious with this sort of thing and try to get ahead of any problem.

[Dave Ramsey]

Notarized won't matter. What does matter is everybody signs it and is in agreement and that's all six parties who. Okay, yeah, four cut three couples because I don't want the spouse bitching later that the deal wasn't done and they didn't speak into it. Yeah, okay.

[Robert]

Right.

[Dave Ramsey]

So let's just, let's run some numbers right quick. Okay. Let's call it 150 because you get the rent taken in half. Okay, so 30% is 60K. No, it's not, it's 45K. 40% is 60K. And so we've got 30, 30 and 40, right? Okay, so you guys take on 45 of the PPP. Your father in law takes 60 off of what he's owed, so now he's owed 10 and there's 10 or 11 or whatever owed to the landlord and they owe you the ppp. So the somebody you know, that's the way to move it around. Y'all start just assigning this. But you guys need to get some cash out of this to throw at this ppp because I don't want you to get stuck with that whole thing because that represents half of the debt, not 30% of the debt. And that's a big. So you just gotta talk it through. It's just a math. It's a math riddle. If everybody's of the right spirit. It's just a math riddle. And it's you're getting rid of the personal guarantees or you're taking on the personal guarantees where they actually belong. And this, ladies and gentlemen, is why I told you during COVID not to take out those freaking PPPs. By the way, I did say that you can go back and look it up in 2020. I yelled about it and I got yelled at because I was an idiot. You know, one of the first things I discovered working in the financial world is how absolutely devastating it is when the breadwinner of a family dies and there's too little life insurance or none at all. Grieving families are suddenly left behind, scrambling to pay bills and trying to make ends meet. I also discovered that there are a lot of rip offs in the life insurance world. Like that whole life crap posing as an investment opportunity. What you need is level term life insurance, usually 10 to 12 times your income, which is the smartest, most affordable way to protect your family. The key is finding an independent broker who represents a ton of companies and works for you, not for the insurance company. This is exactly what my friend Jeff Zander and his team at Zander Insurance are all about. They shop the term life companies to find you the best options. And they've been around for over 95 years, so you know they'll be there when you need them. Zander is the real deal and that's why they've handled all my personal insurance for over 25 years. I trust them. And you can too. Visit Zander Dot Com. For instant online quotes or for a more personal touch, give them a call at 800-356-4282. I love a good math riddle, so I can't stop messing with it. If you happen to listen back to the podcast, Robert, when we play it back, here's the. Here's the formula. Okay. Father in law has 70,000 owed to him that he borrowed on his 401k. So his 40%, if there's 150,000 in debt is $60,000. That leaves 10,000 owed to him. Okay. Whatever the rent is, it should be around $10,000 with the landlord negotiation and whatever is owed to father in law and everything above 45,000 on the PPP is paid by the sister in law. Sister in law's on the hook for 45,000 dol. Also Robert's on the hook for 45k of the PPP. So sister in law owes father in law 10 grand and she owes the rent and she owes whatever the difference is there. That's going to be another. See 10. She should go borrow that money and throw it on the ppp, the little bit of difference and call it a day. Yes.

[Jade Washaw]

And they were free and clear. Their name is no longer.

[Dave Ramsey]

Yeah, they've got the PPP. They got the remaining. They got 45,000 of the PPP left and that's if it's only 150. Now if you're able to sell some stuff and do some, some liquidation sales and all that, every dollar you reduce this changes that formula.

[Jade Washaw]

It does. Yes, it does. That's where.

[Dave Ramsey]

Because you're taking the total down. And you know what I'm gonna do is go ahead and clear the rent off as quick as possible and then I'm gonna work on the PPP as quick as possible. And father in law's the last in line.

[Jade Washaw]

Yeah. Cause the cash that they get from the sale, they have to also split that 30, 30, 40.

[Dave Ramsey]

Well, you throw it at the debt and it automatically reduces it. If they throw, if they reduce the debt with the cash they get from the sales, then that automatically reduces by the exact same percentages.

[Jade Washaw]

That is true. But then they have to decide what goes first.

[Dave Ramsey]

Yeah, the rent goes for the rent goes first in the ppp. Yeah, Father in law's third. There's only three items on there and he's last in line by far.

[Jade Washaw]

Why?

[Dave Ramsey]

Because he's the easiest to work with. Yeah, he's, he's, you know, he's in control and he stepped up and stepped into it, much like Robert's wife did when she signed that ppp. But still. Still a problem. But the PPP will come take you out. You do not want.

[Jade Washaw]

I know it. That's what I was saying for the. I'd want. I'd want that PPP debt.

[Dave Ramsey]

I want that thing gone. But the rent's only gonna be like 10 grand.

[Jade Washaw]

That's true. They'll knock that out fast.

[Dave Ramsey]

Yeah. So if you could get 20 grand in liquidated dollars. Changes this formula pretty dramatically.

[Jade Washaw]

He didn't say what kind of business it was, so hopefully they have more than that.

[Dave Ramsey]

Yeah, I hope they can get some money coming in, but it's a sad situation. But the good news is it sounds like they were doing it on a fairly. The relationships sounded. He didn't bring up that they were all fighting.

[Jade Washaw]

Yeah, that's true.

[Dave Ramsey]

And I think if they were fighting, he would have said so. Very interesting. Lee's with us in Spokane. Hi, Lee, how are you?

[Robert]

Hey. Great. Thanks for taking my call.

[Dave Ramsey]

Sure. What's up?

[Robert]

So I'm wondering if before I start my new job, that won't give me a paycheck for two months, it's unpaid training. Should I pay off my debt with my last retirement? And I'd love to give you context real fast, if that's okay. I wrote it out because I was so nervous.

[Dave Ramsey]

It's okay. Sure.

[Robert]

Okay.

[Dave Ramsey]

So a letter to Jade.

[Robert]

Okay. So I formally worked the baby steps with my ex husband. And. But. And I did the Gazelle Intensity. And then unfortunately went through divorce. And post divorce, obviously super difficult. I channeled all my grief into buying a home. And that was back in 2018. And so I'm a homeowner. The last two years, I've had some physical and mental health setbacks. And I'm back into debt. $7,500.

[Jade Washaw]

Okay.

[Robert]

And now my assets are. So I'm 41, single, I'm about to change jobs. I have a house. I bought it for $410,000, and I owe $200,000 on it. Okay. I have a paid for 2,000 Fit. No. Excuse me. 2015 Honda Fit.

[Jade Washaw]

Okay.

[Robert]

I have $12,000 in a Roth IRA. And then $10,000 from when I briefly worked as a teacher for a few years.

[Jade Washaw]

And that's in retirement?

[Robert]

Correct.

[Jade Washaw]

Okay.

[Robert]

And see, I. Mostly, my career has been restaurant work, so I don't have a lot of retirement. That's the only retirement I had from the two years of teaching. But today I hate being in debt.

[Jade Washaw]

Today you're asking do I take the money that I have to pay off the 7, $500 of debt, or do I wait in two months until I start getting paid regularly and then do it? Is that the. The main question?

[Robert]

Correct.

[Jade Washaw]

Do you have any other savings anywhere or. This is the only money. Like, what's. What are you using to pay off this debt is what I'm asking?

[Robert]

Well, I've been basically, like, the last year, been just barely making enough money to pay my bills. Just kind of recovering from the last few years of, like, physical and mental stuff.

[Jade Washaw]

Got you.

[Robert]

And. And I will be able to rent out my house when I leave for training for my new job as a flight attendant.

[Jade Washaw]

Yes. But you didn't. You didn't answer the question of do you have any money saved?

[Robert]

Oh, no, I gave you every. I think $500 is sitting in my bank account right now.

[Jade Washaw]

Okay.

[Dave Ramsey]

And so are they providing while you're doing flight attendant training? They're providing food and housing.

[Robert]

Correct.

[Jade Washaw]

Okay.

[Dave Ramsey]

And you're going to rent your house out for how much?

[Robert]

1700Amonth.

[Dave Ramsey]

Okay. Why can't you just throw that at 7500?

[Robert]

Well, my total bills are about 2500, so I still have to come up with.

[Dave Ramsey]

Oh, wait a minute. You got to pay a house payment?

[Jade Washaw]

Ye. If I were you, in many ways, you're kind of in, like, a storm mode. You're transitioning, but the transition isn't complete. And if I were in your shoes, I'd want to know, okay, I've crossed over. I made it through training. I definitely am getting a paycheck. And then I feel like I'd hit play on paying this off. And.

[Dave Ramsey]

But no, you don't cash out your retirement to do it. No, that's borrowing money at 30% interest. It's going to be a 10% penalty, plus your tax rate. So you're going to get a minimum of a 30 to a 40% hit in taxes and penalties. And that's like saying, hey, Jay, do I borrow money at 40% interest to pay off the 7,500? No, you don't.

[Jade Washaw]

New.

[Dave Ramsey]

New.

[Robert]

Yeah.

[Dave Ramsey]

No.

[Robert]

Yeah.

[Dave Ramsey]

What kind of debt is a 7500?

[Robert]

Well, my heater went out last summer, and that was about 6,000 on what I had.

[Dave Ramsey]

What do you owe it? Who do you owe it to?

[Robert]

I put it on a credit card.

[Dave Ramsey]

Okay, so is this all credit card debt?

[Robert]

Yeah.

[Dave Ramsey]

Okay. All right. And so you're going to be training for three months or two months?

[Robert]

No, training is six weeks. But you don't. We won't be put on the Next payroll until the following month.

[Jade Washaw]

And so I'll try to like, what.

[Dave Ramsey]

Will you be making?

[Robert]

They pay $32 an hour and they guarantee you 90 hours a month. So it's not big bucks either. That's what's making me nervous.

[Dave Ramsey]

Why are you doing it?

[Jade Washaw]

It takes time to build up to be able to have that schedule. Like a full time schedule. That's what I've heard flight attendants say. Right.

[Dave Ramsey]

Why are you doing it if you didn't pay anything?

[Robert]

Well, to answer that question, so I'm single, I don't have kids. I know I can pick up more hours and it'll provide me the retirement, travel benefits. Travel benefits for my parents and my siblings.

[Jade Washaw]

And is there something you can do alongside it until it does start to pan out? Because there is a seniority play there. So is there something that you can do with it? Exactly, because you can't. You can't.

[Robert]

I'm keeping my teaching credentials so I've been subbing. That's what I've been doing the last few months is substitute teaching, which is great because it's flexible. I can pick up right when I can. I can't do that in the summer obviously, but maybe I could tutor or something.

[Jade Washaw]

Yeah, yeah. I think you have to. I think you have to do two jobs until this turns into a full time job.

[Dave Ramsey]

What was your plan to cover the house payment? 1700 doesn't cover it.

[Robert]

My house payment is 1300.

[Dave Ramsey]

Oh, okay.

[Robert]

So yeah, okay.

[Dave Ramsey]

Yeah.

[Robert]

But my bills and expenses, you know.

[Dave Ramsey]

So while you're in school, can you tutorial?

[Robert]

I doubt. They say the six weeks is pretty intensive training, so I don't.

[Dave Ramsey]

I'm just trying to figure out how you're getting through that. I still feel like you're going to end up with another $10,000 in credit card debt.

[Robert]

So the stipend, the food stipend they'll give me is 800. It'll be about 800.

[Dave Ramsey]

Information I didn't have. Okay. I'm starting to see it now. And then the other thing you could consider doing is selling the house.

[Jade Washaw]

Yeah. You're not going to be there hardly much once if you're gonna.

[Dave Ramsey]

If you're gonna be flying the friendly skies or whatever skies they are. You know, I don't know why we need a 400, 000 house. Just get you a little apartment and go live the adventure. Sounds like that's what you're signing up for is an adventure because you're not signing up for pay. I can tell that. So, yeah, I might sell the house and that solves the whole stinking thing. But no, I would not cash out my retirement. I'm gonna weasel my way through this. And this is the Ramsey Show. I've been helping people get out of debt and change their lives for over 30 years. So I know change isn't always easy, but it's worth it. And here's change that's actually easy and worth it. Switching to Boost Mobile Boost gives you nationwide 5G coverage for reliable calls and streaming. And their plans start at just 25 bucks a month for unlimited talk, text and data. With Boost Mobile there's no junk fees, no contracts and they offer a 30 day money back guarantee. Plus their customer service team is made up of real people, not robots. So switching is easy. So go to boostmobile.com Ramsey that's boostmobile.com Ramsey our every dollar team multiple does multiple free trainings for you this month. Join LIVE to learn how to break the cycle of paycheck to paycheck in just 90 days you're going to get a step by step walk of the EveryDollar app learning how to put together a budget to get out of debt to get on the same page with your spouse. Our biggest budgeting questions are answered live in the Q and a. Over 60,000 people have already joined. Spots are limited. Sign up now for [e-mail] webinar Jerry is with us in Dallas. Hi Jerry, how are you?

[Robert]

I'm doing good. How are you?

[Dave Ramsey]

Better than I deserve. What's up?

[Robert]

Right. Bit of a situation me and my wife are in right now. We're first time homeowner buyers trying to purchase a home. After doing the Math, the first three years of mortgage comes around to 45% of our monthly takeaway income after taxes.

[Dave Ramsey]

The area where the house is being.

[Robert]

Built is really hot right now. Everything around is it being sold, major developments going on in that area. But I guess we're just in two separate minds about do we take the plunge now or wait a year and then maybe the price goes up even further and then you know, we're just stuck in the apartment.

[Jade Washaw]

Why did you say it would only be that much for the first 3.

[Robert]

4 years depending on how the loan is working out. So we doing the 2:1 option. So first year.

[Dave Ramsey]

So this is not only 45%, it's an adjustable rate 30 year mortgage.

[Robert]

Right. So if you're taking the average I guess from the third year onwards is going to be.

[Dave Ramsey]

You don't have any idea. It's about no I called an adjustable rate mortgage.

[Robert]

Yes.

[Dave Ramsey]

Going to adjust. You don't even know.

[Jade Washaw]

How old are you?

[Robert]

28.

[Jade Washaw]

What's on fire, dude, that would cause.

[Dave Ramsey]

You to be the stupid.

[Robert]

Yeah.

[Jade Washaw]

Yes. What Dave said.

[Robert]

No, no. The mortgage is going to be 5200 after the third year for the next 30 years.

[Dave Ramsey]

So what do you guys make?

[Robert]

We take home 11, 2,50 after taxes a month.

[Dave Ramsey]

And do you think your income is going to double in the next year?

[Robert]

No.

[Dave Ramsey]

Then don't do this deal. It's really, it's asinine. You are signing up, you're playing. You're signing up for financial suicide.

[Jade Washaw]

The truth is, and earlier in the show we had Brian Buffini on and we were talking about this very thing. Okay, real estate, I get it. It feels very expensive. Sometimes it feels out of touch. Sometimes it feels like it'll never happen. But that's not true. However, your time horizon for when it will happen may be different from what.

[Dave Ramsey]

You expected and your neighborhood might be different from where you expected.

[Jade Washaw]

That's also true. You said it's a very neighborhood they're building.

[Dave Ramsey]

You may not be moving into that neighborhood. You obviously can't afford it.

[Jade Washaw]

So what would it look like to look in a different neighborhood? Or what would it look like to just change your expectation a little bit? Because to put yourself in a situation where you're at 50% for you to be trying to convince us that that's a good idea, it's not sustainable.

[Dave Ramsey]

You know, everything that comes up because you don't leave enough room in your budget because you're what we call house poor. You're signing up for poverty. And everything that comes up that you guys want to do or need to do that you don't have room for in the budget is going to be new debt. And so you're going to run up a pile of credit card debt, a car debt, and you're going to run up some other debts here and there because you pinched yourself with this house payment. And let me tell you, the way the indexes are set on adjustable rate mortgages, they're set. The interest that they give you going in is a bait and switch because it's not even covering the index. Meaning if interest rates don't go down, they would have to. Interest rates would have to go down for your payment to remain the same. So there's a very high likelihood this payment's going up substantially as soon as it's ready to adjust. And so you've signed up for a rat and a wheel that's skinny. That's what you've signed up for.

[Jade Washaw]

And let me tell you something else, Jerry, because we get this call all the time. You're married, probably newly married. Yes. What happens when you decide to have a baby? And what happens when suddenly a wife or a spouse decides to stay home and say, you know what? I wanna stay home with the baby. Now you are locked in.

[Dave Ramsey]

You can't.

[Jade Washaw]

And so the best advice I can give you is to think about that future.

[Dave Ramsey]

Oh, and you can't afford daycare either. There's not room in the house.

[Jade Washaw]

That's what I'm saying. There's no foresight here. And we're here to help you with that. Gotta think about daycare.

[Dave Ramsey]

You guys are so desperate to buy a house in that particular neighborhood, you got house fever and you need to go take a cold shower. This is a no. It's a hard pass no. And it's not because I don't want you to have a house. I don't want the house to have you. This transaction is going to screw up the next decade of your life, minimum. If you do it, you can just go back and say, the mean old nasty guy in Tennessee told me that this was going to screw up my life. And he was right. You can remember that if you go forward with this. Please, son. I love you. Please don't do this to yourself and to your new wife. You're signing up for trouble. You can't afford to live in that neighborhood today. We know that because you had to put it on a 30 and you had to put it on adjustable, and it's still too high a percentage of your take home pay. There's nothing in this formula that makes sense. Everything in here screams don't do it, including me, over and over. Was I unclear?

[Jade Washaw]

You weren't. And we don't even know. Jerry. You didn't tell us. If you have no other debt, my guess is you probably already have other debts.

[Dave Ramsey]

Yeah, so? We're not the cosmic killjoys here. We're trying to keep you from signing up for what you think is a dream. And we're real. Sure. It's a nightmare.

[Jade Washaw]

Oh, it is.

[Dave Ramsey]

That's all it is. We just want good things for you, brother. I want you to reconsider this and not do it. And then I want you to back up. Pan back, zoom out. Start looking further out. Look for something a little older. Get your foot in the door on homeownership after you're debt free, have an emergency fund, and you put Down a good strong down payment. And it's, you buy a fixed, fixed rate 15 year where the payment's no more than 1/4 of your take home pay. And so the translation is it's going to be a lot less expensive house than the one you're looking at. It's not going to be nearly as cool as the one you're looking at. But you're brand new, married in Dallas freakin Texas.

[Jade Washaw]

And for new listen for new couples, that's some of the best advice that I can think of, what Dave just said. And think about what your life will be once you have children. Because most, you know, I'm not saying it's for everybody, but most people get, they get married and they plan on having children and daycare is expensive. If you have two kids, you're at least spending $2,000 a month on daycare. Think about that now. Think about what does somebody want to stay home? Could that possibly be in the future? Because a lot of times we say no, I'm going right back to work. And you don't know what you're going to do. So please consider that. Because I hate those calls, Dave, when they call in and they just, they, they feel like they're between a rock and a hard place because there was no foresight on really what they wanted their life to look like in the future.

[Dave Ramsey]

Well, there's, it's, it's all becomes about the house fever.

[Jade Washaw]

Yeah.

[Dave Ramsey]

And it's got to buy a house. You got to buy a house. You got to buy a house. Everybody's got to buy a house. And everything makes sense if you buy a house. It's the same stupid thing that we sign up for with education. No matter what it costs, I got to go get a degree. No matter what it costs, I got to get a degree. Because you can't get ahead without a degree. And so I'm going $200,000 to get a degree in left handed puppetry. And it'll all work out. It's the same kind of. It becomes illogical because you're assigned a value to something that it doesn't have.

[Jade Washaw]

That's right.

[Dave Ramsey]

Home ownership is good. It's not all good when you do it wrong. It's all bad. And you know, don't, don't do this. That's why they call them brokers, broker and broker and broker. That's what you're going to be. Don't do this, don't do this. And so I'm sorry if I disappointed your realtor or your Builder. But they shouldn't have told you to buy this house. A person with ethics would look at a young married couple and go, honey, you can't afford this. You don't need to do this. And instead, they're just trying to get a commission.

[Jade Washaw]

Yeah, it will be more painful to get this house and have to let it go in two years. You know what I'm saying?

[Dave Ramsey]

The deal closed on. Yeah, but it puts strain on your relationship. It puts strain on your career decisions going forward. It puts strain on everything. You do not have margin in this deal.

[Jade Washaw]

And then you start to resent the house because it's got you locked down. Yeah, it's. It's not good.

[Dave Ramsey]

Well, not good. Maybe she resents him for talking her into the house.

[Jade Washaw]

Or he resents her for saying, I want, I want, I need, I need. Remember? I need, I need, I want. Remember that from.

[Dave Ramsey]

Oh, yeah.

[Jade Washaw]

What about Bob?

[Dave Ramsey]

That was it. That was it. That was the movie. Wow, look at your callback. Look at that. I want, I want, I want, I.

[Robert]

Need, I need, I need.

[Dave Ramsey]

I knew you'd get that good old movie. Richard Dreyfuss, Bill Murray.

[Jade Washaw]

That's right.

[Dave Ramsey]

This is the Ramsay Show.

[Jade Washaw]

Hey, guys, what's up? It's Jade Warshaw. And look, if there's anybody who knows about student loan debt, it's me. My husband and I had $280,000 of it, but we were able to dig ourselves out. And you can, too. If your student loan payment and interest rate are burying you, refinancing could be the solution. Now, I recommend contacting my friends at Laurel Road today through their online application. You can get an initial rate quote in less than five minutes. And if you have a more complex situation, you can schedule 30 minutes to talk to an actual human being. Thanks. Thank goodness Laurel Road makes it simple. There are no fees involved and you could save thousands over the life of your loan. Remember, you should only refinance if it makes sense in your situation. So if you're looking for a low rate or a shorter term so that you can pay off these student loans fast, talk to my friends at Laurel Road about their competitive interest rates and how you could actually get a lower rate by signing up for autopay. Listen, nobody's coming to save you from your student loan debt. If you want it gone, you can't mess around. Go to LaurelRoad.com Ramsey to find out more about student loan refinancing. Again, that's LaurelRoad.com Ramsey.

[Dave Ramsey]

Jade Washaw, Ramsey personality, is my co host Today. Thanks for hanging out with us, America. Let's face it, our money and relationships work together to help us win or they work against us, cause us to lose. You don't have to stay stuck in this area. I'm going out with Dr. John DeLoney on a six city tour. We're gonna do the money and relationships tour in this coming Monday. I'm going to be. We are going to be in Louisville, Kentucky April 21. Durham A week from today, April 23 on Wednesday, Atlanta week from Friday, April 25. Phoenix, May 5, Fort Worth May 7 and Kansas City, May 9. Tour starts next week. Kansas City and Fort Worth are almost sold out. Do not wait. Get your tickets right now and go to ramseysolutions.com tour or click the link in your show notes. Either way, Spencer's with us in Dallas, Texas. Hi Spencer, how are you doing?

[Robert]

Great.

[Dave Ramsey]

Hi Dave.

[Robert]

Hi Jay. Thanks for having me on. Hope you're doing well. Got a got a question for you. So I'm currently on step two and expect to make it through step four within the next 12 to 15 months. But right, I'm looking, I'm looking ahead here and kind of a unique mortgage situation and that's kind of what I'm wondering and kind of wanting some insight on. So about four and a half years ago, my in laws helped us purchase a house and essentially bought the house for us. And they're our lender and so we pay them a mortgage every month which doesn't include any type of escrow or anything like that. But I set up the payment based on what we could afford and we're never going to pay it off. And my in laws have had that conversation with us and they're in their late 70s now so it's basically going to get folded into, you know, some sort of inheritance. Is it in my best interest to essentially avoid SEP6 in this situation? I'm a little conflicted because it's not really in our best.

[Dave Ramsey]

So what do you owe your in laws?

[Robert]

So we owe them 348, 296. Right now the house is.

[Dave Ramsey]

And they have no intention of receiving that from you before their death?

[Robert]

No, not at all.

[Dave Ramsey]

And what's the size of their estate?

[Robert]

I don't know that exactly. I've never had that conversation.

[Dave Ramsey]

Millions or ten millions?

[Robert]

It's, I would venture it's probably in the millions. I mean he retired in his late 50s.

[Dave Ramsey]

And how many siblings does your wife have?

[Robert]

She has one sister, older sister.

[Dave Ramsey]

Okay, all right. And my suggestion is you all quit Pretending that this is a mortgage, all of you. And so what I would do is sit down with them and say, look, we need to restructure this, okay? We either need to go get a mortgage and pay you all off, and then we'll get the money, of course, when you pass away as an inheritance, or you guys can just take. Advance us her a portion of my wife's inheritance by just forgiving this loan. Of course, that's what should happen about.

[Robert]

But it's certainly an awkward situation to have. You know, no one ever wants to have that conversation.

[Dave Ramsey]

Yeah, I don't. I don't want to have it, but y'all all signed up for this awkwardness.

[Jade Washaw]

And it makes, it makes sense. It feels presumptuous, like to go and. And say that I understand that, but it does make sense. And if they're logical people, I feel like they would understand that.

[Dave Ramsey]

And they can do that with what's called the Unified Estate Tax Credit. File a one piece of paper with their tax return. There'll be no gift tax on it. And then just your wife's portion of the estate is reduced by 350,000 bucks. And then you have a free and clear house. And we have jumped ahead to baby step seven, of course, which is a wonderful gift. And then you guys say, we promise to pay. They put the equivalent of house payments into investments so that your grandchildren are multimillionaires.

[Robert]

That is the goal.

[Dave Ramsey]

That's what you would tell parents moving forward. You tell them their grandkids are going to be multimillionaires because we're going to pay a house payment and then some into investments almost immediately. Because you guys are just pretending this is not a real mortgage. It's a form of denial.

[Robert]

Exactly. No, it is. It's kind of an oddball situation. And I'm not sure how often you've counseled somebody in this type of situation.

[Dave Ramsey]

I've counseled them plenty of times where they had a regular mortgage with the in laws, which is a mistake too, but because it changes the flavor of Thanksgiving dinner. Have you noticed the borrower is slave to the lender? And it's weird and it's awkward. And now every time I'm looking at my father in law, I'm looking at my master, not just my father in law. And it's weird. I borrowed money from Sharon's dad one time when we were broke. And he's the sweetest, nicest guy possibly to ever live. He is a sweet man. And I felt like dirt drug into the floor Every time I walked in that house until I got that thing paid, he never said an unkind word. He never rolled his eyes. But I felt like. Like poop.

[Jade Washaw]

Same.

[Dave Ramsey]

And it's just awful in there.

[Jade Washaw]

That's so true.

[Dave Ramsey]

It just. I mean, and Sharon, she didn't care as her daddy didn't bother her. I was the only one with my panties in a while, you know, I mean, it was just. My God, I felt awful. And so y'all, you know, and that's kind of. He's being pretty chill about it, but he's got a little bit of that going on, so.

[Jade Washaw]

Yeah, he can't avoid it.

[Dave Ramsey]

I would say. Look, I would say this is an awkward conversation. Mom and Dad, I want to have it because the plan is for us to never pay it off. So let's just change the structure of it and reduce the thing and go ahead and release the lien and make it a gift, an advance gift against her portion of the inheritance.

[Jade Washaw]

And she needs to lead that conversation.

[Dave Ramsey]

No, agree.

[Jade Washaw]

I agree.

[Dave Ramsey]

But you need to be sitting there, too. And mom and dad, look, it's silly because you don't ever expect to get the money. So since you're never going to get the money, we don't have a plan to get out of debt. We have to wait on you to die to be debt free. And we don't want to do that. So we're either going to get a mortgage and pay it off ourself, or we're going to pay you guys off or you're going to forgive it. So what do you all want to do? Because this thing, we're going to pay a payment that's not enough to do anything. And I'm just stuck like a rat in a wheel. No, thank you. Yeah, it's a mess. Our question of the day is brought to you by. Why Refi? Why Refi refinances defaulted private student loans, which are different than federal student loans. And it means you can't even make the required payments. If that describes you, contact Y Refi for a low fixed rate loan customized for you. Y refi.com Ramsey. That's the letter y r f y.com Ramsey might not be in all states.

[Jade Washaw]

Okay. In honor of Financial Literacy Month, today's question comes from Ava at Agape Christian School. She says, is it necessary at some point to get a credit card? My mom says it is, but I want to think otherwise. Well, you are very wise, Ava, to want to think otherwise. Yeah, it's not necessary. And it's not wise really to get a credit card. If you're getting a credit card, you're probably doing it for one of three reasons. You're doing it A, cuz you think you're going to build credit, B, you're doing it cuz you have no money and you're relying on credit cards to fill the gap, Or C, you've convinced yourself that the points are worth it. And so my guess is that you're probably thinking about building credit. And I would tell you that.

[Dave Ramsey]

Or your mom is.

[Jade Washaw]

Yeah, your mom is. And the truth is people don't talk about it enough. We're some of the only ones out here saying that you don't need, you don't need credit to get through life. You can get through life just with the cash that you earn from your income. And a lot of times people fall back on, well, how are you supposed to get an apartment? How do you get a car? How do you get a house? Those are the three things that people are looking at. And the truth is you can't have an apartment without a credit score.

[Dave Ramsey]

Not a big deal. Most of them will take you.

[Jade Washaw]

Most of them, yeah. If you, if one doesn't take you to, you go to the next one. Obviously, when it comes to buying a car, we would say the best way to do that is, is to save up and pay cash. The first car that you buy is.

[Dave Ramsey]

Probably going to be the only way to do that.

[Jade Washaw]

Yeah. What did I say?

[Dave Ramsey]

Best?

[Jade Washaw]

Oh, the only. Yeah, Dave got me on that. The only way. Yeah. Your first car is probably going to be a junker. Maybe you pay $5,000 for. For it. But you save up and you trade it in and you add cash with it every time. And before you know it, you're going to be driving the car that you want to be driving. And then of course, with the house, Ava, we suggest manual underwriting. Okay. And that's just, just them looking at your actual income to decide if you can borrow this money. And they're looking at things like trade lines, and they're looking at things like your income, your actual money. And so that's how that works. You, I say all the time, credit, it's a product, it's something that's being sold to you. And people benefit from that. What we're teaching, the only person that really benefits from it is you. You're you. It is for you. We don't get paid because we tell you to live a life with a zero credit. Credit score. So that's one good way to Sniff it out.

[Dave Ramsey]

Only one reason to have a credit score, Borrow money. If you don't want to borrow money, you don't need a credit score. Pretty simple. This is the Ramsey show. You want to know more about something. There's a time in your life and.

[Jade Washaw]

In the baby steps for renting. But you don't want to do it forever.

[Dave Ramsey]

Because when you rent, you're still paying for a mortgage, just somebody else's. Plus, rent means instability in your budget.

[Jade Washaw]

Because it always goes up, never down.

[Dave Ramsey]

So when you're ready to buy, make.

[Jade Washaw]

Sure you work with a mortgage partner. You can rely on Churchill Mortgage. Churchill is Ramsey trusted to help you make the move from renting to home ownership wisely. Churchill understands that when you buy a home the Ramsey way, your mortgage payment will be a consistent, manageable part of your monthly budget. Plus, when your home is paid off.

[Dave Ramsey]

That was your largest expense.

[Jade Washaw]

Now it's extra money in your pocket.

[Dave Ramsey]

And an asset towards turning you into.

[Jade Washaw]

A baby steps millionaire. Get started on the American dream of homeowners ownership [e-mail] that's churchillmortgage.com.

[Dave Ramsey]

You guys. I get it. Inflation is hitting hard right now. Milk, bread, meat. The price of everything has gone up. So you can complain or you can do something about it. Like shop somewhere. Stuff costs less. I'm talking about Aldi, the newest sponsor of the Ramsay show. Aldi gives you a no nonsense approach to shopping and prices that won't bust your butt. Budget. Listen to this. Aldi shoppers can save up to 36% on a typical shopping trip, which adds up to about $4,000 a year for a family of four. So stop overpaying for groceries and start shopping smarter at Aldi, where you'll save with the lowest prices of any national grocery store. Find a store near you today at Aldi us That's a l D. I dot us four three. Live from the headquarters of Ramsey Solutions, it's the Ramsey show where we help people build wealth, do work that they love and create actual amazing relationships. Thank you for joining us, America. We're glad you're here. Jade Washall, Ramsey personality number one best selling author is my co host today. The phone number here is 888-825-5225. The call is free and some say the advice is worth exactly what you pay for it. Sarah is with us in Canada. Hi Sarah, how are you?

[Robert]

Hi, I'm well, thanks. How are you?

[Dave Ramsey]

Better than I deserve. What's up?

[Robert]

So my husband and I make a very good Living combined and savings is important to both of us for our children's future, for our own retirement. But we seem to have different philosophies. I think, about how we enjoy the fruits of our labors as well. My husband feels like we could always be saving more, but I like the finer things.

[Dave Ramsey]

Yeah, me too.

[Robert]

And I want to buy the nice clothes while they still fit. So I guess, what's your advice as far as finding a middle ground? Is it okay to splurge a bit on vacations and nicer things in our youth?

[Dave Ramsey]

You know, I got a feeling you guys are out of debt.

[Robert]

Yes, well, we have our mortgage, but that's it.

[Dave Ramsey]

All right. And so you're in baby, what we would call baby steps. 3, 4, 4, 5, and 6. You've got your emergency fund. You don't have any debt except the mortgage, right?

[Robert]

Correct.

[Dave Ramsey]

And how much is in your nest egg?

[Robert]

We've got about 500,000 combined.

[Dave Ramsey]

And what do y'all make?

[Robert]

I'm in sales, so it fluctuates between 300 and 350 a year.

[Dave Ramsey]

Okay. All right, cool. So there. There are three things you can do with money, and you should do all three at this stage. Okay. Four, five, and six. You can have fun with it, which is lifestyle and things you're talking about, Sarah. You can invest it, which makes your husband grin, and you can be generous with it. Generosity, giving. You should be doing all three. And so what we teach folks to do at your stage, you're still trying to get the house paid off, is another one of the things, okay. At your stages, to not necessarily be intense, but to be intentional, which would include some fun things. And so the trade off is not how much we invest, because you shouldn't be investing more than 15% at this stage. 15% of your household income should be invested more than that needs to go on the house. Anything beyond that. Okay, now in that budget, then we need to budget some enjoyment. It we make several hundred thousand dollars a year. Sounds like you probably got a net worth north of a million dollars, counting your home equity and so forth. Or close. You're in control. You're not, you know, you're not flopping around out there spending like you're in Congress or something.

[Jade Washaw]

Listen, I'll filter. I'll take that one step further because my husband and I were working to pay off our house. So in a similar situation. And I kind of have this checklist, Sarah, that I go through in my head when it's time to buy something or spend money on something. It's a financially responsible adult checklist. All right. And if you check green on everything, then it's usually a yes. And then it's just deciding what the parameters are. So, A, if you're a person who's debt free, which you are. Green check. B, if you're a person who is consistently budgeting like you are a budgeter, you live on a budget. You've practiced the habits that a budget puts in place for you. Green check. Are you a person who carries the proper insurances? Have you done your checklist, you know, your coverage checkup, and you're making sure that you have everything in place? Yes. Green check. Are you a person who values and is saving for the future and Dave went through that, or do you have your three to six months emergency fund? Yes. Are you investing 15%? Yes. And are you actively paying more towards your home, which is a forced savings account? Yeah. Screen check. And then finally, are you a person who prioritizes generosity? So if you're checking green on all five of those things on that checklist, that is a really good indicator, and.

[Dave Ramsey]

It kind of gives you, yeah, go on a trip.

[Jade Washaw]

You're not doing anything wrong. You're doing everything right. And that's what it's reminding you of. And then you can go, okay, yeah.

[Dave Ramsey]

So if you. If you spend to the point.

[Robert]

If you spend irresponsible decisions in there.

[Dave Ramsey]

No, it's not irresponsible. If you spend to the point, you're doing no extra on the mortgage and no generosity. That's irresponsible. Yeah.

[Jade Washaw]

It'll tell you.

[Dave Ramsey]

If he saves and pays down on the mortgage and there's no funds in a $350,000 household income. That's wrong. Because you need to budget something for fun. So we need to. You actually make enough to do all of it. It's just a matter of how much goes to each. But there's something has to go on generosity that you feel it. Something has to go on the house that you feel it. And something has to go to fund that you feel it. And you've got the money to do all three, right?

[Robert]

Yeah, absolutely.

[Dave Ramsey]

Yeah. And that's a matter of you all budgeting together. Yeah. It's not a matter of age. It's a matter of. I mean, if you're 55 and you call me up, you got $80,000 in car payments. We're not even having this discussion. I don't care about your clothing desires. You have a disaster, and, you know, screw it, you have to wear what's in your closet. All right. But that's not you. Okay? That's not your situation. And you know, and the next thing that will happen is the house will get paid off. And then the next thing that will happen is his savings bent will. That gift that you have a husband that saves will start to have fruition and you're going to look up. You've got several million dollars in a paid for house. Now your generosity and your fun is going to go to a whole nother level while still building wealth. And that's the baby step seven. When you head up there and you've got the house paid off, it frees up yet again. It does it again. But always in baby steps 4, 5, and 6, be intentional and do Jade's adult financial checklist.

[Jade Washaw]

Financially responsible adult checklist.

[Dave Ramsey]

I like that.

[Jade Washaw]

That's what I'm doing in my mind.

[Dave Ramsey]

Financially responsible adult check list.

[Jade Washaw]

Yeah.

[Dave Ramsey]

A frackle.

[Jade Washaw]

A frackle.

[Dave Ramsey]

Okay. You need a frackle.

[Jade Washaw]

You can keep that one.

[Dave Ramsey]

Yeah, I think that's probably bad. I just made that up here. And I think we'll let that die today on the end.

[Jade Washaw]

We can.

[Dave Ramsey]

Well, they'll put that one behind us, but yeah. I like that, though. I mean, because what that's telling us is we're touching the bases and we're being a grown up. Because when we look at our screen, y'all don't know this, but we have a call screener, Christian, and the folks in our booth, the booth people do the call screening in there and they put up here someone's name, where they're from in one sentence about what they're calling about. So my husband and I disagree on our fun money. Is it okay to have fun? When we see that, that line, most of the time, it's a different answer than she got.

[Jade Washaw]

That's right. Because they've been irresponsible and they want to be.

[Dave Ramsey]

And they're having a little princess fit.

[Jade Washaw]

That's right.

[Dave Ramsey]

Or a little prince fit. Which they.

[Jade Washaw]

I love telling people. Yes, when we can see.

[Dave Ramsey]

I work hard and I deserve it. No, you don't. You deserve it if you got the freaking money. Not because you worked hard. We all work hard. You know, get a little cheese with that wine. Seriously. Unbelievable, right? I mean, we all work hard. That's not the issue.

[Jade Washaw]

That's right.

[Dave Ramsey]

The issue is, are you a grown up? Do you have a freckle?

[Jade Washaw]

Do you have your frackle? Do you have your frackle in place? No. That's right.

[Dave Ramsey]

That's so good. That is so good. Because, I mean, the deal is, Sarah, the answer, you know, the thing is what we might have judged you before we brought you up and asked you questions was not true about you. You're a very responsible person. You all have done a great job together in tandem. And I, I think the answer to your question overall is you win the argument. Your husband needs to loosen up a little. That's what it sounds like. Y'all enjoy this. And these days, Sharon and I look at each other when something comes up and we go, why wouldn't I got the money? Why wouldn't I?

[Jade Washaw]

You got your frackle.

[Dave Ramsey]

I got your frackle. I hope that dies with that segment. This is the Ram Ramsay Show.

[Jade Washaw]

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[Robert]

Well, good news.

[Jade Washaw]

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[Robert]

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[Jade Washaw]

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[Robert]

Investing includes risk, including possible loss of principal. Before investing, carefully consider a fund's investment.

[Jade Washaw]

Objective, risks, charges and expenses contained in the Prospectus.

[Robert]

[e-mail] Read carefully before investing.

[Jade Washaw]

Mutual funds distributed by Timothy Partners Limited.

[Robert]

And ETFs distributed by Foreside Fund Services, LLC.

[Dave Ramsey]

Hey, folks, how would winning $5,000 in cash change your life? This month, we're giving $5,000 to one grand prize winner, and we're giving away a $500 prize every week in May. It takes less than 15 seconds to enter. No purchase is necessary, and you can enter D. Increase your chances of winning, Enter the Ramsey cash giveaway until May [e-mail] giveaway. That's ramseysolutions.com giveaway. Well, let's face it, our money and our relationships. Relationships are intertwined, and sometimes they're both out of whack. We're gonna help you. Dr. John Deloney and I are coming to six cities with the Money and Relationships Tour. Raising great kids, handling money fights the right way Making real friends in the 21st century. Is marriage a good idea still Is. Is wealth evil subjects we could cover. We can. We're going to cover a lot of different stuff. It's going to be a lot of fun. Louisville, one week away. April 21st Louisville, Kentucky. Durham in April 23rd. That's a week from Wednesday in Atlanta. A week from Friday. April 25. Phoenix, May 5 and Fort Worth, May 7 and Kansas City, May 9. Tickets are not sold out. You can still get yours. Please come. We would love to have you. We're going to laugh together, we're going to cry together and you're going to leave with information that's life changing and a lot of interaction in this. It's going to be a lot of fun. Ramseysolutions.com tour if you're on YouTube or podcast, click the link in the show notes please. Josh is in San Antonio. Hi Josh, welcome to the Ramsey Show.

[Robert]

Hi Dave, how are you?

[Dave Ramsey]

Better than I deserve. What's up?

[Robert]

Yes. So I'm calling to see if I need to sell my car or not for your opinion.

[Dave Ramsey]

Okay. What do you all want it?

[Robert]

I owe. Well, plus my car. I owe seven thousand on it and my wife has one for eight thousand as well. It'll be ow. Eight thousand.

[Dave Ramsey]

Okay. What's your car, your seven thousand dollar.

[Robert]

Car worth about nineteen.

[Dave Ramsey]

Okay. And what's her eight thousand dollar car worth?

[Robert]

About same.

[Dave Ramsey]

Okay, and what do you make together?

[Robert]

Our household income is after taxes, about 83,000.

[Jade Washaw]

Is this the only debt?

[Robert]

No, I also have a $2,000 credit from a home, home security and 23,000 in student loans.

[Jade Washaw]

Okay. Yeah, I mean I'd probably, I definitely would offload one of these. Did you pick yours just because it's a little bit older.

[Robert]

It's actually newer and it's smaller and we have a child and.

[Jade Washaw]

Got it.

[Robert]

We were expecting another one but not anymore. But we have, we have a child and maybe more soon.

[Jade Washaw]

Okay. I mean, yeah, I would definitely do that. Truthfully, if you wanted to, you don't have to, but if you wanted to, you could offload the other one and maybe take 10 of it and finish out the debt completely and then buy another one with the other, you know, with the other nine. I don't know if you want to get that extreme. You don't have have to because you're going to have these paid off so quickly but because of the equity in them and it's kind of nice to. How long have access to that?

[Dave Ramsey]

How long you been working on this stuff? Josh.

[Robert]

As far as getting out of debt, just a couple months. We've done a good amount about over 6,000, I think.

[Dave Ramsey]

How long y'all been married?

[Robert]

Been married two years.

[Dave Ramsey]

Yeah. And when did she lose the baby?

[Robert]

Oh, yeah, very recently.

[Dave Ramsey]

I'm so sorry.

[Robert]

Yeah, a couple months ago. About two. Two months ago.

[Dave Ramsey]

Yeah. Okay. When you guys get on a detailed every dollar budget and you get fired up, you're going to plow through this debt pretty quick. Okay. Because you know, $50,000 makes you free.

[Robert]

Yeah.

[Dave Ramsey]

And you know you could make, you can make 25,000 next year. This year at a side hustle. I am trying to plus tight, plus tightening down the budget. And so hypothetically you could keep the cars, but if you have a car that doesn't fit with your family plans anyway. Yeah. That's an easy one to offload. I don't recommend. If your wife has gone through what she's been through and you all have been through, I don't recommend selling her car right now. Just. Just let her.

[Robert]

Yeah. That's why I only did mine.

[Dave Ramsey]

Yeah, I think that's, I think, I don't, I don't think we need to throw sacrifice at her today. Okay. But I think we do need to sit down, get on a written plan and make this money. Behave for the first time ever in your lives and get in attack mode. And so since you are probably going to need to do something different on your car anyway. Yeah. Sell it and buy, buy something for $5,000 and throw the rest of it at debt. And for a little while, while you get out of debt the next year and a half or so, you drive a hooptie. Whoopee. No big deal. You can do that for $5,000. You can get a very reliable Honda Camry or something like that. Not necessarily pretty, might need to give it a name, but you know, it's that kind of car. Right. But it's my get out of debt car. While I'm getting, getting my, getting the financial foundation laid for my family growth. That's called being a grown up and being a good man. I like your question a lot.

[Robert]

I do have one thing to add though.

[Dave Ramsey]

Okay.

[Robert]

We do also have 17,000 just sitting in our bank account right now.

[Dave Ramsey]

Well, thanks for burying the lead. Okay.

[Jade Washaw]

That's important. That changes things a lot.

[Robert]

Just afraid. We're afraid.

[Dave Ramsey]

Okay, so here's what we're going to do. We're going today, we're going to talk about selling your car and we're going to pay off her car and the stupid home security loan. That was dumber than a rock. Okay. And then we're going to start attacking the student loan. And let's see, we've got 17 and 19 is 12 and 7, you got 24 and 10 is 4. We got. Hey man, you only have $19,000 left on your student loan.

[Robert]

Wow.

[Dave Ramsey]

And that's it. And you're driving a $5,000 car. We put the difference on the student, on the student loan, we pay off her, her loan and the other tonight. And we're going to put you on the baby steps. Baby steps are you take all your savings down to $1,000 and you attack your debt like your life depends on it. Because if you didn't have any payments right now, you would be breathing different as your family's going through this tragedy and this sadness. But you've got this stuff hanging over your head and the grief. Agreed.

[Robert]

Yeah, exactly.

[Dave Ramsey]

Yeah. So let's clean it up, man. I think that's a real gift to this emotional situation. To pay off her car tonight.

[Robert]

I agree.

[Dave Ramsey]

And the home security loan. Oh my gosh. It's kind of a no brainer. And. And then we're going to throw, you know, everything else down to a thousand dollars at the. Yeah, you're going to make a lot of progress. This is so great.

[Jade Washaw]

Instantly.

[Dave Ramsey]

Yeah, you're going to knock. You're gonna knock it down in 25, 26 tonight. And then when your car sells, you buy a $5,000 car, you're gonna knock it on down to 19. Oh my gosh. You're gon debt free by football season.

[Robert]

Oh, that's great. Because I'm a. I'm a teacher that's very involved in marching.

[Dave Ramsey]

Good, good. Well, that doesn't mean you get to go to any games, but you'll be debt free. Now. You get debt free, man. When you payments. But a house payment, the next thing you do is you take that thousand dollar account and you raise it up to three to six months of expenses. He's going to do this.

[Jade Washaw]

Yeah, he's going to do this.

[Dave Ramsey]

This.

[Jade Washaw]

I'm glad he told us about the 17,000.

[Dave Ramsey]

You know what? Babies and the promise of babies will.

[Jade Washaw]

Wake you up 100%.

[Dave Ramsey]

It will get your butt in gear. It's like, oh, no, this just got real.

[Jade Washaw]

100. Yes.

[Dave Ramsey]

It.

[Jade Washaw]

Yes.

[Dave Ramsey]

I have to feed this thing.

[Jade Washaw]

Yep. It ain't going any. Yeah.

[Dave Ramsey]

Has to buy diapers. Yes, yes, yes, yes, yes, yes. Wow. Yeah. It's a good thing you have that moment. We had a debt free Scream in a different segment that the guy said, you know, when the kids got ready to go to college, I had an oh, crap moment. When you have that moment, you go, oh, man, this just got real. And then you kind of start getting disgusted.

[Jade Washaw]

That's right.

[Dave Ramsey]

We make too much money to be this broke. And then you say, I've had it. And when you finally say that, oh, your life is about to change, it's so wonderful.

[Jade Washaw]

That was the main motivator when Sam and I were getting out of debt is I. I was like, how can we have a family? We have to clean this up. And I mean, that was our choice. But there was no way I could foresee us starting a family with that amount of debt. And so it was necessity.

[Dave Ramsey]

Yeah, yeah. In that case, an emotional necessity.

[Jade Washaw]

Yeah, that's right.

[Dave Ramsey]

But that's a fair necessity.

[Jade Washaw]

Yeah.

[Dave Ramsey]

Good stuff, Good stuff. You're a good man. Hang on, buddy. We're going to give you a. A copy or we're going to give you every dollar is what I'm trying to say. The premium version. To help you get started on this budget, I'll send him a copy of Total Money Makeover too. So he and his wife have got a road map to follow those baby steps and do exactly what I just told him to do. This is the Ramsey show. You spent years trying to get everything.

[Jade Washaw]

Just right for your family.

[Dave Ramsey]

Now you need an easy way to.

[Jade Washaw]

Make sure your important financial documents are.

[Dave Ramsey]

As organized as the rest of your house. House. Well, good news, Knockbox. That's n. Okay box, as in next.

[Robert]

Of kin box is a complete system.

[Jade Washaw]

That helps you be sure that you.

[Dave Ramsey]

Leave happy memories, not a mess when you pass away.

[Jade Washaw]

Knockbox is a simple way to organize.

[Dave Ramsey]

Important paper and digital documents, IDs, tax returns, insurance policies, estate plans, accounts, and.

[Jade Washaw]

Other personal history in one manageable place. Your family will feel your love in every detail you take care of.

[Dave Ramsey]

So start taking care of [e-mail] Ramsey.

[Jade Washaw]

A well organized legacy is a gift to your family.

[Dave Ramsey]

That's nokbox.com Ramsey. People ask me all the time.

[Jade Washaw]

George, what's your number one money saving hack? I'm glad you asked. Nothing makes me happier than helping another frugal friend. So here's the hack. Get on a budget. Seriously, how are you supposed to save money if you don't know how much you're spending in the first place? And that's what makes the EveryDollar budgeting app a game changer. With EveryDollar, you'll get a clear picture of your spending. And from there, it's easy to see where you can get more intentional cut back and save more money. So how much money are we talking here? Well, the average EveryDollar budgeter frees up $395 in their first budget budget.

[Dave Ramsey]

That's the hack.

[Jade Washaw]

And if you ask me, I think you're way above average and you'll save even more. So what are you doing still listening to me? Go download the EveryDollar app for free and start saving more money right now.

[Dave Ramsey]

Nicole is in Jackson, Mississippi. Hey, Nicole. What's up?

[Robert]

Hey. How are y'all doing?

[Jade Washaw]

Good.

[Dave Ramsey]

What's up?

[Robert]

My question today is very simple. Kind of whether my husband and I should move from apartments or not.

[Jade Washaw]

Oh, what's causing you to consider this? What's going on?

[Robert]

Basically, there's just lack of peace in our life right now. And so we're trying to strive towards peace. And so we're pretty vague.

[Dave Ramsey]

What is going on?

[Jade Washaw]

What's causing the lack of peace?

[Robert]

So, just to give you a little bit of a background, right now we are at an apartment that we've been in for four years that costs about $800 a month is all included. It even has a storage unit downstairs that we can put a bunch of stuff for free. It comes with all utilities. Everything sounds great, spacious. And it has allowed us to get debt free. We have our emergency fund. We've even saved for school for my husband and I to both go to get her master's degree in pursuit of also more peace. And we are now in the process of saving for a down payment. And the problem is our landlord. We have been having a little bit of a conflict with him, and he also hates conflict, so his lack of communication skills are very, very poor.

[Jade Washaw]

And so what's the nature of the conflict?

[Robert]

Well, things like our toilet broke recently, and he told us, I'm sure you all can figure it out. Y'all have a blessed day. Stuff like that.

[Jade Washaw]

Not have a blessed day. Okay.

[Dave Ramsey]

Yeah.

[Robert]

And we also don't have a contract with him, so things can change at any moment's notice. We. Things like the washer and dryer. The apartment doesn't come with a hookup, and so we have to use his. His dryer and washer. And every time we need to use, we have to ask if it's available. And did this recently change?

[Jade Washaw]

Did this. I mean, you said you've been there for four years. Was it fine, and then suddenly it just kind of got weird? Or has it always been like this and now you just can't take it anymore.

[Robert]

I think it's gotten more. I think the boundaries between professional and personal have kind of blurred to where. Because there's not a contract, there's not really a line as to what he will take care of or what we are.

[Dave Ramsey]

Was there before.

[Robert]

A line?

[Dave Ramsey]

No. Was there a contract? No.

[Robert]

No, sir, there wasn't.

[Dave Ramsey]

Okay. And so that didn't change. You brought up contract three times, but it hadn't changed.

[Robert]

Yeah, no.

[Dave Ramsey]

So what's changed is, is that his behavior has just gotten a little weird.

[Robert]

Yes, it has.

[Dave Ramsey]

Okay.

[Robert]

And we've confronted him. I had a conversation recently with him about it and it doesn't seem to have changed at all. Now the scary part here is that we are looking at moving at other apartments and we found an apartment that is connected to the school that I'm going to be with. It is about 1300, about 13 to 1400amonth. And so that is calculating within the two years that I'm going to be in school or.

[Dave Ramsey]

What do you all make?

[Robert]

We make. It fluctuates because my husband has a contract usage contract rescue technician. Rope rescue technician. And so it goes between 80 to 170. But we have already chosen that we're going to go part time here at the end of April also for peace because he travels a lot for work and in for a long experience expended period.

[Jade Washaw]

So what would you be bringing home every single month?

[Robert]

We have decided that we're going to work just enough to pay for bills and put a little bit of a pause on saving for a down payment. And how much is that? Another job.

[Jade Washaw]

How much is that?

[Robert]

We're thinking about 50 from 170. Yes, sir.

[Dave Ramsey]

That's a lot of peace.

[Jade Washaw]

What's causing the non p. Like what about working is causing the non peace? Help me understand that.

[Dave Ramsey]

His travel.

[Robert]

He travels, but you don't have to.

[Dave Ramsey]

Cut it by 2/3.

[Robert]

No, no. And he. We are open to him continuing to work, but the only difference would be that he has the more of option to say when he can go and when he doesn't.

[Dave Ramsey]

Yeah.

[Robert]

Does that make sense?

[Dave Ramsey]

He doesn't make 170. He makes 140. Oh, well. But not 150. No, not 50. And sit at home and twiddle his thumbs.

[Jade Washaw]

Okay, but.

[Dave Ramsey]

And call that a master's. What's he want a master's degree for anyway?

[Robert]

In counseling? We both are going towards mental health counseling.

[Jade Washaw]

Okay. So let's put all the pieces together. So we're about to Take a major pay cut cup. We're about to increase rent because you can't live with old boy anymore. There's no contract. And since there's no contract, you can basically leave at any time.

[Dave Ramsey]

No, you gotta give 30 day notice.

[Jade Washaw]

You still have to give 30 days. Okay. So those are the pieces of the puzzle that I see. And you mentioned that you want to save for a down payment on a house. So it feels like you're wanting to do a lot of things that are going to. Cause that are going to need more.

[Dave Ramsey]

They're inconsistent.

[Jade Washaw]

Huh?

[Dave Ramsey]

These things are inconsistent with each other. Other. That does not bring peace. That's called dissonance in the counseling world.

[Jade Washaw]

Very good. Yes.

[Robert]

Yeah. I guess the question is, is it worth spending more money and not putting 12,000 in the down payment, which is what we would not be saving, or do we just put up with it for two more years?

[Dave Ramsey]

See, they're not, they're. They're not all on the same spectrum.

[Jade Washaw]

Right.

[Dave Ramsey]

Okay. You move because you're dealing with a torque, but you work a little more so you can still hit your goals.

[Jade Washaw]

That's right.

[Dave Ramsey]

And that's called peace. Peace is not lack of working. Peace is lack of money. Lack of peace is lack of money. That doesn't bring peace. Being poor is not peaceful.

[Robert]

No. Yeah.

[Dave Ramsey]

Okay. And so, you know, I would move. Get yourself in a different situation. You're over this guy and you're done with him. I don't know exactly what he did, but you're done with him. We can tell you.

[Jade Washaw]

Yeah, okay.

[Dave Ramsey]

So far all you've said is he didn't fix a toilet. That's the only thing you said. And he's a little whiny about when you use the washer and dryer that you've used for four years. But that's it. So, yeah, move. That's fine. And you're gonna pick up a little expense and you're gonna start on your masters. And in order to pay for your masters and the extra expense, you're not gonna get to cut your work down to 50k from 170k. You're going to cut it down to maybe 100 or a little bit. Take some of his time off the road. I ain't got any problem with that. But he's not working himself to death. I'm sorry.

[Jade Washaw]

And you're probably going to have to prioritize what's more important, these master's degrees or saving up for a down payment. You're probably not going to be able to do all of it at one time. So, yeah.

[Dave Ramsey]

Yeah. I'm thinking just to remind everybody, hard work won't kill you. Right before you die, you pass out. That's not. You can go get stuff done. I mean, the stuff you and Sam did while y'all were getting out of debt was not. You were solving for peace by getting out of debt.

[Jade Washaw]

That's right.

[Dave Ramsey]

Not by cutting your hours down to nothing. You added 70,000 hours to the middle of the thing and you went bananas.

[Jade Washaw]

That's right. You're right.

[Dave Ramsey]

And Sharon and I did the same thing because we were solving for peace, but it required an amazing amount of hours and sacrifice. We lived like no one else so that later we could live and give like no one else else. No discipline seems pleasant at the time, but it yields a harvest of righteousness. The scripture says so. Yeah. One of the things we've learned over the years, Nicole, is that Earl Nightingale used to say this, that the things you're willing to do to get to your goals are not the problem. It's the things you're not willing to give up. To get to your goals. You got to give up some stuff to get to your goals. You got to pay a price. And you're gonna pay a price. So choose your hard. Deloney says choose your hard. Which hard thing do you want?

[Jade Washaw]

That's very accurate.

[Dave Ramsey]

You know, pick one of them and take it. And I don't care if the hard things putting up with the landlord and staying in the 800, fine. That's the hard thing you chose. And you want to pull back on the. Pull back on the hours and pull back on the income come. Okay, you chose your hard, but you got a new hard. It's gonna be a long time before you get a house.

[Jade Washaw]

Yeah, that's right.

[Dave Ramsey]

You got a new hard. One of you is working on your masters, and the other one probably edding right now because you probably don't have the money to do both if you do all that. So you got to choose which thing is going to be hard. And you can't do it all. It's. You know, it's not fruitcake. That's not an option. You can't put it all in there.

[Jade Washaw]

Yeah, I like to think of it as trades. You're tra. You are trading. You're always trading one thing for another thing. Thing. And then you get to decide, what do I. What would I rather have?

[Dave Ramsey]

Well, but you can't do it all. And it all work. It doesn't. And call that solving for peace. It's not. The Money and relationships tour is halfway over and the energy in every room has been unreal. Each stop has been packed with real talk, big laughs and life changing moments. Now it's your. Come hang out with me and Dr. John DeLoney in a city near you for a night that could change your money, your relationships and your future. This is your last chance to join us in Phoenix, Fort Worth or Kansas City the week of May 5th. Grab your tickets today at ramseysolutions.com tour. Our Scripture of the day. The Lord will fight for you. Union need only to be still. Oh, shut up. I can't so hard. Will Rogers said the road to success is dotted with many tempting parking spaces.

[Jade Washaw]

Okay.

[Dave Ramsey]

Oh, you can park or you can drive on the road. Okay, I got that Will. He was clapping. Crystal's with us in Portland, Oregon. Hey, Crystal, what's up?

[Robert]

Hi, Dave and Jade. Thanks for having me.

[Jade Washaw]

Sure.

[Dave Ramsey]

How can we help?

[Robert]

My husband and I will be retiring at the end of the year.

[Dave Ramsey]

Congratulations.

[Robert]

Thanks. We followed the baby steps for multiple years and we're debt free, including the house, and have a fully funded emergency fund. But it's always been our understanding that the emergency fund is to tie us over if we ever had a loss of income. So once we retire and are no longer dependent on the employment paycheck, do we continue to keep the same level of cash on hand or would we be better off investing that money?

[Dave Ramsey]

To start with, the emergency fund is not to tide you over. In the case of loss of income, it's to cover. It's to cover emergencies. One of those could be a loss of income. Another could be the transmission goes out. Another could be a family member's ill and you need to buy some airline tickets instantaneously to fly across the nation to see them. You can have all kinds of things that have nothing to do with loss of income. A medical emergency, it would not be a loss of any. It could include a loss of income, but it doesn't necessarily. And so that's the first thing. Then the second thing is what ends up happening, and Sharon and I have experienced this, and I know Jade and Sam have too, is that as you move along and you guys have done a wonderful job creating Crystal. Thank you. Your likelihood of actually what is defined as an emergency that's big enough to touch, the emergency fund gets bigger and bigger. When we first started, a tire going out on the car was an emergency. Now we yawn and fix the tire. You know, because we don't have any payments, there's plenty of room in the budget. It's not exactly an emergency, but when we were broke, a blown tire was an emergency. You follow me? And then, you know, when you. And now that you guys have a substantial net worth, you can do just about anything you want to do. You've done a great job of paying off everything. You don't have a house payment. And so if your heating and air goes out and it's $15,000, you probably can just cash flow that. Agreed?

[Robert]

Agreed. Yes.

[Dave Ramsey]

So you're, you know, you wouldn't touch the emergency, but can you imagine 10 years ago if the heat and air went out and it's 50. Yeah. You'd be touching the emergency fund. You weren't at this stage then. So the what is, what is an emergency that is big enough to touch the emergency fund? It's got to get pretty big the more wealthy you become. So your actual need for the cash emergency fund does go down the wealthier and more debt free you get. Does that make sense?

[Robert]

It does, yes.

[Dave Ramsey]

So, yeah. So you're holding how much cash now and calling in an Emergency Fund Fund, 25,000. And your household income is what, 205. And your net worth is what, 3.2 million. Okay, 25 is not bad. I mean you could just keep that in a cash in the safe. It wouldn't be a big deal.

[Robert]

That terrifies me.

[Dave Ramsey]

You know, I'm not telling you, dude, that was joking. But you know, and I wouldn't, but you know, you see what I'm saying? It's not, not a but 20 that if you took, took the emergency fund to 5,000 and invested the other 20, it doesn't change your life.

[Robert]

Okay.

[Dave Ramsey]

Doesn't really change anything. If you, so if you want to, you can because if you needed more than 5,000, then you could go, you know, just take some money out of that mutual fund that you put it in. Right. And you can. And if it happened to be when the market was down because maybe the president screwed with the market with the tariffs and all that garbage, then you know, at that moment you had to pull money out. Well, you might lose a little bit. Oh well, you don't. You know, instead of 3.2, you have 3.199999. Oh, well, you know, I mean, you're going to be okay. So it doesn't, it again doesn't do away with the emergency. I still would have one because some liquid cash to lay your hands on if you need something quick.

[Jade Washaw]

I think that's a good thing.

[Dave Ramsey]

It's a good thing to have. And I don't think 25 is too much in your world. If you told me you had 100 grand, I'd tell you to back it down to 20.

[Jade Washaw]

Yeah, yeah.

[Dave Ramsey]

But. Yeah, that's a good question.

[Jade Washaw]

It's a good question.

[Dave Ramsey]

You do. But I have noticed. Have you noticed that, too, with you and Sam, that as you. As you get further down the baby steps?

[Jade Washaw]

Yes.

[Dave Ramsey]

The. What we used to call an emergency now is a yawn.

[Jade Washaw]

Yeah, it's just. Okay, I'll just cash flow it.

[Dave Ramsey]

Yeah. You know, the kid bumped her head and we got to get staples in the emergency room, you know.

[Jade Washaw]

Yeah. I don't want to dip into the emergency fund.

[Dave Ramsey]

I mean, one of the grandkids bumped his head the other day and, you know, that's part. Part of raising a kid. They split their head open, so you got to go fix it. Right. Staples in it.

[Jade Washaw]

Some of it, too, is like a. I don't know. I don't know if it. I don't know the right word to describe it, but we hate touching the emergency. It's in a completely different bank.

[Dave Ramsey]

Yeah.

[Jade Washaw]

And.

[Dave Ramsey]

Well, I mean, because. Because we went completely bankrupt. We had an emergency fund for the emergency fund. I mean, and she told me if I touched either one of them, I was going to die.

[Jade Washaw]

That is.

[Dave Ramsey]

I mean, she can't stand it. It's like that touches her nerve. From the old.

[Jade Washaw]

That's Jade and Sam is over there. I will do anything to never touch that. I just want to look at it.

[Dave Ramsey]

Bob's in Birmingham. Hey, Bob, what's up?

[Robert]

Hi, Dave and Jake. Thanks for taking my call.

[Dave Ramsey]

Sure. How can we help?

[Robert]

My question is, I'm 61 years old. I got about six more years before I retire. I currently have a traditional 401k with the government, and I'm trying to find out. We have now paid off both our houses and we have about $2,500 a.

[Dave Ramsey]

Month more to invest.

[Robert]

Should I max out the 31,000 a year into my current traditional 401, or.

[Dave Ramsey]

Would I be better off taking that.

[Robert]

2500 and possibly getting a smart vester investing into a Roth?

[Dave Ramsey]

Well, your gains are going to. If you do it into a Roth, that's fine, but you can't get that much into a Roth. Can you do a 401k Roth with the government?

[Robert]

We cannot. No. So it's a traditional form. My wife has a Roth IRA with the company she works for. In the government, though.

[Dave Ramsey]

Can you load that one up?

[Robert]

We could, but she's, she's only 50 years old, so we only have so much. We can go with that.

[Dave Ramsey]

But you don't sound like you need money.

[Robert]

Well, I'm trying to play catch up. You know, my current, my current situation. Egg the size of nest eggs, about 600,000, 700,000.

[Dave Ramsey]

How old are you? You told me, you told me you're 61. Yeah. And your wife's 50. Okay, well, okay, so there's two options. Use the Roth. I would not use traditional because it's going to be subject to RMDs when you're 72 required minimum distributions. Okay. Or 74. I think I moved it forward. But anyway, either way, you're going to have to be. You're going to have to. It's going to screw up your taxes late in life and I wouldn't do it. So I would either put it. Get with a smartvestor and put it in a low turnover mutual fund to where the taxes don't come due and if they do, it's very few of them, or I would load up her Roth or both.

[Robert]

Okay.

[Dave Ramsey]

Any of those are fine. But I would not put it in your traditional because that traditional as an inherited IRA has to be distributed with your heirs in 10 years because they're going to clean it out and all the taxes are going to come to with a Roth. There is none. And so it's all tax free. It's tax free on inherited ira, so it doesn't cost anybody anything. We're done. So that's why I love the Roth aspect of this. So I would do two individual rod, load up your Roth. I'd load up your Roth and her Roth for sure. I might load up some over in her fund. You got 30,000 bucks to work with and, and you could do what's called a low turnover mutual fund. So the taxes aren't activated.

[Jade Washaw]

That's good. That's good. I do the same thing.

[Dave Ramsey]

Yeah, that's a good way to do it. The low turnover means they don't sell the stocks inside the mutual fund very often. So the taxes aren't activated.

[Jade Washaw]

Got it, Got it.

[Dave Ramsey]

They're not activated until you sell the fund itself. And when you do, it's tax to capital gains rate, which is 15% rather than ordinary income, which that traditional would be taxed at ordinary income. So we're going to do a low turnover mutual fund and. Or some mix of her Roth and individual Roths and I would sit down and run the numbers with your smartvestor Pro [e-mail] on SmartVestor to find out who we recommend in your area and run the numbers out and see how that's going to work out for you. But I don't want to be subject to the problems of traditional, which is full tax bill, RMD and inheritance problems. It creates all of those. So I'm always going to move over to Roth for those reasons, especially at your old age. So good stuff. That puts us out of the Ramsey show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the prince of peace Christ Jesus. Go call every customer.

[Jade Washaw]

Hey, what are you still doing here?

[Dave Ramsey]

You know the rest of the show's.

[Jade Washaw]

Happening on the Ramsey Network app, right? So you got to jump over there to continue watching. You can download it for free.

[Dave Ramsey]

Just go to your app store, type.

[Jade Washaw]

In Ramsey Network, it's completely free, and I'll drop a link in the show notes to make it easy for you. So if you're watching on the app, you're in luck. But if you're watching anywhere else, this show is over for you. So jump onto the app and let the fun continue. All right, go on now. Don't make it weird. Okay, I. I got nowhere to go, so you need to go. Okay, bye.

[Robert]

Bye now.

[Jade Washaw]

All right, this is.

[Dave Ramsey]

It's getting weird over there, guys. What do we.