Today's Habits Create Tomorrow's Progress

Summary

---

The Ramsey Show – "Today's Habits Create Tomorrow's Progress"

Date: August 3, 2026
Hosts: George Kamel, Jade Warshaw, Rachel Cruze
Podcast Theme: Building wealth, overcoming money mistakes, and creating healthy financial habits through listener Q&A.

---

Overview

In this episode of The Ramsey Show, hosts George Kamel and Jade Warshaw, with guest Rachel Cruze, address a variety of real-life personal finance situations submitted by callers around the country. The focus is on how taking daily, sometimes difficult, financial steps creates long-term progress—and the urgent need for clear boundaries, practical budgeting, and healthy money habits, regardless of past financial mistakes. The episode covers diverse topics, including family financial dysfunction, oppressive job contracts, home repair versus selling, helping kids start strong with savings/investments, and how to navigate financial strain during life changes like divorce. As always, the Ramsey philosophy of living debt-free, building margin, and prioritizing responsible choices is front and center.

---

Key Discussions & Insights

1. Family Financial Dysfunction & Boundaries

[00:39–08:37]

• Caller: Sarah from NYC details her parents’ repeated requests for large financial favors, including co-signing a $250K HELOC to cover debts, despite already owing her $20K.
• Hosts: Strongly discourage enabling.
  • Jade Warshaw: “They’re going to HELOC their way into oblivion…The answer is you get to say no.” (02:10)
  • Jay: “Dysfunction is magnetic…it has a way of pulling us in not just physically, but mentally. I think I’d get the heck out of that situation.” (04:59)
• Key Advice:
  • Don’t co-sign or lend more money.
  • Instead of cash, help directly with essentials (utilities, groceries).
  • Support siblings’ wellbeing, but don’t shoulder parents’ consequences.
  • Move out as soon as possible to break the dysfunction’s pull.

Memorable Moment

• Jade Warshaw: “Oh, parents, please do not put your kid in this position. This is abuse on several levels.” (08:27)

---

2. Golden Handcuffs – The Perils of Workplace Contracts

[10:25–19:12]

• Caller: Lauren, a healthcare worker in Utah, owes an exorbitant amount if she breaks her government service contract early ($280k fully, $900k if breached).
• Feels trapped in a toxic work environment with limited options to break the contract without bankruptcy-level penalties.
• Hosts: Empathize and break down the “golden handcuffs” dilemma.
  • Jay: “You can’t afford the soul tax…” (14:36)
  • Jade Warshaw: “All of these programs…sound so amazing. The red tape on the other side and the prison sentence and handcuffs is the part that scares me.” (16:24)
• Key Advice:
  • Try to transfer sites, not get fired purposely.
  • Consult an employment attorney and review all contract options.
  • Prepare financially for a possible move; prioritize mental health and family needs.

---

3. Home Repairs vs. Selling – Sentimental Value vs. Financial Reality

[21:47–30:38]

• Caller: Chris in Dallas wonders if she and her siblings should pour money into fixing their mother’s dilapidated house or sell as-is.
• Hosts’ Consensus:
  • Don’t invest large sums if the land itself is more valuable and a builder is likely to tear it down.
  • Focus on mother’s safety and independence, not sibling equity battles.
  • Jade Warshaw: “You can show her all the facts and say, ‘we’re not going to put all this money in to fix it up..’” (28:23)
• Practical Steps:
  • Get a professional, unbiased estimate of both as-is and post-repair values.
  • Prioritize mom’s well-being and living arrangements over family nostalgia or future inheritance.

---

4. Foundation for Young Adults – Savings, College, and Investing

[32:45–41:59]

• Calls:
  • Gigi (20, debt-free, $7k in savings): Should she move savings to investments or high-yield accounts?
  • Madison (Atlanta): Best way to invest birthday/earned money for her children.
• Ramsey Advice Highlights:
  • Maintain a 3–6 month emergency fund first; use high-yield savings for now, given future short-term expenses (housing, moving).
  • 529 plans are primary for college savings; if unused for education, can roll over to Roth IRA later.
  • Teach kids three uses of money: give, save, spend.
  • Explore new “Trump accounts”/Section 530A accounts for children (specific for those born 2025–2028).

Quote:

• Jade Warshaw to Gigi: “I’ve never heard someone complain that they started their adult life with too much in cash.” (35:33)
• Jay on teaching kids money: “If you just teach a kid how to save, they will become a maniacal saver and have a really hard time enjoying their life.” (39:22)

---

5. Practical Budgeting & Debt Snowball in Action

[44:08–63:08]

• Multiple Callers: Strategies to maintain momentum during high-cost seasons (e.g., childcare), deciding if an expensive home is sustainable, and using ‘EveryDollar’ for detailed budgeting.
• Notable Insights:
  • High income doesn’t guarantee margin—track every dollar, especially with hidden “subscription creep.”
  • Don’t panic if mortgage is slightly over the recommended 25%, but make a plan to adjust if needed.
  • Don’t let a 30-year mortgage or miss on Ramsey rules force hasty sales if the situation can be improved with discipline.

Quote:

• Jade Warshaw: “Just imagine, though, she’s in a place where the roof isn’t about to fall on her. That’s pretty comforting.” (28:07)
• George Kamel: “You can still go to heaven with a 30 year mortgage.” (62:00)

---

6. Large Financial Choices – Lump Sum to Debt, Selling Assets, and Divorce Survival

[65:35–83:12]

• Listener Questions:
  • Should we drain savings to pay off debt? (Answer: Yes, quickly rebuild emergency fund after.)
  • Sell a truck to pay off two-thirds of total debt? (Answer: Yes, reduce monthly expenses, get breathing room, buy another car with cash later.)
  • Navigating financial chaos during divorce—prioritizing four walls (food, housing, utilities, transport) over all else until income stabilizes.
• Hosts Emphasize:
  • Math is clear; having “savings” while in debt is false security.
  • Sometimes you need to break from sentimentality and make the tough call (house, car).
  • During legal/mental health crises, focus on surviving with necessities, working with social workers and legal aid as needed.

---

7. Investing, College Funding, and Luxury Purchases

[96:34–116:05]

• Topics:
  • Parents consider selling investment property to fund three kids’ college (consensus: yes, turn property equity into direct college fund, set clear student expectations).
  • Why prioritize 15% to retirement before paying off mortgage? (Time in market compounds exponentially; pay off house at normal pace.)
  • When is it okay to buy a luxury car? (Only after all other wealth-building is on auto-pilot. Know your personal numbers—and don’t let lifestyle creep erase your gains!)
• Memorable Moment:
  • Jay to luxury-car-seeking realtor, Braylon: “You work really hard, you should know where all your dollars are... I want you to have that clarity on your numbers to feel really good about it… that lets me know you, not Joe, are a financially responsible adult.” (112:08)
• Quote: Jade Warshaw on cars: “It’s not a horse. It doesn’t have a soul.” (72:05)

---

Additional Notable Quotes + Timestamps

• On Family Dysfunction:
  • “I think that dysfunction is magnetic and it has a way of pulling us in...” – Jay (04:59)
• On Crushing Debt with Intent:
  • “Your biggest wealth-building tool is your income. Let’s do what it takes to free that up and stop giving it away in monthly payments.” – Jay (68:19)
• On Breaking Generational Patterns:
  • “It’s the same person in the mirror who made all those bad decisions. Same guy’s going to make the good ones.” – Jade Warshaw (74:31)
• On Hard Choices During Divorce:
  • “The number one thing: take care of you. If you can’t go to work and make income, we’re gonna be back in the shelter.” – Jade Warshaw (92:24)

---

Timestamps for Key Segments

• 00:39–08:37 – Family enabling, saying NO, breaking out of dysfunction
• 10:25–19:12 – Toxic workplaces and “golden handcuffs” contracts
• 21:47–30:38 – Home repairs vs. selling, prioritizing parent’s safety over sentiment
• 32:45–41:59 – Kids, savings, teaching investing and giving
• 44:08–63:08 – Budget deep-dive, childcare squeeze, home affordability
• 65:35–83:12 – Debt payoff vs. savings, selling assets, navigating divorce
• 96:34–116:05 – College funding from investment property, retirement-vs-mortgage, spending for show vs. wealth
• 117:47–End – Managing finances through divorce and legal limbo

---

Tone & Takeaways

Throughout, the tone is empathetic, direct, and hope-filled—focused on real solutions, not judgment. The hosts blend humor (“It’s not a horse. It doesn’t have a soul.”), tough love, and encouragement, always emphasizing that anyone, regardless of their past or current struggles, can reset their finances and start moving forward—one habit, one decision, and one dollar at a time.

Final Words:
Jade Warshaw: “There’s ultimately only one way to financial peace, and that’s to walk daily with the prince of Peace, Christ Jesus.” (End)

---

For more on intentional budgeting and financial transformation, visit www.ramseysolutions.com

Transcript

[George Kamel]

Foreign. To you by the EveryDollar app.

[Jade Warshaw]

Start budgeting for free today. Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit union studio, this is the Ramsey Show. I'm George Camel here with Jade Warshaw taking your calls at 888-255- Will try to help you take the right next step, your life and your money. Sarah is up in New York City. What's going on?

[Caller]

Sarah, Hi. Thank you for taking my call. My question. My question is my parents, they're pressuring me to find a $250,000 HELOC and I feel very uncomfortable doing it.

[Jade Warshaw]

You should.

[Caller]

Yeah. They already owe me $20,000.

[Jay]

Oh, man.

[Jade Warshaw]

So they went, hey, bank of Sarah hooked us up last time. Let's try to 10x our loan.

[Jay]

Why is this even a conversation? Why is this even gone beyond the point of an immediate. No,

[Caller]

honestly, they. They cannot pay their debts, and I'm very worried for my little siblings.

[Jay]

Okay.

[Jade Warshaw]

Because they're. The siblings are living with them. You are not.

[Jay]

Yes.

[Caller]

No, I'm also living with them as well.

[Jade Warshaw]

Oh, wow.

[Caller]

Very hectic. I'm 23. Okay.

[Jay]

And how old are the siblings?

[Caller]

They're 14 and 8.

[Jay]

Okay, 14 and 8. And is the HELOC? You said they can't pay their debt. So is the HELOC supposed to be used to pay the debts? Is that the point?

[Caller]

Yes, but the thing is another twist. They already took a HELOC on our primary home. They want to take a HELOC out on their rental property.

[Jay]

Oh, boy.

[Jade Warshaw]

What's the rental property worth?

[Caller]

It's worth about $950,000.

[Jade Warshaw]

And what do they owe?

[Caller]

They owe $250,000.

[Jade Warshaw]

So they got 700 grand sitting in equity in that thing?

[Caller]

Yes, but why not sell it? They refuse. I guess they want to keep it in the family, but there's not going

[Jade Warshaw]

to be anything to keep in the family if they keep this up. They're going to he lock their way into oblivion to where there's no equity anywhere, and they're going to be forced to sell it one day. So no. The easy answer is you get to say no.

[Jay]

Go back to the kids, though, when you say you're worried about them in your mind, what do you think is going to happen?

[Caller]

I'm worried that there's not going to be any money left for them.

[Jade Warshaw]

And they're like, as far as inheritance.

[Caller]

Yeah. And then I also think I feel like the primary house is going to get foreclosed on because they have no cash.

[Jay]

But they do have. Here's the problem. What you're saying is likely true. Maybe they will get foreclosed on. Maybe they will destroy any inheritance or anything like that over the course of time. All those things are very possible. So hear me say that. Because if they don't change course. Yeah. They're really setting that path for themselves very clearly.

[Jade Warshaw]

Inheritance is the last thing I'm worried about.

[Jay]

Yeah. And the truth is, if they do foreclose, the truth is they do have some assets here that they have at their disposal if they choose to do so. The hard part here is these are grown adults who are going to make their own choices. And the hard part is you just having to sit back and watch despite them maybe having some better advice. Them not taking the advice. That's the hard part. If you had told me, hey, I'm really worried that the kids aren't having food at night or the lights are getting cut off and things like that, I think we'd be in a different discussion right now. But if truly your only worry is, gosh, when we become adults, there's not gonna be any inheritance, I don't know that there's much you can do to stop that.

[Caller]

Yeah, that's true. I also, I feel like the lights might come off because my parents, they don't work, they're both retired, and they don't have any cash at all.

[Jay]

Well, you're there. Are you there without. Are you there staying rent free or what's your deal being there?

[Caller]

No, I give them $1,000 every month.

[Jay]

So why don't you let me say this? Instead of you giving them $1,000 in cash, why don't you say, I will pay the utilities? If I'm going to be there, I'm going to pay the water so that you know that those things stay on. And, you know, maybe the other bits you pay groceries or whatever it is that you're doing. But in. I would be hard pressed to be handing somebody my money in cash, hoping that they're doing the right thing with it, which is keeping the utilities on in the place that I'm living.

[Jade Warshaw]

If your family's livelihood is at stake, you need to get involved. And that does not mean you need to loan them money. It means you need to be involved with the budget and paying the bills, and you might need to take responsibility because these grown adults have chosen not to.

[Jay]

Why are you living there?

[Caller]

Well, I still have, like, one more class left for college, so I Was going to take that class. And then in December, I was thinking about moving. I have about $60,000 saved.

[Jay]

You want to know what? You want to know what I think? I think that dysfunction is magnetic and it has a way of pulling us in and pulling us and not just physically, but even mental. When you're around dysfunction, before you know it, you're starting to act in dysfunctional ways and you're starting to confuse. Consider doing things that you know are dysfunctional.

[Jade Warshaw]

It's like a vortex you get sucked into.

[Jay]

Like the fact that you're even calling us concerned about what do I do here? Lets me know, man, this dysfunction is really having a pull on you. I think I'd get the heck out of that situation. And it's not to say you don't talk to them or see them or interact with them. I'm not saying cut them off by any means. I'm s. I'm just saying you've got money. You're 23 years old. You're grown. Go and start your life and start on a healthy path.

[Caller]

I agree.

[Jade Warshaw]

So they have a thousand bucks coming in from you. They have rental property money coming in. I assume they have Social Security. Any other sources of income?

[Caller]

No. Oh, they also have another rental property as well.

[Jade Warshaw]

Where's all their money going?

[Caller]

Bills? They're backed up on everything.

[Jade Warshaw]

So it's all going to bad debts they're trying to keep up with.

[Caller]

Yeah, he has about, I think 100,000 in credit card debt.

[Jay]

How old are they?

[Caller]

My dad's 70 and my mom's 50.

[Jay]

Okay, so older parents.

[Jade Warshaw]

Can she work?

[Caller]

I think she's going to start working. She never worked before, but she's going to start. She's going to have to get a job.

[Jade Warshaw]

No time like the present. So how much debt do they have total? Do you know? Between all the T locks and consumer

[Caller]

debts, I think about 800,000.

[Jade Warshaw]

Okay. And they have at least 700 locked up in this rental property. Number one, what's the second property worth

[Caller]

and what is owed on it that's debt free. They owe about. They don't owe anything, but it's worth about 400,000.

[Jade Warshaw]

Okay, so they have $1.1 million that they have access to if they chose to sell one of these properties or both of them.

[Jay]

They're not in the red. They just have a lot of risk in their life.

[Caller]

Yeah, that's true.

[Jade Warshaw]

So you can show them that. Hey, mom and dad, I'm not going to co sign anything, but what I can help you do is Come up with a plan to. To get out of this. If you're willing to listen to me. If you don't want my advice, fine. But that's all I'm able to help with at this point in my life.

[Caller]

That's true. I'm also afraid that they're not gonna pay me back.

[Jade Warshaw]

They're not gonna pay me back.

[Jay]

They're not gonna pay you back. Certainly they're not.

[Caller]

Yeah.

[Jade Warshaw]

What makes you think they would be shook? Cause they said they would.

[George Kamel]

Yeah.

[Caller]

I mean, you know, it's your parents. You know, I would think they would

[Jay]

be back, but it's not about that. It's. You can tell by people's patterns of behavior what they're most likely.

[Jade Warshaw]

Sure they want to pay you back. I'm sure somewhere deep in their heart they feel for you going, man, we really need to get her money back. But they've got a thousand things going on. And you might get it back, an inheritance one day. But at this point, there's still a lot of life to live for these kids and for your mom and for your dad. So in the meantime, we need to clean this mess up. And you might need to show them how bad this really is. And that debt is not the answer because it got us where we are today. Another HELOC isn't going to solve anything, is it? It's all about the behavior that got us here, and they're not willing to change that. And you can't change them.

[Jay]

No, you can't.

[Jade Warshaw]

That's why I don't want you to get involved.

[Jay]

Yeah. Yeah. You can't change them. And I think you need to move out. I go back to my point. If I'm you this weekend, that's my. That's my fun. I'm going out and I'm apartment hunting. You've got $60,000 saved, which is amazing. Go put it to good use.

[Jade Warshaw]

Oh, parents, please do not put your kid in this position. This is abuse on several levels.

[Caller]

Sam.

[Rachel Cruze]

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

[Jade Warshaw]

Lauren is in Salt Lake City. Up next, what's going on, Lauren? How can we help today?

[Caller]

Hi, my name is Lauren. I'm working at a job at a company that I don't respect how they've treated myself and some of the employees. But I'm under a service based repayment through a health grant through the government. And so they paid for all of my school and livings I've been while I was in school. And so now I have a period of commitment time. And if I don't fulfill that commitment, I would owe back three times to the government. What was paid.

[Jay]

Three times?

[Caller]

Yeah, 3,000. What was paid. And so they initially paid around 280,000. And so if I don't fulfill it, then I would owe back basically a million dollars. So I don't technically have any loans per se that I'm paying, but if I don't fulfill the commitment, then I would have to pay it back.

[Jay]

I've never heard of such a thing, have you, George?

[Jade Warshaw]

Not three times the amount. And you're sure about all the fine print here? You're saying that you would owe them like $900,000 if you quit today?

[Caller]

Yes. So it's, it's really scary.

[Jade Warshaw]

What if you get fired?

[Caller]

Yeah, so if I get fired, I'd have up to six months to find a job or I get placed at another. Another health site.

[Jay]

What's wrong with that?

[Caller]

Not necessarily anything wrong. It just would require me to move. So there's no other. They have kind of certain scores and so the nearest site to me is about nine hours away.

[Jay]

But it's not, it's not the job, it's the location. Right. You said it's a toxic environment.

[Caller]

Yeah, it's a toxic work environment.

[Jade Warshaw]

Is that one person or is it like this whole place is corrupt?

[Caller]

The whole place? Yeah, there's been.

[Jade Warshaw]

That's comfortable. What program is this that you studied?

[Caller]

I'm. I'm working as a medical. It's through a medical program, but it's through, like the health research.

[Jay]

How long do you have? How long is the contract for before you. You're free?

[Caller]

So I have about a little under three years left.

[Jay]

And if you move locations, like, to George's point, let's say you got fired and you move, does the term start over again? Or are you able to, you know, do your time, the rest of your time in the. In the other location so I can

[Caller]

do the rest of my time in another location? I think the part that my husband and I have been torn about is just that we have family where we're at, and it would require us to sell our house in kind of sort of in that sense financially. And so.

[Jay]

But isn't that the least of your problems? Because when you called in, you said, I hate my job, but the problem is if I leave, I owe 3x the salary. So that means let's pretend. Let's pretend that wasn't the case. Let's just pretend you hated your job and you wanted to leave. Would you still be saying, oh, well, here's the problem, you know, we have to move and, you know, housing and whatever. Do you see what I'm saying? I feel like you shifted the problem to something else just now.

[Caller]

Yeah, I agree with you. I think I've felt pretty stuck where I'm at.

[Jade Warshaw]

Is there a way to transfer versus having to force yourself to get fired? Which sounds insane. Can you just go to leadership, or is there a bigger organization that handled this program that you can go to and ask for a transfer?

[Caller]

There is a way to transfer to another site. And so I am interviewing another site. And that's kind of part of the reason that I wanted to reach out today is just to kind of see if that. If that was wise, because I'm.

[Jade Warshaw]

How far is that from where you're at?

[Caller]

It would be a little under 10 hours away. And so it would require a move. And that's actually one of the closest sites to where I'm at now. Just trying to figure out, with lots of little kids in a big move, if that makes sense, even if I'm going to come back here because my husband would also obviously lose his job here as well.

[Jay]

It's okay. So let's separate it out. It sounds like on the one hand what I hear is you can't stay at this job. Like, for your own mentality, you can't.

[Jade Warshaw]

You can't afford the soul tax that is to be paid.

[Caller]

Now.

[Jay]

What we can't do is cloud an inconvenience with keeping us in a really bad situation. Moving is inconvenient. Even when you want to move, it's inconvenient. So let's just put that on the shelf as being a moot point because moving is always going to be an inconvenience. So let's not let that stop us. I think the main thing here would be your husband's job. That could be a logical thing for us to consider staying or staying closer by. What type of work does he do? Is he movable? Tell us about him.

[Caller]

He's movable. He's also in health care and so could get a job easily more, you know, daycare and childcare. We've got three kids in daycare, so lots of. Lots of movement there.

[Jay]

And that's okay.

[Caller]

If I could stick through here that maybe I could stay at home at the end of it.

[Jade Warshaw]

We don't know the environment you're talking about. So I don't know on a spectrum of. My boss is annoying to. I'm having a mental health cris because of this. I don't know where you're at.

[Jay]

Yeah, tell us.

[Caller]

Yeah, it's definitely more towards the latter. I've watched several of my co workers get fired in front of me and so it's been. It's been a really hard.

[Jade Warshaw]

Are they in the same program as you? What happens to them?

[Caller]

Pretty much everyone that's in the program stays until the day they can be released and then leave.

[Jade Warshaw]

But you're saying they got fired so they have to move to a different location 10 hours away?

[Caller]

Yes. Yeah. So coworkers that do get fired or let go prior. Do you have to move.

[Jay]

Do you think they got fired on purpose?

[Caller]

I think it possibly. I think a lot of it is the employer. I've watched about 30 co workers get fired in the.

[Jay]

Then those jokers are getting fired on purpose. I think they're seeing the same thing you're doing.

[Jade Warshaw]

And the fact that no one's seeing this pattern going, hey, there's some toxic leadership here. If 30 people are getting quote unquote fired who are otherwise great workers. So this is a real tough situation. There's just suck on both sides of this. And so I would just try to make peace with this move and go. It's an adventure. Yes. Family's gonna be further away for a couple of years, but three years from now, this is all over. And it's a good reminder that all of these programs, they sound so amazing. Like what a blessing to have a whole program paid for that would have cost you over a quarter million dollars. We can all agree. That's awesome. The red tape on the other side and the prison sentence and handcuffs is the part that scares me.

[Jay]

With these programs, can you afford to move? Tell us about your finances.

[Caller]

Yeah, I think so. Right now we're in a really good financial position. We make about 225 combined and our house is almost paid off here. And so we would, we would sell our house and we could, we'd probably rent where we would go. Yeah, I'm not sure that we would stay. I think the part that might be hard financially is that we would possibly be living on just my income for a while. And the rent where I'm interviewing is more expensive because he won't be able

[Jade Warshaw]

to find a job or what it

[Caller]

probably more until we can find childcare because we'd be trying to enroll. But the area a lot of these sites are in really rural areas with not a lot of resources.

[Jay]

Well, let's do it. Let's give you a fair order to make this move. So the first thing that you would need to do before you transfer or before you get yourself fired because you pulled the fire alarm, you need to make sure he has a new job. Right. Like that's thing one, because you don't want to go somewhere if you can have him locked in and you locked in. I think that's a good thing.

[Jade Warshaw]

And we can figure out childcare. You've got options. You could hire a nanny for six months if you needed to.

[Jay]

Yeah, for sure.

[Jade Warshaw]

And it'd still be worth him working.

[Jay]

And if you know where the transfers send you, then he can start to look in those areas prior to you actually requesting the transfer or prior to you getting fired. I don't know. I'm not going to tell you to get fired on purpose.

[Jade Warshaw]

Trust me, Lauren, I would be contacting an employment attorney.

[Jay]

I know that's true.

[Jade Warshaw]

They're going to be looking into the fine print of this. They, they can read these contracts backwards and forwards and tell you what your actual options are versus just our opinions,

[Jay]

basically because we've never seen it. Yeah.

[Jade Warshaw]

But if I'm in your shoes, I'm going to be taking the contract, uploading it to AI, talking to the employment attorney and seeing what all of my options are. And this choosing one, that is the sort of path of, of least resistance here that's going to involve the least amount of pain. But it sounds like either way it's going to be a tough go for the next couple of years. Whether you stay, whether you move. And you know, three years feels like a long time in the scope of your whole life. You're going to go, man, remember that time we had to move 10 hours away for three years?

[Jay]

Yeah. It can feel very short, too.

[Caller]

Yeah.

[Jade Warshaw]

Oh, man, that is wild.

[Jay]

The bigger lesson. Let's talk about the bigger lesson that might be in this whole thing. This was golden handcuffs if I've ever seen it before.

[George Kamel]

Yeah.

[Jade Warshaw]

To stepping into knowing that I would have to pay 3x the amount.

[Caller]

Yes.

[Jade Warshaw]

And knowing that it was over a quarter million, which equals three times that.

[Jay]

And you're going into the unknown. Yeah. You're going into the unknown for it. Oh, lordy.

[Jade Warshaw]

Yeah. That's the financial equivalent of having to hand over a kidney. Oh, gosh. Would not recommend.

[Caller]

Sam.

[Jade Warshaw]

Hey, George Camel here. A few years ago, someone stole my identity. And let me tell you, that is not a quick fix. It takes hours on the phone, piles of paperwork, and a whole lot of stress trying to untangle the mess. And even after that, there's this nagging paranoia because your information is already out there. And the truth is you can do all the right things and still become a victim. That's how common identity theft is. And that's why I'm glad I had Zander's identity theft protection. When my identity was stolen, their team stepped in right away. They were monitoring my information and caught the issue. And their US based recovery specialists help handle the calls, the paperwork, the cleanup, so I didn't have to do it all on my own. Zander also includes up to $2 million in stolen funds and expense reimbursement. And with the family plan, your kids are covered for free. You work too hard to let identity theft steal your time, your money, and your peace of mind. So go to zander.com to enroll today or call 800-356-4282. If you're working the baby steps, the best and fastest way to do it is by using EveryDollar. It's more than just our budgeting app now. The plan is built right into it. You can track your progress, get personalized recommendations and coaching for your situation so that you can free up more money and work the plan even faster. You can start everydollar for free by downloading it in the App Store or Google Play. Chris is in Dallas, Texas. Up next, Chris, welcome to the Ramsey Show.

[Caller]

Hi, George. Thank you for taking my call.

[Jade Warshaw]

Sure.

[Caller]

My question is, is it worth it for me and my two siblings to fix up our mother's house. It's got a lot of foundation, plumbing, roofing. The regular issues, or should we just sell it as is?

[Rachel Cruze]

Woof.

[Jade Warshaw]

What's it going to cost to get it back to a decent condition?

[Caller]

Well, the foundation, the quote we got was $13,000. It needs 28 tiers. But if you fix the foundation, you in turn, of course have to do the plumbing and the windows and the roof and so forth.

[Jade Warshaw]

We're basically rebuilding this house pretty much.

[Caller]

And she owes 8,000 on it because she and my dad, God love him, you know, wanted us to have these great childhoods. So they just kept refinancing the house. And it's obviously very sentimental and time we bring it up to her, you know, it's very emotional. But a portion of her ceiling fell a couple weeks ago. And yeah, we had a contractor come by and, you know, put it. Put some plywood up. And so now, of course, mom thinks, oh, okay, this is great. It'll last last another year. And I'm like, mom, this is so unsafe.

[Jay]

But how old is she, Mom?

[Caller]

She's 78.

[Jay]

And when you've said to her, I feel like our options, mom, or we can start to do the work on this house, or we can sell it. What does she say?

[Caller]

She says, where am I going to go if I sell it?

[Jay]

Yeah, that's what I want to know.

[Caller]

Well, where she would go is my sister has offered to let her live with her and her family. My husband and I have room. Or we could find her a nice little apartment where she doesn't have to stress over these issues. But it depends on the day. Honestly, when I ask her, she's.

[Jay]

Is she.

[Caller]

Well, she just. Oh, yes. Oh, she's. She's very well.

[George Kamel]

Okay.

[Caller]

She's. Yes. Active. Yes.

[Jade Warshaw]

But she has no money other than Social Security.

[Caller]

She has 2200amonth from Social Security and about 500amonth from an annuity. I started her on a budget, and she's got about A$400 a month margin. I mean, she's just. Yeah, she doesn't have the money to fix it. Asking if we want to fix it, and then we get the house when she passes.

[Jay]

What's it worth?

[Caller]

The value on this Dallas County Central appraisal district is about 265 to 270.

[Jade Warshaw]

If you fixed it.

[Caller]

That correct? That is if we fix. Okay. She's received a couple of, you know, these Internet offers, which I tell her to stop looking at.

[Jade Warshaw]

Oh, God. Like, buy your house in cash today.

[Jay]

What's the. What would Be the as is price. Have you talked to a realtor about that?

[Caller]

Well, I've talked to two of the contractors that have been out who are builders, and one of us gave. It. Gave us an offer of 140.

[Jade Warshaw]

Okay. So all is not lost. You could walk away from this with 120 grand, probably after fees.

[Caller]

I think that's about what I. What I figured I'd still have a

[Jay]

realtor look at it and make sure because, I mean, that guy might have just been trying to take advantage of a situation. I'm not saying he's a bad guy,

[Jade Warshaw]

but at least we have a floor. We know someone will give you 140, barely. So now I'm going to go, who's the highest bidder? And work with a pro real estate agent who can get rid of this thing. I personally don't think it's worth all of you chipping in all of your money to hopefully get this thing back to working condition so that one day we can keep the sentimental value of this house.

[Caller]

Okay.

[Jade Warshaw]

I don't know who's going to want it at that point. Who's going to live there? Are you going to turn it into a rental? Because at that point, how sentimental was it?

[Caller]

Well, it does have. She has a lot of. What am I trying to say? It's a big lot. So if a builder did tear it down, he could probably build two or three homes to corner lot in a, you know, wow.

[Jade Warshaw]

So you might be able to get a nice offer on this thing because the land is worth more than the house that's sitting on it.

[Caller]

100%.

[Jay]

Interesting.

[Jade Warshaw]

I don't think it's worth rebuilding. This is a lot of hassle, a lot of siblings, money tied up in this thing. Everyone's going to want to get their money back out. So now it's going to be a fight of when are we going to sell this so I can get my share out. I think it's going to cause more familiar harm than it's going to be, you know, precious sentimental family time.

[Jay]

Let me, let me ask you this because I would wonder. These are the questions. If I were in your shoes today and I were making the decision, I would want to know exactly what the house plus the land would be worth. And I want you to really do your due diligence on that. I'd want to know with the fix and without the fix, and then take that margin between the. The two amounts and go. Okay. If we. How much money do we truly have to invest into this and if it really is a fraction of the amount that you would bank off of getting it fixed, then I'd be asking myself the question, can I do this in cash? Do I need to even include the siblings? Because that might make it easier and to just know, hey, later on, I'm getting my. This is what I put in. I'm getting that money out, plus whatever our split is or whatever, and maybe not involve as many people, because if there's a. If you find that there's a lot of money that's going to be left on the table, there might be something that's worth doing in cash if you can afford it. Now, if you can't afford any of this, it's a moot point.

[Caller]

Well, between the three of us, we can afford to do it. My brother has expressed interest in buying the house. But my point to him, well, if we fix this house up, then I want my money out. You know, if you get this house, I want my money back.

[Jade Warshaw]

I just called it. I knew this would happen, Chris. This is what happens when siblings get involved financially and. But now there's so much emotion wrapped up in it. And what would mom want? So because of that, and here's the problem, you might put 100 grand into this, and some builder comes along, couldn't give a rip about it. He's going to tear it down anyways, so you don't roi on it. He probably would have given you the same offer if you had done nothing to it. So that's why I would do all of my homework, like Jade said, figure out, here's what it would truly cost to rebuild. Here's what we could then get for it. Here's what a builder would be willing to pay for it. Here's where we're going to put Mom. Here's where we're going to put her money to afford that and come up with a game plan all together as siblings.

[Caller]

Okay. The harder part, of course, is the sentimental part of it. It's just hard for her to do that, and that's, you know, that's emotional, and that's something we have to work with her on. So, you know, as they get older, they have their routine, they know where everything is, and they like what they do, and they don't want to change anything.

[Jade Warshaw]

Just imagine, though, she's in a place where the roof isn't about to fall on her. That's pretty comforting.

[Caller]

She says, God will provide. And I'm like, mom, God provided you a sign by having the roof cave in. It's time to go to the ceiling, it's time to go. And she just says, we'll keep praying on it. But I, I love her.

[Jade Warshaw]

But sometimes God provides with wise counsel to avoid us bringing harm to ourselves. So it looks a lot of different ways so that I can't help you convince a 78 year old woman to let go of a home. That's beyond me. But I think what you can do is show her all the facts and say, hey mom, we're not gonna put all this money in to fix it up and here's what we can get for it. Here's what we're gonna do with that money. We found you an awesome place, let's go check it out together. Or you're gonna go live with, you know, one of the siblings and she's gonna have to make peace with that because this is the life she' for herself.

[Jay]

I will say I do want to add to that part. I think you, the siblings do have to be careful. So let's say you sell the place as is. That's her money. And so taking that, what I want to make sure doesn't happen is, well, we want to preserve as much as this money as possible. So let, let mom go live with sister and that way we don't have to spend money on an apartment or something like that. I don't want you guys to be thinking too much about what it is that you want out of this deal. I want you to be thinking a lot about what really will be good for your mom. For her to keep having independence, for her to feel good about her day to day life. Because the truth is today it is her money. If you guys have not, you know, fixed the house right, the whatever equity is there is hers. So just keep that first and foremost and don't spend the money before it's yours. If that makes sense.

[Caller]

It does. Thank you both so much. I really appreciate the insight.

[Jade Warshaw]

Absolutely. That's a sticky situation.

[Jay]

Yeah, that's not easy.

[Jade Warshaw]

I can't imagine. But there is a piece of this too. If you got to think about long term care expenses, you know, if she's in her 80s and she needs, you know, medical attention and we need to put her in an assisted living that could cost you 100 grand a year and someone's going to have to pay for that.

[Jay]

Yeah, that is a good point to.

[Jade Warshaw]

And so we need to be thinking about what assets do we have at our disposal to make sure that we can take care of her in the best way possible. Maybe they want private in Home care.

[Jay]

Yeah.

[Jade Warshaw]

That's going to cost a lot of money too. And so I like the idea of selling this thing, getting a whole bunch of money out, that is. Now let's give her the best life possible instead of having her sitting in this place that's literally falling apart.

[Jay]

It's dangerous where she's at. It sounds like it is.

[Jade Warshaw]

So yeah, I'm gonna go. The memories I will carry with me, it's not in the studs of the walls. It's in our hearts. And that's a hard thing to sell to a 78 year old woman who's this has been her whole life.

[Rachel Cruze]

Yeah.

[Jay]

Yep, yep. But she don't have any money. It's tough.

[George Kamel]

Sam.

[Caller]

Foreign.

[Rachel Cruze]

Ways to save time and mental energy Especially during the summer when life gets busy. Between vacations, camps, deliveries, travel plans, online shopping and trying to keep everyone organized, my mental load can get pretty full. That's one of the reasons why I love Delete Me. Most people don't realize how many data broker sites have their information online, like old addresses, phone numbers and even family connections. And that can put you at risk of being a target for spammers and scammers. But removing all of it yourself can turn into a giant project. That's why Delete Me is amazing. Because Delete Me handles it for you. Their privacy team of experts removes your personal information from hundreds of data broker sites and they keep monitoring it throughout the year. So far, Delete Me has saved me about 90 hours I would have spent myself removing my information. And honestly, it feels so good knowing that someone is in the background helping me and I don't even have to think about it. So this summer, give yourself a vacation with one less thing to manage. Get 20% off annual [e-mail] Ramsey that's JoinDepthMe.com Ramsey.

[Jade Warshaw]

Gigi is in Chicago. Up next, what's going on?

[Caller]

Gigi, hi. Thank you for taking my call.

[Jade Warshaw]

Absolutely. How can we help?

[Caller]

So I'm a 20 year old college student and I was just wondering how much should I have in my personal savings account before I start putting it into a high yield savings or mutual fund?

[Jade Warshaw]

You are the most mature 20 year old I've talked to in a long time. Congratulations, you won the prize. That's awesome. How much do you have in savings?

[Caller]

About 7,000 right now.

[Jay]

Wow.

[Jade Warshaw]

Awesome. Are you debt free?

[Caller]

Yes, I am.

[Jade Warshaw]

Fantastic. Well, you're doing better than 99.9% of America at 20. Let's keep it that way.

[Jay]

For real.

[Jade Warshaw]

So we Always Recommend Having a 3 to 6 month emergency fund of your expenses, not income. And so once you have that, anything beyond that I would utilize towards either short term goals, sinking funds or investing. Okay, so how much are your expenses per month right now?

[Caller]

Right now like probably $250 dollars. Yeah.

[Jade Warshaw]

How are you doing this?

[Jay]

You live on campus?

[Caller]

Yeah, I'm on a scholarship and everything is paid for. It's a full ride.

[Jay]

That's so awesome.

[Jade Warshaw]

Wow. Are you smart or talented or both. How do you get this full ride?

[Caller]

I'm a golf county and there's, there's this scholarship, the Evans foundation and they pay to send deserving caddies to school. So I catted my whole life and I got it.

[Jade Warshaw]

That's amazing.

[Jay]

Great. So how much time do you have left in school?

[Caller]

Two years. And after school I'm hoping to get a job obviously but you know, I don't know if I'm moving out of state to get, I need to get an apartment, maintain you know, enough liquidity so that I'm like if I need a down payment or something like I have the ability to do that. So that's why like I don't want to put too much in an account where then I have to pay to take it out. So I just don't really know how much I should be putting in.

[Jay]

And yeah, I really like a high yield savings for you because there are in two years you do have some real expenses, you're going to want an apartment. So first and last month's rent is going to be there. And then suddenly what George talked about, your emergency fund is going to have to tick up because well now you have rent and maybe, you know, it's

[Jade Warshaw]

not going to be 250amonth anymore, it's going to be 2,500 exactly.

[Jay]

And probably that $7,000 is going to be right on for what you're looking for.

[Jade Warshaw]

There might be moving costs, there might be a car upgrade. And so for that reason, for a 20 year old who's going to graduate in two years, there's nothing wrong with just stacking it up in a high yield savings account because you have so much time on your side to invest and have compound growth work in your favor. And if you start off completely debt free with a bunch of money in the bank making a good income, you're going to be able to invest 15% or more the rest of your life.

[Caller]

Okay, great, thank you.

[Jade Warshaw]

I don't know that I would invest at this stage until you have full time working Income and you're planted somewhere and then you'll know how to allocate that money. I've never heard someone complain that they started their adult life with too much in cash. So I'd love for you to have that problem. Gigi, great question. Way to go. Who knew? A golf caddy. I know, full ride.

[Jay]

I wish I had a time machine.

[Jade Warshaw]

Half the parents out there are trying to get their kid to play golf. I'm like, hey, maybe you help the golfer.

[Jay]

Maybe just be a caddy.

[Jade Warshaw]

That's the ticket right there. All right, Madison is in Atlanta, Georgia. Up next. What's going on, Madison?

[Caller]

Hey, I had a question about investing for my kids.

[Jade Warshaw]

Sure.

[Caller]

Specifically they have where they get, you know, they're only five and three so they get minimal income, but they do a little flower stand and they earn their own money. I make sure that they tied with it. And then I have been putting some of it originally like their birthday money and stuff like that we would put in. My husband works for a employee owned company where they do stocks. So we were doing that and then I started listening to you guys and realized it's not good to put all their eggs in one basket too. And so now I've gotten them like a 529. I mean not a 529. I've gotten them an S&P 500. But I was curious if it's better to like go ahead and do them a 529 or. I mean, I know it sounds sill, but they can even do like a raw expenses income as long as I don't put their birthday money in that. So I was just curious what your thoughts were and the best course of action for them.

[Jade Warshaw]

Great question. I love that you're thinking about this for a 5 and 3 year old. A lot of parents out there struggle with this. Either they don't know what to do so they do nothing or they do the wrong thing or they try to do seven okay things. So here's how I see it. If you're looking at education, which I would be Starting with, the 529 plan is your best bet as far as retirement goes. It's awesome. If you want to kickstart a little retirement for your kids, they should be okay if you raise them right on that regard. But school is a much bigger price tag and it's coming much sooner than their own retirement. So most people go, well, my kid might not go to school, so let me not save anything. And now you have all this money stuck in a retirement account while your kid goes 400 grand into student loan debt.

[Caller]

Right.

[Jade Warshaw]

So I'd rather you fund the 529 first. And if they don't use it all, you can change beneficiaries at any time. You can roll over up to 35 grand over to a Roth IRA over time. So that becomes a retirement account for them, essentially. And it has way better tax advantages.

[Caller]

Okay. And then if you put in to a 529, because I haven't like looked into it in depth because I'm just now kind of getting started and listening to you guys and all that, they. If I do a 529, am I able to like invest within the 529 or does it just kind of grow?

[Jade Warshaw]

Okay, it's just, it's just like an ira. There's going to be a bunch of options for funds there and there's a lot of bad funds you don't want. So I personally avoid things like bond funds, target date funds. You want to stick to 100% equities because they're young, they got a lot of time for this to grow. So let's stick with those growth stock mutual funds and index funds.

[Caller]

Okay, perfect. So just chunk it all in at 529 and call it a day.

[Jade Warshaw]

And here's what I do Madison as well. If you have the 529 on lock and you know that, hey, based on the average stock market return, we're going to have enough to cover, let's say an in state school for four years. If you want to save for other things like let's say cars, wedding, a future down payment, you can use that parent taxable brokerage account to sock away money there and that money will be super flexible.

[Caller]

Okay. Okay, gotcha. Yeah, I know that I won't have a hold of it forever, so I just wanted to take, take advantage of it while they would let me use, use part of their money to go ahead and invest.

[Jade Warshaw]

They will. Thank you later.

[Jay]

They will.

[Jade Warshaw]

Whatever toy they could have bought is that. That's going to be like 70x if they just let it ride in retirement. So I like there to be a split, you know, some. I think it's great to teach a kid that money is an amoral tool and it has three uses. Give, save, spend.

[Jay]

Yep, yep.

[Jade Warshaw]

So let's teach them to do all of it. If you just teach a kid how to save, they will become a maniacal saver and have a really hard time enjoying their life.

[Jay]

Now that's what we do with our kids. They have their chart where they can check off the chores that they've done. And they get paid at the end of the week. But the rule is you can't spend your money on payday.

[Jade Warshaw]

Oh, I love that.

[Jay]

They have to wait until the next time so that it's not like I

[Jade Warshaw]

got my paycheck, I go spend, it's gone. Yeah, it's a little delayed gratification.

[Jay]

Uh huh. They have to have delayed gratification. And so that's the way it works. But yeah, we teach them they have to put 10% aside. They have a jar that they put their savings in. They have a jar that they put their spending in.

[Jade Warshaw]

And yeah, I love it. Great question. And Madison, hang on the line. I'm gonna send you a copy of Rachel and Dave's book Smart Money, Smart Kids. It's really great to walk you through sort of the age appropriate conversations and tactical things you can do to help your kid understand money. Because that's every parent's goal. Especially if you follow Rams. You're like, how do I get my kids on this? I want them to get it early. And we already got budding entrepreneurs at 3 years old. Oh yeah, she's got a Roth going on. I mean that's pretty impressive.

[Jay]

Yeah, that's so good.

[Jade Warshaw]

And it's a good reminder if your child has legitimate earned income. We're not talking tax fraud here.

[Jay]

That's right.

[Jade Warshaw]

But it's Inc. Have a little business. Let's say they do any modeling or acting, something like that. They work, they work for your own business. You can pay them above board and they can then invest up to that amount in the Roth IRA. And can you imagine 60 years of compound growth from 5 years old to 65 years old?

[Jay]

I know that's right.

[Jade Warshaw]

That's pretty impressive. It wouldn't take much to cause you to be a multi millionaire.

[Jay]

It wouldn't. And as long as you're doing that 529 first, you've kind of got both bases covered, which is really nice.

[Jade Warshaw]

And there is a new option now with these Trump accounts. They're technically called the section 530A accounts if you want to make it apolitical. But all it is, the government said, hey, we're going to create these accounts so that you can invest for your kids. Anyone can contribute up to five grand a year. And if your kid was born 25, 26, 27 or 2028, the government will seed it with a thousand dollars. That's money that you didn't put in. Thousand bucks Sitting there at that age to grow into retirement. And at 18, it basically converts to a traditional IRA for the child. So it's a pretty cool thing.

[Jay]

There's nothing bad about it.

[Jade Warshaw]

Yeah, the tax treatment is the only terrible thing because you use after tax dollars and you pay taxes on the way out. But there's a cool hack that I'm exploring where you can convert from traditional to Roth.

[Jay]

Okay.

[Jade Warshaw]

Once that kid's working at their tax rate, be super cheap to convert. Now you got tax free money growing for. So that's.

[Jay]

I like how your mind works.

[Jade Warshaw]

Very nerdy, very in the weeds. And if you want more info on this, I'm going to be walking through exactly how that that works. In Investing Essentials, it's a virtual event. Dave Ramsey and I. September 1st and 2nd, investing essentials. You can get [e-mail] events if you want to join us.

[George Kamel]

As your business grows, everything becomes more complex.

[Jade Warshaw]

There was a time when Ramsey Solutions

[George Kamel]

had too many disconnected systems and not enough visibility across the business.

[Jade Warshaw]

We wasted too much time chasing information instead of making decisions. That's why we got NetSuite. NetSuite brings your financials, inventory, CRM and more together in one place. More than 43,000 businesses trust NetSuite, including Ramsey. And now they're taking the next step with NetSuite Next, making it easier to put AI to work across your entire business. NetSuite Next helps you make the most of your time automating routine work like forecasting demand and following up on overdue accounts.

[George Kamel]

With NetSuite Next, AI is built into

[Jade Warshaw]

every so you can ask it questions, just like when you're talking to a member of your team. And right now, you can try NetSuite next for free. If your revenue is at least seven

[George Kamel]

figures, go to NetSuite AI Ramsey.

[Jade Warshaw]

That's NetSuite AI Ramsey. Welcome back to the Ramsey show and the Fairwinds Credit Union Studio. I'm George Camel, joined by Jade Warshaw. Free call at 888-255-225. Jacob is in St. Louis. Up next. Jacob, welcome to the show.

[George Kamel]

Hey, guys, how you doing?

[Jade Warshaw]

Doing well. How can we help today?

[George Kamel]

Hey, so my wife and I are on baby step two. We currently have 24,000 left to pay off. We paid off 76,000 over the last 22 months.

[Jade Warshaw]

Way to go. Way to go.

[George Kamel]

Yeah. Thank you.

[Caller]

Thank you.

[George Kamel]

Yeah, we've, we've really been able to make a lot of progress. The main thing is because we' childcare for our three kids.

[Jade Warshaw]

How do you do that?

[George Kamel]

Well, yeah, well, my mom was a director at a preschool. That was kind of part of her contract.

[Jay]

Perfection.

[Jade Warshaw]

Yeah, you got a built in blessing there.

[George Kamel]

Yes, it was amazing and we made the most of it. So the bummer is that kind of ended. So coming into the fall now we're going to be paying for childcare. So it's gonna cost us about 2,400 per month and that is eating up pretty much all of our margin and it's really slowing down the snowball here. Yeah.

[Jade Warshaw]

Is that for all three kids or is that two that are in daycare?

[George Kamel]

So, yeah, actually, yeah. So our oldest is starting kindergarten in the fall, so it's gonna be for two kids.

[Jade Warshaw]

Okay.

[Jay]

And I mean, that's a fair price. Just for anybody listening, you can easily pay 1200, 1300, even 1400, depending on the age. If it's the younger, the younger they are, the more expensive they are, it can be up to 1500.

[Jade Warshaw]

So that's the going rate, unfortunately. So what is your after tax monthly take home pay?

[George Kamel]

After tax, it's about 9200amonth.

[Jade Warshaw]

Okay, that's a great income. And so you're saying your bills after daycare is paid from that 9200, pretty much leave you with nothing left to throw at extra at the debts?

[George Kamel]

Yeah, yeah, we have like a margin. We went through it and laid it out. Our margins like probably about 2 to 400 right now.

[Jay]

How much is your home payment?

[George Kamel]

Our mortgage is like 27, 2800.

[Jay]

Okay. How much are you paying in minimum payments?

[George Kamel]

Minimum payments are, let's see, like 700, like 750.

[Jay]

That's not a lot. So I'm finding that there's still quite a bit of money here. Where's it going?

[George Kamel]

Great question. I figured you'd say that because I was going through all of this. So just our needs, like our monthly needs, excluding daycare and mortgage, I have it like 3200.

[Jay]

Right. And that's the chunk that I want to know more about because like if

[Jade Warshaw]

you ranked them from most expensive, would it be, you know, we spend a thousand thousand bucks on food, then we spend 800 bucks on this. Where is it? Where's that money going?

[George Kamel]

Yeah, I think like food is at like 625amonth.

[Jay]

Okay. So I'm showing, I'm showing that you still have 2,725 to go.

[George Kamel]

Okay.

[Jay]

And I mean, obviously yes, you have utilities, but if you're telling me, hey, what the two items that I actually thought were going to be really high were really low. You said 625 on groceries. Stupendous. You said 750s on your minimums. I mean, obviously, I wish you had no debt, but that's not that bad, right? So there's. There's money going somewhere. I would challenge you to look to where that is, because I think there's probably a lot of things that are nickel and diming you. Because generally the big ticket items, it's either the mortgage is too much or, yeah, daycare could be sucking up whatever margin you have. But I actually don't think daycare is the culprit here.

[Caller]

Okay.

[Jade Warshaw]

Because, I mean, even after daycare is paid, you guys are taking home well above the median household income. So that's where we're going. Well, there should be more, but I think this is going to take you two sitting down, doing a very detailed budget, and instead of going, let's see if there's anything left over, instead, let's make a goal. Hey, we need to find two grand a month to put towards these debts with minimums, plus extra two grand. So that's 1300 bucks we need to find in this budget. Where are we going to find it? And you guys take turns going, all right, I think I can slash this down here. I can reshop insurance here. Oh, you know what? You're doing your 401k. Let's pause that. Let's get some money back in. And if you start doing a budget audit and getting real creative, I think you're gonna find way more margin than you thought.

[Caller]

Okay.

[Jade Warshaw]

And I'm gonna help you with that. We're gonna give you every dollar premium, and it actually gives you personalized recommendations now based on your goals, where you're at, what your actual expenses are. And we'll make those recommendations just like Jade and I would do on the show.

[Jay]

Now, are you guys still investing?

[George Kamel]

No, we. We did pause that.

[Jay]

Okay, that's good. Yeah, I think it's probably the devil's in the details. You know, it might be things that pop up that maybe you didn't budget for, and you look up at the end of the month, and it's like, oh, gosh, we did do Doordash, or we did go to Target, do a Target run, or all those little things. Coffee? I'm trying to think. It's the little things. Maybe. You have a lot of subscriptions, do you? If you have Hulu, Netflix, Disney, Paramount plus, Amazon Prime, Fandango, Instacart. Instacart.

[Jade Warshaw]

You just keep going. Everything's A subscription.

[Jay]

Everything's a subscription. So my point is I'm talking to myself because that's me. So cut half of them off.

[Jade Warshaw]

And I think 15, 20 bucks, you don't feel it in the moment, but it can add up. So I hope that helps you start to navigate this. It's a hopeful situation because you have a great income. There's not a ton of debt left. You guys have made crazy progress. So I just don't want to see you lose all of that momentum just because of the childcare.

[Jay]

Now, for those who are listening, and maybe you don't make $9,200 a month. Maybe you make somewhere around $5,600 a month. And you're like, like, I have kids in daycare. Jade and George, where my margin, like in the truth is daycare. I do feel like sometimes the baby steps can really be impeded by seasons. If you're in a daycare season and you're not making, you know, maybe you're making the average income, you're going to feel that stupendously and you're probably going to be a person who has to go out and side hustle and supplement your income in order to make that work. But the good news is, and if you've ever stopped to think about it, George, the good news is if you can pay for daycare with two kids, you can pay for college when it's time. You can cash flow it because it's basically the same $36,000 a year. You know, you could go to state school.

[Jade Warshaw]

So once they're out of daycare, just reallocate that daycare payment to their future.

[Jay]

Yes. You're basically paying for college twice. I don't know why anybody. Nobody talks about that.

[Jade Warshaw]

You know, that's a life hack there.

[Jay]

It's a life hack. There's hope. If you can pay for daycare, you can pay for.

[Jade Warshaw]

Jay just told you, you'll never get rid of this payment. They're like, there's hope yet. But there is truth in that. And a lot of times people do make really good money and they go, well, I don't have any margin and I always want. I wish I could sit down and look at their bank statement, look at their every dollar budget and help them. But luckily the every dollar app now does that for them. So I always point people to that. It's such a great tool that. Plus ask Ramsey, which is our AI Chatbot, if you combine those two things,

[Jay]

you will feel like you got a raise.

[Jade Warshaw]

You could sit there for Two hours and go, hey, give me more recommendations. Hey, here much I'm spending on groceries. How do I cut this down? Hey, here's how much I'm spending on my utility bills. How can I get this down?

[Jay]

And you know it's going to be through a Ramsey lens.

[Jade Warshaw]

Through the Ramsey lens, yeah. So I love that. But insurance is a sleeper. People don't realize that they're overpaying for insurance, so I always tell them to reshop using an independent broker. And again, we have an awesome coverage checkup tool that walks you through all the ones you need, making sure you don't have too much insurance.

[Jay]

Right.

[Jade Warshaw]

You don't want too little insurance. But a lot of people will reach out and say, oh my goodness. I just say save 300 bucks a month just by re shopping because I always had whatever XYZ company for the last 10 years.

[Jay]

And then check your Amazon, go through there because sometimes it just becomes a catch all. And you can look at the end of the month and just go, what have I done? What have I done?

[Jade Warshaw]

It's like the little sticker on the gas station pump.

[George Kamel]

I did that.

[Jade Warshaw]

Yeah, it's your own face pointing at your Amazon account going, how did we spend $2,000 on Amazon? Amazon? How much of that did we need? And how much of it was just retail therapy after the kids went down, man, it'd be like some real questions to ask ourselves.

[Jay]

If you've worked hard to keep your car running, the last thing you want is stress when you're running the kids all over to summer activities or loading up the family for a well earned vacation. That's why I trust Christian Brothers Automotive. Listen, most people don't worry about their car just because it's older. They worry because they don't feel confident about what's happening under the hood or who's working on it. And that kind of uncertainty can turn a simple trip into a stressful one real fast. But Christian Brothers is different. They use digital vehicle inspections so you can see what your technician sees, know what needs attention now and what can wait, and make decisions without the pressure. That's how you protect your time, your money and your travel plans. And Christian Brothers stands behind their work with the nice difference warranty. Three years or 36,000 miles, whichever benefits you more. So before your next trip, take care of the car that's taking care of you. Go to cbac.comramsey to schedule your service and get 10% off your visit. That's cbac.comramsey 10% off up to a $250 value. See stores for details.

[Jade Warshaw]

Jesse is in Modesto, California. What's going on, Jesse?

[George Kamel]

Hey, George Jay, thanks for having me on. Get straight to the point. So my wife and I, we bought a house about four years ago and since then I started listening to the show a lot more and where you talk about buying a house on a 15 year fixed at no more than 25% of your take home. Well, ours is a 30 year fixed and, and it's about close to 40% of our take home. And the question I have is, would it be wise to look to downsize from our current home even though interest rates have risen since we bought our house, or should I try to find more work to bring up our income? I don't know if you guys have any advice on a good approach for that.

[Jay]

I'm glad that you're realizing the problem that this is. If you said to us, I see a long term play where my income can go up and it will stay up, there might be a way to keep this if that's happening in the near future. But what I wouldn't want you get sucked to get sucked into is maybe I can side hustle my way out of this. Because side hustles are temporary situ like temporary fixes. And so that's kind of where the rubber meets the road on this. Is there an upside for your careers that you do think you could get to fairly soon that would, you know, be sustainable for this?

[George Kamel]

I don't think there's anything like within the next five years that would drastically increase to where it's going to, you know, put me up closer to that 25%.

[Jay]

Yeah.

[Jade Warshaw]

Give me the numbers on this. I'm curious, what's the mortgage payment and what is your after tax monthly income?

[George Kamel]

Our take home is probably 9,000amonth.

[Jay]

Does that include and that's just after taxes or does that include.

[George Kamel]

That would be after our health insurance and our I invest 10%.

[Jade Warshaw]

Okay, so let's remove that out. That'll help our numbers here. That is a confusing point. When we say 25% of after tax income, we're just saying after your taxes are paid. But don't include healthcare and 401k because that can skew the numbers that might force you to go, hey, you know, we're actually at 28%. This is not a fire.

[George Kamel]

Gotcha.

[Jay]

Okay, so how'd you calculate it?

[George Kamel]

Just, that's just all that comes out prior to I getting the deposit into my checking account.

[Jay]

So you did it based off the 9,000. That comes into your checking account?

[George Kamel]

Correct. Okay.

[Jade Warshaw]

And what's the mortgage payment?

[George Kamel]

It's about 3,700amonth. And that's just, just mortgage.

[Jay]

And how much goes out of your check for investing and how much goes out for health?

[George Kamel]

I have about 10% set for investments. And then health is not much. It's a couple hundred bucks.

[Jade Warshaw]

Okay, so you probably, it might be like, let's say, let's call it 10, 3, for example, 10,300, which brings you to 35% of take home pay. Okay, so it's not great. But I wouldn't say this is on fire where I'm telling you, hey man, you got to sell this thing now. The question is, do you have enough margin to do the baby steps, live your life, create sinking funds, all of that?

[George Kamel]

Yeah, I would say we have a decent margin. We have no debt besides the mortgage. I think that the only thing that after listening to your show that I started to realize is I could go up to 15% on my investments. But I want to invest. We have three kids, so I want to start investing for their education. And as soon as I start thinking about all those things, I'm like, I don't know quite where we're going to get all that margin. And part of the reason I'm putting it all together, why we want to be around that 25% is so you can have those margins to make those investments.

[Jay]

Yeah, that's true.

[Jade Warshaw]

You're getting it, man. That's exactly it. We want you to be able to live your life. And that's not because we're trying to be super legalistic and you're a bad person if it's 30% on a 30 year. We've just found that you're going to pay that house off in 15 years. Worst case scenario, you're going to have extra money to cover the vacations, the car repairs, the kids, activities, whatever it is. And so that's where I'm, I'm wondering if you keep this thing for another year or two and see where we can shave, how we can make more, and then later on down the road you can decide, hey, this is. There's not a sustainable path.

[Jay]

And I mean, you can run real numbers on this today to get your head around what the future would look like. So I would go ahead and I would plug into my budget, how will my paycheck change once I invest the full 15%? Because the truth is, if you have no debt and you have an emergency fund, you should be doing that. Today. And then I'd say, okay, ideally in my ideal world, what I'd be putting into the 529. So I'm gonna, you know, 300 bucks a month. Okay, great, subtract that. And then I'd like to be making extra mortgage payments. In my ideal world, it'd be, I don't know, 700 bucks a month. Whatever you decide. And then, then see the margin. And you and your wife decide, how do we feel about this? Is this enough to take the vacations we want to take? Is this enough to, you know, be in the lifestyle that we want to be in, that we've worked hard for? And I think that will inform a lot of your decisions looking at the real numbers around it.

[George Kamel]

Gotcha. Just a real quick. I guess the reason it felt more of like a urgent fire situation is because you guys talk about a 15 year fix and we're on a 30 year, you know, well over that 25% of the take home.

[Jay]

So I mean, I do think that

[George Kamel]

a little more stressful it, it is

[Jay]

because a lot of times people will do a 30 year to be able to afford the house that they want. And if you're telling me that Even on the 30 year it's still 35%, yeah, you bought more house than you should have. I mean, there's no question about that. I think that you bought more house than you could afford.

[Jade Warshaw]

Can you guys reasonably downsize? What would that look like in Modesto area?

[George Kamel]

I mean, we could probably find something. I think our house is probably worth around 600 right now, and we have about 130,000 in equity. We could probably find something in like the five hundred thousand dollar range. So it's not like a major downsize. I never ran the numbers on what a 15 year fixed would look like.

[Jade Warshaw]

Yeah, my guess is it would, it would be a whole big chunkier take home pay. And you got to think about all the fees involved with moving, selling a house, buying another house. So I don't know that I would go down that road until I know for sure that this is unsustainable. But right now, now I'm, I'm the first guy to tell you. If I was, if I felt heart palpitations that you should sell your home, I would let you.

[Jay]

It's not on fire. It's just something to be thinking about.

[Jade Warshaw]

And you do live in a, you know, high cost of living area and that's just part of life there. You just kind of have to make more money to have a life with Some cushion. So I would be looking at your career as going, okay, can I work overtime temporarily, if we need some extra margin. But long term, what does it look like to get the core income up? Do both of you work right now outside the home?

[George Kamel]

No, I, I work full time. My wife works. It's a pretty job. So it's, you know, kind of fluctuates.

[Jade Warshaw]

Okay. So if she got something that was more stable, that paid higher, you know, higher wage, that could be your ticket to making 11 or 12 grand a month. All of a sudden, this mortgage payment is a nothing burger.

[Caller]

Yep.

[George Kamel]

Yeah. Okay.

[Jade Warshaw]

Good luck, man. It's. It's a fun math equation that life is.

[Jay]

And I think you highlighted a good point, George. You know, our rule of thumb, I think everybody knows it, but we'll say it again. 15 year fixed rate mortgage is what we would suggest. And obviously you want a mortgage where the take home is no more than 25%. But sometimes, you know, people run into the Ramsey principles after they bought a house. And so they're looking at their mortgage and they're going, oh, gosh, mine's 29% or mine's 32% or mine. And it's not to say that you have to run and sell your house and get it to 25.

[Jade Warshaw]

Lightning will not strike if you're at 28% or. And you can still go to heaven with a 30 year mortgage. So don't worry about that.

[Jay]

And we're not telling you if you have a 30 year, you need to refinance to a 15 year. Right now, we're not telling you that at all. But we are saying that if you're wondering if it feels tight and you're wondering why that's something that you can look at and go, okay, now I understand why it feels tight. It may not be that my income's the problem per se. It's just I have a little bit more house than maybe I should have bought. And then you can decide the way you want to solve the problem. But if you're looking at your life and you're going, you know what, we're kind of doing the things we want to do, maybe we don't have as much margin as we want, but we're ticking off all the boxes and we're going in the right direction. Yeah, it's not on fire. It's just something that be aware of.

[Jade Warshaw]

Yeah. It's a good reminder. If you're following the baby step, sometimes it feels like you're living paycheck to paycheck because you've given every dollar a name and that can feel like, well, there's not an extra 3,000 bucks lying around because I allocated it towards college savings. This much is going to savings and I like to automate it personally. So by the time the money hits my checking account, it's already gone to all the different things. And all I have in that budget is the spending money left.

[Jay]

Right, right.

[Jade Warshaw]

Because all my saving stuff is gone, the giving stuff is gone. And so it can feel like that money's gone. But I like it because I'm human.

[Jay]

Yes.

[Jade Warshaw]

I'm gonna be tempted to spend it if I see extra.

[Jay]

Yeah, I mean, you don't. You don't. You should not be spending everything you get. You should be doing the things that make you financially responsible.

[Jade Warshaw]

And good luck, my friend. As a dad of young kids, I'm starting to think a lot more about the world they're growing up in and how I'll help them make sense of it as they get older. And that's why I like World Watch, a video news service for preteens and teens. Because one thing I know for sure, if you don't teach your kids how to understand the world, somebody else will. And these days, that could be TikTok, YouTube, Instagram, influencers, or whoever happens to show up in their social media feed. World Watch's 10 minute videos help young people understand what's happening in the world through a Christian worldview without all the outrage, negativity and noise that is everywhere these days. The reporting is factual, engaging and designed specifically for preteens and teens. And World Watch creates opportunities for something every family needs more and more of, meaningful conversations. Instead of just reacting to headlines, kids learn how to think about what's happening in the world. And parents get a chance to keep those conversations going at home. Because when my kids are old enough, I want them informed, not overwhelmed. And right now, you can get a 30 day free trial. Just go to Worldwatch News Ramsey or use promo code Ramsey to get started. That's Worldwatch News Ramsey.

[Caller]

Foreign.

[Jade Warshaw]

The Ramsey show question of the day is brought to you by why Refi? If you keep putting off dealing with your private student loans, now is the time. Why Refi helps borrowers explore low fixed rate refinancing options and affordable payment plans. Go to yrefi.comramsey to learn more. That's the letter Y r e f y.com Ramsey may not be available in all states.

[Jay]

All righty. Today's question comes from Tyrone in New Jersey. He says my Wife and I have $34,000 of debt and $12,000 in savings. I'd like to drain our savings to pay everything off, but it's hard to get over the fact that we will only have $1,000 in savings and we really want to buy a house. This feels like a step backwards. Can you give me some encouragement about pulling the trigger? Okay, this is fun.

[Jade Warshaw]

Well, here's some. Here's some reality. You guys have a negative net worth, so let's not talk about a step backwards. We're already in the negative.

[Jay]

Yeah.

[Jade Warshaw]

We can't go much further back. So you would take your. Let's say, 11,000 of the 12, keep your starter, emergency fund, 1,000 bucks, and you would knock that debt down, and you'd knock out a couple of payments along the way. Probably.

[Jay]

Absolutely. I mean, I think the biggest thing is what he's talking about is it feels cushy to have $12,000.

[Jade Warshaw]

You feel exposed.

[Jay]

It's a security thing. And what I. You know, on my sheet here, it says, can you talk me into using savings to pay off debt? Yeah. My talk into it is mathematical because the person who has debt and then says, but I have 12,000 in savings, I'm like, math says you don't have any money. Math says you actually owe 22,000. That is just basic arithmetic, which is my favorite type, by the way.

[Jade Warshaw]

And so arithmetic. I haven't heard that word in a.

[Jay]

Like, arithmetic. And so when you look at it for what the numbers actually are, you realize, oh, crap, I'm actually putting my security in something that's false. And so that's kind of my way of thinking about it, George. I mean, I don't know if you're funny as.

[Jade Warshaw]

As a guy who likes the numbers and likes the math. I think this one is the best emotional play in the whole. In all of the baby steps.

[Jay]

We switch chairs. Okay, go for it.

[Jade Warshaw]

Here's why. When you have a thousand dollars, you are a little bit scared. You're like, okay, we got to get out of this debt real fast, because I want to get that EM fund real fast. I want to build it back up. And so that's why I actually like this one. It causes people like fire. Yes. It causes people to move faster. And part of the problem is when you got 12 grand sitting in savings, you have comfort. And when you're comfortable, you move a little bit slower.

[Jay]

That's a good word, George.

[Jade Warshaw]

There's a lack of urgency. And so I like the fire. This thing lights under your butt when you got a thousand bucks to your name. And here's the good news. Most people in a given month could cash flow any given emergency. There's very few things other than like, you know, the H vac or like a roof needing to instant, instantly be replaced where you need to come up with 20 grand on the spot.

[Jay]

Right, right.

[Jade Warshaw]

Think about your last couple emergencies. It's likely the flat tire. It's the dental emergency. You have health insurance for that. So as long as you have good insurance in all places, you know your deductibles, you could likely pause the baby steps and cash flow that emergency in any given month.

[Jay]

That's a good point. Yeah, I think that's a good point. And then when you think about, okay, once the debt's gone, how quickly, with all those freed up payments, how quickly could you stack back 12,000 and then some? And you do the math on that and you go, oh, you want to know what? This is actually a really great play. We say around here all the time, your biggest wealth building tool is your income. That's your biggest wealth building tool. And so let's do what it takes to free that up and stop giving it away in monthly payments. And when you do that, that's when you start winning with money.

[Jade Warshaw]

I hope Tyrone was listening. If not, this was a big waste. I'm kidding. I'm sure it helps somebody out there. There's a lot of people in that.

[Jay]

Yeah, I think that's a very normal way to feel. And I think there's a little personal pride attached to it, too. Like, I saved, yeah, $20,000.

[Jade Warshaw]

I'll tell you this, though. When someone tells me I went down and I had this much in savings, before I go, oh, they're actually doing it, they're going to get out of debt matters. I'm convinced because now, like, I'm willing To pause the 401k, I'm willing to do the side hustle. This means something to me. I'm prioritizing this. So that's what, to me, it's more of that. I'm putting the stake in the ground line in the sand more than it is a financial, you know, equation. Arithmetic, if you will.

[Jay]

Arithmetic.

[Jade Warshaw]

That was fun. Thanks for indulging me.

[Jay]

You're welcome.

[Jade Warshaw]

Donald is in Eau Claire, Wisconsin. What's going on? Donald.

[George Kamel]

Donald, hi. I was wondering if my wife and I should sell our truck to pay off two thirds of our debt. Wow.

[Jade Warshaw]

What's the truck worth?

[George Kamel]

21,000.

[Jade Warshaw]

21,000. And what do you owe on it?

[George Kamel]

8,800.

[Jade Warshaw]

Okay. So you owe about nine. It's worth 21. So you could walk away from this thing with about 11 grand. 10, 12 grand?

[George Kamel]

Yes.

[Jade Warshaw]

Okay. And then you would use that money to buy a different vehicle. Do you need a different vehicle right now?

[George Kamel]

No, we have two vehicles at the moment. And I would probably use it just to pay off her. Most of our debt.

[Caller]

Wow.

[Jade Warshaw]

What's the other debts?

[George Kamel]

We have 9,000 in a personal loan, 8,000 towards my student loan, two credit cards that are around 2400. And I can't remember what else.

[Jade Warshaw]

Something else in there possibly.

[Caller]

I don't.

[George Kamel]

Okay.

[Jay]

Yeah, because you said the 21,000 was 2/3 of the day. Okay, so we're about there.

[Jade Warshaw]

Yeah. So you don't even need this truck. You could sell it, profit 12 grand and knock out some of these smaller debts with it.

[George Kamel]

Yeah.

[Jade Warshaw]

Speeding up the process by I assume, several months.

[George Kamel]

Yeah, we'd probably. I did the math and we're on $10,000. Wow.

[Jade Warshaw]

What's the payment on the truck?

[Caller]

266 feels like a no brainer.

[Jade Warshaw]

You free up a payment, you get 12 grand to throw at the smaller debts. You don't need the truck. I'm going sell it today.

[Jay]

Yeah. Why would, why would you not sell it just because you like it?

[Caller]

Yeah.

[Jay]

Okay. Yeah. I mean, that is part of the, the sacrificial nature of the baby steps is you let go of some things that maybe you like or you wish you could keep. But it's the greater good. Right. You're doing it all for the greater good. So I would do this deal.

[Jade Warshaw]

How much do you guys make?

[George Kamel]

$7,800 a month.

[Jade Warshaw]

Fantastic.

[George Kamel]

After tax.

[Jade Warshaw]

So if you sold the truck through that amount of the smaller debts, you have that debt remaining with your income. How quickly would you guys be out of this whole thing completely debt free?

[George Kamel]

Probably four to six months.

[Jade Warshaw]

Wow, Love that. We're talking like by Christmas.

[George Kamel]

Yes.

[Jade Warshaw]

Christmas is going to hit different. And then by the springtime, you'll likely have your fully funded emergency fund. Right.

[George Kamel]

I would hope so.

[Jade Warshaw]

Think about that, man. By summer of 27, you guys have no consumer date debt. You got 20,000, 25,000 bucks sitting in a high yield savings account. How quickly could you go save up and go buy yourself a nice truck?

[George Kamel]

Probably within two or three months.

[Jade Warshaw]

Think. I mean, we're talking like one year from now. You're in a totally different phase of life. You're a guy who happens to life instead of life happening to him. And you can save up 2 grand a month and go buy a $20,000 truck 10 months later.

[George Kamel]

Later.

[Jade Warshaw]

That's crazy. You see that future ahead of you.

[George Kamel]

Yes. And we paid off about $80,000 or $70,000 in the last two, two and a half years.

[Jade Warshaw]

Oh, wow. So this is a home stretch.

[George Kamel]

Yeah.

[Jade Warshaw]

So this is just you going, hey, let's not make this any harder than it has to be. Let's get rid of this truck. There's more trucks where it came from. So I feel real good about you selling this thing. It's not a horse. It doesn't have a soul. It's got horsepower, though. I'll tell you that much.

[Jay]

You know, I just love calls like this because it reminds me, I read a book by Hoda Kotb. It's called Jump and Find Joy. Anyway, in the book, she's talking about how you can be going through life, and you can just stop and go, you know what? I don't want to keep going down this path. I just want to stop and make a change. And I love stories like this because this guy, he's gone, was going through life, and he was like, you want to know what? I don't like this. Let me stop. Let's re. Just throw. Throw all the cards up in the air and start going down a different path. And now you look, he's paid off $80,000. He's about to sell a truck. It's. You can just stop and go. This doesn't feel right. And I want to go in a different direction, and I just love that. And we have the plan to help people do that, and they do it every day. And I always like to say, the time is going to pass anyway. So you have the luxury and you have the option.

[Jade Warshaw]

Where do you want to be two years from now? Now you want to still be in debt?

[Caller]

Yes.

[Jay]

God willing, you have two years in front of you. And if you can do the same, you can. You could be the same. You could be worse off, or you could be better. And all of that has to do with people in a moment just going, I'd like to make a change. I'd like to just stop. I'd like to get off this ride, and I'd like to get on this ride, please.

[Jade Warshaw]

This ride is not fun anymore. Is there a different one?

[Jay]

There's a different one. This ride is making me sick. I like better.

[Jade Warshaw]

It's the same person, person in the mirror who made all those bad decisions. Same guy's going to make the good ones. Yes.

[Jay]

Yes, please do it. I Love stories like Donald and the calls we've gotten earlier. It's so worth it. Guys. You can.

[Jade Warshaw]

Somebody out there is going to get a sweet truck from Donald.

[Jay]

I know that. At a great price. Hey, what's up guys? It's Jade Warshaw. Now I know a little something about saving money. While my husband and I were paying off over $460,000 in debt, we went over every expense in our budget to find ways to cut back. Nothing got a free pass, including our phones. And you need to be doing the same thing. And now with Boost Mobile, one of the easiest places for you to save money is your phone bill. Their unlimited plan is just $25 a month. Month forever. With a price that nice, why would you ever go back to your old carrier? And with Boost Mobile, there's no contracts, no hidden fees and no surprises, which makes this a no brainer when it comes to saving money. The best part, you can keep your phone and your number when you switch. So it's not like you're making some huge lifestyle change. Listen, you need a phone, but you don't need to be overpaying every month. So whether you're paying off debt or building wealth or you just want to keep more of your money in your pocket, this is a win. Go to boostmobile.com Ramsey and make the switch today.

[Jade Warshaw]

That's boostmobile.com Ramsey $25 forever requires customers to remain active on Boost Mobile unlimited plan. Paul is in Las Vegas. Up next. Paul, welcome to the Ramsey Show.

[George Kamel]

Hi, George. Hi, Jay. Thanks for having me.

[Jade Warshaw]

Sure. How can we help?

[George Kamel]

I had a question. So I'm in. Just getting into baby step number six. I paid off all my consumer debt. I'm doing. I have the emergency fund and I'm investing for my retirement.

[Jay]

Way to go.

[George Kamel]

Here's this. Here's the situation on my house. I bought this house three years ago. It was from my in laws at the time. They're no longer my in laws. I bought the house from them. They had solar put on the house house prior to me buying it. When I bought the house, I told them, I said, I'm buying the house. I don't want to assume the solar loan though. And we'll keep the solar in your guys's name. I'll continue to make the payments on it, which I've been doing. Now I'm entering baby step six. I did a title search on my house, but after I purchased the house, the solar company put the lien on it for the equipment on the roof against my former in laws, I owe 32,000. Well, the solar loan is 32,000. I owe 92,000 on my house. I'm wondering do I pay off my house or do I pay off the solar? Since regardless, at the end of the day when I go to sell the house, I'm going to have to pay off the solar anyways.

[Jade Warshaw]

What's the situation with the ex in laws? Do you still communicate with them?

[George Kamel]

Here and there. I mean I have it set up to auto pay on the solar account every single month. I don't really have to deal with that and like the aspect of sending them money, but I'm still on good terms with them.

[Jade Warshaw]

Okay, but you're making the payments.

[George Kamel]

Correct.

[Jade Warshaw]

So what was the deal with them? It sounds like they got the best deal here. You're making the payments. There's a lien on your house, but it's in their name. But there's really no risk on their part because the lien is against the

[George Kamel]

collateral is your house, the equipment lien. So it's not against the house, it's just against the equipment on the roof.

[Jade Warshaw]

So they could come repo the equipment?

[Jay]

Why not?

[George Kamel]

Theoretically I, I have like a moral obligation and I made agreement with them that hey, I'm going to make the payments on this, I'm just not going to assume it. And that's where I'm at right now. And I've continued to make those payments for over a year and a half after the divorce.

[Jade Warshaw]

I'm guessing they don't have the money to pay this off.

[George Kamel]

Correct, they do not.

[Jay]

I'm trying to understand why. I know it's spilled milk, but I'm trying to understand why you would agree to make the payments. Like why you would go that far but not say I don't want anything to do with it, period. Do you see what I'm saying?

[George Kamel]

Yeah, I get, I get that. And it was the, at the end of the day when I went to purchase, I tried to see if I could get out of the solar agreement. I couldn't, I didn't want to assume it, to put more debt on my own myself and put more stuff on my credit. And so I just, at that time, you know, I was, I was good with them. I was good with my ex wife at that time. I was like, yeah, I'll just, I'll continue to make the payments on this. And I made that agreement with them. I have a lot of, a lot of respect for them. Yeah, marriage didn't end on bad terms or anything. And I Don't want to screw their credit over by saying, right, right, I'm done paying it.

[Jade Warshaw]

Do you know if this lien is actually real and recorded on your home? Because sometimes they use this as a scare tactic and it's not actually valid.

[George Kamel]

It is real and it's recorded on the home. Because I owned a couple properties, a couple of parcels, and when I split and sold one of my parcels at the beginning of this year, it was an issue on. On it. And they were trying to say, well, you can't sell it until you pay off that lien. And I was like, well, it's an equipment lien. And then they ended up letting me sell the property that was attached to it. So now when I go to sell the house, it's going to be an issue with selling.

[Jade Warshaw]

When do you plan on selling the house?

[George Kamel]

Probably in the next two to three years.

[Jay]

I kind of think you have to think of this as though you bought the house in any other way other than the way that you bought it. If you bought the house in any other way, you would have assumed all of this, this, and it would be on you to take this over anyway. So I think I'd have to.

[Jade Warshaw]

Just payments.

[Jay]

Right.

[Jade Warshaw]

So you have the money to pay this off?

[George Kamel]

It would drain my emergency fund.

[Jade Warshaw]

How much is in there?

[George Kamel]

And my emergency fund is around like 38 to 40. Some of that's in a high yield savings and then some of that isn't. I have an account that I just have like for my house or all my bills for my house go out of that. I put money into that every month.

[Jade Warshaw]

Okay.

[Jay]

I think it would simplify your life.

[Jade Warshaw]

Yeah, I would just pay it off today and then rebuild the emergency fund and then begin attacking the mortgage with any extra margin. You may not have to pause investing. It sounds like you could do this pretty. This all pretty quickly and kind of just restart from scratch here.

[Jay]

Yeah. What's the. I'm just curious, what's the percentage on that loan for those solar panels?

[Caller]

So.

[George Kamel]

And that's the other thing. So my home loan, I own 91,000. My payment on it's $1,000 a month. I have nine years and four months left on it. And so that's a four and a half percent. The solar's 32,000. It's 2.9%. And I don't know exactly. The maturity date is in 2046.

[Jay]

Yeah. It's like, let's get this out of our life. I would.

[George Kamel]

Okay.

[Jade Warshaw]

It stinks because you worked hard to save all that Money up. You had an agreement with these in laws. Then there were the ex in laws. And I'm guessing there was nothing in the divorce agreement about the ex in laws loan, right?

[George Kamel]

No, there wasn't.

[Jade Warshaw]

It was just sort of a verbal,

[George Kamel]

kind of verbal part of the thing. And that's where I'm like, I know I could just stop paying it tomorrow if I really wanted. And I don't, I don't feel right doing that. I looked into trying to do like a solar exit company and I couldn't find one that was like really a reputable one that I didn't get, like feel like I was getting a scam vibe from.

[Jade Warshaw]

Well, here's my thinking because my guess is they act like a debt relief company where they tell you, hey, stop making payments and then we'll negotiate with them. It'll take your credit, but you can get half of off something like that. So I'm wondering if you can negotiate with the solar company at this point and explain the situation and see if they might settle for a lower amount.

[George Kamel]

Yeah, well, that's the other issue is the solar company, it's out of business. So now it's through. Is this through the lending company, which is still in business. So it's, it's.

[Jade Warshaw]

Yeah, it's a matter you might see if you can negotiate.

[George Kamel]

Yeah.

[Jade Warshaw]

And say, hey, I sort of, you know, adopted this solar loan loan. Here was the agreement. If you're willing to take, you know, 25 grand, I'll pay it off today, write you a check.

[Jay]

It's worth a try.

[Jade Warshaw]

Yeah, I would at least try that. Worst they can say is no.

[George Kamel]

Correct.

[Jade Warshaw]

So that would be the route I go. But I would not make extra mortgage payments until the solar loan is taken care of. And I like your point. It's too much to rob you of your piece to go, well, I'm going to let it get repoed, be on my roof taking down the solar, infecting my credit or whatever it would do, who knows. Oh, that's messy. Ex in laws. That's about as messy as it gets. James is in Baton Rouge up next. What's going on, James?

[George Kamel]

Hey, so I, I have a. We're in the middle of our debt payoff and we're, we have a car and I guess basically my question is from kind of the Ramsey perspective, if interest rates matter or if it's just that best to get rid of a debt.

[Jade Warshaw]

Debt.

[Jay]

Yeah. There's two prime methods that people tend to think about when they're paying off debt. One is an avalanche method where they are thinking about the interest rate in terms of which debt to pay off first. And then there's the snowball method, which is the one that George and I and everybody at Ramsey suggests, where you're looking at the debts in term of balance, full balance owed. And so when you really look at a person who is interested in paying off all of their debt, the data does show that the debt snowball method is the way to go. And people have the most amount of success in paying off all of their debt if they use the debt snowball. And the reason for that is you get small wins quickly. And so that's what I would say when it comes to paying off debts. What, tell us about yours.

[George Kamel]

Well, we, me and my wife, we started our payoff or our debt journey about two years ago. We reached the point where we've paid off everything but the house, the student loans and the car.

[Rachel Cruze]

Okay.

[George Kamel]

And we built up about six months of an emergency fund.

[Jay]

Go back. Why did you stop at. Why did you stop without doing the car and the student loan?

[Caller]

Not that we stopped.

[George Kamel]

We're kind of in the middle of that.

[Jay]

But you stopped to build up the savings is what I'm saying.

[George Kamel]

Yeah, well, my thought process on that was all of those are with percentages that, you know, we started our journey in the secular world. I was getting most of my advice from, you know, other financial people. And so in our mind it was get everything paid off that we can't beat in the market. Right. And then build from there.

[Caller]

Okay.

[Jade Warshaw]

So how much do you have in savings?

[George Kamel]

Savings? About. About 15,000.

[Jade Warshaw]

And what's left on the student loans?

[George Kamel]

The student loans are actually fairly fresh. My wife just graduated last year. I was working her through school.

[Jade Warshaw]

And what's the balance?

[George Kamel]

About 30,000.

[Jade Warshaw]

And the car loan?

[George Kamel]

About 18.

[Jade Warshaw]

18. Okay. I'd get rid of that car loan and use most of that emergency fund and just follow the baby steps as is. And it's because they work. And I know it's scary to lose your savings, but what you're really gaining is traction on the debt free journey.

[Jay]

Let's give him a copy of the Total Money makeover to Reed.

[Jade Warshaw]

Hang on the line. We'll send it your way.

[George Kamel]

Thank you.

[Caller]

Foreign.

[Jade Warshaw]

Welcome back to the Ramsey show in the Fair Winds Credit Union studio. I'm George Camel here with Jade Warshaw. Stacy is up next in Tampa, Florida. What's going on, Stacy?

[Caller]

Hi, George and Jay. Thank you for accepting my call. Actually, basically I'm trying to keep from going back to A show shelter.

[Jade Warshaw]

Oh my goodness. A homeless shelter?

[Caller]

Yeah, I recently got out of it about three, four months ago. I managed to save $500 since I got out of there. But I owe the IRS and child support and child support has already put in as a call that I'm, I, I made a mistake to call the IRS and child support thinking that the start with payments them but now they're wanting each one was 750amonth.

[Jade Warshaw]

So IRS wants 750amonth and child support is 750amonth?

[Caller]

Yeah. Okay, when you call, when you called

[Jay]

them, what were you hoping to do?

[Caller]

I mean I figured maybe 201 and the other one maybe 300.

[Jade Warshaw]

Okay. You thought it'd be a much lower payment and they, they said nope, this is what it's going to be.

[Caller]

Yes.

[George Kamel]

Wow.

[Jade Warshaw]

Are you working right now?

[Caller]

I am.

[Jade Warshaw]

Okay. What are you doing for work and how much do you make?

[Caller]

I'm a front desk for surgeons receptionist and I make 2500, give or take a month after taxes.

[Jade Warshaw]

Okay.

[Jay]

Is that 40 hours a week?

[Caller]

Week, yeah.

[Jade Warshaw]

All right. What's your living situation right now?

[Caller]

I'm currently renting a high efficiency house.

[Jade Warshaw]

How much is that a month?

[Caller]

I can afford currently a thousand.

[Jade Warshaw]

Okay, so 1,000 bucks a month and then if you owed this child support and IRS, that's 1500 extra, which is all of your income gone. And you haven't even put food on

[Caller]

the the table or my phone or my bus pass because I don't have a vehicle either. That's why I'm trying to save money.

[Jade Warshaw]

How are you getting to work right now?

[Caller]

Literally trying to fish. Bus route, I think the bus.

[Jade Warshaw]

Okay. Oh my goodness. I'm so sorry. What, what happened that got you into this situation? Originally?

[Caller]

Mental health, nervous breakdowns. I have 39 years of trauma, so I unfortunately keep going into depression and attempt suicide.

[Jade Warshaw]

And do you have medical support right now?

[Caller]

Yes, that's the other thing I need to venture into. I have to go to therapy every week to keep me going. That's the reason I came to Florida to run away from home. I tried trauma. I literally came to Florida about six, seven months ago. No, about a year actually now that I think about it. I just like eight months in the shelter. So yeah, it's been tough. But I refuse to go back to a shelter. I never been and I never want to do it again. That one time was more than enough. And I need to get mentally healthy and pay off my debt.

[Jade Warshaw]

How much debt do you owe total?

[Caller]

Give or take? About 35 grand between the IRS and the child support.

[Jade Warshaw]

Okay. And is there a judgment against you for these?

[Caller]

Yes. Because in the divorce my ex husband owed property taxes. So they give them to me and he took my 401k, my pension, my house, my car. He took everything because of our nervous breakfast down. Wow. So I have.

[Jade Warshaw]

Your wages are being garnished for these payments to the IRS and child support?

[Caller]

Not yet. They are in the process of it. Not with the IRS and the IRS right now. Currently I'm trying to make like $50 payments here and there whenever I can since they removed me from that. What is it called where they don't give you. It's when I was in the shelter, I was desperate and I called them and I told them my situation and they put me on something where they do not charge me interest for a little bit while. Yeah. And. But when I got. I started saving money in a one minute, you know, get started and catch up on everything. I call them up and I tell them, okay, so I'm currently working. I want to make payment plan that I can afford so I can pay off this debt. They removed me from that no interest thing. The gentleman that I spoke to, I told me. He me told me that she was going to do. I was like, no, don't do anything right now. It's like I'm. I'm literally just out of the shelter. I'm just not getting on my feet. I need a little bit of time. But unfortunately the gentleman when I said and remove me from that. So now I'm starting to create interest once again by. On the IRS and with the child support. I called them and I told them that was again a payment plan. And they told me and I also modify my child support because I obviously I cannot no longer afford 500amonth.

[Jade Warshaw]

Yeah, that's a huge chunk of your income. So they should adjust that and I would fight for that.

[Caller]

Can you get that before this is. No, they said 20, 28 is when they can do a modification because they send the paperwork to the shelter. However, the shelter either returned it, misplaced it, I don't know. But I did not get the paperwork. So now they say because they send me the paperwork to shelter and I never responded, I'm no longer eligible for them to modify my child support.

[George Kamel]

Okay.

[Jade Warshaw]

Do you have a social worker that you're connected to

[Caller]

employ the shelter? Yes, I do have a social worker.

[Jade Warshaw]

I would lean on them to see what resources are available, what programs are available to help you get your head above water right. Now and even fight for you, because you're doing a lot, you're doing a lot to just try to fight these things. Pay what you can go to work every day. So in my mind, number one, you gotta take care of you, because if you don't have your mental health and physical health, you can't go to work. And if you can't go to work, you don't have an income. If you don't have an income, we're gonna be back in the shelter. So that's how I would prioritize it. And you need to put food on the table first. So here's what you need to focus on with your 2,500 bucks a month. The four walls, food, utilities, housing, transportation, like your bus pass. And that might mean we don't have a car for the foreseeable future, but at least we can keep the bills paid, the lights on, we can eat. And beyond that, insurance. Any insurance you have to pay, let's make sure we have that covered. And if that means you can't pay whoever else, that's tough cookies. And we can deal with the ramifications of that later. But the IRS is the one that is not going to go away. And so we want to get, get, get them off our back and see if they can lower that payment. It sounds like you've, you've tried to talk to them. They haven't been super reasonable, but you simply do not have the money to pay. So at some point, they're going to have to give in and go, all right, 300 bucks a month is what we'll take on a payment plan. And same with the child support

[Caller]

I did when they sent me the court documents indicating that they were going to start segregating my, my check from child support, I did appeal for it and explain my situation once again. So I'm still waiting on that. I just did that last week, the appeal in the meantime, I'm waiting on that.

[Jay]

In the meantime, look for whatever extra work that you can be doing that's within walking distance, that's within bus pass distance, even a couple hundred extra dollars in your pocket is going to go a really, really long way to make you feel a little bit more secure

[Jade Warshaw]

in all this, even asking at work, is there extra work I can do over overtime, come in on the weekends, anything to bring in a couple extra hundred bucks. That is breathing room for you. We're wishing you the best.

[George Kamel]

Hey, guys, Dave Ramsey here.

[Jade Warshaw]

Every day on this show, we help people work through real money problems and figure out what to do next. Now, you can get that same kind of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principle principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple and free to use. Go to ramseysolutions.com and try Ask Ramsey today. That's ramseysolutions.com. Buying or selling your home is high stakes because one bad deal could cost you tens of thousands. You don't want to overpay for your next house or sell your current home for less than it's worth. And that's why Ramsey trusted connects you with vetted real estate agents who have the experience to guide you step by step to make smart decisions, not expensive mistakes. Connecting is easy. You can go to ramseysolutions.com agency. You fill it out, compare agent profiles, interview your top choices and pick the right one for you. So you can go to that website, ramseysolutions.com agent for free or click the link in the description. If you're on YouTube or podcast, Christy is in Washington, D.C. up next, Christy, welcome to the show.

[Caller]

Thank you. Thank you so much for having me. George and Jane.

[Jade Warshaw]

Absolutely. How can we help?

[Caller]

Well, ultimately, our question is about paying for college for three kids. First, we want to thank you. We want to thank total money makeover. Back in 2009, my husband and I paid off $92,000 in debt in 22 months. Wow, that snowball. So thank you. That set us on a pretty good financial path, but not perfect because like I said, our questions about paying for college. We have three kids. One is in her second year of college, one is going to be a senior, one is a freshman. And we're okay now, but we're going to run out, basically. So our question is ultimately, what's the best path? We have some investments and we want to know what the best path would be.

[Jay]

All right, are there any scholarships involved? Are they working? Tell us all the components that need to come together aside from just you guys cash.

[Caller]

Sure. Our oldest is in. She'll be a sophomore. She did get a number three scholarships, smaller scholarships, but basically we're paying almost full price. And our middle daughter did get a nice sports scholarship. She'll be a senior in high school, but we already know she has a nice sports scholarship which will pay for a little over half. But it's out of state, so it's still going to be.

[Jay]

Oh, it's out of state.

[Caller]

Yeah, it's still going to be around 20 per year. And then our son is a freshman in high school, kind of unknown. So we're just going like when we run the numbers, we're just like, we're paying, we're in Virginia, we're gonna pay, you know, basically full. We're just trying to be conservative and assume we're gonna pay full price.

[Jay]

Okay. So the biggest thing, the biggest thing here is college choice, right? So going out of state, although there's a scholarship there, that's a big, that's a big deal. And so I'd want to know, are there any other schools offering anything? You know, cuz once you have, as an athlete, I can tell you once you have one school, it kind of does kind of open up the doors with some other schools of the same stature. So I would be looking into that.

[Caller]

Okay.

[Jay]

And then the other thing is we

[Caller]

are in, in state, nothing as of now.

[Jay]

Okay.

[Caller]

Keep looking.

[Jay]

Because if she's also a good student, she might find that she can get academic schools and then walk on to the team that she wants to do. I had that option too. So if, if sports is a thing, but she's also smart, I think there might be other ways you can play that to where she can still play, still have better scholarships and be in state.

[Jade Warshaw]

Because if in State is 15 a year and you're paying full price, that's still cheaper than your half off out of state school.

[Jay]

Right. And I gotta say this, when it comes to sports, if she stops playing, she can lose her scholarship. Like if she goes does freshman year, she's like, mom, it's too much. I. Or I hate the team, I hate the coach. What do you. Whatever it doesn't play now she doesn't have any money and she's in an out of state school. So I just want to make all those things there. Now with the freshman coming up, obviously we need to start looking at maybe can we do community college first and do those gen EDS there. Right. So I think there's some things that we can tweak with the senior and with the freshman so that we're not spending way more than we need to and we won't run out of money as quickly. And then there's another part where it's like, can they work a little bit? Can they start saving up a little bit to put towards this and have some skin in the game as well?

[Caller]

Yes. And they, and they actually, Are they good? Actually all three have jobs.

[Jay]

Okay, good.

[Jade Warshaw]

So how much do you guys have that you could utilize? That is Non retirement money.

[Caller]

Okay. So. Well, that's our question. So long story short, after we, you know, did our debt snowball? We're in a good financial position. We moved from Connecticut to Virginia and the house we bought was a foreclosure. Because it was a good deal. We fixed it up, we did pretty well on it, and building our dream home became possible because of that. And so what we did was kind of Ramsey inspired. Not kind of totally Ramsey inspired. We sold the house that we had fixed up and we moved with the three. They were really little then, so it was much easier, but we moved into a two bedroom condo while we built our dream home.

[George Kamel]

Home.

[Caller]

And

[Jay]

this seems like a long story to tell us something simple.

[Jade Warshaw]

How much do you have, Christy?

[Jay]

Not that we don't want to hear

[Caller]

it, but for college, just in general,

[Jade Warshaw]

because we can just look at your assets and go, okay, how much do you have that is non retirement that we have access to. That could be stocks, that could be savings, whatever it is. Well, could you sell a property? Is that what you're getting at?

[Caller]

Well, yes, that's kind of what I was getting at. The condo that we lived in, we kept and we have rented for the last 11 years. Years. It's been wonderful. Great investment. It is worth 415 and we owe 130 on it.

[Jay]

Okay.

[Caller]

And so our question is, should we sell that condo? And basically, I mean, we would have more than enough to pay for college.

[Jay]

That'd be college fund.

[Jade Warshaw]

You'll walk away with like 250 grand. That becomes the college fund.

[Caller]

Right. Or it's been a very good investment.

[Jay]

Where's the condo? Is it even in Virginia?

[Caller]

Right nearby us? Yeah.

[Jay]

Oh, it's by you. Okay.

[Jade Warshaw]

Cash flow after all expenses and the mortgage is paid, all of that, we

[Caller]

get about a thousand a month.

[Jade Warshaw]

Okay, where is that money going right now?

[Caller]

To college.

[Jade Warshaw]

Okay, so when you say to college, where is the current college savings?

[Caller]

529s.

[Jade Warshaw]

Great. How much is in the 529s across? All of them.

[Caller]

Okay. After we paid for our first year of our first daughter, we are down to about 20.

[Jade Warshaw]

Okay, last left.

[Caller]

And that will get us through that. Plus what we're putting in. We're putting in the thousand from the condo, plus from our monthly budget, another thousand. So between the two we can pay for another full year. And then our second daughter goes in and we can get about halfway through that year and then we're going to run out of that 529.

[Jade Warshaw]

Okay.

[Jay]

It almost feels like a bit Of a no brainer, I think to me because knowing that there's two behind you that are coming, I would, you know, and the condo's cool. It's cash flowing. It's not like it's like changing your life, the thousand dollars a month. But in many ways this is the college fund that you should have been building from the beginning.

[Caller]

Yeah.

[Jade Warshaw]

So I know you love it. And now what you can see is, hey, this was kind of a secret blessing because this helped us cash flow college. None of the kids are going to have student loans. But that also means we need to reset the conversation with the kids that we're not about to walk into the mall and just buy whatever we want. We are going into store with a shopping list. Here's what we can do, here's what we're not going to get. Because if you give a kid carte blanche to go anywhere in the world, they're going to choose anywhere in the world when you tell them, hey, we're going to cover four years at an in state school and you're going to work your tail off and apply for scholarships and grants. Now we're all in agreement.

[Jay]

You guys set the budget ahead of time and make them align to the budget because my guess is you probably want to take some of this money and chuck it towards your current home. Right. Get that paid off.

[Jade Warshaw]

And your freshman's not going to be happy about this because he saw the other siblings get to do whatever the flip was they wanted. Right. There's going to be a little bit of it's not fair.

[Caller]

Right.

[Jade Warshaw]

Why they get to go out of state.

[Caller]

Yeah. No, I got you. And, and that's definitely. We, we are already having those conversations.

[Jay]

Yeah.

[Jade Warshaw]

Here's the math on this, Christie. You sell that condo, you pocket 250 in a high yield savings account. Even that will net you about 700 bucks a month just from the interest off of that with no half hassle, no landlording, plus your 250 principal

[Caller]

and then just take from that and pay as we go.

[Jade Warshaw]

Exactly. Now you could shovel a lot of that into the 529. It doesn't have a whole lot of time to grow and have the, you know, compound growth, but it's still nice to have that grow for the next four years for your high schooler.

[Caller]

Right. And we get a t. We do get it in Virginia. A nice tax break.

[Jade Warshaw]

That's great. On top of the tax free with withdrawals for qualified education expenses. That's personally what I would do. And the 529 plan is great for that because there's no income limits. The contribution limits are virtually unlimited. And so that becomes your glorified college savings account, that condo. So I would, I would grieve it, say goodbye to the condo, get rid of the renters as soon as you can and enjoy debt free education for all three of those kiddos. It'll be worth it. Hey, George Camel here. We often talk about how being normal sucks when it comes to to your money. But guess what? Normal isn't so great when it comes to your job either. Normal is staying in a job you hate, dreading Mondays, and working for people you don't even like. Sound familiar? Well, the good news is you can break free from normal because Ramsey Solutions is hiring and we refuse to settle for the ordinary. In fact, we are anything but normal and we are proud of it. And right now we're hiring for technology, sales, marketing, writing, copy editing and creative roles. So head over to ramseysolutions.com careers and apply today. Ask Ramsey is our free AI tool that's built and trained on proven Ramsey principles. And today we're going to break down one of the questions we received this week. Here it is. Why should I set aside 15% to replace retirement before paying off my mortgage?

[Jay]

I love this question. We get this a lot. And one of the reasons is compound interest is really time sensitive, right guys? And your mortgage isn't going anywhere, but the time in the market is going somewhere. We want you to capitalize on that and spend as much time in the market as you can. A dollar invested today is worth far more than a dollar invested five years from now. So, so important there. And the truth is your mortgage has, has a fixed payoff date regardless of when you attack it extra hard. Of course we want you to do that at some point, but yeah, because

[Jade Warshaw]

the thing is if you just made minimum payments on your mortgage on a 15 year, it's gone in 15 years,

[Jay]

which is still way better.

[Jade Warshaw]

So we need to be investing because there's no guaranteed sort of fixed forced savings plan there like there is with your mortgage.

[Jay]

That's right.

[Jade Warshaw]

So it is wise to do both. And the Ramsey plan lets you do both. We Recommend it investing 15% once you're debt free with an emergency fund, any extra money you can put towards college or extra on the mortgage. And if you do it our way, you have a reasonable house payment, 25% of take home, you'll have extra to do all of this stuff with. And then once the mortgage is paid off, you can invest 20, 30, 40, 50% to your heart's delight.

[Jay]

Right.

[Jade Warshaw]

And maximize your wealth.

[Jay]

The problem is if you skip investing and you pay the mortgage faster, you arrive at a paid for house, which is kind of nice. But then your retirement is very thin and that doesn't feel very good either. So you're scrambling and to catch up. So there's a way to do this, guys, and the Ramsey plan lets you do both.

[Jade Warshaw]

So check out Ask Ramsey. It'll walk you through your financial goals based on your specific situation. Do [e-mail] or you can use the link in the description if you're on podcast or YouTube. Braylon is in Austin, Texas. Up next, Braylon, welcome to the show.

[Caller]

Hi. Thank you so much for taking my call. My boyfriend loves this show and I've been debating back and forth on a life update upgrade. I would say a car upgrade.

[Jay]

Okay.

[Caller]

Specifically, tell us more. So I'm really wanting to upgrade to a luxury car. I do work in real estate, so clients see my car from time to time. Right now I drive a 2021 Toyota Camry and there's quite nothing wrong with it. And I do not have a car payment. But I've had a really good year the last two years in real estate and I'm wanting an upgrade. So I wanted to hear Yalls thoughts

[Jay]

is I want to know the number one driver. Is the number one driver I have the money to do this and I earned it or is the number one driver? I'm a real estate agent and I want people to think that I do really well. So I want to drive a really nice car.

[Caller]

It's honestly split 5050. Like when I get in a car, I want to feel like I'm in something really updated and I have worked really hard and I know I deserve that. And there's a little bit of that too. Yeah. I do want people to know that they're well taken care of. And you know, I'm a great real estate agent.

[Jade Warshaw]

Okay. What's this car going to cost?

[Caller]

Around 70.

[Jade Warshaw]

And what are you making a year

[Caller]

so far this year I've made 280.

[Jade Warshaw]

Whoa.

[Caller]

Thank you. Last year I did 428.

[Jay]

So you didn't need the car to smash it at real estate.

[Jade Warshaw]

There's people driving luxury cars that suck at real estate. I just want to let you know that. Good job. I don't want you to think that the car is the difference maker that you're going to get clients. You're already doing it in Your Camry. So. So clearly nobody's reaching out to you because of your cool car is what I'm trying to say.

[Caller]

Thank you.

[Jade Warshaw]

So I want to free you of that. That no matter what car you drive, you're just a really good real estate agent who helps people.

[Jay]

Yeah. The question is, do you have 70,000 saved?

[Rachel Cruze]

I.

[Caller]

My net worth right now? My boyfriend does all my investing for me, so. Shout out Joe. He's listening right now.

[Jay]

Wait, did you. I'm sorry, did you say your boyfriend does all your investing for you?

[Caller]

Yeah.

[Jay]

Just as a guy, or is he.

[Jade Warshaw]

Is he just like, a finance nerd and he's like, hey, I'll get you

[Caller]

set up, like love. Yeah, he just loves investing. He. He works in, like, investment properties.

[Jay]

And, you know, do you know how it's being invested or you're just like, here you go, Joe. You got it?

[Caller]

I do. I'm. I'm so next to him when he does it. He's teaching me, so. My friends, too.

[Jay]

Okay, I'm a little concerned, but let's move on to the top.

[Jade Warshaw]

What is your net worth?

[Caller]

My net worth is at 380 right now.

[Jay]

Good job.

[Jade Warshaw]

Total. Okay, so where did all the money go?

[Caller]

What do you mean?

[Jade Warshaw]

Because you said you made 428 last year, but your net worth is 380.

[Caller]

We had some big purchases like last year, I guess. I'm not quite sure, to be honest.

[Jay]

Your net worth is 380 or you have 380 and invested?

[Caller]

I have three. No, my net worth.

[Jay]

Okay.

[Caller]

I don't know. This would be a joke question, to be honest.

[Jay]

Well, that's why I wanted to make

[Jade Warshaw]

sure net worth is assets minus liabilities.

[Caller]

Net worth. He says my net worth is 8 or 380. I told him I was calling today. I was like, asking him all these.

[Jade Warshaw]

You said we had big purchases. What does that mean?

[Caller]

I bought him World cup tickets for his birthday. Wow.

[Jay]

But that's not okay. That shouldn't be. I mean, it's expensive. But to George's point, if you made four, you know, four something last year,

[Jade Warshaw]

like, where did all that go?

[Jay]

Say again?

[Caller]

To pay tax.

[Jay]

Yes, that's true. Okay, so let me ask you these questions. How much do you have in liquid cash?

[Caller]

I'm not sure.

[Jay]

See, this is why I don't like Joe doing this. Because you.

[Jade Warshaw]

If you have to go. I got your number, Joe, for how much I have in checking, we have a problem.

[Caller]

Yeah.

[Jade Warshaw]

What is in your checking? SL savings across those two.

[Caller]

Probably around 70 right now. In my checking. But then I have. Have about 40, maybe 80 invested into Roth.

[Jay]

40 or 80.

[Caller]

I'm seeing the numbers right now, and I don't have all the. I don't have the sheet in front of me, but we have a sheet of it.

[Jay]

Okay. Braylon.

[Caller]

Yeah.

[Jay]

This is what I'm going to say to you. This is. Aside from the car, I really want you to know you work really hard. You're really good at your job, you make a lot of money for a single individual. You should know where all your dollars are, especially if you're saying you want to buy a luxury vehicle. One of the caveats to being a. Able to. To really spending that kind of money and feeling good about it is knowing that I am a keeper of the funds. Like, I know how I'm spending my money. I know where every dime is going. There's you. You want that backing this purchase because that lets me know that you, not Joe, but you are a financially responsible adult. And so I want you to have that clarity on your numbers, to feel really good about it. I don't want you to have to go to him and say, joe, what do you think? I want you to be able to

[George Kamel]

look at the number.

[Jay]

You know what I'm saying? You deserve that with all the work you've put into this. Okay.

[Caller]

And this is. This is new. Like, I just started this the last two years, so I am still learning. And I. I didn't learn. Like, no one. No one taught me about money. Really.

[Jay]

I totally get it. I totally get it.

[Caller]

The first one. And it is overwhelming, you know, working as much as I do and then having to learn about it, all this.

[Jay]

But two years. But I'm going to push you on this. I'm going to push you on this. It doesn't take two. Two years to do a budget and be able to look and say, here's how much I have in savings and here's how much I have in my checking. That doesn't take two years. I want you to know those numbers tonight.

[Jade Warshaw]

And you. You help people with numbers all day long in real estate. You know how much your clients have in savings, but you don't know how much you have.

[Caller]

Okay, wait, he sent it to me. He's listening right now.

[Jade Warshaw]

Okay.

[Caller]

Good old. Okay, like, in my checking, I have 50.

[Jade Warshaw]

Okay, good.

[Caller]

High yields. I have about 50. That was about. That was a deduction because of tax. We had to move stuff over. Okay. I obviously had a big chunk to pay in that. Robin, it is actually 300 300,000 invested? Yes.

[Jay]

Okay, I thought so I thought that that was your retirement.

[Jade Warshaw]

We're not going to touch invested money, so let's use future income. But here's the parameter. You're not going to buy a brand new car right now, even if you had 70 grand to spend on.

[Caller]

That was my question too, is like leasing financing. What are your thoughts on that?

[Jade Warshaw]

No chance, no lease. You're going to pay cash and you're going to buy a used luxury car.

[Jay]

And it sounds like you've got maybe around 45 to spend because what I'd want for you if you said 50 in checking, 5 in high yield savings and the rest is invested, I'd be thinking, okay, I want three to six months of expenses, that's liquid. So I would move whatever six months of your expenses are into that High yield savings. Savings, that's an emergency fund. And then whatever is left, that's kind of your car fund.

[Jade Warshaw]

And I would separate the two, open up a different high yield savings account called car fund. And once you have let's say 40, 50 grand in there, you go buy yourself a nice used luxury vehicle. So what kind of car are you looking at? I'm sure you already know exactly the make, model and trim level.

[Caller]

I really like the Mercedes GLC coupes or the GLE coupes.

[Jay]

Listen, I like this frame.

[Caller]

You. Yes.

[Jade Warshaw]

So that's 70 grand new, right?

[Caller]

Yeah.

[Jade Warshaw]

Here's the good news. Mercedes go down in value heavily. So you can go buy a 2022 version of that. That's still super nice, low mileage. And you can go pay cash for that once you have the money. But you got to get your money in order. Right now it's a mess. You make great money and you got nothing to show for it in savings. So let's get control of that before we start buying super nice things.

[Jay]

Yeah, and we'll give you a copy of of. We'll give you every dollar. We'll give you a copy of the total Money makeover. Read that. And you don't need Joe for that. You can do that on your own.

[Jade Warshaw]

And you should take a back seat. Joe. She's got this one. The problem with online investing advice, you hear so many different opinions and you're left wondering if you're even doing it right. And that's why we created Investing Essentials. Join me and Dave Ramsey at this two night virtual event to learn Dave's playbook for investing and wealth planning. We'll break down 401ks mutual funds, passing on wealth and more so join us September 1st and 2nd. Tickets start at 199 bucks. You can get yours today at RamseySolutions.com events or just click the link in the show notes. Our scripture of the day, Matthew 6:26. Look at the birds of the air. They do not sow or reap or store away in barns. And yet your heavenly Father feeds them. Are you not much more valuable than they? Mary Kay Ash said, aerodynamically, the bumblebee shouldn't be able to fly. But the bumblebee doesn't know it, so it goes on flying anyway.

[Jay]

Is that true?

[Jade Warshaw]

I didn't know. I figured it must have the aerodynamics built in.

[Jay]

You really think it's sitting there thinking about it?

[Jade Warshaw]

I don't think so.

[George Kamel]

I don't know.

[Jay]

Mary Kate.

[Jade Warshaw]

All right, I'll take it. It's an interesting thought.

[Jay]

It's an interesting thought.

[Jade Warshaw]

I get the principle underneath it, and I respect it. There we go.

[Jay]

There we go.

[Jade Warshaw]

Speaking of which, Kay is in Houston, Texas. What's going on? K?

[Caller]

Hey, thanks so much for taking my call today. I appreciate it.

[Jade Warshaw]

Absolutely.

[Caller]

Yeah. So I am going through a divorce after leaving an abusive marriage, and I'm underwater every month. And I'm sorry.

[Jade Warshaw]

It's okay.

[Caller]

I have two kids. Two and 10 months. And I'm just trying to figure out how to manage. Manage all the costs coming at me.

[Jade Warshaw]

So. Sorry.

[Caller]

I'm about 5,000 in the whole a month after doing my budget. Once the divorce is finalized, I'll be okay. I'll be like, right. Right at where I need to be each month. But right now, I'm having to cover my rent on my new apartment, plus my old mortgage and the bills at my marital home. I had to move out of my house.

[Jay]

Why are you having to do rent and mortgage? Is he paying anything to the mortgage? Mortgage?

[Caller]

He paid half. I'm just giving him half of everything right now. That's what our county standing orders require, that I pay half of all of our bills until something else is in place.

[Jade Warshaw]

So everything is 50? 50 until divorce is processed and final.

[Jay]

Okay.

[Caller]

Just until there's a temporary order in place. So we're working on that with our attorneys. But he's dragging his feet, you know, and making things drag out longer and getting more expensive.

[Jay]

Is there a cap on it at all?

[Caller]

Yeah, I'm hoping to have it set in September, mid September. So I'm hoping by mid September I can get some clarity on, like, okay, maybe I can stop paying the mortgage and stuff, and then that would give me at least that but at this point I'm just, I just. Yeah.

[Jay]

Okay. Who's got the kids?

[Caller]

I do. I have them for full time.

[Jay]

Okay, so of the 5,000 that you're underwater, tell us how much money that you have to your name that you can spend on the things that are not half of the bills,

[Caller]

like cash. Would I have cash on hand?

[Jay]

Yeah. I mean is, is, is the income being split or is it just the expenses being split?

[Caller]

No, so I, it's just expenses. So we reach like our income. Like I, like I'm giving, I'm paying half the mortgage like on the website.

[Jay]

Understood that. But you don't get half of the income that you guys shared.

[Caller]

No, no. So I just, I actually make more than him. So we just, I just stopped giving him money essentially.

[Jade Warshaw]

Okay, so how much are you bringing in every month at the, you know how many you get? Two paychecks or one paycheck?

[Caller]

Yeah, I take, I usually get two. I stop my retirement. So I'm getting 4230. I get 4240amonth or every two weeks. Sorry. Okay, 8400amonth.

[Jade Warshaw]

8400amonth. And then what is the mortgage costing you? You're half of it.

[Caller]

3,000.

[Jay]

Wow.

[Jade Warshaw]

And then your rent.

[Caller]

So right now my rent is 2000 because I did a short term lease. But I'm hoping that'll go down a little bit when I find something longer.

[Jade Warshaw]

Okay, so you got 3,400 left after that. And then you still have all the bills to pay.

[Caller]

And that's probably on his. On the house. Let's see, it's $415 about now. That's average. And then on me for water and Internet and electricity. It's about 450 right now. But that was because I. Long story short, it should go down a little bit.

[Jade Warshaw]

Who's living at the house?

[Caller]

I'm sorry?

[Jade Warshaw]

Who's living at the house right now? Is he still there?

[George Kamel]

Just.

[Caller]

Yeah, just my stuff.

[George Kamel]

That's it?

[Jade Warshaw]

Just your stuff?

[Caller]

Just my spouse.

[Jade Warshaw]

Oh, your spouse. Okay.

[Jay]

So I want to make sure I understand towards. Aside from the mortgage, the other bills that you're on the hook for are 415 for the old house and then 450 is your kind of utilities and bills for the apartment.

[Caller]

So that we have two car payments. Sorry. Okay, so one car payment, half of the car payment.

[Jay]

And tell us what, what that is.

[Caller]

So his is 750. So half is 750. And then my total car payment is 1300 and I'm paying that on my own right now.

[Jade Warshaw]

Oh, my goodness.

[Jay]

And why isn't yours part of the half split? Why. Why are we splitting his car but not splitting your car? If this is decided by your state,

[Caller]

it. It hasn't been finalized yet. But the end, like, hopefully by September, he will end up covering the home and his car. My stuff.

[Jay]

You said earlier, you said earlier that whatever the decree was, said that you needed to pay. You guys had to split the household expenses, which I sounds like included the cars. And I'm saying, why only his car and not your car?

[Caller]

Yes. So I was paying only half, and then he told me I needed to pay for my own car. Okay.

[Jade Warshaw]

So no, no, no either.

[Jay]

The state says if you have to follow the law, so does he.

[Jade Warshaw]

Why does he get to decide right now?

[Caller]

Yeah, that's a good call out.

[Jade Warshaw]

Because here's what I'm wondering. You said you're 5,000 in the hole and you make 8,400.

[George Kamel]

Bring it in.

[Jade Warshaw]

That means your expenses are over $13,000 a month.

[Caller]

Based on what I put in every dollar. That's what I was getting out.

[Jay]

So what are the other. Let's, let's pretend the 1300. Let's split that up now because let's, let's go ahead and do that and say, okay, yeah, we're both on 650 on that. Then what's the other major big ticket things that we're missing?

[Jade Warshaw]

Are there a bunch of other debts that aren't accounted for yet?

[Caller]

No, I only have two cars in the house. The mortgage, there's only two debts. Oh, I have a credit card that I have currently, but I'm paying the minimums on that the moment which. The minimum that is 500 because that's where I've been putting my attorney fees.

[Jade Warshaw]

Okay. Is the car in your name only and the loan?

[Caller]

No, unfortunately it's not.

[Jade Warshaw]

Okay. Because I'm trying to think of a way to get you some breathing room right now. And selling that car is A1.

[Jay]

But you should have. You should have breathing room because if I go through everything that you told me and I take all this out, there's still 11 $35 there. Now granted, we haven't done groceries, trees yet, but I'm nowhere, I'm nowhere near.

[Caller]

I am going to counseling regularly at this point.

[Jay]

Okay.

[Caller]

Due to the situation.

[Jay]

Fair enough. Yeah.

[Caller]

That's 800 bucks a month right now.

[Jay]

Okay, so now, now we're starting to get in the red.

[Caller]

Sorry, Daycare. Because they. I did not have that cost Prior, but now I have to pay for daycare, and he will not pay for half of it. But again, because we did not have daycare before.

[Jay]

But here's the thing. We're either going to play by what the state. If you. If you have to do what the state says, he has to do what the state says. So it's your children to just take

[Caller]

out takeout daycare that I'd be paying towards that house.

[Jade Warshaw]

I would be talking to your attorney and saying, he's not playing fair.

[Jay]

He's not playing fair.

[Jade Warshaw]

So it's on them to. To force him to play fair. It can't just be you texting him, saying, please pay.

[Caller]

No, no. Absolutely no. No. And that's what we're working on.

[Jade Warshaw]

So let's get with the attorney and then redo the budget based on what you actually have do to. To cover, and that will give you at least a clear picture. And then 45 days from now, we're going to know. And in the meantime, I would be talking to my attorney to see what financial moves I can make legally to try to free up some breathing room, what I can sell, what I can move around. Because going five grand a hole in the hole every month is not going to work even for another month and a half.

[Jay]

If you do what George said you should do, which is split everything and do it, do, do it fair, you're going to be right at zero. You're not going to be far below, but you're going to be right at it. I do think counseling is really, really important for you. $800, though, right now is really, really high. I'd be trying to see what I can shave off there or even speak with them and say, hey, and sometimes

[Jade Warshaw]

even your insurance might cover partial or full. And so maybe go through them and see and maybe cut it down to 2 or 3 instead of 4. 4 or 5. Just things like that. Go through the entire budget and see what we can trim right now just to get by. That's all we're trying to do, is just break even.

[Caller]

Yes.

[Jay]

And to your point.

[Caller]

Go ahead, Go ahead.

[Jay]

I was going to say the things that I would. If you've calculated, this is my half, this is the dollar amount for my half.

[Caller]

Yeah.

[Jay]

How you want to allocate it to make sure that you're doing the most important priorities. I think you have the right to do that at this point. Point. Because if he doesn't pay his half of the mortgage that's on him. If he doesn't pay his half of the car, that's on him. Right, but you need to make sure the kids get to daycare. Right. So I would prioritize it in that

[Jade Warshaw]

way that puts this hour of the Ramsey show in the books. Remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of peace, Christ Jesus.