Wealth Doesn't Happen By Accident

Summary

Podcast Summary: The Ramsey Show

Episode: Wealth Doesn't Happen By Accident
Date: July 31, 2026
Hosts: Jade Warshaw & Rachel Cruze (with George Kamel, Dave Ramsey Network)

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Overview

This episode tackles the reality that wealth is a product of intentional action, not luck or accident. Through real-life callers, Jade and Rachel offer focused, practical advice on debt, budgeting, relationship issues related to money, large financial decisions, and the emotional component of handling finances. The tone is candid yet compassionate, encouraging listeners to take control, avoid “stupid tax” mistakes, and not be paralyzed by past errors.

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Key Discussion Points & Insights

1. Lending Money to Family and Friends

(00:35–08:23)

• Caller: John from Tulsa, OK reveals he and his wife have loaned ~$45,000 from their emergency fund to family and friends without a solid plan, leading to their own financial trouble.
• Key Insights:
  • Lack of intentionality and budgeting puts well-off families at risk.
  • Lending to loved ones rarely ends well and strains relationships.
  • Money should be given with no expectation of return—or not at all.
  • Borrower truly is “slave to the lender.” (See Proverbs reference)

Notable Quote:
"Loaning is not really an act of generosity because it’s not a give. ... This was an act of a bank, which you called that out and now you’re on the hook." —Jade Warshaw (04:39)

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2. Budgeting & Reducing Anxiety with Debt Payoff

(10:20–19:38)

• Caller: Christy from Providence, RI struggles with anxiety while zeroing her account to pay down $200k in debt.
• Key Insights:
  • Always maintain a cushion; zero-based budgeting doesn’t mean $0 in your account.
  • It's vital to actively plan and calculate debt payoff timelines—don't just operate on "vibes."
  • Maintain flexibility: pause debt payments for emergencies, then resume.

Notable Quote:
"Zero-based budgeting does not mean zero in your bank account." —Rachel Cruze (11:41)

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3. The Importance and Mechanics of "Cushions" in Your Budget

(21:16–24:21)

• Host Segment: Jade and Rachel reiterate the importance of maintaining a small, intentional cushion in the checking account for forgotten expenses and accidental overdrafts—not to be confused with an emergency fund.

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4. Marriage, Money & Work: When a Spouse Refuses to Contribute

(25:08–31:23)

• Caller: Chris in Iowa City faces an unworking husband who justifies his lack of employment through religious means.
• Key Insights:
  • After eight years with no change, the decision is on the spouse: accept it or leave, but don’t complain.
  • Emotional bonds ("trauma bond") can keep people stuck in dysfunctional financial (and emotional) situations.

Notable Quote:
"If you choose to stay, you can't complain anymore because you've chosen it." —Jade Warshaw (28:41)

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5. Company Car “Benefits” That Cost You

(32:47–39:18)

• Caller: Kelly in Detroit is anxious about a company car benefit requiring she lease or buy a new car from the company every four years.
• Key Insights:
  • Forced car turnover is rarely a good financial deal, especially if personal preference is compromised.
  • Autonomy over vehicle choice and depreciation should be taken into consideration, even with company perks.

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6. How Much Life Insurance is Enough?

(39:35–42:05)

• Caller: Andrea ("Andy") in Manhattan asks about sufficient life insurance coverage.
• Key Insights:
  • Rule of thumb: If you work, 10–12x your income in term life insurance. If you're a stay-at-home parent, 4–5x.
  • Term life is affordable and should be secured sooner rather than later.

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7. Debt & Vehicle Overload

(43:36–51:50)

• Caller: Omar from San Antonio has $85k debt, mostly from vehicles (truck, boat, RV).
• Key Insights:
  • “Toys” and vehicles should not exceed half your annual income in total value.
  • Sometimes it makes more sense to “let it burn” (sell/deconstruct your financial situation) and rebuild intentionally.
  • Owning depreciating assets with debt is a fast path to financial stress.

Notable Quote:
"Wealthy people, long term, invest in things that make them money. And when they have the cash to buy something and they can afford it, they go and buy it." —Rachel Cruze (48:54)

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8. Retirement Questions After Job Loss

(54:05–58:41)

• Caller: John in Milwaukee, 62, lost his job, has $700k in retirement savings, and wants to know if Roth conversions and early retirement are feasible.
• Key Insights:
  • Significant life & tax strategy changes (like Roth conversions) should be discussed with a financial pro.
  • Sometimes living on drastically less for several years can work, but the math and lifestyle implications should be tested.

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9. Prioritizing Savings for Children vs. “Catching Up”

(60:53–63:34)

• Caller: Lauren, now making a decent income after time as a struggling single mom, feels behind providing for her only child’s future.
• Key Insights:
  • Start where you are—consider 529 for college, a car fund at 16, but remember your example matters most.
  • You're probably not as “behind” as you think.

Notable Quote:
"You’ve already given him so much, as your example." —Rachel Cruze (62:13)

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10. Real Estate: House Hacking, Risks & Ratios

(65:18–74:12)

• Caller: John in NYC is “house hacking”—renting out part of his house but wonders if the large payment is unwise.
• Key Insights:
  • House hacking can work if total mortgage outlay (after rent) stays within 25% of income.
  • The true risk is dependency on renters; if unit is vacant, financial stability is threatened.

Notable Quote:
"If that family moves out, you’re gonna be pretty urgent to put some people in and may not have the bandwidth…and that’s part of the debt complex." —Rachel Cruze (68:56)

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11. When to Buy a House While in the Military

(96:07–100:25)

• Caller: Ashley, a military spouse, asks about buying with a huge down payment but short time frames in each location.
• Key Insights:
  • If you’ll be in an area less than five years, don’t buy—even with a big down payment. The transaction costs and risk rarely make it worthwhile.
  • Park your “future house” money in a brokerage account for better growth.

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12. Side Hustles: Turning Baking & Cooking into Income

(101:15–105:51)

• Caller: Kira in Philadelphia wants to monetize her love of baking and cooking as a stay-at-home mom.
• Key Insights:
  • Start by serving your local community, but check legal/regulatory considerations.
  • Run it as a business—track inputs, charge appropriately, don’t let word-of-mouth outpace your preparation.

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13. Major Life Changes: Handling Life Insurance & Loss

(117:44–122:18)

• Caller: Lisa in Atlanta recently lost her husband and is unsure whether to use the life insurance lump sum to pay off her house right away.
• Key Insights:
  • After a major loss, wait 9–12 months before making any big financial moves.
  • Park proceeds in high-yield savings and revisit when emotionally ready.

Notable Quote:
"There’s just, I mean, you’re in a cloud right now… I wouldn’t do much." —Rachel Cruze (119:17)

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Notable Quotes & Memorable Moments

| Timestamp | Speaker | Quote | |-----------|---------|-------| | 04:39 | Jade Warshaw | "Loaning is not really an act of generosity... this was an act of a bank." | | 11:41 | Rachel Cruze | "Zero-based budgeting does not mean zero in your bank account." | | 28:41 | Jade Warshaw | "If you choose to stay, you can't complain anymore because you've chosen it." | | 48:54 | Rachel Cruze | "Wealthy people, long term, invest in things that make them money..." | | 68:56 | Rachel Cruze | "If that family moves out, you’re gonna be pretty urgent to put some people in..." | | 62:13 | Rachel Cruze | "You’ve already given him so much, as your example." | | 119:17 | Rachel Cruze | "There’s just, I mean, you’re in a cloud right now... I wouldn’t do much." |

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Timestamps for Important Segments

• 00:35–08:23 — Family loans gone bad
• 10:28–19:38 — Budgeting, debt payoff anxiety
• 21:16–24:21 — “Cushion” segment
• 25:08–31:23 — Marriage/Joblessness crisis
• 32:47–39:18 — Company car “deal” breakdown
• 39:35–42:05 — Life insurance adequacy
• 43:36–51:50 — Debt + toys: when to cut losses
• 54:05–58:41 — Layoff, retirement/Roth conversion
• 60:53–63:34 — Saving for kids after struggle
• 65:18–74:12 — House hacking: is it working?
• 96:07–100:25 — Buying a home in the military
• 101:15–105:51 — Starting side money in the kitchen
• 117:44–122:18 — Major loss & life insurance usage

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Original Tone and Language

Practical, warm, direct, and no-nonsense. Hosts regularly call out common sense mistakes with humor and empathy. There’s a consistent focus on empowering listeners with knowledge while encouraging personal responsibility and hope for recovery and progress, no matter how many “stupid” mistakes have been made.

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Final Takeaways

• Wealth is built intentionally—with clear budgets, boundaries, and proactive decision-making.
• Lending money to family is fraught with risk; generosity is better expressed as gifts, not loans.
• Budgeting basics—like maintaining a cushion—are crucial for mental and financial health.
• When facing life-changing events (divorce, job loss, loss of a spouse), pause before making big money moves.
• Seek out advice for complex financial decisions, and don’t let financial stress rob you of life, peace, or purpose.

If you want more answers or tailored advice, check out the Ask Ramsey tool at ramseysolutions.com.

Transcript

[George Kamel]

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

[Jade Warshot]

Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network in the Fair Winds Credit Union studio. This is the Ramsey Show. I'm Jade Warshot. Next to me, Rachel Cruz. We're taking calls about your life and your money for the next hour or so. So hop in on the phone lines. Where John is there from Tuls, Oklahoma. Hey, John, you're up on the line.

[Caller]

Hi, ladies. I would like to introduce myself real quick. I am the president of the First national bank of the Perpetually Screwed. I am married to the CEO of the First national bank of the Perpetually Screwed. And let me explain why I say that. So I found out maybe a few months ago we've loaned out maybe $45,000 to three people.

[Rachel Cruz]

Oh, okay. Now I get it. You're the bank. You're okay. I was like, where is he going?

[Jade Warshot]

How did you find out that you loaned $45,000? Were you loaning money without telling your wife and she doing the same?

[Caller]

No, she did it to us. And now I said yes to two of these people and it was 18,000.

[Jade Warshot]

Who are these people?

[Caller]

So one is our father in law, one is a friend who's a teacher who doesn't get paid in the summer, and then another is a close family friend. And I did not authorize the third. And so now we're about 40 to 45 thousand dollars of our emergency fund is loaned out.

[Rachel Cruz]

Okay.

[Caller]

And now we've hit a financial snag of our own and we need that money. I don't know what to do. Yes, we are in couples counseling about this and other things, but we. I don't know what we need to do aside from maybe rice and beans until this stuff gets paid back for maybe five to seven years. What is the solution here? Because we. We need some of this money now. And.

[Rachel Cruz]

Yeah. How much you guys making?

[Caller]

It's about. I'm. I'm around 69 and she's around maybe 80.

[Rachel Cruz]

Okay.

[Caller]

And.

Well, so I was supposed to make 10,000 more, and then my company cut my overtime. That was tried. That was kind of the cushion of this fall. And so I just. I'm kind of stuck here. We need this money now.

[Rachel Cruz]

What happened that caused you to need this money right now?

[Jade Warshot]

Yeah, because just losing overtime doesn't feel like enough of a.

[Caller]

We've. We've had some home expenses pop up.

[Jade Warshot]

Like.

[Rachel Cruz]

What?

[Caller]

But I know it's going to sound really kind of, you know, it's not dramatic, but we're building a poll and the patio is also, turns out, has dry rotted and needs to be replaced. And so we had money set aside for this, but now it's just overages at the wazoo. And so I'm just like, how much

[Rachel Cruz]

money are the overages, John? How much are they?

[Caller]

It's maybe as of last night, it's about 15,000.

[Jade Warshot]

Okay, and how much was your emergency fund total before the 45,000 was spent?

[Caller]

So the, the emergency fund, I think, is gone. I think. I'm not really the one who does the books.

[Jade Warshot]

I think it's gone.

[Caller]

I think the emergency fund is gone.

[Jade Warshot]

Okay, so they're right there. Let's hang out right there. Because that's the problem in all of this. There is a lot of individual things that we could point out. But I think the main problem that at least I'm seeing, Rachel, is there's kind of a lack of lackadaisicalness about the money. You don't even know how much was in the fund, but you were okay. You okayed $38,000 of loans and didn't even know how much was there to begin with. And then you're looking up going, well, this. Well, hold on. I'm just going by what you said. And then you're saying we're building a pool in the midst of this and

[Rachel Cruz]

without an emergency fund.

[Jade Warshot]

Without an emergency fund, or at least we don't know how much was in the emergency fund. So this points to just what I'm just going to call. There's no intentionality here. It's almost like you guys are doing pretty well. You're making $150,000 a year. You've got a cushion, and now we can just kind of do whatever we want. And I think that's kind of what's taken place.

[Caller]

Yeah. You know, and I thought there was still. Granted, I. I knew there was more than 18,000 in the emergency fund. And you probably felt.

[Jade Warshot]

But it was vibes. I'm saying it was gone on vibes, because I was like, yeah, there's probably more than that. We can go ahead and do this. And the way we teach here is there. There's so much power and knowing exactly how much money you have and assigning. And this is how I'm going to spend it. And this is where it's going to go. And we're thinking about it ahead of time now. What's happened? So let's fast forward to the loans. What's happened here. And this is a separate issue. We've taken money and we've loaned it to family and friends, which is loaning is not really an act of generosity because it's not a give. Right. It's giving is, I don't expect anything in return. I'm giving this to you. This wasn't an act of generosity. This was an act of a bank, which you called that out and now you're on the hook. And unfortunately, if you push on your family and friends to give you this money back maybe before they expected to, maybe before they can, so that you can keep doing this pool, it is going to have an effect.

[Rachel Cruz]

Yeah. I mean that's, that's part of the risk of when you go into debt and you borrow or you're the lender to people in your life because, yeah, this happens.

[Jade Warshot]

Borrower, slave to the lender.

[Rachel Cruz]

Yeah, absolutely.

[Caller]

And we have, we have had the conversation now where I'm like, there is a reason banks would not give these people money and they had to.

[Rachel Cruz]

Yeah, it's a, seriously, it's a great point.

[Caller]

So that is why I say I'm the president of the First national bank of the perpetually screwed.

[Jade Warshot]

Well, you learned a lesson.

[Rachel Cruz]

Okay.

[Caller]

People could not qualify for bank loans.

[Rachel Cruz]

Yep. So what's going to have to happen, John, is for, I mean, honestly, what I would do out of just my sanity is I'm like, I wouldn't expect this money back to your point.

[Jade Warshot]

That's right.

[Rachel Cruz]

And you said seven to eight years. You threw out like a number of years of what you expect. I would not hold onto that for eight years. Okay. So this is what we would call a massive stupid tax. If they end up writing you a check later in life, then fine. But I would move about my life. I would say that was so stupid that we did that. And now we have to figure out how to find $15,000 to cash flow a home project that we started with no money. Right. Extra safety net wise. So we got to learn that lesson too, John, that when you, when you have no margin, you know, even if you had $20,000, that's all you had and you allocated $20,000 something, you still don't have enough money to do the project. You don't need to spend all of your, all of your money on one thing. And so I would look to say, hey, we're gonna have to pause everything for now. And I mean I would scrape together and find, you know, 3,000, 4,000amonth of whatever you can to be cash flowing your way through the deck construction and the projects that you have going on. But I would not be holding my breath for your family or friends to pay you back. And to your point, Jade, I wouldn't urgently go to them either, because that's going to.

[Jade Warshot]

Yeah.

[Rachel Cruz]

I mean, like, you could have a right to, because.

[Jade Warshot]

Yeah, but it's not gonna help the relationship.

[Rachel Cruz]

No, I mean, you're done at that point.

[Jade Warshot]

This whole thing makes me. I've heard your dad, Dave Ramsey, quote this scripture a lot, and it's so true. He says, suppose one of you wants to build a tower. Won't you first sit down and estimate the cost to see if you have enough money to complete it?

[Caller]

Yes.

[Jade Warshot]

That's just wisdom. That's Luke 14:28 for anyone who's interested. And that's so much of what we teach guys. Budgeting. And just sitting down and knowing where every single dollar is going, otherwise you'll won it went right. And that's exactly what's happened to John here, is they make good money, $150,000 a year and something so slight as I no longer get overtime and I've lent out some money and I started a tower or a pool. Yeah. Without counting the cost. And that's why, gosh, guys, if. If I don't tell you anything else, budgeting is so, so important. Knowing where every dollar goes, so, so important. The.

[Rachel Cruz]

I appreciate your humor, though, through the pain. I appreciate your attitude.

[Caller]

Sam,

[George Kamel]

Let me tell you what I get asked all the time, when should I get term life insurance? How much do I need? Is it affordable? Those are the right questions to be asking, so let's take a quick review. The fact is, term life isn't a baby step. So if anyone is dependent on your income, you need to have 10 to 12 times your income in life insurance now. And most people are surprised by how affordable term life really is, even if you're not in perfect health. Look, look, I understand the hesitation since most insurance companies make it more of a hassle than it needs to be. Not at Zander Insurance. They're not an insurance company. They're a broker that works for you. That means they'll shop and compare the top term life companies to find the most competitive options on the coverage for your family. For almost 30 years, I've recommended Zander for straight answers, competitive rates and coverage that actually protects your family. Call 800-356-4282 or go to zander.com for a quick and easy quote. That's zander.com.

[Jade Warshot]

Alrighty. Back to the phone lines where we have Chris in Providence, Rhode Island. Hey, Christy, how can Rachel and I help today?

[Caller]

Hi, I was just hoping to have any tips or tricks and help working through the anxiety of not having any money while we pay off the debt. Like, I know we're supposed to put as much money as we possibly can towards paying off that debt, but just filled me with anxiety to take my accounts down to just a couple of dollars in the bank until the.

[Jade Warshot]

Okay, can I tell you something? Number one, I love this question and I'm so glad you called in because I think this is something that gets overlooked a lot, and because of that, it can cause a lot of heartache and pain. And Christy, you are dealing with something that I, myself and my husband Sam dealt with. First off, number one mistake, Rachel, is people forget to budget for a cushion. They budget every dollar and they're like, yes, I did it. Zero based budget, and everything's going to debt and minimum payments, and they forget to put a line item in the bud of, you know, it's a little bit different for everybody, but let's just say $100 that you just leave in there so that in case something happens that you forgot about, you're not at zero. Your, your bank account should never be at zero. It should never be at Zero based budgeting. $3.

[Rachel Cruz]

Yeah. Zero based budgeting does not mean zero in your bank account.

[Caller]

Yes.

[Rachel Cruz]

So you can have, have a good cushion in there. Yes. So when those things come up, it doesn't take you into the negative.

[Jade Warshot]

Yeah. Yes. A subscription is bound to come out that you forgot about. Right. And then next thing you know, you're overdrawn. And then it just creates this cycle stress and anxiety. So that's thing number one. Thing number two, I want to make sure. Did you do baby step one first or did you just skip it and go to baby step two?

[Caller]

So, yeah, I did baby step one and didn't really stop that. Like, I have $100 of my paycheck going into a separate savings account that I don't even know how to get money out of.

[Jade Warshot]

That help me understand. Are you, you're still doing that?

[Caller]

Yes. So we did. We saved $1,000, and then for my, my paycheck is automatically deposited and I separated into a checking account and then that Savings account. So $100 goes into that savings account.

[Jade Warshot]

Okay.

[Rachel Cruz]

Just as extra cushion.

[Caller]

Yes.

[Rachel Cruz]

Okay.

[Jade Warshot]

What I would do is I would cut off the $100 going to a separate account because the account that you have there, that's Baby step one, you want that money separate from your checking account. I think it's very important to have that. And then on your budget that's associated with your checking account, you want to delineate. Okay, I have $1,000 every month in my budget, my every dollar budget that is aligned to a cushion. And the reason for keeping it in that checking account is because if something happens, then it's there. You don't want it. You don't want to have to move it from someplace else because the transaction now has already happened. Maybe overdrew, maybe the card was declined. Right. That's why you want to have it in the checking account. Does that make sense?

[Caller]

Yes.

Yes.

[Rachel Cruz]

Christy, how much debt do you guys have to pay off?

[Caller]

Right now? It's around $200,000.

[Rachel Cruz]

Is that consumer debt?

[Caller]

We have about three credit cards that we still have to pay. I have a student loan, and we have a HELOC.

[Jade Warshot]

Okay, how much is the HELOC?

[Caller]

It's around 30,000.

[Rachel Cruz]

How much, how much do you guys make a year?

[Caller]

Close to 200.

[Jade Warshot]

Oh, okay, so you're, you're doing that, right by including the HELOC in your debt snowball. How, how quickly have you projected that you'll pay off this 200,000 in debt?

[Caller]

So I'm hoping to have the credit card debt paid within the next two years.

[Jade Warshot]

Is that based on a calculation, or is that based off a vibe?

[Caller]

It's based off a vibe.

[Jade Warshot]

Okay. I, I, Christy, you are the best

[Rachel Cruz]

you can pick up on. On Christy.

[Jade Warshot]

Well, Christy, you're my people, man, because I. What? The things that you're doing, I recognize them because I've done these things, and I. So many people listening are doing exactly what you're doing, which is why I love your questions and I love the things that you're bringing up. Do you know what will give you so much peace, Christy, and so much motivation is if you're making a budget, well, calculate it out. Calculate it at your current income. Okay. $200,000 a year, minimum payments plus extra payments. Use one of our calculators. You can go to ramseysolutions.com maybe they'll put it in the lower third on the screen here. But do the calculation based as things are today. And then once you see that number, once you see, okay, 24 months, maybe that's the time period you can. Then you now you have options. You can decide, am I happy with that? Am I not happy with that? And if you're not happy with it, then you can start to Brainstorm. Okay. What would make me happy? I want to do it in 18 months. Okay. How much money do I need to fill that gap? Right. And now you're reverse engineering it to. To have control and do what you want to do? Oh, I cannot tell you. That will give you so much peace and so much hope and so much motivation. And a lot of times, Cristy, it's like a $500 difference a month could really move the needle, change the game.

[Rachel Cruz]

Thousand bucks, you guys. What do you bring home every month? Probably around 12,000.

[Caller]

Yeah. Yeah. Yes.

[Rachel Cruz]

Okay. Because I'm on salary. Okay. I mean, I just did quick math, and I was like, okay, let's 12,

[Jade Warshot]

5, something like that.

[Caller]

Yeah.

[Rachel Cruz]

What could you. You know, if you. If you could pay $4,000 every single month, that'll take you four years. If you could pay $8,000 a month, that's two years. Right? So you just kind of like, start looking at the numbers, saying, what has to be true for us to be done completely in two years? What would that look like? And if $8,000 feels like there's no way we can live, you know, on the rest, then what do you have to do to get 8,000? Is that an extra thousand a month that you guys work extra? Like, right. You start to create this pattern, but, you know, it's done in two years or whatever timeline you pick. And I think that that lowers the anxiety because there's actually facts in front of you and numbers that you see.

[Jade Warshot]

And.

[Rachel Cruz]

And, Christy, just remember this, too. We teach this in the baby steps. If something comes up during your debt snowball journey and you have to have tires and some plumbing fixed in your home or whatever it is, and it's more than a thousand, you just pause everything. And instead of that eight grand going to debt, maybe two grand of it stays with you, and you fix the emergency, and then you go back to it. You know what I mean? Like, there's some ebb and flow to this, to life that is very real. But. But that doesn't have to cause you to lose progress or lose sleep at night because you. Because you have anxiety about the unknown.

[Jade Warshot]

That's a really good point. I. I like what. What Rachel said there. You guys have a really great income, and therefore, if you did need to cash flow it, you actually have a nice income to pull from. Some folks, you know, if you're making 60 grand, it feels even scarier for them because the cushion, the amount of extra margin is far less generally. And so I want to encourage you that you're really in a good position to work the plan and work it to the fullness, and you can really TR that it's going to work for you. And all of this that Rachel and I have said, we haven't talked about side hustles, we haven't talked about overtime, none of that. And all of those options are available to you? Do you have kids?

[Caller]

Okay, I have kids, and two are still in the house.

But I want them gone. They won't go anywhere.

[Jade Warshot]

Oh, they're grown. Grown adults in the house. Okay, Got you. But the good news is, you know, you're not in that phase.

[Rachel Cruz]

No childcare.

[Jade Warshot]

Yeah.

[George Kamel]

Yeah.

[Jade Warshot]

And so you've got. How old are you?

[Caller]

56.

[Jade Warshot]

Okay.

[Rachel Cruz]

Do you have that time? Do you have money in retirement, Christy, you and your husband?

[Caller]

Yes, my husband and I both have 401ks, and I have a pension.

[Rachel Cruz]

Okay, good, good, good.

[Jade Warshot]

So then, yeah, this just becomes. And I'm stealing this from Dr. John Deloney. How do you want your life to feel? Right. How do you want it to feel when you come home? How do you want it to feel when you're on vacation? How do you want it to feel when you're laying in bed at night and everything's quiet? And having this debt paid off and going quickly about it, I think is really going to give you that feeling that you want. You've worked hard for 56 years. You want to feel the peace that should be associated with the hard work that you've done.

[Caller]

Yeah, it's just. It's really just getting in that mindset. And then, you know, for example, my sister the other day called me and said her electricity got shut off because she forgot to pay it. And, like, okay, can you afford to get it back on? And she could afford maybe half. And since we had the money, I'm like, all right, I'll give you the money. But it's. It's also money I don't think I'll ever see again.

[Jade Warshot]

Yeah.

[Caller]

So that's what makes me anxious. If I had taken my, say, my. My checking account down to, say, $100, I wouldn't have had that money to give her to pay that.

And I know it's not my responsibility

to take care of.

[Rachel Cruz]

Sure. No. But when your sister's lights get shut off, I hear that you want to help. Yeah, Yeah, I get that. So that's why, again, there's always buffer in your checking account. Everyone here, Jade, loud and clear. There's always going to be buffer. Okay. And then you also have Your thousand dollars, you need an operating expenses, knowing that there's a revolving door in your life. And your checking account does not need to be at zero.

[Caller]

Never.

[Rachel Cruz]

Yeah. And even if it needs to be more than 100 bucks, I don't care what it is. But it's like, okay, here's enough that makes sure that it's the catch. All for everything, so we don't overdraft. And then again, you guys, your thousand dollars is separate. And if something comes up, you pull out of that. If it's an emergency, yes.

[George Kamel]

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[Jade Warshot]

Attorney Advertising Results may vary and no specific outcome is guaranteed. Okay, Rachel, before we move on, I want to go back to the cushion discussion right quick because I think that is something that does get missed sometimes. Because it's not like a core part of teaching. Like it's kind of just an assumption. But some of us are still learning. And so I want to hit that for just a second. So if you're in baby step two and you're thinking, okay, Jade, how much cushion? Because you and Rachel didn't tell me how much, here are some things I want you to think about in determining your cushion. Because it is going to be a little different for everybody. Depends on how much you make all of those things. Here are some things that will help guide you in the right direction. Number one, in baby step two, this is not an emergency fund. Okay? It's not. The purpose of the cushion is not to be an emergency fund. So you already had the thousand dollars saved. So if you were thinking of getting up into that range, you were wrong. This is just a cushion. Okay. Number two, a good way to think about it is this is. This money is here in case something happens that I didn't expect in my budget. What's the worst could happen? Your Amazon subscription for $120 comes out. Right. Or grandma's birthday. Right. All of those things are kind of under the $150 range.

[Rachel Cruz]

Yes.

[Jade Warshot]

So that's a fair place to start in your life. Look at what's really something that I could honestly forget that I didn't budget for. And you'll find that it's usually pretty low dollar things.

[Rachel Cruz]

Yes, totally. Totally.

[Jade Warshot]

The third thing you need to consider is that money then is going to. If you don't touch the cushion, it's going to accumulate over time. So you could look up and go, oh, gosh, I have $400 here, or I have $800 here. That's a lot of money. At some point, you do need to drain it back down, move it over to, you know, savings, or move it toward the debt, whatever baby step you're on, and keep it at the established cushion amount. So what I did once I learned I needed a cushion is if I got to the end of the month and I didn't touch the cushion, I would move it onto the debt. And then the next month, it's built in there again. Okay, so don't let this thing accumulate. And then you're like, great, now we have money to go, you know, on that cruise. And then the third thing, I just want to say, this is on your honor. Okay. This is back when we were in elementary school, the teachers would say that when you take a test, you're on your honor. We're not trying to police you. We want you to get out of debt, and we want you to do it quickly. So that's why we're saying this. It's not to, like, shake a finger at you, but also don't hold $800 in your account when you're trying to get out of debt. You need that to put towards the deb. So that was my teaching. That's.

[Caller]

Love it.

[Jade Warshot]

Do you have anything to add?

[Rachel Cruz]

No. I think Rachel Cruz, I think covering the. The basics again for people as they're in it, because a lot of you are on baby step two, getting out of debt. And so you're in the middle of all of this. So these are important things to remember, because if you don't, it derails you. And if something does come up, you're like, well, crap, we're negative 75. And that's just more demotivating than anything. So keep yourself in check with all of it so that you can keep throwing good money at the debt to get out as quickly as possible.

[Jade Warshot]

And if you're beyond baby step two, it's not nearly as big of a imposition. Yeah, big of a deal. Okay, great. That being said, guys, we answer a lot of questions here on the show, whether it's about cushions, whether it's about investing, whatever it is. And the truth is, we do wish that we could get to every question that you guys have on the show, but we can't. So if you do have a question and you want an answer for your situation, just go over to our website and use the Ask Ramsey tool. Ask Ramsey is our free, free AI tool. It's built and trained on proven Ramsey principles. You'll get an answer the exact same way that we'd answer it right here on the show. So ask your question today@ramsey solutions.com or go ahead and click that link in the description if you're listening on podcast or YouTube. Alrighty, we got Chris, who's in Iowa City, Iowa. Hey, Chris, how can Rachel and I help?

[Caller]

Hi, I'm looking for some advice. I was very much raised on the Dave Ramsey principles. My dad was very strong. He actually taught a class using looked. I was homeschooled.

[Rachel Cruz]

God bless you, Chris.

[Caller]

My husband and I, Yeah, my husband and I, we got together eight years ago. We are both previously divorced. He's been divorced twice. And just shortly, like maybe two or three months after we moved in together, he got laid off of his job and hasn't had a job since. That was eight years ago. He does some. Yeah, he does some small odd jobs, like maybe two landscape jobs a year, snow removal in the winter, but nothing solid. I clean houses for a living, like at least four or five houses a week. We do manage a property in our town, but that's $800 a month. It barely covers his child support because he has children from a previous marriage. Our house is halfway paid off, but it's a house that I had from my previous marriage and, like, I just took over the pay. I use my child support that I received to pay off, like, the house payment every month. And, like, we're just barely scraping by.

[Rachel Cruz]

And what does he do during the day?

[Caller]

Sits at home on his phone. He, like, his excuse is very much a religious thing. Like, he says that God Bless me. To be able to work so he can be available to the church ministry. Like he volunteers for like church basketball games, sets up chairs at church. He's on a few missions trips and like, people donated money towards that, but like, he doesn't provide hardly any money to our household.

[Rachel Cruz]

Sounds like a 19 year old.

[Jade Warshot]

How old are you guys?

[Caller]

That's another issue. He's 52 and I am 32. So I feel like I made a very bad choice in the beginning and now I'm.

[Rachel Cruz]

Are you married?

[Caller]

Yes.

[Rachel Cruz]

You are? When did y' all get married? You said you, you.

[Caller]

Eight years ago.

[Rachel Cruz]

Okay.

[Jade Warshot]

He hasn't worked any of the years you've been together.

[Caller]

That is. No, I'm like, I thought it was a fluke at the beginning. Like he lost his job and he blamed it on, you know, he was going through a very messy divorce.

[Rachel Cruz]

Okay. So Chris, what are you gonna. So Chris, it's been eight years. Yeah.

[Jade Warshot]

That's a long time.

[Rachel Cruz]

You've been putting up with this for eight years. What do you, what do you think you should do?

[Caller]

I feel like I'm very much in a trauma bond relationship. Like my parents, my pastor. I've gone to counseling with my pastor and my husband and I, like, they're all like, you know, if he's not going to change, like, what else can we do?

[Jade Warshot]

What do they suggest? No, no. What do they suggest when you're in counseling?

[Caller]

Either we separate and I'd be better off, or he needs to get a job. And. But then, so what?

[Rachel Cruz]

You're gonna have to make a decision. So. Chris, you have to make a decision. You're either gonna live with this for the next 30 years.

[Jade Warshot]

Yeah. Cause Rachel and I are gonna tell you the same thing your counselors told you.

[Rachel Cruz]

Yeah. So you're either gonna live with it for 30 years or you make a different decision. You give them, there's an ultimatum and I hate to like dangle that. Like you're. But it's been eight years, right. He sounds like a 19 year old who's in home from college for the summer. Do you know what I mean?

[Jade Warshot]

And let me add this, Let me add this to what Rachel said, because this is the crux of all of this. You went to the counselors, they told you one thing, and you said, ah, I'm not ready to do it. Then you're coming to us saying the same thing. We're telling you the same thing. If you choose to stay, you can't complain anymore because you've chosen. You've chosen it. At that point. So for these eight years, I don't know when the first time was a counselor that a counselor told you, hey, this is your choice, but you made it. And then you made it the next year. And then you made it the next year.

[Rachel Cruz]

And the next year. He's not gonna change.

[Jade Warshot]

He's not gonna change.

[Rachel Cruz]

And I'm always. I'm very cautious to ever, like, you know, throw out, like, you have to, you know, divorce him unless you're. You're physically in danger or something. Right. Cause, I mean, we. We're gonna get off this call in about four minutes. And this is your life. Like, you. You have to. But, you know, you have to make these decisions. But you need to know, Chris, like, it's you.

[Caller]

You.

[Rachel Cruz]

You will choose this every single day for the rest of your life. And he's not honoring you. If you want to talk scripture, it says, yeah, you. One who takes care of his own, who doesn't take care of his own household is worse than an unbeliever. And so he's not doing any level. It's.

[Caller]

So.

[Rachel Cruz]

It's so interesting that this is his position, because I feel like Jade, two shows ago, we had to untangle another level where it was like, that she's forced home and she has no rights, like.

[Caller]

Like, you know what I'm saying?

[Rachel Cruz]

It's so funny that, like, you get both ends of the spectrum with people. So. Yeah. And I would. And I would assume, Chris, the mayor. I mean, I think this is probably one small area of a marriage that probably hasn't existed for a really long time.

[Caller]

Right?

[Rachel Cruz]

Yeah.

[Caller]

No, there's. There's many layers.

[Rachel Cruz]

Unwilling to change.

[Caller]

Yeah. Yeah. And there was other, like, anger management and things that he's gone through, and some of that has gotten better. But it's the finances that really keep pulling me. And then we have, like, savings from, like, our tax return or, like, we sold a vehicle. Like, we bought one and sold it for more than we bought it for. So we have some savings. But then he has it in a safe and says, no, we're not going to use that. That's for emergency.

[Jade Warshot]

That's the thing.

[Caller]

Then he'll turn around and ask me for $20.

[Jade Warshot]

But you're focused on the wrong thing. You're focused. It's very easy to get distracted on things like the money in the safe or, you know, how many houses your cleaning per week. But the big issue is this is a marriage, a foundational marriage issue, and you have to decide, am I going to continue on the ride, or am I not?

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[Jade Warshot]

All right, back to the phone lines we go where we have Kelly, who's in Detroit, Michigan. Hey, Kelly. Happy to have you on the show.

[Caller]

Hi, thank you so much for having me.

[Jade Warshot]

How can we help?

[Caller]

I am calm because I find myself in a unique situation. My husband has just been promoted to a level at work where he is eligible for a company car.

[Jade Warshot]

Okay.

[Caller]

However, there is a caveat with that, that since he has a spouse, the spouse has to either buy or lease a new car manufactured by that company every four years in order for him to stay enrolled in the program. I currently have a 14 year old Corolla that has been paid off since day one. And the idea of this makes me very nervous, but I'm not sure if it would actually be better financially or not.

[Jade Warshot]

That's very strange because if your car's paid off and they're saying you can have one for free, but the spouse has to lease one, then it's a break. Like it's not a. It's no longer a deal.

[Caller]

Correct. And he doesn't get the car from the company, he just has access to it. So heaven forbid if he's fired or if he leaves, then he gives it back.

[Jade Warshot]

You have a lease?

[Caller]

Yes.

[Jade Warshot]

So what do you think?

[Caller]

I. We Both need new cars. And I can recognize that we're both driving old cars that are coming to the end of their life cycle. But I don't know that buying or leasing a new car every four years is the answer. Even if his car insurance, gas, everything is completely covered. I'm having a hard time stomaching the thought of buying a new car every four years.

Yeah.

[Rachel Cruz]

I would look at the loss that if you bought a new car this year, just say 20, 26 and you sell it in 20, 30. Well, I guess you can't really but like on an average of what a car depreciates and you could see that's the amount of money that's wasted. Does that cover gas and if your husband operated his own vehicle. Right. And I think you come out ahead that way. How much do you guys make a year?

[Caller]

About 300,000 combined.

[Rachel Cruz]

Okay. What's your net worth?

[Caller]

Oh, good question. I'd say maybe we don't have any debt, if that helps.

[Jade Warshot]

Okay.

[Caller]

Around 5, 600,000.

[Rachel Cruz]

Okay, good for you guys.

[Caller]

Generously.

[Rachel Cruz]

Yeah, generously. We'll round up. Yeah, I, I don't think it's going to be worth it financially. When you look at what the money you would lose on a new car every four years, I think you would be probably. I haven't run the number, so you need to. I think you'd be far better off with him just having his own vehicle.

[Jade Warshot]

100%. Because I just want to make sure I'm understanding this. He gets a company car, but the only way he gets the company car is if you lease a car every four years or buy every four years.

[Caller]

Correct.

[Jade Warshot]

Okay. And you currently you're like, my car's paid for in cash. So now you would be guys, you guys would be going back into debt to get a car because now you're. Does that make sense?

[Caller]

Yes. I don't know if we would end up going into to debt. We've also talked about just leasing, the absolute cheapest option.

[Jade Warshot]

But leasing is the most expensive way to operate a vehicle. Let's. And we can break that down if you, if you need us to. But leasing is no better than financing.

[Rachel Cruz]

But even if you bought the new car in cash and you guys just cash flowed, a new car again, when

[Jade Warshot]

you sell it, the depreciation.

[Rachel Cruz]

Depreciation, I think will be more than what it would take if he just kept his car. Right. Because you could go buy, you know, a $20,000 used car and replace your 14 year old car and be done for another, you know, eight Years, right?

[Jade Warshot]

Yeah. And then you have to think about what you want because that plays heavily into this. If you just said, if this were off the table and you said, hey, let's buy a new car, what would you choose? That's going to be a completely different choice than saying, okay, I have to. I know knowing now that I have to do this every four years, I need to pay for it up front. Like, right now, you're going to choose a, you know, Ford Focus because you can pay for it in cash. And you know what I'm saying? So it just. I feel like the tail is wagging the dog on this, and I think that you guys should be in control of your money. So I would lean towards. I think I would lean towards. Not because it's causing you. It's forcing you down a pathway.

[Caller]

Okay. I agree. I'm trying so hard to be respectful of his progress and excited and supportive, and I know how badly he wants to participate, so that's a huge factor. But I've been saying everything that you both have.

[Jade Warshot]

Well, what about after four years? So can you opt out? Like, let's pretend. Okay, so today you did say, we're at the point where I actually do need a car. What if you participated and said, okay, well, we're going to take cash and I'll buy my new car. You'll get your company car. We'll do that for four years. And then after that, you reevaluate, and if you decide it no longer works for you guys, there's. That feels like that could be an option.

[Rachel Cruz]

That's true.

[Caller]

Yeah, I agree with that. I think it just kind of goes back to with what you said about not actually having a choice then. Because if I could pick anything in the world, I know what I would get, and it wouldn't be on my list of options.

[Rachel Cruz]

Yes.

[Caller]

Yeah.

[Rachel Cruz]

Yeah. Well, so I think either way, Kelly, you're. I don't think anything is going to take you guys into bankruptcy or something. Do you know what I mean? Like, it's a. It's a car, and everything will be done with cash if you end up going either route. And so that's the only thing I would say. You're not quite at the million doll net worth where we'd say, yes, go buy a new car. Again, we just talked about all the depreciation. Is it worth it? Is it not? I don't think it's going to be the end of the world. I just don't like someone dictating. It's part of Being out of debt, it's like the autonomy. I get to decide things. And it's one thing if he just gets a company car and they give him one and he didn't get like it, but it is what it is. That's fine. But for you then to turn around and have to go purchase something that you don't really even want in the first place, that would be. That would be tough. So, again, I don't think either way is going to be a massive issue. I just think it's a stupid program to make you do this.

[Jade Warshot]

It's, it's, it's a forced behavior. You have to choose if it works for you guys or not. But that's a choice. I mean, there's not a. There's not a wrong choice. I don't think at this point.

[Rachel Cruz]

I would not lease it, though.

[Jade Warshot]

No, definitely don't leave if you're going to do it. We're a problem.

[Rachel Cruz]

That's right. That's right.

[Jade Warshot]

Thank you for the call. Good question. Let's go to. To Andrea. Andrea. Andrea in Manhattan, New York. Tell me how to say.

[Caller]

Doesn't matter. I'm open.

[Jade Warshot]

What about Andy? Can I call you Andy?

[Caller]

Yes, ma'. Am.

[Jade Warshot]

All right, let's go with that.

[Rachel Cruz]

Perfect.

[Jade Warshot]

How can we help?

[Caller]

Thank you for taking my call. My question is, after listening to your show for a while, does my husband and I have sufficient life insurance?

[Rachel Cruz]

Oh, good question. How much do you guys make a year?

[Caller]

400,000.

[Rachel Cruz]

Okay. How much life insurance do you guys have?

[Caller]

He has total with his work life insurance and then the private policy, he has a million. And then the same for me, I

also have a million.

[Rachel Cruz]

Okay, two million. Yeah. We say four to five times your annual income. Is that right?

[Caller]

Okay.

[Jade Warshot]

Yeah. No, for stay at homes.

[Rachel Cruz]

For stay at homes. That's right. For working. If you are going 10 to 12, if you're bringing it home. So we need more. Yeah, I would double it then. Gosh, Jade, thank you.

[Jade Warshot]

Four to five years, it'd be like that. Oh, did we make it clear for you? Do we need to say it again just in case?

[Caller]

Can you say it again? Yes. So if we have a million. That's not. The answer is not. That's not enough.

[Jade Warshot]

No, because that would mean that you make 400,000 or that you make 100,000 a year. Right. Ten times that would be a million bucks. So he makes 400,000. If you did 10 to 12, that

[Caller]

household income is 400. Collectively. I do not stay home. I work. He works. Collective house income is 400.

[Rachel Cruz]

So I would split that out and I would just multiply both of your incomes by 10. If you're both working, it's 10 to 12 times your income. If you are a stay at home parent, it's 4 to 5. It's kind of half of that is the way we look at it. But, but yeah, 10 to 12 times for you guys. So yeah, it would probably need to be double.

[Jade Warshot]

So two. Two million for you, two million for him.

[Rachel Cruz]

How old are you guys?

[Caller]

49.

[Rachel Cruz]

Okay. Are y' all in pretty good health?

[Caller]

Health, yes.

[Rachel Cruz]

Okay. I would do it as soon as possible because term life, it's pretty inexpensive and you guys, I mean with, at a, at 50, you're getting up there where it starts to kind of, you know, you will pay higher, you'll pay a little bit more. But I would do it before I'm 54, 55.

[Jade Warshot]

Yes, now. And call Xander, call Xander Insurance. They're going to help, you know, you shop out the best ones for you and just look for a 15 or 20 year level term. And also just know, Andy, that the point of this is, is to get to the point of self ensuring that you don't need to continue. So ideally you would only have to take out one term of this. And if you continue doing the baby steps the way we teach you could drop it in 15 or 20 years because you've built your nest egg so that you don't need to rely on it anymore. Which is really the whole purpose of building wealth through the baby steps is you have that security, that man. We've built so much wealth that, that we're good. Come what may.

[Rachel Cruz]

May.

[Jade Warshot]

Come what may. All right, guys, remember that Xander Insurance, that's where you want to go. They're going to help you shop. All the different insurances that are out there, that's what I use, that's what Rachel uses. And they will take such good care of you.

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[Jade Warshot]

to remain active on Boost Mobile unlimited plan. All right, welcome back to the Ramsey show here in the Fair Ones credit union studio taking your calls about life and money. We've got Omar in San Antonio, Texas on the line. Hey, Omar.

[Caller]

Hello.

[Jade Warshot]

What's up?

[Caller]

Well, I've been listening to you guys for close to a year now. There's little clips here and there on Facebook and YouTube. And lately I. I finally got a decent paying job and I started looking more and more into the show, watching longer videos and stuff like that.

[Jade Warshot]

I love that.

[Caller]

And yeah, I guess now I'm ready for a little more guidance on what to do with my position I'm in right now.

[Rachel Cruz]

What's going on?

[Caller]

So I'm 22. I finally got a decent job. Like I said, I'm taking home about 85,000 a year. My fiance, she's bringing home about 20,000, 24,000 a year. And we got about 85,000 more or less in debt right now.

[Rachel Cruz]

How much?

[Caller]

About 85,000.

[Rachel Cruz]

85. What is the 85,000 consist of 46,000 in the truck.

[Caller]

Oh, 15,000. Yeah, I rolled over negative equity and I was. Yeah, okay, terrible.

Yep.

15,000 on a boat that I do make money off of as I'm a charter captain on the side rides. All right, 18,000 on my RV.

[Jade Warshot]

Lots of vehicles here, sir.

[Rachel Cruz]

A lot of toys. Omar, we know what kind of guy you are.

[Caller]

I gave up rent to have the rv. Thinking I'm paying a lot more in rent when I can be paying towards something I'll eventually own.

[Jade Warshot]

You know, that's a common thing that I hear. And we'll get to that in a minute. But you're not alone in that thinking. But we'll talk about why that's not a great choice later on. Tell us, is there anything else that you're leaving out? I think there's a couple things missing here. 46. Oh, no, you're getting. You're getting close.

[Caller]

Yeah, I think that's about an average there. Close number. Yeah.

[Jade Warshot]

Any credit cards?

[Caller]

No, I paid those off last month.

[Jade Warshot]

And no student loans or personal loans?

[Caller]

No.

[Jade Warshot]

Okay, good. Well, the good news.

[Rachel Cruz]

Well, yeah. Can I get yeah. Our rule of thumb is you should have nothing. That or you shouldn't have everything. Combined with motors and wheels, that includes a boat. All of it. That is more than half of your annual income. And you are at your annual income, Omar. So half of this has to go to make sense financially. So I don't know what that looks like for you. I'm curious. What would the truck bring if you were to sell it? I know there's negative equity in it, which sucks, but. But what? What would it bring?

[Caller]

25,000 o.

[Jade Warshot]

Okay, hurtful.

[Rachel Cruz]

How about the boat?

[Caller]

The boat. I might be able to break even on it.

[Rachel Cruz]

Okay.

[Caller]

I have, I have 15,000 in cash.

[Rachel Cruz]

Okay, great.

[Caller]

And that's really what I can get rid of it with.

[Rachel Cruz]

And the RV you're living in?

[Caller]

Yes.

[Rachel Cruz]

If you were to sell it, do you know how much it would be worth?

[Caller]

I do not. On the top of my head, what I picture it won't be. It's somewhere around that number as well. 18,000.

[Jade Warshot]

You bought it used, I'm assuming?

[Caller]

Yes. From. From a dealer.

[Jade Warshot]

From a dealer. And how long have you been in it?

[Caller]

Eight months.

[Jade Warshot]

Okay, so I'm glad that you haven't been in it too, too long for it to really depreciate too, too heavily on you. If I were in your shoes, I would be looking at the boat because it's break even and I'd be looking to get out of the rv. And here's why. You might be thinking, well, Jade, I live in the rv, but the RV is the same as one of these vehicles. It's going down in value every moment that you hold on to it. And so you're flushing money in a greater way down the toilet. A lot of people feel like when they're renting, they're throwing money down the toilet. But with the rv, you're throwing even more because you're, you're, you're footing the bill for the depreciation on it. So I actually would get out of that and I would go back to renting.

[Rachel Cruz]

And then, and then if you sold your. Just let's pretend. Okay, so what Jade said, say the boat's gone and the RV's gone just for fun. Okay. In this scenario, say you sell the truck for 25,000. Then you have 21,000 in the hole. Okay. And let's say you go down and you get a loan from the credit union for 21,000. You take your 15,000 that you have saved and let's say you go buy a seven thousand dollar car. I Don't know. Yeah, yeah. And you go and take the eight, throw it at the 21, then you only have $13,000 of this loan left to pay off. That feels like that. That feels like a totally different world, Omar, than 85,000. Making 85,000. But it's going to require you living on less than you make and getting rid of stuff that goes down in value. Wealthy people, long term, invest in things that make them money. And when they have the cash to buy something and they can afford it, they go and buy it. And it doesn't hurt. It doesn't sting. It's like, oh, yeah. It's just. It is what it is. Yeah. It's fine. Because I want you to get an RV and a boat and a truck and all the things. Eventually you just can't afford it. You're broke.

[Caller]

Yes.

[Rachel Cruz]

So you got so to make some extreme.

[Caller]

Yeah.

[Rachel Cruz]

So to make some extreme changes, it's going to be extreme. You're going to be moving and selling a boat that you're making some side income on, which will hurt a little bit at first. But once those payments are freed up, I bet that's the amount of money you make on the boat.

[Jade Warshot]

I bet you tell us. Let's, let's hear some real numbers. When you have your truck payment, your boat payment, and we won't include RV because that's rent. But what are those two payments together, truck and boat?

[Caller]

1090 for the truck and 250 for the boat.

[Jade Warshot]

Okay. So I mean, we're 1300, almost $1400. I mean, a month. Do you make that in boat rent, whatever you do with the boat?

[Caller]

Yes.

[Jade Warshot]

Okay, so you just will do it without the risk?

[Rachel Cruz]

Yep.

[Caller]

Yep. So with that, the 15,000 I have saved, I was considering paying the boat, and then I'd have no more boat payment, but I'd be making, you know, potentially more profits on the boat.

[Jade Warshot]

So pay off the boat with the 15,000. How would. And then get out of the RV and then that still leaves the truck. So what would, how would you solve for transportation then?

[Rachel Cruz]

I mean, you still, you're still $70,000.

[Jade Warshot]

Yeah. You'd still be driving this truck that's going underwater more and more every day, and you'd still be paying $10.90 a month for it.

[Rachel Cruz]

Let's say this, John. If you didn't owe anything on the boat and you had no emergency, you had no cash saved, and you had a boat, and you told us, I have a boat worth 15,000, we'd say sell it to Help get out of debt.

[Jade Warshot]

Absolutely.

[Rachel Cruz]

Like, the boat's not necessarily the problem in that scenario, but it's like, sell everything. Sell everything. What is it? Sell so much stuff, the kids think they're next, right? You're going crazy at this.

[Caller]

I saw that clip.

[Rachel Cruz]

Yeah, ye. The idea of, like, just get rid of stuff. Like, start getting rid of stuff. This stuff is supposed to be bringing you fun and peace and joy, and it's not Omar. I mean, you're calling us. You're as much debt as you make every single year. Like, that's a lot.

[Jade Warshot]

You want to know what this is like? And just give me a minute to paint this as a picture. You have this house that you've built, right, With a truck, a boat, and an rv, and the house catches fire, which is this. This is a hot mess. This is a flame, okay? And you're going back into the house on fire, trying to save stuff. And we're saying, you want to know what? Go ahead and let it burn. And then take the insurance money and buy something new. Build something completely brand new. And you're wanting to go back in and go into the fire where all the stuff's going to be damaged, and you're risking at keeping the risk and trying to salvage this stuff, and we're like, dude, dude, burn it up and start over. Does that make sense?

[Caller]

Yes. Perfect sense.

[Jade Warshot]

You know what I'm saying? Hopefully, that helped you out a little bit, because we want you to start something fresh that's intentional, that you can build a foundation of wealth and peace on, and you're trying to build on the old rickety foundation that didn't make sense that you admit, hey, I made a lot of mistakes here. That's why I'm calling in. Let's do it right. Let's do a fresh.

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[Jade Warshot]

Back to the Ramsey show, where we have John in Milwaukee, Wisconsin. Hey, John, what's going on in your world?

[Caller]

Good afternoon. I'm 62 years old, and until three weeks ago, I was making 93, 000 a year and my position got eliminated.

Oh, no, I'm wondering.

Oh, yeah, no problem. I. I'm wondering if I have a solid plan for retiring at this point or if I need to go back to work.

[Rachel Cruz]

Okay. How much do you have in retirement?

[Caller]

I have about 700,000 total, but 500,000 of that I want to do Roth conversions starting next year. And with my wife working full and she works part time with that, I think we could stay in the 12% tax bracket and do the conversions for the next five years.

[Rachel Cruz]

Okay. And pay the taxes. And you would have enough money?

[Caller]

I do have enough cash to pay the taxes.

[Rachel Cruz]

Okay, how much. How much money do you have cash available?

[Caller]

About 250, 200.

[Rachel Cruz]

And is that just sitting in like a high yield savings account or a brokerage account or where is that exactly?

[Caller]

High yield savings.

[Rachel Cruz]

Okay, great.

[Jade Warshot]

Do you guys have any other streams of income? Obviously there'll be some Social Security. Does anybody have pensions or any other money coming in that we should know about?

[Caller]

About. No.

[Rachel Cruz]

And how old are you guys, John?

[Caller]

I'm 62. She's only 56.

[Jade Warshot]

Okay, you said she works part time.

[Caller]

She brings in 30,000 a year.

[Jade Warshot]

Okay.

[Caller]

So it might be a little tight

living on the 30,000 for those years, but can you.

[Rachel Cruz]

Can you.

[Caller]

Zero deaths? Yeah.

[Rachel Cruz]

Okay. You and houses paid off.

[Caller]

Yes, it is.

[Rachel Cruz]

Okay.

[Jade Warshot]

How many years would you plan on living on? Just hers.

[Caller]

Five more years from then out, then I would start collecting Social Security.

[Jade Warshot]

And you guys have run that budget out. An every dollar budget to see. Okay, here it is. Because you were make. I mean, making 93,000 a year is a big draw.

[Caller]

Yeah, it would definitely be a big change, but we ran it out and look doable, just not.

[Jade Warshot]

Is this your strategy or have you talked with, like, a smartvestor pro or a professional?

[Caller]

I have not talked to a professional. That's why I'm calling you.

[Jade Warshot]

Okay. I would speak with a smartvestor pro because there's a lot of ins and outs of this, especially when you factor in the Roth conversion. I think that's the part that there's a lot of strategy around that that they'd want to talk through in detail.

[Rachel Cruz]

And I would just wanna make sure, because I'm just thinking, you know, you're 62, praying you have 30 years, maybe 40 if you get to the 102 mark. But I'm like, you know, you pray for that, and the amount of growth that's gonna happen in that account will probably mathematically be more than the taxes you'll pay here in the next five years. So there's enough time that if you do make the conversion, it probably will mathematically be in your favor. But there's also, you know, the reality of life and to say, okay, is that gonna be worth it? You know, if, you know, family history, your own health, all of that. And so I would factor in a lot of those other scenarios, too, as you're thinking through this. But, yeah, to do something like this and to take your lifestyle this drastically down for five years, in order to do it, I think you still will become. Come out ahead. But I would want you to sit down with an investment professional financial planner to run the numbers and look at some estimates of what the returns would look like to make sure that this is the smartest thing.

[Caller]

Okay, that sounds like a good plan.

[Rachel Cruz]

Yeah. So if you go to ramseysolutions.com check out our smartvestor pros. There should be one there in the Milwaukee area. One or two. And just. Yep. I would run it by. Because I would want to. I just don't want you paying taxes on the conversions when you could just be pulling out the money, paying taxes on it today and living off of it. You know what I mean? Like. Cause I think there's enough in there. I don't know. I just would want to run out a couple of scenarios with them.

[Jade Warshot]

Unless for some reason it was, like, strictly a legacy play for those inheriting the money.

[Rachel Cruz]

Yes.

[Jade Warshot]

Because you want a piece there.

[Rachel Cruz]

That's right. That's right. Yeah. So, yeah, if you were wanting to keep a lot of this and pass it down to your kids. That's a good point, Jade. Then, yes, then the conversion would be Great. But if you're planning on using this money while you're alive, most of it and living off of it.

[Jade Warshot]

Yeah, it might not be. Yeah, I would just double check smartvestor for sure. That's a really good question. And I think we do get that question a lot, which is why going back to. And I think it's important to highlight this going back to what we teach. Our platform for investing, like our strategy for investing is so important to know because it will avoid a lot of this, which is when you have the opportunity and you've met the criteria to start investing. Which for the baby steps it means you're out of baby step one, you've saved a thousand dollars, you're out of baby step two, you've paid off your debt using the debt snowball and you're out of baby step three, meaning you've saved three to six months of expenses. Now at baby step four, you can invest 15% of your income. But how do I do it to avoid what we're talking about here? You want to start first with your employee sponsored retirement fund. If you have a 401k through your employer and there's a match, match meaning free dollars start there. But honestly guys, if there's a Roth option within your 401k, that is a fabulous place to start and actually max that out. Now if there's not a Roth option and there's just a match, invest up to the match. But then guys, immediately go to a Roth ira. You want to max it out, I think this year is 75. And then you have the yeah, 7500 and then there's a catch up contribution, I think up to 8. Max out that Roth because those are dollars that you've already paid the taxes on. And then it's going to continue to grow tax free. And when you get to the point of retirement, if you have most of your money in Roth funds, this is money that's going to grow tax free. There's go ahead.

[Rachel Cruz]

You don't have this problem of having to try to convert it later in life where you're going to be paying taxes on that much on $500,000 is what he's going to end up paying taxes on and spreading it out over five years.

[Jade Warshot]

And there's no required minimum distribution, meaning if you don't want to touch it, you don don't have to know which is so great.

[Rachel Cruz]

If you do pass it to the next generation, I think it is up to 10 years. Within 10 years they have to use it. But again What a sad problem for your children to have that they have to get the money out.

[Jade Warshot]

You have to use your. Spend money that you didn't make. Yeah. Very good question, though. Let's go to Lauren in Omaha, Nebraska. Hey, Lauren, how are you doing today?

[Caller]

Oh, my God. Hi, you guys. This is so cool. I'm doing great. It's great to talk to you. My question is, and it seems kind of straightforward, but there's a lot of context that I would like to be able to provide. I'll let you guys ask, though. Ultimately, what I want to know is how do I prioritize saving for my son? I only have one child. He's. I had him with a previous relationship, not my current husband, but I was a single mom for a really long time. And just this year, I got to the point. I'm sorry, I might start crying, but I got. I just this year got to the point where I'm actually making, like, a decent income. And my husband and I, who I've only been married to for about four years now, we're doing really well.

[Rachel Cruz]

And, Lauren, that's awesome from where you've come from as a single mom.

[Caller]

Yes, it was hard. Yeah. And, you know, I sacrificed. I worked. I worked the whole time. I never took benefits or welfare or anything like that. And. And, you know, his dad and I. So my son's dad and I started saving for him when he was a baby, but I never really was able to contribute to it. And I just feel so far behind in my own life that I feel like I'll never be able to give anything to him.

[Rachel Cruz]

Oh, Lauren, no, girl, you've already. Well, number one, you've already given him so much. You've already given him so much. As of your example. So from a numbers perspective, let me ask you this. When his dad was saving for him, what was he. What was he saving in or for?

[Caller]

So we both contribute to the same account. It's just in a normal, like, credit union account, you know, it's. There's, like, no return on it. And I've tried to get him to, you know, like, we're gonna meet this month and discuss our options for where to put it. And, you know, we're, like, civil with each other, so it's fine. That's all good. But there's only about 6,000, and it's mostly in a CD. There's, like, a little bit that's not. But it's mostly in a CD.

[Rachel Cruz]

How old is your son, Lauren?

[Caller]

He's 14.

[Rachel Cruz]

14. Okay. So here's what I would do. If there was 6,000 to his name, I would be thinking through the first big purchase is probably gonna be a car at 16. What does that look like? Does he contribute some? Do you use some of this money that your husband saved for that? Next is college. You guys could open up a 529 and start funding, funding some college funds, some money for him for that. Anything beyond that. If you want to do any level of investing or anything, you can do an upma, it would be in his name. He'd get it at 18. I probably wouldn't do that at this point. But those, I think those are the two big things, Lauren. And, hey, you've done a great job.

[Jade Warshot]

You're not as behind. You're really not behind.

[Rachel Cruz]

You're doing great.

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[Jade Warshot]

Back to the phone lines we head where we have John in New York City, New York on the line. Hey, John, how can Rachel and I help?

[Caller]

Hi. I'm trying to figure out if I made a dumb decision and if I need to sell my home. Right now, I'm trying to do house hacking, but when I account for all the income, the mortgage payment, it comes out to about like 38 to 40% of my income. And yeah, I'm trying to see what you guys think.

[Jade Warshot]

Okay, so tell us. Explain it to us in real numbers what you have going on and what's happening.

[Caller]

Absolutely. So my mortgage payment is $5,000 a month. I make 5,800. Bonuses can be up to $3,000. Usually my wife brings in 2,200, and then the rental income is 2,200. So that puts us at about 13,000amonth after taxes.

[Jade Warshot]

Okay. And the house hacking part, you're in the house and you have. Is it a shared space or how does it work?

[Caller]

It's a two family home. We live in one unit and then we rent the other unit out.

[Jade Warshot]

Okay. And you said you pay the. You, you told us the mortgage. 5,000amonth. But how much is the whole? Like, what do you pay for the property?

[Caller]

We bought it for 668. It's supposed to have appreciated about 7%. So if I were to sell it today, would. Which would be a $20,000 loss versus what I put down when I bought it last year.

[Rachel Cruz]

Yeah, yeah. Do you. Do you guys like that? Do you like the situation you're in? Or is it all miserable? You don't like the house. You don't like living next to the people that are renting from you. Like, how does it feel day to day?

[Caller]

The tenants are great. Our neighbors are fantastic. The house is 113 years old. Year to date, we've put like $14,000 in maintenance and repairs. Thank. You know, with my bonuses, we've been able to cover it without debt. I do have $48,000 in debt, but that's student loans and car payments. And so I don't know, because if I account for the rental income, right. The cost of the house is 38% of all of that. But if I were to assign the entire rental income and subtract it from the $5,000 mortgage payment, then what's left over would be. Essentially my housing cost would be about a fourth of my income. So do I, I account rent as my full revenue or do I just not do that?

[Rachel Cruz]

Yeah, I would count rent as income as part of the equation. Yes.

[Jade Warshot]

And I just want to get clarity on my end on something. You said the mortgage is 5,000amonth. Is that the total mortgage is. Or is that your portion of the mortgage?

[Caller]

That's the total. So that's mortgage, interest, taxes.

[Jade Warshot]

Got it. Okay. And so it's not.

[Rachel Cruz]

It's not terrible. It's above the 25%, but it's not. Yeah, I mean, it's, It's. No, I don't think you necessarily made a terrible decision. The idea of owning a piece of property, though, that is dependent upon other people paying rent. Yes. The problem puts you at risk for sure. Nothing's on fire right now, but if you guys want out of that and say, yeah, we want a more stable, we're good renting For a few years till we get another great down payment and we'll just go buy a single family home and do our own thing. You could totally do that. But yeah, I don't think anything's on fire right now. But you are very dependent on that other unit being filled. And the risky thing is if that family moves out, you're gonna be pretty urgent to put some people in and may not have the bandwidth and the margin to find someone. That's great too. Right. That's part of the debt complex is like there's like tons of urgency to keep this ball moving because once it stops, you go under.

[Jade Warshot]

Right. And again, let me just clarify a number just to make sure I'm on this, because I don't think the numbers are the issue. I think the, the dependency on the renters are the issue. But just to clarify, the mortgage is $5,000. They're paying 2,215 of it. Right?

[Caller]

Correct.

[Jade Warshot]

And you're on the hook for 2,785 of it.

[Caller]

Correct.

Okay.

[Jade Warshot]

And then plus maintenance. But bringing in your 13,000, you are below 25% because 25% of your 13,000 is around 32.

[Caller]

Right. But the 13,000 accounts for the rent.

[Jade Warshot]

Right. But I'm just saying, if you're figuring it the way we do, which is, hey, your mortgage, or in your case, your portion of your mortgage shouldn't be any more than 25% of your take home pay. You've got your wife's 2,200, you've got your 5,800, and you've got got money coming in from another source for 2215. Right. You've got that money coming in and now that's your income. And then your mortgage, if you're at 25%, could honestly be up to 3200. And yours probably might be that way, like you said with repairs and things like that. But the ratio feels correct. Pointing back to Rachel. I think that she's exactly right. The problem is not the ratio. The problem is, is you're dependent on them paying that. Because if some, for some reason they don't pay the 2000, 215, you lose the tenants. It takes you a long time to find new ones. Now you do encroach on that ratio and now it does feel like an issue.

[Caller]

So I guess my last question would be, is it okay to pause the debt payment? Because like I mentioned, I have $48,000 in debt that I'm trying to snowball. Is it okay for me to pause it Right now build at least some kind of emergency, emergency fund that would cover their rent in case they were to leave me for one or two months and then resum. Debt payment afterwards.

[Rachel Cruz]

I probably wouldn't. I think I would probably stick to paying off debt. And for some reason when does their lease, when are they up to renew?

[Caller]

They just renewed. So it would be until October 1st of 2027.

[Rachel Cruz]

Okay. Yeah, I would just start paying off debt and then for some reason if something happens, pause the debt snowball and build up. Because again, even if you had to pay the full a little over $5,000, you could still make that work. It's going to be a lot be really tight, but it could be possible. Right. So I would just keep throwing money at the 48,000 of consumer debt and if something happens, then pause the debt snowball, build up some money until you have time to, to fill the unit again. And then. Yeah. And then long term too, John, you and your wife decide like what's, what's worth the, the in inflexibility if you will of having, having people next to you and having to depend on someone else for you to pay the mortgage on this place too. So from a long term perspective, I would not recommend someone do this. But for you, nothing is on fire. And again it's not, it's not at a crazy percentage. Even if you had to pay both units.

[Jade Warshot]

It's not. That's a really good question though. And it, it's one of those things that I feel like we get all the time. People enter into real estate and they have it, it. The intent is to build wealth and by way of building wealth maybe they're creating a lifestyle of peace or whatever it is, but it ends up being more of a anxiety or more of a stressor to them. And I think that when that happens you do have to reevaluate.

[Caller]

Yeah.

[Rachel Cruz]

The whole house hacking idea. It's funny, I'm like on paper the concept sure can make sense. You could hear and be like okay, yeah, yeah, someone else is paying basically your mortgage while you're building out. Yeah, yada yada. But then I'm like, yeah, but then you got other, you got the crazy Smiths next door that are, that you're dependent upon. Right. Like they are, they are one of the ones that is holding your financial peace basically. And if they go away then, then yeah, then you're like, you're stuck with it. And so that's one of the problems about the get rid. If it sounds too good to be true it probably is because you usually don't factor in real life risk.

[Jade Warshot]

Right.

[Rachel Cruz]

You don't factor in people in the situation. Just them. Just people. Right. The relational side of everything. Like none of that fits in an Excel sheet. And so really do have to play out your life to say okay, there's other factors here. And yeah, with the. It sounds too good to be true. It, it probably is. Is really. Oh, it's more real than ever, I feel like.

[Jade Warshot]

And if you are going to do something like this, because I do like create. I like when people are creative about finding ways to make money and things like that. And so if you are going to do it, you do have to look at the total mortgage and say that port that total mortgage, does it fit within the parameter? And if it does and it's just gravy for somebody to be paying you, then it's like, hey, yeah, do it until you can't stand the people anymore.

[Rachel Cruz]

Yeah. Well, we had a guy call and he, and he did that. He had a home he owned and it was, it was, it was right at that 25%. It was great. And he still had student loans pay off. So he's renting out, he's having roommates, basically three of the rooms. Yes. And so he's making rental income that not only could he pay the mortgage, but it's all going towards the debt. So like things like that. You're exactly right. You can still get creative with this but, but when you're dependent upon somebody, especially in a housing situation to pay their portion for it to work for you, that's just a level of risk.

[Jade Warshot]

It's very stressful.

[Rachel Cruz]

Yep.

[Jade Warshot]

Yeah. Yeah. And if you're interested in real estate, always check out our real estate pros. They can help you out. You can find those@ramsey solutions.com real estate but again, we're all about paying cash and we're all about handling that 25% rule.

[Caller]

Sam.

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[Jade Warshot]

All right, you guys are coming. Question of the day is brought to you by Y Refi. If you keep putting off dealing with private student loans, now's the time. Y Refi helps borrowers explore fixed rate financing options and affordable payment plans. Go to yrefi.com Ramsey that's the letter y-r f y.com Ramsey and it may not be available in all states.

[Rachel Cruz]

Today's question comes from Victoria in Hawaii. We have three children and they are all in music programs. Last year, we spent $5,800 on lessons alone. We are currently paying off debt and my husband wants to stop all music lessons in order to become debt free. This is something that I've always wanted to provide for my kids, so it'd be hard for me to see them stop. Should we give up this expense to get out of debt or should I continue pushing for music lessons?

[George Kamel]

Ooh.

[Rachel Cruz]

Oh, man. Okay, so it's close to like 500 bucks a month. I mean, here's the bottom line with all of us is it's math, right? So the faster you. Or the deeper you sacrifice and you cut everything that is not a need, the faster you are going to get out of debt. So my question, I guess, would be more of, okay, when you guys look at this timeline, how much debt do you have? Do you have, you know, $15,000? Do you have $500,000?

[Jade Warshot]

Like, and how much do you make?

[Rachel Cruz]

And how much do you make? All of it? Yes. So that plays into a lot of this because if 500 bucks is a month is going to slow your debt snowball down. Three months, who cares? I would be like, just take the music. Like, it's three months, you know, but the, but the extra job you're working, that's three more months of that. Like, you. You have to account for all these other things that you're stretching out your debt payoff. But if you. If it's going to be longer, I don't know, you. You would have to pick the timeline and Decide. So it's not a need. So if you cut the music lessons, you can always pick them back up. Up six to eight months after. You know what I mean? From now, once you're debt free, you can always just pick it back up. And depending on the age of your kids, like, I don't know, my kids do piano, but they like. One of them stopped for probably five months and she's getting. I don't know, it's just not that hardcore for us. But it's good for them to do. It's that kind of feeling. So I don't think it's a need. And 500 bucks again, in some people's world, that's a lot.

[Jade Warshot]

It could be everything. Yeah, it's a lot.

[Rachel Cruz]

So I understand it's an important value for you guys, but you also are broke. Broke. So you have to kind of realize, what can we really afford with the lifestyle that we've chosen to live that's gotten us into debt in the first place?

[Jade Warshot]

Yeah, I think it's absolutely. I. I couldn't have said it better myself. And I do think that that does bring up a values question. And I. I want to throw this in here because I want to know your answer, Rachel. So a while back, I did a post on a couple of things that I. I would not give up in baby step two. Because we're good. Yeah. Because we're always talking about cut everything, stop everything. And one of the things I think we can both generosity in the form of especially like that if you're a Christ follower, that base. Like, hey, I do 10% to my local church or even 10% to a charity. If you're not, that's fine.

[George Kamel]

Cool.

[Jade Warshot]

But having generosity, I never let go of that. The other thing I put on there is if you need help and you

[Rachel Cruz]

need counseling, like therapy or.

[Jade Warshot]

Therapy. Yeah, Budget for counseling. Like, there are certain things that I think are at a. A primal need that totally. You don't want to let go. And they may feel like luxuries, but based on your values or based on what is truly a need at a moment. Moment, you got to do it. One of the things I said is anything that. Like a date night. And I'm not saying you have to go out every, you know, once a week or. But like having a special night that if you have to pay for a sitter, that you're valuing your marriage and valuing your bonds. And I was wondering if you have anything that you would add to that.

[Rachel Cruz]

Oh, that's a good one. That I would not cut out.

[Jade Warshot]

I put you on the spot. But no, no, no.

[Rachel Cruz]

I was gonna say I'm in my health era, Jade. Ah.

[Caller]

Ah.

[Rachel Cruz]

So I wouldn't do. So I mean, if I had like a personal trainer or something a little bit above and beyond, I probably would cut that for a season.

[Jade Warshot]

But you got to do your basic appointments.

[Rachel Cruz]

But I. If I did, if I needed a gym membership, I would keep that.

[Jade Warshot]

Yes.

[Rachel Cruz]

Like, things like that. To say I'm going to keep these classes going more for my own sanity.

[Jade Warshot]

You need it for just as much your mental health as your physical health.

[Rachel Cruz]

So I would say that I love the date night idea because I'm like, even just take me to Chili's.

[Jade Warshot]

Chili's. We don't have to get crazy here.

[Caller]

That's all I need.

[Rachel Cruz]

All I need. I would say that. And then as we're thinking about the kids and like, we do rec sports, so they're not expensive. It's not. I mean, you pay like a initial registration fee and that's about it. And if it was time to sign up for that for like fall soccer, I would probably go through with that. I would say the kids can still play at the ymca, so we can

[Jade Warshot]

find another way to make that money.

[Rachel Cruz]

Y. So there. There'd be a couple of things, but an ongoing expense, like. Like this specifically 500amonth. It's a lot that's ongoing. That feels. Yeah, that feels like a lot.

[Jade Warshot]

It's a good question. It's a good conversation.

[Rachel Cruz]

I. My hair, Jade say what? I got grays early in life. I'd get my roots done. I would. I would keep that. I'd keep my hair appointed.

[Jade Warshot]

Well, somebody called it. That's a good one. Because somebody called in and asked about that in baby step to it. And that's another one we can add to.

[Rachel Cruz]

You may have to find a cheaper

[Jade Warshot]

person to go to, but yes, there's always options to make it less expensive. But you do. If you have a job or a corporate job, you do have to do what you have to do to show. Show up in a profession.

[Rachel Cruz]

Let me ask you this, because you and Sam remind me the time frame.

[Jade Warshot]

Eight, seven and a half years.

[Rachel Cruz]

Seven and a half years. Would you say if someone is looking because, I mean, you guys were like half a million dollars, like you are looking at a sprint. Not nine months, not 18 months, like seven years. Do you give more grace to sustain a lifestyle to get you through that than like the 18 hex?

[Sponsor/Ad Voice]

Yes.

[Rachel Cruz]

Okay.

[Caller]

Yeah.

[Rachel Cruz]

See, that's good to Know, because for people out there that have hundreds of thousands of dollars of student loans and you're looking out and you're like, it's going to take four years. You may be looking at that and thinking, okay, I have to, I have to live that out for four years again. Nine months. I carried a baby for nine.

[Caller]

You.

[Rachel Cruz]

You can do anything for nine months. Like, shut up and get ready. But the long term is harder. That's hard.

[Jade Warshot]

I'm so glad you said that. Which does point to something that we should highlight, which is most people, people, when we talk about the baby steps, baby step two is what we're talking about. Paying off all your debt minus your mortgage. The average person who's doing it, they're doing that in two years.

[Rachel Cruz]

18 to 24. 24 months.

[Jade Warshot]

18 to 24 months. That's like, you know, a drop in the bucket, right? So to her point, you can sacrifice and do anything for that length of time. If you're, if you're beyond that, I do think it's important, especially if you're like four years, five years to your point. Yes, I think it's important to highlight. And if you can do it ahead of time, I think that's even better to kind of highlight what your milestones are gonna be and say, okay, you know, once I get to the three year point, or once I've paid off $200,000, we're going to do XYZ. And then once I get to that point, then I'm gonna let myself get my nails done again and then. And live your life. Because the truth is your life is still your life and you want to enjoy it to a certain extent. And tomorrow isn't promise. And so balancing that and knowing that, okay, okay, there's a certain responsibility that I can hold for 18 to 24 months, but beyond that, I do want to make sure that I'm in my life a little bit and I'm still. Otherwise your mental health is going to get nasty.

[Rachel Cruz]

Yeah, right, right, right. Absolutely, absolutely.

[Jade Warshot]

So, so good. That's a really good question. Alrighty. Let's go to these social questions. I really like these because it's a way that you guys can contact us if you follow Rachel online, myself, any of the personality or even the baby steps community, which is our Facebook group, you can drop your questions in there and we'll see them there and we can answer those. So this comes from Hannah on Facebook. She says, we're rebuilding our emergency fund due to some unexpected home repairs. It will take us five to Seven months to rebuild if we continue our retirement investments, or two months if we temporarily stop them. Does it matter which way we choose?

[Rachel Cruz]

Oh, I'd go two months.

[Jade Warshot]

I would, too.

[Rachel Cruz]

Contact hr, Just say, pause two months, be done, press play again.

[Jade Warshot]

Yeah.

[Rachel Cruz]

And I wouldn't drag it out, because who knows what else is gonna come up? Seven months stuff could happen.

[Jade Warshot]

Yeah.

[Rachel Cruz]

I don't know. That's stretching it for me.

[Jade Warshot]

I 100% agree. And I actually think that that's the way the baby steps work, as you work through them. If something happens and you have to take a step back, which is not a negative, the whole purpose of the emergency fund is there in case something happens. So it's not a negative. But if you go back and you have to redo it, then you're back to that step.

[Rachel Cruz]

Now, if it's like 30, 60 days with retirement funding, you could probably get away with that.

[Jade Warshot]

Yeah, yeah, yeah.

[Rachel Cruz]

Just to keep going. But seven months. No, I would pause and get it done in two.

[Jade Warshot]

I love that one. Okay, one last question. Annie from Instagram says, how do you balance working the baby steps and still enjoy life? Because time flies and your kids are growing up quickly. I feel like we got that.

[Rachel Cruz]

I know. Yeah. I mean, I still think there's things that you can do with your kids. And again, I'm gonna. I'm gonna base this on the 18th, 18, 24 month time frame that. That flies.

[Jade Warshot]

It really does.

[Rachel Cruz]

It goes so fast. And you can still enjoy your kids without having to spend money on them. That's the other thing. It's like, there is stuff that you can do. You guys and you and your kids want to be with your kids. Like, I always go back to that.

[Jade Warshot]

They want to be with you.

[Rachel Cruz]

It's this. It's the smallest things. Like, I think I've told the story, but this was, I guess at Thanksgiving, we took our kids, we put all the bikes in Winston's truck, and went to the high school to see down the road. And they literally, like, made this whole loop and this whole thing around. And they are. It was the best. They. They were so happy. They were fine.

[Jade Warshot]

Fine cost nothing.

[Rachel Cruz]

Yes. So, listen, it does not take that much, honestly, so you can enjoy your life with your kids and get out of debt. And the beautiful thing is when you're not a stressed parent and not have anxiety about money, you're going to be more peaceful to be around.

[Jade Warshot]

Welcome back to the Ramsey show here in the Fair Winds Credit Union studio. I'm Jade, this is Rachel, and we have Emily from Auburn, Alabama on the line. Hey, Emily, what's up in your world?

[Caller]

Hi, guys, how are you?

[Jade Warshot]

Excellent.

[Rachel Cruz]

Doing great. How are you?

[Caller]

You Fantastic.

[Rachel Cruz]

Great.

[Caller]

I will jump right into it. I am 29 years old and about two years ago I went through a divorce. And at the time, my ex was active duty military and I was a police officer. So truly just both very challenging careers and we just drifted apart. Long story. But two years later or. Well, going through that, I realized that going from two incomes, we not have any kids to one income, I was like, wow, cops don't make any money. So after, you know, keeping my job as a cop for. I was a cop for six years and I had to work so many part times and so much over time, it felt like every single month I was just breaking even. So my degree is actually in sales and business marketing. So I went back into sales. I got a remote job. It was a very hard decision because again, I loved my job. It was so fulfilling. I felt like that was my calling. Like, I felt like God, that was what God made me to do. But I need to make a change because I was wearing myself out. I was stretched too thin and it was not sustainable. So I got a job working from home sales and I make double the amount of money I get to sit at home. I like had a dream job that I bet everybody would want. But now on the other side of things, I was able to pay off all of my debt. I was able to buy a house. So the only debt that I have is my house.

[Jade Warshot]

So where's the problem?

[Caller]

So I just am so unfulfilled. Like, I wake up every day and I'm like, this is like for work, life balance, it's great. But this is like not my dreaded every day. Yes, exactly. Exactly.

[Rachel Cruz]

What were you making as a police officer?

[Caller]

So my base is about 55.

[Rachel Cruz]

Okay.

[Caller]

And. And then I was in like a very specialized unit, so we were on call all the time. I worked so much overtime. And then on top of that, I would work like part times as like a higher security, essentially.

[Rachel Cruz]

Okay, so you would make what doing all of that?

[Caller]

So my last year of the cop, my W2 is like 82.

[Rachel Cruz]

Okay. And how many hours did that? Because you said you worked a lot of overtime. So how many hours week, if I had to guess.

[Caller]

So just normal hours was 48 hours. And then on top of that, I was probably working another 20 to 25 hours.

[Rachel Cruz]

Okay.

[Jade Warshot]

To get to the 82.

[Caller]

Yeah.

[Jade Warshot]

Oh, wow.

[Rachel Cruz]

And then what are you making now

[Caller]

at this role, I'm making 150.

[Jade Warshot]

Okay, so are you. Are you essentially saying because you left the cop position because it was stressful, it was a lot. It was just overwhelming.

[Rachel Cruz]

And you didn't make a lot, right?

[Caller]

Yeah.

[Jade Warshot]

So you're saying. You know what? I'd actually, I'd go back to the overwhelming overwhelm to be doing what I love instead of having maybe a cushy schedule, but I just don't, like, I just dread it. Is that what you're saying?

[Caller]

Yeah, exactly.

[Jade Warshot]

Okay.

[Caller]

My question, I just, like, I can't fathom going back to making so little amount of money and barely like having any personal time. So it's just like such a hard.

[Jade Warshot]

Well, would you have to do the ot?

[Rachel Cruz]

Do you have to go back into exactly what you were doing, or could it look a little different?

[Caller]

So my house now, my only debt is. I. My mortgage would be like. My mortgage is about $2,200 a month now. And that would. I feel like going back to being a cop on that salary would feel suffocating.

[Jade Warshot]

Do you have. How much more. How much more do you have on the mortgage? Like, how close are you to.

[Caller]

So I literally just bought it about three months ago though, for 300. So I still have like 297. Okay.

[Rachel Cruz]

Forgive me, Emily. I don't know how. Well, I don't know how all this works. I wonder if the overtime you were doing that you made an extra 30 or something. I'm wondering, could you do that and not be a full time police officer or you have to be a full time police officer in order to do that. Like, I'm wondering if you can kind of scratch your itch and. And do some things like every other week, still plug back in and make

[Jade Warshot]

sure the security stuff.

[Rachel Cruz]

Yes. Just to.

[Caller]

That is definitely. It's called a reserve officer. That is definitely an option. And I've asked my former employees and they're like, as soon as one becomes available, because the city only allows like a certain amount in their budget every single year and they're all filled. So, yeah, I have been waiting for like six months for them to have an opening, because I do think that would be perfect.

[Rachel Cruz]

Yep.

[Caller]

But I just feel like every day I'm like, oh, my gosh.

[Rachel Cruz]

Yeah. And that's not a way.

[Jade Warshot]

Yeah, that's no way to live.

[Rachel Cruz]

No. There's a point that the diminishing returns of the extra money you make takes. You know what I mean? It's not even worth it to a point of like, I'M miserable every Monday as I'm doing what I'm doing. So you don't want to live your life like that long term by any stretch. You know, if you hold on the line, Emily, we're going to get you Ken Coleman's book Find the Work youk're Wired to Do. There's a great assessment in the back, and I'm just wood wondering from a creative perspective, what about being a police officer and all those things that you enjoyed pulling out that part of you and finding a position, a job that maybe you're not even thinking about, but you're able to use that skill set and your mind in that way. But it may not have to look like you're working 60 hours a week. Right. And making half of what you were making when you're working 40. Right. It needs to make sense. Make it make sense. Right. So we'll give you that for sure after this call because I'm hoping that maybe can steer you. There's an assessment in the back to. To generate some ideas.

[Jade Warshot]

Yeah, I. I like that idea. I'm just thinking through other things that are maybe just way more abstract of your mortgage. So the main problem is the mortgage payment. That's what's keeping you. Because you go. If I go back down to 55 now, my mortgage is too big a chunk of my, you know, my life here. So if you did a play. If you did a play while you're waiting for that security role or whatever that was to open up, if you did a play where you're like, hey, I'm gonna just save up and chunk away as much money as I can, and then maybe I can put, like, a lump sum on this mortgage and kind of recast it to where that payment makes more sense. And then I can go back to the cop role and not.

[Rachel Cruz]

And not have to do overtime.

[Jade Warshot]

And not have to do overtime, that's something that might work too, again. And there's a level of sacrifice to that, obviously. But if we're looking at this long term, maybe that is worth it to you. So just another thing to throw in the hat there, but I agree with Rachel.

[Rachel Cruz]

Did you come from a family, Emily, of public service?

[Caller]

No. I'm the first and only one.

[Rachel Cruz]

Okay, what did you love about it? What. What was so great you guys?

[Caller]

It was just so fun. And you just get to, like, put bad people in jail and, like, chase them and, like, just the adrenaline, like,

[Rachel Cruz]

it was just so fun.

[Caller]

Yes. Like justice. Oh, my gosh. Yes.

[Rachel Cruz]

Wonder if you're an enneagram 8.

[Caller]

I don't know.

[Rachel Cruz]

I'm trying to think of like, like your personality.

[Caller]

I am. And you are. That's me, girl.

[Rachel Cruz]

Some eights are some of my best friends. A lot of my girlfriends are commanding. I just wonder if. Yeah. Like what kind of role can you have in that? Right. That you find just. I don't know. Like that scratches all those itches to find a fulfilling career. I don't know. Emily.

[Caller]

I.

[Rachel Cruz]

And, and you're still, you know. I say so young. I don't mean that, you know, demeaning by any means. But you, you have a lot of time on your side. Yeah. To kind of figure out this path. And you've set yourself up so well financially in order to do that. Which is amazing. I mean you're debt free. You've done it all the right way. I mean it's, it's amazing. So you can have the options which is wonderful. That's why you do all the hard work on the front end. So I'm proud of you. Yeah. And I hope you kind of. I hope you find that next step. Sorry we weren't. Wish we had the magic career to pull out of our hats.

[Jade Warshot]

I think the resource is really going to help her cuz it'll help you identify those skills that Rachel was talking about and it will suggest other career fields that you can use. That same juice that gets you going just in other career fields that maybe you hadn't thought about.

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[Jade Warshot]

Alrighty. Ashley is on the line. Who's in Omaha, Nebraska. Hey Ashley. How can Rachel and I help today?

[Caller]

Hey.

We are a military family and so we move around every two to three years. But we've been saving. Okay, well, I've been saving pretty much ever since I got a job. And then I convinced my husband to save with me. And so we keep building up our house down payment. And we know Dave always talks about waiting till you live somewhere for five years, but is there ever a point where it's like you have such a high down payment that you can ignore that rule?

[Rachel Cruz]

Tell me why you guys move every two to three years, did you say?

[Caller]

Oh, we're in the military.

[Rachel Cruz]

Military. Okay, gotcha. How long will you guys. Well, is it your husband or you myself? Yourself.

[Caller]

My spouse.

[Rachel Cruz]

Your spouse. Your spouse. Okay. No, you're fine. Sorry. How long will he be in service for? Do you know now?

[Caller]

Well, originally we were going to get out in like three to four years, but now the talk is to stay in the full 20, which is why that's when it was like, oh, well, shoot.

[Jade Warshot]

Yeah.

[Caller]

Long time to wait to buy for sure.

[Rachel Cruz]

How much longer is that for you guys? How many more years?

[Caller]

It would be 15. Another 15 years.

[Rachel Cruz]

Another 15. Okay. I know, Ashley, we have, I mean,

[Caller]

depending on where we live, live, like we have like a 50% down payment. So it makes us antsy sometimes of like, oh, we could just, I don't know, you know what I'm saying?

[Rachel Cruz]

Yeah, no, for sure. Well, the thing is, you don't have to.

[Jade Warshot]

You.

[Rachel Cruz]

Well, number one, you could just leave it alone and just, you know, I, I would hate to keep it in just a high Yield Savings for 15 years. Part of me would open up a brokerage account, put that in, and you just kind of have it earmarked as down payment for when you actually do settle. Because I probably would not advise you, Ashley, to buy a house if you're only going to be there for two years. I would just the, the exhaustion of selling it and turning it around. I mean, because, yeah, you're going to use probably 15% to commission every time. All of it. I don't think it would be. I don't think it's worth it. But I also don't want you to keep saving. Like put it in a, in a brokerage or something and then go enjoy life. Like, you know, I'm saying, like there's. You're in a great position, so don't feel like you have to keep putting money away for something that's not gonna be happening for 15 years. You've done the work, walk away from the account.

[Jade Warshot]

And in 15 years, the growth on that, who knows?

[Rachel Cruz]

You'd have something in cash probably, which would be insane.

[Caller]

That's true. I think. Yeah. That's probably what our problems, that we keep it in a CD because we keep thinking like, oh, this next move will be there long term. And then. But yeah, I have, I've heard of her brokerage account, but I'm gonna have to.

[Rachel Cruz]

Yeah. And you can do it Fidelity or Vanguard. I mean, you can honestly just open up your own on, on a website. I mean they make it pretty simple these days. And I would just get an index fund, you know, it'll have 500, you know, stocks within there, which is awesome. And it really just follows the S and P and, and you kind of just park it in there and don't look at it because, well, you guys are military, you know, foreign affairs start happening and the market dips and then you're going to be mad and pissed.

[Jade Warshot]

You're like, jaden, Rachel just told me

[Rachel Cruz]

to put in there. So this is a long term play. I would look at it as a long term investment for the house and then go rent somewhere great. And I would even say, which I'm a spender, Ashley. Even if you guys, you know, got to a point that you're like, oh gosh, we need like 10 grand for something, something, something. I don't know, you use some of

[Jade Warshot]

it, like enjoy your life. Fifteen years is a long time.

[Rachel Cruz]

It's a long time. So I would, Yep. I would just park it somewhere that's gonna have way more growth long term and earmark it as the house fund. And I would rent, though. I would not go through the process of buying a home.

[Jade Warshot]

I wouldn't.

[Rachel Cruz]

Turning around and sell two years later. That's a quick turnaround. I'm sorry, but thanks for your service for you and your husband, everything you guys do for this country. We really, really appreciate it.

[Jade Warshot]

That's such a good point you made, Rachel. All the closings costs, like when you buy one, the closing costs when you sell one, the realtor fee, like all that adding up over time over three or four different locations is.

[Rachel Cruz]

It doesn't always. Yeah. And depending on the mark, I mean, you know, your house is not going to appreciate maybe even that much in two years. So you may actually end up losing money by doing that. But I know I could, I could see and I assume they have kids and because she said our family moves like to want to have your, your own place.

[Jade Warshot]

But.

[Rachel Cruz]

But the reality is, you know, because of what you guys do, it's, it's not going to be your Own place in two years anyways. And I. And don't keep other military families that are listening or people that do move around for even career. Don't keep a house in another city and try to rent it. Don't be a longdistant landlord. If you leave a city, sell your home and use the equity to buy the next home. Don't be having like three or four houses around the country of all these places you've lived.

[Jade Warshot]

Good, good, good advice. All right, thank you for the call. We've got Kira next who's in Philadelphia, Pennsylvania. Hey, Katie. Kira.

[Caller]

Hello. How are you ladies today?

[Jade Warshot]

Doing all right, how about you?

[Caller]

Doing well. All right, I'll get into it. So little background. About four years ago, five years ago now, my husband and I got out of debt, paid off $125,000 in 23 months. Since then we've had three babies and my husband had two surgeries, two serious surgeries. Surgeries. And we are on baby step 3B and we're feeling discouraged. I'm a stay at home mom, so, you know, one income family. My husband makes $85,000 a year before taxes. He's in sales so he can make more than that. But you know, I'm looking to try and bring in some extra money if I can. I love to cook, I love to bake. And I mean, I've been told I'm good at it. I don't know. So I'm wondering, wondering what your suggestion would be to kind of start some sort of side hustle. I mean, I don't know how far I could take it and I don't know what the logistics or like the rules are for cooking for people. You know, I don't, I haven't looked that far into it, but I would like to start maybe making meals for people and selling them once a week. Like, what are your thoughts? How can I go about starting that?

[Rachel Cruz]

Well, I have two examples of real life examples. There's a mom that goes to our kids school and she bakes and everyone just literally uses her for birthday parties. I mean, she's always doing stuff and she'll have holiday baskets that you can come and buy. And she's kind of created this community that people go to her for for cookies and cakes and all of it. And so. And she's just, you know, she's a mom and she's awesome, but she, she's kind of created this network and I don't know how much she makes. She's never told me. But everyone goes to Her. So that's one end. And then we have people, they live in a neighborhood that connects to our neighborhood. And they, they. They were. He was a chef in Nashville and ended up coming home with his wife. And they do, like, sourdough breads. They. During the winter when we have snow days, they make these, like, basket meals and they sell it on Facebook. And so people are like, literally lined up outside their house to get soups. And like, like, they make the most incredible food and they've. They have killed it. I mean, they have stands set up. I mean, like, they, they. It is prime. So I'm like, those are just two examples in my own personal life. And again, I don't know if they have business license. I mean, I don't know all the ins and outs, but that those are two women who are home doing life, but they've like, they're really good at this thing. And over time, word of mouth in a community gets out. And it's amazing.

[Jade Warshot]

Yeah, I love those ideas. I think the best side hustles are based on things that we already love and that we're already good at and that we can set the fees and the hours right. Which is true. Just that with cooking, I do think in the area you'll want to check out, like, what the regulations and what the laws around having, like a cottage setup is usually what it's called because it could be different when I did things like that when I was in South Florida. It has to do with the scope of what you're doing, and sometimes it'll require things like you have to put the nutrition ingredients on the box or you have to have. It'll. There'll be some regulations for what you need to.

[George Kamel]

To do.

[Jade Warshot]

And it's probably. I don't want to say this, but it's probably pretty easy to curtail some. That. Some of that if you're really starting small. But once word of mouth picks up, you probably want to make sure that you're following those guidelines and making sure of that. Yeah, but the biggest thing that I would say, aside from legal and all those things, is make sure you're running this. If it's supposed to be a side hustle, run it as a business and make sure you're keeping track of what you're spending on product and make sure you're pricing things in such a way that you're actually making a profit. And you can look at back on this and go, I actually made a profit. I didn't just break even or I didn't Just do this thing for put in a bunch of sweat equity and make sure you're factoring in your time in that. In that cost. Right, because the dollars and cents might make sense, but if it's taking you, you know, 15 hours to make a certain amount of money, then it's no longer worth it. So factor in all of those things and make sure you're doing due diligence there.

[George Kamel]

You should not feel uncertain about investing and you don't have to. That's why we created Investing Essentials, a two night virtual event where George Camel and I walk you through my playbook for investing and wealth planning. We'll simplify everything from 401ks and mutual funds to passing on wealth so you can invest with confidence. Tickets start at $199. Get yours [e-mail] events or click the link in the show notes.

[Jade Warshot]

All right, guys, we say it all the time that buying or selling your home is a high stakes game. Because one bad deal could cost you tens of thousands, thousands of dollars. And the truth is, you don't want to overpay on your next house or you don't want to sell your current home for less than it's worth. That's why Ramsey Trusted connects you with the vetted real estate agents who have the experience to guide you step by step to make smart decisions, not expensive mistakes. Connecting is easy. Just compare agent profiles, interview your top choices, and then pick the one that's right. For me. For you. So find a local Ramsey Trusted agent who has your best interest at heart for [e-mail] agent or simply click the link in the description if you're listening on YouTube or podcast. All right. Marielle is in St. Louis, Missouri. Hey Marielle, how are you?

[Caller]

Good.

How are you doing?

[Jade Warshot]

All right. How can we help?

[Caller]

So I am a public school teacher, so we have pensions.

[Rachel Cruz]

Thank you for your service as public school moms. We appreciate you.

[Jade Warshot]

Absolutely.

[Caller]

Thanks so much. So, currently in Missouri, I am forced to put in 14.5% into my pension contributed to my pension program. And my husband is military, so we move around a lot and we will not be in Missouri long enough for me to be vested into my pension. So that money has to go somewhere. It can't just stay with Missouri's peers program, PRS program. So my problem is because we're moving to another state and I'm not that. My question is, should I move that into a traditional IRA and let it grow or should I pull it out, take the fees which would probably go from. I think I'll have only like 11,000 in there, and we'll be pulling out. I think after fees, it's going to be a little less than 8,000. But that would get rid of the last of our debt and kind of jumpstart our emergency savings. And. And I would have a pension in our next state. He has his military pension plus all of his retirement accounts, plus I have other retirement accounts. So our retirement looks really good.

[Rachel Cruz]

You really want to cash this out, don't you?

[Jade Warshot]

Well, I wouldn't. And I want you to ask more questions because I don't know every state could be different, but I know that in many states, their retirement system will let you leave the money in the paper pension. You wouldn't necessarily have to move it. So if you wanted to let it stay until it's vested, you could do that. So I would check on that option.

[Caller]

In the state of Missouri, you have to work five in the school system in order to keep that.

[Rachel Cruz]

Okay.

[Jade Warshot]

Okay. I would roll.

[Rachel Cruz]

I would just roll it to an ira, honestly.

[Caller]

Okay.

[Rachel Cruz]

Yep. And I wouldn't take the. I wouldn't pull any money just in. As a standard principle out of. Out of retirement unless it was to avoid. Avoid a foreclosure or bankruptcy. So let that just grow. And you guys. Yep, Yep. So, yeah, I would roll it to an ira, and that's what I would tell anybody. Even who was at a company. Right. That left their company and their 401k. You roll it towards to a traditional IRA and just keep it in there.

[Jade Warshot]

Yeah. Really good question.

[Caller]

Okay.

[Rachel Cruz]

Yes. But, yep, thanks for you and your husband, too. Two tough jobs, military and teacher. So we appreciate you for sure.

[Jade Warshot]

Sure. Great. Great question. All right, next we have Drew, who's in Greenville, South Carolina. Hey, Drew.

[Caller]

Hey. How are y'? All?

[Jade Warshot]

Excellent. How can we help today?

[Caller]

Good. Well, my wife and I are on baby step two and are relocating for an upgrade in employment. And we have a house, and we're trying to sell it, and it looks like we're going to be clearing about $50,000. And I'm wondering if we should use that as a 20% down on our next house or if she. If we should just crush off the remaining debt that we have and get a pretty good jump start on baby step three by renting instead.

[George Kamel]

Wow.

[Rachel Cruz]

Plan B. I would say go ahead and pay off your debt. How much debt do you have?

[Caller]

22,000.

[Rachel Cruz]

Okay. What's it in?

[Caller]

It's in a car and just a little bit of a student Loan left.

[Rachel Cruz]

Okay. How much do you guys make a year?

[Caller]

85.

[Rachel Cruz]

Okay, great. Yes, I know. I'll be honest, Drew. I would. Yeah, I would pay off the debt, get an emergency fund, and then save at least 5% for the down payment, because what happens? And you may have felt this already, I don't know. But having no emergency fund debt, still, that you're paying these payments and owning a home, there's so much that can just go wrong. It is a way more peaceful process. It's a longer process. Process, but it's way more peaceful to have no debt, Everything's paid off. You guys have a fully funded emergency fund, and then you go and buy a home, and you're a homeowner with that under your feet. That is a much more stable position to be.

[Caller]

Awesome. Okay. That's what I figured we'd be ending up doing.

[Rachel Cruz]

Awesome. So. Great. Well, glad we affirmed it

[Jade Warshot]

for sure. Great call. We've got Christine next. Who's in Los Angeles? California. Hey, Christine. Christine.

[Caller]

Hi. How are you, ladies?

[Jade Warshot]

Excellent. How can we help out?

[Caller]

Well, I currently own a condo. I'm single or divorced anyway. And I'm just trying to decide if I should sell it or sell it in rent or keep it and just kind of, like, struggle with it a little bit. It's kind of expensive.

[Jade Warshot]

Is that the reason you're even considering it? I was going to say, is it the expense? Is it debt? Why are you even considering selling? Selling it.

[Caller]

It's a lot. It eats up a lot of my monthly income, and I. I have been paying for my daughter's expenses. She just graduated college, and so I've been, you know, paying that for the last four years, and it's put me in debt, and now I'm just like,

[Jade Warshot]

are you still paying them? Are you still paying her expenses?

[Caller]

No.

[Jade Warshot]

Okay.

[Caller]

No, I'm not.

[Rachel Cruz]

How much consumer debt do you have?

[Caller]

I have $17,000 in credit card debt yet.

[Rachel Cruz]

Okay. And is that it?

[Caller]

That's it. Okay.

[Rachel Cruz]

How much do you make a year?

[Caller]

My. My GROSS is like 123, I think, but I take home 109. That's after taxes.

[Rachel Cruz]

After taxes. Okay. And how much is your condo payment each month?

[Caller]

The payment, the mortgage and insurance is 3200.

[Rachel Cruz]

Okay.

[Caller]

And my taxes and then my HOA is 6000.

[Rachel Cruz]

Okay, so you're at like 3, 800, basically. So that's close to that. 25. Yeah. That's not. That's not wild. Do you like the condo is the only reason you want to sell it is because you have this debt because it's not a massive part of your take home pay.

[Jade Warshot]

You said you bring home 9,109. So around 9,000amonth?

[Caller]

Yeah, yeah, 9,000amonth.

[Jade Warshot]

Okay.

[Rachel Cruz]

Okay. Sorry.

[Jade Warshot]

It's a bigger, it's a bigger, yeah, bigger piece than we. Yeah. Thinking.

[Caller]

Okay.

[Jade Warshot]

I was like, yeah, I think ideal for you would be somewhere. Yeah, ideally for you would be somewhere around like 2300 or 2200 and we're creeping up to 4000.

[Caller]

Yeah.

[Jade Warshot]

Okay. Yeah, you'd feel that.

[Rachel Cruz]

Sorry. I was doing it on 12,000amonth. I know I was putting you, I, I was putting your, your gross in. My bad.

[Jade Warshot]

The debt's not the issue here. Like, I mean obviously we want you to clear out the debt, but that's not going to make a change. I don't, I don't think unless you're paying a thousand bucks a month and you feel like that would give you everything you need once the credit card debt is gone. But I don't feel like that's it. Am I wrong or am I right?

[Caller]

Well, I feel like I got into that. Well, I don't feel like it. I got into debt because I was trying to pay like fifteen hundred dollars a month towards my daughter's school and living expenses. And so it's funny, if I didn't have that, that then it would be a lot easier.

[Jade Warshot]

But you don't have that because you stopped paying those expenses. How long have you been outside of that rhythm of life?

[Caller]

She just graduated and like moved out on her own.

[Rachel Cruz]

So like two months?

[Caller]

A month? Yeah, yeah, yeah.

[Jade Warshot]

I mean, I mean if we're, I hate to be like too legalistic on this, but it really is a parameter for a reason. And so I think that you're feeling, feeling the effects of that and you were feeling it before because you were going into debt to help her. It's not like you were using cash flow money to help her. You were going in debt to do it. So I think that you're going to keep feeling that until you find a place of living that meets, meets your standard of income a little bit better. Okay, so what's, what'd you pay for the condo? Like what do you owe on it and what's it worth? Let's say that. Would you. What do you owe in what, what's it worth?

[Caller]

I owe about 485 and it's probably worth about 650.

[Jade Warshot]

Okay, so that's an easy, that's kind of a no brainer. I Think.

[Rachel Cruz]

Yep. And then that could be a great down payment. The rest after you pay off your debt and emergency funds for somewhere else. Maybe different location, but that's a little bit less.

[Jade Warshot]

That's what I would do,

[Caller]

Sam.

[George Kamel]

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

[Jade Warshot]

All right. Our Ramsey show scripture and quote of the day, Romans 8:31. What then shall we say, say in response to these things? Well, if God is for us, who can be against us then? Jen Sincero said you can have excuses or you can have success. You can't have both. Perfect for what we teach.

[Rachel Cruz]

Pretty good.

[Jade Warshot]

Love that. Alrighty, let's wrap it on up. We got Lisa, who's in Atlanta, Georgia on the line. What's up, Lisa?

[Caller]

Hi there. How are y' all today?

[Jade Warshot]

We are doing fabulous. How are you?

[Caller]

I am doing okay.

[Jade Warshot]

Well, tell us how we can help you be better than okay.

[Caller]

Alrighty. My husband recently passed.

[Rachel Cruz]

Oh, Lisa.

[Jade Warshot]

Sorry.

[Caller]

Thank you. And he did have life insurance and we both do. And we have always just had small policies that were enough to basically pay off the house because we were both gainfully employed. So basically I know that the life insurance is coming. It's, you know, we owe 100,000 on the house. It's about 200,000 in life insurance. And part of me wants to go ahead and just pay the house off and get that done. But I am close to retirement in the next two to three years and I probably won't stay here. I don't think this is going to be my retirement home. So I'm wondering if I should pay it off or if I should sit tight and wait to decide what I'm going to do first.

[Jade Warshot]

How long? Tell us again how long it's been since he's passed.

[Caller]

Under a month.

[Jade Warshot]

Yeah. For that reason, I think I'd wait. We, we tend to teach not to do anything like not to make any major financial moves after something like that. Life altering, you know, a loss like that. Just because there's just, I mean, you're in a cloud right now.

[Rachel Cruz]

You're absolutely grieving. Lisa, so, yeah, I would not, I would not make any big financial moves for nine months to a year. I would just sit and, and, and be sad and miss him. How long were you guys married for?

[Caller]

36 years.

[Rachel Cruz]

36.

[Jade Warshot]

I'm so sorry.

[Rachel Cruz]

Was it sudden, Lisa?

[Caller]

No.

[Rachel Cruz]

Okay.

[Jade Warshot]

So tough.

[Rachel Cruz]

That is, that is a. Just horrible. And so, yeah, the grief you're in. I, Yeah, I wouldn't, I wouldn't do much. Are you okay with retirement? What kind of money do you guys. Guys have?

[Caller]

We're, we're in decent shape. Not, not fabulous because we were normal for way too long. But, you know, we did kind of get it all together good and decent. I mean, you know, I've got.

[Rachel Cruz]

How much is that? How much is in retirement?

[Caller]

I've got 500. Okay, okay. In my retirement and you know, and obviously no debt and. Except the house.

[Rachel Cruz]

And how much is the house, house worth?

[Caller]

About 350.

[Rachel Cruz]

Okay, good. So. And you're going to retire, you think, in two years, is that what you said?

[Caller]

Probably about two years, yes.

[Rachel Cruz]

Okay. And where do you think you're going to go? Do you know?

[Caller]

That's what I'm debating. I may stay here, but downsize.

[Rachel Cruz]

Okay.

[Caller]

Or, you know, and move, you know, kind of move closer into town. We're kind of rural.

[Rachel Cruz]

Okay.

[Caller]

Or we, I mean, we, we've talked, we also talked about Tennessee and we talked about Florida as well, because they're cities we like in best places.

[Rachel Cruz]

Yes. Do you guys have kids?

[Caller]

No.

[Rachel Cruz]

No. Okay. Yeah. At least if I were you, if you were my mom and I was, and I was talking to you, I would just put this 200, 000 in a high yield savings account and I wouldn't touch it. And honestly, because you have an. I mean, after the year of the grief, in the next year you're going to be retiring. There's two major events happening in a pretty fast period of time of these two years. So I probably would, I wouldn't do anything. I would just stay where you are and after you retire, then you can look up and see how much you have left on the house after the two years, decide where you want to go, sell the 350. In a perfect world, you would, you would buy around that same mark so that you could add your 200 of his life inside insurance to your 500. Right. And that could be 700. That would be wonderful. Okay, so that's probably, that's what I would do. And if you go to Fairwinds Credit Union online, their whole, their customer service is amazing. And so if you don't have a bank that has a good high yield savings, I would definitely recommend them. But I would. I would probably just put that 200 in there and let it sit. Yeah. And just. And just grieve and make your next move for the next chapter of your life, Lisa, of retirement and all. So I hope that's helpful. And I'm so sorry.

[Caller]

Yeah.

[Rachel Cruz]

That's so heartbreaking.

[Jade Warshot]

Oh, thank you for trusting us with that call. That's so special. All right, we got Shane, who's in Los Angeles, California. Shane, you're up next. Shane, are you there?

[Caller]

Shane, can you hear me?

[Jade Warshot]

Yep, sure can.

[Caller]

Excellent. Great. The question for myself is, I am. Is it okay to loan my parents money? Just given the circumstances I'm in?

[Jade Warshot]

Tell us more. Tell us the circumstances you're in and tell us how much money they want you to loan them.

[Caller]

Of course they would like me to loan them $5,000. I currently rent a room from them. I pay about $200 a month. Months. And the last year I actually went through divorce. And they weren't. They didn't ask me to pay me rents. I was living free. But now that I've kind of established myself, got a job, I'm actually paying them $200 a month in rent. And they currently have a home that they're paying off. I would say they're about 70% of the way through paying it off. They actually want to buy an additional home. Home. And they're asking me to loan them $5,000 for that down payment. And. No, I've heard your conversations, your videos, and I'm kind of in a little pickle because they've helped me out so much. But you don't have any money, do you? Oh, yes, I do. I've been able to save up. So right now I have about $30,000, 22,000, my retirement, and I have 8,000. Listen, as an emergency, if they need

[Rachel Cruz]

$5,000 to buy a house, that's why they don't need to be buying a house. If they can't afford a $5,000 swing, that's not good for them. Like if we're talking about a $10,000 car and they need half the money to buy a car, that's one thing. If you can't spend five, if you don't have $5,000, that makes or breaks a deal in a house, you don't even find the house.

[Jade Warshot]

I know that's right. Plus, you are. The whole point of you being in there was to get back on Your feet. That was the whole point. Right.

[Rachel Cruz]

So yeah, yeah. What are they going to do with their current home? What's the plan? Is it to rent out the next home they're going to buy or something?

[Caller]

So they're going to be living in the current home. They, they're going to try to rent that second home.

[Rachel Cruz]

Okay.

[Caller]

So that's informed them that it's a risk because you know.

[Rachel Cruz]

Yeah.

[Caller]

It's just a lot.

[Jade Warshot]

When do you move out? When do you move out?

[Caller]

That's a great question.

[Jade Warshot]

I would just exit myself from this.

[Rachel Cruz]

From the conversation.

[Jade Warshot]

Yes sir. Exit the chats because you're getting tied up. I think cuz it's weird once you go back home you're getting tied up in the family business stuff again and it's like if you had been out in your own house with your own people, you probably wouldn't even be be a part of this conversation. But it's cuz you're at home and I get it. I respect the fact sometimes you need to reach reset. Life throws you things. I'm not, I'm not. There's no shade there. But I think now that you've told me, hey I got 30k saved. I feel like it's probably just time for you to move on.

[Caller]

Yeah.

[Rachel Cruz]

How old are you?

[Caller]

I am 24.

[Rachel Cruz]

24. Okay.

[Jade Warshot]

Yeah.

[Rachel Cruz]

I would say. I wouldn't, I would not loan my parents money. I do not think you have any obligation because they've been kind to you. They. Yeah. You're their son. They chose to bring you in. I mean it's fine like that. It is what it is. But yeah. I think the sooner you, yeah. You get on your own, Shane, I think probably the better off you're going to be if you, if you do decide against our advice to give them $5,000 of your 30,000 then give it to them. Don't have strings attached because they're going to loop you into this home and then try to pay that rent and have. You're going to be all entangled in their mess and don't do it. If you're going to do it, just give it and be done with it. But I wouldn't. I don't think that you're obligated to by any means.

[Jade Warshot]

I mean that calls back to our very first call. I think it was the day where the people had loaned family members and friends money.

[Rachel Cruz]

Yes, that's right.

[Jade Warshot]

And then they came on hard times and they needed the money back and it was like oh this is so awkward.

[Rachel Cruz]

That's exactly right.

[Jade Warshot]

So that just highlights why the principle

[Rachel Cruz]

is the bookend of the show. People don't lend your friends and family money.

[Jade Warshot]

Give them money. And if for some reason you move back home, you need to put a time limit on that mess and say it is from here to here. And here is the clear goal. Goal that I have that I'm trying to accomplish. Alrighty, then. Well, that was a great show, Rachel. And remember, guys, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of peace, Christ Jesus.