You Can’t Make the Same Money Mistakes and Get Better Outcomes

Summary

The Ramsey Show Episode Summary

Episode: You Can’t Make the Same Money Mistakes and Get Better Outcomes
Date: January 28, 2026
Hosts: George Campbell & Rachel Cruze
Podcast: The Ramsey Show (Ramsey Network)

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Episode Overview

In this episode, George Campbell and Rachel Cruze, both prominent Ramsey personalities, answer a range of listener questions about overcoming past money mistakes, building wealth, partnerships in business, debt payoff, investing for kids, real estate, and more. Drawing from their signature “baby steps” approach, the hosts reinforce the core Ramsey principles: budget with intention, avoid debt, plan for emergencies, invest wisely, and never repeat the same financial mistakes expecting a better outcome. The show blends empathetic coaching, tough love, and real-world advice for callers in all stages of their financial journeys.

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Key Discussion Points & Insights

1. Turning a Side Hustle into a Business (Paranormal Investigations)

• Caller Jake (00:58): Runs a small paranormal investigation business with his cousin and friend, earning $10-20k/year; wants to know how to scale to full time.
• Advice:
  • Don’t go full-time until side income matches/exceeds your current salary.
  • Clarity in partnership agreements (ownership, buyouts, what happens on death, divorce, etc.) is crucial to avoid relational fallout.
  • Clearly define roles and responsibilities; written agreements are vital.
  • Focus on building your client base—only level up when you have to turn down business for lack of time.
  • Don’t go into debt for equipment; grow with profit and save for business investments.
• Quote (Rachel Cruze, 04:19): “You guys need to write out very, very, very, very clearly...kind of this almost contract between you all for when the worst case happens.”
• Actionable Tip: Consider leveraging content creation (YouTube/media) to scale awareness and potential revenue.

Relevant Segment: 00:57–09:01

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2. Overcoming Financial Scams and Setting Boundaries

• Caller George (10:37): Lost ~$45k to a Ponzi scam, plus legal fees, and asks if he should keep pursuing the scammer.
• Advice:
  • After a judgment, if the person has no assets or income, more legal costs won’t likely recover lost funds.
  • Sometimes you have to emotionally write it off as the “stupid tax.”
  • Use painful lessons to fuel future financial discipline and get back on track.
• Quote (George Campbell, 13:19): “If you spend 25 grand chasing this guy down...it may be time to emotionally write this off and call it a stupid tax and move on.”

Relevant Segment: 10:37–15:55

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3. Credit Scores, Mortgages, and FICO Myths

• Caller Dominic (15:55): Wonders if a mortgage alone keeps a “good enough” credit score for his next home purchase.
• Advice:
  • Yes, history of on-time mortgage payments generally leads to a solid score.
  • No need to open new debt accounts to “build credit.”
  • Once debts are fully paid and accounts closed, the score will fade out in 6-12 months (“zero credit score”).
  • Manual underwriting is available for those with no score.
• Quote (Rachel Cruze, 19:14): “We just like to say that because it sounds cool. What’s your credit score? Zero.”

Relevant Segment: 15:55–19:32

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4. Facing Special Assessments and HOA Headaches

• Caller Tommy (22:55): Bought a house in Colorado; HOA is levying a $5,000 special assessment due to $1 million in deferred maintenance, with talk of more increases.
• Advice:
  • If you sell now, you still pay the assessment and eat selling losses (~$25k estimated).
  • Stay for at least a few more years if you like where you live; re-evaluate when more is clear.
  • Weigh housing costs, special assessments, and rising insurance against income growth/stretch.
• Quote (George Campbell, 27:12): “I don’t want to, you know, eat 25 grand to save five.”

Relevant Segment: 22:55–27:37

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5. Whole Life vs. Term Life Insurance and Self-Insuring

• Caller Mark (27:55): At 63, has a whole life policy (over $40k cash value, $160k death benefit), asks if he should cash it out.
• Advice:
  • Most whole life policies only pay out the death benefit, not the cash value, if you die.
  • At retirement age, consider if you’re already “self-insured” through savings/investments.
  • May be better to surrender the policy, invest the cash value, and skip high premiums going forward.
• Quote (George Campbell, 28:57): “You might be at a spot...just put $1,700 bucks in a savings account...you might be better off.”

Relevant Segment: 27:55–30:25

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6. Surviving a High Mortgage after Divorce

• Caller Anna (32:27): Divorced, two kids, used settlement for a home in Seattle; mortgage is 50%+ of take-home pay.
• Advice:
  • Consider holding the house for 1-2 years to build equity and avoid a loss.
  • Get serious about budgeting; cut all access to credit cards to break cycle.
  • Use this temporary discomfort as a reset and be “hardcore” about avoiding debt.
  • Utilize EveryDollar and track every expense; only sell when you can exit safely.
• Quote (Rachel Cruze, 38:42): “You’re kind of on this whole new journey, whole new chapter...it’s a new identity. So different.”

Relevant Segment: 32:27–41:38

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7. Profit Margins and the Morality of Business Pricing

• Caller Katie (43:54): Feels guilt about profit margins in family trucking business; wonders if they’re overcharging.
• Advice:
  • There’s nothing immoral about healthy (even high) profit if you’re not cheating customers and are providing value.
  • If compelled, earmark some jobs every year for reduced price or charity.
  • Profits enable generosity; don’t compromise business viability.
• Quote (George Campbell, 47:03): “Is there a moral profit margin...that’s immoral to charge?”
• Quote (Rachel Cruze, 49:19): “Could you scratch this itch...for situations you feel led to, but don’t change the whole structure.”

Relevant Segment: 43:54–51:35

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8. Borrowing from Family for Real Estate Investing

• Caller Matthew (53:13): Considers borrowing $100k from dad to buy an 8-unit property via creative financing.
• Advice:
  • Massive risk: borrowing from family, balloon payments, multi-party deals, low experience in property management.
  • Violates three Ramsey rules: don’t buy investment property with debt, don’t buy before primary home is paid off, and never borrow from family.
  • Start small with cash investments, not risky “shortcut” deals.
• Quote (Rachel Cruze, 59:13): “You tell this lady you’re a real estate investor...Ding ding ding, here’s my ticket out.”

Relevant Segment: 53:13–62:20

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9. Paying off Student Debt & Car Leases

• Caller Caitlin (64:33): At 24, new MBA grad, $50k in loans, earning only $50k/year, also has a car lease.
• Advice:
  • Income is key: consider side jobs; paying off $1k/month cuts payoff to about four years, but push to accelerate this.
  • Lease was a bad move; learn to not put yourself in a corner with “only one” (expensive) option.
• Quote (Rachel Cruze, 73:04): “When you paint yourself in a corner of having just one option, that’s usually when we make really bad financial decisions.”

Relevant Segment: 64:33–73:59

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10. Investing for Kids—529s, Brokerage, and Roth IRAs

• Caller Austin (76:29): On Baby Step 5, wants the best ways to save/invest for children; has three young daughters.
• Advice:
  • Use a mix: 529 for college (tax-advantaged, flexible, even transferable), plus a regular brokerage account in parents' name for other big life events.
  • Avoid UTMAs/UGMAs due to loss of control at 18.
  • Once kids have earned income, start a Roth IRA for them—a huge headstart.
• Quotes:
  • (George, 81:39): “I just don’t like the idea that the kids are going to have control at 18...I hope they’re wonderful, but you never know.”
  • (Rachel, 82:20): “If you have a SmartVestor Pro, they can give you a map...the difference just in case they do go to school.”

Relevant Segment: 76:29–85:27

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11. Budgeting & Dealing with Financial Uncertainty (Illness, Job Security)

• Caller Jason (86:14): Diagnosed with MS, high health insurance needs, fears job loss.
• Advice:
  • Stick with the baby steps; focus on debt payoff, bolster savings for emergencies.
  • Seek (even expensive) long-term disability insurance and pursue life insurance (but acknowledge diagnosis complications).
  • Prioritize financial margin to be ready for change; use uncertainty as motivation to become “self-insured” and debt-free.
• Quote (George Campbell, 94:02): “This is going to be your why as to why you become debt free even faster...make sure your family’s taken care of.”

Relevant Segment: 86:14–94:02

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12. Emergency Fund: Gold, Crypto, or Cash?

• Caller Natalie (95:51): Husband wants to keep the emergency fund in gold/crypto; she prefers savings.
• Advice:
  • Emergency fund should be accessible, liquid—best in a high-yield savings account, not investments or speculative assets.
  • Investing is for wealth-building, not for emergencies.
• Quote (George Campbell, 98:17): “This is way beyond just where should we put our savings. This is a fundamental disagreement on what is an investment.”

Relevant Segment: 95:51–98:38

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13. Should You Get Life Insurance While in Debt?

• Caller Marissa (98:38): On Baby Step 2, considering pausing debt payoff to afford term life insurance.
• Advice:
  • Life insurance is non-negotiable if you have dependents; cut lifestyle and get the coverage now, not later.
  • If expecting, save aggressively until baby is born and healthy, then resume debt payoff with gusto.
• Quote (George Campbell, 104:51): “Do not sit on the fence with this life insurance. Get it done today.”

Relevant Segment: 98:38–105:18

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14. Simplifying Retirement Accounts as a Married Couple

• Caller Jade (106:34): Newlywed couple, multiple accounts (pensions, 401ks, crypto, etc.), $70k windfall soon.
• Advice:
  • Use windfall to clear all consumer debt and fully fund an emergency fund.
  • Each person’s accounts remain in their name, but consolidate for convenience (with a SmartVestor Pro’s help).
  • Crypto is not “diversification” if it’s 100% of your spouse’s portfolio; mutual funds/ETFs should make up the core.
  • Be wary of overextending on housing—review mortgage against income.
• Quote (George Campbell, 111:12): “His risk meter is broken if he’s putting 100% of his investing in crypto.”

Relevant Segment: 106:34–115:57

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15. Lending Advice as a Mortgage Officer

• Caller Dave (117:04): Loan officer struggles with clients (widows) seeking mortgages when selling assets may be better.
• Advice:
  • Approach with empathy; clarify you want the home to fit their lives, not just the approval amount.
  • Share wisdom, then let clients make their choices.
• Quote (George Campbell, 118:22): “I want to make sure this house fits your life, not just your approval amount.”

Relevant Segment: 117:04–121:45

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16. How Long Should You Live “Cheap” at a Parent’s House?

• Caller Brian (121:45): 28, living in dad’s extra house in Alaska, minimal expenses, wants to know how long to keep “the good deal.”
• Advice:
  • Don’t just coast—use savings to make aggressive progress on debt and save a down payment.
  • Set a specific exit plan (e.g., age 30), get focused about financial independence.
• Quote (Rachel Cruze, 125:40): “If you could live off 40 grand, you could bank so much...not only pay off this airplane, but have six figures saved up by end of year.”

Relevant Segment: 121:50–126:04

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Notable Quotes (with Timestamps)

• “You guys need to write out very, very, very, very clearly...almost a contract between you all for when the worst case happens.”
  — Rachel Cruze (04:19)
• “If you spend 25 grand chasing this guy down...it may be time to emotionally write this off and call it a stupid tax and move on.”
  — George Campbell (13:19)
• “Zero credit score. What’s your credit score? Zero. That’s the real flex.”
  — George Campbell & Rachel Cruze (19:14)
• “I don’t want to, you know, eat 25 grand to save five.”
  — George Campbell (27:12)
• “You might be at a spot...put $1,700 bucks in a savings account...you might be better off.”
  — George Campbell (28:57)
• “You’re kind of on this whole new journey, whole new chapter...it’s a new identity. So different.”
  — Rachel Cruze (38:42)
• “Is there a moral profit margin...that’s immoral to charge?”
  — George Campbell (47:03)
• “You tell this lady you’re a real estate investor...Ding ding ding, here’s my ticket out.”
  — Rachel Cruze (59:13)
• “When you paint yourself in a corner of having just one option, that’s usually when we make really bad financial decisions.”
  — Rachel Cruze (73:04)
• “This is going to be your why as to why you become debt free even faster...make sure your family’s taken care of.”
  — George Campbell (94:02)
• “This is way beyond just where should we put our savings. This is a fundamental disagreement on what is an investment.”
  — George Campbell (98:17)
• “Do not sit on the fence with this life insurance. Get it done today.”
  — George Campbell (104:51)
• “His risk meter is broken if he’s putting 100% of his investing in crypto.”
  — George Campbell (111:12)
• “I want to make sure this house fits your life, not just your approval amount.”
  — George Campbell (118:22)

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Key Takeaways

• You cannot fix past money mistakes by repeating them—only radically different behavior brings new results.
• Clarity and written agreements are vital in both partnerships and marriages.
• The emotional toll of money mistakes can be heavier than the financial one—“stupid tax” can be a powerful motivator.
• A budget is your most powerful tool for freedom—even more important when you’re in crisis or change.
• Don’t worry about having a credit score—worry about your real-life financial margin and liquidity.
• Avoid debt, especially for investments or from family—take the slow, steady route to wealth.
• Don’t sacrifice your peace or marriage for questionable investments or excessive risk.
• Generosity as a business owner is great—but it must operate within a solid, profit-generating framework.
• Have a concrete plan and timeline for leveraging “cheap” housing (e.g., living with parents) toward independence, not complacency.

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For more information, visit: RamseySolutions.com

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Timestamps for Main Segments

• 00:57–09:01 – Side Hustle/Partnerships
• 10:37–15:55 – Scam Recovery/Stupid Tax
• 15:55–19:32 – Credit Score & Mortgages
• 22:55–27:37 – HOA/Special Assessments
• 27:55–30:25 – Whole Life vs. Term Life
• 32:27–41:38 – Mortgage & Single Parent
• 43:54–51:35 – Business Ethics & Pricing
• 53:13–62:20 – Investing via Family Loans
• 64:33–73:59 – Early Career/Student Debt
• 76:29–85:27 – Investing for Kids/529s
• 86:14–94:02 – Illness & Uncertainty
• 95:51–98:38 – Emergency Fund: Cash vs. Crypto
• 98:38–105:18 – Life Insurance While in Debt
• 106:34–115:57 – Retirement Consolidation
• 117:04–121:45 – Mortgage Advice Ethics
• 121:50–126:04 – Living Cheap with Parents

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The Ramsey Show continues to help millions avoid common pitfalls and build a financially solid future—by learning, forgiving themselves, and courageously making different choices.

Transcript

[Sponsor/Announcer]

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

[George Campbell]

Normal is broke and common sense is weird. So we are here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union studio, this is the Ramsey Show. I'm George Campbell joined by best selling author Rachel Cruz and co host of another show we do together, Smart money Happy hour on Ramsey Network. The number to call is 888-255-2225. And I'd be remiss not to mention this, this crazy winter storm that has hit our area, Nashville very hard. So thinking and praying for all of those that have been affected by this.

[Rachel Cruze]

For sure a lot without power.

[George Campbell]

We made it here through the ice to provide this show. It's what America needs right now, I guess. Rachel, here we are. Jake is going to kick us off in Detroit. Jake, welcome to the Ramsey Show.

[Caller]

How's it going?

[George Campbell]

Great. How are you? How can we help?

[Caller]

So me, my cousin and our friend, we started a company and we do like paranormal investigations and things like that.

[George Campbell]

Paranormal investigation? We're talking ghosts.

[Caller]

Yes.

[George Campbell]

Okay, wait, what? Real life Ghostbuster?

[Caller]

Yes. So give you like a base of what we do. We kind of just like one of people's homes and confirm that there's a presence there.

[Rachel Cruze]

Shut. So how do you do this, Jake?

[Caller]

So it's a number of things. It depends on, you know, where we're at, you know what, what kind of person we're dealing with. As in like we know what the spirit is. Because sometimes you get understood the basics of what you know, you know what paranormal investigating was built on. Opposed all the fancy equipment. We do have a bunch of equipment.

[Rachel Cruze]

But it depends on like detects like orbs and stuff.

[Caller]

Yeah, so I know about, I've done.

[Rachel Cruze]

I've done a ghost tour in my.

[George Campbell]

You called on the right day. Rachel is all. She's about to pay you.

[Rachel Cruze]

Okay, sorry, sorry.

[George Campbell]

This is, this is a business you started with your cousin?

[Caller]

Yeah, my cousin and then our friend.

[George Campbell]

Okay, so three of you, when did you start the business?

[Caller]

We started the business in August of 25.

[George Campbell]

Okay. And how much have you guys made from this business so far?

[Caller]

So based on what we're looking at, we're looking at between 10 and $20,000 a year.

[George Campbell]

Between the three of you, that's going to be split.

[Caller]

Yeah.

[George Campbell]

Okay.

[Caller]

Now my question is, is that, is there a possibility? Obviously we can't do a full time off of $20,000 a year even if it was just one of us. So my question is, number One, is it possible for me to do this full time? And number two, if it is, what are the steps to making this a full time thing?

[George Campbell]

Okay, so let's talk about it. Regardless of what the business or hobby is, let's talk through this, how to do this wisely. We always tell people, you want to get the boat close to the dock, meaning we want this business to be generating enough income to where you clearly can go, hey, if I did this 40 hours a week and we scaled up, I, I could definitely replace my income, if not get a raise. So what are you making now?

[Caller]

Right now, your full time job? My full time job. Around $60,000 a year for you.

[George Campbell]

So let's say the business, you were like, hey, we can see a path where this could make 180k this year after expenses. We could, we'd pay ourselves 180k, 60 grand each to make this work. Would you all go all in on it?

[Caller]

No. Absolutely.

[George Campbell]

Okay.

[Rachel Cruze]

Okay. So with the partnership side, Jake, so that's, that's the money side. And I will say their partnerships can be very difficult. And the fact that you guys have three people who are going to have ownership in this company, you guys need to write out very, very, very, very clearly kind of this almost contract between you all when the worst case happens. Because for a lot of people in partnerships, the worst case happens and that', Addictions, affairs, divorces. I mean, you go, death. Yes.

[George Campbell]

Someone dies, someone wants out and they want to buy out, you got to buy out their share. Now how does that work?

[Rachel Cruze]

All of it? So you got to go through like, in like a lot of detail, think of like crazy situations and say, hey, if this plays out, here's what this looks like for us. And you want to be very upfront and very clear and to know that you and I hate to be Debbie Downer about partnerships, but when you go into something like this and you say, hey, we're going to commit so much time and energy into it, and I'm doing this with a family member and a good friend, there's a chance that that relationship doesn't survive if something happens to the business.

[George Campbell]

Because here's what happens. Likely one of you is going to be working harder, or at least think you're working harder than the other ones. And so then there's resentment. You go, well, I feel like I should get 50%, you guys should get 25 each. Because I'm handling all the business, I'm doing all the sales. And so that's where you guys need to get Very clear on what the roles are, what the boundary lines are between your kras, your key results areas. And so if you do it that way, this could be a fun hobby that turns into something. What's your current game plan? Like, how do you get customers?

[Caller]

So it's really word of mouth. And we have social media, but it's not really, you know, social media or. Social media isn't really big or anything, but it's really word of mouth. So if we, like, we did an investigation at pretty big barbecue restaurant near us, and that got us a few other people. Now, as for what you were saying with the. With people having, you know, written out roles. So I am the. I consider myself the lead. That's just how it is. So. But most of the time, I am scheduling. I am, you know, finding new customers if possible. I, you know, looking for anything new.

[George Campbell]

So you're like customer acquisition, new business.

[Caller]

Yeah.

[George Campbell]

Okay. Yeah. What about the other two?

[Caller]

My cousin, she is the merchandise person.

[George Campbell]

We got merch already.

[Caller]

What was that?

[George Campbell]

You got merch? Like T shirts and hats. What are we talking?

[Caller]

So Holly, we go to, like, a third party place where they create it, and we don't buy anything. They just. They sell it and we get a.

[George Campbell]

Little bit like a drop ship situation. Okay.

[Caller]

Yeah.

[George Campbell]

All right. And then third person, the friend.

[Caller]

Yeah, he's the equipment tech. So what he does is if he wants to be taking you, first of all, if anybody asks questions, he's the guy to ask.

[George Campbell]

He's like the expert. Yeah.

[Rachel Cruze]

So without him, this whole business kind of dissolves.

[Caller]

Well, I mean, all of us know all about the equipment. It's just I have him making. Having him answer all the questions because basically to keep the world off of myself and my cousin. So him and I know all about the equipment. My cousin still knows about it, but she doesn't, you know.

[Rachel Cruze]

Gotcha.

[George Campbell]

Okay.

[Caller]

But basically what his job is is, number one, to explain the equipment to people if they ask questions. Number two is that if you want. If he finds a new piece of equipment, his job is to learn as much about that piece of equipment as possible, bring it to the company, and say, here, here's this. It cost us amount of money. It can do this, this and this and this. You know, he should be. I think we should buy it, and then we have a discussion about it.

[George Campbell]

Okay. Most important question. Have you guys found any paranormal activity?

[Caller]

Oh, yeah.

[George Campbell]

And then what happens? Do you get, like a reward? You get paid the same amount whether you find something or not?

[Caller]

Yeah. So basically, how I work is it's kind of like, you know, a money back guarantee. So if you go in here, and so we recharge anywhere between $80 to $110 to $160 per. Per house, depending on, you know, what we're looking at, what the dangers are.

[George Campbell]

You said $160 on the high end. Yeah. I think you guys need to up your prices, man. This is serious work. If you want to scale it, you need to look at all the factors here and you need to get enough people in the pipeline where you can go, hey, if we did this full time, we can make this work to.

[Rachel Cruze]

The point that you're having to turn people down because you don't have time for it.

[George Campbell]

That's how you know this is gonna work. But for now, leave it as a hobby. Continue to try to grow it. I would start a YouTube channel and really make this a media company.

[Rachel Cruze]

That's a good point. And it's been what, six months they said since August.

[George Campbell]

August of 25. So yeah, we're talking six months still early on.

[Rachel Cruze]

So. Yep. I would just take your time. Don't rush into anything and don't go into debt for this equipment. Save up and pay ca.

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[George Campbell]

10% off up to a $250 value. See store for details. George is up next in Newark, New Jersey. George, welcome to the show. Are you with us?

[Caller]

Thank you. Thank you.

[Sponsor/Announcer]

Sorry about that.

[George Campbell]

Oh, absolutely, yes. What's going on?

[Caller]

How's it going, guys? Rocking and rolling. First off, you guys are awesome. I've been working with you all for maybe like going on two years about to be debt free this year and everything like that. Working with the smartvestor pro in Maryland.

[Rachel Cruze]

Oh, good. Amazing.

[Caller]

I had a quick question for you. Hopefully this is your area expertise. If not, then hopefully you got me in the right direction. I. Before I was working with you all, you know, I was ignorant to a lot of stuff. So I got mixed up back in maybe 2016 with a guy from my gym. Long story short, he was running the LLCO supposedly, and I was investing into a high interest savings account. So basically I got scammed. Long story short, he got me for 38 grand.

[Rachel Cruze]

Oh, no.

[Caller]

And then I hired lawyers. Lawyers and everything like that. So all in all, I was out maybe like 40. About 45 grand.

[Rachel Cruze]

Oh my gosh, George.

[George Campbell]

Awful.

[Rachel Cruze]

So sorry. Was it like a Ponzi scheme kind of thing or like a. Like. Or he would take your money and invest, you know, put it somewhere else, thinking he would make a difference, and then he ended up not. And lost all your money?

[Caller]

Exactly.

[Rachel Cruze]

Oh, man.

[Caller]

So I, you know, again, this is before I met you guys. I wish I would have met you guys sooner, but that's done. So it's kind of a thorn in my side because I'm trying to figure out whether I should continue going after him because I already went to court, we already got the judgment, he didn't show up and everything like that. You know, he got served and everything. But the thing is, you know, I had to learn about the law because the judgment is just basically right now. Because he got rid of all the. Yeah, exactly.

[George Campbell]

If he doesn't have assets, doesn't have income, you can garnish. There's not much they can do.

[Caller]

That's basically what I wanted.

[George Campbell]

When you say you've been chasing for four years, who has actually been the person trying to track him down and. And get him to pay?

[Caller]

I hired a debt collection company. And then at first it was, you know, it was free and everything like that because, you know, they would, you know, if they get paid, I get paid kind of. Kind of deal. But then after maybe like a year or two, then they want. They asked me if I wanted to like increase some. Some kind of excuse they gave me. And it was like another two grand or whatever. I think to push that forward because this is during the pandemic, so to push like paperwork for it. And so that added to the money that I'm out. And I wanted to see if you guys think I should just count it as a loss or just, you know, because without assets, you know, now that I know that it's just.

[George Campbell]

Yeah, that's my fear. If you spend 25 grand chasing this guy down and then it turns out you don't get a dime from him, well, now you just lost another 25 grand, so it may be time to emotionally write this off and call it a stupid tax and move on.

[Caller]

Yeah.

[George Campbell]

If it's been four years. I mean, this is. This is weighing on you. It's living rent free in your head. And I think it's time to move on.

[Caller]

Oh, yeah.

[George Campbell]

People do all kinds of dumb moves and lose 40 grand. You know, I went in 40 grand in consumer debt back in the day. And so I'm going to chalk it up to a life lesson that was hard to learn and never let it happen again.

[Caller]

Got you. Okay, I figured that.

[George Campbell]

I'm so sorry, man.

[Rachel Cruze]

Sorry, George.

[George Campbell]

I'm like. Like when I. I'm like a dog who's like, I want to.

[Rachel Cruze]

I want to get this guy on justice.

[George Campbell]

I want to go full John Wick, man, you know, point.

[Rachel Cruze]

And it was $38,000. You know, it's not 3, 800. Like, that's a lot of money. It's a lot of money. But the crazy thing is, is I do think once you emotionally kind of just get over it, right? You detach and you're like, okay, I am moving on. You start to really, really see what you can do and what you have the power to do, as you're experiencing now on baby step two, George, like, you're getting yourself out of debt. Like, that money will come back, right? Like, you will be able to turn all this around, but it's just emotionally to let it go, which sucks.

[George Campbell]

Sorry you're dealing with that. Maybe this will get you debt free faster. If you allocate all of your energy and focus and resources towards that, I think you'll feel a whole lot better. And it'll be a fun story you share with your kids one day when you're a multi millionaire.

[Caller]

Okay. Okay. Yeah.

[George Campbell]

Best of luck, my friend. Oh, that's brutal, Rachel. That reminds me. When I got scammed long ago, fraud happened. People opened up AT&T accounts, Verizon accounts under my name, Social Security number, past address.

[Rachel Cruze]

Horrible.

[George Campbell]

Racked up 1700 bucks on both accounts, never paid a dime. And so I had to deal with that. And luckily I had Xander ID theft. And so they stepped in and helped clean this mess up. But I found who the people were. Cause I was a sleuth.

[Rachel Cruze]

You found who it was. Like the individuals.

[George Campbell]

Yeah. And I really wanted to Go full, you know, wishbone on the case and go, I'm gonna investigate. I'm gonna bring them to justice. And then I just, I'm like, what am I doing? What am I doing?

[Rachel Cruze]

Just Nancy Drew.

[George Campbell]

I don't know how dangerous these women are.

[Rachel Cruze]

Yeah. Was it women?

[George Campbell]

It was two women.

[Rachel Cruze]

No way. Still have their names here, like in America.

[George Campbell]

They're in Boston. In the Boston area. I lived in Tennessee at the time, but they opened these accounts up in Boston. So, yeah, there you go. I'm not going to, I'm going to. I'll leave that for future investigations. But goodness gracious, it's hard. It's a hard pill to swallow when it happens. All right, Dominic is in South Bend up next. Dominic, welcome to the show.

[Caller]

Thank you.

[George Campbell]

What's going on?

[Caller]

So I've heard you guys speak about zero credit score and buying houses with manual underwriting. I purchased a home years before hearing about you, so having zero credit score when buying my next one won't be an option.

[George Campbell]

Sure. You have a credit score now due to your mortgage payment.

[Caller]

Correct. Is that alone going to be enough to maintain a good enough score or what's the.

[George Campbell]

Have you made your mortgage payments on time?

[Caller]

Yeah. That's great.

[George Campbell]

You likely have a great score. So there's no need to open up new credit accounts and credit cards to try to increase it. When you go to get another mortgage, they're just gonna look at yours and go, okay, is your debt to income ratio good? Do you have a history of on time payments and they'll grant you that? So unless you, have you checked your credit score, is it in the tank or is it solid?

[Caller]

No, it's solid. I just, I wasn't sure if just a mortgage alone would be enough in the future.

[George Campbell]

Yes.

[Caller]

Or if they needed more history.

[George Campbell]

No, you'll be good. And if you ever have questions about it, you can always contact, you know, Churchill Mortgage and they can walk you through what they actually look for. But your this, the score is the score. That's what they're looking for. And so they're not going to say, well, you don't have enough types of debt. That's all factored into your score. And so if your score is solid, you're going to be fine. And once you pay off the mortgage, then six to 12 months after that your credit score will disappear again.

[Caller]

Okay.

[George Campbell]

Until go back through that process. But you're on, you're on the path, man. Good for you. How long until you pay off the house?

[Caller]

I don't think I'LL pay it off.

[George Campbell]

Not with that attitude, Dominic. What's left on the mortgage?

[Caller]

First home. I still owe 160 on it.

[Rachel Cruze]

Okay, because you're saying you'll probably move homes, move houses.

[Caller]

Yeah.

[Rachel Cruze]

Gotcha. Yeah.

[George Campbell]

Okay.

[Rachel Cruze]

Yeah, I know. That's it. But it's a good question because we do talk about people not having to worship at the altar of, you know, the credit.

[George Campbell]

The.

[Rachel Cruze]

The FICO score. The credit score, because you can actually get a house called, you know, through manual underwriting. But if you have a bad credit score and you go and apply for a mortgage, they're going to pull your credit score regardless.

[George Campbell]

That will hurt you.

[Rachel Cruze]

Yes. If you have one that's undetermined, then you can do manual underwriting. But if you have a bad credit score, when you go and get a mortgage and as you're getting out of debt, George, for a lot of people, consumer debt, your score will lower as you. You know what I mean? Like, as you're starting to get out.

[George Campbell]

That's how stupid the credit score game is. You're like, wait, I'm things. I'm knocking out debt. And they're like, yeah, but we don't like that.

[Rachel Cruze]

I know.

[George Campbell]

We'd rather you keep it around, pay it perfectly.

[Rachel Cruze]

Yeah. So on baby step two, you guys, if you're paying off your debt and then you try to go and get a mortgage which is not part of the, you know, that's baby step 3B. But if you try to do it earlier and they pull your credit score, it may not be great because you're paying off your debt, your consumer debt.

[George Campbell]

But very few people, and they hear, they always go, well, what about once I'm out of debt? I'm like, well, then you still need to save up your emergency fund and then still save up your down payment. And so you're talking potentially years of not having a score, which is fine. So your credit score will not be in the tank. And as long as you actually close all accounts.

[Rachel Cruze]

Yes.

[George Campbell]

If you still have any accounts open or you still have a credit card open, that will show up on your credit report and keep your credit score alive. And so make sure when you pull that credit report, nothing is active. And then six to 12 months later. There's no real exact timeline, but that's what I've experienced and many that I've talked to, your credit score just becomes indeterminable. It doesn't actually go to zero.

[Rachel Cruze]

Yeah, it's not actually technically a zero credit score.

[George Campbell]

We just like to say that because it Sounds cool.

[Rachel Cruze]

It's fun.

[George Campbell]

Zero. What's your credit score? Zero.

[Rachel Cruze]

Zero. I don't have one.

[George Campbell]

That's the real flex. And that's honestly they operated back in the day, like in our parents day. The credit score has only existed since the 90s. So before then you're like, well, how do people get homes? Well, they looked at your actual tax return. You had a relationship with the bank and they looked at your income and savings.

[Rachel Cruze]

I went okay, your other bills, what you pay on time, what you know, if you're a trustworthy borrower that they can lend money to. Like they looked at you as a person, which is what manual underwriting does anyway.

[George Campbell]

So instead of the computers going good credit score, give them a loan. And so it's really not that difficult. I've done it myself. I'm alive to tell the tale. So it's worth pursuing to become completely debt free and then do it the right way. If you're waking up tired every morning, you don't need more caffeine. You need better rest. And that's why Casper mattresses are engineered to help you sleep deeper and wake up refreshed. And this isn't just one George's opinion. Thousands of 5 star reviews prove it. Plus Casper mattresses ship free and come with a hundred night trial. So you've got nothing to lose. Sleep is a must and you deserve the best. So go to Casper.com Ramsey and use promo code Ramsey for 25 off mattresses and 10% off everything else. That gives you up to 1200 bucks off the Snowmax mattress which is the exact one I sleep on every night. That's Casper.com Ramsey code Ramsey exclusions apply. Well, you guys asked and we listened. The live like no one else cruise is back by popular demand. This is your moment to celebrate your debt freedom with Dave Ramsey and all of us Ramsey personalities in the western Caribbean. Worst places to be right about now.

[Rachel Cruze]

And look what I brought today.

[George Campbell]

Didn't even mean to live like no one else Tumblr.

[Rachel Cruze]

This is the tumbler we all got from the cruise.

[George Campbell]

Yeah. So tropical.

[Rachel Cruze]

Huge.

[George Campbell]

Take me back.

[Rachel Cruze]

I know. Look at all these leaves. See?

[George Campbell]

So that was like a swag drop. I think we did in some of the rooms.

[Sponsor/Announcer]

All the rooms.

[Rachel Cruze]

You get fun surprises on this cruise, guys.

[George Campbell]

So much swag.

[Rachel Cruze]

So great.

[George Campbell]

So come share your story with Dave. Swap jokes with me, sing karaoke with Jade. I don't know what Rachel's going to be doing. Maybe shopping. Shop with Rachel at some of the crews, get some accoutrements. And souvenirs. And if this is for a specific person, this is not for everyone. It's for people who are on baby step four or higher. Meaning you've paid off your debt. You have the emergency fund. We want to celebrate that Progress. Join us March 14th through the 21st, 2027. You've got time to budget and save. You can get your deposit locked in and right now you can save up to 300 bucks. This week only. When you book by February 1st, cabins are limited and you can lock in your spot with a $600 deposit. Click the link in the show notes or go to ramseysolutions.com events if you want to learn more.

[Rachel Cruze]

And George, the cruisers that went back last year, they got this email about a month ago.

[George Campbell]

We gave them first dibs.

[Rachel Cruze]

There is some spots filling up because a lot of them are coming back, which is so fun. So you need to. Yes, if you want your cabin, do it. And a lot of people didn't know we did the cruise until after. They're like, I wish we had known. I wish we had known. So you know, now you know it's happening.

[George Campbell]

If you've heard our voice, you know, there we go. Join us. It's gonna be a good time. Tommy is in Colorado up next. Tommy, welcome to the Ramsey Show.

[Caller]

Hey, thank you guys. How are you guys doing?

[George Campbell]

We're doing great. What's your question today?

[Caller]

Hey, so I me, my wife just bought a house in August and turns out that the HOA has about a million dollars in deferred maintenance. Their solution is to do a $5,000 special assessment and then hopefully increase dues going forward. We're wondering if it's a good idea to stay or maybe try and cut our losses and get out of this situation.

[George Campbell]

Wow, that's pretty aggressive over a one time $5,000 fee. What do you know that we don't?

[Caller]

The couple things is the total amount to get back to zero would be a $20,000 fee.

[George Campbell]

Okay. So there might be more assessments in the future.

[Caller]

There might be more in the future. And then we live in a high fire zone, high fire danger community in 50 year old houses. We lost our HOA coverage this year and we are being covered by excess insurance and we're expecting that to probably go up to almost 75 cents of every dollar that comes in Purdue's.

[Rachel Cruze]

Was this disclosed to you, Tommy, when you guys bought? Because you just when did you say you bought? Just like in August.

[Caller]

Would you say in, in August?

[Rachel Cruze]

Yeah, yeah, yeah, yeah.

[Caller]

There was nothing to Disclose at best. We maybe could have dug into the documents and found it, but yeah. Is not in very good shape.

[George Campbell]

Well, do you like where you live right now, aside from these fees?

[Caller]

We really like the house, but yeah, we're just concerned about the money. It was mentioned that the hoa, if this does not pass, which it's a community vote, we could head towards bankruptcy as a community.

[George Campbell]

Yikes. Okay, what's the HO fee now, monthly and what will it go up to?

[Caller]

300, $340 a month and then there's no consensus about the raises would be. The documents are extremely limited to 3% a year, but that's not enough to keep up.

[George Campbell]

Okay, well, the bad news is you got to pay this 5,000 assessment no matter what. Even if you sell, it's going to come out, and so you're not going to get out of that. So what you're really asking is, is it worth it to live here long term knowing it's going to get more expensive to live here?

[Caller]

Yes.

[Rachel Cruze]

Yeah. What's the, what's your mortgage payment percentage wise to the income you guys bring home?

[Caller]

Just shy of 30%.

[Rachel Cruze]

Just shy. Okay. Okay. And because these dues, you know, the HOA and insurance and all that, we kind of wrap into our 20% rule of. Of what your percentage should be from a mortgage standpoint to income. So I'm wondering, as these start to notch up, if, you know, if you start to get to be, yeah, over 30%, 35%. I mean, all of that, then there gets to a point that you can't afford to live there anymore. Right. But I feel like that would take a lot in order for that to continue to raise.

[Caller]

I just factored in just the mortgage. If I were to factor everything else in, it would be closer to 40%. Currently, with the HOA insurance, is there.

[George Campbell]

Room for your incomes to grow?

[Caller]

There is.

[George Campbell]

Okay. I would hold off. Personally, I don't think this is like, we got to get out right now. I would hold off. Since you enjoy where you live. This is just a part of living in society, unfortunately. And HOAs get a lot of hate for a valid reason. And assessments are part of the annoyance. You're like, I already pay so much to live here. Now you're just going to throw five. It's like the Mafia. It's like, give us five grand or else, and you have no way out of it. And so long term, if you see the writing on the wall, if three years from now your income hasn't gone up and yet all of Your dues keep going up, the assessments keep showing up. That could be a sign, hey, it's time to move. But the longer you wait, the better off you are, ROI wise on this purchase of the home. The sooner you sell, the more of a loss you're going to take because you got to pay realtor fees, and you probably don't have much appreciation at this point. So this could be a way more than a $5,000 loss just to get out.

[Caller]

Yeah. Now we were estimating 25,000 loss to get out.

[George Campbell]

Yeah. So I don't want to, you know, eat 25 grand to save five.

[Rachel Cruze]

And I think you're going to know a lot in 12 months right after. After a year, I just. I think that a lot will kind of shake out and you guys will kind of see where you're at. And then to your point, George, you could look up, you know, and say, okay, let's stick it out for another year. Let's see where our incomes are at that point, see what the HOA is doing, you know, and you can make. You can make the call. Yeah. In three years or so. But I probably wouldn't go any less than three just because of everything attached to it, fee wise.

[George Campbell]

And if you want to live in a non HOA community, you're gonna have to go probably further out, and it may not be a home that you love. And so this is a trade off of living where you want to live. HOAs are everywhere. All right, Mark is in Sacramento up next. Mark, welcome to the show. How can we help?

[Caller]

Yeah, I told your screener I'm just about. I'll be 63 next month. And I got a whole term. Whole life insurance.

[George Campbell]

Okay.

[Caller]

That I've been paying into. Oh, God. Since before I was 30. Oh, wow.

[George Campbell]

You made someone very wealthy.

[Caller]

My brother's the one that signed me up for it.

[George Campbell]

That hurts.

[Caller]

Even more business anymore. Yeah, so. So my cash value is up well over $40,000. The policy itself only pays out 160.

[George Campbell]

Yeah.

[Caller]

And I'm married. My wife is 64. You know, she's obviously the beneficiary. And from what I understand from listening to your show that should I pass away, my wife will get the 160. And all the cash value is just.

[George Campbell]

Goes to the insurance company.

[Rachel Cruze]

Yeah. It's horrible.

[George Campbell]

Yep. In most policies, that's how it's structured, which is insane. I'm with you. At 63, you might have a hard time getting term life in place now, but it's worth looking into and to see you know it's going to be expensive, but your whole life policy is also very expensive. What are you paying per month?

[Caller]

Oh God. It went up this year like over 200 bucks. I'm in. 1700 bucks a year.

[George Campbell]

Oh my goodness.

[Caller]

Yeah.

[George Campbell]

How much do you guys have in retirement? Are you self insured to where if you didn't have this policy in place, your wife would be okay if something happened?

[Caller]

Me and my wife, not including our house, are at about 1.2 million.

[George Campbell]

Okay. You might be at a spot and you can consult with a, you know, financial advisor to see, hey, is this worth keeping around? Because if you just put 1700 bucks in a savings account, you might be better off than continuing to pay this with 160k payout.

[Caller]

Well, that's what I'm, you know. Or, or what about taking out the cash value?

[George Campbell]

Yeah, I mean, that's another option. You, you surrender the policy, take the cash value, invest that plus your 1700 bucks a month, you'll probably be better off. You'll get to 160 pretty fast. As long as you're still with us. And I hope.

[Caller]

Okay, that's my question.

[George Campbell]

I would run the numbers. This might be something you keep around for now until you're very sure that if something were to happen, you are self insured. But 1.2 million based on your expenses, you might go. Yeah, we can easily drop this and get this money out of here and.

[Rachel Cruze]

Invest that with what we already have.

[George Campbell]

Yeah, exactly. 1700 bucks on top of your 40k. That'll add up fast, my friend. And I'm so sorry that your brother hosed you into this. I don't know what your relationship is.

[Rachel Cruze]

Like 30 years ago. 30 years ago.

[George Campbell]

It's all water under the bridge. Foreign. Hey guys, George here. Listen, just because it's 2026 now doesn't mean 2025's ideas all go away. Some things are timeless. Like if you want to win with money, it's still the same playbook budget like your money depends on it. Avoid debt like $10 lattes and build wealth on purpose. But here's the truth almost nobody tells you. Most banks make money when you lose yours. They want you swiping, overdrafting and racking up fees because that's how they stay rich while you stay broke. And that's why I tell people to go with Fairwinds Credit Union instead. They actually want you to win with money and become debt free. And their smart bundle gives you a no fee checking account, a high yield savings account, and my favorite the new Ramsey branded debit card that says debt is normal, be weird right on the front. It's not just a piece of plastic with your money attached. It is a declaration. It says you're not buying the lie anymore. You're taking control of your money for real. So this year, forget the gimmicks from the big banks, forget so called rewards that keep you broke. And instead partner with a credit union that actually backs you working the baby steps. Go to Fairwinds.org Ramsey to get started. That's Fairwinds.org Ramsey insured by the NCUA. Anna is up next in Seattle. Anna, welcome to the show.

[Caller]

Hi. Thank you.

[George Campbell]

What's going on?

[Caller]

Okay, so I bought a house in August briefly. I'm a divorced single mom. I have two kids. I basically used my divorce settlement to buy this house. I put a big down payment and even now I am struggling with having a pretty high mortgage payment with my, with my income. And I, I don't think it's sustainable. And I'm sort of going back and forth on, you know, what is the best decision. If it wasn't, you know, it's done now, but what could I do to kind of help myself move forward? I bought a house and I thought I would have some money left over, but I had to pay off my car in escrow and that added an extra like $18,000 in order for me to get my debt to income ratio low enough to be approved.

[George Campbell]

So does that increase the amount of mortgage you needed, which increased the payment?

[Caller]

Mm, yeah. Yeah.

[George Campbell]

So tell us the ratios. What is your mortgage payment and what is your after tax monthly income?

[Caller]

My mortgage is 3880. So you can just, I don't know, 30, 38.90. Let's say that that includes all of the homeowners insurance and. Insurance and property tax.

So they, they put it in there.

So yeah. So 30, 38, 3800 and my net pay is 6220. Oh, yeah, I mean I, I make 103,000, but I live in Seattle and it's very expensive.

[George Campbell]

So we're talking 2/3 of your take home is going toward the mortgage and that's not leaving a whole lot left to live and put food on the table, let alone accomplish any financial goals.

[Rachel Cruze]

Are you getting child support at all, Anna?

[Caller]

Yeah, I get, I get, I get 850amonth for two kids.

[Rachel Cruze]

Okay.

[George Campbell]

And that's on top of your 6200?

[Caller]

Yeah, that's on top.

[George Campbell]

All right, that helps a little bit.

[Rachel Cruze]

Yeah. We can count that. Yeah, we kind of count all income coming even in, even if it is child support or alimony.

[George Campbell]

So it gets you to like 55%. Now does that include the take home pay? Are you, do you have any deductions coming out like health care premiums, 401k?

[Caller]

I pay my health care. I, my kids health care are on their dads and I pay, I have to help pay for that. My, my deductions are just the typical.

Taxes, just tax stuff.

[George Campbell]

Okay.

[Caller]

I do, I do contribute to 401k.

[George Campbell]

How much? 1% I believe.

[Caller]

I think I meet my company match. I think it's 4%.

[George Campbell]

Okay. So you're likely investing. If you make 100k, we're talking four grand. And so you wouldn't include that for the 25% parameter which also helps your number. So now we're down to like 50 ish percent which is not great but at least we're kind of. We can see the forest from the trees here. Is there room for your income to grow?

[Caller]

There's a little bit. I mean I don't, I wouldn't say anytime soon.

[George Campbell]

Okay.

[Caller]

No.

[George Campbell]

When did you buy this house?

[Caller]

Like the line of work I'm in. I bought it in August.

[George Campbell]

Okay. It's only been half a year.

[Rachel Cruze]

Yeah, it's similar to, to our last callers, six months. Because there's not going to be a ton of equity.

[Caller]

I mean it's, I already, well, I mean I don't know how accurate you know, looking at Renfin Etc is but I mean there is, there is already equity in the house.

[George Campbell]

You know, what would you get if you sold after, you know, net of fees and all that?

[Caller]

I mean I don't, I don't, I haven't calculated the fees but I bought it for 7:30 and it's, I mean it says it's worth between 820 and nine something.

[George Campbell]

Yeah, I'd be shocked. In six months.

[Rachel Cruze]

I was gonna say 150 grand. Zillow's always Zillow and Redfin. They're not always accurate.

[George Campbell]

I know.

[Rachel Cruze]

Yeah. So what you could do, Anna, just to gather information as you're thinking about this because it is a big enough question financially for you is to get a realtor and have them just pull some comps in the area and just see. I mean, you know, maybe it's gone up a little bit. I mean I don't know. But after you factor in maybe a little bit of equity, but then all the fees and the realtor fees and all that when you sell the commissions, like once you factor it all in you, you may end up losing money if you end up selling. Right. So there might be a reason to hold it and to stay in it for maybe two years or so. And it's going to be uncomfortable because it is eating up so much, but at least to get some equity back in so that you can make a better long term decision. Because it probably was. I mean, I would feel like if I went through something like that and having kids, you want a place to land, you want something that you're like, okay, this is our home. We're building this new life. Right. And so like I could see it almost being an emotional decision and not always factoring in like, okay, what is this actually gonna feel like in real life? So I don't fault you for that. It makes sense. But we also want to get you into a place where you can start building walls and you have some breathing room. Cause you know, going through a divorce might that, that's in of itself extremely stressful. And then you put on top of a financial strain which so many single moms, I mean, you are in the boat with so many people, which is so hard. It's so hard. So heartbreaking having to raise these two kids too, along with everything.

[George Campbell]

Have you done a monthly budget to see how much is actually left over or if you're going into the red each month?

[Caller]

I mean, I'm working on it. I mean a big part of why I got divorced was because of my financial incompetence. Because of yours, because of mine.

[Rachel Cruze]

So what went on there? Just not keeping up with details. Spending whatever you want. What does that look like?

[Caller]

Yeah, like hidden debt, you know, I'm working on it. I'm actually in a DA program which is helping.

[Rachel Cruze]

Good.

[Caller]

So I was completely out of debt and now I have debt again. Home costs are, you know, obviously because I kind of living outside my means. But I don't. I do know some places I can tighten. I do have kind of a side job.

I teach classes.

And I can.

[George Campbell]

Have you cut off all access to debt. Have you frozen your credit.

[Caller]

I don't use my, I don't use my credit cards. I mean, the other question I had is I do own my car and my car's worth, I would say $18,000. But I could easily it feel, you know, sell it and then get a car that is, you know, combat good for my kids and for me and for commuting. But. And you, I wouldn't do it.

[George Campbell]

You're not going to free up a down payment. And then you're going to downgrade in car. And you might have, you know, eight grand, but that doesn't solve that mortgage problem.

[Rachel Cruze]

Yeah. Your car's not the issue at this point.

[George Campbell]

So I would, I would hang on, like Rachel said, for, you know, two years and then see where you're at. Nothing is like, you're not going to miss a mortgage payment. You're just sort of skating by right now in survival mode, and it is going to be uncomfortable. And that's where the budget is really going to help you. Because now whatever's left over after that mortgage payment comes out, you have to be very intentional with. And that's where a budgeting app, like every dollar will help. So I'll, we'll make that our gift to you to help you figure all this out. And when you fill out that everydollar budget, you'll list your income for the month, include the child support, and then below will be all of your expenses.

[Rachel Cruze]

Yep. Yes. Stay on the line. And Christian will pick up. And George, I vote that Anna cuts up all of her credit cards tonight.

[George Campbell]

Absolutely. You said you don't use them, but you still have them.

[Rachel Cruze]

I think, I think you just cut it off at the source since you know it's an issue. Right. Just in general, it's been just cut off at the source. And listen, if you hate it, I promise they'll let you back in.

[Caller]

I don't.

[Rachel Cruze]

You can get another one.

[Caller]

Yeah, I only have, I only have one. And I paid, I pay a lot off.

[George Campbell]

One is all it takes every month. I'll tell you that. You can still do some damage.

[Rachel Cruze]

I'm not kidding, though. I would cut it up and actually use a debit card. Force yourself to use your money. Because there is something. Even if you pay it off every month, there's something about in the moment, taking care of groceries, your. Whatever it is, when you pay it, it's done. There's not a bill coming. And it actually factors in psychologically and you end up actually spending less when that's the case. And so I would try to. Anna, you're kind of on this whole new journey, this whole new chapter, this whole new life. Right. And so it's a new identity. So different.

[George Campbell]

You're the kind of person who doesn't swipe the credit card, who uses her.

[Rachel Cruze]

Own money because she doesn't have one. Right. Because she cut it up.

[George Campbell]

I love it. I love that challenge, too.

[Caller]

I, I, I should. Sorry, I can't. I go back. Let me go back. I, I have one credit card I cut off every month. My other credit card, I don't use it. I had a, I opened it because I used it for moving fees, et cetera, you know, some new things in the house and I have to get some appliances and it had a zero percent.

[Rachel Cruze]

Well, I would cut it up, pay it off and close the account. And I want you to try no debt, Anna, like hardcore. And it's extreme. This is extreme in our world today. But be so hardcore with it and be so extreme and do it for six months and see how you feel. Because I'm telling you, there is a freedom there. You don't even realize the burden you're carrying. So if you keep doing what you've been doing, you're gonna keep getting what you've been getting. So do something so extremely different with your money and see the. If you missed open enrollment, don't panic. Most health plans lock you out for the year if you didn't sign up by December. But Christian Healthcare Ministries lets you join anytime. CHM offers a simple, flexible and budget friendly alternative to health insurance. And you can join anytime. That's right. No open enrollment deadlines. CHM is perfect if you're self employed, starting a business or in between jobs because it gives you options without those out of control COBRA costs. And CHM isn't insurance. It's a community of believers coming together to share medical bills and pray for one another. That's real peace of mind. You're not just sharing costs, you are sharing community. And families have trusted CHM since 1981 with billions of dollars in medical bills shared. You can see any doctor or hospital you want with no network restrictions. And members say that they and save hundreds of dollars a month compared to traditional insurance. So make a change that fits your budget and your values. Check out chministries.orgbudget to learn more. That's chministries.orgbudget.

[George Campbell]

Welcome back. Welcome back to the Ramsey show in the Fairwinds Credit Union studio. I'm George Camel, joined by Ramsey personality Rachel Cruze. We're taking Your calls at 888-825-5225. Katie is in South Carolina. Up next. Katie, what's going on?

[Caller]

Hey, thank you guys so much for taking my call. I hope y' all are well.

[George Campbell]

We are. What's going on with you today? How can we help?

[Caller]

So, I mean, I might sound crazy for saying this, but I just can't shake the feeling that we're charging A little bit too. And I guess I'm looking for a way to justify my guilt or, you know, try and figure out how to process, you know, how fast do we want to grow and how should we scale our company?

[George Campbell]

Okay, so we. Is this your husband?

[Caller]

Yeah, my husband started this business before we got married, and I kind of joined him after that. We've been in business for about 11 years.

[George Campbell]

Cool. What kind of business is it?

[Caller]

It's a trucking company, so we do some hauling.

[George Campbell]

Wow, that business has really taken off, hasn't it?

[Caller]

Yeah.

[George Campbell]

What do you guys bring in a year?

[Caller]

So last year we brought in 290,000 sales. And then after, you know, paying everyone and expenses, we profited about 120,000.

[George Campbell]

And that's as a household. So that's your household income for the year.

[Caller]

So that's not the household income. Most of that stayed in the business. That was just what the business profited. We paid ourselves about 50,000.

Oh, wow.

[George Campbell]

Wow. And that's together. That's total. That came to you guys. Wow. All right.

[Rachel Cruze]

Yep.

[Caller]

Correct.

[George Campbell]

So where did this price hike come into play and why?

[Caller]

Yeah, so we. Our pricing is very simple. We just match what the competition is around us. We don't have a lot of competitors, and, you know, we're one of the few people that do our specific type of hauling in our area. So we really have just always kind of matched what market price is. But I'm kind of looking at case by case, job by job, and realizing that the range of profit we have on each job is super wide. So sometimes it's a small amount of profit, but a lot of the time it's quite large. So I'm just kind of. When I brought up the idea of restructuring how we do our pricing and taking it from super simple to trying to be a little bit more specific so we can afford to help some people that usually say, oh, no, you're too expensive. Of, well, you know, if we were willing to make 40% profit on that job instead of 60, maybe that person would have said yes, because.

[Rachel Cruze]

Do you feel like you need more business? Do you feel like you need more business?

[Caller]

Well, so our work is very seasonal. The demand in season is so high we can't keep up with it. But then during the off season, it's not really a thing. So we, you know, we obviously slow down a lot, and that's. We're blessed that, you know, able to work very full time overtime six months out of the year is enough for us to live off. And then the Rest of the time we can work on side gigs or spending more time with family, which is great. So yes and no. We definitely don't need more work. We can't handle it in the summer. But the idea is obviously to grow so we can do even more during the summer, if that makes sense.

[Sponsor/Announcer]

Got it.

[George Campbell]

So is there a moral profit margin in your mind that is like anything above this, it's immoral to charge?

[Caller]

Well, I don't have a specific number. It's more the concept of, you know, is it. Is that even a valid question?

[George Campbell]

Well, I mean, if you look at prices is his reasoning. Hey, everything's gone up. Everything costs us more fuel, insurance, maintenance, tires, labor, permanents, like that's all gone up. And so it's not like he's tripling the cost just for fun. And you guys are bringing home 50 grand household.

[Rachel Cruze]

And it's a specific type of service that you said there's not a lot of competition. And so you have high demand. Yeah.

[George Campbell]

I mean, and not a lot of supply, which means you can charge more. And it's not like you're hurting anybody. They're happily paying you for this service that they can't do themselves.

[Caller]

Yes. The more I say it out loud, the more I know I'm kind of making my husband sound like a superstar in business. But, you know, I just always back to. I always go back to the few cases where people have asked us for help and you know, we give them our price and they're like, oh, you know, that's way over budget. And in my head I'm saying, I really know I could have helped this person out. I could have met their needs and I chose not to because I wanted to keep that profit high.

[Rachel Cruze]

Yeah, I hear you. So I wonder if. Because even here at Ramsey, for instance, we give stuff away a lot, whether it's tickets to a live event, books and some stuff. It's very nice coaching, one on one coaching that will pay for people's sessions. We will have life with an open hand, business wise. But we're only able to do that because we are making a profit on the other end that is feeding a thousand people that work here and their families and all of it. Right. So. So there, there is room to be. If there is room to be generous. I would talk to your husband about that and say, hey, you know, and I hate to. This sounds so like legalistic and I don't mean to be this like for formulaic about it, but I don't know. Okay. I'm just Thinking like four different situations, you know, throughout the summer when you guys are in high demand and people are like, we need you, but I can't afford that pricing. You know, are there four times that you can say and you guys agree on that? Like, hey, I just feel something in my spirit that I'm supposed, that I'm supposed to extend some grace to them and help them.

[Caller]

Yeah.

[Rachel Cruze]

And so that way you're at least in the practice of doing that when you feel led. But it's not changing the whole structure of the company because I don't feel like you guys are doing something wrong or immoral, to George's point. And you know, you're, you guys are bringing home 50k a year out of the store.

[George Campbell]

We're far from being greedy here.

[Rachel Cruze]

Yeah, yeah, yeah. It's not like you're making 5 million and you're like, oh my gosh, I feel like we're overcharging everyone.

[George Campbell]

Most of your customers are making more than you. And so that's the other thing to think about here is you guys also need to put food on the table and you have financial goals and there's nothing wrong or immoral about making money. Have you screwed anyone over? Have you lied? Have you cheated?

[Caller]

Right. No. Yeah, absolutely not.

[George Campbell]

And so it's okay to say, this is what our service is worth and we're gonna charge it. And if you can't afford it, that's not a slight on them. It's just saying, hey, you need to go somewhere else that you can afford. And so I can't get everything that I want. There's things that I can't afford and I don't expect that business to go well. Can you just bring the budget down for me? This is not a charity. If you want to start a charity, go for it. You can open a non profit and do all kinds of charitable giving.

[Rachel Cruze]

Yeah. But I wonder, could she kind of like scratch this itch a little bit within minutes? Right.

[George Campbell]

I like your idea of saying, hey, there's going to be a customer that comes our way that I just, my heart grieves for them and I want to help them. And that's totally great to say. We want to be generous to this many customers a year. Or when it comes up, we're going to give some people a break. But I don't think you also need to go, well, whatever your budget is, we'll try to meet that. Because that's how you go out of business. Yeah.

[Rachel Cruze]

I mean, any industry, Katie, there's going to Be people that can't afford. You know what I mean? I'm like, I just think, I don't know why I thought social media, I'm like people that need help with social media, there's people that do that as a job that charge insane money because they're really good at it or people that are starting out and don't charge much and you couldn't afford the high end. That's okay. It's a service they provide. And just cause they charge a lot doesn't make them a bad person. It means they're probably really good at their job or they found this niche area of life which is what you guys have done. So nothing bad, but I would say lean into when you can. And it's not the whole business model, but if there's moments to say, hey, I want to be generous, in this instance, you and your husband get on the same page with that and maybe that'll kind of help free up your spirit some in that generosity.

[George Campbell]

Think about it this way. If you guys charge more and you make more, that gives you the freedom to be more generous when the time comes without it being a loss for you. And so I, I think there's nothing wrong with that. And listen, if you charge too much, you'll go out of business eventually. And so you'll know when the price is right, when you have the right amount of supply and demand happening. And so I'm, I don't think anyone's right or wrong here. I think we need to meet in the middle and understand you want to be generous and he needs to pay the bills. Both of you are right. Tax season is coming up fast, which means a lot of you are paying more attention to your money and maybe realizing the holiday damage. So if you're trying to clean up the budget and start the year strong, cutting your phone bill is an easy win. With Boost Mobile, keep the phone you love and pay just 25 bucks a month for unlimited data. Talk and text forever. No contracts, no traps. Just predictable savings that help you stay in control. Switch [e-mail] Rent Ramsey. Restrictions apply. See website for details. Matthew is in Denver. Up next. Matthew, welcome to the show.

[Caller]

Hey, thanks for taking my call. How are you all doing this afternoon?

[George Campbell]

We're doing great. How can Rachel and I help?

[Caller]

So I just, I was going to get some advice. My wife and I are looking taking a $100,000 loan from my father to buy an eight unit rental property and I just kind of wanted to see what you guys thought based on the details of the property and everything else.

[Rachel Cruze]

Yeah, let's hear it. Because not super excited about this as of now taking out a loan, but from your father in law. But yeah. Give me your numbers. What are you thinking?

[Caller]

Okay, so I got a $900,000 property with 3% interest owner finance. And so it's going to be $100,000 of my money. $100,000 loan from my dad. And then the owner is willing to do $100,000 of in kind money is what she calls it. And, and that includes repairs and improvements on the property for a period of 10 years. And then she's also willing to mentor my wife and I for two years, the first two years that we own the home. And then at the end of the 10 years it's going to be a balloon payment. And I know this kind of goes against a lot of the Dave Ramsey, I guess, principles, but I wanted to see what you guys brought cause I think it might be a good opportunity for us to kind of get a business and start moving that way.

[George Campbell]

Do you guys own a home currently, a primary home?

[Caller]

Yes, we do own a home currently and we have no debts or payments at all besides that house.

[George Campbell]

Oh, besides the house, what's left on that mortgage?

[Caller]

190,000.

[George Campbell]

Okay. And what's your household income?

[Caller]

We make around 135,000 and there's a lot of room for growth there. Cool.

[George Campbell]

How did this idea come up of the 8 unit and then your dad loaning you the money? Who brought it up?

[Caller]

So we met this woman at a graduation and we, we had owned a single family home, investment property. And we got to talking to her and she and I kind of told her that we're real estate investors. And she's like, oh, well, I got a deal for you. My husband and I are trying to get out of this property because her husband is, is pretty sick and they're just trying to move down to Arizona. And so that's kind of how this got brought up. And then she is the one that's kind of structured this deal.

[Rachel Cruze]

Sounds like it.

[George Campbell]

So she knows your dad and was like, well, if he ponies up 100, you pony up 100, we can make.

[Rachel Cruze]

This work and I'll mentor you for two years.

[Caller]

Yes.

[Rachel Cruze]

From Arizona.

[Caller]

Yeah, she's kind of curtail related to my wife. Not by blood or anything, but Matthew.

[Rachel Cruze]

I just see 85 ways this could go sideways. It's not worth it. It's not. I mean from the way the loan structured with the balloon happening in 10 years all this borrowing from family, going into a $900,000 investment property that you don't have the money for, you got. I mean, do you. How much do you all have saved? How much cash do you and your wife have?

[Caller]

So I have $100,000 for the down, and then we have about $250,000 in the markets right now.

[Rachel Cruze]

Okay, why don't you. Why do you have to borrow money from your dad? Take your money out if you're going to do the deal. I wouldn't do the deal. But don't. Don't borrow money from your dad. You have $350,000.

[Caller]

Okay. Got it. And I don't know, I guess my thought is if I could keep it in the markets and make 10%, whereas I could pay my dad back 10% on the money that he loans the company.

[George Campbell]

I mean, you're needing the stars to align with this. You need eight tenants who pay on time with no risk there. You need to pay dad back. You need to make money in the markets. There are so many variables here that could go wrong.

[Rachel Cruze]

All this just 10 tanks, you're screwed. Right? If the market tanks, you're screwed.

[Caller]

Yeah.

[Rachel Cruze]

You can't find renters, you're screwed. If the market goes down. As Dave always says, if, If Trump burps and the market, you know, he.

[George Campbell]

Was like, we're going to invade Greenland. The stock market got spooked.

[Rachel Cruze]

That's right. Yeah.

[George Campbell]

And so you just don't know?

[Rachel Cruze]

Well, I mean, yeah.

[George Campbell]

But here, here's the parameters that are.

[Rachel Cruze]

Under the house, Matthew.

[George Campbell]

Yeah. The underlying principles are we never recommend you buy investment property until your primary home is paid off. Number two, we never recommend you borrow to invest in a rental property, always recommend paying cash. And number three, we always tell people, never borrow money from family. And so there's a lot of principles here that are being violated, all for the sake of a quote, unquote, good opportunity.

[Rachel Cruze]

And can I. I'm going to say this, Matthew, and I don't want it to be rude, but you guys had one single residential investment property, correct? You and your wife.

[Caller]

That is correct.

[Rachel Cruze]

And you tell this lady that you, your, your, your real estate investors, which I guess technically you are, you have one investment property. And I think she saw. Ding, ding, ding. Here's my ticket out. I got to get out of this horrible situation I'm in because my husband's sick. And again, I don't think it's like ill will on her end. I just think she thought, oh, my gosh, here's A guy who's probably doing all these, like, deals that you see on TikTok and he's, he's got eight VRBOs and here. You know what I mean? And he'll do it, I bet, I bet. I bet I could offer him this and we'll, we'll structure the loan where it works for him so I can get out of here. That's what she saw. I mean, honestly, she didn't list it. She didn't go and go to some, you know, investment firm that has, you know, 18 different investors around the country that go and buy property. You know, I mean, like. No, no, she found you and your wife and you thought you hit the. Hit a great deal and you hit a horrible deal.

[George Campbell]

Deal.

[Rachel Cruze]

Not good. Not good.

[Caller]

Okay. Okay. Thank you. I appreciate the advice.

[George Campbell]

Not what you wanted to hear. I know, but.

[Rachel Cruze]

Sorry, Matthew. So listen, what you and your wife did, though, with. I would pay off your house, but I, I'm all about. I think, I think having investment properties is amazing. My husband and I do, my family. I mean, I think it's. I think it is great. You just have to start slow. Like, the first one Winston and I got, this was, gosh, probably 10 years ago. It was a short sale condo in this, like, kind of like sketchy part of Nashville. But it's what we did. But we got a deal. We saved up, you know, we. We bought it for really not a lot. Had to go do a lot of work in it. We sold it probably, gosh, seven years later when Nashville was on. And it was amazing. I was like, this is great, right? Like, you have to start slow, start small. Don't start with a million dollar eight unit property because you're about to take on all those people. Like, that's gonna be. Be a huge headache. Like, get some things under your belt, start small, and then start to work your way up, which is not as flashy, not as exciting, but it is peace. That is a peaceful way to do this and not create chaos because you guys are setting yourself up from chaos and maybe to ruin a relationship with your dad if this goes bad too.

[George Campbell]

I've rarely seen it where they go. Yeah, borrowed money from dad. It worked out perfectly. Paid him back and he was happy. I was happy. Happy. Usually it becomes, well, dad wants a piece of the pie now. He wants his money back because he needs to retire.

[Rachel Cruze]

That's it. Yes.

[George Campbell]

Which means I need to sell the property. Oh, and he wants appreciation, and so he wants that too. On top of his hundred thousand. On top of Interest and it just always ruins.

[Rachel Cruze]

Yeah. Or he gets, and he needs 100 grand back, you know, and I don't know, there's just a, there's a lot, a lot of things.

[George Campbell]

So I would, I would hold off and just go slow and, and it's.

[Rachel Cruze]

Not exciting, I want to know. But it's worth it.

[George Campbell]

What is the 250 invested for? What is that earmark for?

[Caller]

What do you, what exactly do you mean by like what am I saving that for?

[George Campbell]

Yeah, you said you had 250,000 in the markets. I'm guessing that's not a retirement just in a brokerage account.

[Caller]

Yes, it's a mix of IRAs and then just the personal brokerage account. And that's just saving for retirement is kind of what I've been doing and kind of learning to trade it on my own and with the help from a financial investor and stuff.

[George Campbell]

Oh, okay. I was going to say if you have liquid money that is really earmarked for nothing and you want to take it and throw it at the house, the non retirement portion, you could do that and speed up the process. Free up a mortgage payment and then you can stack cash fast.

[Rachel Cruze]

And you guys are amazing savers. So then, yeah, stack up some cash and get 300 grand here. You know, like save that over the next five years or whatever your income is and then go buy a rental property with cash and that's it. You know what I mean? Like you can, you can do this slow walk in it, but do it in the right order. Pay off the house if you have the money. I would pay off your primary home. And the key is just stay away.

[George Campbell]

From this is reducing risk. And right now we're just adding more and more and more risk. And your first real investment property to be a $900,000 eight unit just feels like we're biting off a lot here.

[Rachel Cruze]

Yes.

[George Campbell]

I mean for the purposes of helping this woman move right. With her ailing husband. Yeah.

[Rachel Cruze]

I mean eight different families, eight different, different situation. I mean that's a part time job right there of what you just signed up for as a landlord. So there's not passive income. It's a lot of work. A lot of work.

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[George Campbell]

We are. We are headed to Detroit next to talk to Caitlin. What's going on? Caitlin?

[Caller]

Hi. How are you guys? I grew up listening to you guys, so it's amazing. I'm here.

[George Campbell]

That's fantastic. How old are you now? You grew up? I mean, this is a long time.

[Caller]

Yeah, my dad used to have you guys on the radio. I used to do the, you know, putting every dollar in the individual envelope. But I'm 24, so.

[Rachel Cruze]

Nice. So great. Well, thanks for calling in.

[Caller]

Yeah, of course. So my question is, I just graduated with my master's. It took me five years, and I ended up getting most of it covered with volleyball scholarships. But Now I have $50,000 in student loans, and I ended up getting a job out of college that pays 50,000, which obviously it's a lot less. I mean, it's more like three grand every month. So. So I'm just calling in to kind of see how I should attack that and what I should be doing, you know, in the future to kind of get these loans paid off as soon as possible.

[Rachel Cruze]

Yeah, that's a great question, Caitlin. Are you living at home or where are you? What's your living situation?

[Caller]

Yeah, so my living situation, I pay 1,251 for my rent.

[Rachel Cruze]

Okay.

[Caller]

And it doesn't include utilities. I just moved in. So I don't know exactly how much my utilities are going to be, but I have it kind of confused. Conservative at like, you know, like 150, hopefully.

[Rachel Cruze]

Yes. And you said you're bringing home 3,000?

[Caller]

Yes, 3,000 every month.

[Rachel Cruze]

3,000. Do you see your income going up? I know you just started, but I'm just thinking, you know, your, your rent is close to 50% of your take home pay, so it's eating up a lot of your income. So just to be able to pay these loans off faster, I would want your income up. So from either, either if it's from your primary job job, or you're probably going to be taking a second job. Caitlyn, I hate to say it but, but right now in life that's what I would do. And I, I, whether you're waiting tables or doing whatever you can at night after your job, a few nights a week can make a big difference.

[George Campbell]

Yeah, that could be a thousand bucks a month. You can just throw all of that at your student loans.

[Caller]

100%. Yeah. And that's kind of been where I, because I'm very, obviously, I went to business school, I'm very like entrepreneur, like kind of minded. But it's a little hard right now because I feel like I'm just, you know, looking at a million different things to do and again, trying to like center myself on what should I actually be focusing on to potentially, you know, start a brand or you know, bring in some extra cash or something like that.

[George Campbell]

Yeah, well your focus right now is just solely knocking out that debt because getting rid of that will give you the flexibility to actually pursue those things and not be a hindrance. Because right now you need that financial foundation of no time debt and an emergency fund. Then we can start building toward this business. So what did you get your master's in?

[Caller]

So I got a master's. It was an mba. So just in business administration.

[George Campbell]

Okay. And what are you doing right now for work? What kind of work is it?

[Caller]

Finance.

[George Campbell]

Okay. So there's probably a lot of room for growth in the finance world.

[Rachel Cruze]

I'm hoping that MBA pays off, right. That it puts you more marketable. I mean seriously though, because some people are getting jobs out of College at 50 grand without an MBA.

[Caller]

Yes. And I definitely understand that and I also hope it does as well. And I got my undergrad in marketing, so it's kind of a big switch to go into finance. So I was kind of willing to take a lower paying job in order to kind of get my, you know.

[Rachel Cruze]

Foot in the door or whatever up.

[Caller]

Yeah, exactly.

[Rachel Cruze]

Gotcha. Yeah. So I think, yeah, if there is something that you could start on the side that doesn't cost a lot, that's going to bring in more than waiting tables or you know, delivering, you know, food or whatever the, whatever the side gig is that you are gonna have. If you find a way to make more doing something else, that's great. We actually do find that you tend to make more in your skill set. Like if you have a specific skill, you know, even if it's like helping coach volleyball or not coach, but even like do personalized sessions like with girls at the local high school, like parents will pay big bucks, you know, when it comes to sports. So I'm like, if there's, if there's kind of a little niche there there that you could make more doing there and be able to charge more than. Again, if you're just waiting tables or something. But yeah, I would be getting an extra job or two and I would try to bring in. I mean, if you could cut this in half, like, right, because if it was $1,000 a month that went towards this debt, that's 50 months, that's over four years. And we want that cut in half. Like, could you bring in two grand a month? Right. Extra beyond your job. And if your primary job, job, you know, you get a raise maybe in six months or a year, like that extra raise goes straight to pay this debt off. Like everything is so tunnel visioned towards paying off this debt. Because just like George said, when you don't have. When you don't have debt and then you have some savings in the bank that's going to give you so much flexibility in what you get to do in life. I mean, the options and the freedom you have.

[Caller]

Okay, that makes sense.

Thank you.

[George Campbell]

Do you have any other debt outside of student loans?

[Caller]

I don't. I only have. Well, I do. I have 2000 for a medical thing that just happened, but I'm kind of waiting right now on the insurance to see if that's going to be covered, but that's about it.

[George Campbell]

Okay. No car loan, no credit card debt.

[Caller]

I have, I'm leasing a car. But.

[George Campbell]

Caitlin, Caitlin, I thought you said you've been listening.

[Rachel Cruze]

You grew up with us. Caitlin, how many times have you heard.

[George Campbell]

Dave say it's the most, most expensive way to operate a vehicle?

[Caller]

I know.

[George Campbell]

And he calls it a fleece. It even has its own nickname.

[Caller]

Yes.

[George Campbell]

What car is this? Tell me exactly the make, model and year of this vehicle.

[Caller]

So it's a Chevy. It's a Chevy LT20, 25. And the reason why I leased it was because I was. I had my full car paid off and everything, and then it completely broke down. And it wasn't fixable, it was very old. So I was kind of in between work at that time and I, you know, all My friends are on spring break. I didn't have anybody to take me. There was no Ubers. So I had to make a very, you know, quick call. And that, in opinion, felt like the best thing to do because I didn't have any money saved for another car. And Ubers were. I mean, like I said, we didn't have Ubers where I was going to school. So that's like. I know. I talked to the dealer about potentially, you know, getting.

[George Campbell]

There's no getting out of a lease. I mean, you're gonna find someone to take it over or have the full amount in order to buy it out, which is.

[Caller]

Payment is only. It's $400. So it's. It's not good, but it's not, you.

[George Campbell]

Know, that's a lot of money out of your 3,000 take home pay. I mean, what's the balance?

[Rachel Cruze]

And you don't get to keep the car at the end, you know.

[Caller]

Yeah, that's what.

[Rachel Cruze]

No, but this is a good. This is a good lesson, Caitlin, because I want you. Well, I want you to know that it wasn't a great decision. Like, do you look at it now and like, oh, man, I probably. Like, if anything, I could have taken a $5,000 loan out from the bank and at least gotten a $5,000 car and pay that off soon. Right? Like, there's. There are. Again, we wouldn't have endorsed that. But there are other things that you could have done in the situation. And when you get painted, this is true for anyone into a corner and you feel like this is my only option. That's usually when we make really bad financial decisions. And some people do that with a car situation. Some people do that with a house. They go and buy a house, you know, a house, and they're like, oh, my gosh, I feel like it was the only thing. It's the only house we could have bought or, you know, or the school or college. It's the only college. I had to do it. I didn't have the money, so I had to take out the loans. It was the only way, like when you paint yourself in a corner of having just one option, usually debt is going to end up having to be the solution. And so I do. From from here on out, I would love for you to start thinking of, like, okay, I'm not going to be pinned in a corner. I'm going to think about options A, B, C and D. And I'm going to look at, okay, here are all my options. A bad option, good option, uncomfortable option. Oh, this is a really easy option in the moment. Probably not great long term. You know, you look at all the benefits. But when you have multiple options in life and you force yourself to have multiple options because there are, there always are, you make better decisions. So just remember that going forward. Caitlin, if I was 24, I wish someone had told me that because sometimes I don't make great ones.

[Caller]

Yeah, no, thank you. That's so nice. Thank you.

[George Campbell]

These are expensive lessons to learn now, but I'm telling you, at 24, if you figure this stuff out, you knock out this dead fast. Fast. From 26 or 27 onward, you are going to build so much wealth and have the ability to be an entrepreneur. But the problem with entrepreneurs is their risk meter tends to be broken. And so they're willing to take quote, unquote risks for a quote unquote opportunities, which usually means leveraging a whole bunch of debt, hoping it all works out. And unfortunately, we take the calls from the entrepreneurs who say, my business failed and apparently they still want me to pay back these SBA loans. I know they don't just forgive them just because the business failed. And so doing it with less risk is always going to give you the best ability to survive.

[Rachel Cruze]

Yeah, you're such a go getter, Caitlin. Just steer all that energy in the right direction financially and you're gonna do incredible. But you gotta reign that in and keep listening to us and actually listen this time.

[George Campbell]

Don't just hear us listen.

[Rachel Cruze]

You're awesome. Thanks for calling.

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[George Campbell]

Buying or selling your home is a big deal, and you want an expert in your corner fighting for you to find the best deal for the right price. And the Ramsey Trusted program is the only way to find a top agent you can trust who will help make your home a blessing, not a burden. It's easy. You compare agent profiles, interview them, and choose the right one to work with. You can find a local Ramsey Trusted Real estate pro for [e-mail] agent or click the link in the description if you're listening. Listening on YouTube or podcast. Austin joins us up next in Knoxville. What's going on, Austin?

[Caller]

Hey, Rachel and George.

[George Campbell]

How are you today? Doing great. What's going on with you? Good.

[Caller]

Living the dream, of course.

[George Campbell]

Love to hear it.

[Caller]

So my wife and I, we started the Ramsey plan a few years back and just started chipping away at it, kind of dive into that deficit. And we, you know, we've since had a family. We chipped away at it and snowballed our debt and got to baby step number five. And so with the three kids, they're getting to the point where we're getting a little nervous because we don't have anything for them. Saved, dedicated just to them. So we were looking at different ways to get the ball rolling. And once you kind of get into that and open those doors, there's a lot of different options. Looking at ESAs, looking at 529, you know, Roth IRAs. And then even within those, there's different layers for each one of those buckets. And there's a lot of variables in the equation. So and everybody has obviously the unsolicited advice because we have three daughters. So once they see an all, you better start saving for college or for weddings and all this stuff. And so I guess the fear is, you know, we want to do something, but we don't want to make a decision now that our girls might pay for later on. Right. So how old are we? Nine, seven and five.

[George Campbell]

Okay, nice. So we've got a decent timeline here until college, adulthood, weddings. And so the A1 is college and maybe a car if you're going to help with that. And so there's a few ways you can invest. I love the 529 plans are a great option for college saving ESA also. But there's more limitations to that as far as your contributions. And then you can invest outside of that. And so you can do that in a brokerage account in your name. That's personally how I like it because you retain control. What scares me about some of these investment accounts for kids is they get control no matter what when they turn, you know, 18 in most states. And so you give a guy, kid, compound growth, it's 100 something thousand dollars. If I'm 18, I'm going to blow.

[Rachel Cruze]

You're like, hey, this is, this should be for a down payment for your future home or your wedding. And they're like, I'm going to girl.

[George Campbell]

I'm buying a Lamborghini.

[Rachel Cruze]

Your girls will probably never do that, Austin. But to George's point, it is. You never know. Yeah, yeah, that's right. That's right. There is less control when it comes to that. And at 18, yeah, that's a lot to give depending on, you know, how much you have saved. So. Yeah, so the 529 is a great starting point for the, the, for the college fund. That's what we're, that's what my husband and I are doing. Our kids are very similar ages. They're 8, 10 and 5 or 6 now. Gosh, 8, 10, time flies. So, yeah, we do five. We have five 29s for, for each of them. And then we've just kind of created an account in general. I think it's even just like a, an index fund, honestly, that we just throw money in each month that we kind of save and it's kind of earmarked kind of for them in the future. So whatever that looks like to be able to help them, you know, and what they need, weddings and. Yeah, I mean all, all that kind of stuff that just gets so expensive and depending on when it hits, you know, it could all be at once too. You never know. So that's kind of what we look at the options.

[Caller]

With a 529. I know there's the custodial option, right. Where we have more control as the parents versus them. At the same time, if they don't go into secondary education, they want to do something else or they get, you know, full rides to wherever. I know there's options there for that money. But if you make, you know, the unqualified withdrawal, we're paying a pen penalty. There's just, there's a disadvantages when we start to look at it on, yes, there can be.

[Rachel Cruze]

So the good thing is it grows tax free, which is great. And then if you get a scholarship and grant, you can actually pull money out with These?

[George Campbell]

Yeah, pull it against the scholarship. So if you get a $10,000 scholarship, that's $10,000 you could pull out of the 529. And on top of that, with the new Secure Act 2.0, you can roll over up to 35 grand into a Roth IRA for them. And so there are more options. And I'd rather you have them money and not need it than not have it. And now they're turning to student loans and parent plus loans.

[Caller]

Sure.

[George Campbell]

That's the reality for most people. They go, well, I don't want to invest because what if we don't use it and then they don't do anything. And so if I'm you, I'm going to open a 529 plan for each kid and then open a brokerage account in my name like Rachel said, and just put money in there and that becomes the future. Gift money, wedding money, whatever.

[Rachel Cruze]

Yeah. And in their name, Austin. My parents did this when, with Roth IRAs, once they start working, like when we start when we were teenagers and we actually filed taxes under our name.

[George Campbell]

Once they've earned earned income.

[Rachel Cruze]

They have earned income. Then you can open up a Roth IRA in that. Yes, in their name. And, and what's wild is my Roth, which I'm trying to think, when mom and dad opened that for me, I think I was probably 15. It's when I started working at.

[George Campbell]

I thought you'd be like 4 years old. Like, well, Rachel's off.

[Sponsor/Announcer]

Yeah.

[Rachel Cruze]

No, no, no, no, no. They, they did it the right, the legal way. I really did go earn an income. But they, and I think they even helped fund it. I mean, honestly, like, because it wasn't a lot of money, but as long.

[George Campbell]

As you earn that level, they can fund it. So if you made seven grand that, that year, they can, they can do.

[Rachel Cruze]

Their own seven grand. Yes, exactly. In it. So. Yeah, it wasn't a ton. Yeah, it was definitely not even seven grand. But what's crazy is starting that at 15 versus my husband started one after we got married and just, you know, just a 10 year period, like the difference in the compound interest, it's pretty wild. So you could do that later too, for the girls. As you're thinking about this, I have a feeling you're gonna have a lot of options, but. Yeah, but you're not a big fan of the utmas, right, George?

[George Campbell]

No, I just don't like the idea that the kids are going to have control at 18 because I just don't know what they're going to Turn. I hope they're wonderful, sweet children. And they're going to be like, we want to give it to the old folks home, but there's a chance they blow it. Prodigal son style. So I like retaining control personally. So I would do both. 529 plan and the brokerage account really hedges your bets. And it's okay to not be fair, you know what I mean? The 9 year old should have more dumped in than the 5 year old because they have 4 extra years of saving and compound growth on their side. So it's okay.

[Caller]

There's more of a lump sum to start versus a higher percentage. Percentage or both.

[George Campbell]

You have the money. I mean, if you've got ten grand just sitting burning a hole in your pocket, you can front load that 529.

[Rachel Cruze]

And what's wild too, Austin, is you. We did this with our, our Smartvestor Pro. They can do a map. It's not 100% because we don't know the future, but they can look at the rate of which tuition has increased and how much money you have in to see and say, okay, you know, are you overfunding it? Are you not? I mean they can kind of help you balance. And even Austin, if you guys wanted to underfund it some, right? And you didn't, you knew like, okay, we may only have, I don't know, 30 grand in it per kid or whatever, even though college is going to be double that because we're going to do something else over here. But to George's point, you have to invest somewhere else. The difference, just in case they do go to school. But if you're scared they're not going to use it or whatnot, you could underfund it a little bit and invest somewhere else and use that money and.

[George Campbell]

Just be prepared to help cash flow.

[Rachel Cruze]

That's right, you have to.

[George Campbell]

Or they're working part time to help pay. They're also working on scholarships and grants. So it's a great problem to have. If all of your kids get full rides and the money sits there and you can change the beneficiary at any.

[Rachel Cruze]

Time, that's it too. It can be passed down. So your girls could even keep that 529 and give it to their girl. Right? Their grandkids, nephews, crazy about it. It's like, you can stay in.

[George Campbell]

It grows in perpetuity.

[Rachel Cruze]

Yeah. There was one call we took. What was that? Last week, George, about the, the debt. It was a, it was a main. He was like 40 and he had, I Don't know.

[George Campbell]

It was a College 529 still.

[Rachel Cruze]

It was something like that. And he ended up saying I didn't want to cash it out. I'm going to keep it.

[George Campbell]

Yeah. Generational endowment basically.

[Rachel Cruze]

And he did the math and it would pay for like 10 kids. College is like the next generation down because of the growth like which is just wild. So even that's something, you know, you can think of. High level too.

[Caller]

Awesome. A lot of options there. And that's where I was kind of like a little overwhelming. So we wanted to kind of throw out a lifeline to see if anybody had any good.

[George Campbell]

I keep it simple. I hope we help narrow down your focus to those two things. One for college, one for non college.

[Rachel Cruze]

And then I throw in the Roth. Once they start working. That'll be later down the road.

[George Campbell]

Get them working. That nine year old, you know, might be coming up. These kids these days, they're always doing side hustles. Yeah. They're going to become, you know, world renowned YouTubers by 11 years old. We got.

[Rachel Cruze]

That's true.

[George Campbell]

That's what everyone's fear is like. Everyone's gonna just be like influencers and YouTubers. No one's gonna go to college.

[Rachel Cruze]

So much money.

[George Campbell]

So it's a real fear because I do think college is due for a reckoning where families are waking up going why would I go to school? Unless you need to. Unless you're becoming a, you know, a lawyer, a doctor, a nurse, a teacher. Things that require that degree.

[Rachel Cruze]

Yeah.

[George Campbell]

Otherwise don't just go to burn some time.

[Caller]

Time.

[George Campbell]

I know. As much as Rachel loved her college experience.

[Rachel Cruze]

No, I did. I know. But I do think. And again, I don't know where I sit with this. My kid. I'm not at this age where my kids are having to make these decisions right now. But there is something when you're 18 to still be in a structured type environment if you have the money. Again, I'm not saying like, like don't go take out crazy student loans and not know exactly what you're doing. Yes, you want a game plan. But there's something about those years that, that you're still in a system that helps you kind of like stay on track.

[George Campbell]

You're in a little safe bubble to mature and grow and learn some social skills.

[Rachel Cruze]

They're still so young.

[George Campbell]

It's just a very expensive.

[Rachel Cruze]

It is. I know.

[George Campbell]

Way to do it.

[Rachel Cruze]

I know.

[George Campbell]

If you're going to go into crippling debt. So always cash flow. You can go watch Borrowed Future for free on our YouTube channel. It's a documentary we did on the student loan crisis in higher education. Worth the watch with your kids. Welcome back to the Ramsey show in the Fairwinds Credit Union studio, I'm George Camel joined by Rachel Cruz this hour. The number to call is 888-825-5225 in. If you've got a question or you want to join the conversation, Jason is in Phoenix up next. Jason, welcome to the show.

[Caller]

Hey guys, thanks for taking my call. Much appreciated.

[George Campbell]

Absolutely. What's going on today?

[Caller]

My family and I are working our way through the baby steps. We're on Baby Step two, but there's a lot of uncertainty in our life revolving around two kind of central areas. One, one, the employer I work for is kind of cutthroat and the assessments are pretty strenuous each year. I do pretty all right. But you know, there's always that uncertainty every year. And then two, I was diagnosed last year with a chronic disease that will progress with time.

[Rachel Cruze]

And I'm sorry.

[Caller]

My wife is a stay at home mom. We're a family of five. And there's just a lot of uncertainty in our life. So I've been trying to think about things, things like the rate at which we pay off debt versus the rate at which we can start some other investments besides retirement, slash start doing the 529 for our kids. And I just wanted your input on how to juggle the baby steps with those year by year uncertainties.

[George Campbell]

Wow. Well, I'm so sorry to hear about your diagnosis. Is it something where they can sort of give you a timeline of here's how it will progress? You know, is this life threatening? Is this something you can manage? What does that look like? Look like.

[Caller]

It'S a long term progression. It's multiple sclerosis. And so it definitely could be slow, but it also could be.

[George Campbell]

But you could live a long full life still?

[Caller]

Yeah, yeah, I could. And medicines are really great in this day and age for it. But it's still an uncertainty there in the background sort of stacked on top of the uncertainty with the infection on a year by year basis. I just wanted to know if you guys would say that in this kind of a case we may want to invest in some 529 at the same time first or you know, something like that.

[Rachel Cruze]

Well, I probably wouldn't just because I think with the there's no guarantee that you're going to lose a job and if you did lose this one, you'd have to replace it anyways. Right. I mean, so there would have to be, you know, income coming in. And so how much, how much debt do you guys have and how much do you make a year?

[Caller]

I make about 170 a year and we got about 80 grand in student loans.

[Rachel Cruze]

Okay.

[Caller]

To pay off and then a 266 mortgage.

[Rachel Cruze]

Okay. And how long have you been with the company?

[Caller]

Almost three years now.

[Rachel Cruze]

Okay. And is it.

[Caller]

And the other thing is.

[Rachel Cruze]

But go ahead.

[Caller]

The other thing is that the company has great health insurance, like one of the best in the country. So my medicines are incredibly expensive. And losing the company would mean losing co pay assistance and stuff like that.

[George Campbell]

Yeah, you'd be paying like hundreds and hundreds a month out of pocket just for the medicine.

[Rachel Cruze]

Is there something obvious in the assessment coming up, Jason, that you think that you really could be terminated, or is it just this kind of like lingering fear of like. Ugh.

[Caller]

It's a lingering. It's a lingering fear. It's kind of subjective every year based on your supervisor? My supervisor likes me, but I don't think he assesses me of the highest quality as say, the previous supervisor I did. It's just sort of a personal bias and so I don't think I have any issues to worry about really right now.

[Rachel Cruze]

Yeah. When is the assessment?

[Caller]

It comes at up while it's conducted in April and May and then I find out the results in July. In July I find out the result.

[Rachel Cruze]

Okay, gotcha. Yeah, I mean, if there's nothing obvious besides just that, it's just a tough, you know, they make tough calls really quick or, you know, besides that. Yeah, I would, I would stick with the baby steps because I think not having the debt is going to get you guys freed up from not just that payments, but also the risk of, of having this bill that's just lingering. And if I, if you guys are able to, you know, cutting the lifestyle, which I'm sure you've done, because I think you guys have been working on baby step two, you know, cutting everything down what you can because you're making a. You make a great income. And I'm just wondering if you can get this thing paid off. You know, if you guys lived on 80, could you pay this off in a year?

[Caller]

Yeah, I was trying to run the math on that. I think the most we can squeeze out of it. If you just said like the groceries, mortgage and basic bills, I think the most I could squeeze out would be about 4, about 4k a month. Our groceries are bill is a little high. Well, especially with my Diagnosis, I have to eat a pretty good Mediterranean diet.

[Rachel Cruze]

Okay. Yeah.

[Caller]

I can't just live on rice and beans because diet is a big issue with the progression of this disease too. They've learned. Okay, so.

[George Campbell]

So this might take a little longer. So the year and a half is what we're talking for you to knock out the student loans.

[Caller]

Yeah, that's what I'm thinking, like year and a half. Ish.

[George Campbell]

That's great. You guys have any savings right now.

[Caller]

I mean, besides retirement? Yeah, I got about seven grand. But I also have some potential lawyer fees coming up dealing with my dad's probate. I'm sort of saving that for in case.

[Rachel Cruze]

Okay. Yeah. And I'm okay with you having a little bit. Oh, I'm sorry, man. Y' all have had a rough go. Yeah, I would just make it an aggressive goal to get that paid off and then to get that emergency fund and then you'll be jumping right back into retirement and kids college. You know, I think a two year difference isn't going to be massive. I think you guys will be, you'll be fine. And then if something switches with the job or if something does happen in July, that's when I would pause everything, stop paying aggressively on the debt, see if you can find something new. Obviously, because you're gonna have to, you know, support your family in some way.

[George Campbell]

On the defense side, do you have long term disability insurance?

[Caller]

No, I was actually in the process of getting term life insurance and thank you so much for asking me this. This is another point. I was in the process of getting term life insurance when the diagnosis came through. So I was denied, but I do I.

[George Campbell]

These are two different things. So you've got long term disability, which is you had. You've not passed away, you just are unable to work and still alive. Do you have that in place through your employer or do they offer that?

[Caller]

No, no, I don't think they offer the disability one. They do have a life insurance. And then I also picked up accidental death because I have to wait five years after my diagnosis to circle back around to try to get term life again.

[George Campbell]

Okay.

[Caller]

They require a five year assessment to see how you progress kind of thing. So. But no, I've been thinking a lot about the long term disability insurance after listening to you guys and I just asked the guy who I do insurance with the other week if we could look at that. He hasn't been able to get back to me yet. But like, I look at that as almost even more improbable than ever getting regular term life insurance because you're talking about a long term thing and this is something that's chronic. Right. So I'm not sure I would qualify for that ever anymore.

[George Campbell]

Yeah, I mean there are some guaranteed issue policies. They're just more expensive and it's not going to cover a whole, a whole lot. The policies are going to be much smaller to the face value. But there's, there are certain things you can do and I would keep pushing to get any coverage you can for those five kids and your wife, protect your family. But man, this is one of those, this is going to be your, your why as to why you're going to become debt free even faster as to why you're going to save like a, like a madman to make sure that your family's taken care of. And man, I hope that this is something that you end up managing and you live a time long, long life and your family's taken care of and those kids go to college debt free. I'm, I'm praying that for you.

[Caller]

I appreciate that a lot.

[George Campbell]

Wishing you the best on this journey.

[Rachel Cruze]

You're amazing, dad.

[George Campbell]

Jason, the fact you're even thinking about this right now and so hard stage that you're in and what, what's going on is impressive. So keep fighting the fight man. We're rooting for.

[Sponsor/Announcer]

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[George Campbell]

The Ramsey Show Question of the day is brought to you by Y Refi. If your private student loans are in default, it's time for a plan. Y Refi helps you refinance defaulted private student loans into a low fixed rate payment so you can get back on the baby steps and start making Progress. Go to yrefi.com Ramsey that's the letter y r e f y.com Ramsey may not be available in all states.

[Rachel Cruze]

Today's question comes from Natalie in Wyoming. My husband and I do not agree on where money should be saved. I was putting money into a savings account until we got married last year. I have around five months of expenses in that account. My husband Says it's losing value due to inflation and thinks that any money we save should go into gold or crypto. While I understand his logic to a point, I do feel uncomfortable with it, especially the crypto. My logic is if an emergency happens, we have immediate access to it. I appreciate that he wants to invest for our future and protect our wealth. Does he have a point about the savings account or should we leave it where it is?

[George Campbell]

Oh boy. This is way beyond just where should we put our savings. This is a fundamental disagreement on what is an investment.

[Rachel Cruze]

That's true. That's so true.

[George Campbell]

Let's separate. Separate it. All right, let's talk about the emergency fund first. Your emergency fund should be liquid and accessible in a savings account and ideally a high yield savings account, which helps you at least keep up with inflation.

[Rachel Cruze]

Yeah, so he was right to that point. I agree. Yes.

[George Campbell]

You don't want it just sitting and checking or a normal savings account making 0% interest.

[Rachel Cruze]

Yes. So yeah, I'm right. Yes, he's correct. But then you are also correct that this is savings. This is not an investment. We see this as interest insurance. So your emergency fund is like insurance. It's there when you need it. And so to your point that if something comes up, you have to be able to get to it. So yes, you are exactly right. When you put it in something that you can't get to, I mean, golly, God forbid, crypto or gold, you're going to have to sell, let alone even just the market. Right. It takes a little bit to get the money out and all of it. So there's something about the ease of that emergency fund being there. But then also we want to invest, which is a different category.

[George Campbell]

Category that is completely different. And clearly he's, he's been online too much. If he's going, we got to put all our money in gold and crypto, the US dollar is going to crash or maybe the stock market did, you know, 23% last year and everything's actually just fine. And so I'm not going to trust the fear mongers telling you to put all your money in gold or crypto. If you want to use some fun money and he wants to do that on the side, that's fine. But you need to be investing 15% of your income into legitimate tax advantaged retirement account accounts in mutual funds. If you have that as the foundation, a fully funded emergency fund, you're investing 15%. If he wants to use some fund money because he's spooked and he wants to buy Some gold or crypto he can have at it. So I think we're having very different discussions here and we need to just be clear on what this money is for and where we're going to store it safely.

[Rachel Cruze]

Good question.

[George Campbell]

And if you want a great high yield savings account, our friends at Fairwinds Credit Union have a really great smart bundle you can check out. Just go to Fairwinds.org ring Ramsey and you can get their high yield savings account along with their no fee checking and the Ramsey beware debit card. Fantastic. Great question. All right, Marissa is in Philadelphia. Up next. Is it Marisa or Marissa?

[Caller]

It's Marissa.

[George Campbell]

Great. Nailed it. First try. What's going on?

[Caller]

So my question is, should I slow my family down on baby step two to start putting money towards life insurance for my husband who does work a high risk job and, or for both of us? I have context if you'd like that.

[George Campbell]

Yeah. How much debt do you guys have?

[Caller]

So our mortgage is just under 500 and then we have about 44 in school loans and then we are at about 90 in other like personal credit.

[George Campbell]

Okay. And when you say, you know, putting money towards life insurance, what have you looked into and what has happened than the cost?

[Caller]

So my husband's employer does offer life insurance, but it's not nearly enough to, you know, keep me and my, my current child and future child who's expressed in about two weeks.

[Rachel Cruze]

Hello. Congratulations.

[Caller]

Thank you. So that's not nearly enough to cover our debt and to keep me afloat if something happens to him. Yeah, I've kind of noodled with the Zander, like kind of not really committing to anything. Just estimates for my husband, we're looking at about 70 to 100amonth to take out enough to cover our 10 month.

[George Campbell]

Our.

[Caller]

Is it 10 months or 10 years of expenses?

[George Campbell]

Okay, 10 times your income.

[Caller]

Yeah, 10 times the income on like.

[George Campbell]

A 15 or 20 year term policy.

[Caller]

Yeah.

[George Campbell]

Okay.

[Caller]

And then for me we're looking at 30 to 50amonth. So I'm looking at like 150 to, you know, almost 200amonth.

[George Campbell]

Yeah.

[Caller]

And like where I'm still working on getting us out of being in the red every month with budgeting and baby step two.

[Rachel Cruze]

Okay. Yeah. Well, life insurance is something I would get. So I would figure out where, where else we can cut in order to make this happen. What's your income? What are you guys bringing up in.

[Caller]

So together we bring in about base 200 a year. He is paid hourly and it's kind of tricky to like guess, but he makes about almost double what I bring home. And my husband travels for work and I am, I work from home, but I'm like the stay at home parent. So like I do all of the house making. I deal with our, how our kids.

[Rachel Cruze]

It's a lot. How are y' all in the red though, Marissa? Making 200 a year?

[George Campbell]

Year.

[Caller]

We have debt that we have.

We.

So we've been married a few years, but we are just kind of getting around to like actually financing. Not financing, consolidating our money.

[Rachel Cruze]

Okay.

[Caller]

But all the payments. We just weren't budgeting. Yeah, we just weren't budgeting and we've decided that we can't keep moving like this. So.

[Rachel Cruze]

Good. Well, good for y'.

[Sponsor/Announcer]

All.

[Rachel Cruze]

It's kind of your we call it your I've had it moment that you've had that you're like, we. Yeah, we make 200. What are we doing? Why do we feel broke? How do we not have enough? So I love that. Do you guys have the EveryDollar app?

[Caller]

We've looked at it. We are, we've not. I've not taken the step to actually set it up yet.

[Rachel Cruze]

Okay. We're going to give that to you for a year. That's our gift to you guys as a. It's a, it's a little bit of a baby. A baby gift. We'll say.

[George Campbell]

Yeah, I like that. A push. Get a push present. That's what they call it these days.

[Rachel Cruze]

That's right. Yeah. The Every dollar app is your. I hope you get a better push present.

[George Campbell]

I think if you do this budget together, you're gonna go, oh my gosh, we're bringing in, you know, $10,000 a month, $12,000 a month. Where is it all going?

[Rachel Cruze]

2,000 at restaurants, you know what I mean? Or whatever. Like, it's just crazy what you can spend when you're not watching. Like. So I think you will tighten up that lifestyle. It's going to be a big change for you guys is to live on nothing. You're gonna live on nothing. Like it. Try to make a budget budget where you're, you know, and seventy thousand dollar income, right. And then everything else, one hundred and thirty goes to this debt and gets it cleaned up, which you don't even need that much. I mean. Yeah, you guys will be out so soon. You really will.

[George Campbell]

You have such A great, what, 134,000 in consumer debt? 90 plus the 44.

[Caller]

Yeah.

[George Campbell]

Okay. Is there anything you can sell in there? Are there cars involved that have Loans.

[Caller]

We both have cars that are paid off. Actually, that's one thing we don't have.

[George Campbell]

Wow. What makes up the 90 in personal credit?

[Caller]

So we finance some home improvement things. That's about 10. We have about 20 in personal credit card. And not to jump down a rabbit hole, there's a work credit card that has racked up debt that we're trying to fix that we are on the hook for, unfortunately.

[Rachel Cruze]

Yeah.

[Caller]

Okay, and then it's 44 in school student loans.

[George Campbell]

Is that 44 part of the 90 or is that on top of.

[Caller]

Is on top of.

[Rachel Cruze]

Oh, okay, so it is, it is 130. So you're right, George. I mean, so yeah, if you guys could live on 70, you know, and throw everything at this debt like, you know, you guys can make some progress.

[George Campbell]

Which means we are not doing any investing right now. We are making sure we're not getting big tax reform refunds. We are not eating out and obviously not going on vacation with a newborn. You know, we're not shopping.

[Rachel Cruze]

We're not going into Target. We're doing nothing. Nothing but to get this debt paid off. And again, at Marissa, I really think you guys will, will see some big progress. You know, I will give you this though. We call it sork mode. When you are expecting, we do say to pause everything and save up as much cash until you and baby are home and everything's good. So if you guys want to start, we're going to give you every dollar. So I want you guys to make a budget tonight so that you guys can get ready for February and start acting like, hey, we're going to, we're going to live on a tight budget this month. But instead of that money going to debt, I would just put it in a savings account for now until you're good. And then once you have, once you come home and baby's good and you're good, take whatever has been in that savings for the next two months, which again I'm hoping is like four grand, you know, eight grand or something. Throw it at the debts once that happens. So.

[George Campbell]

And do not sit on the fence with this life insurance. Get it done today. I know it's 150 bucks a month, but you need it. It's a non negotiable in the baby steps. Xander.com or you can call 800-356-4282. They'll take care of you. Foreign.

[Sponsor/Announcer]

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[George Campbell]

If you're sick and tired of working so hard and got nothing to show for it, that is normal. Unfortunately, and normal is broken. You don't have to live that way. Our EveryDollar budgeting app helps you find extra money every month and builds you a personalized plan to beat debt and build wealth. And in just 15 minutes, you'll find thousands in hidden margin and you'll feel like you got a raise. So don't live normal when you can live like no one else. You can start every dollar for free in the App Store or Google Play. Jade is in Boise. Up next. Jade, welcome to the Ramsey Show.

[Caller]

Thank you.

[George Campbell]

What's your question today?

[Caller]

Okay, so my husband and I are newlyweds. We've been married about a year and we have like a huge budget. We've combined. I'm afraid we overextended when we purchased our house when we got married. But I'm just trying to figure out how to combine our multiple retirement accounts that are kind of spread all over.

[George Campbell]

How old are you two?

[Caller]

Okay. I'm 48 and he's 50.

[George Campbell]

Okay.

[Caller]

And I think our 30 year mortgage will have some working till he's 85 unless we do something really smart.

[George Campbell]

Well, yeah, yeah, I hope we do something about that. No need to keep it around for 30 years. And so what you're talking about retirement accounts specifically?

[Caller]

Yeah, and we also have a lump sum of 70,000 coming in soon. So I feel like I have four options with that 70,000. And I want to be really smart with that.

That.

[George Campbell]

Okay, what's your household income?

[Caller]

So we gross about 200,000 and I feel like we bring home about 130 of that.

[George Campbell]

Great. So about 10k a month. Little over that. And do you guys have any debt outside of the mortgage?

[Caller]

Just one car for 40,000.

[George Campbell]

Do you have any savings right now? Anything cash, liquid?

[Caller]

Yeah, we have 6,500 in an HSA account for medical expenses and about 15,000 set aside for our emergency fund.

[George Campbell]

Okay, so we'll have 70 coming in plus the 15.

[Rachel Cruze]

When does the 70 come in, Jade, did you say?

[Caller]

I think 50 will come in in about two months. And 30 will come in or 720ish will come in about four months from now.

[Rachel Cruze]

Okay, so you'll have everything thing by April. April. May.

[Caller]

Yes. Okay.

Yes.

[George Campbell]

Cool. And have you guys actually combined your finances as far as a checking account goes, how are you handling that?

[Caller]

Yes.

[George Campbell]

Okay, so let's give you the game plan and we'll talk about the retirement portion. So in the baby steps, currently you guys are in baby step two, which means we're knocking out all consumer debt. So right now for you, that'd be the $40,000 car loan. And the good news is that 50 grand is going to knock out that loan and.

[Rachel Cruze]

Okay.

[Caller]

And that was one of my first option choices as take that and put it there.

[George Campbell]

I know there's more fun things you probably wanted to do with that, but that is the, the right thing to do because it frees up a giant payment. What's the car payment?

[Caller]

825.

[George Campbell]

Woo. You just got a raise.

[Rachel Cruze]

Great, great, great, great.

[George Campbell]

So that leaves you, you got 85 total coming your way. 40 goes to the car. That leaves you with 45k. And a majority of that will be your emergency fund of three to six months of expenses.

[Rachel Cruze]

And they have $15,000 already. Already of that.

[George Campbell]

Yeah. And so you're going to be golden. You'll be through baby step three by the time all this money comes in. Which gets you to the point where you guys are investing 15% of that awesome $200,000 income. That's 30 grand a year you'll be putting into retirement accounts going forward. Tracking.

[Caller]

Yes, yes.

[George Campbell]

Okay. Now when it comes to retirement accounts, you were talking about combining, those retirement accounts will remain in your own name, separate.

[Caller]

I mean like I have Percy from a state job and then he has a bunch in like crypto. And then I have a bunch and one from like two prior jobs. I have some in Fidelity from a prior job and some in. Yeah, Vanguard and some in Trans America and some like.

[George Campbell]

So, okay, so it's just there's, there's funds all over the place and you're just trying to simplify your life.

[Caller]

Yes. We have 10 different retirement places where money's being.

[Rachel Cruze]

Yeah, yeah, yeah. It's a lot.

[George Campbell]

Yeah. If I'm in your shoes, I would be contacting a smartvestor pro and saying, hey, help us simplify. Now, every account that's in your name is going to stay in your name. That when it comes to retirement. And same for him. But what you can do is then kind of pull the money into one place for like, hey, I want to put it all in Fed Fidelity. Well, they can help you kind of roll all of that over. The things that make sense to roll over.

[Caller]

Okay. When we talk about being balanced now, he pretty much went 100% crypto, and I went 100% ETFs. So do is like, is that balanced? That's what he thinks is balanced is. Yay. We're like 50, 50 almost of crypto.

[George Campbell]

So, like, as long as one of us has our head on our shoulders, we'll be. Be good. Yeah, no, his, his risk meter has, is broken. If he's putting 100% of his investing in crypto.

[Rachel Cruze]

Yeah, I would not be doing that.

[George Campbell]

He's. He's gambling. That's pure speculation. And again, I'm not mad at crypto. If you love crypto, put some fun money in there. But you guys need to be investing 15% of your income into tax advantage retirement accounts. With things with a proven track record like mutual funds, ETFs. That's fine if you want to do that. But putting it all in crypto is not balanced at all. Even if it's on one person. Okay, That's a different battle.

[Caller]

At about 300,000, would you say about 15% of that is like the crypto play?

[George Campbell]

You're saying he has 300,000 in crypto?

[Caller]

No, but if you had 300,000 total.

[George Campbell]

In investments, how much is it okay to have in crypt. I mean, we, we generally say don't have more than about 5% of your world tied up in the. Those things that are more speculative. So it depends on your net worth. You know, 10 grand in crypto for someone might be a whole lot, and for someone else, it might be, you know, chump change for. Compared to their net worth. So it's all about ratios there. But I think you guys have an alignment issue more than a financial issue.

[Rachel Cruze]

What does he say, Jade, when you kind of bring up that? Because, I mean, does the crypto make you nervous?

[Caller]

It makes me really nervous. But he thinks that it'll make him be able to retire a millionaire.

[George Campbell]

So what if I told you he can still retire millionaire and not even touch crypto? Because what's really happening is he wants to shortcut it, which, I mean, he's 55. He's no, you know, no spry chicken here, but there's still a level of I want to get there faster. And therefore I'm willing to take shortcuts and potentially try the get rich quick route. So. Yeah.

[Rachel Cruze]

And it may not be a battle you win. I don't know, Jade. I don't know what your tolerance is for. Yep. For that kind of risk, but if I were you, I just wouldn't count.

[George Campbell]

On that money being there in retirement.

[Rachel Cruze]

Exactly.

[George Campbell]

You have to play that game.

[Rachel Cruze]

Yes. So. So I would for your sake just say, okay, well, if you like, if he's just like gung ho and he's not moving anything, it's not very loving to you. I would say, number one. Number one. But number two, making sure that. Yes. What income that you, you know, the 15% you put in to the ETFs or whatever it is run. There's a calculator on RamseySolutions.com and you can run some numbers and just look at those and see how that makes you feel. Right. And, and you may be, you know, moving up in your job too and doing incredible and you're like, that's great. We'll have $4 million for just my stuff. I mean, I don't know, I'm just making up numbers. But you know that you'll be great. You'll be fine. Even if his, you know, crashes out. And who knows, who knows what's going to happen with crypto. That's what's hard about it is that there's no long term track record that we can look back and see what's been proven with it. And so again, I'm not mad that he has some in it, but I wouldn't. I think we're, I think he is not diversified at all. I mean, that's like the, not even the definition of diversification. And most financial planners would tend to agree, which obviously they're in the market, they probably have a reason to their job, but still it's.

[George Campbell]

Yeah, it might take a third party like that.

[Caller]

Knowing this helps with knowing that with the 30k left after paying off the new car that we probably shouldn't put any more of that in crypto.

[Rachel Cruze]

No, I would not.

[George Campbell]

Yes, going forward, I would do that. That 30k of your 200k, that 15% should be going into actual retirement accounts, into mutual funds. So that would be the game.

[Caller]

Perfect. The next question I had though, and where I wanted to like a big thing is we did buy a $640,000 home. The average home price in our market is about 550. There's not very, you know, what percentage.

[Rachel Cruze]

Of your mortgage, what percentage of your mortgage Jade is going to. Oh, sorry, what, what percentage of your mortgage is from your income each month or how much is your mortgage payment is it's 4,000.

[Caller]

We'll just refinance to from 7.2% interest to 5.875.

[George Campbell]

So it's high. But if you guys can keep up that income, you'll be okay. But I would not let that be mortgage sit around for 30 years while he continues to accumulate crypto. And that is my fear is he will be 85 going, why would I put down on the mortgage? I can keep investing in crypto. It's gonna be a hard conversation.

[Sponsor/Announcer]

When you're tired of feeling stuck with money, there's just one solution. To get different results, you have to do something different. No one accidentally wins with money. You have to have a game plan. And that begins with our get started assessment. Go to ramseysolutions.com start, answer some questions, and we'll show you what steps to take next. Don't stay stuck. Take control of your money. Starting Today, go with ramseysolutions.com start.

[George Campbell]

Our scripture of the day, Luke 14:11. For all those who exalt themselves will be humbled, and those who humble themselves will be exalted. CS Lewis said, humility is not thinking less of yourself yourself, but thinking of yourself less. Poetry right there. That's good.

[Rachel Cruze]

Great quote.

[George Campbell]

All right, let's go out to Dave in Denver. What's going on, Dave?

[Caller]

Hey, guys, thanks for having me. I'm a loan officer for mortgages. My question is I often get clients names. They come to me needing a mortgage. Most often it's older clients in this situation, and one spouse has passed away. I have access to their assets or see what they. What they have. And it's a vulnerable situation. And really they don't need a mortgage. What they need to do is sell some of their assets to get a. To get a home, to downsize. I'm just looking for advice on how to bridge that gap with that and how to properly communicate that to them.

[George Campbell]

So you see this going to a dangerous place, and you're like, how do I help these people when my job is to lend them the money that they're approved for?

[Caller]

Yeah. And it's not overly dangerous sometimes, but, like, you know, they have one spouse, maybe their whole life collecting these assets. And so when I come along, I say, hey, maybe you should look at selling somebody that's kind of a, you know, my husband or whoever put all this together, this whole life. Who are you to tell me to sell this kind of thing?

[George Campbell]

Yeah, you feel like, hey, that's outside the boundaries of my job job. But it's like your Heart is aching for them to be like, hey, you really need to go do these things.

[Caller]

Yeah. So I'm looking for words of wisdom on how to appropriately navigate that.

[George Campbell]

Well, I think you have the right heart. That's the most important part is, is your motive and your spirit and the tone in which you deliver this. But I think just starting with, hey, I want to make sure this house fits your life, not just your approval amount. And as I'm seeing it here, I can see the assets over here, I can see what the mortgage payments can to be. I think things are going to be tight unless you make some moves, make some sacrifices here and you could offer, hey, one recommendation you could pursue is selling these assets, which could do xyz.

[Caller]

Yeah, yeah.

[George Campbell]

And then it's just, it's not you telling what they have to do, it's just saying, hey, I try to, I treat people how I want to be treated. And I can see all of your information here. And this is what I'm seeing.

[Rachel Cruze]

Yeah. And it's kind of a, you know, for them, take it or leave it kind of thing. But it's almost for your conscience. You know, you're like, man, I see this and I just want to say it out loud. But at the end of the day, they're going to be the ones, you know, making the decision. And if they don't take that advice and they do something else, that's okay. That's, you know, they're adults and they can do that.

[George Campbell]

At least you're sleeping well at night knowing that you said your piece.

[Caller]

Oh, yeah, absolutely. I just trying to figure out how I sprayed the Dave Ramsey throughout my entire career.

[Rachel Cruze]

Yeah, Love it. I love it.

[George Campbell]

It's hard because you don't like, well, Dave says, but you, you can't do that. It's not going to work. And instead you sort of get to the root of it. You say, hey, the families that I see thrive when it comes to buying a home. They have margin outside of their mortgage payment to live and to save and to have fun and go on vacations. And right now, what I'm seeing with your payment, it's going to be a lot of your income taken up by this payment. And so you can go, hey, here's the approval amount. But here would be a, let's run the numbers and see what would be a comfortable amount. And then you can kind of get to the principles without saying, well, Dave recommends 25% of your take home pay on 15 year fixed rate mortgage. You know, they get to choose the wisdom at that point.

[Caller]

Yeah. Big Dave. I'm Little Dave. That's Big Dave.

[George Campbell]

Little Dave. Big Dave. I like it. That's true. It's.

[Rachel Cruze]

You know what, Dave? I mean, honestly, that's, it's really. It would be so impressive and it would actually garner a lot of trust, I would think, from the people you're working for. Because in some situations, I'm assuming, you know, you're asking for them to pay less for a home, you know, and that's money out of your pocket too, right? If they choose less loan, less origination.

[George Campbell]

Fee, less commission, all of that.

[Rachel Cruze]

Yeah. I mean, all of it. So there's something, I don't know, really trustworthy for you to say because you're not, you're not doing it the other way to be like, hey, you should spend more here with me so I can make more. In some of these cases, it's. It's the opposite. And so they shouldn't be offended by that. Right. There's. I mean, yeah, there's. I don't know, a lot of kindness in you even doing that.

[George Campbell]

Yeah.

[Caller]

Well, thank you.

[George Campbell]

Absolutely. Thanks for actually being, you know, serving well and serving your customers well and being one of the good guys in the mortgage world. That's fantastic. Rachel. I've got a friend in the mortgage world and he, knowing what I do, he's like, dude, you would not believe the debt to income ratios people show up with. You're like, this is bonkers. Like, no one should be giving them this loan.

[Caller]

Loan.

[George Campbell]

And sadly, a lot of the banks, you run it through the computer and it goes, yep, give them the loan, that's fine.

[Rachel Cruze]

Yep, yep, we'll just do it.

[George Campbell]

And the bank doesn't always care about the reality of your financial situation. Wild.

[Rachel Cruze]

Because that's part of what got us into the biggest housing disaster in zero. Wait is because of that kind of stuff too. Lending people money, giving it an amount. I know. Keep on doing it though. Oh, my gosh.

[George Campbell]

All right, let's go out to Brian in Alaska. Brian, what's up?

[Caller]

Hi, can you hear me?

[George Campbell]

Yes, loud and clear.

[Caller]

Okay, sweet. So I am in an interesting situation where I actually live in my dad's second home or my parents second home here in Alaska while my family lives out of state. I'm curious. I feel like I'm getting a smoking good deal on rent here. You know, I just rent a room, but it's way cheaper than I could rent anything else in the area. How long should I stay here? Saving up for a house, You Know, how long should I let this good deal ride? As long as they're willing to give it to me.

[Rachel Cruze]

That's a good question. How old are you?

[Caller]

I'm 28.

[Rachel Cruze]

28. Okay. Are you married?

[Caller]

Nope.

[Rachel Cruze]

Single? Single. Okay. Any debt? Consumer debt?

[Caller]

I owe $12,000 on an airplane that's in like a leasing company that I own.

[Rachel Cruze]

Okay, 12,000.

[George Campbell]

And that.

[Rachel Cruze]

Is that it? No credit cards or car loans?

[George Campbell]

Nope.

[Rachel Cruze]

Okay, great. And how much credit card and how much do you make a year?

[Caller]

Last year. So I started a new job last year. In six months I made about 55,000. And then this year year for the. For the whole year, I guess about 120 to 140.

[Rachel Cruze]

Good for you. Okay. And how much money do you have saved?

[Caller]

I currently only have like $3,000 saved.

[Rachel Cruze]

Okay.

[George Campbell]

How long have you been living in your dad's place?

[Caller]

So I've been living here about three years. I actually used to own half of it, and then I sold out my half to my stepmom. That paid off a lot of my debt and was able to give me a down payment for this airplane that I lease out.

[George Campbell]

Okay, so this airplane, is this a business you have where you basically rent out the airplane?

[Caller]

Yep.

[George Campbell]

Okay, what do you make from that? Is that on top of your 140?

[Caller]

That. That's completely separate. So I make about $40 an hour every time it flies. And right now? Now it's pretty much just all going back into the business for improvements for the airplane.

[George Campbell]

Got it.

[Caller]

I'm paying the principal for. I get a loan from a friend of mine, basically zero interest that I pay the principal out of my personal funds. And then what the airplane makes just kind of gets circulated back and then making improvements for the airplane.

[Rachel Cruze]

Okay, gotcha. Okay. So. So yeah, the whole living with parents or on their property or whatever for a period of time, I'm totally fine with it. I think after a while there needs to be a point that you go and you're on your own and you're living on your own, doing your own thing. So what worries me is, and I know you just got this job six months ago, you said, so I'm not going to harp on it too much, but you said, I'm getting a great deal. All this, but you only got $3,000 saved. So there's a part of me that's like, you know, people have this idea I'm going to go live really cheaply at my parents, but then they don't take what they would have paid in Rent or more of what they're saving and actually save it. You know, they end up spending it on restaurants and going on trips and stuff. And so then it ends up being this point of like, okay, you weren't using it actually to benefit yourself or to get you further financially. You were just using it for lifestyle in the moment. So if you're doing this, I want you to be really, really disciplined and you make a great income. And so honestly Brian, I mean, you're a single guy, you're living in Alaska and basically no rent. If you, if you could live on, I don't know, 40 grand a year or something crazy like you could bank so much money, not only pay off.

[George Campbell]

This airplane, but you could have six figures saved up.

[Rachel Cruze]

Yes.

[George Campbell]

You know, by the end of the year, maybe into a little into three really quickly.

[Rachel Cruze]

And I would, I would use that for a down payment on a home. Cuz as soon as you can get something in your name, building equity, that's the best route for you, Brian. So I'm okay with it for a little bit, maybe a year or two, but I would be so disciplined in that to actually put that money and that savings towards your future and a future home for yourself.

[George Campbell]

I would just say, hey dad, I'm going to be out on my 30th birthday and that's the plan. And you go, I'm going to save up like a madman. Until then, I'm going to live off a thousand or for 1,500 bucks a month and the other six, seven grand is going to go into savings for that house. Build for your own future and independence and you will not regret it. That puts this hour of the Ramsey show in the books. Remember, there's ultimately only one way to financial peace and that's to walk daily with the Prince of peace, Christ Jesus.