You Need To Do a 180 From the Life You’ve Been Living

Summary

Episode Summary: "You Need To Do a 180 From the Life You’ve Been Living" – The Ramsey Show

In this engaging episode of The Ramsey Show, host George Campbell and co-host Rachel Cruz delve into a variety of callers' financial struggles, offering expert advice rooted in Dave Ramsey's proven principles. The episode emphasizes the necessity of transforming one's financial habits to overcome debt, build wealth, and enhance personal relationships. Below is a detailed summary of the key discussions, insights, and conclusions presented throughout the episode.

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1. Overcoming Financial Strain and Relationship Tensions

Caller: Jeremy from Ottawa, Canada

Situation: Jeremy uprooted his family to move closer to his partner's family, resulting in a 65% pay cut—from over $150K to under $50K annually. This drastic reduction has led to accumulating bills and heightened financial stress, causing strain in his relationship.

Advice Given:

• Open Financial Communication: Jeremy and his partner need to collaboratively assess their financial situation by combining their finances, creating a joint budget, and identifying the debt “hole.”
• Explore Income Opportunities: Jeremy should seek higher-paying job opportunities or his partner should consider increasing her working hours to bridge the income gap.
• Address Relationship Issues: The financial stress is symptomatic of broader relationship problems. Effective communication and shared financial goals are crucial for sustaining the relationship.

Notable Quotes:

• George Campbell [05:31]: “Life is too short to live with this kind of stress.”
• Rachel Cruz [04:37]: “It sounds more like a relationship issue. Money's just a symptom of it.”

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2. Balancing Retirement Savings with Home Purchase

Caller: Sid from Nebraska

Situation: A retired couple with an annual income of $125K, $200K in cash, and over $500K in IRA accounts plans to purchase a $450K home. They are contemplating whether to withdraw funds from their IRAs or utilize monthly distributions to pay off the mortgage within ten years.

Advice Given:

• Leverage Cash Savings: Use the $200K cash for the down payment while keeping IRA investments intact to benefit from continued growth.
• Consider Mortgage for Liquidity: Taking on a mortgage allows the couple to maintain liquidity and let their investments grow tax-deferred.
• Downsize if Possible: Opting for a smaller, more affordable home could reduce financial strain and facilitate faster mortgage payoff.

Notable Quotes:

• Rachel Cruz [11:22]: “You can knock that mortgage out over time and if times get tough, you have the money and you can leave the money invested.”

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3. Investment Strategies for Young Entrepreneurs

Caller: Amy from Savannah, Georgia

Situation: A 20-something entrepreneur running a digital marketing business seeks investment advice, particularly regarding retirement savings and real estate.

Advice Given:

• Prioritize Retirement Savings: Allocate 15% of income to retirement accounts such as Roth IRAs or Solo 401(k)s tailored for self-employed individuals.
• Invest in Mutual Funds and Real Estate: Focus on growth-oriented mutual funds and consider real estate investments after securing a paid-off primary residence.
• Avoid Overextension: Start small with real estate investments to manage risk effectively.

Notable Quotes:

• Rachel Cruz [15:23]: “The goal for you guys is to invest 15% of your income into retirement.”
• George Campbell [17:09]: “If I was in your shoes, Amy, I would just open up two Roth IRAs.”

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4. Managing Joint Finances in a Cohabitating Relationship

Caller: Lindsey from Louisville

Situation: Lindsey and her boyfriend, who have two children together, recently moved in together. Lindsey has $30K in debt accumulated before the relationship, while her partner also has his own debts. They are unsure whether to combine their finances or manage debts separately.

Advice Given:

• Maintain Separate Finances: Keep finances separate until marriage to prevent complications in case of a breakup.
• Tackle Debts Individually: Each partner should focus on paying off their respective debts independently to ensure progress.
• Future Financial Unity: Upon marriage, they can consider combining finances and jointly managing debts.

Notable Quotes:

• Rachel Cruz [22:27]: “Keep them separate because combining can get messy.”
• George Campbell [24:44]: “We recommend keeping finances separate until you’re legally married.”

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5. Early Independence: Moving Out Versus Saving for a Home

Caller: Stephan from St. Paul, Minnesota

Situation: A 20-year-old contemplating moving out of his parents' home. He has substantial savings but is debating whether to move out now and gradually save for a house or wait to accumulate a larger down payment.

Advice Given:

• Gain Independence Now: Moving out fosters responsibility and personal growth, characteristics vital for future financial stability.
• Manage Expenses: Pay off existing debts, such as the $7K car loan, and establish a solid emergency fund before purchasing a home.
• Set Clear Financial Goals: Establish specific savings targets and timelines to facilitate a smoother transition into independent living.

Notable Quotes:

• George Campbell [28:22]: “You're still pretty young. It's a great way to stair step it.”
• Rachel Cruz [29:33]: “Have a money goal with a time frame.”

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6. Deciding to Sell a Small Business to Eliminate Debt

Caller: Corey

Situation: Corey is considering selling his small food truck business, valued at around $42K, to accept a higher-paying chef position. This move would help eliminate approximately $100K in debt, including a $18.5K vehicle loan.

Advice Given:

• Sell the Business to Reduce Debt: Selling the food truck can significantly lower his debt burden and eliminate underperforming assets.
• Pursue Higher Income Opportunities: Transitioning to a higher-paying job will accelerate debt repayment and improve financial stability.
• Future Considerations: Once debt is cleared, Corey can reconsider entrepreneurial ventures without the pressure of existing debts.

Notable Quotes:

• Rachel Cruz [56:33]: “This is a no-brainer, honestly, because you get to live your dream without the debt burden.”
• George Campbell [56:36]: “If I were in your shoes, I'd do it.”

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7. Retirement Investment Strategies for Seniors

Caller: Kathy from Boston

Situation: At 67 years old, Kathy plans to retire in three years with $250K in investments across stocks, bonds, and mutual funds. She is considering whether to maintain these investments or switch to more conservative options like annuities or IRA CDs.

Advice Given:

• Maintain Growth Investments: Keep investments in growth-oriented mutual funds to outpace inflation and ensure financial growth during retirement.
• Avoid Low-Return Options: Switching to annuities or CDs may preserve capital but limit growth potential.
• Ensure Sustainable Withdrawals: Pair her investment strategy with Social Security benefits to cover monthly expenses without depleting retirement funds prematurely.

Notable Quotes:

• George Campbell [60:23]: “You want to see your money grow beyond the rate of inflation.”
• Rachel Cruz [60:52]: “Leave your money invested in the market to continue growing.”

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8. Transitioning from Church-Provided Housing to Home Ownership in Retirement

Caller: Dan from Chicago

Situation: Dan, a pastor, is preparing to retire in a year. Currently living in church-provided housing, he and his wife are considering purchasing a modest home to build equity and mitigate future rent increases.

Advice Given:

• Assess Affordability: Calculate potential mortgage payments against fixed retirement income to ensure sustainability.
• Delay Purchase if Necessary: Consider postponing home purchase to save more for a substantial down payment, reducing mortgage size and monthly payments.
• Budget Carefully: Allocate savings specifically for home-related expenses to avoid overextending financially in retirement.

Notable Quotes:

• George Campbell [75:14]: “Working longer gives you more wiggle room.”
• Rachel Cruz [80:47]: “Your housing line item is one of the most expensive and volatile.”

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9. Ken Coleman's Heartfelt Segment: Choosing Memories Over Debt

Situation: Ken Coleman shares a memorable interaction with a caller about choosing to attend a once-in-a-lifetime Taylor Swift concert with his daughters instead of selling the tickets to pay off student loan debt. This segment underscores the importance of creating lasting memories and finding joy amidst financial planning.

Advice Given:

• Prioritize Experiences: While financial responsibility is crucial, so is creating meaningful memories with loved ones.
• Balance Financial Goals with Personal Happiness: It's essential to strike a balance between debt repayment and enjoying life’s precious moments.

Notable Interaction:

• Ken Coleman: “She did not go into debt to do it. It was a gift.”
• Rachel Cruz: “Enjoy your life. Enjoy the things that matter.”

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Overall Themes and Conclusions

• Transformative Financial Actions: The episode emphasizes the need for significant changes in financial behavior to overcome debt and build wealth.

• Effective Communication: Whether in relationships or personal finance, clear and honest communication is vital for financial success and personal well-being.

• Prioritizing Debt Repayment: The hosts consistently advocate for prioritizing debt elimination through strategies like the debt snowball method to gain financial freedom.

• Balancing Savings with Enjoyment: While financial prudence is essential, the episode highlights the necessity of enjoying life and creating memories without compromising financial goals.

• Tailored Financial Strategies: Advice is personalized based on callers' unique situations, demonstrating the importance of adapting financial principles to individual circumstances.

This episode serves as a comprehensive guide for listeners facing diverse financial challenges, reinforcing Dave Ramsey's philosophy that with disciplined planning and thoughtful decision-making, anyone can reclaim control over their financial destiny.

Transcript

[Rachel Cruz]

Hey, guys, this Christmas we're giving away cash. So enter the Ramsey $5,000 Christmas cash giveaway. For your chance to win big this holiday season, go to Ramsaysolutions.com giveaway to enter. Now.

[George Camel]

Live from the headquarters of Ramsey Solutions, it's the Ramsey show, where we people build wealth, do work that they love, and create amazing relationships. I'm George Camel, joined by my co host Rachel Cruz. She's also the co host of another show we do together called Smart Money Happy hour. The number to call is 888-825-5225. You jump in, we'll talk about your life, your money. We'll help you take the right next step and we'll try to make it entertaining too because, you know, life's too short.

[Rachel Cruz]

Yeah. Yeah. And money's fun. All this is fun. We can enjoy this.

[George Camel]

The world is heavy and we're out here just making light of it all and showing you some a path forward, some hope. So Jeremy's going to kick us off across the border in Ottawa, Canada. What's going on, Jeremy?

[Caller]

Oh, just trying to keep one foot in front of the other. How about yourself?

[George Camel]

That's right, my friend. How can we help?

[Caller]

Well, hopefully with some answers to some money problems. But in a, in a nutshell, I uprooted my family and moved, ended up taking about a 65% pay cut. And now everything's just starting to pile.

Up and pile up.

And I want to know if it makes me a deadbeat father if I move back to my old job where I'm making north of 150k versus south of 50k just to keep all the bills paid and food in the fridge.

[George Camel]

What was the reason for you to uproot them and take this pay cut? It was clearly a big enough reason that you guys did. Decided to do this just to keep.

[Caller]

The family together, be a little bit closer to my partner's family. They're, they're super close, but.

[Rachel Cruz]

Okay.

[George Camel]

And now you're realizing we can't sustain this financially with our lifestyle, our bills and our much lower income. This is stressful for us even though we're closer to family.

[Caller]

Exactly.

[Rachel Cruz]

Is. Are you in a. When you moved away, how far away are you from where you guys moved? Because when you said to go back to my job, does that mean move again to go back to the old job? Or you could do something different with where you guys live now?

[Caller]

It's 3,000 miles and I was told if I go back and going back by myself.

[George Camel]

Whoa, like an ultimatum.

[Caller]

Yeah.

[Rachel Cruz]

Does she understand what's going on financially at all? How is she feeling? Is she stressed about it?

[Caller]

She knows that it's not. Well, but I'm. She's kind of blind to it, and she. She just took a different job to work less hours, too. How is she helping anything?

[Rachel Cruz]

Okay, when you say she's blind to it, does that mean that she doesn't have all the information or. She has all the information, but the way she's processing it is not correct.

[Caller]

In reality, I think she's just ignoring the. The issue.

[Rachel Cruz]

Okay, how much are you guys in the whole a month financially with. After everything's paid, how much. How much more do you need?

[Caller]

I don't know. She doesn't tell me what. What her expenses are.

[George Camel]

Okay, so you guys don't have any finances combined?

[Caller]

No.

[George Camel]

Are you. Are you legally married or just cohabitating?

[Caller]

Just. We're. We're common law and we got to two little ones.

[George Camel]

Okay. And bank accounts are separate. Do you guys venmo each other for the mortgage? How does this work?

[Caller]

I take care of the mortgage in one vehicle, and she does the rest.

[George Camel]

Okay. And she's not feeling the stress of this financially, just you?

[Caller]

No. She is too, because apparently she hasn't been able to make her minimums either.

[Rachel Cruz]

Okay, so it's sounding more like a relationship issue. Jeremy, it sounds like you guys just aren't doing well as a couple in general. I don't know if money's the main issue. I think it's become a symptom of it. But you guys, it doesn't sound like you guys communicate well or have the same goals or do this life together very well. It seems very separate, even from an emotional standpoint. Is that right?

[Caller]

It's getting there, that's for sure.

[George Camel]

Well, it sounds like you went along with this to appease her, to be closer to family, knowing full well you guys were going to be in the hole financially. And I don't know if you didn't make that clear or if she just was blind to it, as you said, and just going, I don't care. We're making this move. We'll figure it out.

[Caller]

Pretty much.

[George Camel]

Well, there. I don't know who your God is, but you need to come to Jesus conversation where you go, listen, you're clearly not doing well financially. I'm not doing well financially. This family's not doing well financially, and life is too short to live with this kind of stress. So if we're going to stay here, we have to make it work. And here's what that's going to take. And that's when we lay out the finances together, get on a budget together and figure out what the hole is and how we're getting out of it. And that might mean you need to find a higher paying job. She needs to work more hours. We need to combine bank accounts. That might be some of the step, the next steps you take.

[Caller]

Okay. And if that doesn't work, like should I jump back out to my old jobs just so that I know that my kids are fed?

[George Camel]

I mean, that's the noble thing to do. I don't think it helps your marriage at all or with this common law situation you have going on. So you're going to grow further apart while keeping the kids fed. And so I'd rather.

[Rachel Cruz]

Can you keep the kids fed though where you guys are to be able to work on the relationship and get a higher paying job where you are?

[George Camel]

Or can you sell the car and make other sacrifices to cover your four walls? For now.

[Caller]

The car is upside down by about 15.

[George Camel]

Do you know what she makes at all?

[Caller]

She's supposed to make 85 a year, but she has a habit of not going to work.

[George Camel]

Wouldn't you get fired if I don't show up to work enough? Dave says, all right, we're going to find someone else who can actually do this job.

[Caller]

Well, she works in healthcare, so they're, they're begging for people to work there.

[George Camel]

And what do you do?

[Caller]

I'm in the construction.

[George Camel]

Okay. What were you doing before when you were making six figures?

[Caller]

I was working in a mining industry.

[George Camel]

And that industry obviously doesn't exist where you're at?

[Caller]

No.

[George Camel]

Is there an equivalent or is there a better construction job up the ladder that you can aim toward?

[Caller]

I've progressed up the up the ladder in my company a little bit already. And the next step would be to become a supervisor, but that's at least a year and a half out because I've asked my boss for more hours and if he would be able to give me a wage increase and he just said that I'm not there yet.

[Rachel Cruz]

Okay. So Jeremy, I think what it comes down to is you guys aren't paying your bills. I mean, what, what's happening financially? There's an issue. So the adult thing is that you both sit down together and say, here's what it takes to run our household and we have to make X amount every month for this to happen. And we don't get to decide that. We don't feel like doing that. That has to happen. So either we're cutting our freaking lifestyle and taking everything off the table and doing nothing in order to feed the kids, or we're going to have to decide different jobs. We're going to have to choose to move back. Like, we don't get to just sit and not make money and not pay our bills like that. Like, we can't do that. So that's not an option. We're adults and this is part of life. And so that's one thing. But the other thing I'm very concerned about, Jeremy, is the relationship. I mean, I mean, it just, it sounds bizarre to me that she's so in the clouds that she wants nothing to do with you financially. Then she's made that very clear. My question is why? Because long term, this is not a sustained relationship. You cannot live your life on two separate pages financially because what that is, it's an indicator of how your relationship is in general. And you guys are going to just keep moving further and further apart. And you guys have two kids together, so it's worth the fight. But you first, from a tactical standpoint, have to get enough money in to pay the bills and you both have to come to that understanding. And if she is so in the clouds in that, then she may not be a great partner long term because she's probably in the clouds on everything else. So. So there has to be some big decisions that are going to be really difficult. But you both have to step up as adults and decide to face together.

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[George Camel]

Welcome back to the Ramsey Show. I'm George Campbell, joined by Rachel Cruz this hour. Phone call is right there. Just pick it up, dial it,582-55225. And if you get through the screeners, you'll be lucky enough to talk to Rachel Cruz herself and get some financial wisdom. That's, that's my goal at least. I'm hoping to call in very soon. All right, let's get to our question of the day, Rachel. It's brought to you by. Why refi? Why refi refinances defaulted private student loans that other places won't touch and they give you a low fixed rate loan built just for you. Cherise K lowered her payment from two grand down to 680amonth with why We WireFi. So go to wirefi.comramsey today to learn more. That's the letter Y r e f y.com Ramsey may not be available in all states.

[Rachel Cruz]

All right, today's question comes from Sid in Nebraska. What's your advice about retired senior citizens purchasing a house between Social Security and pensions? My husband and I have an annual income of about $125,000. We have $200,000 in cash and a little over $500,000 in our IRA accounts. We are going to buy a house for about $450,000. Should we take money out of our IRAs to pay for the house or keep it invested and take monthly distributions to help pay off the mortgage in less than 10 years?

[George Camel]

This is like a little common core math riddle. It's very exciting. Okay, so the house is 450. They have some cash, 200k. So that's great. That would be a serious down payment if they took that minus an emergency fund. And they could take some from the IRA and pay cash, but that would deplete their nest egg. So they would have to live off of Social Security and pensions for the rest of their life, which we don't know how old they are, how many years they'll live. I don't have a crystal ball, but.

[Rachel Cruz]

It sounds like between the Social Security and the pension, 25 case, that's not bad.

[George Camel]

I could live off of that.

[Rachel Cruz]

Yeah.

[George Camel]

So it depends. They live in Nebraska. Don't know what the cost of living is there. But I, I do like the idea of they could take on a mortgage because they're paying rent right now either way.

[Rachel Cruz]

Yeah, yeah, totally.

[George Camel]

So if they could at least have a fixed expense of a mortgage and then knock that out over time and if times get tough, they have the money and they can leave the money invested, let it continue to grow, and seven or ten years from now, let's have a goal to have no payments in the world.

[Rachel Cruz]

Yeah, I think that's it. I think you do still have an aggressive goal of paying it off because as quickly as you can pay it off. That's going to leave those investments to continue to grow versus feeling like in.

[George Camel]

A perfect world, I'd say let's buy the house with cash.

[Rachel Cruz]

Right? Right.

[George Camel]

There's not a ton of that to go around right now. If they had a $3 million nest.

[Rachel Cruz]

Egg plus this, or I mean, not even looking at $450,000 house. I mean, if you're retired, get something smaller.

[George Camel]

Do you need a three bedroom at this stage of life? Maybe you can downsize. I think that's the move. But I like the way they're thinking, and I don't think there's a wrong option here. But the goal is let's have no payments as soon as possible.

[Rachel Cruz]

Yes. It's great.

[George Camel]

Glad we agreed on something today, Rachel. We got there.

[Rachel Cruz]

Always disagreeing, George.

[George Camel]

So much disagreement. All right, Amy's up next in Savannah, Georgia. What's going on, Amy?

[Caller]

Hey, guys. How's it going?

[George Camel]

Pretty good. How are you?

[Caller]

Good, thank you. Thanks for having me.

[George Camel]

Absolutely.

[Caller]

I am looking for your top investment recommendations to a entrepreneur in her 20s.

[Rachel Cruz]

Ooh, nice. What do you do?

[Caller]

I have an online business. It's digital marketing based, but we work with influencers.

[Rachel Cruz]

Oh, that's great.

[Caller]

And have multiple other online business ideas as well as a brick and mortar. And want to get into real estate investment. So just looking to set myself up well while we're young.

[George Camel]

Fantastic. Are you married?

[Caller]

Yes.

[George Camel]

Okay. And what is the household income between what you take home from the business? 75.

[Caller]

Yes.

[George Camel]

Okay. What part of that is yours from the business?

[Caller]

So we both work full time for our business, so that's what we take home together from the business.

[George Camel]

Is it just you two working in the business or do you have other employees?

[Caller]

We have four other contractors on our team.

[George Camel]

Cool. And so what is your next goal? Do you guys have debt you're trying to clean up? Do you have savings you're working on, or are you in that investment phase where you've already got those two?

[Caller]

Yeah, we're on step four. So we've got the emergency fund. We've got all the debt covered except for the mortgage. And so I really, you know, you hear all the advice. Retirement accounts, life insurance, stock market, real estate. And I just, I just want some narrowed direction on where we should be investing.

[George Camel]

Yeah, well, we have very simple instruction when it comes to investing, and that's mutual funds and real estate. That's pretty much all Dave Ramsey does. That's the only thing I've done. Rachel may be fancier Than me, I don't know.

[Rachel Cruz]

No, not fancier.

[Caller]

George, for the sake requirement, no retirement account needed. Is that.

[Rachel Cruz]

Well, no, you do need retirement.

[George Camel]

That's what's within the retirement accounts.

[Caller]

Yeah.

[George Camel]

And you have options as a self employed person that I want everyone to know. If you're self employed, you're a freelancer, contractor, you don't just get to say, well, I don't have a 401k so I guess I'll never invest. You have the option of a Solo 401K. If it's just you and your spouse, you have the option of a simple IRA or a sep. SEP ira. So those are some options you can look into. And I'd be working with a financial advisor to figure out which one you can legally do for your situation.

[Rachel Cruz]

Yes. I think the goal, Amy, for you guys is to invest 15% of your income into retirement. And so that's going to look like from a business side what, what George is saying. Yeah, there's seps, there's solo IRAs, there's different options for entrepreneurs when it comes to investing for retirement. Then there's also just your traditional, like just a Roth ira and anyone can open up that you can put in, I think $7,000 a year per person. So you can do that as well. Um, so those are two great avenues to be putting that 15% and then anything above that. Once you guys are at a point that the house has paid off and all of it, that's when you can get a little bit more expanded when it comes to investing. So that's when you'd max, still max out those retirement accounts because those are just great from a tax perspective. A lot of those grow tax free, which is fantastic. Or. Yeah. Or real estate's another great option down the road. And we, we always talk about paid for real estate. So it's not starting big and fancy. You're actually starting pretty slow because it's at the speed of cash and it's.

[George Camel]

Only after you've got your primary house paid off.

[Rachel Cruz]

Yeah, this is after. Yeah, that's a lot. Yeah. But for right now, Amy, that shooting for that 15% of your income going into retirement specifically is going to be the best bet for you.

[Caller]

Perfect. So what about like a separate mutual fund through Fidelity or something like that?

[George Camel]

Just like a taxable brokerage account. Yeah, I wouldn't worry about that. I, you know, the wisest thing to do is to take advantage of these tax advantage accounts first, like the Roth.

[Rachel Cruz]

Ira, and then put extra money towards the house. Do you guys own a house?

[Caller]

Yes.

[Rachel Cruz]

Okay. So I would put extra money to pay that off first before I opened up just like a mutual fund account. And then again, once the house is paid off. That's one thing Winston and I did. We opened up just a separate mutual fund account that we just kind of had in there just to put extra money in, you know, if we had it. So, yeah, so there's definitely those other options.

[George Camel]

That's more of a baby step 7 item. Once you get the house paid off, then you can increase your investing and then those taxable accounts become part of your wealth building plan to maximize it. But for, if I was in your shoes, Amy, I would just open up two Roth IRAs. Both of you put 15% in there. That's a little over 11 grand between the two accounts. And within the Roth IRA, once you have money in there, you have to actually purchase funds. And that's where we talk about those growth stock mutual funds.

[Caller]

Got it. Okay. And I'm going to ask you a real estate question.

[George Camel]

Sure.

[Rachel Cruz]

Yeah.

[Caller]

So we've, we've purchased our first home in the forethought of turning it into a rental after the fact. So what is your advice on how long to live in it? Can we move out of it before it's paid off to buy something else? Like, what would your recommendation be there?

[Rachel Cruz]

I wouldn't. I mean, I would, I would get to a point that you would be able to cash flow the next purchase because. Yeah, I mean, because if anything, it's. If you went and got another mortgage and had a rental, then the rental payment, you know, is, is paying the, is going to eventually be paying the mortgage of your primary house.

[George Camel]

And so just adding another layer of risk and headache. And yeah, I'll tell you what I did. I just sold the house and used all of the equity toward the next one. Until you have that house paid off, then you can focus on cash flowing that next purchase. So that's the simplest, most peaceful way to go about it. But again, if you scroll tick tock, you're going to see a lot of people going, oh my gosh, no, keep it as a rental every time. Why would you let go of it?

[Rachel Cruz]

Yeah, and I love the question though, Amy, because I think again, we're all for real estate investing, but I do think there is this like, romanticized idea of having rental property. And it's not that passive. I mean, there, there is so much that goes into it. You have to deal with people. You're dealing with stuff breaking. I mean, like you have this massive asset and if you don't have a lot of cash flow to cover some of those things, it just ends up being a real headache. And so again, the most peaceful thing to do is what I would do is, yeah, roll all your equity into the next house. And like Winston and I, which I know this is, these years aren't here anymore. But this was about a decade ago. But we got a condo, George, for $44,000 in foreclosure. And just like, it's like crazy, it was far out of Nashville. Crappy, crappy condo. We went and redid it and all of it and we kept it for about a decade and then sold it.

[George Camel]

So like, and appreciate it.

[Rachel Cruz]

You can start really, really small. Start small. Don't feel like you have to go big. And again, it's not as passive as you think. It's a lot of work. It's a lot of work.

[George Camel]

Good reminder. And if you want free guide, complete guide to investing, go to Ramsaysolutions.com guide. Anyone listening out there? It's our free guide for investing. Ramsaysolutions.com guide. Hey guys, George Camel here for Deleteme. I saw a headline the other day that made me squirm. One third of the US population's background info is now public. We're talking 115 million Americans. Personal info out there in cyberspace for data brokers to buy, sell and trade like Pokemon cards. And data theft happens all the time. Data brokers get your info like your name, address, phone number, even your kids names. And then boom, it's available to online bad guys. But to that, Delete Me says, not so fast. That's because DeleteMe finds and removes your personal info from hundreds of these data broker sites. And they send you an easy to read report showing you exactly what they did and how much time they've saved you. What I love most is that Deleteme reduces the risk for scams for me and my family. Not to mention that we get fewer creepy ads and robocalls. So it's time to take control of your online privacy. Their individual delete me plans start as low as nine bucks a month and you can get 20% off if you go to joindelit me.com/ramsey. That's joindelete me.com/ramsey. Welcome back to the Ramsey Show. I'm George Camel. My co host today is Rachel Cruz and the number to call is, 482-55225. Well, the holiday season's here. We've got something extra Special. To brighten your Christmas, you can enter the Ramsey $5,000 Christmas cash giveaway. Enter daily to increase your chances to win one of our $500 weekly prizes or that five grand prize. Five grand grand prize. You like that? Five, five, five. That's a tongue twister. Just go to Ramsaysolutions.com giveaway. And while you're at it, don't forget our 50 Days of Christmas deals. You can save up to 30% on gifts that will give hope and life change to everyone on your list. We're talking about books like I'm Glad for what I have from my friend Rachel Cruz or my book Breaking Free from Broke, on sale for the first time and other Ramsey fan favorites. These deals will help you stay on budget while giving gifts that matter. Go to Ramsaysolutions.com store or click the link in description if you're listening on YouTube or podcast. Let's get to the phones. Lindsey's up next in Louisville. What's going on, Lindsey?

[Caller]

Hey, guys. How are you all?

[George Camel]

We're doing well. How can we help today?

[Caller]

So I have a quick question. My boyfriend and I have recently moved in together and we've been together for about a year now. I'm very early on in the baby steps, so I have about $700 in my thousand dollar fund.

[Rachel Cruz]

Good for.

[Caller]

Yeah, it's a big deal. So I have about 30 grand in debt and this was all accumulated before we got together. He has his own debt. I don't know all of it, but it's definitely not as much as I have. My question is, do I focus on my debt alone and he focus on his debt alone or should we combine these and tackle them together? I just don't know what's right.

[Rachel Cruz]

So keeping them separate is what we would recommend because you guys aren't legally married. So combining finances to someone that you're not married to can get really messy, really, really fast. So, yeah, I would definitely keep it separate. So I would work two completely separate baby steps. So you have your 700 with your debt, he has his. And then if you guys ever did get married, then you would combine it after you say I do, rings are on, good to go. Combine it all. And you, you can work out of one account. But yeah, what we have found, Lindsay, is just that, you know, if or when, you know, a breakup happens and so much of either his assets, your assets end up getting entangled with each other and you're using your income to pay off his debt. He's using his income to pay off Your debt. And it really, from a individual standpoint, you've made no progress or. Or less progress than you would have made if you just worked on your own if something were to happen and you guys separated. So. So, yeah, that's what we would. We would say.

[George Camel]

Can I ask a harder question, Lindsay?

[Caller]

Yeah, absolutely.

[George Camel]

When are you guys getting married?

[Caller]

Well, we have talked about it. It also is kind of weird because I just got out of a 15 year relationship and, well, not recently, but, you know, a while ago. And all of our debts were combined, like his debts were my debt, you know, and then because.

[Rachel Cruz]

Were you guys married?

[Caller]

Separate? We were, yeah.

[Rachel Cruz]

Yeah, Yep. Totally a little different.

[Caller]

I was like, man, what if something happens and we're only paying off his debt? And then I look, you know, I'm coming out behind.

[George Camel]

There's a thousand things that could go wrong with this situation. And that's why we recommend just waiting. You'll have legal protection. You'll have the marital unity of going, all right, it is we now. It's our one account, our one pile of debt. And that. That is the best way. When you get to that point, you will find that does accelerate. But now is not the time to do that. So if and when you guys get married, combine, and we hope both of you are on your journeys and keep each other accountable. Is he on board with this plan?

[Caller]

Yeah, yeah, we. We've been kind of flirting with the idea separately, obviously, for about three years.

[George Camel]

And I think you make it a competition. You know what I mean?

[Caller]

Like, no, that's great. That's actually a great idea because everything's a competition.

[George Camel]

How about this? You pay yours off first. He's got to pop the question if he's serious about this.

[Rachel Cruz]

My gosh. It determines on the he pays his.

[George Camel]

Offers, he has to pop question.

[Rachel Cruz]

Don't listen to that, Lindsay.

[George Camel]

I'm kidding. But yeah, don't let that hold you guys back from getting married either. That's another thing that comes up is they go, well, we want to wait till we're debt free to get married. Get married when you feel like it's the right time to get married and the debt will take care of itself if you guys are on the same page.

[Caller]

Awesome, awesome, awesome advice. I do have one more quick question. I already know the answer to this, but I just want to see what you guys think.

[George Camel]

Okay, tell us the answer after you're done because I'm curious.

[Caller]

I have about. Okay, I have about 20 grand in student loan debt. I plan on going back in January, obviously, I don't want to take out more debt to do that. So I'm guessing the right answer here is to pay out of pocket.

[Rachel Cruz]

Yes. Why are you going back? What are you getting back? What kind of degree?

[Caller]

It's a social work degree. So I'm going to be a therapist. I have two years in. I need pretty much two more to even be taken seriously. Four more to actually get anything done. So, yeah, that's kind of my thought process.

[George Camel]

What's it going to cost?

[Caller]

Ooh, that's a good question. I'm going to university, so I'm sure it's going to be up there. I went in Denver for one semester and it cost me ten grand to walk in the door.

[George Camel]

Well, I would caution you to make this as affordable as possible because I don't know if you know, but like social workers, they're not out there flexing with their crazy high income. So I don't want you to go spend 50 grand to go make 35.

[Caller]

Okay.

[George Camel]

And so if you're going to even cash flow it, find the. Is it the only way? Is it the best way, as our friend Ken Coleman would say. And if that means an online program, a community college, they really don't care where you went. They just want to see that you did the work, you got the experience.

[Caller]

Okay. Okay. That's great advice too. Thank you guys so much.

[George Camel]

Absolutely.

[Rachel Cruz]

Thanks, Lindsey.

[George Camel]

We helped at least one person today. Rachel. We're off to a great start. All right, let's move on to Stephan in St. Paul, Minnesota. What's going on?

[Caller]

Hey, Rachel Hall. George.

How's it going?

[George Camel]

Great. How are you doing? Great.

[Caller]

Hey, so a little bit about me. I am 20 years old and I still live with my parents out of high school. I went into trades and I currently.

Work for a solar company where I do day to day operations and I'm.

Their lead designer as well.

So I guess my question for you guys is, you know, I'm at that.

Stage where I would like to move.

Out and I have a good chunk of money saved, but I'm wondering if.

I should wait another year or two and put a big, large payment on a house or I should move out now and slowly save up and wait.

Till the time is right to buy a house.

[Rachel Cruz]

I mean, we're. I'm usually more on the side of moving out. And now if you had a very, very specific goal with a very specific time frame saying, you know, Maybe you had $15,000 in debt and you're like, I'm. If I, you know, I'm working three jobs. I'm going to pay this off here, but I'm saving money on rent, but in six months, I'm moving out after the debt's paid off. Like, if there was, like something that was more specific for you, then maybe considering it, but. But the fact that it's just to save up for a down payment on a home, I don't know. There's something to be said about just living on your own and, and figuring out life. There is a. A something within your character that changes when you have to be the one responsible completely. And now that you're an adult and you're working full time, you're making great money. I think it's just. I think it's better for you to be out on your own now. You're 20 years old, so you're still pretty young. You're not, you know. Oh, yeah, 28 or 30, 32.

[George Camel]

I moved out at 20, Stefan, if it gives you any, you know, and I moved across the country, finished school, all that. But in your shoes, I would think it's wise to rent. It's kind of like you don't want to go for your first car when you're 16 and get a Lamborghini. It's just too much car. The maintenance is too expensive. You're not prepared for it at that age. So similar to becoming a homeowner at 20. I would say it's a. It's a lot going on right now when your frontal lobe is still developing and you're trying to figure out life. But it's a great way to stair step it and go, all right, I know how to pay bills on my own. Still having to take care of my own life. There's a sense of independence. There's a maturity that happens. And that's why I think it's wise to rent for a year or two.

[Rachel Cruz]

Or however before you.

[George Camel]

So I would say absolutely. Move out. You're out of debt. With an emergency fund.

[Caller]

I currently have about. I currently owe about $7,000 on my car, but I worked a side hustle over the summer and I'm ready to.

Pay that off at the end of the year.

[George Camel]

Awesome. That would be my goal. Let me get the debt paid off. Let me get a little savings going to prepare for, you know, the deposit that's going to be required for rent, some furniture for my own place. And then I would say, mom, dad, it's been awesome. Thank you so much. Yeah.

[Rachel Cruz]

But yeah, and I would have a. I would have a money Goal between now and February, if you decide to move, whenever you're deciding to move, have a goal of a amount you want and a time frame. And I think it would be very mature of you to sit down with your parents and say, hey, here's my plan. You know, I'm going to be here for, for four or five more months. My plan is to save up this. I'm going to pay off my car and just give them the dignity as parents to be like, yeah, I'm, I'm an adult and I'm, I'm moving off. And well done, mom and dad. Thanks for all the help. And I'm a man now and I'm making my own money and living in my own spot.

[George Camel]

I'd be teary eyed if I was that parent going, I did a good.

[Ken Coleman]

Job raising my son. Stefan.

[George Camel]

Stefan, we're cheering you on, man.

[Rachel Cruz]

This is awesome.

[George Camel]

I know.

[Rachel Cruz]

Great job.

[George Camel]

What a, what a fun rite of passage to move out of the house and get your own place. Even if that's renting. It's the wise thing to do. This is the Ramsey show.

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[George Camel]

This is the Ramsey show. I'm George Campbell joined by Rachel Cruz this hour and a very special guest. Some would call it a chemistry. Ken Coleman joins us. I like what you for this segment and this is what we call a callback. So you guys took a call on the Ramsey show.

[Ken Coleman]

Yeah.

[George Camel]

And it became legendary. Dave reacted to this call and we got an email from them back and we wanted to give you guys an update. So tee it up, Rachel.

[Rachel Cruz]

Yeah, so we got a call when kid and I were on the show probably a few months ago, and it was a mom who got her daughter tickets to the Taylor Swift concerts. And she was like, well, if she sold those tickets now she could pay off all of her student loan debt. What should we do? And I'm like, you go to the concert. I mean, like, like you'll live once. This is insane. Go to the concert. You can't get tickets for it. If you got tickets, you go, you figure out the Debt later, you didn't go into debt for the concert, but the tickets are bought. Just go and enjoy. And then Ken over here became a swiftie and said the same thing.

[Ken Coleman]

Well, here's the deal. I asked one quick question to the lady. She said, if we sell them, we'll make somewhere in the 10 grand range and we'll put it towards it. I said, are you. Were you planning to spend that amount of money out of your own pocket to help your daughter with her student loan? And she said, no. And then I said to Rachel Schock, I think I go make a memory with your two daughters.

[George Camel]

Wow, life is short.

[Ken Coleman]

And she acted like I was the Grinch who got a heart.

[Rachel Cruz]

I couldn't believe it. So then the comments on YouTube went well. And the comments were like, Dave would never give this advice. They're giving the wrong advice that David would. So then when Dave was on the show a week later, we played the clip because I was like, dave, you tell America were we wrong? And he agreed with us only because it was a gift.

[George Camel]

What a bizarre.

[Rachel Cruz]

From the mom to the daughter. And he said, you can't undo a gift. You can't, like, make her now sell it now. He said, if your daughter called me, then maybe I would make her sell. But I think we. I think we do have a.

[George Camel]

We have a clip we can play. James. Okay.

[Caller]

My daughter is 22, and she just graduated from college with some student loan debt. And about a year ago, she was able to get on the presale and buy three tickets for her, my older daughter and myself to go to a Taylor Swift concert in Indianapolis. We got him for like $209 a piece. So now I'm seeing these resale.

[Rachel Cruz]

Oh, it's crazy. Oh, it's crazy.

[Caller]

It's insane.

[Rachel Cruz]

Yeah.

[Caller]

And so I told her, like, why don't we sell those tickets and you can knock down so much of your student loan, but you'd be so far ahead. She says, absolute. It's non negotiable. It's a bucket list item. She's like, probably you, Rachel, a Swifty. And this is, you know, and it's her money, right? No, it was my money.

[George Camel]

Oh, okay.

[Caller]

It was my money, so I paid for them. But, you know, I mean, this is. And for me too, I'm looking at like, you know, she's iconic. I would love to go to her concert. My daughter, of all the people that she could take, she wants to take her sister and me, you know, I mean, that's great. It's Going to be a fun thing.

[Ken Coleman]

And what would your, what would your take be? What? Rachel, now walk us through. What do you think you can make on these tickets?

[Caller]

I'm thinking. And it would average out between three, three, four grand easy.

[George Camel]

Yeah.

[Ken Coleman]

Per ticket.

[George Camel]

I get it.

[Ken Coleman]

So her student loan debt is 24, 000.

[Caller]

Correct.

[Ken Coleman]

And that's what you would want to put the money towards?

[Caller]

Absolutely. 100 of it would go to there.

[Ken Coleman]

Would you be putting 9,000 plus dollars towards her student loan if you hadn't bought these tickets?

[Caller]

I would not.

[Ken Coleman]

I wouldn't resell these tickets. Here's the deal, Jill. You weren't planning to cut a check for $9,500 to put on your daughter's student loan ever.

[Caller]

I was not.

[Ken Coleman]

So my whole point is like a windfall.

[Caller]

Right. If I, if $9,500 fell into my lap, I might do that.

[Ken Coleman]

I get it. But this is your daughter's and it's a once in a lifetime concert.

[Rachel Cruz]

Oh, yeah, I agree. You go, Jill. Go to the concert.

[Ken Coleman]

You weren't going to do this anyway. And I think your daughter said absolutely no way. And I think it creates an unnecessary tension. She's 22. She needs to pay the thing off herself.

[George Camel]

Anyway.

[Ken Coleman]

There's a lot of reasons I want our audience to know I'm not just. I just think when I look at something like this, this is about the emotional not to find.

[George Camel]

There we go, man. You. I mean, that's some common sense wisdom right there. And here's the update. Jill emailed back in.

[Rachel Cruz]

We got this yesterday.

[Ken Coleman]

This is a sweet note.

[George Camel]

Can I read this email?

[Caller]

Yeah.

[Ken Coleman]

Because I can. I'll cry.

[George Camel]

Okay.

[Ken Coleman]

That's true.

[George Camel]

I was pretty amazed that my calling question garnered so much discussion. And the follow up with Dave and Rachel was great. Love that. I wanted to send an update because we went to the indie concert this past Sunday and it was just as amazing an experience as Rachel indicated it would be. Taylor Swift really puts on an impressive performance and the crowd and energy was fabulous. I had a wonderful weekend with my daughters. Like Ken advised, I made great memories with my daughters. I'm attaching a couple photos. You're seeing them on the screen. If you're watching on the app now.

[Ken Coleman]

Look at this one. Read what that says.

[George Camel]

And look at this bracelet. The friendship bracelet that is now Taylor made famous. What's it say?

[Ken Coleman]

Ken says make memories. And I got choked up when I read this the other day. I did.

[George Camel]

Did you ever think that you'd make it to a Taylor Swift friendship Bracelet.

[Ken Coleman]

No. And it wasn't about, like, a really.

[Rachel Cruz]

Cool bucket list thing, though.

[Ken Coleman]

Yeah. But it wasn't that I was included in that. It was that I had a little, teeny, tiny, really fun and entertaining small infantesimal play and that mom making memories. And I just think that you don't know if you have tomorrow. And I think I got choked because I got one little girl.

[Caller]

Yeah.

[Ken Coleman]

And I. If Josie said, dad taking me to Taylor Swift, I'm gonna go deliver garbage, I'll. You know, I might steal some ordering garbage. I'm just making the point. You do. And you would do it for little me. 100. Come on. I got a little chokey. So it's a little dusty in here.

[George Camel]

What is the TLDR spark notes Here is. She didn't go into debt to do it.

[Ken Coleman]

She did not.

[George Camel]

It was a gift.

[Rachel Cruz]

Yeah.

[George Camel]

She wanted to be generous and make a memory.

[Rachel Cruz]

Yes. And because that. The tickets, the value of the tickets.

[Ken Coleman]

I think there's a lady in the front row that's a little cry. She's crying. Are you crying?

[George Camel]

I think she's laughing at you, Ken.

[Ken Coleman]

Oh, you're not crying.

[George Camel]

Maybe she is.

[Ken Coleman]

You're kind of laughing at me.

[George Camel]

No one knows she was crying.

[Ken Coleman]

I think she was. See?

[George Camel]

Special.

[Ken Coleman]

It was a sweet thing.

[Rachel Cruz]

I know.

[George Camel]

And I think we turned Ken into a swiftie by accident.

[Rachel Cruz]

I know.

[Ken Coleman]

I don't even know what. What that means, but sure.

[Rachel Cruz]

Oh, you are my daughter is deep in your heart. I think you're there because it's always the tension on this show when we talk about money, that we say you live like no one else, so later you can live and give like no one else. And so this mom was debt free. The mom was responsible financially. She had the cash to pay for these tickets. Like, she did nothing wrong. I mean, nothing that we would say, like, oh, my gosh, you shouldn't do that. But her daughter, on the other hand, right. Is the one with the student loans and all of it, but it was a gift to her daughter. And again, it's this tension between. We want to be wise financially. You want to get to a place that you financially are at peace. You have a solid foundation under. You don't have debt. You have an emergency fund. Like, we take care of it. We are adults. We're going to be wise with our money. But then on the other hand, hear me say this, and all of you that have listened for a long time and are on baby steps 4, 5, 6, and 7, enjoy your life. Enjoy your life. And everyone's like, oh, Dave, you know, saves all the time. Dave Ramsey, doesn't he? He saves, but Dave spends.

[George Camel]

He ain't eating rice and beans no more.

[Rachel Cruz]

Dave parties. Like, I mean, he's a. He is a spender. And that's what we want for you, too. We want you to be at a place where you have the money and you can enjoy it.

[George Camel]

Downshift from the Gazelle intensity to intentionality.

[Rachel Cruz]

Budget for the Ramsey. The Ramsey message is not, oh, my gosh, we're gonna have to find coupons for every single purchase for the rest of our lives, because we have to just save a ton, and we're gonna just die with all this money. And we never enjoyed life.

[Ken Coleman]

George, we're talking to you, by the way.

[George Camel]

I know. I felt that that was a personal attack.

[Rachel Cruz]

Enjoy it. Enjoy life.

[George Camel]

Some of us enjoy also using a coupon.

[Ken Coleman]

No, you enjoy counting your money.

[Rachel Cruz]

Oh, my God.

[Ken Coleman]

You're the nice Ebenezer Scrooge. You're not a mean person, but you like counting your coins.

[Rachel Cruz]

He likes to split appetizers at restaurants. I'm like, there's a point, people. There's a point that we need to just relax.

[Ken Coleman]

Yeah.

[Rachel Cruz]

And enjoy.

[George Camel]

Relax and get your appetizer and buy the Taylor Sweat.

[Ken Coleman]

You know what your advice would have been? If you buy any memorabilia or merch, sell it afterwards.

[George Camel]

I probably would have said, George would.

[Rachel Cruz]

Have sold the tickets.

[George Camel]

I would have said, sell the tickets. Invest in a Good Girl stock mutual fund from 22 to 62. Is that really what you would have.

[Ken Coleman]

Said in that situation?

[George Camel]

No, no. I probably would have been on Team Ken and Rachel and said, begrudgingly. Yolo, because, you know, it's the recipient.

[Ken Coleman]

Even then, you got to throw a begrudgingly on.

[George Camel]

Well, it's the recipient's deal. She gets to do what she wants with that gift. If she wanted to sell it and pay off debt or do anything else, that's up to her.

[Rachel Cruz]

Absolutely.

[Ken Coleman]

By the way, I do want to point out that at the very end of that segment, you can go back and watch it on YouTube. And it was also on, I think, Rachel's Instagram. And she collabed with me on that one, but I finished with a lyric from 22.

[George Camel]

That's impressive.

[Rachel Cruz]

And the. And the mom said.

[Ken Coleman]

And she followed up.

[Rachel Cruz]

She. What was it? It was something I forget, but it was down bad at the joke. Yeah.

[Ken Coleman]

I thought I was gonna be. I thought I was gonna be cool host and drop in a lyric. And then mom came right back, and Rachel was so happy. I don't know that I've ever gone to a commercial break where she was so emotionally just overjoyed.

[George Camel]

Yeah.

[Ken Coleman]

So much fulfillment in her face. You got to watch the clip. For those of you that were listening, we played that. You got to watch her. She's so excited and scared.

[George Camel]

I want to see you guys communicate. Only in Taylor Swift lyrics.

[Rachel Cruz]

And just one of the joys of happiness. And they found this scientifically proven. Arthur Brooks talks about this.

[Ken Coleman]

Yeah.

[Rachel Cruz]

You actually can find joy when you spend money on experiences with people that you love. It brings actual joy to your life. So.

[George Camel]

So, George.

[Ken Coleman]

George, let's book a guy's trip.

[George Camel]

I'm in.

[Rachel Cruz]

He just talked about how you didn't have a lot of friends to travel.

[George Camel]

Me, Deloney. Taylor Swift.

[Ken Coleman]

No. Oh, see, you said that.

[George Camel]

Didn't know where you were going with that.

[Ken Coleman]

We'll go canoeing with James.

[George Camel]

Next time you guys host a show together, you better be wearing friendship bracelets, too.

[Caller]

Yeah.

[George Camel]

Let me guess. We're gonna go hunting and kill stuff. No, thank you. I'll take Taylor Swift. This happened been the Ramsey Show.

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[George Camel]

Live from the headquarters of Ramsey Solutions, it's the Ramsey show where we help people build wealth, do work that they love, and create amazing relationships. I'm Ramsey personality George Camel, joined by best selling author and co host of Smart money Happy hour, Rachel Cruz. And we're taking Your calls at 888-825-5225. You jump in, we'll help you take the right next step for your life and your money. Alexis will kick us off in Phoenix. How can we help Alexis?

[Caller]

Hi. So I am a single mom, I'm co parent and I currently make $50,000 before taxes. So I bring home about 40, 38 to 40,000 after taxes. And my problem is I have $3,500 in bills monthly, but my paychecks, I bring home $3,000 a month. So, you know, I'm always $500 below what I need to pay my bills. So I didn't know if it was smart to stop paying my personal loan or to stop contributing to my 401k. Like I don't want to hurt my credit, but at the same time I'm like, maybe it's more important to, you know, tackle the bills that are non negotiable.

[Rachel Cruz]

Yeah. How much of the 3,000 is debt and how much of it is just bills for lifestyle?

[Caller]

All. So all of it is bills. The 3,500 that I owe monthly, all of its bills. My rent is, I pay 1800 for everything in my house. My car Note is like 534. Car insurance is 200. Health insurance is 150. Yeah. So it all adds up to.

[Rachel Cruz]

Sure, sure, sure. Okay, so tell me the debt specifically. So your car loan is how much total?

[Caller]

30,000. 30,000.

[Rachel Cruz]

And you pay how much a month?

[Caller]

534.

[Rachel Cruz]

34. Okay, and then what other debt? You said a personal loan.

[Caller]

Yeah, I have a couple of personal loans. They consolidated it. So I have one 2500 one and I have a couple of credit cards. So altogether that's another 10,000. So I'm $40,000 in debt. And then just like my, my, the bills that I have 40,000 in debt.

[Rachel Cruz]

Yes. Okay, so how much is the payment for the personal loan? The 2500. 300.

[Caller]

300.

[Rachel Cruz]

Okay. And how much are you paying in credit cards every month?

[Caller]

I actually stopped paying. Well, one of them is 50. I paid $50 for the small credit card, the $500 credit card. The other two ended up going to collections. Okay, so I haven't been making any payments on that and I've been thinking about just letting the other one go to collections. You know, my credit.

[Rachel Cruz]

Yep, for sure. Okay, so yes, I would stop contributing to your 401k for sure. I would stop any retirement savings. I would press pause on that. So I would call your HR department on Monday and make sure that no more money is taken out.

[George Camel]

What percentage is that or what's the monthly amount that's taken out?

[Caller]

$80. And then they go up to 6%. So they're matching me to contribute to 4% they contribute to.

[George Camel]

Okay, all right, so if we pause that, you'll get 80 bucks back in your life. Here's what we're doing the math for. We're trying to find you margin. And there's two ways to get it. Yeah, Spend less and make more. I think we need to do both.

[Rachel Cruz]

And this car, Alexis, it is. It is way beyond what we would recommend. We always say that you want anything with motors and wheels to be half or less of your annual income. And, yeah, you're making, you know, 50,000. You have a $30,000 car. You have too much car. So I would be getting rid of that. Do you know how much it would be if you sold it? Kelly Blue Book it?

[Caller]

No, I just got it this year. I got it in February, so 2024, I don't know, but I know I will be upside down. And I ended up having to get the car because the one that I had, I had to put it a little. 2016 wasn't the best car, Alexis. A and B car.

[George Camel]

Let me. Yeah, I want to show you something about your language that has gotten you to this point. You said I had to.

[Caller]

Okay.

[George Camel]

Nobody has to get a $30,000 car right? Now, I understand that you didn't have the money to pay for a car in cash, but it's these kinds of decisions where we take that off the table. We start to go, okay, what car can I afford? Well, I could afford a $7,000 car if I save up 500 bucks a month for the next 12 months. That kind of decision and process will help you get to the point where you no longer ever touch debt again.

[Rachel Cruz]

Because if you think about it, this car payments is exactly the amount of money you need to stay current on all of your bills every single month and break even. So, yeah, and I would. And Alexis, I would do a private.

[George Camel]

Sale, get the most money.

[Rachel Cruz]

Yeah, I wouldn't. I wouldn't, like, trade it in a dealership or anything. And so if you're. If you're underwater on it, then you will take another small personal loan and you can add a couple of thousand dollars to that loan as well, just to get a car to get you by. But again, I'm talking about like a really crappy, not great car, like something really, really, really, really cheap, like 5, 6, $7,000. Because I would rather you have a $10,000 loan than a $30,000 loan right now. So. So if you're underwater by 5, let's.

[George Camel]

Say it's only worth 25 and you owe 30, then. And then you're going to buy one for 5. Well, that's a 10 grand delta we need to find. And so that's where Rachel's saying go down your credit union, get one personal loan so that we lessen the debt and get you out of that payment.

[Rachel Cruz]

Yes. And then what's the situation with your, with your kids? You said you're co parenting. What, what is, what it like? What are your weeks look like? Are you, do you have the kids every day? Are you split custody or how does that, how is that working?

[Caller]

Yeah, I have her four to five days a week. But it's, it's, you know, we're very flexible. We don't have like a set schedule. But he does, he's very involved. He has the baby ones if I ever, ever need him to, however.

[Rachel Cruz]

Okay. Okay. So. Yeah, because I mean I, if I were you in this position, I see a way out. You're able to, you're going to be able to get out of this debt. Even though I know it feels overwhelming. But if you think about it, if you go down in car and we'll pretend your new loan is 10,000. Yeah. You have some credit card debt but then the, that's going to be 12,000. How much is credit card debt do you have? Did you say total 10,000.

[George Camel]

Okay, so you're cutting your debt in half just by getting rid of this car and that's going to get you out of debt twice as fast.

[Caller]

Yeah, I definitely thought, I'm definitely open to it because I definitely thought about it. I just didn't know how I was going to, you know, eat up the what I was over in. But like, yeah, I guess either you.

[George Camel]

Have it in savings or you need to get the difference in that personal loan and it doesn't. Do you have anything in savings right now?

[Caller]

Not as of this month. Now. Ended up using it all.

[George Camel]

Okay, so your next goal, your A1 is number one, keep food on the table. So your four walls need to stay covered before any other bills are paid. So your food, utilities, housing, transportation, and if that means the bill can't get paid for the credit card companies, whatever, we'll deal with that later. Then beyond that, you need to get a thousand bucks saved really fast to cover those little ankle biter emergencies and then Alexis too.

[Rachel Cruz]

Sorry, I know we're throwing a lot at you, but your rent, you're bringing home 3000amonth and your rent is 1800. So that's more than half of your, of your, of your take home pay. So I, I don't think that's sustainable. That's going to be a really, really hard hole to climb out of in a sense, versus if it was, you know, a thousand bucks. Right. And I know that rent and more like the housing situation is less in your control. It's so difficult. So, so difficult. But again, for a season, for two years, right. Like it's not going to be forever, but for two years, finding something that is way cheaper is something that, that I would look into too, because it's either getting your income up or it's going to be lowering your expenses. And that's a, that's a glaring expense that I see that's not from a ratio standpoint, is going to be really difficult for you to get ahead with keeping that more than 50% of your income going to rent.

[George Camel]

And so for now, right, Alexis, that might mean that you get a side hustle that brings in one 25 bucks a month and that, I mean 125 bucks a week, that's 500 bucks a month to keep you afloat to cover all the bills. Yeah, that might be what's necessary in the season. On top of working, getting your core.

[Rachel Cruz]

And I would say still on top of moving. Would you, George? I mean, I would.

[George Camel]

If you can find a place that's cheaper. Yeah, might be a little further out. Not as nice because I would hate.

[Rachel Cruz]

To have a side hustle just to keep your living expenses afloat because the goal is that your income keeps everything afloat that you need your four walls and anything extra is going at the debt. And so again, I think it's going to be difficult to do that with that $1,800 rent payment. So I would look really hard, Alexis, for somewhere cheaper. I hope that helps.

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[George Camel]

Solutions is a paid non client promoter of participating pros. Learn [e-mail] SmartVestor I'm George Campbell joined by Rachel Cruz. This is the Ramsey show. Open phones at 888-825-5225. We're head Tampa next to talk to Corey. How can we help? Corey?

[Caller]

Hi there. Thank you for taking my call.

[George Camel]

Sure. What's going on?

[Caller]

I'm contemplating selling my small business to accept a job that would increase my total income to try and get out of this debt that we're in as quick as possible. And I'm just trying to make sure that I'm doing the right thing.

[George Camel]

Okay, how much debt are you in?

[Caller]

Right around 100,000 before my mortgage.

[George Camel]

Okay, and what kind of debt is the hundred thousand?

[Caller]

Let's see, we got 35 is allocated towards the small business. It's a food truck. So that was a startup loan from friends and family members, about 30,000 in student loans, 10,000 to fix the AC and then about 22,000 and 25,000 in vehicles.

[George Camel]

Okay, and what is this business worth if you were to sell it?

[Caller]

I would estimate around 42,000 to just sell the trailer. And then I also have a truck that I bought to use with the business that I could potentially let go as well.

[George Camel]

What's that worth?

[Caller]

It's worth right around 13,000 and I owe 18,500 on it.

[George Camel]

Okay, so you're about five grand underwater on that. Okay, so you would get 55k essentially for selling this business.

[Caller]

Correct.

[George Camel]

And you need another five to get out of the underwater loan. And you're about 100k in debt. So this gets you out of debt twice as fast. And what's the household income now?

[Caller]

Right now my wife just got a promotion. She makes 7 or 67 before bonuses with potential 12,000 in bonuses. I make about 550 at a part time job a week. And then the trailer, we really don't take a paycheck from it. I just whatever profits at the end of the month I throw at debts which is averaging between, you know, 2,030 500amonth.

[George Camel]

Okay, so altogether you guys make about 100k a year roughly.

[Caller]

It's not including the trailer in any way, shape or form. Seeing as how I don't take a paycheck from it, it's closer to like 85 to 90.

[Rachel Cruz]

And what's the new job, Corey, that you're looking at?

[Caller]

I would be taking a chef position at the part time job now which would get me up to 73 guaranteed with a potential 12,000 bonus as well.

[George Camel]

Amazing.

[Rachel Cruz]

For the food truck itself, is it something you would go back to doing after, like if you were completely debt free, would you still keep this, keep doing this or are you getting burned out?

[Caller]

Well, I kind of burned out on it. Been doing it for about two and a half, three years, working seven days a week, you know, 70, 80, 90 hour weeks and just, it was never supposed to be the end all, be all. It was supposed to be a stepping stone towards a brick and mortar location. And it's just looking like the reality of it, it puts it, you know, five, six, seven years down the road. And I just don't think that I could put my family through that hardship.

[Rachel Cruz]

Yeah, totally.

[George Camel]

That's mature of you.

[Rachel Cruz]

Yeah. And I think, I mean, I think you're listening to your gut and I think you're, you're seeing kind of the tea leaves of what, what's happening. Which I think is really smart, Corey, really, really smart. Especially when you talk about the food industry. We've gotten calls of people that go straight to want to go straight to the brick and mortar and take out a massive loan. And the food industry is one of the highest ones that you know, the highest parts of, of small businesses that goes up and it goes down and it close, it closes more than any other industry. Yeah, it's just a re. And as you experience with the food truck, it is just a, it's a tough, it's a tough world to be in. It's a lot of work, a lot of work. And again, not always with the guarantee that it's going to be successful. So being a chef somewhere I think sounds like the perfect next stepping stone.

[George Camel]

You're gonna get 50 grand raise while getting rid of half of your debt.

[Rachel Cruz]

And you're still doing the thing you love. You're still able to, you know, be in that world of, of cooking and food and hopefully innovating experience. Yeah, I mean like to me this is kind of a no brainer, honestly, because I don't know, you kind of get to still live your dream but not have to deal with owning anything right now.

[Caller]

Right.

[Rachel Cruz]

So yes, I would, I would do it.

[George Camel]

I try to get top dollar for your trailer and the truck. And do you have anything in savings?

[Caller]

We have right around 2,000 in our emergency savings and then I have about 2,000 cash that just kind of floats around for expenditures.

[George Camel]

Okay. You may want to wait another paycheck or two, get that 5,000 difference that you're underwater on so that you have the money to actually get rid of the note on that truck.

[Caller]

Okay.

[George Camel]

And that way you're not having to take out another loan to clean this up. And then I take that new job, man, and I would clean this mess up. You're probably get, I mean you'll be making what, 150k household at that point?

[Caller]

Roundabouts.

Yeah.

[George Camel]

You know, and so you'll be more of.

[Caller]

It's not guaranteed, you know, so it's, there is a little bit of a fluctuation on it.

[George Camel]

Sure. And then you know, making about 150 with 50k left to pay off. That's going to get knocked out real quick versus your situation now which is we make 80, 90 with a hundred to pay off. The math ain't math and on that one. So we do need some drastic changes. You're willing to do it, you're burnt out on this and guess what? Later on down the road you may decide to do this dream again, but you're going to do it with cash, with more experience, while making more money. And so I don't want you. I know it's. It's hard to grieve something that you put your heart and soul into and I can tell you're passionate about it. But, but there's also wisdom and going now's not the time.

[Caller]

Yeah. And you know, we just found Dave Ramsey and your whole system a few months ago and we have made considerable progress towards our debt. We always live all of our debts from three years previous. We haven't gone into any debt in the last three years. We were just paying minimums. And then we read, you know, total money makeover and we started trying to get out of this debt. We're still struggling with the budget somewhat. You know, I feel like there's still more room for cutting Some expenses, but it's just, you know, been a little bit of a struggle.

[Rachel Cruz]

Yeah. And just to give you some, some hope in it, I mean, you guys have just been doing this a couple of months. And even with the budget, we, we say it usually takes about three to four months to really get in the cycle of doing it. And, and it actually be correct that you can live on. So you guys are just starting out. And the fact that you're so gung ho about it, I'm like you, you're gonna make great progress.

[George Camel]

And the budget is easier to do when you have less debt, more income. The numbers will start to give you some hope instead of go, oh my gosh, how are we gonna fix this puzzle? And so we're wishing you the best, Corey. Appreciate the call. Yeah.

[Rachel Cruz]

And you know what? Hold on the line, Corey. Christian will pick up and we'll give you every dollar premium for a year on us. And this is our budgeting app that hopefully will help get this a little bit more organized. It's a very, it's a great app because it's very fine tuned. Like, you get to see all the cataracts. Yes.

[George Camel]

All right, let's go to Kathy in Boston. How can we help? Kathy?

[Caller]

Hi.

[George Camel]

Hey. What's your question?

[Caller]

Okay. I'm 67 years old and I'd like to retire in three years. And I do have money in stocks and bonds and mutuals. And I'm not sure if I should keep it there or if I should maybe switch to annuities or IRA cds. He didn't know the best way to go.

[George Camel]

Well, I mean, switching to annuities and IRA CDs, you're talking about really lowering your ability to make any money. And so you're just sort of preserving what is. And you know, if you're 67, there's a good chance you live to 87 if you're in good health, Right?

[Caller]

Yes.

[George Camel]

And so I want to see your money grow beyond the rate of inflation. So what is your money in and how much?

[Caller]

I have approximately 250, 215,000. And that would be like stock sponsored mutual, because I have it in three different places that kind of manage it.

[George Camel]

Okay. What else?

[Caller]

No, no, I do have, I get. Have Social Security.

[George Camel]

Okay.

[Caller]

And then I work and I work.

[George Camel]

Okay. So what's your plan to actually retire? How will you cover your expenses in retirement?

[Caller]

Just with my investments in the money I have and of course my Social Security.

[George Camel]

What are your monthly expenses?

[Caller]

Oh, let's see. Maybe, maybe 1600amonth. Maybe. I mean, 2000 would be way overkill.

[George Camel]

Okay. And what's your Social Security payment going to be?

[Caller]

2100 after tax.

[Rachel Cruz]

Okay, nice.

[George Camel]

So that's enough to cover the baseline bills for now without more inflation. And I would leave your money invested in the market. I wouldn't go to, you know, search for a 4% return when what we've seen in the market. I just checked my 401k last year, Kathy. 37% return when I just left it in and didn't touch it and left it in the overall market and growth stock mutual funds versus those less risky but lower return things like those CDs and annuities. So I would stay on your plan. This is the Ramsey Show.

[Ken Coleman]

This show is sponsored by BetterHelp. This month is all about gratitude. And most of us have people in our lives that we're grateful for. One of those people for me is the wonderful Marilyn Fanon. She gave me a chance. She taught me poise and professionalism and she challenged me. But there's one person that we often don't take time to think. Ourselves. We don't always acknowledge that we're barely surviving or that we're moving forward or that we're working towards a better life and better relationships. And in a world where everything seems to have gone bonkers, it's not always easy to be grateful. So here's my reminder to thank the people in your life, including you. And sometimes to do that, we need some professional help. We need to talk to someone trained to help us discover true gratitude for ourselves and others, especially in the holiday season. That's why I recommend BetterHelp. BetterHelp is 100% online therapy and you can talk with your therapist at just about anywhere so it's convenient for your schedule. You just fill out a short online survey to get matched with a licensed therapist and you can switch therapists at any time for no extra cost. This season, let the gratitude flow with BetterHelp. Visit betterhelp.com DeLoney to get 10% off your first month. That's BetterHelp. H E L p.com DeLoney folks, the.

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[George Camel]

Welcome back to the Ramsey Show. I'm George Camel, joined by my Smart Money Happy Hour co host, Rachel Cruz. If you like this show, you'll definitely like Smart Money Happy Hour. Go check it out on the Ramsey Network app or wherever you get your podcasts as well as YouTube. So you've been hearing us talk about the budget that really is the key to creating margin with your income. Spending less, making more, making a plan for your money. Everydollar is the best way to do it. You can plan your spending, track your expenses, save for what matters most to you, all in an easy to use app that fits into your busy life. If you've got a spouse, they can be signed in and have it on their smartphone too. So go check it out. Go download EveryDollar for free in the App Store or Google Play. Or you can click the link in the description. If you're listening on YouTube or podcast, Stacy's up next in Atlanta, Georgia. How can we help you today, Stacy?

[Caller]

Hey.

[George Camel]

Hey.

[Caller]

Well, my problem is my husband was out of work for two years. He invested in something that just didn't work out and so he had to go back and get a job. And we put all of our life savings, everything, retirement, everything into it.

[Rachel Cruz]

So what happened?

[George Camel]

How much are we talking? And what was this investment?

[Caller]

He actually invented a product and it's still underway and EPA just kept putting it back and putting it back and putting it back. So it's kind of stuck with California's epa. And he just thought it would be like, oh, this will be a five year plan. Me, I'm more a realist. I'm like, this is going to take at least 10 or 11 years. Well, I was right and it's not fun being right. And so he had to get a job. He's 61. Nobody wanted to hire him. And he was a smart guy. Somebody finally did hire him. He's making 135,000 a year.

[Rachel Cruz]

Good. And how much money did you guys take? How much money went into all of this?

[Caller]

We put a million into it.

[George Camel]

Was this cash or did you take on debt?

[Caller]

No, we took everything out. Yeah.

[George Camel]

So you still owe a million dollars in debt?

[Caller]

No. No, we don't. Thank God. We only owe. We only owe $80,000 in debt. We have a house. It's.

[Rachel Cruz]

Did he borrow on the house at all?

[Caller]

No.

[Rachel Cruz]

Okay. No, we kept. Stacy, I'm. How long ago was this?

[Caller]

Well, we've been in it for about 10 or 10 years. 11 years. Yeah.

[Rachel Cruz]

So over the Course of that amount of time is it added up to a million?

[George Camel]

You were just dumping money into it. There's nothing we can get out of this.

[Caller]

It would put a million in and then they would pay. You know, he was trying to pay and had investors and everything but people dropped out and it's just, it's been a shit show.

[George Camel]

So what's your income? Are you working?

[Caller]

So I have always been a stay at home mom. I had raised my kids. I had a special needs child who they said no one ever would graduate. But we actually got him to where he has a skill. He's a welder now.

[Rachel Cruz]

So that's huge for him. Yeah.

[Caller]

So. But all my efforts were put there. So at one time I was capable.

[George Camel]

So your household income is now 135k. You owe 80k in consumer debt, correct?

[Caller]

Yes.

[George Camel]

Okay, what's your question?

[Caller]

In the house. We own the house.

[Rachel Cruz]

Is it outright or do you guys, do you guys owe anything on a mortgage?

[Caller]

We own it. We own, we owe 375,000 on it.

[Rachel Cruz]

You owe that.

[Caller]

Okay. Yes. And so of course we thought about moving. We tried to figure out where to move and God, the housing market is terrible where we're at. And so we're trying to figure out that. I am working part time. I'm actually in my spare time an artist. So I sell pieces for like $3,500 a piece for my art. But they're a few, you know, it's one every two or three months. That's. That doesn't cut it.

[Rachel Cruz]

Sure.

[Caller]

And I have applied to over 314 places, 12 interviews and repeat interviews only to not be hired because nobody wants 55 year olds with no college education. So I just need to know, do I get a consolidated loan and put it all so because interest rates are killing us and I'm optimistic I won't.

[George Camel]

Get consolidated alone isn't going to solve any of your problems. You're just moving the debt around and they're going to take an average of the rates. So it's not really going to, you know, work any miracles here. Your best bet is to use this 135k of income you have. Live on as little as you can and throw the rest at this 80k until it's knocked out.

[Caller]

Just keep going at it and it will. You think it'll make a dent because.

[George Camel]

Yeah. Well, here's the good news. If you use the debt snowball method, smallest to largest balance, ignore the interest rates. I know that's hard right now because you See how much you're paying. But as you knock out the little debt, you free up a payment. Now take all the margin you were throwing at that, throw it at the next smallest debt, you free up a payment. And you see that as you go downhill, the debt snowball is going to pick up more snow.

[Rachel Cruz]

Stacy, how often can you paint? Because when you said I can sell a painting for 3500, I mean that's.

[George Camel]

If you can sell one a month. That's serious.

[Rachel Cruz]

Yeah. I mean, I'm not kidding that that makes you.

[Caller]

Well, I know. And I'm trying to desperately to get there. I have literally, you know, tried to build my own website on my own. Did it, you know, I've been doing this. I'm not good with social media. I'm not.

[George Camel]

Well, get connected with your local art communities. Art.

[Caller]

Yeah.

[Rachel Cruz]

And you have paintings sitting. Do you have paintings sitting, waiting to be sold?

[Caller]

Oh, yeah.

[Rachel Cruz]

Okay. Okay, okay. So it's not a matter of like, okay, gotcha.

[George Camel]

Maybe you could sell prints. I mean, there's a lot of options in the art world where you can make some good money. And it sounds like you're talented.

[Caller]

Yeah, I.

[Rachel Cruz]

It's just in the jobs you're applying.

[Caller]

I'm not an entrepreneur.

[Rachel Cruz]

Yeah, yeah, no, you're good, Stacey, I think. Yeah. Yeah. What kind of jobs have you been applying for? I'm just curious. Is it just.

[Caller]

Oh, my gosh. You name it, I've applied.

[Rachel Cruz]

So even like administration, type roles, Everything. Everything.

[Caller]

Literally, I mean, everything.

[Rachel Cruz]

And you know what, you could. Have you looked at online type jobs? Like, I just wonder, even for like, as a virtual assistant, like, usually moms that have raised kids can get crap done. Like they know how to schedule, they know how to run a household. So I even wonder from like a virtual side, you could do a virtual thing and paint and try to kind of get that going.

[Caller]

I haven't done that. I have not done that. Virtual assistant.

[Rachel Cruz]

I would look into something like that because a lot of people, you had even pieced together a couple of jobs because some people just need someone for 10 hours a week, you know, and you could get, you know, two or three people that you're helping and then on the side, how old are your kids?

[Caller]

They're, they're grown now. The youngest is still. He's 21 and still living at home.

[Rachel Cruz]

But we're 20 something year olds.

[Caller]

Yes.

[Rachel Cruz]

Do you have a daughter?

[Caller]

No.

[Rachel Cruz]

Okay. Daughter in law. Ask yourself.

[Caller]

We have no family.

[Rachel Cruz]

Well, I was gonna. Well, I'm thinking from a social media Perspective. Ask one of your sons, any of, like their girlfriends that they know or people like friends and jump on the phone and learn some of this. I'm not kidding. Like, this is. And you don't have to grow this like crazy account by getting your pains out there because, Stacy, I really think that thirty five hundred dollars, that's.

[Caller]

I've got 450 followers right now.

[Rachel Cruz]

Oh, good.

[Caller]

Yeah, I'm trying to work toward get 500 because then I can start getting payments for like affiliate, you know, these.

[George Camel]

Are the ideas when you start coming up with not what's the next piece of debt we can jump to because you're going to get out of this. But it's going to. The only way out is to get out, not to switch it to a different type of loan with slightly lower interest. You guys are your best bet to get out with this amazing income, and that's just going to mean getting to work and living on less. So do a budget with your husband tonight and go, what can we live on? How little can we live on out of this? 135 so that we can get out of debt fast.

[Rachel Cruz]

And considering you guys have no retirement, Stacy, you probably will be. You guys probably will be working for the next, probably 10 years or so. So we're going to give you Ken Coleman's material, his assessment.

[Caller]

Yes.

[George Camel]

Find the work you're wired to do. It comes with his get clear career assessment. So take that.

[Rachel Cruz]

And it's awesome because it will, as you fill it out, maybe spark ideas for you from a, from a work standpoint that could just kind of get your wheels turning on other opportunities to get some income in, because I think that's going to be your best bet. And, and I'm, and I'm so, I'm so sorry that this happened. I mean, I, I know you guys are adults and you guys made the decision and you're reaping the, you know, the consequences of it.

[Caller]

Well, but it's really your journal.

[Rachel Cruz]

Oh, yes, I'm getting your journal because I'll throw that in there. Too bitter. Yeah, I would, too, Stacy. I would, too. But you guys, yeah. As a couple, you know, I mean, that's a, that's a hard, it's a hard thing to grieve. It's a hard pill to swallow that you guys. But you know how to save. You guys had a million dollars at one point.

[Caller]

Yeah.

[Rachel Cruz]

So obviously we'll make it. Yeah, you will. You will. Well, hang on the line. We'll get you Ken Coleman's material in my contentment journal. And we'll get that out to you, Stacy. But it is, it's, it's, it's a little bit of the grind and it's that that pill of bitterness of like, man, yeah, what did we do? But hey, that was in the past and now you get to choose, choose a different future.

[George Camel]

I'm choosing hope and choosing confidence.

[Rachel Cruz]

Yes.

[George Camel]

Who's going to want to hire a 55? I would want to hire Stacy. She sounds very hardworking and talented. And so you get back out there and you show them what you're made of, Stacy. And call us back when you guys are debt free. We can't wait to celebrate with you. This is the Ramsey Show.

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[George Camel]

Welcome back to the Ramsey Show. I'm George Campbell joined by Rachel Cruz. Open phones at 888-825-5225. You call in, we'll help you take the right next step for your life and your money. Dan is up next in Chicago. How can we help? Dan?

[Caller]

Yeah, I'm a pastor and I've been most of my ministry. I've lived in a home that has been provided by the church and I'm getting ready to retire and my wife and I kind of feel like we need to buy a modest home in order to, you know, perhaps gain a little bit of equity and protect us from, you know, rising rents and things like that.

[George Camel]

That's wise.

[Caller]

I'm sorry.

[George Camel]

That is wise. I like that, man.

[Caller]

Why?

[George Camel]

It's. No, it's wise. Sorry. There is wisdom in that, Dan. I like that. Okay, so you want to, you want to buy a house when you retire next year?

[Caller]

Yeah.

[George Camel]

How much money do you guys have?

[Caller]

Well, we've, we're going to have about $2,000 a month after the Medicare deduction in Social Security. We've got about $350,000 in a 403 account and we've got $50,000 cash. We don't have any debt. Just didn't know what the right move for us would Be is it better for us to go ahead and spend the money on rent, or is it better for us to try to find a home that's within our price range and then take on a mortgage?

[George Camel]

Well, I'll give you the good news and bad news. The great news is you're going to retire with no debt and an emergency fund. The bad news is you don't have much money to put into a house as a down payment to be able to afford the mortgage. Because you said your income is going to be fixed at two grand a month in retirement.

[Rachel Cruz]

Yeah.

[Caller]

Plus whatever we withdraw out of our 403.

[George Camel]

And the 403 at 350. I mean, it's not a massive nest egg that's going to last us, you know, 30 years. And so how much money can you guys save in the meantime to get a down payment while you still are working?

[Caller]

I. We're saving right now about thirteen hundred dollars a month.

[George Camel]

Okay.

[Caller]

And I'm planning on working, you know, another 10 or 12 months.

[Rachel Cruz]

Yes. That'll be close to 15,000. Yeah. I mean, have you looked at homes? I know it says Chicago on the board where you're from, I guess a suburb of Chicago. Have you looked at homes and what they're costing?

[Caller]

Yeah, we're really in a small town about west of Chicago, and we feel like we can get a more than adequate home for us for, oh, you know, in the 1 140, 150 range.

[Rachel Cruz]

Okay. Yep.

[George Camel]

I would sit down tonight and, you know, pull up the mortgage calculator and say, hey, if we put, let's say, 50 down into a house, we had $100,000 mortgage, what would that be monthly? Because my concern is if you're living off of 2K and you're probably not going to be able to pull a ton off of that 403B while it's sitting at this stage at 350. Because you would decimate it if you took out 150 from that 403B. I mean, that's a large part of your nest egg that you've unplugged from future compound growth. And so I would sit down to see, does it make sense to rent? Can we rent for, you know, 750 in our area versus the mortgage being 1,200 bucks. That's the kind of math I'd be doing to see how can we live off of this income. Because it's not a lot of income to live off of, just considering the two grand plus a little bit from the 403B.

[Caller]

Yeah. Okay.

[Rachel Cruz]

But you wouldn't say to rent long term, though, George.

[George Camel]

No, long term, I'd rather have you in a house.

[Rachel Cruz]

Yeah.

[George Camel]

Right now. It's just. There's not a ton of money to throw into the house and just purchase it with cash without just using.

[Rachel Cruz]

No. Yeah. And you may not have to purchase it in cash. He could put a down payment.

[George Camel]

You put 50 down, took $100,000 mortgage.

[Rachel Cruz]

Yep.

[George Camel]

I doubt the payment would be astronomically high, but again, if you're making two grand and the payments. A thousand bucks, that's a lot of your world just eaten up by the mortgage.

[Caller]

Yeah, well, I didn't know. Didn't know what my options were.

[George Camel]

Could you work longer? If you could you do an extra year?

[Caller]

Oh, I could. Yeah. That's. There's not. I'm not under any pressure to retire or anything like that.

[George Camel]

I might just. Just to give you guys a little more wiggle room, allow your nest egg to grow, allow you to get more cash for the down payment. That would give me some more peace personally.

[Rachel Cruz]

Because you guys could get close to. I mean, if you guys saved for the next two years, let's say you could save up to 30 grand in just that cash flow that you're, you know, living off of, plus the 50 that you have, that gets you close to 50% of a 140 mortgage. You know what I mean? So, like, your. Your math is. It can compound pretty quick if you. If you do work maybe one more year.

[George Camel]

Yeah. And I. If I were you in your shoes, and I would sit down with a financial advisor who can kind of crunch these numbers for you, but I wouldn't be comfortable taking out more than a thousand or fifteen hundred bucks a month out of that 403B. Because you guys might have another 30 years ahead of you that you need to live off of this.

[Caller]

Right.

[George Camel]

And so that's where the numbers come.

[Rachel Cruz]

Yeah. How much are your expenses a month? Month, Dan, for you guys, how much you guys spend right now?

[Caller]

Probably about, I don't know, 28 to 3,000, something like that.

[Rachel Cruz]

Okay. So, yeah, so I think what George was, you know, saying that 3,000.

[George Camel]

And that's without paying rent.

[Rachel Cruz]

That's right. That's right. So then, yeah, that's 4,000. Let's pretend that the mortgage was a thousand dollars. So that means you'll need 4,000amonth. And so you get the 2,000 that you were saying comes in from Social Security and everything and making sure that you can withdraw again. That we're just speaking on you know.

[George Camel]

Round numbers here, napkin math would say, you know, taking out 2,000 out of that nest egg every single month, you'd probably run out of money while your expenses may be going up later in life. So that's my concern. I don't want you guys to be down to the wire every single year. That's not the kind of retirement I want to have. And so that's where we were saying, pause, work longer, keep stashing away in that nest egg, stash money away for the down payment, and then see where you're at a year or two from now.

[Caller]

Okay, all right. Well, yeah, I appreciate your. Your advice.

[Rachel Cruz]

Yeah, I hope that helps Danish in retirement for sure. And that's, you know, that's a common issue that we hear with people that do ministry and housing is provided is like, oh my gosh, that's great. I don't have to pay for, you know, rent or a mortgage. And then you get to Dan's age at retirement age, and there hasn't been an intentional saving towards a house.

[George Camel]

Yeah.

[Rachel Cruz]

And then you're kind of stuck.

[George Camel]

So if you're in that spot, here's what I would do if I was in your shoes, whatever you would be paying market rent, I would take that amount and put it away in an investment account for as long as you have that career so that when you do retire, you go, oh, my gosh, we have 400 grand just allocated for.

[Rachel Cruz]

Housing for a house because. And always remember that your housing line item in your budget is usually, number one, the most expensive and number two, the most volatile. Because rent especially will always be going up. That's what we've experienced Right. Over the last few years. Like it continues to go up. It rarely. If it never goes down.

[George Camel]

And so 20 years from now, Dan's rent might be four grand.

[Rachel Cruz]

Exactly. So if you like, just say, well, I'm never going to buy a house. I'm going to just be a renter for the rest of my life. Well, that's one expense in your budget that's very expensive and will continue to go up variable versus saying, I'm going to buy a home and I'm going to work to pay it off. That's why it's baby step six. And we actually met somebody at the break, George. She just paid off her house on Tuesday and someone else had paid off their house that was here for their 40th birthday.

[George Camel]

Two in a row.

[Rachel Cruz]

Two houses in a row that were.

[George Camel]

People paid off at very young ages.

[Rachel Cruz]

Yes. And so that's the Beauty is that line item again is out of the budget.

[George Camel]

So retirement has a lot more flexibility.

[Rachel Cruz]

That's right.

[George Camel]

When you get that house paid off going into retirement. So that's the goal. Rachel, we've got a really fun little assessment on the website right now that helps people figure out if they're staying on track with the baby steps. So you can take a quick quiz to check your progress and received a personalized plan just for you. So here's how you get the get started assessment. Go to the show notes of this episode, the description. Click on the link titled are you on track with the baby steps? And you can complete the quiz.

[Rachel Cruz]

Yeah. And this is always helpful because especially if you're new to the show, a lot of people find us on podcast or YouTube and been listening just a little bit, you know, there to know kind of where you stack up up against other. Other people, you know, other people, other Americans, but also against the plan. Just to kind of know where. Where am I? Like, how do I even start this process? It helps you really kind of get a baseline for it. And I think that's always helpful if you're, you know, money's an area for some people. They don't really. Yeah.

[George Camel]

You're doing 17 things at once.

[Rachel Cruz]

That's right. Yes. But. So to get actually a concrete idea of, okay, this is exactly the next thing I need to be doing. It's a great tool, so make sure to check it out.

[George Camel]

Can I tell you one of my secret gear grinders?

[Rachel Cruz]

Oh, I can't wait.

[George Camel]

When people say, so, Rachel, we've been doing the baby steps just out of order. And I go, well, then you're not doing the baby steps. If you're investing and trying to pay off debt and saving and you bought a house while you're in debt, I'm like, you don't say you're doing the baby steps. Out of order. Just tell me you're not doing the baby steps.

[Rachel Cruz]

So personal.

[George Camel]

Just a personal.

[Rachel Cruz]

A little grudge there, George. You just feel, you know, it's rare.

[George Camel]

That I'm bothered by something. I'm kidding.

[Rachel Cruz]

Well, George is not uptight at all. No worries.

[George Camel]

High standards.

[Rachel Cruz]

Maybe we're gonna unwind them. Enjoy this Friday.

[George Camel]

We'll do that after this hour is over. For all of you listening to the show on YouTube or podcast, it is about to end. But you can listen to the rest of the show. We got more to come over on the Ramsey network app. You can finish the show in a distraction free experience. So go check out the Ramsey network app in the app store completely free. And you can catch a another hour of this, so don't miss it. Click the link in the show notes or go watch the rest of the show in the app for free. We'll see you over there. Hey, you're still here. What are you doing? You do know that the rest of today's show is playing right now over on the Ramsey network app, right? All you gotta do to finish the episode is search Ramsey network in the app store, Google Play store, or just click the link link in the show notes to download the app for free. Yep, you heard me right. For free. Then right there on the home screen, you can watch the rest of today's show. Bada bing, bada boom. All right, I'm getting out of here. Enjoy. We'll see you on the app.