THIS Is How You Set Yourself Up for Success
2024-02-14 01:57:41
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Live from the headquarters of Ramsey Solutions, it's the Ramsey Show where we help people with their money, with their work, with their reason for getting up in the morning and with their relationships. If you want to be on the show, give us a buzz at 888-825-5225.. We've got an opinion on just about anything that's going on in your life and our promise is we'll sit here with you, walk with you and we'll figure out what's the next right step. I'm John Deloney, joined by my good friend, Rachel Cruz, and we're taking your calls. Again, 888-825-5225 on this special Valentine's Day episode.
I know, the Manufacture Day of Love. Can we say that?
Oh gosh, I actually like it. You don't like it? You like Valentine's Day? Yeah, why?
Oh wow, I would have thought you would have been like a skeptic, like a, eh, love is all year round.
I like love.
I do too, but not when it's like a holiday.
Here we go.
Alright. Really? Are y'all like doing something? You and Sheila going out tonight?
Dude, I got into my car today and there was like a gift in the driver's side of my car. Oh my gosh! The Deloney's love. Valentine's Day. No, we love each other.
What about your house, Rachel?
Well, we went out to dinner last night.
That's yesterday. Let's go to Emily in Cincinnati, Ohio. What's up, Emily?
Hi, there. I'm good. How you doing?
We're figuring it out. Hey, real quick, before the call. Are you thumbs up or thumbs down on Valentine's Day?
I think thumbs up.
Yeah. You know why? Because you're a person with a heart. That sounds cool, Rachel.
I am. It's like the Hallmark. I'm a giver. That's how Hallmark makes their money. Okay.
Emily, we're here for you. Alright.
What's up, Emily? How can we help?
Well, my husband and I got married about a year ago. I've been single for 23 years. My goals were to have my house paid off, debt free. I achieved that goal. Had money in the bank.
I, you know, discussed before we got married his financial situations. Everything was brought out. He basically had a house. He didn't have a house at that point, but he had a car payment and he paid that off. And so that was about $700..
And then he said he was helping his daughter with her student loans. She's 36.. His son is 33.. After we were married, I found out a few months later that he was in debt to his two adult children, $86,000..
Oh, gosh.
And then, after the marriage, we got taught, so that didn't go very well with me. And then I found out that he had racked up about $40,000 in credit card bills because part of the wedding. We just bought a new home.
He makes very good money.
And then, when I heard about the $40,000, that just blew me away.
He didn't tell you about that when you were going through the $86,000?.
No.
What a coward.
And he didn't tell me that he was racking up his credit cards. We went on honeymoon. He lost his job two weeks before our wedding. That was fine. He did put $200,000 down on a house that we did purchase.
In that time, we've had to move. We just sold the house, but I had paid cash. I had sold my house prior to buying this other house.
So how can we help you? There's a lot going on here. I know. Give me some direction here. How can we help?
Okay. I want to know is, right now, the credit card bills, he paid off by turning in his stocks. So now that is a zero balance.
How do you know?
You know what? I don't know.
You don't know. You have a man that you share a home with. that you can't trust as far as you can see. And he's so full of crap, his eyes are brown, and he is just running through life, dragging you behind him.
Right. Well, he makes... So he did the budget. And after we went over the budget, we had about $900 left to live on. And that's without paying our credit card bills.
He makes $170,000 a year.
How do you know that?
Through his paychecks. I did look into that. I said, I need your pay stubs. I want to see what's coming in.
I want you to pull credit reports on everybody in the house tonight.
Well, we did because we just purchased a house, and his are in the 800s. Okay. So the thing is, his daughter, who is 36, I guess we owe about $36,000 in debt to her bills. They are in her name. He's a cosigner.
His son...
And what was he using that $36,000 for, Emily, when he borrowed from that one daughter? Like, what was that for? Just lifestyle?
Just... Nope, nope.
It was for her student loans. They're for her student loans.
Okay, okay, okay. Okay.
And then his son, I found out we owe $55,000 on, $55,000..
Student loans?
Student loans. And he's 33, and he...
And both were communicated to the adult children that he would pay for them?
Evidently. Okay. Mm-hmm. Yes.
And he says that's true, too. The adult children say that, and he said that.
Well, I'm not talking to the adult kids right now, because I'm furious. Yeah. And the girl, she's a nanny, and claiming that she doesn't make enough money to pay anything. So...
Emily, Emily, Emily, Emily. Your rage is misguided, and it's not helping.
No, I know. It's not helping.
Yeah. Mm-hmm. You're not addressing the core issue, which is you married a man, and right out of the gate, he lied to you to the tune of over $100,000.. Correct. On multiple occasions.
That's where this conversation has to begin.
Right.
And I don't want to look at it like that, but it's true. We'll get to the money part. You know how you pay off money? He's going to have to make a whole bunch more. And you're all going to have to sell a bunch of stuff and cut your lifestyle.
But beneath that, you don't have a man that you trust. Mm-hmm. And so you're running around mad at everybody, enraged. How much are you working? What are you doing?
All of that is misplaced. All of that is your body trying to cope with the fact that you are connected to somebody that you don't trust.
Mm-hmm.
Have you sat down and said, hey, you lied to me. We have to rebuild this whole relationship over.
Oh, yeah. Okay. Absolutely. I told him that. And on top of this, let me tell you one more thing.
He is a game collector, board games, and he probably has close to a million dollars in board games.
Well, cool. He could pay this crap off of him. Bye. That's awesome.
Right. Well, when I asked him, and so let me ask you this, I said, he doesn't want to get his kids to pay for their schooling or take on responsibility for it, or he's still paying for his son's $89 phone bill, even to this day. And I said, how about if I get divorced and I get the best lawyer and I take half of your retirement, which he has about $800,000 in, and half of your games.
Well, Emily, but now you're getting in the mud with a pig.
I know.
Oh, my God, I know. Be a person of dignity and respect. Stay above it. If you have decided, you know what, I can't be married to a man child like this, then make your choice. But right now, you're just jumping, you're cannonballing into the mud with him.
Yeah. And I would keep saying- I want to stay married to him. Yes. And if you want to fight for the marriage, at this point, though, financially, I would stay away. I would have a separation.
I think that's a very healthy boundary to have at this point. And you guys need to go to marriage therapy. And all of this has to be resolved, because, to John's point, the trust is completely broken, not just from the money side, but in other aspects as well. And so, until you feel confident that you guys are working as a team, then you can move forward financially together. But I'm so sorry, Emily.
You need to give him a roadmap of what he can do to earn trust back. Sell games, have hard conversations with his kids, give him a path back. You need that and he needs that. This is The Ramsey Show.
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Welcome back. This is The Ramsey Show. 888-825-5225 for this very special Valentine's Day episode.
Yeah. And speaking of love, John, the event that we put on, that we both loved.
Speaking of love.
That we love so much, the money and marriage. getaway, you guys. It is back. We're so excited. So this fall, October 24th through the 26th, John and I will be spending a whole weekend with you guys here in Nashville.
Focus on your marriage, focus on your money. It's a two and a half day. It's two and a half days full of teaching you when it comes to communication, intimacy and money. And there's gonna be lots of Q&A. We get to answer questions from you guys.
That was a great part of the event. I feel like we had a conversation the entire weekend with you all. And we want you to walk away with tools that you need to build that deeper connection when it comes to your marriage, when it comes to your money. And so our platinum tickets are already sold out, but there are a few VIP tickets left, which includes a meet and greet with us. And we just wanna make sure you guys can get those before they're gone.
So tickets start at $799 at ramsaysolutions.com slash events.
And it's still a bargain, for 800 bucks is a lot, but two and a half days for a marriage retreat that we've not got one. That's rare. We've not got one. One couple that's written back and said, we wish we hadn't done that.
Oh yeah.
It's the opposite. You could just hand out cash in the back of a room and someone's gonna be like, I can't believe that you... And not one person. It's been so remarkable. So very, very cool.
It was a great weekend. So during Money in Marriage, we do lots of direct Q&A, so people leave feeling like, hey, we got our question answered, or here's the thing we're struggling with, or how do y'all handle these things in your own homes? And it was a pretty intimate weekend because we had our spouses out there. We kind of opened the cupboard doors of our own relationships. So here's some questions that didn't get answered, that they pulled together for us.
Here's one.
Let's see here. Pick a number between one and eight.
Oh gosh, this is so scary. Let's go six.
I grew up with very little, and now I have more money than my family ever had. growing up. Controlling it has become an obsession. How can I disconnect from the childhood fear of not having money and focus more on being intentional with it? And that's a great question.
Yeah, that is a good question. Yeah, so I would say this fear drives a lot of people. I found this when I was doing research for my book, Know Yourself, Know Your Money, how much the childhood idea that if money was a stressful point, and whether that was verbally or emotionally, how many people, I mean, they swing the pendulum? so far the other way of like, not wanting to be that, like. they're so adamant about it.
And so what I think you have to do is like you have to almost practice and live out these money habits day in and day out to remind yourself that you're okay, that you're okay. And it's almost like you can tell your head that, but if your actions and your body don't follow, you're not living in that fullness, right? And so I would, honestly, you've probably created a budget because you're obsessed with controlling your money, which is great, but I would force myself to spend some and to say, I'm okay letting this money go, because as tightly as people hold on to money, sometimes it's hard just to open your hands, right? And spend it and let it go. But I think, as you start to live that out and then you practice spending, you'll see, I'm okay.
I'm okay because you're spending on a plan, you're being reasonable about it, but until you can actually go through those motions and that becomes part of your rhythm, you're not gonna know it. Because you can know in your head all day, but until you actually live it out, you're not going to.
You have to teach your body that you're okay. Yes. There's a kind of a behind closed doors quote in counseling, which is, the thing that kept you safe as a kid. is what ruins your relationships as an adult, right? If you learn to hide as a kid, it kept you safe from, maybe, an alcoholic parent.
And that makes it really hard to develop intimacy. if every time something gets scary in your house or you get into a fight with your spouse, you hide, right? So, very similar, if you develop this sense of control to get you out of a thing, it's that gazelle intensity, cool. That's the thing that kept you safe. And probably this person worked really hard, has gone to college, has got a great job, has done all these things so that I would not be like them.
And then they got there and they realized, oh, that tension's still there, right? And so, okay, the thing that got you here, cool. You're safe now. Now you gotta, like you said, practice something new. My friend Michael Easter, here with Comfort Crisis, he has a line that I love and he calls it gear, not stuff.
And so him and I have just had some personal conversations and he's written on this about the anxiety of clutter and too much stuff everywhere and just going to buy stuff, to buy stuff.
Right, right.
And so he's categorized as stuff and gear. I need this backpack. that's really great, and here's why. That's different than I'm just going to go to the mall and spend some money. So maybe you make yourself a gear list.
I do need a pair of pants.
It's like utility to the thing you're buying.
They need to be nice because I don't want to buy another pair for five years. Then I'm going to buy a nice pair of pants. That's different than let's just go shopping, right?
Yes, yes, yes.
So maybe make a gear list that you're going to slowly get over the next year. And also, I think generosity helps with this too. Like practice opening your hands and letting some money go.
Yep, yep.
Intentionally. That's awesome. All right, let's go out to Christian in Martinsburg, West Virginia. What's up, Christian?
Hey guys, I'm doing well. How about y'all?
Outstanding, brother. What's up?
Yeah, so I've got a question for the two of you here. My wife and I purchased a vehicle in 2021 with a loan at a 3.99 interest rate. And we've been making monthly payments all on time of $275 a month. So we've currently got about $7,072 remaining on the loan. And timeline-wise, it's looking like we'll be paying it all off in about 26 months.
Say $72,000.. Sorry, sorry, Christian. $72,000 left?
No, ma'am. $7,072..
Okay. Okay. I'm sorry.
No, you're good. Why is that?
What kind of car did you buy? I was like, what kind of car did you buy?
No, just a Toyota Highlander for my wife and the kids.
Hey, that's about $70,000 these days, man. That's not a cheap car.
Well, I work in insurance, so I see those numbers, unfortunately, more and more these days. But part of the reason for my call here is I'm considering just a Ramsey debt reduction strategy. And I've been looking at our finances. We have about $5,900 in a Robinhood account and about $10,000 in savings, and we're still really trying to build up the emergency fund up. So should we sell the stocks in the Robinhood account and take some from savings to immediately pay off the loan, even if it means lowering our emergency fund?
Or is the monthly car payment low enough where it makes more sense to leave the money in the stock market and have more in the emergency fund?
No, I would cash out the Robinhood account, that $5,900.. So yeah, I would throw $6,000 at this, take a little bit from savings. And that's the only debt you guys have, right?
We do have a mortgage, but it's the only other debt that we have.
So that's what I would do personally. And then your savings will be down to around $9,000, or maybe $8,000 after taxes, if you have taxes in that account. But yeah, that's what I would do. And then take that savings account that you have, that'll have around $8,000, and then build on that to your three to six months of expenses. So it's the Ramsey Baby Step.
So you'd be at Baby Step 3 at that point. So that's what I would do. And that gets you guys, yeah, in a great position. Are you guys... Do you have investments beyond this account?
Do you have retirement, 401k, or a Roth IRA?
Yes, ma'am. We have a Roth IRA that we're contributing to. And then I'm big on trying to help the kids out long-term with college. So we've also been making contributions to a Smart 529 account for them.
Good, good. Yeah, that's amazing. So great. So I would just keep all of that up. I mean, you guys are right there.
But yeah, I would pay the... I would cash out and pay off that car immediately. Okay.
Internalize that. You're going to be debt-free in about 45 minutes.
Yeah. I mean, the idea sounds great, you know, having nothing but the home to work at.
Listen, what a Valentine's Day gift when you slide across the table. a zero balance on this car note for your wife.
How much is the car payment a month?
$275.. Okay.
Okay. So it's not huge.
Yeah, but you just got, what's three times 12?? 36?? Yeah, you got a $3,600 a year raise just now.
Yeah, that makes sense.
Right? With no residue.
A little bit less than that $3,500 a year raise just by hitting, clicking a few buttons on your computer. And if your boss said, hey, what would you, you do this and this and this, I'm going to give you a $3,500 raise. You'd be like, all right. Well, here you go. Merry Christmas, man.
Happy Valentine's Day.
Thank you guys so much.
Great job. I appreciate it.
Happy Valentine's Day to you guys, too.
888-825-5225.. This is the Ramsey Show. So call us with your relationship challenges. I especially want you to call if you have your spouse with you and you're wondering, is it their fault or is it mine? Rachel and I will solve it for you.
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Welcome back to the Ramsey Show, 888-825-5225.. I'm John Deloney, joined by Rachel Cruz. We're taking your calls on money, life, and especially on your dating and marriage relationships. on this special Valentine's Day episode. Let's go out to Marissa in Columbus, Ohio.
Hey, Marissa, what's up?
Hi, guys. How are you?
We're partying. What are you up to?
Enjoying my day off. It's beautiful here today.
Congratulations. That must be nice. Yeah, thank you. Rachel's my boss, and we don't get those very often. What's up?
We work. I'm just kidding.
Well, hopefully you do get a couple days off. You guys work hard too. You got it. Thanks. My question is, so.
my husband and I, we're a little background, we're 32.. We live obviously outside Columbus. We just bought our forever home, like we had bought a starter house probably five years ago, fixed it up, sold it in June, bought our forever house, moved in. Unfortunately, we have a 6.9% or whatever interest rate. Our other house, we had a 15-year like two and a half percent, so quite a shock adjustment, but in the long run, worth it.
I guess we have no debt. For context, my husband works in IT. He makes about $150.. I'm a nurse, so I make about $80.. Then we have a 10-month-old daughter.
We're just trying to figure out the best way to pay off this mortgage as quickly as possible while also enjoying ourselves a little bit. We live very well below our means, but just that we have a financial advisor and talking with them about savings for our daughter's future and weddings and college, and if we have more kids, it's just making our head spin.
Originally, we had talked about, of course, once rates lower again, maybe high fours, low fives, refinancing, but then even that, it's like we would still pay what we're paying now, but at the new lower rate to pay it off quicker, but it's still going to take 15 or plus years to pay it off. I guess we're just trying to figure out the best way.
How much is left on the mortgage?
We have about $400..
$400 left. Okay.
Yeah. I have about $50 in savings. My husband has about $75, and then we have retirement accounts and stuff, and then with our financial advisor, through other IRAs and stuff like that, we have about $30..
Okay.
Yeah. It's just like we had talked about. maybe, if we do refinance, just putting whatever I make towards the mortgage and living off what my husband makes, but even then it would still take quite a bit of time. It wouldn't be like a quick couple of year process.
Rachel, before you walk through the numbers, Marissa, can I ask you a question? Yeah. Absolutely. Is this house worth it?
100%. Yeah. Oh, yeah.
Because you're doing a lot of financial gymnastics. You're spending a ton of energy. What about this? What about this? What about that?
What if we did this? I think it's just important to go stop for a second and say, is this still what we want to do? We love this house. It's our quote unquote forever house, which, by the way, no such thing as that. This is a house that we love, but, man, it has taken all the fun out of our life.
Right. You're still all in on it?
Yeah.
This is our dream, but- You said you live far below your means, so how much margin do you guys have a month, would you say, that you put into savings?
So I put about a thousand and then an additional 500 a month goes to our financial advisor. My husband puts 500 a month and then-.
This is non-retirement, correct?
Correct. Yeah. Just to whatever. We've got various investment stuff. Then my husband's probably saved an additional 1,500 on his end.
Wow.
Okay. So I'd say here a couple of things. Yeah. Number one, I keep hearing you say, like, my husband's money, my husband has this, I have that. I would challenge you guys to combine everything, because you guys are working towards the same goal, but you're still on two separate roads financially.
But if you put everything in one pot, instead of saying, well, I have 50,000 and he has 75,000, together, this is what we have. There's something about that unification that happens when you are unified. that helps this plan go faster. So what we found, Marissa, is that you are trying to do a couple of things and well-intentioned things. So I would kind of put some structure around them.
So I would, at this point, you guys have well over a fully funded emergency fund. I would say 50 grand is plenty for you guys for an emergency fund. You could probably even lower some of that if you wanted, but I would look at that extra 75,000 and just have the conversation, hey, is this something? we would just want to put a chunk of that towards the house? I mean, you're going to knock off almost 100 grand towards the principal and the house.
if you do that. That's an option. And then from there, let's invest 15% of our income into retirement, nothing more, nothing less. Let's put a little bit away for college. I would not worry about weddings and all of that.
You're adding in a lot with a 10-month-old. So I know it's so easy to dream, but that's muddying up, kind of what John was saying. It just feels like you're trying to do all these things. It's kind of muddying the waters. So just look at what you really need to do.
And so we'll put some money away every year for college, and you can kind of run those numbers and just decide, per household, what feels right to you. And then anything above that, I would throw towards the house and throw towards the principal of your mortgage doing that. And then, I mean, Marissa, we find that people that follow this plan, they pay their house off in seven years. So it's not a two-year process. on average.
It's about seven years. And so, as you guys map it out, I mean, you make $230,000 and you have a $400,000 mortgage. So I'm like, golly, in four years, if you guys just lived on $130,000...
Or three years.
Yeah. You could pay it off.
Can I tell you one hard thing, Marissa?
Yeah.
It sounds like you lean a lot on your financial advisor. If you get with the wrong financial advisor, you need to remember that they can be very self-serving and they will talk you into taking huge chunks of your money. You want to get a financial advisor that works for you, not the other way around. And they'll look at you, the wrong ones, and call you...
The old financial advisor we had definitely, kind of, when we were younger, took advantage of us. We were newly married. That's right. And kind of sold us on the whole life, first term life. That's right.
That's right. And we ended up doing both. Yeah. Okay. And then we had paid $10,000 in, but we were out $5,000 or $6,000, so we ended up switching to a friend.
Good. Well, so... Yeah. Follow Rachel's policy. Now, and I want you to know, we don't have a financial stake in your success here.
We're rooting you on. This is what we would do in our own house.
Put 15% away and put the rest towards your house. And your financial advisor may be like, oh, you're so stupid. You're missing out. But 15% aside, you're going to be fine. You're so far ahead of the game with the people we talk to right now.
And you owe what on your house? $400?.
Yeah, we owe $400.. We just moved in in June. Okay.
Imagine this.
So we've only been there six or seven months.
Imagine this. What if you sat down and had a conversation with your husband and you put $15 from that pile that you call yours, and you put $75 from him? And by the end of this weekend, your mortgage is done to $310 already.
Right. Yeah. Yeah. We've talked about that because, like I said, we've obviously both have our own accounts and then a joint account. So we were just talking about that last night.
What if we just put so much amount from our nest egg in? But then, you know, it's just like there's almost too much good advice, because then his parents are like, well, you guys should just wait to refinance.
No, no, no, no, no, no. No, they're wrong. Listen, here's what I want to be your guide. Solve for freedom.
What's not? What's the best? What's the best interest rate? What not? What's the best move that might happen in three months or six months?
Hey, by the way, I'm looking to buy a house and everybody's waiting for these interest rates to drop. And they didn't the other day. Oh, yeah. Then everybody freaked out. And then the inflation report came out.
Dude, everybody's just throwing darts with a blindfold on. I want you guys to change your metric. Solve for freedom. What's the fastest path to our family? not owing anybody anything?
Forget the interest rates.
Let's be free and let's give that kid your new kid. Yeah, a wedding is going to be awesome. to save up for a college will be awesome. Let's give their nervous system 18 years of parents who don't owe anybody anything.
That's peace. Then that kid can rappel off and go do some amazing things that our culture desperately needs young people to get to get involved with. Right. Let's solve for freedom. Not for everybody else's advice.
This is The Ramsey Show.
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Welcome back. 888-825-5225.. This is The Ramsey Show. Let's go out to Kimberly in Seattle, Washington. Hey, Kimberly, what's up?
Hey, are you still there?
We're here. How's it going? How can we help?
Good. Well, not good, but maybe you can help me out with some suggestions. My husband, just like about a week ago, went to the hospital and was diagnosed with basically a liver. His liver is shot. It's beyond repair.
They gave him maybe a year, year and a half to live.
Oh, my gosh, Kimberly. I'm so sorry. Yeah.
Yeah, and he struggled with alcohol addiction off and on over the years. He said, I knew that this was probably going to happen, but when you're addicted, you're addicted and it's hard to stop something. So anyway, our situation right now is he's working or trying to work because he doesn't feel well. And I've been doing the best I can to do Ramsey stuff without him not being on board, which means not very much.
Anyway, I have questions here as to what we should do, because this freight train is moving.
It's moving forward.
Do you guys have kids, Kimberly?
We have adult kids who are doing really well off on their own. They're amazing.
How old are you guys?
I just turned 60.. He's a few years younger than me, three years younger than me.
Anyway, and in fact, I just worked. I had a hospital bill. I took a grinding job to pay the balance off because of insufficient insurance and just got it done. So here we are with another hurdle.
We do own our own house, but because I haven't had access to the funding I wanted to do to keep up on it. It needs exterior repairs that are fairly expensive, as in roof gutters, some siding and then paint after that.
It's an amazing house. It's in really good condition, but that would have to be done if we were to possibly sell and downsize, if that would be one of the options we should consider. I don't know. We have a lot of stuff sitting around that my other half cannot get rid of, anything, ever. So getting those options for getting those things sold and how to approach him on that.
We'd have to have somebody come and remove things.
Kimberly, let me hop in here.
Yes, please.
You've gone directly, and, quite honestly, if you've been married to somebody who's struggling with alcohol for a long time, you have been responding to crisis after crisis and thing after thing forever, right?
Amen.
So the way you said this, I want to challenge you on it. Well, now we got another hurdle. This is not just another hurdle.
No, it's big.
This is the last one, I think. Right. Yes. And so you have been working with somebody for a long time. Everything in this conversation has changed now.
And the conversation changes to, now. we have an hourglass. We have a clock that's ticking. And the doctors clicked it on for us. And so we're not talking about how you feel, if you really like this collection of bottle caps you've been keeping.
That ship is over. That ship has sailed out to harbor. We are now creating a life that I'm going to have to inhabit because you're going to be gone.
Yeah. And that looks like making sure I got a home with four walls on it, and I can pay bills.
Right? And some of it, you're going to... I remember sitting with somebody that I care about deeply, and I was helping them, and their house was full of stuff. And I was trying to help them throw it away. This is several years ago.
And I just finally stopped and looked at them and said, I need you to hear me say this.
When you die, I'm going to throw all of this away. I can do it now, or I can do it when you're gone. And there was a long, long pause, and they said, you're going to have to do it when I'm gone. And I said, okay. I'm moving on with my day.
I'm not going to spend another second here. I've already made that choice, but I'm not going to fight that in this moment. See what I'm saying? So, I want you to...
Right, because he was not even used to that idea, yet. It hadn't even been introduced. Right?
Right. So, here's what we're doing. We're reverse engineering this thing for the four walls.
I hate to live like this, but this is the clock you've been given. I want to go 18 months and start working backwards.
What does life look like?
And you don't have to do a roof and siding and gutter. You don't have to do all that at the same time. We're going to price each one of those things out, these things that we have to do, so we can keep our house, these things that we have to do, so we have transportation. You're going to have to have a job if you don't have any retirement.
What's the financial status, Kimberly? Do you guys... I know you said you own your home outright, so there's no mortgage or anything on it, correct?
Yeah. Well,
in the earlier days, I was working to pay a little extra here and there, because I'm the one that doesn't want to be in horrendous debt, a debt of any kind, actually.
He used to work a very good job, and part of it was an investment account that was like a retirement, right?
He got to a point where he wanted to start his own business. He'd always wanted to do this because his family had done it, and they had done it poorly, and they fought, and they divorced, but it still is a dream of his.
So did he cash out the investments?
So, over time, yes. He cashed out almost everything. So what's left? He threw into a business without knowing how to run a business. Yeah.
Yeah. I hear you.
Kimberly, you're going to have to set that aside because you've got an emergency in front of you. Yeah.
So what debt... I know. No, no. You're fine. You're fine.
Okay. What debt do you guys have? Any at all? Any consumer debt? Credit cards?
Car loan?
We... No. Okay. We have no debt.
No debt. Okay. And how much money are you...
Property taxes and things like that. Okay.
Are you working, Kimberly? Do you work?
I was in order to pay off my hospital debt.
Okay. Yeah.
It was horrendously huge, and I finally got that paid off, but it was very hard. It was just a...
Okay. How much... Okay. Okay.
What was he making a year?
What's he making now?
Yes.
To keep you guys... Crap. I should know this. No, it's fine.
30,000?. 70,000?. Do you have any round... Yeah.
30-something.
30-something. Okay. Okay. And that's a... Let's call it 35..
And that's a... Okay. So... And any investments? Sorry.
I know you said he cashed out his to start the business. Do you have any retirement?
Nope. Okay. Okay. So, what I want you to do, Kimberly, is... The silver lining from a financial standpoint, all of this, is you guys have no debt.
I mean, you don't even have a mortgage. So, that in and of itself is like... That's a relief. So, what John was saying, the four walls, I want you to go and do a budget, Kimberly, and I want you to stay on the line, and we're going to give you Financial Peace University and EveryDollar Premium, because I want you to start budgeting, and I want you to know to the penny...
No, I do have EveryDollar already.
Oh, you do?
I do. I'm so glad. Because I think, if you have those numbers in front of you, of the things you have to do, you have to keep the lights on, the cell phone bill, your insurance, food, gas in the car, you have all of that, and that's what you're going to have to look at, Kimberly, and say, okay, I have to at least make this, right? When the time comes, I have to at least make this. And then I would not encourage you to sell the house or even to put in a ton of repairs right now.
No. I think you're fine. What I would do is... Not right now. And I wouldn't, unless your roof is leaking or something, but for now...
And then, Kimberly, when the time comes, I want you to grieve. I want you to go through that process, and don't make a big financial decision until about six months to a year. And if in two years, three years, you decide to sell the home and downgrade, take some of the equity, you can do that. But don't feel like you have to make these big decisions today. Today, I just want your four walls covered between now and 18 months.
I'm so sorry, though. I'm so sorry, Kimberly.
That's the first hour in the books. We'll be right back on The Ramsey Show.
Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people with their money, with their work, and with their relationships. This is a special Valentine's Day episode. I'm John Deloney, joined by my good friend, Rachel Cruz. And we're taking your calls on just about anything, but especially if you've got a question about your marriage, about somebody you're dating, if you have a question about who's right, you are them. Rachel, and I will solve it for you.
888-825-5225.. It's 888-825-5225.. Let's go out to Los Angeles, California, and talk to Madison. Hey, Madison, what's up?
Hi. My husband and I recently got married. We are debt-free and about to finish saving our six-month emergency fund.
Good for you, guys.
One of our goals is to own a home one day, and we want to start investing, but we don't really know where to start. We want to be good stewards of what the Lord has blessed us with. What advice would you have for us? Should we even have the goal of owning a home right now?
You want to buy a home in Los Angeles?
We live about an hour outside of Los Angeles, so not right in the city.
If you start saving now, you'll be ready in 2068, probably.
Give or take a month or two.
Madison, how long have you guys been married?
We've been married for three months.
Okay, congratulations.
Y'all are awesome. Congratulations.
How old are you guys?
I'm 19, and my husband's 23..
Okay, so great. Debt-free, fully-funded emergency fund is right around the corner. How much are you guys making a year?
Combined, we make $98,000 a year.
$98,000, okay. Awesome. And you're just renting right now?
Yes.
Okay, so good.
Yeah, I mean, I think owning a home is a great next step. I mean, John was joking that it's going to, yeah, not really joking, but kind of joking, 60 years in the making.
It's more like 2015..
I know, I know. Have you just priced out, for the fun of it, some houses around your area that you guys are like, ooh, that would be a great spot to, you know, a great area or type of house? Like, do you have any idea on price ranges?
Yes, we've been looking a little bit. I don't know if we have, like, a price range right now, but I guess we were more wondering, like, investments or, because we don't currently have any investments, you know, should we invest and save for a house at the same time? How should we do that? I don't know. What practically does that look like?
Yeah, well, I mean, number one, you guys are young, so I want you to take a little bit of this pressure off of any of this, right? You have time to do both. You have time to save for a house and time for investing. So just, yeah, I want you to just know, okay, we are way ahead of the game. So any of this path that you're going to take, you guys are going to be fine as long as you're consistent with it.
So what I would probably do, Madison, is I would open up some retirement accounts. Do you guys have 401K options at work? Does your employer's match at all?
Yes, my husband does.
Okay. And how much does his employer match up to?
Oh, I'm not sure.
Okay. So I would find that out. Okay. And then together, yeah, I mean, this is after you're about to fund your six-month emergency fund, so we'll just pretend like that's done. And then, moving forward, yeah, I would invest 15% of your income into retirement because you're not super serious about buying a house right this second.
If you guys had a house in mind and you were like, we have somewhat of a down payment, we want to save more, we have a goal in 12 months, we want to put this down, if it's very specific like that, then I would say you're totally fine holding off on investing. But it's just the idea of a house right now. So if you're kind of just in that spot, I would go ahead and start funding some retirement for the calendar year. Both of you guys open up Roth IRAs, and I would go ahead and fund 15% of your income into retirement and go ahead and just start that process. And then here in the next, I don't know, year, two years, I mean, again, it's not a rush to go in and buy a house.
Renting is okay, especially since you guys are newly married. Putting any level of that on you, it's a lot. So, yeah, I would kind of look around and just kind of see, you know, where you guys want to be and maybe have it a goal by, you know, maybe next summer we're going to start really saving for a down payment towards a house. I mean, I would give yourself about a year. And again, be looking at prices, be looking at places around.
But I would go ahead and make it a goal for this calendar year to fund retirement. And then come 2025, if you want to back off of that 15% a little bit in order to put more down for a down payment, I would put no less than 5% down on a 15-year fixed rate, with your payment being no more than 25% of your take-home pay. It's kind of our formula that we go by. Sure. So run those numbers.
And then in 2025, if you guys really start seeing, okay, that's the kind of house we want, this feels reasonable, we can save up and, you know, do a 10%, 5%, 15% down payment, take some extra money. And if you have to lower that 15% a little bit during that time, that's okay. But I wouldn't worry about a house this year. I don't know. For me, it's easier to see life in calendar year sometimes.
So, like, just for you guys, you've been married three months, enjoy this year, fund some retirements. And then, in 2025, I would start looking and just say, okay, you know, I mean, that's where you guys are in the process. But don't feel like you have to rush into anything.
Perfect.
Well, thank you. Yep, absolutely.
Congratulations, Madison. You're way, way ahead of the game. That's fantastic. Let's go out to Naples, Florida, and talk to Sandy. What's up, Sandy?
Hi, John. Hi, Rachel. How are you today?
So good. What's up?
Well, I have a head versus heart situation. I actually have two. But my main situation is I could be debt-free, but in a way, I don't want to give up what I'd have to give up to be that way. So I live in Naples, Florida. It's beautiful.
It's warm all year round, relative to the Cleveland area where I came from. And I moved here on a job transfer. I've since left that company, but unfortunately I was laid off in November of last year, small severance, which has ended. I'm now living off of my savings. I've done okay.
I'm single, 61, and I imagine I'm going to stay single. I don't see that changing. But I bought my condo in 2017 for $169,000, and I owe $122,000 on it. At a rate of 2.89.. The only other debt I have is a car at 0% for 60 months.
I owe $10,000, and I have that $10,000 tucked away in a savings, earning $4.25..
So my condo today is worth about $305,000.. I could sell it myself. I have the knowledge and ability to do that. I could probably walk away with about $160,000.. Where would you go?
Go back home to my Cleveland area. I could pay cash for a very modest home or condo there.
Where do you want to be? You want to be in Naples.
I want to be where it's warm. Yeah. That's where I would like to be.
How much do you have in retirement?
So I have in savings, and, again, that includes my $10,000. for the car. I have about $34,000.. I have $71,000 in two brokerage accounts, and I have $387,000 in my 401K.
Okay. And you imagine you'll be getting another job to bridge some time.
Yeah, I don't want to do that. That's the other.
Sandy, you've got to get a job.
I know. Yeah, you've got to get this paid off. I mean, you could even throw the $71,000 at it, pay off the car today. Pay off the car today. Yeah, you're going to have to go back for a little bit.
Your retirement's great, your account there. But I would work to pay off that condo, but stay where you want to stay.
Yeah, don't sell your condo. Get out of debt. Solve for freedom.
This is the Ramsey Show, 888-825-5225.. Hey, listen. If you are concerned about the economy, and you just see your neighbor pulling into your nice middle-class neighborhood in a car, how are you affording that? Why? Why?
And you just wish people around you had the wisdom of this show.
For no money, you don't have to send any money. All you have to do is like or subscribe the show. It puts the show up in the algorithms, and it kicks it into the feeds of your neighbors, into their podcast feeds, into their YouTube feeds. It just sends the show everywhere. And the more people who subscribe and like, and I know it's a pain in the butt, and I know sometimes you have to log in.
It's worth it for everybody. It puts the show in front of more people. And so for everybody,
it just doesn't cost anything to help out your neighbor.
And share the podcast, though, too. I mean, I get my crime podcasts that I listen to from friends, even here at the office. And we'll send each other podcasts that we love. So if you love it, send it out.
Or, if there's an episode you think, ooh, my mom needs to hear this, send it to her. Or a buddy that, ah, this marriage sounds like yours. Send it to them. Be careful.
And make sure to tell them that.
Be careful with that. But yeah, that's right. Hey, let's go out to Honolulu and talk to the MAX. What's up, Max?
Hey, how you doing? Thank you for taking my call.
You bet, man.
How's Hawaii, Max?
It's nice. It's nice.
You're not Max Holloway, are you? One of my heroes?
No.
All right.
What's up?
I was calling because something happened where my brother kind of holds a lot of anger towards me because he got fired from his job and I had to take it over.
And I'm getting ready to move out now. And I'm worried it's going to cause more family disconnect. So I'm just trying to get some help navigating the situation.
Is it a family business?
It's like a financial and family thing. I mean, that was the business. No, it's somebody we know that he worked for.
What is it? What kind of business is it?
It's a pool cleaning job. I take home about 50 a year, so it's pretty good.
50 a year? And why did he get fired?
He had gone on a trip for an extended leave and I was covering it for him. And the boss at the end of it decided to fire him and offered me the job.
Oh, man. So you did a better job?
I don't know.
It was just like he didn't break a rule. You just out cleaned the pools and the boss was like, I kind of want you instead.
There were some issues with him and that was a part of it. I'm not sure if my brother would even be let back after anyways.
Okay.
So what is his beef with you? that you weren't right or die? Like, yeah, forget these guys. Is that the beef?
I think what happened was he's just feeling like he lost out on a good opportunity.
He didn't. He wasn't a good worker.
He wants somebody to blame for it, and it's me. He wants to blame me for it instead of himself.
And I'm okay with that. The main issue is the money from the job helps financially support my family. I come from like a single mom household and I'm 19.. I'm trying to move out and be on my own, which would mean that I wouldn't have the same amount of money for my mom anymore. And I'm worried that's going to create even more of a family disconnect.
So I don't really know what to do.
What's your mom do?
She cleans. She's a cleaner. She works like two jobs cleaning.
How much does she make?
I'm not sure exactly. I think I went over it with her one time.
Okay. How much difference does she need? Like, how much are you covering the bills in the house?
I'm contributing about, it was about $1,500 that I was paying off from debt on the water bill. And then now it's like to about $1,300.. I pay some of rent. I buy all of our food and I cover the water.
Does she have other struggles, Max?
No, I mean, I think.
Like with addiction or with mental health challenges?
Do what? No, I don't. Oh, sorry. What was that?
I'm asking, does she have.
Not with addiction or mental health.
Okay.
So she just. Yeah.
Why have you become the caretaker of your mom?
I think it's just, it's really expensive here and it's hard to afford to live out here. If you aren't making hundreds of thousands of dollars a year.
Exactly.
And I have two, the main thing is that I, my mom, I think she'd be fine on her own, but I have two younger sisters, and that's where I feel weird. leaving. I feel like I'm abandoning them.
How old are they?
They're 11.. They turned 11 yesterday.
Is it at a point where you need to sit down with your mom and have a hard conversation about the financial realities?
So I have about six months ago and I've been keeping up. I told her six months ago, I plan on moving out of March.
Okay.
And she hasn't really done any much action towards like figuring out another situation. So I don't know, like if I should just stay and keep helping so that we can stay, they can stay in their house. Or if I should just go on and, you know, put my oxygen mask on before there's, you know,
man.
Well, I just feel, like Max, that, I mean, you've put yourself in a caretaker's role at 19.. You know what I mean? Yeah. For, and it's, and it's heroic, right? In one sense.
I mean, you've really stepped up and helped your mom, but this will be your whole life unless something else changes. And I feel like that's unfair to you in your life, in your future family, to feel like you have to be the one to carry this burden. And, and I understand obviously why that is, but long-term, I just don't think it's, it's fair for you to play this role.
Yeah, I think I've come to a similar conclusion. I just feel like I'm, I'm like,
sure. What, like, what, yeah, what do you do? You let your mom like lose the house with your two little sisters, right?
Yeah. And then it's like, where do they go? We have family here and I'm sure they could move in with my grandparents or something.
But hold on, hold on. Your mom also plays an integral part of this. If you told me, my mom really struggles with addiction and my mom struggles with some mental or emotional health disorders, then I would tell you, like, man, life handed you a mess, and it's just, it might be a season, right? It may be that you're going to stay at home for a few years and see these, these young girls, until they get older, right? That's not the case.
Your mom's making some choices on a daily basis as to where she's going to work and how much money she's going to make and what she's going to ask of her 19 year old son.
And so you're making decisions for an adult. And that's not your job. Your job is, unfortunately, you've been cast in the role to make sure your 11 year old little sisters have food and water, which is never your job, but here we are, right? And so, man, you're a, you're a, you're a man of noble character,
but I want you to hear what Rachel's saying. five years from now, what would be better for you to have started pool cleaning and also gone to get a couple of community college classes on the side. And five years from now, you've got an associate's degree and now you've got four employees of your own and you're making $200,000.
or you're still making $50,000.. This guy had to lay you off because business got slow. And now you're making $35,000 and you're in the same bedroom, in the same house, except you're 24 years old.
Like, if you think on a, on a longer time horizon, what's the best thing you can do for your family? It might be to go spread your wings and fly.
I think, I think so too. I think I just needed some, like,
I didn't even not feel like I was crazy or anything. No,
you're not crazy. You're going to feel guilty.
It sounds unkind, right?
You're going to feel guilty. Yeah.
Like, it sounds like, Oh my gosh, I'm abandoning my family. But what I want to relieve you of is that was never supposed to be your role. And, like John said, if there was like a dire situation of something, that's another conversation. But, but yeah, I mean like it's, it's, it's a, it's a grownup problem that your mom, who has two daughters at home, should be the one calling the show and saying, I can't pay my bills. What do I need?
What can I do? Um, and looking at her budget and all of that. And I think you can help guide that max, but you can't even change the way she handles money either, because you don't have that ability. We don't have the ability to change people.
Here's where I think you can get some peace in this transaction. Okay. Number one, you're going to feel guilty. Just know that's coming. Okay.
Uh, you may have heard me say this on the show, choose guilt over resentment every time. If you just stay there and wither, you're going to resent your mom, and that's not fair to her. So, choose guilt. The second thing is come up with a number. And sit down and tell your mom for six months, I'm going to send a thousand dollars home.
I'm going to send $750 home and make sure that everybody's clear on when this money is coming and give her a ramp. You'll sleep a little better at night, I think. And it's going to be not a, just a cutoff, but it will be, uh, a peaceful departure. I'm sorry, my brother, let us know if we can help.
Thank you.
This is the Ramsey show. Triple eight, eight, two, five, five, two, two, five. Our question of the day is brought to you by neighborly, your hub for home services. Nothing can ruin your Valentine's day faster than a plumbing emergency.
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today's question comes from Ella in Minnesota, umbrella.
What's up?
My boyfriend of 12 years listens to you all the time. We have three daughters together, but he doesn't want to get married, as he doesn't want us to pay for a wedding or risk paying alimony. If we ever split up, he thinks this is in line with the baby steps theory. What do you think? I don't think we've ever said that.
This is the greatest question ever.
I like that. She blames it on the baby steps.
And that the baby steps are just a theory.
He thinks that.
I think Dave just, his head exploded in the other country where he is right now. I think he, just like, he, was like, I got a bad headache. Cause somebody called the baby steps a theory. I love it.
Ella, you need to.
We all are basically married. You're playing married together. Kids together.
Your boyfriend is a child and you don't need to have a hard conversation because this ends. Unfortunately, this ends in a pretty gnarly way. He is married to you. He lives with you. Y'all have three kids.
Y'all have created humans together. And he's holding onto this. Nah, nah, dude. Nah, we're just dating, just dating dude. Cause I don't want to pay for it.
By the way, he would pay alimony. There's a thing called common law marriage. And I don't know what the rules are in Minnesota, but he's going to pay. You can't just have three kids and be like, nah, bro, I'm out. Nah, dude.
Nah, I found somebody else at the bowling alley or wherever this dude hangs out. So yeah, I, I don't think this has anything to do with the baby steps. I think this has to do with a man who is playing some kind of weird vocabulary gymnastics in his mind and pretending he's not married, but he really is. Yep.
Yeah. It just, it feels like a level of immaturity to me. Cause I'm like, okay, pay for a wedding. You don't really even have to do a wedding. Let's just be honest.
Like you're like, go to the JV and get done with it. Uh, it's more the alimony or whatever it is, but to John's point, yeah. You're going to pay.
And, um, no. And in the baby steps, we would tell you like, get married for multiple reasons, but get married. And so, uh, there's not a particular marriage baby step in the baby steps theory, but, uh, yeah, we would recommend that you get married before you start having kids and buy a house together. Um, because, as, as this man did wisely point out, it makes things real complicated financially. If you don't have a plan.
Um, and there's not, there's not business protections on the backend.
Yep. That's right. Oh,
umbrella. You need to sit down and say, we're getting married, or else let's go out to Detroit rock city and talk to Andrew. What's up, Andrew. How are we doing?
Hey guys. Thanks for picking my call today.
You got it, man. Thanks for calling. What's up?
Um, so I guess long. story short, um, my wife was diagnosed with cancer back in July. you know, that happening. I started going through mental health stuff on my own, basically had kind of what is a manic episode and maxed out all my credit cards, not really caring what happened. And now I am stuck with regret and $15,000 in credit card debt.
Uh,
what kind of cancer man?
Uh, it was ovarian cancer. So, um, due to that, we're not able to have natural kids anymore. So we're looking at adoption and me being 15,000 in debt doesn't help with paying for adoption.
Yeah. But let's, let's do this all in order. Um, you're as a family, y'all got hit in the mouth, right?
Yep. How old are you guys?
Uh, we're both 25.. I'm about to be 26..
And did you go in for, Hey, we want to start a family and y'all had a big exciting time and y'all planned it out. And then you started trying to have a family. And then she went to the OBGYN and found this out. Is that how that happened?
It exactly. That's exactly how it happened.
So you have to stop right there for a minute and just grieve this. Everything in your life is different now.
Hmm.
The debt, we'll get to the debt, but we have to own this part. Now, did she, um, did she have surgery? and she's clear?
Uh, yeah. So we just found out a couple of weeks ago, the PET scan came back. Good. Yes. So now she's just got to keep all the scans.
Yep.
Excellent. Excellent. Excellent. Thankful for that.
And so, um, you may have had with someone who classifies a manic episode or whatever, however, you want to diagnose it. Here's an, I want to give you an, I want to give you another picture to that. Okay. What if your body is just working perfectly? What if it just went on the, it just went into hyper drive for a minute and you did some dumb things.
and now the smoke is clearing and we're back.
Yep. Right. Yeah. So let's don't carry regret moving forward. Let's just pay this stupid 15 K off and move on.
You see what I'm saying? Like, and I'm minimizing it on purpose. You did something dumb. Yeah, you did. Okay, cool.
Let's solve this problem and move on.
This problem doesn't define you. That moment of cancer doesn't define your wife or your family. Y'all had these dreams of biological kids. It's, it's not going to happen. So cool.
We're going to go down the adoption. You see what I'm saying? Like, we're just going to look at the next thing in front of us. I'm not going to carry old cinder blocks with me. I'm just not going to do it, man.
Life's too heavy moving forward to carry old crap with us.
Yep.
How does that sound? Does that sound cheesy and lame? Are you, are you hearing what I'm saying?
No, I'm getting it. I'm hearing what you're saying.
That's awesome.
Yeah. Cause there's a level of, um, what John's saying that, yeah, what, what you've done in the past, it doesn't have to define you, Andrew. And the thing is, in one instance, I'm like, you know, there is light because it's not like, oh gosh, I've struggled with overspending for the last three years. And now I've realized I have to face it. It came at a point of crisis and a point of pain, and that's how you chose to cope and to keep yourself alive in that situation.
Right. I mean, like,
no, no, no. And you're like, all right, yeah,
I did it this way. Right. And yeah. And it wasn't, you know, the best thing ever. No, but you may not have the tools to do otherwise.
that this is where we're at. And so I think kind of just setting all that down and say, okay, how do we move forward now? Um, how much, how much do you guys make Andrew a year?
Um, well, she wasn't, she wasn't working throughout the whole thing. So I'm, I was bringing in about 45,000 a year.
Okay.
Um, she's getting ready to go back to work and she brings in around 60..
Okay, great.
What do you do for a living?
I'm a mechanic.
Okay, awesome. And, um, what other debt do you guys have?
Um, we own a house. I think that's like one 60..
Okay.
Um, and then she's got some student loans from nursing school.
How much is that? How much are those?
Oh, I want to say around 90,000..
Okay.
I'm not positive, though.
Okay. Yeah. Well, I want you guys to get on the same page on how much you guys owe total. And was there anything with the credit cards that you bought that you're like, Hey, maybe I could just turn around and sell a bunch of this stuff or return.
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