Give Every Dollar a Name Before the Month Begins

Live from the headquarters of Ramsey Solutions, this is the Ramsey Show where we help people build wealth, do work that they love, and create amazing relationships. I am Rachel Cruz hosting this show today with my good friend and best-selling author Jade Warshaw, and we are here to answer your questions. It is a free call anywhere in the country at 888-825-5225. So give us a call. We'll talk about your money, we'll talk about your life, your relationships, anything and everything. We are here for you. So first up, we have Chelsea in Des Moines.

Hi, thanks for taking my call.

Absolutely. How can we help?

Have you guys ever heard of recasting your mortgage? Yes, and I was wondering if there's any downsides to it.

What's making you wanna recast? Did you get like an inheritance or like a lump sum?

No, we're just very good at saving and we have maybe 20 to 30. Well, we are getting a tax refund, but we have $30,000 squirreled away and yeah, we were just wondering if we could lower our monthly payment.

Yeah, so let's talk through this, so for anybody listening, really, the idea of recasting is usually if you've got a giant lump sum of money, in this case 30,000, you can put it towards the mortgage. And then you can go in and basically have them redo the amortization schedule so the interest rate doesn't change, and so there's no closing. You don't have to close to do it, but the point is it can lower your payment. And so my question to you here we're all about paying off debt, and the best way to pay off the debt is to pay more, not less, right?

So I'm finishing up nursing school, I have $12,000 of loans which I can write a check for in the fall when I graduate. But I was waiting to see, like if I get a sign on bonus or where I'm gonna work. What kind of loan repayment they have before writing that check off to pay off the debt?

Is that it?

That's all the only debt we have.

And then you guys have and all your savings is this 30,000?

12,000.

12,000 Okay, so you have $42,000, so yeah, Chelsea, I mean, if I were you guys, I mean, I wouldn't wait. I would go ahead and just pay off your student loan because you have the money for it, the 12,000, go ahead and pay it off with the money that you guys have saved.

Yeah, they're about 2,500.

Total that includes rent or your mortgage and everything.

Yeah, okay, is the purpose in recasting? I'm just asking, is the mortgage eating up too much of your monthly take home? Is that? Are you feeling a squeeze? is that why you're wanting to do this?

I think technically it is slightly above 25, but once I start working, we're gonna almost double our income. So, to answer your question, we don't really have to lower the monthly payment, but I'm just excited to pay off our mortgage.

Good listen, I love that the way we let me just kind of outline the way we would teach it in order to get to that point. Because Rachel and I both want you to get to the point of paying off your mortgage. And you're actually starting to get to the point where you can start working on that. So Rachel already said, you'll have the 30,000 saved. We could call that three to six months of expenses, because your refund is going to pay off the debt, right? So you pay off the debt, you have three to six months of expenses.

Yeah, and Chelsea for you guys right now. I mean your monthly expenses at 2,500, which is pretty remarkable. If that's, it is great, considering that your mortgage is included in that. If that's true, then your six month emergency fund it may not be that big. It may be, you know, close to 12, 15,000, so you may have 15 to 18,000 extra of cash in that fund.

148.

Okay, okay, so it may make, it makes a dent.

I mean, it's not recasting it, which is great. But when you do, like, let's say you have 13,000 to put at it, like, right, you don't keep all that 30,000 saved. It is gonna cause on your monthly payment, more of that payment each month to go towards the principle when you do that. And so that's, that's really the magic of this whole thing.

So that's awesome. Yep, Thanks Chelsea. thanks for the call. Hope that that helps. Yeah, Jade. I think that's one of these things, especially in not this specifically with the recasting, but the housing conversation. You know, trying to kind of find these like these ways to be able to do it because people want it in the market.

That's right, that is right. Well, I love that conversation. And the truth is, you know, I even find that. When you walk through the baby steps, you get to this point where it's like, I paid off all my debt and you're going. You've been so intense that a lot of people want to carry that intensity to paying off their mortgage as well. And listen, I always say, if you and your spouse, if you're married, if you and your spouse decide that you want to keep that intensity, great.

Have life, have a life. Yes, yeah, because for so many people, those steps, you know, one through three, I mean, it's intense, you guys. And we were talking to a couple earlier, even today, and kind of encouraging them, motivating them to be like, to go all in.

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Hi, thank you. I appreciate you guys taking my call.

Absolutely. How can I help?

I'm calling because my wife and I, we've gotten to a point where we've only got two remaining debts. It's our car payment and then our house payment. Nice, and we want to know if we should be throwing all of our money at the car and the house.

I mean, do you think she could get a job within six months? a teaching job?

Probably not for the pay that she has, she works in the more, you know, probably the higher paid district in our neck of the woods over here. Okay, and so, yeah, if she were to be losing a job like that, I mean, obviously that'd be a pretty heavy hit to our income that we have coming on in.

What is the income?

She'd absolutely go and work. So our growth from last year is 146,000. I mean, right now we're taking home about probably 8,900 a month. She's also out. Other caveat, too. She's out on maternity leave right now, only bringing in 50 of her regular pay. At least until August, when the new school year starts.

Okay.

How much of the 146 was hers?

Versus Yeah, hers was 88,000, okay, and then mine is another 60..

So, Joe, I mean, have they given her any indication that she would be one of these layoffs? Or is this just like a oh my gosh, they're laying off and we're scared and we're kind of freezing? So I just wonder how much of this is actually a reality for her.

No, I mean, her district won't tell anybody anything. But she's a relatively newer teacher. She doesn't have as long of a tenure as a lot of her other colleagues do.

Okay.

Yeah, it is.

Okay, and she is planning on going back to work, correct?

She, That's correct, yeah, in August.

And the truth is, if the worst were to happen and there was a layoff, or if she was let go, she could find a teaching job. It may not be at, you know, in the district you want, or at that same pay level. But she would find something until she finds the thing, so I do feel good about that. What do you owe on the car?

The car we just owe $22,000.

Why did you prepay it as opposed to making a lump sum towards the principal?

We just weren't sure how our finances would shake out once our baby arrived, so we paid out. I mean, we killed off all of our debts and then tried to pay ahead on the car as much as possible. Just so that wouldn't be something we have to worry about for about a year's time, in case we just had money issues that popped up with.-.

How much is in the emergency fund, Joe?

We've got 22,000 in our emergency fund.

And that's what you owe on the car.

That's right, yeah.

If you want to know-.

Yeah, do you think that we should try paying ahead on the car, or should we just hold it still?

Well, it's just kicking the can down the road, yeah, continuing to stay in debt versus just paying it off and being done with it.

Yeah.

If you really want to know what we would tell you, I mean, if we're just chatting face-to-face, I would tell you. I would say, and this is what I would say to anybody. I'd say you're going to be better off paying off that debt today. Cause what's the payment? and I know you're ahead on the payment, but what is the payment?

The payment is 700 a month.

Okay, so think about how quickly you could save up an emergency fund when you have an extra $700 a month, along with whatever extra margin. And that way you're done, it's free and clear, you're not worrying about interest.

Right, okay.

Yeah, yeah, I hope that helps. Joe. I know it's probably not.

We wanted to run it by someone else. You know, I appreciate having, you know, someone on the outside looking in because we kind of get tunnel vision on, you know, what our concerns are.

Yeah, totally yeah. And I think the reality, too is what can happen so often that, yes, the layoffs are a reality. Right? They are happening, but at the rate of which they are and it actually coming to fruition. It hasn't happened yet. So there is a point of that reality of saying, okay, if something were to happen, then we act upon it.

That's right, yeah.

Sometimes that's a different mindset, but yeah, I'm not being able. If you guys wanted to keep, I mean, I wonder when she would be able to know about the job. But still taking it down to that thousand dollars and then you guys saving what you can, yes, to save up for it.

And it's worth noting, honestly, for anybody listening, I'm always going to recommend you. If you have extra money, I'm going to recommend you put it towards the principal, not make extra payments, yes.

It's kind of like the recasting we just talked about to a degree, right? You're kind of like shuffling the deck a little bit versus just saying, no, go actually on the principal. Because that's going to help you better in the longterm, mathematically speaking.

And you almost always have to call in order to do that, whether it's with your mortgage, a student loan, a car payment, you almost always need to call them and say. I already made my like. I already satisfied my monthly payment, which goes satisfies the interest for this month. Now, this lump sum amount which is separate, I want it to go fully towards the principal and you have to call in order to do that so.

Yeah, we were talking to somebody, it may have been on the show or on social media or something, I remember saying. And they were making extra payments, but when they saw their principal really hadn't changed much, yeah, and it was just catching up on all this interest payments. And it didn't do mathematically what they wanted it to do. So that's a really good point that when you are making extra lump sums towards your debt on the principal. That's usually takes a phone call, some level of communication to be able to make sure that that's where that money's being directed, because that's where you're going to see the biggest bang for your buck in that, that's right.

Yeah, she says. A couple of years ago, my husband bought a house with his mom. He told her that if she helped with the down payment, he would pay the mortgage, taxes, utilities, et cetera. I agreed because I thought it would be temporary as a way to help each other out, but it's sounding more like it's a permanent thing. To secure her retirement, I didn't imagine living my adult life, working so hard to pay bills and still feel like a guest in our home.

Oh man, Oh geez. Okay Miranda, we hear you, we hear you, yes.

Hopefully, that's not the case. Hopefully she just gave money towards the down payment.

Yes, so yeah. So what I would do is like, there's a realistic conversation to be had of. I mean, honestly, if someone's gonna live in a small apartment versus a house, say it. Rachel There's a family involved with children, right?

Grandma gotta go to the apartment.

Yes, grandma's gonna go to the apartment, yeah. Because at the end of the day, especially if you guys are not on the same page, I mean, we know. I mean, I think it's kind of more few and far between, but people that live with their in-laws and it works. Sure, like, I mean, that happens, and both parties are genuinely great with the situation. But the fact that you guys are on such uneven footing when it comes to the emotional decision of, like, Hey, living with your mother-in-law, then, yeah, then something needs to change.

Yeah, absolutely, I validate that 100. I think it's totally fine as the wife to say, hey. I'd like a place of our own and be able to experience life as our own family here. And I love your mother, but we can help her with an apartment. But there's also something to be said.

Yeah, for sure, yeah, that's the hard thing, too, is because when people get in a situation, especially with parents, when they're going to retirement. We've had a lot of calls of that of kids saying, what's my responsibility for my parents? But if you're not in a good place financially, then you're not gonna be able to help. So getting you guys in a really steady place financially, that if there was margin to be able to help and that's what you guys decided together, then that's a whole other thing.

Hello Rachel, how are you doing?

Doing great. How can we help?

I have a two-part question. My son graduated high school recently and he is planning to join the Marines in about a year. So I have a vehicle of my own, a 2017,.

It's paid for.

Yes, the vehicle is paid for.

How much is it worth, do you think?

About 7, 7,000.

Okay, I mean, I either way, you know, I think would work, I think, maybe having a conversation with him. I mean, it's a very kind of you. Yeah, I mean, if you're in a place where you can let go of this asset and you're fine, and it's paid for and everything. Yeah, maybe just ask him, Hey, do you want this car? And it may be actually a really great quality car, you know? Even though it's past 100,000 miles, it still could be in great condition. Versus him having to go in car shop and, you know, pay for an inspection and like all of that. That you have to do when you buy another used car or give him the option.

Yes.

Oh, you're having him pay you back.

No, I would probably just give it as a gift, or just sell the vehicle to somebody and get cash for it. And then maybe just see what he wants to do. Maybe he wants a different type of vehicle than what I have right now.

Yeah, right, so I would, yeah, I would ask him, I think that's a fair thing, yeah, just to see what he wants. Because he may be great with just being given the car, or again, if he doesn't want that specific car, then he could say, Yeah, dad, could you sell it? And we'll get some cash and we can go car shopping together for that amount of cash.

That's true. Yeah, what will you do if he says, Yeah, dad, I want the car? And what will you drive? and what's your plan for your next vehicle?

I have cash saved already to buy a truck and I'm looking 25 to 30,000.

Okay, awesome, so great. How generous though, Darby, and what a great position to be in. I'm like to start off, you know, as he's graduating and going off to the Marines and everything for a year. To be able to have a car, that's a really generous gift of you to give your son.

So I have a second part question of the same thing.

Okay, yeah, we have about 30 seconds.

Okay, should I put his name on my insurance?

Put his name on your insurance.

Car insurance.

And yeah.

Yeah, I would price it out, car insurance these days is getting like, really crazy expensive, yeah, expensive. So I would probably price out. What the cheapest option would be if it would be to bundle on yours, or if, yeah, if it's cheaper, to get an individual policy.

You could go to RamseySolutions.

Yeah, that's right. Yeah, go to yeah, zanderinsurance..com and see what they would do, because, yeah, car insurance, it's a tricky. That's a tricky field right now. Jade We're seeing prices, it's gotten crazy.

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Hey, how y'all doing?

Doing great. How can we help?

My girlfriend and I are looking to get engaged, probably near the end of the year this year and get married in 2025. And we both own our own homes, and I know normally, Dave says, not to invest in real estate unless you're going to pay cash. But since we both own our own homes. We were thinking of selling my house and using the equity from that to buy a home. Because we'll have five kids put together that will need to fit under one roof. And then would it be dumb to keep her house as a rental at that point and rent it out?

Yeah, for sure. Okay, so tell me about your home. How much is it worth if you were to sell it today?

450 to 500.

Okay, and how much do you owe on it?

200.

Okay, and then how about her house?

Hers is pretty much in the same range, 450 to 500, and she owes 250.

And she owes 250. Okay, great.

So if you sold them both, you'd walk away with what?

Probably 400, 450, something like that, yeah.

What would so you said, you guys plan on having families? What would happen if you sold them both and put this money down on the house that you want to buy together?

That's definitely an option. That's kind of what I was wanting to ask. I know the thing is right now. Obviously, the interest rates are significantly lower on the homes we own and whatever we buy together. The interest rate's gonna be triple plus what we're currently paying, or I guess double, probably two and a half times what we're currently paying.

Yeah, I mean, in most cases, it's gonna be to sell both. I mean, unless you had the cash to significantly put down on one of the houses and the one that you want to buy. I mean, are you guys combined? When this happens? When you guys get married, what will your situation look like financially? What kind of debt do you guys have?

I just recently started the program and I wasn't very far buried in the first place. I only had like 3,000 in credit card debt and that'll only take me a month to pay off. And then I know she has 40,000 in student loans. But I figured use the equity from my house should be able to pay that off quickly. And then our combined household income would be in the 180 to 200 range.

Whose house is bigger? Like, what's the better property of the two, yours or hers?

So mine, we could in theory fit the whole family in. It's a five bedroom, three bath, so in theory we could fit, but it has no backyard. The backyard's trash and the house isn't nearly as nice and stuff on the inside. It's older than her home, but her only has four bedrooms. And we'll have five kids right away, and then we would like to ideally add another kid eventually.

Why will you have five kids right away?

She has two, or she has three kids, and I have two.

Got it okay? So you're combining families? There's part of me. Here's another option. And I mean, this is not a right or wrong. But what would it look like to sell one of the properties? Because they're about worth the same and there's the same amount of equity, it seems like just about.

Yeah, I almost would just say, grade into, sell hers and then you guys take out what's left when that's what Jade is saying. But throw it at this mortgage, and at the student loan, you can basically have everything paid off and then wait a year or two. I mean, there's no rush and just see even at that point what the housing market's doing, what rates are doing. All of it cause I would almost just want to be in a paid for house at this point and try to juggle two mortgages. Because the truth is, too. Yeah, in a dream world, having hers as an investment property, I get it.

She has her kids 50-50, pretty much exact, and then I have my kids every Thursday and every other weekend.

Okay, okay. So even from a space standpoint, you guys would be fine in the five bedroom. And I know you said, it's older and all of that. But man, there's Graydon, I'm telling you there's something about. -.

Freedom.

Freedom. Yeah, not having any payments at that. I mean, like, you guys have done really well so far, so just keep that. I would just keep that going and I probably I wouldn't fool with keeping an extra property.

I think about whichever one, if you're really concerned with interest rates, or really concerned with wanting to stick with one of them long-term. For some reason, I'd choose the one that you maybe can make into what you want it to be, right, like you said. One of them, the yard is trash, but maybe the other one is good. And there's like space if you ever wanted to make some improvements with it. Because the truth is, you're gonna have a lot of extra money that you can throw at fund things like that. If you do it the way that Rachel and I just suggested. So I'd also put that into the equation and think, okay, maybe the yard is trash, but maybe if we put some money into it, it could be awesome. So there's some creative thinking. I think that can be done here, not just financially, but to make one of these properties what you ultimately want it to be.

Yeah, okay, and then I'm gonna give you another path. GRAYDON Sorry, I know we're going all the way around, let's go. If you sold both, like the price point of houses right now, what would a house be in, like your dream world?

I mean, it's kind of crazy. We've been kind of looking on Zillow a little bit. And this is allegedly, according to the Endler, one of the most hottest areas in the country right now. And if you put a five bedroom filter, you can put it from 300,000 to 800,000, and the cheapest house is like 600..

Right, okay, because I was gonna say, and the cheapest house is probably crappier. Is the cheapest house crappier than your house?

No, I would say it's nicer, it's nicer, okay, a better kitchen, granite countertops and all that stuff.

Okay, because if you did sell both, you'd walk, I mean, you'd have like around 550,000, but you'll still have closing. You'll have a lot of fees in that, which may take down, yep, which would take it down. And then you'd have a small mortgage on a small amount, on maybe 200,000. But I don't know if that's worth it right now. Graydon.

It's the rates for me.

Yeah, I would sell hers, take that equity, pay off her student loans, pay off most of your mortgage, and man, that's a yeah. And you can always upgrade countertops and all of that later, if you want. Or wait a year or two, and if prices stay the same or continue to tick up a little bit. Save some money, sell yours and put that money with it and get a house that you guys want. So I hope that helps. Thanks Jade for being a great co-host, thanks to everyone in the booth, thank you, America.

Hey, how are you guys doing?

We're doing great. How can we help?

Yeah, so I'm a graduate student and I'm really wondering how I should be spending my extra money. So what I take home is usually about 33,000 a year and I already have a six-month emergency fund. I have no debt and I've matched out my Roth IRA for this year already, and I'm just wondering the extra money that I have. Where should that be going? What should I do with it?

Wow, good for you Jason. How are you paying for school?

So it's fully funded, it's a P.h.D. program in STEM, so they pay me to do it.

Good for you, That's amazing, yeah. So you're making money through the school and getting it paid for.

That's incredible, Yeah, that's great.

When do you graduate?

Probably 2026, maybe 2027.

Okay, so two to three years.

How old are you?

I'm 25.

Okay, and how much extra money are we talking a month? So you've maxed out your roth, which is amazing? Yeah, how much money per month do you have that you're wondering what to do with?

So typically, in a typical month, I'll save between 1,000 and 1,500 out of my stipend. And then I put away a big chunk of that to go into my roth for the next year. So I guess what I'm looking at is like 6,000 at the end of the year. That I don't know if I should just throw it in a high-yield savings, or if I should be investing it. Or what do you think?

Yeah, if I were you, I would just put that in a high-yield savings account and I would just let it sit there. Because, I mean, we're talking 12 to maybe 20 on the high end after three years of cash. And I would assume Jason. After school, you'll probably be looking for a job, possibly be moving, and that could be a great down payment for a house.

Yeah, what's your living situation now?

Yeah, so I have student housing which is subsidized, which is great because Irvine's very expensive.

Yeah, that's what I would do. And for a first-time homebuyer, you'll look at putting anywhere from 5 to 20 down. I mean, more if you have it, but you probably won't considering California real estate. But-.

I was gonna ask about that. Irvine is expensive. Do you plan on staying there? Is there a reason because your family's there? or?

Yeah, so I have lots of family nearby, my girlfriend's family's nearby. Okay, I just I love it here, I'm happy here.

Okay, there you go. Yeah, that's great, that's enough for me.

Yeah, so I think it'll be, yeah, you'll have to, yeah, have some good savings to be able to do that. And remember, when you do purchase your first home, you know it doesn't have to be a single family, it could be a condo, it could be a townhome. I think just getting into the market is great. And honestly, Jason, you're in a really great position. I'm like, you have, you're maxing out, you know, very good, you know? One avenue of retirement, which is great, but I would hate for you to, like, have all retirement funded. And then no cash. And then you're not able to buy a house, you know? So I would put that extra and some high-yield savings.

That's where my six month is right now.

Oh, perfect, yeah.

Just keep adding to that.

Awesome, so great Jason. well well done. we applaud you. But, yep, just put in a high-yield savings. You probably have to rent maybe a year or two or three after school even, but I think a down payment on a house is your next big step. So great job.

Hello ladies, my name's Alexis. Obviously I'm on baby step number two with 18,000 still to go. I'm a single mom. I was calling because I'm not sure if I should pause the baby steps to save up to move back to Ohio, where I'm from.

Oh gosh, Alexis, I'm so sorry, thank you. Okay, so you're looking at? You'll be wanting, you want to move to Ohio because your dad is sick? And have they given him? I mean, I know a diagnosis, do you know? have the doctors said anything with? just like lifespan and stuff, do you know?

Well, they, yeah, well, it's slow. But they gave him six years and that was eight years ago, so he's been on borrowed time for the past couple years.

Wow, okay, okay, so yeah. Have you looked into moving costs, what it'll take to move? Have you looked at places to rent possibly up there? Have you looked into any of that?

Yeah, I have. I have the option of staying with my dad and just kind of doing half of the bills there. Or finding my own place. Which would kind of be equivalent to what I'm paying now in Tennessee.

Okay.

So it's kind of the same. And I have a remote job that allows me to work from anywhere, so I can take my job with me.

Okay, and you said, you're a single mom. How many kids do you have?

Only my son.

Okay, how old is he?

And he's homeschooled, he's 14.

He's 14 and homeschooled. Okay, yeah, well, I think, yeah, I think this is one that I would say, yeah. Pause your debt snowball and save up some money for sure to be able to cashflow this move. I think this is an important move. This is one of the times I would probably say, pause. To be able to be close to your dad during this time, especially since this is, yeah, what's looking like in your future, even taking care of your grandmother? So I think it would just be up to you, Alexis, to run the numbers on what's best from you from a financial standpoint of staying with him or getting your own place.

Will you have a support system when you're there in Ohio? Because you're taking on a lot?

I mean, my little brother is there and so I'll have him and I have my like church family.

Okay, great.

Like my home church from when I was in Ohio.

Okay, that's good.

So I'll have that, but as far as the rest of my family, they'll remain here in Tennessee.

Okay, yeah, that's a lot, you know, to go. And you've got the situation with your mom, the situation with your dad, plus a move, plus a teenager. There's just a lot in that equation. I just wanna make sure you've got people around you that you can lean on and cry on their shoulder. And let them hold you up and take care of you. Because you're gonna need a little bit of care yourself.

For sure, for sure, yeah. So again, this is one of the times we talk about for momentarily pausing the baby steps. But a move like this would be one of those. So to pause and save up and make sure you cashflow all of that. But Alexis, I'm so sorry, that's a hard. This is a hard season, I know, but you're doing a great job and hopefully, hopefully we helped give you a little bit of peace and guidance.

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Welcome back to the Ramsey show. I am Rachel Cruz hosting with Jade at Warshaw and taking your questions up. Next. We have Kaylee in San Diego. Hey Kaylee, welcome to the show.

Hi, thanks for having me.

Absolutely. How can we help?

I just have a question. We're in kind of a unique situation. We're a military family out in San Diego. We bought a house a couple of years ago and we don't totally love the area. It's kind of a situation where I don't feel safe when we deploy in the area.

Yeah, well, we wouldn't normally tell somebody to sell their house to pay off debt. We would normally just say, yeah, work extra, cut your expenses and just do it that way. But if you're not happy with the home that you're in for some reason, then I think that's a separate conversation, right? So I would look at the house as one conversation, the debt as another. And then if the finances overlap, then that's a pro.

Yeah, I'd say so, probably the situation we're in. I mean, we're gonna have to move anyways in the next two years, because these military and they're gonna make us move in two years. And we've got a great house on base that we're interested in. Okay, of course, that puts us back into, like, the rental people, of course, which that part I don't love.

Yeah, well, I would say because of career choice and being in the military. Rental people is where I would put you guys anyways, because what you're experiencing now, yeah, you move so often. And until you're in a place long-term, or his time is up there, I would tell you to rent anyways. So, yeah, this feels like the right move, Kaylee.

I think so, my only question would be, I'm always looking at the behavior, part of it. So what kind of debt was the 35,000??

35,000, so only some of it is a student loan, about 8,000.

A car payment, okay?

That's the other one, yeah.

So it sounds like you've kind of learned your lesson. You're like, if I go to school this time, I'm cash flowing it, paying off the car. From now on, we buy cars in cash. I just like to check because I do think that sometimes when there is a convenient option to pay off debt. I'm happy that you have that. But I also wanna make sure that the behavior is in check too, so that you don't go back in debt again.

Yeah, absolutely definitely. Yes. I mean, the student loan the first time, too, is like loss of scholarship situation too. So we're definitely like on the same page, we want to be debt free.

Yeah, listen, I'm glad it's there for you.

That's great, I thought it might be a good idea.

Yeah, for sure, yeah.

Yeah, awesome, well, great. I'm glad to know that we're on the right track then. Thanks guys.

Absolutely, thanks Kaylee. Yeah, again, I would separate those, right? Because I think, like you said, it's easy to do something like sell a home and just have a sweeping pass over the debt. And you keep on moving. But those conversations are important. And again, being in the housing market right now, if you're in and especially if there's a good rate and all of that, that's such to your advantage. But he's in the military, you guys, and it's like you're moving constantly and always.

Yeah, there were some really cool stats that were in that article that I think really just point to the madness of the time. Like, it's just we went from a time where people were paying $50,000 over asking and $100,000 over asking. And then to a point where, like, interest rates have gone through the roof and it's like, Am I ever gonna be able to buy? There's just been so many shifts in the market and people just trying to do the best they can. And so a couple of the stats that I thought were interesting. 43 of recent home buyers say that they're struggling to make on-time mortgage payments, and that might be because they overbought or kind of overextended themselves.

And like the housing idea again, financially speaking, it's wise to own a home, right? Eventually it is, because eventually you're gonna pay it off. It's an asset to you, you're not having to worry about rents rising or whatever. Like, having a house in your financial portfolio is something that we want for you. But at the same time, people believe and really do. Oh my gosh, if I could just have a house, if I was just a homeowner, life would be better.

100. And I feel like where we're sitting, we're playing both sides of the fence on Okay. We're on one hand, telling people, Listen, if you have to rent for a little bit longer, it's okay, there's no stigma in renting. So that you can get into a place and have peace about it, and if you do have the money. We know that interest rates are super high. And I think you and I were talking doing a real estate thing and there I mean six, seven, even 8 for interest rate.

Yeah, and I think there's a reality to you guys. If you just have too much house. I mean, if it's 50 of your income, it's gonna be hard to do much of anything, whether you're investing or paying down debt. So again, looking at the whole picture, I think is really important. But be in a position if you are ready to buy that you feel good, you feel good about it. This is the Ramsey show.

Seven whole days.

Seven whole days we will be on this ship. It's a beautiful ship, actually, really, really beautiful. And here's the thing VIP upgrades, they're already sold out.

Yeah, set sale.

Yeah, March 22nd through the 29th, so here in about nine months. And again, these are for people that are on baby steps four, five, six or seven. So if you're getting out of debt, pause, we may do another one.

Thank you. So, I have a unique situation. I'm getting an insurance payout of approximately somewhere around $40,000 in about a month. And then I will have the opportunity to get a payout of around estimated around 60,000 next year from a victim's fund.

What happened, Nicole?

My son was killed in an accident last March.

Oh, I'm so sorry. How old was he?

He was 18 years, eight months and four days.

I'm so sorry.

Oh so sorry, Nicole.

It's been very rough and I've not been able to return to work full time. So that kind of plays into my equation too, because obviously I've just been trying to survive. But I'm worried about, like my 401K, I haven't. I just recently started making contributions to it again, but I'm only working part time. So I don't know like what the best use of that money is. I wanna be smart and honor my son and my choices.

For sure, absolutely. Are you able working part time? Are you still able to keep everything afloat with rent or mortgage or food bills, all of that? Have you gotten behind on anything?

No, I'm not behind on anything. I actually have a very decent hourly rate. I work in the human resources world and so I'm specialized in one aspect of that, and so I make a decent amount, even though I'm only part time.

Okay, and do you have any other kids that you're supporting?

I have an older daughter, I'm not supporting her, but I'd like to factor her into the equation also.

Oh man, Nicole, I'm so sorry. Do you have any debt right now?

I have about $12,000 in credit card debt and I have a mortgage that's I've got about 128,000..

On it, okay, do you have any money saved?

I only have like a couple thousand dollars saved, I went through a lot of savings.

Okay, and what can I ask? Caused the $12,000 of credit card debt? What was that on?

Some of it was grief, honestly, some of it was to pay for final expenses.

Yeah, sure, sure, which is understandable. Oh, I'm so sorry.

Are you in grief counseling? are you working through that?

I am, I have an amazing counselor.

So Rachel and I could give you some thoughts. I mean, obviously we would say, okay, yeah, let's clear out this debt, let's make sure you've got a good footing and you've got three to six months of expenses. But what do you think you said? You wanna do something that honors your son?

Okay.

Yeah, yeah.

I agree.

I agree, I do like that a lot. If I pay my credit cards off, should I put that money towards my house payment as an additional principal payment or?

Yes, if you had, yeah, if there was more that you were divvying in that category, then yes, yeah, if there was more there, yeah, put it towards the principal. Yep, and maybe you just do all that now with the 40, and then maybe when you get the 60. That's when you say, I'll give some of this to charity to get yourself. I think there's something, too, Nicole, about having that solid financial foundation under you. That maybe can give a level of clear headedness too when you get this next sum of money. So maybe using some of this for your benefit to set you up well is beautiful.

Hey y'all, how are you doing today?

We're doing great. How can we help?

So I have a question after reading a little bit from a breaking piece from Broke. In the investing section, it said that we should avoid index funds and instead go for mutual funds. But I know mutual funds have more fees and sometimes they don't beat the index. There's a lot of them out there that don't.

Yeah, I didn't know George's words for that.

I'm not sure. Well, I can't say yay or nay to that. There are times where we would say, choose mutual funds, like when you're investing for your retirement. We just know that over time, because they're actively managed, they're switching out those funds in an attempt to beat the index, right? And so, of course, we want you to have the best rate of return.

Yeah, for sure.

So that's why we would say that now. To your point, index funds are not bad, they're passively managed, and the whole point is they follow whatever index it is. So if it's S&P 500 or if it's Dow Industrial, whatever it is, there's different ones that they follow. And so that is a little bit of.

Yeah, and again, I think more so for the long-term approach, especially when you're thinking about retirements, mutual funds are. It is a great place to park your money when you're doing all of that because it is spreading it out so much. But again, like Jade said, for a short-term, we know people, a Vanguard account and they put some money in. But I think you wanna be careful with what you're doing, because a lot with index funds you're doing it yourself. And I think there is something to be said. That if you don't know it well enough and you're not diversified well enough, that's where some red flags can be raised. But yeah, I wouldn't say it's that we're completely against it by any means.

Yeah, honestly, if you're investing and you're not investing in single stocks, in many ways, I'm just happy that you're doing the muscle of investing. But, to Rachel's point, I think we're in the era of TikTok and Instagram. Do it yourself.

Okay, I guess my question was more, cause I don't have a lot of margin, and I guess I'm technically in step seven. But I don't own property, so that's kind of what I'm working for in the long-term. So is there a situation? So would that be one of those situations where you might go index funds?

I mean, how close are you for a down payment on a house? How many years do you think?

Ooh, at my current pay rate, which I'm hoping to improve, it might be 10 to 15.

Years until you have a down payment, yeah.

Yeah, I don't have a lot of margin each month.

What do you make a year?

I make about 37k.

Okay, how old are you?

I'm 25.

Okay.

And what's the market like in Roanoke? Because for first-time home buyers, we're saying, you know, five to 20 down.

I haven't really looked around that much, cause I've been, I've got Ken Coleman's book at home. I'm trying to get my income up right now and I just got out of maybe step three, so.

Yeah, that's great.

I figured thinking 10 to 15 years down the road might work out best for me.

Okay, I would probably say to be a little bit more aggressive, I think. When you get your income up and depending on, yeah, which part of the country you're looking at. You know, a 5 down is great. And I would get into the market as soon as possible. With the parameters that it's no more than 25 of your take-home pay and all that. But yeah, I would want to get in more aggressively, Chris. Especially if you're going to be somewhere long-term. Because the faster you can get in again, reasonably and responsibly, the better off that you're going to be.

Well, that's assuming that your income doesn't change, and it is going to change. You're 25, your income is going to go up. You know, you've got the right resources. You're already digging into Ken Coleman's material, so I can tell you your income is going to go up. And I don't know if you have debt or not, but you knock that debt out, that clears up more margin. And so there are definitely things to make that go faster for you picking up a side hustle, there's a lot that you can do there.

Yeah, that's great. Thanks Chris. Up next, we have Cort in Lubbock, Texas. Hey Cort, welcome to the show.

Hey, how are y'all?

Doing great. How can we help?

So I have a question, and I don't. I mean, I'm sure you'll get some people ask this. But what are y'all's thoughts on vacation huts? That's kind of what we're thinking about next.

Yeah, I think it's a great goal.

Okay, we've owned a couple of rentals and they, I mean, we kind of made money when we sold. We don't technically make money because the insurance now is going crazy. Every time we go to Florida, they're like, you know, I talk to owners that live there and they're talking about how they're making double their mortgage or triple. I know that's subjective, but it just seems like a lot more than what you would expect from a tenant landlord type situation.

Yeah, vacation rentals are the most volatile. So when the things, when times are good, it's real good, and when times are bad, they're real bad. So no, I mean, I think it's the same rule with any investment property, regardless if it's vacation or just down the road. It would be paying cash for it, so that volatility isn't there.

Yeah, I said I was still in middle school then, so I don't really remember the tear from that.

Yes, so I mean-.

I'll remember for you.

Because those are the first places that you know that people stop when the economy turns. And again, we pray that never happens. But again you're putting it's a risky business, and again, when it does. Well, yes, I agree. There's places in Florida, for sure. They're written out like, yeah, probably double the mortgage, but you're being a long distance landlord, you're gonna pay management.

No, I'm just trying to think of another, I mean, another income where I don't need extra income. But I need to figure out where to put this.

Yeah, I would get. I mean, do you have? how much money do you have?

I mean, I probably like between everything, like three, 400.

Cat like liquid, liquid or in investments.

Yeah, oh yeah, yeah, all liquid, yeah.

Yeah, so maybe, yeah. So I would look for a spot. I mean, if you want the vacation side of it, yeah, look for somewhere, look remote. Don't go to the hotspots because you're going to pay four times that. Yeah, they're like one to three million.

Just for the starters.

Yeah, so, or what you could do court. If you want to get into real estate in Lubbock, go buy, you know, two, yeah.

We've owned a few houses there, we just didn't really make money until we felt so. Right now, we're living in a super nice lease that we're in a five-year lease right now because I'm so scared to buy a house.

You're leasing a house.

I don't know why, I just am. We are.

But you're you feel okay going and buying a house in Florida?

I do just because we've talked about it for four years. We go four times, like I'm leaving tomorrow to go and I'm talking to another-.

But you're living, but you're living in your house.

I know I know you are right. So that's the deal where it's like, I just, well, I run a business, I run, we have six locations, so I kind of travel everywhere.

Okay, okay, I hear you well, what I would say court is, I think for you and your family. Owning your main property is gonna be key long-term to have equity. And that you don't have to worry about a house payment later down the road because you're gonna have everything paid off, you'll be self-insured, it'll be great. And then from there, let's look at investment properties paying cash for them local so that you can keep an eye on them. I think is where I would start, but I appreciate the enthusiasm and all of it. Because one day you could own a house in Florida and pay for it, so that could be a great goal, that's right.

Well, thank you for taking my call. So I was divorced two years ago. I'm a single mom, I'm almost 49, so I'm working as a medical receptionist right now. And I do have a side hustle as an artist as well, where I sell my art. And I'm just really having a really hard time.

Okay.

But so he's kind of put my payments on hold because he knows my situation is crazy, which is not ideal right now. But-.

So your mortgage is on hold right now? Yes, okay.

I'm just, but I can't keep up with my bills. My minimums are so high now because I have, you know, some of my minimums are like $400 on these cards. And then I have the house bills and my son. And I'm just wondering, do I file bankruptcy? Like, what do I do?

So no, I would not say you're bankrupt right now. No, no, these numbers aren't impossible. Okay, so how much are you making a year?

I mean, I've only had this job for a few months. I was working on my own since my husband moved out, doing the art-based business, which was doing okay. I was paying my bills, but then I was spiraling and it just hasn't been great. With the economy, people aren't buying as much.

Okay.

I'm probably gonna look for a full-time job within the next few weeks. I just wanna wait till my son, like, I just have to figure out what I'm gonna do with my kid. It's really tough.

For sure, how old's your son?

I have to get him off in the morning, yeah, I have to get him off to school every morning, which they've been really flexible with.

Yeah.

So it's tough because my parents are up in age and I don't wanna use them anymore.

No, for sure, for sure. I can't have the bus every morning. So I think what we're gonna need is just this plan. Because I can hear you're spiraling. You have a lot of things going on, right? I'm like, you're a single mom, and when you guys were married, did he do most of the finances?

He did, and then he ran into some issues with his mental health and some other issues, and he kind of lost his whole career in his sanity. So I don't receive any child support or alimony. I kind of just wanted him to leave the home. So I took on the marital debt, which grew a little after he left, because it was only my income for so long. And I'm just like at a wall now, where my cards are maxed, I can't make the minimums, what do I do?

Yes, well, yeah, because they're gonna come and take all of your assets before, and so we wanna be able to keep you. Yes, so here's the thing, Carrie. I think for you to feel stable, I think getting your income up is number one. Okay, and you're just starting this new business, right? You were in an industry, art and selling the art, which is great and wonderful, but after a while, it was not paying the bills.

With the taxes, it's about $1,300.

Okay, okay, okay, if you, so if you can paint out a picture yearly, like if you were here a year from now. If you had to guess, how much do you think between still selling some art? If you're doing that at all, but also a full-time job, how much do you think you could bring in?

I mean, the job I'm working at now is only $18 an hour. It's not much at all so, and most of the positions I've been looking at, they're like $20 an hour. So I would also contemplate, would you recommend getting, like, going back to school at night to get my bachelor's? Cause I already have an associate?

No, no, no, no, I don't think education is the problem here, I think it is income. And I think you're gonna be, yeah, I think you'll be able to get it up, but I think, I mean, honestly, Carrie, I think. Getting these four walls covered, making sure food before, credit cards and all of that are paid, that you and your son are taken care of on the basic level.

Yes, I do. I had to get a new car last year, I had, like, a 15 year old car, that finally.

Okay, Carrie. How much is your car loan total?

That car payment is 365.

18,000.

I think it's just about even cause I did check the other day.

Okay, and no money saved, it's not so probably.

I have nothing, I'm like living minute to minute.

Yeah, I hear you, I hear you, okay, so you have the $18,000 car payment, you have about 20,000..

Yeah, so then the house.

Okay, and you have no money saved, none, none savings, okay?

Okay.

And I think that's gonna start to give you some level of footing here because I need you to get some quick wins as well. And if you stay on the line, Skylar's gonna pick up and we're gonna get you connected with a coach. Cause as a single mom, I mean, I can feel it, I can feel it on you.

Okay.

And so we're gonna get you with a financial coach, though. Because I know that there's just so many, so many elements of this story. And I do not think you're bankrupt, though, Carrie. I really think if you get your income up and you get a level of stability and consistency with these bills, you get this car out. So you're not dealing without debt over your head and you work on getting out of this credit card debt. I mean, you really are gonna get some quick wins and I think that's gonna give you a level of confidence too. Carrie, So stay on the line, Scholar will pick up, but I'm so sorry.

Hey, how you doing?

Doing great. How can I help?

Well, my wife found the show and she's been kind of aggressive about implementing some of this stuff, to say the least, and I just don't-.

Jeremiah, Let me just say, Jeremiah, I'm sorry, I'm sorry. Sometimes we are used as a weapon in people's homes, we're cuss words sometimes, so I'm probably more on your team, Jeremiah.

All right, well, here's the thing. We're pretty good financially.

So this crazy woman, who's she been listening to? This is madness, Jeremiah, This is madness. Oh man, okay, well, this is so funny because I number one. I love her enthusiasm. Because I think some people personality wise, when they get this taste of like, Oh my gosh, I could have no payments.

Yeah, yeah, she is. The problem is, though, is like, I planned on doing this again. Like, as soon as her car was paid off, my car is 12 years old, you know, it's getting there, and, you know, as soon as hers was paid off. I was looking at, you know, shopping around and looking for something that was 0. And doing this again. Instead of just pulling, you know, $60,000 out of savings, you know, to pay cash for something.

Yeah, how much do you guys have saved? how much is liquid right now that you could get to?

Liquid about probably 60,000.

Okay, and how much is left on her car?