Build Wealth by Doing What Rich People Actually Do

Caroline is with us in Washington, DC. Hi, Caroline. How are you? I'm doing great, Dave. Thanks for taking my call.

Sure. What's up? My question today is about spending a lot of money on a big trip. for my family. Cool.

Sounds, fun. Do you have a lot of money?

That's the question. I retired last year, and I feel like I'm doing pretty well. I guess the question is, if I don't have all the money saved, is it okay to take it out of retirement? We're going to Disney for my whole family, and it's like 20 people. You're paying for the whole thing?

I'd like to. It's for my retirement. How much do you have in your nest egg?

About $1.

1 million.

You're going to spend, what, $40,000, $50,000 bucks? Right. I think I'll have about $30,000 saved by the time we go. We live on my pension. My husband and I live on our pension and his Social Security.

I haven't taken any money out of there, and I don't have any debt. How old are you? 62..

Yeah, I think you ought to do it. You do, even if it's a lot of money? Yeah, it is a lot of money, but you have a lot of money. You're a millionaire. You're a millionaire.

I know, I just don't spend like that. It's really hard to spend money. Well, that's how you got a million dollars, and I don't think you're going to do it again, and the reason I don't think you're going to do it, I don't think you're going to do this every year. This is probably a one-time hit.

By the way, your $1.

1 million, if it's invested in good growth stock mutual funds, it should make another $100,000 this year that you're not going to use because you live off your pension, right? Right. So it'll be $1.2 million, so you're spending some of your income. Okay. You're not actually spending out of the nest egg.

Does that make sense? Right. Yeah. Well, I mean, it feels like if I'm taking it out of there, you are. I will end up taking it out of there, some of it anyway.

I mean, if you take $20,000 out, and you save $30,000, and you spend $50,000, yeah, that's a lot of people and a lot of Disney, but that's your choice, and you live like no one else, so that later you can live and give like no one else. Here, you are living and giving because you're having your family go, but it's something you get great joy out of watching all those little kiddos run around Mickey Land. That's right. That's right. I took the whole stinking bunch on a Disney cruise one time, the whole bunch, the whole fam-damly, and they all loved it.

I hated it, but they loved it. Well, it's a one-time thing. Yeah. My job was to pay for it and be quiet and let them enjoy it and not ruin it, with me being a grouch, but it was Jesus Christ. Did you wear the Mickey ears?

No. I would have forced that on you if I'd have been a part of the Ramsey family, but that's...

It's just not my gig, okay? I'm sorry, but that's a lot of small humans, may or may not have bathed well, trapped on one boat, okay? That's all I'm saying. And so yeah, including the ones we brought with us. And so they're no exception.

But anyway, it was fun. They had a blast. We've got great pictures with every freaking princess that ever was a princess or thought about being a princess, and every character. And Rachel Cruz was in heaven because Disney's her thingy. And so she probably instituted this whole thing and talked me into it.

I promise you without knowing. Have fun. Have fun. This is what you've worked for. Go, do it.

Enjoy it. And don't think a thing about spending too much money, because it's not too much. You probably don't need to do this twice a month, but if you do it once, and it's a big one-time celebration, you're going to be in great shape. You've done a wonderful job handling money. You're millionaires.

I'm so proud of you. Congratulations. This is why you've done all that stuff to get to do this with all the grandbabies and the great grandbabies, or whatever it is that all these people add up to be in your group there. Have a blast. Yeah.

I was just going to say that I would stop thinking about how much you're spending, because you've just walked through it with Dave. And this is a priceless memory. If you make it to a grand old age, and we hope you do, this will be something that you will think about and reminisce about for a long time. And I don't think you can put a price tag on it. And I think this is a great decision.

Go and have an absolute blast. Yeah, absolutely. Get a couple extra toys. It's why you do that. Well, pay extra for the front of the line, passes or whatever the crap it is.

What do you call that stuff? A fast pass. Is that what it is? I don't know. There's actually a couple levels to that.

There's a fast pass. Take the top level. Take the top level. If you're going to spend that kind of money, do not be inconvenienced by the other people that are there. Yeah.

Nobody wants to stand in line for the log ride or whatever that thing is. You and I are the worst possible people to ask these questions to. It's too bad our resident.

We should have phoned her. We should have phoned her. Phoned a friend. Phoned a friend. Arnold's with us in Baton Rouge.

Hey Arnold, how are you? Hi. Better than I deserve. Good. What's up?

I have a question. I'm 24.. I've been out of college for a year. My wife is 21, and we own a house. We're both engineers.

I make 85 and she makes 93.

. And we got one of those FHA loans for a mortgage, and we put 3.5% down, and I'm trying to at least get to that 20% ASAP to get rid of the PMI.

We're a little over $270,000 left, and we're putting in an extra $1,100 a month in principal. only. Rock and roll. How can I help? So we're at 6.5% right now.

I'm wondering, I hear these rumors that the mortgage rates are going to go down later this year or later on, and I know you can refinance, but like, what's the rule or your guidelines for that? How... Just a break-even analysis. It's a break-even analysis. And so let's say that rates dropped from...

Yours is 6.

5%, you said? Yes, sir. Let's say you could get a 4.5%. That's a 2% spread. And let's say you got $200,000 by then, still outstanding.

So 2% of $200,000 would be $4,000 a year. you would save. Right? Okay. And if your refinance cost is $8,000, how long?

at $4,000 a year savings, does it take to break-even? Two years. If you're going to be in debt long enough to break-even, then you would talk about refinancing.

Okay. And you could do it on 1%. You can do it on a half a percent. But obviously at a half a percent, it's going to take you seven, eight years to break-even. It's probably not going to make sense.

But anywhere from 1% north of their savings, you can start running the calculation. But it's simply take your savings annually and divide it into the closing costs or the refinance. And that's how long it takes you to get back to, even for having refinanced. And then everything from there is gravy on the biscuit, right? Mm-hmm.

That's a break-even analysis and that's how you would do it. That's how you decide. But obviously we don't have to worry about that today. This is The Ramsey Show.

I've been doing this show for over 30 years and some of the saddest calls I've taken are from situations that are completely preventable. Yeah. And what's so hard is I feel like one of those, especially the ones that I'm like, oh, it's terrible. People that call in and their spouse has passed away suddenly and they don't have life insurance. When you have to think through, how am I going to pay my bills?

How am I going to eat next week? Yeah. In the middle of all that grief, it's terrible. So life insurance is the one thing, especially as a mom with three little kids, that I'm so big on for people to get because it's inexpensive. Zander is the place that Winston and I actually get all of our life insurance.

And it doesn't cost much, because Zander shops among a gazillion different companies. It doesn't cost much. You just have to admit that someday you're not going to be here. You got to say it out loud and you got to say, I'm going to say, I love you to my family by taking care of them and taking the time to put this stuff in place. The cost of stinking pizza.

to get a free quote, call 800-356-4282.

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Ken Coleman, Ramsey Personality is my co-host today. Thank you for joining us, America. Open phones at 888-825-5225.. Frankie is in Greenville, North Carolina. Hi, Frankie.

How are you? Hi, Dave. I'm good. How are you? Better than I deserve.

What's up?

So I have a pretty straightforward question. I talked to my dad yesterday and he wants me to pay for his life insurance policy. He said I should think of it like an investment and he doesn't want to actually pay for it himself. So I just wanted some advice on maybe how I can talk to him about paying for his own life insurance, or should I pay for it myself?

That's so weird,

isn't it? Yeah. When you heard that, you had to go, say what?

I don't know if you said it out loud, but you said it in your head, didn't you, Frankie? I did, and he said it to my mom and he said, you know, because he's not going to be receiving any of the benefits. I was like, well, I mean, that's kind of the point. He was saying. since he's not going to be receiving it, I should pay for it.

How old are you?

I'm 24.

. And how old is he?

65.

. Is he ill?

Not necessarily. I mean, he has some health issues, but I mean, for his age... But his death is not imminent, as far as we know. Right. Yeah.

Yeah. So you could be doing this for like 30 years. Yeah. Yeah. Yeah.

I think that's a hard pass.

That's a big N-O. Nope. Nope. Let's just call that. Let's check the box beside.

nope. Yeah. Now, your question was, though, how do I talk to him about it? Just go, Dad, you know, I'm 24.. I'm going to be doing other kinds of investing rather than in your death.

And I don't think we're going to go this way, but thanks for the offer.

Yeah. Okay. Yeah. I think that... Pretty simple.

You don't need to be snarky about it, although it's really tempting. But it doesn't serve any purpose. Just be snarky about it, other than make you feel just because it's just strange. And he knows it's strange. And I don't know, your dad does stuff like this often, doesn't he?

Yes, he does. Yeah. Quirky, quirky, quirky dude. Okay. Yeah.

I just, I would just smile and say, Dad, you know, thanks for the offer. I've kind of thought about this and I talked with my financial guys and they said I should just be doing regular investing rather than investing in your death. And I'm just not comfortable doing that. And so, but thanks for the offer. No.

And I really wouldn't go into a bunch of, I wouldn't go into a long, lengthy discussion about it. It's just a two sentences. and no. Well, what I'm going to do is I'm going to play this back for him later. Okay.

That's fine. You could tell him. I said, obviously he's quirky, but cause that's a really quirky thing to say to your 24 year old daughter, dude, if you're going to play it for him. I mean, I wouldn't do that to my 24 year old daughter. You've got other things you should be doing with your life rather than investing in your dad's death.

I mean, and besides that, mathematically, it's a bad investment because insurance companies make money on insurance,

right? The probability of his death is, and the payout is less than the premiums that they think they're going to receive. If they don't receive premiums equal to the payout before he dies, they lose money on the insurance. And if they do that often enough, they go out of business. So insurance companies make money on insurance, which, by translation, means it's not a good investment.

It is a good purchase. for those of you out there. Uh, we had a debt-free scream yesterday, I believe our day before yesterday that the young lady's husband was killed in a car wreck. He was 30 something years old, two months before they were debt-free. two months before that he had gotten life insurance and he had a brand new baby.

Now that's a good time to buy life insurance. That's perfect. I mean, that, that family's taken care of because that young man was just a stellar dad and husband, but this is a completely different thing. It's not a good investment mathematically. It is a protection for your family in the case of a horrible event happening.

But if your dad doesn't, he's 65, he may not need life insurance. If he's got enough money, he could not just not buy life insurance. I'm 63.. I don't have any life insurance. I have a huge pile of money and no debt.

If I die, Sharon's going to have a party. She doesn't need life insurance. Okay. And it'll be a big party. I guess not.

if I die, when I die, if I died before her, is what I should say, right? Well, we will know that that's her plan. And I'm a little worried about it, but yeah, I mean, the data probably backs it up. I would just say this, that this is just like common core math. It just doesn't make sense.

And we already have good math. We don't need to invent something. This is just a wacky idea. The minute I heard it,

by the way, reason with wacky, you just got to move on quickly. Yeah. I wouldn't know that.

You didn't have to deal with common core math, but I'm glad because it would have made the top of your head explode. It must've been what happened. Okay. Joel is in Chicago. Hi, Joel.

What's up? Hi guys. Pleasure to talk to both of you. Finally. Um, I have a question about, uh, I did that question.

Um, I just started listening to you guys a couple of weeks ago. Um, I've been binge watching your podcast or listening to your podcast for like every day, nonstop. Um, some, you know, I've been talking about this and we're getting ready to start the baby steps. We have the 1000 already set. Um, the issue that I'm having is, um, I need to get some quick numbers real fast.

We're about 25 to 30 in credit card and personal loan debt. We have about 31,000 in two car loans, um, 122 in our mortgage. And we have a second home, which was our first purchase. that still fits at about 40 K and that's being rented currently. Um, and so what's your household income?

Uh, we make around one 40 combined before tax. And your, your question is simply how to start the baby steps. Yes. Okay. We get on an every dollar budget.

You and your wife are in agreement that we're going to get out of debt and we're going to sacrifice to do that. Because if you didn't have any of these payments, you'd have a lot of money. agreed. Exactly. And that's the whole idea.

And so do you have any savings that's not in retirement? Um, no, um, just, just the one K for the, the startup. You got the baby step one. Okay. Then we're going to list all these debts, smallest to largest.

We're going to pay minimum payments on everything, but the little one, we're not going to see the inside of a restaurant unless you're working there as an extra job. And you're not going to go on vacation. You are broke people that make $140,000 a year. And you need to clean up this $70,000 or worth of stupidity before you do anything else as stupid, but car loans and all this other mess you've got, and you've got to get disgusted about it and attack it, and attack it and attack it to where your friends think you've joined a cult. Okay.

I agree. Um, the one, the one thing I did want to mention is, um, like the one car loan, we owe 2000 on it. So that'll be gone in like the next four months. No, no, no, no. It doesn't take four months to pay off 2000 when you make one 40..

Well, you do that the first time. Yeah, I agree. I totally agree with that. Um, the second thing is the second car is our second vehicle, which is an SUV. That one's the one that that's sitting there, about 29,000..

And I told my wife, we need to just get rid of the car, and that's where she's gone. No, I wouldn't. I wouldn't. The best way to get your wife on board is not say, I want to sell your car. Well, that's actually just like a weekend vehicle.

I drive a personal, I mean, a work vehicle, Monday through Friday. Is that your car drives? Uh, it's kind of both our cars, but we use this because we have three kids. So it's a larger vehicle for the family. So you have a work car that you own.

Uh, it's a, it's a company vehicle, but okay. Okay. And then she has a car. Yep. Which is the one that's about to be paid off and that's a community vehicle to work every day.

And then the other one has 29,000 owed on it. Yep. Her car that she owns carry your family. Yeah, we'll, we'll fit. I mean, my oldest is about to finish high school and the other one, the smallest one, is like 10 years old.

So I mean, we fit not that not much space, but I told her, you know, something we could do with the, what we wanted is just, yeah. The other thing you could do, what's the rental worth?

Um, uh, I think about one, one, 2130.

. Yeah. You could dump it and clean up the whole mess. But, um, either one of those is fine. Uh, or, or neither.

If you want to just bust all the way through it, you're going to trade sacrificed lifestyle, scorched earth lifestyle longer. You're going to stay in the mess longer. If you don't move one or both of these other items, and that's the decision, the two of you can make together. This is the Ramsey show.

with so many health insurance options and so much fine print, you need to work with someone you can really trust. Health trust financial is partnered with Ramsey for 20 years, saving our fans money and hassles with the right coverage and great service. health trust financial works for you, not the insurance company. And they're the only health insurance company Ramsey recommends go to health, trust, financial.com that's health, trust, financial.com.

Ken Coleman, Ramsey personality, is my co-host today in the lobby of Ramsey solutions. And you can join us there anytime you'd like. the coffee is free and the homemade cookies are free. And you can watch the show from one to four, the coffee and the cookies are worth the price. The show's questionable.

And, uh, but you can come hang out with us. There's usually 50 to a couple hundred people sitting out here and in the lobby of the Ramsey solutions right here, where we do the show is the debt-free stage. And Andy and Tesla are on that stage. How are you guys? Good day.

Thanks for having us. Absolutely. Tesla. Did I say your name right? I'm making sure I didn't mess that up because I hesitated there for a second.

All right. And how, where do you guys live? Dayton, Ohio. Oh, fun. And how much debt have you paid off?

$134,100 in seven years. Way to go. And your range of income during that seven years between 80 and a hundred thousand. We're just a little North of that now. Cool.

What do y'all do? for a living? I'm an X-ray and CT technologist at a local hospital and I'm a massage therapist at a local hospital. Oh, wow. Is that where y'all met?

Yeah. Nope. We met through high school. We're high school sweethearts. Oh, that's fun.

So, seven years, 134,000 in Dayton, Ohio. Would that be your house? This would be our house. You paid off your house? Yeah.

Looking at weird people. We're weird. Yeah. How old are you two weirdos? I'm 33 and I'm 36..

You have a paid-for house? We have a paid-for house. Wow. What's this house worth? Anywhere between $225,000 and $250,000..

Excellent. Excellent job. And how much have you guys gotten your retirement nest egg now? Close to $200,000.. We're hoping to hit that goal at the end of the year here.

Yeah. So, you're going to, you're going to bump up about a half a million dollars towards a net worth, right? Yeah. Going to be millionaires soon. We're about, we're almost halfway there.

Yeah. Way to go. I mean, easily. by the time you're 35 or 40, you'll be millionaires. Yeah.

Way to go. You guys, awesomeness. I'm so proud of you. Yeah. So, what happened seven years ago?

that made you decide you could and should pay off a house? Yeah. So, um, before we got engaged, um, he told me to read your books because he had already read them. Um, and then we got married. and then we did the financial peace course.

Um, and we, we originally paid off $46,000 in 12 months and one week when we got married. Yeah. And those were on student loans. That was in 2015.. We got married in 14..

So your work to plan right up the baby steps. We just did the baby steps and we had some hiccups along the way. It wasn't, it wasn't perfect, but you know, we did it to the best of our ability. And, uh, when we got the house, you know, we, we wanted to have children and it was get a house. We didn't want to have them in this little apartment.

Sure. And so, uh, that's where it got tough for us. We couldn't have children easily and we didn't keep track exactly, but we spent between eight and $10,000 with fertility treatments over about a course of a year. So we weren't, we weren't focused on the house at that time. We were just trying to, that's fine.

That's perfect. Yeah. That's exactly what we'd listened to your show and you'd advised others to do. And then it was, um, we were told we could not have kids. naturally, um, that we needed to go through IVF.

Um, so we were not taking out a loan. Um, we weren't about that now. So we saved up the money that we needed. Um, and we were planning to do IVF July of 2020.. Um, and I got pregnant, naturally with our first wife.

Got a signing bonus. It was fun. So all the money that we saved up went to our house. As soon as we had the first one, we wanted to make sure everything was okay, and then we had another one and we held onto it for a little bit there. Yeah.

And then, right, right after we knew we, like you say, have a healthy, happy home, we went ahead and did it and we were done. So I love it. Way to go, y'all. Yeah. That's a great story.

Yeah. Thank you. Thank you. I think I know somebody else. that happened too.

Yeah, that's exactly right. Our youngest daughter, same situation. Doctor says it's not going to happen. We pursued adoption and then adopted two kids, adopted two boys. And when we brought the second one home, he was 12 days old and we found out Stacy was pregnant.

So, so we went from one to three at nine months. I don't recommend that at home, but, uh, I got to ask you this because this is a really unique story. Yeah. Um, and I think it'd be fun for young couples, couples your age, some younger than you, some your age. Why now on the other side of paying this house off?

I mean, they hear us talk about it. Why should you pay off your house? Yeah. Why does it matter now? What's it feel like?

There's two good reasons right there in our, in our little sons there, Eli and Isaac. And, uh, you know, it was just something we've kind of manifested as we got engaged and as we got married, and something we've just always wanted to do and be in a situation where we can control our own destiny. Somebody else isn't controlling it for us. Yeah. You make a hundred thousand dollars a year.

You got a no payment in the world. Yeah. And then, and then, uh, I hope she's okay with this, but she's getting her master's degree in September. Yeah. And so she's going to have a master's in healthcare, admin.

So what will that do for your income immediately? And even long-term? do you have an idea? Um, right now I'm kind of staying put, but if something, you know, opens up, it will just increase our income. It'll just be a nice cherry on top.

And the nice thing about it is my work is very helpful. So, um, yeah, they've paid for most of it. So there's just a two year deal with that, but you know, that's taken care of. Even if she wants to leave, we can pay for it right now. So we've got it there and it's just, see, okay, here's what I want everybody to hear.

How carefree you are with going, uh, if it doesn't, I do this. And see that the whole thing on this is freedom. That's the play. You guys can kind of just make your own decisions. I love that answer.

That's what I want people to hear. And you're so relaxed, by the way, and you share all these options. I mean, it was challenging. It's challenging, but I mean, you can do it. When the brakes go out and the beater car and the KFC, you know, you're using the e-brake to get through there.

You're like, Hey, we got to get that next car. You know, it's like, we don't want to be back in those positions. So that's great. Yeah. It's, it's been a lot of fun along the way.

And we, we laugh a lot. We argued the other big tip that I listened to your show. When we were in our apartment, we sat across from each other doing the budget and it was miserable. And I remembered you here and say, and you say about sit next to one another. We changed that.

It changed everything right now and in a hurry, and put us on the same page, you know, and that, that was a big key moment in our journey there. Yeah. Way to go. You guys. All right.

What's your biggest tip to get somebody out of debt? If somebody says, how do you do that? How do you pay off your house? What's the secret to getting out of debt? I think you just got to be on the same page.

Like it's challenging, but we went over numbers all the time and adjusted our budgets, adjusted our budget. We became very comfortable with talking about that amongst ourselves. And then, uh, just having that, why, you know, we want to be free. We don't want people to control us. We want to control, you know, our own situation.

And, and then, uh, yeah, we just, we just couldn't be happier with it and how it's worked out and where it's projected. So we're proud of you. Congratulations. Well done. All right.

Let's bring the guys into the picture here.

How old are they?

This is Isaac. He's one and that's Eli. He's three. Ah, okay. Perfect.

Very good.

Well, as good as it gets right there. This is the real deal. We've been there, brother. No worries. No worries with us.

It makes a great video for you.

All right. Andy and Tesla, Eli and Isaac, $134,000 paid off in seven years, make an 80 to a hundred. count it down. Let's hear a debt-free scream. Three, two, one.

We're debt-free.

And those two little boys don't even know how big a hero that mom and dad are. They've changed their whole family tree. I mean, they're going to be 35, 36 years old. Millionaires are already half millionaires and make a hundred. They have no payments in the world.

They've set themselves up to take care of themselves, those little boys, and anything they need to do in the future. So well done. Such heroes. People, when you take control of your own life in a culture that has told you that you are a victim for everything, when instead you decide I'm not going to be a victim, I'm going to be a victor. When you take control, we immediately, at Ramsey, label you hero.

Because you're standing out, you're standing up in a culture that's lost its backbone. Stand up and stand out. Do it. Time to be a hero, boys and girls. Got little boys like that that need heroes in their lives.

This is The Ramsey Show.

This show is sponsored by BetterHelp. Hey, good folks, it's Deloney. And with back-to-school madness on deck, my family's schedule is already so packed. And we haven't even made room for things like exercise and date nights and counseling and all the other things that make our life even worth living. When it comes to taking care of me, I have to remember to put on my oxygen mask first, meaning I have to do the things that help me stay well and whole.

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Ken Coleman, Ramsey Personality, is my co-host today. Thank you for being with us, America. If you want to help us out, we could use your help. You are our best marketing agent. And you do that simply by clicking follow on the show or subscribe, depending on the platform you're on.

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So thank you, thank you, thank you. And the five star reviews help as well. Ken Coleman, we are going on a cruise. That's right. I've got my suntan lotion already.

The live like no one else cruise. If you are baby step four or beyond, that means you're out of debt and have your emergency fund, everything but your house, you're out of debt. Then you're working on the, you're at the, you know, you're in a different range there. If you're in those first three things, you shouldn't be going on vacation until you get your emergency fund and you're out of debt. We tell you that.

so you don't go on the cruise with us. But if you're baby step four and beyond, we would love to have you. It's almost sold out. It is March, the 22nd through the 29th of 2025, on the Holland, on a Holland America ship that is almost new. It's a fabulous, fabulous ship.

And we are really excited. We're going to Turks and Caicos, St. Thomas, Puerto Rico, the Bahamas, all the Ramsey personalities will be on there, including me all week. Plus, we will have a Grammy award-winning dove, award-winning Stephen Curtis Chapman with us. And plus, we will have Dina Carter with us.

Remember strawberry wine, a famous Nashville musician. She'll be with us, several comedians and other things hanging out with us. It's going to be a fabulous week. We're going to be doing events that are Ramsey, unique events. The ship has never seen anything like you, people and us.

When we get there, we're going to take over the whole thing. The whole ship is us. Nobody else is going to be on it, but the whole it's. you're trapped with Ramsey people the whole week. It might be a way to kind of get a spouse going, you know, but you need to be on baby step four and beyond.

Right. Wow. So there you go. I like that idea. A little motivation.

Yeah. Okay. Ramsey personalities. It's the Ramsey cruise, the live like no one else, cruise March 22 through 29.. Now, cabins are rapidly leaving.

We've only had it up for sale for four or five weeks and it's going to be sold out very soon. So if you still want to go, you can put down as little as a $600 deposit and a normal cruise routine on all that. Just go to Ramsey solutions.com slash cruise. And you can join us for Turks and Caicos, St. Thomas, Puerto Rico, the Bahamas.

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I need a little whistle behind that. All right. Sarah's in Fort Collins. Hi, Sarah, how are you? I'm good.

How are you guys? Better than we deserve. What's up? Okay. So my question is, I'll give you the question and I give you some context.

My question is whether or not we should look at buying a home next spring, probably a little after the new year, or if we should continue to rent. So we've sold both our primary home and a rental property in January of this year to help us get out of debt faster. The original plan was to rent for the next four years while my oldest is in high school. And then we were going to move out of state, but now we're wondering if it would be better to buy a house next spring, after we've saved up a down payment, and just live in the house for the following three years. The oldest graduates from school.

Yes. He will be a freshman this upcoming fall. Yeah. And so you're willing to move the other kids, but you're not willing to move the oldest. Yes.

So we would, we would have a very tight window between the oldest graduating. The reason we're not moving before is because I have shared custody of him and we can't move. Oh. And so the, the other kids are with your current husband and he's with a former. Correct.

Now logic is kicking in. Okay. Cause I couldn't figure out why we had to be, why this guy was so special that we had to wait on him, but no one else. But now I get it. Okay.

Well, I know, but he's a, he's a freshman. So that goes with the territory. Now I get it, though. It makes sense. What you're saying is very logical.

Okay. Uh, the answer that is a math formula, and what we've got to try to guess at is what we think houses are going to go up between the time you buy it and the time you sell it. Okay. And, uh, Fort Collins, Colorado is a good market. I know the market, it's a strong market.

And, um, my guess is, is that if you said, okay, a home in this neighborhood, talk to a local Ramsey trusted real estate agent and say, if we were to buy a home in this neighborhood, what would we think the appra, the, uh, uh, appreciation, would be per year for three years? percentage wise, is this going to go up? 8% a year, 10% a year, 4% a year. What do we think it's going to go up? Okay.

And they can actually provide you hard data on that. You can pull up a statistics in a statistic in the MLS, a real estate agent can pull this up for you. It says in this neighborhood, the average appreciation for the past five years has been X percent. for the past 10 years has been Y percent. Okay.

And you can use something like that percentage. Now, obviously the last five years have been wacky. Last 10 years have been wacky. It's not a normal quote, real estate market agreed. Agreed.

Yeah. So, but, but you can, so you temper this information with the knowledge that hopefully the next five years is not as wacky as the last five years. So, um, uh, but you look at that and the second piece of data that you could look at is in that neighborhood, for the last five years or four years or three years, what has been the average days on the market? D, O, M. Okay.

Okay. So let me give you two possible math examples to show you how you would use these numbers. All right. So you say the mat, cause they usually kind of, they kind of correlate. Okay.

If, if the houses aren't going up much in value, you probably take a while to sell them. Agreed. Agreed. It's not a hot, super hot market. So you might hear like a 270 day average days on the market, nine months average, and it only goes up 2% a year.

If that's the number, you get back, you don't buy a house, cause it's not going to go up enough to even break, even with expenses. when you sell it after three years. Follow me. And it's going to be hard to sell. But the other side of that equation is what, if it said, okay, average days on the market is eight days.

This is a white hot market. And the appreciation rate has been 12% a year. Well, in three years, that's 36%. Right? Yeah.

Well, you're going to make some money and you're going to be able to get out of the house. That market's at market super high. You're probably not going to be all the way on either one of those spectrums, but that's how the formula informs you whether or not to buy is the house. It needs to go up during the three years, at least 7% a year. Okay.

That's going to be 20%. And then you're going to have expenses that are going to be 10 to 12 when you sell the house. Yes. So then you're going to make a little money. And, but if it's not going to go up at least that much, you're not going to make money and you're going to wish you didn't do this.

You'd be wishing you'd rent it. You see how I did that calculation? I do. Yeah. And that makes total sense.

Okay. And just get, you could call one of the Ramsey trusted real estate agents off our website. They'll help you do that right now, knowing that maybe they can help you buy a house next spring. And you can tell them which neighborhood you're looking at. Perfect.

We actually have one we use to sell our house. Oh, okay. Did they do a good job? Yeah, they did amazing. It was such a smooth process.

Once we sold two at one time, it was, it was a lot, but they did awesome. Very good. Well, that's what we want to hear. I'm always dangerous to ask that on the air, but yeah, no, it's not because we vet those people so hard. We know that they're amazing.

Yeah. These real estate agents are amazing that we have on our, in our system. So, folks, that's the thing. If you're moving into, I'll tell you where that formula comes up. for a lot of you out there is if you're military and they move you every two years, that just means you're not buying, because when you run this formula on a two year, very few markets are going to make sense.

It means you're renting. You're going to be, if they're going, military is going to move you every two years. You're probably a renter and that's okay. Just be piling up cash to buy when you get out of the military.

Live from the headquarters of Ramsey solutions. It's the Ramsey show where we help people build wealth, do work that they love and create actual, amazing relationships. Ken Coleman, Ramsey personality, number one, bestselling author of the book paycheck to purpose, where he helps people do work that they love. He does that on the Ken Coleman show too, on the Ramsey networks every day. He's my cohost today.

Open phones at 888-825-5225.

. Thank you for joining us, America. We're so glad you are here. Laura is with us to start off this hour in Kalamazoo, Michigan. Hi, Laura.

How are you? Hi, Ken and Dave. I'm so excited. Thanks for making my call. We're honored to have you.

How can we help? Well, my husband and I did our debt-free screen last June. We're in baby step seven now. And we have two working teens at home that they work because they know if they want spending money, they need to work hard and earn it. So currently we're having them save half, spend half.

I don't know why. That's just what we're doing. They don't have a budget. We haven't helped them with that yet. So I'm calling to ask, what are the best strategies to guide our teens?

in your principles? Very cool. And how old are they? My son is 14, 14 and a half. He just got his first job as a busboy.

And although he started a poop scoop, dog poop scoop business last year. So he's a hustler. And my daughter is 19.. She's home from college and working this summer. Okay.

All right. Well, all a budget is, is we tell our money what to do before it leaves. Yeah. Okay. So it could be as simple as a yellow pad and you put the number you're going to earn this month at the top of the yellow pad.

And you put down five or six, seven things you're going to spend the money on until there's nothing left. And that would include savings. So if, uh, what would you say the 14 year old would earn in a month? Give me a guess. A couple, about $300..

Okay. Let's just put $300 at the top. Okay. And, um, if you want him to save 150, you just take savings, 150.. Right.

And then you say, what else would he spend the money on? Games? I don't know. What's a 14 year old? spend money on these things?

Oh, my word. They buy cologne. They buy food at the mall.

You know, random. Okay. Well, I mean, so, uh, personal items.

food. Okay. Uh, uh, entertainment. Yeah. Movie tickets.

So, uh, if you want to go to a concert or a movie ticket or something like that. And so just put three or four categories down through there and say, okay, what are you going to spend your money on? I, I really don't mind what he spends his money on, as long as he does it on purpose. Yeah. Before it leaves, because what happens is, is that something will jump up in front of his 14 year old face, or not her 19 year old face, and they'll go do that.

Then they haven't got money for something later, like car gas.

Right. And that's how adults that don't do a budget live panic to panic. Yeah. Yeah. Is the 50, 50 save spend split appropriate?

or you can do whatever you want to do. I don't care. I would add a category. I would say give, give, save, spend. If you can teach kids to work and earn money and then teach them to give, teach them to save and teach them to spend wisely and intentionally, you have done a great job as a parent.

I love that. That's really helpful. Yeah. That's what we do with financial peace, uh, junior. That's what our high school curriculum, that's homeschool curriculum for teaching kids in depth about all the parts of money, but budgeting and working is certainly part of it.

Um, and even the book, let me send you the book. Rachel was Rachel's number one bestseller here. Her first number one bestseller, smart money, smart kids. I did the book with her and it was me, as the dad and daughter, both voices in the book of how to teach kids to be smart money, to be smart money, smart kids. Yeah.

I'll send you a copy of that and you guys read through it. It goes a lot more in depth than what we're doing, but the core principles are those four things, work, give, spend intentionally and wisely, and, um, safe. And if you can learn, if you can build those muscles, and youngsters age appropriately from three to 23,, they can leave your house and they won't have to come back except for a visit.

Yeah. Yeah. They don't end up boomeranging because they don't know how to live. Yeah. And Laura, I would just, I want to encourage you, uh, that it's, it's one of the best things you can do is teach, uh, model.

So you guys, you speak to whatever part of the budget and your process and how you and your husband do it. But I would encourage you to just back away once. you kind of do that, teach and model. And I just think one of the best lessons is failure. And I think we, as parents, and I'm speaking from experience where I've stepped in and rescued, I would not step in and rescue because we're not talking about a whole bunch of money, but one of the best ways for a kid to learn budgeting is to screw it up and to be in a situation where I didn't plan that.

I mean, we're going through that with one of our kids right now and he just blew through some money and he came to me and I went, uh, man, that stinks.

And I'm not kidding you. And I literally walked out of the room and it was really hard for me, but I'm just, I'm just telling you that we forget as parents sometimes that failure is the greatest teacher, uh, because you've given context. So that's my little encouragement is don't try to rescue. Remember, their brains aren't developed like yours. And so they're going to think things about money and do things with money.

that seems just absolutely wild and wacky. And by the way, it is. They're, they're wild and yacky. They're teenagers. Yeah.

When we also, and you can, if you want to take it even further, it depends on how much you want to mess with this, but we had our kids at 14 and 15 years old opened their first checking account and they ran the money through the checking account. Now they, they did. I, and I made them learn to write a check, which, it turns out, was an archaic exercise that no one actually does anymore. But, um, and, uh, because they, they never wrote a check in their life. I don't think, I think they had debit cards then on those accounts, and that's how they used.

all the money was through the debit card, which is fine. I don't care, but I want them to learn to keep up with and, and reconcile, balance a checking account and manage a checking account. And, uh, because people run those things in the overdraft, you know, like this off, I guess if I can keep pulling the card out, they'll just keep paying it. You know, it's like, yeah, ding, ding, ding, ding, ding, ding, ding. Yeah.

And it runs up a bunch of fees. So, um, you know, and there's a fabulous story in the book, when Rachel bounced the check and I came home and there's NSF fees. She's 15 years old, laying on the kitchen counter. I made her go. Her mother took her driver down to the bank and sit with the bank branch manager and apologize for lying.

because she told that bank, she had money in her account and she didn't. And, um, the kid never bounced the check again. I'll tell you that she's still in therapy, but she never bounced a check. Laura's enjoying Rachel's trauma way too much.

But I mean, that's the kind of stuff we did. And we weren't, it's just, you know, you have to learn to do these things. If, if I can, let you pay one, S, one or two NSF fees. And the guy actually waived the fees because he thought it was so funny that she came into the office and apologized. So, but the, uh, but the, uh, you can learn this lesson, you know, and never bounce a check the rest of your life.

That was valuable. It's well worth it. You know, valuable. This is the Ramsey show.

Ken Coleman, Ramsey personality, is my co-host today. Thank you for joining us. America. Tabitha, is in Denver. Hi, Tabitha.

Welcome to the Ramsey show. Hi there. How's it going? Better than we deserve. What's up?

Um, so I'm seeking some advice. My husband and I don't agree on whether or not to pay off our car loans. Um, I'd like to pay them off. Um, but he does not agree with that. He likes being in debt on a car.

He, he tells me, and I quote, um, paying off our car loans is like giving away free money based off of our low interest rates.

So he actually believes that people build wealth by borrowing on their cars.

I, I don't understand it. to be completely honest. It's something that we argue about pretty frequently, actually. Okay. Um, okay.

So how, how can we help? Do you think?

Well, so I'm, I'm looking for ways that I can explain to him, like why it would be worth it to pay the debt off. Okay.

Um,

well, I, I, uh, can I ask a quick question, Dave, really quick water? What's the interest rate on these two loans?

So, um, in total we have 27,000.

. Um, so, 20,000 on one, and it's 3.49% interest, 7,000 on the other. And it's 2.94% interest. Okay. Well, let's address the theory that he's operating on first.

Okay. And, and, uh, and then, let me just tell you, I don't think we can convince this guy. I don't think he has any desire to be convinced. I think he's already made his mind up, but we will, I will answer your question anyway. Okay.

Cause I, in other words, I don't think this is going to work, but I'll tell you. So what he's, what he's, his premise is, is that if you can borrow money at, what'd you say the interest rate was 2.7%, right? Is that right? Uh, one of them is 2.94.. The other one is 3.49..

Okay. So, let's just call it 3%. All right. If you can borrow money at 3% and you could invest it in a good mutual fund, it made 10 or 12%. You're making the spread.

Okay.

However, he's not doing that.

He didn't invest, that. He invests the difference. There's no $27,000 investment out there as a result of having borrowed on these cars. So his, his premise is 100% theoretical. In other words, it's bullcrap.

Okay. Now the problem with his premise, it sounds like if you invest money at 10% and you borrow at three, aren't you making a seven spread?

Maybe, but if you made a seven spread, you have to pay taxes on it, and you've increased your risk load, your stress load, and you've strained your relationships in your household. And by the time you've done all of that, you really didn't make any money. So it's a bloody joke. Okay. Because 7% on a, on $10,000 is 700 bucks.

7% on $30,000 is $2,100.

. Okay. No one ever got rich on $2,100 a year ever. mathematically. So again, his premise is absolute bullcrap, because the numbers break down when you tear into it.

Another reason we know that is, is that we have done, we've worked with millionaires for decades. And a couple of years back, we did the largest study of millionaires ever done in North America. We studied 10,167 of them. I wrote about it in the book, Baby Steps Millionaires, and I'll send you a copy of it as my gift. Okay.

That might give us a chance at helping this guy, but I don't think this guy wants to be helped. So I usually can't help people that don't want to be helped. But anyway, the, um, as we studied 10,167 millionaires, we found that 89% of them were not millionaires because of inherited money. In other words, they invested money. They handled money wisely.

They lived on less than they made. They got their house paid off. They stayed out of debt and they built wealth. And that's how 89%, 9 out of 10 of America's 24 million millionaires right now, that's how they became millionaires. Okay.

As we studied, Tabitha, 10,000 people who are rich, not broke people with a car payment and an opinion, but people who actually are rich, the number of them that we found that became wealthy due to borrowing on their car at 3% and investing the difference and investing the amount instead at 10%, the number of people that did that to become millionaires out of 10,000 of them was precisely zero.

None of them used your husband's plan to become wealthy. None of them.

So what, what that statistically tells us is? your husband is wrong. Like you thought, okay, he loses the argument. Now that still doesn't answer your question. How do we convince him?

And I've told you three times already. I don't know if we can, but I'm trying to tell you, you're not crazy. You're accurate. You're, you know, he's kind of looking down like you're, like some kind of juvenile that can't do math. And he has high math figured out when it's quite the opposite.

Your women's intuition was way wiser than his screwed up half butt attempt at mathematics. Yeah. And I go so far as to say, this is a cop-out. This is a quick little line that he's kind of manufactured from social media or some social message out there, or some car dealer who sold him these cars. And this is his quick Heisman trophy stance to you.

Like, I don't want to talk about it because I don't think he actually wants to. It means you put your stiff arm out. Okay. She might know what it means. Yeah.

The point is. I know what it means. Thank you. Thank you. Thank you.

Here's my point. Oh, I had to think about it. Oh, okay. I'm sorry. That's okay.

So here's my point. I think it's a cop-out because he doesn't want to do the hard work that you're asking him to do, to budget, to sacrifice, to pay these things off. That's my take. And I think I'd push in a little bit further as his wife and say, I don't feel safe financially carrying this debt. I think you got to have a real conversation.

I think it's a marriage conversation, because he's not allowing for a financial conversation. Yeah. And there's a lack of respect towards you. That's just not okay. It's getting me riled up and giving you this answer.

And because I kind of hear him sneering a little bit in this, like, oh, you, just little lady. I think. so. I had the same feel, like that little line he had like in his holster, and he just kind of pulls it out, flings it at her, go away. Yeah.

It does feel dismissive. I got this. Yeah. It does. Yeah.

And, and the hilarious thing is, is he's a hundred percent wrong. He's totally wrong. It's a hundred percent wrong. And Tabitha wins. Ding, ding, ding, ding, ding, ding.

Now how to get him to do a tab of the, I don't know, and probably not all the snark that Ken and I are employing. It probably won't work. Right. So you're going to have to be more loving and that, but I think, if he needs, he needs to hear that, how important this is to you. And he needs to hear that he has to respect you.

Yeah. Now my wife and I can have a good argument about most anything, but I'm going to respect her opinion. And at the end of the argument, we may do one, we may do the other. neither. There's no, no set rule that one of us has to quote when or not.

Um, but we're going to do it in a respectful way, in meaning that I'm not going to be dismissive and she's not going to be dismissive. Like you. just, you, just, you're, you're just a man. You don't understand. And, um, I mean, she tries that sometimes.

she tried that when we're like putting furniture in the new house, like I'm an idiot. Cause I don't know anything about decorating. Cause, I can't even match my clothes. And so there's the problem is she's not an actual quote. No, I mean, but that's basically the, that's basically the tone.

Right. Because it's also accurate. I have to think about my clothes a lot just to make sure something doesn't flash. And so, yeah. And like, you don't know anything.

You're just, you're just a knuckle dragger. You don't know anything about decorating. Right. And I don't, right. But I do know what I like, and it's my freaking house.

So I get a say, you don't get to dismiss me and she doesn't get to dismiss. And I don't get to dismiss her. She, her opinion too. She lives in that house too. It's her money too.

So we have to work through this. This is called marriage. And sometimes it's a challenge. Yeah. Tabitha, roll it back on YouTube and letting it mad at us.

That's why we do this. I'd be okay. I'm pretty good at pissing off. Reluctant spouses. It's like a gift, because they're wrong.

This is the Ramsey show.

Ken Coleman, Ramsey personality is my cohost today in the lobby of Ramsey. solutions on the debt free stage, Cameron and Chelsea are with us. Hey guys, how are you? Good. Welcome.

Welcome. Where do y'all live? State college, Pennsylvania. It's near Harrisburg. Love it.

Welcome to Nashville. And how much debt have you paid off? We paid off 151,307 and 40 cents. I like it. How long did this take?

42 months. All right. Good for you. And your range of income. during that time, our range of income was 71,000 to 171,000..

Wow. What do y'all do for a living? I am an audiologist and I'm a software developer and also serve part-time in the army national guard. Well, thank you for your service. You're welcome.

How do you go in three and a half years, up a hundred thousand dollars in income? I graduated. Oh, there it is. Oh, there it is. So the 151,000 might be student loan debt.

It is all of it. Almost all of it. Okay. What else? We have $12,000 in a car loan.

Okay. And then the rest of student loans. Okay. So you got out of audiology school and immediately kicked the income in way to go. And you guys were looking at that going, Oh, but we also have 151,000 to go with this gift of debt.

What was the plan? How did this work? How did you end up doing Ramsey? So, um, we go back a little bit further. It kind of, our story kind of started right after we got married.

How long have you been married? Um, since 2018.. Okay. Um, right after we got married, her parents actually gave us your financial peace university DVD box set. Oh yeah.

Um, but we never opened it. It actually, it actually sat in our living room for about two years. We never touched it. It makes a good little coffee table when you first get married. Yeah.

And, uh, and then, um, through an online audiology group, um, shout out to Molly, somebody who messaged Chelsea offering to sponsor us to take financial peace university online. And we took FPU. And then, after the first class, we sat down, did our monthly budget, wrote down all of our debt and got really nauseous and realized that we had a problem. Um, and then scarce crap out of you, doesn't it? Yeah.

We realized we were spending about $500 a month on restaurants and other things that we really didn't need at all. Um, so it was kind of game. on from there. We started and we were doing pretty good for about a year. Um, and then, in 2021, we coordinated an FPU class for a few of our friends and we realized that we really weren't being gazelle intense.

We didn't tighten down the budget the way we should have. Um, and from then on, it was kind of game on. We realized we were doing it wrong, needed to make a change. And we started listening to your podcast every day to kind of get that motivation going. Um, and we started meeting weekly to talk about the budget and, um, started working door dash.

We delivered food at night after we got off our full-time jobs and yeah, that was kind of it. It took a lot of work, but worked your tail ends off. Yeah. And then you get out of school and get a bigger shovel. How long you been out of school?

Two years. Two years. Okay. So two years of this, uh, three and a half year plan. So basically almost half the time you've had the big shovel.

And prior to that, you were just scrapping. Yeah. Yeah. Yeah. Way to go, guys.

Way to go. You got to kind of feel like accomplished. It does. It's a ginormous weight off your chest. Yeah.

You guys are heroes. Well done. I'm just curious, what was the greatest challenge for you two in this process?

I think the working extras. I mean, we had our full-time jobs, but I think that, you know, the getting off at five o'clock and like pushing through, yeah. Deciding, Hey, we're going to go out until nine, 10 o'clock and deliver food. When, you know, she had a doctorate degree and I'm working as a software developer, kind of delivering food just kind of feels not like something you want to do at night.

Well, is there, is there a sense of pride there? in a negative way? It's like, come on, what am I doing? And that really starts to play games with your head. Doesn't it?

It does. Yeah, it does. Yeah. That's very cool. I talked to a pastor one time who was leading financial peace, and he decided he was going to get an extra job, and his extra job was valet in cars.

And, uh, he said it was really rough. when the guy that is in my congregation came up and I had to park his car. He said that was a real pride. knock. It was hard.

Yeah. Way to go, y'all. Way to go. Was it worth it? It was.

Absolutely. How are you feeling now? Surreal. Yeah. Free.

Yes. Yeah. Yeah. Well, a month before, um, we paid off. a month before we paid off everything.

a month after we paid off everything, we actually had our daughter Katie. Oh, wow. So we paid off everything. And then, a month later, she arrived. Wow.

Wow. Through all of that too. And I'll just say, like the feeling of sitting in the hospital, waiting for your baby to be born and knowing that you don't know any, but, Oh, anybody, anything is a great feeling. You didn't have to think about the money. You can just be there.

She will never live in a house that has debt. Isn't that cool? Yeah, it is. That's pretty cool. Y'all, you guys are heroes.

You changed your family tree. You did it for her. That's awesomeness right there. That's noble. Very well done.

Very well done. All right. When people ask, they say, Hunter, I've got $150,000 in student loan debt. I'll never get out of that. Don't?

they say that? I say it all the time. Sure. Hope the president will forgive it, because I can't ever pay it off. I'm stuck.

And, uh, you weren't waiting on Biden or Trump to take care of your life. Thank God. And instead you said, we're going to do this. So what's the secret to paying off $150,000 in 42 months? I think definitely the budget and communication.

I think that was the two biggest things that we took away from. this is, um, our communication with one another, too, is completely different than it was three and a half years ago. Now, have you guys watched debt-free screams on YouTube all the time? Okay. So you hear people say that exact answer.

all the time. They say communication and budget. And yet when you did it, it didn't feel like when you actually did communicate and you actually did a budget, it didn't feel like it did when you heard somebody else doing it, when they said, Oh yeah, of course, it's a budget and it's communication. But then, when you actually do it, it's like, wow, that really is it. Yeah.

Yeah. Yeah. When you can put the numbers on paper and actually see the progress, you kind of realize that, um, how would you do it without this?

Amazing. Very well done. You guys. Very, very well done. All right.

And miss Katie was, Oh, how old is miss Katie? She is 11 weeks old. Oh, my goodness. That's a good enough reason right there to do all that work. Yeah.

And you never have to work extra. She'll never know it. Yeah. Wow. She'll never know those long hours.

I like it. Well done. Well done. Beautiful. Changed your whole family tree.

You guys are heroes. Excellent job. Cameron and Chelsea and Katie, right on cue. Harrisburg, Pennsylvania state college, 151,000 paid off in 42 months, making 71 to one, 71 counted down. Let's hear a debt free scream.

Three, two, one. We're debt free.

Can you imagine, the audiologist covered her baby's ears? I saw that. That's a, that's a, that's a pro move right there. Pro hack. Love that.

Well done. Well done. We've actually got little headphones for them in case your parents really want to scream, because it scares some of the kids sometimes, but, uh, that's so cool. What a neat couple, man. What rock stars.

that just did it, man. It just did it. I mean, that's hard. They did this on no money for the first half of their journey. And then, when she makes, starts making some money and they add the overtime to it and the extra jobs to it, boom, we get out of there and we're done, baby.

We're done. Yeah. The thing I'm always inspired by when we hear these stories, and this is the latest example is these are men and women who decide that they're willing to do what it takes now to be able to live the way they want to live in the future. And at the end of the day, whether you're changing your life and your physical life, your emotional life, your relationship life, you got to make that decision, that there's some hard work that you've got to go through in order to live the life you want to live in. And they're standing on the other side of this with a brand new baby.

I mean, literally brand new. That's really cool stuff. Very neat. Very neat. This is the Ramsey show.

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Ken Coleman, Ramsey, personality, number one bestselling author of the book Paycheck to Purpose, is my co-host today. Our question of the day today comes from Travis in New Mexico. We are a family of six. My wife and I are both turning 45 this year. Income wise, we make about $400,000 a year before taxes and 5% to 15% bonuses before tax.

We're living paycheck to paycheck and cannot seem to get out of this. We're about 1.1 million in debt, including our mortgage. We spend more than $20,000 every month on expenses, leaving close to nothing to put towards extra debt payments. Other than vacations costing $15,000 to $20,000 a year, it is almost impossible to cut into other budget items. We need help on a game plan.

Yeah, you need a game plan, but the statement, it's almost impossible to cut into other.

. To live on $400,000 a year in New Mexico. Yeah, it sounds like we've got some emotional issues with some poor decisions we've made, because if you're living paycheck to paycheck on that spend every month, you're just out of control. Yeah, there's something really, I mean, everybody out there that's making $100,000 a year and saving money, is laughing at you right now. That's just ridiculous, okay?

So, yes, the vacations need to go away. And yes, you probably have some stupid cars you can't afford. And you may even bought a house you can't afford, I don't know. But I don't know what decisions you've made. that eats up $400,000 a year, and you don't seem to think you have any room in that budget.

And don't tell me, it's because we have a family of six. Bull crap. Lots of families of six live on $50,000 and $60,000 all over America. So, sorry. I don't have enough information here to give an intelligent answer.

But I don't.

. We spend more than on expenses, leaving close to nothing. It's almost impossible to cut into other budget items. So, my only guess here from 30 years of doing what I do, is that one of you, either you, Travis, or your wife, is an absolute child.

One of you is a princess. One of you gets everything they want, and the other one is afraid of them. Afraid to tell them, you're a freak. You're out of control. We're stopping this.

You're a nut. We're not doing this anymore. And you're afraid of them to say that. Yeah. So, I don't know which one of you it is.

I kind of think it's you, Travis, the way this is worded. But you could just be scared of your princess wife. I don't know.

But somebody here has put the emotional barrier up that this is reasonable. And no one in America listening to this right now thinks this is reasonable. Even people in Washington, D.C., who can't balance a budget, if they had to, look at you making $400,000 a year and say there's nowhere to cut and don't think that's reasonable. Even a congressman would look at your budget and say that's not a reasonable statement. That's a bold statement.

Wow. I don't know if it's true, and you're always right.

I mean, it sounds like a congressional budget, where essentially, you know what I'm seeing here, and all joking aside, I think you actually put your finger right on the nerve of this deal. Just because you say we want the country club membership, and we put it in the budget, doesn't mean it should be in the budget. Doesn't mean you need to be in the country club. That's right. But it's where I feel, oh, shut up.

We eat there every Sunday after church, and you're broke, and you make $400,000.

. Shut up. Yeah, I don't know what it is. We have some excess in the budget. Our children are all, have you seen the thing, I saw it the other day, it's the funniest thing.

on travel baseball. Oh, I think I know what you're talking about. I guess it was a reel. Somebody sent it to me. Like, congratulations, your son just made the travel baseball team.

That means that you will have no weekends for the rest of your life. It will cost you $26,000 up front, an additional $124,000 a year in travel and expenses, and when he graduates, he will never play ball again. Yeah, it's so true. Congratulations, you've made travel baseball. We can't cut that out, though.

Yeah, I mean, it's like, holy. That's right. So, yeah, this is, it kind of falls in that, like this, there's an emotional barrier to cutting it, not a reality barrier. That's what I'm smelling. Absolutely.

Because there's nothing else, there's no other explanation for this ridiculous statement. So, and Travis is stupid, man. You're gonna have to do something different. You keep doing what you've been doing, you're gonna keep getting what you've been getting. That's the definition of insanity.

Continue to do the same thing over and over again, expecting a different result. You have to change, and change is hard, but it's not as hard as being broke and making 400k. I hope I'm shaming you into doing this. It's kind of a spiritual gift of mine. All right, Ralph is with us in Phoenix, Arizona.

Hey, Ralph, what's up? Hey, how are you? It's great to listen to you. Thanks, man. How can we help?

Well, I have been struggling to keep my head above water for quite a long time,

fighting with it. I have $75,000 in credit card IRS debt. I have my social security. Which is which? You have.

$75,000 in the two. How much IRS?

$44k. Okay. And so $30k in credit cards? Yes. Okay.

All right. The credit cards are in a debt management plan. I'm paying $700k a month on that.

And the IRS, I'm still negotiating with them. I expect I'm gonna have to pay them about $500k a month. You're negotiating them on the payment amount? Yeah. Okay.

And how did you end up owing the KGB, I mean the IRS, $44k?

I took some money out of my 401k and didn't pay taxes on it. Oh, there's that. Okay. Where'd that money go? It went into a house I built and then sold, and I lost the money.

I got scammed and a couple things. Yeah, I've had a real run of bad luck and bad decisions, and I'm just determined that I'm not gonna spend the rest of my life like this. What's your household income?

Well, I'm on social security and I'm working part-time, so I'm probably making somewhere around $50k. How old are you? 67.. Okay. And so you're gonna put the IRS on a payment, you got the credit cards on a payment.

How can we best help you today? Well, I'm so tired of living like this, and I've had this thought that maybe I should sell my house, take the equity, and pay off all my debts, and just downsize and start over. What do you owe on your home? $250k. What's it worth?

Four and a quarter.

Okay. So you would be free, and you'd have $150,000 minus $75k, so you'd have $75,000 in your pocket. Right. And you're gonna buy what? I don't know.

My credit score is 673, so I don't know what I'm gonna get for a mortgage. You're not. Yeah, exactly. What I've been fantasizing about is buying a nice fifth-wheel rig and living in that somewhere. No, we don't want to die in a trailer.

No, that's not a retirement plan, dude. No, I don't like it. What you're after is freedom, but that's not gonna get you what you want.

How's your health?

Knock on wood, good. Are you married? No. Divorced a long time ago. Okay, all right.

Yeah, if you sold the house today, you would be free, and then you rent something as inexpensively as possible for two years and let your credit score heal, because it'll heal over time when you don't have any payments and you get rid of the IRS. Right now it's not healing. As long as the IRS is sitting there, your credit score is gonna stay down, period. So you're gonna be renting for two years. You're gonna be 69, and you're gonna be buying something at that point.

During that time, however, you will not have any of these payments, and if you can keep your health up and continue to bring in the income, you can stack some cash on top of that. 75 or 80. we got left over, right? So your purchase would not occur for two years, though.

Yeah, I just don't know what I could rent. I mean, house payment's $1,900, and what am I gonna rent for close to that? No, you need to rent for less than that, even, and you're probably gonna move away from where you are right now in order to do that. You got any buddies that are single that need to rent and cut their costs? Maybe time to go back to the roommate situation, my friend.

That's right. I've given that a lot of thought about getting a roommate. I have a friend of mine, Stanley, that he's just been catsitting for me. Yeah, I think I'd do it the other way around. I think I'd be the roommate, sell this house, and clear the debt.

Yeah, that was Ken's idea. That's a thought. That's not a bad thought, and you got a tough one there. This is The Ramsey Show.

Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual, amazing relationships. Ken Coleman, Ramsey personality, number one best-selling author, is my co-host today. Thanks for joining us, America. We're glad you're here. John is on the line in San Francisco.

Hey, John, how are you?

Hey, Dave, how you doing? Better than I deserve. What's up? Hey, I'm seeking advice on how I can get my name out of a house loan. I purchased a home in 2008..

I was valued at $200,000 under my credit. with my girlfriend at the time. Her in-laws offered $40,000 to help us with the down payment, with the promise that we'd pay them back when we refi in a year. The girlfriend at the time and I broke up months later. I wanted nothing to do with the house.

I left. We went to a UPS notary place to get my name removed out of the title, and the in-laws' name got added on the title. The loan, though, stayed in my name, with the promise of getting my name out of the loan after a year or so. I've tried countless times to initiate a refi for the house, but it never works out with the in-laws. Either they didn't get approved, or the credit at the time wasn't good, or they did not turn in paperwork, et cetera.

16 years later, the house loan is still under my name. The title is under their name. There's now renters in the house, managed by a rental company. It has an equity of about $400,000 at this time. I recently reengaged with them with a new mortgage loan advisor in the picture two weeks ago to reattempt another refi to get my name out of the loan, and it's taken them two weeks to just send back documents to get the process going.

So, I feel like it might end up to be another unsuccessful attempt. So, my question is, what can I do in this situation? My ultimate goal is to get my name out of the loan this summer. I want to move on with my life and my new family, and I also want to ask if I have any rights to the equity of the house whenever it gets sold.

Norman, you want the equity out of the house. Is there a place for that? Really, my ultimate goal is just to get my name out of the loan and out of my credit. That's my number one priority. Okay.

All right. So, your case study on what not to do, don't buy a home with your girlfriend, super. don't buy a home with your girlfriend with her parents putting down the down payment, and super duper, don't do all that and then later deed the home over to them without getting your name off the mortgage. That should have been done simultaneously, or you should have kept your name on the mortgage. You shouldn't have done any of this to start with.

It's a disaster. It's why we tell people never buy a house with someone they're not married to. You even refer to them as the in-laws, and yet you were never married.

It's just your girl, it's your ex's parents, your ex-girlfriend's parents is all it is. They were never in-laws because there was no law involved in this. No, never were married. So, okay. What do you make?

I make about 150 to 200k a year.

Okay.

All right. Have you sat down in person with them, or has everything just been by phone or email?

I was in person with them, I want to say three weeks ago, for a graduation. I had a daughter with a girlfriend.

Oh, there's that. So, this is the grandparents of your daughter. Right. Yep.

And the plot thickens. Yes, it does.

Okay. And she just graduated from high school? Yes. Wow.

Okay.

Well, there's a lot of stuff you can do here, and none of it's going to be pleasant.

if you want to get rid of the mortgage. Okay. So, one is obviously what you've been doing, and if they go get a new mortgage and get it out of your name, then easy. That's going to be pleasant. And if you can persuade them, assist them, even write a check for them to be able to get the loan, I would do that because of the fact that they are the grandparents of your daughter.

Right.

Before I heard that, I was going to go more scorched earth, because these people have been dragging along for a long time. Right. Now, if they won't do that, your options are aggressive. That's your only options that are left. I assume there's nothing in this whole stupid deal written down, is there?

No. Okay. No partnership agreement of any kind, no transactions or anything else. Okay. All we've got is what you said and what they said.

He said, she said. So,

what I would do next, if you want to get this aggressive, is sit down with them in person and say, I really have to get this loan out of my name. I need to move on with my life.

My daughter has graduated from high school. She's moving into adulthood. You guys need to make this come to an end for me. If you don't, if you can't, we need to figure out something else. So, one option, folks, is for you to sell the house so that you can pay off the loan and get it out of my name.

That's an option, and you can do that voluntarily. Folks, if you don't do that, if you want me to buy you out of the house, I will give you a few thousand dollars. I don't know if you got any money at all.

John, have you got any money? Yeah. How much money have you got?

I want to say we have at least saved up 50k for emergencies. So, if you bought this house for 50k back from them and they deeded it to you, that would be a deal, because it's got a lot of equity, right? Right. So, I'll give you guys 50k and you deed it over to me if you don't want to sell it, but they'd be smarter to sell it and put the money in their pocket, right? Right.

Okay. Those are two options, folks. If you don't want to do that, then I'm going to ask a judge to rule on this situation, because you're taking advantage of me and I have to stop it. And so, the judge is going to require you to sell the house and that's going to involve me suing you, and I really don't want to do that. It's going to be very expensive.

It's going to be long and drawn out. You're going to hate it. I'm going to hate it. Everybody's going to end up mad, but the lawyer who's going to cash our checks.

And so, I don't want to go that way, but if you guys are just going to sit on your thumbs, I'm going to have to. You're going to force me to do that. Now, that's pretty aggressive and you can file a lawsuit over this, in air quotes, partnership dispute. And you'd have to talk to an attorney about the basis for that. But basically, you're forcing them to liquidate the asset to make good on their promise in this partnership.

that's gone awry. And that's the legal basis for what I'm talking about. But you're going to end up suing these people if they won't voluntarily go, get a new mortgage or sell the property or deed it over to you.

And any of those proposals are fairly aggressive, but it's time somebody get off their thumbs here and that somebody is those people, the grandparents of your daughter. This is The Ramsey Show.

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Ken Coleman, Ramsey Personality is my co-host today. Thank you for joining us, America. Open phones at 888-825-5225.. We're so glad you're here. We appreciate you hanging out with us.

The best way to make the most of your money is to make your money behave. Tell it what to do instead of wondering where it went. That is called a budget. People who plan things are the ones that execute the plan, and they're the ones that win at anything. No one accidentally gets to Florida from Tennessee.

It requires a plan. You don't just wake up and go, oh, I wonder how that happened. No, I mean, you got in the car, you got on a plane, you had a plan, and you executed the plan. Same thing's true with your money and building wealth. It never happens by accident.

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So check it all out, EveryDollar in the App Store. Kelly is with us. Kelly's in Raleigh, North Carolina. Hi, Kelly, how are you? Hi, good.

Me and my husband are huge Dave Ramsey fans, so we're really excited to be on the call. We're honored to have you.

So me and my husband have been doing really good at budgeting. We've been following Dave Ramsey's plan, and we actually finally had some wiggle room in our budget to put extra debt payments. We've sold some assets and stuff, but then he lost his job last week. So now we're back to the point where, you know, we're trying really hard not to use credit cards, and we were looking at... He didn't get any severance?

No, it was a small company, and it didn't end on good terms. So now, unfortunately, no. We were just kind of high and dry. Just dumped? Yes.

And what do you make? Well, I'm self-employed. I started a bookkeeping business, and I've been doing it full-time for about six months now, but we're making about $10,000 a month gross. What are you netting?

I'm paying myself about $45,000.

. No, I didn't ask that. I asked what you're netting. You make $10,000.. You run a small business.

You have a net profit per month. What are you netting on $10,000?? What are your margins? You're a bookkeeper.

About $5,000.

. It's pretty good profit. Yeah. So why can't you live on $5,000 a month?

Well, because we've made stupid mistakes, and we lived above our means. We know that. And so we have $100,000 in debt. Not counting your house. Right.

Not counting our house. On what? Which is about $88,000, is our house. I said not counting your house. Right.

You have $100,000. not counting your house or counting the house? Not counting the house. Okay. What's the $100,000??

What kind of debt?

Credit cards, consolidation loan from medical debt, things like that. How much is cars?

Actually, we have two older vehicles, so they're paid in full. Okay. So it's all credit cards and debt consolidation from other credit cards? Yes. And medical stuff, too.

$100,000?

. Yes. Okay. All right.

That's pretty close to about $5,000 a month in payments. Yeah. Okay. And what was he making? About $4,000 a month.

Doing what?

He was a generator service technician.

He works on generators? Yes. Okay.

All right. Like commercial, obviously. Yeah. Like whole house generators. Yeah.

So we're talking mechanical work? Yeah. Service repair, maintenance. How long ago did he get laid off? A week ago.

A week? Yeah. Toward the end of last week, yeah. Oh, not even a week. Okay.

Ken? Yeah. I got to jump in and say he needs to be getting busy right now doing as much freelance mechanical work until he can get another mechanical job. I can tell you, in his particular talent field, I know he's specific in that generator field, but with his ability, he should be getting as much work as he can until he lands another gig, at least completely replenishing what he was making. But this is not a, oh, we're trying to avoid credit cards.

No, no. He's going out and he's working like crazy, fixing stuff everywhere. I mean, your area of where you're at in North Carolina, fantastic job economy. If you're anywhere near Raleigh, North Carolina, we're talking about a booming economy, a lot of people, a lot of cars breaking down, a lot of machines. He is getting after it.

Two jobs, three jobs. If these are part-time jobs, like I said, just like filling in at a garage where, hey, we need a couple of extra hands around there. It's intensity, intensity. He has such a transferable skill right now to where per hour, he should be making really good money, and quickly. Yeah.

Bottom line is someone who knows how to turn a wrench, regardless of what they're turning it on. Someone who knows how to analyze something like a generator breaking down and diagnose that can work on a lot of different things. That's what Ken means by transferable skill. And what we want to encourage him to do, and you to encourage him to do, is to get over the shock and the pain of having been fired and dumped out on the street with nothing. Get over that anger as fast as possible, because the best revenge is success.

Right. Well, and so he was helping me. Part of our gazelle intensity was he was helping me bookkeeping at night. And because I'm very small, we were considering letting him try to help me grow the business, because I could use an extra hand. Does he know how to do bookkeeping?

He can help me with some of the more basic things, yes. Yeah, but that's been working with me. Sure, at night, that's okay, but you're not going to be able to pay him what he could make out in the marketplace, are you? No, not immediately, no. But it's kind of one of those hard situations where I can't really grow the business.

You don't have the ability to invest in your business right now. You have to have the money. now. He has to go get a work. That's right.

Him working in your business right now is an investment that you don't have the money to make.

He has to go create an income right now. Like by next week, I want him working somewhere, doing something. And to keep the wolf away from your door so that you guys get where he needs to bring enough. you guys can eat and pay your payments. And then we can start talking about building up the business, working at night, working weekends.

Maybe he shifts and goes a whole other direction with his career, even. I don't know. Is there something else he's talked about doing? that's fun?

Yeah. I mean, he's pretty talented. He's pretty well versed at a lot of different trades. And you're well aware right now that the trades are just a boom. It's the best thing to be in, because you can just get hired in 20 seconds.

That's why Ken and I are sitting here encouraging you to do that. Kelly, just to show you, I just Googled mechanic jobs in Raleigh, North Carolina. And I'm looking at three right here. One just says maintenance technician. I haven't clicked on it.

That's $25 to $35 an hour, full-time, no degree required, includes health insurance. I mean, you understand this. You understand it. Okay. So this is just about, let's move on.

He can make $40 an hour. Absolutely. Well, we're a little over an hour away from Raleigh. That just was the closest city. Yeah.

Drive your butt over that direction and get a job. Hello. Yeah. I get it. I get it.

But there's lots of things in your area where people need someone, today's point, that can turn rich. Yeah. And your husband knows how to do that. He's talented. He can do a lot of stuff and then continue to grow your business.

And if he wants to quit and join that business someday, when you guys can get large enough to justify that. But you called me in a crisis. The first thing we have to do is put the crisis to bed. Yeah. There's the triage.

And then we can come back later and talk about investing and growing your business. That's the first thing. Don't get the two confused. Yeah. And your husband's very marketable once he gets past being pissed off over being fired.

So he needs to go. do this today. Move today.

Urgency. This is the Ramsey Show.

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Ken Coleman, Ramsey personality, is my co-host today in the lobby of Ramsey Solutions on the debt-free stage. Mark and Stacy are with us. Hey, guys, how are you? Hi. Hey, we're doing good.

Welcome. Welcome. Where do y'all live? We are outside of Annapolis, Maryland, and Odenton. Oh, fun.

Welcome to Nashville. And how much debt have you guys paid off? Just under $93,000.. All right. And how long did this take?

Do you remember?

19 months, 10 days. Love it. Okay. And your range of income during that 19 months? We started off at $178,000, and last year we ended over $200,000..

Good for you. Well done. What do you guys make? I mean, what do you do? I'm a licensed esthetician.

And I'm an IT professional. Awesome. Very cool. Good job, guys. What kind of debt was the 93??

Okay. Well, I have a list, because it's a lot. Okay. We owe the IRS money. We had three credit cards, two cars, four cell phones, two personal loans, Peloton, and a 401k loan.

And a partridge in a pear tree. Yes. You guys were normal. Pretty much. Yeah, we borrowed on everything in sight.

That's pretty much normal. Wow. So what happened 19 months ago? What was the wake-up call, and how'd you get tied into Ramsey? So I discovered the podcast and started listening to that.

Downloaded every dollar. We have two teenagers, so realizing that we had no money for college was kind of a driver. Yeah, scared the crap out of you. Sick and tired of not having enough money. Sick and tired of being sick and tired.

So you start listening to this crazy podcast, and you come home, and Mark said what? She's definitely the brains of this operation. I mean, she listened to you guys endlessly. I heard your voice constantly in our house. Like a fingernail down a chalkboard.

She is endless, but it's great. But he paused his 401k. Oh, wow. That was huge for him. Wow.

Because he did not want to do that. Yeah. And so you went along for the ride. I did. At times begrudgingly, but you did it.

That's good. Good for you guys. Well done. Well done. Thank you.

Very fun. So an endless podcast absorption, which gives you a lot of instruction, a lot of little nuanced ideas on things to work on. And what did you guys do from that point? Really just work the plan. I'm a purist, but we worked with what we had.

So what do you tell people? the key to paying off 93 in 19 months is? So the things that I wrote down that were important to us were, well, actually one, just making the decision. I mean, it's that simple. I had heard your podcast before, but it didn't stick.

But once we decided, following your steps as prescribed, exactly, don't question it. And then combining accounts, we were married 19 or well, 20 years this year, and we just did that. Wow. Was that kind of weird? Does it feel real awkward?

It was a little bit, but totally worth it. Yeah. And then, six months later, you go, why don't we do this earlier? Yes, pretty much. That's why most people experience it.

Yeah. I mean, you kind of had your own deal for 20 years, and then you slam, dunk together. It's like, there's a culture, there's a shock runs through your system, but then, once you get a new rhythm, it's like, well, then we should have been doing this all along. Right. And being flexible, because things always change.

Yeah, they do. Even in 19 months they do. Yes. Yes. That's very cool.

Very true. Very true. Way to go, y'all. Thank you. You've been married 19 years.

Have you ever been debt-free during the 19 years? No, we've never not had a car payment. Wow. Yep. Always a car.

And I have said, I will always have a car payment. Sure. That was permission to get a new car. if you were going to pay one off. As soon as we get paid off, we can't live without a payment.

We gotta go get another one. Yeah. That's it. Yeah. That's, that's the way the mind, the mindset of the American, works now, but not you.

You're weird now. Officially the best kind of weird. Yeah. Well, when people, when normal's broke, you don't want to be normal. You know, it's that simple.

Way to go, y'all. Yeah. I have two questions. The first one's a quick one. Do you still have the Peloton and do you use it?

We do still have it, and I use it every day. All right. All right. That's huge. That's big.

And this is for you, Mark, and you're a hero in this too. So this is actually, I think, would be fun. I'm not in any way calling you out, but as the reluctant spouse, I mean, we've seen that on you and you're hearing the story, you know, what would you say to other spouses who right now, their spouse is eating up the podcast? They're on YouTube. They're listening on radio.

They're just talking about it all the time. Very similar situation that you were in. Because I think you have a unique perspective here. What is the key when you're the reluctant spouse and you got one that's on fire?

You just have to be patient with it,

suffer along through the process.

That's good. I mean, like I said, she's the brains of the operation. So I followed her lead and I started paying attention to the things you guys were saying and just cooperating with her and trusting the process, of course. Even when you don't agree necessarily, you're not a hundred percent bought in. Is that what you're saying?

Correct. Yes. One of the big things was eating and we didn't get to eat out a lot and we just had to have specific things that we ate.

I see a little trauma there, Mark. You're like, here's some food items that you don't ever want to eat again. The good news is, the food scene in Nashville is incredible. That's right. So you're going to be able to find you some great restaurants while you're here.

now that you're debt free. Way to go. That's true. That's so good, you guys. Thank you.

I completely agree with that. I don't want to put words in your mouth, but the way we're, those of you listening only, you're not seeing what we're seeing with Mark, but it looks to me like, as I'm watching you, you said she's the brains of the operation two times, but I kind of think you went along with this just because it meant a lot to her and you love her. That is true. Yep. Not necessarily had anything to do with you liking it.

It just, this means she's really fired up about this and I love her. So I'm going with it. Yep. Yeah. That's cool.

Thank you. There's nothing wrong with that. That's a good thing. You're a good man. That's a good man.

Yeah. Well done. Well done. You guys are incredible heroes. You changed your whole life.

You changed your whole family tree permanently. I hope it's permanently. Well done. Never going back, never going back. Now that we're free, now that we're combined, it's all on game on game on game on.

Very cool. And now we can actually send these kids to college and pay for it. Yes, that's right. Cause we've got a couple hundred thousand bucks a year and no payments. Ding, ding, ding, ding, proper college choice.

Good choice on what we're going to study to make it worth it. And both of you got those fields. Both of you got great fields that you're in. So, very cool. Very cool.

All right. Bring up the kiddos, introduce them. Let's hear their names and ages. So this is Sadie. She's headed off to a community college in Maryland.

All right, Sadie. And she's 17, and this is Chase, and he is 16 and he is a junior in high school. All right. Way to go. You guys.

Very cool. I love it. I love it. Excellent job. All right.

From Annapolis or just outside Annapolis, Maryland, Mark and Stacey, Chase and Sadie, 93,000 paid off in 19 months, making 178 to 200.