Do You Have Too Much Month Left at the End of the Money?

Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I am, Rachel Cruz, hosting this hour with my good friend and bestselling author, Jade Warshaw, and we are here to answer your questions. So give us a call at 888-825-5225, and we'll talk about your life, your money, your relationships, your career, anything and everything. We are here for you. So, first up, we have Ashley in Charlotte, North Carolina.

Hi. Sorry, I'm really nervous.

No, you're good. Don't be. It's just us.

It's just us girls.

It's just chatting. You're great, Ashley. How can we help?

So I'm trying to figure out if I step away from work, if I'm going to financially ruin my family.

Ooh. Hmm. Hmm. Let's talk more about that. Why do you feel like that could be the case?

So I make about double what my husband brings in, and he works at a small business, so they don't offer health care or retirement plans or anything like that, and he's never going to leave that. That is his life.

Okay. What does he earn?

I love him.

What are the real numbers?

So he earns about 60, and I earn about 115, roughly.

And how old are your kids?

I have a four-year-old, a three-year-old, a two-year-old, and a one-month-old. Wow.

Oh, Ashley. Oh, my Lord. You're in it. I feel like we should just take a moment and pray.

I just almost fell asleep just listening to that. That's crazy.

Goodness. Oh, man. Okay. So, and I totally get this, Ashley. Like, after my third...

Well, he says that we'll figure it out and it'll be fine. But he feels like, if I do step away, that I'm not going to feel fulfilled staying at home. He feels like I was meant to work and that I'll get bored.

Well, I think that.

I mean, we're doing the baby steps. We're honestly, we're doing pretty well. We are debt free. We have a fully funded emergency fund. We own our house outright for rental.

Okay. Okay. And have you done a budget with just his income, just to see if, you know, from basic necessities, if everything would be okay?

We have.

It's tight. It's going to feel tight.

It's going to be covered with my work. And so if we went to his, we would be about $2,000 short a month if we start paying, if we get insurance on his. So, and I don't know where to cut or what to do.

Because $2,000, yeah, that's a significant gap. That's not 200..

Is there something you could do to bring that in to where you're still not working full time, but you're closing that gap while still staying at home?

I'm not sure. I haven't really looked into that.

Okay. And why doesn't he look at for another job? That's another point. I know you said that this is his life, but like, what's the situation?

I mean, this is his life. He, he's known what he wanted to do since he was 12 years old, like. Yeah, but what is it?

What is it? What is it? What is it?

Well, he partially owns the business. It's he, he is a martial arts instructor.

Okay. So is there a path to, is there a path to growing the business to where he's earning more? basically, is what I'm asking?

There definitely is, but it probably won't be for like another year or so.

Okay. Okay. So, okay. So I think what it gets down to Ashley is you guys, you and your husband, y'all have to sit down and decide what is, what is a priority for our family? What does a priority look like?

So, um, when you're crunching those numbers, be careful, because I want to make sure that you're crunching them. If you're doing your budget, your lifestyle as it is, with both incomes, and you say, Hey, we could get this. We just, we're just $2,000 away. That's pretty good. That might just be the difference in you changing your lifestyle a little bit.

It might be. It probably is the lifestyle thing, but I mean, there's definitely things that we could cut. Um, like. there's some programs that our kids are in, um, but you have to ask yourself about.

that quality of life too, because there's part of this where I could look at this and go, Hey, you go out and make an extra thousand. He, go out and make an extra thousand. Like that should be easy enough. But if that still just gets you to a barely baseline, how much are you going to enjoy staying home with four kids when you can't put them in any activities? So there's, you got things to weigh out there.

Yeah. So maybe there's another option, Ashley, even for you for the time being, or maybe you guys say for a season, for three years, we're going to grind it out, and you do, and you cut the lifestyle way back. Um, but yeah, so I, thanks for the call, Ashley. I don't know if that helps, but I think you guys sitting down and deciding what you value the most, because something is going to have to have a sacrifice and you guys need to choose that. That's right.

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Welcome back to the Ramsey show. I am, Rachel Cruz, hosting this hour with best-selling author, Jade Warshaw, and we are answering your questions. And today's question, Jade, comes from Isaac in Ohio.

Yeah. He says, my wife and I are recently married and found a house that we would like to buy for 600,000.. We earn about the same amount a year, $600,000 a year, and we have zero debt. Good. My wife has over 200,000 sitting in a savings account and I own a home that I bought before a marriage.

Yes. And yeah, and the combination isn't happening like it should of the oneness. Yeah, because if I were you, Isaac, I would sell your home and you guys together go in and pull your money together, see it all under one account, and let's put down the biggest down payment we can, regardless of man, woman, whose money it is. It is you guys together. And I think people get in trouble, Jade, sometimes.

So absolutely.

I don't know. I don't, yeah, I don't, I don't like that way of thinking.

I don't either. I 100%, and I love that you put it in that way. It's just a personality trait. It's not a gender on that, but they've got to, they've got to get together. Yeah.

On. both ends of, y'all are on both extreme ends. Her feelings on one end and, Isaac, the way you view money and relationships is at the other. Y'all need to find that. There's a balance there.

Hi.

Hello. Can you hear me? okay? Yes, we can. How can we help?

So my current situation is I am 30 years old, trying to move out and I have poor credit, except I don't really have any debts to pay off to build credit. And I'm getting declined everywhere, left and right, and I'm not sure what to do.

Do you have poor credit or zero credit?

Poor. Uh, no 600s, but everywhere I apply, that's everywhere I apply. That's all they really look at.

Yeah. Um, why is your credit low?

Uh, I have two derogatory marks and I haven't necessarily been smart in the past, but I started following you guys over a year ago and I've paid off a couple of credit cards and all I've left is two, like collections. And so it's just dropped over time because I've been slowly paying everything off.

Yeah.

But you still have the two in collections.

Yep.

Yeah.

I mean, the fact is it's going to be low and bad until you get everything that was on your credit cleaned up and cleared off, including the two that are in collections. And then after that, once everything's off, yeah, once everything's off your credit, it takes, you know, six months to 12 months for that to drop off completely. And then you're at zero, and that's where you want to get to. So I think it's just going to take you some time. Why are you trying to buy rental properties when you have two items in collections?

No, I'm just, I'm just trying to move out.

Trying to rent somewhere. I was renting.

Oh, rental. Okay.

Have you had a consistent job at the same employer?

I worked as a trucker and I just actually a year ago switched jobs. So I've been employed at the same place for over a year.

Have you shown them proof of income at an employer for one year? And do you have money saved? Like, do you have first month's rent, last month's rent, a security deposit? Do you have cash that you can be up front with?

Yeah, I have, I have the cash and I have all the proof, for, you know, what I make and all the other bills that I paid on time. And just nothing. So then you're working.

I mean, at that point, honestly, you're just working with big corporations, where there's probably a manager at that apartment complex and he literally doesn't have the power to rent you something. Cause it probably is, Hey, if anybody's below 700 or whatever, you don't have the authority to go and rent. So either you need to get to somebody with higher authority and the power to be able to kind of overwrite that, or you need to look for somebody that's a landlord and they're a one-off and it's not part of a big, you know, system, like a big apartment complex, but maybe it's a small, you know, one bedroom, something, that, that, that there's a owner, that you can actually talk to that owner and tell them about your situation. Have you tried that route or has it been just more like apartments that you've been shopping?

I've, I've been looking around and Zillow and, like all the main, like main places to apply for rent. The only thing is, so there is like a, you know, I'm trying to move out within like two months and also I had an idea to get a loan to try to build credit, but I'm not, I'm not really sure. Like, I wanted to get your guys' opinion on that as well.

I definitely would not go into debt to try to build your credit. I think in this case, to Rachel's point, you just got to find the right situation and going to basically, for lack of a better word, like big box apartment rentals may not be the move for you. And, yeah, finding a landlord, that's an individual that is willing to look past that. I also think, no matter what you do, cleaning up these collections needs to be a one, because as long as you have things in collections, nothing's going to get any better. And the faster that you do pay those off, the faster that you can get to a zero position, which is still going to look better.

Yeah. Yeah. Yeah. And that's, that's the distinction here that Jade's exactly right. It looks better to have an undetermined credit score that they can't pull numbers for because they don't exist, because it's been over a year since you've had any level of debt.

I've been doing this show for over 30 years, and some of the saddest calls I have 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 in the middle of all that grief? Like it's just, it is, it's terrible.

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.

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Hi.

Hi. How are you?

Good. Thanks.

Good.

So the question I have is I wanted to know if we should pay off our car or buy or sell it and buy a van or something larger for our family.

What do you owe on the car?

$21,000.

Okay.

So you've got $21,000 and then the option was, or should we buy a van?

Yeah. So we're a family of three, and I mean, the car that we have is fine, but I feel like we're just like busting out of the seams. So I wanted to know if maybe we should sell it. I mean, it's probably, if we sell it, we'll probably sell it for probably around the same amount that we owe.

So break even.

Right.

And then how much do you have saved?

Nothing right now.

Okay. So, and is there another car in the situation too? Like, do you, are you a two car family right now?

Yeah, we're a two car family.

What's the.

How much do you guys make a year?

About $160,000.

Okay. And what other debt do you guys have?

Um, we have that car and student loans.

How much in the student loans?

Uh, 34.

Okay.

And no money saved at all?

Um, well, we have an emergency, we have $1,000.

Okay.

Okay. Um, we can sell the other, we do have another car, but it's paid off.

And what could you get for that one?

Um, we could probably get, um, 7,000.

If, the, if, the, if the goal is to get a vehicle that's large enough for your whole family to fit and pay cash for it. My first move, unless you can tell me why this wouldn't work, cause you know more about your situation than I do, obviously, is to sell the one that's worth something. So you get a headstart saving for the van. So my thought would be sell car number two, it's already paid off, clear $7,000.. You've already got the $1,000 saved.

But you'll be a one car family.

You'd be a one car family.

And Victoria, you said we're a family of three, is it just you, your husband, and a baby?

No, no, I'm sorry. We're a family of five, we have three kids.

Okay. I thought, okay, Victoria, I think we can stay in this car a little bit longer. I thought it was just a family of three. Okay, you have three kids. Yeah.

So what have you looked at? Like these vans, is there one for 7,000?? Can you find a junker for 7,000?? And is this dire straits, I guess, is what I'm trying to figure out.

Right. I mean, we've been looking at vans, we're looking at like a 2015,. it's looking around 10,000 to 12,000..

Okay. I just, the only thing will be, y'all have to save for it. Yeah. Yeah. You got to just save for it, Victoria.

It's just how urgent is this? Because I'm looking at $21,000. you owe on the first car, 34,000 student loans. And I get that it's not comfortable for three kids in the back. Like, I don't know, do their car seats not fit?

I mean, I guess it's not really urgent, but I'm just thinking of, like, you know, it's a growing family. We have sports, we have so many events going on. And, like the car that we, it's a Toyota Highlander. I mean, it's just, it would be more and it would be more comfortable to have a van.

I mean, not a new van. Wait, so you have a Toyota Highlander already? Isn't that an SUV?

It is.

Okay. Okay. I'm changing this. I'm changing my vote right now. You told me you had two cars.

The one with 21.

Then I'd sell car number two, put it towards the Highlander, get that thing paid off as soon as possible. And can you guys survive as a one car family for a while to pay off some debt before you save up and buy a second one?

That would be ideal. However, we are, my husband and I, both work and we do commute.

Okay. So you're not seeing a way to do that.

I think it's just a sense, Victoria, you're going to have to just pay this car off. You're going to have to pay off these student loans and y'all got, I mean, but you make 160.. I mean, you're in New York City, so I know it doesn't go as far, but it's just going to be you guys buckling down for 18 months, two years. And it will be uncomfortable. I mean, yeah, it will be uncomfortable.

Yeah. That's going to be going down in value and pretty, you know what I mean? It's just another thing. So.

But I get it. We have three kids and if they're all in one row, they're going to be hitting each other, and it's annoying, and there is stuff everywhere. Like, it is true, but also, I think you guys have different priorities. And if you're going to follow the steps to get in control of your money, stop sending your income out to freaking car payments and student loans and actually keep your income.

But let's be honest.

And get out of debt. It's a thing.

She has a Highlander. That's plenty of space. Victoria, I'm getting you a little bit. That's plenty of space. It's not the same layout, obviously, as a minivan, because, let's be honest, I can't drive a minivan, Rachel, but I have been in one and they are very nice.

The Odyssey, it is like a living room. It is the best thing ever. You're not cool. I get it.

But the space, it's so easy to get the kids in and out. That is very, very true. But a Highlander will get it done.

It will get it done. Yeah. The minivan has its luxuries and it was so cheap. when we went and priced out cars. We looked at SUVs, we looked at all different levels and I'm like, I just couldn't stomach buying an SUV because I'm like, my children, God love you if you listen to this later on in your life, kids.

100%.

And the minivan was a third of the price. Really? A third of the price of some of the SUVs that we were looking at. And I was like all day. It's like a mom set in that driver's seat, Jade.

Minivan is great. The worst part of it is people have to see you drive it. It's a minivan. You have to drive it.

That's the worst part.

But I'm with you, Rachel. I know. I know. I'll get my cool mom SUV soon. Yeah.

Hi. Hi. Thank you guys for having me.

Absolutely. How can we help?

So my question is, do I pause Baby Step 2 in order to save up money? I just got told last week that we're being laid off here at the school district that I work at. I'm sorry. And so, yeah, it was a little unexpected. But I just, I'm in Baby Step 2, so I'm like, do I save up money now, in case, you know, for the future?

Is it just you? Or are you married? Do you have a family?

Yeah. So my husband and I, we started this about a year ago. We paid off almost $50,000..

Good for you, guys.

Yeah. So we have $6,500 left to pay on one card. And our last day of work, well, for me, is August 30th. So I have a few months of, you know, paychecks. And so, yeah, we're just wondering, like, do we continue to pay on it or do we save up money?

Yeah.

So you've got $6,500 left and then you're done, done?

Yes. Oh, wow.

Oh, that's awesome. How much will you guys be, how much will you make between now and August?

Yeah. So we bring in about $6,000.. It could be between, you know, $55,000 on a slow month, but usually it's about $6,000..

Okay. And we're in March. So we got April, May, June, July, August.

$1,400.

$1,400.

We're paying $1,400, yeah. Okay. So my little calculator that I have on my tracking sheet shows that we should be done with this by August. Okay. Of this month that I did my job.

Then you have no savings. Yeah, yeah, yeah.

Yeah.

What do you do for work?

So I'm a secretary. Okay. And they've, yeah, they've laid off about half of us. So we don't know if we'll be called back. So I guess we're just kind of waiting.

Can you just clarify what do you make versus what your husband makes each month?

Yeah. So I bring in $2,800 a month and he's the rest of it.

And that amounts to $6,000?

Mm-hmm. Okay.

Got it. Okay.

Exactly. Yeah. And just a quick shout out, you guys gifted me a financial piece last year and it's been a relief.

Mm-hmm.

I'm so glad. Me too. I'm so glad. Yeah. I think my first reaction would be what Jade said of, hey, could we live off...

what you guys bring in. He's got 32 and you've got 28..

Mm-hmm. So we're right about the same. So we would be very...

It'd be tight.

We'd be very limited and just right on the cutoff, which I would be worried to just live off of his income. Well, here's the thing.

Yeah, sure. The blessing you have here is you know this is happening and you know it's not happening until August. Correct. It's not to say that you have to wait till August to find a new job, right? You can start looking closer and closer and really truly have something lined up so that you have a smoother transition.

Yeah. Do you love the job you're at? Because you keep saying, if I get called back, what does that mean? Is it because another department would need something?

Yeah. So with our school district, we have unions. So there is a possibility of being called back once the school year is... We're getting closer to the new school year. They're like, okay, well, if we have extra students, like our number of students go up, then we might be able to hire some of us back.

I don't think I would count on that.

Yeah. The other thing is that I would want to look, even if it wasn't a secretary position, I would look at a different, like a teaching assistant or something else in the district, because of just the benefit of being able to bring my son to work with me. He works at the same school that I work at. And even if I move schools, I could bring him with me or school closer. That's the benefit of being able to work in the district.

Yeah. So there's a lot of benefits to your overall life for you to stay if you can.

Yeah. I'm not worried about not being able to find another job. I know that I could do it.

But you want to go back to that school for all of that, which I totally get. Okay. So, honestly, what I would do is I would save up maybe two months worth of it and you won't have it all paid off by August. You'll have two more months of that debt. But I'm okay with that in the season, because it's not two years, it's two months.

Well, let me ask you, is anybody doing a side hustle of any sort to make this go faster?

Yeah, we do. On the weekends, we're doing Instacart. I am helping my dad with his business. Good for you guys. Okay, good.

And the momentum is just going to.

I'm with it. My thought was going to be, is there some way that you guys can pick up any extra work so that you can keep almost like doing both? You're still able to maybe to pay off this debt, but you're also able to stack up some savings. And then the other side of it is, is there still a way to have something? just be in talks or have something lined up, just in case?

Yeah. If your confidence is high, you can plug into something.

Yeah. So there is... So we get the month of July off for summer break. So there are summer school jobs and stuff that we can pick up.

Yeah. That's it.

That's great. So that's what I was thinking of doing. I'm like, okay, maybe I can pick up a few extra summer school hours. And also, there is a possibility of being able to find another job. I have somebody who can help me with that.

Good.

Okay. Like medical offices and stuff. Yeah. That's great. I'm just preparing.

Yeah. Yeah. And Aurora, you guys are doing an incredible job. I mean, and this is why you do this. This is why you do this.

Thank you for having me.

Absolutely. How can we help?

Hi, I'm 54 years old. I have no debt. I paid off all my student loans, credit cards, and my house, and my car.

Good for you.

Wow.

Yes. I have 76,000... I'm sorry, 72,600 in the money market. And I want to know how to start investing.

All right. That's good. So are you currently investing any of your paycheck every month when you get paid?

No, ma'am. I am not. We don't have that option at my job.

Okay. So they're not offering like an employee-sponsored 401k. That's okay. You can still start investing 15% of your income today by just investing in a Roth IRA. Right?

No, ma'am. I'm single.

You're single. Okay. So yeah. You're. technically...

Well, I only make about $32,000 a year. Okay. And I pretty much use all of that to live on and pay the bills I do have to living expenses. I do have a little bit left over from each paycheck, but I have not been putting that in savings for about... I got divorced in September, so I haven't been putting anything in savings since I got divorced.

I see. Well, the good news is, like you said, you've got the $72,000, so you don't necessarily need to set any more aside into savings per se. But the retirement piece, I do want you doing that because you've got to keep actively adding to this nest egg.

Do I take any of the $72,000 and put that in a Roth IRA, or can I do that?

You can, but you can only do it up to a certain point, and then you're going to have to go into a brokerage account, or you're going to have to work with an investment professional to see what's the best option for you to open up. Okay, I got on... Go ahead.

I'm sorry. No, you go. I got on SmartVestor, and I have an appointment with... I guess he's called a financial professional.

Yes.

I guess I'll speak with him. Yes. And then...

So, when you work with that SmartVestor Pro, they're just going to give you the options, and the best options for you and your situation. But at the end of the day, the thing I want you to hear me say is, I think you've done a great job with the $72,000, but what you've got to do is you've got to take some of that as your three to six months, because I don't want you investing all of your money. You've got to keep some of it liquid. And so whatever six months of expenses is for you, take that and just set it aside. Put it in a high-yield savings account.

Yes. What is a high-yield savings account?

It's a savings account. Most of them, the good ones, are online accounts. You could check out Ally.com. We don't endorse them, but it's just the one I use. I know George uses Marcus by Goldman Sachs.

Yeah, we use an Ally. Yeah, it's similar to a money market account, Lisa. So it's an account that it usually, I think now is actually getting a higher rate of return than money market accounts. It is. But a high-yield savings account.

I went back to work.

You went back to work. Okay. So I'm guessing this is one of the first times you're handling everything on your own, huh?

Yes.

Okay. You're doing great. You're doing a really good job, Lisa. What are you doing for work?

I work in a finance office, so I do the accounting work.

Okay. That's awesome. So my only other thought, because of your age and because you don't have much in retirement,

Thank you so much. I really appreciate your time.

Yes, absolutely. Absolutely.

Really good.

Yeah, and that's, again, learning about this stuff and understanding, okay, what is a Roth IRA? And I even love, like, what is a high-yield savings account?

Yeah, great questions.

Like, getting, yes, getting to these basics and really having this knowledge. Knowledge gives you power. And when you have knowledge, you usually have options. Yeah. And you're able to see, you're not pinned into one thing and because, oh my gosh, this is the only thing I got to do, and I don't even get it, but I got to do it.

Love it.

Up. next, we have Morgan in Tucson. Hey, Morgan. Welcome to the show.

Hi. Thank you all for taking my call.

Absolutely. How can we help?

So, my wife and I are buying a house. We got it down to $635,000, but it needs a little bit of work. We do have to put a new roof on it, which we estimate to be about $30,000.. However, that's our lowest estimate, so it could be as much as $40,000.. We also have another $3,000 to $7,000 for radon, so we're looking total at $33,000 to $50,000 that we have to put into the house before we move into it.

So you're going to put $235,000 down, and when were you saying that you're going to do this? recast? How long are you waiting?

We originally were going to do it the next day, which we were allowed to do.

I don't understand why. Help me understand that.

The only reason that we wanted to do it was because they gave us another half percent discount on the mortgage rate. That's all.

So the next day put another $100,000 down.

Correct.

And there's no – I mean, obviously with the recast you're not closing again. You're just putting a $100,000 payment.

Correct.

I don't know. I want to know if there's a loophole there. I want to know something more about that. It just feels weird that you would hold on to your down payment.

From what we can tell, they market you hard. They try to get you to spend that money on something else and not recast it. It just gives them one more chance to get the money from you.

And this is all to save a half a percent?

Half a percent and, yeah, half percent on the mortgage 15-year.

Yeah, because, I mean, if worse comes to worse, Morgan, what would happen if you guys – you put $235,000 down. The next day? they're like, oh, this isn't going to work. The recast, oh, gosh, oh, gosh. Could you just throw the $100,000 on the house?

Right, so that's what my original question was. We have, I mean, to be on the safe side, $50,000 worth of repairs. We'd like to put down as much as we can on the house, but we also don't want to get into a cash crunch.

Yeah, so the question is if you save the $50,000 out, I'm not really concerned about the recast and all that. My thought is, can you afford the, here's my two questions for you. Can you afford the house if you don't get the extra percent off? That's the first, the extra half a percent. That's the first question.

Yeah. Yeah, it will.

So then, if I were in your shoes, based on what you said, I would probably be like, okay, we need this money. Because, like you said, radon, the roof's got to get fixed. Was it radon? Is that what you said?

Yeah, radon and roof.

The roof's got to get fixed. That's $50,000.. I mean, you need to get that done. So I would just keep that money out and have those repairs done. You put $285,000 down on a $635,000 house.

Which is great, because you were putting almost 50% down. That's awesome. So yeah, I mean, you guys are in a great position, but yeah. So I wouldn't, I would rather have the cash, fix what you need, and then aggressively pay down the house. Because do you guys have any other debt?

No, we don't have any other debt. We have very good income.

What do you guys make a year?

Before taxes and everything, $480,000.

And then the good news is, I mean, you said it's 50k on the high side. It sounds like you're like being, estimating this aggressively, which is good. And if you get out on the other side and you're like, hey, we still have $10,000 or $15,000 left, throw it towards a mortgage.

Right. Okay, so you guys would suggest then recasting less, and then recasting or paying down quicker after everything is settled with what's remaining?

Well, would they let you, are they going to let you recast it, even though it's now going to be less than $100,000?

Yeah, they don't care. That was part of the deal we signed with them.

Okay. Yeah, I'm okay with that. And you guys make insane money, Morgan, too. So I'm like, if you have, you'll have roughly $330,000 left on the mortgage, and you guys making $480,000, which again is before taxes and everything. But I'm like, y'all could have your house paid off in three years if you really did it.

True that. You know, usually when I hear recasting, I kind of, my radar goes up, because a lot of times people are doing that really just to get a lower payment. And it's in their mind, they're thinking, this is great. I don't have to close again. I'm not paying those closing costs.

That's right. That's right. Yep. No, that's good, though, because I think, again, with the housing market where it's at, it is. It's so expensive.

There's a lot of incentives out there, incentives out there right now, too, that can lure people away from better judgment.

Yes, exactly. So be careful with some of this, you guys, as you're out house hunting and all of it. We love houses. We love real estate. We want it to be part of your life, but we want it to be a blessing, not a curse.

It's crazy. It says, this is from CNN.com, it says, Federal regulators finalized a rule on Tuesday to cap most credit card late fees at $8 as part of a broader push by the Biden administration to eliminate junk fees. The Consumer Financial Protection Bureau estimates the new regulation, which was first proposed in February, will save families more than $10 billion a year by cutting fees from an average of $32.. It comes as Americans continue to pile on credit card debt. Guys, we know Americans are in $1.1 trillion, with a T, of credit card debt, which is crazy.

Someone's not telling the truth.

Someone's lying because somebody is being charged these fees is all I'm saying. It says these individuals will now save an average of $220 per year. I think that's a lie. The new rule aims to close 2010 loophole. So basically, you know, Rachel, when I hear things like this, there's part of me that thinks there's goodwill here, like there's good intent.

We don't want credit card companies to take advantage of them being in a tight situation.

Yeah, so how can we, kind of, you know, close in the gap on that? And so eliminating junk fees, I think, in one way, it's great, because some people might look at $32 a month or $18 a month ago. That's nothing. But we do know that a lot of folks who are using credit cards, not everybody's using them to live a lavish life. Some people are just trying to keep the lights on, trying to keep groceries in the house.

They're not going to just lay down and say, yeah, sure, whatever.

Yeah, $10 billion.

I know. And what's crazy, too, and it's interesting to think about, and I hate to say this because, like you said, I'm like there are people hurting and that this is the thing that's somewhat keeping them afloat, if you will, but still in this cycle, is that these fees hurt less. So does it keep you in a cycle because it doesn't hurt as much?

Yeah, you're not being charged that heavy late fee, so it's okay if you're late. It's okay if you keep it around.

But then your credit score keeps getting dinged. I mean, like all of it. So it's just being aware that this still, like you said, Jade, can't be the thing that motivates you. It has to be out of this willpower, of a higher will, if you will, to say, oh my gosh, I don't want this to be my life. And I don't want this cycle in general, regardless of what, you know, what legislation is passed or not.

I just wish, you know, some part of me goes, if you really want to help people, show them the way out. Don't show them the way to stay in it and stay comfortable. Like, honestly, I mean, Ramsey. here at Ramsey, we're always showing people how to get out of debt, how to get out of a cycle. And I'm just like, stop giving people money and show them the way out.

Yes. But anyway. Governments on both sides are not known for that, y'all.

So we got to take it in our own hands. Take the matters into your own hands. That's right. And just get out of it if you can, if at all you can. And we're going to show you how to do that here on the show.

Yeah, absolutely. All right. Up. next, we have Joshua in Mobile. Hey, Joshua.

Hey, how are y'all doing today?

We're doing great. How can we help?

Yes, ma'am. Me and my wife, we purchased FPU about three days ago. And we've been following through. And we had about $6,000 in savings. So I couldn't talk her into just having $1,000 in emergencies.

Listen, you've got to sleep at night.

I hear you.

Exactly. So I took that $4,000, and I paid off my credit cards.

Good for you. Got rid of them. How'd that feel?

Yeah, I paid off. It felt amazing. It's just a never-ending cycle, it seems like. So I thank God that I found a way out of that.

That's awesome.

But I also paid off a washing dryer that I had to purchase due to an emergency that popped up in our home. And the thing is, is, instead of just having, you know, like $8,200 of debt left over, I bought my wife this car that I seem to hear about all day long and y'all keep getting asked about. And this car was $41,000.. Uh-oh. Yep.

Have you, Kelley Blue Booked it, Joshua?

No, ma'am, I haven't.

Okay, because I'm curious. How long ago did you get it?

We've only had the car for like four months. And then I ran across y'all and I was like, man, that was perfect timing. Okay.

Yeah. Four months too late, a little bit. I know. I wish we were there earlier. Was it brand new?

Yes, ma'am. Yep.

Okay, so it's taken a hit. And I'm curious, though, you owe $37,000 on it. I'm hoping there could be a wash there. You know, if you could sell it. I would Kelley, Blue, Book it and see what you can.

It's a five-year loan at 2.

No. How much do you guys make a year?

We made $120,000 last year. Okay. Annually.

Is this your only car?

When I look at the total, I'm like, yes, her only car. And then my truck's paid off.

And then what other debt do you guys have?

I have a $7,000 personal loan and then $1,800 on a stupid computer that I bought.

Okay. So you'll get that paid off this month, I'm hoping. Yeah. Oh, God, Joshua. I'm selling the car.

She had a 2008 Nissan Sentra. And, like I said, we got a one-month-old daughter. And I was like, you know, that thing ain't safe. And she was like, well, let's get this $20,000..

The thing is, you go from one extreme to another.

Don't do that. I hate when people do this. And I get it's out of the love of the baby. But a Camry is safe.

Yeah.

An eight-year-old Camry is safe. It's going to be fine. It's going to be fine. And, Joshua, run the numbers just for yourselves. And just say, let's put this car payment.

What is your car payment? I'm just curious on this $41,000 vehicle.

Yeah, it's like a $750 a month. Ooh, Lord.

That's messed up.

Like I said, I got this short loan. That's still horrible.

I don't care. Joshua, sell it. Lock arms, sell it, and then go get an awesome other car in 18 months, once you're debt-free. But get this $41,000 of debt in a stupid car out of here. You guys can do this.

Can it even be taken care of, though, the way it's supposed to be is the question.

And there's a level of, like, you know, and I can be like this, where I'm like, I just don't want to spend money on something that I can't enjoy in life because I'm so scared it's going to get destroyed. And maybe one day, once they're teenagers, or, I don't know, parents of teenagers can correct me. Yeah. There's a point that I'm like, okay, great. That's not going to get spilled on.

All I know, Rachel, is. I watched my son take a piece of pizza and take every piece of topping off of the pizza into his lap in the car. And then, when I leaned over to see what he was doing, I watched my daughter spill her piece of pizza on the carpet.

Oh, yeah.

And I'm like, I can't drive Alexa's truck. It's done. I never can.

It's a real thing. So we want to enjoy life to people. So some people go get the brand new thing because of the new baby. And I'm like, I don't know.

They're going to spit up on it.

Yep, 100%.

The car seat is going to put those deep indentations into that nice leather. Even if you put down the little mat, it's still going to put that deep, you know. Done. so. You put the little kick pads.

We'll wait. We're going to have delayed gratification, Jade. That's right.

And these kids are not going to ruin that truck when the time comes.

That's right. That's right. All right. Up next, we have Erica in Gainesville. Hey, Erica.

Hi. Thank you for taking my call.

Absolutely. How can we help?

So my husband and I sold our first house two years ago because we wanted to buy some land. And we had $150,000 in equity in our house and decided on our path to be debt-free, we were going to buy a property outright. We didn't want to have a mortgage at all. So we did. We found a five-acre property with a double-wide mobile home.

Go ahead, Rachel. I heard you.

Yeah, no. I was going to say, yeah, your credit will lower as you pay off debt, but it will get to a place, Erica, where it's undetermined, basically. And so it will take about 6 to 12 months, once you pay off that last debt, for it to get there. And then from there, you would do a process called manual underwriting. Now, that's usually for already a home.

The good news is the time is built in, because the time that it's going to take you to save up for the down payment is the time it'll take for your score to roll to zero.

Yep, that's right.

So there's part of that.

So my husband's a veteran, so we were planning on doing a VA loan. And I guess we may have to look into that more if they will do an underwriting, manual, underwriting process for VA loans. I'm not totally sure about that.

Well, typically we would suggest a conventional loan. There are some instances where a VA will work, but a lot of times they have a lot of extra fees that end up making it more expensive. So really do your research on that before you settle in on a VA loan, simply because usually I think the biggest benefit is you don't have to put money down, correct?

Correct, yes.

And we want you to put money down, because we want you to have almost like instant equity when you're going forward.

Yeah, so at least 5% for your first home is what we say, 5% to 20% is ideal. But you guys too, Erica, I'll just say it because I have you on the call. When you go into this build process, again, it'll be in a few years, but this is a situation that you'll go to the bank and they're going to be able to say, oh, my gosh, you qualify for this. And you're going to think, oh, we don't need that. And then you're going to start the home build process and be like, oh, we can upgrade here.

And if you can get your loan, a construction to permanent loan, the first time, that way they know, hey, I'm getting this loan for this. It's going to automatically convert. And you're not having to go through that closing process twice. or get to the point where you've taken out this construction loan. To Rachel's point, if you've gone over budget and then you're going over here to try to get that to convert to a mortgage and you're not approving, that.

You get in trouble there.

You can get in trouble there. So make sure you're doing it all in one from the beginning. And there's plenty of mortgage companies who will do that for you. That's right.

Up. next, we have Nicole in Kansas City. Hey, Nicole. Welcome to the show.

Hi.

Hello. Hello. How can we help?

Okay. So I am calling. My husband and I live very frugally. I mean, we're kind of the joke of everybody, because we drive the old cars. But we have secretly been able to put money away.

Right. Yes.

And we hear them talk a lot about Roth IRAs. And I'm like, is that what I start doing? And we probably make, both of us together, maybe $90,000 a year. And we probably have $90,000 savings.

Okay.

Well, do your employers offer any sort of investing opportunity? 401K, 403B?

Yeah, we do both have that. And we have, like, employer match, 5%. So we both do the max of 5% both.

So you are doing that currently? Yes, we are doing that currently as well. Perfect.

And so my thing is, like I said, I'm putting away about $1,500 a month, sometimes $2,000 a month. And I'm going, I need to be doing something more with this money, because I'm going to be 37 this year. And I'm, like, you know, retirement's really not that far out in the future.

Do you guys have any debt, Nicole?

That's right.

No debt. Okay. So what I would do, Nicole, is remember this formula. Match beats Roth beats traditional. So the first thing you're going to do is your match.