Saving for the Future Starts Today

I'm George Campbell, joined by my good friend Ken Coleman. This is your show, America. We are here for you to help you take the right next step with your money, with your work, and with your life.

The number to call is 888-825-5225. I'd be happy to chime in on your money questions.

And Ken, he is the work-career-purpose guy. If you feel stuck, you feel like you're not doing what you want to do, you feel like you could be making more money, you're not sure how to have that conversation with your boss or your co-worker, Ken is an expert at walking you through those predicaments.

And so we're happy to take your call. 888-825-5225.

Matt joins us up first in Raleigh. Matt, what is going on, my friend? How are you doing today?

Good, how are you?

Good, how can we help?

One of the things that came up was saving for college, which I'm able to provide that. I'm in the military, and I'm actually going to be passing along my 9-11 GI Bill, which is a full-ride scholarship for that child.

The only thing is, is my wife is concerned that much money when our child turns 18 is going to be too much. I kind of did the math, $100 with a 10% rate of return. By the time they're 18, they'll have $53,000. Just trying to get an insight if that's too much money or...

All the income and savings that I have, me and my wife have done it together. And so it's just more of a way to get a head start for a child. That way, they don't feel like when they turn 18 that they're on their own.

And I think you're going to raise a great kid that's not entitled, because that's always the fear, Ken, is you go, here's a pile of money, don't ruin your life.

But I think if you raise your kid the right way with the right mindset around college and adulthood, they're not going to ruin their life. They're going to say, thank you for helping set me up for success.

And so they develop grit, they develop hard work, they don't have that sense of entitlement. That would be my only thing. I'd be a great, awesome surprise, but I would not reveal it early.

Because, you know, listen, who among us doesn't change our gear?

Right, well, that's true.

What do you think, George? I'd like to hold off on it.

And right now with college, they're not going to.

And if we do have a second child, that's what I was kind of telling towards my wife is, I mean, if they have $50,000, they'd be able to go to college and not have any debt and possibly even leave college with some of that money still left over.

What happens is the kid doesn't have the money to go. They take out six figures in student loans, and then there's trapped with payments. So I love that you guys are thinking through this in a really wise way, Matt. And I think this kid's obviously going to go to college debt free, but the better thing is they're going to learn money management at an early age.

It is possible. And sometimes it's the GI Bill through the military. It's one of the great benefits. If you're a service member and you're able to go to school debt free or your children are able to go to school debt free and not have that burden of student loans, what an incredible way to set your kid up, Ken, to not be in chains when they graduate. Because then no matter what job they have, they feel broke.

That's right.

Because they've got payments all around them.

This is The Ramsey Show.

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. And you have to do the same thing too.

Together we can show up and be strong in all of this chaos.

So don't skip the things that matter to you, including therapy.

When it comes to therapy, call my friends at BetterHelp.

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Be sure to put your oxygen mask on first and never skip therapy day.

Call my friends at BetterHelp.

Visit BetterHelp.com slash Deloney today for 10% off your first month.

That's BetterHelp.com slash Deloney.

The number is 888-825-5225. Don't be shy. Don't be scared. Give us a call. We'll walk you through.

But if you look at us two, I mean, you couldn't be less scarier of two guys.

Fair point.

My baritone, maybe. But yours?

My tenor?

Kind of a mousy tenor.

I recently found out the condo association hasn't been really managed that well over the past 15 years or so.

I've been here for about eight.

I just found out that there's about $3 million worth of damages on the property in terms of roofs that need to be replaced and siding and rot and things like that.

Possibly mold, but they're not sure yet.

There's about 15 buildings on the property that need to be fixed and everything and repaired.

They did have a guy come on site and do a full evaluation assessment of the property and documented all the damage that he found.

But I'm just trying to figure out how much of an increase in an HOA fee is too much to the point where, as an owner, I should probably think about selling my property or just saying put,

considering how much home prices have appreciated over the years and the high interest rates with mortgages.

I would certainly be taking on more debt than the current mortgage that I have now, which is at about $120,000 that I owe currently.

But you can't sell the condo without paying the fee.

That $3 million mark is just the preliminary company that came in. They want to get quotes from three others before they take action.

And next year, so like by the end of this year, hopefully they should have a plan in place to repair the damages.

That's their goal, the board.

And they had like a projection increase over the next 20 years.

It would be a 20-year loan that they would take out most likely to do the repairs.

And the HOA would max out around the 15-year mark, so somewhere around like $20,000, $30,000 something.

It would be up around like $725 it would cap out at.

But next year, it would be around $600, but this year we're at the $500 mark.

Potentially. And then eventually $2,400 a year plus.

But that kind of caps out. You're not going to be paying $2,000 in HOA fees.

Because this does stink, and it happens all over.

And you're right, a lot of HOAs are not managed well, and things like this happen.

And it gets passed on to the homeowners, of course.

So not fun to deal with, but this is part of life.

As a homeowner, you get to deal with.

So what is your mortgage?

Outside of the HOA fee, what is that added up to?

And so as that goes up, it could creep up to 50% of your income is going toward this house,

which is then going to be hard to invest for the future, hard to live your life.

Are you feeling that pain right now?

I'm pretty frugal.

I try to save as much as I can, but I'm definitely concerned about the future,

especially as the HOA fee creeps up to $600 by 2025, potentially.

Once you put numbers to it and you add this into your budget, the extra, you know,

$50 a month they're going to start charging is not going to crush you.

That's $600 a year.

Correct?

Correct.

So it's not fun to pay the extra $600 a year, then $800 a year.

But it's not worth, let's go ahead and sell the condo today,

because you might have to deal with more HOA fees and higher HOA fees elsewhere

if you went and sold and bought another property, especially in the Boston area,

because my brother's got a condo in the Boston area, and he knows this life well.

These are some old condos that have not been taken care of very well.

So, Jack, if I'm in your shoes, I'm going to hold off is what I'm telling you right now.

It's not worth it to save $600 a year.

I would rather you go make more money.

So how can we get your income up to where this isn't as big of an issue?

What are you doing for work?

after taxes, but I gross about $80K a year.

The company is kind of going through a restructure,

so I might be at that salary for a little bit longer.

And to George's point, at this season of your life, that gig, you know,

the gig economy right now where people are using their professional skill set,

which you have plenty, to make money on the side, you know, contract labor.

Look, you know, that's the way you get more margin right now.

And if you want more margin, go get it.

You know, and you may get to a certain point where you go,

okay, I'll do it for six months, I'll do it for 12 months, I'll do it for 18 months

to save X amount of dollars.

It's not a bad idea if you've got the margin relationally to be able to do it.

you got to also think about the fees that you're going to pay to sell it,

the fees you're going to pay to buy a new condo, moving costs.

So there's a lot of other figures to factor in that I think would outweigh

the extra 600 bucks you're going to pay in the next year.

So down the line, if you want to move because of other reasons, you can move,

but I would stay put for now.

And I agree with you, he should stay, but I think he benefits.

I mean, sure, he's going to pay more in HOA, but then, you know, if he sells it down the road,

I would imagine these improvements are going to help his sales price.

And I'm sure even in the eight years, Jack, you've been there, the condo is appreciated.

Correct?

I like the benefit of the improvements.

If you hold, like George says, I think George is right for every point he makes,

but I'd add that to it. You're going to benefit from that.

You know, think of it as an investment in your resale value.

that's still pretty reasonable for a metro city like Boston.

Incredibly reasonable.

To have your own place.

So you've done this really smart, Jack, and I'm proud of you for living on less than you make.

That's the key to this whole thing.

Do you have any debt?

I just paid off 33 grand over the summer for my student loans.

How does that feel?

Yeah, it was pretty sweet.

You got an emergency fund as well, three to six months?

Are you born and raised or been in the Boston area a long time?

I'm pretty impressed with the lack of accent.

We're chameleons.

We can bring it up when we want to.

Take us to break in Boston.

Bostonian.

Dude, it was wicked sick, dude.

Poppy just smashed one to the Green Monster.

You actually have to know about baseball to finish that, but it was good accent.

That one you got to get for Fenway.

Welcome back to the Ramsey Show.

I'm George Camel, joined by Ken Coleman.

Ken and I are going to be at a brand new event that we've got coming up May 10th and 11th,

right here in Nashville, Tennessee, called Total Money Makeover Weekend.

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I already did that last week, and I'm not going to pitch it again.

So you brought it up, but that's what people want.

Their wives care what they wear.

What if we had a special bonus session, you and I lead it, couples only,

and we kind of help the wives out, and we call it Total Clothing Makeover.

and we will judge their fashion and give them some tips.

Ken, I—

Maybe we start with Deloney.

We could start with Deloney.

We could start with John.

Thank you, James, the producer.

I mean, first of all, would it kill him to dress like a doctor?

The guy doesn't have to make a lot of decisions.

I'll do it next time we're on together, just so you can take shots at it.

We have a good time.

We do.

Who's up next?

That's right.

I know.

But this is a really good one.

I'm excited to get your input.

So then, Ramsey Show question of the day, brought to you by Neighborly, your hub for

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10 years ago, I was destitute and owed $15,000 to the IRS.

I raised my kids by myself with no contribution from my ex-wife.

I followed your teachings, and I'm now debt-free with money in savings and investments.

I'm retired and living very frugally, but I'm terrified of being destitute again.

My weekly grocery budget is, am I reading this right, $35?

I don't use the AC in the summer and won't turn on the heat in the winter.

This is from Billy in Indiana.

He turns it on when it gets below freezing.

I take three minute showers and haven't eaten out in two years.

How do I live without my phobia of being broke again?

Man, this is intense.

But let me just say, destitute, it's a heavy word.

The youngsters don't know what that word means, but it takes down and out to a new level.

I think that him having nothing at all so seared his conscience.

I do, and I think this is therapy.

that is in opposition to the voice of fear.

Because the voice of fear is rooted in tremendous pain, George.

And so you've got to counteract that.

Again, Deloney's not here, but the bottom line is this is a form of OCD.

And OCD is anxiety, and I'm not in any way diagnosing him with OCD,

but I'm saying it feels like he's so obsessed with saving money

that you're talking about $35 a week, not using the air conditioning.

These people do not have thrilling, joyful lives.

And so I would start with, I think Ken's spot on here,

Billy, you need to go to therapy and deal with the past.

And a good start is reading our friend Dr. John Deloney's book,

Own Your Past, Change Your Future, because you're not there anymore.

You're doing well now, and so we tell people to make a budget

and actually look at how much margin you have

and force yourself to go out and eat once a week.

Force yourself to go be generous.

We've found that generosity can unlock something

when it comes to that destitute mindset,

and it will make you have an open hand when it comes to money.

So I would start to give, save, spend in each area.

You're great at saving, and that muscle has been flexed,

but you've got a flat tire when it comes to giving and spending.

So I would increase both of those, force it in your budget.

And the other thing I would do is get people around you.

You sound like you're isolated, like you're living like a recluse.

Start making some community.

Get plugged into a local church.

Hang out with family and friends.

That's going to help you break out of this.

I mean, this is just overcoming the trauma

and then beginning to get the tools to get over it.

But then you've got to take some steps and go,

Okay, what if I spent $150 a week on groceries?

I don't know that that's going to solve it.

We're going to spend $40 this week, $45 the next week,

until you're spending a reasonable amount.

I mean, this sounds like it's affecting your health.

If you're living in a 34-degree house,

eating literal rice and beans, that's frightening.

So, Billy, we're wishing you the best, man,

but you've got to take some steps to knock yourself out of this vortex.

Sorry to hear you're going through that.

All right, let's go to the phones.

Janice is in Orlando.

Janice, welcome to The Ramsey Show.

Hey.

Thank you for taking my call.

Sure.

To give you some background,

well, I'm 58 years old, divorced.

I work full-time.

I have no dad.

Janice, sorry to interrupt you.

Could you maybe adjust your phone?

You sound a bit muffled.

Who's better?

Okay.

So, 58, divorced.

You're working full-time.

No debt.

I have an emergency fund.

I'm currently taking full retirement as well.

The problem is I currently rent out a studio,

and with rents increasing the way they have been,

I'm getting a little nervous,

and I'm wondering if at 58,

is that a good age to maybe purchase a condo?

I don't want to get into a situation where the rents get too high

and I'm not able to pay, basically.

No, it's a reasonable fear.

The right age to buy a home or condo or whatever

is when you're financially able to,

and so I think now is a great time if you have the money

and you can put down the down payment

and you're able to cover this mortgage,

it's no more than a quarter of your take-home pay,

that's how you know you're making a right decision.

But I think you're right.

I would rather you have a fixed cost and pay off that house

so that you can retire with dignity

without these rising costs of rent weighing you down in retirement.

So, how much money do you have saved outside of the emergency fund?

Well, the emergency fund, I have 32.

But you haven't started on the down payment savings?

I would begin there.

How much money can you put away every month for this down payment now?

I have $30,000 in my emergency fund, which may be a little too much.

Total money that I have is the last time I checked,

which was two days ago, $117,000.

$30,000 is liquid, and then the rest is split between a 401k and a Roth.

We need to build up money outside of that with future income,

and so that's what I would do.

Increase your income, put that money aside.

When you're ready, reach out to a Ramsey-trusted real estate agent

at RamseySolutions.com,

and we're wishing you the best with the home ownership journey.

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I'm George Campbell, joined by Ken Coleman.

If you like this show, be sure to check out all the shows on the Ramsey Network,

including the Ken Coleman Show,

which films right next door to The Ramsey Show, which is fun.

And of course, the Smart Money Happy Hour.

I co-host with Rachel Cruz and my YouTube channel.

We're having a good time over there, Ken, breaking records around here.

People are enjoying the YouTube content.

and you obviously are really great for that quick, snippy, you know, entertaining.

I mean, you're just perfect for YouTube.

I'm being serious.

Well, I've got a face for radio,

and I think YouTube is the next best place for people who don't have the face, you know?

You can make it as a YouTuber out there.

I like that.

I'm trying to compliment you.

But I'm just saying, I'm not surprised that the channel's doing great.

I think it's fantastic.

I'm very happy.