Why You Need a Firm Financial Foundation

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'm Ramsey personality, George Campbell, joined by my best friend and best-selling author, Dr. John Deloney. He's in the house, he's ready to help, we both are. So give us a call and let's talk about your life and your money and help you take the right next step, regardless of what's going on in your life.

Thank you. How are you guys?

We're doing well. How are you?

I'm doing really good. My question is, so just give you a little back story. My wife and I are debt free. We're saving up for our fully funded emergency fund right now. And then we plan on to start investing from there to fund our retirement.

Where's that question coming from? It's a question I hear all over the, I mean, I hear that question everywhere and I've actually lost many a night's sleep over that question. Where are you getting it from?

So, you know, I'm, you know, I have some friends and they're talking about, you know, Bitcoin and all these cryptocurrencies, and I'm not going that route, but I don't have a, you know, when they say, well, what about the dollar? I don't really have a good answer or rebuttal as to why dollar is going to, you know, maintain its value over something like cryptocurrency. So I just wanted to get, so. I guess it's coming from, you know, what is trending.

Just kind of in the air. Yeah. I'm going to give you my very primitive answer, and George, who's way smarter on this stuff, will give you a more sophisticated answer. Okay.

Definitely. No, that's, that's super good. All right.

That was my, that was my, uh, my, my, uh, dragons and like swords, answer. What do you think, George?

I fell asleep about three seconds of that. John, I know you did. I was bored too. No, I'm just kidding. That was a really good answer.

Hey, Joseph, I'm going to ask a question on your behalf to George. So is that right? Okay. He's smarter on this stuff than I am. Um, George, I remember doing an event, uh, with Jocko once.

It hurts them financially.

It hurts them significantly. And so my understanding is the world's debt essentially traffics in U S dollars. And so if a group of countries get together, like let's crash the dollar. You can do that. And it may be, uh, maybe to your advantage over a hundred years, but it's going to be ugly, right?

Yeah. And as much debt as we have, we have a lot of friends out there, John. And so they go, Hey, that's my friend. You don't mess with them. Cause they're protecting us.

That was Joseph and George. That was, that was what, ultimately, when I was where Joseph was, I was spinning out, man, I wasn't sleeping for weeks. I was asking everybody all the time. Ultimately, I came to what can I control here? And if it all goes away, if I don't owe anybody anything, then there's not going to be somebody knocking on my door and say, that's mine, right?

Joseph, thank you for a great conversation, man. Hope it helped.

Thank you. Have a good day.

You too, man. This is the Ramsey show. We'll be right back. 888-825-5225..

Hi. Thank you guys, so much for taking my call. I'm really excited to talk to you today.

We are excited to talk to you. How can we help?

Yeah. So my question is that I just started Baby Steps 3 and I'm kind of at a crossroads as far as where I want to live. So right now I'm in a really low cost of living area. My rent is only $9.50 a month outside of Des Moines. I could renew that lease in August and stay there for another year.

All right. Is it just you? Are you single?

Yeah, it's just me.

Okay. And when will you be done with Baby Step 3, when you have that emergency fund?

Um, well, so Baby Step 3 is done. I'm in 3B.

Oh, good. Okay. So you're in 3B and you're saying, Hey, it's going to take, what, six months longer to get the down payment goal for Boise if you move there?

I'm not entirely sure how much longer it would take me. I think six months is probably a good estimate versus where I'm at now. I think it would take me about 16 months. So I guess about 22,, I would say, if I moved to Boise.

Okay. And, uh, do you have a job in Des Moines? that's, that you can, is flexible enough to move to Boise?

Yes. I'm in medical sales, so it shouldn't be too hard to find another position in Boise.

What's in Boise?

Nobody is in Boise. I just took a trip out there before Christmas time and I really, really loved it. I love hiking. I love the Mountain West. Um, and I'm still young.

Yeah. I mean, if I'm in your shoes, I'm moving.

I would be moving this weekend.

Cause, even if you were, I wouldn't tell you to buy a house sight unseen anyway. So move there, rent, get to know the areas, save up that down payment. If it takes six more months, Hey, at least you've been living in your dream city for a year or two, you know?

Yeah, that makes sense. So your advice is, even if it's going to take maybe closer to two years instead of a year and a half, to save up, to move out there.

Yes. And if it's going to take longer than two years, I would begin investing into your retirement plans, 15%.

Okay. Okay. And I'm already doing that. Not quite at 15% yet, but I'm already investing a little bit into retirement.

Great. And this is assuming your income doesn't go up and you don't have any side hustles. And so, if you're feeling that itch, I would work on getting your income up. And in medical sales, that's pretty easy to do if you hustle.

Correct. Yeah. I would have to look exactly at what the, um, going rate is for, for my industry in Boise, but I would imagine it would be a bit higher than where I am now to adjust for the cost of living.

I love it. And the other thing is, you could also get a roommate in Boise. You don't know. And so that could also help free up some margin to throw at the down payment.

True. True. That's true. I hadn't thought about that before.

I had roommates up until I was married and, uh, you know, it's not the most fun you can have, but it's, it wasn't, it wasn't a deal breaker either. And it saved me a whole lot of money that I was able to put toward my financial goals.

Right. 100%. It is nice that I don't have to have a roommate now just because rent is so inexpensive outside of Des Moines, but it definitely could be an option if I moved to Boise sooner.

Yeah. Find some community and get plugged into a church and Facebook groups, and you'll find someone to rent with. I think females renting together very different than males. Males are just gross.

I just, I was just thinking, I bet you were the guy that cleaned up everything and complained about how everybody, nobody, cleaned up anything.

I didn't complain. I was just secretly resentful. There's a difference.

That is true. You just had that smoldering.

I can't stand dishes sitting in a sink. Yeah. I can't stand stuff just sprawled across the coffee table at the end of the night. Just bothers me.

I went to counseling, George, and I was healed, and you can, you can be too.

My OCD can be healed. Thank you for that, John. That's for a different show. Maybe the Dr. John Delaney show.

You should call into my show. Why am I so hard to live with? By George Campbell.

That's my wife calling in with that call. All right. Rhonda's up next in Washington. What's going on? How can we help?

Hi. Hi. I am a 54 year old, recently divorced. Um, and I have an opportunity to start taking my pension, um, a little early. Currently I have.

If it's a lump sum.

Right. Okay. So I can't take a lump. I cannot take a lump sum. That's not eligible on my plan, apparently.

Okay. What's the amount?

Um, it would be like $2,000 a month until I'm 62.. And then at that point it drastically reduces that. It's a level income annuity.

Okay. And why are you wanting to take the early pension? What would the purpose be?

I'm thinking of taking it just to pay off the house early and make sure that I've gotten myself set up better since, um, since I'm on my own now.

How recent was the divorce?

A year ago.

Okay. And has the dust all settled from this?

Um, the house is worth for 420 and I owe 150 on it.

Okay. And what's your income?

Um, I make 175..

Oh, amazing. So either way, you could knock out this mortgage in the next few years.

Um, it would be a struggle, but probably yes.

Okay. And if you wait to take the pension, what is the upside of waiting versus taking it now early?

Um, taking it now early is, the pension doesn't roll to anybody. Like. it's not like I can leave that to my children or anything. So if something happens to me, it's just gone.

But you don't get more if you wait.

Um, I would get my, my monthly payment. It would go to a single annuity for the rest of my life, which would be like $1,900 a month. So it's not really that great of a difference.

Yeah. I'd go ahead and take it then. I mean, 24K a year for the next eight years. That's serious.

Right. Okay.

But I'd have a purpose for the money. And I was just talking to somebody, um, in their fifties recently, just a, a personal family connection and, um, off of the back end of a divorce and the advice I gave them. the same advice I'll give you, which is I can't think of a better place to start being 55 or 56 and suddenly finding yourself in a different marriage situation than you expected to have no house payment, at least that part is okay for the foreseeable future.

Right.

Yes. Was this, was this divorce expected or unexpected?

Um, it was very unexpected.

Okay. So there's going to be a part of your body learning how to redo life in a world where the ground just got pulled out from under you. So it's hard to trust every next step.

No, I haven't.

That's right. Go, get it. You're worth that.

Freedom's around the corner for you, Rhonda. And I want this thing gone in like 18 months. if you're taking this early pension and I think you'll get there and then max out every single contribution you can make to retirement. You have catch up contributions you can make as well. So I'd love to see you build up that nest egg and retire with dignity and then work because you want to instead of because you have to.

So we're humongous, George.

Gigantic. And so bookkeeping can be a lot. And if you're not already, one of the first things we tell people to do, John, is to keep personal and business expenses separate. So create a different business checking account, your personal checking account, keep them separate and then create a regular bookkeeping routine. so you're always on top of tracking expenses, receipts, invoices, all that fun stuff.

Hey, listen, I don't have a lot of friends. It's not a huge secret. But listen, I.

You have a CPA friend.

I do. But before I sent all my stuff to my tax pro, I used Ramsey Solutions as an employee. here. We get it for free. Smart tax.

It's legit. I love it. So here's the deal. A Ramsey trusted tax pro can help if that's your boat. You need that level of support.

Go Strohs.

My husband and I bought our home, our dream home, three years ago. We're scheduled to pay it off this year and we're really excited about that. We'll be completely debt free. But it's really difficult for me to feel a sense of relief, given that our property taxes are really high. So, even though I listen to your show all the time, I don't hear any guidance on property taxes.

Well, it should only make you nervous if you can't afford it. And I know everything's bigger in Texas, and that includes property taxes.

They're pretty brutal there in Texas.

Can you tell us the number?

So the house is worth about $900,000 to $950,000 and we pay $20,000 a year in property taxes.

So what makes you nervous? Are you, are you angry? Are you nervous that y'all are going to not be able to pay the bill? Like, what, what is the, if you're paying off a $900,000 house in three years, y'all have the money?

Yeah, yes, we do. I? just, the idea of paying someone else's mortgage, you know, pretty much every year or buying a new car every year just kind of freaks me out.

Well, what's your household income?

This year is probably going to be around, you guys are going to probably laugh, but around $650,000..

Wow. Don't laugh at all. So this is, this is about anger. This is about how in the world, when it got cold that our, we run out of power and I'm paying this kind of homeowner insurance.

And then I looked at what the home, the property taxes were in Nashville, and then I got really upset.

Yeah. They're pretty low here. I moved from Texas and it was, it's pretty awesome. Not going to lie.

Um, it's like maybe a 10th of that.

Yeah. I mean, how should we think about it in terms of, I don't care how much money?

you make, why would you want to buy a new car? Think about it in terms of all of the other frustrating expenses that you'll always have, because we talk a lot about debt freedom and don't owe anyone anything, and I know people are always like, well, you'll always have property taxes and insurance. I'm like, yes. Number one, that's not debt. And number two, I look at it in terms of ratios.

Or just sell the house and move. But the one thing you can't do is just sit there and stew in it, because you're making yourself crazy and you're making your home a place of tension and your marriage a place of tension. If you got to get out, get out. But otherwise, just say this sucks, but I love this house. I love this neighborhood.

Okay.

I mean, I hate to be that black or white about it, but do you have another option?

No, my husband really loves our house. And every time I mention it, he says, we'll be fine. But I just wanted to know if there are any guideposts around it, because we're still going to be required to spend $20,000. And as the value of the house goes up, it'll just increase over time. And he's considering putting in a pool.

Can I ask you a quick question? And I know some people on Reddit are going to roll their eyes at this question. Did you grow up with very much or not very much?

Not very much.

Okay.

Yeah.

Often, if you don't grow up with very much, the adaption to ratios is very hard.

And we have one car.

Listen, you are, you are choosing to see the world through a lens of scarcity.

You'll forget about the property taxes.

Yeah, man. You look what we get to do. And then, yeah, it's an annoying cost. Living in Texas is very, very expensive. They don't tell you that before on the brochure, before everybody moves there, but it's expensive.

And back to the math, Kim, this is 3% of your gross income is going to cover your property taxes. Let's say, after taxes, it's, it becomes 5%. Well, our parameters, cause you're looking for one is no more than 25% of your take-home pay going towards housing expenses, so you guys are well below that, even when you factor in insurance. And so I would sleep easy at night knowing this home is going to about to be paid off. You're going to free up that level of margin.

$2,000.. We bought it for 600,000..

Boom. Once you pay off this house, just see that money, as we just covered the property taxes.

And become an advocate in your community for lower property taxes. Get involved at the, at the local political level, be a loud voice there. But, but man, just don't haunt your home through, I wish it was different when it's not going to be different. Right. Make a choice and then move on.

Beautifully said. Thanks for the call, Kim. This is The Ramsey Show.

This is The Ramsey Show. I'm John Delaney, joined by my co-host, George, the man camel.

The weird middle name.

I know. We're taking your call on life and money, whatever you got. Let's go out to Orlando, Florida and talk to Caleb. Hey, Caleb, what's up, man?

What's happening?

Good afternoon, guys. Thank you for taking my call. Sure. Big thanks to both of y'all.

Thanks, man. Appreciate that.

So what's up?

Oh, so I'll, uh, a little bit nervous here. So I'll try to keep my thoughts organized. Um, first off, my wife and I have eliminated about $272,000 worth of consumer debt in the past two years.

Two years?

What do you do for a living, man?

I'm a, I'm a lineman. Um, so work on power lines and I've, we've been very blessed. Um, I've had some, some big storms here and there that have, that have paid well and was a major curse on us for a long time because we were spending every bit of it, but, uh, a lifestyle pre-pitcher.

You just made more and spent it all.

Yes.

Yes.

Um, started in the industry making 15, 14, 15 bucks an hour and, uh, got to the point where I was making a little over $50 an hour and felt like financially. we were in the same place. we were at 14 or 15 bucks an hour, just add more stuff.

Sneaks up on you. So how can we help today?

So my big question is, um, we just recently have closed out every line of credit we had. We, we caught a podcast about, uh, making sure that you eliminate those open lines of credit, even if they have a zero balance, cancel them and get them closed out. We have done that. Um, we do not currently own a home, we're renting and we have a piece of property that we owe about $60,000 on. Um, our dream is to finish paying the property off and, uh, eventually build a house.

Have you contacted Churchill mortgage?

I actually did. I spoke with them yesterday and, uh, they, to my surprise, were in the same agreements with our local credit union. Um, they said they do conventional mortgages every day with a zero credit score, but for a construction loan for a new built home, you will not get a construction loan without them being able to see your credit history.

Okay. So what would it look like for you to go the conventional route?

Uh, I mean, I believe we could do it, but we've got, so the piece of property that we've got, we've kind of invested a lot into over the years. Um, it's about 18 total acres. So side development, our work, um, we love the property. So.

I, what's it going to cost to build?

In our area right now, um, to build a very modest, moderate house, we're looking at about 350,000 and that's, that's on the moderate side. And, uh, of course we plan, like I said, to pay the property off, um, we'll have to have more than 20% down to, uh, you know, make sure that our mortgage isn't above 20, 25% of our monthly take-home pay, but it just, I just kind of feel like this is kind of put us in a little bit of a pickle and we're looking, looking for some advice on the right direction to go here.

Man. Well, I'm sorry to hear that. That's a tough one. Construction loans are one of those. They're obviously more rare than the conventional side.

So definitely, definitely possible. Um, but it would definitely take a little while. So I, I used to travel a little bit in this line of work and the income was significantly better than it is now.

So what's the household income today?

Household household based salary right now is right at a hundred thousand. Okay. Um, my wife no longer works, which has been a huge blessing. We've got three kids, that she stays at home and homeschools and, uh, wouldn't change that for the world, but my income still varies significantly. I mean, the past two and a half years.

And your next goal is to pay off this 60K on the land?

That's right. That's our last bet.

And you guys have an emergency fund in place already?

So we are, we're on that step three. We've got, we've got about 7,000.. Um, so, not quite our three to six months. So that's technically, that's what we're focused on right now. And immediately after that, we will focus on the...

And are you renting?

We are currently renting. Yes.

Okay. I would just sit down with your wife tonight, look at the budget and go, what would it look like if we pursued this path over here and we tried to cashflow? We need to get the emergency fund. We want to pay off this land. We want to start saving up.

Right. Okay. So definitely, I guess my biggest question. to add on to that, and I know y'all never suggest opening a line of credit or debt, but both our local credit union, and I don't, I hate you to say it, but Churchill Mortgage even said you may have to open a single line of credit.

In order to qualify for the construction loan, you need to have a version of credit history.

And it's similar if you want to get a, even a conventional mortgage over, I think it's a $765,000 threshold, something like that, becomes a jumbo mortgage, and there's no manual unwriting for that one either. So there is some weird quirks in it.

I think it's outliers like the construction loans, the jumbo loans.

I think it's going to come down to you, man. Like, and what's, what is, it's between you and your, you and your family.

So I, I definitely feel that our, our mindset and our look on our finances is completely different than what it was two and a half years ago. Sure.

I have, I have a hard time telling a lineman who's got three kids at home, who has just, I mean, you are the epitome of, you're, you're the man that I want to parade in front of everybody across the country who tells me and George, you can't do it. And you're a guy who went and got a trade and you got real good at that trade. And you said yes to every opportunity. And you missed a lot of little league games. You missed a lot of home stuff, baby steps.

And you, you told me you paid off 273, 272 in two years.

Two, it's actually to the T, 272, five. And it's been right at two and a half years. And that has been, I mean, that has been grind like never.

You know what you're capable of. And so I'm going, okay, one more year, you could have paid for this whole thing in cash. And so I know it doesn't sound fun to go back to that level of sacrifice. And maybe you do it in four or five, cause you got three kids now and you're down to one income, but I'm telling you, it's possible. There's ways around it.

Good. So I know this is a difficult question. I probably know the answer to it, but I'm wondering if I should file for bankruptcy. Um, I really dug myself a really big hole that I'm having a really hard time getting out of. Um, and I need to know like what are the best steps that I can take to maybe not have to go down that route.

I'm sorry to hear that. And I hate that that's even on the table for you. And I'll tell you upfront, most people that call in asking if they should file, uh, we tell them, no, you can absolutely get out of this. And it's not because we're just like power of positive thinking over here. We have seen people get out of bigger holes, making less money.

So I make just under 95,000 a year. I live in a, um, I actually own my home. I bought a home a few years ago. I am a single mother as well. Um, so my debt between credit cards and personal loans is about 32,000 a year.

Wow.

Okay. Before, before George even talks as of right now, I don't even know the rest of your situation. Bankruptcy is off the table. Okay.

Okay.

Like. we're not even going to think about it. That's not even an option. Okay.

Okay.

If you were told me you were a million dollars in debt and you made 95,000 different conversation, you are going to be good to go. Cool.

Okay.

I know you think I'm crazy. I'm just telling you. You are squared up. You are all good.

You are about the average person that calls into the show, Cynthia. And the reason I say that is because most people that call in, they have about half of their debt and tight, you know, tied up. And so if they make a hundred, they probably have 50 in debt. And when I started this program, I had 40 in debt and I was making 40.. And so it feels even more daunting when you have as much debt as you have income.

Yeah. Um, I'm paying the bare minimum. I did start the snowball method, so I was dumping, you know, some extra money into one loan or credit card at a time. I'm actually paid off one loan. I'm going to be paid off.

What loan is that? I have a long way to go. Is that your smallest one?

It's the smallest one since I really started trying to buckle down and get better.

Okay. And do you live in New York City proper or are you outside of the city?

I'm right outside of the city.

Okay. And you use your car to commute to work?

I do.

Okay.

I do.

What's the car worth?

Um, well, about $17,000 left on here. It's probably less than that.

I would check the Kelley Blue Book private party value just to see what it's worth. Because there's a whole bunch of options you can do before ever thinking about bankruptcy, but one option would be to sell the car in downsize and buy a cash card that you drive around for now. Cause that would free up, you know, a third of your debt right there.

And that car would be embarrassing. You would roll your eyes. People would be like, but I thought you made a bunch of money. And you would say, yeah, I'm just, I'm free now though.

Yeah. Is public transportation an option where you are?

Um, my commute is about an hour to work, so I do need something reliable. I am a single mother. I need to make sure I can get my, you know, my child to learn from school. She's in a lot of extra activities and things. So I do want something that's reliable and safe as well, but downsizing could be an option.

Sure. Well, I'm just saying like the price of a car doesn't have a ton to do with reliability. I drove a $6,000 car and it's more reliable than my wife's luxury SUV. That's in the shop right now. And so I just say that, I say that out of frustration.

I do have my 401k. That's really about it right now.

How much are you putting into that? Percentage, wise?

Um, about 4% of my salary, of my income.

Congratulations. You just got 3,800 bucks back in your life every year. Cause you're going to pause investing while we get out of this debt.

Yeah. I was thinking that I should do that.

So that's going to free up. Get this, you ready for it? You just got to raise $316 a month back in your paycheck.

Yeah, that sounds about right.

And you can now throw to your debt.

All right. Now I'm going to really challenge you. Are you ready?

Okay.

How much are all of these activities that your kid is involved in costing you? Oh, gosh.

So I took a sacrifice and I decided to coach one of the teams so that she could play on it for free. Um, so I'm really not paying much for that.

That's one of the teams. That's one of them. What about the rest?

There is a team that's coming up. It is, it's going to be a little costly.

Okay. So maybe not this time. Cause, I'm going to tell you something.

I look at it as an investment.

It's not, it's not, it's not.

You call this saying, should I file for bankruptcy?

It's the greatest scam on American families. If your kid is not in this soccer team, when they're seven, then they're never going to get to the team when they're 12 and then they're never gonna. It's not an investment. It's blowing up families. And I'm a travel sports kid.

This is true.

I know it's true. I know it's true.

Definitely stressful. So there's not much peace.

And sometimes, when you're a single parent, the idea you carry around that guilt, you carry on that shame, and you, the idea that I would never ever say no to my kid on something they want to do. I can't never do that. I'm telling you, you got to, cause, you can't afford it. But if you buckle down for the next 18, 24 months, you can say yes to everything after that.

More than we should.

Yeah.

Probably. Yeah. I think I've already tried to cut back on that.

I want you to cut back to zero. No more going out to eat. Not until this debt's paid off.

I think, switching the language, Cynthia, from I'm going to try and to. I'm the kind of person who's going to meal plan because I want to get out of debt that badly and bankruptcy will destroy your life. This is not a get out of jail free card. It will implode everything around you. And so I'm telling you, pause investing, cut up the cards, budget.

And FPU. Let's give you a financial piece of courses.

Watch all nine lessons. Have your, have your kids, watch it. Have your kid watch it with you and go, this is the plan mom is on. This is why we can't do travel sports. This is why we're not eating out.

This show is sponsored by better help. This is Deloney, and I'm always railing against social media, especially in the summer, because everyone uploads the highlight reels of their perfect bodies and perfect vacations and perfect kids. And I know they're not real. And I also know that I'm blessed beyond my wildest dreams, but I still find wishing my life was like other people's. And, based on the data, I know this is happening to you too.

Welcome back to the Ramsey show. I'm George Campbell, joined by Dr. John Deloney. If you're enjoying the show, be sure to check out all of the other great shows on the Ramsey network, including the Dr. John Deloney show and my YouTube channel, which you can find by searching George Campbell with a K.

All right, Kelsey writes, we have a family member that is seriously dating someone and will probably get married in the next two years, but they aren't engaged yet. I love it. So good.

There's a lot to unpack right there.

We are seriously dating. They're not engaged. Maybe they'll get married in two years. Probably. That would reduce the seriousness to which they are dating.

Hard, no. No. That's weird.

And by the way, when he gets married, him and your family member start their own family plan. You don't add new, what, man.

If he needs to save 50 bucks per month, there's cheaper cell phone options out there. So if he's still paying and he's then saving 50, he's probably paying upwards of a hundred right now.

Yeah, just don't, just don't. Like. it's from, it's, they discussed this cleanly in Ghostbusters. Don't cross the streams. Everything bad happens when you cross it.

And then it gets weird because they break up, but he's still on the phone plan.

Phone plan. And he just decides, like, you know what? I'm not going to pay anymore. Oh boy. Yeah.

Not worth it.

Never. When they get engaged. No. When they get married, kick her off the plan. They get their own plan.

That was easy. And thanks for that, John.

We should have one of those easy buttons.

They're not going to give that to us. You can't, you can't be trusted with it. First of all, you'd be hitting it all the time for no reason.

All right. Let's go to Savannah in Melbourne before George hurts my feelings anymore.

What's going on in Florida, Savannah?

Hi, thank you so much for taking my call, guys.

Absolutely. How can we help?

So my question is, should I go back to work, and would that be the best way to get our family finances under control? Obviously, I can unpack that.

Sure. So are you staying at home with kids right now?

So I have a one-year-old son and, um, I have a baby on the way. She's due in late May. Woo.

Party. And you're saying I'm going to go back to work right now?

Well, right now would be like after the postpartum period.

Okay. Um, so we're saying like by the fall, you, you might go back to work.

Yes. And so, okay. So I've got birth costs that will be due in a couple of weeks to my midwife. It's about $3,000.. Um, my husband's an airplane mechanic and he makes gross about $56,000 a year.

Hold on, hold the phone. So whose name is on the mortgage?

Uh, well, it's not a mortgage. I just pay my mom.

So it's your mom's mortgage and it's your mom's house.

Uh, we are all on the deed and she bought it cash.

Oh, she bought it cash. There's no mortgage. Both of your names are on the deed. What happens when?

She gives us a really good interest rate because she made up the interest rate.

Oh, my gosh. Wait, I'm so confused. You're paying a fake mortgage payment. Why not just?

Just unzelling her.

Oh, gosh. Okay. That's a story for another day.

This is going to go bad in so many ways.

It means that we can afford to have a home with a, but you don't have a home.

But you don't have a home. You're renting from your mom, but Hey, that's a total conversation. Here's the deal. Your husband has another business that he's like trying to build the business. He's got a baby coming, so he needs to pay for his baby.

The business doesn't make money.

Y'all made a choice to get a midwife. Don't, I don't knock that choice at all. My wife got one. We, I mean, she got one as well, but it's expensive.

I'm very anti-hospital birds.

So you can, but you can, you can have these philosophical points. Like I'm anti, this cool, but that anti cost a lot of money and it doesn't work with insurance.

I will be reimbursed most of it, but it's obviously after the birth and you have to be out that money.

So, yes. So maybe your choices mean you got to go back to work, or maybe your choices mean your husband's going to stop investing in his business and pay for his wife and baby to have, um, you know, to be born, right? There's all. these are just choices.

How much debt do you guys have right now?

So we have $14,000 of debt. Um, and half of that is medical debt for my one-year-old. He was hospitalized. Um, and that's another point that I have is, if I go back to work, then we would have to look at childcare. And so there's a cost to that.

So you guys have good health insurance?

If I have two kids, then we do, luckily.

Okay. And are you going to hit your out of pocket to where this, you know what your limit will be?

Unfortunately, the timing of when my son was hospitalized made it that it started over this year.

Ah, reset.

I was like, oh, now I have to do it again.

That stinks. Okay. So you guys make 56K total per year and you have 14,000 in debt.

Unless my husband decided to pay himself.

Which I would advise him doing.

Yeah. Cause, he has a baby on the way and he's got another baby in the hospital.

So I would pause everything right now and just make minimum payments on your debts and stack up as much cash as you can until baby's here. You and baby are healthy. Then we'll restart the debt snowball. And then we'll look at what it's going to look like. Should we go back to work?

Um, okay. So I was, but I hadn't graduated by that time. And then I was pregnant with my son when I was in school. So the job that I had was. That's like 17 an hour.

That's my, my degree. My first degree was in humanities. It didn't matter.

So you have a degree.

Okay. Yeah, it doesn't matter. You go to the box.

They check in the, some interview process. They go, cool. You have a degree. And what they're really looking for is can Savannah do this job that she applied to do? And, uh, that's your job to prove that to them.

But the other side of it is, and this is something you've been avoiding. You've been avoiding it. And I'm only telling you this because I love you. Okay.

Welcome back to the Ramsey show. I'm George Campbell, joined by Dr. John Deloney. The number to call is 888-825-5225.. Nathan joins us up next in Richmond, Virginia.

Hey, can you guys hear me good?

Yes. Loud and clear.

Awesome. Hey, thanks for having me on the show. A longtime listener. I'm not as good here in the last couple of months, but, uh, I was calling because, um, uh, I think I'm going to be out of debt here soon, whenever I get this, uh, this bonus in May. But I've, uh, I've been out of debt before.

Well, I think this is as much an emotional call as it is financial. I'm going to let John address that. I think you, you don't trust Nathan anymore, because you backslid. And there's some shame and baggage from that. Cause you're like, man, I worked so hard to become debt free.

Yeah, for sure.

That's tough, man.

What. there's something else that here at play here. What is it, Michael?

Nathan, are you with us or Nathan?

I'm sorry, Nathan, you there?

Yes. Sorry.

I read the wrong name on the board. There's something else that play here.

I, I don't know, man. I, uh, you know, we got married. My wife, um, my wife has a job, but she doesn't, she doesn't really make any money. She, she works her own business and she keeps herself afloat. She's a, she's an athlete.

We're new property.

No, no, I, I don't, I don't like loan her any money or give her any money. And she runs her own business and she is really good at her finances. But she, she basically says, you know, you make the money, you pay for the house. You pay for everything that we have here. I'm going to do my best to make sure that I don't pull any money from what's coming in.

I don't think that, Nathan, I don't think that's it. I, I, man, I wish I'd said it out loud first. Um, you sound like a guy who opened his eyes and found himself running parallel lives with his wife.

Well, we, we do really well. I live on 45% of my income, but I'm a, I'm a spender mine. Where's the other 55? we did it the first time. I'm sorry.

Where's the other 55% going?

It's right now. it's going towards the debt. Um, at least 40% of it, I spend one paycheck that pretty much covers us for the month and the other paycheck I allocate to, uh, to what we got going on.

So how much debt do you have versus how much you make?

Uh, I make, uh, $3,600 a paycheck. I don't know what that comes out to. I'm in the military, so I have non-taxed income, but my W-2 is $90,000 a year. Okay. And, uh, I have $56,000 in debt.

What kind of debt is this? If you listed it out?

Um, I have $15,000 on a vehicle that I bought for her after, uh, after her last truck blew up. And then, uh, I have a motorcycle, and then I've got some left on the loan that we took out for the wedding. And then the rest of it is on credit card.

All right. You told us at the beginning of this call, dude, that life just hits you in the mouth. It didn't. Life didn't hit you at all.

It, it, my, uh, my HVAC, my H, well, the wedding, we, we only paid like $7,000..

I'm just saying, you had a wedding, you got a motorcycle, you bought a truck. I mean, you made some choices and then you gave yourself zero margin and then your air conditioner went out.

Well, that's not the timeline, but you know, that's fair. I had to buy the truck or she can't do her job. Whoa, whoa, whoa, what do you mean? you had to buy the motorcycle?

What's her job?

She's a, she is an equestrian athlete. She needs a vehicle to be able to move her horses up and down the country to do her job.

But you said this business does not make money, and, and, and she's.

committed to not pulling from the family finances until you'll get out of debt.

No, it breaks. even. It's net zero. She, she covers herself for her gas.

So it's a hobby. It's a hobby.

It's 100%. It is not a hobby. She is an Olympic level athlete.

I'm not, I'm not trying to diminish her. We're saying her ability. She's amazing. I'm just saying somebody who's it's, it's not making money. So it's not a business.

Um, what was her W-2 this year?

She doesn't, she doesn't make an income.

Therein lies the problem, my friend, you went into debt for a business that doesn't make revenue. And now the, the truck is depreciating and you have no way to pay it. So I think we need to call it what it is.

I do have the money. I understand, but I do have the money to pay for it. But most of the debt that came was because of me. I've got $22,000 on a credit card. She didn't do that.

What was the credit card money spent on?

I spent $16,000 on the HVAC and the rest of it I spent on myself, because I thought I deserved it.

I think we need to have a conversation. Come to Jesus meeting tonight with her and go listen. And if this is not on her, this is on you just as much. And you need to say, I have not done a good job leading this area of finances and this situationship where, like, I've been floating the business and I've been trying to cover our bills. It has not been working.

I can't do that.

Why?

She's been, well, she's an Olympic level athlete. And I make enough money to get out of debt and I am getting out of debt. I'll be out of debt in the next six months.

And what's the say? you're not going to be back in it when she needs a new truck for her business?

I just don't really see what that has to do with, uh, with that. It's not a...

You called in saying, how do I make sure I never go into debt again? And I think we need to get to the root of the problem.

What is the question?

Well, my question is whenever I get out of debt again here in a few months, the problem was, is I had the emergency fund. I was building it up. And then every time I got somewhere around $10,000, only around three months, I had $10,000 and I was like, oh, I want this thing. And that's what I spent my money on. Cause I've never had a savings account.

And so I'm wondering, I'll tell you right now, Nathan, until, until, and dude, listen, George and I are all on team. Nathan. We don't win if you don't win. I want you to win this thing. I want your marriage to be amazing.

I'm not going to tell you to sell the horse, but I will tell you to sell the motorcycle, Nathan. Best wishes to you.

Hey guys, it's Rachel Cruz. When it comes to teaching kids about money, moms tell me all the time, just how overwhelming it can feel to get started. That's why I'm so excited to tell you about Financial Peace Kids. This toolkit was designed to make learning to save, earn, spend, and give money fun for both you and your kids. The best part, it only takes 10 minutes a day.

This is the Ramsey show. I'm George Campbell, joined by Dr. John Deloney. If you're enjoying the show, don't keep it to yourself. Don't hide it under a bushel.

What is a bushel, George?

You know, you don't know the old saying, don't hide it under a bushel. Don't hide your light.

I remember, like the VBS song from when I was a little kid.

That's what I was referencing.

Oh, you don't want to hide it under that either?

Yeah. When people ask me, Hey, why don't you wear hats? I say, don't, you, don't hide this under a bushel. And I point to the hair. They never laugh.

Hi, my husband and I are a little late to the party, but, um,

George is always late to the party.

So you're invited to the party.

Cause he's too busy fixing his hair. Exactly. Okay.

Well, he doesn't hide it under a bushel. That's for sure. So how can we help?

There you go. Well, um, my husband's 67 and I'm 62 and he does not have a retirement plan cause he's self-employed. And I was wondering where we paid off all of our consumer debt and we're just trying to knock out the house now. Um, and I'm just wondering if I should up my contribution to my 401k. I have a, um, a Roth, um, 401k.

Well, who told him that he has no investment options as someone who's self-employed?

Nobody did.

Cause there's tons of investing options, not to kick y'all while you're down.

But the way you phrased that was like, he doesn't have it because he's self-employed. It's like, no, it didn't have it. Cause he didn't save it.

Well, that too.

All right. Good call. How much do you own that mortgage?

Uh, we're down to 178..

Okay. What's the household income?

Uh, about 200..

Wonderful. Okay. And how much are you guys currently investing out of that $200,000 income?

Um, 15% is going into my Roth 401k.

Okay.