There Are No Shortcuts to Financial Responsibility

Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work that they love, and create actual, amazing relationships. I'm your host, Jade Warshaw. I am joined by bestselling author George Camel in the house. Tonight. we're...

Hi. Oh, my God. I don't know whether... I was just thinking this. I don't know if I should be excited that I'm on this show, or if I should be just disappointed,

but here we are.

Yeah. No, thank you guys for just taking my call. I really appreciate it. I am stuck in a little bit of a pickle, and I just... Since I've put in the request to be on the show, I've come up with a couple of different options for myself, but I just want to get y'all's opinion and see what the best option would be.

Yes, that's right.

That's right. And then, so we... Last year, we realized we had a two-year-old, and I took a year off. I was suffering severely from postpartum depression, and we accidentally kind of racked up a lot of money on our credit cards during that time.

Okay.

So now we're stuck at $35,000 on credit cards, and the interest is all the way up to 27% on a couple of them.

Yipes. Okay. Yeah.

Okay. So I had a plan, and you know what they say when you have a plan, right? Throw it out the window, because that is not what's going to happen, let me just say, because we owned our home, we bought our home in 2021, we had about $75,000 of equity in it.

Okay.

So we put it on the market three months ago, and we sold it, and we got the $75,000, and I thought we were going to be, you know, pay off the credit cards, and we're good now.

What did you do? What did I do? I didn't do anything.

So, you know, it happened for a reason, and I believe that God had me—I've been married for five years. I've been with my husband for eight.

Well, tell us what happened.

He accidentally gambled a lot of money, and we lost a lot of money.

How much? All of it?

$25,000, he lost.

So now you've got $15,000.

So now, well, we've paid—I paid off, so I didn't know that it was March Madness. I didn't know that it was going on. He was in a really bad spot. mentally. He's doing a lot better.

Oh, boy. Okay. So let me recap right quick. in case—let me just recap. So you were—you went back to work, you were still making $50,000..

Unfortunately, I was trying to get it consolidated before I paid it off, so I was literally calling debt—I mean, the collection—.

I just want to know, did you get any of it paid off? No. Okay. And have you acquired more debt since then? I want to have a full picture of this.

And the $11,000 of student loans.

And $11,000 of student loans. Any cars?

We have a lease ending next year, but we own our other vehicle.

Okay.

He intentionally gambled this amount of money.

For sure.

He lost control.

Oh, absolutely. I mean, it was 10 days after I lost my job, and his brother and him really talked about, oh, I made $3,500 a night, and he was looking at it like, maybe I can recoup some of her losses.

And that, that right there, that's the problem, because you guys looked at this debt. You keep finding quick ways out. You're like, we have $35,000 of debt. Let's sell the house. We'll take that equity.

And so far, I'm not feeling a lot of responsibility taking on your part or your husband's part. It's been like, well, we had a plan, but then life—no, you chose to do the consolidation. You chose to get that lease. You chose to gamble away $25,000.. And I'm not doing this as a judgment, because I want to beat you up.

Oh, absolutely. And that's, I mean, I definitely, you know, this is why I called him. My husband instantly said, he goes, you know that they're mean, right? And I said, great, we're financially abusing our credit cards. We're financially irresponsible.

And I need help. You guys are treating yourselves— We need to click y'all's heads together. That's right.

Y'all are treating yourselves way worse than we could ever treat you. That's true. We care about your financial future more than you do. We want to see you win. And there's a way out of this.

He's in therapy. He hasn't started any support groups just yet.

Is it helping? I mean, you said that he was gambling March Madness, so it's only been, what, a month?

Yeah.

But this is not the first time this man has gambled.

It isn't. But it's always been, like, maybe $200, $300, and it's always been, like, with me or, like, of my knowledge. But this time, he did it—.

As far as you know.

Yeah, it was a huge betrayal. We're in marriage counseling. We're in individual therapy. We've been—it's been—I'm at this point now because of how long it's been. I've had the time to go through all of the emotions.

women can't win.

We stay home with our babies, and we can't afford it. And then—.

You can win, you can win. You can win. I don't want you making any more excuses. What I want you to— From this point on, I want you to take responsibility, like George said, and we're going to give you a plan to walk out of this. Right now, you're A1, is?

$15,000, you know, that's it. That's all we have left.

$15,000 or $50,000?

Life's not going to just happen to you anymore, you're going to happen to it.

That's exactly right. This is The Ramsey Show.

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

You're listening to The Ramsey Show. I'm your host, Jade Warshaw, joined by George Camel. Hey, the Live Like No One Else cruise is back! Hey, don't call it a comeback. I'm calling it a comeback, George.

down, George. Can't keep us at bay, literally. Hey, that's good, that's good. They should.

have used that in the marketing. They should have. Listen, this is your chance. Don't miss the boat. How about that one?

our system. We have no way to officially pull your credit report to make sure you.

don't have debt. I'll be there doing that. Yeah, that would be fun. I'll be checking.

everybody in. We got some special guests. We've got some cool friends. Stephen Curtis, Chapman, Stephen Bargatze, Nate Bargatze's dad doing magic and comedy, Dean Carter, Carolyn Xavier, another great comedian, Wynn and Phil, songwriters of some of the biggest country hits. you've ever heard, the behind-the-scenes, guys.

love anything cooking-related. Food Network star and wonderful chef. Yeah, apparently she'll be doing some food demonstrations. That's why I'm going. Listen, I'm going because of the locations.

Well, there's more demand. Think about it. In the last five years, how many people have gotten out of debt, got the emergency fund, began investing? So, there's even more demand now. People saying, I wanted to go, now I can go.

know, VIP upgrades are already sold out and the suites are almost sold out too. So, trust me, as someone who worked on cruise ships for 10 years, you need to get these tickets because you want to get the good, good. Get you a room with a balcony, with a window. You know what I'm saying, George? That's what you need.

Jerry, what's going on, buddy?

opportunities. Okay. Where do your parents live? Sorry, go ahead. Where do your parents live?

more expensive and less opportunity, housing-wise? Well, so, Central Valley of California, I'm sure you're probably already aware, housing is somewhat expensive in the state and, you know, we do okay, but we're getting to the point where we're having a tough time making the ends meet. Okay. So, you're.

already there? Yes, ma'am. So, it's a matter of staying there versus moving somewhere that makes more economical sense for you? That is correct. Is this both sets of?

parents? No, sir. My set of parents, or really my mother, she does not live in California, so that makes it easier. Where does she live? In Challengate.

trying to, is the other option. moving by where she is? That's what I'm trying to.

clarify. I see. Well, the option we're considering is either, A, living kind of halfway between her parents and my mother, or just moving where we could get the best income. Where does your mother live? My mother, she lives in.

Denver, Colorado. Oh, boy. Two very high markets. Okay. Here's a, I don't know if.

this is even a possibility, but I'm throwing it out there. Can they move?

closer to wherever you land?

that's where the rub lies. Yeah. What is the nature of their care? Are they?

actually in poor health right now? No, no, no. They're doing great. They are in their 80s, but they're in very good shape for being in their 80s. I don't see.

why you couldn't just move further away and visit when you need to, and if things.

take a turn, you can always reassess. Yeah, yeah. I think that's kind of where we are leaning. I guess, for me, the concern was, you know, let's say we, you know, we take off, we do our thing, and then, you know, her, you know, mom or dad starts going downhill, and so there's the possibility that, you know, my wife might be living, you know, months, hopefully not over a year, but, you know, just taking.

care of them while I'm holding down the fort. Is that the plan that, as they get older, you guys would be primary care providers?

assumption. It's kind of like, yeah, what we thought we would be doing. Well, I.

would definitely, instead of assuming that, I would definitely speak with them because, and find out what they have in place. They might have long-term care insurance. They might have something in place or have an alternate plan, since, you know, they're the people that are in question here. So, I would definitely speak with them and find out, and that way you guys can make a plan together that makes sense. And, honestly, as the caretaker, you guys are, I'm trying to say this delicately, it's your time and resource and effort.

set of variables in there, but.

there for them. So, then I think the next set of conversations, and George, you can jump in here, I think the next set of conversations is you getting with them and saying, here's where we're at. You know, the assumption is that we're going to take care of you guys as you continue to age, and we're happy to do that. But in order for us to do that, it's got to work out for us financially, so that when the time comes for us to retire, we're also, you know, in an.

advantageous position. Yeah, that's. the big caveat here, is I don't want you guys to have your financial goals held back because you're taking care of the parents, and then one day you wake up and go, oh crap, we're still broke, and we had nothing to show for all of our hard work. So, if they have a big nest egg, I'd rather see them get, you know, quality in-home care, if that's the option, but at least roll out all the options, put the conversation, put all the cards on the table, and then make a decision when the time comes versus what could be five.

years from now. Absolutely. Either way, I think that you guys have to get to a place that is sustainable for your lifestyle, for you to be able to live and have a home and take care of yourselves. That's a big, big piece of.

this puzzle.

generations. How old are you, Jerry?

outlook? Do you have debt? Are you doing well? So, we do have debt. Actually, it's so funny, we were doing pretty good on the Ramsey program, but I got a little dumb and I got a car loan.

on. now, I want you guys working the baby steps. Yes, mom and dad, you need to think about what the future holds from them, but A1, Jerry, is you and your wife getting your financial situation in order, and that means paying off this debt, and hey, never get a car loan again. No more car loans! Put your financial mask on first, buddy.

a better punchline next time. That was not that funny. This is the Ramsey Show.

slash Ramsey.

Yes. So, I just finished up baby step number three, which is I did one year of a fully-funded emergency fund, just because I'm a little bit paranoid. So, basically, I'm still step four, step five, done, working on. But what I'm struggling with is step six, paying off my home early. So, essentially, I have $500 a month to play with.

I should do. And you're already investing your 15%, correct, off your gross? Correct. And to my employers, 401k. So, tell us why you're struggling with doing all three simultaneously.

or if they have Roth IRAs, that sort of thing.

Okay. And you're saying, I'd rather invest that extra $500 instead of paying down this 3.25%.

mortgage? Correct. And what would you invest it in? My mortgage payment right now is only $800 a month, and that's including escrow. And what's your income?

27.

invest it into?

Okay. Well, the other piece is, what if we could free up that mortgage payment you're making, or at least most of it, aside from property taxes and insurance? How much is actually going?

to principal and interest out of that payment?

But okay. So, let's imagine you freed up $700 in the next few years by aggressively paying down the mortgage. That's $1,200 you could be investing. That's serious. Right.

that I think you can't factor into an equation is the peace that you feel when you pay off a.

mortgage. Because you just told me you were paranoid to the fact that you have a year of emergency fund, but you're not paranoid about owing $107,000 to a lender who could take away.

your home if something happened. I can see how. that's contradicting, for sure. So, if I'm you,

if you're truly paranoid, then I would want to see you pay off your house super fast.

And if you hated the way it felt, then you could always borrow against it and get a mortgage again, but no one ever does, because they love living in a paid-for home.

Yeah, definitely. I just got to get over the fact that I'm no longer seeing any type of account grow, because what I liked about the emergency fund is I'm seeing that.

account grow. Well, you are seeing it grow. You are seeing it grow. I think people forget, like, every time you pay off your mortgage, that's money back in your pocket. Every time you make payments, it's money back in your pocket.

And even if you're not in a great area, you still could build another $107,000 in equity. Your house isn't going down in value. No. Unless you live in a mobile home.

Do you? Right. I do, actually, yes.

Then your house is going down in value. Then your house is going down in value.

You should have told us that from the jump, Chase. Let's re-talk about this, because, yeah, I don't necessarily like the idea of you staying in a home, in quotes, that's going down in value.

Regardless of pay it off early or not, you need to get out of this mobile home.

And the good news is you've got a bunch of money sitting there. You've got six months of savings that you don't necessarily need. You could put that towards a down payment if you, since you over-saved. Yeah. And in my opinion,

I'm on a good-sized lot, so I could probably sell it for $225,000, $230,000.

So you would walk away with $100,000 in equity?

Oh, yeah, about that or more. And that's the move. If I'm you... By the way, what do you have saved? Tell me how much you had.

In my emergency savings, I have $20,000, but in my retirement accounts, I have $70,000.

So the $20,000, that's your one year of saved expenses?

Yeah, because my expenses is total $1,500 a month, times $12,000, only $18,000.

Then I change my advice. I change my advice. I would not touch that, because I think wherever you're moving to next, $20,000 is probably going to cover you for three to six months.

I've never seen a millionaire say, the key to becoming wealthy was I got in a mobile home and the payment I would have paid, I put into investments. I think you're going to be wealthy and I don't think this strategy is going to have anything to do with it.

Then I think you're going to feel way better about paying off said mortgage, because it's actually going to be a mortgage that actually does go up in value and you can buy in a better neighborhood. Now, what you were saying makes a lot more sense for George and I, but I think that's definitely going to be the move going forward. That was different.

We got there.

All right. Let's try to talk to Sarah real quick. She's in Charleston, South Carolina. What's going on, Sarah?

Hi, I'm doing good. I had a question about whether or not we should save for a house in about two years and buy, or if we should just invest that into our IRA.

Okay. Well, let's find out if you're in the position to do either. Do you guys have any debt?

No. We're on baby step four-ish.

Perfect.

We have no debt at all. We have two fully paid off cars. We have 70K in CDs and thoughts with a high APY. We have 5K in our checking. We have 55K in our savings.

Yeah. So technically you guys are on baby step three B or baby step four. It's up to you. You can do one before the other. If you say, you know what, for now we're going to stop investing and we're just going to save up our down payment.

In between a year and 10.

Okay. Well, that gives you a little bit more time to save up, to see what you can afford. Use the calculator on ramsysolutions.com. How much house can I afford? And start running those numbers to see what you need.

Yeah. The key is, how urgent is this home purchase? You can invest anywhere from zero to 15% while you save up that down payment quickly. That's how to think about it.

Love it. This is the Ramsey Show.

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You're listening to The Ramsey Show. If you've got questions about your money, we've got answers. I'm Jade Warshaw, your host. George Campbell is your host today as well. And if you have a call, if you have a question, you can call in.

Tejas. What's going on, Ashley? Hello. Thank y'all so much. I'm so excited and nervous all at the same time.

What are the vehicles?

So we both owe about $50,000 on our car. So $100,000 total.

Y'all are driving some nice whips.

Yeah. And we've bought new cars every couple of years. We've just rolled a bunch of negative.

equities. If it's over $50,000, it's a whip, Jade. I've learned that.

Yeah. Okay. I'm with it. I'm with it. You said you're high earners.

Yeah. After we pay the IRS their pound of flesh, about $750,000 would be our combined pay.

Mamacita. That's what I'm talking about. What do you guys do for a living?

We're both work and sales and leadership positions.

Very cool.

Well, you're crushing it. You guys are rock stars in that regard. We're hustlers. And the good news is you can get rid of these cars, probably like today. How much do you have in savings?

We had about $300,000.

That's non-retirement, right? That's non-retirement. Sweet.

What are y'all saving for, an apocalypse?

Listen, George, anything can happen.

I guess.

Wouldn't shock me. in Texas. They're always prepared. Well, why don't we pay off the cars today?

Yeah. What's stopping you?

I guess just the fear of not having the cash sitting there. I don't know.

You'll have $200,000 left over and you'll make another $200,000 in the next few months. I know. Where's the sphere of comfort? I think we need to address that.

Well, let's see. What's your monthly budget? What's it take to make your lifestyle tick each month about?

So that's been the fun part about this whole thing is we never really had a budget. We had credit cards and we would just pay them off every month without really even looking at it, which is silly now that I've listened to y'all. But we've gotten rid of all of our credit cards and we actually sat down and made a budget together. And with investing, savings, and giving combined, we can live really, really well for about $28,000 a month, which, if you do-.

I would hope so.

Yeah. That's investing 15% in addition to what the company matches for my husband and is already taking out, and all of that.

What's your mortgage payment?

It's $3,200, and that has our taxes rolled into it. We have a 2.7% interest rate, so super low.

Is it a 15-year or 30-year?

It's a 30-year.

Okay. So honestly, with your mortgage, that's very frugal for what you're earning. If I were you, my goals would be, like George said, I'm paying off these vehicles today, paying off these whips today, like George said.

Thank you, Jen.

Yes, you're welcome. And then, yeah, keep doing your investing, your 15% plus plus. And then my next goal is, what do you owe on the house?

So that was another question I had. We owe about $460,000, $462,000 if I'm being exact. But we could sell it for $1,050,000.. So we have really great equity sitting in this home.

That's awesome.

Do you want to sell it?

A little bit of a remodel. I mean, I love to move, but I don't know that that's always the best choice.

Well, it's not about best. I mean, you guys make great money. You can stay in this house. I don't want to do it just because there's equity there. I want you to move, because you want to move, and it's the right thing for you guys.

Well, that would be. my thing is we could pay cash for a new home and have absolutely zero debt.

Sure. But you could also, if we're going to be real, you could pay off your mortgage this year. That's also true. So to me, that's not the deal breaker of, we could pay cash. Well, you could pay it off in the next year, making $750,000..

Do you have kids?

I do. We have two kids.

Two kids. Okay.

Yep.

Yeah. I mean...

Two kids, four and 14.

I love George's plan. And I endorse that. I co-sign that plan. I think for you guys, the hardest part is you make so much money, it could be easy to get sloppy. Because it's like, it feels like it's easy to clean up a mess because there's a lot of extra cash sitting there.

10 grand of fund money in a line item for you guys. Who knows? But without making that budget, you're going to wake up and go, where did all of our money go? We spent $60,000 on a credit card this month. And that's why I love, you.

Freedom to spend. All right, real quick, let's go to Tommy. He's right here, local in Nashville, Tennessee. What's going on, Tommy?

Hi there. I have two quick questions for you guys. They're not quick, but they could be quick.

Well, we'll make them quick. We got about three or four minutes.

But long story short, I have done the baby steps and I kind of fell off the wagon. So I did the first three and we have no debt and we're a single income household. So the issue kind of is during baby steps two and three, where I have side jobs, my wife's home with the kids and hustling to make it happen. Now that that has happened, and I stopped contributing to my retirement account during that time. That's been a few years now.

What's your income?

I'm not counting on that. About 100 to 105..

Okay. Are the kids in daycare?

No, they're all at home with mommy.

Okay. And what are you investing right now? 15%?

No, so we're not right now.

You can't financially?

So when I do, I have every dollar, so I'm doing all right. But when I am putting all the apps, putting everything into an envelope, I have about five or 600 bucks, which would be about there. But then that always gets consumed. I end up transferring it back from savings at some point.

But if you're investing, that's coming out of your check before you ever see it.

No, no, I'm not investing.

He had paused it to pay off the debt, and now they're realizing they don't feel like they have the margin. Let me ask you this.

There's something eating up this 100 grand.

What's your mortgage payment every month?

About 1,900 something for two grand.

So two grand? That shouldn't be it.

You have some massive expense in your budget that we don't know about.

Because if you don't have daycare.

Yeah, we have no debt, so no daycare. I think the mortgage is the biggest one, but we're going to sit down and get back...

You're probably bringing home, what, six grand a month?

About six grand, yeah.

So where does the other $4,000 go? Even food and insurance, utilities, all that?

It's probably close to 800 to 1,000.

We're not even halfway there.

When you went through your budget, what was the biggest line item besides rent? Because for most people it's daycare or school tuition. If you don't have that, what was your second biggest line item? You should know that off the top of your head. And if you don't, that's where the problem is.

I'm excited.

Let's go. We got Chelsea and Daniel. And let's kind of, before we go, let's kind of like frame this up a little bit. George, set the stage.

This is a segment we've done a few times. I guess we call it pick a side. Is that right, Producer James? So a couple calls in, both of them on the line with a disagreement. Sometimes it's lighthearted.

I'm putting on my referee jersey, my whistle. I'm ready to get into it.

I was thinking more like the judge's robe and tiny gavel. Yeah. Okay.

You went law. I went sports.

I never go sports. I wanted to know that. All right.

Let's check in with Chelsea and Daniel. Can you hear us?

Yes, I can.

All right. Tell us what's going on.

So we disagree with what to do with, specifically, in this case, $80,000.

That makes sense. So you guys are on baby steps four, five, and six. Yes?

Yes.

Okay. Just to confirm. You sounded a little...

I was not a confident. yes. That's okay.

Do you guys have any debt whatsoever?

Our mortgage.

Just the mortgage. Okay. And do you already have three to six months of expenses saved up?

Yes.

Okay. So yeah. So technically you're on baby steps four, five, and six. Are you guys currently investing 15% of your gross income monthly?

I'm going to say yes. I think I'm pretty sure we are. We might be doing more than that.

A little more. Daniel, do you want to add something?

I think she's right. We haven't done the math, but I'm pretty sure it's around that, if not more.

Okay, cool.

And where did the 80K come from?

What do you owe on that mortgage?

That's exactly right. We owe $385,000..

What's your household income?

Easy.

Either way, regardless of what happens. Regardless, if you invest this money or you pay down the house first, you're going to have five to $10 million net worth.

If you just keep doing what you're doing.

Wow.

So, when you put it that way, Daniel's going to get his wish, because your wish is financial security. Chelsea's wish is financial security. And so what we're arguing about is the short term. And truthfully, you guys make 400K. What if we set an aggressive goal to pay down this mortgage?

Yeah.

It's kind of a win-win. Like my concern. there is, like, that's, two years of not investing. No, no, you're investing 15% of $400,000..

Have you plugged that into an investment calculator lately, Daniel?

So we're not saying don't invest and pay off the mortgage. We're saying invest 15% and whatever's left, pay off the mortgage. And I would consider this 80,000 above and beyond your traditional income.

So just a little layout. Go ahead, go ahead.

The point that we disagree on is like, do we take the, like, quote unquote,

extra money, bonuses, R's, and stuff like that, that we get and invest it in the house or invest it in, like index funds or whatever form of stock market stuff?

Based on the way the baby steps work, which is what we teach here, baby steps four, five, and six, you do them simultaneously. But the extra...

Are you getting this every year, this money? A couple times a year, yeah. Okay. So I would just consider it part of your household income. And so I think, to make both of you happy, you can invest 15% of whatever your household income is.

Gotcha. That's a good way to look at it, because it comes every year. It's part of your normal income. It just comes later, basically. So I like that plan.

And can we do some fun math, Daniel, just to give you some peace? Sure. You're 33, right? Let's say you invest just 15%, no more. Everything else goes toward the house, even for the rest of your life.

And that's assuming you never make more money and never invest more than $5,000 a month, which is obviously not going to be the case.

With a 10% return, you're talking $8 million. And you can adjust for inflation and all the nerds can come at me. I'll be okay with $4 million, $5 million, $8 million, $10 million. All that to say, your dream was a million. And I just showed you how, regardless of how you get there, you're going to be much higher than that.

Put that gavel down.

That's it. Judge George has ruled.

Listen, I'm right there with you, but I think I'm just the bailiff in this case.

The verdict is.

Say it. Chelsea. There you go. You are not guilty.

This is The Ramsey Show.

Yes. This is a virtual event, so you can join us wherever you are. And this is really a deep dive on investing. This is something that our fans and audience have been asking for. They're saying, hey, what's Dave's real playbook?

Yeah. I heard Dave talking about this the other week and he said it's going to be like 101, 102, 103, all the way up to 104.. And I think that's great, because people definitely have different areas of interest and they want to go as further than they've ever gone.

It's like working out. You've got to start with the low weights, low reps, and then you get to my level. You're benching 300..

Oh, wow. Okay, George.

No, I can't. I'm trying to get on that level. That's like three George Campbells. We can't do that.

I love this. For the first time, Dave is opening up his personal playbook on investing. You do not want to miss this. You're going to learn how to maximize your 401k and mutual funds. You're going to learn Dave's personal strategy for real estate investing and which investing trends to follow and which ones to avoid.

It's about four hours of content over those two nights.

Listen, I'm going to be there. I'm logging on.

I'll be tuning in as well from inside the room. I'll be there live.

I love it. Let's go to Blake, who's in Louisville, Kentucky. What's going on, Blake?

Hey, thank you guys for taking my call. I've been a longtime listener and I really appreciate it.

Awesome. How can we help today?

So I just had a quick question, and it's kind of a little bit of a debacle for me. We have a van that we had bought, me and my wife, whenever the height of the used vehicle market was insane. People were paying astronomical numbers for used vehicles. I bought it based on the safety of my daughter, who at the time was only eight months old, because the vehicle we had didn't have AC in the rear, but, down to the money, the part of it.

How much was the van?

So the van was $40,000 and we owe $32,115 on it still. Our monthly payment is $585.75..

Well, if it makes sense. So the truck that's paid for that's worth $10,000, is that your daily driver?

No, I actually drive it. I'm fortunate enough to drive a company service truck.

Oh, nice.

Okay, that's good. And what about the trailer?

Side work. The trailer is just something I had upgraded. It's just something I found on Facebook Marketplace years ago.

So you don't need it?

I don't, not necessarily. I mean, I do haul with it every once in a while, but not enough to keep it around.

We'll survive.

And the $15,000, is that your three to six emergency fund, or is that.

So I actually was heavily into sports cars a few years back and I actually sold it because I realized it sat in the garage and it was unrealistic to keep. Yeah. So that was that money and we turned that into our emergency fund and it's... Actually, we're not even able to touch it. So that's very important to us.

What do you mean by that?

Like, we talked to the bank about not being able to.

Oh, okay.

What account is it, in? What kind of account?

It's a savings account.

Okay, just a normal savings account, but with a little bit of lock and key.

Yes, exactly.

Got it.

So you owe $32,000, a little over $32,000 on the van, and you're thinking, hey, if I sell all this, I can clear $27,000.

My thought was to sell the truck, sell the trailer, and then we would be roughly down to $20,000 on the van, and then actually sell it back to the dealership. They would take it off our hands, no questions asked, essentially. And I detail my vehicles like I'm a fiend about it. So they're consistently clean and they love the fact that it's as clean as it is, so they're willing to give me that.

Well, so you're just trying to get out of from being upside down.

Exactly. And I just don't want to sit on it anymore. I have a car that my grandma gave us. It's a, my dad called it an heirloom.

What happened to this whole reliability story you gave to me?

He realized that it's not that big of a deal and that anything with AC will work.

What's your household income here?

So now that my wife stays home, she's two weeks home now to stay at home. Mom, my take home is right at $69,300.. I think it's like $5,800 a month.

Okay. Okay.

So you're $20,000 upside down. Is that what I'm getting?

Yes. Okay. And it's because we put so many miles on the van in such a short amount of time.

So if you sell the trailer and the truck, that only gets you $12,000.

Yes. So if we don't touch the savings, so we have $32,000 on the van. If we take that $12,000 from the truck and the trailer or the $2,500, that'd knock the van down to $20,000..

You're saying you could sell it to the dealer for $20,000?

Roughly, $18,000 to $20,000.

I don't think it's worth getting rid of this thing. I feel like you should just keep it at that point.

Yeah, I'm trying to get out from under it. And I just didn't know if it was worth to keep it or to give it back.

I mean, how quickly could you save up another $5,000?

We're actually, since she's only two weeks into being a stay-at-home mom, we're still trying to figure out how to re-budget everything. Because we lost, let's see here, we lost about $2,000 a month in income.

The only reason that I might vote for you getting out of this is because it's a $40,000 vehicle and you make $69,000.

That's your take-home, right?

Yes, that's my take-home.

So what's your gross on your tax return? Does it say $85,000, $90,000??

Roughly. I would have to go back and look, yes.

Then, you know, it's up to you. You're not out of... You were out of bounds to go into debt for it, but you're not out of bounds to keep it and pay it off. It's up to you. If you're just like, I hate the thought of this thing.

My fear, since you love cars and toys, is that you go out and go, well, we lost that van. It was so reliable. And now this grandma's hooptie's not doing it. So now we got to go get another $50,000 car for reliability.

Well, you need to draw a line in the sand that you're not getting car loans anymore, right?

Nope, we're actually done with that. No, that's why I'm trying to figure out how to get out of this, because I'm at the point, you know, I'm sick and tired of being sick and tired.

I would sell the truck and trailer, use most of the savings to pay this thing down, get rid of the payment, and then decide what you want to do with it. You probably will end up keeping it just because you've already done. The damage is done. The loan is gone. You freed up the $600 that you were paying on it.

George, how often do we get people who have rolled negative equity into vehicles? They end up upside down and it's just they're trying to move heaven and high water to get out of these loans.

My guess is 90% of the callers with car loans are upside down. In this market. Yeah. And it's one of the reasons I hate car loans so much. But the good news is you could sell it.

Well, if you're looking for something to do with your tax return, a lot of y'all are upside down. That's what you could do with it. You could take it, finally, get out of that loan that you've been paying $700 a month for. Just an idea. This is the Ramsey Show.

I want to stay right side up, Jade.

You are listening to the Ramsey Show. Hey, thank you for listening to the Ramsey Show. You know, throughout the duration of the show, whoever we're hosting with, we all go out into the lobby of Ramsey Solutions. There's folks that come to visit from far and wide. We had a lot of folks today from the Minnesota area.

We're not doing a telethon. There's no PBS donation. All we ask is that you do this very easy and free thing, takes you a second.

That's right. Like, subscribe, share. That's all it is. Maybe it's a text message and say, hey, I listened to this podcast today. It was amazing.

It's showtime.

Yeah, we're going to go all the way to Milwaukee, Wisconsin. We got Andrew on the line. What's going on in Wisconsin?

Hey, there. How's it going?

Doing good. How are you?

Good, good. Thank you for my call. Long time listener. First time caller.

Awesome. Well, how can we help today?

So I, best thing I ever did in my life, I bought a duplex when I was 20 years old. This was about 13 years ago. So now I'm trying to figure out, should I leverage or should I pay cash for the next one? I'm not exactly sure. Interest rates going crazy.

Is the first one paid off?

It's $40,000 left.

$40,000 left. Okay. Can you tell us, can you paint us a bigger picture, so we can kind of understand what's going on? So, duplex number one, you owe $40,000.. Duplex number two, what will it cost you?

In the area, looking like $250,000-$250,000 could be the minimum.

Okay. All right. And tell us about the rest of your debt. Do you have any other debt? Car loans?

No debt.

Okay. Personal mortgage?

That's it. That's it.

Are you renting right now? Or do you live in the duplex and rent the other ones out?

I live in the duplex and I rent out the other half.

Got you. So, essentially, you owe $40,000 on your personal mortgage, which also happens to be a duplex. What do you earn? What's your income?

I make about $70,000-$75,000 a year.

And you're asking us, should I pay off this mortgage or should I leverage the equity and go get another one?

Correct. That's my biggest decision right now.

Okay. Well, I can tell you, based on your attitude, you're not going to like what we have to say. Never leverage debt. Never go backwards. Always pay for investment properties with cash.

That was basically me asking you to confirm that.

Yeah. Well, the HELOC is going to put you at risk. That's what you were going to plan on doing, is kind of this BRRRR method. you've probably seen on social media. I'm going to take out the equity I built, the home appreciated in value.