There’s No Shortcuts to Financial Freedom

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 Jade Warshaw. I'm joined today by bestselling author Rachel Cruz. Thank you for being here with me today, Rachel.

All right, it's been a good show, it sure is.

All hour. We're going to be taking calls about your life and your money, so give us a call. The number is 888-825-5225. We'll take your call and we will give you our best shot at advice. I think we do a pretty good job, but I guess at the end of the day it's up to you. So let's go straight to the phone lines where we've got Jason from San Jose, California.

All right, thanks for taking my call. The problem that we're having is my wife and I can't decide if we're in baby steps three, four, five or six. And we seem to be moving in and out of those baby steps.

Tell me more.

Well, we make about $320,000, which is our household income. We've got two mortgages, one on our primary home, with about $220,000 left to pay on it. Then we have a rental property that we break even on every month, and we've got about $300,000 left on that. We both save for our retirement and we max that out every year to get the matching contributions.

What's in the money market?

The money market has about $100,000 in there.

Okay, would you say that that's more than six months of expenses?

Oh yeah, definitely definitely.

Yeah, and so you're saying she wants money. on top of that, it sounds like she just wants a little slush fund. So that if you go over budget, it's all good, right?

No, because we do use the Money app and that's working out well.

She just wants to have access to it.

Well, I don't know if it's, yeah, I don't know if it's much access. I just wonder, Jason, because in your head, yeah, there's money there, but it's kind of attributed to whatever may be needed. I think for her, there could be a level of safety of saying, hey. We're going to open up a new account in this money market account and we're labeling it the emergency fund. And we're going to have six months in there. And that's it. That's what it's titled, that's what it's labeled, and that's what it is, and nothing else.

I think it would, but the question is the follow-up question to that is, do we stop the baby steps four, five and six to get the $100,000?

No, because you have the money, you have the money in that money market account, that $100,000 could be it.

Oh, I see.

Is it just because it's the same place where all of your retirement is and where all your investing is? Is that why she's not viewing it as an emergency fund?

That's right, yeah, we've had issues come up, like last year in the rental, we had a flood that we had to deal with. And we went into one of the accounts, we pulled the money out, we paid cash.

We've got peace, right?

Yeah, but then did you go back and replenish that? Because in her head, she's like, Oh, my gosh, we've used that. Is it here? I don't know, I can see what she's saying, because that's how I am.

Is that the emergency fund?

Does that count the emergency fund? Are you adding those together? He's like, No, I'd never add them together for your sanity, and I'm like, thank you.

So you don't think we should slow down on paying off the mortgage early?

No, you have it, no, you have the money.

You have the money, so I would take that. I would take part of that $100,000 that you have in cash or somewhere else. I don't care where. You get it and get a six-month emergency fund in a new account and label it emergency fund. And I think that will ease her tension. I really do. I think that would be, that's what I would do.

I just want to make sure we're covering this because the screen says we can't save up an emergency fund. And is there something we're missing here? Is it just as simple as relabeling this money?

Yeah, it is. It's because she wants in the regular checking savings account that are in the day-to-day operations, she wants to see the savings account be six months. And I'm saying, well, if we want to do that, then we've got to stop on the extra mortgage payments we're making, and we've got to stop on the 401K payment. We've got to stop those other baby steps to rebuild that six-month savings.

Well, I think you guys both have a place where you need to concede a little bit. Because to her, what she wants is I wouldn't keep the emergency fund with the normal checking. And we have Ally where we do all of our savings and then we have chase over here. That has other things. And so I wouldn't keep it with your normal day-to-day funds. But to your point, I mean, we recommend all the time. You can keep it in a money market, or you can keep it in a high-yield savings account. So whatever feels right, but to Rachel's point, you do have that money. And so I think that you guys both have to give a little and take a little. You have to be willing to pull it out of a money market. Because for whatever reason, that's making her feel some type of way and then she's got to be fine with you putting it in someplace else.

We used to say back when cash was the prevalent thing of the emergency fund. And we'd be like, don't put it in the sock drawer where the pizza guy can get it. That's right, kind of that joke that it can't be so accessible, that you just go and you can just get it.

You want to forget about it.

Yes, you want it in a place.-.

We feel really blessed because we don't argue about this, this is just like you never argue about money. We don't have to. And it's just like, what's the best approach? yes.

Yeah, I think for her to know she can get access to it if you guys need it for an emergency number one and number two for her. Just peace of mind that there's extra money over here, it's for this. It's not going to get tied up in some stock deal that you're doing Jason here or that, right?

Now, one quick question now do you pay off your primary first or your rentals first?

Primary.

Primary.

Okay, great. I want the place where you guys lay your head at night to be completely debt-free and peaceful.

Perfect.

Awesome.

Thank you so much.

Yep, thank you for the call. That's a really that's an interesting thing, Rachel. Because I do think that when it comes to savings, you do have to keep it a little bit. It's got to be enough out of reach to where you don't quote accidentally spend it, but at the same time, it's got to be liquid enough to where? If the water heater goes out and you can't cash flow it, you can get to it, so you don't want to invest it.

And you made a good point earlier that, and I don't think this was her from what he was saying. But you also don't want to have a bunch of money so that you can be lazy with your budgeting and you spend more than you make. But it's okay because we got 10 grand over here, we'll just get it. Don't let it be a cushion for your everyday expenses, it's a cushion between you and life when the big stuff happens. That's your emergency fund, not to cover lifestyle.

That's right, this is the Ramsey show.

I've been doing this show for over 30 years and some of the saddest calls I have taken are from situations that are completely preventable.

Yeah, and what's so hard is I feel like one of those, especially the ones that I'm like, Oh, it's terrible. People that call in and their spouse has passed away suddenly and they don't have life insurance. When you have to think through, how am I going to pay my bills? In the middle?-.

How am I going to eat next week? Yeah.

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

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

You're listening to the Ramsey show, I'm Jade Warshaw, next to me is Rachel Cruz, and we're going to be your hosts for the next couple hours. Hey, our month long sale is almost over, so don't wait.

All right.

Next, we've got building a non-anxious life for less than $18.

Hi, how are you? Thank you Rachel and Jayne.

You're welcome. How can we help you?

So my question is, and this is going to go against everything Ramsey has taught. I want to buy a sports car.

Okay, tell us more.

So far, you're not against what Ramsey teaches. Now. Where are you at financially? That might be? Do I, yeah?

He drives a raptor and he's a car guy.

Yeah, yeah, we're not against cars.

He said, But it's a brand new car, and he said, you can't buy a brand new car unless you're a millionaire.

Do you know why we say that?

I've read, I've went through financial peace, and I've done everything.

Right, but do you know why we would say that?

Because it was going to make me in debt. And I know, because I went to the dealership and I started, I got sick out of my brain, I couldn't purchase it.

So wait a minute. Are you trying to buy this brand new car on payments, or are you trying to pay cash for it?

Wait, Jade, can you tell me why you?

Oh, no worries, there's kind of two ways to thinking about it number one, the first thing is, yeah. If you're going to buy a car, for sure, in cash, whether it's brand new or used. Then. The second part of this is what you mentioned, which is Dave would say not to buy a brand new car until you're a baby steps millionaire where your net worth is a million dollars. But the reason for that is because when you drive these brand new vehicles off the lot, they depreciate so quickly.

So my personal financial situation, I mean, so I'm buying.

Yeah, yeah, okay.

Yeah, I know it's very. And they also have a dark horse, which is a little bit cheaper, but they're like $800,000, $900,000..

Okay, so what do you earn every year? What do you earn a year?

So I took a step back this year, I pushed the pedal off the gas, I made $240,000..

Okay.

For.

What's your net worth?

For the past three years.

What's your net worth?

I mean, define net worth like.

It's what you own, minus what you owe.

So think real estate.

Okay.

I owe $180,000.

Okay.

But now the house is worth $740,000.

Okay.

I have $500,000.

Hey Jay, do you have the cash for this?

If you have the cash.

If you have the cash, buy it, you're fine.

I just don't want to use cash.

All we had to hear was the car and the savings. So you're there.

And it's less than half of your annual income, it's less than half of your annual income, so just pay for it. So no, we would not tell you....

But I also have financial responsibilities, so I had. And the reason to buy this car is because I had a divorce. And I was going to therapy and my therapist asked me, When were you the happiest? And I used to have a sports car before my marriage when I got my divorce.

That's bad, that's a bad motivator.

A car is not going to make you happy. Cars are fun. Things are fun, things that we can buy with money are fun, and you might have a bit of happiness for a moment.

Yeah, and the challenge of the emotional side of it. A..J I mean, when your therapist said, When were you the happiest? And you remembered a sports car, it probably wasn't because of the actual car itself. That doesn't bring the monetary value of happiness and joy.

You're still you.

You're still you. And so, yeah, I mean, we're not mad at cars, like we were saying earlier. And yeah, Jade, you walk through all the situations that he needs to have in order to wisely purchase this. And other than that. You guys like, it's a car, it's a car.

I agree with that. It was like, at first it sounded like maybe it was just going to be a fun discussion, but digging deeper, it did feel a little bit more like. It was almost like he was anguishing over it, too, like, should I do it? And it's this.

Yeah.

You know, it's temporary fun, but speaking of temporary fun, I also want to reiterate the fact that, you know, we have a lot of rules and guidelines and guardrails. RACHEL When it comes to money. And sometimes we kind of get a bad rap, people think that we don't know how to do the flip side, which is like, sometimes you do get to have fun. And the whole point of building this foundation is so that you can do things like buy the car that you want to buy and have the home that you can afford and would like to have. And, you know, take the trips that you want to take.

Yes, yes, you know, and you do it with more freedom because you have more control over what's going on financially.

So yeah, aj we're not scrooges.

That's right, that's right.

Yeah, A.J. If you can afford the car, do it, but don't do it. If you think it's going to fill a void and take you back to a place in time when you were happy. There's only one way to financial peace, and that's to walk daily with the Prince of Peace. This is the Ramsey show.

So here's a quick math refresher. There are only 24 hours in a day. So your business needs to streamline tasks that are time suckers and focus on activities that make money. So, to reduce headaches as they scale, smart businesses use Netsuite by Oracle, the number one cloud financial system. Netsuite helps you improve efficiency by bringing all your major business processes into one platform. So, join the more than 37,000 smart businesses like Ramsey Solutions that have done the math and graduated to Netsuite.

This is the Ramsey show. Hey, we're happy to hang out with you guys, taking your calls all afternoon about your life and your money, so give us a call. Anything from budgeting to planning for a vacation to a spouse that just doesn't seem to get it, give us a call.

Hi guys, can you hear me? okay?

Yeah.

It's such an honor to talk to you guys, I have so much respect for you both. I'll get right into it. So I have about $30,000 to $35,000 in debt and I've been working for a company that's a shop. I work in a shop. And they build stuff for some of the different LDS temples and some of the Apple shops around the world, and whatnot.

So, are you applying for other positions in your skillset?

I have been trying to apply for other positions, yes.

Okay, how long does it take and what does it cost to get the license?

It's about 30 hours of class work, and I believe it's about $2,000.

Okay, do you have any money saved?

I just have $1,000.

Okay, so you're in baby step one?

Yes.

And how long does that take to get the license?

It's a 30-day class.

Okay, well, it sounds well worth the investment. I mean, you'll be making $11 or more at an hour for two grand. So there's a part of me, yeah, probably that. I may pause the debt snowball just for a bit and save up that $2,000. And then go get this license and then start again.

Is it just you or do you have a family?

I have a fiance and her two daughters.

Okay, so you guys aren't married yet? does she have debt as well? and when do you get married?

She does, she has debt, she has about $6,000 in credit card debt and about $15,000 to her parents.

Okay, and when do you guys get married?

We're supposed to be getting married in October.

Okay, and you guys are saving up, paying cash for that. Everything's looking good on that side.

It's probably going to have to be delayed. I kind of want to just do something at the court and maybe delay the ceremony and the party and all that till later.

Because of the debt.

Yes.

I mean, I would definitely talk that over with her because she might have something else planned in her mind. Listen, I like this idea of you getting the license. How quickly will that parlay into you making this income? Because, in essence, you're striking out on your own?

Yes, I'm not sure exactly. So another quick thing is, I took the Ken Coleman assessment and it talked to me about doing stuff. In communication. I feel like I'm really good with communication and talking to people and whatnot.

Okay, well, that's different than the license. So let's solve the immediate problem. The immediate problem is you work in a toxic work environment. Nothing is stopping you from applying for a couple of things and getting set up and getting out of there.

Cutting grass, That's what I've been doing is cutting grass.

Yeah, cutting grass. Keep doing that and maybe take on more clients so that you can get out of this toxic work environment. And I have a feeling that once you get out of that environment, it's going to kind of like, clear the clouds a little bit. Because right now you're in a mode of I just, I got to do something, I got to find something.

And then if there's a real opportunity for, because the communication thing, I think, is a dream idea that you may have to work into. Yeah, but if you're, if. There's a real step, though, partly of of doing some level of contract work with this license, and I'm talking about a realistic step. You've talked to somebody you know that they need that position. You could have, you could be in that position in 60 days after, you know, you save and you take the exam and all of it.

You take a pay cut.

Probably slightly. Yeah, yeah.

And then, like, do add more, more like jobs for my yard.

Yes, that's, yeah, that's what I would do. Yes, because it's not like.

I've been told my whole life I'm not good enough and that I won't be able to like. This is all I can do. And so I'm scared, I'm scared to do something different because I don't know if there's anything I mean with my yard business. I do really well with that.

I think that you're going to shock yourself, I think that you have a unique set of skills that you have to offer. And there's only one parley. And I think that when you get out there, because here's the thing you've been in that toxic environment. That probably hasn't done much for the state of your self-esteem. And I think breaking free of that and literally taking the time to pour into yourself and change that negative talk in your head.

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.

You are listening to the Ramsey show, and hey, thank you for listening to this show. This show is bringing hope to so many people, changing millions of lives. I'm one of those lives and so I just have a special appreciation.

Hello, hi Jade and Rachel, thank you for taking my call.

You bet?

Me and my husband are having a little bit of a disagreement about a job that's coming up. Me and my husband are in baby step 3. So saving up for that three to six-month emergency fund.

Oh, okay.

He says that they're poor.

Did they come to you because they figured you would give them a discount? Have they given any indication that it's like, Oh, they'll probably give us a discount?

Not necessarily, but they know that we're going to be cheaper than a regular contractor is going to come out and do it.

I mean, Brenda, how long would the project take? How long would the project take?

Two to four days, depending on how extensive it is. Once we get into it, if it's worse than we think it is.

And if you did it, that would be the only thing you could work on for the two to four days.

Yes, but it's time that my husband has off anyway, so it's not like we're taking off additional work.

Yeah, I mean, if you feel like you're being taken advantage of, that's one thing for sure, that doesn't feel good ever to anyone. But we also when we talk about giving, you know, there's giving in money, there's giving in time, there's giving in talents. And maybe it's a thing your husband's like, Yeah, I just feel called to help this family and they're in a really rough situation.

I mean, I'll tell you what my husband and I do. Because I'm always the one that's like, let's give this much, and he's like, cool out, like, let's pull back, like, let me look at the numbers. And so what we always do is we agree to pray about it.

Yeah, or maybe it's a time thing, too. That if you guys get into it and it's going to take a day beyond that, that you guys may say, hey, there's a point that we're not going to be able to continue this because of X, Y and Z, and letting them know that up front, have you guys asked their budget at all?

We know they've heard about the Ramsey plan and they agree with it, but we also know that they don't have the money.

Yeah, but did they say that to you guys like, we don't have money to fix this?

Well, not necessarily, but they told us that they might put, like. We said we would need money up front to pay for the materials. And they said, well, if we don't get paid this week, like if our check isn't big enough, we'll just put it on a credit card. And that's when my husband was like, Well, you know, we don't really have to do that much.

Yep, so again, I think.

You know, we didn't put them in this position, they knew about this leak for years and they did nothing about it. Sure could have been a cheaper fix.

Yeah, yeah, so yeah. And again, I think if there are people in your lives that you continue to enable and continue, yeah.

What's the real numbers here? Because you gave us by hour, like, how much money is this equating to?

So if it was my fee, it would be $1,000 to $1,500, not including materials, and we don't upcharge on materials at all. Okay, and if it was my husband's, it would just be $200 flat.

And who covers the materials they do?

They still cover the materials, yes, so it's about $300 in materials, and then an additional $200 for labor, so $500 total.

Okay, so we're talking about the difference between, like, $200 or $1,800??

No $1,500 or $500.

Okay, so it's 1,000..

Because the materials is $300 and it'd be the same either way.

So it's a $1,000 difference. You know, I wouldn't tell you what to do. I mean, I can sit here and be like, Listen, if you guys have the money, do it. But at the same time, you and your husband have to be on the same page, and that's something that Rachel and I can't do for you.

Yeah, if he's having to take PTO and all, yes, I think that there's, yes, wise ways to go about it. But if you're self-employed, he's doing his own thing and he has two days that he has to go and help. I don't know.

I think service is a great way to give.

Yes, and it hurts sometimes more than money. Time is so valuable. Oh yeah, it's so valuable. Oh yeah.

Oh, that's a conundrum. But, you know, I always like to lean a little bit on the side of generosity. I know, I mean, you have to do what you can afford and what makes sense for your family, but yes, generosity is very, very important.

It's a little wordy. I'm glad for what I have.

I'm glad for where I am and I guess at some point maybe there'll be another one.

Yes, there might be another one love, it might be a generosity, one coming down the pipeline. But yeah, the kids books, they've been fun. Yeah, I can't wait for that.

That's excellent. So we're taking your calls. You can give us a call. the number is 888-825-5225 and we'll hook you up with our best advice. All right, we've got Jenny.

Hey guys, thank you so much for taking my call. So my husband and I need help. We were on baby step 3, but then we bought a house, so now we're back to baby step 1. And our key question is, should we sell our home that we bought a year ago or sell one of the cards that we have fully paid off?

Help me understand a little bit of what happened here because you were in baby step 3.

Yeah, so as far as the car, we only had one at the time and we needed a second vehicle.

Okay, so then let's talk about this mortgage. So you said, sometimes it's 25, but it could be as much as 50. Tell us about the work and why it's fluctuating, such.

Correct, Yes, so my husband, he is self-employed. I am on a fixed income, but I also can get a little bit more income here and there because I have a license to sell real estate. So there are some months where we make about $11,000, other months we make about $6,000..

Yeah, I mean, honestly, Jenny, this kind of sounds just like the stereotypical lifestyle creep scenario. I mean, you guys were fine. Yes, you're a one-car family, but everything was going. —.I mean, you had money in the bank, you didn't have debts.

Yes, that's correct.

So that's probably going to mean going back in lifestyle, because that's really the only way that this is going to be fixed. I think, I mean, yeah, you guys can continue to try to up your income, for sure. But this $10,000 in credit card debt, a car loan. I mean, all of this is it's continuing to hang around your neck. So I'm wondering, yeah, if you guys just rushed into the house?

Yeah, I do feel like we rushed into it because before we were renting and our lease was coming up to an end, so we were considering renting again. But we wanted to see if we could qualify for the home and we did. But we actually ended up using Now payment assistance, so I was running the numbers on our house. And conservatively. It's worth around $310,000 right now because we bought it last year and we owe about $295,000 in the loan. As well as DPA, which would be close to $12,000..

Okay, and no savings right now.

No, not at this time, okay?

Yeah, I think that the pattern here is an opportunity presents itself and we take it regardless of if we can afford it or not. Because the truth is, you couldn't afford to get this house if you had down payment assistance.

Yeah, and people get mad at our house formula, but you guys, this is exactly why? Because the bank doesn't care, the bank is going to give you any amount of money. Basically is what it feels like, way overextended. And then people take it. And this is not me yelling at you, Jenny, but just in general, this is what happens. You go sit in the office and they're like, Well, look, this is how much?

We actually, so we have two cars, one is paid off and the other one has a loan, but the vehicle that's paid off. It's worth around $18,000 to $20,000, according to Kelly Blue Book. So I guess, should we sell that vehicle that is paid off and just kind of liquidate the money that we have there?

You owe $10,000 on the car with the loan.

Yes.

And then what would it sell for?

That car, that one, ranges maybe around $8,000 to $10,000.

So you'd break even on that one.

Potentially, yes.

Like, if you sold it for $10,000, you owe $10,000, so it would just be a break even.

Right, yeah, and that monthly payment is $209,000..

But you're saying, if you sold the paid off car, you'd get $18,000.

Yes, $18,000 to $20,000.

So then you could pay off the existing car and then pay off the IRS.

Yes.

I might do that.

Okay, yeah, obviously it's in good condition. The biggest bang for your buck right now, yeah, is what you want, okay.

This is the Ramsey show.

With so many health insurance options and so much fine print, you need to work with someone you can really trust. Health Trust Financial has partnered with Ramsey for 20 years, saving our fans money and hassles with the right coverage and great service. Health Trust Financial works for you, not the insurance company, and they're the only health insurance company Ramsey recommends. Go to healthtrustfinancial..com.

You are listening to the Ramsey show I'm Jade Warshaw, joined by Rachel Cruz. We're taking calls about your life, what's going on with your money all hour long, so feel free to chime in. The number is 888-825-5225..

Yeah, Andy says. I recently found several debit card options that give customers 1 return on how much money that you spend. It sounds like a good alternative to using credit cards, since I would still get rewards, but I avoid going into debt. What are your thoughts on this? Yeah, I mean, if it's a debit card, I'm all about it. There are some banks that are trying to be competitive in this space and do more of this. So you may see more and more of it come out.

I agree. I think if it is your motivation to change, then you might be the one that gets caught overspending. To get the 1, I'm like, 1, thank you, but next spend $500, you get $5 back.

You're like, Oh my God, I spent that on mozzarella sticks at Sonic. It's just not exciting, it's just not really going to change your life.

Yeah, sorry about that. Do what you will.

Yeah, they make you feel like it, though, don't they? I mean, they're like, Cash back 1. You're like, you actually do the math, and you're like, Oh my god, okay.

You got to spend a lot to get a very, very, very little bit. Yeah, yeah, it's probably not for me. All right, let's talk to you. Sorry, Andy in Kentucky.

Oh, not much, I'm just having a good morning up here. Things are starting to warm up in Alaska.

Yay, I'm happy for you. Is it the light season or the dark? When does the dark season end?

It's the light season, so this is when everything happens, everybody wakes up and gets out and about.

I love that for you. How can we help today?

Well, I used to have an airplane, and that's kind of typical of Alaskans, we buy airplanes, like maybe Californians buy Teslas.

Is it like the kind that can land on the water?

It was capable of that. But no, I never owned a float plane. It was a standard wheel plane. it had skis and stuff for wintertime, but no, it wasn't a float plane.

So you sold it?

Yeah, so I sold it, I kind of lost interest in it. We've had two children since I bought it. I actually sold it for more than I bought it for, which is kind of insane. Planes appreciate, maybe classic cars, I guess.

What did you sell it for? Can we ask?

I sold it for $135, which is quite a bit more than I bought it for in five years. So I'm planning on paying taxes on that, so I'm setting that aside. But I'm guessing probably I'll end up with like $120 free and clear after that, according to my tax guy. Okay, so I'm trying to decide what to do with the money.

Listen, I hope that my first thought, let me tell you, my first thought is you bought the plane and you lost interest. I would hate for you to invest in commercial fishing in the first interest. But that's just me off the top. So let's get a picture of the rest of your finances. What else is going on with your money?

Yeah, sure, so we have no debt, except for our mortgage.

Cool, And how much do you guys owe on the mortgage?

$350.

Okay.

Yeah, so my wife has two options for her job, kind of standard 401K, and then she also invests in a 457B, and then I have a 403B with my job.

Okay, and how much is it going to take to get into this commercial fishing? So I have the boat already.

It needs a little bit of work. The permit, it's a limited entry permit system. There's only about 1,800 permits in this area of Alaska, so it does fluctuate based on the market right now. Two years ago, permits were $260,000..

How does that make you feel that you're investing? Like, how often does the season fluctuate?

Oh, all the time. In 2005, my dad and I bought in when I was a little kid, and we bought a permit for $35,000. So it can definitely go up and down. So you kind of have to take a step back and look at 10-year timelines in the last 10 years.

How long is the permit good for?

I'm sorry.

How long is the permit good? For how many years?

It's a limited entry, so when you buy, you own it, it's yours.

Okay, so the one that you guys bought back in the day for $35,000, that's just your dad's like, you're not still on it.

Yeah, he sold it two years later for $80,000. So that kind of is an example of the crazy fluctuations. And I've been waiting for a long time to invest back into this fishery, but it's all about timing.

And are you wanting to do this, Cameron full-time?

No, it's a one-month kind of commitment. At the end of June, I'm actually going out there June 20th to fish with my family, and usually you get done around July 12th. And what can you make?

What can you earn in that one month?

Oh boy.

Not the record, like, what's the normal?

No, absolutely, I would say. The average is maybe $50,000 to $70,000 in that month.

That's an average, so it would take you, you know?

Like a 10-year average, I would say, yeah, but there are years where it's zero.

Yeah, and this would just be on the side. Like this doesn't affect your full-time job or anything like that, like you could get time off to do this.

Oh yeah.

Okay.

Well, you know, they just announced this price increase this year because last year was really rough. We only got 50 cents a pound for salmon. And then this year because they wanted to convince fishermen to come back, because it was such a terrible year. Last year they put it at $1, so the permit price is shot back up to about $170..

Did I hear you say? $130?

$130, Yeah, yeah, $130. It went from $130 to probably about. It's probably around $150, $170 right now, but there are no permits available. Everyone bought back in when they heard the price increase.

Well, here's the thing you've got $120 to work with, and so I'm not taking on debt to do this. If you could get it for $120, I'd probably do it. And if your wife agrees, that's a big caveat to all of this.

By doing something your family's done for decades. Yeah, if you and your wife are on the same page, we're good with it. You pay cash for it.

You are listening to the Ramsey show? I'm so glad you're here with us. I'm Jade Warshaw. Joined by Rachel Cruz, best-selling author, host of Smart Money, Happy Hour and the Rachel Cruz Show. Hey guys, I'm so excited.

It was so good, it was such a great weekend. To the point, jade, that we put the tickets on sale for next year there, and they almost completely sold out just at the event.

Just at the event.

So the majority of the people coming were people that were returning. Yeah, and so then the Fall event sold out. We have one in October, and tickets are already gone, they're already gone.

I hope.

Rachel, Can I come back on this one? We're going to invite you back. Yay. And it was such a great weekend. And I think the mindset, too, of just getting away.

One of the things I loved about the event, because I was there just as a spectator. I got to do my little thing for a moment, but I watched. And you guys are so open, there's no holds barred. All the conversation is very real.

No fluff zone here.

All right, I'm excited. All right, let's go to Mike. He's in Pittsburgh, Pennsylvania.

Hey ladies, how are you? Good afternoon.

Great. How can we help?

Good, hey, I got a quick question for you, and that is simply, how do we, my wife and I, bridge the gap to retirement? So, maybe different than some of your callers. 49 50 years old became debt-free at the age of 32. So kudos to my wife for pushing us to get to that point.

So my first question before we, like, get into those numbers is okay. So you want to leave your jobs and not do that grind? But you're going to do something to bring in money at a less intense pace.

Yeah, so here's a funny thing. Over Covid, I developed, we created a little ice cream shack from the ground up. That ice cream stand is pretty much self-sustaining. We do about $150,000 a year in sales, which is open five months out of the year. It's somewhat profitable, but also designed in the aspect of being able, hopefully, to break even that we can shuffle money to.

Sorry, can I just clarify, that's top line, that's not profit, yeah.

No, that's correct. no, you're 100 correct. That is $150,000 in sales. That is not top line. It is being managed by a manager, our employees, and again, small operation, but still pretty productive.

What does it bring you for cash? What does it bring you in cash?

That's a great question. We are right now, with pretty much hands-off filling in here and there, we're roughly $30,000 to $50,000 a year.

Okay, okay, sorry to break in, I just wanted to clarify that.

That's a fun little thing, just to start in Covid and make an extra $50,000 a year.

I know, right?

Well, the fact of the matter is, that's when online shopping became rampant, and our kids found out about online shopping. And we were like, hey, if you want to learn what a dollar is, let's make you work for it. So they work, we pay them a handsome little salary because it's a great way for us to shuffle money out of the business. To them. Number one.

That's great, so let's just spitball this. Pretend that you and your wife walk away from your $300,000 income, you're taking $50,000, hopefully a year. From this ice cream shop. Is there anything else that you'd be doing?

Yeah, it's a great question. And our neck of the woods cost of living is relatively dirt cheap. Being debt-free ultimately helps us do that. What else would I be doing golfing and whatnot?

But do you have investments set aside for that?

Small amounts, I think they each only have maybe $30,000, $35,000..

How much do you have in non-retirement? Mike? You said you had a vanguard that you could get to. You said a million in that.

Yeah, there's about a million in that and about $154,000 in emergency.

Okay, is the $154,000??

It's in my local bank money market account.

Okay, I'm just thinking, numbers-wise, that's a really hefty emergency fund. Would you agree? Yeah, so you could lower that.

I don't disagree, but how we've worked our lives is we lived off of one salary, we lived off of her salary. My salary went into. And once it got into the checking account, bank account, once it got to a certain level, we just simply clicked transfer and moved it to Vanguard.

Gotcha.

Transfer move to vanguard.

So, yeah, I would be looking at kids college, for sure. I mean, the Vanguard accounts that you guys have. I mean, you need $750,000 for just your lifestyle of 75. That doesn't include anything that this ice cream shop is bringing in, so it would be even less than that.

Do you know what your rate of return has been?

We've actually done pretty decent so out of the $2.1 million year-to-date. So you can do the math for me because I'm not that smart. We have captured, I think, $85,000 in returns from January through the end of April.

So, okay, what I would do? Sorry, Rachel. That's a combination of both 401K and personal, though. Here's the thing like, initially.

Because you can't touch the 401k or Roths, really until 59 and a half. So yeah, you guys have about 10 years that you'll need to float. And, like Jade's saying, not touching the principal, that was my question.

How do we bridge this gap?

Yes, so I mean, it would be either using the earnings off of the vanguard, or it would be, I mean, you could dip into the Vanguard if you really wanted to. But I also think, Mike, you guys, I mean, golf and all that, it is so great and fun and all of it. But I do think that you guys may get three years into it and just be like, let's start something else. Like, let's find another way to spend time and bring in some money too. So I think you don't have to go from corporate 40 hour a week crazy job to nothing. Kind of like what Jade was saying.

To make $25,000.

That's right, yeah. To bridge that gap until you guys can hit that retirement age to really access then the rest of this money.

I love that idea, Rachel. Just take a nice vacation, break a hiatus if you will, yeah.

Do a year 18 months.

Yeah, that's great. And then get a side hustle making 25k a year and you don't have to touch that money. This is the Ramsey show.

Hi, good afternoon, I need your help specifically to find out. What do we sell or liquidate to purchase our retirement home? My husband and I are both federal retirees. I've been retired for about a year.

What kind of debt is it?

Excuse me.

What kind of debt is the $15,000?

My husband just bought a 2024 F-250.

Can you just reach over and pull some of that cash somewhere? Do you have anything liquid that you can pay it off with?

We do, and he said he wanted to keep it for the gap insurance, something about getting a loan to ensure that it had gap insurance. In case it got into an accident or something that would cover the value of the truck.

I don't see what one has to do with the other, but what's your main question?

I want to buy a $700,000 retirement home and we have two homes, we're going to sell one. It's worth about $280,000. Okay, and then we need to find or free up $420,000 because my husband does not want to hold a mortgage.

You said you had two properties, is that right, Kate?

Yes, we have two, we're living in one, it's worth about $280,000, We're going to move into the other one, it's also worth about $280,000..

Okay.

We've just renovated it, we're going to move into it and then update this one and sell it.

So when you sell whichever one, what are you going to clear on it?

We're going to clear $280,000.

$280,000.

$420,000.

Okay.

But will you sell the other property, too?

My husband really wants to keep that for retirement for when we're 80. And it's a much smaller property, it's 1,100 square feet and it's in a great area. It was the worst house on a nice block.

So why don't y'all just move there now?

We are, we're moving there next week.

I know, but why are you wanting to buy a $700,000 home?

I want a larger home, it's a small home, but I want a larger home with room and I want a pool.

How are you going to be splitting your time?

What do you mean splitting our time?

Is it like, I'm splitting half of my time in this great $700,000 home? Maybe it's on a lake or whatever? And then I live here part of the time because I just can't see the point of having two personal residences.

We will be either renting it out, renting out the smaller home, the 1,100 square foot we're going to rent it out, or brbo it. One or the other. Okay, once we find the $700,000 home.

Okay.

We'll move into that full time.

Can you sparse out the 2?

Yep, I have $34,700 in cash.

Okay.

We have 1.

Okay.

11. I have an $11,000 Roth Ira. I don't think I can get to that for another couple of years, though.