Don’t Be Your Own Worst Enemy!
2024-02-02 01:57:09
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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. Not the fake kind, the real kind. I'm your host, Jade Warshaw, joined by Rachel Cruz, host of The Rachel Cruz Show that you can find on YouTube, also. Smart Money, Happy Hour. Love that.
Also the author of. I'm Glad For What I Have. Listen. The list goes on.
Oh, Jade. It's good to be here with you.
Love it. All right. If you want to talk about your life or your money, you can give us a call. The number is 888-825-5225,. and we will do exactly that.
Let's go straight to the phone lines, where we've got Nicole in San Francisco, California. What's going on, Nicole?
Hi, Jade. Thanks for taking my call.
No problem.
My question is, I live in a very expensive area. Half of my take-home check goes to my rent. I work remotely, so it's kind of ridiculous that I'm staying here, and I'm thinking about moving to Texas.
I see that the new constructions in Texas, they have lower interest rates, like 4.
9% interest rate, whereas the interest rates right now are 7%. And I'm wondering if that's too good to be true. Why are the new construction interest rates so low and attractive, and should it be something that I pursue?
I have heard of new construction being able to offer lower rates. I guess they're eating that cost at some point within the process. I just love that you're looking at your situation and saying, listen, it's too expensive for me to live here. Rather than continue to struggle, I'm going to embrace new opportunities. So I don't think it's too good to be true.
Does your question go further?
No, yeah. I was wondering if there was some sort of trick that they're doing. that I'm not understanding.
Also, it's a big move for me, and it's something that I want to do because I am single, I just live by myself and my dog. And if I were to move to Texas and save money, I'll be able to pay for egg freezing, which is something that my job doesn't help pay for. And it's also something that I was like, I know I don't want to finance it. They have a lot of payment plans for egg freezing. And it's something that if I move to Texas, I could save money, because, I mean, even a mortgage payment is going to be way lower than what I pay for rent right now.
And we're seeing that, Nicole, I mean, like your situation, it's very common, and we're seeing that a lot with people in these like really high priced areas, especially where you are, San Francisco, the Bay Area, I mean, I think it's number one right now in the most expensive places to live. But you look at people in New York and, you know, different places, and we're seeing that people are gravitating, obviously, to places that they can actually have an affordable lifestyle and actually enjoy their money, versus being tax, high, real estate, being insane, and experiencing exactly what you're experiencing. So just know you're not alone in that change, even though that's a big change. You're right. I'm like, when you decide to change locations and states, and it is, I mean, you're uprooting your life.
But I think what you have to realize is you're doing it for a reason, right? You're not necessarily running away from something, right? You're running to the life that you want. And in order to get that and do the things that you want to do, like freeze your eggs and different things, you have to have more margin. And so that means other areas of your life are going to have to look different in order to do that.
And so you're just kind of weighing the pros and cons. And I really applaud you for that. And it's not easy, but it's a reality I think a lot of people are facing.
100%. And here's the thing, even if you get there and you realize, oh, man, whatever they quoted me on the interest rate, it's slightly higher or it's not quite that, it's still a better situation financially. You're still going to get more for your money. You're still going to be able to afford owning a home or getting a place for yourself more easily. So what are you looking to spend?
Can you tell us a little bit about what you're looking to spend? Obviously, having your rent or your mortgage be 50% of your income is just not sustainable long-term. So have you identified a number that puts it at 25% and what you could spend in order to get that?
Yeah. So I was looking at homes around $300,000, which here, I would be $1.5 million.
Yeah. It's crazy. Crazy. Well, good for you, Nicole. Yeah, I think it's great.
And I think builders are feeling a little bit of the pinch of people pulling back. When rates went up, suddenly everyone kind of paused and they're like, I'll just wait to see if rates drop. And then when they drop, they probably will. They're going to fluctuate. We're in an election year.
Things are always kind of up and down. And then when they drop, everybody's going to be out of their works. And I think Jada just drives prices back up. So if anything, the time is to get in now. And you can always refinance later.
But if you're in a good position to buy a home, I'm not saying everyone needs to rush out and buy a home. But I think her, Nicole, is a great example of kind of looking at all your options, being wise. And I think, yeah, homes are not selling, have not sold, at least in the calendar year of 2023, like they were in 22 and 21.. So I think builders are feeling a little bit of that pinch. They're probably wanting some inventory off their hands.
And if they can partner with the bank and all the things and get a lower rate, they're probably doing that to entice people. But obviously, Nicole, do your due diligence. I mean, your home is, for most people, the largest purchase that you make in your lifetime. So don't rush into something. Because I think sometimes, at times, even these new builds, if they go real quick up, they may not be the best quality.
You want to look at quality, look at different areas and all of it. So do your research, because it's a big change and a big purchase. And even, Nicole, what you could do is, since you're moving to a brand new state, you could even rent, which I know you're so tired of renting right now. But you really could for six months to a year, just to be like, OK, is this the part of Texas I want to be in? And because once you buy a home, you're planted there for a bit.
Yeah, and a completely new state, completely new culture. I 100% agree with Rachel in that I would rent for them. And I definitely would not do a long-distance home purchase of like, I wouldn't do that. But, to your point, there are new builders that are offering those kind of incentives on the rate. Because we had callers call in saying, listen, I'm trying to sell my property, and it's hard for me because I'm having to compete with a new builder around the corner who's offering a lower interest.
So that is definitely happening. So just do your due diligence. Do your homework. Don't just jump out there and buy the first thing. you see, that seems right.
Because, I mean, I think it takes a while, Rachel, to really get the feel of a new neighborhood, let alone a new city, let alone a new state. There's a lot on this.
Totally, yes. Yep, absolutely, yeah. And I think, Nicole, too, I do applaud you just for looking at options. Because, Jade, we talk to a lot of people, and they're stuck. I feel like we always pick on California.
It's expensive! Your real estate is high, and it's a high cost of living. So it's an easy place to pick on. But a lot of people, and they're like, well, I'm in California. I'm in California.
I'm in California. This is it. This is it. And you have to realize about anything in life, which, again, I know, uprooting your life is a big deal. So I'm not saying it flippantly.
But I just love the fact that she is taking initiative and saying, hey, I can make choices in my life.
That's right.
And for me to have the kind of life that I want, it's going to require some changes. And so for some of you, maybe it's changing your money habits. For some of you, it's changing location. I mean, I don't know what it looks like for you. But this idea that I have control over my life, and I get to make decisions for myself,
it's powerful. That's right. And remember, it's not just change for the sake of change. It's change to get you where you want to go. You want to be a homeowner.
You want to have more margin in your budget. You want to be able to enjoy your income. So focus on that side instead of focusing on the uncomfortable part, the change, or I may not know anybody. And just think of it as an adventure. You're off on an adventure to create the life you love, in the words of Rachel Cruz.
That's right, Jade.
This is The Ramsey Show.
You're listening to The Ramsey Show. I'm Jade Warshaw. This is Rachel Cruz. And we're taking your calls for the next couple hours about your life and your money. So give us a call.
The number is 888-825-5225.
. And we would be happy to answer any of the questions that you have. In the meantime, The Ramsey Show Question of the Day is brought to you by Neighborly, your hub for home services. Neighborly offers a helpful winter maintenance checklist that you can download for free at Neighborly.com. That would be very helpful for me.
And for the more challenging stuff in and around your home, Neighborly has a local pro to help. Find out more at Neighborly.com slash Ramsey.
And today's question comes from Heather in Wyoming. I'm a stay-at-home mom, and this has been the most stressful, painful past two years of my life, with my husband making horrible financial decisions that left us over $500,000 in debt. He owns a tree service business making $70,000 a year, and is trying to start a mobile mechanic business and has purchased an investment property. We have a $163,000 mortgage on our house. The rent is a total disaster.
that's completely.
. Oh, the rental. I'm sorry. The rental is a total disaster. that's completely gutted.
And we have to make payments every month while earning no income with it and no progress on the repairs. He also bought a brand new truck that we owe now $84,000 on, and $18,000 on a loan on a bobcat for the business, a $20,000 home equity loan that he used to fix up the rental. Oh, and over $5,000 in credit cards. He keeps saying he's working on it, and he is a hard worker, but has put us in a completely impossible situation. that angers me and stresses me out every single day.
I work odd hours because we can't afford child care, nor do I want to give up time with my kids to fix a problem that I did not cause. I feel so stuck and hopeless. All right. Can we just...
Listen, I wrote it all out because I'm trying to track with this.
Okay, Heather, this is not a.
. You shouldn't be this way. She's very bitter. Yes. As we can tell.
Yes. Very resentful, which again... Is valid. Is valid. But they feel like not only different pages financially, but they have been split now, emotionally really severed.
I mean, she wants.
. It sounds like she wants nothing to do... I mean, nothing to do with him. Yeah. Oh, and $5,000 in credit cards.
Yeah. I mean, it is...
Stuck and hopeless.
She is not in a good place, which I get it, Heather. I'm like, yeah, all these decisions were not wise decisions made. That he made decisions without obviously talking to her or working as a team. So what do we do, Heather? What are we going to do?
I'm seeking counsel, number one. I always talk to folks about keeping their money safe, Rachel. It's kind of like an acronym. And the first thing to decide where you're at. So S is for seeking counsel.
If you're noticing trends within your money with your spouse, that you're like, what's going on here? I feel uncomfortable. I feel unsafe financially. I feel like there's something going on. And then you're going to find, listen, if there's things like addiction, abuse, that's the A.
Yeah.
And then F is financial infidelity, which this is getting real close to falling under. And in my opinion, it is because he's going out and spending massive amounts of money without your...
Permit?
Permit.
Well, I'd say permission. Your...
Input. Input, yes. Yeah, without mattering. And then the E of that is you need to evaluate your options. So that's how you go through this.
And I do think that this is a.
. Sometimes people think financial infidelity is like, I'm just hiding money under the mattress or something like that. But I'm like, this is a lot of money. And it sounds like, we don't know Rachel, but it sounds like she has made her objections clear. And it sounds like we could be wrong.
It might be something that he did. And then, after the fact, she was like, well, how could you do that? But even still, you've got, this is... There's financial issues here. But when I look at this, I go, this is a couple who desperately needs to go to therapy.
Like they need help. And...
Yeah. And he's obviously not living in reality. No. And there's people like that, that we talk to. And I hate to pinpoint people, but it's the dreamers.
It's the, oh, I have an idea. And this idea is going to work. Or I have a new idea here. And don't worry, don't worry. This is surely going to...
And it's a level of immaturity to a point when you actually make decisions in those dreams and they don't come to fruition. You have to have reality to say, I can't do this anymore. So there's a safety here, Heather, that I would want for you. Like a point where you're like, I can't keep putting myself... There's a level of danger there in this situation that's endangering my kids and my family.
That is what it is. So that weight that you're feeling is very, very real. And I just want him to wake up to the reality. And I think what's going to have to happen is a third party. You're probably not going to be the one to do it, Heather, sadly.
And I think sometimes.
. That's right. I mean, it's like our spouse... I mean, all of us feel that way with our spouses. There's always that thing that you're like, this, this, or this.
And you can say it and then it ends up being nagging and it's not effective. But when you actually sit down with a third party, usually if it's coming from someone else, it's big in there. But that's it. I'm like the financial issues here are a symptom of where you guys are in your marriage. And again, I don't blame you, Heather, for being angry and bitter.
But what are we going to do with that? We can't just sit in that and continue to be in that cycle. You, Heather, have to then grow and learn. other boundaries you put up now. Is there like, what do you do now?
What are those steps? Yes, that's right. Which is really hard, but that's the situation.
Yeah, that's right. Because something's got to change. And in a situation like this, not to belabor it, but there's very little you can do to control the other party. Like, there's nothing you can do really to control the other party, but you've got to sit down and figure out, okay, what am I, Heather, going to do in order to try to better the situation? I can seek out counsel.
I can put these boundaries in place. But then you've also got to kind of have that point of where you go, okay, where does this just get completely toxic? And that's up to you and, like Rachel said, a third party to decide.
And Jade, we talk all the time about couples staying on the same page, being on the same team, all of this. But there's extreme situations that we talk about a lot. And I mean, Heather may be in one of those. for me, where I'm like, there's a point that you have to protect yourself and your kids, right? Like, if he's going to continue to spend, I mean, hundreds of thousands of dollars, like.
I don't want my name on those. I don't want my name on that.
And if you're headed towards a, I'm not putting this evil on you, but if you're heading towards a point where, like, listen, I don't know if I see us together in the future, the more he racks up, like, I don't want to be any part of that, because if you don't stick together, there's like, I'm looking like, is this part of this going to be on me? No, you know? Yeah.
So, for the time being, Heather, there's probably some hard boundaries I would put up to protect you and the kids. But working on your marriage could solve a lot of this. And then my prayer is that they would get to a point, that they're in agreement and realize, okay, he's not going to do X, Y, and Z. And now, as a team, we have to work together. And if you guys get to that point, Heather, that's where you have to say, all right, we're in this together.
What are we going to do? That's right.
And then it's on both of you to just link arms and get out of it together. Yep.
And that's what we pray for. We don't want this to split couples, but this is the stuff that causes divorce in marriages, right? 100%. If another spouse doesn't want to take the responsibility of the decisions they've made, they're probably not taking responsibility in other parts of the marriage too.
That's such a good point.
So hard.
Such a good point and such a good reminder, man. It's uncomfortable and it is not fun, but have conversations with that person that you're engaged to or even that person that you're dating. And if you've just gotten married, start having these conversations. You've got to know the other person's philosophy on money at the end of the day and not just make assumptions and go, oh, they've got a good job. They probably have it together.
Or they don't seem like they have a lot of debt. Really digging deeper and figuring out and just asking, even when you dream together, Rachel, I know there's times Sam and I will sit together and think about, oh, it would be cool to have a business like that one day. Then take it a level deeper and go, well, to what extremes would you go? I would never take out money for a business, would you? Really ask the questions, find ways to bring money into the conversation so you really understand, in a lot of different facets, what their views are on money.
Because, as we see here, it can really be an issue long term.
Such a tension point. It's a big relational wedge that's caused. So yeah, you're exactly right. And I think, especially when you're dating, engaged, we get this question a lot of, when do I bring up the money? When do I all of it?
We would always encourage to be having hard conversations about everything. And we've talked to people on the show that have been dating for six years and they don't know anything about their partner's financial situation. And they think this or that. I remember being on the show with you one time. We were like, what do they talk about?
I know. So take this stuff seriously, you guys. Don't ask about their 401k on the first date.
That's a little extreme.
Start understanding to be in the same value system with the person you're going to link arms with. But it's a hard one. It reveals a lot.
Listen, I say all the time, if you have babies together, you can share a bank account.
That needs to be it. And both people's opinions should matter. And sometimes it takes some time and many, many conversations and counseling to get to that point. But go through that journey. This is The Ramsey Show.
This is The Ramsey Show. I'm Jade Warshaw. This is Rachel Cruz, to my right. And we're taking your calls. So give us a call.
The number is 888-825-5225 and we'll try to help you out. Let's go straight to the phone lines where we have. Avery in Newport News, Virginia. What's going on, Avery?
Hey, Jade and Rachel. It's so great to talk to you. I can't wait to see you guys in May.
Awesome.
Oh, you're kind of the total, like, you're the total, like, you're the total, like,
money makeover weekend?
Oh, yeah, absolutely. And I'm bringing a friend, too.
Love it.
That's exciting. Ooh, love that. How can we help today?
All right, so here is the situation. My mom always says the strongest thing in the universe is compound interest. My brother always says time in the market beats timing the market every time.
Let's go.
And I thought I was smart enough to time a dip. I had about $21,000 worth in a Fidelity mutual fund in my Roth IRA. And I sold my positions on it back in September. I was going off a bad hunch and have watched the market rally by, like, at least 20% cents. And I've calculated that I missed out on about $4,000 worth of gross.
I'm kicking myself. I still contribute weekly, but that $21,000 is still sitting there in the account. I feel like I've learned my lesson, but what do I do now? Should I buy back in, or should I wait for the rally to end and maybe buy in at a dip?
Listen, I'm glad that you've learned your lesson, and I hope that it sticks. Do you have any debt?
I have no debt.
Okay. Do you have three to six months of expenses saved?
Yes, I do.
Awesome. Listen, I'm getting back in today. And from here on out, I'm adding 15% of my gross income to it every single month.
Okay. Today?
Yeah. How are you feeling? Are your armpits sweating? What's going on?
Yeah, I feel like.
. I don't know if I buy now. I feel like it's so high. If you wait, you're timing the market again.
That means you haven't learned your lesson yet.
Avery. Yeah, okay.
Listen, yeah, because Avery, I think the point, though, is that all of this is long-term, right? So whether you get in today, whether you get in in 30 days, whatever it is, the earlier you get in and you ride this out, again, long-term, we're talking decades here, that's what's important. So $4,000 at the end of when you're 65, it's gonna be a drop in the bucket. Because how old are you now?
I'm 25.
. Yeah.
So, like all of the.
. I mean, it is. If you time it, if Avery of February of 24 is different than Avery in July of 24.. If you wait six months or whatever, it's not absolutely the end of the world, but I think it's more about the principle behind this, right? The idea is that I can't time the market.
It's an election year. We have no clue what's gonna happen. And so, if anything, I'm like, yeah, the lesson is I'm not gonna try to time the market. The lesson is I wanna invest long-term. That's what I'm doing.
So to practice on the principle of the idea is to say, yeah, I'm at a position to start investing, put my money in the market.
Yeah.
Okay. And so even if I buy in today and then it goes down, like, I feel like I'm gonna kick myself again.
Avery, you're not gonna worry about it until you're 65.
How old are you? I just need to trust. It's 24, 25..
Listen, think about it. Okay. If you, I think you're focusing and Rachel tried to lay it out for you and I think she did a beautiful job, but let me take a swing at it. I think you're so focused in whatever rate of return that you're hoping to get immediately or in the next couple of months. But if you look at it, like, I don't know if you're new to the show, but we talk all the time about, oh, you can get, you know, even if you just invest in an S and P 500 account, you're still gonna look at about 10% over time.
Everything is over time. And if you're pulling it out every month or every other month, or when you think the market is dipping, you're not allowing for the rebound that always happens on the other end of that. And you can look over the last 20 years. Even you can just see, listen, the annualized rate of return has been upwards of 10%. And that's what you can count on.
That's why we suggest what we suggest. And that's why everybody invests in these accounts in order to have their retirement.
Avery, I say this in the most loving big sister way that I can, you are going to be your worst enemy. Okay. You're going to be the person that's going to be going on CNBC and watching the ticker at the bottom and saying, oh gosh, oh gosh, Avery, you got, you have to, you have to put the money in and you've got to forget about it. That's what this is. This part of investing is that it is long-term retirement type mentality.
And, and it's going to take some, it's going to take some, uh, restraint from you and your personality. Cause I'm trying to talk you off the ledge and your money's not even in the market.
You know what?
Avery is who really needs a smart investor pro, because one of the things that they will help you do is not freak out.
Talk you off the ledge. Yes, yes, exactly. Yeah. So it is one of those things, Avery, you, I mean, I, I, I, never really, I mean, I watched the market for this job. So, so we know what's going on in the economy, but from a personal standpoint, I'm like, and it kind of sucks for me, Avery, from a personally, cause.
I'm like, I'm such a spender. And when we fund our 401ks and Roths and all the things that we're supposed to do, cause we're smart and we're wise. And we actually do it, Jade, even though it kind of makes me like, because it feels like a black hole. And I'm like, this money is leaving where we could be going on a great vacation this summer with that money. So it does kind of feel like, man, my money's just leaving and I'm never going to see it again.
But you have to have the, you, you have to know that a 65 year old Avery is, is gonna want to live a great life. And, and you're going to have a plenty of money to do that. Avery, if you start investing now and not try to time every little thing, because when you're in that little situation, that's the principle you live by. You're, you're not going to win long-term, because you have to have a long-term mentality.
Yeah. You can't do the, I feel like he's trying to find a way to maybe make this thing happen faster and get rich quick. And I'm like, listen, it doesn't work that way. And if it does, I feel like it's a fluke. And then everybody tries to figure out what it was that they did.
And it's like, listen, just understand. It was just something that happened in a moment. So, ooh, I hope that helps. Let's take another call. Let's go to Haley in Philadelphia.
All right, Haley, what's going on?
Hey guys, thanks for taking my call.
You're welcome.
My question is, I'm wondering if I should sell my car to pay off my student loans, or if I should keep my car, pay it off tomorrow and follow the baby steps to pay off my student loans. Mm-hmm.
Okay. Well, how much do you have saved? And how much is the car bringing if you sell it?
So I have $10,000 saved, and the car value on Kelley Blue Book is $15,000.
Okay. Do you owe anything on the car?
So, yeah, I owe $5,000.
So essentially, you'd be.
And how much.
. Oh, go ahead. How much is your student loans?
I have $17,000 in student loans.
How much do you make a year?
I make $70,000.
Okay. No, I would not sell this car. No. You owe $5,000, throw $5,000 of the $10,000.. I haven't paid off today, and it's gone.
And then you have, yeah, $4,000, keep $1,000 in an emergency fund, take $4,000, throw it at, yeah, the student loans. And gosh, and you got $13,000 left, making $70,000.. You're going to... Yeah, you'll be able to pay off your student loans quick.
Yeah. I love it.
Yeah, I would not sell it.
Okay, perfect. And right now, I'm putting 11% of my take-home pay into my 401k, so I'm assuming I should probably stop that.
Yes, I would pause that. Yep, exactly. So that'll be more money back in your paycheck to throw at this debt, which is awesome. Yeah. I mean, if you had...
Like, we talked to a girl two days ago, me and George did, and she had a SUV BMW. She could sell it for like $70,000.. I mean, it was a pretty big chunk. Oh, wow. She owed some money on it.
She could have paid it off with her.
. All this stuff. Yeah. But I mean, it was an asset that was like, oh my gosh, you could sell it and make something. But no, you...
Yeah, with a $15,000 car, you owe five, you make 70, you're in a great position just to sell it. And you have that $10,000 saved, which is awesome.
Yeah. That's great.
I mean, the reason why I wanted to sell my car to begin with is because I live in Philly, so I don't.
. And I work from home. So I'm literally using my car once a week, and that's when I go see my parents. So that was kind of my train of thought. I mean, it makes sense too.
I mean, I don't feel like it's something that's on fire for you to make that choice right away. I'm with Rachel. If you still owed 15 on it, it might be a different discussion. But the fact that you only owe five and you have the five in your possession, and you still have money to make decent headway on the student loan, I feel like it's something that after you pay off the car and maybe a year from now, if you're like, listen, I never use this car, you might decide to sell it. But for now, sticking with it.
Listen, good job. I'm happy for you. You'll be debt free in no time. This is The Ramsey Show.
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You are listening to The Ramsey Show. I'm Jade Warshaw. This is Rachel Cruz. And let me tell you something. I'm hyped, guys, because we have a great live event coming up in the late spring.
Actually, it's May 10th through 11th. It's the Total Money Makeover Weekend. And listen, I've been here for some really great live events, Rachel. But I think this might be the one that I'm most excited about. It's going to be all the personalities.
It's a whole weekend here in Nashville at our live event center up there, on a beautiful hill, with a beautiful view of Nashville and the surrounding area. And we're just giving you a crash course on the Baby Steps, how to manage your money. I love this event because it's really for anybody, regardless of where you are in the Baby Steps. You could be on Baby Step 1 or Baby Step 7.. Yes.
And you're really going to benefit from being at this event. It's like a rally, Rachel. I'm here for it.
You know, at Ramsey, we've done so many different types of events, like you said. And we try to cover some events. We try to cover your whole life. And we try to do it all. But it is fun to kind of focus in on a subject like money, which, Ramsey's, you know, it's what we talk about most of the time here on the show.
And so to have a whole weekend dedicated to that and really have the time to walk through principles and ideas and motivation and fun. Yeah. George and I are going to do a Smart Money Happy Hour live broadcast the Friday before. I think I'm allowed to say that. Go ahead and say it.
If you didn't, you know, if I wasn't supposed to, sorry. And yeah, there's just some really fun things we're going to be doing. And if you are a fan of the content on this show and others, you're going to love this weekend. It's a really fun.
Listen, I'm excited. I had a meeting yesterday with one of our folks on staff who helps plan the content. And I told her one of my ideas. It's out of the box, Rachel.
Oh, I get it. Jade, you're always good at that. It's going to be fun. You're creative.
So early bird tickets start at $99.
. But remember, it's for a limited time. So go to ramseysolutions.com slash events today, because Rachel and I both know these tickets sell out super fast. And if you want that early bird pricing, you got to do it today or like tomorrow, this weekend. You just got paid.
So go on ahead and do it. It's $99.. Get that now at ramseysolutions.com slash events. That's exciting. Man, after that, I feel like we have to go to the phone lines.
If you want to call in the numbers, 888-825-5225, and we'll try to get to your call. But in the meantime, we have Madison in Tampa, Florida. What's going on, Madison?
Hi, guys. Thanks for taking my call. So I'm just in a predicament. I just found out that I will be terminated from my job that I've been at for almost five years as of July 31st of this year.
Sorry. So sorry. What do you do?
I'm currently a business financial administrator for a sales and marketing company.
I make about $43,000 a year at this job. So I have six months to plan. We're not officially terminated until July 31st. And at that time, we will receive severance, although I don't know how much.
OK.
Keep going.
I was going to say, I don't currently have anything in savings. And I'm worried about what's coming next.
Yeah. So, Madison, the way I would handle this, when we talk to people who are paying off debt, and there's a big life change that they are aware of, most of the time it's a baby, right? They're pregnant, and we call it stork mode. Pause the debt snowball and just pile up money. And I would say the same would be true if someone knows that they're going to relocate and they know that they're going to have some moving expenses.
We'd say, put some of that money aside. And for you, thank God you have six months, which is a gift to at least know that they're not coming in and they're, like, today's, your last day.
Honestly.
So, for now, I would save as much as possible. I would be in that mode of saving, saving, saving. Do you have a lot of debt?
So, I have about $13,000 in debt.
What's it in?
The majority of it, student loans. I just recently got my accounting, my associate's degree in accounting.
OK. So, yeah. So, what I would do, I would be saving, Madison. And then, I mean, I would start looking, what, May-ish and say, hey, I'm going to, or even line up a job sooner than that, and just say, I'm trying to do it now. Would you leave the job?
I always wonder about that. They give you six months.
I mean, if you know it's happening in six months, I would not wait. I personally would not wait to the wire. I'll be honest with you, Madison. I don't know a ton about the financial admin space. Is there a lot of jobs out there?
Is it easy to just kind of go in, apply for something and get it? Or do you feel like, you know, that it could be a couple of months to find something? What do you think? Have you looked? Or do you kind of know the landscape?
So, I don't think there's much as far as the admin side. But I do have a part-time currently with a company called Primerica. And I'm currently getting licensed. I just recently got licensed for life insurance. And I'm currently trying to get licensed for investments.
So, I've been trying to build that. And I am also wondering, so I'm about to receive my tax return that time of year. Yeah. I'm going to receive a nice chunk. I have a 12-year-old, 3-year-old, 2-year-old, and a 1-year-old.
Oh, we didn't get that. Oh, wow.
Okay, good. Okay, so you have four kids. Yep. Yeah.
Yeah. So, you know, I'm going to receive about a little over $10,000 for my tax return. Okay. And I'm wondering what my best steps are to take that.
Save it.
Yeah, save it. Are you married, Madison?
No, I'm not. No, okay. I have a partner. I do have a boyfriend. Okay.
I just didn't know if there was like a dual income situation. Here's the thing.
Yeah, I'm the only.
. Yeah. I'm the breadwinner. Okay.
Don't stick around. What I don't want you to do is stick around, simply to get the severance. Like thinking like, I'm going to do this thing up to the wire to get, especially an unknown amount that you're like, listen, I don't even know how much it is. In this equation, I care more about stability and taking care of the kids. So really lining up something, or at least, listen, start getting options.
It's not to say that you have to take the first job you apply for, but start seeing what's out there. If I'm you, I'm using this as an opportunity to take a step up, find another position that's within my field of knowledge and what I love to do to possibly get a raise and get a higher salary, and really just look at this. I mean, I know it sucks and it hurts. You've been there for five years. But, like Rachel said, it's a gift that you've got six months, and really think of this as the stairstep to the next best thing and the next good thing for you and your family.
And before you get off here, let's connect her with some of the Ken Coleman materials.
The assessment, his book, Proximity Principle would be great too. Yeah. So, Austin, if we can give those to her, that's a great point. Yeah. And Madison, I would be encouraged to, you know, I mean, it's not like you're trying to replace $143,000 position.
$43,000, you can do that. You're smart. You've done this. And you've been with this company for five years. So there is, you know, a part of you that you want to leave.
well. But I don't know why my heart kind of flipped on this, Jay. But when I'm like, oh, you got four kids. All right. We're a single mom.
We got to provide. Now you have to do what's best for Madison. And I think you can leave well and respectfully, but I would be looking for another job because you got to pay your bills. And so, and if you find it and you find a job you love and they need a sooner start date, I would just tell the company, you know, I would give plenty of notice. Yeah.
But do it respectfully. But you have to take care, you have four kids to take care of. So I would do this faster, you know, and again, I hate to say if you're a single person, all that, but you don't have, there's not as much. That's right. It's on you.
You could probably have a level of flexibility to a degree. But when you have dependents in your household, you want to make sure that, that you're well covered. So I would be saving that tax return. I would be saving every penny you can between now and finding a new job.
Well, let's talk about that, Rachel. Okay. So when I was in my day, when, if you left a job, it was like, listen, give, give two weeks notice or more. If you can. Yeah.
Is that still like the running? I think so. Is that still the thing? Two weeks notice.
To me, I feel like that's a respectful, right? And the company, you know, like here at Ramsey, if someone gives her two weeks, they usually don't laugh. They don't stay the whole two weeks. It's like, Hey, let's wrap some stuff up. Cause, once you're done, you're done.
Yes. But if they're in a position of, cause, it sounds like layoffs. So the layoffs, so the company's not in a good position. So if she does have a critical role, I would want to hand that responsibility off. Yes.
To do it well before my area is, is gone or whatever the situation is.
So that will never bite you in the butt.
It's all, you never want to burn bridges. It's very appropriate. I think. Yeah. I think so too.
I'm like, listen, if you can give more, if there's a way to do that, I'm not mad at that.
People give less and I'm like, or two days or whatever.
That's terrible. I know. Or to just walk in and be like, I quit. Like, are you kidding? Listen, you never know.
One thing I've learned, Rachel, is you never know who you'll run into on down the line. Yeah. You know, you get older. Cause the world is small, like it's big, but it's small. And I've always been shocked at the people who have like come back around in my life or vice versa.
And it's kind of funny, because sometimes people want things and I'm like, I know how you were.
I worked with you before.
You know? Yeah.
But Madison too, and anyone out there that has a big change like that, I think, Jade, you said something that I was like, yes, see this as an opportunity of growth. And Ken's book, The Proximity Principle, is really going to help you find that next better thing, right? This is a closed door to open something great. And we want to believe that for you, Madison.
Absolutely. Well, thanks for hanging out with us. Keep hanging out with us. We're going to take more of your calls. Hear from more of you guys coming up next.
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 for this hour, Jade Warshaw, joined by your other host, Rachel Cruz. And we are taking your calls for the next couple of hours on your life, your money, whatever it is that's going on in your financial situation. We'd like to help you with that. So give us a call.
The number is 888-825-5225.
. And we'd be happy to give our two cents. All right, let's go straight to the phone lines. We've got Trevor in Tacoma, Washington. What's going on, Trevor?
Hey, thanks for taking my call.
You bet.
Yes, I had a question. Me and my wife have been paying off debt for the past seven years slowly, but we have two items left, which is our house and my student debt. Last year, I started investing through Fidelity. And within six months, I've put in about $10,000, pretty much from side hustles. And my student debt is around that same amount, $10,000..
It's the last debt I have. I feel like I know the answer. But I'm wondering if I should pull that and pay off the student debt. I haven't made really any money in the stock market, only being in there for six months.
Is it just a brokerage account or is it a retirement account?
I have two. I maxed out last year, and then I've started this year. So in the Roth, I have about $7,500.. And in a just normal brokerage, it's about $1,800..
I would not touch the Roth. It's retirement. And I do not want you to start the habit of, if I need money, I pull it out of my retirement. Now, if you had single stocks laying around, listen, what's in the brokerage is technically up for grabs. It's not a whole lot of money, but it's some money.
What I really want to hammer home, though, is the idea of just stay the course. It sounds like you understood that the plan is for you to pause retirement until you finish paying off debt. But it sounds like, and I relate to this because when you said seven years, everything in my body went, I know about that because it took my husband and I seven and a half years. And it sounds like you kind of got a little bit weary and maybe felt like you were getting behind. And so maybe you started investing.
And I just want to encourage you from this point on, listen, I would stop investing and finish paying off this debt. Like I said, don't touch your retirement, what you put in there already. If you want to pull what's in the brokerage, you can. There's no penalty on that other than maybe a little bit of tax on it.
How much do you guys make a year, Trevor?
We're a single home income. I stay at home and homeschool two kids, and she makes about 70, 70,000..
So you guys have been paying off debt for seven years. What was the debt you guys paid off and how much was it?
It was actually my side. We got married a few years ago and it was all my side debt. And it was, oh, gee, the whole story of me being in the military overseas and my other significant other not paying off that. And it just stacked up, racked up, and it was horrible.
Gotcha. Gotcha. Okay.
We're talking about credit card to repossessed cars.
You guys have been through it, Trevor. I mean, to Jade's point, I'm like seven years. But honestly, so I get the, you know, there's a weariness there where you're just like, oh my gosh. But what you've done, though, so far, which is one of the biggest obstacles for people, is to change what you believe about money, right? There was one set of beliefs that you had overseas in the military that got you, you know, those choices created an outcome that you said, I don't like this outcome.
So you have been working your way right out of this. So I think that one of the biggest, again, hurdles you've overcome, that is, hey, I'm going to look at money differently. But then you get into the details, into the kind of the nitpicky stuff, like we are here at Ramsey, where we're like pause, retirement. Like there's certain things you do for a reason. This isn't just for the heck of it.
It's because of what we've seen over time. And this last bit, Trevor, I mean, this is like... Home stretch. I know. I hate to even like relate it to this, but I just watched a video.
It was on Instagram, Reel, and there was a.
I mean, the cars are paid off now. Is there a way I can do both? Maybe make a higher payment on my student debt?
No, I think you just pause it. You're going to be okay for a year. Yeah. For a year. And you guys make $70,000..
And I would even, Trevor, I'm like, if there's anything like at night that you can go do, if you can make a side gig of, you know, with a thousand bucks a month, like that's going to add to this. I mean, anything...
Well, this is where my money came from, with side gigs, like putting into this. There you go. Okay.
What about the $70,000?
? Do you have anything that you guys, from just a lifestyle standpoint, that you can cut?
Oh, we've been cutting the past two months subscription.
Okay, good, good. So you're kind of back in it. It's that fuel, but it's almost like you're limping a little bit to that finish line and I want you to sprint. Like. I just want you to get there and you're going to be okay if it pauses for a year.
How old are you guys?
33.
Oh yeah, you guys are fine. Jade's got... Yeah, Jade, give us the math.
I love walking you through this. Okay. You said you're investing a little bit now. What percentage are you investing? How much a month?
Again, it's not from our actual account. It's from me doing side hustles. Still. It's around a thousand a month.
Okay. You're investing a thousand a month, which means obviously, when you have this debt clear, you'll have that and more to invest, right? So let's just pretend that you said right now there's 75 in your Roth. I'll just put it at 5,000, just to be... I'm going to make this like so foolproof.
And let's say that every month you do an additional thousand dollars every single month.
This is after you're out of debt.
This is after you're out of debt. And this is... I'm going to do like a super conservative rate of return. I'm going to say 8%, just for all the hater-aids out there to just calm down. And let's say you retire at 33, right?
Let's see how much money that would be for you.
Oh, shoot. No, not retire at 33.. He has 33..
Oh, he has.
. He's... I'm saying for 33 years, for 30 years.
In 30 years. Okay. I'm sorry. I'm sorry. Yeah, yeah.
Wait, Rachel. Keep the conversation going because my computer's being weird.
Yeah, yeah, yeah. So he's 33.. And let's say, in 30 years, you decide that, yeah, I'm going to retire at 63, 64.. The beautiful thing is that you'll see the decisions you've already made with the Roth, which again, would not completely agree with because you still have debts. But the proof is, is that even if you waited one more year, didn't contribute anything to investments or retirement, paid off his debt, went back to investing in retirement and put money away in 30, 33 years.
Dude, $1.
5 million in 30 years.
And just pause this year. Yeah.
You're still going to.
. My point is, you're still going to be just fine. Sorry for the delay. My computer was not doing what I wanted it to do. But that's starting at $7,000, which you said.
you have 75 in your Roth right now. That's a 30-year term. You're in your 30s now. You're going to invest. You're going to retire in your 60s.
It's a very conservative rate of return that I put in here. You're going to do better than that rate of return. I'm just letting you know. And this is a thousand bucks a month. Come on now.
And then 15% of your income too, with that 70,000, I would push you guys to say, yeah, instead of that going to debt, that's going to be now going to investing as well.
And this is assuming nothing changes. You're going to earn more money. You're going to have more opportunities. I just want you to see. worst case scenario is $1.5 million.
Come on, Rachel Cruz.
Oh my goodness. I'm so excited. I feel like people need to do this more. People need to run out the numbers and stop letting it circle above their head and cause them...
And the fear that's out there. Yeah.
It's like you're over here getting a stomach ulcer because you're like, I'm getting too old. And I used to feel that way. My husband and I didn't start investing until our mid-30s. And now I see like, we're going to be just fine. And you're going to be just fine to work the plan as planned.
It works every time. This is The Ramsey Show.
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You are listening to The Ramsey Show, and, by the way, thank you for listening to The Ramsey Show. We're just so grateful that each and every day, you guys choose to log in or go onto YouTube or go to your podcaster and pick our show to listen to. That's great. We're here because of you all, and we just want to encourage you to keep doing that. Keep liking, keep subscribing, and really keep sharing it with people that you think will enjoy the content that we give to you guys every single day.
It doesn't cost you anything, and it really is beneficial for us and for the people around you because they get this wonderful resource, but it also helps us, because it just helps the algorithm favor us a little bit more above some of the other things that are out there. If you like this, tell other folks about it. They might have their crime podcasts that they like, but tell them about The Ramsey Show. It's me. Listen.
These crime podcasts, I don't.
. Rachel, I don't get it, but...
I'll send you one.
I don't know if I can watch it.
I feel like.
. No, they're listening. You listen.
Listen. Okay. Yeah, you don't want to.
Yeah, there's nothing, scary, you see. You just listen to it. Oh, get ready. I got you something. Don't you worry.
Rachel Cruz loves her a crime podcast. Jade Warshaw, your other host, is fearful of them,
but listen, as long as we're part of your daily routine and you listen to a little bit of The Ramsey Show, then go listen to a little bit of your other podcast. So, so funny. Well, anyway, my point was to tell you that we appreciate you and keep doing what you do. We're going to go to the phone lines where there's Tony in Rochester, New York. What's going on, Tony?
Hi.
Hey.
Um, so, um, I'm calling because, uh, I, I am quite a bit in debt. Uh, it's gotten to a point where, after I pay my bills and subscriptions and things that I got going on, um, it's the, the amount of credit card that I got, it's pretty much takes over the rest of the paycheck. And, um, you know, we're trying to manage it. Um, I'm looking at options. I mean, because, you know, sold a car, considering maybe selling a house.
A house? Do you have more than one?
No, the house.
The house. Okay.
Yep. Selling the house. Um, and, uh, maybe using that, uh, bring them down. I owe, I make about a hundred thousand a year. And, uh.
Is that including your wife?
I owe about, what's that?
Is the hundred thousand, including your wife?
No, it's just me.
Just you. Does she work outside the house?
Well, I, that, that's the, our household. I'm, uh, she's, she's at home. Okay. And, um, I, I'm the one that's working outside.
How much credit card debt do you guys have?
We got about 126.
126,000 in credit card debt.
Yeah.
And what's Tony?
So yeah, no, you know, it's okay. I can hear it in your voice, Tony. I mean, it's, um, that's hard. That's really hard. What caused, what was the reason for that?
Well, um, I was out of work for a year to figure out different things. I attempted, uh, some things on my own as well. I wasn't able to make enough, uh, to, to get us, uh, out of, you know,
to be able to sustain us for a long time. So I getting that, uh, starting getting, uh, credit cards to be able to manage, uh, uh, you know, I finally got a job and then it's grown, because once, once I guess there's a point of, you have enough debt, the payment, get it to, uh, get you to a point where you can't make it's. it's what's left is not enough. So you gotta continue getting more and more and more and more. And we haven't been able to manage reducing the expenditures enough.
Yeah. So how long have you been in this, in this job that you're in now? How long has it been?
About, about a year.
So when did you decide, when was the point for you that you were like, I, I gotta do something different. This isn't, this isn't working.
Well, as soon as I'm looking at the numbers, I mean, two years ago, a year. Well, for a while we've been wanting to do something, but it's, uh, it's become quite urgent now. So we're trying to figure out.
How much are you paying every month? How much are you paying every month towards these credit cards?
Probably $1,500, a little more.
$1,500?
$3,500.
Oh, $3,500.
. Okay. And is that...
Minimum payments.
That's the minimum payments. Wow. And you mentioned a car. Um, is it, tell me about the car situation.
So we have two cars. Um, one of them, I ended up having to spend quite a bit in repairs and things like that. And I said, well, you know what? Um, I got it fairly nice, but, um, I didn't want to continue. And, and so I have another car that's, uh, newer and it's in good shape.
I, I, I don't, I mean, I, I own loans on them. So, um.
Can I, sorry, just to clarify.
I only have the one car right now, at this point. Okay.
So there's one car, the car that you said you didn't want to, you know, continue with, what did you do with it? Do you still own it? Does it just need the repairs? You sold it.
Sold it.
Okay. So now you're a one car family.
There's one car family for now.
Okay. And the car that you have, what do you owe on it? And what's it worth?
It's, it's, uh, I owe about 30,000 on it. It's probably worth the same amount, maybe a little more. It's fairly newer. So it's kind of.
Okay.
The loan's a little older. What the, that car is worth. So if I were to sell it, I don't know that I'll get my money back.
Yeah. You'd be underwater in it.
And, um, and there's no, you have no savings. I'm assuming nothing saved anywhere.
Not well, just a little bit. And I, and I'm very little.
Okay. That's an off limits. What I want to ask about, um, sorry, I'm going to pry, like I'm putting my crowbar in and I'm prying out. Um, your wife's a stay at home, mom. Yeah.
How many kids do you have?
Which is just hearing, hearing us.
Oh, hey girl.
Hi.
Um, hi. Hi. Hey. So you're staying at home. You're doing, you know, you're doing some heavy lifting.
Um, how many kids are you watching and taking care of? Three. Three. And what's their ages?
We're, uh, already the oldest one is 11.
Uh-huh.
Andreas eight. And the, uh, the youngest one is six.
Okay. So when I'm listening to that, I'm hearing school-aged kids, which is great, because that daycare, you know, bill is not a thing. So my question is, and you know, I'm, I'm, I'm going around this delicately, but I think there's room that you can work as well, because right now, the most money that you can bring in is what's going to break this cycle.
Yes. Yes. Yes. I'm just trying to, to make smart choices. Uh, like I was telling him, it's just difficult to, to sit down and like, uh, search, you know, like a search for a job, that, uh, it's prudent in terms of, uh, knowing the hours minimum per hour.
And just with one car right now, we, uh, are managing. So he takes the car for the most part right now or, or, if not, the bus, uh, it is a bit difficult, but yeah, that, that is my main goal.
Well, I always say, get, I always say, get a job until you get the job. Cause, right now, literally anything you do is going to help you guys out.
Yeah. If you drop the kids off and go work at a bakery, you know, for whatever it is, like, go, yeah. Doing something, because, um, and what's your name? Can I ask? We have Tony and.
And, uh, Inez, Inez.
Okay. Yeah.
Um, it's not that I haven't tried. I, I've actually tried to.
Sure. Sure.
Come up like with, uh, on the side job, like staging. Yeah.
Yes. Here's the deal. You guys, I, I, I know Tony had mentioned, or at least it's here on our screen. Um, one of your biggest questions was debt consolidation, and here's what, here's what.
I wanted.
So here's the deal. You guys, what's going to fix this issue is you guys, it's not rearranging this credit card debt and trying to find a lower interest rate. That's not your problem. The problem is, is that you guys lived a cycle with your money that got you in this problem and in this mess. But the beautiful thing is, yes, you were the ones that got yourselves in this mess, but you're the ones that's going to get yourselves out of it.
Okay. And so listen to each other. Cause this is the stress point. Cause you're starting to make that turn of saying, we're going to do something differently. She's looking for a job.
You've sold a car. I mean, you guys are feeling this tension. You're starting to make these choices. You're getting in the right direction. So stay on the same team, because Tony's not feeling great about himself.
And when I heard you, when, when you, I heard your voice immediately, Tony, I thought he's caring so much. There's a lot of shame. Yes. There's a lot of guilt that you feel, Tony, like. this was my responsibility.
I tried taking care of my family, and this is what I got us in. She is supportive. She sounds wonderful, you know, and she's wanting to help. But, but you guys together, you have to work as a team and stay on the line. Cause Austin's going to pick up and we're going to give you Financial Peace University and EveryDollar Premium, which is our budgeting app.
And you guys sit down together, go through these lessons, learn the basics, because debt consolidation, that's not going to be your answer. You are your answer. You guys can do this. We take these calls every day and hear people that do their debt-free screams. I mean, Jade is a living testimony of this, of you guys can do this.
It's going to take a long time. It's a lot of sacrifice, but it is possible. So I'm so glad you guys called today and we, we wish you nothing but the best. You guys can do this.
Hey, you're listening to the Ramsey Show. I'm Jade Warshaw. This is Rachel Cruz, to my right. And we're taking calls about your life and your money just came off of a call. And, you know, honestly, we get calls all the time of people, you know, they're in a hard financial situation and, you know, we're asking questions and mining around to kind of figure out what's the core of the problem, where'd the problem come from?
How can we go about a life that we're not repeating those mistakes again? And you kind of do have to dig in and each individual kind of has to go back and do their own digging so that they're figuring out what happened here. Like, it's good to want to solve a problem, but you also have to go back and go, okay, but what happened? Like, what caused me to, to act in that way? What did I do?
that caused us to kind of spin out? And we try to help you guys with that a little bit. And some of that is personal work. But one of the themes that I noticed, Rachel, is, and I get this, like, I, this is not me pointing a finger. This is just, I think, a human nature thing that we have to guard against, which is, you know, everybody has work, in the words of Ken Coleman, that they were created to do.
And everybody wants to find the work that they're created to do and the thing that gives them life and the thing that gives them energy. And I'm all for that. You know, you want to be excited to go to work and feel like it's time well spent. But I do find that a lot of times we enter into seasons of life that we are doing work that we don't love. And it's not the job.
And it's not, right, the one that we were hoping for. And I, you'll hear me say it time and time again, do a job until you get the job. And so, in the spirit of what I think is just a consistent thread that we see throughout, and even that I face throughout times in my life, is five reasons to get any job.
To go.
Just to get any job. All right. So, number one, some money is better than no money.
That's right. Right.
Some money coming in is better than no money. When COVID hit, we were in the cruise industry and ain't nobody going on cruises and the live entertainment industry, and wasn't nobody going to a live event. So I had to get a job and my husband had to get a job. I had to get a job that I did not like that, to be honest, I was over, fully, fully, fully overqualified for. But we didn't want to just burn savings.
So it's like bring in some money. Like we were debt free. We have hardly any expenses. Any money that we bring in is going to be great. So we did that and it didn't feel good.
And let me just say, I don't necessarily believe that work is beneath people, but in some days it felt like it was beneath me. Like, let's just be honest about that. Somebody needs to say it. You know, some of you feel like, listen, I don't, I shouldn't, I shouldn't be working at McDonald's. Okay.
I get that you feel that way, but you don't have any money. So go work at McDonald's. All right. And listen, just be happy that McDonald's is open, because back in the day in COVID, it wasn't even open. So anyway, some money is better than no money.
Rachel, the next one I have here is your spouse needs to see who you are.
And if you're a husband or a wife and you're facing a very hard time in your marriage, go get a job, because when they see you at home and you're not working and they feel like they're taking on the burden of that, you can help take some of that off. So go get a job. And then that might encourage your spouse to go. get a job. Like, that is good.
Your spouse will feel like, I remember when I was a kid, like my dad, he just was always working. And I was like, one thing about. my dad is like, this man is going to work. Like, and it just, it builds a sense of security in your kids and in your family. Yeah.
Go get a job. And, and no one's going to be going, well, but, but my dad only works here. No one is saying that they're going, listen, my dad goes out and works hard every day.
That's right.
Go, get a job. All right. Number three, you'll learn what you like and what you don't like.
Yes. By testing out all different things. Yeah.
Listen, I don't like food service. I don't like call center. I don't really like working with animals, even though I like animals.
Yeah.
I like cooking. I don't like making wedding cakes. I've done it before. It's a lot of work. Like I can tell you, Rachel Cruz, the things that Jade does not like doing.
Okay.
And I, now I know the situations that I do enjoy working in. So you'll learn what you like. You'll learn what you don't like. Number four, you'll be productive. Yes.
And there's just something to be said for, all. right, I'm getting up.
And leaving and doing something. Yeah. Or not leaving, but staying at home and being on your computer, doing something.
Yes. Something you're getting out of your bed. Even if you're putting on sweat pants and going up and putting your little headpiece on and doing your call center job, I'm almost talking about it. Like I know it. Yeah.
Okay. And then, finally, it will build confidence in you, because when you go, the longer you go without a job, the more you wonder if you'll ever be able to get a job. So to just go from one job to another says, listen, I've got some confidence. Like I can say when I go to my next interview, I can say that I'm currently working. or I can say.
Here's the experience that I've had. Yeah.
Or at least feel it on the inside. That's right. So there you have it. Five reasons to take any job before you get the job.
And that was free, ladies and gentlemen.
Free game. Right.
From Jade Warshaw. That's amazing, Jade. I mean, seriously, because I do think that there is this feeling, and especially if you've been in a certain industry or you kind of have your line of sight of like, this is what I do and you get laid off or you're in a bad situation, you quit, whatever the reason is.
Yeah.
And you still have that kind of narrow focus of this. And to your point, when bills have to be paid, open those horizons and go. Just do something. Yes.
Yeah. And one door leads to another. And you never know. You might be taking someone's burger order and you meet the person taking the order. They have a situation that they tell you about and it leads to the next thing.
You never, ever know what's behind a door. So don't count it out and think that you're above it, or think that it's... Just keep going. Anyway, I digress. I got to take a deep breath.
I love it. We got to go to Brenda in Washington, DC. Sorry, Brenda, that you have to come after that. But what's going on in your world?
Hi. So me and my husband are looking to buy a house. We want to know if we're even there yet and, if we are, what steps financially we should take to get there. as far as pausing our investments, continuing to invest, or, yeah, what we should do.
Okay. Well, what we look at, Brenda, is a series of steps that we want completed before you go and purchase your first home. So how much debt do you guys have?
We have about, I think, $12,000 total for our cars, and that's it.
And that's it? Okay, perfect. And do you guys have any money saved?
We have about $55,000 in savings.
Okay, that's great. How much do you guys make a year?
Combined, we make around $220,000 before taxes. I don't know what it is after, to be honest.
Yeah. Okay, perfect. That's a great income. Okay. So if I were you, Brenda, I would pay off your cars today with the money that you guys have saved in that $55,000 account.
And then the remaining, I would look to see how much your expenses are a month. Because what we say is, after you pay off all your consumer debt, look to get a three to six months of expenses saved in a fully funded emergency fund. And you can put that money in a high yield savings or a money market. And for you guys, you may want to put some more towards savings once you pay off the cars. Or maybe that's enough for you guys.
But I want you guys to look at your own budget and figure out, okay, if we need probably three months. Do you guys have kids?
No, we do have a kid on the way. That's part of our...
Oh, okay.
We want to buy a house too.
That's so great. Well, congratulations. When are you due?
Yeah, thank you.
September.
In September. Okay. That's awesome. So yeah, so I wouldn't push the timeline of the home, with or without the baby. Okay.
So meaning like, I wouldn't feel like, oh my gosh, I have to get in before the baby. Or I wouldn't let the baby's timeline dictate your house timeline. I want your money to dictate the house timeline. So again, I want that fully funded emergency fund. And, honestly, Brenda, with a baby on the way, starting to look for a home, I would feel comfortable around that five to six month mark for an emergency fund and just making sure you guys have plenty of cash set aside.
And then you want to start saving up for your down payments. And I would say to put at least 5% down and make sure your payment is no more than 25% of your take-home pay. So when you run those numbers, you guys can kind of look. Now you're in the DC area, so you're in an expensive part of the country, real estate wise. So your expectations and our formula, we get knocked on it.
sometimes. It is more on the conservative side, but I don't want this house to be the thing that stresses you guys out. So it may take maybe another year or two, or depending on what kind of house you guys are looking at to really kind of slow down and say, yep, let's get in a good position, have good down payments and making sure that it's a reasonable payment within our income to make sure to pull the trigger. So I hope that's helpful, Brenda. And if you go to ramseysolutions.com, we have tons of articles and free content on home purchasing.
So make sure to check that out.
It's way too easy to put off making a will. And believe me, I've heard every excuse in the book, but not having the time is one excuse we can kick to the curb right now. Because these days, most folks can make a legally binding will on their laptop between loads of laundry. If you're wondering if you can make your will online or if you need a lawyer, we have a quiz to help you figure that out in less than five minutes. Just go to ramseysolutions.com slash wills quiz, ramseysolutions.com slash wills quiz.
You're listening to The Ramsey Show. Hey, by the way, a couple of days ago, we did a Q&A after The Ramsey Show, all on budgeting. And it was really cool. It was live. It was George and I here in the studio.
It's still on the YouTube page, if you want to go and check that out. If you have any questions about our budgeting app, EveryDollar, which is the best budgeting app in the world, we did a live Q&A where we had EveryDollar pulled up on the screen. George and I were just kind of little characters in the corner, so you could really see how the budgeting app works. And we answered, Rachel, gosh, probably eight or 10 questions in depth. And I mean, it's questions that most of you have all the time.
How do I do sinking funds? What do I do if I get paid four times a week? Do I do my budget by week? or how do I do it? We answered all those questions.
We talked about, gosh, paying off debt. So many just everyday questions. So if that's something you're interested in, find it on our YouTube page. They'll pull it up at some point, or maybe even after this segment. So stay tuned for that.
It's so valuable. There it is. It was really, really cool. I think like over, gosh, the numbers on it were crazy. I'm not going to sit here and try to quote it.
But my point is go watch it, because it was super duper valuable. And I'm sure that we'll do that again. I don't know when, but it was super valuable. So go in there, EveryDollar again, such a great budgeting tool. But like, let's be honest, there's sometimes questions that you have and things that you want to know about it.
And so we're here to answer those questions, as well as questions about your life and your money, which we're going to do. The number is 888-825-5225.. We're here to help. And let's go to Jerry in Phoenix, Arizona. What's going on, Jerry?
How are you doing? Thanks for taking my call.
You're welcome. How can we help?
My question is, I'm 66.
. My wife is 71.. She's been diagnosed with dementia for three years. I'm so sorry. I'm having to go into a long-term care facility.
I've done the baby steps. I have like $5,000 in emergency fund and $20,000 in savings and investing. My house is paid for. But my question is, should I sell my house to pay for her long-term care, which I can't afford on my income?
How much does the long-term care, how much is it costing you? Like, what's the cost per month, per year?
Cost per month for long-term care is about $7,000 a month. And I take home only $5,000 with my retirements.
Okay. And are you retired, Jerry, then?
Yes, I'm retired, military. Disability and social security.
Okay. Okay.
So tell us more about your home situation.
Okay. I own my home. It's worth about $700,000.. I could sell the house here and move into a smaller house for like $400,000.. It would leave me about $250,000, and I could use that to pay monthly on long-term care, memory care.
That would only last for maybe two years or three years.
Assuming it's not invested.
What's that? The house? No.
The $250,000.
. Are you just thinking of it as a lump sum, as it is?
No, I could give it cash. Yeah, I would have to. Yeah, it would just be my equity out of the house after I sold it.
And tell me again. Sorry, I was kind of writing down some things. Tell me again what you have in retirement as it stands.
Okay. Military retirement, military disability, social security, and my wife's social security. And it adds up to about $4,800 a month.
But what are the nest eggs? Is there a nest egg anywhere in there?
I got $20,000 in the savings account and $5,000 in another savings account for my emergency fund.
Okay.
Let me think here.
I've been trying to get everything right, and the house paid off.
Yeah.
Getting there, but then this happens.
Yes, I'm so sorry. And Jerry, I mean, I'm assuming because you called and asked the specific question. I mean, so. she will need to be in a long-term care?
Yeah, she's getting to a point where I'm not going to be able to take care of her at my age. I'm doing full-time caretaking for her right now. But I'm just trying to look into the future. I know it's not going to last forever.
Yeah, I know. Oh, I'm so sorry. Have you looked at other options at other, whether it's homes or facilities, or even in home care at all?
Yeah, I have looked at it. It's a little bit cheaper, but not very much. Still going to be about $5,000 more than I take home.
Yeah.
In this case, though, a $2,000 difference is a big difference from $5,000 to $7,000.
. So it is something to consider.
Okay. Yeah, I thought about that, because the house that I have now, well, I'd have to sell this house. That's one thing. I didn't think I'd be able to have money to do anything.
Yeah, I do think so.
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