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- What's up guys? I'm your host and friendly personification of fiscal wizardry, George Camel. And today we're swinging head first into your financial queries, doubts, and dilemmas. That's right, I asked you guys what questions you had for me. And let me tell you, I got some solid responses and an unsettling number of inquiries about my hair. I'm more than just a head of hair. There's a person attached to this with a heart and feelings.
So let's jump into your money questions and other questions and see if we can give you some advice that's worth more than all the golden bananas in Donkey Kong's stash. But first, barrel roll on over to that like and subscribe. And when you smash those buttons, do it for Diddy Kong.
Us little guys got to stick together. Diddy knows what I'm talking about. I'd like to know more about paying your house off early versus investing that money. So let's talk about this. Paying off the house early versus investing that money. This is hotly debated. People go, why would you pay off your house when you could invest that money and make more in the stock market? Well,
One is a for sure thing, right? Paying my house off is a for sure thing. There is a guaranteed rate of return on paying my house off. Playing with the stock market, it's a different scenario. And the other piece of this equation is you can't put a price on that emotional, mental freedom you feel when you don't owe anybody anything. It is absolutely worth it. And I would do it 20,000 times over again. I don't want to, but I would.
I don't know what Eeyore person told her. It can't be done. You can't rent an apartment without a credit score. Gotta get your credit score. It is a farce. It is a lie. It is a myth. And frankly, I'm just tired of it.
In fact, on my podcast, Define Print, which you can go check out, I did a whole episode on credit scores and I physically called departments. You can hear the phone calls, random apartments across the country, houses for rent from landlords. And I said, hey, I don't have a credit score. Will you rent to me? And they said, well, yeah, we'll do a background check. And as long as you have first month's and last month's deposit, you're good to go. And I went, oh, okay, that was easy. It absolutely can be done. Stop believing the lie that you can't be a renter without a credit score.
When is it too soon to sell a house you bought? If I sell before five years after owning, what penalties will I take? Well, if you've owned and lived in that house for two out of the last five years, you can sell the house without penalty. Now there's no penalty if you sell before then, but you will owe money on the capital gains. So if you bought the house for 200, it's now worth 250. You sold it a year later.
You're gonna have to pay taxes on those gains. Now, if you stay in the house for two out of the five years, you get to take that money tax-free up to $250,000 if you're solo or if you file jointly up to $500,000 tax-free in home appreciation. Pretty cool.
Is a house an investment or a savings account? I believe a home acts more like a savings account than an investment. Thank you for sharing your opinion. This is a squishy one. I mean, a house is an asset. We can all agree on that. It's not always an investment and it's not quite a savings account. Now, I like to say that
paying down your home is kind of a forced savings plan. And it can be an investment when you take into account that homes can appreciate in value and it can be an awesome part of your wealth building journey. I'm gonna put it in the category of technically neither, but I think it's a very wise decision to make when you're ready. And it's a great asset to have that can appreciate, which you could argue puts it in the category of investment, but I won't do that. I will not give you that satisfaction. ♪ But I won't do that ♪
Great question. I always prioritize paying off your debt first before becoming a homeowner. And here's why. When people call The Ramsey Show and they're calling about their problems, a lot of the times they got a house too soon, they're still carrying a bunch of debt,
and the payments are just too much. They don't have emergency funds saved to cover all of the issues that can happen when you're a homeowner. So I would absolutely pay off the 19,000 in student loans, then get a fully funded emergency fund of three to six months of expenses, then begin saving up that down payment. Is that kind of a bummer? Probably, because you're going, man, I really wanted to get a house, but you're just not ready to become a homeowner quite yet. So pause, pay off the debt, get some money saved, save the down payment, then you'll be ready. Are home warranties worth it?
I would say unequivocally, no. They make the warranty company money, but it's not gonna help you in most cases. They only cover the cheapest repairs or replacements, and they still have added service fees. And so warranties are really a waste of money. I was just talking to my friend and he said, "Hey, I had a home warranty. They came to fix the fridge and the ice dispenser, and it covers the ice maker, but not the dispenser."
Well, that's a problem. So all of the big issues and all of those things are so much fine print that makes it not worth it. So here's a better idea. Keep that money you would have spent on a home warranty in your pocket, put it in a savings account and use that to pay for appliance repairs and replacements on your stuff. And that way you control the process. You can hire the right person to fix it at the right price. And you can make sure you get appliances that are right for you and your family's needs. Thoughts on living with in-laws to save for a down payment.
This is a tough one. This one can be an okay idea, but I'm gonna say as a caveat, you need to have very, very clear boundaries in place. Have it all written out. Here's how long we're gonna stay. Here's how much we're gonna pay in rent, if anything. And a lot of the times,
It sounds like a great idea and then you get into it and it takes way longer and there's a lot more drama and it hurts the relationships and the in-laws thought you were staying for six months but now it's a year and you have nowhere to go 'cause you're not ready for the house yet. So I encourage people to rent if you're able and if you have a great relationship and you're gonna be very clear about the boundaries and this is six months while we get on our feet and get the down payment, that can be an okay idea. I just haven't seen it work out a whole lot of the time.
Preparing for baby during baby step two. Should you pause the debt snowball and start saving everything when you get pregnant or when you begin trying to conceive? Should you splurge on nothing? Example, up a baby stroller, which I now know what that is, as in almost dead. That's a great question. Should you save up during baby step two? Do you pause the snowball? And the answer is yes. I would pause the debt snowball. You are in what's called stork mode once you're pregnant.
Now, up until then, let's pay off the debt. Let's start to clean up this mess. But once you know you're pregnant, you know you're going to have a kid, let's pause it at snowball. Let's start stacking up a whole bunch of cash until mom's home safe, baby's home safe. Then we can use that towards our debt. There's just so many unforeseen things. And no, I would not splurge on the Up A Baby stroller if you're in baby step two. Let's find something affordable and used on Facebook and the baby will be okay. I promise.
What are your thoughts on investing for teens? This is an interesting one. I think it's very wise to build up the muscles of saving and investing as early as possible. But do I think all teens should just be investing? Not quite. I think teens should be investing in themselves. Because truthfully, teens are making money
not a whole lot of money, and therefore there's not a whole lot of money to invest. And there's also some big expenses coming up if you're a teenager. Things like having to pay for your own cell phone, your own insurance, your own car, your own fuel, spending, enjoying your teenage years, saving up for college, all of that stuff. So I believe if you have college paid for, you have a full-time job, you're through college, that is the right time to be investing. Once you're making some real money and you're through college,
that huge life change of further education, upgrading the car, whatever it may be. So I personally would say, no, you got plenty of time to invest from age 22 to 62 to become a multimillionaire and you'll be okay. Now, if you have some earned income and you want to put some in a Roth IRA, that's totally fine. Start to play around with that. But I would invest in yourself first.
I'm a self-employed freelancer making $75,000. What's the best way to set aside money for taxes? A savings account? A different checking account? I need it to go elsewhere so I'm not tempted to spend that money.
That is very wise, first of all, that you're even thinking about that fact that I could be tempted to spend this if it's just sitting in my checking account. So I like the idea of having a separate account for these taxes. You don't necessarily need a business checking account unless you kind of have your own business going. In that case, I would open a business checking, but I would move that money over
to savings. And on average, I'd put 25 to 30% of whatever money you take in over to a different savings account so you're ready to pay the IRS. And according to the big dogs over at the IRS, you should pay estimated taxes quarterly if you expect to owe at least a thousand bucks in taxes on the income you make from freelance work. Why? Because the US is a pay as you go tax system. So if you've got a normal nine to five job with a salary, benefits, whole nine yards, the chances are your employer is withholding taxes from each paycheck and they're sending that money to Uncle Sam to cover your liability.
Not usually the case with freelance income, and that's where quarterly taxes comes into play. So I would be setting the money aside in savings, and every quarter file your estimated quarterly payments with the IRS so that you don't get a surprise bill at the end of the year. Is it smart to use a sinking fund for insurance while paying off debt?
I love that you're even thinking about this. So a lot of people have quarterly insurance payments, semi-annual, annual insurance payments, and I absolutely recommend a sinking fund for those needed expenses like insurance. Now, a sinking fund for vacations while paying off debt? No, we're cutting that. You don't need a sinking fund for that because you're not going on vacations.
Insurance is a must-have regardless of where you're at financially. So yes, if it's, you know, 600 bucks a year, let's put the money aside every single month so that when that $600 bill is due, we've got the money to pay for it in the budget. The rest, let's throw out the debt.
I have no life insurance. I don't need any, right? I'm a single 60-year-old woman. My kids are grown and independent, and I'm debt-free with a will and enough money to pay for any after-death costs. You are doing so well, and I'm so proud of you for even thinking about this stuff. So no, you don't need insurance for your life if nobody relies on your income. Like you said, you already have money to cover any after-death costs, funeral costs, which is such a wise thing because when you pass, and I hope you live a long life,
healthy life. I don't want your kids worrying about how they're going to cover you financially and cover your financial situation on top of grieving the loss of someone they loved. So no, you only need term life insurance if someone else relies on your income like spouse or kids. But as you said, your kids are grown and gone. They've got their own life and their own finances, which is awesome. What age should my husband and I make a will?
There is no age. It's today. If you get married, you need to have a will. Every adult in the U.S. should have a will. You need a legal will the moment you become an adult, not a second later. And since nothing you own will fit through that big exit door in the sky, the time for a will is right now. But to give you a healthy sense of urgency about the right time to make a will or update yours, here's a list of common life events that make people think, yeah, I really ought to get that taken care of or updated. Getting married, having kids, or your minor children becoming adults, going through a divorce, a death,
of anyone named in the will, like a beneficiary or the executor. Moving to a new state, there's new rules when it comes to that stuff. Facing a new circumstance, there's addiction in the family, there's a disagreement in the family, you change your mind. All of that stuff might mean you've got to update your will. So get it in place today if you're listening. You will not regret it.
What is your biggest goal after baby step seven? So if you're new to this stuff, the Ramsey baby steps, they walk you through getting out of debt, having savings, starting to invest, paying off the house early and being outrageously generous. So baby step seven is to build wealth and give outrageously. There's no real parameters around what that looks like. So you're asking me personally, what's my biggest goal? Well, part of it is to increase in all areas from giving, saving and spending.
So we still have investing goals. I'm about to bring a child into this world. So I want to make sure their college is totally covered. I want to be able to upgrade the car for my wife because she deserves it because she's amazing. I want to give outrageously. We want to cover someone's adoption one day. We want to be able to buy a single mom a car one day. Those kinds of goals get me really excited. And it's the kind of stuff you can focus on once you're in baby step seven. You're out of debt. You have no payments in the world. It's an incredible feeling. Highly recommend it.
What are green flags from a guy from a financial perspective?
I would say, number one, they don't have to be debt-free. So don't let that be a huge red flag. If they want to go into more debt or they're trying to stay in debt versus getting out, that is a red flag. A green flag for me would be he's investing for his future. That's a huge green flag. He's investing in retirement accounts like a 401k, a Roth IRA into the stock market, mutual funds, index funds. If he's like super into crypto and single stocks, that would be a red flag. So you want to be investing in the right things. Another one would be that he has an emergency fund.
He has his act together, and he's not trying to constantly flex and be super showy with his money. I like a guy who's a little more stealth wealth. You know what I mean? That tells me they're mature, they have some class, and they're the kind of person you want to spend your life with. Now, if you've got a question we didn't get to, leave it down below in the comments. Let me know what you'd like to hear about next. And as always, don't forget to share this with a friend who needs a little attention, right? They don't ask for much. You've been busy lately with the kids and your karate. Ah! Ah! Ah!
A little I see you would mean the world, so share it with them. Thank you guys for watching. See you next time.