Breaking the Paycheck-to-Paycheck Cycle
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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. I'm your host, Jade Warshaw. I am joined by one of my favorite co-hosts, Rachel Cruz, best-selling author, host of The Rachel Cruz Show, and we are joined together today.

Join forces to answer your questions about life, money, relationships, the holiday season, whatever is sticking in your crawl. We are going to help it come out of your crawl as we take your calls. Give us a call. The number is 888-825-5225 and we'll chop it up with you. Let's go straight to the phone lines. We've got LJ from Tulsa, Oklahoma. What's going on, LJ? Yes. Thanks for taking my call. No problem. How can we help?

I'm kind of new to all this. I just recently heard about y'all because some friends are talking about a concept of debt snowball versus a debt avalanche. And it got me curious, so I started looking and researching all up and found the baby steps. And I got some savings, but I'm trying to pay off debt. So I'm looking at all the places to get my hands-on money to help pay debt off. And I have a 401k that they call the target date.

401k from a previous job. Is there any downsides or is that a good place to look at getting money to help pay off debt since I'm currently in a 457 at my new job? Yeah, I mean, I love the fact that you're looking for ways to pay off your debt and I love that you feel that it's urgent for you to quickly get your debt paid off, but I would not pull from retirement savings of any kind in order to do that. And

The fact that you once had a 401k and now you have a 457, that's not really a license to do that because it's still retirement money. And so there's still penalties and fees if you were to dip into that money. Not to mention, that's not truly the solution, right? We don't want you robbing from Peter to pay Paul. And so I think the solution for you is probably going to be

finding that money either by picking up extra work or cutting back areas in your budget. LJ, your 401k that was with your previous job, is it still there? Have you rolled it over into a traditional IRA?

It's still with the company that I left it with. Okay, so I would recommend actually taking that out and just rolling it over to a traditional IRA. One of our SmartVestor pros in your area can help you do that. But yeah, I wouldn't leave my 401k with a job that I'm not at currently. So rolling that over just to an IRA is one move you could do. It won't help with the debt payoff, but it will help with your investing overall picture. Mm-hmm.

Okay, so not to put it with the new 457 government program that I have? No, I would keep it separate and just a traditional IRA, yeah, so that you're not paying taxes. And then how much debt do you have, LJ? About $33,000. Okay, and how much do you make a year? Not counting my mortgage. Me and the wife combined make about $90,000. Okay, that's great. Look, you can be out of this debt in a year. I mean, if you guys decided, hey, we're going to live on $60,000, you're out in 12 months.

And that's not that's not including extra side hustles, which you could easily decide to pick up. Right. So what do you think about that? That actually sounds really good. It'd be awesome to get out of all this debt. Does it seem possible? Like when I said that, did you go, oh, yeah, we can do that? Or was that like, yeah, right, Jade? What did you think?

Well, it sounds great. I just thought it would take more like two or three years. No, the good news is you can do this really quickly. I mean, just looking at the numbers and like I said, you guys cutting down your lifestyle, which is going to take you guys getting on a budget, which are you already on a budget? A loose one. A loose one. What are you using? Is it what are you using currently?

We just run our numbers through like Excel spreadsheets. Yeah. Well, I want to get you guys hooked up with EveryDollar because it is the best budgeting app that is out there. And it'll help you get a really, really clear picture on what your numbers are every single month. And it'll help you set those goals. You can really get in there and see like...

to the date when you're gonna be done paying off your debt and you get to adjust that money and adjust those payments in order to get it done either faster or push it down a little bit. So that's our gift to you today. Look, I'm really proud of you. That's a really, really great call. Thank you so much for the call, LJ. Look, you can do it. And I think a lot of people, Rachel, do think that, oh, I can get out of debt, but it's gonna take me all these years in the future. But then when they really start crunching the numbers, they're like, hey, I can do this even faster than what I once thought I could. Exactly.

All right, let's go to Kevin. He's in Houston, Texas. What's going on, Kevin? Let's make it a quick one. Hey, how you doing? Doing good. How are you? Good. It's fun to talk to you guys. You too. So I'll make it short and simple. I just paid off like $10,000 in credit card debt. I'm on baby step number two. Good for you. So my next loan to attack is my truck loan. And it's my only thing I have left, but it's a high one. It's around $10,000.

$83,000 left. Whoa! It used to be $94,000. It used to be $94,000, but now it's at $83,000 because I make extra payments. What kind of truck is this? This is a souped-up Ford F-250 Lariat. Is it for work purposes? No, it's just pure luxury. I'm one of those that just has the truck for luxury. I don't pull nothing. How much do you make a year, Kevin? I make about $14,000 a month. Okay.

Yeah. Gave or take. Like sometimes it could be 10, 12, 14. Yeah. Depends on how much I want to work. I'm selling it. Yeah. I'm selling it. I would. Kevin, $83,000 in a truck? That has debt that's going down in value that you're paying interest on?

Wow. It took me like a while to get it because it was like I had to preorder it. I believe it. I'm sure you did. Yeah. Yeah, I bet. And so I do want to add it to the Dead Snowball, but I just I'm trying to figure out how to go about it. If I should just.

pay more every month or just save up one giant wait no no you want to be paying on it yes as you as you get extra cash flow you're throwing it at the truck but we would i mean i would run the numbers kevin i would kelly blue book it run a scenario look on craigslist look at you know local dealerships for other trucks and just for a for a second just think oh my gosh because how much is your payment it's about 1700 a month oh lord

Kevin. Kevin. Kevin, run the numbers. Okay, go to RamseySolutions.com and pull up our investment calculator. If you invested $1,700 a month, if you invested that, Kevin, do you know how much money you would have? I wish I had my computer on. I would do it right now. I'm a skeleton. Kevin, we're back. I'm dead. I am just... Wow. And do you have other debt besides this or is this going to be it? This is it. This is really my only payment I have a month is because...

All my other expenses are paid for. Wow, Kevin. Rachel, you keep the conversation going. I'll do the investment calculator. You got to go. We got like 30 seconds.

Okay, I would, I mean, Kevin, I'm not going to sit here and like convince you. You're a grown man. You can do what you want. But our biggest goal is that we want your money working for you, not against you. There is so much of your income and heart. You make incredible money. I mean, $150 to $160 a year that actually you'd be building wealth for your family. You could actually be changing your legacy and building your wealth with this versus sending it to someone.

Ford Motor Company or wherever it is going, right? So there's power in letting your money work for you versus it working for a car dealership. And that's what you're doing right now with this truck. Wow. I'd sell it. If you did $1,700 a month, $2,225,000 after 25 years. 25 years, you could have $2,000,000. This is The Ramsey Show.

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You're listening to The Ramsey Show. I'm Jade Warshaw, joined by Rachel Cruz. Give us a call. The number is 888-825-5225. We'd be happy to hear from you. We'll go straight to the phone lines where we've got Caleb in North Carolina. What's going on, Caleb?

Hi. So my question is, so I work with my dad after I'm done with school like two or three times a week. And I make like $80 a week. And I want to know what I can do with my money right now to set up myself for my future. My goodness, Caleb, how old are you? I'm 12. Wow, that's so impressive. What kind of work do you do with your dad?

We go to people's houses and fix like washers, dishwashers, refrigerators, and like microwaves and stuff like that. Caleb, let me tell you, not just the money you earn is helpful, but knowing how to do all of that later in life in about 10 years. I know, right? People will be very thankful to be your friends because not a lot of people know how to fix all that stuff, Caleb. So I love that you're even learning that trade now. That's amazing. Amazing. Thank you.

I would love to hear what Jade would say about this because we both have kids, Caleb. So we think about this a lot for our kids. But the fact that you're earning money like this, I think, is fantastic. So I think the first conversation I would have looking to the future, the next the big purchase you'll probably have in your future is a car when you turn 16. So I'd ask your parents what their plan is for that if they decide.

have, if they were thinking about, you know, if they would have the money that they were going to plan on maybe buying you a used car, or if they were going to expect you to maybe pay for that, or maybe they would match what you save. But I would, I would probably have a conversation first and foremost about a car, which seems kind of far away. I know you're 12 and 16 seems far, but there's really, besides just buying some things that you may just want for fun, you

I think working towards a big purchase is a really great goal at your age. I'd agree with that. Yeah, I use every dollar and I have my financial plan for December. I'm going to put 80% of my stuff into 80% of my money into savings and then 10% into tithes and 10% into fund money.

Wow. Good for you. Caleb, so what do you spend money on right now as a 12-year-old? What are things that are fun for you to spend money on? Well, to be honest, I like going, I like, I spend it on video games, to be honest. Yeah. Hey. That's great. That's great.

That's great. Good for you, Caleb. Wow. Very impressive. And your parents, look, when you get off the phone, give your parents a big hug because they have really taught you well. And for those listening, he is doing right. Like you do three things with money. You can give it, save it or spend it. So he's decided to save 80%, which is a lot. That's a lot. Great. That's great. And then you're giving 10% and spending 10%. And in your case, yeah, I think spending on video games sounds wonderful. I don't have anything

to add to this caleb i just want to say thank you for your call you're doing such a good job come over to my house and fix the dishwasher you know what i'm saying or be a co-host here and help some people out because you're doing real good for 12 years old wow i know that's right shout out to the parents i know well done so great thanks for calling caleb thank you so much oh my goodness let's go to lauren in dallas texas what's going on in your world lauren

Hi. So my mother-in-law lives with us. She's going to be moving out in June when our lease is up. Our rent is $2,400 and she pays $800 of that. So I'm getting a raise in January, which will increase our income about $1,000.

$5.50 a month. My question is, since we're kind of paycheck to paycheck right now, should we use the raise to save for a security deposit and moving expenses and move somewhere less expensive in June or should we use the raise to pay off debt until the lease is up and then stay in our current home come June? The lease is up in June. How much do you guys make a month?

I'm currently about 106 with my raise will be up to about 115. A year? Yes. Okay. Okay. And what do you take home each month? Like what do you see when you take home your check each month? About 55. 55. Okay, good. How much debt do you guys have?

Quite a bit. With cars, credit cards, medical debt, student loans, all that we're at about $100,000. Okay, $100,000. And you said it's cars, medical debt, credit cards, just kind of normal? Yeah.

Yeah, well, with your current income, yeah, $2,400 a month for rent. I mean, that's that's pumping up to close to half your your income. So I yeah, this is too of an expensive place, Lauren, that where you guys currently are. Yeah.

So if your lease is up in June, I mean, you probably can't, I don't know if you can break the lease or what, if you can move out sooner, but I would work towards looking for a new place in June, especially since your mother-in-law is not going to be living with you guys. Yep. Find the cheapest place that you can. And then from there, start working the debt snowball. But between now and then I would start the debt snowball though, Lauren. I would find that. What is your smallest debt?

Out of everything you listed? Probably a credit card. Okay, which is how much? How much do you owe on that? $2,000. Okay. So yeah, I would make it a goal to start chipping that away and working extra. And I guess is the $115 a year include you and your husband's income? Yes. Okay. So yeah, I mean...

You have a, yeah, I mean, you're making good money, but you also have a good amount of debt, 100K. So I'm going to say that there's probably going to be a season of side hustles and earning some extra income. Do you guys have kids? Yeah, we have three. Okay. So, yeah, so that's always a tricky thing to navigate. And, Jade, I know you and Sam did that with kids too. And so, like, it just, that adds a dynamic that's very real. Yeah. That makes it difficult. But I think...

for you guys to be as focused as possible and map this out. But I sadly learn I don't I can't in good faith tell you to stay where you are when half of your income is going to be going to this rent because it's just it's you guys will not be able to get traction of paying off this debt. No, definitely not. I agree wholeheartedly. Have you priced out some cheaper apartments in your area?

Yeah, we're currently have two dogs also. So we're in a house right now. So I feel like we need to stay in a house just because there are a family of five with two dogs. It's a little chaotic in an apartment, I can imagine. So we're kind of on the outskirts of Dallas where it's cheaper, but I'm not sure kind of what we can find that's going to fit us that's going to be cheaper. Yeah.

Yeah, you got to find you're definitely going to need to find something. Otherwise, I mean, it goes one or two ways. You either see your income going up substantially, like 25% more to where this knocks down to where it's supposed to be, or you find an apartment or a home to rent that's 25% less. Yeah. And Lauren, remember, this is just for this is temporary, which I know it's like it sounds it sounds insane.

it's easy on our side of the desk to be like, go find another place to move in. You're thinking of all the logistics and uprooting your family. Like I know it's a lot. I know. Yeah. Yeah. I mean, it's, it is, it's a lot. So there's either going to have to be what Jade said, substantial income raises that you guys are just working extra, but I don't want you to do that to have to float a necessary payment like rents, right? Like if you're doing that to pay off debt, that's a seasonal thing, but I don't want your lifestyle currently where you guys are

You just can't afford where you live. And so I think that there is going to have to be some really hard conversations. And it's kind of one of those things, Lauren, you know, choosing your heart. And we talk about this a lot. Like where you are now currently with money is hard, right? You're feeling the stress. You're feeling like, oh my gosh, we have so much debt. I'm stressed. I don't like this. Like that's hard.

It's also hard to move and to downsize and to make some tough decisions with schools and the logistics of your family. That's not fun. That's hard. But at least at the end of that hard, there's a level of peace that comes, right?

Because you can actually breathe and get some control where this hard that you're in, if you just stay where you are, literally physically in that house, but also where you are financially, it's going to continue to have this hard. And I would choose the latter, the latter hard. I would too, because...

like you said, that intensity that you put in, that's not supposed to be the way your life is lived. Right, right. Like you'll just, everything you do is like, I'm just working to live. You know, I'm just working to do this house payment. And then you're going to hate your house because. Oh, it's taking you away from your kids. Exactly. Yeah, it's a burden, not a blessing that we talk about a lot on this show. That's right. This is The Ramsey Show.

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What's going on, friends? You're listening to The Ramsey Show. I am your host this hour, Jade Warshaw, joined along with bestselling author and author of the new book, I'm Glad For What I Have. Yes. Yes. Love it. Right. Rachel Cruz is sitting next to me today and we're taking your calls about your life and your money. So give us a call. The number is 888-825-5225.

And I have to tell you guys, it's always an exciting day when someone pops into the office and is like, Jade, have you seen this latest video on TikTok? And I'm always like, no, I haven't because I don't hang out on TikTok. But I'm always very entertained on what they bring. And so today there was a video that came across Rachel and I was like,

This is crazy. You haven't seen it yet. No, I'm not. But I thought it would be cool. And James was like, hey, we need to watch this and we need to see you guys' reaction to it. So go ahead and give it a whirl. I feel like my husband and I are doing everything right. We both have good jobs. I'm a nurse. I'm a registered nurse. I work full time. He works full time. We just got paid this past Friday, right? We paid the mortgage. Right.

Bought some groceries. Put some gas in the car. And guys, it is Tuesday. And we have like $200 or $300 to last us until next Friday. Like, we don't live in a big house. We live in a little ranch. It's 1,100 square feet. Three bedrooms, one bath. Us and our two kids. I'm so stressed out. This isn't how it's supposed to be.

You know, growing up, we were told go to college, get a degree, work to support your family. Here we are. Did that. Now what? Now what? Wow. Man. Listen, you should know that we did edit it down that that video quite a bit because it was pretty long. OK. And she's emotional the entire time. And she also does mention, Rachel, that she works full time as a registered nurse. Her husband works full time as well and does side work.

They have two kids is what she says. And she says in the video that we just got paid on Friday. Paid the mortgage. Yeah, just mortgage, gas and groceries. And now to only have two to three hundred dollars. That's like the. Yeah, that's crazy. Look, I have my take on it. You tell me yours. Whoa. OK. My knee jerk is I feel like we get callers like this a lot. I do. I mean, I feel like the state of money is.

is not always pretty and it's and it's really stressful and even when you do you know we even talk to people on baby steps four through six and they're like oh my gosh it still kind of feels tight because like we're having the fun kids you know and all of that is is is real but they're not at a breaking point at what she is at so my natural reaction is how much is the mortgage and

How much are you guys making a month? What other debt? So you just got paid. Yes. And you only have three to it. So that means that they only really if they really only did groceries, gas and mortgage. That means, yes, there's a ratio. Yeah. They're off somewhere. Yes. And what?

And if you only have $200 to $300 left in your account, that means the other paycheck you got 15 days ago is gone too. What is that going to? Are there other payments? You know what I mean? Like as it starts to decrease that much. Well, let's look at this in a real way. Okay. So let's say she got paid on the 30th, which is like the first for most people. Okay. And if they paid their whole mortgage, that's most people's biggest bill. So that's gone. And then if they...

spent half their grocery money, half their gas money, then I'm like, okay, the next check is if they've got two kids, we don't know how old they are. Let's say they're in daycare age. Maybe the next biggest chunk goes to daycare. Then the other half goes to gas. Other half goes to groceries. My question still is, if you can only pay three things, then there's something ratio. There's a ratio that's off. Yes. Like we say 25% for housing. But also I would want to know where else is that? Right. So like,

Where did the 15th paycheck from the month before? Yes. Where is that all going? Yes. Is there payments to car payments sitting in the driveway? You know what I mean? Like, I want to know so many other things. I mean, she says, quote, we did every we've done everything right, which I feel because that is that is a sentiment. What she said is, you're told go to college. In fact, when I went to school, you know, which was 15 years ago, there was no even talk of college.

of hey let's look at price tags it was really go where you can get in you go and you'll get a great job yes working 40 hours a week everything's gonna be fine right and she says i don't know if it was in this video because i've seen both versions did she say that she's going to school full-time too no she's going to okay so that wasn't in the clip guys she's going to school full-time as well which is a big expense so here's my take here's this is just me

She says, okay, I'm working full time, going to school full time. Papa's working full time. He's got a second job plus two kids. Forget finances. I'm just crying every day anyway, because that's just a lot. Like, let's be honest. That's just a lot in life. The number of hours in a day. So part of me also feels like there could be a piece of this. That's like, if she's going to school full time somewhere else too. Yeah. I'm like, stress will make.

everything seem worse. Yes. Right. And when you feel stretched on your time, it makes everything harder. Like those $300 that they have all of a sudden just feels like even less. Right. Because like, I don't want to cook tonight and I don't want like there's a lot that feeds into that. And so part of me just wonders, well, I have two thoughts. I'm like, are you paying your way through school? That's a big piece of the budget.

or are you going into debt for school? That not only adds to debt, but also stress. So I just see a real domino effect that seems to be taking place. And part of me wonders, okay, do you guys need to pull back in some way? Maybe you need to wait on school. Do you know, is it going to ROI the money you think it's going to ROI? Like there's so many things. Listen, at the end of the day, she needs to call us and we need to help her with her budget. Honestly.

And I'm like, maybe it's because we're on the Ramsey show watching this, but I automatically wouldn't be like, how much are the car payments? How much are the debt? Like, because that's always our thing. But Jade, and again, this may not be her situation, but statistically speaking, could easily fall into this scenario where there's two $600 car payments in the driveway and that's $1,200 that's gone every single month out of a paycheck. So like there are real things that could be happening behind the scenes numbers wise that could actually free her up.

I believe there are. I would want to know. Yeah. Because if you're a registered nurse, you're making great money. And if your husband's working full time and on top of that, working a side hustle. And if you're in a state where the nurses don't make a lot of money, maybe you need to move. Because...

That pay changes depending on where you live. Yeah, that's true. And so, you know, like plenty of people all the time are in jobs where theoretically they should be earning more, but they happen to be in a place where they're just not earning that much. And so in this case, I feel like that could be at play, but I don't think that we heard this part either in this clip, but she also goes on to say, someone needs to do something about this. Like, and she starts talking about the state of the economy and she does say like,

you don't like don't comment to me about Trump and don't comment to me about Biden but this is an economy problem and someone needs to fix it maybe if we all band together some someone will fix this and someone will hear us and come help us and I'm like if you're to the point and this is not criticism by the way like I'm saying this as a person who is I

I had that same, I've had a moment in my Jeep Liberty with my husband when I told him to pull the car over because this cannot go on any further. And I like seeing her cry through tears. Like I know what that is. Yes. And I felt that. But at the same time, you can either look at that as a moment of someone come help us. Someone needs to do something or go, I need to do something. I can't keep living like this. My husband and I have to change. Like,

where is that side of it? Yep. Yep. Cause that's a complete flip of the perspective. That's a great point. That's a great point. You know, because I'm not like, I'm not trying to be ugly or, you know, incompassionate, but the fact is,

probably no one's going to knock on your door and go, I'm here to save you. Like no one's going to do that. The government, look, they're just going to keep on ticking and keep on. And I don't want you to keep living like that. So my guess is there's probably not a real budget in place because when there is a real budget, you can see, like you said, if those ratios are off, if you're like, wow, we're paying 50%.

for this 1100 square house, you know, that's too much. Like you, you'll be able to see those numbers. So, yeah. And I think you're right that the idea that you have to advocate for yourself, no one is going to come save you. And that's true with your health, with your, I mean like all these areas of life, not just money, but you do get to a point as a grownup where you're like, oh my gosh, I felt this with my kids. Like,

at the doctor or something, I'm like, oh, there's no one else. Like it's me. It's me that's having to do this. Right. So like there's a moment where you have to be the advocate for yourself and your advocate for change. And it's hard, but, but, but what she's feeling, a lot of people feel, cause it has been a hard year. You guys, it's been a hard year, but we also want to look at the numbers.

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You're listening to The Ramsey Show. I'm Jade Warshaw. This is Rachel Cruz, and we are taking your calls all hour. Give us a call. The number is 888-825-5225. We'd be happy to hear from you. Let's go straight to the phone lines where we've got Diana from New York. New York! What's going on, Diana? Hi, ladies. I'm well. I'm just outside of New York. I'm in Connecticut. And I am calling because my husband and I, we've been married 11 years. We have three amazing kids. And I'm going to be calling

we are struggling when we first got married we

My husband really struggled. He was laid off from a job just before our wedding, and it was unexpected. We were given the choice when we had a wedding. I have super savvy, money-savvy parents, and I just kind of thought that the lifestyle would somehow continue. And we were keeping up with the Joneses, and we chose the wedding over the down payment for the house.

We were paying higher rents, and it put us in a position where we made very bad decisions with credit cards. And we've honestly been struggling just ever since. Income-wise, we're in a good place right now, but we had two kids 11 months apart,

Oh, wow. Within the year of getting married. And now we have a little girl that's just about to turn four. But we still have that credit card debt from like, you know, six, seven years ago. And we're in debt and we're living paycheck to paycheck. No matter how much we make, it just never seems to be enough. And I just really...

want to get smart with our money. And I just feel like we're in this big hole and we can't get out of it because of our past. And we have about $65,000 total worth of debt. And we don't even touch $45,000 of that. And because we have poor credit, you know, we pay high interest rates for

our cars and, you know, have all along. And we were just finally on the path to homeownership. And two months, two years ago, two months before we closed on our house, my husband was laid off again. And fortunately,

We never missed a beat. The paycheck, he was reemployed within two months and ended up income-wise getting more. But at that point, we had no choice. We were going to lose the house. So my mom fortunately stepped in and took on the mortgage for us. So you're in the house now?

We are in the house now. And who's paying for it now? Yeah, we are. We're safe. Like I said, my parents, fortunately, are the opposite of me. What is the mortgage? Can I get a few particulars from you? Sure. Okay. How much are you guys making a year?

My husband makes about $125,000 and I make about $25,000. And then we each have a few occasional side hustles, but they're seasonal. So per month we bring in anywhere between $9,600 and $10,500 a month. Okay. And can you go through and list out each debt that you have that totals up to $65,000?

We have about $45,000 in personal loan. We have $14,000 on a car. Fortunately, we were able to, before we purchased our home, we got rid of his car because he went fully remote during the pandemic. Okay.

Um, and so we're a one car family now. I did get into a, unfortunately a car accident. Um, and so the car that was paid off, uh, was totaled. Um, we probably made a mistake by, um, you know, buying a car worth more than what we had, but we've got 14,000 in a car loan remaining. Um,

and we put about 20,000 down when we bought the car two years ago. Okay. What other, what other debt? So we've got the 45,000 personal loan, 14,000 on a car. Yeah. And then about 5,000 I would say in a credit card debt, five and probably about 4,000 in medical. Okay. So you've got a really good income. This is good. Okay.

the $65,000 of debt. And the one thing I also want to ask you is your mortgage payment. I wanted to know how much your mortgage payment is every month. It's $2,500. Okay. Not a problem.

Okay. I mean, after we pay our bills, I mean, it just seems like every month, anytime we get ahead, I mean, just like with home oil, you know, once we get a delivery, we have, we're back to zero and, um, you know, and plus we have poor credit, so we have nothing to, you know, float us. And, you know, to be honest with you, when I look at your debt,

there's nothing on here that I that I go oh my gosh they've got they're drowning in payments like you've got a lot of debt here but I I also wonder if you guys is spending it is where it's like where you're spending is out of control because I'm looking I'm like okay a four thousand dollar medical debt five thousand dollars in credit cards if you're paying minimum payments and you're making ten thousand five hundred months that's not what's sinking you right your fourteen thousand dollar car is not what's sinking you

Yeah, I'm definitely the one causing that, and I recognize that. I definitely have a hard time with not keeping up with the Joneses, and I'm definitely the spender, and I'm definitely the cause of, I think, a lot of that, too. We tend to eat out a lot

because we're busy with the kids and we're working and paired with, you know, trips to Marshalls and HomeGoods. See, that's where the money's going. And I'm glad that you recognize that it's you doing that. The question is, what's going to happen to change that? Because here's the thing. You could pay off all this debt, but if you don't get your spending under control, you're still going to spend away all the money that you're supposed to be using to do things like save and invest. And this is going to be an ongoing problem for you, even if you,

you guys managed to pull yourselves out of debt over time. So we've got to get a handle on that. And I'm guessing you're not on any real budget. It's kind of just pay the bills and everything else is up for grabs kind of thing.

Yeah, I try a budget, but then, you know, something happens or we need home oil, heating oil, or, you know, I have a rare eye condition, you know, a contact lens tears and I need a contact lens that weirdly isn't covered by the insurance company. And it's just like one thing after another, it seems. And any time we get a nest egg, it just seems like something pops up.

Okay, well, that's where your budget is going to help you. Because if you're doing a good budget, you're going through every single dollar and you're assigning it with a purpose and you're choosing. Like budgets include more things than just rent, mortgage, utilities. It includes things like a trip to the eye doctor or my contact lenses or a miscellaneous category for things that...

you know, there's always something that pops up in the month. That's like, I didn't know this was coming, but I've got this little, you know, cushion here just in case. And so that's what a good budget boils down to. But I cannot stress it enough.

At the end of the day, it's the budget is a tool. It's something that we pick up and then we wield it and use it and follow it or don't follow it. Right. The budget doesn't do the thing for you. At some point, you do have to be like, I'm a grown woman. Like, I'm a grown woman. Absolutely. Who has the ability to say yes or say no. And it sounds like you're kind of to that point.

Yeah, Diana, there's and you've said it twice on this call. So I'm going to just kind of say what you've said is keeping up with the Joneses, keeping up with the Joneses. I know, you know, like you've said that a few times and, you know, money, we can we can talk about the numbers a lot. And that's what we're good at on this show to help you solve that. But what Jade said earlier was exactly right. That until you, Diana, like there's something there's there's something in there with you. And I can say this because I'm a spender and I get it. But I think it's

being able to pinpoint what is it in me that is causing that? What is the insecurity in me? Because it's not other people's fault, right? They're living that lifestyle. But what we have to realize is, you know, comparison will always be in us. I was talking to Dr. John Zolony about this. Like there's a core part of humans that comparison's a real thing. Like even back with our ancestors when they had to hunt and they, you know, they had to figure out things like you're constantly, you know, sizing up

things in your life and people had to do that for survival. So like that is a part of who we are. We are naturally bent to look around and see. But the problem is, is when we look around and see and suddenly we say, oh my gosh, I want what they have because what they have is going to fulfill something in me, deep within me that's missing and that's what I have to have. So there's some core things

emotional parts of this, Diana, in you specifically and in your story that I would love for you just to dive in. If you hold on, Austin will pick up because I want to give you my book, Know Yourself, Know Your Money, and Love Your Life, Not Theirs. It's about comparison. Give her mine too. Give her mine too. Oh, yes. And money's not a math problem. Jade's quick read. So this is so true for a lot of people, Diana. But if you can get Diana under control and actually start mapping out a budget, I think you guys are going to see a lot of progress.

But it's hard, but you can do it. You can do it. We're pulling for you, Diana. This is The Ramsey Show. 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 am your host today, Jade Warshaw, joined by your other host today, Rachel Cruz, and we are taking your calls. So give us a call. The number is 888-825-5225. We would love...

to hear from you. And I think it's really great, Rachel, that we're both on the show together because the fact of the matter is we both have really great books out at this time. Rachel, your first kids book ever, which is so exciting. Yes. I'm glad for what I have is available for pre-order now. That's super exciting. Order now. It's not pre-order. It's out.

out oh it's out now out and about girl I'm reading this copy you're good no worries no you're good you're good yes yeah it launched beginning of November of this past month so yeah it's um it's been so great and talking to so many parents you know talking about contentment with kids is a really important conversation to have so hopefully this book kind of launches in

into that conversation i've really enjoyed on your social seeing everybody like post they're reading it to their kids and yes i love it love to see it so if you haven't gotten your copy get your copy today it's out there it's a great christmas present now yours is pre-order yes mine's

still on pre-order until December 5th. Okay, it's coming soon. Oh, Jade, I'm so excited for you. And it's really great because if you do order it while it's on pre-order, the book that I came out with is called Money's Not a Math Problem. And if you order it now, you get three months of every dollar premium for free, which is our budgeting software that we talk about here all the time. And most people are trying to get their money on track for the new year. So this is a great time to pre-order it so that you get

every dollar premium with it. So that's that. Order it today. It's $10. Come on. $10. Love it. Go ahead and do that. Let's go straight to the phone lines where we've got Brenda in Dallas, Texas. What's going on, Brenda?

Hi. Yes, my dad, he's in his 80s, and I have determined that he's been scammed out of thousands of dollars by a fake publishing company. Shoot. And so I recently persuaded him that it's a scam, but I still feel like he's very vulnerable because they'll just keep calling and keep calling with a new scam and all of those things.

A year ago, he got a call out of the blue to republish one of his books. And so they asked for money up front. And since then, they've even withdrawn without permission from his account once they got his account number. Oh, wow. So how much money are we talking? Right now, it's almost $20,000.

Brenda, do you guys have contact information for these people? I mean, like this is they're stealing money. It's this is illegal. Have you contacted the police? No, I haven't really known what road to go down legally. What I have been doing is like we canceled his cards and got new cards and we put in fraud information with the police.

with the bank. And, um, he recently agreed to add me to his bank account. Um, you know, I mean, he, he wants to leave a legacy for his family and he's written these books and they're wonderful books, Christian teaching books. And, um, it's just hard for him. He's, you know, he's not a child that I can tell what to do. He's a grown adult and I don't want to take away

um that but he's very vulnerable he's easy to persuade and they just keep calling with different tactics wow

So I guess my question really is, because he's written another book and they want and he didn't tell them, fortunately. But, you know, it's ready to go and be published again. And he basically told me, can you find me a safe place where I can publish this book? And in some respects, I want to just shut the door and say, don't do that anymore. But writing is his thing.

his outlet well sure and when you say publishing when you're saying publishing Brenda do you mean just printing copies of the book

printing copies of the book and like making it available on Amazon, you know? Yeah. I mean, that would probably check all the boxes for him. Okay. Yeah. And all of that's not like crazy inexpensive. I mean, it's not crazy expensive. I mean, you could, you could do that. I mean, it'll take some, you know, some work on your end, Brenda, to help find a printer and all of that. But if that's his wishes, yeah, he doesn't need to be going through a third party unless you think like, oh my gosh, it's like C.S. Lewis's stuff or whatever that is.

whatever that like he actually could get signed to a public a legit publisher and do this I don't think that's really what he wants to do necessarily well and I don't think I would trust it at this point yeah no no no I know I know so so yeah I think you guys need to print yeah some some copies and have a few boxes to give to the grandkids I think you can probably put it on Amazon I mean we do that kind of stuff here at Ramsey yeah and the main thing that he's asked me is you know um

can you find me somebody that can be kind of like my agent? And, and, and respect to that, I feel like he, he had somebody that he knew was a legitimate, trustworthy publisher. Then he would be less likely to fall into the trap of those that are untrustworthy and pursuing him constantly. Um, thought about getting him to change his phone number and everything. But, um,

What if he got around? It kind of sounds like he's trying to do a lot of this in a vacuum. What if he got around some clubs and started getting to know a group of writers to where everybody's kind of looking at each other's stuff and everybody's kind of sharing contact information. And it's a little bit more of a trusted environment where it's like, have you used this guy? Yeah, I've used this guy. How did you get your book on Amazon? This is how I did it. And it kind of did a community approach as opposed to

I'm just like going down the yellow pages and I'm going to pick a publisher and I'm going to like, that does feel very, you don't know what you're going to get. And he's 80 years old, Brenda. I mean, what's your, do you like,

Like, what do you think his motivation is? Like, what do you think this is in him? Has he always wanted to do this? It's not to crush his dreams. There's also a reality that you're 80. Right. This may not be your big break. Right. I mean, I don't understand if there's an unhealthy part of him trying to be somebody. Is there anything like that? Or is it just genuinely he...

what he's writing about and he wants it available for people to read, right? Like I'm like, I wonder what his motivation is in all of it. Well, and his first book that he wrote is a kind of a teaching book on Christian foundations and

the driving point behind creating the book was to use it in a church setting. And he did use that for years. And at some point he wanted to take that material and put it together in a book form. And I think his desire now comes from all that happened with that years ago. And so now he's written another book that's similar to that. And yet another one. Um, and yeah,

He lost his wife, my mom, in January. And he just really needs something to grab onto. Yeah, a great outlet. To give him focus. Yeah, so what I would do, Brenda, if I were you, is I would sit down with him and say, Hey, Dad, listen, here's what's happened. You have been scammed out of almost $20,000. We can't keep doing this. It's not wise, Dad. So any big money decision that's happening, anytime you want to spend money, will you just run it by me? I just want to talk through it.

make sure that I can maybe like run course for some of this to be able to help you. 'Cause I want you to, if you have this dream and have this content that you want published and out into the world, like we can get that done. Like we can do that.

We also need realistic expectations of what things are in life. And we don't want your legacy to go down the drain financially by making bad mistakes. And so I want to honor you in that and help you in that as your daughter. But also let's be wise in any big financial decision, dad. Like let team up with me and let's talk it through together.

You're listening to The Ramsey Show. I'm Jade Warshaw, your co-host today, joined by Rachel Cruz, your other co-host for today. Give us a call. The number is 888-825-5225. And if you are into Spotify, you probably received your like annual Spotify wrapped results, which is pretty cool, where it'll just basically tell you like what the top

things you listen to. If you're into podcasts, they'll tell you the top podcasts you listen to on their platform. And it's been really cool because since those results are in, we've noticed that we're number one on a lot of people's charts, which is really, really cool. So we want to know if...

The Ramsey Show made your Spotify wrapped list. And if it did, let us know. That would be so great. Share your Spotify wrapped results and tag us on social for a chance to hear your name mentioned on this show. That's so cool. And a lot of you, I know, Rachel, I've seen you repost some. I've reposted some. And so here are some of the... And you're on the like main...

I know. They could have three people. And so it's Dave, Jade and George, right? Look, luckily they got my good side. I'm so excited. It's a great picture. Here are some of the usernames of people who have shared that we were in their top podcast. So hopefully I get these right, guys. Okay. We have Nicole M. Nicole M. Litched. That's her username. This one is Jade Pettibrodbent. Okay.

There you go. No relation to myself. Blake Permenter, Aaliyah Fitz, Chrissy underscore 305, Katie Irene 183, which some people might remember her on the show from being the horse girl that George said she had to sell her horse. Allie Kins. I'm going to try this one, but it's not going to be good. Toxic Kitty.

toxic kitty looks i don't like the sound of that then we got here morgan roarer love it guys keep sharing your playlist we will say your names on the live radio podcast and hopefully we'll say them right so if i didn't get it right please believe me i tried still share them with us whether it's

you know, in the comments or, you know, the little paper airplane on Instagram. We'd love to see that. All right, Rachel, should we go to the phone lines? Yes, let's do it. We got Jake in Cincinnati, Ohio. How can we help Jake?

Hey, thanks for taking my call. Follow the baby steps. Everything's great. For people that are listening first time, they definitely do work. So follow them, of course. Love it. Question, I'm a school teacher. So we're at the point now where we're looking at the investing of the baby steps and 14% of my income goes straight into like our school's pension plan. We don't really have a choice through the state. And I was wondering if the advice changes to people like me that don't really get to control that. Do I just do an extra 1% outside of that or what your guys' advice would be?

Yeah. So with a pension, we usually say that you,

you want to take that percentage and just cut it in half. So 50%, so 7% of it's fine. I would then fund my own 7% because the thing with a pension is you don't have really a choice on where that money's invested. And the powerful thing about retirement investing, yeah, is that you have the ability to look and to choose the mutual funds and all of that. So we want more of that on your side. So Jake, yeah, with your, that 14%, yeah, drop it in your head.

seven percent so that means you'll have eight percent that you're going to want to invest to get to that 15 percent in retirement so that's that's what i would do does that make sense for you jake yeah perfect just eight percent into a roth ira max it out yeah that's right all of the yes from there it's perfect right yeah great job jake awesome well done well thank you so much for the call all right let's moving on along we've got andy who's in tulsa oklahoma what's going on andy

Thank you very much for taking my call. I'm calling today for some advice, help with my 25-year-old daughter who a year ago had $30,000 in the bank in her own business, but she walked away from that and went to another state to join a fellow that she had met up with. And unfortunately, two weeks ago, she came back home. There really

relationship went poorly. She's down to $1,500 to her name. She has broken a lease at an apartment, which she's going to owe $6,000 for and a credit card that she has $6,500 balance on, both in her name only because he had horrible credit. But those we're just going to deal with. We're just going to deal with those. Yeah, he talked her into putting everything in her name alone. The worst one is at age 25,

a major car company gave them a car loan. They bought a car for $66,000. They ran it up to $80,000 by adding on warranties, etc., etc. They borrowed about $70,000 from this car, again, in her name only, and she's stuck with this thing. She doesn't have the money. She can't take the apartment on her own. She can't own this car on her own. She simply doesn't have the wherewithal. It's an 84-month loan.

at 9.59%. And the total amount is $80,000? It was purchased for $80,000. There's a $70,000 owing on it. And unfortunately, I booked it. And the Kelly Blue Book on the car is about $35,000 to $40,000 as a private party. So yeah, horribly upside down. As her dad, I'm saying, look, take your lumps, pay the apartment, pay the credit card,

but let's turn this car back into the bank and just take the hit on your credit report. Like a voluntary repossession? Is that what you're suggesting? That's what I'm thinking. It'll be one event, not many, and she can explain it and she'll just have to live it down, but there's no earthly way she

She can even sell the car for Kelly Blue Book value and then make up the difference. Like I said, a year ago she had $30,000 and now she's down to about $1,500. Before we do a voluntary repossession, because that is an atom bomb. Let's be honest about that. That's going to follow her around in a similar way that even a bankruptcy would for quite a while. The other debt that she has, the $6,000 lease thing, the 6,500 credit cards thing,

that's not like something she can't easily overcome. And the $70,000 car is a lot. And there may be some other options there, but let's talk about her income because I know she got out of this relationship, but she's still able to earn an income. So what, what does that look like for her? What's her profession? Like, can we get some numbers in that, in that area? Yeah.

So a year ago, she had her own business doing eyelashes, eyebrows. And at one point she was earning more than I am. But she walked away from all of that. And to be perfectly honest, I have no understanding whatsoever how these two are making money. They were doing online coaching for physical training and fitness and nutrition, etc. So just like influencing and stuff. Okay.

Right. And it clearly doesn't work. Okay. So she's not earning anything right now.

She's not earning anything right now. So, Andy, what, and where's the guy in all of this? She left town, but is he? So she left, yeah, so she's come back home now two weeks ago. It was, it ended up abusive, both mental and physical. Wow, I'm sorry. So there's that side of it. Yeah, for sure, which is real. He's, yeah, he's back in the state that they were in, but I heard he's mobile. I don't know. He's gone to the wind. Okay.

Okay, okay. So he's out. Yeah, so we're starting clean slate without him. So yeah, Andy, I think for her...

I think one of the best gifts that you could give her, especially considering what she just walked out of, is any level of confidence that she can have back in herself. Because when you're in a relationship like that for... I mean, she was in there for a year, I think you said. I mean, that tears down who you are as a person. And so there's something about... This is not the fix-all, but...

For her to go back to something she knows she's good at. So the eyelashes, everything, the cosmetic stuff that she was doing. If there's a shop, if there's a...

you know, some type of business that she doesn't own. I don't think she's in a place to start her own thing that she could go and just start working, you know, even if it's 30 hours a week, but that there's some consistency in earning an income and we're not going to be in a rush. All these numbers are here. We're going to work through them. But there's part of her building back that dignity and that confidence in who she is

And I think her living with you guys for a bit, I think is a really wise thing, especially from what she's just come out of. I'm okay with that. I'm 100%. And so, yeah. So I would say...

Like Jade said, the atom bomb of the car repossession, I almost would just try to sell it for that $40,000, take that $30,000, you know, so she's going to have a loan of that. She's going to have a lot of debt here. Yeah, she's got to get a loan for that difference. Yes, and there's going to be some years of working through this, but obviously I'd rather be in this situation than where she was. That's right. But there's just some things that she's going to have to really slow walk financially to

But I also think it's possible for her. I mean, I really do. I think it's going to be a long road ahead, but I think that there is a way. You're a good dad. This is The Ramsey Show.

Hey, what's going on, everybody? You are listening to The Ramsey Show. Hey, thanks for listening to The Ramsey Show. And if you like this show, we'd always love it if you like, subscribe, and share it with somebody who you think could benefit from it. I'm your host, Jade Warshaw, and I'm joined by Rachel Cruz today as we take your calls. Give us a call. The number is 888-825-5225. And we'll talk about the

things that are concerning you, everything that relates to your life and your money. It could be relationships with your kids. It could be your career. It could be the holiday season that is upon us, Rachel. And I was talking to James during the break because I saw a article that said,

25% of Americans are still paying off Christmas from last year. Oh my gosh. While simultaneously plan on spending more this year. This year just keeps going, keeps going. And so I find that to be very interesting. So Rachel, I'm going to hit you with a couple of facts. Okay. And I want you to react and let's get into this. So

The stats say that on average, Americans are going to spend $875 on Christmas. And that kind of shakes out to a little over 600 on like gifts for like immediate family, coworkers, then another around 200 on like decorations, like miscellaneous things. And then another hundred on just kind of like random, oh, like that guy over there needed a gift kind of thing. What do you think about that number? Okay.

It doesn't sound like terrible to me. It doesn't sound... I thought it would be more. Yes, I would have thought at least 1,200. In my head, I thought it'd be over 1,000. For the average family? Yeah. Like...

But also all of that, that's not just Christmas gifts. This is like the whole holiday season. This is the holiday season. Yeah. And part of me goes, okay, 875. Couldn't we have like stacked up a little money throughout the year to make that happen? I know. That's right. That's right. Think about that, guys. Okay. So then I read this stat. 48% of Americans start shopping before the end of October. So. Oh, wow. People get started early. Yeah.

And I'm like, okay, like that spreads it out a little bit. Right. Through at least three months. Yeah. But they're putting it on credit cards. Yes. It's going into going on to debt. Okay. So this is the kicker. Here's the kicker.

60, 61% of people have said, and this is very current, like as of October, 61% of people have said, hey, we're living paycheck to paycheck. Four out of 10 people are saying, man, we are worse off this year than we were last year. So basically they're saying life is hard right now. Finances are hard right now. But when asked, they still plan on spending more this year than last year. That for me, and I'm like,

Wait a minute. Wait a minute. What's happening? And then they come through with the stat that says 74% of Americans say they feel stressed about their money. I'm like, what is happening? You're making this choice. Yes. Oh my gosh. See, that's what's funny is I'm like, and it's such a human behavior thing that it's like once you have your mindset to something, you're like, oh, I'm going to do it regardless of what the other numbers are saying. I'm going to choose to continue following this plan. And you're just like, wait, no, no, no. You can stop right now. You can stop.

and pivot well ross on friends with the couch and he's like we can all pivot our plans if your numbers are not adding up like this and if you're still paying christmas from last year yeah let me tell you what i'm hearing in my heart that i i know that i know someone is saying i know someone is like jade the year has been so hard i feel like i can't spend money on anything i just need a little joy i just need a little joy rachel like

I can't give up Christmas too. Like I can't, let me just go hard on Christmas. And then when January 1st comes, I'll get back on track. And please, Rachel, don't take Christmas from me. I got to get my gifts. Come on. I got to get,

And what's funny is the gifts. Let's just be honest. Some I'm sure really great sentimental things. Yeah. Probably a lot of crap for the kids that they're going to play with for two days and then they're moving on to the next thing. As you pointed out yesterday, Jade. Adults don't need gifts. Shipping gifts around to Aunt Rita who if Aunt Rita quote Jade needs the blender, Aunt Rita can buy the blender. That's right. So really I'm like it's either obligation or

It's because you just always have done it. Yeah. I mean, like, right. There's a lot of this in play when you could actually say, okay, let's just stop. Let's just stop and reassess what's, what's really happening. And we can get our kids some things.

But it doesn't have to be that much. It doesn't have to be that. What would happen if you got like a family gift that like the whole like a ping pong table, like something that it's one gift. Like you don't have to spend four and five hundred dollars, but it's one gift that the whole family can truly enjoy. It brings everybody together. Like what would that look like, especially if you're in debt and you're really trying, you know, you're still paying off Christmas from 2022. Right. Right. Or

beyond. Like, I just feel like there's ways that we can pull back and go like, do we want to stay on this hamster wheel? That's it. Yes. Keep creating debt. And or do we want to just do because really, usually it only takes one year to like

put that stake in the sand and be like, all right, this year is going to be different. And you can get so much traction from just one time drawing that line and be like, this year we're not doing it. And there's something about lived experiences that I think bring us back to what we've always done, right? It's like, we know it, we're comfortable with it. It's just what we do. And so we just go back into what we do.

And to your point, if you change something different this year for Christmas, like you pull way back or you stop giving gifts out to Aunt Rita, whatever it is, and you live through it, it gets to be February, March, and you think, oh, okay, everyone's okay. Yeah. Everyone's fine. Yes, that's right. We all survived. And I could repeat that again, right? So it's almost like you have to go through the actual action of it to assure yourself

you're going to be okay. And everyone else is going to be okay. That's a word, Rachel, because it really is like a news cycle. Like when something is really big in the news and it's like the only thing anybody's reporting on. And then two, three weeks later, it's crickets. You never hear about it again. Yes. And I feel like Christmas is that. Like right now it's like Christmas. There's only two paychecks till Christmas. And by the way, there is only two paychecks till Christmas. And it's like the only thing we can think about. But you're so right. On December 26th,

No one cares. I know it's over. Yep. Yep. December 26th. It's over. And you can go, wow. Okay. Like that is over now. And honestly, and call me cheesy, but I'm being for real. I'm like, even just past Thanksgiving, it's,

I'm like, and I know Thanksgiving doesn't have gifts and all of it, but I'm like, when I look back with my kids, I'm like the memories we have. We took bikes to an empty parking lot from a high school down the road, road bikes around the parking lot because Caroline can now ride her bike. You know, we went on a hike. We did puzzles. I forced my kids to do puzzles because I'm 80 years old and I love puzzles. So we did like Christmas puzzles.

We watched Home Alone 2. We saw My Family. We had a Friendsgiving. Everyone brought appetizers and stuff. And we all had a great night and played a game. You know what I mean? You look back and it's like, that's the good life. 100%. It's not all the...

that you clean out of your playroom 18 months later. That's all. You know what I mean? Like, yes, I do. And so there's something to be said. Yes, stuff is fun. We are not against stuff on this show. Okay. So like, yes, Santa's me bringing a new bike for one of the children. And yes, like we're going to be having

stuff this Christmas. But yet, like, what do we all remember? We remember the time spent. And I don't want to seem like a Hallmark movie. But it's just true, you guys. It's true. So that is true. Don't go into debt. Like, don't. Stop. Just stop. It's unnecessary. Go ride bikes in an empty parking lot with your kids and have an afternoon. I mean, it might be the first time you've ever done that. Because Rachel, what you're describing, that is a...

mindset. And for many, that is a complete mindset shift. Like I was on a webinar the other day about budgeting and we were talking about, look, if your Christmas budget doesn't allow for it, you may have to cut back. And some of the people in the chat were saying, oh, we're not having Christmas this year. And like, oh, I guess that does it for Christmas this year. I guess we can't have it. And I'm like, because it equals gifts. Because, yeah, that's what I'm saying. That's a mindset shift, because for a lot of people, Christmas is

is gifts and we've never had it any other way. We don't know what it looks like to not have a stack. You know, everybody posts that stack on Instagram where they're all like stacked up the wall and all the wrapping paper is the same. And I'm like, whose life looks like that? But did I tell you my story about this last year? No, but tell me we,

We I did that okay I did that okay I saw everyone posting their pictures I thought it was sweet And we were going to bed that Christmas Eve You know I think Santa had come And you know the Christmas tree was all It just like it was a sweet picture for me And I took a picture and I did put it on Instagram I just said happy Christmas you know Merry Christmas Eve everyone hope you're having a great time Yeah I hope you're having a great Christmas with your family Jade the amount of comments underneath that was like

I'm so glad you practice a minimal Christmas, Rachel. Minimalism is at the... All this stuff where I was like...

No. Oh, I didn't think we did. Oh my gosh. Winston, did we? So obviously we did good. It made me feel good. That's great. Because there wasn't a ton, but I feel like we got good gifts for our kids. It just made me laugh because I was like, Winston, who knew it? We were minimalists. Look at that. I didn't even know it. And it was a great Christmas. You don't need gifts to have a great Christmas. This is The Ramsey Show.

This is The Ramsey Show. I'm Jade Warshaw, joined by Rachel Cruz. Give us a call. The number is 888-825-5225. Let's go directly to the phone lines where we've got Monica in San Jose, California. Hey, Monica, what's going on?

Hi. Thank you for taking my call. So I'm calling because my husband and I bought our first home in the Bay Area in September. I can go into the financial details of, you know, how it all went down, but essentially it was for $1.19 million. $1. what? $1.19. Okay. We were able to put $550,000 down. Wow. Nice. Nice.

Yeah. So I, again, if it's helpful, I can go into all the financial details of like what the mortgage is. What's your question? The question is that we hate the house. Oh, what? Yeah. What changed? Oh no. Yeah. We're really unhappy. Shoot. Why? It's just, it's not a great layout for our lifestyle. Um,

Not a lot can be done to change it. It's a townhome. So, you know, there's restrictions on what you can do with an HOA. And not only that, it's a three story townhome. So it's just a big issue around layout. Did you know that going in? Like you didn't buy a sight unseen.

Yeah, I know. We did know it, but we, you know, we were first time home buyers and I think we really didn't spend enough time on thinking about the home. We were really concerned about whether it was a good financial decision and we spent a lot of time thinking about that. Yeah. And yeah. And you know, this is like a very competitive area for real estate. So yeah,

We just we really wanted to be homebuyers. And like at the end of the day, the question is, you know, we're already here. It's already done. Is it worth it for us to take a loss and try to get out of it as soon as possible? Or should we try to stay? Do you feel like it's going to be a loss?

Well, like my husband is particularly very unhappy here. And like, I just feel life is really short and it's causing a lot of stress. And like financially, if you sold it, why would it be at a loss? Well, the value of the home is already dipped since we purchased it. What's it at now?

and also of course the seller fee for, you know, working with a realtor, all of that is going where we would definitely take a loss. It's a matter of how much of a loss. So we're just trying to think through, does it make sense to stick it out? Like how long should, should we try to stick it out before trying to sell it? I gotta be honest. Like part of me, like I'm hearing what you're saying and I can tell that it's really bothering you. Um,

It's bothering your husband more than you, Monica. And that's my, that's a little bit of my question is that he's unhappy and he's short and he's not. But like I, the reasons and look, feel free to elaborate, but like,

People call in and they're like, oh, the guy upstairs is smoking weed or, you know, my neighbors are violent or there was a murder and, you know, across the street. Like there's those are the reasons that I'm like, yes, you need to move immediately. But when somebody is like, oh, I just bought a one point one nine million dollar house and I just don't like the layout. I'm struggling with that. I'm not going to lie. Is there something else that is it far from work? Is there a big commute? Like, is there something else that's really weighing into this that you're not saying?

Well, you know, we moved from a home that was in the same community that we were renting and it was fully upgraded and we missed the opportunity to buy that home like without realtors being involved. So we, you know, it could have been like a directly buying from the owner situation. And so I think like that's really weighing on us and comparing this home to that is really hard because that was an upgraded home. This is not. Yeah.

And we're going to have to put some money into this home to make it as comfortable as that home was. It's also on a busier street, so it's really loud. And we have a baby, and she's often being woken up due to the... Well, a sound machine can solve that. We can just get one of those white noise machines. I'm just being flat out honest with you. I don't know that this is a reason for you guys to move. I think this is a bit of a...

And I'm not saying you can't move eventually, but to take a financial loss doesn't make sense.

Yeah. Yeah, it doesn't, Monica. I mean, you call it into a financial type show. And so we do look at the numbers of this. And yeah, I mean, it's not. I mean, if you guys have the money and you find something better and you guys just shake hands with each other and say, we're going to take the loss. We're going to call it stupid tax. We shouldn't have bought in the first place. We're going to go find something we want. You guys can. But financially, it's not smart. And what you have to understand too, Monica, is that there's a...

There's a level with this discontentment that can be legitimate. Like, I get that. But also that level of discontentment and who you guys are still moves with you. And so that is one conversation I would make sure to have with you and your husband to say, okay,

We're moving because we don't like the house and no house is going to be perfect and the next house we come to is not going to solve all of our problems. It's not going to be the thing that fixes everything in our lives. Does that make sense? There's a level of that discontentment that I'm hearing and that can follow you. It's more so that when someone is

Deeply unhappy Like every single day And it's impacting Your well-being To the point that it's That's it though Monica Why shouldn't he be doing that It shouldn't be impacting him Because there's three stories Like do you know what I'm Like that's where I'm like Woo There's some stuff happening That's probably more than Just the house In his In his life And what's happening I mean like

If you're really that unhappy because of a layout of a house, then you're an unhappy person. Like there's something else going on. Yeah, I second that. I think there's some... I mean, my husband and I moved from South Florida to here, Monica. And before we moved, we had done everything. We had completely renovated our house, made it exactly the way we wanted. But then we moved for a job and we moved here. And our house is nice, but it's not upgraded. It's not...

It's not the way it was. And I could easily be like, oh man, like that other house was so much better. And now we're going to have to, you know, renovate this one. And $1.1 million, you know, like there's, there's just some part of that where you do have to take a beat and be like, well,

we have a great home and it's going to take a while to get it where we want it. Or we're going to have to live in this home until we can afford to move to the next home. Yeah. So I guess the question is, how long do we need to hold it before it makes sense to sell it? I think.

Our rule of thumb is five years For a house to kind of ride through the market Well we tell people to buy If you're going to buy a house make sure you're in it for at least five years That's usually a good average amount of time For the market to kind of go up and down All of that but again And we're in a weird market you know And Monica hear us say like

Like, and I always give people this out on this show that you're a grown up. Like if you guys decide we're going to go take a $80,000 hit. Yes. Then we're going to do that. Right. You're the one who has to sleep at night. But just hear us say, though, there is other stuff happening that's causing this unhappiness that will follow you. And that would be more of my concern. If we can't be content as a family of where we are.

And again, I understand like, oh, the cabinets are old. Like I get that things aren't upgraded. I understand that. I understand that. But, but the, but the, the environment of the emotional environment of the family and of the home, the fact that it is so tilted right now because of a layout and three stories is,

That worries me. I don't like that. So there's a part of me that kind of wants y'all to stick it out. Figure out what the real problem is. Yeah, to have to deal kind of with where you guys are. And I know that's stressful as a wife and all of it. Yeah, you're in a hard spot, Monica, and I'm so sorry. So again, if you guys choose to

I pulled $80,000 out of the air. I don't know what it'll be. Then y'all can and you can move. But if you're asking from a financial standpoint, five years is usually a good rule of thumb from a timeframe perspective. Well, it also makes me wonder. I'm like, okay, if they sell this house at a hit, they're not going to... They bought what they could afford. So what are the chances that they're really going to be able to get anything better than what they already have now? Do you know what I mean? So they could... A better layout maybe? Maybe. But it might not be fully upgraded. Yeah.

I don't know. I'm sorry, Monica. Deeper issues are involved here, 100%. That does it for this hour of The Ramsey Show. Join us for the next hour.

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 am your host, Jade Warshaw, joined by your other host, best-selling author, host of The Rachel Cruze Show. Rachel Cruze, I almost said The Ramsey Cruze Show. It's great. Hey. Very similar. It's all the same.

All the same. We're taking calls about your life and money, so give us a call. The number is 888-825-5225, and we would be happy to talk with you. Again, anything that has to do with your life, your money, Christmas gifts, whatever you can think of, we will talk about it, as long as it has to do with life and money. So give us a call. We'll go directly to the phone lines here with Dorothy in Boston, Massachusetts. What's going on, Dorothy? Hey, Jade. Hi. Hi, Rachel.

My question today is where would be a really good place to start when someone knows little to nothing about investing? I love that question. Is it you? Is it you?

It is me. I'm asking for a friend. Yeah, keep right here. No, it's great. You know, let me just tell you what I did. I knew that I wanted to work with a SmartVestor Pro or like work with a professional, but I also wanted to kind of have like a baseline of knowledge going in so that I could follow them in the conversations and also have an idea of what I wanted because...

I didn't want to go into it with this idea of like, okay, you just tell me what to do. Right. I wanted to learn and understand it. And so for me, a lot of that was I started listening to shows like this and digging into that content. And on our website, RamseySolutions.com, we have so many articles on investing and all these things that you can really sort through. And I think that that's a really great resource to,

And then I just spent time doing my own research. And then I called up a Smart Investor Pro and I kind of let them know, hey, here's what I'm thinking. The financial plan that I follow talks about investing across four types, growth, growth and income, aggressive growth and international. And they talk about putting 25 percent into each one. I agree with that.

And I just really started that conversation and I let them know, hey, I'm open to learning. I just want to understand how we're investing and how we're doing this. And so that's how I started. Does that, is that ringing? Is that pushing any buttons for you? I'm sorry.

Yes, it is. I'm not quite there yet to baby step four. But I just want to have like some basic knowledge. Yeah. Yes. So when someone's like S&P 500.

Yeah, totally. Okay, so here's just kind of a, let's just do a quick like four minute high level investing school for you, Dorothy. Oh, I love it. Okay. So when it comes to investing, we always, we have the rule, we call it the KISS rule. Keep it simple, stupid. That's what we say. Keep it simple. Great rule. Yes, because people get very,

Very deep into the weeds of stuff And they're all like Trying to do all this fancy stuff So keep it simple So yes You mentioned the S&P 500 The Dow Jones When you turn on the news And you see the big chart Right With all the stuff Right so He has a ticker I'm like That's right Yeah So what you're looking at Is just basically The values of these companies And so The S&P 500 Is the top 500 Largest companies Yeah

And so you're going to have Apple, you're going to have Ford Motor Company, you're going to have Target. I mean, you're going to have 500 of the largest companies. And when you buy into those companies, you buy into the market, right? You can do S&P 500, which is not to get too complicated, like the index funds. You can go into the stock market. But basically what you're doing is you're buying a small portion of these companies when you go and buy a stock. Right.

Now we recommend Dorothy people can buy single stocks where you put all of your money in Apple or you put all of your money in Target or all of your money in American Airlines. We don't recommend that. So some people's strategy is they go and they and they buy individual stocks and

And they put their money and hope that a few of these companies do really well. What we teach, Dorothy, is to invest in mutual funds. So mutual funds are 90 to 200 of those stocks in one fund, okay? And so that's going to help spread your money out so you're not in single stocks. So that's kind of how the market, the basis of that. Now, we can branch off into retirement investing. So you're going to hear things like a 401k.

which most companies offer their employees and they'll do a match. So if you put in 3% of your income, Dorothy, the company will match 3% or some companies it's 4%, 5%, 6%. Now, when you're opening a 401k,

Then you have a choice when you put the money that they have, where is that money going? And that's what Jade is talking about is actually taking your money and buying mutual funds with it. Now, the specific mutual funds are the four types that she talked about. That's pretty deep in there in the details of it.

But that's the 401k. There's a IRA, a traditional IRA and a Roth IRA, which is another vehicle for investing. And again, you can open that account, but the money you have in that account, you want to actually invest. And that's where a SmartVestor Pro can help you.

And then another term to remember, Dorothy, is Roth. Roth is your friend, R-O-T-H. Roth means it's after-tax dollars. So it's after you've paid taxes on your income, your income hits your checking account. You use that money to go and fund a Roth IRA, which the great thing about that, since it's after-tax dollars, that means all the growth that's going to happen, compound interest in that

in that account is tax-free because you've already paid taxes. Yes, which is beautiful. So whenever you see Roth, we want that. We want Roth IRA versus traditional IRA.

And if your company offers a Roth 401k, you take that too. Now, again, it's after tax dollars. So you're going to feel it a little bit more. It kind of hurts a little bit more because you've paid the taxes and you're like, oh. But again, that's kind of just, I don't want to confuse you, but that's kind of just the basics. No, that's,

Very clear. That we look at. But I would sit down with a smart investor pro, what Jade said. If you go to RamseySolutions.com, you can find one in your area. And if you're anywhere near Boston, there should be multiple. Yes. And sit down and talk to them, set up meetings and interview each of them and kind of figure out who you like just from a personal standpoint, who you enjoy, who's going to teach you. Because...

This is it. Yeah. You want someone in your corner because it can get really granular really fast. That's right. And you want somewhat of an understanding, but you also have to know that these people, you know, they do this day in and day out. Right. So there's a level of trust you have with them to understand.

in this process. Yeah. And I also want to encourage you or anybody else listening. People rarely understand it in one take. You know what I mean? Like I had a buddy come visit me and she was like, Jade, explain this, explain this Roth IRA thing to me one more time. And then,

You rarely get it in the first try. It's like I remember the first time I was like, wait a minute. What now? And it's like you want to go back and listen to it again. So go back and listen to this call again. Like I said, dig into some of those articles. Make sure you're setting up time to talk with these people because it takes a minute for you to really understand it. Because like Rachel said, and it's true.

It does get granular very quickly. And it's like, okay, well, once I finished my Roth IRA, then what do I do next? And then if I have more money, where do I go next? And so before you know it, you're really going down the line on this. And you want to make sure that you do have a clear understanding because these are your hard-earned dollars. Yeah. And Dorothy, and for anyone listening, that baby step four is 15% of your income into retirement. So retirement is going to be your 401k at work or 403b.

and a Roth IRA. So those are the two main ones. There's other things like an HSA and different things if you max out those other two that are options. And we talk about that here at Ramsey. But for most people listening, always remember it's your 401k and Roth IRA, 15% of your income that goes into those. That's right. All right. This is The Ramsey Show.

You are listening to The Ramsey Show, and I want to let you guys know that our Ramsey Solutions Cyber Monday sale is extended. So if you thought the savings were over, you were wrong. You can still go on and get some of our lowest prices of the year all week long. You can get meaningful gifts for your family and friends as low as $7. I'm talking about audiobooks. I'm talking about every dollar premium gift cards for $49.99. That's

amazing. You can even get things like Financial Peace University, our nine-week series, to help you learn about money. You can get that for as low as $59.99. There are gifts for everyone. You can find things for your kids. You can find things to set and accomplish your goals. I'm talking about the Ramsey 2024 Goal Planner, which is just

$44.99. And by the way, the content in that was designed by Rachel Cruz sitting to my right, Dr. John Deloney and myself. So it's a great planner to help you work on your faith, relationships and finances through all the teachings that we give you throughout the year. So

that's a big one and honestly one of my favorites the rachel cruz wallet is available in many colors i think the champagne color is my favorite one rachel if i'm being oh in a brand new edition navy we did a navy this year i know i love it too what i'm saying guys is you've got to get online and shop our week-long cyber monday sale it's at ramsay solutions.com slash store gotta go pick that up wow all right

Let's talk from neighborly.com here for a moment. So our question of the day is brought to you by Neighborly, your hub for home services. Now, if you need work done on your home, your yard, but don't know where to start or who to trust, I'm telling you, Neighborly is the answer. Find all the help you need at neighborly.com slash Ramsey. That's neighborly.com slash Ramsey. And today's question comes from, we're ready for this.

Scrooge mom on a budget from Ohio. She requested this name. She said, please address the topic of Christmas gifts for teachers. I hear my adult children talk about the cost of gift cards, etc. for their children's teachers. I raised four children. They had multiple teachers every year for specials, you know, PE, speech, music, art, playground, supervisors, cafeteria workers, homeroom, etc.,

Uh, any given Christmas, I could have dropped hundreds of dollars on 30 plus teachers and support staff alone. They are hardworking professionals and I'm trying to understand how this all got started and why it has gotten out of hand. I am more inclined to get a Christmas gift for those working on Christmas day. Interesting. Fair. Um,

Yeah. So I don't know where this quote unquote got out of hands. I don't know. And I think it's a I think it's a really personal thing that whatever you choose to do what your budget allows. But I do think the expectation of just people in general doesn't need to be your expectations. You have to set your own for your own household and everything.

And Jade, what I have found with majority of my kids, majority of years, a lot of the room mom or someone will actually, you'll Venmo her money and she'll get a big gift from the class. Oh, that's great. So that works out really well, which is very nice. Now, I will say this is one my our teachers. I will. I do kind of go big on my kids like specific teachers. So like the kindergarten teacher and Amelia has third grade. She has two teachers. So.

I will. I'm like, because I just appreciate them a lot. And again, we have our budget. It's something that I plan and I do. So that is one area of life that I feel like I'm more. I probably I may spend more on a teacher than my like my parents. Oh, my God. Because look, but that's your choice. Yeah. And I want to and I genuinely do. And I don't do it for all of them, you know, even though there's so many people that help out and all of that. But I think it's.

It has to be in your budget. That's right. And the expectations for your family, not letting everyone else set it. But I think the group gift is always a great, it's a great idea. I like that. Look, I hope that's what happens with my son's kindergarten class because I haven't heard anything yet, but I'm like, what do we do? And I know teachers, I've heard from them

They don't want candles. Right. And all of that. Please no candles. So gift cards is a thing, right? So if you go and yeah, spend, you know, 20 bucks or whatever to get them a great gift card at Target. Yeah. They're going to appreciate that. And can I just say for the people who,

get them a gift card that they really can choose what it's spent on like Visa gift cards Target gift cards like Target and Walmart gift cards I think are fine because there's so much or like Amazon gift cards because there's so much to choose from but don't come in here with like a Subway gift card because everybody doesn't like Subway or even Starbucks yes I just feel like yeah yes I just I I

I think that I speak for the teachers when I say let them kind of choose their own gift. If you're going to do a gift card, make sure you make it a generalized. Yes. And it is for me. It's a, you know, it's a profession that it's, I mean, and everyone knows that they're not paid, but they should be paid for the amount of,

hours and work and what they're doing. They're literally teaching the next generation. I mean, I can't, I'm not a homeschool mom. I mean, I, I wouldn't be terrible, terrible teacher. I mean, Amelia's bringing home common core math now. And I'm just like, I literally have no idea what you're like. I can't do this. I don't know what you're doing. I'm scared. So it's yeah. And so I really do appreciate good teachers and we've been so blessed our kids school. I mean, every teacher we've, we have just loved, I mean, they're just wonderful. So it's,

Yep. I teachers out there to all you teachers listening and watching or if you know a teacher send them this clip because Jade and I both as moms greatly appreciate good teachers because man it's a lot of work. They deal with a lot. I mean I would say at the very least if if your holiday budget if you're like look on the holidays I'm stretched to my like stretch to the core.

make it a point to contribute at least at some point throughout the year. Yeah. I would say that. Or like do baked goods, like do like a loaf of bread with a letter, like some level of appreciation. Yes. It doesn't have to be through a present. Yes. Some level of appreciation. I think. They all need it. Yes. It's,

Christmas or like just make it part of your rhythm because they need that stuff. Oh, love it. That's good. Sorry, Scrooge mom. We had to debunk you on that one. All right, let's go straight to the phone lines. We've got Debra in Dayton, Ohio. What's going on, Debra?

Hi, I'm looking at starting building a real estate property portfolio. Cool. And I'm ready to do like probably a baby step. I'm very, I would say, conscientious about being in debt. I own my own home. We don't have a payment there. We own another home that's no payment, but that's getting prepared to go on the market for rent here for probably around $1,600 to $1,700 a month.

I do own another smaller property that I purchased waiting for that refi at 6% and I owe about a 70K on that. My payments are about 600 and rents for about 975. Just to get somebody in there quickly, I do that. So I'm selling to the air. The debt that we only are carrying now is a truck that we got at 0% interest.

And that was like for our future uses. And that is probably about $1,200 a month. What's the full amount? Oh, how much did it cost? Yeah. Oh, we went big. $95,000. $95,000? Yeah. We've been getting some expensive cars this show. We like cars. We like motorcycles. What else do you have? What other? Just curious.

Four motorcycles. Four motorcycles? Are they all paid for? Yes. Yes. Okay. Range Rover. Purchased.

Fully in cash. How much do you guys make a year, Debra? A van, no, I just wait until I have it or we paid it off. Okay. So together, I have an escort set up for myself and my husband makes $110,000. I make maybe somewhere similar because I'm on a commission. So you guys make $220,000 a year? Yeah, roughly $220,000 to $250,000.

Okay. So we purchased a house a year and a half ago, remodeled it, and it took about 50K to get it up to what we want. So I'm very happy. I was very conscious to stay to where probably I could sell it now for 350. You may have to come on with your question because we're right up against the clock. So how can we help? Yeah. My question is, I

I have probably 60K in my account. So I could pay off that little rental property. I could pay off the 0% interest, but I really want to maybe purchase, have money to purchase

Okay, so if I were in your shoes... If I were in your shoes, I would pay off the final rental that you have because your primary residence is paid for in cash, home number two is paid for in cash. If you can pay off rental home number three, I would definitely do that and I would not buy any more real estate without paying cash for it. Also, you guys have too much stuff that's tied up, too much money tied up in vehicles that are going down in value. I would seriously consider scaling back on buying things with motors. I...

It sounds like you have too many as it is. This $95,000 truck really, really deeply, deeply bothers me. But you guys have got a high net worth, so I'm not that concerned about it. Get it paid off as soon as possible. This is The Ramsey Show.

You are listening to The Ramsey Show. There are only two more paychecks till Christmas. So help, let us help take the calls about your life and your money and what you're doing with your money, not only now, but into the new year so you can get on a plan where you're actually making traction and paying off debt and saving money. We want to help you do that. So give us a call. The number is

888-825-5225. I'm Jade. She's Rachel. We will take your call. Let's go straight to the phone lines where we've got Mary from Calhoun, Georgia. What's going on, Mary? Hey, y'all. Thank you for taking my call. You're welcome. How can we help?

Okay, so my husband and I are babies at this, but after watching y'all for about a week now, we are on fire, and you have helped us come up with a solution for our health situation. So we want to spend the next year or so saving up for our emergency funds. We'd like to get $20,000 in that. And after that, we want to pay off our home as quickly as possible, investing everything that we have to get it done so that we can demo it

Wow. Okay. Yeah.

why would you demo your investment? But we live in a farmhouse that was built around 1880. And unfortunately, the additions that they did to it are garbage. Okay. And we didn't discover this until after moving in. And none of the bones of the house are solid enough for us to renovate it room by room, which was the original plan. Very Chip and Joanne again. Okay. But anywho, so our

I just need to know. Would it be hurting our families

to not invest in retirement or any of our children's college funds or any of that while we try to get this pay off as soon as possible because the damage to the house is pretty severe. I mean, we've got broken joists and there's rot, and it's not something that we should be sticking with for much longer. And we're hoping that if we can really pour our hearts into this at the conservative end, we can have our house paid off in about five years.

Well, Mary, I look, I love the way you're thinking like, hey, we want to do this. We want to try to do this really responsibly. I will say there's a reason that the baby steps are listed as they're listed. I do have a couple of questions and holes to poke in your plan. Number one, your plan doesn't align with our plan. And so I just want to call that out. We would say, hey, after you finish baby step three, after you get your twenty thousand saved, you do need to start investing more.

15%. It would be one thing if you're like, hey, we're saving for another down payment. And I'd say, yeah, do that simultaneously. No problem. And since you do have kids, I do want you putting away

some money as well for their college. And you get to decide what that percentage is as far as the kids college. But I do want you to start investing because five years is a long time to delay that process after you've already delayed it for paying off debt and saving money. Right. And so for that reason, I would not do that. And then the other thing that we can talk about is

Why you feel the need to pay the home off before you cash flow any changes to it. Because you don't necessarily have to pay off the home before you cash flow any changes. You could do them both intentionally if you wanted or one first and then the next. The house just isn't worth putting money into. But if you pay it off, you will have put the money it takes to pay it off. And then you will have... Because the equity and everything. Yeah. Yeah.

So it's not like you're bypassing that step. If you pay it off, that is money that you've put into the equity of that land and lot. And then if you choose to rebuild it... And then that house, and then you're basically demolishing the house. So the equity is... That's not tied up in the land and the lot, the equity in the house. How much would the house be worth if you were to sell it? Our estimated home value is about $282,500. Okay. And we owe $147,000. Okay. Um...

And you think a complete reno is what you guys want to do? Or would you ever look at moving? Are there any other options that you guys have looked at? We love where we're at. We love our church. We live in a very small town in a very small community. And we do homeschool, so it's not like school ties us down here or anything like that. But looking at the house, it just...

It breaks my heart, but it doesn't look like it's worth putting money into trying to fix it at all. I mean, we put Band-Aids on it to make it livable and safe for our children, and we just had an infant. Have you run any numbers, Mary, on how much it would cost to build what you guys want? So we found house plans for free, and it's about $150,000.

To build that house. It's very small and it's something we can build on in the future. Okay. Okay.

Yeah, well, I would not sacrifice retirement for this. I understand that this is a really exciting dream and you guys want to do this. But I'm with Jade. It would be simultaneous for me. And there's a part of me too, I'm like, I would hate for you guys to still have $147,000 mortgage and then have to take out a construction loan on top of that. So yeah, I mean, it's just going to take a little bit, Mary. I think you guys need a little bit of patience. How much do you guys make a year?

Um, my husband's net is 60,000 a year. Okay. And that's including overtime and things like that. Okay. So yeah, I mean, I mean, I would say this, Mary, if the house is as in terrible condition as what you're describing, like, is it safe for you guys to live in it for five years?

Yes, we can make it work for five years. Okay. So it's safe. Okay. I would not, I would not, I would not sacrifice retirement, Mary. I think that these five years are crucial for just compound interests and starting for the future. So if I were you guys, I would not sacrifice that. How old are your kids?

I have an eight-year-old twin, a four-year-old, and a six-week-old. Yeah, if you wanted to wait on kids' college, I mean, you could if you wanted. I mean, I would maybe put a little bit away for them. But I just think that this will be a slower process than probably what you're giving it credit for. And who knows, too, Mary, in five years when the house is paid off,

And the kids are five years older and all the things like life changes. You know, you guys may make the decision of, gosh, we may want to move somewhere.

Just houses in general. Maybe we want to do something different. I don't know. Like, so just know between now and five years, there's a lot of life that happens. So yes, I would aggressively pay off the house, but I would not sacrifice investing while doing that. Yeah. I'd also be curious. I'd also be curious if you've had anybody like a, like a contractor or a home builder come out and look and say, do we need to start from scratch or what can, like, what can we do here? Because that just feels really, um,

Like we're going to bulldoze our house and completely start over because you bought it for almost $300,000. So it's worth something. You know, it's not like you're like, oh, this house is worth 2750. You know what I mean? It's not what I'm picturing. But yeah.

Okay. Where did I get $282,000? That's the estimated home value. Okay. But my point is, yeah. I'm not sure I could sell it in this condition. Interesting. Okay. Well, I mean, I still would. It just feels really drastic. So I would...

get definitely a second opinion. And I think I like what Rachel said, which is in five years, you don't know where you're going to be. And you may be like, look, I don't want to go through all that. That's a lot. Yeah. And maybe you do. And yeah. And then again, maybe you guys look up in five years and you say, well, we have some money. We have some money in our 401k that we've been investing and the house has paid off. And what do we want to do now? You know, and that's the beautiful thing about being debt free is it does give you options and choices. And if you guys want to go build something, I would just hate to

lose complete, but if you want to, yeah, lose complete value of the house, but if you want to stay on the same land and all of it, maybe it's what you guys choose to do. But I would just say, Mary, to have a little bit more patience. Yeah. And definitely not sacrifice retirement in this. And if the house does become unlivable,

for any reason, then yeah, I mean, be prepared to go rent somewhere for a little bit and all that. Cause you'll probably have to do that during the building process as well in five years, six years when you guys decide to do that. So I hope that helps Mary. Thanks for calling. Yeah, that's a very good call. That's so interesting. You know,

we've had a couple of calls like that today, Rachel, where people have gotten into a house and then they've realized this is not what I, this is not all it was cracked up to be. Like we need, we need to get out of here. Whether it's, I just want to turn and run and move or I'm ready to bulldoze the whole thing. And I just think it just goes to show like,

planning and taking your time and really understanding what the steps are going to be long term is going to save you a lot of time, a lot of money, a lot of heartache. And it's worth doing that due diligence on the front end so that you don't kind of find yourself at this place where it's like, oh, I got to make a move fast. And then you lose money because of it. Right. This is The Ramsey Show.

You are listening to The Ramsey Show. I'm Jade Warshaw, your host. I'm joined by Rachel Cruz. So give us a call. The number is 888-825-5225. And we will do our best to help you with the questions you have concerning your life and your money. Let's go straight to the phone lines. Do you have our scripture of the day? Oh, I do have our scripture of the day.

Rachel. Tradition. I know. I know. Well, I didn't even think about it until you were going into the fourth segment. And I thought, into the show. We don't want to break tradition. Have we ever skipped it? Oh, we have. Oh, well. Once or twice, accidentally. We wouldn't have been the first. Look, I'm glad you got my back on that. Look, I'm already thinking about other things. It's a Christmas miracle. It's only two paychecks to Christmas. We saved the show. You did.

All right, scripture and quote of the day. Hopefully it's a good one. It says, it's Psalm 42. Look, this is you, Rachel. Okay, here we are. She lifted me out of the slimy pit.

and the mire he set my feet on a rock and gave me a firm place to stand thank you Rachel for pulling me out you're so welcome you are so welcome and then we've got Reba McIntyre she says to succeed in life you need three things a wishbone a backbone and a funny bone come on Reba we didn't we didn't want to miss that that's a good one backbone

Funny bone and what wishbone. Oh, I love that. There you go. That is so, so good. You're welcome, America. Rachel saved the show. She pulled us up out the slimy pit. That's what I'm talking about. All right. Now we can go to the phone lines where Devin is waiting for us in Kansas City, Kansas City. What's going on, Devin?

Hey, I just had a question about, I want to see your opinion on dropping my car insurance to liability only with being in Baby Step 2. It would save me about $700 a year, but my car is worth only about $2,500. So that's kind of the dilemma there.

Yeah. I got to say, I don't think that I would do that liability. I mean, that's like the bare minimum. And we would say that you would need at least 500,000 worth of liability coverage. So I probably wouldn't drop it down because here's the thing. You want to make sure you're covered no matter what. Like if you get in a five car pileup, you want to make sure you are covered. Right. And so it's just one of those things that you never know what's around the corner.

And I find this a lot. You're not the only person, Devin. I think when we're in baby step two, we're so intent on paying off debt that we're willing to sacrifice everything to do it. And a lot of people erroneously think that insurance, because it is something that we add to our budget, right? A lot of people think that we do that after baby step two, and that's just not the case anymore.

We always say that insurance is not a baby step. It's something that you do the moment you find out about it, right? The moment that you get the knowledge and go, oh my gosh, I need life insurance or oh my gosh, I need the right coverage on my vehicle. And there's a reason that we suggest these amounts because it really does protect you, right?

In case the worst happens and you run into somebody and the damage is far beyond what you ever thought it would be. And so those are the sorts of things that can really bankrupt people and put them in a really tough situation. So I would not do that, but I would use our coverage checkup and make sure that you have the right insurance, the right amount of insurance and that you're getting it for the best possible price. I would do that.

Yeah. I'd keep the liability at the highest that I can get it. I just didn't know if having the collision and the comprehensive, would it not be worth that much? Say it was my fault in an accident, getting another $1,000 car probably wouldn't be an issue because the car is not worth that much. So I didn't know if it would be good saving that amount because I'd be paying about $700 a year just

Just for a car that's worth about $2,000, $2,500. And you can't drop it lower since the value of your car is lower? No. The collision and the comp, they are what they are. But the liability, I've got that maxed out as high as it can go. Okay. Well, if you feel confident that you can replace the value of your own car. Yeah. And you've got $500,000 on the liability you said?

Yeah, I've got the max I can do, I think, 500, 300, something like that. It's just the portion of insurance replacing my car, that part, I don't know if it's justifying, you know, because almost about three years if I didn't get in a wreck and needing my car replaced, I'd be paying over the worth of my car pretty much. I can understand that. Yeah.

Let's see. That's your choice? I'm just kind of thinking through that because they're usually together, right? You're comprehensive and your collision is together or are they separate? I think they're together is what I'm aware of.

I would, you know, I can see what you're saying and that makes some sense. I would still just check that coverage, check up just to see. You might be able to get it for less expensive and that way you're covered on all three fronts. But I do understand what you're saying about like if my vehicle is only worth this much, like I can cash flow that if something happens and I get in a wreck, right? Yes. Yeah, that's what, we're in baby step two, me and my wife, and we've only got $8,000 left to go. We should have that paid off by April. So that's why it's kind of like,

We're about to have more income coming in with another car being paid off. And then we'll be working on Baby Step 3. So it's just kind of a weird timing. And that's what I'm trying to figure out. Yeah. Listen, in your case, if you have the cash to replace the car, if something happens, you can remove the collision. But if you move to a more expensive car, just don't forget to add it back because you want to make sure you're covered in that case. Does that help you out? Yeah.

Yeah, it does. Thank you, guys. You're very welcome. That's a really good question. Thanks for the call. It ends up being kind of that puzzle of figuring out, okay, what do I have? And always still wanting to be insured, right? To a degree that you get that. Like, that's another thing. So it's all, it's that puzzle. Yeah. I mean, the liability is the most important piece because you want to make sure that...

you don't know what the nature of the accident is going to hold and you want to make sure that you're covered in that area. So that was a really, really good call. Let's take another one. Let's go to Jason in Sioux Falls, South Dakota. What's going on, Jason?

Hey, Rachel. Jade, pleasure speaking with you. My quick question is my wife and I are expecting some hospital bills to arrive in the next week or two. And we were wondering, is there anything we can do now to take advantage of my HSA or are we kind of too late for that? Should we just keep stacking cash? Well, what are you expecting? How much? Yeah. How much in medical bills? Oh,

Um, not sure the total, but assuming that it's nothing more than what my health insurance deductible is, then it would be $4,000. Okay. Is that, um, is this on top? What other baby step are you in? I just want to get a picture of where you're at. Yeah, we're, we're in baby step two right now. Okay. And how much is in your HSA right now? $400. $400? Yes. Okay. Okay.

Yeah, I mean, you could put money in that and use it. I mean, the health savings account's a great option for health expenses. I mean, that's what it's there for. That's right. So yeah, that's a great place to save some money versus, you know, you could just do a high yield if you wanted. But yeah, I mean, I'm trying to think the rate for HSAs. I don't think the rate is really the thing because what I would do, I think what I would do

And double check this, but unless you're investing that HSA money, you're not getting a return on it. It's sitting there taxed, but it's protected. It's protected. But what you could do is save up the how much time until this $4,000 thing takes place?

Um, maybe two weeks. Oh, two weeks. Okay. Yeah. Just throw it in the HSA then. Like once we receive the bills. Oh, gotcha. Okay. Yeah. Yeah. I would just filter it through there and then you're going to, you're at least going to get the tax shelter on that money that you use for those qualified medical purchases. What I was going to say is if this was going to be like long term, six months or whatever, six or eight months, you could like save it up in a high yield, get a little return on it and then throw it over there. But

You know, this is in two weeks. So yeah, just put any extra, yeah. Any extra cash you have, yeah, in that HSA. That's great. I love it. Does that help you out? Sounds good. Awesome. Thank you so much, Jake. Whoops, I didn't mean to cut you off. I thought you were done. Thank you for the call. Hope you got the information that you needed. I think we covered it. So good. I love an HSA, Rachel. I know. Well, and what's so interesting too, and I feel like even in the past few years for us,

using it with an investment. And so you can actually use it as an investment vehicle. That's right. And beyond Baby Step, you know, four, five and six. That's right. So it's a great place to put money, whether you're in Baby Step 2 to actually use for medical that you need expenses. But also in the future, it's a great investment tool too. Yeah, that's right. Because when you're 59 and a half, that money, you don't have to use it for medical expenses anymore. You can use it just for general...

Yeah, anything that you want. So that does it for this hour of The Ramsey Show. Thanks for joining us. Remember, when it comes to your life and your money, you can tell me that you won't do it, but don't tell me that you can't. Thanks for listening.

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