How About You Actually Do Something About Your Finances This Year?
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From Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by my good friend Rachel Cruz, and it's open phones this hour at 888-825-5225. Help us help you take the right next step for your money and your life. Isaac is going to kick us off in one of Rachel's favorite towns, Knoxville, Tennessee, home of the Vols. What's up, Isaac? Go Vols, Isaac.

Absolutely. Go Vols. Good to talk to you all. Pleasure. What's going on? Yeah, so I'll start with the question and then get some info on. My question is, should I liquidate some of my taxable investments to provide a larger down payment for a house? And if so, how much? So I'll start with some info. We're on the equivalent of Baby Step 3B. We've got the emergency fund, no debt.

We live in a house. We're renting a house for about $500 a month. Wow. And it would not be super, yeah, it's quite a blessing. We're staying in my in-law's house, so great relationship there. Thank you. That explains it. Wonderful. Yeah, yeah, definitely. So it would be not ideal to raise a child here, so we'd like to get into a home before we start down that path.

But we are not sure if we should use my wife's perspective income. She's not working right now. She's looking for a job. Not sure if we should use her future salary to account for the 25% take-home pay recommended for a monthly mortgage. So we've got $55,000 in liquid cash between a high-yield and a treasury.

and an additional $115,000 in those non-tax-advantaged investment accounts. Way to go. What are those in, Isaac? I'm just curious. Is it mutual funds, stock? Yeah, various mutual funds, yeah. Okay. All right. And you're saying, should I use this money for the down payment? I personally would. What else were you saving this money for? Well, it didn't really have any specific earmark past that. We're doing other tax-advantaged accounts like Roth IRAs, HSN, employer Roth 401K.

So are you investing 15% of your income right now into retirement accounts? Yeah, I think it's maybe a little bit over when we're all said and done with matching those accounts. How much will you need for the down payment?

Um, well in our area, 300,000 for a house is about the lower end. Anything less than that would require quite a bit of restoration. Um, but in order to get that 25% of just my take home pay, cause we're not sure what she's going to be making and if she'll be working longterm or not, if we're able to have kids, we'd like for her to stay home if possible. Um, looking at probably around a hundred thousand or more Mark, but it's a little bit of just trying to convince myself that, um,

I see all that in the investment accounts and then put it into an app. Yeah, the problem when you invest for no reason, then you go, oh, I don't want to use this toward the house. But if I told you when you started, hey, this is going to be your home down payment fund, you'd have no problem cashing it out. Yeah. So if I'm in your shoes, Isaac, and I've done this because our first townhome was $300,000 and we saved up and we put, I think it was, you know, 40% down on that and paid the rest off quickly. I think you're going to be in the same boat.

So if you liquidate this, you might have some capital gains, of course, use some of the cash, leave your emergency fund separate. And then if you could put down 50%, I mean, that'd be amazing. Yeah. And I think the reality that your wife is going to get a job. So finding on average what you think she's probably going to make, I would add that to the equation because she, I mean, what kind of line of work is she in?

Well, she's got a master's in education, but we've decided for various reasons she's not going to go back to teaching in like a middle school. She is looking at a local university at UT, possibly working there or some other companies in town, just wanting to help.

help people do the work that they love. So she's very much a supporting role kind of person when it comes to work. Not necessarily exactly the job. It doesn't really matter too much. It's just who she's able to help is what's really important to her. Okay, but she will be working is my point. So I do think finding kind of, yeah, on average, because I would add that in because it's going to take you guys a while to find the house,

you know, go through all the process and the, you know, I mean, it's gonna, it's not like you're going to have to have this money by tomorrow. So it's going to give her enough time to find a job and while you guys are looking. So yeah, I definitely, I think you're, you're in a great position and I would take some of that money out of a mutual fund for sure for a down payment. Gotcha. And then I do have one quick follow-up question. Um, how much cash would you all recommend staying liquid? I heard that in the next, in,

In the six months or so after you get a house, it's going to be repairs. Like $1,000 a month is a good estimate. And we also want to have enough to pay cash for a car if one of our two older cars goes out.

I would just create a sinking fund. You don't need to park 20 grand just for that. I would just start a sinking fund where every month you put away 100 bucks, 200 bucks to start covering some of that. Maybe the car becomes a $500 sinking fund and 12 months from now you got six grand. So you decide what's right for you guys and your family and when this car might kick the bucket or when you want to upgrade. But I think sinking funds are the easier way to do that. So I wouldn't be too concerned about

oh my gosh, this house is going to cost us 50 grand right after we move in. Yeah. And if you need additional money, that's what the emergency fund's for too, that you can use, Isaac. Some people, it sounds like you'd be like, how could I not use this? Right. That's a game people play. Exactly. Your savings muscle is incredible. And so the hard part for you is just letting go of that and actually using it for your future goals. Yeah. Yeah. How young are y'all?

I'm 26 and she's 25. You guys are unicorns. You're going to build so much wealth. I'm not concerned about letting go of these investments because you're going to build it right back up. And guess what? In a few years, you're not going to have a house payment. I can tell you're the kind of guy who's going to knock out this mortgage. You're going to replace that mortgage payment with investing. And before you know it, you'll have another hundred grand saved up.

All right. So way to go, man. Thanks for the call. Cool beans, guys. Yeah, thanks for the time. Love a Vols fan, Rachel. They're all smart. They're doing it out there. They're all smart, you know? It's here for the right team. You have wisdom. Wisdom everywhere. Spoken like a diehard Vols fan. Wow. That is good, though. But I think it's a good point you made,

When you're putting money away, especially this is non-retirement, right? So if he's talking about 401k, Roths, you know, 403bs, in that world, we would say, no, we do not cash out retirement.

But these investments that are not retirements, but are, you know, whether you're out there and you have company stock or single stocks, mutual funds, using that money towards something that's going to continue to up your net worth and up your quality of life, which is a down payment and almost, you know, a house I feel like is a great asset investment.

and this is why we always say to pay it off. Don't just leave, you know, if you have money to pay off your house when you're in baby step six, do it because it's like assured that your money's going to something worthwhile. It's a forced savings plan with a kind of guaranteed rate of return. And once you get that paid off, I mean, that's an amazing feeling where you now have the margin to do even more wealth building. And so I think the hard part for a go-getter like our friend Isaac is I just want to keep saving. I don't want to let it go. But guess what? On the net worth statement, nothing changed. That's

That's right. You just move the money from here to a different house. Yeah, it's a great point. And it's hard because you don't see the number going up like you did with your investments. But what you do have is a lot of peace when that mortgage payment is such a small part of your world because you put 50% down. Yes. And you took on a reasonable mortgage. What most people do is say, I don't want to touch the investments. I'll take the whole thing out in the mortgage and I'll be fine. Yes. And then the mom wants to stay home and they go,

oh my gosh, I can't breathe. That $2,000, $3,000 mortgage payment now feels like it's too much. Feels like a lot. Yeah. And which is smart that they were even talking about, you know, you can't,

everything in the future, right? So there's things that you have to make decisions on today that are wise. So her knowing that she'll probably get a house, right? But even the family, some people are like, well, should we like wait till we start a family, all of this, right? But if you're in the market to buy, now is the time because prices are only going to continue to go up. Yeah, if you're out of debt, you got the emergency fund, you got the pile of cash for that down payment, don't sit around because guess what? The Fed rates are going to go down, home prices could go up and you're going to go, oh my gosh, I should have bought. Yep. I should have bought.

Don't try to time the market. This is The Ramsey Show.

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Welcome back to The Ramsey Show. I'm George Camel, joined by bestselling author Rachel Cruz. Open phones at 888-825-5225. Raphael's up next in Kissimmee, Florida. What's going on? Hello. How are you? Doing well. How are you? Good, good. So my wife and I can't come to an agreement here on what to do with our motorcycle loan that we have. Oh, this is a fun one. Rachel loves settling debates. I love motorcycles, too. Who do you think is right?

Honestly, I can't answer that. Okay. Smart man. Yes. Okay. What's going on? What's the issue? Okay. So I just think I have an employee stock purchase plan. It's going to invest, I think, in December. I'll have about $13,000 in there. I just tell her I'd rather leave that in there and get a loan to

figure out what the upside down is because I want to get out on it as I can and instead of owing 23 let's say I'm upside down by 10,000 I can get a personal loan for 10,000 and knock that off and she's saying no liquidate the stocks and let's not go into debt be completely debt-free yes is this the only debt you guys have or there is there more

No, I have a personal loan of $20,000. And you want to get more personal loans? Yeah, I see. I'm just walking through the train of thought here. Now, I love that you're wanting to trade down your big debt for a smaller debt, but I like your wife's thinking more of we could be completely debt-free instead of struggling to pay this next $10,000 off while trying to pay the other $20,000 off. Plus, when you have that volatile single stock, I mean, that thing could drop.

And so I love the idea of using this as a blessing. You got that stock at a discount, let's sell it and, uh, you know, probably be in minimal gains and be out of debt completely. Okay. What's your thinking in keeping, keeping the stock? Do you just like to see the number go up? Well, I, so my thing is I make 80,000, uh, 80, 85. Um, and I, I just tell her, wouldn't it be better once we, if I do get the loan and I knock it down quick with her, um,

I guess I want to just leave the money in there so when we get debt free I can go buy like say a cheaper $5,000 motorcycle. I'm really not that good with budgeting. Clearly, obviously, I'm in debt unfortunately but we want to prove our family wrong that there is a way to be debt free. She's on board. I'm on board too. I just don't know how to tackle this. Well, the best way to prove them wrong is to become debt free and stay debt free. Would you not agree? Yeah.

Yeah, yeah, I agree. Are you guys, your wife, do you guys have your money combined? Because you said, I'm making $85,000. Is she working as well? Yeah, she gets about $800 every two weeks take home. I get about $26,000 every two weeks. Okay. What does she do for a living? She...

She's a full specialist, like in facials, nails, et cetera. Okay. Okay. Okay. And are you guys, yeah, does she have any debt? She does, but that's like a whole, I would say if you wanted to throw her thing in there too, we're looking at maybe $30,000 on top of that. So $20,000 plus the $30,000. You had a personal loan for $20,000. You also owe how much on the motorcycle? $20,000.

Uh, 23. So you have 43 there and then she has 30. What's her 30?

It would be like miscellaneous, like self, one of them would be like Verizon. Another one would be student loans. Most of it is student loans, but. Okay. So Rafael, let me tell you this. I love, love and very encouraged that your goal, both of you want to prove people wrong and not just, that's not the goal to prove them wrong, but to prove them wrong to be debt-free, right? So you both want to become debt-free. You both want to live a debt-free lifestyle. Okay.

So what we have found is the fastest way to get from where you are, which is just the starting off point, to actually accomplishing that is a couple of things. First and foremost, you will win, I'm going to say, three, four, five times faster when you guys work together as a team. Your language is still, well, hers over here, mine, my income, her income.

When you start, you and her start actually looking at numbers together, that combination of combining finances, working out of the same bucket, seeing this together, tackling all of this together, regardless of who's quote unquote dead it is,

And you're going to get so much momentum by just simply doing that. It's unbelievable. And I'm telling you that because when you start doing a budget together, which we're going to give you every dollar premium after this call. But when you guys sit down together and you start doing a budget together and you start cutting expenses together and you start making decisions about what you're going to have for dinner together because you're not going out to eat, like things start to really pick up speed when there is an emotional

emotional attachments that you guys are a team. And again, that starts with the numbers. So that would be my first piece of advice is to work at this more unified than you are now. And then number two, you're trying to do too many things to get the goal that you want. And it's way less complicated than what you're making it to be. So everything we talk about is to liquidate everything but retirement accounts to pay off debt.

So that would mean liquidating the stock, putting it towards the debt,

That would be selling some stuff, figuring out what you're going to sell the motorcycle, which is great. But when you start doing these things and you guys are making a hundred and around 105 a year, it's amazing the progress you guys can make when you are focused intensely on one thing and that is getting out of debt. It's not trying to, you know, do retirement over here. It's not trying to like get some liquid cash over there. Like it's not trying to do 18 different things together. Your number one goal is to get out of debt. And that's

maybe working extra, selling stuff, cutting expenses together. I mean, it's all of this snowball effect that occurs. And we just see people that they just get so much momentum because you're going to actually start seeing these wins. And that's going to fuel this behavior change, which is key that personal finance, it is 80% behavior. It is only 20% head knowledge. So you're going at this more from a head knowledge standpoint and less of a behavior. And I want you to

you know, flip those two and just try it, try it our way. And if you look at it, you can go back to what you were doing. That's right. And in six months, if you're like, this isn't working at all, you can do it your way, but try something different. Yeah. Yeah. Awesome. And, um, just one last question. I, I heard you say you like motorcycles too. Oh, I was kidding. Sorry. Well, this, well, this, uh, budget app or like, well, this teach me once we do finish baby step two, um,

How, when am I allowed to go buy a $5,000 motorcycle off of Facebook? When am I allowed to do these things that I actually enjoy? It's simple. Once you have a foundation to where you have no debt and an emergency fund, that's when you move from this intensity to intentionality. Where you go, all right, if I save up $500 a month, in 12 months, I'll have $6,000 saved up to go buy a used motorcycle in cash. Do you see the difference there?

versus rolling up to the dealership and them going hey we got a nice shiny one over here and that we can get your payment down that's how broke people think they think about how much down how much a month rafael from now on is going to think like wealthy people how much can i afford it right now if not we got to act like an adult and say we can't do this right now yeah and that's after paying off all of your debt and having a three or three to six month emergency fund saved

And once you do that, you're good to go. You're good to go. Take a great vacation, buy a motorcycle, you and your wife together deciding on some of these big purchases. But that would be the time. So it's going to be maybe a year or two, two and a half years. But I'm telling you, you'll do it with so much more peace and enjoyment and freedom.

than you will trying to continue to live this lifestyle. And your arguments and debates will change. It'll be like, where are we going to go on vacation this year instead of, okay, what debt are we going to pay off first and how are we going to do it? So the fights get better as you get to a better place financially, Raphael. So let me encourage you with that. And if you follow the things that Rachel just told you, you are going to have so much freedom, not even two and a half years from now, a few months from now, just doing the budgets.

showing you the reality of what could be if you guys just got a handle on this amazing income you have. Yeah, so hold on the line and Taylor's going to pick up and we want to give you guys every dollar premium and FPU. We'll throw in Financial Peace University because I think... So kind. Outrageous generosity. You know, learning some of these basics, you two together watching these videos and kind of going through this, I think it's going to be really, really helpful. Thanks for the call, Raphael. More of your calls coming up. 888-825-5225. This is The Ramsey Show.

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Hello. Hi, thanks for taking my call. Hey, sure. Happy to help. What's going on? So basically I have a 401k from a previous job and I was wondering if I should roll it into my current 401k or I also have two annuities that are variable annuities. Okay. How long ago was this job in this 401k? How long it's been sitting there? It's been sitting there for probably about five years.

It's time, don't you think? It's collecting dust over there. It's definitely time. It is. So generally, the best thing to do would be to roll it over to an IRA and do a direct rollover. So what you don't want to do is withdraw the money. You don't want to see the money. You want to directly put it into that next retirement vehicle. And if you have a great 401k with great options and low fees, you could roll it directly to that new 401k. The difference is the IRA is outside of your employer and you have way more options.

And it's in your control. So we like the IRA for that reason. Was it traditional or was some of it Roth? It was traditional. Okay. So you want to make sure you do a direct rollover to a traditional IRA. And that way you'll have no kind of fees or penalties there. Okay, perfect. And then I do have some money in savings, but I have it kind of in just some of those saving apps. And I was wondering if anything I should roll it into a high-yield savings account or one of the money markets.

Yeah, high yield savings account right now are actually outperforming money, money market accounts on on most basis. But you can, what I would do is and what we've done is look at look at an online bank, because usually you can get a better rate of return, especially just for a high yield savings. So I like that option the best. Because I mean, money market accounts, yeah, for the most part, they, they act, you know, pretty similarly to high yield savings. But

What I have found, at least in the last probably, I don't know, 12 months or so, we saw better rates of return with a high yield, personally. But do some of your research and look. But yeah, just looking at like an ally bank or, you know, some type of reputable. Because you're getting like 0.01% right now interest on your savings, I'm guessing. Yeah, what app is it in?

Yeah, it's essentially like the acorns in capital. Yeah. Ooh. Yeah, I would be a little bit more aggressive with it. Yeah. So, yeah, I would look at an online bank, just a good high-yield savings and making sure that some of them can come with limitations, meaning you have to have a certain number or a certain amount in order to open it and all of that. Yeah, you want to look for ones with no fees, no minimum balances, all of that. And there's a ton out there. Yeah.

And essentially, I'm kind of wondering, is that money accessible when it's in those savings accounts? Because I feel like I'm going to be able to need to access it. Yeah, it is. It may take one to two business days, we've found, to take money out of our high-yield savings and transfer it to our checking account. And some of them will come with check-writing privileges even out of it and a debit card, but you can only do up to like five transactions a month.

So yes, you can get to it for sure. But it's just a good place to put long-term savings. It would not be an account that you would use for everyday transactions, but something that you're like, oh yeah, that money can just sit and grow. If I need it one day, I can get it. I can pull it out without fees.

Yeah, because the only reason I kind of have savings right now is I'm about to move somewhere where rent is going to be higher. So I just was also wondering if eventually if I kind of went through the savings, which obviously hopefully not going to happen, but then can I just close out the account? Yes. Yeah. Just pull the money out and close it. Yeah. About penalties? Okay. Awesome. Yeah. Thanks for the question, Catherine. Next up, we've got Hannah in Chicago. What's happening, Hannah? Hey, how are you guys? Doing well. How are you?

I'm good. You guys are my favorite duo, so I'm happy to speak to you both. Jackpot. So my question is, I have a truck loan. I owe $6,000 on it right now. I can get about $9,000 for a private sale. So I was wondering if I should sell it, clear the car note, and then be able to pay off my remaining two personal loans and be debt-free or continue working the debt snowball method. What are you going to drive if you sell it?

I'm not sure. I haven't got that far, but I do work in town and I do have a work truck. If my place of employment would allow me to drive that, I thought that might be an option. Hannah, I probably wouldn't considering how low of cost that this is. Like if you told me, you know, that it was, you know, $30,000 or something, but I'm like, you know, if you sell this, you would cash out $3,000 and then you go buy a $3,000 car. And the difference between a $3,000 car and a $6,000 car isn't like...

crazy different right i mean i just i think you'll be going into a similar type of vehicle so i would just from simplicity's sake i would just put this in the deck if you like the truck the truck's not the the major problem here uh what's your total debt load

I have a personal loan for $2,500 and then a very small consumer debt of $900. So I'm almost there. I think I'm ready to be debt-free and I'm getting so close I was considering it. Yeah, nothing's on fire here. You're not in a desperate situation. I just don't want you turning around and going, well, all the cars that are reliable are going to be $6,000. Now I need to come up with the extra three. And so it's not a huge part of your debt and I would just knock it out and keep the car.

What's your income? That's what I thought too. I make 57 a year. Awesome. Well, you'll be there in no time. I know. You're doing great. I think so. Yeah. Knock out that 900 and that 25 first and then just start attacking the truck. Awesome. Thank you guys. I appreciate it. Absolutely. Happy to help. All right. Let's keep it moving. Jonathan is in Lexington, Kentucky. Jonathan, welcome to the Ramsey Show. Hi. Thank you so much for all that you guys do. Happy to be on the show. Appreciate that. How can we help today?

So I'm in a really, really good position, all things considered, debt-free, out of college, and making more than I'm spending. Where I live is a fairly low cost of living area. But my question is, now that I have $10K saved, everyone is encouraging me to use that $10K to...

get a loan or a down payment for a lot and build a rental cabin and then sell that, turn a big profit. What? Everyone? Are you talking like three knucklehead friends of yours?

My broke brother-in-law, yeah. Okay. This feels like a very oddly specific goal. Well, I'll tell you why. In the place that I live, it's very high in tourism, and so a lot of people have made money by virtue of rental cabins. What's your primary home situation? Well, I have a fantastic living situation. I

thanks to my employment. So I don't pay anything for where I live, and I live by myself, so it's amazing. But where I live is heavily, it's a tourism area, and that's business year-round. And so every rental cabin that's built is bought. And so the question is, with only 10,000, you know, having outright...

Hey, you're yeah, you're you're breaking up, too. We can't we can't get. OK, my fear, Jonathan, is I want to make sure you are taking care of yourself. So the fact that you're you're living somewhere, that you're not paying anything or getting any equity. If you leave this job, you'll probably end up having to rent somewhere for a bit. So I almost on the side would take that 10K. I mean, how long do you think this job is this like a long term play for you?

Yes, I'll be here for a long time, as long as I can, without screwing it up. Okay, but I want you, I want Jonathan to own a home eventually because I don't want you to get to 50 years old and not have any money to go and buy a home and then you have to go take out a $300,000 mortgage. So I would be thinking about my living situation first and foremost because that housing part of your budget eventually will be the largest thing

part. So no, I would not take 10 grand and go into debt for a rental cabin, even though it's the best market. It looks shiny. I mean, this is basically get rich quick for your area. And I know it's worked for a few folks. You're not in a place to be a real estate investor quite yet. So just hang on, keep saving up, get your own place. And later on in life, we can look at that option. This is The Ramsey Show.

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Welcome back to The Ramsey Show. I'm George Campbell, joined by Rachel Cruz this hour. Today's Ramsey Network app question is from Melissa. What does Melissa have to say? She says, I am single and about to move into my first apartment. My question is, how do I keep from spending foolishly since I'm now responsible for supporting myself? I would like to have an accountability partner to keep me straight, and I'm not sure how to find one. I've been hurt by people in the past.

So I spend money to fill in the emotional gap. Wow, very self-aware. Melissa, I need to change that way of thinking. So any advice you have would be fantastic. Wow. Well, therapy is, I think, a great start. I think we need to figure out what's at the root of all of this and start to kind of heal from that. And I do love the idea of an accountability partner as another thing. And that could be

They don't have to be like your best friends physically. I mean, we have a great Facebook group, the Ramsey Baby Steps community, and they're always encouraging each other in there. And they'll say, hey, someone talk me off the ledge. I'm going to go add to cart over here. And then the budget is really...

It's kind of a built-in accountability partner. Yeah, for sure. Yeah, I mean, I think obviously there's pain from some levels of relationship. I'm not sure which kind that you've been burned by. And so I think sometimes that hurt and that rejection does come out sideways and it looks different for everyone. And in your case, being, I mean, very self-aware, right?

That yeah, you spend money to probably keep yourself busy or to keep yourself feeling good. And I think there's a reality of understanding that, you know, what's the, what is the truth of what money does and, and,

You know that it's been scientifically proven that buying stuff does not fulfill you and does not give you literal happiness or joy long term. It just doesn't. And so I think there is a way to shift that behavior of understanding, yes, the facts, but you can't just willpower your way into that. I think there needs to be some good input in your life. And that's where like therapy, George said that.

And even, I don't know, even the word accountability partner, I don't know why, George, it kind of makes me, kind of makes me, I don't know. It's a little campy.

And they're there as supports more than like, I'm going to keep you accountable. Because sometimes that can feel like preachy or something. Yeah, you don't want to hang out with that person. But here's the other side. Don't have friends that also spend frivolously and are always going out and are broke. Like, put people around you. Yeah, that respect your boundaries and respect what you're doing. And you also want to grow. Yeah, that's right. That's right. So, yeah, having just, yeah, people in your life. But it's going to take time for you, I think, you know, to build that trust because of...

what's happened to you in the past. And the beautiful thing is about moving into your first apartment is you got bills now. So you kind of have to go, the bills have to get paid. There's not going to be a whole lot of extra margin just to go spend frivolously. And that's where the budget becomes even more important once you gain that independence. Good for you. Love the self-awareness. I know. That's impressive. Okay, let's get to the phones. Dave is in Charlotte. What's happening, Dave? Hello.

Hi, guys. I'll try to make this short and sweet. I have a $1.5 million house that's in an area where the houses sell normally in less than seven days at or above asking price.

And you guys have made me very cost conscious, so it's hard for me to justify to pay a 6% commission or $70,000 for a house that's going to sell in less than seven days, basically just to get it listed on the MLF. So what are my options? I know a real estate attorney said he would charge me $6,000 to do the actual close. But in terms of working with agents, can you shed any light on how I can minimize the commissions?

Well, they've changed the structure recently and it's kind of becoming, you know, a big bubbled effect within the real estate world. But I think a lot of agents are still kind of abiding by that 6%, the 3%, 3% split. So, I mean, if you're using someone for their services, I mean, I guess it's now, it can be dependent on the agent now to a degree because of what they're

choosing to do on the commission side because it has changed in recent months. But overall, I mean, you're using their services, so you will be paying some level of a commission, I'm sure. If you want to do sell by owner, you know, you could do that where it's just you doing it, then you wouldn't have an agent involved. But usually we find statistically speaking, you'll make less as a private seller versus if you actually use an agent. But

But so I would use an agent and I understand the frustration around it. And some agents are changing their commission structure because of everything that's happened in recent months. So you could talk to them and see what they would say and what they were, what, you know, what they're requiring for their services. So it may depend agent by agent.

What'd you buy the house for? So you're making a million dollars off of this. That's pretty wild.

So letting go of... Oh, I've had it for 25 years. Yeah, you've hung on to it, and that's appreciated. Why are you guys selling it?

We're just downsizing and retired and moving to another house. Okay, that's great. Here's what I'll say about the agent. I think if you're just looking to get it on the MLS and that's all the agent's good for, then you need to find a better agent. A good agent's going to make up for what they cost you. And that might be, you know, if you went for sale by owner, you might get 1.43. We don't know. And if you work with a great agent, maybe they get you, you know, you start a bidding war and you got 1.57, right? Yeah.

Right. So that's part of it. I just went through a tax deal with this city, so I've done a pretty extensive study of comps in the neighborhood and in the zip code. So the data is pretty readily available in terms of how long they'll sell and how close to asking price. So that's usually the value that an agent brings. But in this case, I'll just have to look at other options. I feel like you should go into real estate, Dave. You've done all the work, man.

Yeah, I know it hurts, and I'm the same way because I'm super frugal, but the one thing I'm willing to spend money on is a good agent for the largest transaction of my life, which I assume this is for you. And I understand that, but like I say, knowing the area so well and knowing what they're selling at. There's ways you can negotiate. Let's say your agent who's going to sell, well, that becomes your buying agent, and they end up taking 1.5% off.

Yeah, yeah. And so that stuff happens all the time. So I would get in touch. And if you want to kind of vet some, we've got Ramsey Trusted Real Estate Agents. Go to ramseysolutions.com slash agent and see who's out there. Interview them. See what they're willing to do and see what they're willing to offer. I'll reach out for a couple of them. Thanks for your time. Absolutely. It's a great question. I love that you're thinking this way. And it's what's helped Dave build this level of wealth. Well, and to have a mediator between you

And the buyer and all of that, right? I mean, like, it's just, they take a lot of the grunt work out for you. They really do help. Absolutely. Thanks for the question. Andre's up next in Houston, Texas. How can we help, Andre? Yes. I'm 28 years old with $20K in savings, and I wanted to know how to invest it. All right. Give us a little bit more about your financial picture. What's your income?

Um, it's about like $29,000 a year. Okay, and do you have any debt? Uh, no, sir. Okay, and is this your, all of your savings, the $20,000? Does this include like your emergency fund?

No, not really. I have maybe like a couple more stashed away in another bank account, but it's just like maybe like $2,000. So you have about $22,000 liquid cash in these accounts. Okay. Well, here's the deal. Once you're following this Ramsey plan and you're out of debt, the next step is to build a buffer between you and life called an emergency fund. And we recommend three to six months of expenses. Okay.

So for you, that might be, I don't know, $10,000, $15,000? Yeah. Are you single, Andre? Yes. Okay. Yeah. So you would probably be more on that three-month side versus the six-month. So yeah, I would kind of figure out for you what would be about three months of savings to keep you afloat if something happened to your income. Okay.

and making sure you have that. And then, yeah, the next step would be investing. And so I, you know, would look into things, you know, like a retirement type vehicle with investing. So a Roth IRA, if you have an earned income, you can apply for a Roth IRA. And that's a great option. You can invest up to $7,000 in that a year. And that grows tax free. So there's a lot of benefits. So that will count. That's just great. So I would probably start there. Does your employer have a 401k by chance?

As a benefit? They have a savings plan. I think it is. Okay. Yep. So I would look into that too. Maybe on Monday, go and ask them about that. And so I would do the match for the 401k, but I would get that emergency fund and a high yield savings account and then look into opening up a Roth IRA. Okay.

Thanks for the call, Andre. That puts this hour of The Ramsey Show in the books. Thank you to my co-host, Rachel Cruz, all the folks in the booth keeping the show afloat, and you, America. Thanks for hanging out with us. We'll be back before you know it. To find a Ramsey-trusted real estate agent that can help you buy or sell your house the way we teach, visit ramsesolutions.com slash agent or call us at 1-800-634-4222.

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From Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Camel, joined by Rachel Cruz, who is also my co-host on Smart Money Happy Hour, which you can check out on the Ramsey Network. We're taking your calls at 888-825-5225. Call us up. We'll try to help you take the right next step for your life and your money. Justin kicks us off this hour in Santa Clarita, California. What's going on, Justin?

Hi there, guys. How are you doing? We're doing well. How can we help? So my question is kind of a detailed question. I'm curious what you guys give for advice when an amazing job...

is in a different location than a happy life, I guess would be the primary question there. So you live in California. Is this job elsewhere? The job is in Santa Clarita, and kind of where I envision a happy life is about three hours north of there. You envision a happy life, or what does that mean?

So the location that's about three hours away is where family is, where my significant other is. That's a difference maker. You buried the lead there. Okay, so what is this amazing job and why can it not exist in that area? So I'm a veterinarian and about...

A year and a half ago now, I actually moved to where I currently am working in order to take this job because where I was working before wasn't quite making even life ends meet, even as a veterinarian. So you weren't getting paid enough.

Correct. And, and even then I was in the, the work-life balance just wasn't there. I was averaging like a hundred hour work weeks. Good night. Um, now I've got, I found an incredible job, but I have found somebody that is, um,

And we've been dating for about a year now, back where my family is from and where I would like to eventually move to. But now I'm in the quandary of probably not finding a similar job lifestyle that I have found. Have you looked at vets in that area? I have. And they can offer...

similar, but it's not, I guess it's kind of one of those things where it's hard to turn down what I am currently making and the fact that I only have to work four days a week for what I'm currently making in order to... Do you think they would negotiate if you said, hey, I'd love to apply, here's kind of what I'm looking for? I think it would be reasonable, but I... Is the cost of living lower three hours north?

It's actually considerably higher. Okay, so that'd be a tough life move financially. Yeah. Do you have any debt? No, no debt. Awesome.

I mean, I'm moving. If I'm you, I'm like, there's, I mean, you know, I think part of having a happy life, I think a job is a big part of it, right? You spend on average 40 hours a week if you're working 40 hours a week. Maybe 100 if you're Justin. Yeah, yeah. We don't want to go back to that, Justin. But the other elements of your life, your family, relationships, I mean, all of that, you can't pay for, you know, like those are things that are

They're priceless. And so what is going to create a healthy overall life? And I think, I don't know, for me, it wouldn't be staying in a city three hours away from the people that I love unless she's willing to... Will she move to you when you guys get married? She would. But I think it's the same situation where her family and her job is where...

I would potentially be moving back to. So, you know, as far as the logistics, it doesn't make a whole lot of sense. Sure. Is there a world where you move out there, you're working, it's not the dream pay necessarily or dream hours, but you eventually could start your own practice?

That would be something that I, and I'm actually starting to do a little bit. I'm starting to create my own mobile practice in the basically back home.

I would start exploring the options. I'd start calling up and doing some Zoom interviews or next time you're over in the area, meet with them and stop by and get a vibe for what the options are. And then you can kind of figure out. But I think right now we're making a lot of assumptions about what life is going to be like either way. And I like to have a little more facts.

Yeah. Well, I guess so. Well, so I guess if I had more facts and I don't know if like a, you know, salary numbers, anything like that, anything that that would be useful to kind of add into this conversation goes. What are you making now in this amazing job where you make crazy money and work four days a week?

Um, right now it's about 440,000 a year. That'll do it for four days a week? Yeah. And what would you make? Probably around 200 is what I'm getting as far as my interviews go that I've had people I've talked to. What does she make a year? Um, right now, um, around 40. Okay. Okay.

So you would, because I'm just thinking long term, like my motivation would be even before my own family. It's the significant other, right? If you're about to start a life,

with someone and I and I'm and I'm assuming Justin you guys are wanting to get married so that's where my that this is where my perspective is so if I'm wrong you can shift me but but me and my spouse so this is a different I'm glad you asked this George because I mean you're basically moving you're taking 200 grand a year to move for a $40,000 job versus if you guys together said hey after we're married why don't we live here for two or three four years um

see if we enjoy this area. Like it would be worth taking a shot for this amount of money. And if you just stacked up hundreds of thousands a year and you were able to move and start your own practice. That's right. Maybe you have a goal that will eventually want to be out there, but because of the situation that you're in right now. But again, that would be speeding up the relationship. And I don't want to do that on a basis of money either. Right. So, so there's some factors that come into play and I also would not move to

For someone that I'm not married to either or engaged to at least. Now, I know your family's there too, which is great, right? That could be a pull. But maybe that's, hey, once we get married, have kids, all right, we're going to move to be closer to the grandparents. Yeah, or a certain dollar amount or a certain timeframe or something. But I think that it's significant enough to have that conversation. Would she move at all where you are?

She would. And I guess that's maybe part of the, maybe a part of the major question is with, we are currently both renting. And if we were to move one way or the other, like, I guess when my question now is. Yeah, I would, I mean, you can afford just to keep renting while you guys go through the engagement process. And then once you're married, buy a house together. Don't do that before you're married. It's a disaster. Yeah.

legally and all of that if you guys ever break up. I would use the season you're in to just stack up so much cash that whatever the next adventure is, it's going to be a breeze, even if it means a pay cut. Thanks for the call, Justin. Thanks for helping you walk through that situation. This is The Ramsey Show.

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Today's question comes from Nathan in Kentucky. I am 14 years old and I was just wondering what is a good way to try and become, to try and become at least a hundred dollar. Oh, oh gosh. A hundred million. Wait, a hundred million, a hundred millionaire by the time I didn't know that was a term. I wasn't sure either. Uh, I was just wondering because I discovered you guys on Tik TOK. Okay.

I'll get us, George. And I thought to myself that y'all had good information and I just wanted to know if it's possible. Thank you for your time. Wow.

I'm doing the math for our friend Nathan here, Rachel. It's not looking good. $100 million. Do you want to know what it takes, Rachel? I actually would love to know. Okay, it takes, get this, you would have to invest from the age of 14 to the age of 30, and we're going to assume a 10% rate of return. Sure. Okay? Yeah. From 14 to 30, you would have to invest every single month $220,000. So there's the true answer, Nathan. Nathan. But because now your hope has been stolen from us. Yeah.

Let me give you some different advice. Do a millionaire. Do $1 million. $1 million. To get to a million. Okay, well that's... So that would be, what did you say, $2,000 a month at that point? $220,000 was for $100 million. Yeah. So if we take it down to $20,000, that's $10 million. That's pretty good. I'm going to go $5,000 a month would get you to $2,000. So $2,000. Just about $2,200 a month. Okay, all right. From $14,000 to $30,000. Okay, all right.

That's still a lot of money for a 14-year-old to be socking away. We've at least got a bullseye we can look for. Okay, so Nathan, I would encourage you...

to get beyond this like label of quote unquote millionaire. Because I think a lot of people believe if I just had this amount of money. Whether it's one million or a hundred million. Yeah, everything's going to just be fine and I'm going to be okay. And the truth is financially, numbers wise, there's a good chance, yeah, that you, you know, that's really going to help you. But your money habits are going to be a big part of this. And who you are as a person, Nathan, is going to have a big part in this. Because there are people who,

I would say that have millions and millions and are still very discontent people. And they're still running this race, acquiring, trying to find some level of joy and peace in life. And they're not finding it through money because money does not bring that. It can bring stability.

It can bring you the ability to do things with your life that is fun and have experiences. Like, that is all true. But there is, I would say, a bigger character question there of why do you want to have this millionaire status? And, you know,

to go ahead and bust the bubble that just because you reach that does not mean that life is suddenly going to be perfect for you. I feel like that's the myth out there, you know? Oh, yeah. If I can just do this and by 30, you know, there's like kind of that whole, the fire movement. And it's like, I'm not going to do anything with my life. And if this doesn't happen by this age, then my life is over and I've failed. Right. Yes. It's insane. So I just, I rebuke all of the get rich quick

even if it's with decent intentions and you want to do it the less risky way, there's just no good reason that any human needs to make hundreds of millions or even I need to have a million by this age. And the truth is, Nathan, if you follow the Ramsey baby steps, you're going to get there by 30. Your net worth will be a million dollars or more just by staying out of debt, stacking up cash, buying a home, getting the house paid off, investing 15% of your income,

over time, compound growth is going to take over and do the heavy lifting for you. So that's the not fun answer. But I do think we need a new book from Dave called Baby Steps 100 Millionaires. I looked it up. It's called Centi-Millionaires. Centi-Millionaires. That's right. Oh, so it is a thing. Centi-Millionaires. You have 100 million or more. I am not cool.

I wasn't your words, not mine. So I'm saying thank you for the Nathan. It was a good brain exercise, even if it wasn't a pretty wild question. It's good for you. The fact that a 14 year old thinking that way, he's going to be the world changer out there. Sure, because it's going to take being an entrepreneur to make that kind of money or even close.

you know you're not going to make that as a w2 employee likely but i wish you the best maybe nathan will be calling in at 30 being like hey just so you guys know i have 100 million i'm a wait what was it called again a centi millionaire you know al termosi you know the super beefcake dude we've had him on the show and he's he's a centi millionaire and he's an entrepreneur that's how he did it it's great and he's about my age so call me a failure many many do many do you're still working george you know i'm here i'm doing it still coming

I just do it because I love it, Rachel. I haven't had to work in years. I'm kidding. All right, let's go to the phones. Einar is in Oslo, Norway. We're going international. Whoa, we're going overseas. Here we go. What's going on, Einar? Hi, guys. It's such an honor to talk to both of you. I'm great. What time is it there? One.

Right now it's 24 past 9 p.m. All right. Thanks for staying up with us. Appreciate it. Thanks for the call. Yes. What's your question? Thank you. Okay, my question is how do my wife and I decide the amount and the amount of our personal line items in the budget? So I'm a firm believer that...

equal isn't always necessarily fair because, for instance, a haircut for her is much more expensive than mine. Unless you're George Camel. It is the opposite in the Camel household. But yes, it's a good point. Yes, and you two are the perfect couple to answer this with a woman, a man, and a spender as favors. Okay. Yeah. Yeah.

Yeah, I think that the amounts totally could be different. And I'll be honest, Winston and I, well, I think we may budget the same amount, but I spend mine every month. And Winston probably rarely blows through his fun money. Yeah, he may. I don't even. Yeah. So we probably technically could budget less for him and

he would be fine. But it's yours equal in the budget? Yeah, I was going to say, it is equal in the budget. You're making me question, why do we do that? Why do we not just correct it to what's reality in the crew's household? I'm not sure. Because I don't think Winston would care if you lowered his amount. No. And if Winston wanted to buy something, like, yeah. That's how it goes. Once a year, Winston goes, I want to buy this, and he just does it. Yeah.

He spends all of his money. How much fun money do I have? Yeah, so I would I would agree. I do not think that it has to be equal. But I would I and I say that cautiously hearing people that are listening or watching us now that are not in your position because you're saying that yours would be lower than hers. Correct.

Yes. So I think that is totally fine. But I don't want some crazy spouse out there listening and being like, oh my gosh, mine gets to be higher and you should lower yours. Like I heard on the show, they said the husband should be lower. Yeah, yeah, yeah, yeah. So I don't want to create conflict between married couples out there. But if the reality is that you're naturally a saver and you're not going to spend as much as she spends, then yeah, I think it's...

reality should reflect the budget. So I would for sure and not feel bad about that because you're right. I mean, as...

Technically speaking, women, I think, do spend more. George is the exception here. You got the right co-host. But here's the other thing. I don't have any hobbies. Except for your dogs and your hair. Exactly. And coffee. And coffee. But I don't go crazy there. Do you spend more than Whitney, though, a month? I wouldn't say in fun money. Because, again, I don't have fun. I went to a movie last night, and I was like, wow, I'm really living. Yeah.

That's it. So, Einar, can you give us a number here? Like, I don't know, what's the currency in Norway? Is it a kroner? Krone? Yes, correct. But to keep it simple, we can just divide the total amount in Norwegian kroner by 10, and we got the dollar amount. Okay. We bring in around 6,000 a month.

And for the next month, we set up actually equal, so 200 each. But last month, we set up 454 and 200. And it worked out. It worked.

See, that's something we can deal with outside of this, but it has nothing to do with the budget. It's just she feels like it should be more equal and she feels bad spending, but the budget is permission to spend. It is, and it should be a reflection of reality. And the reality is, you know, what she spends per month is going to be more than yours. And that's totally okay, regardless of who brings in the money.

Put it all together. You say, what is the reality of our life? And that's how we're going to budget. Listen up. Trying to reach your money goals without a rock-solid budget is like trying to climb Mount Everest in ice skates. It isn't going to work. That's why we built the EveryDollar app to help you win with money. It's the simplest, most straightforward way to track your spending and give every dollar a job. That way, you can stop letting your money push you around and start reaching those money goals.

Download every dollar for free on the App Store or Google Play. Welcome back to The Ramsey Show. I'm George Campbell, joined by Rachel Cruz. The number to call is 888-825-5225. Diana's up next in San Jose. Diana, welcome to The Ramsey Show. Hi, James. Thank you. Absolutely. How can we help today?

So I have a question. So I'm 28. I have no debt and I've been saving for a house for about five years and I'm not seeing no results. And I just wanted to ask what else could I be doing so I can afford a home in San Jose? Where are you seeing a lack of progress? Is it in the savings account or is it what the amount of money will do for the housing market?

It's the housing market. So I have a full-time job and I make about 100K a year. And I have about 100K saving cash. But it seems too little to buy a house here in San Jose. And the reason I would like to stay here is because all my family is here. Yeah, I mean...

It is so difficult, Diana, because I mean, you are in what the top three highest real estate markets. I mean, the Bay Area, it's like that Miami, Manhattan. I mean, it is the most expensive real estate market. I mean, it is. So it's going to take you.

on average twice as long as someone living in Nebraska and buying a house. So even though you make 100 grand, which is great, it's not crazy money for out there even. I mean, your cost of living is high and the market is. So I think it's one of those things, Diana, that it is frustrating. And I think you're gonna have to map out and just say, okay, I'm in this for the long game. And it may be that I'm 32 when I own a home

and not 29 or 30, right? Like bumping it out multiple years is probably what's going to have to happen. And I'm assuming you're looking at like a reasonable situation for yourself because are you single?

Well, I have a significant other, but we're not married, and I don't want to buy a house together right now, maybe in the future. For sure. Smart woman. So I think a way to get into the market, if you can, is even a condo or a townhome. It may not be a single-family home, just to get yourself in a position to even own something in that area, right? It may not be a single-family home right now. It might need to be further out of the area. Do you commute to work in San Jose proper?

Yes, so my work is in South Bay and my commute is about 15 minutes. 15 minutes. Okay. So let's say you were going to do a half hour commute. Would housing be cheaper out there?

Yes, maybe in Gary Roy or Morgan Hill, I'm guessing, but it's getting more expensive and people are moving out of, I would say, to afford a home. They've got the same idea as you. They're going, well, this is where I can afford and therefore supply and demand. So here's what I would do, Diana. I would sit down and go, what are my non-negotiables?

What must be true and what can I compromise on? And that might be, hey, I'm willing to get a fixer-upper, but I'm going to live in the part of area I want to live in. Or it's going to be brand new because that's what I want, but it's going to be further out. Or it's going to be at the townhome instead of the single family. So I think we need to start going...

Listen, the reality is it's an insane area to live in. When you make $100,000, that's amazing money for most areas of the country, and yet it's not enough to buy a home in San Jose for a single woman. You know what I mean? And that might change one day as you get married and your spouse makes $100,000 and now we're making $200,000 or more. Well, now we can upgrade over time. So it doesn't have to be a forever decision, but I also don't want you sitting on the sidelines for another five years. Okay. Is that helpful? Yeah.

Yes. Okay. I wish we were. Thanks for the call. We could have like a secret life hack good news. I mean, I'm telling you, California real estate, y'all. You get your Southern California, you get your Bay Area. It's just, I mean, it is so expensive. I mean, and other areas are expensive too, right? I mean, all of housing is up. Yes. We know that. But there are just these pockets around the country that it's like,

I mean, it is what it is, right? I mean, you have a beautiful home, but if you decided to move to Beverly Hills or wherever and you put that same money, you'd go, oh, we need to get like a- A fourth of it probably. We can't fit the kids. You know what I mean? So there's just a reality to it. Yeah, totally. Not fun to deal with. And so if you do decide, I'm gonna work in this area, we also have to figure out how do we get our income up in order to go with the ultra high cost of living. We kind of need an ultra high income in order to make this work long-term. That's right. And it's the math, which is-

Not always fun. Math doesn't have emotion. We do, or I do. I wish math had more empathy. George has some emotion. I need more math. No, but it's hard. Rachel's the empathetic friend. No, it sucks. I mean, like, man, it's hard. All right. Well, let's move on and hopefully have some good news. Barbara is in Atlanta. What's going on, Barbara?

Hi. I don't know if I have good news or not, but I'm really happy to be talking to you. Barbara, we were hoping, but hey, it's okay. You are the good news. We're happy to talk to Barbara. We're glad you called. Thank you. So we're getting close to retirement. I'm 63. My husband's 66. We have $700,000 in an investment account. Whoa. Nice. But we also have $40,000 in consumer debt. So I'm really tempted to take some of that money and pay it off.

And but he's starting to draw Social Security next month and it'll be about thirty five hundred a month. So I'm wondering if we should use that to pay it off or if we should invest that and take out a lump sum and pay off our debt. We also have a little mortgage. OK, what what's the seven hundred invested in? It's with one of your smart pro investors. It's he's got it in a in a mutual fund. Is it is it within like a Roth IRA or 401k or is it just a standard just growth mutual fund? It's a.

No, it's a 401k and we have a smaller Roth. Okay. But that is essentially, that's your retirement nest egg is the 700k. That's exactly right. Okay. So that plus whatever we get in social security, that's the retirement plan. So we need to make sure that we can live off of all of that. Yes. Okay. And we figured out we can. Okay. Have you talked to your smart investor pro about the best approach sort of mathematically, strategically for where to pull this money from, whether it's from future income versus your investment account?

We talked about the lump sum, and he says he thinks that's a pretty good idea, but he hasn't really gone any further than that. And I'm starting to think that maybe we have some options. You definitely have options. I love the idea of not touching the nest egg. That would be my number one goal for you guys is to leave the nest egg to grow because we know on average it's going to double about every seven years. So seven years from now, if you don't touch it, you got $1.4 million. Well, that's a very different retirement.

And so I don't want you to decimate the nest egg before we even get to retirement. And so if you can use the $3,500 and you continue working, you guys are on a budget. Yeah, are you guys still working? Yes. Okay. I'm just going to work another year, and I'll work probably two more years. Okay. Well, how much are you guys making? Well, we bring home $8,000 a month. That's our take home. Okay. How little of that could you live off of? What do you need to get by?

Well, we break even each month because we've got that consumer debt. You're spending eight grand a month right now? Yes, and we need an emergency fund. That's our whole problem because we're spending money that we're putting money on credit cards for like tires and our vehicles.

dogs, you know, need surgery and things like that. So we need to get an emergency fund going too. I'm really dedicated to working these baby steps, but I feel like it's kind of late in life and I don't really know if everything applies the same way. Totally. Yeah. And it does. And what I would be, you know,

thinking about Barbara is, yeah, could you pull money? You have 700 grand. So could you pull it and pay off this 40 grand and be fine? Yes, you could totally could. But the truth is, is the way you guys are living, your habits aren't changing by doing that.

And by living paycheck to paycheck without savings is what I worry about you guys going into retirement because with those habits, that magnifies the more money you have. And so I would rather your habits change here in the next year or two as you guys enter retirement more than anything. So I think it would be just a good practice. And like you said, you're in your 60s and you're like, is it too late? I'm like, no, it's not too late. But I do think it's harder to change a habit that has been in place

For you know 40 years or you know However long you've been working and living So I think it's gonna it can Be a harder change for you Guys but I think it's I think it's a needed one And I think taking that eight grand And saying what can we do to To

to not just live off of that paycheck to paycheck, but what can we do to cut expenses, get margin, pay off this 40, get an emergency fund in place, do it all with your income here in the next two years. That would be a great challenge for you all because then your habits have changed. You've created a new way of functioning with money and then you get to go into retirement with

freaking 700 grand, which is amazing. Yeah, that would be my goal. We're not retiring until we're out of debt with an emergency fund. And that means we're going to work until we have to. And that should put some fuel to this fire. Thank you for the call, Barbara. This is The Ramsey Show.

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with a $600 deposit today at ramseysolutions.com slash cruise. Welcome back to the Ramsey Show. I'm George Campbell, joined by Rachel Cruz. Open phones at 888-825-5225. If you want to know...

The best way to manage your money, there's no get rich quick life hacks here. It is by doing a budget. It's by looking at the reality of what you make and what you're spending and then trying to stick to it. And that's what we've done with our EveryDollar app. It's completely free. We've got over 10 million people using it. You can get it in the App Store or Google Play. And it's the same way Rachel and I manage our money.

It's the same way I managed money when I was broke. And now that I got some, I still use the budget to make sure that I'm hitting my goals and spending what I should be. So go check it out in the App Store or Google Play. And if you're listening on YouTube or podcast, we've got a link in the description for you. Wes is in Philadelphia. What's going on, Wes? How can we help?

Hi, George. Hi, Rachel. So I have a question. I am on baby step two and I am. So my wife and I are on baby step two.

We purchased some property on a tax sale back in 2020. And then our plan was to, because it was only a couple miles from our house, to eventually build a house cash and rent that out. But plans have changed. We moved up north to Pennsylvania for my job. And I am now looking at selling that property and

While we're on baby step two, we are looking at selling that property to be able to either A, pay down on our debt, or B, help my wife start a business to be able to increase our income and then pay down the debt faster. How much are you going to get from the sale of the property?

So retail appraised value is about $21,000. It's not much land. But if I were to sell it to an investor, it would sell much quicker, and I would probably get between $10,000 and $15,000. And how much debt do you have? So currently consumer debt, we have $43,000, various, some credit card, some medical. I have a little bit left on my truck along with student loans.

How much do you guys make a year? We're already down $49,000. Nice. Well done. How much do you guys make? I make $140,000 with my salary, but I have the opportunity with bonuses and things to make up to about $180,000. Okay. How much does your wife make? She stays at home with our two boys. Okay. What kind of business is it that she's wanting to start? Well, so something we've talked about recently

is for a family business that she would kind of manage is a monthly family type of activity type of thing where we would...

put together a box of a kit. Oh, yeah. So one of the ideas would be maybe for like a spring or a summertime activity, there'd be a small easel in there with a poster board and some water balloons and some water-based paint. And you fill up the water balloons with the paint, throw it out there. You have an afternoon of fun and you have some artwork to put in the living room. How many of these kits has she sold so far?

None yet. We're just in the thought process. We have not even listed the property yet. So I'm just trying to look at the... Okay. What options type of thing... Yeah. ...you would go down. So I would put this towards the debts and I would do that because the business model, you know, the business plan, it is not, you know...

It hasn't even been happening. It would be different if you're like, oh my gosh, she has all this business. She's doing this thing and

golly we're making this and if we just put a little bit in there she could make 4x that like if there was actually a proven um sustainable business i may could talk about something different um but as of right now yeah because it's just a complete startup whiteboard i would definitely get you guys in a position where you're debt free um so that 10 grand i would definitely take to that 43.

make it 33 and start working your way down. And then I would get an emergency fund in place before you start that business. And then once you guys are debt free with an emergency fund, then she can start that. And I would start it very slowly.

move at the speed of cash and slowly work her way up. Because I think sometimes, you know, we talk to people on the show and they have a dream and they want to go get a business loan for 60 grand to start something that's not proven out and they get themselves in a mess. So just for future...

future, uh, advice. You didn't ask for that, but I'll give that to you for free. No, I appreciate that, Rachel. Um, and that's the, that's the other, other thing is, uh, with us looking at selling this little piece of land, uh,

we would have that cash and we were just trying to figure out which would be the better option. Yeah, I would definitely put it towards the debts. The secret sauce here is your amazing income. It's not the land. It's not the business opportunity. It's I make 140 to 180 grand. Let's take control of that thing. Because if you can start throwing six grand a month of the debt, this thing's gone soon. Yes. And so I think we've been hanging on to it too long.

Yeah. Well, we've been working on it for a little bit less than a year now. And they paid off $49. Yeah. In a year. So you'll do the next half in what, nine, 10 months? If we are unable to sell the property for whatever reason, you know, the storm, Helene, that went through, I'm not sure if we'll be able to sell it. Yeah. Yeah.

But if we're able to sell it, then we'll have it paid off before springtime. But if not, then it'll probably be summer to maybe early fall next year. That's great. Cool. Good for you guys, Wes. Well done. Yeah. That's a lot of hard work. And I love the business idea. You know, they have some of those subscription boxes and I've gotten them as a gift. One of our kids got one as a birthday gift. Yeah. So every month they got this like

activity you know in the mail is exactly what you're talking about Wes and it's great and it's great so I think yeah there's some fun outlets and creativity when you see a need out there to be able to yeah start a business I love it one day well she'll call back and say I have a hundred thousand for my side business what do I do with that's right oh my gosh blew up or 500 grand should my husband quit his job yes that's my favorite all right Ben is in Minnesota what's going on Ben

Hi, George. Hi, Rachel. I guess I just have a question about my company-funded annuity plan and whether I should be investing alongside that. Right now, I'm technically in baby step three. I'm just looking ahead. Okay. What are the options for retirement through your company?

Well, it's a company-funded annuity plan. So whatever I make a month, they'll put in 25% of what I make. Regardless of if you put in anything? So you put in $0, they're still putting in 25% of your income? Yes. That's awesome. It's great. Yeah, it's a national electric annuity plan, so it's like...

A lot of linemen have it. Yeah. And that's the only retirement option? There's no 401k, so you're on your own. We have a 401k, too, and right now I've always just put in 5%, which is kind of the minimum. Okay. So I've just been doing that and just been kind of living that way. But I'm just wondering if I should be putting money into a Roth, too, or...

Yeah, so once you have your baby step three completed, so you have your fully funded emergency fund done, then yeah, I would look to say, you know, because the 401k, what's the match there? Is it 5%? And that's what you're matching to? Yeah.

No, they don't do a match. They don't have a match. The big thing is the annuity plan for them. Okay, gotcha. There's no Roth option? Then I would keep my 15% in retirement. I would not let them do the annuity and all of that. I would not put my own money in it. I would, yes, go to the... No, they do it. Okay, great. That's awesome. Yeah, so I would go to the Roth first, max it out, and then go to the 401k after that. Okay.

Okay. The reason I'm really asking is we're going to buy my wife's grandparents' house one of these days. They're in their 90s.

So I kind of was thinking of flip-flopping maybe step four, was it four and five? Well, there's 3B where you start saving up the down payment and you get to choose how much you invest during that process. But thanks for the call, man. Hey, if you're listening on YouTube or podcast, the show's about to end. So head on over to the Ramsey Network app to finish the show in a distraction-free experience. You can go download that in the app store or click the link in the show notes. We'll see you over there.

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