Don’t Let a Good Reason Become a Bad Excuse
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This is the Ramsey Show, where we help you win in life. We want to help you win with your money. We want to help you win in your work, and we want you to win in your relationships. The phone number for your questions is 888-825-5225, 888-825-5225. I'm Ken Coleman, and I'm joined by the illustrious, the incomparable, the fabulous Jade Warshaw, ladies and gentlemen. Hello.

How about that? I gave you three adjectives today. Listen, my eyebrows couldn't keep up. I was trying to keep up with you. I like that. So we are here for you. Jade will take the lead on those money questions. And then anything related to your work, specifically, how do I make more income so we can get through these baby steps faster? I want to help you ideate on those questions. So give us a dial, 888-825-5225. We started off in the ATL where April joins us. April, how can we help today?

Hi. So my question is, do I sell my home to get out of debt and a bad marriage? Maybe. Tell us more. So I got married less than a year ago. I didn't know it was going to be emotional. I got married less than a year ago and I came to the marriage with debt. I have about $91,000 of debt that is not including the home.

My home is worth about $180,000 positive. So I have 180 in equity. Okay. My marriage has gotten progressively more toxic to the point of verbal threats of harm. It's already been emotionally and verbally abusive, but now there are threats of harm. So my question is, would it be a good idea to sell my home to start over from scratch financially and

And to get out of this marriage. Well, let's start with the most important thing first, which is getting into a safe place and out of this marriage. That's that's thing number one. Do you have a plan in place that you're able to put into action immediately? Yes.

There's somewhere I could go. I could always go to my mom's house. Yeah, you should. Because we live together. I could always go to my mom's house. I don't have a plan. I'm just confused at this point. I do think you need to go to your mom's house because any man that would make a threat to physically harm you, you can't stay there tonight. Right. Yeah. And I'm sorry. I'm so, so, so, so sorry. This was not what you pictured when you said, I do. No one pictures that, right? No.

Okay. Deep breath for both of us. All right. You're going to mom's house tonight and we're going to come up with a plan that you can move out, be on your own and feel like you have some confidence. Yes. Yeah. Okay. So let's talk about what you're earning. What, what do you bring it in every month? As little as 6,000. I'm in commissions. I get paid commission. So as little as 6,000, as much as 10. Okay. Six to 10. What do you do?

Okay, good job. All right. So can you kind of go through this $91,000 of debt with me just so I can get a handle on what it is? Can you kind of itemize it for me? Yeah, so around $50,000 in student loans, about $10,000 in a personal loan,

$50,000 student loans, $10,000 personal loans, $6,000 on a car, and $25,000 on credit cards. Okay. $25,000 or $2,500? $2,500.

Thousand. Thousand. Okay. Haven't made great choices. Is this in your name or his name? Both of your names? This is the debt I brought. Okay. And do you guys currently share your finances? Like, are you sharing bank accounts? Are you sharing that sort of thing? Not anymore. We tried the Financial Peace University. As soon as it came time to put it in act, he immediately put our joint account in the negative. So I don't contribute to that account anymore. Okay. So for all intents and purposes, you're separate?

Yes. Okay. Okay, so tell me about the living situation. Are you guys renters? Do you own a house together? Tell me about that. He owns his own home, which he's renting out, and I own my own home that we live in. Which is the one you told us you had the equity in. Correct. Okay. So it's your home. Yeah. So you can, when I say it's as easy, it's not easy, but you can ask him to move out. Right. Okay. Okay.

Okay, so head back around this. Okay, so what about savings? Do you have any savings? No. I'm in a financial distress, which I haven't experienced since I was very young. And to be married and experiencing it now is crazy. Are you behind on anything? No. Okay. I didn't have to think about that for a second. No, everything's current. Okay, that's a good place. So the good news is...

In this way, you're not really beholden to anybody. You're not dependent in the way that this is his house or, you know, you have a level of independence here that's in this case good. And at this point, really, it's just if you're talking about the financial side, it's you walking the baby steps like anybody else. The good news is I think you have a good income. You know, obviously, it's better when you make ten thousand in a month. But there might be the situation where you can add to that inside hustles. Do you have any children or do you guys have any kids together?

No kids together. I have a child in college and I'm paying for him to breathe. Okay. Okay. But no, no little kids, nobody at home that needs your time. So for you, the name of the game, I mean, it's twofold, just like we would tell anybody else. We're looking for ways to get the income up, whether that's you side hustling, maybe you can take on more time at the dealership, whatever that looks like, that makes sense for you. And then it's bringing the expenses down.

So that's what we're looking at. And at the end of the day, we're taking these debts smallest to largest, right, Ken? I mean, $6,000 car first. Yeah, absolutely. So you get some momentum. But I think in conjunction with what's going on here, I think because you own the home that you guys are currently living in, I think we got to play serious with this guy. I think you have to say, you're never going to threaten me again or I'm calling the authorities. I'm going to my mom's house until you move out.

And this can all be pressed pause on if you agree to go to counseling. But at this point, when a man threatens you, I think he's gone way too far. And I would call him out on it and say, never again. You made your last threat. Now, if you want to go get some therapy and you want to, we can sit down with a professional where you feel safe. But I agree with what Jade said, but I would let him know that I'm moving to protect myself from,

and I'm giving you X amount of days to get all your stuff out. And the next time I see you, we'll be in divorce proceedings unless you're willing to sit down and try to rescue this marriage because I always loved the idea of let's try that. We'll see if this guy's the real deal when you come to that. But I think at this point you have to play hardball with him and say, this is my home. I'm in debt. As you said, I'm in financial distress. So in this case, Jade, answering the initial question, I don't think you have to sell this house.

But I think that if this house represents a lot of pain and this thing does go the route of divorce, it might not be a bad idea to sell it, start fresh anyway. So you have some good mojo in the next house as you get healthy. But neither one of us are saying you have to sell this house. You make pretty good money. Yeah. And I think Jade's right. I think if you just get serious...

and take care of yourself and this is part of it, I think you can walk this out and you make really good money. I think you have some extra motivation right now to sell as many cars as possible. Yeah. And hey, don't keep this a secret. A lot of people would keep this a secret. Make sure you get some good girlfriends around you. This is the time if you got brothers, call up your brothers, call up your dad, call up your grandfather, call up your pastor.

These are times where you don't, you let people know what's going on and that you need help and that you need people around you and let them help you and be there with you when you confront this person for the first time. Yeah. Thank you so much for the call. We're rooting for you. This is The Ramsey Show. Hey guys, it's Rachel Cruz here to tell you about a faith-based alternative to health insurance that can make healthcare more affordable. Christian Healthcare Ministries. CHM allows members to share each other's healthcare costs

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Welcome back to the Ramsey Show. Thrilled to have you with us. 888-825-5225 is the phone number. 888-825-5225. Want to help you win with your money, win with your work and income, and win in your relationships. Jade Warshaw joins me. I'm Ken Coleman. We're thrilled to have you. And Jade, my note said it's time. You've got the details there, so I'm going to bring you in here on this because you are

are a person who has done how many cruises like how many cruises have you been on uh i probably couldn't give you a number but i can tell you i oh gosh how many cruises per year for how many years well i did about oh gosh i probably did about 30 like about 40 weeks a year for a long time okay so how many years would you say a decade so for minimum minimum 400 cruises

Well, no, because you can go on for like, I would go on for like three days and leave and then go on another one in five days and leave. So I'm going to double it. 800 cruises. I've been to 92 countries, Ken. Yeah. And you were a professional singer. Yeah. And so when you hear about the Live Like No One Else cruise, are you like, are you serious? I can't get away. I've been on the land for a long time. Now you're back.

And it's going to be a lot of fun. It's going to be fun. Listen, this one's going to be different. But you're speaking this time. Yes. You're not singing. I'm not. Unless you decide to spontaneously lead the crowd in some type of thing. Play us a song.

piano man just kidding i would never there is but you're going to be speaking along with dave ramsay myself john deloney yeah rachel cruz george camel seven days at sea yeah march 22nd through 29th this is coming up next year duh uh and we'll be stopping in kent turks and cacos i'm excited about saint thomas love puerto rico love that country well territory

Yes, a territory there. And here's the thing. We are starting to see cabins running low. So if you want to do any type of VIP upgrade, those are basically sold out. So if you're even trying to pick up a cabin, you need to log on now to do that. If you want one with an ocean view, you need to get your deposit in now. The deposit is 600 bucks. So for anybody thinking, man, I got to pay for the whole thing at

It's not really like that. You pay $600, and then at the next appointed time, you pay the other money. So that's the way it works. You can book your cabin today at ramseysolutions.com slash cruise, and we'll be there. Yeah, it's going to be fun. We'll be there. So make your decision now and again. These are for people that are in Baby Steps 4, 5, 6, and 7, obviously. That is right. So if you're not there, sorry, but now you have a little extra motivation beyond all your other dreams and goals as well.

That's right. So it's going to be a lot of fun, going to sell out. And I've got to see if I can get the captain's hat from Gilligan's Island. I have a couple. But I want to get it on Dave. At some point, I want to get him to put it on without frowning at me or shouting an insult. Ha ha ha!

He might frown at you. I can definitely see that. But I think people want to see that. They do. So I'm going to get my hands on one of those and get him to, through crowd pressure, put that on. I expect to see you in a captain's hat, kid. Well, that's easy. You're going to be in linen. Trust me. You're going to be in your Uncle Cage sandals. I'm going to look like I stepped out of the J.Crew Ralph spring edition of the catalog. There's no question about it. I've already got two different types of deck shoes I'll be wearing. Okay. Yeah. Yeah. Yeah.

I mean, when in Rome, you know? Well, my copy here says that we've got big news and it said that the big news was the live like no one else cruise. But I know about some other big news, Ken. It's your birthday. Oh, you did it to me. I didn't know where you were going at first. It's your birthday, guys. It is. Kenneth Wayne Coleman. It is his birthday. He is turning 40 for the second time in 10 years. What?

Also known as 50. You know what? Men are not ashamed of this, folks. I'm 50 today. The big 5-0. Ken, keep doing what you're doing. I'm trying. You're making it look good, Ken. It's the moisturizer. All right.

All right, we'll do that. But thank you. Yes, thank you, Jade. You'll have to sing to me later today. I've got to get that Whitney Houston style. Can you do that after the show? Save a little bit? I'll save it for you. Save a little bit for the gathering. Okay. All right. So fun. Yes. Can't believe I'm 50, James. It got here a lot faster than I thought. I never thought you were a day over 35, Kim. Thank you. Well, the Botox helps. All right. Columbus, Ohio is where we go. Amy is waiting for us. Amy, how can we help?

Hi, I'm wondering if I should take a job offer from a approach from a company. This would be about $30,000 more. However, the schedule wouldn't be as great. Or if I should stay with my current company who I just started with in May for a better schedule. Okay. So if I'm hearing this right, this is as simple as better pay versus better schedule. Is that about right? You are correct. And which way are you leaning before you called us?

It was so hard. Of course, I love the personal time. This $30,000 raise would also bring more opportunities for growth later. It is a leadership position. So, of course, there's the responsibilities of that. Yeah. Yeah. And how do you feel about that part of it?

I enjoy helping people, and I enjoy guiding people, of course. It's completely different when you're the person that's always the one that someone's looking towards. So it's definitely intimidating, and I think that's the biggest part. I'm intimidated, and I don't know if it's the right move. So that's probably more of a factor than the schedule issue, correct? Quite possibly. Yeah, it's scary. Have you ever led before, been in any type of supervisor role before?

I have for a short period, yes. And how did you do? How would you grade yourself? I, especially since I was very new at it, I did well. Probably about a B because, of course, there's always room for growth. But people said that they enjoyed what I did and enjoyed helping, or they enjoyed me helping them. What if I told you that you could be a really great leader if you just asked two questions every week? Would you believe me?

I would try to. Okay. So I'm going to give you two questions. I want to address this, and then let's get to your decision. But real quick, I just want to take the fear factor out of leadership. And it is intimidating, by the way, and that's very natural to feel. But if you were to boil leadership down to two basic actions, I believe it takes away the intimidation factor, and I think it's going to make you extremely effective. And here are the two questions. This is for your direct reports, and I think you do this on a weekly basis. The first question is, how are you doing?

That is not a greeting in the hallway. How you doing? It is a look them in the eye and go, hey, how are you doing? Everything good? And you should know enough about them to where you can just lean in. And we're not talking about getting up in their business. We're talking about what little bit they share. They will begin to share more over time. But how are you doing as a person? Okay, I heard your dog was sick or word is that your mom's going through something. You know, whatever they're sharing, you've heard it and you lean in.

As a person to say, how are you doing to let them know that you care? The more you ask that question, the more they will know you care and the more they will trust you, which leads to the second question. And they will be willing to answer the second question. The more they give you answers on the first one. And the second question is, how can I help you win?

Okay. And that is people want to know that their leaders know what they're dealing with. Do they have the resources? Do they have the time? Are you tuned in to what's going on in their job? If you ask those questions on a weekly basis over time, you will develop unbelievable communication and trust through the transparency that's going on with those two questions. You got it?

Yes. Now that will make you a really effective leader. I promise you. Okay. Now let's just talk about the decision. The long-term is what I was going to ask you about. And you already gave us that answer. So you said this job with more money also gives me more opportunity long-term for me. I'm going to go with the long-term opportunity. As long as the new schedule change, isn't some type of massive, massive disruption that would make my family life such a dumpster fire, Jade.

that it wouldn't be worth the long-term opportunity and the short-term pay. What do you think? I agree with you wholeheartedly. So is that the case then, Amy? Will the new schedule be super negative or disruptive to your personal life?

It would be somewhat of a disruption. This is, if I could say, it's for hospice and my availability would have to be pretty much 24-7 for a short period of time, at least a year, until we get full staff on board because, of course, things can happen in an instant. That would mean I'm missing holidays as well. So here's the deal. Can you do that for a year for the payoff?

I think I would like to. Well, then I think you got your answer. We never get to answer these questions. Our job is to poke around, tell you what we think. That's good. But I think you're ready to take this new role. And I think for a year, you and your family can step up. By the way, Jade, I'll give you the last word on this. We've got about 30 seconds. I think it's all in how she communicates this to all the family members that will be affected.

I agree. They can kind of jump in and support. Yeah, I think so. Understanding it's a short, like we always say, short-term sacrifice, long-term gain. Yeah, I love it. All right. So we are in agreement. Go for it. Stack that extra cash. I like that $30,000 bump and what that can do in the short term to set you up for the long term as well. Don't move. More of your calls coming up. This is The Ramsey Show.

I've been doing this show for over 30 years, and some of the saddest calls I have taken are from situations that are completely preventable. Yeah, and what's so hard is I feel like one of those, especially the ones that I'm like, oh, it's terrible, are people that call in and their spouse has passed away suddenly, and they don't have life insurance. When you have to think through how am I going to pay my bills...

I'm going to eat next week. Yeah, in the middle of all that grief. Like it's just, it is, it's terrible. So life insurance is the one thing, especially as a mom with three little kids that I'm like so big on for people to get because it's inexpensive. Zander is the place that Winston and I actually get all of our life insurance. And it doesn't cost much because Zander shops among a gazillion different companies. It doesn't cost much. You just have to admit that someday you're not going to be here.

You got to say it out loud and you got to say, I'm going to say I love you to my family by taking care of them and taking the time to put this stuff in place. The cost of stinking pizza. To get a free quote, call 800-356-4282. That's 800-356-4282 or go to zander.com.

Welcome back to the Ramsey Show. I'm Ken Coleman. Jade Warshaw joins me. The phone number is 888-825-5225. 888-825-5225. Let's go to Indianapolis, Indiana, where Zachary joins us. Zachary, how can we help today? Hi, how are you guys? We're doing great. What's going on?

So, I'll cut to the chase. Monday, I lost my house in a house fire. What? For at least four months. Yeah. Oh, my God. What do you mean, at least for four months? Was it total? It was contained to one room, thankfully, but we had a lot of stuff in that room that the room is completely gone. They have to completely gut it and reconstruct it, I guess. Okay. Nobody was hurt? No. The dog was inside, but thankfully, they got him out. Okay. Okay.

Okay, so pup is okay. And when you say it's only one room, is that downstairs, upstairs? What was in the room? It was our downstairs master bedroom. Oh, no.

We were actually supposed to sell the house four days prior. Well, four days after the fire had happened. Oh, my gosh. But that's not happening anymore. So thankfully, like a lot of my stuff was packed up and ready to go. But like my wife's entire wardrobe, everything like our bed, our newborn son's bed and everything is. Oh, my gosh. Where were you guys when this happened?

I was an hour away at work and my wife was at work. Oh my gosh. And your newborn son? He was at grandparents. Oh my gosh. Thank goodness. But the rest of the house is okay. Yes. My stepdad was driving by when it started to smoke really bad. So he caught it. What happened? What caused the fire? Do they know?

It was one of the outlets by our bed. They're not exactly sure, but they think maybe a wire came loose and like touched the insulation or something or a mouse chewed on it. Oh my. That is crazy. Well, I'm so glad everybody's okay. Well, a couple of things to be grateful for. Obviously, you guys weren't there. Your wife was not there. Your baby son, the dog is okay. My goodness. And your father-in-law's driving.

by. Yeah, and I love that. And again, grateful that it's just the room, and four months from now, you've got a rebuilt master. Now, I know all of the other things that come with that are awful, but all things being equal, you dodged a major, major crisis, yeah? Yeah, definitely. All right, so how can we help today?

So we were planning on selling the house because my wife bought it before me and her were ever together. And it is a nightmare of a house. Foundation issues and electrical issues. Yeah. So we were really wanting to get out of it. We were buying a new house closer to my parents and it's a lot nicer house, but did you already make the offer?

Yeah, but we are doing a contingency buy. Got it. Okay, good. So we're probably going to lose that house now that we have to wait another four months. Yeah. We have just started the baby steps. We've got about $85,000 in consumer debt. Okay. We don't have much savings, especially after the fire now. And then... Whoa, whoa, whoa. What have you been doing? Yeah.

Um, we, we just started it. So we had the emergency fund, but now with the fire and stuff, we, the thousand dollar emergency fund or yeah. Yeah. A thousand dollars. Okay. So, um, um, here's what I think. So where are you staying right now? Right now we're at my parents. Okay. You're at your parents. You've blown through most of your thousand dollars. What do you have left?

Right now we've got, I want to say, well, she actually made an extra car payment. So we're waiting for that to come back. But we'll have about 13 in our account, but we have bills and everything. And I do a ton of driving for work. So I have to leave at least five to 600 in there for gas. Okay.

Okay. So, okay. Is insurance going to cover the total rebuild or is there going to be more cash? Yeah, they're going to cover it, but they are kind of dragging their feet. So, right. Okay. I think you're a little new to the baby steps. And so I kind of want to reset and get everything on, on so that you and I are at least on the same footing kind of going forward. Um, I hate that this happened to your house and I hate that you guys had a plan and the

This just threw wrenches all up in that plan. However, in one way, like Ken said, you dodged several bullets here and I'm going to add another bullet to the list that I believe that you dodged. Now, looking at your financial situation, fire aside, now is not the time for you guys to buy a house.

Yes, I agree. I originally wanted to rent, but we live in a small town and leaving the town is not an option for us because of my wife's work. And that's where our babysitting situation is located. And there is no places to rent that wouldn't be the same amount as what our mortgage was going to be. That has the space for two kids and a dog that allows dogs to

Um, there was one place that was available and we applied and we got denied because of our credit. And then, um, uh,

And then it went off the market like a week later. So, so, okay. So to address that, unless you were going to, unless by selling this house, let's pretend the fire didn't happen for a minute, unless you were going to have this, this huge amount of equity that was going to allow you to get into the next house and pay off, you know, this debt or something like that, that would have been the only way it would have worked out. And if you had called us prior to that, I would have said, you could just got to keep looking, look for the right rental because something will come on the market. That's what I would have said to you in that situation. Um,

But where you're at now is okay. Insurance is going to cover the rebuild of the master bedroom. You know, you guys are in a place that, you know, hopefully you're not spending a whole lot staying with family, but you are going to spend some, but you've still got, you know, you're still working. So the income is coming in there. Um,

we've got to prioritize this debt and yeah that's got to be the number one thing because technically Zachary when you go to buy a house you want all of your debt paid off then you want to have saved up three to six months of expenses that's not talking about a down payment that's just you having money you know when you move into this house and then it's like okay I need a down payment so you guys were quite far from being there uh when you sold the house what was it going to bring

We were going to get about $15,000 in equity and then my sister was also going to give a gift for a down payment as well to help us with that. Okay, and when you got that gift from your sister, what percentage wise was that going to be towards your next down payment?

We were going to be using an FHA loan, but it was going to be roughly 12 to 15. Yeah. Yeah. I think in many ways this was a blessing in disguise because I think you guys are about to get in way too deep. You always want to make sure that you're putting at least 5% down on a house. You want to make sure it's no more than 25% of your take-home pay. These are the things you want to make sure of. Yeah.

And going forward now, it's just not the time. And hopefully what I would do, what I would do for you guys, if the house that you're in is a nightmare, obviously there's electrical things that need to be fixed. Obviously there's other things. Those are things that you might have to shell out some money to fix in the meantime, because you,

the solution and can we see it all the time my car broke down i'm just gonna trade that in and trade up and get a new car with payments because we don't have the two thousand dollars to fix it so we get a twenty thousand dollar car right and the worst i said this to dave on friday the worst thing is and i'm not saying that this is you but you buy five hundred thousand dollar house but the ac breaks and you don't have five thousand dollars to fix it right happens all the time so push push pause on home buying it's not the time yeah

Rebuild, get your life back on track, get the things fixed in the home that's going to make it a safe place for you to live. That's right. And hey, let's look at the positive on this. I think Jade's right. And I think I'm going to give you just a little bit of a, I think hopefully a little mindset hack here. You know, you should get a new master bedroom.

You know, in the sense of, you know, did you lose some stuff? Yes, that stinks. She lost her wardrobe. That's awful. All those things are just awful. But baby safe, dog safe, you're safe. You know what? You had a really old master bedroom. Now you get a new master bedroom. And I like Jade's pressing pause right here and just kind of going, you know what? Life just threw us a curveball, but let's hit the curve. Yeah, yeah. You know, like I know, you know, I'm stuck in this baseball metaphor, but stay with me.

You know, curveballs are meant to strike people out. Come on, Ken. But let me tell you something. Really good hitters know how to hit a curve. And if you hang a curve...

These people put it out of the park. They smash it. And I think right now, I think through the coaching you just got from Coach Jade over here, I think you guys can take this curveball that life threw at you, and you absolutely hit a grand slam and come out of this thing way better off. So please listen to what she said. I think she's absolutely right, and I think you guys got a second chance. Not fun.

Not fun how you got it, but nonetheless, a second chance. So there you go. All right, don't move. She's Jade Warshaw. I'm Ken Coleman. We're here for you. This is The Ramsey Show.

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Welcome back to The Ramsey Show. I'm Ken Coleman. Jade Warshaw joins me. The phone number is 888-825-5225. Chad is joining us now in Sioux City, Iowa. Chad, how can we help today? Hi, Ken. Hi, Jade. Nice to talk to you. I'm calling just because I'd like to know if it would be wise to convert a 401k to a Roth. Okay, that's a good question to ask. So are you moving jobs?

Is that what's causing you to? I'm 53, my wife's 52. Kind of got into this late in the game. We have about $560,000 total in investments and mutual funds between $457,000 at my work. She has two IRAs and then I have a Roth. I was looking to convert her IRA into a Roth. How much is it? $170,000. Okay.

So here we work through a series of baby steps. I'm not sure how familiar you are with them, but technically... Okay, so do you guys have any debt? No debt. No debt. Okay. What about the house?

house they're paid okay yeah if you want to start that process i would say yes the only caveat to that is obviously if you're in baby step two we don't want you to do that because you're going to be on the hook for the taxes and uh you know that money can be used otherwise if you're on baby step two but for you guys it seems like the right move um are you working with a tax guide or anybody to help you in that area

Yeah, I do have those people in place. I kind of wanted to get your guys' opinion before I went and actually spoke to them about it. Yeah, if I were in your shoes, I would start trying to make that move. I mean, I don't know if you listened a few days back, but we had a guy who...

he had amassed such a wealth, $8 million, but it was all in traditional funds. And so he was just getting nailed with required minimum distributions. And so there is a part of this where you do need to begin making that transfer over to Roth. And I think that you need to work with a Ramsey Trusted Pro in order to do that, somebody to help you with the tax side of it and somebody to help you with the investment side of it.

So if you need that, we'll make sure that Christian picks up and gives you that. But if you're asking if now is the time, my answer is yes.

Yeah, I agree. I don't disagree because of the way you walked it through. I mean, we've got the baby steps. And again, the timing on this, this is why our formula matters. It matters big time. And that's why we always say match beats Roth beats traditional. Like we want you investing where there's free money. But at the end of the day, the Roth is, I mean, the whole point is when you go into those retirement years, A, you don't want to be taking...

having to pay taxes on what you're pulling out of there. And B, if you do amass the type of wealth that we hope that you do, if you're in traditional and you're having to take those required minimum distributions, you're paying taxes on that. That's right. And that has the ability, depending on how well you've done, to boost you up into some tax brackets. So textbook yes on this one. And I love how you walked him through that. So our new audience, make sure you're paying attention there.

as to the why it's a yes for Chad because for some it's not. So really, really good review there. Let's go to Tampa, Florida now and Valerie is joining us there. Valerie, how can we help? Hi, so I'm calling in. I'll be my age. I have

has a wealthy 24th and he's planning on going to law school. Um, both have our undergrad and as he's going to law school, we're, um, wanting to have kids. Like you want to have like a big family, like four to six kids. And we realized that we probably shouldn't be waiting until after he's done, um, to start having kids. So then my question is, is like, he's going back to school. He obviously won't be making money cause he'll be,

No. Yes. Well, first of all, we don't have any kids yet, right?

No, but like I'm definitely planning on having kids. Hold on, hold on, hold on. All right, so I'm stepping in here real quick because I'm going to play old man because I'm 50 today, Valerie, so I'm feeling extra wise, okay? I got a good night's sleep. And I want to start off with this, and then I want Jade to – she has no problem taking issue with me if she disagrees. But I hear some things that 50-year-old Ken says, slow your roll, youngster. All right, let me just go through a couple things. How old are you and your husband, and how long have you been married?

24, and we're three and a half years. Three and a half years in. Okay. And so if we start trying to have kiddos today, there are no guarantees that we're going to have them in the timeline that we want. Would you agree with that statement, Valerie?

Yeah, correct, but also he's going to be going to law school in fall of 2025. Doesn't matter. This is my timeline. You follow me. Don't jump off the timeline, Valerie. I see what you're trying to do. I'm going somewhere with this. You have no idea that you guys are going to get pregnant when you want to get pregnant. You have no clue. Okay? So he's going to law school when? Starting in the fall? A couple weeks? Yeah, fall of 2025. Oh, fall of 2025. So he's got a year to work.

Yes. Yes, he does. All right. And I have another another suggestion here in a second. Here's my point. You are asking if you should take out loans for something that may not be absolutely in need. You could be working full time and not have kids stacking cash, cutting your expenses. And so I think this is a bad idea to even consider it because because here's here's what I know about law school. Where is he going and what is it going to cost?

So he's going to, it's in St. Pete, and he's planning on getting a full-ride scholarship. Great.

That was my, great. So why would we need money? Why would we need student loans if he's getting a full ride? Did you say he's planning to get or he's getting? Yeah, he's planning on getting, like based on his LSAT score and what his, all of his things he got, he should be getting a full ride for whatever reason. If he doesn't, we'll have to pay whatever. But anyway, so yeah, my question is if the

But like, you know, preventative. If we are in law school and like I'm pregnant, like what would you recommend? Like would you recommend, you know, mom going to work, putting kid in daycare? No, no, I wasn't finished, Valerie. Valerie, I wasn't finished. Sorry, Jade. No, go ahead, kid. I'm going to say this. You should not be trying to have kids. You're 24. Get through law school. It's two years max, right? No, it's not. It's three years. Who cares? So three years apiece. You're 27. Stop this nonsense.

Stop it. Stop it. It is not smart in this situation for you to be planning to have kids right now. Just chill out until you get the cash to be able to have kids or you have a budget where you can have kids. Don't walk yourself into a student loan because you think you've got a mama timeline. Stop. It's not smart. Jade? Yeah, well, I'm planning on having like four to six kids. I don't care. I don't care.

I planned to dunk a basketball when I was 16. It didn't work out. Okay, here's the thing. Listen. Yeah, I'm not going to wait until I'm old to start trying to ask questions. You don't have any control over it. You don't even have to wait until you're old. Let me just throw it to you like this. Mom to future mom. A, there's a couple of things here.

There is something... It's important to plan, okay? All I'm saying is you have the ability to make a great plan here and to create as much of a situation where you're setting yourself up for success as possible. To Ken's point, you do have plenty of time. That's number one. But then we have to be aware of the things that we cannot control. A, you might get...

Listen, I hope you have six very wonderful pregnancies and they happen exactly when you want them to. But there is a part of this where, listen, somebody threw the cards up in the air and you don't know where they're going to land. So I love that you're planning. If you're planning, then let's plan a way where you're not going into debt. That's all I ask. We're planning for a way that allows us to have the life that we want where we're not going into debt.

Two, the other huge variable in this, Valerie, that you're forgetting about is once these babies come out of you, you don't know what you're going to want.

You might suddenly be like, practice law. What was I thinking? I want to stay home with these babies or I want to do part time or I want to homeschool them. My husband, my husband, lawyer. And so that right there, knowing that variable is a huge, not that I had to give you any more reasons not to go into debt, but the worst thing ever would be if you went into debt to get a degree and then you hardly used it for the next 18 years. I'm sorry. I'm not going to law school. Yeah.

No, no, we know you're not. Oh, I thought she was gone too. No, she's not. Okay, well still. No, it's her husband. Here's the deal. Still. Valerie, I think you've decided that you think it's okay because he's going to be a hot shot lawyer and he's going to be able to pay the loan back. Sorry, you called the wrong show today. I don't think you need to do this at all. He needs to work like crazy and save up money. Good grief. All right, I got to go rest. I got to rest too. We'll be back. This is The Ranges.

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225. I'm Ken Coleman. Jade Warshaw is with me. We're going to take your questions about your money and your income today. That's kind of our focus. But, you know, you call. We'll talk to you about whatever you want to talk about. Boy, it's been a weekend, hasn't it, in the news? I mean, I feel like the last three weeks has just been one headline after the next.

Yikers. I think it's going to be like, you know, like, where were you? Where were you when the towers fell? Where were you? Right. In the 2024 election. Yeah. Where were you when the announcement was made? Really? Okay. Nevermind. No, no. I'll tell you. I can see James rolling his eyes here. I'm still a man of the people, but if you must know, I was in a, I was in a spa treatment for my birthday.

And true story, it has a show connection. James, it's a true story. I got out of my, my lovely wife got me a spa treatment. I enjoy massage. And so I come out of my massage. I walk in the locker room and I open up and I grab my phone and I see texts from Rachel Cruz and Dr. John Delaney. Wow. Just stacked like six messages. I was late to the party.

They broke the news for me. Wow. And I was trying to play catch up. So there you go. There you go. There you go. In case you don't know what we're talking about is President Biden. Is there anybody on the planet that doesn't know about that? Somebody. Somebody doesn't know. That's what we're talking about. Anyway, the news got to me that way and I was a little groggy.

So it took me a second to process it. But Rachel Cruz, by the way, is always Rachel Breaking News Cruz is what I call her. She has got her finger on the pulse of what's going on in the world and has a great opinion about it all. All right, to the phones we go. 888-825-5225. David joins us in Chicago. David, how can we help? Hey, guys. How are you? Good. How are you, sir?

I'm doing okay. I'm recently divorced and I've been left with a 401k from my employer that has 160,000 in it currently. I'm also currently contributing 15% to it and I get a 3% match. And I have a HISA with $100,000 in it. I have no debt, no loans, no car payments, nothing. I gross 100,000 a year.

After taxes, I'm bringing in $4,300 a month and I have $2,800 a month in expenses. So if everything's good with the kids, usually I'll probably be saving anywhere between $1,000 to $1,500 a month. I'm 46 years old.

the goal was to have a retirement of 2 million and I also need to buy a house I'm currently renting. So at my age, I don't know how feasible this is anymore, but I'm just curious, do I need to get a side hustle? Am I currently having an income problem now because of my age with what my goals are? I don't know what to do. Um,

I don't hear a lot of issues. Okay, let me run it back and make sure I didn't miss anything. You got 160K in your 401K where you're doing baby step four and you're contributing that. You got a 3% match. That's great. You got 100,000 stashed away. Part of that is an emergency, a fully funded emergency fund. And part of it is earmarked, I guess, for whatever you want. You're making 100,000 a year. When you're taking home, what you're actually taking home is 4,300 a month. And you want to buy a house.

Where's the problem? He wants to know if he can get to $2 million. You got a $2 million loan. Yeah, I don't know if I'm going to be able to get to the $2 million retirement goal based on my age. How old are you? I can take, I'm 46. Okay, 46. All right. Yeah, this is your calculator. She loves her investment calculator. So while she's pulling this up, David, do you anticipate...

Getting a raise, making more money, or in your current situation, do you feel like you can, through reasonable activities, right, extra work, maybe some, again, getting promoted, pivoting maybe, do you feel like you could contribute way more than you are now?

That's a great question because I'm currently, I'm in finance. I am new to finance. I went back and got a master's degree and got a finance degree. So where I'm at right now, I just received a promotion that got me to $100,000. So I don't see anything on the horizon in the next year or two. But with the finance degree, I was thinking about going to get my certified management accountant degree.

certificate to try to increase the salary more. So that'd be about nine months to study and take the exams or maybe do bookkeeping on the side of the side hustle or something like that. I can, I could do work from home and that, that would be the next step. Either that or I thought about, uh,

I mean, really anything, even if I had to drive an Uber or something. All right, your head's in the right place. So let me bring Jade in here because she's got her calculator because this was your question. What do I have to do to get to $2 million in retirement? She's got her calculator out. Take it away, Jade. Okay, so listen, you're 46 years old. Let's say you work and you want to retire. Let's say you want the $2 million at least by 67, 65, right? Yeah.

You've got 160 in there now. If you're investing 15%, that's around $1,250 a month with your income. And average rate of return, 8% to 10%. And I only say 8% because of the haters. It's really 10 and up. Let's be honest about that. If you're in good growth stock mutual funds, like even if you're in the S&P 500, like you're going to get 10%. Okay. Annualized, by the way, for the haters. All right. When I put that in, you're going to be over $2 million. Okay.

My results say $2,359,579. And that would happen even with my employer's 401k because I'm not sure. And I didn't even include the free money match part. That's gravy.

The 3%? I didn't include that. Like, I'm saying this is you and your money, your contribution. How's that feel? Yeah, they currently have me in a van. I'm in, like, one of those Vanguard Target funds in 2050 or something like that. Okay, I'd probably change that. Yeah, but she's got you at 2.3, David, so you're not too late. You're not too late at all. Not by a long shot.

And that's at 67. Run those numbers to 75. Maybe, let's see. I was planning on working past the age of 70 because I have a seven-year-old daughter. Let's say it's 72. That's when you have the least amount of, let's say, Social Security. So let's say 72. A lot of people like to go till there because that's when they get the max. $3,979,034.

Oh my God, that's good. So what I need to do then is probably remove it out of a Vanguard fund and move it into like more of a mutual fund. Yeah, we talk about spreading your investments over four types, growth, growth and income, aggressive growth and international. And they're not target date funds. So I want to get you hooked up with a SmartVestor Pro before you get off of here to help you select those funds and not just select them, but really you understanding what's going on with them. Because if I look, you know, if I look at my 401k, you should

your annualized rate of return should be around 10% all the time. Okay. Okay. That's not necessarily one year from the next year, but when you take this whole track of growth, this whole arc of the time that you're in the stock market, if you look and say, okay, all of that time combined, what was my average annualized rate of return? You should be above 10%.

So that's what we're looking for. And that's how we're plugging these numbers in. But I mean, even if I were just to play a little bit and just for kicks, put it at 8%, let's see what it puts you at. You're still at 2.5 million. So, you know, you can play with those interest rates and see where it lands you. But for anybody listening, if you're not really looking at an investment calculator, you need to be. And you need to be plugging these numbers in. We have a really great one at ramseysolutions.com. They can throw it in the show notes. But

Instead of kind of feeling that anxiety of the unknown, Ken,

plugging these numbers in and seeing for yourself, seeing what it would take, playing with the interest rates, playing with the monthly contribution that you're putting in. All of that stuff gives you so much peace because we're talking about real numbers, not just shadows. It's a great motivator. It really is. And hey, David, you got to be just fired up, my friend. You called in thinking you were behind the eight ball. And my friend, you are on your way to four million plus, says Jay. Nice job. This is the Ramsey Show.

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That's BetterHelp, H-E-L-P dot com slash Deloney. Welcome back to the Ramsey Show where we help you win with your money, win with your work, win in your relationships. I'm Ken Coleman. Jay Orshaw joins me. The phone number is 888-825-5225, 888-825-5225. Tallahassee, Florida is where we go next. Brandon, how can we help? Hi there. Thank you guys for doing what you guys do. Thank you.

My question today is, so let me just give you a little background. Basically, got married about two months ago, and me and my wife had a plan for what we were going to do. I was going to go, I graduate in December with my bachelor's, and then I was going to go on to either PT school or PA school. And then she's pregnant now, so we're going to have a kid soon, so I'm excited for that. But that does kind of throw a wrench in that. Even before then, I was never too...

I was never really that set on going to PT school or PA school, just kind of what we were going to do. And now that she's pregnant, that kind of throws it out the window. So my question is, how do you figure out what you, what you should do? How do you find like a successful career? I'm only 21 and my wife is only 21. That's just kind of love it.

Well, I wish they taught you this in school, but this is what I teach. And I think there's a three-part, if you want to call it equation or formula, and let's just think of it as three wires that everybody has. The first wire is talent, just what you do well. You know, Brandon, when you just started moving and shaking in the world, even as an elementary school kid,

Your teachers noticed that you were talented in certain areas. Certain things came easy to you. Your parents noticed it. Maybe there was a difference between you and your siblings on things. But everybody comes in this world hardwired with talent. So we just, these things come easy to us. We do them well. That's the first wire. The second wire is passion. This is, we enjoy this task or this role. You know, some people, just to give you an example, they love organizing something, right? Some people love fixing stuff.

Some people love talking. I mean, we could just go through the entire world of work, and there's just some work that everybody kind of has their own list of, this is stuff that I really enjoy doing. The third wire is all about motivation. What gets you fired up? What motivates you? And this is results-oriented. So I call this wire mission. In other words, what do I want to accomplish? What results do I want to put in the world?

Okay. So talent is what I do best. Passion is what I love to do most. And mission is the results that I care deeply about. Does that make sense? Those three things? Yeah. Yeah. So figuring out what you want to do, you got to figure out those things. And then you figure out, okay, once I know what I'm good at, what I enjoy doing and what results motivate me, I begin to see where in the world of work do I fit?

And so I'm going to give you a kind of clue because I think you have a sense. There's four types of work. If I took every job, every career path in the world, and I put them into four categories, one would be people work. Another would be ideas work.

The other would be process and then objects. So idea work, right? So Jade and I are in that, we're kind of in people and ideas. So our work falls in people and ideas. We work with people. We're coming up with ideas to help people, right? So we're not inventing something.

but in the, it relates to an object, but an inventor might be in the ideas and objects space, right? They invent a tool or they invent a machine that does something. And, and so you could see object work is, is physical work with your hands, either creating something or fixing something. So you've got people, ideas, processes, processes, by the way, engineering type work, a lot of technical work, organization, things like that. So when you think of those four areas of work, people,

ideas, processes, and objects. Where do you think your talent falls? I've worked all the way through college, even in high school, as a tennis coach. So that's people. Yeah, that's people. I think that might also fall under the ideas category. Actually, I'd throw it into process because coaches teach you how to hit the serve. How many different elements are in a serve, would you say?

No, the thousands, but you can break it down to four. Okay, great. That's a process. So if you're going to teach me and Jade how to serve a tennis ball, that is a process. So that's people in process. So that's what you're talented in. And usually we're going to see some consistency that you enjoy people in process work. True or false? Yeah, I do. Yeah. All right. And so if we look at what motivates you,

Doing that work, people in process, what's the result that you most want to create as a coach, in your words? I think for me it's always been working with specifically a lot of young men

to build discipline in their lives. Because I know most of them aren't going to go play pro or to go play college even, but to kind of, you know, disciple them, if you will, in that area. I agree. So in the Get Clear Assessment, which I'm going to give you, by the way, and the book, Find the Work You're Wired to Do. So I'm going to give you this as our gift so you can work through this.

But you're going to see that one of the six missional results in the assessment is the result of influence, Jade. And I think that anybody who's in people and process work, one of you are going to see a big theme of you're driven by influence. In fact, the result that you really get motivated for is influencing people. And it's not about hitting the serve.

It's not isolated to hitting the serve. It's about what can I teach them in tennis so that they learn something they use in life. Does this sound like it's resonating? Yeah. All right, so now let's pull back for just a minute. I don't think you're limited to coaching in sports.

I want to bring Jade in here because she's a D1 athlete and she's got a lot to say on people that are high achievers. But my take is to pull back before you get your results just on this call is to think about how could you be a coach in the world of work that's not necessarily coaching sports? And so I think, Jade, management.

leadership. Yes. I mean, he's not limited to coaching high school tennis or college tennis is the point I'm trying to make. Yeah. Well, I mean, I think you framed it up. I felt like I just sat through a masterclass the way you framed it up. Anything with people and processes where you have that influence, that could be in a classroom, that could be in a boardroom, that could be on a court, that could be in a lot of different areas. So the doors, I feel like just flew wide open of opportunity there. Let's put you on the spot, Brandon.

So you're 21. So what would you try tomorrow? Try, not commit to for the next 10, 15, 20 years. What would you try tomorrow if there was zero pressure to succeed? You knew you were going to be good at it, and we could pay you what you needed. What would you try? I guess I've always wanted to...

open and run sports facilities or I mean just facilities in general but obviously sports is the realm I'm in um all right so I'm gonna give you that even owning it great so let me give you two strategies how much are you making right now and what role are you what kind of work are you doing and how much you're making I work part-time right now because I'm still in college I make about 30,000 as a part-time tennis coach oh wow good for you and uh when were you graduating with what major

I will graduate in December. So that the fall semester, I'll finish that with an exercise physiology degree. So here's why I think you were attracted to the PA or the PT. I think you've seen a lot of that given your, your, your involvement with athletics and coaching. And I think it's helping people. And I think you have a heart to help people. But I think the minute that the baby came in, you were like,

this is not something I really wanted to do. I thought it was a good professional track. Now it's going to cost me money and it's forced you to go, what is it that I want to do? So is that true? I want to make sure I'm not putting words in your mouth. So here's what I would do if I were you. I think you have two tracks to run and you could do this simultaneously. I don't think you go get a loan. Obviously we don't believe in borrowing money and just try to start a facility. So I would start with, um,

Who in your area where you live operates these type of facilities? And I wonder if you don't reach out to them through some kind of connection. It could be first degree, second, third, fourth degree. Take them to lunch. Take them to coffee. Say, I just want to pick your brain on how you got where you are and what you're doing. I would learn enough to go, what are your margins? Yeah.

How difficult is this to be successful? I mean, just go to school on somebody around this idea that you had. And then the second track could be you might get a job with somebody who needs a sharp young guy coming out of college, who's coached, who loves sports. And maybe you go to work for somebody like that and learn the ropes before you ever confirm that you actually want to own your own place. This way we take all the risk out.

and you learn and you get a good idea what you're thinking. That's what I'm going to advise you right now. And I would say the same strategy if you get another idea later today. But I want you to hang on the line

Christian, let's get him the new book, Find the Work You're Wired to Do. It comes with the Get Clear Assessment. You're going to get your results, and I think it's going to confirm a lot of what we've discussed. But when you get the clarity on who you are, then, Jade, that's when you're able to answer that intimidating question of, what do I want to do and where can I do it? We've got to start with the who, and that clarity gives us confidence to move forward. Thanks for the call, Brandon. We'll be right back. This is The Ramsey Show.

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Welcome back to The Ramsey Show. I'm Ken Coleman. Jade Warshaw is alongside. The phone number is 888-825-5225. Okay, Jade, I want to get you to weigh in on something that is honestly a little bit shocking to me. I don't know why I'm shocked by it. I just think it's such a bad idea. I'll let you kind of weigh in on this. But we're going to get a lot of these calls. I think so. So we're going to get out in front of this. Yeah.

So in my hands here. What you got? I've got a headline. New 401k rule makes it easier to tap savings, 401k savings, for emergencies. Jade, say it isn't so. I'm like Michael Scott when he's just like, no! That's the way I feel. This is terrible. This new law will make it easier for Americans to use their 401k and other retirement funds as an emergency ATM. Okay.

Americans can now withdraw up to $1,000 from their 401k without any penalties if the money is needed to cover a financial emergency. Now, before you could take hardship withdrawals, but this kind of takes it a step further. Acceptable reasons could be medical care, funeral expense, auto repairs. But here's the difference. Or any other necessary emergency personal expense. Who determines that? You don't have to show proof of it.

So with the hardship withdrawal, you kind of had to do the paperwork, blah, blah, blah. With this, you don't really, it's just up for grabs. You have access to this. I think you have it every year. It might, I think it's every year that you have this available to you. But obviously, if you only have $1,500, you know, in your 401k or something, you can't go below $1,000 in your 401k. So you would only be able to get 500. But

This is what it says. Savers are allowed to make one $1,000 distribution per year. For the said emergency? Is that what we're talking about? Okay. Yep. But here's the kicker. The funds must be repaid within three years. Savers will still need to pay income tax on that withdrawal if they don't pay it back, and they will not be able to make an additional hardship withdrawal. Oh, this is awful. So, I mean, I get it. I get why they're doing this. It's that classic...

You know, I'm not trying to be ugly, but it's that classic American way. Right problem, wrong solution. Right. It's like, yes, you know, this change comes as a growing number of Americans tap their 401ks because they're having a hard time dealing with inflation and the fact that prices have gone absolutely bonkers. And so, yeah, right problem. Americans are struggling. Wrong solution. Right. We always it's like, OK, we'll get a credit card. OK, we'll borrow from your 401k. It's like the worst.

possible advice that you could give somebody. But luckily here at Ramsey Solutions, we're about solutions. So we can give you some better solutions, but this really draws the picture around for me, Ken, um,

why we teach what we teach. Okay, so obviously we teach a set of baby steps, seven of them, but the first four are the ones that I really want to call up right now to discuss because these are the ones that people struggle with, right? We always say, okay, baby step one, you save $1,000.

And so many people can want to just jump on her back. A thousand dollars, that's not enough. And I'm like, clearly it is because that's what people need. And we know the statistics, the status constantly changing, but it's somewhere around the point that 36% of Americans have $0 saved and 15%.

56% of Americans could not cover $1,000 emergency in cash. Like they'd have to go to a credit card. So having $1,000 saved in your money, your cash, that's baby step one. Then everybody knows baby step two, yeah, you're paying off the debt. But what really gets people is we say, don't start investing until baby step four, after you've paid off your debt, after you've done baby step three, save three to six months of expenses. And that really gets people excited.

right here in the heart. That's right. Why would you say that? Don't you understand compound interest? Yes, I do. But this is really a behavioral and a risk problem that we're solving for. That's exactly right. And to your point, you make a great point that the government is limiting you to a thousand dollar distribution from your own 401k, but you're paying taxes on that. Yeah. And interest.

Yeah, that's you robbing yourself. So you're not even getting the $1,000. No. If we use the Ramsey method, you're saving the $1,000. It's your money and it is there in its totality. Yes. When you need it. Yes. And so I think you make a really great point. So the federal government and Ramsey Solutions are on the same page about the number. Yeah, 100%.

Except you're not getting $1,000 of value when you borrow from yourself. You're not. Oh my gosh. And a few people do the math on the opportunity cost there, but if you're constantly, and I'm not saying like this is something you do every month because you can't, but if you're a person who creates the habit of saying, you know what, if something goes wrong, I can just hop into my 401k and pull out

You know, I can do a 401k loan. I can take this thousand dollar distribution. That is a horrible habit to create. It's kind of like, you know, if you have cookies on the top shelf,

All it takes is one time to go in that jar. And once you get a taste, good luck to you. Like good luck because you've realized how to get to the cookies. It's really not that hard. Now you also know how they taste. It could solve the problem for you. You've created this cycle, but Ken, let's talk about why we say baby steps one, then two, then three, then four. First off,

You have to think about risk, right? As long as you have debt in your life, there's risk. Something goes wrong. You don't make a payment. You lose your job. Everything is up on the table. And if you have debt and you don't have an emergency fund, where's the first place you're going?

More debt. Yeah. We see this with credit cards all the time. People use credit cards to make it through. Or if you say, you know what? I'm going to try to do it all at once. I'm going to put a little bit of money to pay off my debt. I'm going to put a little bit of money to go to my 401k because after all, I get a match. I don't want to miss that.

If something happens, if there's an emergency, where's the first place you're going? Right to the 401k. So we're creating this kind of one step forward, two steps back, one step forward, two steps back, as opposed to just saying, okay, I'm going to walk in a straight line and I'm going to keep going forward. Even if in the moment it feels like I'm going a little bit slower, you're not.

You're making more headway. And so there's thoughts behind this, guys. Not to mention, when you just wait till baby step four, you can invest 15% because all of your income is open to you. It's not just getting the 3% match, right? All of your money is there and you're going to be able to make up any time that you may have lost, lost in air quotes, doing baby step two. So this is a proven plan. And so your options really are

Go with the folks on the radio who are telling you about the proven plan or don't do the proven plan. And I don't know what the IRS, let them give us guidance. I promise you, you know, because it's in this article. It's interesting. Here's what we know historically about this. In the past, people who are making these types of withdrawals from your 401k owed the income tax on the money, couldn't even pay it. And then you could also be hit with a 10 percent early withdrawal fee.

And they're under the age of 59 and a half. So this is another trap that looks like it's there as a safety line, right? Like I'm going to throw out the, what do you call the things when you're in the pool? Safety net, buoy. Thank you. You know, somebody throw that out here and we're going to give you a line to pull you back in. And in this case,

you actually are creating a bigger emergency for yourself in the midst of an emergency. Like that's the whole point. And so, you know, let's talk about this. We just, we only have just a couple of minutes left because I think, Jade, it's still very hard for some people. And this is out of respect and dignity that I say this, but based on the income that they make and the current cost of everything in this world, inflation is still high. Yes.

amassing, and I use that word on purpose, $1,000 feels like it is amassing $1,000. I want to give it to you here. It feels impossible for some people. Let's talk to people right now who go,

Baby step one, get $1,000 in the bank. Jade, I am broke. I'm barely making it. What would you say to them to go, okay, here's hustling, gritty. I know it's hard work, but practically speaking, some of the best ways to get $1,000 in the bank in America today. I think the quickest way you're going to do that is to start selling stuff.

If you're talking about I need money today, that's what Facebook marketplace... Give me an example. We're selling clothes. I'm selling clothes. I'm selling anything that someone will buy. Whether that's instead of giving stuff to the Goodwill, see if you can sell it on these OfferUp sites and Mercari sites and all these sites. I'm picking up as much extra work as I can. I don't care. Anybody can work a phone service, customer service job. Do it at night. They're looking for night shifts. There's these... Babysitting. Babysitting. Dogs sitting.

Anything. It's temporary. Most people, when they really put their foot on the gas, they can get that $1,000 saved in 30 days. If it takes you 45 days, I'm fine with that as long as you're going hard in the paint. I love that. That's what I'm talking about. Basketball reference right there for you non-sports fans. She's talking about throwing elbows, leaning the shoulder into this debt. We're going to do what it takes to get the money. Don't move. We'll be right back. This is The Ramsey Show.

Welcome back to the Ramsey Show. I'm Ken Coleman. Jade Warshaw is alongside. The phone number is 888-825-5225. 888-825-5225. Okay, so this is fun.

uh during the break we got an update from james the fearless leader uh our producer and apparently you and dave uh had a fun call a couple days ago on the show and and not only was it fun i guess we have an even more fun update so yeah tell us what's going on yeah well first off when y'all call in i remember so joan called in he was from springfield missouri i believe and

Springfield, Illinois. Springfield, Illinois. Okay, they're close. They're close. Listen, I'm going off memory here. I'm going off memory.

okay it doesn't matter so juwan calls in he had he was living with his girlfriend i believe she was pregnant but they already had two kids it was like one of those situations where like juwan juwan you gotta get married dude marry this girl show her that you care put a ring on it and don't you know this guy emailed in he was like hey you want to know what i'm getting married what did he say james

He said, hey, the advice worked. I'm getting married tomorrow. Tomorrow? Now, did he agree with the advice right away or was he a little standoffish? He did. Matter of fact, I believe Dave was like, uh-oh, he's crab walking. He's acting like he's saying one thing, but he's doing another. And so both of us were like, man, is he going to do it? I don't know if he's going to do it or not. And so he decided. He made a decision. Good friend. He followed by it.

Way to go. So there you go. Fun update. He's not going to regret it. But if you, hey, by the way, if you've ever called into the show and you did the advice, let us know. Let us know. We do love the where are they now? Where are they now? Right. That's always kind of fun. Yeah. Hey, real quick. Some of you are going, all right, election year. What's the Fed going to do? And you're thinking about buying or selling a house. And

And we don't think you need to be on the sidelines. We think you need to be doing what you need to do, but doing it with the right person. That's why I want to tell you very quickly about our Ramsey Trusted program to help you get the right pro, the right agent that you can trust to keep you on track with what we teach and get the best offer on your house or find the right house.

So these are the top agents in your area who we trust, and then you get to review them, interview them, and decide if you want to work with them. Ramsey Trusted Agents are where you need to be going if you're thinking about buying or selling a house. Ramsey Trusted Real Estate Agent is sitting there waiting for you to find them for free, all at ramseysolutions.com slash agent. Again, that's ramseysolutions.com slash agent. All right, Stephanie is up next in Vancouver, Tennessee.

She's on line four. There she is. Stephanie, how can we help? Hi, guys. Back to your earlier thing, I follow Baby Step 1. A thousand bucks is definitely enough to get you going. All right. Hey, real quick, tell people, give us the 20 seconds how you amassed your $1,000 so they can learn from you.

Basically, we cut things in our budget as hard as we could. Things like what? We did sell some stuff. Things like unnecessary subscriptions. We started doing a budget. That's a good point right there. And you found some money. We started doing one. My husband and I hadn't put our money together, so we were kind of wasting the money.

The money, in a way, because it wasn't like we were aiming at the same target. It was like trying to shoot a cannon at two things at once. It was just not working. Good for you. Stephanie teach the lesson. Very good. Very good. Yeah. No, it was pretty good. And like I said, it hit everything. We've had like little minor ones come up that we've used to reach for a credit card for and...

Now, please use our money. I love that. Good for you. And by the way, Stephanie, mentally, if you have to dip into that, it's also a lot easier knowing I did it once before I can fill it back up, isn't it?

Well, yeah. And honestly, I was on maternity when we first started, and I'd gotten to $750, and then I didn't get a payment from my government, and I had to use it. And I was just like, wow, look, that's actual money and not debt. That's right. Good for you. That was great. Well, thank you for the testimony on that. So, Stephanie, how can we help you today? What's going on? Oh.

Okay, so we're going up on, we started at $110,000 and we are at like $55,000 now, $55,000, $56,000. We started with about 12 debts and now we're down to about five. We're working right now on a line of credit.

When that one's gone, it's with the bank and it has a much lower interest rate than some of our other debts. So what we were thinking is instead of just paying the minimum payment on the debts, just taking the line of credit and wiping one out so that we're paying a lower payment to have more margins.

Now, I mean, I know that that's transferring debt, but it also is increasing our margin and it's not opening a new line of credit. My husband and I have had some debate on this, including if we were to do that, should we do the car first because it has a bigger payment or anything like that? And I looked on the Ramsey information and I didn't find anything specifically with open lines of credit. Let me jump in. Let me jump in to make sure I understand you before you go further because I don't want to lose where you're at.

So you're saying you've got five debts left and one of them is a line of credit that's open. And are you wanting to transfer the other four onto that line of credit? Is that what you're saying? That line of credit is $10,000. We have $2,900 left on it. All of our other debts are around $12,000 or $13,000. So what we're hoping to do is kind of use it as a vehicle to get the payment much lower to be able to smack them out faster.

So transferring your current debt by basically putting it into the line of credit like she's asking. And we know it's still debt, but what we're hoping is that we can get more margin and more traction with it. You're doing that because of the percentage rate or because you think it'll free up the other payments?

And it will. It will. Because the MasterCard, we have two MasterCards and a Visa. The two MasterCards are both at about $12,500 and the Visa is about $13,300. The Visa is negligible because it's the same interest rate pretty much as the line of credit. I hear how you're thinking. I hear how you're thinking. You're doing a lot of math.

And let me validate this because I understand what you're doing right now on a heart level. Like when you've been working the baby steps, you do get to this point where you're like, okay, what can I do to work some magic here? And you start moving eggs around and you're like, I could do this. I could do that. And you start kind of,

you start finding ways that you think will work better, but really they're kind of veering you off course. And here's what I would say. Here's why I wouldn't do this. There's part of what you're saying that makes sense. And I'll validate that. Yeah, like if you have a high interest rate, why wouldn't I move it to somewhere where there's a lowest interest rate? If I can make all this form into one payment, that's gonna be lower than these other payments over here and free up some more money. Why wouldn't I do that? I hear what you're saying. However, the negative side of this, and it's a big negative is,

one of the beautiful things about the debt snowball is you have all of these debts and you can list them smallest to largest and you can check them off your list and something that dopamine when you check one off the list is enough to keep you going to the next one. I would much rather have

five debts of ten thousand dollars each than one debt of fifty five thousand i would much rather have three debts that's five fifteen and twenty than one debt that's 45 do you see what i'm saying like i don't want you to group these together because then you're not going to get the satisfaction of paying them off one by one because that is a grand motivator in this whole thing well

And the line of credit, it does max out at 10. So, I mean, we would still be paying off, like, the remainder of the balance on each thing, but it would just be, like, quite a bit less. Yes, but at that point, the difference is so negligible. Like, at that point, money-wise, it's so negligible. I...

You're grown. You can do what you're going to do what you want to do. But if you're asking my advice, I truly think that you should keep these as are. Because if you run out the interest, by the way, anybody, if you run out the interest on the debt snowball, it's going to be negligible. What matters is finishing it.

That's what truly, truly matters. And my husband and I both thought that too. We were like, well, you know, it will make it like a little bit faster, but the difference is only going to be, you know, a couple hundred bucks either way. Yeah. And then you're dealing with a $10,000 chunk again, whereas right now it's at 2,900, right? Yeah. So, you know, that way mentally you're kind of restarting like, okay, I thought this thing was almost gone. Now I've kind of like refilled it and I've got a big, another big chunk of debt to pay off. And I mean, yeah,

I don't even want to know what the difference in interest rate is because we've seen the math on that. So I, I wouldn't do it. Say again. It's gross. It's gross. Yeah. It's gross. The interest rate for the line of credit is like 11 and the interest rate for the credit card is like 27. Yeah. I mean, I know these credit card rates, but I will tell you that's going to light the fuel to get it done. And I,

I mean, that's what I would do. All I could tell you is what I would do. And I stand by that. Yeah. Well, and, and, and, and so we have been consistent on that. I mean, we get this call a lot. It's not the first time we've heard that. And again, we teach discipline and momentum is, is what is at the core of what we are teaching. It's discipline for momentum. So, uh,

Do what you're going to do. People do. But you called us, and Jade laid it out by the book. So really good stuff there, Jade. All right. Wow. Another hour in the books. Thank you for listening. This is The Ramsey Show. This is The Ramsey Show, where we help you win with your money. Win today.

at work and when in your relationships. 888-825-5225. 888-825-5225 is the phone number to jump in. We're here to help you. We've got your questions. Jade Warshaw joins me. I'm Ken Coleman, and we're so excited that you are with us today. Let's go. The phones are lighting up. Joshua starts us off this hour in Idaho Falls, Idaho. Joshua, how can we help? Hey there. How are you doing? Good. How are you today?

Good. Hey, I have a two-part question. First question is, what is a reverse mortgage? And the second question is, how do I convince my mother not to do it? I haven't heard of it. I follow your guys' baby step, so I just wanted to get some more information on that. So your mother-in-law is wanting to do a reverse mortgage. That's right. Why?

Well, from what I can gather, she doesn't have a lot in savings or anything like that. She doesn't have a lot of retirement from what I can tell. Okay. So I think this is her way of maybe skipping that step or something. I'm not sure. Okay. So not a lot of, how old is she? About 60. Oh gosh. Okay.

I'm going to say no on, I will always say no to reverse mortgage. So basically what she's doing is letting the bank take over and they, they own it. They're making a payment. She's still, you know, on the hook for taxes and insurance and everything like that. But once the money runs out,

that's that. And she's so young. Like there's a lot of time for this to play out. And a lot of times if that person were to pass away, that goes to the heirs and they're left with a home that's either upside down or a home that's, I mean, these end in foreclosure. The foreclosure rate on these is just...

astronomical. So I would not suggest that. I would suggest something that's going to kind of help her get a hold of her situation. So I don't, you know, tell me more about your relationship with her. Are you the son that can kind of pop in and say, okay, let's look at your money. Let me help you with this. Would she let you help? Probably not. No. Did you say this is your mother-in-law?

No, this is my mother. Okay, I'm sorry. Oh, mother. Okay, yeah.

Would you like to get to a later date, mom, and have no equity in your home? Because that's what this is. And I can't believe she would go for that, would she? It's, you know, one of those deals where she's talking to her finance friend or something like that, and they gave her this idea, and now it sounds real good. You got any siblings that have a better relationship with her?

Not really. I mean, at the very least, you could play out the number. I mean, I don't some people respond well to math. Some people just fall asleep. Right. At the very least, maybe you run the numbers. I don't know how much equity is she. Yeah. How much equity does she have? Because you don't have access to 100 percent of it, only a portion of it. So if you had to guess, what do you think?

I would guess maybe she has $200,000 on a $300,000 home. Oh my gosh. Oh, this is horrible. Yeah. Because the people, let me put it like this, because there's no real smart way to do this, but the people who think they're smart doing this think, okay, I've got a lot of equity. I'm 86 years old.

not to sound morbid but i'll probably pass away before i run through all this equity that's what they're thinking and so they're like if i don't have anything left to leave i'm fine with that this is what i'm gonna eat off of right but in this case i'm like fees fees alone are gonna eat up so much of that and i can't remember off the top of my head you'll have to check it for yourself what percentage of that is actually going to be available to her i think it's only

60 I can't remember but check to see what of what percentage of equity is actually available but that's what she's got to realize this is a this is not even a solution it's not even a band-aid this is like when you just kind of wipe wipe your knee on your shirt right to stop the bleeding for a quick second she's going to end up without a home this is going to end in foreclosure

So we've got the solution here. I think I painted, I didn't have to tell you how bad of an idea this is, but what we've got to get her to see is, okay, how do we solve this problem? What's social security? What's she living off of? What does she need? And is she on a budget? So those are the kind of detective work that you're going to have to do. And I think that it's you sitting down with her and saying, listen, mom, this is your life, but I'm your son. And the truth is,

If you don't let me help you now, you're going to assume I'm going to help you later when it's too late.

Right. So in that way, you do have a stake. You're a stakeholder in this and she might not see it now, but that's kind of the picture you have to paint. Like, listen, I want to help you now where when it's not so much of a burden to me as opposed to you cutting me out because when you're 80, then I'm going to have no choice and then I'm going to be a little bit pissed because I tried to help you when you were 60. How old is she? A 60. Okay. You know, you can't even qualify until 62. Yeah.

Yeah, she's thinking about it now, though. I know, but here's the other thing. I wanted to do a little research while Jade was talking. Jade's right. The range of money you get is between 40% to 60% of the equity.

So she's got $200,000 in equity. That's hardly nothing. The range is $40,000 to $60,000. And I do think that instead of the emotional conversation with her, because it's very hard to tell your adult mom, and there's obviously some stuff going on there, you know, you don't feel comfortable. It's almost laughable, the idea of sitting down and talking to her, is the feeling I'm getting from you by the actual laugh. So I wonder if you don't just show her the numbers.

And just say there's a better way, mom, and help her ideate on how she comes up with it. What is the actual amount of money she feels she needs to get her hands on? I don't know. Yeah. You got to dig, man. This is your mom. You at least got to ask. You just heard her say it and you're like, ooh, warning sign. Like I wouldn't go in there coaching her up.

but I would ask some questions and not make her feel like she's on the defensive, but ask some questions and go, hey, mom, I did some research on that. That's not a really good deal for you because you're really young. And start running numbers. See, numbers aren't emotional. So life expectancy, do your homework on what that is. She's 60. The actual amount, let's run the numbers on the 40 to 60% that Jade was talking about of the 200,000 is what she's going to be only eligible for. By the way,

she's on the younger side of this, she will just have turned 62. The people that get 60% that Jade was, she was right, those are older people. So she's not going to get 60. She's probably going to be in the, let's assume 40 to 45%. So by running numbers with her, it's kind of like, hey, I'm not telling you what to do, mom. Like show her some respect, some dignity, not the know-it-all hot shot son.

I ran the numbers, mom. And so of the 200,000, you know, 40% is this. So 10% is 20. So usually what? 40,000. She can only get a way. Well, the 40 is more than that. So, so you start running those numbers and you show her, okay, you're going to have this much cash. That's what the most you can get mom. And then let's play this out. You have to pay it back when you sell, when you move permanently or you die.

And then you've got to start walking through what do you need the cash for? Yeah, because what if you go to sell the house and you've taken all the equity out? You're upside down. And by the way, that burden passes to you. Right. I just think the only way to get her talking about this is asking questions and not putting their own. Don't make statements because that puts somebody on the defensive. But I think you've got to hope that she sees the numbers and goes, oof.

This is not a good idea. Thanks for the call, man. You're a good son. But I would step into the conversation. This is The Ramsey Show.

The Ramsey Show continues to bring you some hope through some practical answers on how you can win with your money, win in your work, and win in your relationships. 888-825-5225 is the phone number. We'd love to hear from you. 888-825-5225. I'm Ken Coleman. Jade Warshaw joins me. And we go to Alan now. Oh, wait a second. I got ahead of myself. How could I forget?

Pregunta. In my hands, the question of the day, and it comes from Matt in Minnesota. Yeah, he says, I'm a young attorney and an aspiring stand-up comedian. I'm single with no kids, no student loans, and a great job in my field. However, it has always been my dream to be a comedian. I have my feet planted in...

in my local scene, but if I continue to gain some traction, I'd love to pursue comedy full-time, which would require me to quit practicing law in the capacity that I do now. I also would likely have to relocate to a major city such as Chicago, New York, or Los Angeles,

This change is a couple years down the road, but in the meantime, what steps would you advise me to take from a financial standpoint in order to put me in the best position to succeed as an entertainer in the future? I love this question so much. This is great. I got some ideas too. What say you? I think that, listen, I love that you're a comedian. The first question I always ask, are you good? Like,

I want to know, are you good? And don't ask mom. Don't ask grandma. Don't ask a family member. Get real feedback as to if you are good and if this is something that you can even become good at because everybody thinks they're good. So that's part one of...

That's the first step in this journey. Do I have what it takes? By the way, this industry, it's pretty easy to know because if you keep getting invited back to comedy clubs, because here's the deal. People who own comedy clubs, they will not put in a comedian who sucks. No. They just won't. So that's the good news. Plus, you're going to get feedback from the live audience too. Live audience. So it's kind of hard to be a delusional comedian. Yeah. Kind of hard. And put yourself out there.

out there like in a lot of different environments not just the same environment um so let's talk about this practically number one i can tell you about my husband and i right because we're we started as entertainers my husband is still an entertainer and i will say you have a great situation where you're practicing law it sounds like there might be a portion of that where you don't necessarily have to do it full time if you're kind of in your own like doing your own thing maybe there's some work that you can do on the side but my point in saying that is

until you are doing comedy full-time, you do have to have a day job. Like there's gotta be something that you're bringing money in. And it is nice to have, if you can now secure three to six months of expenses or a little bit more, that is going to be really great for you because it kind of frees you up. It's like, okay, I'm waiting tables in the day and I'm doing this thing at night, or I'm taking a couple of cases, you know, here or there, the easier stuff in the day. And I'm doing this comedy at night. And for you, it's about chasing down the right agent, right?

to make sure this person is really helping you get booked, which by the way is a clue to what we talked about earlier, Ken. If you're having trouble getting an agent, you're not doing very well. Matter of fact, first time on The Ramsey Show.

Christian's going to pick up before you leave. My husband's an agent. We own a talent agency. So I'm going to give him my husband's phone number or not phone number, email address. You can email him and he'll review it for you. And so we'll tell you or not. And we will be honest. And if you're good, we book cruise lines. So hey, there you go. Okay. Well, I'm going to pick up on that part of the advice. I love this.

I would do a couple of things. One, I would be, if I'm getting paid anything, even small stuff for local clubs or gigs that maybe that Jade's husband gets you or whatever, I'd be stacking, stacking, stacking. I agree with it. I would do 12 months.

I would not move to a city to go all in on comedy until I had 12 months expenses because you're a lawyer. You are not going to be desolate and homeless living under a bridge, but I would give yourself 12 months to absolutely go all in. 12 months expenses would be a minimum for me. Um,

to the extent that you could save up even more beyond that is all gravy, but I would say minimum 12 months. The other thing is I would also challenge your –

your idea that you have to live in those cities. True. I'm going to challenge that. I'm not saying that I'm right, and I'm not saying that you don't have to, but I want you to dig into that a little bit and go, okay, I understand why you're saying New York, LA, Chicago, because legendary comedy clubs, there's more of it, a lot more places to work. However...

I love the idea of an agent or a promoter behind you like Jay's husband because, listen, man, you can make really good money on cruise ships. Cruise ships and there's land circuits that if you get the right agent, like I have buddies that don't live in those major cities. Like I can tell you right now, like there's circuits in Phoenix, in the Arizona area, in Texas where it's like you live in Fort Lauderdale, but they fly you out there and you can do three months of cruise.

That's what I'm thinking. Solid touring. Like there is real, there's real networks out there. So yes. I love that. Lots of options. That's where I was going is, okay, I don't have to live in Chicago.

But because I'm in a great cash position and I'm making really good money, I can zip in, zip out. It doesn't hurt to be in Atlanta, Chicago, Las Vegas. Proximity matters. It does matter. There is no question. That's why I'm saying that loosely. I don't know, but I tell you this, I could figure it out. I can talk to comedians and I can figure it out pretty quick. And you can do the same because you know the industry. So thanks for the question. Really good stuff. Let's go to Alan now in Kansas City. Alan, how can we help today?

Hi, thank you for taking my call. So in the next 60 days or so, I'm going to be going and purchasing a new car. I'm going to be paying cash for it. It's going to cost me around $30,000 to $32,000. I'm just trying to find out what's the best way to negotiate to make sure I get the best price. I mean, should I...

Just go in and tell them, hey, I don't need your stupid financing or should I kind of string them along? Is this a brand new car? Let's talk brand new. Is this going to be brand new? Yes, it's going to be brand new. And you've got the $30,000 to $32,000 saved up cash? Yes. All right. What's your income? About $120,000. Okay. Do you need this car? Like, is it, you need to get a car? No.

I'm going to be, my car currently has near 200,000 miles. I'm basically going to drive it for as long as I can, but I think it's going to be just a couple. Okay. My point is you're not desperate. Like that for me, Ken will give you the good on this, but my number one thing is I never like to go buy something in a desperate state. I like to feel like

I can move on. Like I can go to another dealer. I can go to another law. I can move on to like that. There is so much power in being able to go. Nah. Yeah. Here's what I would do in this situation. Uh, I would do your homework on it and just see what, uh, what that car is going for, uh, at multiple different places. I'm assuming you've got the car and the, the actual, you know, exactly what you want. Correct.

Yes, I know exactly what I want. Yeah, you know, all these car lots, by the way, they tell you no haggle, but I've just bought cars for, let's see, I got one for my wife, I got one for my two boys. So I am in the middle of this, and I will tell you, here's what I've learned, Jade. The no haggle doesn't include all these ridiculous fees they stick on it. That's true. So all these car lots now say no haggle, and I did a very popular segment on the show called We Need the Haggle.

We need the, we need the more, we like what happened. Bring back the haggle. Bring back the haggle. I mean, so here's how I would do it. I'd walk in and you can go look. I know that you guys, this is your no haggle pricing, but let's say it's a $32,000 car and just go, I can't go. I can't go over 28.

And they're going to look at you and the guy's going to go, well, let me go talk to my manager. I hate when they say that. But here's the deal. I love it. I just sit there and look so like I'm ready to leave. Like I can't get out of there fast enough. And they know I got Ken on. I got this guy about ready to leave. I got to hook him. So here's what they start doing. Yeah. You look at the, say, give me, show me the sheet. Show me how you came up with 32. What's the 32.5? They give you a sheet. By the way, you start going, what's this fee?

Title transfer. What's this fee? Just go. Paperwork. I don't know what these fees are. I'm not paying these fees. I'm only going to give you this number. And it needs to be lower than what they're doing. And I had this happen. Now, I walked on all of them, Jake. Yeah. But multiple times, I had car dealers drop the number. So this idea of no haggle is not true. Haggle away. And so that's how I negotiate. Go, no, listen, I'm a cash buyer. This is what I'm looking for. I'm not going to pay this.

So I'm going to go until I get this price. And I'm almost guaranteeing you, you'll get the price that you want. I will say though, it's tougher. It can be tougher with the cash because they're not making any money off of that. They only make the money off the finance. So in some ways, you do have to push back.

push. Yeah, maybe, but Alan, I'd also go at the end of the month too. Always go at the end of the month when they got to hit their sales quotas. They got to close some deals. Last day of the month, in my opinion, is always the best day to buy a car because they got to close a deal and it's got to be my deal. That's how I would do it, but you can try it another way. This is The Ramsey Show.

Welcome back to the Ramsey Show. Thrilled to have you with us. I'm Ken Coleman. Jade Warshaw joins me in studio. 888-825-5225 is the phone number. The best way to make the most of your money is by creating and sticking to a monthly budget. Every dollar is the way to do it. It makes it simple to plan spending, track expenses, and save for what matters most.

and it's all in an easy-to-use app that fits into your busy lifestyle. Keep a pulse on your spending and make progress on your money goals with EveryDollar. Download EveryDollar for free in the App Store or Google Play. That's EveryDollar. Download it for free in the App Store or Google Play. Liz is up next in Spokane, Washington. Liz, how can we help? Hi, Ken. Hi, Jade. I have a question about buying my first house. Okay. All right.

So I am 26. I make $140,000 per year. My take-home pay after taxes is about $110,000 per year. I have no debt. I have $60,000 in retirement and $60,000

in cash. I'm starting to kind of think about what it's going to be like to buy my first house. However, I'm really, really debt adverse and the thought of getting a mortgage is absolutely terrifying. So I've always wanted to save up and buy house cash. That's kind of always been my goal that I would hope to do. So currently I'm saving about 40K per year in cash savings. And so at that rate,

Where I live, it would take me probably six or seven years to save up for a house, which would be okay. But I'm afraid that in six or seven years, you know, houses are not going to be 300K. Now they're going to be 400K. And so I'm afraid that if I save up and buy cash, I'll be spending, you know, 10 or 15 years saving and then paying essentially double what I would have paid for a house.

paid if I had just bought now. So I'm just kind of torn between getting a mortgage or not. Yeah, there's a part to that where you're chasing, you're constantly chasing that rainbow as far as the house price is concerned. So while I agree with you, being able to pay cash for a house is excellent. And that's really the number one way that if you can buy a house, you should buy a house. But

There does come a point where, you know, for the average person with their average salary, there is a point where it's like, okay, shouldn't I just jump in already? And I think in your case, the answer to that would be yes, but at what point? So just to recap, there's no debt. You said you have 60K in cash, 60K in a 401K. Is that what I heard? Is there any other liquid money?

Because the 401k doesn't count? Okay. Yeah. And it's not just 401k. It's mostly Roth. There's some in a Roth, some in a 401k. And then a little bit of that is just personal investments. I think maybe about 10 to 15k. Okay. The 10 to 15k, that's personal investments like a brokerage account, non-retirement? Yes, ma'am. Okay. And what's that year marked for?

Retirement as well. At my current career track, I plan that I'll probably be retiring before I'm able to withdraw from my retirement. Okay, so it's like a bridge. Okay, so that's earmarked for that. So that means we won't touch it. Is it in mutual funds? It's not in like single stocks and stuff like that? Correct. It's in mutual funds. Good deal. Okay, so...

Right now, unless I'm missing something, I'm seeing a person with a great income with three to six months of expenses, which is basically your 60K that's around six months or more. What portion of that 60K can you put towards a down payment? So my expenses right now are actually really quite low. And so I only have 10K of that as my emergency fund. And then the other 50K is currently my house fund. Okay, so 10K, how does that work? You're saying that you can exist...

For six months on $10,000? No, that's three months. Okay, three months. Yeah. Are you single? I feel comfortable with three months. Okay, you're single? I am, yeah. Okay, I'm poking holes in this because since you're afraid, I want to make sure that everything is right on so you don't have to be afraid of anything. Here's where I would poke holes in your emergency fund. A, because it's the only income you have going in and it's just you.

One stream of income makes me want six months of expenses because if something happens, it's all on you. So that's the first thing that I would beef up and that's going to make you feel better. Second thing I'd beef up is if you buy this house, what it takes to keep your life going also goes up slightly. So

So if you really want to feel great about this, you'd kind of project it out and say, okay, if I get this house for 280,000 or for 300,000, what's my mortgage going to be? What's my life going to look like? And what's really what would six months be of that lifestyle? Because that's the lifestyle you're going into. That might be what I would shoot for in your case, right? Yeah.

what you're going towards. And then from there, it's like, okay, now let's talk about our down payment. To your point, you're saving $40,000 a year. How much do you need to have? Like, what do you want to get to? Do you want to get to 50% down? Do you want to get to 40% down, 20% down? So I would start running those numbers out. I wouldn't go beyond like a two year, three year deal on this. That's as long as I take to save up, assuming you've already got the five to 20%.

Gotcha. Okay. So yeah, I definitely want to do 20% minimum. I'm not really willing to do any less than that. But you think instead of saying, okay, I'm going to save up to 50%, I should say, all right, I'm going to save it for three years. And as long as I have over 20% move forward at that point. Yeah, I'd either set it at a dollar amount or a time amount. And that's up to you. Because part of this is,

I don't want this because if you're toggling between baby step 3B, which is saving for the down payment and baby step 4, which is saving 15%, I do want a time limit on this because I want to make sure that you're investing 15% sooner than later.

But if you're not toggling, if you're like, listen, I'm doing the 15% now and I still have a lot of margin. Yeah, play with the three year span. But like I said, I mean, Ken, if it's me, I'm pulling the trigger at least after like three years. I don't think I'm going to run this out seven years. I agree with your reasoning because you want to invest in and we want you to start to get the compound interest going. How old are you?

I'm 26. Oh, yeah. So Jade's got you at 29, you know, and still that gives you a lot of time to invest. The other thing I would be thinking about is, okay, let me rework this and go, all right, this number I want to get, if I wanted to get to that number, and I don't mind you shooting for 50% down, don't think you have to, and I agree with Jade, but let's say you want to do that. You're single now. So I would start to go, what would I have to do

And how much would I have to make in addition to what I'm already making and saving to get to that number in the same three-year period? I would at least run that exercise, right? So for instance, if you said to me, and I'm making this up, I'd have to save another $20,000 a year. I'm just using that as a random number.

in order to get to this number within three years that Jade is coaching me on. Because I think Jade's absolutely right on that. Two to three years to me is right. So I would then go, all right, so if it's 20,000 more, then that's X amount a month I've got to save. I'm going to go make that and I'm going to make this thing happen faster. I just think that would be something I would consider. Yeah. I mean...

three years, you said $40,000 a year, three years gets you $40,000, $80,000, $120,000, right? Yeah. Which is great. If she wanted to add an additional $20,000 per year there, you start breaking that down and that's less than $1,500 a month or right at that, right? Is my math right? No, it's a little bit shy of that. So it's just a little bit above $1,500 more a month gets you an additional $20,000. So

So, you know, it's that kind of thing just to start looking at all your options to go, oh, okay. But I think Jade's right in wanting to get you investing that 15% as soon as possible.

Well, so I think that's part of it as well. I am already investing. Currently, my savings that gets me to about 40K, I have about 60K of extra income per year that I don't need or spend on anything. And so currently, 40K of that is going into savings and 20K is going into hitting my Roth contribution and then extra investing on top of that. So another thing that I was thinking. Are you investing more than 15%?

Yes, I am. Okay. I would swap that. There's your money right there. Hit 15%. That's max right now. Focus everything else at the down payment. And then once you buy the house, now that extra money goes to pay off the house. And then you're going to have exactly what you want really, really quickly, which is a paid off house.

that you don't owe anybody on. And then once the house is paid off, then you can take that margin that you have and you can throw all of it out of your investments. So number one, like Liz, you're amazing. Hey, I want to make sure that you have everything you need. You can check out ramseysolutions.com slash realestate.

And it's a hub that's got everything that you could ever need. And when the time comes for you to actually get the house and start looking, you can go to ramseysolutions.com slash agent. And that's where you can find a really great agent to help you find the perfect house for you in your price range. Yeah, awesome.

Love that. And love just how focused she is. Man, I wasn't like that at that age. Are you kidding me? She's going to be fine one way or the other. And I thought that was really good advice. Now it's nice to know she's actually already invested the 15%. So really good stuff. All right. We got to take a quick break, but we're not going anywhere. We don't want you either. She is Jade Warshaw. I'm Ken Coleman, and you're listening to The Ramsey Show. Welcome back to The Ramsey Show. Thrilled to have you with us. The phone number to jump in on the conversation is 888-

825-5225, 888-825-5225. I'm Ken Coleman. Jade Warshaw joins me. Our scripture of the day comes from Proverbs 21.5. The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty. Our quote of the day from none other than the Fresh Prince himself, Will Smith. Being realistic is the most commonly traveled road to mediocrity.

That's a little bit of a mic drop, Will. I know. Big Willie Styles. I would say he slapped us with some common sense there, but probably not the best thing to say. Very good, Ken Coleman. You like what I did there? He's never going to get, I don't care. I'm all for restoration and rehabilitation. No, you can't. He is never going to live that down. No, never. As great a work as he has done. I know.

I still love Will Smith, but that was a wacky moment in time. Oh, man. Wow. It's still shocking to me. I was watching it live. I was on a plane. I thought it was a joke. I was on a plane, you know, and you're live streaming. And I was like looking around like, did anybody see this? Yeah. Yeah. I thought it was an act. Yeah. Yeah. And then I saw it in slow-mo and I was like, nope. It ain't an act. Not an act. Wow. All right. Let's go to Beth in Seattle, Washington. Beth, how can we help today?

Hi, I'm so excited to be talking with you. Thanks for taking my call. You bet. We're excited to talk to you. What is happening? I'm wondering if you guys could help me think through a framework for deciding how much money I should put into my kids' 529 plans. Okay. I've been using some Ramsey tools, but I'm getting stuck, and I'm so excited to talk to both of you because, Jade, I know you have young kids, which is where I'm at, and, Ken, I know you have a really good pulse.

on this college collegiate environment. Well, tell us about the kiddos. Yeah, so start with tell us how old the kids are and what you've got saved or what you were thinking about saving.

Yeah, absolutely. Okay. So I have a four month old, a one and a half year old and a three and a half year old. And right now we are just putting in a couple hundred dollars a month for each kid into their 529. But my husband has like quarterly stocks that vest. So in

in the future we want to put something bigger and I've heard Dave tell folks like hey if you have some money sitting around you know an initial investment of 50k can sometimes do the trick but when I've used the Ramsey calculator online it's telling me to put in more than that and

And Ken, I've also heard you say that the landscape for college is probably going to significantly change by the time my kids age in. So I'm just a little bit stuck. I don't want to overfund, but I also want to be a good steward and plan well for the future. Well, let me address my part really fast because mine is the fastest and then Jade can walk you through this. I do say that and I do agree.

that the landscape is going to look very different. Education, higher education as we know it, is going to be very, very different by the time your kiddos are there. However, the 529 has so much broad usage of it as it relates to any kind of training. I don't think training, I don't think education is disappearing. I just think it's going to look very different. So the 529 is still a very, so I just wanted to clear that up in case you were wondering what I think about that. I think the 529 is a wonderful vehicle as far as the amount goes.

you're off to a pretty good start as young as they are. Jade, what do you think on that? I think the first place to start is what your target is because then you can kind of work backwards. And so...

If you're you have to there has to be a set of assumptions in order to figure out that target. So if the sum of the if the assumption is, OK, I'm assuming all of these three kids are going to go to some form of higher education. What do we want to spend for them? Like that's that's really what it is, is what are we willing to spend? What makes sense for us? Do we want each of them to have ninety thousand dollars? Do we want each of them to have one hundred twenty thousand dollars?

And so if you and your husband can get together and say, what do we want? And then just run those numbers. Start with what the best. And then run those numbers back. And you go, oh, maybe that's not possible. Okay, then what would be our next ideal? Okay, run those numbers. Okay, that could be possible. So start with that in mind and use an investment calculator in order to do that. I mean, I just threw some numbers in here. I'm like, okay, if you invested $300,000,

per kid right for the next 18 years you know you're gonna have around 180,000 right so start with that and then what you can look at that that whole equation and go okay now do we want to be able to pay 100 or do we want the kids to have some skin in the game and if so what do we think about that so I think these are the questions that you ask because if you don't have a clear target of

then what are you really shooting for? And you don't know if you've won or if it was successful or if you hit the goal or not, right? Yeah, I agree with that. And here's the deal. This is a bit of a moving target.

So, you know, you start looking at, okay, state schools. So where you all live, I have no idea what the state of Washington has, you know, are there breaks, you know, taxpayer funded, you know, tuition breaks, you know, those kinds of things. You start looking at state schools, you start, you know, but just to give you an idea, uh, just to give you a number, just to use Jade's, uh, formula here, I got a friend of mine, um,

Lives here in the Nashville area. His kid got a bunch of scholarships, great grades, going to Auburn. SEC school, Jade, going to Auburn, not far from here, okay? It's going to be $45 a year. That's a lot. So you start adding that up. For simple math, let's just round it down to $40. Yeah.

And now you're looking at 160,000. So at that rate, what you're already doing for the kids, you're going to be there. So you start looking at that and you're going, but what's it going to be 18 years from now? You don't know. We just don't know. And so try to be as practical as you can. But I think just at the rate you're doing right now, I think you're going to be in really good shape, a big chunk of change for each kid because you're just a bit under. Well, did you say we're doing 300 a month for each kid?

That was just me throwing that out. 200. But Jade ran some numbers at 300, and it's $180,000 per kid. Yeah. So you're not far off of that. No. And so you just, it's a moving target. But boy, it goes a long way. It does. Yeah, I think it does. And I do think, you know, Ken, your kids are older than mine, but...

As they grow, you start to see who they're shaping into and you can start making those adjustments. You may have a kid that goes to a trade school. And by the way, the 529 can be used for that. That's right. You may have a kid who goes, I want to be an entrepreneur. I want this certificate. So again, this money can be liberally used and widely used. So does that help you in the sense of what you're, I want to make sure we answered your question because there's no specific number we would tell you.

That honestly is so helpful. And it's helpful to hear you guys say like, yep, it's a bit of a gamble. Like you're just doing your best with the information that you have and you keep checking in and change your plan accordingly. And if you overfund it, if you overfund it, I mean, remember, you get the money back from scholarships. You can pull that back out. Like if they end up getting full rides, like you can pull that back out.

back out of the 529. That's right. So it's not lost forever. Yeah. You know, and if you get down to it, like we had a caller call in the other week, Ken, and they had massively funded, you know, overfunded the 529s. It was like 80,000 left. And it was like, listen, at that point, we just told him, hey, if you want to pull it out, pull it out and take the 10%.

hit. Yeah. No one's griping about having extra money that you had to pay taxes on. Yeah, you can pull it out. So there really is no risk at all, Beth. No risk. Okay. Okay. Hey, thank you both so much for putting my mind at ease. I appreciate it. You guys are doing great, actually, to get ahead of it that early. Yeah. Smart. Fantastic stuff. And again, back to the compound interest calculator. Love it. It's my friend. You start putting in that little... That was... What you ran... I want everybody to hear this. Yeah. You ran...

$300 a month times three kids. So it was a $900 investment from the time they're todd-babies. Yeah. She only has one toddler. Yeah. I think, a three-year-old. Yeah, she had the four-month-old, one and a half, three and a half. Okay, so two- And you're looking at $180,000 for each kid. That's great.

That goes a long way towards really expensive schooling. Schools are insanely expensive. Yes. Although I do think something will have to give. And I really believe, I can't even begin to get a crystal ball out for 18 years from now on higher education. But something has to give. The student loan to the trillions of dollars. The American people, 46% of American parents said they wish their kids would go to trade school.

If colleges and universities were running for president, they wouldn't probably get elected. You know what I mean? Facts. They're suffering a little bit. Yeah. And I think that only gets worse unless something happens with tuition. Something's got to happen with tuition. Yes. You know what I mean? In the meantime, all we can do is save up and do our best, and you can only afford what you can afford. And at the end of the day, that's the guiding light.

Speaking of guiding lights, she is Jade Warshaw, my co-host. Happy birthday, Kate. Thanks to James Childs. Thank you, my friend. And thank you, America, for listening. This is The Ramsey Show.

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