Caller

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John Deloney

Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union Studio, this is the Ramsey Show. I'm John Deloney joined by Jade Warshall taking your calls live. Let's go out to Fort Myers, Florida and talk to Martha. What's up, Martha?

Caller

Yes, hi.

John Deloney

How are we doing?

Caller

I'm doing great. Thank you so much for taking my call.

John Deloney

You got it. What's going on?

Caller

Okay, so I've been watching your show for many years, but just recently, me and my husband, we're kind of fed up with the way we've been living. And we are trying to make a lot of changes and it just seems like we're being thrown curveballs now that we're trying to get our lives on track with money. Everything's coming up. I mean, there's a lot of things coming up, but one thing that's staring us in the face right now is our septic tank. It's failing. Yeah. And it's backing up and we're having a lot of issues trying to make sure that we're, you know, providing a sanitary area for our kids to live. We have five kids and my husband is the only one currently working full time. And I'm trying to find odd jobs, you know, to cover some credit card debt that we have. But I got a job at a hospital and I'm starting my orientation in August. But I need money now. And we don't know what to do with the septic tank. We're, we're actually, I'm ashamed to say we're about $100,000 in debt and we only make 136,000 a year. So we are up to our ears with debt and we just don't know what to do about this septic tank. We, it makes us sick thinking that we need to maybe get into more debt to cover this, but we don't know what, what else to do.

Jade Warshaw

What's it. Go ahead.

John Deloney

I was going to say the. Is it not an issue where you can pay somebody four or five hundred bucks to pump it and get you to limp along until. For a few months?

Caller

That's what we did back in March.

John Deloney

Okay.

Caller

We noticed that it was backing up, so we got that pumped out and then it's been only about four months and we got it pumped out again today and it's failing. So we don't know what else we can do. It's going to cost up to, it can be from 10,000 to 18,000.

John Deloney

I've, I've gotten quotes on septic, like to replace them. I, I, I had one up to 60 grand because they're going to have to go through rock uphill. I mean, it's a whole thing. So, yeah, it can be expensive.

Jade Warshaw

Let's see, when you, when you pump the tank, it gets you two more months, Is that what you're saying? Two to three months?

Caller

Yeah. So it was March, April, May, June.

John Deloney

Yeah, four months. I'd rather you spend 400 bucks every four months until y' all can get up the cash than to go backwards. But I'll, I'll let Jade walk you through the dollars and cents because y' all got a mess on your hands.

Jade Warshaw

Yeah, and it does, by the way. I just want to acknowledge that this is normal. This is, this is a normal thing people face. When you start working a plan and you say, I'm going to get serious about it, it's almost like the universe says, prove it.

John Deloney

Well, it's everything, right?

Jade Warshaw

Like, these things start happening.

John Deloney

I'm gonna start eating healthy. And then someone's like, hey, we just made you a cake. We're gonna drop it off at your house.

Sponsor/Advertisement Voice

That's just life.

Jade Warshaw

Exactly, exactly. So don't. This is not abnormal. You're not alone in that. So what I want to find out is, is there any money anywhere that wife. So do you guys have vehicles? Tell me about the 100,000 in debt and tell me, tell me more.

Caller

Okay, so we, we bought a house. It's about it. When we bought, it was about 35 years old and nothing was renovated on this house. So we thought, we're going to update this house as we live in it and as we grow. We had three kids when we moved into it. Now we have five kids. It's a three bedroom, two bathroom home. So it feels small, but we're trying to like, make it as homey as possible.

Jade Warshaw

But so is the 100,000. Is that a HELOC on upgrading or what's the hundred thousand of debt?

Caller

Okay, so during COVID we were backed up on our mortgage and we were behind like $10,000. So that's on the mortgage. Like, if we sell the house, we have to make sure we cover that, but we're not paying that monthly. Our most debt, I would say, is cars. We have a big Chevy Suburban car that we're paying about 45. We still have 45,000 on it that we owe, but we can Only sell it for 20. Who said that? It's a huge Kelly blue book on private sale. On private sale, probably 25. It has a lot of miles. It's a lot of miles on the car.

Jade Warshaw

Any negative equity in there or. That's just.

Caller

We rolled. We had a van and we rolled it into the new loan. Okay. Because we had a circumstance with family.

Jade Warshaw

What about the other Suburban car? So what you're going to find is that as I ask you questions, if you give me a excuse on why you did it, I'm going to cut you off. Because we got to get past that. It doesn't matter. Right.

Caller

I get it. And we did it. And it was like we didn't think it through. But, I mean, we do love the car. It's just our whole family.

Jade Warshaw

You probably can't afford it and we'll figure out if we can get you out of it. But you said. So the Suburban, what's the other vehicle?

Caller

It's a small Toyota that my car, my husband uses to travel to and from work. It's. He owes 17 on it.

Jade Warshaw

And what's it worth?

Caller

It probably is exactly what it is.

Jade Warshaw

Okay.

Caller

Yeah, I didn't smirk it.

Jade Warshaw

Okay, good. And then from there, anything else notable is student loans, credit cards.

Caller

I have a student loan of $6,000 that I've been paying like monthly on, but just 6,000 on it. I'm going currently back to school, trying to get a technician job certificate, and that's 3,000 that I'm paying monthly on and has zero interest every month. And then we just have a bunch of credit cards. We have a $15,000 credit card when we were doing home renovations, so we're paying that off.

Okay.

Jade Warshaw

And I didn't ask you this, but what do you bring home every month, like when you guys get your paychecks? What's it total to?

Caller

About 8,000. My husband is currently working full time, and I'm trying to get back into the workforce after being home with my daughter.

John Deloney

Okay, but you said you make 136.

Jade Warshaw

Feels a little.

Caller

Yes.

John Deloney

So 8 seems pretty low to me.

Caller

Maybe I miscalculated. But we were putting about.

John Deloney

Are you putting into retirement, too?

Caller

Yeah, but currently we stopped doing that because we're not keeping up with our payment.

Jade Warshaw

Okay, good. Now, how much is the mortgage

Caller

currently? Our mortgage is 1550. And that's really good.

Jade Warshaw

Yeah, that's not bad. Yeah, that's. That's excellent for where you're at. Okay. So I think there's some money in these cars that is Going to help you not only pay off your debt quicker, but solve the septic tank issue. Do you have any money saved? I didn't ask. I'm guessing no.

Caller

No. Every time we try to save money, like something comes up like either we have to. Our battery died last week on one of the vehicles. So we had to pay $200. I mean, and that's all we had. So some of this is, you know, we're trying to.

Jade Warshaw

Yeah, yeah, yeah. Some of this is emergency and some of it's just better planning. So we do need to be planning for maintenance. I mean, one of the things with cars is they need batteries every so often. They need tires every so often. They need oil changes. So let's get in the habit of starting to think ahead a little bit more. And I know it. You've got five kids and a husband. You got a lot going on. But I think starting to learn to look forward in the budget. If you're not using every dollar will make sure to get you that. But John, I think there's some money in the $17,000 vehicle getting that out

John Deloney

of your car goes to goes today. And by the way, I was a dean of students at a law school in a $3,000 truck. And I did two years on this show driving an old used Prius. You should have seen me pull that Prius up next to Dave Ramsey's Raptor. Right. And we had a lot of bickering back and forth. Your husband's going to be fine, but you'll need that $17,000 margin today so that car gets sold this week. Okay.

Caller

Help me.

Jade Warshaw

And then we're gonna just put us. We're gonna stack up as many thousands as we can. He can drive a three thousand dollar beater. They're out there. My old Cadillac is worth fifteen hundred and it drives just fine. So they're out there.

Caller

Yeah, yeah, we need to start looking for that. Yeah, that, that might be something that we didn't even consider.

John Deloney

We thought, yeah, it's gonna take a lot of work and a.

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John Deloney

All right, we're back. So, Jade, I talked too much in that last segment and I think I do. We didn't get Martha like the outline of a plan and so she's still on the line here. I want to make sure we get her an outline of a plan. So she got $100,000 in debt. They make 136,000 bucks, but it's credit cards, it's two giant car payments and now they got septic issues. The one thing I heard throughout that call was, yeah, but here's why we have this debt. And yeah, here's why we have this debt. And there's a, there's a story and there's an emotion in it. The only time I've seen people be successful and just saying enough is enough, we're going to take back ownership of our home and our money is a, I don't care why it happened. Here we are and I don't give a crap, come what may, we're never borrowing money again. Moving forward.

Jade Warshaw

Yeah, it's not about what you did, it's about what you did next. And you're so right. The first two things that she's got to do is to your point, decide she's never going to borrow money again. The people that walk the Ramsey plan, that is the line in the sand that they draw. Otherwise, it's all for not like what are we even doing here? Second thing she needs is a budget. Christian is going to hook her up with every dollar you need that. That's the basis of the plan. More tactical into her numbers is we've got to sell the seventeen thousand dollar Toyota or whatever that was that's going to leave them with no car but also no car payment. And so just before we do that, you should be able to, within a pay period, stack up 2,000 bucks that we're going to do to buy a car in cash, a beater, like I said before, the break. My car, my old car, it was a Cadillac SRX. It had 200,000 miles on it. It's worth $1500. Somebody's going to buy that for 1500.

John Deloney

I might buy that.

Jade Warshaw

You might buy it.

John Deloney

It's a fancy looking car.

Jade Warshaw

Yeah, absolutely. Listen, I might give it to her.

Sponsor/Advertisement Voice

I might.

Jade Warshaw

It's just sitting in the driveway. Maybe I will. So that's thing one. Sorry. I'm really thinking about giving her that car. That's, that's thing one. The next thing is, why don't you take over? Because my brain is really thinking about that right now.

John Deloney

The neck. The next step is we, we have to start looking at listing these debts out in smallest to largest. And it, you gotta, you got this old mortgage back pay hanging out there. You got all these credit cards out there. You've even upside down 20 grand on this car that you just had to have that we love.

Jade Warshaw

You might be able to go to the credit union and get a loan for that difference. And if you are willing to hold on private sale for a little bit more than 25,000, that could be worth it for you. I run the numbers out because maybe not. If you say, okay, I'm going to get $30,000 loan, that means you're, you're 15,000 less in debt is the way to look at it. Because that means I'm paying off the 25,000 and I'm buying a $5,000 van. Used. That's what that looks like.

John Deloney

And people will talk about you when you drive down the road in these cars.

Jade Warshaw

Yes.

John Deloney

And what we're, what we're suggesting is I don't care what other people think. As for me and my house, we're going to choose freedom.

Jade Warshaw

Yeah. And the only way that works, by the way, is if you have a better interest rate that if your interest rate is cruddy because your credit is bad. I don't know that I would do that. I might just write it out. But look into that because that might be the key to set you free.

John Deloney

Yeah. All right, let's go out to Louisville, Kentucky and talk to Whitney. Hey, Whitney, what's up?

Caller

Hi, John and Jade.

John Deloney

How are you?

Caller

I'm good.

John Deloney

What's up?

Caller

So my question is my son is starting college in August. And as a parent that wants him to learn from being an adult before he actually gets out on his own, I wonder how much or when I should start charging him rent to live at home because he is going to stay at home to go to a cheaper college and he's going to try not to take out any student loans. So he is going to be cash flowing in scholarships.

John Deloney

Oh, I have a hot take on this one.

Jade Warshaw

I might have one too. I want to hear John's hot take.

John Deloney

My hot take is if my I, I have a 16 year old, he's heading into his junior year of high school two years from now. If he says hey, I have a small scholarship at a local college, I want to go there, I want to cash flow it but I'm not going to be able to afford room and board. I would invest in him and let him live at my house for as long as he was in school full time, enrolled also working a part time job and he kept his grades up. I, I, I wouldn't. I'm way more concerned about the young people who gradu just kind of aimlessly wander back to mom and dad's house. I don't even mind folks who graduate and they're starting a new job and they want to get ahead. And so mom and dad and this young adult sit down and they come up with a plan for six months or a year with no rent. I got no problem with that. It's the unintentionality, the aimlessness that I struggle with. I, if I'm you, Whitney and Jade, I wouldn't charge my kid rent for. Because it sounds like he's trying to do this the right way and this is a way you can invest in him moving forward. But that's, that's my thought on it.

Jade Warshaw

I 100% agree with what John said. When you said it, Whitney, my first question was going to be tell me about your financial situation because if you're not careful, even unbeknownst to yourself, you could end up kind of, for lack of a better word, cashing in on this for your own needs.

John Deloney

Yeah. Do you need the money?

Caller

Right. So I'm a baby step one and I do work three jobs. I work really hard to try to make sure that, you know, I'm as gazelle intense as I have time for. So I don't feel like that I need it. I just don't want him to miss out on the learning experience of paying rent. He does have. He doesn't have a car payment. He saved up and he bought a car and then it broke down. At that point he was planning on going to IU Indy which would have been away from home. And at that point he realized oh wait, stuff is expensive. And so he was like, hey, are you okay if I stay at home? And that way I don't have to pay like room and board. And then he can eat at home and have meals and stuff like that. And so I feel like he's on the right path and I don't want to charge him, but also I don't want to rob him of that learning experience of doing his budget every month and knowing that at some point he will have to pay a rent or a.

Jade Warshaw

You could split the difference. I mean, you could not charge him rent. But say you still have to have a budget, which is if you are bringing in money, you've got to plan out for how you're going to spend that money, which I do think is a valuable tool. And maybe he does kick in some for groceries.

John Deloney

Yeah. And yeah, he can buy his own milk and cereal or whatever. Are you a single mom?

Caller

I am.

John Deloney

Okay. I need you to hear me say this, how you're handling this and how the action steps he has already taken when life threw him little bits of adversity, like a car broke down and he started looking at the room and board cost. And he also has this underlying principle in his heart and mind that I don't want to owe anybody any money. I want you to hear me say directly, he's learning from you. You're doing a great job.

Caller

Thank you.

John Deloney

He's watching his mom scratch and claw and grind it through. And so you. Part of changing your family tree is maybe investing in him and you don't have the cash to do that right now. You're digging yourself out of your, out of the hole you found yourself in. But just that little gap of you can stay in this room. And I, I love the idea of every month you're going to sit down or you're going to go over family expenses together and I want you to learn how this house runs and how expensive things are, et cetera, et cetera. And yeah, maybe after a sophomore year he can kick in the light bill or the water bill or whatever. But I, I think he, you're doing a great job. I don't think this kid has any notion that he's. That life, it comes with a free ride at all.

Jade Warshaw

Plus, he asked you, what do you think if I stayed home? It wasn't just like this entitlement of I'll just stay home and sit on the couch. Right.

Caller

Yeah. My mom heart was definitely like, yes, he's gonna stay at home. I was like dreading, looking forward to, you know, moving day, moving him away. So I'm pretty excited that he's Staying home. Even though, you know, we pretty much see each other in passing. And even when we do, I'm like, I have to force him to hug me sometimes. He's like, mom, okay, so I want

John Deloney

you, I want you to draw up a lease. And that lease might say you have to have dinner with me once a week or every, every Sunday. And you get to do the laundry in the house. I start to think, if you're working three jobs, if you had the ability to hire a five hour a week personal assistant, what would you have them do? Okay, your job is the air filters and make sure all the light bulbs are changed every month and make sure that like the trash is taken out. Like, take some of those things off your plate and he can start to learn how a household runs underneath it all. But as for me in my house, I would just support them doing it.

Jade Warshaw

Yeah, I think so too. So not such a hot take, more like a room temp.

John Deloney

Room temp? Yeah, reasonable take. I'm so torn right now, Jade. As my son's talking about colleges, I'm like, you could just stay here. But I know he's gotta go. But I'm like, he could just stay forever and ever and ever.

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John Deloney

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Caller

Hey, what's going on?

John Deloney

What's going on? I'm. We're doing great, man. How about you?

Caller

Well, I guess if I was doing great, I wouldn't be calling.

John Deloney

But that's fair. That's fair. What's going on?

Caller

It's all good. So I guess, you know, I've been listening for a few months, and I hear, you know, some of these really intense saving goals when you're in, you know, step two. And earlier, I guess you'd say I'm in 3B. 456. No debt. Saving for a house. My wife and I are in our mid-30s. We've never owned a home, and we live in Indiana now, but we'd like to move east to the D.C. region, which is much more expensive someday. And I guess I just love some perspective on, like, what is the right setting for saving per month to make this happen?

Jade Warshaw

I love that question. So tell me right now, what are you doing? How much are you putting towards the down payment and how much are you investing?

Caller

Yeah. So we're both doing 15%. 401k through work. We take home 5,800 every two weeks combined between the two of us, so around like 11.5k a month.

Jade Warshaw

Okay.

Caller

You know, and so of that right now we're targeting 3,000 for the house and then 450 or so for 529 for our son, who turns two in a couple months.

Jade Warshaw

Four.

Caller

Another. Yeah. For the. For the 529. Yeah.

Jade Warshaw

Good.

Caller

Yeah. So those. But we keep chafing kind of against it. And I'm wondering is that just because that number is really high and we should keep fighting for it. Shoot from the moon. You land amongst the stars or, you know, should we try to pull back somewhere else?

John Deloney

450 is a lot.

Jade Warshaw

I feel like that's kind of a lot. And also it all depends on how quick the problem we're solving for is how quickly do we want this home? So I think that's the guiding principle here. I agree with John. 450 is a lot. I mean, it depends on how long you plan on doing that. What's your target amount? All of those questions I would ask. But I think first things first is making sure we're not focused in the wrong area. And I really do think the house needs to kind of wag the tail here.

John Deloney

Let me ask you this, dude. You talked about some of the people you listen to on the show, and some people are very aggressive. Once you don't owe anybody any money, there is. There's. We're talking about building wealth so that when you get in your 60s, 70s and 80s and 90s and maybe even beyond, by the time we all get there, that you, because you were diligent when you were younger, you're able to take care of yourself and your family in those. In those years, Right? As my buddy Arthur Brooks says, we way over index our 20s and 30s, and we forget about our 40s, 50s, 60s, 70s, 80s, and 90s, right? So the question that people have to ask themselves after they're out of debt is, what kind of life do I want to have? And I want you to own a home so that nobody can come in there and take it away from you so that come what may, me and my family have a house. We have a place that. That we can put a flag out in front of. I want you to have some retirement savings. I want you guys to have some fun, too. I want your kid to be able to go to school, whatever that looks like. I don't know if he's gonna have some college robot teaching your child, like, who knows, right? But the question you and your wife have to ask yourself is, what kind of life do we want? And I'll tell you, there starts to get some variance in there. In my house, I have. I'll call it pathological, a psychological problem with owing people money. I don't sleep. It keeps me up. I spin out all the time. And so for me and my wife, there was. I'll call it a panic on my part. She's like a walking Xanax for me. And so it was much more intentional on her part. But we focused on getting a house and getting a smaller house than we could have qualified for from a mortgage standpoint. And we got it paid off as quickly as we could so that I could have some peace, because I was solving for peace, right? And so you and your wife asking each other, what kind of life do we want to create together? And then you're talking just math problems at that point.

Jade Warshaw

Yeah. And let's run out some of those numbers. Let's run out the math that plays next to what John is saying. So if you say, hey, we're going to get a house in the area, what's that cost you? What's that look like, dollars wise in.

Caller

Yeah. In D.C. i mean, it's, you know, the, the county that I grew up in in Maryland. I mean, you can't, you can't sneeze in there without spending half of half a million bucks. I mean, it just, it's gotten crazy expensive. So, like, looking out, you know, you can, you can find, you know, 400, 500,000 dol. If you're willing to drive a little bit to work. You know, some of these details are kind of hard to forecast because there's career changes involved in making this happen. Right.

Sure.

John Deloney

But hold, Rick, Let me, let me, let me call this out. You and I were told a lie. You and I were told if we just go to school and, or we just get a good job and if we get a good ride or die spouse, that we can live wherever we want. We can quote, unquote, follow our passions at this work, job thing and it would all work out. And that's not true. The truth is, you, me, Jade, our families, everyone listening to this has to make uncomfortable choices. Do you want to go back and live where you grew up, where you were raised? You have this picture of your head of the perfect childhood. That's amazing. Here's the math problem associated with that. And if that math problem costs you the life you want to have, going out to dinner, going to concerts, being silly, like buying your kid the nice basketball shoes, if they mix a team like, those kind of things, things, then we're going to have to be sad and grieve the fact that we can't do everything that we. What we want because the world didn't hand itself to us. You get what I'm saying?

Caller

I hear that. And part of our calculus we're trying to move out there is we're basically alone here in terms of. We have a, you know, we obviously have a son.

John Deloney

Sure.

Caller

We want to. We want another child. And we just, we don't have really any help out here.

Jade Warshaw

I totally. Yeah.

John Deloney

Family. I get that.

Jade Warshaw

I can get that.

Caller

Yeah.

Jade Warshaw

Well, let's put our, let's put our heads over, around the numbers and then that'll help you make the choice on this. Because if you say, hey, we're in baby step three right now. You guys are investing 15 and you're saving 3,000amonth. But if I plug in, if I, and I'm just on the Ramsey mortgage calculator, you said in the DC area, it's around half a million. So $500,000 if I plug in. Current 15 year fixed rate, interest rate 5.9. Let's say you get that. And I know this is in the future, so I'm just. This is napkin math. Okay. But in order for that to be a fair portion, 25% of your 11 and a half thousand dollars income, that mortgage with everything all built in, HOAs, home insurance, taxes, insurance, it can really be no more than 28, 2700 bucks a month. 2,900 on the highest. Right. So if I am solving for that, you're going to have to put down at least 230 to 240. Right now we're saving at a rate of 36,000 a year. So taking that data, we can say, okay, if we want to do this, if we're serious about doing in this, this in the next, I don't know, three to four years, we've gotta, we've gotta be serious about saving more. So I would be okay with you backing down the 15 that you're investing for the next three years. Even I wouldn't surpass three years because I don't want you to miss out on time in the market. But do you see what I'm doing there?

Caller

Yeah, I really hadn't thought to touch that. And we do have about 55,000 towards this in a specific account.

Jade Warshaw

Good.

Caller

And then I do have 125,000 in a managed brokerage that I'm hoping not to touch.

Jade Warshaw

You're burying the lead.

John Deloney

You're there. Start with that next time you call. You have it.

Caller

Look, ask. Ramsey told me to try to avoid touching it. I get that. Hey, don't let that, let that become generational and see if you can get there without it.

Jade Warshaw

It's just in the brokerage, it's not weird.

Caller

It is, it's not broke. Sorry. It is not retirement.

Jade Warshaw

Yeah, as long as it's non retirement money. I totally would be interested in touching that for this reason, because this is a mate. Owning a home is a major part of building wealth. And so for that reason, it's not like we're sacrificing wealth building in that way.

John Deloney

Did you put in there? I want to buy a house and I put down 15 in retirement and

Caller

this thing knows my life story.

John Deloney

Well then that's a glitch in the matrix that I got to get. I got to get with the team and we got to get that fixed. Because, yeah, if you said, hey, I have this money in a brokerage account, I'd say, yeah, don't touch it if you can avoid it. But if you want to buy a house, that's what that money's for. That's exactly what that money is for.

Jade Warshaw

Yeah. So if you pulled back even for a year and made that 36,000, I don't know, 50,000, you're there in two years.

Caller

Right.

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John Deloney

All right, let's go out to Roanoke, Virginia and talk to Chris. Hey, Chris. What's up, man?

Caller

Hey. How are you guys?

John Deloney

We're doing great. How about you?

Caller

Good. I really appreciate you. I'm a big fan. The term salt for peace has changed my wife and I's viewing finances. It's awesome. Thanks for doing that again.

John Deloney

You got it, brother.

Caller

Yep.

So our question, my wife and I make about 200 to 250 a year and we own five homes. They all have mortgages.

John Deloney

I thought you were solving for peace. Dude, that's a lot of houses.

Caller

Yeah, no, I know. That's why I'm calling you, bro.

John Deloney

Okay, gotcha.

Caller

Our primary residence has 290 on the mortgage and then our rentals have 91, 95, 125 and 139. We have 250 grand in cash. Do you snowball the rentals or do you pay off your primary?

Jade Warshaw

Well, I am interested in paying off the primary. I want to know what each of these you told me what you owe. I'd love to know. Can you go through and say what they're worth?

Caller

Sure.

The 91's worth about 150, the 95 is worth about 150, the 139 is worth about 200 and the 125 is worth about 160.

Jade Warshaw

And is there one of them that is a pain in the butt that you like? Tell me which ones that you're like. If I had to sell, it'd be these ones. And. And here's why.

Caller

Yep. So the 125 we would sell because it's an HOA. Made a lot of mistakes over my life. I'm a real estate professional and we've narrowed it down to just sing family homes. That's what we're good at. So the, the 91, the 95 and the 139 we're going to keep, but the 125 I would sell.

Jade Warshaw

Okay. And so if you. So there's 75 in equity there. Maybe when everything is all said and done, what do you think you'd take

Caller

home on the 125 if we sold it? You probably only take 30k home.

Okay.

160.

Jade Warshaw

Okay. And so that gets you, with the cash, 250. That gets you pretty close to what you owe on the primary.

Caller

Yes. Correct. You'd be about 10k short.

Jade Warshaw

Okay, so is that what we're trying to solve for is just getting that primary paid off? Would that be enough for you and then cash flow and the rest to pay off?

Caller

We went back and forth so many times doing this, my wife and I, on whether it's do you pay off your primary residence or do you pay off the rentals and leave and get better cash flow on them? So ultimately they're all going to be paid off anyway. We're not buying anymore until we get to that point. But you have this huge chunk of money right now.

Jade Warshaw

Yeah. And let me tell you, nobody, my renters are not going to be paying, living in a paid off house while I live in a house with a mortgage. I could tell you that right now. You know what I'm saying?

Caller

I'd appreciate that.

Yeah.

Jade Warshaw

Like you guys are the ones working hard.

John Deloney

I.

Jade Warshaw

All day, every day I want my primary mortgage paid off. Here's why And. And this is just. This is just life experience. Whenever the. The stuff hits the fan, right, when there's a diagnosis, when there's. Not to say that there'll ever be a Covid ever again. But you know what I'm saying, when somebody loses their job, when things shift and change, the number one thing that people want to protect John is their house. That's the number one thing they look at is they go, oh, my gosh, as long as my house is secure, I don't want. Make me have to, you know, give up my mortgage. No foreclosure. Right. That's the scariest thing that we can imagine is the. The place where we lay our head to be in jeopardy. And so that's why I say what I say, which is take this cash and pay your house off first.

John Deloney

And do you have. I'm assuming you have a fully funded emergency fund, right?

Caller

Yeah, we do. About 30 grand. Just, you know, six, seven months with

John Deloney

the having five houses or four houses right now. Hopefully you'll sell one of them and you'll have three house. Or. Or, yeah, four houses left.

Caller

Yep.

John Deloney

I just, I. I'm biased right now. I just need to tell you. I had a. A day a week ago where I got up before work. I took one vehicle with one of family members to one shop. I took another vehicle to another shop and had another family member drive me back. My primary air conditioner in my house went out. Oh, my. Well wasn't working, so the house had no water in it. And it all happened on the same day, Ed. After I've unwound all of that, just let me tell you, it's very, very expensive. So you've got that times three, three or four. And so your emergency fund, I would want to hang on to some more cash because you're. You've got a. Unless you've got retained earnings on each one of these rental houses, which I doubt you do. I mean, if the air conditioner goes out on these things, you got to pay for it.

Caller

Right? Right.

Jade Warshaw

Yeah. Well, that brings me to the next point. Like you paying off your first mortgage. That was thing one. But the next step that I would take, because I'm all with John on solving for peace, is now I'm looking at mortgage number two, number three, and number five. And I'm going, okay, amongst these, is there one that I can sell to make good on the other properties? Because my goal would be. My goal would be to have as many of these paid for as possible as quickly as possible, even if that means letting one go because again, we're, we're, you know, cutting down on the risk. And I know what it is that you're trying to do, but I. You do have a lot of risk right now. So my question to you is really, how well are these cash flowing?

Caller

They, they break even at best. Realistically, the. Oh yeah. I mean, after the mortgage, you gotta figure you set aside for your expenses. And we do have retained earnings for things like that that happen in the business.

Jade Warshaw

Yeah.

John Deloney

How much?

Caller

The only one, about 40 grand.

Jade Warshaw

I just don't know that these are a success. I think they're just something you have.

Caller

The only one we are absolutely opposed to selling would be the one for 139. So ultimately, if tenants leave, it's more difficult to sell property with tenant in it. If a tenant leaves. We're not opposed to selling the 91 or the 95 either.

Jade Warshaw

And I love that. I actually think that's really good. This is what came to my mind when you told me this. I bought a pair of jeans and they were expensive, but they didn't fit. I put on too much weight and I didn't get rid of them because I spent over $100 on them. And I felt like I needed to keep them even though they're of no use to me. They don't make me feel better about my life. And every time I go in the closet, I'm like, come in. You know, and that's the way these properties are. It's like you bought them, them, they're not cash flowing. They're a pain in the butt. They're keeping you from paying off your current mortgage. Just accept it and end it in

John Deloney

your one of me a week ago from having one air conditioner, a roof on another, and then somebody trip on a driveway and this whole house of cards you built up is over. Like, you're in a mess. You know what I mean? And so going back to the softer beast.

Caller

That makes sense.

John Deloney

Here's a fun. And again, like, I'll tell you, my friends who are in the banking industry laugh at me because they tell me I'm too risk averse. Whatever. Well, they'll actually say, like, how do you stage dive off of a. Off a stage at a punk rock show, but you won't even do like, right. So I'm risk averse on, on some things, but not on others. But here's the thing. I want you and your wife to just imagine you don't owe anybody for your primary house. It's yours. You don't owe anybody on this one mortgage or maybe two on these other two houses, and you don't owe anybody anything. And so you're making 230, 240 a year, and a hundred percent of that is your money minus what the government takes. Is that going to give you the exhale that you're looking for in your own home? Do you get what I'm saying? Well, that, will that take the edge off the electricity of the angst of. What about this? And did you get this? And hey, this guy called and is there just this mo. This notion of, like, we got peace in our house now, now? And some people like the electricity in their house, man. That's how they choose to live. And I'm not their guy, but, but good, good on them, dude. I got friends like that. But like you said when you, when you first called, like, as for me in my house, dude, I love owning properties. I've got properties. I like them, but I just don't want to worry about them.

Caller

So you're saying, so pay off the primary and then sell these as the tenant leave until you just know that anymore.

John Deloney

Until, like. And I would roll that equity. I, I, I, Jade, I'd probably babystep to these because I, these are big debts you have outstanding here. So I, yeah, I would sell what I could and reverse engineer it until I've paid off the remaining three or the remaining two or the remaining one if I have to, and then I would take that cash flow and start building them back up. You're not, you're not buying $600,000 properties. And so it would take you another year or year and a half to save up another 150 grand to buy another one of these houses, right?

Caller

Yeah. So with the money that we have now, pay off the primary, then go back to the snowball.

Jade Warshaw

Yep.

Caller

And sell them when they come up.

Jade Warshaw

Yep. And I, I would go ahead and sell number four. Since you identified that right off the bat, I'd go ahead and do that as quickly as possible. Yeah. Pay off the primary and then as, like you said, as those leases go up, knock them out one by one, sell them off.

Caller

I appreciate y'.

Jade Warshaw

All.

John Deloney

So I got to know who won, you or your wife?

Caller

Oh, we were on the same page. We both wanted it. We both wanted to pay the house off.

Jade Warshaw

Good.

Caller

Absolutely.

John Deloney

All right. Good deal. Look at me and Jade bringing families together.

Jade Warshaw

Look at this.

John Deloney

Usually, Jade, it's one or the other, but, yeah, I like a united family.

Jade Warshaw

Every now and then, this guy's a smart guy.

John Deloney

Yeah, well, and what I love about him is he's really smart. And then he got all, he did all the smart things that smart people tell you you're supposed to do. And then he heard the message, what if I felt different, though? And if I'm doing all the right things, why doesn't my home feel more at peace? And he's going to solve for peace.

Caller

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Jade Warshaw

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John Deloney

Welcome back to the Ramsey show in the Fair Winds Credit Union studio. I'm John Deloney, joined by Jade Warshaw. Let's go out to Minneapolis, Minnesota and talk to the great and powerful Laura. Hey Laura, what's up?

Caller

Hi guys. So my question is, I have three kids. We are currently in baby step number two. We used the EveryDollar app and we budget for what we call Adventure day a couple of times a month. Our kids still get fun memories just in a smaller, more intentional way while we're still paying out debt. And my question is about teaching contentment and financial responsibility at young ages. I have a five year old who especially notices when his cousins get really big extravagant gifts and he doesn't understand why we don't do those things right now. He will be heading into kindergarten this fall and he'll see see even more kids with more experiences and things that he doesn't have. And so my question is what are some age appropriate conversations or ways that we can talk about money comparison and contentment so that he understands why we're choosing to be responsible and that he's not missing out while we still work on baby step number two.

John Deloney

Okay, so I'm going to reframe a lot of this. Is that okay?

Caller

Yes.

John Deloney

So he is missing out. And contentment is a lifelong journey that I would never. It's not developmentally appropriate for a five year old to have the understanding of commit like contentment and like innate joy when I've got used shoes and my cousin just showed up here with rocket shoes, right? And he is missing out because that kid's got rocket shoes and he doesn't. And so instead of trying to shift his, you should be, you should be feeling this way instead of what your body's telling you. Sit with him in that frustration because you probably know you probably have friends and family members that have a nicer car or newer clothes, et cetera, and you know how that feels too. And so it's not about taking a five year old and trying to disassociate them from their body, from their own feelings. Showing your 5 year old, 6 year old, 10 year old, I'm not scared of your feelings and I'll sit in them with you. You get the difference there?

Caller

Yes. Y.

John Deloney

And so a conversation we have a lot at our house is like when we go to Dave Ramsey's lakehouse. Dave has us all out once a year and we all go ride the jet skis and do all the wild stuff and then we'll come home. And my son's was with us during the, the days when we were trying to figure out how to keep the lights on. But my daughter doesn't have the, that lived experience. And she's like, dad, why don't we have a lake house? Can we get jet skis? And so we have the conversation like, as for our family, this is how we do life. And we're so blessed to have friends that have this cool stuff. And that doesn't mean that she doesn't want a lake house. And that doesn't mean that she doesn't think her dad's cheap and that, you know, all this. She's allowed to have those thoughts. She's 10. Right? But the, the conversation always comes back to, as for our family, here's what we do. And you have to be able to hold that space when your kid gets frustrated with you and they get mad at you, why can't I have this? And why can't have it? They're not going to understand complexities of budget when they're 5, 6, 7, 8, 9, 10, they will understand mom and dad hold firm and they still love me. You get that? Where I see most parents struggle here is it begins like, you want to be able to give your kid nice stuff. Right? You want to be able to give your kid some of these things and then you start feeling less than. So it's you being able to hold your own. Like, no, we're making the right decision for our family now and into the future.

Caller

Future, yes. I love that mindset shift.

John Deloney

But yeah, I, I always want to caution parents when kids have big feelings and when they get, when they get really sad, really mad or really frustrated, it's easy to a treat them like an adult. Don't talk to me like that. Or you shouldn't, whatever. And it's also easy to turn into a moral issue or a character issue. I like to look at it as a tools issue. This kid's feeling big kind of ways. And they don't have the toolkit yet. So job is to give them the tools. And that tool comes from, I'll sit right here with you. And by the way, not every behavior is acceptable. You can't talk to me like that. You can't throw things, you can't break things, but your feelings are fine. I'll sit here with you and I'll tell you, man, it's. I. Jade, I don't know if I hate it. I hate it when my son or daughter's upset with me. I still don't like it. You know what I mean?

Jade Warshaw

Y.

John Deloney

But it's my job to sit in it with them.

Caller

I feel that. Yes. I hate that feeling as well.

Yeah.

John Deloney

Can I tell you, I'm proud of you. Thank you for putting a stick in the like, like just plant a flag in the ground and saying, as of now, we're going to weather this storm because the future is worth it. Y' all are worth it in the future.

Caller

And that, that's really the only, like, tool that I have that I, I keep repeating. And I, I just feel like I keep repeating that and telling him like, not today, but something.

John Deloney

We will get there someday. For a kid is abstract.

Caller

Yes.

John Deloney

It's why, like, Christmas feels like a thousand years for a five year old and it feels like 30 minutes for me. I feel like I'm was just buying Christmas presents.

Caller

Right.

John Deloney

And we're already entering into like the fall season here. Right. And summer's almost over.

Jade Warshaw

Can I also float out there? That part of this, though, kids want whatever it is that they don't have.

Caller

Yeah.

Jade Warshaw

Like it doesn't even have to be like a money or like a standard of living thing. My kids, I introduced them to original Nintendo because I had one in the attic and I was like, I'm gonna see if they like playing. They love it. It's so, it's so old. But they were already arguing about who got the controllers and it's not fair that he gets to play more and it's unfair that. Right. And it, it's, it's an old game, but it's just because somebody else had it that now they want it. And you see what I'm saying?

John Deloney

That's developmentally appropriate.

Caller

Yeah.

John Deloney

For, for young kids.

Jade Warshaw

I think it probably has less to do with lifestyle than it does to do with, it's just a thing I want and don't have. And I think because adults understand what money can get and not get, we make it more about lifestyle.

John Deloney

Yeah. And so I would probably back off not today, but one day. Because you're confirming we're, we're less than now, but one day we won't be less than. And maybe shift the conversation to. Yeah, they've get, they got, they got a cool four wheeler and maybe when we get to go visit them, we can ride on that four wheeler. But our family, we like to go on walks and we like to go fishing and we like to do. I love how intentional you are with your kids. They're going to get special laser beam time from their mom and dad, I promise you. For their nervous system, for their brains, for their relationships down the road. You're putting in some major deposits in their relational bank account ounce.

Caller

Yeah.

John Deloney

You still there?

Caller

I'm still. Yes. Thank you so much.

Jade Warshaw

She was, she was letting it marinate. She was letting it sink in.

John Deloney

Are you tearing up? You're, oh, hey, we're on your team. I'm, I'm so proud of you. I can hardly even. I mean it's, it's amazing what you're doing for your family.

Caller

Thank you so much.

John Deloney

You betcha. You betcha. Jade. I, I, I'm still haunted by that. Hey, dad, can I have this? And it's, it's like, nah.

Jade Warshaw

Yeah.

John Deloney

And it's harder now. It's harder now that I could. And I'm choosing not to.

Jade Warshaw

Yeah, that's true.

John Deloney

Because it's not a part of the value set. Or it's because we don't need anything new or, or I don't know.

Jade Warshaw

I don't know. And I would just, I'm Just gonna say this just in the spirit of being old school, because I'm. I feel like I'm getting older and older. When I was a kid, we didn't get. Get nearly this kind of treatment. It was just like, my dad would just be like, we ain't got no money. And that was that. And we just adapted. So on the one hand, I get it, and on the other hand, I'm like, they'll be strong. Like, they'll be fine.

John Deloney

They'll be fine. Especially it for parents in baby step two. You can't buy them all the stuff. You can't buy them all the fancy birthday parties, whatever. But what Laura's doing. But I will give you a half a day of directed time if I got it is magic. Magic. Way more important than any old plastic trinket you can buy.

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John Deloney

All right, let's go out to New Orleans, Louisiana, and talk to Desiree. Hey, Desiree, what's up?

Caller

Thank y' all so much for taking my call.

John Deloney

Yeah, thanks for calling in. What's going on?

Caller

So my husband and I need to get a new car, and we're debating between getting a $10,000 older vehicle or a $25,000. A newer used car we currently have both would be paid for in cash. Either option. We have another vehicle that has 130,000 miles on it, and my husband drives. He commutes for work. And so he puts about 27,000 miles on a car per year. And so I'm expecting the current car that we have to go out within the next, like, three to five years.

John Deloney

Why?

Caller

And so I kind of wear.

John Deloney

You're talking to two people that drive their cars into the dirt.

Jade Warshaw

Is it like a Ford Fusion or something?

Caller

No. I mean it is a Toyota.

John Deloney

Is it a square Kia? A Toyota? It hasn't even started.

Caller

It is. But I guess I did the math and I was just thinking like with it at 130,000.

John Deloney

Oh, no, that Toyota is going to last longer than y'.

Caller

All. Yeah, yeah.

John Deloney

Buckle up on that one. Y' all have the cash to pay for it? Do you have an emergency fund?

Caller

We do, yes. So we have a $40,000 emergency fund outside of. So we have $28,000 saved in addition to our 40,000 emergency fund.

Jade Warshaw

Good.

John Deloney

So what's.

Caller

If we were to go, y' all

John Deloney

have the money, you'll have the cash. What do you. What's the. What's the congestion in your heart over this decision?

Caller

I guess not big. We've always had a larger emergency fund and so it bringing us down to like what I true emergency fund is the 40,000. And so. Yeah, yeah. And then if this car were to go out or, I don't know, something were to happen, I would have to actually pull from.

John Deloney

Where else? Where else? And this is the pot talking to the kettle here. Give me another thing totally not money related, where you're anxious about a future thing happening. Happening.

Caller

Not money related.

Yep.

I don't know. I guess.

Are you.

John Deloney

Are you a worrier?

Caller

No, I don't think so. I think it really just comes down to having the financial. We're not able to save as much as we used to. So like we have two kids now and so we still save, but there are months where we don't. And I mean it's. We're budgeters, but.

Jade Warshaw

But if you use some of this 40, 000, it's going to take you a while to build it back up again and you don't want to do that. Yes, I get it.

Caller

Yes. I think that.

John Deloney

So if you solve for peace, which one do you want to have? Would you rather have a nicer car and less money in the bank account that you're just like you snuggle in every night, you check your bank balance and you go, ah. Or would you. I mean, a crappier car in that or not a crappier car, just an older used car or do you want a newer used car car?

Caller

I guess I don't look forward to. If we were to do the like a $10,000 vehicle that's like 10 years old. I Don't look forward to, like, hey, what's the. And like, are there any underlying issues with it that we're not able to see, like at purchase price? Rather than spending the money up front,

Jade Warshaw

let's look at a bigger picture of your money. So what do you guys bring home every month and what do you bring home every year?

Caller

Yearly we bring home 130,000. And then monthly we home 8,000amonth.

Jade Warshaw

Okay.

Caller

Give or take.

Jade Warshaw

So what we. Let's use this to kind of be our framework and how we think about this. So two things are true. We do have a framework for cars, things that go down in value. And we don't want any more than half of your annual take home to be tied up in cars. So for you, that's somewhere around 60, 65,000, and you're nowhere near that. So that's thing one that kind of gives me a green checkbox that. Okay, we're not. Not. We're not breaking any rules of.

John Deloney

We're not being unwise.

Jade Warshaw

We're not being unwise here. The second thing that I want to bring up is you've got 40,000 saved, which you yourself has said. Like, that's six months of expenses. Like, that's a full emergency fund. Something that I find, and I want to call this out with you because I think it'll help the greater audience, is when we teach our seven baby steps. The first three, right, get $1,000 saved, pay off all of your more consumer debt using the debt snowball, and save up three to three to six months. Those are intended to be extremely intense. Intense. We sacrifice everything. We give up what we want to do those things. But then once you cross that line, now we're going from intense to intentional. In the same way that you had to practice what it feels like to say no, to cut back, to change your habits once you cross over into baby steps 4, 5, and 6, you have to do those same things, only in the opposite direction. Now we have to practice. What does it feel like to actually enjoy my lifestyle in a responsible way? Because I'm now a financially responsible adult. Adult. What does it feel like for me to know what my limits are and feel good about making that choice? And instead of doing the easy thing, because the easy thing to do is just avoid and go. That feels weird. I'm just gonna buy the thing that's less expensive. That's what I know to do. Right? But that would not be really enjoying what you working so hard for. So I actually, in your case, I would push you to enjoy the work in the money that you have. And I'd say, hey, you're no longer in this season of life where you have to drive the cheap hoopdy. Not that 10,000 is cheap, but the less expensive hoopdy that's got, you know, already has 100,000 miles on it. You've actually earned the right, and you have it in your margin to get the $25,000 car and feel really great about, like, hey, this is the nicest thing I've ever bought. What about that?

Caller

Yeah.

John Deloney

And as a guy who has commuted in multiple different states in multiple different jobs, jobs with used Toyotas, I like the idea of my wife and our two kids being in the 25, 000 car. That's just me. I would like that.

Jade Warshaw

How does that make you feel?

Caller

I think a release.

Jade Warshaw

Oh, yay.

Caller

I think just because I want to make sure that we're making, like, what y' all said, a wise decision.

John Deloney

Yeah.

Jade Warshaw

And so this is what it's about.

Caller

Purchase.

Jade Warshaw

I gotta tell you, like, this.

Caller

This is.

Jade Warshaw

This is what it's about. We get a bad wrap around here for. It's like, we're cheap, and you gotta. You gotta live. You gotta live low forever. And I'm like, no, man, you gotta make the transition. I was just seeing that recently.

John Deloney

It's. It's kind of come out all over the place. Like, Dave Ramsey's stupid because he wants you to sacrifice your whole life. You've never gone out with Dave. You've never had dinner with Dave. You've never been to a party with Dave.

Jade Warshaw

Yeah.

John Deloney

Buckle up. You never been out to dinner with Rachel. You never been out to dinner with Jay. Dude, the only person is George. He's the worst. But other than that, I mean, when you.

Caller

When you.

John Deloney

The whole purpose of sacrificing like bananas in your first. Second. First, second, third baby step is so you can have. Finally have a real version of the life that you want, Right? And it's not unrestricted. Even Dave has to keep a budget.

Caller

Right.

John Deloney

But, like, it's not unrestricted, but inside of that, dude, it's the best, man. So, yeah, you guys have worked your butts off. Y' all saved a whole bunch of money. You got two young kids. Kids. I'm with you. I'd get the nice car.

Jade Warshaw

Yeah. And this is something. I. I think we're saying this because I think we've all struggled with it to a degree, because it's true. Your brain is in one form. Like, you have to be a certain way to do baby steps 1, 2, and 3. And you have to do a complete. In many ways, an about face. Because in baby step two, you have told yourself, spending is bad, spending is not good. And then you have to train your brain to be like, you know what? All spending is not bad. This spending is good.

Caller

Right?

Jade Warshaw

This is fair. You know, like, you've told yourself, anything extra, extra, we don't want it. And now you go back and say,

John Deloney

desiree, let me call this out with you, because you sound like me. Here's the deal. You know this about yourself. I know this about myself. If you went to the store and you and your husband bought a $10,000 car, you would get home and you'd immediately have regretful feelings. You know that? And if you go buy that $25,000 car, you're gonna see your bank balance, and you're gonna have regretful feelings. So just knowing that no matter what I do, I'm gonna have the little feeling monster inside of me, be like, you know, you should have. You know, you should have just know coming. And then say, gotcha. I got it. I feel it. I'm not even gonna fight. I'm not even gonna fight it. And then I'm gonna go do the next right thing after that. And that's emotional maturity. I have this feeling, and it's real. And then I'm gonna go do the next right thing. And it's getting right back on the same plan. But, yeah, all you people out there that think Ramsey followers live boring, awful lives, come to Ramsey Cruz, man, it gets wheels off.

Jade Warshaw

I can tell you that. I. I relate to that. I put off buying a new car for the longest. I said in the other segment, my Cadillac SRX, it's worth 1500 bucks. It's got over 200,000 miles on it. And I just would not buy myself a new car.

John Deloney

I talked to Sam. He's like, I don't know, man. She won't.

Jade Warshaw

I won't. And then finally I did. And I did. And I'm like, what was I waiting for?

John Deloney

I saw you roll up in your new car, and I was like, whoa.

Jade Warshaw

They see me rolling, dude, for real. They hating. I'm just joking. But just do it in joy when you can afford it.

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John Deloney

remain active on Boost Mobile Unlimited plan. Buying or selling your home is high stakes because one bad deal could cost you ten tens of thousands of dollars. You don't want to overpay for your next house or sell your current home for less than it's worth. That's why Ramsey Trusted connects you with vetted real estate agents who have the experience to guide you step by step to make smart decisions, not expensive mistakes. Connecting is easy. Just compare agent profiles, interview your top choices and pick the person who's right for you. Find a local Ramsey Trusted agent who has your best interest at heart for free@ramseysolutions.com agent or click the link in the description if you are listening on YouTub or podcast. Let's go out to Eric in Chattanooga, Tennessee. What's up Eric?

Caller

Hey guys, thank you for taking my call.

John Deloney

You got it brother. What's up?

Caller

My question is my wife is currently making about 75k a year and our household take home pay is between 150 and 175 a year. We're actively saving to buy our first house, but these got accepted into a program to go back to school which would require us taking about 80k out in student loans after degree is done. She would be expected to triple her income with our goal of buying a home. Do you think taking 80k out of student loans is a smart decision or would you recommend delaying school?

John Deloney

What's the program that's going to triple her salary that she's going to be making 210 the day she graduates?

Caller

It's CRNA school. She's a nurse currently right now in our end. Okay, so it'd be a nursing estate for any of the things. Sorry, drawing a blank.

Jade Warshaw

But, but there's a, there's data that shows that that's what her income will be right out of school?

Caller

Yes, ma'.

Jade Warshaw

Am.

John Deloney

Then I, then it's so how long, how long's the. Yeah, I notice the RNA is how long's the program? Program?

Caller

It's a three year program with a year of clinical in it. So she gets paid during that year, but it's very minimal what you make during that one year.

John Deloney

So is she going to be in school full time? So she's going to lose her 75 year salary while she's doing this or is she going to work and go to school full time?

Caller

No, she'll be in school full time. I'm making anywhere right now. I work in outage season with my job, so it's not completely guaranteed, but I make anywhere between 85 and 100. But it should go up to around 150 here soon. I just started.

Jade Warshaw

So what I hear is, I hear this is a decision about what do we want to do the most. Because I think you can do a lot of this over time. But something's going to take the first seat. Right? Um, right. You're either going to say right now we're focusing on the house and we're going to, you know, try to buy this house, or you're going to say, you know what, we're putting the house to the side and right now we're going to focus on her going to school because what's off the table, at least in my book, is debt. A student loan is 100% off the table here. So we have to figure out are we going to cash flow and save up 80,000 to go towards education or are we going to save up $80,000 to go towards a down payment on a house?

John Deloney

How much do you have saved for your house, house yet so far?

Caller

Well, we're 21 and 22. We just got married.

John Deloney

Okay.

Caller

A few months ago.

So.

So we really just started our jobs not too long ago. So right now I only have 20k saved.

John Deloney

Okay.

Caller

But I already bought. Well, we built a mini house with cash without paying.

John Deloney

Okay.

Caller

That's what we're living in right now, about 600 square feet. We don't have any debt. We don't even have credit scores because we've never owned a credit card.

John Deloney

Okay. So let me, let me tell you this. I'm 25 years down the from you, more than 25 years. Okay. And I understand what it would, what it would have been like talking to 21 year old me. I was dumber than a box of hammers. You don't sound like that. You sound like you're way ahead of where I was at 21. Okay, so I'm, I'm pleading with my 21 year old self here through you. Is that cool?

Caller

Yes, sir.

John Deloney

If you and your wife will just make a scratch and claw Commitment for 36 months. Months. 3 years, 36 months. Make one of those construction paper chains that just has 36 months on it and y' all will take that 20 grand you've got saved. Actually you got emergency funds, so I'd hang on to that and cash flow. This school that's coming up with 26 grand a year and that means you're going to have to really contract how y' all live. But you got a paid for tiny house, y'. All. You're just living small. At the age of 24, based on the numbers you gave me, y' all will be making 370 grand a year. You know what that will make you at 24? Rich.

Caller

Yes sir.

John Deloney

You know what house, you can buy whatever house you want. If you're 24 years old making $370,000 a year, you at 150 and her at 210 or 360. I'm sorry, 360 grand a year. It's just going to take you deciding at the, at this early part of your marriage. As for our household, we don't borrow money because we always want to be in control of our lives. And I'd rather us have tuna fish sandwiches for dinner and us have eggs like breakfast for dinner for three years than to ever be beholden to somebody else. And I've worked. I, I want there to be good CRNAs out there in the world. I've got young kids, right. I want there to, I want them to be out there in the world and licensed and credentialed. I want that and I want them not owing anybody any money so that they can make the next right ethical choice and not be stuck between some machine because they got to pay their student loans off. You know what I'm saying?

Caller

Well, I guess my, my main question would be and main concern. I completely understand what you're saying. And you know my goal goal was to never really take out of debt besides my mortgage. But here in a school was very competitive and she got in. I'm sure she can get in again but I guess she's nervous about that too. Maybe the that. What if they don't take her back in? Next time we want to apply, I'll let you know. Our monthly take home right now is about 13. And we spend about three a month.

Jade Warshaw

Right.

John Deloney

So why can't we cash flow it goes.

Jade Warshaw

If you're only spending if you have 10k of margin every month, there's no reason that you can't cash flow this.

John Deloney

Yeah. Go.

Caller

Okay.

John Deloney

Yeah. She shouldn't put it off. Plus, you got 20 in the bank. You already have this. You already. You almost completely have the first year tuition in your bank account right now.

Caller

Yes.

John Deloney

And so that puts you basically a year up.

Caller

First year. I think we would possibly, because, I mean, semester's coming up soon and we possibly have to pull out a small loan, but.

Jade Warshaw

No, I don't think.

Sponsor/Advertisement Voice

I don't think you do.

John Deloney

Why do you think that?

Caller

Well, let me think about this. Tuition got 20k. Right now we're making about 10k.

John Deloney

And all you do is put it on a semester payment plan and you pay them every month for over the course of that month. They're going to charge you an extra 50 bucks for that and you cash flow it.

Caller

So put it on a payment plan.

John Deloney

Yeah, with the university. I'm not taking out a loan.

Caller

Yeah, I was just thinking about paying it up front for the. I. I understand what you're saying.

Jade Warshaw

If you can pay it up front, that's great.

Caller

Adulting can even work.

Jade Warshaw

Oh, no, you're doing a great job.

John Deloney

No, you're doing awesome, man. But here's the thing. If you take debt off the table, you'll figure it out is what I want to hear. I want you to hear me say, right, If. If that's not an option, you're like, okay, you got in. We're going to figure this out.

Jade Warshaw

And if you had the. If you had the stack of cash to just pay for the whole semester, that's. That's fine. But what John was saying is making it more palatable so you can do it bite size every month with this 10k of margin that you have every single month.

John Deloney

And by the way, you have, the first semester's tuition is going to be about 13 or 14 grand. You have that in your account right now, plus you'll have 6,000 left over. Write that first semester check and then y' all start living. September, October, November, December, your Christmas is going to be different because y' all intentionally are sacrificing for a whole lifetime time of winning. They can never take her CRNA license away from her. This is a good degree, dude.

Caller

I understand, but.

John Deloney

But you're in a position to do it and never owe anybody anything, which means if she gets pregnant year two and she looks at you and says, I don't want to be a nurse anymore. You're like, that's cool. We don't owe anybody any money.

Jade Warshaw

The hard part about being 21 and 22 and having a lot of goals is you want to do them all at once.

Caller

Yeah.

Jade Warshaw

And it's like, if I'm not doing them all at once, you almost feel like you're failing or you're just not

John Deloney

achieving well and also feel you can get that loan and then you don't have to change your lifestyle. And I want people, if you're going to make an $8,000 investment, like they're doing that I totally support. It's going to come at a cost. Have that cost be now, not for the rest of your life. This show is sponsored by Better Help. Summer is a time when people escape, whether it's relaxing or going on vacation. We've all been told this lie that if we just escape from it all, everything will magically work itself out. But here's the thing. A vacation won't fix what you won't face. If you're anxious, if you're burned out, or you're struggling, these problems will be waiting for you when you get home. This is why I recommend talking to somebody. And this is why I recommend BetterHelp. BetterHelp is online therapy that fits into your life. You can talk with a licensed therapist by phone, video, or messaging from any anywhere. No commuting, no sitting in a waiting room. Just a safe place to process what's actually going on in your life. All of BetterHelp's therapists follow a strict code of conduct, and you can message your therapist and schedule sessions right in the app. If it's not the right fit, you can switch therapists anytime for no extra cost. Don't ignore what's coming to the surface. Sometimes the strongest thing you can do is stop trying to escape and start dealing with your challenges. Challenges go to betterhelp.com Ramsey to get 10 off. That's BetterHelp. H-E-L-P.com Ramsey. All right, let's go out to the 806, Lubbock, Texas, and talk to Caleb. Is which. What's up, Cale?

Caller

Hey, how's it going? This is. Yeah, this is Gail.

John Deloney

What's up, man? How we doing?

Caller

Good, good, good.

John Deloney

So what's up?

Caller

Oh, sorry, I just thought that was my turn to the question there. Yeah, I got a question for you. I work in safety for a big solar company out here. Well, they're. They're nationwide, but I just happen to be in Texas and my wife is starting, she's, she's in an internship for the same company, but she'll be starting a salary position here in probably next three months, two to three months here. And it'll bring our total income, which sounds crazy to say for daddy's need now, but a little over 200 I think 10 or 15k after all that's said and done, not including bonuses. And I'm 22 and she just turned 21 and we don't actually enjoy our job at all. I actually don't mind my job per se. I think the circumstances for my job, I really don't enjoy, enjoy where I'm located, the travel and everything like that, but I definitely don't enjoy where I'm at personally. And, and same thing with my wife, you know, she's going to be dealing with the same issues, issues that I have.

Jade Warshaw

Is it the people or the tasks?

Caller

I'd say it's people. Yeah, I definitely say it's the people. It's not my favorite type of people. And they're more blue collared workers, you know, all at the end of the day. But in solar, it's kind of a funny thing but we're, you know, it's kind of like bougie construction, building these solar farms out here. So not necessarily your, your typical blue collared workers. And I don't know if that's quite the environment for my wife long term as well, which is maybe also factoring into my, you know, concern here.

John Deloney

Okay, but, but hold on, hold on. Like I've, I've lived out in your part of the country for half my life. Okay. So I know that area well and I know there's some places where it's tough to be around some folks and I know the, the aesthetic is pretty tough and I know in the middle of summer it's miserable. Right? There's a lot of hot. It's hot. The wind is blowing. Right? It's miserable out there, right?

Caller

Yes, yes. 100.

John Deloney

Okay, so I, I get that. And closer into city it's a cool place to be, but also it comes with a lot of stuff. Here's what I want you to think about. You're 21 and 22. What would three years of y' all doing this hard job in your early 20s and living on like minimal, just deciding we're gonna, we're gonna, the first couple years of our marriage, we're just gonna go all in hard on this deal. And yes, there's gonna be goofballs that we have to work with. It's gonna be not beautiful out here all the time. It's gonna be miserable when it gets hot in the summer. And we're gonna set up our ENT because we worked really hard when we were 22 and 23 and 24. I just think the whole follow your passion thing is one of the most nonsensical, moronic things. I don't want people to be miserable, and I never want someone to work in an unethical place. But there's a. I don't know, man. I look, I look back at 20 year olds and I'm like, dude, this is the season to work like crazy to set yourself up. I'm. Let me put it this way, brother. I'm living the life I have now, Me and my family. Family based on working like a maniac in my 20s and early 30s. You get what I'm saying?

Jade Warshaw

Okay. I would agree with John. I think most of us in our 20s and even into our 30s did jobs that we knew were not the end game and we knew we didn't like very much. The only difference is we weren't making

John Deloney

this kind of money.

Jade Warshaw

We were making 18 bucks an hour or 12 bucks an hour. Whatever.

John Deloney

Yeah.

Jade Warshaw

What baby step are you guys guys on?

Caller

I honestly have no idea. I. I don't know. I don't know. My parents actually met Dave Ramsey like 25 years ago and they've always raved Dave Ramsey. And I did the stupid college or teenager thing and was like, oh, that's cool. But I'll never have to, like, really think about money.

Jade Warshaw

Well, let's see if we can diagnose you.

John Deloney

Hold on. I. I don't know. How big is your truck?

Caller

Oh, I'm sitting in it right now. It's pretty big.

John Deloney

Is it a. Is it a 250 or 350? 50?

Caller

No, no, it's a. It's a 26, 150.

John Deloney

Okay. A 26, 150.

Caller

Yeah. That's nice. It's nice.

John Deloney

Oh, my God.

Jade Warshaw

Does it have payments?

John Deloney

Yes.

Caller

No. No, it doesn't have payments. This is actually. Wow. This is from work truck. I don't, I don't pay. I know. It's. It's a personal vehicle and we have an option to buy it at the end of. End of it, and it usually ranges about 10 to 12K with one of our, our fleets that we work. Work with and say bought it for the. It's. It's a pretty sweet deal. No, I. It'll be at the end of. End of the.

John Deloney

Okay, so what's this? What is so bad about your life?

Caller

Okay, so I. To throw a wrinkle in this. I probably should have stated this earlier. I'm living in Lubbock right now. We moved to Lubbock with my wife. But we. I work two hours away from Lubbock, so that. To throw the wrinkle, we're not working in. L. I drive. I leave at 4 in the morning.

Jade Warshaw

Oh, my gosh.

Caller

Every morning, I don't get home.

John Deloney

Okay, but when she gets done with her internship, are y'.

Caller

All.

John Deloney

Are y' all gonna move out there?

Caller

No. No, there's nothing out here. I don't know if. I don't know if I could say names on the show, but I'm next to a really big ranch in West Texas, the eighth largest ranch. I don't know. So we're. It's out here in the middle of nowhere. It's really just this ranch and two small towns of 120 people. And there's no houses. There's no anything. No RV spots. We looked into everything. We exhausted every option.

Jade Warshaw

So you're in the car four hours a day?

Caller

Yes, sir. I guess, ma'. Am. Sorry. Four hours a day.

John Deloney

Oh, no. Okay. But there.

Jade Warshaw

Yeah, that's pretty bad.

John Deloney

It is bad. That's. That's a brutal. It's a brutal commute. But I also know there's other towns in between there.

Caller

No, no. I live legitimately. If you look at the map or map. If you look in the three Texas, there's. There's nothing. There's. There's spur, which is about.

John Deloney

Yeah.

Caller

20, 30 minutes closer, but there's no houses for rent in there.

John Deloney

Be making 210,000. Go write somebody a check for 78 grand for their home.

Jade Warshaw

Well, let me ask this. Can you do the same work someplace else? That's why I asked you earlier. Is it the people or is it the. The tasks? Are you able to do this type of work? Is it transferable?

Caller

Yes. With this company specifically. There were almost nationwide here. I believe we're in like, 26 states. My main issue is I just started this position where I'm at with all this money, which is why also I'm concerned because I've never been in charge of this much money.

Jade Warshaw

Yeah.

Sponsor/Advertisement Voice

You don'.

Jade Warshaw

Feel like you could ask to transfer?

Caller

No, not. Not this early on because of where we're at specifically. It's such a hard position to get people to come over here. Our hourly People and our salary people. So basically it's like you're locked in for the next two years here.

Jade Warshaw

I won't lie. I won't lie. You have a tough four hours a day in the vehicle and it's hot. That, that's very tough. Now are you, you and your wife are doing this separate or are you commuting together together?

Caller

No, we commute together. So that.

Jade Warshaw

So at least you're together.

Caller

Yes. I also don't pay for gas. I don't want to make it seem like I'm paying for all this stuff. I don't. I have a gas card.

Jade Warshaw

So let's get back to your baby step right quick. Let's get back to your baby step right quick because that, that'll help us know if you really need to do this. Do you have any consumer debt?

Caller

Is that like credit cards?

Jade Warshaw

Yes, credit cards, student loan, cars.

Caller

I have no, no student loan. I have a car payment, which is going to sound so dumb, but I also have a Chevy call Colorado, which I got right before starting this job.

Jade Warshaw

What do you owe on it?

Caller

I was going to need a truck. I was 17k on it.

Jade Warshaw

Okay. Anything else? Anything other than mortgage debt? Any, Anything that you owe to anybody?

Caller

No, just I think I have like 500 on a credit card and that's it.

Jade Warshaw

Okay. And do you have any money saved that's not retirement?

Caller

I have. Without looking actually into it, my actual Savings only has 800 in there, but I don't transfer anything over for my checking account when I get paid to my savings account. So I, I don't know, I'll. I would assume with what's in my checking that won't come out this month. You know, if that's how people do it, then it's probably close to 3, 3 or 4K.

Jade Warshaw

Okay. Here. Before we hit the break, here's, here's what I think is necessary. At the bare minimum, before you can quit this job, you have to do three things for me. Four things. Number one, you have to have a budget. You have to budget your money and you need to be budgeting your money for at least three months to see how much money you have and what it's going to towards. So promise me that. Number two, you need to pay off all of your debt. The 17,000, the 500. What? If you sell it, I don't mind. If you pay it off, I really don't mind, but you need to get out of debt. And number three, I want you to save up six months of expenses and I'm going to add a fourth thing to the list. This is your fourth thing of homework. You and your wife need to have other jobs secured before you leave this job. And if you do those four things, I think that, that it's a smart way to exit. I would not come back to haunt you for that choice.

John Deloney

And I'll just tell you right now, I can't remember what I, what I was doing when I was 21, 22. And so if you think about 30 year old you or 40 year old you, that commute is going to be non existent. Other than you and your wife got to spend a lot of time together. I still vote for two or three years of just sucking it up and making a jillion dollars. Welcome back to the Ramsey show in the Fair Winds Credit Union studio. I'm John Deloney joined by Jade Warshaw. Let's go out to Savannah, Georgia. Savannah, Georgia and talk to Robin. What's up, Robin?

Caller

Hey, how are y' all doing? Thanks for having me.

John Deloney

We're doing great. Thanks for calling in. What's going on?

Caller

All right. I am 45 and I want to go back to school to be a physician assistant. But the only school that offers it near me is private and it's $136,000 for, per year.

John Deloney

For the entire program.

Caller

For the entire program here to two year program. And so I talked to my husband about it and he thinks, well, he literally said call Dave, see what Dave thinks. But he doesn't think that it's responsible.

Jade Warshaw

What's the difference in cost between a non private institution? What's a non private cost?

Caller

The non private I think is like, well, I called one and they said that it was 40,000 and I'm not sure that has to be per year because I looked up another school and it was the school I did my bachelor's in and it was 40 per year. 80,000.

John Deloney

The cost is all over the place. Yeah, usually it's about half.

Caller

Yeah.

John Deloney

60% to have. Yeah.

Caller

Yeah. But the, the non private school is a two hour drive for me and I would have to redo all of my prereqs.

John Deloney

So let's back out a little bit. Why pa? What about the medical profession do you want to get into?

Caller

Well, I love the independence of PA versus nursing, but I'm kind of having a midlife crisis like I said. And so one of the things that I've been kind of looking at is what makes life feel meaningful to me. And I'm looking back at like high school years and it's Always been when I went overseas, when I was involved in some sort of missions work. And so I've been thinking, what would be meaningful to me in the next part of my life is if I have the opportunity to be hands on with third world country and, and make a difference in that way. But also it would have to be something that I could do here as a career, sustainably and enjoy working.

John Deloney

So this is going to be a strange question, a strange next question. What about this idea? Had your husband. Did your husband's first response be, that's a. That's not a good idea. Call Dave. Is it that. Is it that he's seeing you struggling? Is it that he knows my wife faints every time she sees blood? Is it like. Or is it we don't have the money? Like, what is it about that?

Caller

Spend 130, say $140,000 on my next phase. Then that's $140,000 we don't have for whatever else.

John Deloney

Yeah, but that's a foolish argument because you're going to make a bunch of money being a pa. Yeah.

Jade Warshaw

And what is whatever else?

Caller

Right?

Jade Warshaw

What is whatever else?

Caller

Like retirement. We started a little bit late for retirement, so we only have probably, excuse me, about 600. Save for retirement.

Jade Warshaw

You'll be fine.

John Deloney

Yeah, you're gonna be fine.

Caller

So you think that it would be.

John Deloney

Well, here's the deal. You have these feelings. You're having a, what you, what you self. Diagnosed as a midlife crisis. You want to. You're having a crisis of meaning. Like all that stuff. All that stuff is important and it's awesome and it's good. Let's move that aside for a second. What you have in front of you is a math problem. Do you have $136,000 or over two years, do you have 70 grand and 70 grand.

Caller

Yeah. I mean, and my mom just passed recently and she left like 80,000. So there's that. But we were going to, you know, give that to our son, give him a leg up. So that would be taking away from him.

Jade Warshaw

I really think that I'm looking at this and I think it's important that people do, to quote Ken, do the work they're wired to do. And I think it's important that you have a career that gives you more meaning. And some people find that later in life. I also think your 40s is when you really start to be like, okay, like I'm. This is who I am and this is what I'm doing, and this is the contribution I'm making. And then when you get into your 50s, like that's when you're really just kicking it. Right. I think going back to the retirement, you have 600,000 there. If it's invested well, if it's making at least 10% in seven years, it's going to double. And you're not going to stop contributing it to it. You going to keep contributing the 15%, right. No one is saying stop doing that. So you're going to be fine there. But you do have this money in front of you and you do have options. Some of them may be uncomfortable, but you do have the non private option. And if you did that, then you'd have the cash to cover it through this inheritance. And nothing says that you can't continue to put some money away for your son. I think there's a way to tick all the boxes here. But there is going to be some level of sacrifice if you choose to do do this. Whether it's okay, we're not giving our son a lump sum of 80 grand like we thought, or I'm gonna have to be in the car for four hours a day. That's different than I thought. Right? There is going to be some give and take on this. But I do think that it's worth it to pursue the thing that you know in your guts you're supposed to do. Now if you don't know in your guts that you're supposed to do this, that's a different conversation.

John Deloney

Yeah, before I did anything, I would spend $3,500 and go as an assistant on a medical missions trip. Because what used to give me life was mowing. I could spend all day mowing people's lawns. Mowing my lawn. I love it now, man. So if I look back at 18, 20, 25 year old me, I was like, dude, you know, it used to give me life. This, that used to be always my stock answer. If I won the lottery, no one would ever see me again and I'd have a huge lawn business. I would not do that anymore. Right. Because it doesn't. It used to give me life. And when I think back on those, those days, I romanticize them, it's not real anymore. So before I did anything, I would spend the money and go spend 10 days doing medical missions as an assistant, handing a surgeon gauze and doing whatever I need to do in a third world country. And see, is this still what lights me up? And if it is, can you get that from coordinating medical missions? Can you get that from 50 other avenues before I go back to quasi medical med school.

Jade Warshaw

I love that.

Caller

Right.

John Deloney

If you want to be a physician's assistant in the States day in and day out, deal with managed care, deal with insurance companies and help people day in and day out, and then a couple of times a year, go overseas, if that's who you want to be for the back half of your life, then yeah, dude, you'll have the cash. It's a worthy investment. And you're not, you're not robbing Peter to pay Paul here. And we're going to give our son a leg up in other ways.

Caller

Right?

John Deloney

But man, there's, there seems to be a bunch of other steps before you're just like, you know what, I don't know, I don't know. Let's put $140,000 in two years of my life down on the table. That just seems like a huge, a huge bet without knowing convincingly this is what I want to go do.

Jade Warshaw

So step one, let's give you Ken's book. Find the work you're wired to do and let's do the career assessment that's inside of that and that's going to help you. You kind of put the pieces together and then in the, the book, it's just a little short read. He walks you through what to do with the results. So I think that's thing one thing too is if, if that's, if everything still points to kind of this field ish, then do exactly what John said and test it out in multiple areas. There's nothing that stops you from testing this before you invest any money into it. And so I think those two things are your homework that must be done first before you, you sink even a dime into this.

Caller

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John Deloney

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John Deloney

Ramsey Solutions is a paid non client promoter of participating pros. Learn more@ramseysolutions.com SmartVestor. Our why refi? Nice talk. Listen, the words get stuck in the old mind sometimes. The why refi? Question of the day. Our question of the day is brought to you by why Refi? When past due private student loans keep pulling you backwards, it's hard to focus on what's ahead. Why Refi helps borrowers with low fixed rate refinancing options that fit your budget so you can focus on the Future Again, visit why refi.com Ramsey may not be available in all states.

Jade Warshaw

All right, today's question comes from Keith in Tennessee. He says, I found out today that my brick and mortar bank allows children with a joint account to get a debit card as young as three years old. Wow. I was mortified thinking of a preschooler walking around with a card in a world of marketing. Okay, at what age do you think it's appropriate to give a child a debit card? Debit card, Keith, I think you're overthinking this. I mean, I'm just saying, obviously we're not giving a 3 year old. I think a fair time is when they get their first job because then they actually have a little bit of money to speak of. I think I got mine when I was 15 or 16 when I started working at Kroger bagging groceries. And my mom was on it. It had a check. It had a checking and a, you know, a debit card attached to it. Checking and a savings things. And I'm trying to think what else. I think there was. She, she could see the transactions I was doing and it was just a great way to kind of like be connected on there. But yeah, I, I mean, what say you 16, whenever they get their first job?

John Deloney

Yeah, I think when, yeah, when my son started working. Yeah, we got, he has it online, so it's a till account, but yeah, so we can transfer money back and forth. But now that he's in school, when he goes on school trips and things, it's easier just to make sure he's got eating money and stuff like that. That. But yeah, if, if somebody was to get a debit card and hand it to a first grader, that's madness. Like, Right. And there's no point. No. Or a second grader or whatever with the debit card, there's just, no, there's no point to it. But yeah, I'm with you. I think when, when, when kids are getting their first job.

Jade Warshaw

Yeah, you get your first job, then it teaches. I mean, you can do all the stuff together. It's like, okay, we go down to the bank together, we open up the account. Obviously mom or dad is, you know, listed on there just to be able to see what's going on. And then it's a great way you start teaching budgeting, you start teaching just that basic next steps in managing money.

John Deloney

So I, I, I'm so old, Jade. My dad, I remember it was a, like a cool day we had, but he took me and got me my first savings account. But it had a checkbook attached to it. But it's because I had a mowing business and I think I was 10 or 11, but I had to ride my bike to the bank to deposit checks that I got from customers or to get cash, cash out to do whatever me and my knuckleheaded friends want to do.

Jade Warshaw

Isn't that so funny? I, George and I were talking about this on the previous show. Just checks in general is crazy work. The fact that it's a piece of paper that you just hand out to people that has your account and routing number on it.

John Deloney

Oh, well, now that, now that it can all be done electronically, it is, it is mad.

Jade Warshaw

It's crazy. And the funny thing is there's this real circulating on, on Instagrams and TikTok where it's, I guess, general why. And they're like, if you can read what this says, you can have it. And you know, when you write a check, it's like, if you write a check for 3,000, $3,100.26, it says it's written out 3,000 and then it has 0 over 26 as the change. The kids don't know what that means. So no one can read the check. They're like, what is this? I don't know what it is.

John Deloney

I saw. No, it was a website about two or three years ago that said, like, how to write a check. And it was a website for your young adult men learning, like, how to shave, like your granddad and how to shine your leather shoes. But it was like, how to write a check. And I was like, oh, gosh, I'm old.

Jade Warshaw

Yeah.

John Deloney

I still write two checks every month for what I deposit into an account for my kids and I write a check. And it's a strange, this is going to sound ridiculous, and I know this is nutty. It's a, I'll call it a spiritual discipline for me. I want to stop and pause and write this check that's going into an account for my kids that they don't know about.

Jade Warshaw

Okay.

John Deloney

And it's a moment and then I still to this day write my giving checks to my church. And on a check, I can respect it. There's one guy that I hand him to and he's like, brother Davis, it's you. Yeah. He smiles and says, thanks, man. Or we'll. We'll put it in the box.

Jade Warshaw

But.

John Deloney

And. And let me tell you why. I. I sometimes will hand it to. But usually I give those checks to one of my kids to tell them to go put it in the box

Jade Warshaw

so they know mom and dad.

John Deloney

They can see. See. Oh, my gosh, mom, what are y' all doing? Or dad and I can. I remember a couple weeks ago, I leaned over, my daughter, looked at the check, and I said. She goes, dad. And I said, remember, it's not our money. And she's like, oh, yeah, you want

Jade Warshaw

to know what, John? I'm so glad you said that. And, Kelly, I'm taking a detour here because the people need to hear this. You know, I'm so glad you said that, because I. I ran into something very similar in my life, so. So I think the way that the world is so digitized, you, it's harder to show your kids the things that you're doing so they can learn from it, because everything's on our phone. So if we're doing something on our phone, they don't necessarily know that that's what we're doing. So case in point, you writing the check. If you had just gone on your phone and did the little, you know, Apple Pay or Zelpa, however they do it, they would have no idea that mom and dad are generous. And this is a monthly rhythm or weekly rhythm that we have of generosity. Right? So taking the time and doing it the manual way. Same thing with, like, I don't know, I'm just gonna go ahead and say it. Like the Bible app on your phone. I'm like, you want to know what? Let me get back out this paper 1. Because my kids need to see me opening up these texts and seeing the text. That's what my mom used to do. So it's like, well, let me see it, Jade.

John Deloney

Even in my house, like, over the last couple of years, my wife has started reading more and more on her phone. And because she used to have a Kindle and now she can just get it an ebook on her phone, I thought she was just texting and texting and texting all the time. Scrolling. Yeah. I was like, hey, who are you texting? And she's like, I'm reading a book. And that. I mean, it affected me. Even, like, your kids and the people around you are just going to see you staring at the screen, and they're going to make up what you're doing on that screen.

Jade Warshaw

So get analog.

John Deloney

Yeah, I do. I. I still. I still order checks. I'm probably one of 10 people you want to know.

Jade Warshaw

Recently, I ordered checks. And the reason was because of this place right here, I forgotten one of the receipts I needed to turn in. And if you don't have the receipt,

John Deloney

you got to check to Ramsey every month.

Jade Warshaw

And they were like, you gotta write a check. I was like, a check?

John Deloney

Yep. I write a check to Ramsey every month because I always lose my receipts when I'm out on the road. Every time. Let's go to Minneapolis, Minnesota and talk to Jane. Jane, we're right up against the clock, so jump right into your question.

Caller

Okay. Thanks for the. Thanks for taking my call, guys. So I am looking for what Dave Ramsley calls what?

John Deloney

You got it?

Caller

I have. I think it's an iceberg question. Not an icebreaker, an iceberg question. So I'm 43 years old. I have $35,250 in debt. It is that. That is exclusively what Dave also lovingly refers to as stupid tax. I have no mortgage. I paid off my home. I've got a 18 year old about to start college, but she already has her associates. I am wondering, since I'm doing this out of order, what is the best way to pay this off? Do I continue to tackle this monthly or do I just cash out some investments, that some of it taps into a little bit of retirement or. I'm not sure exactly what the right path is. So I'll pause there and let you guys talk and then we can go on from there.

Jade Warshaw

I just want to make sure I wrote down the amount of debt correct. Did you say 33 or 35?

Caller

$35,050.

Jade Warshaw

35,000. And you did say you're out of order. So you've got no mortgage. I think that's a great thing. Do you have any money saved? Any cash money?

Caller

Yep. So my net worth even with this 35,000 is a little over 700,000. But all of that's in retirement except for I do have some in a brokerage and I have some in a high yield savings.

Jade Warshaw

Okay, tell me what's in the high yield savings.

Caller

I've got 12,000 there.

Jade Warshaw

Okay. And tell me what's in the broken brokerage.

Caller

Brokerage at 16.

Jade Warshaw

Okay, I think there's your. There's your debt payout money right there.

John Deloney

How much do you make every month?

Caller

Okay.

John Deloney

What's your monthly take home?

Caller

A lot. So the reason that this is an iceberg Question is, because job situation, I am not sure how long I will have it. My daughter has been. I have been working over 80 hours, 90 hours a week for over a year. My daughter is tired of it. I'm tired of it. And where I live currently, the market is not very good.

Jade Warshaw

So all of this is reason to. All of this that you're saying is reason to get this under control and get this debt paid off. Because when you don't have payments, suddenly you have options and you don't have to work jobs that you don't have to work and you don't have to stay in situations that feel unsafe for you or unsustainable for you. So I would. I would reach over and I would pay off this debt and then I would say stack up three to six months of expenses in the meantime. And then if you have to transition jobs, you're in the perfect situation to do that.

Caller

Foreign.

Hey, guys. Rachel Cruz here. And I love summer. There is more fun on the calendar, more time with your people, and way more chances to make memories.

John Deloney

But you know what else there's more of spending.

Caller

Oh, between the extra groceries and gas

Jade Warshaw

and camp fees and family trips, it

Caller

all starts to add up so fast. And before you know it, money stress

Jade Warshaw

starts to steal the fun out of everything. And that is why I love the EveryDollar budget app because it helps you

Caller

plan your money, track your spending, and

Jade Warshaw

find more margin in your budget so

Caller

that you can put extra cash towards the goals that matter most. Enjoy your summer without the money stress.

John Deloney

Download the EveryDollar app in the App

Caller

store or Google Play and start for free. Today,

John Deloney

We're taking your calls live. 888-255-2225. Let's go out to Indianapolis and talk to Veronica. Hey, Veronica. What's up?

Caller

Hi.

John Deloney

How's it going?

Caller

How are you guys? I'm good.

John Deloney

Excellent. Where do we doing Great. How are you?

Caller

I'm good. So I just had a question. So my boyfriend and I are looking to combine our finances. When we get married, I am debt free except for my home mortgage. My boyfriend makes a little over six figures, but he does have 50,000 in student loans in addition to his car payments. So I own my own home and he owns his own separate home. He thinks once we're married, we should tackle his loans together and wants to get my house put in both of our names. But I would like to keep my home, pay off my mortgage, and just kind of have him finish off paying off those loans before we get married. So how would you Advise us to structure this.

Jade Warshaw

Okay.

John Deloney

I mean, he. It sounds like he wants to get married now.

Caller

Now I'm thinking probably in the next, like, year, year and a half or so, like, we'll get engaged.

John Deloney

Well, let me put it this way. When you get married, your stuff and his stuff becomes Yalls stuff.

Caller

Yes. I'm thinking maybe, like, if we move in together, we would just be engaged and have like a long engagement. So then I would be able just to pay off my mortgage and then he would live in the home, but could pay off, like, util.

Jade Warshaw

I think you guys are making it too complex. I think we can make this really simple and clean. Do you want to hear what I'm thinking?

Caller

Okay.

Jade Warshaw

I think the simplest, cleanest way to do this is until you're married. You have your things, your money in your residence. And he has his things, his money in his residence. And then when you guys get married, wherever you guys are at the point of marriage, everything comes. Combines. So if your home is paid off by then it's our house. And yeah, you could add them to the deed. You're. You know, I think you should add

John Deloney

him to the deed. It's Yalls stuff.

Jade Warshaw

And even if you're not. It's not finished. Paid off. Yeah. You still add them to the deed because it's yours and it's ours together. And then if he still has a little bit of debt left, that's ours together. And we'll combine our money and pay. Pay it off together. But I think it starts getting complex when you start doing unit things, but you're not a unit.

Caller

So, like, if we were to be engaged, would you guys advise that he move into my home? Because at that point, we're not married, we're just about to get married, and then just have him aggressively try to pay off those loans while we're engaged.

Jade Warshaw

I wouldn't, because engagement is. I intend to be a unit, but I'm still not a unit yet. So let the intention. Intention, let the intention period play itself out because there's a reason that it's there. Let it play itself out until it's. The intention is actually realized. And, oh, we are a unit. And then because if for some reason, if for some strange reason, because it happens every day, and I would never, you know, project that onto you. But if some reason, one of three things that could take place. Number one is you start living together, you decide, we don't really like each other that much, and you've already got everything tangled up in, mingled up. And then it's like, oh man, that sucks. And then number two, what happens all the time is it kind of just gets comfortable. And before you know it, it's like, I thought we were getting married, but somebody just gets comfortable with this intention to marry situation and they just want to stay there. And then you end up calling me five years later wondering how do I get this guy to budge or vice versa. Maybe he calls and says how do I get this girl to budge? And you've already co. Mingled everything up together and it. And it's just a kind of a woman web there. Or the third thing happens, which is somebody starts to be codependent on the other and it's like I don't even know that I really want to be with this person. But we're all commingled together and my income is based on hers and she's already paid off some of my debt, so I kind of feel like I owe it to her. It gets messy. You're the expert on this.

John Deloney

The question I. Yeah, all three of those things are. Are excellent. And I'll tell you the. I just finished a two year marriage project that ended up in a, In a marriage book that I, I hadn't superintended to write. But it, it. I'm proud of it and it'll be coming out next year. One of the data points that surprised me the most was the everything from life satisfaction to net worth to amount of sex to health outcomes, even between the difference between cohabitating couples and married couples. And my wife and I have, we've. I've talked about openly. We've been. Today's our 24th anniversary. We've been ride or die for almost a quarter century. That's today. But there's.

Caller

Congrats.

John Deloney

Thank you. But there's been seasons where we're only married because of what a pain it would have been to go to the courthouse and unwind everything.

Jade Warshaw

I know that's right.

John Deloney

And so here's why that's important that even people will tell you in Hollywood. Well, that means the relationship's over. No, that means there was a hurdle that we both put up to protect us from ourselves sometimes. And that's a good thing. Right. So my bigger concern for you is if you're not ready for your stuff to be Yalls stuff, then just be his girlfriend and pause the marriage talk for a while.

Caller

Okay.

John Deloney

Because if your identity as a homeowner is more important to you than your identity as a wife and a co creator of an amazing future with another person where Y' all are creating a singular universe, a future for y' all that's gonna. It's gonna have two independent people in it merging over time. But if it's. If your identity is more. This is. I'm a homeowner. I'm a. I'm. I'm a boss. I do my thing. That's awesome. You get to pick that. But don't try to do that and get married, too, because it's going to be you getting in a boat that is your marriage, but you're gonna have one foot in your other life, and it's a recipe for getting yourself hurt, for getting him hurt. And y' all ending up in drifting into two different oceans. Right.

Caller

So are you saying, like, if we were to get engaged to still live apart, I would.

John Deloney

Because actually, you don't have the legal protection unwind the relationship if something goes sideways. And again, like Jade said, I don't want to wish that on you, but Jade and I only have jobs because people's plans don't work out. Out.

Jade Warshaw

Yeah. And I'd also ask, what's the rush? Why. Why do you feel that you. You need to do that so quickly?

Caller

I guess, like, I just wanted to be completely in debt before we, like, intertwine our lives together just to put us in, like, the best financial position to hopefully buy, like, a future home together in cash. I mean, we both have homes of our own that I know we're going to appraise. And so I guess, like, the bigger picture would be to, since I am on baby step six, to be able to buy, like, my next with him in cash.

John Deloney

Okay. But here's all that matters. That means let's get married tomorrow. And I'm gonna help you, and together we're gonna pay your stupid student loans off so fast, and then we're both going to sell our homes and buy this other house, like, or I'm just gonna sit here and wait on you to pay off your 50,000 delaying, like, this future house that we want to buy together. The end date may still be the same, or you may be able to accept. Accelerate it if y' all get married and work together. But it almost sounds like you want to. Like, you did this, and so you clean up your mess, and when your mess is cleaned up, then you can join me. Is that. Is that. Is that part of it?

Jade Warshaw

If it is, it's okay to say that.

Caller

I mean, I just feel like I worked, like, really hard to where, you know, I'm at financially. You know, it took me a really long time to be able to get to baby step six. I put 25 down on my home. And so, you know, I've been picking up extra days at work, but I also know how hard he works. He also picks up extra days, weekends.

John Deloney

So you can look at it, you can look at it two ways. You can look at it. I did all of this. And so until you bring yourself up to my level, I'm going to, I'm, I'm not going to engage in this future thinking with you and this future actions to steps with you. Or you can say, thank God I worked so hard so that when we join, all we have to do is get over this $50,000 hurdle together and then we are off to the races. If you view yourself in like a lifeguard stand at a swimming pool looking down at him swimming and thinking, when you climb up here, then you'll be up here with me. I'll tell you right now, your, your relationship isn't as on the same footing, but if you, if you climb down off that stand and you pull him out of the water and y' all climb up together, man, y' all can accomplish anything.

Jade Warshaw

And if you take that same way of thinking and you transfer it out of money into other areas of life where spiritually, when they get where I am or you know, relationally where they get where I am, you start to realize that it's not really a wonderful way of thinking.

John Deloney

It's two imperfect people trying their best to create a pretty amazing life together.

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John Deloney

Today's scripture of the day is Luke 12:15. And he went on to say to them all, watch out and guard yourselves from every kind of greed because your true life is not made up of the things you own, no matter how rich you may be. Nathan W. Morris says, edit your life ruthlessly and frequently. It's your masterpiece after all.

Jade Warshaw

Love that.

John Deloney

Let's go to Dallas, Texas and talk to Ross. Ross, I need to let you in here. There we go. What's up, Ross?

Caller

Hey, how you guys doing?

John Deloney

Doing great, brother.

Caller

Meet you guys. Good to hear you guys. Yeah, great. Thank you. I have a quick question about a Roth ira. Like, an IRA account. I'm a freelance musician, and I'm poised to make, like, a decent amount of money for the first time, for a few years. I'm not making a ton, and I'm just trying to set myself up for retirement. And I'm not. I'm kind of confused on, like, which type of retirement account to open. Roth IRA versus traditional.

Jade Warshaw

I love that you're asking that question of, is it. The first thing I want to find out is if it's time for you to start investing, if it makes sense for you to start that path yet, because there's kind of a good, better, and best way to look at this. And so we found over time that the best time to start investing so that money can actually stay invested and you don't end up pulling it out for an emergency or anything like that is after you've paid off your debt and after you've stacked up three to six months of expense expenses. Have you done those things?

Caller

We are currently paying off student loan debt and a little bit of credit card debt.

Jade Warshaw

Okay, how much do you have left to go?

Caller

We got about 38,000 in student loan debt, about 2 or 3,000, I think, in credit card debt.

Jade Warshaw

Okay, 2 to 3,000.

Caller

Doing the baby steps recently. Oh, good. I just turned 31.

Jade Warshaw

Okay, great. So what I would advise, and I'm going to tell you the answer to your question, but I would advise, advise for you to pay off the student loans and the credit cards, stack them smallest to largest and. And pay minimums on all of it, but put any and all extra money that you have to that smallest. It's probably a credit card right now, unless you have the student loans broken up into smaller pieces. But whatever the smallest debt is, that's the one that you attack first. And the reason for that is it's going to allow you to invest an amount that really is going to move the needle for you. Um. Cause ideally, we want you investing 15% of your gross income. That's where we want you. And if you can do that, that's. That's the magic number that you have. We have found that over time, if you do that, it really is going to build wealth for you and your family, and it's going to set you up for retirement in a major way. So that's kind of the, you know, underlying thing there. And then the Second part of that is now we want you to save up three to six months of expenses because that's your emergency fund. That's kind of your insurance policy against debt in the future. If you've got. Let's spitball. What would you say is six months of expenses for you?

Caller

About $12,000.

Jade Warshaw

So if you had $12,000 just sitting in a bank, I mean, what would you really need to go into debt for?

Caller

Right.

Jade Warshaw

You know, the car could break down, you could do a roof repair, you could do a new unit.

John Deloney

It depends on what kind of guitar he needs. What kind of music musician are you?

Caller

I'm a classical musician.

Jade Warshaw

Oh, See, like he's got like an upright bass.

John Deloney

Yeah. Or violin. Like, those violins can get real, real expensive.

Caller

Yeah.

Jade Warshaw

What do you play, by the way?

Caller

I play the trombone.

Jade Warshaw

Love that.

John Deloney

How much is like a good OG trombone cost?

Caller

Mine cost about four grand.

John Deloney

Okay.

Jade Warshaw

Okay. Yeah. So you got an. Enough money. 12. 12 grand really is like, if you're saying that that's four, six months of expenses. That's super good. So now you have that money there. If anything pops up, you don't need to use a credit card, you don't need to go back into debt. So that's kind of your buffer against going back into debt. And then from there on, yeah, you're investing 15% of your gross. So whenever you get that check, 15% of the gross amount goes straight over into a Roth ira. Ira, and I would suggest Roth, because that's one where we're paying the taxes upfront. That's really one of the biggest differences. Traditional, you pay the tax when you pull the money out in retirement. And Roth, you pay the taxes up front so that later in retirement you don't have to pay the taxes. And the money is also growing tax free, which is so important not just for you, but for your heirs. Because the goal is you're going to keep investing the. That money's going to keep stacking up and at some point you're going to leave this earth. And that money, whatever was left, is going to transfer you to your heirs. And guess what? They're not going to have to pay taxes on it either, because it's already been. The bill's already been fitted. See what I'm saying?

Caller

Yeah, totally.

Jade Warshaw

So that's kind of the nuts and bolts on it.

John Deloney

Can I celebrate you as a musician thinking about this?

Jade Warshaw

Yeah. So good.

John Deloney

I hang out with a lot of musicians and I've never had the IRA conversation before, so good on you, brother.

Sponsor/Advertisement Voice

Uhhuh.

Jade Warshaw

It's.

Caller

Yeah.

Very, very good.

John Deloney

That's impressive. I. You know what? It's because I hang out with punk rock musicians and he's a classical musician, so maybe, maybe that's, I don't know, more thoughtful.

Jade Warshaw

I don't know.

John Deloney

Hey, listen. The right insurance acts as a shield around your loved ones and your wallet if and when disaster strikes. Our free insurance coverage checkup helps you figure out if you have the right coverage by giving you a personalized action plan with clear next steps. Go to ramseysolution.com checkup to take the coverage checkup and find out if you have the protection. Protection you need. Let's go out to Louisville, Kentucky and take one more call. Let's talk to Andrew. Hey, Andrew, what's up?

Caller

Hey guys, thanks for taking my call.

John Deloney

You got it, brother. What's going on?

Caller

I recently graduated from nurse anesthesia school and this is, you know, the end of an 11 year process for me. And now I'm at the point where I'm trying to put away as much money as possible and also, you know, get my mortgage payments payment down. I'm very lucky to have no student loans. And I'm really trying to see if I'm being a little too aggressive with it because I've been picking up a lot of overtime to try to make this, you know, my, my current plan work.

John Deloney

How old are you?

Caller

I'm 29.

John Deloney

29. Are you married?

Caller

No, I'm not.

John Deloney

So you're just cruising and crushing all by yourself?

Caller

Yep. Cruising, crushing. It's been a good six months since I got out of school.

Jade Warshaw

Congrats on that degree. Really, really good.

Caller

Well, thank you.

Jade Warshaw

And how did you deal with no student loans?

Caller

I was very, very fortunate. My mom and dad helped with my bachelor degree and my master degree and I was a travel nurse for two years, which allowed me to save up enough to pay for my graduate or my, my doctorate program.

John Deloney

All right, so hold on, you. I want you to change your story up a little bit, okay? And then we'll get to the answer of your question. Yes, you were fortunate and you had some help along the way. But unlike me, when I got my first big boy job, you made a choice and that was to save money because you had a different vision for your life down the road and it allowed you to cash flow a really critically important credentialing and education that now has changed your future in a pretty dramatic way. So, yes, you get, you were pretty fortunate and you got some support, but you also, you made some pretty important choices on your own. And I'm proud of you for that. Do. That's good.

Jade Warshaw

So.

Caller

Well, thank you. Thank you.

Jade Warshaw

So how aggressive are you? I mean you're like, am I being, am I, am I going to ham. Let's decide how much are you putting aside like percentage wise for retirement and how much are you saving towards your mortgage?

Caller

So my mortgage currently it's a 5.4, 5.49%. It's a $3,100 a month mortgage and I'm paying 6,100 every month towards that through retirement funds. My employer contributes 8.5% of my monthly take home pay. So that ends up being around 2,500 that they contribute. I also max out my 403B and my 457, so that is right around 2,500 each. And then through a brokerage account, I'm putting a little over $1,000. So total right around 8,500amonth.

Jade Warshaw

I'm putting so much percentage of your take home. Is that

Caller

my take home if I don't work any overtime would be 17,000amonth. With the overtime I've been working, that can be anywhere from 25 to 30,000amonth. Okay, so here's what I'm putting away a good amount.

Jade Warshaw

You are. Here's what I would suggest. I would suggest capping at, for the time being, I would suggest bringing your investing to 15. So 15 of your gross. Okay. Not of your take home, 15 of your gross. And that's a great place to start. You're going to build plenty of wealth like that and then whatever's left. If you want to be aggressive about paying off your mortgage, you can do that. Now the question is how aggressive? Because we do want you to enjoy life a little bit.

John Deloney

Go on some dates.

Jade Warshaw

Dude spent 11 years and go to

John Deloney

some games, go have some fun, get some friends, go do, go bowling or trivia nights and stuff.

Jade Warshaw

You're 29. You have so much time. I mean, this is, this is the time.

John Deloney

Here's a question I want you to ask. Okay, we're going to run out of time here. What kind of life do you want to have? And you've worked so hard to give yourself tons of options. I want you to have some joy in your life. Remember, there's only, there's ultimately only one way to financial peace and that's to walk daily with a prince of peace, Christ Jesus. This has been the Ramsey Show. Thanks for joining us.