Don’t Depend on Anyone Else To Fix Your Financial Mess

Live from Nashville, Tennessee, this is the Ramsey Show. I'm John Deloney, joined by my good friend George Camel, and we are talking everything money and building wealth and doing work that you actually want to show up for. We're talking about your marriage, your relationships, your mental and emotional health, whatever you got going on in your life, we're here for you. 888-825-5225.. That's 888-825-5225..

When you put it that way, John, it is a little frightening.

Nah. Nah.

We have Kelly Daniel producing today, so I think we're in good hands.

I know Grandpa is out of the building and Fun Ant is here. That's awesome. Very cool. All right. Let's go out to San Diego, California, and talk to Alexander.

Hey, how's it going, gentlemen?

Good. What's up, man?

Yeah. So I'm currently on military training exercise and I'm just going over my finances and stuff like that. And I came across the Baby Steps and just really revamped my whole, envisioning about, like my finances, trying to get my life back on track. I'm 130 years old, married to an amazing wife. And my question is just trying to handle unity and transparency in the household when it comes to finances and trying to get on the page.

So do me a quick favor. Talk directly into the microphone. So you're telling me you found the Baby Steps, you stumbled on us on one of the internet's channels and it's ringing a bell with you, and you want to know how you can be more transparent and united with your wife when it comes to money conversations, is that right?

So I feel like we're on the same page. We go over our finances. We talk about how we want to change and we're both on the same page. It's just the fact that, when it comes to holding each other accountable and own over finances, if one of us expends too much money on certain things, my wife, for example, I would confront her about it and then she would make the statement of she works and that she wants to be treated like a child. But I want us to just be on the same page and worry about the future rather than the now moment, and I'm trying to get us out of debt and I just feel like we're not on the same page.

Yeah, there are. Here's a personal question. Do you treat her like a child?

Only when it comes to things I'm passionate about. There you go.

So her accusations to you are right. My guess is you come at her, you'll have a mission, you have a plan, you've got a military plane, and you know how to succeed in this operation.

It's black and white. Do this. And if you don't, you didn't do this. You failed. We failed the mission.

And for her, she's like, let's just go ahead and get guacamole while we're out. And you see that as mission failure. And she's like, dude, what are you doing? So you're not going to like my answer. I can make up something or I can just tell you the straight up truth.

You can tell me the straight up truth.

Oh, dang it. I wanted to. I was so excited for the alternative.

You can make up something and then tell me the truth. How about that?

I'll just go straight with the truth. All right. I'm going to over gender this, and that's not fair, because it's not applicable to everybody. It just tends to be the way we hear this on the show. And you are this to a T.

That's beautiful.

Is that fair?

Yeah, I appreciate that a lot. Thank you.

So what does, um, underneath the charts and the graphs and the money in the, I want to drive nicer cars and finally be able to buy a house in San Diego, California, underneath all that practice with me, what's your heart on this deal? What scares you?

Um, honestly, I feel like I'm 27 and I'm just now educating myself on all this, and five years from now, I just want to be able to provide and be the man that, you know, I didn't have growing up as a father figure, just like, take care of my wife.

If she hears those words, it's going to change her entire attitude toward this plan. And if you couple that with, Hey, I want to make this fun. I don't want to make this feel like bootcamp. What would make this fun for you? What are some things we can do to celebrate the wins?

Do you get, do you get worked up? Do you have like a, when you get fired up, do you get pretty worked up?

Uh, I never stress out.

No, no, no. I mean, I'll just say it this way, cause we're getting up against the clock.

Oh, like passionate?

I don't yell and I don't scream. That's just not how I roll. But George will tell you, my wife will tell you, when I get fired up about something, you can feel the nuclear reactor in my chest. You can feel it. Yeah.

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

Welcome back to the Ramsey show. I'm John Deloney, joined by George Camel, and I want you to stop what you're doing, because I'm about to ruin the image and the style that you're used to. I remember that song. Hey, listen, don't miss your chance to join us on the live, like no one else cruise. The cruise, a seven day cruise.

Wow. There was a lot going on there.

We're not going to Key Largo or Montego.

That's the next cruise. Hopefully.

Hopefully.

When's it happening, John?

It's going to happen March 22nd through 29th, 2025.

Which means you've got time to plan, time to budget.

Well, here's what's awesome.

Time to get your deposit in.

This is for people who have paid their debts off. Yes. They have their fully funded emergency fund.

I think Turks and Caicos just sounds the fanciest to me.

I've been to zero of these places.

Yeah, anything's fancy to me, because I've never been on a cruise in my adult life.

I went to Arby's the other night. I just stopped for a minute and took it all in. I was like, this is a nice place.

Yeah, I'm excited just to get to go on this cruise. Exactly. And you're going to provide some entertainment. I heard you're going to be doing all the guitar solos from your favorite songs. Just the solos.

I heard you're going to be in the corner doing stand up jokes.

I'm actually thinking about it. That might be one reason to go.

You should say that off air, so that people will actually put down their deposit. That's fair. It's going to be tough.

Maybe we'll do a comedic duo. We'll be like a Steve Martin, Martin Short thing.

That's probably not going to happen. That won't happen. But I think it could be great. It could be great. We'll do that in the Bahamas.

Why there?

Let's go out to Alberta, Canada, and talk to Jesse. What's up, Jesse?

Hi there. Thanks for taking my call.

Of course. What's going on?

Me and my husband have paid off $200,000 in debt in the past two years.

Amazing.

What did you sell?

Pardon?

Did you sell something?

Well, I sold one house. We still have four mortgages. We still have about $240,000 in debt with our four houses. I'm wondering what you would recommend, how to go about this, what kind of action should we take?

So you've got your primary home. Does that have a mortgage on it?

Yes. I owe $80,000 on our primary home.

Okay. Then you've got some rental properties. What are these?

Yeah. So we have three rental properties, one owing $26,000, one owing $55,000, and one owing $81,000..

Okay. And you have no other debt?

No other debt.

Wonderful. Okay. Well, your smallest one at $26,000.. Now you don't really follow a debt snowball per se when it comes to mortgages, unless it just works out that way. So generally we would say, hey, pay off your primary first.

Yeah. How much money do you make?

How much money are we making on the properties or personally?

What is your take home income? What's on your tax return?

Well, I'm on maternity leave right now. But when I was working prior to that, I made before taxes about $225,000 and my husband was about $150,000, I think.

What will you make this time next year?

I'm thinking probably about $150,000.

You'll be at $150,000?

For me. Yeah. And then he'll probably be around, yeah, that $120,000 mark or more.

Okay. So let's say you're bringing in $300,000, could you still throw $100,000 a year toward your debts? Like you have been?

Yeah.

There we go. So either way, this plan is done.

So you think we shouldn't sell one of them to pay off?

I would.

Oh, I mean, if one of them gives you a headache, sure. But because you could pay all this off in two and a half years, if you said, we love them all, we want to keep them, we're going to knock it out in two years, we'd say, all right, fine. But if one of them, you know, choose your least favorite and sell that one, and it speeds up this whole process.

And that's what-, Jessie, I have had the fortune over the last four years, since I started working at Ramsey, to actually spend time around real estate people.

I actually do sell real estate.

Oh, you do?

Yeah. So you sell it? I sell it. And I, like, I bought my first property when I was 19 and I just started buying them. So we had five and then I just sold one.

You're the first real estate person I've ever talked to that. it doesn't feel like we have to pry a property from their fingers.

What John is saying is you're level-headed, Jessie.

Well, thank you.

Maybe you're a medicated real estate person.

So is there one of these that, like, it's been a real burden, it's not been fun, the tenants that we've had issues, it's not cash flowing very well. Is there one of those? you go, hey, we could sell this one, use the net proceeds and start to pay all these off?

Okay. And then maybe invest in something bigger is what we're hoping, we're thinking, maybe if we sell one, we'll get into more of the Ramsey mindset and then we'll be able to buy.

an apartment building. Let's knock out all of the debt first and then, from there on out, we're going to attempt to pay cash.

Yes.

Because think about all of those properties, cash flowing with zero debt attached to them. How quickly could you stack up, along with your amazing income, how quickly could you stack up $300,000? $400,000?? Yeah.

So let me ask you this. On the house that you owe 80, on, what's the equity in that home?

So on our personal home, we could sell it for probably $300,000.

What about the other rental home that you owe 80 on?

The other one, about probably $289,000.

Okay. What's the equity accrued on that one?

We could probably sell that one for $150,000.

Okay. So you'd probably net somewhere around $80,000 and $90,000 selling that one. And then you could use that to pay off your primary instantly, freeing up your mortgage.

payment. And then almost paying off the one that you owe $26,000 on. And given your take-home income, you would pay that $26,000 off that month too. So if you sell the house that you owe 55 on, that pays for essentially, that, and a little bit more of your take-home income pays for your primary residence in the 26.. And then you and your husband shake hands, y'all high-five each other, and y'all go scorched earth and pay this other one off.

So pretty much in one year, you will have.

Three paid-for houses.

Three paid-for properties. One of those one you live in. That's a great feeling and a lot of cash flow on top of your incomes going up in the future. So that's where I tell you, pay cash in the future, reduce your risk, increase your peace, go slow. You're doing amazing.

Awesome. Well, thank you so much.

Absolutely. You got it. You got it. You got it. All right, George.

Why were you wrong?

She just didn't sound like a real estate person.

That is fair. Usually they're a little bit more... They're defensive and starry-eyed about why they should keep everything and get more.

Get more.

And she was saying, I want to reduce.

She asked the question, should I sell one? I just have never heard a real estate person...

Real estate. people never want to let go. No.

I've heard Dave talk about selling two or three of his children before he would sell his homes.

He does love his real estate. Yeah, he does.

Hey, 888-825-5225.

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This is the Ramsey Show, 888-825-5225.

Hi, how are you today?

I'm good, and you?

I'm doing well.

Awesome. What's up?

So I am on Baby Step 2.

What do you make?

$85,000 a year before tax.

So you could knock this out. Let's just play out two scenarios. One is you knock it out on your own, and you're done with this within what? I'm going to give it eight months. You could pay this off, make an $85,000, with that being your only debt.

Definitely. Yeah.

That'd be fun. Now, here's the upside of that. You are free to move about the country. If you find a better job, if you've got a toxic boss, if things go down at work, you can just leave.

As George just said, that, I puckered up.

Right.

So I'm not saying that's a terrible deal.

That's not rhetorical. You tell me. What do you think? If you love this job, and you never want to leave, and it's all good and great, and wonderful and grand, maybe that's a risk worth taking.

Honestly, yeah. I don't have a desire to leave right now. I could see myself here for a long time. I'm feeling pretty comfortable with everything.

And what if you get a headhunter who goes, oh my gosh, Chloe's amazing. We'll pay you $125,000 a year. And you go, ah, I can't leave.

Or your new boss goes, hey, a headhunter just called. They're going to pay me $250,000.. I'm out. Here's the new boss, Dan. And Dan eats a lot of Cheetos, and he has braces, and he's 44, and he's gross.

Right.

So who knows? I guess this, I've learned the hard way over the years that the one thing I won't sell is time.

Okay.

Well, I take it in perspective. So, like when I took this job, if I quit today, I can't go start another show, right? For X number of years. Right? I signed that.

Right.

Yeah.

I see what you mean.

That's a gamble you take. How much have you paid off?

About $5,000 in credit card debt, and then another $6,000 in private student loans.

Great. How long did that take?

I own my car.

How long did it take?

That's about six months. I got really serious in January. So maybe closer to seven.

So my math was right. Eight months, folks. Intensity, probably closer to seven. Now that you're going to get aggressive, you could just knock this out and be free.

Yeah. I think that makes sense.

Chloe, dude. You know what to do. It just feels baller, dude. I just don't think it counts. To just do eight months, and it's mine.

If it was like, they're going to forgive a hundred grand and I need to stay there a year, I'd probably be like, all right, I can stick out.

Yeah. No matter what. Do that.

So I don't want to villainize this. It's a nice benefit, but I just don't think the juice is worth the squeeze on this one.

Okay. Yeah. Thank you. I appreciate that. That definitely gives me a different perspective on it.

Excellent. Excellent.

That's what we're here for.

And George, I'm trying to play this out. So if I owed $50,000, nope, because that would be three years for every 10 grand.

They're paying off 10K a year. Yeah.

And each 10K owes you three years. That's a lot.

I don't know if it accumulates, I'm guessing is you just have to stay three years beyond whatever they forgave.

It's a $3,300 raise a year.

But I don't know. I just feel like I can go make 10K with a side hustle and not have to be tied down.

I was just thinking, I can make 33 a year, right? Because that's what the payout is. It's a $3,300 a year raise over three years is basically what that is. And I would go, you can Uber that.

It's not really a gift. It's kind of like a loan with strings attached. And if you follow our thing, then you don't have to worry about it. Yeah. So I don't know.

No, thank you. Rules and restrictions apply. Let's go out to Philadelphia, where I was born and raised, on the playground. I spent most of my days. Let's talk to Tom.

Hey, John and George. Thanks for taking my call.

You got it. What's up, brother?

So I'm looking for some guidance. I'm 33, married. We have two kids and hopefully we'll have another in the springtime of next year. We're currently in baby steps four, five, six, and seven. Now the one thing is with the house we're in, we will be looking to upgrade sometime in the near future.

Well, Tom, the good news is paying off your mortgage is stacking up cash. It's a forced savings plan. And so here's what I did. We paid off our home and then we rolled all of that equity, 100% equity, into that next home purchase. And so that's what you're going to be able to do.

Okay. Why don't you just buy the house now?

Well, we've been trying. So it's crazy here, the housing market. We've found a few homes that we love. The one thing is we don't want to rush, right? Because the home we're in has everything we need, but we would want, you know, a little bit bigger of a yard, some more room for the kids and what have you.

Makes sense. That's wise. Are you working with a real estate agent right now?

We are. Yeah. We have a great real estate agent up here. She's been a saint, very patient with us, as we, you know, look for dozens of homes at a time and just say, no, not quite right.

That's the game. But you guys are doing the right thing. Unless there's some crazy issue, an emergency, where you have to pause and stack up cash, then I would just keep on. You got the emergency fund, you know, your health insurance, you know, you're out of pocket max, not your first rodeo with kids. And so just keep on the baby steps, man.

Awesome. All right, guys. Well, I really appreciate the time. Thanks for everything you're doing.

You got it, my brother. George, I have been guilty over time of planning for things in the future that may or may not happen. Having another kid, getting another job, getting another raise, whatever. The Astros finally trading for somebody that they could win.

Let's not get crazy, John.

I know.

I relate.

One of the challenges, I think, as he was talking about, we hear this all the time, it's about the money part. I just feel like I can get one step closer to this imaginary future if I just have a bunch of cash versus. let's just keep doing the next right thing and the next right thing. And if you need to buy a house, then we'll sell yours. That's fine.

And that's why I like to force the discipline. Get that money out of here. I don't want to see it. Put it in the house, put it in the 401k. Don't allow me to touch it because I'm human.

Because even the best of us, it gets us.

I will screw this up.

888-825-5225.

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Wow. That was inspiring, John. I feel like it's my civic duty now to hit the subscribe button.

That's where we are.

It's an American right that I get to have.

It used to be, I'm going to put a sign in my yard, or it used to be, I'm going to go knock on doors. Now it's as simple as, hey, well, you hit subscribe and everyone in your geolocation will begin to get this feed a little bit more, and it will begin to encourage people to say, hey, you know, you don't have to have that car. You don't have to have that much angst in your home. You don't have to have that kind of debt. And that means you don't have to have that kind of, ah, going on all the time.

That's what we need. There you go.

Let's go out to San Diego, California, and talk to Sarah with an H. What's up, Sarah?

Hi, I want to take a quick moment before I ask my question to just say thank you to the whole Ramsey team. My mom took Financial Peace University in the 90s and I took it 17 years ago. We're both multimillionaires now and you guys have truly changed our family tree. So I just wanted to say thank you.

That's amazing. Thank you for sharing, Sarah.

Can I push back on one thing? you said? Yes. We didn't do anything.

Especially John and I. We were, yeah.

Yeah. George wasn't born yet when Dave started, but we run our mouth on the radio. You are the one, you and your mom are the ones that, day in, day out, week in and week out, put money away, didn't borrow money, lived a different kind of life so that you can have this moment right now. So hear us say, we accept your gratitude, but we want you to hear us say we're proud of you.

It's awesome. Thank you.

So what's up?

So I have a 13-year-old daughter and five years ago there was an accident and she got third degree burns. She received $185,000, which she'll be able to access when she's 18.. I've never told her about the money and I'm wondering when I should. Do I wait until she's 18? Do I tell her now?

Yeah, that's a great question. I would, 13 is pretty young and I have a 14-year-old and I've got an eight-year-old and I spent my career working with college kids. I would wait until we get much closer and the conversation around that money, I would have it as directed as possible, meaning I would really dig into the, where do we want to go to college? How are we going to pay for housing? What do we want to do when we get there?

I like that.

Do you see any sense where you're, I mean, 13,. who knows? There's a fabulous, I think it's a Mark Twain quote that says, when I was 14, my dad was the dumbest guy in the world. And when I came home at 21,, I was stunned at how much my dad had learned in seven years. It is, so entering into 14,, 15, 16, that's just the wild west.

So I've been teaching her the principles. We started with Dave Jr. many, many years ago, but of my three children, she's definitely my impulsive spender, can't save a penny of the three.

So yeah, I think. continuing to instill those lessons, letting her practice along the way and letting her be a part of tips, letting her be a part of saving, letting her be a part of, hey, mom, I want to buy that. And you saying I'll buy half of it, but you're going to have to save for it, and letting her feel what the frustration of holding off on a purchase and then the excitement about buying and then also the frustration that money's gone. now. Let her practice.

Yeah.

Do you lose all custodianship of that money when she turns 18?

Yes. I had the option to put it in some sort of like annuity type plan, and I didn't want to do that because I was worried she would sell it for 40% or whatever kind of scam you can get roped into. So I went for the full thumb, but I am terrified that she might make bad choices with it.

Yeah. You're a good parent. We all are.

You got five years and a lot of growth and maturity to do exactly what your mom did with you and go, here's a wise way to handle money. Here's the way that's caused us to build wealth and have more peace in our house. And here's what it's going to take for you to follow in those footsteps. And if she learns that money comes from work and she learns the dignity of earning as she gets her first job and saves up for that thing, then money will just make her more of whatever she is. And the goal for every parent, of course, is I want my kid to be generous and wise and diligent with the money and not wasteful and impulsive.

Every 18-year-old is impulsive too, and 21-year-olds are impulsive. My friends with full sleeve tattoos tell their kids, not until you're 25, because you're going to think something's really cool when you're 24, and that band is not that cool, right? So similar here, you know what would be a fun exercise for you guys to do?

John, here's a fun fact. From 18 to 60, if you just park that money, 185 grand, turns into $12 million. You didn't add a penny. That's mind-blowing. That might change your mind about what to do with this money.

That's also Greek to an 18-year-old. We'll be right back.

Hey guys, George Camel, here. No matter what platform you use for news or entertainment, you and I both know it is way too hard to keep your feed from getting junked up with bad content. I know I'm not the only one who's gone searching for The Ramsay Show, only to find myself two paws and 12 videos deep in a kitten hole on YouTube, which is great, but not what I'm looking for right now. And heck, if you're tuning into this digitally, there's probably some weird, scammy, suggested content trying to play in the sidebar right now.

Cryptocurrency.

See what I mean?

And that's why I love the Ramsay Network app. It is the best place for uninterrupted, easy access to the content that keeps you focused on your goals. It's all Ramsay, all the time. Which means you don't have to worry about getting off track. With over 7,000 hours of Ramsay content, yep, you heard that right, 7,000..

Live from Nashville, Tennessee, this is The Ramsay Show. I'm John Deloney, joined by George Campbell. We're taking your money, your work, your relationships, your emotional and psychological health. calls from all over planet Earth. 888-825-5225..

I'm doing great. When you opened the show, you said, we're taking your money. And it was a long pause. And I thought, this might be a different show. Yeah.

I'm actually happy to take your money. You can Venmo it.

I stand corrected.

At George Campbell.

Or at.

Oh, I'm happy to. I'm happy to. Let's go right down the street to Michael, right here in Nashville, Tennessee. What's up, Michael? How we doing, man?

Hey, how's it going, gentlemen?

Good. What's up?

So I got a kind of doozy one for y'all.

Ooh, I like this. Bring it.

So, a couple of weeks ago, my mother called me, or she actually flew out from California to Nashville to come see me in person. She said that the family friend who she's known for a long time passed away.

Ooh, wow. I think I know where this is going. What's special about this neighbor?

Well, now, in the will, he's designated me as his son.

Okay.

That's a dead giveaway.

Yeah.

And I've asked my mom, like, why would he? Like, I've never met this man, never met him before in my life. He used to send me birthday cards every year for my birthday. And whenever I would ask who this guy was, she would always say, oh, he's just a friend. He's a friend of mine, known him for a long time.

Okay.

So dealing with all that, and then having to deal with the funeral arrangements, because, since I was technically the next of kin, I had to be the one to start the process. And it's just been a wild week and a half, two weeks for me.

Hey, hold on. Hold on a second. Sit with me for a second on that.

No, I'm not married. Don't have kids. Okay.

How old are you?

31. Okay.

So I need you to metabolize what I'm about to say.

Yeah. How it's structured, if I could go into a little bit more on how, he, so how it's structured is, we won't necessarily be able to collect the liquid cash that's in it, because it's all tied to stocks and mutual funds and such. So we would, me and my mom are splitting the dividends, the interest, and whatever income that trust brings in, which is about on average, according to the lawyer, about half a million a year.

Why can't you sell the stocks inside that trust if you're the sole heir?

Well, the trustee is his lawyer. So he has complete authority and discretion over how the trust is given out. And he feels that this is the best way, since I've never handled this kind of cash before.

So, Michael, before the day is over, I would hire an attorney. And if you don't have one, I'll send you the name of the guy that I use here in town. Because you live in my neighborhood. But I would have your attorney look over these documents.

So, and, you know, further into the how it's structured. when she passes on, I will be inheriting that half of the income. And when I turn 60 years old, the trust will close. And then I will be essentially handed the check of whatever the principal is in that trust.

Okay.

Well, here's the deal, Michael. It's hard to give you in a minute to tell you exactly what to do with all of this. But here's what the team you need to build around you. Like John said, you need a good attorney. You need a good insurance broker.

No.

Okay. That's probably going to be soon in your future. A good investment pro as well, because even the money that's coming in that you're peeling off of this thing, you're going to be investing a big chunk of this. And then, lastly, a good tax pro. A CPA in your corner to help you minimize the amount of taxes you're paying on all of this income and help you strategize.

I call a lawyer first.

Yes. Yeah. Those are the two.

Because, Michael, I'm going to get the nuts and bolts of this thing. What did your mom tell you? Did y'all have a good, open conversation?

It was a good conversation. She told me the reason why he didn't really stick around. His issue was he couldn't commit. He wasn't a bad guy per se.

Michael, Michael, I'm the father of two kids. He was not a good man.

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Welcome back to the Ramsey Show, 888-825-5225.

I know I'm getting old and I'm like, thank God for the rain. Yeah, I love rain. Don't have to water the grass. It's been so parched out there.

Today's question of the day comes from Molly in West Virginia.

She says, I believe my father-in-law has been tricked into a marriage by a younger woman. His wife passed away a year ago and the new wife took advantage of his loneliness. My husband doesn't seem to see what I see. How can I let go and not be bothered by the fact that she's using him? I don't want to be fake and pretend everything's great when I see a lot of issues.

Well, and there's also, is this like a, just his name just slipped my mind, but like an Anna Nicole Smith situation, where he's 90 and she's 25? Or is it he is 70 and she's 55, right? So I don't know what younger woman means here.

So she needs to address this with her husband. I don't know that she needs to be involved as much. Does the son need to talk to dad?

No. I mean, if dad is, I think what needs to happen here is Molly needs to call this new woman and take her to lunch and get to know her. Because right now, Molly's creating stories in her mind, and then her body's responding to those stories. She's acting upon those stories. She's getting enraged by those stories.

Yeah, the operative word here has been tricked into a marriage. I don't know how you trick someone, because they have to sign something and say, I agree to this marriage. Like, I feel like I tricked my wife into the marriage, but that's for different reasons.

Correct.

But this one feels like she's saying.

I think her exact words were, George tricked me. Right.

I think she gave in. That was relentless. Persnickety, even. So, yeah, there's too much, we don't know. Molly, I hope you call the show, because I want to learn more about this situation.

Yeah, I don't feel like I have enough information here to pass on this. The one thing I will tell you is, spend as little time possible making up stories about why other people are doing what they're doing, what they're thinking. And, by the way, we all do this, listeners. You know that politician. He's just.

Oh, I didn't think about that.

This is turning into a country song real fast. This is a very West Virginia call, right?

100%.

So, I would reach out, Molly, and.

At the end of the day, she can't control father-in-law and his decisions. Whatever it is, financially, relationally. So, there's a part that she just has to also let go and go, well, I did my part. I'm going to sleep well at night, knowing I tried to warn him.

Yeah. So, how can I let go? I want to lean into the relationship. And if it's confirmed, then I can walk away. I can set up boundaries.

Hey, guys. What's happening?

Man, we are making it rain out here, literally. It's pouring.

It's the summer of George around here.

What's up?

All right. So, a little bit of a back story. I called in about three years ago. And Dave put me on the right track. We just paid off all of our debt.

You're close. Congrats, brother.

All right. So, here's where it gets interesting. So, where we currently live, it's in a very congested area. We each drive about an hour to work every day. Sometimes that commute could be two hours, really, depending on the traffic and what's going on.

Can you afford it?

I feel like I can.

What's your current house worth?

We're figuring out the 25% rule. We feel like we're way under that.

Oh, okay. So, what would your commute become once you move?

30 minutes.

I like that. So, what are the downsides here?

I guess the downsides would be, of course, like I said, our house is almost paid off, and we'd probably be taking on about a $100,000 mortgage by the time we met, after closing costs and all that sort of stuff.

You'd be taking a mortgage of $100,000?

Yeah, that's probably what we're looking at.

I would do this tomorrow.

And how quickly will that get paid off with your income?

Well, we're going to do a 15-year, but I feel like we could probably pay that off in five or six.

What's your income, household?

We're making $150,000 a year combined.

Okay. Could you throw upwards of $50,000 a year toward the mortgage and live off the $100,000??

I don't see why not.

Well, then it's gone in two years.

You'd be debt-free in two years.

That's basic math.

And we've been getting rice for three years.

So there you go. Just set a goal. It doesn't need to be crazy, but set a goal and say, in two years, this new mortgage is going to be paid off. And instead of one year from now, we'll be debt-free, if we move, it'll be two. Whoop-dee-doo.

And, George, I'm becoming more and more, I don't know if it's bullish or bearish, I'm becoming more careful about how I can buy back time.

Hundreds of hours a year.

One way every day.

Right.

And over the course of a week, you're buying back five hours. So ask yourself, what would we charge, what would we pay for half a day together every week? That turns into, you just bought a full day of time together, not including sleeping time, but we bought ten hours every two weeks, just in commute time. Gotcha. I mean, I would do this tomorrow.

Here's the strawberry on the top. So the house that we're selling probably can use about $90,000 of work, but we can currently sell it at $300,000, as is, no problem tomorrow. So this will be a new construction home, brand new house.

Sell it tomorrow. Call the realtor today, go to ramsaysolutions.com-

Slash agent.

Slash agent. Get yourself a SmartVestor Pro, I'm sorry, a Real Estate Pro, and get that thing on the market in the morning.

Awesome.

Congratulations, man. You're going to have to get a chicken coop, you're going to have to get overalls, a straw hat, the whole thing, brother.

Could be a bunker, could be cool.

Yes, you're going to have to get a bunch of deep freezers, and ask people if they've heard about meat prices. You're going to be the whole out, like, you're going to be one of my neighbors. now. I can't wait, dude. Congratulations.

How you doing, John?

I'm good, man. What's up?

I've got a couple questions. I'm getting married in a month. We're looking to buy a house, hopefully this week. I'm just wondering if we're making the right moves here.

That's a lot, man.

You're making two of the biggest life decisions and throwing the biggest party of your life, with all of the headache and chaos and joy all at once. Why is the house so urgent?

We are currently staying with a friend, per se, of kind of living.

Why can't you rent a place?

I can, but I moved in with them, and we did the bathrooms. I do construction for a living. We're remodeling.

Tell me about—you all have a house already picked out?

Yes, we have one picked out. It's $450,000. is what I'm hoping I can get it for.

How much money you got?

I have about $400,000.

Are we paying cash for this thing?

I don't know that we want to pay all cash.

You do.

But we definitely would want to put 50% to 70% down.

Why wouldn't you pay cash for this?

I don't know.

Yeah, I would.

Why did you save up $400,000?

Well, I sold my house. I bought low and I sold high, so I did very well when I sold.

Amazing. And you guys have no debt currently?

No debt. Cars are paid off.

What do you do for a living?

I do bathroom and kitchen.

What does she do for a living?

She works in a salon. Actually just opened her own salon.

Can I paint a picture of a world for you?

Yeah.

She does hair. She's pretty good at it, right?

Yeah.

You guys are both in fields that are very important, and they can also be very feast and famine. Feast or famine. If there's an economic downturn, people put off redoing their bathrooms. If the economy is doing great, everybody wants their bathroom redone. And when the economy is great, everybody wants their hair done and colored and all that.

Right.

You have $400,000 saved up. She's got $100,000 and something saved up. Y'all could pay cash for this house and still have $75,000 to $100,000 in cash in the high-yield savings account. Bro, I wouldn't think twice about this.

Think about it this way, Ryan. If you were sitting in a paid-for...

We're ready to pull the trigger. That's for sure. I just don't know that we want...

Well, I think it hurts to let go of that money.

There is a smarter move to do with the money.

Okay, let me put it this way. If you hate having a paid-for house, come Christmas. You hate not having a house payment. You and your wife are like, man, our new marriage is great. Our jobs are going great.

So, Ryan, think about that. It helps to flip the situation.

I pay for cash for everything.

So why go into debt now, when you can avoid it entirely and still have money left over?

I'm jealous of you right now. That's what I'm saying.

Well.

Like you've won. You're going to enter into a new marriage as a tradesman, man. And you know what else it's going to allow you to do? You know those customers that you have to take those reno jobs because they're big jobs, but you know, right when you meet them and they walk you through what they want done, you're like, oh, this is going to be awful. You get to pass.

Absolutely.

So, Ryan, think about this. You're sitting in a paid-for $450,000 home. Would you have a discussion with your wife when you go, hey, you think we should take out a loan at 7% interest. to do some fun investing with that money? You would go, no, that's way too risky.

Well, there's a lot of rehab that needs to be done at the house.

But you're a rehab guy.

And you're going to have $75,000 to play with between emergency fund and whatever, you know, renovation money plus your future income where you don't have a mortgage payment. So you're going to be able to cash flow literally anything in life. And if one day she wants to shut the salon down to stay home with the kids, she gets to do that without a fight. And we just go, cool. We're going to be fine.

And nothing helps a marriage like bathroom and kitchen renovations. That was a lie. I just made that up. That'll be hard.

Yeah, that lead time is pretty hard.

So, help me and George out. We're jawing at you. Help us out. I don't understand your reluctance or your hesitancy.

Just the security of having a good chunk of change.

That's it. So I'm going to suggest you consider exchanging that chunk of change, the security you feel there, with having a home that no one can take from you.

It's true.

At the end of the day, brother, all I can do is tell you what I would do in my house. George, do you?

Yeah. I mean, I've done it, Ryan, and I don't regret it. John and I both paid off houses and we go, all right, we're happy here. Not going to go take out a loan to invest. Don't miss the chunk of change.

Combined with probably $130,000, $140,000.

$140,000, no payments in Chicago. You could start throwing away a whole lot into investments and savings per year, right? With no payments in the world?

Mm-hmm.

We can build, back up some security, but this time it's different, because we're not paying a lender, we're not paying interest, we're paying ourselves. We're building for our future instead of building someone else a big building in downtown Chicago.

Mm-hmm.

So it's a different mindset. And it's a big paradigm shift compared to what culture will tell you. And I promise you, if you scroll Instagram, there's going to be some dude being like, Ryan, I got 10X your money, bro, just give it to me, we'll leverage it all, it's going to be great. And guess what? You're not going to sleep well at night.

Or if nothing else, brother, you're going to put that, let's say, you decided to take out a $200,000 mortgage, you put half down, you're going to put that money in a high-yield savings account at 5%, but you're going to be paying 7% on the mortgage.

Wishing they had a half million dollars in cash to buy a $400,000 house,

especially in the trades.

Start your marriage off with peace. If you hate having less money fights, you can start some for fun. How's that? That's my promise to you.

Congratulations, man. When do you get married?

Next month.

I love it. We're going to send you Financial Peace University as a wedding gift from John and I, and you don't even have to send us cake in the mail or anything.

We're also going to send you one year of EveryDollar, the best budgeting app on the planet, so you and your wife can budget your debt-free life, and y'all can decide how fun it is to spend money. And, like George said, if y'all just want to start some fights, y'all can do that too. This is The Ramsey Show. We'll be right back.

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Welcome back to The Ramsey Show, 888-825-5225.

Hey, doing good. How are you?

Excellent, excellent. What's up?

Yeah, so right now I'm 19 years old, and me and my wife, we just bought our first house earlier this year in February.

Wait, you're 19?

Yes, sir.

What's the secret? Every 19-year-old wants to know.

Work hard, I guess. I started when I was 14..

But you're married too? I was still trying to find someone to go to a Chinese buffet with me when I was 19..

That may have been your problem, John. Not the most romantic.

As I said it, I thought that was the issue. Okay, so you're married, 19,. you're a homeowner now. All right, you're way ahead of me and George, but how can we help?

Well, in two years from now, I have the opportunity. The company I work for is wanting to open a new branch. They're going to give me a branch ownership role, and so I'll be a branch owner in Orlando. So I'll be moving about two and a half, three hours away from where I currently live, and I'm wondering if we should sell that house that we just bought in February or if it's smart for us to rent it out and purchase another home in Orlando.

Love it. Okay, here's my answer, and I'll give you the back story behind it. I would sell the home and take all the equity you have and roll it into that next home. The reason is, if you lived in Jacksonville and you and your wife sat down and said, hey, what do we want to do with our financial future? You wouldn't go, hey, what if we bought a rental property in Orlando?

And can I pass on one more thing to you, Christian?

Yeah.

All right, so what kind of work do you do?

I do sales for a roofing company.

Okay, excellent. So I'm going to give you some old man wisdom. Is that cool?

That's all right.

All right. It hasn't happened to you yet, but you will have an employer that sits you down and says something like, I see something in you, and I'm planning on doing this. So in three years or two years, or in six years, I'm going to do this, and then we're going to do this, and then this is how this is going to impact you. Right. And over my quarter century of work, I have gotten excited about other people's plans for me.

Yeah.

Congratulations, my brother. You are way ahead of the pack. That's impressive. All right. Let's go out to Seattle, Washington, home of Pearl Jam, and talk to Gillian way where we are.

Hey, guys. It's great to be with you. Thanks.

It's great to be with you. What up?

So I wanted to start off with some awesome news. My husband and I just spent the last two years putting me through school completely debt-free. So I just graduated last month. I worked full-time the entire first year of the program. It was brutal, like 13-hour days, but we paid off about $20,000 of payments to the school just straight in cash.

Hey, hold on. Hey, Gillian? Gillian?

Yeah? Yeah?

The things you're saying can't be true, because we hear them all the time. You can't go to school debt-free.

Which trust fund did you pay for this out of, Gillian?

Yeah, you can't pay things with cash, and you can't work and go to college at the same time.

Well, so I will say I was very fortunate, very blessed. I had a great job with the university before starting school. Way to go. And I found out I could get partial tuition exemption.

But guess what? I was being a goofball. I was just being a moron. I'm proud of you.

Those are all decisions you made.

Congratulations. Yeah. That's awesome.

Yeah, thank you.

Okay, so how do we help out?

I start my new job next week. During that time in school, we also saved up about $30,000 so that we could pay for the last eight months when I got to kind of the work-study part of my program where I had to be working full-time within the context of being a student. We've got about $10,000 of that left because we have penny pinched to the max for the last eight months. And we've got about $7,000 in car debt. I think I know that the plan would be to pay off the car debt with that leftover money, but I'll admit that $10,000 makes me feel very safe, and it's exactly the amount of our fully, like, funded emergency fund.

You're telling me the school is paid for, so you have no upcoming expenses?

That's right. This is our only debt left. What is the car payment? It's $7,000 on a 0% car loan.

What's the car payment?

It's about $428 a month.

Okay. So let's say that you did pay off the car today. That leaves you with $3,000, and it frees up $428, and you have your income. So how quickly could we get back to $10,000, knowing all of that? How many months?

I think, aggressively, maybe eight or nine months.

Okay. So, eight months from now, we're back to where we are, and we're going to be fine with $3,000.. How many emergencies have you had in the last year that were over $3,000?.

Thankfully, zero.

And you've got a paid-off car that's reliable and working, and if there was a car repair to be made, you could cover that. You guys have health insurance?

We will when I start my new job. I'm going to be honest. We haven't had much for the last year. We've been kind of living bare bones. Oh, boy.

So once we have all the insurance in place—.

My husband's an Army vet, so he has the VA.

Okay. Good. So when you really think about it, a lot of this is like, but what if? And I'm going, but what if you had no payments? And how quickly could we build this back up?

Yeah.

You knew we were going to say this. Gillian.

I know. I know. I was hoping you'd agree with me, though.

You're just too impressive. You're too impressive to give us the 0% loan argument, Gillian. You're too smart. You're too successful. You guys are too— I mean— You have too much money.

I did think that we'd be able to start paying the car more aggressively than $428 a month.

Then save that aggressively.

Probably evens out.

Save that aggressively.

Yeah.

Hey, look. By this afternoon, you can be totally free. Yeah. Totally unchained from anyone, anything, any bank, any lender. You and your husband, totally free.

That's enough to get apps and zerts. I regret that immediately.

I feel like you just spoke millennial, and I don't know what that means. Appetizers?

I'm going to go away for a little bit, John.

That's probably good for everybody. This is The Ramsey Show. We'll be back soon.

So, my question, my husband and I had been pretty financially sound for quite a few years.

What happened, Carrie? Rock bottom is a pretty, it's a left turn here. What happened?

Yeah.

Take a breath. Take a breath for me. Take a breath for me. I can hear you. Take a breath.

We sold our house about a year ago and moved into my mom's basement. Our goal at the time was to take as much that we could make off of our house to start settling debt.

I'm sorry, Carrie.

Zach.

Zach.

Younger. He was 22..

Yeah. I'm sorry. Can I tell you something?

Yeah.

You're not supposed to find your 22-year-old brother passed away, and I'm sorry.

Yeah.

Nobody's supposed to experience that, and I'm sorry.

It's really hard. Yeah. And I have, aside from my husband and my older brother, actually finding Zach, my kids are almost six, four, and two.

What issues are your children dealing with health-wise? Are these ongoing chronic issues?

Yeah. My four-year-old was born with a genetic condition that causes airway problems. So she struggles with breathing and choking, gaining weight because she can't breathe, or she is lacking weight because she can't breathe. And then my son was born—he's two—was born with feeding issues as well, and he's on a feeding tube.

Tell us about this debt. What kind of debt is this, and was this happening aside from the medical issues and the family issues?

It started out with travel expenses. On credit cards? Yeah, on credit cards.

Okay. How much debt total?

Between credit cards and student loans, our vehicle, we're right about $98,000.

Okay. And what's the household income right now?

I'm a stay-at-home mom because my kids can't be in daycare. My younger two.

Why did your husband have to leave his job?

There wasn't a lot of understanding about him needing to have time off. And so it was just kind of an ultimatum type situation.

How are you guys putting food on the table this week?

We live with my mom, so she does help.

But are you basically going to continue living on credit cards in the meantime?

We're selling everything that we can.

Hold on, Carrie. What your kids need is mom and dad to be able to breathe.

Yeah.

They need a roof, they need food, and they need their medical care. But they need mom and dad to be able to exhale, and y'all can't.

Yeah.

I'm going to start talking slow, and I'm going to hold this call over. You're going to hear some music come up in a few minutes, and we're just going to let it roll over to the next. We're going to stop for a commercial break, and then we'll come back. But listen to me. You have two issues going on here at the same time.

Yes.

And you've got the trauma of walking in and experiencing what you experienced. And we won't go to it in detail, but it's not like it is in the movies, and it sits in your soul, right?

Yeah.

Right. And I've been in those rooms, and it's heartbreaking. It's staggering. That's number one. Number two, you have the heartbreak, the trauma of looking at two of your babies and wondering every second of every minute of every hour of every day if they're okay.

Yeah.

Right? And that's a lot.

Yeah.

And when you're faced with? the first thing I talked about was Zach, you're faced with the kids, it's easy to sit down and just say, screw it.

Yeah.

And yet, this is the third thing, and this is the part that I'm going to get in trouble for on the Internet, and I don't care, because I care about you too much. It's not like I'm not compassionate, but you'll have to, at some point, orientate yourself, decide, we're going to start choosing reality. Yeah. Because we can't live in mom's basement, even though it's rent-free, and still take care of these kids with the healthcare. We're going to have to move.

Yeah.

And that's not a today thing. It's not a right. this second thing.

Right.

All right? So hang on the line, and George and I are going to stop, we're going to take a break, and we're going to come back, and we're going to give you a couple of really clear tactical tips that you can take right away. Okay?

Okay. Okay. Thank you.

All right? Hang on, and we'll be right back. This is The Ramsey Show.

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Welcome back to The Ramsey Show. I'm John Deloney, joined by my friend George Camel. Wow. Sorry, I paused there for a second.

I thought it was a big intro. It turns out you just had a little brain fart. I've seen your moment.

Yeah, I froze there a little bit. So we're talking to Carrie. We held Carrie over the break. Carrie's got three young kids, six, four, and two. Two of them are dealing with some pretty significant medical challenges.

Yeah.

Okay. I want to tell you that I'm proud of you for calling, and I'm grateful that you called, okay?

Thank you.

This is one of those moments that, in a real-world situation, we would spend several hours sitting together unpacking this whole thing. So I'm going to throw some things at you. George and I are. Some steps. Okay.

Yeah.

Is this ideal? No. And I'm only telling you this because I love you and I wouldn't wish this on my worst enemy, but here we are. Okay? Yeah.

Okay.

You got to wait for the smoke to clear a little bit. Because what I don't want you guys to do is to do something rash and quick and wake up in six months when the smoke clears and your heart is still broken because of Zach's passing. Your kids' medical situations haven't changed up or down much. But then y'all just went and bought a home. or y'all packed up and moved across the country, or y'all went and just did a thing.

Yeah. Yeah.

Is this an incredible burden on you? Yes. On him? Yes. And this is reality.

Yeah.

Okay. The third thing is, y'all are going to have to begin to make a plan for finances, for grieving, for moving, because you're going to have to move closer to these medical resources, because this is going to be your life.

Yeah.

Okay? And that's okay. It's just going to be a change in reality. And so George is going to walk you guys through some of the money stuff and we're going to give you a whole bunch of resources. But one of the homework assignments I always give somebody who's experiencing grief like y'all have experienced is I want you over the next few weeks, I want you to write your brother Zach a letter.

Okay.

And this will be a very painful exercise. Because there's probably a lot going on inside this home, isn't there?

Yeah. Yeah.

Probably has for a long time. All right, George, walk her through her financial path here.

So, Carrie, what was your husband making when he was working?

He was right about $56,000.

Okay. And is that job now out of the cards? Has he severed, burned that bridge? Could he go back and say, hey, listen, it's been a crazy month. I'm ready to get back to work.

There has been potential of that. They have kind of chatted about that. And then he has had another interview with a company that is looking into him.

What are you guys doing for health insurance?

Right now, our kids are on, our kids and myself are on the state health insurance.

Was his work. insurance better? Better coverage?

It was, yeah. Okay.

Because what I don't want is for you to rack up medical debt in the meantime because of these serious health issues you guys are facing. Right. That's number one. Let's make sure we get income in the door and cover our four walls. That's food, utilities, and your housing and transportation.

Yeah. Okay.

Hey, hold on.

Yeah.

He needs to go visit them in person. He needs to take a shower. He needs to shave. He needs to put his dress clothes on or whatever the work uniform was. He needs to go up there and say, hey, guys, I'm ready to come back.

Okay.

Okay. And if they say no, cool. He's going to dust his sandals off and he's going to go on to the next thing. He's going to stop at McDonald's and Starbucks on the way home and get jobs there. But we're going to end tomorrow with applications out and hopefully with jobs in hand, okay?

Okay. All right. How much car debt do you have?

Right now, it's at $41,000.

How much is the car worth?

Probably about $55,000.

That car is gone today.

Yeah.

Now you've freed up $900 in your budget. And on top of that, you're going to have $14,000 to go. get you guys a nice budget. $5,000, $6,000 car. And the other $8,000, $9,000, we're going to throw at the smallest debt that you have.

Sure, yeah.

Do you see how you can breathe? You're starting to see the forest from the trees now. And that's the debt snowball. So we're going to gift you every dollar to help you budget the income, cover the expenses, find the margin. And it's going to walk you through that.

Okay, yeah, it does.

And we're going to cover all of that. You're not going to pay a dime.

Okay, here's the deal, Kerry. You're going to feel lonely. You're going to feel scared. And I want you to know you can call us at any time and we'll put you back on and we'll walk with you. I don't want you to sit down with your husband.

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Welcome back to the Ramsey Show. And if you're counting, that is the second Smashing Pumpkins song. Let's go out to Raleigh, North Carolina, and talk to K.I.M. What's up, Kim? How we doing?

Hi there. My question is, I'm going through a divorce and my husband said that I could have the house, but he wants me to give him $20,000 for his lawyer fees. And we own the house, trying to preserve it for the kids. And so I don't have any savings. I stayed at home for most of our marriage.

How old are your kids?

Most of them are adults. I have two still at the house.

Okay. Why is he deciding who gets what in this marriage?

Well, because he can afford a lawyer.

Well, no, he's making you a settlement offer.

He's making an offer. And I mean, I want the house. I want to be able to stay home for the kids. I want my kids to be able to come back to the house and be able to have events there.

I know, Kim, but you're not metabolizing the gravity of what's happened.

Okay.

Can you afford it? If he writes you a check for this house and you go down to the credit union and take out a $20,000 loan. Can you afford to pay the note on that $20,000 loan and pay the taxes and insurance on this house indefinitely?

Well, I have a job. I mean, it would be buying the house from him, basically for $20,000..

Right. That sounds like a killer deal. And if that's the case, I would tell you to go down to the credit union and get $20,000 and be done with this divorce and move on with your life. Get everything in writing. But I'm asking you, can you afford this house?

Probably $650,000.

Do you need all the space still?

I would just like to stay there until my youngest gets out of high school.

Kim, it's real important. I'm only pressing you because I care about you, okay? I know there's a lot here that you want to do. You desperately want to do. What George and I are asking you is, can you?

I have been able to do that. I have been able to do that.

So you've been covering this on your own?

I've been covering on my own since September of last year.

You also told us you have no savings.

I don't have a lot of savings, but I'm up to, I think I just went over $4,000.

I'm trying to make sure you have margin to live. Not just get by.

I'm just getting paycheck to paycheck right now. I'm trying to put some away. every month. I've been hit with a lot of his debt.

Why are you getting hit with his debt? Hold on. Why are you getting hit with his debt?

Well, a couple years ago, he wrote a bad check to the state, and the state found me and my job. I don't know that he's working or not. I have an order against him.

I feel like this all needs to go before a judge.

Yeah, his mother, I'm sure, paid for it.

Okay.

He doesn't have anything. He's in debt. He's constantly in debt.

So he's broke?

He's broke.

Why would he not force the sale of the house then and take half the equity?

I don't know. That's why I'm trying to jump on the generous offer. I just don't know where to get it.

Yeah, there's almost always a catch with a generous offer like this. Do you have an attorney?

I don't.

Yeah, I would get one before the day's over. And I know you can say you don't have enough money, but I would figure that out. And if you have to go to a local law school and ask for one of their students to help you out in a clinic, or if you have to call legal aid, I would call somebody, because I'm afraid you're about to get played. For an attorney, especially a divorce attorney that's going to get paid on a percentage of a settlement, for them to call and offer you what looks like a seesaw, with $580,000 versus a $600,000 on one side and $20,000 on the other, there's something going on there. This doesn't sound right to me.

It feels to me that if this went before a judge, they'd go, yeah, you're not paying lawyer fees, and you're going to get the house, and you're not going to pay his debt.

I don't know. I mean, he's not been a good husband.

Yeah, no question about that.

And how much debt are you taking on on his behalf? I don't understand this.

Well, he and I were supposed to each pay half of the taxes on the house this past year, and I paid mine, and he didn't pay his. So I've been paying his half of the taxes on the house. And then two years ago, he wrote the bad check for the state taxes, and the state came after me and were trying to take my...

This is my worry. He's going to make a lot of half-baked promises and go, well, yeah, half is mine, and then puts you in debt on top of the $20,000 you're going to take out while you're already living paycheck to paycheck. Do you see why we're worried for you?

Yeah, I mean, well, I told him I wanted to make sure his debts were his. This is final. I don't want anything else to come to me.

And here's what he's going to tell you.

The state taxes went to my name, too.

Here's what he's going to tell you. Yeah, it's all part of this. You just get to keep the house, and you're going to go, okay. And I get to keep the house, and it's worth a lot of money, and it's not going to disrupt our two youngest, and that's my main concern right now. And George and I are both worried about you tomorrow, and the day after that, and the day after that.

I'm afraid it's not worth it. I'll be in more debt trying to pay rent somewhere. I live free, other than the house bill.

But rent isn't debt, and if you sell that house, you've got a big pile of money. Even after you pay off all your debt, you'd still have a giant pile of money to go buy something reasonable that suits your needs, that doesn't need a bunch of repairs, that you can afford ongoing. That's what I'm – without knowing anything more, that's what I would be doing.

But I'm telling you what I would tell my sister, what I would tell my brother, what I would tell my friends, what I would do myself. And I would not sign anything, I would not move forward until I was sitting with an attorney who had reviewed this stuff. And there are attorneys, I know them personally, who will go to war on behalf of a grieving,

You need someone fighting for you.

That's right.

And for anyone going through this awful situation called divorce, we've got a great resource on the Ramsey Solutions website, we'll link it in the show notes. It's called Divorce Checklist, How to Prepare for Divorce. from our friend Dr. John Deloney. It'll just walk you through step-by-step, tactical things you can do to make sure you're protected.

That's right.

That's right.

It's not fun. Any business transaction that looks like, I'll just take 20, you take 600,000,. I'm going to go, wait a minute.

It's one of those like, trust me, bro. It's a great deal. Take it. Don't.

We care about you. Call an attorney today. We'll be right back.

That's snappier.

That is snappy. Some would say that is also a quote for smashing pumpkins. Let's go out to Dallas, Texas and talk to Amy. What's up, Amy? How are we doing?

I'm good.

What's up?

Kind of.

Not really.

I have a question. I'm just trying to find a way to get through our debt fast. My husband and I have 500, and I just discovered you guys. on Monday. I printed out the baby steps and placed it on our fridge.

Oh, you went all in.

Did you get the Kool-Aid packets and just start chugging them?

Not yet. No.

Drink the Kool-Aid. if you're going to be part of the cult. Go for it.

I'm getting there, though. I promise. We're already done with Baby Step 1.. We're on Baby Step 2.. We have $530,000 of debt.

What kind of debt is the $530,000?

Yes, sir.

Let's separate. Let's just focus on consumer debt and Baby Step 2.. What does that add up to?

We have a 401k loan of $20,000, and then the rest is the house.

If we knock out the 401k loan, the rest is your primary house mortgage?

Yes.

So you owe $510,000 on your home?

Yes, and I was worried that it was too much, like if we paid too much for a house.

Well, that's too late now, but what is your household income?

Let's see. I make $86,000.. It should go up 2% in September. And then my husband, he makes, I think, about $118,000..

Okay, great. So you guys are bringing in well over $200,000.. Okay.

Yeah.

So why haven't we been able to knock out this 401k loan, making $200,000?

Yeah, our mortgage is like $4,500 a month.

And what's your take-home pay every month? What actually shows up in your bank account?

So currently, it's $4,800 for my side, only because I started a new position later. But in September, I'll get the $86,000..

Oh, so you're not making $86,000?

Yeah, it's been prorated to $73,000, but then in September, I'll get the $86,000 to $88,000.

So you make $48,000 a month right now. What does he bring home a month?

Oh my gosh, I should have gotten that number.

It's okay, we can take a wild guess. But my question here is, if the mortgage is $4,500 and you guys bring home $10,000, well, that's a lot of your world being eaten up by that mortgage. And if there's not a long-term solution to get the income up, this house may not be a sustainable solution for us. So that's one side of this, but here's the key. You're going to knock out this $20,000 quickly.

Yes.

Are you investing right now at all, either of you?

Well, no. I mean, I'm a school counselor, so I have the teacher retirement deal, but that's about it. I haven't even gone towards getting a Roth or anything yet.

Do they force you to invest in that?

No, they don't force us. It's optional.

So how much are you investing right now?

None.

Okay. And how about your husband?

My husband has a 401k, and I think I have to ask questions.

Okay. Well, you've got homework to do, but here's the key. I want you to pause all investing until this 401k loan is knocked out. Okay. Because here's the thing.

Wow. Okay.

Baby step two, you're going to knock out real quick because it's just consumer debt. Baby step six is when you knock out the mortgage. And so you've got a gap there. We got to get through baby step two, get a fully funded emergency fund. Then we begin investing while paying down the house.

Yeah, we have $4,000, but that's going towards paying off the 401k loan.

Any savings, any extra income needs to be getting thrown at that loan. That kind of focus intensity, you'll be done with this thing in a few months. And since you're a new listener, Amy, I'm going to gift you Financial Peace University, as well as a copy of my book, Breaking Free from Broke. Go through both of those with your husband. And I think that's going to light a fire under you, to stop messing around and just get focused for a season.

Okay. Got it.

Awesome. Hang on the line. EB will pick up. We'll get you the book and FPU.

And welcome to the gang of not normal people.

The hardest part, John, is just going like, okay, I got to do something. that's not the way I've been doing it. That's right. So difficult.

And Dallas, Texas is full of people like, look at my house, look at my cars, look at my fancy boots. And being able to say, I'm selling that. I'm not borrowing that. I'm driving that. And I'm going to have something y'all don't have, which is peace in my house.

Sure. So my wife and I are in baby step two. We just finished clearing up $46,000 of consumer debt.

Way to go. Awesome.

$16K of that was a car and $30K of that was federal student loans. So we only have two debts left, and they're big ones. One is the mortgage, and then one is her private student loans that she had refinanced. So the mortgage is about $70,000, and the private student loans are about $140,000.. So I was wondering, my question is, is it okay to go out of order with the baby steps and pay off the mortgage first, and then the private student loan, or would you stay in order?

I'd stick with paying off the student loans.

Oh, I'd be tempted to do it the other way.

What's your income?

Together, we make about, well, we take home about $150K a year.

Okay. So if you guys got real focused, could you knock out these student loans in two and a half years? What are we talking, as far as timeline?

Yeah, I'd say about three years, if we were going to do the student loans first, and then half of that.

Because these student loans, they're made up of a bunch of loans, I assume.

No. So it was refinanced to one giant loan.

Oh, gosh. What is the payment on a $140,000 student loan?

It's about $1528 a month.

What's your mortgage payment a month?

$1562.

All right, George, so go with me on this. He pays the mortgage off, and you guys get, like, this is out of order. This is not the Ramsey steps, but you get B-A-N-A-N-A-S about that mortgage, and you decide we're going to have this done in 12 months. Okay. We're going to work maniacally, but, more importantly for you guys, we're just not going to spend.

I'll go with you on this, John. It's mainly because there's no real debt snowball to do here. You're not freeing up payments along the way.

The house is the lower debt, yeah.

And so you'll knock that out in half the time, free up the same amount of money, start throwing that at the student loan debt. That's how it works, and with your intensity, it's going to be a wash either way. So go for it. You have my permission. It's all you need.

Did we just agree?

We just agreed to agree.

We just agreed. Hey, thanks for joining us right here on the Ramsey Show. We will be back in no time. Don't borrow money. We love y'all.

Hey, folks. Dave, here. You want to hear even more life-changing content from Ramsey? Download the Ramsey Network app so you can catch all your favorite shows all in one place, like the Ramsey Show, Smart Money, Happy Hour, and the Dr. John Deloney Show.