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Chapter 1: What is the main topic discussed in this episode?
Live from the headquarters of Ramsey Solutions, broadcasting from the Pod's moving and storage studio, it's The Ramsey Show, where America hangs out to have a conversation about your life and your money. I'm George Campbell, Ramsey personality. Join this hour by my colleague, Christina Ellis, and we are here for you, America, taking your calls about life and money. 888-825-5225.
Let's get to the phones. Elizabeth is in Toronto, Canada. All right, Elizabeth, how you doing?
Hi, George. Hi, Christina. I enjoy watching the both of you. Great dynamics on YouTube. Oh, thank you.
What an honor to talk with you. How can we help today?
Thank you. So I'm calling because I have, my question is around, should I pay down, pay off my HELOC or should I pay off down my mortgage? And the reason being is that my mortgage is 119,000. I'm paying 7%. I did not, it came due in December 1st of last year. And I decided not to renew it until I figured out what I'm going to do with it. So right now I'm paying $2,033.
That includes mortgage insurance. Whereas the HELOC, it's $77,500. I have the money to pay off the HELOC, except that if I paid off, it's locked in. It's a variable rate locked in over five years. I've already done a year and a half into that. And I'm thinking if I had to break it, it's going to cost me, to pay it off, it's going to cost me about $1,500, a little over $1,500.
So I'm thinking if I put, I know you guys say consumer's debt, get rid of it, particularly the HELOC. but I'm thinking if I, and I'm paying right now, um, $772 per month on the HELOC. Um, I doubled the payment for to, um, deal with the inflation. Um, but with the, um, the sorry, the, um, the mortgage, um, uh,
What I'm thinking, I'm paying $2,033, and if I were to pay down $77,000 on that $119,000, obviously it would be less, and I'll free up some more money faster to pay down the mortgage this year, and then I could focus on throwing all of the extra money as well as the money once I pay off the mortgage towards the HELOC.
So how much money do you have?
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Chapter 2: When should I pay off my HELOC?
You have $77,000 saved. That's amazing. That's going to feel so good.
I'm super excited about you being free from this thing today. Does that include the $1,500 stupid tax?
No, that's extra.
Okay. So do you need to have that before you can pay this off in full?
Yes. I can get that.
Let's pull from your savings to get rid of this today.
I have a part-time job on the side.
Okay, great. And you've got extra money in the bank outside of the 77 you mentioned, right?
Just not a whole lot, but something, not a whole lot.
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Chapter 3: What are the risks of co-signing on a loan?
This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Christina Ellis this hour. Open phones at 888-825-5225. Well, Christina, we talk a lot on the show about building wealth, and there's a lot of ways to do it, and most of them are not great. And this was an interesting article from Money Wise that I wanted to get your take on. Here's the headline.
Investing in art is a great hedge against inflation, and you don't need millions to buy in. Hmm. Hmm. Huh. Head tilt. So it goes on to say the current state of the economy has dealt with some heavy hits for the everyday investor. It goes on to talk about inflation. And then it goes on to talk about these alternative investments. So these are assets that are not stocks.
They can help hedge against inflation, protect your wealth from downside risk, and potentially enhance portfolio returns.
Ooh, sounds so fancy.
Yeah, that's a very fun word. And there's a startup called Masterworks that is trying to kind of disrupt this industry, which art is a $1.7 trillion asset class, according to Deloitte, which is pretty wild. And they say contemporary art has outperformed the S&P 500 by 131% for the past 26 years, and it has nearly zero correlation to stocks, according to Citi. That's an interesting stat.
I don't know. I mean, it feels a little bit biased. This whole article feels like it was paid for by Masterworks. So I don't know how much I can trust it, but it's an interesting concept, this idea. And I think what Masterworks is doing is much like, you know, you buying a stock, a little share of a company, you can own like a share of the Mona Lisa.
So you get a little tiny piece of the Mona Lisa and the ideas art appreciates over time as it gets older, ages like a fine wine, and you end up making money from that investment.
Well, George, I'm super curious how you feel about this because I know how much you love crypto and all the- Love crypto, love art. Fun new forms of investing.
Yeah, I'm not a fan. I'm just going to say it right now. This feels super risky, even though they're saying- has very little risk. I would much rather invest into things that I understand. I would rather invest in my 401k in mutual funds versus alternative investments.
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Chapter 4: How does investing compare to paying off debt?
And I assume mom has nothing in the bank?
Not really, other than low liquidity stocks.
Okay, so is she able to sell those off?
Not in time for this situation. because it needs to be all one big payment by Friday. But you guys already have that money, you're saying? Mm-hmm.
Okay. So I would go ahead and make sure this loan is cleared in time. Have you contacted the lender to let them know the situation?
Yes.
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Chapter 5: How can I prepare for retirement if I'm close to it?
Okay.
What's that discussion been like when you're on the phone with them?
Basically, what they said is I could probably be able to pay it off as well. Within the year, because me and my brother made sure that we got a loan with no prepayment penalty. So we're just going to, as far as our plan goes, we're just going to try and apply as much money as we can this year to get them out of our hair.
You're talking about those personal loans you guys took out for 8K and 11K? Yes. Okay, what about the $35,000, $40,000 loan that you're paying off to keep the house?
It was... The loan basically was set up in a way to defer our house payments to the loan. So during the time it's just, we're making, we're just kind of paying off the house in that sense.
But when you call this lender up, about the $35,000 to $40,000, what's the conversation like? Have they threatened you? Have they said you have to pay this by Friday? Tell me about that conversation.
Oh, no. Yeah, where in the fine print was it, hey, if you miss a payment, it's due in full within a week?
It was my mom who talked to them, and they just kind of like... They were just like, oh, yeah, sorry, we... you know, you didn't make the payment, so your house is in foreclosure kind of thing. They really didn't, like, give any heads up on that whole spectrum of, you know, that side of the loan.
Okay, this may be an unpopular opinion, but I'm kind of frustrated with your mom right now. Like... Oh, no.
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Chapter 6: How can I avoid FOMO in my investing strategy?
Okay.
I just had another surgery recently, so I'm not doing anything right now.
Well, as you heal up, it may be prudent to look into some jobs you could do, even from home, on a computer, something to give you some purpose during the day once you're healed up. Obviously, your brain's working great, and that's a huge blessing.
Yeah, I just, I'm, I'm so stuck with, with, you know, like let's, you know, I pay off this car, you know, we're sitting, we have 180,000, even if I keep 60 of it just to pay the bills for the next year, next two years with her salary, you know, there's 140, 160 just sitting there. Like, is that something that should be.
doing something is that something that should should i buy art you know dear lord no no frank i want this money working for you now's not the time to get fancy this is not a pile of fun money we're going to go gamble away this is money i want you guys to use to secure your future and so that means we're paying down the mortgage because once we have no mortgage payment that really sets us up to where even if you could never work again she would be able to cover all the bills with extra margin okay
Yeah. So we're putting away some of that money for a fully funded emergency fund, three to six months of expenses. And is she still investing toward retirement?
Yes.
Okay, great. So keep doing that. And then from there, do you all have kids?
No kids.
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