It’s Never Too Late to Clean Up a Financial Mess
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From the Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Kamala, joined by my good, good friend, Dr. John Deloney. Taking your calls at 888-825-5225. You jump in, we'll help you take the right next step with your life, your money, your mental health, your relationships, whatever is going on. Speaking of what's going on.
Yeah, before we get going, I think it's important just to... Let our friends and colleagues and family members in Los Angeles just know we see it. It's a disaster, man. I'm rarely speechless and just watching some of that footage. I've got friends in Pepperdine. It's just devastating to see. So it's one of those things you feel helpless sitting this far away and you're watching on your TV or watching on your phone. But... What we can offer right now is to let people know they're not alone. We see it in our thoughts, and we're praying for you guys big time.
Yeah, our hearts are with you all. And speaking of which, John, our first call is from California out here. Nitish is with us. What's going on, Nitish?
Hey, folks. Thanks for taking the call. Sure. And I appreciate your sentiments on LA Fire. Right now, I have a question that my wife and I bought a house worth around 2.5 million. And we have another house which is worth around 1.3 million. And it has 500K remaining. We have rented it out. It's around $4,000 per month. So, um, our salary is around, um, 900,000. Um, uh, and, uh, yeah, so we were just kind of concerned, uh, um, whether to kind of keep the rental property, uh, or sell it off. Um, the rental is coming like pretty nicely. Like it's around, um, 4,500, which is kind of like covering all the mortgages and, uh, any other insurance and stuff like that. So I was just wondering what your thought is on that.
What is the mortgage on your current home? Uh, it's around 2 million. Okay. So you've got two and a half million. Do you have any other debt outside of these two mortgages?
Just a car loan, maybe $40,000. Okay.
Well, you're calling us because your plan isn't working as you wanted it to. There's some stress here, and I would feel it. If I was over $2.5 million in debt, regardless of my income and how great things were right now, in the back of my mind, I would be knowing this is a house of cards. It could all come crashing down any minute. Yep. And so you want to reduce risk in your life. You're using language like, well, it's just a 40K car loan. That's kind of what gets us here, right? You guys have an just undeniably insane income. And yet what happens is you just go, well, we can acquire more and handle more payments. And it leads us to this place where we have to decide, do we want to keep going down this road or do we want a more peaceful path?
So if I was in your shoes, I'm going to try to reduce that risk. So you have an amazing income. How much extra margin do you have at the end of each month?
So we have around cash coming in around 25K after all the 401K savings and everything. We have around 1 million in stock and around 401K is around another million.
Okay. And the stock is non-retirement, right? It's fully vested? Yes.
Okay.
So you could sell a whole bunch of that and knock out a lot of this debt. You could knock out the car loan instantly and knock out the rental loan instantly and make about, you know, what, a quarter progress on your own mortgage.
That's absolutely correct. My wife and I, like, so my wife kind of feels that the rental is self-paying, so why should we worry about it? Let's just, like, the lenders pay for our mortgage pretty much. And I'm trying to convince kind of like lowering the risk. So I don't know. Do you remember?
I don't know if you remember. It was a while ago. There was this thing called COVID and people quit working. And then the local government said they don't have to pay rent and you can't evict them.
Yeah.
Remember that?
Yep. Yep. I do.
So I would assume the mortgage on your rental property is not very safe. Because you don't ever know. And especially in California with the squatting laws. I mean, y'all have good tenants, and God bless you. Because those tenants can go south in a hurry. And it might be 30 days, 60 days, 90 days, 6 months, 2 years. You guys get tied up in court, but the bank doesn't care.
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