๐ Are you on track with the Baby Steps? Get a Free Personalized Plan ๐ฑ Watch the full episode for free in the Ramsey Network. app George Kamel and Jade Warshaw answer your questions and discuss: "We're in the middle of a bankruptcy and now have $25k in home repairs," "Not having direct access to my savings scares me," "Is it okay to do my debt snowball out of order?" "How can I help my adult son and daughter buy homes?" "Should we pay down our house or wait until rates come down?," "Should I pay off my car or buy a hooptie?" Next Steps: โ Help us make the show better by taking this short survey! ๐ Have a question for the show? Call 888-825-5225 weekdays from 2โ5 p.m. ET or send us an email.ย ๏ปฟ๐๏ธย Find a Ramsey Trusted Real Estate Agent ๐ต Start your free budget today. Download the EveryDollar app! ๐๏ธ Dave Ramsey and John Delony are going on tour this month! Get tickets today Connect with our Sponsors: ๐ Stop paying more and start shopping smarter at Aldi ๐ฑ Get 10% off your first month of BetterHelp ๐ฑGo to Boost Mobile to switch today! ๐ฅ Learn more about Christian Healthcare Ministries ๐ก Get started today with Churchill Mortgage ๐ Get 20% off when you join DeleteMe ๐ฆ Go to FAIRWINDS Credit Union for an exclusive account bundle! ๐ฅ Save 15% on your first Field of Greens order with code RAMSEY โจ Find top Health Insurance Plans at Health Trust Financial ๐ธ To find out more about student loan refinancing, check out Laurel Road ๐ป Visit NetSuite today to learn more ๐๏ธ Use promo code RAMSEY for 18% off at The Nokbox ๐ต Learn more about Timothy Plan ๐ Get started with YRefy or call 844-2-RAMSEY ๐ Visit Zander Insurance for your free instant quote today! Explore more from Ramsey Network: ๐ธ The Ramsey Show Highlights ๐ง The Dr. John Delony Show ๐ธ Smart Money Happy Hour ๐ก The Rachel Cruze Show ๐ฐ George Kamel ๐ช Front Row Seat with Ken Coleman ๐ EntreLeadership Ramsey Solutions Privacy Policy Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What should I do about expensive home repairs during bankruptcy?
Hey guys, thanks for having me on today. You're welcome. So I have, my husband and I are currently in the process of converting our Chapter 13 bankruptcy into a Chapter 7. And we just found out a couple weeks ago that our home has some pretty expensive foundation repairs that could be necessary that could cost around $25,000. And we don't want to go into any more debt for that.
So we're wondering if we should sell our home and rent in the meantime in order to kind of restart our lives back after this bankruptcy.
Man. So $25,000, have you gotten multiple quotes on this or is just one guy said this?
It's one, but half of the house has already had foundation repairs. So that half is already warrantied. So it's kind of a weird situation where we feel like we need to use that company in order to use the warranty on the half that has been done.
So that half hasn't been paid yet?
No, it has. Texas Foundation is weird. Half of the foundation only needed it at one point, so they only did the repairs back a long time ago. And now the other half has kind of shifted and needs about the same repairs.
But that part's not under warranty?
They would, no, it's not. And they would use the warranty to do adjustments on the half that has.
And that would lower the cost? Is that what you're saying? I'm just asking, could there be another company out there? It's been a couple of years, I guess. Could there be another company out there where you could get it done less and it still be under warranty once the work is done?
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Chapter 2: How can I manage my emergency fund without direct access?
Yeah.
And so I would be more concerned. Now you're in baby step two. So here's a thousand. She's saying I put 500 over here. I got 500 over here, but I need direct access. Here's what I found when it comes to emergencies. Very rarely is it I need cash within the next hour. If that's the case, you're probably getting scammed. It's probably some kind of Western Union transfer thing.
They want you to buy some gift cards. Most emergencies I found there's time to transfer it out of the savings account to the checking account. And so you've got a little bit of time. You can take a day or two to get that that money in there. And so it's really not that big of a deal. I found I keep all of my money in high yield savings.
I will say, you know. This might be you and I might vary on this a little bit because, you know, George, he's very level headed, very cool, calm and collected. I, on the other hand, tend to freak out. So I kept my. So when we were on Baby Step One, George, I kept the thousand dollars in like the same account that's.
Like connected to your check. Yeah.
Just like a normal savings. Cause I'm like, which that's fine. I'm not trying to earn interest on this. Like, I don't care. I just want to be able to get to it. And then when we moved up to the three to six months, then I popped that in the HYSA. Cause it's true. I do feel like those bigger emergencies, like your foundation or your roof or whatever, I don't know.
You need a new car or something like that. Yeah. Then it's like, yeah, I can take some time. I'll take some days. And to your point, George, it gives you time to think rationally. Is this the best decision? Have I spent time on this? And then by the time the funds transfer, you can feel like a responsibly a financial responsible adult.
Yeah. The bigger problem is when you have the access is too easy and you go, oh, man, I just moved it from savings to checking and now it's gone.
Yeah, that's a good point. You kind of have to know your personality, right?
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Chapter 3: Is it okay to do my debt snowball out of order as a student?
I don't remember the last big what was like a five thousand dollar emergency. We tended to be like, you know, a plumbing guy, the electrician. Yeah. A few hundred bucks.
Yeah, that's true. The last big one we had was, let me think, our washer and dryer, our washer. Our washer went out.
Oh, boy.
And of course, I did what any American would do and say, well, if you got to replace the washer, you got to replace the dryer so they can match. That wasn't the smartest choice. Aesthetic. It's all about aesthetic. I don't regret it, but it might not have been the most savvy choice. Let's go to the phone lines. We've got Sarah in Seattle, Washington. What's up, Sarah? Hey, how are you guys?
We're doing good. How can we help?
So I want to do my snowball out of order. And I have a reason. So I am a full-time working adult student. I have paid off several debts till now. My next four debts are student loans. Because I'm still a student, I don't have a payment due on them. So I wanted to jump to my if debt that would make it so that I can free up a payment and do my snowball, grow my snowball faster.
Oh, I see. So you're not doing the baby steps out of order. You're doing the debt snowball out of order.
Yes. Okay.
What's that debt that's outside of the snowball you want to start on?
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Chapter 4: How can I help my adult children buy homes without stealing their joy?
The only question I had in this is, and this is kind of getting in the nitty gritty, but I'd be wondering, okay, are these loans subsidized? Are they unsubsidized? Are they still, do they have the ability to gain interest even though I'm still in school? Do you know the answer to that?
Yes. Three are subsidized or not subsidized. The smallest one is subsidized. So only one is not gaining interest. Okay. My employer is paying for my tuition now.
And before this legal issue with Max, I was cash flowing school. I see. I see.
I mean, knowing that my loans are active, even if I'm not, would still make me want to work this in order. But I understand the temptation that you're saying of getting like the thousand dollars back because you're spending that. So that's what my brain would do. My brain would be like, listen, student loans are a major problem. I want to knock these things out as soon as I can.
How amazing to have paid them off before you've even graduated. That's kind of where my mind goes to.
George, what about you? Well, I want to zoom out a little bit and go, what is your total debt amount right now?
Excluding the house?
Yes.
About $78,000. Okay.
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Chapter 5: Should we pay down our house now or wait for interest rates to drop?
Yeah. It was a two-year legal battle, so... Here's...
this is gonna sound nitpicky, okay? And there's method to my way of thinking of this and George might have another take on it. But my husband and I paid off $460,000 of debt, 280,000 of it was student loans. And it's just daunting to look at a task like that. And I'm sure you feel the same way, Sarah.
But I found that there's something about, if I have found a system and a solution, if I can build the muscle of sticking to the plan Every time I stick to the plan, I stick to the plan, I stick to the plan. It takes the guests out of it and it causes me to be more consistent long term than kind of jumping around and picking and choosing.
Because this is you're going to hit peaks and valleys on this. There's going to be times where you're ready to run through a wall because you're so like geared up to do this. And then there's going to be times when you want to quit. But if you build up the muscle of I stick to the plan, I do, I stick to the plan, then there's something about that that really helps.
And so in this case, I would stick to the plan, even though that thousand dollars is waiting there. Build the muscle of doing the plan the right way so that when the rubber meets the road, you'll do the plan the right way.
I love that. You're going to free up a lot of money cleaning up those student loans too. Those payments will also get free.
That's right.
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Chapter 6: What are mutual funds and how do they work?
Hi, this is Eric. How do you do?
How do you do? We do good.
I'm good. Thank you. Do you have any questions for me before I ask my question?
Should I? I've never done a pre-questionnaire. I think you should start this one out for us, Eric.
Okay. Well, here's the story. I have two children. I have a son, 37, and a daughter, 27. Okay. And I have, you know, for a few years, I've had a dream of becoming wealthy and being able to afford to buy a home for my children. And that is starting to look like a reality, but I was thinking about it, like, is this something I really want to do?
And I realized that by giving them a home, I'm not really giving them anything. I'm taking away the that they would have of achieving this milestone on their own. So I... I mean, are you picking the home?
Are you picking the home or are you just giving them the cash?
I was thinking I would help them pick a home, but I just... I don't think it's a good idea. I think they... It'd be more satisfaction if they could do it themselves.
Maybe ask them.
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Chapter 7: What are the different types of mutual funds I should know about?
Okay, so are you worth multiple millions of dollars?
So here's what I would do. Let's just make this cut and dry. If you're wondering if it would steal their joy or not, just ask them. Say, guys, here's what I was thinking of doing. I was thinking of saving up some money to buy you guys a house, but I don't want to steal your joy out of this. Would you want me to help you pick it out, or would you prefer to just be gifted this cash?
Would you prefer for me to just help you with the down payment? I think if we have questions in these situations, George, the best thing to do is just ask. And listen, I'll tell you, I, for one, would have loved... If somebody was like, let me give you this special gift.
Yeah, ask any Gen Z millennial who's struggling to wonder if they'll ever afford a home. And they went, I don't want to steal your joy. Oh, come on. I think they'd all say, no, I'll take the house. I'll be very joyful.
Ultimate joy. Oh, yeah.
The question is, how are they doing financially? Right. Because if they're already struggling, broke, and they can't take care of this home, it could be a burden instead of a blessing. That's true. There's a lot more we need to dig into to understand. Are they responsible financially already? What is the cause? What's causing them to not be able to afford a home right now?
And is this home going to cause some level of entitlement? There's a lot to dig into, but it starts with a conversation with them.
Yeah, that's right. So if your kids are like like George said, if they're entitled, if they're doing something that's like a failure to launch and they're struggling. Yeah. Monetary gifts probably aren't the right thing.
Or if there's a lot of misbehavior and they're just going into credit card debt. Yeah. Just buy stuff they can't afford. I wouldn't just throw a home at that.
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Chapter 8: Do Dave or George recommend paying off your home after retirement?
Hey, yeah, I got a quick question for you. So me and my wife were trying to get out of debt as fast as we can. We've got a pretty big mortgage that we took out two years ago on the house. So it was $637,000 for the house. We put 20% down. So we're at $508,000. We've been paying that for two years. Our interest rates is $5.99. Payments are $3,446 a month.
But I've been making additional payments on it because I don't want to be here forever. So right now, for a year and a half, we've been doing about $5,000 to $5,200 on it. And this is your only debt? Yeah. This is my only debt. I have credit card debt. I own all my houses. I own all my cars. I don't use credit cards. I only use them for like a debit card, basically.
It's a credit card, but I pretend like it's a debit card. We just pay it off.
I'm just going to glaze over that for now and pretend like you didn't say that so we can answer your next real question. What's the question you have today?
So my thing is me and my wife, we're working on it real hard to pay it down. We're looking at we're on track to pay this off in 11 years. It's a 30-year loan, but if we keep paying the way we are, we should be done in 11 years. I've also been putting money aside, saving, because...
I believe that if you have a savings on the side, more feed doesn't show up in your life as long as you have a good savings on the side.
Well, we would teach for you to have three to six months of expenses. And then after that, you're in baby steps four, five, and six where you're investing, saving for the kids' college, and putting extra payments towards the house. So that's all good. How can we help you today?
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Chapter 9: Which Baby Step is the hardest to complete?
So my thing is, so me and my wife have been doing that. We've been putting away. So in savings, I've got 95K, and I've got it in a high savings interest. It's at 3.7%, so we're making some off of it.
Good.
But my thing is, I'm trying to decide, talking to my wife, is like, do... We've been kind of waiting and hoping that the interest rates would go down, but I don't think they're going to. We were thinking about taking a big lump sum right now from my savings and putting a big down payment to knock the loan down even more.
Or do I just stay the course that we're doing because we are knocking it down pretty quick?
I wouldn't use your emergency fund if that's what you're talking about. If the $95,000 is your three to six months of expenses, I would leave that there because you need that there as a cushion. Okay.
I'm guessing that's more than that. So anything above six months, I would take that as a lump sum and throw it at the mortgage because the less principal you pay, or the more you throw at the principal, the less interest you'll pay the following month, which will save you money in the long run. So I would not wait for interest rates to do anything.
I would just be plugging away at that mortgage every single month like you're doing consistently and knock that thing out and try to even beat your goal. Do it in 10 years or less. So we found the average millionaire does in our study, 10.2 years.
Woo, that's lightning fast. I imagine that when a person who's not used to hearing our show hears that, they're like, George, you're lying.
It's the data. 10.2 is too random to make up. That's just what the data said from 10,000 millionaires, and it wasn't necessarily their first home. That's right.
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