Chapter 1: What is discussed at the start of this section?
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Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union Studio, this is The Ramsey Show. And I'm Rachel Cruz hosting this hour with my good friend and best-selling author, Jay Borshaw. And we're here to answer your questions. So give us a call at 888-825-5225. At first, we have Drew in Fort Worth, Texas.
Hey, Drew, welcome to the show.
Hey guys, thank you so much for taking my call.
Yes, absolutely. How can we help?
Quick background before I state my question. 15 years ago, my parents went broke and transferred their house to me for a symbolic dollar to keep it from the bank. The transfer was legal. The contract gives him a lifelong right of residence, but doesn't require rent. They only pay property taxes and upkeep, meaning no positive cash flow on my end.
They also verbally agreed to pay off the remainder of the mortgage. Because of that, they have always acted as if the house was still theirs. allowing people to live in parts of the house and remodel sections without my knowledge. And I'm OK with that. Now, after their court case ended last year, they're expecting me to pay for the house.
And my question is, am I required to pay them if I want to keep the house?
So they would be moving out in this deal. They would be moving out and the house would go to you.
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Chapter 2: What financial obligations arise from a family house transfer?
And my parents, they live in that house in a different country.
Got it. So what is... Go ahead.
Now, as the court case ended last year, that raised the question, how do we proceed? And they verbalized the expectation that I pay if I keep the house.
Right.
And my question is, yes, I would like to keep the house. And the transfer was legal. But I don't think, to be honest, to be required to pay.
Well, I think if you're going to keep the house, you should be living in it or deciding who lives in it. Using it in some way, yeah. Yeah, as opposed to you keeping it just for ownership purposes and them living in it. Now, if you were to keep it, would you require them? Let's say you did keep it. You took over the mortgage. Would they pay you rent or they would pay zero?
I don't know.
And why would you pay for a house, Drew, that you're not living in at all? I mean, you have no financial gain at all from this. And it's in a different country. What country is it in?
It's in Germany.
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Chapter 3: How can I help my husband with his debt while protecting my assets?
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Up next, we have Josh in Seattle, Washington. Hi, Josh. Welcome to the show. Hi, Rachel. How are you? Hi, we're doing great. How can we help? Yes, I had a question about converting a home equity line of credit over to like a 12 or 15 year mortgage because we're not making any progress. We're just paying interest only right now and will for the foreseeable future.
Okay, because of the payment and that's what you guys can afford or what? Uh, we, we pay, um, a ridiculous amount for private school education for four kids. And that's kind of locked down our, our monthly, um, I guess, ability, uh, to make any progress.
How much, how much is the HELOC and how much is the tuition for the four kids?
Sure. So the, like the interest only payment or how much do we owe?
Why don't you tell me both? What's the total amount and how much do you pay every month?
Sure. So we owe $65,208, and then our interest-only payment each month is right around $450. It kind of fluctuates because it's a variable rate. And then our monthly payment for private school is $3,704.
And what's your income between you and your wife?
Sure. So it just changed. My wife just went back to work over this year. So she'd been out of work raising the kids, not out of work. Jeez, how insensitive. No, she was at home with the kids and just went back to work a month ago. So that just added about $1,000 a month. So our total take home is right around $11,500. And what's your mortgage payment? We don't have one.
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Chapter 4: What should I consider before becoming a stay-at-home mom?
To do a home remodel. We lost our minds. We paid off the house. We were completely debt-free, and we were working baby steps four, five, and six. And then I had some really good ideas, and it turns out they were terrible ideas. And we borrowed $105,000 for a home remodel and then spent the rest in cash.
Okay, but still, you're making $11,500. School is $3,000 a month total, right?
$3,700.
Okay, still. So you're at $7,000 a month. You have no mortgage. Where's the problem here to pay $450 a month or more? You could pay $1,000 a month to pay off this HELOC.
Okay.
Yeah, it would just take forever.
There's the problem. Okay, now, Rachel, now we got to the bottom of it. It has nothing to do with the payment. It has to do with the fact that you're like, I'm tired of paying this. Can't I just roll it into my mortgage or create a mortgage out of it?
Which would be a difference, though, for you, Josh? It's all the same. Is it just the interest that you're worried about? Yeah, it's that we're not making any progress. It's interest only. So we're not making a dent in the $65,000. So how much extra could you pay? Say you did convert it to a mortgage, how much extra would you find to pay it?
Because if you kept it at $450, I'm not going to be happy. How much? $500 a month. Where's all your money going, Josh? I'm confused. I mean, can you guys log into my EveryDollar app? Yeah, I know. I kind of want to. You log in.
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Chapter 5: What happens if I surrender my car to the bank?
Can I do that, or is it going to be a problem if I just hand the keys to the bank and walk away? My sister will get a car for me, and I'll make those payments. I didn't know if that was an option or if I'm going to pay for that in the future.
No, because you're still going to be, if you surrender this car, they're going to take it and they're going to auction it. And whatever the difference is on the $60,000 loan, you're still going to have to pay.
Chapter 6: How can I help my husband with his debt while protecting my assets?
Where did you get the $33,000 number? Because Wagoneers are nice. Yeah, but their value is horrible.
Oh, is it?
Their value is horrible.
Is that Kelly Blue Book?
My attorney during bankruptcy, Kelly Blue Book, yeah. Okay, shoot. Oh, man, I didn't know that. When I see them, I'm always like... I know, they look nice, but they drop like a rock. They're terrible. They have no value.
When you turn them in, you are absolutely hosed with them. They're $100,000, and you'll get $20,000 for them. So one of my biggest goals for you would be... Twofold. The first one, and I think that this car is huge because it's $1,300 a month.
I would exhaust everything because anything is better than you having... You owing $38,000 is better than you owing $60,000 basically at just about any term. 100%. You know? So see...
scour and find what you can yes to see if you can get any kind of loan to be able to pay off the difference and then get you a crappy car with it but hey Hannah hold on the line Christian's gonna pick up and we're gonna get you with one of our certified financial counselors to walk with you because as a single mom juggling all of this to have someone sit down and actually run the numbers longer than just eight minutes of what Jade and I can do we want to give that to you as a gift Hannah and you're doing incredible you're an incredible mom you're an incredible fighter yes and we're here for you Hannah
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Chapter 7: What should I consider before buying a house near family?
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So just go to the show notes and click the link titled Are You On Track With The Baby Steps and complete the quiz. All right. We have Susan in Arkansas coming up next. Hi, Susan. How are you? Good. How are you? We are doing great. How can we help? Good.
Chapter 8: How do I navigate financial challenges as a single mom?
My husband and I are on. We finished all the baby steps. My husband is 67. I'm 61. He is going to go into a partial retirement next summer. And our net worth, including our home, is about $3.5 million. Oh, wow. Good for you guys. But the $2.5 of that is, you know, not the home. And I guess a million of that is in brokerage, and then the $1.5 is in IRAs. Okay.
So the question is, we have a son and daughter-in-law that live about five hours away from us in a very booming market. And they're just having a growing family. And it's just so important to us to be close to family. And we're running up there all the time, staying in hotels and being guests and all that. And we are really wondering if it would be wise to buy a small house, maybe three.
We're looking at there are some starter home neighborhoods for like you could get a brand new house for $350,000. You know, like 1,600 square feet. Just something that we could stay in when we go up there. The thing is, we are going to be probably relocating in about three years to that city. Oh, okay. So, but you know, then we have three years to be going back and forth and all that.
And we want to be up there more because the babies are babies right now. Sure. So, um, you know, it's been suggested that we would rent maybe something for a couple of years and then makes a big move in three years. But it's such a booming market, um, that, you know, when we're not up there, it would just be sitting in there and we'd be paying rent on it. But it,
be building equity yeah how far away what is your how far away are they it's about five hours away okay and then three what's the three-year mark is that his retirement when he's done fully yes he's got to step down retirement you know and so he'll be he'll be needing to be in our our town right now well and you guys can cash flow a 350 a 350 home right now right We could, yeah.
So I would probably just do that, Susan. I would not rent. No, no way. I would either just have a little hotel fund and know you'll be staying in a lot of hotels for the next three years and that's okay, or I would just go ahead and buy. Go ahead and buy it. Yeah, because it would be trading one asset for the other, right? It would be trading some of our net worth right now.
It would, but you're going to sell your home in Arkansas to move full-time in three years. How much is your house in Arkansas worth? About a million. Okay, great. Great. So that's great. Then I would just put that in investments. The thing about our house is it's about five years old. It's brand, you know. But if we wait too long, it's not going to be brand.
It's not going to be as new as it is right now. Oh, it's just three years, Susan.
You're fine. Yeah. Okay. I wouldn't worry about that. Yeah. I'm not concerned about any part of this. No. You're not concerned about any of that.
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