Your Mindset Matters More Than Your Money

Девочка-пай Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. George Camel, Ramsey personality, co-host of the Smart Money Happy Hour, is my co-host today.
Open phones at 888-825-5225. That's 888-825-5225.
Paul is with us in Minneapolis. Hey, Paul, welcome to the Ramsey Show.
Hey, Dave, thanks for taking the call. I have another should we pay off the house early out of our retirement question for you.
Okay. Why is this one different? Well, my wife and I are both retired.
I'm 61. She's 58.
We retired with a mortgage. And I've got a number of differing opinions from our financial guy.
I've got friends that work in the finance industry. I worked for a bank in 30 years.
I guess just looking for another opinion, maybe one with a little bit more credence than some of the others, I guess. Okay.
So how much do you owe in your home?

It's a $450,000 house.

We owe $170,000.

And how much do you have in your nest egg?

What's that?

What's your net worth?

What do you have in your nest egg?

Net worth is about a million and a quarter.

We've got just over a million.

That is investment retirement.

If your house was paid off, why would you go borrow on it? We would not. Then what's the difference? I guess it's just, okay, let me rephrase the question.
Maybe a better question is if we decide to do this, is it a process over multiple years to ease the tax burden? Do we just bite the bullet and take the hit and do it once? Or how would I do it? I've been doing this 30 years. I've never had anybody call me back and say they were pissed off because they paid off their house.
Fair enough. So one shot? I or would you...
I'd write a check today. I'd be debt-free.
I'd have been debt-free yesterday if I were you. And quit listening to all these idiots.
There's a lot of idiots out there running around with an opinion about your money, and you're a millionaire. What's your mortgage payment? Go ahead.
What's your mortgage payment right now? Mortgage payment is what, $1,200? Okay, you'd free up most of that, which now you can invest. So yes, you'll lose some out of that investment account, but you're going to still invest for the next 20 years.
Dude, you're just going to sleep so much better tomorrow. I mean, we're both retired, so invest is rolling, not necessarily additional.
You have almost zero risk in this situation because you could write a check at any minute and pay it off if you got in a pinch. You don't really need the money in one way or the other.
It's all about, you know, what is your end goal? When you're 85, do you want to have a mortgage? You know, why would you keep it? There's no reason to keep it. You wouldn't go borrow on a paid for house in order to have more money to invest.
And so write a check and sleep better tomorrow, tonight, pay it off tonight, hit the submit button. And then when you go and you get the mortgage release in the mail, make a copy of it, take your shoes off, walk into the backyard, have a mortgage burning party And tell me that didn't feel good.
I mean, there's just no downside to this. You know, you're a million.
You're going to be okay either way if you don't follow our advice, if you follow those idiots' advice. But if I've got a financial person that's telling me to stay in debt, I'm getting a new financial person.
Period. Because, George, we studied 10,167 millionaires.
The number of them that told us that they became wealthy because they borrowed on their home in order to invest was precisely zero. None of them leveraged their personal residence to build their wealth.
None of them. And so the idea that i continue to leverage my personal residence in the name of building wealth is asinine based on the millionaire data well we're seeing so much more of this because people have their record low mortgage rates they don't want to let go of dave yeah why would i have my mortgage you know but i got your mortgage rate b you know what my mortgage rate is zero i don't have one hello heck of a rate zero i got the best rate come on man so when rates go up and down you don't have to worry about them because you don't need debt anymore it's a great feeling instead of worrying about what the market's doing so yes it hurts to write that check and lose that much money lose quote unquote but you never really had it if you owed it to the lender in the first place.
Paul, pay it off, son. Pay it off.
There's a bunch of intangibles that you're not even considering in this decision. You're still acting like it's primitive math, or at least the idiots advising you are.
So you're going to sleep different. Your wife's going to look at you like a hero.
Never once have we had a wife said, you know, my husband borrowed deeply on our mortgage, and he's my hero. Never came up.
I love the Kermit vibes she had, too. That was great.
Miss Piggy meets Kermit. Well, it's the best I can do.
It's the best I can do. Anna is with us.
Is it Anna or Anna? It's Anna, I'm sure. And she's in Grand Rapids.
Is it Anna? Is that right? Yes, it's Anna. Hey, how can I help? So I recently paid off all of my student loans and am debt free.
Yay! Way to go! Thank you. Yeah.
So I I couldn't have done it without you so um but i have my three six months of expenses uh i just finished that up and i'm wondering now if i should be investing my 15 percent or if i should be saving for a wedding that my boyfriend and i are planning to have in about a year and a half. So I'm wondering if I'm leaving for that.
Wedding. Yeah? Okay.
Perfect. Are you guys paying for this on your own? We think so.
We don't really want it. We just want to plan for that and that if something comes, then we'll go for it.
But yeah, we kind of just want to plan on doing it ourselves just in case. Okay.
I would set a very specific goal, a number you're trying to hit to save. And I would try to hit that before the year and a half is over and then begin investing.
You got that money set aside. You know, you're not going to have to go into debt for this wedding.
That is the goal here. And so that's why we're telling you save for the wedding first.
Because what happens is you start investing 15%. The wedding was over budget.
Now we got to put it on a credit card. For sure.
Yeah. So what do you think you're going to spend? We're thinking maybe between, I would say probably, we're thinking between 20 and 30 depending on what rates are, but probably 25 is the goal we set.
Okay. Well, if you, yes, that, that by the way, that's about an average wedding in America right now.
So you're not above average. You're not below average.
You're right around. There's 28,000 last year.
So the thing is having three grown kids that all got married and I was involved in the budget because I was paying for it, or at least part of it anyway, all but one. All of it, but anyway, my part, the bride's part, and then my son, we participate some.

Have a detailed budget, not a general goal.

Lay it out.

Okay, this is how much we're going to spend on the photographer.

This is how much we get on the dress.

This is how much we spend on the reception.

And treat it, I'm sorry, but treat it like a project.

You're managing a project.

You are.

So you have a timeline.

You have a budget. And you, you know, you stick to it.
What must be true? Well, we can't have that. We got to have this instead.
If you don't have a very specific thing, then you'll line item, you'll get into a mess there. But that sounds reasonable, I would say, for the wedding first.
Statistics show that half of Americans don't have enough life insurance, or they don't have any at all i don't understand this john why don't people want to take care of their family they think they're not going to die or something well i used to be one of those guys i didn't even think about it and one of my buddies said hey the only reason to not have life insurance is if you hate your wife and kids and i immediately went and got term life insurance that's a gut punch for decades Dave, I've sat across people who've lost a spouse. They've lost somebody important to them.
Me too. They don't know what to do next.
You're going to have a crisis here. You know, you got two options while you're sitting and talking to a young widow.
She's concerned about how she's going to invest all this money properly and not mess this up, or she's concerned how she's going to eat tomorrow. These are the two options.
It's saying I love you to your family.

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George Campbell Ramsey personality is my co-host today.

Thank you for joining us.

Open phones at 888-825-5225.

Will is in Atlanta.

Hi, Will.

How are you?

Good.

How are you, Dave?

Better than I deserve.

What's up?

About two months ago, my grandmother passed away, and I received about a $1.1 million

inheritance.

Wow.

I'm sorry for your loss and thrilled for your blessing.

What a wonderful thing she did.

That's amazing.

You're the only grandkid?

No, I'm one of two grandkids.

Each of you got 1.1?

Yes. Way to go got 1.1?

Yes.

Way to go, granny.

Wow. But my question today was, how do I make this?

I'm 23 years old.

I was just calling to find out how do I make the absolute most of this.

So this is a little bit intimidating to you. Yes.
Good. Good.
That's a good sign. That means you're wise.
If you were having a woohoo, I hit the lottery moment, it would mean you're a child. And so I'm glad you're a little bit, that's a great, it should take your breath away.
This kind of fear is the beginning of wisdom. So way to go.
It's a good fear. I don't want you to be panicked or anxiety-ridden or anything like that, but I do want you to be aware I just got behind the wheel of a car that is way more powerful than anything I've ever driven, and I need some driving lessons.
That's what you're aware of. Good for you.
So proud of you. Good, good, good, good, good.
Okay. First thing is keep that mindset.
Second thing is never put money in something you don't understand. No matter who says to, including me, anywhere you read or hear to put money in something and you can't tell somebody else how it works in detail, do not put money in it.
Okay? Okay. Which means you might be going a little bit slow at first, because this money might just be sitting in a bank account, because that's what you grasp right now, okay? Mm-hmm.
Okay? The third thing is, the Bible says, in the multitude of counsel, there is safety. Money people, too many of them, have a little bit of arrogance in them, and they want to tell you what to do.
If you have a money person, a financial advisor, an insurance person, a real estate person, an estate planner that is telling you what to do, instead of teaching you, fire them and get another one. You want someone with the heart of a teacher because it is not their job to manage the money.
It's yours. Your grandmother didn't leave it to them.
She left it to you. So it is your job to sit with a mutual fund broker with an advisor and learn and learn and learn and learn and learn.
And you're doing that today. You called us because I want to learn what to do, right? That's very good.
But always look for someone with the heart of a teacher. You cannot offload the nervousness of this responsibility by letting someone else make your decisions.
Okay. That makes sense? Yes.
If you have to understand it and you have to have people helping you that have the heart of a teacher, that helps you understand that those two things work together. And then you're going to move slow.
You just move at the speed of your comfort at the speed of peace when in doubt don't easy enough right that is very easy yeah in other words when your stomach's moving up towards your throat you wonder if this would make your grandmother angry with you don't do it it. Which is your fourth thing.
Each time you make a decision with this money, ask yourself, would this cause her sitting in heaven to smile and be proud of her grandson? Okay? And if the answer is no, don't do it. Because this lady had some sense.
She left $2 million to her two grandkids. So I think we can use her as a filter for our decision-making, honoring her legacy, honoring her memory, causing her to smile in heaven as our filter, and that's going to help you also.
Does that make sense to you? Yes, it does. Okay.
So there's no magic formula on what to do with the money. I put mine in growth stock mutual funds and I pay cash for real estate and I live 100% debt free.
And you probably already knew that. Yes, I do.
And George does the exact same thing. Absolutely.
And when you look at this money as a steward or a manager of it, it changes the filter. And an easy way to do this is filter it through the baby steps, number one, but also filter it through three buckets, giving, saving, and spending.
So you should give some of this and be generous, just like your grandma was. You should spend some of it and enjoy it.
And you should invest probably the biggest portion of this for the future. What do you make? I currently make about $110,000 a year.
Okay. so you don't need any of this no yeah and

so here's an interesting thing if you put it in something like a mutual fund it makes 10 it'll double every seven years so you're you said you're 23 yes 23 years old so it'll be 2.2 at 30. At 37, it'll be 4.4.
At 44, it'll be 8.8. it'll be 4.4 at 44 it'll be 8.8 it'll be 16 million when you're 50 if you just don't touch it and invest it and it makes 10 percent yeah mind-blowing i i i didn't get it like wired to my bank account it just got transferred into one of the financial institutions that she was associated with.
But currently, it's split up about $350,000 as in personal stock choices and CDs, and then $750,000 as in a managed stock account. Okay.
Well, I don't play single stocks, so I probably wouldn't do that because there's more risk. but I want you to get in there and start figuring it out.

And again, there's nothing to panic about,

but feeling the weight of this as a responsibility to manage

is a proper philosophical spiritual stance for you.

If you do that, it'll cause your decision-making to be different

than just some little kid who got some money and blows it all by the time he's 26. Yeah.
Okay. Because you're not, you're already more manly than that.
I can tell. Very wise.
Yeah. I'm very well done.
So I, I, I, I don't know if he said it, but no debt emergency fund in place. That's a good spot to be investing in to buy a property with cash, a reasonable property, enjoy some of it.
And then the rest I'd be investing either in more real estate if he's comfortable or just putting it in some good mutual funds. Just take your time.
Take your time. No rush.
Yeah. Very, very calm.
Well, good question, man. So put good people in your corner that have the heart of a teacher.
They'll help you. If you want to know about the investing the way we do it and the way I personally do it and get someone with the heart of a teacher, click SmartVestor at RamseySolutions.com.
You'll find a SmartVestor Pro or two or three in your area. There are people that have the heart of a teacher and know the way Ramsey does it.
And they can walk you through that and teach you what you're doing. And they're going to move you out of those single stocks.
I can tell you that. Once you understand, you're going to move you out of those single stocks.
Paul is in Cleveland, Ohio. Hey, Paul, welcome to the Ramsey Show.
Hi, thanks for having me on. How are you? Better than I deserve.
What's up? I'm trying to – I recently graduated from college. I got about $20,000 student loan debt and about $40,000 already invested in my retirement account split between a Roth IRA and my company's 401k.
What do you make? I'm trying to balance. What's that? What do you make? I make about $60,000 a year.
Okay. You're trying to balance what? Trying to balance continuing to save for retirement and getting ahead on that.
I'm 24 years old and just making sure that I also pay off the student loans. So I have got about $10,000 set aside as an emergency fund, and I'm just trying to figure out what to do next, whether I should lump some pay down my student loans or just keep saving for retirement since the interest rates are a little bit lower than what you expect to get out of the stock market.
Well, Paul, I will talk to you as if I went back in time because I had more student loan debt than you and I made less than you. And so at 23, I was $40,000 in student loan debt.
I wasn't making any progress. I was trying to play the same game you are, balancing this all.
Here's what you got to do. Paradigm shift.
Let's try a proven plan. That means we're going to take $9,000 from this emergency fund, pay down the debt.
That's going to leave you with $11 left. Making $60, you're going to knock that out quick.
Pause investing. You'll be back to investing probably in six months if you do it this way.
Investing 15%. Don't balance debt and investing.
Get the debt cleared and then go whole log on the investing. That's what George is saying, and he's right.
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Where did you find that?

George Camel, Ramsey Personality, is my co-host.

That was direct to the booth dudes who picked out some strange bump music there, George.

That's a new one.

I know them all.

I think I'm on The Price is Right.

One dollar, Bob.

It's like a hip game show.

I would love to see you on The Price is Right, Dave.

It's not too late.

I don't know.

I was stuck on an elevator.

I don't know what happened.

All right.

Up next is Jacqueline in San Antonio.

Hey, Jacqueline, how are you?

Hi, guys.

I'm well.

Thank you.

Better than we deserve.

Good. How can we help? You didn't even ask, but I answered anyway.
What's up? Hey, you know, I already knew the answer. I'm on autopilot, Jacqueline.
How can we help? I have a beautiful, responsible 19-year-old daughter who lives with us and is about to make me a grandmother. I know.
It's funny. I said responsible first, right? Except for that one time, yeah.

Yeah, okay.

My question, well, financially responsible, hardworking,

excellent work ethic, and morally sound.

My question is, how much should I be helping her

throughout this pregnancy and throughout the first month? It was obviously unplanned, and she's had a hard time with processing the whole thing, and she is now unable to work. So I'm just kind of looking to you.
It was sort of a light came on as I was driving and listening to you, and I thought, I respect Dave's answers, so let's run it by him. Well, I appreciate that.
Sometimes when I'm facing something like that that is a little bit ethically or morally or, I don't even know, those aren't the right words, relationally overwhelming,

it helps me to say not what is the right answer today,

but what do I do today that is the right answer for 10 years from now?

Exactly.

Because we have a strong foundation with our kids of teaching them financial responsibility.

You know, we go by years for years and years.

And so what you've got is, I mean obviously obviously a baby is an awesome wonderful thing particularly grandbabies if i don't know how great grandbabies were going to be i'd have been nicer to their parents um so you know all of that part is wonderful so this is a bad metaphor but i would almost say what if she had a car wreck and couldn't work? She ran a red light. It was her fault.
And then she got hurt, right? That's not a really good metaphor because it's not as babies are much sweeter than that, right? But, I mean, that's kind of how I think I probably would look at it. I'm just thinking like a grandpa right now or like a dad.

And that's where my brain is stuck.

This is not a 39-year-old who's done heroin for 15 years and hates me.

This is a 19-year-old that messed up, made a mistake that otherwise has led a pretty good life is what you're describing to me.

That's correct, yeah.

When our kids graduate high school

thank god god didn't throw all of us out in the ditch the first time we made a mistake so i got lots of grace and mercy in this situation if it's me i'm just going to take care of her like she's 17 yeah and then but but all with the idea that we're going to lead towards a sustainable answer when she's 25.

So what's sustainable for her when she's 25? Well, obviously, financial responsibility, career responsibility, mommy responsibility, living on her own and sustaining and developing a life, whether she does that as a single mom or later on gets married to someone, right? You mind if I add one more thing in? Okay. When they graduate high school, we have them pay us rent immediately.
And the thing is, their grades stay up in college. When they graduate, they get all that money back.
So it's basically savings. If they don't, we keep it.
She was able to, in school, pay us rent $500 a month, and she also saved $6,000 working full-time in six months. So she has $7,000 in her savings account.
And really my question was, do I even let her touch that? No. Are you guys okay financially, you and your husband? We are.
We're debt-free besides our house. This is not a financial lesson.
I'm loving my my daughter through a very very tough time she had a car wreck you know and that's very validating yeah that that's what i would do and and i'm pretty hardcore on tough love as they call it uh but this is not tough love this is not a time for that for me for me this is a little scared pregnant girl and i'm gonna put my arms around her i'm a lover she's mine and we're gonna get her through this but all not with the idea that she lives in your basement till she's 39 but the idea that she's gonna because you gave her some room here to heal and to not not heal but to go through this process well and heal it's been traumatic i'm sure yeah And so to go through it and get back on her feet emotionally, relationally, make better choices going forward. This is not a pattern that represents her life.
And so let's get back on that track that she was on. And then you've got a 25-year-old that's an amazing human being.
It's an amazing mom, and everybody's happy and proud. Again, I'm not enabling into the distant future, but on the short-term here, I just completely take care of her, as if she was in ICU or something.
What do you think, George? Yeah, I'm with that, and I'm also wondering, you said she's unable to work. Is that just a short-term thing? What does that look like? It is.
She developed a pregnancy disease around five to six weeks during her pregnancy before she could even process, and she became so sick that she was hospitalized. The good news is that it does go away the moment she delivers, and she's managed now.
The hospitalization helps them to manage her sickness, and so she is medicated, and she's managed at this point and able to function, but it's very unpredictable, so she's not able to get another job. Yeah.
This is a 19-year-old and a baby. Take care of her.
Just take care of her. Yeah.
That's what I would do. That's exactly what I'm going to do.
Okay. You're a good mom.
You've got a good heart. And you're not, you know, you've raised a, I know you're tough because you raised a kid that has work ethic.
You raised a kid that's making, you're making her pay rent. You raised a kid that did this and that and this and that.
And, you know, so you're not a pushover enabler mom. I don't think.
I didn't hear that. Well, I think that's where it goes into the long-term ramifications.
If this is still a decade from now and we're still living like this in the basement, that's where we need to go. We need to have an exit strategy out of this too once she's healed up and on her feet.
In my mind, this is the perpendicular opposite of someone who's 31 years old and does this and is belligerent and says, if you don't help me, you'll never see your grandkid and all that kind of stuff. I have a completely different reaction to that person than I do this 19 year old kid.
And if you're 19 and you don't like me calling you a kid, I got socks older than you. So just calm down.
That's the deal. I love that just means I love you is all that means.
It doesn't mean that I'm putting you down, but I got a little more rings around the tree. It's a nice way to put it.
A little more age going here. So, you know, that's the thing.
So, you know, what you're looking for in relational things, period, but certainly in financial relational things is you're looking for patterns, not singular events. And patterns cause you to endorse a situation or to avoid a situation.
And that keeps you from becoming an enabler if you're wondering out there and you're a mom and a dad. So if you've got a 37-year-old that lives in your basement and will not work, that's a pattern.
You need to kick said butt into the street because you're not a blessing to them.

You are a curse to them.

You are an enabler.

You have stolen their dignity, the dignity of autonomy, the dignity of standing on your

own, the dignity of hard work, the dignity of killing something and dragging it home.

The only thing they know how to do is play Nintendo, and it's your fault. You should be ashamed.
That's a different pattern for moms and dads. And we got that out there because we got a group of males that aren't yet men that are stuck in their mommy's basement, and mommy's still doing their dadgum laundry.
And if you don't like that, that's okay. Get you a show.
This is mine. So that's how this works.
Wow. Well, nothing will turn you into an adult like having a baby.
So the maturity, we just hit the fast forward button right there. I'm just getting a puppy.
I'll do it. My gosh, a baby.
That'll push it right there. This is the Ramsey show.
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Canada is on the line. Maggie is calling.
Hi, Maggie, how are you? Hi, good, Dave. How are you? Better than I deserve.
What's up in your world? Well, Dave, I'd like to liquidate my portfolio and be able to put it, I want to trade with cryptocurrency. And I just want your opinion.
Do you listen to this show? Yes, I do. Okay.
What are you currently invested in? I have an investment account. I have TSFA and I have a RIF account.
And what has caused you to go, hey, you know what, I'm going to trade all of that to go into crypto? Because I'm losing in my portfolio drastically this year. And I just know that I don't believe I'm going to come back like for a long time.
Like, I mean, they say it'll come back, but I think it's not going to come back for 10 years, and I'm already 72, so I just feel like, and I also have experienced, like, it's not like I haven't, I have been doing crypto trading now for a while. Have you seen the crypto market? It's a lot darker than the stock market.
You're trading a paper cut for a stab. Well, I've made money in the crypto market.
How much? Probably about $10,000. Is that enough to retire on? No.
What's in your investments currently?

But I've also picked contracts that have been lower, definitely,

because I haven't had that much money to do anything with.

At your age, I'm not going to go to Vegas and just put it all on black and hope for the best.

That's not a great retirement plan.

That worries me. Let's back up.
Let's back up a second, okay? You're scared because your good investments went down. And right about the time I get desperate and scared is the step before I get really stupid.
Desperate people and highly greedy people make the worst financial mistakes, and your fear is making you do statistically or suggesting that you do statistically the equivalent of putting this money on a roulette wheel or a hand of poker because crypto is extremely volatile extremely risky at least 100 times more risky than your current retirement portfolio at least and you're telling me oh i put money in the slot machine and i came out with more money than more money than I put in. Well, I'm not doing it myself.
I have a trader that's helping me, you know, like, so I never close my market in a negative position. It's always in a positive position in crypto.
Okay. Well, Maggie, you do what you want.
I'm 62 um yeah i my net worth is hundreds of millions of dollars and i have precisely zero in crypto right and i'm not desperate and i'm not scared warren buffett said and you have you have it you know the idea that you have a trader doing it for you scares me for you even more because this is giving you false confidence a you've had some wins b you have someone whispering in your ear how wonderful they are and how they are going to take care of you which is how people that are 72 years old lose everything they own this is how it happens okay please don't do this But I don't think that the decision is really up in the air.

I think you've already made your decision.

And if I told Maggie, hey, two years from now,

your money's going to be back to where it was in your retirement account,

I don't know that she would do it,

but it's hard to see that far out ahead when you just see your accounts bleeding out.

And so you just want to do anything to not be doing that.

One of the wealthiest men in the world says,

be greedy when others are cautious and cautious when others are greedy.

And that's Warren Buffett.

And he doesn't mean greedy like being a bad person, a lack of character greedy.

He means be aggressive when others are cautious and cautious when others are aggressive.

And crypto is no place to play with money that you can't afford to lose. And you're going to lose it.
And then you're going to call me back and say, well, I had this guy who made me, you know, and he's singing a siren song. And I sure hope you don't do it, honey.
I sure hope you don't do it. Well, it sounds like this trader is probably telling her, hey, just liquidate and give me all your money.
This trader is definitely, he's talked her up big time. He's buttered her bread.
And this guy's a freaking con artist. He's a crypto con man.
Well, we've also had the quote from Warren Buffett saying he wouldn't pay $25 for all of the Bitcoin in the world. Yeah.
And I think he's got more money than me, you, and your trader put together. So, you know, and I don't disagree with that at all.
So it's just an extremely volatile market, and that's being kind. It's crazy, crazy is what it is.
But I don't have any money in it, and there's a reason. Crypto is way more down.
Well, how much is it down, George? Do you know? I mean, it depends on what coin. A lot of them went bankrupt.
There's fraud. There's scams.
97%. Oh, and by the way, too, Maggie, the number of people that have lost, the number of dollars lost not in Bitcoin or not in crypto, but in fraud associated with crypto is what? I mean, in the billions.
Billions. It's $2.5 billion at at this point have been lost to crypto.
And let me tell you who the number one target of that type of fraud and con is. People over 65.
People that are desperate and scared. Empty promises.
And so I'm not saying your trader is a con artist. I'm just saying there's a higher probability that he's a con artist than if he was in any other business because of the number of crypto con artists that are out there.
This thing has drawn the worst of the worst. And so you can do what you want to do, but you made the mistake of calling here and asking, and we will give you our opinion, and we are experts on our opinion.

Jessica is in Michigan. Hi, Jessica.
What's up? Hi. My name is Jessica, and I am 37 years old, and I'm a single mom of two, and my question is, is how do I get the momentum to, I'm on Baby step number one, I am about, uh, 30, or I'm sorry, $17,000 in debt between student loans.
Um, no cut, my car's completely paid off, but I'm just trying to get momentum into getting that cash shaved up for baby step number one. Cause I always try to validate my purchases and I'm just trying to find a way to get the momentum to stop validating.
people's purchases. Right now, I make about a little over $38 a year.
Okay. What has caused you to want to do this plan in the first place? I have been listening to Dave Ramsey off and on for about, let's see, about 11 years.
But I've really jumped into it more in the last couple of months. Wanting to change my family tree.
I come from a family where we've all not been so great with money. And my dad actually died.
I'll tell you how I did it, Jessica, as a fellow spender. Yeah.
I looked at my kids. They were babies, and we were broke because of my stupidity and I said I'm not doing this anymore I'm sick and tired of being sick and tired and every time I got ready to spend I treat I would ask myself if I had to not spend this money so that I had the money to save the life of my child could I do it could? Could I find the discipline? And that was an easy answer, of course.
And so I did stuff like I would practice going to Costco and buying nothing and walking out. And that was like a breakthrough for me.
Because I truly thought that if you went to Sam's or Costco, that they check your receipt on the way out, that it was federal law that you had to spend $200 or you couldn't get out. They wouldn't let you out.
That's why they check it. And I was that guy.
And so I just had to, I kind of had to equate it with the life of my children, which is a bit melodramatic, but it's also kind of true because you want to change your family tree, you said. Yeah.
What does 40-year-old Jessica want to look back on and say, man, I'm so glad Jessica made those decisions. And if that means, you know, taking away your debit card information from every website that you have, hiding it, having accountability with a friend, do whatever it takes.
I would think if you've got a spending problem that Amazon Prime is not even a possibility. I'm cutting that out of my life.
You've got to turn it off. If you've got a spending problem, if you're trying to say, no, I'm not going to spend.
Because, I mean, that's just so easy. It's easy for me, you know, and I teach this stuff for a living.
So you just got to, you got to equate it with a big why and you got to be sick and tired of being sick and tired. And then gradually you'll reform your character.
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Live from the headquarters of Ramsey Solutions, it's the Ramsey Show. We help people build wealth, do work that they love, and create actual amazing relationships.
George Campbell, Ramsey Personality, is my co-host today. The phone number is 888-825-5225.
Melanie is with us in Philadelphia. Hi, Melanie.
Welcome to the Ramsey Show. Hi.
So excited to be here. Thank you for taking my call.
We're honored. How can we help? First of all let me just say george i'm reading your book it's super awesome oh thank you so much appreciate that so yeah no problem so my my question is so my husband and i are in baby step two um i'm working two full-time jobs he's a school teacher and also has a training like a personal training um gig on the side that he does.
He rents his own facility, but he's had it for four years. And my concern is that he really hasn't made any profit off of the business.
He makes just enough to just pay the bills in the business. At what point do I have that conversation that it may not be worth his time in the business just because it's not bringing in enough revenue.
Anything that doesn't make money is called a hobby. Right.
It's not a side hustle. It's a hobby.
He likes personal training so much he's willing to do it for for free almost i mean he makes some money but not as much as i think he should because he's been doing it you're changing your tune in the middle of the call which is it how much does he really make net profit on the thing probably it varies every month so we can run range anywhere from 1500500 to $2,500 a month. Profit.
Oh, well. You said after he pays his bills, he's not making much, if anything.
He's not. What bills has he got? The rental on this place? Yeah, just the rental on the place, and then he has that his utilities are included with the rent in the facility and then he has like i know his internet or something that he pays okay so he's getting 1500 to 2500 and what's the rent uh 1600 so it almost takes everything so if he doesn't make 1600 in a month he loses money right okay I, I don't think it's unreasonable to sit down tonight and say, honey, I, we've got to look at this as a business and, and we need to look and see what we've got to do with your pricing and the number of clients that you have to make what you're doing over there profitable because it's not okay that you're spending all this time over there and potentially even losing money.
Right. So let's get, let's get out the numbers.
Let's get out the numbers and run a P and L on this thing and just sit there tonight and run a spreadsheet on it. How long has he been doing it? Um, he's had this place now for four years.
Okay. Well, back like you know for the last 12 months and pull the pull the revenue and then put in 1600 a month and then put in the internet fee a month and and let's see if we've really got a profit or not figure out what is hourly wages on this yeah my guess is you know you made spent $600 over there.
Right. You're making a dollar an hour.
Come on, man. As a business owner, at what point do you say, like, it's just not viable anymore? I mean, he's supposed to be like an adult and stuff.
He teaches children. Yeah.
Yeah, he does. What does he teach? Health and phys ed okay and how how what what age children uh anywhere from kindergarten to high school okay and so we would assume that they know how to do basic addition of subtraction yes and he should if he's teaching i mean really yeah I, we're, he needs, you know, you need to sit down with him and say, I need you to look at this through the eyes of a business, and let's look at it for a few minutes, and let's see if you think this is worthwhile.
But you don't need to tell him. He ought to be able to.
A logical adult male, female, should be able to come to a conclusion on this without his wife or husband telling them i mean you ought to be look at it and go i'm making a dollar hour no that doesn't cut it you know i'm supposed to be providing for my family during this time no no and you guys are in debt and so i think that's a part of this equation is we need to actually make money right now. So here's the thing.
Anytime we're in a business situation with our entree leadership clients on a side hustle or a small business idea, we do one of a couple of things. One is we have to ask ourselves, what can we change to make this viable? And if the answer is there's not a change that'll make it viable, then it's time to shut it down.
Okay. I mean, I think you guys are going to look at this and figure out, I think you're going to look at this and figure out you put $18,000 or what is $19,000 in rent into it last year,

you know, and he brought in 19,500 bucks.

I think that's what you're going to find.

Yeah, I think so too.

And, you know, so, and then how many hours you spend over there, divide that into 500

and you look at him and go, honey, what part of this is smart?

Thank you. mind yeah i think so too and and you know so and then how many hours you spend over there divide that into 500 and you look at him go honey what part of this is smart none right so you know you so we something has to change this is not okay we have to raise our prices increase the number of, or we've got to say we're not doing this anymore.

Okay.

Yep.

We're going to have that conversation.

I appreciate your opinion on that. I guess the other thing is, you know, do you have a basement?

We do.

Why don't you do it down there?

Yeah.

$1,600 a head per month instantly.

Another thing people do now is they'll go to your house and do the work out there. Oh, yeah.
Yeah. And the other thing he can do is just go work at a gym that already has personal training, and they hire him and pay him money so he doesn't have any of the overhead.
Yeah. So there's a lot of options.
Part of the equation on the business model may be getting rid of this rent. And suddenly, yeah, you're doing in-home work and in your homework, in other people's homes for them, you know, personal training, you go visit Jim, then you go visit George, and then you do whatever.
That's the dream. And they pay you money, you know.
And I have a gym in my house. We did that for a long time.
And so my wife made fun of me. She said, you know, the guy's counting for you.
But that's what you need count to 10 you're paying that in that moment paying that guy big money for counting i'm paying for accountability there's that but i i can count to 10 i already can do one two i can i can you need a guy yelling at you other than the guy in your head we don't need anybody yelling at me but um but we need someone i know if he's going to come over there then i'm going to do the workout right otherwise i might find my little butt on the sofa you know that could happen and so that's that's what you know that's what a personal trainer does sometimes we know what we can google the workout we hire the personal trainer because we need that level of hand holdingholding right now. Yeah, I mean.
That's okay.

Yeah.

So, I mean, he could provide the service, like George is saying, charge even more to come to people's homes in person and or in your basement and or if you're going to keep the location, you got to make the location.

Having the location needs to cause you to make more money than not having the location would cause you to make. I think you're going to get rid of this location at a minimum.
This is the Ramsey Show. All right, Dave, you have some strong opinions.
Possibly, yeah. I think so.
Okay, because you really prefer credit unions over big banks. So why is that? Well, credit unions, for one thing, are non-profit, which means that the members, the customers own the credit union.
So any profits that the credit union makes goes back into customer pricing. So you get better interest rate on savings, cheaper checking, and so on, that kind of thing.
But what's more important than that, though, is the fact that the customer is the owner changes the spirit on the credit union. So I find very few credit unions that aren't very customer-centric.
Yes. Well, and I think we have found one that is incredible, and that's Fairwinds.
They are an incredible credit union that is really out with the heart to help the customer.

You know, that's why we're partnering with them.

Because they've got a scope to be able to handle the Ramsey audience.

And they're the right kind of people with the right kind of values.

And they've done a really, really good job with customer service.

And the deals that they're offering, the Ramsey tribe is incredible.

Yeah, absolutely.

And you're right. Their customer service is unbelievable.
Winston and I just signed up and we got an account. And I'm not kidding.
It took less than five minutes. It was so user-friendly.
The step-by-step approach was unbelievable. And then the next day, my phone rings and it says Fairwinds on my phone.
So I answered it and talked to someone there and they said, yeah, they give calls to every new customer. And so again, they just really care about your experience.
And I so, so appreciate that. So again, you guys, I know it can be a pain to switch banks or to open up new accounts, but Fairwinds, again, they make it so easy.
Plus anything that you can do at a traditional branch, you can do with them at fairwinds.org or on their app, and you'll have free access to over 33,000 ATMs. Hey, you guys know how much I hate banks in general, and so for me to do this is a big deal.
Talk to our friends at Fairwinds and check out the combined checking and savings bundle that they created just for the Ramsey tribe. You guys, it's incredible.
Yeah, you guys, it's so easy to join Fairwinds no matter where you live. So go to fairwinds.org slash Ramsey to learn more.
That's F-A-I-R-W-I-N-D-S dot org slash Ramsey. Listen, I know a lot of you would rather watch paint dry in slow motion than file your taxes.
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George Campbell Ramsey personality is my co-host today. Today's question of the day is brought to you by Y-Refi.
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Today's question comes from Chad in South Carolina. He says, I work full time and I have a lawn care business on the side.
Part of my business income was paid in cash and partly by payment apps like Venmo, etc. I've been paying taxes on everything except the cash, and I was wondering morally and legally how I should handle that income.
Obviously, I already pay a lot of taxes and I'm trying to save money where I can. Should I feel bad about this? And if so, should I clear everything up with the IRS and pay back what's due to them? You can decide if you want to go back or not and deal with it and how far back you want to go.
But income in America, regardless of how it's received, is taxed. That's the law.
And so it is a moral and ethical thing to pay taxes on money you receive as cash, period. And I pay taxes.
I mean, if we get paid in cash for something here, it all goes into the revenue, and it all goes into the calculation, and we pay taxes on it, just like we do everything else. So mechanically, how you can do it is when you get paid in cash, just deposit it into the business bank account,

and then it'll be reflected there as income, and that'll help you do the totals and figure out what you're supposed to do with your quarterly estimates on your business.

That's the mechanics of it.

So, Chad, one of the things I read several years ago that really leans into this george as far as i'm concerned is um tom stanley the great tom stanley who did the original book the millionaire next door he and i became friends before he passed away his daughter sarah we interact with her now she still does research on millionaires and billionaires and so forth. He did another book called The Millionaire Mindset Later.
There's two books by that name, but he did one by that name, where he studied billionaires. That wasn't millionaires, billionaires.
And he studied people who had accumulated a billion dollars from nothing and so these were very very billions a thousand million and he did he went out this one this research a little bit different he tried to find the correlating things in their life you know marriage were they married one time had they been married six What was their education? You know, what were the things in their life that led them to be in a position to do this? And he found 37 different items or things that he correlated, and then he forced-ranked them in how often they appeared. So number 37 appeared the least often among the billionaires, and number one appeared in every one of them.
And number one that appeared in these people who became billionaires from nothing was that they had fanatical levels of integrity. Character.
he interviewed a competitor a friend an employee a former employee his kids his wife when they spoke of this man they always spoke of impeccable integrity not just honesty but integrity is a wholeness to it and it's a he's the same on sunday as he is on monday if he says he says this guy's falling duck i mean this guy is impeccable fanatical about his integrity and that reinforced to me that when i don't pay my taxes it has nothing to do with whether the taxes are just or not.

It has to do with I'm not doing the right thing.

It's my integrity.

It doesn't reflect on them.

Anybody who has walking around since pretty much agrees

that the federal government and the IRS and the income tax system

is a complete moronic train wreck. It's absolutely unfair and horrible.
But that doesn't say anything about my integrity. My integrity is I'm going to follow the law exactly.
It's what they said to do. I'm not looking for a shortcut.
And so we report every stinking dime that we take in at the Ramsey's because it makes a statement about me, not about them. And then I'm going to also make another statement about me.
I'm going to spend a lot of money with attorneys and CPA firms to try to figure out what I legally don't have to pay. And I'm not paying a stinking dime more than I got to on the other side of that, because I hate them.
But still, my dislike of the tax system is not going to be reflected, not going to change me as a person of integrity, because I want to be on that list that Tom Stanley did. You know, I want to be in that lineup with that Hall of Fame right there.
If you want to build sustainable wealth and have your integrity intact, pay your taxes, Chad. So that's it.
It's that simple. And, you know, I'll go so far as this.
Let me just, let's just carry that on out a little bit. Fanatical integrity means like when you work for someone and they pay you to work there.

When you're not working, you're stealing.

When you're sitting on your Facebook account for three hours while you're being paid to do work that you're not doing,

that's not integrity.

That's stealing. It's not cute.
Everybody does it, but everybody's broke and everybody doesn't have a good life and everybody struggles in their relationships and everybody can't deal with anything except their anxiety and their heart attacks and their obesity and everything else. So everybody you don't want to be like.
So here's what's weird. Even if it's not popular with your coworkers, while you're at work, work all day, every day, because that makes a statement about you not about them it's not about well my boss is toxic oh kiss my butt because they wanted you to work now you are you have a toxic

ball it's a toxic work environment they expect me to work and i can't live on facebook you're

killing me here dad come snowflakes work while you're at work it's an integrity issue

Thank you. can't live on Facebook.
You're killing me here. Dadgum snowflakes work while you're at work.
It's an integrity issue, you know? And so it carries, get there five minutes early, get there five minutes late, leave five minutes late. Don't be the first one screeching tires out of the dadgum parking lot every afternoon.
You know, it's not that hard. That's a sign of of integrity it's a sign of integrity and i figured out being on time is integrity i hate that one once i figured it out though i'm i'm i'm trains run on time around here we put a little clock up on things staff meetings got a little countdown clock and we start at 8 30 we don't start 8 32 we start at 8 30 and you come wandering your little buddy and six minutes late it's you know well there's traffic well there's traffic every day there's nothing new about that you know there's traffic of course there's traffic you know i had to get the kids ready for school every day you know it's not a surprise you know we do you know if i tell sharon i'm gonna be home for dinner at 5.30, I come walking in at 5.37, she's like, it's getting cold.
Food's cold. Getting cold.
You said 5.30. And she's not a butt about it.
I'm not a butt to our team about this stuff. But these are things I had to start talking to myself about.
And that type of character is the type of character that grows billionaires.

Chad.

And so pay your taxes, honey.

Every dime of them.

Hope that was clear.

It is true, though.

It's interesting how that carries through every part of your life.

Your career.

Your marriage.

Your relationships.

Your finances.

Being the person you said you were going to be. Being a person of character.
Do what I said I was going to do. Follow through.
Follow through. Follow through.
And, you know, God, I can't stand being late. Because it says I didn't think they were important enough to get there on time.
It's arrogance. I can't stand it.
Stinking airlines. Unbelievable, man.
What's Delta mean when you look it up in the Greek? We ain't gonna be there. That's what it means.
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George Camel, Ramsey Personality, is my co-host. Joe is in New York City.
Hi, Joe. Welcome to the Ramsey Show.
Hi. My parents have recently taken out two loans to remodel their home in the amount of $55,000.
And they're trying to tell me I'm responsible for it. And I want to know if I should agree to this or not.
I'm sorry. Why would you be responsible for a loan on their house? I'm confused.
Because after I left college, I moved back in with them, and I've been with them for the past five years. So? That's how I see it as well.
Was there not room for you, and they had to create an extra room for you, and you requested this? No, it was my same room from high school. In fact, when they were looking to get the home redone, I told them no.
I was part of the conversation with the contractors that came to look at the house. How old are you? I'm 31.
Why do you still live at home? I have a lot of student debt I'm working through right now. You need move out i agree with you you should have moved out 10 years ago what in the world what in the world i mean i know you're not obligated morally legally ethically anything here i have no idea where they got this um i don't i don't understand the conversation even but i also am not going to tell you to stay there one more minute.
You shouldn't be there. It's not good for you.
Yeah, I've been paying down my student loan so I can recast. It doesn't matter.
It's not good for you. Even if it slows down your debt payoff, this is stunting your growth and it's causing this relationship to be strained, which it may already be too strained to repair.
I don't know. What do you do for a living? I work with the local Department of Social Services.
What do you make? $60,000 a year. Okay.
So your degree is in what? It's in environmental science. Okay.
And what do you owe on this degree?

Oh, when I last booked, $110.

Okay.

Well, it sounds like you probably are going to have to make some career choices as well.

And you're probably going to have to pick up some part-time income and be working like a maniac because you're not, you're not making progress.

Okay.

You're, you're not, you need to be paying like 30,000 bucks, 40,000 bucks a year

on the loan to make it go away in two or three years.

And, um, and you can't do that making 60 living in New York city.

And so you're probably need a different job and you need six other jobs in addition to that.

And let's get your income up and get you out and get you into the world in a sustainable situation.

So the odd thing is, is the reason you stayed there was to pay down your student loans, and you haven't.

Ta-da time to go bud time to go get you a better job go get you lots of jobs and get you a different place to live and pay down the student loans for real this time but uh so that was mythology that you told that was a lie you told yourself so that And you didn't mean to, but lots of people do this.

Five years with very little bills, you should have made some serious progress on the debt. And it sounds like it's just you get comfortable living at home.
You sort of resort to your old childhood self, and you don't make as much progress as you think. And, you know, the frustration with the 31-year-old still living in your basement could boil over into a misguided, toxic claim that you owe us money for us taking out debt.
You know, like the parents have kind of lost their minds a little bit. And this is their...
Resentment starting to show? This is their toxic methodology to solve a failure to launch.

Well, we can get them to pay us back. This is our way of kicking you out, because we don't know how to do it.

And we're all really frustrated.

So that's probably where some of this is coming from.

But to answer your question, no, you do not owe the money.

Yes, you should be gone by the end of the month, at the end of next month for sure. And you may need a new job by that time too.
And you may need a new state to live in by that time too. You need to live in an affordable area, make a pile of money, and clean up the mess.
Because while you were living with a place with no rent you made

no progress or no sustainable progress no measurable progress tom is in chicago hey tom how are you dave and george is it it is an honor to speak with you both you too what's up I've been renting a townhome for many, many years, and the homeowners through their property manager have informed me that they now want to sell and have asked me if I'd like to purchase it before they list it. I don't know how to handle it in that situation without it being listed.

Of course, if it were just a house that I was looking for, I don't know how to handle it in that situation without it being listed.

Of course, if it were just a house that I was looking after,

going after in a normal situation, I'd get a realtor.

Do I get a realtor in this situation?

Since it's not being listed, I don't know if I'm allowed to do that.

You're allowed to do anything.

It's just a matter of who's going to pay for it and whether you actually need it or not. So you need a mortgage, right? Mm-hmm.
And you need someone to guide you through the contracting process and the mortgage process and the appraisal process and all of that. Are they giving you a price on the property? Yes.
Okay. They've given me 330, uh, based on some comps, uh, that the property manager pulled up, who is a realtor.
Uh, I didn't like the cops. I wasn't, I didn't agree with those comps.
They were in an area not very close to me. And when I looked them the homes were much nicer than uh than this than this home so i don't know how to you know combat that so they have they have a real estate agent it's called a property manager it's a licensed real estate agent yes and they're probably going to list it with this person eventually uh but they're asking me before they list it yeah but it doesn't what's the benefit to you and there's no benefit to you you're not getting a deal there's no bargain i guess the deal i guess the benefit is that no one else would be able to make an offer on it oh yeah okay um i mean if you had a transaction you were comfortable with and you can go through and get your mortgage and everything, you can go to a title company, get a contract drawn up, and do this.
I think this transaction is so far from happening that you probably do need a pro in your corner to help you navigate the negotiation and then help you navigate the closing, help you navigate the appraisal, help you navigate the getting of the mortgage and all the different things, all of things you don't know how to do. But if you had all those things already lined up, you don't have to have a real estate agent, but you can, in this case, I think you'd benefit from one.
And just say, you know, if they list it, typically what happens is the listing agent, in this case the property manager, they're going to put a 6% commission on it or something about like that. And then the agent that represents the buyer is going to split that with the selling agent typically.
That's a normal transaction. And so, you know, if you get a real estate agent to represent you

and they work with the selling agent before it actually goes on the market

but a commission is still paid, it didn't cost you anything.

It cost them something.

And, you know, let me tell you, if you just buy it right now,

I think this agent is going to get both of the commissions. They're probably going to charge the seller a full commission.
So, yes, the answer is I'd go get a real estate agent. Yes.
In your situation, I would. Yes.
I mean, it's kind of borderline, but I think there's a lot of...

A, there's another real estate agent already involved.

Okay?

B, you don't like the comps, so you've got some negotiating to do.

C, you've got to have somebody walk you through the closing process and the mortgage-getting process and the appraisal process.

So all of those things tell me, yeah, I put a real estate agent in your corner.

It's just worth it for the stress factor at this point. Well, and the expertise to guide you through a journey that you've never been on.
They might negotiate and save you 30 grand to where it was, all right, it was worth it. RamseySolutions.com slash agent will help you find a Ramsey trusted agent in your area to help you do that.
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Open phones at 888-825-5225. Danny is with us.
Danny is in Boca Raton. Hi Ben.
Danny how are you? I'm doing all right. How are you? Better than I deserve sir.
How can we help? So I have a three-year-old and a six-week-old. Me and my wife would like to put some money away for them.
We were wondering what the best thing would be. Okay.
Well, we teach folks a thing called a process for becoming wealthy and taking care of all the different components of our life called the baby steps. You may have heard of that.
You may not. But the first thing you would do is not put money aside for your kid.
The first thing you would do is to set money in an emergency fund of $1,000, a beginner emergency fund. The second thing is get out of debt, everything but the house.
How much debt do you guys have? Pretty much none. We only have two credit cards, but there's no debt on them.
We have about $3,000 in emergency funds. Okay, no car debt, no student loan debt? Nope.
Good. What's your household income? Together is about $80, $85, $90.
Okay, cool. Well, once you've done Baby Step 2 two, which is debt free, but the house, all that means is you need to place some scissors across those credit cards and cut them up, start using debit cards.
So you don't accidentally slip into debt, which people do all the time. Then we would go on to baby step three, which is finish the emergency fund.
And you're short on that. You got a $3,000 now account and it needs to be three to six months of expenses.
Once you have that, then you would begin investing in your retirement, 15% of your income going away for retirement. And once you got that started, then you start saving for the kids college, which is what you're calling about.
And, uh, but the best thing you can do to stabilize the family for the kids is to, uh, you know, to know, to be out of debt and be building your investments. And then in addition to that, we can start saving for kids college.
If you click on SmartVestor at RamseySolutions.com, you might find a SmartVestor Pro that you will find, a SmartVestor Pro that we recommend. Sit down with one that you like that has the heart of a teacher,

and you'll want to learn about 529s and ESAs

and putting money in mutual funds for your kids' future.

Is that what we're talking about here?

Yes, sir.

Okay.

It says on my screen something about an IUL.

Yeah, we were looking through those because um well you got a friend in the insurance business yeah yeah guess what which by the way is gonna make by the way more yeah so IULs are awful it's an indexed universal life you never do investing inside of an insurance policy.

It is the world's worst place to do investing.

The only people in all of the financial world that recommend that you invest inside of a life insurance policy are insurance people.

Nobody else does.

Nobody else believes that crap.

It's so outdated, so outmoded, covered in fees, horrible product.

Don't do it.

Was I unclear?

No, sir.

Okay.

And by the way, your kids don't need life insurance.

Life insurance is meant to replace your income in case something happens to you.

So you, your wife, you both need a good term life policy, meaning it's not for your whole life.

We're talking about a 15-, 20-year level term life policy, 10 to 12 times your income. If you have those in place, you can rest easy at

night. Yeah.
And then if something happened to the two of you, your kids will be taken care of,

right? Right. And you get that at zanderinsurance.com.
They'll shop a gazillion

companies, get you the best deal. That's who you deal with.
And it's way more affordable than

this IUL policy. It'll be 5%.
$5. if your IUL is a hundred bucks this will be five bucks.
It literally is five percent. It's horrible man.
So just stay away from that. So you know walk your way up into investing in real investments and in the meantime make sure you've got term life insurance in place and you've got the whole thing taken care of.
Dave, I'm seeing this all over social media. I don't know why, but the young people are gravitating towards these universal life policies.
And here's how it's marketed. They go, you know, you're supposed to use your life insurance while you're alive.
Did you know that? And everyone's like, oh my gosh, this is brilliant. This investing policy inside of my whole life.
Oh my gosh, this is amazing. I'm going to become a millionaire.
And the commissions and fees these guys are making selling this crap is insane. And the amount of time you have to spend pulling that premium every single month in order to make any amount of money is absurd.
I don't know how it's legal. The indexed universal policy is a newer version of an old bad idea is what it amounts to.
And so what you're going to find if you take this product apart and look at the components of it, the insurance portion goes up every year. It's basically what we call an ART, an annual renewable term.
Term insurance, all life insurance gets more expensive every year that you're alive period because you're

statistically more likely to die every year you're alive right brilliant so if you're 51 you're more likely to die statistically than if you're 50 period okay end of story now why would you get how do you get then a 15 or a 20 year level term insurance well it is cheaper than the average of the 15-year of increases. The ART would start out cheaper, and it would end higher, and the lines would cross right in the middle, hypothetically, if it was exactly how you see what I'm saying.
So the ART would go straight up, and the 15-year would be level, and it would cross right in the middle at seven and a half years. However, it doesn't do that because it is cheaper for an insurance company to produce a 15-year policy because they keep you for 15 years, called persistence in the real insurance business, than it is for them to try to get you to stay with a policy that goes up every year.
Can you imagine that if you get a bill and every year it goes up, you're probably more likely to cancel that? So that policy doesn't stay on the books. So it's more expensive for them to sell ARTs.
So net result is a 15 year is way cheaper than the average of 15 years of ART. Okay.
Now the index universal goes up every year inside the policy, but you don't see it. So if you've got a $400 premium, a certain portion, like on your, you know, if you ever look at your mortgage, your mortgage payment, a portion goes to interest, a portion goes to principal.
The further you go along, more goes to principal, less goes to interest. This is exactly the opposite.
The further you go along, more goes to insurance, less goes because the ART is going up every year inside there, less is going to your investments. And so if you keep the stupid thing long enough, it will begin to be the point that the premium you're paying will not even cover the insurance cost.
And so it starts to eat back into your savings just to keep the policy alive. And the thing gets what we call upside down in the insurance business.
And so now you've got a real piece of crap that's eating itself from the inside out. But they pitch it as this really sophisticated, nuanced, it's so complicated, you don't understand.
Just trust me as your insurance guy. I'm going to make you lots of money.
Let me give you a clue. Okay.
When you drive past most cities, the skyline has banks and life insurance companies. These are the two towers in every skyline.
Santa Claus didn't build those. And those people didn't build them with wealth they inherited.
They built them with money they took from you. Banks, screwing you.
Life insurance companies, screwing you. This has been going on for decades.
Nothing new. It's not a new, it's not a new song, not a new dance.
And just because you put it on TikTok, for God's sakes, doesn't make it smart. As a matter of fact, that kind of dumbs it down.
That's a trigger word for you. I'm sorry.
I shouldn't have mentioned anything. I mean, it's just like, what we teach is that you should take the difference that if you pay a five bucks for term life versus a hundred for whole life, take the 95 bucks you would have spent and invest that.
And you're going to be way better off than having touched one of these crappy policies. Oh, here, by the way, after you paid an extra on this all these years and you die, they only pay the face value.
They don't pay the face value plus your savings that you've been paying extra to build. So it's like a savings account with a crummy rate of return.
They get locked up. That when you die, they keep your money.
I mean, who would bank with that? Oh, people that buy stuff on TikTok. I think Danny needs better friends.
Yeah, well. It's time.
No, I mean, that happens to everybody. Because that's how most, particularly whole life, permanent life, crappy life insurance is sold, is some old friend from college suddenly remembers you.

My buddy from Northwestern Mutual said, let's be done with that.

Oh, that's horrible.

That happened to me.

That happened to me.

I bought it when I was a child boy.

Yep, sure did.

I did the same stupid stuff.

And I have a degree in finance.

And I fell for the crap.

Now he's a grown man, America.

He made it.

This is The Ramsey Show.