If You Want To Be a Millionaire, Do What Millionaires Do

Speaker 1 Live from the headquarters of Ramsey Solutions, this is the Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships.

Speaker 1 I'm Dave Ramsey, your host, number one best-selling author, and Ramsey personality Ken Coleman is my co-host today as we answer your questions about your life and your money.

Speaker 1 The phone number is 888-825-5225.

Speaker 1 Merry Christmas, America. We're so glad you're with us.
Brittany is going to start this segment in Charlotte, North Carolina. Hi, Brittany.
How are you?

Speaker 2 Hi, I'm wonderful. How are you today?

Speaker 1 Better than I deserve. What's up?

Speaker 2 I've got a question for you. So my husband and I have started doing the baby steps.

Speaker 2 We have started our budget, and we are just trying to figure out where do we put this leftover money that we have at the end of the month.

Speaker 2 I have quite a few student loans

Speaker 2 as well as our car payments.

Speaker 2 We have a credit card and we have a $10,000 personal loan that my husband just had to take out because he had issues with his truck.

Speaker 2 So I'm just trying to figure out what's the best bang for our buck as far as this leftover money that we have at the end of the month. Okay.

Speaker 1 $10,000 worth of issues on a truck?

Speaker 2 Yeah.

Speaker 1 One in the world.

Speaker 2 What?

Speaker 2 So apparently the engine had some kind of issue, and it's a no-manufacturer problem. Recall hasn't happened yet, but yeah,

Speaker 2 it's going to be give or take about $7,000 to $10,000 to fix it.

Speaker 1 Okay.

Speaker 1 Yeah.

Speaker 1 And you already took out the loan?

Speaker 1 Yes, he did. But the work hasn't been done?

Speaker 2 They are starting it and doing it now. Oh, okay.

Speaker 1 All right.

Speaker 1 All right.

Speaker 1 Okay. So the first step to getting out of debt is quit borrowing more.
That's why I was asking.

Speaker 1 So

Speaker 1 the

Speaker 1 baby steps are your order of attack. That's what they're for.
So we start with number one. Do you know what number one is?

Speaker 2 I have to have a $1,000 emergency fund.

Speaker 1 Starter, beginner, emergency fund. Do you have $1,000?

Speaker 2 Yes, sir.

Speaker 1 Do you have more than $1,000?

Speaker 2 We have about $1,600 in our savings account right now.

Speaker 1 Good. Okay.
So we're going to take $600 of that and any other money we can squeeze out of the budget, and we're going to apply it to baby step two, which is the debt snowball.

Speaker 1 Does that sound familiar? Yes, sir, it does. Okay.

Speaker 1 And the debt snowball is where you list all of your debts, smallest to largest, except your home, pay minimum payments on everything but the little one, and attack the little one with a vengeance.

Speaker 1 Yes. What's your smallest debt?

Speaker 2 It's about

Speaker 2 the, and that's, I guess that's my biggest question is within my student loan, it's a bunch of smaller little loans.

Speaker 1 Okay, what is your smallest debt?

Speaker 1 They're little debts. They're small, some small student loans.
It's not by category, it's by debt. $2,000.

Speaker 2 What?

Speaker 2 It's a $2,000 student loan.

Speaker 1 Okay, good. So we're going to throw $600 out of savings at that and any other money we can throw at it and try to get that paid off in about a month here, right?

Speaker 1 Yes.

Speaker 1 What's your household income?

Speaker 2 We make about $215,000 a year. Okay.

Speaker 1 Him and I both combine. Excellent.
And what's your next smallest debt?

Speaker 2 It's another $3,000 student loan.

Speaker 1 Good. I want both of those gone by the end of January.

Speaker 1 Okay.

Speaker 1 Including the $600,000 we're pulling out of savings. You see how we're doing this? Boom, just like that.
And every dollar we can squeeze out of this wonderful income that you have,

Speaker 1 we're going to attack, attack, attack, attack, attack. Now, if you do not need but seven thousand dollars then take three of that borrowed money and put it back on that loan

Speaker 1 okay and you have a seven thousand dollar loan for your debt snowball instead of a ten

Speaker 1 right okay

Speaker 1 and uh it sounds like everything the truck's already down there and this deal is already done i might have challenged even how to fix the truck but sounds like we're already um cows out of the barn on that one so

Speaker 1 yeah but

Speaker 1 good news is you have a fabulous income. What is the total of your debt?

Speaker 2 Well, not counting our home, it is $125,000.

Speaker 1 Oh, excellent. If you live on beans and rice, you'll be out of debt in a year.

Speaker 2 That's the plan.

Speaker 1 Okay. I love it.
And no eating out and no vacations and no more borrowing money. And we're going to attack this to the tune of about $10,000 a month.
And we're going to be out of debt in one year.

Speaker 1 And that still leaves you $100 and something thousand dollars to live on. Oh, darn.

Speaker 1 Wow, that's a pretty cool plan. That's how you do it.
That's your order of attack. And then once that's gone, we go back to the $1,000 account.

Speaker 1 Baby step three is we raise it up to three to six months of expenses, a fully funded, proper emergency fund, because $1,000 is not enough. We all know that.

Speaker 1 And then once that's done, then you do baby steps four, five, and six simultaneously. Four is you start putting 15% of your income away in retirement.
Five is you start funding your kids college.

Speaker 1 Six is we throw everything else we can get our hands on at the house and get the house paid off. It usually takes about five or six years to knock it out.

Speaker 1 And then once you finish that up, you're at baby step seven, which there's nothing left to do then but become very wealthy and outrageously generous. And it just works, Ken.

Speaker 3 Yeah, because it's momentum. And I think it's so great to hear new callers, new people coming in, listening to what Dave just laid out.

Speaker 3 The secret to the baby steps that Dave figured out a long time ago is the sheer momentum, the emotional momentum of knocking out those debts and seeing that there is a path out of this.

Speaker 3 Because for a lot of people, $120,000 of debt, just the sound of that is bone-crushing. And so to understand that we can do this one step at a time, it's really, really huge.

Speaker 3 And I got to say, back to that truck issue, something like that happens. I think people automatically, Dave, they default to,

Speaker 3 I've got to go into debt because this is my car. And they don't sit there and go, what what are all of my options right now that don't require taking out debt?

Speaker 3 They just immediately default to, well, it's my car. And that's a bit of a trap.

Speaker 1 It is. And well, here's the thing.
Most Americans, that's a good point, solve their problems with a debt payment. They get a new debt to solve a problem.
I want to go to college.

Speaker 1 I don't have any money. So I'm now on a student loan.

Speaker 1 I don't have a car. I like that car.
Now I have a car payment.

Speaker 1 And I want to go on vacation, and I don't have any money. So now I have a vacation loan.
Oh, wait a minute. Christmas this year is in December.
It caught me off guard.

Speaker 1 Oh, that's going to be some credit card debt.

Speaker 1 Anything that's a surprise and everything seems to be a surprise, we solve our problems with a new debt payment. And you're going to be in debt the rest of your life.

Speaker 1 And that's what the banks have taught you to do. And it's a mindset that, Ken, you're exactly right, has to be broken where you say, I don't borrow money anymore.
So now what am I going to do? Yeah.

Speaker 1 Yeah. Remember that you're going to take it off the table.

Speaker 1 It's not even on the table grandma used to say where there's a will there's a way yeah and I believe if you will yourself to not use debt as an option you can get pretty innovative in fact that's where innovation comes from a lack of resources that's the very nature of innovation they figure out a way to solve a problem yeah people that have uh a lack of resources get more creative always yep always i have gotten very creative many times over the years once i drew a line this end and said i don't borrow money so that's part of her story going forward now That's the plan.

Speaker 1 This is the Ramsey Show.

Speaker 1 Ken Coleman, Ramsey personality, number one best-selling author of the book Paycheck to Purpose. He's my co-host today.
The phone number here is 888-825-5225. Ray in Houston, Texas.
What's up, Ray?

Speaker 2 Hey, Dave. How are you?

Speaker 1 Better than I deserve. How can I help?

Speaker 2 Okay.

Speaker 2 so I am 27 years old and I just finished filing well I mean just completed chapter 7 bankruptcy and I have no idea what to do next financially at all

Speaker 1 I'm sorry wow

Speaker 1 are you working are you working

Speaker 2 yeah so right now I'm just bartending I'm still trying to find a job in my career field in the meantime which is what what field is that

Speaker 2 I have a degree in chemistry, so I was working as a lab assistant, but it was a contract-based, and my contract wasn't renewed.

Speaker 1 What's the path, though?

Speaker 3 What's the ideal path that led you to a chemistry degree? Where do you want to be?

Speaker 2 I thought I just wanted to be a chemist.

Speaker 2 I'm not sure if that's still what I want to do at the moment.

Speaker 3 Well, I'm not worried about the moment, but I am trying to think about this long-term play because now you're rebuilding your life.

Speaker 3 So is chemistry off the table, a career in chemistry off the table, or is it still on the table?

Speaker 2 It's still on the table.

Speaker 2 Still on the table.

Speaker 1 What's that income look like?

Speaker 3 What would be a top income in your field?

Speaker 2 Usually like around 70,000, 80,000.

Speaker 2 Okay.

Speaker 1 So Ray, what happened? Why did you file bankruptcy?

Speaker 2 I was married

Speaker 2 and we divorced and

Speaker 2 I

Speaker 2 was I also lost my contract job so I just had a lot of debt and I just stopped paying for everything and

Speaker 2 I felt like there wasn't any other options to do except follow chapter seven.

Speaker 1 Okay. What was the debt?

Speaker 2 I had a car loan for about thirty-five thousand dollars.

Speaker 2 It was about fifteen thousand dollars in credit card debt and my student loans, which is about sixty and they're not bankruptable.

Speaker 2 Well, I actually was able to get them discharged, actually.

Speaker 1 Oh, they're private. They're private student loans.
They're private student loans then. Okay.
Yes. Okay.
Yeah. All right, good.

Speaker 1 All right. So when I was 28, many years ago, I filed bankruptcy, Chapter 7.
I lost everything, and I went through it. It was very painful and

Speaker 1 a lot of shame that I had failed because I had.

Speaker 1 And it took some of my confidence away.

Speaker 1 And so

Speaker 1 the way I chose to react to that was to do an autopsy on my stupidity

Speaker 1 and say, what put me here?

Speaker 1 What are the things I believed that were obvious lies? that put me here.

Speaker 1 You follow me? In other words, if you're going to go through that kind of crap, at least learn the lessons, right? At least pass the test. If this is a test, at least pass the test.

Speaker 1 So you never go back for those reasons. So

Speaker 1 you bought an education you couldn't afford. You bought a car you couldn't afford.
And you had no savings.

Speaker 1 So when you went through a job loss and a divorce, everything came tumbling down because you had a lot of debt and no money. Does that sound right?

Speaker 2 That's correct.

Speaker 1 Yeah, that's the CSI on your deal. So how do we recover from that? Well, we do the opposite of that.
We pile up cash and we have no debt.

Speaker 1 And that's what I've been doing now for 35 years.

Speaker 1 It worked, too, by the way. Good news.

Speaker 1 So next time you need a car, you pay cash for it or you don't buy it.

Speaker 1 The next time you need to take a class, you pay cash for it or you don't buy it.

Speaker 1 The next time you need to dot, dot, dot, fill in the blank stupid stupid American thing we do and don't do it unless you pay cash for it.

Speaker 1 And

Speaker 1 part of my written monthly budget for the rest of my life from age 30 to age 64 today has been the first line in my budget is giving. I'm a Christian and I tithe to my local church.

Speaker 1 That's the first line. First thing that happens to money when it comes to us.
The second thing that happens is savings.

Speaker 1 And then we eat.

Speaker 1 We're always going to give and we're always going to save and we're always going to eat.

Speaker 1 But we don't purchase crap while we've not been generous and while we've not saved money. These are basic principles and they're kind of common sense if you think about it.

Speaker 1 But no one does them, Ray, and that's why most people are broke.

Speaker 1 This is how you recover, kiddo.

Speaker 1 And you do what Ken's talking about, and you start,

Speaker 1 let's get your career in business. Okay?

Speaker 1 You're not tending bar because it's what was your goal when you were 16 years old.

Speaker 1 You're tending bar because that's where you're hiding while you're recovering from these wounds of a lost job, a bankruptcy, and a divorce. You've had three major blows emotionally.

Speaker 1 So I don't want you to come out of the cave and go be who Ray's supposed to be, which is a chemist making hundred grand a year or whatever it is you want to do. I don't care.

Speaker 1 But God made you to go do something, so let's get that figured out because that's going to bring you in more money than you're making now, more satisfaction than you're making now.

Speaker 1 And then you can start saving and giving and avoiding debt going forward with a plan. Does that all that make sense?

Speaker 2 It makes sense. Yeah.

Speaker 3 Ray, I just want to add that, Dave, I'm curious to know what you would say to this, having walked through this yourself. But Ray, I've got a friend of mine.

Speaker 3 He's a big fitness expert, and he says, exhaust the body, tame the mind.

Speaker 3 And I think there's a bit of a truth there for you in this situation in the form of not necessarily working out, but I think you need to be working as much as you can.

Speaker 3 I'd like to see you make the transition into your field because that's your greatest potential for income.

Speaker 3 But whether you're working at a bar or you're working three or four jobs right now, I think you need a mental win. And I think you do it two ways.

Speaker 3 You're working so hard that you have nothing else going on and you're piling up cash, as Dave says, because I think you need the emotional win

Speaker 3 and I think you need the mental win and not beat yourself up anymore.

Speaker 3 I think you need to see yourself establish that bank account and get it growing, and watch yourself get some momentum of putting cash in the bank so that you convince yourself, I can actually do this.

Speaker 3 I'm not a moron. I'm not the only person that's ever gone bankrupt.
Dave Ramsey has, and he's done well since. So, I just think that would be my encouragement to you.

Speaker 3 Stay busy right now, be as busy as you can, can, not to

Speaker 3 detach, but to grow from this and to exhaust your

Speaker 3 work body and your work mind

Speaker 3 so that you can say, hey, I'm actually winning and I can build myself back up. I can come out of these ashes.
That would be my recommendation.

Speaker 3 I think that's the best thing coming off of a big loss because I think it's traumatic.

Speaker 1 Well, and what happens is you start getting some wins and it rebuilds your confidence. That's part of answering the question: how do I recover? That's it.
Is you rebuild your confidence? I had to,

Speaker 1 and it worked. Amy is in Dallas.
Hi, Amy. How are you?

Speaker 2 Good. How are you guys doing?

Speaker 1 Better than we deserve. What's up?

Speaker 2 Hi, I was just curious: is it up to the employer's discretion to allow or not allow a conversion from traditional 401k to Roth 401k? I've asked multiple times, and my answer has been they don't do it.

Speaker 1 If

Speaker 1 the employer sets the rules of the 401k in place, some do not have a Roth option.

Speaker 2 Mine does. Mine does have both.
So I've since done contributing to Roth, but I was hoping to...

Speaker 1 Your company offers a Roth 401k and a regular 401k.

Speaker 2 Yes, sir.

Speaker 1 Then it is not up to the employer's discretion. They're telling you they won't let you do it?

Speaker 2 Correct. Like,

Speaker 1 that's weird.

Speaker 2 Okay.

Speaker 1 It's not their money. And they have rules that they have the place to put the rules in place.

Speaker 1 And if they chose not to have a Roth option, they can do that for everyone. But they can't select, look at you, and say, no, you can't do this.
Is this a small employer?

Speaker 2 No, corporate America.

Speaker 1 You need to get above this idiot's head. Somebody in HR is making a huge mistake.
No, they do not have the right to deny you.

Speaker 1 If they're offering the plan to everyone, they're offering the plan to everyone.

Speaker 1 You can't say some employees can do this and some can't. That's not the way 401k rules work.
So I think you got to dig into this and learn a little bit more. There's something weird here.

Speaker 1 This is the Ramsey Show.

Speaker 1 No one wins

Speaker 1 at anything big.

Speaker 1 By accident.

Speaker 1 Winning is not an accidental thing

Speaker 1 you have a great marriage it's not an accidental thing it's not a random lightning strike

Speaker 1 if you have a fabulous career you build wealth it's not it's not random you do it a series of intentional acts when you're handling money the very basics

Speaker 1 of handling money is to handle it instead of wondering where it went And that's telling it what to do. That's why we developed the world's best budgeting app called Every Dollar.

Speaker 1 Every dollar will help you give every dollar a name and make every dollar behave and do what it's supposed to do.

Speaker 1 My friend John Maxwell says, a budget is people telling their money what to do instead of wondering where it went. My friend Zig Ziglar used to say, if you aim at nothing, you'll hit it every time.

Speaker 1 Most mediocre people aim at nothing, and then they're shocked that their life is mediocre in a a category or in general.

Speaker 1 Winning is an intentional act. Aim at something.
Do it on purpose. You can download every dollar.
The budgeting app I'm talking about, 50 million people have.

Speaker 1 That's a lot.

Speaker 1 I wish all of them are using it. But wow, pretty cool.
But download it for free in the App Store or at Google Play. Alex is in Atlanta.
Hi, Alex. Welcome to the Ramsey Show.

Speaker 2 Hey, Dave, thanks for having me.

Speaker 1 Sure, man. What's up?

Speaker 2 Hey, so I had a quick question.

Speaker 2 Might be a little complex, but my dad's been disabled my whole life, and he's had multiple heart attacks. My mom's been fighting with stage three cervical cancer.

Speaker 2 You know, I want to know if it's honorable to go $1,000 into debt to be able to take my wife and kids down to go visit them.

Speaker 2 Take them to Disneyland and what my parents used to do with us when we were kids. So they can, you know, I don't know when the the next time we're all going to.

Speaker 1 Take your kids to Disneyland? Your parents?

Speaker 2 All of us.

Speaker 1 Oh.

Speaker 1 Your parents' health will allow a Disneyland trip?

Speaker 2 In a wheelchair, yeah.

Speaker 1 Disneyland or Disney World in Orlando?

Speaker 2 Disney World in Orlando.

Speaker 1 Where's mom and dad?

Speaker 2 He just got cleared to fly from California to Florida to visit my grandmother and my sister. She just had a baby, too.

Speaker 1 Okay.

Speaker 2 I'm just trying trying to.

Speaker 1 So what's your household income, sir?

Speaker 2 I bring in anywhere from 80 to 120.

Speaker 1 Why can you not find $1,000?

Speaker 2 Dug myself a little hole

Speaker 2 before I had kids and bought more expensive cars than I should have. And

Speaker 2 I'm paying the price now.

Speaker 1 So you don't have $1,000? You make $120,000 a year. You don't have $1,000?

Speaker 2 I have $2,000 in savings and $2,000.

Speaker 1 You can take $1,000 and go to Florida.

Speaker 1 Okay.

Speaker 1 Why did you call me and ask me to borrow money when you have $2,000 in your savings account?

Speaker 2 Oh, I wasn't calling to borrow. I was calling just for some insight.

Speaker 1 No, you were saying, is it honorable to borrow money because my parents are sick and dying, so I can spend some time with them before they leave this earth, and I have to borrow money to do it, but you don't have to borrow money to do it.

Speaker 1 Yeah.

Speaker 2 I was just trying to figure out if I should keep the $1,000 or $2,000 for

Speaker 1 let me re-ray frame this for you, okay? If you borrow $1,000, you're not borrowing it for your sick parents. You're borrowing it to put it in savings.

Speaker 1 It's the same thing.

Speaker 1 If you take $1,000 out of savings and you borrow $1,000 for this trip and put it back in savings, it's the same thing.

Speaker 1 So you're really not borrowing for the parents' trip. You've worked this whole drama thing up in your head.
You're really borrowing so you don't have to deplete your little savings account.

Speaker 1 See the difference? Yeah.

Speaker 1 Now, what this is, if I'm you, is my wake-up call.

Speaker 1 It's time to do some different stuff, Alex. Agreed?

Speaker 1 You make too much money to be this freaking broke. You work too hard to be this freaking broke, dude.

Speaker 2 Yeah.

Speaker 1 What's the depression from? You sound like you're walking around in a mud hole.

Speaker 1 Just trying to figure out the way. I mean, I've read the books.
I've read your books.

Speaker 1 You have the energy of a hound dog in the sun.

Speaker 1 What's the deal, man? I mean, are you depressed?

Speaker 2 You know, I think it's just hard watching your family suffer your whole life, and then you try

Speaker 2 and you're trying to prevent that from happening in your house and with your kids and trying to make everybody happy and trying to

Speaker 2 be happy yourself too and make all the right choices.

Speaker 1 Sounds like you're exhausted.

Speaker 2 Yeah.

Speaker 3 I think you're emotionally exhausted.

Speaker 1 So here's the thing. You make $120,000 a year.
The plan you've been working is not working. Can we agree with that?

Speaker 1 You work too hard. You make too much money to be as broke as you are.
So take $1,000 out of the account is the answer to your question and go visit your mom and dad.

Speaker 1 Take them everybody to to Disneyland. That's fine.
But when you get home, man,

Speaker 1 it's time to sell some cars.

Speaker 1 It's time to cut up the credit cards. It's time to put everybody on a budget.
And I don't care if the 14-year-old's happy. By definition, 14-year-olds are not happy anyway.

Speaker 1 And so I don't really care. That's true.
That's the deal. So I don't know if you got a 14-year-old.
I just made that up. But

Speaker 1 you said you're taking kids to Disney. Maybe it's the eight-year-old that's not happy.

Speaker 1 The definition of happy when you're eight is you have shelter and food and dry clothing that fits.

Speaker 1 That's it.

Speaker 1 After that, everything else is a spoiled freaking American.

Speaker 1 So, you know, it's okay to have some nice things. It's not okay to have some nice things when you can't afford them and you can't afford them.
You guys have got to change your ways, man.

Speaker 1 This is your wake-up call.

Speaker 1 When you make $120,000 a year and you have to call some guy on the radio that you've never even met to ask permission in your mind or to ask insight in your mind to use $1,000 of your $2,000 savings account.

Speaker 1 That's signaling. That's flares going off.
Time for a change. Time to do something different, dude.

Speaker 3 He's going to have to get comfortable disappointing some people.

Speaker 3 Or really, to be honest with you, he's got to be okay with what he perceives as disappointment when in all reality, it's just not there. That's what I hear.

Speaker 3 I hear a guy that's just overextended, and he's just lost all reason because he's trying to emotionally feel good about himself, make sure everybody else feels good about him.

Speaker 3 And he gets to this point where he calls and says, Is it okay to take a thousand dollars out on a credit card just to pay for this trip?

Speaker 3 Because I feel like I got to make my mom and dad happy because they made me happy. I heard that throughout the entire description, and I feel bad for him.

Speaker 1 I really do. But it's not even, it's not even on the

Speaker 1 issue.

Speaker 3 It really isn't.

Speaker 1 So that's not the issue. It's all in his head.

Speaker 1 So, guys, one of the things you have to do in this regard

Speaker 1 is

Speaker 1 all of us, Dave included, me included, rationalize our purchase. And one of the rationalization methodologies that we use is that we are

Speaker 1 doing this for someone else.

Speaker 1 And

Speaker 1 when you unpack it, most of the time that's just not true.

Speaker 1 Example, okay?

Speaker 1 Little family has a brand new little baby.

Speaker 1 We spend $26,000 redoing the nursery.

Speaker 1 Promise you, little baby has no freaking idea. You did not do this for the baby.
It does not change the baby's environment. It does not change their developmental skills.

Speaker 1 It does not increase their intelligence. All absolute hogwash.
You did this for yourself.

Speaker 1 You did this so your friends could walk in and go, oh, it's so cute.

Speaker 1 And they're not talking about the baby. They're talking about the nursery.
And so babies don't give a crap. All they want is a dry diaper and some food.
That's all they, and a good hug.

Speaker 1 That's what a baby needs. That's it, man.
It's simple. They don't need $26,000 worth of nursery equipment.

Speaker 1 Now, if you have $26,000 extra laying around and you want to spruce up your home and do something nice, do it.

Speaker 1 I can promise you, Sharon Ramsey is doing that right now for Christmas for no apparent reason. but that she has the money.
And that's okay.

Speaker 1 But that's different than I'm broke and I did this for my child. No, you didn't.

Speaker 1 Your child is three months old, they don't have a freaking clue.

Speaker 1 Hello, Christmas present purchasers.

Speaker 1 Who are you really buying for?

Speaker 1 Think about it. I don't mind you being, I'm not the Grinch, but quit using the little children as my rationalization.
This is the Ramsey Show.

Speaker 1 Ken Coleman, Ramsey Personality, is my co-host today.

Speaker 1 If you don't know, we have the Ramsey Network app that is free 100%. There is no subscription anywhere around it.
All you got to do is download it and start using it.

Speaker 1 And it carries the third segment of the show every day on video and audio that is not available on podcast or YouTube. And you can search by call

Speaker 1 subject. Say, I want to talk about how how yield savings accounts.
And you pull up four or five times we've talked about on the air without having to listen to 26 hours of podcasting to get there.

Speaker 1 So if you're looking for a specific thing, you can do that. And you can communicate with us by email, which is exactly what Adam did.

Speaker 3 Today's Ramsey Network app question is, of course, from Adam. He says, could you please explain how to know if I can be self-insured?

Speaker 3 I'm 47, married with two daughters in their teens, and I have $250,000 in investments.

Speaker 3 I believe my current life insurance policy, which I bought from a relative, is overpriced, but I'm afraid to change brokers. At what point can I pull the plug on having insurance?

Speaker 1 Okay.

Speaker 1 Well, we're talking about life insurance, and so the way you answer the question and back into it is if you die,

Speaker 1 can your wife survive

Speaker 1 if you die this year,

Speaker 1 can your wife survive on the investments in the situation that she's in?

Speaker 1 Generally speaking, we would tell folks to be self-insured.

Speaker 1 You would need to be 100% debt-free house and everything, and the kids are grown and gone, and there's a substantial investment, and she could live off of the income that the investments create.

Speaker 1 So if she made 10% on $250,000, that'd be $25,000 a year, and she's got two teenage daughters. No, I don't think you're self-insured.
Yeah, I agree. You got to replace your income.
Now,

Speaker 1 if you make $60,000 a year and you have a million dollars, well, the million will create, you know, $80,000 to $100,000 a year in income for your wife without touching the million

Speaker 1 and your kids are grown and gone and your house is paid for. Well, your wife actually gets a raise if you die.

Speaker 1 Yeah, right. Then you're self-insured, right? And so if your investments will replace your income

Speaker 1 and or the fact that you're dead free and or the kids are grown and gone, that puts you there. But dude, you're not.

Speaker 1 I would not tell you to do this. Now, if you're getting ripped off on insurance, it's time to have some courage and talk to Xander Insurance and get the proper amount of term insurance in place.

Speaker 1 It's not that expensive, even at 47.

Speaker 1 If you're not overweight and you don't smoke, term life insurance is just cheap. And Xander Insurance can shop among a bunch of different companies, get you the right deal, get that in place,

Speaker 1 and

Speaker 1 I wouldn't even contact the relative. I would just contact the insurance company and cancel it.

Speaker 1 Your relative may not even be in the business anymore. If they are, they might not even notice the cancellation come through.

Speaker 1 And if they do, when they call up, just go, you know, I just want another different, I want a different direction. You're not required to get into a long explanation.

Speaker 1 with someone that sold you something that you believe is overpriced, except goodbye.

Speaker 3 I agree. You know, this isn't scary.
I know it seems scary, but this is, again, the kind of the law of the unknown.

Speaker 3 The thing we don't know anything about, we want to leave it alone because it seems scary or time-consuming.

Speaker 3 And Colin Xander, you're going to find out how seamless this process is to get properly insured. There's nothing to be scared about for switching.

Speaker 1 Yeah. Well, he just, he said, I'm afraid to change brokers.
He's afraid of the conflict with a relative. That's what it amounts to.
Oh, okay.

Speaker 1 I didn't read that. I'm reading that.
Yeah, yeah, I guess. That's what I get.

Speaker 3 Well, you know what? Same deal there.

Speaker 1 What are you afraid of? Yeah.

Speaker 3 I mean, if you want to pay extra money just because you don't want to deal with disappointing a family member, that's just not the way I want to live. I'd rather save money.

Speaker 1 Yeah. Well, and there's, you know,

Speaker 1 why would someone that loves me overcharge me? Yeah.

Speaker 1 There's the other side of this.

Speaker 1 Who is it I'm disappointing here? The person who's supposed to be having my best interest at heart and yet overcharge me. So, yeah, I don't know.
Gosh, sorry, I'm disappointing you. Right.
Who cares?

Speaker 1 Yeah. So yeah, get your, get your term insurance in place, the proper amount.
You're not self-insured yet. I don't think.
I don't think your wife wants to live on $25,000 a year.

Speaker 1 I could be wrong, but I don't think she does.

Speaker 1 Derek is in St. Louis.
Hi, Derek. How are you?

Speaker 2 Hi, Dave. Been a big fan for a long time.

Speaker 1 Thanks. I'm great.
Thank you.

Speaker 2 The reason I'm calling today is my wife would like to quit her job and stay home with the kids.

Speaker 2 About 10 years ago, we built a house on the family farm, which I now run.

Speaker 2 We've got a little over $2,000 a month mortgage.

Speaker 2 And I'm just afraid if she quits,

Speaker 2 we're barely going to be able to pay all the bills. We also have

Speaker 2 three children. The two older ones are both in Catholic school

Speaker 2 because we didn't want them in the public schools here locally.

Speaker 1 Okay, so what is your income? What do you make a year on running the farm?

Speaker 2 Well, I also work full-time off the farm. Oh, good.

Speaker 1 What's your income if she quits?

Speaker 2 So my take-home pay from the job is a little north of $100,000.

Speaker 2 It's about $5,200 a month take-home.

Speaker 1 That's her.

Speaker 1 $100,000 is $8,300.

Speaker 1 You don't have $3,000 in withholding.

Speaker 2 Well, there's also 401k and

Speaker 2 health insurance.

Speaker 1 Okay, how much is going into 401k?

Speaker 1 15% right now. And are you in baby step four? You're out of debt, except the house?

Speaker 2 All but my car, which is a $5,000 loan, I drive it for work.

Speaker 1 That's the only debt. And how much do you have in savings other than your 401k?

Speaker 2 I'd have to check. I didn't look today.

Speaker 2 So we have $3,000 or $4,000 in savings.

Speaker 2 The farm accounts, we make some money on it.

Speaker 2 If we have trouble, we can...

Speaker 1 Pay your car off today, Derek.

Speaker 1 I could. Yes.
No, you could. You need to now.
Okay.

Speaker 1 Now you're out of debt on the car. And the answer to your question is

Speaker 1 $2,000 a month on $8,300.

Speaker 1 And you've got farm income. What is the net profit on the farm that you pay taxes on annually?

Speaker 2 Well, it varies year to year.

Speaker 1 I know it's a farm.

Speaker 2 Yeah, yeah. The commodity prices went to half price this year from last.

Speaker 2 I haven't got all the, I haven't got everything back from the crops, but

Speaker 1 honey, how long have you been doing this?

Speaker 2 All my life.

Speaker 1 Okay, so what do you make a year on a stinking farm? It's not rocket size. Are you making 30,000, 300,000?

Speaker 2 This year, it's probably going to be closer to 10,000 to 15.

Speaker 1 15 okay in some years you make 20 so you're not making much money on the farm okay I got it

Speaker 2 forty to fifty

Speaker 1 well except twenty okay all right so somewhere at least by okay now

Speaker 1 all right so you got a hundred fifty thousand dollar hundred and forty thousand dollar household income

Speaker 1 so the question is

Speaker 1 run a budget in detail

Speaker 1 we keep we keep a spreadsheet then run your budget as if she's not working and bank her check

Speaker 1 say that again emails run a budget for the next three months as if she's not working and put her entire check in savings

Speaker 1 okay if you can do that

Speaker 1 she can come home

Speaker 1 if you can't do that what have we got to change so that she can come home is it Catholic school is it we move what have we got to change what's less important than her coming home?

Speaker 1 Both of those other things, the farm and the Catholic school, sounds very important to you.

Speaker 1 But maybe, I mean,

Speaker 1 one of these things may need to give. I don't know for her to be able to come home.
So, but if you simply, the math is, if you'll just practice living on your income,

Speaker 1 then...

Speaker 1 Gosh, it's a no-brainer. She can come home.
You don't have anything to be vaguely afraid about. You actually have done an analysis and have proven what we call proof texting

Speaker 1 the concept.

Speaker 1 But if you can't bank her check and make it,

Speaker 1 then you start asking yourself, what have we got to change for us to be able to bank her check and make it? And we've got to work that through.

Speaker 3 It's just powerful, the deduction that you just gave, folks. I mean, you've got to take the emotion out of this stuff.
I'm afraid. What are you afraid of? Is there something to be afraid of?

Speaker 3 Or is it just a fake monster under the bed? You've got to look under the bed. And that's the idea here.
And I think there's so much power in what you know and what you don't know.

Speaker 1 And then you put the things on the scale and go, that's not as important as her being home. Or that is more important than her being home.
So she's not coming home, if that's how that works.

Speaker 1 I mean, it's just math. This is the Ramsey Show.

Speaker 1 Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people

Speaker 1 build wealth, do work that they love, and create actual, amazing relationships. Ken Coleman, Ramsey Personality, number one best-selling author of the book Paycheck to Purpose.

Speaker 1 He's my co-host today.

Speaker 1 Open phones here at 888-825-5225.

Speaker 1 Tyler's in Charlotte, North Carolina. Hi, Tyler.
How are you?

Speaker 2 I'm good. How are you?

Speaker 1 Better than I deserve. What's up?

Speaker 2 So I run a realtor business of five agents and property management as well. And my attorney approached me about potentially partnering 50-50 on it.

Speaker 2 And I've been against that since I've got started for many reasons. But just kind of wanted to run it by y'all and see what y'all thought.

Speaker 3 Give us your top couple of reasons why you didn't want to do it.

Speaker 2 Just risky. You never truly know who you're working with.
They could change their mind, you know, down the road or get greedy, get sick.

Speaker 2 I mean, many different options that could cause hassles in the future.

Speaker 1 Our rule is the only ship won't sail is a partnership.

Speaker 2 Yeah.

Speaker 1 So

Speaker 1 I find, with the exception of medical practices and law practices, we coach tens of thousands of small businesses through entree leadership, and we find almost no partnerships of this type survive 10 years.

Speaker 1 They don't make it 10 years.

Speaker 1 And because of a lot of different things that you just described, sometimes it's not negative things even. Sometimes it's a positive thing.
But

Speaker 1 why would your attorney want to buy 50% of your business?

Speaker 2 Well, he's he's been doing law for 10 years now and he's just kind of looking to grow another realm, I guess. Kind of the same way I am, just kind of wanting to pick things up and

Speaker 2 do something a little different than we've been doing.

Speaker 1 I'm sorry, same thing. You're you're wanting to do something different?

Speaker 2 Well, I've I've just, yeah, every couple of years I kind of get bored is the best way I can say it, and I look to start something else.

Speaker 2 And I've done that the last couple of years, and it hasn't been a great decision.

Speaker 2 So I thought this time I would just kind of try to grow my main business instead of trying to branch out into other things.

Speaker 1 Yeah, staying in your lane is a good thing. Yeah.
Okay.

Speaker 3 How would it change?

Speaker 3 How would it change? Have you guys talked about the details of what it would look like if he came in?

Speaker 2 Yeah, I've been working with him for about four years. He's got a lot of, you know, obviously contacts, other lawyers and stuff like that in the area that he's merged his business with.

Speaker 2 And my main business is investors, and he knows a lot of them. He closes business deals and everything as well as regular real estate.

Speaker 2 So we'd be looking to separate ourselves from the overhead brokerage, kind of make the firm

Speaker 2 a standalone thing. get an office going because I don't have a brick and mortar office yet and he has one kind of available

Speaker 1 and then just kind of merge into that he would help with the laws you don't have a brick and mortar for this other thing you have one for your real estate office

Speaker 2 no i don't have one because i'm but you said you had nine agents or five agents i have five yeah we i opened an office one time and it never really benefited us and because i kind of started during covet is why i got started um and we've just never ran out of a out of an office we've all intensified the principal broker has to have a location

Speaker 2 Well, it's a brokered by business. So I have my firm.
I'm brokered by an overhead brokerage.

Speaker 1 Oh, you're not the principal broker.

Speaker 2 I'm a broker in charge of this firm for property management.

Speaker 1 Yeah. Yeah.

Speaker 2 Yeah.

Speaker 1 Principal broker in most states has to have a physical location. Okay.
Hey, hey. Okay.
All that doesn't to me is simple. I know I would not go in partnership.
I don't do partnerships.

Speaker 1 I don't mind doing a deal with someone, a singular deal, a one-off that has a set end to it. That's more of a joint venture.

Speaker 1 And I don't do hardly any of those, but I would do that. But something that is an ongoing thing that does not have a set calendar to its expiration, a term to it, I would not do that.
No.

Speaker 1 If he's got some investors and y'all want to work out some deals,

Speaker 1 you know, where

Speaker 1 You know, he gets a certain amount of legal work if he keeps spoon feeding you investors and that kind of thing, a legal way to do the transfer on that, that's fine.

Speaker 1 But no, I don't, you don't need a wife. I mean, that's an attorney.
No, no, no.

Speaker 1 I wouldn't do it. No,

Speaker 1 I think

Speaker 1 you guys are just bored.

Speaker 1 You need to back up and say, gosh, what can I do to make this thing exciting and go push something out there that's different and that gives you some energy again? But

Speaker 1 no,

Speaker 1 it's a compliment that he came to you and said, it'd be fun to do business with you. I think I like the way you do stuff.
But that compliment does not substitute for good sense.

Speaker 3 You just nailed it. I cannot tell you how many times I've taken calls on the Ken Coleman show like this where someone feels like they are less than if they don't take

Speaker 3 some opportunity that in their heart they don't want to take. But because it's an opportunity, what happens is the brain feels great.
There's an endorphin release from being wanted, right?

Speaker 3 Or from being approached on this. And so you feel like, oh, common sense says I'd be an idiot to walk away from this.
And in all reality, you got to trust your gut.

Speaker 3 You got to trust your principles and your values. And you led, Tyler, with principles and values.
And I think you got to listen to those things. Those are bedrock things that keep us

Speaker 3 grounded and keep us from making big, big mistakes. And I think, Dave, you nailed it.
I think

Speaker 3 there's something weird, right, about the psyche when

Speaker 3 somebody wants you to be a part of them or they come to you with an attractive offer.

Speaker 1 I want you in this deal.

Speaker 1 And

Speaker 1 one of the things that has happened to me over the years running Ramsey is people come in with ideas. Sure.
Hey, I want to share this idea with you and see if you want to work on this idea. And,

Speaker 1 you know, I don't.

Speaker 1 I just don't.

Speaker 1 You know, one guy was, you know, he's like, well, this is the best idea since sliced bread. You need to sign an NDA so I can tell you about it.

Speaker 1 You need to sign a non-disclosure agreement so I can expose this wonderful idea to you and I said please don't tell me any more because dude I get ideas in here like shovel fulls every day ideas are a dime a dozen people who can actually get crap done those are hard to find

Speaker 1 ideas not hard to find they're everywhere people that execute and follow through with excellence and energy and enthusiasm and that those are those are a rare gem you bring me one of those I'll sign an NDA.

Speaker 1 But I don't need, because please don't tell me your idea because we might have already had the idea and then you'll think I stole it from you. Because they're that easy.
Ideas are just everywhere.

Speaker 1 When you're entrepreneurial, I mean, I'm somewhat ADD, I guess. It's undiagnosed.
When I was a child, they called it hyperactive. But yeah,

Speaker 1 Dave talks too much on all my report cards. Now I make a living doing it, but there you go.
So

Speaker 1 much to my grade school teacher's chagrin.

Speaker 1 But So, ideas are everywhere. I mean, squirrel, there's another idea.
You know, you boom, they're everywhere. So, but people that can do them are not.

Speaker 1 And that's the same, it's the same category here of the affirmation of, oh, I brought you an idea. Oh, thank you.
I'm worthy of your idea. Thank you.

Speaker 1 But then I quickly figured out, no, no, I don't need to. No, no, no.
That's a nightmare.

Speaker 3 So true. You know, it's because of the law.

Speaker 1 Do you not tell people to eat beans and rice, rice, and beans?

Speaker 2 Yeah.

Speaker 1 Would you believe that to date we've had over 1,000, over 1,000 people propose that I co-author a book with them

Speaker 1 of Beans and Rice, Rice and Beans Recipes.

Speaker 3 Yeah, it's a great idea.

Speaker 1 Because they didn't understand it was a metaphor?

Speaker 1 It doesn't literally mean everyone should actually eat.

Speaker 3 I thought you were going to tell me people pitched you on having your own rice brand or beans.

Speaker 1 Oh, that too.

Speaker 3 I'm sure that's too. That too, yeah.

Speaker 1 Uncle Ben's got the market. He's got the market.
This is the Ramsey show.

Speaker 1 Ken Coleman, Ramsey Personality, number one best-selling author of the book Paycheck to Purpose on sale at theRamseysolutions.com slash store

Speaker 1 right now. One of the many books we have on sale that'll make a difference in someone's life.
Check it out for Christmas. Hey, I love talking to you guys about money.

Speaker 1 I also love talking about business, the small business as well. Like we were just...
Our last caller there. If you didn't know, I host a podcast called the Entree Leadership Podcast.

Speaker 1 It's been on the air for many years since podcasts first started. I took it over.

Speaker 1 We had other folks at Ramsey doing it, but I took it over about two years ago and started taking calls from small business people with questions about business and leadership and so on every day, or not every day, but one day a week.

Speaker 1 And if you have a small business or leadership question, reach out to us. Leave us a voicemail at 844-944-1070.
We'll set you up to be a caller, 844-944-1070.

Speaker 1 Or you can go to entreeleadership.com/slash ask Sterling in Austin, Texas. How are you, Sterling?

Speaker 2 I'm doing good. How about you?

Speaker 1 Better than I deserve. What's up?

Speaker 2 So we are on,

Speaker 2 my wife and I are on baby step two,

Speaker 2 and I was wondering, according to the baby steps,

Speaker 2 when should we purchase a house?

Speaker 1 We call it 3B.

Speaker 1 After baby step three is in place, you're debt-free and you have an emergency fund of three to six months of expenses, then start saving for your down payment in 3B.

Speaker 1 In other words, between three and four, if you want to not start retirement savings for a short period of time and use that time to build up your down payment, that's when we would tell you to do it.

Speaker 2 Okay, that makes sense. We are sadly

Speaker 2 about to have to go back into step one

Speaker 2 because of car repairs.

Speaker 2 But then after that, we're going to be back to step two. And so we're thinking about the future

Speaker 2 and trying to look at the market and

Speaker 2 see when we can save up for a down payment.

Speaker 1 Yeah, we want to get you in that. That's perfect.
So how much debt you got left, Sharling?

Speaker 2 It's still a lot. Right now, I want to say it totals to $109,000 with all the student loans, all my student loans, and then we both have

Speaker 2 two car loans, and then we have one personal loan. Yeah.

Speaker 1 What's your household income?

Speaker 2 Together, we make about $120,000 a year after taxes.

Speaker 1 Cool. What's the most expensive car loan?

Speaker 2 That would be my truck at $26,000.

Speaker 1 Okay. All right.
Cool. Sounds like you got a good plan.

Speaker 1 If you want to speed speed up the house, you jet the truck.

Speaker 2 I've been considering it.

Speaker 2 I've really been considering it. Right now, it's been giving me a lot of problems.

Speaker 2 I have a friend who says the one thing that's worse than either parts or payments is having parts and payments when it comes to a vehicle. You could say it.
And

Speaker 2 yes, you can thank Robert Looney for that one.

Speaker 2 He's told me parts and payments are unfortunate is one of the worst things you can have. And right now, my truck has been giving me both problems.

Speaker 2 And I've been really debating about getting rid of it.

Speaker 1 Yeah, if you could get 26, and you probably can, you probably get close to that for it, depending on what it is.

Speaker 1 It gets you out of a fourth of your debt and speeds the purchase of the home, which goes up in value and the truck goes down in value. I'm not against having a nice truck.

Speaker 1 I'm just always trying to figure out a way to get to my goal faster.

Speaker 2 Yes, sir.

Speaker 2 I was doing

Speaker 2 some

Speaker 2 kind of estimation

Speaker 2 on every dollar,

Speaker 2 and it looks like

Speaker 2 after all the bills and other things that my wife and I are about to cut out, because we are deciding we really don't need, we have about $3,500 left over.

Speaker 1 Yeah, it's about a three-year plan.

Speaker 2 So we're going to start really cutting things out and try to get that close to $5,000 left over every month or at least $4,000 and then really start paying things to make it a two and a half to three year plan.

Speaker 1 Yeah, and it'll be and the truck payment is how much?

Speaker 2 The truck payment is $712.07.

Speaker 2 It's like a 3.9% interest rate.

Speaker 1 Put yourself in a hoop dee and run the numbers with that extra 700 on there. And that's what you'll see what I'm talking about then.
That's cool. Hey, man, you're doing great.
I'm proud of you.

Speaker 1 Can't wait to hear you do your debt-free scream. Good job.
Rick's in Columbia, South Carolina. Hi, Rick.
Welcome to the Ramsey Show.

Speaker 2 Thank you, Dave.

Speaker 1 What's up?

Speaker 2 Well, I'm 47, and I'd like to retire at 55, and I'm not sure where to go yet.

Speaker 2 I thought I was pretty fiscally responsible, and then I started to listen into you in 2022 and realized I wasn't as smart as I thought I was. So I'm going to ask for help.

Speaker 1 Oh, my goodness. Okay, cool.
So how much debt have you got today?

Speaker 2 The only debt I have is I've got a company truck where I got a three-year loan and it's $1,500 a month, but I get reimbursed $1,100 to $1,700 depending on how many miles I drive from my company.

Speaker 1 You get that whether you have a car payment or not.

Speaker 2 Correct. So, yeah, I need to get that truck paid off, and then they still give me the same amount.
But the truck has to be, it can't be more than three years old. do that.

Speaker 1 So you have to systematically keep money moving that direction so you can upgrade the truck periodically. Yeah, true.
But no more payments.

Speaker 1 Yes. The program is independent of debt.
It does not require debt.

Speaker 1 You just used it to justify debt. So

Speaker 1 okay, so we're going to clear that. Now,

Speaker 1 what's your nest egg looking like in your 401k?

Speaker 2 Well, I've only I came out of a different position where I was in a pension program.

Speaker 2 And then April of 22 I started in with this 401k program and

Speaker 2 I've got

Speaker 2 this is the big question is last year I started doing a Roth 401k good

Speaker 2 and my talk tax advisor said that I should be doing a traditional 401k you should fire your tax advisor because you said yeah

Speaker 1 so I'm serious it was a heart attack They're trading a tax deduction for tax-free growth. This guy can't do math.

Speaker 2 That's what I thought, too. So I kept doing the Roth 401k this year.

Speaker 1 And change tax advisors because I don't know what else he's doing this dom.

Speaker 2 Yeah.

Speaker 1 All right, anyway.

Speaker 1 So you don't have a lot there. So you're a long way from retiring in seven years.

Speaker 2 Yeah, so I got $19,000 in the Roth 401k, $67,000 in a traditional 401k,

Speaker 2 18,000 in the HSA, and that's all since April 22.

Speaker 1 Good. Okay.
Well, you're tracking them. You're dumping dumping a bunch of money in.
What do you make?

Speaker 2 My base pays $111,000, and then my bonus was $56,000 this year.

Speaker 1 Okay, you married?

Speaker 2 Yes, three kids, but my wife stays home with the kids, so it's just my income.

Speaker 1 Okay. Well, I mean, the beautiful thing about what you're doing is you're making all the right moves.
I think the thing that will help you is to,

Speaker 1 you know, just do some calculations. You can use some of the

Speaker 1 calculators on our website. They'll help you, or in the Every Dollar app, either one.

Speaker 1 And start saying, okay, what will I have when I'm 55? What will I have when I'm 60 based on my current trend line with the lump sum I have now plus the payments I'm putting in now?

Speaker 1 And that'll start to tell you, you know, give you some comfort level as to where you're going to be.

Speaker 1 I don't think you're going to be mathematically able to live like anywhere near like you're living now at 55 years old with no work. So I think you're working a while.

Speaker 1 But that's not a bad thing, though. You need to be doing something.
I'm 64. I work.
So

Speaker 1 it's not the end of the world.

Speaker 3 Yeah, I would agree with that. I think the 55 is a little too aggressive.
So now, you know, double down, do your numbers, crunch, and go, okay, what is it really going to look like? And again,

Speaker 3 the data, Dave, just to back up what you said, the data is overwhelming for people who want to research it on what happens when you truly stop working.

Speaker 3 Now, financial retirement, in my mind, is different than just straight professional. I'm not doing anything any longer.

Speaker 3 And I think that it's not good for the body and it's definitely not good for the soul.

Speaker 1 Not good for the mind. It's a terrible thing to waste.

Speaker 1 Yeah, doing something,

Speaker 1 I just,

Speaker 1 having enough money to not have to work is different than just not working. That's what you're saying.
100%, yeah.

Speaker 1 Yeah, but either way, either way, you can start to run your numbers out and it'll give you some insights onto where you are.

Speaker 1 You're doing pretty good, Rick. Sounds like it.
I'm going to get out of the truck debt and I'm I'm going to jack up on some of these other things, the investment side, and get this thing moving.

Speaker 1 This is the Ramsey Show.

Speaker 1 Ken Coleman, Ramsey Personality, is my co-host today. Today's Ramsey Show, Question of the Day, is sponsored by YReFi.

Speaker 1 When you're trapped in a maze of defaulted private student loan debt, it's hard to find your way out, but YReFi can offer you a lifeline with custom refinancing based on your ability to pay and a lump sum payoff option you could qualify for after 24 months.

Speaker 1 Go to YReFi.com slash Ramsey. That's the letter Y, R-E-F-Y.com slash Ramsey.
Might not be in all states.

Speaker 3 Today's question comes from Nikki in Kansas. My husband has been at his current job for over five years.
He has received yearly inflationary raises.

Speaker 3 A new manager position was recently created, and my husband considered applying for it, but before he could, it was given to another employee that has no previous experience in the role.

Speaker 3 This new manager now repeatedly asked my husband for advice and wants him to work extra hours and to cover his lack of competence.

Speaker 3 I think it's time for him to find a new job, but he wants to make it work here. His annual review is coming up.

Speaker 3 Should he mention the situation and bring up needing increased compensation or a path to growth? Well, Nikki,

Speaker 3 when somebody has done me wrong, I found, Dave, that my wife, Stacey, has always taken it worse.

Speaker 3 I don't know if Sharon's that way or not, but it feels like this situation where your husband's griped a little bit about this,

Speaker 3 Nikki, and you've gotten really upset about it. And I would listen to your husband here.
He wants to make it work. And based on the facts you've given us, he never raised his hand for the job.

Speaker 3 And because he didn't raise his hand, whoever hired this other employee is not on the line for that because they can't read mine.

Speaker 3 So in this situation, I always tell people to never ask directly for a raise. I teach to

Speaker 3 talk about a growth plan after you talk about a desire to grow. In other words, I think in his annual review, he needs to sit down and say, hey, listen,

Speaker 3 you know, I was thinking about raising my hand for this other position. I didn't.
And that's on me. But what it did show me is that I want more.
I want to lead. I want to step up.

Speaker 3 I want to climb here at company XYZ. So to that end, in my review, whether you got it for me today, but in the future, in the near future, I'd like to meet with you and discuss a growth plan.

Speaker 3 What tools can I add to my tool belt? In other words, skills and experience. And then what are some shortcomings?

Speaker 3 What are some areas that may be blind spots for me that I need to be aware of so that I do better and make myself a better

Speaker 3 employee?

Speaker 3 And then can we lay that plan out? And how do we measure it? So that you and I are operating off the same sheet of paper, same sheet of music.

Speaker 3 And if we measure that, will that lead to opportunity for more responsibility, which should come with more compensation?

Speaker 3 That's the spirit, the posture that you should have so that you do not put your leader on the defensive because many times they are not the sole decision maker in you getting a promotion and a raise.

Speaker 3 And so the reason I prescribe it that way, Dave, is it allows them to have some ownership in it. They don't feel put on the spot.
They don't feel backed into a corner.

Speaker 3 And then we have an adult, mature, professional conversation about a path forward.

Speaker 1 The other thing I want you to ask yourself

Speaker 1 is:

Speaker 1 who is ambitious here, you or your husband?

Speaker 1 Because A, he didn't raise his hand for this position. B, his wife wrote us an email,

Speaker 1 not him.

Speaker 1 Two indicators he ain't real fired up

Speaker 1 and so are not as fired up as you are.

Speaker 3 That's correct. That's very obvious.

Speaker 1 So

Speaker 1 I don't want you to want something for him more than he wants it for himself because that's going to come through when he sits down in his review. He needs to be confident, competent.

Speaker 1 How can I add value to this organization? What do I need to do to make myself more valuable so that I can grow here?

Speaker 1 Grow, meaning grow in responsibility and in value that I'm adding and hopefully in compensation someday. And that requires a body language,

Speaker 1 a little swagger.

Speaker 3 Yeah, you got to show some hunger. I think what they want to see here is, I want to get better.
I want to do more, be more, and that's attractive.

Speaker 1 And, you know, I think that's a discussion. Maybe your husband doesn't want any of that.
Maybe you want it.

Speaker 3 I think it's very possible.

Speaker 1 So you need to talk that through before you send him into the lion's cage.

Speaker 1 Open phones at 888-825-5225. Matthew is in Houston, Texas.
Hi, Matthew. How are you?

Speaker 2 Hey, guys. Thanks for taking my call.

Speaker 1 Sure. What's up?

Speaker 2 Hey, so I have a budgeting question. I'm trying to figure out what I should do for an extra $20,000

Speaker 2 in income I'm going to receive three to four times this year from overtime work.

Speaker 1 Send it to Dave's Bahama Fund.

Speaker 1 P.O. Box.
No, I'm kidding. Okay.

Speaker 1 All right. So

Speaker 1 you're going to make an extra 80 grand?

Speaker 1 Yeah. Sweet!

Speaker 1 Very nice.

Speaker 1 Pretty nice.

Speaker 1 Where are you on the baby steps, bro?

Speaker 2 I'm not sure what baby step exactly.

Speaker 1 Okay, so this whole thing's new to you. Okay, that's cool.
That's fine.

Speaker 1 Okay, we teach a process to use all extra money to achieve wealth as fast as possible, and we apply it in an order, a forced ranking of importance, okay?

Speaker 1 And that system is called the baby steps, one baby step at a time, and you'll become wealthy. So I'll walk you through them right quick.
You ready?

Speaker 1 Okay.

Speaker 1 First thing you need to do is save $1,000. I bet you've already done that.

Speaker 1 Yes. How much money do you have in savings?

Speaker 2 Just savings. I have about 50K.

Speaker 1 Okay, good for you. And how much debt do you have not counting your home?

Speaker 1 None. Good.
Okay. Baby step one is save $1,000.
Baby step two is to become debt-free, everything but the house. Ding, ding.
Check those two boxes.

Speaker 1 Three is to have an emergency fund of three to six months of expenses. If we call that $50,000, that emergency fund, you're there.
Three. Baby step four is start putting 15%

Speaker 1 of your income towards retirement, not more, not less, in 401ks and Roth IRAs. Are you doing that?

Speaker 2 Yeah, I'm maxing them out. It's more like 25% at the moment.

Speaker 1 Okay. Baby step five is kids college.
Do you have kids?

Speaker 2 No, I'm single.

Speaker 1 Oh, that's easy. We skip that one.
Baby step six is pay off your house early. How much do you owe on your home?

Speaker 2 Yeah, I owe $200 on my home, and right now I'm putting an extra $400 a month towards the principal.

Speaker 1 Okay. And what do you make? What's your total income, sir?

Speaker 2 Well, depending what this OT

Speaker 2 should be close to about $200 this year.

Speaker 1 Okay. And you're single and you have no debt payments.
If I woke up in your shoes, what would I do following those steps I just gave you that I've taught 10 million people?

Speaker 1 I would tell you to reduce your 401k to 15%, not maxed out.

Speaker 1 And I want you to take everything you can squeeze out of of your monthly budget including this bonuses that are coming in and throw it at the mortgage let's pay this house off in two years

Speaker 2 okay yeah that's um kind of what I've been leaning towards too I don't like having it hang over my head but I was also wondering if I should consider a side brokerage account or after the house is paid off

Speaker 2 Okay, so after the house.

Speaker 1 Yeah, here's why. Here's why.

Speaker 1 This is,

Speaker 1 I don't want it hanging over my head. There's actual data.

Speaker 1 We did the largest study of millionaires in North America ever done, 10,167 of them.

Speaker 1 Two primary things caused them to have the first $1 to $10 million of net worth. Investing steadily into their 401k and paying their home off.

Speaker 1 And paying the home off is a big part of it. by the way.
So a paid-for house. How old are you?

Speaker 1 I'm 26. And the house is worth what?

Speaker 2 Probably about 260.

Speaker 1 Okay. So when the house gets paid off, by the time it's paid off,

Speaker 1 somewhere around 34 years old, 33 years old, you're going to have a net worth of over a million dollars at the track you're on right now.

Speaker 1 So way to go, dude. You're killing it.
Proud of you. Hang on.
I'm going to send you a copy of the book, Baby Steps Millionaires.

Speaker 1 It's my latest number one bestseller, and it'll show you exactly the stuff I'm talking about, why, when, and where, and it'll help you dial this in. You are a stud.
Keep it up, man.

Speaker 1 This is the Ramsey Show.

Speaker 1 Thanks for joining us, America. We're glad you're here.
Open phones at 888-825-5225. Well,

Speaker 1 It snuck up on you again. Christmas is here.
Are you ready?

Speaker 1 Hey, whether you're shopping for yourself or you're looking for the perfect gift to help someone get their money in order, now is the time to shop and get up to 30% off our best-selling products, including Ken's book, Paycheck to Purpose, my book.

Speaker 1 The one I just mentioned, Baby Step Millionaires, or Total Money Makeover, Non-Anxious Life by

Speaker 1 our own Dr. John Deloney, Breaking Free from Broke, on Sale by George Camel.

Speaker 1 Human questions for humans decks of cards, $12.

Speaker 1 ramseysolutions.com slash store by the way the reminder this is the last segment of the show on podcast and YouTube you can pick up the final segment of the show the final episode or the final portion of the episode rather uh at the ramsey network app it's completely free you can download it right now at apple or at google play and you can always hear everything we're doing at ramsey network on there video and audio so be sure and jump over to the ramsey network app and pick up everything you need to know Tammy is in Nashville.

Speaker 1 Hi, Tammy. Welcome to the Ramsey Show.
What's up?

Speaker 2 Hey, thank you so much. Thanks for accepting my call and sharing your knowledge.
I just have a quick question.

Speaker 2 My husband and I are actually wanting to buy a home, and he wants to do this shared mortgage. And he's trying to convince me that it's a great thing and that it's so wonderful.

Speaker 2 And it sounds very stupid to me.

Speaker 1 And so I would just like to know what what you're doing. Don't hold back, Tammy.
Tell us how you really feel.

Speaker 2 Well, I wanted to know what is this and the negative and the positive, if there is any positive.

Speaker 2 That's my question. Shared mortgage, negatives and positives, and is it a good thing?

Speaker 1 It is not a good thing. Your instinct is correct.
You win the argument. Now, let's talk about why.
Praise the Lord. Yeah, let's talk about why.

Speaker 1 You have a good nose for stupid.

Speaker 1 And

Speaker 1 so you're like my wife in that regard. But

Speaker 1 so

Speaker 1 a shared appreciation mortgage is what we're talking about. And what this is, is the mortgage company, in return for a lower interest rate

Speaker 1 and in return, usually for lesser down payment,

Speaker 1 you give up a portion of the increase in value.

Speaker 1 And so

Speaker 1 you buy a $300,000 house and it goes up to $500,000. The sum of that $200,000 increase goes back to the mortgage company when you refinance or when you sell.

Speaker 1 So you do not get all of the growth in value.

Speaker 1 The downside

Speaker 1 is two things.

Speaker 1 One is it can trap you and make it very difficult to refinance if you were able to and get rid of them, okay?

Speaker 1 Get rid of that loss of growth.

Speaker 1 And it can also make it difficult to sell. And of course, the third thing is, is you gave up some of your growth.
And the trade-off's not worth it, is what it amounts to.

Speaker 1 I don't know why he's being pulled into that. That's very strange.
Because

Speaker 1 the thing is, very, very few mortgages, very, very, very, very few people do this.

Speaker 1 I thought the program was actually dead until a few months ago. I heard somebody bring it up.
I think somebody's out there promoting it or something because I hadn't even heard of it in a long time.

Speaker 1 The first time I heard of it was back in the 90s. And

Speaker 1 in a high interest rate environment, you know, and so interest rates were really high and people were trying to get the rate down by giving up some of their future appreciation.

Speaker 1 So Tammy, kind of think of it this way.

Speaker 1 Have you heard these things with student, some of the student loan things where you can go to a certain college and you don't pay as much to go to the college, but you give up some of your income to that college?

Speaker 2 No, I've never heard of that.

Speaker 1 Same deal, same kind of a thing here.

Speaker 1 You're selling off your future for a little better deal in the present, and that's never a good trade.

Speaker 2 I'm sorry. So you're saying that once

Speaker 2 if you ever decide to sell or if you ever decide to whatever, you have to give them a portion of the value?

Speaker 1 Yeah, of the increase in value, yes.

Speaker 1 So if you bought a $300,000 house and it went up in value to $500,000

Speaker 1 and you had a 20%

Speaker 1 shared appreciation as an example, then you would give up 20% of that $200,000 growth or about $40,000

Speaker 1 when you refinance to get rid of that mortgage.

Speaker 1 And by the way, if you wanted to just pay it off,

Speaker 1 if you started making a lot of money and you were working the Ramsey plan, you wanted to pay it off, you got to pay off that appreciation that you owe them to, not just the loan balance. Oh.

Speaker 2 Well, here's the idiotic thing to me:

Speaker 2 we have $400,000 or whatever in cash, liquid. We could just buy the home, but he doesn't want to do that.

Speaker 2 He wants to go through the bank because in his mind, he's keeping his money and making some money from the bank. And I'm like, this doesn't, why would the bank do that? That makes no sense to me.

Speaker 1 Well, the bank did it because it's good for the bank.

Speaker 1 But your husband's wrong.

Speaker 1 You're right. Pay cash for your house.
You have the money. You are exactly right.
That's what I told him. He needs to listen to his wife.

Speaker 2 In his mind, he's amen. In his mind, he's thinking he's keeping this money for somehow in his possession or something.

Speaker 2 And I'm like, but I don't understand why we need to go through the bank and loan the bank our money to get a mortgage through the bank.

Speaker 1 Here,

Speaker 1 let's try a couple things, okay?

Speaker 1 Number one, you can say this. Let's pay cash for the house.

Speaker 1 If two years from now, after we pay cash for it,

Speaker 1 you want to talk about getting a mortgage, we'll talk about it.

Speaker 1 You know how hard it is for somebody emotionally to put a mortgage on a paid-for house? He'll never do it.

Speaker 1 Okay. So try it, honey.
Try it my way. Pay cash for it for two years, and then we'll talk about it.

Speaker 1 So that's thing number one. Thing number two.
All right. We did the largest study study of millionaires ever done in North America.
I say this all the time because we did.

Speaker 1 We studied 10,000 plus millionaires. The number of millionaires that out of 10,000 of them that said we became a millionaire by

Speaker 1 borrowing money on our home so that we could invest, what your husband's talking about,

Speaker 1 the number of millionaires that said they did that out of 10,000 was zero.

Speaker 2 Okay.

Speaker 1 So the data says the facts are that your husband's theory is wrong.

Speaker 1 Okay. Okay.
One last thing, and

Speaker 1 I'm going to keep throwing stuff at him and at you too, but here's the thing. So

Speaker 1 when I went broke,

Speaker 1 I did whatever I wanted to do because I'm really smart with math, and I did some stupid butt stuff like he's trying to do. And

Speaker 1 I found in the Bible, Proverbs 31 says, who can find a virtuous wife? For her worth is far above rubies. The heart of her husband safely trusts her,

Speaker 1 and he will have no lack of gain.

Speaker 1 Now, that doesn't mean he can't argue with you about this. He should and challenge your theory.
He should. I do with Sharon, with my wife.
But I trust my wife to have common sense and input.

Speaker 1 Ken trusts Stacy to have common sense and input. Hang on, I'm going to give you a copy of the book, Baby Steps Millionaires, for you and your husband to look at.

Speaker 1 I think it'll help your husband with this. He's trying to do a good thing a bad way.
It's a bad move. You smelled it out.
Congratulations.

Speaker 3 I'm going to say what I think a lot of Americans are thinking right now, that Tammy would be a great co-host one time with you.

Speaker 3 Were you not thinking that, James? I mean, was she let off with stupid with the same passion that Dave says it?

Speaker 3 I thought Tammy, America would love Tammy. I love Tammy.
She's a treasure. I just wanted to say that.
I think that was one of my favorite calls that I've ever heard because she's on it. She makes

Speaker 3 no mistakes about what she thinks, and I love her.

Speaker 1 I think she's great. I don't think communication is a problem in their head.
No,

Speaker 3 you and Tammy co-coaching someone would melt the internet.

Speaker 1 It would melt YouTube.

Speaker 3 Picture Dave fired up and Tammy a little fired up.

Speaker 1 It would be great radio.

Speaker 1 You're awesome, Tammy. Very fun.
You're amazing, lady. Well done.

Speaker 1 This is the Ramsey Show.

Speaker 3 What up, what up? It's Dr. John Deloney from the Dr.
John Deloney Show with some amazing news.

Speaker 3 The latest episode of United States of Anxiety is available right now exclusively on the Ramsey Network app.

Speaker 3 This docu series follows real people from my show as they embark on a 90-day journey to transform their lives and I personally walk alongside them every step of the way.

Speaker 3 Okay, now here's a sneak peek of what the new episode is all about. And don't forget to click the link in the show notes to download the app.

Speaker 1 What's up, Kelsey?

Speaker 4 So, I've lived with crippling anxiety for as long as I can remember. How do I stop it from constantly coming up in different areas of my life?

Speaker 3 What does crippling anxiety mean? Paint me a picture of that.

Speaker 3 All right, so you ready to jump in?

Speaker 2 I'm ready to jump in. So, we're going to check in with Kelsey 30 days, 60 days, 90 days.

Speaker 4 I cannot even function because I'm just crying.

Speaker 4 My mom left us when I was four. I truly felt like for a while I had no family.

Speaker 3 She's experiencing things that really hurt a long time ago.

Speaker 1 Tell me about this boy.

Speaker 4 He triggers me a lot. Scared of losing Paul, scared of doing the wrong thing, scared of not being enough.

Speaker 3 It just feels like it would be exhausting to be Kelsey. It is.
Whenever somebody's playing whack-a-mole with their anxiety, when it just keeps moving, that tells me the underlying system's not okay.

Speaker 4 How do I get my inner child out of this relationship? Because I feel like she's running the show.

Speaker 3 One of two people that's supposed to never leave took off.

Speaker 1 I was this,

Speaker 1 I was this burden. New burden, that's right.

Speaker 3 To the one person

Speaker 3 who should carry all of it. Did you ever tell that little girl that it wasn't her fault?

Speaker 2 I don't know what to do.

Speaker 3 You either have to choose to let this guy love you, or you got to choose to let this guy go.