Don’t Let Panic Derail Your Plan

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Normal's broke and common sense is weird.

So we're here to help you transform your life from the Ramsey Network in the Fairwinds Credit Union Studio.

This is the Ramsey Show.

I'm Dave Ramsey, your host, Ken Coleman, Ramsey personality, number one best-selling author and host of the front row seat on Ramsey Network, is my co-host today.

Open phones here at 888-825-5225.

Shay is in Nashville.

Hi, Shay.

How are you?

Hey there, I'm so well.

How are you?

Better than I deserve.

What's up?

So I'm just in an interesting situation right now.

I just found out I'm expecting.

Yay!

Is that your first?

It's with my husband, of course.

What was that?

Is that your first baby?

Yes.

Cool.

How old are you?

I'm 23.

Awesomeness.

Cool.

Okay.

Wonderfulness.

Yeah.

So

the thing is,

it's not planned, so we don't have our finances fully in order.

And with me out of work, when the time comes, we will be short of our budget.

So if I could just get any advice on anything else we're missing on what else we could do.

Yeah, it just got real.

Why are you out of work?

Well, she's saying when she has the baby, right?

Yes, I'm in work right now.

Oh, you are.

I misunderstood.

It is getting tough already

with all the nausea.

Yeah, you got a little morning sickness going, huh, kiddo?

All right, this is so fun.

All right, so I distinctly remember, like it was yesterday, it wasn't, but like it was yesterday, that when I graduated from college and got my first adult job,

I felt like an adult.

We got married.

I felt a little bit more like an adult, but nothing scared the crap out of me like the first baby on the way.

It's the same way for me.

Yeah, okay.

And so what little was left of your former

high school, college

freewheeling, partying or not, but just

not worrying about responsibilities.

What little was left of that is now gone, right?

I suppose so.

Yeah, yeah.

So now it's time to get real serious about your careers and real serious about the grown-up stuff, like making some money, having some money for you and this kid, and figuring out how to do this.

And that's why you're calling.

I'm so proud of you.

Way to go.

Because you're reacting to a natural anxiety that we all have had, any of us that have had a baby, unless you're psychotic.

When the baby actually comes, it's going to be another one, by the way.

It's going to another level of seriousness.

It's like a, whoa, this is, I'm now in charge of a life.

I have a real

burden here.

I have a real responsibility here.

Await here.

You're going to feel it again, even

when

Junior enters the world.

So

this is so awesome.

So what this means is probably more than ever before in your life, you're going to get real serious about making some money.

Yep.

That's all, that's what all that leads to.

So, what do you do for a living?

I refurbish furniture and woodworking in Nashville.

You don't make any money, do you?

Oh, I make a lot of money.

Oh, do you really?

Okay, good.

I do.

Okay,

what's a lot of money?

What are you making?

Well,

I was

cut back because I left work for a time.

So, I'm I'm currently making $24 an hour at 32

hours a week.

Well, that's not a lot of money.

In my mind, it has been a lot of people.

But you're saying

you're scraping by, and you're worried that...

Okay, and what's your husband make?

He's making $2,200 a month.

Yeah, y'all are starving to death.

What does he do?

He works in a warehouse that supplies apartments with furniture and utilities.

And how old is he?

He's 23.

Okay.

All right.

And so he just took a job so y'all could have food and lights and water.

And

he's not afraid of work.

That's a good man.

But now it's time to not do that anymore.

It's time to take a career position and start thinking about what am I going to be doing when I'm 30 that makes $100,000 a year.

Right.

Both of you.

And if you're going to be refinishing furniture, it's because you own a refurbishing furniture company.

That's the only possible way you're still doing that when you're 30.

Because you're not going to do artsy fartsy and make a living working for somebody else.

Not going to work.

Yeah, I'm curious.

What is his goal?

Has he stated a professional idea or two or three to you?

He's had a few ideas, and

he really would like to get into home inspections.

He loves home supply.

Is he handy?

Is he good fixing stuff or doing stuff?

Does he find that he enjoys doing things like that?

He's not so much handy, but he's very intellectual and he loves logistics.

And he has no formal training, right?

You guys just kind of out of high school?

What's his background educationally?

Yeah,

we're both out of high school, got jobs, and have worked our ways up in the company so far.

Well, you know, when you look long-term here,

I would run those numbers and look at what a future looks like inspecting homes.

That's a little bit of a niche.

Now, I think there are people who do very well at it once they consolidate a lot of realtors and things in an area and they become go-to and then they can scale themselves.

But the reason I asked the question about the hands and is he good at things like that, if he's analytical or logistics, I mean, a career in logistics does have an upward mobility.

But I'm telling you, if I'm 23 and I wake up today in your husband's shoes,

I'm going to look at trades.

I'm going to look at some of that talent that he has, and we're going to give you the book, Find the Work You're Wired to Do.

It's got the get clear assessment in it.

I really want him to take it.

I'd like you to take it.

We'll give you, well, Kelly, let's give him a book each.

There are two codes, one book.

Here's the deal: he needs to be looking at the trades right now because there's so much upward mobility for him to make much more than he's making right now at $22 an hour.

And secondly, $2,200 a month is worse than $22.

That's right, $2,200 a month.

But more importantly, there's a path to ownership in the trades right now.

And if he has any kind of talent in that area,

I would be looking at that if I were him because of the opportunities.

Yeah, so there's two parts to the equation.

We're going to send you that book, and you guys are going to take the assessment, and I want you to develop a long-term game plan for both of you.

What are you going to be doing when this kid is 10?

That makes a lot of money for your family and that you enjoy and that you're passionate about.

And all three are congruent.

Okay.

The second part of the equation, though, though, is what are you going to be doing in the next nine months?

You guys need to take six different jobs, all of you.

You need to work like crazy people and pile up as much cash as you can pile up right now.

Get ready because you're getting ready to have a hiccup in your income nine months from now, right?

Right.

And so you've got to get ready.

And the way you get ready is you build a storm cellar and you fill it with money.

And you go work, work, work, work, work, work, work, work, work, work, work, work, work, work, like crazy for a short period of time.

If you have family in the area that can help watch the baby, you could spin off this woodworking that you do and work full-time or close to full-time if you schedule, you know, your work around weekends, odd hours, because it's really project-based.

That's how you can make sure we don't miss any money once baby arrives.

You got to start thinking like that.

Yeah, well, she sounds like she's doing it for someone else by the hour.

I agree, but my point is, can she now do that for herself?

That's right.

And then set her own hours because these are project-based.

So it's time, it got real.

That's the summation of the call.

It got real.

And the short term, you got to pile up some cash and get ready.

Long term, it's now time to do big boy, big girl jobs, careers, not just I take a job that pays me some money so I can make it to the weekend.

I've been doing this show for over 30 years, and some of the saddest calls I have taken are from situations that are completely preventable.

Yeah, and what's so hard is I feel like one of those, especially the ones that I'm like, oh, it's terrible, are people that call in and their spouse has passed away suddenly and they don't have life insurance.

We actually took a question of a lady and she had three kids pregnant and husband didn't have life insurance.

And I'm like, I can't even imagine, or even if it was opposite, right?

If a mom passed away, there's a dad with kids and trying to figure out how am I going to afford child care?

How do I, how do I outsource some stuff that maybe she was doing?

Like, and it just takes the grief and the sadness of something like a sudden death to a whole new level.

Like when you have to think through how am I going to pay my bills

next week.

Yeah, in the middle of all that grief, like it's just, it is, it's terrible.

And so life insurance is the one thing, especially as a mom with three little kids that I'm like so big on for people to get because it's inexpensive.

Xander is the place that Winston and I actually get all of our life insurance.

And we keep re-upping it because I'm like, I just want it there.

Like there's something about that safety of knowing that you have money if something suddenly happens.

And it doesn't cost much because Xander shops among a gazillion different companies.

It doesn't cost much.

You just have to admit that someday you're not going to be here.

You got to say it out loud.

And you got to say, I'm going to say I love you to my family by taking care of them and taking the time to put this stuff in place.

The cost of stinking pizza.

There really is.

So that is one one thing to do to say I love you to your family.

So we've used Xander for all of our families' needs for insurance for many years, including, of course, term life insurance.

To get a free quote, go to 800-356-4282.

That's 800-356-4282 or go to zander.com.

Brandy is with us in Georgia.

Hi, Brandy.

How are you?

I'm good, Mr.

Ramsey.

How are you doing today?

Better than I deserve.

What's up?

Well, I've been married for 25 years, and

I don't work at the time.

I'm taking care of my grandson, which my husband totally

is on board with that.

But I get no money unless I have to ask for it.

And we are debt-free.

We owe nothing.

And I I just feel like anything I say, he doesn't want to take my advice or anything.

Like, I feel like we need to sell our house now because it's a bigger house and we don't really need all the room.

And we could sell this and we have a really good life.

I mean, I feel like.

I don't know.

I just fuck his daughter instead of his wife.

Oof.

How can we help?

Well, I just, I don't know.

I mean, what should I, like, we ended up separating like two years ago, and I found out

actually what he was worth and what we was worth.

Like, I don't know anything.

If he was to pass away tomorrow, I wouldn't know what to do.

I don't know what's in his bank account.

I have no access to anything.

My name's not on his business.

My name's not on his debit, you know, card.

I can't use his debit card.

And we've been married for 25 years.

I'm like, you know, and it really aggravated me when we separated because my attorney, you know, gave me all this information on, you know, what he's got.

And I was just like, I feel like I deserve that, you know, more.

Well, where's the marriage now?

We're together.

I take care of my grandson.

I can work.

Like, if I, you know, and I've even said, do you want me to work?

He's like, no, I want you to take care of our grandson.

You know, I think it's wonderful that we can do that.

But it's like, I don't get paid for taking care of my grandson.

So I'm having to always ask him for money.

Does he give you money when you ask?

What's that transaction like?

He does.

Yeah, he does, but he only gives me money for what I need.

Like, if I'm going to get groceries, he'll give me like $200.

I'm like, $200 don't buy anything you know and my fear is I'm going to get up to the counter and not have enough money and have to pay everything back and I know he's got the money to give me that's what's hoped so you know it makes me so aggravated at him well what happened over a two-year or you separated two years ago what happened as a result of separating because it doesn't sound like anything has changed It hadn't.

And honestly, I feel like we got to...

Why are you not still separated if nothing changed?

I thought, well, financially, it was so expensive that I was having to pay attorney fees, which he had to pay me $750 a week alimony during that time, but I had to get a place to live, so I didn't realize how expensive things was because I was, you know, we didn't have any debt.

So I went from not having no debt to having like, you know,

$300,

probably $3,500 a month that I had to pay, you know, for my rent.

So you went back to jail

because it was too expensive to be free.

That's what, what's what I'm hearing.

Yeah, I just love them so much.

It's crazy.

I I know.

So, why did you call us?

I'm so confused.

What do you want us to do?

Well, I just feel like, am I in the wrong for wanting, you know, having a marriage?

No, you're not in the wrong, but you're not doing anything about it.

I know.

That's why I called you.

I can't do anything about it.

You've got to do something about it.

What can I do?

What should I do?

I think you've got to decide if you want to be married to someone that treats you this way.

And you're going to have to sit down.

My recommendation would be that the two of you sit down with a good marriage counselor and that Bubba hears for the first time in his 25 freaking years that he's mistreating his wife.

And he too, if I he says I don't manage his wife.

I don't care what he says.

You actually care what he says, but I don't.

I know.

So you need to not care what he says.

You need to go see a marriage counselor because he sucks as a husband.

He's a horrible husband.

I feel like.

I agree.

Because I had to go to the doctor yesterday.

Darling, you're just going to talk my arm off and do nothing.

I can tell.

I can tell exactly what's going to happen with you.

So So you've got to decide what you're going to do,

okay, and quit telling me stories about him.

Are you going to actually get on the phone and call a marriage counselor and go sit down with one?

You need to do that today.

And if you don't do that, quit telling people stories about him.

Shut up.

Live with it.

Okay?

If you're not going to do nothing about it, shut up about it.

But if you're going to do something, then we'll pray for you and back you because, and yes, you're correct, honey, that

the situation's weird and he's not a good husband.

He's mistreating his wife.

And the problem is he's probably not a bad guy.

He's probably just doesn't even know how to do it.

He probably doesn't know how to be a good husband.

He thinks he's taking care of you.

He may be that dumb.

And so, you know, we're going to have to educate him and teach him that, you know, this is emotional financial abuse, dude.

And so you need to involve your wife in the decisions.

Let her have the dignity of being one of the two adults in the household.

But that's a marriage counseling thing, honey.

I can't dictate that.

I don't have a magic wand over here to tap him on his little head and say, that's it, dude.

Now you're magically healed.

And I can't do that from here.

But you're going to have to work on it.

And I don't think you're going to.

You just talk about it all the time.

Yeah, you've married a control freak, and then you've let him get more and more control over 25 years.

And then you've summoned up some guts, which I admire two years ago, but then it ended up being a pump fake.

You just pump fake, or he called your bluff.

He played to your greatest fears as my guest, not knowing the details, and you caved.

And you've convinced yourself that I love him so much, and I don't think that's the case.

That's enabling.

That's just bullcrap.

I love him so much, I'm willing to be abused.

Come on.

He's warped.

I don't think he's dumb.

I think he's warped because he's really unhealthy.

And I'm not attacking him, and I'm not making excuses for him, but you've got to shake him.

He needs to be shaken.

Yeah.

If this guy was my buddy, I'd be boxing his ears, man.

I'd be giving him a hard time.

That'd be fun.

That'd be an interesting conversation, wouldn't it?

Of course, he wouldn't have been my buddy because he wouldn't have.

That's true.

That wouldn't have worked out.

That wouldn't have worked out either.

John is in Nashville.

Hey, John, how are you doing?

Doing

yourself, Mr.

Ramsey.

Better than I deserve.

How can we help?

Well, I'm having some issues.

I'm 20 years old.

I have a one-year-old kid and a wife.

And I'm in so like deep debt to the point where I think I'm going to have to go bankrupt.

What kind of debt have you got, honey?

I have $32,000 in student debts for my wife.

She's currently in school.

And then I have.

So

you have $32,000 in student debt, and you're continuing to run up student loan debt?

No, so that's.

Who's paying for her school?

I am.

She's a stay-at-home mom.

With what?

I have a one-year-old

With me working.

Oh, okay.

And what other debt do you have, Sherry?

And then I have two vehicle loans.

And on my truck, I'm two months behind.

And I owe.

How much do you owe on your truck?

I owe $11,700.

Okay.

And what do you owe on the other car?

What do you owe on the other car?

$10,000.

Okay, and what other debts do you have?

Credit cards?

I have $3K in personal loans and then about 1,000 in credit cards.

Okay.

All right.

And what do you make, sir?

I make $3,500 a month.

Okay.

All right.

Okay.

You're not bankrupt.

You're 20 years old.

You have a baby and you're scared.

And you've done some dumb things that have put you in a corner, but it's not bankrupted you, okay?

You have cars that you can't afford.

Okay.

You can't afford these cars.

Obviously, that's why you're behind on the truck.

You do not have any organization to your money, no budget or anything else.

And student loans are not bankruptable.

And you can't bankrupt on the cars unless you pay the bill.

And if you don't pay the bill, you give up the car in bankruptcy.

So if you have no cars and you still got the student loans, you could be bankrupt.

But it really wouldn't do you much good.

You could just sell the cars and still have the student loan and not be bankrupt.

Gotcha.

What's the truck worth?

Whenever they pulled it, I had the loan out for $12,000, $7.50.

What's the truck worth?

It's probably worth $9,000.

Okay, good.

And who do you owe the money to?

The bank.

Local bank.

Okay.

And what about the $10,000 car?

What's it worth?

We paid $16,000 for it.

I gave $6,000 down.

Good.

You need to sell that car this week.

Okay.

And your wife can't be in school.

You can't afford to pay for school right now.

When your truck payments are behind, your wife's not going to school.

You don't do that.

Okay.

You got to get organized here.

We're going to help you, man.

I've been where you are and been scared with a little baby and didn't know what to do.

We're going to put a Ramsey coach in your corner at my expense.

We're going to pay for it and we'll put you into Financial Peace University.

And you and your wife are going to do that.

You're going to have to sell everything, and you're going to have to work like a maniac, and you can turn this around, and we can show you how.

You're going to be okay, son.

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Blake's with us in Asheville, North Carolina.

Hi, Blake.

How are you?

I'm good, Mr.

Ramsey.

How are you?

Better than I deserve.

What's up?

So I'm starting a new job next week.

I'm leaving leaving my current job tomorrow.

Wow, cool.

Big deal.

Big race?

Yeah, big deal.

On paper, it's more money, which I'm excited about.

How is it on paper and not real?

Because it's not in my bank account yet.

Oh, because it hadn't happened yet.

Okay.

Yeah,

I thought that was a congressman on Meet the Press for a second with that answer.

On paper.

On paper.

The promise is that we're going to get a raise.

Okay, I got you.

All right.

Yeah.

About $1,900 more a month guaranteed.

Okay, cool.

Starting out $25 an hour, four days a week, 12-hour shifts, long shifts, but I get the whole weekend off, which is a blessing from what I'm currently doing.

Okay.

So I'm just kind of looking.

I want to start investing

money.

I've not had any legal room in.

my financial situation to start investing.

So I'm kind of just kind of looking where and what I need to do to start

investing.

And by the time I'm 60.

Yeah,

you'd have some money.

Good for you.

So do you have a 401k at the new place?

I'll have to set one up after 90 days.

Okay.

Do the Roth 401k.

Roth, okay.

That means it's going to grow tax-free,

but you're going to pay taxes on the money that you put into it now, which is whoopy-doopty, no big deal.

And they're going to match it probably.

and if they do, they match it with non-Roth, which is okay.

And pick good growth stock mutual funds.

You can go back and listen to this later if you want to, but there's four types of mutual funds we invest in.

I invest in, Ken invests in.

It's what we teach.

Growth, growth and income, aggressive growth, and international.

Those are the four categories you're looking for.

And you're looking for long track records, five years or more on those, preferably ten years or more,

but long track records.

And so, if you've got two growth funds, you can look at them and go, okay, this one has a 10-year track record and it is averaged 12%, and this one has an eight-year track record and it is averaged 11%.

Oh, I'm going with the other one.

Okay, you know what I'm saying?

That's how you're looking at it.

It's not real hard.

And they can show you every bit of that in the HR stuff with your 401k when the 90 days comes up.

And we recommend you put 15% of your income, not more, not less, into your 401k.

Now, that is if you are debt-free and have your emergency fund in place of three to six months of expenses.

Is that true?

That is not.

Okay, then we don't need to start investing yet.

We need to first investment is to get the debt paid off so that you've got the money to invest.

Okay.

How much debt have you got?

I have 36,000 in student loans.

Okay.

I'm going to attack that like my hair is on fire.

Yeah, that's what I was thinking.

I'm going to be in a good position next month, especially to start attacking that.

Yeah, I mean, you got an extra $1,900, plus you can squeeze your budget down.

So $3,000 times $12,036,000.

You're done in one year.

You got a $2,000 raise, and I'm pulling another $1,000 out of your party budget, and you're going to get out of debt in a year.

And those weekends.

So you got some time there.

Yeah, go make some money on the weekends.

Let's do it even faster.

Yeah,

i i do have a weekend kind of gig cool what do you mean

um it's just depending on uh what it is i do i work in a production event production so i do i got my degree in theater

focusing and lighting design so i do like concerts and weddings corporate events okay and just depending on the position it depends on the uh yeah i'd be working all the time for a short period of time if they don't have one of those gigs going i'd be doing something else okay lots of stuff going on in your area there in Nasheville.

Lots of things you can lay your hand to as a temporary thing.

Because the faster you get out of debt, the faster you get to invest, the faster you're wealthy.

Hello.

Yeah.

So that's the way we're looking at this thing.

That's how we're going to go at it.

Really good question, sir.

Congratulations on moving on up.

I like it.

I like it.

I like it.

By the way, I just got to say this real quick because we continue to see this stuff on social media and in traditional media about

a poll came out from Gallup, just came out yesterday.

The American people people losing faith in capitalism.

Is the American dream alive and well?

And all this crap that gets put out there.

And I just want to point out, here's a young man who is on the precipice of realizing the American dream.

And he's calling in it with a question like this.

So I just want to contrast all the stuff you hear versus here's a real young man who's got it figured out and he's going to get debt-free and he's going to be a multimillionaire because he's doing this early on.

So this is a separate narrative than what you hear on TikTok and and facebook and all the things this is the real deal here so i applaud you blake uh because you are the numbers change when people do guys when you've been reading these things you're being lied to yeah that's right the communist professors have put out the poll that capitalism is dead

and the communist professors are on payroll at the college that was financed with your freaking student loans you need to keep in mind where this crap is coming from yeah okay

so

capitalism is not dead.

As a matter of fact, it is the best way in human history at this particular moment in time.

You have, if you are right now in your 20s, you have the most opportunity to build wealth the fastest

of any time in any period in any location since man began walking the earth beside Eve.

Old Adam.

Remember him?

Yeah.

Since then, all the way to now.

This is the best moment in time.

Where I in my 20s right now, broke, I could be a millionaire so freaking fast it would blind you.

There is so much opportunity.

But if you sit around and suck your communist thumb and swine about capitalism and wages and house prices while living in your mother's basement typing on your $2,000 iPhone instead of working your little butt off,

then you deserve what you get because you're signing up for victim mentality.

We don't do victim around here.

We do victor.

Blake is a victor.

That's exactly right.

He's going to get it.

Poster child.

That guy right there, man, he's a stud.

Let me tell you, if he's single and you've got a daughter over in Asheville, you need to try to tell her to find him.

Because that one's a keeper right there.

That guy's going places, right?

You don't want your daughter marrying a dreamer, they'll be in your basement.

I'm going to be, I'm going to, what do you do?

I'm an activist.

I pick it against capitalism.

Yeah, well, that God help me.

Geez, get away from my kid.

Because you know, the captains of industry are looking on the streets of Chicago and New York and L.A.

for all those placards.

Those poster boards are making a difference.

It's just ridiculous.

You think I make a single decision at Ramsey based on those morons?

Absolutely zero.

okay?

Just zero.

So nobody does.

People that are doing things don't have time to watch that garden.

That's right.

So, yeah, I get aggravated.

But sure, that's a good point, Ken, that

truthfully, the digital age, you can just decide.

And I'm in business.

And a minute and a half later, you have a website.

and Shopify set the stinking thing up and you start selling your little idea.

And then when it fails, you can start another one next week.

I mean, it's just the most wonderful time to be alive and make money and help people.

It's an amazing moment in time.

Blake just got a promotion and he has got a side hustle on the weekend.

If he can do it, you can do it.

But he's been destroyed by $36,000 worth of student loan debt.

He's hopeless.

He'll never make it.

The system is rigged against poor Blake.

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James is in Oklahoma.

Hi, James.

How are you?

Good.

How are you?

Better than I deserve.

What's up?

Hey, we recently came into an inheritance um and we were wondering what to do with the money we have a small farm and we owe uh we still owe on it

and uh

and and that's it but we didn't know if we should invest or pay it off okay and how much of an inheritance did you receive sir

seven hundred uh thousand and there's roughly three hundred and

thirty thousand left that's coming in additionally.

So you're going to get a million total.

And how much is owed on the farm?

The total land is 336,000, but the house is separate and my student loans.

How much are your student loans?

My debt, 46,000.

Okay, so 400,000 clears everything out of a million?

Roughly 600 will clear everything.

I'm sorry, I got lost.

You said you had 340,000 on the land and 40,000 in student loans.

Is there a house loan, too?

Yes, there's a house loan too.

Oh, oh, separate.

Okay.

So you could be debt-free for $600,000 and still have $400,000 left over when the smoke clears.

Okay, cool.

Why would you not do that?

Well, we were talking, our financial advisor was wanting to invest the $600,000 now, and then so we just didn't know if we should invest.

And he was saying not to pay off the house because of the percentage.

And I just didn't really know what to do to get debt-free and then worry about investing.

Or, yeah,

what's your household income?

Roughly $200,000.

Okay.

So, if you had zero payments, you'd have lots of money to invest, wouldn't you?

Yes, sir.

Yeah.

I think you need a new financial advisor.

Yes, sir.

Yeah.

This one sucks.

So, yeah.

Yeah.

Honestly, I mean...

We have cows, too, that help make the farm payment as well.

Well, that's good.

That's good.

The cows make money in your pocket if you don't have a payment, right?

That's true.

Okay.

All right.

Yeah.

This idea that wealth is built from borrowed money is mythology when we actually look at the hard data.

We studied 10,167 actual millionaires.

The number of them that said the way I became a millionaire was my financial advisor told me to invest with him instead of paying off my farm was precisely zero.

Ten thousand one hundred and sixty-seven millionaires disagree with your financial advisor.

Yes, sir.

That's what I'm saying.

Okay?

And so if you take the freed up cash flow that you will have and you quit borrowing money the rest of your life and you have you're going to have approaching a $2 million net worth when this all happens, and a $200,000 income, you're going to be worth $20,000, $30,000, $40 million, dude,

when this is over.

I mean, if you'll just stay out of debt and keep steadily investing and steadily being generous and paying cash for things from this point forward.

And let me ask you: who passed away that left you this money?

My dad.

He was a big.

He was a big, he was a big what?

Fan of yours.

Oh, okay.

So, well, regardless if he was a fan of, he's probably a fan of mine because he probably did the stuff I'm talking about long before he even, before he even heard of me.

And then he just found me and I agreed with him.

Does that sound right?

Yeah.

In other words, it's not me.

It was him.

And

I think if he's in heaven and you pay off your farm, I see him smiling.

What do you think?

No, yes, sir.

I completely agree.

He'll also be smiling when you fire this financial advisor.

Yeah, and by the way, by the way, that's the issue.

This financial advisor, you've trusted up until this point, and he gave you this advice.

And yet, something in you said, I think I should call Dave today.

Doesn't ring

my dad taught me.

So I trust the guy.

Dad's money I'm getting.

I'm going to honor him with this legacy.

And this guy,

yeah, it doesn't feel right.

See, you can't be afraid to disappoint.

It's a tuning fork of your heart.

Yeah.

So disappoint the financial advisor.

That's what's going on here.

I'm happy to disappoint this person.

I know you are, but a lot of our callers, we got to get them to the point where we realize, hey, you already answered this question before you called us.

Here's the other thing.

Unless I miss my guess, this guy that I'm talking to on the phone right now's net worth before the inheritance was greater than the financial advisor's.

Guaranteed.

The dirt, the cows, everything, all of it.

This is just saying.

Caroline's in Colorado.

Hi, Caroline.

How are you?

Hi, I'm good.

Thanks.

Good.

How can we help?

I'm just, I'm feeling a little discouraged.

A year ago, my husband and I were on BB Step 4.

We had two full-time jobs, three additional income streams.

But in the last 12 months, my husband lost his job.

We're down two income streams.

We had to deplete our emergency savings, use some retirement funds, and go into debt.

And

we are,

we, well, I guess I can explain that.

You didn't have to, but you did.

Why?

We were trying to get out of debt by selling one of our properties.

You got into debt, you said.

Yes, because it took us longer to sell the property and we had to put more into it to sell it than we were expecting to.

But why did you not just go get the job and replace the income?

I'm sorry, which job?

The one he lost.

Oh, he did.

He found another job, but he had to take a pay cut.

Okay.

There's a lot of have-tos in this story.

All right.

And

okay.

How can I best help, darling?

Well, so we are net worth millionaires, but we're struggling to get by a month to month.

And we recently sold one of our rental properties,

like I said, to get us out of debt.

And we're just at a crossroads and unsure of what the next best move is.

Okay.

If you have a net worth, so so is is your household expenses too high?

Yes.

Okay, so what are we doing to cut those?

I mean, I've cut back on everything.

What's it take for you to live a year?

Rough, well,

including the mortgages that we have, it's around $15,000 a month.

Okay.

So you're net worth millionaires, but you've leveraged yourself into real estate and gone broke.

You need to be selling every piece piece of real estate you have except your personal residence.

You're not cash flowing on this million.

Your million dollar net worth is not paying you enough to justify the expenses that you have.

Okay, so but you've got debt associated with all this net worth, so the net worth is invalid.

Okay, but my husband's income isn't enough for us to live off of, and we need additional.

It is if you don't need thousand dollars a month to live most people don't

that's ridiculous

are you catching what we're saying what's the biggest chunk of the fifteen give us the real numbers uh i mean the two mortgages obviously so what are those two mortgages um one is forty six hundred and one is thirty four hundred right

so sell them

right well and that's that's what i'm saying is we did sell a property and we have yeah but you're I'm not talking about the property you already sold.

I'm talking about the one that's killing you right now.

You have houses you can't afford.

Okay.

It's um I mean, it's worth $1.8 million and we have about $250 million.

Wonderful, but it's killing you.

And then do what with the money?

Buy a paid-for house.

that has no mortgages.

Okay.

You know, you you've got got debt that's so high that it is invalidated, that is creating personal consumption debt on real estate.

You have two houses, neither one of which are rentals, neither one of which are investment properties.

You are consuming $8,000, $9,000 a month in mortgage payments.

Am I understanding you correctly?

Yes, sir.

I mean, we have a third rent or a third rent.

I know, but those properties right there are creating the $15,000 a month nut you want to crack, correct?

Yeah.

And so you bought houses you can't afford, honey.

That's what we're saying.

And so get your dadgum

out go where it fits within your income.

And that's called selling these extra houses.

You've been living higher on the hog than you can afford.

Or than you can afford now, anyway.

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Welcome back to the Ramsey Show in the Fair Winds Credit Union Studio.

I'm Dave Ramsey, your host, Ken Coleman.

Ramsey personality number one best-selling author is my co-host today.

Chris is in Wyoming.

Hi, Chris.

How are you?

Good, yourself?

Better than I deserve.

What's up?

I just wanted to give you guys a call.

I just, I mean,

kind of

going through some struggles and with debt.

And

I got fired from my job on Wednesday.

Whoa.

That sucks.

What happened?

They gave me an evaluation, and I guess I didn't score high enough.

And

I think they fired me because of my hearing issues because

I was born partially deaf.

And

I think that's part of the reason why they fired me because I couldn't understand things.

Yeah, you're going to speak directly into your phone, sorry.

You got muffled on me there.

But you had trouble understanding things?

What was the job?

Yeah,

I was working at a casino.

I was doing surveillance.

And

they just

kind of looking at cameras.

I'm answering phones.

And I think

I just wasn't understanding a lot of stuff that I was being told.

And they didn't tell me they fired me because of my hearing issues, but I kind of think that's what it was.

Well, and the reason I'm asking this follow-up is because this is going to inform maybe some advice we give you going forward.

When they went through the evaluation, whether or not they told you that or not, did you agree that you weren't meeting their evaluation points?

Yeah, I do.

I do.

Listen, you're not speaking directly into your phone again, honey.

You don't have to do that.

It's muffled.

Yeah, so

I do agree that

I was having a hard time understanding things that they were, the tasks that they were giving me.

Okay.

Okay.

And so

your biggest crisis is you're unemployed.

Yeah.

I'm unemployed, and

my wife can't work because

she tore her femur back when she was in the military, and she's using two canes, and she hasn't worked for so long.

And

so it's just, it's been hard to try to take care of her, myself, and our three kids.

And

are you aware of what kind of work that you can do where the hearing is not going to be that big of an issue?

For like

15 to 20 plus years, I was doing like physical work, like warehouse type work because it really didn't involve a whole lot of, I mean, I started to hear things, but it wasn't as bad as, you know, having to like, I wouldn't have to like answer phones or any type of thing like that.

And

so I've been trying to get back into that again it's just been with winter hours coming up it's just kind of been more harder to get into that again how did you lose your hearing

I was born with I was born with it it's it was genetic okay do you have hearing aids

yeah I do I went through the the Wyoming workforce and but they're not working they were

um they were they're working um they they They've been a big help.

But even after I got the hearing aids with the casino, I was still having a hard time.

So

I try to do everything the best I can, and I seem to still have a hard time hearing.

Well, the casino is a very noisy place, and even with hearing aids, that can be a problem.

Well, I'm worried about your location.

It seems when you said winter hours that you have limited opportunities due to where you are.

Is that what I'm understanding?

Yeah,

because because I mean, I'm here in Cheyenne, and they usually when winter starts coming up, that's when they kind of a lot of places, you know, cut back hours and because they're fully staffed and it's harder to get into places.

And

sure.

How much money do you need to make?

What's the bottom line that would just take care of you guys, just your basic expenses?

What do you need?

I mean, my rent,

I mean, it's my rent, my electric.

I mean, I don't have to worry about like gas or anything.

Give me a number.

Do you got a number, a monthly number that you need to live?

In all honesty, I mean, I honestly don't know.

Can't really figure out a number.

It's usually about,

I think it's like $3,000 a month.

That's usually where all my bills are at.

Because I got two vehicles and then, you know, my kids taking care of the expenses for them, too, and the food and all that stuff.

And

you have two car payments?

Yeah, I have two car payments.

I have

my truck payment, which is $740, and then my car payment is $360.

I don't know what in the world planet you're on that you think you can afford a $700 truck payment.

When I was working with Walmart,

I got fired from them the the same year in January.

Why did you get fired from Walmart?

Because of my attendance, because of the wife's medical issues with her leg and then my mental health.

I was leaving a lot and I was calling off a lot because of my mental health.

And I ended up, after I got fired, I ended up with a lot of money.

What's the nature of your mental health problem?

Well, when my daughter was born, she

No, your mental health problem.

What's the nature of your mental health problem?

I'm depressed.

Okay.

All right.

And

is your wife on military disability?

No, she she's been trying to fight with the VA for

several years.

And

are you on any kind of disability?

No, I'm not.

I tried to get on Social Security and they they they denied me because I I I I finally got the job at the casino and they denied me because

I was making too much and so I that would that would be true that would be obvious yeah okay so what we've got to do is we've got to figure out a career where you can make some basic income and son you got to sell your truck

a $780 truck and this picture that you have painted for the last few minutes is insanity

it's nuts

So you've got to get rid of the $780 payment and you guys could go down to one car for that matter.

Your wife doesn't work.

She's on two canes.

I don't think she needs to be driving a lot.

So

you got, and then you're going to have to pick up work doing a lot of other stuff until you can land something that's stable.

Any good suggestions, Ken?

Well, the reason I went that direction of what have you done or what kind of work is because you're going to have to get back into that space.

And what I heard was a lot of limitations.

But right now, you can't accept limitations.

I understand depression is real.

That's a real thing.

I get it.

But you're going to have to fight through that because you are the person that this entire household is relying on.

So, yeah, manufacturing, warehouse work.

I'm showing up and I'm going to go back to Walmart and I'm going to say, hey, here's what happened to me.

I'm going to power through it.

I mean, anything and everything right now, two and three jobs, you have got to get enough money that maybe seeing, not maybe, I'd see a therapist.

I'd scrape enough money together where you get some help because a professional can help you uh with some tools to power through the depression and uh it's this is desperation time yeah yeah i'm sorry you're facing all this so sorry

i'm a hundred percent sure we've got to get your income up and i'm a hundred percent sure you need to sell your truck and when you do those two things uh you create a sustainable situation mathematically and that gives you the opportunity to work through the emotional struggles that you got so

keep it up, dude.

Keep pushing.

Keep fighting.

You can do it.

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Not in all states.

Today's question comes from Carlos in Texas, and he gives us some context from a Newsweek article that I'll read first, and then his question.

The federal government will accept Venmo payments from citizens who want to help pay off the national debt.

The Treasury has begun accepting Venmo transactions as contributions toward the national debt, which currently stands at $36 trillion.

I made it through that, James, without laughing.

But now, Carlos's question based on this excerpt.

What is your opinion on the new option of being able to voluntarily Venmo the U.S.

government to help pay down the national debt?

Well, my opinion is comes from one of my favorite movies where Anthony Hopkins plays this old man who's had a stroke.

And now it hits, I said it's one of my favorite movies.

What is that movie?

Where Brad Pitt's in it, and he's the old, and they're coming for his land.

Somebody bail me out, James.

What is that movie?

Legends of the Fall.

The Legends of the Fall.

And they come over, and his son comes up to old Anthony Hopkins, who suffered a stroke, and he has a chalkboard around his neck.

That's how he communicates with his family.

And they say, Dad, they're offering us land.

The government's offering us money for our land.

And he says, his mouth is all crooked, and he leans in.

He says, screw.

Screw.

That's my answer.

That's my answer.

Are you kidding me?

The government came up with this idea that we're going to Venmo my money when they already tax me too much, Dave?

My blood pressure is unhealthy.

It's not good for you.

Take the ball away from me.

This is bad for you, Ken.

I can tell.

It's just not, you know, your mental health now, Ken.

Dave, I need to take the rest of the show off.

My mental health is too fragile right now.

I've not heard this.

Have you heard of this?

Yeah.

Yeah.

I think it's wonderful because there's always some idiot out there who says

that

everyone should pay their fair share, and I would be willing to pay more.

Someone always says that when they're talking about tax the rich, right?

Oh, sure.

And so I always wanted them.

We had that argument many years ago here in the state of Tennessee.

We ran a governor out of office that tried to bring in a state income tax, and

he was confused, and the people here didn't want that.

That's so glorious.

Anyway, anyway, so yeah, but there were all these libbies that were saying, you know, like, oh, well, well, I would pay more.

And we're like, well, you can.

Just send them a check, you doofus.

Right.

And so, if you want to pay more because you just think this, that this is the whole thing's such a great operation, then send, yeah, sign up for Venmo, baby.

Have at it.

But the rest of us who have something akin to common sense would be like, screw it.

Right.

It's the dumbest idea I've ever heard of.

You gotta be kidding.

Here's the thing:

49%

of Americans pay zero zero

federal income tax.

Did you know that?

51% of us carry the whole thing.

That's not helping

zero federal income tax.

So please don't talk to me about fair share ever

again.

Yeah.

Okay.

I'll help you with this.

So everybody ought to be paying something.

I don't care if you make $5 and you pay a nickel.

I don't care.

You ought to be paying a little something.

Everybody pays a little something.

And so we can start arguing about flat tax now.

And that would be fair if I pay 10% of my income and you pay 10% of your income.

And I make a lot more, so I pay a lot more.

That's fair.

The way it is now is not fair.

But it's not equitable.

But anyway, so yeah, if you want to pay some more into the government, I think if you're the type of person that believes this is a good idea, I think you should do it.

You know what?

No, it's actually true.

If you're that stupid, then you shouldn't have any money anyway.

So go ahead and send it to the same organization that ran up the debt to $36 trillion and steaming towards $40 trillion.

It's the most,

it's just nonsensical.

So sure, yeah, you should, yeah, you should do that.

You know, they just did that to just for you and me.

Is that a fake question?

Is that just to see if I'm 100% real, but but I knew it would be gold with y'all too.

I feel like I need a whole bottle of Pepsi DC just chewing on them after that question.

Yikes.

Rochelle is in Texas.

Hi, Rochelle.

How are you?

Hey, it's not Rochelle.

She chickened out.

I'm her husband.

Okay.

So

what's the chicken husband's name?

What's your name?

The chicken husband's name's Charles.

Hi, Charles.

How are you, man?

I'm good, and thank you for taking our call.

I've been listening to you guys for a long time.

Thank you how can we help sure

uh so i'm active duty military uh and my wife and i will we're going to be getting transferred out to hawaii for our next unit uh we're kind of at an impasse right now we're finishing baby step five and uh we're considering buying a house but as it sits right now with the math that we've done it seems like buying a house in hawaii is going to tie up so much of our liquidity.

It just seems like it'll do better invested in good gross stock mutual funds.

We're hoping to get your opinion on that.

Thank you for your service.

We appreciate you.

And

the way we coach the military, and we coach a lot of folks in the military over the last 30 years, is there are some times when you make a move for two years that you will buy a house, but most of the time you shouldn't.

Most of the time you should rent.

And here's the math and the reason.

Most markets, most real estate markets on average do not increase enough during the two-year period of time that you're there

to

be able to sell it and make money.

You will lose money on the transaction.

And most real estate markets move slowly.

Now, you're moving into a Wahoo, I assume.

Yep, that's correct.

Yeah.

And so,

you know, the Wahoo market has a lot of military saturation, a ton of it.

And so there's always a good amount of military type housing for sale, which means it's harder to sell it when you get ready to move.

Now, if you've got the money to play in a non-military neighborhood, so to speak, that maybe you could, the thing, if it goes up in value fast enough and you can sell it quick enough, Those are the two variables, you can make money, then it's okay to buy.

But probably in Oahu, you're probably going to be better off renting.

Transpose that with we were working doing some stuff with SEAL team, and they're in the San Diego market, right?

San Diego real estate generally is going up very quickly and generally sells very quickly, and it's not saturated with military.

And so that's a market.

Virginia Beach is another one, the market you can move into and out of and make money.

But if you're going to be stationed in the middle of a Kansas cornfield and it's all military around you, because the only thing in the entire area is military, you're always going to have a bunch of military people that moved off and their houses are for sale or for rent.

And it screws up the market and makes it hard to sell.

And so you can end up with 273 days on the market, nine months to get out of the stupid thing, and you're going to lose your butt.

So

I think you're going to, when you investigate Oahu, you're going to figure out that you're going to lose money if you buy for two years.

I got it.

And also,

an additional worry that we have is our next unit will almost guaranteed be Kodiak, Alaska.

And like pay is going to drop pretty significantly off that Oahu pay.

So with the house not being paid off,

which again, we calculated out.

I don't think we'll be able to pay it off in time if it's an $800,000 house, for example.

Yep.

When we go to Kodiak, we wouldn't be able to make that work.

The pay would just be too much.

Exactly.

And again, Kodiak is going to be a lot of military in that market, right?

Right.

Real strong military consideration.

And so

it's, yeah.

So thank you for your service.

And but what I'm going to be doing is piling up money.

And when you are stationed in an area that makes, that is a vibrant real estate market that is not saturated with military, you can make money, then it's okay to buy.

Otherwise, I would rent and pile up money for when I retire and then I'm going to from the military and then I'm going to go buy when I hit my 20 year or whatever it is you decide to walk on it.

Again, thank you for your service.

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Brittany is in Huntsville.

Hi, Brittany.

How are you?

I'm good.

How are you?

Better than I deserve.

How can I help?

My husband and I just started Financial Peace University and downloaded Every Dollar.

And we are struggling with whether or not we should do the snowball out of order.

So right now other than mortgage, our only debts are about $22,000 on my vehicle that I drive and about $31,000 on my student loans, which are broken up into seven different loan groups.

So the loans would technically be the smaller debts that we should snowball first.

But I am pregnant and due in six months, my current car won't safely fit two car seats for our toddler and new baby.

So, like, I feel like I should focus on the car first and was just wondering what you all think on that.

So, you owe how much on the car?

$32,000?

And it won't hold car seats.

$22,000.

It was a RAV.

Yeah, $22,000.

The $31,000.

What's it worth?

It's worth about $22,000 with trade-in value.

Kelly Blue Books said we could get $24,020,000.

What's your household income?

About $150,000.

I'm currently a stay-at-home mom, so that's on my husband.

Okay.

What does your husband drive?

He has a lease deal through his job.

He's an engineer for Toyota, so he's.

What does he drive?

A

Tundra

truck.

Okay.

What year is your RAV4?

2021, I think.

Okay.

So who told you that the RAV4 cannot accommodate two car seats safely?

So I guess I told me that because our current car seat and our infant car seat for my toddler that we had, we just upgraded his.

Neither of those will fit behind the driver's side without touching the seat, and there's supposed to be a one to two inch gap.

Well, the manufacturer says that you can actually, on the 2019 and later models,

you can put three car seats in there.

So I'm not trying to counterpoint you, but you've created this narrative that's completely false.

Yeah, anyway, yeah, I'm fine with selling the Rev.

Why don't you just sell it and buy a $10,000 car?

Okay.

That's a van.

Buy a $10,000 minivan.

Okay.

And that reduces your debt from $22,000 to $10,000.

Well, so the thing is, is like we just started doing Ramsey Solutions financial planning.

So we have

$10,000.

Like we could

$20,000.

Go

buy a $10,000 car and sell the Rev, and you got rid of $22,000 worth of debt.

Yay.

Okay.

Okay.

A $10,000 minivan, though.

Not a $30,000.

Yeah, that's what I thought we were leaning towards.

No, no, no.

So we were just looking at it because we were trying to figure out, we thought we were upside down on the car.

It turns out we aren't, which is good.

That's awesome.

Yeah.

Just get out of it.

And then all you got to do is fight through the student loans, and you're driving a $10,000 car, and you make $150,000 and you got a baby.

This is awesome.

Yeah.

Okay.

Yeah, but just fight through the student loans then.

But you always use these things as a reason to go backwards.

The reason we were all, Ken and I were both dancing over here on the other side of the microphone is 90% of the time that somebody calls with your question, Brittany, they want to move up in car.

That's what I thought.

Exactly what I thought.

I just want a bigger vehicle.

I don't know.

I don't blame you.

That little RAV is a tiny little,

it's a tiny little wishes it was a jeep car.

Yeah.

And so, you know, it's, yeah.

And I don't blame you.

I mean, it's kind of weird.

Thinking about babies in the back of it's weird in my mind.

So I don't mind.

Yeah.

But move down in car and take your 10 grand and let's accelerate this whole process, okay?

Okay.

You get to accomplish both goals in a positive way.

Okay.

That's what I would do.

Yeah, very cool.

And I'm glad you gave perspective because that's what I thought we were being set up for.

I did too.

I did too.

That's what most people do, and we have to be careful about because everybody calls us, not most people.

Hey, listen, full confession: my mom held me in her arms.

That's how old I am.

I know, yeah.

So

I don't do well with the

car seats are too big.

What is happening?

But the RAV is a tiny little.

I get it.

I get it.

It's a tiny little.

I get it.

I was wrong.

It's a Jeep that needs to add water to.

I mean, it's just

too small.

A Chia car?

It's a Chia car.

I can see you.

I like that.

I like that.

Grant is in Montana.

Hey, Grant, what's up?

Hey, how are you?

Great, man.

How can we?

Thank you for taking my call.

Sure.

So I'm looking for some help or some guidance on

whether the balance, whether taking care of my father is a priority or building a life with my girlfriend slash soon-to-be wife.

I started my life over at 25.

I got sober, built a career for myself, and about two years ago, I had to move in with my father.

He's disabled, not able to take care of his home and property.

How old is he?

68.

And what is the nature of his disability?

He's confined to a wheelchair.

He has some spine issues that

surgery helped?

About five years now.

Have you been with him for five years?

No, I've been with him for two years.

Two years ago, the HOA sent him a letter.

I had been mowing the lawn and taking the trash out and doing what I could, but I lived about a half hour away.

And so

we just made the decision.

Are you planning to live with him for the next 10 years?

That was my plan.

I was single at the time that I made this this decision, and then

the girl came along.

So now you're not planning to live there for 10 years.

So we have to have a plan for dad and a plan for your life.

They don't have to, they don't have it.

It doesn't have to be either, or it should be both.

But the plan for dad might not be that you live there.

It might be that we figure out some other way that he gets cared for.

Sure.

So what we've done is in preparation for that plan or

whatnot.

He spent a lot of his retirement.

He retired pretty early.

He retired when I was about 15.

I'm 34 now.

So he spent a lot of his retirement.

Sort of the big

thing he has left is the house.

But we took the house and put it in a trust of which I'm the beneficiary now

in preparation for

him being moved on to Medicaid at some point.

You understand Medicaid is welfare.

Yes.

And you understand that welfare nursing home is a different level of care.

Yes, I do.

Okay.

Yeah, we're not.

So you're planning to put him in a Medicaid nursing home so you can keep the house.

That was not my plan.

That was what he wanted to do in case he had to go on Medicaid because they have like a five-year look back period.

They sure do.

They sure do.

Yeah.

And the trust doesn't help at all.

They can undo the trust, but I only five-year look back, so it's got to be five years.

Has it been five years?

Yeah.

No, we just put the house into the trust last year.

So you got four years that you're going to continue this if you're going to continue this.

Probably not going to work.

I think you're selling the house so that your dad can use his money to care for him so that you can

and he gets a sustainable situation.

He can't live in this house without help, and he doesn't have the money for the help.

And you're not the help anymore.

Well,

that's where I struggle.

I don't.

I don't.

No dad that is a good man wants his kid to have no life when he's sitting on a house that the money from the house will take care of him.

You're supposed to go on and have a life, young man.

And you can take care of your dad.

You can set up a situation where your dad is cared for with the equity from this house, moving into a one-level house, a situation where he's got care with the money that's the equity because he's blown his retirement.

And then you go on and have a life in the process.

These things are not incongruent.

E.J.'s in Philadelphia.

Hi, E.J., how are you?

I'm great.

How are you?

Better than I deserve.

What's up?

So, my fiancé and I are getting married in about a month, and

we're about to receive $20,000 as a gift, not for the wedding, but because we're getting married.

And we wanted to

know.

Yeah, yeah, it really is.

And we wanted to know what would be the best direction or the best place for us to put that money.

So just for some context, we just finished school,

her last December and me over this past summer, and we just started working full-time.

And the only debt that we have is

$18,000 in student loan.

And so we're trying to figure out if we should

save that money and snowball our debt or

move into a better place or whatever.

And I just wanted to know what you think would be a good direction for us to go in with that money.

Yeah.

The problem with this is it's when you get a gift like this in a situation like this, it's $20,000 and it feels emotionally like it's $200,000.

Right.

I mean, it's just exciting and wonderful and what a wonderful, generous gift.

And

then if you want to do something that's non-sexy but smart with it, it's hard because it's emotional.

And

so, you know, the answer to what we would teach you at Ramsey to do with any money that you get from any source is to work the baby steps.

Why?

Because that's the shortest path to wealth and puts you in a position to do anything else you want to do, which is generosity, change your family tree, buy a house, all those kinds of things.

And so we're always going to do that, but with a gift like this, it's very hard because this has got such sizzle on it.

that it's different than,

you know, Dave, I got $20,000 in a mutual fund.

What do I do with it?

That's different than I got a wedding gift and I'm newly married and newly graduated.

It just has, that's got a lot of sizzle on it.

You see what?

See what I'm saying?

Yeah.

So it makes it very hard for you to do what I'm going to tell you to do, which is just pay off your student loan, man.

Yeah.

Yeah.

Yeah.

Yeah.

It's hard to say, yay, yeah.

Yay,

Yay!

Yeah, that's a, yeah, I got it.

I'm trying to, I set you up, man, but I mean, I understand the feels on this.

So, uh, but yeah, because the faster you get out of debt, the faster you have control of your most powerful wealth-building tool, which is not the 20,000, but is your income.

Yeah, yeah.

So

what's your income going to be now, the two of you?

So I work two jobs, and I make around $90,000 a year, and my fiancé makes around $55,000.

Those are your postgraduate jobs, right?

Yeah, she's in her field that she studied.

I went to school for ministry, and I work that part-time.

Okay.

And I do HVAC and plumbing full-time, which I did not go to school for.

But that's not unusual.

Yeah.

80% of pastors are bivocational in America today.

Right.

All right.

So the

$140,000 household income.

Yes.

And you're how old?

I just turned 22.

Oh, see, that's awesome, man.

You're killing it.

And now you've got no dad

because of this wonderful gift.

It's just, it's just,

it's just emotionally hard to do that, but it's the smart thing to do.

It is what I would do, and it's what I'm going to tell you to do.

And if you were my son, who is 22, I would tell you to do this, and I'm going to tell you to do this because I love you.

But I'm also admitting simultaneously that it absolutely has no sizzle.

And it's a sizzle gift with a wah, wah, wah suggestion.

But the faster you get out of debt, the faster you can build wealth, the faster you'll be able to have a nice family, the faster you'll be able to do all these things.

And it just, I'm going to get you there as fast as I can every time.

And I'm 1,000% consistent on this.

Kenneth is in Georgia.

Hi, Kenneth.

How are you?

Hey, you're doing great.

Thanks so much for having me today.

Sure.

What's up?

I just discovered the Ramsey plan this past summer, and it's really quick with me.

I've been enjoying it so far.

We are on baby step two, but my wife and I are thinking about having a second child, and I just wanted to make sure that financially this is something we can afford.

It's not going to crush us.

I'm in a little bit more of a house than I really should be.

We're having a mortgage payment of about $4,100 a month, whereas we take home about $12,000.

I do have a side gig that brings in about $2,000 to $4,000,000 a month, so that does help a lot.

That makes that number work.

Until your other income goes up, you're going to keep the side gig because otherwise you can't afford the house.

You're right.

But that's not too bad.

Okay, good.

Why would you not be able to afford a baby?

I don't understand.

Oh, we have just been having repair bill after repair bill with this house.

It needs a new roof.

It's got foundation issues.

We had to replace the entire HVAC.

We've got to set up a new drainage unit.

And I don't know, maybe I'm feeling a little overwhelmed.

Maybe this is an emotional thing, but I'm just worried, can I afford this?

Am I going to sink myself?

Yeah.

Well, I mean, if you've got to trade a money pit for a baby, I'd trade for the baby.

Well, that's a pretty easy to call, yeah.

Yeah, that's an easy decision.

So, sell the money pit and go get you something else.

If you don't think the repairs are done, sometimes these things go in waves, though, right?

I mean, maybe you just finished your last wave of repairs and you won't have any for a while.

That would be nice.

Yeah, I mean, I don't know.

If that's the case, it's emotional.

Yeah.

If it's not, if it's not, you're observing a logical pattern and you're wise to be concerned.

Okay.

So you got to decide which one of those it is.

Do you think it's over?

I think that these are one-time repairs.

I think that

each of the ones you named are, but I mean, is the pattern over or are we in a money pit?

That's what I'm worried about.

How old's the house?

It's about 25 years old and we've been in it for about a year.

So

you've been through the other mechanicals, the water heater, the dishwashers, all that's new?

We have replaced the dishwasher.

We have not replaced the water heater yet.

25-year water heater is done, bud.

Yeah, it's going to need it real soon.

Yeah.

So

you got some things like that that are aging out that are what we call functional obsolescence in the real estate business.

So they're functionally obsolete.

And so,

you know, that's the age of the house.

And that doesn't mean it's a money pit.

It just means it's an old house.

And so,

you know, one of our houses is 13 years old, and I'm putting a roof on it this week, and I just put a heat and air system in it.

So it's the same thing.

I just, both of them went at the same time.

And so,

you know, that's just, it just kind of goes with the calendar is what I'm saying.

And so if you think you're facing that, then you may want to buy a newer property that's a little different and a little less expensive, maybe.

And that

is your family plan, planning.

Yeah, I would have wanted to know, is there an emotional attachment for you and the wife?

Doesn't sound like you're too emotionally attached to it but is she but i i i agree i would uh take my losses early i talk to a great real estate pro

and do some homework on this house what needs to be done is is what's done already enough to move the house i mean i think you need to know all the information that you're dealing with because you're clearly frustrated yeah and i just learned a new phrase i got to figure out how to use it this week functional obsolescence i got to tell you that's impressive i don't know that I could get it out.

I got to practice that one in front of the mirror.

It's the obsolescence.

That's a tough word, but that's a new one for me.

I feel like if I drop that in the right room.

It comes out of my real estate training back in the day, way back in the day.

I thought you were going to say it comes out of somewhere else.

I don't know where you were.

It does that too.

But the

functional obsolescence.

Did I get that right?

Yeah.

All right.

Well, I mean, you know, with vehicles, it's planned obsolescence, right?

See,

now you're showing off.

You've heard that.

No, I mean,

the whole auto industry plans for the car to deteriorate in a certain number of years.

I feel smarter because I now know about functional obsolescence and planned obsolescence.

Not a book that's coming to you anytime soon, but I do like that I know that.

Not a title that would sell.

Yeah, not a good idea.

We're going to probably back right off of that on the Ramsey Personality title list.

It's not going to make the cut.

Yeah, but the deal is stuff wears out.

Hello.

That's all it is.

That's all it means.

It's just a John Deloney word that means stuff wears out.

That's all it is.

It's a good Scrabble word.

Oh, yeah.

You could spell it.

I couldn't.

I'd have to look it up, but I think that's illegal in Scrabble.

So what do I know?

We've all done dumb things with money.

I've done them with zeros on the end.

One of the biggest mistakes I see people make with money is not having a plan for it.

You got to have a plan.

You got to be intentional and you need to get a budget.

You have to tell your money where to go so you're not wondering where it went.

Our budgeting app, EveryDollar, helps you do just that.

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Welcome back to the Ramsey Show in the Fair Winds Credit Union Studio.

Ken Coleman, Ramsey personality, number one best-selling author, is my co-host today.

He's also host of the front row seat show on Ramsey Network, which is exploding.

If you've not watched this long-form interview show, there's a little bit of everybody been on there already.

You don't want to miss it.

Be sure and check it out.

Benjamin is with us in Seattle.

Hi, Benjamin.

How are you?

Hey, Dave, how are we doing?

Better than I deserve.

How can I help?

Love to hear it.

I a question about rolling over my current 401k

into a roth ira even though i'm still employed with the 401k don't think you can do it

okay you can roll it into a roth 401k inside your company does your company have a roth 401k option

yes it does okay you can move it there but i don't think you can move a 401k while you're still employed

gotcha of any kind traditional roth anything so

how much is in it?

Not much.

It's around $30,000.

Okay.

So you're going to create about $7,000 in taxes, okay?

Okay.

When you do that, because you're going to take a non-taxed item and make it taxable that year.

Do you have an extra $7,000 laying around to pay the taxes?

The 401k is a Roth 401k.

Oh, I'm sorry.

Oh, you just wanted to roll it out to an individual from the Roth 401k.

I I thought you were in a traditional 401k.

I'm sorry.

Roth 401k into a Roth IRA.

Gotcha.

Okay.

Can't do it while you still work there, I don't think.

Gotcha.

Don't need to unless you get.

Wow, you just got crummy options or what?

Yeah, crummy options.

It's a 2% match, and so just not getting a lot there.

My Roth IRA has probably 40 grand in it.

So

I was just thinking if I had more,

a bigger number in one account, more growth

versus two accounts.

No.

Let's pretend that one, that the current individual is returning 10%

and your company was returning 10%.

It's the exact same thing as if you put them together and they return 10%.

Gotcha.

A bigger number does not make you more money unless the percentage is different.

The percent of return is different.

You follow me?

I do.

Okay.

So, and besides that, I don't think you can move it until you leave the company anyway.

So, I think you're there.

And a 2% match is 100% on 2%.

That's pretty good.

You got 2% before you got started.

So, yeah, just be careful and pick out good options.

Make sure you're fully funding the individual one.

And

there we go.

That's one of those math things that

there's a couple of those that float around in the culture, Ken, that are

interesting.

And I don't know,

I don't know,

a lot of people think that if I put all my accounts together in one big lump sum

and I make the exact same interest rate, then I'm going to make more money.

You'll make more actual dollars, but you don't make more than the total would have been anyway.

Correct.

Because the sum hasn't changed.

It's just now consolidated versus.

The total principle that is earning has not changed.

It's just being in one pile, being in six piles doesn't matter.

Right.

Assuming the piles are paying exactly the same for purposes of this math briddle.

Yeah.

The other one is funny is I don't want to pay off my mortgage because I've already paid all the interest.

Correct.

And that's not true.

You don't prepay interest at all on an amortization mortgage.

A standard mortgage is calculated like simple interest.

And we can walk you through that for the fun of it.

Okay, you take your annual percentage rate, say 6%,

divide it by 12, which would be your monthly percentage rate.

So that would be a half a percent per month.

And so you're paying a half a percent on that month's outstanding balance.

When you look at your amortization schedule and you say, what number of dollars of my monthly payment is going towards interest this month, you're going to find it to be, if you have a 6% mortgage, exactly half percent of whatever's outstanding right now.

Ta-da.

And that's called a simple interest calculation.

But the amortization schedule, because it starts out with the largest possible balance, so more is going to interest on the first payment than ever will again.

And every time you pay a payment,

more goes to principal, less goes to interest, more goes to principal, less goes to interest every time you pay a payment.

And because you pay so much interest on the front end like that, it makes people think they're prepaying interest, and they're not.

That's right.

You're only paying exactly what you owe.

So there's no disadvantage at any time to pay off a mortgage.

No disadvantage, mathematically.

You only paid what was appropriate.

And so if you prepay, if you send them an extra $10,000,

it slides you forward in the amortization schedule.

So figure out what your principal balance is, $290,000 a day, move over in the amortization schedule to $280,000, and that's what your next payment will look like, not your next payment.

Because now you have $10,000 less that that half a percent this month is being multiplied on.

280 versus 290 in my example.

And so

a bunch of math gibberish there, but all of that to say, there's this interesting mythology that runs around them.

People make bad decisions on that.

I guess the other one that

those don't aggravate me, just I'm a math nerd.

But the one that aggravates me is where people just go ahead and transfer their house prior to death.

I'm going to just deed this to to my kid.

It's a $200,000 house, and I'm just going to give it to him and I'm 60 years old and then I'm going to live in it.

Well,

honey, there's just so much that you don't understand about what you just screwed up.

Number one, when you give someone an asset that's $200,000, you just inherit, you just got gift tax.

And when you get audited, they're going to tax you at 55% of that gift.

The gift tax is horrendous.

So you can't just decide, I'm just going to give somebody money.

You have to go through a few little tax moves in order to do that.

You can do it, but you have to file some forms and do it on the Unified Estate Tax Credit.

There's a way to do it.

But you also just lost what's called stepped-up basis on that.

So here me help you with this.

Mom and dad bought the house in 190 whatever,

right?

And so they have almost, they paid almost nothing for it.

And so when you get the house as a gift, your basis for calculating capital gains is what their basis was, which is nothing.

And so when you sell the house, you're going to pay capital gains on the entire amount because you geniuses deeded it to you before they died.

If instead you got it upon death, you get what's called stepped up basis.

And that means that when you sell a house within six months of the death of the person that owned the house or a stock, either one, it's presumed that you sold it for market value and your basis is market value, zero taxes.

So capital gains tax on $200,000 is $30,000.

So a nice little $200,000 home, you just made a $30,000 error.

Try doing it on a million dollar house.

Yeah.

You just made a $150,000 error, not to mention gift tax if you did it wrong.

Just because I'm just going to do this to my kid because I think I don't want the government.

And you just screwed up the whole stinking thing because you didn't know what you were doing and you didn't get some good advice.

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Stephanie's in Orlando.

Hi, Stephanie.

How are you?

Hi, I'm good.

How are you guys doing?

Better than I deserve.

How can we help?

Good.

Well, I'm recently engaged, and I'm trying to figure out if I should buy a house before we get married or wait till after.

Absolutely not.

Please don't.

I'm going to beg you not to.

Not to wait.

No, no, don't buy a house until you're married.

Don't buy a house.

No, of course.

I don't want to buy a house with him,

but he has some debt.

So I'm trying to figure out:

should we get married to help him pay the debt off, and then we buy a house?

Yeah.

Or should I go ahead and buy the house on my own

first?

Do you think Dave's being clear enough?

Sometimes he's fuzzing.

Okay, so

let me stop that, Stephanie.

I'm sorry.

That's not fair.

I need to tell you why.

Okay.

Here's the thing.

You're getting ready to join your lives.

The best way for you guys to become wealthy is for you to join your lives.

Combine everything, assets, liabilities, incomes.

And we together are aligned on our steps and

what the future looks like and the steps to get there.

Okay.

And when you do that,

it's a major plus for your relationship because when you can agree on your spending, you're agreeing on your fears, your dreams, your life.

Money's not important, but where it goes speaks loudly who you are and what you dream about.

And when the two of you combine, and in the old marriage vows, it used to say, richer for poor, sickness and health, unto thee all my worldly goods I pledge.

And it creates a unity

in a joined approach.

What ends up happening, and we see it in the actual factual data 10 years later, after you're married, is you have what we end up calling in the financial world the marriage advantage, to where a 35-year-old married couple has a net worth that is far beyond a couple of single people that are 35.

Right.

So even if that means delaying some things.

No, it's just a matter of not delaying them much, but it just we're putting them in an order that might not be comfortable.

Right.

So we're going to pay off the debt.

We're going to build an emergency fund.

Then we're going to get a big down payment and buy a nice home on a 15-year fix where the payment's no more than a fourth of your take-home pay.

You're going to start putting 15% of your income away towards retirement after that, and you're going to become very, very wealthy in about a decade.

Yep, exactly.

Because I'm there now on my own, but seeing that, you know, my plan is to join as, you know.

So how much do you have in savings that's not retirement?

About $50,000 right now.

And how much debt does he have?

He has about $31,000.

Perfect.

When you get back from the honeymoon, pay it off.

That's kind of what my thought was.

Because I still want to save some more money for a down payment because even $50,000

is just okay.

Pay off the debt, and then you've got a combined household income of what when you come back from the honeymoon?

Maybe around $90,000, 95,000, maybe.

Good.

And so you're what, 25, 26?

Oh, I am 37.

37.

Okay.

All right.

What do y'all do for a living?

I'm a production planner in manufacturing.

What's he do?

He's in shipping, receiving for manufacturing as well.

Okay, cool.

Cool.

All right, perfect.

So you are a planner.

That's why you're lining up on all this immediately.

Exactly.

The way your mind works.

All the numbers written down.

That's the way your mind works.

I've been listening to you guys for five years now.

Okay, well, you know the baby steps then, and I'm just walking you through them as a combined couple.

We're going to take your 50, pay off his 30, that leaves 20.

Now we've got a $90,000 household income.

The 20 is probably your emergency fund.

So we start from scratch, real quick,

build our down payment, then we buy a home.

Meanwhile, or shortly after buying a home, one of the two, we start baby step 3, B, or 4, 15% of your income going into retirement.

You've heard all this before, hadn't you?

Oh, yeah, plenty of time.

Actually, I didn't include my emergency fund in that.

I have a three-month.

Okay, then you got a 20-head start, not a 50-head start towards your down payment.

Good.

Exactly.

Okay.

If your emergency fund is big enough for our emergency fund, that is.

Not yet, I don't think, with what I think a new mortgage will be.

Okay.

Well, then, yeah, we'll get there.

But I mean, you see, you know exactly what to do.

It's just a matter of when, what, and why.

But no,

don't try to don't look for a hack.

Just go straight through it.

Exactly.

It's the fastest way.

It's just not popular.

It's not cool.

Your friends are going to go, what?

Who gives a crap what you think?

You don't have any money and you're not living in my house.

So, I mean, what?

You know,

these are not real friends.

Real friends go, yes, you're so smart.

You're wise beyond your years.

Go do the smart stuff.

That's very cool.

Congratulations.

Hey, I'm going to send you a copy of the Total Money Makeover, The Baby Steps.

You already know them, but I'm going to send it to you anyway as a wedding gift.

Very cool.

That's fun.

Yeah,

I like how wary she is, you know, not jumping in emotionally, very solid.

And I'd love to know what she has in retirement.

We didn't get to that, but I think that they're going to be in great shape.

The other thing I would say, we didn't get to this, but for people that are listening, watching this,

in a situation like this, and I'm sure she's done this, you want to make sure that this person is

on board with you.

before you get married on the finances.

It's not something you want to come in.

And in this case, I'm not saying this is happening here,

but you want to be careful not to come in.

We combine finances and pay all this debt off, and they go, Woohoo, and then they go get more debt.

Super important that you got this stuff figured out pre-marriage.

Amen.

Loretta's in Texas.

Hi, Loretta.

How are you?

I'm just fine.

How are you doing today?

Better than I deserve.

How can I help?

Well, I am 64 years old, and I'm

so ready to retire, but I'm I'm just worried about my finances.

Okay.

I have

$8,000 in an emergency fund.

I have $12,000 in 401k.

I have $15,000 in savings.

My home is paid off.

My vehicle is paid off, and I have no other debt.

Okay.

And what will you live on if you retire?

Social Security.

Well, I mean,

I can't just retire.

I'm probably going to work the rest of my life.

But the job that I have now, I am

a truck driver.

I do super loads.

And so, you know, it's physically demanding.

It's a lot of work.

But, you know, at some point,

you know, I want to be home.

What do you make?

$110,000 a year.

Okay.

Why have you not saved anything?

Well, I mean, because I paid off debt.

Okay, so your debt's gone now.

My debt is gone now.

So how much longer do you want to work and pile up some cash?

I mean, why don't you try living on nothing and let's put $100,000 away in the next two years?

$50,000 a year.

$50,000 a year.

Well, you don't have any payments.

You're on the road.

Because I don't have, I can actually put even, you know, probably put even more than that.

Good.

Because it's just me.

Good.

So, you know, with everything.

Well, let's not retire on social insecurity.

okay so hang in there another couple of years and

how much how much could you put away out of 110

if you go hog if you go whole hog you just go all in girl

75 okay that's 150 in two years right

yeah all right now that makes you 66 years old

And if you then will set your budget up with no debt to live on your social security, if you invest that with a Smart Investor Pro and some good mutual funds, it will double every seven years.

So at 73, you'll have 300,000 if you don't touch it and live on the Social Security.

Now you're building a nest egg.

Okay.

And that's where I want you to go.

This idea of $12,000 and I'm ready to retire.

Uh-uh.

Uh-uh.

I don't want to live on Social Security.

It's not enough.

I've been working too hard all these years.

You have for sure, kiddo.

Hey, what's up?

Dr.

John Deloney here.

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Jake's in Minnesota.

Hi, Jake.

How are you?

Hey, there.

Thanks for taking the call.

Sure.

What's up?

I was just calling to ask,

me and my wife are trying to figure out if we should work on paying down our current mortgage, which we secured at 2.75%,

or if we should be working on saving up our

savings to get into a bigger home down the road, pay off your mortgage.

As fast as you can.

Okay, just

as fast as you can.

Just go at it.

Yeah, just go at it.

Now, I mean, you need to be working what we call the baby steps.

Have you heard us talk about those?

Yep, I'm familiar.

Okay.

And so are you out of debt everything but the home?

That's right.

And you have your emergency fund of three to six months of expenses.

Yes.

And you're putting 15% of your income into retirement plans.

That is something that we've backed down a little bit on recently.

My wife and I, we don't have great matching from our employers.

Doesn't matter.

It doesn't matter.

You need to be putting 15% of your income away for retirement and good gross stock mutual funds.

That's going to build wealth for you.

And then beyond that,

any money we can find in the budget that we want to throw at the house, let's just start paying the house off systematically.

And

those are the things that the people that become millionaires the fastest do.

They steadily invest in their 401ks and they pay off their homes.

Data after data after data.

We've got 10,000 of them we interviewed, we know.

Okay.

Yeah, we're

I think we're pretty close to the point where we're almost ready to take the jump on the new home, which is what we've been trying to do.

It doesn't matter.

It doesn't matter.

You're just going to sell this house and the equity is going to come out of it anyway.

Fair.

I think we're just trying to make sure that if the right house comes along, that we have enough liquid that we don't have to make a contingent offer.

Would that ever make a difference?

No, you have to make a contingent offer because you have to sell the house.

You can't take on two mortgages.

I think there might be a little room for us to own both for a few months, but yeah, correct.

You don't want to turn yourself into a motivated seller.

The thing doesn't sell for six months and you're paying payments on it, you're going to give the stupid thing away.

You don't do that.

No,

calm down.

Go take a cold shower.

You're getting house fever.

Yeah, the

you've been out looking at the weekends at the open houses, hadn't you?

Yeah.

We've been working on it.

Yeah, you've been working on it.

It's working on you, too, dude.

Yeah.

We're expecting in March, and we've just been kind of looking at our current home situation and trying to figure out how we can make that next step happen.

Yeah.

Yeah.

It's okay to calm down and come go after the baby.

As a husband and grandpa, I won't recommend you plan a move during a pregnancy.

You're not going to be a popular dude.

Ten years later, she'll still bring that up to you.

That time that you moved me while I was nine months pregnant.

Yeah, she'll remember that for the rest of her life.

She won't forget.

And I got to speak on behalf of all babies.

They have no idea how big the house is.

A lot of this is just very natural.

You're a baby advocate.

Yeah, I am.

I am.

It's the first time I've taken advantage of it.

I'm here to speak on behalf of the world of male people.

You know, Dave, I really am.

No, I just hear this a lot from young couples.

And by the way, it's very normal, and I'm not in any way judging it.

But we start to think, well, this is what the nest should look like.

And this is what the nest should feel like.

And in all reality, it can get you in real trouble.

And the scenario that Dave gave you, we get that call a lot where people, they thought it was going to work out and then life has got a different idea.

And then you're stuck, as opposed to being patient here.

And the baby's going to be fine.

You don't need the perfect nursery and all the things.

It just doesn't matter.

You're going to be so exhausted, you don't even want to think about all this.

So I think Dave's right.

Patience, patience, patience.

Yeah, and definitely a contingency.

Absolutely.

That or sell the house and move into an apartment while you're looking.

So you don't have no, you're going to do that for you.

For two moves, that'll get you in real hot water.

That's gross.

Yeah.

It could happen, but yeah.

Yeah.

No, because here's the thing.

Honestly, you start talking about 279 on one side of the fence like this is a bargain.

Right.

Okay.

Like you got, I got this cheap interest rate.

Dude, after the 11th month and the house hasn't sold, that cheap interest rate is going to look like it's 27%,

not 2.7%.

And you're going to be going, oh, God, I'm just, this is killing me.

We got to get this house moved.

You're going to be calling a realtor every day.

You're going to be dropping the price, dropping the price, dropping the price.

Then somebody's going to come in and lowball you and you're going to take it.

Do not get yourself in that position.

And so

it's easy.

Do a contingency deal or

don't do it.

And so, like, I had one guy who said, well, God told me to do it.

And I said, no, he didn't.

Yeah, he did.

No, he didn't.

I'm positive.

God didn't

tell you to do that.

He said, how do you know?

I said, because the Bible says the blessings of the Lord have no sorrow added to them.

And there's sorrow added to your mess you created here.

And then you're trying to blame it on God.

And God's up there laughing, going, you're just one of my stupid children.

You know, and he's got a bunch of stupid children because I've been one of them.

Me too.

But that's not fair, Dave.

You used God's word to debate God's voice.

That's not fair.

You were not playing fair.

That's such a pro move, by the way.

That's a good one.

That's a flex.

That's a flex.

All right.

Alan's in Georgia.

Hey, Alan.

What's up?

Hey, how you doing today?

Better not deserve.

How can I help?

Yes, sir.

So

I've inherited some land from whenever my mom passed away.

And she's kind of been sitting there, not making any money.

And I think it's probably time to sell.

How much it gonna bring

conservative 350 to 500.

Wow.

Nice inheritance.

Very nice.

64 acres.

Thanks, mom.

Wow.

Yeah.

So what are you going to do with a 400, 500 grand?

Well, I kind of wanted to get into real estate.

I've been doing some research on like beach condos

and kind of looking at the I think their return on investment is hovering from 8% to 10%.

And

kind of wanted your opinion on it.

Where do you live in Georgia?

Albany, but it's in Leesburg.

Yeah, yeah.

Okay.

The land.

Well, the reason I asked is resort real estate, mountains, beaches,

lakes is the most volatile type of real estate.

It's the first thing that goes up when times are good, and the first thing that goes down when times are bad.

And that includes the rental income on it.

So

if you have some kind of a problem and the economy slows down,

you're going to be the first one to take it on the chin.

The value goes down and the rentals are hard to keep booked.

So I don't recommend resort real estate as an investment.

If you want to buy a toy for your family to go stay in at the beach, that's a different discussion.

You pay cash for toys.

But

that's not what you said.

So instead, I would buy a boring rental property that's steady and it's probably close to you.

Or two or three.

I'd rather you buy two or three $200,000, $150,000 houses in your area there, and they'll go up more steadily than those beach condos will.

They won't go up as much during good times, but they won't go down as much during bad times.

And you create this tortoise versus the hare type of investment portfolio.

I've got a question for you on this.

8% was his goal.

He stated it on the call.

Why wouldn't you say, just put that in our investment,

our four buckets that we talk about?

Why not invest it in the market?

Why even take on the headache of real estate?

Well, 8% is his cash on cash.

Got it.

That's how much he makes in his pocket versus what he invested.

That doesn't count how much it goes up in value every year.

Fair.

And it doesn't count that he can also shelter a portion of it by doing depreciation.

So those three numbers added together are on an 8% are going to sound more like 17%.

Okay, got it.

Correct.

And then it makes it worthwhile.

I look for 8 to 10 on a residential if I'm buying it.

On commercial, I look for 10 to 12 cash on cash, but I fully expect to return about 20 on a 12, including, it's called an internal rate of return, which includes the increase in value and the write-off of the depreciation schedule.

All right.

Our scripture of the day, James 4, 3, when you ask, you do not receive, because you ask with wrong motives, that you may spend what you get on pleasures.

Our friend Art Laffer said, it's not true that Congress spends money like a drunken sailor.

Drunken sailors spend their own money.

Congress spends ours.

Fact.

Fact, Art.

You can tell Art used to hang out with Ronald Reagan a lot.

That's a great line right there.

That's fabulous.

All right, here we go with

Gerard in Texas.

Hey, Gerard, how are you?

I'm better than I deserve.

Dave, how are y'all?

The same, sir.

How can we help?

So my wife and I are on baby step two.

We should be done with about $40,000 worth of debt by the end of the year, and we're going to be moving on to four, five, and six.

I already kind of have plans for retirement and early payoff payoff of the house, but I'm confused a little bit on the college savings side of things.

Cool.

How old are your babies?

Four and seven.

Awesomeness.

Okay, what are you confused about?

So I looked at the Dave Ramsey calculator on how to save for college and what we would be putting aside just based on what we think living expenses are and tuition will be.

That number seemed high, around like $1,100 a month or something like that.

I didn't know if that was normal to set that much aside in a 529 or

I would not do that.

Okay.

Okay.

What would y'all recommend as far as how to tackle the tuition versus living costs?

Yeah, honestly, I need to go look at that calculator.

It sounds like.

So

tuition has averaged 7% to 8% per year inflation rate

for the last 40 years or so.

and so it's you know regular inflation is two to four percent

average I mean one year Biden we had 9.7 but I mean the normal inflation rate is two two to seven or two to four and then with this so that's what it's going up so you got a you know University of Texas is probably fourteen thousand right now in state tuition

and so if you wanted to say okay four years of that is 60,000 bucks, right?

Correct.

Okay, and then add 8% a year for a decade.

And

that's going to be your tuition cost, right?

And so that's what you would do.

And then, yeah, we use a 529

because if you put in,

you know, a couple grand or something a year, not a month, but a year,

you're going to have about 90 or 100,000, you probably have about 1,000 40,000 bucks in there, something like that, if you started with the babies.

And so you'll have somewhere around 100,000, $150,000 in there.

And a lot of that is growth.

And if it's in a $529 in a mutual fund, the mutual fund in a $529, it's going to grow tax-free for tuition.

And so if you have $100,000 worth of growth, see, if you put it, okay, let's say you put in $2,000 a year for 10 years.

That's 20,000 bucks you put in.

If there's 120 in there, there's 100 in growth.

You got me?

No taxes on that 100 is important because that's a $20,000 tax bill, $30,000 tax bill that you're avoiding by putting the mutual fund in a 529 for purposes of the kid.

That makes sense.

Yeah.

So, yeah, I mean, a couple grand a year is going to take you a long, long way towards doing this.

And the other thing that we

would not have said 10 years ago that we will say today is I think higher education is going to look dramatically different 15 years from now, wouldn't you, Ken?

I've been pretty bold on that.

And I believe you're going to see a decentralization.

You're going to see specialties like obviously medicine, law, look very similar to how we see them today.

But as far as the traditional four years, and you got to take a bunch of undergrad stuff, and you got the prerequisites before you get to the major, I think that's going to splinter.

I think the onset of AI, I think that we are actually at a, I think, a fever pitch on what the American people are willing to put up with.

And I think when you see

meaning willing to pay for it.

Give you real numbers so you know where I'm coming from, Gerard.

Gallup came out with information this year in a poll.

46% of American parents said they would prefer that their kids go into trades and not into college.

Our good friend Mike Rowe, I call him the Oprah Winfrey of the trades.

He's been banging this drum for a long time.

You only look at that as an insult.

But I do think Dave's right.

I don't think you're going to see the exorbitant costs.

I don't think, now you've got to plan for it, but I don't think you're going to see that.

I think we've kind of jumped the shark.

Well, the

student loan debacle

has highlighted that some of the higher ed stuff is out of control.

And so

I do know that people are going to be more cognizant of what they pay and what they get for what they pay.

That's right.

For sure.

And so I think that's going to create a downward pressure on that inflation number that I gave you of 7% to 8%.

So I don't think they're going to maintain that.

I think you're going to see, Dave, a little quick prediction.

I think I've been studying this.

I think you're going to see private sector competition for traditional education.

I think people are going to come along and go, wait a second, we can provide training for what corporate America really wants for a whole lot less money and make a ton of money doing it.

And you're going to see these outsized tuitions go away because they can't compete with the private sector.

Google's doing their own training program, a six-month program.

I think you're going to see more and more big-time companies are going to outsource their own education training to private education companies.

Watch for that.

I think that's going to happen.

All of that to say that if you have put a couple grand a year for a four-year-old and a six-year-old, you're going to have 100,000 plus in there when you get there each.

And that's going to give you a real head start into whatever you want to do, whether it's a trade, a certification program, or an actual four-year degree.

which

we're not against four-year degrees.

We're just against getting a degree for four years in left-handed puppetry from a school where you pay $150,000 a year to go

so they can brainwash your child into being a communist.

And so I'm against that.

I think that's a problem.

And so

as a parent or a grandparent, I'm not writing that freaking check anymore.

And I'm not by myself.

So that's what we're seeing.

So I think you're to you know you're doing your individual planning, but you're doing it in the context of what is happening culturally right now on this subject.

That's why we wanted to comment on it.

So it's very good.

And Ken, I think it's worth highlighting a couple things here while we're at it.

You've been working with self-improvement in the self-improvement space.

And the new show, Front Row Seat, is helping people learn leadership skills and highlighting stories of great men and great women and what they did to get there.

And

you know, what we discover every time we do that, if you read biographies of great

people who are successful in any function, whether business, ministry, sports, whatever, you find

that

they

were the secret sauce, not where they went to school.

That's exactly right.

And so the number of times that people become successful due to the particular school that they went to is precisely zero.

And yet we go, well, if he went to Harvard,

bullcrap.

Nobody cares out here is the problem.

It's all theory.

There's no data to back it up.

78% of the Fortune 500 companies have a CEO that went to a state school.

Yep.

And eight out of 10

had a 2.5%.

They didn't go to Wharton.

They didn't go to Princeton.

They didn't go to

Muckety Muck School.

They went to a state-freaking school, Penn State, Michigan State.

That's right.

University of Tennessee.

That's where they went to school.

They didn't go to Vanderbilt.

The 78% of the CEOs of the Fortune 500 companies.

Not straight up.

There's data for you.

So where you go to school doesn't matter.

It's a big deal.

It's right.

Because it costs out the button.

And we're beginning to see the American people, and this isn't just parents anymore.

The young people are going, they're reading the stories, they're paying attention, they're older brothers and sisters, they're going, there's not a value exchange here.

No, I can't spend $250,000 to become a social worker for the state of Tennessee with a master's degree and make $38,000 a year.

That's dumb, but that's right.

The ROI is not there anymore.

It just doesn't work.

So you guys got to think about stuff like that.

And Gerard, you're very wise to stay on top of the whole idea and be watching and monitoring all this as you go.

That puts this hour of the Ramsey Show in the books.

We'll be back with you before before you know it.

In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.