Don’t Let Panic Derail Your Plan

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Speaker 1 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.

Speaker 1 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.

Speaker 1 Shay is in Nashville. Hi, Shay.
How are you?

Speaker 2 Hey there, I'm so well.

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

Speaker 3 So I'm just in an interesting situation right now. I just found out I'm expecting.

Speaker 1 Yay!

Speaker 1 Is that your first?

Speaker 3 It's with my husband, of course.

Speaker 1 What was that? Is that your first baby?

Speaker 3 Yes.

Speaker 1 Cool. How old are you?

Speaker 3 I'm 23.

Speaker 1 Awesomeness. Cool.
Okay. Wonderfulness.

Speaker 3 Yeah. So

Speaker 4 the thing is,

Speaker 3 it's not planned, so we don't have our finances fully in order.

Speaker 3 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.

Speaker 1 Yeah, it just got real.

Speaker 1 Why are you out of work? Well, she's saying when she has the baby, right?

Speaker 3 Yes, I'm in work right now.

Speaker 9 Oh, you are.

Speaker 1 I misunderstood.

Speaker 3 It is getting tough already

Speaker 3 with all the nausea.

Speaker 1 Yeah, you got a little morning sickness going, huh, kiddo? All right, this is so fun.

Speaker 1 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,

Speaker 1 I felt like an adult. We got married.

Speaker 1 I felt a little bit more like an adult, but nothing scared the crap out of me like the first baby on the way.

Speaker 1 It's the same way for me. Yeah, okay.
And so what little was left of your former

Speaker 11 high school, college

Speaker 1 freewheeling, partying or not, but just

Speaker 1 not worrying about responsibilities. What little was left of that is now gone, right?

Speaker 3 I suppose so. Yeah, yeah.

Speaker 1 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.

Speaker 1 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.

Speaker 1 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

Speaker 1 burden here. I have a real responsibility here.

Speaker 1 Await here. You're going to feel it again, even

Speaker 1 when

Speaker 1 Junior enters the world. So

Speaker 1 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.

Speaker 1 Yep. That's all, that's what all that leads to.
So, what do you do for a living?

Speaker 3 I refurbish furniture and woodworking in Nashville.

Speaker 1 You don't make any money, do you?

Speaker 3 Oh, I make a lot of money.

Speaker 1 Oh, do you really? Okay, good. I do.
Okay,

Speaker 1 what's a lot of money? What are you making?

Speaker 12 Well,

Speaker 13 I was

Speaker 3 cut back because I left work for a time.

Speaker 3 So, I'm I'm currently making $24 an hour at 32

Speaker 3 hours a week.

Speaker 1 Well, that's not a lot of money.

Speaker 3 In my mind, it has been a lot of people.

Speaker 1 But you're saying

Speaker 1 you're scraping by, and you're worried that... Okay, and what's your husband make?

Speaker 3 He's making $2,200 a month.

Speaker 1 Yeah, y'all are starving to death.

Speaker 11 What does he do?

Speaker 3 He works in a warehouse that supplies apartments with furniture and utilities.

Speaker 1 And how old is he?

Speaker 3 He's 23. Okay.

Speaker 1 All right. And so he just took a job so y'all could have food and lights and water.
And

Speaker 1 he's not afraid of work. That's a good man.
But now it's time to not do that anymore.

Speaker 1 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.

Speaker 1 Both of you.

Speaker 1 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.

Speaker 1 Because you're not going to do artsy fartsy and make a living working for somebody else. Not going to work.

Speaker 11 Yeah, I'm curious.

Speaker 11 What is his goal? Has he stated a professional idea or two or three to you?

Speaker 8 He's had a few ideas, and

Speaker 3 he really would like to get into home inspections.

Speaker 3 He loves home supply.

Speaker 11 Is he handy? Is he good fixing stuff or doing stuff? Does he find that he enjoys doing things like that?

Speaker 3 He's not so much handy, but he's very intellectual and he loves logistics.

Speaker 11 And he has no formal training, right? You guys just kind of out of high school? What's his background educationally?

Speaker 1 Yeah,

Speaker 3 we're both out of high school, got jobs, and have worked our ways up in the company so far.

Speaker 11 Well, you know, when you look long-term here,

Speaker 11 I would run those numbers and look at what a future looks like inspecting homes. That's a little bit of a niche.

Speaker 11 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.

Speaker 11 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.

Speaker 11 But I'm telling you, if I'm 23 and I wake up today in your husband's shoes,

Speaker 11 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.

Speaker 11 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.

Speaker 11 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.

Speaker 1 And secondly, $2,200 a month is worse than $22.

Speaker 11 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,

Speaker 11 I would be looking at that if I were him because of the opportunities.

Speaker 1 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.

Speaker 1 What are you going to be doing when this kid is 10?

Speaker 1 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.

Speaker 1 The second part of the equation, though, though, is what are you going to be doing in the next nine months?

Speaker 1 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.

Speaker 1 Get ready because you're getting ready to have a hiccup in your income nine months from now, right?

Speaker 1 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.

Speaker 1 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.

Speaker 11 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.

Speaker 11 That's how you can make sure we don't miss any money once baby arrives. You got to start thinking like that.

Speaker 1 Yeah, well, she sounds like she's doing it for someone else by the hour.

Speaker 11 I agree, but my point is, can she now do that for herself?

Speaker 11 That's right. And then set her own hours because these are project-based.

Speaker 1 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.

Speaker 1 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.

Speaker 1 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.

Speaker 14 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.

Speaker 14 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?

Speaker 14 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?

Speaker 14 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

Speaker 1 next week.

Speaker 14 Yeah, in the middle of all that grief, like it's just, it is, it's terrible.

Speaker 14 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.

Speaker 14 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.

Speaker 14 Like there's something about that safety of knowing that you have money if something suddenly happens.

Speaker 1 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.

Speaker 1 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.

Speaker 14 There really is. So that is one one thing to do to say I love you to your family.

Speaker 1 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.

Speaker 1 That's 800-356-4282 or go to zander.com.

Speaker 1 Brandy is with us in Georgia. Hi, Brandy.
How are you?

Speaker 15 I'm good, Mr. Ramsey.
How are you doing today?

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

Speaker 15 Well, I've been married for 25 years, and

Speaker 15 I don't work at the time. I'm taking care of my grandson, which my husband totally

Speaker 15 is on board with that. But I get no money unless I have to ask for it.
And we are debt-free.

Speaker 15 We owe nothing. And I I just feel like anything I say, he doesn't want to take my advice or anything.

Speaker 15 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.

Speaker 15 I don't know. I just fuck his daughter instead of his wife.

Speaker 1 Oof.

Speaker 1 How can we help?

Speaker 5 Well, I just, I don't know.

Speaker 15 I mean, what should I, like, we ended up separating like two years ago, and I found out

Speaker 15 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.

Speaker 15 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.

Speaker 15 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.

Speaker 15 And I was just like, I feel like I deserve that, you know, more.

Speaker 11 Well, where's the marriage now?

Speaker 15 We're together.

Speaker 15 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.

Speaker 15 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.

Speaker 1 Does he give you money when you ask?

Speaker 11 What's that transaction like?

Speaker 1 He does.

Speaker 15 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.

Speaker 15 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.

Speaker 15 And honestly, I feel like we got to...

Speaker 1 Why are you not still separated if nothing changed?

Speaker 15 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.

Speaker 15 So I went from not having no debt to having like, you know,

Speaker 15 $300,

Speaker 15 probably $3,500 a month that I had to pay, you know, for my rent.

Speaker 11 So you went back to jail

Speaker 11 because it was too expensive to be free. That's what, what's what I'm hearing.

Speaker 6 Yeah, I just love them so much.

Speaker 15 It's crazy. I I know.

Speaker 1 So, why did you call us?

Speaker 1 I'm so confused. What do you want us to do?

Speaker 15 Well, I just feel like, am I in the wrong for wanting, you know, having a marriage?

Speaker 1 No, you're not in the wrong, but you're not doing anything about it.

Speaker 15 I know. That's why I called you.

Speaker 1 I can't do anything about it. You've got to do something about it.

Speaker 9 What can I do?

Speaker 1 What should I do? I think you've got to decide if you want to be married to someone that treats you this way.

Speaker 1 And you're going to have to sit down.

Speaker 1 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.

Speaker 15 And he too, if I he says I don't manage his wife.

Speaker 1 I don't care what he says.

Speaker 1 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.

Speaker 1 He's a horrible husband.

Speaker 1 I feel like.

Speaker 15 I agree. Because I had to go to the doctor yesterday.

Speaker 1 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.

Speaker 1 So So you've got to decide what you're going to do,

Speaker 1 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.

Speaker 1 And if you don't do that, quit telling people stories about him. Shut up.

Speaker 1 Live with it. Okay? If you're not going to do nothing about it, shut up about it.

Speaker 1 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

Speaker 1 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.

Speaker 1 He probably doesn't know how to be a good husband. He thinks he's taking care of you.
He may be that dumb.

Speaker 1 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.

Speaker 1 Let her have the dignity of being one of the two adults in the household.

Speaker 1 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.

Speaker 1 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.

Speaker 11 Yeah, you've married a control freak, and then you've let him get more and more control over 25 years.

Speaker 11 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.

Speaker 11 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.

Speaker 1 That's enabling. That's just bullcrap.

Speaker 1 I love him so much, I'm willing to be abused.

Speaker 1 Come on.

Speaker 11 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.

Speaker 11 He needs to be shaken.

Speaker 1 Yeah.

Speaker 1 If this guy was my buddy, I'd be boxing his ears, man. I'd be giving him a hard time.

Speaker 11 That'd be fun.

Speaker 1 That'd be an interesting conversation, wouldn't it? Of course, he wouldn't have been my buddy because he wouldn't have.

Speaker 1 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?

Speaker 5 Doing

Speaker 10 yourself, Mr. Ramsey.

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

Speaker 16 Well, I'm having some issues. I'm 20 years old.

Speaker 16 I have a one-year-old kid and a wife.

Speaker 18 And I'm in so like deep debt to the point where I think I'm going to have to go bankrupt.

Speaker 1 What kind of debt have you got, honey?

Speaker 16 I have $32,000 in student debts for my wife.

Speaker 10 She's currently in school.

Speaker 16 And then I have.

Speaker 1 So

Speaker 1 you have $32,000 in student debt, and you're continuing to run up student loan debt?

Speaker 6 No, so that's.

Speaker 1 Who's paying for her school?

Speaker 16 I am. She's a stay-at-home mom.

Speaker 1 With what?

Speaker 10 I have a one-year-old

Speaker 16 With me working.

Speaker 1 Oh, okay. And what other debt do you have, Sherry?

Speaker 5 And then I have two vehicle loans.

Speaker 16 And on my truck, I'm two months behind. And I owe.

Speaker 1 How much do you owe on your truck?

Speaker 10 I owe $11,700.

Speaker 1 Okay. And what do you owe on the other car? What do you owe on the other car?

Speaker 1 $10,000. Okay, and what other debts do you have? Credit cards?

Speaker 19 I have $3K in personal loans and then about 1,000 in credit cards.

Speaker 10 Okay.

Speaker 1 All right.

Speaker 1 And what do you make, sir?

Speaker 16 I make $3,500 a month. Okay.
All right.

Speaker 1 Okay.

Speaker 1 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?

Speaker 1 You have cars that you can't afford.

Speaker 1 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.

Speaker 1 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.

Speaker 1 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.

Speaker 1 You could just sell the cars and still have the student loan and not be bankrupt.

Speaker 1 Gotcha. What's the truck worth?

Speaker 1 Whenever they pulled it, I had the loan out for $12,000, $7.50. What's the truck worth?

Speaker 16 It's probably worth $9,000.

Speaker 1 Okay, good. And who do you owe the money to?

Speaker 10 The bank.

Speaker 1 Local bank.

Speaker 1 Okay. And what about the $10,000 car? What's it worth?

Speaker 1 We paid $16,000 for it.

Speaker 16 I gave $6,000 down.

Speaker 1 Good. You need to sell that car this week.

Speaker 1 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.

Speaker 1 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.

Speaker 1 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.

Speaker 1 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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Speaker 1 Buying or selling a home is a big deal, and you want an expert in your corner, not somebody who got their license three weeks ago and happens to be your Aunt Sally.

Speaker 1 Bad idea.

Speaker 1 You need like a real real estate agent, like somebody that knows what the flip they're doing. Hello.

Speaker 1 The Ramsey Trusted Program is the only way to find a high-octane, high-protein top agent that you can trust, that we trust, to make your home a blessing and not a burden. It's easy.

Speaker 1 You compare the agent profiles. You can interview them.
You can choose the right one to work with among the Ramsey Trusted bunch.

Speaker 1 To find a local Ramsey Trusted Real Estate Pro for free, go to ramseysolutions.com/slash agent or click the link in the show notes. Blake's with us in Asheville, North Carolina.
Hi, Blake.

Speaker 1 How are you?

Speaker 20 I'm good, Mr. Ramsey.
How are you?

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

Speaker 20 So I'm starting a new job next week. I'm leaving leaving my current job tomorrow.

Speaker 1 Wow, cool.

Speaker 1 Big deal. Big race? Yeah, big deal.

Speaker 3 On paper, it's more money, which I'm excited about.

Speaker 1 How is it on paper and not real?

Speaker 20 Because it's not in my bank account yet.

Speaker 1 Oh, because it hadn't happened yet. Okay.
Yeah,

Speaker 11 I thought that was a congressman on Meet the Press for a second with that answer.

Speaker 1 On paper.

Speaker 1 On paper.

Speaker 1 The promise is that we're going to get a raise. Okay, I got you.
All right. Yeah.

Speaker 20 About $1,900 more a month guaranteed.

Speaker 1 Okay, cool.

Speaker 7 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.

Speaker 1 Okay.

Speaker 20 So I'm just kind of looking.

Speaker 19 I want to start investing

Speaker 20 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

Speaker 20 investing. And by the time I'm 60.

Speaker 1 Yeah,

Speaker 1 you'd have some money. Good for you.
So do you have a 401k at the new place?

Speaker 20 I'll have to set one up after 90 days.

Speaker 1 Okay. Do the Roth 401k.

Speaker 26 Roth, okay.

Speaker 1 That means it's going to grow tax-free,

Speaker 1 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.

Speaker 1 and if they do, they match it with non-Roth, which is okay.

Speaker 1 And pick good growth stock mutual funds.

Speaker 1 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.

Speaker 1 Growth, growth and income, aggressive growth, and international.

Speaker 1 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,

Speaker 1 but long track records.

Speaker 1 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%.

Speaker 1 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.

Speaker 1 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.

Speaker 1 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?

Speaker 1 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.

Speaker 1 Okay. How much debt have you got?

Speaker 19 I have 36,000 in student loans. Okay.

Speaker 1 I'm going to attack that like my hair is on fire. Yeah, that's what I was thinking.

Speaker 20 I'm going to be in a good position next month, especially to start attacking that.

Speaker 1 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.

Speaker 1 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.

Speaker 11 And those weekends. So you got some time there.

Speaker 1 Yeah, go make some money on the weekends. Let's do it even faster.
Yeah,

Speaker 20 i i do have a weekend kind of gig cool what do you mean

Speaker 20 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

Speaker 1 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.

Speaker 1 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.

Speaker 20 Yeah.

Speaker 1 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.

Speaker 11 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

Speaker 11 a poll came out from Gallup, just came out yesterday.

Speaker 11 The American people people losing faith in capitalism. Is the American dream alive and well? And all this crap that gets put out there.

Speaker 11 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.

Speaker 11 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.

Speaker 11 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

Speaker 1 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

Speaker 1 so

Speaker 1 capitalism is not dead.

Speaker 1 As a matter of fact, it is the best way in human history at this particular moment in time.

Speaker 1 You have, if you are right now in your 20s, you have the most opportunity to build wealth the fastest

Speaker 1 of any time in any period in any location since man began walking the earth beside Eve.

Speaker 1 Old Adam. Remember him? Yeah.

Speaker 1 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.

Speaker 1 There is so much opportunity.

Speaker 1 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,

Speaker 1 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.

Speaker 11 That's exactly right. He's going to get it.
Poster child.

Speaker 1 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.

Speaker 1 That guy's going places, right? You don't want your daughter marrying a dreamer, they'll be in your basement.

Speaker 1 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.

Speaker 1 Geez, get away from my kid.

Speaker 11 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.

Speaker 1 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.

Speaker 1 People that are doing things don't have time to watch that garden. That's right.

Speaker 1 So, yeah, I get aggravated. But sure, that's a good point, Ken, that

Speaker 1 truthfully, the digital age, you can just decide.

Speaker 1 And I'm in business.

Speaker 1 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.

Speaker 1 I mean, it's just the most wonderful time to be alive and make money and help people.

Speaker 1 It's an amazing moment in time.

Speaker 11 Blake just got a promotion and he has got a side hustle on the weekend. If he can do it, you can do it.

Speaker 1 But he's been destroyed by $36,000 worth of student loan debt. He's hopeless.
He'll never make it.

Speaker 1 The system is rigged against poor Blake.

Speaker 1 We've told you for years, debt is dumb, cash is king, and the borrower is slave to the lender. So, when we find a bank that actually gets that, we shout it from the rooftops.

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Speaker 1 James is in Oklahoma. Hi, James.
How are you?

Speaker 30 Good. How are you?

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

Speaker 29 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

Speaker 29 and uh

Speaker 17 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

Speaker 29 seven hundred uh thousand and there's roughly three hundred and

Speaker 7 thirty thousand left that's coming in additionally.

Speaker 1 So you're going to get a million total. And how much is owed on the farm?

Speaker 29 The total land is 336,000, but the house is separate and my student loans.

Speaker 1 How much are your student loans?

Speaker 29 My debt, 46,000.

Speaker 1 Okay, so 400,000 clears everything out of a million?

Speaker 29 Roughly 600 will clear everything.

Speaker 1 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?

Speaker 19 Yes, there's a house loan too.

Speaker 1 Oh, oh, separate. Okay.
So you could be debt-free for $600,000 and still have $400,000 left over when the smoke clears.

Speaker 1 Okay, cool.

Speaker 1 Why would you not do that?

Speaker 29 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.

Speaker 17 And he was saying not to pay off the house because of the percentage.

Speaker 29 And I just didn't really know what to do to get debt-free and then worry about investing.

Speaker 17 Or, yeah,

Speaker 1 what's your household income?

Speaker 29 Roughly $200,000. Okay.

Speaker 1 So, if you had zero payments, you'd have lots of money to invest, wouldn't you?

Speaker 23 Yes, sir. Yeah.

Speaker 1 I think you need a new financial advisor.

Speaker 1 Yes, sir. Yeah.

Speaker 1 This one sucks.

Speaker 1 So, yeah.

Speaker 1 Yeah.

Speaker 1 Honestly, I mean...

Speaker 7 We have cows, too, that help make the farm payment as well.

Speaker 19 Well, that's good.

Speaker 1 That's good. The cows make money in your pocket if you don't have a payment, right?

Speaker 23 That's true. Okay.

Speaker 1 All right. Yeah.

Speaker 1 This idea that wealth is built from borrowed money is mythology when we actually look at the hard data.

Speaker 1 We studied 10,167 actual millionaires.

Speaker 1 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.

Speaker 1 Ten thousand one hundred and sixty-seven millionaires disagree with your financial advisor.

Speaker 1 Yes, sir. That's what I'm saying.
Okay?

Speaker 1 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,

Speaker 1 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.

Speaker 1 And let me ask you: who passed away that left you this money?

Speaker 25 My dad.

Speaker 7 He was a big.

Speaker 1 He was a big, he was a big what?

Speaker 29 Fan of yours.

Speaker 1 Oh, okay.

Speaker 1 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.

Speaker 1 And then he just found me and I agreed with him. Does that sound right?

Speaker 12 Yeah.

Speaker 1 In other words, it's not me. It was him.
And

Speaker 1 I think if he's in heaven and you pay off your farm, I see him smiling. What do you think?

Speaker 19 No, yes, sir.

Speaker 19 I completely agree.

Speaker 1 He'll also be smiling when you fire this financial advisor.

Speaker 11 Yeah, and by the way, by the way, that's the issue.

Speaker 11 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.

Speaker 1 Doesn't ring

Speaker 1 my dad taught me.

Speaker 11 So I trust the guy.

Speaker 1 Dad's money I'm getting. I'm going to honor him with this legacy.
And this guy,

Speaker 11 yeah, it doesn't feel right. See, you can't be afraid to disappoint.

Speaker 1 It's a tuning fork of your heart. Yeah.

Speaker 11 So disappoint the financial advisor. That's what's going on here.

Speaker 1 I'm happy to disappoint this person.

Speaker 11 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.

Speaker 1 Here's the other thing.

Speaker 1 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.

Speaker 11 Guaranteed.

Speaker 1 The dirt, the cows, everything, all of it. This is just saying.

Speaker 1 Caroline's in Colorado. Hi, Caroline.
How are you? Hi, I'm good. Thanks.
Good. How can we help?

Speaker 31 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.

Speaker 31 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

Speaker 1 we are,

Speaker 5 we, well, I guess I can explain that.

Speaker 1 You didn't have to, but you did. Why?

Speaker 31 We were trying to get out of debt by selling one of our properties.

Speaker 1 You got into debt, you said.

Speaker 31 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.

Speaker 1 But why did you not just go get the job and replace the income?

Speaker 31 I'm sorry, which job?

Speaker 1 The one he lost.

Speaker 4 Oh, he did.

Speaker 8 He found another job, but he had to take a pay cut.

Speaker 1 Okay. There's a lot of have-tos in this story.
All right. And

Speaker 1 okay. How can I best help, darling?

Speaker 31 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,

Speaker 31 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.

Speaker 1 Okay.

Speaker 1 If you have a net worth, so so is is your household expenses too high?

Speaker 8 Yes.

Speaker 1 Okay, so what are we doing to cut those?

Speaker 31 I mean, I've cut back on everything.

Speaker 1 What's it take for you to live a year?

Speaker 31 Rough, well,

Speaker 31 including the mortgages that we have, it's around $15,000 a month.

Speaker 1 Okay. So you're net worth millionaires, but you've leveraged yourself into real estate and gone broke.

Speaker 1 You need to be selling every piece piece of real estate you have except your personal residence.

Speaker 1 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.

Speaker 1 Okay, so but you've got debt associated with all this net worth, so the net worth is invalid.

Speaker 31 Okay, but my husband's income isn't enough for us to live off of, and we need additional.

Speaker 1 It is if you don't need thousand dollars a month to live most people don't

Speaker 1 that's ridiculous

Speaker 11 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

Speaker 1 so sell them

Speaker 31 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.

Speaker 1 I'm talking about the one that's killing you right now.

Speaker 1 You have houses you can't afford.

Speaker 7 Okay.

Speaker 31 It's um I mean, it's worth $1.8 million and we have about $250 million.

Speaker 1 Wonderful, but it's killing you.

Speaker 31 And then do what with the money?

Speaker 1 Buy a paid-for house. that has no mortgages.

Speaker 1 Okay.

Speaker 1 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.

Speaker 1 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?

Speaker 31 Yes, sir. I mean, we have a third rent or a third rent.

Speaker 1 I know, but those properties right there are creating the $15,000 a month nut you want to crack, correct?

Speaker 1 Yeah.

Speaker 1 And so you bought houses you can't afford, honey. That's what we're saying.
And so get your dadgum

Speaker 1 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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Speaker 1 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.

Speaker 1 Chris is in Wyoming. Hi, Chris.
How are you?

Speaker 25 Good, yourself?

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

Speaker 17 I just wanted to give you guys a call.

Speaker 30 I just, I mean,

Speaker 17 kind of

Speaker 17 going through some struggles and with debt. And

Speaker 17 I got fired from my job on Wednesday.

Speaker 1 Whoa.

Speaker 1 That sucks. What happened?

Speaker 25 They gave me an evaluation, and I guess I didn't score high enough.

Speaker 17 And

Speaker 25 I think they fired me because of my hearing issues because

Speaker 25 I was born partially deaf.

Speaker 33 And

Speaker 34 I think that's part of the reason why they fired me because I couldn't understand things.

Speaker 1 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,

Speaker 25 I was working at a casino.

Speaker 25 I was doing surveillance.

Speaker 33 And

Speaker 25 they just

Speaker 33 kind of looking at cameras.

Speaker 25 I'm answering phones. And I think

Speaker 25 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.

Speaker 11 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.

Speaker 11 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?

Speaker 33 Yeah, I do. I do.

Speaker 1 Listen, you're not speaking directly into your phone again, honey. You don't have to do that.
It's muffled.

Speaker 17 Yeah, so

Speaker 29 I do agree that

Speaker 25 I was having a hard time understanding things that they were, the tasks that they were giving me.

Speaker 1 Okay. Okay.

Speaker 1 And so

Speaker 1 your biggest crisis is you're unemployed.

Speaker 5 Yeah.

Speaker 33 I'm unemployed, and

Speaker 25 my wife can't work because

Speaker 25 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

Speaker 25 so it's just, it's been hard to try to take care of her, myself, and our three kids. And

Speaker 11 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?

Speaker 30 For like

Speaker 25 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.

Speaker 25 And

Speaker 25 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

Speaker 34 I was born with I was born with it it's it was genetic okay do you have hearing aids

Speaker 25 yeah I do I went through the the Wyoming workforce and but they're not working they were

Speaker 34 um they were they're working um they they They've been a big help.

Speaker 25 But even after I got the hearing aids with the casino, I was still having a hard time.

Speaker 5 So

Speaker 25 I try to do everything the best I can, and I seem to still have a hard time hearing.

Speaker 11 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.

Speaker 11 It seems when you said winter hours that you have limited opportunities due to where you are. Is that what I'm understanding?

Speaker 22 Yeah,

Speaker 25 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.

Speaker 25 And

Speaker 11 sure.

Speaker 1 How much money do you need to make?

Speaker 11 What's the bottom line that would just take care of you guys, just your basic expenses? What do you need?

Speaker 33 I mean, my rent,

Speaker 33 I mean, it's my rent, my electric.

Speaker 25 I mean, I don't have to worry about like gas or anything.

Speaker 1 Give me a number.

Speaker 11 Do you got a number, a monthly number that you need to live?

Speaker 25 In all honesty, I mean, I honestly don't know.

Speaker 25 Can't really figure out a number.

Speaker 22 It's usually about,

Speaker 25 I think it's like $3,000 a month.

Speaker 22 That's usually where all my bills are at.

Speaker 25 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

Speaker 1 you have two car payments?

Speaker 25 Yeah, I have two car payments.

Speaker 34 I have

Speaker 25 my truck payment, which is $740, and then my car payment is $360.

Speaker 1 I don't know what in the world planet you're on that you think you can afford a $700 truck payment.

Speaker 22 When I was working with Walmart,

Speaker 25 I got fired from them the the same year in January.

Speaker 1 Why did you get fired from Walmart?

Speaker 17 Because of my attendance, because of the wife's medical issues with her leg and then my mental health.

Speaker 17 I was leaving a lot and I was calling off a lot because of my mental health.

Speaker 25 And I ended up, after I got fired, I ended up with a lot of money.

Speaker 1 What's the nature of your mental health problem?

Speaker 17 Well, when my daughter was born, she

Speaker 1 No, your mental health problem. What's the nature of your mental health problem?

Speaker 17 I'm depressed.

Speaker 1 Okay. All right.

Speaker 33 And

Speaker 1 is your wife on military disability?

Speaker 17 No, she she's been trying to fight with the VA for

Speaker 1 several years. And

Speaker 1 are you on any kind of disability?

Speaker 33 No, I'm not.

Speaker 25 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

Speaker 1 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

Speaker 1 a $780 truck and this picture that you have painted for the last few minutes is insanity

Speaker 1 it's nuts

Speaker 1 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

Speaker 1 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?

Speaker 11 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.

Speaker 11 But right now, you can't accept limitations. I understand depression is real.
That's a real thing. I get it.

Speaker 11 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.

Speaker 11 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.

Speaker 11 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.

Speaker 11 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

Speaker 1 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

Speaker 1 keep it up, dude. Keep pushing.
Keep fighting. You can do it.

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Speaker 1 The Ramsey Show question of the day is brought to you by YReFi.

Speaker 1 You may think no one can help with your defaulted private student loans, but YReFi is different. They work with borrowers in tough spots without judgment.
Check them out at yrefi.com slash Ramsey.

Speaker 1 That's the letter Y R E F Y dot com slash Ramsey. Not in all states.

Speaker 11 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.

Speaker 11 The federal government will accept Venmo payments from citizens who want to help pay off the national debt.

Speaker 11 The Treasury has begun accepting Venmo transactions as contributions toward the national debt, which currently stands at $36 trillion.

Speaker 11 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.

Speaker 11 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.

Speaker 11 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.

Speaker 11 Somebody bail me out, James. What is that movie?

Speaker 11 Legends of the Fall.

Speaker 1 The Legends of the Fall.

Speaker 11 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.

Speaker 11 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.

Speaker 1 Screw.

Speaker 1 That's my answer. That's my answer.

Speaker 11 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.

Speaker 1 It's not good for you.

Speaker 11 Take the ball away from me.

Speaker 1 This is bad for you, Ken. I can tell.
It's just not, you know, your mental health now, Ken.

Speaker 11 Dave, I need to take the rest of the show off.

Speaker 1 My mental health is too fragile right now.

Speaker 1 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

Speaker 1 that

Speaker 1 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.

Speaker 1 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

Speaker 1 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.

Speaker 1 And we're like, well, you can. Just send them a check, you doofus.
Right.

Speaker 1 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.

Speaker 1 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.

Speaker 1 Here's the thing:

Speaker 1 49%

Speaker 1 of Americans pay zero zero

Speaker 1 federal income tax.

Speaker 1 Did you know that?

Speaker 1 51% of us carry the whole thing.

Speaker 11 That's not helping

Speaker 1 zero federal income tax.

Speaker 1 So please don't talk to me about fair share ever

Speaker 1 again. Yeah.
Okay.

Speaker 1 I'll help you with this.

Speaker 1 So everybody ought to be paying something.

Speaker 1 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.

Speaker 1 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.

Speaker 1 The way it is now is not fair.

Speaker 1 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.

Speaker 11 You know what? No, it's actually true. If you're that stupid, then you shouldn't have any money anyway.

Speaker 11 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,

Speaker 11 it's just nonsensical. So sure, yeah, you should, yeah, you should do that.

Speaker 1 You know, they just did that to just for you and me. Is that a fake question?

Speaker 11 Is that just to see if I'm 100% real, but but I knew it would be gold with y'all too.

Speaker 11 I feel like I need a whole bottle of Pepsi DC just chewing on them after that question.

Speaker 1 Yikes. Rochelle is in Texas.
Hi, Rochelle. How are you?

Speaker 24 Hey, it's not Rochelle. She chickened out.
I'm her husband.

Speaker 1 Okay.

Speaker 1 So

Speaker 1 what's the chicken husband's name?

Speaker 1 What's your name?

Speaker 24 The chicken husband's name's Charles.

Speaker 1 Hi, Charles. How are you, man?

Speaker 24 I'm good, and thank you for taking our call. I've been listening to you guys for a long time.

Speaker 1 Thank you how can we help sure

Speaker 24 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.

Speaker 24 It just seems like it'll do better invested in good gross stock mutual funds.

Speaker 25 We're hoping to get your opinion on that.

Speaker 1 Thank you for your service.

Speaker 1 We appreciate you. And

Speaker 1 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.

Speaker 1 Most of the time you should rent. And here's the math and the reason.

Speaker 1 Most markets, most real estate markets on average do not increase enough during the two-year period of time that you're there

Speaker 1 to

Speaker 1 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.

Speaker 1 Yep, that's correct. Yeah.
And so,

Speaker 1 you know, the Wahoo market has a lot of military saturation, a ton of it.

Speaker 1 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.

Speaker 1 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.

Speaker 1 But probably in Oahu, you're probably going to be better off renting.

Speaker 1 Transpose that with we were working doing some stuff with SEAL team, and they're in the San Diego market, right?

Speaker 1 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.

Speaker 1 Virginia Beach is another one, the market you can move into and out of and make money.

Speaker 1 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.

Speaker 1 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

Speaker 1 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.

Speaker 24 I got it. And also,

Speaker 24 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.

Speaker 17 So with the house not being paid off,

Speaker 25 which again, we calculated out.

Speaker 24 I don't think we'll be able to pay it off in time if it's an $800,000 house, for example.

Speaker 1 Yep.

Speaker 6 When we go to Kodiak, we wouldn't be able to make that work.

Speaker 24 The pay would just be too much.

Speaker 1 Exactly. And again, Kodiak is going to be a lot of military in that market, right?

Speaker 1 Right. Real strong military consideration.
And so

Speaker 1 it's, yeah. So thank you for your service.
And but what I'm going to be doing is piling up money.

Speaker 1 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.

Speaker 1 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.

Speaker 1 Again, thank you for your service.

Speaker 1 If you're tired of living paycheck to paycheck and you can't get ahead, join one of our free every dollar trainings.

Speaker 1 Jade Washaw, Rachel Cruz, George Camill, our Ramsey Personalities, are doing trainings every week this month.

Speaker 1 They're all hosted by one of the Ramsey Personalities, and we're going to show you how to stick to a budget, find thousands of dollars of margin using Every Dollar so you can get out of debt.

Speaker 1 When you do a budget, you feel like you got a raise. That's what it amounts to.
And we're going to show you how that works exactly. And you can ask questions during the live QA.

Speaker 1 Sign up for free at ramseysolutions.com/slash webinar. Brittany is in Huntsville.
Hi, Brittany. How are you? I'm good.
How are you? Better than I deserve. How can I help?

Speaker 13 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.

Speaker 13 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.

Speaker 13 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.

Speaker 13 So, like, I feel like I should focus on the car first and was just wondering what you all think on that.

Speaker 1 So, you owe how much on the car? $32,000? And it won't hold car seats.

Speaker 9 $22,000.

Speaker 1 It was a RAV.

Speaker 1 Yeah, $22,000. The $31,000.
What's it worth?

Speaker 13 It's worth about $22,000 with trade-in value. Kelly Blue Books said we could get $24,020,000.

Speaker 1 What's your household income?

Speaker 13 About $150,000. I'm currently a stay-at-home mom, so that's on my husband.

Speaker 1 Okay. What does your husband drive?

Speaker 5 He has a lease deal through his job.

Speaker 13 He's an engineer for Toyota, so he's.

Speaker 1 What does he drive?

Speaker 1 A

Speaker 1 Tundra

Speaker 11 truck. Okay.
What year is your RAV4?

Speaker 4 2021, I think.

Speaker 11 Okay. So who told you that the RAV4 cannot accommodate two car seats safely?

Speaker 13 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.

Speaker 13 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.

Speaker 11 Well, the manufacturer says that you can actually, on the 2019 and later models,

Speaker 11 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.

Speaker 1 Yeah, anyway, yeah, I'm fine with selling the Rev. Why don't you just sell it and buy a $10,000 car?

Speaker 1 Okay. That's a van.
Buy a $10,000 minivan.

Speaker 1 Okay. And that reduces your debt from $22,000 to $10,000.

Speaker 13 Well, so the thing is, is like we just started doing Ramsey Solutions financial planning.

Speaker 8 So we have

Speaker 13 $10,000. Like we could

Speaker 1 $20,000.

Speaker 1 Go

Speaker 1 buy a $10,000 car and sell the Rev, and you got rid of $22,000 worth of debt. Yay.
Okay.

Speaker 1 Okay.

Speaker 1 A $10,000 minivan, though. Not a $30,000.
Yeah, that's what I thought we were leaning towards.

Speaker 4 No, no, no.

Speaker 13 So we were just looking at it because we were trying to figure out, we thought we were upside down on the car.

Speaker 9 It turns out we aren't, which is good.

Speaker 1 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.

Speaker 1 Yeah.

Speaker 1 Okay. Yeah, but just fight through the student loans then.

Speaker 1 But you always use these things as a reason to go backwards.

Speaker 1 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.

Speaker 11 That's what I thought. Exactly what I thought.

Speaker 13 I just want a bigger vehicle.

Speaker 1 I don't know.

Speaker 1 I don't blame you. That little RAV is a tiny little,

Speaker 1 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.

Speaker 1 So I don't mind. Yeah.
But move down in car and take your 10 grand and let's accelerate this whole process, okay?

Speaker 1 Okay. You get to accomplish both goals in a positive way.

Speaker 1 Okay. That's what I would do.

Speaker 11 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.

Speaker 1 I did too.

Speaker 1 That's what most people do, and we have to be careful about because everybody calls us, not most people.

Speaker 11 Hey, listen, full confession: my mom held me in her arms.

Speaker 1 That's how old I am. I know, yeah.
So

Speaker 11 I don't do well with the

Speaker 11 car seats are too big. What is happening?

Speaker 1 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

Speaker 1 too small. A Chia car? It's a Chia car.
I can see you. I like that.
I like that.

Speaker 1 Grant is in Montana. Hey, Grant, what's up?

Speaker 1 Hey, how are you? Great, man. How can we?

Speaker 26 Thank you for taking my call. Sure.

Speaker 26 So I'm looking for some help or some guidance on

Speaker 26 whether the balance, whether taking care of my father is a priority or building a life with my girlfriend slash soon-to-be wife.

Speaker 17 I started my life over at 25.

Speaker 26 I got sober, built a career for myself, and about two years ago, I had to move in with my father.

Speaker 26 He's disabled, not able to take care of his home and property.

Speaker 21 How old is he?

Speaker 21 68.

Speaker 1 And what is the nature of his disability?

Speaker 26 He's confined to a wheelchair.

Speaker 26 He has some spine issues that

Speaker 1 surgery helped?

Speaker 18 About five years now.

Speaker 1 Have you been with him for five years?

Speaker 26 No, I've been with him for two years.

Speaker 21 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.

Speaker 18 And so

Speaker 1 we just made the decision.

Speaker 1 Are you planning to live with him for the next 10 years?

Speaker 18 That was my plan.

Speaker 26 I was single at the time that I made this this decision, and then

Speaker 1 the girl came along. So now you're not planning to live there for 10 years.

Speaker 1 So we have to have a plan for dad and a plan for your life.

Speaker 1 They don't have to, they don't have it. It doesn't have to be either, or it should be both.

Speaker 1 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.

Speaker 23 Sure.

Speaker 26 So what we've done is in preparation for that plan or

Speaker 29 whatnot.

Speaker 26 He spent a lot of his retirement.

Speaker 26 He retired pretty early. He retired when I was about 15.
I'm 34 now.

Speaker 25 So he spent a lot of his retirement.

Speaker 27 Sort of the big

Speaker 26 thing he has left is the house.

Speaker 26 But we took the house and put it in a trust of which I'm the beneficiary now

Speaker 26 in preparation for

Speaker 26 him being moved on to Medicaid at some point.

Speaker 1 You understand Medicaid is welfare.

Speaker 1 Yes. And you understand that welfare nursing home is a different level of care.

Speaker 18 Yes, I do.

Speaker 1 Okay.

Speaker 29 Yeah, we're not.

Speaker 1 So you're planning to put him in a Medicaid nursing home so you can keep the house.

Speaker 27 That was not my plan.

Speaker 26 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.

Speaker 1 They sure do. They sure do.
Yeah.

Speaker 1 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.

Speaker 26 No, we just put the house into the trust last year.

Speaker 1 So you got four years that you're going to continue this if you're going to continue this. Probably not going to work.

Speaker 1 I think you're selling the house so that your dad can use his money to care for him so that you can

Speaker 1 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.

Speaker 5 Well,

Speaker 26 that's where I struggle.

Speaker 1 I don't.

Speaker 1 I don't.

Speaker 1 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.

Speaker 1 And you can take care of your dad.

Speaker 1 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.

Speaker 1 And then you go on and have a life in the process. These things are not incongruent.

Speaker 1 E.J.'s in Philadelphia. Hi, E.J., how are you?

Speaker 27 I'm great. How are you?

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

Speaker 27 So, my fiancé and I are getting married in about a month, and

Speaker 16 we're about to receive $20,000 as a gift, not for the wedding, but because we're getting married.

Speaker 27 And we wanted to

Speaker 1 know.

Speaker 27 Yeah, yeah, it really is.

Speaker 27 And we wanted to know what would be the best direction or the best place for us to put that money.

Speaker 27 So just for some context, we just finished school,

Speaker 27 her last December and me over this past summer, and we just started working full-time. And the only debt that we have is

Speaker 27 $18,000 in student loan.

Speaker 27 And so we're trying to figure out if we should

Speaker 27 save that money and snowball our debt or

Speaker 27 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.

Speaker 1 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.

Speaker 1 I mean, it's just exciting and wonderful and what a wonderful, generous gift. And

Speaker 1 then if you want to do something that's non-sexy but smart with it, it's hard because it's emotional. And

Speaker 1 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?

Speaker 1 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.

Speaker 1 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,

Speaker 1 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.

Speaker 1 It just has, that's got a lot of sizzle on it. You see what? See what I'm saying?

Speaker 1 Yeah.

Speaker 1 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.

Speaker 1 Yeah.

Speaker 1 Yeah.

Speaker 1 Yeah.

Speaker 1 Yeah.

Speaker 1 It's hard to say, yay, yeah.

Speaker 1 Yay,

Speaker 1 Yay!

Speaker 1 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.

Speaker 1 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.

Speaker 16 Yeah, yeah.

Speaker 1 So

Speaker 1 what's your income going to be now, the two of you?

Speaker 27 So I work two jobs, and I make around $90,000 a year, and my fiancé makes around $55,000.

Speaker 1 Those are your postgraduate jobs, right?

Speaker 27 Yeah, she's in her field that she studied.

Speaker 27 I went to school for ministry, and I work that part-time.

Speaker 10 Okay.

Speaker 27 And I do HVAC and plumbing full-time, which I did not go to school for.

Speaker 1 But that's not unusual. Yeah.
80% of pastors are bivocational in America today.

Speaker 1 Right. All right.
So the

Speaker 1 $140,000 household income.

Speaker 1 Yes. And you're how old?

Speaker 7 I just turned 22.

Speaker 1 Oh, see, that's awesome, man. You're killing it.
And now you've got no dad

Speaker 1 because of this wonderful gift. It's just, it's just,

Speaker 1 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.

Speaker 1 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.

Speaker 1 And it's a sizzle gift with a wah, wah, wah suggestion.

Speaker 1 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.

Speaker 1 And it just, I'm going to get you there as fast as I can every time.

Speaker 1 And I'm 1,000% consistent on this. Kenneth is in Georgia.
Hi, Kenneth. How are you?

Speaker 36 Hey, you're doing great. Thanks so much for having me today.

Speaker 1 Sure. What's up?

Speaker 36 I just discovered the Ramsey plan this past summer, and it's really quick with me. I've been enjoying it so far.

Speaker 36 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.

Speaker 29 It's not going to crush us.

Speaker 36 I'm in a little bit more of a house than I really should be.

Speaker 36 We're having a mortgage payment of about $4,100 a month, whereas we take home about $12,000.

Speaker 36 I do have a side gig that brings in about $2,000 to $4,000,000 a month, so that does help a lot.

Speaker 1 That makes that number work.

Speaker 1 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.

Speaker 1 Why would you not be able to afford a baby? I don't understand.

Speaker 12 Oh, we have just been having repair bill after repair bill with this house.

Speaker 36 It needs a new roof. It's got foundation issues.

Speaker 12 We had to replace the entire HVAC.

Speaker 36 We've got to set up a new drainage unit.

Speaker 12 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?

Speaker 36 Am I going to sink myself?

Speaker 17 Yeah.

Speaker 1 Well, I mean, if you've got to trade a money pit for a baby, I'd trade for the baby.

Speaker 35 Well, that's a pretty easy to call, yeah.

Speaker 1 Yeah, that's an easy decision. So, sell the money pit and go get you something else.

Speaker 1 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.

Speaker 5 That would be nice.

Speaker 1 Yeah, I mean, I don't know.

Speaker 1 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.

Speaker 5 Okay.

Speaker 1 So you got to decide which one of those it is. Do you think it's over?

Speaker 18 I think that these are one-time repairs.

Speaker 36 I think that

Speaker 1 each of the ones you named are, but I mean, is the pattern over or are we in a money pit?

Speaker 19 That's what I'm worried about.

Speaker 29 How old's the house?

Speaker 26 It's about 25 years old and we've been in it for about a year.

Speaker 1 So

Speaker 1 you've been through the other mechanicals, the water heater, the dishwashers, all that's new?

Speaker 26 We have replaced the dishwasher.

Speaker 36 We have not replaced the water heater yet.

Speaker 1 25-year water heater is done, bud.

Speaker 36 Yeah, it's going to need it real soon.

Speaker 12 Yeah.

Speaker 1 So

Speaker 1 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,

Speaker 1 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,

Speaker 1 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.

Speaker 1 And so,

Speaker 1 you know, that's just, it just kind of goes with the calendar is what I'm saying.

Speaker 1 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

Speaker 1 is your family plan, planning.

Speaker 11 Yeah, I would have wanted to know, is there an emotional attachment for you and the wife?

Speaker 11 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

Speaker 11 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.

Speaker 11 I got to practice that one in front of the mirror.

Speaker 1 It's the obsolescence. That's a tough word, but that's a new one for me.

Speaker 11 I feel like if I drop that in the right room.

Speaker 1 It comes out of my real estate training back in the day, way back in the day.

Speaker 11 I thought you were going to say it comes out of somewhere else.

Speaker 1 I don't know where you were. It does that too.

Speaker 1 But the

Speaker 11 functional obsolescence. Did I get that right?

Speaker 1 Yeah. All right.
Well, I mean, you know, with vehicles, it's planned obsolescence, right?

Speaker 11 See,

Speaker 11 now you're showing off.

Speaker 1 You've heard that. No, I mean,

Speaker 1 the whole auto industry plans for the car to deteriorate in a certain number of years.

Speaker 11 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.

Speaker 1 Not a title that would sell.

Speaker 11 Yeah, not a good idea.

Speaker 1 We're going to probably back right off of that on the Ramsey Personality title list.

Speaker 11 It's not going to make the cut.

Speaker 1 Yeah, but the deal is stuff wears out. Hello.
That's all it is. That's all it means.

Speaker 1 It's just a John Deloney word that means stuff wears out.

Speaker 11 That's all it is. It's a good Scrabble word.

Speaker 1 Oh, yeah. You could spell it.

Speaker 11 I couldn't.

Speaker 1 I'd have to look it up, but I think that's illegal in Scrabble. So what do I know?

Speaker 1 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.

Speaker 1 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.

Speaker 1 It's the easiest and fastest way to make a monthly plan for every dollar you've got coming in and going out.

Speaker 1 Now's the best time to get started before the ridiculous holiday spending season gets here and sucks you in because you didn't have a plan. Don't let that happen.
You're done making that mistake.

Speaker 1 Go download every dollar for free in the App Store or Google Play today.

Speaker 1 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.

Speaker 1 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.

Speaker 1 You don't want to miss it. Be sure and check it out.
Benjamin is with us in Seattle. Hi, Benjamin.
How are you?

Speaker 24 Hey, Dave, how are we doing?

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

Speaker 24 Love to hear it.

Speaker 12 I a question about rolling over my current 401k

Speaker 35 into a roth ira even though i'm still employed with the 401k don't think you can do it

Speaker 1 okay you can roll it into a roth 401k inside your company does your company have a roth 401k option

Speaker 1 yes it does okay you can move it there but i don't think you can move a 401k while you're still employed

Speaker 1 gotcha of any kind traditional roth anything so

Speaker 1 how much is in it?

Speaker 36 Not much. It's around $30,000.

Speaker 1 Okay. So you're going to create about $7,000 in taxes, okay?

Speaker 1 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?

Speaker 12 The 401k is a Roth 401k.

Speaker 1 Oh, I'm sorry.

Speaker 1 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.

Speaker 35 Roth 401k into a Roth IRA.

Speaker 1 Gotcha. Okay.
Can't do it while you still work there, I don't think.

Speaker 35 Gotcha.

Speaker 1 Don't need to unless you get. Wow, you just got crummy options or what?

Speaker 17 Yeah, crummy options.

Speaker 25 It's a 2% match, and so just not getting a lot there.

Speaker 12 My Roth IRA has probably 40 grand in it.

Speaker 35 So

Speaker 35 I was just thinking if I had more,

Speaker 35 a bigger number in one account, more growth

Speaker 35 versus two accounts.

Speaker 29 No.

Speaker 1 Let's pretend that one, that the current individual is returning 10%

Speaker 1 and your company was returning 10%.

Speaker 1 It's the exact same thing as if you put them together and they return 10%.

Speaker 1 Gotcha. A bigger number does not make you more money unless the percentage is different.
The percent of return is different. You follow me?

Speaker 5 I do.

Speaker 1 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.

Speaker 1 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

Speaker 1 there we go. That's one of those math things that

Speaker 1 there's a couple of those that float around in the culture, Ken, that are

Speaker 1 interesting. And I don't know,

Speaker 1 I don't know,

Speaker 1 a lot of people think that if I put all my accounts together in one big lump sum

Speaker 1 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.

Speaker 11 Because the sum hasn't changed. It's just now consolidated versus.

Speaker 1 The total principle that is earning has not changed. It's just being in one pile, being in six piles doesn't matter.
Right.

Speaker 1 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.

Speaker 1 Correct. And that's not true.

Speaker 1 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.

Speaker 1 Okay, you take your annual percentage rate, say 6%,

Speaker 1 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.

Speaker 1 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.

Speaker 1 Ta-da. And that's called a simple interest calculation.

Speaker 1 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.

Speaker 1 And every time you pay a payment,

Speaker 1 more goes to principal, less goes to interest, more goes to principal, less goes to interest every time you pay a payment.

Speaker 1 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.

Speaker 1 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,

Speaker 1 it slides you forward in the amortization schedule.

Speaker 1 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.

Speaker 1 Because now you have $10,000 less that that half a percent this month is being multiplied on. 280 versus 290 in my example.

Speaker 1 And so

Speaker 1 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

Speaker 1 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.

Speaker 1 I'm going to just deed this to to my kid.

Speaker 1 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.

Speaker 1 Well,

Speaker 1 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.

Speaker 1 And when you get audited, they're going to tax you at 55% of that gift.

Speaker 1 The gift tax is horrendous. So you can't just decide, I'm just going to give somebody money.

Speaker 1 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.

Speaker 1 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,

Speaker 1 right?

Speaker 1 And so they have almost, they paid almost nothing for it.

Speaker 1 And so when you get the house as a gift, your basis for calculating capital gains is what their basis was, which is nothing.

Speaker 1 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.

Speaker 1 If instead you got it upon death, you get what's called stepped up basis.

Speaker 1 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.

Speaker 1 So capital gains tax on $200,000 is $30,000.

Speaker 1 So a nice little $200,000 home, you just made a $30,000 error. Try doing it on a million dollar house.
Yeah.

Speaker 1 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.

Speaker 1 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.

Speaker 1 Hi, Stephanie. How are you?

Speaker 6 Hi, I'm good.

Speaker 37 How are you guys doing?

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

Speaker 37 Good.

Speaker 37 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.

Speaker 1 Absolutely not.

Speaker 1 Please don't.

Speaker 1 I'm going to beg you not to.

Speaker 37 Not to wait.

Speaker 1 No, no, don't buy a house until you're married.

Speaker 3 Don't buy a house.

Speaker 37 No, of course. I don't want to buy a house with him,

Speaker 37 but he has some debt. So I'm trying to figure out:

Speaker 37 should we get married to help him pay the debt off, and then we buy a house? Yeah.

Speaker 37 Or should I go ahead and buy the house on my own

Speaker 5 first?

Speaker 1 Do you think Dave's being clear enough?

Speaker 11 Sometimes he's fuzzing.

Speaker 1 Okay, so

Speaker 1 let me stop that, Stephanie. I'm sorry.
That's not fair. I need to tell you why.
Okay.

Speaker 1 Here's the thing. You're getting ready to join your lives.

Speaker 1 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

Speaker 1 what the future looks like and the steps to get there. Okay.
And when you do that,

Speaker 1 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.

Speaker 1 Money's not important, but where it goes speaks loudly who you are and what you dream about.

Speaker 1 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

Speaker 1 in a joined approach.

Speaker 1 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.

Speaker 5 Right.

Speaker 37 So even if that means delaying some things.

Speaker 1 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.

Speaker 5 Right.

Speaker 1 So we're going to pay off the debt. We're going to build an emergency fund.

Speaker 1 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.

Speaker 1 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.

Speaker 37 Yep, exactly. Because I'm there now on my own, but seeing that, you know, my plan is to join as, you know.

Speaker 1 So how much do you have in savings that's not retirement?

Speaker 37 About $50,000 right now.

Speaker 1 And how much debt does he have?

Speaker 37 He has about $31,000.

Speaker 1 Perfect. When you get back from the honeymoon, pay it off.

Speaker 37 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

Speaker 1 is just okay.

Speaker 1 Pay off the debt, and then you've got a combined household income of what when you come back from the honeymoon?

Speaker 37 Maybe around $90,000, 95,000, maybe.

Speaker 1 Good. And so you're what, 25, 26?

Speaker 37 Oh, I am 37.

Speaker 1 37. Okay.
All right. What do y'all do for a living?

Speaker 9 I'm a production planner in manufacturing.

Speaker 1 What's he do?

Speaker 37 He's in shipping, receiving for manufacturing as well.

Speaker 9 Okay, cool.

Speaker 1 Cool. All right, perfect.
So you are a planner.

Speaker 1 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.

Speaker 9 I've been listening to you guys for five years now.

Speaker 1 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.

Speaker 1 Now we've got a $90,000 household income. The 20 is probably your emergency fund.
So we start from scratch, real quick,

Speaker 1 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.

Speaker 1 You've heard all this before, hadn't you?

Speaker 9 Oh, yeah, plenty of time.

Speaker 37 Actually, I didn't include my emergency fund in that.

Speaker 1 I have a three-month.

Speaker 1 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.

Speaker 37 Not yet, I don't think, with what I think a new mortgage will be.

Speaker 1 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,

Speaker 1 don't try to don't look for a hack.

Speaker 1 Just go straight through it.

Speaker 1 Exactly. It's the fastest way.

Speaker 1 It's just not popular.

Speaker 1 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,

Speaker 1 these are not real friends. Real friends go, yes, you're so smart.
You're wise beyond your years. Go do the smart stuff.

Speaker 1 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.

Speaker 1 Very cool. That's fun.

Speaker 11 Yeah,

Speaker 11 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.

Speaker 11 The other thing I would say, we didn't get to this, but for people that are listening, watching this,

Speaker 11 in a situation like this, and I'm sure she's done this, you want to make sure that this person is

Speaker 11 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,

Speaker 11 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.

Speaker 11 Super important that you got this stuff figured out pre-marriage.

Speaker 1 Amen. Loretta's in Texas.
Hi, Loretta. How are you?

Speaker 38 I'm just fine. How are you doing today?

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

Speaker 3 Well, I am 64 years old, and I'm

Speaker 38 so ready to retire, but I'm I'm just worried about my finances.

Speaker 1 Okay.

Speaker 38 I have

Speaker 38 $8,000 in an emergency fund.

Speaker 38 I have $12,000 in 401k.

Speaker 38 I have $15,000 in savings. My home is paid off.
My vehicle is paid off, and I have no other debt.

Speaker 1 Okay.

Speaker 1 And what will you live on if you retire?

Speaker 29 Social Security.

Speaker 4 Well, I mean,

Speaker 4 I can't just retire.

Speaker 38 I'm probably going to work the rest of my life. But the job that I have now, I am

Speaker 3 a truck driver.

Speaker 7 I do super loads.

Speaker 38 And so, you know, it's physically demanding. It's a lot of work.

Speaker 8 But, you know, at some point,

Speaker 38 you know, I want to be home.

Speaker 1 What do you make?

Speaker 15 $110,000 a year. Okay.

Speaker 1 Why have you not saved anything?

Speaker 8 Well, I mean, because I paid off debt.

Speaker 1 Okay, so your debt's gone now.

Speaker 38 My debt is gone now.

Speaker 1 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.

Speaker 1 $50,000 a year.

Speaker 1 Well, you don't have any payments. You're on the road.

Speaker 38 Because I don't have, I can actually put even, you know, probably put even more than that. Good.

Speaker 38 Because it's just me. Good.
So, you know, with everything.

Speaker 1 Well, let's not retire on social insecurity.

Speaker 38 okay so hang in there another couple of years and

Speaker 1 how much how much could you put away out of 110

Speaker 1 if you go hog if you go whole hog you just go all in girl

Speaker 1 75 okay that's 150 in two years right

Speaker 1 yeah all right now that makes you 66 years old

Speaker 1 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.

Speaker 1 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.

Speaker 1 Okay. And that's where I want you to go.
This idea of $12,000 and I'm ready to retire. Uh-uh.

Speaker 1 Uh-uh.

Speaker 1 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.

Speaker 32 Hey, what's up? Dr. John Deloney here.
The new dates have dropped for the Money and Marriage Getaway over Valentine's Day weekend in 2026.

Speaker 32 This is your chance to hit pause on everything in your life and reconnect with your spouse over a long weekend in Nashville, Tennessee.

Speaker 32 Me and my friend Rachel Cruz will be digging into topics like sex, money, communication, and more.

Speaker 32 This weekend is happening on February 12th through the 14th, and early bird prices start at $749 per couple, but the prices will be going up soon.

Speaker 32 Get your tickets today at ramseysolutions.com/slash events.

Speaker 1 Jake's in Minnesota. Hi, Jake.
How are you?

Speaker 1 Hey, there.

Speaker 5 Thanks for taking the call.

Speaker 1 Sure. What's up?

Speaker 2 I was just calling to ask,

Speaker 2 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%,

Speaker 2 or if we should be working on saving up our

Speaker 2 savings to get into a bigger home down the road, pay off your mortgage.

Speaker 1 As fast as you can. Okay, just

Speaker 1 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?

Speaker 1 Yep, I'm familiar. Okay.

Speaker 1 And so are you out of debt everything but the home?

Speaker 7 That's right.

Speaker 1 And you have your emergency fund of three to six months of expenses.

Speaker 1 Yes. And you're putting 15% of your income into retirement plans.

Speaker 2 That is something that we've backed down a little bit on recently.

Speaker 2 My wife and I, we don't have great matching from our employers. Doesn't matter.

Speaker 1 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,

Speaker 1 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.

Speaker 1 And

Speaker 1 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.

Speaker 1 We've got 10,000 of them we interviewed, we know.

Speaker 2 Okay. Yeah, we're

Speaker 2 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.

Speaker 1 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.

Speaker 2 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?

Speaker 1 No, you have to make a contingent offer because you have to sell the house.

Speaker 1 You can't take on two mortgages.

Speaker 2 I think there might be a little room for us to own both for a few months, but yeah, correct.

Speaker 1 You don't want to turn yourself into a motivated seller.

Speaker 1 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.

Speaker 5 No,

Speaker 1 calm down. Go take a cold shower.
You're getting house fever.

Speaker 2 Yeah, the

Speaker 1 you've been out looking at the weekends at the open houses, hadn't you? Yeah.

Speaker 2 We've been working on it.

Speaker 2 Yeah, you've been working on it.

Speaker 1 It's working on you, too, dude.

Speaker 2 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.

Speaker 1 Yeah. It's okay to calm down and come go after the baby.

Speaker 1 As a husband and grandpa, I won't recommend you plan a move during a pregnancy.

Speaker 1 You're not going to be a popular dude. Ten years later, she'll still bring that up to you.

Speaker 1 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.

Speaker 11 And I got to speak on behalf of all babies. They have no idea how big the house is.

Speaker 11 A lot of this is just very natural.

Speaker 1 You're a baby advocate. Yeah, I am.
I am. It's the first time I've taken advantage of it.

Speaker 1 I'm here to speak on behalf of the world of male people.

Speaker 11 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.

Speaker 11 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.

Speaker 11 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.

Speaker 11 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.

Speaker 11 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.

Speaker 1 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.

Speaker 11 For two moves, that'll get you in real hot water.

Speaker 1 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.

Speaker 1 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%,

Speaker 1 not 2.7%.

Speaker 1 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.

Speaker 1 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.

Speaker 1 And so

Speaker 1 it's easy. Do a contingency deal or

Speaker 1 don't do it.

Speaker 1 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

Speaker 1 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.

Speaker 1 And there's sorrow added to your mess you created here. And then you're trying to blame it on God.

Speaker 1 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.

Speaker 11 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.

Speaker 11 That's such a pro move, by the way. That's a good one.
That's a flex.

Speaker 1 That's a flex.

Speaker 1 All right.

Speaker 1 Alan's in Georgia. Hey, Alan.
What's up?

Speaker 18 Hey, how you doing today?

Speaker 1 Better not deserve. How can I help?

Speaker 18 Yes, sir. So

Speaker 39 I've inherited some land from whenever my mom passed away.

Speaker 39 And she's kind of been sitting there, not making any money.

Speaker 17 And I think it's probably time to sell.

Speaker 1 How much it gonna bring

Speaker 7 conservative 350 to 500.

Speaker 1 Wow.

Speaker 1 Nice inheritance.

Speaker 1 Very nice. 64 acres.
Thanks, mom. Wow.
Yeah. So what are you going to do with a 400, 500 grand?

Speaker 3 Well, I kind of wanted to get into real estate.

Speaker 39 I've been doing some research on like beach condos

Speaker 39 and kind of looking at the I think their return on investment is hovering from 8% to 10%.

Speaker 19 And

Speaker 29 kind of wanted your opinion on it.

Speaker 1 Where do you live in Georgia?

Speaker 18 Albany, but it's in Leesburg. Yeah, yeah.

Speaker 1 Okay.

Speaker 39 The land.

Speaker 1 Well, the reason I asked is resort real estate, mountains, beaches,

Speaker 1 lakes is the most volatile type of real estate.

Speaker 1 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.

Speaker 1 So

Speaker 1 if you have some kind of a problem and the economy slows down,

Speaker 1 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.

Speaker 1 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

Speaker 1 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.

Speaker 1 Or two or three.

Speaker 1 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.

Speaker 1 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.

Speaker 11 I've got a question for you on this.

Speaker 11 8% was his goal. He stated it on the call.

Speaker 11 Why wouldn't you say, just put that in our investment,

Speaker 11 our four buckets that we talk about? Why not invest it in the market? Why even take on the headache of real estate?

Speaker 1 Well, 8% is his cash on cash. Got it.
That's how much he makes in his pocket versus what he invested.

Speaker 1 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.

Speaker 1 So those three numbers added together are on an 8% are going to sound more like 17%.

Speaker 1 Okay, got it. Correct.
And then it makes it worthwhile. I look for 8 to 10 on a residential if I'm buying it.

Speaker 1 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.

Speaker 1 All right.

Speaker 1 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.

Speaker 1 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.

Speaker 1 Fact.

Speaker 1 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

Speaker 1 Gerard in Texas. Hey, Gerard, how are you?

Speaker 6 I'm better than I deserve.

Speaker 29 Dave, how are y'all?

Speaker 1 The same, sir. How can we help?

Speaker 17 So my wife and I are on baby step two.

Speaker 28 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.

Speaker 28 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.

Speaker 10 Cool.

Speaker 1 How old are your babies?

Speaker 29 Four and seven.

Speaker 1 Awesomeness. Okay, what are you confused about?

Speaker 28 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.

Speaker 17 That number seemed high, around like $1,100 a month or something like that.

Speaker 29 I didn't know if that was normal to set that much aside in a 529 or

Speaker 1 I would not do that. Okay.

Speaker 5 Okay.

Speaker 28 What would y'all recommend as far as how to tackle the tuition versus living costs?

Speaker 1 Yeah, honestly, I need to go look at that calculator. It sounds like.

Speaker 1 So

Speaker 1 tuition has averaged 7% to 8% per year inflation rate

Speaker 1 for the last 40 years or so.

Speaker 1 and so it's you know regular inflation is two to four percent

Speaker 1 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

Speaker 1 and so if you wanted to say okay four years of that is 60,000 bucks, right?

Speaker 1 Correct. Okay, and then add 8% a year for a decade.

Speaker 1 And

Speaker 1 that's going to be your tuition cost, right?

Speaker 1 And so that's what you would do. And then, yeah, we use a 529

Speaker 1 because if you put in,

Speaker 1 you know, a couple grand or something a year, not a month, but a year,

Speaker 1 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.

Speaker 1 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.

Speaker 1 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.

Speaker 1 You got me?

Speaker 1 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.

Speaker 1 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

Speaker 1 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?

Speaker 11 I've been pretty bold on that. And I believe you're going to see a decentralization.

Speaker 11 You're going to see specialties like obviously medicine, law, look very similar to how we see them today.

Speaker 11 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.

Speaker 11 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

Speaker 11 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.

Speaker 11 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.

Speaker 11 He's been banging this drum for a long time.

Speaker 1 You only look at that as an insult.

Speaker 11 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.

Speaker 11 I think we've kind of jumped the shark.

Speaker 1 Well, the

Speaker 1 student loan debacle

Speaker 1 has highlighted that some of the higher ed stuff is out of control.

Speaker 1 And so

Speaker 1 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.

Speaker 1 And so I think that's going to create a downward pressure on that inflation number that I gave you of 7% to 8%.

Speaker 1 So I don't think they're going to maintain that.

Speaker 11 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.

Speaker 11 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.

Speaker 11 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.

Speaker 11 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.

Speaker 1 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.

Speaker 1 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.

Speaker 1 which

Speaker 1 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

Speaker 1 so they can brainwash your child into being a communist. And so I'm against that.
I think that's a problem. And so

Speaker 1 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.

Speaker 1 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.

Speaker 1 That's why we wanted to comment on it.

Speaker 1 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.

Speaker 1 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

Speaker 1 you know, what we discover every time we do that, if you read biographies of great

Speaker 1 people who are successful in any function, whether business, ministry, sports, whatever, you find

Speaker 1 that

Speaker 1 they

Speaker 1 were the secret sauce, not where they went to school.

Speaker 11 That's exactly right.

Speaker 1 And so the number of times that people become successful due to the particular school that they went to is precisely zero.

Speaker 1 And yet we go, well, if he went to Harvard,

Speaker 1 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

Speaker 1 had a 2.5%. They didn't go to Wharton.
They didn't go to Princeton. They didn't go to

Speaker 1 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.

Speaker 1 The 78% of the CEOs of the Fortune 500 companies. Not straight up.
There's data for you.

Speaker 1 So where you go to school doesn't matter.

Speaker 1 It's a big deal.

Speaker 11 It's right.

Speaker 1 Because it costs out the button.

Speaker 11 And we're beginning to see the American people, and this isn't just parents anymore.

Speaker 11 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.

Speaker 1 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.

Speaker 11 The ROI is not there anymore.

Speaker 1 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.

Speaker 1 That puts this hour of the Ramsey Show in the books.

Speaker 11 We'll be back with you before before you know it.

Speaker 1 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.