Changing Your Life Starts with Changing Your Mindset

this is the ramsay show you can be intentional about your character you can have money and a career you are the hero in your story [Music] live from the headquarters of ramsey solutions broadcasting from the dollar car rental studios it's the ramsay show where dad is dumb cash is king and the paid off home mortgage has taken the place of the bmw as the status symbol of choice chris hogan ramsey personality multiple number one best-selling author is my co-host today as we take your questions about your life and your money open phones at triple eight eight two five five two two five that's triple eight eight two five five two two five starting off this hour is going to be anchorage alaska cindy is with us hi cindy welcome to the ramsay show hi dave hi chris thanks for taking my call sure what's up so i had a question i'm currently in baby step 3b and i've been in alaska for on and off for about nine years working as a nurse um and i figured it's time to start looking to purchase either a condo or a home and i wanted to get your opinion um so i'm currently i have where i could buy a smaller one-bedroom condo but kind of looking at the real estate market it seems like those condos have a longer resale like you're on the market longer so my question is is it better to go ahead and purchase like a smaller condo outright or kind of wait a little bit longer and either put a higher down payment on a larger condo or a house or obviously by 100 down but if that wasn't the ability so i just want to get your opinion on that cool so you're you're out of debt and you have your emergency fund now you're saving your down payment right correct and i have enough that i could buy like a small like a one bedroom condo is like 105 to 115. but um the resale on that what is your income yeah um anywhere depending on if i work um one or two jobs anywhere from 75 to 90 okay a year okay and so how long will it take you to save up to buy uh a little bit better than the one bedrooms that don't set resell well um i'm guessing probably about another year like to put a hundred percent down but i could put obviously that larger so you have a hundred now yes correct wow okay and how much longer do you see yourself in alaska's cindy well and that's kind of i have a little gypsy stole so i've kind of been i've got one foot in and one foot out okay i i heard the southern come out right there in that gypsy soul originally oh we'll see we might be related that's us you're from the motherland kentucky that's good but i went to school in louisville so i understand okay but in your gypsy soul do you see yourself there another three to five years or less one half of me that's the and that's where the caveat comes in one half of me says yes because i didn't think i would see myself here this long okay i don't but at the same time don't buy a one bedroom yeah you told me three times uh that they sell slow and they don't appreciate well and so it's just not a good investment i mean you already knew that you didn't need me to say it you were telling yourself that so the two options are you wait and save unpay cash for a little bit better property that you could resell if you get ready to move and you're not stuck in it and that also means it's going to go up in value because time on the market is also correlated with appreciation most of the time meaning if something sells really fast it's hot it usually is going up in value and so that's the you know those two things the days on the market are correlated with appreciation rate in your mls statistics typically so i you know i'm okay if you buy today and put half down and pay the other half off in three years gotcha okay or or if you want to wait and pay a hundred percent and you wait a year and a half or whatever and you want to pay put 100 down either one's fine but i would not buy the soft market one bedroom now dave explain the phrase and this thing is said oftentimes in real estate you make your money on the buy what does that mean well you you have to buy something if you're gonna get a deal at a deal right and don't buy something that's got a bad situation like those one bedrooms in that market aren't selling okay so that's you you you know you made a poor decision at the buy it's not necessarily the money that you made but that's going to cost you money on the sale on the back end right and like the first house uh i ever bought was up on a hill uh and it wasn't up on a good hill it was like stuck inside of a bluff and nasty and ugly i mean this house was ugly ugly with a u and i got a great deal on it but you know what when i got ready to sell it it was still ugly and so i gave somebody a great deal how long did it take for this thing to move it took forever you know and so uh that that's the problem you get into is that you know if the reason you got a good deal is still there when you get ready to sell you're gonna give somebody a good deal you know whether it's floor plan whether it's the elevation from the street whether it's the fact that there's a flood of the one bedrooms and there's they built too many of them and a lot of the people buying those necessarily aren't they're not putting down routes they're more transitory whatever yeah whatever the reason is that you got a deal going in is the same reason you're going to give a deal going out unless you can change that and i mean if the reason you got a deal was it was a foreclosure it needed carpet paint and a roof curb appeal and and the curb appeal is fine but you just need to cut down all the big bushes and put down some new landscaping you had 25 year old you know plants out front that look like crap that kind of thing and you go in and do a makeover on the house now that you've changed the equation there that one makes sense but cindy i would tell you this reach out get an endorsed local provider somebody that can give you that objective third party opinion and guide you so you emotionally don't get so caught up into it uh but come up with a dollar range that you're going to buy don't let the bank or mortgage company tell you how much you're gonna spend you need to do that on your own yeah well you've done such a great job she really has i mean you've saved up a hundred thousand dollars most people don't have a thousand dollars that's exactly she's got a hundred she's been intentional she really has pretty impressive well she's from kentucky dave she's she's smart i'm just gonna put that out there are you yeah you're just gonna you think i'm just gonna leave it later i think you will maybe not maybe not we can fight on air it's okay for us to battle [Laughter] i'm just gonna laugh all the way into the commercial break that's all i'm gonna do but seriously people out there i know okay here you go i know mortgage rates are low and everyone's getting house fever and you're getting tempted but listen to me don't let interest rates determine when you make this move the goal is not to buy a home the goal is to own that bad boy outright so you stay in control of you and your thing what she's done she's done that she really has she's sitting there on a hundred thousand dollars she easily could have been shopping with a ninety thousand dollar household income for a three or four hundred thousand dollar house easily yeah and instead she's questioning whether she ought to buy a one hundred thousand dollar one bedroom that means her heart's right her head's right that's right and i don't care where she's from she's acting smart she is smart doesn't matter where she's from we're gonna give her credit oh well done well done yeah home prices um people you know getting the impulse fever this built up thing inside of your spirit that is forcing you and your emotional mind to buy the largest purchase you're gonna make yeah this is a recipe for stupidity it really is and this is how people get burnt is doing this kind of stuff so she's she's being very very smart way to go cindy great job chris hogan ramsey personality and i will be back right here on the ramsey [Applause] show [Music] folks it's an honor to tell you about the army national guard not only are they big supporters of our high school curriculum but they also give you the opportunity to impact your local communities whether your goals are to get an education serve your country or have a better life the army national guard can help you get there plus they offer unbelievable financial benefits secure your future today visit nationalguard.com ramsey to find out more [Music] so chris hogan ramsey personality is my co-host today i am dave ramsey your host thank you for joining us open phones at eight two five five two two five luke is with us in green bay hi luke welcome to the dave ramsey show thank you good afternoon dave and chris sure question for you today is regarding umbrella insurance my wife and i a few years ago got a one million dollar umbrella policy liability and just curious if there's a certain net worth where we should look at adding to it on to two and three and four million as you go along or is there a certain ratio that you can say you kind of have a rule of thumb for well it starts to get ridiculous when you get above 5 million the bargain is 1 million you a couple hundred bucks you can buy 1 million umbrella but above 5 million you start to get ridiculous um i mean i have found a 10 million that's decent i think i've got 10 right now but i also have the dave ramsey problem i mean if i bump into somebody they're gonna be going oh i'm okay what's your name dave ramsey oh god you know and so all of a sudden you know it's like i got a big target on my butt right so um i went ahead and picked up an extra level of it but i don't know that i would necessarily recommend that anything above five million what i do tell you to do when you get above the million need i mean if you're starting to sit on a net worth of um uh you know north of three to five million dollars and that kind of a thing you're starting to worry million dollars probably not enough you really need to start looking at other risk management things you can do then and that's starting to put assets into uh llcs and trusts and so forth i personally do not own a single thing anymore i don't even own my cars my cars are in llc's and that's all from a risk management standpoint that the owner of the car is the only person that could only only entity that could get sued if something happened the individual only way i could get sued personally is if i had committed a criminal act and they could they could pierce it then but but um so like my one of my farms is in one llc this building is in a trust uh and so on i don't personally own anything and that way if someone falls over and one of those properties or something happens around one of those items they can only if you lost the lawsuit they could only take the assets in that entity entity that's right and you bring up the statement risk management which is huge because you can work so hard to build wealth but if you don't protect it the right way with an umbrella policy which all that is folks is it's another layer of coverage over your automobile and your home owners and so it's just like an umbrella that you'd walk outside with it's that extra layer of protection and dave said it a million dollar policy is a couple hundred dollars a year yeah and so you can get that in place but the llc and the trust they've are crucial things for people to get set up well and what you're gonna find is is that when you get north of five million dollars in net worth if you're being wise and watching everything there's two things to get that start three things should start to get very complicated your taxes uh your risk management portfolio meaning you start buying things in the name of something else and uh uh your estate plan and the three of those things work together uh you need to have the entities built in such a way that they serve the estate plan but also serve risk management and so that that's where you know you're going to start to spend some money on defense yes and on diligence to keep the government's hands off to keep a target off your butt that kind of stuff but you know it's such a small dollar very computer very few times do i would i suggest it would be highly unusual for me to suggest more than a 5 million umbrella an umbrella only covers liability too it doesn't cover anything else so it's not it's not covering the property itself you get covered with traditional insurance yeah but the umbrella it just attaches to the liability limits on the top of your car policy the top of your liability limits on your car policy the top of the liability limits on your homeowner's policy extends them out another million dollars and at 250 bucks somewhere around there and all kinds of everyday millionaires out there so if this is something that rings true for you i want you to go to daveramsey.com and click on the insurance elp and start to have that conversation like this is the time to get those things in place yep sean is in bloomington indiana hey sean welcome to the ramsey show hi dave thanks for taking my call sure what's up yeah so my wife and i are in a very unique situation on these past couple weeks she works for an esop company and they just recently got bought out by another company so all the employees are being paid out in their vested shares wow so my question is we have the option to take out a distribution up to 40 of the payouts of the vested shares and my question is do we take some of that out to pay off all of our debt including the house and then roll over the rest in the 401k option that they're providing with the company or um should we just roll everything over into the 401k so it is all pre-tax is that what you're saying um no the tap you will start to pay the taxes on on the vested shares but um yeah and so you can't roll it into a 401k then if it's not pre-taxed it can't be rolled into a 401k um yeah based on the paperwork here um they're giving us the option to um i guess move it into a 401k i'm still looking at all the paperwork here but yeah i double checked it because typically what they would do sean in that scenario they would allow you to take what you own in stock and then purchase new stock of the new company okay like it may not be a traditional 401k but just double check that but i'm going to tell you buddy how much debt do you guys owe on right now outside of your home uh we all want two vehicles that's 53 000. how much money is this transfer going to be worth it's 1.477 million this is her part correct [Laughter] wow i love it congratulations woo-hoo seriously we feel like that we've won the lottery yeah and okay here's what you need to do you don't need to ask two goobs on the radio you need to get some tax advice okay i want you to get some detailed tax advice because there's too much money involved here i can't tell exactly what you've got from the way you're describing it and i'm afraid i'm going to mess you up as far as taxes number one i want to get the money out of that single stock as fast as i can into mutual funds now you can do that inside of a 401k inside of a rollover to an ira or if you've got the ability to just take the money out and only pay the taxes on the gain i can't tell what what is available to you to shelter it so what i would do if i were in your shoes let's play this through let's pretend this is pre-tax because it sounds like it may be okay and they're going to convert it to stock and then i'm going to convert that stock into mutual funds inside the 401k as fast as i can if you can move it instead of the 401k into an individual traditional ira with no taxes i'm going to do that with the bulk of this and i'm going to pull out 400 grand and just pay taxes on it because i think there's not going to be penalties on it and pay off your house and your cars what's your home mortgage uh we currently owe 126 000. okay so 200 grand plus some taxes gets you out of debt 100 right correct out of 1.7 i'm definitely doing that unless you're getting hit with the 10 penalty plus your tax rate and i don't think you are i think you're gonna get taxed at a capital gains rate with no i again you're going to have to get some professional tax advice because i'm going to screw this up but yes i unless you're getting absolutely hammered on the withdrawal then i would pull enough out to be debt-free and i would roll the rest of it into mutual funds into the 401k and i would move it into some uh in an individual ira rollover if i can get with one of the smartvestor pros and get online and get with one of our tax pros if you don't have one in your back pocket both of them are ill or the elp for taxes and the smart investor pro for investing they both can tell you exactly what you've got because i can't tell how this esop was set up i can't either and i want everybody else to calm down out there because this is not how these normally play out this is the best version of this story well it's an employee stock option program i mean he stopped and the thing just went bananas it did they got lucky wonderful but don't leave your money in the new company stock any longer than you have to run uber high risk here i want you to get out of that and get into some diversified investments where you can calm your risk down and that way this money's gonna still be sitting there that's right congratulations that's so thrilling this is the dave ramsey show [Music] [Music] so chris hogan ramsey personality is my co-host today matt and jamie are with us in sioux city iowa hey guys how are you we're good dave how are you better than i deserve i see on my screen you're debt-free congratulations thank you we're excited how much have you paid off eighty one thousand two hundred forty three dollars and ninety three cents love it how long did that take roughly 16 months good for you and your range of income during that time um so our primary jobs have us right about 50 take home um and then the um four or five side hustles that we did throughout that time brought us up to about 80. wow four to five you guys are after it good what this of uh debt was the 81 000 uh so it was all student loans and 95 of it was probably me ah how long you guys been married just about a year and a half okay so you get married and you started on this boom just like that huh pretty much when we were doing marriage prep um my sister and her husband who have been married for a few years they introduced us to you um so we started you know reading your books listening to podcasts and we were engaged and then the day after the wedding we got home and drained my bank account um and really just kind of started wow went after it very cool so the side hustles left and side hustles to the right what was the most lucrative per hour the best side hustle um i would say probably i bartended a couple different places i would say the marina bar or even during the pandemic once things were shut down and matt and i were both working from home i started quilting and doing like t-shirt quilts and baby quilts and things like that and i got faster at it so that turned into pretty good you know per hour wage that is fantastic and looking at this so jamie did you kick-start this or did you guys kind of both come together and agree we both really agreed um i think matt um because he was he was kind of the one that was bringing in the student loans um he got pretty intense about it and we started um you know even though we were still engaged and we hadn't combined our finances you know we were doing the monthly budget we were tracking everything we were spending um and so that was kind of um how i had lived i mean i worked 40 50 hours a week during undergrad so i didn't have student loans um and so once we got married we were really on the same page which made it a lot easier yeah that's fantastic i mean when you guys are in this thing together you know people rowing in the same direction get to destinations faster so very proud of you who encouraged you all during this during this time um i would definitely say like jamie said her sister and her brother both of our parents were very much in tune with it as well they were big supporters of us and you know just her and i like like she said we got very serious about this our first year we did not live with heat or ac one day it got to 49 degrees one night and we just we powered through it and now we are currently living in a funeral home to save on rent so we're we're all in on this whole thing so it's it's pretty pretty crazy we got quite a story to tell wait a minute here hold on just a minute are you all working at this funeral home or living there um a little bit of both that's i guess you can count that as one of my five jobs um it's you know it's just kind of as needed basis on whatever they need help with but um i it was one of my gigs when i was in college and then when we moved back to the area you know friends of ours had run this funeral home and they said hey do you want to live there in exchange for some extra hours that you're going to help us so yeah you know hard to turn that down well okay no it's not hey you all are all in for sure yeah you're gonna be killing your grandkids yeah we lived in the funeral home that's how we there's only there's only been one really ghost story so we're doing pretty well for having lived there for a year and a half so we're happy with it wow that's one too many but i'm good yeah all right i'm even more impressed with you all now i was before but now i think i think jamie comes from a family that believes in working really hard yeah i mean her family's been farmers for a long time and when i got there it was um like jamie had already had this figured out on what what work is and what you need to get done and um we need to spend money you need to have money and we don't do much of the spending so that's kind of what i learned and um yeah now we're now we're killing it yeah so what do you guys tell people the keys to getting out of debt are um i would say um to be on the gentle edge of just grow up i would say you have to stop buying into this myth of instant gratification i think that's something that our society has kind of manipulated people into thinking that you know everything is just right there and it's kind of what you said just do what feels good um you know you have to kind of get over that and work towards something bigger and and get rid of that you know instant gratification um that was the biggest thing i think for us because there would be weekends that we would work 40 45 hours in a three-day span and we would make seven or eight hundred dollars but i didn't want to go to dairy queen to spend six dollars to cap off the weekend like we were just kind of so um you know gazelle intense that you know we just really didn't want to break from that um and we really looked kind of beyond that fleeting moment well done well adults devise a plan and follow it children do what feels good you're right yeah that's just absolutely vital so well done how does it feel now that you're there i mean it's incredible we're starting to you know jamie's gonna go to school here again pretty soon and we're already cash flowing that um you know it's just been part of the process she got her master's degree we cashflowed our wedding our honeymoon i mean it's just that's how we're going to start doing things and continue to do things so it's incredible that we don't have to pay student loans every single month that that chunk of change is coming out automatically it's it's awesome to see that the hard work we put in is staying in our bank account and we get to use it how we want to yeah wow proud of y'all very proud of you well done well hey we're going to give you a copy of chris's book everyday millionaires and i'm also going to give you some tickets to the friday night valentine's weekend special where john deloney and rachel cruz are doing a money and marriage event so we're going to give you some tickets for that you guys you guys need a night off i'm just saying wow yeah weekends with bernie and everything oh my gosh unbelievable wow so you guys are impressive so well done you're absolute rock stars i'm proud of you very proud of you all right it is matt and jamie 81 dollars paid off in 16 months making 50 to 80. and uh there's a great place to go when you're broke to work they proved it well done count it down let's hear a debt free scream three [Applause] [Music] [Applause] great job i love it i love it wow all right madison pick up and get him a copy of chris's book plus get him a copy of this upcoming event it is this coming friday february the 12th the marriage and money event with rachel cruz and dr john delony talking to you about the money and marriage connection the communication one of the things we have found over the years for those of you that are married it is absolutely vital that you're on the same page with money it changes your relationship it changes the probability of your wealth building occurring everything it's only thirty dollars twenty dollars was the early bird ticket so it's only thirty dollars a ticket and uh you can enjoy this live stream and uh this coming friday at 7 p.m central no matter what your marriage looks like right now we can help you achieve better unity and communication at the special valentine's edition of money and marriage streaming live to your home friday february 12th at 7 pm and again dr john deloney rachel cruz one thing for sure if those two are speaking there will be humor oh they're going to have fun the two of them are they're just funny we may have to be there to make sure they do what they're doing exactly yeah they got to hit the stuff they just get to cutting up but listen i don't know anybody else that does that stuff no not you and i we are straight laced that's right we stay with the business always we never we never stray never weekends with bernie twice or two or three times an hour here's the deal if you're a part of ramsay plus you better get on over there and reserve your seat because you get a chance to check it out for free it's a part of your membership man check it out this is how it works date night this is how it works i love it this is the ramsey chef [Applause] [Applause] [Music] [Music] chris hogan ramsey personality is my co-host today this is the ramsay show thank you for joining us the phone number is triple eight eight two five five two two five adam is in valdosta georgia hi adam how are you hey dave hey chris thanks for taking my call sure how can we help i'm in a position where um with my career i'm trying to go back to school and get a degree to further my career and i'm in a position where it's possible that i may have to go into debt to get this degree um with my career classes can be transferred over into credit into this specific university online university and there's no way i this only one that moves all the classes i've ever taken into college credits so i'm trying to struggle because i'm i'm doing my debt snowball i'm struggling with handling the debt that i have and trying to stay debt-free for my degree and what's your degree what's your degree field i'm trying to get a bachelor's or four-year degree in business administration okay and how much do you lack um i have depending on how many credit hours my classes for my career move over i have only my core classes so i'm fairly fresh into it so you got like three years of work left yeah i mean right and i could cut i could cut that in half almost if i go to this university because it'll transfer all my career stuff over so you'd have a year and some change left you be in your senior year or late in your junior year correct okay all right and what do you do for a living i'm a firefighter okay how old are you i am 26. okay and so the business degree does what for you it allows me for it's one of our uh requirements for promotion in the future as a firefighter you need a business degree uh as a uh higher level and administration level uh chief oh actually okay yeah it's a further down on my career path yeah all right and how many years before you would be eligible for that um position if you had this degree if i had the degree i would say roughly five to ten years it's rough to say but at least five yeah okay and um how many colleges are in valdosta um three i believe okay yeah three yeah and you're the one you're looking at though is online correct not one of those three no uh this is the only this university or the online university is the only one that moves all my clown i got that part i got that part have you talked to all three of the others i have okay because they are much cheaper than the online yes a fourth aren't they uh roughly yeah yeah so that's what you're doing you're either gonna go over there and talk one of them into this and uh appeal i mean sit down in the president's office just stroll your butt in there and sit down and go i'm getting ready to move everything to an online and pay too much for this degree because you guys won't transfer these credits so we've got to figure out something because this is crazy i would rather keep the money here in our community i'm a firefighter here in this community i'd rather keep the money here in the community and support our local college and it's better for me to say i graduated from this local community and it is by the way right yeah you're not going to go into debt and go online matter of fact i think the online idea is just a bad idea because i think you're paying way too much for the stinking degree that you don't need for seven years right so i would just nix that and i i think you just got to do some politicking on the transfer because the thing these are small colleges this isn't like you're trying to go the freaking harvard and get them to waive your you know accept your credits right this is valdosta state or whatever it is for god's sakes i mean it's not like it's it's not a i'm not putting it down i'm you'll probably get a great education there but my point is you'll have access to people probably that have an open mind oh by the way they they actually want students need students they definitely i'm going to go in there and find out what the appeals process is or who i have to appeal to or who who needs to stroke a agreement an executive order waiving this or i don't know how it works even yeah i wish dr john was here because he would know because it baffles me because even with a community college they will take their credits not give you the grace some some of them but i mean i'm going to communicate adam take the opportunity or the thought of going into debt off the table exactly that's what i want you to do just because right now you've got that looking like it's the only option to you and it's really not i'd much rather you go have that conversation go low and slow as you're going part time and it take you longer to get the degree with avoiding debt we got 43 million people walking around with 1.7 trillion in student loan debt you you don't want to go there yeah and all and a percentage of them whining at the top of their lungs expecting the government to forgive their debt now um we've got the um the lefties you know going bananas on this stuff now and so oh we should all have it forgiven we should know and so you know i'm going to be telling you no no no no no no now the other question that i would bring into play here i understand that you need the knowledge pieces to be an administrator in a leadership position that high that the the business leadership but um i might even challenge that the degree is a hundred percent a prerequisite for you moving up into those roles i think if you could exhibit and show the knowledge that was in place right you probably might you'd be eligible for that as well i i actually have never run into that before but that doesn't mean that you're not correct i'm just saying i haven't run into it and so it does make sense it's logical sense that to be in an administrative role as senior chief of the chief of uh fire chief for the whole county or whatever that kind of a thing that you would need some uh organizational administrative uh skill sets that you would get in a four-year business degree that that's logical to me i'd even have a conversation with the chief there to find out can i enroll in the national guard well or will they pay for it yeah i mean i want to have the conversation on this to find out and understand it more uh but adam thanks for reaching out buddy you can hear it's heavy on your heart you need some more options and to have some conversations and keep gathering information the the trick is as chris said take the debt off the table it's not an option and then from there what are we going to do we've got to find another way to get this goal accomplished and that's what i keep poking out around the edges here what are the options to still accomplish the goal with no debt yeah well and and you know either cash flowing it national guard fire department ships in i don't care it doesn't matter to me i hate that you would pay four times more because you can't get the local college to accept the transfer credits yeah which is illogical by the way on top of that so it means you got a good case as far as i'm concerned brenda is with us in oklahoma city hi brenda welcome to the ramsey show how can we help hi thank you um i want you to rethink if you would buying personal defense insurance because i'm single i live alone and i don't live in the best neighborhood and i've already bought it in all actuality and my son is a firm believer in you he's coming home next month he's helping me go through my budget because he's already succeeded with yours what are you paying for this oh 179 a year and you mentioned he's gonna go um right oh about 30 000 a year that's a lot of money for you and so basically if you pull your handgun out and shoot a bad guy this is supposed to protect you it would because well i actually know the company yeah it's a really good company there's there are some legitimate companies in that space and there are some companies that cover about half of what they say they're going to cover too so um i mean i live in tennessee i i'm a handgun enthusiast i collect guns yeah uh i carry every day um i don't have it and i make a lot more than thirty thousand dollars uh but the biggest insurance i've got is i'm going to run because i'm not pulling that gun out right i'm going to run that's right i'm going to run like like my head's on fire yeah so i i if you want to buy it it's okay with me i mean it's nothing in the world it's a lot of money for you honey and i might think about spending 179 on moving um you know some other things like that there's some other things to look at but i you have the you give the impression as if this is somehow going to fix everything if you shoot somebody it's not it's not it's going to ruin your life [Music] this is the ramsay show [Music] you can be intentional about your character you can have money and a career you are the hero in your story [Music] live from the headquarters of ramsey solutions broadcasting from the dollar car rental studios it's the ramsey show where debt is dumb cash is king and the paid off home mortgage has taken the place of the bmw as the status symbol of choice i am dave ramsey your host chris hogan ramsey personality is my co-host today open phones at triple eight eight 825-5225 eric starts off this hour in erie pennsylvania hi eric how are you hi i'm doing well dave how are you doing better than i deserve how can we help so i'm 19 years old i'm a full-time college student and i've just started um listening to your show i just got my car paid off so i have zero debt and i got into college with a lot of scholarships and i'm also very very fortunate to have a college fund so i will be graduating with no debt i've been working hard throughout high school and college since i was 15 and i have about 24 000 saved up between my savings and investments and my question is should i start contributing to my roth ira or should i wait until i'm out of college and i've started my career man you're a rock star well done yeah congratulations i'm proud of you man very well done um here's the thing you have plenty of time after graduation to begin your retirement investing so if you graduate from school get your first gig your 401k roth there or your roth iras and start from there on you're go and you keep doing that from 22 until you're through your working lifetime you're going to be a multi-multi millionaire plus you are not afraid of hard work and you've been very intentional with your money very wise beyond your years and so if you don't get crazy you're going to be a multi multi multi millionaire because it's the way you're wired up is you're heading in that direction already the best insurance that you have the best income is for you to finish your degree and finish it without debt as long as the degree is something that's applicable and there's a job market for it what are you studying [Music] um i'm studying communication sciences and disorders and i'm going to go for a master's degree in speech language pathology phenomenal excellent excellent so that is going to afford you an excellent income would you agree yes okay so um translation the money that you would put into a roth the end of good mutual funds the money it would make in the next three years compared to what you are going to be worth as a result of graduating with this degree is is not even on the same chart you are a much better investment than a roth in mutual funds are to finish your studies now i understand you've got it mapped out with scholarships and with a college fund that you're going to go through debt free i heard that clearly and i heard that you have twenty four thousand dollars it wouldn't make me mad in other words if you didn't start your roth until after graduation and instead ended up with i'm going to make up a number 50 000 bucks in an account when you graduate you can start investing some of that money then you can use it for transition into your new career and move cities and all that kind of a thing have a fully funded emergency that's like an insurance policy to ensure that eric graduates debt-free yeah and eric what about the masters are you going to be paying for that or is your college fund going to pay for it um my college fund is going to be paying for it it's great i'm actually in a five-year program so i've already been accepted into the master's degree program and i know exactly how much it's going to cost not bad also roll over so um i will be graduating 100 debt free well i'm proud of you buddy and here's the beauty of it while your college friends might be eating ramen noodles you can upgrade okay you got some money uh but be smart and like dave said graduate have fifty thousand sitting there ready for you to jump start life and be just hyper intentional moving forward then eric even if you wanted to park some of it into an investment say like a an index fund okay an s p 500 fund a no load fund something like that if you want to park some of it there and begin some investing that's okay i just wouldn't put it in a retirement product like a roth or a 401k because my big goal for you is to finish this wonderful track you have put yourself on and uh man you've gotten some really good coaching and advice and you you know you're a very very sharp young man great job buddy excellent excellent work angel is in tampa florida hi angel how are you hey good afternoon david chris uh thank you for taking my call sure how can we help well i have two questions one i want to start with i have an rv that i purchased uh and i'm on my baby step two and i it's i owed 55 it's probably worth 45 so my question is in baby step 2 do i just get away or find a way to get rid of it even if i have to carry or maintain some kind of you know balance yes okay yeah what do you make a year uh 72 yeah now this thing's insane what's the payment on it oh it's nuts it's 500. yeah yeah forever 500 months yeah so what yeah you'd you're gonna end up with a ten thousand dollar unsecured loan at your credit union or your bank to cover the deficit that you're in at and because you've got to cover that difference in order to sell it and get the title correct correct or the rv company okay or if the rv company will carry it for you yeah then i would let you do that as well but yeah you need to get rid of it and you're gonna have to cover the difference so but it's better to be ten thousand dollars in death in 55. absolutely and the 500 you've been used to paying that's going to allow you to again you're going to go to that snowball route make minimum payments on everything but the small one and once you chop that down you're coming on down and angel you're going to change your kind of financial situation uh with that but go talk to a credit union or your bank because this has to be unsecured in order to release the title from the rv company yeah or if the whoever you've got the rv loan with if they will agree to just let you sign a note for the difference if you've already got the loan over to your local credit union for instance or over at your local bank you can get them to just allow you to sign a note for the difference and and you pay payments on that and put it into your debt snowball but again it's easier to get out of ten thousand than 55 and and owning a 55 000 vehicle that's going down in value like a rock sitting in your driveway when you make 75 is a mathematical using it twice a year crazy land yeah no it's got to go you got to get rid of it you don't own any rvs i don't why uh i i waste my money on other things i do waste money i mean because i own two boats and two seadoos and that right there offset us rv right and so i mean i got two ski boats but but again they're a very small percentage not only of my net worth but of my income but they are also used and and well um the one when i bought it i bought one of them no no i meant they're used throughout the year oh you're always you know riding around behind that boat all the time but yeah but but i mean he may be using the rv he we don't know he's not using it but um the abode and rv all these things are toys right and there's nothing wrong with having a side-by-side or you know getting a snowmobile or whatever it is you want to get this a toy but all the things that you number one you gotta pay cash for it and all the things that you own with wheels motors and them they go down in value so they should add up to no more than half your annual income because otherwise you have too much juice tied up and stuff going down instead of yeah that's not good pretty simple math formula this is the dave duh the ramsay show [Music] [Music] so cliff and i joined christian healthcare ministries because we really liked the concept of christians sharing each other's burdens and we really experienced that firsthand when cliff was diagnosed with heart disease it was just such a relief to know that financial burden was going to be taken care of chm is the original and longest serving health cost sharing ministry get started today and check us out at chministries.org backslash budget [Music] so [Music] chris hogan ramsey personality is my co-host today thank you for joining us this is the ramsay show the phone number is triple eight eight two five five two two five tony is with us in sioux falls south dakota hi tony welcome to the ramsey show how can we help good afternoon gentlemen thanks for taking my call hey my question is i get a my company leases a vehicle back from me i'm currently on steps four five and six and it's about eight hundred and fifty dollars a month and it the over the last ten years i've used that fund i've just put it in a savings account and gained zero interest on it to buy my vehicle with cash every time and i'm just looking at i'm wondering what to do with that money this time around if it's a money market uh mutual funds savings account what's the best option well if you put it into a mutual fund you stand the probability of it going down in value not just up right correct and i know you say if they're not going to leave it in five years and not go into a mutual fund yeah um this last this last time it was actually about five and a half years when i used the funds well i mean you could you could split it up and you could put half into a s p 500 and a half into a money market and then you're not putting it all at risk of going down if you want to try to let it earn a little bit um the trick is that the system is what's going to save your butt not the fact that you had it invested okay how much money are what you're talking you're talking about you said 800 a month and you're putting it all aside for car replacement right correct it's about ten thousand dollars a year and at the end of the uh i usually run the vehicles to about 200 to 250 i'd like to run them as long as they can yeah and uh let's say over that five year period of time then let's say it averaged twenty five thousand dollars because fifty thousand in five years so it averages median the median point is 25k and so if you make 10 on 25k that's 2 500 uh which does not impact a fifty thousand dollar situation that much okay so what you earn on this money is not as important as the fact that you have a system to keep yourself from going into debt so it would be okay to earn nothing then as long as i'm continuing with yeah because it's the the investment but if you were going to leave it alone 20 years and you left it at one percent well that'd be ludicrous right yeah yeah and tony i mean you've got an opportunity to be able to put half of that aside for car replacement you could throw the other half your cedron four five and six you could throw that toward the mortgage you know the point is you want the money to work for you don't put any more in this car replacement fund then you need to replace the car right and so whatever the schedule is on that and again if you want to just just to dial it up a little bit move half of it into mutual funds and into an s p 500 and the other half just let it ride on a thing i mean let it ride in a money market account but but the whatever you earn on it even if you earn really good money is not going to substantially change your life what is substantially changing your life is you've been smart enough to avoid debt and you have a system to replace these cars as you after you wear them out and you are destroying them because you're the number of miles you're putting on them i mean you're just wearing them out and that's uh your road warrior that's part of the cost of doing business in your world nothing wrong with that but at least you've figured out how to admit it and uh that's pretty cool and you also figured out the 800 a month doesn't cover all your costs so uh they're they're giving you uh some money but they not giving you a company car you'd have been better off with a company car a lot better off all right dave is with us in dallas hi dave welcome to the ramsey show how can we help hey dave i'm uh trying to determine whether or not i should do a deferred income annuity why would you do that well my financial person suggested it because i'm i'm real fearful fearful of the other market crash and she's like well you know if the market crashes you know the he's losing the value of our retirement right now i'm i'm retired uh my wife is fixing to retire i'm 58. how much money is it retired at 55 and uh how much money is it we've got 2.3 and you're fearful that the market is going to completely destroy well not completely but uh you know half and then if i'm withdrawing and where in history have you seen it do that okay uh you're right you're right uh or 30 i guess and where in history have you seen it do that i thought 2008 was somewhere around there no it was half i went from 30 the dow went from 13 to 6 700. okay and it was back in a year right and now it's not 6700 or 13. it's 30 000 right correct okay so unless you have a need for 2.5 million dollars at the bottom of the market you would not embrace the 30 percent loss you would ride it out wouldn't you yes even though i'm going to be withdrawing you know 10 grand a month which is a whole 120 000 a year that's not even the growth okay okay dave listen yes sir listen my friend you are an everyday millionaire you have been intentional in growing this money you're going to be fine i i listen the thing is this okay i understand that the world is unraveling out here in front of us i'm watching it too i'm not disagreeing with you about that but we we dr daloni talks about when we're in a crisis situation or when we're in a situation facts are our friends not fear and if the facts say if there's some actual facts that indicate that we're going to have a substantial market drop and it's going to maintain and it's going to stay down there then we would have this discussion i don't have any of those facts the only thing i've got is i don't like the socialist tendencies that are in dc right now i don't like the idea of heavy taxation i don't like what they're going to do to the economy uh overall i don't think it's going to be pleasant but i don't think we're going to see a market correction of 30 percent i'm 60 i have pulled zero out of the market due to my being upset about the current world that i live in does that make sense yes so while i have those emotions i have to gauge the actual facts of the history to do that so all of that said i'm not sure i would do a deferred income annuity i might do a variable annuity and a variable annuity will give you principal protection and a floor of a minimum gain or a minimum increase in value usually five percent six percent and you're invested in vehicles that are going to make you 10 to 12 on average but if the market really tanked you'd have principal protection and you would have uh uh you know a floor for the earnings and so if if that will make you sleep better at night you're going to pay an extra fee for that variable annuity that you really don't need it doesn't give you anything that you need except that peace of mind that you're looking for so you're paying for that now would i move the whole two million dollars in there absolutely not but but would i move in your case if you still think this through and you still are worried about it uh you know then you know you might move 500 700 in there maybe move a third of your of your net worth into that it's not a bad place because you can put it in good mutual funds you'll still have a similar growth rate you're just going to have a higher expense ratios okay and when you pull money out of it it's no longer going to be taxed at uh well it's it's in a it's all in 401ks anyway isn't it correct yeah you're going to be tax ordinary income anyway when you come out but um oh no oh i'm sorry uh right now no mine's not in 401ks uh all of mine is sort of the majority of mine is in um irs okay but if you have non you see you're taxed at ordinary income when you pull it out of a traditional ira and so when you pull it out of this you're going to be tax ordinary income too so that doesn't harm you much if you're dealing with non-retirement money putting into a variable annuity you're going to change from capital gains taxation to ordinary income taxation which is something else to consider but that's not your case yeah so maybe a third of it dave but the other thing i would do is i'd spend some more time learning about history and let facts be your friends even though we're scared [Music] [Music] [Applause] [Music] chris hogan ramsey personality is my co-host thank you for joining us america you're listening to the ramsay show i'm dave ramsey your host kyle is with us in fayetteville north carolina hey kyle how are you hey dave thanks for taking my call i got a quick question about a little bit of extra money that i got where i should be putting it i say i should be putting it extra towards my mutual funds my wife wants to pay off the rental properties your wife would be right so even if i plan on selling those rental properties when i retire out of the military in four years we'll go and sell them now i could do that okay but they're they're they're still making me a little bit of money and so when i retire i think the key here is a little bit yeah but kyle think about it that same mindset you have of wanting to put the money into mutual funds for it to be able to grow long-term for you if you go ahead and sell them now and take that equity finish cleaning up whatever debt you have and now you invest that now you're on a serious long-term growth plan yeah here's the thing you're not really making any money on these rental properties are you um not real money i mean i'm making close to 750 a month off the rentals and it's paying down the mortgage and you know building equity 750 minus vacancy minus repairs yes yeah so you know really we're talking about three or four thousand dollars a year and you're how far in debt on the rental properties uh total it's four 437. 437 thousand dollars worth of risk to make three thousand dollars a year that does not make sense when you said a little bit of money i knew what you were talking about see i love real estate but real estate is not a good investment the way you've done it because this is probably it has as much chance of costing you money at the end of the story as it does making you money so i think you're both going to get your wish i would sell the rentals now because i don't think they're a blessing and i want you to buy rentals later and pay cash for them in your wealth building journey but not this year and maybe after you get out of the military and maybe after you decide where you're going to settle and all of those kinds of things but right now i'm going to go ahead and invest that money in mutual funds like you wanted to do yeah kyle thank you for your service by the way but i knew dave was about to do a math lesson on you i knew it because i've been around enough and i've heard it and unfortunately you know when we see it for what it is you see those numbers the real way and you start to identify you're only making about three grand a year and taking on that level of risk you can quickly identify that it's not worth it well there is something that has risen up um in the um 20s the 20 year olds 20 to 30 year olds even 20 to 35 year olds right now that we're seeing almost on a moment-by-moment basis in all of our interactions uh with you guys out there through broadcasting and through all the other ways we interact with you uh the positive is there's this tremendous that this generation whatever we're calling these 20-somethings um has this tremendous entrepreneurial zeal in drive and this this this sense to be independent it's not greed driven it's uh initiative it's very positive it really is it's a wonderful character attribute you've got that that's how you got these rental properties and that drive is causing these 20-somethings to do two things and oftentimes poorly because they're doing them too quickly i did this in my 20s but i'm a boomer which now is a put down but it used to be just a demographic but um but uh now i've got old man house shoes you know so there you go but the uh uh the the this wonderful zeal this wonderful entrepreneurial zeal is causing these 20-somethings to buy real estate so i gotta buy real estate i'm gonna get rich in real estate i'm gonna get rich in real estate man when i was in my 20s is when infomercials started oh that was the beginning of infomercial oh yes i'm going to get rich in real estate i'm going to get rich in real estate and i grew up in the real estate business and so i went straight into i'm going to get rich in real estate and i did i became a millionaire by the time i was 26 and uh the other it's driving this bitcoin craze it's driving this gamestop crate yes yes uh the same zeal is driving people to do these things and to get out there and i'm gonna turn i'm gonna do something i'm gonna get something i'm gonna and it's not greed it's the spirit on it i mean the my discernment says it's not greed it is initiative it's it's a positive ambition but what caused what happened with me was i bought real estate that i couldn't afford i leveraged it i used totally borrowed money and i ended up with 4 million worth of real estate that i owed 3 million on so i had a million dollar net worth but it wasn't cash flowing and i was flipping it and it was barely cash flowing like his is barely cash flowing this is why i know this math because i lived it right because i did the same thing only i did it with more zeros on the end it wasn't 400 000 is 4 million and it took me down because the bank got uh sold and called our notes and uh then i and i didn't have any cash i was not in it i had all these assets but there was no cash [Music] and when you do that with real estate is when you're gonna go broke not when you're gonna make a fortune in real estate and so real estate that does not have margin is not a blessing it's a liability and investing in things that don't have margin or that are a high risk gamble play is a misuse of your entrepreneurial ambitious zeal and so i love the zeal what i want to do is channel it with some wisdom and a process some wisdom yes and that is slow down a little bit yeah and pay cash and don't invest everything you have in super high risk crap um i mean and i i know there's stories of people making money in bitcoin i know there's stories of people making money with gamestop we talked to one here on the other day i'm not saying it can't happen but i know stories of people make money at the roulette wheel too that's right i know people that made money on wheel of fortune but that doesn't mean our jeopardy i've got personal friends that that won uh and they won 50 000 bucks or something but they didn't change their career to be game show operators right and they didn't put everything they had that didn't push all their chips to the center of the table on one hand of cards and that's what we're doing when we go into highly leveraged real estate into businesses with no margin or high risk investment plays and we act like it's a freaking game right because we put all the chips in the center table now if you've got a small percentage of your chips and you're going to lose those and it doesn't kill you that's different i don't even recommend that but i'm not going to make fun of you for that right i am going to call you out on the other because this this you know it leads to uh bad critical thinking that okay real estate's a good investment so all real estate no matter how broke i am is a good investment that's right that's bad thinking skills it is and that's what happened with in the 90s with day trading uh it's what we're seeing now with bitcoin and gamestop uh but i'm gonna tell you something dave i'm getting these callers calling in these millennials on my show the chris hogan show that are saving and investing and following the plan and the trail is the foundations course they took in high school that they were either financial peace babies where their parents went through it taught them or they went through foundations and so they've got this learning foundation literally where they're thinking and following the process yeah it's encouraging i had people you know when i'm doing real estate deals i had people that thought i was a genius when i was buying all that real estate um except the old people and the old people that had money kept looking at me going son you're too leveraged you got no cash this is going to catch up with you you're going to get a spanking you're going to get it and i kept going oh you're this old you don't understand this is a proper use of capital markets and i used all the cash flows you know i've got great internal rates of return i have no cash right no liquidity i couldn't buy a freaking loaf of bread you know but i got four million dollars in real estate and so this idea that you can throw around all your arrogant little terms and all they show is your immaturity they don't show that i'm a dinosaur they show that you're a child that's all it shows and so the thing is use this ambition this movement which is so positive in this generation in a slower more methodical cash basis way with high margins and then you're going to learn love real estate i got a bunch of real estate and i want you to have some too i just don't want to have you there it is [Music] [Music] [Music] well tax season is here i know that's exciting oh goody dave thanks for the help the reason i want to say that listen you got to do your taxes early the reason you do them early not in march or april is because you're going to be under far less stress and less stress means less mistakes plus if you actually owe taxes filing early means you can start saving or being ready to file early even if you need to if you need to save up and wait until april 15th actually pull the trigger on the file you'll at least know what the target is right if you need a tax pro you need to get with one right now before they get busy you get busy you know this is the sooner you reach out to a tax pro the better and that way your taxes get done way before the deadline and then you can decide a strategy for this year and what you need to do text the word tax pro to 33789 and we'll hook you up with one of our tax endorsed local providers text tax pro one word to 33789 and you'll find a tax pro that chris and i and all the ramsey personalities endorse and think are awesome seriously clemmy is with us clemmy is in uh atlanta georgia is it clemmy is that correct yes sorry how can we help hey how you doing fellas hey so i've got a question i'm in a job um that i love and with my uh career trajectory um i plan on i'm assistant manager at the retail store and within the next year or so i'm going to bump up to a store manager and write that out for another five years and stay with the company and go to um corporate office after that but my quandary is that i have credit card quoted to me and it goes against everything that i believe in and i have to push these get stored credit cards and i'm having a hard time um doing my job effectively and also and also i don't want that to um hinder me from moving up within my company so i'm at a loss of what to do in this regard how long have you been with him uh since 2016. so i'm we're going on five years what do you make i'm almost 60. how big a knot is in your stomach well listening to you every day doesn't help [Laughter] sorry about that i'm really brother something i don't believe in him let me listen brother my friend i crossed that same path and here's the reality it is truly a matter of you coming to understand that the skill set that you've been blessed to have the way that you work the way that you serve customer service and sales that same skill set can be used elsewhere without you having to have a conflict of what you believe in and it's going to require you to have that thought process before you gain clarity and i would tell you what i did was i started to write down options where where else can i go and help people and serve well without having to do something i don't believe in and i'm going to tell you in that industry it's not going to go away you're not going to be able to miss this in order to move up you're going to have to embrace it and and not only embrace it do it well so that's where you're going to have that crisis of kind of internal conflict you're going to have to change industries but that doesn't mean you can't still can't serve people now here two or three things come to mind one is you've got a detailed career path laid out in your mind with this company so you're not abandoning a 60 000 your job that you hate no you're abandoning a dream that you've had yeah yeah if you leave this company and that's going to be very hard to do that's why this conflict is so real and i'm not suggesting that you have to do this on principle you're calling and saying that the principles are that you feel like you're in conflict so one thing is i think you need to it's going to take you a little while and you don't have to panic and you're not stealing from you're not stealing bubble gum from little children i mean this is not you know you're not you know you're just doing something that you don't feel good about that you wouldn't do for your own kids you wouldn't do for your mama and you know so you're violating your conscience in that regard and so but but it's not you're not you're not doing anything illegal and you're not doing anything immoral uh so i would take my time and work my way into a new dream a new career path that uh that i can begin working on and so you know embrace some of ken coleman's materials at kingcoleman.com and you know the proximity principle book will give you a copy i'll have madison pick up and give you a copy so that's kind of thing one is there's a real emotional process that probably is going to take more than 10 minutes okay if they came in and said you had to do something illegal that would take you about a minute and a half to walk out the door right absolutely but but this is not this is not that situation this is just a this is a rub is what this is but it's a rub it's like chris said it's not going away now the second thing is to embrace what chris's portion of advice was one of my favorite books on business that i've ever read is by our friend rabbi daniel lapin and it's called thou shall prosper and rabbi lapin as you can obviously guess is a jewish orthodox rabbi and the book is the 10 reasons that jewish people have had a tendency to prosper throughout history beyond the population that they've been installed in and so for instance uh three percent of americans are jewish 67 percent of the forbes 400 is so these are 10 principles we all want to know right those of us that aren't jewish but rabbi and i have become really good friends over the years and one of the 10 principles is that over a long period of time it is almost impossible for someone to prosper doing something that they don't believe to be morally correct yes so it's going to be very difficult over the next 10 years for your dream path to actually occur because you have this other you know knot in your stomach and you know and i'm sorry i put it there but i'm glad you recognized it i mean i i again i'm not pounding my fist and yelling that this company is horrible or something they're just a retail company selling credit cards they all do and my goal is that one day uh enough americans wake up and realize that the credit card is basically the cigarette of the financial world that companies like this quit doing that because the public pressure forces them to like the public pressure is forced to change in smoking you know when i was growing up you could smoke on an airplane a metal tube with people in it full of smoke i mean it's just amazing in the air it's just and the funniest one was when they went to no smoking sections yes as if as if as if the magic you were exhausted it's like the no p into the pool i mean you know it's like it doesn't go to the other end of the pool come on and so um you know but anyway that you know that's what's going to happen if as we continue to have more and more and more people understand that living debt-free is a fabulous way of doing it it really is and clemmy i'm going to tell you that little knot that you have right now is only going to continue to grow so i i am too but i'm excited for you the thing that that i got to was that it was a matter of the lord had something else for me to do and so having that awareness as dave said you do shift the dream but you do understand that you're still able to serve people and use the skill set you've been blessed to have and that you've polished and so again we get ken's book we're going to send you a copy i want you to read it but start to lay out options and i'm proud of you for reaching out and talking about this uh early on uh it was something i struggled with before i reached out to a mentor to discuss yeah i think the options is a big deal when you've got a new dream that is as detailed as your current dream oh man oh game changer in a different area that's not going to cause you these knots in your stomach yeah then making the change will be easy right now the idea of making the changes going from this dialed in path to nothing yep and that's not a jump anybody can make emotionally if you're wise your emotions will stop you from doing that and they should so take your time and let's get a new dream detailed out a new path that says i'm going to work here and then i'm going to be a store manager and then i'm going to be original manager and then i'm going to work in the home office and whatever it is i mean you had it laid out i mean you got it dialed in and uh but i i wish i could tell you that the big box whatever it is uh retailer home depot they'll wake up uh lowe's uh whoever it is you know walmart whoever it is i don't know who it is that i wish i could tell you they were going to quit pedaling credit cards soon enough for your dream to come true but they're not no they're not um targeting we're going to keep working on them at ramsay though yeah we are until we bother them enough that enough people start to realize that i think we can change and create a whole movement i think we are we are we are going to create a home this is the ramsey show [Music] so [Music] this is the ramsay show [Music] you can be intentional about your character you can have money and a career you are the hero in your story live from the headquarters of ramsey solutions broadcasting from the dollar car rental studios it's the ramsey show where debt is dumb cash is king and the paid off home mortgage has taken the place of the bmw as the status symbol of choice i'm dave ramsey your host chris hogan ramsey personality is my co-host today open phones at triple eight eight two five five two two five that's triple eight eight two five five two two five jacob is with us in danbury connecticut hi jacob welcome to the day to the ramsay show how can we help hey dave chris uh thanks for having me how are you guys better than we deserve how can we help um just got a question about a 401k investment retirement investment right now i have a traditional 401k and i'm looking to go to a roth 401k i just have a question on the best way to do that if i have to do it all at once with the taxes or if there's a steps i can take to kind of cut down on the amount of i have to pay out yeah well the first thing is just stop doing new except roth let all your new contributions be roth from this point forward that's step one okay now how much is in your 401 k in the traditional uh about 50 000 right now okay and what baby step are you on i am on data step four okay then i would not convert the 50 000 until after your home is paid off okay because it's gonna create about twelve thousand dollars in taxes and i would rather you use those twelve thousand dollars for your five or six baby step but later on when you're in baby step seven and you scratch up some extra cash then yeah go ahead and flip it uh flip it on over into the roth at that point but uh it won't hurt anything for it to sit there and grow as traditional for a couple of years while you get the house paid off okay um i i do have another question about mutual funds um right now i do have a portfolio it's kind of a slow growth i'm just wondering what the best mutual fund that you would recommend to invest in non-retirement non-retirement why would you have non-retirement um i don't know if if it's something that i may need to pull out of it or how much is in it i have about seventy thousand what's the balance on your home about seventy huh i think we just found a use for it jacob did you feel that that was a seismic shift right there for you buddy you have an average what do you make a year uh well this is actually the first year with a bunch of overtime i just pulled in about 120. way to go man and your debt-free house and everything i'm so proud of you game-changer jacob yeah seriously brother hey man cash it out pay off your house now let's take that house payment and let's uh save up twelve thousand dollars and convert the rest of that 401k to a roth and then let's start maxing everything out and uh then let's just start piling up some cash and being unreasonably outrageously generous you are so cool man he is seriously i mean a young man that has listened and followed the principles uh is about 100 desperate i mean for the most part mostly you know but now he's got a chance to kind of right the ship and get himself from moving in the right direction so for clarification for those of you that are just kind of in the middle of you know what a baby step is but you're not sure about the nuances whatever money you have in anything that is not in a retirement account should be liquidated and used for whatever step you are on yes step one's a thousand dollars two is debt-free everything but the house three is an emergency fund four is 15 of your income going into retirement five is kids college if that's if that's applicable if not we head straight on to six and pay off the house that's how i did that right but non-retirement accounts dave can look like what a brokerage account a mutual fund investment seventy thousand dollars with a seventy thousand dollar mortgages an inheritance all of these things yeah yeah the money is sitting there from you got some stock your grandpa gave you you got seven thousand dollars in savings bonds that granny gave you you've got five gold coins that you don't that you don't even know how you got them or why you got them or i don't know what it is what have you got that is just sitting around it's an investment use it for the baby step that you're on because the shortest distance between where you are today and wealthy and outrageously generous is walking those baby steps exactly and as quickly as you possibly can don't change the recipe okay any times people tell me chris you know i'm following baby steps ish i'm doing ramsay-ish i'm like stop doing ish and do it yeah follow it to a t we've had millions of people get help why are you overthinking the wheel it works hey we're even walking with our thousand team members this year yeah our internal vision for the year is to walk the talk and so everybody's going through financial peace university again we're dialing in so that our own team members are not doing ish that's right and uh we're even doing t-shirts issues of wish hogan's got hogan's saying on the t-shirt issues of which i like it but seriously got an opportunity right now where you are uh to make a decision and if you're not a part of ramsey plus i'm telling you right now get over there we are adding more information and more content at all times you have an opportunity to get connected with the events that we have via live stream because you're a member of ramsey plus so text the word trial to 33789 again the trial is the word text that to 33789 and come on in yeah if you're brand new the thing is that he he's right that we've got this whole thing we just installed it's in about in the last six months or so where the first 90 days we give you small consistent wins not just the baby steps but every little detail leading up into a baby step small consistent wins these add up to big results and better habits and that means you're going to get where you want to be faster so free trial by texting the word trial 23789 now if you're a member by friday night we've got the money and marriage event friday night and it is 30 if you want to watch it as a live stream rachel cruz and dr john deloney talking about marriage and money it'll be fun funny and informative uh great holla a great valentine's day gift but if you're a member ramsey plus it's free yup most of our live streams are free to ramsey plus members in addition to financial peace university in addition to premium version of every dollar all of that's all wrapped up there to make sure you get what you need and that we're able to walk with you and show you how to do that but the trick is there's kind of a spillover effect you know like one of those water wheels coming around as the water fills up one area it moves one more time spills out that's how the baby steps work it does any of the water that you've got you put it in that bucket yeah until that bucket's full and it spills over the next one move on and then any other water you get whether it's from your budget or the gold coins in your safe or you're gonna sell i don't know grandpa's whatever i don't know what it is this thing you've been hanging on to it really is not an asset it's just sitting over there on its butt looking at you and the only thing we don't do is we don't cash out retirement to do that because of the penalties and the taxes are so heavy and it makes it just it takes the fun out of it i'm telling you you got a great opportunity change your future change your mindset and if you change your mindset i'm telling you you can change your life yeah so come over to ramsey plus check it out jacob's in a great place yes he is he's debt free house and everything you just helped him if he does what we told him to do he better follow the directions jake today jay right now don't make us come to connecticut please no it's cold i can't go up there i can't go please don't make me nope i'll text you please i don't i'll do anything i would almost pay off your house to keep from coming not really [Music] [Applause] [Music] [Applause] what makes our show unique is that we genuinely care about our listeners we're intentional about choosing the best advertisers to recommend blinds.com is no exception they offer high quality window treatments at unbelievable prices and they make it simple to shop blinds shades and interior shutters with easy online ordering free shipping and a guaranteed perfect fit go to blinds.com and take advantage of this week's special savings [Music] [Applause] [Music] [Applause] [Music] chris hogan ramsey personality is my co-host today we invite your calls at triple eight eight two five five two two five our question today comes from blinds.com find out for yourself why blinds.com is the number one online retailer of custom window coverings you get free samples free shipping and with the new promos they run every month you save even more use the magic word the promo code ramsey all right today's question comes from dave in kentucky uh he says i lost my wife in december of 2020 my goodness i have an eight-year-old that will start receiving survivor benefits of 858 dollars per month from social security by the time she reaches 18 the total of those payments will be around 100 000 what would be the best thing to do with the money so it earns interest and is worth more once she's 18. wow well i'm dave i'm so sorry to hear about your loss my friend um that's tough and i can't imagine uh what you're going through i hope you got a good church and good friends around you but looking at this this dollar amount this 858 survivor benefits coming in this has got to become part of your budget uh you're going to use this to raise your daughter yeah what whatever whatever baby step you're on and if you'll follow the stuff we teach by the time she's 18 you'll you will have fully funded her college fund and she'll have a lot more than a hundred thousand dollars and you will have become wealthy over that 20 years and she will have a lot more than a hundred thousand dollars and so there's not any moral ethical nor legal obligation for you to set this money aside in her name you spend more than 858 raising a kid a month anyway and so just put it into your budget and work your budget because we're counting on you to be a great dad and anytime you work your budget it is for the good of you and your family yeah and so your daughter is going to more than benefit far beyond what the 858 dollars would have done right by you doing the right thing people struggle with this child support i should set it aside right no it's all part of the budget because you spend more than those dollar figures on kids anyway yeah just to raise them yeah no without a doubt i mean the percentage of the the roof replacement the percentage of the electric bill the percentage of the insurance that the kid rides in the car the cost of the car the value of the loss in the car the kid is receiving the benefit of all of that and this is called raising your children in a family it's what it is and so mathematically you spend a lot more than that on the kids portion of your life yeah and so there's no you've done nothing wrong uh by not setting it into a separate account and as a matter of fact setting it into a separate account i think would be wrong yeah it's the improper use of it it's not the most efficient use of the money so good question natalie is in canada hi natalie welcome to the ramsey show hi dave thank you for taking my call um i'm trying to figure out a few things but the main thing is whether or not to uh try and get my husband on board with selling our house i've brought it up a few times but he really doesn't want to sell it at a loss we moved a year ago about an hour and a half away from his current work he planned on getting job job around where we live we live in the middle of nowhere um with the intention of being able to grow our own food and just be out in the country again where we both kind of grew up and um anyway it hasn't happened yet he's trying but it hasn't happened we just realized we were expecting another so we've got one toddler and another on the way um so he has a job it's just an hour away an hour and a half yes so he's traveling about three hours a day but the income is uh he takes home about uh 31 000 and some uh 30 almost uh 31 200 a month and um we don't have any um uh real issues exposed with spending that we're aware we don't you know we don't have any money subscriptions we don't have any money no we don't have any money thirty one thousand in the three hour drive a day i know where your money and babies i mean you're only any money no i i don't know how to convince them we're we're both believers um unfortunately because of covet all the churches are shut down the one we did get to know it's closed now and we really haven't developed any sense of community around here how much do you owe on the home natalie okay uh so so far we have we oh it's around 280 000. okay uh it was 300 just under 350 000 when we lost how are you making a payment on that making 31 grand well we're losing we're leaving every month how um we yeah i would guess how much is your house one thousand payment hundred and eighty three dollars and how much do you all have in savings right now oh we're burning through it uh we've probably got yeah right now brought a thousand nine hundred left to our names in liquid and you're burning how much no um we are burning i wrote this down too got all kinds of papers in front of me um two thousand seven hundred and seven dollars and forty so you don't even have a month left not really no not really i mean two thousand over nineteen hundred you don't have any money left yeah i don't know what to do i don't know what to do um i'm trying to say okay i i don't know let me okay i'm a little bit confused let me let me stop i don't want to uh i don't want to take your side and jump all over him right now but that's how i'm no no that's how i'm feeling i don't like well because this is absolutely asinine that you guys have let this that you've let this burn down to this y'all should have been out of there six months ago i agree and so i don't i don't understand why we're in denial about math what's his problem he doesn't want to show that a loss i don't care he's going to lose it to foreclosure i know but you said you bought it at 350 correct and it's now you 0280 so what's it what do you think it's worth now i wish i knew we haven't gotten the price okay so here's the steps i think in sitting down and really sitting down with him hold his hands and i want you to schedule i've scheduled a real estate agent to come over here tomorrow night because tonight we're about to have a come to jesus meeting the math is over we cannot that we cannot pretend anymore you've got your head stuck up something i don't know what it is and it's got to come out yeah this is ridiculous and put put his hand on your belly and let him know you've got another baby coming this is crazy time time is at the end i have i have he's even finished your book we bought your book on amazon he read it he's so excited so gung-ho he's not going to look for more jobs now but it's it's just it's not about jobs it's about this house is gone yeah yeah yeah it's gotta be it's a three-hour drive with a pregnant wife who's scared and he's out of money this house is gone sell it before you lose it yeah what do we do do we rent or um you move to town and rent when we went there it was eighteen hundred a month you're gonna have to get other jobs but listen what your your little dream of living in the country and growing veggies has turned into a nightmare yeah yeah i know and so something's got to change we can you cannot stay where you are yeah it's not going to work now then the only question is where are we going right and you got to start figuring that out as a next step but this i i i don't know what you were waiting on were you waiting on the housing ferry to show up i mean it's not this isn't you know unless you were going to have an income all of a sudden start appearing that's double yours yeah it's not gonna work this is not gonna work it's not just and so natalie the urgency you hear in our voice is that we don't want you all hanging out for another two to three months you don't have that you're never gonna come get the house yeah you don't have that time so i would much rather you all make a proactive decision reach out to your lender have a real conversation get the real estate agent the real estate elp over tomorrow you are moving yeah voluntarily or otherwise you are moving much rather you be in control this is where you are and so let's face it and decide what we're going to do where are we moving because we're moving this house is gone i'm so sorry i'm sorry you guys have been through this but you've i you got to deal with it you cannot you cannot not deal with it anymore [Applause] [Music] [Music] chris hogan ramsey personality is my co-host today the phone number is triple eight eight two five five two two five drew is with us in chicago hi drew welcome to the ramsey show how can we help hi how are you great it's a pleasure to speak with both of you too um so uh my wife and i uh have been davish for years uh last march i was able to get my wife uh 100 percent on board uh i'm sure the pandemic had a little bit to do with that so we started using the every dollar budget uh which allowed us to pay off our uh only vehicle loan um got rid of all the credit cards that we had wonderful um cash flowed three kids uh braces uh and we've got a fully funded emergency fund now how does that feel ah it feels fantastic good fantastic how's it feel to hurt her i'm sorry i said how does it feel to her oh she's she's wondering why we didn't start it earlier it was your fault say i told you so it was your fault drew i'm sure i'm not i don't know exactly how but i'm sure it was your fault drew do not say i told you so that's that's never going to work right all right good good so um so we have college coming up i have uh my three kids are 15 excuse me 17 15 and 14. we have 27 000 left on the mortgage um and uh based on uh some advice you just gave jacob a little while ago um i think part of my answer uh question was answered um i i do have a non-retirement brokerage account that i had seventy seven thousand dollars in so i'm basically i was trying to figure out what to do with that should i pay off the 27 000 mortgage should i open and fully fund uh two roth retirement funds for my wife and i um what's your household income um uh it's it's right at about 175. excellent okay so here here's the here's the uh the hinge pin mathematically for your whole situation that'll set you guys free you need to sit down and map out for all three kids what you need what they need for college and how you're gonna do that and when you see that number and you see how you're gonna do it it's gonna set you free to do the other stuff because here's what's happening if i'm in your shoes you tell me if i'm wrong but i think this is what how i would be feeling if i was sitting there i got this brokerage account i got a 27 000 mortgage i could easily pay it off today um and i need to get my iras funded but god those kids that's coming at me like a freight train right now that that that big college bill is looming and i don't know what it is and i'm a little bit afraid if i pay that mortgage off and i start my 15 baby step four into retirement that i'm not going to have the money for college right and i do you feel that way you have uh i do i do i i now i i do have uh a 457 through work good um that that i have uh 150 about 150 000 it all right so tell me the ages of the kids again uh 17 so uh she's a junior um so we've got a little over a year and a half um uh 15 these are freshmen and then 14. so so i have that uh 457 also and they uh my uh employer just changed the management of that 457 and as for the past many years um they didn't offer a roth uh option and now they do so i've stopped putting into the regular i've opened up the roth but it's you know so i still have the okay here's what i'm gonna do if i'm in your shoes all right i'm just going to throw some numbers down just for the fun of it but i want you to go do a formal version of this with your wife okay let's let's say we research the kids college and a hundred thousand dollars will put them through each i don't think it will quite but i'm going to use that number for a minute okay so over the next four years because i've got a 14 year old i need 300 grand that makes sense yes i make 175 and so if i did four into 300 that'd be 75 a year i can cash flow that right yes you see how having the numbers helps you relax a little bit so i know seventy five thousand a year for four years and or a hundred thousand dollars a year yeah for four years you can cash flow that now a hundred percent of the time i'm going to write a check tonight and pay off your mortgage knowing that i can get there because you've already got 50 of your 300 to 400 that you're going to need 77 minus 27 is 50 right yep right okay i got 50 of it now the only question is in order to cash flow it am i going to have to tap the brakes a little bit on my retirement in order to cash flow college because i got college right here on top of me of course the kids are gonna go to school they're gonna they're gonna take uh act testing and they're gonna take it again they're gonna apply for scholarships we're going to affordable schools we're not going to uber expensive schools you don't have the money and you're going to go to you know something you can afford but even having done all of that you're looking at a three to four hundred thousand dollar bill over this period of time yeah roughly andrew once you do this you've got your mortgage payment now freed up because you paid off your house yeah so the only question that remains is how much retirement am i going to be able to do while i'm cash flowing college for the next four years actually right so there's one uh wrinkle there too i i also will be receiving a pension um of probably right at about a hundred thousand when you retire or a lump sum yeah no when i retire oh but we're not retiring anything i'm saying way down the road yeah because when the kids are through school you're gonna load retirement when the kids are when the kids are through school you're gonna load up retirement yeah because you you've got that money so you can do this you're going to be good buddy now what you have to do is stay allergic to stupid from now you got to map it out and you got to map out the kids school yeah and and have some firm discussions starting tonight on where you're going to school where you're not 17 year old yeah i mean this is this is real but i'm writing a check paying off the house i got 50 started towards my three to four hundred thousand dollar need over the next four years before the last one starts school but we really have a total of eight years to spread it across so this makes it even more doable so you can map out the actual cash needs so the 17 year old starts i need this much cash this year right so you got your one out of your 50. you probably got year two out of your 50. now the 15 year old starts school and you got three and four for the first one and you got the second one right and you're going to end up with uh two in school for quite a few years at the same time but you can map that cash out and and out of your cash flow in your budget again with a reasonably priced education and you're going to be able to do that and then back into how much can i put towards retirement out of that and paying cash for school so we're going to have the discussion with them about that and we got but if once you map this out it's going to give you a ton of peace just like when you started doing a budget you felt like you got a raise but all we're doing is we're mapping out the next eight years which gets the 14 year old four years starting school four years to finish school yeah and now you're not guessing you're not you don't have this thing looming over your head where you're wondering you can sit down and actually know and once you put a dollar amount to it now you can put a savings plan toward it yeah this will work this will absolutely work hold on i'm gonna have kelly send you a copy of debt free degree number one bestseller by anthony o'neil and you guys need to read that and the kids need to read it uh is it'll help you understand that you can get a degree debt-free especially when mom and dad are 100 that free house and everything and make 175k ding ding it's doable it's very doable but we got to plan it out we got to think about it and you can't you're not going to no one accidentally wins the super bowl it doesn't happen we noticed that the other night this is the ramsey show [Music] [Applause] [Music] [Applause] [Music] [Music] [Music] our scripture of the day ecclesiastes 7 12 for the protection of wisdom is like the protection of money and the advantage of knowledge is that wisdom preserves the life of him who has it john zinger says great leaders are not defined by the absence of weakness but rather by the presence of clear strengths i've never heard that one that is a good that's a good one that is a good one chris hogan ramsey personality is my co-host here today david is with us in houston texas hi david how are you you know i don't know whether to say better than i deserve or focus but not finished i'm doing pretty well that's a pretty good hogan impersonation there that david i'm gonna give you an a on that one okay thanks hey um i've got a question for y'all uh i'm 30 years old married i have uh two kids three and under with one on the way and i am blessed to be debt free except for a mortgage um we got about 125k left to pay off on that um kind of a back story is you know i grew up kind of as an fbu kid my parents did it back in 2006. i read your book dave total money makeover in 2008 and we did fp as a couple in 2013. but i'm kind of struggling now with baby steps and burnout now we're on baby steps four five and six we purchased our home in 2015 as a double income no kids and then in 2017 uh my wife quit after we had our daughter in the middle of hurricane harvey and uh took a big pay cut there to about 70k then i was blessed out of promotion before i i got a 42 pay raise in 2019 so now i'm making about 110k um so my question i guess is you know with all the things that i found the more money i make the more things that they pay for whether that's 529 for the kids home insurance life insurance property tax etc so how can i keep my eyes and our eyes on our financial goal without running out of gas during dates four five and six well the first thing that comes to mind is baby steps one through three are gazelle intensity and four five and six are not you move from intensity intensity to intentionality on for on four five and six so four five and six involves a budget for a vacation it involves a budget for an upgrade in vehicle it involves a budget for you're running a marathon here you're not running a sprint and so you're not on beans and rice rice and beans and you make 110 000 you've done very well in your career well done you're putting 15 percent of your income away you don't have any payments but a house payment you've got an emergency fund in place you have a very reasonable house mortgage and you got some kids and you're funding a 529 but you're you're slowing into a rhythm run now you're not doing speed training it's a marathon and i think you're still have the trying to run the emotions at least if not maybe even trying to crank the math down uh as if you were still on gazelle intensity that'll burn you up you can't do that yeah and david you're also at that stage of life where you've got all of these young kids you got another one coming so you're feeling the pressure and the strength you're gonna get out yeah along with them from home along with lack of sleep are you working from home too yes sir oh yeah man so you let's let's be honest the mindset on the financial side is they've said it's a mindset it's the intentionality factor but what you're feeling is the stress and strain from the other things of life and i want to tell you as a former master isolator because i was perfect at it i thought you don't want to do life alone and so you want to get some good guys around you you want to have a connection and a relationship to talk about the stresses and strains of the kids of the pressure uh it's one of those things where we're not meant to do life alone so you need some community yeah and you know it's the stage you're in oh yes i mean you've got uh there's not a lot of traction mathematically with where you are in these baby steps and the kids just keep piling up here and you're just like i'm stuck and he doesn't get to leave he's working from home yeah yeah there's a lot that's a lot you know you're i think just saying all that out loud oh helps with the idea of burnout that yes a normal human being in your situation would be stressed yes so if you are stressed you are a normal human you are normal you are not a psychopath no and if you were just clueless then i would tell you i'd worry about your mental health you are feeling exactly where you are right now in this season brother we'll get you out of the house and working yeah that'll be helpful it will and we get the baby here the last one that'll be that'll be gonna be the the that'll be helpful yeah and you get into you know but you're not going to see one of the frustrations that we've watched people experience and i guess we've all experienced that walk these baby steps is that you see such huge chunks of traction in the first three yeah and then when you go to four five and six it just slows down yes and it's the long haul this is a it's a five seven year ten year slog that's just a thought and we're just that's why we budget in there for the upgrades and some of the other things as you go along you budget right for this or that and um you know if you need to back off on a 529 just a little bit in order to breathe have a fun fund yes a little bit while you're here this is the time that it's appropriate to do that i just want you doing it on purpose and i don't want you to fall into debt right because you take your take your eyes completely off the ball so you go from intensity to intentional yeah and that's where we want to be and david just like the seasons of the weather this season too will change my friend it really will just hang in there with your wife make sure you guys relationship is connected get some coaching if you need to or some counseling if you need to but get some good guys around you so you can do life with them because you got other fellows that are feeling the same thing you know it's weird it feels like it's yesterday in some ways and in some ways it feels like it was a hundred years ago but the year rachel was born we filed bankruptcy we had no money that's why you filed bankruptcy and i got a toddler a marriage hanging on by a thread i'm working from home and i'm broke i got no money and um you know sharon was to say the least overwhelmed she wanted me away she didn't want to look at me to start with that's pretty disgusted uh valid valid but uh you know i mean we went through a similar season uh but much worse yeah in the sense of there was not money for uh the electric bill and there was not money you know we're i mean we didn't go hungry literally but we were broke we had no money and i had to go make money every week in order to just pull things together and i got little babies my self-esteem was destroyed my marriage is on the rocks i mean it's that was a tough tough season and so it feels like when i talk about it it comes up in my throat and i remember it like it was yesterday but it was you know 30 years ago so uh in that sense david you're in a similar type thing but much better and i'm not saying yours is that your your feelings aren't valid they are valid right uh but you're just that that's what that those young that young kid stage of life they suck they suck the marrow out of your bones yes emotionally that's what they they're so needy takers we love them they're cute as they can be but that's why when i have all the grandbabies over i mean that's how i send them back home that's why i send them back home because i love them but they need to go home have to go home you know and it's just they you know when you're when you're six months old and you can't do anything for yourself you're all you are is a taker man i mean we love you you're cute as a button and uh papa dave's gonna bounce you on my knee but um but they they do they pull the energy out of and the math out of everything and and so it is valid to feel that it's not really a burnout it's more of a i'm not getting traction yeah fatigue it's a fatigue it is a fatigue yeah it's a mental it's a math fatigue an emotional fatigue a spiritual fatigue a relational fatigue yep and uh so yeah just own that and and say that that's real get some guys guys of young families around you like chris suggested yeah form your group of guys get out of the house yes go to the store and just walk around go in the backyard and hit a tree with a stick i don't know do something man i mean that's get out of that house yeah let your wife get out of the house too take turns take turns yeah for god's sakes yeah budget for a babysitter that's a good thing yeah i mean i'm with you brother that's what we're saying but you'll get through it and you can still hit your baby step yes you can just don't let this cause you to fall off the horse that puts this hour of the ramsey show in the books we'll be back with you before you know it in the meantime remember there's ultimately only one way to financial peace and that's to walk daily with the prince of peace christ jesus [Music] you

Channel: The Ramsey Show - Full Episodes

Views: 56,198

Rating: 4.871397 out of 5

Keywords: dave ramsay live, dave ramsey, dave ramsey channel, dave ramsey live, dave ramsey live show, dave ramsey live stream, dave ramsey podcast, dave ramsey radio show, dave ramsey show, dave ramsey show full show, dave ramsey show live, ramsey, ramsey solutions, the dave ramsey show, the dave ramsey show live

Id: 5naMPdvtdEU

Length: 121min 15sec (7275 seconds)

Published: Wed Feb 10 2021