You Are the Problem AND the Solution to Your Money Problems!

[Music] [Music] 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 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 you jump in we'll talk about your life and your money it's a free call and some say the advice is worth what you pay for it flying solo today the phone number is triple eight eight two five five two two five that's triple eight eight two five five two two five melissa in new york city starts us off this hour hey melissa how are you hey thank you very much for taking your call it's been much appreciated absolutely how can we help okay i have some um i might have some you know for me it's exciting but my husband's going to be retiring and he has the final papers to fill out and i figured you're the best person to ask his question he's being offered 1.6 million dollars to retire for his pension payments and i really don't know which way to go because there's so many options so a lump sum a lump sum on the pension is 1.6 well correct so you can get a 1.6 million dollar correct payout that's not a retirement package that they're paying him compensation to retire that's his pension correct okay all right so that will have to be rolled over right into a um you know like a retirement you know you know you get it so it differs so no no tax implications right away right or he has an option to take like he can has options like 25 50 75 or 100 for survivorship right for you or for or for your heirs beyond you yeah correct okay so obviously you can only choose one so obviously you picked me but um he would he would offer the 100 survivorship if anything um you know they make it they make it very attractive the only surviving one generation past you though after that it's gone yes sir that is correct yeah so ultimately the money either evaporates or it stays in your family it stays it only stays in your family if you take the lump sum and you roll it to an ira correct correct yeah so you take it okay and the how was the pension payments because i'm just so scared with the market and what's going on and you know my husband taught me i'm crazy not to take it for not to take the lump sum yeah we can make money on the lump sum now go back and sit down with your investment advisor if you don't have one get with a smartvestor pro and sit down right and look at how old are you guys he's 55 and i'm 50. okay and look at the market look at the market for the last 40 or 50 years okay and you can even there are some charts that are interesting to look at which will help you with your nerves okay that that have the worst day here's what happened in on black monday in 1987. here's what happened uh when the market went down at the end of the bush beginning of the obama administration 2008. here's what happened after 9 11. here's what happened spring of covid yes okay which as an example it went down dramatically for 57 days right or went down down dramatically and it took 57 days to recover we did not know that when because we did not know what covid was going to do to our economy right correct but the only way you would assume that you would not ride this roller coaster out from the bottom back up would be you would have to make the assumption that the economy is entirely collapsing same in 2008 same in 911. same if you go back into the carter administration same if you go back to here's a weird one in the late 1950s the stock market shot way down when the russians launched the first satellite and beat us into space sputnik actually you can see a stock market change on these geopolitical issues the assassination of osama bin laden she's a spike upward you know and so on so these are these are issues that don't have anything to do with finance but that end up driving the market on a short term because the market is also driven by emotions so it helps you to look at that and it helps you to go okay how long did it take to after the planes hit the towers and the stock market was literally closed for two days because the wall street is right there on that tip of manhattan and then when it finally did reopen it tanked it dropped 500 points in 20 minutes right i remember that i remember most people don't remember is is that in 47 days it returned right and better than ever exactly and shot in there and never looked back uh it went down to 6 500 in 2008 it's at 35 000 the dow is this week so right yeah you've got to get you got to get those numbers kind of down in your heart or you're going to freak out with this idea now once you've done that once you've done that then here's what you're going to discover the average on the stock market return since it began is a little over 11 between 11 and 12 depending on how you want to measure it somewhere in there right this pension is paying out at about seven percent okay so if you run your pension numbers on the 1.6 million you're gonna see seven percent of their abouts okay depending on which survivorship you choice you pick but that's what that that number of dollars annually on as a return on 1.6 will be right around there so you're going to get more money while you're alive in mutual funds and you're going to get more money when he dies in mutual funds by rolling it by rolling it to there so it at least my children can have it to them and it doesn't disappear upon the death your children and their children's children and their children's children here's another interesting thing if you don't touch it and you just live off of something else and you invested in in that it'll double about every seven years well he's got he's got about a million in his 401k plan now yeah so yeah if we take 1.6 just talking about this one discussion you know it's gonna be 3.2 after seven years at 62. at 69 it would be about seven and at 76 it'll be 14. 14 what nine million yeah and that all goes to your kiddos and their kiddos kiddos and so on as long as you know and a hundred percent of the time it does not go to them if you leave it in this stinking pension so you take the rollover and you roll it in a direct transfer traditional ira which you've already researched you've already discovered there are no taxes and you invested in a good mix of mutual funds i'm 60 i'm older than you guys mine is invested across the four types that we talk about here on the air one-fourth in growth growth and income aggressive growth and international all mutual funds that have long 10-year or more track records all mutual funds that have outperformed the index for the area that they are in meaning the stock market so they're doing better than the market on average and have a track record of that and 100 of that money will pass to my heirs it will not be left behind for the pension plan there's very few times folks that you won't take the lump sum on a pension and that's the reason because you lose it all when you die that's it you get zero it's easy math this is the ramsey show [Music] we were drawn to christian healthcare ministries because we both had young families and we wanted to have more children and we had also just started a real estate company and needed to find health care coverage that would meet our needs we were attracted to chm because of its low monthly costs and the ability to negotiate medical costs down established in 1981 and accredited by the better business bureau chm is here to meet the needs of your growing family or small business check us out at ch.ministries.org backslash budget we absolutely believe in it [Music] [Applause] [Music] [Applause] our question of the day is from blinds.com a wonderful american company you can find out for yourself why blinds.com is the number one online retailer of custom window coverings free samples free shipping the new promos they run every month you'll save even more use the promo code ramsey to get the best possible deal you know i bought blinds from these guys many times and we've endorsed them for over a decade now you know why they take care of you guys today's question comes from debra in arkansas my 90 year old mom recently recently received 300 000 from the sale of her home she now lives in independent living residence at a cost of four thousand dollars a month she received about fifteen hundred a month from social security she has no debt she's cognitive ambulatory and in good health for her age someone from her bank called me to talk about investment options for the three hundred thousand should she invest any of these funds or just let it sit in her bank savings account if she should invest then how much well it's a touchy subject if we're parking it for her peace of mind we can park it in a savings account it will make absolutely nothing which is the bank's goal and um she'll make nothing and she'll lose nothing and she'll have that nest egg just sitting there she the likelihood of her burning through it and while she's alive at her age statistically would be zero because you only need a couple thousand bucks a month twenty four thousand and two uh she just lived over a hundred and that's not gonna you know likely statistically not likely to happen do people lived over and yes they do but that's not statistically um were i her was it me if i was 90 i would not be handling this money for my own use i would be handling it to pass on in which case i would want it to work a little harder than a stinking bank account and so i personally would invest it because i'm very comfortable with that but i would not want her to do that unless she was very comfortable with that because she's not really investing it for herself she's investing it for whoever is going to inherit it and so during the next five years that she lives 10 years that she lives two years that she lives the money will be earning a decent rate of return i mean we're not talking about a lot of money here we're talking about the difference in nothing and about 30 000 a year so basically if this money were invested it would make enough to cover the difference that she doesn't have or pretty close and so you wouldn't burn through it you would basically sit there and tread water and the whole 300 give or take a little bit depending on how she lives and how the market does and all that kind of thing would be there for the heirs that's how i personally would want to handle it if i were in her shoes but i'm very comfortable with all of that and i would not want her to do that if it kept her awake at night if she were scared we're certainly not going to make investment decisions based on a banker's recommendation that's like making a transmission decision based on a muffler guy's recommendation you don't need to do that so you need to sit down with an investing professional and if she's cognitive talk to her about what she wants to do with her money mom do you want to want the money to work a little harder and take a little risk with it or do you want to park over here and not make much but have no risk that's really her two options there's not much middle ground it's really going to be a little bit one way or the other but the risk is not it's that she's going to lose it all because that doesn't happen good question side note you ever hear some people say i lost all of my retirement money in the stock market you heard somebody say that that is someone that did one of two things they either emotionally were so caught up in the market going down that they just lied because there's never been a time that the stock market even in the great depression even the crash of 29 or the dad blame rock slide of 2008 whatever you want to call it right the market went in half and so if you had a million dollars at the beginning of the 2008 slide it would have become worth a half a million dollars and today it would be worth four million dollars if you left it alone okay so if you bought at the highest possible point but before the 2008 slide and you sold at the lowest possible point and you had a million dollars you would have lost a half million dollars that would feel that would leave an ouchy mark that would feel like crap like oh no i just lost a half million dollars ouch and if you cashed out you would have locked that loss in and you would have lost that money but you still cannot say i lost all my money in the stock market because you didn't you could say i lost half my money in the stock market that would be accurate point being that even when you're 90 if the market goes down unprecedented with the exception of a couple of times in a hundred years if the market went down fifteen percent oh god it's sixty thousand dollars out of three hundred k and it comes back so far a hundred percent of the time so far there's no guarantee there's no guarantee about that house you bought either oh well real estate's a good investment i'm trusted well why why do you trust it because your whole life you've been driving by houses and especially if you're old like me you've been watching these houses go up in value for a long time i turned 18 years old i sold my first house for forty two thousand five hundred dollars i got my real estate license three weeks before that which tells you a couple things number one an 18 year old kid sold a house number two somebody was dumb enough to buy from him and number three they bought a house in 1978 for 42 500 which today would be easily worth over 300. now we all kind of know that if we got walking around since so we feel comfortable with stuff with real estate investing but the stock market is exactly the same way what are we looking at there we're looking at historical data we're looking at the period of time over which real estate has gone up in value and it's gone up in value pretty well all the time stock market exactly the same way but there's something different about the stock market i guess because you don't drive by it and you don't see the trees in the bushes and the bricks and the mortar and so there's something emotional feels out of control about it but if you're looking at historical data well past performance is not indicative of future performance yes it is it's the only thing you've got to forecast with that's the biggest line of crap ever put out by a regulator they have to put these big disclaimers on the bottom of all investments past performance is not indicative of future yes it is it's the only thing that is i mean my past performance of growing hair on top of my head is indicative of the future of that it's not likely to cause start happening tomorrow you know it's not going to happen it's it's you can take the past and project it into the future it is going to happen most of the time unless something changes so that's what you're looking at when you're looking at stock market history when you're looking at real estate history you look back far enough to go is this a stable investment it's why i don't invest in other things because when i look at the history it's too scary for me and there is the chance of losing 100 of your money that's why i don't invest in currencies that's why all the bitcoin people are angry with me because i'm not jumping in on their little fad uh it's you know i got socks older than bitcoin and i'm just i'm sorry guys you can be angry with me and you can call me unsophisticated and do doesn't know what he's doing none of which would be true except you just disagree with me and i hurt your little feelings and you've made some money on bitcoin lately i'm glad you made money i didn't want you to lose money i want everybody to prosper but i don't like the risk i don't like the risk i don't buy gold because i don't like the risk the volatility of gold is cray-cray it's nutty so what you're looking at when you invest 300 thousand dollars you're not going to lose 300 000 if you put it in mutual funds now if you put in a single stock that company could go broke and you could lose the entire thing on that one company but that would be ludicrous but if you're well diversified the chances of you losing it all are very close to zero the chances of you losing half of it are very close to zero so you can't go i lost all my retirement no you didn't stop your trauma queening this is the ramsey shack [Music] hey folks i got a great option to help you pay for your education the army national guard the army national guard believes you are the next greatest generation because you have proven that even in adversity that you have what it takes to succeed that's why they offer benefits like tuition assistance career training and a paycheck to help you avoid debt no matter what your goals are the army national guard can help you get there visit nationalguard.com to find out more [Music] [Applause] so [Applause] [Music] cynthia is in new orleans welcome to the ramsey show cynthia how can i help hi thank you for taking my call i have a question i'm retired i'm 60 and i had to go back to work and the job that i have now does not uh put into retirement so i talked to a small investor pros she suggested that that i don't worry about investing into retirement at this point and just focus on paying off my home do you agree with that not a bad idea how much do you have in retirement i only have like a hundred thousand okay all right uh and what are you making uh at your new job now that you're retired about 3 000 a month and what is your uh do you have a retirement income already coming in from your old job or from social or anything yeah yes 2500 a month 2500 okay all right good well how much do you owe on your home about um to 220. [Music] i think that's probably pretty good advice um i'd love for you to be doing both you don't have a ton of money coming in um you've you've got about 60 000 coming in total between these two or three sources and so um i'd love you to get that house knocked out uh because a paid for house sets you up for a lot of stability in your latest years you know like when you're 80 with a paid for house versus a mortgage that's a big deal okay it would be okay if you wanted to do a roth ira i mean you can do six seven thousand dollars a year on that um that's not going to keep you from paying off the house um if you want to go that route that would be okay uh it's not the end of the world i mean you qualify to do seven thousand a year at age since you're over 50 and you're making over there you have the earned income so you could do a roth if if you want to but over five years it's just 35 000 you're putting in and it only reduces how much you pay on your mortgage by 35 000 so um you know yeah i might go ahead and do a roth just to get some more going in there but but i really do want you to focus everything you can focus on the majority of it on paying off the house so i think the the essence of what your smartvestor pro told you i would completely agree with so hey thank you for the call and congratulations on the retirement andrew is with us andrew's in atlanta hi andrew what's up hi dave pleasure to speak with you sure 15 months ago i entered into a three-year car lease since then i've learned how foolish that was and i'm considering how to get out of it given the current market and the car's value should i find a way out or you know specifically would the dealership let somebody come back in and just say i want out you guys can make more on it right now um or should i just take the lesson learned and never lease again when it's over well the way the numbers work out is this what you're on the hook for is 20 more months approximately of your car payment plus the er plus the closed in buyout at the end there's a stated value in your in your fleece that you can buy the car for at the end of the 36 months there's approximately 20 months of that left right 30 30 000 plus about uh is 800 car payments so uh it's a monster it's about 46 000 yen nice car ridiculous big car yeah okay um and um so those are the two numbers you can add those two numbers together and say that's what the whole picture looks like now if you wanted to get out the way to measure against it is really to measure the 800 per month for 30 months or for i'm sorry there's 20 months left so um is that 16 000 is that right no is it 160 14 600 14 600 or something around there yeah yeah am i dropping a zero uh but anyway the uh uh so compare what you have exposure that you have yeah it'd be 14 000 uh 16 000 somewhere in there um versus what you would lose on it if you sold it today now the way you would calculate that is you find out what you can sell it for in this ridiculous wonderful hot market for used cars and you compare that to another number and that's calling the fleece who have you got the fleece with you call toyota and say i want the early buyout number which is the equivalent of your payoff today that's not the 30 000 at the end that's today if i write a check today and pay the thing off that compared to the value how far upside down are you less i'm sorry that could be less than what the less than 15 000. and so you know uh what was the original msrp on the car the sticker price uh i was looking at the lease here the uh adjusted capital cost is 55 i don't i don't know what the sticker price was again i learned the hard way that's okay all right and uh have you looked up what it's worth at all um the trade-in value is around 43 uh private parties around 46. okay so let's call it 45 for discussion purposes and now you call toyota up and they say um your early buyout is uh 40. okay you can write a check today for 40 and be clear then that means you're five in the hole if you keep it you're 15 in the hole even if you turn it in right yeah so if you want out of it this is probably going to be a good one to get out of you're probably going to find you're not much in the hole right now what is what kind of toy must be a truck yeah it's a time drill yeah it's a beast double cab so what i did going through the specifics would i find someone that is willing to buy it from me and then yeah you would sell the car to someone and write a check for the difference in that and the early buyout and you've got to send that whole amount to toyota then they send you a title okay so i just let toyota know i'm selling it and i'm yeah i'm sorry i hadn't looked up any details i'm just curious about how that yeah well i mean the way you left it's just like pretend you had a car loan uh god forbid with bank of america the title would not be held at your local branch it'd be held out of town yeah and so if you did the same thing and you were upside down there you have to give the whole amount of the payoff which is the amount you put with it plus what the buyer gives you right so the buyer drives off with a car and a bill of sale and the keys that's the way it always works then you send the full payoff to bank of america in this case toyota they send you the title you sign it over to your buyer it takes about five weeks okay four weeks three weeks depending on how efficient toyota is uh to get you know to get the full transaction done now and if you do it with a dealer you're going to get less for it because the dealer is going to buy it at wholesale but you're not going to have to screw with anything they're going to take care of everything so i'd get a dealer bid on it see what a toyota dealer will give you i'd compare that to what private sale is saying on kelly blue book and then i'd get your early buyout number from toyota but you're going to write a check for something here it's just not going to be as much as if you keep it understood thank you hey thanks for the call man i appreciate you joining us open phones at triple eight eight two five five two two five you jump in we'll talk about your life and your money the car fleece is the most expensive way to operate an automobile it is not cheaper it's more because when you add up the numbers he just said and here's the thing that car goes in his example he msrp sticker was 55 at the time he turns it back in three years later the turn in value is 30 000 he can buy the car for 30 000 at that time or hand them the keys right now i'll guarantee you this toyota's a lot of things but stupid's not on the list 100 of the time that 30 000 has been very carefully calculated with toyota tundra statistical evidence that says that that's about what that car is going to be worth he's it's not a 35 000 car and he can buy it for 30 at the end of the lease and it's not a 40 000 car that he can buy for 30 at the end of the lease and it's not a 28 thousand dollar car that he can buy for 30th and lease it's a 30 000 car you could buy for 30. so when you put that number in there with 800 and some dollars a month you figure out what his cost of capital is which is the effective interest rate and it generally is around 14.2 percent it's the most expensive way to buy a stinking car don't do it it's a car fleece you're getting fleeced it's a bad idea [Music] paying off debt is smart saving and investing is smart being generous is smart but there's one key to winning with money that's often forgotten and that's protecting your family from emergencies there are ten kinds of insurance coverage you might need based on what stage of life you're in and we've built a tool to show you what coverage you need to add which one of the rip-offs you need to drop or what you need to adjust it only takes five minutes and it's free we'll even rank your to-do list by importance email it to you so you've got a game plan you're ready to go fast it's free it's called the coverage checkup and it could be the most important five minutes that you spend today one of our listeners named donald wrote and said uh for anyone who's not completed this checkup do it right now you never know when something will happen and you never want to leave your family in a bad situation sounds like he knows personally i'm afraid text check up to 33 789 it's free text check up two three three seven eight nine don't let an emergency sneak up on you defense is as important as offense in finance carla is with us carla is in des moines iowa hi carla welcome to the ramsey show hi dave thanks for taking my call i we have four rental properties and we're just wondering if you have any like baby steps associated with owning the rental properties like you do with uh like on your personal side you know the is there a certain amount we should have an emergency fund and and like where do we park extra money as we're saving to buy the next one okay are they all paid for um we have kind of a little bit of a long story we have like a three thousand dollars on one because our personal residence is will be a hundred years old next year and people our age are getting older and they have things like hip replacements and that so we're thinking we're gonna probably have to get out of this place eventually and so we we keep a little bit of a note there at the bank so we have that relationship um with them in case we do you want a relationship with a bank so we can borrow when we need to get our own like if we need to get a different house like we don't need to move right now yeah so what's the house that you're living in worth it's worth maybe 95 000. and when you sell it and buy the one that you want to live in because you can't live in it anymore because of hip replacements what would you buy well we'd probably buy a ranch thing so it's all one level i don't know around that but there's that period of time where you have to get like the loan no you don't you know you put your house up for sale and you sell it on a contingency and you go buy it you've done enough real estate deals you know that and all of your rentals paid for except for three thousand dollars yeah yeah okay write a check today and pay off the stupid loan okay that's your baby step then next baby step is just pile up cash oh by the way before you get ready to move you're probably gonna have a big enough pile of cash to just buy you a house then when you sell the one you're living in you'll be able to use that to buy some other rentals so like do you have like like here we would probably not have to replace all the water heaters at the same time the chances of that happening are very rare but it would it could happen that we would have a hail storm and we're replacing like fighting and you'd have insurance so like so you just there's not like an amount that you keep what does it take to operate the rentals i try to keep six months of that of what it takes to operate them just stay in a cash position real estate people like me and you are the world's worst about keeping cash around we always want to put it back into more real estate we don't ever have quite enough cash well i and that's another question i have is it possible to have too many savings accounts um there's no point in it one will do the same thing as seven i know but like if i if like our car fund if i would marry that to our tax fund it looks like i have a bigger amount well as long as you keep up with as long as you keep a little spreadsheet tells you what the breakdown is it doesn't matter i know but i have i how many savings account have you got well we have we have an hsa and we have a car fund and then we have like a taxes fund and then we have like a a regular savings account so that um like it's attached to the checking account in case i'd ever overdraw the account which never happens and then we have like we have a savings account for our rental deposits and then we have like a savings account for just rentals in general well that would be an investment account the last one should be invested because your rentals in general means you're trying to buy more or in maybe this case you're going to buy a personal residence when you sell the one you're living in for some reason or another you're doing fine i i think you're just obsessing about this whole thing if you want to have 14 accounts i don't care it's just a lot of trouble um but it's also a lot of trouble to keep up with all of them on a spreadsheet and they're all in one so however you want to run it i i don't keep that many accounts and i got a lot more rentals than you got so um i mean i have one account for each of the businesses that own the rentals and i've got llcs that own rentals and when i've got more than five million dollars in one llc i open another one and so if i buy a property that's in excess of 5 million dollars i have a unique llc just for that particular property and so i've got a handful of those but uh but that's you know but i don't have different personal savings accounts floating around i do have a separate emergency fund that i never touch uh because sharon said uh if i do she's gone and um and then uh beyond that we've got it we're we're investing money to get ready to buy the next piece of real estate so you're doing fine overall what you're doing is accurate you know where your money is you know what's going on you're in control you've done a great job it sounds like you've got a net worth well in excess of a million dollars so way to go you're an everyday millionaire you're a baby steps millionaire you've done the stuff way to go samantha is in colorado springs hi samantha how are you hi dave thanks for taking my call sure what's up um so my two debts that i have to pay off um are the exact same amount so i've asked some other people their opinions and everybody seems to differ so i figured i'd ask you um what's the amount a heloc i have a heloc for 50 000. and then i have 50 000 on my student loans and what's your household income um we bring in around 6 000 a month okay your your heloc does not go in baby step two it goes in baby step six and it's big enough you probably need to look at refinancing your house and rolling your heloc into a new first mortgage because your household income is only 72 000 a year right yeah yeah yeah so when your heloc our second mortgage is over half your annual income we throw it to baby step six and in your case it's so big it's gonna be so long before you get it and the student loan knocked out that you need to probably get you a new first mortgage what's the balance on your first mortgage what's the balance on your first mortgage today 255. 255. so you owe 300 and 5 000 on your home what's it worth um about 415. good okay yeah i probably what's your interest rate on your first um it is 3.65 okay you can beat that and you can get rid of a heloc so you now have two reasons to refinance unless you've got bad credit i'm gonna go get in touch with churchill mortgage and try to get a 15-year fix down around three percent it's going to save you 0.65 on the first it's going to get rid of the instability of that heloc because it's usually a variable rate and it's indexed based on the banker's whim meaning it's not indexed at all they just decide what the freak they want to charge you on these things and they change it periodically they've been historically low for so long they've lulled everybody to sleep but they're dangerous as crap because a lot of them have a call and almost all of them have a variable rate that's not end indexed to anything anything so that's simple uh yeah i refinanced that then that means guess what we're working on your student loan we're gonna knock it out as fast as you possibly can and that means beans and rice rice and beans extra jobs not eating out you're not going on vacation until you get rid of said sally may that old woman needs her eviction notice from your life get after it get it get it you got this you can do it that puts us hour the ramsey show in the books our thanks to james childs our producer kelly daniel is our associate producer and phone screener i'm dave ramsey your host and we will be back [Music] have a friend or family member that needs a daily dose of ramsey advice in their life let them know about the ramsey call of the day podcast it's a quick hit of advice about life and money in under 10 minutes check out the ramsey call of the day podcast wherever you listen to podcasts [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 this is common sense for your dollars and cents teaching you to live on less than you make a concept congress can't grasp it's a free call at triple eight eight two five five two two five that's triple eight eight two five five two two five cameron is in kansas city to start this hour off hi cameron how are you doing well dave how about yourself better than i deserve how can i help i'm just looking for some advice between the balance in terms of paying off our mortgage early and our long-term investment plan so i'm 29 married with a two-year-old and another kid on the way wonderful um we we currently owe 245 on our house we put about a hundred thousand down about a year ago good um and we have 65k in cash savings i make 125 in base and bonus and then my company does for an esop so about 11 percent esop contribution on top of that okay here's the program that we have used to lead tens of thousands of people into millionaire into being millionaires having a million dollar net worth or greater we call it the baby steps and you may have heard them baby step one save a thousand dollars two is be debt-free with your house you've done those two uh three i think you've done those two you're out of debt except the house right correct okay three is having uh three to six months of expenses set aside for emergencies 55 000 would qualify as a matter of fact it's probably a little high for your emergency fund beyond that we do baby steps four five and six simultaneously which is to your question and that's 15 of your income going into retirement which is a substantial amount right now with your great income then we start putting something in baby step 5 towards the kids college and you can decide how beefy you want to do that but i want you with a couple kids be doing at least 100 bucks a month or something just get started at least if you want to get beefier that's fine beyond that i throw everything i can get my hands on at the house now until it's paid off and then once it's paid off we max out all retirement that's available and become very wealthy which is baby step seven now why do i do that well number one at babysit four you're putting 15 of your income away which at 29 years old is 30 000 bucks and so you've got millions of dollars at retirement in that account if you do nothing else you're going to be just fine but you're not going to do nothing else not with what i just outlined you're also going to save up and pay cash for your kids college and baby step five and in six we're going to go and get the house paid off now we've completed at ramsey research the largest study of millionaires in north america ever done 93 of them did not become millionaires from inherited money and i can unpack that if you want me to point being they all did something to build wealth what did they do by far the vast majority of them we found in almost every time to the point it was almost stereotypical in almost every case we found they had done two things one is they had significantly and steadily funded their 401k roth ira retirement plans and that like say i found somebody with a million and a half dollar net worth that was often times a million dollars the second thing they had done is they got their home paid off and that was often times a half million dollars so for an everyday or a baby steps millionaire someone who followed those baby steps under a five million dollar net worth what we typically found was their house was about a third of their net worth and it was paid off that element and the big loaded up retirement was uh the two main things we saw over and over again the point being cameron that we didn't find hardly anyone who had a big home mortgage because they put it all in investments sure yeah and i think that's really where my question comes in is you know basically 11 of my compensation goes into our esap i'm contributing eight percent to mine are you putting eleven percent in the company contributes eleven percent i'm asking you to put in fifteen of your income so i do eight percent to my roth i would have you put in 15 of your household income into retirement in addition to the 11 you're not putting in the 11 they are they're not taking it out of your check are they yeah so that's a huge piece of i'm sorry are they taking it out of your check or are they giving you money are they putting it in there they put it in there okay it's not coming out of your check so the incumbent figures you gave me were not including that correct it would be like 140 so this is like a match in a way okay yeah better than yeah so you don't you don't worry about that i mean that's nice that's gravy on the biscuit but i want you to take your household income before income taxes are taken out and say 0.15 and i want that much going into retirement that's 15 that's a lot more than you're doing right now sure and and even with what i'm doing right now i mean the the calculations spit out you know 10 15 million of the future retirement which then feels somewhat silly to to still be paying a mortgage right now so i think that you're not gonna have both you're 29. okay you're you're not gonna you know own only have 10 million dollars and never pay your mortgage off because you're going to pay off your mortgage long before then even if you hadn't called me you would have done that but you don't need to stop doing retirement because oh i've done enough and i'm counting on them putting in 11 no you put in 15 percent and you go ahead and put the balance that you can find in your budget without straining too much and not taking well you know your wife still gets to buy a couch you still get to go on a vacation uh and you'll find money out of there to chunk and you'll hit bonuses and stuff you can chunk towards that house you're gonna have that house paid off for five years even putting 15 of your income away and you're easily gonna hit both but no i would not back off and say oh retirement's handled no i'm not that's the other direction i wouldn't go so i wouldn't uh you're going to be fine i do think your prediction is accurate this is not discussing whether you're going to be bankrupt or not you're you're doing a great job a you're paying attention you're being very intentional with your decision making you're thinking about this you're good using good critical thinking skills so you're not going to make a big mistake but if you were following our plan which is what i would tell you to do because it's called our plan um you know it'd be 15 of your income into retirement and then kids college and then getting your home paid off so here's what's interesting about cameron's call and about what some of you are thinking while you're riding around listening to the show right now you're thinking that sounds so simple you know why because it is it's very simple to understand what to do the problem comes in the doing it oh there's the problem you know you lose weight take in less calories that's a problem though this boy likes chocolate doughnuts they're in danger if i'm near i know what to do the problem comes in the doing it 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] well the housing market's a bit hot isn't it talked to a guy who put his home on the market over the weekend 87 people looked at the house he has 17 offers in 24 hours all of them over asking price some poor guy who bid 50 000 over asking price 16 of them are not going to get the house that's a hot market wow and is this going to continue at this rate probably not there are several leading indicators in the market that the rate of housing price climb inflation is going to slow lumber has finally caught up and has uh has no longer spiking in price with a new record every month new housing is starting to catch up in a lot of areas so the market's not going to reverse itself and it's not going to collapse in on itself or something like that but we're going to continue to see prices increasing it's going to be as hot as it's been now here's the trick you do need to those of you keeping your homes and not selling in this crazy market you do need to check your homeowners insurance because it has a stated value on it uh it does not cover what the house is worth it covers what the policy says and so if your policy hasn't been updated in a year your house could be worth hundreds of thousands of dollars more than it was at this time last year and you're not covered so you need to make sure that's done and you could get even while you're at it you ought to price your homeowners insurance because you're probably paying too much the market has really shifted on that so our endorsed local providers for insurance are independent agents which means they shop a gazillion different companies and get you the best possible deal so what you do is you text home to 33 17 33 789 text home to three three seven eight nine and you'll talk with a trusted insurance pro a ramsey trusted insurance pro about finding the right coverage for you they're gonna shop a bunch of people get you the best deal oh and make sure your home is properly covered it used to adjust based on market value but those were old policies and they're just about all gone now you have a stated coverage amount and that's all you got plus or minus a little of an inflation factor but you're not covered if you haven't kept yours up to date text home 233 789 gary's in charleston south carolina hey gary welcome to the ramsey show hi dave thanks for taking my call sure what's up uh well my wife christy and i are here um and we've we sold our boat that was our paid off boat and our paid off truck in this market we got top dollar and we're using that plus a little bit of savings uh to pay off the house tomorrow yay way to go yeah thanks so uh you know we've you know we've kind of worked hard and uh you know increased our income to where it's at today and paid off all the bills and congratulations that people anyway thank you but uh but yeah we started watching your show and now we've you know consolidated all our bills together uh you know which made us waste less money but now we're at that point uh we're hitting baby step seven um and next steps and yeah we just we have more money than we know to do with what do you mean what's your household income household income this year should be right at 360. wow how old are you guys i'm 38 she's 40. yay and what's the house worth um 325 to 350. excellent how much is in your retirement accounts your nest egg uh selective collectively around 360. okay all right cool we but we maxed them out and we maxed them out uh each year she she started sooner than i did and i know i started recently well you guys are doing a great job i mean in about 20 seconds you're going to be millionaires and you're on your way well done what can i answer for you uh well yeah we we we have some money in stocks have about you know six figures in stock still and now we're about to have a lot of disposable income and while i haven't been wrong on my individual stock that i've been investing in uh i know that you teach to diversify and i think that's a you know a very wise move and i'd like to go that way moving forward okay um so uh just some of your suggestions of now we're gonna have a disposable income anywhere between seven seventy five hundred and nine thousand a month so what do we do with it excellent well such choices to have yeah it's such a problem well it goes back to philosophically or theologically there's only three things you can do with money you can be generous with it and you should so label some of it for generosity you can invest it and you should so label some of it for that and you can enjoy it and you should so label some of it for that uh and and so there are some items out there in your future that two years ago would have been immature and silly but two years from today you'll be able to purchase that item and pay cash for it and it will fit right in and you won't have to worry about it it's a non-issue because it's a small enough as a percentage of your wonderful world that you'll be able to do that thing go on that trip buy that classic car buy that piece of jewelry that piece of art i don't know something that you enjoy then you're going to invest now i only invest in two things i invest in real estate that i pay cash for and i invest in good growth stock mutual funds spreading across the four types i'm a little heavier in real estate than i am in mutual funds for two reasons one is i bought about um about several about about 100 million dollars worth back in 2008 and i bought it at about 10 cents on the dollar about 50 million dollars worth actually so it ended up shooting way up because i bought it way at the bottom i haven't been able to buy anything like that since but um so i love real estate but i'm heavy in real estate for that reason because my returns have been better there because i bought at the worst time in the last 40 years probably uh and so which is to my advantage so anyway you're buying real estate that i pay cash for and then investing in mutual funds and whichever one you're more comfortable with some people don't like mutual funds so they're light in those some don't want to deal with tenants and the hassles of owning real estate and so they don't have any or hardly any in real estate um you know if you have something else you want to play in that's fine if you want to buy a little bit of single stocks i don't suggest you have more than 10 percent of your net worth in your case that'd be a you know less than a hundred thousand dollars in single stocks because it's just too risky but if you really have a thing for it and you want to put that much in there and play with it you'll be okay you're not going to mess it up doing that because you've got a small enough amount in there that even if you lost the whole thing which you would never do that but even if you lost the whole thing you still would be worth over a million dollars in just a few minutes here so all of that to say congratulations the trick is now take that disposable income and just label it x for fun y for investing and z for generosity and um then you're going to be very intentional about your investing very intentional about your fun and very intentional about your generosity within that set amount of dollars and so that allows sharon and i to do some really fun things uh with the amount of wealth that we've built and we don't even have to uh emotionally sweat it oh are we are we bad christians if we buy that no we've been very intentional good stewards and it's a small percentage of our world and then when we get ready to do some generosity we're like oh have we messed up our whole estate plan because we gave too much away no we're not being crazy we're being very wise and yet outrageously generous but when that money's already earmarked to give away and you set it aside it's interesting your emotions have already given it away you just haven't transferred the bank account yet and so go ahead and do some of that when we move our money into our family foundation it's already given away technically speaking it's already given away in that case because it's a foundation but also emotionally we were done with it once we earmarked that money going that direction and it just gives you a lot of peace that all three things are happening the way they should fun generosity and investing to create more fun and more generosity [Music] [Music] gravy in the lobby of ramsey solutions on the debt free stage josh and ali are with us hey guys how are you good how are you sporting some good-looking t-shirts straight out of debt baby i like it congratulations how much have you paid off we paid off 31 03.45 great how long did it take four months and five days wow and your range of income during that time uh 90k to 95. we didn't really get a raise we just had a couple of stimulus and we sold stuff okay that's a stimulus too excellent yay love it love it love it that sounds fun way to go you guys what kind of debt was the 31 000 uh we had two cars uh student loans a couple of credit cards and some medical bills so normal kind of normal yeah how long you all been married since november 2nd so not too too long that's kind of why we went on the journey together to be honest gotcha okay so as soon as you get married boom game on knock this out or right before you got married you started it tell me exactly what happened here so we got married in october and started on the 12th of november just like that just like that so i'm a mortgage loan officer so i kind of talk about the debt snowball a lot believe it or not so it's one of those things i was like you know we should probably look into this you know if we want to have the life that we really want together you know that we vowed to each other then we need to kind of do something about it okay so um what what how did you decide how did you have this discussion before you while you're being engaged and actually when after we got married we had cash flowed our wedding without knowing that that's what we were doing um and it was weird because when we were able to pay cash for the wedding we were like what have we been doing with we could have been saving money this whole time how did we do that so he brought it up to me after we got married like hey maybe we should pay off all our debt you know maybe that's the next best thing we can do in order to start saving for since i talk about this to other people all the time okay yeah it's easy to talk about you know other people's debt and other people's problems and not necessarily look at your own and i actually grew up listening to you but in my mind like you know as a child a lot is caught and what i caught from that was that dave ramsey was for people that had their lives together so we never really we never really did that because our lives weren't really together yeah that's funny when quite the opposite is true but yeah [Laughter] that's so fun all right so it just kind of came together gelled and you said oh i had this epiphany we pay cash for the wedding we can do this i tell people to do this we can do it um and game on yeah so just like that you joined arms and went after it yeah and i kind of suggested to him after he brought it up he's like we should pay off debt and i was like you know what we could do we could sell a car oh and he went oh well i don't know oh could this be my car that would be the one that gets sold so naturally yeah that's the way to start the honeymoon yeah we did it um we sold the car yeah that's how we started what was it what kind of car it was a 2015 kia optima oh nice car gone okay what are you driving now 2019 kia forte oh my god that's not exactly a big like you're not dying no not at all oh man and it's paid for it and it's faithful so that's a that's enough of a move to get the get the goal hit yeah and now you're free and you can do whatever you want with this kind of income and no payments how's that feel to knock that out that fast as your first order of business in a marriage so when we first started like we kind of did we did the budget you know we did the every dollar app and everything and we were like okay we should be able to do this in about seven months and then at that point we weren't even tithing so we were like okay seven months no tithing you know we should be able to do this and then we just kind of decided like you know we should really you know be thankful for like the position we're in the jobs that we have and so we started tithing and lo and behold we actually did it in four and a half months it was with tithing so we were like oh wow you know this is you know we listen to you a lot and a lot of people go through it like they think that this is going to be a long process and it doesn't have to be if you are a gazelle intense like you say to people you know you don't have to spend 200 on groceries you know you if you budget everything and you can make the make it work however you want sell stuff you know there's so many different ways to become debt free and you know the the weight that it's lifted off of us is just unbelievable the interesting thing is you get to decide how hot to turn the flame no one just i didn't call you up and go turn it up hotter right you know you just decide i want to get out faster i'm going to turn it up a little hotter or i don't really think i'm going to do that i'm going to turn it back a little bit you get to decide it's your flame it's your how much do you want to cut how far how deeply do you want to cut into this budget and you're in control it's not like dave ramsey's going to come knock on your door and check your budget and what's funny about that is you start off thinking that there are things that you need to do that you have to have and then as you get closer and you see your progress you know with the snowball you you start to realize that there are things you can live without you can make deeper cuts and sacrifice to get there faster and and race against yourself so yeah that's it it becomes kind of a little mental emotional game doesn't it yeah and for sure there's a lot of times where we didn't spend all our money on groceries that we had budget for our groceries and it went straight to debt and then allie was like oh you know we can probably cut back on groceries we have enough left over from the week before and then you know then you start becoming so obsessed with paying off the day i'm a huge nerd i didn't know that before but i'm the nerd i love it dial it spreadsheet up dial that every dollar i like it very good that's cool yeah we start redefining uh correctly what most people in america including you including me have defined incorrectly and that is the difference in wanting a need most of us have absolutely no needs in this country there's very few people actually have a need most of stuff we call i need is i want most the time and then you go i found out i didn't have to have that to live you know and i didn't have to have that to live and look at that and we can get a little faster and then when we're free we can do a lot more we can live like no one else and and give like no one else so what do you tell people when they ask you that the key to doing this is i always say the key is just having be consistent with it and don't fall into the stigma that debt is normal right like i've seen i see credit reports every day and people have all these car payments and for the longest time myself i thought you're gonna have a car payment until you die right that's just a normal thing that people think cars break down just don't fall into that stigma your debt is not good and it's one of those things it's not a tool to use for things you know you just pay it off you you don't realize the weight that can be lifted until it's gone yeah and it feels it feels clean now doesn't it yeah simple right you're just swimming in a bad pool to a good pool i would just add also the budget because i thought that i we thought that we were budgeting before and we would go where where where is all this money we should have where did it go we didn't have an answer for it so being very diligent about that budget that was a bad word in my family growing up sure it led to money fights and so i think i kind of avoided that um but it now budget's fun for us right yeah it's like oh we can like cash flow vacation in two months you know what i mean all this money right and who can we help with it and all kinds of stuff it changes everything well way to go very very cool and isn't it interesting that you you made you're giving a full 10 to your local church and didn't slow you down but sped you up yeah it was oxymoronic it is that was honestly like my five-man honda that was the hardest part for me was getting my heart right because i knew that i was being called to do that that we were being called to do that and it i was selfish but your mat well your math brain says that's backwards yes right you want me to give money away but i'm gonna get out of that faster that just seems backwards well that wasn't even the reason that we did it we just felt that that was what we're supposed to do we felt led to do it and and it was like god was saying hey look i i got something better for you like just let me let me help you because i can do this faster than you think you can so and then we fully funded our emergency fund two months after paying off debt wow so you guys are so impressive well done well we got a copy of the legacy journey for you that's your next step is to completely change your whole legacy and you are well on your way you got a great start so proud of you another copy of total money makeover for you to give away to somebody get their journey started you can pay it forward with that as well and of course that's our our number one best seller by far around here so congratulations we're very proud of you thank you very proud of you too you guys are impressive all right it's josh and ali murphysboro tennessee 31 000 paid off the first order of business and four months of marriage make a 90 to 95 game on count it down let's hear a debt-free scream three two one ah love it man that's powerful well done you two very well done [Music] [Music] it is oxymoronic to think that generosity adds to prosperity you would think if i had a bigger pile of money because i hadn't given some away that i would be more prosperous and the truth is the opposite happens and it happens so often that it is a principle now for those of us that are people of faith evangelical christians we're taught and believe that the bible says that we're to give a tenth of our income to our local church a tenth a tithe which is a hebrew word obviously an old english word representing a hebrew word but it literally the word means tenth one tenth of our income now you may or may not agree with that that's not up for discussion you can agree with it and if you do that's fine if you don't then i get to do it it's my faith i get to choose you get to choose what you do i'm not telling you you have to do something but that's what my faith teaches as an evangelical christian and here's the interesting thing about that the bible says in malachi a testimony in this says the lord of hosts god says test me talking about the tithe he's discussing the tithe right before that regarding the tithe test me god says test me and see if i will not throw open the windows of heaven and pour out for you a blessing that you cannot contain and i will rebuke the devourer for your sakes now the word blessing there does not mean bmw in the hebrew it is not necessarily the word blessing is not necessarily money or wealth now sometimes people on the prosperity side of the christian world quote that scripture and says god promises to bless you financially if you tithe that's not what the word says the word is the word barakah b-e-r-k-a-h and if you look it up in the strong's concordance which is where you get an english translation of the hebrew word you'll find that word b-e-r-k-a-h means peace refreshment as a camel finds in an oasis at an oasis there's always shade there's always water as opposed to a dry parched desert now reread that test mean this says the lord of hosts and see if i will not throw open for you the windows of heaven and pour out for you a blessing that you cannot contain peace as a camel finds at an oasis that you cannot contain now what ends up happening whether you're a person of faith or not here's the principle that works and it works again you don't there's no it's not unique to christianity although it manifests itself well within the christian theology what happens is this it's almost impossible to be a miserable person when you are a generous person generous people are almost always happier a lower incidence of depression among generous people very few people that are generous are depressed it's very unusual almost never happens generous people are attractive they smile more they're not attractive because people want to be around them to get money from them that's not the point the point is the generosity is not just an act it is a character quality that induces several acts like integrity integrity is not an act you have integrity you are a person of integrity you are a generous person it is a character quality like honesty integrity kindness it's something now if you're a kind person that's the quality when you when you out of your kindness you do something if you're a compassionate person that's the quality out of that you're compassionate to someone then that's the verb that comes out of your character quality and i think we can all agree joyful people generous people compassionate people kind people are all more attractive oh couldn't we use a little more of that attractiveness in our culture today there's a lot of just ugliness out there today and most of it is born in fear which is not attractive most of it is born in anger which is not attractive most of it is born in selfishness versus selflessness which is not attractive so here's what ends up actually happening the people who have as a steady part of their financial diet the rhythm of their life they are generous people who tithe their weekly paycheck to their local church people who give regularly not just once a year not randomly but as a part of the rhythm of your life like breathing and bathing you're giving you're catching somebody at the gas pump and you just buy their gas you buy the person behind you at the starbucks lines next order i don't care what it is those are little tiny things maybe you do some nice big things maybe you pay for an orphanage to be built maybe you pay for a hospital to be built i don't care how many zeros there are on it but when people have a regular rhythm of generosity they are a different kind of a person and they're very attractive and people want to be around them and they want to have them as employees and they want to work for people like that as an employer they are easier to work business deals with they're not functioning in fear and anger all the time there's a little different sense of confidence and competence and you know what all of that leads to more money generous people have a tendency to prosper because of that it's not really because they gave the money away it's because their heart and who they were as a person was changed when they gave the money away and it made them attractive and attractive people have more of a tendency to prosper than unattractive people i mean think about it if you're an employer and you're sitting there and you're looking at two candidates that are up for promotion one of them is going to get the job one isn't one of them is miserable angry fearful all the time every time you look at them they look like they were weaned on a pickle and you look at the other one and they're smiling and they hold the door open and they always put others first and they're thinking about how they can make everything better instead of how they can make themselves better and bigger they're equal in their talents but that one character quality distinguishes the two of them apart who gets the promotion everybody answer with me the generous person that's who gets the promotion generous people have a tendency to prosper who are you gonna hire to do your lawn care who you're gonna hire to fix your car who are you gonna hire to do your hair who you're gonna hire to someone's weaning on a pickle someone's angry all the time and selfish and they're figuring how they can cut every corner on you or someone's got a little margin in their life there's a little wiggle room in their spirit everything's not so freaking tight they're not about to explode all the time now tell me generous people don't prosper i've watched it for decades and this is why you will hear regularly a testimony and it's not a mystical weird christian thing but you'll hear a couple like that last couple doing their debt-free scream that says you know we started giving away 10 of our income because we thought we should we were convicted of that by god's spirit we thought god was telling us to do that that's exactly what you heard them say and yet they got out of debt three months faster than their original plan in almost half the time of their original plan did the math really change no their income went up only a little bit they were able to sell his car but what changed was them be not conformed to this world don't be normal normal sucks you don't want to be normal don't be like this world be transformed how you transformed the renewing of your mind you change your mind you get information you didn't have and you install it into your hard drive and the operating system is permanently changed it's called living like no one else so that later you can live and give like no one else this is the ramsay show [Music] hey it's kelly associate producer and phone screener for the ramsay show if you would like to do your debt free scream live on the show make sure you visit theramsyshow.com and register we would love for you to come to nashville and tell dave your story [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 thank you for joining us flying solo today here on the ramsey show open phones at triple eight eight two five five two two five emily starts off this hour in auburn alabama hi emily how are you good how are you doing better than i deserve what's up a huge fan first of all um so i'll get right to it so my husband and i are closing on a house in a couple of months we did a sending custom build luckily we went and right at the same the right time before all the cost of lumber went up good um yeah so we have about 200 000 in savings in the bank 30 000 of that's going to be our emergency fund and we're reserving about 20 000 for housing such as like fence and any extra furniture that we need should we put the remaining all the remaining 150 as a down payment or put some of that in another investment because we're doing the 15 of our income into retirement we follow your plan to a t so we just didn't know if we wanted all of that money in the house or if we should put it somewhere else okay if you follow our plan to a t and you were already in the house and above your emergency fund and above your furniture fund and above your 15 of your income you found some money what would you do with it in baby step six i'd pass my house you pay it towards the house right right so you wouldn't you wouldn't put it into an investment because you're following our plan to a tee yes and so you're going to put 150 000 down on this house see that's a lot easier does that make sense i mean that's just following the baby steps out is that life okay yeah i just i asked you know i listen to you every day and i just heard you know well i mean if you call me up and you had if you if you put a hundred thousand down and you put 50 000 mutual funds and you called me up you said i got 50 000 in mutual funds it's not in retirement what should i do with it i would say well you're on baby step six and i would tell you to pay down the house you know that because you follow my plan to a t right correct yeah so if you were to invest it i would have you undo it so that you could follow our plan to a t cool well we will do that then now the reason is we want to paid for house and the pile of money in retirement not just one or the other at the end of the story right yes that was correct okay yeah doing so good well done appreciate you calling in open phones at triple eight eight two five five two two five that's triple eight eight two five five two two five well dave ramsey doesn't know what he's doing i mean everybody uses a debt that's wealthy no you must live in your mother's basement and write that financial blog because the actual data of wealthy people is is that by and large they don't use debt to get there by and large they do get their homes paid off the vast majority of america's millionaires 93 of them did not inherit their money according to an airtight piece of research that the ramsey research team did and out of those 93 of america's millionaires we studied over 10 000 of them the largest study ever done the vast majority of them paid off their homes early and had money in their 401ks and in their roth iras and mutual funds and that's how they get their first 1 to 5 million now if you want a billion instead of for the first five million if you want to jump try to straight jump straight to a billion well you might borrow money out your eyeballs that's possible but i'm not here trying to create billionaires i'm here trying to create millionaires because i want families to be able to retire with dignity be able to change their family tree and be able to live well i don't need you to go broke six times in the process getting there we're not trying to write a success manual on going broke over and over again by taking all this risk i went broke once and i did all of i did that apparently for all of you so you don't have to because you can learn from my stupidity you don't have to follow it so this is this idea that sophisticated people all borrow money is absolute statistical hogwash it's simply not true they do not now do sometimes billionaires yes sometimes they do does somebody worth 30 million dollars maybe but you got 30 cents 30 cents and you're losing some of your cents all the time and so don't talk to me about how sophisticated people borrow money you're freaking broke they do not now that's what i used to think because that's what my broke finance professor taught me if your finance professor is broke that's like having a shop teacher with missing fingers you should think about where you're getting your advice so uh be careful when someone says oh well such and such like ramsay is not sophisticated the stuff we teach is unbelievably profound and sophisticated it just doesn't line up with your get rich quick little immature self and you don't like it some of you oh well you don't have to follow it this is america you have the right to be wrong you're allowed to go do whatever you want to do so she's brilliant she's done a great job they've handled their money beautifully and they're well on their way to substantial wealth and we meet everyday millionaires baby steps millionaires who follow these baby steps by the tens of thousands every day i meet more and is it because i didn't make up any of this i didn't invent any of this it used to be called common sense it's just now marketable because it's so freaking rare it's like having a superpower i've made millions and millions of dollars selling common sense because there's not any out there and so it turns out it's like a rare commodity it's like finding a big old diamond out in the middle of your backyard look at that oh my god that's a genius live on less than you make who would have thought of that you know but that's really that's where we live instead we've got oh i'm gonna bitcoin my way in and i'm going to play the lottery and i'm going to borrow and do nothing down real estate and buy 73 houses with no money and think that ain't gonna bite me in the butt later of course it's gonna bite you in the butt later it's gonna take you to your knees it did me and it will you please don't do that stuff i'm gonna bring pain to your family and then you have to do it all over again it's much easier just to do it slower and do it right it's also faster to do it slower and do it right it's easier to do a job right the first time and wealth building is no different so walk these baby steps and in 10 to 12 years you'll probably be a millionaire most of you but to the extent you don't then you have to wander off and find your own way because you're going to reinvent common sense that's just silliness and that is not an indicator that the stuff that the ramsey personalities and dave ramsey teach is simplistic or out of touch or he's such a boomer oh my god you're such a child you're just such a baby child listen little baby child here's the deal the boomers got this stuff figured out that's how i lived this long got this stinking much money it didn't cause i was stupid or unsophisticated or ignorant or backwoods or any of those things this stuff is profound it's easy to understand but it is life-changing because you have to change your life to live like this in the middle of a culture that's lost its freaking mind this is the ramsay show [Music] stop paying your overpriced wireless provider and switch to pure talk they use the same network as the larger providers for much less for just 30 a month get unlimited talk text and six gigs of data with no contract the average family saves over 70 dollars a month by switching to pure top just go to puretalk.com and enter the promo code ramsey to save 50 off your first month pure talk simply smarter wireless [Music] you know what sucks living paycheck to paycheck at the end of the month barely covering the bills and never getting ahead it's like being stuck in a revolving door with your money it doesn't have to be like this you can stop going in circles and start making progress check out financial peace university in every dollar they're part of ramsey plus a membership in ramsey plus will show you how to make the changes you need to get the results you want with your money and that's because ramsay plus gives you complete access to our best online money courses like i said financial peace university know yourself know your money from rachel cruz all kinds of tools like every dollar all kinds of stuff there the ramsey plus membership is everything you need you can get out of the cycle you can start making real progress jump in for your free trial at rmz plus today text trial 233 789 text trial 233 789 open phones at triple eight eight two five five two two five matt is in milwaukee hi matt how are you i'm doing great dave how are you better than i deserve what's up hey i i appreciate everything you do i just recently got engaged with your whole program i just got done telling my wife all i wanted for father's day was to enroll in a financial peace course my question for you is so we work on our debt snowball now we've got about 135k in debt mostly student loans cars and a little bit of credit uh my question for you is i through my company have the opportunity to go through like a employee stock program at a significant discount i have been contributing to it yeah fifteen percent because of the um so for the stocks they allow up to about ten uh should i continue to invest in that not the performance the discount is the discount's fifteen percent in it yes yes that's standard it's that's regulatory okay that's what they all are so my question oh they are okay i did not know that um do you recommend continuing to invest in that based on the discount and building that up to pay off debt or just completely putting out all cash stores i would stop all investing and take any money that's not in a retirement account and throw it at your debt snowball okay and here's why let's look at that single stock for a second as i said 15 standard in all employee stock option plans if you will pull up your company and notice i don't even know what it is and look at your company's stock price on a 52-week chart a one-year chart and you will see the variance of price most of the time will be in excess of 15 meaning that um by the time you get it bought you might have overpaid for it or you could be buying it super cheap and it could go up 30 over what you paid for it it's all over the place it's a very high risk play playing single stocks and 15 discount is not enough because the volatility in one calendar year generally is going to exceed that and the volatility was 15 you know we could talk about the play but when the discount is 15 the volatility might be 20 percent that's not a play you want to make ever for that matter but uh if you want to make it you want to make it on a very small percentage of your world after you're out of debt but our the beauty of our get out of debt thing is matt it's all about focus and if you'll stop doing everything else and completely focus on getting out of debt and it becomes like a freaking obsession where you've lost your mind and you get out of debt that's how people get out of debt you can wander into debt but you can't wander out you can't do six things at one time and still get out of debt it won't work you got to completely squeeze cash out of everything stop putting money in anything until you get the debt paid off and completely throw it at the debt snowball that's how people are having these fabulous stories of getting out of debt this incredible focused intensity and that's what you'll learn in financial peace university and i'll give it to you for father's day since your wife didn't we'll give you a one-year subscription to ramsey plus which will include financial peace university the every dollar premium and everything else you need to get out of debt sir we will help you and you call me back if i can help you anymore kelly will pick up and she'll get you signed up and take care of you anthony's with us in fort myers florida hi anthony welcome to the ramsey show hey how's it going um me and my wife just started just found you a few months ago and started following your program and uh we never had any debt but we just finished saving uh six months living expenses right and it's saving ten thousand dollars great and um now we're on baby step three b saving for a house and i've heard you say sometimes keep investing 15 um into retirement and other times put it on hold and i was wondering how do you determine um whether it would be better to put it on hold or keep investing 15 while saving for the house it's a personal preference some people prefer to put it on hold because they're all jacked up about getting the house others are willing to wait a little bit longer because they're all jacked up about getting started with investing so it's just personal preference there's nothing on it so um i mean you can actually add up what what is 15 equal uh what's your household income rate of 70 000. okay all right so 15 is about 10 000 bucks a year less that you would be putting towards your down payment if you don't temporarily stop investing now what i don't want you to do the only guideline i would give you is i don't want you to stop investing to do no baby step four for more than three years so you need to get your down payment whatever you're gonna do if you're gonna stop investing if you're not gonna go to baby step four uh you need to do whatever you're gonna do inside of three years and that's what the way i would get at that hey thanks for the call las cruces new mexico matt is on the line hey matt how are you you're all right how about yourself better than i deserve how can i help well i was just wondering i have about eleven thousand eighty three dollars in uh credit card debt and i recently got an ad in the mail i guess you could call it uh to consolidate them uh to get a much much lower interest rate i'm got 29 on all three credit cards and the lower interest rate would be six percent yeah i'm just kind of wondering do you think it's worth it to do that or should i just forgo consolidating them and continue to pay on them as i've been what's your household income currently i am at 49 and eighty but as of july fifth i start a new job or i'll start there at fifty seven thousand two hundred by december 2022 i'll be at sixty five thousand are you single no sir what does your wife make my wife what does she make but um well she just lost her job due to kobe so she's just now another job she's also pregnant i mean she just lost her job just yeah it's because she's pregnant oh and can't get the shot right now because we're afraid it might hurt the baby that's why okay i'm with you on that so right so what does she do what does she do she is a prevention specialist she works with uh youngins and trying to keep them off drugs okay all right and how pregnant is she we just started second trimester okay all right well i would look for something for her to do no we we are we're we're looking i mean anything but but i mean i i would because anything we can do here's the thing okay 29 on 11 000 is 3 000 a year i would want you to pay off 11 000 in six months so it's 1500 worth of interest that you're going to pay currently if you reduce it to uh six percent that's going to be about 300 so it's gonna save you about twelve hundred dollars in six months twelve hundred dollars is nice if you hand it to me i'll take it okay but would you notice that twelve hundred dollars does not pay off eleven thousand he knows it so what pays off eleven thousand is you getting on a beans and rice rice and beans budget and attacking this like your freaking life depends on it and you knock it out fast now if you're gonna do that we're talking about saving twelve hundred dollars is all cause you're gonna pay it off inside six months that means that you are going to put two thousand dollars a month on this debt which means you're doing nothing nothing except working and paying on this stupid debt that's killing you now if you want to do that and reduce it to six percent that's fine but don't you dare reduce it to six percent and walk off like you did something and then leave that debt laying there you gotta pop it in the nose dude [Music] [Applause] [Music] [Music] open phones this hour this is the ramsay show the phone number is triple eight eight two five five two two five thank you for joining us jeff is in orlando hi jeff welcome to the ramsay show hey mr dave how are you sir better than i deserve what's up uh i i think i've made a mistake buying a car warranty and i'm wondering if i can that cash out my car warranty to pay down my loan yes so they i i wasn't sure i'd get about 22 000 left on my car loan and if i cash it out today about three years early it'll give me another two thousand dollars to pay down on my loan yes i should i should just go ahead and do that not warm but worry about the warranty yes all righty now let me back in i appreciate you being so trustworthy of my advice but let me tell you why okay sure then you can decide okay extended warranties car warranties included are 87 profit and overhead on average they are 13 statistical probability of coverage now what that means is if we're going to open up an insurance company of any kind an extended warranty company of any kind i don't care what we're going to warranty the first thing we would do is we would figure out okay we're going to cover the car in this case against being against breakdowns for xyz and a b and c we're going to cover those four things then what we're going to do is we're going to say this type of car a i don't know a hyundai or whatever it is okay just make up a brand we're going to study that car for breaking down on the items that we're covering and out of a thousand hyundai's just like that we're going to know that the average car is going to break down a certain number of times mathematically out of a thousand we'll get some good averages and so we know what it's going to cost us per car that we cover on average does that make sense it does so it's a statistical table it's called an actuarial table in life insurance but anytime you're running a statistical probability of an event occurring like that you're doing you're studying it's an actuarial study okay and so that's all you're doing is you're just figuring out out of a thousand hyundais and we're gonna cover let's just say let's just make it simple it never happens but let's say you're gonna buy a transmission insurance and that's all it was then you would study a thousand hyundais of that exact model and make and say out of a thousand of them seven of them the transmission is going to go out and the transmission costs this much money and you divide that into times seven divided into a thousand and we know what it costs us per car out of a thousand that we cover is that one more time that logical that makes sense to you it does yeah that number that number is thirteen percent on average okay meaning that that's all that they're covering you for is thirteen dollars out of every hundred one hundred and thirty dollars out of every thousand two hundred and sixty dollars out of every two thousand so what i just told you to cancel was 260 dollars worth of coverage and you got two thousand bucks back for it yeah that makes sense two years ago i bought it with the warranty for 3200 so i've already had about hundred dollars as uh you would say stupid tax yeah yeah you've lost that unless you had 1200 worth of repairs and you were one of the seven people out of a thousand or whatever the number is right in which case you always feel like a genius for buying these things but statistically they the other 87 percent on car warranties about 50 percent of it is paid in commission to the dealer so when you bought a 3200 warranty somewhere around 1500 bucks went to that dealer as a commission and the rest of it went to uh 13 then 260 went to cover the actual event on average and the balance went to profit and overhead for the warranty company that sold it to the dealer they made a profit in there as well but about 50 percent of car warranty is is actual commission and that's why best buy when you're checking out for an extended warranty if you go to best buy and buy a number two pencil they will try to put an extended warranty on it you know what i'm saying because they make more money on extended warranties on at best buy and on credit cards and 90 days same as cash than they do on tvs their money that they make is on extended warranties and on financing so and the car dealer is not much different so all of that is the reasoning behind this so what i just ask you to do is take 260 worth of risk on average in return you reduce your debt by 2 000 i think that's a good trade that's why i told you to do it sure absolutely two thousand dollars closer to being debt free so i appreciate it yeah and you may have something break tomorrow you know that right yeah yeah yeah that's cause that's not covered by your regular warranty and therefore not covered by the extended warranty so you're going to be cussing dave ramsey then unless you understood the risk that you were taking and so that that's but i never buy extended warranties on anything for that exact reason right there it's simple math for me i will self-insure through something that gives me a 13 benefit out of a 100 dollar um it's just not worth it to me it's you pay so dearly for the coverage that's what it comes down to open phones at triple eight eight two five five two two five uh jennifer's in champaign illinois hi jennifer how are you hello dave i'm blessed today how are you better than i deserve how can i help okay i'm calling on behalf of my daughter to see what i can do to possibly help her out of a situation that she has gotten herself into she's a single mom with two school-aged kids she has a good job where she makes about 32 dollars an hour and has some excellent benefits with that unfortunately she has a lot of debt and not a lot of assets in her case what situation did she get herself into she bought a house that was condemned why with a gentleman because she was with a significant other who talked to her well basically she went along with it drank the kool-aid and went along with the story unfortunately her name is the only one on the loan and it's a personal loan it is not a house loan so how much does she have on the personal loan um her personal loan is right around 24 000 is the property in her name it's in both their names where's goober where'd he go oh he's not paying on it at all i know is he still around oh yes okay yes i don't think we can help her well that was what i thought but my question is with her debt is there a better way for her to refinance that as opposed to this personal loan that she has now she needs to sell the condition at home as much as she can as soon as she can and pay down the loan as fast as she can and probably evict goober okay well she's no longer with goober i thought you said he was still there oh he's still in the city oh he's still hanging around but he got all he wanted out of this okay now he's got half a house he wanted out of this but this house is in um it's most likely the city is going to make them demolish it yeah i know they're not there they're going to make the new investor demolish it because she's going to sell it this week and guber is going to sign or i'm going to threaten him within an inch of his life okay i like that yeah because he he's a parasite is what you've just described right mm-hmm yeah he needs to sign and they need to get rid of this house i hope your daughter is not further in debt when the smoke clears but the house is not encumbered by a mortgage she just has a personal loan of twenty four thousand dollars so she gets eighteen thousand for the house voila she's got an extra six thousand dollars for having taken a trip with goober so it's not encumbered by a house loan no you said it was a personal line yes it is it's probably not got a lien on the house they probably didn't take a lien on the property because it probably ain't worth that much any idea what they paid for it it was fifteen thousand dollars they paid for it and then she took out a personal loan to do home improvements on a house that would you couldn't you could make it livable maybe so she's living in dollars no living with us right now okay all right good there's no way you could live in this it's a horrible horrible situation so again my question was to see if there was anything that we could do to advise her i think let's cut let's cut bait let's cut the losses as fast as we can get him out of her life as fast as we can and as far as we can permanently and get this property out of her life it's not going to be anything but a money pit for her she needs to get rid of it and if she ends up a little bit in the hole getting rid of it so be it that's part of the price she paid for this bad decision i'm so sorry for her what a horrible [Music] thing [Music] our scripture today matthew 5 14 and 15 you're the light of the world a town built on a hill cannot be hidden neither do people light a lamp and put it under a bowl instead they put it on a stand and it gives light to everyone in the house albert schweitzer said at times our own light goes out and is rekindled by a spark from another person each of us has caused to think with deep gratitude of those who have lighted the flame within us agreed so our last caller mom calling grieving for her daughter who has children single mom she hooks up with a guy who's a bad dude he may not be intentionally bad dude but he's stupid and he talks her into getting on the stupid train with him and together they buy a condemned house for fifteen thousand and they put another nine thousand in it and she has twenty four thousand dollars and she already had thirty two thousand dollars in debt and she already was a single mom barely making it living with her mom i have done a whole lot of stupid things in my life and i have coached and sat with people and cried with people and prayed with people that have done a whole lot of stupid things in our life most money problems are self-inflicted most of the time like almost all the time that i have gotten messed up in a money situation lost my tail in was because i was stupid and you know when i'm the dumbest the same time that poor girl was i'm the dumbest when i'm desperate right after i get desperate i get really stupid because when you get desperate you will grab at things and try to do things that you know in your mind are not going to work but somewhere deep down in your heart you think you're going to win the lotto so you buy the ticket knowing you're not you think you're going to beat the odds you look at this guy standing in front of your young woman and you know he's a twerp but you're so desperate that you try to hook up with him anyway he tries to talk you into buying a freaking condemned house and you know this is not gonna work but you're so desperate that you tried anyway and now we've got an extra tens of thousands of dollars worth of problems this hurts so bad i'm so sorry and some people don't like it that i call some of these things that people do stupid oh ramsay just calls you stupid ramsay calls himself stupid so we're all stupid we're all on we've all bought a ticket a time or two on the stupid train i'm not saying anything that i haven't done or you know i've done stupid with zeros on the end so i'm not picking on any body or shaming anybody but i mean just be careful when you're the most vulnerable when you're the most desperate because that's the most time you're gonna fall into the trap when you're desperate for companionship you'll overlook the fact that this guy is just mentally ill when you're desperate to get out of your mother's basement you overlook the fact that this real estate deal is a horrible idea desperate always leads to stupid high probability of stupid is following desperate be careful folks jonathan's with us in houston texas hey jonathan welcome to the ramsay show hi dave how's it going better than i deserve what's up i want to know how you handle family members in an estate situation i'm over the estate my sister's over overseas my mom's finances but every month at the end of the month she's basically drained down my mom's social security check i'm sorry how are you over oh your mom's still alive yes i'm also alive my dad died recently and left the estate to my mom i'm the trustee she's a beneficiary okay so how is your sister over the money if you're the trustee of the estate and all the money is in your control this the money that my sister is dealing with is my mom's social security money that's coming in oh that's all i'm only oh yes my lawyer says that i'm only over the estate i'm not over the social security right that's true you don't have control of that okay and so uh your sister is using up your mom's only money to live on yes she doesn't have a job hasn't had a job in several years till it's at home wow and how old is she about 42. okay you hold your mom 72 with alzheimer's oh wait is she um is she still is she lost her capacity no not yet she's still functioning day to day um but she lost her decision-making ability no when you ask her direct questions she can definitely answer that but if you leave with something that's opening that you will ramble on and kind of drift off okay so let me tell you i mean you can go as hard on this as you want to go one is you can just let this run its course and not worry about it and you just make sure your mom's taken care of because soon enough your sister's gonna have nothing when your mom passes correct she's gonna be out on her own she's gonna figure it out then that's gonna happen soon enough uh if you to go harder on it you can sit down face to face with your sister and say listen here's what's coming when mom's gone you're gonna be out you'll get your share of the inheritance because that's what the will says and i will abide by the will but you're not going to be here anymore you're not going to be staying i'm sorry i've done sit downs with her over four times my friends have told her some of the things i told her and she still doesn't listen she just keeps on going the only other thing you can do if you want to go hard and i don't think i would recommend this but um you would have to have your mom declared incompetent and have the court apport appoint what's called a guardian that light on someone to watch over your mom which would likely be you at which point you would evict your sister that's pretty hardcore your mom's not going to enjoy that process your sister's not going to enjoy that process therefore you're not going to enjoy that process and truthfully i mean what's your mom's life expectancy do you think five years four years three years five years i'm i'm giving it i mean you know we're current condition right now yeah it's pretty easy to say five years probably or less yeah issues yeah i'm not medical but i mean you've got you've got a medium level of all summers and so it's always debilitating so i don't know anything about it i've just worked with enough of these situations looking in from the outside so i mean it's up to you do you want to let this uh i i you don't need the social security money it doesn't do anything for you it just aggravates you that your sister is a parasite it does i'm i'm trying to make sure that i paid off all my debts once my dad passed away i made sure that all the investments are up to snuff so that my mom will have if she needs any assisted living nursing home anything like that there's money there to take care of her for five six seven years but my sister doesn't understand that like we need an emergency fund i saved up a lot of money and bought a new washer dryer because it went out of the house because my sister didn't have the money saved up and i'd tell her these things and try to explain it to her and nothing gets through here and i'm just wondering like what i would do is sooner rather than later i would get your mom in a different situation for care and just sell the house you're in charge of the house are you not yes yeah okay so when your mom doesn't need to live there anymore and needs care i would get her in an assisted living situation even if it's a nice high-end you know partially functional but then just tell your sisters you know you have to move because the house has been so and that that gets her that may not get her out of the social security but it gets her out of everything else yes and it gives her the wake-up call that bless her heart at 42 she needs because she's not productive she's not happy she's miserable every day every day i told her she's miserable just there's no dignity in the way she's living it's not fun for her either it's just sad but the problem is she's got some kind of mental thing going where she's in denial about what her life's gonna look like so i really wouldn't i can't recommend you go hardcore on it but if you want to you'd be understandable that you did but i i think um you know just but please don't continue to expect your sister to change ever she's not going to change all that's going to happen is she's just going to become homeless and then she's going to change but you're not going to change her you're not going to talk her out of this i'm sorry that's so painful i'll put sass 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 this is james childs producer of the ramsay show you can listen to all our shows with the ramsay network app on your smartphone browse by topic or even sync clips to your friends download the ramsey network app in your favorite app store today you

Channel: The Ramsey Show - Full Episodes

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Id: 4MMbuIs9asA

Length: 122min 0sec (7320 seconds)

Published: Mon Jun 21 2021