The Ramsey Show - App - 7 Steps to Win With Money and Transform Your Life (Hour 1)

Episode Date: June 13, 2018

The show about you

🎵 Live from the headquarters of Ramsey Solutions, it's the Dave 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. The phone number is 888-825-5225. That's 888-825-5225. John is with us in Albany, New York.

Hey, John, how are you? Very good, sir. Thank you for taking my call. Here's my situation. I'm 55 years old. My wife is 51. We just came through paying off a whole lot of stupid. We paid off $76,000 in about 26 months, and that was about four months ago. Then we put our fully funded emergency fund aside. Great.

And now I'm ready. I have the house yet to pay for. So I'm at the situation where I'm at 55 years old. I have nothing saved, really, from retirement at all. I mean, my wife has a small 401K. I get a small military disability pension, and I'll get about $400 from the state for a state retirement that I have. And what's your household income? About $120,000.

Awesome. It could fluctuate a little more because of commissions, some in sales. And how much is your out on your home? I owe about $218,000 on it right now. I just refinanced it 15 years. It was $224,000 when I first did it. Now it's down to $218,000. Okay, I'm a big number guy.

Let me walk through what I just heard, okay? You owe $200,000, $220,000, whatever. You make $120,000. You paid off $76,000 in what was it, 18 months? 26. 26, in two years. Okay. So if you did 76,000 every two years, from 55 to 65, that would be $760,000.

200 of that would go towards paying off the house. That would be a half a million invested. Yeah, I guess it could be. Well, it's the same thing you just did. Instead of applying it to debt, I'm applying it to wealth. Yeah, because what I was thinking about doing was just taking it and hammering it and paying off the house and then taking it and paying off and then investing it once the house is paid off.

Just in case something should ever happen, I would have a totally paid-off house. Yeah. What if something happened? What's going to happen? What's that? You never know when you get older. You mean you die? No, I just think, you know, you might want to either lose a job,

or my wife wants to stop working, or just loss of income. My wife wants to stop working. That's not something that happened. That's a decision. Something that happened is somebody gets sick or dies or something like that, or lost a job, but you go get another job. So, no, I'm going to work the baby steps. I'm your age, and it's exactly what I would do if I woke up in your shoes.

Here's the thing. Take your $76,000 success story. Way to go, dude. And apply that to your future. You have proven your ability to get organized and to handle money well. Something fired you guys up, and you took off, and you're running like crazy, and you're doing great. Let's apply that to the future.

Fifteen percent of your household income going into retirement until we get the house paid off. How quickly can we pay off the house? Well, 15 percent of your household income is $20,000 a year on $120,000. Okay? Right. All right. So let's use our $76,000 every two years. And every two years, that would be $40,000 going into retirement

and $40,000 approximately going on to the house. Now, divide $200,000 by $40,000, and I got five years the house is paid for. So when you're 60, your home is going to be paid for while you put 50% of your income into retirement, 15% of your income into retirement. And then past that, you're going to load up on retirement and finish up what you're doing. I'm getting the power of compound interest working for you, though, by getting this 15%, this $20,000 a year for the next five years going into retirement.

That 100 is not going to be 100. It's going to be 300 by the time we get there because of growth. And I don't want to lose that growth between now and 60. So we've got to get something started for retirement. The shortest path to your retirement security is a paid-off home and a nest egg using the baby steps. And so I'm going to stick right with the plan that I've used for so many millions of people over the years, and I think you can do it. I think you've experienced some success, and it's making you think,

hey, I can do this. Am I sure this is the right way? And I'm saying, yes, I'm sure it's the right way. And I'm going to send you a copy of Chris Hogan's book, Retire Inspired, which is where you're headed. And I think that by the time you're 70, your net worth is going to be over a million dollars. Because I think you're going to have a paid for $300,000 house,

and you will have been investing $120,000 worth of income, plus or minus, during that time and investing heavily. And I really think with a paid for house, and that house will have gone up in value, it's probably worth $300,000 now. It will have gone up to half a million, and you're going to have a half million to $700,000 in mutual funds, and you're going to be sitting pretty when you get there. That's where you're headed. But don't let up.

You're playing the cards right, and keep doing this. So Kelly will pick up. We're going to give you a copy of Chris Hogan's book, Retire Inspired. All right, Victoria is with me in Kansas City. Hi, Victoria. How are you? Hi, Dave. I'm doing so well.

How are you? Better than I deserve. What's up? Okay, so my husband and I are currently on Baby Step 2, and we have about $60,000 to pay off. We're just getting started. And all along, our plan has been to wait until we're out of debt to have kids, to start a family. And so now I think that we're kind of getting a little bit of hope and a little bit of traction. We're realizing that emotionally we're ready and we want

to have children. But we're wondering, like, would it still be smarter to wait until we've paid off all of our debt? Like, what is is your stance on that or should we just kind of start now and roll with it and and maybe take a little longer to pay off our debt but in 25 years of doing this show i've never told someone to not get married or not have kids based on their debt okay that you do that when god tells you to do that okay okay and uh but now we use common sense with that mix. Okay. In other words, we don't marry someone who's $400,000 in debt and thinks they want to go another $400,000 in debt if you hate debt. That's not going to be a good marriage. That's going to be hell on earth.

But the reason is not the debt. The reason is the person's attitude toward the debt in that case. Okay. Then the baby thing, babies don't cost that much. It's just a disruption in terms of the cash flow. And so you're going to be fine. You're going to be surprised about how much formula is and that you have a federal law says you have to go to the pediatrician 46 times

and all that, but, you know, but that kind of stuff costs. But the rest of it, they don't, you know, they don't take up that much space. They don't burn any more electricity. So, you know, it's just, you know much space. They don't burn any more electricity. Well, that's true. It's just have babies when you're ready to have babies. Now, what I would do if you're in Baby Step 2, when you become pregnant, not until, but when, when the doctor says, okay, then I would stop Baby Step 2 temporarily and build up an emergency fund until baby comes and then use that emergency fund to reinstate and kick into Baby Step 2 again after baby comes

and mama comes and comes home from the hospital, everybody's fine, restart again. But you temporarily press pause on your debt snowball if you're doing a pregnancy in the middle of it. This is the Dave Ramsey Show. Hey, this is Dave Ramsey. You know, most of us have gotten behind on our bills at one time or another. That's nothing to be ashamed of. It happens. And many of us know the embarrassment that comes with those harassing calls from collectors. Some of these guys are just scum. But then there are the collectors that are just plain crooks. These are the guys that take it a step further and they violate the Federal Fair Debt Collection Practices Act on a daily basis.

They're breaking the law and they need to be stopped. The truth is, debt collection is the most abusive, out-of-control industry in America today. But you don't have to put up with it. If you have collectors calling you multiple times a day, calling you at work after you've asked them not to, cursing or threatening you in any way, then you need to visit CollectionBully.com. These folks will connect you with an attorney who I know can help you. These attorneys know how to stop

collection agencies from bullying and threatening you anymore collectionbully.com go to collection In the lobby of Ramsey Solutions, David and Margaret are with us. Hey, guys, how are you? Hi. Hello, Dave. Good. Welcome. Where are you all from? San Jose, California.

That's a bit of a trip to Nashville. It's been a long journey, so we had to make it. Very cool. Well, we're honored to have you. And you're here to do your debt-free scream. Yep. How much have you paid off? $973,000.

Okay. He just dropped a million dollars like it was nothing. Wow. That's just nuts. Okay. I got to hear the way, man. All right. How long did this take?

It took five years, but I have to say part of that was making the tough decision to sell our house and become renters again so we could pay off the other $123,000 of debt we had. Gotcha. And what's your household income during this five years? It went from $200,000 to $400,000. My goodness. And what do you all do for a living? I am a real estate agent and a very happy real estate ELP. Oh, very cool.

And I'm a preschool teacher. Love it. Very fun. Well, thanks for being an ELP. So now it's making sense. We're selling a little California real estate as part of this million-dollar transaction. And how much did the real estate sell for? It sold for, we were actually upside down. It was at the bottom of the market.

And our house that we owed some $825,000 sold for $525,000. But I had to make the short sale work with two different banks. So I was a pit bull and I made that happen. So I feel like that was a big contribution for me. She was the short sale negotiator with the bank. Wow. Beware of the preschool teacher. And the Italian in me.

I love it. That's for sure. I love it. That's cool. So you did this without recourse, huh? Yep, we did. They cleared the loan. They cleared the loan, and I still have the documents that I'm saving in the vault forever.

Forever and ever. Amen. Yes. So you sold the house for $525,000. And you had $850,000 roughly. Owed. Yep. So it's like a $300,000 swing there.

Yep. And we bought the house. As you say, if you don't buy a house without debt, it becomes a burden. And our house was definitely a burden. We had a negative amortization loan that was switching from a $1,700 payment to almost a $5,000 payment, which we couldn't afford. We borrowed the down payment from her dad and we had two car loans and four credit cards and owed the IRS. You sound like real estate agents. We viewed April 15th tax day as a suggestion.

That's good. That's funny. Oh, so the short sale with the pit bull, that clears $800 and some change of the $973. And you say there's another $100 and a quarter that you cash flowed through this time. But the biggest strain was just making the decision to do the house deal. Especially being a real estate agent, going from owning to renting, I was concerned what people were going to think about us and how they were going to view us. Yep, absolutely. Especially me. Absolutely, yeah. And, you know, we just grow up around real estate, and we love real estate, and we don't want to ever get rid of it once we've got it. And

we just kind of got, all real estate's good. I grew up with the same brain that works the same way, and it doesn't always work. Yeah. Is is the problem exactly and our our house had a roof that needed replacing it had twelve thousand dollars of termite damage i mean it was a fixer-upper wow unbelievable so how did you get involved how'd you guys get plugged into the dave ramsey process in this five years well my sister had always been telling me about dave ramsey uh They paid cash for a car. And it just seemed really weird to me. It seemed like some sort of cult or something. So I always resisted it.

But I'll never forget the day. It was January 3rd. My boys and I were dragging our Christmas tree out to the street to cut it up so the trash man would take it the following day. And someone from the bank, because we were behind on our mortgage payments because they were no longer $1,700, they were $5,000, came to take a picture of the house. That was tough.

And being a real estate agent, I knew why that person was there. But my youngest son, who must have been like eight at the time, he's like, oh, daddy, is that for Google Earth? He just thought it was cute. They daddy, is that for Google Earth? He just thought it was cute. They were taking a picture for Google Earth. And that's when I said, no, boys, come on in. We need to have a family meeting.

And it was that weekend. I told the kids and the family what was going on and bought Total Money Makeover on a Friday and couldn't put it down. And I hate reading. She actually said to me, what are you doing? Why are you reading a book? Because I just can't read a book. I read the whole thing cover to cover.

And I just said to her, we got to do this. Wow. And what did you say, Margaret? I said, okay. I let him take the lead. We went out to dinner and explained to the family what we were going to do how this envelope money system

was going to work and he said now kids you got to support mom because I think they were between 11 and I don't know

15 and my youngest son when we explained the envelope system when we got to the clothing envelope he's like oh great

when mom and Natalie our daughter when mom and Natalie spend all the clothing money then I won't get any shoes it didn't happen because he gives me a good play money fund i love it very cool well you've made a great income and you've made some really hard choices and that's put you where you are how's it feel now it feels amazing i mean i i just we our whole 27 years of marriage we've been in debt we use two credit cards to buy her wedding ring so we've never known what it's like to be debt free and just the feeling of now we can begin life all these things we've put on hold for so many years

when the kids would ask it was always always, nope, not till we're debt-free. Nope, can't buy that till we're debt-free. And now we can do it, and it's just surreal. And he sent me back to work, too. Well, there's always that. I didn't like that. There's always that.

That's part of the equation sometimes. Instead of me getting a job delivering pizzas, I sent her to work. There you go. And gave her the banks as a full-time job to negotiate with, which is a dadgum full-time job. Unbelievable conversations you have had. I've had them, too. They are no fun. Well, you guys are impressive.

How does it feel now that you're completely done? I asked that once before, but one more time. Well, I'm still working. I want to quit that job. But now we've got the 23-year-old in college, so cash for college. Yeah, the other thing we did during this five-year period, we had a son that went off to college in San Diego, and we wouldn't allow him to get a student loan. So we've been cash-flowing his college while we've been becoming debt-free.

And we also cash-flowed two of our kids where we did your program. Every dollar they put in a bank for a car we gave them a dollar matched matched and our oldest son bought a car for cash for 13 000 and our daughter paid cash for a car for 8 000 wow all while working on becoming debt-free yeah you guys have changed everything yes you got a whole new rut in your brain you don't even think the same way now no and it feels good not to have the IRS call me anymore. Or people taking pictures of your house. Exactly.

I remember that. And I remember the guy that came by one of the rental properties we had that we were getting foreclosed on. And they had sent him to board up the house. And they hadn't yet foreclosed on it. But they were afraid their collateral was not being taken care of. I had renters in there. And these idiots were going to put plywood across the house. I mean, just the dignity that that kind of crap steals from you is just, it reminds you that the borrower is slave to the lender.

It changes. It's down inside, and you just want to fight it for the rest of your life, and so I have. Yeah, I couldn't sleep at night if I heard, like, a car, like, driving slowly by our house, and I'd always look out the window to see if it was someone taking a picture or... Or a repo man. Yeah, taking a car like driving slowly by our house and i'd always look out the window to see if it was

someone taking a picture or or a repo man here a repo man car wow wow now you don't forever you're free yep you guys i don't even have to ask you'll never go back no definitely not no way to go and we've changed the kids lives and that's a huge part of it that's the big deal right there everything has changed yeah well congratulations you two we've got a copy of ch it. That's the big deal right there. Everything has changed. Well, congratulations, you two. We've got a copy of Chris Hogan's book for you, Retire Inspired. Thank you. And that is the next chapter in your story to become millionaires. You're well on your way to doing that and outrageously generous along the way.

The good news is you've completely changed. That's the transformation that has to happen. And you change, then the money changes. It's not the other way around. And you guys are proof of that. Very proud of you all. happen. And you change, then the money changes. It's not the other way around. Right. And you guys are proof of that. Very proud of y'all. Congratulations.

Thank you. Very well done. David and Margaret, San Jose, California, $973,000 paid off. That includes the sale and short sale of an $800-and-something house. Done this over five years, making $200,000 to $400,000. Count it down. Let's hear-and-something house. Done this over five years, making $200 to $400. Count it down. Let's hear a debt-free scream. One, two, three. We're debt-free!

Absolutely awesome. This is how it's done, people. Wow. Wow. Change. Change is hard. Change is worth it. This is The Dave Ramsey Show. One-third of American households have no life insurance, and half of the remaining households don't have enough.

The main reason people don't have coverage is they think they can't afford it, they don't know what kind or how much to buy, and they're afraid of making the wrong decision. Listen, it's not that complicated. If you have a family that's depending on you, you must have term life insurance. Rates are at an all-time low, so price should not be an excuse. Stay away from cash value whole life plans. I recommend 15- or 20-year level term insurance plans,

and you need between 10 and 12 times your income. I've been sending you to Zander Insurance for almost 20 years. They shop the top companies to get you the best rates and keep the entire process simple. Call 800-356-4282 or go to zanderinsurance.com. Take the time to take care of your family. Call 800-356-4282 or go to ZanderInsurance.com. Thank you for joining us, Amanda. We're glad you're here. This is the Dave Ramsey Show. Jeff is with us in Washington, D.C.

Hi, Jeff. How are you? I'm doing great, Dave. How about yourself? Better than I deserve. What's up? First, I want to thank you for literally saving my life with your teachings. I'm trying to pay that forward a little bit and get an FPU class going at my church.

I've received permission to use the space, but I'm getting no support from the church on advertising or talking about the class. My pastor has talked to me and commented that he believes the program's a little bit towards prosperity theology, and that it ignores some level of privilege that's required to make it work. Do you have any advice for me on what I can say to them to try to get more support? Well, let's just do this. He has made a set of assumptions based on something someone told him, not based on facts. Because I'm neither um how can i start from being bankrupt to do what we've done and that assumed privilege um i mean i grew up a poor redneck kid so i mean a lower middle class

redneck kid and um so uh privilege is absurd. It's kind of liberal lingo, so I don't know if I can help this guy or not. But the prosperity thing just probably means he just doesn't know that our teaching is not prosperity. Because prosperity gospel obviously assumes that God gives you something because you ask God to give it to you, or you claim it in the name of Jesus. You've heard that, I'm sure. Everything that we talk about talks about, you know, what Proverbs says, that the diligent prosper, meaning that when you work your butt off, you have money. That's not the prosperity gospel.

Prosperity gospel is you get money without working for it. It's a heavenly lotto, in other words. And so it's actually the opposite of what I believe and what I teach. So both of these things are uninformed at a minimum. At a maximum, it's just him being insulting. And I don't know which it is. So we can find out, though. The way to find out is ask him to attend the class.

I'll pay for it. I'll give him a membership. He can come as my guest. And then when he finishes, if he assumes either one of those things, he's a fool. Or if he refuses to attend, then it's just a liberal making a statement. And some of those are out there. I don't know what he is. I don't know him. I. I don't know him.

I hope he just is uninformed. I'm going to go with a positive assumption, right? Even though both of those things are highly insulting to me personally. But I understand there's people out there that are uninformed and run their mouth, whether they're pastors or not. So I'll give it to him, and you offer for him to attend for free. And then after he attends, we'll see where he comes out at that point. But, you know, it's just absurd.

The only people that use that lingo after they actually know what we teach are people that have an alternate political agenda. And it's not a theological argument at that point or a doctrinal argument at that point. So to get him to back it under his current set of assumptions would be inconsistent. He's tolerating you teaching the class with his current set of assumptions because he has no respect for the material or the man teaching it currently.

So if I were him, I wouldn't have allowed you to teach it if I had that set of assumptions. So he's being fairly nice in that regard. Because he believes negative things. I wouldn't allow somebody to come in my building and teach my people stuff that I thought was negative. You follow me? Yeah, and I told him that I just wouldn't take no for an answer. So he bowed to the faith. Well, he's tolerating you and or me for whatever reason. So the thing is this. My grandma used to say those convinced against their will are of the same opinion still.

There are people out there walking around based on a liberal, not theology, but liberal political mindset that are never going to be okay with you reap what you sow. They're never going to be okay with cause and effect. I can't change them. You can't change them, whether they're a pastor or whether they aren't. And so I'm not going to attempt to, and I would suggest you don't attempt to. But, you know, find another church in the area that will embrace, you know, what you believe and what you've experienced as well,

which is why you believe it, and allow to teach it there if this doesn't work. But hey, let's try to win the guy over. Maybe he just doesn't have good information. I sat with some guys the other day who actually went 10 years thinking I didn't love Jesus. And they just had to sit down and have lunch with me to figure out that it was the truth that I do. So they really didn't think I was saved. It's pretty, pretty interesting. So and based on that had kept me out of their church.

So it's OK, though. I mean, that's just part of it. That's just uninformed. There's uninformed and then there's obstinate. Right. And but take it. See if you'll go through the class. Say, listen, I talked to Dave and he says that he's neither of those things,

and he wants to offer you the class to attend for free to prove it, and tell him to come through and check it out. Not so you can sell him on it, but so that he can make a decision. Because if he's correct about me, he should not allow the class in his church. I don't think. I wouldn't. If I was leading that church, I wouldn't have let it in there if if he but if he just has these vague sense somebody told him this somewhere

some group he's in or something somebody mouthed off and he believed what he heard then you know find out for yourself dude find out for yourself prove your ideas prove them in the marketplace so hold on I'll give to Kelly pick. We'll give your pastor a free ride through Financial Peace University. I hope he agrees to attend. If he doesn't, we'll know where he stands. Lauren is in Detroit, Michigan. Hey, Lauren, how are you? Good.

How are you? Better than I deserve. What's up? Yeah, well, my husband and I are disagreeing on how to pay off his student, his Canadian student line of credit. We have saved up some money in anticipation of buying a home, not now, but in about two years, and also to save up for an emergency fund. But now, after listening to your show, I feel like we should use our savings to put down a large chunk on this loan, and he doesn't want to use it. Well, he hasn't had the benefit of listening to the show, and you understand that we're not, you know,

what we teach is to do what you're saying. Baby step one is only $1,000. Anything above that that's non-retirement savings goes at your debt. Why do we teach that? Because the number one impediment to building wealth is debt. The number one wealth-building tool is your income, and when you don't have any payments, you have the ability to build wealth. You have the ability to be outrageously generous in the process.

And so that's the thing he doesn't see. He just says, oh, you're listening to this guy on the radio. You want to take our savings? You've got to be kidding me. That's all he heard, right? Yeah. And so, no, you need to talk through the why and not what Dave says. And the reason that we say this, the reason we talk about this is we're going to play all the way through,

meaning we're going to get the debt paid off and then think about it. What if we had no debt at all? How quickly could we rebuild our emergency fund and then rebuild our down payment for our home? But if you plan on keeping the student alone around for 5 or 10 or 20 years, then you would go with his plan. I know. That's what he wants. He doesn't see a problem with it being there for like 8 years, and I want it gone.

There you go. And the reason you want it gone is he's willing to tolerate it. Like, well, it's a backache, but it doesn't hurt that much. And you're going, yeah, but if we would work out really hard for 90 days, we'd never have a backache again. And, you know, you believe that. He thinks he's normalized the debt in his mind. So that's what you've got to talk through with him is the why instead of the what.

The what is do we take the savings and pay off our student loan debt. The why is yes, because we can build wealth faster when we don't have any payments. And that's the direction you go. So good question. Thanks for joining us. Our question of the day comes from blinds.com. Give your home the simplest makeover ever and take advantage of site-wide savings at Blinds.com. Use the promo code Ramsey.

Chrissy is in Georgia. When you mentioned leasing a car, you used the term fleecing. Why? Is it a bad idea? Yes. Smart Money Magazine, My Calculator, and Consumer Reports, all three will tell you that fleecing a car, you're getting fleeced, is the most expensive way to operate a vehicle out there. It's the most expensive way to borrow money to buy a car. And yes, you're effectively borrowing money to buy a car.

Dumb idea. Math on it is horrendous. This is the Dave Ramsey Show. Okay, I need you to listen to this, because one normal routine that everyone does can cause total chaos in your life. I'm talking about the simple act of using Wi-Fi. When you're on Wi-Fi anywhere in public or at home, you're at risk of hackers easily seeing every site you visit and every search you're doing online.

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600 million people worldwide have downloaded Anchor Free's Hotspot Shield. Download it right now. Just search Hotspot Shield on iTunes or Google Play or go to hotspotshield.com. You can be secure in seconds. Download Hotspot Shield by Anchor Free today. Stephen is next up in Elizabethtown, Kentucky. Hi, Stephen. How are you? Good, you?

Better than I deserve. What's up? Okay, so currently I have $7,500 in my savings and $2,000 in my emergency fund. And I'm moving down to Texas in June. And I just turned 18 and got $10,000, and I invested that into a mutual fund. Okay. And I just turned 18 with that, and what I want to do with that is invest that and just forget about it. And then when I turn 21, I get $15,000.

When I turn 25, I get $25,000. And then when I turn 30, I get $45,000. And I kind of want your opinion on what I can do with that as I grow into age. Okay. Well, certainly investing it is a good thing. There's nothing wrong with that. You go earn an income so you don't have to worry about touching that money. You've got your emergency fund in place. I'm assuming you're debt-free, right? Yes, I got a car when I was 16 that's paid off, and it's got 40,000 miles on it,

so it should be good until I'm 30. I'm going to drive that into the ground, and then after that, buy a new car with cash. Sure. We'll pay cash for whatever you do, whatever cars you buy or anything you do from this point forward. The other thing that's going to happen is somewhere out there in the future, you're probably going to be looking at buying a home, and you may end up using some of the invested money as your down payment at that point. And there would be nothing wrong with that at all.

That's a good investment as well. And so, yeah, it sounds like you're really on track. So this sounds like a structured settlement to me. Yeah. What happened? Were you in an accident or something? I was in a car wreck when I was nine years old. And so I'm stuck with back pain for the rest of my life but it's given me

this money and i'm just kind of wanting to invest all that but then also everyone's telling me right now i need a credit card i need i need to build credit for the future and i'm kind of standing here since i followed you since my freshman year in high school what should i do with that as well wow very cool. Yeah, you just avoid the debt, and no, you don't need a credit card. That's wrong. And everyone is broke. They said and I heard are a bad financial planning firm.

You don't want to use they said and I heard for advice because they said and I heard are normal people, and normal people are broke. Seventy percent of Americans are living paycheck to paycheck and are broke. And so whatever most people say is what you don't want to do because most people are broke. And so they're telling you to go out here and go into debt. That's absolutely ridiculous. It's ludicrous. You've done a great job of handling your money, and you're right on track. So I think you just play this right through.

You've got your game plan, and I would stick right straight to it. Good question. Thank you for joining us. Aaron is with us. Aaron is in Sacramento. Hi, Aaron. How are you? I'm well, Dave.

Thank you very much for your time today, sir. I truly appreciate it. Sure. What's up? I have a question for you. My wife and I are set to retire in about two years. I'll get a traditional pension from my employer, and on top of that, I have a 457 plan through them. My wife has two separate 403B plans through her employer.

We're debt-free with the exception of the house, no kids for college to worry about, none of that. So we're focusing on our house right now. My question is, when I do retire or when we both retire, would it be wise to take our mutual fund accounts, our deferred compensation accounts? We'll have enough built up in them to pay off our house, and that would include taking the tax hit. Will you be old enough you won't have a penalty, or you will have a penalty?

I don't think I will have a penalty, because the 457, I can start taking out of that the day I retire. Right. Yeah. And so, yeah, you can pull from that. There shouldn't be a penalty. The only tax hit is it's deferred compensation, so the compensation when you pull it out is taxable, but that's not a problem at all.

Yeah, I would use that money in a heartbeat to pay off your house. How much do you owe on your home? About $400. And how much is in the 457? Between the two right now, there's about $500. Good, good. So about enough to do it then. It should be, yes.

And pay the taxes, you know. Yes. And then how much is in the other nest egg? We've got a three to six months right now. No, I'm saying in your retirement nest egg. Oh, well, I'm a county employee, so I'll just get a percentage of what my paycheck was. But I thought you said you had 403Bs and other investments. So, yes, yes, sir.

I have a 457, and my wife has two 403Bs that we'll be able to cash out when she retires also. Okay, well, you don't need to cash those out, right? Sir, I'm sorry? You don't need to cash those out, right? Sir, I'm sorry? You don't need to cash those out, right? No, I will have to cash hers out also. We'll have to cash out three of them, but it will pay off our house entirely, and we'll still get a monthly income through my actual employee pension. But you'll be broke?

No, sir, we won't be broke. We'll get the monthly pension, and we'll have money in savings. You know, we've got money set aside for that also. Money set aside for what? Well, we've got a savings account, if you will. We won't be broke because I'll still be getting a monthly pension check. My point is you won't have any money other than your monthly income. You're going to use your last dime of your nest egg to pay off

the house. Is that what you're telling me? Yes, sir. No, I would not do that. I want you to pay off your house, but I do not want you to pay off your house and have no money left and be 100% dependent on that monthly income from the government.

No. No, no, no, no, no. Too much risk. Now now i do want you to pay off the house as fast as possible but i i would not clean out all your entire nest egg to do that i i thought you were saying you had 401ks 403bs over here with a couple hundred thousand in them and the enough in the 457 to pay off the house so um that's i'm glad i clarified that no i would not i would not take you down to zero or close to zero uh in order to pay off the house at that stage i do want you to get the house paid off but not that badly thanks for the call mark's with us in houston texas hey mark how are you hey dave i'm doing great Thank you for taking my call, sir. Sure. What's up? So I'm looking to upgrade my truck, say, in the next six to nine months.

And I'm trying to evaluate the opportunity cost versus, you know, going and buying a I have about $30,000 that I have set aside for that. And I'm looking at maybe a $15,000 truck versus maybe buying a thirty thousand dollar truck so i'm trying to evaluate how do i make the best decision you know with with the incremental cost to buying a maybe a newer better vehicle versus just buying a you know maybe a seven-year-old truck that would probably do about the same thing and this is your everyday driver or it's a work truck or what yes sir it would be my everyday driver for me and the family what is your everyday driver, or it's a work truck, or what? Yes, sir. It would be my everyday driver for me and the family. What is your household income?

This last year, I was just under $150,000. Good. And what's your net worth? Right at about $300,000. Good. Okay. We don't recommend anyone buy a brand-new vehicle unless they have a million-dollar net worth. But if you're talking about a $30,000 used versus a fifteen thousand dollar used truck and you've got the

cash to buy it basically it there is um the only reason that you would it's consumption you know when you buy a truck um the difference in the 15 and the 30 the nicer truck is just money you're consuming it's like it's like saying uh i'm going to go on vacation and i'm going to spend ten thousand dollars on vacation you know and there's nothing wrong with that you have the money you save the money you make enough money to spend have an expenditure like that it's not it's not out of line ratio wise and so it's just a matter of what you want to spend your money on uh But can you always, you could 100% of the time invest the difference and come out ahead because whatever you invest in is going up in value and the truck's going down in value.

In other words, you're saying, hey, I'm looking at a $10,000 vacation, but what if I went on a $3,000 vacation and invested the $7,000? Would I come out ahead 100% of the time? Of course. Right. Right. Right. And you would.

But the question is, do you want to consume some of this money, enjoy some of this money on that vacation, or in your case, buy a truck? So I think you've saved up the money for that purpose, and I don't think you're someone who impulsively blows money and is out of control with materialism just based on the way you're handling your money. I'm perceiving that. So I don't think it's out of line to buy the truck, the $30,000 truck. But you just look at it at consumption versus investments, and you may get more joy out of doing the investment and driving the $15,000 truck.

I don't know. It's just a matter of how you want to spend your money at that point. Because there's not a – I mean, you can't – it's apples and oranges that we're trying to compare investments versus consumption. So just decide whether you're going to get that much joy out of it. And if you do, then that's fine. It's not out of line for you and your situation. That puts this hour of the Dave Ramsey Show in the books. Hey, guys, it's Blake Thompson, Chief Production Officer for the Dave Ramsey Show.

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