The Ramsey Show - App - Am I Responsible for My Parents' Charges on My Card? (Hour 2)

Episode Date: July 31, 2018

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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 market has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. This is your show, America. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Denise is starting us off in Los Angeles this hour.

Hey, Denise, how are you? Good. It's an honor to speak with you, Mr. Ramsey. You too. How can I help? Just have a question. I am totally debt-free, but the way I came about it is kind of not easy for me to enjoy. I was actually going through a divorce, and my husband passed away before it became final in December.

So basically, all the things I thought I was going to have to sell, keep, or split became mine. And I got a couple of life insurance policies. So because of that, I was able to pay off my house and pay all my bills. And I'm debt-free, but I'm not able to really feel like I can enjoy it. I feel like compared to other people that have been on your show that have scrimped and saved, not that I haven't done that in the past, but this was kind of a windfall and unexpected, and it's hard for me to just enjoy it.

I mean, that's a human emotion. We don't celebrate death, and we don't celebrate divorce. I mean, those are both painful things for people to go through, and obviously you all weren't getting along, but you didn't wish him dead, I suspect. No. You know, I mean, that, you know, so, I mean, you would be, like, weird if you wanted to jump up and down and throw confetti because somebody died,

you know. Right. I mean, that would be strange. So I can get that you don't want to celebrate it because it wasn't due to effort, but it doesn't mean it was a bad thing or that you did something wrong. You didn't do anything wrong. Right. And it's just, you know, I mean, I feel good about it.

I've taken a load of stress off. Sure. You know, I'm putting away 20% of retirement. I've got a good emergency fund i've done everything i'm supposed to do it's just bittersweet it is it's very bittersweet and it's just kind of unusual because the death is one thing but the divorce is just another layer to it so so did he have any uh heirs or children outside of um no that that would have gotten the money had the split occurred? No, not really.

I mean, we didn't have any children between the two of us. And he didn't have any prior marriage or anything? No, no. There's just, you know, it's just the weirdness of it. And maybe I helped you to just call and say out loud it's weird and me to go hey you're right it's weird but you know next chapter of your life is we're going to take this um horrible situation and um you know move forward from it and the benefit of the bad situation and we're going to turn it into positive things in the future and so all you can do is take the you know the money that's freed up now can do good things right right you can be generous and

you can grow wealth and you can help others and you know generosity and all that kind of thing so there's all kinds of good things that can come of this but i'm with you the way it came about is not something anybody would sign up for right right and i am making the decisions i need to make with it but yeah i i have the book retire inspired i'm starting to read that so you know it's just a it's just an unusual circumstance and not too many people i agree i agree i had a lady call in one time that was even worse than this in my mind. They had lost a child. A child had been killed in a car wreck, and they received several million dollars as a result.

And it was hard for them to enjoy that money, you know, because that's a horrible thing to go through. And so, I mean, I get that that but it's not like we're sending the check back you know you know so we can we can open a memorial in the name of the child or you could do something in the name of your ex if you wanted to you know um you're not you're not duty bound to though you're not morally bound to do that but um right i just want to give you permission to say and to you know permission for this to be weird because it's weird and just okay next you know okay yeah i probably needed to hear that because it is it's just a little unusual and it's not something i've some people know the situation some people don't have an idea at all again i i'm with you i don't think you

ought to be i think you'd be strange if you're out there throwing confetti and having a big party that'd be just strange as crud so but um but you know my kids used to say when you're having an awkward conversation when they were teenagers they would put their hands together and do their thumbs out and they called it awkward turtle like a turtle upside down on its shell and can't do anything you know like awkward turtle and it was like meaning a conversation that they were having was awkward and you're not having an awkward conversation but you're having an awkward moment in this phase of your life is what we're saying it's just weird and uh unusual but uh that doesn't mean that it can't be a blessing. Yes, yes.

It's just been, like as you said, it's just been very bittersweet. Things are coming about the way I hope they would be. It's like that stupid candy we had when we were kids, sweet tart, which I never made any sense at all to me that you put those two things together. But it's just sometimes our life deals us those cards, and that's what God has for us. And so I think can you look forward and be an honorable person and honor God with the possessions that you have by managing them well for the good of others and for the good of yourself?

And if you can, you've done the best you can in a weird situation. And over time, some of the weirdness will begin to shed itself off of this, I guess. So, hey, good call. Very interesting discussion. Thanks for voicing that. I'm sure there's others out there that relate to that. Brooke is in San Diego, California. Hi, Brooke.

How are you? Hi. Nervous to talk to you, but grateful for your advice that you may have for me. How are you? Better than I deserve. What's up? So here's my situation. Two years ago, my husband and I got house fever. You know, San Diego is a very expensive market right now.

And we decided it would be a good idea to buy a house with my parents. The house is big. It has enough space. But after we got into the house, we realized that it's more than we can chew. We bring in $8,500 a month, and our portion of the house payment is $3,300 a month. So we are just making it by we have no debt. And we've, you know, tried to talk to my parents about selling. They're not interested in selling at all. However, recently with my husband's job, he's had the chance to maybe relocate to either Arizona or Northern California. And my parents understand that this

would be an opportunity for us. And so they're at the point where, okay, if we're going to relocate them, they are willing to possibly put the house up for sale to help us get ahead. So we just want to know if this is something we should do. Yes. Yes. You've told me six different ways in these sentences that you shouldn't have done this, and I agree with your conclusion. And you have the opportunity to undo it and not do it again. Yay.

And get out unscathed. Wow. That would be pretty cool. Yeah, let's make that move, kiddo. This is the Dave Ramsey Show. Are high health care costs getting you down? Are you confused trying to navigate your options? Do you wish you could find an affordable affordable biblical solution to your health care costs? Based on New Testament principles, Christian Health Care Ministries, or CHM, helps Christian families, churches, and ministries join together as the body of Christ to share their major health

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Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. chministries.org. Thank you for joining us, America. This is The Dave Ramsey Show. We're glad you're here. Open phones at 888-825-5225 Sarah is with us in Pittsburgh Hi Sarah, how are you? Good, how are you?

Better than I deserve, what's up? My husband and I are wondering if we would be able to afford to pay for a house in cash So I was hoping to run the numbers by you Okay Alright, we have $10,000 in checking. We have $25,000 in our emergency fund. We have $30,000 saved for a house down payment, $4,000 for our next car. We make $5,100 a month. We have $149,000 in mutual funds and $71,000 in a Roth IRA. You have how much in mutual funds?

$149,000. Mm-hmm. Okay. All right. How expensive a house are you talking about? I bought, I guess. How expensive a house are you talking about buying? Probably $150,000 to $170,000.

Why couldn't you? Well, we just started the pre-approval process for a mortgage, so I didn't know. Well, why wouldn't you just pay cash for it? You got $149,000 in mutual funds and $30,000, say, for a house. Where I come from, that's $179,000. That ought to be able to pay for that. It just makes me anxious, so I thought I wanted to ask. House payments make me anxious.

Debt makes me anxious. What would you feel like to have no payments in the world? I've never had a payment, so that in and of itself makes me anxious. We're 32. Where did the $149 come from? Savings. We've had a couple deployments through the years, and we're out of the military now. So you aggressively and frugally managed your money?

Yes. And you didn't have a house payment? No, we've rented for the last five years. Oh, you did have a payment. You had a rent payment. Right. We paid rent. Look at that.

Oh. So if you didn't have a rent payment you could save even faster right right we'd be able to put that money back towards retirement well you could build like your 149 that you're scared because it's not there it freaks you out a little bit that's not there anymore my point is you put that there in the first place now you don't even have a house payment a rent payment anymore you got to be able to put that there in the first place. Now you don't even have a house payment or rent payment anymore. You've got to be able to put it there faster, right? Exactly, yeah. So that's the point of being debt-free completely. Your most powerful wealth-building tool is your income.

You have already proven that even while renting. Now you don't even have a house payment because you just paid cash for a house. So now you're really going to understand your most powerful wealth-building tool is your income. Okay. I think we can do that. Like I said, it makes me nervous because retirement's my goal, and we're a lot of years away. Not having a house payment takes you to that goal even faster.

Do you follow my reasoning? I do. Get after it, kiddo. You did great. Very proud of you. My house payment takes you to that goal even faster. Do you follow my reasoning? I do. Get after it, kiddo. You did great. Very proud of you. That's very neat. 30-something years old, paying cash for a house.

Boom! Love it. Jonathan's with us in New York. Hey, Jonathan, how are you? No, it's Chelsea. I'm sorry, in Denver. I can't read. Hey, Chelsea, how are you?

I'm great. How are you, Dave? Better than I deserve. What's up? So, I have a question for you. I'm hoping you can settle something for my husband? I'm great. How are you, Dave? Better than I deserve. What's up? So I have a question for you. I'm hoping you can settle something for my husband and I. Okay. So if I'm paying a debt that's not technically ours. So a few years ago, my parents had filed bankruptcy,

and they had used a credit card in my name to buy some of the things they thought were essential. So as of right now, it has a $5,000 balance. They're not using it anymore. I put a stop to that. But in the past year, I haven't really seen a lot of traction on it. So we're trying to decide, we're in baby step two. Is this something that we need to take over and just clear the debt, call it a gift to them, and then never let them touch anything of ours again? Or what we should do? found our boundaries huh yeah i sure did real quick um well i would correct you on one thing technically it is your debt because it's technically

in your name and so technically they aren't going to call your mother if you don't if it didn't pay they're going to call you technically right so it So it's your debt. Now, the question is, you know, morally, your parents owe you $5,000 for this debt. Right. And so what's your household income? So we make about $110,000. I would pay it and forgive it. I would pay it and forgive it. I just walk away from it.

That's the next part of it. So my husband was like yes we're going to pay this let's just do it for them um so i was the one who didn't want to but the other part is since we're in baby step two right now do we put that in front of our last debt we're probably three months away from paying off the last 8500 the lights at the end of the tunnel but do we move this to the priority and then is it larger i mean you have two debts left a five thousand dollar credit card and how much is owed on the other debt 8300 then it's your it's your smallest debt okay it goes in the front it's just we're just gonna we're gonna treat it like it's your debt

because as i said it's your debt it is and so it just had this other complication around it this emotional and relational issue um i will tell you having been through this kind of thing a few times myself and been through it hundreds of times with people who've asked this question um i would venture to say very close to 100 of the time you will be the greatest you personally not your husband not your parents but you personally will be the greatest you personally not your husband not your parents but you personally will be the greatest beneficiary of paying this off and forgetting it okay you will you until it's gone and you've released it you won't realize how much how much it was tight in your stomach over this issue and then there's's going to be like this piece that you're going to breathe in like a cool mountain morning, right?

You're going to just suck this piece right in. You just go, oh, wow, I feel so good. There's going to be a release. That's what I'm saying, you know. And I've done it in situations like that where I was all bound up. I'm like, I'm going to pay a dead gum bill. And it was bothering me more than it was everybody else, you know, and I let it go. And it was like, wow, that was cool.

That was worth five grand. Easy. Jonathan is with us in New York. Hi, Jonathan. How are you? Good. How are you doing, Dave? Better than I deserve.

What's up? Well, I have a question. I need some advice. I'm getting a lump sum of money from my job, and we have a finance vehicle and a lease vehicle and i want to know if should i pay off my finance the vehicle that's financed and then take that money and save it to pay off the lease when it's due or or i really don't know what to do. Okay. So how much do you owe on the vehicle that has a loan on it? It's $15,964. Okay.

And the lease, how much is remaining on the lease? How much time? Two years. Okay. And how much is your lease payment? Lease payment is $348,000. Okay. And what's your household income?

$52,000. I'm on disability right now, so it's mainly disability and my wife's income. And how much is this check you're getting? $21,000. Okay. And do you have any debt except these two cars? My wife has student loans, and then we have $2,000 in credit card. How much are the student loans?

Roughly around $63,000. Okay. All right. Cool. All right. What I would tell you to do is pay off the credit card and cut it up. Uh-huh. And cut it up.

And then I would tell you to pay off the $16,000 car. And then let's start on the student loans from there with your budget and let's get them paid off now the one thing you got to think about though is this when we do that and that is what are we going to do with this lease car when the lease is up are you going to turn it in and get you a little cheap car that you pay cash for yes yes we are discussing that. Okay. I want to come to that conclusion before I make this decision, because it might change what you do in your decision-making. But the proper thing to do would be to pay off the one car, and then let's get a cheaper car when this lease runs out that we pay cash for.

You might save a little bit of that money towards that end, because I want you to pay cash for something and turn the lease car in at the end of the lease. And then we attack the student loans and you're completely debt free at the end of that equation. But you don't take out another car payment at the end of this. You need to get rid of this thing at the end of this lease. But it's going to be most economical to keep it through the end of the lease at this stage. You're too close to the end of it. Hope that helps. This is the Dave Ramsey Show. Let me tell you a story about two families that are very much alike in a lot of ways.

Both families have two working parents and a couple of young kids. Each has debt and a struggle to make ends meet. But they're starting to make headway with their budgets and smarter decisions with money. They have dreams and plans, and the only real difference is that one family has the right amount of term life insurance and the other doesn't. Big difference. If one of the parents die, and that does happen, their well-being would be destroyed. Paying for the mortgage, utilities, food, and other bills would be impossible, let alone saving for education or retirement.

That's why every day I talk relentlessly about getting term life insurance. Just go to ZanderInsurance.com or call 800-356-4282 and see how inexpensive it really is. Be the family that takes those deliberate steps to be different and responsible. It really does make you the hero of your story, and it puts you on course for better things ahead. In the lobby of Ramsey Solutions, Kevin and Tina are with us. Hey, guys. How are you? Great. Awesome. Welcome, welcome. Tina are with us. Hey guys, how are you?

Great. Awesome. Welcome, welcome. Where do you guys live? Lincoln, Illinois. Lincoln, Illinois. Welcome to Nashville. And obviously, based on the matching t-shirts, you are here to do a debt-free screen.

Yes, we are. I love it, I love it. Way to go. So, how much have you paid off? $99,348.88. Okay. Give or take. How long did this take you?

43 months. Good for you. And your range of income during that time? $123,000 to about $133,000. Good. And what do you guys do for a living? I'm a police officer in Lincoln. Oh, wow.

Cool. And I'm a certified vet tech, and now actually I'm managing a practice in Lincoln. Very good.. Cool. And I'm a certified vet tech and now actually I'm managing a practice in Lincoln. Very good. Good for you guys. Good. And you brought the three kids with you. We did. All right. And what are their names and ages? This is Katie. She is 16. This is JR. He's soon to be 15. And this is Valerie. She's 17. All right. Perfect. And the shirts say we're debt free. And what else? What's the story on the shirts? Breaking the chains. I'm sorry? Breaking the chains.

Breaking the chains. We felt like we were knotted up just like you do in your class. And we watched the video. And that was us, Dave. Okay. And so you're changing your family tree. We are. This is it.

We're looking at the last ones to be in debt in your branch. Amen. I love it. Way to go, you guys. Very fun. A hundred grand's no slouch. Yeah. I mean, you dropped some, this is pretty serious, in almost four years.

Yeah. I mean, you guys have been after it for a while, too, so this is impressive. What kind of debt was the $100,000? Mostly consumer debt. We had a lot of credit card debt, a little bit left on a camper, a little bit left on a vehicle. How much of it was credit cards? A significant amount, about at least 50% of it. Okay, so like 50 grand.

Yeah, and then there was a point where we realized we owe less on our house than we owe on a credit card. So we thought, hey, while we're at it, let's just keep going. Oh, the house is in this number. Oh, my gosh. Yeah. Okay, that's very cool. So what's the house worth oh you think about 170 wow so we're looking at weird people amen yes i mean your house has paid off in everything yes wow very very cool yeah so what happened 43 months ago because you guys were just bebopping along normal people a little bit of debt here a little bit of debt there.

More on a credit card than on your house. What's up with that? Yeah, yeah. And then, man, all of a sudden something happened. What happened? Oh, well, this guy here broke his leg playing football. Oh, well, there you go. Yeah, had to have emergency orthopedic surgery.

Didn't even know that was a thing. Rushed him in the ambulance down to the hospital. Surgery that night. And I'm sitting there as a mom realizing we've been living paycheck to paycheck. We've been robbing Peter to pay Paul. We've been doing exactly what you say. We're transferring balances to other credit cards because it's 0%. We feel like we're doing something, and then we run up another one.

And, you know, we just like stuff, and we liked vacations, and we thought we worked hard, and we deserved it. Lo and behold, we didn't realize if we just saved for it, we could have done all the things we've done without the debt. So it really started probably May, a few months before he broke his leg and we had a new pastor come to our church and he threw up this picture of this weird bald guy cutting up credit cards. That guy. Yeah, right? And so I looked at him and I thought, there's no way we could live without our credit cards. I mean, that's what fills up the tank and the gas.

That's what buy groceries every month. How would we do that? Put it on the back burner. So I was working two jobs already, had been doing that for about five years. And you know what? We weren't getting ahead. We were just spending more.

And so we got that second job going again. And I sat in the break room one day and I said, has anybody heard about this guy named Dave Ramsey? And lo and, and I sat in the break room one day, and I said, has anybody heard about this guy named Dave Ramsey? And lo and behold, three people in the break room raised their hand, and two people were debt-free because of you, and one was working on it. Wow. Yeah. So it was awesome.

And I said, well, I need to know more. So one of them went out to the truck, got me the CDs. I think it was the original 12 that you had. I listened to one on the 20-minute drive home, and I was like, this is what we need to do. So I gave it to Kevin that night to listen to while he was on patrol. He came home that morning, and he said, yeah, this is it. And we got on it. I mean, we did the budget.

It wasn't an easy task. Did you go to the class at the church or what? We didn't yet. So we just listened to the CDs. Okay. And we started our budget. And, I mean, there were a lot of tears that first budget, Dave. It's hard.

And drawing that line and seeing everything that falls below the line, that's tough. And then to do your debt snowball. And at the time, I was the one that was financially doing all the bills, in charge of the money. I felt like I was a total disappointment to him when I showed him our debt snowball and we saw that number. It was hard. A lot of tears. A lot of tears., but you know, we're pretty competitive people. So once we got on it, we were like, let's do it. And so Kevin, when she sat down and she opened up all that stuff and you knew that there was a problem, but you didn't know what it was exactly, were you shocked or were you like, well, I knew it was bad. Um, I wasn't shocked. I don't

think not to the extent that she was i you know i knew there was some uh quite a bit of debt there but i just kind of kept thinking you know the one thing we did right was the house and we bought it right and i remodeled it and we and i'm just like you know we're we were on schedule to pay that off anyway and i thought when we get that done you know we'll just roll that money over here we're not that bad um. Um, but then I just, like you talk in the FPU class, just the stress and that place that women have that men don't, you know, I could see when she was sitting there doing the bills in the month and writing stuff out that, that, um, just the effect it had on her, just mentally draining her, um, how important it was that,

you know, we get this, you know, squared away. And so at that point, um, you know, once we got doing it, we're like, well, we're stupid. This was easy. Like I said, it's sixth grade math. There was nothing difficult about it. So then we're like, we've got to tell everybody else this. So since then, we've coordinated five classes at our church. She ran also the… Generations.

I did a class of that. Oh, yeah. For the kids, yeah. The teenagers, yeah. We're hoping to get another one. Generation change. Yeah, it was awesome. We're hoping to get another one.

We have someone in our church that actually is looking for us to do a prison ministry and take it to some ladies that are going to be getting out in the next year. We're really excited to get a chance to do that as well. Wow. Well, you're paying it forward big time. That's awesome. Yeah. Very cool, you guys.

Thank you for leading the class. Thank you. And it's all because you broke your leg, dude. Yeah, right. I mean's awesome. Yeah. Very cool. You guys, thank you for leading the class. Thank you. And it's all because you broke your leg, dude. Yeah. I mean, right. Right. And then, you know, we realized once we were getting our house in order, God then threw one more thing at us and brought Valerie into our lives. So instead of having two kids, we have three kids now. And, you know, Dave, it wasn't an anything. We just adjusted the budget and we kept on moving. It was great. Well, she looks like she belongs. Yeah, right? Fits right in. That's perfect, you guys. She looks like a sister.

Part of the team. Got the T-shirt and everything. Life is good. Well done, you guys. Very well done. Very fun. And, yeah, you're right. When you get yourself in a position and a blessing like having somebody like Valerie join your family comes up and you're in a financial position, you don't have to hesitate. You can go, okay, God, love it.

Valerie, come on, let's do it. Can't wait to see what else God has in store for us now we've got our house in order. Well, I have to say, Dave, that one of the reasons that Valerie's here is because we've taken your class. And I know when you talked about your wife, when she has that feeling, you know, and knowing that's a Holy Spirit. She came to us through my work when I was on patrol one day, and I got called to a call, and Mom was kind of done with her. And I just thought, you know, just in a little separation for some time. I've seen this a thousand times.

And I tried to find some place for her to go, family, friends, and Mom was having none of it. And I said, well, you know, would you let her just, and I'm standing there going, oh, there's just no reason that this kid is just in a bad situation. He's somewhere else. And I said, not her fault. Yeah. And I just had this feeling, this feeling come over me. And I, I mean, just hear you saying that, you know, and this burning go through my body. I was like, I know this, this is a Holy spirit. So I said, mom, I said, would you let her, you know, and this burning goes through my body. I was like, I know this, this is a Holy Spirit. So I said to mom, I said, would you let her, you know, come stay with us? And we thought, you know, just kind of be a little break for him. And mom was more than happy to let her do that.

And that was October 5th of 2015. Wow. She's been with us since. That's great. Yeah. Very cool. And a welcome addition to the family. Yes.

That's awesomeness. Very neat. Very cool. Well, God is good family. Yes. That's awesomeness. Very neat. Very cool. Well, God is good, you guys. That's amazing. And when you're available like that, you can do all kinds of stuff. And when you've got the financial thing on the run, it allows you to do that. You don't have to be perfectly cleaned up.

You weren't at that time. No. But you knew you were going to be. Right. And there's hope that goes with that that allows you to make that kind of a decision. Very powerful. Very powerful. Congratulations, you guys. Thank you. There's hope that goes with that that allows you to make that kind of a decision. Very powerful. Very powerful. Congratulations, you guys.

Thank you. Proud of you guys. Awesome. We've got a copy of Chris Hogan's book for you, Retire Inspired. Next chapter in your story that you're going to be millionaires and then continue to be outrageously generous. Count it down, guys. $99,000 paid off $100,000.

43 months, making $123,000 to $133,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Love it, love it, love it. Well done, you guys. Man, that's awesome. That's about how it works right there. Got to be smart about it. Work hard about it. It's worth it. Guys, let's talk about that timeshare pitch that you fell for.

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Now, I know I'm just adding salt to a very old wound, but look, if you tried calling the resort and they won't take it back, if you tried selling it and no one will buy it, call Timeshare Exit Team. Timeshare Exit Team will get you out. You'll have to be patient. It can be a long process, and it costs money, but it works. They're so confident in their exit service that if they don't get you out, you get a 100% refund. Call 844-999-EXIT.

It's free to talk. 844-999-EXIT. TimeshareExitTeam.com. Thank you for joining us, America. Bobby is in California. Hey, Bobby, how are you? Hey, great. Thanks for having me, Dave. Sure.

What's up? I've been saving for my kids since they were babies for college, and I have a 529 and I have an UTMA. And I was just wondering maybe what I should do with the UTMA. I know it's a little different. The 529, you have to pay for college expenses with that. But I think the UTMA, you kind of have to give it to them. And I was just wondering how I should go about that. Well, as you said, the UTMA, you've already given it to them.

The UTMA is the Uniform Transfer to Minors Act, and you put money in the kid's name. You're the custodian of the money. You make the decisions on the money until they're 21, in which case, regardless of how nutty they are,ian of the money. You make the decisions on the money until they're 21, in which case, regardless of how nutty they are, it's their money. And so it's your job to make sure they're not nutty because a well-funded nutty is a bad idea. Yeah, they're not nutty. Yeah, well, yeah.

I told my kids, you know, if you're going to go crazy, you're going to have trouble finding this money. I'll just steal it because I'm not going to finance your heroin addiction, you know, and that kind of stuff. But legally, it's theirs. And so that's the Atma. And, of course, it is growing at the child's tax rate, which means unless it starts making some money, it won't bump up above their minimums and it won't be taxed. But then later on, once there's some money in there, it'll be taxed, but at a very, very low rate and consequential most of the time.

And so, you know, unless you really got some serious money in there, it doesn't get taxed for a long time. The 529, of course, as you said, is in your name, and you're the custodian of that account as well. It has to be used. It's got the child's name on it, their social security number on it. It has to be used for their higher education, can be transferred to a sibling if they don't use it,

and can be withdrawn if they get scholarships in the amounts equal to the scholarship. And so they get a free ride playing football or something. You can pull out the equivalent of what that's worth each year as long as you get documentation from the university um and so you know if you're out of state you know athlete or something you can pull uh usually 15 20 grand out per year of that with no taxes on it at all um and or no penalty you do pay the taxes i think but i think you pay the penalty and the penalties on 529s are heavy if you pull them out uh and don't use them yeah and so you don't you're gonna get hammered on that but anyway so i use 529s for the bulk of it uh if it starts

if the 529 starts getting like you know 100 grand in it or something and you start getting nervous about that then you say i going to back down on that. I'm going to do an UTMA. Because see, an UTMA is just their money. They can use that to buy a house. They can use that to buy a car. It's just their money. And so instead of overfunding at 529, you would use the UTMA on balance.

And that's how we would recommend you do it, is just get started with the esa the educational savings account or the 529 both of which have to be used for education you choose the mutual funds you continually choose the mutual funds are invested in must be used for college but it's like a roth it grows tax free completely tax free where the atma does not grow tax free and be taxed at the child's rate and um and is turned over to them at 21 years old that's the differences and then based on that you can make your decision on how to best use them tatum's with us in north carolina hi tatum how are you hi how are you better than i deserve what's up well i just want to thank you so much for everything that you do every day.

Thank you. Yeah. So here's my situation. I started a business in January. It's been going great. It looks like, Lord willing, I'll bring home $45,000 to $55,000 this year. Wow. Yes, sir.

I'm super thankful. And I have $8,200 left on my debt snowball. So hoping to finish that real quick. Yes, sir. And I have a 403B that I had through a missions organization I used to work with years ago. I'm not contributing anything to retirement because I am working my baby steps. Good. My question is, I know I need to be responsible and purposeful with everything that I have. Good. And so I'm wondering, should I roll that 403B into an IRA? Yes. Okay. And should I go ahead and do that now, even though I'm not contributing anything? Yes.

Okay. Would I do that by meeting with a SmartVestor Pro? You would. Okay. And pick out some mutual funds and fill out the paperwork, and they will, if you have the address and so forth of the 403B, you fill out the paperwork, they will send the papers directly to the 403B. 403B then will release the money directly into the ira it is not sent to you that's called a direct

transfer rollover and that way you have no taxes you're just signing some paperwork back and forth and then you get the money uh into an ira and a good mutual funds where you can control the investment you can watch over it and as you said you can be more intentional about everything and we always tell folks when you leave a company with a 403b 401k 457 whatever it is roll the money to an IRA because you have more control over it and you have more options to choose from there's 8,000 mutual funds you can put it in and you know with a 403, there's only like 10 or 12 or 401K, 10 or 12 options. And so you've got more options and you don't have to go back through an old HR with an old company you don't work for anymore and try to

do stuff. It's a lot cleaner. And that's why we recommend it. So, good question. And you're exactly right. Just click on SmartVestor at DaveRamsey.com and put in your information. It'll drop down a list of the SmartVestor pros in your area, and you can select one and or more to meet with and decide who you want to be your person helping you do investing. Go forward. They don't work for me, but these are the people I endorse. Tina is with us in Albuquerque, New Mexico. Hi, Tina. How are you? I'm good, Dave. Thanks for taking my call. I'm a divorced single mom, and I'm trying to figure

out what my next steps are. So I was a stay-at-home mom for five years. I was in an abusive marriage, and I had to cash out my loss in order to leave and pay for essentially a place to escape an attorney's fee. So I'll be 37 this year. My divorce settlement allowed me to buy us a townhome in cash and a car in cash. I have $10,000 in emergency funds. I am debt-free. I am maxing out my Roth every year and contributing another $400 a month to 457. And then on top of that, where I work, I get a pension. But I feel like I'm making up for a lost time

because I... You're okay. So then my other question is... So what do you make? I make $39 for a year. Wow. And you're doing all that out of that. Good job, kiddo. I don't have any bills.

Yeah, that's true. You don't. That's beautiful. You're going to be just fine. You're going to be just fine. You're at what we call baby step seven, which is everything's paid off. You got your emergency fund in place. And so from a wealth building perspective, in addition to saving up to buy things, now if you're saving up to buy a vacation or you're saving up for Christmas or you're saving up for the next car, this one's a nice one and it's paid for,

so you're okay right now. But later on, you save up and pay cash for things. No debt in the future at all. You were very smart to lay that foundation. Now then, you just max out your 401K, you max out your Roths, and you're going to be fine. You're going to be really in good shape. And if you want to do some more investing, you can pick some mutual funds to invest in.

But if you just keep thinking the way you're thinking, you're going to be a millionaire. Perfect. Thank you, Dave. You're right on track. Well done. How's it feel? Hello? Thank you very much. You're welcome. Appreciate it. Very well done. You ought to feel great. I mean, you busted out of that abusive situation and landed in landed in tall cotton that's fabulous very very well done open phones at 888-825-5225 brandon is on facebook once i pay off my credit cards will i be hurt by closing the account won't hurt a bit you won't feel a thing it might lower your credit score but it won't hurt

if you want to worship at the altar of the great fico you don't do dave ramsey because fico is not supported by this process the only way you keep your credit score high is borrow money and pay interest borrow money and pay interest borrow money and pay interest that's where credit score comes from you don't get one otherwise. And if you're going to worship at that altar, I can't help you. But there's no indication that a high FICO score causes wealth building. As a matter of fact, quite the contrary. You have to pay a lot of interest

out to keep a high FICO score. So, yeah, it'll hurt your credit when you close accounts. Oh, well. This is the Dave Ramsey Show. Hey, guys. This is James Childs, producer of the Dave Ramsey Show. I'm excited to announce that we're now carried on 600 radio stations across the country. To find one near you, head to DaveRamsey.com slash show. Can you believe this real estate market?

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