The Ramsey Show - App - Are We Headed for Another Recession?

Episode Date: May 11, 2022

Dave Ramsey & Rachel Cruze discuss: Should you consider your home your primary investment vehicle? A look back at April 2021 where Dave predicted the inflation we're seeing today (and where we're headed). Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6

Live Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of BMW as the status symbol of choice. This is the Ramsey Show, where we help people build wealth, do work that they love, and create amazing actual relationships. Rachel Cruz, Ramsey personality, number one best-selling author, and my daughter is my co-host today as we answer your questions about your life and your money. Troy is with us at 888-825-5225. He's in Sacramento. Hi, Troy. How are you? I'm doing great.

Thanks for asking, and thanks, Dave, and thanks, Rachel, for taking my call this afternoon. Sure. How can we help? You know, my wife and I have been big fans, and we've followed a lot of your teachings and precepts over the years, and it's allowed us to come to a place of having no debt other than a little bit left over on a primary mortgage.

We'd like to move out of Sacramento. And my question directly is, if we paid off our home, we'd be debt-free and it'd be great. And then we would be freed up to invest more and more into either retirements or other investment opportunities. My question is, do you ever consider a larger mortgage, like buying a more expensive home in a more expensive area as your primary residence, as an investment vehicle, rather than using the money and investing in, say, the stock market? Well, the problem with that is that you're violating the rule of diversification because then you've got so much tied up in one asset.

So let me give you an example. As we're studying the 10,000 millionaires in the Ramsey study of millionaires, when we would run across one, and they were very rare, but occasionally we would run across one that was a millionaire, maybe their net worth is a million two but their paid for home is a million one well they're legitimately a millionaire i mean their net worth is over a million dollars but that's a little scary because they're not diversified and that asset does not create an income for them at retirement right it creates a place for them to live and so they could live in a six hundred thousand dollar paid for house and have six

hundred thousand dollars with a million two in other words invested creating income and so the while the home is an asset it's not an income producing asset right so you know in our situation our retirement 401k is just shy of a million dollars. You know, our daughter's colleges, you know, we've saved and we have that essentially taken care of with scholarship that they've received. You know, we've got the emergency fund put in place. We've got cash in the bank. The current home value that we have is about 575 and we owe about 170,000 on it. And so we, you And so we feel like we've got a good base. We could continue doing that, pay off the house.

So what price range home would you be in with your investment concept that you're pitching? Well, it's right around a million dollars. And so a 30-year-old... So you're currently at $1,617 net worth, right? Right in there. And you'd have a million of it in your home. If we went down that road, yeah. That's a little high.

That's a little high. That makes me a little nervous. It's not over in the stupid column. It's just the nervous approaching stupid column. It's not even close to because my wife is listening on the other it's not even close to stupid okay i'm joking around with you you guys are brilliant you're millionaires way to go congratulations i'm so proud of you you've done a lot of things right so all we're doing is just discussing the fact that um you're going to have uh what uh What, 60% of your net worth tied up in non-income producing assets.

I'll give you another example. I'll give you another example of that. Okay, I've got a 250-acre farm that does absolutely nothing except hold the earth together and is a place for me to shoot guns and drive four-wheelers. It does not create any income. It's worth millions of dollars, okay? But it does not create any income it's worth millions of dollars okay but it does not create any income if that was the larger portion of my total net worth that would be unwise because it really is a receptacle for bullets and four wheelers that's really all it does it

doesn't create anything for me to live off of and so even though it's a wonderful investment because it's going it's in because it's in a prime location, it's in one of the fastest-growing counties in the nation, you know, it's wonderful ground. But, you know, someday when some Ramsey sells it, it won't be while I'm alive, but while some Ramsey sells it, they will do very well on it. But it's not an income producer. So that's the whole discussion, and you guys just got to balance that out in your minds and go okay and what is our income and how much can we add to the 700,000 of income producing assets if we do this so that it's less and less and less and

less out of balance it starts to bother me what percentage because you said 60 there but what's the yeah i mean when you get north of 50 it start be scary. I mean, you got a million two and a half of it's in a house. That's not too bad as long as you're adding to your investments, right? Yeah. But again, it would change. It skews. The percentages would skew as you go way up, too. So I say you had a $20 million net worth.

Well, I wouldn't want you to be anywhere near that in your personal residence. Sure. You know, maybe one twentieth, five percent will be a million dollar house. Yeah. Or a two million dollar house would be 10 percent with a 20 million dollar net worth. But you shouldn't be sitting around a 10 million dollar house with a 20. That would be ridiculous. Yeah.

You know, you can do it, but I just don't think it'd be wise. Yes. And so in my mind, it would be ridiculous. And I'm just going to go a step ridiculous and and you're and i'm just going to go a step further because what you're saying though it's mostly majority because there's not an income producing element to it it's not that like the house is going to be taken it like it's not like it's a risky thing because it's there if he dies what's his wife going to eat on yeah she can't eat the bushes in front of the house. Right.

No matter how valuable they are. She's got to sell the house in order to liquidate to get money. And I don't want her to have to do that. I want her to be able to live comfortably on the income-producing portion of the portfolio. Yeah, that makes sense. That's what's running through my head. They're okay as long as they're sitting there right now. If everything stays the same, he keeps creating. We don't even ask what his income is, but I'm sure it's great.

I mean, he's a smart guy. They're going to do fine. They're smart people. There's really not a horrible answer in this whole thing. And so, you know, let's say, let's pretend they make $300,000, and they're going to have no house payment, and they're going to be in a million. So that house is pretty well, it's going to go up in value. It's California real estate, but it's going to go up in value it's california real estate but uh but

it's not what they're dependent on in other words they're going to take a 150 of that two of that 300 start throwing it adding to that 700 in 10 years this thing will really not be out of whack at all yeah as long as he doesn't die as long as he doesn't quit it working as long as that income doesn't go away and we don't complete the plan but if you stop early in the plan you might have to liquidate the house that's what that's kind of i kind of i want things to work when they don't work and when they do work yeah i want the plan to have addressed both sides of the equation and that's that's all i'm wincing about when we're talking about this but yeah and so yeah the overall idea too is diversification spread your portions to seven

yes to eight for disaster may come upon the land that's a biblical reference from ecclesiastes don't put all your eggs in one basket some do will cause a pandemic to happen or go crazy when a pandemic does happen or something and then you something, and then there you'll be in that mess again. This is The Ramsey Show. Hey, if you've experienced Financial Peace University, I want you to listen up. You know firsthand how hard and confusing money can be. You also know how life-changing this course is. And I bet there's someone in your life who needs the hope and community that you found when you went through Financial Peace University.

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I'm just kidding. I'm totally kidding. Or am I? No. What would I do? $3,000 right now? Seriously? Yeah. I'm totally kidding. Or am I? No. What would I do? $3,000 right now? Seriously? Yeah.

Oh, my gosh. I would probably go buy something. Yeah. I'd give some away. Yeah. I would save some, and then I would go spend it. You're trying to give the right answer. Is that what you're doing?

All right. So, well, it's one of the- Are you giving me $3,000 or no? It's one of the best times of the year at Ramsey. We're not giving you $3,000, but we're giving one of our me $3,000 or no? It's one of the best times of the year at Ramsey. We're not giving you $3,000, but we're giving one of our listeners $3,000. Oh, that's pretty fun. And $500 a week in May and a grand prize of $3,000 in the Ramsey Cash Giveaway. To enter the Ramsey Cash Giveaway, go to RamseySolutions.com slash giveaway.

Don't forget, you can enter every day for extra chances to win. There is absolutely no purchase necessary, but you must be 18 or older to win. And we're not stopping there to help you crush your financial, personal, and professional goals. We're putting our number one best-selling books and tools in the Ramsey $10 sale. In many

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Check out the Ramsey $10 sale. Don't forget to enter the ramsey cash giveaway at ramsey solutions dot com ryan is in orlando hey ryan welcome to the ramsey show super dave how you doing sir better than i deserve what's up hey i just you know first of all i just appreciate you and rachel taking my phone call and uh i gotta give a big shout-out to Sharon. You know, she must be an amazing mom and a wonderful wife. Sharon, that's so nice.

So make sure you tell her that. We'll pass that along, Ryan, and you were right. She is. How can we help today? All right. So, you know, I've been listening to the show the last couple years, and, you know, I've noticed, you know, you yourself had to kind of bob and

weave a little bit through the changes and, you know, you stayed the course and things are going well and, you know, you're an inspiration. So to get to the point, you know, 2019 was a tough year. I've been married the last couple of years prior to that. 2019 my wife left uh in november after we paid off you know all her debt and things of that nature not a big deal march of 2020 uh got the divorce paperwork pandemic hit the whole nine yards so needless to say i pushed pause on the baby steps um just kind of focused on me mental health and things of that nature. Um, and increased my, my, uh, my revenue done really well. Um, but now I'm at the point, you know, the divorce was finalized last year, uh, in June and, uh, you know, we're almost at

the year mark. So I'm, I'm ready to push play and kind of get things rolling. So where I'm at right now, I've got $128,000 in the bank. I have a rental house. I owe $84,000, and it's got one of those stupid second mortgages on it for $42,000. So that's $126,000. I could literally get that paid off. But the end of May, my parents are gifting me or blessing me with a car, which I'm giving them 10 grand for. So I'm about eight grand short. The rental house that people are leaving in August. So I guess I'm at that point now. I could have all the money by July.

Should I wait to get everything paid off until I get renters back in the house, or should I go ahead and just push play and keep that baby step emergency fund because the house will be paid off, but I'll just be waiting to get a renter in there. You have an emergency fund in addition to the money you have, the $128,000 in the bank? Just keeping the baby step, the $1,000. Oh, okay. You don't have any debt but the rental? I own my regular house, but it's on wheels, so I didn't want to bring that up.

Okay. All right. But you don't have any debt other than real estate debt? That's it. Okay. All of the real estate debt falls into Baby Step 6. Well, so I own a house that I live in. This is considered a rental house.

Which is baby step six. Okay. So that's... You are going to go ahead. How much do you owe on the house you live in? It's 58. Okay. Okay.

I'm going to pay it off before I pay off the rental. So you have $128,000 in the bank, and you need $10,000 to buy a car, and you need to have a fully funded emergency fund of three to six months of expenses. And so what would your normal fully funded emergency fund be? How much would that be? I would probably like to keep it at 15 20 but really six months is probably seven eight grand well all right let's let's call it um let's call it 20 for the fun of it for a minute that leaves you 108 and you need 10 for the hat for the thing that leaves you 98 and then you pay off the one you live in that leaves you 40 and so you could pay off the second mortgage and the

only mortgage you'd have left is your first mortgage on the rental if i did the math right you'd have the car an emergency fund your residence would be paid off and the second mortgage on the rental would be paid off and you still have a little bit to throw at the first mortgage but not much yeah and then just use your budget money to begin to get that first mortgage paid off. And what did you say you make a year? I'm north of $100 right now. I made $108 last year. I'm on target there now.

Were the kids in the marriage? No, thank God. No kids. Okay. All right. And so we made $112 together, and she left. I got it up to $108 by000 by myself, so that was good. But I knew you were going to say that. I just think, for me, it's so much benefit to get it paid off, the rental house.

You might sell it. The house is on wheels. I might sell that move, too. You might sell it, too, but at least it's paid for for now. You get money out of either one of them when you sell them. We're not spending the money. It doesn't matter where we're going to park it for the most peace when the place you sleep in is paid for it changes the way your head hits the pillow all right well i just i wanted to kick in the rump i guess i don't i don't think you need to i don't think you need a kick in the rump.

I think you've had enough of those. You're doing great, Ryan. I actually think you need a hug. Yeah. You sound like you're hurting, man. I'm back involved in church, and I love my church, and there's some great people there, so I'm surrounded by it. You still got some sadness hanging on you.

Yeah, I do. It's tough. Yeah. I do. It's tough. Yeah. I'm sorry. I'm sorry for what you've been through. It's been a hard season for you. You're a good man. You got a big heart, and your heart was broken.

And it takes courage around to press play again. I mean, when you paused it, you know, which I think was wise with what you were walking through, to kind of tackle this again, I mean, it takes a level of like, okay, I'm going to re-engage, and that can be really difficult. So I'm excited for you. I think you have great traction. You obviously have an incredible work ethic. You're being wise and thinking through all the steps and what to do.

But I think you're going to do great. We'll send you a copy of Dr. John's number one bestseller that just hit the number one spot um on your past change your future i think when you read through that um it's going to help your heart and a lot of us have been through having our hearts broken in different ways in the last 36 months 24 months and some much more tragic things than others, certainly. But most people have experienced an increase in pain during this time of one kind or another, and it's not unusual at all for us to have some lingering sadness from that, some grief from all of that.

And you just look back and you go, what in the world was I thinking? Well, you know, you were sad. So the interesting thing is when you start taking these actions with that money instead of sitting on that money like it's an egg, you're going to get some energy from taking the actions. You know, writing a check to mom and dad, get the car. Write a check, pay off the house with wheels. Pay off the second mortgage.

Set that emergency fund aside in a physical separate brand new account that's just for emergencies never to be touched or mixed with any other accounts when you start making some of these moves again the literal movement will give you some energy back but hang on kelly i'll pick up we're going to send you a copy of his book and um just want you to know rachel and i are hugging you right now, brother. This is the Ramsey Personality, is my co-host today in the lobby of Ramsey Solutions on the debt-free stage, Robert and Crystal are with us. Hey, guys, how are you? Doing well. How are you? Better than we deserve. Welcome. Where do you guys live? Just north of Baltimore.

Cool. Welcome to Nashville. Thank you. And all the way here to do a debt-free scream. How much have you paid off? A little over $75,000 in about 25 months. Good for you. And your range of income during that time? It was about $87,000 to $130,000 in about 25 months. Good for you. And your range of income during that time? It was about $87,000 to $130,000. Cool. Very good.

Good for you. Well done. Okay, what kind of debt was the $75,000? It was about $56,000 in student loans. Sorry. We had $12,000 in a car, five credit cards and a small family loan ah okay cool well what made you guys go on this journey almost two years ago well we moved to baltimore in 2013 and that's when i started listening to your show um it was after that i started paying off my student loan debt

by myself because we weren't married yet until 2015 but even after 2015 we didn't combine so i was still kind of paying my own off and uh finally in july 2019 i find finally paid it off um and that was when she was like oh you know maybe it's possible so we were we took a trip up to my parents for i think it it was Thanksgiving that year, end of 2019. And I was like, let's listen to something on the radio because Haley was in the backseat with a movie. And I was like, put the Ramsey show on. She was like, and she's like, all right, let's put it on. So we listened to it. She's like, listen to the people. And she's like, oh, we can do this. So we went on the trip. We came back back and uh we combined finally and uh we started

you know going on the journey right at the beginning of 2020 oh of course and then um you know we're we pay off a few things the credit cards first and she's like wow that's not that difficult yeah and then Basically, with the credit cards, just to throw that out there, I had two credit cards. I was paying $70 on one, measly $70, and the other one was paying $100. So when I paid $70 and then a little bit extra, it got quickly paid off. And I go, wait, the $70 I can do, I can buy more clothes, makeup, or I could put it towards the other credit card.

And when I put that combined of the $100 and the $70, it didn't seem like I was taking extra money in my pocket. And then all of a sudden, in three months, that credit card was paid off. And so that's where I had this epiphany like, wow, this actually really works. And it's not putting a strain on our family. It's not putting a strain on me. It's just extra money that I was actually pouring towards a credit card that i didn't even need to have so i started to see the snowball effect and it really got me pumped that's awesome yeah and then and then we had another issue um early april our cat got sick we had to put some money into him

but then april 6th he uh we put him to sleep. Morning of April 7th, I get a phone call from her and I'm at work. And I've said, you know, she's probably still upset. I answer the phone and she says, I just got let go from my job. Due to COVID. So 2020 was really hard for us. And I honestly, it was a blessing. Thank you, God, because of the fact that we paid those credit cards off. So if we didn't pay that little extra bit before going into 2020, we would have been in a very dire situation.

Like how do we pay for our house, daycare? But honestly, it was like a blessing in disguise. So a couple months, you know, she got a severance that helped cover things. A couple months went by. She got another job. Ended up being, it was work from home, but it was a fairly toxic work environment. Her boss was kind of bullying her a little bit.

And so she ended up quitting that after a few months. Two, three months go by. She finally gets another job as a recruiter, but a job that she had interviewed for previously, got in contact with her after she took that job, and it's the one that she wanted. Wow. She ended up leaving that to take the one she has now. Yeah. And it was about a 75% pay raise where she was at the beginning of the year to where she ended the year.

Yeah, and on top of that, we pushed our daughter into kindergarten. She was right on the cusp to start kindergarten. And so when we got her in there, we didn't have to pay for daycare, which was another mortgage payment. So that really, that severance pay and the extra money from the daycare, we were just pushing it towards any debt that we had. Because honestly, that was money already being taken out of our pockets. Why would we just keep it in our pockets to spend miscellaneous on miscellaneous things?

So I was just telling Kat, like, you know, in 2020, you would think we wouldn't be able to pay all this debt. But think about it. In 25 months, that is including 2020. Yeah. And it's including 2021. And we were able to pay all that so it's amazing yeah and you went through all kinds of ups and downs and dipsy doodles to get there it wasn't easy but it definitely uh it got me the opportunity that i waited patiently for the dream job um that i always prayed for and asked for that's amazing

you guys so through that i mean obviously there were some hard spots what would you say was the thing that kept you going like that secret thing out there that people are like wow they did all that in two years like what's the secret what's the thing well for me it's just getting on the same page with her because you know that whole time before we were just i was paying myself my own student loans yeah and then we combine and it's, you know, when you put the power of the two incomes together, you can really make it happen. I would say for me is, one, me praying and being grateful and content with what I have.

We didn't live outside of our means. And second, to just stick with it and see it through. Like I said, I was paying $70 on one credit card in 100. For what? Once I paid that $70 off, I said, I was paying $70 on one credit card in a hundred for what? Once I paid that $70 off, I had, I can literally be like, Oh, let's go and spend it on eating out and so forth. But I didn't, I put it towards the $100 and one 70 pay that credit card off within three months instead of like, Oh, the seven or eight months that I like projected it to pay off. So stick with it, see it through, and see that snowball effect.

It actually, it's amazing because it just pushed me to do more. It's awesome. That's awesome. It's the momentum of getting those wins. And you're like, okay, I'm going to keep going. I'm going to keep going. You don't want to stop.

That extra money that we all paid off a debt literally is now, it's not money out of our pockets at all. It's actually saving for our new house. And it's not like a strain on us like most people would think. It's like, no, that money was from that $70 credit card at first. That $100 off, that $15,000 card, you know, it all collected up. And I just, I wish that like my friends would see like this is what happened.

That's why we say your largest wealth building tool is your income. And when you actually get to keep your income instead of of it going back out to the 70, the 100, the car, right? Like you said, it's yours. It's like, oh, this is actually my money that I can use to do what I want. That's amazing, you guys. Congratulations. Well done. Proud of you. Good work.

You brought your daughter along to scream with you. What is her name and age? You want to bring her up into the shot? Yep. This is Haley and she is six years old. Hi, Haley. So sweet. She's so pretty with those teeth. I love it.

I love it. That's perfect. Good stuff. All right. We've got a copy of Baby Steps Millionaires for you, because that's the next chapter in your story, a copy of Total Money Makeover for you to give away. And this week, we started giving away also Financial Peace University and every dollar is a part of Ramsey Plus, a one-year subscription to that.

And you can either use all of these yourself or you can give them away as gifts or however you want to do it. We want to help you. Certainly Total Money Makeover you can give away because you've already lived that part of it. And on with the next chapters of life. Well done, you guys. We're proud of you thank you you're amazing well done beautiful beautiful family good stuff all right it's robert and crystal and hayley

75 000 paid off in 25 months making 87 to 130 count it down let's hear a debt-free scream three two one we a debt-free scream. Three, two, one. We're debt-free! Yeah! I love it! Way to go, you guys. Beautiful stuff. Awesome.

You know, she, with great enthusiasm, explained the debt snowball perfectly. Yep. You know, when you pay off that little debt and you take that money and you throw it on the next one, and you take that money and throw it on the next one, and you take that money and throw it on the next one, every time you pay off another debt, the snowball rolls over. More money. And there's more money going on. But also, there's more excitement.

Yes. Because you get to see this benefit of this thing moving. And you're actually getting traction. And this whole money thing is working for the first time in your life. You're working with your spouse for the first time in your life. There's a lot going on there. Well done, you guys. We're proud right back. This is The Ramsey Show. My co-host is Rachel Cruz, Ramsey personality, number one best-selling author. Rachel, we always have some good discussions when you're on here.

You and I are sometimes arguing and sometimes just discussing something that's going on in the world. And always bringing you and I bringing different perspectives to things. Yes. Well, James, the producer, emailed probably two weeks ago and was like, isn't this crazy? This played literally one year ago, this clip. So I watch it. And during, I'll say this, during some of our debates, you know, I question like, Dave, he doesn't, he doesn't really, he doesn't really know.

He doesn't really get it. He's really missing the mark here on this one. He doesn't, he doesn't see it. But on this clip specifically, as I watched it again a year later, I thought, he's brilliant. He he's like who was like the old psychic that was like 800 the 1-800 number miss clea or yeah is that what it was she got arrested but she didn't know it was coming so she wasn't a psychic i was watching i was like is dave psychic okay so what we're gonna play

for you is the clip he's just psycho that's yeah and maybe both uh that played it played april 27th of 2021 okay we got to get back everyone get back in your mindset of 2021 of early 2021 okay the pant i mean stuff is still here you know you're still wearing a mask on airplanes covid was still like it was still kind of all kind of around the idea of it uh gas just started going up. Car prices, I do not think at this point were outrageous. The car thing had not happened yet. Biden was barely in office.

Yes. So, again, we are sitting one year ago, basically today, when this segment aired. So, we're going to play just a little bit of it, and we're going to watch Mrs. Clea do her magic. Have you felt this ever i mean for four i've never seen it like this exactly yeah but uh in 19 in the 19 uh what we are going to see out of this that you've never seen your generation never seen is inflation inflation the components that make up the inflation index housing is one of them it's the biggest part of inflation and when housing shoots up and oil shoots up and oil has shot up too yeah it has yeah and uh you know you look at the gas pump oh yeah double oh i know i filled up my minivan two days ago nobody's talking nobody's talking about it but the gas pump doubles and housing

goes up a bunch then all of a sudden you're going to see stuff like i saw in the 70s and 80s which was double digit inflation where stuff's going up 10 15 a year and inflation was out of control and the politicians it took it you know it took some real strong politicians to do away with it uh it was out of control how do they do away with it well i i credit ronald reagan and just putting the brakes on because it was out of control under Carter, and he comes in and shifted economic policy and just started opening up, doing away with regulation, opening up the markets. Because if you can flood the market with supply, it slows down the feeding frenzy. Because if you can get it everywhere, there's no scarcity, then the prices start to settle.

You know, if there's an scarcity, then the prices start to settle. You know, if there's an oversupply, prices go down. If there's an undersupply, prices go up because there's people chasing it. Sure, supply and demand. You know, half the number of people chasing it as there are. You know, you've got two houses for sale for every buyer. Well, all of a sudden, prices stabilize, start to go down, or at least quit shooting through the roof. So they're out of control, upward inflation.

So we're probably going to see some actual inflation out of this, which we've not seen in two decades. You watch these interest rates go up with inflation? Yeah. It'll shut this housing market down. I was going to say, yeah, the correlation between inflation and the interest rates. If you go from three to six, this housing market will freeze like a deer in the headlights. It'll just stop. People will just stop buying. They'll just back up and wait.

And you're going to see some of that back and forth now it's gonna be a little rocky a little volatile but it won't this feeding frenzy that you've got right this second is not going to continue we're talking about the housing market going into that okay so you predicted inflation you're like inflation's gonna happen your generation's never seen it before but it will happen and i remember thinking oh doomsday dave i don't know i it before, but it will happen. And I remember thinking, oh, doomsday, Dave. I don't know. I don't know if it'll happen. Inflation has happened, and then you predicted

that the interest rates for mortgages will go up, and now they're up to 5%. They've gone up in the last few months. So, like, inflation hit. Mortgage interest is going up. What's going to happen next? Are we heading for a recession? Predict the recession. Predict it right now. are we heading for a recession predict the recession predict it right now are we going to recession but seriously

is that how crazy though that you that well the signs were there it's not i'm not no i know i know the things were happening the components of inflation were already kicking in we were seeing prices jump through the roof on things and the biden administration on the things it could do things about wasn't for instance energy if the stuff at the gas pump is his fault the other parts of inflation the the republicans are trying to blame him for it's not his fault it's pandemic's fault it was a supply demand curve thing and so fox news wearing biden out

you know because they're trying to get gop in at the midterms, right? So it's political on blaming him for it. But anyway, and we are probably going to see 6%. I said we'd go from 3% to 6% on mortgages, and then I said the housing market would freeze like a deer in the headlights. It will. It won't go down. It's not going to be like 2008.

I'm not predicting it to go down. It's not going to be like 2008. I'm not predicting it to go down. But, you know, two years ago in 2022, we had a 32% increase in the cost of housing in America. The next year, we had a 17% increase. The average increase over the years is about 4%. And the reason for that is very simple. Shortage of houses. New houses, yes. There's 10 buyers, 20 buyers for every house that's on the market and when you've got those kinds of pressures you're going to have an artificial inflation it's a supply demand curve

inflation it's not a thing it's not a prosperity type inflation it's not a the economy's too heated up thing but you know when people slow down buying houses it will slow down the rate of increase in houses they're not going to go down i'm going to wait on real estate values to come down you're going to be you're going to be dead before they come back down they're not coming down they're just they're not going to go up at 32 a year yeah and this idea of 400 people bidding on one house over the weekend stuff that's going to go away because when you double the cost of interest, your payment on a $400,000 house goes up dramatically. Sure.

Okay, so what, yes. So those two percentage points is from 3% to 5%. Yeah. It's devalued the bond market like 35%. The bond market is crashing with these increases in interest rates. And the market has gone down. The stock market has gone down. Yes.

And that's because the economy is slowing. That's recessionary okay so so the gdp came out gross domestic product which came out down over the first quarter and if it goes down two quarters in a row it's a recession so we could be entering a recession at the end of this quarter if it continues to go down yeah we probably will and you think we'll probably hit a recession yeah i think i think we're in one. Yeah, I think we're right square in the middle. I don't know how long it'll last, but it depends on how long they keep monkeying

with stuff in Washington. Yeah. But, you know, they could have done a lot to help the supply-to-man curve stuff, like getting the ships off the ocean. You know, when you've got billions of dollars of goods sitting in the ocean waiting to come on shore and you can't get baby formula, that's a false thing caused by regulations and crap.

Okay? Get the stuff out of the cartons and get it in the stores. And so there's some stuff that the policymakers and the politicians can actually do that it is their fault. Okay. So the recession word is a scary word for a lot of people because last time we hit that was during the 08 crisis, all of that, right? So you hear the word recession. Recession simply means the economy is not producing as much goods and services as it used to. And it can affect you.

Mainly it will affect your jobs because the businesses that are not growing do not hire. And businesses that are shrinking fire. They lay off uh and it's not it's not pandemic furloughs they say you know economics are bad i have to show you know we're we're laying you off permanently that's what they'll do and so there'll be some people losing jobs so we've had this shortage of labor we've got almost no unemployment right now it's like the weirdest it's the weirdest mix it's's a weird, weird, weird gumbo. And so, but the stock market is slowing because profits are down, because the economy is slowing,

even though prices are up. Yes. But people are spending, not spending as much as they were even six months ago. Right. We know that because their economy is shrinking. Because there is not stuff to buy? Not stuff to buy. They're fearful?

I don't know. Consumers pull back? Yeah, probably. I don't know. But recession is not an emotional thing. And it's really, honestly, it's kind of a natural second step after a bizarre supply demand inflation curve like this. So will inflation go down once the recession, that's all?

It'll kind of work itself. Inflation will go down when the supplies hit the market again. When it comes back, yep. In each area. Stuff's going to stop shooting up when there's plenty of stuff. Yes. Plenty of cars, cars will go down. But there's still not plenty of cars.

There's still a shortage. Yep. So that's what's driving that. That's crazy. So recession is still a shortage. That's what's driving that. Inflation is not a feat. Recession is not a feeling. It is two consecutive quarters of a shrinking economy.

It's not a feeling. It is a thing that's going to happen, though. This is The Ramsey Show. Dave here. You can find all of our shows with the Ramsey Network app on your smartphone. It's the only place to listen to the entire back catalog of episodes. Download the Ramsey Network app in your favorite app store today.