The Ramsey Show - App - At What Point Can I Self-Insure? (Hour 1)

Episode Date: July 5, 2022

Dave Ramsey & Ken Coleman discuss: Self-insuring for long-term care insurance, The best way to find scholarships, Fixed index annuities. 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 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 the 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 actual amazing relationships. This is a show about your life. Ken Coleman, Ramsey personality, number one best-selling author, is my co-host today as we answer your questions. The phone number is 888-825-5225. Matt starts off this hour in Huntsville. Hey,

Matt, welcome to the Ramsey Show. Yeah, Dave, thanks for having me on. First-time caller, long-term fan. Well, thank you, brother. How can we help today? Well, I went to some of my first financial peace classes about 10 years ago. My wife and I worked really hard at becoming debt-free, which we did. Good for you.

About a year and a half ago. Good for you. And now I'm a half ago. Good for you. And now I'm trying to figure out, you know, next chapter of my life, how do I plan for, you know, potential early retirement and or, you know, just doing something different. And one of my concerns is long-term care insurance. And I'm sort of a, I mean, I hate to say this, but I'm sort of an anti-insurance guy just because of the cost.

That would be all of us. Okay, good. We believe in never buying insurance unless it's absolutely necessary. Exactly, exactly. And so anyway, so it's one of those last pieces that I'm trying to figure out, do I really need it or not? How old are you? From a financial standpoint. How old are you?

I'm 55. Okay. And what's your net worth now? $4.2 million. You don't need it. Great. Simple. Now let me tell you why I said that and see if you agree with me, okay?

Sure. The average nursing home stay is 2.4 years. Yeah. The average. And the average is about $100,000 000 a year so let's call it quarter million dollars okay so your risk is zero to 500 000 right yeah if i did those numbers right you can handle that risk if you burn through 500 000 mama's left with three and a half she's gonna party when you're gone yeah yeah for multiple

reasons she's got plenty left to throw a party a big wake is because we're all gonna be sad but yeah i'm just i'm talking to you like my wife talks to me so there you go but uh no i get it i get it yeah i mean you you got and you got five years so by the way if you do nothing with that net worth except keep it invested at around a 10 rate of return your four and a half in seven years will be nine yeah and you'll be 62 the chances of someone going into a nursing home and spending a dollar with a nursing home prior to age 60 is very close to zero statistically so so let me ask you this would you recommend you know kind of putting that into some sort of a safe fund for the future or just keep on investing and just you got nine and a half million you can come up with a half million yeah okay got it yep you're gonna be fine i mean you just got a big old chunk of mutual funds in your 401k she needs to write

some checks the nursing home because you get early dementia or whatever onset then boom she writes checks and she burns through a half million she's more than good because here's the thing 75 of the ladies outlive their husbands yeah and so the normal scenario with someone with a three or five hundred thousand dollar net worth is papa goes in the nursing home, burns through the nest egg, cracks and scrambles the nest egg, and gets taken care of and dies and leaves mama broke. So this is why if you've got $300,000 to $500,000 in net worth, you definitely buy long-term care insurance the day you turn 60. It's your birthday present to your wife.

Yeah. But in your case, you're self-insured. I'm self-insured. I'm 61. I didn't buy it. Okay? I got plenty of money. Sharon's got plenty of money. wife yeah but in your case you're self-insured i'm self-insured i'm 61 i'm by it okay i got plenty of money sharon's got plenty of money she's got too much money if i die it's not good so i'm having to sleep with one eye open but yeah so that's yeah you're good matt you're good so yeah and so long-term care insurance is a little bit like um old Willie Nelson joke about taxes, right?

You either want to be broke and the government provides you with nursing home care through Medicaid welfare, and you're 100% broke, or you need to be so wealthy that you can, you know, $10 million and you can afford a half million. It's the folk in the middle that can get burned up with it and the old joke with the way when jennings told uh willie nelson was he said you know the irs is suing me for a million dollars and jennings said that's really good because if it was fifteen thousand dollars you'd have a problem since it's a million dollars they got a problem it's true it's that kind of thing so you want to be on one end of the other of it. And, you know, that's a – but it's a really good kind of insurance to have if you're in that slot where you've got less than a million dollar net worth, greater than poverty level net worth, because you're going to go through some serious money and you're going to feel – people have this emotional reaction as if the nursing home somehow, you know, robbed them, you know, pointed a gun at them. And I don't want the nursing home to get all my money.

You know, it's like, well, you don't want the restaurant to get all your money, but you keep going over there and eating, you know. So they provide a service. You pay for it. There's a third option. Stacey and I have discussed this. I don't know how serious she is. But, you know, I get to that point.

Instead of paying the nursing home, I just told her to take me out to the Alaskan bush and just let me wander off and let the Kodiaks take care of me you know ken it's a joke you with the with the kodiaks and you that i just it's not a picture i can deal with it's just you know you'd be out there coaching him on a new career i would be i'd be uh well i'd be talking to a tree you know kodiak let him just go out there and wander off. You're horrible. I know. Paige is in Salt Lake City.

Hey, Paige, what's up? Hey, thanks for taking my call. Sure. How can we help? My question is kind of a two-parter one. I am a college student, and I was just wondering what's the best way to find scholarships online without being scammed? college student and i was just wondering what's the best way to find scholarships online without being scammed and what site what do you think about the sites that find the scholarship for you

but require subscription fee to do so uh yeah we've investigated most of them actually consider buying two of them uh on the subscription and the problem we we found is there's kind of two classes of this scholarship stuff that shows up in these databases. One class of scholarship is kind of hard to find because they don't spend a lot of money advertising the fact that they give out a scholarship, and it's a legitimate scholarship. It's the Kiwanis Club there in your county, and they put out $2,500, but they really don't have like a big site, and they don't spend2,500, but they really don't have like a big site, and they don't spend a lot of time putting it on one of the subscription

sites and paying them for it to be on there so they can give away money. That's who you're really after. Then there's another kind of scholarship that we don't talk about a lot here, but we're finding it as we do research in this space, because I'm dying to build some kind of product to help you guys, and I just haven't been able to figure out a way to do it yet our product team has been working on it for about two years but um that's why we've investigated but the other that's there's this litter this clutter in the space and it's their scholarships but they're they're not really scholarships they're really putting the scholarship out there to collect your data and to get you to sell you something.

And so it's kind of a fishing expedition on their part. And those are the ones you're running into that are pissing you off, I can tell. You're talking about scammed. I mean, you know, so you don't want to pay to do that, for sure. So the truth of the matter is, is that you've got some work to do to dig out the hard to find ones and to comb through some of the subscriptions. If you get one scholarship and you paid for a subscription, $200 a year, and you got a $1,000 scholarship, you came out. Okay. But you are going to have some crap in there that you've got to wade through to get to it.

And, you know, just keep following Christina Ellis, our Ramsey personality. She's the absolute expert on this stuff. Over the years, the risk of becoming a victim of ID theft has skyrocketed. Today, thieves steal your info for not only financial fraud, but for tax refund and social security fraud, medical ID theft, criminal acts, and even home title fraud. How do they get your info? Data breaches, internet hacks, phishing scams, malware, the list goes on and on. Cleaning up the mess is a huge nightmare, so having a protection plan, in my opinion, is just a necessity. But spending hundreds of dollars a year with these hyped-up

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You're out of here after this hour i'm just saying everybody it's been great toss you oh alex is with us alex is in nashville hi alex welcome to the ramsey show hello gentlemen thank you for taking my call i'll try to be concise i work in it since covid uh overtime has been readily available my base salary salary is $40,000. I've been able to make about $65,000 since COVID annually for the past two years. I've used that surplus to pay out debt and cash flow a wedding. I found out today our rent is going up by $500, and I'm wondering if I should do the budget for our rent as we plan to move or not move based on overtime or based on my base salary wow uh if the overtime is going to be there i don't mind you doing the point of the whole thing there's no magic to the fourth of

your income going to housing the the whole point of it is don't be house poor whether you're renting or whether you own if your house payment your rent, is a huge percentage of the money you have available, then you don't have any money left after you pay it. It's kind of a simple big number concept. It's not a splitting hairs difference here. But that's a lot of overtime. Are you going to continue to work that kind of overtime for a while to come? Just for another year, I should have my student loans paid off in the next six, eight months.

So I'm looking forward to paying that off. That's the ultimate goal. From a numbers perspective, our rent is going to go up to $2,500 a month if they don't come down. We've submitted like a basically an offer. We're trying to negotiate. So our rent is either going to go up to $2,500, bring home per month between my girlfriend and I, and we get married in October. We bring home about $7,000 a month net. So that's, you know, it's a little higher than 25%.

So I don't know if we should move to someplace cheaper or what we should do. Yeah, you should. You should if you can. And the reason is simple. The rent is, you know, it's patience. You're not investing in something here. You're parking your butt somewhere until you get some money and buy a house. And the more you pay in rent, the less money you're going to have for other things,

like getting out of student loan debt and, like, buying a house. And so, you know, anything I can do to get cheaper rent anytime, I'm going to try to do it within reason. And so, yeah. Yeah, I mean, rents in Nashville have gone through the roof because a stupid mayor raised the property taxes through the roof. The Comrade Cooper, the mayor there. I was hoping you were going to put that out there. Oh, my God. He just destroyed the economy over there. the um comrade cooper i was hoping you were going to put that out there yeah oh my god he destroyed the economy over there but the not destroyed it but it just hammered the businesses

and everybody else and so those high property taxes are now being reflected in your rent because the landlord's costs went up and so you get to pay the taxes is what amounts to um alex what do you do in IT? What's your position? So I basically help our company keep people working from home. So we have thousands of people that work from home. When those thousands of people have an issue, they call a number. I talk to them and work, then help them stay online, keep them working. So internal tech support would be one way of saying it. Correct. What's your goals in technology?

Do you see a ladder? Do you have something you aspire to in technology? So I was in the midst of making a career transition before the overtime became available. So I'm just using the overtime as a vehicle to pay off my debt. Ultimately, my goals are not in IT. Okay. Well, the reason I asked that is I think Dave's right. I would lower my rent, and I would also pretty quickly get out of this overtime reliance and move yourself up the professional ladder so we're increasing our income as well as decreasing that rent as we're saving for a house. So it sounds like he's got a good plan. Yeah, and that's exactly what I would do.

Because here's the thing. The rent is – I did that. When Sharon and I first got married a million years ago, we rented – our first property that we rented was very expensive. And I was actually – I thought I was so proud because I was renting the Taj Mahal. Right. Of course. I mean, you know, it was great.

It was an amazing property. And I went to visit my old elementary school principal now that i had come back home to nashville local boy does good just just drop by to say hi i had a job i had a wife i thought life was good and she said where are you living and i told her and she said good lord what are you paying and i told her and she said well that's dumb why are you paying that much in rent yeah really we literally moved out of that property at the end of the lease six months later and cut our rent in half. Oh, that felt good. In half.

That feels good. So different numbers than Alex is dealing with, but it was a different world in those days. But, I mean, we moved to a one-bedroom apartment in a not-so-great complex and cut our rent. Actually, it was more than in half. That's pretty bizarre when you think about it. But was it placed up camp until we saved money to buy something? It's temporary. And so it was a complete waste to rent, to spend a whole lot of money on rent,

spend as little money as you can on rent. And, yeah, so, yeah, that's the premise I'm coming at this. So, Alex, you're getting the same advice that my own elementary school teacher or school principal gave me when I went back to visit years later. I would have loved to have been there when she dropped that on you. She was classic no-nonsense. Classic no-nonsense. What was her name? Evelyn Hyde.

Oh, Mrs. Hyde. Everybody needs a Mrs. Hyde in their life. She was a wonderful lady. That's cool. Just an absolute jewel. Hyde. Everybody needs a Mrs. Hyde in their life. She was a wonderful lady. That's cool. Just an absolute jewel. All right, let's see here. Earl in Philadelphia. Hi, Earl.

Welcome to the Ramsey Show. Yeah, how you doing, Dave? A little nervous right now talking to you. No troubles. How can we help? Yeah, I'm a government employee, and I'm looking to possibly retire this coming year. And currently right now I have in my TSP about $1.8 million. Way to go!

Whoa. You're a rock star, man. Yeah, yeah. And with the government, they— You don't sound real impressed with you. I'm impressed with you. I don't know. Having that much money, it still makes me a little nervous.

And it's traditional. But, yeah, with the government, they provide you with, like, financial courses. And one of the guys who gave the course, I guess he's like a financial guy, and I just said, let me just talk to him. And he mentioned something about a fixed index annuity. And I know how you feel about annuities, but this fixed index annuity, you know, he basically gave it a spin where, you know, when the market goes down, it doesn't really go down. And I don't know, I just don't really feel too good about it. And also, too, I did talk to one of the SmartVestor pros,

and I'm going to talk to another one to interview them. But I just want to know, how do you feel about it? I mean, I don't know much about fixed index annuity. I did a little bit of research, but I just want to hear it from you. Okay. Well, basically what we're talking about is an indexed annuity that has a floor to it. It's not going to go below a certain return, probably 5% or 6% or something like that. And it's probably indexed. Typically, it would be off of something like the S&P 500.

Right, right. But indexed means it's not fixed. Indexed means it follows an index. Okay? Okay. So, like, have you got your TSP in the C plan? Some c plan some of it yeah okay so the c is an index that's an index so you have an indexed investment now if you have money in the s plan that is an index it follows a small cap index uh and so all you're doing is you'd find a group of stocks that the weighted average of those stocks represent an index.

So an S&P 500 is an index, and so it follows that. The problem is not the index or indexing. The problem is not the floor. The problem is that the annuity fees are double what you get with a mutual fund, and his commissions are 4X what he would get if he sold you the a mutual fund, and his commissions are 4X what he would get if he sold you the same mutual fund, same index, without it being in an annuity. And so this guy wants a commission. You need to run.

Okay. I kind of got that feeling, but I said, you know, let me talk to someone, but I just didn't feel right about it. Trust your feeling. Yeah, your feeling was right. But that's all it is. It means it's a conservative way that gives you a floor, but you're paying dearly for it. It's not the end of the world.

It's not an absolute horrible product. It's not as bad as, like, Whole Life or something like that. But it's not as good as just a group of mutual funds with your SmartVestor Pro, which will have much lower fees. They make much less commission on you doing that. You've got a much better situation. You've got $2 million. You need to learn to trust your gut.

You have a really good gut instinct. This is the Ramsey Show. We'll be right back. Ken Coleman, Ramsey personality, is my co-host today in the lobby of Ramsey Solutions on the Dead Free Stage. Kevin and Alyssa are with us. Hey guys, how are you? We're doing fabulous. Dave, how are you? Better than we deserve. Welcome to Nashville. Where do you live? We live in Sullivan, Indiana. It's a very small rural community. Near what? Near Terre Haute. Okay, that'll work. Well, welcome. Good to have you guys. How much debt have you paid off? We paid off $72,000 and we cash flowed $18,000 of that towards my master's degree. Good for you. And your range of income,

how long did that take you? It took us 26 months. Good. And your range of income during that two years? Range of income was started at $90,000 and we today we're at 152. Wow nice jump. What do y'all do for a living? Well I'm a history teacher for a high school called Duggar Union Community Schools and I'm also in the Indiana Air National Guard. Great your master's in history? It is in history. Excellent good okay. And I work full-time as a federal employee and I work part-time as an elected official on my local school board. Just to clarify, a different school board than Lisa. So there's no nepotism there. Oh, I don't know.

I thought you were setting up job security for the history teacher here. I don't know, man. Yeah, we can lay off everybody but that particular history teacher. Very good, guys. Very good. Cool. So what kind of debt was this, $72,000? Well, Dave, we're a little weird.

We paid off our mortgage. Whoa! You're more than a little weird. You're actually very weird. Congratulations. Thank you. How old are you guys? I'm 31.

I'm 35. And you have a paid-for house? Yes. That makes you weird right there. What's the house worth? In today's market, it's about $200,000. I love it. How does it feel to not have a payment in the world and in your 30s free it was free yeah that's pretty incredible wow

i mean most people never even think about paying off their mortgage and you guys do it in your early 30s what in the world inspired all of this well about 26 months ago we happened to be looking at our amortization schedule. I got that right here. Yep. Happened to have it. Just happened to have our amortization schedule. And we were looking at our mortgage payment and we realized how much we were paying to the bank in interest. Over half of our mortgage payment every single month was going to interest and very little was actually going towards the principal yeah and so that upset us because we were just basically throwing money at the bank and so you know it's amazing there's a couple times people really get upset about math

one of them is the first time you ever get a paycheck and they hold taxes out and you go what and the second time is when you figure out how bankers make money. Yeah. Right. We were definitely giving the bankers a lot of money, and so we decided we're not doing that anymore. Let's pay off our mortgage and get this done and over with. I love it. Wow. Boom. How'd you get introduced to Ramsey?

Well, Dave, we've been following the Baby Steps for years. I've called him the Ken Coleman Show twice. Wow. So we love you guys. We're big fans. And so we followed the baby steps from step one all the way to now we're on step seven. So we've paid off all the non-consumer debt or the non-mortgage debt. And that was $77,000 actually. And we got to the point to pay off the mortgage.

And that's when we just tackled it. Just looked down and went, I only got two years. I can be done. Yeah. And actually David, uh, it was supposed to be four years.

That was our goal. Um, so kind of to skip ahead just a little bit. Um, so we set a goal, uh, 26 months ago, ago as a God goal to say,

you know, how can we pay this mortgage off in four years? And we said, mathematically, it can't happen. We just don't have the income. But we had faith and we had the faith that the Lord would provide for us. And we just put our heads down and we're grinding. And a friend of ours has a good quote, when you live in the kingdom, you can't lose. And so our number one piece of advice and our thing here is get into the kingdom. And the Lord provided. And whether it was stimulus money that we would get, we didn't need it, but we took it and we just put it right towards a mortgage.

And we just kept on. We were blessed so much, and we just continued to be blessed because it allowed us to pay it off, not in four years, but in 26 months. Yeah. I can't prove it theologically or biblically, but just observation for 30 years, I swear I think God is standing around waiting on someone to start behaving, you know, and start going, oh, there's two that actually get it. I can give them some money. They are worthy of trust. They are trustworthy.

Oh, look at those two. I can give them some money. And I can give them a chance to go make some more money because you're not afraid of work, you know? And so because we know that God provides for the birds, but he does not throw the worms in the nest. They leave the nest, go get the worms out of the ground. And that's what you've been doing.

You've been working, but God gave you open doors, gave you options, ways to do it so that you could prosper. That's strong, man. I love that. Thank you. Good job, you guys. Yeah. First, real quick question.

Favorite period of history? I'd probably have to say World War II is one of my favorites. Okay, cool. I just had to ask. So when you guys decided you'd already paid off debt previously, and now you go, okay, we get after the home. And so I'm just curious, having gone through the first part of that, now coming after the home, what did you take from the first part of that journey of the consumer debt and all this other stuff, and how did it inform this journey, make you a little bit more effective?

I'm just curious what you learned and then what you put into play as a result. Yeah, great question, Ken. So the first part, we learned about the journey in and of itself. So when you set a big goal, when you're on that journey, it's the process of that journey that shapes you and shifts you and makes you a more refined person. You start building better daily habits. You start building better financial habits, healthy eating habits. And so we just took those principles and the first few baby steps and then applied them to this baby step. And, and it's like the snowball, it got rolling and we couldn't stop it. And, um, what, yeah, we were just so blessed with that. Um, we just continue to work hard and, uh, follow the principles. You guys talk about them all the time. And we just put them into practice.

Way to go, you guys. Very well done. Favorite period in history, I'm going to guess. Founding of the nation. You know that. Revolutionary War period. He's a history nut. Which is fun to travel with if you're touring cities like Boston, right? He knows more than the stupid

travel guide or whatever the guy was walking around. Remember that guy? Oh, never forget. That was interesting. So, hey, way to go, you guys. What do you tell people the key to getting out of debt is? The key is, number one, get into the kingdom. Number two, set big goals.

Goals so big they scare you. And because when you're on that journey, that's when you start becoming a better person and learning. We would also say you're going to face adversity. There's no question. Murphy's going to hit you or you're going to fail. You're going to make bad decisions, but you just never give up. What was the biggest adversity you had to leap over in this 26 months? 26 months, the biggest piece of adversity?

Probably be our vehicles. Yeah. Our vehicles are 10 and 12 years old. They constantly break down. There's adversity sitting in your driveway. Yes, every single day. And actually, we just got one of our vehicles back out of the shop. We had to get an alternator replaced.

And, you know, it's like we could have very easily went and bought a brand new vehicle. It is time for you to move up in car now. Okay. You know, it's like we could have very easily went and bought a brand new vehicle, but... It is time for you to move up in car now. Okay. I mean, you can wait until these used car prices come down a little bit. Yeah, that's right. You guys need some cars. Way to go, you guys.

You're amazing. Well done. Very well done. We got a copy of Baby Steps Millionaires for you. That's for sure your next chapter in this story. Very well done. And also a copy of the Total Money Makeover for you to give away and get your next chapter in this story. Very well done. And also a copy of the Total Money Makeover for you to give away and

get someone else started on the process. Bring the kids up and give us their names and ages. Come here, Chris. This is Arian. She's nine years old. This is Amira. She's seven years old. This is Kansas. She's six years old. And this is Kylie. She's 15 years old.

All right. Very cool. Very's six years old. And this is Kylie. She's 15 years old. All right. Very cool. Very cool. Well done. So, Dad, I believe the ladies have ganged up on you in this family. Wow. Absolutely. Well done. Very well done.

All right. All right. Kevin and Alyssa. Kylie, Arian. Arian? Arian. Arian. I'm sorry.

Amira. I can't do any of it. And Kansas. I'm messing it all up. From Indiana, $72,000 paid off in 26 months, making $90,000 to $152,000. Count it down. Let's hear a debt-free scream. You ready, ladies?

Thank you for changing our family tree, Dave. Three, two, one. We're debt-free! Way to go, you guys! T-shirts say straight out of debt for those of you listening on the radio. I love it. This is The Ramsey Show. We'll be right back. Ken Coleman Ramsey personality is my co-host today as we take your questions about work that you love, how you build wealth, and how you create real relationships.

Stephanie's with us in Louisville, Kentucky. Hi, Stephanie. Welcome to The Ramsey Show. Hi. Thanks for having me. Sure. What's up? Well, so COVID was actually a kind of lucky thing for us.

Right at the very beginning, we were able to buy our first rental property. Right when rates were low but before housing prices just skyrocketed, it came with a two-bedroom house and a three-bedroom with an extra office that they've been using as a fourth-bedroom double-wide. The regular house, it didn't really need a whole lot of work, even though it hadn't been lived in in a while. So we threw some paint on it, did a couple of small things, and have been renting it out. I would like to fix up the double-wide.

It needs a lot of work, though. And since this is new to me, my husband grew up flipping houses, and doesn't really want to participate beyond like giving advice. Um, so this is kind of my, my little project. Um, but I don't really know where to draw the line as far as how much to cashflow for it because, you know, at the end of the day, it's still a double wide. Um, but I think that it would be, I mean, it's already there. And I'd like to get more rental income out of it. And I think, you know, long term, it might be a good thing.

You know, I don't want to be a slumlord, but I don't want to make it a Taj Mahal either, because it's still going to be a 30-year-old double wide. So I'm not sure, I guess, just how to go about that. Is that is there like a certain number as far as how much i should put it you know that should be my absolute cap as far as what's put into it um well what you have to what you have to consider is is that the long-term play is the thing's worth zero yeah that's where it's going yeah i can't imagine it'll be there's a day There's a day that they don't go up in value, they go down in value, period. Yeah. Okay, so there's a day that it's worth zero.

So that tells us that's a different formula than fixing up the house, which is going up in value, okay? Yeah. And so it's a different way of looking at it and so forth. What do you think you could rent it for if it was fixed up? If it's three bedrooms, I could probably get 15 to 18. of looking at it and so forth what do you think you could rent it for if it was fixed up uh if it's three bedrooms i could probably get 15 to 18 if it's four um somewhere in the 16 to 20 okay let's call it let's call it you're talking 1500 a month yeah wow okay that's an impressive

figure all right so we're going to get 15001,500 a month, and what would you talk about spending on it? Because basically here's, let me go ahead and limit you, all right? You want to recoup it fast with $1,500 a month because your other option is sell it and move it off the property before it goes down in value further. Yeah. If you're going to keep it, you're going to burn it off the property before it goes down in value further yeah if you if you're going to keep it you're going to burn it to the ground like driving a car into the ground kind of thing and so you want to recoup everything that you put in it with cash flow off the rental and so if you if you make an eighteen thousand dollars on it and you spend thirty six thousand

dollars on it it's two years before you can get your money back. And it's not going up in value. It's going down in value. So this is a pure, I'm going to trade some cash up front for a $1,500 a month income that will last for a while. Okay. So I'm going to go ahead and tell you, your limit is a max of 30. Okay. How much have you got to spend on it well i my gut

tells me we you know i don't want to put more than about 50 into i've already got 30 put away um for just kind of whatever we happen if i were in your shoes i wouldn't put over 2025 in it okay i'm gonna fix it because you're basically you're trading that 2025 you're gonna get that back and only then are you making money and from then on that's the money that you make until it goes down to complete seed and it's going to go down to seed how many square feet is the double wide it's big it's bigger than my house it's um 1800 square feet. What could you sell it for today? Somebody move it off the property. Three to five range because someone actually was interested in it and got a quote for $15,000 to actually move it.

It's not really habitable right now. It's got a lot of holes in the walls and um a skylight that's leaking but if we were to fix that would take out i'm gonna i'm gonna change my mind this is a piece of trash i'm gonna sell it yeah okay you don't want to deal with what this is going to be for the next eight years ten years it's going to be a constant headache it's not that you know it's just going to be a problem and it's not going up in value i'm going to sell it for five i'm going to be a problem, and it's not going up in value. I'm going to sell it for five. I'm going to take the 30 to 50 that I was thinking about spending in the wrong place,

and I'm going to build a little property up there or something that goes up in value. That's exactly where I was leaning, Dave, is what could you build? If you want a rental property that bad, what could you build over time? Yeah. That's going to build on the same foundation that's there? Well, not necessarily the foundation, but maybe use the same septic system or the underground utilities that got there, some of the infrastructure there.

And I'm just going to be thinking that way. Even if it takes me two or three more years to save up and spend $100 on something up there, I don't care. Whatever you want to do. But I just want to think I always buy real estate with a 20 year 50 year mindset i never buy it with a two-year mindset okay i just don't do it i and consequently the number of pieces of real estate i have sold in the last 30 years is one two three i've sold three pieces of real estate everything else i have bought i've kept and that that's the way you make money in real estate you don't make money in real estate you

can make money flipping properties but you don't make money in real estate with double wides now you do make money in real estate with double wides uh if you buy them on cash on cash basis and the cash you put in you met like i know a guy owns a trailer park okay and that thing prints money okay but you know he's got five thousand dollar trailers right all over this park you know so like fifty or hundred thousand dollars worth of these things sitting there and the stinking thing's throwing off fifty or hundred thousand a year right so he doesn't care if they're going up in value right he didn't care if they're going down in value sure but basically the thing is gradually deteriorating back to the earth.

That's right. That's right. It's not going to be worth anything. And I just wonder, with the husband having a background in this, and she seems like she was going to do the work. He knows that. I wonder what they could build a 1,200-square-foot building for. I don't...

You know, it'll take a lot these days. Yeah. But, yeah. But still, yeah, I'm just going to go that direction long term i'm not screwing with this thing if it's me you do whatever you want to i'm not stuck up it's just a matter of math for me bethany is in fort wayne indiana hi bethany how are you good how are you better than i deserve what's up um my husband and i are on baby step four and five and we've got three kids um he's looking at a career change that would take us back to school for about five years.

Five years? What's he studying? Doctorate in psychology, so society. Okay. So he wants to be a psychologist? Yes. Okay. Anyway, so we're saving to go back to school.

We're assuming that he won't be able to work full time while he's in school. So we're just trying to save up as much as possible. Why? And I was, um, he can work full time and complete a doctorate in five years. Sure. He could. Has he got his undergrad? Um, yes, but it's an engineering.

So it's a, it's a big career change. Okay. Well, I've got two little kids. I'm doing this at night, and it maybe takes me six years, but I think you can do it in four and do it part-time. I mean, it does not take that to get a doctorate. You've got to do some undergrad studies to get some foundational things, some prereqs under your belt, and then you've got to go do the grad work,

and then you've got to go through the grad work and and you know then you got to go through the doctoral process and that can take some time but uh um i'm going to roll up my sleeves and knock this out but i'm not quitting my job no absolutely not he doesn't have to do that and you guys need to dive in and get a lot of research and a lot of confidence in the clarity behind that but that's absolutely dave's absolutely right and it it might delay a little bit but it's also gonna the return in the delay is that there is no interruption of income and you guys aren't unnecessarily sacrificing financially now he's going to sacrifice some sleep but it's worth it yeah yeah to go get to live his dream but yeah i i know i'm gonna sort of goof around at this and i'm gonna work part-time and my family's going to starve while I do it.

No, not something I'm signing up for. No, I think we're going to I think we're going to roll up our sleeves, get some stuff done here. If that that again, that's what we do at the Ramsey House. And that's how we answer it here. This is the Ramsey show. Hey folks, Ken Coleman here. Did you know The Ramsey Show is one of the most popular podcasts in the world? Get your daily dose of advice on life and money. Check out all of our shows from The Ramsey Network wherever you listen to podcasts.