The Ramsey Show - App - Calculating How Much to Save Each Month for College (Hour 1)

Episode Date: February 8, 2019

The show about you

Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studio, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Ashley is with us in Indianapolis to start off this hour. Hi, Ashley. How are you? I'm great, Dave. How are you? Better than I deserve. What's up? We are on Baby Steps 4, 5, and 6, and I'm trying to figure out how we know how much we need to save monthly to pay for our kids' college so that we can start using that extra to attack the house.

Okay. Well, you have to have two things, two variables on that that we know, and then you can just sit down with your SmartVestor Pro, and they can calculate it for you pretty quickly. One's simple. It's the age of your child. How many years have we got left to save? How old are your kids? Eight and 12. Okay.

All right. So we have six and ten years to go, right? Right. And then we look at, okay, how much is college going to cost that one's a little more complicated but um you can get some help with that college tuition is about college tuition inflation averages for the last 50 years or so about seven percent a year uh but we can just look at today's as an example and say the typical college today is about $45,000 tuition for in-state state schools plus room and board. Okay?

Okay. And so, you know, you're looking at $60,000, $70,000. And if we just said we got eight years to do $80,000, that would be $10,000 a year. That would be $800 a month, not counting the fact that the money will grow. And it will grow, and so you won't need that much. You probably need $400 or $500 a month per kid. In your case, I'm rough and dirtying this, but that's the way you would go about the calculation. You can actually put the college target dollar amount and the years and the rate of return projected on your mutual fund

into a simple financial calculator with your SmartVestor Pro, and it'll spit out exactly what you need to be doing to make that exact amount by then. Of course, that assumes no scholarships. That assumes the kid isn't working. That assumes all these things, which I would assume scholarships and kid working if it was me, you know, because I'm going to make them apply for a bunch of scholarships and get the free money. And I'm also assuming a state school because unless you're making serious bank, you're not going to make the prestige school tuition by the time these kids get to college since you're just starting.

And it costs a lot of money per month to do that. But you can sit down with those things and figure out exactly what you need and back right into it. It's not that hard. Ellie is with us. Ellie is in Phoenix, Arizona. Hi, Ellie. Welcome to the Dave Ramsey Show. Hi.

Thanks for having me. Sure. What's up? All right. So I have $3,000 left on my car, and I have about $2,000 left in credit cards. And I was wondering if I should sell my car to pay off the leftover and the credit cards and just drive something, you know, not as new. Okay. So you have how much left on your car?

$3,000. Left to pay it off. Left to pay it off. And $2,000 left to pay off credit cards. Yes. So $5,000 makes you debt free. Yes. And what's your car worth?

Okay, so the private party value was $14,000. Okay. And what do you make a year? $35,000. Okay. So how old are you? 21. Are you just graduating college and getting started, or what's your story?

No, I'm in school right now. I'm studying forensic accounting. I have about one year year left so i'm at the job i'm at i'll be here for about another year and a half until at least finish my degree yeah okay well at 35 000 living like a college student if you just crunch it down you can pay off five thousand dollars in debt and keep the car that's what i was also i was thinking that i'm like climbing the fence right now like i'm not quite on the fence but i'm like thinking about it because if i pay it off and i can have it all you know paid off like by the end of the month if i can sell it but yeah but you can probably get it all done in what five or six months otherwise right well i don't have any

other bills other than my my car so i was thinking of having it all paid off by the end of March. Okay. So end of the day or end of March are our two choices? Yeah. Yeah. So I'm end of March and keep the car. Okie dokie. Because you're in an upward trend with your income over the next several years.

Yeah. And this car is not going to, you know, when you're making 40, 50, 60, whatever you're making coming out with forensic accounting, maybe even 75, you know, this car is not going to be anywhere near out of line. It's not technically out of line with our guidelines today because we say don't be more than half your annual income. So even today it's not out of line, but it's close. It's a big fancy car if you were going to be making $35,000 for the next 10 years. But you're not. Gotcha.

So given that trend and given that you can clear up this debt and it's not much debt, I'd keep the car. There's no way I'd sell it in your situation. I'd work my way through the debt and keep it. Hey, thank you for the call. Open phones at 888-825-5225. Thank you for joining us jason is on twitter dave is gold or silver bullion a suitable substitute for a one thousand dollar emergency fund biblically it is considered money as an honest and right measure um yeah and so were denarii, and so were, which would be a dollar today,

not a dollar, but it would be a medium of exchange currency. There's all kinds of coins and other mediums of exchange mentioned in Scripture. So I don't think we can go that gold is more biblically correct than currency have a hard time proving that one it was the medium of exchange in biblical times it is not the medium of exchange today uh oil was a medium of exchange in biblical times because oil was used to keep the holy of holies lit, often used to pour over the head of a king to anoint a king or to anoint anyone for a certain subject because oil was a sign of God's spirit, and it was used often as a medium of exchange.

We see that in Proverbs when it says, in the house of the wise are stores of choice food and oil. Oil was a symbol, an indicator of wealth, because it could also be used like we use green president's faces as a medium of exchange. So I think you're stretching it to start calling gold biblical. Nah, not really. Not really. Not any more than green president's faces.

So, no. Besides that, investing in gold and silver is stupid. So, just aside from the biblical discussion, because it's so volatile and has a horrible track record as a rate of return, it's not where you would park your emergency fund. Not even with the whole biblical thing. Everything okay in there, James? 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 has struggled 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. Logan is in Nashville. Welcome to the Dave Ramsey Show, Logan. What's up? Thanks, Dave.

How are you doing? Better than I deserve. How can I help? Great. I have a question about working per diem that I get for work into my every dollar budget. So my thought is I would just spend the money on my work trip for hotels and meals and whatever else I need on the trip. And then anything I have left over, I would just take that lump sum and take it, put it into my budget as additional income. Is that how you would do it, or would you do it a different way?

That's perfect. That's exactly how I would do it. Of course, all this is assuming that it is a per diem that you get. Whether you use it or not, you do not have to account for it. That's just extra money they give you because you're traveling. Exactly. That's correct. You don't have to give it back.

You don't have to account for it. You're not stealing it, nothing like that. It's a straight per diem. Yes, sir. Gotcha. Okay. Yeah, you're exactly right. I just added in as a lump sum, and it's just like a server that has tips.

You just add them up and say, that's part of my income, and it goes right there on the budget. We've got to give every dollar an assignment, every dollar a mission, and you just make some budget adjustments as you go along and use your EveryDollar app, and it keeps her rolling eric's with us in boston hi eric welcome to the dave ramsey show hi dave thank you for taking the time to speak with me sure what's up uh i'm on baby step 3b i'm completely out of debt i graduated from college uh last, and I was curious to know how I could best go about saving up for a down payment for a house. Well, you've obviously done a great job somehow getting to this point.

How did you save up your emergency fund? So I graduated from school full scholarship the whole way, and then since then I've been blessed with a pretty good income. And as a recruiter, I've been able to save about $2,000 a month, give or take, depending on how things are with commission. And that allowed me to fully fund the emergency fund. But being in Boston, it's a very high-cost-of-living area. And even a cheaper home that's about 30 minutes away from where I work is going to be about half a million dollars. And a down payment at 20% would be $100,000.

So I could save that in about 50 months, four years. But I was wondering if you think that's the best route that I should take and should I completely stop retirement while I'm doing that, or what do you think would be the best path moving forward? Well, on a first-time home purchase, we don't slam the mic down and say you have to put 20% down. 20% down is a really good idea because you can avoid PMI, private mortgage insurance, which will cost you about $75 a month per $100,000 borrowed. So, I mean, it's some serious money in terms of

what it adds to your payment if you don't put down the 20 but um on a first-time home purchase we don't do that so i think um i think you just start saving as aggressively as you have been and uh let's see let's see where you end up in about three years with your income going up and you doing that i think another thing that'll happen in about three years with your income going up and you doing that. I think another thing that will happen during that three years is you're going to learn the real estate market thoroughly. Because, you know, yes, there's half-million-dollar houses, and that's probably the average in the Boston area. It's an expensive market. That wouldn't be unusual um but you know most areas let me just

tell you the national average on homes is 225 000 right now um and so that's the average home price in america is boston double that probably probably uh but that's average, which also indicates there's houses cheaper than that. And so, you know, if the average is $225,000 in a typical town, then you can find a $100,000 house. And if the average is $500,000 in Boston, then you can find a $250,000 house. So, you know, you've just got to look and learn and learn these markets. And while you're saving, just, you know, become an expert on real estate in the area. It's kind of a fun hobby to go out and look at properties on the weekends, hit the open houses, and go around and match up the listings and see what stuff's costing and start to learn the nuances of the market.

You may find a market that's growing or a gentrification market where stuff's still a good deal, but it seems to be trending the right way. There's all kinds of ways you can skin this cat. But in the meantime, just save you up a big pile of money, and let's remove the absolute necessity to put down 20%, although it is preferable, obviously. Open phones at 888-825-5225. Kaylin is with us in Tulsa, Oklahoma. Hi, Kaylin. How are you? Obviously. Open phones at 888-825-5225.

Kaylin is with us in Tulsa, Oklahoma. Hi, Kaylin. How are you? Hi, I'm good. Hi, I'm 14, and I have my $500 emergency fund already. And my question was, what percent of my minimum wage paycheck should I invest and save, and what kind of investing can I use right now? You're pretty amazing.

You're on it, kiddo. I got a feeling you're getting ready to be an everyday millionaire before we know it. So who's paying for your car when you turn 16? I'm going to pay for my car. Okay. And so the larger portion of your paycheck you save, the nicer car you're going to get. Because that's your main savings goal right now. So there's four things we do with money.

We work to create it. You're doing that. Way to go. High five. Way to go, Rockstar. Number two thing we're doing to create money, or once we create money by working, we give it, save it, and spend it. And, of course, the more we do of any one of those three, the less there is for the other two. And so it's that dance that we begin between those three things that we will dance with the rest of our lives.

And it's a wonderful thing for you to build all three muscles, the spending muscle, wisely, carefully, not too much, the giving muscle, liberally, generously, the saving muscle called CAR. And so I'll tell you what happened to my kids when they were your age. Once they started breaking the money up into three categories like that, we're Christians, and so they were tithing a tenth of their income. That was their giving portion. And so then past that, they were saving for their car, and they were spending.

Their spending pretty much went down to very little, and the other thing that happened was they started looking for ways to make more money than minimum wage, because babysitting, you can make 20 bucks an hour dog sitting and walking you can make 15 20 bucks an hour mowing grass you can make more than that um so you know it's just whatever you want to do but you can sure make more than minimum wage even as a 14 year old matter of fact both of my daughters went and got the little ymca certification for babysitting they were where they learned cpr and they learned a few other things and that kind of stuff so they were certified babysitters yeah that's a big deal and uh anyway they used it i'll

tell you they they worked their little tails off and um you know they worked the book table at our live events selling books off the back table and that kind of stuff and we worked them um my son painted the stairwell here when he was 15 inside this building and it's a big old building and a big old stairwell took him a while then he didn't do so good so he had to do half of it over and so you know that all comes into getting to pay for the car but it was a whole lot more than minimum wage in every case. And that's what happened to them. They cut their spending down so that they could save more because they start saying, I'm 14.

I got two years. What kind of car am I going to buy? $2,000, $1,000 a year. That's $80 a month. And you start doing some goal setting and dividing out how much you need to be saving, and you start going, I've got to get a better job. Probably. Hey, good call.

You're going to be all right. I'm proud of you. Very well done. Open phones at 888-825-5225. You jump in. We'll talk about your life and your money. Joanna from the Baby Steps, the Ramsey Baby Steps Facebook group says, I reached Baby Step 4.

I think I'm ready to start investing in a Roth IRA, and I'm getting ready for retirement. Does anyone know where to start? Great question. Great question. Well, this is when we send you into the SmartVestor Pro in your area. Go to DaveRamsey.com. Click SmartVestor, put in your info. It'll drop down a list of the SmartVestor Pros in your area.

You choose among them. You make the choice. And I recommend sitting down with them. They have the heart of a teacher, and you begin learning for your first set of investing. The Roth IRA is in good growth stock mutual funds. Really good place to start your baby step forward. Nothing wrong with that at all. 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, biblical solution to your health care costs? Based on New Testament principles, Christian Health Healthcare Ministries, or CHM, helps Christian families, churches, and ministries join together as the body of Christ to share their major healthcare costs. Christian Healthcare Ministries is the original health cost-sharing ministry. A Better Business Bureau-accredited organization, CHM members share to pay each other's medical bills. It's not insurance. It's Christians financially and spiritually supporting each other. It's what Christian Healthcare Ministries has done for over 35 years.

And our members have shared over $2.5 billion in medical bills. To learn more, visit chministries.org. That's chministries.org. Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live, Brandon and Kelly dropped by. Hey, guys, how are you? Good, how are you? Welcome, and where do you guys live?

Louisville, Kentucky. Cool. And wearing a good Predators t-shirt, though. There we go, man. I love it. Good for you. Well, welcome to Nashville. Did you go to the game last night? Oh, well, I did watch it. Oh, it was good. Winning in overtime. Yeah, I caught it, too.

Proud of our Preds. They're doing good stuff. So, welcome, guys, all the way here from Louisville to do a debt-free scream. You got it. How much have you paid off? About $29,000. Cool. How long did that take? 32 months. Good. And your range of income during that time? Started about $25,000 and up to $45,000. Wow. You almost doubled your income.

How'd you do that? Well, we got married. Well, that'll do it. Okay. Okay. So you started off doing this single? Yes, I did. And how long have you been married uh about nine months yeah oh wow okay so knocked it out that way so what kind of debt was this it was my vehicle and student loans okay and so brandon brought no debt into the marriage i did not but uh brought an income to help you knock it out yeah he was nice and let me put the wedding money towards it oh yeah well it's a good thing so uh did you guys talk about all this before marriage i assume not really i think it was since i had been working on this so for so long by myself i think he just kind of knew it was coming oh yeah i don't think he had a choice

yeah okay all right this is the way it's gonna be. So how's it feel now that you're debt free? It feels awesome. It is. It's a great start. Yeah, for real. What started you on this process 32 months ago? So basically, I have this job that I love, but it doesn't make a lot of money. And I'm probably never going to make a lot of money at this job.

So I just started thinking about my future. And, you know, well, if I'm going to continue to work at this place that I love and have this income that, you know, it's definitely livable and I appreciate it, but it's never, I'm never going to be making six figures. I just started to really think about my future. And I was just talking to my boss today and I just said, you know, what are you doing for your retirement and then she actually um had taken fpu through her church oh so she um got me talking about it and then she gifted me the total money makeover for christmas one year nice and it just went on from there and here we go just like

that very very cool well now you've done it you-free. What do you tell people the secret to getting out of debt is now that you did it? The budget. Just sticking to it and learning to say no. And you may not have a lot of people, have a lot of supporters, but, or at least in our case, we had a lot of supporters, but we didn't have anybody who was really as gung-ho as we were. So they didn't quite understand it. They were like, okay, that's fine, but do you still want to go out to dinner tonight? But you're not going on vacation? Right, yeah, yeah.

We got that vacation one a lot. We decided to skip our honeymoon until we could afford it. There you go. Well, now you can afford it. Yeah. Making $50,000 a year almost and no payments in the world. It's a good place to be. Yes, it is. Well year almost and no payments in the world. No. It's a good place to be.

Yes, it is. Well done, you guys. Very well done. Well, we've got a copy of Chris Hogan's Everyday Millionaires for you because you're on the way to being one. I've already got it, but thank you so much for offering. Sure. Well, we'll give you a copy of The Legacy Journey. Do you have that one? I do.

You got them all. Well, take something, for God's sake, and give it to somebody. Re-gift it to somebody else. I'll be all right if you do that. So we just want to say thank you, and we're proud of you. Well done. Thank you. Very well done.

Brandon and Kelly, Louisville, Kentucky, $29,000 paid off in 32 months, making $25,000 to $45,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Love it! Well done. Very well done.

Man, that's fabulous. Open phones at 888-825-5225. Brian is in Atlanta. Hey, Brian, welcome to the Dave Ramsey Show. Hello. Talk to you. Good to talk to you. How can I help?

All right. I have a question. I'll be finishing up baby shoes by the end of the month. I'm looking towards the future and being able to move up a house. I already have a house. I'm about to see an equity. And I'm just trying to figure out some strategies to be able to bump up to the next five years or so. Good.

Good for you. Well, I mean, obviously above your emergency fund of baby step three, you could start saving towards your down payment. Depending on how enthusiastic you are about doing that, you could either start your baby step four, 15% of your income going into retirement, and save above that, or you could tap the brakes on that. If you're going to do this house move pretty quick, you could tap the brakes on that for a couple of years and then save up to move up in house at that point now the trick is obviously

you're going to sell the house you're in take that equity plus whatever other money you save and make your move up and always at that point make sure your payment is no more than a fourth of your take-home pay on a 15-year fixed rate. Joshua's in Columbus, Indiana. Hi, Joshua. How are you? Doing good. How about yourself, Dave? Better than I deserve. What's up? All right. So I am wanting to go back to school, and I have a little bit of time to save up, but after doing the math, I feel like I might have to dip into my emergency fund. I was wanting your opinion on that just for living

expenses to get by. Uh, you're going to quit work. Um, actually I will be able to, um, leave to do an accelerated program. It'll take one year, and my job will actually pay for it and then take me back afterwards. Your job will pay for what? It'll pay for the schooling but not the living expenses. Okay. And so you're not going to work while you're in school? While I'm in the program, it's actually going to be eight hours a day, five days a week,

because it's an accelerated course. It's actually on a military base, and so besides just normal schoolwork, they actually have you work out with the military members who are there on base, and then you do practice routines with them and such. It's kind of a unique program. Is the housing and the food packaged into the program? The housing, yes. The food, no.

I could get a part-time job. I've served before, and I could work on Friday and Saturday during the night, but I'll be about 40 minutes away. It's kind of a secluded military base. I'll be about 40 minutes away. It's kind of a secluded military base. I'll be about 40 minutes away. Okay, so you've crunched the numbers pretty carefully on this. What are you coming up short per month? In total, I'll come up short about $2,500.

My emergency fund right now is $7,000, and I might be able to cut that down a little bit. I based it off of working a certain amount of overtime. I might be able to exceed that, but I don't know what kind of expenses might come up until that time. When does the accelerated program start? It starts in August. Okay, so we've got about seven months to be ready and to do more than you had thought you were going to do.

Okay, well, here's what ran through my mind when you first started asking the question. It sounds like you're a single guy. Correct. How old? 24. Okay. A $5,000 emergency fund might suffice. Okay.

Which answers the question overall. Generally speaking, when I hear this question, let me tell you what pops in my head so you can plant this in your spirit for the future and so that our listeners hear the right answer. Going to school is not an emergency, so you don't use the emergency fund that's what popped into my head when you get ready to ask yourself i'm going to use x for the emergency fund ask yourself if x is an emergency because if it's not then you wouldn't use the emergency fund now in your case you're dialing this in you've got a pretty low risk environment for housing is furnished you got a job lined risk environment. Housing is furnished. You got a job lined up when you come back out. You're 24. You're single. $5,000 emergency fund's probably

a little slim, but it's not the end of the world. So I probably would just rephrase it so that we can make it okay and say, we're going to adjust your emergency fund. You don't need as much. And oh, that gives us some money to do this with. Oh, and you're going to work like a crazy man till August, so hopefully you never even have to do that. But generally speaking, is couches on sale? Can I use my emergency fund? No, that's not an emergency. Thank you for joining us, America. We're glad you're here. Open phones at 888-825-5225.

Stephen's in Detroit. Hey, Stephen, welcome to the Dave Ramsey Show. Hey, Dave. Hey, what's up? I currently make $6,000 a year. I have no debt. I have a fully funded emergency fund. And my wife's in school right now.

That's paid for by our parents. And we will be renting for the next approximately five years here in Michigan, and we'll eventually be moving back to Kentucky. My question is, for the next five years or a portion thereof, should we be saving towards 3B and just try to pay completely cash for the house, or should I be investing 15% for the next year or so? How old are you? 30.

Okay. I already have $60 thousand dollars a year you told me that i'm sorry and then your wife when she graduates and you move back to kentucky what do you project your household income might be at that time probably 150 okay you'd be 35. All right. And I've got 36 in retirement already, currently. Well, the basic concept is this. The longer you stay out of retirement, the harder it's going to be to build wealth. But your income is going to go up dramatically.

So whatever catch-up you would need to do, you could do easily as long as you stay with the plan, and you don't just say, well, I'm not going to invest in retirement now, and later on, I'm going to find another reason not to invest for retirement, and then later on, I'm going to find another reason, you know, so, you know, you could stay out of it and just build a big whopping down payment, which wouldn't be a bad thing at all. That'll help that house get paid off faster. Because the whole goal is between the paid-off house and the 401k investing from now until retirement, 35 years, that's what makes you wealthy, are those two things. That's the primary data points of the millionaires that we studied. Paid-for house and a big loaded-up Roth IRA and Roth 401k and that kind of stuff.

And so the trick is just to make sure you keep yourself in the rhythm of doing all of that and you don't lose focus and just wander off and never save for retirement or wander off and never have a good down payment for the house or keep a mortgage the rest of your life or those kinds of things. So long as you've got those things broken, it's not going to matter which way you go if you are if you feel like you guys are pretty hyper disciplined people i probably would use this five years with the lower income to just pile up a big pile of cash for the house and start my 401k and my roth IRAs when i'm making bank at 35 after the move, when the household income almost triples in this case.

And so, you know, you'll be able to really load it up. Again, the point is you don't want to build a rhythm in your life, a series of behaviors that are going to lead you anywhere except towards wealth. And so, and not investing is one of those bad behaviors right not uh saving for a down payment on a house would be a bad behavior so that if you and it kind of sounds like you're a planner just listening to the way you talk and you're the way you ask the question and the fact that you are even asking the question, you're really thinking through from a critical thinking standpoint.

So you're probably going to do very well by just piling up cash for your down payment, then start your 401K. I usually don't like people to start it that late. Five years is a long time to do baby step 3B, a little too long, really. But your case is different because you're planning a move very distinctly because you're there for education. Things are going to change. Your household income is going to shoot way up and so

on. Christy's with us in Fort Leavenworth. Hi, Christy, how are you? Hi, I'm good. How are you? Better than I deserve. What's up? Well, my husband and I are a little bit torn on a decision and we were just wondering if you could give us some clarity. Currently, he's active duty military, and we're stationed in Kansas.

We are set to finish our baby step two in May. And then in Alaska, or I'm sorry, in June, we'll PCS to Alaska. We have two cars right now. They're both beater cars. Each of them were about $1,000 max. One of them will stay here and we'll sell it. The other one, we have to get it ready to ship if we decide to take it with us. The military will pay for us to ship it.

So that part won't cost us. But we have like a huge crack in the windshield and it has to be thoroughly detailed before they'll move it overseas. And so there's just a lot to get it ready to go. If we were to stay here, we wouldn't bother fixing it up. We just keep driving it until we've worked through the baby steps and we're ready to move up in the vehicle. But what we're trying to decide, I know under normal circumstances, you wouldn't suggest we're putting more money into a vehicle than it's worth to repair it.

But if we don't do that, we're worried about getting to Alaska and having no car and feeling pressured to buy something right away. Why don't you sell both of them and just buy a car in Alaska? Well, we've talked about that. You'd have $2,000 and buy a $2,000 car in Alaska. That's what we've talked about. We just weren't sure if getting to Alaska we would feel pressured and not have anything. We've never rented a car even.

I think maybe it's been like 15 years since we've rented a car. Would renting a car would renting a car to get us through until we find something cost a lot well you wouldn't want to do that for six months but you could do that for three weeks okay yeah well i really appreciate it that those are some of the things we were talking around and that that yeah i just wouldn't go to trouble ship a thousand dollar car great i appreciate that That's kind of what we were wondering. Yeah, I'd dump them both and put the cash in your pocket and then make your move and so forth. Okay.

Thank you. I appreciate it. Thank you for your service to the country. Aw, thanks. Thanks. Appreciate the call. Wow. Open phones at 888-825-5225.

Justin is in Colorado Springs. Hi, Justin. How are you? Good, Justin. How are you? Good, sir. How are you by yourself? Better than I deserve. What's up? So recently, I'm currently active duty military.

I've been in about six years, and I recently received an inheritance of $50,000 from my grandma who passed away probably about three months ago. Wow. way probably about three months ago wow um i put i put 25 000 into a cd going at 2.75 percent and i'm keeping the other 25 in my savings so currently i don't have any debt i have a car paid off i have a roth ira i'm putting about 400 a month in i'm just curious what i should do with the money should i keep it in the the CD? Should I invest it in? Stuff like that. How old are you? 23.

Okay. And are you a military lifer, or when will your tour come to an end? Well, currently I'm at five years right now. Six years, I'll have to re-up. I'll probably go for another four, and we'll see from there. Okay. I'm just curious what to do with the rest of the money. I got you.

I understand. I'm just trying to think what you might be going to do with it in the next five years. What do you think? Do you think is there any good thing you're going to use it for in the next five years? I don't think so. Well, yeah, I recently moved to Colorado Springs. I just got here, and I'm currently in a one-bedroom apartment. I'm kind of nervous about

buying a house just for the simple fact that i could move at any time i would not buy this because not because of colorado springs but because uh you know you can move at any time and if you buy a house and don't keep it at least three years you're probably going to lose money on the house after fees and everything on both ends and you might get stuck with it it might take six months to sell it after you leave. And that really becomes a complete pain in the butt. Now, I say you keep ripping where you are right now. What is your car worth?

Trade in value, probably around $10,000. Okay. Good car, then. And what did you say your income is? Probably around $30,000. Okay. $30,000 a year. Good.

So here's what I would do. I always think when I get money that there's three things you ought to always do with money. You ought to give some, save some, and spend some. Okay? Okay. And it doesn't mean a lot of any of that, but I think you probably ought to do something fun, nothing big, $1,000, $2,000 of it, something fun. I think you might want to give some of it. Find somebody who needs some help.

And I would sit down with a smart investor pro with the rest of it, and I would invest it in some good growth stock mutual funds and just let it grow. Ten years from now, you have a big pile of money if you do that. Big pile, like half a big pile of money if you do that. Big pile. Like half a million dollars, probably. So I would sit down and do that and just forget you own it and let it grow in mutual funds. Get with us. Click SmartVestor at DaveRamsey.com.

Thanks for serving your country, sir. This is James Childs, producer of The Dave Ramsey Show. Did you know you can now listen to The Dave Ramsey Show on Pandora and Spotify? For all the ways to watch and listen, check out our show page at DaveRamsey.com slash show.