The Ramsey Show - App - Calculating How Much You Need for Retirement (Hour 3)

Episode Date: February 14, 2019

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Music Music Music Music Live from the headquarters of Ramsey Solutions broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is done, cash is king, and the paid off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host.

You jump in, we'll talk about your life and your money. It is a free call at 888-825-5225. That's 888-825-5225. Jennifer is with us in Lexington, Kentucky. Hi, Jennifer. Welcome to the Dave Ramsey Show. Oh, thank you for talking to me, Dave. Sure, what's up? Okay, so I am very new. I actually just started watching your YouTube videos and Rachel's videos and bought your first book in January, early January. Wow. Welcome. Thank you. I'm very excited about what you're teaching. And so I'm actually getting a pretty large tax refund. It's about $5,700. And I have three credit cards.

One is the total on it. It's about $3,000. The other one is about $500 and the one that's in between is about $22. Now on the one that's $500 is the payment. I actually cut them off. I did the hardship and got all those knocked completely down in January. Do you have any other debts? I have one car. Okay. That's about $7,000 is what I owe on it. And you're single? No, I'm married, got two kids.

Oh. And my husband's got a vehicle. I'm sorry. Okay. So there is a we, and we have a vehicle with debt on it? He does, yes. Okay. And how much is owed on his car? About $22. Okay. And how much is owed on his car?

About $22,000. And how much is owed on your car? And how much is owed on your car? About $8,000 on my car. Good. Okay. And do you have any money in savings that's not in retirement? Yes.

We have about $2,200. Okay. Good. Good. And have you and your husband started talking about the idea we need a plan to clean this mess up? Yes, we are. We're in it together. Good, good.

All right, so we're laying. We've been married 21 years. Good. So we're laying out a budget, and your household income is what? Total combined about $62,000 for the year. Very good. Okay. All right.

Well, the $5,700 would be applied along with $1,200 out of savings, leaving you $1,000 in savings for Baby Step 1. And so that leaves me $5,900, $6,900 to apply to those credit cards. They're all gone, and then we've actually got some left to throw onto your car and see if we can't start knocking it out. We're down to two car payments. Yeah. Okay.

That was easy. Well, that actually made me think. Well, I have some small, and I forgot to tell you this, I have some small doctor bills, and I mean like small, 50 here, 25 here. They're just kind of slowly coming in. And so I wanted to knock those out too. But you got enough to do that. Okay.

I guess that was easier than I thought. Well, I mean, 6,900, your credit cards didn't even add up to 5,700, the three of them. I guess I was thinking I was going to keep that money in savings and just start using the snowball method after that. No, we keep $1,000 in savings, and we throw everything that we can find from any source at the smallest debt until it's gone, and then at the next smallest debt until it's gone, and then the next smallest debt until it's gone,

and we're down to really probably putting a couple thousand onto your car, it sounds to me like. So then we're just going to hit that car as hard as we can hit it every month until that's gone, and we're down to really, you know, we're probably putting a couple thousand onto your car, it sounds to me like. And so then we're just going to hit that car as hard as we can hit it every month until that's gone, and then we're going to knock his car out and be done with it. And then we'll be debt-free. Then we go back to that $1,000 account and raise it up to three to six months of expenses. How many years have you been getting a $5,700 or so big tax refund? A long time.

Okay. All right. Yeah, I know. I just watch all your YouTube videos, and we're working on getting that resolved because that should be coming to us every month and not the government. Ding, ding. Ding, ding. I mean, you've really learned a lot since January.

Oh, I have been watching you nonstop. Oh, bless your heart. I feel like I got that gazelle stuff that you talked about. That gazelle stuff. Yeah, that gazelle stuff's out there. But, yeah, I totally want out of debt, and I want to be one of those that comes in and does the scream, and I want to be one of the millionaires that you talk about.

I think you're on your way. You've come a long way since January. So we've got a plan. We're adjusting our W-2s. You're ahead of me on that. You knew what to do on attacking the other debts, and just get after it, kiddo. And the interesting thing about having a plan is, you know,

having a destination is you'll actually know when you get there. If you aim at nothing, you hit it every time. And that's what most people do. They just wander along and don't know what they're doing. They don't have a plan. And, I mean, you're pretty impressive. You've already got your plan lined up. Jennifer, I think you're going to be fine.

Nita's with us. Nita is in, well, no, it's not. It's Jessica. I'm sorry. Jessica's in Detroit. Hi, Jessica. How are you? Good. How about you, Dave? Better it's not. It's Jessica. I'm sorry. Jessica's in Detroit. Hi, Jessica. How are you? Good.

How about you, Dave? Better than I deserve. What's up? I was calling. I've been listening for quite some time, and I read Everyday Millionaire. I read Total Money Makeover, and I'm just trying to figure out

if I should stop contributing to my 401k. Why? I have 77, I don't have any other debt but a student loan debt. I have $7,700 left on it. Oh, well. I have $8,000 in savings right now. Stop just a second. So you've read all these books that we wrote, right, about the Baby Step, right?

And so you know the answer to the question, right? Yes, I think I do. Well, what's the answer? To stop. Yeah. Why? Because I need to pay off the debt, and that way I can start baby step three. Yep.

And then start investing. Exactly. And here's what happens. We win at what we focus at. And if you focus on anything, you'll win at it. No one wakes up one morning and says, hey, I'm going to go run a marathon. Well, some people do, but not many, right? But if you train for several months, because you focus on your physical fitness and your endurance, you can train up and go run a marathon.

And so what you focus on is what you win at. If you focus on your relationships, you win at that. If you focus on your spiritual walk, you win at that. If you focus on your career, you win at that. If you focus on getting out of debt, you win at that. If you focus on your spiritual walk, you win at that. If you focus on your career, you win at that. If you focus on getting out of debt, you win at that. And the power of focus causes us to succeed in a particular area, and money and debt is the same thing. And so we've just found this whole personal finance thing is so behavior-oriented

that mathematically it's not making you rich to keep doing your 401k while you're trying to get out of debt and mathematically it's not causing you to get out of debt by stopping your 401k but it's this whole thing i'm all in i'm not ishing it i'm all in and when you do that something changes inside it's kind of like that, ah, you know, I'm sick and tired of being sick and tired. I'm all in. When you do that on anything, that's when you start to win. So that's why we teach you to do that. It's a good clarification.

Thanks for calling. This is the Dave Ramsey Show. With more frequency than you know, I get calls and emails from people dealing with the recent loss of a spouse or a parent. You can hear the struggle and the heartache that they've been experiencing. And at a time they should be grieving, what breaks my heart the most is the strain and tension that they're going through because of money. Especially when it's a situation that could have been avoided. If you have a family, it is your responsibility to have term life insurance. It's one of the things you do to say I love you. And yes, this is an ad for Zander Insurance.

But since this is one of the most effective ways I have to love you. And yes, this is an ad for Zander Insurance. But since this is one of the most effective ways I have to get my point across, so be it. For over 20 years, I've been telling you about the importance of term life insurance and protecting your family. Listen, you need to check out Zander.com or call 800-356-4282. I can't say it enough. Protect your family. It's what you're supposed to do. Go to Zander.com or call 800-356-4282. Ever felt stupid because you couldn't understand your taxes? Amy, one of our fans, had a different kind of an experience after working with one of our endorsed local providers, our ELPs for taxes.

She said, I've never had someone try to help me understand how taxes work until I worked with this ELP. There's an expression, if you can't explain it to a fifth grader, you don't understand it well enough. And she helped me fully understand it. We found our new CPA. Thanks, Dave, for pointing us to her. You can find yours, your tax professional. By the way, someone that uses a tax professional

on average pays $830 less in taxes than someone who uses software or does it on their own. That's the statistical averages nationally. I don't do my own taxes, and I know a lot about it, but it's stinking complicated and time-consuming and makes me feel dumb. I don't want to do it. I'd rather have someone do it for me and show me what they did. I need to understand it, but I don't need, you know, I'm not signing something blank, but there we go. Find a tax professional.

Go to DaveRamsey.com slash tax advisor. Erica is in Albuquerque. Hi, Erica. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks so much for taking my call and for all that you do. Well, thank you. How can I help today?

My question is in regards to pension plans. You always say to take the lump sum, and I wondered if that's still true in the case of an early lump sum payout and if that answer would change if I anticipate possibly going back to the company in the future and still being eligible for the pension. No and no. I would take it. I would roll it to an IRA always so that there's no taxes on the lump sum.

But here's the situation. Whether you go back to the company or not, when you can get the lump sum, it gives you two areas of benefit over the existing pension. One is pensions are highly regulated, as they should be, to protect the people that it is owed to that they because in the old days pensions get the crooks would get them the mafia would get them clean them out and that kind of stuff right so now they're highly regulated for your benefit but the downside of that is is they're not allowed to invest well and so the typical pension is calculated on a rate of return of six or six and a half percent a mutual fund, a good group of mutual funds, you should average more like 12%

because that's what the stock market has averaged. I average that on mine. So you make more than you would make on your same amount of money. Let's say it's $100,000. I'll just make up a number. That's your lump sum. If you leave it in the pension, in a sense, it effectively is growing at 6% or 6.5%.

Now, they don't show you that. They don't show you an account with an account balance, but it's calculated to where what you're going to receive at retirement is based on what that $100,000 would become and then what 6.5% would produce, all based on 6, 6.5%. You follow me? Yeah, their paperwork tells me that it's 8%. Okay, but sometimes it's that high. But it's still not as good as mutual funds. Sometimes it's 6, 6.5%. You follow me? Yeah, their paperwork tells me that it's 8%. Okay, but sometimes it's that high. But it's still not as good as mutual funds.

Sometimes it's not. The point is, sometimes you can get that high. It sounds like it's a well-run pension. Good. That's good news anyway, especially if you're going back someday because you don't have a choice but to be in it when you go back, but you do have a choice about this particular lump of money. So we make more while we're alive. That's point number one. Point number two is, of course, when you go back but you do have a choice about this particular lump of money so we make more while we're alive that's point number one point number two is of course when

you die with a pension it dies with you and so if it's a hundred thousand dollars and you die your heirs get a hundred thousand dollars if it's in an ira if you die and there's a hundred thousand dollars in your pension your heirs get nothing well i wish it was a hundred thousand dollars say that's $8,000. Then it's mainly theory. It would be worth starting it over if I do go back to the company. Then I'd have to go back to square one with my time. And the way it's calculated is based on your years of service as well.

Yeah, but the point is $8,000, it doesn't matter much. It's more of a theoretical discussion at this point because the amount of money we're discussing is not life-changing for you. Okay? Yeah. But the concepts still apply. It's just smaller numbers. You're going to make more on your $8,000, and it'll survive you. Okay.

It's that simple. If it's $80,000, $8,000, $800,000, it's still exactly the same principle. And so I'm always going to roll it on that basis. And, again, the years that you're getting mean absolutely nothing except at 8%. And that's what it's worth. I mean, you're not – it doesn't – there's no exponential. There's no thing you missed out on a certain break point or something. It's a straight line calculation.

It has to be by law. So, you know, it's not like it's up for grabs on what's going on here. But the good news is when you do get back in the thing later, whether you leave the eight there or not, I wouldn't leave it. But whether you leave it there or not, when you get back in later, at least you know it's probably being run pretty well because 8%, that's pretty good. That's above average. It really is. Most of them are 6.5, 7, 6, right in that area. Nita is with us in Chattanooga.

Hey, Nita, welcome to the Dave Ramsey Show. Hello. I've made a decision to never borrow money again for anything. And my question is, is it wrong, or I should say, is it the same thing as getting a loan, taking an advance, advance commissions for initial expenses? Mm-hmm. Oh, being advanced on your income by your employer?

No, taking a partial advance of commission. From your employer? No, not from an employer. I'm in sales. I'm self-employed. Taking from a client. Taking a partial advance in commission for initial expenses. Okay.

Is that the same as getting a loan? No, because A a you're not paying interest on it and b if the deal goes sideways you don't have to pay it back right oh right okay that's right and the other uh it's just like a half percent of what the seller the item is that i'm selling for a private seller and then then once the item sells, I get the other 99.5%. Okay. Well, that's not enough to worry about to start with. It's just such a small number.

But, no, I mean, on principle, you say I don't borrow money. Is this borrowing money? No. No. I mean, if you don't have to repay it, it's not debt. And if you're not being charged interest, it's not debt. These are, you know, is there some kind of a negative thing that happens in your life in the event you don't repay it,

in the event the thing doesn't sell or something like that? Are you creating a problem for yourself? If that's the case, then, yeah, you would call that debt. But I don't think in this case that's what you're facing. I think you're probably just fine to go right ahead. Sarah is with us in Lawton, Oklahoma. Hi, Sarah. Welcome to the Dave Ramsey Show.

Hi, Dave. Hey, what's up? I want to know, how can I be debt-free in three years before I'm 25? Wow, very good question. You take the amount of debt that you have and divide it by three, and you need to make that much and pay it on the debt per year. How much debt have you got? $55,800.

That's with the house. Wow. Look at you. Okay. So some quick math tells me about $18,000 or $19,000 a year paid towards the debt would do it in three years. Does that sound right to you? Yes.

Okay. And so what do you make a year household income my last year my husband was still in school and he made about 26,000 last year there'll be more this year what about you um i made 14,000 but i am now a stay-at-home mom okay all right if you're making 26,000 and you have a kid, you're not paying back $18,000 a year. Right. Not an eat. Right?

Okay. Yeah. So the answer to your question is you have to have more income to do what you're talking about doing. Why three years? You just made up that number because it sounded good? I like the idea. I'm with you.

Well, my dad died nine years ago, and when I got, I'm going to get $35,000 at age 25 and 26. And I don't want to use that money on debt. I want to be debt-free before I'm 25. Okay. You need $18,500 a year to put towards debt, and you don't have that based on the income that you're projecting. So you need to do something to create an income probably of $20,000 a year. So that's you working or your husband working a side gig, side hustle that makes $20,000 a year.

That's the math. I mean, and now we just got to figure out how can we do that? What can we do? Cut grass, build decks, walk dogs, babysit. I don't know. What are we going to do? Are we going to make some money? I love your goal and I love your heart.

But we just got to, you know, are we going to do this on 26,000? You're not. You got to get your income up. This is the Dave Ramsey Show. MC Chef. Why in the world would you trust some random guy in a cube when getting your mortgage? Do you really think he cares about your long-term money goals? Well, he doesn't. Those companies care about getting you into whatever home loan program they're pushing that week. When it comes to ordering a cheeseburger, the meal deal works fine. But let's get real, people. We're talking about the largest investment you'll

probably ever make, so don't be naive and trust an order taker who pressures you into a pre-packaged loan. My friends at Churchill Mortgage have been helping my listeners for over 25 years. Call Churchill Mortgage and get custom solutions from an expert within 10 minutes. It's simple. They'll shoot straight with you and quickly show you the real way to save money. Call 888-LOAN-200. That's 888-LOAN-200 or visit churchillemortgage.com. This is a paid advertisement. NMLS ID 1591. NMLSconsumeraccess.org. Equal housing lender 761 Old Hickory Boulevard, Redwood, Tennessee 37027. In the lobby of Ramsey Solutions, Zach and Rachel are with us. Hey, guys, how are you?

Good, how are you? Better than I deserve. Welcome. Good to have you. Where do you live? Charlotte, North Carolina. Very nice. Well, welcome to Nashville.

All the way over here to do a debt-free scream. Yes, sir. Good. How much have you guys paid off? About $250,000. $350,000? $250,000. $250,000.

Still great. Wow. And how long did this take? It took a total of about five years, but we paid the last $200,000 in about 26 months. Wow. And your range of income during this five years? It ranged from $130,000 up to about $250,000, $260,000. $270,000. Wow. Excellent. What do income during this five years? I ranged from $130 up to about $250, $260. $270.

Wow. Excellent. What do you guys do for a living? I'm a pharmacist, and he's a physical therapist. Oh, man. Great careers. You're killing it. Making a quarter million dollars a year and then just cranked on it this last 24 months. I'm guessing with this timeline, you might have paid off your house. We don't own a house. You don't own a house. Oh, it's all the debt from the PT pt and the pharmacy school yes you got it okay there it is

all right yeah of course what am i thinking about so good so how long you been married a little over two and a half years okay so you started this process before getting married yeah we took a financial piece when we were dating to make sure we were set up for when we got married. And then we got 100% all in when we got married. Yeah. Good pre-marriage counseling. Yeah. I love it. Okay, so you were on the track.

Things were rolling along. Did your income spike? Is that what caused the, I mean, you caught your own here in the last 24 months? Is that what jammed it up? So Rachel was in residency. Oh, okay. So she was on a really low income, and then I was a physical therapist, and I started a side hustle. So we were both able to basically double our income.

Yeah, okay. That's the $130 to the $270. That's 24 months ago. Yes. And that's what caused that kick. Yes. Okay, that's what I was thinking. So you were working it, right?

But then, man, when the truck backed up, the Brinks truck backed up, you were able to get after it, right? Right. Yeah. Cool. Well done. Well done. Now, you probably don't know a lot of pharmacists or PTs walking around out there debt-free, do you? No.

Yeah. So are any of your compadres looking at you strange? Yes. Most people expect to carry this debt for the rest of their life and don't have any intentions to pay it off. And when we posted that we were debt-free, Zach had a lot of physical therapists reach out to him and just ask, How are you able to do this?

I'm in this much debt. Please tell me. Yeah, I need hope. You have hope. You give me hope. That's inspiring, Zach. That's cool. That's pretty awesome. So what did you tell him? What hope. You give me hope. That's inspiring, Zach. That's cool. That's pretty awesome.

So what did you tell them? What's the key to getting out of debt? Dave Ramsey. We said go Dave Ramsey. Well, I appreciate that. What did you learn in financial peace or whatever that caused you to be able to do this? What are the steps you take to get out of debt? Budgeting, snowball, and living like no one else so that you can later live like no one else.

Yeah, and now you can later live like no one else. Yeah, and now you can. You don't have any payments. Yeah. I mean, the way you did this, you can buy a house in two years and pay cash. We're hoping to. That's the next step. Is that a plan?

That's the plan? That and a new puppy. A puppy. What kind of dog are you going to get? A wire-haired pointing griffon. Oh, my goodness. I don't even know what that is. It sounds fancy.

They're real cute. I bet they're cute. I bet they're cute. I bet they're cute. Well, you can afford him, whatever he costs. So you've done a great job. Other than the puppy, what are you going to do to celebrate? We came here. Okay.

All right. What else? We've done a couple trips in the last year, but some of that was when we had loans and some was after loans. But it was all about, for us, it was planning for that. So that we didn't look at the budget as a way to deprive ourselves of anything but it was to be smart about where we did spend that money okay well you were making such traction man it's absolutely amazing well done you guys thank you well done who were your biggest cheerleaders outside the two of you uh both of our parents were really supportive um but our mother-in-law susan lee's here with us she's our c. She was kind of the woman that was always looking at our numbers,

and when we felt discouraged at what we were doing, she would say, this is how much you've done. This is how much you've paid off, and would just keep our heads above water and encourage us nonstop. Love it. Way to go, Mom. That's great. Nothing like having a CPA in the family to kick you and make you go. Right. I like it. That's good stuff. Well done. Very well done. Well, we've got a copy of Chris Hogan's Everyday Millionaire's book for you. You'll be wanting about 20 minutes at this rate. And you're on your way.

And that puppy's probably going to have enough food. It looks good. Things are going to be okay. Thank you. Good stuff. Proud of you guys. Thank you very much. Well done.

Thank you for coming by. Zach and Rachel Charlotte, North Carolina. $250,000 of student loan paid off in five years, making $130,000 to now $270,000. Ding, ding. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free.

We're debt-free. Love it. Wow, that's amazing great stuff great stuff well done judy on facebook says dave my husband and i need to replace and increase our life insurance policies we owe 419 000 on our home and we're strapped with a $2,400 a month mortgage payment. What life insurance do you recommend for us? My husband has whole life since 35. We now know that's a big mistake. Well, Judy, you don't cancel life insurance that you have until you have your new insurance in place.

And I would recommend going to ZanderInsurance.com, Z-A-N-D-E-R insurance, and shop for some inexpensive term insurance. Of course, when you get that in place, then you would cancel the expensive ripoff whole life insurance. And if there's any cash value there, you can use that to start whittling on some of your debts or building your emergency fund or wherever you are in the baby steps. Now, when you're at Zander Insurance, I recommend you buy 10 to 12 times your income on you, 10 to 12 times your husband's income on him. And that would take care of the mortgage.

That would take care of whatever you needed if you did that. And so if he makes $50,000 a year, then he would need $500,000 to $600,000 worth of term insurance on him. I recommend 15 to 20-year level term insurance because in 15 to 20 years, kids will be grown and gone, college will be behind you, the debts would all be gone because I'd never tell you to take out more than a 15-year mortgage, so you'll be debt-free house and everything. And during that 15 to 20 years you would have also built your nest egg and your 401k working your baby steps four five and six at the

same time knocking things out there and so if you're sitting 20 years from now 15 years from now with five or six hundred thousand dollars in mutual funds and your iras 401ks a paid for house and no kids at home and you don't want any life insurance, well, you'd be okay if he died. And he'd be okay if you died, financially speaking, anyway. So that's where we get the 10 to 12 times your income, and where we get the 10 to 12 times your income will replace your income if invested. And so, again, if you're counting on his $50,000 now and you invest $600,000 and it makes 8%, that's $50,000.

And so we've replaced his income. If it makes 10%, you'll get $60,000. You'll get a raise on it. But you've replaced his income with investment income from the nest egg invested from the life insurance proceeds. So 10 to 12 times your income on you, 10 to 12 times his income with investment income from the nest egg invested from the life insurance proceeds. So 10 to 12 times your income on you, 10 to 12 times his income on him, 15 to 20-year level term. Get a quick, easy quote. They're free.

It takes about 10 seconds to get the numbers back at zanderinsurance.com, Z-A-N-D-E-R, insurance.com. I've endorsed Jeff. We've been friends for 20-plus years, and that is the best prices anywhere on term insurance. I buy my personal insurance from Zander, lots of my insurance, but that includes certainly the life insurance policies that we have on me. So that's simple. It's that simple, guys. Hey, thank you for joining us on the Ramsey Baby Steps community on Facebook. That would be a private group that you can ask to join, and we will let you join.

And in another hour earlier, one of our debt-free screamers met her new husband there. Huh? Who knew it was a dating service? Probably got somebody there that's not going to be in debt. That's a good idea. That's probably as close to a dating service as we're going to launch around here. That's not the business we're in. But it worked out for Stephanie.

Good stuff. Open phones here at 888-825-5225. This is common sense for your dollars and cents. God's and Grandma's ways of handling money. This is the Dave Ramsey Show. Thank you. Our scripture of the day, John 3.16 For God so loved the world that he gave his only begotten Son that whoever believes in him shall not perish, but have eternal life. Martin Luther King Jr. said, I've decided to stick to love.

Hate is too great a burden to bear. Ryan is with us in Indiana. Hi, Ryan. Welcome to the Dave Ramsey Show. Thank you, sir. How are you? Better than I deserve. What's up? I had a question. I'm potentially buying a house off of a family member, and I was wondering if there was a way to do it where I wouldn't have to pay interest and where credit would kind of be irrelevant.

I'm a little bit confused. I mean, obviously, if you pay cash for it, you would not have to pay interest, and credit would be irrelevant. No kidding, right? But if there's debt involved, credit of some kind is going to be relevant, and certainly there's going to be interest. Okay, so there's no way to buy it on like a rent to own or um i guess not through a bank where you wouldn't pay you could you could buy it and they could uh owner finance

it and not charge you interest that technically would work i wouldn't recommend that because I wouldn't want to owe a family member money. Yeah. So how much is this house? We're working on it right now, and my fiance is going to live in it next year. And then when that's over, I should be in a place with no debt and emergency funds saved up. So then we're going to purchase that as soon as we get married. Okay. So you're supposed to get married, like, next year?

Yeah, next year. And whose house is it? It's her parents' home. Her parents own a rental property or something that's paid for? Yes, yeah. Okay. And does she have brothers and sisters? Yeah, she has a brother.

Okay. And how much is this house worth? I'd say after we fix it up, it'll be worth probably $65,000. No, I mean now what it's worth, because after you fix it up, it's your house. But what's the house worth to them if they were to just put it on the market today as it sits and sell it? $50,000. Okay. All right.

Do they want to give it to you? I don't think that's necessarily an option. I'd say we'll have to pay something for it. It'll probably be below market price, but... Okay. Do they need the money? No. Okay.

Well, they have the opportunity to set you up. So I'll give you another option. It doesn't sound like it's going to happen, but I'll go ahead and teach you about it so at least you have the information. An individual can give another individual $15,000 a year without any gift tax. Okay? There's four, if you're married to her there's four individuals involved mom and dad you and your wife so dad can give you 15 his daughter 15 his wife can give you

15 and his daughter and her daughter 15 that's a total of000. And so they could give you this house in four separate components like that and pay no taxes on the transaction, and you would have a debt-free house. That's a possibility. If they chose to do that, that's how the transaction would occur. See your tax professional, get the proper documentation done so nobody gets nailed with gift tax but as inexpensive as this house is they could do that do they have other wealth um they own their farmers they own a bunch of ground and and then their own home but nothing else out of that okay so somehow they would make it fair, they'd have to do something for her brother

if they did that, right? Yeah. Yeah. And so that's probably what's going on. Plus, they may be saying, well, you need to earn it or whatever, that kind of a thing. Now, if this house was not in the family, is this a house you would still buy? I think it'd be a really good fixer-upper kind of beginner house for a young family.

Okay. Yeah. Okay. Yeah. Okay. Well, what I would do is just if they don't want to do the gifting, which is perfectly fine, they don't have to, and you don't want to approach it with like somehow you're entitled for that because you're not, but if they chose to do that, it could set their daughter up beautifully. Because without a house payment, dude, you guys could rocket in terms of building wealth. You could really do well.

And that's where I'd like to get you to. So what will you be making and what will she be making after you're married? I'm 23 right now. I currently make about $80,000, but I have $30,000 in debt, so I should have that paid off. And an emergency fund by next March is my estimation. And then she is in college still, but she'll graduate and she'll be a teacher, so probably another $40,000 or $30,000. Okay. I think you can probably walk in as a debt-free newlywed couple making $120,000 a year,

you can probably walk into your local credit union and borrow $40,000, $50,000 pretty easy. Okay. And that's what it's going to take to buy this place because you're going to turn around and pay it off in two years. Mm-hmm. Right? Yes, sir, yep. I mean, because your ratio of your income to this amount, I mean, you're killing it.

This is a great starter place for you. This is a really good plan. I like it. And so because you're being super conservative on this little house, and it gets you started. And, yeah, I think that's what I'd do. I'd swing over to the credit union as soon as you're debt-free and you're married and, you know, you get settled in,

ask them if you can rent the house for one year from them with the option to purchase it in writing, the rental in writing, and the option to purchase it in writing with the amount settled on. Because so far it's been a vague discussion. And you don't have your amount settled. And I'd like to get the amount settled, because if the amount's $70,000, you're not buying this house. It's not worth $70,000. Right?

Yes, yes. A deal is $30,000 on this house. Right? Yes, yes. So if they're not going to give it to you maybe they're giving you a deal that's what you indicated earlier and so you get all that settled what is the option price what's the right price to do it with and um and that's settled and the rent amount is settled rent for one year during that year i'm very sure with the kind of income you have with no debt at

all you should be able to sit down in person in the credit union with the branch manager and i think they'll make you a little loan like that that you pay off very very very quickly and no won't even need closing costs on that no closing costs no points just lock it in and knock it out well done christy's in Baltimore. Hi, Christy. Right quick, what's your question? Hi. Thank you for taking my call, sir. Sure.

How can I help? My question is, really, what is your target? What do you shoot for for retirement when you can breathe a sigh of relief and know you've made it? Great question. Well, first, I want you to go to Chris Hogan's website, chrishogan360.com. Okay. Because that has the R-I-Q on it. I want you to go to Chris Hogan's website, chrishogan360.com, because that has the R-I-Q on it and the retire, inspire quotient, and it's a little app there that very quickly and completely free will help you calculate in detail your retirement.

But the quick and dirty answer to your question is, if you have a lump sum that you can live off of 8% on, and you're investing it in mutual funds and averaging 12%, then you'd be okay. So $500,000 is $40,000 a year. A million is $80,000 a year. Okay. Okay.

And so if you need a million dollars to live on $80,000 a year, then that's your target. So if you can live on 8% of your nest egg and you're willing to invest it in carefully selected good growth stock mutual funds that are making 10 to 12, then you will come out over the long period of time. You won't have to touch the nest egg. You can live off the eggs that the goose is laying. You don't have to kill the goose. You just get the golden eggs. That's all you need.

You just need the income it creates and don't kill the goose. And that's the principle. So if you can live off of 8%, 6%, 7%, something like that of your nest egg, then you're going to be okay. The thing is it never works out exactly that way. You either end up with a lot less than that or a lot more than that, depending on how good choices you make. And so it

becomes irrelevant because no one lives on exactly, has the exact perfect size nest egg. No one ever does that. That's theory, which is known as crap. So, that puts this hour of the Dave Ramsey Show in the books. We'll be back with you before you know it.

In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Hey guys, it's Blake Thompson, Senior Executive Producer for the Dave Ramsey Show. This hour's over, but you can find more great content on our YouTube channel. Catch the most watched Dave Ramsey, debt-free screams, and the very popular Everyday Millionaire segment. Go to the Dave Ramsey Show YouTube channel and Catch the most watched Dave Ramsey, debt-free screams in the very popular everyday millionaire segment. Go to the Dave Ramsey show, YouTube channel and click subscribe.