The Ramsey Show - App - Can I Do Baby Step 2 Without My Husband Being On Board? (Hour 2)

Episode Date: July 9, 2021

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🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, 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. I'm Dave Ramsey, your host, Christy Wright, Ramsey Personality, number one best-selling author of the book Business Boutique and host of the Christy Wright Podcast, which is a big exploding movement, is my co-host today. As we answer your questions, the phone number is 888-825-5225.

That's 888-825-5225. Ryan is with us to start off this hour in Waterbury, Connecticut. Hey, Ryan, how are you? Good, Dave. How are you doing? Better than I deserve, sir. What's up? I'm 27 years old, and I'm on baby steps four and six and i was wondering if it would be ridiculous or wise to stop making extra payments on my mortgage to save up and build a basketball court in my backyard a basketball court in your backyard what does like a real court like like

not just like a goal like an actual court yeah like a concrete slab oh my like a real court, not just like a goal, like an actual court. Yeah, like a concrete slab. Oh, my. Like a full court or half court? I would do a half court. Half court. Yeah, half court. Okay. What would it cost?

Between $3,000 and $6,000. And what do you make a year? Last year I made $65,000, but this year i'm looking to make closer to 85 what's your house worth uh 228 okay and you just love that i'm just curious why you just love basketball you just want to play all the time yeah or is this just kind of like a ridiculous thing to do because i'm trying to be wise you know wealth, and I was planning on paying the house off within five to seven years. But other than that, I was just curious on, you know. No, it's not ridiculous.

I mean, people put tennis courts in their backyard. People put pools in their backyard. They do all kinds of things. Let's talk about it from a real estate perspective. No, it's not ridiculous, but let's talk through, is there a better way to do this than, and a worse way to do this? And the answer is, yeah, I think there is, probably from a real estate person's perspective. So I'm going to put that hat on for a minute.

Yeah. I'm going to build it, if I'm doing this, for the least money possible, number one, because it's not going to add a dime of value to the house. Right. So, like, if you spend $6,000, the house is not worth $6,000 more because of it. As a matter of fact, if you do it poorly, the house might be less marketable because it's kind of got this weird thing in the backyard for somebody that doesn't play basketball. Right.

That's what I was worried about down the line like i looked at a really nice vacation property the other day that like a super super nice one i don't play tennis and it had a fabulous tennis court in the backyard and i kind of looked at that as a negative not a positive it's like a thing back there that i don't need or want and you know it's like a like a problem not a not an need or want. And, you know, it's like a problem, not an opportunity. So if you do it wrong, that's how you do it. So depending on how you're – I mean, I'm just thinking about properties that I've owned or lived in. Number one, growing up in Nashville, we had turnarounds that you went back out of the garage and you drive away, and most of the neighborhood kids, including when my kids were little, we had a nice turnaround that was paved.

In our case, it wasn't concrete, and we put a basketball goal on the house or put one on a pole on the edge of the turnaround, and it didn't really, A, cost anything extra to put the actual surface in. It was a little bit of money to put a goal up, but, B, it didn't weird people out that weren't basketball people when they came to buy the house. They just went, well, I'll take the pole down, right, if I don't want it back there. And so do you have, like, a turnaround you could do that with? I don't.

But my other idea was to build a patio on the back of the house, you know, closer to the house, and it would be a smaller patio but also i could play basketball on it and then that would be the same kind of a thing makes a lot more sense and then you you know and then the the buyer can visualize i'm just going to pull the goal out or you could even pull the goal out yourself before you put it on the market and then you've just got a nice patio you built now we're not messing with the marketability of the house okay and that is less weird. The only other thing I can think of is, again, a driveway configuration matters here,

but if you don't have a turnaround, if you have a – your driveway pulls up and you could simply extend the driveway back and put the pad there it gives additional parking spaces or maybe a slab to put an extended or to put a an exterior garage on someday if it wasn't a basketball court that kind of thing so we've got again like like the patio thing it's got multiple uses right so i just want you thinking that way don't stick it back there and make it a problem for the buyer how long are you planning to stay in this house, out of curiosity? Well, I wanted to pay it off as soon as possible, and that looks about five to seven years.

And then my plan was to either use it as a rental or resell it and move up in-house. Gotcha. Okay. Okay. I think you just use some of these ideas we're batting around here and try to make it a... Multi-use type of thing yeah where it's got possible other uses so it doesn't just look like a problem concrete slab in the backyard yeah you know like why is it there i wanted to grow tomatoes there

you know and that you know that that's what people will that's what that stinking tennis court i mean i think it's wonderful if you play tennis but i don't play tennis well and even turn it into a shooting range? The thing is the percentage of people that might buy your house that like basketball is small, and then the people that would want to play is even smaller, and then the people that would want that in their backyard is like tiny. So you're talking about a very small percentage of people that someone would actually like that. So the rest of the people you're isolating, and it's a turnoff. So build it in such a way that it can be something else yeah in addition to that and the least possible cost as well because

you're not doing that and then and the more you move in that direction the less you are on the ridiculous side and the more you are on the wise side there you go good question interesting chuck is chuck's with us in kansas city hi chuck how are How are you? I'm doing good. Thanks, Dave. I'm 57, and I just came into some money, and I was wanting to invest it for retirement. And one of the options I looked at was indexed annuities, and I was curious what you thought about that option. It's okay. I wouldn't use it for an actual retirement account because an annuity grows tax-deferred, and a retirement account also grows tax-deferred. So it's kind of redundant in that sense, or tax-free if it's a Roth.

And you're paying an extra fee for it to be in the annuity. So you just buy the index. You buy an index mutual fund inside of your Roth if you were going to do that. The other thing I want you to be aware of is I'm 60 and I don't use them because they've got extra fees. The commissions are much higher on them for the seller, the financial advisor that's selling them, than a simple mutual fund transaction. And so instead what I do with a lump sum like that is I invest it just in an index fund. I use an S&P 500 index fund.

I just drop some money in there. And it grows without taxes by and large until you take it out because it's capital gains growth. It is not dividend growth. And they have what's called a low turnover ratio. So study and learn a little bit about low turnover ratio mutual funds. That would be my suggestion. But the variable annuity, as long as it's got good mutual funds in it, is not horrible in your situation. In an uncertain world, being a good steward of your money is more important than ever.

While some circumstances can't be controlled, there are items within your budget you can take charge of, such as your health care costs. For nearly 40 years, Christian Health Care Ministries, or CHM, has provided a budget-friendly means of sharing for medical bills when our members need it. Learn more by visiting chministries.org slash budget. That's chministries.org slash budget. Christy Wright Ramsey personality is my co-host. Open phones at 888-825-5225. Nick is with us in New York City. Hi, Nick. How are you? Hey, Dave. Christy with us in New York City. Hi, Nick.

How are you? Hey, Dave, Christy. Thanks for taking my call. Sure. How can we help? So I'm feeling a little stuck because of prices in New York City. So I'm 24 years old. Just started working as a software engineer about six months ago. And right now I live in my grandmother's house.

She's graciously allowed me to live here for almost nothing since college, which I really appreciate. But I'm definitely ready to move out. So what I want to do is buy a condo with that 20% down to avoid PMI. But because of prices in New York, I'm not sure if I'll be able to afford that down payment for like another three years or if i rent with friends like that would just push this savings goal like further down the road so i need a little advice on what i should do there what are you making so uh it's going to be about 100 gross and uh it's like 6k per month after taxes yeah not not bad for 24 man well done got a great

career ahead of you you're obviously not only a software engineer you're obviously a good one well done uh very cool yeah you're you are in a very very expensive uh real estate market at least for now i don't know that it will remain that way i think delaying buying in new york city would be a real good idea right now because that is one of the markets that we may see some price adjustment because of the you know the collapse of so many businesses in the area and the collapse of the economy in the area and um so and the number of people leaving the market so i you know i personally would not be in a hurry to buy there. And so I think saving some money is a good idea.

And, you know, how did you end up, where are your parents? How did you end up at your grandmother's? So my family lives in Georgia, but my grandmother has a house in new york and uh it was easy for me to get to college you know if i lived up here so um you know everything just worked out for me to stay in new york but she lives in the same home uh yeah this is like her summer house she uh goes back to the caribbean uh you know for half a year so right now she's enjoying the warmth down there okay so you have six months a year that she's not there roughly give or take right but um we do like have other tenants in the house um so like some of the rooms

are being rented and um it's like i do live with people it's you know i'm ready to get out of my own you know at 24 and uh you know kind of start life on myself so okay go rent you something it's not gonna it's not gonna delay you that much your career is not three years from now you're not gonna be making 100 grand anymore you're gonna be making, don't you think? Yeah, definitely. Yeah, considerably more. You should be on a pretty heavy uptick.

I don't know. Christy, what are you thinking? Well, whenever people ask questions about should I do this and some type of sacrifice, it's not bad that you're living there, but you said yourself you're ready to move out, and you're 24 years old. You're a young man want independence and i don't blame you so to dave's point it's not going to set you that much back financially whenever you're ready to buy he wouldn't you wouldn't buy right now anyway and then in the meantime for those three years you have the dignity of your own place and doing your own thing and paying a little bit of rent and i think it's going to be worth it on the journey to you to get to be out on your own.

So there are some sacrifices that's like, yeah, let's make this sacrifice because we're going to be able to save some money. There's other ones like, hey, this isn't going to set us back that much, but it's going to give us the independence and dignity along the way, and that's worth it. And I think this is one of those things. I think you're ready for it. You need to find something fairly inexpensive to rent. We're not trying to spend a whole bunch of money here because the more you spend on rent, the less you're going to have for a down payment.

So that part of your equation is actually correct. But is it going to slow you down or keep you from buying because you came out and got a rental? No. So I'm going to look for something inexpensive. We're not trying to make a statement with your rental property quite. If you do make a statement, the statement is, I'm cheap. That's the statement you're going for. Yeah's not the i'm cool don't don't make an i'm cool statement with where you go to live all right and uh and don't justify it and don't rationalize it and don't go well it's class to eric and he don't give me all that crap because the more you spend

on rent the less you're going to have for the down payment or the longer it's going to take you to buy and we don't want to do that but i think it's worth it for you to just in your personal development to go ahead and make that move. I agree with Christy. So I thank you for the call. Open phones at 888-825-5225. Also in New York City, Mike is with us. Hey, Mike, how are you? Hey, better than I deserve, Dave. Thank you. Sure. How can I help? Sure. So I have a question for you. I did something a few months ago that I know you would advise against, but it was before I found your podcast. So don't be mad at me.

I'm not mad at you. It didn't hurt me. That's true. So I did a cash out finance when the rates went real low and I was able to drop my mortgage rate over a full point, and I figured, hey, while I'm at it, why not take out some extra cash to have? But, you know, now I have this extra debt that I have to carry. So my question is, should I go ahead and repay this thing back and pretend like it never happened, or should I try to invest it? I got it at a pretty low rate. I'm just trying to see what I should do with it.

Well, I agree with you. I wouldn't have done that. But now we're there. So we're not going to – that's water under the bridge. That milk is spilled. So you're out of debt except this home? No, I'm on baby steps four, five, and six. That's what I mean.

You're out of debt except the home. Yep. And you've got your emergency fund in place. And you're already putting 15%, not counting this money. And so regardless of where the money came from, if you have a pile of money and you're in 4, 5, and 6, you would say you're going to use it on 4, 5, and 6. 4 is underway. Do you have children? Yes. Okay.

Is their college fund underway? Oh, yeah, it sure is. You know, I'm still saving towards it, but I have a good amount for them. Okay. Then baby step six is pay off the house early, right? Right, exactly. And so we would use, if you got a bonus equal to the amount in your savings in excess of your emergency fund, you would throw it at the house, wouldn't you? Yes, I would. Yeah. So I just throw it at the house. Yeah, the problem with, you would throw it at the house, wouldn't you? Yes, I would. So I just throw it at the house. Yeah, the problem with my thing was the closing costs were about $20,000. So I feel like I'm just basically kind of throwing that money away. Yeah, every time I do something stupid and it costs me money, I call it stupid tax.

Yeah. But you can't get that money back. No, that's true. What I did was i put the money in a mutual fund for now um to try to let it doesn't matter i had it it doesn't matter that's just not that's not a path that people use to build wealth it doesn't work and so we don't you know never i've never talked to a millionaire said i borrowed on my house as much as i could possibly borrow my entire life and i refinanced it off and took cash out and put it in a mutual fund, and that made me rich. I've never talked to a single millionaire that told me they did that.

Yeah. So it's not a methodology that works. So even though it's a very costly mistake, that cost is even under, you can't undo the cost. So the only question is now, do you want to invest in mutual funds, or do you want to work our plan and work your baby step six? That's the only question you've got. and then you've got to decide that but if it's me obviously my plan the thing we teach here at ramsey is we will put excess cash that you've got this non-retirement funds from any source onto the house and pay it off as soon as possible

well and mike i think you know that i think you know that probably by listening to the show and what i would guess dave and maybe this is just a hunch, but sometimes we – I've done this in my life when I've made a mistake with money is I resist doing something that's going to make me face the fact that I lost that money. So it's like putting it back on the house makes me kind of face the fact that it's the $20,000. So I'd rather put it over here because then I can sort of sideways justify that it wasn't totally – I think I figured out a way to make this okay. Turn the other way and pretend that $20,000 didn't happen. If I put it back on the house, it's like, oh, I've got to totally face it. Let's just face it, Mike.

It is. It happened. Bite the bullet. Put it on the house and just move on. Rip the Band-Aid off. You're right. You're right. That's exactly what it is.

It's emotionally. Yeah, you've got to admit it. But it's like you know when you the car's gone down in value I don't know whether to sell it it's gone down in value when you sell it you admit it

that's it that's the same kind of thing that's the same issue exactly you've nailed that well done this is the Ramsey Show. We'll be right back. Christy Wright Ramsey personality is my co-host today. I am Dave Ramsey, your host. This is the Ramsey Show.

In the lobby of Ramsey Solutions on the debt-free stage, Nathan and Allison are with us. Hey, guys, how are you? Good. How are you, Dave? Great. If you're on the debt-free stage, it must mean you're debt-free. How much did you pay off? We paid off $124,000.

Way to go. How long did this take? About 30 months. Good for you. And your range of income during that time? So we started at about $70,000. That was Nate when he graduated. And then I graduated, and it was about $120,000.

And then we ended up door dashing on the side and then I picked up a lot of extra hours at my job and then we ended at about $140,000. Wow, doubled your income with all that. The door dashing, the extra hours, hard work, everything. What do you guys do for a living? I'm a nurse. And I'm a mechanical engineer.

Very good. Two great careers. And yeah, you do have the ability to pick up some extra work particularly during this 30 months wow yeah cray cray time yeah wow what kind of debt was the 124 000 it was mainly student loans and then in including that we had a small credit card loan and then a small car loan okay So what started this whole journey? So back in college, as I was getting ready to graduate, I got a new internship at the job I'm currently working at. So with that internship, it included some benefits and some of that was like a 401k plan and things

like that. Quickly realized, I don't know anything about investing or money management. And so I went to Google, said, I got to learn more about this kind of thing. So I found your guys' program, started to listen to it. And the more I listened to it, I started making more sense. I followed the baby steps and quickly realized, oh my, we're doing this out of order. We're jumping out of order by trying to jump into investment. We've got to tackle these loans before we dive into that.

With that, we followed the baby step plan. We wanted to live like a broke know broke college kid you know keep living like that while we made our new income so so i introduced that to allison and then she had some thoughts of her own on that yeah i um i was not really on board so i had heard of you actually i remember in high school my parents at the time were taking fpu and all i had heard was your name and that they had mentioned they were never going to co-sign a loan for any of us kids and I was like so sad I was like like who is this Dave guy like I do not like him and that's the only thing that's the only thing that I'd heard about you I love it so then when Nate had mentioned it I was like I know like I don't want to do that

like everything I've heard about him is terrible. But then he started showing me. He punishes people. All he says is no, no, no, no. Yeah. So he started trying to convince me, and it took some time, but I realized that you're not all that bad. How many people have that story, Dave? A lot of people. A lot. to know me is to love me but

from a distance oh it's a problem that's awesome yep that's awesome what was the hardest part like once you decided to commit y'all are both on the same page what was the hardest part about making that change um i feel like for probably both of us staying focused, we have both started this as soon as we graduated. So all of our friends from college were starting their jobs, making more money. And when you make more money, you want to buy a house, buy a car, all that stuff. And it's very easy for us to want to do that too. But we realized that that was not the end goal. And yeah, staying focused for sure yeah just remembering like said that just to be patient focused that you know we didn't get into this debt

overnight you know it you know we picked it up it's not gonna just disappear overnight either so we're in the business of crockpots not microwaves so there you go how long y'all been married uh almost two years okay so you started this process so we were engaging yeah we he kind of did on his own for a little bit and then i got on the page after that i've made him an unfun date one more time that dave ramsey caused her to be denied something i love it that's great way to go you guys i'm so proud of you how's it feel feels good if yeah it feels weird still like it's um we live like broke college kids for so long and i feel like it's um hard to remember like hey if you want to get that more expensive thing it's okay now because you're not free like

you can do that yeah we got we have some room in the budget too yeah because you're both making really good money now right and you started process, you were just starting your careers. Yep. And you hadn't even entered the nursing world yet. Yeah. So, yeah, pretty incredible. So now you're sitting with a, you know, a hundred and a half income probably from this point forward and no payments in the world.

You will do whatever you want to do, right? Yes, sir. I love it. Well, congratulations, you guys. Thank you. All right. So when people ask you, how'd you do that? What do you tell them the key is?

To remember the end goal and to let anything, like it's short term. So there is an end and you can do it and anyone can do it. It's not a way of life. Yeah. Yep. Live like no one else so that later I can live and give like no one else. Yep. And just staying focused on that budget. You know, you create a plan, come up with a plan, and part of that plan is probably

going to include a budget and sticking to it and holding yourself accountable. Yeah. Well, both of you are in career fields where, you know, you enter a process of some kind, whether it's a prescription, you know, a pharmacology thing, or whether it's a prescription, a pharmacology thing, or whether it's a series of mathematical formulas that cause a bridge to be able to stand up. You said mechanical engineering, but maybe not. But, I mean, you still get a result from having done a certain thing. And so following a plan to get the positive result is how you're both trained academically, right?

So it's easy in that regard because it's just the way your brains are wired up yeah so now you just apply to the next thing right yep and uh see how wealthy we can become and how generous we can become it's going to be so awesome you guys are incredible so great job so what are you uh what 27 28 we're 26 26 wow and. Wow. And completely debt-free. Way to go, guys. Who was your biggest cheerleaders? Our parents, but to be honest, we didn't have a lot of cheerleaders. A lot of people looked down on us, honestly, and thought that this was weird.

It is. So many people told us, like, you guys are so young. You're never going to be debt-free, first off. Like, why would you even want to be debt-free? Like, that's not normal. And I feel like we would go home and talk about it together and it would almost get us more fired up like this is going to happen and now it happened and it's awesome to say that and that's right and all those people that have all those payments you don't have those payments all those people that thought you were crazy they get payments you don't have yeah they're going to start coming around now wanting to know how you did it can you

teach us how to do that yeah that's what they're going to start coming around now wanting to know how you did it. Can you teach us how to do that? Yeah, that's what they're going to say. That's the next thing that's going to happen. Plus, mom and dad who refuse to co-sign for any loans. They are super excited about this right now. They're going, touchdown, baby, touchdown. They're like, welcome back, welcome back. I love it. Well, well done, you guys.

Very, very well done. We got a copy of Rachel Cruz's book, Know Yourself, Know Your Money, her latest New York Times bestseller. And it is an incredible book. You'll enjoy it. So we're so proud of you guys. Congratulations. Thank you.

All right. It's Nathan and Allison, Rockford, Illinois. Wow, $124,000 paid off in 30 months, making $70,000 up to $140,000. Count it down. Let's hear a debt-free scream. Three, two, one. We a debt-free scream. 3, 2, 1. We're debt-free! Yeah!

Woo-hoo! Awesome. Congratulations, you guys. I love it. That's amazing. The Bible says no discipline seems pleasant at the time, but it yields a harvest of righteousness.

The ability to delete pleasure for a greater good. Living like no one else so that later you can live and give like no one else. Adults, devise a plan and follow it. Children, do what feels good. There's emotional maturity to people who learn how to sacrifice for a greater goal. And there's such a theme today in this slow and steady, this sticking with it, focusing over time, sticking with it, sticking with it, sticking with it,

and how it pays off. It's not this quick win. It's not this all of a sudden you flip a switch and it's easy. There's not a magic pill like we've talked about in business or finances or life. But if you stick with it, then you yield the results, the harvest of righteousness we're talking about. We're talking about whether it's in your finances or even in your character. Over time, the discipline pays off.

Well, and it becomes second nature. Yeah. It becomes your new way of living. It gets easier. That's right. It drills new grooves in your brain. That's right. And you have a whole different, the neuroscience backs it up, you know.

So it's just beautiful. Well done, you guys. They can do anything now. Yeah. 26. Yeah, they can do anything now. Yeah, 26. Yeah, they can do anything now. 26. This is The Ramsey Personality, is my co-host today. We're answering your questions about your life and your money.

Open phones at 888-825-5225. James is in Evansville, Indiana. Hi, James. How are you? Hi, Dave. Pretty good. Good. What's up? I have a college planning question. My wife and I have five young daughters, ages 10 to 13 months, and we have five 529 plans and are contributing the max for the tax incentive of $2,500. We're now at a point in our life where we could be applying more, but what does that look like for having five kids and here in about eight years having one go off to college? Yeah, well, about five years.

No, no, no, eight years. I'm sorry. Yeah, okay. All right. No, it's more like 13. Wait a minute. Oh, there it is, 10 years. I'm sorry. I i couldn't try to look at these numbers i wrote it down i couldn't find them uh all right so you know what what it amounts to is is you need to be putting in more for the 10 year old than you do the 13 month old

because the 13 month old's got a lot of time to grow in that account. And so who have you got your 529s with? You got an advisor? Yes, we have an advisor. We've got about 17,000 that it's grown right now for that 10-year-old. No, no, no. For the 10-year-old, okay. What I would do is sit down with the advisor

and make sure that the money is invested in the 529 and good growth stock mutual funds that have a good track record first. If it is, then I would ask them to tell you, okay, in order for the 10-year-old in eight years to have X number of dollars, what have we got to add to that account? In order for the next one to add, you know, in so many years, what have we got to add to that account in order for the next one to add you know in so many years what have we got to add to that account and it might end up that you're putting i'll just make up numbers you might end up putting three thousand dollars uh or four thousand dollars in the 10 year olds and you might end up putting five hundred dollars in the 13 month old and

they'll end up with the same amount. Okay. Because you got started later on the 10-year-old. Yeah. And so you didn't have as many years for the money to grow. So it's kind of like life. Equal is not fair. Yeah, they've already been told that. Yeah, equal is not fair. Yeah, they've already been told that.

Yeah, equal's not fair. Fair is not equal. And so, you know, if you've got a special needs little brother or little sister, we're going to give more money and make sure that that child is taken care of. Equal is not fair. Fair is not equal. Fair is what you have at the county. Is there a magic sauce for about what should be put in to be able to fully fund them?

Well, what you need to do is just determine what your goal is, your goal amount, and you say, okay, as an example, they're going to go to in-state schools. They're in Evansville, Indiana. They're going to go to the University of Indiana, okay, or Indiana University. All right, and you call them and go, what's it cost to go there, and what are your projections on your tuition eight years from today? And they tell you it's going to take $150,000 to go there with room and board eight years from now for four years. And I'm making up numbers.

I don't know. Okay. Today, tuition is about $10,000 plus room and board per year for an in-state school average nationally. And so you're probably going to find somewhere around the $10,000 number per year. So that's $40,000 plus if they're going to stay in a dorm and eat. Okay, so I'm going to guess and say they can go for $100,000 eight years from now. That's maybe $125,000, but you can actually get the number from the university, bother them a little bit, or wherever you think you want them to go to school, and then you can back into the actual goal with your advisor.

They can put it into a financial calculator and go, okay, in order to do that, you need to save $2,642 a month or $2,642 a year. They can tell you exactly what you need to do in order to get there. Once you have that goal and you have the time period, it's a financial calculation at that point. It's a math formula that goes into a financial calculator and you can back into it so um but you need a target not just so far your target has been we want to save for college and it was very vague but if you really want to do it perfectly and you want to know when you're done this is how we did

it okay what we did was we said we wanted i want a hundred thousand dollars per kid and i backed it out for a four-year-old and i said in order to do that today i need x in there and i just i had made some money that year and i just put x in there and then i was done that account was over i never added to it again never had to i put enough in there that it was going to grow for the four-year-old in 14 years to this much so when daniel ramsey got ready to go to school there was a hundred thousand in there for him you know and it was ready to go and we just picked out a number but uh you need to if you want to be really nerdy about it and i do recommend that if you know what your goal is you can back into your numbers exactly i've got a question about the scholarship side of things because i know with 529s i get specifically

for school if you save all this money and then your kids are just get a ton of scholarships, what do they do with that money? A hundred percent of what they get in scholarships can be removed tax free. What now? If you got $100,000 in there and you get $40,000 in scholarships, you can take $40,000 out and then there's no taxes on it. Oh, really? Wow. Yeah. You just have to prove the scholarships if you're audited.

I didn't know that. So you can remove it and you've had tax free growth on your money in a 529? Wow. Yeah. You just have to prove the scholarships if your audited is off. I didn't know that. So you can remove it, and you've had tax-free growth on your money in a 529. Wow. That's cool. It's wonderful. Because it incentivizes the child to get scholarships and that type of thing and do well. No, they got money. It's free money.

Totally. Okay. Great. Yeah, I mean, they go buy a house with it when they get out of college. I didn't realize that. That's awesome. It's a pretty cool thing. You're setting up millionaire stuff here.

Yeah. Setting your kid up to be a millionaire before they're 30. Because if they come out of school with $100,000 or $150,000 and no student loan debt, and they go get a job making $70,000 or whatever they're making these days, right, doing whatever. Yeah. Oh, my gosh. I mean, you know, 22 years old and you're making that, and you've got zero debt, and you already have a paid-for house?

Ding, ding. Yeah. You're a millionaire by the time you're 30. Yeah. And the number, I mean, it's just compound interest. It's just running the math out. And so what he's doing there, the way he's planning, I mean, he's thinking about it. He's got a little baby, 13 months, and he's going, this baby's going to go to college.

But once you dial all that in and then you see what the next layer of effect of that is and the next layer of that effect, it gets rowdy. Right. And when we talk about you changed your family tree, really did change your family tree it's real it really happened taylor's in denver hey taylor how can we help hey how you doing dave better than i deserve what's up so i have a dilemma um i'm currently in denver colorado and i'm working at a great job i make about ninety thousand dollars a. It's a contract position and they told me already that they'd like to extend it at the beginning of the new year for

another year. But my last job has now invited me to come back and join them for a substantial raise. They'd like to offer me $160,000 to move to Orlando, Florida, and work there for eight months till the end of the year, and then the position will be over with. My question is, should I stay in Colorado, knowing that I have a good paying job, and it'll last a good long while, or should I go to Florida for the additional money, which is roughly about 3,000, I'm sorry, three times my take-home pay each month here in Colorado. Well, no, it's not three times. 90 times three is not 160. What do you do for a living?

So, yeah, it's about $9,000 take-home pay for the job in Orlando, Florida, and about $5,300 take-home pay for the job in Denver. Okay, that's not even double. It's not five times as much. Yes, sir. Okay, tell me you don't do math for a living. Okay, what do you do? I don't do math for a living.

I do construction, thank God. Okay. What kind of construction are you doing? I do 5G fiber optic construction. Good for you. Okay, I get it. And so how old are you? I'm 24 years old.

What do you want to be doing when you're 34? I want to be running my own telecommunications business. Which one of these two decisions takes you there best? I think they both take me there. Which one takes you there best? The kind of job that I'm at. Nah. Because your business is so, you are contract to contract to contract anyway.

You guys jump from job to job anyway in your world, don't you? Yes, sir. All right, jump job to job and take the money. Unless you just don't like Orlando. It's an adventure, dude. You're 24. Go make some money. That's my opinion.

Yeah. You're young. Do it while you can. This is The Ramsey Show. Have a friend or family member that needs a daily dose of Ramsey advice in their life? Let them know about the Ramsey Call of the Day podcast. It's a quick hit of advice about life and money in under 10 minutes. Check out the Ramsey Call of the Day podcast wherever you listen to podcasts.