The Ramsey Show - App - Can We Afford To Retire? (Hour 1)

Episode Date: December 11, 2023

🎵 Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work they love, and create amazing relationships. I'm George Campbell here with the man himself, Dave Ramsey. This is your show, America. That's my new title, The Man Himself. I like that. I don't know what himself is. It's just epic.

I'm always himself now. Legendary. Who knew? Wow. Open phones here. We want to talk to you about your life and your money at 888-825-5225. That's 888-825-5225. Jason's with us in Hartford, Connecticut.

Hey, Jason, welcome to the Ramsey Show. Thanks, Dave. How are you doing today? Better than I deserve. What's up, man? Okay. Yeah, I'm a longtime listener and I'm a longtime saver. I was hoping you could answer a question regarding a retirement disagreement between my wife and I.

I'm 54. She's 51. I'd like to retire next year at 55. I feel like I have enough savings to retire comfortably, maybe possibly do a side gig. And she doesn't feel like we do. So just asking for some advice. Well, retirement's not a feeling. So that's at least some consolation to you. We can look at some facts and data to go, all right, do you have the finances to retire? Is your nest egg big enough? How much is your nest egg, dude? Around two and a half million. So she needs more than a couple hundred thousand a year to live on?

Apparently so. What's your current expenses? You know, right now we're probably about $8,000 a month. Okay, so you need $100,000 a year to live, and $2.5 million invested in good mutual funds, if it made 10%, would be $250,000, right? Correct. Now, you probably don't have access to all of that at 54, do you? No, she's going to be younger, so she will probably work until she's 10 and a half. No, you can't access all the $2.5 million now at 54 years old because some of it's in 401s right correct yeah 59 and a half before you get to it right yeah have you got some money to live on until you get to 59 and a half

well she could she she's actually employed she's uh makes most of the money in the household so what does she make she she makes around 160 a a year. Okay. And your expenses are $8,000. So if you weren't even there, she'd be okay. Correct. I think she's trying to tell you something. I mean, actually, I just want to get out of the corporate. Okay. So, yeah, there's a couple things.

Mathematically, the answer is you're just fine. And I just outlined why. Yep. As soon as you get access to $2. Mathematically, the answer is you're just fine, and I just outlined why. Yep. As soon as you get access to $2.5 million, if it's invested well, if you pull off 8% or 10% of that a year, regardless of whether she's working, you easily are going to make more than it takes to cover your expenses, right? Correct. It's a math thing.

Like George said, it's not a feeling. But I think there's a lot more going on here than this. Well, we're completely debt-free. We have no credit card debt. No, I mean, she doesn't want you sitting at home on your butt at 54 years old. No, no. It's not the fact. It's just going to be a career change for me.

I'm very handy. A side hustle is different. Yep. Yep. I want to retire and do a side hustle. It's not a side hustle. It's a business. Retire and open a business.

Okay. Well, we'll call it a business. Yeah, let's start a small business idea that makes more than you used to make in corporate yep and then none of this is an issue so i i just can't recommend i'm 63 and i can't recommend you do nothing it's not worked out for most of my friends they die no i'm not going to do anything trust me we have a younger son that i actually want to spend the summers with so the home uh the business would give me the flexibility to schedule work based on his school schedule. So if he was home in the summers, I could spend more time with him.

So this is kind of a work-life balance thing for me. Yeah. You have the money to do whatever you want. I'm now moving from financial to life. Do something, okay? Babysitting your kid in the summers, going with the net worth you have, is your only goal, and calling that life balance and making it sound cool. It's going to wear pretty thin quick, dude.

You're going to want to go do something with your life, and you're too young to do nothing. You're too valuable in the marketplace. So go do something with your life. That's just guy to guy right there. There's nothing to do with the math. The math is you're just fine. And I'm a thing. I kind of think in this argument with your wife, she's a little bit worried about that. Um, I don't think so because I'm pretty, um, I'm pretty involved in, uh, all kinds of activities and civics. That's not the same thing. Well, I have a lot of activities to keep me busy. That's not the same thing.

I'm talking about being of marketplace value, not simply serving the JCs. Okay. And so you can do whatever you want to do. I'm not belittling you for that. I'm just trying to listen to what's going on here because there's nothing in this math that says you can't quit cold today. All the math says you can quit. Well, the issue for her is she just doesn't think we have enough. That's the thing.

She's just worried that we're going to run out of money. Have you shown her the expenses and the net income and what the retirement accounts will do? Yeah, we've already met with a planner, and he says we're good to go as well. Well, then she just doesn't believe the data at that point. A lady that makes $160,000 a year is not stupid. So what is she really saying? That's what I'm trying to figure out. No, she's come from a family where everybody works. No, she didn't come from a family where math didn't work.

Math works in all families. She doesn't believe the math. Well, then that's a different issue. But she's not too stupid to believe the math. She's not wanting to believe it for some reason, and that's your core issue. It's not do I have enough to retire. It's how do I deal with my situation. So I have a friend I talked to the other day.

He's like the sixth guy to ever go through Financial Peace University. Wow. He called me up, and I met with his grandson. That's how long ago this was, right? I met with his grandson the other day who's a millionaire because this guy went through Financial Peace University. Pretty cool. But the first time him and his wife walked in,

she was a real estate agent, and they had $4 million. They were in their 50s, and she thought she worked like 80 hours a week selling real estate. She could not relax. And I sat down with the math, and I showed her the exact same math that he had been showing her that $ hundred thousand dollars a year 30 years ago four hundred thousand dollars a year 30 years ago you know you've got enough you don't have to be in freak out mode she relaxed calmed down ended up selling more real estate because she

wasn't in freak out mode all the time and but it was there was something it was an emotional thing like with jason's wife because jason's wife the lady i'm talking about is not dumb she's brilliant and jason's wife not dumb people they don't generally pay dumb people 160 grand for much of anything generally it's not for long anyway it catches up with you being dumb but the uh but but the is it the security gland it could be it could be a scarcity mindset potentially like i knew a guy that was a billionaire, and I asked him why he worked all the time, and he said, I grew up dirt poor. And I'm like, oh, I get that.

And he goes, no, like the dirt, the floor in our house was dirt. That's dirt poor in Appalachia. And he goes, I can't get that out of my system, so I work all the time. I'm like, that's not a math problem. That's not a financial problem. That's not a financial problem. That's a psychological problem. You have a wound from your past, a trauma that you've not overcome. And that's a Dr. John Deloney answer.

It's not a George Campbell, Dave Ramsey answer, right? Yeah. Well, a lot of that has to be dealt with if you're going to ever think it's enough. Because at some point, you got 20 million. This guy had a billion. It could all go away at any time. So I got to keep stacking, keep stacking. Yeah. And listen, you get $20 million. This guy had a billion. It could all go away at any time, so I got to keep stacking, keep stacking. Yeah, and listen, you can't get enough.

Godliness with contentment is great gain. Financial peace. Two words that don't go together, like airline service, right? This is The Ramsey Show. Hey, you guys. Health insurance costs are only moving one way, and that way isn't down. And if higher costs aren't enough, the wait times to see your doctor are longer, and it's harder than ever to get anything approved through the bureaucracy. So, if you feel like the system is working against you, try a biblically

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George Campbell, Ramsey personality, soon to be number one bestselling author. We have launched the new book is my co-host today breaking free from broke the uh i actually am holding one the real that they really came in when i got here they were on my desk they're pretty cool man this is the real book it's coming out january but it's in pre-sale right now breaking free from broke the ultimate guide to more money and less stress on pre-sale right now in the store along with a lot of other wonderful ramsey goodies rachel's a new book is about sold out we've got a order another order coming in uh the children's book it's gone crazy i'm glad for

what i have thank you yeah that's what the book is called and we're glad that it's selling thank you i'm glad for what i have another bestseller. Well, you posted a great picture of you with the grandkids reading the book, and I think that pulled everyone's heartstrings. I don't know if I was reading. I think I was just kind of hanging out. Yeah. Was I reading it? Well, it was a posed photo.

It was a posed photo. I imagined you reading. Yeah, it was Rachel. Yeah. I'm sure the kids love when you read to them. Yeah, it's great. Papa Dave stories. Read the Total Money Makeover to those kids.

Papa Dave stories are a big deal, man. Epic. I'm just saying. Epic. Because I just make up stuff. Justin's in Washington, D.C. Hey, Justin, what's going on? Hey, how you doing, sir? Better than I

deserve. How can we help? So, I'm active duty military, and I have a decent amount of credit card debt along with debt in general. And I really am trying to figure out how I can start knocking this debt off and eliminating this, you know, because it's become a bit of a burden,

and I honestly don't even know where to start. Cool. How old are you? I'm 28. Cool. How much debt you got? Between house, credit card, vehicles, we're about $350,000. How much of that's house? $290,000. Okay, so you got $60,000.

How much of that cars? About $30,000 to $40,000. Okay, so you got $30,000 in credit card debt. Roughly, roughly. $28,000, yeah. Okay. All right. Well, thanks for your service.

Which branch do you serve in? I'm currently Army, sir. Okay. Cool. Thank you very much. How long you been in? I've been in about six and a half years. About long enough to make this mess.

Yeah. Yeah. Unfortunately. Okay. And you're ready for a change. The payments have caught up to you, and you guys are feeling the weight of these, and you want out. Yeah, yeah. What's your household income?

Between my wife and I, we're about $100,000. Great. So you make $100,000, you owe $60,000 in this consumer debt. So the question is, how much margin can we create to throw extra on the debt? And we're going to follow the debt snowball method. That's the way 10 million people have followed it. It's the same way I got out of $40,000 in debt. And so you have how many debts? Three or is it more than that total between the car loans and the credit card?

Is it multiple cards? No, it's one credit card. And honestly, I really didn't even want to get a credit card to begin with unfortunately but you know when you become a homeowner it's one of those things so yeah you got to have it as like a backup plan well a backup plan would be your own money like having an emergency fund where you become money money would be a backup plan debt didn't turn out to be a good backup plan 20 interest on 30 grand is a bad plan for sure yes absolutely so how much are you going to, okay. So we're going to list the debts, smallest, largest. You have one big credit card,

one big car, and that's it other than the house. Is that it? Uh, yes. I have a, one of my cars paid off already. Um, and then I have a motorcycle, uh, that's, uh, we're alone 10,000 right now. Okay. And what did you say the household income was again? We're about a little under $100,000. It's like $98,000 and some change. Okay. Justin, when I was exactly your age, I filed bankruptcy.

That was 30 years ago. Really? About 35 years ago now. So I know how it feels to be scared and broke. And after that, I figured out how to get out of debt and stay out of debt and I figured out that it was worth it to sacrifice now I call it live like no one else so that later you can live and give like no one else the way you're living life now is all the money comes in all the money goes back out and there's nothing left but stress

so we after each paycheck we we still pocket about anywhere from 1500 to 2000 a month after after all our bills if i woke up in your shoes knowing what i know now and today i'm a multi-millionaire because I quit doing stupid crap or as much. I limited the stupid crap I do, right? And so if I woke up in your shoes, I'm going to give you a real harsh prescription because I know that the faster you get out of this mess, the faster you're going to actually become wealthy. You see the ratio of that?

Yes, sir. Okay. So anyway, I would sell my motorcycle today. It's a freaking toy. Yes, sir. no one else so that later you can drive like no one else you're driving a thirty thousand dollar car i probably consider selling that and moving down but if you want to plow your way through it you got sixty thousand dollars worth of debt and if you do that at two thousand dollars a month that's 30 months right two and a half years you're not you don't need to see the inside of a restaurant and you don't need to go on vacation the only time you're in the inside of a restaurant if somebody you love is working there and you're getting a free meal and that might be you but i don't care nobody is going anywhere except we're getting out of debt we're living on beans and rice rice and beans

we're gonna clean this freaking mess up and we're never going back in debt again because if you didn't have any payments but a house payment right now man you'd have some money and you deserve to have some money because you have put in your time serving your country. You don't deserve to be this broke. Absolutely, sir. Now, this is going to boot camp. That's what I'm doing. You hearing me?

Yeah, absolutely. So I actually do have my motorcycle up for sale right now. Good. You're ahead of me. What's it listed for? So after all the aftermarket stuff I put on it, I'm trying to sell it for about $10. And you're okay. Yeah, so I figured if I can get maybe a little bit less, maybe $9,500, I can put the $500. Yeah, you can cover it, or a little bit more, and you'd have $500 to throw at the credit card.

Chop the credit card up, get your wife on a budget, you two sit down and get the EveryDollar app out. It's completely free to download it and use it. It's the number one budgeting app in the world. Go check it out and sit down and lay yourself out of budget and commit to boot camp for the next 24 to 30 months. And you could be debt free, but the house, and then that sets you up with a lot of money in your pocket to do a lot of stuff with in generosity in investing and to begin paying off your house yeah and there's a lot of sacrifice you can make if 30 months sounds like a long time let's sell more stuff let's increase the income let's get the expenses down donna's in wilmington delaware hey donna what's up hi how are you sir better than i than I deserve. How can I help? Well, I'm just checking with you.

I've been listening to you for about two months. Checking with you to see if I'm making the right decision. My husband and I are seniors. We're retired. We own a house in Delaware, one in Lewis, which is near Wilmington, and a rental property in Rehoboth. And my son lives in Connecticut, and we're considering buying a third home up there instead of visiting him and paying hotel rooms all the time, buying a house and making it into an Airbnb, and this way we can use it when we want and rent it out when we can.

The two houses down here are fully paid off, and our rental property pays the expenses for our house here, which is a good thing, but it would mean having to go into debt when we go to Connecticut. We don't have much money for a down payment, so we'd have to mortgage the whole thing, and we're looking to no more than about $250,000 to $300,000 for a house up there. I just don't want in my 60s to make a wrong decision.

Yeah, it's a wrong decision. Don't do it. I'm going to be five years on the road eating cat food after I go to bed. It's a wrong decision. Don't do it. You don't spend $250,000 of borrowed money to avoid a hotel room. No. Well, eventually.

No, not eventually. You're not right. That's exactly what you're doing and then you got to screw with airbnb people lord help you have you ever rented to airbnb people now you're running a hotel oh yeah that's a total pain in the butt this is going to be a big headache and it's going to cost you guys a lot of money and it's going to cost you guys a lot of money, and it's going to cost you your peace. Just rent you a hotel room, honey. I mean, you can go rent the freaking Four Seasons suite in the corner for a lot less than this

and pay cash for it. I mean, just go, you know. No, no. If you can't pay cash for toys, don't buy toys. And this is a toy. Donna, we love you. If that sounded harsh i apologize i'm coming up on a commercial break and i want to tell you the truth because i love you this is the ramsey show george camel ramsey personality is my co-host today i'm'm Dave Ramsey, your host. Thank you for joining us, America. Open phones at 888-825-5225.

I say America. I just came back from an overseas vacation in Egypt, and I'm shocked as to how many people in other countries, everywhere we go, listen to this show. It's because your co-host is half-Egyptian. So now I'm bringing a whole new market to you, Dave. That's it. They were like, George Camel. You know George Camel, that guy?

You're the guy with George Camel. That's what they kept saying. That's what they told me over and over. I'm sure you stand out like a sore thumb there, too. It doesn't help. Yeah, lots of sore thumbs. Yeah, that's a, yeah. In the lobby of Ramsey Solutions on the debt-free stage,

Brandon and Hannah are with us. Welcome, guys. Hey. What's up? Where do you guys live? We live in a small town called Mount Dora just outside of Orlando. Awesome. Welcome to Nashville.

And how much debt have you paid off? A whopping $143,000. Nope, $110,000. $110,000. Whopping. You almost grew it there. All right. And how long did this take?

Four years on the dot. All right. And making what kind of household income, range of income? When we first started our debt-free journey, collectively, we were making $48,000 a year. At the end, currently where we are, we're making about $143,000 a year. Nice jump in four years. Yeah, yeah. Very well done.

What do you got to do for a living? I am a corporate recruiter for an insurance technology company. There we go. And I work on our corporate marketing team. And we happen to work for the same organization, actually. Shocking. Is that where you met? No, high school.

Oh, okay. High school. Yes. All right. How long have you been married? Two years in January. actually shocking is that where you met no high school oh okay high school yes all right how long you've been married coming up on two years oh okay so you started this separately and then finished it together absolutely so uh what kind of debt was the 110 000 and whose fault was most of this there's always one uh well i think uh we73,000 in student loan debt. My student loan debt. Which became ours. We had, what was it?

$18,500 of credit card debt. And then we were paying back an auto loan that my grandparents had purchased a car for us when we really needed one. And we wanted to pay them back as soon as possible. Oh, okay. Yes. And I want to emphasize that the $73,000 was just for my bachelor's degree okay all right and what's your degree in uh

communication specifically in public relations and advertising and now you work in marketing you're actually using your degree you're it's unusual wonderful good for you good stuff well what started this journey guys uh dave uh four years ago, I called into your show. And I was- Was I nice? You were very nice. Oh, good. I was in a pickle, had five credit cards maxed out,

up to my eyes in minimum payments. And I was considering debt consolidation, but the bad kind where you default on all of your loans and then your credit score tanks and everything goes out of whack. You talked to me out of it, sent me a copy of your total money makeover, read it cover to cover a few times, and you got on the program and then got her along with me. That's the best where are they now story ever.

One of those free books actually worked, Jordan. Amazing. That one worked. God, sometimes they work, sometimes they end up in the trash. I'm never talking to that guy again. You took the advice and you inspired others. And here you guys are together. Was it easy for you to get on board, Hannah? Did you already know about this stuff? So actually, no. When he first presented it to me, I was like, I know how to save money. I'm making my own money. I'm an adult, whatever. But he broke it down into such a fun way, especially following a lot of your practices after reading the book. We even incorporate,

you know, now we have monthly budget meetings that we followed the budget document that's on your website, I believe. Oh yeah. Very good. Old school. I like it. Very well done. Congratulations. Yeah. We actually were able to cash flow her entire master's degree oh wow um which was excellent she didn't believe it was possible but i broke down the numbers like hey we can do this um what's your master's in my master's is in public relations so okay and that helped me actually get a big bump in my pay i bet awesome so it already roi'd very good yeah now that's called smart education i like smart education there's too much dumb education out there that's smart well you actually want to hang the degree up when it's paid for when you

got student loans attached to it you're like i'm going to hide that in a closet well they can repo it so you don't want to do it way to go guys yeah how's it feel to be free amazing like a literal weight off your shoulders i didn't think the psychological benefit was going to be as powerful as it has been but it's been phenomenal uh One of the things, and I would say this is probably the hardest thing we did, but shortly after getting married last January, we took all of our honeymoon money, all $12,000, $13,000 and threw it at debt and had to postpone our trip to Italy, but we were finally able to take it earlier this year. All right. Yay.

That's a good trip. Very good. Well done. Nice honeymoon. Great photos, too, if you're watching on YouTube. Fantastic. The Italy photos. That's the perfect. Yeah, the Colosseum.

That's some good delayed gratification right there. You guys still took the trip. A lot of people think, well, Dave doesn't want me to live my life. And we go, no, you can live it two years from now with freedom. We're not paying for that trip six months later. You guys did exactly that. Yeah. And unfortunately also this year I was laid off in February and fortunately because we were smart and had a cushion between us and life, it was a lot easier to go through that and not freak out like we would have a few years ago. Yep. Every $5 out of the nine that we make in monthly um went to our savings

and just but like going to the debt at first and then after we finally got debt free it is now just become a nice nest egg as our six month emergency fund yeah how old are you two 29 and 28 all right not even 30 years old you paid off 110 000 in debt in four years of that you've been married two years and you're working it separately before that well done what do you tell people the key to getting out of debt is because you're a blazing example you did it I'm so proud of y'all thanks Dave um I would say 100% it is worth it um unfortunately the systems in place can kind of make you feel like it's hopeless in America but you can absolutely do, especially speaking to the younger audience and talking to the people in

their 20s and 30s. You can do it. Just perseverance, dedication, staying consistent and being honest with yourself. And I think the biggest thing too is simplifying it and communicating it. It's so scary to talk about finances if you don't know what you're talking about, but with tools like your money, total money maker book, every dollar, we use that all the time. You know, it just made it so much easier. And we were able to just really focus, dig our heels in and get to our goals. And I'm so happy we've done it now in our mid to late 20s. And we never have to look back. And listen, there were moments where, you know, we're just putting money towards this day. And it's just like, this is never going to end.

I'm sick and tired of throwing my money into this never-ending black hole. And it was just absolutely worth it. We worked two jobs in the beginning. Yeah, for almost two years, I worked two jobs with a day off every week just to get ahead. What was the best money you made at a side gig? At my previous organization, I worked for the airlines and they commissioned bonus checks to us depending on how well we were doing during the flight. So just hustling like that and then just finding something easy to do

on the weekends. Oh, okay. All right. Good. Very cool. Very cool. Way to go, you guys. Thanks, Dave. What a great job. I can tell you guys have built these muscles where you're like, any financial goal, we're going to be able to do it because you know how to go, you guys. Thanks, Steve. Way to go. What a great job. I can tell you guys have built these muscles where you're like, any financial goal, we're going to be able to do it because you know how to save, you know how to spend wisely, and that's the most hopeful part of all this. You guys are invincible now. Yeah. And honestly, this is four years in the making. It has taken us four dedicated years to be here today.

Did some of your friends think you were a cuckoo? Yeah. A hundred percent. Friends, family. Yeah like think you were cuckoo yeah friends family yeah a lot of cuckoos out there yeah yeah some people are like don't worry just pay the minimums on the day don't worry be happy stay in debt yeah it'll all work out no it won't this is called grown-up stuff yeah way to go you guys it's so good it's so good so now you get to do the toby key thing how you right? Oh, my gosh. I love that song.

We just hope we can inspire other people out there to do this because I promise you it's worth it. You just did, my brother. Well done. Very well done. Hey, we've got a copy of the Total Money Makeover for you to give away in the Live and Give box. And, of course, the Baby Steps Millionaires book because that's your next step in this journey. You're going to be there for sure. And a Financial Peace University membership. So enjoy those or give them away as our gift thanks for coming all the way up from florida to do your debt-free scream

you two are incredible brandon and hannah orlando florida area 110 000 paid off in four years making 48 to 143 they did it before they're 30 count down. Let's hear a debt-free scream. All right. All right. Three, two, one. We're debt-free. Yeah. That's how it's done right there. Love it. This is the Ramsey personality is my co-host today open phones at 888-825-5225 our question of the day comes from our friends at neighborly your hub for home services for over 40 years neighborly has done an exclusive network of trained local service providers backed by the Neighborly Done Right promise. So if it's not done right, Neighborly will make it right. Visit neighborly.com slash Ramsey and you can learn more. Today's question comes from Peter in Michigan.

Hey Dave, I just turned 22 and have a credit score of 730. Oh God. I'm looking to buy my first home within the next year, but the interest rate on homes are through the roof, although I see that they are coming down a little bit. Should I hold out for lower rates? Go ahead and lock it in. Thank you. Aha, the classic conundrum. Should I time the real estate interest

rate market? It's kind of like timing the stock market. The best timing to invest in the stock market is when you have the money to invest versus trying to figure out if it's going to go down or up. Exactly. So I would buy when he's ready to buy. Yeah. Marry the house, date the rate. So buy the house and refinance when rates come down. You're not married to the mortgage, you're married to the house. So figure out the right house at the right time, the right girl at the right time, get married, and date the rate. The rate's temporary.

It's not a permanent decision. So no one says you have to keep a mortgage. So, matter of fact, I have a 0% mortgage. I don't have one. I haven't had one in years. Not a percent, not even a mortgage. So there you go. And that's a possibility, too, in your future.

So I will tell you this, Peter. You're 22. You've got plenty of time. There's no problem. You'll get there. But whenever you're ready to buy, marry the house and date the rate. And you can refinance. You can refinance.

Any of you that are sitting there right now waiting on house prices to come down, you're going to be waiting. you're going to be waiting. You're going to be waiting. There's some prices that have adjusted, but values have not adjusted. Prices have adjusted because some of these people are trying to get some of these people who are paying too much because everything was in a frenzy. You remember right after the Fauci pandemic, you all remember that? Yeah.

Right after that. Everything was listed for a bajillion dollars and the market was like, no, we're not paying that. You were looking for a sucker, and the sucker didn't come, so now they dropped their price. But the values have not gone down. And they're not going to go down because there's a shortage of housing. Buyers are not out there eating up everything right now, and there's not a lot of inventory. And so it's just, it's a really slow market, number one, but it's slow in listings too. You can't find a property because there's not a lot of inventory. So it's a really weird

time to buy, but there's nothing wrong with buying right now. If you wait two years, the price is going to be more. And if you buy now at a higher rate and the rates come down, you just refinance. That's the whole thing. Ashley's with us in philadelphia hi ashley welcome to the ramsey show hi dave how are you better than i deserve what's up so my boyfriend is receiving a pretty large settlement um in the next coming months and we're kind of debating uh we're looking to buy our first home um And obviously once the home comes, once the right home comes, we'll do that. But he's stuck on paying the house out in full. And I'm wondering if it's better to do a big down payment and get a mortgage on the house.

Why do you want a mortgage? I don't know. I feel like putting a huge lump of that settlement into a house why do you want a mortgage more i i'm not i'm not sure well you just told me you wanted a mortgage what do you think you should do with it i just want him to use it as wisely as possible. Sounds like he wants to avoid debt. How much is he getting?

Right around half a million. Okay. And how much is the house price you're thinking about buying? We were thinking like mid threes. Okay. All right. Is the settlement taxed? No, it's not. Okay. All right. Is the settlement taxed? No, it's not. Okay.

All right. Well, let me send him a warning through you, and you're not going to like this, okay? Okay. There is no we. You're not married. Exactly. Yeah. There's a he.

I'm coming into it. Yeah, exactly. There's a he i'm coming into it yeah exactly there's a he it's his money and so if he buys a house it goes into his name not our name unless you're married are y'all getting married um eventually we've been together for six years so apparently apparently not okay so um i mean six years and you're in pain or get off the ladder. I mean, so you've already figured out what you're doing. But if I'm him, what is his income? Right around 55, I think. Okay.

So let's pretend for a second. Let's just reverse engineer this so that it'll help you with your heart on understanding where our advice is coming from. Let's pretend that he made $55,000, had $200,000 in the bank, and a paid for $300,000 house. And you walked up to that guy and you met that guy. He had a paid for $300,000 house, $200, the bank he makes fifty five thousand dollars a year would you then tell him to go get a mortgage because that's wise no same thing though isn't it i just did it backward yeah it's the same exact thing so the only thing that that could fall under the heading of wisdom is if it made sense, and I don't think it does and George doesn't think it does, to borrow on your home to do investing. And effectively if you're going to invest some, let's say he put $100,000 down and instead

of paying the other $200,000 on the house, put it in mutual funds, okay? Which is kind of what's probably rattling around in the back of your head somewhere. If that makes sense, then borrowing on the paid-for house to do the same thing would also make sense. But by reverse engineering it, it makes you realize, oh, there's risk involved here. I know you can't get into lawsuit details. Was he injured for the settlement? He was, yeah. Okay.

Mm-hmm. All right. Is he okay? Yeah, he's great now. He can still work? No permanent damage to his income? No. No, it was a miracle heal.

Good, good. I'm glad for him, and you too. Yeah. So I would tell him to pay cash for his house and set aside an emergency fund and invest the balance long term. And by the way, if you don't have any payments in the world and you make $55,000, you could pay what's the equivalent of a house payment into your investments every month, and that alone will make you a millionaire in just a few years. Okay. Does that make sense too? It millionaire in just a few years. Okay.

Does that make sense, too? It does. It does, yeah. Yeah. So that's what I would do. But, yeah, those of you that are shacking up and playing house or whatever you want to call it stuff, be sure that you keep your legal stuff completely separate and you have to be careful even with your pronouns in this case

not like woke pronouns but like pronouns like the you have to get your we're buying a house we're buying a house we aren't doing anything he is we're getting a settlement now he is if you're married there's a we when you're married, there's a we. When you're married, you become French. Oui, oui, right? That's how that works. But until you're married, there's not a we. Legally, I'm talking about.

And honestly, actually, that also leaves you in a predicament as well that I don't want you in. I would rather you have the safety in this relationship and the things that you've been pouring into, the economics you've been pouring into this for six years. I'd rather you have the safety of marriage. Marriage represents safety for you, young lady. So just as a guy who's seen all the stuff go bad because that's all we do we work with a lot of people who are things went bad i want i want you to have a better

life than this is setting up because you know one day he just decides you're not there legally he didn't have to do anything except tell you to move he didn't even have to evict you. You don't even have tenants' rights. You just move out. You're a squatter. No equity, nothing. And that's just, you know, you don't want to play that out for 90 years. You don't want to play that out. I've been married 43 years.

You don't want to play that out 43 years and see how that looks. This doesn't age well. It's like cheap wine. It doesn't age well. So, you know, that's just me loving you right now, telling you that for you. So you guys do whatever you want to do. You're grownups, and we love you either way. We'll help you all the time.

You call us anytime. This is The Ramsey Show.