The Ramsey Show - App - Cash Out Investment to Pay Down Debt? (Hour 2)

Episode Date: October 20, 2020

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live from the headquarters of Ramsey Solutions broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host, Anthony O'Neill. Ramsey Personality, number one best-selling author, is my co-host today here on the air. Open phones at 888-825-5225. That's 888-825-5225. Caleb is with us in Lancaster, Pennsylvania.

Hi, Caleb. How are you? Hey, Dave. How are you doing? Better than I deserve. How can Anthony and I help? Well, so this may be a silly question, but when I was little, my grandma invested money for me into a GE stock account. And when I was 18, she turned the account over to me. GE was going down.

It was plummeting at a really fast rate. So I cashed it out and reinvested it into a growth stock mutual fund. I'm currently going through Financial Peace University with my fiance, and I'm working on Baby Step One. And the account has enough in there for me to complete my $1,000 emergency fund. So I guess my question is, do I take some money out of that growth mutual fund account just because I didn't invest in it? It's not really my long-term investment plan, and I'm trying to work through the baby steps. Do I cash that out and then put it in a money market account, or do I just leave it be for now? Caleb, how much do you make a year, man, right now?

I'm currently in college. I'm working my way through, so probably maybe $25,000 at best. Okay. All right. So, maybe 25,000 at best. Okay. All right. So yeah, good question, but you already know the answer to that. So it's not a dumb question. Let me say that up front. All right. But no, and you said something I want to call out. You said, since I didn't invest it. No, you did. You cashed out the single stock and you turned it into a growth stock mutual fund. So you made that call. Which was a good call. The best call, honestly.

So I want that to stay there. Now, you make enough money to go ahead and get you $1,000 emergency fund up real quick. Nope. We're going to cash it out. You're going to cash it out? Absolutely. Because you've got debt, too, don't you? I do.

Well, I'm paying my way through school school but I anticipate within next year having debt yeah no you're going to avoid the debt you're going to work like crazy man and cash flow school and you're going to use everything above a thousand dollars to do that you don't have any debt today no none right now when are you getting married uh next september this 2021 yes sir and how much debt does she have she has none her school is uh paying for her to go she's a nurse when do you graduate uh i will graduate in 2023 so i'm finishing up my sophomore year what about her she is going to graduate in may oh okay so when you get married neither one of you are going to graduate in May. Oh, okay. So when you get married, neither one of you are going to have debt, and she's going to have a really nice income,

and you're going to be making $25,000 plus whatever else you can scrape together so you can pay cash for the rest of your college. And your first baby step is baby step one is $1,000. You don't have any debt, so baby step two is null and void. You move right on to having a fully funded emergency fund of three to six months of expenses in a money market account. So, yeah, we're going to use the $1,000 on the first three baby steps rather than let it stay in an investment.

The investment was a very good move versus leaving it into a single stock overall, especially for a young man of your age. Very sophisticated. Okay. But I'm going to work the baby steps straight up and that includes any money that is not in a retirement account is used up on baby steps one through three until then and and so until you had a fully funded emergency fund if you had 20 000 bucks sitting in a mutual fund believe it or not i'm going to move

it over to a money market account because I want it sitting there just for emergencies. The purpose of your emergency fund is not an investment. It's insurance. Yes, I got you. I got you. I guess I was, yeah. I got you, Dave.

It's okay. It's all good. Life is good. All right, let's see here. Up next is going to be Cedric in New Orleans. Hi, Cedric. How are you? All is well, Dave.

How are you? Better is well, Dave. How are you? Better than I deserve. How can I help? I have a question, man. I just have excess of cash saved, and I was just curious on the best way to utilize it in kind of this volatile market. Okay. Volatile market.

You're talking about the stock market? Oh, well, like I said that I work in the energy field, and I guess it would be, we've kind of hit the bricks. Oh, so volatile job market. Yes. Okay, so how much money do you have? Right now I have about $115,000 cash. Good for you. Okay.

Thank you. Well, we would work in, like we were just doing a minute ago right through the baby steps right right through all of them I mean if you have a hundred thirteen thousand cash now definitely let me ask you this question you don't have any debt as one make sure I'm correct right there's no debt according to you baby steps I'm on baby step six. Baby step six. Okay, cool. And now how much do you own the mortgage? $330,000. $330,000.

How much is your three to six months for expenses? How much would that be? Three to six months, I have about $15,000. Okay, nice. Very conservative. Yeah, what do you make? Total is about $200,000. Okay, so let's call your emergency fund $50,000.

Right. You have $15,000 plus the $113,000? No, no, I'm sorry. I said I have $115,000 cash. Yeah. And that $115,000, like I said, includes the $1,500. All right. So let's say we got, let's call it $50,000 emergency fund because you make $200,000,

and that's going to be a six-month emergency fund pretty easily in a volatile job market because you're in a topsy-turvy world of energy right now. Yep. And so if we take that away from the 115, I think that gives us 65,000 left over, right? Right. Yes. Which would apply to Baby Step 6. Yes. Okay.

And that was kind of my curiosity of putting it towards 6 or even putting, all right, because currently I'm putting 15% towards my retirement. That's all you do. You keep doing that, and we chunk everything we can find on the mortgage. You're just sitting on some excess cash, and we're just going to use it to accelerate baby step six. And I think a lot of people, Dave, during this time, they get nervous because of the market. And I understand that. But at the same time, you have good income coming in.

You're following all the baby steps. You have more than enough in your savings account. Go ahead and take this opportunity. Go ahead and get out of baby set. Number six, get into baby set. Number seven, where you start building wealth and you start giving and just think about all the things we can do when we do not have any debt and how we can really start

being a blessing and building more wealth for, you know, your kids. So that's one thing I'll think about. Exactly. The, the idea of getting the house paid off as a building block to becoming a millionaire is essential.

Yes. And Chris Hogan talks about that. When we studied all the millionaires we studied, we found that they really had two major building blocks on the positive side. Yeah. On the negative side, they avoided stuff like debt. They kept the proper insurance in place, those kinds of things. Yeah.

But on the positive side, they fill up their 401k, and they ended up with a million dollars plus in a 401k and a paid $4.5 million house, and they're sitting there with a million and a half dollar net worth. And so the paid-for house and utilizing the 401k is what we found is the typical track that takes someone into their first million dollars. This is The Dave Ramsey Show. You know, so many people have such a negative attitude about life insurance when it's actually one of the most caring and giving things that you can do.

Still, 7 out of 10 families either have no life insurance or they don't have enough. I don't get it. Look around. People die at all ages. I know it's sad, but that's reality. What's worse is when they leave their family unprotected, creating even more hardship. Yet somehow we find reasons not to get it done. It can't be the price. Term insurance is just plain cheap. Now, that's why I talk about Zander Insurance so much. Not because they're just an advertiser, but because they offer a crucial service that helps you and me. Call them at 800-356-4282 or check out their rates at zander.com. Listen, in the end, you need to get past the unpleasant images and just make sure your family's protected. Be responsible and feel good about what you've accomplished.

Go to Zander.com or call 800-356-4282. 800-356-4282. so what would it feel like to have no payments no master card who named that anyway you hadn't discovered bondage or american distress you don't have a car fleece sally may's not got her own bedroom at your house can you breathe this in for a second what if you had no payment not even a house payment do you think you could be outrageously generous then do you think you could be a world-class investor then do you think you'd have financial peace two words that don't go together like airline service i mean do you think you could do that you could do this you could do

it that's what ramsey plus is all about it's one membership that catches you up step by step through the baby steps out of debt into wealth and you'll be guided through our three big hitters financial peace university the premium version of every dollar our budgeting app and our new baby steps tracking app plus you get a ton of different courses and tools access to financial coaches we have a free trial right now available to ramsey plus jump into the free trial for ramsey plus that i mentioned it's free davramsey.com slash free? DaveRamsey.com slash Ramsey Plus. DaveRamsey.com slash Ramsey Plus. Our question of the day comes from Blinds.com.

They have a 100% satisfaction guarantee. That means even if you mismeasure or you pick the wrong color, if you screw up, I like an if I screw up, they guarantee it. That's pretty cool. Free samples. They'll replace everything, by the way. Free samples, free shipping, new promos all the time. Always use the promo code Ramsey. It's magic. It'll get you a deal. Check it out. So our question, Anthony. Today's question comes from

Alden in Washington. He visits DaveRamsey.com to ask, with 529 plans being different from state to state and seemingly being inflexible about how they invest the funds. What are your thoughts on saving for college using a Roth IRA for our kids? I use a Roth 401k at work and I max out each year. And my thoughts, my thought is if we fund the Roth IRAs each year for our kids, college expenses, whatever is left over can go towards our retirement. What are your thoughts? Well, first thing, Alden, is you've got bad information. Right.

Okay? You need to get with a smart investor pro and learn about the 529s. There are some 529s that are very inflexible and don't put money in them. You know, they lock you into the investment, they lock you into whatever, and they're not the 529 for you. That's one of the reasons we like the ESA for the first $2,000 educational savings account. But there are 529s that are completely flexible, that you control the investment. You control when it moves and if it moves.

It doesn't move automatically based on the age of the kid. You don't want an aging 529. You're controlling all these different issues, and so they're completely flexible. But you just need to get with a smart investor pro and find those. You're right. Some states, their 529s are just crappy. Yeah. And you don't want to do that.

And technically, prepaid college falls under a 529. Yes. But you would never do that if you listen to us. We can tell you never do prepaid college because your only rate of return is the inflation rate of the tuition. So you wouldn't do that. But we don't use Roth IRAs for college. No. We use them for retirement.

Retirement. Exactly. And that's Roth IRA invested into a growth stop mutual fund, too. Here's the good news. What's the good news? Alden's actually saving for his kid's college. Absolutely. I mean, he's thinking about it.

Alden is like, hey, what do I do to protect their future and also to protect his so i i like that question yeah they're not going to participate in this student loan epic failure no that has screwed up so many people's lives absolutely i'm going to do something way to go alden i mean you're you know you're you're poking around you're learning you're figuring out what's happening. Good for you. Touchdown, baby. I love it. All right. Jacob is in Las Vegas.

Hi, Jacob. How are you? Hi. How are you, Dave? Better than I deserve. What's up? So I'm 17. I'm turning 18 in like 12 days, and I'm getting a $300,000 conservatorship inheritance. I've been speaking with a financial

advisor, Edward Jones, and I was wondering what should I be investing in the future and can I trust financial advisors and if I'm on the right steps towards expanding my growth in the future. Wow. Jacob, is this financial advisor one of our smart best friends? No, he's not. No, I don't know. Sorry.

Okay. So here's the answer to your question. Not because I'm cynical and not because everybody's a crook, but the answer to your question is no, you can't trust anyone because it's not their job. You've been given a really large job for a 17, 18-year-old young man, and it is not their job to manage this money. It's your job.

Their job should be to teach you, and your job is I don't put money in anything i don't understand because i am responsible for this money when you turn the responsibility over to a financial advisor that's when you're getting ready to lose your butt young man yeah you understand what i'm saying yeah jacob you heard these stories of these athletes that made 10 million dollars and then they have nothing and because they turn it over a financial advisor yeah i watch your i watch your shows a lot okay so you've already heard this story so your job now is to catch up very very quickly as a super young investor you're a very young investor, and your job is to catch up

your level of knowledge to where you become a competent investor on $300,000. But raise your right hand. Dave, I'm not putting money in something I don't understand. Right. Right.

Let me give you a couple things to do, okay? Okay. Number one, you need to, let me give you a couple things to do, okay? Okay. Number one, you need to talk to three in-person, three different financial advisors. And you are interviewing them, not for their expertise, but for their ability to teach you, because whose job is it to manage the money, Jacob? Yours.

Me. Me. Yeah, you. You. Okay, so you're going to interview three different ones, and who's going to teach me and walk with me and mentor me where I can make decisions about this money that has been entrusted to me? Mm-hmm.

Okay? So you've already got one guy you're talking to. That's great. There's nothing wrong with Edward Jones. Check them them out jump on get a smart investor pro or two and go interview two different ones but i want you to meet with them in person it's a three hundred thousand dollar decision yeah right okay now the second thing i want you to do after you did that is i want you to talk to three different cpas okay about tax issues and i want you to begin to build your board of directors for this three hundred thousand dollar company called jacob incorporated and these are your this is your board of advisors and you've so you got a cpa in one corner you got a real you could if you're thinking about real estate you

could put a real estate person on your board. They don't have to meet together, but in a sense, you're building this team around you of people that know about taxes, that know about real estate, that know about insurance, that know about financial. It's not one guy or one gal. I've got 15 of these people speaking into my life, and this is what wealthy people do. And if you want to be wealthy people with this $300,000, this is how you're going to do it. This is a big job for a 17-year-old, Anthony.

It really is. And, Jacob, real quick, are you going to college? Well, I plan on going into real estate because I want to get a realtor's license and learn real estate. Okay. Because that's what a lot of people in my family did. Okay, cool. Honestly, I didn't plan on it, no. I understand.

That's fine. That's fine. Totally. Okay. So, but, you know, you probably got some lean years because I got my real estate license when I turned 18, and I did sell a house three weeks later, but it was to a guy I went to high school with, and we had both just graduated. So, I mean, other than that, I don't know where you're going to find clients yeah because i don't know

who buys a house from an 18 year old not being mean or anything but you got a credibility issue on your sales process here that you're going to have to work through you can become good at it and i'm sure you're going to be because you're smart and you're mature beyond your years i think you're a stud i think you're going to do great but you may have a couple years that this is a tough business yeah and so you're going to think that through too what you're going to do is your side hustle to eat with if you're not making a house sale uh in there but listen the job is not get a financial advisor take your hand off the wheel you are driving the car that's for all of you out there very important lesson it's the only way you'll end up with money at the end

of the story this is is the Dave Ramsey Personality, is my co-host today here on the Dave Ramsey Show. Kylie is with us. Kylie is in Kansas City. Hi, Kylie. How are you? Hi, I'm great. It's so good to talk to you guys. You too.

I see on my screen you're debt-free. Congratulations. I am. Thank you so much. Way to go. How much have you paid off? I did $47,000 in 22 months. Good for you.

And your range of income during that time? About $47,000 to $58,000 or so. Cool. What do you do for a living? I am a special education teacher for the blind and visually impaired. Wow. Sounds rewarding. Yes.

Very rewarding. Very cool. Good for you. So what kind of debt was the $47,000? I had $5,000 in medical, $16,000 student loan debt, and like some people right out of college, I bought a brand new car for $26,000. Oh, I deserve a new car. That was me. So did you keep the car did you sell it

i did keep it um because it fit within the guidelines i thought so it did yeah very good and you just worked your way through it so you really i mean basically in two years you paid off 47 000 making 47 000 plus000, plus or minus some increases there. But, I mean, that means you're living on beans and rice. Yeah. Very much so. It's pretty easy to do when you're single living by yourself. I make my own rules.

And then picked up some side jobs and sold everything that I could and really stuck to a strict budget. Cool. How long have you been out of school? Oh, man. I finished grad school about five years ago, and you guys would be happy about this one. They used a government-funded grant program to have my training paid for

so I didn't go into any more student loan debt. That's a good thing. Okay. So what happened 22 months ago put you on this journey? I had an ER visit, and once I got out of the ER, they slapped me with that bill and I realized that that was the difference. That monthly payment was my comfort, my cushion, and now I was living paycheck to paycheck and I realized I can't make this much money and live this way. And so I changed what I was doing.

Now, who would you say were some of your biggest cheerleaders along this journey? Honestly, you guys, where I listen to the podcast like every day. I'm one of those weirdos that beats it up and makes you talk like a chipmunk, listen to you in the car. Anthony, she just said you talk like a chipmunk. No, she was talking about Chris Hogan. And then I listened to you guys a bunch

in the car and even on my dating profile, the very first line says followers Wait, wait, wait, wait, wait. Dave Ramsey. Wait, wait, wait, wait. This is the Dave Ramsey show.

This is not the Anthony O'Neill show. Did you say on your dating profile? Yes, on the very first line. Oh, well, okay then. Okay then. You put Dave Ramsey podcast.

So how many eligible bachelors does that run off? A lot. All of them. She's still single. Hey, and let me answer this question. Seriously, though, what was clearly you lived off of half of your income. Outside of that, what were some of the other struggles along this journey? What were some of the things, some of the sacrifices?

What was the hardest thing you had to really give up or do to become debt free today? I think giving up on travel was a big one for me. I thought I wanted to go do all these things, see your friends out doing them. And to say no to all these invitations is really tough to do, especially when society around you, they're all spending, and you want to keep up with the Joneses, but realizing that the Joneses don't really care what I'm doing was the biggest difference. Yeah.

There's a bit of a wake-up call there, isn't it? So the good news is now you don't have any debt. Now you can travel. Correct. wake-up call there isn't it so the good news is now you don't have any debt now you can travel correct my my biggest why was because i wanted to be a foster parent and so right at the end um i passed on my licensing things and got my first placement and i'm able to give my foster child so much more because i'm not worried about living paycheck to paycheck and then we're able to go do things and i don't even think twice about it wow absolutely incredible very well done hero how's it feel now that you're free oh my gosh it feels so good it's such a relief yeah well done we've got a copy of chris hogan's book for you everyday millionaires that's the next chapter in your story for sure so proud of you way to go thank you

so much kylie 47 000 paid off in 22 months making 47 to 58 count it down let's hear a debt-free scream three two one i'm debt-free I love it. That's hilarious. Here's an interesting thing. If you do not set a detailed goal, you will not move forward. People don't accidentally win yes she didn't accidentally live on half of her income right that was intense that she did that in 22 months 2020 has been exhausting and chrissy wright's got her all-new goal planner ready for 2021 and the planner will help you manage your schedule grow as a person set your

goals crush your goals and having a planner is like having christy as your personal coach and believe me christy is a freaking cheerleader she cannot keep herself from doing it in the hallway at ramsey she's cheering people on loud too yes she's loud there's no question and in a good way and the best part is you get the 2021 goal worksheet that you get started filling out right now. The new 2021 goal planners are available today in our online store at DaveRamsey.com. And you get the goal-setting gift pack for free, which is a $30 value. You really do want to hurry because, as you you might imagine we can't sell these things much after the first of the year so we do not over order we under order we would rather run out

than throw them into a dumpster so we're going to run out and that means you're not going to get one if you don't get one soon go to DaveRamsey.com get Christy Wright's gold planner for 2021 and then you can jack it up and cause this stuff to happen the there's a power to being intentional absolutely to laying out a plan and then executing the steps to hit that plan and you know what dave help me remember who wrote this quote i can't remember who's i want to quote it correctly but it says aim at nothing hit nothing have a target and at least you'll get close to it yeah aim at nothing and you'll hit it every target, and at least you'll get close to it. Yeah.

Aim at nothing and you'll hit it every time. Zig Ziglar. Zig Ziglar. Yeah, yeah. So I'm like, for me, when you have a plan, you have something you're aiming for. And here's the truth, Dave. I'll be honest. I don't hit all of my goals because some of them are high, but I get very close.

Yeah. I get very close and I hit a lot of goals. So we got a guy on our team. Okay. That has lost 57 pounds. Yeah. close. Yeah. I get very close, and I hit a lot of goals. So we've got a guy on our team that has lost 57 pounds. Yeah. Okay? Yeah. And we were talking about this the other day. He's a big old boy.

He needs to lose some weight. Okay. Okay. Because he's dangerous. Oh, yeah. His health was in danger. Okay. And so the doc said, you know, you're going to die.

Yeah. Okay. So, okay, I'm going to lose some weight, or I'm going to die. So I think I'll lose the weight. That's a good thing. So he dove on it, right? He's after going to die. Yeah. Okay. So, okay, I'm going to lose some weight or I'm going to die. So I think I'll lose the weight. That's a good thing. So he dove on it, right? He's after it. So here's the thing.

The goal he set was to lose 65 pounds during that period of time. He did not hit his goal. He lost 57 pounds. Is he a failure? No. Of course not. No. Everybody's walking around going, dude.

Right. You look good. You lost a Backstreet Boy. I Everybody's walking around going, dude. Right. You look good. You lost a Backstreet Boy. I mean, this is incredible, man. You know, wow. Come on. And he's going to do it again. So, you know, the number of times I set a goal to sell X number of books or I set a

business goal or I set a, you know, a half marathon goal on a time and I miss it. That does not make, because here's the thing. You are in the game. Yes, sir. Because there's two other kinds of people. Yeah. There's the one that are ready, aim, aim, aim, aim, and pull the trigger. You know, do something.

And then there's the person who's like ready, fire, aim. Right. They just shoot, you know, just constantly have no direction. Zero. And they're just going off all the time in 42 directions. they just shoot, you know, just constantly have no direction. Zero. And they're just going off all the time in 42 directions. There's no focus, no power of intentionality on the focus. And so you're exactly right.

If you aim at nothing, you'll hit it every time. You hit it every single time. And a key thing for me that helps me, Dave, is whatever my goals are, I break those down into daily habits. Yep. And those daily habits get me to my goals. What activities do I have to engage in on a daily basis to cause the goal to be real? There you go. Obviously, it's increased exercise and decreased caloric consumption.

Yes, sir. Weight loss is not freaking rocket science. You can't outrun a Big Mac. This is The Dave Ramsey personality, is my co-host today here on the air. Chase is with us in Philadelphia. Hi, Chase. How are you? Hello, gentlemen. How are you? I just want to say you're such an amazing blessing and i just want to thank you for all you do praise god thank you thank you thanks for being with us sir how can we help

yes sir so i started listening to you a year ago and i'm 29 years old my wife and i are on baby steps four five and six and i have a very strong pension. It's very stable. I'm in law enforcement and basically I can retire with over 90% of my salary every year for the rest of my life. That being said, I have a mandatory pension contribution of 7%. It makes up a total of 5% of total household income for my wife and I. Okay. So the question is, can I count that pension towards 15% of my investment for the household because my wife and I want to pay off this house as fast as possible and we have about 12 years left. The stronger you're convinced the pension is, the more you would count.

I typically tell people to count about half of it because you don't control the pension, what it's invested in. You can't take it with you, and you can't control even what it grows to. And so you've got no control over anything here except that they've got a great history that you're looking at in your case, but there's others that are weak. And so, you know, ultimately when the house is paid off, you're still going to be young people, right? Yeah. Yes, sir. Yes, sir.

And you're going to load up everything anyway. Yes, sir. Max out all retirement. So the only difference is do you put in a little bit more between now and the time you pay off the house? That's the only difference, right? After that, it's all game on anyway. But, yeah, we don't... So you can if you want, because you think it's a super strong pension. The downside is

you're not going to have as much money if you're wrong about the pension. Right. Okay. And what I don't want people doing ever is 100% counting on their pension. Yeah. Right. Because that's completely out of your control, and you need to count on things you can control. Yeah.

And that's the beauty of the whole 401K plan. Yeah. That whole process. Thank you very much, sir. Hey, man, thank you. We appreciate you calling. Yeah. And Chase, thank you, man, for serving, too.

Absolutely. That's awesome. So, Anthony, the history was when I started doing this show, pensions were a much bigger thing. And they've generally gone away. Yeah. 78% in the last two decades, 78% of the companies have done away with their pensions. You usually find them now only in super large companies or in government. Yeah.

It's the only place you find them. Yeah. And there's all kinds of stories of a pension failing. And they're supposed to be highly regulated. You're supposed to be having the feds watching over your shoulder and you're meeting these guidelines. But with a 401k, you have control. It's your money. Yes, sir. Yes, sir. 401k, especially if you got the option between a Roth or a traditional Roth. And then also you have more control over, too, on a Roth IRA.

And so those are the two that I invest into. Those are the two I suggest. I've never, I guess in my generation, Dave, we're not really seeing that many pensions, other than this young guy. But even some of my peers. If you're working in a government job, you're seeing it. Yeah. But, like, for instance, CalPERS, which is the California pension plan for California employees and teachers and so forth. Yes.

A guy just sent me an article this morning. I was just reading it. They are $160 billion underfunded for their obligations. Wow. $160 billion. It's been been poorly managed and they're screwed so here's what they're doing they are proposing to borrow an additional 80 billion to expand their investment portfolio because borrowing their way out of the 160 billion dollar problem is going to work it's not so they're going to further weaken a already disaster of a pension plan so you government employees in california if you're sitting around waiting on california calpers to take care of you i've got bad news it's not it's

not looking good yep it's not looking good at all not Not only are they $160 billion underfunded right now, a billion at the state level. Okay, so, yeah, these guys are operational morons. And then they're going to go borrow an additional $80 billion to invest to try to make up the missing $160 billion, unfunded liabilities uh and what that means is is that they have a group of people who have retired yeah 160 billion dollars short on paying that out so are so that means the the uh the goose is not laying enough golden eggs and so they're getting ready to take a leg off that goose and then they're ready to take a leg off that goose.

And then they're going to take another leg off that goose. And we want to borrow a leg and throw it in there so that this goose can stand up for a little while longer and lay golden eggs. But eventually, even then, the burn rate on the thing, they're not making as much on the pension as they have obligated because they did their actuarial science wrong. They did the statistical analysis wrong that they're supposed to have the money. A hundred and sixty billion of unfunded liabilities. So speaking futuristic, Dave, what does this look like for those individuals 10 years from now? If they don't turn this, the thing will collapse. Yep.

Because they'll burn the house down is what they're doing. Yep. They're going to kill off the goose. They're going to have to use up the actual principal because they're underfunded. And then there's nothing there to send anybody a check eventually. You burn through the cash. And that's what CalPERS is looking at right now. I mean, California does stuff big, and it's usually wrong, but they do it big.

And they did this billions, 160. I thought I misread it. 160 billion in unfunded liabilities. And I don't get how do they think borrowing more billions will help the situation long term. Keep in mind, we're talking about the government. Worse than in mind we're talking about the government worse than that we're talking about the california government so i mean you just have to keep in mind who's who you're dealing with oh dave rebs the secret to happiness is low expectations oh my gosh unbelievable yeah it's uh so i you know if you're a teacher in california and you have no money in

your 403b no money in your 401k and you're counting on calpers i'm telling you you need to get through these baby steps and you need to get in you know you need to get something going so that you can start making a contribution to your retirement yeah because here's what's interesting it doesn't take a lot of money it doesn't yeah it doesn. I mean, $100 a month turns into a million dollars. Yes, sir. In your working lifetime. Yes, sir. You know, 401K Roth and good growth stock mutual funds with no match.

So you can control your own destiny instead of waiting on an inept, incompetent state to do that for you. Now, again, the young man we're talking to a minute ago said his pension is really strong quite the opposite and so we don't you know but if you say i if you call me up and you go i'm a you know i'm a california employee i'm gonna say don't count your pension at all yeah for your future if it comes in we'll count it we'll take it it's gravy on a biscuit i'm not predicting the complete failure of the thing today but it ain't looking good boys and girls yeah i mean it is looking nasty over there right now yeah and so whoo scary stuff so here's what we find we find that people that are successful are the ones that take control of the variables themselves

they don't wait on someone else to do it for them. And what do you have to lose, Dave? Like if you go ahead and invest into a 403B or 401K and an IRA, you actually just have more icing on the cake if it comes in. And it's always interesting, too, when people ask the question, like, is it okay if I invest less? Yeah. If you want to have less, that would be a good plan. But nobody ever calls up and goes, how can I invest more? I need to invest more.

How can I give more? How can I increase my giving? How can I increase my wealth? So what we ought to always be asking is, how can I possibly invest more so that I've further changed my family tree, so that I'm further generous, and I've got more stability? And that can happen if you have a pension and you do the 15%. You will get more. Yeah. You know, and it doesn't hurt you to have more, but it will hurt you to have less.

Yeah. And you will feel that in the next 10, 15 years. If a million dollars gives you at retirement, gives you a level of peace, think what 10 will do. You know, why not? What's the downside? It's not we're worshiping money that's not the point the point is this is a tool and it's better to have more tools in your belt baby that's the plan this is the dave ramsey show This is James Childs, producer of The Dave Ramsey Show.

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