The Ramsey Show - App - Do What You Love to Do (Hour 3)

Episode Date: December 24, 2018

The show about you

🎵 Live from the headquarters of Ramsey Solutions, 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. You jump in, we'll talk about your life and your money. It's a free call at 888-825-5225. That's 888-825-5225. You jump in and we'll talk. That's 888-825-5225.

Starting off this hour is going to be Luke in Portland, Oregon. Hey, Luke, how are you? Better than I deserve, Dave. How about you? Just the same. Merry Christmas. How can I help? So I currently work as a mechanical engineer.

I am considering a career shift over to patent attorney. That would involve about four years of school, and I've mapped out how I'm going to pay for that going through all the way through. However, the part that I haven't really been able to think through is retirement. I'm currently 25. If I go forward with this schooling, I wouldn't be starting retirement saving until I'm about 30. And so I just wanted to hear your thoughts on that and really go from there. Well, you should be fine if you make patent attorney money. Sure, but I'm looking at the numbers of how that investment will grow over those five years compared to starting five years later. What do you want to do with your life?

You know, I want to, at this point, I think that move, I would love to do the work of a patent attorney. Then do it. At the end of my life. Then do it. Okay. And don't overanalyze the financial implications of it do what god has for you to do that gives you passion and makes you smile and you make a fabulous income at and you're going to be just fine don't you know what would you pause i mean what would you do

not do it if it mattered if it mattered two hundred thousand dollars more in your retirement no you wouldn't and so instead of two million two you only got two million in your retirement and and then you do what's something you hate your whole life no yeah yeah it's and that's you know i don't know what the actual numbers would come out but you know whatever you're going to lose during this time on what you would have invested, you will make up for it, likely, in a higher income doing what you love. And if you don't, so what? You're still going to be okay. Okay. That make sense?

Well, thank you, Dave. Yes, I appreciate your input. Hey, Merry Christmas. Get after it. Roshon is with us in Buffalo. Hey, Roshon, what's up? Hey, Merry Christmas. Get after it. Roy Sean is with us in Buffalo. Hey, Roy Sean, what's up? Hey, Dave, how you doing? Better than I deserve.

How can I help? Hey, so in the next three months, I'm going to come across about $10,000 to $12,000, and I'm moving to another city, and I'm just trying to figure out what to do with that money exactly. Okay. You're moving to another city to do what? Actually, to pretty much be closer to my girlfriend. Been long distance two years because we're getting pretty serious.

But I'm losing my job, so that's why I'm coming across this money as like a company layoff. It's kind of like a blessing in disguise in a sense. Okay, so the timing of losing your job and getting a severance to make the move is good. And what are you going to be doing in the other city? You got a job? So right now it's like four months out. So I've been putting my resume out there to kind of line things up. In a perfect world, hopefully it lines up.

Yeah, what do you make now? I make about $60,000. Okay. What do you do? I'm an accountant. Oh, okay. See, I'll be able to land something doing that, right? Where are you going?

Right, right, right. What city are you moving to? Detroit. Okay. Yeah, they've got lots of accountants there. Good. Okay. Okay.

So, yeah, you land the job, and then this money becomes a net signing bonus, correct? Correct. Effectively. I mean, it's a severance, but if you don't need it because you go straight to work at the next deal, as you said, perfect world. But, hey, you got four months to create your perfect world, so let's create our own world. Right. Meaning land something, and then we're chasing the girl, the job, and everything. And that's all fun.

That's cool. So then the 10 to 12 becomes your emergency fund or will apply it to your debt once you get moved and get settled in. Now, you may need some of it for a transition for your move, maybe a deposit on a rental or, you know, your cable bill deposit or your electric bill deposit, that kind of a thing. I don't know. Whatever you've got to have may need some actual money to pay for the move. I don't know how much furniture you got, but that kind of thing, right? And so we don't want to use it all up, but you're probably going to use some of it on the physical transition.

And so, but let's minimize that. You're probably going to use some of it on the physical transition. Right. But let's minimize that and then work the baby steps that we call them after that, and that's $1,000 saved, and then everything after that starts going towards your debts. Kendra is with us in Atlanta. Merry Christmas, Kendra. How are you? I'm good, Dave. How are you? Better than I deserve. Merry Christmas, Kendra. How are you? I'm good, Dave.

How are you? Better than I deserve. What's up? Yes, I'm in the middle of baby step number two, and I just found out through my car loan, I just found out through my lending institution that they charged me a fixed, a set amount of money as interest instead of just charging me interest rate. So I called today because there was a discrepancy in my this month's payment, you know, principal to income to the interest ratio. Sorry, I'm a little nervous.

That's okay. And they pretty much said that they charged me $9,000, and it doesn't matter if I pay off the car off early because any additional monthly money will go towards the interest and not principal. So do you think it's a good idea to refinance or what should I do? So you're paying a very high interest rate. Yeah. Because you bought a car with bad credit that you couldn't afford.

Well, no, I have good credit. I had a lot of debt and i had a lot of um that and i had a lot of um negative equity yeah so what's your interest rate um it's like a 6.75 well uh this is what's called a prepayment penalty it's a top loan a total of payments loan and um it is the worst possible structure of loan and it's typically done with subprime lending where someone has bad credit or too much debt and you're basically they were trying to scream at you and say don't buy this car but you bought it anyway because we're going to screw you and then they did um and so yeah you've gotten killed here uh and it doesn't matter if you refinance it or not you're going to pay the entire stinking

interest bill whether you refinance it or not so yeah if you can refinance it what do you owe on the car total oh my god um i owe about 36 on it thousand yeah it. $1,000? Yeah. What do you make? I make $75,000, about $75,000, $80,000 a year. Oh, my God. Sell the car. It's absolutely absurd. Sell the car.

Yeah, you have a car that's, you don't need to refinance it. You need to sell it. Yesterday. It's absolutely ridiculous. Insane. Bad idea. This is the Dave Ramsey Show. Let me tell you a story about two families that are very much alike in a lot of ways. Both families have two working parents and a couple of young kids. Each has debt and has struggled to make ends meet.

But they're starting to make headway with their budgets and smarter decisions with money. They have dreams and plans, and the only real difference is that one family has the right amount of term life insurance, and the other doesn't. Big difference. If one of the parents die, and that does happen, their well-being would be destroyed. Paying for the mortgage, utilities, food, and that does happen, their well-being would be destroyed. Paying for the mortgage, utilities, food, and other bills would be impossible, let alone saving for education or retirement. That's why every day I talk relentlessly about getting term life insurance.

Just go to ZanderInsurance.com or call 800-356-4282 and see how inexpensive it really is. Be the family that takes those deliberate steps to be different and responsible. It really does make you the hero of your story, and it puts you on course for better things ahead. Thanks for joining us, America. We're glad you're here. Open phones at 888-825-5225. Wade is on Facebook. Dave, is there a book on mutual funds for dummies that you would recommend?

You know, the best investment book that we have out is Chris Hogan's Retire Inspired book. And I would recommend that to you highly. It's a number one bestseller. And it goes into pretty good detail. You can always look for more. But it just depends on how much you're wanting to comb through the process. I do not know of a single book other than that that goes into the absolute nerd-level breakdown on mutual funds

to teach the details about it. I will tell you that what I have learned over the years from having invested for 30 years now 35 years now that um the vast majority of what mutual funds of the money that you make in mutual funds is number one because you actually put money in it there's a lot of people with a lot of theory. There's a lot of people that sit around and talk about stuff over a cup of coffee, and they have a lot of opinions, but they get paralysis of the analysis, and they never do anything.

The actual investing of money is what causes investments to grow more than anything else. The second thing that I spend the vast majority of my time, other than actually doing it when it comes to investing, is I look at the rates of return over a long period of time. And, you know, there's a couple ways to measure that, there's CAGR, which is the compound formula, or there's a simple formula that's just the average annual return over a period of time. And you can look at the average annual S&P, which is a standard and poor 500, if you're buying good growth strike mutual funds, and you want to beat that. You want to buy a fund that has a higher average annual than the S&P over the given period of time that you're looking at. And so if you've got a fund that's been open 30 years, has it beat the S&P on average for 30 years?

And the average annual return is enough to tell you that. And if you want to compare two funds, one against the other, on how they've done in the same period of time, you can compare it on average annual return. The CAGR is a little bit more sophisticated way of looking at it, but it's irrelevant. The reason it's irrelevant, the differences are irrelevant is, again, if you pick a fund that's outperformed the S&P and you actually freaking invest in it,

that is enough knowledge right there to cause you to be a millionaire. That's what all the data tells us. And so all this other hair-splitting and analysis and details of, did the S&P average 11.6 and then the average, and then the CAGR is 10.7. Yeah, or whatever. So what? You freaking nerds. You get so much paralysis of the analysis that you actually do nothing.

I'm not saying that is you in particular asking about a book for dummies. That's a different thing. But what you have to beware of in the open market is the people that are drawn to the financial services world are math people. They love math. I'm a math person. I love math. And I caught myself for many years getting caught up in over analysis. I was spending so much time analyzing, I was doing nothing.

And people get paralysis of the analysis. And a lot of people in the financial world do the same thing, and they will spend an immense amount of their life with their head stuck up their butt trying to figure out something. It's unbelievable. Instead of actually doing it, the ones that we talk to, these millionaires on this Millionaire Theme Hour, I'm a teacher, Dave. My husband is an engineer.

My wife is an engineer, and I'm a teacher. And we've invested in our 401K. Were you concerned about the difference between CAGR and average annual? What's that? What's your net worth 4.2 million what's that what's the difference they don't even know did you look at the expense ratios on the mutual fund did you look at the 12B1 fees? What's that? They don't even know. They have $4.2 million. Meanwhile, Mr. Capital Nerd over here with two nickels to rub together can give you every analyzed breakdown of everything that's ever happened inside of a mutual fund and never did anything

and has $100,000 to his freaking name. But the guy who just actually did it and picked decent growth stock mutual funds that outperformed the S&P, which are everywhere, by the way, they're the ones that become millionaires. They don't get paralysis of the analysis. So all of that to say, I hadn't really thought about it before, but I probably will never be recommending a book on the details of a mutual fund because I don't care. And the data says you shouldn't either. The data points of millionaires, not broke people with analysis skills, but millionaires, and for that matter, multimillionaires, are people who actually do something with their money to invest it to cause it to win.

And they have some basic investing tenets that they use. So if you go across the four types of mutual funds we talk about, growth, growth and income, aggressive growth, and international, and you decide to spread across those four over a period of 30 years, that portfolio of mutual funds that outperform the S&P will outperform just being in one type of fund or just being in one fund. Or take out any one of those four, and it will underperform what all four of them are together. We've done the research. We've done the analysis.

We broke it down. We've had our SmartVestor pros look at it. We've gone through it all it's absolutely there so you don't have to have a big bunch of detailed analysis on this now you're welcome to look at it i'm not saying i'm not trying to hide anything from you you're welcome to understand it but my point is these minutiae minute differences in viewpoints on these things you know honestly most people don't even think about whether the mutual fund has a load or not, meaning that they paid a commission or not. And that's a mistake.

You should pay a commission on a portion of your funds because it brings a quality investment advisor into your life to walk you through the process. And there's all kinds of data that says that people that invest on their own with no-load mutual funds have a tendency to time the market more, meaning they try to jump in when it's hot and jump out when it's cold. And people who time the market, tons of research, all kinds of possible analysis shows that you do not get as high a performance as if you just buy and hold and keep holding and keep holding and keep holding and keep holding. But what about when it goes down? No one gets hurt on a roller coaster ride except those that jump off.

I have never divested a single mutual fund that I own except when it, A, underperformed its category over an extended period of time, meaning if I had a growth stock mutual fund that was underperforming all other growth stock mutual funds over an extended period of time, I would move it to a different growth stock mutual fund. Or if I was buying a piece of real estate, I have cashed out some no-load funds that I bought for that purpose. Other than that, I've never one time in 35 years moved money out of the market because I was scared or into the market because I was greedy.

I just steadily invest, steadily invest, steadily invest, steadily invest, steadily invest, steadily invest, and there is millions and millions and millions of dollars in there as a result. And you can too the data all shows us that when you have someone coaching you to keep you from jumping in and out and to give you some basic information to keep you investing in understanding what you're investing in someone with the heart of a teacher like one of our SmartVestor pros, the data all tells us that when you stay in the game, you don't jump in and out, you've got somebody coaching you to show you how to pick something

that's better than the S&P 500, that's really about all that matters. You start investing, you keep investing, you don't quit investing, you don't time the market, and you buy funds that outperform the S&P. start investing, you keep investing, you don't quit investing, you don't time the market, and you buy funds that outperform the S&P. And really, if you do that and you keep doing it for an extended period of time, you'll be a millionaire or better. This is the Dave Ramsey Show. Are high health care costs getting you down?

Are you confused trying to navigate your options? Do you wish you could find an affordable, biblical solution to your health care costs? Based on New Testament principles, Christian Health Care Ministries, or CHM, helps Christian families, churches, and ministries join together as the body of Christ to share their major health care costs. Christian Health Care Ministries is the original health cost-sharing ministry, a Better Business Bureau-accredited organization CHM members share to pay each other's medical bills. It's not insurance. It's Christians financially and spiritually supporting each other. It's what

Christian Healthcare Ministries has done for over 35 years, and our members have shared over $2.5 billion in medical bills. To learn more, visit chministries.org. That's chministries.org. Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. chministries.org In the lobby of Ramsey Solutions, Charles and Julie are with us. Merry Christmas, guys. How are you? Doing great, Dave. Merry Christmas to you. Good to have you guys. Where do you live? We live now in Montgomery, Alabama.

Awesome. Well, welcome to Nashville. And all the way up here to do your debt-free scream. Absolutely. Very cool. How much have you paid off? Dave, we've paid off $278,000. Woo! And how long did that take?

Took us a little over six years to do. Okay, cool. And your range of income during that time? We started out with nothing for quite a while. And then we were working over in Asia. And when we came back, we had zero income. And so I was doing a lot of day labor, doing a lot of pizza delivery. I was able to get into the Air Force. And I started out at about $75,000. And through the last six years uh promotions and bonuses and paying off some rental property now we're about 120 000 a year good for you and you're still in the air force yes sir well thank you for your service very cool good for you guys and uh so what kind of debt

is this 278 over six years so maybe not your typical debt we uh we actually owed some money to emissions agency we owned owed about a thousand dollars to them we owed about three thousand five hundred to family we had a home equity line of credit of about thirty four thousand we had a mortgage on a house for about ninety six thousand and a mortgage on a condo for about a hundred and forty four thousand and it's all paid off. Yep. House and everything. House and everything. I'm looking at weird people.

Way to go, you guys. Very cool. So, Julie, how does it feel to have a paid-for house? Unreal. Amazing. I told Charlie on the way here, I feel like this is concreting our debt-free. This is making it real. So it's been a little surreal after many, many years of saving and scrimping and budgeting and

cash enveloping. Yeah, six years for real. So when people find out that you have everything paid for and they say, how did you do that? What do you tell them the keys to getting out of debt are? I would say something that helped me keep focused because he was more the one that drove it. And I finally got on board after a year or two of him driving it. For me, the thing that really kept us going is I kept a future focus because it would get hard in the present, especially having

kids and not being able to do a whole lot and being at home a lot. So I just kept that focus forward. When we get this debt paid off, we can do whatever we want. We can have all the fun we want. And now you can. Yeah. Do anything you want. And so how many kids?

We've got four. Okay. And their ages and names? Jonathan is eight years old. Catherine is five. Nathaniel is three. And Ethan is about five months old. All right.

Go, Ethan. Love it. Well done, you guys. This is very fun. Congratulations. So tell me the story. How did you get started on this six years ago? What made you think, hey, we can have everything paid off in six years?

I'm not sure that we necessarily had that vision then. About six years ago, though, we were coming back from working for a missions agency over in Asia, and we were incredibly frustrated that we had to come off the field because finances were a big issue, and we had two properties back in the States that were not paid for, and we were having properties back in the states that were not paid for and we were having issues with renters and we were just both incredibly frustrated that finances is what was making the decision for you you were forced to do stuff yeah yeah and so that that vision of knowing that one day in the future we could absolutely make our decisions based off of what we believed were the right decisions

and not what the bank was telling us was the right decisions. That's what drove us a good bit, I believe. The borrower is slave to the lender. And when you've got all this stuff tugging at you, you can't make other decisions. You're stuck. You have to pay your bills kind of thing. So enough is enough. And then how did you get connected to us?

So we had done a couple of financial classes through our church with Crown Financial Ministries. Right. And then when I got back into the Air Force, one of the chaplains, Justin Combs, back in New Mexico, was able to teach the class at our squadron. Yeah, we have a lot of military teaching. And so we went through that course, and that kind of relit the fire again. And then later, Julie and I actually facilitated the class at our church, and that really got us on board with it because when you're teaching somebody

these principles, you absolutely have to adhere to them as well. So that really helped us stay motivated. A different kind of accountability then, for sure. Well, very cool. Well done, you guys. Thank you. Congratulations. Well, we've got a copy of Chris Hogan's book for you, Retire Inspired, number one best-selling book.

I want that to be the next chapter in your story, to be not only debt-free but now millionaires and outrageously generous as you go along. Now you get to make your own choices. Yep. With the exception of four make your own choices. Yep. With the exception of four kiddos. Right, right. So have the kids been practicing their debt-free screams? They have. They know about it, huh?

They do. All the way from, well, it's a pretty good drive from Montgomery, Alabama. You can practice pretty good on the way. Good stuff. All right, it's Charles and Julie. Jonathan, Catherine, Nathaniel, and Ethan. $278,000 paid off in six years, making zero all the way up to $120,000. That's their house and everything.

Count it down. Let's hear a debt-free scream. All right, let's go, kiddos. Three, two, one. We're debt-free! Yeah! That's how it's done. I love it, I love it, I love it.

Very well done, you guys. Congratulations. Very proud of you. Excellent job. Richard is with us in Jonesboro, Arkansas. Hi, Richard. How are you? Yes, sir.

Very fine. Good. How are you? Yes, sir. Very fine. Good. How can I help? I think a very simple question. It involves private parties leasing vehicles, you know, non-commercial. Can you explain to me why, if, is there any financial gain to leasing? I ask you because my daughter and husband down in Houston lease their cars. They have for a long time. And right now they're leasing a ridiculous-looking Hummer and a Lexus to drive back and forth to their ordinary jobs. Leasing in that situation is basically another way of borrowing the money to drive the car that you can't afford, is what it amounts to.

And then when you put the actual calculation, you put the actual numbers for the lease into a calculator, you can figure out, if you know finance, what the cost of capital is, meaning the interest rate, the effective interest rate. And most leases come out in the 14% range. So it's not only a method of financing a car, it's an expensive method of financing a car. Smart Money Magazine, MyCalculator, many other people in this field that have done, you know, the breakdown say that car leasing is the most expensive way to drive a vehicle.

In other words, it's the worst way, the dumbest possible thing you can do. So, Richard, your observation of your kiddos driving cars they can't afford that are ridiculous, they're not only doing that, but they're doing it in the most expensive way possible. So there's so much ridiculous going on in that conversation that it's unbelievable. So I don't know if you can get through to them or not, but if you can, you know, there's just lots and lots of evidence out there that a car we call it fleecing like you get fleeced like you got ripped off that's what you call fleecing you know if you ever hear somebody got fleeced that's like a sheep losing its hair

you know i mean you're losing its wool so you're getting fleeced you're losing it you're getting fleeced. You're losing it. You're losing your butt is what it amounts to. And it's a horrible method for driving a car. But it's less down and less a month, and that's all people care about. Broke people ask how much down and how much a month. Rich people ask how much. When you quit asking how much and you ask how much down how much a month, you're going to payment the rest of your life. You're going to be broke the rest of your life.

This is the Dave Ramsey Show. Thank you. Our scripture of the day is John 16, 33. I've said these things to you that in me you may have peace. In the world you will have tribulation, but take heart, I have overcome the world. Harvey Firestone said, the way of the pioneer is always rough. Yeah, but you know what? There's always freedom there, too. It's rough, but it's worth it. Josh is on the line.

Josh is in Atlanta. Hey, Josh, welcome to the Dave Ramsey Show. Hey, Dave. Thanks for taking my call, man. Sure. What's up? So I'm 34 years old today. Congratulations.

Happy birthday. Thank you. My birthday present to myself was I paid my final debt off last week, so I'm completely debt-free now. Yay! Hey, and I'm looking at what to do next. So I sat down to do my every dollar budget for January. Good. And the number of options I had to fill the almost $1,200 I'd go in my debt snowball just kind of threw me for a loop. And I'm kind of looking to get some advice on what the next step should be

now that I'm debt-free and looking to move forward and stay debt-free for the rest of my life. Good for you. Well, the first thing you need to do is continue through the baby steps. And baby step number three is to build an emergency fund of three to six months of expenses. So whatever monies you can squeeze out of your budget, that $1,200 a month, etc., that's what you're going to want to do with it, is go ahead and build that three to six months of expenses. As far as the every dollar budget goes, anytime you're using budget forms,

whether it's our online budgeting app, which you're talking about there, or the budget forms in the back of the book, no one but God has enough money to put something in every blank. So you're not trying to put something in every blank. The blanks are there just to remind you of what you may want to do here or there. And so you don't have to break every dollar down into, you just want to give every dollar a name. All you want to do is be intentional with every dollar of your income. But you don't have to fill up every possible savings category

or spending category or everything else. It's impossible to do that. Those are there to remind you what you might be doing so you don't forget something and then it messes up your budget the next month, right? Right. So it's not so much having to fill every blank. It's just making sure the blanks that matter most get filled first. The ones that you care about most.

And really, the next one you should care about is getting the emergency fund done, the three to six months of expenses. Go ahead and stay with those baby steps that we teach. Baby step one is $1,000 saved. Baby step two is your debt snowball paying off all your debts, which you've done. Congratulations. And that brings you to baby step three, three to six months of expenses. When you finish that, then you'll start your retirement savings at 15% going into retirement.

And then past that, we'll start saving for kids' college if that applies. Past that, we pay off the house early. And then that leaves us only Baby Step 7, which has become very wealthy and be outrageously generous along the way. Chad is in Sioux City, Iowa. Hi, Chad. Merry Christmas. Hi. Hi.

Merry Christmas. Thanks for taking my call, Dave. Sure. What's up? Hey, so we've potentially got a chance to be debt-free. And so right now we've got a vehicle loan, which is around $9,000 left to pay off. We've got a house loan that has got about $25,000 left to pay off. And we've got about $55,000 left to pay off, and we've got about $55,000 in savings.

And the other thing is we've got our other vehicle is probably on its last legs, so we're expecting to replace that within the next probably 12 to 18 months. So I guess the question is, should we pay off the vehicle and then pay off the house, or is there any advantages to keeping the house? Both have about 2.5% interest rates on them right now. So I guess that's the question. Should we just pay all the debt off and be debt-free right now, or should we wait on the house loan? Do you want to keep debt your whole life?

No. Why not? Do I want to keep debt your whole life? No. Why not? Do I want to keep debt my whole life? Yeah. No, I don't want to stay in debt my whole life. Why not? Because I want to have freedom, financial freedom. All right.

Is there any reason to wait to have financial freedom? Hello? I suppose, yeah. No, I don't. I suppose not, I guess. Yeah. I mean, it's inconsistent with the goal of I don't want to keep debt my whole life. It's inconsistent with the goal that you have debt when you have the money in the bank to pay it off.

So I'd write a check today and be debt-free. Okay. Because it's consistent with what your goals are. And if you want to stay in debt, then you don't need to follow the Dave Ramsey stuff, right? I mean, and you don't, you know, if you like 2.5%, I love 2.5%. I'm going to keep as much of that as I can keep. Then you wouldn't pay off the debt, and you're going to plan to stay in debt at 2.5% the rest of your life because it's awesome. Right?

But that's not you. Right. You think 2.5% is cool, but it ain't awesome. It ain't awesome enough to keep it the rest of your life, so let's go ahead and get rid of it now. Does that make sense? Yeah, that makes perfect sense. Okay, so let's see. 9 and 25 puts me at 34.

From 55 leaves me 19 in the bank. What's your household income? Probably around 120 a year. So with no payments at all, which by the end of the day is where you are, how fast can you save up and pay cash for the car that you need to move up? If you leave the 19 alone as your emergency fund. Yeah, I could probably, probably within a year, could probably save up and off for a car. Yeah, or less, depending on how expensive a car you're buying.

So is that okay? Does that work? Yeah, no, I think that works. Yeah, so let's get $20,000 as your emergency fund, Mark, and let's pay off everything else. Boom, we are done. And then we're going to start saving for the car beyond the emergency fund. And when that's done, then let's start making sure we're putting money aside for retirement, 15% of your income towards retirement. And by the way, making what you make, which is double the national average, in excess of double the national average of household income. At your age, if you save 15% of your household income,

by the time you retire at 65 to 70, you will be a multi-millionaire. If you do that in good growth stock mutual funds in your 401k and your Roth IRAs, the way we teach. The stuff we teach leads you to being millionaires and multi-millionaires. And people are doing it all the time. But it takes a while. I mean, you're young yet. You've got a ways to do this.

But you can do it. You can absolutely do it. And I highly, highly recommend it. So, hey, thanks for the call. Congratulations on being debt-free. And Merry Christmas. Steve is with us. Steve's in Nebraska.

How can I help, Steve? Well, Dave, I'm glad you're taking my call. I have a question on retirement. Actually, it's my wife's retirement. She has settled. We have to choose a settlement option for her pension that's available to us. Is there a lump sum option? The lump sum option, there is, but it's almost nonexistent

because if you take the lump sum, it's about $150,000. And with her income, if she keeps it in a pension, for instance... Okay, you're not talking directly into your phone. I can't hear you. Okay. Yes, I do have a lump sum, but they keep that so low that nobody will take it because it's such a small amount. No, that's not true. That's not true. The lump sum is calculated based on pension regulations.

And the pension regulations state that everything is calculated around a 5% or 6% interest rate. And so it's the net present value of the stream of payments with her estimated death date. It's a calculated thing. It's not a punitive thing where they're trying to fix the game. And here's the deal. When she dies, the money's gone forever. Well, that's what we have to choose.

Yeah, so I'm going to choose to keep the money after she dies, and that's called the lump sum. And I'm going to do a direct transfer rollover. You'll end up with more money during your life if you invest that in mutual funds, and you'll end up with a lot more money, which is any more money than you would get otherwise, at death. Well, we could choose to pay the second to die as well. Yeah, but the math doesn't work. You can do whatever you want to do, Steve,

but the math says that during life, if you invest the $150 in good mutual funds, it'll make you more than you're going to be getting while you're alive, and an infinite amount more upon death, because the $150 is still there, plus whatever growth has been on it that you didn't pull off. So I'm always about to lump sum. I get it out of their control, get it in my control, and I'll make a lot more with it. That puts this hour of the Dave Ramsey Show in the books.

We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Thanks for making us the third largest talk radio show in the nation. You're one of 12 million weekly listeners on 575 stations. Find a station near you at DaveRamsey.com.