The Ramsey Show - App - Do You Have What It Takes To Get Out of Debt? (Hour 1)

Episode Date: March 8, 2023

Dave Ramsey & Jade Warshaw answer your questions and discuss: "Should I try house hacking?"  Dave and Jade walk through the 7 Baby Steps and ask if you have the motivation to do what it takes to get out of debt, from the blog: What Are the Baby Steps? "How does gift tax work?" from the blog: What Is the 2022 Gift Tax Limit? How to use retirement funds. Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Take our FREE 3 minute assessment: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Live from the headquarters of Ramsey Solutions, broadcasting from the pods, moving, and storage studios, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. Jade Warshaw, Ramsey personality Personality is my co-host today. We're going to be talking to you about your life and your money. It is a free call. The phone number is 888-825-5225.

That's 888-825-5225. Caesar starts this hour in Chicago. Hi, Caesar. How are you? I'm doing great. You know what? That's Cesar. Is it C Chicago. Hi, Caesar. How are you? I'm doing great. You know what? That's Cesar. Is it Cesar or Caesar?

Caesar. It is Caesar. Like Julius Caesar. Got it. Okay. I did not mess it up. Good. How can I help?

Thank you so much. Yeah, I'm 26 years old, tuned in from Chicago. I have approximately $100,000 in my savings. I have approximately $60,000 in mutual funds that it's parked in a Roth IRA, Roth 401k. And I feel like I have a lot of options. There's a lot of pressure to buy. I'm thinking about buying the building. And it's putting a lot of pressure on me, but it's a lot of options. I really don't know what to do at the moment.

And I would like your advice about my situation. Do you have any debt? Zero debt. Zero debt. Way to go. Are you married? I am not married. Why hasn't some woman snapped you up?

I know. That's right. No, there's a woman. Trust me. You see? Yeah. Man, you're killing it. Way to go. Very good. You're killing it why are you good you're killing it why are you going proud of you so is your person is your personal residence paid off as well

or are you a buyer yet i am renting at the moment in chicago and this is my situation for renting it's a two-bedroom it's a thousand dollars a month, and I'm splitting it with a roommate, five hundred dollars each. Wow. Stole that. So you're not in a hurry to get out of that. No, that's a deal. I know. So what's the deal? I assume they're not shooting down the street, are they? No, no, they're not actually. They're not shooting down the street. So what exactly is your question? Like, what are you hoping to get from this call? Okay. There's a general question and a specific question.

I'm feeling a lot of pressure to buy my own building, a multifamily unit home, and to move into that. Who is pressuring you? You know, that's a great question. It is. In Chicago, it's like the thing to do you know like well among 27 year olds is the thing to do but that doesn't mean that's smart yeah so i mean dude you you have really good instincts you have really good skills

you are so far ahead of normal normal sucks is, is broke, has no money. I mean, you got some money piled up. You've done a great job. Way to go. If you want to buy a condo to live in, that's fine. But don't buy it because the society that's stupid thinks you should. Okay. You got to buy it because you looked at it and you said, I like these numbers. I mean, you're the guy living in a $500 rental situation in Chicago.

You're that guy. Score. You're the smart guy. I know, right? You're the smart guy. Be listening to him. He's got more going on. So if you want to go buy you a condo, that's great.

You've got $100,000 to put down, or you need to set back an emergency fund of three to six months of expenses and set back anything else you need to purchase. If you're thinking about buying a car, you're thinking about buying whatever so that you don't go into debt for the future items. But after that, the rest of that money is your down payment on a condo or whatever if you want to buy something. But when you say buy a building, you know what I'm hearing?

You've been reading real estate investment crap on Tic Tac. That's what it sounds like no it's that my grandfather owns a multi-family home a lot of people in my circle you know a lot of a lot of them uh the older generation owns a multi-family home so i was thinking why don't i house pack get a renter on the top floor live on the first floor and rent out the basement. That's not a bad idea, but you should do it because as you looked at it, you thought, A, that's how I want to live because the great news is your tenants are attached to you. The bad news is your tenants are attached to you. Exactly.

They're going to be knocking on the door at 2 a.m. if they don't like something, unless you really set some real clear boundaries. It's very difficult to manage a multifamily that you live in from a boundaries perspective. So if you want to do that, that's fine. There's nothing wrong with that. But there's nothing that says if you don't do that, that you're stupid, because you ain't stupid, dude. I know that's right.

People need to be listening to you instead of you listening to what they're saying. So if you want to take 75,000 bucks, what do you make? So I make approximately 75,000 a year through my full-time job, and I also own a business. And what does it make? I'm combining the income from both.

Oh, so you make 75, including owning a business, not also. Including a business not also okay so if you want to take 75 000 of the 100 leave 25 for an emergency fund and you know you continue out of your monthly budget doing investing into your retirement plan at your workplace then uh and you want to go buy your multifamily live on the main floor there's nothing wrong with that's not a bad plan at all but this idea that somehow you know i i don't i here's here's a good rule of thumb okay whatever everyone else in america is doing do the opposite and you'll probably have some money true that now can i play devil's advocate here why because i'm sitting here thinking

well here's my thought i'm like okay if he was buying a personal residence and he knows that he can afford it without a rent without any rentals you know just on his own great but if he's buying this building that's more expensive and he's depending on the rent coming in should he not pay cash for this property no no it wouldn't matter if it's your residence and you're going to take out a mortgage as long as you can pay the payments and if you have to have the rent to pay the payments no that's what i want that's what my thing with caesar i want to make sure he doesn't need the rent from the other people living upstairs or downstairs you don't go buy something that you can't if your renters all don't pay you can't be up a creek right so he's got to you got to be able to afford this regardless if you have renters, Cesar.

That's just a little thought there. That'll keep you. Because when you have an empty apartment and you have to make payments, you become desperate. And when you become desperate, right after that you get stupid, and that's when you put the wrong tenant in and you create a bigger mess than an empty apartment created. That's true.

And so if you don't have to make the payments if you don't have to have somebody to stay alive right you know inside the inside the unit there then you make better decisions on who goes in to the unit well he's got his family but i'm also thinking your family is also the ones that is like hey this month's a little tight give me till next month so there's just a little there's a little tight. Give me till next month. So there's just a little stuff there that he might need to consider before going in. Absolutely, absolutely. But overall, do it because it's the lifestyle

you wanna live. I wanna live on the first floor. I'm willing to do that at this phase of my life. I'm willing to deal with tenants next door. I'm not doing this because my grandpa did it. Right, yeah. I'm not doing this because my grandpa did it right yeah i'm not doing this because i saw it on tic tac that's we're not doing that and um you know until we arrived on the tic tac scene about a month ago you could pretty well say that whatever was said on there was

useless garbage we're trying to displace it with some wisdom so i've had a few things posted on there that did 10 20 million views and that kind of stuff. Thank you guys, I guess. I think I should thank you. Yes, thank the people because they're making the views go. Yeah, well, I mean, we've got to put something good on there to try to redeem

the platform. But yeah, it's more full of get-rich-quick crap than anything I've seen since Midnight Cable. This is The Ramsey Show. Thank you to our audience. You're apparently telling other people that we're here. Thank you.

Our numbers are going up in every format from youtube to podcast to radio thank you thank you thank you we appreciate that uh we know it didn't come up come from anywhere but you because we do not spend 300 million dollars on marketing like sofi instead we just actually help people instead of screwing them and um then you go tell other people so thank you for that if you're new you're one of those new people coming around, you're trying to figure out all this lingo around the Ramsey thing, where all the baby steps and debt snowballs and all this stuff, you can go to RamseySolutions.com and click on the Get Started button.

We'll help you figure out the next best step in your financial journey. It's completely free to do that, and we'll walk you through. And what's become famous around Ramsey was because many, many years ago, decades ago, people came to me and they said, what do you do first? Do you do retirement first, or do I do kids' college first? That's very important. Do I have an emergency fund first? That's really important. I need to get rid of this stupid credit card debt. It's 22%. That's very important. Where do I start? And what we did at the time many years ago was we laid it out and then we adjusted it a couple times in the early days we only adjusted it in

25 years but we laid out what to do first what to do second and we call them the baby steps because if you eat it if you want to eat an elephant you do it a bite at a time so if you want to get control of your money you do it a step at a time baby steps baby step one is you save a thousand dollars quickly little starter emergency fund once you've done that and some of you just have that money you just name it that just now you've already did baby step one you just reset that money in your mind over to the side that's baby step one baby step two is you pay off all of your debt except your home using the debt snowball the debt snowball is where you list your debts smallest to largest

pay minimum payments on everything but the little one you attack the little one with a vengeance you're not going on vacation you're in debt you're broke you're not going out to eat you're in debt you're broke you work all the time you're in debt you broke. There's a great place to go when you're broke. To work. Okay? This is what you do. And you bust your butt. And it's scorched earth. No lifestyle.

No nothing. You sell so much stuff the kids think they're next. You name the dog eBay and the cat Craigslist. Everything's going out the door. We're getting this mess cleaned up. We're sick and tired of being sick and tired people that do it with that intensity get out of debt in an average of about 18 to 24 months now average means that some of you have half a million dollars of student loan debt like jay did took her

seven years okay and then average means some of you have five thousand dollars in debt and ten thousand dollars in your bank account when you heard me rant and you just went and paid it off now you're debt free took you 13 seconds okay but the average is000 in your bank account when you heard me rant and you just went and paid it off. Now you're debt free. Took you 13 seconds. Okay. But the average is 18 to 24 months. Then when you finish that with the same level of intensity, you continue. We call this gazelle intensity, the gazelle running from the cheetah for its life. When you get out of debt, you finish baby step three with the gazelle intensity and that's three to six months of expenses then we turn off the intensity and we move from intensity to intentionality and we do baby steps four five and six simultaneously that's 15 of your income

going into retirement that's what's going to make you a baby steps millionaire in about 12 years following this plan you're going to put money into kids college if that's applicable and you didn't sell them off number baby step six is any other money we can find in the budget we're going to throw at the house and the average person paying off their house following these baby steps is doing it we've been doing this for 30 years is doing it in about in about 10.2 years in our baby steps millionaires study we did of millionaires, some of them had followed our stuff, some of them hadn't. They were doing it in about 11 years.

Wow. But the point is there's an intensity for that first three steps to get out of debt and get your emergency fund in place because until you do that, you're broke. And you're walking around in a culture strutting around like you got some money. You got no money. Shut up. You're broke. Quit acting like you're walking around in a culture strutting around like you've got some money. You've got no money. Shut up. You're broke. Quit acting like you're something.

You're broke. And this putting on the crap has got to stop. And, Jade, you've been hearing this thing in Baby Step 2 where people are struggling with motivation. Yeah. You know, I get it all the time, Dave. They go in my DMs, direct message, even in our Financial Peace University class, I get the same question, which is, Jade, you guys did this for seven and a half to eight years. How do you stay motivated? And, you know, at first, Dave, I would kind of give like the nice

answer, like, well, you got to connect to your why and all of this. And I really got to thinking about it. I was talking to Sam about it. And the more people ask me, it kind of frustrates me because there's gotta be no other option. Y'all don't get Jade frustrated, okay? There's gotta, when Sam and I were getting out of debt, there was no option to not do it. It's a must. I have to.

My life will never be what I need it to be, what it should be, what God wants it to be if I don't do this. So this idea that, well, maybe I'll do it and maybe I won't, that cannot exist. It's not an intellectual exercise. It's not an exercise. You've got to... It's an emotional, visceral decision.

Yes, I must. It's got to... And nobody can do that for you. You listen to this show or you come to a live event and and we'll light that match for you but you've gotta like stoke your own flame my buddy uh lucas did a talk about this he said um you could be a spark or you can be a flame and you can tell the difference by when the wind blows if you're a spark the wind blows immediately you go out just like that but if you're a flame when the wind blows you get you

get bigger you get more aggressive you get larger and more fierce and and if you're talking to me and you're asking me how can i stay more motivated i'm sorry to tell you you're a spark you're just you're just a little fluttering spark and you've got to do what it takes just called you people name she called you a little spark you're just a little spark. Just a little spark. A little wimpy spark. And the moment the wind blows, man, the minute you have to dip into your emergency fund, the minute something happens, you're ready to go, well, I don't know if I want to do it. I don't know if it's worth it to me. I tried that Ramsey stuff.

It doesn't work. What do you mean? What do you mean you don't know if it's worth it to you? Do you want to change your life or not? It's that simple. If you're waiting to feel motivated you will be waiting forever because that is completely mythological motivation is not an external substance no it doesn't come from out there to take you in here yeah and you know one

of the things i've kind of run into this over the years me teaching it to the same frustration blake thompson our old producer he now runs all of Ramsey Networks. Yeah. He used to do these comedy bits and he created this comedy bit that we would play on the air called Detanol. And it was a pill you could take that would get you out of debt. If you just took this pill, you'd be out of debt. And that's what everybody's looking for. They're looking for a magic pill.

You know, I was wandering in the vitamin aisle and I ran into one of my pastor friends who's kind of loud and he yells down the aisle ramsey there's no pill on there's gonna help you you gotta eat less so good it's so true y'all want the magic pill that's gonna magically make this easy it ain't gonna be easy it doesn't exist let me tell you what easy is easy is when you finish easy is when you finish it gets easier but let me tell you this i mean there's other side of that where people go man this is hard right paying off dead hard working is hard but you wish learn to do hard but can i just say it's also what is also hard is not being able to afford groceries man that's hard that's hard when you look up and you don't have the money to take care of your kids you don't have the money to spend the gas to go visit a loved one in the hospital i'm talking about myself

that that was hard that's hard to stomach because that reflects back on you and you go oh my god i've been an idiot with money and in comparison just saying in comparison it's easier to sacrifice to win so that you don't have to endure those other things. You live like no one else so that later you can live and give like no one else. No discipline seems pleasant at the time, the Bible says, but it yields a harvest of righteousness. Listen, you're going to pay a price. You're going to pay a price. You're going to pay a price of mediocrity throughout the whole scope of your life, and your life's going to suck perpetually. Yeah, because the time's going to pass regardless. You're still waiting on the government to fix your life. That's humorous.

And, you know, so you're either going to live a life of mediocrity because you half but do stuff or you're going to pay a price for a short period of time and you're going to light yourself on fire and be a flame, not a spark. I love that. That's a good line. I like this. And a lot of you are going to look up, you know, Dave said the stats on getting through baby step two. Most people who get through baby step one through three, it's two and a half to three years. That sounds a lot like a lot when you just say it. But man, that is just a drop in the bucket over time.

And some of you who've been kicking your student loan can down the road for three years, you could have been done and finished. You could have been done. And. You could have been done. And let me tell you something. I think she just was shamed you. When this thing kicks back up, you are going to regret it. Start today. Yeah.

Start today. So where does it come from? It comes in believing the best way to live your life is free and it's worth paying the price to get there. That'll give you the motivation. Sure will. I want to change my family tree. I want to look in my kids' eyes and have a different set of values.

A godly man leaves an inheritance to his children's children. Amen. So James Childs, our producer here on The Ramsey Show, has a boss. His boss is named Blake Thompson. He likes to brown-nose his his boss and so he dug up the old death and all clip during the commercial break and um so we'll um you know the the death and all if you didn't catch it uh it is the the only way that you can get out of debt by taking a pill all right here we go nationally syndicated talk radio host dave Ramsey has often said that there is no magic pill for

getting out of debt well sorry Mr. Ramsey but there is and it's called Detanol Detanol is a 100% all-natural drug that is guaranteed to control your spending and control your desire to overspend one pill a day and you will no longer feel the need to spend money you don't have. We have created this drug because we care about you. Detanol, the pill that cares. Minor side effects may include fatigue, headache, nervousness, sore throat, explosive diarrhea, insomnia, drowsiness. Okay, stay awake. Horrible nightmares. Oh!

Gastronomical trauma. Oh, my! Hallucinations. That rabbit just said my name. Chronic halitosis. Woo! A slight cough and a runny nose. Detonol.

Brought to you by the Credit Card Association of America. Credit. The easy way out. Oh, wow. This show has changed a lot. I mean, that's a 20-year-old bit. Not bad. It's still funny.

Not bad. I found it to be funny. He did some others that would get you canceled. That one's passable, though. All right, here we go. Jade Warshaw, Ramsey personality, is my co-host today. In the lobby of Ramsey Solutions on the debt-free stage. Omar and Angela are with us. Hey, guys, how are you?

Hi. Doing well, doing well. How are you? Better than we deserve. Where do you guys live? Up the street in Nashville, Tennessee. Oh, just right here. Oh, yeah.

Well, welcome, neighbor. Good to have you. And how much debt have you guys paid off? We paid off $175,540.61. Phenomenal. How long did this take? 20 months. Whoa! And your range of income during that time? $540.61. Phenomenal. How long did this take? 20 months. Whoa.

And your range of income during that time? During that time, it went from $158,000 to $245,000. Wow. In 20 months, somebody get a job? That would be Angela. Okay. Excellent. What do you guys do for a living?

I'm an in-house attorney for a wealth management firm. And I'm a project manager for a consulting firm. Wow. Both of you are killing it. What great income. So what kind of debt was this? $176,000. Oh, law school. There was some law school debt. Two grad schools. Two grad schools, law school. And a couple of credit cards and a balance on a car. Okay. Very cool. All right. So tell us your story. How did you get started on this Ramsey stuff? And why 20 months ago? So we've been married now for two years, and there'll be three months actually as of four days ago. And this journey started

actually when we got engaged in November of 2019. Little did we know how much the world would change a couple months later. But for me personally, nothing will have you take a really deep look into your life and your finances and in fact, every other aspect of your life until you decide you're going to get married. And so I took a deep dive into my finances, took a strong look at sort of what I had left. And thankfully, my brother had taken FPU. My dad has hosted two sessions at his church down in Florida. So I was pretty familiar with you, Dave. And what I decided to do was to take your steps on a test run with my personal finances before we got married. And in about eight months, I paid off about 75% of the debt that I had before we got married. It works. It absolutely worked. Got on the budgeting app. You worked. Yeah,

it absolutely worked. And so before we got married, we had a deep, you know, one of several deep financial talks and let her know that this is a path I really wanted us to go on. And she tepidly accepted. So Angela, how did that change? How did you, what was that journey like to get on board with that yeah so i'm marrying a crazy man so i mean we got married december 4th 2020 and that same month we started our budget you know to aggressively pay off our debt and initially i was you know in a transition of my career i was gonna make more money so i'm like are you really gonna like start tightening you know our belts and so it was once i started seeing those balances go down,

and I was like, oh, okay, we would have these like check-ins with each other. And he's like, this is how much we paid in the last couple months. I'm like, oh, okay. You know, so that was motivating that debt snowball of just seeing the debt go away. And as our income grew, thinking about like what we could do for ourselves, for family for our future you know so just seeing that debt go down just really motivated me so the psychology aspect of the debt snowball really does work oh yeah it really does yeah every month when we just checked in I was like oh my gosh I can't believe you did that yeah pretty amazing yeah so you get married right off the back end of the COVID mess well the beginnings of that depends on who you are is off the back end of the COVID mess.

Well, the beginnings, it depends on who you are. Some people are still in it. But yeah, but I mean, December, after the world shut down in March, April, right? And so, wow, what a time. And then in the midst of that, you're still paying off all this debt. 75,000 you knocked out, Omar. I mean, that's pretty incredible. Then you get married, and and then it's game on and you start to see the results and just turned up the heat even more absolutely absolutely I mean in some ways COVID was a mixed blessing because I had nothing to do so it was very easy to budget my entertainment budget was

a close to zero as as you're close to zero as you could possibly get it so eating out the eating out thing was not a problem there was no place to go not at all not at all learn to become a good cook and you took advantage of the student loan pause i'm guessing oh absolutely i mean it was the only i mean it was real it was tangible and it just made that balance just go down so much faster and it was motivating to say the least very cool say something to the people who are waiting say something to the folks who are like hey i'm taking advantage of the the no payments. I can put that back in my, you know, the nerdy law student in me, I listened to the arguments of the Supreme Court just last week and it's not looking good. And I'm thankful that we made decisions that whatever happens up in Washington, up on those court steps

doesn't really affect us. There you go. They're not in control of my life now i love that so true so true you guys are a power couple man i mean no question i feel it through the glass it's great all right so now your brother taught financial peace university your dad did it a couple of times at the church back in florida she kind of knew it was hovering out there but now you walked in it both of you yes and have experienced this as a married couple. Tell folks if they want to pay off $176,000 in 20 months, what is the secret to getting out of debt? Well, I'm sure we definitely have opinions. My personal one is you have to tell your money where to go. I still use the EveryDollar app to this day because we still have goals moving forward. And if you don't have control of your money, your money is going to take control of you. And you have to stay focused

and you can't get distracted. There were so many times where we'd be like, oh, we could do this or that or someone has some other advice and was like, nope, this is what we're going to do until that balance is zero, we're not doing anything else. So you just have to stay focused.

Don't pay attention to any of those distractions. It was sacrifice, wasn't it? Yeah. It was hard, wasn't it? Yeah. Was it worth it? It was so worth it. Absolutely. it was so worth it absolutely will you go back in debt oh no never again silly rabbit tricks are for kids yeah way to go you guys way to go y'all are you're amazing very very proud of you who was your biggest cheerleaders i I bet dad and brother. Oh, yeah. They were very good. Her parents were wonderful.

And then we have our friends, Charlotte and Jeff. They actually started FPU on their honeymoon. Way to go. Oh, that's romantic. Not. Okay. Yeah. Cool.

Way to go, guys. So good. Very fun. Very fun. Hey, we've got the Live and Give bundle for you. The Baby Steps Millionaires book, which you're probably there or about to be there soon. guys very fun very fun hey we've got the live and give bundle for you the uh baby steps millionaires book which you're probably there or about to be there soon at the way you're going with this income and this this level of focus excellently uh total money makeover book for you to give away

financial peace university membership for you to give away so you can live some of it you can give some of it that's why we call it the live and give Proud of you guys. Thank you. Well done. Well done. You're heroes. Omar and Angela Nashville, $176,000 paid off in 20 months, making $158,000 to $245,000. Count it down. Let's hear a debt-free scream. All right. Three, two, one.

We are debt-free. We are debt-free. Yeah! $176,000. We're approaching $5 million already paid off on debt-free screams, and it's still early in the year. That's for this year alone. This is The Ramsey Show.

Welcome to The Ramsey Show. Jade Warshaw, Ramsey personality, is my co-host today. A lot of you got questions about taxes. One of our listeners wrote this in. Dave, I gave a car to a family in my town, and I'm worried how that affects my taxes and their taxes. I don't want either of us to pay penalties or some crazy fees. Well, good for you generosity i like that sounds like you're living and giving like no one else for 2022 if you give gifts worth 16 000

or less individual to individual you can do that without paying any taxes amount goes up to 17 000 in 2023 the lifetime gift limit is $12 million. That's your estate tax exemption amount. And the person you gave the gift to doesn't have to pay the gift tax. But if the value is more than $16,000, the gift tax on the amount above $16,000 would be 18 to 40% of the gift's value and although some gifts are tax exempt that's not the case here so here's the thing i'm gonna bet good money that that car that you gave away was not over sixteen thousand dollars so you got no gift tax don't worry about it you don't have to file anything they don't have to file anything an individual can give an individual without filing a thing up to sixteen thousand dollars last year well Well, I gave them $32,000. Okay, well, then write a letter and have them sign it if you are married

or if they are married that says you gave half a car to the wife and half a car to the husband and have them sign that that is the agreement. You're still under $16,000 per individual. Moms and dads that want to give grown kids money because you've got too much money, you don't know what to do with it, you could actually give $64,000. So mom gives daughter-in-law $16,000 and son $16,000. Dad gives daughter-in-law $16,000 and son $16,000. Oh, wow.

Four different checks, all $16,000. You're still under 16 000 individual to individual and that is not married couples are not individuals uh when it are there a couple is not a unit it's two people in there still in terms of the way the tax law looks at it so best thing you can do is work with a tax pro that's up to date on the latest tax code head to ramsey solutions.com slash tax pro we'll get you connected with someone who's Ramsey-trusted to do your taxes if you have a complicated return. And check SmartTax at RamseySolutions.com if you don't have a complicated return,

and we'll help you with a very easy piece of software, very inexpensive to file your taxes. You've got to love it. Matthew's in Columbus, Ohio. Hey, Matthew, welcome to the Ramsey Show. Thanks. How are you? Better than I deserve. Matthew's in Columbus, Ohio. Hey, Matthew, welcome to the Ramsey Show. Thanks. How are you? Better than I deserve.

What's up in your world? Yeah, so I just switched roles to another organization that is a state-run agency. And so 10% of my paycheck automatically goes to the state retirement fund. And then, so I was wondering, I have an option to do a 403B or a 457B, both pre-tax or Roth. Should I put the 5% in one or both of those funds? Should I put them in just a Roth? I would put it in an individual Roth IRA. Okay. Get a broker. Go to RamseySolutions.com, click on SmartVestor, and just do you an individual Roth, because you've got more control and more options than the 403B.

If you don't do that, do the 403B. 457 is just deferred comp. That's a different program. The 10% is mandatory, mandatory i take it in your state yes do you have any control on what it's invested in um i can do so there's three options on that side i can do an alternative where i can put them into i can put them into the funds that i want per se i mean they thought of selected funds funds or a traditional pension or a deferred contribution, which I think I also get to select from a variety of funds. A. You picked A, not B or C. You picked the mutual funds.

Okay. And what you're looking for, we suggest you spread across four types. Yeah, growth, growth and income, aggressive growth, and international is what you're looking for. 25% into each one. Now, when are you vested in the estate? When do you have that as your own, that you own it? If you left, you could roll it? If I go to A, it's automatic.

And they match, they give us a, it's supposed to be a 14% match if I went with BRC, but because of the agreement with the state retirement fund company, I get only like 11%, so it's 10 plus 11 that would be added to my fund. Perfect. Do A. That way you own it and you control it. That increases your chances of your probability of becoming wealthy far beyond some state-managed crap okay hey well done man very good good call good question thank you for joining us open phones at 888-825-5225 tom's in toledo hey tom what's up

how you doing sir better than we deserve how can we? Very good. Hey, I'm almost 61 years old. I've been working all my life. My wife and I, we are debt-free except our house. Way to go. We have been that way for quite a while. Whatever God gives us, we try to be good stewards. But my question is this. I retired in 2009.

I've been double dipping. I went back to work for the state. I've got about, it looks like it's going to be about $250,000 come to maturity when I turn 65, a money market account, because of the state retirement. I owe about $150,000 on our house. We want to get it paid down to about $110,000 before I retire in 65. What would I do with that $250,000? Would I pay off the house or what would you suggest? Aside from that money market account, what's your net worth right now? We've got about $90,000 in a reserve fund, and then we've got our emergency fund of four months.

We've got a slush fund, a God fund, a utility fund. So I would say right now, uh, we, we would be at, uh, and then probably at 300 to 350,000. Okay. How much is in the slush fund is um right now six thousand dollars we have about sixteen hundred dollars of discretionary funds monthly um we're that's why i said we're going to be putting five to a thousand dollars extra a month against the house yeah when do you uh what what is the the money is it truly a money market account you don't have it invested in mutual funds. Well, that's what they call it. That's what O'Pierce calls it. Since I retired once already, I can't have a second retirement with them.

Can you not have it invested better than a money market account? Because a money market account is paying you 1%. Right. Yeah. No, I can't. I can't do it. I can't pull that money out. I mean, inside, they don't offer other investment options.

All the contributions. No, at the state. It's still stuck at the state, right? It's still stuck at the state, right? Yes. Okay. Do they not have other options other than just a money market that you can move it to inside the state program? No.

That's weird. I have deferred third comp but that is above and beyond that's different my contribution the my contribution is 10 percent and my employer's contribution is 14 percent just like the last guy we talked to yeah and so the the but the question is usually they have more than one option that you can have it parked in. To say it only has to be in money market is highly unusual. That's crazy. Like, I think you're wrong. It's that unusual. Okay.

I want you to see if you can get that invested better into some good mutual funds. Poke around, see if they have other options while it sits there. Because you've got five more years, right? Right, right. Okay, let's do that. And then let's take a bunch of that $90,000 and a bunch of your great income, and let's pay off your house in about a year yeah okay like 61 let's have it paid for you throw that big 90 000 account that's sitting there at it you only owe 150 that's 60 grand you got a slush fund you

scratch together some of the nickels out of the couch you start throwing your income out of your budget at it and let's get that thing knocked out. 1% on a money market. He could have put it in a high-yield savings account and done better than that. It's stuck in a retirement program. And some retirement programs, state-run, are dumber than a rock. That's horrible. I mean, you just never know. You never know.

So I don't know what they got. I don't know what the deal is. But even the stupid ones have more than one option, usually. So I'd look at it. I really would. But let's just try to take that 90 and half the house. Yeah. That's the thing.

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