The Ramsey Show - App - Does an Income Gap Matter When Dating? (Hour 2)

Episode Date: February 25, 2021

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. Dr. John Deloney, Ramsey personality, is my co-host today. He's the guy that does the Dr. John Deloney Show, oddly enough. And it's a wonderful podcast that is exploding where we deal with your issues about life, relationships, mental health challenges, boundaries, family things. It's all woven in together. And guess what?

It's all woven in together here on the Ramsey Show as well and always has been for the last 30 years. So it's perfect that he's here to help. The phone number here is 888-825-5225. If you've got questions for Dr. John and or me, we will definitely both jump in. 888-825-5225. Mark's with us in Seattle. Hey, Mark, how are you? Hey, good, gentlemen.

How are you guys doing? Great, man. What's up? First off, just wanted to give you guys thanks for everything that you guys do. My parents are big Ramseers. They went through your class through church and all that. They just kind of taught me everything, and I passed along my brother-in-laws who are big listeners,

and I'm sure they're even listening now. Just had a quick question for you. I'm going to be getting out of the military here soon, within the next year. We're on baby steps four and five right now. I have two kids and all that. I got about $15,000 in the savings. And when I get out, we're looking at moving back home to Florida, or home for us, back to Florida.

The question with that is, my wife is able to transfer. She's a government contractor. She makes between $20,000 and $25,000 a year. But I don't know what I'm going to do yet. And so we're trying to figure out when we go back to Florida if it would be smart for us to, you know, finally get the house that we wanted. We've been nothing but renters our entire life.

Finally get the house we want, or should we continue renting until I can find a nice steady job and basically go from there? You're not going to get the house you want with $25,000 a year income did you say she makes 25 grand a year or 125 25 25 grand a year we got about 15,000 in savings this is a little bitty house my man yeah i wouldn't even transfer just go get a job at starbucks make 25 grand okay yeah so no no you don't you don't have enough income to buy a house that you're going to be pleased with. Okay.

And so I have the GI Bill that I can... It doesn't matter. They don't give you houses. They don't qualify you for houses under the VA that you can't afford. Okay. Well, if I went that route, I'd be getting about $1,600 a month for the housing allowance, as well as me working either part-time if we go that route. Oh, wait a minute, wait a minute.

You're not talking about the GI Bill to buy a house. You're talking about you're going back to school. Yeah. Oh, and you want to take the stipend and do that on top of hers. No. You need to rent until you're out of school. Yeah. Rent until I'm out of school. Yeah. What are and you want to take the stipend and do that on top of hers? No. You need to rent until you're out of school. Yeah. Rent until I'm out of school.

Yeah. What are you going to study? Right now, I'm just working on my general associates. And then from there, I got a couple of different things I'm looking at. Possible looking at a nursing degree. My eyes are kind of open right now. I'm kind of getting out of the military earlier than I expected. So we're just kind of open to anything right now.

Thank you for your service. And you have this wonderful benefit to have education at your fingertips. Education with no game plan as to where it's going to take you is known as a waste of time. Okay. So you need to spend the next few months dialing in a detailed career path and game plan that then will tell you what kind of education you need to get. You may not need a four-year degree.

You may want to go into technology and get some Microsoft certs. I don't know. I don't know what you're going to do. You may want to go in the real estate business, in which case you don't need a four-year degree. You need a real estate license. I don't know what you're going to do. You may want to go in the real estate business, in which case you don't need a four-year degree. You need a real estate license. I don't know what you're going to do with your life, but you need to dial that in and don't just go to school because it's there.

That's going to take you nowhere. John's got a Ph.D. in higher education. Am I wrong? No, I do. And I've worked with veterans for years who they get out and then they come and they just start going to school and think they're going to figure it out on the way. And then you know those that

are dialed in. And there are a few students that you want in your class more than a dialed in veteran who knows what they're going after, has got a game plan. Thank goodness for this benefit that I think they fully deserve. But yeah, I'd rather see you go work for a year, go be a nurse's aid, go work in a hospital, go do something got a game plan thank goodness for this benefit that i think they fully deserve but yeah i'd rather see you go work for a year go be a nurse's aide go work in a hospital go do something and see

is this what i want to do don't want to dedicate the next four to six years of my life doing this you do not have to go straight into school out of the military okay in order to it does it does not invalidate your gi bill right and yeah the yeah, the only thing is trying to set up something. Like I said, I have the two kids and all that, so we're going to need that type of income coming in, and her salary isn't going to really cut it. That's right. Exactly.

That's what my point is. And so buying a house is down the road. The big thing in front of you is to you know you got you got one year so let's set some deadlines and say 90 days from today we will have spent enough time in prayer in discussion and reading and learning and uh visiting some people that are in different career fields that's right talking to rear you know reading everything ken coleman writes uh and learning about careers and where you're going to go to have dialed in. And then you say, I've got nine months to get prepared to start knocking out the things that are going to allow me to go be one of those after you've decided what one of those is.

Go do that. Be one of those. Then talk about buying a house. How many people over the years, Dave, have you talked to veterans who come in and they get that house buying quote-unquote benefit, then they find themselves stuck? I used to live, one of the colleges I worked at

was next to a base, and it just felt like there was a rotation. They got a stipend to live off base, and they just go buy a house, and then in two years, they're getting shipped out somewhere, getting sent out. Yeah, it's a rotation. They got a stipend to live off base, and they just go buy a house, and then in two years they're getting shipped out somewhere, getting sent out. Yeah, it's a mess. They had no money down, so they're upside down, upside down. Yep, they're stuck.

It just feels like people got stuck a lot. The VA loan, the sad thing is the VA loan for housing is supposed to be a nice benefit. Now, the education loan is a nice benefit, but the VA loan actually sucks. Oh, yeah. For two reasons. One is it's actually more expensive. It's a higher interest rate and higher fees, which is absolutely ridiculous. You would think that if you're going to give the veterans a benefit that it would be cheaper.

It would be better than everybody else. That's right. But it's not. So there you go. There's your veterans administration working for you. But then the second thing is they do have this zero down idea, which means the seller pays all the closing costs. You literally can walk in and sign the papers with not a dollar and buy a house. But you can never walk out that back door again.

Exactly. But then you owe 100% more than 100% by the time all the stuff's rolled into the thing of what the house is actually worth. You know how long it takes to get out of that? Five seven years before you got enough equity to sell it and break even and that yeah this is it's a nightmare it's a trap you know don't step there it's gonna rip your leg off and i know you want to come home get plugged in get a house get those kids everything stable just hang it there man hang in there, man. Hang in there. VA didn't mean for that to be a trap.

They were trying to be nice, but nothing down is not nice. Nothing down screws you over. And at a higher interest rate than you could have gotten if you'd put down a good down payment. So, no, you don't want that benefit. You're right. It's a trap! It's a trap!

This is the Ramsey Show. Your number one wealth-building tool is your income. For business owners, this comes as no surprise, as you're used to putting in extra hours and watching your bottom line. That's why Christian Healthcare Ministries, or CHM, is a great option for those who are faith-focused and budget-conscious. CHM is not health insurance. Rather, it's a health cost-sharing program. It's not harder, but it is different.

To learn if CHM is a fit for you or your business, visit chministries.org slash budget. Dr. John Deloney, Ramsey personality, is my co-host today. Thank you for joining us here on the Ramsey Show. The phone number is 888-825-5225. Well, folks, 2020 was crazy, and your 2020 taxes are going to be crazy. So first, you need to, you know, some of you got unemployment. Did you know that's taxable, by the way?

Yes, that's taxable income. Another big thing to keep in mind was remote working. If you left your resident state to work remotely from another state, you may have to pay taxes in two different states. How joyful is that? Come on, man. Wasn't always the case. It depends on the state you live in, depends on the state you worked in, and if you lived and worked in different states, you need to look into state taxes, and you need to know how this works. It's complicated. If you're unsure if 2020 has made your taxes different, take our tax quiz.

It's free. It'll tell you if your situation is simple enough to do with tax software or if you're better off hiring a pro. Text the word tax quiz to 33789, and you'll find out what your tax situation really looks like. We'll help guide you, and we can hook you up with the best, the Ramsey Smart Tax software or with one of the ELPs for taxes, the pros. Whatever we need to do to help you, we're going to help you. Text tax quiz, no spaces, to 33789.

And just so people know, that's the tax stuff I'm using for my taxes for my family. It's good stuff, man. Just like that. Charles is in Toledo. Hey, Charles, how are you? Hey, I am great. Glad that I found you on the radio. Well, thanks.

Sorry, on iHeart, actually. A friend of mine years ago introduced me to some of your methods, not to you. So that kind of slowed my progress down a lot. I could have been doing a lot more sooner, but I am 50, pretty much debt-free except for mortgage. And when I start putting in, it's a 0% mortgage. So it kind of doesn't make sense to really save a lot of money to skip the 401k to pay that off. Um, but I can do that. But so the point is, um, does the financial peace university or the Ramsey plus teach me how much of my money I can spend where, for example, I like to take my wife and kids out to dinner, but I don't know, I can't find online how much.

Am I allowed to allocate towards that per month? I'm a late saver. I only have about $20,000 in my Roth IRA at the moment. So I do want to put in as much as I can. In July, I'm eligible for a Roth 401k, but they will match 7%. So obviously, I want to do that. That's great. Well, budget percentages would change depending on your situation. If you're in what we call baby step two, meaning you're clearing off all your debts except your home, and I think that's where you said you are. You know, if you're already past baby step two, then, you know, yes, you can allocate some. You can lighten up your percentages and allocate some for fun, some for restaurants and vacations and those kinds of things.

If you are in the get out of debt mode, gazelle intensity and baby step two, the allocated percentage for restaurants is zero. The allocated percentage for vacation is zero while you work your way out of debt. And that's not like Dave Ramsey's punishing somebody like some of these idiots say on social media, but it's more like this is how you win. You have to pay a price to get out of debt. this is how you win right you have to pay a price to get out of debt it's how i won you have to pay a price to get out of debt it's not easy it's hard now but but as you go along yes there are some uh guidelines we've got some percentages

some of them are in the back of the different books in uh for instance total money makeover i think there's a percentage guidelines on the in the forms section in the back of the book the old analog forms i don't think there are percentages in every dollar if i remember in the budgeting app which is really what i recommend you use but if you're just looking for some guidelines there's's that. Now, one that is well known is we tell folks not to have more than 25% of your take-home pay going out in housing, your house payment. And so there you are. But, you know, what ends up happening is the percentages don't matter as much as every dollar that goes to one thing can't go to another. And once you start doing that with your spouse, then you come to an agreed amount for restaurants.

And so if you make $70,000 a year, the agreed amount for restaurants is not $700 a month because you can't hit your other goals. And you're going to make those decisions automatically when you're looking at it um but there's not a magic formula that says you know if you just limit your restaurants to this but but instead you start making wise decisions that everything every budget category is a trade-off putting money in one by definition means there's no money for the other

one and i like what rachel talks about is asking yourself that next layer, which is, why are you buying that? Are you buying another shirt? Do you have money in your clothing budget because you actually need new clothes? Great. Are you buying stuff, new clothes, because that's your addiction, right? Yeah. That is a way you're wallpapering over some other stuff you need to be dealing with. So I like to ask myself.

And the eating out thing is that. That's right. It's not for showing off for other people, but, you know, why are we eating out so much? Right. Is it because we don't like spending time at home? Is it because one of us doesn't want to cook or doesn't like to cook or we can't get to the store? Or is it just because at the end of the day we just. It's a form of entertainment.

That's right. You know, and so are we, you know, what's going on with that? Why are we doing that? Doug's with us in Tampa. Hey, Doug, welcome to the Ramsey Show. Hi, Mr. Ramsey. I'm Dr. John. I'm a little nervous, but here goes.

Okay. I met a wonderful woman a few months ago after moving down here from pittsburgh and um there's a large gap in our income where i'm about 60 000 and she makes about 175 000 um has a house that's valued at over 400 thousand dollars she sounds like a wonderful woman she is she is And she's listening at home working. And, you know, I've been down this road before in 2010, met somebody and married her. And nine months later, I was diagnosed with leukemia. However, in the meantime, we were trying to buy a house and i had no credit and in order to get approved for a mortgage um i had to take out credit cards long story short um three and a half years later she divorced me before my cancer treatments were over and i i i ended up uh moving into my own place. Wow. How can we best help you today, Doug?

Well, okay. Well, how do I, I see a future with this woman, but I've tried to convince her if she gives me $100,000, I'll give her 2% cash back. And she says, well, I won't have things. I'm so confused. Why would she give you $100,000? What are you talking about? For credit cards. She likes to use credit cards still.

Oh. And I'm saying, you know, when you talk about that. Yeah, the metaphor. I thought you just met a girl and were like, hey, babe, give me $100,000. Yeah, I was like, wow. No, no, no, no. Yeah, that's a problem. So, okay, here's the thing.

The number one cause of divorce in North America today is money fights and money problems. And John will tell you, and all good PhDs in psychology will tell you, you're not really fighting about money. You're really fighting about what's important to you, power. Control. Control, life, is stalled. Right. And she's not better than you because she makes more money than you. And you are not better than her because of Phil in the play.

Y'all got to come at this at equals. Who cares who's making the most money right now? Right. Or really what the past is. That's right. The past just makes you want to address it right which is a good thing but um if you can agree on your money principles and on your spending you are agreeing about your whole freaking life right because those things flow around it and and when you cannot then you you know you're stalled until you can and so i would

recommend you guys jump in you can jump in so I would recommend you guys jump in. You can jump in and go through Ramsey Plus, jump in there together, and start taking some of the classes together. It gives you a point of reference to talk through some of these things. And as this goes forward, you may want to do some pre-marriage counseling that will get you there as well. Don't marry someone that you're not on the same page with about money. This is The Ramsey Show.

We particularly love doing debt-free screams live in the lobby of Ramsey Solutions on the debt-free stage. We really love doing debt-free screams in the lobby on the debt-free stage when it's one of our own Ramsey team members and Kate Cameron is with us on the stage and half the dadgum building is out here to watch to cheer her on, to do her debt-free scream. There's hundreds of people out here. You a little nervous?

Yeah. We're up here doing a world-class radio show. There's about three people milling around out here. You walk up here and the's about three people milling around out here. You walk up here, and the whole place shuts down when it comes out here. A lot of support, that's for sure. Very cool. Very cool. How much debt you paid off, Kate?

$25,564. Cool. How long did this take? 12 months. 12 months. I will not ask your income because your peers are standing around, and that would be unfair. So what kind of debt was the $26,000? It was all student loans.

All right. Very cool. Very cool. Okay. So now you've been with us about what, three years? It'll be two next week. Okay. Yes.

All right. Two years. And you're in the Ramsey Education Department, meaning you work with the high schools and the K-12, right? Yes, I do. And what do you do there? So I talk with our teachers and administrators, and I get them to have our curriculum for the students. Yeah, be able to teach foundations and personal finance.

Exactly. Some of the 48% of the high schools in America that teach it. And it's all your fault. Well done. Yeah. Well done. So you've been here for two years years and it sounds like you've been working on this process about that period of time then so does the story have something to do with joining

us and so you're like oh i guess i better do this stuff yeah so um when i first moved down here i was really excited and a funny story you know i had my car break down before i moved down here from michigan so i was like, you know what? I love this job. I'm meant to be here. I know I am. So I moved into an apartment right next to the old building, actually. So I walked to work, walked to the grocery store for about three months.

And then I was really thankful. Like while I was saving up, I had my family friend just gift me a car. So it's just one of those things that things just work in your favor when you're following God, right? Yeah. And so after taking FPO, I was like, I really need to be doing this. I need to be doing it the right way. And so I finally decided after actually taking it twice to just say I'm going to be gazelle intense. So my 2020 goal was I'm debt free.

That's my 2020 goal. And you did it during the pandemic then? Yes. Of course, your pay didn't stop here. So that wasn't interrupted. But our lives were all turned upside down anyway. So how old are you? I'm 26.

Okay. So who were your biggest cheerleaders? Definitely my friends, my family, and of course, my team, as you can see. Yeah, absolutely. Cool. So mom and dad, where did you move from to move here? Mid-Michigan. Okay.

So, they're back home cheering you on then, huh? Yes. Yep. All right. Very cool. So, what was the hardest part of this? I mean, working in Ramsey's hard anyway because we work our butts off. Yeah.

And this stuff's, like, all over you. And then, you know, you're, like, smothered with it, right? Right. Well, I think the hardest part for me to even get started was I had a very, like, anxious money classroom as we teach from Rachel's book, right? And so I was so afraid to spend thousands of dollars paying off my student loan debt because I'm like, I need this money, right? I was used to a very, like, paycheck to paycheck kind of, you know, classroom, like that anxious classroom. And so it was after I went through FPU that I'm like, listen, I need to be doing this. I know I can do it.

I have a stable income. Like, there's no excuse. So I think the hardest part when I was actually in the journey was saying, like, I know I can do this. I'm going to do my discipline. God's going to provide and just continue to get excited about the process. So you were neck deep in it. And then we put everybody in the auditorium downstairs, COVID hits, and we said, okay,

here's what we're going to do. Everybody, we're going to start working from home. And if we don't keep revenues up, it's not going to go well. And leadership won't take pay first. But eventually, if we don't get revenue in this place, it's going to start costing people jobs. You know, I made that announcement. And you're sitting there pouring all your money onto debt and gave all your savings up. You had to be freaking out.

Yeah, a little bit. And I'm in a sales role. So, of course, that's always uncertainty. But I had faith in God and I was at the time working at like part-time for a catering company serving there. And of course with catering companies, it's usually like big events, weddings, that kind of thing. And so that ended too. So it was like, okay, one thing after another, but I found another job serving and bartending. And I was like, I'm going to put my work in, and God will provide.

And he did. And I'm really thankful to be here. And, of course, sales went down because the school administrators weren't there to buy curriculum from you. And then they came back up. Right. Yeah, so it's turned out okay by the end of the year. But it's been quite a roller coaster you went through emotionally while you did this. I'm so proud of you.

Thank you. That was tough. Yeah, and you're coming to work every day. Your job was to talk to people who were completely frazzled all day long, too. And I talk a lot about secondary traumatic stress. You experienced that. Tell me about that. Yeah, daily I would have teachers be like, I don't even know what's going on.

I don't know about curriculum. I don't know about anything. And I'm like, okay, we're going to make it through, guys. I promise it'll be okay. One way or another, we're going to get these students through. So every day, every week, you are talking to frazzled people on top of your frazzled world, right? And going home saying, I'm doing the right thing. I'm following the plan.

I'm following the plan. I'm following the plan. Good for you. God's got my back. God's got my back. Exactly. Well done, Kate. Thanks back exactly well done kate very well done you're tough you are tough so so there's a 26 year old out there that owes 25 30

40 000 and they're just not all in explain the feeling just throughout your body explain this to folks what this feels like now now that you're free yeah it is just so fun to be like okay i just got a paycheck and i have options like i of course i'm saving right baby step three but um it's like okay i don't need to put it towards my student loans i don't need to put it towards this thing that i owe like i have options and that freedom and that ability to say i get to choose what i get to do with this is so worth it. A hundred times over. It was worth the really tough, hard, scratch and claw year. Absolutely.

Yeah. The price you paid was worth it. Exactly. You ever go back in debt? No. Oh, my gosh. Oh, no. No.

That's scary. It's like, uh-uh. No, sorry. I love my options. And, Kate, you are tough. And, man, you went step by step, but I don't want the people listening to this and you can't see it, but, man, you are surrounded by people, and we cannot do life by ourselves,

and you've got cheerleader after cheerleader after cheerleader in this room, and so everybody's here sharing in this extraordinary achievement, man. It's awesome. Well done. Thank you. So well done. So proud of you. All right. It is Kate from the Education Solutions team, or she calls churches, calls schools and administrators

and teachers every day to get them to teach the high school curriculum, foundations and personal finance, because don't you wish you had learned this stuff when you were a kid? It's almost our byline over there, you and uh highly successful and this is what you call an incredible 26 year old right here i'm telling you we got a building full of these they're incredible it's incredible they're incredible so proud of you so well done all right kate 26 000 paid off in 12 months count it down let's hear a debt-free scream. Three, two, one. I'm debt-free. Yeah.

Woo-hoo-hoo-hoo. Yeah, baby. So awesome. Woo-hoo-hoo-hoo. Yeah. You know, people don't understand that have never led an organization that during the pandemic, those of us that were leading companies, we're looking out at a room full of her. Yeah. It's my job as the leader to keep the revenue coming in so she gets to live her dream.

Yeah. And I'm sitting here thinking all that stress we went through last year in leadership to be able to keep this place afloat, be able to keep things running. All the criticism we took, that's why we did it. That's right. For her. Because she keeps her job. That's right. And she gets to do this. I'm so proud of her.

That is so cool, man. And she didn't cave in. She didn't quit. She didn't say, well, I'll try again in 2021. Yeah. She didn't panic. Yeah. She played through.

Act of faith. Walked out her faith. Kept making the calls. What a cool 26-year-old. She didn't panic. Yeah. She played through. Act of faith. Yeah. Walked out her faith. Kept making the calls. What a cool 26-year-old. That's awesome. Very cool. Got a building full of them, man.

Love it. This is the Ramsey Show. Thank you. Dr. John Deloney, Ramsey personality, is my co-host today. This is The Ramsey Show. Thank you for joining us. Open phones at 888-825-5225 donna's in utica new york hi donna how are you hi dave i'm doing well how are you better than i deserve what's up okay so i have a whole life insurance policy um and i i would like to cash it in. I just found out that there's dividends on the policy, which I believe are tax-free. I have a loan out on the policy and a cash value on the policy, a small cash value.

So my question is, should I take out the dividends first, or if I cash it in, will I get those dividends that I have on my policy? You should get them if they haven't been used to buy paid-up additions. Yeah, they have not. I didn't even realize that. They would have just been added to your cash value. What's that? I'm sorry? They would have just been added to your cash value, and none of this is going to be taxable.

So they're saying I got $4,300 in dividends and a cash value of $5,300, but then they said I'm going to be capital gains taxed on 80... No. Nah. Okay. I doubt it. Here's how the calculation works, okay? The dividends are not taxable, period. Okay?

How much is your loan? The loan is $15,000. I didn't even remember. Okay, so these numbers are above the loan being paid back, right? Yeah. Okay, because you don't get the loan money. I mean, the cash value has to pay off the loan first. So now, as far as the cash value, whether it has a capital gains or not, here's the basis.

All the money you've ever paid into this policy added together is your basis. So do you remember what your premium is? $40 a month. Okay. For how long have you been doing this? 1992. So $500 a year for 30 years. Okay.

You don't have any capital gains. Okay. 30 times 500, all right, is more than your cash value. You would only have a capital gain if all the premiums you have paid in over time is equal to more than your cash value or less than your cash value. And it never is because these things suck so bad they're horrible i know okay now let me tell you how a dividend works just for the fun of it okay now how old are you 60 okay do you need life insurance does someone count on your income to eat no are you married yeah okay do y'all have a pile of money other

than this well i mean i have and we have savings but i mean i probably only have about ten thousand dollars in savings so how does he eat if you die well he's working and has a retirement. Okay. All right. So if you don't need life insurance, then it's fine. If you want to buy some life insurance, you would buy it prior to canceling this. That's thing one. Now, a dividend is not taxable because it is not a dividend in the true sense of the word. A dividend is when a company makes a profit like Home Depot, and they pay their stockholders some of the profit out, and that's a dividend. Okay?

Life insurance dividends have nothing to do with that at all. There are two kinds of companies in the life insurance world, stock company and a participating company. Stock company never pays dividends. The only ones that do are participating the stockholders of a participating company are the policyholders so if you have a state farm policy or you have a i don't know who's who's is yours with credential yeah, okay? And that means that the policyholders are the owners. Now, in order for them to give you, an owner, profit back, they would have had to charge you extra to create that profit. Does that make sense?

Yes. So there's no dividend. If I own the company and i want to and i want to buy something from myself and i charge myself a little extra so that i can give myself back some more money that's nice of you that's nice of me and then so that's why the irs has deemed life insurance policies that have dividends to be non-taxable because the actual ruling states it's the return of a deliberate overcharge right okay and that's why it's not taxable it's a it's a shell game it's a scam and so um it's of no benefit at all so that that's just all that is

is you paid too much for the policy all these years so now you got four thousand of it coming back that's all that was right then on top of that you paid too much to build up a cash value and you're going to get that back but you're not even getting back all that you paid in so you got no taxes on that either so that that's the moral of the story on that and and these whole lot that's you know one more way that these holiday or one more way that these uh whole life policies suck it's just unbelievable and by the way you paid extra to create the savings account in there called cash value and when you wanted your money out you had to go borrow your own money and pay them interest to do that so that loan you've been paying interest on was where you borrowed your own money and this whole time do

these companies take that money and then they go invest it somewhere else and keep the gap, right? Oh, yeah. Yeah. Yeah, absolutely. So they're like a long-term interest-free bank. Virtually interest-free. That is making money on their stuff. Right.

That's why in any skyline in America, you drive around, there are two tall buildings, banks and life insurance companies. Right. You built them, people. Wow. You built them, people. Wow. You built them in both cases. You gave them your money. And, you know, this is the great credit card scam, the great, you know, car loan scam, the great whole life life insurance scam. And some of the wealthiest companies in America are life insurance companies because they have all of the money like hers sitting on the books.

In the commercial real estate business, if you want to go get a shopping mall for $26 million and you want to find a lender for that, the primary lender is life insurance companies. They do tons. Oh, so they're functioning as their own bank inside of. They do tons of commercial lending. And they're functioning as their own bank inside they do tons of commercial lending and they're lending her money and they make the spread and they make the spread that's right wow huh you just follow the money baby just follow the money and you'll see where it is you'll see what's been going on so oh man and i had never heard that uh you get the blessing of them increasing your rate and then saying,

hey, here you go. Here's some of it back. Look how benevolent. Yeah. Right? Yeah. Wow. So, you know, as long as your cash value, now, if her cash value does include her loan

amount, so I'm going to rethink that. She probably had about a $15,000 basis, and she said she had a $15,000 loan, so she might going to rethink that she probably had about a fifteen thousand dollar basis and she said she had a fifteen thousand dollar loan so she might actually have a cash capital gain you'd have to see your tax professional to be sure and double check that but the way you calculate your basis is all the premiums you've ever paid in is your basis and as long as your cash value is not higher than that number it almost never is then there is no capital gain on it because you lost money you lost money right you didn't keep up with inflation putting 40 bucks under your bed for yeah 20 or 30 years you'd have been better off putting in a

fruit jar you'd ended up with more money wow at the end of this story wow you wouldn't have the life insurance but if you put your money in a fruit jar and buy an inexpensive term policy you'd end up with more money yeah if you put the money in real investment like a mutual fund and buy an inexpensive term policy good roth ira you'd end up with millions of dollars more i mean that little 40 a month policy would have amounted to not you know we're talking about 8 000 15 000 here these kinds numbers, it would have been hundreds of thousands of dollars. Wow. Difference. Instead, they loaned money to a shopping mall developer with her money.

That's how it works. Oh, well. That's discouraging. It is. It is. Wah, wah. Yeah. Well, you know, live and learn.

Don't buy a whole life policy. That's right. And if you got one, get rid of it. This is the Wah, wah. Yeah. Well, just, you know, live and learn. Don't buy a whole life policy. That's right. And if you got one, get rid of it. This is The Ramsey Show. Hey, it's Kelly, associate producer for The Ramsey Show. This episode is over, but if you heard about an event, product, or service and didn't have a chance to write it down, don't worry. We list everything you've heard about during this episode in the podcast show notes section.

Or head over to DaveRamsey.com and click Dave Recommends. Thanks for listening.