The Ramsey Show - App - Don’t Be a Financial Lemming… Think for Yourself (Hour 1)

Episode Date: February 22, 2022

Dave Ramsey & George Kamel discuss: Paying down debt vs. investing in rental property, Getting out of a car lease, When it's time to re-finance, Prioritizing debt. Want a plan for your money? Find out where to start: https://bit.ly/3nInETX  Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 

Live from the headquarters of Ramsey Solutions, 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. I'm Dave Ramsey, your host. George Campbell, Ramsey personality, is my co-host today. He's also the host of the Fine Print Podcast on Ramsey, your host, George Campbell. Ramsey Personality is my co-host today. He's also the host of the Fine Print Podcast on Ramsey Networks. Be sure you check it out so you know what the fine print says, baby. It's a free call here if you want to talk about your relationships, your mental health, your job, your career, your money. We talk about all of it right

here. It's called The Ramsey Show. We talk about you right in front of you baby the phone number is triple eight eight two five five two two five that's triple eight eight two five five two two five henry's with us in chattanooga hey henry welcome to the ramsey show hello hi i've got a question can you hear me yes sir henry henry are you okay i've got you i'm sorry that's okay i had a quick i had a question i'll try to make it quick would it be wiser to try to pay my house off or would you rather me buy another house as a rental investment i'd love for you to do both but in the order of paying off your own home first okay okay it's what i do about we teach people to avoid debt and the shortest way between where you are the shortest distance between where you are in wealth is to get out of debt and stay out of debt so i want you to buy rental property i want you to pay cash for it after you pay off

your house yeah and a lot of people they call us dave and they've already got the investment property and so we're not going to yell at you we want you to get cash for it after you pay off your house. Yeah. And a lot of people, they call us, Dave, and they've already got the investment property. And so we're not going to yell at you. We want you to get out of all of the debt. But if you haven't done it yet, the way to do it is pay off your own mortgage first, save up and pay cash for the next one. And guess what? It's going to take longer. It could take three, four, five, six years to do that. But that patience is going to pay dividends when you own all of the income coming in from that property. And Henry, let me expand. Would you permit me to expand on that just a second? Here's the thing. I own a whole bunch of rental property today, and I've been in the real estate business my whole life. I did it with debt and went broke. Later on, I've done it without debt,

and I get to keep it all. And so 100% of the foreclosures occur on a home with a mortgage. We've done research. So the thing that happens is this. When you're managing, this is speaking as a landlord that's done it for years, when you are managing a piece of rental property that has zero debt, it changes several things you're going to do. Number one, the repairs that need to be done are easy to do. Number two, the cash flow on the property, 100% of the rent goes in your account. You don't have to pay a payment.

And so it changes the cash flow returns dramatically. And here's the other thing that's very weird. You are never desperate for a tenant, so you wait to get the best possible tenant you don't take somebody that's got like three degrees of sketchy and put them in there because you need to make your payment you're never desperate and so you don't get into sketchy tenants you end up with better tenants and let me tell you what that transfers to fewer repairs and more money and so it is a slower way but it is it's a peace-filled way to own rental property because you everything you just when i'm writing a check to that heat and air guy i'm not sitting here going gosh i gotta make a payment i'm going all right let's get the right

thing for the heat and air because i'm going to own this house for 10 years i want to do the right repair i don't want to patch it up to get by I want to do the right repair. I don't want to patch it up to get by. I want to do the right repair the right way at the right price. I'm not going to put you in my house if I think you're sketchy just because I need to make the payment. I'll wait on somebody that's not sketchy. Non-sketchy renters are better, George. I like those, and desperation is always going to lead to some poor decision-making.

Yeah, I usually get stupid right after I get desperate. That's been the pattern of my life. It's a kissing cousin of stupid. If I get desperate, if I get freaked out and terrorized, you know, a lot of people did that around COVID. They got stupid because they got terrorized. They were freaked out. They got fear.

They're watching fear porn on the TV all day long. You're going to die. You're going to die. You're going to die. You're going to die. You're going to die. You're going to die. And then they got in freak out mode, and they did some really stupid butt stuff.

Yeah. But it was all based on your brain shuts down the critical thinking portions of your brain shut down when you're afraid and desperate is a form of afraid and so i you know anytime i feel pinned against the ball i'm forced to do this the number of times i've taken calls on here on the air over 30 years where somebody says, you know, Dave, I know the car is 18% interest, and I know I paid too much for it, and I know I should not have bought this car, this much car. But, Dave, the transmission broke, and I had to get to work. I was forced to buy this car. And I'm like, forced? Isn't that an interesting language choice? Yeah, it sounds like someone's got a

gun to your back going you better buy this car at 18 and that's how it felt emotionally and your brain shut down and allowed you to just go over here and check about six stupid boxes and call it smart yeah it happens with cars all the time and real estate is probably second yeah i mean anything we do around money or life for that matter i mean i've seen people pick out the wrong mate because they didn't think they were going to get one and they got desperate and they took you know the sketchy mate and that's not a good idea that's worse than a sketchy renter that's true harder to get rid of too much more expensive brooke is in claremont florida hey bro, what's up? Hi, how are you? Good. So my question is, I have a 2021 Honda for lease. I actually just quit my job because I couldn't take it anymore,

and Honda's the only one that can pay off my lease. I just don't know what to do if I need a car. I don't know if I should finance something through Honda because they'll give me my payoff if I have them buy it. But I'm kind of stuck. I don't know what the best thing to do is. Wow. How much is your car payment?

It's $678,000. Wow. I can't breathe. And you quit your job, so you have no income. I do. I got a serving job actually so how old are you 23 uh 24 24 yeah almost like i've done this before um wow you got to be pretty scared right now kiddo um i mean i have my boyfriend um you know he's there for me we've been dating for a while we just bought a house so i guess you know that he just got a house i mean we got it together i'm on the deed but it's his house yeah not if you're on the

deed it's not well yeah so it's our our house yeah guess so i guess you're in a partnership with somebody you're not married to okay um there's a lot a lot here so so what i want you to do is go get a kbb jump online to kbb and find out what this car is worth not what the dealer says it's worth and then i want you to find out from honda what the early buyout on the lease is the used car market has gone bonkers and it's very possible you can get enough out of this car if you sold it to an individual to pay off the lease okay that gets rid of the disastrous mess that is called your car your car deal honey is cray cray it's over the top nuts and it was exposed when you quit your job but it was already crazy before you quit your job yeah

what you're making in payments right now you could save up in a few months and get a beater car to get you around yeah go buy a thousand dollar car with cash drive that for a month then go buy a two thousand dollar car with cash drive that for a month then go buy a three thousand dollar car with cash drive that for a month then go buy a five thousand,000 car with cash, drive that for a month, then go buy a $3,000 car with cash, drive that for a month, then go buy a $5,000 car. You're going to be able to do that once you get working again. But you've got to get to working, and you've got to get rid of this payment. And I don't even want to start on you about buying a house with somebody you're not married to.

You have gotten yourself into a mess there also. It just remains to be seen. So get married, please. This is The ramsey show did you know statistically when it comes to life insurance and protecting your family that women are more likely to be uninsured or underinsured than men. This doesn't make any sense. Women make up half the workforce, contribute mightily to family incomes, and in many cases are the breadwinners and take care of their families 24 hours a day. This is one of the most overlooked areas when it comes to financial planning. Maybe it's a relic of the past, but a loss of income or the need to replace family care is equally important for women as it is for men.

Single moms, working moms, and stay-at-home moms all need term life insurance. Rates are actually lower for women, which is why I send you to Zander Insurance. They shop the top term life companies to find the lowest rates available. You can compare rates online at zander.com or call 800-356-4282. This is something every family has to deal with. That's Zander.com or 800-356-4282. George Campbell Ramsey personality is my co-host today. George, I feel a little bit like we didn't have enough time to address all of the things going on in that young lady's life. So I think three things stuck out immediately in the call. And for the rest of you listening out there, here's what our advice would be.

Number one, never buy a house with someone you're not married to. Yes, that can create a whole slew of problems but like she was saying she's on the deed and i don't know her situation on the mortgage but if this relationship doesn't work out this is a nightmare and someone's getting kicked out of their home yeah and they're also going to continue to own a home that they no longer live in and possibly be on the mortgage and so basically what you've formed in legal terms is a general partnership and you have no partnership documents when you are married there's a whole group of laws that surround your rights to protect you when you are two single

people buying a house together you are forming a general partnership and if you don't have general partnership documents there is nothing to dictate what happens and so um he beats the crap out of you and starts doing cocaine kills your dog and you run off into the distance you're on a mortgage with him and you own a house with him and you can't do squat about it you're stuck maybe it's not as severe as that maybe it's not as bizarre as that but you you are stuck so if you're gonna shack up one of you by the house the other one be the one that's going to leave when this doesn't work okay and and you're free then and they're free but there's no mechanism like in a divorce there's a mechanism that forces what happens with the ownership of

the house the disillusionment of the assets, the marital assets. But there is no mechanism for this unless you spend $20,000 going into civil court and legal fees to get this disbanded. So it's just a nightmare. It's also a relational nightmare. It's also a lot of other things that are dumb. But in addition to that, you just set yourself up in a financial credit and legal mess yeah okay number one number two if you're upside down on a car you owe more on it

than it's worth and you have a ridiculous car payment that you shouldn't have bought and some life event occurs that tells you that um the way you get out of a lease is a lease has an early buyout that is different than the total of all the payments. Okay, you can't just add up all your payments plus your residual value at the end. You call and get the early buyout because that is an effect. It's like getting an early payoff on your loan. When you pay a loan off three years early because you're selling it, you don't pay interest on all of those three years. And a lease doesn't technically have interest but has cost of capital built in and so they it is a reduced amount when you pay it off early an early buyout so you need that number it's your payoff figure

and you need what the car is worth in today's weird world for the first time in 30 years of doing this show you might actually get more for the car than the early buyout is. Because of how used car market is. Because the inflated prices on the cars. And so with her little Honda, let's say that little Honda sells for $38,000 and the early buyout is $36,000, then you could sell it to anyone for $38,000, but you have to give Honda the $36,000, which is the early buyout. You put two in your pocket in that case. Get you a beater car.

If the early buyout is $36,000, you sell it for $34,000. You've got to come up with $2,000 to pay the lease out so that the new buyer can get a clear title. You do not have to sell it to Honda. Yeah. And you don't want to go from a frying pan into a fire and go finance another car if you're getting out of a mess you go get a beater a garage sale car um that has a horrible color and is mechanically reliable and you pay 750 for it at a garage sale and it's a 1974 ford okay but it drives perfectly and you're not you're not going to keep this car you're going to give it a name and you're going to tell your grandchildren what you used to do back in the day back in ought 22 i drove a car that was bird egg blue we called it old blue

you'll be telling your grandbabies this someday and this is the kind of car you need to buy when you're getting out of this mess number three don't quit your job unless you have another one lined up yeah she's relying on the boyfriend at this point now you're really trapped you got honda around your neck you got him around your neck you got a mortgage around your neck and you're gonna get in panic mode and just like we were talking about before we picked up the call with her as soon as i get desperate i get stupid so i want you listen unless you're being harassed physically or asked to do something criminal i just couldn't take it anymore that's not an no you don't quit suck it up buttercup and stick it out two more weeks for your i can't take it anymore and go get you another job doing something before you just walk out cold and

that's the power of the baby steps is you have options when you follow these steps and you're debt-free you got the emergency fund, you can breathe. And you might be able to quit that job and step into something else. And Ken Coleman talks about that all the time, bringing the boat close to the dock and having a plan. It would take 48 hours to land another job in this world. And you're going to interview different while you still have that job. Take some of your vacation time and go interview. Take a day or two off and go

pto time whatever it is and go interview go get something else landed um you know so you so proverb says he who is impulsive exalts folly folly i have been impulsive and i have exalted folly what that means is a folly is is the verb of a fool in action so when i am impulsive i am by definition a fool in motion a fool in motion i like that and so uh you know impulsive is not i i i just live free, that's just immaturity, whether you're 54 or whether you're 24. And so I'm not picking on her. I'm just saying some of you listening out there, these are some life lessons. You should listen to this show because it's entertaining. Thank you.

But you should also walk away from this show every day going, I just learned something. I want to be less foolish and a little more wise. That's my hope. Less impulsive. Yeah. Yeah, a little more grown up. I'm going to slow down just a little bit wise. That's my hope. Less impulsive. Yeah. Yeah, a little more grown up. I'm going to slow down just a little bit. I'm not impulsing a car.

I'm not impulsing a house with a boyfriend. I'm not going to quit my job because I had a bad day. You know, just calm your butt down. I mean, really. This is just, I feel so sad for her. She's just got a mess on her hands. And I'm not picking on her, y'all, because I was a lot worse than her when I was 24. A lot worse.

That's not the point. The point is, if we're going to listen to this stuff, we need to get the, what are the nuanced lessons out of this, rather than just be aghast at how bad the situation is. All right. Gabriel is with us in St. Louis. Hey, Gabriel, what's up? Hi, Dave and George. Thank you for taking my call, Gabriel, what's up? Hi, Dave and George. Thank you for taking my call.

Sure, what's up? I have a question for both of you. We are in the middle of doing a refinance on our mortgage to pay off our credit card debt, the tough shed, and half of a car. And we're now questioning it because our mortgage balance is $216,000 with a 2.5% at 15% 15-year rate, and the new mortgage would be $244,000 with a 4% interest rate for 15 years. No. Should we do this?

No. You're going backwards. Okay. You're taking a higher interest rate to finance a steak dinner that you put on that credit card over 30 years. That's what I keep saying to my husband this is done cushion and i'm like but this is not dave's rules and plans and i don't want to do it my gut tells me not to do it let me just tell you here has nothing to do with what dave thinks okay dave's rules don't matter the only reason i would ever give you a guideline is because it's what's good for you.

It's not like Dave Ramsey needs you to go do it a certain way. What's good for you? What's going to cause you to win? And so what's your household income? Our household income net is $98,184 a year. Monthly, it's $8,184. And how much do you owe on your car? On our car, we owe right at $50,000.

$50,000? On one car? Okay. Yes. Okay, go ahead. And your credit card? Our credit cards are $13,735. Okay.

And what was the other debt? The mortgage. Okay, that's all. You just had those two in the mortgage. Okay, cool. So here's what I would tell you to do for you. Not for me and not because of my rules. What I tell you to do because of you.

Why don't you cut up your credit cards, get on a budget, and sell this ridiculous car. It's nuts. It's two cray-cray cars in a row. They've eaten up all their income. This is the Cray-Cray Car Hour. Wow. This is the Ramsey Show. We'll be right back. George Campbell Ramsey personality is my co-host today this is the Ramsey show in the lobby of Ramsey Solutions on the debt-free stage Peyton and Haley are with us hey guys how

are you we're great how are you better than're great. How are you? Better than I deserve. Welcome. Where do you guys live? We live in San Antonio. All right. Welcome to Nashville. How much debt have you paid off? We paid off $110,305 in 21 months. Good for you. And your range of income during that time? Range of income was $115,000 to $155,000. Wow. What do y'all do for a living? I'm a seventh grade life science teacher, and I own my own scientific consulting company. All right. And I'm a land surveyor. All right.

Very good. You're making good money. What kind of debt was this $110,000? Our mortgage. Whoa! Look at you weird people. How old are you guys? 24 and 28.

And they have a paid-for house. That hurts my brain in the best way. Yeah, baby. Touchdown. What's this house worth? It's about $250 now. Wow. That's so fun.

You're so weird. I love you. You're amazing. We love you back. This is great. This is amazing. All right. So how do you pay off $110?

That's $55,000 a year in two years. You were on beans and rice. That's right. We love budgets. I love budgets. He went along with it. That's incredible. I'm the spender by far.

But I mean, you guys have been tight. There was no room in this. Yeah. We got promotions. We got side hustles. I started doing some wedding coordinating on the side as well. I worked a lot of overtime. Nobody on this stage afraid of work, right? No.

Y'all were getting it, man. I mean, you were getting it. Thank you. This is beautiful. Congratulations. Have you guys always had this level of work ethic? I think so. I think so.

We've both worked since we were young. Wow. Are you financial peace babies? I've got to hear the story of how you got connected to all of us. How did you get started to do this? So my parents did FPU when I was a kid. And so I always put that as something I'm going to do in the future and then never really thought of it again.

We both heard of Dave Ramsey and financial peace because we grew up in church and both heard of Dave Ramsey and financial peace because we grew up in church and everyone talks about Dave Ramsey. Um, but we didn't really do, do find it. I guess we didn't really know, um, all of the classes. Like we didn't take them all, um, until we were married and we took the financial peace class together. But this all started, uh, really much before that when we were dating. I was paying for grad school in cash. And I got. Haley didn't just pay for grad school. She paid through undergrad by herself as well.

And she took off, took a couple loans when she was a freshman and then paid the rest of the way through undergrad and grad school in cash. And so she kind of looked at me whenever we were dating and said, hey, you know, you ought to look into doing a budget. That's a nice way of saying it. Hey, he had all the other boxes checked, so this was the only one we had to talk about. Did it feel like a threat at the time?

Like, you ought to do a budget. It was very casually mentioned. If you're like me, then you ought to it was very casually mentioned like me then you ought to do a budget yeah you you know you should look into doing this you you've got a job now and you know and they kind of clicked and i was like oh wait a minute this is the time that i'm supposed to be doing that this is the future to get yes this is the future that's amazing and i had watched her she got her school loans bill in the mail in grad school from undergrad, and it had about doubled to almost $30,000. And she freaked out and paid all of it off in about four months.

She paid all those off. So I was like, hey, you know, this should be a priority. So we made it intentional and did it from then on out. And I had my own budget until we got married, and then we combined. How long have you been married? Two and a half years. Okay. So right after you got married,

you bought a house and attacked it. Yeah, we rented a really cheap apartment for about nine months. It was rough. Saved up. We put about 40% down on the house. And so then whenever we got the mortgage first, we just went gazelle a tense on it and paid it off.

It was a series of intentional acts over a long period of time. People look at 24 and 28 year old and go, well Dave, it was easy for them. No, they started this stuff when they were young. They put a huge down payment. They stayed out of debt. They got out of debt quickly. And this is what can happen. Paid for house in 24 and 28.

Moms and dads, this is what can happen. You teach your kids to work and remind them that they're supposed to go through Financial Peace University i mean it's just not because it's financial peace university but because it teaches you how to live principles you know it teaches you all the things that you should have learned like in high school or before you were an adult on your own uh when we took that financial peace class we signed up for it as soon as we got back from our honeymoon uh and we went in like thinking oh no like we're those people who don't have debt like we don't want to rub that in other people's faces like we're those people who don't have debt like we don't

want to rub that in other people's faces because a lot of people are going to come here hurting and we learned that there was a lot more in financial peace university than just get out of debt we learned a lot of good stuff there and in our two and a half years of marriage we don't fight about money like we never have because there's no need when you're on the same page with with money and and this class helps you do that. Wow. You're amazing. I'm so proud of you.

Thank you. I bet your parents are jumping up and down. They're pretty proud. Score. Score. I love it. Yeah. This is great.

Yeah. When the kiddos turn out and they don't live in your basement, we parents like that. It's a cool thing. Yeah. Way to go, you guys. Way to go. So well done. Who were your biggest cheerleaders outside the two of you?

We have a couple at church that we just really love and adore. And they're doing the Ramsey life, too. They're Kelly and Brant Burnett. They're probably our biggest supporters. Yes. They are. Very good. Do people think you're weird?

Like, your friends are like, wait, what? Oh, for sure. Are you just rich? Do you have a trust fund? They do think we're crazy. But then they hear I'm a teacher and he's a land surveyor, and they're like, wait, can we sit down for coffee? How does this work? There you go.

Now they're interested. There you go. Well, you're living your life well. That's why. We also started, we're Ramsey coordinators at our church now, too. I hope so. Thank you. You'll be great coordinators.

What a story to tell your class and hold up that it can be done yeah you know just fabulous just beautiful beautiful beautiful beautiful well we've got a copy of baby steps millionaires for you because for sure you're going to be one before we know it you guys are man you're tracking you're amazing and how ordinary people built extraordinary wealth how you can too and you're you're on track so copy of Total Money Makeover, you can give it to somebody in your class or somebody trying to get to go to the class or somebody you just want to help, whatever. Stir up a holy ruckus with that thing, man. That's what we do around here.

So good job, you guys. Thank you. And thanks for leading the class too. That's very, very nice. It's good, and you'll get a lot of satisfaction watching other people straighten their lives out doing it. I have. So congratulations to you. Very, very well done.

All right. It's an incredible power couple right here. Seriously. What, 24 and 26? 28. 28. 24 and 28. A paid for $250,000 home in San Antonio, Texas.

Oh, I know what I wanted to ask you before we count that down. You said we stayed in the cheap apartment. Tell me about the cheap apartment. We did. Our apartment that we rented after marriage was about $150 a month. I don't know. $850. Oh, sorry.

Wow. $850 a month. $150 would be really cheap. Yeah, $850 is cheap. $850 was as cheap as we could find. We signed the lease, and then we told our family where we had signed the lease. The neighborhood, and they went bonkers. The neighborhood.

They're like, you can't live there. That's high crime. Yeah, they were not pleased. But it was fine. There was a dumpster fire. That's why we told you afterwards. And other than that, we were good. Yeah, you always talk about the year of the dumpster fire.

New Year's, when we came back on New Year's Day from the party, there was literally a dumpster fire in our apartment complex. A real one, not a metaphorical one. Beginning of 2020. We were like, we should have known. After midnight. That's the scented candle for 2020, yeah. Oh my gosh.

Wow. So it was, but nobody got hurt. It was safe enough. Safe enough. It was safe enough. Yeah, I mean, we checked that before we signed the lease. It was was decently clean you didn't check in with your family because they had a cow yes that's true you live there how long six months six months six seven months and saved up 40 down payment that's that's what i'm talking about sacrifice when you get that because i said

cheap apartment i want to know what it meant okay because um there you go well all right peyton and hayley san Antonio texas 110 000 paid off in 21 months house and everything 115 to 155 count it down let's hear a debt-free scream three two one we're debt-free Wow. Way to go, you guys. Absolutely incredible. I've got a lot of hope for this generation, Dave. If I keep meeting couples like that, we're in good shape. Yeah, I just, I don't know how you can not have hope when you sit in these chairs

and we get to meet people in their 20s every week doing stuff like this it's there's an incredible generation coming up here this is the ramsey show Thank you for joining us, America. The phone call is free, and some say the advice is worth exactly what you pay for it. The phone number is 888-825-5225. George Campbell Ramsey Personality is my co-host. Over the last 30 years, I've walked with a lot of people that had a lot of stress, usually around the money subject, but there's all kinds of stress and anxiety and loneliness out there. And it was particularly exasperated during the pandemic. All kinds of crazy in your family.

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Today's question comes from Steve in Oklahoma. He asks, I'm 72 years old and my wife is 70. We're both in good health. We have a combined retirement and social security income of about $140,000 a year. We own our home outright and have no debt. We have about $100,000 in Roth and $1 million in traditional IRAs. Our wonderful financial advisor is recommending a distribution of no more than 4%. We're looking at about 5% to enable us to travel while we're able to. What is your recommendation on the maximum annual distribution? It's a great question, and they're in a good spot.

And so this makes me feel better about saying, sure, $40,000 versus $50,000 on the distribution is what they're really asking, right? On, let's say, the million dollars in traditional iras that's going to be taxable this doesn't feel like a big portion of the world if they've got uh you know the 140 000 income so if the money is invested in good mutual funds and it's making you know average market returns of 11%, 12%, why can you only take out 4%? Just fear, I think, is the main reason people do it. Why would the financial advisor say that? He gets more money?

Is that how that works? Possibly. Or possibly he is a financial planning lemming. You know what a lemming is? That's an old school word. These are small rats that run in herds and follow each other over cliffs. That is the funniest way I've heard to describe financial advisors. And so, meaning you go along with the crowd.

You go along with the crowd. You go along with the crowd. And you don't even ask why. You just go along with the crowd. And so, you don't want to be sheeple. So, here's the thing. That is a standard thing in financial planning, 4%. Because after inflation and after poor rates of return on the portfolio,

you're still going to be okay at 4%. But by God, 5%, you're going to sink it, you know, which is completely asinine. This is ridiculous. They're going to ultra-conservative here. Steve, you are smarter than your financial advisor because you have more money than he does. And you've done a better job than he has. So you can kind of tell him what to do with your money.

Be real comfortable doing that. And, dude, if you want to pull out 6%, it's okay with me. I think you're going to be okay. If you want to pull out 10%, you're not going to destroy the portfolio because, dude, I mean, you're 70. What are you going to live to, 170? You know, you're not going to destroy the portfolio because dude i mean you're 70 well you're going to live to 170 you know you're not going to wind this thing down in 25 years you're not going to you're not going to tear the principal up in 25 years even doing that so you can be um in a position to enjoy your life and so i would suggest five maybe six percent draw down on this

if you've got it invested in good mutual funds that are giving you market rates of return. And I also would suggest that your wonderful, that's what he called him, right? Wonderful, yeah, those are not my words. Wonderful financial advisor. Have a good explanation for why he's giving you these numbers. If you're getting an 11% or 12% rate of return, why are you suggesting that 5% is going to destroy my life when 4% does not? It's not logical. 1% is not life-changing either way. Well, it's not logical.

There's nothing. It's only based in, that's a standard card you pull out of the file in the industry. I am curious, Dave. Would you say what's strategically the best route to go using the Roth portion first versus traditional? The traditional's got a mandatory distribution anyway. You know, at 70 and a half that he's going to have to begin, and so I'm going to start there and at least do the mandatory. The Roth is tax-free and will pass tax-free.

I'm probably going to use the traditional. I'm probably going to go ahead and pay the taxes on it and pull out enough to pay the taxes on it before I touch the Roth and let the Roth continue to grow tax-free because it will pass to your heirs tax-free as well. So that's the good news on that. Good deal. So good question.

Wyatt is with us in Omaha, Nebraska. Hey, Wyatt, welcome to the Ramsey Show. Hey, Dave, how are you guys? Thank you for taking my call. Sure, what's up? So I had a question about some debt that my wife and I have. We have about $34,000 in combined debt, mostly consisting of my student loans and the remainder of my car loan.

And a little bit of that is the minimal amount she owes on her car right now. My student loans sit at about $9,000 remaining right now. My car loan is about $19,000 and her car is about $6,000. Our total household income is a little over $100,000 a year. And we've been saving for the last year, and we have about $35,000 saved between the two of us right now, and none of that, no credit card debt, no mortgage at the moment. My question is whether I should, you know, just bite the bullet and pay off the remainder of my student loans while they're 0% interest right now and then focus on the car loan after that? Or if I should take advantage of the car market right now and possibly sell my car because the Cully Blue Book value is about $37,000 for it.

Whoa. Cars worth $37,000 and you owe $19,000. Yeah. And you're clearly not in love with the car. Well, you know, I've been thinking about, you know, how to get rid of some of my debt, and it seems like it could be a possibility to... So tell me the numbers again. It was 19 on the car, and what else? Student loan was nine? 9,000 on my student loan. And what was hers? 19 is what I owe on the car.

And her car is 6,000 left. Six, so 15 fifteen and you've got the cash to pay this all off today just write a check dude and be out of debt you see that's my thought um what are you saving up for what's your deal well so we want to buy a house well you're broke man you can't buy a house you're gonna get out of debt that's not house money that's paying off debt money right now. Sure. Yeah, of course. Write a check today and be debt-free, and then get yourself on a budget

and save up your emergency fund of three to six months of expenses, and then start saving for your house down payment. You were able to save up $35,000 while making all these payments. Now imagine all these payments are freed up, and you save up this $35,000, and it's going to turn into $50,000, $60,000 real fast. Yeah, that's a good way to look at it. You know, I recently started, you know, listening to you more often. My wife's listened to you for a couple of years, and she read Total Money Makeover,

and I've started reading it right now, and, you know, it's just opened my eyes a little bit. You know, I think the good thing is we don't have any credit card debt. You know, we don't use them too often. We only have one. That doesn't change the answer, though. Of course. Yeah. The answer is when you get off the phone, are you going to get out of debt?

I believe so. And cut up the cards while you're at it. Go ahead and cut them up. Get on a budget. Get on a debit card. Fix your emergency fund up to three to six months of expenses. And then let's get this thing moving and get your house down payment saved. Dude, you're making a lot of money, and you've really done a pretty good job overall.

The good news is you've got this big old savings account, and you can just wipe it out, baby. How long did it take you to get out of debt? A minute and a half? That's a good deal right there. A minute and a half. I want my debt snowballed in a minute and a half. You don't need the credit card when you're debt-free making $100K. You become the bank.

I like that much better. Ding, ding. Love it. Wow, well done. Well done. This is The Ramsey Show. Did you know over 18 million people listen to The Ramsey Show every week? A lot of those people listen on one of our 600-plus radio stations across the country.

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