The Ramsey Show - App - Don't Gain Credit Card Points...Gain WEALTH! (Hour 3)

Episode Date: August 31, 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. I'm Dave Ramsey, your host. Thank you for joining us, America. We're so glad you're here.

Open phones at 888-825-5225. George Campbell, Ramsey personality, is my co-host today as we talk to you about your life and your money. 888-825-5225. Mary is in Sunnyvale, California. Hi, Mary. How are you? Oh, very good, Mr. Ramsey.

How are you? Better than I deserve. What's up in your world? Well, I found your book at the local library in July of this year, and I read it, including Rachel's book and all that, but now I'm having paralysis by analysis. So I don't have any consumer loan. I don't have car loans, but I have a mortgage loan again,

and that's because I paid cash for my house in 2011, but then in 2015 I refinanced it to buy a rental unit. And then in 2018, I saw another opportunity. So I used my HELOC plus my savings to buy another rental. Last year, I got laid off. And so because of low interest rate, I refied to lower my mortgage and then my HELOC. So I got the 1.99% interest. But I didn't know it then. I didn't know that, you know, I should just pay off the house and all that. But now that I got laid off, the recruiter of the hospital called me back and offering a sweet deal. So I don't know. To pay off my mortgage, should I just sell some of my investment or should I go back to work and pay it off and then retire?

Because I considered retiring this year, I mean last year. I haven't been working since last year. How old are you? 58, I just turned 58. What are you, are you a nurse? Yes, sir. Okay. Is the duty hard?

Yeah, if I go back to work, I'm going to work night shift full time, 12 hours each shift. Why? Yes. Why? Night shift also. Why work night shift? I know because that's the only offer they have, but the hospital... I'll guarantee you there's other offers for nurses in California.

Yeah, but because if I work for the same company, I will retain my seniority of over 25 years. It didn't get you much. It got you the night shift. Yeah. Your seniority sucks. I work night shift a lot. I'm a bear.

Well, you know, I will have the first choice of vacations and all that, and then the shift that I will, I mean, not the shift, but like the days I want to work. But this is my dilemma. I don't have a dilemma. You're 58. You have the money to not work. I'm not working the night shift. That sounds strenuous to me.

So tell them if they want you, you'll take the day shift with your seniority. There's none. Or if I want to do that, I have to work night shift first for six months. No, you don't. And then once there's an opening. No, you don't. Well, that's the offer. That's not a law.

I know it's the offer. Make a counter offer tell them they're stupid i'm not coming to work over there unless you work me during the day because that's what my own well we have the cna contract and that gives a crowd you work so what do i do i mean i can i qualify for pension but I haven't collected it because once I collect it, then I can only work one day a month. Or I can start collecting. So when I, you know, when my goal now is to pay off. So what do you make if you go back?

Well, they will give me a sign on bonus of $30,000, and then I'm going to make $100 an hour. And what does day shift pay? Well, there's no position for day shift. It's only for night shift. Back to where we started. You just don't listen, okay? I've told you six times there's a day position over there. You just accept what they tell you.

Don't accept what they tell you. The rule on the ramsey show is we break the rules okay so you you that listen do you understand what you're saying they're willing to pay you a hundred dollars an hour and a thirty thousand dollar signing bonus but you can't get the day shift i'm calling bullcrap on that six months of night shippers okay that you listen you do whatever you want to do hon okay that's the deal that's there's no possible way i'm working night shift and if you don't understand that you are in a catbird seat negotiating position here go over there and smack them between the eyes and get the day shift and a hundred dollars an and a $40,000 signing bonus. They need nurses.

You are in the driver's seat. Okay? Quit acting like all these dadgum rules apply. They don't apply. Or go to work somewhere else and let them pay you $30,000 for a day shift. But you don't have to go back to the night shift. Make it at 58 years old when you have the opportunity to not work anymore. I think you go back to work, but I think you go back to work in a good, reasonable situation.

And by definition, night shift is not that for me if I'm 58. Yeah, I think she needs to advocate for herself, and she needs to do some research, look around to other companies. Because I don't care about the seniority if it means your life sucks yeah so i mean darwin they're putting like all these things on the table that says they desperately need you and i'm trying to explain to you that you have the power to overcome some of what you perceive to be the rules i don't perceive them to be the rules and although if you don't go to work at that hospital again doesn't matter to me go to work at a doctor's office i don't perceive them to be the rules. And if you don't go to work at that hospital again, doesn't matter to me. Go to work at a doctor's office. I don't care.

But, you know, if you can get $100 overnight, you can get $75 during the day and a signing bonus, and you probably can get $100 during the day right now. You know, we are in California here. This is a desperate situation, and, you know, you are the hero signing up here. Oh, my gosh. But, no, I'm not going to work six months overnight because that's what the recruiter said. You're making more than the freaking recruiter, okay?

So keep in mind who's in charge here, you. All right, Logan is with us in Milwaukee. Hey, Logan, what's up? Hey, I am curious if it's crazy for me to consider getting or buying another property when I still have a mortgage on my first house. Yes. Okay. Short and sweet.

Yeah. You called the, we believe, the shortest distance between where you are and wealth is no debt show. Right. I agree with that. It's just a long name and so yeah it's called the short version is called the ramsey show but the yeah the uh and so we're always going to say clean up the debt and then use the cash flow from your life and from the cleaned up rental property with no debt on it to buy the next one and the next one next one i admit that

that is frustrating to start that way. I can promise you when you get to where I am, I own close to $200 million in real estate, all paid for. It leaves you in a different position than my friend. You'll be glad you did it this way when the pandemic hits and a bunch of your tenants can't pay their rent. Yeah. And you don't have any payments.

Puts you in a whole different world. You can be merciful. You can not go broke. You you don't have any payments. Puts you in a whole different world. You can be merciful. You can not go broke. You can do a lot of stuff. This is the Ramsey Show. Dave here. We just launched a brand new listener survey. We want to know what you think about the show. You'll be entered to win a $100 Amazon gift card. No purchase necessary. Take the survey at ramseysolutions.com slash survey or text survey to 33789. George Campbell, Ramsey personality, is my co-host today.

We value the input of our listeners here on The Ramsey Show. It helps us know what's important to you so we can deliver the right content that will help you with the questions and challenges that you have right now. One way you can share your thoughts with us is by answering a few questions in a new survey that we just launched. You can check it out at ramseysolutions.com slash survey. It takes only a few minutes, and there's a $100 Amazon gift card that will be drawn from the people who take the survey. It's up for grabs.

Thanks for your time. Text survey to 33789 or visit RamseySolutions.com slash survey. Text survey to 33789. You can take a survey about this show and tell us what's going on with it. Our question of the day comes from Blinds.com, a great American company. Find out for yourself why Blinds.com is the number one online retailer of custom window coverings. With free samples, free shipping, and the new promos they run all the time, you save even more. Use the promo code Ramsey to get the best deal. Today's question comes from Diane in Arizona. My husband and I are in baby step two

and are working hard to pay off our debt. The one issue we struggle with is not using credit cards. We use them to pay our utilities, groceries, and other monthly bills, but we never carry a balance. By doing this, we're able to travel for vacations for free using our points. What's wrong with doing this if we're not going into more debt? The age-old question, Dave.

The age-old question. We've been exploring this topic on the fine print because it's one of the biggest objections we get here at Ramsey. People are going, well, Dave, I pay off my card every month. I get some free stuff. What's the harm? Right? So we should clue in Bank of America and Chase what portion of their marketing is working the best.

And it is this crap. The vacations. The points. This is the one. This is the one that's got people believing in stupidity still after all this time. Yeah. And here's what happens. And you can listen to the true cost of credit card rewards.

This is the second fine Print episode that we released. And we dug into this with an ex-Capital One insider. Okay. What did they say? She said they run 10,000 experiments a year on people to figure out what's going to get them to spend more, to use the points. And one of the biggest ways they do it is through the points. Because you know how the points work.

They don't say it's $500. They say you're going to get 128,000 points that you can use to redeem flights that cost $74,000, and the points change every day, and there's blackout dates, and there's restrictions. And on top of that, the whole 2% cashback, that one is one of my favorites, because you know what 2% of $1,000 is? $20. $20 to spend a thousand and uh that's not a great deal so let me let me get this straight if you spend ten thousand dollars you get 200 bucks ding ding ding that'll make you rich yeah spend ten thousand get 200 that's a formula for wealth building right there we did an analogy did you people go to grade school listen diane here's the thing we did this analogy in the in the podcast about chucky cheese because this is what it reminded

me of dave you go to chucky cheese oh my god it gives you a ten dollar bill and you get these coins claw on toy story yes so you get your coins and you're so excited to spend those coins that you spent $10 on, and you go, and you get all the tickets. And you get 400 tickets, and you go to the table at the end of the day, and you go, wow, I can get any prize. And they go, no, you get sticky hands and a pack of gum. And you go, wow, I spent $10 for sticky hands and a pack of gum. That cost a quarter.

Yeah, and you go, I got screwed. Yeah, I think. So here's the thing. i don't have big buildings dave uh the credit card companies do they're sponsoring every stadium in america and they're doing it with billions of dollars that they're making off of the backs of these people who are overspending you yes yeah so here's the thing um to start with you're not going on vacation for free. That is an absolute, asinine, stupid statement. It is not true.

You might have got your airline ticket for free, but everything else on the vacation was not free. So you're spending money and you're going on vacation when you should have been working because you're in debt. You're not supposed to be going on vacation when you're in debt. We follow everything you say. No, you don't. You don't go on vacation when you're in debt, and you don't go out to eat when you're in debt we follow everything you say no you don't you don't go on vacation when you're in debt and you don't go out to eat when you're in debt you you work and you work and you work and you clean your dadgum debt up and that is that that's the ramsey plan now you can say you can you can go do your plan if you want but don't say you're doing my plan when you're going on vacation, because it's just not true. And here's the thing.

The arrogance that is required, the intellectual arrogance that is required for you to think that you are taking on billion-dollar companies who have algorithms that know what bottled water you drink, and you are somehow beating them and you're you're you're fleecing them you're getting an airline ticket and it doesn't cost you anything you really are pretty arrogant to think that you're actually winning at this game i mean honestly do you understand that when whenibank, when you call them, your zip code is pulled off your NSX code, and the person answering the call, if it's a friendly call, is a person of the same accent as you. If you call from the south, you'll get a syrupy southern bell accent.

And if you call from the wicked northeast, you'll get a wicked northeastern accent. These people screw with you on levels you have no idea and you think you're beating them yeah absolutely incredible so here's the thing we did study we did a study of millionaires we studied 10,000 of them 10,167 not a single one told us we became millionaires with our free vacation points because we ran all our utilities our groceries and everything else through a credit card and then we went on vacation for free and it didn't cost us anything and that's how we built our wealth not one said that isn't that odd diane so here's the thing people that ask this question are people that think they're beating the system. Let me tell you how you beat the system. You don't play. Don't play in the system.

You know what it's like? It's like being a mouse in the maze and you get to the cheese and you think, I won. I got the cheese. And you zoom out and you go, no, I'm just a part of a giant social experiment that exists to take my money. That's what it is. So you can play that game, and that's fine. You can get your vacations. But I'm not in the business of trying to gain points. I'm trying to gain wealth. I want to complete the baby steps. I want to pay off my house.

I want to give outrageously. And that doesn't happen by paying off my card every month and reaping the benefits of 2% cash back. You know the Chuck E. Cheese thing is funny as crap. Oh, it's great. The team did a great job with the edits. We got the coin sound and everything. You got of 2% cash back. You know the Chuck E. Cheese thing is funny as crap. Oh, it's great. The team did a great job with the edits. We got the coin sound and everything. Those tickets come out of there, skee-ball or whatever,

they're just coming out of there like crazy. You've got this long line of tickets and your little kid, they think they're getting the big prize and you get nothing. You never get the big prize. You get nothing. You spent $10 to $20 to get a prize

that cost less than $0.50. And the same thing is happening when you go to book these flights and you go well we can go to boise yeah i don't think uh martinique was on the list was it no you're not going to the bahamas first class i don't think i'm sorry so belize and bermuda are not on the list no no so san diego's nonetheless nashville's not on the list no it's black's blackout. Blackout dates. Blackout mean they don't go. Don't go.

Oh, no, they just won't take you. That's what I mean. I think you can do a lot better by using a debit card and using cash and saving up for your own dang vacations. Yeah. You know where I go on vacation? Anywhere you want. There you go. That's how that works.

And, you know, when I use those credit cards, that always works. That's how it happens. I haven't had a credit card in, my gosh, it's, George, it's coming up on 30 years. Wow. We should have a party. We should. We can't use points to pay for the party, though. In Belize.

In Belize. I'm in. How about Cabo? Let's go to Cabo. I'm in. We're heading there. Man, I'm telling you. I love it.

Great question, Diane, but a hard answer. Yeah. Well, because it's passive aggressive, so you need a wrong answer. I mean, a hard answer. What's wrong with doing this? Because we're not going into any more debt. Yes, you are. You're going into debt because you're not paying off the debt that you have because

you're spending money that you don't have to do crap you shouldn't do. There it is. It's a, just, there it is. It's a simple thing. But it's your life, darling. You get to do what you want to do. The problem is you ask our opinion. And we are an expert on our opinion. We've led more people out of debt and into wealth than any other brand in America today.

But you do what you want to do, kiddo. This, you be you. This is The Ramsey Show. charge camel ramsey personality is my co-host today augustine is with us he's in uh court lane idaho hi augustine, Augustine. How are you? Good. How are you? Better than I deserve. What's up? So I'm 21, and I bought a house this January before I turned 21 because I really wanted to. That was my goal in high school. And so I did it, but now work has been really up and down.

And so every once in a while, like I'll have a trouble making the payments. So I want to make extra cash rather than just working. But the house has made about $100,000 in equity in the last seven months. So my question is, should I sell it and have more to put down on a regular down payment, like a bigger down payment on a different house or like use it as an Airbnb style or something else like that. What do you do for a living?

I work on elevators. What's your extra job? I was working at a marina for a second job when it was slow. Now work's picking back up, so I make $38 an hour right now at the elevator job, which is like it's a good job, but it's just kind of sketchy, so I was just curious. What do you mean by sketchy? As far as the volatile?

Yeah, it's volatile. Since it's considered construction work, it goes up and down with the amount of work that we're able to pull in. When work is good, like when we have a lot of big jobs or whatnot, work is great.

I can't complain, and payments are super easy, and I have no struggles. But when it's slow, like when we finish a big job and it's slow for a month or so, and it's like, okay, well, now should I? I think it comes down to a budgeting question. I think it comes down to a budgeting question. I think it comes down to a career question. Because you're never going to be able to establish a life with an income that is not steady enough that you can make enough money during the year to eat. Right? Sure.

Because here's the thing. It doesn't matter if you have some months that the income disappears, as long as you have enough months that it doesn't, and the overall average for the year is still an excellent income. I mean, if you make $500,000 a year, you don't. But if you make $500,000 a year and you have two months with no income, it's not a big deal, right? Right.

So the point is you're not making any money. It's not just the volatility. It's the overall, you're not making any money. It's not just the volatility. It's the overall income is not enough to support you. They're not working you enough to where at the end of the year, when you add it up, you add a good job. That's what I'm saying. So I think you've got a career problem. I don't think you've got a house problem. You may need to sell your house to step into your next career, or you may need to look for a different place to apply your trade because, you know,

$38 an hour is a pretty sweet income, but not if you're not getting it. Right. So, I mean, if you're 31, you don't need to be making the same phone call with the same income problem. Agreed? Agreed. Agreed. So you got to solve the career problem, and then that'll tell you what to do with the house. No, you don't do Airbnb. You either get this career thing solved and keep the house, or you sell the house, put the money in the bank until you get the career thing solved.

One of those two things. But the last thing, you need some other goob living in your house, and you're trying to pay payments and maybe they don't show up because of covid and you know maybe idaho decides to lose its dadgum mind like some of these other places and now you're just shut down and you don't need all this risk man you're 21 you got a hundred thousand bucks on the table take your money and run sit sit over there in an apartment and get yourself solved, or get yourself solved and keep the house. One of the two is what I would do. Yeah, we need some stability here and a financial foundation.

I don't know if you have any debt, but if you do sell the house, I want you to make sure you're following the baby steps. You clean up the debt. You have an emergency fund. That way, when you get into a house again, you're not going to be having this problem where you're having anxiety about being able to afford the payment in case something goes bad, in case you can't find some work. But I do think you need to find a career that's stable with a steady paycheck right now at your age.

Yeah. It is a bit. I had trouble not laughing. His income goes up and down in the elevator business. Okay. I'm just saying. I missed that. That was way over my head.

I'm just. I just. Yeah. That was. That's clever. Yeah. Well, it is what happened. I mean. That's the business yeah, that was, yeah. That's clever. Yeah, that's, well, it is what happened. I mean, it's.

That's the business. It goes up and down. That's a Papa Dave joke right there. Oh, okay. Eric is in Washington, D.C. Hey, Eric, what's up? Hey, Dave, I'm still laughing from that last call. He enjoyed it too.

Okay, we're good. Oh, good. We got another one. All right, good. How can we help? I am, so I'm calling because I want your career advice. I'm sort of at an impasse right now. I currently work a salaried position, and I was offered recently a 100% commission job.

Okay. What do you make at the salary? I make $80,000. What do you do? I'm a real estate valuation consultant at a large firm. So you're doing internal appraisals for their purchases? So I work with internal and external clients, and it's valuation work for different commercial real estate assets,

but some of it is appraisals. Okay. All right. So some of it's for depreciation schedules and so forth. Yep, that's correct. Gotcha. Okay. We use some of those firms here.

Okay. Cool. 80 grand. How old are you? I'm 29. And your straight commission gig is what? This would be in the real estate industry as well. It would be for financial brokerage for commercial real estate. Financial brokerage.

Right. So I would connect borrowers and lenders for uh these large commercial assets okay and that's what the income would come from is those those success fees so a commercial originator of sorts okay um you probably have pretty good knowledge of that business what what what what is uh what do you think your income would be? Have you talked to other people doing it? Have you got some kind of trend line on this thing? Yeah, I mean, I've interviewed people in the industry,

and it's really just a success or failure sort of thing. It's like the Matthew effect. You either get it all or you don't get anything. So it's pretty risky, in my opinion, and that's sort of why i'm calling up i don't have any debt i have you know some savings in the bank but i don't want to just give that away for this risk but you know it's all dependent on the individual well and the market can shift on you and mess you up too so um you know i mean what would you think?

I don't know how to project this. Is this a $200,000 thing? Is this a $100,000 thing? What are you thinking? There have been guys that they make two deals a year, and they make a quarter of a million dollars, but then others struggle to live off of 10 deals. I'm lucky that I can live off of 50 grand,

and obviously way more than that. I don't have any kids. I'm relatively young. But coming in new, I don't have any connections, which is what the name of the game is. And that's where you're going to make the big bucks. Starting out, I would probably struggle.

What's an interim? Is there an interim step, a middle step, where you don't have to jump all the way in the deep end of the pool? No. Well, that's why it's a difficult decision for me. There's no salary. No, I'm not talking about salary. I'm talking about is there an apprenticeship or could you go sell commercial real estate for a while and build the connections?

So I would work under two directors, and so I would get their mentorship. So I would not be there just by myself in the deep end. I would have connections guiding me. And they might throw you some of the crumbs off their table. Exactly. Okay. I guess I'd add up the crumbs and see what they look like, and can I make it on that for a year or two and give this a good hard try?

It sounds like a wonderful adventure. The upside is that there's a tremendous income potential. and can I make it on that for a year or two and give this a good hard try? It sounds like a wonderful adventure. The upside is that there's a tremendous income potential. The downside is the slice of the market that you're operating in is really thin. The number of human beings and the number of actual deals that will need you is a small number compared to, say, things where there are large numbers, like residential real estate, and you do bazillion houses, right? This is a small number of humans ever do a transaction or even witness a transaction like you're doing. But when you hit one, I mean, you're whale hunting, you're elephant hunting, you're not rabbit hunting.

When you go elephant hunting, there's just a few of them, but they're really big. And rabbits, they're everywhere, you know? And so that's kind of what you're looking at. I don't know what to tell you. It sounds kind of interesting, except it just bothers me that the slice is so thin. Yeah. He's young. If he has the risk tolerance, it's an adventure.

Just have a big old savings account. He does have the risk tolerance. You can hear it in his voice. This is The Ramsey Show. show. Our scripture of the day, Proverbs 12, 25. Anxiety weighs down the heart, but a kind word cheers it up. Maya Angelou said, If you must look back, do so forgivingly. art, but a kind word cheers it up. Maya Angelou said, if you must look back, do so forgivingly. If you must

look forward, do so prayerfully. However, the wisest thing you can do is be present in the present, gratefully. Go, Maya. Some classics. All right, Kelsey is with us in Baltimore, Maryland.

Kelsey, how can George Camel and I help? Hi, guys. I'm so excited to be talking to you. You too. So I have a question about whole life insurance. My parents got a policy for me when I was in the crib and passed this policy on to me a few years ago. We took a loan out from it to put down on the house and just kind of knowing we never had to pay it back and just knowing that I didn't really care about this policy.

It's very small. We have other life insurance that's not whole. I'm not sure what to do to keep it active. I pay about $800, $900 a year. Cancel it. Really? Cancel it. What about the tax implications?

Should I worry about that at all? There aren't any. Oh. Here's why. Okay. Your tax basis in a whole life policy is the total of the premiums paid in. There is no possible way that you took out of this policy more than your parents has paid in. They're just horrible.

It's a black hole for money, especially kid whole life policies. Your parents meant well. They were really sweet, and the net result was they were able to help you with the down payment on a house had they actually invested in mutual fund with the same amount of money they put in this policy they could have just bought you a house but that's a side issue that's over that's water under the bridge now so that's how bad these things are mathematically so but anyway yeah you don't keep it around no No, it's not a pet. And we can honor their intent and their heart without, you know, continuing to throw money off the bridge every day, every month, every year. Right.

So, yeah, I would just cancel. If you don't need the life insurance, I'd just cancel it. Nope. If the basis does come in, and they will send it to you because they'll threaten you with this. It's their way of getting you to not cancel it. Apparently, that's already happened. That's where you got this information the agent says oh no

you're gonna get taxed and you're like yeah it's four dollars you know but uh instead of 800 this year so i i can i i'm gonna give you a 95 probability that there's no taxes on it at all on the five percent chance that there is their your taxes will be less than your premium this year. Okay. So, I mean, at the end of the day, when you get it all done, it's not going to – because, again, your basis is the total of the premiums paid in. And only if you receive more than that, including the loaned amount, okay, because the loan is paid off as a part of the cancellation.

And if there's anything above the loan that comes to you those two things if that is larger than the total of the premiums only then will there be taxes and it almost never is because these things really suck so bad okay great thank you so much thank you for the call appreciate you joining us. You know, so that is like a product from the 1940s and 1950s. It's like an alligator. It's a dinosaur that has survived into the modern era. How do they do that? Slick marketing? It's a dinosaur because when you sell it, people buy it.

Whatever it is, if you sell it enough, aggressively enough, people buy it. I mean, Gerber, the baby food company, still sells whole life policies to people when they get a baby so that they can go to college. Well, let me tell you where you're going to college. Nowhere. You're not getting in anywhere with that policy. Yeah. Okay, because you're going to make $14 when it's all over. You're not getting in anywhere with that policy. Yeah. Okay? Because you're going to make $14 when it's all over.

You're getting screwed. No. Listen, if you buy your financial products from a baby food company, it might be an issue. You're doing it wrong. Okay? If your baby food says American funds on the outside of it, you might have the wrong baby food. Come on. Don't eat it. Stay have the wrong baby food. Come on. Don't eat it.

Stay in your lane, people. Stay in your lane. And you talk about why this is a bad product. It's trying to do two things at once. It's trying to be insurance and an investment. And you're saying, hey, there's way better ways to invest. And it's always only one, and you're always paying for both. Yep.

That's the problem. So we recommend term life insurance, level term life, 15 to 20-year policy to where you're self-insured when that policy runs out. And it's a fraction of the price. That's for adults. Yeah. And for the kids. If you want to save money for your kids, save money for your kids. But there's no need for a life insurance policy on your three-year-old.

Because if they pass away, you didn't lose their income. Now, if they get a $2 million ad campaign contract with huggies because they have a cute butt that's great then sign up a life insurance policy because now you have an income there for this cute butt yeah and you've got to take it you know you got to protect that but that's 99 of the children do not make an income that's worth insuring. Okay? So, you know, this is just, and so it's being used as a savings vehicle for college, and that's a freaking joke. So what happened was her parents paid into it her whole life, 20 years, and she got five or ten grand out of it.

It's the sunk cost fallacy. I got to keep this thing alive because we've been keeping it alive forever. Yeah. It's the sacred cow. We've always done it this way way and this is why we will always continue to do it this way we have no other reasoning that's it's a bad reason it's a sacred cow rule yeah brian's with us brian is in columbus georgia hi brian how are you you're well dave how are you better than i deserve what's up

so my wife and i are both active duty r. We've been in the Army for about eight years. We both plan on serving and retiring after 20 years. My question is about the best way to save and be financially independent at 42. Obviously, we'll still do something. But, you know, after working as hard as we have over the last eight years or so, we like to be able to, you know, volunteer, take care of the family, do whatever. So without being able to have access to traditional retirement savings venues, I'm curious if you have any thoughts on that.

Well, you have Roth IRAs available to you, and you have the TSP available to you. So we're currently saving in both of those uh but i just didn't want to incur oh yeah yeah oh i see what you're saying you need some bridge money you need some other money outside of that okay yeah exactly so thank you for your service by the way so you got 12 years to roll and get ready yep how much is in your tsp and roth's now so right now we have about 150 between our roths and Roth TSPs. Okay, you'll be at about 600 with that plus whatever you put in. Yeah, so we make about 150 after tax right now.

We also have about 120 in non-retirement investment accounts. Some of that we have set aside to you know buy buy new buy a new car in like two years um and when mine will give out yeah you're still you're still going to have a million to a million and a half at your current rate uh plus whatever you put in so you're you're in really good shape um if you're invested in in you know market rates of return in good mutual funds that's where you'll roll on that. So, yeah, I think you've got to look at some low turnover mutual funds, they're called. Get with one of our SmartVestor pros and just set up a whole side thing that says, okay, I need this amount of money.

And let's say you build $600K in there or $500K in there and you want to pull 10% off of it. That's going to give 50k plus your double military retirement you ought to be fine okay and on top of that you're going to have another million dollars but that's all trapped until 59 and a half and on top of that you're only freaking 42 and you probably do need to go do something and make some money just for just for fun how would you uh how would you oh absolutely how would you allocate i guess if we're saying saving 15 percent um a year would you shift the um i think you have a more aggressive plan than a 15 plan number one i want you to get

the house paid for but aside from that you may want to put as soon as you get the house paid for you can go more than 15 and i'm going to go i'm going to go pretty heavy over into that bridge because you're going to have i mean you're rocking it you're doing a great job i'm going to head over into that bridge a low turnover mutual fund is a mutual fund that doesn't have but about five percent or less of the taxes are due on the gains because they're not selling the stocks inside the mutual fund so that's what you're looking for, low turnover ratio mutual fund. It'll keep the taxes off of you until you actually use the money, like a capital gains rate.

It's a really good strategy for what you're trying to do. George Campbell, good job. Thank you. Ben and Kelly, we'll be back before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Dave here. We just launched a brand-new listener survey.

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