The Ramsey Show - App - Don't Jump off the Investment Roller Coaster! (Hour 2)

Episode Date: April 29, 2020

Chris Guillebeau, Savings, Debt, Career Tools to get you started:  Debt Calculator: http://bit.ly/2QIoSPV Insurance Coverage Checkup: http://bit.ly/2BrqEuo Complete Guide to Budgeting: http://bit.ly/2QEyonc Interview Guide: http://bit.ly/2BuGnZE Check out other podcasts in the Ramsey Network: http://bit.ly/2JgzaQR 

🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid off home mortgage has taken the place of the BMW as the status symbol of choice. I am Dave Ramsey, your host. Open phones at 888-825-5225. That's 888-825-5225. Chris is starting off this hour in California. Hi, Chris. Welcome to the Dave Ramsey Show. Hi, Dave and Chris. Thank you so much for taking my call. It's an honor and a pleasure.

Sure. How can I help? So, quick background. My wife and I are 34. I'm the sole breadwinner, self-employed electrician. And we've been really leaning heavy into baby steps four, five, and six with an emphasis on six the last couple of years. Wonderful. And we've really, really knocked down the mortgage quite a bit. But now, obviously, because of the ongoing pandemic, business is down. I'm still bringing in, you know, ongoing pandemic, business is down.

I'm still bringing in, you know, some pay, but it's not a fraction of what it used to be. And so I called my mortgage company and I said, hey, I'd like to capture some of the benefit of all this payments I've been making. I'd like to recast the mortgage. And they said, sure, you just need to make a $10,000 principal reduction payment at the time you request the recast. And, you know, I've got I'm sitting on about thirty thousand dollars in cash, probably five in checking and twenty five that I consider our emergency fund. And we could probably consider that about a 10 month emergency fund. So why do you need to recast the mortgage? I'm just thinking I don't know how bad this is going to be, and I'm trying to lower all my expenses as much as possible

so that if things do get really bad and if... So how much is your house payment? It's about $1,200 and change. And recasting it will lower it to what? Because we paid so much, it'll probably cut that

in half. We owe about $81,000. So you really think your income is within $600 of losing your home? Nah. Nah. Okay. So just keep paying as agreed and then go back to paying extra as soon as things get better.

Yeah. You're going to make $1,200 house payment in California. You'd do a dance in the street, right? Yeah, I did. I bought when the prices were down, and the house that I bought was an unlicensed pharmacy, so it was a really good deal. I know, but you see what I'm saying. I mean, you got an unusually low house payment for California.

For that matter, nationally, you have an unusually low house payment. And I don't think your income is going to drop. You got how much in savings for emergencies? About $25,000. usually low house payment. And I don't think your income is going to drop. You've got how much in savings for emergencies? About $25,000. Okay. I don't think you're going to get in danger here. Okay.

I would not bother with this. And recasting the mortgage doesn't do anything to help you pay it off. It just simply lowers the payment. Right. Yeah. Right. Well, thank you, Dave. Yeah. I think you've done a very very good job and i really appreciate you saying okay i'm gonna try to get out ahead of this i'm gonna

try to think through it but my point is is if you get within six hundred dollars a month of having a problem you probably have a bigger problem than this mortgage true and that's it's just you know if it $6,000 and you're going to recast it and it's going to be $1,000, yeah, maybe, okay. But $600 swing, you know, nah, you're going to be all right. You're a scrapper. You're going to make this happen, number one. Number two, you've got a great emergency fund.

Number three, if you get within $600 a month of a problem ongoing for an extended period of time or you actually get in trouble with the mortgage, that would be – you've got a lot bigger problems then. And I don't think we're going to get there with coronavirus. But what do I know? I didn't think we were going to get here with coronavirus. What do I know? So, hey, thanks for the call. All right, Axel is with us in Washington.

Hi, Axel. How are you? Hello there. Hey, what's up? I am currently on my lunch break, so I don't have much time at this point. Me neither, so we're in the same place. How can I help? Nice.

I have saved up six months' worth of emergency fund, and that's currently in my savings. And I, at this point in time, have $10,000 in checkings, which was a financial goal of mine to do. Above the emergency fund? Above the emergency fund, yeah. Why? I want – I'm trying to figure out how to invest it the right way. And I've, because of that, I haven't done anything with it. And it's just kind of grown.

That's fair. Do you have any debt? No. Okay, cool. So you got your emergency fund. My mom. Are you putting any money into retirement? At this point, no.

Okay. Does your work have a 401K? Yes. Okay. Let's go talk to them about that after your lunch break then. And let's start talking about, we say after you're out of debt, you have your emergency fund. That puts you at what we call baby step four.

And you start putting 15 of your income away for retirement and uh once you're doing that or even right before you do that if you say hey i want to buy a house i haven't bought a house yet then you would save up and you could use that 10 000 in that direction uh the only thing i'm sure of is i'm not going to leave it sitting there and checking uh you don't need that for comfort. You have an emergency fund of three to six months of expenses for comfort. You need enough in checking just to handle cash flow back and forth, and $10,000 is way more than the typical person needs in their checking account. Ongoing. You know, it's not earning anything there, so it's just not what you want to do. Hang on,

I'll have Kelly pick up. We'll send you a copy of the book, Total Money Makeover, before you go on your lunch break, and that'll help you get things going. Noah's with us in Texas. Hi, Noah. Welcome to the Dave Ramsey Show. Hi, Dave. How are you? Better than I deserve. What's up? So, a little background. I'm 19 years old. I'm currently going to Texas Tech University to get my mechanical engineering degree. Wow, wonderful. Thank you, thank you. I have no debt

and I make about $1,200 a month from work. I get paid $15 an hour so it's kind of however many hours I get to work. The guy working has been really flexible and he says put school first, put school first, do what you need to do, and then you can come work.

And then I also get about $350 biweekly from my parents. How are you paying for school? So my parents actually saved up a bunch of money for me, and so they cover whatever my scholarships have done. I got about $50,000, $50,000 or $60,000 in scholarships, and so that covers most of it. You rock, man. You guys have done such a great job. Well done.

Thank you. Here's the thing, Noah. I appreciate that. The degree field you have chosen is excellent in terms of career possibilities and probabilities, and you're going to make good money, and you're going to make the return on investment, the money you spend to get your education in mechanical drawing,

mechanical engineering at Texas Tech University, the money you spend there is going to recoup. You're going to get a great return on investment, a much better return than you would on investing in mutual funds. And so you are the best investment you can make. I know you have college covered with your parents and with the scholarships, but we're only talking about $12,000 a year here that you can save. And so if you save $12,000 a year and you're a freshman and you do that for four years,

you'll have $36,000 when you come out of school. You can invest it then. Meantime, I'd pile it up just as an insurance policy to ensure that you get through school with zero debt. Noah, you are a better investment than mutual funds. Make sure you get through school with no debt. Just pile up the cash. That's all I would do. This is the Dave Ramsey Show. We're all going through challenges, and our lives have been impacted in ways we've never anticipated. If we learned anything, it's that change is constant and having a plan is crucial to our family's livelihood. This is why I talk about term life insurance every day. And for those of you that haven't taken care of this for your family, I'm not sure what you're

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A few weeks back, my good friend Donald Miller was up at an event at my home, and he brought a buddy of his who we became instant friends named Chris. I'm going to mess up his name, Gillibow. He can help me in a second with that. And Chris and I got to talking the other day, and he launched a book in the middle of the coronavirus. Worst timing in the world, but we don't have any choice in this publishing thing because that's how it lines up and happens. The book is a great book.

It's called The Money Tree, a story about finding the fortune in your own backyard. He's the author of the New York Times bestseller, The $100 Startup, and Chris is joining me to talk about this book. Hey, Chris, how are you, my friend? Hey, Dave, I'm great, And you got the name just perfect. Okay. That's great. Wow.

I'm amazed. Okay. So I like this. I love this style of writing where you get the whole point across. I learned the principles through a parable, if you will, a story through the process. And so the $100, the a hundred dollars startup, uh, was a huge success. So what made you do the money tree and who's this book for? Yeah. Yeah. Well, so, so the money tree, this is the story of, you know, finding the fortune in your own backyard. Uh, when I wrote

the a hundred dollars startup, that was, uh, that's a how to book. It's a business book and it's, you know, it's pretty step-by-step. So I'm proud of that book, but a lot of people don't read business books, as you know. Lots of people are interested in stories. And this book, The Money Tree, I feel like it's very relevant for the time that we're in. So it's a terrible time to launch a book, as you said, but at the same time, it's this time of uncertainty where people are trying to figure stuff out. And a lot of people are asking maybe the things that we assumed before, or we expected, or we believed are not true now. And a lot of people are asking, you know, maybe the things that we assumed before we expected or we believed are not true now. And so I got to do something for myself,

I have to find financial security. So it's essentially the story of this guy who has a good job. His name is Jake, he's got a good job, or let's say a decent job. And he's a hard worker, but he's still in a lot of debt, you know, just like so many of your listeners, he's got a lot of debt, and the debt is affecting all parts of his life, his relationship, his day job, everything else. And so he has to figure out what do I do? Like, how do I, how do I get out of this situation? I can't just work harder. You know, I can't just, you know, drive for Uber at night or something.

I have to do something, you know, to really kind of take control of my future. So he ends up going to this group called the third way and begins experimenting with reselling. He gets a challenge to go and make $1,000 before the next meeting. And at first he's like, how am I going to do that? If I knew how to do that, I wouldn't be coming to this meeting. But he goes away, he kind of figures it out. And so from there, he starts a service, he starts a bunch of other stuff. So it's this whole process of anybody out there who's hoping to create more financial security for themselves, career security, so that the next time something unexpected happens, they have more of a foundation

through their side hustle, their second income. My hope is that people will find it enjoyable, entertaining, inspiring, but they'll also learn something through it, as you said, with those principles. Yeah. The wonderful byproduct of going through crap like the nation's going through right now is that it kicks a bunch of us out of the nest. I mean, you and I were talking at that event. We're both serial entrepreneurs. I mean, you and I were talking at that event. We're both serial entrepreneurs.

I mean, we've both got 27 ideas a minute. But not everybody has trained their brain to do that, or is as ADD as I am, either one. But they may have had a job that they really didn't like that just got taken away from them. And the idea of a side hustle might just have become the thing. It might be their deal. And so running a side business or starting a business right now,

this is just amazing times. This could be the, you know, you could look back 20 years from now and go, I would have never started that business, but I got kicked out of the nest by the coronavirus. Yep. You know, I hear stories like this all the time. I got kicked out of the nest by the coronavirus. Yep. You know, I hear stories like this all the time. I'm not so much coronavirus, and this is new, but, you know, over the past 10 years that I've been writing, I hear stories of people who got laid off, and at first it was traumatic, and they thought, oh, this is terrible. Then they ended up starting something that they never imagined before.

Maybe it was just a dream, you know, some kind of idea that they hadn't pursued. And then, you know, as you said, it becomes the best thing that ever happened to them. And so I'm collecting stories now of people who are already trying to adapt and pivot and transition and say, well, what are the opportunities now? Because whenever there is disruption or disorder or chaos, there are also possibilities, you know, just like whenever there's a progress or new technologies, some industries are harmed. So you have to ask, okay, well, you know, in the opposite situation, who is actually benefiting during this time? And what's the, what's the thing that I should pursue now? So there's lots of opportunities from, you know, the millions of people that are doing remote work now hadn't done that before, you know, at home exercise, everything is going online,

virtual, digital. So there are opportunities, but I think that even more valuable thing, what you mentioned earlier about training your brain, that, that is the skill to learn. So it's not so much like what is the hot thing right now, but how can you develop that power of observation so that the next time something comes around, you're like, well, here's what I noticed and here's what I've done so far. Here's the experience I have, the skills that I've developed. How can I apply that now so that I continue to build security for myself and my family? Chris Guillebeau is with us. He's the author of the New York Times bestselling book, The $100 Startup. The new book is called The Money Tree, a story about finding the fortune in your own backyard.

You can pick it up anywhere great books are sold, certainly Amazon and your local bookstore will have it. Chris is a known author, and so the bookstores are going to have his stuff front and center. You're always going to be able to find it there. And you can certainly, as I said, pick it up on Amazon. So what about that person that is a little bit like I was describing myself or maybe even you a while ago that has just too many ideas? How do you suggest they filter through the ideas? Too many ideas, yes.

I have that problem myself. I think you can do a couple of things. You know, first of all, you ask, what is your goal? Like, what are you trying to accomplish right now at this point in your life? Because if your goal is like, man, I got to make some cash, like I need to make $5,000, you know, in a pretty short period of time to pay off debt or get back on my feet. That is a different goal from my job is okay right now, but I want options for the future. You know, I want to do something so that if that job changes at some point, I'm not dependent on it. And so I think if you're in that place where you're like, man, I need to do something now, you know, the number

one thing I recommend to everybody is do some kind of reselling thing because everybody's got stuff they can sell. First of all, you know, the average American's got something like $2,000, $2,500 worth of stuff in their closet that they're just not using. So it's not like you're selling off your prized possessions, but you can sell off some stuff on eBay or any other auction site next door, offer up, you know, et cetera. There's lots of options for that. And the reason why I mentioned that it's not so much just like selling your own stuff by doing that often. And this is what happens with the character in the book as well. By doing that, you're going to learn something and you might be able to see like, here's something else that I can buy and resell. Here's what other items are selling for. Here's the completed auction

price. Oh, I see where I can buy this, you know, somewhere else and then resell it. So that's a skill that you're not going to do it for the rest of your life, presumably. But 20 years ago, when I got my start, that's what I learned how to do. And it led to so many other things that came later. So reselling, I think is the first thing. The second thing is, okay, you've got all these different ideas. You actually have developed a plan for lots of different services, products, et cetera. You know, ask yourself what is the most feasible, how it has the most profit potential, and what are you the most motivated to do? Hopefully something's going to emerge from those three questions. What is most feasible? What has the most profit potential? And what

are you the most motivated to do? Because, you know, life is short. You might as well do something you're excited about. Yeah, you know, when we were broke, I used to do a thing with a yellow pad. I was doing real estate deals, and I made a list of the deals I was working on, and I would just prioritize them. What makes me money by Friday? And, you know, once you identify that, you just go, well, the other deals I can work on later, but I need some money by Friday. Yeah, I mean, so it's prioritization.

You're thinking about the urgency. You're thinking about the scarcity. And then the last thing I would say is like, if you really can't decide, man, you just need to pick something because I think the greatest challenge or the greatest obstacle people have is they just get paralyzed by indecision and they call it research. You know, they say, Oh, I'm researching different stuff. You know, I got, they spend six months considering different ideas, but honestly, if you pick the wrong idea, you're going to figure that out pretty soon, in a few weeks or whatever, a few days maybe. And then you try something else.

So I guess I think having a bias toward action over, you know, extensive planning, extensive research is going to serve you well in the long term. Yeah, a lot of non-fatal failures. That's good. Right. That's good. Just reach out there and smack something and see what, push something, make sure it moves, you know, make something, create a little friction somewhere.

You'll get pushback. You'll figure out where you're supposed to be pretty quick. Sure, sure. You'll get pushback or you'll get ignored, which is worse. And then you realize, okay, there's actually something different, you know? That's the God's truth. I love it. Oh, Chris, thanks for hanging out with us.

The book is The Money Tree, a story about finding the fortune in your own backyard. Please check it out. The author is Chris Guillebeau, and you don't want to miss this book. It's a great read. I've gotten most of the way through it, because I just picked it up and couldn't put it down. It's a fun page-turner in that way. You'll enjoy it. The Money Tree.

Thanks for hanging out, Chris. Hey, thanks so much, Dave. I appreciate you. Alright, this is the Dave Ramsey Show. Folks, since you're spending more time at home these days, why not make the most of it? Now, I know not everyone has the means to do a full renovation, but thanks to our friends at Blinds.com, there are some small changes you can make to help improve your home. Blinds.com makes it incredibly simple to shop top quality blinds, shades, and interior shutters from home with easy online ordering and free shipping right to your door. Listen, window treatments are a simple project that you can do that really benefits the look and feel of your home. And if you're nervous about doing it yourself, well, don't be.

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This is the Dave Ramsey Show. Phone number is 888-825-5225. Warren is in Texas. Hey, Warren. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call. Sure.

What's up? Well, my wife and I were working the baby steps. We started off with $120,000 in debt. And then a few months ago, we found out that we were having our first baby. Yay! I know. It was a huge blessing. So we went ahead and pushed pause on baby steps just temporarily. And we saved a whole bunch of money. And then once we felt like what we had is, you know, an appropriate amount to save up, we continued to pay down debt after having a

little bit of money set aside for the baby. The baby's home now. He's happy and healthy and everything is good. So here's the conundrum we're in. We have almost the exact same amount of debt and savings right now. And we've gotten kind of comfortable and, you know, having that nice amount of money in the savings account. Now we've got this little guy to look after. So we're just looking for some guidance on how to proceed and do this the right way. Are your jobs stable in coronavirus? Mine is.

We are uncertain about hers. Can you make it on your income? I think so. yes, sir. Okay. Then we work the baby steps. Baby steps, do you know, are you familiar with those? Yes, sir. Go to basically down to $1,000 in the savings account to pay off the debt, correct?

Yep. Ooh, okay. And then you have no debt, right? Yes, no debt no money it's just it's hard to yeah hard to stomach it and what is your what is your household income right now about 200,000 cry me a river dude yeah i know you make two hundred thousand dollars a year and you have a thousand dollars in the bank and no payments in the world. How fast can you rebuild your emergency fund? 20 seconds. Yes, sir.

I mean, it's going to happen in 20 seconds. Just go do it. But getting rid of the debt is absolutely paramount. The fact that you have a little bit of a knot in your stomach and a little bit of gulp of air when you do this is going to make you really focused on getting that emergency fund put back quickly am i correct yes sir things are just a little bit different with the little guy now i love it right you're 100 right yeah you feel the you feel the weight of being a grown-up of being responsible for other human beings to eat uh but you make a lot of money warren i mean you're doing wonderful congratulations what a wonderful career and so wonderful career. And so you're not in a hurt.

You're going to be just fine. But I really appreciate you being a responsible man as a dad, as a husband, and being thoughtful about that. But I'm not asking you to be reckless. You have a ton of money coming in. Yes, sir. Okay, thank you. Thanks for the call, man.

You're going to be just fine. Open phones at 888-825-5225. Daniel's in Texas. Hi, Daniel. How are you? Good. How are you, Dave? Better than I deserve.

What's up? So I'm trying to figure out what my next step should be. I just paid off my house last week. Yay. So I'm trying to figure out what my next step should be. I just paid off my house last week. Yay. And I wrote a check for $150,000, which is what I owed. And I have about $250,000 in savings. My goodness, you've been making some money, haven't yeah not too bad i can't complain way to go

i have uh you know i have um obviously i have an emergency fund i don't have all my cars are paid for i don't have any debt and i i put um i've been able to put fifty thousand dollars i have three kids and been able to put fifty50,000. I have three kids, and I've been able to put $50,000 in each one of those savings accounts, I mean in a bank account. And I'm wondering what I should do next. Okay, I will put those in good mutual funds for their education. I wouldn't put it in a bank account. It's not earning anything in a bank account.

The good news is you've been making money, and you've been paying attention. So paying attention to the money and you've been paying attention. So paying attention to the money and where it's going and making it behave. And you've been responsible. So you've got a really good foundation here to build from. And so I would just tell you to get with one of our SmartVestor pros. Click SmartVestor at DaveRamsey.com and they'll help you get some investing started versus a bank account for those kids' funds and for your retirement. You need to be saving 15% of your income towards retirement.

Then once you're doing those two things, which are fairly easy to do in your situation, that's just kind of a minor tweak, then you've got a bunch of extra cash left over because you're 100% debt-free, and you've just got to figure out what you want to do next for investing. I do not invest because I've talked to so many wealthy people over the years. I do not invest in anything super fancy that I don't understand. I have to understand it and I have to like it. And so there's only two things I invest money in, other than obviously generosity, which is a type of investing, I guess. But in terms of actual investing looking for return, I buy real estate that I pay cash for. And I put money in good growth stock type mutual funds.

And that's the only investing I do. And, um, and it has, it has been very, both of them have been very, very good to me over a period of time. Now, both of them come and go, they're up and down and all that, but that's investing. And I don't buy, I don't borrow money. So in your case, you never borrow money again. You've made it this far, but yeah, I'll start. If you like real estate, start buying some real estate. Pay cash for it. And, obviously, you're buying real estate to create an income, income-producing real estate.

Because if you're going to put a couple hundred grand in something, he needs to give you some money back for that investment. Jose is with us. Jose is in South Carolina. Hi, Jose. How are you? I'm doing good, Dave. How are you doing? Better than I deserve. How are you? I'm doing good, Dave. How are you doing? Better than I deserve.

What's up? Thanks to you, me and my family are on baby step four and four, five, and six. And I work in the aviation industry and just been informed that in a month and a half, we're going to be furloughed from this patient. So I have the option of transferring with the company to another base up north but me and my family we really like it down here and we're not sure what our next step should be what do you do uh airline mechanic airline mechanic okay and what city in South Carolina are you in? Columbia. Okay. And so there's someone, a regional airline, I'm guessing, that has a base there that you work for, and they're doing away with that base.

And it's not coronavirus-related. They're just changing their business strategy. Am I understanding you right? Yes, that's correct. So it's a few more months before you have to make the decision, right? Well, I actually have about three weeks to make the decision. Okay, and after three weeks, what happens if you say I'm not going to move? Yes, I say if I don't move, then I'm going to go with the company. I can take the furlough and have recall rights, or I can decide to go with the company.

So after three weeks, the pay stops? Yes. Okay, so we're down to, I thought it was several months. Mm-hmm. Didn't you say there was a couple of months before they were moving? No, well, in June. June is when there's closing in June, but we have to make the decision

in about three weeks whether we're going to be transferring or just take the furlough. I understand. I'm going to take the furlough. How long does your pay last? Only three more weeks? Just about. That doesn't make

sense. You said they need you another month. Well, I mean, it'll be about, be about the parallel three weeks after the closing date in june oh okay so that means you're going to get paid almost to july if you don't move yeah good can you not find another place to turn a wrench on an aircraft between now and then well i've been searching over here, but due to the coronavirus, all the airlines are coming from the hiring freeze right now. Yeah, that's true. Okay. If I were you, I think you're making a decision.

You don't want to live up north. You want to live there. Yeah. And so I'm not going, and I'm going to spend a lot of my time as people start coming back to work and some of the hiring freezes start going off. I'm going to start landing myself in the middle of some of those places where I can land a job in this area. Hang on. I'm going to send you a copy of Ken Coleman's book, The Proximity Principle.

I think it'll help you. And go to his website, kencoleman.com, and download a bunch of the free resources. It'll help you land that job. If I were you, I'd stay right where you are and change companies. Folks, I love telling you about well-made, well-thought-out products. Today, I'm talking about Grip6 belts. I don't know about you, but I'm not a fan of traditional belts. They never fit right, and they're uncomfortable. Grip6 belts are unique. Owner BJ designed a truly modern, minimalist belt made of

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Some of you are freaking out about your investments. You're watching the stock market, and this whole dipsy-doodle that has happened with the oil business and with the coronavirus, which are related to each other, has scared you to death. And yet you know you need to be saving 15% of your income. There's tons of research in the investment world that I've witnessed over the last 30 years that says that when you have a high quality advisor that teaches you with the heart of a teacher in your corner, you make a much better rate of return on your investments. Is that because they are light years smarter at picking mutual funds than you are? No,

they're better at picking mutual funds than you are. No. They're better at picking mutual funds than you are. They've been doing it a long time, but you're going to pick the mutual fund. They're just going to teach you about some funds that are available. So why is it people get a much better return rate of return with an advisor that has the heart of a teacher? Because they talk you off the ledge. What I do here, don't jump off a roller coaster in the middle of a teacher because they talk you off the ledge. What I do here, don't jump off a roller coaster in the middle of the ride. That's the only way you get hurt. Ride this out.

Ride it out. Ride it out. Ride it out. If you do not have an advisor in your corner that has the heart of a teacher, and you know they have the heart of a teacher because when you meet with them or talk to them you learn something and you become more over the years you become more and more and more able to make your own decisions quickly and easily because you have more and more knowledge that they have given you that's how you know you have the proper advisor. That's simple. So

if you want one of those and you don't have one, click smart investor at Dave Ramsey.com. It'll, you put in your information, it'll drop down a list of the smart investor pros in your area. And then you pick the one you want and and you will be getting these much better rates of return because you'll stay in the market, and you won't be trying to time the market, and you'll be picking mutual funds that outperform the S&P. They are there. They are there, and they can help. Hey, thanks for joining us.

Open phone is at 888-825-5225. Marcus is with us in Michigan. Hey, Marcus, welcome to The Dave Ramsey Show. Thank you so much, Dave, and it's an honor to talk to you today. You too. What's up? Well, Dave, I've been struggling with something for a few months. That's why I called in.

I am 27 years old, and I was diagnosed with a chronic pain condition in my teens. And to avoid going into the weeds too much, we're preparing for my fourth surgery in four years. And the doctors have told me that I'm not really going to get any better. And to hear that at 27 is not great. So I called you today just to kind of, you know, I'm just trying to figure out my financial future, you know. I'm a social worker. I love my job.

I make $54,000 a year, but I'm very realistic in that I probably won't be able to work full-time when I hit 40. So I was just hoping for your thoughts today. Well, obviously having long-term disability policy as one of your benefits wherever you are employed is a big deal. And so when you get on a group policy, it is not based on your health condition at the time. It's just based on the fact that you work there. And in all the years I've had, we've got 1,000 folks here now, and I've probably had close to another 1,000 that have worked here at one time or another over 30 years.

And out of all of that time, I've only had two go out on permanent long-term disability. Both very sad situations. And I was really glad we had long-term disability insurance furnished here as a benefit. And it doesn't cost a lot for the employer to do it. It's one of the better benefits that an employer can furnish in terms of what it costs them versus what it provides for the team in terms of protection. So, number one, you want to make sure that's in place wherever you are because, obviously, you're anticipating needing that in the future. The second thing is that this just puts an added intensity on you working the baby steps. Being out of debt, staying out of debt, so that you can pile up cash and investments in the next 15 years, is what you're telling me, is absolutely essential because obviously from a math perspective, the bigger the pile of money you have when you're unable to work anymore,

having a long-term disability insurance policy in place when you're unable to work anymore. And, you know, there's all the other health concerns, psychological concerns, pain management concerns that I don't know anything about but you're asking me about the money and so uh if i'm in your shoes i'm going to get very very intense uh probably what someone else might consider wigged out i'm going to be it's like my whole thing you know i'm gonna do these things and i'm not gonna you you do not have the luxury of being impulsive irresponsible overspending out of control with credit cards you don't have that luxury other people your age could recover from something like that uh but you've got to stay away from that stuff so that you've got a big pile of cash. Is that logical?

It's very logical. It makes a lot of sense. I don't have any consumer debt. I do have student loans, but half of my student loans are being forgiven if I stay where I'm at for two years as a rural community health center. Good. I'm really, really focused on my student loan. And they have long-term disability insurance there? We do, yes.

Good. And I've already utilized my short-term disability twice, so we have that too. Yeah, okay. Well, and just, you know, your emergency fund needs to be, you know, we usually say three to six months of expenses, but you've got a chronic situation medically and so uh uh you know you need an extra emergency fund because you're going to be tapping it it's like you know i had actually i have a thousand dollars but my thought was to put

my stimulus check and my emergency fund now yes baby step two, I don't mind you building it up a little, because you've got mitigating circumstances here that are very real, and you're going to have regular medical bills that are far beyond what the typical person would have. Agreed? Agreed, yes. That's what I mean by chronic. And so I'm talking about the pain.

The pain's a different issue. I'm not the expert on that. You probably know a ton more about that than I do. But the point being, you're going to have some bills coming, and so, you know, you live in an area where hurricanes come more often. So you're going to have to have a bigger rainy day fund, right? Right. That's all I'm saying.

And so, yeah, make sure that you get that bigger now, and then let's get those student loans cleared in the next two years, and then it's game on. How big a pile of cash can we build? The other thing that happens is if you have federally insured student loans, which hopefully this is not going to be the case, but if you go out, in other words, they're going to be gone before you went out on disability, but if you go out on long-term disability and they're federally insured student loans, they are forgiven.

Once you're approved for SSI, for Social Security Disability, which is permanent disability, then student loan debt is forgiven. Sally Mae, federally insured student loan debt, is forgiven at that point. You have to go through the hoops, and it's a pain in the butt to get it done, but you can get it done, and you need to. So, yeah, that's absolutely the way to go about this. Hey, God bless you, brother. If I can help you as you're going through this, you call me anytime.

I'm here to help. It's a tough, tough situation you've got there. This is The Dave Ramsey Show. as you're going through this, you call me anytime. I'm here to help. It's a tough, tough situation you got there. This is the Dave Ramsey Solutions wants to give you some hope. For the very first time ever, we're giving you Financial Peace University free for 14 days. Go to DaveRamsey.com slash hope so you can watch from home. Business leaders make your life easier with FreshBooks. Whether you're starting a business or you've been at it a long time, FreshBooks is one of the smartest decisions you'll make this year.

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