The Ramsey Show - App - Don't "Oops" Your Way Into Student Loan Debt (Hour 1)

Episode Date: January 18, 2019

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Live from the headquarters of Ramsey Solutions, 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'm Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Our congratulations to our publishing and book team and Chris Hogan, another number one bestseller announced yesterday. Everyday Millionaires is yet another number one for Chris and for our team.

Very, very proud of them. That book has become an unusually popular book. It is highly sought after. It's very good information, and our congrats to our team. Open phones at 888-825-5225. Mike is with us in Saginaw, Michigan. Hey, Mike, welcome to the Dave Ramsey Show. Hey, Dave, thanks for taking my call.

Sure, what's up? So I'm 29. I'm a registered nurse with my associate's degree. My wife is also a registered nurse. I recently decided to go back to school to become a nurse practitioner just to further my education and kind of bump up my salary. My question is, I'm just a little worried about putting off retirement. It would take me about another three years, two months. We started trying to knock down the baby steps in August.

We started out our debt with about $50,000. We got it down to $40,000, and then all this came up. And I just really wanted your advice as to whether or not I should go back and if it's okay to put off retirement for another three years. Okay. So you're going to go to school full-time to be a nurse practitioner? Correct. Okay.

It's a wonderful degree field, and you should do very, very well going forward in the future with it. The only question is just timing in the ebb and flow of your life overall. What does your wife make? She works part-time we have a 18 month old daughter so she works two 12s a week and then watches our daughter the rest of the the time so how are you paying for school uh i'm to try to cash flow it. That's the plan. I have recently been looking into scholarships and going to try to apply for as many of those as I can. I made $62,000 last year, and I think she made $35,000.

Okay, so if you're not working and she's making $35,000 with an 18-month-old, how are you cash-flowing school? Well, I plan on working while I go. Oh, I thought it was full-time. Yeah, yeah, I'm not going to stop. Oh, okay. It's online at Walden University, so I'll be going online, not to an actual college. Okay, so we're dealing with a $90,000 household income then.

While you're doing that, you're going to go to school and get your nurse practitioner online. Okay. Correct. I'm feeling better already mathematically. Okay. But you've got $40,000 in debt left. When would you start school? Next week, if I started.

Just like that, huh? We make about $5,000 a month, bring home. And we were putting about $2,000 a month towards the other debt. How old are you? My rent is really cheap. I'm 29. I have about $20,000 in my 401k. My wife has about $10,000.

Okay. All right. I think that this is a really good plan. I might change the timing of it if I were you. Let me tell you what I'm hearing. I got a young dad who works hard. His wife works hard. Got an 18-month-old.

You're working a full-time job. You're trying to get rid of $40,000 worth of debt, and you're going to go to school. I just got too much food on the plate. Some of it started falling off. You got a lot of balls in the air juggling here when you start doing that. And so you can do this if you want to, as long as you cash flow it. But try to cash flow it and call me later and say, oops, I fell into student loan debt. You're not Britney Spears. You don't, oops, okay?

You're going to have a plan here, and there's not going to be a try. You're not going into debt. Or you stop school, okay? That's a concrete barrier. I'm not going to move on that one. Now, if you've had that barrier in place and you figure this out and you go ahead next week, the warning is you got a lot on you, and it was stuff you chose to put on you at the same time. Another possibility making $90,000 is you wait 18, 24 months to start your nurse practitioner school, and you're debt-free when you start, which would make cash-flowing this a lot easier

if you didn't have the $40,000 in debt hanging around your neck. So spend the next year, two years, whatever it is, getting out of debt, and then start nurse practice, nurse school. Now you can cash flow it a lot more likely, and you're not carrying so much weight. I mean, I just don't want to just keep putting bricks in your pack while you're trying to walk along the path here. And you can do it. You can probably do it. You're young. You've got a strong back.

You can probably pull this off but you're just asking for you got no margin left anywhere you're using up all your emotional energy your spiritual energy your financial energy everything is stretched to the max is what i'm hearing so i'm probably going to tap the brakes i think you really need to go do the nurse practitioner thing i would just probably wait 18 months, 24 months, and then do it. That's probably what I would do because it's going to be okay. You'll still be 31. You're going to be okay. You've got plenty of time.

You've got a lot of life left in front of you. You're already making good money. You're already in a good career field. You're just accentuating it. We're just putting some icing on the cupcake with this next move, and it's something you should do. I would wait until I got out of debt just because of what i said it's an but but i'm not gonna be mad at you either way i'll help you either way but the warning is don't oops i ended up with student loan debt thanks for the call open phones at triple eight

eight two five five two two five all right james oops was like a britney spears i didn't do that wrong is that she did do say say okay that was like a Britney Spears. I didn't do that wrong. She did do say. Okay, that was like before you were born, though, right? No, that was like when I was in middle school. You were in middle school? Yeah. Okay. You're in diapers.

Okay, that's good. I guess socks older than you. Okay. Open phones at 888-825-5225. Y'all jump in. We'll talk about your life and your money. Oh, my gosh. Becky is with us.

Becky's in Memphis. Hey, Becky, how are you? I'm great. How are you doing? Better than I deserve. What's up? Well, thank you so much for taking my call. So I have a question about my retirement.

So my company where I work has recently been sold and i have an option of doing a traditional 401k or doing an a rock 401k and so i'm just really torn on what to do do the roth do the roth okay yep absolutely and take your old 401k because your old one doesn't blend with this one perfectly. You can roll it. You have the option to roll it out to an IRA and a wood. Okay. Now, I'm just curious. Why do you say that?

Because you've got more options and more control. There's 8,000 mutual funds to choose from in the brave, free world out here. And in your 401k, there's 12 or 14. Oh, wow. So get with a SmartVestor Pro and get your mutual funds picked, the best of the best of the best out there. Put that in your 401k. You can flip it to a Roth later if you want to.

But in the meantime, let's get this Roth going over at work because everything that grows, it grows completely tax-free. Oh, I love debt. This is the Dave Ramsey Show. I'm going to go on a little rant here for a minute. I took a call from a father who wanted to know how to plan for the care of his special needs daughter after he dies. Why is it that parents of special needs children are so deliberate in their planning while other parents have a tendency to be sloppy? Do the needs of your family matter less if something happens to you?

Oh, I'm sorry, did I just guilt trip you into getting some term life insurance? Well, then good. Your family needs you to step up. Having the right amount of term life insurance is a matter of personal responsibility. If you want to use the new year as a reason for doing the right thing, then do it. Term life insurance is something every family needs, which is why I talk about it every day. It's not complicated, it's not expensive, and you need to do this now. Zander Insurance is the only place I recommend.

Visit Zander.com or call them at 800-356-4282. Please learn from other people's mistakes and get this taken care of. That's 800-356-4282 or Zander.com. Thank you for joining us, America. Chris Hogan and Anthony O'Neill had a bang-up wonderful smart money event last night in Colorado Springs. And this coming Tuesday, Chris Hogan and I will be in Irvine, California, the Los Angeles area, at a sold-out event there. I think we've got about between right at 4,000 folks coming to that. And a Smart Money event this coming Tuesday night. Thank you to the L.A. area. Then in Raleigh, North Carolina, on February the 5th, Rachel Cruz and Anthony O'Neill will be in Raleigh.

And if you'd like a ticket to that, you need to get signed up for that. It is selling rapidly. Anthony O'Neill and I will be in Grand Rapids, Michigan, February the 20th, Cincinnati, Ohio. The next day is February the 21st, Rachel Cruz and Anthony O'Neill. And then on March 14th, Anthony O'Neill and I, I'm coming to Atlanta. So I'm looking forward to that smart money event there. And then we've got the smart money event, the very first one ever done, and I'm going to be doing it by myself.

Wow, I haven't done that in years. San Diego. And that's on March the 25th. And this is going to be a very special Smart Money event, a little different content. So I'm looking forward to it because I don't get to do it by myself very often. So I'm just going to mess with it. I act like I own the place. There you go.

At these events, you plan on being there. We've had over 5 million people around the world get out of that. We've had millions and millions of people come to these live events. I've been doing them 25 years. And we've had everywhere from 3,000 to 12,000 people, depending on the type of event and what we were doing at these things. They generally sell out. And if you want tickets, come to DaveRamsey.com or call 888-22-PEACE.

It's a great night. It's like a pep rally for your money. You know, it's like the stuff you hear on the radio, but you're there with 000 other people cheering and yelling and we're all going to do this stuff you got this you can do it and you leave believing you're not as weird or crazy as it sounds when you're in your car by yourself listening to me because it sounds weird i mean this stuff is that i teach is so countercultural it's so different than everybody else, that to get in a room full, an arena full of other people that believe the same thing is inspiring. It really is. And you can bring your spouse who's sort of on board, and get some on board.

You bring your friend that you've been trying to get on board, and get some on board. Bring your parents, bring your grown kids. Maybe if your grown kid attended a smart money event, they would move out of basement there's a guarantee i can't make but we'll give it a shot a lot of fire under their little butt there you go zachary is with us in san antonio texas hey zachary how are you good dave how are you thanks for taking my call sure what's up so i am currently 21 years old i owe uh seven thousand two hundred dollars left on a car that i bought in 2017 and i have uh about twelve thousand dollars saved up i was i started listening probably i don't know three four months ago and i i just wanted to call in and say you know is that something I should take out of that $12,000 savings and just pay it off now?

So how much have you been listening over the last month? I've been five days a week just while I work. Okay. Then you know what I'm going to tell you, don't you? I'm leaning towards knowing what you're going to tell me, but I wanted to be sure, but I also wanted to ask this in consideration to it. That's the only thing that I have on my credit as credit history, so should I continue paying it off to get more credit history,

or should I just pay it off all in one lump sum? Okay. Here's how we've led more people out of debt and into everyday millionaire status than anybody else. We have figured out that the shortest path to wealth is to not use up your most powerful wealth building tool, which is called your income. So when you don't have payments, when you stay out of debt, it is one of the key data points towards building wealth. So I don't borrow money. And for 25 years, Zachary, I've taught people not to borrow money and to get out of debt as fast as they can.

And the reason is what I just said, because it's the shortest path to wealth. That simple. Okay. Now, once we've established that, then we say, okay, what is building credit? Well, building credit is I'm going to go into debt and pay it on time so that I have a better score with the credit bureau, so that I can go into debt and pay it on time so that I can have a better score with the credit bureau, so that I can go into debt and pay it on time so that i can have a that's

building your credit that's how it works right right sounds a little like a dog chasing its tail okay and so if you if you if you stipulate in this conversation that the shortest path to wealth is to avoid debt then going into debt in order to have the opportunity to go into debt, in order to have the opportunity to go into debt, is not the shortest path to wealth. As a matter of fact, it'd be just plain dumb. And so I don't teach people to build their credit. My credit score is zero.

Okay. Well, I didn't know if that would affect me in the future on buying a house and it honestly i i'm i'm ready to pay it off today and be debt free by the end of the day but what what are my next steps after that well then let's start building an emergency fund and then build up a big hairy down payment on your house and i assume you're renting an apartment i actually stay with family. I only pay about $300 a month in rent. Perfect.

Okay. Well, you may have to, when you go to get a mortgage, if you have zero credit, now you don't have zero credit. You've got a car that will continue to show on there as having been paid off, but I assume you paid it on time. Have you not? Oh, yeah. I'm like six months ahead on the payments.

Okay. Then it's going to show up. The time that you've had the debt is going to show on your credit, so you do have a credit score. You do have a credit report. But if you don't have enough, then the mortgage company will have to do what's called manual underwriting, which means they will just say, okay, verify your job,

verify your down payment, and they can have the people that you're living with write a letter and say he's paid us $300 a month rent for this many years or months or whatever it is. And that's enough to get a mortgage at the same interest rate as people with a high credit score. It's called manual underwriting. And if your mortgage company doesn't know how to do it, folks, check with Churchill Mortgage. They actually know how to do it, folks, check with Churchill Mortgage. They actually know how to do it.

A lot of the mortgage companies have gotten so dumbed down that they're not allowed to think anymore, and they just look at a monkey looking at a credit score. Ooh, ooh. Yeah, the number's big enough. Ooh, ooh. The number's not big enough. Whatever it is, right? And so that's the one time, if you're borrowing money, that you're going to not have a credit score. You're going to have to have a workaround.

The rest of the time, you're paying cash for cars, trips, furniture, whatever it is you're going to do. You're going to pay cash for it. No building the credit score. And, you know, the problem with the credit score is there's no middle ground. You either got to go borrow $150,000 over the next four years and pay it back in a bunch of little gotcha debts and kicking kicks in the butt and kicks in the teeth. And then you'll have an 800 credit score or you have zero credit score like I do. And you just decide which way you want to live. Living in the middle with a 650 credit score is a dumb idea.

That'll kill you. You get nothing. Then you got nothing from either side of this equation. So good question. Thank you for joining us. Open phones at 888-825-5225. Justin on Twitter is in the same camp. Dave, I know you suggest canceling credit cards.

Doesn't that hurt your credit rating? Yes, it does. Or is this just another ploy by credit card companies to get you to keep them? No, it hurts your credit because you don't have the account open anymore, and it's systematic. It doesn't hurt it like like paying late. It doesn't. It's not a black mark. But the way your credit score works, the algorithm, the mathematical algorithm that builds your FICO score is based on your consistent and constant interaction, paying them money. And if you quit paying them money, them being the banks, consistently, constantly,

then you're not going to have as high a score. So if you have one account that's open versus 20 accounts that's open and perfectly paid, you're going to have a lower score. So, yeah, closing up your credit card accounts does damage your score, with the goal being for your score to disappear because you have no open accounts of any kind, no outstanding balances of any kind, nothing where you're interfacing with the grid, and then you get what I get.

For 28 years, I've had a zero score. Indeterminable. They actually sent me an email. We want to make sure that you're not feeling poorly. Are you sick? Have you died? Kind of a threat, I think, but I'm doing just fine. Thank you very much. I'm just not giving you people a bunch of money anymore. This is the Dave Ramsey Show. Are high health care costs getting you down? Are you confused trying to navigate your options? Do you wish you could find an affordable, biblical solution to your health care costs?

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To learn more, visit chministries.org. That's chministries.org. Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. from Blinds.com. They have a 100% satisfaction guarantee. It means even if you mismeasure or you pick the wrong color, they will remake your window blinds for free. You get free samples, free shipping,

and with the new promos they run every month, you can save even more. Use the promo code RAMSEY. Sherry's in North Carolina. Dave, where do HSA accounts fit into the pecking order for investing? Are they considered retirement savings if we don't plan to use them for our current medical expenses or withdraw before age 65? Use an HSA savings portion of the account as a retirement vehicle until you've maxed out everything else, anything that's available to you, and then you'd max that out. You might use the HSA account, savings account, after you have a fully funded emergency fund and it is not included in your emergency fund, and it would be only for ongoing and, so to speak, chronic-type recurring medical bills.

If you have allergies and you know you're going to spend $1,000 a year on allergies, and you know you're going to spend $1,000 a year on allergies, not out of your pocket, in addition to your medical insurance, your health insurance, then you would run at least $1,000 of your spending through the HSA because the money you put into the HSA is tax deductible, and so you don't pay taxes on that $1,000. See, if you bring that $1,000 home, it looks like $700. But if you put it in the HSA, the whole $1,000 is in there. You can use the whole $1,000. So it's kind of like the government's paying $300 of your bill.

You're paying $700 of your bill because it's a tax-free medical expense when you run it through an HSA. So if you've got ongoing expenses, you use the HSA to run the money through because you get the tax break on the spending. That's very wise. Now, in your case, you're saying we don't plan to use it for current medical expenses, which is where the Ramseys are. Knock on

wood, we so far have been a healthy bunch. And I've had an HSA since they very first came out. I loved them the day George Bush came up with the idea and put them out there. And he was roundly criticized, by the way, by the left when he did this. But it is an excellent, excellent tool. And I've had one all along.

The weird thing is I've never used a dime of it. And so I've fully funded the thing every year because I fully fund all my retirement that I'm allowed to put because long ago I was past baby step seven and maxing out everything and so i've got like two hundred thousand dollars in the stupid hsa because it's just funds and funds and funds i put in mutual funds and so it became what you're talking about an extra retirement account in a sense but uh that's unusual and um you know you need to get to the point that you're at baby step seven before you start talking about doing that.

So the only thing you would use the health savings account, the actual savings portion of it for, is medical bills. And don't put any more in there than you need to put in there for medical bills until you get to baby step seven. That's the answer to your question. But because you have your emergency fund in place, you can cover stuff that comes up out of pocket. Now, again, whatever the rhythm of your spending in your family is out of pocket medically, you need to be putting that much in there every year just to cut down the taxes on the medical bills.

Roger is with us in Miami. Hey, Roger, welcome to the Dave Ramsey Show. Thank you. Good afternoon. How are you? Better than I deserve. What's up? Hi. So I'm a 24-year-old. I have about $154,000 in student loan debt, and I just wanted to know if I should worry about paying off my loan as soon as possible,

or use some of this time to sort of build up a savings and buy a condo or something where I get a mortgage that's cheaper than my current rent and then focus on paying the loan off. Wow. My current rent is about $1,500 a month. Wow. Yeah. What do you do for a living?

Well, I'm a pharmacist. Well, that's good news. Yes. So what are you making? $111,000. And when did you get out? When did you get out? A couple months ago.

Good for you. Well, I'm proud for your income. I'm scared to death for you on these student loans. Here's the thing. Six months ago, you were living like a broke college student, right? Right. Now you make $111,000. Why don't we keep our lifestyle down and pay the student loan off in a heartbeat,

like two years? Two. Yeah, like have no life. You remember when you used to have no life, remember? Before you got rich? You just got rich, right? You just hit the lotto, $111,000. And you were eating ramen noodles before, remember?

That's right. Yeah. So go back to the ramen noodles for two years and be 100% debt-free. Okay, okay. And, oh, wait a minute. I could just tell by that you ain't doing it. So let's keep working on this. The other thing is is as a pharmacist

have you investigated yet how much money you can make on the weekend working at the hospital uh no i haven't i've been doing some overtime though oh good i do yeah i've been doing overtime and using that money to save and how much does that pay? So if I do overtime on top of my 40 hours, the money comes out to about close to $1,000, a little bit $1,000 over my paycheck. A month? A week. Well, a month would be $2,000

with the overtime. $2,000 a week, a month. Okay, so $24,000 more. Okay, so here's what I'm doing. I'm looking at your $154,000. And I'm looking at this $154,4 as you have this wonderful story of your life that you've just told me until you told me this 154. And it's almost like I've got this healthy young guy who's got cancer. And I'm saying cut the cancer out fast.

Don't play with it like it's a pet. That's what I'm telling you. The shortest distance between where you are with your fabulous income and your great choice of career, by the way, congratulations, well done, the shortest distance between you and where you are today and being a millionaire is to clear that student loan debt like it was cancer. I agree. So I guess one of the obstacles I had here is the rent.

I feel like I'm paying too much in rent. You are. $1,500 a month. So I either wanted to find a cheaper place to rent or save a little bit, get a mortgage on a home, and then my mortgage payment, hopefully have that reduced to something like $800 or $700 with all the payments, and I end up owning that condo or whatever I buy. That's really intellectual but not wise.

Okay. You know, you've worked that through with your brain, but out here in the real world, that's going to bring a bunch of crap into your life. Right now, today, I'm talking to an excellent, employed, broke 24-year-old. You're $154,000 negative net worth. You don't need to be buying a house. So, yeah, rent the cheapest thing you can or take in a roommate. You do need to make a move on that.

But listen, this is 100% focus on the debt. We're going to clear the debt. We're going to clear the debt. We're going to clear the debt. And then I do want you to go buy something. Miami is a wonderful market to buy real estate in. It's a great real estate market. It's a great town.

It's got a lot of flavor, a lot of spice there. It's wonderful. I love the town. But, yeah, you have the ability to make a lot of money, make a lot of extra money, dial yourself down to nothing, no life, like you used to do when you were studying to be a pharmacist. You had a singular focus, a singular goal. You were delaying pleasure to win. You were paying a price

to be a stud now you're the stud now pay one more price and clean up the stinking mess you made with those debts because dude man i mean if i'm talking to you at 26 years old and you're 100 debt free and you have the ability to make 150 000 a year hey you're gonna have so much money you're gonna be that we just paved the road man we just paved the interstate and set a ferrari on it you're going to have so much money. You're going to be in. We just paved the road, man. We just paved the interstate and set a Ferrari on it. You're going to be in good shape. But right now, I set a Ferrari on it, and all I see is speed bumps. So let's get the thing smoothed out here, and that's what I would do.

Hold on. I'm going to send you a copy of the book, The Total Money Makeover, that outlines exactly how 5 million people are doing what I'm trying to talk you into doing. So I'll help you. I'll show you what to do. I'm trying to talk you into doing. So I'll help you. I'll show you what to do. I'm honored to have you in my audience. And great career choice, Roger. Well done.

Well done. Man, that's awesome. Open phones this hour as we talk to you about your life and your money. Man, when I first started this show 25 years ago, there were zero smart 24-year-olds calling me. Zero. Now I get to talk to them almost every day. The 25, 26, 28-year-olds that I'm talking to right now

are some of the smartest I've ever talked to in a quarter of a century that I've done this. You people that think these millennials are stupid, they're not stupid. Some of them are lazy, but most of them are awesome this is the day ramsey Thank you for joining us, America. We're glad you're here. Open phones at 888-825-5225.

Jordan's with us in Little Rock. Hi, Jordan. How are you? Hey, Dave. How's it going? Better than I deserve. What's up? Hey, my wife and I are on baby step six, and we've just got the house left as our debt.

And so we've got a the house left as our debt. And so we've got a lump sum. We've got about $30,000, and I'm trying to decide if I just want to throw it all at the house or if I want to try and invest it into mutual funds and make some money off of it. What is your home worth? It's about altogether. It's about $330,000. Okay. And what do you owe on it?

About $250,000. Okay. Well, let's pretend you didn't have that $30,000. Okay. Why would you have not gone to the bank and borrowed another $30,000 on your house to invest it? I don't want to get another loan. Okay. Well, what if you just refinanced and had a $280,000 loan instead of a $250,000 loan?

Just to reduce the monthly payment? No, I'm saying you had a larger loan by $30,000 loan? Just to reduce the monthly payment? No, I'm saying you had a larger loan by $30,000 than what you have today. Okay. And invested that $30,000. Mm-hmm. Why haven't you done that? I hadn't thought of it. Okay.

Well, I was hoping you were going to say, I haven't done that because I was trying to get out of debt. And borrowing money is putting me further into debt. But the bottom line is that all the millionaires that we have studied, the vast majority of them, one of the key data points in them getting to millionaire statuses, they paid off their home early. We didn't talk to any of them. Not one out of the 10,000 millionaires that Chris Hogan and our team interviewed, not one said, I became a millionaire because I borrowed money on my house to invest in mutual funds.

They all said, I paid off my house as early and as quick as I could. I didn't borrow any other money of any kind. And so what that information tells me, as applied to your question, is I would pay off my house as quickly as I could because I'm trying to build wealth as quickly as I can rather than trying to borrow my way into wealth. Because effectively by not paying it down, you understand you're borrowing it, right? Yes, I do. Okay. All right.

That's the opportunity cost on your money. So, yeah, I'd pay down the mortgage as fast as I can in baby step six. When the house is paid off, then I will max out in mutual funds all retirement accounts that I can possibly get my hands on, plus some more. And you live and give like no one else. That's baby step seven. Phyllis is with us in Tulsa. Hi, Phyllis.

Welcome to the Dave Ramsey Show. Thank you. What's up? Okay, here's my dilemma. I am 67 years old, recently divorced. Good Lord. After 24 years, I was left with quite a bit of IRA divided. I don't know how to invest it. I'm rolling it over into an IRA, and I don't know whether to go medium to high risk or low to medium risk. Do you have any other income coming in?

I have Social Security. And I'm going to actually, in the end, need some of that to live on, but I've got about $260,000 to invest. And I'm afraid to put it in medium to high. Afraid it will lose money that I don't need to be losing at my age, I don't think. And so do I keep it in low-risk mutual funds, or do I put it in medium? I'm not sure what your advisor is calling low, medium, and high, but let's just talk this through for a second.

Okay. Most of the time, what they call high risk, if you look at it over the scope of 10 years, the number of times you would have lost money in any given 10-year period of time is less than 1% of the time. And that's a standard mutual fund investing. Like, I'm 58.

That's what mine are invested in, and that's what a lot of advisors call high risk. So the point being, you could put money in there. You could put the $260,000 in there today. It might be worth $240,000 at the end of this year, and then it might be worth $300,000 at the end of the next year, and then it might be worth $290,000 at the end of the next year, and then it might be worth $300,000 at the end of the next year, and then it might be worth $290,000 at the end of the next year, and then it might be worth $350,000 the next year, you see?

And so, but the bottom line is, over the scope of the years, even though it's going back and forth, you don't get hurt on a roller coaster if you don't jump off. I don't want you on a steep roller coaster, a scary one, but I, you know, so my point is that high risk in some of these scenarios, and again, I'm not positive how they've categorized this, and I want you to sit with your advisor and learn some more so that you're not scared. And if your advisor doesn't have the heart of a teacher, click SmartVestor at DaveRamsey.com and find someone in the network of people that we endorse

and we recommend, and they'll help you with the heart of a teacher, and you can actually learn this stuff. But what you want to look at is the long term, because here's the thing. You're not going to take the money out. You just need the income off of it. Right. And if you can make 10% a year on it, that's $26,000 a year. It's a couple grand a month.

Right. I was told that if I don't invest in least medium that if inflation raised i would definitely be losing a lot of money agreed agreed and so um and again i'm not worried about the words high or low medium or high risk because none of these are in las vegas we're not going to las vegas okay that's not what we're doing here we're investing and so this is like is this a a good neighborhood to buy a house or a medium neighborhood to buy a house both of them you're buying a house and buying a house a pretty safe thing right but one of them might be a little better than the other that's all these words

mean in this scenario so this is not like rolling the dice and you're going to lose the entire $260,000. That's not on the table if this advisor's worth is salt. So you need to get in there and understand what they're talking about and say, okay, if I leave this alone 10 years and all I take off of it is the income, what are the chances that I'm going to lose money percentage-wise over the history of this kind of an investment? If I look back 50 years on this type of an investment if i look back 50 years on this type of an investment how many times would i've lost money between 67 years old and 77 years old and i think on the high risk even they're going to tell you very very low like almost never

would that have happened in the last 50 years and so uh if you're leaving it alone 10 years because you do not need to touch this principle. You do need to live off of the income, though, to have that extra couple thousand dollars to go with your Social Security. And that needs to be your budget. I don't want you eating into the actual goose. I don't mind you touching the golden eggs. But the 260 is the goose that's laying them. You leave the goose alone.

That's your principle. And that's how you set this thing up and work yourself through with that. Sit down again with your advisor and really understand. I think you're going to find that what they are calling high risk is not really, in the scope of the world, high risk. It's the highest of the three things you're looking at. But compared to Vegas, compared to gold or Bitcoin or stupid stuff that people do, which is ultra, ultra high risk, single stocks compared to that. This is not even on the same planet with those. So this is like this is a good good neighborhood a medium neighborhood which is it and you're just looking at it that way and sit down and learn that from them and ask them over

the last 50 years if i had invested at high what percentage of the time would i've lost money and they can actually run a pro forma out and show you that you learn from them learn from them take your time this is up to you to make the decision. Not because Dave Ramsey said and not because your advisor said. It's because you learn from me. You learn from them and then you make your own decision. But I think that's what you're going to find. So, good question.

Open phones at 888-825-5225. We're glad you're with us, America. Listen, when you're dealing with financial people, tax people, real estate people, mortgage people, estate planning people, advisors for your investing, depending on which insurance, a lot of times all they've learned how to do is sell. And you don't want a salesman. You want a teacher. You want to learn. Because it's not their job to make your life decisions. It's your job. Their job is to teach you.

And if they can't teach you, then they don't get your business. You walk away. In every case, people, you need people with the heart of a teacher, not the heart of a salesman around financial products. This is the Dave Ramsey Show. This is James Childs, producer of the Dave Ramsey Show. Did you know you can now listen to The Dave Ramsey Show on Pandora and Spotify? For all the ways to watch and listen, check out our show page at DaveRamsey.com.