The Ramsey Show - App - Find a Way to Create Margin to Go to School Debt-Free (Hour 1)

Episode Date: November 8, 2019

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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'm Dave Ramsey, your host. You jump in, we'll talk about your life and your money. It's a free call at 888-825-5225. Brittany is with us in Los Angeles. Hi, Brittany.

Welcome to The Dave Ramsey Show. Hey, Dave. Thank you so much. It's such a pleasure to speak with you. Thanks for taking my call. You too. How can I help? So I'm currently 28.

I live in Los Angeles. I'm working two jobs in hospitality, one full-time, the other is part-time. I bring home about $28,000 to $31,000 after taxes a year. I'm debt-free, thanks to you. I started getting on your plan about six months ago, and I picked up the second job. I'm on a monthly budget, but my question for you is I'm looking to go to school for the first time and I want to become a physical therapist, but I'm not sure how to go about it and still be debt-free since I feel like I'm already kind of, my budget's already really tight. What do you suggest? Okay. Where did you grow up? I grew up in Pennsylvania, actually. Okay.

And what brought you to L.A.? I wanted to be a singer-songwriter, so I was out here for about eight years working on that. But through the course, you know, through the different course, I found that I like it more as a hobby, more than a career. Gotcha. I don't like the, you know, the uncertainty of, like, not having a paycheck. than a career. Gotcha. I don't like the uncertainty of not having a paycheck. I appreciate that. I got into hospitality, which is great, but it's not something that I want to do when I'm 40, 50 years old. Gotcha.

Well, that's good planning and good thought on good critical thinking skills on your part. Very well done. So here's what runs through my head. There's two ways, of course course to get through school debt free um there's three variables but two ways the the one of the big variables is uh the cost and so to become a physical therapist is a wide range of costs and so where you choose to go to school matters a lot because you want to go to one that doesn't cost much okay absolutely you don't have any money so we're going to just start with that one

so you don't get to just pick one because almost no one goes to a physical therapist because of where they went to school my wife is my wife is having a checkup this afternoon and neither she nor i and ask the doctor where he went to school right it doesn't come up the only time it comes up is in a highly specialized field where you're looking for the top person in their field because you have an extreme situation that's the only time it comes up so to have a great to have a great career where you go doesn't matter what matters is did you learn something and did you get through without a big pile of debt? So number one variable is choose the cheaper school. And then the second thing is from there, we need to start looking for companies that support or hire physical therapists.

Some of the big hospital companies like an HCA is an example, and start talking to them of do they have a program where, because some of them do, where they will pay for your tuition while you're working for them doing something else, but then you're also committed to work for them for a few years after you graduate because they're trying to do this as a recruiting tool. Okay. Looking for scholarships, in other words. Lots and lots and lots of different places,

but that's a goldmine for scholarships in the health care field is the health care companies are always desperate for new team members and will do all kinds of things to get you in. Of course, the military is an option. That's an outside option and may or may not be something you want to consider but they'll certainly pay for it and again the same thing you're going to commit to work for them for three or four years at a minimum doing that now then the last part of the equation is your income versus your outgo um the average

household income in america is fifty nine thousand dollars right now now obviously that average includes a lot of dual income households a lot of people where both people are working spouses are working and you're obviously single the way you're discussing this so um but so you're at about half at single but you also live in the second most expensive city in america i know i know that's what makes it a little challenging so i'm wondering if you don't locate a physical therapy school that's inexpensive in a more inexpensive market if you can't get into the hospitality field in that area and work and work your way through because your expenses would be so much less.

I mean, I have no idea, but let's just say I'll just make up a place, okay? Let's say you went to a physical therapy school in Des Moines, Iowa, okay? You can make almost as much in the hospitality field, waiting tables and so forth, in a good restaurant there as not quite but almost as much and your expenses to live will be half yeah and i don't know that you'd want to live necessarily i just made up a city des moines a great town but whatever town it is knoxville tennessee i don't care right but some town that's that's inexpensive to live in, you can get in an inexpensive school, and you can work your butt off and get some of those scholarships,

and I think you can get through. I think it's going to be tough because I think you're already living hand-to-mouth where you are. You ain't got any margin to throw at school right now. That's why you called. Right. So we've got to do something to create margin. You've got your income up or your out go down, right? Right.

How old are you? 28. Yeah. I think you're going to do this. I think you're going to figure it out. Yeah, I'm ready for it. If you'll treat the problem like, okay, I'm going to go do something crazy for three or four years to get to live this dream. I'm going to go live someplace I wouldn't normally live.

I'm going to pay a price. I'm going to live like no one else so that I can get to get to live this dream i'm going to go live someplace i wouldn't normally live i'm going to pay a price i'm going to live like no one else so that i can get this degree to live this dream i think you can do this yeah because you're that girl i mean that's who you are aren't you yep yep i can do this i I think you can. I think you can. So you've got some analysis to do. Locating a school, locating a city, and some stuff like that. Or you've got to figure out a way to make a ton more while you're there, or find somebody that just pays for school, and you live there hand-to-mouth while you go through school and keep the exact same location, same jobs.

There's nothing wrong with L.A. It's a wonderful place. It's. There's nothing wrong with L.A. It's a wonderful place. It's just expensive. Nothing wrong with it. It's just everything you touch is, you know, glitter there. And that's why you went there in the first place, was to try to get some of that glitter on you. But that's okay.

That's cool. Next chapter. Turn the page. Next chapter. And you got the stuff. You got the moxie. I can hear it in talking to you thanks for calling in open phones at 888-825-5225 matt is on twitter dave do you recommend a

separate emergency fund for rental properties and if so how much yeah rental properties i treat them like a separate business and business should have its own retained earnings to cover its own issues. And so, yeah, your rental property, I would hold money in the rental property account to cover expenses that are going to occur there. Vacancies, heating air that needs to be replaced, hot water heater goes out, roof leaks. You know, you've got to put some money back there. And I usually hold about three months' worth of rent in each of my rental accounts, and that gives me plenty of pad there,

and then I don't ever have any panic by coming up short on cash. 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? Based on New Testament principles, Christian Health Care Ministries, or CHM, helps Christian families, churches, and ministries join together as the body of Christ to share their major health care costs. Christian Health Care Ministries is the original health cost-sharing ministry. A Better Business Bureau-accredited organization, CHM members share to pay each other's medical bills. It's not insurance. It's Christians financially and spiritually supporting each other. It's what Christian Healthcare Ministries has done for over 35

years. And our members have shared over $2.5 billion in medical bills. To learn more, visit chministries.org. That's chministries.org. Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. chministries.org. If you didn't know, we have the Ramsey Baby Steps community on Facebook. And Joanna says, Dave, I've've reached baby step four i think i'm reading to start investing in a roth ira and getting ready for retirement does anyone even know where to start absolutely you start with roth iras roth 401ks if you have a match you start with the match that's definitely the way you go you go. Roth means tax-free growth, and you always invest in good growth stock mutual funds.

I personally invest and have recommended for almost 30 years here on the air that you spread your investments across four types. Our everyday millionaires, many of them did something very, very similar to that. The four types are growth, growth and income, aggressive growth, and international. And if you need some help doing all of that because it's new to you, or for that matter, most of us need some help. I have help. I have someone watching mine with me. They're called SmartVestor Pros.

I'm not in the investment business. I don't sell investments. None of my people here do. But we have an endorsement program called SmartVestor. If you click on SmartVestor at DaveRamsey.com, fill in some info, it'll drop down a list of the SmartVestor pros in your area, people that are professional advisors. It's what they do for a living. They'll sit down with you and help you do that.

It's very, very easy to do. And, you know, there's a list of them you choose which one you want to work with in your area, but you're going to find them to be people that give you advice similar to what you'll hear here on the air. And so you're not going to hear anything inconsistent. You're not going to be getting three different directions to go and not know what direction to go. But you're all about learning when you're investing. You don't put money in something you don't understand.

You don't put money in something because Dave Ramsey said to. You don't put money in something because anybody said to. You put money in something because you understand it and not until then. You know what people say right before they lose all their money? Oh, I got a guy who handles mine. That's what they say right before they lose all their money. When someone says that, what that means is they have no freaking idea what's going on with their own money. They just handed it to somebody.

It's like dropping your kid off with a stranger. What kind of parent are you? Really? You're not going to do that. You're going to know what's going on. You're going to know who's in the house, what's happening with your kid, and what's happening with your money. Because I've got to tell you, your money is going to get mistreated

if you don't know what's going on with it. Rhiannon is with us in State College, Pennsylvania. Hi, Rhiannon. How are you? Hi, Dave., Rhiannon, how are you? Hi, Dave, I'm doing well, how are you? Better than I deserve. What's up? So, just about a year, just under a year and a half ago, my father passed away and he left me with some beneficiary money. Oh my goodness.

He left me with $100,000. How old are you? Yeah, about $107,000. How old are you? 22. 22. How old are you? About $107,000. How old are you? 22. 22. How old was he? He was 45.

Wow, young. What happened? Yes. He had a heart attack, and they pronounced him brain dead about a week or so later. I'm so sorry. Wow. But it was a year ago, and he left you $100,000, and you're 22. Yes.

Wow. So what are you going to do with it? Well, I've already spent more of it than I wish I had. I paid off my student loans for my bachelor's degree, which is about $7,000, and I also bought a new car for about $27,000, which I regret now. And then also I've been living off of a lot of the rest of it. I was working and making money too, but it became a little bit too much to be working and full-time at school being, you know, in my junior and senior year um so right now i have about fifty thousand and six hundred dollars left in the bank and how much do you need to finish school i well what i plan to do is i plan to become a physician assistant and i will have to take

science prerequisites um the program for that is going to be about $10,000. How much do you need to finish school? I'm sorry? How much do you need to finish school? Oh, I'm about to finish school in two months. My bachelor's is paid for, but in total, $60,000. And you have $50,000 left? Yes. Okay.

I think we know what we're going to do with the money, and then we've got to figure out how you're going to eat during this time, which means you are back to work. Yes. And you're going to be on a tight budget watching what you're doing because otherwise you're not going to finish school without debt. Right. You make enough to eat and pay your rent while you're going through school,

and you have the money to finish school if you don't screw it up and go buy something else. You paid cash for a $27,000 car. Yeah. You could sell that. I actually recently paid it off. I took out, like, a $7,000 loan just to build credit, and I just recently just paid all of it off. Yeah, you could sell that. Yeah, and that's what I was considering.

I looked on KBB, and it says that the car's value is about $26,000 now. Yeah, that's good. So it's not, you know, not too much. You haven't taken too much of a bath for this mistake. But honestly, a $27,000 car in your situation, as broke as you are with the goals that you have that are much bigger than car ownership. I mean, your education goals should be your dad's legacy, not a car. Yeah.

And, yeah, I realize that now. Okay. You know, my thought process is reliable. Sell it and buy you a $5,000 or $6,000 car and get yourself on a tight budget and make sure you're working and lay out a game plan where your income will cover your housing and food needs and you've got the money then to complete tuition. And that's a good game plan. And, you know, in what, three years you'll have the degree, right? Yes, just about.

Yeah, from now. And you'll be a PA. Is that what you said you said yeah that's what i'd like to be yeah well are you are you getting the grades can you do it i think so yeah i mean it's going to be it's going to be tough work especially working too but i think i can do it okay one of the ways you you can always test yourself and i've used this with myself and with others too on whether you're using an inheritance properly is you can always test yourself, and I've used this with myself and with others too, on whether you're using an inheritance properly, is you visualize standing beside the situation that you use the money for and ask yourself, is your dad in heaven smiling? And I see you standing on that stage graduating with that PA degree in your hand,

driving a $3,000 or $4,000 car, a $5,000 car, a $6,000 car, whatever, and zero debt. And I see your dad smiling, don't you? Yes, I agree. Driving a $27,000 car, not so much. No. Does that make sense? Yes, it makes sense. I just wasn't sure.

I'm always weary of getting a used car because of the expenses that go into it. Yeah. Well, you're not going to spend $20,000 on a $6,000 car. Okay. So we know you're going to come out ahead. Okay. And if you start spending too much on it, sell it and get a different one. And, you know, that's the thing.

So, yeah, that's the thing to think about. It's just some ideas for you. I know you've got some tough decisions to make and you've been through a tough time. I'm sorry that this is left on your plate. But I'm really glad that $100,000 was left on your plate to be able to start your life off. And you have the opportunity to honor your dad's memory by doing this properly. And I think that's something that calls us to more nobility when we say that. I'm not shaming you.

Instead, I'm calling you to nobility. And what's the most noble version of Rhiannon in this case? And it's the one that seeks out something that's great for her future, not for her Friday night. And that's the thing. Don't spend this money. This money is for your future and your education. And you graduate and you live on a budget and you're responsible and you're careful.

Hold on. I'm going to send you a copy of the book, The Total Money Makeover, to walk you through this process. Download that EveryDollar app and get your budget going. Look in where you can work. You can do your undergrad work and work. Most people work while they're doing their undergrad. Most people work while they're doing their undergrad. Hey, America, did you hear that? Most people work while they're doing their undergrad. This is the Dave Ramsey Show. We'll be right back. Thanks for joining us, America.

We're glad you're here. Brad is in Nashville. Hi, Brad. Welcome to the dave ramsey show hello thanks for taking my call sure what's up yeah i had a mortgage payoff question for you um i i currently have a mortgage 30-year mortgage um that remaining balance of 350 000 and i'm wondering if i should use money in my after-tax stock account and savings account that's excess of my emergency account to pay this off

or just put chunks on it at a time. I have the money. I'm just having trouble just coming up with it. What are you having trouble with? Just the whole time value of money, just, you know, putting, you know, what I can make. What's your house actually worth? Probably about $600,000. Based on your concern about time value of money, why do you not owe $600,000 on it?

I've chunked extra on it. That's contrary to your time value of money problem. Yep, you're right. It's inconsistent. Okay. So here's what's going on. You have some good information, but it's incomplete. And so that caused you to be left with a primitive analysis.

And let me walk you through that, all right? Because I used to think exactly the same way, so I know where your brain is. Yeah, okay. Because you obviously have a good intellect, especially on financial things. So your concern is if I can borrow money at 3%, 4%, 5%, and I can reinvest it in a good mutual fund at 10, 11, 12 percent, am I not making that spread? Why would I ever, you know, miss out on that spread?

And, you know, I've got the money invested now. It's making me 10, 12, whatever it's making me. Not today, but it's making me that overall. And why would I, you know, lose that spread? And I had to really wrestle that down because that's how I was trained in the financial world, obviously, with a finance degree. And then I had to start looking at, when I started looking at stuff through the lens of the borrower is slave to the lender, and there's no good mentions of debt in Scripture. And I'm going, okay, either God's stupid, and I've got something figured out he doesn't know about,

or there's something I don't understand. And so what I figured out was that that formula that we just used, 10% over 4%, a 6% spread, leaves out risk. And in a sophisticated investment analysis, you adjust for risk meaning i would never compare a growth and income mutual fund apples to apples with an aggressive growth stock mutual fund the aggressive growth stock mutual fund might have an average annual return of 20 percent the other one might have an average annual return of 12 percent but the risk ratio is completely different the risk profile in those two funds is completely different.

Agreed? Agreed. Okay. So what you would do is you would adjust, and in that world, you can actually use a thing called a beta with an inverse formula. I won't get into all that crap, but basically you can say, because one is more risky than the other, we mathematically adjust for risk to be able to compare them apples to apples.

And that's the proper way to do an analysis between those two funds. But no one applies that concept, that level of sophistication, to this debt analysis that says time value of money, and I could use this money to make more than I'm making now. But what I have found is this. When I do pay off my house, I've done a – in other words, risk neutralizes a lot of the difference between the 4% and the 10%. It takes away most of that spread when you factor in risk because there is risk when you have a mortgage.

Now, it's not a lot of risk because you've got the money in the bank today to pay it off or an investment to pay it off. But there is risk. And so you have to admit that 100% of the foreclosures occur on a home with a mortgage. There is risk. And so you have to admit that, you know, 100% of the foreclosures occur on a home with a mortgage. There is risk. And so getting rid of that, what I found is it's not completely quantifiable in a simple mathematical formula. Because when you don't have a mortgage, you start making different decisions with your career. You start making different purchase decisions. You start having different levels of enjoyment with your career. You start making different purchase decisions. You start having different levels of enjoyment with your money. Your relationship with your spouse starts to have

a different depth because there's a level of security in your overall life that there wasn't before. And those things are really hard to put on paper. So what I have figured out is I'm going to live 100% debt free and I'm going to invest like crazy the rest of the money that I have in cash that comes in, and I've ended up with a ton of money doing that because I don't have any risk, and I'm just investing real money, not borrowed money. So all of that to say, if I woke up in your shoes, I'd pay off your mortgage today, and if this discussion gets sour on you and you think Dave Ramsey's crazy a year from now, just get you another mortgage.

No, I completely agree. I mean, that's the one thing that he said each day is just it's a lot of money I still owe. You know, I just, so, I mean, my gut's saying just pay it off, but my mind sort of just wrestled back and forth. What I'm trying to point out is your gut is not intellectually wrong. Your mind is. Your mind is using an incomplete primitive formula. Got it.

That's what I'm pointing out. Does that make sense? Completely. Yeah. Pay it off, dude. You got this. Thanks for the call. Open phones at 888-825-5225.

See, your heart's where it's not really your gut. It's really your heart. Your heart's where you measure risk. My heart's telling me to pay off my house. My head's telling me, I can make more money on this money than that money. But your head's missing some stuff. It's missing risk. And it's kind of a fun thing. I was doing this with a class of MBAs.

I was speaking to them. Because MBAs are all taught, you know, masters in business, they're all taught strategic thought, and they're all taught to borrow money. And I got a finance degree, I was taught to borrow money. My broke finance professor used to teach us to borrow money. And so, you know, it's, but a broke finance professor is like a shop teacher with missing fingers, right, people? So think about this, right? It's like a, you just can't think that way, and you have a different way of looking at things. So, but you can really do a very sophisticated mathematical application of this. It would just take a lot of time, too much time really on the radio to walk through the whole thing.

But what happens is this. Think about this. How many of you, if you had zero debt, and you looked over in your 401k and there's $300,000, and you had $300,000, and you had $40,000 in the bank for your emergency fund, would make different career decisions. Way too many of you just said yes, meaning I would leave this jerk that I work for and I would go do dot, dot, dot.

I'm not saying you'd go in business for yourself necessarily. You might just have a different career. You might go in a completely different direction. That thing you've always wanted to do, why are you waiting? You know, and here's the weird thing is, that thing you've always wanted to do is probably where you'll make the most money you've ever made in your life if you're wise about how you do it. This idea that if you're going to live your passion, you make half the money. No, you make twice the money.

You make more money when you're doing something you're good at because you work harder at it, you're creative, you think about it all the time, you can't keep yourself from moving because you love it. You don't think I love what I do? I can't keep myself from sitting at my laptop writing a blog article. I can't keep myself from doing it. I can't keep myself from coming down here and writing a blog article. I can't keep myself from doing it. I can't keep myself from coming down here and doing this radio show when I'm in town. I love this.

And I'm really good at it as a consequence. And consequence, I get repaid a lot. I make a lot of money. Unashamedly. I'm a capitalist pig, baby. I love this. I'm here, baby. and i want that for you see that's what's this sets you up to be how many of you if you didn't have any payments would tell your boss who's a jerk to stick it take this job and shove it how many of you would do

that yeah there you go that's it man and i'm not telling you quit your job today i'm saying there are benefits to being debt-free that are beyond the simple mathematics of the fact you don't have to pay interest anymore you start to be set free slavery is more than simple possession Possession. It changes the spirit. It changes your relationships. Slavery. The borrower is slave to the lender. I love that call. Thank you, sir. That's a great call.

This is the Dave Ramsey Show. Thank you. We'll be right back. Jamie from our Ramsey Baby Steps community on Facebook said, Woo-hoo, we called an ELP. We got a quote that would save us a staggering $877.18 a year. Sorry, lifelong friend and agent, you're fired. Live like no one else. There you go. You can save like Jamie by simply bundling your auto and home insurance together with one of our independent insurance agents who will shop a bazillion companies and get you the best policy at the best prices. Just go to an insurance endorsed local provider.

And that's an ELP for insurance at Dave Ramsey dot com. And you save money really any harder than that, is it? All right, Rebecca is with us in Fargo, North Dakota. Hi, Rebecca. How are you? Hi, Dave. Thanks for taking my call. Sure.

What's up? Well, two years ago, before my husband and I started your plan, he had an emergency emergency open heart surgery he had undiagnosed condition and uh came out of his overnight surgery with an artificial heart valve and a synthetic aorta wow how old is now uh he was 36 at the time okay and how long ago was this two Two years. Okay. How's he doing? Great. Good. Doing awesome. Good. Okay.

But he can't get life insurance. I suspect. He had it through his company, and he has since changed jobs, and now the most we can get a hold of is like a $40,000 plan through work. We worked with a few brokers. Did you try Zander? Tried Zander. They couldn't help us.

Okay. Yeah, I suspect. I think that's probably accurate. Yeah, because this is a pretty extreme surgery on a very young guy, and so I suspect over time, though, he will become more insurable. Is that what you've been told? We're hoping that. And we did finally find a broker who was able to get us in touch with Prudential,

and they could do a $500,000 policy on a 20-year term for $215. And we're just wondering, is that, you know, it seems like such a high amount for a term. That's ridiculous. It's up to you guys. I mean, do you have children? We have a two-year-old. He was three months old when all this went down, and then we have one on the way in January.

Okay. And what does your husband make? He makes about $47,000. And what do you make? Right around that same mark. Okay. Here's the thing. What you're balancing this off against is that's a very, very expensive policy,

and then the risk is if, God forbid, something happens to him, you've got to raise his kids. So I would pick the $40,000 up for sure. And I think you can pick up some other odds and ends policies that are non-medical, meaning they don't. We actually got a letter from a previous employer saying that he could continue the policy that they had with them if we just start paying that company directly. It would just be another $40,000, but it's like $8 a month. Do it. Do it. Definitely do that.

That's a lot better deal than the other one, right? And so the other place you may be able to pick it up that's cheaper than we're talking about with Prue is, do you own a home we do call your mortgage company and see if they sell any mortgage life mortgage life is about 5x normal but prue's quoting you more than 5x normal okay and um then you can just look at it so we we're talking about $2,400 a year out of your income of $90,000, and you could have a half a million dollars in insurance. It's up to you as to how worried you are about that. But I'm with you. It's up to you.

How are you going to feel if, God forbid, something happens to him? And you've got to raise his kids. That's what we're worried about here, right? Right. Well, we got on your plan a year and a half ago, and over the next nine months we did get debt-free, $21,300 in nine months. And we listen to your radio so much that our son calls you Uncle Dave. So, yeah, we're just trying to make sure.

Well, I mean, if you did do the approved policy, I would say let's do it, and let's just plan on keeping it a couple years. And during that time, you know, finish off being out of debt, have your emergency fund, start really building wealth, and maybe he starts to become insurable with some distance between the event and you know the the longer it's been since he had the surgery the more insured more likely he is to be insurable at a reasonable rate so i might go ahead and take it as a temporary thing it's not your permanent answer but i might take it as a temporary thing just say you know we're going to do this we're going to do it for two years and then we're going to look at it again that's's with a baby and a two-year-old, yeah, I probably would.

You're making $90,000 household, I probably would spend $2,400. I probably would. And I'd pick up the other two, too, just for the fun of it, just have them in place because they're not that expensive, and you have another $80,000 right there. And then let's just decide two years from now, try again, see if we can get a policy, and look at your situation. We're debt-free. We've got this pile of money.

Oh, I feel a whole lot better now, you know, and that changes the equation. Thanks for calling in. See, folks, that's what happens. You want to have insurance that's not only at your company because of what he just experienced. You lose the insurance when you leave the company. In this case, they're letting him go back and get it for some reason, but that's unusual. But, you know, you have an event, and then you leave the company, you lose the insurance. You get a cancer diagnosis or a heart diagnosis or something like that.

And the second thing that we get out of that call that you need to learn is this idea that as you decrease your debt, as your children get older, and as you increase your wealth, your need for insurance is going down. As you decrease your debt, increase your wealth, and your children get older. In other words, if you've got an 18-year-old, you have $500,000 in mutual funds, and you have no debt, your need for insurance is a lot less than if you have debt and a 2-year-old that you've got to raise for the next 18 years, right? Or 16 years, or however you want to measure that. But the point being, the older the children get and or leave home as they grow up, and you'd have zero debt and you build wealth,

you do away with your need for life insurance over time. And that's just from good financial planning is all that is. So good question. Thank you for joining us. I'm sorry you're facing all that. I'm glad he's doing so good. That's great. It's pretty amazing if you think about it.

So that's why we don't buy whole life life insurance, which is roughly 20 times more expensive because you take the other 19 times and you do your investing there and you get out of debt there. So when you as you invest over time and you say for 20 years, I'm going to invest 15 percent of my household income because I paid off all my household debt, not counting my mortgage. And during that 20 years, I get my house paid off. And during that 20 years, the kids grow up and leave. And so now you're not 30 with a two-year-old. Now you're 50 with a 22-year-old. And you're debt-free.

And you've got $500,000, $600,000, $700,000 in mutual funds. Now, if your husband dies in that situation, your wife dies in that situation, you know, you're debt-free, no kids at home, and you've got $700,000. If you had no insurance, you'd be just fine. And so by increasing your wealth, increasing your net worth, decreasing your debt, increasing your investments. And by raising the kids and they are grown and gone or closer to growing gone, your need for insurance dissipates every year. So in her situation, as they hang on for two more years, you know, the kids are two years older. They're two years further down the pike saving and investing. And they've finished up getting rid of the debt except for the home and the house is even starting to go away.

See, their need for insurance two years from now is less than it would be today. Now, we buy a 20-year level term to take you all the way out to give you a comfort level, but it changes everything if you start to look at the insurance through the lens of actually financial planning instead of the lens of what your insurance agent wants you to do, which is give them a commission. This is The Dave Ramsey Show. Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show. This episode is over, but if you heard about a product or service and didn't have a chance to write it down, don't worry. We list everything that is mentioned during this episode in the podcast show notes section.

Thanks for listening.