The Ramsey Show - App - Handling Money With Grace vs. Being Hardcore (Hour 2)

Episode Date: December 1, 2022

Dave Ramsey & Rachel Cruze discuss: When parents offer to pay for travel plans, When spouses disagree on when to give kids money, Pausing Baby Step 3 to pay for a car, Catching up on the Baby Steps after getting off to a late start, Update on student loan forgiveness, What to do with a workers comp settlement. Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Movie and Storage Studios, it's The Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. We help people build wealth, do work that they love, and create actual amazing relationships. Rachel Cruz, Ramsey Personality, is my co-host today,

number one best-selling author, and my daughter. Thank you for joining us. Open phones at 888-825-5225. Hey, guys, I want to just stop a second, especially this time of the year, and say thank you to all of you. We regularly ask you to consider subscribing to the show on YouTube or on your local podcast, your version of where you listen to podcasts and so forth. Of course, share it with a friend. You can do that with a link or a text or whatever.

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and so those are all Ramsey Network productions and uh they're all of us jumping in and off of each other's shows is what it amounts to and uh and this one's kind of the mothership that you're listening to here but um thank you guys thanks for listening to dr deloney for smart money happy hour is a big hit um it is it's uh really really fun um even for old people i like it um until until until this week and i don't this i don't like the uh blind love this thing the reality show stuff that was a painful it was a painful episode but you and george handled it the process well and your addiction to those reality shows is a little bit it's a little bit uh disheartening but... It gives me life. It gives me life. I love it.

Clarence is with us. Clarence is in Baton Rouge. Hey, Clarence, what's up? Hey, Dave and Rachel. It's really good to talk to you. And Rachel, I have to say that this week's episode of Smart Money Happy Hour actually enjoyed more than I thought I would. Yes!

Thank you, Clarence. You're saving me. Wow. You're saving me. Clarence, you're a love-is-blind guy? I wasn't until I listened to it, and Rachel was so enthusiastic. Oh, she is enthusiastic.

You gotta binge it. You gotta binge it over Christmas break. You just have to be careful what you're enthusiastic about out there, I'm just saying. Alright, man. How can we help today? Sure. So, you know, it's almost Christmas time and we're in Baby Step 2, but my parents said they wanted to pay for the gas money for us to come home for Christmas because obviously that wasn't an option for us to come home while we're in Baby Step 2.

And, you know, there's no strings attached. They don't want us to get any gifts or anything. They just want us to be home for the holidays with them, you know, especially they want to see their grandkids and everything. So I just wanted to hear your advice about it because I just feel guilty because I have been, you know, working the baby steps, getting stuff done, but I just feel like everything's, you know, my fault because, you know, I'm the one that got us into the debt to begin with. And my parents have helped us out with things before with, you know, especially before we were all intense. And now and now that we are just kind of feels weird you know accepting

their uh charity when you know i just want to kind of just do things and just kind of buckle in myself and just get through the baby steps okay so i kind of want to figure out is this a um a little bit of just like a pride thing or is there a value system that you and your wife have set this holiday season and the only reason I asked is I was talking to Dr. John's Loney about this and about you know setting up boundaries and like if things are just if they're crazy like there's a level that you you know may say no this year not necessarily because you can't financially afford it but just even on an emotional standpoint of like if you're just like I just want our families choosing something different so is there any level of that? Or is it just strictly you feel we're

accepting money from your parents for gas money, but you guys want to go there? Well, I think you nailed exactly what my wife has been saying that she doesn't want it to be a pride thing for me of being just self-reliant. It's more of just like, you know, we've been, you know, working hard towards, it's not like it's going to negatively contribute to us. It's not going to put us any further in debt. I just, you know, my parents have done a lot to help us over the years. And sometimes it feels weird for me being, you know, in my late 20s. And, you know, I'm working on, you know, various degrees,

so we're not making a ton of money right now. But, you know, eventually we'll, you know, build up our income. But it just just feel like uh i i guess that's why i was asking to see if it was a pride thing for me as opposed to just a hey this is you know it is a pride thing and it's not a bad kind of pride to just stand up and go you know i i feel more like a little boy than a man when I do this, and I don't like it. And that's okay to say out loud, okay?

And then the weird thing is, once you say it out loud, it kind of loses its power. And so, like, you know, we were making pretty decent money. We didn't need the money. And when Rachel was a little girl, her grandpa uh sharon's dad owned a gas station and it was kind of tradition when you went in for thanksgiving everybody filled up at the gas station and it wasn't you know he's like make sure you get a tank of gas before you leave and we're like you bet pep especially the cost of gas right now you know so uh but i and but it didn't have it

wasn't because we couldn't afford it that didn't have it wasn't because we couldn't afford it that was different or it wasn't because we were working a plan that was different but it was still free money from grandpa you know kind of thing uh so i kind of get what you're saying i think it's a normal feeling to do this but if i were in your shoes i i would uh accept the gift and go home and let them see their grandkids. Okay, well, that's great. That's exactly why I called you guys. I think that you and Rachel are the perfect ones to answer this.

So thank you so much. It speaks highly of your character that you're struggling with this a little bit. If you let it completely dominate who you are and keep everyone from having a good Christmas, then it's kind of gone over the bubble. Does that make sense? Yes, it does. Yeah, so I'm proud of you. Yeah, it's great, Clarence.

Yep, accept it. Go home for the holidays. Yeah. It's great. Yeah, and it's, you know, interesting. We talk about giving a lot, and we're doing the Giving Show on the 14th, and if you have a great giving story, by the way, email it to us at ask at ramsey solutions.com ask at ramsey solutions.com put giving

in the subject line but one of the most difficult things about giving is learning to receive it's very hard it's hard for me and almost of proportion kind of things, like it's over-the-top stuff. That one I really, really, really struggle with. This is The Ramsey Show. ស្រូវានប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប់ប� rachel cruz ramsey personality is my co-host today, best-selling author. Thank you for joining us, America. Open phones at 888-825-5225. Hey, if you procrastinated, blew past Black Friday, Cyber Monday, we're extending our Cyber Monday sale. We're here to help. For this week only, you can get our best-selling books and tools as low as $5.

You've got to hurry. These deals will end this week. You can get our quick reads like my latest the momentum theorem dr john deloney's redefining anxiety all under 10 bucks our number one bundle the starter special has 77 off on it and we've extended the cyber money sale on the 10 book sale which includes all three of rachel's books number one bestsellers, and Baby Steps Millionaires, my latest number one bestseller, is $10, and Total Money Makeover, all there. This is not a place where you're going to find inflation.

As a matter of fact, we are into deflation, like recession, apparently. I don't know what our problem is. Cyber Monday sale continues all week long. Be sure and check it out, ramsaysolutions.com. Our question of the day comes from blinds.com it's the number one online retailer of custom window coverings free samples free shipping and new promos all the time check it all out they use the promo code ramsey when you do and today's question comes from rachel in kentucky our 19 year old daughter just moved out after

paying rent to us for the last eight months. My husband wants to consider the money as hers and give it back to her. But I disagree. Currently, she has zero plans to go to college and has moved out because we made her. It was time. I was considering investing some of it or using the money to pay for college for our other daughter who will be graduating high school next year. What's your opinion? Mom is hard.

Mom is feisty towards her daughter. Oh, I bet if it was a son, she'd give him the money. Oh, 100 percent. Oh, I'm harder on my daughters. I feel like than Charles. Well, baby boy, little baby boy. I don't know. Rachel, let me think.

I mean, I think it's fine not to give it back to her. It does feel funny using her money to pay for the other sister's college. Would you give it back to her? Even if she has no plans? Like she doesn't know what she's going to be doing? Okay. There's something wrong with this situation that is not money it was time for her to leave and i'm going to take her money and give it to her sister

it kind of sounds like we're a little pissed at daughter i don't know i feel something there's a little friction here between mom it's time for her to get out why hey i'm with you kick them out i ain't got any problem with that part but um get out well hey i'm with you kick them out i ain't got any problem with that part but um get out there and do your thing i don't think you have to give her back the money you don't have to but don't not give it to her because you're angry with her for her behavior and then don't yeah not give it to her and double down on the punishment and give it to her sister yeah that's that's that's a little vindictive is the way it feels a little bit here so uh by and large i i think that is so that is kind of sad that i'm thinking about my two daughters

and if i'm like you're so mad at one of them you give it to the other one yeah yeah it's like you little twerp i'm gonna give it to your sister um so yeah i i um I think your husband is probably saying that giving your daughter back this money is not a moral issue. It's not an ethical issue. I don't think it is. I don't think you owe it to her. I think her leaving with a little bit of friction as she leaves, sparks flying as the old was uh drug out and thrown in the back of the car whatever we call it here um this would be just a little grace i'm going to give it to her and just call it grace and just put not to try to buy her affection or to cover over the misbehavior

something like that i don't know what went on um but you you know you said it was time for her to go so there's something there's something a little bit pushy there and because we made her it says she moved out yeah yeah um uh or maybe uh she was doing nothing i mean she couldn't you know what i mean like yeah i don't know so maybe you tie the money giving money back to her based on her behavior some behavior you want to encourage out there in the wild okay and so like um you know if you do this or this we'll give you the money we're going to give you this back or you know like for instance and you know honestly i kind of think mom's pretty upset whether there's a lot of emotion in these

words and i think probably mom you step back and just ask your husband to talk to her about it to the daughter about it and uh because there seems to be a little bit there and just say you know we i think we might uh we might want to help you in your new start um and if you like so we'll match you your emergency fund or something if you match your emergency fund or will um you know or if you're going to pay if you're going to pay off some debt we'll help you with that and we'll match that up you know we're going to pay off some debt, we'll help you with that. We'll match that up. We're going to use some of the money you paid us in rent to help you get started

and to encourage some good behaviors. If you want to go through Financial Peace University, we would give you $1,000 of this back as an incentive to do that. Something like that. Something that helps the daughter that left get a sustainable situation out there. But I would not give it to her if she's misbehaving out in the wild yeah and you're going to finance her misbehavior by giving her her old rent money back that's not an act of love that's just enabling so um yeah i so i i guess there's a lot going on here that we don't know but um

we are sure mom's hardcore, no question. And I like her. That's great. Because an eagle that doesn't leave the nest is eventually known as a turkey. Open phones at 888-825-5225. 888-825-5225. You know, I found that line was when you and i did that book smart money smart kids you're first number one we were talking about kids leaving the nest in that book and you know

in researching that book and trying to put verbiage to some of the stuff that we did in our family and that we've taught other families to do on teaching their kids how to handle money that's when that line came up and that's how long i've been doing that it just occurred to me that's where that came from yeah all right james is with us in san bernardino california what's up james hey how's it going dave uh rachel mary christmas god bless you guys everyone at ram's solutions how you guys doing merry christmas same here how can we help um i want to know if i am taking a ride on the Rambulance 4 if I'm being reasonable. My wife and I are about to finish Baby Step 3. I would put us in Baby Step 3B.

But prior to that, I'd like to buy a car. I want to save up for it, pay for it in cash because I have one vehicle in my family and it's a salvage title to go to Camry and I want to know if prior to babysat 3B, if saving up for the car is reasonable. Sure. Absolutely. That's exactly where you do it. Perfect. I was like, James. Now, the thing is, thing is obviously you know what are the guidelines on cars you tell me james um i mean i'm thinking i'm thinking they're used toyota something i and i correct me if i'm wrong i think it's oh my god i've been listening to you for four years dave oh you're fine i put you on the spot and gave you a test.

You gave him a pop quiz, Dave Ramsey. No, James, you did not fail. You didn't know you needed to study. No. Dave, just tell him the answer. So no more than half your annual income in total cars. The other car is the Camry with the salvage title? Yes, sir.

So it's worth... 200,000 miles in it, but it still runs, yeah. Yeah, but it's not worth much, okay. And it's worth... 200,000 miles in it, but it still runs, yeah. Yeah, but it's not worth much, okay. And what's your household income? Household income is about 160. Excellent. You do need some cars. You need two cars.

Yes, sir. Yeah, you're driving... The Camry's on its last leg, and you got no other cars, right? No other cars, and I'd like to buy a RA4 something all-wheel drive i can't buy an electric car like rachel oh that's okay james not everybody can be not everybody can be rachel and george um good no rav4 is great that's a great car yes getting but yeah you're talking about a reasonable car you guys make great money what are you going to spend on it um i mean i'm in California.

Everyone wants EVs out here. I still like me a combustion engine. I'm thinking $20,000, $25,000. And what are you going to spend on the other car? Because you've got to buy another one, too. I mean, this one still works. All right. I think you need to move up a little.

I'd move up to about a $10,000 car, probably. It's well within your budget, and you need to, it's time. You've gotten the emergency stuff behind you. One, two, and three is the hardcore gazelle intensity. Now you are moving from intensity to intentionality. You make $160,000 a year. You don't have to drive a piece of crap if you save up and pay cash for it. This is The Ramsey Solutions on the debt-free stage, Jarrett is with us. Hi, Jarrett. How are you? I'm living the dream. How are you all?

Better than we deserve, sir. Welcome. Where do you live? Atlanta. Oh, cool. Welcome to Nashville. And how much debt have you paid off, Jarrett? $37,271.94. Cool. And how long did this take? 19 months. Good for you. And your range of income during that time? Started at $52,000, made a job change, got a raise, a promotion. Took on some side gigs, so now it's over $60,000. Good for you. What do you do for a living? I'm a healthcare marketing specialist at a healthcare IT company.

Great. Good for you. Cool. What kind of debt was the $37,000? So student loans. It was a credit card. And then a loan I took out to pay off another credit card. Of course.

Yeah. Of course. Yeah. Real financial mastermind. So what happened 19 months ago got you started on this Ramsey way? So when I graduated from college in 2016, one of my mentors, my saxophone teacher, was telling me, hey, you really need to pay off your debt. Start investing, building wealth.

And I was like, great. I'll do that. I did not do that. And then I went to work with his wife, and she was like great i'll i'll do that i did not do that um and then i went to work with his wife and she was doing the same thing so for four years they were just pounding this into me and i just i think i like set an arbitrary goal like okay i'll try to be debt free by the time i'm 30 um january 2020 rolls around oh um i was like okay i'll try to pay off the car this year and i was like i wasn't even Dave-ish. I was on like the LaCroix version of Dave. Like just no substance at all.

The horrible tasting water version of Dave. Yeah. So I did pay it off that year. And the next month when I should have started paying off another debt, I was like, okay, I've been good. I can treat myself a little bit this month and then I'll get back on it next month. And then, so I paid off $6,000 on the car, but I replaced it with $6,000 of credit card debt, of course. And I remember waking up at the end of the year

feeling just horrible. I mean, I was like, I have all the, I should have all this money, but I don't. And I got a Christmas bonus for my job at the time. And I know I had to just put it all on the debt. And I was like, this should be my money. Like I hate waking up like every, everyday feeling like this, like I have this weight on my chest and I just snapped. And I was like, maybe it's time to finally listen to, to Chris and Kenyon who were telling me all these years to actually do this and start getting out of debt and building wealth. That's amazing. Well, and you, I mean, and you did it in 19 months, $37,000 making 52 to 60. So you, I mean, you sacrificed.

I did. That's a lot. Yeah. It was a lot of cutting back on stuff. Yeah. Went from eating out every couple of every, like several times a month to going, okay, I have a coupon for a free taco in the Taco Bell app. Free taco.

Yes, that I split with Julie, my partner. That was our date night. But I sold a lot of stuff. I picked up, I play saxophone as well. So I picked up some gigs. I dog sat for my sister. I helped public speaker friends do his materials. I was supposed to also chicken sit for my dad when he was on vacation. Oh, stop.

You have to say that carefully. Yeah. That one didn't work out. Their vacation got canceled. So I'm kind of bummed that didn't happen. That's funny. Yeah. It was a lot of cutting back.

Big money and chicken sitting. Yeah. Never heard of that in my life. That's too much. That's so great. Way to go, man. How's it feel to be free? I remember the day I had the money to make the last payment.

I was at my sister's house, and I was driving home, and I just laughed the entire way home. It felt so good. I woke up the next day, and it was like home and i just laughed the entire way it felt so good i woke up the next day and like it was like seeing in color for the first time it was just so it was so amazing that's cool you ever go back in debt now what do you tell people the key to getting out is so i mean make the plan work the plan it's not There's no secret to paying off debt. I mean, so what really was it for me was knowing why you want to do it because sacrificing as much as I did freaking sucked. I mean, it was tough a lot of times,

and there were moments where I wanted to backpedal, but I would stop and close my eyes and visualize different points of what I wanted my life to look like being debt-free. How it was going to feel when you got here. I pictured myself on this stage several times to kind of help get me through. Pictured myself like different stages of my life, what that looked like. And that was enough to step me back into my... Yes. Was that your why why looking at the future self right

yeah future Garrett saying Jarrett saying yep out there very well done all right who were your biggest cheerleaders so um Kenyon and Chris um my my mentors uh they actually got onto your stuff about a decade ago um and went through the baby steps and they are they're they're living like no one else right now and they came and visited you my mom who's here today my parents my family all my friends I would post updates on Instagram and people would message me and say holy crap this is incredible I'm so happy for you a lot of people i also want to give a special shout out to my um grandma jan she is someone i mean you talk about people who live and give like no one else like she is amazing she's always been very uh open with her time and her money and just her resources her

network and everything so she's kind of a great uh model for me very cool way to go jared we're proud of you man thank you good job very good job hey to go, Jared. We're proud of you, man. Thank you. Good job. Very good job. Hey, we've got the Live and Give Bundle for you, the Total Money Makeover book, the Baby Steps Millionaires book, both number one bestsellers, and of course, the Financial

Peace University one-year membership. If you've not been through it, go through it, or any of those. Give them away, read them, whatever you want to do. They're for you, just to say thank you and to say we're proud of you. And thanks for hanging out with us here today in Nashville. Well done, sir. Thank you. Good, good work.

Congratulations. Thank you. Amazing. Jared from Atlanta. $37,000 paid off in 19 months, making $52,000 to $60,000. Count it down. Let's hear a debt-free scream. Three, two, one.

I'm debt-free! Yeah! Yeah! I didn't know you could buy one taco. That's awesome. No, it's a coupon. It's a coupon. I know, but I mean.

Oh, you're joking. I'm just saying. I'm just like, wow, one taco're joking. You're like, oh. I'm just like, wow, one taco. Self-discipline, too, he had. I'm telling you, that's beautiful. Yes, in that way. Very cool. Very good stuff.

What a great, great story. What a great young man. Very neat. Open phones at 888-825-5225. Thank you for jumping in, America. We're glad you're with us. Sal is with us in New York City. Hi, Sal. How are you? Hi, I'm sir, Andy. How are you?

Better than we deserve. What's up? So I moved to USA about five years ago from Pakistan. When I moved here, I had nothing. I literally moved here with like $1,000. And now I made my way up. I now make about $150,000 a year. Wow. But I took my wife's student loan, student debt, whatever you call that.

I just don't get that. It's for $23,000. And then I took some advice from broke people and I bought a car. And my total debt right now is $45,000. I will be paying off that debt very aggressively. I think I should be done with that by the end of 2023. But I feel like I'm really late in the game to building wealth how old are you 39 years old oh you're ancient how are you getting around i mean 39 you got a wheelchair yet um i mean you sound like my dad right now but uh sal you're good i understand i understand because if you run the numbers out you're like oh my gosh

if i started this at 20 how much further ahead i would be if I started at 30 I'm at 40 am I gonna no there's plenty of time you got lots of time Sal and Sal you're only going to be making more and with no debt you're going to have more income to throw at investing and to be building wealth you're going to be totally fine if you got the curve from $1,000 to $150,000 in five years in America, I think you're going to be okay. You're amazing. That is very good to hear from you. You're amazing. Just one more question.

You're going to get there, my friend. I have a heartbreak out. Sorry, Sal. Yeah, absolutely. Great job, though. We got commercials coming in on us, brother. Sorry about that. I know you can do it.

You're on track. You're doing everything right. Hold on. We're going to send you a total money makeover book to give you the exact steps. សូវាប់ពីបានប់ពីបានប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពី Rachel Cruz, Ramsey Personality, is my co-host today. News headline popping up here. The Supreme Court said it will hear arguments in February in a case challenging the Biden administration's student loan debt relief program. But the Supreme Court kept in place a lower appeals court's injunction that prevents the

program from taking effect for now. The plan is estimated to cost 400 billion president joe biden the plan because the administration agreed to extend a pause so the supreme court has today agreed to hear the lower courts uh or the case in the lower court to prevent the uh student loan forgiveness program from going through the biden administration and that's going to happen in february so there's still two more months of till it gets there yeah and nothing is going to happen until then yeah yeah and also of course the biden administration you guys are aware this is extended to what may or june the um no interest so you can go ahead and get your

student loan paid off really this is the time to get it paid off yeah and uh this is going to be drug out for years because no matter what the supreme court rules it's also going to end up in congress because uh if the supreme court rules that uh that the biden administration can go ahead the republican control congress is going to pass a bill to stop it yeah and so you're you can just count on this this thing going back and forth this ping pong um and again we've said since the beginning of time don't wait on someone else to fix your life you don't wait on the government don't wait on the biden administration don't wait on the courts don't wait on the republicans to fix your life you need to go fix your life and that includes

you paying off your student loan debt which is by the way your student loan debt not mine and i'm a taxpayer and if it is forgiven and paid by the taxpayers that means i paid off your student loan debt i resent that well i do i shouldn't have to do that and a guy who's a welder and a guy who's a truck driver and this gentleman i just met who's a police officer uh yeah they shouldn't have to pay off your student loan debt. That's just, it didn't occur to anybody that that was wrong, but that's wrong. You know, a guy who's working, a guy up here on the building working construction right now, hanging steel up there up on top of the hill.

Paying for a master's degree. Paying for a master's degree with somebody in left-handed puppetry who's uh you know yeah it's just wrong it's just wrong y'all all right gregory is in las vegas nevada hi gregory welcome to the ramsey show hi dave and rachel how are you folks better than we deserve how can we help uh so i i just want to say i had the chance to speak with you guys here in las vegas a few months ago and it's a pleasure to speak to you folks again well thank you thank you. How can we help? So here's my situation. I am 29 years old. I'm single, no kids. I'm a motorcycle police officer here in Las Vegas. Last December, I was in a pretty substantial work-related

motorcycle accident, and I am receiving a workers' comp settlement for, it's going to be estimated for about $240,000 to $260,000. Wow. Are you okay? For the most part, yes. I have a bunch of residual pains and aches. I was in and out of surgeries and physical therapy for the past year or so. Fractions in my back, broken wrist and arm and tore up my knee

and pretty good. So I'm happy to be alive though. Yeah, bad wreck. Wow. I'm sorry, man. Yeah, so it happened and I encourage everybody to be safe out there. Amen. But I'm happy to be back at work now

and doing my old job. You're on the bike again? Yes, sir. That was my big goal to get back at work now and doing my old job. You're on the bike again? Yes, sir. That was my big goal to get back up on the motorcycle and show myself I wasn't afraid of it. I mean, getting back to work is awesome. Getting back on that bike scared the crap out of me. Okay. Wow, that's impressive, dude.

Okay, so how can we help you today so um i have been uh soliciting advice from uh some good good uh friend and financial savvy family members about what to do with my uh my settlement money here and obviously my first thought was to just go straight into baby step seven pay off the mortgage and everything i'm locked in at a two and a half percent uh on a 15 year fixed rate mortgage i have about two hundred,000 left on it. So it would be enough to just, just wipe out that mortgage completely. But family argues that I could put it into even just a CD at four and a half

percent and get a return on that. And just that would pay for a good chunk of the mortgage throughout the year. But obviously I want to get some of it and you know, pay off stuff. And I, that's my only debt left. i was just wanting some uncle dave advice okay um gregory how long you've been listening to the show i've been here uh about four or five years and i and i know exactly what you say exactly what you're gonna say but okay you know i i feel what am i just wanted some first hands what am i going to say write a check today or when i get the settlement ding ding

okay now can you articulate why your relative is wrong well i i i look at it a few ways with them they They are... I mean, based on their four years of listening to this show, can you say why we would say your relative is wrong? I guess is a better way of saying it. Well, help me out here. Okay. Well, the data points, after we talked to 10,167 millionaires

for the largest study of millionaires ever done, not your relative. We didn't talk to your relative, by the way. We talked to millionaires for the largest study of millionaires ever done not your relative we didn't talk to your relative by the way um we talked to millionaires and um precisely the number of them that said i used the money from my mortgage instead of paying off my mortgage i used that money to invest and that made me wealthy the number of millionaires that said that they used that money to invest and that made me wealthy the number of millionaires that said that they used that technique was precisely zero not one right not one said i became rich because i arbitrage my freaking house i borrowed on my home and invested at a greater rate which is arbitrage okay it's the definition of the term and not one of the

wealthy people say they do that the only people that talk about that are people that talk about theory and in the real world though the rest of us out here live in a world of risk you've just about got killed on a dadgum motorcycle you know what risk looks like okay right and and risk is we don't know what's going to happen and um we do know that we've also done research that 100% of the foreclosures occur on a home with a mortgage. So when you borrow money, you increase your risk. And risk was not in mathematically in the formula that your relative used. Right. You are taking on more risk. And so if you were to adjust for risk and put the money into a 10% investment,

you would break even. Oh, by the way, on the 10% investment, you also have to pay taxes. So you adjust for risk and taxes. Your 10 is going to start looking a lot like 4. And you're going to be back down to mortgage rates again. And so it just doesn't work. And that is borne out then in the actual practical fact that people who actually do build wealth,

not those that discuss theories about building wealth, but the ones that actually do it, use their most powerful wealth-building tool, which is not borrowed money. It is their income to become wealthy. And when you don't have a house payment sir you are in a position to invest very aggressively to be outrageously generous um i mean take the take a mortgage payment once you pay off this house with this money with this money this is just this is money that let me say 29 years old yep and then run out that mortgage payment for the next 20 years in an investment and what you could make investing

that mortgage payment versus putting this money that quote-unquote in a cd yeah that one thing will make the one thing will make you mean that and gregory there no one's accounting for and people don't talk about this because it's not going to be in the numbers but there is something about when you don't owe anyone anything john deloney talks about this you have autonomy like you when you don't owe anyone anything you have the ability to do whatever you want but whenever you hand a little bit of your future over even a mortgage and a mortgage is the one type of debt we don't yell at people for but if you have the money to pay it off and not to have a bank have any say in your future there is a level where your mind your soul rests and you sleep at night when you don't owe anyone anything and again that's that's more of

the emotional side of this that is not put into percentages and interest rates but it is it's very real it's very very real It's very, very real. That's why Proverbs says, the rich rules over the poor, and the borrower is slave to the lender. You don't run into generous slaves. You don't run into wealthy slaves. And this is the principle that we're operating on, and it really does work. So I appreciate the good intentions of your relative who is wrong but they are ding ding wrong this is the ramsey show dave here you can find all of our shows with the Ramsey Network app on your smartphone.

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