The Ramsey Show - App - Hey Steve Harvey, Stop Killing People's Dreams (Hour 3)

Episode Date: December 14, 2021

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🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host, George Campbell. Ramsey Personality is my co-host to you. Merry Christmas, America.

We're so glad you're here. Open phones at 888-825-5225. Sonia's in Los Angeles. Hi, Sonia. How are you? Hi, Dave and George. Thank you so much for taking my call. Sure.

I'm here calling you for your advice. My husband, he is 63 years old and has a variable appreciable life insurance policy since 1988. I'm sorry. The base value is $85,000 and the net benefit is $126,000 right now. We have a net cash surrender value of $50,000 and a taxable gain of $46,000. Now, for the past 25 years, we have not paid out-of-pocket the premiums due to an ADR relief, due to a class action lawsuit with Prudential 25 years ago. However, my question is twofold. One is, should we take the surrender value, pay the taxes on it, and invest it? And my second question is, I don't know if a variable appreciable insurance upon death will pay the net benefit

or will it just pay the face value of $85,000? Depends on how that one's written. I don't know. It changes. Yeah. There's what's called an A plan and a B plan. The B plan, you've paid extra premium, which you've not because of the lawsuit, but the higher premium essentially buys more insurance

and gives you the illusion that you got the cash value or you got the face value plus the benefit. So your face value plus your benefit takes you to 126, right? Right, right, correct. Yeah, and they're calling that your benefit, right? Yes. So I don't know. I can't tell from the information I've got from you whether that will pay out that or not.

Here's the thing. You know, you can keep investigating it and try to figure it out. If they are keeping the $50,000 upon your death, his death, and giving you $85,000, then in a sense you're paying $50,000 for $85,000 worth of insurance. Correct. So we wouldn't do that. Right. You would take the, even if it's taxable.

And you said that they claim the tax basis, or the taxable amount is $46,000? That's what they're saying yes that's highly unusual too um very seldom do these things make enough money that you get that much taxable uh benefit uh yes but now the fact that you've not paid any premiums all these years might have gotten you there that's it that it's i guess that's possible but because your basis in one of these policies for tax purposes is the total of your premiums and since you haven't paid premiums for years maybe the thing has grown some actual actual taxable yes it's going to be taxable and it's taxable to ordinary income not capital gain or no, I see.

Yeah, so it has gained quite a bit over the past few years. I mean, it used to be like $6,000, but the policy is being repaid by what it makes, because it has a policy adjustment repayment of $6,600, and that's per year. So, I mean, they are getting their premiums anyway. Oh, they're taking it out of your cash value? Oh, yes. Oh, yes, yes. Oh, I thought they weren't being charged because of the lawsuit. You know what?

We did, too, but they are. I keep seeing this policy adjustment repayment of $6,600 every single year. Well, then you're going to be completely out of money in less than 10 years. Well, but what has happened over the past few years is since, you know, the return has been better, that's why it's building up this cash surrender value. They're doing some kind of math games there because that's not happening. $50,000 is not growing $6,000 in one of these policies. It might be growing $1,000 or $2,000, but it's not growing $6,000. So you see, it's very confusing for me.

Here's a good rule of thumb. Here's a good rule of thumb. If you jump in a barrel of rattlesnakes, you're going to get bit by a rattlesnake, and that's what this thing is. It's a barrel of rattlesnakes you're going to get bit by a rattlesnake and that's what this thing is it's a barrel of rattlesnakes and and part of the problem is is they are so good at the math gyrations that to where they it's sometimes hard to figure out where they're screwing you but it's just who they are they're just going to screw you if they possibly can it's how those products are designed they're just horrible horrible financial products so all of that said i'm 99 sure i would get out of this thing uh mainly because of that uh and just pay

whatever taxes there are and just be done with it uh if you need some life insurance and he's insurable go get that in place before you cancel this but i think you're probably paying 50 grand for 85 000 worth of life insurance and i think that's a bad buy, and that would be classic Prudential because they really do suck. I mean, they're on the top list of sucky companies. I mean, it's just, wow, unbelievable. This whole life thing, George, it is the payday lender of the middle class. They have taken advantage of the middle class.

They don't prey on the poor. They prey of the middle class they don't prey on the poor they prey on the middle class and a few uh upper class people buy whole life policies and that walk around strutting around like they're smart or something but most people now have started to understand that that have financial advisors real financial advisors not insurance agents who sell it um that this stuff sucks yeah. Life insurance is not where you build wealth. It is a defensive posture like car insurance against your premature death before you have built wealth. That's all it is. And so only buy term insurance and only do your investing anywhere except inside one of these stupid policies. They're just horrible. Yeah.

You talk about this in Financial Peace University. If it's trying to be two things at once, it's not a good product. You can't have insurance and investment at the same time and do it really well. I'll tell you where else it's showing up. Long-term care policies are now adding in a whole life policy in the middle of them. To make extra money on top? And so you can build a cash value inside your long-term care policy your nursing home insurance and so again again all they're doing is trying to make more money on the long-term care policy by wrapping these things together anytime they bundle these types of things to get investing in with your insurance run run and it sounds like they're preying on the vulnerable you know elderly folks who are going i'm scared i need to make sure that i'm protected here. Well, that would be, well, everybody's trying to figure out a way to, you know,

not feel ripped off on the nursing home scene, right? I don't want to feel ripped off by the long-term care insurance. I don't want to feel ripped off by the nursing home. I don't want my savings plundered in order to take care of me in my old age. And so everybody's trying to figure this out. And in the midst of it, ta-da, here's a whole new way to invest inside your long-term care policy. Oh, just shoot me and get over with. It's so confusing.

It's almost like they do it on purpose. Oh, shocking. You think? It's amazing. One more good observation from George Campbell. I'm sharp. You've been full of those today. This is why you hired me, Dave.

This is it. This is why you get the big bucks. Open phones today. It's a good thing. Right here on the Ramsey Show. The phone number is 888-825-5225. People all over the country are discovering a faith-based and budget-friendly way of meeting health care costs through Christian Health Care Ministries. Christian Health Care Ministries, or CHM, is a nonprofit organization that helps members

carry one another's burdens with health care expenses, and they have successfully shared each other's medical bills for nearly 40 years. See if CHM is right for you by visiting chministries.org. CHM is a proud sponsor of Dave Ramsey Live Events. George Campbell Ramsey Personality is my co-host today. Open phones at 888-825-5225. Thank you for joining us, America. So one of the things that happens when you teach what we teach, stuff like we teach people to get out of debt.

And then there are people that come along and say, Hey, I want to get out of debt. And then there are people who come along and are dream killers and just step on those dreams and say, hey, I want to get out of debt. And then there are people who come along and are dream killers and just step on those dreams and say, you're stupid. What kind of a person would want to get out of debt? Nobody can get out of debt. And sometimes it's your parents. Sometimes it's your loser friends.

Sometimes it's a loser professor. But sometimes it's just a loser. And, you know, because they're dream killers. So, you know, if somebody comes to me and says, hey, I want to start a business, and I think it's a stupid idea, the first thing I tell them is, I think you should start a business, and I think that's a great goal. Let's put some boundaries on that so that you do it in a way that doesn't destroy you. Because I'm looking at this guy going, this is not going to work, right?

But I'm not going to be a dream killer. There's a lot of stuff I do. But, I mean, a lot of people I bust up on. But dream killing is not one thing I do. And, George, you are really big on lifting people's dreams up. I really try. And so when you found this clip, you brought it in here. You don't see George upset very often, but George was not happy.

I was riled up, to say the least, to put it politely. Yeah, just riled up. It's easy to rile you up, but it takes a little bit more for me, Dave. I kind of stay riled up. Yeah. But you don't get riled up, but this riled you up. And you don't want to mess with me because I'm scrappy and I'm fast. And I got nothing to lose.

That's a dangerous man right there. And so we found this clip, Dave. This is unbelievable. This is crazy because this is on national television, and it was a very popular show. I don't know if it still is, but it's out there. Family Feud, long-running show. And as you know, there's different families. They feud against each other, out there. Family Feud. Long-running show. And as you know, there's different families. They feud against each other, hence the name Family Feud.

I haven't watched it since Richard Dawson was the host. Wow. What was that, the 60s? When was that? I think he's dead now. And there's a new guy hosting it, right? Yes, Steve Harvey. Oh, yeah.

You know him. So Steve Harvey's hosting this show, and one of the contestants that's a part of this family, the question was all about a milestone that you'd love to achieve. Let's play the clip. Let's play it. Play that, James. Give me a milestone people achieved they can be proud of. Well, one day, I would like to have no debt. Yes. That's not gonna happen debt is okay OPM

other people's money is how you get rich you use other people's money not yours that's how you get rich Dave I want to punch something You use other people's money, not yours. That's how you get rich. Dave, I want to punch something, and you're the closest thing next to me, and so I'm going to refrain.

You know, here's the thing. If you're a game show host, that's cool. But you probably ought to just host the game show and not give out financial advice, for one thing. The second thing you shouldn't do is give out financial advice if you're $25 million in debt to the IRS. You just airing out some laundry here, Dave? I'm just saying, when you Google Steve Harvey, you find out he's $25 million in debt to the IRS. So if you're $25 million in debt to the IRS, when it comes to money advice, you should shut up. You really should not open your yap.

I mean, and on top of that, be a dream killer for a young guy. Yeah. That's what gets you on this show. I mean, if you want to just be stupid and $25 million in debt to the IRS and have your little game show, that's fine. But when you're a dream killer and you rile George up, that'll get you on this show. Listen, here's the thing. Steve harvey is a celebrity he's a media mogul he makes his money in a lot of ways this young guy funny yeah this is where he makes his money so try that but to don't laugh and you won't be 25 million dollars in debt this idea that this

guy's debt is a bad thing to pay off because it's other people's money and therefore it's good debt and this is how you build wealth it just occurred to me steve har because it's other people's money and therefore it's good debt. And this is how you build wealth. It just occurred to me. Steve Harvey is using other people's money. Mine. Your money. And yours. We're taxpayers.

He hasn't paid his tax bill. $25 million worth. He is using OPM. There you are. Dave figured it out. You're detected. Followed his own advice. This is crazy he's

he's living the dream use opm let's use the taxpayers money don't pay our taxes 25 million dollars in debt i would love to see steve host a financial show and they call and say steve i'd love to pay off my debt can you tell me how and he goes well you got to get more debt man you're doing great keep it up you're not quite there yet i can free up some cash flow for you don't pay your taxes that's one way to do it not a way i'd recommend hey listen steve we would have left you alone brother but you know what happened you you stepped on a young man's dream and you walked over into our garden when you did it and uh so a pruning is in order uh so that's what you're experiencing young man uh stay in your lane brother and you'll be okay with us we love you

we think you're funny we think you're a great guy don't be a dream killer though yeah and if that contestant is listening i want you to call us up because we will actually help you actually we'll give them a free subscription for a year to remsey plus so they can get into financial peace university and we'll get them out of debt. I will personally. We're quite the opposite of a dream killer. Yeah. I want to see that dream happen.

We're like a Make-A-Wish Foundation. We're on the other side of dream killing. If anyone contacts me and I'm their one Make-A-Wish, they've led a sad life, Dave. Hopefully they have bigger dreams than that. I wasn't saying you were the Make-A-Wish. I said we were going to let them make a wish when it comes to being wealthy. We're going to help them get there. Oh, okay.

That's different. George, it was not personal. I thought you meant their wish would be to hang out with me. Well, it could be. It could happen. Thanks, Dave. We can aspire to that. Dave's not a dream killer.

I'm not a dream killer. I'm going to let you live your dream, George. But, hey, listen. If you're out there listening, you're part of the Skeepers family that was on the family feud, hit me up. I will personally financially coach you because our friend Steve didn't do a good job of that. Well, yeah. Condescending dream killer. Man.

Ain't going to happen. Not going to happen. Sounds wrong to you. OPM, other people's money. Use the taxpayer's money. Now, Dave, I think what he's referring to here... You know, if Steve calls us up, we'll help him with his tax debt. If Steve calls us up, it's going to be...

We'll give him a debt snowball with the IRS going. I'll give him a free membership to Ramsey Plus. How's that? You'll give him a debt snowball for... Because then, you know... I mean, he would actually help the general deficit with $25 million being repaid. That is true. Because the deficit...

I think he's repaid. I've got the article here. Did he repay it? It sounds like he... Oh, he worked his way out of it. Look at that. He did he's repaid. I've got the article here. Did he repay it? It sounds like he. Oh, he worked his way out of it. Look at that. He did. He had a few big deals come through.

Oh, wow. A few big deals came through and he. So he's not the cause of the current deficit, just the past deficit. Okay. Yeah. Well, he's using that OPM principle pretty well, though. Well, what it comes down to is he's saying you've got to leverage as much debt as possible, and that is the key to wealth building, which is the antithesis

to how you now How long is that clip, James? You know, off the top of your head? 30 seconds. Roll it one more time. I want to see it one more time. It's just cute. Give me a milestone people achieved they can be proud of. Well, one day I would like to have no debt.

Yes. Well, one day, I would like to have no debt. No debt, no debt. That's not going to happen. Debt is okay. It's opposite day. OPM, other people's money, is how you get rich. You use other people's money, not yours., is how you get rich. You use other people's money, not yours. That's how you get rich.

The federal government's other people's money. I love the lady in the background looking around going, is he serious right now? Did he really just say that? What, what, what, what, what, what? Oh, man. They expect me to run out with like a rubber club or something and start hitting him out of the side. Oh, my gosh. Oh, boy. Well, that was fun he

did get he did get that though he he made the show 22 million listeners so we just upped his ratings does he still do that show i think so is that show still on yeah i see i don't have a tell my television never on except like you know appointment something i don't watch football games football i do watch football that's it. That's about it. But the occasional thing Sharon makes me watch and then football. But, yeah, because I'm just firmly convinced the news has completely lost all their minds. So, yeah. And so has Family Feud. Who thought?

A friendly game show. I bet is, what's the other one? The Wheel of Fortune. Is that still on? That's still going. Big Pat Sajak? Pat Sajak. He's still alive.

He looks great. You know, Pat Sajak was a weatherman here in Nashville. I didn't know that. Before he did that. He was here back when I was a kid. There's your fun fact for the day. That's how old Pat is. Love you, Pat.

This is the Ramsey Show. We'll be right back. In the lobby of Ramsey Solutions on the debt-free stage, Misty and Josh are with us. Hey, guys, welcome to the Ramsey Show. Thank you. Hey, thank you. Hey, man, I'm so proud of you guys. You're debt-free. Where are you guys from? Arkansas.

Little Rock. Very cool. How much debt do you pay off? $74,000. All right. How long did this take you? About nine months. Good.

And your range of income during that time? About $128,000 to, depending on how much it closes this year, $185,000 to $200,000. Whoa. What do you all do for a living? I sell real estate. Oh, that's what you meant by see how much it closes. Okay. And I've got a web development company.

Great. Okay. All right. Cool. So what kind of debt was the 74 000 um we had biggest part was credit cards we had about 42 000 worth of credit card debt um we had uh had to buy an rv so we had about 12 000 in for the rv um that's mandatory yeah oh yeah yeah we like to travel we had a we had a baby born and we decided we had to go travel with an RV, so we had to buy one with that.

Yeah, that makes sense. And it had to fit both our girls and our dogs. There you go. There you go. And it had to have debt. Okay, I got it. It's a lot of hats. Yeah.

But what happened about 10 months ago, 12 months ago, where you said no more? So our best friend, Scotty and nicky actually had told us about um financial peace and told us a little bit about this debt snowball so josh came home and told me about it we kind of started that process just a little bit um scotty i talked to scotty just long enough to know about the snowball and nothing else so that's the only part we got into so we started out a little slow because we didn't hear the whole the whole thing but yeah so kind of what happened at that point we started paying off some debt um we decided to have a baby um had her had lots of medical problems um my oldest they're actually 20 years apart so um know, we wanted to kind of start all over and have one together.

So that brought on a lot of medical. Then my in-laws actually asked me to come work to do real estate with them. So I was in education prior to that. And switching over to real estate, I went from having a solid amount of money every month to nothing for a little while until I got started. And now she's evolved into a rock star realtor. She's awesome. Great. Are you one of our ELPs?

I am. Oh, hey. Rock star. There we go. Thank you. That's how it's done. So kind of what happened to spur the change, though, is after that, we went on a vacation in that said camper that we couldn't afford. We were financing the vacation.

We got to our oldest daughter's house here in Nashville, Tennessee, actually, and his brakes went out in the vehicle. Oh, it's his brakes. It's his brakes. It's like your dog peed in the floor. His brakes on his camper that he bought that I ride in. Yes, yes. I like this.

It's well played. So the brakes went out on the truck. And we basically had to max out the rest of our credit card to finance fixing the brakes. Right. Hold on, hold on. There's $42,000 on this credit card. Yes. What else was on there?

Two credit cards. Yeah. Well, let's see. Some expensive breaks. Yeah, medical bills. We paid a lot of bills. For my business, I had to buy a new Apple computer, of course, and so that was on there. And, yeah.

We just kept finding things that we thought we had to have. And then after that trip, you know, we stopped nashville to get all that fixed and josh said i don't know whether we should continue on our vacation because we were headed to south florida and i was like well of course we got to go to florida we had no money yeah we had zero money so we did our trip and got back and he said i'm not living like this anymore the most stressful trip i've ever been on right so we talked more to scotty nicky um we we went through financial peace university we started being gazelle intense and here we are so i got the whole picture then and started implementing the whole thing and then it started working right yeah way to go you guys way to go it sounds like

you guys were living the high life and then you realize the high life looks a lot like the edge of a cliff yeah right yeah and we also realized that we you know you you can't outspend stupid we we've had a good run with my business doing well and her business doing well and we kept thinking you know well when we double our income then we'll be doing you know better but then we just got more toys and stuff like that and can't outspend stupid so you can't out earn it you mean right oh and we sold the camper yeah we sold the camper to pay off debt how much did it sell for um about 12 000 yeah okay did you so it about paid itself off yeah it did it did yep all right that's good good and somebody out there be careful

those brakes oh my god it was the brakes on the truck that was carrying the camper yeah oh oh it was it was okay the camper brakes were actually it was it was okay camper brakes were actually good so i was using like the little electronic brake to stop the whole truck and everything by the time i get to got to nashville that's how bad it was yeah this is impressive it's scary yeah yeah wow that's pretty redneck i respect it so you guys had to have all this stuff, and then you decided, no, you know what? We have to be debt-free. Oh, yeah. Right.

It's a big mindset shift. What do you tell people the key to getting out of debt is now that you've done it? Well, he's the nerd. I'm the free spirit. So after he kind of taught me the error of my ways, I would say budgeting. The budget committee meeting every month has been great because before we just had money in the bank and when she wanted something she would ask me and all i had to look at was the number in the bank and um and you know and so the budget committee meaning i'm the nerd but every month she brings a calendar with everybody's birthdays coming up and

hair appointments and stuff like that so it works really well and we know you know we're exactly on the same page every month that's so perfect that's incredible that's how you do it and then you can spend without guilt there you go absolutely it feels it's very freeing yeah yeah like rachel talks about it's a spending plan yes that sounds a lot better i like the way she thinks. Not restrictive. Look at you guys now making $200,000, no debt. How does that feel? Amazing.

Yeah. It's so freeing. Very freeing. Yeah. Very cool. Well, congratulations, heroes. Proud of you. And welcome to the ELP program as well.

Thank you. We're honored to endorse somebody that thinks like you all for real estate. And so, yeah, if you need a good real estate agent in the Little Rock area, Misty's out there. There you go. Good stuff. Very, very, very cool. So who were your biggest cheerleaders? Your friends, I guess, that talked you into this, right?

They actually went through it. They've paid their house off. Yeah, they paid their house off just recently. Wow. But every time we made progress, we them and they were always you know they cheered us on through everything even though you know the hard times when we were like man this is a little intimidating with the amount of debt we have and they're like you can do it keep going and and then they celebrated with us when we got everything paid off so cool and you brought

the kiddos with you what are their names and ages let's get them in the shot. Chastity is 24. She's actually a singer here in Nashville. She's lived here for two years now. All right. And this is Kaya. Mm-hmm. And she is how old, Kaya? Four.

She's four. All right. Big girl. Very cool. That's fun, y'all. Well done. We've got a copy of Baby Steps Millionaires for you. It's an early release copy.

The book comes out January the 11th, How Ordinary People Built Extraordinary Wealth. How you can, too, because that's the next chapter in your story. You'll be millionaires now. Looking forward to it. You are on your way. You're heading that way very, very, very quickly. Very well done. And a copy of Total Money Makeover.

You can give it away to one of your clients or something that comes through an ELP lead or whoever else you see out there that needs to know how to do the whole thing, not just the debt snowball, right? Right. That's important. Yeah. Very well done. All right.

Misty and Josh, Chassidy and Kaya, Little Rock, Arkansas, $74,000 paid off in nine months, making $128,000 to $185,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! And the crowd goes wild. That's how it works right there.

Well done, boys and girls. Well done. That's fun. This is cool. It's amazing that you can just decide to not do stupid anymore. It's just a decision. It's just a decision. It starts there.

The act of making something an intentional thing. I'm going to do this. I'm going to pay attention to my marriage. I'm going to pay attention to my money. I'm going to pay attention to my physical fitness, my mental health. I'm going to pay attention to my career. As soon as you start paying attention to it, it starts getting better. It's incredible. Because no one does stupid, you know, like, let's go do something stupid. Very few. I know a couple that do that, but not many. Most people are like, once I start paying attention, I can clean it up. It's hard work,

but it's simple. It's just a matter of intellectual intensity. This is the Ramsey Show. We'll be right back. Our scripture of the day, 2 Peter 3.9, The Lord is not slow in keeping his promise, as some understand slowness. Instead, he is patient with you, not wanting anyone to perish, but everyone to come to repentance. Norman Vincent Peale said, Promises are like crying babies in a theater. They should be carried out at once. I like that.

That's very good. Open phones this hour. This is the Ramsey Show. George Camel is my co-host today, Ramsey personality. If you've had it with living paycheck to paycheck, you're sick and tired of constantly worrying about money, we want you to know you don't have to live like that anymore. Get into Financial Peace University. We'll show you how almost 10 million people now have taken control of their money one step at a time.

And you'll learn how to make a budget that actually works, get out of debt, become wealthy, pay off an average of $5,300 in debt and saves $2,700 in the first 90 days. That's the average person going through the class. That's an $8,000 change in just 90 days. Good return on investment. Financial Peace University is only available through a Ramsey Plus membership. Get started today or gift it to someone you know by visiting RamseySolutions.com slash FPU.

RamseySolutions.com slash FPU. RamseySolutions.com slash FPU. Mackenzie is in Indianapolis. Hi, Mackenzie. How are you? Good. How are you doing? Better than I deserve. What's up?

So a question for you, a little back story. My husband is deployed right now, and I am living with my parents while he's gone, so we can save money and then look for a house when he gets back. My question is, we don't have any debt. My question is, he had stumbled upon, I don't know if it was a video or what it was, but something that has to do with if you put zero down because you could do a VA loan. I know you don't like those.

So my question about it is, he said that, you know, if you put zero down because you could do a va loan i know you don't like those so my question about it is he said that you know if you put zero down and you do the va loan if we put our 20 into the first month of our like mortgage towards like the mean principle um that over the entire time we're paying on it the the interest would be cut significantly. No, that's not true. That's not true. That's not. That's not how it works.

Okay. Regardless of if it's a VA loan or any other loan. Okay. Okay. The interest is charged on the outstanding balance. Okay. Let's say you had a $200,000 house and you could put down $40,000, but you didn't. So you have a $200,000 loan.

And you put down $40,000 as additional principal the first day you move in, like his stupid video told him to do, okay, which is a complete scam. Stay away from those people. But you're then charged interest on the $160,000 per month right outstanding and every month you are charged a little less interest because you pay down the principal a little bit okay that makes sense you're paying every month regardless of what how what is going on you are charged interest on the outstanding balance that month. Oh, okay. So if you put down $40,000 two days after you close the house and move in, like his

stupid video suggests, now you have $160,000. If you pay the same large payment that was based on $200,000, you're going to have, you know, you're going to pay interest only on the $160,000. If instead you just put down $40,000 on the house as a down payment and you have a $160,000 mortgage, you're charged interest the first month, ta-da, exactly the same on $160,000. Okay. The only difference is your payment will be smaller because it was calculated on $160,000 from the start rather than on $200,000 from the start. So to have exactly the same effect, you'd a payment as if if you if you did the normal way you bought the house

put 40 down had 160 000 mortgage calculate what the payment would have been on 200 000 and pay that payment you'll obviously pay the house off earlier no kidding right which will save you interest because you paid the house off earlier because you're not in debt but there's nothing magic about waiting until after the closing to make your down payment that's just ridiculous and that crap's out there people are always trying to hack something that it's not hackable and basically you either owe the money or you don't and you're the interest is charged on the amount of money that you owe every month regardless of how you got there that makes sense right yeah and that's why i called because i was not completely sold on it and i was like and you know what i'm gonna see if i can't ask i'm glad you got through that's a good good question so george if

you had a six percent interest rate or a three percent three percent interest rate okay that's a quarter of a that's 0.25 a month uh three divided by 12 okay it'll be 0.25 or 0.025 um 0.025 is what it comes out and so um uh that is the you take that in the interest rate per month your annualized interest rate divided by 12 and that per month is how much of your payment that month is going to interest and so if your balance is smaller the amount going to interest is smaller and the amount going to principal is greater so anytime you pay down a mortgage you're sliding down that amortization schedule to a different position to where, again, that math lines up. It's calculated as simple interest. Yeah, and as we've been paying off the house, I love looking at those numbers and going, oh, my gosh, instead of $500 going towards interest, now there's only $25 going towards interest as you start to pay it down, and the interest charged is only the monthly rate of interest on the amount,

the annual rate divided by 12, on the outstanding balance. And whatever the rest, if your payment stays the same, more and more and more and more and more goes towards principal. And it's fun to watch that. Yeah. And, yeah, again, there's no hacks around this. The interest is the interest. And knowing the math, even though it's nerdy, really helps. Yeah.

It keeps you from falling into this stuff. Kyle is with us in Washington. Hi, Kyle. How are you? Good. How are you? Better than I deserve. What's up?

Well, got an issue, a family issue I'm looking for a little outside perspective on. Long story short, I have a house mortgage, but I'm debt-free. Other than that, my dad had a house and didn't pay his property taxes. It got foreclosed on. Some guy came in and bought it. My dad didn't even know until the guy showed up on his front steps and said, I just bought this house. My uncle ended up buying that house back for my dad, and they had a deal.

He was paying them back every month, but my uncle owned it outright. Since then, my uncle ended up giving that house to me because he had cancer, and he's passed away. Is there a mortgage on the house? No. Okay, so your uncle paid cash for the house, gave it to your dad. Your dad died. Now your uncle's giving it to you.

He never titled the house to my dad. I got you. He let him stay there. My dad was paying him rent. Let him stay in his house. Okay. So then now it's between me and my dad. And he is supposed to be paying me essentially just the cost, the property taxes and the insurance.

And it's up until now, I mean, it's been barely making the payments, but now we're finally two months late on payments. And I'm just feeling myself in a horrible moral situation where I technically own this house. And I know as a landlord, you don't let that stuff slide. How much are the taxes and insurance it's practically nothing 500 600 bucks a month six thousand dollars a year what do you make a year uh about 80 that's not nothing that's almost 10 of your income yeah so why don't your dad paying the bill That's almost 10% of your income. Yeah.

So why isn't your dad paying the bill? Same reason he lost the house in the first place. He's not too good at managing. How old is he? Born in the 60s. I don't even know. It's time for a 50-something 50 something year old man to grow up i i know yeah i think you need to sit down and talk to him brother i mean this is not okay uh i think you need to sit down and say that you're putting me in a tough situation here

six thousand dollars a lot of money at my house all you gotta do is pay the taxes and insurance and you gotta pay that or we have to figure out something else. I mean, I don't think that's being unreasonable. You can have a kind of conversation. You don't have to be mean to him. But you just walk along tolerating this, acting like it's not happening. It's not helping anybody. You need to say these things out loud, brother.

This is James Childs, producer of The Ramsey Show. Did you know The Ramsey Show is one of the most popular podcasts in the world? Subscribe or follow today wherever you listen to podcasts.