The Ramsey Show - App - How Do I Best Save for an Early Retirement? (Hour 1)

Episode Date: January 5, 2022

Home Buying, Debt, Retirement, Investing As heard on this episode: Sign Up for a FREE trial of Ramsey+ TODAY: https://bit.ly/3rZTUAx Tools to get you started:  Debt Calculator: https://bit.ly/2Q64HME Insurance Coverage Checkup: https://bit.ly/3sXwUn5 Complete Guide to Budgeting: https://bit.ly/3utmVXi Check out more Ramsey Network podcasts: https://bit.ly/3fHhbVE

Live from the headquarters of Ramsey Solutions, 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, Dr. John Deloney, Ramsey personality, host of the Dr. John Deloney Show. Number one best-selling author is my co-host today. Open phones at 888-825-5225. That's 888-825-5225. As we talk about your work, your relationships, your money, you, and how all of these things interact we're glad

you're here open phones again 888-825-5225 julia's in iowa city iowa to start off this hour hi julia how are you i'm so good hi you guys thank you for taking my call. I am like your biggest fan. Okay. We're honored. How can we help? Okay. I'm a little nervous. I'm 23 years old. I work as a nurse and I'm currently on baby steps four, five, and six. I plan to start travel nursing here in August just in hopes to increase my income and learn a bit more. My question for you guys is, should I think about buying a house or a condo to rent out while I travel nurse, or should I just wait on that? I'd wait. Yeah. Okay.

You're 23. You got time. One thing about travel nursing that we know is you're going to pile up a big pile of money while you're doing this. Yes hope so and with that pile of money you might make a different purchase than you would make today okay yeah and uh also uh renting what you know dealing with the tenants while you don't live in the town because you're running around all over the place can uh leave you pretty vulnerable to a mess and my guess about like a property manager? Like I'm just curious. Well, I mean, it's okay to have a property manager, but let me just tell you that there's one thing you've got to know about real estate.

It all sounds good until you actually are doing it. Yeah. And when you're actually doing it, there's blood and guts and cat pee in the living room. I mean, it's just there's stuff you deal with it's real and um i've owned real estate for 40 years and i love real estate but people that have not owned rental real estate or that are all enamored with getting rich in real estate um have not figured out that it is a lot of stuff to deal with. I've got a property management company that I own that manages my properties, and I'm still asked questions almost every day.

Walked by one of them's desk a while ago, and she stopped me and said, hey, what about this with this tenant? And I'm not even doing the day-to-day management, but she was just wanting to know because it was a large situation. So, you know, you're just going to – everything's a large situation here situation here you're adding hassle to your life i would keep my life clean and pile up some money yeah especially if you're traveling my my guess is you're going to go to some city or some state and you're going to love it and you're going to wish you weren't tethered down somewhere else right that could happen yeah yeah you could get the uh itch to relocate when this is all done

and because you're going to see some cool places. That's one of the benefits of doing what I've done all these years. I've gotten to see America's great cities and love them. I mean, there's a lot of really cool places to live in America. I tell you what, last year. There are some armpits in America. Last year, I was on the road more than I've ever been, and yeah, there's some places I've never been to. Incredible, beautiful places all over the country. I was on the road more than I've ever been. And, yeah, there's some places I've never been to. Incredible.

Beautiful places. Yep. All over the country. And there's other places you go and you go, why do humans live here? I remember thinking. The place looks like Beirut. You'll know we can choose. You can live wherever you want to.

It's cool, whatever. Yeah. But, yeah, there's a lot of fun out there to be had and a lot of adventure to be had. Go have that. Yeah. Okay. Good question. Rochelle is with us.

Rochelle's in Los Angeles. Hi, Rochelle. How are you? Hi, how are you? I'm doing great, Dave. Thank you so very much for taking my call. Sure. What's up?

Okay, so I have a company lease vehicle. I know. Don't kill me. I know, I know, I know. And I wanted to find out what are your thoughts on, even though the company pays for the lease, I am currently on my way to, I'm in step number three, four right now, as my baby said. But my question is, do I pay off the lease, or do I sell it now that the market is so high? Okay, one of us is confused. Okay, sorry.

Me or you won. Me or you won, okay? There is no such thing as a company lease. Either the company owns the car, and they're furnishing you the car, or you went and leased a car and you have a car allowance correct number two i lease the vehicles underneath my name okay and the company gives me um five hundred dollars a month which by the way they would give you if the car was paid for oh okay they give you the five hundred dollars way. So you don't have a company lease.

There's no such thing, okay? You have a leased car, and your company gives you money as a car allowance for the use of your personal vehicle. Correct. And if you get fired tomorrow, you've got to pay that lease out. Yep. Correct. So this is a debt you have, and you need to get the either the car paid off

or get it sold one of the two as soon as you can as soon as you can i mean can can you just pay the lease off i mean have you have you called and asked for the early buyout figure um i did i haven't called yet but i did i just looked on the statement and it's um twenty eight thousand dollars maybe twenty thousand and change yeah no maybe uh let's let's go back a minute because there's two things show up on these statements there's is that the total of all remaining payments um the you're talking about like the residual 28 000 the 28 000 would be the residual plus all remaining payments that's a total that's a. figure, total of payments. That is not the early buyout.

The early buyout is what they will let you pay it off for today, which does not include what we call interest, but they call cost of capital. Okay. I would have to call to get that exact number, but I believe it's closer to like $32,000 or $000 and 33,000 no it would be less than 28,000 not including the final payment and the residual amount to buy out the vehicle okay you're misunderstanding okay i'm sorry okay i'm nervous it's okay it's okay let's walk through it right quick because i want to make because it's good for everybody to understand that what could be

showing on your statement is one of two different numbers. The $28,000 is one of these two numbers, okay? It could be the residual value is what you can buy the car for at the end of the lease. Okay. Plus all of your payments up until the end of the lease. How long until the end of the lease? Okay, I have exactly 12 months end of the lease how long until the end of the lease okay i have exactly 12 months left okay so 12 times your payment plus the residual does that equal 28 000 no sir it's

actually more okay then the 28 000 is probably your early buyout because that's the total obligation you have that the more number 12 payments plus the residual value the early buyout is as if you paid off your car 12 months early and it saves you 12 months of interest on 20 30 000 bucks so it's probably three thousand dollars less than the total of payments and sometimes i don't ever know which is showing up on these statements unless they are very clear with it. So if you can sell the car for more than $28,000, you probably should. And then let's figure out a way to get you a car bought that your company approves of so you continue to get the car allowance. And if you take out a little bit of debt on job your home your marriage and your growing family while you're enjoying the present you can't help but think about your future and your finances. As you explore your options, consider Christian

Healthcare Ministries, or CHM, for your healthcare. Their generous maternity program and budget-friendly monthly programs have been a blessing to members welcoming children into their families. Visit chministries.org slash budget to see if it's right for you. Christian Healthcare Ministries is a Ramsey Trusted Provider. Thank you for joining us, America. Dr. John Deloney, Ramsey Personality, is my co-host. He is the author of the best-selling book, Redefining Anxiety, an 80-page quick read. It is available at RamseySolutions.com.

You can get it right now. It is resolution season, and if you're like most people, you make resolutions on New Year's Day. By Valentine's Day, you give up on them. The gym is always empty by Valentine's Day, and you can't get a place in there right now if you go to a public gym. So if you've decided to take control of your money this year, don't do it alone. Get the support, get the accountability, so you make it past Valentine's Day. The best way to do that is plug into something known as Financial Peace University, our class that has now been taught in over 50,000 churches and locations around America to almost 10 million people.

Over 6.5 million families have been through this. And you'll go through our proven money plan. We're going to show you exactly how to do this. It's not in question. We've got this dialed in. We know how to help you not only get out of debt, but become wealthy, become a Baby Steps millionaire, and be outrageously generous. We have in-person classes, online classes. You can do both, and you need to plug into this. It's a free trial for Financial Peace University for the every dollar premium version of the app.

Ties into your bank and downloads your debit card transactions automatically into your budget. Can't beat that. RamseySolutions.com slash FPU. Try the free trial. RamseySolutions.com slash fpu so john i was uh listening to your podcast and i loved no it wasn't your podcast it was entree leadership's podcast you're talking about new year's resolutions yeah and uh that was a an upbeat thing that you upbeat thought you had and i had never looked at that way that it is a wonderful holiday that we celebrate at New Year's

because it gives us all a clean slate. It's a mulligan. You can do anything, Dave, anything in the world. And, like, man, I gained 800 pounds. I started doing drugs, whatever. New Year's resolutions, everyone's like, great, let's do it, right? You can just swipe it and let's do it again, right? It's like the ultimate grace move. I love it, yeah. ultimate grace move so it's the year jubilee every year right yeah

but it just reminds you how much of your life you really do control yes that's right and you know you can just decide this is my year yeah this year i'm gonna lose weight get out of debt i'm gonna be nice yeah this year i'm gonna i mean, that'd be three good ones. This year, I'm going to whatever, right? I mean, you know, it's, you can just decide. Yeah. And there's so much that in a world that's out of control, there's so much of our lives, our daily lives that are up to us. Now, we don't control everything.

I'm not fooled by that. I understand there's a pandemic or was a pandemic or whatever we call this thing now i understand there is uh political unrest i understand there is racism i understand there i understand all that i can't control any of that but there's a whole lot of my life i can control and i can certainly control how i react to all of those things yes and let's let's put into, this is the part that nobody ever talks about. It is a few days after the new year, right? We're in that first week.

And I'm doing some, I go all in on the new year stuff. I like to do all kinds of variables and test with my diet, nutrition, all this kind of stuff. I switch from coffee to tea. And Dave, I've had a headache the last 48 hours. No way. That would melt somebody's, that would melt my bones. And this is a part of changing things that, I mainline coffee as a way of being. You must.

Because tea's got plenty of caffeine in it. Yeah, but I'm, all this little fancy tea I'm drinking that's imported from Mexico. It's a whole thing. And you're drinking like espresso or something on the coffees, right? I'm mainlining espresso. Mainlining, okay. And so I've gone, all I have to say is this change is hard. You didn't just change from coffee to tea.

No, no, no, no, no, no. You went from hardcore crazy coffee to little tea. I went from, yes, an F-350 dually to a Prius. Yes, gotcha. It still gets me where I need to go, but it's not near the horsepower. Yeah, and the headache is blowing up. It is. But all it says is change.

How long do you have to have the headache? It's going to be about another day. Is it? And then you know what? I'm going to wake up, and there's going to be like a cataract was peeled off my eyes, right? And I'm going to have this. So all I have to say is this change, this just decide, it comes with a cost.

You've got to pay for your pay for the way you're living whatever that looks like well if you decide to get a i i did a i'm 61 i did a three mile run this morning thank you very much congratulations man and uh i've been you know back up on my runs again and it got warm enough today that i can actually get out and do that instead of just a walk and uh but you know tomorrow i'll pay for that yeah because i have not because i've not i've not been running for about two weeks so yeah i'll wake up and go oh crap i'm 61 that hurt and we live in a culture where we we associate pain with we must be doing something wrong and no sometimes when it hurts that means you're on the right path right and it's going to be that resistance yeah what is

that marine saying pain is something leaving the body stupid pain is weakness leaving the body it's not stupid it's weakness weakness leaving the body. Weakness leaving the body. It's not stupid. It's weakness. Weakness leaving the body. In some cases, that's true. Some cases, absolutely not. In the case where I slammed my finger in the door. I was going to ask you if that was like a cool new thing. No, that's actually what my granddaughter asked. She said, Papa Dave, who painted your fingernail? And I said, Satan.

Thinking, oh, man, he's going to make his fingernails again. No, you don't want to do that one um and that's after i taught her some new words oh my gosh open phones at triple eight eight two five five two two five happy new year lynn is in chicago hi lynn how are you hi dave i am better than I deserve and thankful to be in Baby Step 7. Thanks to you and a lot of supportive friends. My question today, I work for a very solid company that has offered an ESPP and I've participated in it for the over 20 years that I've been there. Wow. Yeah, just recently discovered, and stocks do very well, just recently discovered, I don't know how I missed it, not recently discovered, I don't know how

I missed it, not paid attention, that they no longer have a six-month look back. So, you know, I guess in most cases, the stock doesn't appreciate maybe that much. I don't know. In this case, closing price in July 1st was $321. December, it was $415. So I'm thinking, first of all, I'm 67. So I'm kind of thinking about stopping this program anyway, because my stock in my company is getting to be like 8% now of my total portfolio. And my advisor has suggested that, you know, like you, that I kind of cut back. I'd like to accumulate more cash. I'm 67 years old. But I guess I wonder, like, what's up with this picture?

Why, like, the price now is $31 more than it was at the beginning of the plan, and they've had my money all this six months. So, like, I'm wondering. Well, that's investing in stock. Sometimes it goes up, sometimes it goes down, right? It's a risk you take, I guess. But you've been, as long as you've been investing, it's just gone up fairly steadily over the years.

But certainly during this one-year look-back, or this six-month look-back, which gives you the benefit of either price, correct? No, it does not. That's what I mean. Oh, they eliminated that. They eliminated that. Okay, so you're stuck with the price is the price is the price. So here's the thing.

Here's the thing. How we got here doesn't matter to make this decision. The way we make this decision is what are we going to do going forward? So how much money is in this company stock? What's it worth? It's about $15,000. Okay, not a lot of money. decision is what are we going to do going forward so how much money is in this company stock what's it worth it's about 15 000 okay not a lot of money all right so let's put 15 000 cash in the middle of your kitchen table you see those hundred dollar bills laying there in your mind right now oh yeah okay now and let's look at your stock price today what it is today and you know some things about this company because you've been around it

a long long time are do you want to invest fifteen thousand dollars into this company and do you want to continue to invest in it monthly on a purchase monthly purchase plan based on what you think it's going to do going forward. Going forward is the only thing we can make the decision based on. The past is worthless except to help us predict the future. So what do you want to do? Are you going to buy more or are you going to buy less? I don't think I'm going to buy more. I think actually a great idea for a friend suggested,

since I give to my churches, I tithe to my church, I'm going to take some of it and give it so it'll have no tax. Yeah, that's a good way to do it. You can do a stepped-up basis on that gift and to the value, and that'll give you a great write-off. That's a good use for it. Some charity work with it's wonderful. Well, you're sharp. You're on top of it. You're going to make a good decision. I trust your decision and I think it's going to be fine.

And the 15,000 is not bothering me a bit one way or the other. I think you're going to be okay. Dr. John Deloney Ramsey personality is my co-host today as we talk about your life and your money. Time for a debt-free scream, at least according to my screen. That's what it says. Steve and Vicki are on the line from Olympia, Washington. Hey, guys, congratulations on your debt freedom. How much did you pay off? We paid off $96 thousand seven hundred and fourteen dollars way to go how long did this take you 24 months 24 months and your range of income during

that time uh we started out at 140 went up to 170 and we're back down to 140 cool what y'all do for a living i'm a registered nurse. I'm a mechanic. All right. Very cool. What kind of debt was your $97,000? It was our house. Yay! All right.

Talking to some weird people. I love it. Way to go, you guys. What's this house worth? Probably $550,000, $600,000 maybe. Wow. I love it. and it's all yours it's all ours how does it feel to not have any payments in the whole world it's crazy yeah it's amazing i thought people who paid off their houses were all uh rock stars and movie stars not not mechanics and nurses. Does that feel weird?

Yeah. The first month with no house payment was like, what do we do with all of this? And then, of course, we hooked up with SmartVestor Pro, and we're ready for retirement now. Hattie, so how much have you got in retirement now? Oh, not enough. We have a lot of work to do, but we're going to catch up. We have lots of time. I'm 50, and he's 51. Oh, you've got plenty of time. retirement now oh not enough we have a lot of work to do but we're going to catch up we have lots of time we're uh i'm 50 and he's 51 oh you got plenty of time you're gonna do just fine okay

all right so now you fill that up and you become everyday millionaires or baby step millionaires right that's right i like it congratulations you guys so very cool and we wanted to say thank you for being there you made it all really happen well we're honored i appreciate that you made it happen i just showed you how i'm so proud of you so tell us the story what got all this started 24 months ago oh goodness it started a little bit before 24 months ago i had finally after years, paid my master's degree off. And the month after I paid it off, my friend was here from San Antonio, and she asked if I'd heard of you. And I said, oh, yeah, I listened to him when I'm mowing the lawn. I listened to his podcast. But, you know, he doesn't really matter to us. We don't really owe anything except our house.

And she said, well, my husband and I just paid off our house. Why don't you take Financial Peace University and do that too? And I thought, oh, my gosh, we could pay our house off. My friends challenged me to drink another beer, and your friend challenged you to pay your house off. It's amazing. Wow. challenge you to pay your house off it's amazing wow we enrolled in financial peace university and followed the steps and and it was just like you say it was game on we were ready and we lit it up and did it i love it you guys are amazing congratulations thank you wow all right now

that people hear this and they just showed your crazy-looking chart, I love it. I love your chart on the YouTube channel and beautiful mind stuff going on there. And so when people see that and they hear you paid off your house and you're 50 years old and you're a nurse and a mechanic and, you know, you make $140 to $170 to $140, what do you tell them the key to getting out of debt is? How did you do this? Stay focused and believe that you can do it. Yeah, and I think also that budget.

Oh, goodness sakes, with that budget, You know, it was hard for a while. It was, you know, we can't afford that, we can't afford that. But you know what? Now we can. So it was totally worth, it was worth the work, for sure. Now, the truth is you could afford it, but you couldn't afford it and hit something that was more important to you. That's right. You're right.

Yeah, you were making choices, intentional choices. Yes. And that's the power of this. The budget just doesn't tell you what to do. It just makes you realize what you're right. Yeah, you were making choices, intentional choices. Yes. And that's the power of this. The budget just doesn't tell you what to do. It just makes you realize what you're doing. Yeah, you're absolutely right. I love it. I'm so proud of you guys.

You're amazing. Thank you. All right, now that the house is paid off, you went and saw the SmartVestor Pro, you're going to start saving for retirement. But what's the first big thing you're going to do to celebrate? Oh, my gosh. We haven't even gotten that far yet i'm looking at him going well we just put a new propane stove in the house i mean oh you celebrate big you go big girl i'm just telling you i got a stove yeah no that's not not what i'm talking

about honey we'll plan something, Dave, I promise. All right. I want you to have some fun. I want you to do something to, you know, drive this stake in the ground and stop, because you just did something very few people ever do, and a whole lot of people don't even believe you can do. To Steve's point, one of the big things you've got to do to be able to pull this off is you have to actually believe you can do it.

Right, right. Yeah, you guys are amazing. Well, we're going to send you a copy of the book Baby Steps Millionaires, because that is definitely the next chapter in your story. You're going to be there before you know it with these numbers. This is pretty incredible. And be able to retire with dignity and spend all of your 50s and 60s and the rest of your life in a paid-for house. Life is really good.

Also, I'll send you a copy of the Total Money Makeover. You can give it away, and you can be the friend that disrupts your friend when they're mowing the grass and says, pay off your house. I like it. Good deal. I like it. I love it, I love it, I love it. Way to go, you two.

You're rock stars. You're heroes. Steve and Vicki Olympia, Washington Washington, 97,000 paid off. That's house and everything. At 50 years old, did it in 24 months after they knocked off her master's degree. Debt and 140,000 income to up to 170, back to 140. Count it down. Let's hear a debt-free scream.

Three, two, one. We're debt-free! Yeah! three two one we're just free boom just like that a half a million dollar paid for house and again i i'm just thinking of this as a citizen dave i want my mechanic to not have a house payment i like it because then when i pull in and the mechanic can say you don't need that man and he's not thinking uh you don't really help my house payment you know what i mean yeah yeah i've accused lawyers of trying to fund their kids college oh man off a lawyer fees oh my gosh i just i love it man we're not getting anything done here but sending the lawyers kids to college i've said that a bunch you know so it's uh yeah it's it's a real thing man that's so great i'm a nurse with andy

for what if you're sitting out there thinking well i'm just uh filling the blank job right i'm just a teacher i'm just a just a mechanic i'm just a nurse i can't you can't oh you definitely a half a million dollar house if they don't owe anybody anything for boom boom boom boom boom and i gotta tell you man there i i'm gonna turn into a positive thinking junkie before this is over this whole thing of if you think you can or you think you can't you're right you're right henry ford quote the power of belief the power of faith is scriptural uh it lines up and it's the opposite of what everything on the Internet is telling you right now about your life. They tell you you can't do anything.

Everywhere there's hate. Everywhere there's toxins flying around in the mental space, and you've got to be careful. If you keep feeding your brain manure, your brain's going to be manure because it's garbage in, garbage out. And your body will be manure, your relationships, your work will be manure, everything will be. And the opposite of that is, what was the key to getting out of debt, Steve? Believe.

You've got to believe. What's the key to becoming a Baby Steps millionaire? Well, you can't do it because of racism. You can't do it because of sexism. You can't do it because the rich inherit all the money. Only wealthy people, only people who give me a millionaires inherit money which means you don't know nothing about nothing when you say stupid stuff like that because it indicates that you don't understand the power of belief number one and the data just the fact the data the data is there to tell you very very clearly that you're wrong but But we've got all the proof here.

We'll put it all in the Baby Steps Millionaires book that's coming out next week to prove it to you. But I did a whole chapter in there on belief because of this because it gets so jacked up that, you know, you know why the second million you ever heard, making the second million is easier than the first? Because you know you can. Because you did it.

Yeah. You know, it's like riding a bike the second time. First time you rode it, you're like, oh, my God. The second time, you're like, oh, I've done it before. Yeah. Same thing. Same exact thing, baby. Way to go, Steve and Vicki.

It's awesome. They're going to be so wealthy. What great people, too. This is the Ramsey Show. Dr. John Deloney Ramsey Personality is my co-host today. Open phones at 888-825-5225. Kelly, was it $58 million that we had paid off in debt-free screams last year? We're doing that from memory. Yeah, okay.

Last year, on the air, we had $58 million worth of debt-free screams. As of our last debt free scream moments ago we're uh broke the first million for this year million 89 000 so far this year already wow and we've been on the air three days there we go so uh just let you know we're gonna beat 58 million next year at that rate so just just go ahead and kelly set yourself a goal we gotta we gotta break 60 million and it's on you to make that happen. Yes. She lines up the debt-free screams, so if she just makes sure it happens.

I like what just happened there. That's pretty good. It's delegation. The problem is I just turned her loose, too, so just keep that in mind. Open phones at 888-825-5225. Alex is in Houston, Texas. Hey, Alex, what's up? Hey, nothing much, Dave and John.

Hey, so I've got this question that I haven't been able to find a good answer to, and essentially it has to do with early retirement and how best to fund that via mutual funds or however that best looks to be able to access it you know when you're 50 55 oh so you'll need an income prior to the 59 and a half to be able to cash out your other stuff yes sir gotcha okay how old are you now uh i'm 26 right now okay and um Okay. And so you are debt-free? Debt-free. Currently cash-flowing my wife's college, but trying to get a few things lined up once that's over and kind of hit the ground running. Okay. Well, my point is I want you to work the baby steps before you worry about the answer to this question

so that this discussion is fine to have but i want it to be a little bit theoretical for right now okay okay i don't want you to take your eye off the ball and go work on this stuff we're getting ready to talk about until you've worked the baby steps in other words you're jacking up your regular retirement first we don't need to talk about retiring early and you have no money in your 401k or Roth IRAs. You follow me? Yes, sir. Okay.

Now, two ways that you can do that. Once you are debt-free, house and everything, and you're starting to really load up your regular retirement funds and you want to do some additional investing that you can access earlier before 59 1⁄2. One is you can begin to save and pay cash for real estate, and obviously real estate throws off an income from the first day if it's income-producing real estate, which is the only kind I'm suggesting right now. But you save up and buy a rental house. You save up and buy a small apartment complex or a little office building or something,

and you begin to work that way. That is obviously money you can access at any time, and you have to access it, the rent that comes off of it. It's not optional. The second thing you can do is you can invest in what are called low turnover mutual funds. Now, the way a low turnover mutual fund works is they don't turn the stocks in the mutual fund over. They don't sell anything. It's a buy-hold strategy by and large.

So if you have a 5% turnover ratio, that means they only sell 5% of the holdings a year. Does that make sense? Yes, sir. And if they don't sell it and you don't sell it, it's a capital gains growth, meaning that you have the growth, but you don't pay any taxes on it until you actually sell some of it. So an example of that that's easy to do is an S&P 500 index fund. And so I dump some money in an S&P 500 index fund almost every month. I've got a good deal in there as my overflow funds because that money then grows and I don't pay any taxes

on the growth or hardly any until I actually pull it out and use it. And if I've left it in there at least a year, when I pull it out and use it, i pay capital gains rate on the taxes rather than ordinary income rate on my taxes so in in most people's cases that'd be 15 instead of 30 or 40 or whatever your tax rate is okay my case i make too much money so my capital gains is way more than 15 but um sorry because i'm rich and i must be punished and that's how that's how the thing works these days but uh but anyway the the the point being that you're getting two benefits here. One, you're not paying taxes until you take it out, and then B, when you do take it out, you're paying less taxes.

Okay? So the low turnover mutual fund works. It doesn't matter how much you take out. Exactly. Whatever you take out is going to be taxable on the gain. So it works like this. The easy way to remember it is let's just take a single stock. Let's say you bought a stock of a share of Home Depot,

and I don't even know what Home Depot sells for. Okay, I'm just making this up. But you bought it for $50, and next year it's worth $60. You do not pay any taxes on that $10 in gain unless you sell that stock, and you'll pay taxes on that $10 then. But if you hold it 10 years and it goes up from $50 to $150, you don't pay taxes on that $100 gain until you sell that stock. And what we're doing inside that low turnover mutual fund is there's a whole bunch of Home Depots in there.

They're just holding them all. And they're all going up, up, up, up, up, up, up, up, up, up, and you're not selling them. And so you're getting the value going up without paying any taxes until you do sell it and you only pay taxes on the amount it went up and the amount you sell. And it's only at capital gains rate. So it's at a reduced rate, and it gives you a delayed tax-deferred growth, a capital gains growth on it. And that's what a whole lot of people do for their what we call bridge investing

to make the bridge between 50 and 59 1⁄2 work. Dave, I hear this question a lot from people in their early 20s. What do I have to do to be able to retire sooner rather than later? My initial pushback on that question is always, why are you already planning on, what is it about the life you're setting up for yourself

that you can't wait to do something else with it? Yeah, agreed. Is that, am I off, because there's something about like, What is it about the life you're setting up for yourself that you can't wait to do something else with it? Yeah. Agreed. Is that – Agreed. Am I off – because there's something about, like, man, if you love coaching, then be the best coach you can be and love coaching. And I don't have any plans to, quote, unquote, do nothing. You know what I mean? That's not one of my life goals.

I like what I do. I've always liked what I do. To your point, if that young man is wanting to do this, his motivation is because he hates his job today. Go ahead and change jobs. Get a new job, man. Get Ken Coleman's book, Paycheck to Purpose, and start making plans to go do something you love. And you'll make more money anyway. So if you're doing something you love, if that's the point.

I have already done the flip, and sometimes it's wrong when I've done it. Because when I hear people say retire what they're really saying is i want wealth that i can i want to be able to access some of my wealth there you go okay before i'm 60 gotcha before i'm 59 and a half and so that's how i interpreted the question okay and if i was wrong and you were right then your advice is actually correct because i don't know i didn't ask him that i didn't i didn't think about that question but that's i just i just flip you know how can i get to some of my money before i'm 60 okay because i don't want it all kind of trapped over there in retirement and he's already he's running spreadsheets this guy's running spreadsheets that's exactly right he's he's 26 and he's

projecting he's nerding out right and uh because i know him because i do it all the time so i did it all the time when i was his age how quick can i get out of this this quote-unquote life thing right yeah well how quick can i get to make get access to some of this money the live like no one else portion of dave saying right yeah yeah yeah if that's what he's saying that i'm fine with it but if he's saying oh i hate my job and i can't wait to figure out a way to not have to do it anymore that's what retirement means that's when i look at the retirement debt and that's what people just die yeah right or their bodies fall apart yeah and so it's time to go and start doing something set up a life you love yeah set up some and you don't have to make less money to do it either you just get kink homer's book and you learn the clear path that

he's got there it's very clear on exactly what to do we talk about in the ramsey show all the time but you're you're exactly right so it's uh i hadn't thought about that chris hogan was ramsey personality did that book retire inspired we kept dealing with that a lot that you know one of the things chris used to say is beautiful saying and i'll steal it uh is uh uh retirement is not an age it's a number yeah yeah. And really what we're saying there is wealth is a number. Yeah, gotcha. Accessible wealth. Accessible, yeah.

That I can get my hands on. So it's a good clarification. Good question, man. A good thing to talk through. Love it, love it, love it. Open phones at 888-825-5225. That puts this hour of The Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit theramseyshow.com and register. We would love for you to come to Nashville and tell Dave your story.