The Ramsey Show - App - How Do I Manage a Large Inheritance? (Hour 2)

Episode Date: December 23, 2021

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Starting point is 00:00:00 🎵 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. Thank you for joining us. Ken Coleman, Ramsey personality, best-selling author of the book Paycheck to Purpose, is my co-host today. We're taking your questions about life, money, career, jobs, whatever you want to do.
Starting point is 00:00:59 It's the Ramsey Show, which means it's all about you. The phone number is 888-825-5225. Michael is in Orlando. Hey, Michael, welcome to the Ramsey Show. Hey, Dave and Ken, thank you so much for talking with me. I just need to start off by saying you need to apologize to Kelly, your screener, for me, because I had to lie a little bit to get on the phone with you. But since I got you on the
Starting point is 00:01:25 phone here, I just wanted to let you know, Dave, I called you a year and a half ago. You recommended us to sell our condo because the HOA dues were insane. Well, we finally did that. We have $100,000 in equity and we just paid off our credit cards last night and we just want a little direction. How should we properly invest this money so we don't squander it on dumb things like tractors and stuff we don't need okay i'm confused why you had to lie to get that question on because we tried three times and she said we can't take that now you got to call back another day so at any rate okay well what happened was you you got lucky Kelly wasn't here. Laura was here today. Right on.
Starting point is 00:02:07 So, all right. I apologize to Laura. That's okay. So you got $100,000 in money laying around. You're afraid you're going to fritter it away. Yes, sir. Okay. We have, we're thinking $20,000 for our emergency fund.
Starting point is 00:02:21 Okay. We have three small kids. We're not super stoked on college just because the way the world is turning. However, we do want to maybe stock a bunch away in mutual funds for them. We just don't know exactly what that looks like and where we should park most of that money. Are you going to buy another house? My wife would like to purchase another property, house or property, and we just don't know if that's a good time to do that now or not. Okay.
Starting point is 00:02:47 Well, what I would do is just give each of these dollars a name, like you named $20,000 of it your emergency fund. I'd set that in a separate account for emergencies only. I would never touch that account except for emergencies only. And then if you give $60,000 down payment on future house a name i'd put that in a different account also and then that keeps you for none of these accounts are attached in any way to your checking account so you can't get to it easily and uh the both of you agree that we're not spending this money it's our house down payment money it's our emergency fund money we've given it a name it
Starting point is 00:03:22 now has a purpose it now has a mission it can't function otherwise outside of its mission that it has now been given and if you want to spend uh you know the remaining money if there's any remaining money after that that still needs a name give it a name we're gonna we're gonna uh enjoy some of this money this amount of money for enjoyment meaning we don't have to report back to ourselves on it with we can spend it without regret we're gonna uh be generous with some of this money hey it's the holidays great time to be generous it's always a good time to be generous never a bad time to be generous so maybe be generous with some of it uh but give the dollars an assignment because when they lay in a quote unquote savings account that's an account we put money in take money out of put and take account put it in take it out put it in take it
Starting point is 00:04:03 out and it doesn't have a name and it does get frittered away at that point. Yeah, it's too much of a temptation. And I love what you're saying there, Dave. Putting a name on it. Then don't just put a name on it. Make the decision. Go ahead and put it there. Like, get it out there.
Starting point is 00:04:16 Sit down and go, what's most important? I think you've got to look at the big picture, too, when you get a big sum of money like this. I think, obviously, the savings part is huge. Some celebration is, I i think very healthy but then you got to say okay what's the best use of this money long term let's look at our joint goals as a couple what matters most this money needs to go to fund that not just well we could buy a house what makes the 10 year old 10 year from now version of me happy with the current version? Yes, I like the long view. If you come into a big sum of money like this, and this is, of course,
Starting point is 00:04:49 walking through the baby steps, right? So it's not outside of our baby steps plan, but I think in that situation, I want the biggest ROI. Yeah, I want to make sure I'm out of debt in baby step two. Yes. And I'm going to make sure I have an emergency fund three for sure. And then, you know, then you decide, what are we going to do with this? We're going to invest some of it. We're going to put some of it for kids' college. We're going to put towards a house. I don't care what you do with it.
Starting point is 00:05:14 The trick is this. What you're concerned about is the most important concern is you want to be intentional, not accidental. Adults devise a plan and follow it. Children do what feels good. As long as you have a plan. No one sits down and goes, I'm going to intentionally be stupid. We all wander into stupid because we didn't have a plan. That's right.
Starting point is 00:05:34 I actually want to ask you a question because he brings up a very good point. And you and I are a little bit different on the college play. I'm a guy that goes, if it's not the only way to get where you want to go or the best way, don't do it. He has to bring up some very interesting questions. So I have a question for you
Starting point is 00:05:49 on behalf of the audience because I want to know what you think. So he's saying, well, we don't know if they're going to go to college. Is college going to be relevant? It's basically what he was saying.
Starting point is 00:05:56 It'll still be relevant on some level. But as a parent, so they're walking the baby steps and they're like, I don't know if our kids are going to go to college.
Starting point is 00:06:03 Whether you agree with them or not on college as a destination, if they pause or they just don't do that step, what do you advise them to do with that money? If they're not going to invest it for their kids, college. Well, I think you should. I think you should save some. Regardless. I think you should save some for college because education of some kind is going to apply to
Starting point is 00:06:23 a 529. I mean, you can go to a technical school and use your 529. That's what I thought. You can get a welding degree and get your 529. And you're going to have to learn to do something. Right. So the couch potato is not a job. Right.
Starting point is 00:06:38 And so it's like you've got to have something you can do, and you're going to have to have the brainpower, the skills to do that thing. And generally, that's going to require some training that you pay for. Would 529 also go towards, like, technical training, any kind of trade, anything? Yes. Okay. Anything that falls under, quote, higher education. That's what I thought.
Starting point is 00:06:56 And it goes to your spouse and to your siblings as well. You can go, mom and dad can use it. A kid can use it. It doesn't have to be that kid. If that kid just decides to go. And if they do go to school and they do get scholarships, the scholarship you can take out. Say you get $8,000 scholarship that year. You can take $8,000 out of the 529 and pay no taxes and no penalties on it. Yep.
Starting point is 00:07:19 So completely tax-free growth. You can take out the equivalent amount of the scholarship each year and file it on your taxes, and you have no taxes on it. Follow-up question on that. I've always wanted to ask you this, and it's relevant at this moment. Let's say they're walking the baby steps out, and the kids are late elementary, maybe fifth, sixth grade. What do you recommend as far as the amount? So they haven't been able to invest from the time the kid is maybe a toddler. You probably can't do enough to invest from the time the kid is maybe a toddler you probably can't do
Starting point is 00:07:45 enough no to overdo it right so you say play catch up aggressive that late that late in the game you probably can't most people won't have ten thousand dollars a month or something they're not going to put that kind it's not a situation and there's not a 529 that will allow that anyway right but um but but you you probably can't either by law or by personal income capacity, have room to overdo it if you're getting started in their 12. You only got six years. Exactly. So you're going to be short, even if you wanted to pay for a lot of it, in most cases.
Starting point is 00:08:17 So just look at that and make some common sense decisions. But I think it's a bad idea not to save for making your brain grow for your three-year-old. Your three-year-old needs to have a growing brain when they're 18. Right. And we need to invest in that. And so just saying,
Starting point is 00:08:34 I'm not going to have their brain grow. No, I'm not up with that. This is the Ramsey Show. Imagine a world where people never have to worry about money ever again. At Ramsey Solutions, our mission is to teach people how to get out of debt and build lasting wealth. And if that means we have to take on the toxic money culture that says you need debt to get ahead, then we're okay with that. We've seen millions of lives changed, and we will continue to create digital products and services to help people transform their lives.
Starting point is 00:09:23 If you want to join me and over 1,000 other team members on this crusade, we're currently on the hunt for web developers, UX designers, and SEO and content marketing specialists. To find out about these positions and more here at Ramsey Solutions, visit ramseysolutions.com slash careers. That's ramseysolutions.com slash careers. That's RamseySolutions.com slash careers. Together, we will disrupt the toxic money culture in America and change lives. Visit RamseySolutions. my co-host today. Nathan is in Richmond, Virginia.
Starting point is 00:10:15 Hi, Nathan. How can we help? Hi. How are you doing? Better than I deserve. What's going on? Okay. So here's what I got going on. I'm 25 years old. I'm getting money from my father who recently passed away. It's going to be over $200,000. I'm not the best in money management. I've heard the saying, it takes money to make money. Should I invest this money into a business?
Starting point is 00:10:37 Should I save this money? What should I do if I want to become a millionaire by the time I'm in my 30s? How long ago did your dad pass away, Nathan? He passed away a couple months ago. I'm sorry. Y'all close? We were pretty close. He had dementia and Alzheimer's, so I didn't see him too often because he was in an assisted living facility.
Starting point is 00:11:02 And I lived across the country, so he was in arizona with my sisters and then i lived over here in virginia so you're getting two hundred thousand dollars cash it's not over that it is just over that yeah i'm not sure the exact number i mean it's just it's not it's not a piece of property or something else it's just it's a investments or cash that's going to come to you liquid that you're going to do whatever you want to do with it yes like my brother's going to hand me a check gotcha okay and uh what do you make a year now so a year i make around i'd say 35 000 a year okay all right so here's what i would tell you. You're calling very wisely to start to gather some wisdom about something you don't know anything about. You have never driven a car before, and someone just gave you car keys, right?
Starting point is 00:11:56 Correct. And you go, well, I hear these things go fast. Yeah. Right? Yeah. And so, you know, and yet if you remember the first time you got behind the wheel of a car uh it was both freeing because you could now go places and control your own destiny and it was uh terrifying and if you don't have both of those feelings with this process you're not wise right okay so uh i'll start with
Starting point is 00:12:28 it takes money to make money uh is not a true statement that's a statement that broke people say as an excuse to not become broke people can you make money using money sure but actually the vast majority of people who build wealth do not build it because someone handed them two hundred thousand dollars they build it because of their habits and their character okay so that's you so here's what we're going to do we're going to just what i number one i tell you do is just slow way down uh i would want you to move along the spectrum from exciting to boring over towards boring. Your job is to manage this money. Your job, as if it's someone else's money and you're managing it for them,
Starting point is 00:13:15 your job first is not to lose it. Your job second is to maximize it. But most people, when they get handed the keys to the car step on the gas and mean it meaning they think their job is to maximize it and they end up losing it so people yeah people that end up in your situation get money lose it very often because they make the mistake of they think it has to be exciting it has to to be sexy, it has to be wild, it has to be crazy, because if I don't maximize it, I'm doing something wrong. It takes money to make money.
Starting point is 00:13:50 We all know that, and so I'm going to invest it over here, and I'm going to do this, and I'm going to do that, and I'm going to do this. Wrong. Slow down. Number one rule, Nathan, don't put money in something you don't understand. Don't put money in something someone else tells you is a good idea, and they sound like they're really smart people. Around the money business, and I've been around it 40 years,
Starting point is 00:14:11 there are a lot of enthusiastic ignoramuses. They mean well, but they're dumber than a rock. And they're excited about their stupidity. And they will put you in stuff. They'll put you in stuff, man. And all your broke friends also got an opinion already, don't they? Yeah, and here's another piece, too. I started a meat company, but the thing about it, when I started this meat company,
Starting point is 00:14:37 it's not my passion because I was so money hungry to where I let money kind of consume my mind. Oh, I need to make money. to where I let money kind of consume my mind of, oh, I need to make money, I need to be this by the time I'm this age. And I chased things that weren't my passion. And then I realized as I got into it, I'm like, shoot, I don't want to do this anymore. Okay, so let's take a couple things. Number one, we can work on your career, and that would be a good use of a little of this money. If it got you into your passion, I'll hand off to Ken in a minute and let him work on that, okay?
Starting point is 00:15:09 But then thing two, here's a rule. If you were to invest this money and not touch it in good growth stock mutual funds, and if it made 10% rate of return on average, in seven years, it would double. You would have 400. And you would you would be what 29 years old right no what how do you say you're 25 25 yeah okay so you'd be 32 years old in five in seven more years it would double again and be 800 000 and in seven more years it would double again and it'd be a $1.6 million. And that is a boring, never-touch-it investment program. You're probably not going to do exactly that, but I want a little of that in the formula here, my brother.
Starting point is 00:15:54 Okay. Where you go have a life, and you pretend you don't have this money, and you let it grow and double and grow and double and grow and double. And so my last piece of instruction before Ken helps you on the career side is I want you to go to ramsaysolutions.com and click on SmartVestor. Sit down with a SmartVestor Pro, and they will teach you about mutual funds, and then you can decide how much of this needs to go into your career changes and how much of it needs to go into mutual funds and that just sit there and
Starting point is 00:16:27 just double so ken yeah real quick question here is the meat company that you started is that what's getting you the 35 000 a year yes all right and so you don't want to do that what do you want to do i know you got some ideas or one clear idea what is it that you really want to do so i really want to do fitness um because even in the times when I was at my lowest, I always stuck to it. Yep. And it seems like it was like introduced to me. Great. You know, at a young age.
Starting point is 00:16:54 So is that a fitness coach, trainer? Is that what we're talking about? So I want to compete in shows and I want to launch. I want to be able to get a following through Instagram and be able to launch a business online and help people reach their fitness goals via online, because everything is online now. And also, you know, even in person, but doing it online, it gives you that freedom to do the travel. All right, so let me make sure I heard this right. You want to be a fitness competitor and then eventually develop some type of online and in-person training business. That's a two-parter.
Starting point is 00:17:29 Am I right? Yes. Okay, so here's the deal. I'm going to caution you on this. Being a fitness competitor is a whole different ballgame. We only make money when we win. So if that's the first goal, you're going to need a day job. So you've got to sit down and go, now, what's the best strategy?
Starting point is 00:17:44 Here's what I would challenge you to think through. You're clear on what you want to do. That's stage one of my seven stages. Stage two is get qualified. So you need to answer the question, what is it that I need to do to get qualified to train people online? Now, online, there's no technical qualification. You just got to have good content that people say, all right, I'm going to watch this guy and I'm going to train the way he trains. But if you want to do it one-on-one there's some qualification that you need how much is that going to cost you how long is that going to take we're going to have to have a day job still in all of this process so if you got the meat company personal trainer could be a personal trainers where i would go into so get qualified to do that
Starting point is 00:18:22 get in the proximity that's it Start doing that and then compete. Any money we make competing in the online business, it's going to grow over time. I would get in the field, work for a gym, and have somebody else pay you to do the training so that you can move from meat company into this job and not interrupt the income. Because, Dave, we don't want him to touch this $200,000 unless it's qualified. Nathan, I want you to take $24,000 of the $200,000 and set it aside for a year's worth of $2,000 a month. Yeah. I want you to pay yourself out of a little savings account $2,000 each month for one year. During that year, I want you to develop a real group of one-on-one personal training clients
Starting point is 00:19:00 that pay you well and you use that money to eat with. Yep. Then you will also perfect your training techniques. Meanwhile, you get to work out like a crazy person for your own competition goals. And let's build a training business, then build an online business while we're competing. And I think that's an order and a way to get at this. And you use a little bit of the money to do that. And let's invest the rest of it and not,
Starting point is 00:19:25 don't be spending a bunch of money on unproven business ideas or trying to buy a franchise on a business out of a box. You're not in a position to do that yet. You've got to get some more notches in your belt. This is The Ramsey Show. We'll be right back. In the lobby of Ramsey Solutions on the debt-free stage, Ben and Justine are with us. Hey, how are you guys? Not too bad. Welcome, welcome. Where do you all live?
Starting point is 00:20:25 St. Louis, Missouri. Awesome. And you're here to do a debt-free scream. How much have you paid off? $73,991. All right. And how long did it take you? 24 months exactly.
Starting point is 00:20:37 Wow. And your range of income during that time? $62,000 to $95,000. Cool. Good. What do you guys do for a living? I'm a manager at Aldi. And I'm an occupational therapist.
Starting point is 00:20:48 Awesome. Very cool. What kind of debt was this $74,000? Almost all of it was student loans. We had a little bit that was a car and then a little bit of medical debt from the birth of our son. How long have you all been married? Seven years. Okay, cool.
Starting point is 00:21:04 So what happened 24 months ago? So about 24 months ago, we were just living life normally, but realized that we were so tired. And then we weren't gaining any traction at all in our lives. We had just moved into our new home. We had at that point, our son who was like six months old and we were working jobs in careers and just not getting anywhere. So we realized that there were things that we wanted to do. We wanted to be able to go out as a family. We wanted to be able to buy a microwave for our new home. And there was just no room in the budget or in our bank account to do so.
Starting point is 00:21:41 So about at that time, my brother had moved into the St. Louis area, and he had just graduated college and was getting ready to start his new job. And he was having dinner with us. And he said that he was getting ready to pay off his student loans using the baby steps. And he asked us if we had ever heard of you. And of course, we said we had. Then he goes, well, have you guys thought about doing the baby steps? And we said, well, no. And he said, well, why not? He said, you guys could totally do it. So at that point, I ended up reading your book, The Total Money Makeover. And then Ben ended up watching a couple of, I think, your podcasts, a couple of your interviews. And at that point, it was game on.
Starting point is 00:22:21 We knew when we believed that we could. Go little brother. How about that? I like that. Yeah. So once we had decided that that was our future and that was what we were going to do, as soon as we were both on the same page, there was no stopping us. So Ben ended up actually changing careers right at the beginning of it from a job that I would consider probably pretty toxic for us in many different realms and into a new role. I stepped into a full-time position,
Starting point is 00:22:52 took on another job, and we also watched a ton of dogs over the course of two years. I think it was over like 200 dogs over the course of two years in order to make this happen you used to like dogs but not anymore oh my god what was the rate on watching dogs i'm curious we watched dogs at about 25 dollars a night okay so we ended up uh able we were able to propel our debts mobile even more wow everything is game on here yes yeah we really really leaned into it and decided that that was what we wanted to make happen. And then with he and I just together as a team, that was what we did. Ben, what was the career change from what to what? I went from manager at McDonald's to just associate role at Aldi.
Starting point is 00:23:39 And then I eventually got moved up into a management role. Wow, good for you. That's fun. Cool, very cool. It's worked out well. Okay. Good for you. That's fun. Cool. Very cool. It's worked out well. Yes. Worked out well.
Starting point is 00:23:48 Everything changed. Yeah. What do you tell people the key to getting out of debt is? I always give people three things. Just being on the same page with your spouse. That's number one. Setting a clear goal. And then just being at a mindset that you're going to get there you know
Starting point is 00:24:06 that you're going to get there so you guys i mean being on the same page with your spouse from the very time you started this you were on the same page yeah it wasn't like one of you got drug kicking and streaming no i would say it took us maybe between the two of us it took about a month for us each to end up being there. Yeah, podcast or YouTube, totally makeover book, and these things weaving back and forth, bouncing around your household, and finally it all lands. Yes. And she definitely pushed me to do that.
Starting point is 00:24:35 Oh, okay. Okay. All right. But it wasn't like you were ready because you wanted out too, though. Yeah. Wow, way to go, little brother. That's amazing. That's a great story.
Starting point is 00:24:47 Very cool. So, Justine, what do you tell people the key to getting out of debt is? I think that Ben really wrapped it up well. But for us and for everyone else, if you're doing this with someone else being on that same page, because two minds are greater than one, Two paychecks are better than one. Being together and having that bullseye goal, you're going to get there twice as fast. So I tell people to stay focused as a team and to make sure that you and your spouse continue or whoever it is that you're going along this plan and journey with are together.
Starting point is 00:25:23 So I got to ask you, I love these stories because the focus and the intensity, you know, it's so incredible. Was there a point where you go, okay, we're heads down for a while, right? And then you look up one day and you go, whoa, we're really making some serious progress. I'm just curious, when was that for you in your journey? I would say about six months in. Six months? Yeah, we were pretty headstrong.
Starting point is 00:25:46 And then we were like, hey, we can do this a couple months ahead of our goal. Let's do this. Let's go headfirst into it. And let's get it done. Yeah. And at that point, we were like, extra jobs, whatever we can do. Yeah. I had written all of our debts down.
Starting point is 00:26:05 And every time we wrote one, we wrote a goal to get there, and every time we kept, we're like, wait, if we do this, we can hit this goal a couple months faster than we thought we could. You know, if we just watch a few more extra dogs, or if we end up picking up a couple extra shifts, you know, we're really going to gain. 200 dogs in two years. That's what I was about to ask.
Starting point is 00:26:22 I'm sorry to interrupt you. I'll just divide it. How many dogs, was there a crazy story where you had, like, I just got to know? How many? The two years. That's what I was about to ask. I'm sorry I interrupted you. I'll just divide it. How many dogs? Was there a crazy story where you had like, I just gotta know. The too many dog nights. There was at one point, there was one overnight where dogs were coming in and out of our home and it ended up being like seven
Starting point is 00:26:36 dogs. We also have three young children too. I know there was one day we watched some dogs who actually had to be diapered and I walked into my home, and I was like, I have to diaper like four living things with heartbeats right now between children and dogs. And we only have a 900 square foot house, so we're just like trying to balance it.
Starting point is 00:26:54 Please God, tell me you charge extra for that. We wish. And tell me you documented the day where the babies were running around and the dogs all in diapers. Please tell me we have pictures of that. We do. We get to work like no one else that's right you guys are powerful you're powerful very very well done so proud of you thank you so your little brother was cheering you on outside of the two of you who else is cheering you on um just like on my side of the family a lot of my parents and my siblings
Starting point is 00:27:26 definitely cheered us on too. Yeah, and my side of the family also was a big support for us. We had family coming into town. We live about an hour to two hours, three hours away from family, but they were coming into town every weekend so that we could work our jobs and work our shifts.
Starting point is 00:27:43 And when they came into our home, that meant they were also watching the dogs and helping us take care of them. So we had an incredible family support. A lot of our friends checked in with us asking us how we were doing, what's new for you guys this week, how many of you paid off. Like an adventure. Everybody went on with you.
Starting point is 00:28:01 Absolutely. Yeah. And we had wonderful neighbors, too, who put up with all the barking dogs and knew what we were doing and why we were doing it as well. That's crazy. So we really had a great village and community behind us. That's so fun. All right.
Starting point is 00:28:14 So you brought the kiddos with you. What are their names and ages? Caroline is five. Lucas is three. And then we have our baby, Becca, who is one year old. Oh, fun. Well, we've got a copy of the Legacy Journey for you because that's what you've done for sure, changed your legacy. And we've got a copy of the Total Money Makeover as well, where you can pay it forward to someone,
Starting point is 00:28:34 and they can pay it forward to someone else, and they can learn how to be on the... You can be like your little brother was to you. Yeah. And that's little brother over there, right? That is. Yeah. He came with you brother over there, right? That is. He came with you to cheer on. Very nice. Very good.
Starting point is 00:28:47 All right, here we go. Ben and Justine, Caroline, Lucas, and Becca from St. Louis. 74,000 paid off in 24 months, making 62 to 95. Rock stars. Look at these heroes. Count it down. Let's hear a debt-free scream. Three, two, one.
Starting point is 00:29:04 We're debt-free scream. Three, two, one. We're debt-free! Yeah! Woo-hoo-hoo-hoo! Wow. You get the feeling that crew right there is unstoppable. Yeah. Hey, let me tell you. You want to walk some dogs for some extra money?
Starting point is 00:29:25 You want to diaper some dogs for some extra money? You want a diaper? Diaper someone else's dogs. For some extra... I got to tell you. That's gazelle. That's over the top. I'm just saying. This is The Ramsey Show. We'll be right back. Ken Coleman Ramsey personality is my co-host today as we talk to you about your life, your money, your career.
Starting point is 00:30:22 The phone number is 888-825-5225. Open phones. And up next is Nick in Hartford, Connecticut. Hi, Nick. Welcome to the Ramsey Show. Hi. Thank you for taking the call. Sure.
Starting point is 00:30:34 What's up? So I'm starting a new job next week for making $40,000, but I have $100,000 in debt. Almost all of it's student loans. About $5,000 is on the credit cards. I just started watching your videos on YouTube and realizing, wow, I've made really dumb mistakes. And so now I need to go through the baby steps and take all that.
Starting point is 00:30:56 What I was going to do was restructure my debt to more favorable terms, but I wanted to see what your opinion was on that to make sure I'm not making another big mistake. Restructure your student loans? Yeah, so my student loans, about 67,000 of them are private with a high interest rate. And I've gotten a quote on how I can refinance that into one
Starting point is 00:31:20 at a much lower rate. Do it. Yeah, lower rate's not bad unless there's a prepayment penalty. Make sure there's no prepayment penalty, and then get about the business of cleaning these things up. I want you to get settled into this new job. I want you to pick up a second job and make another $40,000 and throw it all at this debt. I want you to be debt-free in two years.
Starting point is 00:31:42 Okay. I mean, really get after it, man. I mean, Nick, I want you to go debt free in two years okay i mean really get after it man i mean nick i want you to go cray cray man i want you to go nuts where your friends think you need counseling because all you do is work and pay debt okay i mean it wouldn't it be cool to be done with this in two years definitely yeah that's 40 45 000 a year gets you there and And so that means you've got to make $40,000. You've got to live on less than the $40,000 that you're making now. You need to go make another $40,000 on top of this as your extra part-time job, and you'll be done in two years.
Starting point is 00:32:14 But all you're going to do for two years is work. But you're going to clean up this whole mess in two years, and you won't even be, what, 25 years old, will you? I'm 26 now. Okay, well, then you'll be 28 years old and you're completely free or you can be 38 years old and still screwing around with this stuff like most people okay that's really your two options you got to get with it or not and what ken and i were just talking about there's lots of opportunities out there. I mean, again, you can pick up 40 hours of extra job at Walmart at $15 an hour.
Starting point is 00:32:50 That's $30,000 a year, which means I know you can do better than that even. So that's just exactly what I was talking about. Yeah. And 80 hours a week. I don't want to be a workaholic. You're not going to be a workaholic. You're working for two years with a goal. A workaholic is someone who is mentally imbalanced and gets all of their, you know, gets all this. They're addicted to work mentally.
Starting point is 00:33:14 That's not what we're suggesting. Working hard is not workaholism. Working a lot is not workaholism. It's called getting out of a dadgum mess. And you just get back. You get with it. I mean, he can do a lot of stuff. Oh, tons of stuff.
Starting point is 00:33:27 I mean, again, look, the minimum wage is at a place right now that if you don't find something, it's because you're not looking. That's the reality. If you want to find something to get out of debt, it's there. Big time. You show up with a smile and some character, you're going to get $15 an hour or more, and you can get out of debt quick. I'm telling you. The demand is so hot right now, it's unbelievable.
Starting point is 00:33:52 Yeah. If you don't, then you're going to just wake up 10 years from now. And here's the thing. Two years from today, the market won't be like this. It will not. The job market comes and goes like all parts of the economy. It has swings to it. Mary's with us.
Starting point is 00:34:07 Mary is in Austin, Texas. Hi, Mary. How are you? Hi, I'm fine. Thanks for taking my call. Sure. What's up? My husband is retiring from the military, and he's going to start another job with a government agency.
Starting point is 00:34:20 We have a TSP, and I was wondering if you have any advice on whether we should roll out our TSP into a separate retirement account and start a new one at the new job, or do we continue to contribute to our current TSP? I would roll it to an individual IRA. There's no taxes in doing that, and because you can find mutual funds in the open market that outperform the tsp options okay the c plan's not bad we tell folks to put 80 in the c 10 in the s and 10 in the i is how we tell you to allocate your tsp but you can get mutual funds that will outperform that mix if you go to a good investment advisor like one of our smart investor pros so just go to ramsey solutions.com click smart investor and find one of
Starting point is 00:35:10 the pros in your area sit down talk to them understand what you're doing and what i would do is roll it over to an individual ira a traditional ira and put it in four types of mutual funds growth growth and income, aggressive growth, and international. And then when he starts the new position, he can start the TSP fresh and just, again, 80% C, 10% S, and 10% I is how I would allocate that. And that's going to give you the best rate of return, okay? Okay, thank you so much. Thanks for calling in.
Starting point is 00:35:45 Open phones here at 888-825-5225. Sawyer is with us in Hickory, North Carolina. Hey, Sawyer, what's up? Hey, Dave, how are you doing? I appreciate you taking my call. Sure, how can I help? Well, I've got a question for you. Recently, it's me trying to make a decision on something.
Starting point is 00:36:04 So I have a possible expense that I would be committed to for a year. It would be roughly $400 a month. So my current home expenses are a little less than half of my current take-home pay. That's including you know rent uh the only thing i owe for is a is a truck and uh the truck payments are a little over 400 a month but uh i did that specifically because i'm trying to get this thing paid off because i've been i've listened to you for a long time i don't like being in debt and if i am i don't want to be long how much do you owe on the truck uh the truck is about 14 000 left and your household income is what uh roughly a month it is uh right at 2700 a month pretty expensive truck yeah it uh i was not it well the reason i ended up looking for a truck
Starting point is 00:37:02 was thanks to a girl at rear-ended model one. But I was originally looking for an older truck, and I was really after listening to you for so long. But it ended up being that I got this truck. And so I've got a little over three years left to go on it because I got it for four years. And specifically wanted to, if I was going to get something like that, I knew I'd have higher payments, but I wanted to get it paid off as quickly as I could. But the expense that I've got coming up, though, that I'm trying to decide on is, I told the lady on here that you might find it slightly amusing, is there is a hair-type product online that's supposed to try to help you regrow hair,
Starting point is 00:37:44 and it would be almost another 400 a month so i tried to do my numbers on my current expenses and so my expenses per month are roughly a little over uh 1200 a month uh that's including that truck and that's also including me putting back for a retirement fund that I have. That's all of my expenses except for, say, gas and food. How old are you, Sawyer? 27. Okay.
Starting point is 00:38:14 All right. Cool. Well, you make $38,000 a year, $40,000 a year. You have a $14,000 truck, and you're putting money into investments, and you just went and bought the truck on payments. And 100% of the things you've described are things that we tell you not to do, right? Yeah. Is that right?
Starting point is 00:38:38 I mean, how long have you listened to the show? Well, for a long time, but it has actually been several years since i've got to listen again let's let's to be fair to you then let's recap all right what we would tell you to do is to become debt free first after you have one thousand dollars saved you have any money in savings uh yes you're about fifty five hundred dollars good okay uh you now have one thousand dollars and you put forty five hundred on your fourteen thousand dollar truck and that leaves you ten thousand nine thousand five hundred dollars left on the truck uh you also have an extra job now and you're going to pay that truck off in a very very short period of time when you do that you're
Starting point is 00:39:19 going to finish your emergency oh by the way you stopped all all your long-term investing temporarily today too because you're going to work the baby steps and then once you're debt free and you have your emergency fund in place then if you want to do the hair regrowth program and you want to pay for that that's when you would do it at that point i'm not sure i would do it obviously i haven't done it so i was gonna ask if it works it was it was a done it. I was going to ask you if it works. It was a no-go. I was going to ask for you if it works. I did not try it, but if I had tried it, it obviously didn't work.
Starting point is 00:39:59 This is James Child, 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.

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