The Ramsey Show - App - How Do I Use My HSA for Retirement? (Hour 2)

Episode Date: July 15, 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 BMW as the status symbol of choice. I am Dave Ramsey, your host. You jump in. We'll talk about your life and your money. Open phones at 888-825-5225. Christy Wright, Ramsey personality. Number one best-selling author is my co-host today.

Again, the number 888-825-5225. Johnny is with us in Fort Bragg, North Carolina. Hi, Johnny. How are you? Hi, Dave. How are you doing? Better than I deserve, sir. How can we help? Good. Hey, I was calling. I have a couple of questions. The first one is, if I have a loan with an interest rate of less than 1%, why does it make sense to attack that loan and try to get rid of that debt when I could use the minimum payments and not have to pay a lot of interest and put the extra money from my income into a savings account with a higher return or a Roth IRA or some sort of retirement plan where I'm going to be getting, you know, 10% return or higher if I was doing like investing and stuff.

Okay. And so how old are you? I'm 28 and a little bit of my background. Um, I went to the, I went to the United States military Academy. I got kicked out and luckily didn't have to pay back everything, and I enlisted, but I still have that loan payment. So my income is around $2,100 a month, and my minimum loan payment is $618, and it was originally a $36,000 loan. I got it down to about $10,500. Good for you. $10,500. Good for you. Well it's a really good question and it's asked by a lot of people and it took me a little while to understand the answer.

When I went broke and lost everything because I had too much debt, my first part of my journey was through a faith lens because I had all these letters and licenses and degrees after my name all about finances, said I was supposed to know something about money, but there I was bankrupt. So apparently I was a doofus, right? And so I started approaching things first through the faith lens, and I read in the Bible that the borrower is slave to the lender, and I started learning from Christian teachers that the Bible doesn't have anything good to say about debt, so if God doesn't like debt, why would I?

Okay, so I quit. I don't borrow money, and I did it on that basis alone. Over the years, that was 30 years ago, over the years, I also have approached it through the lens of mathematics or academia, and so here's what I have discovered. When you say, all right i could invest in a mutual fund at 12 why would i ever pay off my house at three percent because i could use that money and invest it at 12 or 11 or whatever and i'm going to make an eight or a nine percent spread and that's the essence of your question isn't it yeah i guess you know

talking about a house or something or whatever whatever the whatever the debt anytime i can borrow money at a cheaper rate than i can invest it why would i ever not do that as much as i can do it okay yeah and the way to the way to explore that and answer that sometimes is scale something and see if your idea works with scale. And so if you could borrow $50 million and go in debt $50 million in order to invest that money and make the spread, would you do it? And that causes your heart to stop a second. You get a little tightness in your throat and your stomach. If you're mature anyway, your stomach starts to move up towards your throat

and you think you want to throw up. When I put scale to the idea, it scares you. Why does it scare you? Because there's risk, and risk was left out of your formula. Okay? And so the honest truth is there's actual mathematical ways to insert risk into the formula. Let me give you a little lesson here on mutual funds, okay?

An aggressive growth stock mutual fund is very volatile. If you were to map it, it goes way up and way down like a super crazy roller coaster. The difference in the top of that mountain and the bottom of that valley mathematically in a statistical measure is called a beta. The greater the beta, the greater the volatility beta the greater the beta the greater the volatility the greater the risk of the mutual fund and so if you have an aggressive growth stock mutual fund with a beta of two which will take your breath away or you have an and it makes a 26 rate of return you do not compare that if you are sophisticated apples to apples with a growth in income mutual fund, which has a beta of a.5, meaning the kiddie roller coaster. Okay?

Right. And so you don't compare 26% with 12% without adjusting for risk, and you use an inverse formula in mathematics with that beta and adjust for risk, and then you can measure these things accurately against each other, risk-adjusted. You have no risk adjustment in your formula, so your formula's wrong. Right, I understand that. Okay, so don't borrow money because you're not risk-adjusting on your theoretical concept, and you're making $2,200 or $2,100 a month. And the second piece of data that you want to do is the study that we did here. And as we studied millionaires, Christy, and we studied 10,167 millionaires, we did not

find any of them that said the way I became a millionaire was by not paying off low interest debt and investing the money. Not a single one out of 10,167 that we interviewed, and they were Ramsey millionaires and white space millionaires, meaning they don't even know who I am or we are. And so if real millionaires aren't doing that to become wealthy, and your formula is wrong, both of those things tell you don't do this crap yeah i think people get caught up in the math and it's not that the math is not important

enough in the math the the it's about the motivation the momentum of one thing at a time in the baby steps but the thing i want you to account for and you talked about this with risk dave the thing that i think people miss is in debt any type of debt with the risk you're losing power and control and options when you own things when you save and put your money in savings when you are debt free then you have more power more control and more options and everything we teach is about increasing your power and control and decreasing your risk because when you do you increase your probability of becoming wealthy yes and you don't have to start over again like i did because i was stupid and deeply in debt and decreasing your risk. Well, because when you do, you increase your probability of becoming wealthy. Yes. And you don't have to start over again like I did

because I was stupid and deeply in debt. Right. You don't owe anyone anything. I never, my risk meter was broken. I think when they get you in the real estate business, they take a hammer to your risk meter and just break it because all these real estate investors, they do not perceive the risk of the leverage.

And they just buy. We had all these seminars going on in the 80s nothing down real estate the guy went chapter 11 that wrote the book you know yeah and so um you know and all these uh i was running to a guy that i had forgotten the name there was a uh nothing down seminar on tv on the first infomercial was a guy named dave del dado okay and i ran into him at this bit he owns a big house in cabo when i was visiting down there the other day and it's like he and he has a big winery and all this stuff but he made all this money from the infomercial not from real estate it's uh yeah don't i mean

real estate's fine but here's the thing debt is not the shortest path to wealth because of the risk factor. That's what it comes down to, Johnny. You can try it and be a hardhead if you want, but that's the answer to the question. This is the Ramsey Show. With more frequency than you know, I get calls and emails from people dealing with the recent loss of a spouse or a parent. You can hear the struggle and the heartache that they've been experiencing. And at a time they should be grieving, what breaks my heart the most is the strain and tension that they're going through because of money, especially when it's a situation that could have been avoided.

If you have a family, it is your responsibility to have term life insurance. It's one of the things you do to say I love you. And yes, this is an ad for Zander Insurance. But since this is one of the most effective ways I have to get my point across, so be it. For over 20 years, I've been telling you about the importance of term life insurance and protecting your family. Listen, you need to check out Zander.com or call 800-356-4282. I can't say it enough. Protect your family.

It's what you're supposed to do. Go to Zander.com or call 800-356-4282. Christy Wright Ramsey personality is my co-host today as we answer your questions about life and about money. Open phones at 888-825-5225. Alan is with us in Lexington. Hey, guys, the phones aren't working. Alan's with us in Lexington, Kentucky. Are you with me, Alan? Hey, there you go.

Alan, are you with me? Yes, sir. Oh, good. I got it. Okay. How can we help? All right. Dave, I've got a question for you.

I'm 53. My wife's going to be 52 next month. Our son's going to be 12 in August. Our household income this year is going to be around $75,000 gross. I have a beneficiary IRA left from my mother in 2009, which passed. It's got about $338,000 in it. We have a home that's valued by our county PBA at $340,000. Wife and I are debt-free.

And I was wanting to ask you about investing this money that's in this beneficiary IRA. We've got it invested the way currently that you teach, but because you can't contribute to it and you have to take an RMD from it every year, if it should be invested any other way other than what you teach because of those stipulations? No, the contribution doesn't matter. The RMD is just aggravating, and they're even worse now. If you'd gotten it in 2020 or beyond, you would have to drain it all in 10 years. But you're running on a very slim RMD, required minimum distribution for you folks out there.

I don't know what he's talking about. But, yeah, I would just minimize it because every dollar you pull out of there, you're going to have to turn it into 70 cents because the government's going to take their cut off the top and so i just let that go i'd let that government tax money sit there and earn you money until you don't have to now your house is paid for right right okay everything Right? Right. Okay. Everything, 100% debt-free, right? Yes, sir. Yeah, yeah. Then if I owned an inherited IRA that way, yeah, thank you. If I owned an inherited IRA, I would take the required minimum

and not take it any sooner than possible. Because if you pull it, you know, you're turning, if you pull $1,000 out, you took $1,000, turned it into $700 after taxes. Yeah. And you could have used that whole, that other $300 that's government money to grow money with. Explain the RMD. Explain the required minimum distribution. How does that work? Well, it used to be at $70.50.

Now it's at $72. That you're required to begin distributing your ira because they want a traditional ira because they want their tax money okay they want to get their tax money on an inherited ira and the rm the required minimum distribution runs out uh based on uh death okay based on the uh an estimated estimated so you're going to take a little bit to where uh by the time you would have died, you would have gotten it all out and they would have gotten their tax money. That was the concept behind it.

And so now at 53, nine years ago or whatever, he inherited his mom's IRA. You have to begin to take it out as if it was at 53. Oh, okay. And so it's a small little amount, progressively larger as you get older, that is the required minimum distribution. But the concept is the IRS wants their money. Yeah. But we want to keep it away from them as long as we can. Yeah, I got you.

We're going to push back. So you're saying leave everything in there. Yeah, as long as you can, in a traditional. Now, if it's a Roth, it changes the whole equation, obviously. And if you, again, under the new rules, if you inherited it in 2020 or later, you're going to have to drain it. It's called the drain in 10 rule. It's what it's nicknamed, but you have to, it's one tenth, a 10% a year for 10 years. And regardless if you're 22 or you're 42, you have to begin to take it out all the way

down through there like that. So Victoria on Facebook says, I recently became a certified nutrition counselor and am working on my business plan and website. What's the best way to launch my business, Christy? You know, the thing that even when you say the word launch, like launch is exciting. You can do build up. You can do a big announcement.

But if you are a nutrition counselor, I say just get scrappy and start telling people. Email your family and friends. You know, one of the things that people underestimate, Dave, is just the simple steps of faith. So you can start with your contact list. You may not have a big email list. You can email everyone in your contact, say, hey guys, you know, I just want to let you know I'm doing this new thing. Here's my heart behind it. Here's my why. If this would benefit you or if you know of anyone, I would love your business. Here's how to contact me. And you just start with who you know. Start with your personal Facebook page until you get your business page up and going. You can get fancy later, but I think just those initial taking some

step of action, it's going to build confidence in you and get money in the door faster. That's going to fuel that growth versus waiting until your website's perfect, waiting until you have a huge email list to launch to. You can do that, but, man, I think you can make money faster if you just get going. Yeah, get organic about it and just stick your foot out the door and go. And here's the other thing that's going to happen. What you think is going to be the thing will almost never be the thing. Yes.

And so you're going to adjust when you get it. When you put your ideas out in the thing it'll almost never be the thing yes and so you're going to adjust when you get it when you put your ideas out in the wild and actually are out there you know with the animals doing your thing you know then you you start to find out that oh this doesn't work the way i thought it did yeah and uh when financial peace university started yeah uh you know i was in a room with an overhead projector and a bad suit, but it was called Life After Debt. And it was a class designed for bankruptcy, to help people avoid bankruptcy. So I went through the types of bankruptcy in one lesson. I went through foreclosures and how to avoid them in another lesson.

So it was for people right on the edge or completely devastated and broke, like I had been. But the weird thing was we kept having none of those people show up to the class everybody that came to the class was not broke they just didn't have any money because it was all going back out the door but they weren't on the edge of bankruptcy or foreclosure right and they just wanted to learn how to handle money they want to learn how to budget they want to learn how to invest they want to learn how to save for emergencies they want to learn how to get their kids college fund going and that kind of stuff. And so after about six months, I went, I got to change this. Right. And I wouldn't have ever known that I had to take out the foreclosure lesson and take out the bankruptcy lesson, which is now in our counselor training.

We'd use the same material to teach the counselors how to do it, the coaches how to do it. Our coach, financial coach training. But I wouldn't have ever known that had I not just taken that leap of faith and gotten started. That's right. And I love how you always say business is a conversation with the marketplace. Well, conversations happen two ways. And I think sometimes we think, well, I've got to get it all right, get it all perfect, put it out there, and then the conversation's over.

No, a conversation is back and forth. I use the iPhone example. iPhone, we're on 10, 11, 12, whatever it is now. They started with the iPhone 1. They put it out there, and the market says, hey, we like this, but a little more of this. Can you make the camera better? Can you make it slimmer? And then you iterate and improve.

I'll guarantee you when they launched that, they had no idea that the iPhone was going to be the camera of choice for Americans. Yes. No. That the camera was going to be the deal. Right. And the market told them that in that conversation. But then to your point, you go back and iterate and improve and change and take out lessons and add the camera or whatever and then you put it back out there you get better and better but it only

happens through the conversation and a conversation doesn't happen until you put something out there so i say yeah start with what you have your friends your family if you're in a service-based business like you're saying victoria is a counselor, then your sweet spot is referrals and word of mouth and people that you already know you like you and trust you. So I think start there. But I love that reminder that in order to have a conversation, you have to start talking and be willing to listen to the feedback. That's where your best ideas are going to come from. Well, you know, honestly, when you hear me talk about that, sometimes it's around here in a meeting and I'm saying we're having a conversation in the marketplace. The marketplace says you suck.

Right. You know, and so. Yeah, on the other side of that. Yeah, like we blew something up, and we screwed it up, and I'm like, guys, you know, your customers all just yelled at you because the sales turned down on this. They just yelled at you that the price point is wrong, that this concept is bad, that this product is poorly designed, even though in our best minds in some back conference room or something and we had it all figured out how this was all perfect

until we put it out there with the animals and then the animals went nope no nope you missed the mark nope nope and you got to be you're going to mess up a prototype never makes it to market ever yeah without adjustments. Yes. And so you put the prototype in the hands of the actual user and see what they do with it. Yeah. And, you know, it takes twice as long, costs twice as much, and you're not the exception. These are the three rules of business. So get out there and do stuff.

Get out there and do stuff. And when in doubt, leave the cave, kill something, and drag it home. But do it in such a way that when it fails or portions of it fail, it doesn't break you. Right. But go ahead and start. Yeah. Go ahead and start and be emotionally prepared for this conversation with the marketplace. That's beautiful stuff.

Good stuff, Christy. This is the Ramsey Show. Thank you. Welcome back to the Ramsey Show. Christy Wright, Ramsey personality, is my co-host today. Juan and Lindsey are with us. They are ready to do a debt-free scream from Denver, Colorado. Hey, guys, how are you? Doing good. How are you? Better than I deserve.

Welcome. So good to have you. How much debt have you paid off? We've paid off $79,355. Love it. How long did this take? 15 months. Wow, you kicked it. And your range of income during that time?

We started off at $108,000 and we ended at $130,000. Good. What do you guys do for a living? I'm a nurse. I order selector at King So supers warehouse great very cool good for you guys you've been working your butts off hadn't you yes so what kind of debt was this 79 000 credit cards student loans car payments and a medical ivs loan wow tons of debt so what happened 15 months ago that lit you on fire?

I wanted to be a stay-at-home mom, and I couldn't. I was looking at our budget. I'm like, we make so much money, I can't do this. So we had heard about you, and that night I was Googling how to get rid of debt, and I signed up for FPU, and it was no turning back after that. That's cool. So, Juan, wait a minute. She walked in and said, I just signed us up for FPU, and it was no turning back after that. That's cool. So, Juan, wait a minute. She walked in and said, I just signed us up for FPU.

What did you say, man? What? Yeah. So I kind of followed her step. Oh, so no resistance. You just went along for the ride, huh? Yeah. I mean, I just got tired of, you know, we'll pay off one credit card,

then, you know, slowly we'll start using it. Oh, I'll start using it again. And next thing you know, it's $3,000, $4,000 on that, and just got tired of that. The second night in FPU, I cut up 22 credit cards, and that was a record for our class. Wow. That's a lot. Yeah. Yeah, it is.

So you guys were just kind of doing the rat in a wheel thing, just run, run, run, run, run, have a heart attack and die, right? Yeah. Lindsay, you bring up a good point, though, when you said you wanted to be a stay-at-home mom and you looked at how much money you made and you couldn't do it. I think a lot of people have that moment where they realize we are making such good money and we have nothing to show for it. We're making such good money and we can't do it, I think a lot of people have that moment where they realize we are making such good money

and we have nothing to show for it. We're making such good money and we can't achieve our goals, whatever that thing is, and you realize in that moment something's got to change. Yes. And all while doing it, I lost 30 pounds on beans and rice diet. Okay. Well, there's that.

Oh, my gosh. Well, discipline begets discipline they say that when you've got your act together in one area of your life it blends over into the other areas very naturally is what i've always heard and i think that's probably absolutely right so very very well done you guys what do you tell people the secret to getting out of debt is? The cash envelopes. Yeah. Yeah. Budgeting. So you guys were working together in unity, in lockstep, as you went along then?

Yes. Yes. Way to go. Congratulations. How does it feel? So amazing. It's still not real. I can't believe we're even talking to you.

This is amazing. So when did you pay off the last debt? February, February 20th. Oh, just the other day. Excellent. So when you paid that off, when you look back at the list of people you paid off, which one debt on that list you go, I hate you people, I'm so glad you're gone? I would have to say it was the IVF medical loan because we had calculated we wouldn't pay off our daughter until she was 15 years old.

And she's four years old now, and we paid it off. So I'm like, never again, never again. Wow. And that's a whole different type of loan because of how personal that is. That's your baby. Yeah. Wow. I told her, if we don't pay you off, mija, the bank's going to come and get you. Oh!

Whoa! You have to sit in the vault until we get you paid off, and then you can put your own layaway. Yeah. She's not up for a repossession. Oh, my gosh. I'm thinking she's probably going to tell her counselor this story when she's older. Oh, my gosh. That's traumatic. I love love it you guys are fun well congratulations you guys we're so proud of you very very well done you're rock stars so will you ever go back in debt never not for anything nothing big enough 22 cards are gone your wallet's a little thinner now and the best way other than

those cash envelopes those cards are gone yeah yeah even with the cash envelopes like i have my debit card but i never use it that's cool i like that yeah i hardly ever use mine i've got a i i carry a a money clip with money in it and that's my redneck envelope i guess but um but uh you know and so i still use i use a debit card at the gas station and a few other places but uh lots of places i actually i'm still that weird dude that pays cash and people are like well how do you make change again you know so because nobody knows how anymore so well way to go you guys we got a copy of rachel cruz's book for you, Know Yourself, Know Your Money, her latest New York Times bestseller, and help you out with that.

And so, count it down, Juan and Lindsay, Denver, Colorado, $79,000 paid off in 15 months, making $108,000 to $130,000. Count it down. Let's hear your debt-free scream. Three, two, one. hear your debt-free scream. 3, 2, 1. We're debt-free! That's what it sounds like when you finally get

free. When you finally get free. That's a big deal. Open phones at 888-825-5225. Rodrigo is writing in asking about Business Boutique. He says, my wife and I are opening a new hair salon. It will have eight booths being rented out. Do we need to have an LLC?

You know, Dave, you and I have talked about this before because I actually came to you years ago when we were starting Business Boutique of what are the technicalities. And really, the simplest way you explained it to me, which I thought was really helpful, is are you in a high liability business or do you have a target on your back? Do you have the perceived wealth or a lot of wealth where people would want to sue you? And if you don't, then you're probably fine to operate as a sole proprietor for those first years, starting out until you really get into the millions. And so I think that you don't see a hair salon as a high-liability business. If you're opening up something like I used the example of a horseback riding camp for kids, that's high liability.

You've got unpredictable animals, that type of thing. But a hair salon I don't think is. What do you think? Yeah, I mean, you've got eight booths. One of those people could get twisted up and decide to try to sue you or something. So you could do an LLC just to kind of ward them off. Because the most they could get would be the things that the LLC owns if you lost the lawsuit or that kind of a thing. But, you know, good business practices, more than anything else, will keep you out of court.

Yeah. And so, I mean, we've run this business for 30 years and have had just a handful of lawsuits out of all that time. Of course, the vast majority of that time we have been an LLC or a sub-S corp. So it would be okay either way here. If you've got eight people, different people at eight different booths that could screw up something, I don't know what it would be, but people get pretty emotional about their hair, I hear. I don't have this issue, but I've heard about stories of people that have hair. So, but the, you know, I mean, if you've got a, I don't know, someone felt like they got a chemical infection from getting their hair dyed or whatever. I'm making up stuff here.

I don't even know. Yeah, the eight booths is what stood out to me as far as the only thing that made me think it might need to be. But typically, I mean, that's not a dangerous business. But if you've got eight people, that's just by scale and scope, you know. Exactly. And what you and I have talked about in the past, too, is I started this as a sole proprietorship. And you just open that as a DBA, doing business as. Dave Ramsey, DBA, doing business as the Lampo Group. And then we incorporated the Lampo Group and later took it to an LLC.

But that was after we got a little bit of size to where someone, there was something to get. Right. But basically, if you're broke and you're starting a business and it's a little, you know, startup thing, you don't need to spend the money or the screw with the tax returns to do an LLC on everything you do. Yeah. That's overkill.

Yeah. This one's kind of on the bubble, so it wouldn't hurt to go ahead and do it just because of the eight booth thing. That would be the only reason I would think about it here. But good question writing in, Rodrigo. We appreciate that. This is the Ramsey Show. Thank you. christy wright ramsey personality number one best-selling author is my co-host today this is the ramsey show louisa is in charleston south carolina hi louisa how are you hey y'all thank you so much for taking my call. Our pleasure. How can we help?

All right. So here is my situation. I am sitting on in my savings about $110,000 that does not include my emergency fund. And at the end of the school year, I am resigning and I'm starting a new career, totally. So I'm wondering what to do with that $110,000. Where should I invest it? So if I need that cash quickly to replace my salary, I can get it, but also I don't want to just sitting there not appreciating. Which direction, which type of investment could do that for me? Well, what are you going to be doing?

I'm going into real estate full time. You already licensed? I'm already licensed. I've dabbled, but the market is hot, and you have to have time to commit to that, and I don't with my current position. In dabbling, have you sold any houses? No. I've listed a few, and then no.

That's the quick answer. Did the listings not sell? No, the people did not want to sell. They ended up changing their mind, and they wanted to buy an investment property. And so we're looking. Okay. So you had one listing? Yes.

Okay. All right. So you're starting really from scratch in the real estate business, having never really done a transaction. Never. Not once. Real estate is in my family, so I've been around it, but brand new. You married?

I am. What's your husband make? He makes conservatively $52,000. Can you guys live on that while you're getting started? We, no, no. We would need about $8,000 more to be in the clear to break even. $8,000? You don't make $8,000 now. No, no, no, no, no.

That would be just on his salary. Just to live on. I'm sorry, $8,000 more than his income? No, on top of his income, we would need $8,000 more. In a year to live on. you could live on what do you say oh a year yeah oh geez okay i was like we're missing something here okay i thought a month sorry a year i thought a month no no no no no we don't need to worry about a year because surely to god you're going to sell a house in a year i'm worried about a month. Okay. Do you all combine your finances, Louisa?

We do. Okay. Just checking there. Okay. We've got two kids. Yeah. Take care. Okay. So you're a few hundred dollars short a month of being able to cover it with his is all.

Yes. Okay. 700 bucks. Whatever. Something like that. All right. Well, there's a couple things you can do. One is you can just leave it all sit there.

It's not going to earn anything, and it is truly your backstop. But we need to budget out and say, okay, we're going to go six months with no income, and what are your real estate expenses? So you need $6,000 to cover that and your real estate expenses. So, I mean, if we set aside $20,000 and we leave it sitting there to make sure that you can supplement your household income, your husband's income in order to cover until you get some coming in and cover some of your expenses because you're going to have some expenses

in the real estate business. Agreed? Yes, I've already paid for most of those. Yeah, but you're going to have ongoing expenses every month that you haven't calculated in your household budget here so i'm gonna set 20 of the 100 aside and i'm gonna put the other 80 in a no load mutual fund no commission mutual fund i use for stuff like this an s&p 500 fund an index fund because there's no commission coming out so you put it in there the only downside is if the market goes down before you pull it back out right and it could and so if you take that 80 000 and put it in there

and you lose uh eight thousand dollars is that going to kill you no no probably piss you off but it ain't gonna kill you is there anything we should watch out for? Well, I mean, if you buy an S&P 500 fund, it's going to do exactly what the stock market does. And the number of times the stock market goes down 10% in a year and does it consistently year after year after year is almost zero. So it does go down, does go up, does go down, does go up. And 10% of $80,000 is $8,000. So really you're putting $8,000 or $10,000 at risk for the hope of making more than $8,000 or $10,000 a year on this money instead of letting you sit there 1%. Right.

That's your tradeoff. And you've got your other money sitting over here to do your transition with. Right. This gives you an opportunity to do both. This gives you an opportunity to make some money on the majority of that savings you're talking about and still have some backup for this in between while you're working on getting your real estate business going. It's the best of both worlds. Yeah, and then just keep the pressure on yourself to get some dadgum transactions going.

And once you get the rhythm of the transactions going, then you have a steady, more predictable income based on your performance, not based on the fact that it's a guarantee because it's never a guarantee. But if you say, all right, I think I'm going to make $50,000 to $100,000 a year. I'm pretty comfortable doing this. Transaction, transaction, transaction. Then you take this money and you apply it wherever you are on the baby steps. You cash it out of that mutual fund,

and any money you didn't use in your little cushion fund, it's over and above your emergency fund. Take all that cash and we throw it wherever you are on the baby steps, which would probably be baby step six in paying off your house early, unless your home is paid for. We didn't get that far, but that's what I would look at. Andrew's in Rock Hill, South Carolina. Hey, Andrew, what's up?

Hey, Dave, two calls from South Carolina back-to-back. There we go. I've got a HSA account through my employer, and every year they contribute $300 after we complete some steps as employees. I'd like to take the money from my HSA, though, about $4,500, and put it into a health savings brokerage account. What is the best way to do that without triggering all kinds of extra suspicion from the IRS? We endorse a company, and I use them personally, called Health Equity that does just exactly

that, and they handle all of our HSAs here at Ramsey. I've got my personal HSA in there. Look those guys up and um there's no triggering it's not a problem at all it's a very standard transaction it's not an audit flag or anything like that and uh mine are invested in good mutual funds i started an hsa when george bush first put them in place a thousand years ago and i've done them every single year and i've never taken a dime out and so it's in there growing completely tax-deferred, tax-free, and guess what? It basically is an additional retirement account for me because I don't use it.

So moving money from one because my employer only contributes to their preferred bank, but moving money from that bank to, for example, health equity solutions is not going to be any issues there? We've never seen it do that, no. I don't have any reason to believe it would. It would be like just rolling over an IRA or something. That doesn't trigger an audit. It's not a suspicious thing because it's just very often done where people have large amounts of money. I mean, my HSA has got several hundred thousand dollars in it now.

Because I've just fully funded every year to keep the government's hands off the taxes and then i'd never use it i just whatever medical we've had out of pocket we just paid it and um i'd rather have that money sitting there growing with no taxes or tax deferred on it and so that's again and i picked just good mutual funds and that just like I did in a 401k or a Roth IRA. Are you using the HSA here? And we do the same. We did the same way. We just pay medical out of pocket and just let it grow.

Yeah. And you've got health equity, of course, as well. So you can pick mutual funds with it. Same thing. Same exact thing. Very good. Yeah. So the HSA, the savings portion of the health savings account is what we're discussing here.

The insurance portion is basically a high deductible health insurance plan that gives you a much cheaper premium. And you cannot fund the savings account if you're not in a position to. But once you're in a position to, you can fund it and use it, or you can do like we're talking about and take it as yet an additional tax-sheltered investment account. Very good stuff. That puts us out of the Ramsey Show and the books. We'll be back with you before you know it. Our thanks to James Childs, our producer, Kelly Daniel, our associate producer, and phone screener. I'm Dave Ramsey, your host, and we'll be back.

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