The Ramsey Show - App - How Do Phantom Stocks Work? (Hour 3)

Episode Date: September 1, 2021

Debt, Taxes, Career, Retirement, Investing 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

Welcome to the 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, number one bestselling author, is my co-host today.

We're here to help you with your life, your money, your career. Ken Coleman's show, The Ken Coleman Show, talks about jobs and careers every day, getting in work that you love, getting involved in work that matters, and we'll take calls about that as well. The phone number, 888-825-5225. Chris is in San Antonio, Texas. Hi, Chris. How are you?

Good afternoon, guys. Hey, what's up? Hi, Dave. So my question is, or I guess, yeah, my question, I have, well, I became a landlord about 22 years ago by default. I have a home in Austin, Texas. I own it. But over that time, that home has grown significantly in value.

So I'm at a point in my life where I might want to sell that home. But I just need some direction in knowing if it's the right time for me to do that. And if I do decide to sell it, I want to know if there's any way to possibly avoid capital gains tax. Well, certainly a hot real estate market, great time to sell real estate, by and large. That's a general statement, right? Capital gains, you're going to pay capital gains on it. My guess is you've been depreciating it all these years, right? Yes. So you probably have an adjusted basis close to zero.

The whole thing may be gain. Well, yes, yes, that's true. Yeah. And so what's the house worth? I think we could list it for about $550,000. Okay. Yeah, so you're going to have, geez, you're going to have $60,000 in capital gains, right? Yes, that's the year. No, more than that, $90,000 in capital gains, right? Yes, that's the fear.

No, more than that, more than that, 90, yeah. Yeah, okay. But I have a stable renter who pays on time, so he does a lot of his home maintenance to the property. So the situation right now is kind of ideal, but again, I don't know if the market's going to continue to increase or if it's going to blow up and start declining in value. Oh, I think it's going to go up in value, unless you've got a neighborhood problem.

But overall, real estate, I don't think real estate as a category is going to go down. Certainly there are neighborhoods that deteriorate. Sometimes people let their property deteriorate that kind of thing but i'm not worried about that part of it uh the only thing i know that you can do to avoid capital gains if you choose now is the time to sell it for you uh would be what's called a 1031 tax deferred exchange and that would involve would involve selling the property into an escrow account and buying another piece of real estate out of that escrow account. And it is in effect a trade as if you've traded this property for another property,

and so you roll your basis into the new property. And so if the new property is $550,000 or less, you're going to have zero basis in it. Yeah, that's what I've heard. In the new property. So, you know, you're not going to have a zero basis in it and uh in the new property so you know you're not gonna have anything you can depreciate um unless you move up in property and so you i mean you can buy a million dollar property but obviously you'd have to put up the money for the difference and so you're getting further into the real estate business at that point and it's just a matter of whether you want to do that or not. But, for instance, if you wanted to buy four houses in San Antonio, $150,000 houses, you could do that. Yeah.

And, you know, being a little, you know, have them out there in your area, be able to spread them out. And you're just rolling the money over from, that's what a 1031 allows you to do. It's kind of like a rollover in the sense you're rolling it from the Austin house over there. Otherwise, you're just going to be paying a 15% capital gains rate or more if you sell it next year. Biden's talking about raising the capital gains rate. I haven't looked at it lately,ave uh i thought that you uh didn't have to pay on the first 500 000 that's personal residence personal because this is a rental it's been a rental more than two of the last five years it is now a rental got it that explains that exemption oh and he's had this in 22 years. That's bad policy.

Hey, I haven't owned any rental homes yet, so I'm a neophyte on that. But now that irritates me for you. I'm glad. Well, I don't sell them, so you don't have to worry about it. That is true. You don't. You hold on to them. But that set bothers me. Well, there's always a way to raise taxes if you're a Democrat.

I mean, that's just how it works. Yes. Melinda is with us. Melinda's in Richmond, Virginia. Hi, Melinda. How are you? Hi, Dave. Hi, Ken.

Thanks for taking my call. I'm really excited to be talking to you all. You too. What's up? So my husband and I, we are about to start Baby Step 4, 5, 6. And my question is about how to hit that 15% towards our retirement. My husband's base salary is at 185 and he gets an additional 30 to 35,000 in bonus and stock. So we're kind of finding that we're hitting that $19,500 401k contribution cap before we hit our

15%. So I was hoping to kind of talk through what we need to be doing to hit the rest of our 15%. Where can we be putting that? You do a couple of Roths. You're going to be over, so you're going to have to do what's called a backdoor Roth. But both of you do a Roth, and that'll just about get you there. That's going to be very close to your 15%. The way a backdoor Roth works is you get with a SmartVestor Pro,

and they'll help you get that going. But all you're doing is you open up an after-tax IRA, and then 20 seconds later you roll it to a Roth. Because it's an after-tax IRA, you've already paid the taxes on the money for it when they're just like you would in a Roth. And so when you roll it to a Roth, it has no tax effect. And I do one every year. And it's the only way you can get money into an individual Roth account if you make more than $200,000.

And you guys do with all this stuff added up here. So you're going to bump into that ceiling. But it's called a backdoor Roth. It's actually technically, I guess it's just a loophole in the law. But someday they'll button that one up, I'm sure. But never have gotten around to it so far. Well, there's a lot of technicalities, a lot of reasons it's very hard to button up. But anyway, aside from that, yeah, you can just open an after tax and roll it to a Roth.

And you do that every year. And so, you know, you'll have plenty of money going in there then i think that and the 19 will get you there i think that'll get you to where you need to be hey thanks for the call open phones at 888-825-5225 it is amazing the amount of energy and brain power and dollars that we spend to get to keep our own money. Yes. Last two callers. Yeah, yeah, yeah.

Got to jump through hoops to keep the government's hands off our money. It had nothing to do with, is this a good investment? It had nothing to do with, I'm able to get control of my money. It had to do with, how do I keep the government

from taking my money? It had to do with how do I keep the government from taking my money. It's a whole new idea. It's like a full-time job. Oh, yeah, we call them accountants. This is The Ramsey Show. Hey, y'all. I'm Christi Wright. Listen, when you're tired and not getting enough sleep, your health and happiness suffers. That's why I'm a huge fan of Glorify, the number one daily worship and well-being app. This app has calming meditations and peaceful sleep music so you can finally push pause and get some rest. Download the Glorify app and get 50% off their full library when you use

the code Ramsey by September 31st. That's the code Ramsey. Ken Coleman, Ramsey Personality is my co-host today as we answer your questions about your life and your money. It's a free call, 888-825-5225. We really value the input of our listeners here to The Ramsey Show. It helps us know what's important to you, and we can adjust our content delivery, adjust what we're doing here to make sure we're serving you. We've been doing this a long time, but we can always learn something from you guys. So if you want to take a survey, a listener survey of this show, this podcast, check out ramseysolutions.com slash survey or text survey to 33789. There's a $100 Amazon gift card that you will be in the drawing for if you take the survey.

Again, visit ramseysolutions.com slash survey or text survey to 33789. We'd love to hear from you. Nicholas is with us in Miami. Hi, Nicholas. How are you? How are you? Hi there. Can you hear me?

Absolutely. What's up? You're going to have to get off your Nicholas, how are you? Hi there. Can you hear me? Absolutely. What's up? Yeah, you're going to have to get off your speakerphone or whatever you're doing there. Get back on your regular phone. Sorry about that. That's okay. Yeah, that's what Kelly told you. Okay, how can we help?

So I have a question about inheritance. So basically, my dad has a fairly peculiar relationship with his family, and he has like five siblings slash nep siblings that depend on him fully financially. And I'm my only dad's son. I'm fully financially independent. However, he's getting kind of old and I want him to set up a will to like

divide his state between me and the people that depend on him financially. But he has not been willing to do that. Why? Basically, whenever I bring up a topic, he avoids it. He tells me that he's going to do it sometimes, and then he never does it. Why? And then, why?

Why does he not do it? I don't know. He's just, like, he doesn't like to talk about money, basically. How much money has he got? I think, probably, like, $2 million in his state. $10 million? $2 probably like $2 million in his state. $10 million? $2 million. $2 million.

Well, sometime he used to talk about money, unless he just fell into a pile of it somewhere. I mean, I think the problem is that basically he's very, I would say, very concerned. Like, he's very, doesn't want to give out any information. Yeah, he's cynical. There's some shame about his siblings still relying on him financially, basically. Yeah, okay. So, do you know what his plan is? I mean, does he intend for them to get the money?

I have no idea, basically. And, like, he doesn't talk to me about that stuff. How old is he? He's 77. Okay. I hear some kind of accent that's not Southern. What's your accent? What's your family heritage?

I'm Latino. Latino. I'm Latino-American. And he is as well? Yeah. Okay. What country? Columbia. Okay. What country? Columbia.

Okay. All right. And so he came here with nothing. Yes. And he made a significant amount of money. And he's 77 years old. Sorry, working. Now, where do his siblings live?

Are they back in Columbia or are they in the States? They're back in Columbia. One of them is in the States and the other one is back in Columbia. Okay. All right. Ken? I just want to know if you've ever actually sat down with him and said pretty plainly, very clearly, hey, Dad, you need to do something about this and see if he's actually going to react to you when you do that,

or is it just something you're kind of kicking the can around and we're all beating around the bush? Just curious. Have you had a direct, responsible conversation about this? Yeah. Like basically I think around last year, one of my uncles died because of COVID. And at that point I'm like, okay, I need to have this conversation. I sat him down. I told him I want him to make things clear of what will happen with his money money because i don't want to have that problem be pushed to me or or to basically have to figure out what he wanted to do once he's dead he told me that he was going to make a will and then nothing came out of that yeah so do you think what would be your guess if he did do a will that it's going to say? You think he's going to want you to manage this money and take care of his brothers and sisters?

I think that's basically what he actually wants to happen. Do you want to do that? I have no interest in doing it. Do you want to do that? I have no interest in that. No. Okay. All right. Hmm.

Well, the only thing I know to do is take another run at it, and then you can just wash your hands of it. And another run would sound like this. Where does he live? He lives back in Columbia at this point. Oh, he's in Columbia as well. Yeah. When will you be with him again, do you think?

Probably Christmas. Okay. All right. So what I would do is say this. I would go ahead and let's just not have an abrupt conversation where we hit a wall at Christmas, but go ahead and start talking to him by phone now and just say, Dad, when I'm there, one of two things is going to occur while I'm there, and I need you to know this because I love you.

I want you to help you cause your wishes to be had. And so when I'm there, I want to see the will, or you and I are going to go meet with the attorney, and the will is going to occur. And, oh, by the way, Dad, I'm not managing this money for your siblings. So you need to have a different idea. I'm not willing to do that. I love you.

I don't need the money. And if you want to do that, you could set it up down there with a trust and so forth. But I'm not going to get sucked into this where you've done business poorly and you take up my life. And I'm also not going to get sucked into managing the money for them for the rest of my life. These are not two things I'm willing to do, Dad. I love you. I'll help you any other way I can.

And if you want to be responsible, you need to get your will done. And I want to see it when I'm there at Christmas. Or I'll go with you when we're there at Christmas. But it does not need to say that I'm going to manage the money for your siblings. And just say all of that on the phone and just let him kind of get – because my guess is it probably takes him a little while to digest it. And you grew up in a culture, like I did, of honor. Hillbillies and Latinos share that, okay? We're a culture of honor.

And so you have to pay him honor. And yet you can honor him and not abide by his wishes. It's possible. But that's just a matter of telling him that you admire what he does, who he is. You admire that he's taking care of his siblings. I'm not willing to engage in that though dad and i and i want to honor you upon your death by making sure that your wishes occur as long as it doesn't involve me having to do that and and so you're being sloppy with this dad and it's not like you you're a

better businessman than this and and i and i and i love you and i admire you so much you're one of my heroes that's how you pay honor. Did you hear it? Yep. And am I right that he is a man of honor? Yeah, I think so. Nobody else takes care of their siblings except people of honor. Yeah. There's a few that do, but they're just psychos.

Most people are just – he sees that as an act of honor. That's why he does it. Yeah. That's who he does it. Yeah. That's who he is as a person. So you can tip your hat to him, pay homage to who he is as a man, what a good person he is, and he is a good person, and do all of that and yet not fall into the trap of getting sucked into managing an estate with no will, nor get sucked into managing his money for his brothers and sisters in perpetuation. And you can just lay those out as boundaries in the discussion, and you can do that while paying him honor, and it's your only shot.

If he doesn't do it then, you just wash your hands of it. Just say, Dad, I just love you, but I'm not doing nothing when you die because i begged you to do this it's all just going to melt down around their heads down there and um you know you just turn up the heat on it i don't know ken any other ideas no i think it's absolutely right i think we need dr john deloney in here we do yeah or he needs to read henry cloud's uh uh boundaries i mean i think that you nailed it you just have to put it in his court. He doesn't want to deal with it. He doesn't want to talk about it.

So he kind of acts like, well, it's just not there. And then, you know, honoring him and respecting him is the way to go, but also forcing the issue. Yeah. You just got to drive the nail home, baby. I mean, and I think you were right. You're on to something. The problem is that the old man is just being thick, and it's going to require a little more direct punch in the nose to get the thing moving.

But the only way to do that is with a velvet glove. That's true. So this is the Ramsey Show. I'm sure most of you have seen the news recently about ransomware, cybercrimes, identity theft, and more and more data breaches. If you thought it was bad before, let me tell you, it's gone off the charts and it's out of control. It's impossible any longer to just bury your head and hope it doesn't happen to you. Today, it really is a matter of when it will happen, and not if. We all live in this cyber world and need to make sure we have the best protection possible without wasting money. That's why Zander's ID Theft Protection Plan is the only one I've ever recommended.

They combine smart cyber protection and prevention services to help reduce your risk, and their team of dedicated experts takes over the work if you become a victim they even provide one million dollars in stolen funds protection and kids are free on their family plan go to zander.com or call 800-3525-5225 in the lobby of Ramsey Solutions on the debt-free stage Chad and Emmy Liu are with us hey guys how are you Dave we're so excited to be here. Welcome, welcome. Where do you guys live? Omaha. Omaha, Nebraska and all the way to Nashville. How much debt have you

paid off? $250,000. $250,000. Yes. Wow. Lots of loan interest. And how long did that take? About three years. Three years, alright. And your range of income during that time? Like $123,000 to $141,000 Like $123,000 to $141,000.

$123,000 to $141,000. Okay. Cool. Wow. What kind of debt was the $250,000? Student loans, mostly. When we started the Baby Steps, we had about a little over $200,000 left on my student loans. Okay.

Wow. And the rest, HVAC, Windows, DEC. Wow. A little bit of home improvement. Wow. Home improvement. Yeah. What do you guys do for a living? I'm a dispatcher for a transportation company. And I'm an occupational therapist in the home health setting.

All right. Very cool. What's your degree in that you spent $200,000 for? A clinical doctorate. Okay. All right. Good for you. Very pricey.

Very pricey. Yeah. Yeah. So, and you're making $141,000. How long have y'all been married? This is our seventh year. Okay. So, after around four years of marriage, you begin this journey to get out of debt.

What started you on the journey? Well, that second little baby sitting over there, I was pregnant with her and we, well, I went into daycare to pick up our first and to reserve her a spot. And I knew how much daycare cost, but walking in, hearing that number, I mean, I went into daycare to pick up our first and to reserve her a spot. And I knew how much daycare cost. But walking in, hearing that number, I mean, I just had a gut punch. And we've always been frugal. We took your class when we were engaged, thanks to our dad, my dad. And I just knew, I mean, I just broke down in tears.

I was pregnant. I just knew we could never pay off my loan debt with $20,000 in daycare every year. And that was just two kids, and now we have three. So there's no way. I mean, we wouldn't have made any progress. I mean, $1,000 extra a month goes nowhere when it's $36 of interest a day. It was crushing. We looked at our schedule, and I worked nights,

so I could watch the kids during the day mostly, and then she would switch off. Yeah. Our managers were just a godsend. We sat down and we're like, what do we do? And my manager let me switch my day off, and he has a rotating schedule, and so we make it work. I mean, before COVID, there were times when we met in the driveway with the keys, gave each other a kiss, and, I mean, we didn't see each other all week.

But now he gets to work from home, at at least for now which is actually a godsend so here we are yeah wow very good you guys so uh how's it feel to be free of 250 000 um it was a long three years it's a lot less crying um and more traveling uh we did our i mean we can get to this later but we did our um dream trip about two weeks ago and took the kids to Disney. And you'll see in the picture, one of the pictures of our kids at Disney. And that just sums up our whole experience. I mean, it's like living your best life in one picture. I mean, I just cry and I'm just so excited.

Congratulations. That's fun. I'm glad you celebrated. We did. Go big. So talk about the intensity what was what were some of the most intense sacrifices i know the the passing ships in the night is certainly one of them but some other sacrifices things that were so difficult but also made huge impact um i think the biggest thing is uh this guy right here you know dave talks about being the man

of the house and stepping up and and being in charge and there are days that he doesn't get any sleep you know we have three kids and i leave sometimes for work at six or seven in the morning and that's the big sacrifice isn't it i mean he's done it all for me i mean 200 000 that's a lot in student loans to yep we just wanted to get it done, so whatever sacrifice we can make. I mean, we sell stuff. We live very frugally. I mean, Nebraska is a low cost of living, but, you know, we didn't eat out. We didn't travel.

I mean, we were gazelle. I mean, if you have a definition of gazelle, we were it. I mean, we didn't sacrifice on some things like pictures. Our family pictures is the most important thing to me. But other than that, I mean, that's it. I mean, that's it. I mean, our clothes, consignment sales. You know, we just did it all.

We were so motivated. What's the thing that you may never eat again? Is there a meal that you ate too much? That was like broke people food and you never ate it again. No, she is the best cook ever. I have a maid. I have a Mr. Mom. I have a house. He does it all.

So no rice and beans is what you're telling me. Nebraska beef, Ken. Nebraska beef. I love it. That's good. I think this guy's got a Superman cape back there behind him. I know. Seriously.

Pretty incredible. You're making the rest of us look bad, dude. I'm just saying. Seriously, stop. Well done, you guys. Very well done. That's cool. Okay. What do you tell people the secret to getting out of debt is? Because you've done, you guys. Very well done. That's cool. Okay.

What do you tell people the secret to getting out of debt is? Because you've done a lot here. Yeah. Having goals and attaining them is a big thing. I mean, we had that ultimate, the large goal of three years of working to pay off this debt, but little goals in between. We can get this loan done and then this one and this, you know, just attaining each goal. And for me, it was just having an end goal in sight. You know, when the kids are little, this is the time to do it. We

realize like as they get older, there's only more activities to do, more things to get involved with and more opportunities. And when they're babies, let's face it, you don't want to travel anyway. It's so hard. So we did it, you know, we're like, let's do it now. We're having our kids now. And then we're going to be free forever. I mean, we have two years left on our house, and then we're done. I mean, we're living it. It's so great.

Thanks to you. I'm so proud of y'all. Well done. You're heroes. Very well done. Great job. Yes. Good stuff.

I love it. Very good stuff. And so you brought the kiddos with you. What are their names and ages? Yeah. We have Elliot. I love it. Very good stuff. And so you brought the kiddos with you. What are their names and ages? Yeah. We have Elliot. He's four. We have Kinsley, who's two years old.

Two and a half. Come here, buddy. And then Brenly, who will be a year and a couple weeks here. She's our sweet baby girl. She's almost three. Hi, Dave Ramsey. Hi, Dave Ramsey. That is Dave Ramsey.

You're right, son. They're like, are we going to see the real Dave Ramsey? I'm like, yeah. He watches on TV all the time with Daddy. Just the digital version. Oh, come here, baby. Well, we got a copy of the Legacy Journey for you. It's obvious that you have a great legacy.

It's a beautiful thing you've done. I'm so proud of y'all. And a copy of the Total Money Makeover as well. The Total Money Makeover for you to give away to somebody and help them start their journey. Chad and Emmy Liu, Elliot, Kinsley, and Brindley, Omaha, Nebraska, $250,000 paid off in three years, making $123,000 to $141,000. Count it down. Let's hear a debt-free scream. Three, two, one.

We're debt-free! Yeah! Love it, love it, love it. So well done. Beautiful job. Man. The schedule thing with the daycare is, that's enormous. Yeah, brutal.

It's an amazing amount of money. Oh, yeah. We know that, the daycare costs in most places. You have to make serious money just to work. Absolutely, right. Yeah, I mean, and she struggled. You think about how much schooling she went through. She's got her doctorate.

She does some really important in-home work. That's life-changing for the families that she's engaging with. I mean, and to see how they're working together, the sacrifice. And you know what? Way to go, Chad. I mean, that's some serious props from your wife, man. And that's next-level conviction that we talk about. We talk about gazelle intensity. It's got to come from somewhere.

That intensity cannot be manufactured. You know that. It comes from a deep, searing conviction that this must happen. I'm sick and tired. I'm not going to live like this. I've had it. I'm not living like this anymore. And you've got to reach that point.

Earl Nightingale used to say that it's not what you're willing to do to achieve your goals. It's what you're willing to give up to achieve your goals. Sleep. Yeah. I mean, we've had two debt-free callers on the show today, both of which worked unbelievable hours. Yeah. And, well, I don't want to be a workaholic.

You're not a workaholic, honey. Workaholic is when you get your satisfaction from work so you do nothing else. It's like you're addicted to work. That's a workaholic. Everyone addicted to work that's a workaholic working hard everyone that works hard is not a workaholic somebody's working hard simply as a goal they're trying to hit they're living like no one else so later they can live and give like no one else i've worked like no one else for 25 30 years now i work when i want to yeah um i want to

be down here and do this show and that's why I do it every day. But it's a decision. You know, when you do what they've done, now they get choices. You get margin, you get wiggle room, and it gives you choices. And you don't have to be working for a jerk. You don't have to be stuck in a bad job. Amen to that. Toxic situation. Changes everything.

This is The Ramsey Show. Our scripture of the day, Isaiah 25.1, Lord, you are my God. I will exalt you and praise your name. For in perfect faithfulness you have done wonderful things, things planned long ago. Michael Jordan said, Some people want it to happen. Some wish it would happen.

Others make it happen. There it is. He certainly did, does, that kind of thing. Ken Coleman, Ramsey Personality, is my co-host today. Q is with us in Nashville. Hi, Q, how are you? I'm good, how are you? Okay, so...

Okay, you're going to have to get off the speakerphone, kiddo. Hello? Yeah, there you go, like Kelly told you to. Okay. You there? You're gone're gone all right up next is weston and uh salt lake city utah hi weston how are you good how are you better than i deserve what's up hi so my work gave me um two phantom unit award agreements, and I was wondering if you could explain what those are.

And, yeah, I just was searching, and I've never seen you talk about them on your YouTube channel or however. No, I probably haven't. But, I mean, basically it's deferred comp is what it is based on the stock price. And there's not necessarily a set methodology on when you receive them. It would be by the agreement. A lot of them, they only let you cash them in when you leave. Is that what yours are?

I believe so. You know, they ended up giving me 1,250 units, and both of them have different grant dates and investing commencement a portion of a company, an equity position it's called. A phantom unit, it's a ghost, obviously. But what it does is it replicates the real thing. And so if you have 1,200 units and they're worth a dollar apiece, then if stock is selling for a buck a share, then it's $1,200. If it's selling for $10 a share, it's $12,000 a share, $12,000. If it's selling for $100 a share, then it's $1,200. If it's selling for $10 a share, it's $12,000 a share, $12,000. If it's selling for $100 a share, it'd be $120,000. So, you know, your units are worth what the stock price is per share of stock.

And then when you can cash them in is unique to each company and each agreement. And it sounds like you have a vesting schedule, which means that's when you actually become the owner. And then what you'd have to determine other than that from the vesting schedule or from HR can probably tell you this, or maybe your agreement if you read through it, after you're vested, can you cash them, or do you have to wait until you leave after you're vested? Vested means they actually are yours for the first time. In a sense, you become an owner of the phantom units, which is kind of an oxymoron.

But, you know, the valuation is the stock price times the number of units. That's what it's worth. And then how you can get to them, the schedule of access to the money is unique to each agreement. So, good question. Thanks for joining us. Open phones at 888-825-5225. Daniel is with us. Daniel's in Nashville.

Hi, Daniel. How are you? I'm good, Dave. I got a question about I get disability from the VA on top of my working. I work for the state of Tennessee, and so I get the retirement through the state with the pension. How do I make the math work on when I realize I'm going to be receiving this disability until I die? And how do I – am I making sense? How am I calculating this so that I am set for

retirement? Uh, right now I have, um, about $150,000 in retirement. Um, right now I'm putting $1,300 a month into my 401k. Uh, even though the sky i'm full pension i don't get uh any match from the state on that but i'm also maxing out my ira every year at six thousand dollars good good um well you've got that nest egg and you the two the nest egg from the 401k and the nest egg from the iras and that's money that you actually control you control what what it is is invested in you control when you take it out at retirement, whether you take it out at retirement. You can let it sit there and grow. You can move it to when you retire.

You could roll that 401K into an IRA at that time and mutual funds, and you can have complete control of that part of your world, and that's your nest egg. So if that nest egg is sitting down with your investment professional, with your SmartVista Pro smart investor pro is going to grow to i'll just make up a number a million dollars all right so you know you've got that nest that million dollars is going to create an income and you've got the va income thank you for your service and you've got the state pension coming and those are your three items that are there. They are different. One's coming from the feds, one's coming from the state,

and one is coming from your hard work, sweat, and saving. And the one that you have the most control over is that last one. The other two, hypothetically, could get messed up. I'm not predicting they're going to get messed up. The state of Tennessee is run very well. If you were in another state, I might be a little bit more worried about the quality of your pension. But some states are run well. Some aren't.

But the state of Tennessee's business has done pretty well. We've had several consecutive good governors in terms of the way they conduct the business of the state. So I think the pension's in plenty good shape, and I'm not worried about that, and I'm not predicting the federal government's going to cave in either. So I think you're going to get both of those, but they're just an income, and they die with you, right? Okay. All right, thank you so much, Dave.

Hey, thank you. Appreciate you joining us. The thing you don't want to do, Ken, in that, and I probably should have brought that up while I still had him on the line. The thing you don't want to do is count only on those. Yes, that is correct. Because you don't have flexibility then. Right.

And you don't have control. No control. Yeah. No options. See, he's in really good shape. Yeah, he's doing great because he's saving like a maniac. Like crazy. I mean, really pouring into his 401K.

He's got the retirement nest egg. So he's going to be in great shape. Yeah. Heading in the right way. Alec is with us. Alec is in Pensacola. How are you, Alec? I'm great.

How are you doing? Better than I deserve. What's up? Hey, I love to hear that. All right. So my fiance and I are about to get married. I'm in the military and she is fresh out of college for a nursing degree. That is going to put us together $55,500 in school debt, two credit cards totaling 5,500 and then two family ones on my part to pay off my car, totaling in $14,000. The car's worth $25,000.

And total income for myself is about $42,000. And obviously we don't know how much she's going to make yet until she finds a job. We're assuming it's going to be between $30,000 and $50,000. And, you know, that's a combined income of maybe 85K with the total debt of 75K. And we're really, really, really trying to rice and beans it, get this debt paid off. Good for you. I didn't know, you know, the best way to go about that and how fast we could assume to maybe pay that off.

Well, very good. Well, I mean, if you did 35 a year, you'd be done in two years. And do you think 35 a year is attainable that's truly beans and rice making 80 and it might involve selling 25 000 car too yes okay i'd really consider that alec that's a that's a big big jump start to what you're doing that car's worth you got it you got it that car's going to continue to go down in value, and right now we're seeing the highest rates for used cars that we've ever seen. I would move on that. You can make some big, big, big progress there.

Okay. That's probably not going to be a real popular decision if that's the first thing out of your mouth, so I wouldn't lead with that. That's true, too. But a real popular decision if that's the first thing out of your mouth, so I wouldn't lead with that. That's true, too. But I think you can do this. I think it's very doable. What I'll do is this. I want to say thank you for serving your country, and I want to give you a wedding gift.

We're going to put you into Financial Peace University, which includes a one-year membership to Ramsey Plus. That will get you signed up for it. We're going to give that to you as our gift. You guys go through that class together as you're doing your premarital counseling, and the two of you together will make really, really good decisions, and the two of you together will decide how deeply you want to sacrifice, therefore how fast you want to get out.

That's how this deal works. So very cool, man. Very cool. Again, thanks for serving. Ken Coleman, good job works. So very cool, man. Very cool. Again, thanks for serving. Ken Coleman, good job. Ben and Kelly in the booth. Good work. I am Dave Ramsey, your host. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Dave here. We just launched a brand new listener survey.

We want to know what you think about the show. You'll be entered to win a $100 Amazon gift card. No purchase necessary. Take the survey at RamseySolutions.com slash survey or text survey to 33789.