The Ramsey Show - App - How Do We Plan College Savings for 5 Children? (Hour 2)

Episode Date: July 2, 2021

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🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's The Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host, Christy Wright, Ramsey Personality, number one best-selling author of the book Business Boutique and host of the Christy Wright Podcast, which is a big exploding movement.

I, as my co-host today, as we answer your questions, the phone number is 888-825-5225. That's 888-825-5225. Ryan is with us to start off this hour in Waterbury, Connecticut. Hey, Ryan, how are you? Good, Dave. How are you doing? Better than I deserve, sir. What's up? I'm 27 years old, and I'm on baby steps four and six, and I was wondering if it would be ridiculous or wise to stop making extra payments on my mortgage to save up and build a basketball court in my backyard.

A basketball court in your backyard. Like a real court, not just like a goal, like an actual court. Yeah, like a concrete slab. Oh, oh my like a full court or half court do a half half half court okay um what would it cost uh between three and six grand and um what uh what do you make a year uh Last year I made $65,000, but this year I'm looking to make closer to $85,000. What's your house worth? $228,000. Okay. And you just love basketball?

I'm just curious why. You just love basketball? You just want to play all the time? Yeah. Or is this just kind of like a ridiculous thing to do? Because I'm trying to be wise and build wealth, and I was planning on paying the house off within five to seven years. But other than that, I was just curious on, you know.

No, it's not ridiculous. I mean, people put tennis courts in their backyard. People put pools in their backyard. They do all kinds of things. Let's talk about it from a real estate perspective. No, it's not ridiculous, but let's talk through, is there a better way to do this than, and a worse way to do this? And the answer is, yeah, I think there is, probably from a real estate person's perspective.

So I'm going to put that hat on for a minute. Yeah. I'm going to build it, if I'm doing this, for the least money possible, number one, because it's not going to add a dime of value to the house. Right. So, like, if you spend $6,000, the house is not worth $6,000 more because of it. As a matter of fact, if you do it poorly, the house might be less marketable because it's kind of got this weird thing in the backyard for somebody that doesn't play basketball.

Right. That's what I was worried about down the line. Like, I looked at a really nice vacation property the other day, It doesn't play basketball. Right. That's what I was worried about down the line. I looked at a really nice vacation property the other day, like a super, super nice one. I don't play tennis, and it had a fabulous tennis court in the backyard. And I kind of looked at that as a negative, not a positive. It's like a thing back there that I don't need or want. And, you know, it's like a problem, not an opportunity.

So if you do it wrong, that's how you do it. So depending on how you're – I mean, I'm just thinking about properties that I've owned or lived in. Number one, growing up in Nashville, we had turnarounds that you went back out of the garage and you drive away, and most of the neighborhood kids, including when my kids were little, we had a nice turnaround that was paved. In our case, it wasn't concrete, and we put a basketball goal on the house or put one on a pole on the edge of the turnaround, and it didn't really, A, cost anything extra to put the actual surface in. It was a little bit of money to put a goal up, but, B, it didn't weird people out that weren't basketball people when they came to buy the house

they just went well i'll take the pole down right if i don't like what i don't want to back and so do you have like a turnaround you could do that with i don't but my other idea was to build a patio on the back of the house you know closer to the house and it would be a smaller patio but also i could play basketball on it and then that would be the same kind of a thing makes a lot more sense and then you you know and then the the buyer can visualize i'm just going to pull the goal out or you could even pull the goal out yourself before you put it on the market and then you've just got a nice patio you built now we're not messing with the marketability of the house okay and that is less weird.

The only other thing I can think of is, again, a driveway configuration matters here. But if you don't have a turnaround, if you have a – your driveway pulls up, and you can simply extend the driveway back and put the pad there, it gives additional parking spaces or maybe a slab to put an exterior garage on someday if it wasn't a basketball court, that kind of a thing. So we've got, again, like the patio thing, it's got multiple uses, right? So I just want you thinking that way. Don't stick it back there and make it a problem for the buyer. How long are you planning to stay in this house out of curiosity?

Well, I wanted to pay it off as soon as possible, and that looks about five to seven years. And then my plan was to either use it as a rental or resell it and move up in-house. Gotcha. Okay. Okay. So I think you just use some of these ideas we're batting around here and try to make it a... Multi-use type of thing yeah

where it's got possible other uses so it doesn't just look like a problem concrete slab in the backyard yeah you know like why is it there i wanted to grow tomatoes there i got that you know and that you know that that's what people will that's what that stinking tennis court i mean i think it's wonderful if you play tennis but i I don't play tennis. Well, and even still. Can I turn it into a shooting range? The thing is the percentage of people that might buy your house that like basketball is small, and then the people that would want to play is even smaller, and then the people that would want that in their backyard is like tiny. So you're talking about a very small percentage of people that someone would actually like that. So the rest of the people you're isolating, and it's a turnoff.

So build it in such a way that it can be something else in addition to that, and the least possible cost as well because you're not doing that. And the more you move in that direction, the less you are on the ridiculous side and the more you are on the wise side. There you go. Good question. Interesting. Chuck is in Kansas City.

Hi, Chuck. How are you? I'm doing good. Thanks, Dave. I'm 57, and I just came into some money, and I was wanting to invest it for retirement. And one of the options I looked at was indexed annuities, and I was curious what you thought about that option. It's okay. I wouldn't use it for an actual retirement account because an annuity grows tax deferred and a retirement account also grows tax deferred so it's kind of redundant in that sense

or tax free if it's a roth um and you're paying an extra fee for it to be in the annuity so you just buy the index you buy an index mutual fund inside inside of your Roth if you were going to do that. The other thing I want you to be aware of is I'm 60 and I don't use them because they've got extra fees. The commissions are much higher on them for the seller, the financial advisor that's selling them, than a simple mutual fund transaction. And so instead, what I do with a lump sum like that is I invest it just in an index fund. I use an S&P 500 index fund.

I just drop some money in there. And it grows without taxes by and large until you take it out because it's capital gains growth. It is not dividend growth. And they have what's called a low turnover ratio. So study and learn a little bit about low turnover ratio mutual funds that would be my suggestion but the variable in the od as long as it's got good mutual funds in it is not horrible in your situation You know, I heard a sad and touching story recently.

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That's why I've used and recommended them for over 20 years. Go to Zander.com or call 800-356-4282. So I don't have to keep talking about these sad stories. Christy Wright, Ramsey Personality, is my co-host. Open phones at 888-825-5225. Nick is with us in New York City. Hi, Nick. How are you? Hey, Dave, Christy. Thanks for taking my call. Sure. How can we help?

So I'm feeling a little stuck because of prices in New York City. So I'm 24 years old. I just started working as a software engineer about six months ago. And right now I live in my grandmother's house. She's graciously like allowed me to live here for almost nothing since college, which I really appreciate. Um, but definitely ready to move out. So, um, what I want to do is buy a condo with that 20% down to avoid PMI, but because of prices in New York, I'm not sure if I'll be able to afford that down payment for like another three years. If I rent

with friends, that would just push this savings goal further down the road. I need a little advice on what I should do there. What are you making? It's going to be about $100 gross and it's like $6,000 per month after taxes. Yeah.

Not bad for $24,000, man after taxes. Yeah. Not bad for 24, man. Well done. Got a great career ahead of you. You're obviously not only a software engineer, you're obviously a good one. Well done. Very cool. Yeah, you are in a very, very expensive real estate market, at least for now. I don't know that it will remain that way.

I think delaying buying in new york city would be a real good idea right now because that is one of the markets that we may see some price adjustment because of the you know the collapse of so many businesses in the area and the collapse of the economy in the area and um so and the number of people leaving the market. So, you know, I personally would not be in a hurry to buy there. And so I think saving some money is a good idea. And, you know, how did you end up, where are your parents? How did you end up at your grandmother's? So my family lives in Georgia, but my grandmother has a house in New York,

and it was easy for me to get to college, you know, if I lived up here. So, you know, everything just worked out for me to stay in New York. But she lives in the same home? Yeah. Half the year, this is like her summer house. She goes back to the Caribbean, you know, for half the year. So right now she's enjoying the warmth down there. Hmm.

Okay, so you have six months a year that she's not there roughly, give or take. Right, but we do, like, have other tenants in the house. So, like, some of the rooms are being rented, and it's like I do live with people. It's, you know, I'm ready to get out on my own, you know, at 24 and, you know, kind of start life on myself. Okay. Go wrench or something. It's not going to delay you that much. Your career is not, three years from now, you're not going to be making $100,000 anymore.

You're going to be making more, don't you think? Yeah, definitely. definitely yeah considerably more you should be on a pretty heavy uptick i don't know christy what are you thinking well it's whenever people ask questions about should i do this and some type of sacrifice it's like it's not bad that you're living there but you said yourself you're ready to move out and you're 24 years old you're a young man you want independence and i don't blame you so to dave's point it's not bad that you're living there, but you said yourself you're ready to move out, and you're 24 years old. You're a young man. You want independence, and I don't blame you. So to Dave's point, it's not going to set you that much back financially whenever you're ready to buy.

You wouldn't buy right now anyway. And then in the meantime, for those three years, you have the dignity of your own place and doing your own thing and paying a little bit of rent, and I think it's going to be worth it on the journey to you to get to be out on your own. So there are some sacrifices that's like, yeah, let's make this sacrifice because we're going to be able to save some money. There's other ones like,

hey, this isn't going to set us back that much, but it's going to give us the independence and dignity along the way, and that's worth it. And I think this is one of those things. I think you're ready for it. You need to find something fairly inexpensive to rent. We're not trying to spend a whole bunch of money here because the more you spend on rent,

the less you're going to have for a down payment. So that part of your equation is actually correct. But is it going to slow you down or keep you from buying because you came out and, you know, got a rental? No. So I'm going to look for something inexpensive. We're not trying to make a statement with your rental property quite. If you do make a statement, the statement is I'm cheap. That's the statement you're going for. Yeah. It's not the, I'm cool. Don't make an I'm cool statement with where you go to live, all right? And don't justify it and don't rationalize it and don't go, well, it's cash to Eric and he don't give me all that crap.

Because the more you spend on rent, the less you're going to have for the down payment or the longer it's going to take you to buy. And we don't want to do that. But I think it's worth it for you to, just in your personal development, to go ahead and make that move. I agree with Christy. So, hey, thank you for the call. Open phones at 888-825-5225. Also in New York City, Mike is with us.

Hey, Mike, how are you? Hey, better than I deserve, Dave. Thank you. Sure. How can I help? Sure. So I have a question for you. I did something a few months ago that I know you would advise against,

but it was before I found your podcast, so don't be mad at me. I'm not mad at you. It didn't hurt me. That's true. So I did a cash-out finance when the rates went real low, and I was able to drop my mortgage rate over a full point, and I figured, hey, while I'm at it, why not take out some extra cash to have? But, you know, now I have this extra debt that I have to carry. So my question is, should I go ahead and repay this thing back and pretend like it never happened, or should I try to invest it?

I got it at a pretty low rate. I'm just trying to see what I should do with it. Well, I agree with you. I wouldn't have done that, but now we're there. So that's water under the bridge. That milk is spilled. So you're out of debt except this home? No, I'm on baby steps four, five, and six.

That's what I mean. You're out of debt except the home, and you've got your emergency fund in place, and you're already putting 15%, not counting this money. And so regardless of where the money came from, if you have a pile of money and you're in 4, 5, and 6, you would say you're going to use it on 4, 5, and 6. 4 is underway. Do you have children? Yes.

Okay. Is their college fund underway? Oh, yeah, it sure is. You know, still saving towards it, but I have a good amount for them to save. Okay. Is there a college fund underway? Oh, yeah, it sure is. You know, I'm still saving towards it, but I have a good amount for them to save. Okay. Then baby step six is pay off the house early, right? Right, exactly. And so we would use, if you got a bonus equal to the amount in your savings in excess of your emergency fund,

you would throw it at the house, wouldn't you? Yes, I would. Yeah. So I just throw it at the house. Yeah, the problem with, you know, my thing was the closing costs were about $20,000. So I feel like I'm just basically kind of throwing that money away. Yeah, every time I do something stupid and it costs me money, I call it stupid tax. Yeah.

But you can't get that money back. No, that's true. What I did was I put the money in a mutual fund for now to try to let it grow. It doesn't matter. While I had it. It doesn't matter. That's just not, that's not a path that people use to build wealth. It doesn't work.

And so we don't, you know, never, I've never talked to a millionaire that said I borrowed on my house as much as I could possibly borrow my entire life. And I refinanced it off and took cash out and put it in a mutual fund, and that made me rich. I've never talked to a single millionaire that told me they did that. Yeah. So it's not a methodology that works. So even though it's a very costly mistake, that cost is even under, you can't undo the cost. So the only question is now, do you want to invest in mutual funds

or do you want to work our plan and work your baby step six? That's the only question you've got. And then you've got to decide that. But if it was me, obviously my plan, the thing we teach here at Ramsey is we would put excess cash that you've got that's non-retirement funds from any source onto the house and pay it off as soon as possible. Well, and Mike, I think you know that. I think you know that probably by listening to the show.

And what I would guess, Daveave and maybe this is just a hunch but sometimes we i've done this in my life with with whenever i made a mistake with money is i resist doing something that's going to make me face the fact that i lost that money so it's like putting it back on the house makes me kind of face the fact that it's the 20 000 so i'd rather put it over here because then i can sort of sideways justify that it wasn't totally i think i figured out a way to make it turn the other way and pretend that 20 000 didn't happen if i put it back on the house it's like oh i've got to totally face it let's just face it matt mike it is it happened bite the bullet put it on the house and just rip the band-aid off you're right you're right that's exactly what

it is it's emotionally yeah you got to admit it but it's like you know when you the car's gone down in value I don't know whether to sell it it's gone down in value when you sell it you admit it that's it that's the same kind of thing that's the same issue exactly

you nailed that well done this is the Ramsey Show. We'll be right back. Christy Wright Ramsey personality is my co-host today. I am Dave Ramsey, your host. This is the Ramsey Show. In the lobby of Ramsey Solutions on the debt-free stage, Nathan and Allison are with us. Hey, guys, how are you? Good. How are you, Dave? Great. If

you're on the debt-free stage, it must mean you're debt-free. How much did you pay off? We paid off $124,000. Way to go. How long did this take? About 30 months. Good for you. And your range of income during that time? So we started at about $70,000. That was Nate when he graduated. And then I graduated, and it was about $120,000. And then we ended up door dashing on the side, and then I picked up a lot of extra hours at my job, and then we ended at about $140,000. Wow, doubled your income.

Yeah, with all that. The door dashing, the extra hours, hard work, everything. What do you guys do for a living? I'm a nurse. And I'm a mechanical engineer. Very good. Two great careers. And, yeah, you do have the ability to pick up some extra work, particularly during this 30 months.

Wow. Yep. Cray cray time. Yeah. Wow. What kind of debt was the $124,000? It was mainly student loans. And then included in that, we had a small credit card loan and then a small car loan.

Okay. So what started this whole journey? So back in college, as I was getting ready to graduate, I got a new internship at the job I'm currently working at. So with that internship, it included some benefits, and some you know, like a 401k plan and things like that. Quickly realized I don't know anything about investing or money management. And so I went to Google, said I got to learn more about this kind of thing. So I found your guys' program. I started to listen to it.

And the more I listened to it, you know, I started to listen to it. And the more I listened to it, I started making more sense. I followed the baby steps and quickly realized, oh my, we're doing this out of order. So yeah, we're jumping out of order by trying to jump into investment. We got to tackle these loans before we dive into that. So with that um we followed the baby step plan um started you know we wanted to live like a you know broke college kid you know keep living like that while we made our new income so so i introduced that to allison and then she had some thoughts of her own on that yeah i um i was not really on board so i had heard of you actually i remember in high school my parents at the time were taking FPU.

And all I had heard was your name and that they had mentioned they were never going to co-sign a loan for any of us kids. And I was so sad. I was like, who is this Dave guy? I do not like him. And that's the only thing that I'd heard about you. I love it. So then when Nate had mentioned it, I was like, no, I don't want to do that like everything i've heard about him is terrible

like but then he started showing me punishes people like oh my gosh no no no no yeah so um he he started trying to convince me and it took some time but I realized that you're not all that bad. How many people have that story, Dave? A lot of people. A lot. To know me is to love me, but from a distance, oh, it's a problem. That's awesome. Yep, that's awesome.

What was the hardest part? Like once you decided to commit, y'all are both on the same page. What was the hardest part about making that change? I feel like for probably both of us staying focused, we both started this as soon as we graduated. So all of our friends from college were starting their jobs, making more money. And when you make more money, you want to buy a house, buy a car, all that stuff. And it's very easy for us to want to do that too but um we realized that that was not the end goal and yeah staying focused for sure yeah just

remembering like i said that just to be patient focused that you know we didn't get into this debt overnight you know it you know we picked it up it's not gonna just disappear overnight either so we're in the business of crockpots not microwaves so there you go how long y'all been married uh almost two years okay so you started this process so we were engaging yeah we he kind of did on his own for a little bit and then i got on the page after that so made him an unfun date yeah one more time that dave ramsey caused her to be denied something. I love it. That's great. Way to go, you guys. I'm so proud of you. How's it feel? Feels good.

Yeah, it feels weird still. Like, we live like broke college kids for so long, and I feel like it's hard to remember, like, hey, if you want to get that more expensive thing, it's okay now because you're not free. Like, you can do that. Yeah, we got some room in the budget, too. Yeah, yep. Because you're both making really good money now right and you started this process you were just starting your careers and and you hadn't even entered the nursing world yet so yeah pretty incredible so now you're sitting with a you know a hundred and a half income probably from this

point forward and no payments in the world you will do whatever you want to do right yes sir i love it well congratulations you guys thank you all right so when people, you're willing to do whatever you want to do, right? Yes, sir. I love it. Well, congratulations, you guys. Thank you. All right. So when people ask you, how'd you do that? What do you tell them the key is? To remember the end goal and to let anything, like it's short term. So there is an end and you can do it and anyone can do it.

It's not a way of life. Yeah. Yep. It's live like no one else so that later I can live and give like no one else. Yep. And just staying focused on that budget. You know, you create a plan, come up with a plan, and part of that plan is probably going to include a budget and sticking to it and holding yourself accountable. Yeah. career fields where you know you enter a a process of some kind whether it's a prescription a you

know a pharmacology thing or whether it's a series of mathematical formulas that cause a bridge to be able to stand up or what you said mechanical engineering but maybe not but i mean you still you know you get a result from having done a certain thing yep and so following a plan to to get the positive result is both you're both trained academically, right? Yep. So it's easy in that regard because it's just the way your brains are wired up. Yeah. So now you just apply it to the next thing, right?

Yep. And see how wealthy we can become and how generous we can become. It's going to be so awesome. You guys are incredible. Great job. So what are you, what, 27, 28? We're 26. 26.

Wow. And completely debt free. Way to go, guys. That's amazing. Who was your biggest cheerleaders? Our parents, but to be honest, we didn't have a lot of cheerleaders. A lot of people looked down on us, honestly, and thought that this was weird. It is.

So many people told us, like, you guys are so young. You're never going to be debt free for stuff. Like, why would you even want to be debt free? Like, that's not normal. Yeah. And I feel like we would go home and talk about it together and it would almost get us more fired up. Like, this is going to happen.

And now it happened. And it's awesome to say that. That's right. And all those people that have all those payments, you don't have those payments. All those people that thought you were crazy, they get payments you don't have. Yeah, they're going to start coming around now wanting to know how you did it. Can you teach us how to do that? Yeah, that's what they're going to say.

That's the next thing that's going to happen. Plus, mom and dad who refuse to co-sign for any loans. They are super excited about this right now. They're going, touchdown, baby, touchdown. They're like, welcome back. Welcome back. I love it. Well, well done, you guys.

Very, very well done. We got a copy of Rachel Cruz's book, Know Yourself, Know Your Money, her latest New York Times bestseller. And it is an incredible book. You'll enjoy it. So we're so proud of you guys. Congratulations. Thank you.

All right. It's Nathan and Allison, Rockford, Illinois. Wow, $124,000 paid off in 30 months, making $70,000 up to $140,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Yeah!

Woo-hoo-hoo-hoo! Awesome. Congratulations, you guys. I love it. That's amazing. The Bible says no discipline seems pleasant at the time but it yields a harvest of righteousness the ability to delete pleasure for a greater good living like no one else so that later you can live and give like no one else

adults devise a plan and follow it children do do what feels good. There's emotional maturity to people who learn how to sacrifice for a greater goal. And there's such a theme today in this slow and steady, this sticking with it, focusing over time, sticking with it, sticking with it, sticking with it, and how it pays off. It's not this quick win. It's not this all of a sudden you flip a switch

and it's easy. There's not a magic pill like we've talked about in business or finances or life. But if you stick with it, then you yield the results, the harvest of righteousness we're talking about. We're talking about whether it's in your finances or even in your character. Over time, the discipline pays off. Well, and it becomes second nature. Yeah. It becomes your new way of living.

It gets easier. That's right. It drills new grooves in your brain. That's right. And you have a whole different, the neuroscience backs it up, you know. So it's just beautiful. Well done, you guys. They can do anything now. Yeah.

26. Yeah, they can do anything now. 26. This is The Ramsey Show. We'll see you next time. Christy Wright, Ramsey Personality, is my co-host today. We're answering your questions about your life and your money. Open phones at 888-825-5225. James is in Evansville, Indiana. Hi, James. How are you?

Hi, Dave. Pretty good. Good. What's up? I have a college planning question. My wife and I have five young daughters, ages 10 to 13 months, and we have five 529 plans and are contributing the max for the tax incentive of $2,500. We're now at a point in our life where we could be applying more,

but what does that look like for having five kids and here in about eight years having one go off to college yeah well about five years no no eight years i'm sorry yeah okay all right um no it's more like 13 you got it yeah oh there it is 10 years i'm sorry i wrote i couldn't try to look at these numbers. I wrote it down. I couldn't find them. All right, so, you know, what it amounts to is you need to be putting in more for the 10-year-old than you do the 13-month-old. Because the 13-month-old's got a lot of time to grow in that account. And so who have you got your 529s with? You got an advisor? Yes, we have an advisor we've got about 17 000 that it's grown in each for that 10 year old no no 10 year old okay what

i would do is sit down with the advisor and make sure that the money is invested in the 529 in good growth stock mutual funds that have a good track record first. If it is, then I would ask them to tell you, okay, in order for the 10-year-old in eight years to have X number of dollars, what have we got to add to that account? In order for the next one to add, you know, in so many years, what have we got to add to that account? And it might end up that you're putting i'll just make up numbers you might end up putting three thousand dollars uh or four thousand dollars in the 10 year olds and you might end up putting five hundred dollars in the 13 month old and they'll end up with the same amount okay because you got started later on the 10 year old yeah and so you didn't have as many years for the money to grow so uh it's um

it's kind of like life uh equal is not fair yeah they've already been told that. Yeah, equal's not fair. Fair is not equal. And so, you know, if you've got a special needs little brother or little sister, we're going to give more money and make sure that that child is taken care of. Equal is not fair. Fair is not equal. Fair is what you have at the county. Is there a magic sauce for about what should be put in uh to be able to fully fund them uh well what you need to do is just determine what your goal is uh your goal amount and you

say okay as an example they're going to go to in-state schools they're in evansville indiana they're going to go to the university of Indiana, okay, or Indiana University. All right, and you call them and go, what's it cost to go there, and what are your projections on your tuition eight years from today? And they tell you it's going to take $150,000 to go there with room and board eight years from now for four years, and I'm making up numbers. I don't know, okay. Today, tuition is about $10,000 plus room and board per year for an in-state school average nationally.

And so you're probably going to find somewhere around the $10,000 number per year. So that's $40,000 plus if they're going to stay in a dorm and eat. Okay. So I'm going to guess and say they can go for $100,000 eight years from now. That's maybe $125,000, but you can actually get the number from the university, bother them a little bit, or wherever you think you want them to go to school, and then you can back into the actual goal with your advisor. They can put it into a financial calculator and go, okay, in order to do that,

you need to save $2,642 a month or $2,642 a year. They can tell you exactly what you need to do in order to get there. Once you have that goal and you have the time period, it's a financial calculation at that point. It's a math formula that goes into a financial calculator, and you can back into it. But you need a target, not just so far your target has been we want to save for college and it was very vague but if you really want to do it perfectly and you want to know when you're done this is how we did it okay what we did was we said we wanted i want a hundred thousand dollars per kid and i backed it out for a four-year-old and i said in order to do

that today i need x in there and i just i had made some money that year and i just it out for a four-year-old and i said in order to do that today i need x in there and i just i had made some money that year and i just put x in there and then i was done that account was over i never added to it again never had to i put enough in there that it was going to grow for the four-year-old in 14 years to this much so when daniel ramsey got ready to go to school there was a hundred thousand in there for him you know and it was ready to go and we just picked out a number but uh you need to if you want to be really nerdy about it, and I do recommend that, if you know what your goal is, you can back into your numbers exactly. I've got a question about the scholarship side of things

because I know with 529s, I get specifically for school, if you save all this money and then your kids just get a ton of scholarships, what do they do with that money? 100% of what they get in scholarships can be removed tax-free. What now? If you got $100,000 in there and you get $40,000

in scholarships, you can take $40,000 out and there are no taxes on it. Oh, really? Wow. Yeah. You just have to prove the scholarships

if your audit is off. I didn't know that. So you can remove it and you've had tax-free growth on your money in a 529. Wow. That's cool. It's wonderful so it

incentivizes the child to get scholarships and that type of thing and they got money it's free money totally okay great yeah i mean they go buy a house with it when they get out of college i didn't realize that's a pretty cool thing you're setting up millionaire stuff here yeah setting your kid up to be a millionaire before they're 30 because if they come out of school with 100,000 bucks or 150,000 bucks and no student loan debt and they go get a job making $70,000 or whatever they're making these days, right, doing whatever, oh, my gosh. I mean, you know, 22 years old and you're making that and you've got zero debt and you already have a paid-for house?

Ding, ding. You're a millionaire by the time you're 30. And the number, I mean, it's just compound interest. It's just running the math out. And so what he's doing there, the way he's planning, I mean, he's thinking about it. He's got a little baby, 13 months, and he's going, this baby's going to go to college. But once you dial all that in and then you see what the next layer of effect of that is and the next layer of that effect, it gets rowdy.

And when we talk about you changed your family tree, you really did change your family tree. It's real. It really happened. Taylor's in Denver. Hey, Taylor, how can we help? Hey, how you doing, Dave? Better than I deserve. really did change your family tree it's real it really happened taylor's in denver hey taylor how can we help hey how you doing dave better than i deserve what's up so i have a dilemma um i'm currently in denver colorado and i'm working at a great job i make about ninety thousand dollars a year it's a contract position and uh they told me already that they'd like to extend it at the

beginning of the new year for another year but my last job has now invited me to come back and join them for a substantial raise they'd like to offer me 160 000 to move to orlando florida and work there for eight months till the end of the year and then the position will be over with my question is should i stay in colorado knowing that i have a good paying job and it'll last a good long while or should i go to florida for the additional money which is roughly about three thousand i'm sorry three times yeah my take-home pay each month here in color, no, it's not three times. 90 times three is not 160. What do you do for a living? So, yeah, it's about $9,000 take-home pay for the job in Orlando, Florida, and about $5,300 take-home pay for the job in Denver.

Okay, that's not even double. It's not five times as much. Yes, sir. Okay, tell me you don't do math for a living. Okay, what do you tell me you don't do math for a living okay what do you do i don't do math for a living i do construction thank god okay what kind of construction are you doing i do uh 5g fiber optic construction good for you okay i get it and so um how old are you i'm 24 years old what do you want to be doing when you're 34 i want to be running my own telecommunications business which one of these two decisions takes you their best

i think they both i think they both take which one takes you their best the kind of job that i'm at nah because your business so, you are contract to contract to contract anyway. You guys jump from job to job anyway in your world, don't you? Yes, sir. All right, jump job to job and take the money. Unless you just don't like Orlando. I would be, it's an adventure, dude. You're 24, go make some money.

That's my opinion. Yeah, you're young, do it while you can. This is The Ramsey Show. Have a friend or family member that needs a daily dose of Ramsey advice in their life? Let them know about the Ramsey Call of the Day podcast. It's a quick hit of advice about life and money in under 10 minutes. Check out the Ramsey Call of the Day podcast wherever you listen to podcasts.