The Ramsey Show - App - How to Assess the Risk of Putting Money in the S&P500 (Hour 2)

Episode Date: April 30, 2019

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios. It's the Dave Ramsey Show, where debt is done, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I am Dave Ramsey, your host, and this is Common Sense for your dollars and cents. It is common sense, but it's fairly uncommon. As a matter of fact, common sense is so uncommon that now having it is somewhat like having a superpower. And that's why you're here.

Thanks for joining us. Open phones at 888-825-5225. That's 888-825-5225. Kevin is with us in Houston, Texas. Hey, Kevin, how are you? Hey, I'm good. How are you, Dave? Better than I deserve. What's up in your world? Okay, so my wife and I have finally decided to bear down and start the debt snowball,

which is a large list, and I have a fifth wheel that I'm upside down in, which happens to be the largest debt on the list, and I'm looking for some dynamite to open things up some, so I'm going to sell a truck that I have that I'm looking at getting probably $45,000 out of. And I want to know, do I use that money to get myself right side up in the fifth wheel, or do I work the debt snowball? In order to in the fifth wheel, or do I work the debt snowball? In order to sell the fifth wheel, right? Well, that's the thing.

It looks like I'm going to be needing the fifth wheel to live in to follow my job. What are you going to pull it with if you sell your truck? Well, I can pay somebody. There's companies that do that kind of stuff okay um so what is your job and where are we following it to oh well i work for a commercial diving company and i would be following a marine based location from galveston over to sabine pass okay and so are you on the boat marine diving are you on the boat full time then uh well i haven't been for a couple years i've kind of taken a shore base position

although i do travel and work overseas from time to time well i mean you're telling me there's one location you're going to be whether you're on a boat or whether you're home. Why can't you just rent an apartment? Yeah, I could. So what do you owe on your fifth wheel? $74,000. Yeah, that's kind of my problem. That's what I was working on in my head. Because you know what that $74,000 value is going to look like.

It's not even worth that today. What's it worth? About $40,000. worth that today what's it worth about 40 and you paid what for it i think i paid 90 brand new and when uh four and a half years ago okay so it's already gone in half once so 40 is going to be worth 20 in another three years yep yeah and right now we're talking about you don't have any money but you've got these large items that are going down in value rapidly. I think you come out better to rent. Okay.

Then lose another $20,000 in the next two years. Okay. So back to the question, do I – Sell the truck and use the money to sell the fifth wheel. Okay. And that puts you down a bunch of debt, right, because you have $45,000. How much is owed on the truck, anything? No, it's clear.

Whoa. What do you make a year? What's your household income? Household's about $240,000. Okay, different world. All right. I just changed things. All right, so you got $40,000, and the truck is paid for.

How much other debt have you got? All in all, including our house, we're probably right around $350,000. Okay, not including the house. Upper $100,000, $180,000, $190,000. Okay, so we got $40,000 on on the fifth wheel what's the rest of it uh credit cards student loans and one vehicle and how much do you owe on the vehicle 40 okay all right uh and um what are you doing with the house if you move and lived in the fifth wheel selling it no no no my my i would just stay mond stay Monday through Friday to work and come home on the weekends.

Okay. Do they not furnish you like a hotel or something to do that? No. I mean, we cater to the oil field, and right now the oil field's been pretty slow the last few years, so they've kind of cut down all that kind of stuff. Well, here's what I would do. The way you need to answer the question is this what is the way that gets you to being completely debt-free the fastest with this fabulous income and in the meantime let you end up where you want to end up your cars are not unreasonable unreasonable because of your huge income, okay?

Yeah. And even the fifth wheel is not as unreasonable as it was when we first started the conversation because as a ratio to your income, you can afford to take these hits. Yeah. But you've got to think, okay, five years from today, I want to be 100% debt-free and investing like a crazy man. Do I own this truck and this fifth wheel at the end of that story? And you need to walk that through i'm not sure uh just sitting here now for a second it might it might be okay because i mean

in your case you could you could haul that fifth wheel down there live in it for two years and um you know it may go down twenty thousand dollars but it's ten thousand dollars a year that's 800 bucks a month in rent and you you would actually rather be in the fifth wheel is what you're saying yeah it's not cheaper but it's not a lot more yeah than rent so um i mean i just didn't really know what to do with the money do i you know get right side up or do i uh work oh and also i want to throw in now that tax season has gone and i have a nice tax bill. Oh. And I understand that.

How much do you owe on taxes? A little over $10,000. Okay, that's first. Yeah. You get the IRS, the KGB, I mean, out of your wallet as soon as you can, as quickly as you can. Yeah, let's sell the truck and move down and in-truck and pay cash for whatever you do.

I would not throw the money at the fifth wheel. I would throw it at the IRS and then work your debt snowball, smallest to largest. But you guys, it's time for you all to cut up these credit cards. And as you said, it's time to get really, really serious. You guys have been making a lot of money, and you've been really, really sloppy. Yes, we have. And we just stopped our 401Ks good which was something else that made me nervous because of our age you know you'll be all right you made 240 000 if you'll spend the next two

years cleaning this mess up you're gonna have money coming out your ears oh i hope so dave but you ought to but it's gonna take two hard years i mean we're talking about 100 grand a year clearing here plus or minus a 45 000 truck yeah now and one of the things that i looked at was your criteria if it's you can pay it off in 18 to 24 months and be 100 debt free not counting your house and you can probably do that yes the other thing was the the value of your boats vehicles was it more than half your annual income? Dadgum close in your case. Just a hair under it.

Yeah, you're on the bubble because of the fifth wheel. I got to tell you, 98% of the time I take a fifth wheel call, I got it sold. But the only thing that's saving it is your huge income. It's not because it makes sense, and it's not because it's necessarily cheaper than rent or any of that. It's just if you want that thing and you want to keep it, you want to fight to keep it, fine. I'd probably be more likely to sell that than it would be my truck, personally, if I were in your shoes, and I'd stay in a hotel

or get an apartment or something down there on the coast while you're working. But you do whatever you want to do. I'm just talking about my personal preference. You got a lot of stuff going the wrong way. You own a lot of stuff going down in value and I would be shedding some of it. So I think you're on the right track. It's just a matter of which way you can get there the fastest, and you've got to do this in two years. I get asked all the time about what people need to do to improve their family's money situation. Two of the most overlooked things are term life insurance and disability insurance. Both plans make sure that you have income to pay bills and take care of yourself and your family if something were to happen. For term life, you need to carry 10 to 12 times your income, and I recommend 15 or 20-year plans for most families. Stay away from

cash value or return of premium plans. They're just a ripoff. Disability insurance is just as critical. How are you going to pay your bills if you're unable to work? Disability is the leading cause of bankruptcies and foreclosures. That's why I send you to Zander Insurance. They've been helping my listeners find the right plans at the lowest cost for almost 20 years. Call 800-356-1780 or visit zander.com and compare online. That's 800-356-1780 or zander.com. Savannah is in Park City, Utah.

Hey, Savannah, welcome to the Dave Ramsey Show. Hi, Dave, how are you? Better than I deserve. How are you? I'm good. I am a sophomore in high school and currently taking your Foundation of Personal Finance class. I have a question about investing. I'm a natural saver and haven't saved for college since I was five years old. Wow.

I currently have $12,000 in the bank, which is my own money. And my dad is a financial advisor and is suggesting that I should invest $6,000 of it in the MSP 500. That'd be fine. I don't think that's a bad idea. You've got some of it that way working a little harder because the bank's paying you nothing. The S&P on its worst year is going to make a little more than what the bank's paying you. Very seldom.

I mean, it could have a down year. That's possible, um i don't think it's going to keep you from going to college i think your dad's probably giving you some good advice so it would be a safe place to put my six thousand dollars in my college fund safe is a relative term okay uh is it safe to get in the car and drive to the mall yes but you could have a wreck right so um but it's safe so you know when you put money in the S&P 500, what you can do, and your dad can show you this since he's an advisor, he can show you how many years that the S&P actually lost money.

So if you put $6,000 in, what are the chances, how many years out of the last 30 years has it been down year over year, meaning is the $6,000 worth less than 6 000 uh not many and so i i you know and given that we're not putting all your money in there just half of your money i think that's a good diversification plan so it sounds to me like your dad's probably giving you some pretty good advice but if you want to learn a little bit more about it he can probably teach you and what i always look at when i'm buying an investment is I look at the track record. And when I say safe, you buy a home.

Home doesn't have a guarantee. It can go down in value. There's no federal guarantee on the value of your home, but it's a fairly safe investment because of the history of homes, the track record. You look back 20, 30, 40, 50 years, a single-family home in America has made money almost every time if you leave it alone a while. Same would be true of the S&P 500 index fund or other mutual funds for that matter. You just look back and, you know, the conservative end of the mutual fund spectrum. I would not do an aggressive growth.

I think that would be a mistake with the window you've got. But you're down on the lesser end a mistake with the window you've got. But you're down on the lesser end of volatility with what you're talking about. And look at the track record. Look at the history. That's how you always gauge an investment. Everybody, whether you're in high school or whether you're 50, you know, how do you gauge an investment? You look at the track record.

And that's how we do it. So, hey, thanks for the call. As a matter of fact, have you ever heard some of the stupid butt stuff that the government makes people say in the investing world let me give you a stupid butt thing they say past history is no guarantee of future performance is not indicative of future performance. Well, it is indicative. That's actually a lie. It's not a guarantee. But if you look at the certain neighborhood and you buy a house,

it goes up in value. That neighborhood has been a, quote, good neighborhood, unquote. Put that in air quotes, good neighborhood, meaning not it's the rich end of town, but it's gone up in value, and it's relatively crime-free, which also indicates that it's going to go up in value, right? It's a safe neighborhood. The schools are reasonable.

The shopping and the traffic is reasonable. It's a good neighborhood, right? And so it goes up in value. Of course that's indicative of its future. The only way to forecast is off of the past, unless you've got some kind of time machine. And so, you know, yes, an investment's past performance is by far, by far and away, the best way to predict its future. Is it a perfect prediction? No, because things can change.

But, you know, it is a very, you look at something that's got a, you look at a mutual fund that's got a 30-year track record, and the same management team or same management style is there, then that's a good, you know, you've got a good safe plan that you're looking at. You don't have a guaranteed plan. By safe, you mean guarantee, then you're probably never going to do any investing, and you're probably going to struggle to build wealth. Daniel is in Ames, Iowa.

Hi, Daniel. How are you? Hey, not too bad, Dave. How about yourself? Better than I deserve. What's up? So my question is based on that money talk and life talk that I've just had with my new fiance. And so we're just kind of getting all our ducks in order and trying to feature plan. And so we've got a few expenses coming up.

So obviously one is a marriage and a wedding. And then she just got into grad school. So she's going to be going back to school for her master's in social work. And then just so it turns out, I also got into the master's program that I was looking at, which is in human computer interaction. And so I've got about $30,000 of debt. She's got like $2,000. And we kind of estimated our annual save rate would probably be around $40,000 per year with our income. And so we just kind of added it all up. And our plan is to eventually move back to be closer to our family in Los Angeles. And so we're thinking it might take you know maybe

two years just to save for down payment for a house or you know just moving expenses from there so it looks like we're out about four to five years and so is that throughout that time do i need to stop all my contributions to my 401k um are we doing everything correctly okay well what yes you need to stop contributions 401k right now um and how are you going to pay for grad school uh cash flowed so good that's good i'm really really happy i found it and when is the uh when is the wedding well we and we haven't really nailed down a date because of this. We don't have a lot of money saved. I've got about $18,000 and she has about $2,000. Okay.

Well, you definitely got enough to get married. Well, and so I have a little bit of padding there just because I am in outside sales and I don't really own a personal car. So for whatever reason, if I were to leave my company um i'd be able to dude we're talking about getting married okay that that trump's buying a car that you don't need right now and may not need ever so um you know that you get married i mean you don't have to spend the whole 18 000 but you're gonna have money to do a basic wedding and because i don't want you start paying her bills or her start paying your bills when you're not married.

That's a dangerous scenario, any more than I would if you just had a roommate and you said, hey, I'm going to start paying some of his stuff. No, you don't do that. That sets you up for failure in the relationship. It sets you up for all kinds of problems of the relationship and what ravels. You just don't want to do that. So I'm scheduling the marriage as one of my first priorities in the financials if i'm in your shoes okay now once i've done that you know

budget a wedding we'll just make up a number 10 grand okay and we're gonna have a ten thousand dollar wedding we're gonna get married i'm gonna buy a ring for a thousand bucks or two thousand bucks or whatever and you just budget that out okay now then then i got a cash flow school and uh we got to combine these households, which, by the way, is also going to lower your costs for operating the households if you combine them. And in a marriage scenario, the costs are even lowered even more than shacking up, by the way, because insurance, all kinds of things you can combine when you're married

that you can't do when you're shacking up. You have to keep individual everythings, and so it's just more costly. So anyway, that all lines up. We're married now. Then we're going to go through school debt-free, and we're going to build an emergency fund. We're going to live on a budget. We're going to work the baby steps as much as we can. When you're both out of school, you should be able to build a down payment

and restart your retirement savings, your 401K savings and so forth at that point pretty easily and then decide to make your move. And when you make the move to L.A., there's nobody that says you have to buy the first day you're there. You could rent for a while there and establish yourselves in your careers there and then save up in that process. So saving up for the house in L.A., way down the list, but just prioritize these things. What's first? What's second? What's third? Again, if I'm in your shoes, the wedding is first, the ring's first, then the wedding.

And then I'm going to, you know, walk down these things in order, put together a plan, combine our finances and combine our goals, and then just prioritize. When are we going to get to each thing? This is the Dave Ramsey Show. One Dental is a company I've been telling my listeners about because I know these guys will save you money at the dentist. One Dental is a dental savings program that allows you to go to one of over 158,000 dental practice locations nationwide and save on things like cleanings, dentures, root canals, crowns, and even orthodontics. Here's the really cool part.

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Matthew is with us in Orlando. Welcome to the Dave Ramsey Show, Matthew. Thank you, Dave. Sure, what's up? Unfortunately, I was in a car accident last week, and I expect the insurance company is going to total out my car. I'm about 15 years old, and I just rolled over 200,000 miles. So hopefully, hopefully I'll get maybe about $2,000 based on what I've looked at online my wife and i are in baby step three we have three months of expenses and savings which is about thirteen thousand dollars i'd like to get

that to a full six months because i'm uh we're a single income household so i have uh two questions the first is would you buy a short-term beater for about $2,000 to $3,000 and continue building the emergency fund? Or would you buy a more expensive car, probably somewhere about the $6,000 range, that we could keep for several years? And then the second is, in FPU, you recommend waiting overnight before making a major purchase. Is there a point where you have enough information to make a decision in one day? Oh, yeah. Or do you all? Oh, yeah, definitely.

On the last part, yeah. Overnight means we don't decide to buy a car and buy it at the same visit. We've not even been thinking about buying a car, but we drop by the car lot and look at one and buy it. Okay. That's not waiting overnight. But if you've been studying and thinking about and looking at cars and you know what you're after and you know what the prices are and you you know tried to buy one and didn't get it and this is the third one you're trying to buy

uh no i don't wait overnight on that i buy it on the spot okay i appreciate that clarification because the decision has been over a period of weeks. It's not an impulsive decision. You know, it's just you've been building up to it, and you're ready to pull the trigger. You have all the information and kind of have a feel for the market and that kind of a thing. I probably would buy the $2,000 car, and then I'd probably upgrade from that maybe to better than a $6,000 car with cash after I got my emergency fund in place. Okay. Well, thank you. My wife and I really appreciate what you've done.

We've taught FPU three times, and our church is going through momentum this year, so we really value your opinion. Very cool. Well, thank you very much. All I'm doing there, just to give you further clarification, is I'm just putting you right back where you were before the wreck. Okay. I understand. Yeah, that's where you – what you you right back where you were before the wreck. Okay. I understand. Yeah, that's where you – what you would have done had you not had the wreck would,

you would have moved up to an $8,000 or a $10,000 car with cash after you got your emergency fund done. Am I right? Yes, that's true. So we're just right back on the program. The wreck is just – means you're driving a different beater than you were driving before. That's all that matters. And it's not for much longer because you're on your way. You're almost there.

I mean, it's like by Christmas you're probably in a better car, right? Hopefully so. Yeah. What's your household income? It's about $93,000 with overtime. Yeah, you're cooking, man. You're cooking with gas. Good for you, man.

Well done. Well done. And thank you for leading the Financial Peace Class, too. Michelle is with us in Tampa. Hi, Michelle. How are you? Good. So glad to talk to you.

I respect your opinion. Thank you for taking my call. Thank you. How can I help? I'm kind of in a dilemma. I'm trying to decide whether I should sell my house or keep struggling along, I guess. I owe $154,000 on my home. I have $17,000 in credit card debt, and I also have $20,000 in a car loan. I'm a bartender, so it's seasonal. I make between $40,000 and

$50,000 a year. I was a single mom for many years. That's probably why I dug this hole. And my daughter is in college now, so I need to help her a little bit. What's the house worth? Well, I just had a realtor look at it, and he wants to list it for $249,000. Okay. Not counting all the financial stuff you're facing, if everything was pretty smooth financially, let's say you didn't have any debt except the house.

Do you like your house? Yes, I like my house. I've been there a long time. But you're just at the point you're ready to get out of debt. Yeah, and I also feel like I should fund my retirement account more. I only have $82,000 in my retirement. I agree. I would sell your car. the car yeah yeah it's the

thing in your whole financial story that is glaringly doesn't make sense right it's like it's half your freaking annual income in a car and that car payment is 600600 a month, isn't it? No, actually it's $315. Oh. Yeah. You got a deal. Okay. Low interest. Yeah.

And spread out longer. Exactly. You're going to be in debt forever. Yeah. I would get me a $10,000 car and get it paid for as fast as I can in your situation and keep your house. Uh-huh. Houses go up in value.

Cars go down in value. Houses help you create wealth and stabilize your house houses go up in value cars go down in value houses help you create wealth and stabilize your in and stabilize your your budget cars don't do that cars destabilize everything i like cars and i like having a nice car and you do whatever you want to do but you call me and ask if i woke up in your shoes i'd get out of that car get me into a ten thousand dollar car and then i'd get it paid off get those credit cards paid off as fast as I can. I'd be working triple shifts to get that done. Because if you had no payments but a house payment, your life would be okay.

You'd be heading in the right direction then. You'd be able to, you know, help with college and fund your retirement and get your emergency fund in place. If you didn't have the credit card payments, the car payments, you could do all that. And you get yourself on a budget. You're not on a budget right now. You're not making your money behave. And I want you to start all that. And you get yourself on a budget. You're not on a budget right now. You're not making your money behave. And I want you to start doing that. But that's what I would do if I woke up in your shoes.

Thanks for the call. Maureen is with us in Tallahassee, Florida. Hi, Maureen. How are you? Hi, I'm good. I have a question. I hope you're doing well. Better than I deserve.

How can I help? So I'm in debt from mostly student loans, and I'm looking to get a new job potentially that will pay me more to help pay those off. And I'm wondering if I should go ahead and spend the money to have someone write my resume or help write my resume? No. Okay. Resumes almost never are the reason.

No, I've never read a resume and went and hired this person. Okay. There's no magic dust for resumes. You need to put the basic information on there, and then you need to find a way to get your foot in the door with the organization you want to work for, somebody you know, somebody that you know that knows somebody that works there, or play soccer with a kid of somebody that works there. I don't care.

Get your foot in the door. And what is it you're wanting to do? What kind of career? Right now, I work in IT, and I hate it. I hate it. I hate it. What do you make? I'd like to go back to some sort of either customer service or quality assurance training. I've always been really good at those things, and I don't have any official training

because I went to school for something that's equivalent to, what is it you say, German polka history. Yeah, what's your degree in? I never quite finished because I got in over my head with my student loans. What were you studying? Art history. Good. And now you're in IT and you make what? I make $37,000 a year.

Okay. All right, good. And how much student loan debt do you have? I looked last night, and it said $72,000 is what it's grown into. How old are you? I'm 35. I was an ostrich for pretty much the last year. I would pick up a book, and I don't have a particular one to recommend,

and I would read some articles online about how to write a resume and how to properly communicate what it is you want to do and why it is you're able to do that. My art history background, my art history education combined with IT background sets me up beautifully to make the next move here into QA. And it actually does. And so because QA is all about, you know, the eye and watching and looking at the customer experience. And, you know, is this, does this stuff, does this thing work? Can we break it before we put it out in the market? That's what QA is, right?

Right. And I actually did, not officially, but I did some of that before I got into IT. Okay. Same company. I just moved up. Then just say that and just say, you know, my experience includes this. And, you know, all you're trying to do with a resume is get somebody to talk to you. And there's no magic fairy dust that makes them want to talk to you.

I'm the boss. Give me the information. I need to decide if I want to talk to you. That's all a resume is. And it's 1% of the hiring process. 1%. No, I would not pay someone to do that. I hope that helps.

This is the Dave Ramsey Show. Elizabeth is with us in Fort Wayne, Indiana. She's in one of our foundations in personal finance. High school classes there at Columbia City High School. Hi, Elizabeth. How are you? Hi, Dave. I'm good. How about you? Better than I deserve.

How can I help you today? I'm calling from my personal finance class, and they're wondering what happens to your debt if you pass away with no relatives or heirs to take responsibility for it. It does not get paid, and the heirs are not responsible for it, even if there are heirs. So let's say that your mom and dad died, and they were $100,000 in debt, and they did not own anything. You, as their heir, do not inherit debt. You don't take up the debt, even if there is an heir. The only way the debt gets paid is if they own enough stuff to pay the debt. So let's say your mom and dad passed away and they owed $100,000,

but they owned a $200,000 paid-for house. Well, that house would have to be sold to pay those debts, and you would only get the difference. But you cannot be held responsible personally for the debt. Their estate is the only thing that stands good for their debt upon them dying so that's why it's so stupid for these banks to give an 85 year old a credit card does that make sense yeah so you see the difference though yes they do okay so they're what they own stands good for what they owe, but the heirs don't.

And even if there aren't any heirs or there are any heirs, the bank just simply does not get paid. So sometimes when I'm on the air here, I talk to someone whose dad passed away. He was 80 years old. He lived in an apartment, renting, didn't own anything, and had $40,000 worth of credit card debt. That $40,000 worth of credit card debt simply does not get paid. That bank lost that money because, honestly, because they loaned it to somebody they shouldn't have. Hello? I mean, because he didn't have any assets, and, you know, when he dies, they don't get paid.

And so they were stupid for loaning him that money. But that's the business risk that that bank took by loaning him that money. They're the ones that lose the money. Not you and me. It doesn't cost you and me anything. It doesn't cost the public anything. It costs the company that is owed the money. They're the ones that lose the money, the bank.

Okay? Okay. Thank you. I'll tell Mr. Ambrose, thanks for teaching your class, okay? Yep. Very cool stuff. All right. Well, tell Mr. Ambrose thanks for teaching your class, okay? Yep. Very cool stuff. All right. Thanks for calling in.

If you didn't know, our high school curriculum, Foundations in Personal Finance, is now taught in over 42% of the high schools in America. That's pretty wild. Four out of ten classes, four out of ten high schools in America are teaching our class. That means if your high school is not teaching our class, you're fairly weird. You should be teaching our class or you'd be weird. And by the way, don't you all wish you knew this stuff growing up? Hello.

Monica is with us in San Antonio, Texas. Hi, Monica. How are you? I'm doing well. Thank you for taking my call. Sure. How can I help? So I'm on well. Thank you for taking my call. Sure. How can I help? So I'm on your program.

I'm just starting, and so I'm trying to get part-time jobs. But really I'm calling in about my mom. So she and my dad have always been in debt. It's not a strange thing to them. And so I haven't had a chance to tell them because they actually live in another city. And so, you know, having a part-time job and won't be able to visit and such, I've been trying to find the opportunity. But she let me know that she had ordered me some shoes.

It's all these catalogs in the mail and they offer credit. And so I'm telling her I don't want to accept this gift because it was purchased on credit. And I'm trying to explain to her how I want her and my dad to be debt-free. So I guess the question is, should I accept these shoes as a gift, or, you know, I don't want to be her parent and tell her how to send her money, but at the same time, I feel like they've been very irresponsible during their life, and I want more for them. And she says they're working on it, but, you know, she keeps doing things like this. How much are you under 25?

I am not. How old are you? I'm 31. 31, okay. And so what amount of debt would you guess your parents have? I honestly have no idea. They just were able to um sell their house they had refinanced i don't know how many times so i was really surprised they came out even um because they relocated to um in with my brother and so i was just uh surprisingly even able to

break even like i said um i have no idea it's not something we really talk about, and so we didn't talk about it growing up. Okay, so how often does she buy you something? Not too often, I suppose. What do you mean, once a month, once every six months, once a year? Probably once every six months, I'd say. Okay. And it averages like the cost of a pair of shoes? Well, so she likes to buy things that are a little bit, I guess, out of our price range,

something that I wouldn't normally buy for myself. Like, I'm more conservative. I like to buy things that are maybe like $25, I think $50. You know, is my limit where I would feel comfortable spending for a shoe. She probably spent more. Okay. But she's not spending $2,000 on you every six months. She's spending $200 on you.

Probably something like that, yeah. I wouldn't worry about it. I'm not going to make a federal case out of a $200 expenditure. Your mom has bigger problems than $200. Definitely. Okay. And so when you make a federal case out of the $200, then what you do is that. Now, if you're out shopping with her and you're walking down the mall and you go, Mom, I'd really rather you don't do that.

I love you guys, and it would mean more to me that you get out of debt and you start working real conservatively with your money than you buy me a gift. I appreciate your sweetheart wanting to buy me stuff, but, Mom, I just really would rather you didn't today. And just if you have the opportunity in person. But, like, you know, just snubbing her and sending something back in the mail and making a federal case out of it or something like that, I want you to maintain your influence with her and increase your influence

and have this conversation repeatedly but not with you know i refuse to accept any more gifts and you know and i would just go mom i'd rather you didn't and then with if you're with her in person make a bigger deal out of it but that way you can with body language and tone express love to her rather than condemnation in other words mom i don't want you to do this because i love you not because i think you're an idiot and i wish you quit buying me stuff you know you got to be careful that that tone doesn't come off that way you're not doing that but when you're not doing it in person you have more of a chance to be misunderstood in the communication and so i want you to set some, but be very careful how you set them so that you maintain influence with the people you're trying to convert.

You have the hardest conversion, relational conversion possible at your fingertips. For children, grown children, to talk to their parents and get them to stop doing something is the most difficult direction of a relational conversation to get people converted to do anything, persuaded to do anything. And so, you know, I've got grown children, and, you know, I appreciate them and I love them, but I also remember changing their diaper. And so it's tough for them to have credibility with me on some of these things. They have to really work to have credibility. And I work at listening to them i want to be respectful but i mean you know i've got a lot of experience and so you know it's just tougher to listen for parents listen to kids that's what you're facing thanks for the call

ashley is on facebook they will paying my taxes online give the government electronic access to my checking account um if you use your checking account, they will withdraw the money from your checking account. But I don't mind people having electronic access to your checking account. I have never told you to not ever have electronic access to your checking account. The only time I'm talking about that is with collectors, where you're dealing with a bill, an outstanding bad debt, and you're dealing with an adversary. A collector is an adversary. They are not your friend.

Now, the IRS is not your friend either, but the IRS is not known for just randomly coming in and taking money out of people's checking accounts. Collectors do that all the time. I have lots of stuff automatically come out of my checking account. Lots of my mutual fund investments every month go in there automatically. All of my bills are paid that I can pay automatically. All the utility bills and anything else that I can do put on autopilot, and I don't have to think about it.

That way I always get all the discounts, and it's automatically done. I'm never late. And so I have a ton of people that have electronic access to my personal checking account, but no one that I'm in an adversarial relationship with. I'm in a fight with. And when you're dealing with a collector, you're dealing with a fight. None of those people should have access to your account because they lie, cheat, steal. You know, they're just not good folk.

That's what I'm saying. This is the Dave Ramsey Show one of the top five most downloaded podcasts last year. To get your daily dose of motivation and inspiration, subscribe today.