The Ramsey Show - App - How to Build Extraordinary Wealth for Retirement (Hour 3)

Episode Date: September 10, 2018

The show about you

🎵 Live from the headquarters of Ramsey Solutions, it's the Dave 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. Open phones at 888-825-5225. That's 888-825-5225. We're so glad you're here. Thanks for hanging out with us. And we're going to start off this hour with Bob in San Antonio, Texas. Hey, Bob, how are you?

Dave, I'm doing great. It is a real honor to talk to you. I've been wanting to do this for years. I'm honored, sir. How can I help? Well, I have about $76,000 of extra money. I'm debt-free, everything except for my mortgage. I don't owe money to anybody except for my home mortgage. I've even got 15% going into my 401k every month, and my son's college is about half funded already. So I've got this sum of cash, and I'm trying to figure out the best thing for it. I've got about a $181,000 mortgage. Okay. Well, what we teach folks to do is do what you've done.

We follow a process, and whatever step you're on is where we throw the cash. Baby step one is $1,000. You've done that, saved. Two is debt-free other than the house. You've done that. Baby step three is an emergency fund of three to six months of expenses. You've done that. Baby step four is emergency fund of three to six months of expenses you've done that baby step four is 15 of your income going into retirement you've done that

so we're working our way right up the steps here baby step five's kids college is half done and six is the mortgage so you got five and six left to do and i would throw the money at those things um how much how old is your child he's 20 He's a sophomore in college right now. Okay. And so what do you need for him to finish school? How much more money that you don't have? How much of the 76 do you need to put in the account for him to finish? Probably another, I'm estimating another $35,000. Okay. Put $40,000 in that account and put the other $36,000 on the mortgage. On the mortgage. Okay.

I'm 57, and I've only got about $79,000 in my 401K. Okay. But you're putting 15% of your income in there, and now college is done. 15% now, yes. Now college is done, and any other money you can find out of your income or anywhere else, we're going to throw at this mortgage until the mortgage is gone. As soon as the mortgage is gone, you're going to start plowing even more in. So what is your household income?

$105,000. Okay. So, I mean, if you save $15,000 a year for 15 years, you're going to be okay nest egg-wise. And that's about what you've got left to work, give or take. Okay. But you're going to save more than that because you're going to have that mortgage paid off long before you retire and you'll be able to put even more aside. So you'll end up with a net worth in excess of a million dollars when you retire.

If you stay right on the path I'm giving you and you should have, it,000, $800,000 or more in your mutual funds at that point. Your 79% plus 15% will grow to that. So do 15% of your income, slow and steady, into good mutual funds. Get the match. Put it in Roth. When kids' college is done, check. Throw $36,000 at the mortgage. That leaves us $146,000, I believe it was, to go on there, give or take,

or something about like that left on that mortgage. How quick are we going to knock that out? You'll knock that out probably in about five years would be my guess. And then from there, you know, we're not going to be limited to 15% anymore. We're going to max out everything in sight, and that will put the icing on your retirement cake. So very, very well done. Hold on, I'm going to send you a copy of Chris Hogan's book,

Retire Inspired, number one best-selling book, and it'll show you the steps. Baby steps are in that book and my books as well, but that'll show you how this applies to your particular situation. George is in Frederick, Maryland. Hi, George. How are you Frederick, Maryland. Hi, George. How are you? I'm doing wonderful, Dave.

It's such a pleasure to talk to you. How are you today? Better than I deserve. What's up? Well, I have a retirement question, but before I get to that, first I want to thank you for everything that you and your team have done. I was introduced to you about, not personally, but to your book and your FPU classes about two and a half years ago.

I taught my first classes. I went through it myself. And in about 10 months, my wife and I were able to become debt-free ourselves. Very cool. I've taught three classes since then and continue to teach so that I can stay in touch with the program itself. So thank you so much. Thank you.

Absolutely. So my question, I'm going to retire in 10 months. My wife and I are wanting to move from Maryland to North Carolina, and we want to build a custom home for ourselves, our dream retirement home. And I don't want to go into this with a mortgage, but when we sell our house here in Maryland, we're not going to have enough to cover the expense of building the house we want. So a quick run of numbers here. I'm going to have a pension of approximately $70,000 a year.

I've got about $762,000 in a deferred comp account. We have another $451,000 in IRAs, and I also have available to me a drop account, which will be fully funded when I retire, with approximately $238,000. Way to go. Well done. I'm looking to pull out a... What's that? I said, well done. You're a millionaire. Way to go. Oh, thank you. Thank you very much. So how much is this house in North Carolina?

Well, we don't know yet. I'm talking with the builders in the past. I'm going to assume it's going to cost me about $550,000 to build. We already owned a lot. What will the House in Maryland bring?

After I have an existing mortgage right now with approximately $50,000 left, it'll be a little bit less than that, obviously, in 10 months when we sell. So I'm going to say between $400,000 and $450,000. Well, you got almost all of it out of that, so you're going to put, what, $100,000 out of your $1.4 million net worth in pay cash for a house? Sure. Okay.

Definitely. I was thinking up to $200,000 max. Yeah. Because, you know, I figure construction costs always tend to run over, but you don't think that's going to be an issue? No. And give her $100,000 to furnish it with and shut up. You got it, man.

You did it. How old are you? I'll be 51 when I retire. Okay. Well, you may have to think about where we're pulling this money from to avoid the penalties, but I suspect you're probably – I mean, you did it. I can afford the deferred comp without penalties because there's no age restriction from the deferred comp.

Right. Okay. You'll just have the taxes on, that's all. But your tax rate will be fairly low because your income will go down, of course. So, yeah. And then the next thing you've got to do is figure out what you're going to do for your encore because you're only 51.

You're not going to fish for the rest of your life. Right. I know that I'm going to work somewhere, because I do want to cash flow college. We have an additional $160,000 in mutual funds that's earmarked for our two-kids college. Man, you've done so good. Well done. Congratulations. Man, that's awesome.

Wow. The other one of those everyday millionaires starting from nothing. I'm talking net worth just under $2 million. Did you all do the addition while I was doing it? Well done, sir. Touchdown. Touchdown, baby. Woo-hoo.

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And lots of things going on. Rachel Cruz is rather busy. You can check out everything that's going on with her on YouTube, of course, her YouTube channel, RachelCruz.com. And a new video series has been launched, and it's become very popular. We're on episode 12 now, I think, of The Rachel Cruz Show, and a big, big YouTube hit. Congratulations. Well, thank you so much. We've had such a fun time doing this whole show, so I'm glad that people are loving it.

Well, the team has worked really, really hard, but the numbers of viewers are coming back, and the response has been astronomical. Y'all are just having fun. Well, it's great, because it's kind of a whole different format than what we've done in anything like here in Ramsey Solutions. So the whole set and the whole show and it being on YouTube and Facebook, getting that delivered that way is so easy for people to access. And, yeah, I mean, we've had a lot of fun.

We have great guests on. We have great tips and segments and inspiration and stories and everything. Everything you need when it comes to your life and your money is on that show. It's a little lighter and a lot more humor. I mean, I'm pretty funny on here most of the time. You're so funny. Most of my stuff

is sarcasm and that way, but y'all are just having like real human fun and it's pretty cool. Yeah, it's great. I mean, yeah, it's a little bit less.

We get into the weeds sometimes. I mean, your calls on this show obviously are very specific to people's situations and I can get deep into 401ks and all of that, which is very interesting and wonderful. So we'll hit some of that stuff. But a lot of the things are like, how do you live your life every day, take control of your money

and create a life that you love? Like how do you stay in this game with your family and put the blinders on and not compare yourself to everyone else to everything from how do you grocery shop on a budget because food is the number one budget buster for most people including myself here at the cruise household and so yeah so how do you do life well and uh we just did a whole show on getting out of debt which was so fun to to tape but this show specifically the one that's out today is all about how to plan a party on a budget and so for a lot of people you're throwing wedding showers baby showers maybe you're having people over for a football game and there's tailgating parties but

all these things in life can cost so much money so quickly and so like how do you plan for the fun things in life and not let it bust the budget so is the greek party part of the did you love my greek food well it was my it was my birthday party. And Rachel, for those of you who don't know, out of our whole family, Rachel is the one voted least likely to cook anything. She never cooks until she gets on TV. No, I don't think. And then she cooks on TV. No, I cook.

But we go over there, and it's a full-on Greek night, and you did great. Thank you. It's our favorite meal we cook. I should cook it on the show. I cooked my white bean chicken chili last episode. So yeah, it's good. That was a good party. Yeah, it was a good party.

And on a budget. And on a budget. There we go. I will say, just a little insight into the Ramsey family, Dave and Sharon Ramsey America has taken up golf. Have you told everyone this? That's a big secret. No, not a secret anymore.

Golf. So I emailed mom and dad, and I was like, mom, dad's birthday is coming up with you on the email. I'm like, hey, we have Thursday night open or Sunday night or Monday night open. What night can you guys do birthday dinner for dad? And mom was like, oh, well, we're going to be out of town Monday night, and we're golfing Thursday night. But we'll see. I was like, are you seriously choosing golf over us? But y'all didn't.

Y'all chose us. You came over and celebrated. We did. We threw you a big party. So Greek Night is not on the episode of the Rachel Cruz Show. It needs to be and it will be soon. I promise. It'll be featured.

But always to plan great parties and to celebrate people you love. But how do you do it well and not spend a ton of money and break the bank? Speaking of great sense of humor, our friend, Les Parrott, is fun and funny. Yes. And as a communicator, he's one of the top speakers, writers in the whole subject, in the whole space of marriage and making your marriage better. But he's also just funny. And so he's just fun.

He takes some really tough ideas and makes the medicine go down easy because of the humor. That's right. And you do the same thing. So we've launched this marriage and money event, and it has gone crazy. So we've actually launched a couple more of them. We're doing Rachel Cruz, Les Parrott, money and marriage. One coming up tomorrow night. Tomorrow night in Orlando.

We'll be there. Oh, that's right. You're going to Orlando. And then you're going to the happiest place on earth or whatever, right? Oh, you guys. We need another segment to talk about this. I'm so excited. I know.

It's been a goal. Taking my granddaughter to Disney. So any of you Disney people out there that you want to cut Rachel in on some deals, you can just tweet at her. But if you want to give me some extra passes or something. Just tweet at her. But we talk about in this event, though, as couples, one of the best parts of marriage that people don't do together is they don't dream. And so we always say to have short-term dreams and have long-term dreams.

And this has been, and short-term being five years or less, this has been a short-term dream of mine for probably three years, ever since we had our first baby. And every time I would talk about it. Now, she's not the baby got big enough that you can blame going to Disney on the baby. No. But Winston and I, he was not his dream. No. It was always a relationship-building opportunity moment, is what I like to say, when it got brought up because he did not want to go.

He's like, why would we spend all this money on something? He doesn't believe this is the happiest place on earth. No, he's like, why would you spend so much money on something that's for a two-year-old? All that to say, though, America, it's happening. So, yes, our short-term dream is coming true. So, you're going to go do an event. We'll do an event. In Orlando tomorrow night.

Yes. And Disney. Magic Kingdom, just for two days with Amelia. With Amelia. And it's going to be great. Baby Caroline staying home. There we go. We love her.

Well, she doesn't. She's not old enough to know what's going on. That's right. That was Winston's whole point to start with. Money and Marriage, then September 27th houston texas money and marriage anaheim california october the 4th money and marriage november the 8th phoenix arizona and then we've already launched the big one which is valentine's day all kinds of special stuff going to be happening around that one with your destination site our own nashville tennessee one of the most popular cities in the nation right now.

Great date night or great date getaway city travel thingy to come to Nashville. I don't even know what you call that. Destination. Destination place. Yeah, I know. But I mean, when you do it as a marriage date. Yeah, we can get away. We can get away.

There you go. And all these events, if you're in the area, it's a date night worth investing in is what we like to say. Because you're talking about your marriage, talking about your money. Get on the same page with both, and it's a really fun, fun night. So you can find all of that and find out about the Facebook and the YouTube broadcasts at rachelcruz.com, and, of course, at daveramsey.com. And, of course, if you want to watch the videos, it's real easy. Just go on YouTube and sign up, be a subscriber, and then you get an email in your email inbox

every time we post anything video from Rachel. But certainly every time we post one of the new episodes, which come out about every two weeks. Yes, every other week right now. Every other Monday. So this is the Monday that's on. Again, Money in Marriage is happening tomorrow night in Orlando. And closed circuit for those of you that work at Disney. Just tweet Rachel and she needs some kind of something special.

If you're a princess, and you're like, can you let me know where you're going to be? I don't know. There's secrets to all of that. But, yeah, it'll be great. Yeah, don't break character. I know. For goodness sakes. So, fun stuff.

And then, of course, September 27th again, Houston. And then we're doing the Smart Conference. Yes. And October 13th in Kansas City. That one, I looked at the report this morning. It has 8% of the tickets left. It one, I looked at the report this morning. It has 8% of the tickets left. It's almost sold out, 92% sold out.

So if you want to come to Smart Conference in Kansas City, it's the day-long event with Rachel and Les and Meg Meeker and Henry Cloud and Anthony O'Neill and Ken Coleman and Dave Ramsey and Chris Hogan. I don't know. I mean, it's like you would pay. The ticket price is nothing. You would pay for that ticket to hear any one of these speakers, and it touches every area of life all day long. It's a blast. So great. I know.

It's a fun day for sure. And a lot of, like you said earlier, though, great speakers and great content, too. You walk away feeling like you drank out of a fire hose is what we say because every aspect of your life is hit with content and it's great it's emotionally relationally spiritually intellectually overwhelming there's so much in one day it just is too much almost but um but hey we're going to give you more than you bargained for and that's october 13th in kansas city we've also got the smart conference on sale for dallas it's about 50% sold out or so. That's January the 12th. So tune in to Rachel's YouTube

specials and Facebook broadcast as well. Comes out every other Monday. One drop today. That's right. Yes. Again, all how to plan a great party on a budget. There we go. And again, if you don't have your tickets to Money in Marriage, there's a few tickets left for tomorrow night in Orlando. And if you tweet Rachel when your tickets to Money in Marriage, there's a few tickets left for tomorrow night in Orlando.

And if you tweet Rachel when you work at Disney, she'll probably barter you a ticket. I bet you could make it to you. I have connections. You could do a little trade-out. I do have connections. You could do a VIP trade-out. Or if you want to sign a book from Dave, I can get that. Oh! I just upped the ante there.

That just changed everything right there. Made the value go down. Ah, Rachel, have fun. You're going to. I know that. Thank you so much. Rachel Cruz, Ramsey personality, number one bestselling author. Be sure and check out all these different things that are going on.

Absolutely amazing times. This is the Dave Ramsey Show. 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 rip-off. 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.

And 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. In the lobby of Ramsey Solutions, Joey and Carrie are with us. Hey, guys, how are you? Hi. Hey, what's going on? Welcome, welcome.

Where do you guys live? We are from Salt Lake City, Utah. Oh, fun. Well, welcome to Nashville. And here to do your debt-free screen. Yes, couldn't be more excited. Love it. And how to do your debt-free screen. Yes, couldn't be more excited. Love it. And how much have you paid off?

We've paid off $192,392. All right. And how long did this take? 48 months. Whoa! And your range of income during that time? We started out at about $90,000 and ended up about $180,000. Man, that's a nice jump in four years.

Doubled your income. What do you guys do for a living? I work in software sales, and I'm a part-time ultrasound technologist. Very good. So you guys are killing it. What kind of debt was this $192,000? Well, Dave, that would be our house.

Oh, I'm looking at weird people. You guys got a paid-for house. Yes, we do. Oh, my goodness. How old are you two? I am 30, and my wife is 29. Wow. Way to go.

Thank you. What's this house worth? Right now, it's worth about $340,000. Unbelievable. Way to go. Thank you. Wow, wow, wow. You. Way to go! Thank you. Wow, wow, wow! You don't have a payment in the world!

No, it's weird. Amazing! So, how long have you guys been married? We're actually celebrating six years this week. Yeah. So, two years into your marriage, you go, we're going to lean on this house and knock it out. Tell me this story. Who sets up to have their house paid for by 30?

You do! But who else? else i mean what were you thinking well it was just an it was always a dream for us so i actually why i grew up well before i even received my first paycheck my dad paid me a hundred dollars to read the total money makeover so. So I just always had the dream to be debt-free forever, and I always was until the mortgage. Yeah. And for me, a little bit different. Grew up in a normal family, as you would say, and met this beautiful person. And before I asked her dad for her hand in marriage,

he said, there's three things I want you to make sure are taken care of. One, your spiritual life. Two, your financial life. And three, do you love my daughter? And he's like, I know you have a spiritual life. I know you love my daughter. However, I will not give you my blessing until you read this. He hands me your book.

I love this man. I love this man. That style right there. Of course I read it. Of course. read it. Of course. By dawn. Yeah. 24 hours later, I asked her to marry me.

That is awesome. Well, tell Dad I appreciate it. Salute. But it took. That's the thing. I mean, it stuck. Yeah. Yeah.

Absolutely. You come in, you get married, and six years later, you have a paid $450,000 house, and you're 30 years old. Yeah. How's that feel? Oh, it feels... I don't know. It's weird, you know?

It's great. A little surreal, I guess. Yeah, surreal. That's a good word. Yeah. Out of all your friends that you know that are your age, do you know anyone else that's got a paid for house? No. Nope.

Nobody that we know of. Yeah. You know anybody that's been working on it? Nobody really cares. I don't think so yeah wow does anybody know you did this out of your friend group we haven't told anyone yet until now now it's everywhere you know now 15 million people know i love it way to go you guys thank you very fun So I know we had one cheerleader, and that was Dad. Who else was cheering you on? Well, here's a funny story. Since nobody really knew, there were some hints where people thought we were trying,

because we always talk about you at family dinners. But for the last six years, we have had one car in our marriage, and now we have two kids, and we still have one car. And I ride my bike to work every day. Whoa. Yeah, it's just always worked. So I can't tell you how many times people made fun of us for one car yeah i bet i'm really ready for a second car though i bet yeah you need to go home and buy a car you really do when you get home get you a car oh my goodness because you have the money without a doubt oh wow absolutely fabulous so people are listening they're going how in the world does anybody pay off basically 200 grand in basically four years um how in the

world do you do that what was the what is it was the biggest thing but if somebody said how do you do that what do you tell them um for us it was you, just looking at the math, what was actually possible. At the upper limit of that, we just set it on auto draft. And no matter what, we knew that this money was coming out every month, so it better be there. Because that's what our payment was. You know, it wasn't the low end. And we did a 15-year mortgage. So we just really, it was like paying a mortgage every week pretty much. Yeah, yeah. So, I mean, you're at work setting goals. You said you're in software sales. So you've got, like, sales goals. mortgage so we just really it was like paying a mortgage every week pretty much yeah yeah so i

mean you're at work setting goals you said you're in software sales so you got like sales goals they really mean something absolutely i mean it's not just like this thing to hit quota and keep the boss happy this is like i i hit this goal i get to knock this much off i hit that goal i get to knock that much off it's like that has to keep you going yeah what's really fun is working on the big the big deals and knowing that when I close this, all that money goes right to the principal. Yeah, now where does it all go? It goes all to the savings for the next house.

We're going to pay for cash. Okay, that'll work. So what are you doing to celebrate? Are you doing a big trip or going to buy her a car? We're here. We all flew here with our two girls, and then we're going to spend a week in the Smoky Mountains. Oh, that's nice. Okay, very good.

And then when you get home, you've got to buy a car. Yeah. Yeah, yeah. Very good. Well done, you guys. I'm so proud of you. Thank you. I mean, that's just wild.

I mean, you're so impressive. So well done. Man, who has a paid-for house? You do. We do. Touchdown, baby. I love it. Well done, well done.

Well, we got a copy of Chris Hogan's book for you, Retire Inspired. We want that to be the next chapter in your story. And during the six years, you had some babies, and you're going to introduce us to them right quick. Yeah. And they're going to scream with us. One thing I thought you'd find interesting, Dave, is we did some math. If we borrowed money like a normal person over 30 years, we saved, by paying our house off early, over $100,000 in interest payments. Wow.

Wow. And when I did the math the other night, it blew me away. Very cool. So how old are the kids, and what are their names? We have two beautiful girls. This one is three. Her name is Cora. And then we have Reese beautiful girls this one is three her name is cora and then we have reese who just turned one and is walking around very cool you got babies about the same

age as rachel's then that's perfect good very good beautiful family congratulations thank you so proud for y'all well done all right it's joey and carrie Cora and Reese. Salt Lake City, $192,000 paid off in 48 months, making $90,000 to $180,000. Count it down. Let's hear a debt-free scream. All right, are we ready? Three, two, one. We're debt-free! Yeah!

Oh, that's how it works. Yeah! Oh, that's how it works. Oh, my goodness. How fun. 30 years old and their house is paid for. Well, Dave, I don't make that kind of money. Yeah. But you didn't make those kind of decisions either.

I'm not saying you've got to make that kind of money to win. The interesting thing, though, is that almost every time someone comes on to do their debt-free screen, during that time, their income has gone up. And they didn't get out of debt because their income went up. Their income went up because they were working with goals. And when you have goals, it draws you along. It's interesting. Dad handed her the book, and he handed him the book, the Total Money Makeover book.

This is the 15th anniversary of the Total Money Makeover coming out. We're offering some exclusive deals online at DaveRamsey.com. Total Money Makeover plus a free Smart Money live stream of one of our live events coming up, all for just $11.99. You can check that out. The Total Money Makeover audio book you can get, plus our brand-new book, Everyday Millionaires, only for $30. There's all kinds of deals over there. Check it all out.

We're celebrating the 15th anniversary of the Total Money Makeover at DaveRamsey.com. That book has been on the bestseller list for some hundreds and hundreds and hundreds of weeks now. I've lost count. We've got a spreadsheet to keep up with it. But out of that 15 years, it's spent more than 12 of those years on the bestseller list and many, many, many times number one. And that's all due to you. Thank you for that.

But the reason is, the reason you're buying it is it works. Total Money Makeover tells you how to do the baby steps on steroids. Get it at DaveRamsey.com or anywhere great books are sold like Amazon and so forth. This is The Dave Ramsey Show. Thank you. Our scripture today, Isaiah 64, 8. Yet you, Lord, are our Father. We are the clay, you are the potter. We are all the work of your hands. Henry David Thoreau said, you cannot dream yourself into character. You must hammer and forge yourself character.

Ryan is with us. Ryan's in South Korea. Hi, Ryan. Welcome to the Dave Ramsey Show. Hi, Dave. Ryan's in South Korea. Hi, Ryan. Welcome to the Dave Ramsey Show. Hi, Dave. It's a real honor. Huge fan of your show. Thanks for taking my phone call. My pleasure. How can I help? Good. I'm in need of some guidance. I'm 27 years old, and I'm living in Korea with my girlfriend. She's Korean, and we met at college.

She's really the reason why I'm here in the first place. And my question is, I've got about $40,000 in student loan debt, and I'm wondering if I should go back to the U.S. to work a job in HR for about $65,000 a year and live with my parents rent-free. They've told me that I could come back and just live with them rent-free. I'll get on their insurance plan. All I have to do is really buy a car, and I could essentially pay off my loan in about six to eight months or so. Or do I stay here in Korea and pay off my loan slowly and be with my girlfriend?

So you don't make as much there. Right. So in Korea, I make about $35,000 a year, and I've got about $1,500 a month in living expenses with rent, transportation, food, and what have you. We're planning on getting married in two years, and so we were recently talking, and she was really fortunate enough to have her parents help out

and pay for her college tuition. So she doesn't owe anything, but I unfortunately wasn't as lucky. But I've got about $40,000 worth of debt, and one of the stipulations behind us, I guess, getting married is we both wanted to be financially secure before we did end up getting married. So she wants me to pay off my loan before we end up doing that, which I think is a good decision. Now, when you get married, will you move to the States?

Yeah, we'll move back to the States together. Okay. And then you would take a job making roughly the same amount of money we're talking about, $65,000. Correct, right. And what is the two-year delay other than you wanted to be debt-free before marriage? That's pretty much it. I mean, I just recently started watching your show, and I mean, I think it's probably important to pay off loans.

Yeah? I've never told someone to become debt-free before getting married. I don't think you have to. I think you need to have a plan to fall under. You wanted to have a checkbox under the column of financially responsible. Married, making $65,000 with a plan to pay off $40,000. And actually, you'd be making more than that because I'm sure under marriage you can get a green card and she can get a job doing something. And so I'm sure that uh your income

would be over 65 000 and paying off the 40 would be very very quick the only difference in your scenario was you wouldn't have free housing because you wouldn't be living with your parents but so what um so i you know the way i answer questions on this show ryan you can do whatever you want you're obviously a bright guy you're 27 you're going to make your own decisions uh if i woke up in your shoes, what would I do? How long have you all been dating? Four years. Okay.

If I woke up in your shoes, what would I do? I would get married very, very quickly. And I would move to the U.S. and take the job and pay off the student loan debt as a married couple. I do not think that's irresponsible. I think you're responsible. Now, if you were to get married and you'd known each other for two weeks and you got married and you didn't have a plan to get out of debt,

instead you had a plan to go deeply into debt, then I would call you financially irresponsible. But, you know, you've got a career field that's reasonable, good career field, identified. What is her training in? What's a career field that's reasonable, good career field identified. What is her training in? What's her career field? Well, her degree is in graphic design. Okay.

So she'll be able to land something. She works for it. I'm sorry? She'll be able to land something making money in the States as soon as you move here after getting married. Right. Yeah. So you're going to have $100,000 income. I would not wait two more years.

I would just get married, get your green cards. I don't know how the immigration stuff works. You probably know more about it than I do. But I would get married, and as soon as you can legally, both of you, come to the States, I would come and get those big jobs and pay off that debt, and then you're going to have a great life. And it would just be that simple. I wouldn't do all this hopscotching around, you know, in two more years.

Goodness gracious, you've been dating for four years. It's a long time. So, yeah. Allison is with us. Allison is in Redding, Pennsylvania. Hi, Allison. How are you? Hi.

I'm good. How are you, Dave? Better than I deserve. What's up? Well, thank you for taking my call. My husband and I actually in August just started going through Financial Peace University, and tonight is our eighth class out of the nine, and I can't wait to tell everyone I talk to you.

They're going to be so jealous. Well, I'm honored. I'm honored. How can I help? Well, so we are in baby step number two, and we have about $60,000 of debt to pay off. And so far, just really with using that every dollar budget and really being more aware of where our money is going, we've already paid off about $10,000. So we're making a really great stride. The 10 included two student loans and one credit card. And we're about halfway done on my husband's cost. Great. Yes. Thank you. So what came up though for us is I have a 401k that I've been investing the minimum in since I started working and I'm 30 years old and my husband has a pension. Um, the same thing, he's been investing the minimum in his pension. Um, and what came up

is it turned out that at my work, I also have a pension that I'm actually embarrassed to say I did not know about, but I received some information in the mail, and I called about it, and I have a pension that I can't contribute to, only my employer contributes. And there's about $17,500 in it. Now, cashing it out at any time, they said I would get a 20% penalty. No, that is not correct. If I cash it out before I'm 59 1⁄2. No, that's not correct.

Allison, that's not correct. There's a 20% withholding if you cash it out. There's a 10% penalty plus your tax rate. What's your household income? Our household income is $130,000. Okay, so you're in a 35% tax bracket in 2018, and then you have a 10% penalty. You would be hit for 45%. And so that's kind of like saying, Dave, I want to borrow money at 45% interest to pay off my loans.

That would not be wise. No. We keep the pension where it is. Okay. Or you roll it to... I wasn't sure. We were thinking maybe we withdraw it. No. You keep it where it is, or you roll it to... I wasn't sure. We were thinking maybe we withdraw it. No.

You keep it where it is or you roll it to an IRA, one of the two, and put it in some good mutual funds. If you're vested in it and you can roll it, I would roll the 17 into an IRA. There's no taxes on that. We don't tell folks to cash out retirement. I would always stop investing. And it doesn't sound like you've done that. I would stop investing in 401ks, minimums or anything else, until you get out of debt.

And temporarily, we stop all retirement, and we completely focus on the debt snowball in baby step two, listing your debts smallest to largest, pay minimum payments on everything but the little one, attack the little one with a vengeance vengeance and work your way right down that list. And as soon as all that debt's gone, then we build the emergency fund in baby step three. Baby step four, we restart our retirement savings and retirement investing, which is 15% of your income going into retirement. But the baby steps are clearly, we tell you to stop all investing temporarily and never never cash out retirement because of the penalty see folks they are required to withhold 20 in taxes on you if you don't do a

direct transfer rollover but that is not your tax amount that's just the withholding amount you're going to get hit, in her case, another 25%. So that about puts this particular hour of the Dave Ramsey Show in the books. Our thanks to James Childs and Kelly Daniel in the booth. I am Dave Ramsey. 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. Hey, it's Blake, Chief Production Officer for the show, and here's a little tip for 2018. Go download our revamped Dave Ramsey Show app from the App Store. We're always listening to your feedback and adding new features to make it even better. Check it out.