The Ramsey Show - App - How to Find Affordable Term Life Insurance (Hour 3)

Episode Date: May 29, 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 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. Thanks for joining us. Open phones at 888-825-5225. That's 888-825-5225. Nate is on the line in Phoenix.

Welcome to the Dave Ramsey Show, Nate. Hey, Dave. How are you, sir? Better than I deserve. How can I help? Hey, I've got a question that I feel like I should know the answer to. I've been listening to you for like 12 or 13 years, and surprisingly, I don't know my own answer. Okay.

We'll try. So I own my own business, and I'm trying to figure out, first of all, I'm on baby step four, four, five, and six. And I'm trying to figure out if I should be doing 15% of my gross or my net. So that's, I guess, question one, but I've got kind of a follow-up to that. Okay. Gross before taxes, not gross revenues. Okay. Your taxable income, not after-tax income.

So when I ask someone what their household income is, they tell me before taxes typically sometimes or they'll say after tax either one and i'll convert it back while i'm talking to them if you've been listening have you heard me do that so if you if you say i make a hundred thousand dollars that means you your business made a profit of a hundred thousand dollars but you hadn't yet paid your federal income tax and that would be 15 of that number is what we're recommending in Baby Step 4. Okay. So that part I was on point, so I thought that was correct. So my follow-up is, so based off of my income, 15%, I can't get to 15% because I'm maxed on all of my so we we have fully funded um simples for my wife and i and we have fully funded

um our rough that we have basically done a back door so with that we still have room to go and i don't know how to get there because as far as i know the only thing above so you put 18 you put 18 19 000 in your simple? Yeah. Okay. And your wife working for the business as well? Yes. Okay. So you put $38,000 in there, right? Correct. Okay.

And two backdoor Roths, so another $13,000, so $41,000. So you're making bank, baby. Yeah, it's right. And it's, yes. Such problems to have. Right, exactly. So what are you making, like 400 grand? Yeah.

Yeah, okay. Good for you. That's awesome. That's absolutely awesome, man. Good for you. Well, here's the thing. You're not going to go broke saving $45,000 a year. You you're gonna be a millionaire just doing that very quickly right that's pretty substantial savings and just those two government accounts the simples

and the roths and you can set the simples up as roths too i think can't you uh no i i don't i don't think so um i think you can you might want want to check on that. But I may be wrong. That's a side nuance in the discussion. Okay. But what can you do after that? You've maxed out all that's available to you. It's that simple. In terms of tax-protected retirement plans, the only other thing you could do to get to 15% would be to just invest in some mutual funds and what i do there and i'm in the same boat you're in um is i actually use for my shorter term investing no load index funds because i'm not investing for the long term i'm

going to roll that over into real estate after it gets enough in there okay so i'll take just an s and p 500 fund because it has a low turnover ratio. Even if you don't go that route, look for low turnover ratio. And here's why. Here's what that means. The turnover ratio is how many times they sell the stocks inside the mutual funds in a year. So if they had a 50% turnover ratio, that means they sell half the stocks in a year, which activates all the capital gains on those stocks if you own the mutual fund, and it's not in a retirement account, okay?

And we're not in one. We're out in the cold here that we're talking about. So if you had a low turnover ratio, meaning they sold almost none of the stocks a year, like 3% turnover ratio, okay, which an index fund is an easy place to find that, like an S&P 500, it'll have a 3%, 4% turnover ratio. That means that the stocks are growing, and they're not activating the capital gains because they held them. It's like buying an individual stock or a rental property.

If you bought a share of stock for $50 and it goes up to $70, you don't pay taxes on the $20 until you sell it. And that's all this is. They're not selling it, so you're not paying taxes on it. So you, in effect, have tax-deferred gain, and if you hold it at least a year, it's going to be capital gains rate, which in your case, in my case, is 20%. So if I'm saving, then when I have enough,

because I do buy real estate. I'm in real estate. Okay, yeah. What I've done is I just use that account, and when I get like a couple hundred grand in there, I'll go buy a property. Okay, and do you pay any sort of – when you pull that out, do you pay taxes at that time? Yeah, you'll pay capital gains on whatever you pull out

if you've left it in there at least a year. If you didn't leave it in there a year, it's going to be ordinary income on your gain, which you get your butt kicked on that. But there's no penalty because it is a capital gain tax, and if you're over 400, it's 20%. But it's still less than what you're paying on taxes. Your taxes are 40% almost. So it's still half. Leave it in there a year. Let it grow.

And that's only on the gain. You've already paid taxes. It's an after-tax investment. There's no shelter on it at all. But if you left it alone 10 years and it went up a million dollars, you don't pay taxes on that gain until you cash it out just like if you own a rental house and it goes from 200 000 to 300 000 in value you don't pay taxes on that hundred thousand dollar gain until you cash it out and what tax people call realized versus recognized it's a realized gain but it is not recognized because i'm not activated the tax with the sale okay so you're only paying the what you were

talking about with the um with the low turnover you're only paying what you were talking about with the low turnover. You're only paying whatever your capital gains would be only if it's turning over during that time, other than that you don't pay anything until you cash it out. Yeah. Okay. And if you held it at least a year, your taxes on the gain are only going to be 20%, not 40%, like your income is. Gotcha. So it's a great deal.

It's a great deal it's a great deal and i use that tool all the time to save up to buy a piece of ground or buy another office building or another piece of property or something and that's my my real estate thing and consequently what's ended up happening is i've ended up with more money in real estate than i have in mutual funds just because i've it's gotten oblong over that direction but it's kind of fun it's cool i love real estate so it's easy for me to do that and if you want to just leave it in there if you like mutual funds better you just leave it in there let it grow that's okay too but at least you've still got tax deferred growth effectively because it's a capital gains type growth and you're not paying taxes on the until you cash it out and when you do it's only at ordinary income that's better than any annuity

product out there because annuity products when you cash them out are all's only at ordinary income. That's better than any annuity product out there because annuity products, when you cash them out, are all taxed at ordinary income. So this is a really sweet strategy. And when you're killing it like you are, man, way to go. I'm so proud of you. Great job, man. Obviously doing a great job in the marketplace. Very well done. This is the Dave Ramsey Show. This is big news, guys.

You need to stop and listen. The Fed decided not to raise interest rates. That means you've got a small window of time before rates rise again. Here's the deal. Most people are paying too much interest on their largest expense, their home. So you're freaking crazy if you don't take 10 minutes to call Churchill Mortgage right now and see if they can save you money before rates rise again. A mortgage through Churchill could save you thousands, or better yet, reduce

the time until you're debt-free. Can you imagine how it would feel to no longer have that payment looming over your head every month? Just go to ChurchillMortgage.com or call 888-LOAN-200. Their team of experts will give you more clarity about your options and more peace knowing you're saving significant money in the long run. Call 888-LOAN-200. That's 888-562-6200 or churchillmortgage.com. thank you for joining us america this is the dave ramsey show we're glad you're here sarah is in the official the ramsey baby steps community there's one official one that we do that's on facebook and it's a private community but you can get in we'd love to have you the ramsey baby steps community she says should i take out short-term disability

while i'm on baby step two no i don't buy short-term disability insurance uh if you get into a short-term thing you're going to work it out you just like if you have a car transmission go out while you're in baby step two you're going to work it out. You'll stop your Baby Steps temporarily. You know, you'll scratch together income, and you'll fight your way through it. But I'm not going to take on the expense of short-term disability insurance. Short-term disability should be covered by your emergency fund, but, of course, you don't have that fully funded yet. You correctly ascertained that while you're in baby step two but uh just the same i take that risk just like i take the risk of your heat and air going out or i take the risk of you losing a

job or i take the risk of you or you take the risk i don't uh of your um transmission going out you have to fight through those things dustin is on facebook i'm 36 years old with a pregnant fiance. Would Dave Ramsey choose a 20 or 30-year term life plan? I always recommend 15 to 20-year level term. 30 almost never makes sense because life changes. And it would be very concerning to me that you're not married at this point. You're doing everything else. So you said fiance. So I don't know how quickly the marriage is coming, but that's a part of the equation as well. So I'm assuming it's coming fast since there's a baby on the way.

But anyway, yeah, 15 to 20-year level term. Here's what's going to happen, Dustin. Term life insurance is so inexpensive, and I've been doing this show for coming up on 30 years, and almost every year term life insurance has gotten cheaper because the insurance companies are so competitive now with things like zander insurance where we come when you go to zander insurance they compare you across a bazillion different companies and so all those companies are competing with each other and it's driving price down and what they're doing

is they used to back in the old days is they would use actuarial tables, which are the statistical probabilities of death. They would use actuarial tables from the 1940s and 50s to calculate what they would charge you for life insurance. Well, in the 40s and 50s, people died younger. There was polio. There wasn't penicillin, know this kind of stuff right and so average death age has increased every year meaning people are living longer and we're healthier in general we're an obese culture but we're healthier in general and so you you know the actuarial tables are reflecting the longer the newer actuarial tables are reflecting the actual uh death probability which it means it

costs less to cover a 26 year old now than it would have in 1940 because they're living longer and thus the cost of the insurance is going down and they're so competitive that it's forcing them to use very modern statistics and um reinsurance provisions and all kinds of other things that they're doing to get the cost down and the risk down to them so they can write these things cheaper and cheaper and cheaper so you're you're brand new married brand new baby 10 years from now you're probably going to get another life insurance policy anyway. So the one you've got is probably not going to last you for 30 years. You're probably going to add to it.

And so I've bought 15-year policies five or six times since I got married. And so they end up equating to 30 years worth but i never bought a 30-year policy the only reason you need that is if you lost your health somewhere along the way and we're not insurable but if you'll buy 10 to 12 times your income at zander insurance on a 20-year level term if you have a young young family, you wouldn't do 15-year. You'd do 20-year. And then plan on adding another policy as your income comes up and your kids' number goes up and that kind of thing later on. You're going to be just fine. And it may be one year I was five years older and the same amount of insurance was cheaper.

One time when I went to get back to buy it because of what I'm talking about here. And so you're going to end up experiencing that as we go along unless the culture just gets considerably sicker, which we're not. We're so health freaks that it's crazy out here right now. Organic everything, right? All right, Mike is in Denver. Hey, Mike, welcome to the Dave Ramsey Show. Hey, Dave, how are you?

I just have a question about some land I actually inherited and kind of what to do with the investment process with those funds. Okay, you sound like you're in a barrel. Can you talk directly into your phone, please? Sure, can you hear me? Much better, thank you. Okay, you had inherited land and what? So I got about 44 1 a half acres from my grandfather.

And my fiance and I are completely debt free. And we're thinking about getting a house. And I was kind of just wondering what your thoughts are if we do a 15 year mortgage. And then I'm going to have some funds left over. So I'd like to maybe direct that into another investment property and just take any extra cash flow and just put that right to the principal and just, you know, very conservative, just build equity and not try to make any cash flow from it because I'd rather direct it. I think I heard you say that once, you know, than just have it sitting there.

Or should I just put it all towards the house? All towards the house. Just all towards the house? Get your home paid off and then buy your investment properties. Okay. Yeah. It doesn't sound as fun to you, I know, but it's a lot less risk. And you're a young married couple.

You get your house paid off, man, there is peace in the valley. It is a nice feeling. And then you've got money flying around everywhere because you don't have any payments. And quickly you'll be able to save up and buy your rental property for cash. Yeah, so just put it all towards the house and then just save, you know, just whatever the emergency fund is. Yeah, so you're telling me you're selling this 44 acres and using that to buy a home for you and your new bride? Yes. Okay, what's 44 acres going to bring?

I'm hoping to get just under $200,000 or around $200,000. How old are you two? 27 and 28. Awesome. So you're going to buy like a $200,000 paid-for house? I mean, we're in Denver, so the real estate's a little more expensive. So we're looking at something, you know, maybe like the high threes and just doing a 15-year, getting that payment as low as you can.

What's your household income? It's conservatively around $80,000, but, you know, there's a range. We're both self-employed so it could be better well i don't yell at people for taking out 15 year or less mortgage but you got 200 000 bucks in your hand and they do have 200 000 other houses in denver i've been there um i know it's an expensive market and i know that that is below the average house price in denver the average house price nationally is 218 in denver it's about 300 okay yeah and so that's average that means it's right in the middle median household in median house price so that that's not putting

you anything fancy um i'd be tempted to buy something cheap and save up 100 and then move up in a few years and then start my rentals but uh if you're gonna do this take that 100 and i would you put on 15 but dude y'all need to pay that off like it's a car payment or something. Let's get it done. Yeah, that's the plan. We have to know we're debt-free. Yeah, let the blessing of your grandfather's inheritance make you debt-free by the time you're 30. Like that.

Like $30,000 a year for three years, and you're done with this out of $80,000. That's doable. And then you're 100% debt-free, and you're making $80,000 to $100,000 by then and then you're 100 debt free and you're making 80 to 100 by then and you're like 30 years old you own a 300 000 paid for house by then it's worth 350 and um you're making 100 you can save like a crazy person and pay cash for your rentals and that's what i would do so think of it that way that's what i meant by car payment think of it and paying it off in three years or something. You can put it on a 15 if you want.

But don't lollygag around on it and then go buy your rental while you still got a mortgage. Don't get lazy on this. Your grandpa was not a man of debt. And he's a man who left $200,000 to his grandson. Follow your grandpa's model. This is the Dave Ramsey Show. Thank you. Guys, did you know we have over 150, about 165 actually, developers on our technology team here at Ramsey Solutions. Yeah, we're a tech company. Every day our tech gurus get to see how the code that they write really changes people's lives.

For that matter, millions of people's lives. I mean, you want to write code for something that matters? Well, we're currently on the hunt for several key developers for expertise in mobile ruby java if you're a top-notch object-oriented developer who wants to work at a company voted one of the best places to work in Nashville 11 times, then check out DaveRamsey.com. Oh, and we don't work 80 hours a week here. We go home at night and see our families. Most developers, they put them in a box and try to kill them at some of these places.

The hours are horrendous. You get paid well, but they try to kill you. We don't do that. Occasionally, we get something going on. We have to work a little bit but 99 of the time we want you home with your family in the evenings this place looks like a ghost town around 5 30 and that's the way we want it so find out about all the jobs available at davramsey.com we're hiring for more than just developers we hired about 200 folks last year. Probably hire about 250 this year. And all at DaveRamsey.com. Just click Dave's Hiring. There's our tab on the right-hand side of the front page

and you can find out everything that's going on here. But particularly mobile, Java, and Ruby. Be looking out for us. Alright, Trina is with us in Oklahoma City. Hi, Trina. How are you? Hi, Dave. I'm good. How are you? Better than I deserve. What's up? Dave, I've been listening to your show for probably about two months

now, and I am wondering how I can get my husband on board to begin the baby steps. I have mentioned it to him several times. Several people I know have gone through your program, and I am very interested, and I'm just trying to get him on board.

I wrote down a lot of our numbers, and I'm sick of being sick and tired. Are you the one doing the bills? It's probably half and half. He pays half, I pay half. No, I'm saying who's writing them? Are you writing the checks? Yes, I write the checks. Yeah, that's what I mean by doing the bills, write the checks.

Okay, so I'm not saying who's contributing. You're both contributing, obviously. How long have you been married? We're fixing to celebrate our 17th year yay good for you guys that's fun okay well um the thing is this uh you probably figured out like i like i have and my wife has that most of us guys are a little thick we do not get subtlety you kind of have to just say it my mind reading skills suck right okay and i'm sure you think you've said it but what i want you to do you got you guys got kids yes okay when the kids are in bed asleep i want you to turn off the television and sit down at the kitchen table and have a talk about life.

Right. And go, honey, I need my man to step up beside me here and look at this with me. I'm not asking you to become a nerd, but I think we work too hard to be as broke as we are, and I think we can do better. And I need you to look at this with me for a minute what's happening is is you got you got the bug bit a little bit listening to the show or somewhere somebody gave you a book or something and you've been doing these drive-bys with him these verbal drive-bys where you just dropped a thing dropped a thing dropped a thing and he's not gonna get it where you do that you're gonna going to have to have to sit down with the TV off and the kids asleep,

looking into his eyes going, this matters to me. This man loves his wife, and when she does that, he's going to respond to that. Right. Okay. Well, I mean, I have not done it like you said. You're right. You haven't, and he hasn't heard you. I have told him.

I'm like, we need to do this. This is something important. I know. I know. But you're not hearing me. You're not hearing me. Okay? Here's the thing.

Sometimes in communication in marriage, you say something, and for you, out of a scale of 1 to 10, it's an 8. And the circumstances and the way you say it conveys to him a two right he's hearing one point he's hearing 1.2 right now and you're carrying around an eight going why can't he hear this and it's the circumstances and the tone when my wife sits down and says this is very important to me i might might disagree, but I'm going to listen, and we're going to have a real intellectual marriage discussion about this. I really think we need to look at this. This matters to me. That's different than we're driving down the road.

I'm dodging traffic. The radio's on, and she says, oh, I heard this guy on the radio. I think we ought to do that. That doesn't work. I don't hear that. That's just more white noise. Right. I'm just telling you how guys' brains work.

We're pretty simple animals. Right. So keep it simple, stupid. Yeah, and not cluttered. Real clear. Right. Okay. I have a second question. I am not familiar with the baby steps other than just what I've heard from your show.

And I have sat down and I have crunched numbers. And I don't really know, like, where to begin. again um i mean i've included every little bitty thing i can think of right down to my daughter's dance tuition every month good good um well here's what's happening you're trying to figure out you're looking in the rear view mirror to do your budget and that's a good place to get information but the proper way to do your budget once you gather that information and so it's good that you gathered the information the proper way is to look out the windshield we need to say okay before this coming month begins here comes june before june gets here i'm going to figure out what june's income is take home pay and i'm going to spend it on june's bills every dollar has an assignment before June gets here.

And then we are going to agree to stick to that. And then we can start with the money we find in the budget making some progress. And that's where you do the baby steps. So what you'll do is go to everydollar.com, download the EveryDollar app for your phone. It's free. You can put it on your phone. You can put it on your phone and put on his phone and you guys can talk about it that way and you can sit together and lay out your budget for june and that's a good way to start the conversation and then the baby steps are what you do when you

squeeze money out of your monthly budget and you say okay june i've got three hundred dollars left i need to give it a name okay what are we going to do with it well your first baby step is you save a thousand dollars and your next baby step is you start paying off all your debts except your home listing them smallest to largest and working them off in that order so i'll send you a copy of the blockbuster bestseller the total money Money Makeover. We've sold about 7 million of those books, so they've helped somewhere around 15, 20 million people. And if you hold on, Madison will pick up. I'll send you a copy of that book.

But you jump online and download the app, the EveryDollar app, and start putting together your budget. And The Total Money Makeover is the step-by-step guide on exactly how to do the baby steps what not to do what to do step by step it's a process book it's exactly what to do and why to do it and that's why it's been so popular because it shows people a clear plan that we can look at and both of us can agree to. With the kids asleep and the TV off, we're planning our life. Jesus said, your treasure's where your heart is. What are we doing with our treasures?

Oh, it's going to stupid stuff. Oh, we got to stop that. We need to plan our future. We want our kids to go to school. We want to retire with dignity. We want our kids to go to school. We want to retire with dignity. We want to be able to give with outrageous generosity. We want to change our family tree. None of that is stupid stuff.

But boy, we all buy some stupid stuff, don't we? This is the Dave Ramsey Show. We'll see you next time. Our Scripture of the day, Colossians 3.12 Therefore, as God's chosen people, holy and dearly loved, clothe yourselves with compassion, kindness, humility, gentleness, and patience. C.S. Lewis said, True humility is not thinking less of yourself. It is thinking of yourself less. Noel is with us in Lubbock, Texas.

Hi, Noel. How are you? Hi, how are you doing, Dave? Better than I deserve. How can I help? Hi, I just recently changed jobs, and I was looking for recommendations and advice as to where and what to do with the 401k that I have there. My new employer is offering like a Roth 401. So I was thinking about signing up for that and letting the other money work somewhere else. Yeah, exactly. You always take your 401k with you when you leave a company. So you take the existing 401k and roll it over to an IRA in good growth stock mutual funds. And then at have a broker, click on SmartVestor at DaveRamsey.com.

It'll drop down a list of the SmartVestor pros that are there in your area. One of them will sit down with you after you choose who you would like, and then they can show you how to do that direct transfer rollover, and they'll teach you what I teach you, that we suggest putting it in four types of mutual funds with long track records, growth, growth and income, aggressive growth, and international. And you want to pick mutual funds that have outperformed the S&P, and you can do that with their help. Robert is in Dallas, Texas.

Hey, Robert, welcome to the Dave Ramsey Show. Hi, Dave. Thanks for having me. Sure. What's up? So, new listener. My wife and I have been listening for a couple months now, and in looking at the baby steps and everything, we've kind of been doing some of those, but out of order.

So, we've got the $1,000, because we actually have about $20,000 in our savings account and then $8,000 in cash that we use for bills and whatnot. And then our biggest debt other than our home is my $20,000 car note. And so my question is, would it be better just to pay that sucker off, like dip into the $20,000 and just pay that all off and then start to rebuild towards our 36 months, or just hang on to it and just keep making extra car payments. So the only debt you have is a car loan and your house loan? We have a little bit of credit card debt.

We have $5,000 of credit card, but your baby steps are saying, you know, tackle the most extreme ones first. So we're talking about the car first. No, our baby steps tell us. Baby steps. Let's walk through it okay sure what we teach people to do is to stop investing and stop saving until they reach that step um and so there's a reason that these are in the order that they're in because they take you

the fastest with the least risk to wealth. Okay? And they actually don't violate common sense. So baby step one is $1,000, and what we would tell you to do is any money that you have other than $1,000 that is not in a retirement account, any investments you have, any savings you have, $8,000 in your checking, $20,000 in your savings, anything else you've got a mutual fund with $5,000 in it that's not in a retirement account, anything like that, we're going to cash out and pay on all of our debts,

listing our debts smallest to largest, and pay them off in that order. That is baby step two. Once that's done, you now have control of your most powerful wealth-building tool, which is your income. A 1% savings account is not your most powerful wealth-building tool. Your most powerful wealth-building tool is your income that you're giving to a car company right now. And now you're going to take every dollar you can squeeze out of the budget,

once you're debt-free, everything but the house, and build your emergency fund at three to six months of expenses. Then, once that's done, we will start or restart and we may have temporarily stopped 401k and Roth IRA investing to the tune of 15% of your income going into retirement. That's baby step four. Do you have children?

Yes, I have a two-year-old and a three-month-old. Great. Then after we're doing 15% in baby step four, we'll move on and start funding their college in baby step five. Any other monies that we find above four and five, we do those simultaneously. We're going to start throwing at the mortgage and paying off the house. Any other monies that we find above four and five, we do those simultaneously. We're going to start throwing at the mortgage and paying off the house. The average family doing this program is paying off their home in between seven and ten years.

Okay, so what that means in your situation is you need to write checks tonight to be debt-free, and you have no money. Right. That is exactly what it would turn out to be. You twenty eight thousand dollars in cash is what i heard and you have an eighteen thousand dollar car note and a five thousand dollar credit card did i hear you correctly uh no it was five thousand dollar credit card and twenty three thousand dollar oh you're exactly broke okay right we we would have just enough to be completely broke. Yeah, except you need to keep the $1,000 because that's maybe step one.

So you're going to have $1,000 left on your car after tonight. Gotcha. And that scares the crap out of you. Yeah. And don't do this. Don't do this if you're not going to play through and do the whole system. Right. Because I don't want you to sit there broke. to play through and do the whole system. Right. Because I don't want you to sit there broke.

I immediately want you to pay off that car. What's your household income? Last year we made about $125,000. This year we should be at $140,000 because I'm an independent contractor. So you're taking home $10,000 a month. So next month you're going to pay off the car, and you're going to start rebuilding this emergency fund right and by christmas you're going to have twenty thousand dollars in savings and no payments that's where you're going but you're going to be on a written budget that shows you

and your wife that you can do that to stop at the point i put you at tonight would be ludicrous. Right. I'm not suggesting that. Setting up for failure. It's just a moment in time, and every moment from this day forward, this savings account will heal rapidly back until Christmas. And so, really, the only – it's not like we're going to stay this way for 40 years. We're going to stay this way for 40 days.

Mm-hmm. You know? And then you're going to have already put back $5 we're going to stay this way for 40 days you know and then you're going to be have already put back five six seven thousand bucks because you guys are making bank right and when you start managing it with a budget and the two of you together are locking arms and saying hey we want to get to building wealth here we want to get to putting money aside for these kids college here hey let's talk about getting this house paid off we could be millionaires that's where you're heading if you follow this through and that's i wouldn't take you there willy-nilly i wouldn't take you there on a whim but i if you play through and you do exactly what i taught you to do right there you're going to be fine but it scares the crap out of you because you're human and it would scare the crap out of me because what you're afraid there, you're going to be fine. But it scares the crap out of you because you're human. And it would scare the crap out of me because what you're afraid of is you're going to stop there. And you're not.

It's just not who you are. You're too smart. You don't make $140,000 at your age if you're dumb. Okay? So you're too smart to stop there. But you've got to do the other parts. That will give you comfort is what I'm saying. When you go ahead and lay your budget out, jump on everydollar. download the thing work on it this weekend if you want i don't care

you don't have to do it tonight but the point is that's how you would apply our baby steps to the math you gave me in your situation is you are debt free with a thousand dollars in the bank and a thousand dollar debt on your on your car. And next month, you're going to have that paid off and put $4,000 towards your, you know, starting to rebuild. And by Christmas, you're easily going to have $20,000 in savings for your emergency fund, and then you're going to move right up the ladder. Click, click, click, click, click, right along. You're going to do just fine.

You're going to be great. So that's what I would tell you to do. It's what we've told millions of families to do over the last 30 years, and it's made a whole bunch of them into millionaires. Because, again, the typical millionaire pays off their home in 10.2 years, and they fund their 401K and their Roth IRAs. These are the things we found when we studied 10,000 millionaires. That's the data points.

That's how they get there. Now, that's not how you get to 100 million, it's not how you get to $100 million, but that's how you get to $5 million. And then you figure out the other stuff as you go along. So, hey, good question, man. Thank you for joining us. We're honored to have you in the listening audience. That puts this hour of the Dave Ramsey Show

in the books. We'll be back with you before you know it. In the meantime, remember, there is ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. This is James Childs, producer of The Dave Ramsey Show. Once again, you made 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.