The Ramsey Show - App - I Did Stupid on Steroids! (Hour 3)

Episode Date: December 30, 2021

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🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thank you for joining us, America. It is a free call at 888-825-5225.

That's 888-825-5225. George Campbell Ramsey, personality, is my co-host today. We'll be taking your calls about your life and your money. You jump in and we'll talk. Josiah in Tulsa, Oklahoma starts off this hour. Hey, Josiah, what's up? Hey, Dave, good to talk to you. You too, man. So my question is, I am currently a resident physician in family medicine here in Tulsa. I have a total debt of just shy of about $430,000, $415,000 of that being student loans. Good Lord. Yeah, so, but where I sit now,

I have one source already of loan repayment coming in through the Army Reserves. That can total amount of $250,000, and it's split up into increments of $40,000 per year. I'm also looking into an employment option through the state of Oklahoma and through this employer that has $200,000 in loan repayment over a four-year period, so $50,000 per year. So my question is, currently in Baby Step 2, how would I go about that fitting into the Baby Steps if someone is the majority will be paying off these loans? Should I pile up cash in the meantime while I'm going through those phases

and set it aside in case anything happens? Let's say you get both of these deals. Do they stack, meaning that you're going to get the whole thing paid off? Correct, yeah. So it would be double dipping, as I call it, in a sense. So there are separate entities. One would be coming from the Army Reserve. The other one would be coming from this program, this statewide program.

Yeah, you won't be able to finish the Army Reserve because the total is more than you need. Say that again? $250,000 and $250,000, you said, right? Yes, correct. Yeah, and that's $500,000. You only have $415,000. So the last two dips from the Army Reserve you won't get to, right? Yeah, so it's pretty much a per-year type of thing.

I know. I can opt out or in. Yeah, I'm just saying that you'll opt out. You won't need all the whole $250,000 from the Army Reserve because it comes over a six-year period of time. Correct. So what will end up happening is that you're going to be done with them paying it in about four years. Correct. Okay.

All right. Just making sure I got my head on straight. So you said family practice, right? Correct. What are you right. Just making sure I got my head on straight. So you said family practice, right? Correct. What are you going to be making? So at this job, it should be right around about $300 or so. Okay. Let me tell you the things that I normally tell people,

and let's figure out how to screw them into your weird situation. Okay. All right. Normally somebody calls me up, and let's say they've got fifty thousand dollars in student loan debt and maybe they make a hundred or a hundred and fifty okay and they say hey my job is going to pay this off over three years well i normally would tell them to be debt free a lot sooner than three years and so what i'll tell them to do in that case is i want you to put fifty thousand dollars in a bank account to sit there until your job pays off this loan for you over three years.

That way, if the job blows up, you can write a check and you're debt free. See what I'm saying? So I'm trying to figure out how to use that principle here because I really do want you to have these two entities pay off your $415,000 over four years. I want that to occur. That's an awesome benefit from both of these things, serving your country and obviously signing a competitive landscape, signing a contract with a medical outfit. Okay? So I want all that to work for you uh but i also don't want you to sit there and one of these things blow up on you for whatever reason and then you end up three years from now with still 150,000

dollars worth of debt so i i guess probably what i would tell you is let's try to get a hundred thousand bucks in savings before we call you debt free and then we'll ride this four years out and just just as a contingency fund in case something gets sideways, I don't know. Here's a weird example. This is not going to happen, but I'm just trying to think of bizarre things that have called in here over 30 years. Let's say you get into this contract with this employer. And you get in there, and there's an ethics problem. And you have to walk.

You're going to lose your dadgum license because they're just doing stuff, right? You've got to walk. Now you just lost $250,000. And you're halfway through this contract, and so you're still sitting there looking at $100,000 worth of student loan debt that's going to take you a lot longer to get through. And so I think having that extra $100 laying aside as a contingency way to step back into this, George, is going to be a way to kind of call it debt-free.

Yeah, because there's some outside forces here that he's relying on to get this debt paid off, which I don't like. But if they're surefire and he can stack up this cash and then he goes, oh, all right, this thing's actually going to work. They're paying all this debt off for me. And now he's got a pile of cash to continue the baby steps. I like that positioning. As long as you stay in the reserve, I think that's one you can depend on.

But I think the rough-and-tumble world out here in the real world is stuff happens, and these employment deals blow up. And I don't think it will. I think he'll be okay. But you can't – you have to – where people get themselves in trouble with money is they run out the best case scenario, and that's the one they believe. And that's the only way it works is if it all works. And so you've got to run out a scenario where if it doesn't work, that also works. See, that's the beauty of being debt-free living on a plan

living on less than you make that works in good times and that works in bad times overall as an overall principle it's the only set of overall principles borrowing up to your eyeballs works if you want to buy a bunch of real estate nothing down as long as real estate goes up and all your tenants pay ha ha ha ha you know it doesn't work right and so you got to have a contingency plan in a worst case scenario then if your plan works in a in a best case scenario in a worst case scenario you got a good plan yeah that's good battle planning if we're going to use an army reserve yeah that's i like that analogy and he's in a good spot i mean this is a huge pile of debt so if he can get this thing wiped out in a few years, he's going to be in a great spot.

But, man, that's a big hole to dig out of, and it's nice to have that help. Ouch, ouch, ouch. That hurts. So now let's sidebar, because you did this in Borrowed Future. We discovered there's really about three types of student loan forgiveness that are not private, that are government. And one type, well, there's one type is private. It's kind of the type of thing he's getting into. Or if you go into an underserved area, the government will forgive in about three years a large chunk of student loan.

The second type of student loan forgiveness, the government will forgive your student loan in the event of death or permanent disability. The third type of student loan forgiveness is a lie. Public? Public student loan forgiveness over 10 years. You know, it just has not happened. You know, hundreds of thousands of applications, hundreds of them approved. Nightmare. 99% dissatisfaction with that government promise it's pretty high

not occurred it's not occurred so don't you don't count on that one while we're on this subject this is the ramsey show In an uncertain world, being a good steward of your money is more important than ever. While some circumstances can't be controlled, there are items within your budget you can take charge of, such as your health care costs. For nearly 40 years, Christian Health Care Ministries, or CHM, has provided a budget-friendly means of sharing for medical bills when our members need it. Learn more by visiting chministries.org slash budget. That's chministries.org slash budget. Christian Health Care Ministries is a Ramsey Trusted Provider. No parent ever wants their child to experience the panic of being unprepared for an emergency. But teaching your teens how to be smart with money

can feel like a really big job. Hey, we got your back. With our digital self-study courses, you can rest assured that your teen will know the right way to handle money, no matter what curveballs life may throw them down the road. Best part, no instructor is needed. Take your teen through the stuff we teach.

If they've got a tablet or a computer, they're ready. Text SELFSTstudy to 33 789 and learn more about all the different courses that we have available for middle school and for high school text self-study to 33 789 our question of the day comes from blinds.com find out for yourself why blinds.com is the number one online retailer of custom window coverings. You get free samples, free shipping, and with the new promos they run every month, you'll save even more. Use the promo code RAMSY to get the best possible deal. Today's question comes from Mandy in Arizona. As a Christian, I think God expects his followers to help the needy at whatever point they are in life.

Baby step seven implies that you recommend giving only after one has paid off all debts and are comfortable. I struggle with not being able to give while I'm paying off debt. Can you help clarify this for me? I think Mandy's got some bad information. I don't ever remember a part where you said don't give. Nope. Is that part of the baby steps nope matter of fact we say tithe from day one for a christian an evangelical christian

and a tithe is the baseline for your giving for those of us that are people of faith that's a tenth of your income to your local church and we start there um now while you're in baby step two uh your family's broke and you take care of your own household first or you're worse than an unbeliever is scripture that's what the bible says so you need to get your family out of the ditch so during that two years you don't need to be giving away tens of thousand dollars now if you find somebody hungry and you want to buy a five dollar meal i'm there nobody's ever going to be mad at you for that that's not the point i'm not only mad at you period but the thing is um you know giving all the way through tithing all the way through

from the day you start our program is what we teach uh some other giving minor giving in baby step two as the holy spirit you know leads but mainly in step two, you need to be getting out of debt. Now, once you've done that and you're on to baby steps three, four, five, six, seven, your giving should increase. That's living like no one else so that later you can live and give like no one else. Now, what we're talking about at baby step seven is outrageous generosity. I mean, over-the-top stuff that blows your mind. Money where you get to the point that you give away more in a year than you used to make and that's what we're aiming at is this crazy levels of generosity

and you know you can get there and i lots of our baby step millionaires have gotten there um you know but you're not not giving right now on baby steps three four or you're on four five and six trying to pay off the house house will be paid off in six months or so and you're not not giving there, right? Yeah, you keep giving all the way through. And then once you get to seven, we just dial that thing up as much as we want. We can get crazy with it. And you unpack this masterfully in Financial Peace University.

In the final lesson, Outrageous Generosity, you walk everyone through this process and you get them dreaming. And that's what I love is you get them dreaming about what could it be like when we have so much money, so much margin left over in our budget, then we can give outrageously. And so you go way beyond the tithe at that point. You can make crazy things happen. You can do wild offerings at your church. You can help your community. You've got tons of stories in there of ways that people can do this. And that's where things get really fun. so you know uh mandy you george is right you got bad information uh you didn't get have didn't have good clarity so if you've been through financial peace university you'll see very quickly we're teaching the tithe from day one all the way through as a minimum baseline for an evangelical christian off the top before you do anything else

first fruits and it's not a legalism thing. It's a matter of the instruction from Scripture, and it's a matter of your heart and setting up. You want to build the giving muscle in your spirit. And then above that, minor giving here or there until you're out of debt and have your emergency fund in place. And then when you break through baby step three and you start putting 15% of your income away,

even though your home is not paid off, you're not in trouble anymore. But when you're in Baby Step 2, you're in trouble. You're in bankruptcy looking for a place to happen, and that's most of America. And so you've got to be very, very focused to protect your own household there. But in no time have we told you to stop giving ever in 30 years of doing this have I ever told people to stop giving.

Haven't heard it. And Mandy, if you're out there listening, go check out Lesson 9 of Financial Peace University, Outrageous Generosity. If we have your info, we'll get Kelly to give you a free 12-month subscription to Ramsey Plus, and you can go watch that video. But that's going to really lay it out,

and it's very clear. We want you to give the whole way through. We just want you to go wild in Baby Step 7 because you can. There you go. Put you in a different place. Sylvia is with us in Los Angeles. Hi, Sylvia. Welcome to the Ramsey Show.

Oh, my God. Hello, Mr. Ramsey. I have a question. I did stupid on steroids. We did purchase a car in June. Please don't get mad. $60,000. And we gave of that $5,500 with the self-tax and $6,000 down.

And we're looking into, like, we tried to send it, give it back to the dealer. They wouldn't take it. And we went to CarMax and we're looking into losing like another, um, $2,000. And I don't know if it's okay. And right now my husband just got on disability again because of this back. So we're on the unsure i feel stupid losing that money but then i see stupid all over around the car when i see those stupid purchase we did what do we do what do i do yeah what's your what's your household income sweetie 120 that's good news okay Okay. Yes. Yeah. Yeah, run it back over at CarMax and give them $2,000 and get out of it. Yes.

Okay. Thank you. Does that feel free? You feel free now? Yes, it does. It does because I keep back and forth. Every time you look at it, you can't catch your breath. Yes. forth that every time you look at it you can't catch your breath yes i even drive it like oh my god i was scared and just stupid just stupid all around you don't want stupids looking

at you in the driveway every day that's going to be a long life so yeah you need to get rid of this you need to get rid of this thing you need to get rid of it quickly while while you still can while while the getting is good do you you guys have another car? Okay. Yes. My husband has a truck. It's paid off. It's worth $20,000. But, you know, we need two cars. You know, LA, we just need the two cars.

And I did have a car. It was reliable. Do you have any money? Yes, we do. Thank God we do. How much money do you have? We have $25,000. Okay, good.

Take $10,000 and go buy you a car that's reliable that you need just to get around with. Then you've got two paid-for cars, and you make $120,000 a year, and then you clean up whatever other debt you've got, and you put your emergency fund back in place and you're going to be fine. So, George, the question now we have to ask you, Sylvia, what allowed you guys to do this and what's going to keep you from doing it again? I think we were always going back and forth,

back and forth of getting a car. And in my mind, I thought, like thought like probably will pay it off in a year you know that year gap but then i guess when i we went to the store the dealer it was like i don't i don't even know what to say babe i it was just stupid and i knew it listen i'm not picking on you but i'm not picking on you but here's the trick i've done a lot of stupid stuff in my life my goal is to figure out when i did stupid stuff why i did that so that i never do it again that's why i'm asking you this not to shame you i'm just saying you know you guys need to sit down and talk about and go are we really committed to living our life without payments what What's going to protect us?

What's going to be our little personal behavior insurance policy to keep us from doing this again? Yeah. And, Sylvie, I want you to check other places. The market's so hot right now. You can check Carvana. Check out all of Vroom, all these websites, and see if you can get a better deal on this. But Dave's right. And based on our parameters, you can't have your 50% of things with wheels and motors

have your household income tied up in this stuff. So you guys got too much car, but you can get out of this thing pretty quick and never do it again. Yeah. Because there's just, you know, you're just over and over and over. I wish I hadn't done it. I wish I hadn't done it. So figure out why you did it and never do it again. So that you never have this kind of a feeling in your stomach again.

It's called regret our favorite thing to do on the ramsey show is debt-free screams our next favorite thing to do is do debt-free screams in the lobby of ramsey Solutions on the debt-free stage. But our mostest of mostest. Is that a word? It is now. I just made it up, and I own the place. Our mostest of mostest favorite Debt-Free Scream is our own team members on the debt-free stage in the lobby. The only negative is it lowers productivity in the company because everybody wants to come out and watch their friend that they work with do their debt-free scream. So there's a bunch of people out here not working right now watching this debt-free scream, which is absolutely awesome because they're cheering their own along.

So Tyler is with us. Tyler Green is a paid media specialist with Ramsey. Just got here, been here about 90 days. And, of course, Ashley is with us as well spouse so way to go guys how much debt did you pay off paid off 46 119 dollars and 92 cents dave love it and how long did that take you took us seven months seven months all right and our rule is we do not ask the team members their household income because that's not fair in front of all their team members yeah well and inappropriate and all those kinds of things.

And I'm very inappropriate, if you didn't know. But we're not going to be today. So way to go, guys. Thank you. What kind of debt was your $46,000? So it was a little mix of consumer credit, car debt, and we had purchased a vehicle that we needed to pay off. Thankfully, we actually cash flowed college, so we didn't do that route.

But we did buy a lot of things we shouldn't have bought at that time. Okay, so you're a new team member for the last three months. Right. But you started this seven months ago. Correct. Tell us the story. How did all this unfold? You want to go ahead and start?

So going back to kind of when we, our story starts when we first got married, and we were gifted FPU by a family friend and we didn't know anything about you. My parents did, but we were gifted FPU and we were like, oh yeah, that's cool. That's fun. But we didn't do anything with it. We didn't go through the class. We didn't listen. Of course not. We were hoping for like a couch or something usable. Yeah, a toaster oven. I mean, come on. My parents ended up convincing us to pay off some debt. So we did get out of debt early on in our marriage. How long have you been married?

Six and a half years. Okay, all right. And then we decided to start going through the course, going through the program, but we did it separately so part of our dysfunction was he would listen to the audio tapes in the car and i would do something at home but we were never together when we did it together we're together so we were in and out of debt for quite a while and never really never one of his own one of his hot one of his call yeah exactly oh wow we weren't on the same page like we understood the concept we understood it we were on wanting debt, but not well enough because we weren't on that same page. So we were in and out of debt for a while. And then fast forward to...

Shortly after you get pregnant. So we bought the car and then we had Titus. I left, who's our oldest, I left teaching. I was a teacher. Left teaching, stay at home with the kids and start my own business and we we started to realize we needed a few things in our life one of the things we needed was a car for her and we didn't actually have uh the plan in place we weren't following our money we weren't paying attention to the dollars that were going in and

coming out and we just thought we needed a few things so when when she got pregnant with our second child, Micah, we decided to go out and buy a car because we thought that was the smart thing to do. And we realized pretty quickly that we were definitely spending more money than we were bringing in. And I remember coming home one day after looking through the numbers, which was part of the problem was we didn't communicate much at all. And I actually looked at her and I said, if we don't do something drastic in the next two weeks, we're not going to have any money to put food on the table. Or pay rent. And here, I was, at that time he came home, I was eight months pregnant. Oh yeah, that's nice. Yeah, well played. Worst timing in the world. Yeah. Panic a pregnant woman. What's wrong, man?

I was in, so at that point I was kind of in denial because I'm eight months. I had this whole idea planned up. And I was in denial about, no, we're going to be fine. Like, we can make this work. We don't need to change things because we were still not so much on the same page. And I said, okay, well, then what? It's like, I think we need to sell your car and go down to one car. And I was devastated.

Now, mind you, we had just bought this car about three months earlier. Oh, of course. So we were doing all the things wrong. And the biggest issue that we had was that we hadn't communicated up to this point about the money thing. We were making one big decision after the next and just getting ourselves further into the problem until we had to make a drastic change because we put ourselves in a drastic situation. And when we decided that we needed to go ahead and do that, we decided to get really intense. And our story is really one of intensity because we had been Davish for so long in our lives.

We thought if you can manage the payments, if you can manage the small things, then you're doing okay. You're getting ahead. You're making do. And that's not the way to live. You're constantly looking over your shoulder for a debt collector. And I remember we were shopping around to try and pay off some of this consumer debt. And I remember one of the credit card lenders who was potentially going to help us kind of try and consolidate or find a way to do that, told me, if you don't take my offer, then you're going to not be able to pay off this debt for like five, six, seven years. You're going to be in this for quite a long time. And I told him, I think we can find a better way. And that's when we started to dig into the plan

and really find out that there is a way to do this the right way. And it was on your shelf all along. We dusted it off and decided, you know what? We should have done this for the beginning. Traded it for a toaster oven. Look at you. I know. So we sold off that car, and we decided to make a few other changes in our life. We actually downsized and got out of our house, moved in with her sister at that time to really convince. So shortly after Micah was born, we moved in with my sister and cut all of our expenses by so much, and anything extra that we had. So that extra that we were using for just surviving, we put all of that towards the debt.

Anything extra that came in. You went hardcore, scorched earth, and did it in seven months. Yes. $46,000. Yeah. Like nothing. Move in with a sister, everything sold. You're not doing nothing.

Nothing, nothing, nothing, nothing, nothing. Yeah. So if we were invited somewhere to a birthday party, we hadn't budgeted in a gift. We either went without a gift or we didn't go. And the thing was, Dave, is we went without a gift and ate free. Yeah. So if we were invited somewhere to a birthday party, we hadn't budgeted in a gift. We either went without a gift or we didn't go. And the thing was, Dave, is we go without a gift and eat free. Oh yeah, absolutely. Anytime there was a free food, we were there. But when we started to look at the numbers, I didn't see a way forward to being debt free for at least three, four, five years with the income and the shovel that we had. We were underwater the entire time. And

what's amazing is when we decided to get intense, there was supernatural provision that just showed up. And, you know, we all just went through this Corona season and there was extra income that was given around by the government, which was unexpected, but we had a plan in place and we knew where we were going to put it. And we started to attack this thing. And as we did, as we got more intense, we found that there was more income coming into our hands, more resources coming into our hands. And we had a choice to make. Do we go and spend it on the car or do we go spend it on nice clothes like some of my friends used to do? Or do we go out and eat for a change because this is unexpected income? Or do we put this towards our debt and really stick to our guns on this? And that's what we did. And that

really allowed us to make a lot of money. So how does you working here come into this story? So shortly, shortly into this process, we started to really look around and say, we need, we need to find something else to be doing. I'm not really liking where I'm working. I wanted something to do with my life that was meaningful, that was on mission, that was passionate. And we had a recruiter that reached out to us from this place right around the time that we were about to become debt-free. And it was really, really interesting because I thought you had to be debt-free to work here. So I thought I was going to disqualify myself if I hadn't had any debt. So we, through the interview process, were hustling hard to get

to the finish line because I thought if we were going to come to the last few interviews, it was going to be like, so are you debt-free or not? And I didn't want to get to the finish line. Because I thought if we weren't going to, you know, if we were going to come to the last few interviews, it was going to be like, so are you debt-free or not? And I didn't want to get to that point. That's fun. We found money in the couch. I mean, I swear I found stuff in the couch. Sister-in-law's couch. Yeah, we found it wherever we could.

But right before the half day in getting here, we actually made our last payment. Oh, man. Wow. And I remember looking at her in the kitchen and actually telling her, hey, we're debt-free. Like, we're completely debt-free. Oh, man. We don't have to worry about this no more.

I'm so proud of y'all. Welcome aboard. Thank you. There's people like you guys we want on the team. That's intense. And just to put the word out, you don't have to be debt-free to work here. Wow. That's intense.

Very cool. And you brought a bunch to cheer you on. We did. That's amazing. We cool. And you brought a bunch to cheer you on. That's amazing. We did. Well done. Tyler and Ashley, Titus and Micah, $46,000 paid off with great intensity in seven months. Count it down.

Let's hear a debt-free scream. All right, ready, guys? Three, two, one. We're debt-free! We're debt-free! That's awesome! Yeah! Family tree change. Good looking family.

Honored to have them on our team. Rock stars, man. Very cool. This is the Ramsey Show. Our scripture of the day, Proverbs 12, 25. Anxiety weighs down the heart, but a kind word cheers it up. Maya Angelou said, if you must look back, do so forgivingly. If you must look forward, do so prayerfully. However, the wisest thing you can do is be present in the present gratefully.

Go, Maya. Some classics. All right. Kelsey is withfully. Go, Maya. Some classics. All right, Kelsey is with us in Baltimore, Maryland. Kelsey, how can George Camel and I help? Hi, guys. I'm so excited to be talking to you. You too. So I have a question about whole life insurance.

My parents got a policy for me when I was in the crib and passed this policy on to me a few years ago. We took a loan out from it to put down on the house and, you know, just kind of knowing we never had to pay it back. And just knowing that I didn't really care about this policy. It's very small. We have other life insurance that's not whole. I'm not sure what to do to keep it active. I pay about $800, $900 a year.

Cancel it. Really? Cancel it. What about the tax implications? Do I worry about that at all? There aren't any. Oh. Here's why.

Okay. Your tax basis in a whole life policy is the total of the premiums paid in. There is no possible way that you took out of this policy more than your parents has paid in. Yeah. They're just horrible. It's a black hole for money, especially kid whole life policies. Your parents meant well. They were really sweet, and the net result was they were able to help you with the down payment on a house. Had they actually invested in a mutual fund with the same amount of money they put in this policy,

they could have just bought you a house, but that's a side issue. That's water under the bridge now. So that's how bad these things are mathematically. But anyway, yeah, you don't keep it around no it's not a pet and we can honor their intent and their heart without uh you know continuing to throw money off the bridge every day every month every year right so yeah i would just can't if you don't need the life insurance i just cancel it um if the basis does come in and they will send it to you because they'll threaten you with this it's their way of getting you to not cancel it um if the basis does come in and they will send it to you because they'll threaten you

with this it's their way of getting you to not cancel it apparently that's already happened that's where you got this information the agent says oh no you're gonna get taxed and you're like yeah it's four dollars you know but uh instead of 800 this year so i i can i i'm gonna give you a 95 probability that there's no taxes on it at all. On the 5% chance that there is, your taxes will be less than your premium this year. Okay. So, I mean, at the end of the day, when you get it all done, it's not going to – because, again, your basis is the total of the premiums paid in.

And only if you receive more than that, including loaned amount okay because the loan is is paid off as a part of the uh the cancellation and if there's anything above the loan that comes to you those two things if that is larger than the total of the premiums only then will there be taxes and it almost never is because these things really suck so bad okay great thank you so much thank you for the call. Appreciate you joining us. You know, so that is like a product from the 1940s and 1950s. It's like an alligator. It's a dinosaur that has survived into the modern era.

How do they do that? It's like marketing. It's a dinosaur because when you sell it people buy it whatever it is if you sell it enough aggressively enough people buy it um i mean gerber the baby food company still sells whole life policies to people when they get a baby so that they can go to college well let me tell you where you're going to college. Nowhere. Not with that. You're not getting in anywhere with that policy.

Yeah. Okay, because you're going to make $14 when it's all over. You're getting screwed. No. Listen, if you buy your financial products from a baby food company, it might be an issue. You're doing it wrong. Okay.

If your baby food says American funds on the outside of it you might have the wrong baby food come on don't eat it stay in your lane people stay in your lane and you talk about why this is a bad product it's trying to do two things at once it's trying to be insurance and an investment and you're saying hey there's way better ways always only one and you're always paying for both yep that's the problem so we recommend uh term life insurance level term life 15 to 20 year policy to where you're self-insured when that policy runs out and that's for adults that's for adults yeah and if you want to save money for your kids save money for your kids but there's no need for a mutual fund a life insurance policy

on a kid because if they pass away you didn't lose their income now if they get a two million dollar uh ad campaign contract with huggies because they have a cute butt that's great then sign up a life insurance policy because now you have an income there for this cute butt and you've got to take it you know you got to protect that but that's 99 of the children do not make an income that's worth insuring okay so you know this is just and so it's being used as a savings vehicle for college and that's a freaking joke so what happened was her parents paid into it their whole her whole life 20 years and she got five or ten grand out of it it's the sunk cost fallacy i got to keep this thing alive because we've been keeping it alive forever yeah it's the sacred cow we've always done it this way and this is why we will

always continue to do it this way we have no other reasoning that's it's a bad reason it's a sacred cow rule yeah brian's with us brian is in columbus georgia hi brian how are you you're well dave how are you better than i deserve deserve. What's up? So my wife and I are both active duty Army. We've been in the Army for about eight years. We both plan on serving and retiring after 20 years. My question is about the best way to save and be financially independent at 42. Obviously, we'll still do something.

But, you know, after working as hard as we have over the last eight years or so, we like to be able to, you know, volunteer, take care of the family, do whatever. So without being able to have access to traditional retirement savings venues, I'm curious if you have any thoughts on that. Well, you have Roth IRAs available to you, and you have the TSP available to you. So we're currently saving in both of those, but I just didn't want to incur. Oh, yeah, yeah. Oh, I see what you're saying.

You need some bridge money. You need some other money outside of that. Okay. Yeah, exactly. So thank you for your service, by the way. So you've got 12 years to roll and get ready. Yep. How much is in your TSP and Roths now? So right now we have about 150 between our Roth IRAs and Roth TSP. Okay, you'll be at about 600 with that plus whatever you put in.

Yeah, so we make about 150 after tax right now. We also have about 120 in non-retirement investment accounts. Some of that we have set aside to buy a new car in like two years when Miles gives out. You're still going to have a million to a million and a half at your current rate plus whatever you put in. So you're in really good shape. If you're invested in market rates of return in good good mutual funds that's where you'll roll on that so um yeah i think i think you got to look at some low turnover mutual funds they're called get with one of our smart investor pros and just set up a whole side thing that says okay i need this amount of money and let's say you build 600k in there and our 500k in there and you want to pull 10 off of money and let's say you build 600k in there

and uh 500k in there and you won't pull 10 off of it that's going to give you 50k plus your double military retirement you ought to be fine okay and on top of that you're going to have another million dollars but that's all trapped until 59 and a half and on top of that you're only freaking 42 and you probably do need to go do something and make some money just for just for fun how would you uh how would you oh absolutely how would you allocate i guess if we're saying saving 15 percent um a year would you shift the um i think you have a more aggressive plan than a 15 plan number one i want you to get the house paid for but aside for. But aside from that, you may want to put – as soon as you get the house paid for, you can go more than 15%. And I'm going to go pretty heavy over into that bridge because you're going to have – I mean, you're rocking it.

You're doing a great job. I'm going to head over into that bridge. A low turnover mutual fund is a mutual fund that doesn't have but about 5% or less of the taxes are due on the gains because they're not selling the stocks inside the mutual fund. So that's what you're looking for, low turnover ratio mutual fund. It'll keep the taxes off of you until you actually use the money, like a capital gains rate. It's a really good strategy for what you're trying to do. George Campbell, good job.

Thank you. Ben and Kelly, we'll be back 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 have a friend or family member that needs a daily dose of Ramsey advice in their life? Let them know about the Ramsey Call of the Day podcast. It's a quick hit of advice about life and money in under 10 minutes. Check out the Ramsey Call of the Day podcast wherever you listen to podcasts.