The Ramsey Show - App - I Feel Like We’ll Never Be Able To Afford a House

Episode Date: June 1, 2022

Dave Ramsey & George Kamel discuss: Klarna's decline and the predatory BNPL industry, Is it okay to put less than 20% down on a house? What to do with extra money from a 529, Pausing the baby steps before a baby comes, Cashing out stocks to pay off a house. Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6

Live from the headquarters of Ramsey Solutions, 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. We're here to help people build wealth, do work that they love, and create actual amazing relationships. The phone number here is 888-825-5225. That's 888-825-5225. Well, George, ripping people off with bad lending practices predatory lending practices even when you give it a cool tech name is no longer cool that's right buy now pay later that's what this is all about i didn't rip anyone off just to be clear here clarna here's the here's the headline from morning clarna clarna's layoff

means nothing no what's the word mean nothing nothing it's just a hip hip it means that now you're gonna pay payments when you should have not bought the shirt if you couldn't afford the freaking shirt oh my god here's what they're saying clarna's layoffs signal a broader buy now pay later slow down oh oh i so bad. There's an increase in common sense. And here's what it goes on to say. These companies are watching their rapid gains crumble. Buy now, pay later.

Giant Klarna, Europe's largest private tech firm, said yesterday it was laying off 10% of the company's roughly 7,000 employees. Wow. 700 people bit the dust. Klarna firm Afterpay, number of these startups, its point-of-sale installment loans is what it is. Last year, U.S. consumers spent over $20 billion through these services.

Now, wait a minute. The CEO says the war in Ukraine... What? Oh, that's what they're blaming it on. Soaring inflation and likely recession as reason for the cuts. I mean, the reason you're cutting your employees is because your product is not selling. People didn't quit borrowing money for their shirt on clarna because of the ukrainian war you it's a great reason double ducking goober seriously that's so lame i got breakfast this

here's from afterpay my biscuit allowed me to do four interest-free payments of $3.75 using Afterpay on a biscuit. Can you believe that? Wow. A biscuit! A literal biscuit. I was shocked. And so here's what's happening. So, Mr. CEO, it's not the Ukraine.

It's the fact that people woke up to the fact you were screwing them, and they got tired of financing their biscuit. This is why you're having to lay people off. Another study says there's an end another study says there's an increase in wisdom and common sense directly correlated to the loss of clarna 700 employees oh my god this is four out of five dentists say if you brush your teeth they won't fall out that's amazing how that works so we've been talking about this before it was cool steering people away from it we did a whole episode on the fine print about by now pay later

george was he was a he was a man i called it was it was early to the party so here's what they're saying buy now pay later companies are dealing with another threat regulation numerous u.s and u.k agencies have launched investigations into the company's potentially predatory lending practices accusing them of irresponsibly allowing young consumers to rack up debt. Wow. Wait a minute. You're saying it's bad to finance a biscuit? Is this what we're saying? It's hurting people.

They're finally realizing that. It's predatory lending. Because they try to act like the good guys. That's what frustrates me the most about this company. Your Honor, I'm in bankruptcy court today because of my biscuit problem. $375, four easy payments. First of all, that's an expensive biscuit, I've got to say. But here's what happens. Retailers can charge more for their products because the price looks lower to these young consumers who go,

well, I can fit $375 in my budget. Why not? I mean, it's almost impossible to pull something up online right now that they don't go for easy payments. And, you know, $4.22. You were around when this originally came out. I'm like, you can't afford antiperspirant? I mean, come on. Well, Dave, it frees money in my budget.

They're trying to help me achieve financial freedom. It's the Ukrainian war. It's thrown everything off. It's insane. Sorry for the Ukrainian war. I don't like it. I don't mean that. I'm not making fun of the Ukrainian people.

I love their goods. But you can't blame your company's failures on that. No. These companies, they try to act like they're the good guys in the lending industry because they go well we don't do interest we don't do all these fees we're better than the credit card companies we're not payday lenders yeah let me let me give you the principle okay 1983 okay take us back 23 years old i bought a house believe it or not for eight thousand dollars i spent twelve thousand dollars to fix it up it was pretty dumpy so i got twenty thousand bucks

in this house i sold it to a guy for thirty four thousand dollars who went and got an FHA loan. This is, it ain't much of a house. Even in 83, that's not much of a house, okay? You know what he did? He didn't get the FHA loan. His grandpa loaned him the money. He turned around and he sold this house that I had 20 in, sold to him for 30, for 50. To a guy on payments zero interest 500 down wow now you tell me that's zero interest because the appraisal on the house was 34

he sold it for 50 is that zero interest no well the contract said it was zero interest this is what Klarna does. It's a modern-day version of that crap. Okay? Just mark it up, double. Mark it up 25%. Mark it up 18%. And then call it no interest.

We're not charging any interest. How could we be doing predatory lending? Yes, you are, boys boys and girls they've all got different traps and so not all of them some of them are interest-free some of them are fee-free but if you miss a payment that is where the apr kicks up way higher than credit cards some of these are 30 apr well and they got more fees than a french poodle i mean it's fee fee fee fee fee everywhere it's just ridiculous and they're hoping and banking on the fact that you won't pay. Oh, yeah, because then they get to really get you with the late charges.

So can you tell that we're not sad that Klarna's not doing well? The reason we're not sad that Klarna's not doing well is Klarna doesn't do you well. We don't really care. All we want is for you to win. We love you people. We want you to win. We're what's known as consumer advocates. We're always going to be taking up for you, telling you that you're getting screwed here, you're getting screwed there.

Stay away from these guys. They're going to screw you. Don't do this. It's going to screw you. Don't do that. If you'll just keep from getting screwed all the time, you'll have some money. What's crazy is that they're not going after the credit card companies, these agencies, but they're going after buy now, pay later. That tells you something about how scummy these companies are and how predatory they are.

Capital One's not, you know, they've got certain levels of regulation, but these buy now, pay later companies, here's what they do. To avoid regulation, they do four payments instead of five because once you do five, now there's the Truth in Lending Act that kicks in. Whoa, I did not know that. Isn't that wild? Fun fact. Interesting information And their marketing goes after lower income

It goes after minorities And so they're starting to get wind of this And it goes after the young and stupid Gen Z If you're young and you're stupid I was just talking to you Yeah So you don't have to be stupid if you're young

And you don't have to be young if you're stupid That's true You could be either one or both But boy, if you're young, and you don't have to be young if you're stupid. That's true. You could be either one or both. But, boy, if you're both, you are a target of these people. You're the one financing a biscuit. If you're financing a biscuit, you might be stupid. If you're financing a shirt, you might be stupid. You got 17 in the closet.

Unbelievable. This is The Ramsey Show. I just saw a study that really made me sad. It showed that families owning life insurance in the U.S. was at its lowest point since the 1970s. After what we've been through the past few years, I'm just lost on how people don't make this more of a priority. How are you going to make sure your family needs are met if something happens to you? This is why getting term life is an absolute necessity. Rates have never been cheaper and the whole

process to apply is pretty simple with many companies not even requiring an exam anymore. This is why I send you to Zander Insurance and I have for almost 25 years. They'll make sure you get the right protection at the lowest cost possible and they're there for you and your family every day. I challenge all of you to make sure your families are protected. It needs to be a top priority. Call Zander at 800-356-4282 or visit zander.com. That's 800-356-4282 or zander.com. George Campbell Ramsey personality is my co-host today. A lot of people would rather spend their weekend doing yard work than talk about insurance, but here's the deal.

If you don't take the time to learn about insurance, you're going to feel like you're getting ripped off, probably because you are. You've got to learn about it. Insurance is necessary, but doing the wrong stuff is really expensive. We think learning about money should be simple or even fun. Our new five-day guide to insurance called Confidence in Your Coverage by our own George Camel makes learning about insurance quick, practical, and you'll even laugh out loud it is George. He's going to make you... I'm going to try to throw a few jokes in there.

Yeah, he's going to keep you humorous, yeah. We understand the little spoonful of sugar helps the medicine go down and all that, right? So every day for five days, Ramsey Personality, George Campbell, will walk you through a new insurance topic, unpacking everything you need to know to get the right coverage. It's completely free to do all of this. Go to RamseySolutions.com slash confidence, because that's what you need. RamseySolutions.com slash confidence.

Our question of the day comes from Blinds.com. They have a 100% satisfaction guarantee. That means even if you mismeasure, you pick the wrong color, they'll remake your blinds for free. You get free samples, free shipping, and with the new promos they run every month, you'll save even more. Use the promo code Ramsey to get the best deal. Today's question comes from Kevin in Phoenix. He says, I know you say to put 20% down

on a 15-year fixed rate mortgage, but in the market I'm in, it feels unattainable. At one point, we hit our savings goal, but by the time we saved up enough, the home prices had jumped way up. We're debt-free, and we've been renting for a few years, and it just feels like we'll never be able to buy our first home. We're trying to run the baby steps, but don't see the light at the end of the tunnel right now. Is it okay to put less down in order to get into a house faster, or should we wait for house prices to come down? Well, that question at the end there, I'll answer that first. Maybe both. We don't say you have to put 20% down, especially on your first home. We say it's ideal to put 20% down because you avoid PMI, private mortgage insurance, which is extra money you pay to protect the lender,

not you. So as a first-time home buyer, I love that you're trying to follow the baby steps. You're debt-free. You're saving up for this house. And so I'm okay with you putting less down as your down payment in order to get into this house. And yes, you probably should wait for the housing market to cool off a little bit so you're not putting 100 over asking with no inspection. Don't do stupid stuff like that. Prices are not going to come down, Kevin. If you're waiting on prices to come down, you're not going to buy a house ever. Prices are not coming down. They are

going to slow the rate at which they are increasing, though. That's what George is referring to where the market cools off. Right now, asking price means suggest you start bidding here. And we want to get out of that kind of thing. And you're probably going to see that. We've seen interest rates tick up. The market has slowed down. We seem to be moving into our second quarter of contraction in the economy. This is known as a recession. And the Biden administration seems bound and determined to create one,

so it looks like we're going to be there. And that's where, I mean, politics aside, it's just observation. And so I think you're probably going to see calming down. But we've never seen house prices go down in the modern America, like since the 1930s, except one time. And that was for about six or eight months in 2008 when the bubble burst on the housing market and it was a it was a financing bubble it wasn't a real estate bubble and so some markets uh phoenix was particularly hit uh las vegas was particularly hit a few other major cities that were super hot

they were they contracted and the prices actually went down but that's the only time i've seen that and i've had a real estate license 30 years i can't find it anywhere uh since the what the late 30s 1930s so what 100 years almost uh and so i don't think you're going to see house prices go down but we did have not it was at 2020 house prices went up 32 percent right yeah it's crazy and then in 21 they went up 14 percent and they're predicting in 22 for them to go up seven percent so we're seeing a a slow the rate of increases is less and i think we're going to continue to see that but i don't think you're going to see house prices lower. So, yes, I would buy, but don't buy more than a fourth of your income on a 15-year fix,

regardless of what you put down. And just understand you are signing up for PMI, which is about $75 a month per 100,000 borrowed. So you buy a $300,000 house, you're paying an extra $225 a month for insurance that is a foreclosure insurance that pays the mortgage company if they foreclose on you. It does nothing for you. But that's what private mortgage insurance is, PMI. So if you can put 5% to 10% down, and it's still a quarter of your take-home pay and a 15-year fixed rate. And then beat that thing down and get it paid down so you can get rid of that PMI, even after you buy. Turn around and get rid of it.mi even after you buy turn around get rid of it yeah that's fine i don't mind that um and then the other thing you can do is you could uh adjust your

desires but dave it's my dream house it's called it's a nightmare right now it's called contentment okay the dream house for someone in 1962 was 1,000 square foot, one and a half baths, one story, one car garage, one car in the driveway. That was the standard of living of the average American in 1962. It is a microwave, a towel-warming drawer, granite countertops, three-car garage with electric garage door openers, which when I was a child were only for rich people. And if you don't have one on your house now, it means you're poverty-stricken. A skylight and a jacuzzi. Ooh, got to have that skylight. That's living. A dog wash dog wash oh that's true i've seen those those are wild i mean this is standard equipment now three thousand square foot two

stories the average home in america it's gonna so while house prices have gone up dramatically since 1962 you can't young kids can't buy a house like they could in 1962. The average house price to the average income is completely out of whack. Well, the average house is completely out of whack, by the way. So there's the problem. Contentment is a big deal. So maybe adjust the expectations, Kevin, and go, hey, is there a condo we can get into so that we can get into this house sooner? Because I don't want you waiting 15 years to get into the market.

People think our advice is, well, Dave Ramsey wants you to only save up and pay cash, and you've got to wait 20 years, and you'll never get a house. That's not it. You know, and by the way, you will get a house. Because there's nothing here stagnant in the whole process. The point is, you know, no one can afford a car because the value of a car right now, a brand new car as a ratio to income versus a brand new car in 1970 ratio to income is completely out of whack. Well, the stinking car is out of whack, too. I mean, these cars are, you know, they're wonderful. Now 50,000, 60,000 is normal.

They're wonderful automobiles. But by God, they'll fry an egg while you drive to work. I've never seen. They do everything. Everything. Rachel's for sure. You don't even have to drive anymore. They'll drive for you.

I mean, and, you know, so here's the thing. I am not saying you shouldn't have nice things. I'm saying your nice things shouldn't have you. And you need to kind of adjust your mind because normal is such a high standard of living now compared to a few years ago that you cannot use 50-year-old statistics and say that the economy is completely out of whack and wealth inequality has lost, we've lost our minds, because we haven't. What we've lost our minds on is what we're purchasing. I mean, this Mastercraft ski boat that I got, it's like driving a spaceship. It is freaking incredible.

Can you get that to drive itself? Because that would be a feature. It's an amazing piece of equipment. But I can afford it. And that's the difference. You know? And, you know, you need to be able to make some money to drive a Mastercraft to pull people around on an entertainment. When you say afford it, you don't mean the payments.

You mean in full. No, I mean. In cash. God, they're fabulous. These cars? These cars are fabulous. These cars are fabulous. These houses are fabulous. But that doesn't mean you can afford it. But that hurts my feelings.

I'm really not concerned about your feelings. How long have you been here, George? This is the Ramsey Show. I'm ZShack. George Campbell Ramsey personality is my co-host today. Cheryl's in Milwaukee. Hi, Cheryl. Welcome to the Ramsey Show. Thank you for taking my call. Sure.

I'm hoping you can help me decipher on what we need to do. I'll give you a little background. We have three children. The first one just graduated from college. Second one will be a junior in college, and then third one's in high school. Now, the first one has $9,000 left over in the EdVest account. And the second one, we might be like $10,000 to $12,000 short in covering the rest of that college education. My husband thinks we should just keep it in there.

I think we should roll it. Why would you not roll it? Pardon me? Why would you? I mean, you're going to come up short on one and you got the money in the other and the other one's done? Right. And he thinks, well, you know, his money, well, even...

It's not his money. It's your money. He didn't put it in there. You did. Well, what if he wants to, you know, for his kids? And I said, well, then we'll start something up when he has kids. I'm not going to sit on nine grand and take it out of our non-existing interest-bearing savings account to pay, come up the shortfall. Absolutely.

Is that right? Yeah. Am I thinking correctly? You are. You win the argument. That's a no-brainer. We're not going to go into debt so that this kid can have it for his grandkids. He's got plenty of time to do that.

He didn't put it in there in the first place. Right. You can change the beneficiary at any time. I mean, we've been very diligent on making sure we were able to help our children come out of school debt-free. Once you did that, that's called like a miracle. It's wonderful. Go. Yeah, so you roll the money, and the other kid gets taken care of.

It was just a calculation rounding error. We round it, we roll it, and move on. And if there's a pile of money when the third one comes out, just split it three ways and it to them i'm good with that but we got to get all three out first we got to get all three out first right okay that's what i would do i mean is that what you're asking yes that's i mean like you said we are not worried about the third because the third one you know we've put more money in as our income has grown so she will have a little bit more to deal with but at the end of the day she might have extra so we would well all three of mine came out with a little bit of a surplus and i did not even it up i just let

them keep whatever was in their surplus and in my case okay but i didn't come up short on one either okay if i'd come up short i would have been the only reason we're coming up short is because she the second one's going to private so it's a little bit more okay well i mean you but everybody made that choice together you knew this i mean no one went oh she's in private who knew i mean you knew you knew she was there right yeah so yeah i mean that's just in other words you made the decision to do this when you made the decision to allow her to go that more expensive school because you knew you were going to pay for it it's just a matter of how right yeah so i pay for it it's college funds college

fund kids college are paid for. Boom. Now, next, what are we doing? Okay? I'm moving on. That's a simple answer. Yeah. That's what I would do.

529s can be transferred to any kid, adult, or any member of the family. It can be niece, aunt, uncle. Mom and dad. It's very generous. Mom can go back and get her master's with what's left over from the kids for 529 now. And a lot of people don't know, if you get a scholarship, you can take that money out of the 529 against the scholarship. Yep.

Tax-free. Tax-free. Tax-free. The amount of the scholarship. So you get a $13,000 scholarship, pull 13 out of the old 529. No taxes. No penalties. No problems.

A lot of things you can do with it. Eric is with us.ic is in wichita kansas hi eric how are you hey dave and george how are you guys doing this afternoon better than we deserve what's up hey man i've got a just a question about uh our family situation my wife and i um we have a little girl that's three i'm gonna be three in june and then my wife is expecting another little one in October. Wonderful. Yeah, we're excited about that.

But I've just got a question about we're completely out of debt. We're on baby steps four, five, and six, and just trying to figure out whether we should kind of halt those and start stacking up some cash. I'm thinking about being out of debt. I have about $1,700 a month that I can put towards pretty much whatever I need to, but I don't know if I should start paying off my house or if I should stack the cash and savings.

I just wanted some advice on that, I guess. What are you stacking the cash for? For our second baby. You have an emergency fund? Yeah, it's up $20,000 right now. You have a job? Why does your second baby need an emergency fund yeah we do it's up twenty thousand dollars you have a job why's your second baby need an emergency fund i i was just like if there was something that went wrong medically or whatever i don't know um how much is in your emergency fund about twenty thousand you have health insurance yeah my wife's on the christian health care ministries

okay all right um unless there's something that you're that you think that that's not going to on the Christian health care ministries. Okay. All right. Unless there's something that you think that that's not going to cover that is a realistic expectation, I would simply continue to follow the plan. Do you have an out-of-pocket maximum on that? So it's like a $500 deductible, but we have to pay everything up front in cash. And get reimbursed.

Yeah, and they reimburse it, basically. Yeah. I mean, is there any difficulties with the pregnancy at all? Not that we know of right now. We just found out the gender this last, actually yesterday. Oh, that's fine. Yeah. Well, I think you're being a good dad to be careful and to be wise and to be thoughtful about this.

But you've got a good emergency fund. I'm not worried about it. If you want to build up the emergency fund a little bit, and baby comes and then throw the money on at the house later in October, that's not the end of the world. But I don't think it's necessary here. It's not. If it'll help you sleep better at night to put that $1,700 away for the next five months

until the baby gets here, that's $8,500. And baby's great. Then we go $8,500 going towards the principal and the mortgage. Or drop it on two college funds and let's get going. You know, whatever. Baby step five, right? Either one's fine. Yeah, you could drop five grand on two college funds and go a long, long way

for Christmas this year. I've been teaching you guys this class. I teach math at a little high school around here. I've been teaching you guys this class. I teach math at a little high school around here. Yeah, awesome. I've been teaching your personal finance class. Thank you. I've watched the show for about a year and a half,

and I've seen different people ask questions, and I just wasn't sure. So I appreciate you guys' time today. Well, thank you, sir. Thank you for teaching the class to high schoolers. That's a big deal, man. Lisa is in Atlanta, Georgia. Hi, Lisa.

Welcome to the Ramsey Show. Hi. Thank you so much. Welcome to the Ramsey Show. Hi. Thank you so much. Good afternoon, Dave and George. I appreciate you taking my call. Sure. So my question is, I am looking to change jobs. I currently have a job that ties me to a radius in Atlanta, and my actual home is outside of the radius.

So I'm looking to change to a 100% remote job that will let me and my husband live in the same home and for me to be able to be with my family that lives in Pennsylvania. So the two opportunities that I have in front of me, one job, let's just call it the retirement company. They specialize in retirement plans. The pay is a little bit less than what I am currently making, but the 401K is good. The other opportunity is in medical supplies.

The pay is a little bit more, but the 401K is not as good. What is not as good on a 401k? So the 401k for the medical company is they'll do a 50% match up to 8%, and then it's a vested amount. So you have a vested schedule. The other one, the retirement company, it's 3% off the top and then a 6% match. And what is the income with the two? What would you be making with the retirement company? What would you be making with the medical supply company? So the $19 with the retirement company. Medical supply would be $21. I'd do the medical supply.

I'd do the medical supply. I don't think it makes that much difference. So 401K is not that big a deal here. The spread on it is not there. And I think there's more upside with your medical supply. I think the other one sounds like a bureaucrat corporate job to me. I'm guessing. I'm reading into things you're saying between

the lines and the sentences, but that's my gut. Yeah, I'd also go, which one do I want to do more? No, there's that. Do you want to be in medical supply? Do you want to be in retirement? Is that all Ken Coleman on me? There's an idea. Yeah. I don't know. Alright, hold on. We're going to send you a copy of Ken's book, From Paycheck to Purpose.

You usually don't make a decision on 401k. You make it on other things that are more important. This is The Ramsey Show. Proverbs 15.1, a gentle answer turns away wrath, but a harsh word stirs up anger. Ralph Waldo Emerson said, you cannot do a kindness too soon because you never know how soon it will be too late george camel ramsey personality is my co-host today allison is in henderson kentucky hey allison how are you i'm good how are you better than i deserve what's up good um so i have a question um in 2001 my employer at the time, they had Anthem Insurance, and that company, I guess, by demutualization, awarded anyone that had that insurance some shares.

Correct. Some stock. And so it has now, in the past few years, it's grown. So my question is, I have enough where if I sell it, I could pay off my house. Well, it would leave me about six months to pay on my own. But I was wondering if it would be beneficial to sell it, pay off my house, and then I'd be debt-free after six months. Yes.

But just paying that capital gains tax, that would be... So? Do it. What's the stock worth? The total amount that it's worth now? Mm-hmm. It's like $28,500, somewhere around there. Okay.

Let's visit your kitchen table with me in your mind okay i want you to see thirty thousand dollars piled up in the middle of that table right you have two choices with this pile of thirty thousand dollars you can pay it down on your house or you can buy anthem stock right which one you're gonna do um i'd rather pay down the house it's kind of a no-brainer you would never have bought anthem stock it was given to you as a part of the process you ended up in it by default you never sat down five years ago and went oh i dream someday that i have thirty thousand dollars in anthem stock that is not how this happened what's left on the mortgage uh it's about 29.5 okay yeah you're

gonna be there in no time kiddo it's gonna be so cool and it's a couple of grand in capital gains right yeah that's what i'm assuming i don't really know how to figure all that but i'm assuming so well i'm guessing it's a hundred percent gain it may even be ordinary income um the capital gain will be on what it went up since you got it but it was given to you uh as an award correct right you paid nothing for it correct so your gain is a hundred percent right and so 30 times it's 4,500 bucks probably 4,000 bucks probably something like that so So get tax advice. Get your tax advisor to tell you how much to set back before you send too big a check to the mortgage company

and they don't have enough to pay your tax bill. Right. But then put the rest of it on the house. Let's get the house paid off. What do you make a year? Well, it depends if I have overtime or not. So anywhere between $60,000 and $65,000. Good for you.

And you're going to have a paid-for house by Christmas. Yeah. Awesome. It's going to feel so good. I hope so. Allison, in our world, this is called a no-brainer. Have at it, kiddo. Lisa's in Atlanta.

Hi, Lisa. Welcome to the Ramsey Show. I think you already took my call we we got her oh wow good okay we've done everything we needed to do she's just hanging around pretty impressive appreciate lisa still listening in yeah thanks cleaning wisdom i appreciate you hanging with us open phones at 888-825-5225 all right george that technique i just used is called a sunk cost analysis oh the kitchen table analogy comes from the harvard newsletter investment newsletter and it really liked in that case the article harkens back to someone says i don't want to i i bought this stock for 120 000 it's gone down five years ago to 80 000

and i don't really want to sell it until it comes back up above what i paid for it i don't want to take the loss what do i do and you don't make the decision on whether to keep $80,000 worth of stock based on what you paid for it. You make the decision on whether to keep $80,000, $28,500 worth of stock based on what the best future is for the money. Now, if you had $80,000 in the middle of the kitchen table and you said, I wouldn't buy that stock again by not selling it, you effectively bought it again every morning. You know, every morning you're making the decision to keep it. It's as if you're buying it yet again. Right. And so, you know, I wouldn't ever buy it.

Well, why? I'm not sure it's going to go back up, but you're waiting on it to go back up well this is a dumb process and this is the way the human mind works and so the guy writing this article was making a really good psychological point and and he trained the kids in the mba classes the masters and business classes that when someone started doing an analysis based on what they paid for it which is called the sunk costs that's history it's over doesn't matter what you paid for it all that matters is where it's going in the future and if someone started doing the analysis based on sunk costs the whole class was trained to yell sunk costs that's fun and shut the whole thing down just to get people out of that mindset of thinking

i i'm you know what and you can do this with a personal item, you can do it with anything. You say, if I had that money, would I buy that again? A lot of times people have moved over the years. They move out of a house. They get transferred to another city. The real estate market's not hot like it is right now. They can't sell the house. They put a renter in it.

They call me up seven years later and go, I got a rental house in Abilene, Texas, and I live in Memphis, Tennessee. Well, you know, should I sell the Abilene? Yes. Why? Because you didn't buy it in the first place for this. If you started over today, you wouldn't buy that property. You became a landlord by default.

It's a sunk cost. How you got there is irrelevant. The only thing that's relevant on the decision on whether to keep it or not is the future. And the future says, if I lived in Memphis, Tennessee, I wouldn't go to Abilene, Texas to buy my rental property. It's devoid of common sense. And so if you wouldn't buy it again today because of its future, whatever it is, the boat and the driveway, then it's time to sell it. But if you go, no, I love that boat, and I couldn't get another one for that amount of money, and our family gets enjoyment out of that, and I can afford it,

and I'm not getting rid of my boat. I love my boat. And if i didn't have it i'd go buy one just like it then you would keep that boat because of the because of its future though not because of its past wow that's an interesting one i like that analogy it definitely helps clear the emotion out of the picture and just look at things logically yeah and you know and and some things uh this would lead you to keep um to use some good emotional intelligence and keep a nostalgic item. When you go, okay, that's my grandmother's wedding ring. It's an heirloom. And I could sell that diamond ring for about $10,000, okay?

But you could never get that back. It's gone out of your entire family lineage forever you know changes things i'm not selling that i'm i'm not selling that i'm selling a lot of things i'm not selling that but people justify when it's a it's a truck and they go dave it's my dream truck i can't sell it you're telling me there's not another Tacoma down the road? It's not that special. That's a different thing that it's not a singular item. Now, if it's a truck that was in 1962, and you and your dad rebuilt it in the garage as an antique mod,

and you worked on it for 10 years from the time you were 10 until the time you were 20 and then you went off to college and your dad passed away and left the truck to you uh i ain't selling that truck you know that's like them that's like grandma's diamond ring then you know uh but but if it's just something you bought three weeks ago or five years ago and you have zero attachment to it other than you think it's cool that's a different thing then yeah i'm selling i'm selling the sell i'm selling the horse camel right oh gosh i was gonna go there dave but i didn't i refrained you held back but i couldn't i learned horses are sentimental last week and they are family and they are basically kids not my words not my words well it's uh george

you should be just. They're calling it Horsegate, Dave. Horsegate. Horse cancel culture came after me. Camel's Horsegate. You're gone for a week, and this is what happens. Camel's Horsegate. I never thought that's how I'd go down. It's on YouTube.

Look it up. Camel's Horsegate. They're going to have to upload a video titled that so someone can find it. This is awesomeness. I'm just telling you. That puts us out of the Ramsey Show and the books. We'll be back with you. Before you know it, In the meantime, remember

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