The Ramsey Show - App - I Have $500K in Debt in a Little Bit of Everything (Hour 3)

Episode Date: January 5, 2023

George Kamel & Dr. John Delony answer your questions and discuss: Living in a van to save money on rent, Why intentionality and identity are key to setting goals this year, A woman whose husband won't partner with her to pay off $500k of consumer debt, "I cashed out my whole life insurance; how do I invest the extra money?" Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET 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 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studio, it's The Ramsey Show, where America hangs out to have a conversation about your life and your money. I'm George Campbell, joined this hour by one of my best friends in the world, Dr. John Deloney. You know him, you love him, best-selling author and host of The Dr. John Deloney Show, mental health, relationship, parenting expert. This guy can do it all. And we're here to take your calls. If you've got a crossroads, you've got something on your mind, you need a second, third opinion,

that's what we're here for. 888-825-5225. Luis starts us off in Atlanta. Luis, welcome to the show. Hey, thank you for having me. How's it going? Oh, good. Thank you. How can we help today? So, rent is really expensive. True. And I'm really considering van life, and I wanted to know your opinion and any tips or... Where do you live? Are you going to park it down by a river?

I'm sorry? Are you going to park it down by a river? Whatever I can. You're going to have to Google that reference later. Dude, don't move into a van down by the river why are you considering van life why are the options either you can't continue to live where you live rent is too expensive

but the other option is move into a van how did you get to that option so I just saw it on Instagram and I don't know. I thought it was a good idea. Did someone on Instagram say it was a good idea? They said, hey, life hack, can't afford rent, live in a van.

I've seen them. Hey, listen, Lewis. Or was this like the influencers who make it look really cool? Yeah, dude. George, they're amazing. Tell me if I'm wrong lewis like they take these old vans and they strip them completely down and dude they make them so rad and they take these awesome photos like on a beach and it's all those people have a lot of money they can afford rent and they live in and how i why is it let me ask you this.

What's so great about where you live that you'd be willing to stay there in a van instead of move to another town or community or job where the rent is less? I guess families here, you know? Okay love i love my family i love them and every bit of every all my family lives in the same state they all live in texas and then i got an opportunity to go make different types of money and have a professional like so i moved because i i had to and i still get to see my family i love them i still get to see them regularly but i had to move so louise you're not buying it what is your rent let's just talk get to the numbers 1200 okay are you living alone with a girlfriend okay are you splitting the rent? No, not yet.

So she's not paying and you are? Yes, sir. Okay. We got 17 more questions now. What's your income? I'm a $30,000 a month. $30,000 a month? I'm sorry, $30,000 a year, $2,800 a month. I was going to say, bro, why are you calling us? I was like, this doesn't matter. And what job are you doing? Because I want that job.

Okay, so your rent is almost half of your... Is that your take-home pay, the $2,800? After taxes? Is that what ends up in your bank? I take it all because I work for a private contractor. Okay. So, here's one option. Hey, girlfriend, we can't live together, and I'm going to go get a roommate. And then your rent just went down to $600.

And now we can breathe. There's one option, right? If you just didn't even want to move. The other option is where else can I live cheaper? And that may not be super viable in your area. You may only get down to $1,000, which is still too much based on your income. So the second question becomes how can I increase my income to where I can afford the rent? Okay.

So what kind of work are you doing right now? HVAC sheet metal installation. Okay, and you're making – How are you making $30,000? What's your actual salary? Is it about $40-something thousand? No, it is $30-something. Okay.

And you're a 1099? Yeah. Are you putting money back for taxes or are you going to be in the hole for taxes too no i'll hold it and then pay it whenever do you have the money to pay the taxes come april um probably not in full dude listen you have too good of a skill and it's such a high-demand area. What's keeping you from going to work for an HVAC company and making $85,000 a year plus benefits? I don't have my high school diploma.

Do you have certification or you just, you can weld? No, nothing, nothing. I just started. I'm 20 years old. This is my first lease ever. So I noticed the money is too much. And what other debt do you have? I just have one credit card. Okay. Is there a balance on there?

Yeah. How much? $900. Okay. And how much money do you have in the bank? Right now, $400 plus $900 in savings. You got $400 plus $900? Yeah. Okay. So $1,000 is your starter emergency fund, which then leaves you, what's that, $300 on top of that to start paying off this credit card. So by tomorrow, we can get $1,000 in the bank and your credit card debt is down to $600.

That's our next plan of attack is paying off that credit card. We're cutting it up. We're closing the account. No more credit card. We're going to start using a debit card. Do you have one of those? Yes, sir. Okay. We're closing the account. No more credit card. We're going to start using a debit card. Do you have one of those? Yes, sir. Okay. That is plan number two. Start using the debit card. Now we're debt-free, and we have $1,000 in the bank. You tracking with me?

Okay. Then we're going to continue saving an emergency fund of three to six months of expenses, not income, just expenses. So start getting on a monthly budget. I'm going to gift you one year of every dollar premium. That is our budgeting tool. You can set up a budget within minutes right there on your phone, on your computer, and it's going to help you pay attention to every single one of those $2,800 coming in every month. And you've got to start making a plan for it and stretching it. And part of that is making hard decisions like saying, hey, I can't live with you and I can't afford rent. So I'm going to have to move. I need to get a roommate and I need to get my costs down in order to survive. And Louis, did you grow up with a lot of money in your home or did you grow up with a family that struggled financially?

Struggled financially. I grew up in the projects in Puerto Rico. Awesome. So, man, I'm so proud of you, man. I mean, you're hustling you're getting it done one of the biggest shifts somebody who grows up in poverty can make in in a mindset is this idea of how do I survive right now which is I want to move to a van that's a how do I survive right now to where do I want to be in five years and what do I have to start doing right

now to get there what certifications do I have to get how do I get to be in five years and what do I have to start doing right now to get there? What certifications do I have to get? How do I get into a local community college? How do I start grinding my way towards where I want to be in five years? That's a totally different mindset and that's the road we want you to be on. Okay, my brother? And if you've got to get an extra job right now,

if you're going to get two roommates, do whatever you have to do to get that financial stability under use. You can really start to build wealth and break this generational poverty. We are so proud of you, man. welcome back america this is the ramsey show i'm george camel joined by Dr. John Deloney this hour, and we are here for you. Give us a call at 888-825-5225. Well, John, the start of the new year always brings a little bit of grace, a little bit of a fresh slate, and everyone starts to write down those resolutions, their goals. Maybe they're the same ones you kind of carried over from last year, and you're like, oh, yeah. Dude, New year's is my

favorite time of the year and i like it because we just give each other a mulligan on everything no matter what's happening you can just say like hey uh i'm i'm just gonna stop uh whatever using cocaine it's new year's and everyone's like cool man like it's just no matter what's like you just get a mulligan right i'm just gonna i'm just gonna control delete and give it another go i just like i know there's a lot about like being you don't need new resolutions and you can a new day any day you don't need to wait till you i agree with all that but i do like something about this collective moment our culture takes just to be a little bit reflective and to say hey who do i want to be this upcoming year or what is that going to look like or what's a couple things i want to accomplish this year i? Or what is that going to look like? Or what's a couple of things I want to accomplish this year? I like that. I think it's a good, healthy practice.

And you, Rachel Cruz, and myself, we got to work on a really cool new project, the Ramsey 2023 Goal Planner, where you cover the relational side for goals, Rachel covers spiritual side, I cover the financial side, which is really helpful to have something tactile you can actually write in, carry around with you around instead of, you know, having it in your phone or in your brain. And so that, what's really cool, I think that's on sale at the Ramsey store right now for like 37 bucks. So not too late to get that. But I wanted to get your take on goals. Because we talk about goals a lot here at Ramsey Solutions. We've got all kinds of frameworks and we want you to set goals in all kinds of areas but what is the dr john

deloney take so i think um the research has borne out that if you start if you wrap your life around finish lines you're going to have a life that um you're never fulfilled because you cross that marathon line and you're still the same person. You did a thing, but you're still George, right? Or the number of people I like, they finally graduate with their PhD and they're like, I still don't like myself. Or dad didn't magically call and be like, now I'm proud of you. That call never comes, right? Or you make a million dollars, whatever the thing is. And so we're a culture obsessed with goals i actually think goals can become markers along the way towards um and i got this from james clear towards a new identity who do i want to be and so every year my wife and i take a day

or two days and we we get away from the kids and we kind of just do a strategic plan for this upcoming year a reflection of how we were last year. How do we think things went? We look at last year's stuff we wrote down. How did it work out this year? Do we, and we always start by asking ourselves, who do we want to be this upcoming year? And I want to be a guy that takes care of my body. Not a guy that at the end of the year, I'm going to bench press 230 pounds. Cause if I, if I make that my goal, you know what I end up doing? Cutting corners. And I will miss things. I won't enjoy my life. I will end up taking a bunch of steroids. I'll cut corners to get my goal. And then I'll end up more miserable when I'm done, right? Instead of saying, I'm a guy that takes care of himself. I'm a guy that wants to be able to roll around with my kids

when I'm 90, with my grandkids when I'm 90. So I'm going to start right now, lifting weights and exercising and taking care. I want to be a good husband and a present father. So goals are important, but for me, they come after identity. So my wife and I set up, here's who we're going to be as a family. Here's who I want to be. I want to be a reader this year. Last year, I was a writer. This year, I want to be this. So we set up the identity. Who do we want to be? And then to be a reader this year. Last year, I was a writer. This year, I want to be this. So we set up the identity. Who do we want to be? And then I think at Ramsey, we've broken it down here.

Then you begin to make markers underneath these things. What are the actions I have to do to backfill this identity? Because you can't just like Michael Scott, like, I declare bankruptcy. You can't just walk out and be like, I declare I'm healthy. It doesn't work like that. You got to actually like change your life, right? You got to start moving. You got to start exercising. You got to go to counseling, whatever you got to do. So at Ramsey, we've identified seven goals, like financial goals, intellectual goals, family goals, spiritual goals, physical, career, social. And if I look at these, I actually, these

fall into the different identity buckets my wife and I set up. Some of these are collapsed, right? But like, how many books do you want to read this year? My wife's going to want to relearn and become more fluent in Spanish. And here's the kind of family we want to have. Here's our spiritual goals. Here's our physical goals. So, we've created those goal lists, but they are in

service to a new identity. They're not the ends in and of themselves because you will get to the end of this year, completely fried, burned out, and you'll have made $100,000 and you'll have no friends. You'll be exhausted and your body will hate you, right? That's different than I'm going to be a kind of person that works really hard and becomes the number one salesman in my company, which means I'm going to get some rest. I'm going to make phone calls. I'm going to say yes to those coffee things and the money will take care of itself on the back end. Right. I love that. And we just had James Clear on the latest Entree Leadership Podcast. So I got to interview him. Dave Ramsey is also on that episode, obviously geared towards business leaders, business owners,

but so helpful for all of you listening out there. Pick up Atomic Habits. It's an outstanding read. He's brilliant. And I love that idea of identity-based because it's also freeing because then it's not about benching 230. It's just, man, I feel better. Here's what's wild. If I'm a guy who takes care of his body, that means occasionally I'm a guy who just doesn't work out and I rest,

or I'm a guy that goes and plays with my kids. Cause I know that that's going to help. I'm going to feel better. Right? So it broadens your horizon. And then inside of that, here's what's now like the, the,

the nutrition scientist and the physiologist. If you want to run a marathon, cool, you're not going to run a marathon to cool. You're not going to run a marathon to get healthy. You are going to run a marathon because you have a physical goal. You are a person who does hard things, right? Really challenging things. And one of those is going to be a marathon. Great. You are going to pause your health for a season because you're going to push your body, right? And so that's how they started talking about some of these things. And so cool.

You're a person who does really challenging things. Awesome. Do it. I, I, one of ours is we say yes to adventures. Me and my friend, Jeff, we're going on a, on a crazy hunting trip in a couple of weeks. I don't even know what we're getting into, but I said yes to the adventure because that's the kind of person I want to be versus I'm going to go do this thing. See what I just, I just, well, you're, you're reverse engineering it and you're starting with the identity, which I think is so important. And it's, it's really at the heart of the Ramsey plan. We're not getting out of debt just so we can get out of debt. Yes, you have to have a goal for that.

You're solving for freedom. Yes. It has to be specific. You have to say, I'm paying off $40,000 in 18 months. But on the other side of that, you're the kind of person who doesn't owe anyone anything. Yeah. Who sleeps better at night. I laugh really hard a lot, right?

And that's the difference. Yeah. That's so good. Well, we have an amazing resource our team has put together. It's a goal setting guide and it's completely free. You can go to ramseysolutions.com slash goals to check that out. That's ramseysolutions.com slash goals. John, do you want to share any goals that you've got for this year? I'll have another book coming out. So I want to, like when it comes to goals, goals, like I want to be a person who writes as an identity. Like I want to write every day instead of these big marathon sessions like I've been doing. And one of the goals underneath that is I'll have another number one bestselling book. So I'm going to have to work really hard on

writing a great book and on the editing and copyselling book. So I'm going to have to work really hard on writing a great book and on the editing and copywriting process, and I'm going to have to do a good job getting out and promoting the book. So all those things are in service to, I just want to be a guy who's a writer who writes a lot. That's good. I'm in that process as well, and I'm trying to create that habit and become that writer.

And it's hard. Just discipline. It's hard. It stinks. Mine, obviously, we've talked about this on air and off air, but taking care of myself and going to the gym, even when I'm the lankiest, most awkward person in the room. And it's really hard, but part of it is showing up.

And James Clear had a great example of a guy, a story where this guy shows up at the gym for like five minutes, and he goes home. Goes home. Every day. Just five minutes, and he goes home. People are like, dude, you're crazy. And he's like, no, I'm the kind of guy who shows up.

I go to the gym. I'm the kind of guy that goes to the gym. And eventually you stay 15 minutes and you go ahead and walk on the treadmill for 10 minutes. You begin to create these little one degree habits. And if you just get one degree better, like I just want to write for 10 minutes, that's it. I'm putting my pen down.

And then next month I'm going to write 15 minutes. That's it. I'm putting my pen down. And then next month I'm going to write 15 minutes. That's it. I'm going to put my pen down. And over the course of time, you begin to crave that routine and you love it. Yeah. The best example was the book. Just read one page. That's it. You read one page and then you go, oh, I read five. I read 20. I read 50. Oh my goodness. But just showing up is the first step. And regardless of what your goals are, we want to help you get there this year. We are here for you, America. We've got tons of resources at RamseySolutions.com. You can start with that goal-setting guide at RamseySolutions.com slash goals.

More of the show coming up. so I'm George Campbell joined by Dr. John Deloney this hour. This is The Ramsey Show. And we love January around here. And we generally get a whole bunch of calls in January because everyone is looking for a fresh start with their money, especially after a tough couple of years. So if that's you, you can't wish for things to change and just expect it to happen. You've got to do some things differently when it comes to money. You've got to have a plan and we can teach you that plan in Financial Peace University. This is the course that will help you rethink how you manage your money and you're going to learn step-by-step how to pay off debt, how to build wealth. And guys, nearly 10 million people have taken FPU. They have followed this plan. They've changed their lives. I was one of those people 10 years ago.

This stuff works. Don't try to reinvent it. Don't try to just take the pieces you like. I was one of those people 10 years ago. This stuff works. Don't try to reinvent it. Don't try to just take the pieces you like. I'm telling you, if you go all in on this plan, it changes everything. And when you intentionally follow it with a focus intensity, this year will be different. I guarantee it. You're going to have more peace in your finances and your life. So start Financial Peace University right now. Just go to ramseysolutions.com slash FPU. That's ramseysolutions.com slash FPU. Regina is up next in San Antonio. Regina, welcome to the show. Hi, thanks so much for taking my call.

I appreciate it. Absolutely. So here's my quick question. Well, I guess I say quick. Here's my question. What do you do when you can't pay the minimums? That's the bottom line question. My four walls are up and everything else is done,

but I just can't get to all of the debts with the minimums? That's the bottom line question. My four walls are up and everything else is done, but I just can't get to all of the debts with the minimums. Do I just let them keep calling and just keep answering them and tell them I'll get to them when I can? Do I try to negotiate the minimums? What do I do? Well, number one, you're doing a great step in just proactively communicating with them and letting them know, hey, here's where I'm at. Here's the bills. Here's the order I'm paying them in. Here's how much I can give you this month. And if you do that, it's better than you ignoring the calls and it going to collections and have people coming after you. I want you calling them more than they call them. They total up to $555,778. $555,000? Is this all personal debt? Personal, pretty much personal debt. Does that include your mortgage? No, that does not include our mortgage. And there's some land in there.

There's credit cards. What are the big chunks? How did you get a half million bucks in a debt, Regina? What happened? Just a whole lot of, a little bit of everything. You know, you stop paying attention and you just, you know, you just kind of keep going. You make good money and you think that you're invincible. And here in one day you turn around and that's where you are. What's your household income?

200. Okay. And is it just you? Is there a spouse? Yeah, I have a spouse. Okay. And how much of this is kind of the consumer debt outside of the land? What kind of debt are we talking? We're still at four because the land is only 100. Okay. So what's the rest of the four?

I'm confused here. Is it student loans, credit cards, car payments? Mm-hmm. Mm-hmm. Student loans, credit cards. Medical bills, personal loans? Yep. Medical bills, personal loans.

Yep. Yep. Yep. I'm running out of things to even throw out there, Regina. I mean, if you have them and that's really all, but there's just a lot of them. What's the big ones? Like how much credit card debt are we talking? The credit card debt is $50,000 personal. The consumer loans are probably the biggest ones those are uh in the 150 range

what was that for what did you buy just a whole lot of stuff like stuff for the house what are we talking i don't i don't like if you gave me a half million dollars i don't know that i'd have enough ideas to spend it like that so i'm just i have a dark curiosity at this point. Yeah, especially the house. Just a lot of stupid stuff. Okay. So is your husband on the same page that you guys are going to get intense about this

and go scorched earth and live like broke people because you are broke people? No. He's not on the same page. What does he want to do? No. File for bankruptcy. And he's just resigned to go, let's just keep going into debt.

It's fine. When we have to go bankrupt, we'll go bankrupt and start over. Yep. Regina. Regina, don't do that. I'm not. Definitely. Well, we need both parties involved to be on the same page because you can't do this alone.

What do y'all do for a living? I'm in banking and he's in IT. So you know what declaring bankruptcy does to marriages oh absolutely individuals like you know absolutely i mean your your lives are going to be a living hell for the next decade if you do this they're not going to be because we're not filing good all right um i'll tell you what you can do you're going to sell everything that you can sell. Everything! The land is getting sold. Bye, Felicia. The cars are getting sold.

Bye, Felicia. The crap that you bought with the credit cards is getting sold. Goodbye! All of it. All of it. We are. We're working on it. So if you sold everything you can sell,

what would that add up to out of the $555,000? If we sold everything that we could, then we're probably... Let's see the line is one cars sell them your camry people these are nice cars i imagine no no we don't what's your house Our house is worth $580. And what do you owe on that? $4. Okay. So if we downsized, we could clear $180 and get something smaller, right? Or even rent for a while.

Rent for a while. Here's what we're trying to – and I know you know this, but I just want to say it clear. Y'all are in a desperate situation. Y'all make a lot of money, which is good. Y'all make a couple hundred thousand dollars a year. It's great. But y'all are broke, broke, broke. And you're one illness away, you're one layoff away from this whole house of cards coming down on you.

And I know you know that, right? You feel it. Yep. Absolutely. So have you sat down with your husband and said, honey, I can't breathe. I'm scared to death and I'm not going to be a, I'm not going to file bankruptcy because it's not, it's not integrous. We have the money. We're just choosing to not live this life because here's the deal. Y'all are going to file bankruptcy and y'all going to run this thing right back up. Because y'all have not changed the core issue, which is y'all don't have a plan.

Y'all aren't together on the same page and you don't have the discipline that, that, that getting out of this thing together is going to give you. Do you guys have kids? They're old. We're an empty nesters. that getting out of this thing together is going to give you. Mm-hmm. Do you guys have kids? They're old. We're in empty nesters. Okay.

How old are you two? In our 50s. And when do you plan on retiring? Well, at this rate? Never. Never, yeah. Never. Well, here's the deal.

I have a lot of hope that this situation can turn around and it can actually turn around pretty quickly because you guys have a huge shovel. Because if you sell the house,

you're going to get $180 there. If you sell everything else, you could probably clear another $200, right? Yeah, for sure. So that's already $380 out of the $555. And now making $200,

we're throwing $100 at the debt because we're living on nothing. And all of a sudden, we're debt-free in a couple of years. Right. So bankruptcy doesn't make sense when it's that clear of a path. But he has to get on the same page. And I can give you a tool to help you get there. I can't force him. And that tool is going to be Financial Peace University.

So I'm going to gift that to you. Do you think he'd go through that with you? All nine lessons, getting on a budget. I've already tried. I used to teach it 10 years ago. Why doesn't he want to do it? No, he doesn't. Why? He thinks there's nothing new to learn.

Is he not looking in the mirror or at the bank statement? Yeah. Listen, he's not on the phone, so we can't... There's no sense in going after him. What I would tell you is, for the first time in a long time in your marriage, I would let him know how terrified you are. And let him know, I'm not interested in signing off on bankruptcy papers. We make enough money.

We can be debt-free in a couple of years. We've got to change our life. You guys are going to need counseling if he's not willing to do this because there's a lot deeper issues. I'm still going to gift you Financial Peace University because I have hope for you guys. But, man, this is a big situation. And counseling is a lot cheaper than divorce.

I'll tell you that much. So I really, really hope this all works out. Please call us back if you need any help. We are here for you, Regina. This is The Ramsey Show. Our scripture of the day comes from Psalm 42, 11. Why, my soul, are you downcast? Why so disturbed within me? Put your hope in God, for I will yet praise him, my Savior and my God. Roy T. Bennett said, never lose hope.

Storms make people stronger and never last forever. Well, John, I can't help. I grew up on the coast. Some storms are pretty rough he's talking about the storms of life it's more of a Kelly Clarkson what doesn't kill you makes you stronger more of that

I knew he was going to sing it some storms there's no coming back from that's another conversation speaking of storms John I gotta talk about our last call from Regina $555,000 in consumer debt, not including the $400,000 mortgage, and they make $200,000. Husband's not on the same page. He's just good to resign to bankruptcy. And I was asking you off air, at what point in a marriage do you go, we can't continue like this? I'm out. What is that conversation like? Well, I take a much broader view of the idea of fidelity, of cheating, if you will.

And if I cash out of the marriage, I'm cheating you out of this union that we agreed upon, right? That we both joined together. And so cheating for me is a much bigger thing than did you kiss somebody? Like that,'s a, it's a, not just a romantic. Exactly. It is a, somebody is walking away from the mirror. They are slowly going to drown you. Abuse is another, like, I'm just slowly pushing you underwater. I refuse to participate in a budget. I'm spending money. I'm choosing to gamble our money away here.

I'm drinking away here. I've got secret accounts over here. I'm choosing to slowly drag you behind my car. And at some point, everybody's got a breaking point. And so I will never tell somebody, you need to leave that person, except in very, very rare situations. I'm not going to tell somebody to go get divorced. But I do think people need to have hard conversations. And when they do, to say, hey, I'm worth more than this life. And when you have that conversation, here's what I need. You have to have an or what statement. And you have to be prepared for that moment to say, or I'm out.

Or I'm going to sell everything i can and um you're gonna have to be resigned to the fact that we're not gonna have a couch because i'm selling it because i'm not living like this anymore like whatever your or what statement is you got to be able to make that um i just have a much i've just i mean i just kind of jaded when it comes to that i've just seen people hide behind that. Well, I'm not dating anybody else, so I can't. And people get trapped. And I just don't think that's the spirit of it. But again, that's my theological hot take on it.

But that kind of call, it breaks my heart because, I mean, what do you do? What do you do, man? What do you do? And that you do, man? What do you do? And that's a powerful, ugly mess. Well, it's a reminder that we can't control other people. Can't. Which is so frustrating. Because you just wish I could just get him to see my side and do what I need.

You can't do that. And the way you laid it out, this is as caustic as this moment is for them, it's a two-year problem. And it's a two-year problem that you and I both know, they could have a marriage in their fifties on the back end of this that is better than any point in their entire marriage. And their sex life can be better and their adventure life could be better and their communication can be better and their relationship with their kids. All that can change in two years of, we are going to go make this thing right and we you and i both we get to see that

over and over on debt-free screen we get to see people change their lives and so it's maddening on this side of it to be like oh or we're just gonna be honest gonna declare bankruptcy just just quit complaining i'm gonna quit and i'm gonna be out and there's there's a moment for bankruptcy hear me say it but i'm gonna quit and uh good good luck like man there's a moment for bankruptcy. Hear me say that. But I'm going to quit, and good luck. Like, man, there's just a resignation that drives me a little bit mad. Make it $200,000 a year. Just deep breaths, John. That's all we can do.

That's all we can control. Let's go to the phones. Tom is waiting for us in New York City. Tom, welcome to the Ramsey Show. Thanks, gentlemen. I'll be quick because I know you have a show to move along. You are on the show, Tom. We're glad you're here, man. All right. It's the Tom Show. Thank you so much, guys. I'll be quick because I know you have a show to move along. You are on the show, Tom. We're glad you're here, man. All right. Thank you so much, guys. I really appreciate it. Happy 2023.

You too. I called in a few weeks ago when I got on the air. I had a question about term life insurance versus whole life insurance. And Dave convinced me to get rid of mine and my wife's whole policies and switch to term policies, which I'm in the process of doing. I'm in the process, in other words, of just waiting for the paperwork to complete. I'm not going to terminate the whole policy until the terms kick in, but that should be next month. Hey, did you catch a lot of hell for it? Did they give you grief over it?

No. I think I was on the air that day. No, no, no. We're talking about the actual brokers. Oh, the whole life salespeople. Were they angry that you were trying to cancel. No, no, no. We're talking about the actual, the brokers. Oh, the whole life salespeople. Were they angry that you were trying to cancel? No, no. You know why?

Because I have my sister's friend is my agent, and I just said, this is what I want to do, and just go and do it. And I got a couple of quotes on the side from different insurance companies to make sure that the policy rate that I was getting from her was as low as some of the other companies were giving me. And I guess the tables, they all use the same tables, I'm assuming, because all the policy quotes were pretty much identical. Gotcha. Very well.

Based upon my and my wife's ages. Yeah, so the thing is I'm going to be saving about $400 a month. I'm still doing long-term policies. We're still doing 30-year policies because my family tend to live pretty long. So that frees up $400 a month roughly for me. And what I want to do is invest that. Obviously, I have a daughter that I want to make sure I've got money for. So my question to you is probably overcomplicating things.

I quickly went and opened up an IRA. I already have a 401K, which is pretty well-funded. And my question was, and I also have a 529 plan. I've got a wedding fund. I've got all these things set up for her as much as I can. I know she's only two, and I'm already got all these things lined up.

Tom, Tom! All right. You're a planner. You're a planner. Good for you. Yeah, I'm a planner, exactly. Because long story short, that wasn't done for me,

and so I'm trying to make sure my daughter doesn't have know, it doesn't have the worries that I had to, the trouble I had to get through to get myself to school. Um, so with that $400 a month, I'm trying to decide if I should just increase my 401k contribution by that amount, or I should, I opened up a separate IRA, uh, or invest the money into an IRA. Is there an advantage to having multiple retirement accounts, or is it fine if I just put it all into my company's 401k? And they do also have the option of a traditional and a Roth, so I do a 50-50 split. That was going to be my question. There is advantages on the types of accounts because of the tax treatment.

So with the Roth, you're not going to have to pay taxes on that when you withdraw in retirement. And there are no RMDs, required minimum distributions, like there would be on the traditional side. So there is a benefit there. But as far as having multiple accounts, you're not really doing anything. You're just kind of complicating things on that side. So I'll tell you what I do. I do 15% into my Roth 401k here at Ramsey Solutions, and that's it. That's it.

Okay. And so if you get to that 15% there, now is your income high enough that you would max out the 401k and need to go elsewhere? Yes. If I did a full 15%, I would exceed the amount that you're allowed to put in annually on a 401k. Yeah. So you have other options, and a SmartVestor Pro can walk you through those.

I'll give you some ideas, though. You can still contribute to a traditional IRA. You may not be eligible for the Roth IRA because of your income, and so you can still do the traditional. There's also an after-tax 401k contribution you can look into with your employer and see if you're eligible for that. One thing you hit on, which I wasn't aware of, and actually that could change things dramatically, you just said, which I wasn't aware of, and actually that could change

things dramatically. You just said, and I want to make sure I understand that if a Roth IRA does not have a required minimum distribution. That's correct. So I could retire at 70, hypothetically, live off my 401k and that Roth 401k, if I did have a separate account, that could just continue to grow and I wouldn't have to touch it. Exactly correct. That might be actually, I don't want to disagree with you, but that might be a good idea for me because that's really what I wanted to do. I wanted to have this account that continues to grow for my daughter that essentially becomes if I- And the goal is not to touch that so it continues to grow.

You could live off of the 401k. And I would still switch. I would go full Roth in that 401k and you can do a backdoor Roth IRA. So if you contribute to that traditional IRA, you can then flip around and make it a Roth by paying taxes on that. So there are a lot of ways to do this once you have that level of income and you're at the level of wealth building. You don't have a paid for house though, right? Only $18,000 left. Oh, let's go. So once you pay that thing off,

then the world is your oyster. You can increase your investing, increase your giving, increase spending. Have fun, man. I'm so proud of you. Wow. I love Tom.

I could talk to Tom all day long. Tom is my people. Appreciate the call, man. This guy is going to leave a legacy for his kids. And you heard him. He said, that wasn't done for me. I want to do it for my kids.

And that is a noble goal. There you go. I love it. A complicated, but noble goal. Yes. That puts this hour of The Ramsey Show

in the books. My thanks to all the folks in the booth, to my co-host, Dr. John Deloney, and you, America. Until next time, spend wisely,

save intentionally, and give generously. Do you love a good day, Brandt? Want to see the latest Ramsey Show videos going viral? Check out your favorite moments from the Ramsey Show on YouTube. Go watch and subscribe to the Ramsey Show channel on YouTube.