The Ramsey Show - App - I'm 13 and Want to Start a Business (Hour 3)

Episode Date: June 9, 2020

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live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and a paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. My co-host today on the Dave Ramsey Show is Ken Coleman, Ramsey personality, host of the Ken Coleman Show, broadcast on Sirius XM for several years. This week celebrating its 50th radio station. In syndication, things are going well.

And, of course, the number one best-selling book, The Proximity Principle. So we're answering questions about your money, your life, your jobs, your careers, like we always do. It's your show, hero. We're here for you. The phone number is 888-825-5225. Scott's with us in Kentucky. Hey, Scott, welcome to the Dave Ramsey Show. Thank you, Jim, for taking my call.

Make this short and sweet as best I can. So my wife and I, she lost her job after 10 years this was back in 2015 we had a three-year-old at home with no child care she drawed unemployment for as long as she could uh i could not make our mortgage payment on the where i mean i got a good job i worked for one of the top two delivery companies in the world anyway I couldn't make the mortgage payment on my own we had no child care options so I said well and I've always I don't I've never liked debt neither one of us like it we've always paid toward principles on vehicles got out of debt early so we sold our house moved to the rural eastern Kentucky bought a place we made good money on the house we sold because we invested every dime we had into it. So we paid, we cut our debt in half, essentially.

So from that point on, she stayed at home with our son until he got of school age. Then she started substitute teaching to give us a little extra money. However, we have been leaning on my father ever since she lost her job i'm not proud of it never have been proud of it but it's the only way we could do what we got to do as far as you know making ends meet uh she now what do you make for the board what do you make driving for delivery? I make 40 roughly. I made 45 this past year. I've got a 401K.

And living in rural Kentucky, you couldn't make it on 45? No. Why? We've got a... I'm sorry. Why? We've got a... Do what? I'm sorry. Why? She... was... I don't know how much exactly she made substitute,

and it was very little. It was monthly. But anyway, we bought... We had a $102,000 home in the place when she lost her job. We sold it. We made $50,000 on it.

We bought another place for $100,000 and paid $50,000 down on it. We paid roughly $350 mortgage payment. We had to take out a home equity loan for heat and air condition, certain things. It's an old house. I had to have the whole thing rewired and everything. Anyway, long story short, I make two grand a month no you don't and two grand a month's 24 000 a year i bring home i'm sorry i bring home two thousand dollars a month where's the other two thousand dollars going

i make 500 a week you make 45 000 a year. You make $45,000 a year. That's $4,000 a month minus taxes is not too grand. Insurance, 401K. So your father's giving you money to fund your 401K? No, no, no, no, no, no, no. I know, but you're not taking enough home to feed your family. Maybe my numbers are off obviously yeah uh needless to say long story short i can the cares act has been invoked on my 401k i have 125 000 in there i have not contributed to that since she lost her job.

She made more money than I did. We don't have boats. We don't have toys. We have a budget. What is your question? Well, my question is, we have lived paycheck to paycheck for the past five years.

I got that. what's your question uh we are considering paying off everything we own with the 401k cares act thing okay and i'm sure you don't owe anything the only the only thing you owe is fifty thousand dollars on your house right well with the heat and air and the things that I have to do, we owe $68,000 total on everything we own. Yeah, and you're going to clean your 401K out. You're going to have absolutely nothing after you pay the taxes. No, I'm not going to clean it all out.

Yeah, you're going to have to to get $68,000 net because you've got to pay taxes. The CARES Act doesn't waive taxes. It waives the 10% penalty. And you're treating the symptom. You've got to pay taxes. The CARES Act doesn't waive taxes. It waives the 10% penalty. And you're treating the symptom. The problem is that you don't have any idea what you make or where it's going. That's not the real problem.

The real problem is you guys are going to have to get a handle on your money. It sounds to me like she's about to go back to teaching because you guys can't make it. And when you move out to the country to save money and you sell a hundred thousand dollar house and you buy a hundred thousand dollar house i missed how you saved money on that plus you bought a house then that you had to renovate so you went backwards when you did this so no i would not cash out your 401k because you're hiding from the issue that's financial denial you're trying to hide from the issue and the issue is is that you have no idea what you make no idea where it's going no what's – because the numbers you're giving me are just completely screwed. They don't work. They don't add up.

Okay? And if you get on a budget with a $350 house payment making $45,000 a year, don't do your 401K and feed your family, and it's tight, it can be done. It's not what I and it's tight it can be done it's not what i would recommend but it can be done but it sounds like she's going to have to add back to the income here more than substitute teaching she needs to go full-time and i'll be honest you know there's no reason why he doesn't have a plan to move up the ladder he said he delivers for one of the two one of the two largest delivery companies in the world that means that that that's a big company. It means he works for UPS because they're based in Louisville. That's exactly right. So I've got good friends that work at UPS, and that's a company that takes their employees very seriously.

There's an opportunity to grow there. If he gets some gumption here and says, wait a second, I'm going to be the best delivery driver there ever was with the opportunity to hopefully move up the ladder there. He could make more at that company. It's unusually low pay. Yeah, but I'm saying he could move from driving. It's unusually low pay for a UPS driver. Yeah, it is.

That's what I didn't understand either. I think they're in that 60 range is what I've experienced. But my point is he can move up the ladder there if he applies himself. That's got to be the issue, budgeting and increasing the income. Absolutely. No reason he should be taking money from dad. I would not cash out your 401K. You're just hiding from the other issues when you do that. And you're getting ready to give the government $1 out of every $3 you pull out of there.

That's what people don't understand, Dave. You get this question all the time. You're going to get taxed heavily. You don't get the money dollar for dollar, not even close, in what's in the account. The CARES Act does waive the 10%, but that doesn't mean you need to cash it out and give the government $1 out of $3 in order to treat this. So here's what you need to do, dude. You and your wife need to go to Financial Peace University. I'm going to pay for it for free.

It doesn't cost you a thing because I've been where you are where I didn't know what was going on. And you're going to have to get a handle on what's going on. You're getting killed by not knowing where all this money is going and making these decisions in a vacuum. So hold on. I'm going to have Madison pick up. We're going and making these decisions in a vacuum. So hold on. I'm going to have Madison pick up. We're going to get you signed up for that. We'll help you get your arms around this. Please don't cash out your 401K.

Please don't do that. Please get in there and figure out what's really going on and get the real problem solved. This is the Dave Ramsey Show. Hey, folks. Father's Day is just around the corner. If you're looking for the perfect, unique gift to give dad, I've got it. Grip 6 belts. If dad's like like me he's not a fan of traditional belts they never fit right and they're uncomfortable grip six belts are exceptional

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And three of the students got expelled and that kind of stuff, right? So the quarantine homeschool jokes, right? Your quarantine forced homeschool adventure might be done for the summer, but you can keep your kids busy with activities and teaching them about money and about life. The Adventure Pack is a family favorite that is filled with storybooks and activities, particularly for kids like 12 and under. And if you've got a teen that's wanting some extra cash, the Teen Entrepreneur Toolbox, perfect, safe, flexible way for them to create their own summer job.

The toolbox helps teens turn hobbies into real businesses, teaches them the value of hard work, leadership, responsibility. It's been very, very popular. Check all of the stuff out for kids and teens and even homeschool curriculum, all kinds of things, at DaveRamsey.com. Or you can check our Ramsey Concierge team at 888-22-PIECE, 888-227-3223. Sanaya, is that right? Is it Sanaya in Massachusetts? Hi, how are you?

Hi, Dave. How are you? I'm fine. Good. Is it Sanaya? Is that how you pronounce your name? Yes. Cool. How can we help? So I'm actually starting my own business and I was wondering if you had any advice for, you know, studying your own business. Okay. I'm having a little bit of trouble hearing you. Can you speak directly into your phone, please? Yes. I'm actually starting my own business. Okay. And I was wondering if you had any advice, you know, for starting a business.

Sure. How old are you? I'm 13. Okay. All right. Cool. What kind of business are you? I'm 13. Okay. All right. Cool. What kind of business are you thinking about starting? So it's more like skin care, but my main idea is lip gloss. Okay. So you're going to produce and make lip gloss?

Yes. What do you make it out of? It's a bunch of different ingredients, but mainly like oils and colors. Okay, cool. And sell it like to your friends at school? Yes. Okay. And I was thinking about starting a a website but that's later down the line yeah good for you okay what does it cost to make a um a tube of lip gloss

um i'd say about 30 dollars for ingredients but for one tube it wouldn't be as much right so what does you make a batch of it right and then you fill up several tubes so what does a batch cost to make 30 dollars yes okay and how many tubes does that make? It can make up to 10 if you have enough enduro. Okay, so let's say you had $3 a tube in your cost then, right? $30 divided by 10, does that sound right? Yes. Okay. What are you going to sell your $3 cost product for?

$3? three dollar cost product for um three dollars how much three dollars three dollars well you're gonna if it costs you three dollars to make it you're gonna want to sell it for more than three dollars or you don't have a business you have a a hobby. Yes. So we want to sell it for $6 or $10. Yes. What does lip gloss cost if you buy it at Walmart? $5. $5. $5. Okay.

Then we're going to make homemade, better lip gloss than they have at Walmart and sell it for $5 and compete with Walmart, okay? Okay. You've got to make a profit kiddo you got to sell it for more than it costs you to make you follow me yes and talk to mom and dad talk to the science teacher let's find a way to cut cost on those ingredients as well because as your ingredients uh the cost of putting the lips gloss together goes down then your profit goes up. And the other advice I would give you besides cutting your cost on the ingredients is make sure that you're selling these in bundles and try to increase your purchases by selling three sticks, five sticks, whatever,

and have your mom and dad, again, help you. How are other people selling packages of lip gloss and things like that? Are there certain fragrances? Boy, I'm in deep water, Dave. I don't know anything about lip gloss. You're big on the lip gloss expertise, are you, Coleman? Well, I need to call Josie, my fifth-grade daughter, soon to be a sixth-grader. She would have an opinion.

She would know all of the answers to this, yeah. Which is what she should do, do some research. She's the target market. Yeah, you ought to research the target market. I quickly got out on the end of the diving board, Dave, and I went. You did. And then you kind of wobbled and you almost fell in. I don't know.

I saw you. I don't know much about lip gloss. Well, me neither. I just learned how much it cost to batch. I didn't know before today. I didn't know either. So good job. Hold on.

I'm going to give you a copy of one of those things we're talking about, the teen entrepreneur toolbox, because, kiddo, you are a teen entrepreneur. Yeah. about the teen entrepreneur toolbox because kiddo you are a teen entrepreneur yeah and uh i'll tell you this you uh you're a very very sharp young lady and people that do and think like you do at 13 years old are the people who run large businesses when they're 30 and so you're going to do just fine you're going to be amazing so you hold on we want to help you with your progress and you need to get to know anthony o'neill through the teen entrepreneur toolbox and it'll get things going so when i

was that age i almost got suspended from school say it isn't so dave can you imagine and it wasn't for what you're thinking i was actually i went to there was a company called tandy leather i don't even know if i don't think they're still open. And you could buy leather working tools. Okay. And so I got the little thing. You'd wet the leather. Yeah.

And you hit the little letter, and it would make a letter imprint on the tool, on the thing. So I made custom wristband, or custom bracelets with your name on them. Okay. Painted in the color that you wanted to order. Wow. Bought the snaps. Did it all. P painted it all in and and and the leather we were using scrap leather so it cost almost nothing to make the thing other than our other than my labor but i was doing such brisk business out of my locker

that the vice principal decided i was selling drugs out of my locker and it was leather bracelets and uh he got a good laugh out of it because he really was kind of doing one of those movie things like he was the creepy vice principal spying on the kid he suspected he thought i was a drug dealer out of my i was doing but i was doing brisk business so it's a reasonable thing the kids all crowded around money changing hands so he didn't even investigate he just saw a huddle around young dave ramsey's locker and money money flying around and and immediately assumes that you know i'm running a pot store over there in my locker or something what were you selling the the wristbands for do you recall you know i don't it wasn't much i mean this was well yeah a thousand and two years ago there were

dinosaurs in the hallway um i love that you were stamping leather wristbands That speaks to the generation I've still got the leather tools So if this doesn't work out, this radio thing doesn't work out I can go back to the leather first Well, you now got a really fancy logo The DR looks really cool So you could get back into it We could get a custom-made leather R

Hey, listen Rachel's got her own very fancy leather money envelope system You could get into the Dave Ramsey wristbands. She almost does again. The other one was a bust because the zipper was bad, remember? Oh, see, I didn't get the email on that. Yeah, it was bad. Yeah, we had to pull it off the market.

It was like we got cheap crap. We apologize to everybody. All of you people that got the bad zipper on the Rachel wallet. Well, the Dave Ramsey wristband, the debt-free wristband, I'm going to throw it in the product meeting that we... Hand-painted. Ramsey wristband, the debt-free wristband. I'm going to throw it. That could go big. I'm going to throw it in the product meeting that we... Hand-painted. I don't know. If you made the original prototype and then we

mass-produced it. You get Oompa Loompas to paint it. I don't know. Paint the wristband, yeah. I don't know. I don't think I've got a steady enough hand or enough patience to paint them now because I'm not money-motivated like I was back then. I love that, though. I mean, you've got to be an entrepreneur. And then I would cut grass and I did everything else. I had a grass-cutting business. That was as innovative. I love that, though. I mean, you've got to be an entrepreneur. And then I would cut grass, and I did everything else. I had a grass-cutting business.

That was as innovative as I got. 27 yards to cut, man. My dad made me keep a P&L on that thing. I made $10 a yard back in the 80s. That was pretty good. $10? $10, yeah. And I got three.

That was in the 70s. Dave, you're a good bit older than me. I don't want to point that out, but I guess I just did. Yeah, you just did on the radio. On my show. I know. You just did that on my show. Folks, I'm looking for work.

I got some leather tools. You can pick up the bracelet business. That's it. That's my new gig. This is the Dave Ramsey Show. Business leaders, now more than ever, we need people with the right skills to support our communities, especially the frontline workers who provide resources and care for those most in need. To help, LinkedIn is offering free job posts for health care and essential service organizations that need to quickly fill critical roles with the people who help us all.

If you are hiring for one of these organizations, free job posts on LinkedIn can help you quickly find the right people for your front line. LinkedIn jobs can help by screening candidates for skills and experience you're looking for and putting your job post in front of qualified people who have what you're looking for and putting your job post in front of qualified people who have what you're looking for so you can find the right person to quickly fill critical roles to post a health care or essential service job for free or if you're in another industry and have hiring needs visit linkedin.com slash ramsey linkedin.com slash Ramsey. Terms and conditions apply. Life on the radio. It's called the Dave Ramsey Show.

We're glad you're with us, America. My co-host today on the air, Ramsey personality, Ken Coleman of the Ken Coleman Show. Celebrating this week, hitting his 50th radio station in the Ramsey personality, Ken Coleman of the Ken Coleman Show, celebrating this week hitting his 50th radio station in the Ramsey Network, carrying the Ken Show across America, as well as SiriusXM, a podcast, and YouTube. You can get it everywhere, and it's all free. And just like this show, it's worth about what you pay for it. Unfortunately true. But Ken has got a real wonderful way of helping people find their career

find their calling find their clear path and we're talking about jobs and money and careers and money today all woven in together jasmine is with us in texas hi jasmine how are you? Hi, Dave. I'm good. How are you? Better than I deserve. What's up? I just, first of all, very quickly, I want to say thank you because coming from someone that was a teenage mom and barely making it paycheck to paycheck, even at one point when we got in my car, since I found you last year, I've paid off about $60,000 in debt, and it's just made a world of difference. So thank you so much. Way to go, hero. How did you do that?

You went fast from teenage mom living in your car to highly prosperous. How old are you now? I'm 27 now. I just turned 27. Very cool. Very cool. I just found you last year. I wish I would have found you sooner.

Okay, so what you're saying is you had a rough start, and you're going along in your career, and then our information helps you work your career stuff into the money you're making like an adult into straightening up some of these things. Exactly. Good for you. Good for you. How can we help?

So my question, I'm very glad Ken is there with you today. I guess this is more of, I know this is a question I can probably, or I need to answer myself, but more of a question of maybe what you would tell your daughter, Rachel or Ken, even maybe your daughter, but your opinion. The military has always kind of been in the back of my mind, and I'm very grateful for the career that I have now. I just, I kind of want to have, I guess, my doors open and different opportunities in case I do decide to make a switch in my career. And like I said, the military has always kind of

been in the back of my mind. It's just, I guess the only thing that's holding me back, if you will, is the fact that, you know, I do have a 10-year-old son. I am married now. I actually just got married last week. Oh, congratulations. Thank you. So I do have a spouse. I'm not necessarily a single mom now. And I just, we talked about it, and obviously he's very supportive of it. He's

actually a veteran himself. And so what's your concern? It's very obvious. You've mentioned it twice that the military has always been in the back of your mind. So I want to, I want you to answer two questions. Why, why is the military and serving in our military always been in your mind? And then the second is, what are you afraid of? What concerns you about taking steps to make that a reality? The fact that I have a 10-year-old. You know, I know obviously that would be a sacrifice that I would have to make in losing that time with him. So I guess, and so like I said, I guess being more of a... You mean like boot camp?

You wouldn't lose four years with him. No, no, not necessarily. But there is possibly, you know, moving. But unless you're deployed, then that would be the only situation where you would be away from him, correct? Correct. Okay. So you have to take that into account, the possible deployment, depending on what position and how you're serving.

So that is an issue. But I'm curious why you've always thought about the military. What's the why behind that? Well, definitely the opportunities and benefits that I hear from them, but mainly, you know, obviously serving our country. But I guess the question, the discussion came up between my husband and I because I'm considering doing a career change and I thought about going into like a PA program and that's kind of when the doors opened to him discussing with me you know well you know he's he had a great opportunity with going to school

when he went into the military all paid for of course right and you know just kind of got that yeah back in my mind as far as oh oh, that might be a good option. What does he do? He works in IT now, cybersecurity. So if the military moved you and your family, he could move his job? Definitely. Okay. That's a positive.

So you're looking at this as the GI Bill, essentially. You go serve, do something you've always been interested in, serve your country. Then you get out and they pay for your education to actually do what you want to do long term is that what i'm hearing and and not only to include mine but more than likely you know my son's um college in the future which i mean i plan to have that set up regardless i'm not i guess i hate to word it that way because i'm not looking for a free ticket to money or anything. It's a benefit that is attractive for the career. There's nothing wrong with that.

I think it's a perfectly fine path. The only thing I would encourage you, what I would tell my daughter is this. I'm okay with that path. It's a good path, a smart path. I just want to make sure that it leads to where you ultimately want to go. And that's the only thing I'd say, and I think that it's going to. So I'm not saying you're a problem. You've got to do a lot of research, and you've got to find out exactly what the guidelines are on education for you, education for your child.

That's one of the two. That's the two of the things you want to get out of this. And so you need to know exactly what your guidelines are to do all that. And as you get that figured out, then you're going to know, you know, is it a five-year program, a four-year program, or a 10-year program? How long have you got to serve to get those full slate of benefits? I don't know that off the top of my head, by the way, but you do need to know it before you make this decision. But if your husband is willing to move, the time away from your child, you know, if you go into certain areas of the military, certain job types in the military,

and at your age for them to, you know, what you could get out of a recruiter, I think you could be pretty selective about what you did. You might even go into officer school. I'd love for her to look into potentially a role in the military that sets her up, qualifies her, when she gets that PA degree and she wants to go in and be a PA. I mean, I actually I we get that call out on the Ken Coleman show. A lot of our veterans will say that they send her to school and then she serves out the school as a PA in the military. That's exactly what I would be looking at. Now that there is a chance of deployment on that. That's not one that you can necessarily stay at home. But that's, you know, the job type is going to determine whether or not you stay stateside in the event of a deployment

or whether you end up in a sandbox somewhere. So neither one of us has served, so we don't know the details, kiddo. But you do need to dig into it, get every one of the details. And thank you to your husband for serving, and thank you for considering that as well. You've got a great story. I kind of have the idea that whatever you set out to do, you're going to be able to pull it off. Just be very diligent, careful, wise, turn over all the rocks, get all the details.

Marty is in New York. Hey, Marty, welcome to the Dave Ramsey Show. Hi, Dave. Hi, Ken. How are you doing today? Great. How can we help? So I had a question. I wanted to know if I should continue paying off my

student debt, uh, roughly around 9,000 left, or do I wait until, you know, COVID-19 has passed and I feel comfortable that my job is still going to be there. I mean, uh, so till now I've been comfortable that my job is still going to be there, but like every month they have like these, uh, meetings with the whole region. Um, it's all region. It's one of the bigger accounting firms. So what would you say the probability is you're going to lose your job in this calendar year due to COVID? 50%, 70%, 20%? So every time they keep on saying it, no layoffs as of now. And they're, I guess, reevaluate.

And that's their most important thing to them is that there are going to be no layoffs. Now, there are other competitors that have done that, so, like, you never know. What do you think the probability is that you're going to be laid off in this calendar year? Hard to know. I never had this, you know, had COVID-19 before, so it's hard to know. But until now, I felt comfortable, and I've been attacking the debt. Okay. It sounds like it's less than a 10% probability to me, the way you're describing it. Am I wrong?

I mean, they did announce that there are no performance bonuses. There are salary raises. Okay. The higher the probability you're going to be laid off, the more likely you stop paying extra and pile up cash. If you're just a worrywart, and there's not an actual probability, but you're just worried in general, no, you don't stop. You get the student loan paid off. You plow through the worries.

This is the Dave Ramsey Show. folks save cash by fixing your major appliances yourself get your parts from my friends at appliance parts pros we just heard from a listener who said he saved his family at least 500 by getting his parts and expert advice to fix his leaky fridge and dishwasher from appliance parts pros these guys carry over 2 million appliance and outdoor power equipment parts and offer easy returns order Order your parts today at AppliancePartsPros.com. Our scripture of the day, Psalm 27, 14, Wait for the Lord, be strong, and let your heart take courage. Wait for the Lord. Winston Churchill said, Courage is what it takes to stand up and speak.

Courage is also what it takes to sit down and listen. Open phones this hour. Ken Coleman, Ramsey Personality, host of the Ken Coleman Show, is my co-host on the air today. We're taking your calls at 888-825-5225. Deborah is in Arizona. Hi, Deborah. How are you? Hi, Dave. So great to speak with you. Debra. How are you? Hi, Dave. So great to speak with you. You too. How can we help? Hey, my husband's retiring soon, and the only debt that we have is our mortgage.

We owe $73,000. And with the state of the market right now and the value of all the retirement dollars that are there, we are contemplating whether we should pay it off in full right now or continue to pay some monthly payments and just take a little bit out of our retirement funds to pay the monthly payment. What do you mean by state of the market? Well, I mean, we've lost a little bit of money it's not as much as it was have you looked at the market today yeah we just sold some stock a few days ago and made a boatload of money so i don't need to worry about that then you're not i mean the market's not really down it's like 28 000 and it was high was 30 in fact it's recovered all of its losses from the year it's now up

yeah okay over over last year they pay the house off yeah how much have you well i mean not based on the marketing way i wouldn't how much have you gotten your nest egg uh 2.5 how much do you own your house uh 73 000 write the check today. Okay. Okay. It's like everybody else buying a biscuit. You did so good. Did you guys inherit a bunch of money, or did you save every bit of this over the years? No, no.

We inherited maybe about $400,000 a couple years ago when my dad passed away. After you were already millionaires. Yes. Yeah. Yeah yeah you're rock stars way to go oh thank you okay i appreciate that we're talking with our investor on friday and we're going to go ahead and do it then it's not his decision just tell him what to do okay your decision it's your money you're the one with two and a half million dollars not him okay so she's a very sharp lady obviously two and a half million dollars ding ding

but my question is why does she call and ask that question what's because she's a smart smart woman what's causing her to question that what happens with most people and i'm not i don't know about her i mean she just wanted some reassurance right she already knew what she was going to do she's probably on that track anyway but the thing is this when there's all kinds of psychological studies on market loss and for every dollar that you lose in an investment in the stock market emotionally you have to make about four dollars to offset it i see in other words it pounds the psyche a lot more than it builds the psyche. Okay. When there's a loss emotionally, then there is a gain.

And so, because, of course, the news and everybody reports on it. Right. And so, when you actually put math to it, though, what that does is it slices through the emotion. It slices through the psychological warfare that you the psychic uh the psychological warfare that you've been under in your brain with this and you go yeah the stock market's been down because of covid you know we all do that right and because it did it went from 30 down to 19 right on the dow 19 000 now and it's i think it's about 28 this afternoon, something like that. And so it's almost recovered back. And so if you take that $73,000 and you say it lost 4%, the state of the markets on that $73,000 is irrelevant.

It's irrelevant. And $73,000 as a percentage of $2.5 million is like a biscuit. That's right. I mean, most people buy it. It's a non of $2.5 million is like a biscuit. That's right. Most people buy it. It's a non-decision. If it's the wrong decision and she lost $73,000, it still doesn't affect her life at $2.5 million safe. So there's no wrong answer here, but we try to get in

and we try to do math with our emotions, but if you'll do the math, it'll cut the emotions in half. That's good. That's a good takeaway there yeah because that that that's the the negative impact on your psyche it takes like a four to one ratio to recover uh you got to make four dollars for every dollar you lost to emotionally recover but when you do the math it tells you it tells your mind hey bs that's not true it calls bs on the mind on the mind trick you're playing inside your brain and everybody does it i do it and i'm

trained in this stuff but you go oh the market's down and then and then you don't notice when it comes back up right see like you know 9-11 when right after the cowards flew those planes into the towers in New York, obviously. What did the stock market do when they reopened finally a week later? It was a Tuesday morning. Monday morning they waited until Monday morning to reopen the stock market. Two reasons. One is that gum rubble fell on Wall Street literally. Wall Street's right there on the south tip of Manhattan.

And the second reason is they wanted to panic to get out of the air on the stock market. But what did it do? It dove 500 points in four minutes as soon as it opened on 9-11. And the headline, worst stock market history, recession coming, worst stock market dive in history. And everybody talked about how 9-11 was going to cause recession. 9-11 was going to cause recession. The terrorist attacks were going to put the nation into a tailspin did it and history says no history says that the losses in the market in the next few days after

the market opened fully recovered in 56 days did you hear a single headline on that, America? No, you didn't. Because they don't report good news. They only report when the world's coming to an end, chicken little. And what they're doing is feeding off of our fears. Much like they did with the COVID. You know, they took what was a valid concern and took it all the way to the hysteria level. And much like they do with a lot of stuff.

They take valid concerns and the hyperbole and the drama around them, and if you buy into that, then it affects your buying decisions. It affects your money decisions. It affects your investment decisions. Because while $73,000 in light of a $2.5 million nest egg is not a lot of money, that's what you mean by the biscuit, it still feels like, wow, $73,000 of cash I'm going to cut a check for is this risky is this scary and that's what she was dealing with yeah it's the emotion is bigger than the reality that's good and that's true in the losses as well yeah because it felt like you know because there was a 20 what a 22 percent down on the market at the

bottom no question and so that's fourteen14,000, by the way, on $70,000. Right. Right. Now we're talking peanuts out of $2.5 million. And now it's down like 4% or 3%, which would be like by dinner on $72,000. A nice dinner, anyway. And so that's how our minds work. And it's like people say, well, you know't i don't want to use up my savings i mean i don't want i don't want to i want to move my credit card for an 18 to a 10 well that's eight percent savings sounds really great what's the balance on your credit card three hundred dollars

well buy a biscuit you know you know when you actually multiply that out it doesn't solve your problem and it keeps you from presenting the problem that's in front of you. So you have to, in personal finance, when you don't take behavior and you don't take psychology and the psychology of losses into play, and the best way to circumvent that is two things. One is look out in the future 10 years and say, what's the best decision 10 years from now? And the second way is to do the actual math and come up with the real dollars involved not the feelings well you just you've just done psychology 101 as you've said because we know that what we think about affects the way we act right i mean you can't act your way into change you got to think your way into change then you act so when

you change your thinking you change the way you act and you just laid it out beautifully that the math takes the emotion out of it i think that's a really good takeaway for a lot of us on a lot of decisions yeah and but it's a good question to ask her because she's i mean obviously they're very smart people get two and a half million dollars from nothing right i mean you don't do that if you're stupid right and they're everyday millionaires they're very smart and uh you know you could tell with their voice patterns or her vocabulary she. She's a sharp lady. So not a dumb question. Not a dumb question.

But when you unpack the why behind it, it helps you grasp, okay, when I'm making my next decision, how do I do that? Gives you the tools to make the decisions with. Good show, Ken. Thank you for having me. Always fun. Co-host Ken Coleman here on the Dave Ramsey Show this hour. James Childs is our producer. Madison filling in for Kelly is our associate producer and phone screener. I am Dave Ramsey, your host.

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. Hey, guys. This is Kelly, associate producer of The Dave Ramsey Show. Did you know over 16 million people listen to The Dave Ramsey Show every week? And a lot of those people listen on one of our 600 plus radio stations across the country. To find a station near you, head to DaveRamsey.com slash show.