The Ramsey Show - App - I'm 19 and Debt-Free...What Do I Do Now? (Hour 3)

Episode Date: March 23, 2021

Debt, Relationships, Savings Sign Up for a FREE trial of Ramsey+ TODAY: https://bit.ly/31ricKt  Tools to get you started:  Debt Calculator: https://bit.ly/2QIoSPV Insurance Coverage Checkup: https://bit.ly/2BrqEuo Complete Guide to Budgeting: https://bit.ly/2QEyonc Check out more Ramsey Network podcasts: https://bit.ly/2JgzaQR

Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. You jump in, we'll talk about your life and your money. My co-host today is Dr. John Deloney, Ramsey Personality bestselling author. He is host of the Dr. John Deloney Show, where he talks about life and boundaries and relationships and all kinds of issues having to do with mental health.

So, hey, if you want to join him on that show, you can always do that. It's a very popular podcast and YouTube show, and you can call in at any time you want. Just call at 844-693-3291, or you can email him at askjohn at ramsaysolutions.com. Askjohn at ramsaysolutions.com. So if you can't get in today to talk to him, that's what you would do. The phone number, though, today is 888-825-5225, 888-825-5225. Rob is in Atlanta, Georgia. Hey, Rob, welcome to the Ramsey Show. Good afternoon, Dave, Dr. V. How are you guys?

Great, man. What's up? Great. I am calling to see when and if I need to move from just a standard will to like a living irrevocable trust. When you got $50 million or more. All right. Perfect. Easy peasy. Here's why, okay? These things are sold. It's about a $3,500 to a $5,000 legal bill to build that document. And then you have to shift every single thing you own that you want to transfer at your death, which is every single thing you own, into the name of that trust, and you have to conduct all business in that trust.

And so if you buy a car, it's in that trust. If you have an investment account, it's in that trust. If you own a piece of property, it's in that trust. You get have an investment account, it's in that trust. If you own a piece of property, it's in that trust. You get ready to sell it, trustee has to sign all the documents. It's a pain in the butt to operate out of the thing. And here's what happens. Lawyers sell these things all the time as a way to avoid probate tax and as a way to ensure that your assets are passed the way that they're supposed to be passed.

And then they don't coach you on moving all your freaking assets, which means the trust is sitting there as a shell, unfunded, doesn't have anything in the name of the trust, and so it's of absolutely zero value at that point, and 78% of the trusts never get funded. People don't move their assets into the name of the trust, so the whole thing's dumber than crap. Now, when you get big money, big money like i'm talking about like like this particular building i'm sitting in is in one of those trusts okay now what that does then because this building that i'm sitting in is worth about 140 million dollars okay so that building as it goes up in

value i don't want that value in my estate i want that value to pass to the kids with no estate taxes. And so placing this puppy and operating it out of a revocable trust makes sense. Doing that for something that's a million bucks will drive you freaking nuts. Right. You follow me? So life insurance, yes. Life insurance beneficiaries and all that stuff and 401k stuff. Life insurance beneficiaries are not taxable as an estate item anyway.

They're not part of your estate technically. I'm just saying if that moves, that'll move relatively quickly after my passing. Oh, easy. Someone's name is a beneficiary. Yeah, they'll get that money most of the time within a few weeks. They'll get your, you know. And the access, if you've named a beneficiary on your 401Ks and your IRAs and that kind of stuff, that's going to be very easy to access by the heirs as well.

And so, yeah, and if you've got a decent will that's done, your family ought to have access through the executor to the cash that's in your checking account within a matter of days. Right. So the probate action will move relatively quickly as well. Assuming you have a freaking will that's done right and the judge doesn't have to blink at it, but you just go in, you know, your lawyer will dance before the judge and do two twirls and walk out of there with the executor's in charge of everything. It doesn't drag out for months.

Now, the reason a lot of people do this some states have a big state probate tax where they they tax your estate upon your death like say you had five million bucks okay and there's if there's a three and a half percent tax on that then you know that's going to be a 150 000 tax, on your estate. And that's a state tax. I didn't know that existed. Yeah, it doesn't in Tennessee. It didn't work? No.

But a lot of states, like Florida's got a big one. So, which a bunch of old people there, so that makes sense. But, you know, but, you know, that's what they're after. So the federal estate tax

doesn't come into play much because the exemptions are large enough. But that's why people move stuff into this because you can avoid that probate tax, and you have instantaneous access to stuff. But the problem is the day-to-day operations while you're living are a complete pain in the butt, and people forget to move everything into the name of the trust and then operate the name of the trust. And so, like, we're adding some property to this campus, and I've got to make sure all that stays in that same trust,

and the money used to buy it has to come out of this trust. Right. And so it's just a freaking barrel of fishhooks just to keep the government's hands off the stuff you've already paid taxes on. Well, you just blew my mind by telling me that some states charge you to die oh well the federal government will too yeah like big okay so i did not know that yeah well yeah i mean the federal state tax exemption right now just die right yeah this is this is when you get pissed off about taxes and this is when you get pissed off about people saying when you work your whole life and you started with nothing and you work your whole life and you've got some money and then people go well you know the rich need to be taxed and so when they die they should be

taxed again on money they've already paid taxes on so the federal estate tax exemption right now i'm trying to look at my cheat sheet here because it moves all the time. Last year, it was $11 million and some change. Okay? So anything over that's taxed at about 40% by the feds. So if you've got a $20 million, $21 million. But they've already taxed it when you made it. If you've got a $21 million net worth and you die, you have a $4 million tax bill. Even if it's all in real estate.

So if it's a family ranch, you've got to sell off part of the ranch. To pay the tax. To pay the feds.s but what about because you're an evil rich person you already bought that so you already made that money so they already taxed you at 40 the first time yeah this is a different 80 tax off your money death tax yeah and that's what he's trying to avoid that's the problem here so it's a it's a i did not know you just blew mind. It's a rare moment when I'm speechless, and I am now. Wow. Well, it just doesn't come up because it's the rich or easy target, right? You should always make fun of and steal from the rich.

It's a Robin Hood thing and a very democratic thing to do. Wow. I didn't know you got taxed when you died. Yeah. Most people don't because most people don't have $11 million. Yeah. So there's no federal tax on anything under $11 million. So you're okay if that's the case.

And if you're in a state where there's no probate tax, you don't. And if you don't have any money, you don't get taxed on it either. Right. But if you work your whole life starting from nothing, your grandpa started a business, and he tries to hand it to your dad, and then your dad tries to hand it to you. And every time it's gone up in value, every time somebody dies, it gets hit again, unless you use one of these trust mechanisms. And even then, some of it's going to be exposed.

I think after today, I'm going to call into my own show to process this. I don't even know what to say. John's grieving on the air. He's grieving the American dream. Wow. Just found out how close socialism is to your back door. It's expensive. Wow. Problem is, how close socialism is to your back door. It's expensive. Wow.

Problem is, you run out of other people's money. This is the Ramsey Show. Technology and digital products are changing every single day. Ramsey Solutions is no exception. We are working hard to produce shows and design products that will serve people well. But in order to do that, we need people like you to join us on the mission to change lives. Yes, that's right. We're hiring designers, marketers, writers, sales reps, and tons of engineers. We are paving the way with our digital products, and we have massive goals to deliver hope to millions more people. And you should know, while we always work hard, we also have a lot of fun.

It's simply who we are. It's no wonder Ramsey Solutions was named Best Place to Work in 2020 by Inc. Magazine. We want you to join our team of 1,000 folks here in Nashville and come do work that really matters. Text CAREERS to 33789 to apply today. That's CAREERS to 33789. Dr. John Deloney Ramsey personality is my co-host today. Have you ever made a dumb decision with zeros on the end because you didn't do your research? Yeah, me too. Most people make choices based on feelings or opinions, especially when they're buying a house.

But when it comes to the real estate market, feelings aren't your friends. Check your facts. Find out what you can actually afford. Research what's trending in home prices. Talk to a reputable real estate agent in your area like one of our endorsed local providers. Never buy a house without the facts again. If you will text the word HOUSE to 33789, you'll get an agent to help you make smart decisions. Text HOUSE to 33789.

Alex was with us in Vancouver, British Columbia. Hey, Alex, how are you? Hi Vancouver, British Columbia. Hi, Alex. How are you? Hi, I'm well. How are you? Better than I deserve. What's up? Okay.

I'm calling today because I have a question about buying a car. I want to know if I'm in the right position to buy a car and if so, how much I should spend. Okay. So I'm a fourth-year university student. I make $40K a year right now, but I project that to go to $60K or $70K once I graduate this summer. I do have student loans. I have about $31,000 in student loans, but I actually have the loan in full in an investment account because here in Canada we get a small grant portion with the loan. So I just spend the grant portion and I put the loan aside so I can pay it back in full in an investment account because here in Canada we get a small grant portion with the loan

so I just spend the grant portion and I put the loan aside so I can pay it back in full after like this summer and I pardon like this summer when you graduate well um once you graduate you have a six month grace period so I'll keep it in the investment until it's like I have to start repaying it nah just pay it off yeah I would pay that sucker off yeah just be done with side issue okay so what's the question about the car so my parents are giving me some money they had a 175 000 settlement come to them and i'm wanting to buy a vehicle i have two vehicles right now. I have one vehicle that's worth about $3,000 and one that's worth about $7,000. And I'm hoping to put that money together, add a little bit from my parents' investment on top of it, and buy a vehicle. My parents are going to give me $15,000, but they said if I buy a vehicle, they'll top it up to $20,000 to help me out.

So it kind of gives me some incentive. I guess my question is that the vehicle that I'm driving right now is very reliable and there's nothing wrong with it, but I just want a vehicle that does all-wheel drive. But I want to make sure I'm doing it the right way, especially because I want to be able to pay for my master's degree in about a year from now and I have a long-term goal of buying a house. So I just want to know how to go about it the right way, given I have all these moving pieces. Good, good, good. Very, very well thought out.

Good for you. Okay. In general, if you're 100% debt-free and you pay cash for the car, no more than half your annual income, and you're not going to be approaching that. And half your annual income this summer is going to be $70,000, so that would be $35,000, and you're not talking about spending that much on a car, I can tell. So you're talking about buying like a $15,000 car, aren't you?

That's what I was thinking. I almost did buy a $24,000 car, but I had your voice in the back of my head saying that that might not be smart. Yeah. Well, the only thing I'm worried about is I want you to have enough cash left over after this car purchase to finish your master's because that's more important than the car. Yeah. So what's it cost to do the master's? Probably about $20,000, I think. Okay.

So let me catch up then. So you have 10 worth of vehicles. Your parents are going to give you 20. That's 30. If you spend 15, you're going to have 15 left, and you need 20. Yeah. And where are you going to get the other five to get your master's? Well, I'll be working, and my expenses are about $2,000 a month.

So I'll be able to save, I think. So you're going to pay cash for your master's for whatever amount you don't have left in savings. If you can pull that off and buy a $15 dollar car i'm good with it okay um and then what that means you don't buy a twenty thousand dollar car yeah okay that's what i was thinking because you're not gonna because that's gonna leave you ten thousand in the hole on your master and that's gonna be tough to pull off with work money yeah yeah so don't do that i want to up my expenses a little and not like so fluently yeah well 15 15 000 is very reasonable car you can get a great car for that and your master's is like on a scale of one to ten a ten and a car is a two yeah they're very important

not important i would be tempted to keep my car and get through my master's degree. Yeah. Especially if you say you've got a reliable car. It may not look pretty and all that. Well, mom and dad are going to give her an extra five. She can make the 15 with that extra five, and it's no net-net loss. That's true. So if they're doing that to get the car, then, yeah, I would do it.

But, again, I'm not going 16. I'm not going 17. I'm not going 20. I think 15 is your cap. And that's selling both the other cars. You don't get to keep any pets around. Right. They've all got to go.

So you put five for mom and dad. That's the extra five they gave you and the 10 from your cars into a car. That's reasonable. But here's the thing. If you go screwing around with it more than that, you're going to leave yourself vulnerable, and you're going to have an excuse in your mind to get a loan for that master's and i'm not going to go with that neither is john especially on a depreciating asset like a vehicle yeah it's the wrong direction

wrong stuff to put money into logan is in chicago hi logan what's up hi dave hi dr d how are you guys doing today great man what's up so um story short, I graduated in the class of 2020. I decided not to go to college due to COVID. I was going to go to music school, and, well, live music isn't exactly around right now. I got a job making about $70,000 to $80,000 a year. I paid off all of my debt. I've got a lovely girlfriend I plan to marry, and I'm really kind of struggling with where I go financially from here.

Where did you stumble into an $80,000 job? I sell cars at a local dealership. Wow. Well done, man. Good for you. Thank you. Okay. So you're 19.

You make 80 grand. You don't have any debt. And your question is what to do now? Basically, where do I go from here? I've, you know, now I've got very few responsibilities. I still live at home. I pay rent to live at home, but that's a very small portion. I've got a decent amount of income coming in. Am I saving that money for a house? Do I start working towards like an engagement ring? These are the kind of questions I'm asking myself.

Yeah, I think all of the above. Goal one is build an emergency fund of three to six months of expenses if you weren't living at home. Okay. If you had an apartment and you needed three to six months of expenses, utilities, rent, food, all that kind of stuff. You need to talk about moving out probably in the next six months or so and get your own place.

And then your emergency fund is your first goal. Probably the ring is your second goal, and then begin saving for whatever, buying a house or whatever beyond that. So I guess in my situation, it seems to make more financial sense that i have a good situation here at home to bank the money rather than go out and spend the extra six hundred dollars plus a month it would be for an apartment well for a little while uh but there's a point you become a man and you move out of your mommy's basement and so the sooner you do that the more likely that's going to become um and so uh if you were marrying my daughter i would want you to have lived on your own and paid your own freaking bills for a little while i don't want you moving from

your mommy's basement to be my daughter's husband i can totally understand that okay and that's just that's a matter of development i i've i 100 agree with that and i i would it's hard when you want to invest and and get this roi on my money that three to six months man is just to protect you yeah and it's not there to grow it's not there to be shiny it's just there to be your own personal bank for yourself yeah the the money you're going to spend living on your own is an investment in your own growth maturity and growing up and it's a good investment and it's an investment in preserving your relationship it's not it's not giving your dad the middle finger

i mean it's just thank you for the you know for the launch pad uh and thank you for not allowing me to have failure to launch and so yeah you know you go do that and then you have your emergency fund in place before you do that and you you know so i'm not saying you've got to move out tomorrow i said six months in six months you ought to make an 80 grand. You ought to pile up, what, 30? A lot of money. You know, you ought to have some money, man. I mean, so where are you spending it on?

You know, I mean, a ring and an emergency fund. And move out. And there you go. That's what I would do. You do whatever you want, brother. But I appreciate you listening. This is The Ramsey personality, is my co-host today. Damaris is with us. Damaris is in New York City.

Hi, Damaris. How are you? Hi, I'm doing well. Thank you so much for taking my call. My pleasure. How can we help? My husband and I currently have about $113,000 in debt, which does not include our home. We have approximately $10,000 in savings for emergencies in case anything happens with the home. We have our son and we're about to start foster caring. And we've been living simple. We've paid off $27,000 in credit cards, so those are gone. And we're just trying to decide, do we use the $10,000 to help pay towards the debt

and bring us down to the $1,000 emergency fund? Being that we have a home and we have someone, a student foster child, we're just not really sure if we should save that money or, you know, use that towards. So what is the $113,000 in debt? We have about $19,000 or so in a car loan and then $94,000 in student loans between my husband and I. And what's your household income? Currently, my husband makes $68,000. I am making, unfortunately, $12,000 a year.

I used to make a lot more, but when COVID hit, I lost my job. What did you used to make? I used to make $52,000. When do you think you'll be back? Well, I'm a bookkeeper, so I've been looking for work on the bookkeeping job, but most jobs now want a degree, and I don't have. I didn't get to finish school. I don't have my degree yet.

In New York City, a non-degreed bookkeeper can make $52,000 with experience. Yeah. I'm actually in North Jersey. Yeah, but, I mean, it's still that same market. That's doable. Yeah. It's not instantaneous, but, I mean, your life did not end because you didn't have the only job in New Jersey that someone paid $52,000 for bookkeeping.

That's just for a non-degree bookkeeper. That's not true. They're there. So that's good news. The good news is you're going to be back if you want to be. Are you going to go back? Oh, I've been looking since October for, in conjunction with this job. I was working actually three jobs at one time just because I wanted to get a, you know, take care of family.

But now I'm making, now those two others fell off. They ended. The contract ended. Yeah. And so I'm still looking. All right. I even started doing DoorDash just to get money coming in while I'm looking. Okay.

I'll tell you what. I want you to go to KenColeman.com. Ken is one of our Ramsey personalities that does a show on Sirius and on 75 radio stations across America. He's not in your market, but he's one of our team members here, and he teaches people how to land jobs and how to focus on their career. There's tons of free resources there on landing a job and doing a more effective, efficient job search than the traditional job search. Okay? He's going to help you a bunch with that. I'm going to give you a copy of his book, free.

It's called The Proximity Principle, but it's KenColeman.com. Now, when you land that job, it's going to lower your fear substantially. You're kind of in a medium-sized storm. And I'm not sure you should be on the baby steps right now. You might should push pause, and you guys just pile up as much cash as you can pile up, and then you land that job, and then you clean out that account and go down to $1,000

and start baby step one, baby step two immediately, tearing into this debt. Again. Okay. But if you want to pile up cash, I'm sorry? We were doing really well, and then this debt. Again. Okay. But if you want to pile up cash. I'm sorry? We were doing really well, and then this happened. So, you know, that's how we paid off the $27,000 before.

You lost almost half your household income. Yes. Is now a great time to be fostering? It sounds like there's a lot of stress and a lot of heat in that home. And, man, fostering, it's such an honorable thing to do, and it is hard. It is hard. You know, we prayed about it, and we were put on hold because of COVID. And then just literally three or four weeks ago, they called us saying,

hey, are you so interested? And in our hearts, we've always wanted to. And we just felt like if they're calling us, it's God's timing. And we're really happy. I mean, God knows we have food on the plate. We're very blessed. We're happy with what we have. And we're just trying to, you know, be thankful. And if we can help another child

in this situation, that's kind of where our heart is at. I get that. I hear you. Yeah, I want to always go back, and this is an overdone analogy, but you've got to put your oxygen mask on first before you put your oxygen mask on your kids. And you guys have got to be healthy. Your marriage has to be good.

You've got to knock this debt out. You've got to figure out what you want to do with employment or stay at home. It sounds like a lot of moving pieces, and to bring a kid into that intentionally, man, it's a wonderful thing to do. But, man, it's going to just add another layer, a big layer of weight into that home. Yeah, agreed. Okay. So push pause and pile up cash on the money piece.

Go to KenColeman.com. Hold on. Kelly will give you a copy of Proximity Prince. I want you to land that job super fast. And then I want you to push play, which means you are going down to $1,000, and you're going to put everything on the debt, and you're going to list your debt smallest to largest, and you're going to pay off $113,000 in 36 months,

and you're going to be 100% debt-free three years from today. But that's how their process is going to go down. But you don't want to half do it and say, I'm going to keep the 10, and then I'm going to keep paying on the debt. No, let's either say it's a storm, and we're on pause, and we're piling up cash, or we're down to $1,000, and we're game on, whichever it is. I think you're in the middle of a storm, and you hadn't really calculated that because you lost half your annual income that's what it sounds like

emma's with us in austin texas hey emma welcome to the ramsey show hi guys how are you good what's up okay i am in a major um i guess you could i want want to say a catastrophe or just kind of some kind of explosion right now. And I really need your help with making a decision for our family. We are, my husband took a job about five and a half hours away. I don't work, but I'm just not sure. We're really close. I've been putting everything towards our debt. We're already paid about... Why are you not moved with him? No, he just took it.

It just happened. When? It's not... Two weeks ago. Okay. So you own a home? We own two homes. Are they up for sale?

No. Why? One has a renter in it and the other one I'm honestly in the middle of doing foundation work repair. Okay. I literally have a leak underneath my slab right now. So you're going to stay at home for a little while until that's, you're going to stay away from him for a little while until that gets fixed and then you're going to get on the market. Well, I don't know because I don't know what's going on our marriage has been shaken

a little bit and so i'm very nervous because it feels like all aspects of my life are not solid does that make sense yeah i'm really um not in a good mental place, and so I need clarity. The reason why our mayor is not in a good place is because I found that he was taking money secretly out of our 401K, or his 401K. And so I don't have 100% confidence. When did you find this out? About two months ago. What was he doing with the money um honestly it was between um just things that he wanted and then because he wanted to be have a gun collection toys and how old is he at 40s so it's his job that he took five hours away is that a

is that a move is that a power play um it could be it definitely and i've been asking you know like we've been you know pinching pennies for a while now and so this is more money um closer to his family not necessarily my family did y'all make this decision together uh i would say that 80 him and 20 me i said i'm supporting you i'm i support you but i also so you don't need to do anything until you guys get in the marriage counselor's office asap yeah yeah there's no no you don't need to do anything until you guys get in the marriage counselor's office. ASAP. Yeah. You don't need to make any financial moves because you've got to decide, both of you, have to decide what's going to happen here going forward. And so while you're fixing the foundation on the house, let's fix the foundation on the marriage.

It's way harder and way more important. Yeah. This is The Ramsey Show. Our Scripture of the Day, Proverbs 18, 15. The heart of the discerning acquires knowledge, for the ears of the wise seek it out. Brian Herbert said, The capacity to learn is a gift. The ability to learn is a skill. The willingness to learn is a choice. That's a strong quote. I like that one.

Maria is with us. Maria is in California. Hi, Maria. Welcome to the Dave Ramsey Show. Hi, Dave. Thank you for taking my call. My honor. What's up?

Hi. So I am 20 years old. I have about $30,000 in savings, and I just wanted to get your opinion on what I should do with that money whether that is putting putting it in a Roth IRA or saving it for a down payment in the future for a house. Okay what are you working you in college what are you doing? Yeah I'm in college I'm in my third year I'll be graduating next May. Good. And I'm working part-time. With a degree in what?

In earth science. Cool. And hopefully I'm able to change that to a degree in geology. Very cool. Okay. So what are you going to do for a living when you get your degree? Well, I'm thinking about going into hydrogeology, doing work in that, which is why I want to target the geology degree.

Right now I'm doing an internship with the water district here in Orange County. So I'm getting the experience that I'll need in the future with this internship. So, yeah, that's kind of what my goal is right now. Okay, so when you finish all of this and you get the dream job, what does it pay? I don't know what a hydrogeologist gets paid. You'll have to tell me. Yeah, they get paid, I think, starting, it's about $80,000 a year. Yeah.

And then it goes up to $120,000. And how long is it going to be before you complete this field of study um well if i if i go to earth science um way i think i maxed out at like 90 which is why i want to do an extra year so if i do that extra year and go into geology i would be graduating may of 2023 and then i can um i would have kind of a bigger pay range in the future, which would, I think from what I've seen, it's about $120,000 to $180,000 with the hydrogeology. And that will take you an extra year. Yes. Kind of like doing grad work in a sense, but it's not really. Okay. No, really. Okay.

No, yeah. Okay. So the $20,000, the best investment that Maria can make mathematically is in this investment called Maria. Completing that field of study, completing that degree with what you just told me you're going to make as a result is worth the investment of the dollars a lot more than a mutual fund or Roth IRA will ever pay you. So I want every dollar you've got committed to you graduating and you graduating debt free as soon as possible and pursuing that line of income that you're telling me you can make.

Yes. Every dollar. Maria is the best investment Maria has possible because you've chosen a field of study that's not left-handed puppetry. You actually can do something with it, and you figured out what that is, and you know. You didn't hesitate when I asked you what the career field looked like and what you would be paid.

You already know. This is not a pipe dream you've got this studied you you've thought this through you're working in it right now you planned it you're working the intern you're doing everything right kiddo thank you yeah i also i forgot to mention um for my my expenses for school i get financial aid so i basically everything's covered which is why i didn't know if I should put that money to be working. I don't care if you save up $100,000 and you don't even need it. Go ahead and save it up and make sure that you graduate.

The day you graduate, you get this job, we'll start investing, and you can use that $100,000 to buy your first house. Okay. But right now, that money is laying there to make sure Maria graduates, and Maria graduates debt-free. John's got a Ph.D. in higher education, Maria. So, I mean, you don't see this kind of thing very often. No, this is a laser focus. But when Dave says all your expenses are taken care of, here's what that means.

Like most college students will say tuition, room, and board. Dave also means your engine is going to fall out of your car. He means someone is going to throw a rock through your back windshield or you're going to need some more clothes, whatever the thing is. So get to the finish line owing nobody anything. Does that make sense? Okay. Yeah, it does.

It does make sense. That's job one. Job two is get to the finish line with $50,000 in the bank. Okay. And some great connections. And no investments made yet. But you're 23 years old at that point making six figures, and you're going to be very wealthy because you are a laser focused

chick i mean you're amazing thank you so proud of you very well done if we could train america to do that say my self was like i don't know man let's like think about it bro and she's i mean the number of people getting a degree in beer pong is scary all right helen is with us in Fayetteville. Hey, Helen, what's up? Hi, Dave. Thank you for taking my call. Sure. How can we help? So my husband and I are on baby steps four, five, and six.

And we would really like to get our house paid off in the next 18 to 24 months. But I'm wondering, does it make sense for us to back off our retirement, investing a little bit to free up some money to throw at the mortgage and just to give you a fuller picture of where we are? What's the balance on your mortgage? 000 so how much you're going to back off and how quick what's it going to change the numbers well so we currently have about 425 000 in retirement he is 50 i'm 49 that wasn't what i asked i asked how much you're going to back off and how fast it's going to pay off the mortgage because it's probably not going to do what you think it's going to do well so we're currently only setting aside about 10 percent we're maxing out the roth 401k and roth i'm self-employed roth ira and then we're we've got some cash set aside beyond our six-month emergency fund and we're kind of we're in that position of all right can we start

throwing this at the mortgage yeah do we need to do outside investment outside i'm sorry one more time would you tell me your household income is about 400 000 oh you didn't tell me okay all right so if you make 400 000 and you don't want to put in 15%, you only want to put in 10%, how much cash have you got set aside? Let's see, above our six months, about $50,000. Okay, so let's see, 5% is $80,000. So if you do that, that's going to pay off, it's $80,000 a year. Did I do that right? I did do that right. That's $80,000 a year. It's 5%.

So if you do that, if you keep only putting 10% in and you take that $50,000 and throw it at the 200 mortgage, you should be debt-free in 18 months, like you said, right? Right. And then the rest of your life you just invest like crazy people. Okay, okay. Yeah, I'm in for that. Okay, all right. Well, I know that 15 is um really where you like well it's a lock but you understand you're in the top one half of

one percent of income earners so that you know you also don't need to spend 10 of your budget on food because you get really large true because you know things start to change with this kind of scale so right you know the good news the great news about this is you guys are actually thinking about it you're questioning whether you should break a rule in the system the dave system you know all that and so you're really you know and obviously you're not dumb dumb people don people don't make $400,000. So not anything I know of. Well, maybe one exception. I know a couple of them. But I just went there in my head.

But anyway, I'm just not going to say it. No, you're fine. You're fine. You're going to do great. You're being intentional. You're being thoughtful. You're being wise. You're going to pay off your house in 18 months, and you're not going to skip a beat.

You're going to have millions of dollars in your accounts, and you're going to be great. So proud of you. Very well done. Very well done. John, good show. Thanks, man. Good job, James and Kelly in the booth. I'm Dave Ramsey, your host.

We'll be back with you 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. This is James Childs, producer of The Ramsey Show. Did you know The Ramsey Show is one of the most popular podcasts in the world? Subscribe or follow today wherever you listen to podcasts.