The Ramsey Show - App - I'm Scared You're Falling For A SCAM! (Hour 3)

Episode Date: June 2, 2023

George Kamel & Jade Warshaw answer your questions and discuss:  "I was told to pull from my 401(k) to let other people invest it for me. Is this a good idea?", How to start investing, from the blog: How to Invest Money in 5 Simple Steps What to do when paying off debt and you get laid off, from the blog: How to Budget After a Job Loss Why trying to play the credit game is "mind numbingly stupid," "Should we borrow from our Roth IRA to pay off my house?", from the blog: Should I Take Money Out of My IRA to Pay Off Debt? Why paying for rental property with cash is better than a loan, from the blog: How to Invest in Real Estate Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Join a Personality-led FPU class. Click here! Want a plan for your money? Find out where to start: https://bit.ly/3cEP4n6 Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Interested in advertising on The Ramsey Show? https://ter.li/s64ye3 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 Pod's moving and storage studio, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by Jay Borshaw this hour, and we're taking your calls at 888-825-5225. You've got a burning question on your mind. You don't know who to go to. You heard something from your brother-in-law. You're not sure if it's true. You saw a TikTok. You want some confirmation or validation. We're here to help you take the right next step for your life and your money. Refugio is going to kick us off in Albuquerque. Refugio, what's going on? Yes, good afternoon. I'm calling because I had a question. I called Merrill Lynch because I work for Walmart, and so I have 401k, and I'd gone to

a live search. It's this Christian business kind of church event. Nonetheless, to get to the point, I thought I would be able, with the uncertainty of times, be able to take out some of my 401k and go ahead and pay taxes, which might not be the brightest idea. At least I could start investing on my own with the tools that I learned from LifeSearch. Well, nonetheless, when I went to call Merrill Lynch, they told me that I could not get any of

my money out unless I were to leave my job, quit my job. And I'm like, well, I don't want to quit my job. And so my question is, and it's kind of like scary. I never thought that you could put money in and not get it out. Have y'all heard of that? Or were they cautioning you of what could happen if you were to remove this before retirement age? Was it more like, hey, you can't access this money it's your retirement money or was it does that make sense because they may have just been adamant because they didn't want you to remove your retirement money or was it like no matter what you can't take this much like i'd love to have more context into that because we would tell you hey don't pull out your 401k right we would tell you not to pull it out yes so no matter they were like um they were like the only way you can take out your money

or any part of it is if you have a hardship uh and they they they kind of told me either you're going back to school um, you have medical expenses. Those would be things that would avoid the fees and penalties. So I have a hunch, I don't know that I'm right, I would say call them back, but I have a hunch that they were saying you can't pull out your money without penalty and without tax unless it's this, which is great advice, by the way. No, I did ask him that question. I go, can I get, even because I told him how much I was going to get, I said, well, can I get half of it?

And I'm aware of paying taxes, and I'm aware that it's going to be a 10% penalty. She goes, well, the way it's set up with your company, you won't be able to get it until you're 59 1⁄2, or you can actually prove that you have a hardship. Okay. I would go to your HR department to just get the fine print on this and figure out what's going on. But the good news is you're not going to do that.

And here's why I referred you. I don't want to be the bearer of bad news. I'm scared you're about to fall for some kind of scam. My red flags were going up and up and up when you started talking about this event you went to and they said to cash out the 401k because the end times are near and you've got to give us your money

and we'll invest it the right way. Does that not sound a little kooky? Well, it does. What they were saying is they have this program which we're going to go back and it's in oklahoma city where um you would learn how to day trade or stop no dear lord no big big big no and big bright red flashing at a christian event they're telling you to day trade jesus would be flipping the tables up in that temple okay look refugio you called this show and we dude we love you we want the best for you

do not do this keep your 401k your 401k it's trucking along it's earning you know interest it's compounding keep that you don't need to get into day trading that is not and guess what those stocks are a part of the same stock market that your 401k is with so if they're truly talking about some hedge against inflation the end times this ain't it and i'm scared they're about to take all your money leave you broke and now you have no money in your 401k and you lost your money elsewhere yeah so i don't know what this is i could be wrong about this but if there was a word day trade in there it's a scam at an event and they're telling you to cash your stuff out and put it in this to be safe man i would run fast and i would run hard and i'm mad at them let me just tell you i'm mad

that somebody told you that that is the worst advice ever all right so you got two folks we're we are gangster for you do not do it and i'm mad at the folks who told you to do it. That's so messed up. Refugio, please avoid 401k withdrawals, avoid 401k loans, avoid day trading, and avoid any event where they tell you the end times are coming. Liquidate your assets and give it to us. We'll know what to do with it. Goodness gracious, that scared me.

Oh, I'm so glad he called us. My heart is palpitating right now. Okay. Let's see if we can get a quick one in here from Emily in Atlanta. Emily, what's going on? Hey, how are y'all? Good. We're up against the clock. What's your question today? So I'm 19 years old. I love watching y'all show. I have about close to $20,000 in my savings just from working. I did not go to college and I work for my parents currently and I'm just like wondering where is the best place to start investing. Okay. Do you have any debt? I do not. No, sir. My parents, I was very blessed growing up and they've taken care of everything for me up till today, or up till now.

That's awesome. Okay, so this $20,000, is part of that an emergency fund? I don't have any bills, honestly. I still live at home. My parents take care of everything for me. Hashtag blessed. I'm under their insurance at the business. Do you have a car? Yes, sir. I have a car and they paid for that as well. Is it paid for or they're paying the payment? No, it's paid for. Great. Okay. I'd still set aside 10K just to be safe because car repairs, deductibles, insurance, I want you to have some cushion there but with the other you know 9 10k you have you could fully fund a roth ira if you have earned income you're working yeah yeah i do

so um yes i work for my parents um they own like a glass company um right outside of atlanta um and probably in about five to eight years um i'll be purchasing it from them eventually. And so my income will significantly grow, like go up. That's awesome. What's your income today? Around $40,000. Awesome. You're crushing it. What's your plan for moving out? Are you moving out soon or? I don't know. The market in my area, like I said, we're right outside of Atlanta, so it's not the best thing right now. And I don't want to rent at all. That's, like, not on the table.

And so I don't know. I thought about looking whenever everyone, you know, says things come down, but I don't even know if things are going to come down. I wouldn't go time the market, Emily, but I would start saving up a down payment now that you have the emergency fund, invest 15% of your income into retirement accounts like that Roth IRA, into good growth stock mutual funds, and get connected with a smart investor pro. These are investing professionals that we trust to invest the right way. And they'll walk you through how to set the Roth IRA up, how to look at the investments the right way,

what to choose, and they will guide you through that. But man, you're going to be a baby steps millionaire in no time. Way to go. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw this hour. The number is 888-825-5225. If you want to chat, if you want to talk shop about money and life, if you've got a question, we are here for you this hour. Daniel is up next in Atlanta. Daniel, welcome to the show. Hello. How are you both? So I'm kind of in a world of trouble here. I have about a $265,000 worth of debt and I just got laid off from my job as part of a reduction in force.

Yeah. Sorry, man. No worries. I'm pounding the pavement trying to look for another one. Yeah, that's... Is this a big shock or has this kind of been on the verge for a while? Oh, no, it was.

Nobody knew about it. It was like, I mean, in fact, in fact, we had our CEO tell us, you know, the week before that, you know, in a meeting and the whole company attended there. He's like, you know, you see all these companies like Amazon and Google laying off people, but we're not going to do that. And then the next week that happened. There were about 200 other people. Wow.

What were you making? About $220 plus bonus would be 20% of my base, and then I got RSAs every year as well. You were crushing it. So how much money do you have in the bank right now? All total, let me see. Let me find it where I have it on here. $45,309.08.

Okay. And do you have anything you could liquidate to get you by and start paying off this debt, like those stocks? Are they vested? Well, no. Once I get terminated, they take them away, all the ones that are vested. They weren't vested. That's a bummer. No, they weren't vested. So what kind of debt is this? Are we talking cars? Can you break down that debt so we can see where we can help you out here? Yeah. It's a mix of credit cards, a line of credit, and two car loans.

And one of them is a BMW, and I'm upside down on that one. Basically, I would have to pay $30,000 to get the actual value of the car, you know, to get rid of the car. Like you owe, it's worth $30,000 and you owe $60,000 to get the actual value of the car, you know, to get rid of the car. Like you owe, it's worth 30 and you owe 60? Yeah, like that. Yikes. How did that happen? Bad decisions.

Did you roll negative equity in? I'm sorry? Did you roll negative equity from another loan or what? Yeah, that's what's for the profit. So why do you have the two cars? Do you have more than from another loan or what? Yeah, that's what's for the profit. So why do you have the two cars? Do you have more than one person in the household? No. Actually, the other one is a car that I had a loan on.

It was a different kind of loan. It was kind of like a line of credit, and I got the title up front. And then this is another dumb mistake. I didn't realize that I had done that with that car. And when I got another car, I traded that car in, but I still owe it on the car. So you don't even have the vehicle, but you still have the debt. Yes. Goodness gracious. All right. This is where it gets real because at this point. Yeah. Well, here's my question daniel truthfully where has this amazing income been going um bad decisions let me say that give me are you do

you have a spending addiction is there another kind of addiction i'm trying to figure out the root of this so we can help restaurants women um you know my thirties and everything like that. And it's built up until now. And so I, I can tell you that my lifestyle is not the same. Um, and it hasn't been for the past, I'd say four years and I'd actually started the debt snowball. Um, you know, I'd say probably maybe eight months ago, um, started it. Um, you know, um, and again, didn't see this coming. But I guess my bad decisions from my 30s, you know, my 40s now, it's caught up to me. And hey, I want everybody listening to learn from this right now. This is the prime example of how you cannot out earn stupid, like stupid decisions. Those decisions, they catch up with you. You don't know when it's coming.

I mean, here you are, you're a single guy, great income, living it up, basically, is what it boils down to. And you're not alone. There's plenty of people doing that and they don't see that this is a domino effect and it only takes one domino to fall for it all to just roll down like that. So this is a learning lesson,

not just for you, Daniel, but there's plenty of people listening who are right there and all it takes is for their, their boss to say, all right, layoffs are coming. So we're all, so many folks are learning from you right now, right now, Daniel. So what is your expenses to get by for one month right now? Do you have rent? Is it a mortgage? Yeah, it's a mortgage.

I have a mortgage, and right now my monthly expenses are about $10,519. Goodness. Is that because you have a giant mortgage? I don't have a – I'm paying about $3,300 in my mortgage. Yeah, that's a lot of mortgage right now for not having the income. Well, I'm- Where's the other $7,000 going? This still feels like your expenses are real high for a single guy.

It's all the credit card debt. Yeah. Okay, these are all your minimum payments. It adds up. It's $265,000. Have you started a budget yet? Have you started, I know you said you've kind of started. Okay. So you know exactly what you have. You know exactly what your margin could

be. We're not just guessing is basically what I'm getting at. No, I'm telling you real numbers. I'm reading from an Excel spreadsheet. All right, sweet. That's good. So Daniel, here's the deal. I'm scared for you and I'm thinking through this if I was in your shoes. And if I didn't find a job like the one I had before where I was making six figures in the next few months, I'm going, I need to look at selling this house and then taking the net profit and chunking it at the debt. So what kind of equity do you have in the house? Right now, about $63,789. Okay. And plus your 45, that would knock out a good portion of your debt, over a third. And I've been told by my realtor that, you know, she's thinking the area that I'm in that I could make $75,000 to $100,000 profit from selling that home. Okay. So even though you

have 63 in equity, based on the sale price, you could make more even after fees. Right. So let's look at the career side of it then. With your job, I mean, how quick, let's be realistic. If you really, you said you're hitting the pavement, how quickly could you find something where you're making, even if it's, because let's look at it on two sides. You need to get anything right now, get any job, you know, it may not be the dream job, but right now get any job you know it's not may not be the dream job but anything to float you until you do get the dream job right right okay like don't wait around for a three hundred thousand dollar job yes go drive for uber until you make 150 and then jump to 250 when you can yeah anything to stop the bleeding because here's

the thing if you can get back to making 220 25020,000, $250,000 and you can throw $130,000 at debt, you're debt free in two years. So this is not a hopeless scenario. It just feels like that right now because you got punched in the face while you had a pile of debt in front of you. Right. I also wanted to ask this question too. So I have a 401k and it has about, I can withdraw about $302,000 from it. Should I leave that alone? Because I could pay off my debt right now with the 401k. I would leave it alone. Leave it alone.

In your 40s, starting from scratch, there's too much growth potential that will happen from that $300,000 for you to liquidate that, pay the penalties, pay the income. It's just triple stupid. So I would use your future income. You're not scared of work. You're going to find that great job again. You're going to pay off this debt. And worst case, this house sale is your parachute to get out of this thing and at least go rent for a while and get out from under this giant mortgage and get some roommates or something. Major lesson learned. Man, I'm so sorry, Daniel. I'm hoping you find that next job soon.

I appreciate it. Yeah, it's definitely one of the low points of my life. I can tell you that for sure. Tough, tough, tough stuff. Look, Daniel's not all that different. We know a third of people who make over $250,000 are living paycheck to paycheck. And this is why. You get that big income and you're like, oh, I can just do whatever I want.

You can out-earn your stupidity when you make $300,000. And everyone thinks, if I just made that much, man, it would be different for me. Yeah, right. Listen, nobody's above it. We have to make these decisions every day to stay out of debt, to do the right thing, to have that money in the bank. And we don't owe anyone anything. A layoff is a lot less scary.

But I'm glad Daniel's at least got some cushion there with 45K in the bank to float him by until he can find that next gig. But scary situation right now. This is The Ramsey Show. I'm George Camel, joined by Jade Warshaw this hour. This is The Ramsey Show. Well, Jade, I thought it would be fun to play a little clip, as we like to do when it's, you know, it's a Friday. We're hanging out.

We're having a good time. And there's this guy out there named Caleb Hammer. Have you heard of him? Love that dude. He's a big YouTuber. He's got almost half a million subscribers over there. And he's become a friend of ours. Yeah, yeah.

He actually followed the Ramsey principles. He has veered off. We don't agree on everything. That's okay. That's okay. But when it comes to budgeting and spending and not being stupid with money, we agree 100%. Love it. And so I wanted to play a video for you and get your take on it. And I think it will spark an interesting discussion so

here we go with some caleb hammer youtube clips i just use the car for the points don't spend there is no points to be gained you're losing to eleven dollars and fifty what what it's not worth me spending money and if i need something if i'm not getting the point because you're not fully painted off why add to the balance ever because this is how they get you and it works on most people and worked on me so everyone say it with me you're not a credit card person it's okay that you're not do you know what that means that i don't use them correctly is that you suck at them they're getting money from you you're not getting any benefit from them. Oh my goodness.

He is wildly entertaining. Wow. He let her have it, didn't he? That's his whole channel. They're called Financial Audits and he'll just sit down one-on-one and just yell at someone as he goes through their bank transactions. I kind of want to do that.

It sounds like a good time. Yeah. We hope to do a little collab with him soon for our YouTubes and we'll have a good time with that. That is great. I hope he doesn't yell at me. I'm nervous. But that really summed up an entire generation's mentality when it comes to credit cards. I don't think anybody should be a credit card person. This idea that

like, well, yeah, this is how, no, but I'm doing it for the points. Do you understand, America, that getting 1% cash back and paying 20 interest means you're losing oh gosh losing bad you don't have that's first grade math yeah 20 negative bad one percent positive not even close to good yeah so here's what people are saying when they say well i'm gonna do the credit game. I'm going to hope for the 2% cash back, which by the way, just basic math here, Jade. Average household income, 70 grand. Take home pays 48. You can't put everything on a credit card.

You can't put your mortgage. You can't put your utilities. Facts. So that brings it down to about, what, 24,000 in actual dollars you could put on a credit card? Yeah. 2% of $24,000. of 24 000 you're talking about 500 bucks a year if you're lucky biscuits so you can get access to the amex lounge once a year so you can

get 500 airline miles which doesn't even equate to 500 actual traveling miles so you can get a one-way flight from nashville to boise oh the stupidity it does not make it make sense jade i can't it i can't it's so ridiculous the the amount that you would need to spend for this to i mean two percent everyone that opens a credit card says well i'm gonna pay it off every month it'll be fine i'll pay it off like tomorrow i'll just take advantage of the bonus the sign up offer oh lord the rewards the miles and then i'll be done. I'll pay it off like tomorrow. I'll just take advantage of the bonus, the signup offer, the rewards, the miles, and then I'll be done.

And it doesn't work out that way. When I have those conversations, I feel dumber afterwards because the logic and the rhetoric is just so mind numbingly stupid. And I'm like, no, no, no, no. We get a lot of flack.

This is probably our hottest, most controversial take here at Ramsey Solutions is that we are very, I cut up the credit card, stick to debit. And we get so much flack, even from our fans who are, we call them Dave-ish, Jade, because they're not all in, they're ish. And they go, I like the debt snowball, but I'm not getting rid of my credit card because I love XYZ. The credit card companies are doing their job. They're doing their jobs marketing so well that you all out there defend them.

You're defending these billion dollar companies putting their names on stadiums while they keep America broke. How do I know that? Because credit card debt has hit one trillion dollars, a world record. Congrats, America. Trillion? America has to be number one at everything. And we did it, Jade. Trillion? America has to be number one at everything. And we did it, Jade.

A trillion dollars in debt. Oh, and what is our parting gift, George, for winning this accomplishment? Well, billions of dollars in interest paid. America staying broke amidst inflation. Under the guise of winning with their credit card awards. So here's the article from payments.com, I think is how you pronounce it. Yeah, yeah.

And it says, last year was a different story when it came to credit card debt as inflation ate away at people's savings. The Federal Reserve increased interest rates against this backdrop. Credit card debt surged by a record $86 billion in the closing quarter of 2022. Spending is nonstop now.

We once thought of putting things on our credit card as frivolous spending, like TVs and big purchases. Now, because of inflation, people are putting actual necessities like food and housing on their credit card. Some people, some people are still going ham on, Lululemon has done better than ever during all this. So we know people are,

yes, there's some folks struggling in that way but there's a still a huge percentage of people who have just said i liked my lifestyle before and even though inflation it's it's more expensive out there i don't want to change my lifestyle so i'll just use credit cards to float it well and they go well i have no other option jade i was forced to because of inflation without looking in the mirror and going, maybe you shouldn't have got that car with the $600 a month payment. Okay. And maybe we shouldn't have ignored student loans for the last three years while we could have actually made progress on them.

It's the comfort. Maybe we shouldn't have bought a house because everyone said renting was a sin. And now we have a giant mortgage payment and we can't afford to fix the HVAC. Yeah. And on top of all that, credit card companies are making record profits because of these interest rates. The average credit card interest rate is now almost 21% compared to 16% last spring.

Wow. And I think that's just for like, if you've had one, like intro rates are even higher. Oh yeah. Intro rates are almost 22%. Introductory APR. And you know what APR stands for?

Added pain and regret. regret oh there it is that's all it is that's scientific for your two percent cash back this is wild and this doesn't just affect people with lower incomes who are struggling this is the high income folks as well if you've been listening to this show for the last 20 minutes you know that this you're they're not immune to it just because they make six figures, especially as we see more layoffs, inflation. People are struggling out there. And it's one more reason to avoid credit cards, not to join one to go, this is the solution to my problems. I can still go on vacation this year if I get enough points. That's an insane way to live. And it's exactly what the credit card companies want want they want you to be in the maze chasing the cheese yeah well they don't they they want you to it's one of those things where our

brains would rather we would rather do what we want to do right now than think about how it could affect our future yes that's just the way we're wired we are very short term or in the moment we don't want to think about that and credit cards are like yes we will take advantage of that and we will make it to where you seemingly feel no pain until the hammer drops hey hey you feel that and then you feel the pain you know what i'm saying so i'm glad that we're out there caleb hammer's out there telling people the truth even when it hurts even we have to yell at you because we want you to win financially and too many people out there are like jay don't tell me how to live my i'm trying to live my truth out here. Your truth is that you're broke and we want to see you retire with dignity

and break generational curses. Yes. So here's the deal. People tune into this show and they know all the stuff we teach about money and they still feel stressed out and stuck. Why is that? Because knowing what to do with your money

is not the problem. We have all the information in today's world. We can Google it, bro. Actually doing it is the hard part and we we know that personal finance, 80% behavior, it's only 20% head knowledge. And what got me out of this cycle, Jade, because I was the same person. I was that girl going, well, I'm going to be the one to win until I wasn't winning. And I felt like a loser because I was broke, $40,000 in debt, trying to play the Delta Sky Miles game and the Discover game, getting my 5% rotating cash back rewards. Wow. And so what got me out of that was taking Financial Peace

University. This is the class that is the difference between trying to get in shape on your own versus hiring a personal trainer. You'll have a coordinator leading the class, holding you accountable with other people in the class as well, pushing you, cheering you on, making you go, oh, I'm not the only one that feels that way. Oh, there's a path out. Oh, other people can do this. That is why this class has worked for millions. And after nine weeks doing this class once a week, you will never handle money the same way again. You're going to make progress faster than ever. So don't just listen to the show. Don't just be Dave-ish. Don't just listen for entertainment. Commit to doing what it takes to win. You can join an FPU class at ramsaysolutions.com slash FPU. That's ramsaysolutions.com slash FPU.

And listen, if this stuff doesn't change your life, you're just not trying hard enough. You didn't pay attention enough. You're not willing to do what it takes. And like Jade says, don't tell us that you can't do it. You can tell us you won't. I know that's right. You can do this. We've seen it happen. We see it happen every day. George and I did it. You can too. You're no different. You are not the exception to the rule.

You can change your life, change your money forever. Break the cycle. This is The Ramsey Show. Welcome back to The Ramsey Show. Our scripture of the day comes from Philippians 1.6. He who began a good work in you will perfect it until the day of Christ. Denzel Washington said, There is a lot of joy to be found in reflecting upon your experiences as you work toward your dreams.

Learn to laugh at your failures, smile at your wins, and don't be afraid to laugh at yourself. Okay, Denzel. I do a whole lot of that around here. That's for sure. Can't take yourself too seriously. That's right. Well, folks, I don't know what you're doing this Sunday, but one thing you could be doing is reading our weekly newsletter that is completely free. And we've got 10 of the most common home selling mistakes and how to avoid them in this week's newsletter. Selling your home is a huge deal when you don't want to mess up. And so you're not doomed. Our team is going to walk you through those mistakes and help you do this the right way. You can sign up for that newsletter at ramsaysolutions.com

slash newsletter, and you will learn how to sell your home the right way. Look, that newsletter is on point. It comes to my email address here at work. It's on point. I read it every Sunday. It's the first thing I do when I wake up. Yep. There you go, George. Love it. All right. Christopher is up next in Cleveland. What's up, Christopher? How are you? Good. What's going on with you? I just have a quick question for you guys. I've been trying to follow most of the baby steps, and I believe we're at the point of about paying off our house. We're just wondering where would be a good way to do it. Should we take some money from this Roth IRA,

just the original principal amount? We have some cash and some mutual funds in other places, but we really don't want to take any kind of loss or penalty, or should I just keep paying a bunch extra every month like I've been doing? I mean, I've knocked out about 80,000 in the last two years. Way to go. So what's left on the mortgage? Best stuff to do. I have about 150 left. Okay. And how much money do you guys have in savings and cash?

Liquid cash. Cash would say 50 between the two of us, between some mutual funds and some other things, probably 150. So these mutual funds are outside of retirement? Yes. But you're saying you don't want to liquidate those? I mean, we could if you think that would be a good route. I mean, I have another mutual fund. I mean, a Roth IRA is about $110,000. Well, I've got about $150,000 in it. $110,000 of it I could take with no penalty, no early withdrawal fee, anything like that. That's the original principle I put in.

I still hate touching retirement accounts. This is not a spot where your guys are on the verge of bankruptcy. And I understand that you can withdraw that principle from the Roth IRA without penalty, but I just wouldn't do it. I think it's a shortcut and it's not going to feel as good when you pay off the house knowing that you robbed your retirement in that sense. You're still unplugging the growth there now the money if you have money just in taxable brokerage that's invested in you know whatever it's invested in whether single stocks or you've got it in mutual funds that you could access if you wanted to

but with 150 000 on your mortgage hey what's your what's your income uh actually the last couple years it's been over 200 i don't even know if I would, because your income is so good. It's the other thing. I mean, I've been going by your Ramsey calculator. I mean, I have roughly the pace I've been doing, probably about another, a little less than 30 payments. I've been trying to add about $5,000 every month to the principal. Yeah, great job.

What have you been saving up in those mutual funds for? It's just stuff that I started a long time ago at a different job. I mean, I was a bricklayer and I didn't have anything. So it was just stuff I did as like an 18, 20-year-old kid. And coming to housing market back in 08, I ended up having to go back to school and change professions. So I do something completely different now. What are the tax implications? If you cashed out all of your non-retirement accounts, what would you owe in taxes?

I don't know, but I don't know how that works. I mean, I guess, I mean, there's been some financial people we've dealt with over the years, and I'm sure I could talk with them or be very- I'm sure a lot of it would be long-term capital gains. Some of it, if you've held it, less than a year, it could be short-term capital gains. Some of it, if you've held it less than a year, could be short-term. But I would talk to them and see what the tax implications are because if you could do that and pay off the mortgage today, it's what I would do personally.

Okay. I love the idea of you being debt-free today with no mortgage and making $200K. You could save back up in a taxable brokerage. You could max out every retirement account in the world. That is true. And without a mortgage payment, it's going to change the game. What's your mortgage payment?

Roughly right now, like $2,260. Awesome. So you'll still have property taxes and insurance to pay, but you're still going to free up probably, what, $1,500 a month? Oh, at least. Somewhere probably $3,000 to $5,000. free up probably what 1500 bucks a month oh at least somewhere probably three to five thousand i mean like i said i mean it's been pretty good work the last few years wouldn't that feel good at least oh yeah i mean that's and you can pat your 18 20 year old self on the back for doing

all that work investing early on to set you up for success uh now that you're older but man that's awesome way to go, Christopher. What a great place to be. Yeah, I'm always in the boat of, if you've got money that's non-retirement and you're just saving to save, I'd rather see you have that freedom. That's true. No payment.

That's true. But there's nothing wrong if you want to just use your future income to do it. I mean, he makes 200K. He could throw 100K a year at that thing and be done with it. Yeah, I think either way would be fine i i think that if it was i mean if the numbers were slightly different let's say his mortgage was a lot more

and it was going to take him many more years to pay it off but he had the money i'd be like yes let's go with him 150 he it's like right on that line either way he's gonna get there yeah he's gonna get there that's exciting but because he called in going i really want to pay off this house i'm willing to take it from my Roth to do it. I'm going, I think you're right. Let's just do it, man. Wow, cool stuff. Pretty cool.

All right, let's take one more from Jerry in Madison, Wisconsin. Jerry, welcome to the show. Hi, thank you for taking my call. I'm trying to see if it's worth buying my second rental property. What I have is household income is about $80,000 a year, and this house is worth $70,000. And I can come up with about $35,000 in cash, so I'd have to take a loan out for roughly the other $35,000. And I'm trying to find out if I should do it or not.

So you have a primary residence currently? Is that paid for? Yeah. I have no debt at all. My current house is worth probably $200,000. The first rental house is probably worth about $70,000. Awesome. And that one's paid for. Did you pay for that one in cash or did you pay it off over time? I paid that in cash. Wow. So what's stopping you from paying this one in cash? How much longer would it take to do that?

Well, the house is coming available here real quickly, and it's a property that has kind of been in the family in and out, and I'd like to have it back. So it's coming up for sale, and I have first dibs on it, but I don't have enough cash and I don't want to take anything out of any retirement or anything like that. Do you have non-retirement invested money? Anything that's non-retirement? Well, that's what I'd be using for the $35,000. Got you. And how soon is this going to be up for sale? Probably about a week or two.

Oh, wow. And if you miss out, you miss out? Is someone in the family going to take it? No, someone in the family is selling it. Got it. So they're selling it from what I'd get from the rent, take away the mortgage payment, take away taxes, insurance, and that, I'd be making about $100 a month on that house. But I'm confident with no debt, we can pay the mortgage payment with my wife and I.

Man, I don't know if you're going to like my take, but I would just wait and do it cash. And if you miss out, that's tough. But making $100 profit on this thing, there's just way too much risk, even with this property not being worth a whole lot. All it takes is one thing to go wrong to where you're now underwater on this. And that's my worry. It sounds sentimental, right? The property, because it's been in the family. Can I ask you this?

Right now, I could buy the house, and we could easily support this, the mortgage payment with my wife and I, because we have no debt. We have no money going out without dipping into anything. So we can cover it on our income, the mortgage itself. How old are you guys? 50 years old. Okay, And you're still working,

both of you. Right. So we're both working. We can easily cover that debt, but we'd actually be making money without actually paying any of our money from our job. I'm hearing two things. One is this is sentimental family property. Another is we're going to make money and we can cover it. And I just don't think I would make the decision based on either of those things. And so I would pass on it and I would live with the regret of what could have been the hundred bucks a month, but I would also sleep better at night without the risk. So thanks for the call, man. That puts this hour of the Ramsey Show in the books. We'll be back with you before you know it. Hey, it's George Camel. If you like what you heard in this episode and want to know more We'll be back with you before you know it.