The Ramsey Show - App - Imagine a Life Without Payments (Hour 2)

Episode Date: December 21, 2021

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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. George Camel, Ramsey personality, is my co-host today. Open phones as we talk to you about your life, your work, your relationships, and your money. It's a free call, 888-825-5225. Kevin is with us in Indianapolis.

Hi, Kevin. Welcome to the Ramsey Show. Good afternoon, sir. It's a pleasure to talk to you. You too. What's up? I wanted to ask what your thoughts are and maybe pros and cons of in order to kind of expedite that number two, allowing my credit card debt to go into collections to hopefully settle for a far lesser number.

Hmm. I would not do that unless you simply have not got a way to pay the bill. How much credit card debt have you got? It's not astronomical. It's about $14,000. It is something I can feasibly pay off. It's just in order to do it comfortably and still be able to put some money in savings, it's going to take a lot longer than I would like. So we work with folks that are on the verge of bankruptcy all the time, and they have no money and $100,000 in credit card debt,

and there's no chance that they're going to pay the bill that they legitimately owe. If it goes into default, then we show them how to settle that debt because it's their only option. We do not do that as a method of getting out of debt more efficiently because we believe that you owe the money you borrowed the money and you have the ability to pay the money and you should pay your bill if there's any way you can and that's your case so no you should get six extra jobs and pay this crap off by Friday. It's only $14,000. How much do you make?

About $60,000. Yeah, and you're only working 40 hours. Well, I'm only getting paid for 40 hours. I would gladly take an extra job. My work schedule is a little cramped to allow for an extra job. But like I said, I mean, it is an amount that I can pay off. It's just going to prevent me from – And you should.

You should sell some stuff. You should find some work that you can do. You can turn Uber on and off. You can get really flexible schedules delivering pizzas. You can talk to your boss about getting paid for the overtime instead of not getting paid for the overtime that you're working on. You can have a garage sale. You've got days off. You've got time. You're sitting in front of the stupid television. Go make some money. It's only $14,000 and pay it back. Don't sacrifice your integrity for that. And I kind of want you to be in pain, Kevin, just a little bit.

I want you to feel the sacrifice because if not, if this feels like a shortcut and you go, man, I negotiated it down, got that paid off, let's do that again. And you're back on the ride and you're back in a cycle of debt. I want you to have a never again moment. And that's going to come from taking the second job, selling everything, going, man, never again am I going to be in that spot. Tighten up the old budget, the belt. Big time. Big time. That simple.

Open phones at 888-825-5225. Cody's in Cleveland, Ohio. Hi, Cody. How are you? Good. How are you doing? Better than I deserve. What's up?

All right. So I'm a new listener. I just found you guys today. Basically, just as in 26, I've pretty much lived paycheck to paycheck my whole life uh and uh looking at you're hearing you guys's channel so far this morning it's giving me some kind of ideas to finally get me out of this this first time i've actually seen like a way out. Go ahead. I've got a total of $42,000 in debt right now. That's just me. I have a fiance, but hers is only $2,000 in credit cards.

I can take care of that. That's not something I'm really worried about. So I have the only real cost I have is credit cards and auto loans. So my question is, this morning I got the idea of checking the value on my, I have a Jeep Compass I've been paying off for a long time. The payment was $600 a month for a while because I brought over negative equity. I got that drawn out longer to lower the payment so I could pay more off. That vehicle has issues. It's been fixed since, but I had to get another vehicle when I did that. So I have two vehicles on loan. So my thought process was I'm only about two grand off from what the dealer will give me for the vehicle and paying it off totally.

So I'm currently, I'm on unemployment. This is the first time I've been unemployed in my life. So I'm going to start door dashing right now until I find something else to be more steady in income. She makes about $20,000 a year right now, $1,700 a month. She works as a nurse and housekeeping. How old are you? I'm 26. Cool. Welcome to the show, brother. Yeah. So what were you doing before, before you were unemployed? Well, for the longest time I was working in the prison systems, making decent money but not making good financial decisions.

So I have a lot of stuff, but I don't have a lot to show for it. Well, you're A1. I want you to get income in the door, and that might mean doing DoorDash, Instacart, SHIP. Maybe you do them all. Do whatever you can right now until you can get a full-time salaried position or something where you have some more stable income coming in and what we teach here is the baby steps i know you're a new listener and so what we're going to do is do you have a thousand dollars in cash right now in

savings no nope so that's your a1 that's your first goal and get rid of that stupid car you said you got the extra car you have two cars right now both have loans on it yeah could you sell both and get a crappy car right now while you clean up this mess yeah that's what i i originally planned on trying to get rid of the jeep no matter what but i've been watching all day and just thinking and and what do you owe on the other car the other so i owe so i have 17 000 roughly on the the jeep and i can get what do you owe on the other car the other car i owe 14 yeah sell them both okay get you a five thousand dollar car i just got the other one i don't know so i think I can get a good value out of it. Good, good. Yeah, I don't care.

Because here's the thing. These things are... If you didn't have these two car payments, you'd have like what's known as a life. Yeah, I'd have a lot of money left over. Yeah, and you could go get the job and you start cooking with gas. Then you could get this thing moving and walk right up these baby steps. Yeah. Here's what I'm going to do.

Kelly's going to pick up. We're going to send you a copy of the Total Money Makeover since you're new to the show. Read through that. Get really intense about this man and call us back when you're debt free. We'll be right back. People all over the country are discovering a faith-based and budget-friendly way of meeting health care costs through Christian Health Care Ministries. Christian Healthcare Ministries, or CHM,

is a nonprofit organization that helps members carry one another's burdens with healthcare expenses, and they have successfully shared each other's medical bills for nearly 40 years. See if CHM is right for you by visiting chministries.org. CHM is a proud sponsor of Dave Ramsey personality is my co-host today. Most people know me as the guy who says, get out of that. The guy who did a lot of stupid things myself in my 20s, lost everything, had to start again. That's all true.

But here's what's interesting. In developing the baby steps, it's how I became a millionaire the second time and following those. And now after 30 years of teaching this since going broke, I meet tens of thousands of millionaires around America that have become millionaires by getting out of debt and starting their investment program using the Baby Steps process. They are what we call Baby Steps Millionaires. So I haven't done a book in eight years, but I thought it was time. So I thought we're going to do a book called Baby Steps Millionaires because I'm meeting Baby Steps Millionaires everywhere, and I want to show you that it can be done.

Too many people out there are telling people it can't be done, and I know that it can be done. And not only am I going to show you, i'm going to prove it to you with data with math with stories with the largest study of millionaires ever done so the new book is called baby steps millionaires it's on pre-order right now it comes out in two weeks uh on just a little over two weeks january the 11th and but you need to pre-order it before it comes out that way you get the 150 dollars worth of goodies that go with the pre-order it's only 20 to pre-order baby steps millionaires you'll also get baby steps millionaires audio book and ebook the legacy journey audio book and ebook

you'll get tickets to the live stream event that george and rachel and i are doing the Ramsey Smart Tax online federal filing for free and the Ramsey Plus free trial for 30 days, an extended free trial. All of that, about $150 value. Just go to RamseySolutions.com. Baby Steps Millionaires. We've already sold tens of thousands. The thing is selling. I was eating lunch with our book, wholesale book guy today.

He just sat down at his table, and he's like, yeah, Target just ordered this many more. Wow. They'd ordered a batch to start with, but they're already seeing the sales are so hot. And Amazon just ordered another, you know, a bunch. And I'm going to just quote the numbers, but they're just crazy and uh because they're they've got the algorithm they can tell what they're selling already and pre-sale and what it's going to do and uh barnes and noble just placed another order so and these are second orders and the book hasn't even come out yet because they're just seeing the activity around it so i think we're

gonna be okay with this i think so too this this message is just something people have been hungry for uh as they search how do I build wealth? How do I make money? Well, and, you know, I wish it was out for Christmas because some of y'all are going to see your stupid brother-in-law who thinks you can't be a millionaire in America. And you want to prove to him you can be. And, you know, because he votes wrong and everything. And so you need to, you know, you want to give him this book and go, yes, you can. And here's the freaking proof.

Shut up. It'll help stop the argument. Yeah, it stops the argument. But, of course, that probably won't work. But you should be nice to your stupid brother-in-law. You shouldn't be mean to him. First rule, maybe don't call him stupid to his face. Yeah, maybe just let Dave do that.

Well, I mean, you know, everybody's laughing because y'all think that, right? It was Merry Christmas, you know, golly. All right. Patrick's with us in San Francisco. Merry Christmas, Patrick know, golly. Patrick's with us in San Francisco. Merry Christmas, Patrick. What's up? Hey, Merry Christmas, Dave. Pleasure to talk to you again.

My question is a baby step-by question, and it's along the lines of it's stupid to do something just for the tax benefit, but if you get the tax benefit out of it, you know, that's an extra bonus. My girlfriend is very big on putting her kids through private education, and what she was thinking is set up a 529, you can take out $10,000 a year for private education, you know, as they're minors, and then the money she puts in would basically be a tax deduction am i missing something it's not a tax it's not tax deductible it's after tax dollars that go into a 529 the only benefit of the 529 is it grows tax free so running it through there running it through there does not create a tax deduction unless unless it does on california state tax now it doesn't on the federal level

i don't know anything about california law but but on the on the federal level it is not a is not a deduction in your federal income tax it does grow tax-free so she dumps a bunch of money in there and it grows it's the growth that's tax-free that matters so if you're doing this on the short term like for two years or something or one year it doesn't i wouldn't even fool with it no no she's planning long term and all the way through college i mean if you got a brand new baby and you're thinking you know when they're in the fourth grade i'm going to use some of this money then yeah i'd use a 529 because the growth will be tax-free. Okay. Okay, very good.

And then, actually, if I could get a lesson from you, it would be greatly appreciated. I saw on Instagram where you say just put money into mutual funds, don't bother with ETFs or anything. And I was just wondering, what's the difference between, like, an S&P 500 mutual fund and an S&P 500 ETF? Either one's fine. Either one's fine. Okay.

I just use a no-load mutual fund out of convenience. I've had that account open with that particular company for a bazillion years. But an ETF is fine. What I don't endorse, I'm not against i don't endorse i'm not against etfs and i'm not against index funds uh we're not at ramsey what we are against is saying that that is where you ought to put all your money because you can't buy mutual funds that outperform them with your long-term retirement investing and you can so that's a false narrative okay so there are mutual you know there are mutual funds that outperform the indexes right yes my Roth IRA that's what I've gone for is just long

track records over but like for instance in my life I don't you know I I'm inside baseball okay you know when I'm when I've got extra, like if I get a big check from a publisher, I don't need the money. What am I going to do with it? Well, I'm going to park it in an index fund or I could park it in an ETF. I just don't have one open. But they're basically the same stinking thing for these purposes. And I'll let it sit in that S&P 500 and keep throwing a little bit of money in there and another little check in there, another check in there. And then I'll pull the money out a year and a half two years later and go buy real

estate with it so i'm not anti-index funds or it's a really good way to good really good efficient way to do some kind of short-term game like that in particular because if i leave it alone a year my gains are at capital gains rate not ordinary income rate and i've got the money earning more than sitting in a stupid money market account right hypothetically it should be and um it's just real convenient really easy to do it but as far as what i get uh where i get banged around in these stupid threads that don't even know what i teach is that you know i I hate EFTs. I don't. We don't.

I mean, we're not against index funds. What we are against is the thought train that's out there that you cannot buy mutual funds that outperform them so you shouldn't bother in your long term. And that's just simply factually wrong. I've got mutual funds mixes in my 401K that outperform the indexes. And I've got them in other investments for long-term hold that outperform the indexes. But the indexes aren't bad. They're just not the best for a long-term play.

Yeah. And, you know, with your message, it's funny. People like to have this argument back and forth. But the thing that you want them to do is just invest something with a long-term track record. And if it's an index and you think it's going to do 1% upward, whatever it is, we want you to be investing for the long term. And right now, people are investing in NFTs and crypto and all kinds of crazy things that don't have a proven track record. And so it's kind of like the people that are having the argument, they're going to be fine. They're going to do okay. We're more worried about the people

who aren't investing at all or in investing in single stocks and super risky, volatile investments. Well, and what ETFs are primarily used for jumping in and out of? investing at all or in investing in single stocks and super risky volatile investments well and you know what what etfs are primarily used for jumping in and out of it's more day trading mutual people trying to time the market and by most people and you know timing the market there is zero research that indicates that a buy hold or that it doesn't beat a time a market time process there's not a market timing process that works. If you could come up with it, you would be a multi-billionaire. Well, I'd sell you the software to do it, like these goobers at these Get Rich Quick things.

They sell you a piece of software that's $4,000. That'll time the market? You're supposed to, you know, based on this, you should jump in, or based on that, you should jump out. And, yeah, if that worked, you think they'd be selling on the back table for get rich quick seminar no billion dollar mutual funds will be using that system dummy i mean come on use your brain but no i've got the clock of this figured out because i met a guy in the back of the ballroom at the ramada inn they still have those oh no they don't have ballrooms at the ramada inn anymore ram Ramada Inns. This is the Ramsey personality is my co-host today.

Travis and Laura are in Austin, Texas. Says on my screen, you guys are debt-free. Congratulations. Thanks, Dave. Well done. How much have you paid off? We've paid off $186,797. Excellent.

How long did that take? It took us about 46 months. Good for you. And your range of income during that time? It started about $76,000 and ending at $190. There's a nice jump in four years. Yes, it has been. Did someone get a job?

What do you guys do for a living? Laura's an RN, and I'm a teacher. Okay. One of you not working at the start an RN, and I'm a teacher. Okay. One of you not working at the start of that, and now both of you are? Is that what happened? Well, no. I was actually coaching in small college and just got done being a graduate assistant. Then I made a career change and started teaching and coaching in high school.

And Laura's picked up an extra job along the way. She teaches nursing on the side and just a bunch of overtime. Oh, my goodness. So y'all just been working your butts off. Okay. Yes. So what was the $187,000 in debt? What kind of debt?

It was about $115,000 in student loans, $36,000 on the car, had some medical and furniture, and then we cash flowed her doctoral degree. Whoa, Dr. Lara. Yes. Way to go. Very cool. Congratulations.

Thank you. Very nice. So, wow, you guys, you've accomplished a lot in 46 months. Tell us your story. What started all this? So, actually, about five years ago, my in-laws started listening us your story. What started all this? So actually about five years ago, my in-laws started listening to your show and they were very inspired and started talking to us about your program. And we bought them FPU for their birthday. And when we did that,

they started the program. And when they were done, they actually re-gifted it back to us and said, okay okay it's your turn and it took us a little while we we were pretty davish for a while and then we kind of just got tired of living month to month and our money just leaving and not knowing where it's going or what we're doing with it and we just decided to go gazelle intense about 36 months months ago and we've done it and we're excited about it wow so let me get this straight they were into the ramsey stuff and you went this will be a fun birthday gift let's gift them fpu but you weren't doing the stuff and then they go hey this is

amazing here you go regift yeah so we actually paid for their program on our credit card and gave it to them for their birthday oh my gosh my gosh. That's a big sin. You know that. The cops are outside your door right now. Oh, my gosh. That's a great story. That is the best re-gift. That's the only one I think is appropriate is re-gifting FPU because it changed their life. Way to go, guys.

Way to go. So how old are you two? 31. Wow. How does it feel to be free? It's pretty relaxing and inspiring. We're real excited about it, and what we can start doing here in the future has been just motivating us along the way. Sounds like the dog's excited too.

Oh, you know, that dog hasn't said anything this whole time, and then all of a sudden they know Dave Ramsey's on. They're getting excited. So pumped. There's that. So you guys obviously had the in-laws as cheerleaders. Anyone else that was cheerleading you on? Well, we actually have four kids.

We started with two when we started the program, and then along the way we got a surprise and had twins. Wow. So they've been pretty motivating for us. Adorable. My parents have been great, helping us watch the kids and you know laura's sisters and all of our family they've been helping out along the way very cool very cool you guys what do you tell people the key to getting out of debt is you did it i mean really the key is setting a good budget we use the every dollar

app we've we've finally gotten to a point where we just know what it is, but it was really monthly meetings, the two of us sitting down. I'm the spender, Travis is the saver. So there were a few heated conversations at the beginning, but we realized we knew what our goals were and what we had to do to get there. And so really setting that budget, meetings monthly meetings whatever we needed to do and just putting faith in each other putting faith in the program wow you guys are incredible i mean there wasn't a single thing that didn't change for you guys in that four years so i love this the heated conversation what was the biggest money fight you had while you were doing this whole thing? Well, I would just say right early on when we started, I struggled, you know, being involved

and saying no just because I was banking about $20,000 a year my first year doing it, and I didn't feel like I could really participate that and it took us a while to uh get get that going uh for us for us to work what was the fight tell us about the fight dave loves a good fight no i can tell you i mean there was a point where you know i wanted to spend i did not want to get rid of the credit cards and i was like no i want the points i want to use the points we're going on a cruise it's going to be on our credit card. It'll be great. And, you know, I could really tell Travis was not wanting to talk about it. And I was like, we need to talk about this. I mean, it was, it was intense for us. And we decided at that point, like we were done fighting about money. And he, you know, I finally was like, you know,

if you don't feel like you make enough money, what are we going to do? We have to do it together. We have to decide together. And I think that's been the success of it at all is every step along the way it's you know it's not yours and mine once we got married it's ours and how can we get ours bigger and better to where we want to go now we're getting down to it way to go that'll preach well done very well done yeah when you when you give up on the philosophical lies that you were believing that put you into the mess, like we're going on a cruise on our points crap, when you give up on that and you actually lean into the truth, which is we're going to have to bust it ourselves and clean this mess up

and quit doing the stupid stuff that got us here, that's when it changed. I could hear that in your voice when you're talking about it. That's powerful. Well done, Laura. Well done. your voice when you're talking about it. That's powerful. Well done, Laura. Well done. Good stuff. Woo!

I love it. Yeah! Excellent. Excellent. Great job. Great job. Guys, you changed your family tree. You're freaking heroes, man.

I'm so proud of you guys. Go get a Ph.D., having babies, pay off $187,000. I mean, that's impressive. Very well done. And you're just 30 years old,000. I mean, that's impressive. Very well done. And you're just 30 years old, man. It's just amazing. You're going to be able to do anything you freaking want to do, you'll be able to do. Including a cruise.

Yeah. Yeah. Which would be scarier than crud right now. Right. Well, if you're paying cash for it, that's for sure. I'm not sure I want to be trapped on a boat with that many people anyway, but right now I for sure don't want to be trapped on a boat with that. Okay, well, I just lost the advertising on the cruise.

Oh, well. So, yeah, I lost that sponsor. All right, guys, we've got a copy of Baby Steps Millionaires coming your way early before it hits the streets on January the 11th, how ordinary people built extraordinary wealth. How you can do this next chapter in your story. You pay off $187,000 by the time you're 31. Ding, ding.

You're going to be multi-freaking millionaires before this is done. This is what's on the way for you. Send you a copy of Total Money Makeover to give away. Financial Peace University, every dollar app. You did it all. You did what it took to win. I'm so, so proud of you. Way to go.

Travis and Laura, Austin, Texas, $187,000 paid off in 46 months, making $76,000 to $190,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Yeah! Yeah! Woo-hoo! Yeah! Yeah, even the dogs are barking.

Life is good. Man. Bust it, man. That's an incredible couple. Hey, they're power, man. That's power couple right there. There's nothing they can't do. That's power. Woo.

You know, the moral of the story is a bunch of morals of the story, but I love what he said. I didn't feel like because I was only making 20, I had the right to speak into this. Let me just tell you, it's called your life, and you better speak into your life. That's the lesson he learned. You've got to speak up. It doesn't, you know, well, my wife makes more than me. My husband makes more than me. I don't feel like, you know, my wife, you know, our income is my income.

So you think she doesn't get a vote? Well, by God, I'll just promise you, Sharon Ramsey gets a vote, okay? So we've run that thing a long, we've run it 40 years that way, and we're not running it any other way. It's not she doesn't feel like she can speak up because I, quote, earned the money, unquote. That's what I love about Sharon. She's not scared to voice her opinion.

She's not afraid, and I can tell you that. But I tell you what, that's how we got where we are, too. You do speak up. You both step into it. It's teamwork. We both have a voice. Who can find a virtuous wife for her worth is far above rubies. The heart of her husband safely trusts her, and he will have no lack of gain.

This is The Ramsey Show. okay guys here's the reality the reality is if you're going to lose weight, it's easier if you have a system. If you're going to get in shape, it's easier if you have a coach, a personal trainer. It's easier to have somebody walk with you, talk with you, bust you. And so the last couple doing their debt-free scream said, you know, they gifted it to their in-laws, and then they re-gifted it back. So they go through Financial Peace University. They use the EveryDollar app. The EveryDollar app is the world's best budgeting app,

and I'm not exaggerating because it's mine. It just is. It's robust. It's absolutely incredible. The premium version that you get with Ramsey Plus when you sign up for Financial Peace University and do the whole thing is connects to your bank, and it automatically downloads your debit card stuff

and you drop it right into your budget. And it's just really, really, really easy to keep your budget going with your debit card transactions. And so, you know, the best tools make it easier in any sports. You know, I think of sports, you know, a really good set of golf clubs does change your game if you have a decent game. If you're – I shoot a lot, and there's a difference in a cheap pistol and an expensive pistol. The expensive ones do shoot better.

There's a reason they cost more. You know what I mean? So you get – you know, the right tools help. And so every dollar helps going through financial peace university learning the stuff there's been uh you know it's a close to 10 million people now have gone through the class over 7 000 families and so you can do all of that and you know since we started we started tracking it gosh a bazillion years ago it used to be it took 90 days to go through the class when we taught it with like vhs tapes and that kind of stuff right and uh the average family would pay off twenty

seven hundred dollars or fifty three hundred dollars in debt and save twenty seven hundred dollars an eight thousand dollar change in position during that 90 days and you know what those numbers are still just about the same we track them all the time and so you get about eight thousand dollar movement in just the first three months of doing this stuff uh and so you get about eight thousand dollar movement in just the first three months of doing this stuff uh and so you know since we don't charge eight thousand dollars to go through the class that makes the class a good buy you know and uh at whatever hundred bucks good roi yeah and if you want to try it out for free you can do a free trial ramsey solutions.com slash fpu ramsey solutions.com slash fpu get intoseySolutions.com slash FPU. Get into Financial Peace University.

Run the free trial. Start using every dollar premium version. You're going to see the difference. It makes a difference. It really does. Greg is with us in Maryland. Hi, Greg. Welcome to the Ramsey Show.

Hey, thanks for having me. Just was scrolling through the radio, first-time listener, and I was like, man, this guy just kind of jives. He makes sense. So I'm calling. I need some advice. What I have going on is I recently have tried to downsize and do everything I can, going from a car loan to a small Honda Civic late model with tens of thousands of miles on it. And no payments. What I'm trying to do, though, is clear debt with my home. It's the only thing left I owe on, but it's $250,000.

And I'm trying to figure out long-term, is it better for me to invest the money that I've cleared up with paying off my car loan and credit cards and use that money towards paying on my home loan? Or do I invest that more to my retirement at work? That's a great question. And welcome to the show. Thank you. Appreciate you listening in. So the process that we teach on the show is called the baby steps. And it's the proven plan that Dave was just talking about with Financial Peace. This is the plan inside of Financial Peace. And so baby step one, $1,000 starter emergency fund. Baby step two, clear all of your consumer debt using the debt snowball.

Sounds like you're done with consumer debt, right? Right. So baby step three is building up a three to six months emergency fund of expenses. Do you have that in place? I do not. Okay. So that would be your next step right now is to stack up that money as fast as possible, three to six months. If your income is really stable, you may lean three,

or if you want a little more, you can lean towards six. And once you're done with that, you move on to baby step four, which is where we start investing. And the investing looks like this, 15% of your household income going into retirement, tax-advantaged retirement accounts like your company 401k, a Roth IRA, things of that nature. Then you move on to college savings. Then you move on to paying off the house. So if you're saying, hey, should I be investing more or paying off the house right now? Once you've got that emergency fund, you're investing 15%, then I would use any extra money to pay off the house early. Once you've done that, you've got a paid for house, you're in baby step seven, and that's where you can go hog wild. You can invest like crazy because you have

all the income in the world. So that's the plan. Yeah, so it sounds like then investing at 15% once you meet that margin or that barrier first, then move on to, okay, anything additional is what you're going to use to do additional principal payments on the house. Exactly. Yeah. Exactly. You got this stuff man that was quick yeah you you dialed it in fast that's exactly and here's the reason okay what we've run is we've run over 30 years of doing this we've run a bazillion different actual life situations and some hypothetical case study ideas and said okay we're going to take someone with this income at this age, and here's how it works. This income at this age. And 15% is a healthy amount, but it doesn't drain you down so far that you get to do nothing

on the house. I mean, you could have said it. We ran some scenarios at 20% back in the day when we were developing this system. We ran some scenarios at 10%, but the 10%, the retirement was too anemic, and the 20%, the amount of money we had to throw at the house was too anemic. And so it ended up landing to where you'll be a multimillionaire if you follow this process exactly because you will have built millions of dollars into your 401K, and you'll have a paid-for house, and that paid-for house will be worth half a million to a million.

And so it sounds like in your case anyway. And so that sets you up to do all of this all of this is outlined in the book that we did that's a number one bestseller for a decade it's on the bestseller list almost every week it's called the total money makeover and it's the baby steps on steroids it shows you every nuance every question every little detail about the baby steps what to do next what to do next what to do next, what to do next, what to do next, and so on. So hold on. Kelly will pick up.

We'll give you a copy of that as a new listener. Merry Christmas. We appreciate you joining us. Nick is with us. Nick is in Orange County. Hi, Nick. Welcome to the Ramsey Show. Hi.

How are you, Dave? Better than I deserve, man. What's up? I have a question for you. So I'm still learning the baby steps that I was referred to by some friends. I've been listening to you on YouTube for a few months and, you know, trying to match up baby steps where we are in our life. And so I've basically got an emergency fund that's probably six to 12 months. So I'm okay with that. My question relates to that. So right now I'm saving about $30,000 a year, partially going towards retirement,

towards that emergency fund. And what we were going to do was basically invest in another home, right? My wife and I are thinking of looking at another home to move to. So my question to you is, right now, out of that $30,000 that's being saved annually, about $10,000 of that is going towards my 401k at my work, and $20k is just going into a savings account because we wanted it to be liquid for the emergency fund slash have that ready when we want to pull the trigger on a home. So I wanted to ask you a really two-part question. One was, at this point, we've got a pretty decent amount saved up in there now. We've been doing this for a while.

So I wanted to ask you, should I now change that $30K allocation and make that more towards the $401K and very little towards that savings? Okay. The simplest thing to do here, if you're following our plan, the baby steps, is do 15% of your household income. So that really simplifies the numbers. Take 15% of what you make in a year. That's how much should be going into your $401K and IRAs. Everything else can go. You should not be adding anything else to your emergency fund you have too much in there now i'd scale it back down to six and use the rest for the house savings you need to separate the house and the emergency fund they're not the same fund it's not a slash

emergency fund slash house fund it's have an emergency fund in one account money market with three to six months of expenses, and everything else is going over here for the house deal. And everything above 15%, you can just pile it over there. And even if you want to back down the 15% a little bit, but I wouldn't. I think you've done, you know, you got a bunch of money saved here. Yeah. So if you keep that up, and if this timeline is looking like, hey, we need to get this house a year from now, I would not put it into the market into mutual funds. But if you're talking three, four, five, six years, you may want to park that in some mutual funds and let it grow.

Yeah, or a portion of it anyway. Yeah. So very good stuff. Thank you for joining us, Nick. We appreciate you being with us. That puts this hour of the Ramsey Show in the books. Good job to George Camel, to James Childs, and to Kelly Daniel in the booth. I am Dave Ramsey, your host, and we will be back.

Hey, it's Kelly, associate producer and phone screener for The Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit theramseyshow.com and register. We would love for you to come to Nashville and tell Dave your story.