The Ramsey Show - App - Inflation Sucks but It’s Not Going To Kill You

Episode Date: April 28, 2022

Dave Ramsey & Kristina Ellis discuss: Inflation has made the economy suck, but you have to control what you can control, Should a married couple move in with their parents? Why it makes sense to pay off your house instead of investing that money. Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6

Live from the headquarters of Ramsey Solutions, 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. We help people build wealth, do work that they love and live with amazing real relationships not virtual ones and it's working we're glad you're here america christina ellis best-selling author ramsey personality is my co-host today as we answer your questions about building wealth doing work you love and high high-quality relationships. We're glad you're here. 888-825-5225. All right, so there is a lot of data heading out there.

This from Fox Business. Americans are quickly losing confidence in the U.S. economy, according to a new survey published this week reflecting heightened concerns among consumers about sky-high inflation and the rising price of everyday goods. A Gallup survey published Wednesday shows Americans have low levels of confidence in the economy. What's more, most Americans expect the economy to deteriorate further. About 76% said the economy is getting worse compared to 20% who believe it is improving. So, Christina, what we have to do when we see stuff like this is there's three or four things going on as far as I'm concerned.

Thing one is there is some real inflation. Thing two is it's not going to kill you. It's bad. It's ugly when you fill up your car and you have a heart attack when you look at the price it's ugly when you consider that house prices are doing what they're doing in a lot of areas it's not going to kill you i don't like it i don't want it to stay around i don't think it's going to stay around that's thing one thing two is the news media particularly our friends at fox want to tell you over and over and over and over and over and over and over again how bad the economy is because if there's one thing that will get a politician thrown out of office of either party it is that the economy is bad so if you

want to dump all of the democrats in the street at the midterm the best way to do that is convince everyone that the economy is bad so there's a little bit of an agenda here just a wee bit and so yes the economy is bad and yes there's some things going on but you know the news media left and right and confused whatever they are they make all of their viewership based on fear porn if we can make you afraid of covid and think you're going to die if we can make you afraid of the economy and just keep peddling the fear porn you will keep dialing in you can't stay away from it you can't take your eyes off the train wreck and so then your adrenaline spikes your uh chemistry in your body starts changing your heart rate changes your eyes dilate you stay

pissed off all the time or afraid all the time. And it keeps you coming back. It's the same thing as a tornado warning by the, oh, God, the weather people. So when I was a kid, we were like, oh, there's a tornado. And now we shut down schools because there might be a tornado three weeks from now. So it's a different world. But there's a little bit of all that going on. So, you know, when you hear that the economy is bad or that Americans have lost confidence in the economy, our message would be, yeah, it sucks right now, but it's okay. Yeah. Well, I think even going with the analogy of a storm, if there's a hurricane coming, what do you do?

You batten down the hatches. You make sure everything is in place and solidified. So I hope people can take that kind of uneasy feeling they feel in their stomachs when they see that news article, when they see the fear porn and they go, you know what, we need to make sure our financial house is in order. We need to really make sure we're on a budget, that we're paying off our debt, and that we're saving for an emergency. Because if something does happen, the more you have your financial house in order, the less of a hit you'll take. And that's why your book is called Financial Peace.

We want you to feel at peace regardless of what the storm looks like. So the good news about the storm is you can use it as a warning to get your crap together, right? The bad news is you don't want to overreact because people go cray-cray when they go down these rabbit holes. I mean, they just – when you're in panic mode, your critical thinking skills shut down. Panic mode is run, right? And, you know, your brain says, get out of the way of the car. You're getting ready to be smashed, right? And you're not supposed to have a critical thinking about, oh, I wonder what that fender will do to my left leg, you know.

We don't want to have a discussion about this. Get out of the dead gum road, you know. But that's what your brain is designed to do that deloney talks about that all the time so the thing is this guys when you start seeing the stuff on the news just kind of take it with a grain of salt some of it is politically driven some of it is if we can keep you upset we can keep you as a viewer and some of it is real and you kind of got to parse through that a little bit and go okay yeah gas is really five dollars and that was really biden on biden's desk he really screwed this whole energy thing up bad uh oh yeah uh supply chains all screwed up and

that drove prices up on a bunch of stuff wasn't biden's fault he didn't do that he didn't cause the pandemic and he didn't cause supply chain mess up after the pandemic could he have done some things to help probably but he couldn't have stopped it from happening some of this stuff is just the result of it's a it's the aftertaste it's the tsunami that came ashore after the earthquake at sea and uh that that's some of that is what's going on there. But the energy stuff is 100% on him. He just screwed that up. Of course, he has no idea. But in the name of being woke or left or energy free or whatever, I mean, whatever he's trying to do, you know, get everybody to buy an Elon Musk car

or whatever he's trying to do, he's screwing up the economy. Because here's the thing. Gas doubling goes into the truck that delivers the bread and into the price of the bread therefore okay so this is a problem so yeah so he's contributing to it so yeah he's going to get his party thrown out for various reasons and that's probably a great thing so it's okay it's going to work out but But the point is, you cannot read these articles in going to freak out mode. Absolutely not. Yeah.

You got to really focus on the controllables. You know, what can you control? You can't control macroeconomics of the U.S. government. You can't control whether gas prices are more expensive next week. But you can control your budget. You can adjust things as necessary so that your family can afford your lifestyle and you can afford the things that you need to pay for focus on the controllables yeah i'll never forget watching a local weather forecaster and her voice was going up the octaves were going up and if you're this

is not like a beagle chasing a rabbit right i mean she's just going crazy there's a tornado coming you know and and i swear the woman, if you have a football helmet, put a football helmet on and go sit in the shower if you don't have a safer place to hide. And so somewhere I've got visualized this redneck sitting in a shower with a football helmet on because this woman said to do this. And I'm just thinking, this is out of control, guys. You know know if a tornado hits your trailer football helmet in the shower ain't gonna cut it it's just not gonna i

mean it's just not gonna work i mean i may or may not still wear the football helmet unbelievable all right so this is the world we live in, though. And so you have to keep, my point is you have to keep your wits about you and make good, solid decisions. Yes, you've got $5 gas. Yes, house prices are out of control right now. And so what do you do? I mean, used cars are going up. What kind of world do we live in? You know.

So is right now a good time to buy a used car? No! It's a horrible time to buy a used car. This is the Ramsey Show. Hey folks, Dave Ramsey here. If you could call into the show and ask any question about money, what would it be? Maybe you're facing a big financial decision. If you could call into the show and ask any question about money, what would it be? Maybe you're facing a big financial decision. Maybe you just want to know you're doing the right thing with your money,

and you wish you could easily get answers. Well, now you can, and you don't have to wait on me. Join Ramsey Plus and jump on one of our live group financial coaching sessions. Yes, live with actual humans. My personal in-house coaches are pros, so bring them all your questions. Investing, budgeting, talking with your spouse about money, anything. They'll guide you so you feel confident you're doing the right thing. Ramsey Plus members can join as many coaching sessions as they want, but spots fill up fast.

So start your free trial of Ramsey Plus to talk to a coach today. Go to RamseySolutions.com slash coaching. That's RamseyS, bestselling author, is my co-host today. We got the football helmet down off the shelf because she's convinced me that she's the one that would wear the football helmet in the event of a tornado while I would be outside looking for the tornado. I may or may not have one for me and the kids. You may or may not have. Oh, we have tornado helmets at your house. Yes, we do. I got them for my babies. I got them for the husband, except for my husband is out in the street searching for the tornado and really did do that you're not you're not joking are you no true confessions true confession in front of 2 million 20 million people you just told people you have a tornado helmet for your kids in my defense the last tornado i don't think there's any defense for this i live in tennessee what can i say

there's a lot of things you can say so do i I live in Tennessee. What can I say? There's a lot of things you can say. So do I. Well, the good news is that we have a very diverse group of Ramsey personalities. We have the football helmet-wearing ones and the non-football helmet-wearing ones in the event of a storm. So now you get advice across the board. Hey, be prepared, y'all be prepared be prepared yeah buy a house with a basement oh my god dig a storm cellar at least you'd be safe the football home it's a joke oh my gosh i have

tornado helmets for my children i don't know christina i i probably should have known this before i heard you hey we don't have a basement yet we don't have a basement yet you sold your house you're homeless what are you talking about right oh i love it just too fun all right lexi is with us in iowa hi lexi welcome to the ramsey show hi guys thanks so much for taking my call sure what's up so my husband and i have been looking at a piece of land outside of our town for a while now. Long-term goal is to build and have a little hobby farm and garden for our three young girls. So this past year, my neighbor's house sold for a lot more money than we would have expected. And so that kind of gave me the courage to contact the landowners of that really beautiful piece of land we want.

And they're actually willing to sell to us. So it kind of all happened, you know, in an instant, and now we're kind of caught up. What do we do? To purchase this land, I'd want us to sell our house and live in my parents' rental house to save some money before building, but my husband's leery that we'd get stuck there for five plus years. We could also just wait to purchase the land and live in our current house and try to save on the side, but we worry about losing the land or housing market prices. So do we sacrifice and move twice and go through lots of hassles to get our dreams faster, or should we kind of slow down, cool the jets, and just try to save where we're at? So how much is the land? The land is $100,000k and how much is your house going to sell for

it would sell for 410 around what do you owe on it we owe 250 okay what's your household income around 170 000 why would you not buy the land and um start construction immediately with a construction loan because i just don't want to um have to pay for a house payment and you're paying a house payment now i know it's just scary it's a lot of money no i'm saying sell the house sell the house oh sell it go go rent something Start construction on the new house. Buy the land. Start construction on the new house. And move in in a year.

Okay, yeah. I guess I'm just hypersensitive to save, save, save, and be as comfortable as we can be. Because that's my husband's fear is I will get stuck in my parents' rental. Well, your husband's right. So here's the thing. Okay, you get $200,000 out of your house. Did I get that right? Yes, sir.

Okay, put $100,000 on the land. You get another $100,000 for your house. Okay, and then so what price range of home would you build? We would say like $300,000 to $400,000. Okay, so let's call it $300,000. You put $100,000 down. You got a $200,000 mortgage. You got a $200,000 mortgage now. What's your problem? I know you're so right. Okay, so let's call it $300,000. You put $100,000 down, you got a $200,000 mortgage. You got a $200,000 mortgage now.

What's your problem? I know, you're so right. Okay, thanks. We needed a third party so I could get my football helmet off. And Christina didn't even help. Come on, Christina, get in here. It wasn't supposed to be this easy well if you if you if you do a four hundred thousand or three hundred thousand dollar house four hundred thousand dollar house instead you're going to be up a hundred in mortgage

you have a three hundred thousand dollar mortgage with one hundred seventy thousand dollar income which is still okay okay all right thank you so much but here's the thing okay uh what you want to do is you you want to get these things lined up. You're now a project manager, and the project is get into the brand-new house on the land, okay? Now, what are the elements of the project? And let's line up the dominoes and then push them all at once, okay? So I'm not putting your house on the market today.

I'm going to buy the land with as long a closing out there as I can. How far away can I make the closing? As long as they'll let you, six months, a year, I don't care, okay? Then I'm going to start drawing. I'm going to have it under contract, no contingencies. We're going to close on it. I'm going to start drawing the thing, thing getting the builder getting construction all lined up and then i'm gonna sell your house and go and let the dominoes all fall down we break ground we start we close on the land we break

ground on the new house well everything's all done but you can't just say okay i'm gonna go buy the land and close on it today you haven't sold your house you can't close on it today and you can't then take a year drawing the house and another year finding the builder right i didn't even think about pushing out the closing some so it's under contract at least and it'll give us a little bit of time as long as you can i mean so that you can get the plans drawn get the construction loan lined up the builder lined up and then you go sell your house close on the land start start the new house boom push the dog so i can save that's why we push it out yeah well you know while you're doing all this

you can save even more yeah yeah do you think it's okay for them to live with her parents temporarily they're not in with their parents it's a rental house okay get a rental you know it's her parents rental house right yeah yeah you're not living with your mom and dad right heck no that would never speaking of football helmets yeah exactly yeah so it's just they own a rental house they'll let you live in for free for a little while yep and your husband doesn't want to get stuck there and his fear of being stuck there is brought on by your penchant for freezing everything do you saved up all the money yeah he's not dumb yeah and so his fears are valid uh not because it's a fear of the situation but he's gonna

he's afraid you're gonna freeze up and he's not gonna be able to get you to start this house right so if you want if you want this all to go down you're gonna have to line up the dominoes and then he's gonna be okay because you literally could be in the new house in 14 months from today assuming your builder is efficient you don't try to build the taj mahal you know um but you might not be able to get that efficiency with supply chain issues and um i don't know it also depends on how many helmets you have to buy because they're in short supply i hear we already got ours so we're good you got you're you got yours you're good okay okay just making sure you're covered here christina

we're prepared we're ready oh i love it this is too much fun way too much fun all right imagine the energy of a jam-packed arena filled with people ready to experience what it means to live life to the fullest picture all of your favorite speakers together on one stage empowering you with the tools the principles that will create unstoppable momentum in your life that is smart conference smart conference is back it's been three years, and we are so pumped to get this event going. Christina will be speaking, George Camel, Rachel Cruz, Dr. John Deloney, Ken Coleman, me, Craig, and Amy Groeschel from Life.Church will be doing a session on marriage. We're going to talk about leadership, money, personal growth, mental health,

relationships, your career. All of it's going to happen. It's October the 22nd in Dallas. It's all day long, and if you come to the SMART Conference at the end of the day, you will be SMART. That's why we called it that. So check it out, guys. It's only $39.

We should charge $339 for this. It is an incredible lineup, an incredible full-day event. You cannot beat this. Go to RamseySolutions.com. Get your tickets before they are gone. It is not yet sold out. It is in October, but it will sell out, and it will sell out early. So be sure, guys, that you get this done.

Smart Conference. It's going to be fun, Christina. I'm so excited. I can't wait. I'll pay you double if you'll go on stage with a football helmet. It's a no-brainer. This is the Ramsey Show. We'll be right back. Christina Ellis, Ramsey personality, best-selling author, is my co-host today. I am Dave Ramsey, your host in the lobby

of Ramsey Solutions on the Debt-Free Stage. Keith is with us. Hey, Keith, how are you? I'm doing wonderful. How are you doing, Dave? Better than I deserve, sir. And here to do a debt-free scream, how much have you paid off? $90,000, $220. Wow. And how long did this take you? Three years and eight months. Three years and eight months. Very good. And your range of income during that time? Started at $62,000 and cleared this year at $94,000.

Cool. What do you do for a living? I am an auditor for the state of Pennsylvania. All right. Cool. Good for you. Good for you. So the t-shirt says debt-free since 2021. Yes. So I completed my debt-free journey in November. The shirt was actually a gift. My one side hustle was I was a delivery driver for Chick-fil-A. Oh, okay. And the operator there bought this shirt or got this shirt for me after I finished. So shout out to Chick-fil-A, Linda Road in Harrisburg.

Mr. Brad, thank you for the support while I was working there delivering God's chicken. I love it. Jesus chicken got me God's chicken. I love it. Jesus chicken got me out of debt. I like it. This is good, man. Good for you, man. Thank you. What kind of debt was the $90,000?

A little bit of everything. Car loan, medical debt, credit cards, IRS debt, a little bit of everything. Okay. What made you decide to do this three years and eight months ago? Well, it truly started in 2017 i was going went to church and heard fpu at you know being advertised and i took the class 2017 and you know i was very dave ish for the first 14 months in fact towards the end of the year you know my car broke down and instead of fixing it i ended up financing car so you know that's more than ish

that's just not at all it was stupid yes it was and then in you know march of 2018 i got an email from my coordinator after i took the class asking who wanted to jump in and help lead i'm like i need a kick in the pants so you know let me get in since then i've now led 11 fpu classes whoa so i lead them at lcbc in harrisburg yeah yeah i've been there spoke yeah wonderful pastor you guys got a great place yeah i was there when you were when you spoke and then was there at the event afterwards when you and chris spoke yeah yep that was a lot of fun yeah very cool man 11 classes thank you yes sir well nothing make you do it like leading it, right? That is exactly right. And it's so much fun when I'm leading it to be able to tell everybody, look, I'm working the same plan. It works. You know, you can show the debt-free screens all

you want. You're going to show everything on YouTube all you want. But to be able to live it out and show everybody, that's, you know, the most powerful thing. That's amazing. So, you're constantly leading people through this. What do you tell people is the key to getting out of debt? I always hear people say the budget's key and everything. But to me, the biggest key was having a strong why, which is my daughters. I have a 16 and 18-year-old daughters. And before I started this, I'm an accountant in my full-time job, and my finances were a wreck. It was embarrassing.

And I wanted better from them. My oldest will be a senior. He's a senior right now, graduates soon. He's going off to college in the fall. And I knew if I was going to get there, I had to clean everything up. So, you know, they're my driving force in everything I've done. Yeah. Way to go, man.

Thank you. Congratulations. Thank you. How does it feel to be free it feels so good i won i made that last payment you know both my daughters were there their best friends were there and as soon as i hit the button you know everybody cheered and i just felt like such a relief off my shoulders now my paychecks come in they go into my savings i can do things I haven't done in years. I mean, back down here to travel to Nashville and hang out with a bunch of friends. Yeah. So what's the story on this posse?

We've been hanging out with this posse for a couple days here. Yeah. I've met everybody a couple times. And you guys have quite a thing going. What is the deal here? So, you know, back in 2017, you know, a bunch of of people were like i think it was mentioned on the show you should start a dating site well some people took that and ran we have two different facebook groups for singles who follow your principles oh my gosh so you know one is dave

ramsay online dating at follow dave ramsay followers online dating and dave ramsay dating group so we've got about 2500,500 members in each group. I am not responsible for anything that goes on in this website. Oh, my gosh, because I'm certainly not getting a commission on it either, from what I can tell. I mean, you know, we charge huge fees, the whole thing, and nothing. Yeah, okay. Well, I get a percentage of that.

Okay, good. So, yeah, I mean, we... So this is some of that gang. Yeah, this is some of this gang. This is some of my biggest... Besides my kids, these are some of my biggest supporters. Obviously, they came in from everywhere. I know, and I've told them the last couple of days how much I appreciate it, you know,

to be able to, you know, being a single dad and being able to do this kind of stuff, you need support. I mean, I've got support from my kids, my friends at home, my church, but having a bunch of people like this that are like-minded and following the principles and also struggling through you know the single life or dating it's it's such a encouragement and help yeah because it's wild out there man it is it's crazy and and community having community around you when you're doing it doing life period but doing the whole financial thing it's just necessary yeah absolutely so absolutely. So what's next? The next thing is, you know,

looking to possibly buy the house I've been renting the last four years, looking to send my daughter to school debt-free. You know, we've, she wouldn't take FPU when we had the huge, you know, push at church, but I'm like, fine, I'm just going to pound the principles

into your head at home. So that's what I've done and it's my oldest like her one class she had this year I think it was foundations at school so she was the teacher's dream she knew all the answers and she comes home telling me how stupid some of the kids are because they're fine

with debt like alright something's sinking in so hey this is working I like this plan very cool I like this plan. Very cool. Very cool. I love seeing your community over there and the way they're smiling and beaming. It really does just show. I mean, they've been hanging around here a couple days.

They're all having fun. I mean, it's a fun group. We're having a blast. We may be back tomorrow. We haven't decided yet. Okay. Well, I mean, you're more than welcome. The cookies are still free.

And they're still delicious. It's all good. Well well you guys have been fun it's been fun talking to all of you at the breaks and everything and uh now that i know the history on the whole thing it makes more sense yeah yeah it was kind of random before well there was there was a group of us down here in 2018 also yeah so yeah i mean we had back then we actually had shirts made up and everything that had different slogans on them and everything. Wow. You guys are a little scary. Oh, we're very scary.

It's all good. Very scary, but very supportive. I'm kidding with you. It's all great, man. I'm so proud of you. Thank you. And I am proud of your gang hanging out with you and supporting you. That makes a huge difference.

You can do so much more when you've got people that are walking with you and holding you're when you're weak and smacking you around when you're trying to do the wrong thing you just got people that love you in your life man it's just a good thing loving enough to tell you what you need to hear not what you want to hear amen so very good stuff we're very proud of you thank you very well done we've got a copy of everyday i'm sorry almost called it everyday millionaires baby steps millionaires that book i wrote there it is yeah baby step millionaires how ordinary people built extraordinary wealth and how you can too and uh that's your next chapter in your story for sure my man without a doubt keith that's where you're going and a copy of total money makeover you can give it away in your class maybe maybe it's a reward for somebody doing something thank you so much for leading so

many fpu classes it's rewarding but it's uh it doesn't doing something. Thank you so much for leading so many FPU classes. It's rewarding, but it doesn't happen without people like you doing it. So thank you. It's amazing. The fun thing I like to do during my classes is we put out a jar throughout the nine weeks, and I tell everybody, if you feel led to leave a tip, go for it. What we'll do in week nine then, with the outrageous generosity, we order pizza, and then everything we've

collected in that tip jar we tip the delivery driver oh fun so like this last class we tipped to our 300 300 hours to the delivery driver so it's delivery drivers going hey if that church thing comes up again i'm gonna take the pizza yeah that's why I try to move it around so they don't anticipate what's going on. That's good. Very cool. Good stuff, man. Good stuff. All right, Keith from Harrisburg, Pennsylvania.

$90,000 paid off in three years and eight months, making $62,000 to $94,000. Count it down. Let's hear a debt-free scream. Three, two, one. I'm debt-free scream. Three, two, one. I'm debt-free! Yeah! Woo-hoo! Well done, sir.

Very well done. Oh, man, that's so much fun. How great is that? Very, very cool. Yeah, the look on his face, I, I like felt that in my soul. That was amazing. Good. This is the Ramsey Show. Thank you. Christina Ellis, best-selling author, Ramsey Personality, is my co-host today. Open phones at 888-825-5225.

Jackson is in Tampa, Florida. Hi, Jackson. How are you? Hey, I'm doing well. How are you? Better than I deserve. What's up? Hey, I'm doing well. How are you? Better than I deserve. What's up? Hey, I got a question regarding the mortgage. I know you guys talk about, I have no debt, and I know you talk about putting 15% towards investments and then the rest going towards your mortgage. My wife and I are incredibly risk tolerant, lost about $50,000 in our mutual funds over the past month, and still just sold my car, invested that money straight into the stock market because

they're on sale. So I know, well, I think that the math says investments. You're obviously a very successful man, so I'm not going to argue with you, but I'd like to genuinely know why do you go with that approach versus the investments if you're risk tolerant well risk tolerance has to do with what your emotions will allow you to do without going into freak out mode sure okay um and so uh someone who has a very low risk tolerance can become a poor investor based on the fact that their low risk tolerance causes them to not take enough risk agreed yep someone who has too high a risk tolerance can cause them to be a poor investor because they take risky investments that end up

losing more than they make because they live out on the edge yeah i'm i'm like i'm 99 mutual funds i'm one percent in football helmets so like i'm i'm in i mean for the score market for the score market i like it oh this is so great new measure of things awesome born on the air today. I love it. That's fat Jackson. Jackson, you get the award. You could go do whatever you want after that.

So, no, I'm kidding. All right. So, yeah, but my point is, okay, so I grew up in the real estate business, and one of the things you do in the real estate business is they take your risk meter and they break it with a hammer. Real estate people have complete risk tolerance. We're idiots. We're idiots.

We don't even know there's risk. Okay? And that's what caused me to go broke because I was not measuring risk. So here's what ends up happening. Debt equals risk. More debt equals more risk. Less debt equals less risk. It adds risk to the portfolio.

You're saying I can emotionally tolerate that. That's one discussion. Another discussion, though, is what is the fastest route to wealth, regardless of risk tolerance? Okay? What's the fastest route to wealth? And, you know, and within that, then, okay, we've got to discuss, can I stomach that with my risk tolerance? Do I have enough risk tolerance to go that route? The fastest, surest route to wealth, the 10,167 millionaires we studied. And the number of them that said, because I had a high risk tolerance, I kept a mortgage the whole time and I invested all the money.

And today I have a million dollars in mutual funds. I have $2 million in mutual funds and I owe $600,000 on my house. The number of them that said that was less than 10%. 90 plus percent said I got my house paid off and I dumped everything in mutual funds in my 401 case. Okay. affirmative way the most likely way the highest probability way according to the data to build wealth is to invest into mutual funds and to get the house paid off um instead of because otherwise you would say you would say all right i'm going to borrow as much as i can borrow on the house all the time and every so often i'm going to refinance it and throw all of that money with the cash out into the and stay mortgaged up to my eyeballs.

Yeah. If the concept worked, you would do that. But the problem with that is that it affects other things in the unseen, and that is that the borrower is slave to the lender. You make different decisions in your life when you don't have a house payment. About your career? Yeah. It puts different stresses on your relationships. You treat your children

different there's different levels of health issues when there's no debt versus if there's debt regardless of risk tolerance all of those things end up applying out there in the real world yeah i keep going back to the car you said you're you sold car to invest. Do you need a car? No, I don't. Actually, that was just, I sold, I was able to sell my car. It was a 2008 Honda Fit. I sold it for $300 more than I bought it for five years ago. And so I bought an electric bike and I take that to work. I'm only three miles from work. The problem is I do live in, you know, Florida, so I'm going to start sweating here soon. But, no, that just, I just, my wife and I felt like we've got our 2015 minivan and, like, we can be a one-car family. Okay.

Okay. Yeah. So that was more. Well, I guess I'm just, I'm having a little bit of trouble wrapping my mind around the math of it, but maybe I need to let that go. I don't think it, here's the, okay, – okay, here's how the math works, all right? In graduate-level studies in finance, or maybe even in a good school in the senior year level, we are taught to – Christina and I were taught to analyze two different mutual funds. Okay? An aggressive growth stock mutual fund has a measure of risk called a beta. The higher the beta, the higher the risk.

The higher the peaks and valleys if you chart it, the more volatile it is. Okay? High beta, more risk. Okay? Low beta, less risk. And so you take an aggressive growth with a high beta and maybe a 2.5 beta or something like that. And then you take a growth in income that might have a 0.8 beta, less than one beta. A one beta is the S&P 500, what the market does, just to give you an example. Okay.

So here's how the math works. In order to compare those two, they have different volatility, so comparing them apples to apples is naive. You see what I'm saying? Sure. So the way you mathematically adjust for it is there's an inverse formula where the beta is flipped on its head in an inverse fraction so that the higher beta reduces the return of the risky investment,

and the lower beta raises the return of the lower investment, so that after adjusted for risk mathematically, you can compare these apples to apples. Does that make any sense? It does. I knew you were smarter than I was. And so it's just it's just what i was taught academically so i'm not a genius so the thing is what what

has never happened though we're taught that in the financial world christina but we're not taught to do that with debt and so we compare a house with a mortgage equally to a house without a mortgage or an investment property with a mortgage equally to an investment property without a mortgage and we do not apply the increased risk a beta to the math formula and so our that's what i mean by real estate people their risk meter is broken they don't analyze for risk and we don't and we don't mathematically adjust for risk. And so when we add the beta idea or concept to your question, it says you are taking more risk, so we should put a higher beta on your plan, a lower beta on my plan, and when we risk adjust mathematically, our plans are going to be fairly equal. Okay.

That's helpful. I really appreciate it. Cool. i don't know if that made any sense or not something like a barrel of fish hooks but it is it is the truth that that's the academic way of approaching it the spiritual way of approaching it is the borrower is slave to the lender 100 of the references in the bible to debt say debt is stupid it's not a sin you're a slave you're a fool you're impulsive it always says that so if the bible, and I'm a Christian, if the Bible says negative things about debt, it doesn't say it's a sin. It doesn't say I'm going to hell if I get a MasterCard.

It's not a salvation issue. But if spiritually my Heavenly Father is saying in his handbook there's nothing good about debt, then I have to read that and believe it if I'm a person of faith. Absolutely. And then I can also go over here and use my brain and use a beta. And either way, I come to the same conclusion. Yep. That's such a great way of meshing those two things together.

Yeah, it's, but the, you know, I actually was speaking to a graduate level group at Vandy one time and walked them through that on the math idea. And they're like looking at me like, I've never heard that before. It's because nobody teaches it. Nobody talks about debt equals risk. So you need to factor a beta into it, a measure of risk mathematically into it. And when you put in a measure of risk mathematically into it, it takes away the advantages of debt. And guess what? We all know that because when you're debt free, you build wealth faster. So, duh, you know, that's kind of the way this whole thing works. It's an interesting discussion. I appreciate his question.

That's great. Christina Ellis, Ramsey Personality. James Childs, our producer. And Zach and Kelly also in the booth. I'm Dave Ramsey, your host, and we'll be back. Dave here. You can find all of our shows with the Ramsey Network app on your smartphone. It's the only place to listen to the entire back catalog of episodes.

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