The Ramsey Show - App - Is $1.4 Million Enough To Retire On? (Hour 3)

Episode Date: June 6, 2023

Dave Ramsey & Jade Warshaw answer your questions and discuss:  "I left my toxic job to start my own business", "Is $1.4m enough to retire on?" "Should we consolidate our debt?" How much tax is due when cashing out stock, 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 pods of Moving and Storage Studios, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. Thank you for joining us, America. Jade Warshaw, Ramsey Personality, is my co-host today as we answer your questions about your life and your money. Open phones here at 888-825-5225.

Thank you for being with us. Jose starts off this hour in Fayetteville, Arkansas. Hey, Jose, how are you? Hey, Mr. Ramsey and Mr. Jade, how are hour in Fayetteville, Arkansas. Hey, Jose, how are you? Hey, Mr. Ramsey and Mr. Jade, how are you all today? Great, man. How can we help? Yes, sir. Well, I just want to start real quick by thanking your entire team. I met most

of you all at the SPAR conference for your grand opening, and what a fine event. So thank you all for what you do. Well, thank you, man. Appreciate you coming over to Nashville for that. Thank you, sir. It was a great, thank you, man. Appreciate you coming over to Nashville for that. Thank you, sir. It was a great, great trip. Cool. How can we help today?

Yes, sir. So I'll start right off the bat. So I just left my 9-to-5 job as an assistant manager just due to poor leadership. And I went ahead and started my own remodeling and handyman services company right off back-to-back within a week. So I'm just calling for some wisdom. You know, I just need to get some do's and don'ts from you. But, yeah, I mean, I need some coaching.

Okay. On leadership, on money, what are you talking about here? Uh, I would say, I mean, uh, finances, uh, I guess start off with this would be my second venture. Uh, I've been to food truck before. Uh, it went well. I sold it, uh, to get my house. Uh, but right now I'm on baby step two and, uh, yeah. Uh, starting off, you know, fresh, uh, with my second venture now is a remodeler step two. And, yeah, starting off, you know, fresh with my second venture now as a remodeler and handyman.

So, yeah, I mean, finances, any – Is it just you in the business, or do you have other folks that are working with you or contracting? Yeah, right now, it's just me, just myself, yeah. Looking to, you know, see if I can hire uh in in the near future but okay so you feel confident about estimating the jobs in such a way that the pricing is fair but you make a profit that is correct sir yes okay all right so what what i would tell you then is make sure the first thing you do if you haven't already done is open a business checking account. It doesn't have to be complicated. It can be just a DBA account. Um, Jose DBA doing business as Jose's remodeling company or whatever,

and it just social security number. You don't even have to have a tax ID number to do that. You can, if you want, but it's not necessary. Um, and then make sure 100% of the income of the business goes into that account. And the only thing you pay out of that account are expenses what's left by definition if revenue minus expenses is what's left in the account by definition your account balance is your profit okay on a simple cash basis accounting system is what you're creating there okay now when you pull money out of that account to take it home to pay bills and eat and all those glorious things, you need to also set aside one-fourth of everything you pull out of that account. So if you pull $1,000 out, you set aside $250 and set that in a separate savings account that you have labeled taxes

so that you can pay your quarterly estimates. And until you make about $100,000 profit, your quarterly estimates are going to be right around 25% because your net tax rate is going to be a little over 10, and you've got 15.3 because you get the opportunity to pay both sides of FICA called self-employment tax because small business people pay double tax. I understand. called self-employment tax because small business people pay double tax so uh yeah and so yeah because we in america and washington dc really believes in small business so they tax you twice so a gift of business ownership yeah that's it so yeah that's what you do and and so yeah you set aside a fourth for taxes you pay your quarterly estimates on time and then the trick here is of

course to manage the estimating process. And, man, I'd pick me up some software to do that, some estimating software, and build it into an accounting system if you can. It's not real complicated to do so that you track how closely and accurately you do that. And you charge all of your tools and all of your purchases to a job job cost everything ah okay that's great and that way you say okay that job was you know i had to buy an extra tool that was x number of dollars to do this job and this job bought the tool and i still made a profit okay that way you don't end up taking all your money and buying tools.

Because in your business, you can just buy tools for everything. You know, I mean, you buy tools for days. Yeah, last night I was at Home Depot, and of course I'm pretty sure you've seen the Milwaukee packout system. And I'm like, I need to go home, just relax, think about it. And then I'm like, well, I don't need to spend, you know, a thousand dollars right off the bat. Yeah.

Let a job buy that for you. Some job where you'll actually utilize that, because that's a great system, by the way. I love the Milwaukee stuff, but I'm a tool in that. But, yeah, jump in there. But let a job pay for it, and that way you're not just a boy collecting goodies. I see. Okay. Um, last, uh, I guess last, uh, uh, question would be, uh, uh, you know, I do

listen to the entrepreneur leadership and, uh, for leadership purposes, uh, I'm trying to, you know, grow as a, uh, grow a better leader just so that when the day do best come when I need to hire, um, just, you know, uh, of course, uh, you, you said, uh course, you set really great examples there at the United Solutions. So just, you know, a couple, you know, pieces of wisdom that I can use from my school. In your situation, it sounds like the first type of hire probably wouldn't be like a full or part time person. It'd probably be just a contracted worker. It's a handyman business. So you might be hiring a guy that does a specific task

and you're just hiring him to do that task for that job. And maybe you've worked out something where he's coming back to you just to do that type of labor. I don't see how right away you'd be making a payroll hire unless it was somebody to do bookkeeping or something like that, or do the

office end of things. And that might be on down the line. You've got to have so much work that you're covered up and simply can't get to it. And then you can justify payroll position. But yeah, in terms of how you treat people, I mean, I think we all learn from the time we got peed on, right? That time you went to work and they got pissed on you. I mean, you're not gonna do that so i had a guy cuss me out when i was in my 20 early 20s and fire me yelling the

f-bomb at me the whole time i still don't know what i did i still don't know why i got fired i probably actually deserved it but i don't know what i did i just want to meet the man that cussed out dave ramsey well i was 20 years old i was kind of a cat aghast I was just caught off guard and I'm like okay okay I get it I'm out of here I'm done okay I'll clean up my desk it's okay but I still don't know what I did to this day and he died so I still I'll never know but the uh but so you know out of that what did I learn wow I have you know I've had uh over the years we've you know we've got 1100 team members we've probably got 1500 people that used to work here that either left and got better jobs or got married and moved to Oklahoma or some of them we fired.

But every single person we fired knows why and none of them were cussed in the process. So I just decided I'm not going to treat other people like I got treated. So treat other people like you want to be treated. Golden rule. The golden rule. I mean, it's not hard. And so just be kind and gentle and courageous and firm and truthful. Treat other people like you want to be treated. You tell them you're going to pay them, pay them.

You tell them they need to do something, make sure they do it. Treat other people like you want to be treated. And to be unclear is to be unkind. This is the ramsey show jade walsh all ramsey personality is my co-host if you're a business leader there's something you need to know all the best leaders spend time and yes some money investing in their own growth. As our friend John Maxwell likes to say, leadership ability is the lid that determines a person's level of effectiveness.

You've got to invest in yourself if you want to grow. And what better way to do that than to attend the premier leadership conference of the year, Entree Leadership Summit. We just finished the one that we did this year, last week here at the Nashville Gaylord Hotel. And next year, we're going to be in Dallas. You're going to be challenged and motivated by the top minds in leadership, people like James Clear from, oh man, from Atomic Habits is going to be speaking. Craig Groeschel, Pastor Craig, pastor of America's largest church, arguably, and one of the founders of the YouVersion Bible app

with a half a billion downloads now. Craig is an incredible leadership speaker and a good friend. Mike Rowe from Dirty Jobs and Deadliest Catch will be there. Carrie Lorenz, America's first female fighter pilot. And is she inspiring, i'm telling you uh some guy named dave ramsey will be there so uh you never know about that guy but uh hey the rest of them probably going to be pretty good and next year summit's 10-year anniversary of this we've been doing it and we're taking it to the gay lord texan in dallas to celebrate if you want to grow your leadership ability and celebrate all that you've

accomplished as a leader so far, you need to join us. It's going to be an incredible week, April 21st through the 24th. Incredible three days, actually. Seriously, if there's a year to be there, it's this one. You do not want to miss this. To learn more, go to RamseySolutions.com slash summit. RamseySolutions.com slash summit ramseysolutions.com slash summit uh our question of the day sponsored by neighborly your hub for home services if you're moving you have a long list of to-dos but

neighborly has local pros like housemaster five-star painting window genie and junk king and uh one of the mr electric guys dropped by the lobby here a little bit earlier from neighborly yeah pretty cool so visit Neighborly. Yeah, pretty cool. So visit Neighborly.com to schedule home service experts near you. Today's question of the day comes from Tony in Michigan. He says, I'm 56 years old and have no debt. I have $1.4 million in the bank and want to know how much is enough for me to feel comfortable retiring. $1.4 million sounds like a lot, but I don't have a good handle

on how long that would last. That's a really good question, Dave. And I feel like a lot of people kind of have that thought in their mind. I've got this money. How do I know if it's enough? How do I know if I can retire or when I can retire? And I feel like it's more about being able to and being happy with living off the interest. So if you looked at 1.4 million and it's invested, let's say that you're averaging a 10% rate of return, are you able to live on the 10% comfortably with inflation, with all of your expenses? So in his case, $140,000 a year. Does that feel right? If you feel like yes, then great. It'll last forever.

It'll last forever because you're never touching the principal. Yeah, it'll keep laying the golden eggs. That's right. And that's really where you want to be. You don't ever want to have to touch that money. But if you're looking at that and you're like, oh, I don't know, living on $140,000, I've been living off of $200,000. If you've got a house payment, there's so many things to consider.

But that's ultimately, at the end of the day, what we want to be looking at is living off of 200 if you've got a house payment there's so many things to consider but that's ultimately at the end of the day what we want to be looking at is living off the interest and if that's possible for you so yeah and here's a simple equation and it is probably overly simple but just to kind of give you an idea all right inflation not counting lately or counting lately actually and for the last 75 years has averaged 4%, 4.2%. Okay. Now, lately, we've been closer to 10. Sure. And in the 70s, we were at 12.

But the average over the last 75 years is 4.2. All right. Now, the average stock market rate of return is 11.8 since the stock market began. That's the average annual return if you had invested in growth stock mutual funds across the stock market. Okay. Now, so if we just use rough numbers, let's say 12% rate of return, which my personal mutual funds have averaged that for decades now.

Averaged. Some years not. Some years a lot more. Average. That's right. Number six grade math. Can you explain that? Average.

Because I know all the time people fight us on on that. The difference between annual or like annualized rate of return, looking at it over the track record of it. Just just look at and say, what did you make? OK, because this is how wealthy people look at. They go, all right, if I'm making 12 and I'm losing four in purchasing power, if I pull off eight, my mutual funds will grow by four a year, but they have to do that to break even in purchasing power.

So if you're earning 12 and pulling off four, you're getting a cost of living raise every year, but it's a cost of living raise.'s not anymore you're not you're not gaining actual wealth right it's net of inflation you're gaining but you're gaining actual dollars to offset the inflation okay so if it and if you did that and if you want to use different numbers use different numbers use 11 and and five then you'd pull off six okay i don't care but that's how you can go ahead so if you got a million dollars and you pull off eight that's 80 000 that means you made 120 so your million grew by 40 000 and you lived on the 80 then so if you can live off of eight percent

and you're invested in good mutual funds you probably pretty much do it in perpetuation it might dip into it a little and it might refill in another year yeah but overall it'll pretty much do it in perpetuation. It might dip into it a little and it might refill in another year. Yeah. But overall, it'll pretty much run. It'll pretty much run like a machine the rest of your life, assuming that the, you know, the American economy continues to do what it has done for the last 80 years. Well, and this is one of those reasons it's so important to do what we teach. Pay off your debt, pay off your mortgage, so that when you're going into retirement, your cost of living is not sky high, right? And let me tell you something else. There are some really stupid people that write financial articles all over the internet.

And here's what's stupid about them, all right? They run all these numbers out in great detail on math, and they do not grasp that life will never, ever happen the way they laid it out. So the way we just laid this out, do you think that the chances that guy's 1.4 million, that he's going to live on exactly 140 or exactly 8% of that, which would be more like 100? Okay. Is he actually going to do it exactly that way? Are those mutual funds going to earn exactly a market rate of return?

Are they going to make a little more or a little less? That's right. What's going to actually happen is he's probably going to live on less than that, and this money's going to grow. And there's some other factors that we haven't even considered in this, like his life and his health and his marriage and you know an inheritance comes or doesn't come in addition to this there's all kinds of other crap that's going to happen and so these guys when they're writing these financial articles act like well i mean if you miss this by

0.2 percent you're not going to make it you're you can't estimate this you can't forecast it within 0.2 percent if you're you know unless you're god you don't know what's going to happen right and i promise you god is not writing financial articles on tic tac okay it's definitely not happening so i can tell because the people doing it are idiots and god's fairly smart so the point is these guys are become such math nerds they think all this stuff operates in an exact little vacuum, and it never works out that way. I mean, can you imagine if today with, you know, I've got hundreds of millions of dollars worth of real estate today.

That was, none of that was in my equation. Right. None of it. Yeah. I mean, all you had to do was be one piece of real estate off. That's right. And the whole thing changes. So, you know, you're in one way or the other.

One business that you sell or that has a hit and booms. That's right. One little thing. So you're 30 years old. You can't predict when you're 70 exactly where you're going to be. But you can have a target. That's right. And say, based on that target, I know that if i'm 25 years old and i average 12

and i put a hundred dollars a month away from age 25 to age 65 that the math tells me that's 1 million 176 thousand dollars is it going to happen exactly that way i just said it wasn't but that's what the math can predict for you it It can go, oh, so we could have over a million dollars. We have hope. We're not going to wait on Karl Marx and socialism to fix this. We're actually going to work and save and live on less than we make and be on a budget and keep our butts out of debt. This is The Ramsey Show.

Jade Walsh, our Ramsey personality personality is my co-host today in the lobby of ramsey solutions a packed house and on the debt free scream april is with us hi april how are you hi dave hi jade hey where do you live i live in harker heights texas it's about 45 minutes north of austin outside of fort hood yeah okay very cool very cool welcome to nashville and how much debt have you paid april In Harker Heights, Texas. It's about 45 minutes north of Austin, outside of Fort Hood. Yeah, okay. Very cool. Very cool. Welcome to Nashville. And how much debt have you paid, April?

$740,619. Yo! Wow! Oh, whoa. Okay. And how long does this take? Four years, eight months, and two days. Good Lord, girl.

And your range of income during that four years eight months and two days good lord girl and your uh range of income during that uh four years uh it was 134 000 to 151 000 last year wow okay you did not make enough to do that in four years you must have sold something big yes i had uh the two rental homes uh from previous duty stations uh like So you're military? Yes, sir. Thank you for your service. What do you do in the military? I am retired as of July 1st. I'm a retired Black Hawk pilot.

Say what? Girl, you're BA. Serious. Sometimes. I'm retired now. Hey, we're in the presence of royalty here. Wow. Oh, man.

Okay. She can take both of us down, Dave. Deep well done very cool and 700 oh and go ahead and now i get the helicopter on the t-shirt okay yeah 740 000 bucks now how much of that was the rental property uh it was 425 okay what are you gonna do now that you've retired uh i took a year off. I'm taking a year off. I'm taking a gap year. I had a best friend get married. My son graduated college in high school last month. Very cool. And so I'm going to do my debt-free scream and then figure out what I want to be when I grow up. Wow. And I can do that now. Very cool. I'm proud of you. Very good. Well, we're honored to have you here. And what an incredible story you are.

So, okay, so you sell off the rental properties. What started all this? How'd you get started on this? So, 2018, I was passed over for the second time for a major. And in the military, when you're an officer, and when you get passed over two times,, get kicked out in seven months. So for the first time, I wrote down all my debts, what kind of job, what kind of salary do I need in the civilian world? I'm a single mom, so it was very important to me. And at the first time, that's how much I realized I was in debt. And I always wanted to get into criminal justice. So I needed, obviously, a six-figure job

and, you know, starting in criminal justice jobs wasn't that. So there killed two dreams, and then I was worried that I might have to claim bankruptcy, which my parents claimed bankruptcy when I was growing up, and I vowed to never do that. And so I decided to do one of those debt consolidation things, and then I was talking to a friend of mine from flight school who is an Apache pilot in Colorado named Lena, and she was passed over as well. And so we were kind of bonding over it, that we were getting out and we were getting stressed. And she says, well, hey, I'm going to start doing this Dave Ramsey plan. I'm like, what is that?

So I looked you up online and saw you had books. And I saw the website. And I'm like, I'm not buying. I'm not giving him my money right now. So I went to the library, checked out the book, and I read like I'm not buying I'm not giving him my money right now so I went to the library uh checked out the book and I read it that night that night was April 21st 2018 and I was hooked ever since um I uh bought every book since then and I was doing it on my own until um turns out uh so the army needed us to stay, so they offered me cell cons, so they were going to let me finish to my 20, which got me to July 1st, 2022, so I was able to stay, and, but at that

point in time, I was like, well, I don't want to be in that situation again in five years, five years is going to pass anyways, so I might as well be out of debt, so I was, I buckled down rice and beans. Luckily that's all my son likes. So we kind of like that on that. That was stationed in Pennsylvania at the time we moved to Texas in 2019. And 2020, we were during COVID, we were quarantined for about six weeks at Fort Hood. And during that time, I was marathon listening to your show, and I heard that there was a free financial coaching call. So I signed up for that. Caroline called me that night, which was actually April 21st, 2020.

So Caroline is one of your Ramsey financial coaches? Yes, sir. Wow. Yes, sir. Actually, it was two years to the date. April 21st, 2020 is when she called me back. And actually, my free call ended up being like three or four hours we just talked and bonded over that she talked me into going to FPU I'm a self-learning I like to read and I was like I already read it

there's I can't get nothing out of FPU put in FPU I've taken FPU 17 times since 17 yes sir and i taught it twice oh my gosh thank you for teaching it so what did uh was she right obviously if you went 17 freaking times but what do you get from fpu didn't get from reading um i i say it's kind of like my aa meeting i you know i i show up and that way i'm in i have a group of people that are like me. Because when you go around to work saying, get rid of your credit cards and no one really, it's so weird. No one really wants to accept that yet. So I feel alone at work for a while. You got to get a group of people that are doing the same thing you're doing.

Yes. It's the tribe. Yes, sir. And after a couple of times of going, I just love watching people grow over. How does it feel to be completely free oh it's such a weight lifted and you're such a precise person every date is memorized i mean blackhawk pilot you don't you don't miss any detail everything's dialed in but have you have you dialed in the feeling and like that wasn't in the checklist in the baby steps sir i'm a checklist person

it's a flight it's a flight checklist okay at baby step seven when you have no debt and you can breathe you're supposed to breathe oh okay there's that part yeah breathe you need to add that into fps okay all right man i love it you're so intense so very well done yeah how does it feel uh it feels amazing um i like that i broke my family curse and then i have a legacy behind my son actually i uh tricked them into uh doing the uh uh the high school foundations i bought it for him for christmas and i said hey when you finish this course, there's $100 waiting for you. He waited until the last minute to do it, but once he did it, he has a notebook full of notes on the course,

and then he said he wanted to be FPU. He said he went and got a part-time job and started his own IRA at 16. Wow. There you go, dude. Well done. Wow. Yeah, you've changed your family tree. Yes, sir.

Yeah, you did. Way to go. Yes, sir. Yeah, you did. Way to go. I'm so proud of you. So proud of you. Okay, now when you're coordinating those classes with paying off $740,000, what do you tell people the key to getting out of debt is? The key to getting out of debt for me since it was a long time, the number one thing is coffee.

And then number two, second grade math skills. And three, you just got to hate debt. I love second grade uh math skills and three you just you just gotta hate debt you gotta love second grade math skills come on and tell the truth yes you gotta hate that you can't love it because when you're in love you overlook things like but when you hate something or you can't stand like everyone hasn't been able to stand a co-worker and you know his schedule you know if he's 30 seconds late to work okay you follow him and that's what you have to do i think this is personal for you i know right i don't even know who this guy is i'm worried about him i don't want to be on your bad side yeah it's not good yeah speaking for a friend she's got details i'm just saying

got a plan you're amazing you're You're amazing. Very well done. So, so cool. I feel, if there's a few more of you out there, I think we in America are well protected. Oh, my goodness. B.A. Wow. Unbelievable. Black Hawk.

Thank you for your service. Thank you, sir. Thank you. And thank you for your incredible story and your inspiration. You're an inspiring young woman. And, you know, to say thank you for serving and to say thank you for leading Financial Peace University twice and going through it 17 times and walking with your coach, we want to offer to train you to become a Ramsey coach. Would you do that if I pay for it? Absolutely, sir.

All right, we're going to pay for it for you. All right. That's it. That's it. That's it. All right. Good deal. And we got this books and stuff for you, too.

But I think you've already bought them all. Yes, sir. But I hand them out. Yeah. I mean, to have somebody like you out there coaching for Ramsey. I know, right? Can't be stopped. Look out, Visa.

Cannot. Oh, yeah. Look out, Visa. I'm just saying, you're going down. She got tabs on you. Look out, Sally Mae. You in danger. All right, April from Killing, Texas. Wow.

$740,000 paid off in four years and eight months, selling the rental properties and doing it. Making $134,000 to $151,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Yeah!

Woo! I almost made a Blackhawk pilot cry. I saw it. This is The Ramsey Show. We're debt-free. Our scripture of the day,verbs 21 11 when a scoffer is punished the simple becomes wise when a wise man is instructed he gains knowledge eleanor roosevelt said learn from the mistakes of others you can't live long enough to make them all that's pretty good that is good pretty good i'll take that one hey back at the first of the year we told you the housing market was not going to melt down it

didn't we told you the market was going to slow down it did and we told you that we were going to continue to see a slight rise in values and prices and and they have. We told you there's going to continue to be a shortage of real estate, and there is. Interest rates have continued to go up, and everybody's walking around with their lips stuck out, but real estate's still selling, and houses are still selling. If you're getting ready to sell a house, this is a great time to sell a house. If you're getting ready to buy a house, great time to buy a house.

If you want to refinance and get rid of the higher interest rate, if rates go down, you could do that later but this is you know you're not going to get a better deal four years from now it's going to be higher this is the time if you're ready to buy to buy and you need a ramsey trusted agent by your side these guys and gals got your team stamp of got our team stamp of approval because they are top tiered real estate agents that you can trust to handle something important. They're not brand new. They do a lot of transactions.

We've vetted them. We've done our very best to find the best possible people we can endorse. They're endorsed local providers for real estate, and they're Ramsey-trusted. Go to RamseySolutions.com slash agent to connect to one near you doesn't cost a thing to connect to them that's ramsey solutions.com slash agent brandy is in sacramento hi brandy welcome to the ramsey show hi hey what's up hi i um thank you of all, for taking my call. So to get straight to it, I inherited my grandmother's home. She passed away in October of 21. I'm sorry. is a 30 plus year old home that's needing improvement. My husband and I both work full time and we have five beautiful children to provide and care for. We are in debt a little

over $45,000 and are looking to pay off the debt. Are you living in the house? Yes. Okay. What were you paying before in rent? So prior to moving in with her, before she passed, we were renting. I know. And what were you paying? $1,350. Okay. All right. And what do you guys make?

What's your household income? Our household income altogether is a little over $6,000. But with child support that I do receive, it's $73,000, $62,000. Okay. So $85,000 a year income, all right? Mm-hmm. And you have $45,000 worth of debt. What kind of debt? Most of it is mine.

I did purchase a vehicle, so I have $25,000 left, and then $13,000 in student loans. Mm-hmm. Okay. And then the rest is like... And what are the repairs to the house that you want to do? Well, there was water damage to the floor and then windows that would be needing replaced or upgraded to more energy efficient and what's the cost of all that have you kind of priced it out to see what that would cost you yeah um flooring no windows between it's like eight to ten thousand what we were looking at um i am reaching out to like pgme

in our area to see if there's any weatherization programs that they have. Okay. And so your net question is what? Well, we'd like to look at consolidating in some way, and I heard about refinancing or HELOC and was wondering what your thoughts were on that. You have a paid-for house. If you go get a mortgage on it i'm gonna smack you okay so that and i'm gonna watch that would be a no okay no your grandmother will come back and no no absolutely you sell your car is what you do sell the car uh-huh you have a paid for house yeah yeah and you have a car you can't afford

yep if you got rid of a hundred dollar payment yeah oh girl and you could take that payment and and a and a thirteen hundred dollar rent that you don't have any more that's two thousand dollars a month and very quickly you could buy eight thousand dollars worth of windows okay and very quickly you could knock out that thirteen thousand of student loans soon after okay you could be debt free have the windows paid off fix the floor all in a little over a year and be driving a five thousand dollar paid for car i'd rather have that and a paid for house with windows than i would a stupid car and see here's what's going to happen with this the difference between you cash flowing this is you if you cash flowing this means I'm getting the windows I need and I'm getting the floors I need you taking out a HELOC is also an excuse for well let's just go ahead and renovate the downstairs and let's just go ahead because that's what

happens people pull that money and in their mind it's like free money. Right? And it's an excuse to do this and that. Well, it's for the house. It's, you know. But I mean, let's think about where you could be three years from now. Completely renovated house and 100% debt free. Mm-hmm.

Holy crap. Yeah. That ain't bad. That's a good place to aim at. Yeah. And from there you could really build some serious wealth. I mean, you got a paid for house in Sacramento freaking California. Yeah.

That's no slag. It's a big deal. It is a big deal. Let's don't mess this up in the name of a dadgum car. Not a chance. All right, Kendall is with us. Kendall's in Spokane. Hi, Kendall.

How are you? Hi, I'm good. Thanks for taking my call. Sure. What's up? I was just wondering about how much taxes you think I would be responsible for if I cashed out an individual stock or if I should just leave it alone where it's at. Where did you get the individual stock? It was gifted to me by my grandparents when I was born, and I turned 30 this year.

Okay. Your basis in the stock is what they paid for it. You'll pay taxes on the difference in what they paid for it and the current sale rate. Do you have any idea what it was, what they paid for it? I would probably have to do some digging. Um, all I know is that they bought like 40 shares and now there's an additional like 104 on top of that. Okay. Yeah. I mean, so you're probably the vast majority of what's the total value of all of that? Uh, just over 40 grand. Okay. You, you probably have 15% tax on almost all of it. It's capital it's capital gains rate and so you know you probably got a six or an eight thousand dollar tax bill and yes i would and yes i would cash it in and

use it for wherever you are on the baby steps okay you're yeah just about to finish baby step two yeah so if you had forty thousand dollars sitting in the middle of the table you would not go buy this stock correct and so by keeping it you're making the decision to buy it again every day okay so i'm just reverse engineering for you here that's all we're doing yeah that sets you up and you can go i it i think everyone hates taxes so bad that it sometimes will keep you from doing what you're supposed to do because you might have to pay a little tax. But, I mean, it's a $40,000 gift. Yeah.

And you net out, you know, $34,000 or $35,000 or whatever it ends up being exactly after taxes. Yeah. And you get to clean up your whole mess and move on. If you're using that to take leaps forward in the debt-free journey it uh it causes your grandparents who gave that to you to smile that's right it's worth it and that's what they'd want you to do with it i think yeah as long as you're not being you know we're not we're not cashing out to buy a car right we're not cashing out to go on vacation and waste it we're cashing out to move forward in our financial plan and that's what i hope she's doing with it yeah that's that's the whole process there.

Very, very well done. Good stuff. Yeah, and so, yeah, when you're analyzing this, now there's sometimes you want to look at the taxes and the penalties and stuff, and like we tell you, don't cash out 401ks. Oh, of course, never that. Yeah, yeah.

Not until it's retirement age. Jay Walsh, our Ramsey personality, was my co-host today. That about puts this particular hour of the Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Hey, what's up guys? It's Jade. Look, if you like what you heard in this episode

and want to know more about getting started on the Ramsey Baby Steps, go to ramseysolutions.com and click the Get Started button. We'll help you figure out the best next step for you based on your specific situation. That's ramseysolutions.com and click Get Started.