The Ramsey Show - App - Is a TSP or the Military Blended Retirement System Better? (Hour 2)

Episode Date: January 4, 2019

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🎵 Live from the headquarters of Ramsey Solutions, it's the Dave 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. This is your show, America. We're glad you're here. Open phones at 888-825-5225. That's 888-825-5225. Kenneth starts off this hour in Nashville.

Hey, Kenneth, welcome to the Dave Ramsey Show. Good afternoon, Mr. Ramsey. Thank you for taking my call. Sure. How can I help? Well, I had a quick question in regards to IRAs, and I was hoping you could walk me through the map. And I'll just use some round numbers. If I have $100,000 in a regular IRA, and I'm in a 25% tax bracket, would it be beneficial to convert a net amount of $75,000

to a Roth IRA versus leaving the $100,000 in the regular IRA account if I don't have any other non-retirement funds available? I wouldn't do that. Okay. Now, the math is, if we want to work on hypotheticals, and then I'll walk you through why I wouldn't do that, but the math is this. If you are in a 25% tax bracket and you leave $100,000 in a traditional, the amount it will grow to, and if you stay in the same tax bracket, of course, you assume the same tax bracket at retirement,

and you probably would be higher, actually, as young as you are, with $100,000 and what it would grow to. But anyway, let's just, for math purposes, use the same tax bracket. If $100,000 grows to, let's just, I'm going to put it in the calculator because this is a fun exercise. I'm going to make that the present value how old are you 35 okay and so let's uh do 30 years all right um and i'll just use 12 for the purposes of this discussion we're going to add nothing to it and that 100 000 would become 300 3 million 594 000 But then you've got to pay taxes on the whole thing.

If it's in a 25% tax bracket, it'd be 25% off of that, right? Yep. Okay? Now, if you take the 25% off now, and you take the 100 down to 75, and I put 75 in that same formula, guess what? It will be 25% less than $3,940,000 in net of taxes then. So it's exactly a break-even. So you're really just counting on the tax rate differences at that point?

You don't get any benefit at all. You break even. I mean, it's all tax-free if it's in the Roth, but it's 25% smaller, and your non-tax-free was 25% larger. After taxes, it's exactly the same as you have after a Roth, which is after taxes because it's tax-free. So there's zero benefit to doing what you're talking about, assuming tax brackets don't change, and that's obviously not going to occur.

We don't know whether they're going to go up, they're going to go down. We don't know whether you're going to be in a larger tax bracket. With $3,600,000, you'd likely be in a higher tax bracket. But unless tax brackets change, and now we're predicting the political climate, that's a joke. So, you know, all of that aside. But if we're just doing pure math, and we said assuming tax brackets remain the same, the amount that you reduce your account by today what just lost that growth which is the exact same amount that it would be your tax bill then so you see what i'm saying so that's why i

tell people to never do it what i do tell you to do is wait until you're uh at baby step six got your house paid off and you got some extra cash, then, and that might be like age 40 for you, okay, then you roll the whole $100,000 over and you pay the 25% in taxes out of non-retirement money. That has the same effect of having actually invested 25% more into the Roth, mathematically, because of the discussion we're having. Is that logical? Yep, that makes sense. So, but the thing is, it's kind of like comparing, I can put $5,500 into a traditional Roth

or I can put $5,500 into a regular, I mean, into a traditional IRA or I can put $5,500 into a traditional IRA or a Roth. Well, that's not apples to apples because the $5,500 you're putting into the Roth is after tax. To compare apples to apples, you'd have to reduce the amount that you put in the Roth by your tax bracket today, which nobody does that. Everybody maxes it, right? But you're really comparing apples to oranges when you compare a traditional $5500 with a Roth 5,500 because one's after tax going in. So the Roth is as if you put in 25% more money because you had to make 25% more do that.

But you're a math guy, and so I'm having fun discussing this because I'm a math nerd to no end so but in the real world what i had to figure out is it doesn't matter if i've got all that math figured out when in reality people put 5500 in either one so guess what i'm actually talking them into investing more money when they put 5500 into their roth it's a trick but it causes people to become wealthy so it's's a great trick. You just kind of have more money at retirement. Fun discussion. Hey, thanks for calling in. Robert is with us in Chicago. Hey, Robert, how are you?

Good. Thank you for taking my call. Sure. What's up? So my sister is 28 years old, and she has $10,000 in car loans and $40,000 in private student loans. And this will be the fourth month that she has not paid for those loans. And my mom is 65, retired, with government pension and Social Security.

She is the co-signer. So she did get a formal warning from the collectors about submitting her to the credit bureau and trying to scare her. So my question is, can her wages be garnished? No. But they can be. Her government and her social can be deducted for student loans. But they can't be garnished on the car.

That's not technically a garnishment. It is a garnishment. That's the way it works. But, yeah, the student loans can get to her, but the car can't be garnished on the car. That's not technically a garnishment. It's just, it is a garnishment. It's the way it works. But yeah, the student loans can get her, but get to her, but the car can't get to her. Now, if she owns anything else, if she has money in a bank account somewhere, they could get that. Uh, yeah, she has a traditional IRA, uh, with, uh, they can't get that. They can't get that.

But if she has a bank account with $10,000 in it just sitting there, they could just grab that after they sued you and won. Okay, so how much has mom got in her IRA? $92,000. And what's sister's problem? She loves to take on debt and never pay it back. Well, I figured that out. But I'm saying why was she paying up until four months ago, and now she's not?

I guess she just couldn't find any clients. We're not too sure. She wouldn't tell us why she couldn't pay. Okay. So she's dumping it on her mom, who's retired and on a fixed income and doesn't hardly have any money. Exactly. What a winner.

Unfortunately, yeah. There's one in every family, brother. Oh, my gosh. Oh, my gosh. Mom is liable. Mom is liable. Okay. She signed the note.

That's what co-signing is. That's why co-signing is stupid. And so have they picked up the car? Not yet, but they are threatening. Good. I would encourage the reposition of the car. I believe she has one more month before that happens. Oh, no, it's four months.

They can get it now. I would tell mom to call them since she's on the account and tell them to come get the car. Let's shake sister's tree a little. Get her car out of the driveway. I bet she finds some clients. Right. Nothing like it. Yeah.

And then you can help mom work to settle the debt on the repo. And mom's credit is going to be messed up, but it was messed up when there was four payments not made. Yeah. Tell them to come get the car. Let's see if we can get this thing moving. Dave's in a mean mood. This is the Dave Ramsey Show. There's nothing smart about smartphones if your wireless plan is blowing your budget each month.

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How are you? Good. How are you, Dave? Better than I deserve. What's up? So currently my husband and I are on baby step two, but he's in the military and it's coming down to the wire to pick his retirement plan. So we can either go with the blended retirement system or we can stick with a regular TSP and we have to make that decision in a few months. And so I was wondering if you know which one would be better for us.

The TSP. The TSP, stick with that? Mm-hmm. Mm-hmm. Okay. But don't put anything in it right now until you get out of baby steps. Yeah, no, we've stopped all of the contributions to it. Here's the reason. It's much like having a company pension plan versus having a 401k.

The 401k, you put all the money in, not counting the match and the growth, okay? But when you leave the company, you can roll that to an IRA and you take it with you. You control what it's invested in. The company pension, in this case the government plan or the military, is not controlled by you, and you don't take it with you. Oh, and by the way, with the company pension or the military, when you die, it dies with you. You can pick joint survivor if you want to, take lesser payment.

Your spouse gets some until they die, but ultimately when you're both gone, it's gone. When you roll your money out of your 401k or your TSP, in your case, if there's a million dollars in there, it's left for your kids. It doesn't die when you die. And so it comes out better while you're alive and while you're dead if you invest it well to pick 401k versus company pension or TSP versus government benefits plan um and they've they've brought the blended down to reflect that it used to be that the military was so strong

on retirement that it offset that and you went with the military retirement anyway because it's really all you got both but um i'm i'm just loving you being in control. That's what I like. And you're in control and it doesn't die with you. And that, that, that always is going to help you move into more money. Aletha is with us in Memphis. Hi, Aletha. How are you? I'm fine, Dave. How are you?

Better than I deserve. What's up? Well, Dave, I don't know how to get my husband on board. Um, we've been to Financial Peace University. Couldn't get him to cut up his credit cards then. Finally got to where, okay, he got in a point where I paid off his credit card, he cut it up. He turns around to get another credit card. And that's not his problem.

His problem is cars. He is addicted to buying new cars. He bought a van in November 14 that we didn't need. That might be more expensive than cocaine. Right. It is more expensive than cocaine because he turned around in December 14, got a Cadillac. Okay, then June 15, the next year, he wanted to trade the van on a truck. So with the van still being new, we were upside down.

$20,000 got added to the truck. Man, you ought to change his name to Chevrolet. He should own a company by now. Dave, you don't know the half of it. We had a Cadillac that was paid off. Okay, you don't know the half of it. We had an account that never paid off. Okay, so let's stop. Let's stop. If I was being at this level of stupid in any area of my life,

my marriage would not be going good because my wife would not be okay with this level of stupid in any area of my life. Dave, we're going to financial counseling, and that's still not helping. You mean marriage counseling? Today he showed me a new Dodge that's coming out. He showed you a new what? There's a new Dodge truck. Oh, Dodge.

Right, a Dodge truck. And he's looking at all the bells and whistles of it, and that's how he starts. Every time he starts by researching these vehicles, the next thing you know, he's got to have it, got to have it, got to have it. And it's always just the last one. Well, here's what I would tell you to sit down in marriage counseling. My experience is this. It starts out as a mild level of aggravation, which kind of sounds like where you are right now.

You're like disgusted. You're rolling your eyes. You're like, this is ridiculous. It starts out at that level but at some point it turns into real deep worry for you where you like wake up at two o'clock in the morning on a cold sweat and then it goes from worry to a level of anger that you cannot recover your marriage from the switch flips and it's like you've had it you up, he's too stupid to be married to, and the marriage is over. It progresses along those lines.

And so everyone does, by the way. And it would be true if you were married to someone who was misbehaving in another area. If someone was doing, you know, like if you ever had a friend that was married to an alcoholic, right? I mean, she'll put up with it. It becomes mild disgust. Then it becomes worry. Then it becomes just this level of anger that he's never going to change, and I give up on his not willing to change, and I leave.

The switch flips, and once that switch flips with a lot of ladies, you can't get it to go back down. It's up. It's done. She's done. But, Dave, we're both retired, and he wants to live the way he wants to live. He's happy. He's content.

I can't fix him. I'm warning you of what's going to happen to you you're going to reach a point you're going to reach a point that you're going to walk out and then go me anybody can talk you into going back so you need to say that out loud to the counselor in front of your husband and say i'm really not to the end of my rope but i can see the end of the rope right and i want to stop this before we get there because bubba doesn't think there's any consequences to his stupidity that's his problem right and you're going to reach a point you don't even think talking to me right now you're going to reach this point but i can promise you having done this for 30 years and

watch people the number one cause of divorce, even after retirement, is money fights and money problems. And so I want you guys to catch this and save your marriage. I want him to hear you and respect you. He's been unwilling to do that. I want to do what I want to do is the name of a child. I deserve this. I work so hard.

That's the name of a child. Adults devise a plan and follow it. Children do what feels good. And when I'm unwilling to make different decisions for the good of my family, I'm a little boy. I'm not a man. And if you're a lady listening, you're a little girl, a little princess. And you're unwilling to do the things for the good of your family, you're not a woman. Chronologically, you may be a woman.

Physically, you may be a woman. But emotionally, you're a little child. I hope I just insulted some of you because that's when I've changed my life when somebody insulted me sometimes. So there you go. Because really, children do what feels good. Adults devise a plan and follow it. When you understand you control your destiny and that when you plant something into your

life, it's going to grow in abundance, including stupidity. You plant stupidity in your life, you're going to get a full crop of it. And that's what he's doing. I don't know what this car thing is, other than I'm a boy and I like cars too. I kind of get his car thing. But just because it's a socially acceptable level of stupidity versus cocaine or alcohol doesn't mean it's not stupidity and doesn't mean it's not destroying his family and doesn't mean it's not ripping his relationship apart and the fact that he isn't owning that part of it

is a side is the big issue the cars and the credit cards and i'm gonna do what i want my woman isn't gonna tell me anything that that's a little boy talking and um all of us have got the ability to be that guy i've been that guy at times in my marriage i've been married 35 years sharon says we had 28 good years of marriage so we've all had that right but you just at some point you got to decide hey the way you win at relationships is you put other people first not all the time yeah you have your own dignity you have your own level level of boundaries and it's not an unhealthy thing but but i'm gonna actually care if my wife is sick i'm gonna take care of her she's gonna care if i'm

sick she's gonna take care of me i'm gonna care that we're gonna retire broke and i've got to put aside some of my little boy desires so that we can retire with dignity and change our family tree. See, I want to be Papa Dave that takes everybody on a cruise. I don't want to be Papa Dave that you have to give him money because he didn't take care of himself. Either way, you're Papa Dave, but what's your legacy going to be? What are you leaving behind? No, not the money what are you leaving behind in terms of your personal reputation with the way you've behaved as a child or an adult

a good reputation is better than silver or gold the bible says what's your reputation for your family what's your legacy what's gonna be on your tombstone yeah that's better than a car. This is the Dave Ramsey Show. What will your family do if you die? Did I get your attention? Good. If you're a father, mother, husband, or wife, it's your responsibility to have life insurance. No matter where you are in the baby steps, you have to deal with this right now.

How will your family pay for the mortgage, put food on the table, or pay for education? How will they deal with retirement and stay the course for getting out of debt and accomplishing something with their lives? This is what life insurance is all about. I knew when I started this show it was something my listeners had to have, so I went out and found a company I could trust to offer the plans I believe in. That's why I've been talking about Zander Insurance for over 20 years. If you haven't dealt with this, please go to zander.com or call 800-356-4282 and let them help. This is a priority. It's not expensive, it's not complicated, and you need to do it today. That's Zander.com or call 800-356-4282. In the lobby of Ramsey Solutions, Dave and Sarah are with us.

Hey, guys, how are you? Hey, Dave. Awesome. Welcome, welcome. Where do you guys live? Salem, Virginia. Wow. Welcome to Nashville.

Thank you. And all the way down here to do a debt-free scream. Yes, sir. Very cool. How much have you paid off? $759,105. Woo-hoo! And how long did this take?

About five and a half years. Wow. And your range of income during that time? $268,000 to $316,000. Wow. Look at that. What do you guys do for a living? Doctors.

Ah, both of you. Okay. Very cool. Well done. I'm guessing that's your house, or did you have that much medical school debt? Yes. It was a share of a building, our house, two medical school loans, credit cards, cards, and all the things that doctors are supposed to have when they graduate.

Practice and everything. Yeah. Okay. And now you're 100% house and everything. Everything. Yes, sir. Debt free. Man, congratulations. Thank you. Wow, Yes, sir. Dad-free. Man, congratulations.

Thank you. Wow, you're weird doctors. We are. I mean, you are dad-free. I mean, $316,000 income and no payments anywhere. Yeah. Whoa! That's going to work.

That's going to work big. Yes, it is. Well done, you guys. Congratulations. Thank you. So you brought the kiddos with you. What are their names and ages? We have Brendan, 16, Mason, 7, and Joanna, 12. Thank you. So you brought the kiddos with you. What are their names and ages?

We have Brendan, 16, Mason, 7, and Joanna, 12. Very cool. Good, good. So what started this journey five and a half years ago? Because among your peers, you are very unusual. We were in a position where we had a lot of debt. And Dave brings home the majority of our income. I own my own office and work part-time.

And so I manage the finances, and he brought most of it home. And it was very stressful. We had a lot of debt to pay. I was trying to pay it off, but the balances were actually rising. How many times did you think to yourself, we're both doctors, we make a quarter million dollars a year, and we're so broke we can't breathe. This is dumb. That was part of the problem is we thought we have a great income we should be able to do all these things yeah and we really weren't being honest about the math yeah you know and sitting down looking at it um so i was trying to pay off our debt but i was also trying to do all the baby

steps at once oh and it was spread so thin, we accomplished nothing. The baby trampoline. Pretty much. Instead of baby steps. Yeah. We were just spinning our wheels, and it was so frustrating. And I felt frustrated and a little ashamed that I couldn't make the numbers work. I felt like they should do more for us than they were.

And he was frustrated because he would want to go get his hair cut, and I would say, you need to wait until the next paycheck. And he couldn't figure out why. Wow. Because, you know, he knew what he brought home, but he didn't know where it was going. Yeah. So. No clue as to insight on that.

So what was the turning point, and what did you do? Our financial advisors, Todd and Pam, told us what to do, but they told us in a very nice way. And then shortly after that, I heard you on the radio, and you were giving somebody what we call a two-by-four talk. Okay. Basically whacking them over the head, you know. And I heard that.

And it was what I needed to hear, and I think probably also what that caller needed to hear. So I researched, you know, what you said made sense. You kind of lit a fire under me. So I went home and I told Dave I do the money this is what we're going to do and we may get rid of your credit cards and no new cars for a while

so that's how it started Dave when she said that what did you say? I was cool right up to the point where she said yeah you can't have a credit card either how do I go to my business she's well we have to plan for it um i don't think i know how to do that so that was that was a learning experience for me yes that's great that's pretty humble that wasn't the way it sounded at home that was cool right up and she said you need to

cut up i said all of them she said all of them oh and and so at that point dave did you get into the numbers and start to see what was going on not at first okay um at first i was kind of like you know um sounds like a great plan good luck with it and and you know that doesn't work real well uh so we sat down and she said part of this is we have to go through the budget. We have to go over. And this $0 budget thing made no sense to me until I saw where all the numbers went. And I was like, whew, we have a lot of things that we shouldn't have. Ooh.

And so we started getting rid of stuff. Whoa. What did you sell? Well, that was the thing. We got rid of a lot of subscriptions, the YMCA, Sirius, all that kind of stuff. And I tried to sell my Jeep. That was about the time the gas prices went up and nobody wanted it. Right.

So I kept it. And it still has 200,000 miles on it. So the main thing you sold was you just cut lifestyle, it sounds like. Well, we also sold an office building. Yes. Oh, there's that. That was $210,000. Oh, okay. Yeah, there was that. That was $210,000. Oh, okay.

Yeah, there was that. And was that where your practice was? Well, that was the problem. It was where our practice was, and our rent went to it, so it seemed like a legitimate way to start working on retirement. And then I switched practices, and the building was still there, and I was no longer in the practice. Somebody else took over and wasn't making rent payments. You know the standard. You don't own it, and they're not paying rent.

You're in trouble. So got out of that. Good time to sell it. Yeah. Okay, cool. Well, very fun. Good job, you guys. Very, very well done.

So now that you've done all of this, a couple docs, notorious for not handling money well, now are completely debt-free, house and everything. Made you really address the issues the the core issue uh the diagnosis of the problem is never really the problem is it it's uh the symptom in your world and uh in our world it is too so what do you tell people the key if somebody's listening and they're a young doc out there, what are the keys to getting out of debt and getting in control? I think, first of all, is teamwork, of course, and honesty.

I think when you sit down with your budget, you know, there are a lot of other positions out there and people who are living a lifestyle they can't really afford. Right. And I think that we have to look at the numbers and just be very honest that if I can't pay cash for that, I can't afford it. So that's important. And the last one is grit, which is perseverance and passion for long-term goals. Basically, just putting down your head and pushing through it. It's not always fun.

Sometimes it is. But you just have to do it. And you've got to have that grit. Okay. So the T-shirts, you made grit t-shirts. I've got a grit one and my daughter does. All right, there you go. Very cool.

Dave, what do you tell people the key to getting out of debt is? Listen to your wife. And I think the big thing is whatever your income is, it's not nearly as much as you think it is. And you have to sit down and look and see how that's going to come out of your budget each month and not. There were several times I'd call, you know, we need to replace a car. Hey, can we afford this?

Yeah, we should be able to. Wrong answer. You need to know. We were sitting in the doctor's lounge one time. And when you start talking about an allowance that you get in front of other doctors in a doctor's lounge, that's a unique conversation. I bet. I bet.

Because we were going somewhere, and I couldn't go because my allowance wasn't due for another week. But it's also an allowance you had input on. Yes. It wasn't dictated to you by your wife. You decided together. No, totally. Totally together. So what happened, because you're pretty calm, easygoing people, and you're both obviously very intelligent.

But what happened in your relationship when the strain of carrying the whole weight went across two sets of shoulders instead of one, meaning you got involved, Dave? Did you all notice a difference then? I noticed a difference in Sarah, definitely. She was feeling a lot of stress, a lot of strain, trying to shoulder it all herself. And I was just coming home, you know, I guess that dumb and happy probably isn't quite right, but pretty close and wondering where all the money was going. And then when we sat down and she saw, I was able to see what she was seeing that, that evened things out a lot. We didn't really fight a lot. There was a lot of silent treatment. What do you mean I can't have this kind of thing? But once, once we got on the same page that that uh that went away sir

did you feel the weight come off and you all started working together and he knew what was going on making the decisions with you absolutely yep okay yeah that's what i usually see you know i that's what sharon and i experienced because she's classic southern bell and it's you know they answer to every question it's whatever you want to do, honey. But she didn't really mean that. That's passive-aggressive Southern Belle talk, which means I'm going to bring it up later if you screw this up. That's what it really means.

You know, I thought I liked having the control, but yeah, it was good to have a partner. That's it. All right. Let's count it down and hear a debt-free scream. $759,000 paid off in five and a half months. Okay, y'all, to God be the glory. Three, two, one. We're debt-free!

Well done, you guys. Oh, man. That was legitimate. This is The Dave Ramsey Show. thanks for joining us nicole is in miami hi nicole welcome to the dave ramsey show hi so good to talk to you. Thank you so much for taking my call. Thank you. What's up? All right. So I'm currently on baby step number two. I started the program in March and I've been pretty intense. I have been working. I'm an attorney, so I've been working, working, working to try to get the debt snowball taken care of.

I saved my first $1,000 and also paid off some debt in the first month. Now, I have my list of my debt snowball, and in my list are property taxes that I owe. The property taxes were due actually a couple of days ago. And what I wanted to know is, because they were already due, should I just continue with my debt snowball until I get to the amount that the property taxes exact to, or should I pay those? Because what happens is if I don't pay them... How much are they?

What happened is $7,000. Do you have any of that money? I'm sorry? Do you have any of that money? Well, I'm actually going to be getting a new case in the next couple of days where I may be able to get that money. But I was wondering if I should apply that to my debt snowball, or should I just not pay it? No, that's a past due bill.

That's like your light bill that's behind, like your electricity is getting ready to get cut off. You don't put that in the debt snowball. You catch it up. Because what will happen if I don't pay the taxes is my bank is going to pay them, and then they're going to escrow me the amount that they paid off, because they're not going to let the taxes just not get paid, because then that would affect their interest in the property. So what I was wondering is if I should...

Do they not penalize you for that? They don't. What they do is they just say pay off the taxes and then they just open an escrow account and that's what you owe when your mortgage goes up. They don't do that in arrears. They do that in advance. So your escrow payment's going to be double.

Banks don't pay your taxes and then let you start paying monthly payments equal to 1 12twelfth of your taxes, because next year, guess what? There's still $7,000 in the hole. Right. Now, they're not going to do that. They're going to charge you double, and so you're going to have to catch up anyway.

So you might as well just pay it. And then you need to put it in your monthly budget to set aside a twelfth every month. Right. I've already done that. I've already put it in for the next year but i just wanted to know yeah just pay it like it's like it's a light bill that's behind like your electric bill was behind or your water bill was behind they're getting ready to cut it off or your insurance wasn't paid and you were getting ready to lose it no you just need to pay

it it's just an outstanding bill that's different than a debt um If it was five years of back taxes, we'd look at it maybe a different way. But, you know, we'd have to look at what urgency there was on it. But in this case, you've got the money coming. Let's just knock it out. Christy's in Greenville, North Carolina. Hi, Christy. How are you? Hi, Dave.

I'm well. Thanks so much for taking my call. Sure. What's up? I'm calling because my husband and I are looking for a used car. His car is on its last legs. And we're on baby step four. We won't have a step five, so we're on like four, about to be in step six.

And I've kind of budgeted $10,000 for this car, but I'm having a little bit of trouble using that power of cash. Not finding a lot of people willing to take cash. A lot of dealerships want us to finance, even if we're buying a used car. I need some tips on how to make this power of cash work for me. Well, with a dealer, it doesn't have as much power because they can take the car and sell it at a dealer auction tomorrow morning and get wholesale for it. And plus, they probably bought it for X. Okay, so if it's a $10,000 car, they might have bought that car three weeks ago for $8,000.

So they're not going to take $7,000. They can run it down the dealer auction for $8,000. And they're not going to take below wholesale now an individual that it might work you might get more of a discount because if you've if you own a ten thousand dollar car that you you have paid off and it's sitting in your driveway and you're trying to sell it and you've been trying to sell it for two months and you've owned it for five years when you bought it it was a twenty two thousand dollar car so now it's a ten thousand dollar car you don't think about what you have in it you just think it's in your driveway in the way and so you have more luck with an individual but the better

financial shape the individual's in the less likely they are to take a hit like that or if the car has just kind of gotten to where it's bothersome it's just bothering them they'll they'll dump it that way you know get rid of it But there's no magic to this. I mean, there's no you walk in, lay $100 bills down. Everybody doesn't bow. That doesn't happen. But it increases your probability of getting a deal. But a dealer has what's called cost of goods sold, meaning what they paid for the item. And they've got an outlet to run down the wholesale dealer auction, you know, without any trouble at Mannheim, without any trouble at all.

And they can get wholesale for it in 24 hours or within seven days. They're just not in a hurt on a car usually, unless it's some kind of unusual car, which case you may not want to buy it. Unusually bad, in other words. So, you know, but I think a little more turning over a few more rocks until you find the right deal. And if you want more of a discount than the difference in retail and wholesale, you're probably not buying from a dealer. You're probably buying from an individual if you're looking for a deeper discount than that. And some of the things I've written about, like, for instance, in the original book, Financial Peace, where I got deep, deep discounts on cars. That had everything to do with buying from an individual in those cases.

And there's nothing wrong with buying from a dealer. And there's nothing wrong with a dealer making a profit. And there's nothing wrong with them not being – they're not immoral because they won't sell the car at a loss. That's not the point. The point is they're in business and they have a dollar amount tied up in that vehicle. And they have the ability to get that money out fairly quickly and easily so it makes them less negotiable in terms of how deeply they'll cut it but between eight and ten thousand you know they probably got eight thousand in a ten thousand dollar car

they probably got about 20 percent room in it 15 percent room something like that depending on the type of vehicle it is and so forth but um somewhere in there they'll discount, but they're not going to take seven for that car. Not very often. It would be an unusual situation if that's the real value when you look it up on KellyBlueBook.com. Robert is with us in Baton Rouge. Hi, Robert. How are you? Hey, how are you doing, Dave?

Better than I deserve. How can I help? Hi. I'm in Chapter 13 right now, probably the last two years. And I was trying to see, my question was, do I just save up and pay the Chapter 13 off, or I just continue with the five years? I would save up and pay it off. You're probably, in most areas, best to do it in a lump sum,

meaning you just save up on the side, and then you get with your attorney and or the Chapter 13 trustee, the bankruptcy trustee, and find out how can I do this to dismiss this early and pay the final bill, and they'll work with you. The good news for you is that the Chapter 13 bankruptcy trustees, by and large, are the shiny spot in all of the bankruptcy world, meaning that they're the smartest and easiest to work with of everybody out there. They're not perfect, and some of them are better than others, but the Chapter 13 trustees, I know a bunch of them. I've worked with them over the years, and they really and large they do a really good job and you can probably contact your trustee directly and get this question answered perfectly

as to how to best do this um if you can't then your attorney can work with you and help you pull it off as well but it's really not that hard you just have to decide if you're going to uh do it as a lump sum or if you're going to pay it off a little bit extra at a time, usually the lump sum works best because it just makes it one clean transaction. And then the Chapter 13 is just it's paid and it's dismissed early and you move on with your life, which is a good thing for you to get this behind you and get started again. Get your fresh start. Hold on, Robert. I'm going to send you a copy of the book, The Total Money Makeover, and help you with your fresh start, okay? You read that and do the stuff in there.

It's the stuff I did after I went through bankruptcy almost 30 years ago. Open phones at 888-825-5225. You can follow me on Twitter at Dave Ramsey. You can follow me on Facebook.com slash Ramsey. You can follow me on Facebook.com, slash Dave Ramsey. Eric is on Facebook. Do both my wife and I need policies, life insurance policies? Yes, absolutely. And you need about 10 to 12 times your income on you.

So if you make $50,000, you need $500,000, $600,000 on you. If she is a full-time mom and does not work outside the home, if you're a high-income family, about $400,000 on you. If she is a full-time mom and does not work outside the home, if you're a high-income family, about $400,000 on her. If you're a low-income family, about $250,000 on her. But it's not very expensive. Go to Zander Insurance. You'll be amazed at how inexpensive it is. Zanderinsurance.com.

It's where I get mine. That puts this hour of the Dave Ramsey Show app from the app store we're always listening to your feedback and adding new features to make it even better check it out