The Ramsey Show - App - Is Bankruptcy My Only Option? (Hour 3)

Episode Date: March 16, 2021

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's The Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. Anthony O'Neill, Ramsey personality, number one best-selling author of the book Debt-Free Degree, is my co-host today on the air. We're talking to you about your life and about your money. Open phones at 888-825-5225, 888-825-5225. Sean is in Grand Rapids, Michigan.

Hey, Sean. Welcome to the Dave Ramsey Show. Hey, Dave. Hey, Anthony. Hey, what's up, man? Not much. I'm just wondering, so I'm on baby step four, I guess. The only reason I say I guess is because I've completed steps one, two, and three.

Okay. But I just don't know how interested I am in actually saving for retirement because I don't know if I could ever envision myself actually retiring. I'm so confused right now. How old are you right now, Sean? I'm 25. How old will you be next year? 26 in February. Okay.

So do you see where I'm going here? Yeah. So you're saying you're getting older. So I know that. Yeah. And I get you. Let me let me let me. I probably started out that off wrong and I got Dave started.

I'm sorry. No, I like it. Why? And I bring out the sass early. Twenty five years old. Are you not motivated to start thinking about your future? Hey, let's try this. What if we change the word from retirement to rich?

I like that word. I mean, I really like the sound of that, too. It's the same thing, dude. Yeah, I understand that that but i just really enjoy working me too i don't i plan to work until i die a matter of fact i'm going to stay around here and just spread hate and dissension in this building oh no you're not but i certainly hope so for all the old and old and dementia crept in and i'll just not be making sense on the air and james will have to be hitting the dump button nah we'll we'll we'll fix that but hey but and this is what i'm thinking like at that point like say i were to go out of my

mind like dementia like cannot can physically not work anymore um couldn't i just have money in the bank to be able to take care of that yeah the problem is the bank pays crap yes like two percent no and i you know so let's pretend let's pretend that you retire you reach an old age whatever you want to call old at 25 years old i'm 60 so old now is a lot older than it used to be so but if let's just pretend you reach old age and you either have a million dollars or you don't right one life is better than the other one yeah then you make choices about whether you want to work or not work dude i haven't had to work in years right i've had financial peace a long time yeah i work when i want to work what

you're doing yeah and so you do the same thing man build you up some wealth and so i think what you're confusing is is that you think you have to sit on a dock and fish at 55 years old and maybe catch a fish and just get a sunburn and you call that retirement uh retirement to us means you got a huge pile of money and you can spend the next 30 years giving it away and never have given it all away because the pile was so huge. Yeah, yeah, yeah, yeah. And I think he says, you know, Sean, I really want you to think about your future. You're thinking about 55.

What if you could retire at 45? What if you could be like Dave and myself? Because, you know, I'm in financial peace. I don't work. I actually enjoy doing what I do with Dave and our team here. This is not a nine to five, like I got to get up and have to go do this. This is I love helping people. What if that could be you at 35, at 45?

But you have to start practicing these principles now. Yeah. Okay. And listen, a million dollars in your mutual funds at retirement is not a lot. But it gives you a lot more choices than not having any money at retirement. And depending on the government for social insecurity. Yes. And so you do not want the mantra of your life to go, I'm going to work all my life and hope the government, which is well known for its ability to handle money, will take care of me. That's not a good plan.

So, yeah, you need the point is not retirement. The point is build wealth. Yeah, that's it. That's the point. So just change your vernacular on it. Change, yeah, the point is not retirement. The point is build wealth. Yeah, that's it. That's the point. So just change your vernacular on it, change your verbiage on it, and maybe that'll change the way you're looking at it. Now, how do we build wealth? The most efficient way to build wealth is in tax-free growth, which happens to be in this thing called a retirement plan, a Roth. But that's the most efficient way to build wealth.

Yes. Keep the government's freaking hands off your money absolutely and that you know or i paid for real estate which then it grows without any taxes on the growth until you sell it capital gains growth is not taxable it's realized but not recognized under tax law and so you can do stuff like that but become wealthy so that you can not only live your best life, not only be outrageously generous to others, but someday you might have a family and you actually want to change your family tree. The Bible says a good man leaves an inheritance to his children's children.

Now that's what we're talking about, Dave. Now I'm getting excited. Legacy. That's it. This is not retirement. This is money. It's wealth. yeah and so it happens to be that the most the first steps to becoming wealthy and the most tax efficient

investments are those inside of retirement plans but if we just take the word retirement off of and call this is the best way to get rich yeah yeah then it changes your mindset maybe and and dave you know i i want to i want to i want to i want to stay right there with you because you've taught me so much from joining your team and really just learning from you watching what you do for your family here's another reason why i'm always recommending to millennials to think about rich think about wealth towards retirement not just towards retirement because what can you leave down to your children's children steve harvey was on the show with oprah Winfrey a while back, and he was telling a story

of how his great great grandmother was passing away. And she asked Steve, she says, Steve, do you know your great grandfather's name? He said, No, she said, Do you know why? And he said, No, she said, because he didn't leave you anything. And that shook me when I was watching her. And I said, I don't want to die. And my children's children don't even know my name. Yeah. I mean, the Vanderbilts know Cornelius. You know, I mean, really, let's be real.

I got a picture of the of the Commodore over the over the mantle, really. Let's be real. They got a picture of the Commodore over the mantle, baby. Come on now. And when I look at you, your grandchildren's children will know your name. And I went to O'Neill. Because I stirred up a ruckus. You did. And I helped you build it. Well, we helped you build it.

And so we are, that's for me, that's why. You know, I want my grandchildren. And I wrote a vow to my kids. I said, hey. The idea is not wealth for wealth's sake. There you go. Money just to pile it up, that's mental illness. There you go, Dave.

Okay, but money's only good for a couple things. Yes, sir. Give it. Yes, sir. Enjoy it. Yes, sir. And have long-term, eternal impact, including the changing of your family tree. There you go.

And so when you can take some money and reach over and change the destiny of somebody's life, change the direction, the trajectory of someone's life, and they might actually be kin to you. Yes, sir. Like your great-grandbabies. Yes, sir. Then money has had a value at that point. There you go. But just piling it up to say, I'm rich, nobody, I mean, that's shallow.

Yeah. Nobody gives a crap what car you drive. That's true. Shallow. Shallow. If a girl wants to date you for what car you drive, don't let her go. Come on now, be impactful for your future, not impressive. All right.

This is The Ramsey Show. Your number one wealth building tool is your income. For business owners, this comes as no surprise, as you're used to putting in extra hours and watching your bottom line. That's why Christian Healthcare Ministries, or CHM, is a great option for those who are faith-focused and budget-conscious. CHM is not health insurance. Rather, it's a health cost-sharing program. It's not harder, but it is different. To learn if CHM is a fit for you or your business, visit chministries.org slash budget.

Anthony O'Neill, Ramsey Personality, is my co-host today. Open phones at 888-825-5225. Becky is with us in Pittsburgh, Pennsylvania. Hi, Becky. Welcome to the Dave Ramsey Show. Hi, gentlemen. Thanks for taking my call. Sure. What's up? So, my husband and I are currently in Baby Step number 2. We've paid off about $11,000 of our $42,000 debt since August. Good. We're planning to make a move from Pennsylvania to North Carolina in July. And my question is, should we halt Baby Step 2 or put money aside through the budget?

Yes. Okay. You're going to have to. It's not halt Baby Step 2. It's just stop everything and pile up cash for the move. Yeah. Okay. Because we do plan on selling our house here to make a profit on there and then renting

when we go down there until we can make a substantial down payment. So I didn't know if we should use some of the profit from the house or but when you sell your home and you make the move then that's got that gives you the cash to pay off all the debt right correct yeah you're debt free then and you go on and you restart your baby steps when you land in north carolina but you're probably going to need some cash to make this move and we've got to get the house sold correct and becky here's here's a key thing too i really want you to do is on baby Step 2, I want you to hear what Dave said. He said, pause, you know, stack up cash. Now, for me, that means budget.

Do the research. Identify how much money you need. So if you need, let's say, for an example, $10,000 to make the move, once you get to $10,000, go ahead and go back on to Baby Step 2 and just start attacking that debt because you have the cash stacked away. Yeah, and then, of course, when the house sells, you ride check and pay off everything. So that's a good move. That's fun. Good for you guys.

Brian is with us. Brian's in Memphis. Hi, Brian. Welcome to the Dave Ramsey Show. Yes, sir. Me and my wife were blessed enough to find your program back in August, and somehow I talked her on board, and we're on baby step two, rocking and rolling.

We've gotten rid of 66,000 in August. Wow. Good for you, man. Yeah, we're out for blood. Well done. Yes. My next question is about we ended up with two mortgages. We outgrew a home, bought a home before we sold our other home.

And where I'm at with it is I owe $43,000 on the home, and we tried to sell it. The realtor said it was worth about $90,000. We had it on the market for about eight months with zero interest in buying and an overwhelming interest in renting it. So we kind of just got tired of carrying the house and decided to rent it. But our renters are getting ready to leave. And my next question is how gazelle intense should I be on getting rid of this thing without just doing something stupid as far as, you know,

putting a $90,000 home up for sale for $43,000 just to get rid of it? Well, I wouldn't do that. I wouldn't do that. You're not being foreclclosed on there's no reason to give it away so you have you have one of two problems or or both um your house was priced too high or your realtors are doofus definitely number two is true okay which may mean the house is priced too high, too. I don't know. I mean, you've got zero interest of any kind. I'm thinking it may not be a $90,000 house. It might be an $80,000 house.

But we know it's not a $43,000 house. Okay. So jump online at DaveRamsey.com and get in touch with one of our ELPs for real estate. They're high-octane, high-pr high protein, and they're going to shoot you straight. One of the ways that a real estate agent is an excellent real estate agent and moves a lot of volume is they don't take listings that are overpriced. They take listings that are priced to sell, not to give away, but they're priced properly. And the seller doesn't get to decide that in the sense that you get to decide it at your house. But, I mean, you look at actual statistical evidence called a comparative market analysis

and appraisal on the property that the real estate agent does showing you comps in the area. And you look at that and go, this house does not need to be listed at 90 it needs to be listed at 82.5 and then it'll move or whatever it is i don't know but i think that's what's happened to you probably you could be just a little bit off and just enough off that you ran off because what happens if people get give give you the eye roll when they see your price right and but i don't know i don't think you need to give it away. I would just start fresh with a good real estate agent

and get good information, and let's price it right. The spring's coming, and it's going to be a great spring. Real estate's hopping, man. It really is. I'm doing the same thing. That's what I would do, Dave. Good. Cool.

I love it. Alex is with us in College Station, Texas. Aggieland. What's up, Alex? Hey, Dave. Just a quick question. So my wife and I, we'll be debt-free by the end of the year. It's a little bit forward-thinking, but I kind of overthink things. But after we get that free we are our next plan is to be saving for a house good but that's not looking like for another about four

years um she while she gets through school and while she's able to um get her degree in teaching and become a teacher and then we're looking to buy after that just in case we move. Um, I, I'm a really flexible job. Um, and so we're, we're just looking to see what would be best. Should we invest, start investing some, we're both 25, 24. Yes. Um, or should we hold off and just pile up money for a down payment? No, no, you're too young and you're waiting for four years. I don't want you to go four years without investing Alex. Now what you can do invest 15%. And you're waiting for four years. I don't want you to go four years without investing, Alex. Now, what you can do, invest 15%. And while you're investing 15%, go ahead and start saving a little bit. Now, once you all find where you are, I don't have a problem with you pausing a little bit to save up aggressively for a down payment. But right now, I want you to take advantage of your age, of this season.

Invest the 15 percent. You can start saving some extra on the side. And then when you all get there, it's about 30. Find your your home, your city. Then you can pause to aggressively go after your down payment. But please take advantage of your age and time and investing right now. Yeah, exactly. That's exactly.

It's well done. So what I would do, you know, Alex, that is follow that plan. But just look out there a little bit and say, okay, today it's four years. But a couple of years from now, you look up and you go, okay, it's two years. And we're kind of thinking by then we want to be over in X or Y city. And you start really kind of dialing in your details and you go, okay, two years out, I might stop and pile up cash and get ready for my down payment at that point. But right now, I'm with Anthony. Let's get started on the investing. You've got plenty of time here, and you can always start and stop

and that kind of stuff if you need to. You may be able to save your down payment beyond the 15% and never stop it. That's a possibility, too. I like that. And, you know, if you just keep working on it and pushing along. Now, obviously, we're doing this while she's in school, he's working, so we're on a pretty tight budget, my guess is. You probably don't have a lot of room in this,

but that's not a bad plan at all. Well done. Open phones at 888-825-5225. Thank you for joining us, America. Now, how many of you guys are stressed out or you're hurting because your retirement savings took a major hit last year? Well, it only took a major hit last year if you took it out at exactly the wrong time. Yeah, maybe you're super close to retiring and you're wondering if you should work a few more years. Maybe you're trying to figure out this overall situation and say, I don't know what to do with my investing.

So you need a pro in your corner to coach you. And it's not to tell you what to do. I don't do what the ELP or the SmartVestor Pro tells me what to do. I learn from them, and then I make a decision. Now, they'll have a suggestion probably, but this is not a my guy tells me what to do with my money, and I blindly follow my guy tells me what to do with my money and i blindly follow my guy you don't do that so if you want to learn to invest or you've got questions about your retirement text invest to 33789.

INVEST to 33789. And, David, I want to say this to America. When you do that, text the word back, you're going to get like three to five smart investors from us who are highly qualified individuals. But let me say this. Interview all five of them and see who works best for you and your family. Yeah. Maybe just personality. Yeah. What do you connect up with?

And what you're always looking for with financial people, whatever kind of financial people it is, is the heart of a teacher. You're always looking for someone that's teaching you. And you'll know you've got someone with the heart of a teacher because you don't feel slimed. You don't feel sold. You've learned something every time you have a conversation with them. Yes. And that's what you want to do. You want to be around people teaching you something so that you can make better decisions with your money.

This is how this works. This is The Ramsey personality is my co-host today here on the air. Open phones at 888-825-5225. Crystal is with us in Orlando, Florida. Hi, Crystal. Welcome to the Dave Ramsey Show. Hi, Dave. Hi, Anthony. Good afternoon. Thanks for taking my call. Sure. What's up? So very long story short, myself and my husband are buying a new home. So we are selling our current home to Roll the Equity into our new down payment all under your guidelines.

But my father came to us and he actually would like to purchase our current home as a rental property. And he would just be paying cash outright for the property. So I'm just calling for your guidance. Is there any way to do things the right way but also avoid paying any unnecessary fees, such as for the realtor or any associated costs, just to transfer that over to him? Sure. It's fairly easy. Do you have a real estate agent friend?

Everybody does. Yes. Yeah. Ask them which title company they use and to give you an introduction to a title company. And you can either get the real estate agent friend to give you a contract, a blank contract and show you how to fill it out as a favor, or the title company can do that. And then, because you do want to do a contract, that way, and not because we're scared

about that or something, but because issues like the proration of taxes or whatever, issues about repairs, all those kinds of things need to be, have been covered on the contract so that everybody in the deal knows what the deal looks like. It's not a big deal. It's just a fairly simple little residential real estate contract form. It's not rocket science. And then that title company can do the closing for you. Oh, great.

And they'll prepare the deed, and your dad's doing a cash transaction, so it's very easy. If I were him, I would purchase title insurance. I always buy title insurance when I buy real estate. And then, you know, and he could buy it from that title company, and they will probably charge you very, very little to actually do the closing. And doing the closing involves drafting the deeds, having him drop by and sign the deeds they'll do a closing statement that just shows uh the the proceeds coming in and the expenses going out the prorations going out and the net proceeds to you he'll give them a cashier's check they'll give

you a cashier's check or you can wire it either one it's not unusual this day and time to do it wire and do it all by email and nobody even goes to the title company in the old days we used to actually go over there and have a physical closing moment where we signed all the documents but that's not done that much anymore yeah uh and so but they can do all of that for you it's a couple hundred bucks maybe uh plus or minus him buying a title policy if he chooses to um or you furnishing him a title policy if you choose to do that. But that's how I would handle it. I just have the title company do it for you. Perfect.

Well, thank you so much. And my husband and I went through SPU. We paid off $110,000 in 13 months. Wow. For the first 10 years, do anything now. And we just can't thank you enough for putting us in such a good position. What a great place you guys are in. The new baby's on the way.

You're debt-free. The house is sold to dad. Life is good. Way to go. Thank you. Thanks to you. Thank you so much. Well, thank you.

I appreciate you calling. Awesome. Very, very cool. Zach is in Youngstown. Hi, Zach. How are you? I'm not too bad. are you better than i deserve how can we help so basically long story short uh i got injured at work at the beginning of this year

um and one thing led to another now i'm about seven months behind on my mortgage payment and looking at foreclosure, kind of looking at all options, and it feels like bankruptcy is my only way out. I'm not seeing if there's any other way. I'm sorry. Are you feeling better? Yeah, I'm getting much better. I had surgery a couple months ago, and I'm just now starting to slowly get back into work. Are they paying you workers' comp? They are, but that has been an up-and-down roller coaster from the get-go. I went about four or five months without any pay before it all got settled.

Are you married? Divorced. Okay. So you're the only person in the house? Correct. Okay. Man, I'm sorry. Yeah. What you're the only person in the house? Correct. Okay. Man, I'm sorry. Yeah.

What a horrible thing to go through. Okay. Well, let's talk through it for a second. What's the house worth? Well, right now, I was actually in the middle before I got hurt of doing some remodeling. What could we sell it for quickly? $75,000. And what do you owe on it?

$85,000. Okay. So you've torn it up enough that it's devalued even below what you owe. Yes. What kind of mortgage do you have? FHA, VA, or conventional? FHA. Okay. All right. and your purpose for filing

bankruptcy is what i mean basically uh it's going to be the foreclosure on the house um i didn't want to go through the foreclosure and now i also have a $500 a month child support, $500 a month car payment, and about $200 in a debt consolidation that I had done after the divorce. Okay. All right. Child support is not bankruptable, neither is alimony. Yeah. Okay. So that's not going away.

The car payment's not going away unless the car goes away, so sell the car. Mm-hmm. Let's, and if the, so here's the thing. Bankruptcy's a 10 out of 10 on dropping an atom bomb on your credit and your future, okay? A foreclosure on a home, except for purposes of buying another home, is about a 4 out of 10. It doesn't really affect you that much. And FHA does not pursue deficits, meaning HUD doesn't come after you if the house doesn't bring enough. So you can stay there until the foreclosure, have a rental lined up and move out,

and in the meantime, pile up cash as high as you can pile it. Sell the car. Get rid of the $500 payment. The child support's not going away anyway. And if you do all of that, bankruptcy's not going to do anything for you. There's no, I mean, you're going to go through the foreclosure whether you file bankruptcy or not yeah because bankruptcy doesn't stop a foreclosure and there's not a bankruptcy that wipes out a car payment unless you hand them the keys to the car

so you don't get to keep the car without the car payment and this car payment's killing you so the car needs to leave and this house is a mess. You sell the car, and you move into a rental, and you start getting an income coming in again. That's your quickest way to rebuild your life. You don't need to file bankruptcy. I agree with you, Dave. Zach, how long would it be before you can get an income coming back in?

I'm starting basically on a sliding scale to go back to work i'm at about half a day now okay um hopefully within two three months i will be back full time yeah same company yes and are they gonna pay you your back workers comp that's that's the main question it's still it's been a fight since the beginning there's some paperwork on their side that wasn't filed correctly um it's a federal job so the department of labor took over and they haven't uh haven't been the easiest to work with either well they're not working much with any excuse to not work with the COVID stuff. So, oh, my gosh, I'm sorry.

Yeah, well, I mean, we get your income coming back in, and, you know, here's the thing. Have they given you an actual date on the foreclosure yet? No, not yet. So I had tried to apply for a mortgage assistance to lower the payment temporarily, and that got dragged on up until about a month ago, and they finally said that they were denying my claim. Dude, it really might be five more months before they actually do the foreclosure. Yeah.

And just live there and pile up cash and get rid of the stinking car and get you a cash car with no payments. And I'm going to put you into Ramsey Plus. I've been right where you are. It's no fun. Ramsey Plus will teach you how to handle money. And I get you into Financial Peace University. And I'm going to pay for it for a year because I remember how it feels to be scared.

And be right where you are with a foreclosure breathing down your neck. This is The Ramsey Show. Our scripture of the day, 2 Corinthians 13, 11. Finally, brothers, rejoice. Aim for restoration. Comfort one another. Agree with one another. Live in peace, and the God of love and peace will be with you. Barbara Bush said, you must read to your children, and you must hug your children, and you must love your children.

Your success as a family, our success as a society depends not on what happens in the White House, but on what happens inside your house, which is what we say all the time around here. All the time. I had forgotten it was a Barbara Bush quote, but there you go. All right. Stephanie is with us. Stephanie is in Washington, Yakima. Hi, Stephanie, how are you?

Good, thank you. Thanks for having me on. I'm a new listener, and I appreciate you taking my call. We're honored. How can we help? Yes. So I'm going to be coming into an inheritance of $25,000 and I wanted to know the best option to not, one, to not be taxed on it. And two, how should I invest it properly? My husband and I, we own a home. We don't have any credit card debt, so we paid off all of our credit card debt. Good.

And we don't have a 401K, though, and we don't have much in savings. So this is a large sum of money for us, and I want to invest it in the best way possible. Good for you. Well done. Okay. And what was the inheritance money in? In what form is it? Well, it's going to be as a check.

Okay, so it's just cash that came. Okay, there is no taxes on it. Inherited money is not taxable. So that's an easy part of the equation. And then, Anthony, we teach folks to, you know, as a new listener, our new arrival at Ramsey, Stephanie, we have a system we call the baby steps. Yes, sir. Yes, I was about to ask that. Stephanie, you said no credit card debt.

Do you have any other debt? Yeah, we paid it all off. So do you have any other debt other than our home mortgage payment, which is approximately almost $1,400 a month, is a hospital payment when my husband and I lost our baby. And I've been paying on that. So I owe a little less than $5,000. Okay. Any car notes? No.

I own my own vehicle and my husband has a company vehicle that he drives. So as a new listener, Stephanie, right now, what I'm going to suggest that you do is follow the first three baby steps, going ahead and pay off that $5,000 and jump straight into baby step number three and go ahead and get a fully funded emergency fund of three to six months right now. Of expenses. Of expenses set aside for emergencies. Okay. What we found is that being debt-free completely, later on, house and everything,

is the shortest path to wealth and stability along the way. Yes. So baby step one is $1,000 saved. Obviously, we're skipping through that. Two is to be debt-free but the house, and that's the way. Yes. So baby step one is $1,000 saved. Obviously, we're skipping through that. Two is to be debt-free but the house, and that's what Anthony just outlined, knocks out the $5,000. Yep. Three is a fully funded emergency fund of three to six months of expenses.

What's your household income? My husband makes approximately $4,000 a month, and I bring in approximately about $2,400 a month. Okay. So you guys are making about $80,000, $90,000 a year. Does that sound right? Yeah. Roughly, it's between $60,000 to $70,000 okay okay and um so if you were to set aside 15,000 as an emergency fund that probably as representing three to six months of expenses and never touch it except for emergencies that's all it's for then that would be great so that's using up 20 uh if we said 15 of the five thousand dollar debt of the 25 that gives you $5,000 to do something with. You might start investigating.

That moves you past your baby step three. Baby step four, five, and six we do at the same time. Four is we put 15% of our income into retirement. Five is kids' college, if that's appropriate. And six is begin to pay off the house. And so you would be at maybe step four, getting your budget arranged and start putting 15% of your income away, and we can use the last $5,000 of this $25,000 to jumpstart that, maybe with some Roth IRAs.

And, you know, click SmartVestor at DaveRamsey.com, and you can find some SmartVestor pros in your area to maybe help you get that started. But it looks like you're going to be able to do a lot with it yeah i mean you fully fund the emergency fund knock out any debt that you got there get that thing out of your life it's great to not have that payment again because every time you make that payment you have to relive the memory yeah and the pain of that of that event and so it'd be great to have that out of your life and um and then begin your investing. And time to get the 401K started and the Roth IRA started and those kinds of things.

And part of that will be getting on a budget, you know, jumping in Ramsey Plus or something like that, getting your budget going with the EveryDollar app. And this is really going to take you a long way. That's pretty cool. I was just thinking that. I was like, wow. And blink of an eye, she's already on Babysitter's 45 five six and a blink of eye yep just like that got there and so that that's pretty cool all right cassie is with us kathy's in springfield massachusetts hi cassie how are you cassie are you with us well maybe not all right let me see if i can get to armando

in miami hi arm. How are you? Good. Thank you very much for listening to me. Sure. I have a question, and I listen to you religiously, and you say that if you have any money, any savings account, once you have an emergency fund, which I do, it's better to pay off your house with that money apart from the emergency fund. The situation I have is a little bit peculiar or different in that I'm retired. Me and the wife are both retired. Our salary is $130,000 a year. We have no debt except for we owe $150,000 on the house. And also I have 500,000 in a 401k. The problem is if I take, if I take the money out of the 401k, it becomes salary. And with the salary I'm making, I'm going to, I'm going to pay at least 20% on that $150,000. And it's going to, isn't it going to cost me

a lot more money to pay off the house? And right now, the monthly payments on the house are only $650 plus tax and insurance. So I can pay for that very easily. I'm still putting away over $2,000 a month in savings. So I'm hesitant. How old are you? I'm 61. We're of them. I'm 61. We're both 61.

61, okay. If we stopped saving money, you're making $130,000, how quickly can you pay this house off out of your cash flow? Well, the thing is, I want to live, you know, because we're retired. I want to live halfway, you know, in other words, I don't want to keep away from the lifestyle I have. Okay, you do whatever you want to do. What I'm going to tell you is this. The data that we have on millionaires is, and you do not want to go up into your later years, it's still hanging onto this house payment like it's a freaking pet.

So I want to get rid of it. You decide how you're going to get rid of it. If'm in your shoes the house payment's gone absolutely i'm either going to get rid of it by cash flowing it over the next three years and you don't want to do that because you don't want to trim down your lifestyle you're enjoying your retirement okay then pull enough out of your 500k to knock that puppy down and i'd be done with it i would absolutely be done with it and then the fact that you don't have a house payment, just pay yourself a house payment, rebuild some investments over time with that. But in the meantime, you're not paying a stinking bank interest. And I got to tell you, man, when you don't have a house payment anymore, the grass feels different under your feet.

That's why I'm kind of tripping, Dave. Like, why would you not want to go ahead and aggressively do that? So when you are older, you don't have to worry about nothing. You can really enjoy your life. Well, he's enjoying his retirement now. Doesn't want to spend any of the $130,000 income. That's cool. But you're going to pay the 20% on the taxes as you pull it out.

You are going to have taxes on 401k. No penalties. But I would pull out enough to pay off the house out of the 401k today. And I'd be debt free. Take the old house payment. You'll rebuild that amount lost within a short period of time just by investing a house payment for yourself into your own situation yeah but armando you can do whatever you want to do it's your life um you know it's your money yeah so hey thank you for the call anthony good job today hey dave thank you

that puts this hour of the ramsey show in the books thanks to jamess, our producer, Kelly Daniel, our associate producer and phone screener. I'm Dave Ramsey, your host. We'll be back 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 The Ramsey Show. Did you know The Ramsey Show is one of the most popular podcasts in the world? Subscribe or follow today wherever you listen to podcasts.