The Ramsey Show - App - Is It Possible To Build Wealth While Renting? (Hour 1)

Episode Date: June 19, 2024

Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work that they love and create actual amazing relationships. The phone number here is 888-825-5225. Rachel Cruz, number one bestselling author, co-host of the Smart Money Happy Hour podcast, along with a YouTube show, along with Mr. George Camel. Also my daughter. She's my co-host today. Open phones at 888-825-5225. Nathan starts this hour in Anchorage, Alaska. Hi, Nathan. How are you? Doing well, Dave. How are you? Better than I deserve. What's up? hey calling in built a duplex with some family members last year um i got out everything i put into it but i was supposed to get a paycheck at the end of the summer and it never came and the relationship with the family members hasn't been great after that just kind of curious

what your thoughts on what I should do. What did you learn from this process? That I don't want to do any deals with family anymore. Disagree. I disagree. I think you should have learned you don't want to do deals that aren't clearly defined and written down with anyone ever. Because you guys did this out of your ear and your rear and don't even know what the other one agreed to. We had it written down.

Oh, you do? That you have a contract with your family member that they're violating? Yes. Why are they choosing not to pay you? Why are they defaulting on the contract? They're wanting to just extend the term. they're not wanting to pay out right now and that's my parents okay why um you can't pay right now they don't have the money they don't have money okay so how much do they owe you uh about $110,000. Okay. And they're supposed to write you a check for $110,000

at the completion of the construction. Correct. And where did you think they were going to get this money when you signed the deal? Out of the loan that we signed on it, the mortgage. Both of you signed a mortgage? Yeah, the property's in an LLC, which I own 50%, and the parents own the other 50%. Okay, and the loan was taken out. Where did the proceeds of the loan go if they didn't go to you like they were supposed to? They went to my parents. What did they do with it, since they don't currently have any money? They paid off some of their line of credit that they used to finance the project.

Mm-hmm. We knew they were going to do that at the beginning, didn't we? Correct. And then they pocketed the rest. How much was the loan for total? Loans for about $385,000. Okay. If they pocketed the rest, they have the money to pay you. Yeah, we spent about $360,000 on the project.

We were supposed to get a check for about $63,000 at the end, and then they're wanting to buy me out now, at least that's what they tell me, and the whole check would be about $110,000. My equity portion passed the loan amount. Okay, that's a different story than you're talking about. You didn't talk about the $110,000 was a buyout. You said they owed you $110,000 at the end of the project that's not true do they owed me like 60 um okay i think it was about 60 grand and then the yeah okay but the part you said the thing cost 360 and you borrowed 385

where the flip you think they're gonna to get 60 that's a twenty thousand dollar spread i need a seventy thousand dollar spread correct how many properties have you built do you were you the builder i was the builder on it okay have you ever built anything before uh i've built i help people build stuff but this is my first honor builder project i'm a general contractor up here yeah okay okay um what are you 25 i'm 22 okay all right um are they saying they will pay you back nathan like i just wonder if they even acknowledge like

yeah we still we owe you about 30 grand and we want to buy you out but we just don't have the money for the or the 63 grand right now like do they acknowledge it when you talk about it yeah they acknowledge it but i haven't seen anything from it i'm also not, my mom manages the finances on the rent. The rents are good, and the tenants are triple A. One's a nurse that makes a bunch of money at the hospital, and the other one's actually missionaries for a church, and the church is never going to default on that. Okay.

The tenants are great, and it covers the mortgage and all the expenses that i haven't seen any i've seen a thousand let me backtrack to the beginning of the deal okay you signed up to build the property and the builder's fee that you were to be owed when the property was completed was how much right about 60 grand okay that's 60 000 and you signed up to build a property and when you signed up what was the budget for the property what were you supposed to spend to build it uh the budget was uh right about 410 okay and who put in in all this other money? Because you only borrowed $385,000 at the end of the story, I think I heard.

Well, yeah, so the budget was $410,000, so I had a billed budget of $410,000. And you built it for $360,000? For $360,000. So you came in $50,000 under budget? Correct. At the beginning of the story, you were supposed to get $60,000. The budget was $410,000. So you all originally planned to borrow $470,000?

We originally planned to borrow because the property appraises for $550,000 last year, and right now it's about 600 this year what did you originally plan to borrow when you were promised 60 and they had a 410 budget uh we were actually planning to borrow about 420 on it that's not enough to pay both of those things honey 420 minus 410 is not 60. I think we found the problem. You've entered into a deal that you have no idea how it was structured because you can't even recant numbers back to me that make sense on some basic addition and subtraction. The only way this deal would have worked at 410 and you get 60 is if they had planned to borrow 470.

You follow me okay is that is that right the 60 the 60 was coming out of the build budget oh so 410 included the but the 60 yeah so my builder's fee like my total bill okay so you were supposed to build it then for 350 and instead000, and instead you built it for $360,000. Yeah. So you went $10,000 over budget. But then that means there's still $50,000. But they didn't borrow $385,000.

I mean, they didn't borrow $410,000. They borrowed $385,000. Yeah. I think you guys put the house on the market and sell it immediately, and both of you get out of it what you can get out of it. And I think you have got to learn a lot more about business before you do another one of these transactions because you're having trouble even laying this out logically for us and i think that's the nature of the problem here yeah and this isn't this isn't to point blame but it does i'm like it kind of sucks he's a 22 year old kid

goes in with his parents you like there's a trusting process there and that's that's a hard that's hard to learn that's hard to learn. That's hard to learn. Except that he's blaming them for ripping him off. And I don't think that's what happened. This is The Ramsey Show. This show is sponsored by BetterHelp. All right, so I was born and raised in Texas and I love the myth of the lone cowboy.

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Rebecca's in Toronto, Ontario. Hi, Rebecca. Welcome to the Ramsey Show. Hi. Thank you for taking my call. Sure. How can I help? Okay.

It's a bit of a complicated situation. I'll try to simplify. But I'm calling on behalf of my parents. Basically, we want to know if it's wise or even ethical to sell their matrimonial home. Basically, my father, he was extremely verbally and emotionally abusive growing up towards my mom and then later for me and my brother. And it got so bad that I had to leave home and get my mom to join me. That was five years ago, and he made it clear that we weren't

welcome back. But prior to me leaving my brother, he was away at university and then he went back to live with my dad. But he left home because he couldn't take it anymore and now he's joined us. But we're struggling. Cost of living in Toronto is extremely high. So just all our friends and family are telling us it's not fair that this is our situation and my dad gets to live in the home. But at the same time, my dad... I'm sorry, why is it not fair that your dad gets to live in the home? Because he was a jerk?

That you give up your rights to home ownership because you're a jerk? I'm sorry? Like, because he was abusive, and he's not letting us back in the home. But it's not your house. Yeah, I mean, it's not my house, but my mom. It's under her name, too. But she's a grown-up, and that's her decision, right?

Yeah, I mean, she wants to sell. That's her problem with him, right? What's it got to do with you? I just wanted to get advice to help them, to guide them, because my dad, he also had a stroke a few years ago, so he's not able to work. But he's independent, so that's kind of why work, but he's independent. So that's kind of why we didn't push to sell the house as well, just so that he can live in the house.

Who's we to push? Who's we that's pushing to sell the house? The mom and the brother, the family, the family that left the abusive dad that is now living together. I'm sorry, your mom lives with you? Yes, my mom and I. I missed that. My mom, my mom and I. I missed that.

My mom, brother, and I. Okay, but they've never gotten a divorce. Yeah, I was going to ask, is there going to be a divorce? They're legally separated, but right now. So when the divorce happens, then that's where things can really start moving with the home, with the equity that's there, with what's owed to her. I mean, all of that. Then he may be in a position where he would have

to sell it um in order to get proceeds for them to have i mean i don't know the divorce law in canada but um that's where you can actually make legal action rebecca but just you can't yeah rebecca here's what i don't want you to do okay and i kind of think i think i heard this but i might be wrong you tell me if i missed it? I'm willing to be wrong on this. I kind of think you still want to be able to have a reasonable, logical conversation with your unreasonable, toxic father. Right. Yeah.

And I want to help you that that's not ever going to happen. Yeah. He's an unreasonable, toxic human being. That's why all three of you have separated yourselves from him now to expect him to suddenly be reasonable and non-toxic regarding a real estate transaction is not going to happen is that okay to understand yes yeah i agree so the only thing this guy's going to do is when someone makes him do it. Agreed? Right. You're not going to persuade this guy to do anything.

Right. Okay. So Rachel's right. When the divorce court drops the gavel and the judge says, Sir, your house is going to be sold now, voluntarily or at auction as an order of the court, then he will sell the house. But until then, he will not. Right. Yeah. My mom, she wanted to get lawyers involved and yeah we just don't have the money for that right now so well what is the

house worth right now probably close to 900 000 no i think your mom's got the money then again i'm like rachel i don't know can law, but I suspect your mother has rights to half of that $900,000, does she not? She would, yes. Okay. Why don't you all talk to an attorney and talk to the attorney about getting paid when the house sells? Okay, yes. And the attorney gets paid out of the house proceeds, and he goes and files the divorce and gets the house sold under divorce court. Because I don't expect your unreasonable, toxic father to suddenly become reasonable right yeah we just wanted to know if it was ethical

because of his stuff to me like oh it's very ethical yeah it's ethical he'll have four hundred fifty thousand dollars with a stroke he can take care of himself okay yeah you guys are you guys, you're the story you have told me is so sad that the three of you are still worried about this guy's happiness. Okay. That's, uh, you know, a therapist would call that codependence. I'm not worried about his happiness. I don't like him and I hadn't even met him and i've only known about him for three minutes yeah you know i hope i hope he turns out i hope it's okay but i mean his own daughter is telling me this horrible story on him and and his

wife has indicated that it's true by leaving him and his son has indicated that it's true by leaving him and so your story is corroborated, right? Yes. Yeah. I'm sorry, honey. I'm sorry y'all have gone through this broken, twisted mess. And I'm sorry the scars are going to take a while for all of you to heal from. But your need to support him or make him happy needs to stop today.

You all need to take care of you guys. He lost that right from you guys. Yeah, he lost that that he lost that and rebecca and that's a you know and and you kind of flew over but seriously like those types of environments um it's extremely damaging on many levels and so for you guys your mom to seek help and and to have somebody a professional talk to you rebecca i'm like being being a child of that it's, I mean, it's horrible. So, I mean, making sure that you put yourself in a healthy spot as well, especially on the emotional side, not just this,

but even feeling like you have to take care of your mom too in this. I understand you guys are banding together, which makes complete sense. But making sure that you're navigating this well to bring in a professional too too, for you guys. Start aiming at what happiness 10 years from today looks like and what are the steps to get there. And making him happy is not one of the steps, I'll go ahead and tell you. Jesse is in San Antonio, Texas. Hi, Jesse, how are you?

Hey, Dave, how's everybody doing today? Better than we deserve, sir. What's up in your world? All right, well, I'm trying to, I guess, prioritize saving and investing. I am probably in between baby steps three and four right now. I've got about 10% of my income invested in retirement. I'm working on trying to get a down payment for a house. Good. And I'm trying to figure out how much I should prioritize the saving for the house versus putting money in investments, whether it's

retirement or otherwise. I wanted to see what your advice was on that. Do you know how long it'll take you to save up for a down payment, the kind of home you guys are looking at in your budget a year maybe two okay i honestly would probably because it's that short i would probably pause investing even the 10 and save up that down payment whether it's five or 20 and then once you guys have that saved and you're in the housing process of buying the home then i would press play and invest 15 percent of your income into that you know we call that baby step 3b around here yeah so i was looking at that i was like i wasn't sure whether that meant hitting the pause button it doesn't it doesn't always sometimes people sometimes people keep doing the 10 percent yeah

but rachel's saying in this current housing environment it's a cool thing to go ahead and get into the house because they're continuing to go up in value, continuing to go up in cost. They're not going down. And so short-circuiting some of that by piling up the down payment as fast as possible is not an unwise suggestion. It's a good suggestion. This is The Ramsey Show. Hey, you guys. Health insurance costs are only moving one way, and that way isn't down. And if higher costs aren't enough, the wait times to see your doctor are longer, and it's harder than ever to get anything approved through the bureaucracy. So if you feel like the system is working against you, try a biblically-based alternative to health insurance,

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more today and join at chministries.org slash budget at chministries.org slash budget. Rachel Cruz, Ramsey Personality, is my co-host today. It is a free call anywhere in North America. Thank you for joining us. Today's question comes from Jenny in Illinois. Jenny says, I'm a single woman and I rent an apartment in a great city. I'm very happy here as it is close to my work, my church, and most of my social activities. I have no desire to own my own home because I'm afraid I have to have maintenance and lawn care people on speed dial and to buy something even remotely affordable, I would have to move way outside of town. Is it okay to rent forever? I hear you talk about a paid off home being a large piece of people's net worth, but is it still possible to build wealth if you don't own a home? So yeah, I mean, I think the biggest piece in this, Jenny, is looking far in the future.

And I always look to when it comes to retirement time, the singular expense that continues to go up that you will not have control over is your house, is your housing. So rent will continue to rise. And if you own your home and you pay it off, then that's an expense that you don't have, and it's continuing to work for you building equity. So it is a part of your financial picture that I would want you to have a part of it. It doesn't have to be today. It doesn't have to be in the next five years. But eventually, I would have homeownership in your financial picture for many reasons. But I think mostly when you look towards times like retirement, you won't have to have that expense that continues to rise

and you actually have an asset for you. I can completely endorse that where you are today in your life, Jenny, that this particular situation makes sense. It sounds like you got it made right now. There's nothing wrong with that at all. It just doesn't scale long-term. So here's the problem. You know, she doesn't say how old she is.

Let's just say she's 30, okay? Every single year from 30 to 70, your rent's going to go up. Or your landlord's asleep at the wheel. They will die, and the next person will jack it through the roof to make up the difference. But the value of the rent goes up every single year from age 30 to age 70. Your most expensive line item in your budget is housing. So the most expensive line item in your budget is out of your control,

variable, and increasing. That is not scalable. That's not sustainable long term. Again, what Rachel said, if you want to do it for four or five years, I think you've got a good gig. Go ahead and do it for four or five years. But let's not translate that to is it okay to rent forever. It's okay, but it's going to kill you.

Because what you're paying in rent now is nothing compared to what it'll be 40 years from now i think we can all agree with that and so when you buy if you buy on a fixed rate 15 year you now have a fixed payment for a property it doesn't have to have a lawn it can have a be a condo. You have a fixed rate. And then when you get paid off, you have a fixed rate, which is zero, other than your taxes and your property insurance, right? Those are two things that will go up as well. But they're a much smaller percentage.

And they don't end up being the largest thing in your budget anymore, usually. And I will say this too, Jenny, that it doesn't have to be a single family home. If you are single, you don't need a lot of room. It could be a condo, right? But owning property that you eventually own full out is what the key is. That's the goal. I don't want you to confuse the fact that you've got a really good situation right now, and I endorse you staying there with a forever plan. It's not a good forever plan it's a really good short-term plan though i would sit there and i wouldn't let your friends shame you into buying something and that's what's happening and people are going you gotta buy a house i gotta

buy a house you don't have to buy a house right now you gotta not got a bad deal but but you do need to stabilize the most expensive line item in your budget before it gets out of control and starts messing up your life i mean can you imagine being 70 years old and broken your rent goes up every month every year yeah that'd be no fun san francisco's calling and that's valerie hi valerie how are you hi hi hi hi hi i am so thank you things are good in san Hi! Hi! Hi! Hi! Hi! I am so excited to talk to you. Things are good in San Fran, huh? Oh my gosh! Oh my gosh!

What is up with Valerie? Well, excited as I am to talk to you. You know, I got some troubles, of course. Um, so I, I, I filed for bankruptcy and I believe it was, everything was discharged either May or June. I can't remember the date, the this year, because it was a little problem and they were missing a paperwork. And so they, whatever, we got that cleared up. So I believe the discharge was probably may i mean june instead of may um but i realized that how do i build my credit up without getting a credit card how do i build my credit back up i know that it was a mistake now you went deeply in debt and got bankrupt why

you want to go back in debt i don't want to go back in debt what is credit for well yes what's credit for that if you don't have a if you credit score is used only for one thing going into debt right you build it only by going into debt and you just got discharged from debt why are you so itching to get back in well i'm i, honestly, honestly, I'm going to call you Uncle Dave. Uncle Dave, honestly, I'm not trying to get back in debt. I just own a house with my four other siblings and me and my sister live in the house and we're paying for the house and they're paying the insurance and the tax and we all pay the insurance and the taxes on the house. Well, I want to be able to come out of this house because this house is what got me into debt, trying to fix stuff. And then we had a guy that

we knew he was a contractor. He is a licensed contractor, but he screwed me and my sister over. And I ended up going into debt, trying to not have holes in my house, not have water flowing from the kitchen. And so I was able to... So it was construction, Valerie, that got you to the point of bankruptcy. It wasn't credit card debt or car loans or everything else. No. Well, you would tell me that my car loans are, you know, ridiculous. My car loan is ridiculous.

Okay, so it wasn't just construction. But it was really the issue of we had water damage. And when he went in to fix all of that and redo the kitchen, they gave us the money to redo the kitchen. Okay, stop, stop, stop. You had a crisis. You had a mess. And you used debt to fix it.

And then you called me after filing bankruptcy and said, how can I go back into debt? No, I'm not. No, that's what you did. Well, building credit. Okay. There's only one way to build credit only one reason to build credit and that's to go back into debt so you're telling me don't worry about if you're not going to borrow

money if you're not going to borrow money you don't need credit and come you know there will be things valerie that they may pull your credit right if you apply for a job sometimes they will pull your credit report if you're for cell phone companies sometimes will pull your credit report renting an apartment um you know there's different times in life sometimes we'll pull your credit report. Renting an apartment, you know, there are different times in life. Yes, they will pull your credit report. But you can do life without it. Yeah, but a credit score you can live without. You can do all of those things without a credit score. It may be harder, right? There's going to be some workarounds, but it is possible. The real, only real reason that you need it is if you're going to go take out a loan, right, for a car

or something else. And if you want a home later, you can do what's called manual underwriting, and there's a process there. But for you, Valerie, I want you, you have a lot of things going on, and I like your energy, and I want to channel that energy to changing completely the way you've been doing money. And even like the mindset of even credit, like there is a totally different system out there that does give you control. It gives you peace. It gives you a plan. It gives you guidance.

And it's going to be a change, a mental change. But if you're ready for that, I mean, I'm going to have Christian pick up and I would love to give you Financial Peace University, our nine lesson course on money, Every Dollar Premium, our budgeting app, the Total Money Makeover 20 year you know anniversary uh addition love financial peace yes yeah so let's all right you go through that christian i'll answer your question yeah what we're bank but when i went

through bankruptcy honey it wasn't any fun and i decided what caused it it was borrowing money that caused it i had a lot of reasons for borrowing money, but at the end of the day, very few people file bankruptcy that are debt-free. This is The Ramsey Show. Rachel Cruz, Ramsey Personality, is my co-host. I'm Dave Ramsey. This is The Ramsey Show. Open phones at 888-825-5225. James is in Fort Lauderdale. Hi, James. How are you?

Hey, guys. Thanks a lot for taking my call today. Sure. So my question is, I'm a W-2 employee. I've been pretty bothered by the amount of income tax I pay. I've been investing into a Roth 401k because of your teaching. My company does match 3% of the 6% up to 6%. Good. But I feel it makes sense to do a traditional 401k for the tax savings and invest the difference of the savings into a backdoor Roth

IRA. But I wanted to see what your thoughts are on that. Well, the math doesn't hold up. Okay. Let's just take a simple example. Okay. I'll just make up, not you, but let's just use an example. Okay.

If you save $100 a month from age 25 to age 65 in a decent series of growth stock mutual funds you'll have somewhere around a million dollars okay if you do that in a roth a hundred percent of it is tax-free if you do that in a traditional you're going to pay taxes on a hundred percent of a million dollars which will be somewhere around $350,000. So instead of having a million, you'll have $650,000 after the government. However, let's add that up, okay? 12 times 100 is 1,200, right? You follow me? Okay.

Times 10 years would be 10 800 right times 40 years which is what we're the period of time we're talking about would be right around 50 000 so you saved taxes on 50 000 meanwhile you got to pay taxes on $1 million. That's your traditional numbers. Okay, so I'd be saving now, just not later. Yeah, but see, when you get to the million dollars, my point is 95% of what's in there is growth, not what you put in. And you're only saving taxes now on what you put in. Now, if you want to get real nerdy about it,

you could run a present value calculation on that $50,000, but it still doesn't make the point. But if you had invested that $50,000 in a backdoor Roth somehow, what does that come out to? It still doesn't offset the fact that you've got $350,000 in taxes. Okay. Don't I pay taxes on the withdrawals on the back end? Not on a Roth, no. Roth is 100% tax-free.

No, on a traditional. On a traditional. As you pull the million dollars out, you're going to pay taxes on a million dollars which is 350 000 if you did it in one year or 10 years you're going to pay out 350 000 bucks i see but what if i'm living off less than I'm making right now but later? And you're in a lower tax bracket? Correct. Well, if you can help me find a place in the history of the United States of America where taxes go down permanently, I'll go with you on that.

But taxes don't go down. They go up because Washington has an ever-increasing appetite for my money. So, James, I think the argument is by the time you retire, even if you're in a lower tax bracket, that lower tax bracket is probably going to be the same or lower than it is today for you. Yeah, here's the other problem, okay? Let's pretend you didn't just do $100. Let's pretend you did a thousand dollars well

now we're dealing with 10 million dollars your mandatory withdrawals are going to keep you in the highest tax bracket and by the way on the roth you don't have mandatory withdrawals oh i don't now we have a required minimum distributions of 72 and a half on traditionals you have zero requirements on Roth. So I'm sitting here with a several hundred million dollar net worth and 100 million probably, I don't know, not quite, in Roth. But guess when I will take that money out for that Roth? I'm 63. You know when I'm going to pull the money out of that Roth?

Never. Because it can go to my next generation tax-free. I'm going to let the sucker sit there and grow. I'm 63. Let's say I lived to 93. That's another 30 years. All that money is going to grow tax-free, and then it's going to be handed to the next generation tax-free. Not true with traditional. An inherited IRA is taxable. So it screws up your estate plan, and if you do really good and you save a whole bunch, you're going to be in a high tax bracket. Doesn't seem to matter which way you vote both of them screw it up okay so i'm just telling you man anything you can do to keep the government from controlling the money the distribution of the money or taxing the money you're always going to come out ahead because

you're so young and smart the beautiful thing about what you're asking is you're actually thinking about it way to go and you're actually running numbers and asking very intelligent questions you came to the wrong conclusion but you're asking great questions and you're paying attention so i can tell you this from having done this for 35 years you are going to be wealthy because even if you miss even if you did this wrong you're going to end up with a lot of money i have a question for the average listener out there that's not going to build a massive company and not going to have your income okay right there they're more just like yeah i'm gonna retire and i am going to use the money but i'm actually going to retire and that's my retirement plan is to use that money okay i'm not saying this me to your money i'm saying the average person out there um so talk

that out right okay let's say you got a five million dollar so you do get so you got a five million dollar net worth yeah or a two million dollar net worth but here's the thing if you start at his age it's gonna be difficult for him to not end up with five million dollars because he's paying attention yeah okay yeah yeah totally totally but anyway the the a lot of people yeah power compound interest is magical i mean it's amazing so anyway that but your point is let's say let's say we talk about our typical millionaire and they've got uh a million five net worth between 401k and 600 thousand dollar house and they got 800 000 bucks 900 000 bucks or whatever in their uh roth IRA and they're going to start drawing it out now what's your question about that yeah so when you were saying

yes you're still going to be paying taxes on I mean the argument still stands when you just went no you're not going to pay taxes on it if you did a traditional if you got a traditional exactly yeah yeah yeah it would still be the traditional route yeah but the lower tax bracket high tax bracket still the argument stands that it'll probably still be the same well you gotta see it's hard to compare a lower tax bracket with zero roth is zero that's the lowest possible tax bracket right okay so i mean i don't care how low the tax bracket is because the 50 000 created the 900 000 yeah in our 950 000 in our scenario it was the seed that grew 950,000 worth of corn and so what's it you end up with because of compound interest when you start in

your 30s or 20s particularly it is 95 percent growth in your nest egg when you get there yes so how that growth is taxed really matters and here's the other thing it's probably even then not going to draw it all down so let's say you got nine or a thousand bucks and you live off of ten percent of it and it's growing at twelve percent okay so ten percent's ninety thousand bucks a year you're going to live on ninety thousand bucks a year and never touch the nest egg so that nine hundred is likely passed yeah as in a from an estate planning perspective totally yeah a hundred percent tax free versus if you that 900 was traditional and you lived off of ninety thousand dollars a year and you paid taxes on the ninety thousand dollars a year because it's taxable but at a lower tax

bracket but not zero uh and and if you did that then you still are going to leave nine hundred thousand dollars if you never touched the principal just lived off the interest it created, the growth it created. You're still going to leave $900,000 all taxable to your kids because an inherited IRA is taxable, and the new rules require that you pay all the taxes out within 10 years on it under the SECURE Act. Thank you, Joe Biden. And so there you go.

I mean, that's new rules. You cannot drag your inherited ira out you've got to cash it out because those people want your money and they're not going to let you keep your money if you structure it in a way what's isn't it what's the death tax the death tax is an estate tax okay it means i've already paid i've already paid income tax on all this money that on top of that's a that you have to have a minimum of that, right? Yeah, $20 million. Oh, okay.

Yeah. But if you get $40 million, or you get $120 million, you get taxed on $100 million at death. That's a lot of taxes. That you have already paid taxes on. That's why they call it the death tax. Because you're taxing people who have already paid taxes, but they're too dead to do anything about it.

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