The Ramsey Show - App - Is It Possible To Invest TOO Much? (Hour 1)

Episode Date: January 23, 2023

George Kamel & Ken Coleman answer your questions and discuss: Catching up on retirement investing, Cashing out a 401(k), "Is it ever possible to invest too much?", from the blog: Dave's Investing Philosophy "Should I get into house hacking?" Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Девочка-пай Live from the headquarters of Ramsey Solutions, broadcasting from the Pod's moving and storage studio, it's The Ramsey Show, where America hangs out to have a conversation about your life and your money. I'm Ramsey personality, George Campbell, joined this hour by best-selling author and host of The Ken Coleman Show, Ken Coleman himself. And we are here to take your calls at 888-825-5225. If you've got money questions, I'm here for you. If you've got questions around

purpose and career and work and is now the time to switch jobs, to just get laid off, Ken is here to help. So give us a call, 888-825-5225. You know what, George? I've learned in my life that every time I've had some personal growth, an area of my life where I've grown personally, I always see professional and financial growth as a result of that. And so if you're new to the audience, I'm your personal growth coach, your work on purpose, more money, more meaning guy. So always love to take those calls. If you feel stuck, let's get you unstuck today.

So you ready to roll? I'm ready. You look fantastic in your denim shirt, by the way. Thank you, Ken. Yeah. Wow, man. See what I did there? It's good to have friends like Ken.

Make George feel good about himself so that now he gives better advice. Taking it back. There it is. Well, let's see if Kevin gets gets that advice he's in turnersville new jersey kevin welcome to the show how you doing hey george hey ken thanks for taking my call i really appreciate this you're welcome what's going on all right so um i just finished baby step three i'm on the baby step four five and six i six. I don't have to do five. I don't have any kids in school, but I'm about to start adding 15% into my 401k. Okay.

And my Roth 401k is that I get a 6% match on. Okay. But because I'm 55 years old, I'm allowed to do what they call a catch-up contribution. And my catch-up contribution is another $7,500 that I can contribute to that for the year. Do I do that or do I just stay with the 15%, take the 6% match, and then work on the house with the extra money that I get for my monthly pay income? How much do you have in retirement right now? I'm sitting at like $400,000.

Oh, nice. Okay. I thought you were going to tell me you had nothing in there. So that makes me feel a whole lot better. What's left on the mortgage? It's about 190. And what's your household income? Right now it's sitting at like close to 100. Okay. Like 99. Love it. And do you see yourself continuing to work for another five, 10 years? What's that looking like? 10 years, um, you know, probably 65 in 10 years. So 10 years, maybe, maybe a little bit longer, but you know, well, I would stay the course that the ladder on what you said, which is 15%, uh, that's going to

get you, it won't get you quite close to maxing out the Roth 401k, but with that match, you're getting 100% return on that 6%, which is great. And so with all the margin you have beyond that, I'm going to throw it at the house. You've got 190 left on the house. You make a hundred. I would set a real hard goal of saying, Hey, in four years, I want this mortgage gone. Okay. All right. That puts you at 59, making 100K. I was at three years with them. I love that. Let's go for three years. Because then three years from now, then we can start maxing out the Roth 401k, doing all of the contributions we can with the catch up. There's also other ways you can really kickstart that

retirement, which is backdoor Roth IRAs, mega backdoor Roth IRAs. So there's a lot of options for you. Maxing out your HSA is another great thing to do at that point. But I would focus on that house payoff and dangle that carrot of more contributions coming up in three years. Got it. All right. Thanks for the clear path. That's what I needed. I'm glad I called today. You got it, Kevin. We are here to help, my friend. Appreciate it. All right, let's move on to Billy in Atlanta. Billy, welcome to the show. I really appreciate it, guys. Thank you so much. Sure. What's going on today? So just a question around 401, having to move it out of a old employment retirement fund and going

to take a penalty regardless of leaving it there or moving it because the new job doesn't offer one for two years. So advice on that, do I leave it there and just continue with the market up and downs, or do I take that full penalty on a cash withdrawal to pay off a little bit of debt? Why do you need to withdraw it? Why don't you just do a direct rollover to an IRA and avoid all penalties? According to the retirement plan now, even doing a rollover to the IRA requires a penalty. They don't have that option pre-built in, and it would be similar to taking a cash withdrawal or withdrawing it from the current plan and starting a new traditional plan. I have never heard of an employer not allowing you to do a direct rollover without penalties.

You're 100% sure on that? I am pretty sure I've spent countless hours on with this retirement plan, and I'm about 99% sure there is a penalty to roll it over into more a traditional style. Okay. Well, either way, whatever it's going to take to get that into an IRA, that would be my move versus moving it over to your new employer. So you already have the new job? I do. And what's – is it a similar retirement plan there?

Similar. Of course, I don't know all the options yet just because I'm not to that time point, but from what I've seen, it is very similar. Okay. Well, I would also get in touch with a SmartVestor Pro and see what your options are. They'll be more knowledgeable on the ins and outs of 401k plans and help you navigate this to limit any fees or penalties you would pay. Okay. Because I've never heard of this where you can't do a direct rollover. Do you know what the penalty is?

18%. 18% in penalties for doing a direct rollover? Yes. Oh, my goodness. All right. I mean, I'm looking into it here to see if that's a thing out there. I've never heard of this. Ken, have you ever heard of penalties? I haven't, and I know you're 99% sure, but I can't tell you how many times I've told Stacy, my wife, that I'm 100% sure that I'm putting this thing together properly, all to find out that I wasn't sure at all. I really do think that you need to speak with one or two of our SmartVestor pros in your area. Do you have a

SmartVestor pro from Ramsey? No, I do not. This is a phone call. Ramseysolutions.com, your area there, a lot of SmartVestor pros. Have a conversation with them. That's what they do. These are people that we've vetted. They don't work for us. They're independent or they work for organizations, but they teach the way we teach. And they are experts on this. They need to look at the fine print. They need to advise you on this. I'm a little skeptical.

And I just know how many times I've been 99% sure and all to find out that I was 100% wrong. Yeah, I can't imagine that every employee that's ever left that company has taken an 18% hit on their retirement account when they leave. It just doesn't make sense to me. So I'm not saying you're wrong. It may just be a weird fluke in their system and their contract, but I would triple check on it. Because what everything I'm saying is a direct rollover is exactly what helps you do this without penalty, without creating taxable events. Yeah. Yeah. Okay. Wishing you the best of luck, man. Yeah, and just on a side note, even cashing it out to pay off roughly $20,000, $50,000 in total debt and still adding some to the bank account wouldn't be an option? No, I would definitely not do that. It's not worth the penalties and fees. You're unplugging all of the growth and compound interest that could be happening. Use your future income and any savings, liquid cash, to do that,

but do not rob your future to pay off the past. That is a bad idea, my friend. Thanks for the call. More of your calls coming up, 888-825-5225. 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, Christian Healthcare Ministries. CHM is a health cost-sharing ministry that's helped hundreds of thousands of families like yours take care of over $11 billion in medical bills since 1981. And CHM has also helped them stay true to their values and avoid miles of red tape. And CHM support goes far beyond meeting financial needs. They'll also help meet spiritual needs. Members become part of a family who will pray with them and for them when they experience a medical event. So listen, y'all, there's no better way to take care of health

care costs. CHM programs start as low as $98 a month. So learn more today and join at chministries.org slash budgets. That's chministries.org slash budgets. Welcome back to The Ramsey Show. I'm George Campbell. Joined this hour by Ken Coleman. Open phones at 888-825-5225. You jump in, we'll talk about your life, your work, your career, your purpose, your money. We are here for you to help you take that right next step.

Our question of the day is brought to you by Ottomans. Ottomans, when you just need to get your feet up. That's what they're there for. Yep. Love it. Today's question comes from Al in Virginia. He asks, what is your recommended percentage of income going into retirement if you're debt-free and you own your home?

Is it still 15%? Currently, I'm right at 30% and I'm 51 years old with north of $1 million in assets, 50% of which is in a 401k. Is it possible to invest too much? I love this question. And I love where Al is at financially. So if you're tracking with the baby steps, Al is at baby step seven, the final baby step, because he has a paid for home, no debt, he's got money in the bank. And so at Baby Step 7, you can invest more than 15% to your heart's desire. It's build wealth and give. And there's no parameters around that. And it's for a good reason. It looks different for everyone. So is it possible to invest too much? I think it's a great question. Because on one hand,

on the financial side, no, you could have $5 million. You could have $10 million in retirement. You could have $20 million. It only gives you more options, a bigger legacy, and more responsibility to manage. But it's a great problem to have. Yeah, it really is. And again, it just speaks to people who are new to this process. When you get a question like this and you hear this, like, this is possible. You can do this. There's a reason why there's seven baby steps. And I love that it's a way for many of you who feel like this is so very far off to realize it's attainable. Well, and at 51 with a million dollars in assets, while that's an incredible milestone, it's probably not enough to retire off of for the next 40 years if you want to have a really

great retirement. Well, let's also point out that he's 51 and then average length of life. I mean, he's still got a long way to go in a good way. He's going to keep racking it up. 40, 50 years, you go, how much do I need to live? And so a good rule of thumb is to go, how much do I want to live off in retirement and yearly income? Multiply that by 25. And that gives you a really good number. And here's why. There's something called the Trinity study out there, Ken, that said, if you peel off 4% of your nest egg every year, your initial balance should remain where it is. So if you have a million bucks, you can peel off 4% without really ever touching that million dollars.

That's a great exercise. And so as far as investing too much, I would always caution you to invest more than you think you'll need because taxes are going to continue to go up. Inflation's going to continue to go up. You don't know what's going to happen in the future, where you're going to want to live. And so I always want more options versus less. Now, here's why I will say you're investing too much. If you are miserable in your everyday life, but you are at least a great saver, but your wife wants to go on vacation and he won't take her, even though you don't have any debt and you've got a million dollars. That's where I would say, let's dial it back so we can

actually enjoy the next few years of our life while we're still young and able. Let's travel. Let's do those things. So if you're allocating to spending and to giving, then the rest can go to saving and you can do that with intentionality and no regret. Yeah. I love that plan. And again, very simple. That 4% rule is a great rule for people to get an idea of what I want to get to so I can live the life that I think I want to. Absolutely. And if you were going, well, that feels impossible because I'm 51, I have nothing saved. There is still hope for you. We might need to reset the expectations of what we thought retirement would be. We might need to look at a different place to live, to downsize

our house, to downsize our life. But you can still retire with dignity if you follow this Ramsey plan. If you get out of debt and have a pile of money in the bank and you're investing towards the future, you can still have a great retirement. Here's a thought, just a thought, George. We should probably talk about this sometime on the show. We are seeing baby boomers retire at record rates. So we're kind of in the middle of this and it's going to be interesting to see over the next five to 10 years or let's call it 15 years. What does the data show us about these large amounts of baby boomers retiring? Because retiring, if it is the notion that it is, I'm not going to ever

work again, and I'm just going to sit around the house and watch TV, take a good afternoon nap, that's resigning. That I'm old and I'm dying. I think retiring needs to have a component of certainly hobbies and things that you enjoy where you are active mentally and physically, but I also think it needs to have a level of contribution. And while it may not be working the same amount of hours, when I look at retirement age, it has no picture at all with me not working. Am I working less? Am I working at a slower pace? Sure. Am I playing more and traveling more?

Absolutely. But contributing through some type of work, it's got to be the case. And I just think aging studies, if you want to go look at these things, do your own homework, it shows that. Staying active is not just go to your swim class at the YMCA and play golf with the guys on Saturday morning. So I just think it's really interesting. For those of you that are like, I'm 51 and I'm just starting, you know what?

It's possible for you to enter into retirement age, have money, work some, and still have a great lifestyle. It's not all on, I got to just live off the 401k. That may be controversial to some, but I just think we're going to see that that shifts with younger generations. Absolutely. And there's only so much on Netflix before you get bored. You need to have a little bit of purpose in life. It's true. So great reminders there, Ken. All right. Let's go to the phones. Mitch is in Atlanta.

Mitch, welcome to the show. Hey, how you doing? Thank you. Oh, man, this is incredible. Thanks for taking my call. Oh, happy to do it. Thanks for calling. Well, here's where I am.

In 2008, I'm a full-time realtor. I've been a realtor for 25 years. In 2008, 2009, when the market changed, I lost everything. So I did foreclosure. A year and a half later, I bought a house of $40,000. And my parents are renovators, so they came down and renovated the house. So the house is, I have no debt. You know, I paid the house off.

It's probably worth about $300,000 now. And I have no debt. You know. I do a debit card. I've got $6,000 in checking. I've got $23,000 in savings. I have a lot of free time. I'm still working full-time as a realtor, but I have a lot of free time. And I don't know what to do now. I don't know if I can score anymore. No debt. Zero. And I don't spend on anything. I don't know what to do now. I don't know if I can score anymore. You know, no debt. Zero. And I don't spend on anything. I don't pay.

I don't buy anything. I just don't know what to do at this point. If my parents, if they pass away, which would be the worst day of my life, they have about 13 houses. So me and my family, my brother, my sister, we'll be looking pretty good with money. When you say you don't know what to do, do you mean do with your day because you're just not interested in selling houses anymore? Is that what you're saying? I do. I want to have a retirement and I just don't know how to do it. I've got money in the bank, but I need retirement and I don't know how to do it. I mean, you know, I've got the 60%, I've got money in the bank, but I need retirement and I don't know how to do that. Well, it sounds like the real estate properties would become part of your portfolio to cashflow some retirement, correct?

Yes. But for now, let's say your parents live much longer. What would you do if you retired tomorrow? Where would your income come from? Well, I do cars as a hobby. Have you been investing at all into the market? No, that's the problem. I don't know where to invest and what to do. I have zero clue about what to do from here. So you have no 401k, no retirement accounts at all? No IRAs. No. Okay. That would be a good first step. How old are you? I'm 59. I guess I'm at step seven, your baby steps. How much cash you have in the bank?

I got $22,000 in savings and $6,000 in checking. That would be basically your emergency fund and spending money, maybe a little bit more. So we still need to figure out retirement income. What are you making per year on average? 50, between 50 and 60,000. So you're not selling a ton of homes. No, I'm not doing a lot. Market's crazy.

It's up and down. But no, I'm not doing a ton of business. Well, I tell you what, this is complex. So George, let's hold Mitch over because I think there's a lot of people that are in his shoes, Mitch, George is going to walk you through step by step what you need to do because there is time. We were just talking about this and you've got unlimited potential with that income, especially in the Atlanta area. So let's hang on. Absolutely. Yeah. There's a financial component here and there's also a purpose component that I want Ken to dig into because you're 59, you got a whole life ahead of you, and you're going, I don't know, man. I don't know what's next. And we want to help you with that, Mitch. So hang on the line. We'll be right back here on The Ramsey Show. I'm George Campbell, joined by Ken Coleman this hour.

I know we get a lot of new listeners this time of year, and so if you're a new listener and you're going, what is all this stuff? They keep mentioning Baby Step 3B and 4 and 7. What is all this about? Well, we made an incredible tool for you at ramseysolutions.com. You can click on the get started button and we will help you figure out the best next step for you based on your specific situation. We'll give you all the tools and resources we can to help you along this journey. All right. So before the break, we were talking to Mitch in Atlanta. Here's the situation. He's in baby step seven. He's got a paid for home worth 300 grand. He's got 23,000 in savings, 6,000 in checking, and he's been a real estate agent for 25 years, but has not done any investing,

and he's trying to figure out what is next. Mitch, welcome back. You still with us? You just nailed it. Yes. Good. Good summary skills. Okay. Yes. So you said your parents have a bunch of property. They have about 13 properties that you would inherit solely? It would be me, my brother, and my sister. So we're probably looking about maybe $600,000 each, probably. Worth of property. Do you think they would want to sell it, or do they want to keep it and use the cash flow as income?

They've been talking about selling and they've sold one. They bought another one. They just buy and sell. And I don't know that, you know, they're 80 and 83 years old and they just don't want to stop working. They're both really in really good shape. They live close to Nashville too. So I'm, that's close to my hometown.

You know, I just don't. So let's find a plan for Mitch aside from whatever happens later down the line. I want to make sure that you know what to do in the next five, 10, 15 years. Yes. So on one side, financially, we've got to get you investing. You're at a great place to do it because you have no debt, including a mortgage payment. And so there's a lot of options for real estate agents. Number one, you can look into IRAs. Roth IRA is going to be a great option for you. And you can look into, are you self-employed, no employees? Self-employed. Okay. You can also

look into a SEP IRA, which is for self-employed folks that have no employees. And you can contribute up to 25% of your income, which is incredible comparatively to a lot of other investing options. Okay. So those are two options right off the bat that I can think of. Solo 401ks are also an option. I would connect with a smart investor pro at ramseysolutions.com who can walk you through all of the options for your specific situation.

Do I look pretty good on paper with my age and no debt? I mean, where do I stand? Well, you need more income. As far as retiring tomorrow, you'd have nothing to live off of. And so that's the only concern. You're in a great spot financially compared to the rest of America. And so the goal right now is to get you a little nest egg to create some cash flow so that when you want to retire 10 years from now and not have to work, you're able to do that.

So a second job is what I need to do, I think. Well, I'm going to push you on that. I don't know if you need a second job. I think you need either to do better in your job or get a better job. And I'm not in any way criticizing you, but I lived in the Atlanta area for 11 years. And a real estate agent who's only making $50,000 a year in the Atlanta area either doesn't want to make much more than that or doesn't really like it, and there's something that's kind of holding you back from really getting after it. How many homes did you sell in 2022?

Hold on a second. I want to get the answer there. So I just nailed it. What did I nail? Because I've done it for 25 years, and, you know, people are just not the same as they used to be. You know, dealing with the public, people are just mean. There's just mean people out there, and I'm just having a hard time dealing with people's attitudes

and everything else. Okay, so that's what's keeping you from getting after it. There's not much to encourage you to get out there and kill something and drag it home. Correct. Okay. Correct. All right, so that's because you're not really wired for this. I don't know that people are any more rude than they were 20 years ago.

It's a tough business to get out there and put yourself out there because it's got a lot of rejection associated with it if you don't get people listening with you or people buying from you. And I think you're in the wrong business. Cars are my passion. Real estate used to be my passion. When you say cars are your passion, what do you mean? Flipping them, renovovating them? Mechanics?

What are we talking about? I have a car channel on YouTube, and I just love finding cars and saving them from being crushed or whatever. What do you do with them when you save them? Well, I've helped people. I found how people will call me, and I have tried to find cars for, find cars for people and I've done it a lot lately, but I don't make any really money off that, but I just like buying these,

especially Jaguars and Trans Ams. I just love these cars and I want to save as much as I can and be saving a car. All right. So while I love that, I love that we're beginning to see something that fires you up. Okay. So you love restoration, renovation, that there's something there. So you need to get into that type of business. You've got to be making money. And real estate, I mean, again, you can get over this and kind of bite the bullet and start getting more active. And I would recommend that for the next however many months it's going to take for you to

get clear on what it is you really want to do and what you may have to do to get qualified to do it. But if you just started flipping cars and getting serious about it, you may have to sell a house or two and take some of that commission and put it towards, now I'm going to go buy a car. I'm going to buy a car for five or six grand. That with about three to six grand of work, I can sell it for $20,000. All right? The profit you just said is exactly what I'm wanting to do. Then do it.

Do it. Because here's the deal. You should be highly motivated right now because you're not making enough money. Mitch, you should be making six figures or more. But to get you to six figures is all about getting serious, and I think you've got a highly motivated cause right now, which is I need to get busy funding my retirement. I've done some good things.

I've lived on less than I make. I have no debt. That's all great, but now it's about income. You need to do something that makes your heart swell, brother. Not for you. You're right. What's going on? You're right.

I know. Where's this emotion coming from? What's going on? I'm just tired. I'm just tired of getting out there and doing the best I can. But I keep getting, you know, just don't seem to be working out anymore. It's not working out because it's actually not your best, and it's not because you're lazy.

It's because you got yourself into a role that's just not a good fit for you. It's why I teach we are on purpose, Mitch. We are doing what we were born to do, we use what we do best that's talent to do something we love that's passion to produce results that matter to us and you've never had that so your soul on fire I used to be when was it now what were you when you were what were you doing when you were on fire I was well I was really loving when I did. The thing I love to do is find homes for people that need a home. I love being a part of their new adventure and their new life. Well, something changed.

So we don't need to recycle what we've talked about so far, but you can regather that. Maybe you should start looking for the people that really need the extra help, people that are looking for a house that they don't know where to find it. Maybe it's lower income, but you need to get some juice, man. And you need to think about the cars and all of that, but start doing something that you love, that you look forward to when you get out of bed, not something you're worried about dealing with. And that's what's going on. That's why you're exhausted to the point of emotion. You're nailing it right on the head. Everything you're saying is exactly what I

thought. Actually, I knew it. I just need to hear it. You needed a push. Yeah, you needed a push. There is work that you were put on this planet to do, and there are people on the other side of that work, Mitch. You need to reconnect with your heart and work that fires you up because you look forward to it you enjoy it and it produces a result that gives you satisfaction and significance george i love this there's the he's literally emotionally drained because it's been so long he thinks it's too light that but it's been so long since he got up and finished a day of work where he felt good about himself. That's a heavy weight. Absolutely.

Hey, Mitch, I want to send you Ken's book, From Paycheck to Purpose, as well as his Get Clear Career Assessment. I think those two resources are going to help you step into this next chapter of your life. Call it an encore career, but you're not done, Mitch. No. You've got a lot of contribution to make in this world, and I'm excited to see you step into that with no debt. What a great place to start. Thank you for the call, brother. This is The Ramsey Show. I'm George Campbell, joined by Ken Coleman this hour. Open phones at 888-825-5225. You jump in. Let's talk about your career, your work, your purpose, your life, your money. We are here for you. Now, Ken, we just talked to a guy named Mitch, and it was more of a

purpose call than a financial call. And I gifted him the Get Clear Career Assessment. We didn't have time to get into what that even is, but it's such a helpful tool for folks like Mitch who are going, what I'm doing, it ain't it. And I'm not sure what the next thing is. So what is the Get Clear Assessment? It is a 20-minute or less assessment, 15 to 20 minutes. We do the hard work by asking you specific questions that will give you answers that reveal to you what you do best. Think of your talent, your strengths as tools. So you get a detailed report on your top talents. Then you get a

detailed report on your top passions. We use the word passion in this assessment to describe work you love to do. You look forward to it. And when you're in the middle of it, time seems to disappear. And then the final report you'll get in the assessment is your top missional result. In other words, what motivates you? What results do you want to put into the world? And so then we put it all together in a purpose statement that allow you to have a high-level job description of essentially what is your sweet spot, this role that you were created to fill. And here's the good news. It'll lead to many different career paths. Could be many different types of jobs.

But in one purpose statement and then the deep dive of the report that you get, you're going to be able to know what you do best, what you love to do, and what results matter to you. And it becomes essentially, George, a 30,000-foot view of the world at work for you that would give you meaning and allow you to make money. So it's a great resource. You can get it at ramseysolutions.com. It's called the Get Clear Career Assessment, and it will give you clarity. And here's what I know, George. When a person is clear, they are confident. And when a person is confident, they can be courageous when life throws things at them, whether they're trying to win financially, win relationally or professionally. So that's why we created it. It's a wonderful gift to someone, maybe that kid who's getting ready to graduate this year. It works for students, college students, husbands that are stuck, wives that are feeling like, oh, I want to come back into the workforce

maybe. What would I do? It's a wonderful application. So check it out, the Get Clear Career Assessment at ramseysolutions.com. Love it. All right, let's get to the phones. Robert awaits us in my hometown of Boston, Massachusetts. Robert, welcome to the show. Hi, how are you guys? We are doing great. How can we help? Thanks for taking my call. So I'm 23 years old, and I just paid off my student loans in one year, which is $27,000.

Way to go. Thank you, thank you. So I have an IT job right now. I'm making $70,000 a year. And with that, I get a 401K and a 4% company match, so I put 10% in right now. And I think that's looking pretty good. So I live at home with my parents for free right now.

And I pay all my expenses and I have no debt other than at all, actually. So I'm thinking of doing house hacking to move out eventually in a couple of years. And I was wondering how I should get started with that. And what do you guys think I need to save for that? How much do you have in savings right now? I have about 10 grand left over after paying all my student loans and stuff. Okay. So let's call that your emergency fund. Yeah. Okay. And you're investing 10%. What is the company match? 4%. Well, if you're following the baby steps, are you a new listener to the plan? Relatively.

Okay. So you would be what we call baby step four, which is invest 15% of your income into retirement. So if I'm in your shoes, I'm bumping that up. At 23 years old with no debt and some money in the bank, you're in such an incredible financial position. And you're wondering, well, where does home ownership fall into this? Well, that would be baby step 3B is what we call that, saving up for that down payment on a house. And you can do this your own way when it comes to 3B and 4. Some people like to invest all 15% and keep saving for the down payment. Some people bring their investing down

to nothing to save for that down payment more aggressively. So in your shoes, you're young, you could do that in order to create some more margin, but I wouldn't touch that $10,000. Let's call that savings for emergencies. So now the next goal is, how much is the house that you are looking to buy this duplex? I haven't found anyone in particular, but I'm thinking around $200,000 to $400,000. That'd be my range. Have you actually found duplexes for sale in the Boston area in that range? Like ones that need renovations and they're picture uppers. Doesn't sound like you're going to have money for renovations.

Because your plan is I'm going to live on one side and the renter is going to live in the other and they're going to magically pay my mortgage. Is that the idea? Yeah. What are the values of duplexes in these areas? I mean, do they hold their value? Typically, because in the Boston area, it's very hard to get housing. Okay. I imagine there's people, duplexes are in high demand because of this idea that you're talking about. So I don't know that you're going to find a deal on a duplex unless it needs a lot of renovations. And man, at 23 with no money, that is a dangerous scenario because what happens when the tenant doesn't pay on time? Oh, and by the way, they

live next door. And so anytime something happens, they're knocking on your door because they know the landlord lives next door. Oh, that's awful. And so I would just tread with caution. I know this is big advice on TikTok on the financial side of, hey, just house hack. It's so easy. You can make so much money. But man, it is so much more complicated than that, and it can be very risky. Is that what house hacking is? I wasn't going to ask, but now I don't care. That's the idea.

I don't know what it is. Robert, did I sum it up well as to what house hacking is? Basically, yeah. Okay. You get a duplex, you know, three, four family, and you live in one unit, and you rent out the other ones, which then ideally pays for your mortgage and then some. Do you want to live with your renters? That's a really, boy, you ought to do that on the talk, George,

because I think that would get some views for you. Nobody wants my opinion there because they're all wanting to make money, Ken. They don't want to hear the money muggings. They're thinking about living next door to their renters. And when something goes wrong, guess what? Absolutely. What happens if you don't get back to them fast enough and they got anger issues? Well, when the HVAC goes out-

I could go on and on. It's on you to fix and you to pay for. And so that's what worries me, Robert, is it sounds like you're looking to put as little down to get into this thing as possible on a 30-year in order to get the renter to pay the other side. Yeah. And so our housing advice is a 15-year fixed rate mortgage because we want you in debt for as little time as possible and where the payment is no more than a quarter of your take-home pay. And so if you can do that

and without having a tenant involved, then I would say you're financially ready to get that duplex or buy a house. And that might mean you need to save up, you know, 40% as a down payment instead of 5% in order to make those numbers work. But it's not to be, you know, super fundamental and go, you're doing it wrong if you don't do it this way. It's because of risk. And all you see on paper is upside if you can just do the crunch the numbers. But reality is a whole lot different. So, Robert, let me just flip this. If you knew that you could buy a home that only you lived in and you could pay it off quickly and then reap the benefits of that very sound investment much later in life,

would you choose that or the housing hack idea? Well, I was always thinking that I could use the housing hack idea as an investment in the future where when I'm maybe on 30, I can move out of that and have those two being rented and then buy a house after that. But I do like the idea of maybe being able to pay off my own house a lot quicker. Yeah, then buy another house. But the point is you skip the whole idea where you're a landlord. Yeah. You don't want to be a landlord. You just want to make money wisely. That's what I heard. Yeah. Am I correct? Yeah, I agree with that. Yeah. So maybe we start looking at, hey, let's get a condo for Robert that he can live in. Maybe you want to get a roommate. Maybe you get a two bedroom condo and you can get a roommate. But I wouldn't go investing in real estate until you've got a paid-for house yourself

and you're at a different place financially. And there's no rush. Man, you're 23. Who cares if you get into this at 33 or 43? Everyone feels like I'm too late, Ken, if I don't get into it. There's an 18-year-old on TikTok who got started and now he's making millions. Man, I think we got to get off social media for a little while. I got a phrase for you. Stop with the housing hacks. Stay with the housing facts. Wow.

Huh? Robert, are you going to tweet that? Nothing says middle-aged man like that. Yeah. They don't like that on the talk. No one likes that. Yeah, but it's a fact. It's true.

Well, Robert, I hope that helps. I didn't want to stomp on your parade there and rain on it, but I've just seen too many situations where it doesn't go according to plan like it did on paper. And the TikTok said it was going to be easy and it would always work out. And life is just messy, man. So the best thing you can do is walk into this thing with patience, with wisdom, and with more money than you think you need because it's expensive. Speaking of life hacks, I got one for you folks, all you youngsters out there. I still haven't met anybody that got rich off of TikTok advice. Ooh, that hurt people's feelings, Ken.

Oh, I'm sure. They're watching out there. Oh, boy. Well, hey, that puts this hour of The Ramsey Show in the books. My thanks to Ken Coleman and all the folks in the booth keeping the show alive and you, America. Thank you for listening. We will be back real soon. Hey, George Campbell here.

If you love the show and you want a deeper dive on your money journey, we've got a weekly newsletter that gives you helpful articles and tips on following the Ramsey way. Just go to RamseySolutions.com today to sign up for the newsletter. Again, that's ramseysolutions.com to sign up for our weekly newsletter.