The Ramsey Show - App - Is It Possible to Overfund an HSA? (Hour 2)

Episode Date: March 6, 2019

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studio, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I am Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Jason is in Rockford, Illinois, starting this hour.

Hi, Jason. Welcome to the Dave Ramsey Show. Thanks, Dave. I appreciate talking to you. Sure. What's up, man? Well, I wanted to tell you I was a federal employee for a year and a half when the shutdown happened. So the first time in working for 25 years, I'm not promised a paycheck. And because that emergency fund, the crisis, I wouldn't even say was an inconvenience. We barely even noticed it. Wow. Good for you, man. Well done.

Everybody's looking for 0% loans from banks all over, and everybody's kind of worried about stuff. The other funny thing is that some of the people at work are asking me. They're more concerned about the condition of my car than I am out in the parking lot because I got the money in the bank and not in the car, so I appreciate that. Good for you. Good for you, man. How can I help today? Well, I got the debt paid off, fully emergency fund got money going into tsp uh but my question is i plan on transferring with my job uh a few more times over the years it's probably not

going to make sense to buy a home and build equity but um besides renting cheap and and money away is there anything else i can do in that area of a Welsh building? That's all I would do is I would have a little mutual fund over to the side that is my house fund, and I'm just going to keep chunking money in it to the idea that maybe, depending on how long this constant transferring goes on, maybe at the end of it you just write a check and buy a house when you know you're settled. Oh, good. Okay.

Yeah, just use it. I'm sorry, just a good mutual fund and just sock it away. That's what I would do if I were in your shoes. How often are you moving? Well, I plan on two moves, about two to three years apart at least. After that, we might settle down, but it's just, it's not

going to be for a few years. Okay. So you may have another decade of this. Yeah, close to it. Yeah. Okay. All right. Cool. Yeah, I'm with you.

Very few places do the houses go up in value fast enough and sell fast enough to buy a home, and it makes sense on a two- or a three-year turn. A few places it does because they're just white hot, you know. But most places you're going to be better off to rent super cheap and then just throw as much money as you can throw in a side mutual fund with the idea that's kind of your baby step 3B, but now it becomes 6. You know, you're saving up for, you know, what would have been your down payment, but now in addition to that, you're saving up to buy the house

at the end of this transfer merry-go-round that you're on. So, cool. Well, Jason, I'm glad you're winning, man. Proud of you. Very well done. James is with us in Memphis, Tennessee. Hi, James. Welcome to the Dave Ramsey Show.

Man, I appreciate it. I appreciate your ministry. My wife and I have been following it for a while, and we've paid off, gosh, man, we've paid off about $85,000 in about 17 months. So we've really been, I guess, depriving ourselves. Good for you. We appreciate your ministry. Good for you. Well done.

I got a little situation here with our church that we go to. It's the one that we took FPU in. We love the church. We love the pastor. We love the people. But based on the biblical principles that you teach in FPU

and all that, our church is, I guess, about to take out a massive loan on a building fund. And is this hypocritical? Are we talking out of both sides of our mouth, or am I reading too much into this? Well, I've got a lot of good friends that borrow money on all kinds of different things. I'm positive, after studying it for 30 years,

that there's no time in Scripture that says borrowing money is a sin, nor does it say borrowing money is a salvation issue. But 100% of the references to debt in the Bible are negative. Right. You're a fool. You're a slave. And so I just, it hurts me when the bride of Christ chooses to go into chains, the chains of slavery. But sometimes what happens is the church board looks more like the chamber of commerce than a group of theologians.

So there's a car dealer, a whole life salesman, and a banker all sitting on the church board. And, of course, they all believe in borrowing money. And they can somehow rationalize it, but they can't find it in the Bible. So I'm pretty graceful with people. I mean, I went to a church for years that had debt. The church I currently go to was a merger. And when they merged, there was $7.5 million worth of debt laying there, and they paid it off in 14 months.

So they went on a campaign to pay it off. But I didn't leave the other place because they had debt. That was not the deal breaker for me. If I feel like the people are being irresponsible or arrogant or something else, I might leave because of that, and it might be reflected in this story, but it wouldn't simply be because they borrowed money so if you love everything else about the place and you can extend them some grace i i think they're wrong you think they're wrong but i know a lot of people that i think

are wrong i still like them true you know and uh so would it make the would it make uh i guess in a sense make my wife and i I a hypocrite as well? If we're totally bought in to paying off all of our debt and we're truly on board with being financially secure, going through your principles, but yet we're still attending a church that's constantly going into debt, which they are about to do, would that in a sense make us be a hypocrite as well i don't think it makes you a hypocrite it you know but it leaves a um you know there's a mark on this it it bothers you or you wouldn't have called me you know so uh you know but i just told you i dave ramsey went to a church that had debt and i paid my tithes there so some of that tithe

money went to pay interest to a freaking bank does that make me a hypocrite no because i'm just extending grace over it i'm not i can't tell everybody what to do i can only convince people to do smart things that want to be convinced and that includes pastors um and so you know i i talk them out of it if i can but i've got friends that run big churches and they go into debt all the time. And I just think they're dumb. I don't think it's biblical, but I don't think they're going to hell for it. And I'm not going to be mad, and I'm not a hypocrite by still being a friend with them, and you're not a hypocrite for still going there. I don't think that's the case.

But I think there's other stuff going on. When I start to believe that someone is not faithful and not wise in areas of decision making debt could be one but then if i start to see it in other areas too now i've got a pattern not of debt that causes me to be a hypocrite but i got a pattern of unwise decision making and leadership and if there's a pattern of that that's a reason to leave a church. Gotcha. Okay. All right, brother. I do appreciate it. If one thing breaks the camel's back at a church, you'll never stay in a church. Because there's always somebody doing something you're going to disagree with.

It's part of church. It's a problem of church. There's people there. Yeah, so I wouldn't leave over just that. I didn't. I just told you. So I wouldn't tell you to do something different than I've done. You can extend a little grace.

I am going to try to have influence and try to stop this train before it runs off the track. I did that at the other place. I tried to have some influence. I didn't throw my weight around, but I tried to have some persuasion. This is the Dave Ramsey Show. You know, I get asked all the time, at what age should I buy life insurance? Let me be clear. If you have a family, if there are people depending on your income, now is the time to have term life insurance.

I don't care if you're 20, 30, 40, 50, or whatever. Your age is less important than your financial situation. If you have debt and a lack of savings, it makes no sense to risk your family's financial well-being based on the cost of a term life policy. Term life rates are just plain cheap, even if you're not in perfect health. And the best way to compare those rates is through Zander Insurance. Zander only sells the plans I recommend and shops among the top companies to find the best rates and the right coverage for you. Call 800-356-4282 or visit zander.com. You got no excuse to put this off, folks. Bad things happen

to people all the time, regardless of age. And it's your responsibility to deal with this. That's Zander.com or 800-356-4282. Thanks for joining us, America. We're glad you're here. Do you know the average graduate leaves college with $39,000 of student loan debt? That's like 40 grand! This is why we created the Graduate Survival Guide for graduating high school seniors. The Graduate Survival Guide.

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or jump online at DaveRamsey.com and just check the store. The sale is on now. Graduation time is coming fast. Eric's with us in Los Angeles. Hi, Eric. Welcome to the Dave Ramsey Show. How you doing, Dave? Better than I deserve.

What's up in your world? Hey, so I need to know where should I start first. So I'm a new listener. I've been listening for about a uh two three weeks and i need to know whether to start with every dollar budget app or the baby steps okay well we're going to do them both uh because they enter that they it's it's interlocking fingers okay and so uh what we're going to do is we're going to uh start with the every dollar budget and load that on your phone or on your computer.

And you can get it on any of those app stores that are out there. It's everywhere. It's completely free. But the whole idea is this. If you give every dollar an assignment before the month begins, every month, you're going to feel like you got a raise because you're going to go, where's all this dadgum money going? You know, when you actually lay it down, you go, okay, here's what I really spend on food. Here's what I spend on lights and water. Here's what my rent is. Here's what my car payment is. Where's all this dadgum money going? When you actually lay it down, you go, okay, here's what I really spend on food. Here's what I spend on lights and water. Here's what my rent is.

Here's what my car payment is. Where's it going? And you're going to, you know, because we all waste money. But when you don't have a plan, you waste more. That's what it comes down to. So we're going to start with that. And then what are we going to do with the found money? Well, that's the baby steps.

Any money we can squeeze out of our life, our budget, or extra jobs, or any combination of those three things, or money we got laying around, what are we going to do with them in order to win with money? And we're going to walk right up the baby steps then. And your first goal, as you've probably already heard,

is $1,000. That's baby step one. And two is we're going to pay off your debts. How much debt have you got? Debt? About $86,000 between me and my wife. $86,000 to $87,000. Okay.

And what's that on? About $23,000 is on cars. About $63,000 is on student loans. Okay. And $500,000 credit cards. Okay. Not much on credit cards. That's good news. And how old are you? 24. Okay. And 500 credit cards. Okay. Not much on credit cards. That's good news. And how old are you? 24. Cool. How long you been married? About three and a half years. Okay, good. And what's

your household income? About $67,000. Okay. And what are your degrees in? uh uh my wife has a degree in um in uh web design and then well and then myself i don't have a degree i i went to a trade school to a to a for-profit school and then like at the very end of my program there the the school was shut down. Oh, wow. So that pretty much, yeah. How much of that student loan debt is that? This one, $13,000. Okay. I want you to do some research online.

There's some laws in place that says if a for-profit closes, that the loan that was made to you is not valid anymore. I think that $13,000 can be forgiven. Okay. I want you to do a little research on that, okay? But aside from that, is she working outside the home or is she staying home with kids? No, she's working outside the home. Okay.

And so you're both working and making $67,000. Right. Okay, cool. Well, then we're just going to walk right up those baby steps like we're talking about. Your car is pretty heavy, 000 car with 67 000 income it's not over the line but it's close it's a big weight around your neck for sure if it's a high interest rate i'm dumping it if it's a low interest rate and you want to fight to keep it i would but

you're gonna have trouble being debt free in two years keeping that car and we want you to be debt free in two years 86 000 that's you know 43 000 a year making 67 living in la i don't think you got the room to do it in two years and keep the car so i'm probably dumping this car but you can continue to look at it and talk about it tell you what i'll do you're a brand new listener i want you to go through our class financial peace university it's nine weeks long and we give you a one-year membership to Financial Peace Online as well. And the Financial Peace Online will give you the access to all the stuff as well, plus other lessons, plus every dollar plus.

So it gives you everything. So if you'll go to the class, I'll pay for it. You and your wife go, and we'll help you turn this around. And you call me back if you've got questions as you're going through. Thanks for the call. Open phones at 888-825-5225. Caroline is with us in Phoenix. Hi, Caroline.

How are you? It's an honor to talk to you, Mr. Ramsey. You too. What's up? Okay. Well, I have an Uncle Dave question for you. I have been cutting through debt,175,000 in five years. Yay. Thank you. I'm on the last bit of it right now. And I got an unexpected,

I got my tax return adjusted, like you say, but I got an unexpected couple extra thousand dollars because I got to claim my son last year i'm wondering the only debt i have left is my car and the i could pay it off this week if i use my emergency fund how much do you owe in your car i owe 4 $2,000. You mean you would use your $1,000 emergency fund? I got $3,100 back. Oh, okay. And you have the $1,000 Baby Step 1 emergency fund that you're referring to? Correct.

It's really tempting, but I would not do that. I figured, but I needed some funds because I'm right at the end. So you can see the finish line. You're running to the finish line. You're sprinting. I'm with you. I'm right at the end and it's so you can see the finish line you're running to the finish line you're sprinting I'm with you I'm out of breath with you you can do this but but here's the thing I too many times when I had absolutely zero money it invites Murphy into my house and everything that can go wrong will and my life starts looking like a country song when I'm broke definitely and I just don't want you down to zero i want you debt-free bad more than anybody on the planet other than you you know i mean you know i'm mr debt-free right so but but i'm not going to leave you with zero money to do that no we're not going to go blow

that one thousand dollars you're going to get there you've already done 135 you're only 1000 off you got this kid you got it yeah you got it. Yay! You got it, okay? Thank you. A couple more months and I'll be coming to see you. I'm ready to see you. Ready for you. Proud of you. Thanks for calling. Open phones at 888-825-5225. Thank you for joining us. Dan's on Instagram. Is there such a

thing as overfunding the HSA? I have enough to cover the deductible and then some. Should I stop or continue funding? Well, I mean, it depends on where you are in your baby steps and in your wealth building. In my case, I have a big, hairy emergency fund, and I use the HSA just to shelter money because it's a tax-free contribution or tax-deferred contribution. If you pull it out of the HSA and use it for medical of course this is tax free there's never any taxes on it um all the medical that we've had we've been knock on wood

fairly healthy around their mz family so i haven't had to really use any big dollars to cover medical and when i did have a few dollars here or there we just wrote the check and i didn't even touch the hsa consequently my stinking hsa because I started the very first time George Bush put the thing in place, I saw it immediately as a big win. I went there the very first year, and I funded it every year fully as just a tax savings. So I've got over $200,000 in my HSA. Just that one account. You know, it's in mutual funds.

I use it as an investment account now. So you can go that way with it if you want. And if you're looking at it that way, no, you can't really overfund it. Can you pay the government too little in taxes? No, that's not possible. I want to pay them as little as possible. And that's how I'm using it. So it just depends on where you are.

Now, if you're using it instead of an emergency fund, no, you shouldn't be doing that. And, yes, you've overfunded it in that case. This is the Dave Ramsey Show. The last thing I want you to feel is buyer's remorse, especially when you offered thousands more on a new home to win a bidding war. If I've taught you anything, it's that blindly throwing money at a problem is a stupid plan and something you'll regret for years. The key to avoiding this rookie mistake is to call Churchill Mortgage and get certified. This easy program puts

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761 Old Hickory Boulevard, Brentwood, Tennessee, 37027. Thanks for joining us, America. We're glad you are here. Open phones at 888-825-5225. You jump in. Nicole is in Houston, Texas. Hi, Nicole. Welcome to the Dave Ramsey Show.

Hello. Hi, Nicole. How are you? I'm great. Thank you so much for asking, sir. Thank you so much for taking my call. Sure. What's up? I am a new listener, brand new, and I saw a few of the baby steps. I was looking over them, and I saw that you recommend that people do not put into their 401k to pay off their debt. My husband is actually very serious about his 401k, and he really believes in putting everything in it. And I was wondering if you could give me some advice

and how I can speak to him about this, but still in a God-honoring way, like what you would recommend as my Uncle Dave. How old are you guys? I am 30, and he's 32. How long have you been married? Almost 12 years. Good for you.

Very cool. Thank you. Well, what I would do is this. I think the 401K question starts to go away when you guys get on the same page about your goals and the shortest distance between where you are and your goal. So let's start.

Let's back up from the conversation and not worry about the details of the baby steps because right now you have a little bit of information about the baby steps and about all this plans and details and all this, and he's got none. Yes. And you've suddenly gotten excited about building wealth. You've suddenly gotten excited about the money thing, and you never have been in 12 years. And so he's kind of looking at you like, who are you? Well, I believe that when I do have the conversation with him, that he will be receptive because he does want to retire early.

Let's start with that. Now you're right on track. That's exactly what you do. Let's get above this and say, okay, let's start talking about, I've been looking at this money stuff, and I'm getting excited about it, and so I want us to talk about wealth. I want us to talk about how we can build wealth so we can be outrageously generous, so we can change our family tree.

And then once we both agree that we're working towards that, then we can back up and say, okay, that's the goal. And then any time you set a goal, one of the next questions you ask yourself, whether you realize it or not, is you say, okay, what has to be true that's not true now for us to get there? Yes, sir. Because if we were already there, we would already have all the things going. We're not there.

And so there must be something wrong with what we're doing. And what's wrong with what we're doing is we have debt and because the number one the number one process to building wealth the number one thing to hit that goal is to be debt free all the data tells us that all the studies of millionaires that we've done all the detailed data that we've drug out of people over 30 years of doing this the number one key to your most powerful wealth building tool is your income. And once you understand that, then you say, okay, I've got to get my income back. I can't be giving it all to banks.

Then the baby steps start to make sense because you say, okay, before I start investing, I need to be able to invest with gusto, and I can't because I'm walking with a limp carrying this debt. When you're paying a $500 car payment, that's $500 you can't because i'm walking with a limp carrying this debt when you're paying a five hundred dollar car payment that's five hundred dollars you can't put it into an investment when you're paying three hundred dollars on a student loan that's been around so long you think it's a pet that's three hundred dollars you can't put into an investment when you have a master card who named that a master card in your life then that's money you can't put into an investment. And so you're limited because all the money comes in and most of the money goes out and

the rest of it goes to the 401k and you're not getting there. So all the data tells us the shortest distance between where you are and wealth is to become debt free because that frees up your most powerful wealth-building tool. But if you start with that discussion before you agree on the goal is building wealth. And the purpose of building wealth, of course, is change our family tree, retire with dignity, and be outrageously generous. These are the things that people build wealth for. I want to make sure my kids are taken care of, I'm taken care of,

I'm not a burden on my family when I hit retirement. And I can help other people with money. And the more money I have, the more other people I can help with money. And so, you know, poor people can't feed poor people. That's a pretty basic mathematical fact. Okay. So we're going to try to be outrageously generous. We're going to put ourselves in this position to be generous. And the way to get there is get out of debt so that we can invest with more gusto, which gets us there the fastest. Now, you might do it the other way. You might pull it off the other way. But very few people do. The data tells us that the people that get there, the successful people, and if your husband's plan worked, you would already be there.

Okay? So his plan isn't working because you're diluting it. You're trying to do two things at once, and you can't do two things at once. It's like people trying to text and drive. You know? They can't text well, and they can't drive well. Your thumbs are all over the place, you're misspelling words, and you're swerving like a drunk.

You're worse than a drunk. And so, you know, you just decide I'm not going to try to do two things at once. You can't do two things at once. That's the problem. And here's the thing. We're not really saying stop the 401K. We're saying stop the 401K temporarily. And almost everyone is debt-free except their house within two years on this plan.

But that's if they get gazelle intense and focused and stop the 401k and take an extra job and live on beans and rice and quit going on vacations and don't see the inside of a restaurant unless they're working there. During the two years, you're completely focused on getting out of debt with, ah, I'm getting out. So it's only two years. You're 32. Two years off of your 401K is not going to keep you from being wealthy.

Mathematically, it's simply not. And so take the time off and completely focus. Don't text and drive. Don't do a 401K and try to get out of debt at the same time. You're not going to do either one well. And that's what it comes down to but if you start with um i'm going to talk about your favorite subject the 401k and i'm going to call your baby ugly that's not a plan that's like walking in and going we're going to get out of debt by selling your truck darling he's going to go i'm not on

your plan and so you know you you started with the what instead of the why. And so go back and do the why, the wealth building. He's going to be receptive to that. He's already wired that way. He's going to be happy you're bringing this conversation up. Start with that and then back down in and then decide if you want to do this the way that we teach. As a couple, you can decide that. This is not a cult. You can decide to this is not a cult you can decide to not join

the cult you can decide to shave your head drink the kool-aid but you don't have to and then you can leave the cult later if you want so we're really not a cult because cult people don't leave they just stay once they're there so you see what i'm saying you get to decide what you're going to do i give you the freedom to decide but there are principles that work here, and if you want to do the proven plan and not do it-ish, you'll get the best results. And that's what we're doing. So good question, because that gives me a chance to get up on my soapbox for everyone out there. Shannon is with us in Savannah, Georgia. Hi, Shannon.

How are you? Hey, Mr. Ramsey. How are you? Better than I deserve. What's up? Well, I was wondering. I took your financial peace class a couple years ago in high school. And there was a thing mentioned about the stocks in there.

And I've heard from a lot of people that it's a good thing to do it because you'll gain money as you go. But I'm very concerned just as myself that if I put money in there, I'm going to lose a whole bunch because I've heard that happen to people too, and I don't want to lose all my money. I want to know where it's at and what I can do with it. Good for you. Okay. Well, that's very wise to not put money in something that you don't understand.

And so you needed a little bit of study. I'm going to send you a copy of the book, The Total Money Makeover. And I'll tell you what, I'm going to send you the complete guide to money, which has in it a chapter on mutual fund investing and how to understand that and how to make the decisions, okay? Let me give you an example for a second, okay? Your parents own a home? They just found me.

I'm sorry? What was it? I'm sorry. Do your parents own a home? Yes, sir. I thought you asked if they were here. I'm sorry. Okay. And if your parents own a home, you're what, 19 or 20? 18. 18. Okay. Since you were a little kid, do you realize that that home's gone up in value?

I think so. Yeah. Okay. And so the same thing happens with stock market, but it's kind of vague out there. But if you were actually to study residential real estate statistics in your neighborhood that you grew up in, you could become an expert in 45 minutes on what the values have done in the last 10 years in your neighborhood. And you can start to look at mutual funds the same way. So I'm going to send you a copy of the Complete Guide to Money. It's got the best mutual fund chapter in San Diego.

Welcome to the Dave Ramsey Show, Si. Hi, Dave. How are you doing? Better than I deserve. What's up? Nothing much. I just wanted to talk to you, and I had a few questions, actually, I wanted to ask you. I recently started listening to your podcast every day on my way to work. I'm a recent college graduate. I'm 23 years old with a degree in computer science, and I actually just started graduating in December and started a new job about three weeks ago, making $85,000 a year. Look at you, man. Touchdown.

Yeah, it's actually pretty interesting. It's nice to have my bank account be more than triple digits for once in my life. I hear you, man. Way to go. Yeah, so my question actually comes from, so I'm a dependent, and when I was studying in college, I took out student loans for about $20,000 for my portion, and my parents, my dad took out a parent loan for my education that totaled around $60,000. I wasn't sure if it was something I should think about is refinancing my dad's loan into my name because I was the one who was doing education. We had kind of a verbal agreement when I started school that I would pay off the loan he takes from me

once I graduate and get a job, but I don't know if it's something I should refinance into my name or should still have the loan in his name. Okay, so morally, based on the agreement you have with your dad, that's your debt. Legally, it's in his name. Yeah. Yeah, I'd go ahead and put it into your name if you have the ability, do you? Yeah, I do have the ability to.

I just didn't know if it was worth going down that street and, you know, talking to like a refinance. Yeah, so basically you got $80,000 worth of student loan debt and you make $80,000. Yeah. And you live in San Diego, which is a wee bit expensive. Yeah, but my monthly expenses don't come up to more than $1,500. I live in a pretty nice apartment, but my rent and utilities, everything is really low. Okay. Well, let's say we put you on a really tight budget,

and let's say we paid off $40,000 a year out of your $85,000. Mm-hmm. That'd be two years you'd be debt-free, daddy and you. Yeah. Let's do it. Yeah, I mean, that's the plan. I'm not planning on trying to spend too much money on other stuff. And I guess my other question was, as a recent college student,

we don't really learn a lot about how to manage your money and stuff. Like in high school or college, it's not really like something they teach you. And so I've been listening to a lot of your podcasts lately to learn. And I'm on baby – okay, so I guess I finished baby step one. I have an emergency fund. On baby step two, I'm working on – because I have my student loans and I have about $1,000 of credit card debt. Do you think it's worth, like, putting the minimum amount that my company matches

into my 401K while paying off my debt? Nope. Nope. I'm going to get the student loan paid. We've got $80,000 we've got to clear up, and that's the goal. You get that done in two years, you're not even going to be 25 years old. By then, you're going to be probably making $100,000. Yeah.

And you have zero debt. Dude, you know how fast this math is going to kick in, and you're going to be worth some serious change? Yeah, I mean, the math looks like it looks good, like the way you're saying it and the way I've been kind of planning it out. But, you know, I wasn't sure because my company doesn't match for my 401K. I'm sure.

I'm sure. I would not try to text and drive. Okay. I would just drive. Let's drive the lane, get the deck cleared up. You can't do two things at once and do them well. Let's focus. Because, listen, dude, you've got the rest of your life.

You've got 40 years to put money in this 401K if you do what I'm telling you to do. You're going to be okay. You're going to be a multi-bazillionaire. Yeah, I don't have a car loan or a car payment either, so it's literally just my student loan. Well, you need to save up and get you a decent car, and you're going to do some other stuff once we get this student loan off your back and your dad's back. So hold on, I'm going to send you a copy of the book, The Total Money Makeover,

which walks you through exactly what to do. You're a computer science major, you know what syntax is. When you lay out a line of code and it's improperly done, it doesn't work. I'm going to give you the line of code for money. It's called a proven plan, and it works.

Millions, literally, millions of people have done exactly what I'm going to show you how to do. So you don't need to reinvent the wheel, dude. I'll send you the formula, work the formula. It's not any harder than that. Hold on. This is the Dave Ramsey Show. Open phones at 888-825-5225. I'm giving away a book every caller.

It feels like Marquis is in Atlanta. Hey, Marquis, how are you? Hey, Dave, how are you? I mispronounced your name. How do you pronounce it? Marquis. Oh, Marquis. Okay, good.

How can I help? Yes, sir. Me and my wife are trying to decide if we should do a cash-out refi on our home and borrow from it. No. You can't borrow your way out of debt. What are you going to do with this money? I don't know. So, okay, let me stop for a second the premise the premise that we use around here from 30 years of doing this is the shortest method to become wealthy is to be is to be out of debt okay and if the shortest method to get out of debt is first stop borrowing more okay so i don't know why you would refinance your house and take cash out. Sometimes people do that to pay off other debt, and I would not recommend that.

Yeah, and I talked to the guy at Churchill, and the regular refi was going to take us a couple hundred dollars higher on our mortgage. So we only have our mortgage and our car left to pay off. So he threw that out there as an option to pay off the vehicle, so that way it frees up that money for the mortgage. Yeah, okay. He's not supposed to do that. I want you to hold on, and Kelly's going to pick up.

I want to know his name. We're going to give him some education. No, that's not proper. So, no, I would not do that. I do not do cash-out refinances unless it's to avoid a foreclosure or a bankruptcy. And other than that, we don't do that. So, hold on. Kelly will pick up.

You don't get a book, but I do get a name. Open phones at 888-825-5225. Matthew is in Fort Myers, Florida. Hi, Matthew. Welcome to the Dave Ramsey Show. Hey, Dave. How are you doing today? Better than I deserve, sir.

How can I help you? Sure. So me and my wife are currently on, we just finished Baby Step 1 of last week. So we're currently on Baby Step 2. I previously quit my part-time job just to have a little bit more family time, and I had a 401K through that company of around $900. But I have a 403B through my current employer, which is some stock, mutual funds, some bonds. Would it be suggestive just to keep that money in the 401K or do a rollover well it's not a hundred dollars so it doesn't really matter okay okay but philosophically because mathematically it's not

who gives a real okay but but but but philosophically we tell you 100 of the time that you leave a company i would roll an old 401k into an IRA that I can control. And I invest my anything over $10,000, which this is not, across four types of mutual funds, growth, growth and income, aggressive growth, and international. In your case, if you're going to roll this to an IRA, I would just pick one growth stock mutual fund that's got a long track record, drop the $900 in there. You could roll it into the 403B. I don't care.

If you cash it out, it's going to cost you about $300. You're going to have $600 in your pocket, but it's not going to kill you. I don't tell people to cash out retirement accounts ever unless it's to avoid a foreclosure or a bankruptcy. Obviously, that's not the discussion here. But it's a small enough amount of money, it just really, again, mathematically doesn't matter. But philosophically, I always roll a 401k when I leave to an IRA, a traditional IRA, and that way there's no taxes on the rollover, and you pick the good mutual funds with a SmartVestor Pro.

But, again, it's $900. I mean, if you hand me $900, I'll take it. Don't misunderstand. But it's not going to cause you – this is not a mistake or an advantage that's going to cause you ridiculous pain or loss of fortune or cause of fortune or anything like that later. So it's not that. But philosophically, I roll it. That's the answer.

Thanks for the call. That puts us out of the Dave Ramsey show in the books. James Childs is our producer. Kelly Daniels, our associate producer and phone screener. I'm Dave Ramsey, your host. We'll be back before you know it. Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit DaveRamsey.com slash show and register. We would love for you

to come to Nashville and tell Dave your story.